Notes to Accounts of Ankur Drugs & Pharma Ltd.

Mar 31, 2011

I. Zero Coupon Foreign Currency Convertible Bonds [FCCBs]:

i] Out of US$ 16 million FCCB's [16,000 Bonds of US$ 1000 each as issued on May 25, 2006], FCCB's of US$ 8 million were outstanding as at March 31,2011.

The said FCCB's are due for conversion on or before May 31,2011.

ii] US$ 20 million FCCB's [20,000 Bonds of US$ 1000 each as issued on December 24, 2007] were outstanding as at March 31,2011.

The said FCCB's are due for conversion on or before December 27,2012.

iii] The Provision for Premium on redemption of FCCB's to the tune of Rs 1,097.07 Lacs has been computed on pro rata basis for the period upto March 31,2011. [P.Y.Rs343.72 Lacs].

II. Foreign Exchange:

On account of various factors including, in particular, an amendment to Schedule VI of the Companies Act, 1956 [the Act] withdrawing the requirement to adjust changes in the amounts of liability relating to loans/ liabilities in foreign currency attributable to Fixed Assets acquired by the Company in the cost of the said Fixed Assets, the Company has decided that it would be more appropriate to account for the change in foreign exchange rates, as the profit or loss of the Company for the year in which the changes take place without adjusting the amount of the change in the cost of Fixed Assets.

The Accounting policy is in line with the Accounting Standard "AS-11", "The Effect of Changes in Foreign Exchange Rates" and also in line with the accounting policy followed by the Company for similar changes relating to liabilities expressed in foreign exchange other than those relating to fixed assets.

III. Contingent Liabilities:

a] In respect of guarantees given by banks on behalf of the Company Rs 173.63 Lacs [Previous Year Rs 173.63 Lacs], the Company has kept Rs 84.22 Lacs [Previous YearRs 104.49 Lacs] in Fixed Deposit with Banks.

b] Claims against the Company not acknowledged as debts: Income Tax Demand Rs 19.27 Lacs [Previous Year Rs 574.27 Lacs] represents the claims where the disputes are pending before CIT [Appeal] / ITAT, Mumbai. However the Company has paid the amount of Rs 19.27 Lacs pending dispute before ITAT

c] Estimated amount of contracts remaining to be executed on capital account [net of advance] for Rs 58 Lacs [Previous Year Rs 2489 Lacs]

IV. Securities for Secured Loans I. Term Loan

a] For Himachal UnitI

Term Loans amounting to Rs 4,025.68 Lacs secured by way of first charge/assignment ranking pari-passu interse the lenders, are as under:

I] First charge over all the movable and immovable fixed assets situated at Village Manakpur, P.O. Lodhimajra, Tehsil-Nalagarh, District Solan [H.P.]-174101.

ii] Second charge over current assets of the Company along with other term lenders.

iii] Personal Guarantee of Mr. Purnandu Jain, Chairman and Managing Director of the Company.

b] For Himachal Unit II

Term Loans amounting to Rs 8,644.36 Lacs secured by way of first charge/assignment ranking pari-passu interse the lenders, are as under:

i] First charge over all the movable and immovable fixed assets situated at Village Makhnu Majra, P.O. Baddi, Tehsil - Nalagarh, District Solan [H.P.] -173 205.

ii] Second charge over current assets of the Company along with other term lenders.

iii] Personal Guarantee of Mr. Purnandu Jain, Chairman and Managing Director of the Company.

c] For Office Premises

Term Loans amounting toRs 2,104.82 Lacs secured by way of first charge/assignment interse the lenders, are as under:

i] First charge over office premises at 20th Floor, Lotus Business Park, Off. Andheri Link Road, Andheri [West], Mumbai-400053.

ii] Personal Guarantee of Mr. Purnandu Jain, Chairman and Managing Director of the Company.

d] For Production Equipment Credit Scheme

Term Loans amounting to Rs 6,471.71 Lacs secured by way of first charge/assignment are as under:

i] First charge by way of Hypothecation over Equipment acquired out of the loan.

ii] Subservient charge on current assets of the company.

iii] Personal Guarantee of Mr. Purnandu Jain, Chairman and Managing Director of the Company.

e] For Working Capital Term Loan

Term Loans amounting to Rs 4,790.29 Lacs secured by way of charge/assignment ranking pari-passu interse the lenders, are as under:

i] Second charge on the fixed assets of the company with other lenders.

ii] Personal Guarantee of Mr. Purnandu Jain, Chairman and Managing Director of the Company.

f] For Short Term Loan

Term Loans amounting to Rs 688.68 Lacs secured by way of charge/assignment as under:

i] Pledge of Promoters Shares

ii] First charge by way of Equitable mortgage over land measuring 17 bigha 17 biswas situated at Village Makhnumajara, Pargana: Dharmpur,Tehsil, Baddi Dist. Solan [HP.]

iii] Personal Guarantee of Mr. Purnandu Jain, Chairman and Managing Director of the Company.

II. Working Capital Borrowings

a] Cash Credit amounting to Rs 47,970.94 Lacs and crystallised liability under LCS and SBLC amounting to Rs 2,682.40 lacs is secured byway of first charge/assignment ranking pari-passu interse the lenders are as under:

i] First paripas such arge over current assets of the Company.

ii] Second charge over all the movable and immovable fixed assets situated at Village Makhnu Majra, P.O. Baddi, Tehsil - Nalagarh, District Solan H.P. -173 205 along with other term lenders.

iii] Second charge over all the movable and immovable fixed assets situated at Plot No. 168/3 and 4, Survey No. 168, Dabhel Industrial Co-operative Society Limited, Village Dabhel, Nani Daman [U.T.] - 396210 along with term lenders.

iv] Second charge over all the movable and immovable fixed assets situated at Village Manakpur, P.O. Lodhimajra, Tehsil - Nalagarh, District Solan [H.P.] 174101.

v] Second charge over office premises at 20th Floor, Lotus Business Park, Off. Andheri Link Road, Andheri [West], Mumbai-400053.

vi] Personal Guarantee of Mr. Purnandu Jain, Chairman and Managing Director of the Company.

b] Sales Bills Discounting/Factoring amounting to Rs 1,459.34 lacs is secured by first charge on the specific receivables factored/discounted by the company and personal guarantee of Mr. Purnandu Jain, Chairman and Managing Director of the company

III. Vehicle Loan

Vehicle Loan of amounting to Rs 74.14 Lacs is secured by hypothecation of specific vehicles against which the loans have been taken.

V. Deferred Tax

[A] In accordance with "Accounting Standard 22" on Accounting for Taxes on Income issued by the Institute of Chartered Accountants of India, the Company has Deferred Tax liability of Rs 5,691.16 Lacs which is arrived after Deferred Tax charge of Rs2,063.18 Lacs to Profit and Loss account.

[B] In compliance of Accounting Standard-22 on "Accounting for Taxes on Income" issued by The Institute of Chartered Accountants of India, the break up of deferred tax assets and liability :

VI. Earning per Share

In compliance of Accounting Standard-20 on "Earning Per Share" issued by The Institute of Chartered Accountants of India, the computation of Earning per share [Basic and Diluted] is as under :

Notes: [a] It is not practicable to furnish quantitative information in respect of individual items in view of the various types of pharmaceutical formulations.

[b] As the Company maintains its records in quantity only, the figures shown as consumption are balancing figures, ascertained on the basis of opening stock, purchases and closing stock.

[c] The above figures are after adjustment of excess and/or shortage ascertained on physical count and write off obsolete and other items.

XiX. The Company operates in a single business segment viz. "Pharmaceutical Formulations" and therefore in the context of Accounting Standard No. 17, disclosure of segment wise information is not applicable.

XX. The Company does not possess information as to which of its suppliers are Ancillary Industrial Undertaking/Small Scale Industrial Undertakings holding permanent registration certificate issued by the Directorate of Industries of a State or Union Territory. Consequently the liability, if any, of interest which would be payable under 'The Interest on delayed payments to Small Scale and Ancillary Industrial Undertakings Act, 1993', cannot be ascertained. However, the Company has not received any claims in respect of such interest and as such, no provision has been made in the books of account.

XXI. In the opinion of the Board of Directors, the current assets and loans and advances have value on realisation at least equal to the amount at which they are stated in the Balance Sheet and provision for all known and determined liabilities is adequate and not in excess of amount reasonably required.

XXII.The unsecured loans, current liabilities, sundry debtors and loans and advances are subject to reconciliation.

XXIII.The previous year's figures have been regrouped, reclassified and recast wherever considered necessary.

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Mar 31, 2010

I. Zero Coupon Foreign Currency Convertible Bonds (FCCBs] :

i] Out of US$ 9 million FCCBs [9000 Bonds of US$ 1000 each as issued on May 25, 2006] as at April 1, 2009, US$ 1 million FCCBs [1000 Bonds of US$ 1000 each] were converted into 3,26,199 Equity Shares during the Financial Year ended March 31, 2010, at a conversion price of Rs. 165 per share. The balance of US$ 8 million FCCBs were outstanding as at March 31, 2010.

The said FCCBs are due for conversion on or before May 31, 2011.

ii] US$ 20 million FCCBs [20000 Bonds of US$ 1000 each as issued on December 24, 2007] were outstanding as at March 31, 2010.

The said FCCBs are due for conversion on or before December 27, 2012.

iii] The provision for Premium on Redemption of FCCBs to the tune of Rs. 343.72 Lacs have been computed on pro rata basis for the period up to March 31, 2010. [P.Y. $ 2093.89]

II. Foreign Exchange :

On account of various factors including, in particular, an amendment to Schedule VI of the Companies Act, 1956 [the Act] withdrawing the requirement to adjust changes in the amounts of liability relating to loans/ liabilities in foreign currency attributable to Fixed Assets acquired by the Company in the cost of the said Fixed Assets, the Company has decided at the end of the Financial Year 2008-09 and after approval of the unaudited financial results for quarter and the year ended March 31, 2009 that it would be more appropriate to account for the change in foreign exchange rates, as the profit or loss of the Company for the year in which the changes take place without adjusting the amount of the change in the cost of Fixed Assets.

The Accounting policy is in line with the Accounting Standard -AS-11-, -The Effect of Changes in Foreign Exchange Rates” and also in line with the accounting policy followed by the Company for similar changes relating to liabilities expressed in foreign exchange other than those relating to fixed assets.

Accordingly, during the year ended March 31, 2010, provision for exchange difference on foreign currency loan made in the F. Y. 2008-09 was written back to the tune of Rs.. 1543.06 Lacs [Previous Year provision Rs. 2613.06 Lacs] in the books of accounts, since the Exchange rate was Rs.` 44.895 / $ [Previous Year Rs. 50.6402/$] in compliance with the announcement dated March 29, 2008 by ICAI regarding Accounting in Derivatives.

III. Contingent Liabilities :

a] In respect of guarantees given by banks on behalf of the Company Rs. 173.63 Lacs [Previous Year Rs. 183.04 Lacs], the Company has kept Rs. 104.49 Lacs [Previous Year Rs.` 106.84 Lacs] in Fixed Deposit with Banks.

b] Claims against the Company not acknowledged as debts: Income Tax Demand Rs. 574.37 Lacs [Previous Year Rs. 19.27 Lacs] represents the claims where the disputes are pending for rectification before AO / before CIT [App] / ITAT, Mumbai. However the Company has paid the amount of Rs. 19.27 Lacs pending dispute before ITAT

c] Estimated amount of contracts remaining to be executed on capital account [net of advance] for Rs. 2489 Lacs [Previous Year Rs.` 3817 Lacs]

IV. Securities for Secured Loans 1. Term Loan

a] For Himachal Unit 1

Term Loans amounting to Rs. 5,137.94 Lacs secured by way of first charge/assignment ranking pari-passu interse the lenders, are as under :

I] First charge over all the movable and immovable fixed assets situated at Village Manakpur, P.O. Lodhimajra, Taluka - Nalagarh, District Solan [H.P.]-174 101.

ii] Second charge over current assets of the Company along with other term lenders.

iii] Personal Guarantee of Mr. Purnandu Jain, Chairman and Managing Director of the Company.

b] For Himachal Unit II

Term Loans amounting to ` 10,271.05 Lacs secured by way of first charge/assignment ranking pari-passu interse the lenders, are as under :

i] First charge over all the movable and immovable fixed assets situated at Village Makhnu Majra, Taluka Baddi, District Solan [H.P.] - 173 205.

ii] Second charge over current assets of the Company along with other term lenders.

iii] Personal Guarantee of Mr. Purnandu Jain, Chairman and Managing Director of the Company.

c] For Office Premises

Term Loans amounting to Rs. 1,101.36 Lacs secured by way of first charge / assignment interse the lenders, are as under :

i] First charge over office premises at 20th Floor, Lotus Business Park, Off. Andheri Link Road, Andheri [West], Mumbai - 400 053.

ii] Personal Guarantee of Mr. Purnandu Jain, Chairman and Managing Director of the Company.

d] For Production Equipment Credit Scheme

Term Loans amounting to ` 42,81.12 Lacs secured by way of first charge/assignment are as under:

i] First charge by way of Hypothecation over Equipment acquired out of the loan.

ii] Subservient charge on current assets of the company.

iii] Personal Guarantee of Mr. Purnandu Jain, Chairman and Managing Director of the Company.

e] For Working Capital Term Loan

Term Loans amounting to Rs. 50,56.41 Lacs secured by way of charge/assignment ranking pari-passu interse the lenders, are as under:

i] Second charge on the fixed assets of the company with other lenders.

ii] Personal Guarantee of Mr. Purnandu Jain, Chairman and Managing Director of the Company.

f] For Short Term Loan

Term Loans amounting to Rs. 51,47.38 Lacs secured by way of charge/assignment as under:

i] Subservient charge over Current Assets of the company.

ii] Personal Guarantee of Mr. Purnandu Jain, Chairman and Managing Director of the Company.

II. Working Capital Borrowings

Cash Credit amounting to Rs. 349,86.16 Lacs is secured by way of first charge/assignment ranking pari-passu interse the lenders are as under:

i] First pari passu charge over current assets of the Company.

ii] Second charge over all the movable and immovable fixed assets situated at Village Makhnu Majra, Taluka - Baddi, District Solan [H.P] - 173205 along with other term lenders.

iii] Second charge over all the movable and immovable fixed assets situated at Plot No. 168/3 and 4, Survey No. 168, Dabhel Industrial Co-operative Society Limited, Village Dabhel, Nani Daman [U.T.] - 396210 along with term lenders.

iv] Second charge over all the movable and immovable fixed assets situated at Village Manakpur, P.O. Lodhimajra, Taluka - Nalagarh, District Solan [H.P.] 174101.

v] Second charge over office premises at 20th Floor, Lotus Business Park, Off. Andheri Link Road, Andheri (West), Mumbai – 400 053.

vi] Personal Guarantee of Mr. Purnandu Jain, Chairman and Managing Director of the Company.

III. Vehicle Loan

Vehicle Loan of amounting to Rs. 94.75 Lacs is secured by hypothecation of specific vehicles against which the loans have been taken.

V. Deferred Tax

[A] In accordance with “Accounting Standard 22” on Accounting for Taxes on Income issued by the Institute of Chartered Accountants of India, the Company has Deferred Tax liability of Rs.` 36,27.98 Lacs which is arrived after Deferred Tax charge of Rs.` 12,01.40 Lacs to Profit and Loss account.

[B] In compliance of Accounting Standard-22 on “Accounting for Taxes on Income” issued by The Institute of Chartered Accountants of India, the break up of deferred tax assets and liability are given below :

XiX. The Company operates in a single business segment viz. "Pharmaceutical Formulations" and therefore in the context of Accounting Standard No. 17, disclosure of segment wise information is not applicable.

XX. The Company does not possess information as to which of its suppliers are Ancillary Industrial Undertaking/Small Scale Industrial Undertakings holding permanent registration certificate issued by the Directorate of Industries of a State or Union Territory. Consequently the liability, if any, of interest which would be payable under The Interest on delayed payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, cannot be ascertained. However, the Company has not received any claims in respect of such interest and as such, no provision has been made in the books of account.

XXI. In the opinion of the Board of Directors, the current assets and loans and advances have value on realisation at least equal to the amount at which they are stated in the Balance Sheet and provision for all known and determined liabilities is adequate and not in excess of amount reasonably required.

XXII.The unsecured loans, current liabilities, sundry debtors and loans and advances are subject to reconciliation.

XXIII.The previous years figures have been regrouped, reclassified and recast wherever considered necessary.