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Notes to Accounts of Mercury Laboratories Ltd.
Mar 31, 2025
1. Note-4 to Schedule II specifies that the useful life specified in Part C of the Schedule is for whole of the asset. Where Cost of a Part of the Asset is significant to the total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part should be determined separately. As per the Management of the Company and considering the nature of Fixed Assets lying in the Block of Assets of the Company, particularly the Plant and Machineries lying in the Block, there are no such major parts whose useful life is different from the useful life of the remaining asset and hence the Company has considered the useful life of the said parts equivalent to the useful life of theAsset only.
(d) Rights, Preferences and restrictions attached to Shares
The Company has only one class of equity shares having a par value of Rs. 10/- per share. Each holder of equity shares is entitled to one vote per share. The holders of Equity Shares are entitled to receive dividends as declared from time to time. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(e) Shares held by Holding Company and Subsidiaries of Holding Company in aggregate As at 31st March Company does not have holding and subsidiary company during the FY 24-25 and FY 23-24
Notes:
The Company has a defined benefit gratuity plan. Every employee who has completed five or more years of service is eligible for gratuity @ 15 days salary (last drawn) for every completed year of service with a overall ceiling of 20 lakhs. The Company has taken a Group Gratuity cum Life Insurance Policy from Life Insurance Corporation of India (a qualifying policy) and makes annual contributions to the same to create a fund to meet this defined benefit gratuity obligation.
The estimates of rate escalation in salary is considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.
The expected contributions for Defined Benefit Plan for the next financial year will be in line with FY 2024-25.
The plan typically expose the Company to actuarial risks such as: interest rate risk, liquidity risk, salary escalation risk and regulatory risk.
Interest Rate Risk:
The plan exposes the Company to the risk off all in interest rates.Afall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).
Liquidity Risk:
This is the risk that the Company is not able to meet the short-term gratuity pay outs. This may arise due to nonavailability of enough cash/cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.
Salary Escalation Risk:
The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.
Regulatory Risk:
Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 (as amended from time to time). There is a risk of change in regulations requiring higher gratuity pay-outs (e.g. Increase in the maximum limit on gratuity of Rs. 10,00,000)
HDFC Bank has sanctioned various credit facilities as working capital finance & Export Credit facility which is secured by way of Hypothecation charged over book debts and inventory. Further, equitable mortgage is also created on company property situated at Gorwa. Personal Guarantee of Director Rajendra Shah is also given to the Bank. The rate of Interest for Working Capital finance is 9.84 % p.a.
Vehicle Loan taken from HDFC Bank at the interest rate of 8.50% p.a
Dues to Micro and Small Enterprises:
With reference to amounts shown as payable to Micro, Small and Medium Enterprises, the information has been compiled in respect of parties to the extent they could be identified as Micro, Small and Medium Enterprises on the basis of information collected and available with the Company and same has been relied upon by the auditors. The Company deals with various Micro Small and Medium Enterprises on mutually accepted terms and conditions.
Sundry Creditors and Sundry Debtors are as per books and have not been corroborated by circulation / confirmation of balances / reconciliation of accounts. Confirmations of parties concerned, for the amount receivable / due to them as per accounts of the company, are under process of reconciliation and adjustments required, if any, will be made as and when the accounts are settled.
Note No40:
In the opinion of the Board, the Current Assets, Loans and Advances which are considered good are expected to realize at least the amount at which they are stated, if realized in the ordinary course of business. Further, in the opinion of the Board, provision of all known liabilities has been adequately made in the accounts.
Note No41 :
Company has used the borrowing from Bankfor the specific purpose for which it was taken at Balance sheet date.
Guarantees:
Bank Guarantees outstanding as on 31st March, 2025, amounted to INR 193.86 Lacs (P.Y. INR 78.69 Lacs) against which the company has kept the Margin Money Deposits worth INR 36.33 Lacs (P.Y. INR33.22 Lacs).
Note :
Dy. Registrar of Companies, Mumbai has filed the petition in Hon''ble Session (Special) Court Mumbai, against the company for alleged violation of certain provision of the Companies Act, 2013 in past years. However these violations are compoundable in nature. The company is defending matter in court. The outcome of petition is pending and as on Date liability is not ascertainable.
Leases
"The company has leasing arrangements that have extension / termination options exercisable by either parties which may make the assessment of lease term uncertain. While determining the lease term, the Management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option.
Note No 46:
Director''s Remuneration
Directorsâ remuneration paid during the year is in accordance with the approval of the Central Government sanctioned to the Company under Section 197(3) of the Companies Act, 2013 for giving the Remuneration above the limits prescribed by Section 197 read with Section I of Part-II of Schedule V of the Companies Act, 2013. The amounts paid includes the following:
i. There are no immovable properties (other than properties where the Company is a lessee and the lease agreements are duly executed in favour of the lessee) whose title deeds are not held in the name of the Company.
ii. The Company has not revalued any of its Property, Plant and Equipment (including Right-of-UseAssets) during the year.
iii. The Company has not granted any Loans or Advances in the nature of loans to Promoters, Directors, KMPs and Related Parties either severally or jointly with other persons that are repayable on demand or without specifying any terms or period of repayment.
As on date of the balance sheet, there are no capital work-in-progress projects whose completion is overdue or has exceeded the cost, based on approved plan.
v. The Company did not have and Intangible Assets under Development as at the end of the year.
vi. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
vii. The Company is not declared as wilful defaulter by any bank or financial institution (as defined under the Companies Act, 2013) or consortium thereof or other lender in accordance with the guidelines on willful defaulters issued by the Reserve Bank of India."
viii. The Company had obtained sanction of working capital limits against security of current assets. However these limits were not utilised at any time during the year. Hence, as such there were no actual borrowings against current assets during the year.
X. The Company has not made a direct investment in Joint Venture during the year which does not have any further downstream investment. Hence, it is in compliance with the number of layers prescribed under Section 2 (87) f the Companies Act, 2013 read with Companies (Restriction on Number of Layers ) Rules, 2017.
xi. There was no Scheme ofArrangements during the year.
xii. The Company has not advanced or loaned or invested funds to any other person(s) orentity(is), including foreign entities (Intermediaries) with the understanding that the Intermediary shall: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
xiii. The Company has not received any fund from any person(s)orentity(is), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
xiv. The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 such as, search or survey or any other relevant provisions of the Income TaxAct, 1961.
xv. There are no transactions which are not recorded in books and have been surrendered or disclosed as income during the year in Income TaxAssessments.
xvi. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
Note No 53 :
Quarterly statement of current assets submitted by company with Banks are in agreement with books of accounts. Note No 54 :
There are no amounts pending to be transferred to the Investors Education and Protection Fund as at the end of the year.
Note No 55 :
Segment Reporting:
The products offered by the Company are in the nature of Bulk Drug Intermediates and its related products, having The same risks and returns, same type and class of customers and regulatory environment Hence, the Company effectively has a single reportable business segment. Hence, segment-wise disclosure of information is not applicable.
Note No 56 :
Impairment of Assets:
During the previous year, the Company had undertaken an exercise to review Property, Plant and Equipment and in absence of any further indications, external or internal, as to any probable impairment of assets, no provision has been Made for the same.
Note No 59 :
Financial risk management objectives and policies
The company''s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets include trade and other receivables and cash and cash equivalents that are derived directly from its operations.
The Companyâs financial risk management is an internal part of how to plan and execute its business strategies. The company is exposed to market risk, credit risk and liquidity risk.
The company senior management overseas the management of these risks. The senior Professionals working to manage the financial risks and the appropriate financial risk governance framework for the company are accountable to the Board of Directors and Audit Committee. This process provided assurance the Companyâs senior management that the Companyâs financial risk-taking activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with Company policies and Company risk objectives.
In the event of crises caused due to external factors such as caused by recent pandemic âCOVID 19â the management assesses the recoverability of its assets, maturity of its liabilities to factor it in cash flow forecast to ensure there is enough liquidity in these situations through internal and external source of funds. These forecast and assumptions are reviewed by board of directors.
1. Risk Management Framework
The Companyâs board of directors has overall responsibility for establishment and Oversight of the companyâs risk management framework. The board of directors has established the processes to ensure that executive management controls risks through the Mechanism of property defined framework.The Companyâs risk management policies are established to identify and analyze the risks faced by the company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed by the board annually to reflect changes in market conditions and companyâs activities. The company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
2. Credit Risk
"Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet itscontractual obligations, and arises principally from the companyâs receivables from customers. The carrying amount of financial assets represents the maximum credit exposure. The Company monitor credit risk very closely both in domestic and export market. The management impact analysis shows credit risk and impact assessment as low.
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate. The company management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Companyâs standard payment and delivery terms and conditions are offered.
The Companyâs review includes market check, industry feedback, past financials and external ratings, if they are available, and in some cases bank references. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the Directors of the company. Most of the Companyâs customers have been transacting with the company for over Five to Ten years against those customers. In monitoring customer credit risk, Customers are reviewed according to their credit characteristics, including whether they are an individual ora legal entity, their geographic location, industry and existence of previous financial difficulties.
3. Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as for as possible, that it will have sufficient liquidity to meet its liabilities when they are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation.
(i) Interest Rate Risk
"Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company has borrowings, therefore Company is exposed to such risk. With all other variables held constant, the following table demonstrates the impact of the borrowing cost on floating rate portion of loans and borrowings.
The company has overdraft facility against fixed deposits. The rate of interest is linked with the rate of fixed deposit with a defined margin."
(ii) Foreign Currency Risk
The company operates internationally and is exposed to currency risk on account of receivables and payables in foreign currency. The functional currency of the company is Indian Rupee. The company uses forward contracts to hedge its currency risk, most with a maturity of less than one year from the reporting date .The company does not use derivative financial instruments for trading or speculative purposes.
(iii) Equity Price Risk
The Companyâs investments are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the price risk through diversification and by placing limits on individual and total instruments. Reports on the portfolio are submitted to the management on a regular basis.During the year including previous year company has not made any investment in any securities having Uncertanities about future value of investments.
5. Capital Management
"The Company''s capital management objectives are:
- To ensure the Company''s ability to continue as going concern
- To provide adequate return to shareholders through optimisation of debt and equity balance
For the purpose of the Companyâs capital management, capital includes issued equity capital and other equity reserves attributable to the equity holders of the Company.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and business opportunities. The Company monitors capital structure using a debt equity ratio, which is debt divided by equity."
Note No 63 :
From the current year, the company has presented actuarial gains / losses on Defined Benefit Plans as Other Comprehensive Income with tax effect thereon. Correspondingly the figures of previous year are recast to make them comparable.
The figures in respect of previous year have been re-grouped / recast wherever necessary to confirm To the current year''s classification.
Mar 31, 2024
3.7 Provisions, Contingent Liabilities And Contingent Assets Provisions
Provisions, which required a substantial degree of estimation, are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to a provision is recognized in the Statement of Profit & Loss
When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost in respective expense.
Contingent Liabilities and Contingent Assets
Contingent liabilities are not recognized but are disclosed in the notes. Contingent liabilities are disclosed for possible obligations which will be confirmed only by the future event not wholly within the control of the Company or present obligations arising from the past events where it is probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent Assets are neither recognized nor disclosed in the financial statements.
3.8 Income Tax
Income Tax Expenses comprise the sum of Current Tax (including past year tax difference) and Deferred Tax. Current Tax
Provision for current tax is made as per the provisions of the Income Tax Act, 1961.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax:
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxation authority.
3.9 Employee Benefits Short-term Employee Benefits
Employee benefit liabilities such as salaries, wages and bonus, etc. that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at an undiscounted amount expected to be paid when the liabilities are settled.
Post-employment benefit plans
Defined Contribution Plans:
State governed Provident Fund Scheme and Employees State Insurance Scheme are defined contribution plans since eligible employees are entitled to get benefits and both the Company and eligible employees make monthly contributions towards the same. The contribution paid / payable by the Company under the schemes is recognized during the period in which the employees render the related services.
Defined Benefit Plans:
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company''s gratuity scheme is a defined benefit plan. The Company recognizes the defined benefit liability in Balance sheet. The present value of the obligation under such defined benefit plan and the related current service cost and, where applicable past service cost is determined based on an actuarial valuation done using the Projected Unit Credit Method by an independent actuary, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligations are measured at the present value of the estimated future cash flows.
Re-measurements, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) is reflected immediately in Other Comprehensive Income in the Statement of Profit and loss. All other expenses related to defined benefit plans are recognized in Statement of Profit and Loss as employee benefit expenses. Re-measurements recognized in Other Comprehensive Income will not be reclassified to Statement of Profit and Loss hence it is treated as part of retained earnings in the Statement of Changes in Equity.
Other Long Term Employee Benefits:
Other Long Term Employee Benefits such as long term compensated absences are measured at present value of estimated future cash flows to be made by the company and is measured, recognized and presented in the same manner as the defined benefit gratuity plant narrated above.
3.10 Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
? In the principal market for the asset or liability, or
? In the absence of a principal market, in the most advantageous market for the asset or Liability
? The principal or the most advantageous market must be accessible to/ by the Company.
Fair value hierarchy
All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole;
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: valuation techniques for which the lowest level input that has a significant effect on the fair value measurement are observable, either directly or indirectly.
Level 3: valuation techniques for which the lowest level input which has a significant effect on the fair value measurement is not based on observable market data.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained Above.
3.11 Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement:
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Subsequent measurement:
For purposes of subsequent measurement, financial assets are measured in their entirety at either amortised cost of fair value depending on classification of the Financial Asset :
? Financial Assets at Amortised Cost
A Financial Assets is measured at the amortised cost if both the following conditions are met:
? The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
? Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised Cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
The EIR amortization and losses arising from impairment are recognized in the Statement of Profit & Loss. The amortized cost of the financial asset is also adjusted for loss allowance, if any
? Financial Assets at Fair Value through Other Comprehensive Income (FVTOCI)
A Financial Asset is measured at fair value through other comprehensive income if both the following conditions are met:
? The asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and
? Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at fair value and changes therein are recognized directly in other comprehensive income, net of applicable taxes.
? Financial Assets at Fair Value through Profit and Loss (FVTPL)
FVTPL is a residual category for Financial Assets.
Any Financial Asset, which does not meet the criteria for categorization as at Amortized Cost or as FVTOCI, is classified as at FVTPL.
In addition, the company may elect to designate a Financial Asset, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch'').
Financial Assets included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit & Loss.
Derecognition:
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. Any gain or loss on derecognition is recognised in the Statement of Profit and Loss.
Impairment of financial assets:
In accordance with Ind AS 109, the company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
? Financial assets that are debt instruments, and are measured at amortised cost e. g. Loans and trade Receivables.
? The company follows ''simplified approach'' for recognition of impairment loss allowance on Trade receivables that do not contain a significant financing component.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
Financial liabilities
Initial recognition and measurement:
All financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
All financial liabilities are initially measured at fair value deducted by, in the case of financial liabilities not recorded at fair value through profit or loss, transaction costs that are attributable to the liability.
Subsequent measurement:
Financial liabilities are classified as measured at amortised cost using the effective interest method. The Company''s financial liabilities include trade payables, borrowings and other financial liabilities.
Under the effective interest method, the future cash payments are exactly discounted to the initial recognition value using the effective interest rate. The cumulative amortization using the effective interest method of the difference between the initial recognition amount and the maturity amount is added to the initial recognition value (net of principal repayments, if any) of the financial liability over the relevant period of the financial liability to arrive at the amortized cost at each reporting date. The corresponding effect of the amortization under effective interest method is recognized as expense over the relevant period of the financial liability in the Statement of Profit and Loss.
Derecognition:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the Derecognition of the original liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid is recognized in the Statement of Profit and Loss.
Offsetting of financial instruments:
Financial assets and financial liabilities are offset and the net amount presented in the Balance Sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the assets and settle the liabilities simultaneously.
3.12 Cash and Cash Equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short- term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
3.13 Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures are carried at cost / deemed cost applied on transition to Ind AS, less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of investment is assessed and an impairment provision is recognised, if required immediately to its recoverable amount. On disposal of such investments, difference between the net disposal proceeds and carrying amount is recognised in the statement of profit and loss.
3.14 Inventories
Inventories are stated at the lower of cost and net realisable value. Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition other than duties and taxes which are subsequently recoverable from taxing authorities in form of Input Tax Creidt or otherwise. Net realisable value is the price at which the inventories can be realised in the normal course of business, and in in case of Semi Finished and Finished Goods, after allowing for the cost of conversion from their existing state, and for the cost of marketing, selling and distribution.
Raw Materials are valued at Cost ascertained on a weighted average basis or Net Realised Value whichever it lower. Finished goods produced by the company are valued at lower of cost or net realizable value. Semi-Finished goods have been valued at lower of Raw Material cost, Direct Labour and appropriate proportion of variable and fixed overheads, latter being allocated based on normal operating capacity or net realizable value.
Stock of goods purchased for resale purposes are valued at their acquisition cost inclusive of all duties and taxes or Net Realizable Value whichever is lower.
Provisions and / or write-offs are made to cover slow-moving and obsolete items based on historical experience of utilisation on a product category basis and market conditions.
3.15 Foreign Currency
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Foreign currency denominated monetary assets and liabilities are re-measured into the functional currency at the exchange rate prevailing on the balance sheet date.
Exchange differences arising on settlement of transactions and translation of monetary items are recognized in the statement of Profit or Loss except to the extent, exchange differences which are regarded as an adjustment to interest costs on foreign currency borrowings, are capitalized as part of borrowing costs.
3.16 Forward Contracts
The Company is exposed to foreign currency fluctuations on foreign currency assets and forecasted cash flows denominated in foreign currency. The Company tries to limit the effects of foreign exchange rate fluctuations by following risk management policies including use of derivatives. For this the Company enters into forward exchange contracts, where the counter-party is a Bank. Theses forward contracts are not used for trading or speculation purpose.
In case, of forward contracts the gain or loss arising on exercise of option or settlement or cancellation are recognized in the Statement of Profit & Loss for the period.
The forwards contracts outstanding as at the end of the reporting period are recognized / restated at forward contract rates for the end date of the contract for a period equivalent to the balance maturity period of the contract as at the end of the reporting period and corresponding exchange gain or loss arising on the same is recognized in the Statement of Profit & Loss for the period.
3.17 Revenue Recognition
Revenue from Sale of Products is recognised when control of the products or significant risks and rewards of ownership are transferred to the buyer for a consideration. This usually occurs when the products have been shipped or delivered to the specific location as the case may be, the risks of loss has been transferred, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied. Sale of products include related ancillary services, if any.
Domestic Sales are recognized at the transaction price of the consideration receivable net of Sales Returns and excluding the Goods and Service Tax (GST) element as well as net of expected volume discounts. Export Sales are recognized at their CIF Value charged to the Customers in Invoices.
Revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. A liability is recognised for expected volume discounts payable to customers in relation to sales made until the end of the reporting period. Any obligation to provide a refund is recognised as a provision.
The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price, the Company considers the effects of variable consideration, the existence of significant financing component and consideration payable to the customer like return and trade discounts.
Sale of Scrap
Revenue from sale of scrap, if any, is recognized as and when scrap is sold.
Other income
Interest Income is recognized on a time proportionate basis including interest accrued based on the amount outstanding and rate applicable and shown under âOther Incomeâ. Interest income from Financial Assets is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.
Export Benefits
Duty free imports of raw materials under Advance License for imports as per the Import and Export Policy are matched with the exports made against the said licenses and the net benefit/obligation is accounted by making suitable adjustments in raw material consumption. The benefits accrued under the duty drawback scheme and Merchandise Export from India Scheme (MEIS) as per the Import and Export Policy in respect of exports under the said scheme are recognized when there is a reasonable assurance that the benefit will be received and the company will comply with all attached conditions. The above benefits are included under the head ''Export Incentives.â
Dividend income
Revenue is recognized when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
Other Items of Income
Other items such as Insurance Claims, Commission, Misc. Incomes etc. are accounted on accrual basis (depending on certainty of realization) and disclosed separately as Operational or Non-Operational Income under Other Income.
3.18 Earnings Per Share
Basic earnings per share is computed using the net profit for the year attributable to the shareholders'' and weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed using the net profit for the year attributable to the shareholders'' and weighted average number of equity shares.
3.19 Dividends
Any dividend declared by Mercury Laboratories Limited is based on the profits available for distribution as reported in the statutory financial statements of Mercury Laboratories Limited (standalone) prepared in accordance with Generally Accepted Accounting Principles in India or Indian GAAP or Ind AS. Indian law permits the declaration and payment of dividend out of profits for the year or previous financial year(s) as stated in the statutory financial statements of Mercury Laboratories Limited (Standalone) prepared in accordance with Generally Accepted Accounting Principles in India, or Ind AS after providing for depreciation in accordance with the provisions of Schedule II to the Companies Act. However, in the absence or inadequacy of the said profits, it may declare dividend out of free reserves, subject to certain conditions as prescribed under the Companies (Declaration and Payment of Dividend) Rules, 2014.
3.20 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
3.21 Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of such assets up to the assets are substantially ready for their intended use. The loan origination costs directly attributable to the acquisition of borrowings (e.g. loan processing fee, upfront fee) are amortised in the year in which they occur.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognised in the statement of profit and loss in the period in which they are incurred.
3.22 Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
3.23 Segment Reporting
With respect (Ind AS - 108 Segment Reporting), the Management of the Company is of the view that the products offered by the Company are in the nature of Pharmaceuticals and its related products, having the same risks and returns, same type and class of customers and regulatory environment. Hence, the business of production and sale of pharmaceuticals and its related products belong to one business segment only.
3.24 Government grants
Government grants are recognised at its fair value, where there is a reasonable assurance that such grants will be received and compliance with the conditions attached therewith have been met.
Government grants related to expenditure on property, plant and equipment are credited to the statement of profit and loss over the useful lives of qualifying assets or other systematic basis representative of the pattern of fulfilment of obligations associated with the grant received.
Grants received less amounts credited to the statement of profit and loss at the reporting date are included in the balance sheet as deferred income.
3.25 Good and Services Tax
GST is a destination-based tax and is levied at the point of supply. It is collected on sale of goods and services on behalf of Government and is remitted by way of payment or adjustment of credit on input goods or services. GST input credit is accounted on an accrual basis on purchase of eligible inputs, capital goods and services.
GST Accounts are created under Balance Sheet Groupings for liability towards GST collected on Sales / Other Revenue and asset towards GST paid on purchases or other expenditure for which credit is available. For Each month the GST liability is worked out after offsetting the credit available against the GST collected. The Net GST Account appears in the Balance Sheet as a Liability, if any amount is payable as at the year-end after offsetting the available credit and as an Asset if credits remain unutilized after adjusting the amount payable.
The balance of GST input credit is reviewed at the end of each year and amount estimated to be un-utilizable is charged to the statement profit and Loss for the year.
The estimates of rate escalation in salary is considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.
The expected contributions for Defined Benefit Plan for the next financial year will be in line with FY 2023-24.
The plan typically expose the Company to actuarial risks such as: interest rate risk, liquidity risk, salary escalation risk and regulatory risk.
Interest Rate Risk:
The plan exposes the Company to the risk off all in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).
Liquidity Risk:
This is the risk that the Company is not able to meet the short-term gratuity pay outs. This may arise due to nonavailability of enough cash/cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.
Salary Escalation Risk:
The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.
Regulatory Risk:
Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 ( as amended from time to time). There is a risk of change in regulations requiring higher gratuity pay-outs (e.g. Increase in the maximum limit on gratuity of Rs. 10,00,000)
Note No 39 :
Sundry Creditors and Sundry Debtors are as per books and have not been corroborated by circulation / confirmation of balances / reconciliation of accounts. Confirmations of parties concerned, for the amount receivable / due to them as per accounts of the company, are under process of reconciliation and adjustments required, if any, will be made as And when the accounts are settled.
Note No 40 :
In the opinion of the Board, the Current Assets, Loans and Advances which are considered good are expected to realize at least the amount at which they are stated, if realized in the ordinary course of business. Further, in the Opinion of the Board, provision of all known liabilities has been adequately made in the accounts.
Note No 41 :
Company has used the borrowing from Bank for the specific purpose for which it was taken at Balance sheet date.
Note No 52 :
Other Statutory Information
i. There are no immovable properties (other than properties where the Company is a lessee and the lease agreements are duly executed in favour of the lessee) whose title deeds are not held in the name of the Company.
ii. The Company has not revalued any of its Property, Plant and Equipment (including Right-of-Use Assets) during the year.
iii. The Company has not granted any Loans or Advances in the nature of loans to Promoters, Directors, KMPs and Related Parties either severally or jointly with other persons that are repayable on demand or without specifying any terms or period of repayment.
iv. The Capital Work-in-Progress ageing schedule for the year ended on March 31, 2024 and March 31, 2023 is as follows:
x. The Company has not made a direct investment in Joint Venture during the year which does not have any further downstream investment. Hence, it is in compliance with the number of layers prescribed under Section 2 (87) of the Companies Act, 2013 read with Companies (Restriction on Number of Layers ) Rules, 2017.
Xi. There was no Scheme of Arrangements during the year.
xii. The Company has not advanced or loaned or invested funds to any other person(s) or entity(is), including foreign entities (Intermediaries) with the understanding that the Intermediary shall: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
xiii. The Company has not received any fund from any person(s) or entity(is), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
xiv. The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
xv. There are no transactions which are not recorded in books and have been surrendered or disclosed as income during the year in Income Tax Assessments.
xvi. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
Note No 53 :
Quarterly statement of current assets submitted by company with Banks are in agreement with books of accounts.
Note No 54 :
There are no amounts pending to be transferred to the Investors Education and Protection Fund as at the end of the year.
Note No 55 :
Segment Reporting:
The products offered by the Company are in the nature of Bulk Drug Intermediates and its related products, having the same risks and returns, same type and class of customers and regulatory environment. Hence, the Company effectively has a single reportable business segment. Hence, segment-wise disclosure of information is not Applicable.
Note No 56 :
Impairment of Assets:
During the previous year, the Company had undertaken an exercise to review Property, Plant and Equipment and in absence of any further indications, external or internal, as to any probable impairment of assets, no provision has been made for the same.
Note No 59 :
Financial risk management objectives and policies
"The company''s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets include trade and other receivables and cash and cash equivalents that are derived directly from its operations.
The Companyâs financial risk management is an internal part of how to plan and execute its business strategies. The company is exposed to market risk, credit risk and liquidity risk.
The company senior management overseas the management of these risks. The senior Professionals working to manage the financial risks and the appropriate financial risk governance framework for the company are accountable to the Board of Directors and Audit Committee. This process provided assurance the Companyâs senior management that the Companyâs financial risk-taking activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with Company policies and Company risk objectives. In the event of crises caused due to external factors such as caused by recent pandemic âCOVID 19" the management assesses the recoverability of its assets, maturity of its liabilities to factor it in cash flow forecast to ensure there is enough liquidity in these situations through internal and external source of funds. These forecast and assumptions are reviewed by board of directors."
1. Risk Management Framework
The Companyâs board of directors has overall responsibility for establishment and Oversight of the companyâs risk management framework. The board of directors has established the processes to ensure that executive management controls risks through the Mechanism of property defined framework.The Companyâs risk management policies are established to identify and analyze the risks faced by the company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed by the board annually to reflect changes in market conditions and companyâs activities. The company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
2. Credit Risk
"Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet itscontractual obligations, and arises principally from the companyâs receivables from customers. The carrying amount of financial assets represents the maximum credit exposure. The Company monitor credit risk very closely both in domestic and export market. The management impact analysis shows credit risk and impact assessment as low.
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate. The company management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Companyâs standard payment and delivery terms and conditions are offered.
The Companyâs review includes market check, industry feedback, past financials and external ratings, if they are available, and in some cases bank references. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the Directors of the company. Most of the Companyâs customers have been transacting with the company for over Five to Ten years against those customers. In monitoring customer credit risk, Customers are reviewed according to their credit characteristics, including whether they are an individual or a legal entity, their geographic location, industry and existence of previous financial difficulties.
3. Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as for as possible, that it will have sufficient liquidity to meet its liabilities when they are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation.
4. Market Risk
Market risk is the risk that the Fair value of future cash flow of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: Currency rate risk, Interest Risk and equity price risk.
(i) Interest Rate Risk
"Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company has borrowings, therefore Company is exposed to such risk. With all other variables held constant, the following table demonstrates the impact of the borrowing cost on floating rate portion of loans and borrowings.
The company has overdraft facility against fixed deposits. The rate of interest is linked with the rate of fixed deposit with a defined margin."
(ii) Foreign Currency Risk
The company operates internationally and is exposed to currency risk on account of receivables and payables in foreign currency. The functional currency of the company is Indian Rupee. The company uses forward contracts to hedge its currency risk, most with a maturity of less than one year from the reporting date. The company does not use derivative financial instruments for trading or speculative purposes.
(iii) Equity Price Risk
The Companyâs investments are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the price risk through diversification and by placing limits on individual and total instruments. Reports on the portfolio are submitted to the management on a regular basis.During the year including previous year company has not made any investment in any securities having Uncertanities about future value of investments.
5. Capital Management
The Company''s capital management objectives are:
- To ensure the Company''s ability to continue as going concern
- To provide adequate return to shareholders through optimisation of debt and equity balance
For the purpose of the Companyâs capital management, capital includes issued equity capital and other equity reserves attributable to the equity holders of the Company.
Note No 63 :
From the current year, the company has presented actuarial gains / losses on Defined Benefit Plans as Other Comprehensive Income with tax effect thereon. Correspondingly the figures of previous year are recast to make them comparable.
The figures in respect of previous year have been re-grouped / recast wherever necessary to confirm to the current year''s classification.
For Naresh & Co. For and on behalf of the Board of Directors
Chartered Accountants Mercury Laboratories Limited
FRN: 106928W
CA Abhijeet Dandekar Rajendra R Shah Dilip R Shah
M.R. No. 108377 Managing Director Director
Partner DIN : 00257253 DIN: 00257242
Place: Vadodara Place: USA
Place: Vadodara Ashish Vasavada Krishna Shah
Date: 28 May, 2024 Chief Financial Officer Company Secretary
UDIN: 24108377BKBOTW7022 Place: Vadodara Place: Vadodara
Dated: 28 May, 2024
Mar 31, 2023
3.6 Provisions, Contingent Liabilities And Contingent Assets Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Company expects some or all of a provision to be reimbursed, reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost in respective expense.
Contingent Liabilities and Contingent Assets
Contingent liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.
3.7 Income Tax Current Tax
Provision for current tax is made as per the provisions of the Income Tax Act, 1961.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax:
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Minimum Alternative Tax (''MAT'') credit entitlement under the provisions of the Income-tax Act, 1961 is recognised as a deferred tax asset when it is probable that future economic benefit associated with it in the form of adjustment of future income tax liability, will flow to the Company and the asset can be measured reliably.MAT credit entitlement is set off to the extent allowed in the year in which the Company becomes liable to pay income taxes at the enacted tax rates.
MAT credit entitlement is reviewed at each reporting date and is recognised to the extent that is probable that future taxable profits will be available against which they can be used. MAT credit entitlement has been presented as deferred tax asset in Balance Sheet. Significant management judgement is required to determine the probability of recognition of MAT credit entitlement.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxation authority.
3.8 Employee Benefits Short-term Employee Benefits
Employee benefit liabilities such as salaries, wages and bonus, etc. that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at an undiscounted amount expected to be paid when the liabilities are settled.
Post-employment benefit plans
Defined Contribution Plans:
State governed Provident Fund Scheme and Employees State Insurance Scheme are defined contribution plans. The contribution paid / payable under the schemes is recognised during the period in which the employees render the related services.
Defined Benefit Plans:
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company''s gratuity scheme is a defined benefit plan. Currently, the Company''s gratuity scheme is unfunded. The Company recognises the defined benefit liability in Balance sheet. The present value of the obligation under such defined benefit plan and the related current service cost and, where applicable past service cost is determined based on an actuarial valuation done using the Projected Unit Credit Method by an independent actuary, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligations are measured at the present value of the estimated future cash flows.
Re-measurements, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) is reflected immediately in Other Comprehensive Income in the Statement of Profit and loss. All other expenses related to defined benefit plans are recognised in Statement of Profit and Loss as employee benefit expenses. Re-measurements recognised in Other Comprehensive Income will not be reclassified to Statement of Profit and Loss hence it is treated as part of retained earnings in the Statement of Changes in Equity.
3.9 Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
? In the principal market for the asset or liability, or
? In the absence of a principal market, in the most advantageous market for the asset or Liability
? The principal or the most advantageous market must be accessible to/ by the Company.
Fair value hierarchy
All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole;
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: valuation techniques for which the lowest level input that has a significant effect on the fair value measurement are observable, either directly or indirectly.
Level 3: valuation techniques for which the lowest level input which has a significant effect on the fair value measurement is not based on observable market data.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
3.10 Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement:
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Subsequent measurement:
For purposes of subsequent measurement, financial assets are classified in four categories:
? Debt instruments at amortised cost - The Company has cash & cash equivalents, loans and trade receivables classified within this category.
? Debt instruments at fair value through other comprehensive income (FVTOCI) - The Company does not have any financial asset classified in this category.
? Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL) - The Company does not have any financial asset classified in this category.
? Equity instruments measured at fair value through other comprehensive income (FVTOCI) - The Company does not have any financial asset classified in this category.
Debt instruments at amortized cost:
A ''debt instrument'' is measured at the amortised cost if both the following conditions are met:
? The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
? Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
Debt instrument at FVTPL:
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
In addition, the company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch''). Company has not designated any such debt instrument as at FVTPL.
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit & Loss.
Derecognition:
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. Any gain or loss on derecognition is recognised in the Statement of Profit and Loss
Impairment of financial assets:
In accordance with Ind AS 109, the company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
? Financial assets that are debt instruments, and are measured at amortised cost e. g. Loans and trade receivables.
? The company follows ''simplified approach'' for recognition of impairment loss allowance on Trade receivables that do not contain a significant financing component.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
3.10 Financial liabilities
Initial recognition and measurement:
All financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
All financial liabilities are initially measured at fair value deducted by, in the case of financial liabilities not recorded at fair value through profit or loss, transaction costs that are attributable to the liability.
Subsequent measurement:
Financial liabilities are classified as measured at amortised cost using the effective interest method. The Company''s financial liabilities include trade payables, borrowings and other financial liabilities.
Under the effective interest method, the future cash payments are exactly discounted to the initial recognition value using the effective interest rate. The cumulative amortization using the effective interest method of the difference between the initial recognition amount and the maturity amount is added to the initial recognition value (net of principal repayments, if any) of the financial liability over the relevant period of the financial liability to arrive at the amortized cost at each reporting date. The corresponding effect of the amortization under effective interest method is recognized as expense over the relevant period of the financial liability in the Statement of Profit and Loss.
Derecognition:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the Derecognition of the original liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid is recognized in the Statement of Profit and Loss.
Offsetting of financial instruments:
Financial assets and financial liabilities are offset and the net amount presented in the Balance Sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the assets and settle the liabilities simultaneously.
3.11 Cash and Cash Equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short- term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
3.12 Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures are carried at cost/deemed cost applied on transition to Ind AS, less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of investment is assessed and an impairment provision is recognised, if required immediately to its recoverable amount. On disposal of such investments, difference between the net disposal proceeds and carrying amount is recognised in the statement of profit and loss.
3.13 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is ascertained on a weighted average basis. Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value is the price at which the inventories can be realised in the normal course of business after allowing for the cost of conversion from their existing state to a finished condition and for the cost of marketing, selling and distribution.
Finished goods produced by the company are valued at lower of cost or net realizable value. Semi-Finished goods have been valued at lower of Raw Material cost, direct labour and appropriate proportion of variable and fixed overheads, latter being allocated based on normal operating capacity or net realizable value.
of goods purchased for resale purposes are valued at their acquisition cost inclusive of all duties and taxes or Net Realizable Value whichever is lower.
Provisions are made to cover slow-moving and obsolete items based on historical experience of utilisation on a product category basis, which involves individual businesses considering their product lines and market conditions.
3.14 Foreign currency
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Foreign currency denominated monetary assets and liabilities are re-measured into the functional currency at the exchange rate prevailing on the balance sheet date.
Exchange differences arising on settlement of transactions and translation of monetary items are recognized in the statement of Profit or Loss except to the extent, exchange differences which are regarded as an adjustment to interest costs on foreign currency borrowings, are capitalized as part of borrowing costs.
3.15 Revenue Recognition
Revenue from sale of products is recognised when control of the products has transferred, being when the products are delivered to the customer. Delivery occurs when the products have been shipped or delivered to the specific location as the case may be, the risks of loss has been transferred, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied. Sale of products include related ancillary services, if any.
Goods are often sold with volume discounts based on aggregate sales over a 12 months period. Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume discounts.
Revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. A liability is recognised for expected volume discounts payable to customers in relation to sales made until the end of the reporting period. Any obligation to provide a refund is recognised as a provision. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. In determining the transaction price, the Company considers the effects of variable consideration, the existence of significant financing component and consideration payable to the customer like return and trade discounts.
Sales are disclosed excluding net of sales returns and Goods and Service Tax (GST).
Sale of Scrap
Revenue from sale of scrap is recognized as and when scrap is sold.
Other income
Interest Income is recognized on a time proportionate basis including interest accrued based on the amount outstanding and rate applicable and shown under âOther Incomeâ.
Export Benefits
Duty free imports of raw materials under Advance License for imports as per the Import and Export Policy are matched with the exports made against the said licenses and the net benefit/obligation is accounted by making suitable adjustments in raw material consumption. The benefits accrued under the duty drawback scheme and Merchandise Export from India Scheme (MEIS) as per the Import and export Policy in respect of exports under the said scheme are recognized when there is a reasonable assurance that the benefit will be received and the company will comply with all attached conditions. The above benefits have been included under the head ''Export Incentives.
Dividend income
Revenue is recognized when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
Insurance Claims
Insurance claims are accounted on accrual basis when there is reasonable certainty of realisability of the claim amount.
Commission Income:
Income on account of commission is accounted on accrual basis based on the Terms of Agreement.
3.16 Earnings Per Share
Basic earnings per share is computed using the net profit for the year attributable to the shareholders'' and weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed using the net profit for the year attributable to the shareholders'' and weighted average number of equity shares.
3.17 Dividends
Any dividend declared by Mercury Laboratories Limited is based on the profits available for distribution as reported in the statutory financial statements of Mercury Laboratories Limited prepared in accordance with Generally Accepted Accounting Principles in India or Indian GAAP or Ind AS. Indian law permits the declaration and payment of dividend out of profits for the year or previous financial year(s) as stated in the statutory financial statements of Mercury Laboratories Limited prepared in accordance with Generally Accepted Accounting Principles in India, or Ind AS after providing for depreciation in accordance with the provisions of Schedule II to the Companies Act.
However, in the absence or inadequacy of the said profits, it may declare dividend out of free reserves, subject to certain conditions as prescribed under the Companies (Declaration and Payment of Dividend) Rules, 2014. Accordingly, in certain years the net income reported in these financial statements may not be fully distributable.
3.18 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
3.19 Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of such assets up to the assets are substantially ready for their intended use. The loan origination costs directly attributable to the acquisition of borrowings (e.g. loan processing fee, upfront fee) are amortized in the year in which they occur.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in the statement of profit and loss in the period in which they are incurred.
3.20 Onerous contracts
A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
3.21 Segment Reporting
With respect (Ind AS - 108 Segment Reporting), the Management of the Company is of the view that the products offered by the Company are in the nature of Pharmaceuticals and its related products, having the same risks and returns, same type and class of customers and regulatory environment. Hence, the business of production and sale of pharmaceuticals and its related products belong to one business segment only.
3.22 Government grants
Government grants are recognised at its fair value, where there is a reasonable assurance that such grants will be received and compliance with the conditions attached therewith have been met.
Government grants related to expenditure on property, plant and equipment are credited to the statement of profit and loss over the useful lives of qualifying assets or other systematic basis representative of the pattern of fulfilment of obligations associated with the grant received. Grants received less amounts credited to the statement of profit and loss at the reporting date are included in the balance sheet as deferred income.
3.23 GST Input Credit
Goods and service tax (GST) input credit is accounted on an accrual basis on purchase of eligible inputs, capital goods and services. The balance of GST input credit is reviewed at the end of each year and amount estimated to be un- utilizable is charged to the statement profit and Loss for the year.
3.24 Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is the company''s functional currency. All amounts have been rounded-off to the nearest lakhs, as per the requirements of Schedule III, unless otherwise stated.
The estimates of rate escalation in salary is considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.
The expected contributions for Defined Benefit Plan for the next financial year will be in line with FY 2022-23.
The plan typically expose the Company to actuarial risks such as: interest rate risk, liquidity risk, salary escalation risk and regulatory risk.
Interest Rate Risk:
The plan exposes the Company to the risk off all in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).
Liquidity Risk:
This is the risk that the Company is not able to meet the short-term gratuity pay outs. This may arise due to non availability of enough cash/cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.
Salary Escalation Risk:
The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.
Regulatory Risk:
Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 ( as amended from time to time). There is a risk of change in regulations requiring higher gratuity pay-outs (e.g. Increase in the maximum limit on gratuity of Rs. 10,00,000)
x. There are no charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period or otherwise.
xi. The Company has not made a direct investment in Joint Venture during the year which does not have any further downstream investment. Hence, it is in compliance with the number of layers prescribed under Section 2 (87) of the Companies Act, 2013 read with Companies (Restriction on Number of Layers ) Rules, 2017.
xii. There was no Scheme of Arrangements during the year.
xiii. The Company has not advanced or loaned or invested funds to any other person(s) or entity(is), including foreign entities (Intermediaries) with the understanding that the Intermediary shall: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
xiv. The Company has not received any fund from any person(s) or entity(is), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall: (a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
xv. The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
xvi. There are no transactions which are not recorded in books and have been surrendered or disclosed as income during the year in Income Tax Assessments.
xvii. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
Note No 52 :
Quarterly statement of current assets submitted by company with Banks are in agreement with books of accounts.
Note No 53 :
There are no amounts pending to be transferred to the Investors Education and Protection Fund as at the end of the year.
Note No : 54 Segment Reporting:
The products offered by the Company are in the nature of Bulk Drug Intermediates and its related products, having the same risks and returns, same type and class of customers and regulatory environment. Hence, the Company effectively has a single reportable business segment. Hence, segment-wise disclosure of information is not applicable.
Note No : 55 Impairment of Assets:
During the previous year, the Company had undertaken an exercise to discard old assets as also to remove certain assets having no value from its Block of Assets. The loss / write-off on this account had been debited to the Profit and Loss Account. In absence of any further indications, external or internal, as to any probable impairment of assets, no further provision has been made for same.
Note No 58 :
Financial risk management objectives and policies
"The company''s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets include trade and other receivables and cash and cash equivalents that are derived directly from its operations.
The Companyâs financial risk management is an internal part of how to plan and execute its business strategies. The company is exposed to market risk, credit risk and liquidity risk.
The company senior management overseas the management of these risks. The senior Professionals working to manage the financial risks and the appropriate financial risk governance framework for the company are accountable to the Board of Directors and Audit Committee. This process provided assurance the Companyâs senior management that the Companyâs financial risk-taking activities are governed by appropriate policies and procedures and that financial risk are identified, measured and managed in accordance with Company policies and Company risk objectives. In the event of crises caused due to external factors such as caused by recent pandemic âCOVID 19" the management assesses the recoverability of its assets, maturity of its liabilities to factor it in cash flow forecast to ensure there is enough liquidity in these situations through internal and external source of funds. These forecast and assumptions are reviewed by board of directors."
1. Risk Management Framework
The Companyâs board of directors has overall responsibility for establishment and Oversight of the companyâs risk management framework. The board of directors has established the processes to ensure that executive management controls risks through the Mechanism of property defined framework.The Companyâs risk management policies are established to identify and analyze the risks faced by the company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed by the board annually to reflect changes in market conditions and companyâs activities. The company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
2. Credit Risk
"Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet itscontractual obligations, and arises principally from the companyâs receivables from customers. The carrying amount of financial assets represents the maximum credit exposure. The Company monitor credit risk very closely both in domestic and export market. The management impact analysis shows credit risk and impact assessment as low.
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate. The company management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Companyâs standard payment and delivery terms and conditions are offered.
The Companyâs review includes market check, industry feedback, past financials and external ratings, if they are available, and in some cases bank references. Sale limits are established for each customer and reviewed quarterly. Any sales exceeding those limits require approval from the Directors of the company. Most of the Companyâs customers have been transacting with the company for over Five to Ten years against those customers. In monitoring customer credit risk, Customers are reviewed according to their credit characteristics, including whether they are an individual or a legal entity, their geographic location, industry and existence of previous
financial difficulties. The company has not written off any amount in recent past for impairment in receivables. In view of the same no provision for impairment is done in current financial year."
3. Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as for as possible, that it will have sufficient liquidity to meet its liabilities when they are fallen due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation.
4. Market Risk
"Market risk is the risk that the Fair value of future cash flow of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: Currency rate risk, Interest Risk and equity price risk.
(i) Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the Company has borrowings, therefore Company is exposed to such risk.
(ii) Foreign Currency Risk
The Indian Rupee is the Companyâs most significant currency. As a consequence, the Companyâs results are presented in Indian Rupee and exposures are managed against Indian Rupee accordingly. So, the Company is exposed to such risk.
(iii) Equity Price Risk
The Companyâs investments are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the price risk through diversification and by placing limits on individual and total instruments. Reports on the portfolio are submitted to the management on a regular basis."
5. Capital Management
"The Company''s capital management objectives are:
- To ensure the Company''s ability to continue as going concern
- To provide adequate return to shareholders through optimisation of debt and equity balance
For the purpose of the Companyâs capital management, capital includes issued equity capital and other equity reserves attributable to the equity holders of the Company.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and business opportunities. The Company monitors capital structure using a debt equity ratio, which is debt divided by equity."
Note No 61 :
"From the current year, the company has presented actuarial gains / losses on Defined Benefit Plans as Other Comprehensive Income
with tax effect thereon. Correspondingly the figures of previous year are recast to make them comparable. The figures in respect of previous year have been re-grouped / recast wherever necessary to confirm to the current year''s classification."
For Naresh & Co For and on behalf of the Board of Directors
Chartered Accountants Mercury Laboratories Limited
FRN: 106928W
Rajendra R Shah Dilip R Shah
CA Abhijeet Dandekar Managing Director Director
M. N°. 108377 DIN : 00257253 DIN: 00257242
Partner Place: Vadodara Place: USA
Place: Vadodara Ashish Vasavada Krishna Shah
Date: 05 May, 2023 Chief Financial Officer Company Secretary
UDIN: 23108377BGUFPQ4919 Place: Vadodara Place: Vadodara
Dated: 05 May, 2023
Mar 31, 2018
1. Financial Instrument
a. All foreign currency denominated assets and liabilities are translated using exchange rate at the reporting date.
b. The fair value of the investment in Unquoted Equity Shares of BIDC are measured at cost.
Credit Risk
Trade receivables Customer Credit Risk is manages by business unit subject to Company''s established policy and procedures. Trade receivables are non-interest bearing and generally have a credit period not exceeding 90 days. Credit limits are established for all customers based on internal rating criteria. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit. The company has no concentration of credit risk as the customer base is widely distributed both economically and geographically. An impairment analysis is performed at each reporting date based on the facts and circumstances existing on that date to identify expected losses on account of time value of money and credit risk. For the purpose of this analysis, the receivables are categorized into group based on types of receivables. Each group is then assessed for impairment using the Expect Credit Loss (ECL) model as per the provisions of Ind AS 109 - Financial instruments. The calculation is based provision matrix which considers actual historical data adjusted appropriately for the future expectations and probabilities. Receivables from group companies and secured receivable are excluded for the purposes of this analysis since no credit risk is perceived on them. The loss rates are based on actual credit loss experience over past years. These loss rates are then adjusted appropriately to reflect differences between current and historical economic conditions and the company''s view of economic conditions overt he expected lives of the receivables.
Foreign Currency Risk
Foreign Currency Risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchanges rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities (When revenue or expenses denominated in a foreign currency).
Liquidity Risk:
Liquidity Risk is the risk that the Company will encounter difficulty in raising funds to meet commitments associated with financial instruments that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly close to its fair value. The Company''s objective is to, at all times maintain optimum levels of liquidity to meet its cash and collateral requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing at an optimized cost.
Provident Fund dues amounting to 59,70,674/- and ESI dues amounting to 16,42,003/- paid during the year being defined contributions have been charged to the Profit and Loss Account.
No Provision for Short Term Compensated absences is required as at the yearend as per the policy of the Management.
The Company has a defined benefit gratuity plan. Every employee who has completed five or more years of service is eligible for gratuity @15 days salary (last drawn) for every completed year of service with a overall ceiling of 10 lakhs. The Company has taken a Group Gratuity cum Life Insurance Policy from Life Insurance Corporation of India ( a qualifying policy) and makes annual contributions to the same to create a fund to meet this defined benefit gratuity obligation.
The estimates of rate escalation in salary is considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.
The expected contributions for Defined Benefit Plan for the next financial year will be in line with FY 2017-18
The plan typically expose the Company to actuarial risks such as: interest rate risk, liquidity risk, salary escalation risk and regulatory risk.
Interest Rate Risk:
The plan exposes the Company to the risk off all in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability(as shown in financial statements.)
Liquidity Risk:
This is the risk that the Company is not able to meet the short-term gratuity pay outs. This may arise due to non-availability of enough cash/cash equivalent to meet the liabilities or holding of liquid assets not being sold in time.
Salary Escalation Risk:
The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future. Deviation in the rate of increase in salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the plan''s liability.
Regulatory Risk:
Gratuity benefit is paid in accordance with the requirements of the Payment of Gratuity Act, 1972 (as amended from time to time). There is a risk of change in regulations requiring higher gratuity pay-outs (e.g. Increase in the maximum limit on gratuity of Rs. 10,00,000)
2. Related Party Transactions
The Company has identified all the related parties having transactions during the year in line with Accounting Standard 18. Details of the same areas under
List of Related Parties
Name of Related Parties Nature of Relationship
Mr. R. R. Shah Managing Director
Mr. D. R. Shah Executive Director
Mr. Paresh Mistry (w.e.f.01.10.17) Additional Director
Mercury Antibiotics Pvt. Ltd. An enterprise Managed by the Relatives of Directors
JAS Healthcare Inc. An enterprise in which director & his relative is director
Bio-Med India A Concern in which Directors are Partner
Mercury Marketing & Consulting Services A Concern in which Directors are Partner
Dilip R. Shah (H.U.F.) Relatives of Director
Kaumudiniben R. Shah Relatives of Director
Kishoriben D. Shah Relatives of Director
R. R. Shah( H.U.F) Relatives of Director
Adit D. Shah Relatives of Director
Janki R. Shah Relatives of Director
Payal Doshi CFO
Mukesh Khanna Company Secretary
3. Impairment of Assets
As a tool to measure to the value of fixed assets, the Company has considered the technical Valuation carried out by expert. In terms of the same and further in absence of any indications, external or internal, as to any probable impairment of assets, no provision has been made for same during year under report.
4. First Time Adoption of Ind As
The Company has followed the provisions of Ind AS 101-âFirst Time adoption of Indian Accounting Standardsâ (Ind AS 101), in preparing its opening Ind AS Balance Sheet as of the date of transition, i.e. April 1, 2016. In accordance with Ind AS 101, the Company has presented reconciliations of Shareholdersâ equity under Previous GAAP and Ind ASs as at March 31, 2017, and April 1, 2016 and of the Profit/(Loss) after Tax as per Previous GAAP and Total Comprehensive Income under Ind AS for the year ended March 31,2017.
5. Reconciliations between previous GAAP and Ind AS
Ind AS 101 requires an entity to reconcile equity, total comprehensive Income and cash flows for prior periods. The following table represent the reconciliations from erstwhile Indian GAAP to Ind AS.
Reconciliation of results between previous Indian GAAP and Ind AS
6. There are no amounts pending to be transferred to the Investors Education and Protection Fund as at the end of the year.
7. The figures in respect of previous year have been re-grouped / recast wherever necessary to confirm to the current year''s classification.
Mar 31, 2016
1. I n the opinion of the Board, all assets which are considered good (other than Fixed Assets and Non- Current Investments ) are expected to realized at least the amount at which they are stated, If realized In the ordinary course of business. Further in the opinion of the Beard, provision for all known liabilities has been adequately made in the accounts and as per management experience and estimates, no additional provisions are required.
2. POST EMPLOYMENT BENEFITS :
Provided Fund and ESI dues paid during the year being defined contributions have been charged to the Profit and Loss Account
In accordance with the policy for accounting for Gratuity Obligation, Gratuity Fund Contribution to the tune of Rs. 7,42,241/- (being current service cost) has been debited to the Profit and Loss Account for the year.
Further in terms of Actuarial Valuation carried out by the Insurer, the Present Value of Obligations as at the yearend comes to Rs. 76,62,067/- (PY Rs. 77,43,743/-} against which the Fair Value of Plan Assets comes to Rs. 86,16,404/- {PY Rs. 65, SO ,272/-) resulting a net asset of Rs. 9,54,337/- (PY Rs. 8,36,529/-).
3. RELATED PARTY TRANSACTIONS :
The Company has identified all the related parties having transactions during the year in line with Accounting Standard 18. Details of the same areas under
(a) LIST OF RELATED PARTIES :
Name of Related Parties Nature of Relationship
Mr. R .R. Shah Managing Director
Mr. D. R. Shah Executive Director
Mercury Antibiotics Pvt. Ltd. An enterprise Managed by the Relatives of Directors
Bio- Med India A Concern in which Directors are Partner
Mercury Marketing & Consulting Services A Concern in which Directors are Partner
D. R. Shah (H.U.F) Relatives of Director
Kaumudiniben R. Shah Relatives of Director
Kishoriben D. Shah Relatives of Director
R.R. Shah( H.U.F) Relatives of Director
Adit D. Shah Relatives of Director
Jankl R. Shah Relatives of Director
4. Impairment of Assets :
As a tool to measure to the value of fixed assets, the Company has considered the technical Valuation carried out by expert. In terms of the same and further in absence of any indications, external or internal, as to any probable impairment of assets, no provision has been made for same during year under report.
5. The figures in respect of previous year have been re-grouped / recast wherever necessary to confirm to (he current year''s classification.
Mar 31, 2015
1. General Information of the Company.
Mercury Laboratories the registered partnership firm started its
business activity in the year 1962. Subsequently it converted into
Private Ltd. Company, & incorporated in the year 1982. Later it further
converted into Limited Company in the year 1992 in state of
Maharashtra. The company has obtained ISO 9001:2008 registration and
engaged in the business of Pharmaceutical items. The company is profit
making and dividend paying Public Limited Company.
The Company made its public issue in the year 1992 and is listed on the
OTC Stock Exchange.
2. Note on amalgamation:
Mercury Laboratories Limited (MLL) (Transferee Company) was
incorporated in the year 1992 and engaged in the business of
manufacturing, exporting & importing of Pharmaceutical Drugs &
Medicines. Mercury Antibiotics Private Limited (MAPL) (Transferor
Company) was incorporated in the year 1989 and it is engaged in the
business of manufacturing, importing, exporting of pharmaceutical
Drugs, Medicines formulations, Bulk Drugs including a wide variety of
Oral Dosage Products such as Liquids, Syrups and Dry Powder based
medicinal products. Both the Companies have been promoted by Shri Dilip
R. Shah & Shri Rajendra R. Shah having a several decades of experience
and standing in the pharmaceutical companies.
The Board of Directors of MAPL (Transferor Company) & the Board of
Directors of MLL (Transferee Company) have respectively passed the
resolutions on 05th January, 2012 to amalgamate both the companies. The
scheme of amalgamation has been presented under Section 391 to Section
394 of the Companies Act, 1956 to Honorable High Court at Mumbai
(Maharastra).
The Board of Directors has passed the resolution dated 3rd April, 2014
after due deliberation and decided to withdraw the application made to
Honorable High Court of Mumbai for amalgamation of the two companies
decided in the earlier year.
3. Share Capital
(a) The Company has a single class of equity shares which are having
par value of Rs. 10 per equity share. All shares rank pari passu with
reference to all rights relating thereto. Each Shareholder is eligible
for one vote per share held. The dividend proposed by the Board of
Directors is subject to the approval of the shareholders in the ensuing
Annual General Meeting, except in case of interim dividend. In the
event of liquidation, the equity shareholders are eligible to receive
the remaining assets of the Company after distribution of all
preferential amounts, in proportions to their shareholding.
4. SECURED LOAN
The State Bank of India has sanctioned various credit facilities which
are working capital finance, Export Credit facility & FCNRB which is
secured by way of Equitable mortgage over factory, land & building at
Vadodara & at Jarod, District Vadodara & against Hypothecation charged
over Plant & Machinery at Baroda & Jarod & against the stock of
inventories & book-debts of the company.
UNSECURED DEPOSITS
The amount taken as deposits from directors and members are unsecured
and are for the period of 36 months. Interest on unsecured deposits has
been paid at the rate of 8 percent.
5. Micro and Small Enterprises
With reference to amounts shown as payable to Micro, Small and Medium
Enterprises, the information has been compiled in respect of parties to
the extent they could be identified as Micro, Small and Medium
Enterprises on the basis of information collected and available with
the Company and same has been relied upon by the auditors. The Company
deals with various Micro Small and Medium Enterprises on mutually
accepted terms and conditions. No interest is payable if the mutual
terms are adhered to by the Company.
Accordingly, no interest has been paid during the year and further no
provision for interest payable to such units is required or has been
made under Micro, Small and Medium Enterprises Development Act, 2006.
Hence, information as required under Schedule VI of the Companies Act,
1956 relating to delayed payments and interest on delayed payments to
Micro, Medium and Small Enterprises has not been compiled and
presented.
6. CONTINGENT LIABILITIES AND COMMITMENTS :
31/03/2015 31/03/2014
(Rs) (Rs.)
Contingent Liabilities
Claims against the Company not 21,82,587 29,59,359
acknowledged as debt
Guarantees (Bank Gurantee) 68,88,570 65,29,253
Other Moneys for which Company is - -
contingently liable
TOTAL Rs. 90,71,157 94,88,612
Commitments
Estimated amounts of contracts
remaining to be executed on capital - -
account and not provided for
Uncalled liability on shares or - -
investments partly paid
Other Commitments - -
TOTAL Rs. - -
7. In the opinion of the Board, all assets which are considered good
( other than Fixed Assets and Non- Current Investments) are expected to
realised at least the amount at which they are stated, if realised in
the ordinary course of business. Further in the opinion of the Board,
provision for all known liabilities has been adequately made in the
accounts and as per management experience and estimates, no additional
provisions are required.
8. POST EMPLOYMENT BENEFITS :
Providend Fund and ESI dues paid during the year being defined
contributions have been charged to the Profit and Loss Account.
In accordance with the policy for accounting for Gratuity Obligation,
Gratuity Fund Contribution to the tune of Rs. 4,93,069/- (being current
service cost) has been debited to the Profit and Loss Account for the
year.
Further in terms of Actuarial Valuation carried out by the Insurer, the
Present Value of Obligations as at the year end comes to Rs.
77,43,743/- (PY Rs. 67,61,967/-) against which the Fair Value of Plan
Assets comes to Rs. 8580272/- (PY Rs.78,82,799/-) resulting a net asset
of Rs. 8,36,529/- (PY Rs. 11,20,833/-).
Method Used Projected Unit Credit Method
Actuarial Assumptions Used
Mortality Rate LIC (1994-96)
Discount Rate 8%
Expected Return on Plan Assets 9%
Salary Escalation Rate 7%
Withdrawal Rate 1% to 3% depending
Major Categories of Plan Assets Insurer Managed Funds -100%
9. RELATED PARTY TRANSCATIONS
The Company has identified all the related parties having transactions
during the year in line with Accounting Standard 18. Details of the
same are as under
(a) LIST OF RELATED PARTIES :
Name of Related Parties Nature of Relationship
Mr. R .R. Shah Managing Director
Mr. D.R. Shah Executive Director
Mercury Antibiotics Pvt. Ltd. An enterprise Managed by the
Relatives of Directors
Bio- Med India A Concern in which Directors are
Partner
Mercury Marketing & Consulting A Concern in which Directors are
Services Partner
Kusumben R. Shah Relatives of Director
Kaumudiniben R. Shah Relatives of Director
Kishoriben D. Shah Relatives of Director
R.R. Shah( H.U.F) Relatives of Director
Adit D. Shah Relatives of Director
Janki R. Shah Relatives of Director
10. Impairment of Assets :
As a tool to measure to the value of fixed assets, the Company has
considered the technical Valuation carried out by expert. In terms of
the same and further in absence of any indications, external or
internal, as to any probable impairment of assets, no provision has
been made for same during year under report.
11. The figures in respect of previous year have been re-grouped /
recast wherever necessary to confirm to the current year's
classification.
Mar 31, 2014
1. General Information of the Company.
Mercury Laboratories the registered partnership firm started its
business activity in the year 1962. Subsequently it converted into
Private Ltd. Company, & incorporated in the year 1982. Later it further
converted into Limited Company in the year 1992 in state of
Maharashtra. The company has obtained ISO 9001:2008 registration and
engaged in the business of Pharmaceutical items. The company is profit
making and dividend paying Public Limited Company.
The Company made its public issue in the year 1992 and is listed on the
OTC Stock Exchange.
2. Note on amalgamation:
Mercury Laboratories Limited (MLL) (Transferee Company) was
incorporated in the year 1992 and engaged in the business of
manufacturing, exporting & importing of Pharmaceutical Drugs &
Medicines. Mercury Antibiotics Private Limited (MAPL) (Transferor
Company) was incorporated in the year 1989 and it is engaged in the
business of manufacturing, importing, exporting of pharmaceutical
Drugs, Medicines formulations, Bulk Drugs including a wide variety of
Oral Dosage Products such as Liquids, Syrups and Dry Powder based
medicinal products. Both the Companies have been promoted by Shri Dilip
R. Shah & Shri Rajendra R. Shah having a several decades of experience
and standing in the pharmaceutical companies.
The Board of Directors of MAPL (Transferor Company) & the Board of
Directors of MLL (Transferee Company) have respectively passed the
resolutions on 05th January, 2012 to amalgamate both the companies. The
scheme of amalgamation has been presented under Section 391 to Section
394 of the Companies Act, 1956 to Honorable High Court at Mumbai
(Maharastra).
The Board has passed the resolution dated 3rd April, 2014 after due
deliberation and decided to withdraw the application made to Honorable
High Court of Mumbai for amalgamation of the two companies decided in
the earlier year.
3. The Company has a single class of equity shares which are having
par value of Rs. 10 per equity share. All shares rank pari passu with
reference to all rights relating thereto. Each Shareholder is eligible
for one vote per share held. The dividend proposed by the Board of
Directors is subject to the approval of the shareholders in the ensuing
Annual General Meeting, except in case of interim dividend. In the
event of liquidation, the equity shareholders are eligible to receive
the remaining assets of the Company after distribution of all
preferential amounts, in proportions to their shareholding.
SECURED LOAN
The State Bank of India has sanctioned various credit facilities which
are working capital finance, Export Credit facility & FCNRB which is
secured by way of Equitable mortgage over factory, land & building at
Vadodara & at Jarod, District Vadodara & against Hypothecation charged
over Plant & Machinery at Baroda & Jarod & against the stock of
inventories & book-debts of the company.
UNSECURED LOAN The amount to taken as unsecured loan from directors are
usually payable on demand but the company reserves it right to differ
the payment of the some for a period exceeding 12 months. Interest on
unsecured loan''s has been paid at the rate of 8 percent.
Micro and Small Enterprises:
With reference to amounts shown as payable to Micro, Small and Medium
Enterprises, the information has been compiled in respect of parties to
the extent they could be identified as Micro, Small and Medium
Enterprises on the basis of information collected and available with
the Company and same has been relied upon by the auditors. The Company
deals with various Micro Small and Medium Enterprises on mutually
accepted terms and conditions. No interest is payable if the mutual
terms are adhered to by the Company.
Accordingly, no interest has been paid during the year and further no
provision for interest payable to such units is required or has been
made under Micro, Small and Medium Enterprises Development Act, 2006.
Hence, information as required under Schedule VI of the Companies Act,
1956 relating to delayed payments and interest on delayed payments to
Micro, Medium and Small Enterprises has not been compiled and
presented.
4. CONTINGENT LIABILITIES AND COMMITMENTS :
31/03/2014 31/03/2013
(Rs.) (Rs.)
Contingent Liabilities
Claims against the Company not 2,959,359 2,810,369
acknowledged as debt
Guarantees (Bank Gurantee) 6,529,253 4,274,966
Other Moneys for which Company is - 1,961,125
contingently liable
TOTAL Rs. 9,488,612 9,046,460
Commitments
Estimated amounts of contracts
remaining to be executed on capital
account and not provided for - -
Uncalled liability on shares or
investments partly paid - -
Other Commitments - -
TOTAL Rs. - -
5. In the opinion of the Board, all assets which are considered good
(other than Fixed Assets and Non- Current Investments) are expected to
realised at least the amount at which they are stated, if realised in
the ordinary course of business. Further in the opinion of the Board,
provision for all known liabilities has been adequately made in the
accounts and as per management experience and estimates, no additional
provisions are required.
6. POST EMPLOYMENT BENEFITS :
Providend Fund and ESI dues paid during the year being defined
contributions have been charged to the Profit and Loss Account.
In accordance with the policy for accounting for Gratuity Obligation,
Gratuity Fund Contribution to the tune of Rs.4,79,170 /- (PY Rs.
4,83,404/-) (being current service cost) has been debited to the Profit
and Loss Account for the year.
Further in terms of Actuarial Valuation carried out by the Insurer, the
Present Value of Obligations as at the year end comes to Rs.
67,61,967/- (PY Rs. 65,61,627/-) against which the Fair Value of Plan
Assets comes to Rs. 78,82,799/- (PY Rs.76,54,631 /-) resulting a net
asset of Rs. 11,20,833/- (PY Rs. 10,93,004/-).
Method Used Projected Unit Credit Method
Actuarial Assumptions Used
Mortality Rate LIC (1994-96) Ultimate
Discount Rate 8%
Expected Return on Plan 9%
Assets
Salary Escalation Rate 7%
Withdrawal Rate 1 % to 3% depending on age
Major Categories of Plan Insurer Managed Funds - 100%
Assets
7. Impairment of Assets :
As a tool to measure to the value of fixed assets, the Company has
considered the technical Valuation carried out by expert. In terms of
the same and further in absence of any indications, external or
internal, as to any probable impairment of assets, no provision has
been made for same during year under report.
8. The figures in respect of previous year have been re-grouped /
recast wherever necessary to confirm to the current year''s
classification.
Mar 31, 2013
1. General Information of the Company.
Mercury Laboratories the registered partnership firm started its
business activity in the year 1962. Subsequently it converted into
Private Ltd. Company, & incorporated in the year 1982. Later on further
converted into Limited Company in the year 1992 in state of
Maharashtra. The company has obtained ISO 9001:2008 registration and
engaged in the business of Pharmaceutical items. The company is profit
making and dividend paying Public Limited Company.
The Company made its public issue in the year 1992 and is listed on the
OTC Stock Exchange.
2. Note on amalgamation:
Mercury Laboratories Limited (MLL) (Transferee Company) was
incorporated in the year 1992 and engaged in the business of
manufacturing, exporting & importing of Pharmaceutical Drugs &
Medicines. Mercury Antibiotics Private Limited (MAPL) (Transferor
Company) was incorporated in the year 1989 and it is engaged in the
business of manufacturing, importing, exporting of pharmaceutical
Drugs, Medicines formulations, Bulk Drugs including a wide variety of
Oral Dosage Products such as Liquids, Syrups and Dry Powder based
medicinal products. Both the Companies have been promoted by Shri Dilip
R. Shah & Shri Rajendra R. Shah having a several decades of experience
and standing in the pharmaceutical companies.
The Board of Directors of MAPL (Transferor Company) & the Board of
Directors of MLL (Transferee Company) have respectively passed the
resolutions on 05th January, 2012 to amalgamate both the companies. The
scheme of amalgamation has been presented under Section 391 to Section
394 of the Companies Act, 1956 to Honorable High Court at Mumbai
(Maharastra).
The proposed amalgamation will create the synergy of Operations,
minimize the Cost, Cost & Administrative expenses & generate the higher
profitability for the companies. In terms of the scheme of
amalgamation, all the assets & liabilities of MAPL will get transferred
to MLL with effect from 01st April, 2011 as appointed date & all the
transactions carried out by MAPL on & after the said Date will be to
the account of MLL.
Consequent upon the receipt of approval from the Honorable High Court
at Bombay (Maharastra), MAPL will stand merged with MLL with effect
from 01st April, 2011 & will stand extinguished & the account of MLL
for the year 2011-12 & 2012-13 will be re-stated for giving the effect
to the said scheme.
The Company has a single class of equity shares which are having
par value of Rs. 10 per equity share. All shares rank pari passu with
reference to all rights relating thereto. Each Shareholder is eligible
for one vote per share held. The dividend proposed by the Board of
Directors is subject to the approval of the shareholders in the ensuing
Annual General Meeting, except in case of interim dividend. In the
event of liquidation, the equity shareholders are eligible to receive
the remaining assets of the Company after distribution of all
preferential amounts, in proportions to their shareholding.
Micro and Small Enterprises :With reference to amounts shown as payable
to Micro, Small and Medium Enterprises, the information has been
compiled in respect of parties to the extent they could be identified
as Micro, Small and Medium Enterprises on the basis of information
collected and available with the Company and same has been relied upon
by the auditors. The Company deals with various Micro Small and Medium
Enterprises on mutually accepted terms and conditions. No interest is
payable if the mutual terms are adhered to by the Company.
Accordingly, no interest has been paid during the year and further no
provision for interest payable to such units is required or has been
made under Micro, Small and Medium Enterprises Development Act, 2006.
Hence, information as required under Schedule VI of the Companies Act,
1956 relating to delayed payments and interest on delayed payments to
Micro, Medium and Small Enterprises has not been compiled and
presented.
3. CONTINGENT LIABILITIES AND COMMITMENTS
31/03/2013 31/03/2012
(Rs) (Rs.)
Contingent Liabilities
Claims against the Company not 2,810,369 2,698,386
acknowledged as debt
Guarantees ( Bank Gurantee ) 4,274,966 2,585,785
Other Moneys for which Company is 1,961,125 2,766,328
contingently liable
TOTAL RS. 9,046,460 8,050,499
Commitments
Estimated amounts of contracts remaining
to be executed
on capital account and not provided for - 78,900,000
Uncalled liability on shares or - -
investments partly paid
Other Commitments - -
TOTAL RS. - 78,900,000
4. In the opinion of the Board, all assets which are considered good (
other than Fixed Assets and Non- Current Investments ) are expected to
realised at least the amount at which they are stated, if realised in
the ordinary course of business. Further in the opinion of the Board,
provision for all known liabilities has been adequately made in the
accounts and as per management experience and estimates, no additional
provisions are required.
5. POST EMPLOYMENT BENEFITS
Providend Fund and ESI dues paid during the year being defined
contributions have been charged to the Profit and Loss Account.
In accordance with the policy for accounting for Gratuity Obligation,
Gratuity Fund Contribution to the tune of Rs.4,83,404 /- (PY Rs.
4,05,162/-) (being current service cost) has been debited to the Profit
and Loss Account for the year.
Further in terms of Actuarial Valuation carried out by the Insurer, the
Present Value of Obligations as at the year end comes to Rs.
65,61,627/- (PY Rs. 46,62,791/-) against which the Fair Value of Plan
Assets comes to Rs. 76,54,631/- (PY Rs. 66,86,360/-) resulting a net
asset of Rs. 10,93,004/- (PY Rs. 20,23,569/-). The Company has not
recognized this asset following the concept of prudence.
Method Used Projected Unit Credit Method
Actuarial Assumptions Used
Mortality Rate LIC (1994-96) Ultimate
Discount Rate 8%
Expected Return on Plan Assets 9%
Salary Escalation Rate 7%
Withdrawal Rate 1% to 3% depending on age
Major Categories of Plan Assets Insurer Managed Funds - 100%
6. RELATED PARTY TRANSACTIONS :-
The Company has identified all the related parties having transactions
during the year in line with Accounting Standard 18. Details of the
same are as under (a) List of Related Parties
Name of Related Parties Nature of Relationship
Mr. R .R. Shah Managing Director
Mr. D.R. Shah Executive Director
Mercury Antibiotics Pvt. Ltd. An enterprise Managed by the
Relatives of Directors
Bio- Med India A Concern in which Directors are
Partner
Mercury Marketing & Consulting A Concern in which Directors
Services are Partner
Kusumben R. Shah Relatives
Kaumudiniben R. Shah Relatives
Kishoriben D. Shah Relatives
R.R. Shah( H.U.F) Relatives
Adit D. Shah Relatives
Janki r shah Relatives
7. Impairment of Assets
As a tool to measure to the value of fixed assets, the Company has
considered the technical Valuation carried out by expert. In terms of
the same and further in absence of any indications, external or
internal, as to any probable impairment of assets, no provision has
been made for same during year under report.
8. The figures in respect of previous year have been re-grouped /
recast wherever necessary to confirm to the current year''s
classification.
Mar 31, 2012
2. General Information of the Company.
Mercury Laboratories the registered partnership firm started its
business activity in the year 1962. Subsequently it converted into the
Private Ltd. Company & incorporated in the year 1982. Later on further
converted into Limited Company in the year 1992 in the state of
Maharashtra. The company has obtained ISO 9001:2008 registration and
engaged in the business of Pharmaceutical items. The company is profit
making and dividend paying Public Limited Company.
The Company made its public issue in the year 1992 and is listed on the
OTC Stock Exchange.
3. Notes on Amalgamation :
Mercury Laboratories Limited (MLL) (Transferee Company) was
incorporated in the year 1992 and engaged in the business of
manufacturing, exporting & importing of Pharmaceutical Drugs &
Medicines. Mercury Antibiotics Private Limited (MAPL) (Transferor
Company) was incorporated in the year 1989 and it is engaged in the
business of manufacturing, importing, exporting of pharmaceutical
Drugs, Medicines formulations, Bulk Drugs including a wide variety of
Oral Dosage Products such as Liquids, Syrups and Dry Powder based
medicinal products. Both the Companies have been promoted by Shri Dilip
R. Shah & Shri Rajendra R. Shah having a several decades of experience
and standing in the pharmaceutical business.
The Board of Directors of MAPL (Transferor Company) & the Board of
Directors of MLL (Transferee Company) have respectively passed the
resolutions on 10th December, 2011 to amalgamate both the companies.
The scheme of amalgamation has been presented under Section 391 to
Section 394 of the Companies Act, 1956 to Honorable High Court at
Mumbai (Maharastra).
The proposed amalgamation will create the synergy of Operations,
minimize the Cost, Cost & Administrative expenses & will generate the
higher profitability for the companies. In terms of the scheme of
amalgamation, all the assets & liabilities of MAPL will get transferred
to MLL with effect from 01st April, 2011 as appointed date & all the
transactions carried out by MAPL on & after the said Date will be to
the account of MLL.
Consequent upon the receipt of approval from the Honorable High Court
at Mumbai (Maharastra), MAPL will stand merged with MLL with effect
from 01st April, 2011 & will stand extinguished & the account of MLL
for the year 2011-12 will be re-stated for giving the effect to the
said scheme.
(4) The Company has a single class of equity shares which are having
par value of Rs. 10 per equity share. All shares rank pari passu with
reference to all rights relating thereto. Each Shareholder is eligible
for one vote per share held. The dividend proposed by the Board of
Directors is subject to the approval of the shareholders in the ensuing
Annual General Meeting, except in case of interim dividend. In the
event of liquidation, the equity shareholders are eligible to receive
the remaining assets of the Company after distribution of all
preferential amounts, in proportions to their shareholding.
(5) Micro and Small Enterprises :
With reference to amounts shown as payable to Micro, Small and Medium
Enterprises, the information has been compiled in respect of parties to
the extent they could be identified as Micro, Small and Medium
Enterprises on the basis of information collected and available with
the Company and same has been relied upon by the auditors. The Company
deals with various Micro Small and Medium Enterprises on mutually
accepted terms and conditions. No interest is payable if the mutual
terms are adhered to by the Company.
Accordingly, no interest has been paid during the year and further no
provision for interest payable to such units is required or has been
made under Micro, Small and Medium Enterprises Development Act, 2006.
Hence, information as required under Schedule VI of the Companies Act,
1956 relating to delayed payments and interest on delayed payments to
Micro, Medium and Small Enterprises has not been compiled and
presented.
(6) Sundry Creditors and Sundry Debtors are as per books and have not
been corroborated by circulation / confirmation of balances /
reconciliation of accounts. Confirmations of parties concerned, for the
amount receivable / due to them as per accounts of the company, are
under process of reconciliation and adjustments required, if any, will
be made as and when the accounts are settled.
(7) In the opinion of the Board, the Current Assets, Loans and
Advances which are considered good are expected to realise at least the
amount at which they are stated, if realized in the ordinary course of
business. Further, in the opinion of the Board and as per management,
provision of all known liabilities has been adequately made in the
accounts.
(8) Contingent Liabilities (to the extent not provided for)
Guarantees:
Bank Guarantees outstanding as on 31st March, 2012, amounted to Rs
25,85,785/- (p.y Rs 8,50,620/-) and Letters of Credit outstanding as at
31st March 2012, amounted to Rs 27,66,328/- (p.y. Rs. 21,59,730/-)
against which the company has kept the Margin Money in the form of
Fixed Deposit worth Rs. 63,13,215/- (p.y Rs. 1,03,13,997/-).
Claims against the Company not acknowledged as debt:
The company has disputed the following statutory liabalities & pending
with following authorites as mentioned below :
Disputed Sales Tax Liabilities : 2,08,608/-
Disputed Service Tax Liabilities : 18,48,486/-
Disputed Central Excise Liabilities : 6,41,292/-
(9) Commitments (to the extent not provided for)
Estimated amt. of contracts remaining to be executed on capital
account: Rs.789 lacs (p.y. Rs. Nil) Other Commitments : Nil
(10) Proposed Dividend :
Amount of Rs. 1.50 per Equity Share aggregating to Rs. 18,00,000/- is
being proposed as dividend on equity shares.
There are no arrears of dividends.
(11) Post Employment Benefits
Provident Fund & ESI dues amounting to Rs.16,84,214 (PY Rs.21,83,038)
paid during the year being defined contributions has been charged to
the Statement of Profit and Loss.
The value of obligation towards entitlement of employees accumulating
earned leave and eligibility of compensation or encashment of the same
is measured at the expected amount required to be paid as a result of
actual unused entitlement standing to the credit of the employees as at
end of the year based on current salary standards. Accordingly a sum of
Rs. 3,30,821 (p.y. Rs.3,08,619) has been determined as obligation as at
the year end. The differential of Rs. 1,28,240 (p.y. 41,655) between
the obligation as at the end of previous year, compensation paid during
the year and the obligation as the year end has been charged to the
Statement of Profit and Loss.
The Company has a defined benefit gratuity plan. As per the Payment of
Gratuity Act, 1972, every employee who has completed five or more years
of service is eligible for gratuity @ 15 days salary (last drawn) for
every completed year of service with an overall ceiling of Rs.
10,00,000 (PY Rs. 3,50,000) at the time of separation from the Company
or retirement whichever is earlier. The Company has taken a Group
Gratuity cum Life Insurance Policy from Life Insurance Corporation of
India (a qualifying policy) and makes annual contributions to the same
to create a fund to meet this defined benefit gratuity obligation.
(12) Segment Reporting
With respect to Accounting Standard-17on segment reporting issued by
the Institute of Chartered Accountants of India, the Management of the
Company is of the view that the products offered by the Company are in
the nature of Pharmaceuticals Formulations. Hence, the business of
production and sale of Pharmaceuticals Formulations belong to one
business segment only.
(13) The Company has not made any forward contracts during the year.
(14) To comply with the International standard of regulatory market the
company has undertaken the project to construct the factory building
and availed the Term Loan in foreign currency (FCNRB) from State Bank
of India Baroda. The undertaken project will take substantial period of
time. The Company has capitalized the borrowing cost of Rs. 14,56,041/-
in terms of the accounting practice followed by the Company in
consonance with Accounting Standard-16 Borrowing Costs.
(15) There are no amounts pending to be transferred to the Investors
Education and Protection Fund as at the end of the year.
(16) These financial statements have been prepared in the format
prescribed by the Revised Schedule VI to the Companies Act, 1956.
Previous periods figures have been recast / restated.
Mar 31, 2011
1 a. Contingent Liabilities not provided for in respect of:
(Rs. In Thousand)
31/03/2011 31/03/2010
Bank guarantees pending to be redeemed 850.62 1114.34
Pending Letters of Credit 2159.73 13063.90
Sales tax matters in dispute 208.61 208.61
b. There is no claim against company to be acknowledged as debt.
c. Estimated amount of contracts to be executed on capital account not
provided for Rs. NIL
3 Sundry Debtors includs Rs. 29.23 lacs outstanding for more than six
months and considered to be doubtful of recovery. However, no provision
has been made in the accounts for the same and to that extent the
Profits/Reserves are reflectef on the higher side.
4 In cases where letters of confirmation have been received from the
parties, book balance have been generally reconcilled and adjusted. In
other cases, balances in the account of sundry debtors, sundry
creditors and loans and advances or deposits are taken as per the books
of accounts.
5 In case of Sundry Debtors and Loans & Advances which are considered
good, the Company holds no security other than the personal security of
the parties.
6 The Company has aviled the Finance from State Bank of India which is
secured by way of hypothecation charges on all types of stocks, whether
lying in the premises of the Company or elsewhere, books-debts, inland
and Foreign bills in course of collection. The loans are further
secured by way of first charge on the Plant & Machinery, equipments and
all other movable assets,both present or future and also by way of
Equitable Mortgage of Company''s Land & Building at Vadodara and also
the Building at Jarod. These loans are also personally guaranteed by
the Directors of the Company.
7 In the opinion of the Board, the Current Assets, Loans & Advances,
are expected to realize at least the amount at which they are stated,
if realised in the ordinary course of business and provision for all
known liabilities has been adequately made in the accounts.
8 With reference to amounts shown as payable to Micro & Small
Enterprises, the information has been complied in respect of parties to
the extent they could be identified as Micro and Small Enterprises on
the basis of information collected and available with the company and
same has been relied upon by the auditors. The Company deals with
various Micro and Small Enterprises on mutually accepted terms and
conditions. No interest is payable if the mutual terms are adhered to
by the Company. Accordingly, no interest has been paid during the year
and further no provision for interest payable to such units is required
or has been made under Micro, Small and Medium Enterprises Development
Act, 2006. Hence, information as required under Schedule VI of the
Companies Act, 1956 relating to delayed payments and interest on
delayed payments to Micro and Small Enterprises has not been compiled
and presented.
9 Post Employment Benefits :
The Company, during the year, has adopted Accounting Standard
15(Revised) "Employee Benefits" issued by the ICAI in accordance with
stipulations of the Standard.
Provident Fund dues during the year being defined contributions have
been charged to the Profit and Loss Account.
Long Term Employee Benefits on account of compensated absences have
been accounted for on actuarial basis using the Projected Unit Credit
Method.
10 Impairment of Assets :
As a tool to measure to the value of fixed assets, the Company has
considered the technical Valuation carried out by expert. In terms of
the valuation report and further in absence of any indications,
external or internal, as to any probable impairment of assets, no
provision has been made for the same during the year under report.
11 There are no amounts pending to be transferred to the Investors
Education and Protection Fund as at the end of the year.
12 Segment Reporting:
With respect to Accounting Standard 17 on Segment Reporting issued by
the Institute of Chartered Accountants of India, the management is of
the view the products of the Company can be classified into only one
category i.e. "Pharmaceutical Formulations". Thus, the business of
production and sales of pharmaceutical products belong to one segment
only.
13 Deferred Taxes :
In compliance with Accounting Standerd 22 on Taxes on income issued by
the institute of Chartered Accounttants of India, the Company has
disclosed net deferred tax liability of Rs.6476.31 Thousand for the
year ended 31st March 2011 after charging net deferred tax liability
for the year under report of Rs.68.61 Thousand to the profit and loss
account.
(b) In respect of the transactions entered with releted entities by the
Company till 31st December, 2010 to which section 297(1) of the
Companies Act 1956, were attracted, as an abudant caution, the Company
has submitted its SUO MOTTO application to the Registrar of Companies,
Maharashtra, for compounding of offence to the Regional Director under
Section 621-A of the Companies Act.1956, which is pending for Disposal.
The transaction with releted entities after 1 st January, 2011 the
Company has obtained the approval of Central Govt. through Regional
Director, Westen Regional, Mumbai, vide approval letter No.
RD/297/372/2374/12/2010/10066 dated 28/02/2011.
14 ContingenciesProvisions :
Contingencies which can be reasonably ascertained are provided for, if
in the opinion of the Management,there is a probability that it will
result in an outflow for the Company in the future. Other
Contingencies,the outcome of which is not certain, have been disclosed
in these notes as Contingent Liabilities. Contingent Assets have not
been provided for.
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