Notes to Accounts of Natural Capsules Ltd.

Mar 31, 2025

13.4 Term attached to Equity Shares:

The Company has one class of equity share having a par value of ? 10 per share. Each holder of equity share is entitled to one vote per share. The dividend when proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General meeting. Repayment of capital on liquidation will be in proportion to the number of equity shares held.

The Company has issued 92,500 equity shares under ESOP (Employee Stock Option).

i) Capital reserve:

On account of forfeiture of amount paid on convertible shares warrants allotted to non promoters share holders.

ii) Securities Premium reserve:

The amount received in excess of Face value of the equity shares is recognised as securities premium reserve.

iii) General reserve:

The reserve arises on transfer portion of the net profit pursuant to the earlier provisions of companies Act, 1956. mandatory transfer to general reserve is not required under the companies Act, 2013.

iv) Proposed dividend:

Dividends proposed but declared by the Company after the reporting period are not recognized as liability at the end of the reporting period. Dividends declared after the reporting period but before the issue of financial statements are not recognized as liability since no obligation exists on the balance sheet date.

Collateral

Charge on current assets, personal guarantee of Mr. Sunil Mundra and Mr. Sushil Mundra, Charge on FD of DSRA of 6 months, exports debtors and stocks. Charge on Industrial property situated at Industrial Plot No.7/A, KIADB Industrial Area, Attibele, Anekal Taluka, Bangalore-560107. Charge on Industrial property situated at 84, Bangalore-Perambai Road, Pichaveerampet, Moolakulam, Puducherry-605010.

Term Loans from Others

Loan from IREDA is shown under this head. It is payable over the period of 72 months in equal monthly instalments.

Security Details

Revolving bank guarantee for an amount equivalent to six months principal plus interest plus liquidated damages and Personal guarantee of Mr. Sunil L Mundra & Mr. Sushil Kumar Mundra.

Ministry of Corporate Affairs ("MCA") through companies (Indian Accounting Standards) Amendment Rules, 2019 and companies (Indian Accounting Standards) Second Amendment Rules, has notified Ind AS 116 Leases which replaces the existing lease standard, Ind AS 17 Leases and other interpretations. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. It introduces a single, on-balance sheet lease accounting model for lessees.

The Company has adopted Ind AS 116, effective annual reporting period beginning April 1, 2019 and applied the standard to its leases retrospectively accordingly, the Company has not restated comparative information.

For transition, the Company has elected not to apply the requirements of Ind AS 116 to leases which are expiring within 12 months from the date of transition by class of asset and leases for which the underlying asset is of low value on a lease-by-lease basis.

On application of Ind AS 116, the nature of expenses has changed from lease rent in previous periods to depreciation cost for the right-of-use asset, and finance cost for interest accrued on lease liability. Refer Note 2 for the Cost of the right of the use of Asset carried in the at the end of the year.

NOTE 40: CORPORATE SOCIAL RESPONSIBILITY (''CSR'')

Pursuant to the requirement of Section 135 of the companies Act, 2013, CSR committee has been formed by the Company. The primary function of the CSR Committee is to assist the Board of Directors in formulating a SR Policy and review the implementation and progress of the same from time to time. The CSR Policy focuses on creating opportunities for the disadvantaged with emphasis on persons with disabilities and technology driven community development.

NOTE 42 A:

A. Defined contribution plans

The Company makes Provident Fund and Employee State Insurance which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised ? 57.25 Lacs for provident fund contributions in the statement of Profit or loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

B. Defined benefit plans (Gratuity)

In respect of Gratuity plan, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as March 31,2025. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit cost method. The following table sets forth the status of the Gratuity Plan of the Company and the amount recognized in the Balance Sheet and Statement of Profit and Loss. the Company provided the gratuity benefit through annual contributions to a fund managed by the M/s. Life Insurance Corporation

The Company is exposed to various risks in providing the above gratuity benefit which are as follows:

1. Risk to the beneficiaries (i.e. for employees)

Insufficient funds: The greatest risk to the beneficiary is that there are insufficient funds available to provide the promised benefits. This may be due to:

- The insufficient funds set aside, i.e. underfunding;

- The insolvency of The Employer;

- The holding of investments which are not matched to the liabilities; or

- A combination of these events.

2. Risks to the Benefit provider (i.e. for employer)

Parameter risk: Actuarial valuation is done basis some assumptions like salary inflation, discount rate and withdrawal assumptions. In case the actual experience varies from the assumptions, fund may be Insufficient to pay off the liabilities.

For example: Suppose the plan''s liability is calculated with salary inflation assumption of 5% per annum. However, Company''s'' actual practice is to provide increment of 10% per annum. This will result into underfunding.

Similarly, reduction in discount rate in subsequent future years can increase the plan''s liability.

Further, actual withdrawals may be lower or higher than what was assumed in the valuation, which may also impact the plan''s liability.

Risk of illiquid assets: Another risk is that the funds, although sufficient, are not available when they are required to finance the benefits. This may be due to assets being locked for longer period or in illiquid assets.

Risk of benefit change: There may be a risk that a benefit promised is changed or is changeable within the terms of the contract. For e.g. the prevailing Act/Regulation may increase the benefits payable under defined benefit plans.

Asset liability mismatching risk: ALM risk arises due to a mismatch between assets and liabilities either due to liquidity or changes in interest rates or due to different duration.

For example: When the liability duration is, say, 10 years and with assets locked in 5-year g-sec securities. After 5 years, there is huge reinvestment risk to invest maturity proceeds of assets due to uncertainty about the market prevailing yields at that time.

The Company has invested the plan assets with insurer managed funds. The Insurance Company has invested the plant assets in Govt. securities, Debit Funds, Mutual Funds, Money market instruments etc. The expected rate of return on plan asset is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation.

NOTE 43:

43.1 Capital management

The Company''s capital management is intended to maximise the return to shareholders for meeting the long and short term objectives of the Company through the leverage of the debit and equity balance.

The Company determines the amount of capital required on the basis of annual and long-term operating plans and strategic investment plans. The funding requirements are met through long and short term borrowings. The Company monitors the capital structure on the basis of debt to equity ratio and the maturity of the overall debt of the Company.

43.2 Credit risk management

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk from its operating activities (predominantly trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to the customer credit risk management. The Company uses financial information and past experience to evaluate credit quality of majority of its customers and individual credit limits are defined in accordance with this assessment. Outstanding receivables and the credit worthiness of this counter parties are periodically monitored and taken up on case to case basis. There is no material expected credit loss based on the past experience. However, the Company assesses the impairment of trade receivables on case to case basis and has accordingly created loss allowance.

The credit risk on cash and bank balances is limited because the counter parties are banks with high credit ratings assigned by accredited rating agencies.

43.3 Liquity risk management

The Company manages liquity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Fair value hierarchy

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either

observable or unobservable and consist of the following three levels:

• Level 1 — Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 — Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3 — Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

1. Incase of trade receivables, cash and cash equivalents, trade payables, short term borrowings and other financial assets and liabilities it is assessed that the fair values approximate their carrying amounts largely due to the short-term maturities of these instruments.

2. The fair values of the financial assets and financial liabilities included above have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparties.

The Company has given a financial guarantee amounting to 7000 lacs.

Future cash outflows in respect of the above referred matters are determinable only on receipt of judgements/decisions pending at various forums/authorities

NOTE 46: EMPLOYEE SHARE-BASED PAYMENT PLANS

The Shareholders of the Company at the Annual General Meetings held on 10^th November, 2018 had approved the Employee Stock Option Scheme (ESOP) 2018. The ESOS''s are administered by the Compensation Committee ("Committee”). Options are granted at the discretion of the Committee to selected employees depending upon certain criterion. Each option comprises one underlying equity share.

The Company has offered equity shares under ESOP during the year for the identified employees and below is the summary of Options vested, exercised and outstanding during the year.

The Black Scholes option-pricing model was developed for estimating fair value of trade options that have no vesting restrictions and are fully transferable. Since options pricing models require use of subjective assumptions, changes therein can materially affect fair value of the options. The options pricing models do not necessary provide a reliable measure of fair value of options.

NOTE 47:

The Company is not holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made there under.

NOTE 48:

Quarterly returns or statements of current assets filed by the Company with banks are in agreement with the books of accounts.

NOTE 49:

The Company is not declared wilful defaulter by any bank or financial institution or other lender during the year.

NOTE 50:

The Company has submitted the registration of charge form to ROC within time for SBI but for HDFC it got delayed and filed within 60 days with four times additional fee.

NOTE 51:

The Company has not made any transactions with companies struck off under Section 248 of the companies Act, 2013 or Section 560 of companies Act, 1956, during the year

NOTE 52:

The Company has not accepted any transaction 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 during the year.

NOTE 53:

The Company has not traded or invested in Crypto currency or Virtual currency during the financial year.

NOTE 54: CODE ON SOCIAL SECURITY 2020

The Code on Social Security 2020 (''the code'') relating to employee benefits, during the employment and postemployment, has received Presidential assent on September 28, 2020. The Code has been published in the Gazette of India. Further, the Ministry of Labour and Employment has released draft rules for the Code on November 13, 2020. However, the effective date from which the changes are applicable is yet to be notified and rules for quantifying the financial impact are also not yet issued. The Company will assess the impact of the Code and will give appropriate impact in the financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.

NOTE 55:

The Company has circulated balance confirmation for Trade Payables and Trade Receivables. The receipt of Confirmation and Reconciliation are in process and the reported balances are subject to Confirmation. Any adjustment, if required, will be made on receipt of the same.

NOTE 56:

Previous year figures have been regrouped to correspond to the current year classification where ever necessitated.

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Mar 31, 2024

13.4 Term attached to Equity Shares:

The Company has one class of equity share having a par value of '' 10 per share. Each holder of equity share is entitled to one vote per share. The dividend when proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General meeting. Repayment of capital on liquidation will be in proportion to the number of equity shares held.

The Company has not issued any equity shares under ESOP (Employee Stock Option).

i) Capital reserve:

On account of forfeiture of amount paid on convertible shares warrants allotted to non promoters share holders.

ii) Securities Premium reserve:

The amount received in excess of Face value of the equity shares is recognised as securities premium reserve.

iii) General reserve:

The reserve arises on transfer portion of the net profit pursuant to the earlier provisions of Companies Act, 1956. mandatory transfer to general reserve is not required under the Companies Act, 2013.

iv) Proposed dividend:

Dividends proposed but declared by the Company after the reporting period are not recognized as liability at the end of the reporting period. Dividends declared after the reporting period but before the issue of financial statements are not recognized as liability since no obligation exists on the balance sheet date.

Term Loans from Banks

Repayment Details:

The loans are repayable over the period of 84 months in equal monthly instalments.

Security Details:

Primary: Charge on FD of DSRA of 6 months, charge on stocks, charge on book debts, charge on current assets and charge on export debtors.

Collateral: Charge on current assets, personal guarantee of Mr. Sunil Mundra and Mr. Sushil Mundra, Charge on FD of DSRA of 6 months, exports debtors and stocks. Charge on Industrial property situated at Industrial Plot No.7/A, KIADB Industrial Area, Attibele, Anekal Taluka, Bangalore-560107. Charge on

Industrial property situated at 84, Bangalore-Perambai Road, Pichaveerampet, Moolakulam, Puducherry-605010.

Term Loans from Others: Loan from IREDA & BFL is shown under this head. It is payable over the period of 72 months & 60 months respectively in equal monthly instalments.

Security Details:

IREDA: Revolving bank guarantee for an amount equivalent to six months principal plus interest plus liquidated damages and personal guarantee of Mr. Sunil L Mundra & Mr. Sushil Kumar Mundra.

BFL: Pari passu charge on fixed assets and current assets of the company & fixed assets of it''s subsidiary company Natural Biogenex Pvt Ltd.

a) Working capital facilities in the form of open cash credit from State bank of India & HDFC Bank is secured by hypothecation of stock of raw materials; work in process, finished goods, book debts, bills and other movable assets of the Company. All the secured loans are further secured by the personal guarantees of promoter directors.

Ministry of Corporate Affairs ("MCA") through Companies (Indian Accounting Standards) Amendment Rules, 2019 and Companies (Indian Accounting Standards) Second Amendment Rules, has notified Ind AS 116 Leases which replaces the existing lease standard, Ind AS 17 Leases and other interpretations. Ind AS 116 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. It introduces a single, on-balance sheet lease accounting model for lessees.

The Company has adopted Ind AS 116, effective annual reporting period beginning April 01, 2019 and applied the standard to its leases retrospectively accordingly, the Company has not restated comparative information.

For transition, the Company has elected not to apply the requirements of Ind AS 116 to leases which are expiring within 12 months from the date of transition by class of asset and leases for which the underlying asset is of low value on a lease-by-lease basis.

On application of Ind AS 116, the nature of expenses has changed from lease rent in previous periods to depreciation cost for the right-of-use asset, and finance cost for interest accrued on lease liability. Refer Note 2 for the Cost of the right of the use of Asset carried in the at the end of the year.

NOTE 42a:A. Defined contribution plans

The Company makes Provident Fund and Employee State Insurance which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised ? 35.60 Lakhs - for provident fund contributions in the statement of Profit or loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

B. Defined benefit plans (Gratuity)

In respect of Gratuity plan, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as March 31, 2024. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit cost method. The following table sets forth the status of the Gratuity Plan of the Company and the amount recognized in the Balance Sheet and Statement of Profit and Loss. the Company provided the gratuity benefit through annual contributions to a fund managed by the M/s. Life Insurance Corporation.

The Company is exposed to various risks in providing the above gratuity benefit which are as follows:

1. Risk to the beneficiaries (i.e. for employees)

Insufficient funds: The greatest risk to the beneficiary is that there are insufficient funds available to provide the promised benefits. This may be due to:

- The insufficient funds set aside, i.e. underfunding;

- The insolvency of The Employer;

- The holding of investments which are not matched to the liabilities; or

- A combination of these events.

2. Risks to the Benefit provider (i.e. for employer) Parameter risk: Actuarial valuation is done basis some assumptions like salary inflation, discount rate and withdrawal assumptions. In case the actual experience varies from the assumptions, fund may be Insufficient to pay off the liabilities.

For example: Suppose the plan''s liability is calculated with salary inflation assumption of 5% per annum. However, Company''s actual practice is to provide increment of 10% per annum. This will result into underfunding.

Similarly, reduction in discount rate in subsequent future years can increase the plan''s liability.

Further, actual withdrawals may be lower or higher than what was assumed in the valuation, which may also impact the plan''s liability.

Risk of illiquid assets: Another risk is that the funds, although sufficient, are not available when they are required to finance the benefits. This may be due to assets being locked for longer period or in illiquid assets.

Risk of benefit change: There may be a risk that a benefit promised is changed or is changeable within the terms of the contract. For e.g. the prevailing Act/Regulation may increase the benefits payable under defined benefit plans.

Asset liability mismatching risk: ALM risk arises due to a mismatch between assets and liabilities either due to liquidity or changes in interest rates or due to different duration.

For example: When the liability duration is, say, 10 years and with assets locked in 5-years g-sec securities. After 5 years, there is huge reinvestment risk to invest maturity proceeds of assets due to uncertainty about the market prevailing yields at that time.

The Company has invested the plan assets with insurer managed funds. The Insurance Company has invested the plant assets in Govt. securities, Debit Funds, Mutual Funds, Money market instruments etc. The expected rate of return on plan asset is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation.

(a) Experience adjustment has been provided only to the extent of details available.

(b) Estimates of future salary increase take account of inflation, seniority, promotion and other relevant factors.

(c) The discount rate is based on the prevailing market yields of Government of India Bonds as at the Balance Sheet date for the estimated term of the obligation.

(d) The Company''s gratuity funds are managed by the M/s. Life Insurance Corporation and therefore the composition of the fund assets in not presently ascertained.

Note (ii) Sensitivity Analysis

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate,expected salary increase and attrition rate. The sensitivity analysis below have been determined based on reasonable possible changes of the assumptions occurring at the end of the reporting period., while holding all other assumptions constant. The results of sensitivity analysis is given below:

NOTE 43a:43.1 Capital management

The Company''s capital management is intended to maximise the return to shareholders for meeting the long and short term objectives of the Company through the leveraging of the debit and equity balance.

The Company determines the amount of capital required on the basis of annual and long-term operating plans and strategic investment plans. The funding requirements are met through long and short term borrowings. The Company monitors the capital structure on the basis of debt to equity ratio and the maturity of the overall debt of the Company.

43.2 Credit risk management

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk from its operating activities (predominantly trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to the customer credit risk management. The Company uses financial information and past experience to evaluate credit quality of majority of its customers and individual credit limits are defined in accordance with this assessment. Outstanding receivables and the credit worthiness of this counter parties are periodically monitored and taken up on case to case basis. There is no material expected credit loss based on the past experience. However, the Company assesses the impairment of trade receivables on case to case basis and has accordingly created loss allowance.

The credit risk on cash and bank balances is limited because the counter parties are banks with high credit ratings assigned by accredited rating agencies.

43.3 Liquity risk management

The Company manages liquity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Fair value hierarchy

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are eitherobservable or unobservable and consist of the following three levels:

• Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 - Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3 - Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions

that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

1. Incase of trade receivables, cash and cash equivalents, trade payables, short term borrowings and other financial assets and liabilities it is assessed that the fair values approximate their carrying amounts largely due to the short-term maturities of these instruments.

2. The fair values of the financial assets and financial liabilities included above have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparties.

NOTE 46: EMPLOYEE SHARE-BASED PAYMENT PLANS

The Shareholders of the Company at the Annual General Meetings held on Novemeber 10, 2018 had approved the Employee Stock Option Scheme (ESOP) 2018. The ESOS''s are administered by the Compensation Committee ("Committee"). Options are granted at the discretion of the Committee to selected employees depending upon certain criterion. Each option comprises one underlying equity share.

The Company has offered equity shares under ESOP during the year for the identified employees and below is the summary of Options vested, exercised and outstanding during the year:

The following table summarises the assumptions used in calculating the grant date fair value for instrument granted in the year ended March 31,2024.

The Black Scholes valuation model has been used for computing the weighted average fair value considering the following inputs:

Description of Relationship
Dates of Grant	November 10, 2018
Market Price (? per share) on the dates of grant	78
Volatility	78%
Risk free rate	6.50%
Exercise price	10
Time to maturity (years)	10
Dividend yield	1%
Option fair value (? per share)	69

The Black Scholes option-pricing model was developed for estimating fair value of trade options that have no vesting restrictions and are fully transferable. Since options pricing models require use of subjective assumptions, changes therein can materially affect fair value of the options. The options pricing models do not necessary provide a reliable measure of fair value of options.

NOTE 47:

The Company is not holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made there under.

NOTE 48:

Quarterly returns or statements of current assets filed by the Company with banks are in agreement with the books of accounts.

NOTE 49:

The Company is not declared wilful defaulter by any bank or financial institution or other lender during the year.

NOTE 50:

The Company has submitted the registration of charge form to ROC within time for SBI but for HDFC it got delayed and filed within 60 days with four times additional fee.

NOTE 51:

The Company has not made any transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956, during the year.

NOTE 52:

The Company has not accepted any transaction 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 during the year.

NOTE 53:

The Company has not traded or invested in Crypto currency or Virtual currency during the financial year.

NOTE 54:Code on Social Security 2020

The Code on Social Security 2020 (''the code'') relating to employee benefits, during the employment and post-employment, has received Presidential assent on September 28, 2020. The Code has been published in the Gazette of India. Further, the Ministry of Labour and Employment has released draft rules for the Code on November 13, 2020. However, the effective date from which the changes are applicable is yet to be notified and rules for quantifying the financial impact are also not yet issued. The Company will assess the impact of the Code and will give appropriate impact in the financial statements in the period in which, the Code becomes effective

and the related rules to determine the financial impact are published.

NOTE 55:

The Company has circulated balance confirmation for Trade Payables and Trade Receivables. The receipt of Confirmation and Reconciliation are in process and the reported balances are subject to Confirmation. Any adjustment, if required, will be made on receipt of the same.

NOTE 56:

Previous year figures have been regrouped to correspond to the current year classification where ever necessitated.

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Mar 31, 2018

1.1 Basis of preparation and measurement

(a) Basis of preparation

These Financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ‘Ind AS’) as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

These Financial statements for the year ended 31st March, 2018 are the first the Company has prepared under Ind AS. For all periods upto and including the year ended 31st March, 2017, the Company prepared its Financial statements in accordance with the accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (hereinafter referred to as ‘Previous GAAP’) used for its statutory reporting requirement in India immediately before adopting Ind AS.

The Financial statements for the year ended 31st March, 2017 and the opening Balance Sheet as at 1st April, 2016 have been restated in accordance with Ind AS for comparative information. Reconciliations and explanations of the effect of the transition from Previous GAAP to Ind AS on the Company’s Balance Sheet, Statement of Profit and Loss and Statement of Cash Flows are provided in note 3.

The Financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the Financial statements, including the preparation of the opening Ind AS Balance Sheet as at 1st April, 2016 being the ‘date of transition to Ind AS’. All assets and liabilities have been classified as current or non current as per the Company’s normal operating cycle and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013.

Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities financial statements.

The said Goodwill is not amortised, however, it is tested for impairment at each Balance Sheet date and the impairment loss, if any, is provided for. On the other hand, where the share of equity in subsidiaries as on the date of investment is in excess of cost of investments of the Company, it is recognised as ‘Capital Reserve’ and shown under the head ‘Reserves and Surplus’ in the financial statements.

Non-controlling interests in the net assets of subsidiaries is identified and presented in the Balance Sheet separately within equity. Non-controlling interests in the net assets of subsidiaries consists of:

(a) The amount of equity attributable to non-controlling interests at the date on which investment in a subsidiary is made; and

(b) The non-controlling interests share of movements in equity since the date parent subsidiary relationship came into existence.

The profit and other comprehensive income attributable to non-controlling interests of subsidiaries are shown separately in the Statement of Profit and Loss and Statement of Changes in Equity.

Transactions and balances with values below the rounding off norm adopted by the Company have been reflected as “0” in the relevant notes in these Financial statements.

The Financial statements of the Company for the year ended 31st March, 2017 were approved for issue in accordance with the resolution of the Board of Directors on 18^th May, 2017.

(b) Basis of measurement

These Financial statements are prepared under the historical cost convention unless otherwise indicated.

2.2 Key Accounting Estimates And Judgements

The preparation of Financial statements requires management to make judgements, estimates and assumptions in the application of accounting policies that affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Continuous evaluation is done on the estimation and judgments based on historical experience and other factors, including expectations of future events that are believed to be reasonable. Revisions to accounting estimates are recognised prospectively.

Information about critical judgments in applying accounting policies, as well as estimates and assumptions that have the most significant effect to the carrying amounts of assets and liabilities within the next financial year, are included in the following notes:

(a) Measurement of defined benefit obligations - Note 43

(b) Measurement and likelihood of occurrence of provisions and contingencies - Note 21 and 26

(c) Recognition of deferred tax assets - Note 9

(d) Key assumptions used in discounted cash flow projections - Note 46

Impairment of Intangible - Note 5

The financial statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year. The financial statements of the Company and its subsidiaries have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after eliminating intra-Company balances, intra-Company transactions and the unrealised profits/ losses, unless cost/revenue cannot be recovered.

The excess of cost to the Company of its investment in subsidiaries, on the acquisition dates over and above the Company’s share of equity in the subsidiaries, is recognised as ‘Goodwill’ being an asset in the financial statements. The said Goodwill is not amortised, however, it is tested for impairment at each Balance Sheet date and the impairment loss, if any, is provided for. On the other hand, where the share of equity in subsidiaries as on the date of investment is in excess of cost of investments of the Group, it is recognised as ‘Capital Reserve’ and shown under the head ‘Reserves and Surplus’ in the financial statements.

Non-controlling interests in the net assets of subsidiaries is identified and presented in the Balance Sheet separately within equity.

Non-controlling interests in the net assets of subsidiaries consists of:

(c) The amount of equity attributable to non-controlling interests at the date on which investment in a subsidiary is made; and

(d) The non-controlling interests share of movements in equity since the date parent subsidiary relationship came into existence.

The profit and other comprehensive income attributable to non-controlling interests of subsidiaries are shown separately in the Statement of Profit and Loss and Statement of Changes in Equity.

Transactions and balances with values below the rounding off norm adopted by the Group have been reflected as “0” in the relevant notes in these Financial statements.

The Financial statements of the Company for the year ended 31st March, 2018 were approved for issue in accordance with the resolution of the Board of Directors on 18^th May, 2017.

2.3 Recent Accounting Developments

Standards issued but not yet effective:

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, ‘Statement of cash flows’ and Ind AS 102, ‘Share-based payment. The amendments are applicable to the Company from 1st April, 2017 Amendment to Ind AS 7:

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of Financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement. The effect on the Financial statements is being evaluated by the Company.

Amendment to Ind AS 102:

The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.

It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity settled awards. Market-based performance conditions and non-vesting conditions are reflected in the ‘fair values’, but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement.

The effect on the Financial statements is being evaluated by the Company.

3. Term attached to Equity Shares:

The Company has one class of equity share having a par value of Rs.10 per share. Each holder of equity share is entitled to one vote per share. The dividend when proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General meeting. Repayment of capital on liquidation will be in proportion to the number of equity shares held.

The Company has not issued any equity shares under ESOP (Employee Stock Option) .

The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income., items included in the general reserve will not be reclassified subsequently to profit or loss except to the extent permitted as per Companies Act,2013 and rules made thereunder.

1.Long-term loans from State Bank of India are secured by first and joint equitable mortgage on pari-passu basis on Land, Building, Plant & Machinery / equipments, furniture & Computers situated at Attibele Industrial Area, Bangalore & at Pondichery and collateral security of entire stocks of raw materials, semi-finished goods and finished goods, book debts, receivable, other current assets etc. Long-term loans obtained from State Bank of India are secured by land and building situated at Pondicherry and hypothecation of plant and Machinery/equipments/furniture & computers. In addition collateral securities consist of second charge on fixed assets by shares of NCL held by M/s.Nandi Synthetic Pvt Ltd to the tune of Rs.36.70 lacs and extension of charge on current asset.

a) Working capital facilities in the form of open cash credit from State bank of India is secured by Working Capital loan from State Bank of India is secured by hypothecation of stock of raw materials; work in process, finished goods, book debts, bills and other movable assets of the company. All the secured loans are further secured by the personal guarantees of promoter directors.

Trade payables are non-interest bearing are normally settled between 30-60 days

The Company has requested its suppliers to confirm the status as to whether they are covered under the Micro, Small and Medium Entriprises Development Act,2006. In the absence of confirmations from the suppliers, disclosure, if any ,relating to unpaid amounts as at the year end together with interest paid / payable as required under the Act has not been given.

4.1 These amounts represent warrants issued to the shareholders which remained un-presented as on March 31,2018.

4.2 During the year there are no amount due to be transferred to Investor Education and Protection fund

NOTE 5

A. Defined contribution plans

The Company makes Provident Fund and Employee State Insurance which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs.9,720,000 (PY Rs. 9,720,000) for provident fund contributions in the statement of Profit or loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

B. Defined benefit plans (Gratuity)

In respect of Gratuity plan, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as March 31, 2018. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit cost method. The following table sets forth the status of the Gratuity Plan of the Company and the amount recognized in the Balance Sheet and Statement of Profit and Loss. the Company provided the gratuity benefit through annual contributions to a fund managed by the M/s. Life Insurance Corporation

The Company is exposed to various risks in providing the above gratuity benefit which are as follows:

Interest Rate risk : The plan exposes the Company to the risk of fall in interest rates. A drop 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.

Investment risk : The probability or likelihood of occurance of losses relative to the expected return on any particular investment which in inherent. 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 of 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.

Demographic risk : The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the assumption.

Notes:

(a) Experience adjustment has been provided only to the extent of details available.

(b) Estimates of future salary increase take account of inflation, seniority, promotion and other relevant factors.

(c) The discount rate is based on the prevailing market yields of Government of India Bonds as at the Balance Sheet date for the estimated term of the obligation.

(d) The Company’s gratuity funds are managed by the M/s. Life Insurance Corporation and therefore the composition of the fund assets in not presently ascertained.

(e) The Company’s best estimate of the contribution expected to be paid to the plan during the next year is Rs.2,338,369.

Note (ii) Sensitivity Analysis

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and attrition rate. The sensitivity analysis below have been determined based on reasonable possible changes of the assumptions occuring at the end of the reporting period., while holding all other assumptions constant. The results of sensitivity analysis is given below:

The Company has invested the plan assets with insurer managed funds. The Insurance Company has invested the palnt assets in Govt. securities, Debit Funds, Mutual Funds ,Money market instruments etc. The expected rate of return on plan asset is based on expectation of the average long term rate of retun expected on investments of the fund during the estimated term of the obligation.

NOTE 6

6.1 Capital management

The Company’s capital management is intended to maximise the return to shareholders for meeting the long and short term objectives of the Company through the leveraging of the debit and equity balance

The Company determines the amount of capital required on the basis of annual and long-term operating plans and strategic investment plans. The funding requirements are met through long and short term borrowings. The Company monitors the capital structure on the basis of debt to equity ratio and the maturity of the overall debt of the Company.

6.2 Credit risk management

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk from its operating activities (predominantly trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to the customer credit risk management. The Company uses financial information and past experience to evaluate credit quality of majority of its customers and individual credit limits are defined in accordance with this assessment. Outstanding receivables and the credit worthiness of tis counter parties are periodically monitored and taken up on case to case basis. There is no material expected credit loss based on the past experience. However, the Company assesses the impairment of trade receivables on case to case basis and has accordingly created loss allowance.

The credit risk on cash and bank balances is limited because the counter parties are banks with high credit ratings assigned by accredited rating agencies.

6.3 Liquidity risk management

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The table below provides details regarding contratual maturities of financial liabilities as at 31 March 2018.

1. Incase of trade receivables, cash and cash equivalents, trade payables, short term borrowings and other financial assets and liabilities it is assessed that the fair values approximate their carrying amounts largely due to the short-term maturities of these instruments

2. The fair values of the financial assets and financial liabilities included above have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparties.

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Mar 31, 2016

1. As per the Special Resolution passed in the Extra Ordinary General Meeting held during the year 2015-16, 11,00,000 Warrants/ Convertible securities are allotted with an option to covert them in to Equity Shares within 18 months from the date of allotment of warrants at a price of Rs.80/- per share. The amount received during the year 2015-16 against share warrants/ Convertible securities represents 25% of the value of approved conversion price. If the option of conversion is not exercised 25% of the value approved for conversion price is to be forfeited. During the year Option was exercised for 2,20,000 Warrants at a price of Rs.36/- per share and shares were allotted.

2. Long-term loans from State Bank of India are secured by first and joint equitable mortgage on pari-passu basis on Land, Building, Plant & Machinery / equipments, furniture & Computers situated at Attibele Industrial Area, Bangalore & at Pondicherry and collateral security of entire stocks of raw materials, semi-finished goods and finished goods, book debts, receivable, other current assets etc. Long-term loans obtained from State Bank of India are secured by land and building situated at Pondicherry and hypothecation of plant and Machinery/equipments/furniture & computers. In addition, collateral securities consist of second charge on fixed assets by shares of NCL held by M/s.Nandi Synthetic Pvt Ltd to the tune of Rs.36.70 lakhs and extension of charge on current asset.

3. Term Loan repayable within a year is Rs. 17.01 Lakhs (Previous Year Rs.60 Lakhs)

4. The Secured term Loans from banks are repayable over a period of 2 to 3 years.

5. There are no continuing default in repayment of loans and interest.

6. Working Capital loan from State Bank of India is secured by hypothecation of stock of raw materials; work in process, finished goods, book debts, bills and other movable assets of the company.

7. All the secured loans are further secured by the personal guarantees of promoter directors.

8. - Research and Development expenditure debited to the Profit and Loss Account aggregating Rs.92,58,494/- (31st March, 2015 Rs 1,01,63,638/- ) has been incurred by the company and disclosed under appropriate account heads.

9. Figures in brackets are in respect of the corresponding previous year.

Foot Notes:

10. Disclosure required in ‘A’ above is required even if there are no transactions between related parties.

11. Amount of transactions should be the sum of amounts receivable/ payable on account of all transactions i.e. including VAT/ ED/ CST but net of TDS.

NOTE 12. - Earning per Share

13. The amount used as the numerator in calculating basic and diluted earnings per share is the net profit after tax for the year disclosed in the Profit and Loss Account.

14. The weighted average number of equity shares used as the denominator in calculating both basic and diluted earnings per share is 51,91,689

NOTE 15 -

16. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.13.79/-Lakhs. (31st March 2015-Rs 15/- Lakhs).

NOTE 17. -Research & Development Expenditure

18. The capital Expenditure in relation to fixed assets has been capitalized and depreciation is provided at applicable rates.

19. The amount spent on Capital Expenditure which are capitalized have been identified and certified by the Management.

20. The details of Expenditures are given bellow

NOTE 21. -

The company has not made provision for Excise liability on goods manufactured but not cleared, as these are accounted on clearance of goods.

This practice has no impact on profit. Excise Duty payable on removal of goods outstanding as on 31st March 2016 to the tune of Rs. 37.56 Lakhs

NOTE 22 - As per the Industrial policy of Government of India, the activity of the company does not require any licensing.

NOTE 23 - Information of installed and utilized capacity

NOTE 24- The previous year’s figures have been regrouped/restated wherever necessary to conform with current years classification.

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Mar 31, 2015

1. As per the Special Resolution passed in the Extra Ordinary General Meeting held during the year 2013-14,4,40,000 Warrants are allotted with an option to covert them in to Equity Shares within 18 months from the date of allottment of warrants at a price of Rs.36/- per share. The amount received during the year 2013-14 against share warrants represents 25% of the value of approved conversion price. lf the option of conversion is not excercised 25% of the value approved for conversion price is to be forfeited. During the year Option was excercised for 2,20,000 Warrants at a price of Rs.36/- per share and shares were allotted.

2.Long-term loans from State Bank of India are secured by first and joint equitable mortgage on pari-passu basis on Land, Building, Plant & Machinery/ equipments, furniture & Computers situated at Attibele Industrial Area, Bangalore & at Pondichery and collateral security of entire stocks of raw materials, semi-finished goods and finished goods, book debts, receivable, other current assets etc. Long-term loans obtained from State Bank of India are secured by land and building situated at Pondicherry and hypothecation of plant and Machinery/equipments/furniture & computers. In addition collateral securities consist of second charge on fixed assets by shares of NCL held by M/s.Nandi Synthetic Pvt Ltd to the tune of Rs.36.70 and extension of charge on current asset.

3 Term Loan repayable within a year is Rs. 60 Lacs(Previous Year Rs.134 Lacs)

4. The Secured term Loans from banks are repayable over a period of 2 to 3 years.

5. There are no continuing default in repayment of loans and interest.

6. Working Capital loan from State Bank of India is secured by hypothecation of stock of raw materials; work in process, finished goods, book debts, bills and other movable assets of the company.

7. All the secured loans are further secured by the personal guarantees of promoter directors.

Note : 8

Note (i) - Related Party Disclosures:

A) Name of the related party and nature of relationship where control exists:

Name of Related Party Nature of Relationship

M/s Mundra Enterprises Sushil L Mundra, Director having Substantial interest in Natural

Capsules Ltd. is Propreitor of Ms Mundra Enterprises

M/s. Balugghat Technologies Ltd Ravi Sethia is a Director of Balugghat Technology Ltd. Ravi Sethia is Son-in -law of Mr. Satyanarayana Mundra having Substantial interest in Natural Capsules Ltd.

M/s.Minakshi Enamels Deepak kabra is a Proprietor of Ms Minakshi Enamels and Brother of Jyothi Mundra, Dirctor

Mr. Sunil Mundra Key Management Personnel

Mr. Laxminarayana Mundra Key Management Personnel

Mr. Satyanarayana Mundra Key Management Personnel

NOTE (ii) - Earning per Share

(a) The amount used as the numerator in calculating basic and diluted earnings per share is the net profit after tax for the year disclosed in the Profit and Loss Account.

(b) The weighted average number of equity shares used as the denominator in calculating both basic and diluted earnings pershareis 50,52,837

NOTE (iii) - Contingent Liability:

Particulars For the year ended on For the year ended on 31st March, 2015 31st March, 2014 Rs. Rs.

Income Tax matters 426,000 426,000

Service Tax matters 4,712,055 -

Total 5,138,055 426,000

NOTE (iv) -

a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.15/-Lacs. (31st March 2014-Rs4/20- Lacs).

NOTE (v) -

The company has not made provision for Excise liability on goods manufactured but not cleared, as these are accounted on clearance of goods.

This practice has no impact on profit.Excise Duty payable on removal of goods outstanding as on 31st March 2015 to the tune of Rs. 17.64 Lacs

NOTE (vi) -

As per the Industrial policy of Government of lndia,the activity of the company does not require any licensing.

NOTE (vii) - The previous years figures have been regrouped/restated wherever necessary to conform with current years classification.

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Mar 31, 2014

NOTE 1a:

Notes:-

1 Long-term loans from State Bank of India are secured by first and joint equitable mortgage on pari-passu basis on Land, Building, Plant & Machinery / equipments, furniture & Computers situated at Attibele Industrial Area, Bangalore & at Pondichery and collateral security of entire stocks of raw materials, semi-finished goods and finished goods, book debts, receivable, other current assets etc. Long-term loans obtained from State Bank of India are secured by land and building situated at Pondicherry and hypothecation of plant and Machinery/equipments/furniture & computers. In addition collateral securities consist of second charge on fixed assets by shares of NCL held by M/s.Nandi Synthetic Pvt Ltd to the tune of Rs.36.70 and extension of charge on current asset.

2) Term Loan repayable within a year is Rs. 134 Lacs(Previous Year Rs.334 Lacs)

3).The Secured term Loans from banks are repayable over a period of 2 to 3 years.

4) There are no continuing default in repayment of loans and interest.

5). Working Capital loan from State Bank of India is secured by hypothecation of stock of raw materials; work in process, finished goods, book debts, bills and other movable assets of the company.

NOTE 2:

(a). In the absence of necessary information with the Company relating to the registration status of the Suppliers under the Micro, Small and Medium Enterprises Development Act, 2006, the information required under the said Act could not be compiled and disclosed.

(b) The total outstanding due to Small Scale Industrial undertakings is Rs. 0.00 lakhs (Previous Year 0.43 lakhs) and the same is due to M/s Benaka Mudran and M/s Trisiris industries.

NOTE 3:

(i). Segment Information:

(a) The companies operation are basically identified into two segments namely Capsules and Formulations

(b) The accounting principles consistently used in the preparation ofthe financial statements are also consistently applied to record Income and expenditure in individual segments.

(c) Income and direct expenses in relation to segments is categorized based on items that are individually identifiable to that segment, while the remainder of the cost are categorized equally among the segments. Certain expenses such as Depreciation, R&D Expenses, Finance cost, which form a significant component of the total cost are not specifically allocable to specific segments as the same is used interchangeably.

(d) Fixed assets used in the company''s business or liabilities contracted have not been identified to any ofthe reportable segments since the same are used interchangeably between the segments.

(e) All the inter segment transfers are made at cost price.

NOTE 4: - Earning per Share

(a) The amount used as the numerator in calculating basic and diluted earnings per share is the net profit after tax for the year disclosed in the Profit and Loss Account.

(b) The weighted average number of equity shares used as the denominator in calculating both basic and diluted earnings per share is 50,22,700

NOTE 5: - Contingent Liability:

As at As at Particulars 31st March, 2014 31st March, 2013 Rs. Rs.

Income Tax matters 426,000 426,000

Sales Tax matters - -

Excise Duty - -

Service Tax Claims

Labour matters

Guarantees

Claims against the company not acknowledged as debts

Other matters for which money is contingently payable

Total 426,000 552,000

NOTE 6 -

a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.4.20/- Lacs. (31st March 2013-Rs 99.75/-Lacs).

NOTE 7 -

The company has not made provision for Excise liability on goods manufactured but not cleared, as these are accounted on clearance of goods.

This practice has no impact on profit. Excise Duty payable on removal of goods outstanding as on 31st March 2014 to the tune of Rs. 15.22 Lacs

Note 8 - Fraud

A fake cheque no:324649 with forged signature was presented at Vellore branch of State Bank of India on 25-03-2014 and an amount of Rs.9,23,580/- was transferred from companies account to an unknown account at Union Bank of India, Vellore,Tamilanadu.The transaction was noticed by the company and an immediate effort was made and the account to which the amount was transferred was frozen and correspondence with all the concerned is on to get company''s amount back.Company''s banker,SBI,Commercial branch,Bangalore,have confirmed that an amount of Rs.8,97,000/- is available in the frozen account.In view of above, a net loss of Rs.26,580/- is likely to be incurred by the company.

NOTE 9 -

The previous years figures have been regrouped/restated wherever necessary to conform with current years classification In terms of our report attached.

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Mar 31, 2013

NOTE 1a - Research and Development expenditure debited to the Profit and Loss Account aggregating Rs.73,84,506/- (31st March, 2012 Rs70,96,629/-) has been incurred by the company and disclosed under appropriate account heads.

The figures have been regrouped as required for the year 2011 -12 and 2012-13.

NOTE 2:

(i). Segment Information:

(a) The companies operation are basically identified into two segments namely Capsules and Formulations

(b) The accounting principles consistently used in the preparation of the financial statements are also consistently applied to record Income and expenditure in individual segments.

(c) Income and direct expenses in relation to segments is categorized based on items that are individually identifiable to that segment, while the remainder of the cost are categorized equally among the segments. Certain expenses such as Depreciation, R&D Expenses, Finance cost, which form a significant component of the total cost are not specifically allocable to specific segments as the same is used interchangeably.

(d) Fixed assets used in the company''s business or liabilities contracted have not been identified to any of the reportable segments since the same are used interchangeably between the segments.

(e) All the inter segment transfers are made at cost price.

NOTE 3 -

a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.99.75/-Lacs. (31 st March 2012-Rs127.42/-Lacs). NOTE (vi) - Research & Development Expenditure

I.The capital Expediture in relation to fixed assets has been capitalised and depreciation is provided at applicable rates.

2.The amount spent on Capital Expenditure which are capitalised have been identified and certified by the Management.

3.The details of Expenditures are given bellow

NOTE4-

The company has not made provision for Excise liability on goods manufactured but not cleared, as these are accounted on clearance of goods.

This practice has no impact on profit. Excise Duty payable on removal of goods outstanding as on 31st March 2012 to the tune of Rs.9.91 Lacs

NOTE 5 -

As per the Industrial policy of Government of India,the activity of the company does not require any licensing.

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Mar 31, 2012

Notes:-

1 .Long-term loans from State Bank of India are secured by first and joint equitable mortgage on pari-passu basis on Land, Building, Plant & Machinery / equipments, furniture & Computers situated at Attibele Industrial Area, Bangalore & at Pondichery and collateral security of entire stocks of raw materials, semi-finished goods and finished goods, book debts, receivable, other current assets etc. Long-term loans obtained from State Bank of India are secured by land and building situated at Pondicherry and hypothecation of plant and Machinery/equipments/furniture & computers. In addition collateral securities consist of second charge on fixed assets by shares of NCL held by M/s.Nandi Synthetic Pvt Ltd to the tune of Rs.36.70 and extension of charge on current asset.

2 Term Loan repayable within a year is Rs.272 Lacs(Previous Year Rs. 184 Lacs)

3. The Secured term Loans from banks are repayable over a period of 2 to 3 years.

4 There are no continuing default in repayment of loans and interest should be specified in each case.

5 Working Capital loan from State Bank of India is secured by hypothecation of stock of raw materials; work in process, finished goods, book debts, bills and other movable assets of the company.

6 All the secured loans are further secured by the personal guarantees of promoter directors.

(A) The disclosure required under Accounting Standards 15 "Employ Benefits" notified in the Companies (Accounting Standards) Rules 2006 are as given bellow Defined Contribution Plan:

The company has applied for exemption of its Provident Fund under section 17 of Employers Provident Fund and Miscellaneous Provisions Act 1952.Conditions for grant of exemptions stipulates that employer shall make good deficiency, if any, in the interest rate declared by trust vis-a-vis statutory rate.

(B) Defined Benefit Plan

The Employees Gratuity Fund Scheme managed by Life Insurance Corporation of India is a Defined Benefit Plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method 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.

ii) The Defined Benefit Plans comprise of Gratuity

Gratuity is a benefit to an employee based on 15/20/25/30 days (depending on the grade/ category of employee and the completed years of service) last drawn salary for each completed year of service. The plan is funded.

(H) In respect of Funded Benefits with respect to gratuity and superannuation, the fair value of Plan assets represents the amounts invested through "Insurer Managed Funds"

NOTE:

(a) In the absence of necessary information with the Company relating to the registration status of the Suppliers under the Micro, Small and Medium Enterprises Development Act, 2006, the information required under the said Act could not be compiled and disclosed.

(b) The total outstanding due to Small Scale Industrial undertakings is Rs. 0.80 lakhs (Previous Year 0.64 lakhs) and the same is due to M/s Benaka Mudran and M/s Trisiris industries.

Note:

a) The Company had opted for the Sales tax deferment scheme under their expansion program. The sales tax deferment to an extent of Rs.231 lakhs was sanctioned to the company vide FAVC no. SIAC/JKA/STD(E)/NCL/AIA/98-99 dated: 30.03.1999. The company opted for availing deferment of sales tax under this scheme from 01.04.2001 & upto 28.02.2007. The total amount of sales tax & VAT retained by the company under this scheme is Rs. 1,47,92,247/-. The above amount has to be paid in 20 equal quarterly installments. The company has paid 16 quarterly installments during the last year amounting to Rs.1, 18, 33,808 for the above deferred amount. During the year, balance due amount of Rs.29,58,439/- has been cleared to the above said deferment scheme to the department. The company has paid total 20 quarterly installments over the year amounting to Rs. 1,47,92,247 out of the above deferred amount.

a) Lease payments recognised in the profit and loss account for the year Rs.3,24,000/- (31st March, 2011 Rs.3,24,000) NOTE 24d - Research and Development expenditure debited to the Profit and Loss Account aggregating Rs.70,96,629/- (31st March, 2011 Rs.42,88,986/-) has been disclosed under R&D Expenses for the year. Corresponding figures for the previous year has been regrouped and reflected.

NOTE 1:

(i). Segment Information:

(a) The companies operation are basically identified into two segments namely Capsules and Formulations

(b) The accounting principles consistently used in the preparation of the financial statements are also consistently applied to record Income and expenditure in individual segments.

(c) Income and direct expenses in relation to segments is categorized based on items that are individually identifiable to that segment, whiler the remainder of the cost are categorized equally among the segments. Certain expenses such as Depreciation, R&D Expenses, Finance cost, which form a significant component of the total cost are not specifically allocable to specific segments as the same is used interchangeably.

(d) Fixed assets used in the company's business or liabilities contracted have not been identified to any of the reportable segments since the same are used interchangeably between the segments.

e) All the inter segment transfers are made at cost price.

Note:

Capital Employed by the Company for its different segment is interchangable and hence Capital Employed for segment reporting has not been made.

NOTE (i) - Earning per Share

(a) The amount used as the numerator in calculating basic and diluted earnings per share is the net profit after tax for the year disclosed in the Profit and Loss Account.

(b) The weighted average number of equity shares used as the denominator in calculating both basic and diluted earnings per share is 45,02,700

NOTE (ii) - Contingent Liability:

As at As at Particulars 31st March, 2012 31st March, 2011 RS. RS.

Income Tax matters 426,000 426,000

Sales Tax matters - -

Excise Duty 126,000 126,000

Service Tax Claims - -

Labour matters - -

Guarantees - -

Claims against the company not acknowledged as debts - -

Other matters for which money is contingently payable - -

Total 552,000 552,000

NOTE (iii)-

a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.127.42/-Lacs. (31st March 2011-Rs 85/-Lacs).

NOTE (iv) - Research & Development Expenditure

1 .The capital Expenditure in relation to fixed assets has been capitalised and depreciation is provided at applicable rates.

2.The amount spent on Capital Expenditure which are capitalised have Been identified and certified by the Management.

NOTE (v) -

The company has not made provision for Excise liability on goods manufactured but not cleared, as these are accounted on clearance of goods.

This practice has no impact on profit. Excise Duty payable on removal of goods outstanding as on 31st March 2012 to the tune of Rs.9.97 Lacs

NOTE (vi) -

As per the Industrial policy of Government of India. the activity of the company does not require any licensing.

NOTE (vii) - The previous years figures have been regrouped/restated wherever necessary to conform with current years classification.

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Mar 31, 2011

1. The total Borrowing cost transferred to Capital Work in Progress during the period is Rs. 22.97 Lakhs (PY: Rs. 94.78) which would be capitalized.

2. Segment Reporting:

(a) The company's operations are basically identified into two segments namely Capsules and Formulations.

(b) The accounting principles consistently used in the preparation of the financial statements are also consistently applied to record Income and expenditure in individual segments.

(c) Income and direct expenses in relation to segments is categorized based on items that are individually identifiable to that segment, while the remainders of the cost are categorized equally among the segments. Certain expenses such as Depreciation, R&D Expenses, Finance cost, which form a significant component of the total cost, are not specifically allocable to specific segments as the same is used interchangeably.

(d) Fixed assets used in the company's business or liabilities contracted have not been identified to any of the reportable segments since the same are used interchangeably between the segments.

(e) All the inter segment transfers are made at cost price.

3. Related Party Disclosures:

(a) List of Related parties M/s. Mundra Enterprises

(b) Key Management personnel Mr. Sunil Mundra, Mr. Laxminarayana Moondra & Mr. Sathyanarayana Mundra

4. Leases :

Accounting for Lease has been made in accordance with the Accounting Standard 19 on "Lease" issued by the Institute of Chartered Accountants of India. Following are the details of lease transactions for the year.

5. Earnings per Share:

In determining earning per share, the company considers the net profit after tax and includes the post-tax effect of any extra ordinary item. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period.

6. Taxation:

The net deferred tax liability as at 31st March 2010 comprises;

7. Long-term loans from State Bank of India are secured by first and joint equitable mortgage on pari-passu basis on Land, Building, Plant & Machinery / equipments, furniture & Computers situated at Attibele Industrial Area, Bangalore & at Pondichery and collateral security of entire stocks of raw materials, semi-finished goods and finished goods, book debts, receivable, other current assets etc. Long-term loans obtained from State Bank of India are secured by land and building situated at Pondicherry and hypothecation of plant and Machinery/equipments/furniture & computers. In addition collateral securities consist of second charge on fixed assets by shares of NCL held by M/s.Nandi Synthetic Pvt Ltd to the tune of Rs.36.70 and extension of charge on current asset. Further the Company has provided the Security of its Immovable Properties comprising of Land & Building (Built/to be Built) situated at Plot No. 7/A2, KIAQB Industrial Area, Attibele, Bangalore measuring an extent of 8165 Sq. Mtrs to cover the credit facilities to the extent of Rs. 1230.00 Lakhs by way of first charge.

(a) Working Capital loan including Packing Credit Loan from State Bank of India is secured by hypothecation of stock of raw materials; work in process, finished goods, book debts, bills and other movable assets of the company.

(b) All the secured loans are further secured by the personal guarantees of promoter directors.

(c) The Company had opted for the Sales tax deferment scheme under their expansion program. The sales tax deferment to an extent of Rs.231 lakhs was sanctioned to the company vide FAVC no. SIAC/JKA/STD(E)/NCL/AIA/98-99 dated: 30.03.1999. The company opted for availing deferment of sales tax under this scheme from 01.04.2001 & upto 28.02.2007. The total amount of sales tax & VAT retained by the company under this scheme is Rs. 1, 47, 92,247/-. The above amount has to be paid in 20 equal quarterly installments. The company has paid 16 quarterly installments during the year amounting to Rs. 1,18,33,808 out of the above deferred amount.

(d) Term loan repayable within one year Rs. 78.50 lakhs (Previous year Rs 100.00 lakhs). Installments overdue towards Principal Rs. NIL (previous year Rs. nil) and Interest overdue is Rs. Nil (Previous year Nil).

8. The total outstanding due to Small Scale Industrial undertakings is Rs. 0.64 lakhs (Previous Year 0.80 lakhs) and the same is due to M/s Benaka Mudran and M/sTrisiris industries.

9. Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances paid) - Rs. 85.00 lakhs (Previous year- Rs. 248.56 lakhs) Contingent liabilities not provided for:

- Disputed Income tax demand - Rs. 9.12 lakhs (Previous year-9.12 lakhs).

- Disputed Central Excise claims - Rs. 1.26 lacs (Previous Year -1.26 lacs). -Disputed Service tax Claim Rs. Nil (Previous year 4.72 lacs)

- Counter Guarantees against guarantees given by bankers Rs. NIL (Previous year Rs. NIL)

10 .Claims against the Company not acknowledged as debts - NIL (Previous year - NIL).

11. The company has not made provision for Excise liability on goods manufactured but not cleared, as these are accounted on clearance of goods. This practice has no impact on profit. Excise duty payable on removal of goods outstanding as on 31" March 31-03-2011 to the tune of Rs. 2.65 lakhs.

12. As per the Industrial Policy of the Government of India, the activity of the Company does not require any licensing.

13. The disclosures required under Accounting Standard 15 "Employee Benefits" notified in the Companies (Accounting Standards) Rules 2006, are given below:

Defined Contribution Plan

Contribution to Defined Contribution Plan, recognized are charged off for the year are as under:

The Company has applied for exemption of its Provident Fund under Section 17 of Employer's Provident Fund and Miscellaneous Provisions Act, 1952. Conditions for grant of exemptions stipulate that employer shall make good deficiency, if any, in the interest rate declared by trust vis-a-vis statutory rate.

Defined Benefit Plan

The employee's gratuity fund scheme managed by Life Insurance Corporation of India is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, 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.

Gratuity (Funded)

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

(C) CIF value of Imports Rs.51.37 lakhs(Machinery & spare parts-Rs. 49.97/Excipients Rs 1.40 lakhs) (Previous year 31.03 lacs)

(D) FOB value of Exports - Rs. 615.17 lakhs (Previous year - Rs. 507.90lakhs).

(E) Expenditure in foreign currency - Rs. 16.95 Lakhs (Previous year Rs. 8.87 lakhs).

(F) Earnings in foreign currency Rs. 563.68 lakhs (Previous year- Rs.444.53 lakhs)

16. In the absence of necessary information with the Company relating to the registration status of the suppliers under the Micro, Small and Medium Enterprises Development Act, 2006, the information required under the said Act could not be compiled and disclosed.

17. Figures for the previous year have been regrouped and rearranged wherever necessary to conform to the current year figures.

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Mar 31, 2010

1. The total Borrowing cost transferred to Capital Work in Progress during the period is Rs. 94.78 Lacs (PY: Rs. 15.72) which would be capitalized.

2. Segment Reporting:

(a) The companys operations are basically identified into two segments namely Capsules and Formulations.

(b) The accounting principles consistently used in the preparation of the financial statements are also consistently applied to record Income and expenditure in individual segments.

(c) Income and direct expenses in relation to segments is categorized based on items that are individually identifiable to that segment, while the remainder of the cost are categorized equally among the segments. Certain expenses such as Depreciation, R&D Expenses, Finance cost, which form a significant component of the total cost are not specifically allocable to specific segments as the same is used interchangeably.

(d) Fixed assets used in the companys business or liabilities contracted have not been identified to any of the reportable segments since the same are used interchangeably between the segments.

3. Long-term loans from State Bank of India are secured by first and joint equitable mortgage on pari-passu basis on Land, Building, Plant & Machinery / equipments, furniture & Computers situated at Attibele Industrial Area, Bangalore & at Pondichery and collateral security of entire stocks of raw materials, semi-finished goods and finished goods, book debts, receivable, other current assets etc. Long-term loans obtained from State Bank of India are secured by land and building situated at Pondicherry and hypothecation of plant and Machinery/equipments/furniture & computers. In addition collateral securities consist of second charge on fixed assets by shares of NCL held by M/s.Nandi Synthetic Pvt Ltd to the tune of Rs.36.70 and extension of charge on current asset. Further the Company has provided the Security of its Immovable Properties comprising of Land & Building (Built/to be Built) situated at Plot No. 7/A2, KIADB Industrial Area, Attibele, Bangalore measuring an extent of 8165 Sq. Mtrs to cover the credit facilities to the extent of Rs. 1230.00 Lakhs by way of first charge.

(a) Working Capital loan including Packing Credit Loan from State Bank of India is secured by hypothecation of stock of raw materials; work in process, finished goods, book debts, bills and other movable assets of the company.

(b) All the secured loans are further secured by the personal guarantees of promoter directors.

(c) The Company had opted for the Sales tax deferment scheme under their expansion program. The sales tax deferment to an extent of Rs.231 lakhs was sanctioned to the company vide FAVC no. SIAC/JKA/STD(E)/NCL/AIA/98-99 dated: 30.03.1999. The company opted for availing deferment of sales tax under this scheme from 01.04.2001 & upto 28.02.2007. The total amount of sales tax & VAT retained by the company under this scheme is Rs. 1,47,92,247/-. The above amount has to be paid in 20 equal quarterly installments. The company has paid 12 quarterly installments up to 31.3.2010 amounting to Rs. 88,75,356/- out of the above deferred amount.

(d) Term loan repayable within one year Rs. 100.00 lakhs (Previous year Rs 90.0 lakhs). Installments overdue towards principal Rs. NIL(previousyear Rs. nil) and Interest overdue is Rs. Nil (Previous year Nil).

4. The total outstanding due to Small Scale Industrial undertakings is Rs. 0.80 lakhs (Previous Year 0.87 lakhs) and the same is due to M/s Benaka Mudran and M/s Trisiris Enterprises.

5. Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances paid) - Rs. 248.56 lakhs (Previous year- Rs. 186.32 lakhs)

Contingent liabilities not provided for:

- Disputed Income tax demand - Rs. 9.12 lakhs (Previous year -9.12 lakhs).

- Disputed Central Excise claims - Rs. 1.26 lacs (Previous Year -1.26 lacs).

- Disputed Service Tax Claim - Rs. 4.72 lacs (Previous Year- NIL).

- Counter Guarantees against guarantees given by bankers Rs. NIL (Previous year Rs. NIL)

6. Claims against the Company not acknowledged as debts - NIL (Previous year - NIL).

7. The company has not made provision for Excise liability on goods manufactured but not cleared, as these are accounted on clearance of goods. This practice has no impact on profit. Excise duty payable on removal of goods outstanding as on 31st March 31-03-2010 to the tuneofRs. 4.56 lakhs.

8. As per the Industrial Policy of the Government of India, the activity of the Company does not require any licensing.