Notes to Accounts of Panchsheel Organics Ltd.

Mar 31, 2024

b) Rights, preferences and restrictions attached to equity shares

The company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount, in proportion to their shareholding.

Details of securities

1. First charge over the Fixed Assets by way of equitable mortagage of Land & Building and hypothecation of Plant & Machinery (existing & future) of the company.

2. Land (leasehold) admeasuring 3251.58 sq. mtrs. Situated at Plot no. B-6 & B-7, Sector -C, Industrial Area, Sanwer Road, Distt. Indore.

3. Charge on additional securities worth Rs.118.61 Lakhs in the form of shares already pledged with the Corporation.

4. Personal Guarantee of 3 Directors of the Company

5. Exclusive charge on current assets and movable fixed assets.

6. Exclusive charge on commercial property located at office no. 1 (1A and 1B), ground floor, Kapadia Chambers, Mumbai 400020

7. Personal Guarantee of all the Directors of the Company

The company has issued 1390000 warrants at Rs. 183.15 per warrant on September 8, 2022 on preferential basis and Collected Rs. 636.45 lakhs at 25% per warrant. Receipt in excees of 25% is accounted as non current liability. The company has converted all the warrants to euity shaes on March 7, 2024 after receiving balance amount of Rs. 1909.34 Lakhs against said warrants.

Details of securities

1. Exclusive charge on current assets and movable fixed assets.

2. Exclusive charge on commercial property located at office no. 1(1A and 1B), ground floor, Kapadia Chambers, Mumbai 400020

3. Personal Guarantee of all the Directors of the Company.

During the year no interest has been paid to such parties. This information has been determined to the extent such parties have been identified on the basis of information available with the Company and the

same has

			(Rs. in lakhs)
27	CONTINGENT LIABILITIES	As at	As at
		March 31, 2024	March 31, 2023
	Claim against the Company not acknowledged as debts a) Demand contested by the Company - Sales tax	65.26	65.26
	- Excise duty - Income tax (Incl. TDS) b) Letter of Credit - Domestic letter of credit	8.28	8.28
	- Buyers credit	148.28	148.28
	- Documents at site

ii) Defined-Benefits Plans

The company provides for gratuity, a defined benefit retirement plan covering eligible employees. The Gratuity Plan provides a lump sum payments to vested employees at retirement, death, incapacitation or termination of employment, as per the company''s policy. Vesting occurs on completion of 5 continuous years of service as per Indian law. However, no vesting condition applies in case of death. The gratuity payable to employees is based on the employee''s service and last drawn salary at the time of leaving the services of the Company. The gratuity plan is an unfunded plan.

The discount rates reflects the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.

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

The expected rate of return of plan assets is the Company''s expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

Sensitivity Analysis

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions by 0.5% is:

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied which has been used for calculating the defined benefit liability recognised in the Balance Sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

iv) Risk Exposure

The Gratuity scheme is a final salary Defined Benefit Plan that provides for a lump sum payment made on exit either by way of retirement, death, disability or voluntary withdrawal. The benefits are defined on the basis of final salary and the period of service and paid as lump sum at exit. The risks commonly affecting the defined benefit plan are expected to be:

Demographic Risk: This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

Salary Inflation Risk : Higher than expected increases in salary will increase the defined benefit obligation

Interest-Rate Risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

v) Defined Benefit Liability and Employer Contributions

The company considers that the contribution rates set at the last valuation date are sufficient to eliminate the deficit over the agreed period and that regular contributions, which are based on service costs, will not increase significantly.

The expected maturity analysis of undiscounted gratuity is as follows:

Terms and conditions:

All the transactions with the related parties during the year are based on the arms length price and terms that would be available to/from third parties All outstanding balances are unsecured and repayable in cash.

38 FAIR VALUE MEASUREMENTS (i)Financial instruments by category

There are no financial assets/liabilities that are measured at fair value thorugh other comprehensive income. Category wise break up of financial assets/liabilities measured at amortised cost and fair value through statement of profit and loss account are given below:

(ii) Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level is as follows.

Level 1 : Level 1 hierarchy includes financial instruments measured using quoted prices.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. iii) Fair value of financial assets and liabilities measured at amortised cost

The carrying amounts of Investments, deposits with banks and interest there on, trade receivables, cash and cash equivalents, loans to employees, borrowings, trade payables and other current financial liabilities are considered to be the same as their fair values due to their short-term nature.

The fair values of security deposits and other advances are based on discounted cash flows. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk. Fair value of the security deposit and other advances are considered to be the same as their carring value.

39 FINANCIAL RISK MANAGEMENT

The Company''s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk. The Company''s focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The market risk to the Company is foreign exchange risk and interest rate. The Company''s exposure to credit risk is influenced mainly by the individual characteristic of each customer end.

39ACREDIT RISK

Credit risk comprises of direct risk of default, the risk of deterioration of creditworthiness as well as concentration risks. It mainly arises from trade receivables, cash and cash equivalents (excluding cash on hand) and bank deposits.

(i) Credit risk management

a) Trade receivables

The carrying amount of trade receivables represent the maximum credit exposure net of provision for impairment. The maximum exposure to credit risk was Rs. 4,401.39 lakhs as of March 31, 2024 ( March 31, 2023 : Rs. 4,159.56).

Trade receivables are derived from revenue earned from customers. Credit risk for trade receivable is managed by the company through credit approvals, establishing credit limits and periodic monitoring of the creditworthiness of its customers to which the company grants credit terms in the normal course of business. The Company’s credit period generally ranges from 90-120 days.

The company does not have a high concentration of credit risk to a single customer. Single largest customer have the total exposure in receivables Rs. 321.88 lakhs as of March 31, 2024 (March 31, 2023 : Rs. 307.42 lakhs).

As per simplified approach, the company uses a provsion matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account a continuing credit evaluation of company''s customers’ financial condition; aging of trade accounts receivable and the company''s historical loss experience. The company defines default as an event when there is no reasonable expectation of recovery. The company has not made any provsion for loss allowance in any of the years presented.

Trade receivables are written off when there is no reasonable expectation of recovery.

b) Cash & cash equivalent and bank deposits

Credit risk on cash and cash equivalents and bank deposits is generally low as the said deposits have been made with banks having good reputation, good past track record and high quality credit rating and company also reviews their credit-worthiness on an on-going basis.

c) Other financial assets

Credit risk on other financial assets is generrally considered to be low 113

39B MARKET RISK (i) Foreign currency risk

Foreign exchange risk arises on financial instruments being denominated in a currency that is not the functional currency of the entity and that are monetary in nature. The Company is exposed to foreign exchange risk mainly arising from Trade Payables denominated in United States Dollar (‘USD’) and European Union Currency (‘EURO’) and Trade receivables in United States Dollar (‘USD’).

(a) Foreign currency risk exposure:

The Company has not entered into any derivative transactions during the year and there were no derivative transactions outstanding as on March 31, 2021

39C LIQUIDITY RISK

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities (comprising the undrawn borrowing facilities below), by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

The liquidity risk is managed by means of the ultimate parent company''s Liquidity and Financial Indebtedness Management Policy, which aims to ensure the availability of sufficient net funds to meet the Company’s financial commitments with minimal additional cost. One of the main liquidity monitoring measurement instruments is the cash flow projection, using a minimum projection period of 12 months from the benchmark date.

(i) Financing arrangements

The Company has undrawn borrowing facilities of Rs. 49.63 lakhs as at March 31, 2024 (Rs. 38.41 lakhs as at March 31, 2023) which is renewable on yearly basis by mutual consent. Undrawn credit facilities comprises of fund based and non-fund based.

(ii) Maturities of financial liabilities

The following table shows the maturity analysis of the companies financial liabilities based on the contractually agreed undiscounted cash flows as at the Balance Sheet date.

41 CAPITAL MANAGEMENT

The company''s objectives when managing capital are to safeguard the Company''s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure of the Company, management can make, or may propose to the stockholders when their approval is required, adjustments to the amount of dividends paid to stockholders, return capital to stockholders, issue new shares or sell assets to reduce, for example, debt.

The Company considers total equity reported in the financial statements to be managed as part of capital.

The Company does not have any borrowing which is subject to the capital requirements.

43 LEASES

As a lessee: Operating lease

The Company has operating leases for land and premises. Most of the leases are renewable for further period on mutually agreeable terms.

Transition to New Standards

The Company has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of less than or equal to 12 months with no purchase option and assets with low value leases. The Company recognises the lease payments associated with these leases as an expense in statement of profit and loss over the lease term. The related cash flows are classified as operating activities.

44 EXPENDITURE TOWARDS CORPORATE SOCIAL RESPONSIBILITY

As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief, COVID-19 relief and rural development projects. A CSR committee has been formed by the Company as per the Act. The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013:

Consequent to the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, the Company intends to transfer its unspend CSR fund to a designated bank account opened with Yes Bank Limited during previous year.

_4g Figures for the corresponding previous years have been regrouped/ rearranged, wherever necessary, to conform to the classification of the current year.

---

Mar 31, 2018

1. Proposed dividend

Under Indian GAAP, proposed Dividend including Dividend distribution tax. are recognised as liability in the period to which they relate, irrespective of when they are declared Under IND AS proposed Dividend is recognised as liability in the period in which it is declared by the company, usually when approved by the shareholders in a general neeting As a result of this change, the liability of Rs 60 36 Lakhs as at April 1 2016 and Rs 60.36 Lakhs as at March 31, 2017 recorded for dividend has been derecognised against retained earnings

2. Excise duty

Under the previous GAAP revenue from sale of products was presented exclusive of excise duty Under Ind AS, revenue from sale of goods is presented inclusive of excise duty The excise duty paid is presented on the face of the statement of profit and loss as part of expenses This change has resulted in an increase in total revenue and total expenses for the year ended March 31 2017 by Rs 115 60 lakhs There is no impact on the total equity and profit

3. Retained earnings

Retained earnings as at April 1. 2016 has been adjusted consequent to the above Ind AS transition adjustments

4. Current tax and deferred tax

Current tax I deferred tax have been recognised on the adjustments made on transition to Ind AS

5. Government grants

Under the previous GAAP, the company has recorded the Government grant related fixed asset in to capital reserves Whereas under lnd AS the company has recognised the grant as deferred income which is amortised on systematic bases over the useful life of the asset to statement of profit and loss This change has resulted in an decrease in retained earnings and increase in deferred income by Rs 27 46 Lakhs as at April 1 2016 and Rs 22 51 Lakhs as at March 31, 2017

6. Other comprehensive income

Under Ind AS, all items of income and expense recognised in a pie nod should be included in statement of profit and loss for the year unless a standard requires or permits otherwise Items of income and expense that are not recognised in statement of profit and loss but are shown in the statement of profit and loss as other comprehensive income includes re-measurements of defined benefit plans The concept of other comprehensive income did not exist under previous GAAP The notes are an integral part of these financial statements

7. Figures for the corresponding previous years have been regrouped/ rearranged wherever necessary, to conform to the classification of the current year.

---

Mar 31, 2015

I OTHER EXPLANATORY NOTES AND INFORMATION:

A. Amount of Income Tax has been provided on Taxable Income of the Company as per provision of the Income Tax Act, 1961.

B. The Board of Directors are of the opinion that discounted net future generation from the Assets in use and shown in the schedule of fixed assets, is more than the carrying amount of fixed assets in Balance Sheet, as such, no provision for Impairment of Assets is required to be made in terms of the requirement of accounting standard (AS-28) "Impairment of Assets" issued by the Institute of Chartered Accountants of India for the year ended 31.03.2015.

C. Segment Reporting :

The Company operates in one reportable segment i.e. Manufacturing and Trading of bulk drug and Intermediate.

D. The Investment made by the company is held in its own name.

E. In the opinion of Board and to the best of their knowledge and belief, All the current assets, loans and advances will have the value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

Provision for all known liabilities is adequate and not in excess of the amount reasonably necessary. There is no liability contingent or otherwise except those stated in the Balance Sheet.

F. Debit and credit balances are subject to reconciliation and confirmation.

G. The expenses of Salary and wages debited in Statement of Profit & Loss includes the amount of Director Remuneration of Rs. 87,60,000/- (P.Y. Rs.78,00,000/-).

H. Pursuant to the enactment of Companies Act 2013, the company has applied the estimated useful lives as specified in Schedule II, as disclosed in Accounting Policy on Depreciation and Amortization. Accordingly the unamortized carrying value is being depreciated / amortized over the revised / remaining useful lives. The written down value of Fixed Assets whose lives have expired as at 1st April 2014 have been adjusted, by way of Depreciation, net of tax, in the opening balance of Surplus in Profit and Loss Account, amounting to Rs.51,85,372.70/-.

The rate of escalation in salary (pea.) considered in actuarial valuation is worked out after into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. Mortality rate are obtained from the relevant data of Life Insurance Corporation of India.

- {Dr. Receivables. ( Cr.)Payable

Company has no Subsidiary or Joint Venture Concern.

The Company has identified ali the related parties transactions during the Year as per details given above.

During the Year, there were no amounts written off or written back from Such parties,

I. Previous year figure have been classified, regrouped and recast to make comparable with those of year under review.

a) Terniai1 rights attached to equity shares :

The Company has only one class of equity shares Slaving par value of Rs.10 per share. Each holder of equity shares is entitled to one vole per share. The Company declares snd pays dividends in Indian Rupees. The dividend proposed by The Board of Directors j$ subject to the approval of the shareholders in the ensuing Annual General Meeting. During the year end and 31st March 2015, the amount of per share dividend recognized as distributions to equity shareholders was Rs. O.50 (31st March,2014 - Rs. 0,50).

To the event or liquidation of the: Company, the holders of equity shares will be entitled to receive remain rig assets of that Company, after distribution o-f all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

---

Mar 31, 2014

1. Termsf rights attached to equity shares :

The Company has only one class of equity shares having par value of Rs.10 per share each holder of equity shares is entitled to one vote per share.The Company declares and pays dividends in Indian Rupees.!he dividend proposed by The Board Of Directors is subject to the approval of the sh are holders in tits ensuing Annual General Meeting

During the year ended 31st March 2014, the amount of dividend per equity share recognised as distributions to equity shareholders was Rs. 0 50 (31st March,2013 - Rs.0,50). 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 a mounts, the distribution will be in proportion to the number of equity shares held by the shareholders

2. OTHER EXPLANATORY NOTES AND INFORMATION;

A. Amount of Income Tax has been provided on Taxable Income of the Company as per provision of the Income Tax Act, 1961.

B. The Board of Directors are of the opinion that discounted net future generation from the Assets in use and shown in the schedule of fixed assets, is more than the carrying amount of fixed assets in Balance Sheet, as such, no provision for Impairment of Assets is required to be made in terms of the requirement of accounting standard (AS - 28) "Impairment of Assets" issued by the Institute of Chartered Accountants of India for the year ended 31.03.2014.

C. Segment Reporting :

The Company operates in one reportable segments i.e. Manufacturing and Trading of Bulk Drug Intermediate.

D. The Investment made by the company is held in its own name.

E. On 10.06.2011, there was a fire incident at Company's factory unit sstuated at Sanwer Road, Indore. Madhya Pradesh. A part of the inventory of Raw Material, Finished Goods, Stock in process, Plant & Machinery, accessories, Building, furniture and other office equipments was damaged. The Company has already lodged insurance claim with the insurance Company after providing salvage value for above damage. Company is confident to receive the full claim and hence the company has not provided any losses on account of fire at this stage and suitable treatment will be given after the settlement of claim with the insurance company.

F. Company has not reduced Depreciation cost of Rs. 645906.83 related to Plant & Machinery received from UNIDO. The said amount is to be charged to Capital Reserve under the head "Reserves & Surplus". As a result, the profit before tax of the company has been reduced by Rs. 645906.83 and accordingly, Capital Reserve has been increased by to that extent.

G In the opinion of Board and to the best of their knowledge and belief,

All the current assets, loans and advances will have the value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

Provision for all known liabilities is adequate and not in excess of the amount reasonably necessary. There is no liability contingent or otherwise except those stated in the Balance Sheet.

H. Debit and credit balances are subject to reconciliation and confirmation.

I The expenses of Salary and wages debited in Statement of Profit & Loss includes the amount of Director Remuneration of Rs. 78,00,000/- (P.Y. Rs.73.20,000/-).

3. Previous year figure have been classified, regrouped and recast to make comparable with those of year under review.

---

Mar 31, 2013

A.. Amount of Income Tax has been provided on Taxable Income of the Company as per provision of the Income Tax Act, 1961.

B. The Board of Directors are of the opinion that discounted net future generation from the Assets in use and shown in the schedule of fixed assets, is more than the carrying amount of fixed assets in Balance Sheet, as such, no provision for Impairment of Assets is required to be made in terms of the requirement of accounting standard (AS - 28) "Impairment of Assets" issued by the Institute of Chartered Accountants of India for the year, ended 31.03.2013.

C. Segment Reporting:

The Company operates in one reportable segments i.e. Manufacturing of Bulk Drug Intermediate and Trading of Bulk Drug Intermediate and formulation.

D. The Investment made by the company is held in its own name.

E. On 10.06.2011, there was a fire incident at Company''s factory unit situated at Sanwer Road, Indore, Madhya Pradesh. A part of the inventory of Raw Material, Finished Goods, Stock in process, Plant & Machinery, accessories, Building, furniture and other office equipments was damaged. The Company has already lodged insurance claim with the insurance Company after providing salvage value for above damage. Company is confident to receive the full claim and hence the company has not provided any losses on account of fire at this stage and suitable treatment will be given after the set dement of claim with the insurance company.

F. During the year under review, the Company has changed the policy for accounting of Gratuity from actual payment basis to provisional basis. Gratuity liability up to 31.03.2012 of Rs.70,86,218/- has been charged to brought forward amount of Statement of Profit & Loss and Gratuity Liability of Rs.10,70,576/- for the year under review has been charged to Statement of Profit & Loss. Company has paid actual Gratuity amount of Rs.56,150/- during the year under review. If the Company has not changed the policy, the Profit of the Company would have been higher by Rs.l 0,70,576/-.

The rate of escalation in salary (p.a.) considered in actuarial valuation is worked out after into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. Mortality rate are obtained from the relevant data of Life Insurance Corporation of India.

---

Mar 31, 2010

1. Contingent Liabilities not provided for:

Bank Guarantee to custom authorities Rs. 3,55,824 (3,55,824). For the same above the Company has deposited F.D.R. of full amount.

2. The Company does not provide for Leave Encashment benefit and Gratuity liability on accrual basis since the same is accounted for on cash basis

3. The Company has received advance licenses for duty free imports against exports made or to be made, from Joint Controller of Exports & Imports. The Company has treated these as stock, as the imports there against will be made in future. However, no authoritative Guidance Note from the Institute of Chartered Accountants of India is available on this item except the opinion of the Expert Advisory Committee.

4. Payment of Remuneration to Director Rs. 2,60,000.00 (1,20,000.00)

5. In the opinion of the Board of Directors of the Company, the current assets, loans and advances have a value on realisation in the ordinary course of business at least equal to the amount which they are stated and the provisions for all known liabilities are adequate and not in excess of the amount reasonably necessary.

6. Previous year figures have been placed in brackets and have been re-grouped and re- arranged wherever necessary.

7. Some additional information figures have not been given due to practical difficulty in giving the same as informed by the Company.