NOTES ON FINANCIAL STATEMENTS FOR THE YEAR ENDED ON MARCH 31, 2016

1. SIGNIFICANT ACCOUNTING POLICIES

1.1. BASIS OF ACCOUNTING

The Financial statements are brpared on mercantile basis under the historical cost convention in accordance with the generally accepted accounting principles in India, Accounting Standards notified under Section 133 of the Companies Act, 2013 and the other relevant provisions of the Companies Act, 2013.

1.2. REVENUE RECOGNITION

All revenue and expenses are accounted for on accrual basis. Revenue is recognized when no significant uncertainties exist in relation to the amount of eventual receipt.

1.3. FIXED ASSETS

Fixed Assets are stated at cost of acquisition and includes other direct / indirect and incidental expenses incurred to put them into use but excludes CENVAT availed on such assets. Whenever, the cost of the fixed asset are met under the specific contract by third party, the same is reduced from the cost of the respective fixed asset.

All indirect expenses incurred during project implementation and on trial run are treated as incidental expenditure during construction and capitalized.

1.4. DEbrCIATION

Debrciation is provided based on the useful life specified in Schedule II to the Companies Act, 2013. Premium paid for leasehold land is amortized over the lease period.

1.5. INTANGIBLES

Intangible assets are stated at costs less accumulated amortization.

Intangible assets are amortized over a period of 3 years.

1.6. IMPAIRMENT OF ASSETS

Where there is an indication that an asset is impaired, the recoverable amount, if any, is estimated and the impairment loss is recognized to the extent carrying amount exceeds recoverable amount.

1.7. PROVISIONS AND CONTINGENCIES

The Company creates a provision when there is a brsent obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or brsent obligation that probably will not require an outflow of resources or where reliable estimate of the amount of the obligation cannot be made.

1.8. INVENTORIES

Inventories are stated at the lower of cost or net realizable value. Cost is determined on the basis of Moving Weighted Average method. The cost of work in progress (other than those lying at third party manufacturing site which is valued at material cost) and finished goods comprise direct material, direct labour, other direct cost and related production overheads.

1.9. INVESTMENTS

Investments, which are long term in nature, are stated at cost of acquisition with provision where necessary for diminution, other than temporary, in the value of investments. Current investments are carried at lower of cost or market value and quoted/fair price, computed category wise.

1.10. EMPLOYEE BENEFIT

1.10.1 Short Term Employee Benefits

Short term employee benefits are recognized in the period during which the services have been rendered.

1.10.2 Long Term Employee Benefits:

a. Provident Fund, Family Pension Fund & Employees' State Insurance Scheme

As per the Employees Provident Funds and Miscellaneous Provisions Act, 1952 all employees of the Company are entitled to receive benefits under the provident fund & family pension fund which is a defined contribution plan. These contributions are made to the fund administered and managed by Government of India. In addition, some employees of the Company are covered under Employees' State Insurance Scheme Act 1948, which are also defined contribution schemes recognized and administered by Government of India.

The Company's contributions to these schemes are recognized as expense in profit and loss account during the period in which the employee renders the related service. The Company has no further obligation under these plans beyond its monthly contributions.

b. Superannuation Plan:

Some employees of the Company are entitled to superannuation, a defined contribution plan

which is administrated through Life Insurance Corporation of India ("LIC"). Superannuation benefits are recognized in the Profit and loss account.

c. Leave Encashment:

The Company provides for the liability at year end on account of unavailed earned leave as per the actuarial valuation.

d. Gratuity:

The Company provides for gratuity obligations through a Defined benefits Retirement plan ('The Gratuity Plan') covering all employees. The brsent value of the obligation under such Defined benefits plan is determined based on actuarial valuation using the Project Unit Credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up final obligation. The obligation is measured at the brsent value of the estimated cash flows. The discount rate used for determining the brsent value of the defined obligation under defined benefit plan, is based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognized in profit and loss account as and when determined.

The Company makes annual contribution to LIC for the gratuity plan in respect of all the employees liability on the basis of actuarial valuation done by the LIC.

1.11. FOREIGN CURRENCY TRANSACTION

Transactions in foreign currency are recorded at the exchange rate brvailing on the date of the transaction. Foreign currency denominated monetary assets and liabilities at the balance sheet date are translated at the exchange rate brvailing on the date of Balance Sheet. Exchange rate differences resulting from foreign exchange transactions settled during the period including year-end translation of assets and liabilities are recognized in the profit and loss account.

In case of forward exchange contracts or any other financial instruments that is in substance a forward exchange contract to hedge the foreign currency risk which is on account of firm commitment and/or is a highly probable forecast transaction, the brmium or discount arising at the inception of the contract is amortized as expense or income over the life of contract.

Gain/Loss on settlement of transaction arising on cancellation or renewal of such a forward exchange contract is recognized as income or expense for the period.

1.12. LEASES

Leases wherein a significant portion of the risks and reward of ownership are retained by the lessor are classified as Operating Leases. Lease rentals in respect of such leases are charged to the profit and loss account.

1.13. RESEARCH AND DEVELOPMENT

Revenue expenditure on Research and Development is charged to the profits of the year in which it is incurred.

Capital expenditure on Research and Development is treated as fixed assets.

1.14. BORROWING COST

Borrowing Costs directly attributed to the acquisition of fixed assets are capitalized as a part of the cost of asset upto the date the asset is put to use. Other Borrowing Costs are charged to the profit and loss account in the year in which they are incurred.

1.15. INCOME TAX

a. Tax expenses comprise of current and deferred tax.

b. Provision for current income tax is made on the basis of relevant provisions of the Income Tax Act, 1961 as applicable to the financial year.

c. Deferred Tax is recognized subject to the consideration of prudence on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

d. Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period.

1.16. EMPLOYEE STOCK OPTION PLAN

The accounting value of stock options rebrsenting the excess of the market price over the exercise price of the shares granted under "Employees Stock Option Scheme" (ESOP) of the Company is amortized on straight line basis over the vesting period as "Deferred Employees Compensation".

2. Travelling expenses of field personnel include incidental expenses on conveyance, postage, stationery and miscellaneous expenses, etc.

3. The amount of Excise Duty disclosed as deduction from turnover is the Excise duty for the year, except the excise duty related to the difference between the closing stock and opening stock and excise duty paid but not recovered, which has been disclosed in the (increase)/decrease in stock and other expenses respectively. (Increase)/ Decrease in stocks includes excise duty on finished goods lying at plants (net) Rs. 56.33 lakhs, (Previous year Rs. 35.11 lakhs).

4. SEGMENT REPORTING:

The Company has one segment of activity namely 'Pharmaceuticals'

5. Figures of brvious year have been re-grouped, rearranged and recast, wherever considered necessary. Figures of brvious year include figures of amalgamating companies & are, therefore, strictly not comparable with those of current year.

6. Figures in brackets indicate corresponding figures of brvious year.

As per our report of even date

For J. K. Shah & Co.

Chartered Accountants

Firm Registration No. 109606W

J. K. Shah

Partner

Membership No. 03662

Place : Mumbai Date : May 20, 2016

For and on behalf of the Board of Directors

J. B. Mody Chairman & Managing Director

S. B. Mody Whole time Director (Marketing)

D. B. Mody Whole time Director (Administration)

Vijay D. Bhatt Chief Financial Officer

M. C. Mehta Company Secretary

Place : Mumbai

Date : May 20, 2016