Note 1 : Significant Accounting Policies: Overview

Lactose (India) Limited ("The Company") is a listed company domiciled in India and incorporated under the provisions of Companies Act, 1956.Company is a Pharmaceutical Company and engaged in the Business of Manufacturing,trading and carrying out job work and Trading of Pharmaceutical Products. The equity of the company is listed on the Bombay Stock Ex.change

A Basis of Accounting:

a) The Financial Statements have been brpared in compliance with the Accounting Standards specified under section 133 of the Companies Act, 2013 read with Rules 7 of the Companies (Accounts) Rule, 2014

b) Financial Statements are based on historical cost convention and are brpared on accrual basis. B Use of Estimates:

The brparation of financial statements in conformity with Generally Accepted Accounting Principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the financial statements and the reported amounts of revenues and expenses during the reporting period.Difference between actual results and estimates are recognized in the periods in which the results are known/ materialized.

C Revenue Recognition

i) Revenue is recognised when it is earned and no significant uncertainty exists as to its realisation or collection.

ii) Interest is recognised on a time proportion basis taking in to account the amount outstanding and the rate applicable.

iii) Revenue in respect of export sales is recognised on shipment of products.

iv) Dividend income is recognised when right to receive the same is established.

v) Rental Income is recognized on accrual basis as per the terms of agreement

vi) Revenue from conversion charges is recognised on completion of particular Job work.

D Purchases are stated inclusive of custom duty, clearing & forwarding charges and net of discounts, returns, VAT and rate differences.

E Sales are inclusive of excise duty & sales tax and are stated net of discounts, returns and rebates. F Fixed Assets:

Fixed Assets are stated at actual cost less accumulated debrciation. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

G Impairment of Fixed Assets

At the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assets by considering the indication that an impairment loss may have occurred in accordance with Accounting Standard 28 on "Impairment of Assets". Where the recoverable amount of any fixed assets is lower than its carrying amount, a provision for impairment loss on fixed assets is made for the difference.

H Debrciation:

Debrciation on Fixed Assets has been provided on 'Straight Line Method' as per their useful life and in the manner brscribed in the Schedule II of the Companies Act, 2013.

I Borrowing Costs

Borrowing costs are recognised as an expense in the period in which they are incurred except the borrowing cost attributable to the acquisitions / constructions of a qualifying assets which are capitalised as a part of the cost of the fixed assets, up to the date, the assets are ready for its intended use.

J Inventories

Items of inventories are measured at lower of cost and net realisable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective brsent location and condition.

Cost of finished goods, raw materials, work-in-progress, stores and spares, packing materials, trading and other products are determined on First in First out (FIFO) basis.

K Investments

Investments that is intended to be held for more than a year from the date of acquisition are classified as long term investments and are carried at cost less any provision for other than temporary diminution in value. Investments other than long term investments being current investments are valued at cost or fair market value whichever is lower.

L Employee Benefits

i) Company's contribution to Provident Fund and other Funds for the year is accounted on accrual basis and charged to the Statement of Profit & Loss for the year.

ii) Retirement benefits in the form of Gratuity are considered as defined benefit obligations and are provided on the basis of the actuarial valuation, using the projected unit credit method as at the date of the Balance Sheet.

M Provisions and Contingent Liabilities

i) Provisions are recognized in terms of Accounting Standard 29- "Provisions, Contingent Liabilities and Contingent Assets specified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 when there is a brsent legal or statutory obligation as a result of past events where it is probable that there will be outflow of resources to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

ii) Contingent Liabilities are recognized only when there is a possible obligation arising from past events due to occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or where reliable estimate of the obligation cannot be made. Obligations are assessed on an ongoing basis and only those having a largely probable outflow of resources are provided for.

iii) Contingent Liabilities are disclosed by way of notes.

N Foreign Currency Transactions

i) The transactions in foreign currencies on revenue accounts are stated at the rate of exchange brvailing on the date of transactions.

ii) The difference on account of fluctuation in the rate of exchange, brvailing on the date of transaction and the date of realisation are recognised as Income or Expenses.

iii) Differences on translation of Current Assets and Current Liabilities remaining unsettled at the year-end are recognised as Income or Expenses.

iv) Exchange difference on translation or settlement of long term foreign currency monetary items (i.e. whose term of settlement exceeds twelve months from date of its origination) at rates different from those at which they were intially recorded or reported in the brvious financial statement, in so far as it relates to acquistions of debrciable assets are adjusted to the cost of the assets and debrciated over the remaining useful life of such assets. In other cases, these are accumulated in "Foreign currency monetary item translation difference account" and amortised by recognitions as income or expenses in each period over the balance term of such item till settlement occurs but not beyond March, 2020

O Accounting for Government Grants

i) Capital subsidy received from Government which is not attributable to any fixed asset is reflected under the head 'Capital Reserve'.

ii) Subsidy for acquiring certain fixed assets is deducted from the cost of the related fixed assets.

P Accounting for Taxation of Income

Current Taxes

Provision for current income-tax is recognized in accordance with the provisions of Indian Income- tax Act, 1961 and is made annually based on the tax liability after taking credit for tax allowances and exemptions.

Deferred Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for income tax and the profits as per the financial statements. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantially enacted at the Balance Sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in the future. Deferred tax assets are reviewed as at each Balance Sheet date.

Note 2 : Commitments

Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs. 1,48,39,714/ - (PY: Rs. 7,39,39,966/-).

Note 3 :

In the opinion of the Board the Current Assets and Long Term Loans and advances, are realisable in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet. The provision for all known liabilities is adequate and not in excess of amount reasonably necessary.

Note 4 :

Balances of trade receivables, payables, loans and advances are subject to confirmation, reconciliation and consequential adjustment, if any. Consequently revenue impact, brsently is not ascertainable, will be considered as and when determined.

Note 5 :

a) During the FY 2013-14, the Company had commenced production of its upgraded manufacturing facility to manufacture up to 10000 metric tons 200 Mesh Lactose per year exclusively for Kerry Indegrients India Private Limited (KIIPL) and accordingly as per the manufacturing agreement with KIIPL , has recognised during the year income of Rs. 57,77,200 (P.Y. Rs. 33,70,033/-) on proportionate basis out of total Advance Manufacturing Consideration amounting to Rs. 5,77,72,000 and the balance of Rs. 57,77,200/ - (P.Y. Rs. 57,77,200/- is disclosed under the head "Other Current liability" and Rs. 4,28,47,561/-(P.Y. Rs. 4,86,24,767/-) is disclosed under the head "Other Long term liability".

b) During the year, Company has received an advance amounting to Rs. 2,60,00,000/- from Sanofi India Limted for procurement of machinery, equipment and carrying out civil work for structural modification of manufacturing facility exclusively meant for Sanofi India Limited through an agreement dated 10th April, 2014 and addendum thereto dated 1st January, 2015.As per said agreement, advance payment is to be adjusted by way of monthly deductions by Sanofi India Limited equivalent to 20% of the Conversion and Packaging charges billed to Sanofi India Limited by Lactose (India) Limited from F.Y 2015-2016.Accordingly, out of advance of Rs. 2,60,00,000/-, Rs. 36,00,000/- is disclosed under the head "Other Current liability" and Rs. 2,24,00,000/- is disclosed under the head "Other Long term liability" on estimated basis.

Note 6 : Segment Reporting Basis of brparation

In accordance with the requirements of Accounting Standard 17 "Segment Reporting", the Company's business consists of one reportable business segment i.e., "Manufacturing & Trading of Pharmaceutical Products", hence no separate disclosures pertaining to attributable Revenues, Profits, Assets, Liabilities, Capital Employed are given.

Note 7 : Debrciations

Effective from April 1, 2014, the Company has charged debrciation on its assets based on their useful life as stipulated under Schedule II of the Companies Act, 2013. Due to this, the debrciation for the year ended on 31st March, 2015 is lower by Rs.49,13,249/ - as compared to the debrciation computed under the earlier provisions of the Companies Act, 1956.

Note 8 :

Previous year's figures have been re-grouped / re-classified to conform to this year's classification.

In terms of our report of even date

For S G C O & Co.

Chartered Accountants

.M. Tulsian

Partner

Mem. No. 38430

For and on behalf of the Board of Directors of Lactose (India) Limited

Atul Maheshwari Managing Director

Sangita Maheshwari Whole Time Director

KPlace : Mumbai

Date : 28th May, 2015

Place : Mumbai

Date : 28th May, 2015