NOTES FORMING PART OF THE FINANCIAL STATEMENTS

1. General Information of the Company.

Mercury Laboratories the registered partnership firm started its business activity in the year 1962. Subsequently it converted into Private Ltd. Company, & incorporated in the year 1982. Later it further converted into Limited Company in the year 1992 in state of Maharashtra. The company has obtained ISO 9001:2008 registration and engaged in the business of Pharmaceutical items. The company is profit making and dividend paying Public Limited Company.

The Company made its public issue in the year 1992 and is listed on the OTC Stock Exchange.

2. Note on amalgamation:

Mercury Laboratories Limited (MLL) (Transferee Company) was incorporated in the year 1992 and engaged in the business of manufacturing, exporting & importing of Pharmaceutical Drugs & Medicines. Mercury Antibiotics Private Limited (MAPL) (Transferor Company) was incorporated in the year 1989 and it is engaged in the business of manufacturing, importing, exporting of pharmaceutical Drugs, Medicines formulations, Bulk Drugs including a wide variety of Oral Dosage Products such as Liquids, Syrups and Dry Powder based medicinal products. Both the Companies have been promoted by Shri Dilip R. Shah & Shri Rajendra R. Shah having a several decades of experience and standing in the pharmaceutical companies.

The Board of Directors of MAPL (Transferor Company) & the Board of Directors of MLL (Transferee Company) have respectively passed the resolutions on 05th January, 2012 to amalgamate both the companies. The scheme of amalgamation has been brsented under Section 391 to Section 394 of the Companies Act, 1956 to Honorable High Court at Mumbai (Maharastra).

The Board of Directors has passed the resolution dated 3rd April, 2014 after due deliberation and decided to withdraw the application made to Honorable High Court of Mumbai for amalgamation of the two companies decided in the earlier year.

3. Significant Accounting Policies

a. Basis of Preparation of Financial Statements

The Accounts are brpared under the historical cost convention and using the accrual method of accounting, unless otherwise stated hereinafter, to comply in all material aspects, with the mandatory accounting standards as notified by the Companies (Accounting Standard) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956 and in conformity with accounting principles generally accepted in India. Accounting Policies, not specifically referred to, are consistent and in consonance with generally accepted accounting principles.

b. Use of Estimates:

The Preparation and Presentation of Financial Statements as per the above bases required the management to make estimates and assumptions that may affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the balance sheet and the reported amounts of incomes and expenses during the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from those estimated.

c. Fixed Assets

i. Fixed Assets are stated at their cost of acquisition less accumulated debrciation. The cost of acquisition includes freight, installation cost, duties, taxes and other incidental expenses, identifiable with the asset, incurred during the installation / construction stage in order to bring the assets to their working condition for intended use.

ii. The Company takes Modvat Credit for the excise duty element in the cost of the Fixed Assets purchased. Furthermore, the Company also receives subsidies against purchase and installation of new plant and machinery in some cases. The cost of assets purchased which is disclosed under the head "Fixed Assets" and for the purpose of debrciation is after deducting the excise duty element as well as the subsidies received.

d. Debrciation / Amortisation:

i. Debrciation on assets is being provided on the Straight Line Method on the basis of useful lives specified in part C of schedule II to the Companies Act, 2013.

ii. No debrciation is being provided on the assets sold during the year. On the additions during the year, debrciation has been provided pro-rata on the basis of number of days for which the asset was used during the year.

e. Inventories

i. Raw Materials and Packing Materials are valued 'at Cost' on FIFO basis. 'Cost' includes all duties, taxes and other expenses incurred to bring the inventories to their brsent location and condition, except duties and taxes which are subsequently recoverable from the taxing authorities.

ii. Finished goods produced by the company are valued at lower of cost or net realizable value.

iii. Semi-Finished goods have been valued at Raw Material cost increased by a proportion of over heads in consonance with the stage of completion as certified by the management.

iv. Stock of goods purchased for resale purposes are valued at their acquisition cost inclusive of all duties and taxes.

f. Foreign Currency Transactions

Transactions in foreign currency are recorded in Indian Rupees at the exchange rate brvailing on the date of the transactions. Exchange gains or losses on settlement, if any, are treated as income / expenditure respectively in the Statement of Profit & Loss except those relating to acquisition of fixed assets, if any, which are adjusted in the cost of such assets. Liabilities in foreign currency as well as receivables in foreign currency as on the date of the Balance Sheet have been restated at the rates of exchange brvailing as on the date of Balance Sheet. However, if the liabilities / receivable have been actually realised subsequently, the same have been recorded at that value.

g. Retirement Benefits

Employee Benefits comprise short term as well as long term defined benefit as well as defined contribution plans.

Contributions to Provident Fund are defined contributions. The Company's Contributions are charged to the Statement of Profit and Loss of the year when the contributions to the respective funds are due. There are no further obligations beyond the periodic contributions.

Retirement Benefits in form of Gratuity are defined benefit obligations and are provided for on the basis of actuarial valuation using projected unit credit method as at the balance sheet date. Actuarial gain / losses are immediately taken to the Statement of Profit and Loss and are not deferred.

Entitlement of employees accumulating earned leave and eligibility of compensation or encashment of the same is also a defined benefit obligation. In terms of the policy of the Company regarding accumulation of earned leave or encashable or compensatory leave, the obligation is treated as long term in nature. The value of obligation towards the same is provided for on the basis of actuarial valuation using projected unit credit method as at the balance sheet date. Actuarial gain / losses are immediately taken to the Statement of Profit and Loss and are not deferred.

h. Borrowing Costs

General or specific borrowing costs directly attributable to purchase / construction or production of qualifying assets are capitalized as part of the cost of that Fixed Asset. A qualifying asset is one that necessary takes substantial period of time to get ready for its intended use. All other borrowing costs are charged as an expense in the period in which they are incurred.

i. Taxes on Income

i. Provision for taxation for the year under report includes provision for current tax, unassesed liability of brvious years income tax as well as provision for deferred tax.

ii. Provision for Current tax is made, based on tax estimated to be payable as computed under the various provisions of the Income Tax Act, 1961.

iii. Deferred tax is recognised, subject to prudence, on timing differences between taxable income and accounting income that originate during the year and are capable of being reversed in one or more subsequent periods. Deferred tax assets are recognised only to the extent that there is a reasonable certainty that future taxable income will be available against which such deferred tax assets can be realised.

iv. Deferred Tax Liabilities / Assets are quantified using the tax rates and tax laws enacted or substantively enacted as on the balance sheet date.

j. Impairment of Assets:

Assessment of Impairment of Assets (as covered under AS-28 Impairment of Assets) is done as at the Balance Sheet Date considering external and internal impairment indicators. If there is an indication that an asset may be impaired, its recoverable amount is estimated and the excess of carrying amount over recoverable amount is provided for as impairment loss.

k. Contingencies / Provisions:

Contingencies which can be reasonably ascertained are provided for i.e. a provision is recognized when the Company has a brsent obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reasonable estimate can be made. Provisions are not discounted to their brsent value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.Other Contingencies, the outcome of which is not certain, have been disclosed in these notes as Contingent Liabilities. Contingent Assets have not been provided for.

I. Changes in Accounting Policy:

Changes in Accounting Policies, having a material bearing on the financial affairs of the Company are disclosed separately along with the amount by which any item in the financial statements is affected by such change wherever same is available

SECURED LOAN

The State Bank of India has sanctioned various credit facilities which are working capital finance, Export Credit facility & FCNRB which is secured by way of Equitable mortgage over factory, land & building at Vadodara & at Jarod, District Vadodara & against Hypothecation charged over Plant & Machinery at Baroda & Jarod & against the stock of inventories & book-debts of the company.

UNSECURED DEPOSITS

The amount taken as deposits from directors and members are unsecured and are for the period of 36 months. Interest on unsecured deposits has been paid atthe rate of 8 percent.

1. Impairment of Assets :

As a tool to measure to the value of fixed assets, the Company has considered the technical Valuation carried out by expert. In terms of the same and further in absence of any indications, external or internal, as to any probable impairment of assets, no provision has been made for same during year under report.

2. The figures in respect of brvious year have been re-grouped / recast wherever necessary to confirm to the current year's classification.

For Naresh & Co.

Chartered Accountants

Mercury Laboratories Ltd.

F.R.N. 106928W  

For and on behalf of the Board of Directors of

Chairman & Managing Director

Director

CAAnil Shah  

Partner

Mem. No.: 035309

Chief Financial Officer Company Secretary

Place : Baroda

Date : 31s" July 2015