1) The term loan of USD 100 million (March 31, 2016: USD 100 million; April 01,2015 : USD 90 million) amounting to Rs, 648.75 crore (March 31, 2016: Rs, 662.60 crore; April 01, 2015 : Rs, 562.50 crore) is secured by first charge on pari passu basis on fixed assets, present and future, located at all locations other than Units at Baddi in Himachal Pradesh and Kadaiya in Daman .This term loan carrying interest rate of 6 months USD LIBOR plus 325 BPS p.a. is repayable in 20 equal quarterly installments commencing from April 01, 2017.
2) The term loan of Rs, 250 crore (March 31,2016 : Rs, 250 crore: April 01, 2015: Rs, Nil) from IDBI Bank is secured by first charge on pari passu basis on fixed assets, present and future, located at all locations other than Units at Baddi in Himachal Pradesh and Kadaiya in Daman. This term loan carrying interest rate at Bank Base Rate plus 75 BPS p.a. is repayable in 10 equal half yearly installments commencing from December 31, 2017.
Further, the term loan of Rs, 250 Crore (March 31,2016 : Rs, 250 crore: April 01, 2015: Rs, Nil) from Bank of Maharashtra (''''BOM'''') is secured by first charge on pari passu basis on fixed assets, present and future, located at all locations other than Units at Baddi in Himachal Pradesh and Kadaiya in Daman. This term loan carrying interest rate at Bank Base Rate plus 25 BPS p.a. is repayable in 20 equal quarterly installments commencing from March 31, 2018.
3) The term loan from others is secured by first charge on pari passu basis by hypothecation of movable properties of the company (except book debts) at all locations. This term loan from others with interest rate of 2% p.a. is repayable in 10 equal half yearly installments having commenced from September 2013.
4) Interest free sales tax deferral loan is repayable in the month of May every year. This loan is repayable by May 2019.
5) Loans from others with interest rate of 3% p.a.is repayable in 10 equal annual installments. Loan amounting Rs, 0.57 crore (March 31, 2016: Rs, 0.76 crore; April 01, 2015 : Rs, 0.95 crore) is repayable by June 2019 and the balance Rs, 2.12 crore (March 31, 2016: Rs, 2.54 crore; April 01, 2015: Rs, 2.97 crore) by October 2021.
6) Preference share
*121,454,927 OCCRPS amounting to Rs, 60.72 crore and 475,659,941 NCRPS amounting to Rs, 237.83 crore were outstanding as on April 01, 2015 Subject to the approval of shareholders at the Annual General Meeting, Board of Directors have recommended dividend of 0.01% (at the rate of Rs, 0.0005 per share of Rs, 5/- each) on 475,659,941 NCRPS of Rs, 5/- each and 121,454,927 OCCRPS of Rs, 5/- each.
b) Issue of Preference Shares as per Corporate Debt Restructuring (CDR) Scheme:
Pursuant to approved CDR package against various liabilities, the Company has issued Preference shares of Rs, 5/- each to Banks/Financial Institutions on the following terms and conditions:
i) 121,454,927 (March 31, 2016: 121,454,927; April 01, 2015: 121,454,927) 0.01% Optionally Convertible Cumulative Redeemable Preference shares (OCCRPS Series 2) issued bilaterally to various Banks, on the following terms and conditions:
The Preference Share holders shall have the right to convert OCCRPS Series 2 along with accumulated dividend, into fully paid equity shares of the Company, in one or more tranches, commencing July 4, 2016 till December 31, 2018, at conversion price as per the applicable SEBI formula on the relevant date i.e June 04, 2016 .The said shares, in case not converted, shall get redeemed along with accumulated dividend on December 31, 2018 without any redemption premium. No shareholders have exercised the right of conversion till date.
ii) 32,265,110 (March 31,2016 : 32,265,110; April 01, 2015 : 32,265,110) 0.01% Non - Convertible Cumulative Redeemable Preference shares (NCRPS Series 2), redeemable at a premium of 20% of the face value along with cumulative dividend on December 31, 2018.
iii) 283,394,831 (March 31,2016: 283,394,831; April 01,2015: 283,394,831) 0.01% Non - Convertible Cumulative Redeemable Preference shares (NCRPS Series 3) issued bilaterally to various Banks, redeemable at a redemption premium calculated at 4% p.a. on simple basis along with cumulative dividend on December 31, 2018.
iv) 160,000,000 (March 31, 2016: 160,000,000; April 01, 2015: 160,000,000) 0.01% Non - Convertible Cumulative Redeemable Preference shares (NCRPS Series 5), redeemable at a premium of 20% of the face value along with cumulative dividend on March 31, 2019.
c) Effective interest rate for the above preference shares is in the range of 10.8%-12%
ii) Significant management judgment is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income by each jurisdiction in which the relevant entity operates and the period over which deferred income tax assets will be recovered.
iii) Given that the Company does not have any intention to dispose investments in subsidiaries in the foreseeable future, deferred tax asset on indexation benefit in relation to such investments has not been recognized. Further, the Company does not have any intention to dispose the land on an individual basis, hence deferred tax asset on the indexation benefit on land has not been recognized.
iv) No deferred tax asset has been created on the loss that would get reversed during the tax holiday period amounting Rs, 121.78 crore (Previous year: Rs, 121.78 crore).
1) Working capital facilities from Banks are secured by way of :
i) First charge on pari passu basis on present and future stock of raw materials, consumables, spares, semi-finished goods, finished goods, book debts and other current assets.
ii) Second charge on pari passu basis by way of mortgage of immovable properties and hypothecation of movable assets, both present and future, located at all locations (other than Units at Baddi in Himachal Pradesh and Kadaiya in Daman). Refer Note 11 to Note 14 for carrying amount of current financial assets on which charge has been created.
2) Buyers'''' credit availed from Yes Bank, ICICI Bank and IDBI Bank are secured by way of first pari passu charge on the entire current assets and second pari passu charge on all fixed assets located at all locations other than Units at Baddi in Himachal Pradesh and Kadaiya in Daman . Buyers'''' credit availed from State Bank of India (SBI) and ICICI Bank during 2014-15 has been fully repaid during
2015-16. Buyers'''' credit availed from SBI were secured by way of first charge on the specific assets and by way of second charge on the entire current assets and second subservient charges on all fixed assets, present and future, located at all locations other than Units at Baddi in Himachal Pradesh and Kadaiya in Daman . Refer Note 11 to Note 14 for carrying amount of current financial assets on which charge has been created.
The above information is given to the extent available with the Company and relied upon by the auditor.
7. SEGEMENT REPORTING
As the Company''''s annual report contains both Consolidated and Standalone Financial Statements, segmental information is presented only on the basis of Consolidated Financial Statement.
8. OPERATING LEASE
The Company has taken land and office premises on operating lease which are cancellable.
These leave and license agreements for the office premises are generally for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. There are no restrictions imposed by lease arrangements or any contingent rents payable . There are no subleases.
The land lease is for a period of 5 to 10 years and are renewable by mutual consent on mutually agreeable terms. There are no escalation in the lease amounts. There are no restrictions imposed by lease arrangements or contingent rent payable. Certain portion of the land has been subleased .
9. FINANCE LEASE
The Company has entered into finance lease for land. These leases are generally for a period ranging 95 years to 99 years. These leases can be extended for further 95 to 99 years. No part of the land has been sub leased. Except for the initial payment, there are no material annual payments for the aforesaid leases. Refer Note 4 for carrying value.
10 . EMPLOYEE BENEFITS
Gratuity liability is provided in accordance with the provisions of the Payment of Gratuity Act, 1972 based on actuarial valuation. The plan provides a lump sum gratuity payment to eligible employee at retirement or termination of their employment. The amounts are based on the respective employee''''s last drawn salary and the years of employment with the Company.
The most recent actuarial valuation of the defined benefit obligation was carried out at the balance sheet date. The present value of the defined benefit obligations and the related current service cost and past service cost were measured using the Projected Unit Credit Method.
Based on the actuarial valuation obtained in this respect, the following table sets out the details of the employee benefit obligation as at balance sheet date:
a) Amount recognized as an expense in the Statement of Profit and Loss and included in Note 30 under "Salaries and wages” : Gratuity Rs, 4.79 Crore (Previous year - Rs, 3.91 crore) and Leave encashment Rs, 15.46 crore (Previous year - Rs, 12.55 crore)
b) The estimates of future salary increases considered in the actuarial valuation take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
c) The plan above is typically exposed to actuarial risk such as interest risk, mortality risk and salary risk.
a) Interest risk: The decrease in the bond interest rate will increase the liability.
b) Mortality risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''''s liability.
c) Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''''s liability.
(B) Defined contribution plan -
The Company makes contributions towards provident fund and superannuation fund which are in the nature of defined contribution post employment benefit plans. Under the plan, the Company is required to contribute a specified percentage of payroll cost to fund the benefits.
Amount recognized as an expense in the Statement of Profit and Loss - included in Note 30- "Contribution to provident and other funds” '''' 20.57 crore (Previous Year - '''' 18.87 crore).
The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.
11. RELATED PARTY DISCLOSURES
As per Ind AS 24, the disclosure of transactions with the related parties are given below:
a) Parties where control exists
Subsidiary Companies (including step down subsidiaries) 17 Nonash Limited
1 Wockhardt UK Holdings Limited (formerly, Wockhardt UK 18 Laboratoires Negma S.A.S. (formerly Negma Lerads S.A.S.) Limited) 19 Wockhardt France (Holdings) S.A.S.
2 CP Pharmaceuticals Limited 20 Wockhardt Holding Corp
3 CP Pharma (Schweiz) AG 21 Morton Grove Pharmaceuticals, Inc.
4 Wallis Group Limited 22 MGP Inc.
5 The Wallis Laboratory Limited 23 Laboratoires Pharma 2000 S.A.S. (formerly Pharma 2000
6 Wockhardt Farmaceutica Do Brasil Ltda S.A.S.)
7 Wallis Licensing Limited 24 Niverpharma S.A.S.
8 Wockhardt Infrastructure Development Limited 25 Negma Beneulex S.A.
9 Z & Z Services (formerly esparma GmbH) 26 Phytex S.A.S.
10 Wockhardt Europe Limited 27 Wockhardt Farmaceutica SA DE CV (w.e.f. November 09,
11 Wockhardt Nigeria Limited 2012)
12 Wockhardt USA LLC w.e.f. October 3, 2008 (formerly 28 Wockhardt Services SA DE CV (w.e.f. June 21, 2012) Wockhardt USA Inc.) 29 Wockhardt Bio AG (formerly Wockhardt EU Operations
13 Wockhardt UK Limited (Swiss) AG)
14 Wockpharma Ireland Limited 30 Wockhardt Bio (R) LLC (w.e.f. August 25, 2015)
15 Pinewood Laboratories Limited 31 Wockhardt Bio Pty Limited (w.e.f. August 19, 2015)
16 Pinewood Healthcare Limited (w.e.f. November 23, 2012) 32 Wockhardt Bio Limited (w.e.f. November 11, 2015)
Swiss Biosciences AG (liquidated on April 13, 2015)
Other parties exercising control
Humuza Consultants (w.e.f. July 08,2014)*
* Themisto Trustee Company Private Limited holds shares in the Company in its capacity as the trustee of Habil Khorakhiwala Trust which in turn holds these shares in its capacity as the partner of the partnership firm Humuza Consultants.
Habil Khorakiwala Trust (w.e.f. March 22, 2017)**
** Themisto Trustee Company Private Limited holds shares in the Company in its capacity as the trustee of Habil Khorakhiwala Trust.
b) Other related party relationships where transactions have taken place during the year Enterprises over which Key Managerial Personnel exercise significant influence/control
The Peace Mission Private Limited w.e.f. 28.12.2016 (formerly Tohfaa Gifting Private Limited)
Palanpur Holdings and Investments Private Limited
Khorakiwala Holdings and Investments Private Limited - w.e.f. July 08, 2014
Dartmour Holdings Private Limited
Wockhardt Hospitals Limited
Amalthea Consultants (w.e.f. July 08,2014)
Lysithea Consultants (w.e.f. July 08,2014)
HNZ Consultants (w.e.f. July 08,2014)
Amalthea Discretionary Trust (w.e.f. March 23, 2017)
Lysithea Discretionary Trust (w.e.f. March 23,2017)
HNZ Discretionary Trust (w.e.f. March 23, 2017)
Merind Limited Wockhardt Foundation
Carol Info Services Limited - w.e.f. July 08, 2014
Dr. Habil Khorakiwala Education and Health Foundation (Trust)-[Wockhardt Global School]
Key managerial personnel
H. F. Khorakiwala - Chairman
Shekhar Datta - Non-Executive Independent Director
Aman Mehta - Non-Executive Independent Director
D S Brar-Non - Executive Independent Director
Sanjaya Baru - Non-Executive Independent Director
Tasneem Mehta - Non-Executive Independent Director
Baldev Raj Arora - Non-Executive Independent Director (w.e.f. May 28, 2015)
Vinesh Kumar Jairath - Additional, Non-Executive Independent Director (w.e.f. November 10, 2016)
Huzaifa Khorakiwala - Executive Director Murtaza Khorakiwala - Managing Director
Relatives of Key managerial personnel
N. H. Khorakiwala
12. SHARE BASED PAYMENTS TO EMPLOYEES
The Compensation Committee of the Board of Directors has, under Wockhardt Stock Option Scheme -2011 (''''the Scheme'''' or ''''ESOS'''') granted 60,000 options @ '''' 397/- per option (Grant 1), another 60,000 options @ '''' 365/- per option(Grant 2), 1,420,000 options @ '''' 5/- per option(Grant 3), 350,000 options @ '''' 5/- per option (Grant 4), 8,500 options @ '''' 5/- per option (Grant 5), 200,000 options @ '''' 5/- per option (Grant 6), and 223,500 options @ '''' 5/- per option (Grant 7) in accordance with the provisions of Securities and Exchange Board of India (Share based Employee Benefits) Regulations, 2014, to the selected employees (including Independent Directors) of the Company and its subsidiaries. The method of settlement is by issue of equity shares to the selected employees (including Independent Directors) who have exercised the options. The scheme shall be administered by the compensation committee of Board of directors.
The options issued vests in periods ranging 1 year and 7 years 3 months from the date of grant, and can be exercised during such period not exceeding 7 years.
B. Measurement of fair values:
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
- The fair values of the loans taken from banks and other parties, and preference shares is estimated by discounting cash flows using rates currently available for debt/instruments on similar terms, credit risks and remaining maturities. Management regularly assesses a range of reasonably possible alternatives for those significant observable inputs and determines their impact on the total fair value.
- The fair value of Investment in Unquoted Equity shares of Narmada Clean Tech Limited (formerly known as Bharuch Eco-Aqua Infrastructure Limited) and Bharuch Enviro Infrastructure Limited are taken as cost of acquisition considering the statutory requirement of regulatory authorities relating to purchase and restriction on transfer. The change in the unobservable inputs for unquoted equity instruments does not have a significant impact in its value.
The following tables show the valuation techniques used in measuring Level 2 fair values, as well as the significant inputs used. Financial instruments measured at fair value
Type Valuation technique
Preference shares Discounted cash flows: The valuation model considers the present value of expected
Security deposits against lease receipt/payment discounted using appropriate discounting rates.
Mark to Market on Derivatives Forward pricing: The fair value is determined using quoted forward exchange rates at the
reporting date and present value calculations based on high credit quality yield curves in the respective currency.
13. FINANCIAL RISK MANAGEMENT
The Company has exposure to the following risks arising from financial instruments:
- Credit risk;
- Liquidity risk; and
- Market risk
i. Risk management framework
The Company''''s Board of Directors has overall responsibility for the establishment and oversight of the Company''''s risk management framework.
The Company''''s Risk Management Framework encompasses practices relating to the identification, analysis, evaluation, treatment, mitigation and monitoring of the strategic, external and operational controls risks in achieving key business objectives.
The Company has laid down the procedure for risk assessment and their mitigation through an internal Risk Committee. Key risks and their mitigation arising out of periodic reviews by the Committee are assessed and reported to the Audit Committee, on a periodic basis.
The Company''''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to policies and procedures.
The Company has an independent Internal Audit and assurance team. There is a practice of reviewing various key select risks and report to Audit Committee from time to time.
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''''s receivables from customers and investment securities. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred and expected losses in respect of trade and other receivables and investments.
Trade and other receivables
The Company''''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
As at March 31, 2017, March 31, 2016 and April 01, 2015, the Company did not have any significant concentration of credit risk with any external customers.
Expected credit loss assessment for customers as at April 01,2015, March 31,2016 and March 31,2017:
The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available information etc.) and applying experienced credit judgment.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Given that the macroeconomic indicators affecting customers of the Company have not undergone any substantial change, the Company expects the historical trend of minimal credit losses to continue.
The Management believes that the unimpaired amounts that are past due by more than 180 days are still collectible in full, based on historical payment behavior and extensive analysis of customer credit risk, including underlying customers'''' credit ratings if they are available.
Cash and cash equivalents
The Company held cash and cash equivalents of Rs, 23.59 crore at March 31, 2017 (March 31, 2016: Rs, 22.47 crore; April 01, 2015: Rs, 636.48 crore). The cash and cash equivalents are held with bank and financial institution counterparties with good credit rating.
The forward contract has been entered into with banks /financial institution counterparties with good credit rating.
Other than trade receivables reported above, the Company has no other financial assets that is past due but not impaired.
ii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''''s approach to managing liquidity is to ensure that it will have sufficient liquidity to meet its liabilities. The Company monitors the net liquidity position through forecasts on the basis of expected cash flows.
The Company has obtained fund and non-fund based working capital lines from various banks. Furthermore, the Company has access to funds from debt markets. The Company invests its surplus funds in bank fixed deposit.
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.
Also issued financial guarantee for loan taken by its subsidiary amounting to Rs, 449.22 crore which is repayable by May 2016 .*
* Guarantees issued by the Company on behalf of subsidiaries are with respect to borrowings raised by the respective subsidiary. These amounts will be payable on default by the concerned subsidiary. As of the reporting date, none of the subsidiary have defaulted and hence, the Company does not have any present obligation to third parties in relation to such guarantees.
iii. Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and other prices such as equity price. These will affect the Company''''s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. Financial instruments affected by market risk include loans, borrowings and deposits. The Market risk the Company is exposed can be classified as Currency risk and Interest rate risk .
a) Currency risk:
The Company is exposed to currency risk on account of its operations in other countries. The functional currency of the Company is Indian Rupee. The Foreign currency exchange rate exposure is partly balanced by foreign exchange contracts and through natural hedge. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies.
As per the policy defined by the Board of Directors and monitored by a committee as nominated by Board, the company enters into foreign currency forward contracts which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables/ receivables.
The company also enters into derivative contracts in order to hedge and manage its foreign currency exposures towards future loan repayment.
A reasonably possible strengthening/(weakening) of the Indian Rupee against various currencies mentioned in table below at March 31 would have affected the measurement of financial instruments denominated in other currencies and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.
b) Interest rate risk
Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing investments will fluctuate because of fluctuations in the interest rates.
Exposure to interest rate risk
The interest rate profile of the Company''''s interest-bearing financial instruments as reported to the management of the Company is as follows.
14. CAPITAL MANAGEMENT
The Company''''s capital management is intended to create value for shareholders by facilitating the meeting of long-term and short-term goals of the Company.
The Company determines the amount of capital required on the basis of annual and long-term strategic plans. The Company''''s policy is aimed at combination of short-term and long-term borrowings.
The Company monitors the capital structure on the basis of ''''adjusted net debt'''' to ''''adjusted equity''''. For this purpose adjusted net debt is defined as total liabilities comprising interest bearing loans and borrowings and obligations under finance lease, less cash and cash equivalents, Bank balance and current investments. Adjusted equity comprises Total equity (other than amounts accumulated in the hedging reserve, if any.)
15. CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for)
(a) Demands by Central Excise authorities in respect of Classification/ Valuation/ Cenvat Credit related disputes; stay orders have been obtained by the Company in case of demands which have been confirmed Rs, 34.84 crore (March 31, 2016 - Rs, 28.10 crore; April 01, 2015 Rs, 30.45 crore).
(b) Demand by Income tax authorities Rs, 207.63 crore (March 31 2016 - Rs, 70.10 crore; April 01, 2015 Rs, 70.00 crore) disputed by the Company.
(c) Demand by Sales Tax authorities Rs, 60.46 crore (March 31, 2016 - Rs, 20.03 crore; April 01, 2015 Rs, 12.60 crore) disputed by the Company (including Rs, 1.33 crore on account of amalgamation in April 01, 2015).
(d) Claims against Company not acknowledged as debt in respect of electricity expense Rs, 5.85 crore (March 31, 2016 - Rs, 5.24 crore; April 01, 2015 Rs, 4.65 crore) and interest expense Rs, 4.59 crore (March 31, 2016 -Rs, 4.68 crore; April 01, 2015 - Rs, Nil)
(e) Demand from National Pharmaceutical Pricing Authority (NPPA) in respect of overcharging of certain products disputed by the Company Rs, 7.30 crore (March 31, 2016 - Rs, 7.30 crore; April 01, 2015 - Rs, 7.30 crore)
(f) Comfort to extend financial support, subject to certain approvals, to one of its subsidiaries towards credit facilities availed by the subsidiary, the impact of which is currently not ascertainable.
(g) One of the customer of a step down subsidiary of the Company has brought a claim relating to a commercial dispute over a contract which is sub-judice. The case has been heard in court, however judgment is currently pending. Since the ultimate outcome of the matter cannot presently be determined, no provision for any liability, that may arise, has been made in the financial statements.
(h) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs, 49.75 crore (March 31, 2016 -Rs, 127.64 crore; April 01, 2015 - Rs, 113.47 crore) after deducting advance on capital account of Rs, 9.17 crore (March 31, 2016 - Rs, 28.98 crore; April 01, 2015 - Rs, 17.37 crore).
16. a) During the year Company has given corporate guarantee of Rs, 1,946.25 crore (March 31, 2016- - Nil, April 01, 2015- Nil) for USD 250
Million loan availed by Wockhardt Bio AG
Loan availed by Wockhardt Bio AG of USD 250 million (Rs, 1621.88 crore) [Previous Year - USD Nil (Rs, Nil)] is secured as under:
i) First ranking charge on fixed assets (excluding Intangible assets) and current assets of Wockhardt Bio AG and its subsidiaries (except Wockpharma Ireland Ltd. and its Subsidiaries and Wockhardt France (Holdings) S.A.S. and its Subsidiaries)
ii) First ranking charge on fixed assets of Wockhardt Limited situated at Kadaiya in Daman and Baddi in Himachal Pradesh and on Fixed Deposits of Rs, 45 crores in India.
b) Corporate Guarantee given in earlier years on behalf of a subsidiary in respect of credit facilities amounts to Rs, Nil (March 31, 2016- -Rs, 62.12 crore, April 01, 2015- Rs, 449.22 crore). This comprises corporate guarantee given by the Company and Wockhardt UK Holdings Limited against loan of USD Nil (March 31, 2016-USD 9.38 million, April 01, 2015- USD 71.88 million) amounting to Rs, Nil (March 31, 2016- - Rs, 62.12 crore, April 01, 2015- Rs, 449.22 crore) taken by Wockhardt Bio AG in earlier years. The said loan had been fully repaid during the year.
17. Bank guarantees issued against various liabilities/obligations Rs, 20.75 crore (March 31, 2016 - Rs, 24.35 crore; April 01, 2015 Rs, 31.72 crore).
18. Exchange fluctuation for the year includes Mark to market loss of Rs, 1.36 crore (Previous year: Rs, Nil) accounted for on the forward contract.
19. As part of Corporate Social Responsibility (CSR), the Company had made voluntary contribution of Rs, 7.92 crore (Previous year : Rs, 8.00 crore) during the year for spending on CSR activities to Wockhardt Foundation and included the same in Note 32 under "Miscellaneous expenses,” being contribution and other expenses (Also Refer note 45). No amount has been incurred by the Company towards construction/ acquisition of any assets.
20 . The Company''''s New Chemical Entity (''''NCE'''') research program continued to get major boost during the Financial Year 2016-17 with US Food and Drugs Administrator (''''US FDA'''') granting abridged clinical trial for Phase III for Wockhardt''''s Superdrug antibiotic WCK 5222.
In August, 2016, the Company received Import Alert 66-40 on its API facility (Active Pharmaceuticals Ingredients) located at Ankleshwar, Gujarat. However, in September, 2016, US FDA excluded product ''''Ceftriazone Sodium'''' from import alert from the same plant enabling the Company to continue to manufacture and sell the same (both API and formulation) in the US market.
During the year, on a significant positive, the Company received approvals of UK MHRA for its manufacturing facility at L-1, Chikalthana, Aurangabad and reduced the inspection frequency to 2 years from existing frequency of 1 year. UK MHRA also has confirmed compliance with the principles and guidelines of GMP for the Company''''s manufacturing facility at Kadaiya, Daman. HPRA (Health Products Regulatory Authority), Ireland inspected the manufacturing facility at Shendra, Aurangabad during the year.
21. DISCLOSURES AS REQUIRED BY INDIAN ACCOUNTING STANDARD (IND AS) 101 FIRST TIME ADOPTION ON INDIAN ACCOUNTING STANDARDS
Explanation of transition to Ind AS
The below mentioned reconciliations provide a quantification of the effect of significant differences arising from the transition from Indian GAAP to Ind AS in accordance with Ind AS 101 for the following:
- equity as at April 01, 2015
- equity as at March 31, 2016
- profit for the year ended March 31, 2016
1. Under previous GAAP, preference shares were shown as part of equity and carried at cost. Redeemable preference shares contain a contractual obligation to deliver cash to the holders. Under Ind AS the same is classified as liability. Proposed dividend on preference shares has been reversed on the transition date.
2. Under the previous GAAP, interest free security deposits were accounted for at transaction price. Under Ind AS, security deposits are to be measured at fair value at inception with reference to market rates and the difference is to be recognized as prepaid rentals
3. Under the previous GAAP, guarantee commission receivable were accounted for at transaction price. Under Ind AS, same are to be measured at fair value at inception with reference to market rates.
4. The Company has chosen to value certain property at its fair value on the transition date. This amount has been recognized in retained earnings. Consequently the Company has recognized additional depreciation on aforesaid based on the fair value in subsequent year. The Company has also accounted for depreciation on significant components of plant and equipment retrospectively in the retained earnings upto transition date.
5. Under previous GAAP, the Company has created allowance for doubtful debts based on its estimation. Under Ind AS, the allowance for credit loss has been made based on Expected Credit Loss (ECL) provision matrix..
6. Under Ind AS, actuarial gain/loss on defined benefits plan are recognized in the statement of Other Comprehensive Income.
7. Other adjustments comprises on ESOP, lease straight lining, etc. adjusted as per the requirements of respective Ind AS.
8. Tax adjustments include the tax effects of certain pre-tax previous GAAP to Ind AS adjustments described above.
22. Optional Exemptions and Mandatory Exemptions availed under Ind AS 101
In preparing these financial statements, the Company has availed itself of certain exemptions and exceptions in accordance with Ind AS 101 as explained below:
a) The Company has elected to measure some items of property, plant and equipment at the date of transition to Ind AS at their fair value and use that fair value as its deemed cost at that date. The remaining items of property, plant and equipments are measured as per Ind AS at the date of transition.
b) Investments in subsidiaries and associates
The Company has elected to measure the investments in its subsidiaries and associates at its previous GAAP carrying amount (i.e. at cost) rather than at its fair value.
c) Share-based payment transactions
The Company has elected not to apply Ind AS 102 Share Based Payments to equity instruments that vested before the date of transition to Ind AS.
d) Business Combinations
Ind AS 101 Provides the option to apply Ind AS 103 "Business combinations” prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.
The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.
Upon an assessment of the estimates made under Indian GAAP, the Company has concluded that there was no necessity to revise such estimates under Ind AS, except where estimates were required by Ind AS and not required by Indian GAAP.
b) Government loans
The Company has measured its Government loan at the carrying value as per previous GAAP at the date of transition to Ind AS in the opening Ind AS Balance Sheet after applying requirements in Ind AS 109 Financial Instruments, and Ind AS 20 Accounting for Government Grants and Disclosure of Government Assistance prospectively.
23. There are no significant subsequent events that would require adjustments or disclosures in the financial statements as on the balance sheet date.
24. These financial statements are the Company''''s first Ind AS financial statements and accordingly previous year figures have been regrouped where necessary to conform to current year''''s classification.