RPG LIFE Notes to Accounts

Note: There are no delayed payments to Micro and Small Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 during the year. Further, there are no dues to such parties which are outstanding as at the Balance Sheet date. This information has been determined on the basis of information available with the Company regarding their status as Micro and Small Enterprises.


1. Intangible Assets are other than internally generated.


2. Additions to Building, Plant and Equipment and Furniture and Fixtures include Nil (Previous year - 5 Lakhs), Rs, 78 Lakhs (Previous year Rs, 90 Lakhs) and Nil (Previous year Rs, 1 Lakhs) respectively pertaining to Research and Development activities.


3. In the previous year, pursuant to the enactment of the Companies Act, 2013, effective 1st April, 2014, the management has evaluated and reassessed the useful life of its fixed assets. Consequent to such change, the charge on account of depreciation for the previous year is higher by Rs, 37 Lakhs. Further, fixed assets of Rs, 1 lakh having no residual life as at 1st April, 2014, have been recognized in the opening balance of General Reserve in the previous year.


4. Depreciation expense for previous year includes prior period credit of Rs, 56 Lakhs representing impact of rectification in the classification and estimated useful life of certain fixed


assets.


5. Computer Software includes assets acquired under finance lease amounting to Rs, 21 Lakhs and Rs, 8 Lakhs under gross block and accumulated depreciation, respectively.


6. Office Equipment includes assets acquired under finance lease amounting to Rs, 26 Lakhs and Rs, 6 Lakhs under gross block and accumulated depreciation, respectively.


7. Vehicles - Under Lease represent assets acquired under finance lease.


8. Provision for Doubtful Debts and Advances (Net) for the previous year includes credit of an amount of Rs, 414 Lakhs recovered from a party towards which provision was created in Financial Year 2013


9. Accordingly, the provision had been reversed by the amount received.


10. 2005 Employee Stock Option Plan (ESOP 2005)


Pursuant to a special resolution passed by the Shareholders at the Annual General Meeting held on 27th August, 2008, the Company adopted the Employee Stock Option Scheme titled ‘2005 Employee Stock Option Plan’ (ESOP 2005) for employees and directors of the Company including those employees and directors who were to be granted options, pursuant to the Scheme of Arrangement sanctioned by the Hon’ble High Court of Judicature at Bombay on 14th December, 2007, in lieu of options that were granted by Brabourne Enterprise Limited (the transferor Company) under its ESOP 2005. The total number of equity shares reserved under the said plan is 250,000 equity shares of '''' 8 each. The details of such equity shares granted are as follows:


A) The Remuneration/Compensation Committee at its meeting held on 6th August, 2010 -


(a) Granted and vested 30,119 equity stock options to employees, in lieu of options that were granted to them by Brabourne Enterprise Limited. The employee had an option to apply for one equity share of Rs, 8 each at an exercise price of Rs, 32.06.


Of these options, 29,255 equity stock options have been exercised as on 31st March, 2016 and the remaining equity stock options have lapsed.


(b) Granted 95,000 equity stock options to the eligible director and employees of the Company, with an option for one equity share of Rs, 8 each at an exercise price of Rs, 100 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/ Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005.


As on 31st March, 2016 all equity stock options have lapsed / forfeited.


B) The Remuneration/Compensation Committee at its meeting held on 20th October, 2010 -


Granted 15,000 equity stock options to an eligible employee with an option for one equity share of Rs, 8 each at an exercise price of Rs, 104 being the price higher than the closing price quoted on the National Stock Exchange prior to the date of meeting of the Remuneration/Compensation Committee. These equity stock options shall vest, in case of employees of General Manager grade and above, equally but conditionally on linear scale based on performance, over five years beginning from one year after the date of grant. Barring certain eventualities, the exercise period to subscribe to the equity shares would be 10 years from the dates of vesting except otherwise mentioned in ESOP 2005. Of these options, 2,910 equity stock options remain outstanding as on 31st March, 2016 and the remaining equity stock options have lapsed / forfeited.


The Company has adopted intrinsic value method as permitted by the SEBI Guidelines and the Guidance Note on Accounting for Employee Share Based Payment issued by the Institute of Chartered Accountants of India to account for the cost of stock options to employees and a director of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. In view of the exercise price being higher than the closing market price on the day prior to the date of grant, the intrinsic value of the option is Nil. Consequently, the accounting value of the option (compensation cost) is also Nil.


The weighted average fair value of each stock option on the date of its grant is Rs, 41.34, which has been vetted by an independent valuer. This fair value has been calculated using Black-Scholes Option Pricing Model. The inputs used for this calculation are (i) Average Share Price: Rs, 91.33 on the date of grant (ii) Average Exercise Price: Rs, 90.70 (iii) Average Expected Volatility: 47.98% (iv) Average Option Life: 8 years (v) Average Expected Dividend Yield: 3.50%, and (vi) Average Risk Free Interest Rate: 8.08%. The daily volatility of the company’s shares on the National Stock Exchange over a period of time prior to the date of grant, corresponding with the expected life of the options, has also been considered for determining the fair value.


Notes:


(a) Consumption of Materials includes consumption by third parties under contract with the Company and consumption in respect of physician samples.


(b) Components and spare parts referred to in paragraph VIII(c) of Additional Information under General Instructions for Preparation of Statement of Profit and Loss in Part II of Schedule III of the Companies Act, 2013 are assumed to be those forming part of the finished goods produced and not those used for maintenance of plant and machinery.


11. Forward Contracts and Unheeded Foreign Currency Outstanding Balances


The Company uses forward contracts to hedge its risks of net exposure associated with foreign currency fluctuations. The Company does not enter into any forward contract which is intended for trading or speculative purposes.


*Amount is below the rounding off norm adopted by the Company.


(B) Defined Benefit Plan


Valuation in respect of Gratuity has been carried out by independent actuary, as at the Balance Sheet date, based on the following assumptions:


(C) Other Employee Benefits


Long-term and short-term liabilities for Compensated Absences as at the Balance Sheet date were Rs, 199 Lakhs (Previous year Rs, 158 Lakhs) and Rs, 96 Lakhs (Previous year Rs, 98 Lakhs) respectively.


Notes:


(a) The primary reporting of the Company is based on the business segment. The Company has only one reportable business segment which is manufacturing and marketing of pharmaceutical products. Accordingly, the figures appearing in these financial statements relate to pharmaceutical products.


(b) Secondary segment reporting is based on the geographical location of customers. Revenue is segregated in to two segments namely India and Other Countries for the purpose of reporting geographical segments.


(c) The accounting policies adopted for segment reporting are in line with the accounting policies adopted for the preparation of financial statements as disclosed in Note 2.


12. Related Party Disclosures


(A) Related parties with whom the Company had transactions during the year


Key Management Personnel Ajit Singh Chouhan (upto 30th September, 2014)


CT. Renganathan (from 02nd January, 2015)


*In view of inadequacy of profit for the year 2014-15, remuneration aggregating to Rs, 31 Lakhs paid to the Managing Director (MD) of the Company in the previous year was in excess of the limit prescribed under Section 197 of the Act. The same has been recovered in the current year.


13. Earnings per share


Basic earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year. Diluted earnings per share has been calculated by dividing profit for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year and also the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. Dilutive potential equity shares that have been converted in to equity shares during the year are included in the calculation of diluted earnings per share from the beginning of the year to the date of conversion and from the date of conversion, the resulting equity shares are included in computing both basic and diluted earnings per share. Earnings per Share has been computed as under:


14. Previous year’s figures have been regrouped / reclassified wherever necessary.


Only Audit Committee and Stakeholder’s Relationship Committee positions are considered.


Ms. Neera Saggi resigned from the Directorship of the Company, w.e.f. October 29, 2015.


Ms. Zahabiya Khorakiwala has been appointed as an Independent Director on the Board of the Company w.e.f. October 29, 2015.


CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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