annual report - wintac limitedwintac limited 1 n o t i c e notice is hereby given that the...

WintacL I M I T E D

ANNUALREPORT 2012-2013

Winning Technologies

BOARD OF DIRECTORS

Shri S.T.R. Mady Shri S.Jayaprakash MadyDr. K.ParanjothyShri. Arun EashwarShri. Ra.ThirumoortiDr. K.Nagarajan Dr. C.Prakash Shri B.P.Thyagaraj

Chairman Managing DirectorDirector (from 06-12-2012)Director (from 31-01-2013)Director (from 11-07-2013)Director (upto 31-01-2013)Director (upto 31-01-2013)A.V.P. (Finance) & Secretary

BANKERS State Bank of India,Nelamangala Branch, Bangalore.

AUDITORS M/s. Rao & Swami, Chartered Accountants, 2/1, Connaught Road, Bangalore-560 052.

SHARE TRANSFER AGENT Canbank Computer Services Ltd., No.218, J.P. Royale, I Floor, II Main,Sampige Road, (Near 14th Cross),Malleshwaram, Bangalore-560003.Phone No. : 080-23469661 / 9662

SHARES LISTED AT Bangalore Stock Exchange Limited Bombay Stock Exchange Limited(Listing fee paid for the year 2012-13)

REGISTERED OFFICE 16/2, OVH Road, Basavanagudi, Bangalore - 560 004.

MANUFACTURING UNIT 54/1, Boodihal Village, Nelamangala Taluk, Bangalore District, Karnataka - 562 123

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N O T I C E

Notice is hereby given that the Twenty-Third Annual General Meeting of the Members of Wintac Limited will be held at Pai Vijay Hall, 530/58, 33rd Cross, 11th Main, 4th Block, Jayanagar, Bangalore-560 011 on Wednesday, 21st August 2013 at 10.00 am to transact the following business:

ORIDINARY BUSINESS

1. To receive, consider and adopt the audited Balance Sheet as at 31st March, 2013 and the Profit and Loss Account for the period ended on that date and the Reports of the Directors and the Auditors thereon.

2. To appoint a Director in place of Sri.S.T.R.Mady who retires by rotation and being eligible offers himself for re-appointment.

3. To appoint auditors to hold office from the conclusion of this Annual General Meeting to the conclusion of the next Annual General Meeting of the Company and to fix their remuneration.

SPECIAL BUSINESS

4. To consider and, if thought fit, to pass, with or without modification(s) the following as a Special Resolution:

“RESOLVED THAT subject to the provisions of Sections 198, 269, 309, 310, 311, Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956 (“the Act”) and subject to the limits prescribed under the Act, and also subject to such approvals as are necessary, consent of the Company be and is hereby accorded to the re-appointment of Shri S.Jayaprakash Mady as the Managing Director of the Company with effect from 1st February, 2013 for a period of three years on the following terms and conditions:

Salary - ` 1,70,000 per month.

Perquisites - The Managing Director shall be entitled to the following perquisites as classified into two categories ‘A’ and ‘B’.

CATEGORY ‘A’

i. Housing: The Managing Director will be provided with furnished company leased accommodation at a maximum amount of ` 30,000 per month.

ii. Personal Accident Insurance: As per the policy of the Company.

CATEGORY ‘B’

Provision of Cars with driver for official use and also provision of telephone at residence will not be considered as perquisites. However, personal long distance calls will be billed by the Company.

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In the event of inadequacy or absence of profits in any financial year, he would be entitled to the remuneration and perquisites subject to limits prescribed under Schedule XIII of the Companies Act, 1956”.

5. To consider and, if thought fit, to pass with or without modification, if any, the following resolution as an Ordinary Resolution:

“RESOLVED THAT Dr.K.Paranjothy, who was appointed by the Board of Directors as an Additional Director of the Company on 6th December 2012 and who holds office upto the date of this Annual General Meeting of the Company in terms of Section 260 of the Companies Act, 1956 (“the Act”), but who is eligible for appointment and in respect of whom the Company has received a notice in writing from a Member under Section 257 of the Act proposing his candidature for the office of Director of the Company, be and is hereby appointed a Director of the Company.”


“RESOLVED THAT Mr.Arun Eashwar, who was appointed by the Board of Directors as an Additional Director of the Company on 31st January 2013 and who holds office upto the date of this Annual General Meeting of the Company in terms of Section 260 of the Companies Act, 1956 (“the Act”), but who is eligible for appointment and in respect of whom the Company has received a notice in writing from a Member under Section 257 of the Act proposing his candidature for the office of Director of the Company, be and is hereby appointed a Director of the Company.”


“RESOLVED THAT Mr.Ra Thirumoorti, who was appointed by the Board of Directors as an Additional Director of the Company on 11th July 2013 and who holds office upto the date of this Annual General Meeting of the Company in terms of Section 260 of the Companies Act, 1956 (“the Act”), but who is eligible for appointment and in respect of whom the Company has received a notice in writing from a Member under Section 257 of the Act proposing his candidature for the office of Director of the Company, be and is hereby appointed a Director of the Company.”

8. To consider and if thought fit, to pass with or without modification, if any, the following Resolution as a Special Resolution:

“RESOLVED THAT pursuant to the provisions of Section 146 and all other applicable provisions, if any, of the Companies Act, 1956 (including any statutory modification or re-enactment thereof) for the time being in force, the Registered Office of the Company be shifted from No. 16/2, O.V.H.Road Basavanagudi, Bangalore- 560004 to No.54/1, Boodihal Village, Nelamangala, Bangalore-562123, Karnataka with effect from such date as may be decided by the Board of Directors”.

‘‘RESOLVED FURTHER THAT, the Board of Directors be and is hereby authorized to take all necessary steps to give effect to this resolution.”

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NOTES: 1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE ANNUAL GENERAL MEETING IS ENTITLED TO

APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER. PROXIES IN ORDER TO BE EFFECTIVE MUST BE RECEIVED BY THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE MEETING.

2. Pursuant to the provisions of Section 205A and Section 205C of the Companies Act, 1956, the amount of dividend remaining unclaimed or unpaid for a period of seven years from the date of transfer to the Unpaid Dividend Account of the Company shall be transferred to the Investor Education and Protection Fund (the Fund) set up by the Government of India and no payments shall be made in respect of any such claims by the Fund. Accordingly, the dividend which had remained unpaid/unclaimed for the financial years upto 2004-05 have been transferred to the Fund.

3. The Register of Members and the Transfer Books of the Company will remain closed from 14th August 2013 to 21st August 2013.

4. Members holding shares in physical form and desirous of making a nomination in respect of their shareholding in the Company, as permitted under Section 109A of the Companies Act, 1956 are requested to submit nomination in Form 2B to the Share Transfer Agents of the Company.

5. Members are requested to notify the change in their address to the Company’s Share Transfer Agents – Canbank Computer Services Limited, R&T Centre, No.218, J.P.Royale, 1st Floor, 2nd Main, Sampige Road (Near 14th Cross), Malleswaram, Bangalore-560 003.

6. The Ministry of Corporate Affairs, Government of India (“MCA”) (vide circular nos.17/2011 and 18/2011 dated 21st April 2011 and 29th April 2011 respectively) has undertaken a ‘Green initiative’ in the Corporate Governance’ and allowed companies to share documents with its shareholders through an electronic mode. A recent amendment to the Listing Agreement with the Stock Exchanges permits companies to send soft copies of the Annual Report to all those shareholders who have registered their email address for the said purpose. Members are requested to support this Green initiative by registering/updating their e-mail address for receiving electronic communications.

7. The explanatory statement pursuant to Section 173 of the Companies Act, 1956 in respect of Item Nos. 4 to 8 of the Notice is annexed.

8. Details of the Directors seeking appointment/re-appointment in forthcoming Annual General Meeting (in pursuance of Clause 49 of the Listing Agreement).

Name Date of Birth Date of Appointment Qualifications Directorships/ Committee

Memberships

No. of Shares

Held Mr.S.T.R.Mady 10.12.1936 04.02.1993 B’Pharma BPRL Pvt.Ltd.,

Shastha Pharma Lab.P.Ltd. 4,07,750

Dr.K.Paranjothy 14.09.1947 06.12.2012 M’Pharma, Phd. Yashaha Lab P. Ltd. NilMr.Arun Eashwar 07.06.1983 31.01.2013 M.Com Q3 India Software P.Ltd.

Balu Spng.Mills P.Ltd. Nil

Mr.Ra Thirumoorti 20.04.1973 11.07.2013 BBM Add Clothings India P. Ltd. Nil

Mr.S.Jayaprakash Mady 05.09.1963 04.02.1993 B’Pharma Shastha Pharma Lab.P.Ltd. 9,10,965

Regd. Office:No. 16/2, OVH Road, Basavanagudi, Bangalore - 560 004.

By Order of the Board of DirectorsFor Wintac Limited

Date : 11th July 2013Place : Bangalore.

B.P.THYAGARAJAST.V.P.(FINANCE) & SECRETARY

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EXPLANATORY STATEMENT IN RESPECT OF ITEM NO.4 OF THE NOTICE PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956Item No.4The Board of Directors at their Meeting held on 31st January 2013, on the recommendation of the Remuneration Committee, re-appointed Sri.S.Jayaprakash Mady as the Managing Director of the Company for a period of three (3) years with effect from 01.02.2013.The Managing Director shall be entitled to the salary and perquisites as outlined in the Resolution placed before the members subject to the limits laid down in Section 198, 309 and Schedule XIII to the Companies Act, 1956 (“the Act”).Nature of Duties: The Managing Director is authorized to exercise substantial powers of management and shall be responsible for the day to day management, subject to the superintendence, direction and control of the Board of Directors of the Company. The Managing Director shall have the general control of the business of the Company with powers to enter into contracts on behalf of the Company in the ordinary course of business and to do and perform all other acts and things which in the ordinary course of business he may consider necessary or proper in the interest of the Company and carry out such duties as may be entrusted and/or delegated to him by the Board from time to time.Shri.S.Jayaprakash Mady is a Graduate in Pharmacy with distinction and an industrialist and has more than 17 years of industrial experience. The agreement entered into between the Company and Sri S.Jayaprakash Mady is open for inspection by the members at the Registered Office of the Company on any working day during the business hours of the Company till 20.08.2013.Except Mr.S.T.R.Mady, being a relative of the Managing Director, and Mr.S.Jayaprakash Mady, no other director is interested or concerned in the said reolution.In terms of the provisions of Section 109, 269 & 309 read with Schedule XIII of the Companies Act, 1956, the appointment of Mr.S.Jayaprakash Mady as Managing Director of the Company and payment of remuneration to him are subject to the approval of the Members in the General Meeting.The Board recommends the resolution to the members for their approval.Item No.5Dr.K.Paranjothy was appointed as an Additional Director by the Board of Directors of the Company with effect from 6th December 2012. In accordance with the provisions of Section 260 of the Act, Dr.Paranjothy will hold office as a Director upto the date of the ensuing Annual General Meeting. The Company has received a Notice under Section 257 of the Act from a member proposing his candidature for the office of Director of the Company.Dr.Paranjothy is a Post Graduate in Pharmacy and a Doctorate in Pharmaceutics. He has a vast experience of more than 40 years in the Pharma Industry and Product Development activity. Yours Directors are of the view that the Company would be immensely benefited by the wide experience of Dr.Paranjothy and therefore, recommend for approval the Resolution contained in Item No.5 of the Notice convening the Annual General Meeting.None of the Directors, except Dr.Paranjothy, is concerned or interested in the Resolution.

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Item No.6Mr. Arun Eashwar was appointed as an Additional Director by the Board of Directors of the Company with effect from 31st January 2013. In accordance with the provisions of Section 260 of the Act, Mr.Arun Eashwar will hold office as a Director upto the date of the ensuing Annual General Meeting. The Company has received a Notice under Section 257 of the Act from a member proposing his candidature for the office of Director of the Company.Mr. Arun Eashwar is a Masters in Economics and has experience of over 16 years as an entrepreneur. Yours Directors are of the view that the Company would be immensely benefited by the wide experience of Mr. Arun Eashwar and therefore, recommend for approval the Resolution contained in Item No.6 of the Notice convening the Annual General Meeting.None of the Directors, except Mr. Arun Eashwar, is concerned or interested in the Resolution.Item No.7Mr. Ra Thirumoorti was appointed as an Additional Director by the Board of Directors of the Company with effect from 11th July 2013. In accordance with the provisions of Section 260 of the Act, Mr. Ra Thirumoorti will hold office as a Director upto the date of the ensuing Annual General Meeting. The Company has received a Notice under Section 257 of the Act from a member proposing his candidature for the office of Director of the Company.Mr. Ra Thirumoorti is a Graduate in Business Management and is an entrepreneur. He has a vast experience of more than 16 years in the Management of business entities. Yours Directors are of the view that the Company would be immensely benefited by the wide experience of Mr.Ra Thirumoorti and therefore, recommend for approval the Resolution contained in Item No.7 of the Notice convening the Annual General Meeting.None of the Directors, except Mr. Ra Thirumoorti, is concerned or interested in the Resolution.Item No.8Currently the Registered Office of the Company is situated at No.16/2, OVH Road, Basavanagudi, Bangalore and Factory at No.54/1, Boodihal Village, Nelamangala, Bangalore. Registered Office houses only the Accounts & Finance Departments and your Directors are of the view that the finance and accounts departments should also be functioning at factory to ensure better co-ordination and to improve efficiencies. Therefore it is proposed to shift the registered office to the factory premises. In terms of provisions of Section 146 of the Companies Act 1956, shifting of Registered Office to a place outside the local limits of the city where Registered Office is situated, requires the approval of shareholders by means of Special Resolution.The Board recommends the resolution to the members for their approval.None of the Directors is concerned or interested in the Resolution.

By Order of the Board of Directors For Wintac Limited

Date : 11th July, 2013 B.P.THYAGARAJPlace : Bangalore. AST.V.P.(FINANCE) & SECRETARY

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DIRECTORS’ REPORTTo the Shareholders

The Directors have pleasure in presenting the Twenty-third Annual Report together with the Audited Accounts for the year ended 31st March, 2013.

Financial Performance ` LakhsFor the year ended

31st March 2012For the year ended

31st March 2013Gross Sales 2593.41 2268.64 Excise Duty 166.53 180.16Net Sales 2426.88 2088.48Other Income 16.34 35.11Total Revenue 2443.22 2123.59Total Expenditure 2453.70 2393.38Operating Profit/(Loss) (10.48) (269.79)Interest 299.91 282.10Profit/(Loss)before Depreciation (PBDT) (310.39) (551.89)Depreciation 196.12 194.11Loss before exceptional expenditure (506.51) (746.00)Exceptional/Extraordinary expenditure 1.19 1032.38Profit/(Loss) before Tax (507.70) (1778.38)Deferred tax 30.64 (58.23)Net Profit/(Loss) after Tax (538.34) (1720.15)

Operations

The operating results of the Company during the year was not satisfactory due to stoppage of sales to US Market and higher operating expenses. The net sales were lower by about 14% at ` 2088.48 lakhs as compared to ` 2426.88 lakhs during the previous year. The net loss during the year under review was also higher at ` 1720.15 lakhs as compared to a net loss of ` 538.34 lakhs during the previous year.

In view of certain Regulatory issues with US Regulatory Authorities (USFDA), the commercial supplies to US Market were suspended and USFDA had issued a Warning Letter. The Company has filed necessary compliance reports and the same has been accepted by the USFDA and inspection is expected to be conducted shortly.

Your Company undertook a major restructuring exercise during the year in view of the higher borrowings, suspension of export supplies due to regulatory issues and consequential higher operating losses. Your Company entered into a strategic alliance with GAVIS Pharma LLC, USA. GAVIS Pharma is a US based Pharmaceutical Company promoted by Dr.Veerappan Subramanian, a person of Indian Origin and based in United States.

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Dr.Veerappan Subramanian, promoter of GAVIS Pharma, is a seasoned pharmaceutical scientist and entrepreneur with a track record of starting, developing, managing and turning around pharmaceutical companies in USA. He has over forty years of experience in the generic pharmaceutical industry. GAVIS Group of Companies lead by their executive team have excellent end-to-end expertise in all aspects of pharmaceutical business in the US and all regulated markets. Novel Laboratories, GAVIS’s development and manufacturing arm, has expertise in product identification, formulation development, ANDA Filing, Manufacturing, Quality Control, Compliance and Regulatory affairs. Novel Laboratories has successfully developed and filed more than 50 ANDAs. GAVIS Pharmaceuticals, the marketing arm of GAVIS group markets and distributes products to all channels of trade including chain drug stores, hospitals, long term care facilities, etc practically covering the entire US Market.

GAVIS Pharma’s association would tremendously benefit the Company in the areas of Regulatory Compliances, Product Development and front-end marketing activities apart from infusion of funds as equity capital into the Company. The Company, pursuant to the Shareholders Approval at the EGM held on 20th December 2012 and other Regulatory Approvals allotted 40,00,000 Equity Shares of ` 10 each at a price of ` 100 per share aggregating to ` 40 crores. The equity funds were utilized for the intended purposes i.e., for repayment of debts, redemption of preference shares, capital expenditure and working capital purposes.

Directors

Dr.C.Prakash and Dr.K.Nagarajan resigned as Directors on 31st January 2013. Dr.K.Paranjothy, Mr.Arun Eashwar and Mr.Ra Thirumoorti joined the Board on 6th December 2012, 31st January 2013 and 11th July 2013 respectively. Mr.K.P.Murali joined the Board as Additional Director and resigned on 11th July 2013. The resolutions for the appointment of Dr.K.Paranjothy, Mr.Arun Eashwar and Mr.Ra Thirumoorthi as Directors of the Company have been proposed for approval of the Members.

Mr.S.T.R.Mady, Chairman retires by rotation and being eligible offer himself for re-appointment.

Mr.S.Jayaprakash Mady, Managing Director was re-appointed as the Managing Director of the Company for a further period of three years effective from 1st February 2013.

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Management Discussion and Analysis statement, Corporate Governance Report and Auditors’ Certificate on the compliance of conditions of Corporate Governance are made a part of the Annual Report.

Preferential Issue of Equity Shares

The Company, pursuant to the Shareholders Special Resolution passed at the extra ordinary general meeting held on 20th December 2012 and FIPB approval, allotted 40,00,000 Equity Shares of `10 each at a price of `100 each aggregating to ` 40.00 crores to GAVIS Pharma LLC, USA on 31st January 2013. The issue proceeds were utilized for the intended use i.e., (i) Repayment of all bank borrowings, (ii) Redemption of preference Shares, (iii) Procurement of capital assets and (iv) for meeting working capital requirements.

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The allotment of 40,00,000 equity shares constitutes 39.90% of the post issue paid-up equity share capital of the Company and thus requiring the allottees, i.e., GAVIS Pharma LLC, USA to make open offer to the public shareholders to acquire 26% of equity shares held by public shareholders under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. Accordingly GAVIS Pharma made an open offer to the public shareholders and acquired a further 15,12,098 Equity Shares. Post public offer the GAVIS Pharma LLC, USA holds 55,12,098 equity shares representing 54.99% of the equity share capital. As stated in the offer document, post public offer GAVIS Pharma LLC, USA would assume the status of Promoters and the existing promoters (prior to public offer by GAVIS) would cease to be the Promoters of the Company and thus changes the Management control of the Company.

Directors’ Responsibility Statement

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that

• in the preparation of the annual accounts for the year 2012-13, the applicable accounting standards have been followed along with proper explanation relating to material departures;

• they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period;

• they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

• they have prepared the annual accounts on a going concern basis.

Personnel

There were no employees drawing remuneration during the year in excess of the limits specified under Section 217 (2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules, 1975.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings/Outgo

In pursuance of the provisions of Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo are annexed to the Report.

Auditors

The Auditors M/s Rao & Swami, Chartered Accountants retire at the forthcoming Annual General Meeting and being eligible offer for reappointment.

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As per the requirement of the Central Government and pursuant to Section 233B of the Companies Act, 1956 your Company carries out an audit of cost records relating to manufacturing of Pharmaceutical Formulations. Subject to the approval of the Central Government, the Company has appointed Mr.Sathyanarayana, Partner – KSS, VKG & Associates to audit the cost accounts of the Company for the financial year 2012-13. The Cost Audit report for the financial year 2011-12 which was due to filed with the Ministry of Corporate Affairs on or before February 28, 2013 was filed on January 2, 2013.

Observations in Audit Report

The Auditors in the Annexure to their report have highlighted that (i) in respect of inventory with third parties, the inventory systems requires to be strengthened and (ii) Internal Control Systems & Procedures needs to be streamlined. Your Directors are of the view that the Company has adequate Internal Control Systems and procedures for accounting Inventory of all the materials which commensurate with the size of the operations. However, necessary steps would be initiated to further strengthen the Internal Control Systems.

Acknowledgement

The Board places on record its appreciation for the continued cooperation and support received from the Medical Profession, various Government Agencies, Shareholders, Business Associates, Employees, Depositors and Bankers.

For and on behalf of the Board of Directors

Date : 11th July, 2013 S.T.R.MADYPlace : Bangalore CHAIRMAN

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Annexure to the Directors’ ReportInformation under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report for the year ended 31st March, 2013.

I. CONSERVATION OF ENERGY

The Company continues to explore measures which will help in conservation and saving of energy.

FORM – A A. Power and Fuel Consumption

2011-12 2012-131. Electricity a. Purchased units Total Amount Rate/Unit

KWH` Lakhs`

20,10,950114.22

5.68

19,16,096119.93

6.25 b. Own Generation Through Diesel Generators: Units Units/per Litre of Diesel Cost/unit

KWH

`

3,15,7522.42

17.89

4,89,6852.50

20.802. Coal Tonnes - -3. Furnace Oil Quantity

Kilolitre- -

4. Other/Internal Generator Rate/Kg Total Amount

(Brickets)Kgs`` Lakhs

28,84,385 3.90

112.49

21,74,9604.65

101.18

B. Consumption per unit of Production : Total Production : (Sterile Products - Ltrs in lakhs) 4.14 4.10

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FORM – BII RESEARCH AND DEVELOPMENT (R&D)i. Specific Areas in which R&D carried out : 1. Formulation development activity for the

Domestic Market as well as for Export Markets i.e., USA, Canada, Australia, Europe and North American Markets.

2. Development and transfer of the manufacturing technology.

3. Process Improvement and technology up-gradation to improve production efficiency.

ii. Benefits derived as a result of the above : No. of products under development increased during the year and more number of ANDA’s would be filed in the coming years thus ensuring a steady growth in exports business.

iii. Future Plan of Action : 1. Future Plan includes expansion of Product Range and Target world-wide regulated markets.

2. Setting-Up of new F&D Facility.iv. Expenditure on R&D

a. Capital b. Recurring c. Total d. Total R&D expenditure as a percentage of total turnover

::::

` Nil` 191.64 lakhs` 191.64 lakhs 9.02%

Technology absorption, adaptation and innovationi. Efforts in brief, made towards technology

absorption, adaptation and innovation. : Development of additional products in Generic

Space for the Regulated and semi-regulated markets.

ii. Benefits derived as a result of the above. : Technical capability of the personnel strengthened to handle more project and also to facilitate registration of the products in highly regulated market.

iii. In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year), following information may be given Technology imported Year of import Has technology been fully absorbed ? If not fully absorbed, areas where this has not taken place, reasons therefore and future plans of action

: : :

:

NilN.AN.A.

N.A.

III FOREIGN EXCHANGE EARNINGS AND OUTGOForeign Exchange earned ` 237.48 Lakhs Foreign Exchange used ` 88.15 Lakhs

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MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY STRUCTURE AND DEVELOPMENTS, OPPORTUNITIES, THREATS AND OUTLOOK

The global economy appears to be transitioning towards a period of more stable, but slower growth. Global gross domestic product (GDP), which slowed in mid-2012 is recovering and a modest acceleration in quarterly GDP is expected during the course of 2013. Financial conditions in high-income countries have improved and risks are down, but growth remains subdued, especially in Europe.

The Indian economy is estimated to have grown at 5% in 2012-13 as compared to the growth of 6.2% during 2011-12. The lower GDP growth was primarily on account of slowdown in all the major sectors like Industry, Agriculture, Services and Trade.

The Global pharmaceutical industry is estimated to grow to US$ 1 trillion in 2013 up from US$ 956 billion in 2011. The market is forecasted to grow at a CAGR of 3-6% over 2012-16 to US$ 1.1-1.2 trillion in sales by 2016. More than 60% of this increase is expected to be contributed by the emerging markets which are anticipated to grow at 12-15%, while the rest of the growth is expected from the Developed markets which are likely to grow at a much lower rate of 1-4%. The global pharma industry for patented products continues to remain fragmented and fiercely competitive. The generic industry on the other hand has the opportunity to capitalize on the products going off-patent in the coming years. In trying to cope with these challenges, the industry has witnessed consolidation; this may be replicated across the global pharma world especially in the generics space.

The Indian Pharmaceutical market is expected to grow at a CAGR of 15% to US$ 29 billion in 2016. The key factors driving growth in the IPM are sustained economic growth, increase in healthcare access and increased penetration in smaller towns. During 2012, growth was primarily driven by volume of around 60% and new introductions contributing around 40% with minimal price increase. A key structural development was the introduction of the new pricing policy (National Pharma Pricing Policy), which will expand the coverage of medicines under price control to almost three times that of the earlier price control mechanism, DPCO.

The year 2012-13 was a challenging year for Wintac Limited. The operations of your Company during the year were not satisfactory due to stoppage of supplies to US Market due to Regulatory Issues and higher operating expenses to comply with the international quality standards. This has resulted into an operating loss (PBIDT) of ` 269.79 lakhs as compared to the operating loss of ` 10.48 lakhs during the previous year. The turnover of the company was also lower at ̀ 2088 lakhs as compared to ` 2426 lakhs during the previous, a decline of 14%.

Necessary steps have been initiated and a detailed report has been sent to USFDA which is accepted. USFDA intends to re-inspect the facility during August 2013 and we hope to resolve the regulatory issues.

RISKS AND CONCERNS

The major activity of the Company is contract manufacturing of the pharmaceutical formulations for the domestic market and for export market. Margins would be under pressure due to ever increasing input costs and competitive market conditions. Further, the cost of operations would be

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higher for maintaining the International Quality Standards and the time-lag between development of products and commencement of commercial supplies would also be longer. There could be a possibility of price reduction in the global generic market over a period of time due to increased competition.

INTERNAL CONTROL SYSTEMS

The Company has adequate Internal Control System commensurate with its size and nature of business. The Internal controls are regularly audited by an external firm of Chartered Accountants. The internal audit programme aims at reasonable reassurance of operating controls and continuously upgrading controls to meet requirements of the changing environment. The Audit Committee oversees the internal audit function and facilitates the management to take pre-emptive steps to minimize exceptions based on the materiality of transactions.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The operations during the year reported a net loss of ` 1700 lakhs. During the year the Company issued further 40,00,000 equity shares (39.90% of expanded capital) of ` 10 each at a price of ` 100 each aggregating to ` 40,00,00,000. The equity funds raised was utilized to fund the working capital requirements, repayment of all bank borrowings, redemption of preference shares (` 200 lakhs) and for capital expenditure purposes.

The total interest cost for the year was ` 282.10 lakhs as against ` 299.91 lakhs during the previous year. The borrowings were repaid later during the year out of equity funds.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

As on 31st March 2013, there were 202 employees on the rolls of the Company and the relationship with the employees has been very cordial.

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CORPORATE GOVERNANCEThe Report on Corporate Governance is pursuant to Clause 49 of the Listing Agreement entered into with the Stock Exchanges and forms a part of the report of the Board of Directors. The Company has complied with the applicable requirements of Clause 49 of the Listing Agreement.

1. Corporate Governance Philosophy

Wintac Limited is committed to high standards of Corporate Governance in all its activities and processes. The Company believes that good corporate governance practices enable the management to direct and control the affairs of the Company in an efficient manner and to achieve the Company’s goal of maximising value for all its stakeholders.

2. Board of directors

The Board comprises of Five Directors and the Chairman is a non-executive Director. Fifty percent of the total strength of the Board of Directors is independent. The number of Non-executive Directors is more than 50% of the total number of Directors. None of the Directors on the Board is a member in more than 10 Committees and Chairman of more than 5 Committees across all the companies in which they are Directors. The Directors have made the necessary disclosures regarding committee positions. The Company has not had any pecuniary relationship and transaction with any of the Non-Executive Directors during the year under review.

The names and categories of the Directors on the Board, their attendance at Board Meetings during the year and at the Last Annual General Meeting as also the number of Directorships and committee Memberships held by them in other companies are given below: -

Names Category

No. of Board Meetings attended during 2012-13

Whether Attended AGM held on27.9.2012

No. of Directorship in other Public Limited Companies

No. of Committee positions held in other Public Limited Companies

Chairman Member Chairman Member

S.T.R.Mady Non - IndependentNon-Executive

10 Yes - - - -

S.Jayaprakash Mady Non - IndependentExecutive

10 Yes - - - -

Dr.K.Paranjothy IndependentNon-Executive

2 No - - - -

Arun Eashwar IndependentNon-Executive

1 No - - - -

Mr.Ra Thirumoorti IndependentNon-Executive

0 No - - - -

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Ten Board meetings were held during the financial year 2012-13 and the gap between two meetings did not exceed four months. The dates on which the Board Meetings were held are as follows:

May 28th 2012 May 31st 2012, June 2nd 2012,August 11th 2012, September 27th 2012, November 11th 2012,November 19th 2012, December 6th 2012 January 31st 2013 & February 12th 2013.

Dr.K.Paranjothy, Mr.Arun Eashwar and Mr.Ra Thirumoorti joined the Board on 6th December 2012, 31st January 2013 and 11th July 2013 respectively. Dr.K.Nagarajan & Dr.C.Prakash resigned as Directors on 31st January 2013. Mr.K.P.Murali joined the Board as Additional Director on 31st January 2013 and resigned as Director on 11th July 2013.

3. Code of Conduct The Company has adopted the code of conduct for all the Board Members and senior

management of the Company and is posted on the Company’s website. All the Board members and senior management of the Company have affirmed compliance with the Code of Conduct of the Company as at 31st March 2013. A declaration duly signed by the Managing Director is annexed hereto.

4. Audit Committee The scope and the terms of reference of the Audit Committee is as set out in Clause 49 of the

Listing Agreements with the Stock Exchanges which, inter alia, includes the following:

i. Overseeing the Company’s financial reporting process and the disclosure of its financial information.

ii. Reviewing with the management the quarterly and annual financial statements before submission to the Board

iii. Reviewing with the management, external and internal auditors the adequacy of internal control systems, adequacy of internal audit function, etc.

iv. Discussion with the external auditors on the nature and scope of audit, review the comments in their management letter, etc.

The composition of the Audit Committee and the details of meetings attended by the Directors are given below:-

Names of Members Category No. of Meetings attendedduring the year 2012-13

Dr.K.Paranjothy Chairman Independent, Non-Executive 1Mr.S.T.R.Mady Non-Independent, Non-Executive 7Mr.Arun Eashwar Independent, Non-Executive 1Mr. Ra Thirumoorthi Independent, Non-Executive -

Audit committee meetings are attended by the Managing Director and Head of Finance Department. Statutory Auditors attended the meeting held on June 2nd, 2012. The Company Secretary acts as the Secretary of the Audit Committee.

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Seven Audit Committee meetings were held during the year on the following dates:

May 28th 2012 May 31st 2012, June 2nd 2012,August 11th 2012, September 26th 2012, November 14th 2012 &February 12th 2013.

The necessary quorum was present at the meetings.

5. Remuneration Committee: The company has constituted a Remuneration committee. The broad terms of reference

of the remuneration committee are to recommend to the Board the salary, perquisites and commission paid to the Company’s Managing/Whole time Directors.

The following Directors are the members of the Remuneration Committee

Names of Members Category No. of Meetings attended during the year 2012-13

Dr.K.Paranjothy, Chairman Independent, Non-Executive 1Mr.S.T.R.Mady Non-Independent, Non-Executive 1Mr.Arun Eashwar Independent, Non-Executive 1

One remuneration committee meeting was held during the financial year on 31-01-2013

Remuneration Policy: The company while deciding the remuneration package of the Senior Management members

takes into consideration (a) Employment Scenario (b) Remuneration package of the industry. The Company pays sitting fees of ` 2500 per Board Meeting to Non-Executive Directors.

The Company pays remuneration to the Managing Director by way of Salary and Perquisites within the limits recommended by the remuneration Committee and approved by the Board of Directors and Shareholders.

Remuneration paid during 2012-13:

Non-Executive Directors:

Name of the Director Sitting Fees (`)

Shri.S.T.R.Mady 27,500Dr.K.Nagarajan 25,000Dr.C.Prakash 25,000Dr.K.Paranjothy 5,000Mr.K.P.Murali 2,500Mr.Arun Eashwar 2,500

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Managing Director : Salary Perquisites Stock Options

Shri.S.Jayaprakash Mady ` 14,40,000 ` 5,93,890 Nil Perquisites include House rent allowance and Company’s contribution to Provident Fund. Period of Contract – 3 years from 01.02.2013. The contract may be terminated by either party

giving the other party six months notice. Severance fee - Nil

Details of Equity Shares of the Company held by Non-Executive Directors as on March 31 2013 re as under:

Name of the Director No. of SharesShri.S.T.R.Mady 4,07,750

6. Shareholders committee: The composition of the committee and the details of the meetings attended by the Directors

are given below:

Names of Members Category No. of Meetings attendedDuring the year 2012-13

Mr.K.Paranjothy, Chairman Independent, Non-Executive 2Mr.S.T.R.Mady Non-Independent, Non-Executive 4Mr.Arun Eashwar Independent, Non-Executive 1

Four meetings of the Investors Grievance redressal committee were held during the year 2012-13 on the following dates :-

May 28th 2012 August 11th 2012, November 11th 2012 &February 12th 2013.

No. of complaints from Shareholders from 01.04.2012 to 31.03.2013 - Nil Complaints not solved to the satisfaction of the shareholders as on 31.03.2013 - Nil No. of pending share transfers as on 31.03.2013 - Nil

Name, designation and address of Compliance officer : Shri.B.P.Thyagaraj. AVP(Finance) & Secretary, 54/1, NH4, Boodihal Village, Nelamangala, Bangalore -562123, Phone No.080-27733370/72, Fax No.080-27733369, Email - [email protected]

7. General body meetings:

Location and time where last three Annual General Meetings were held:-Financial Year ended Date & Time Venue31st March, 2010 09.09.2010 at 10 am Pai Vijay Hall,

530/58, 33rd Cross, 11th Main, Jayanagar, Bangalore-560 011.

31st March, 2011 26.09.2011 at 10 am ---- do----31st March, 2012 27.09.2012 at 10 am

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Whether Special Resolutions: a. Passed in the previous three Annual General Meetings - Yes b. Were put through postal ballot last year - No c. Are proposed to be conducted through postal ballot - No

8. DISCLOSURES: (a) Related Party Transactions: During the year under review, besides the transactions

reported elsewhere in the Annual Report, there were no other material related party transactions of the Company with its promoters, Directors or the management or their subsidiaries or relatives that may have potential conflict with the interest of company at large. Further there are no material individual transactions that are not in normal course of business or not on an arm’s length basis.

(b) The Company follows Accounting Standards issued by the Institute of Chartered Accountants of India and in the preparation of financial statements, the Company has not adopted a treatment different from that prescribed in any accounting standard.

(c) The Company has complied with the requirements of the Stock Exchanges/SEBI and statutory authority on all matters related to capital markets during the last three years. No penalties or strictures imposed on the company by these authorities.

(d) The Company has complied with all the mandatory requirements of Clause 49 of the Listing Agreement with the Stock Exchanges relating to Corporate Governance.

9. MEANS OF COMMUNICATIONS: The quarterly and half yearly results are published in Financial Express and Sanjevani

Newspapers and are also displayed at Company’s website. These are not sent individually to the Shareholders.

The management discussion and Analysis report forms part of this Annual report.

10. GENERAL SHAREHOLDERS INFORMATION

• AGM date, time and Venue - 21st August, 2013 at 10.00 am at Pai Vijay Hall, 530/58, 33rd Cross,11th Main, 4th Block, Jayanagar, Bangalore-560 011.

• Financial Year - April 2012 to March 2013• Date of Book Closure - 14-08-2013 to 21-08-2013• Dividend payment date - N.A.• Listing on stock exchange - Bangalore Stock Exchange Ltd., JC Road,

Bangalore-560 027.BSE Limited, P.J. Towers, Dalal Street, Mumbai - 400 001 Stock Code: 524758.The Company has paid the listing fee to stock exchanges

WintacL I M I T E D

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Market price data:

High, Low of market price of the company’s shares traded on the Stock Exchange, Mumbai during each month in last financial year (2012-13) and performance in comparison to BSE Sensex :-

PeriodCompany’s Share Price

High LowApril 2012 32.00 30.00May 2012 45.00 32.50June 2012 78.95 41.15July 2012 82.60 72.95August 2012 79.95 54.50September 2012 61.00 47.00October 2012 59.40 46.55November 2012 95.90 62.35December 2012 94.00 82.50January 2013 91.20 77.65February 2013 93.00 86.05March 2013 95.00 90.25

Share Performance of the Company

15000

17000

19000

21000

23000

25000

April '1

2

May '1

2

June

'12

July

'12

Aug.'1

2

Sept.'1

2

Oct.'12

Nov.'12

Dec.'12

Jan.'

13

Feb.'1

3

Mar.13

Sens

ex

25.00

35.00

45.00

55.00

65.00

75.00

85.00

95.00Sh

are

Pric

e

WintacL I M I T E D

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Registrars and Share Transfer Agents:Canbank Computer Services Ltd., No.218, J.P.Royale, 1st Floor, 2nd Main, Sampige Road (Near 14th Cross), Malleswaram, Bangalore-560 003. Email:[email protected] Transfer System:Share Transfers in physical form can be lodged either with the Company at the Registered office or with the Registrar and Share Transfer Agents of the Company. The transfers are normally processed within 15 days from the date of receipt, if the documents are complete in all respects.The distribution of Shareholding as on 31.03.2013 is as follows: -

Range of Holdings No. of Holders Amount (`)Upto 5000 5860 71,30,8505001 10000 136 11,40,530

10001 50000 88 19,78,12050001 100000 20 14,10,730

100001 and above 10 8,85,82,190Total 6114 10,02,42,420

Dematerialisation of Shares and liquidity: 92,56,169 Shares (92.34% of paid up capital) have been dematerialised as on 31.03.2013Outstanding GDR’s/ADR’s/Warrants or any convertible instruments – NilPlant location : The Company’s plant is located at 54/1, NH4 Near 39th Mile, Boodhial Village, Nelamangala Taluk, Bangalore Dist., Karnataka Address of correspondence: Shareholders can correspond with the Registrar and Share Transfer Agents at the address mentioned above. The Shareholders may also contact Mr.B.P.Thyagaraj, Ast.V.P.(Finance) & Secretary at the Registered office of the Company for any assistance.

DECLARATIONI, S.Jayaprakash Mady, Managing Director of Wintac Limited hereby declare that all the members of the Board of Directors and the Senior Management personnel have affirmed compliance with the Code of Conduct, for the year ended March 31, 2013.

For Wintac LimitedPlace : Bangalore S.Jayaprakash MadyDate : 11th July, 2013 Managing Director

AUDITOR’S CERTIFICATE ON CORPORATE GOVERNANCETo :The Members of Wintac LimitedWe have examined the compliance of conditions of Corporate Governance by Wintac Limited for the year ended March 31, 2013, as stipulated in clause 49 of the listing agreement of the said company with the Bangalore and Bombay Stock Exchanges.The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to the procedures and implementation thereof adopted by the company for ensuring the compliance of the conditions of Corporate Governance as stipulated in the said clause and the representations made by the Directors and the management. It is neither an audit nor an expression of the opinion on the financial statements of the Company.In our opinion and to the best of our information and according to the explanations given to us, we certify that the company has generally complied with the conditions of Corporate Governance as stipulated in clause 49 of the listing Agreement.As required by the Guidance note issued by the ICAI, we have to state that in respect of investor grievances received during the year ended March 31, 2013, no investor grievances are pending against the Company as on March 31, 2013, as per the records maintained by the investors Grievance Readdressal committee and certificate of the registrars.We further state that such compliance is neither an assurance as to the future viability of the company nor of the efficiency or effectiveness with which the management has conducted the affairs of the company.

FOR RAO AND SWAMIPlace : Bangalore Chartered Accountants (FRN 003105S)Date : 11th July, 2013 (N. Ramesh) Partner M. no : 16153

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WINTAC LIMITED Report on the Financial Statements 1. We have audited the accompanying financial statements of Wintac Limited (“the Company”),

which comprise the Balance Sheet as at March 31, 2013 and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Board’s Responsibility for the Financial Statements 2. The Board of Directors of the company is responsible for the preparation of these financial

statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error

Auditor’s Responsibility 3. Our responsibility is to express an opinion on these financial statements based on our audit.

We have conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion 6. In our opinion and to the best of our information and according to the explanations given to

us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013; (b) in the case of the Statement of Profit and Loss , of the loss for the year ended on that date; and (c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. Emphasis of Matter 7. Your attention is drawn to the following Notes forming Part of the financial Statements for the

year ended 31-03-2013 :

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(a) Note 1.7 giving the reasons for not recording the redemption of Preference shares on 17.02.2013 pending (earlier of) receipt of Preference share certificate / expiry of notice period.

(b) Note 19.1 detailing claims against the company not acknowledged as debts (including demands of about Rs. 267.01 lakhs (excluding interest) upheld by the lower appellate authorities and contested by the company) in respect of which the management expects favourable orders.

(c) Note 28.10 b) that management’s assessment of the impact from the ongoing reconciliations will not be significant.

(d) Note 20.1 regarding method followed for recognition of revenue from Formulation Development Fee.

Our opinion is not qualified in respect of the above matters. Report on Other Legal and Regulatory Requirements 8. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the

Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

9. As required by section 227(3) of the Act, we report that: (a) we have obtained all the information and explanations which to the best of our knowledge

and belief were necessary for the purpose of our audit; (b) in our opinion proper books of account as required by law have been kept by the Company

so far as appears from our examination of those books (c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by

this Report are in agreement with the books of account (d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement

comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

(e) We report that no director of the company is disqualified from being appointed as a director under Section 274(1)(g) of the Companies Act,1956 by virtue of the directorship in this company. In respect of disqualification which could arise from directorships in other companies, representations have been received from the Directors and taken on record by the Board, that they are not subject to disqualification u/s. 274(1)(g) of the Companies Act, 1956 as on March 31st, 2013.

(f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

For RAO & SWAMI Chartered Accountants

(FRN003105S)Place : BANGALORE (N.Ramesh)Date : 31-05-2013 M No: 016153, PARTNER

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ANNEXURE REFERRED TO IN PARAGRAPH 8 OF OUR REPORT OF EVEN DATERE: WINTAC LIMITED

1) Fixed Assets: a) The company is maintaining proper records which shows full particulars including

quantitative details and location of the fixed assets.. b) After many years the management has carried out the physical verification of fixed assets

during the year and compared with the book records. Material discrepancies were noticed on such verification and necessary entries have been passed in the books to reflect the factual position. Attention is drawn to Note 9.5 on the Accounts. In our opinion all assets must be verified at least once in every three years.

c) As substantial part of the fixed assets has not been disposed during the year, our reporting under Clause 4 (i) (c) of the order does not arise.

2) Inventory a) According to the information and explanations furnished to us, physical verification has

been conducted by the management during the year/as at the year end of inventory in its possession. The stock in the possession of third parties has been verified by the management with reference to certificates furnished by them and/or other relevant documents. Materials in transit have been taken as per records. In our opinion the frequency of verification is reasonable considering the size of the company and nature of its business.

b) In our opinion, the procedures of physical verification of stock are reasonable and adequate in relation to the size of the company and nature of its business.

c) The company has a system of maintaining proper records for inventory at factory in respect of raw materials and finished goods. In respect of other items and inventory with third parties the system requires to be strengthened. As informed to us, the discrepancies noticed on physical verification as compared to available book records are not material and have been properly dealt with in the books of account. In respect of stores and consumables, the balance is as per inventory taken and valued by the management. In respect of goods lying with third parties the balances are taken as per declarations received.

3) Loans from/to parties listed in the Register maintained under Section 301 of the Companies Act, 1956:

According to the information and explanations furnished to us, no loans secured or unsecured, have been granted or obtained from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956 except for inter corporate deposits aggregating to ` 252.93 lakhs during the year obtained from a company in which a director of the company is a director. The balance in the said account as on 31-03-2013 is `15.05 lakhs. No interest has been paid on the deposit and in terms of the information furnished to us the other terms and conditions are not prejudicial to the interests of the company. As informed to us no amount is overdue for repayment.

4) Internal Control for the purchase of inventory and fixed assets and for the sale of goods and services.

According to the information and explanations furnished to us, taking into consideration that some items are of special nature for which comparative alternative quotations cannot be

WintacL I M I T E D

24

obtained there are prima facie adequate internal control procedures commensurate with the size of the company and nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. While no major failure to correct weaknesses in internal control in the above areas have been identified, other than need to strengthen system of record keeping of inventory for items other than raw materials and finished goods as reported in paragraph 2 (c) above, the procedures and controls have not been documented and the accounting processes still require to be streamlined.

5) Transactions that need to be entered in the register maintained under Section 301 of the Companies Act, 1956:

a) Our audit has not disclosed any transaction exceeding the value of five lakh rupees during the financial year in respect of any party that needs to be entered in the register maintained under Section 301 and not having been so entered.

b) As explained to us the transactions have been made at prices which were reasonable having regard to the prices which were reasonable having regard to the prevalent market price at the relevant time.

6) Fixed Deposits: The company has generally complied with the provisions of Sections 58A and 58AA of the

Companies Act, 1956 and the Companies (Acceptance of Deposit) Rules, 1975 with regard to deposits accepted from the public. No order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

7) Internal Audit: An external firm of Chartered Accountants has done the internal audit for the year under

review. The internal audit system needs to be strengthened through proper follow up so as to be commensurate with the size of the company and nature of its business.

8) Cost Records: We have broadly reviewed the system for maintenance by the company of books of account

pursuant to the order made by the Central Government for maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie the system provides for generation/maintenance of prescribed accounts and records. However we have not made a detailed examination to determine whether these records are accurate and complete.

9) Statutory Dues: a) The company is generally found to be depositing the undisputed statutory dues (as

ascertained and provided in its books )in respect of Provident Fund, Investor Education & Protection Fund, Employees’ State Insurance, Income tax, Sales Tax, Excise Duty, Customs Duty, Service Tax, etc. though there may be some delay. As per the books, arrears outstanding for period of more than six months from the date they became payable are ` .09 lakh towards PF and ` 9.96 lakh in respect of Excise Duty.

b) Regarding disputed statutory dues, we are informed that Note 19.1 gives full particulars of dues not deposited on account of dispute/ settlement proceedings.

10) Whether accumulated loss exceeds fifty percent of the Net Worth: As per the financial statements under report: a) The accumulated loss as at the end of the financial year does not exceed fifty percent of

the Net Worth.

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b) The company has incurred cash loss during the financial year covered by our audit and in the previous financial year.

11) Defaults in repayment of debts to Financial Institutions etc. The company has no dues to any bank or financial institution as at the end of the year. The

company has not issued debentures. 12) The company has not granted loans and advances on the basis of security by way of pledge

of shares, debentures and other securities. Hence our reporting under Clause 4 (xiii) of the Order does not arise.

13) The Company is not a Chit fund / Nidhi / Mutual fund. Hence our reporting on matters specified in Clause 4 (xiii) of the Order does not arise.

14) The company is not dealing or trading in shares, securities, debentures and other investments. Hence our reporting on the matters specified in Clause 4 (xiv) of the Order does not arise.

15) Guarantees given on behalf of others: In our opinion, the terms and conditions on which the company had given guarantee in the

usual course of business, for working capital finance taken by its associate from a bank are not prejudicial to the interest of the company.

16) Application of Term Loans: As per our information the term loans availed during the year had been applied/are in the

process of being applied for the purposes for which they had been obtained. However they have since been pre-closed out of the proceeds of the preference issue.

17) Funding of Investments: The long term investments held by the company are backed by long term funds. The company

is not holding any short term investments.18) The company has not made any preferential allotment of shares to parties and companies

covered in the Register maintained under section 301 of the Act and hence our reporting whether the price at which the shares have been issued is prejudicial to the interest of the company does not arise.

19) The company has not issued any debentures. Hence our reporting on whether any security or charge has been availed in respect thereof does not arise.

20) The company has not made any public issue for management to disclose the end use thereof and our verification of the same.

21) Frauds: According to the information and explanations furnished to us no fraud on or by the company

has been noticed or reported during the year.For RAO & SWAMI

Chartered Accountants (FRN003105S)

Place : BANGALORE (N.Ramesh)Date : 31-05-2013 M No: 016153, PARTNER

WintacL I M I T E D

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BALANCE SHEET AS AT 31ST MARCH, 2013

Particulars Note No

As at 31.03.2013 `

As at 31.03.2012 `

I. EQUITY AND LIABILITIES(1) Shareholder's Funds Share Capital 1 12,02,97,920 8,02,97,920 Reserves and Surplus 2 32,36,73,201 13,56,88,222 (2) Non-Current Liabilities Long-term borrowings 3 97,26,000 7,95,08,358 Other Long term liabilities 4 3,38,000 4,38,000 (3) Current Liabilities Short-term borrowings 5 1,24,75,148 7,98,46,651 Trade payables 6 6,50,85,622 5,95,44,632 Other current liabilities 7 7,36,37,275 8,67,67,850 Short-term provisions 8 18,79,249 53,90,314

Total 60,71,12,415 52,74,81,947 II. Assets

(1) Non-current assets Fixed assets 9 (i) Tangible assets 21,36,53,973 23,49,29,285 (ii) Intangible assets 1,07,06,013 1,32,16,192 (iii) Capital work-in-progress 2,09,97,795 1,50,34,487 Non-current investments 10 - 90,00,000 Deferred tax assets (net) 11 3,10,45,795 2,52,22,693 Long term loans and advances 12 1,85,43,439 10,27,18,077 Other non-current assets 13 1,39,74,128 1,24,70,124 (2) Current assets Inventories 14 4,64,23,486 4,89,97,899 Trade receivables 15 3,68,49,863 4,27,97,793 Cash and cash equivalents 16 17,83,66,603 1,32,36,624 Short-term loans and advances 17 64,58,095 50,58,519 Other current assets 18 3,00,93,225 48,00,254 Total 60,71,12,415 52,74,81,947 Contingent Liabilities & Commitments 19Other Disclosures 28Significant Accounting Policies 29

For and on behalf of the board, As per our report of even date For RAO & SWAMI

Chartered Accountants F R N NO. 003105 SS.T.R. MADYChairman

S JAYAPRAKASH MADYManaging Director

N.RAMESHPartner

M. No. 16153

Place : BanagaloreDate : 31.05.2013

K.P.MURALIDR. PARANJOTHY DIRECTORS

B.P.THYAGARAJA.V.P. (Finance) & Secretary


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PROFIT AND LOSS STATEMENT FOR THE PERIOD ENDED 31ST MARCH, 2013

Particulars Note No

Current Year 2012-13

Previous Year2011-12

` `I. Revenue from operations 20 20,88,47,622 24,26,87,845 II. Other Income 21 35,10,528 16,33,832 III. Total Revenue (I +II) 21,23,58,150 24,43,21,677 IV. Expenses:

Cost of materials consumed 22 6,14,20,077 7,19,70,211 Purchase of Finished Goods 23 76,20,048 1,25,08,253 Changes in inventories of finished goods, work-in

progress and Stock-in-Trade24 12,01,295 89,77,176

Employee Expenses & Benefits 25 7,94,23,602 7,49,03,555 Finance costs 26 2,82,09,741 2,99,90,937 Depreciation and amortization expense 1,94,10,692 1,96,12,238 Other expenses 27 8,96,72,504 7,70,10,011 Total Expenses 28,69,57,959 29,49,72,381

V. Profit before exceptional and extraordinary items and tax (III - IV ) (7,45,99,809) (5,06,50,704)VI. Exceptional Items : 28.9 10,32,38,314 1,19,265 VII. Profit before extraordinary items and tax (V - VI) (17,78,38,123) (5,07,69,969)VIII. Extraordinary Items - - IX. Profit before tax (VII - VIII) (17,78,38,123) (5,07,69,969)X. Tax expense:

(1) Current tax - - (2) Deferred tax (58,23,102) 30,63,647

XI. Profit(Loss) from the perid (VII - VIII- X ) (17,20,15,021) (5,38,33,616)XII. Earning per equity share: (1) Basic (25.79) (10.26) (2) Diluted (25.79) (10.26)XIII. Other Disclosures 28XIV. Significant Accounting Policies 29




N.RAMESHPartner

M. No. 16153





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28

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2013Particulars Current Year

2012-13Previous Year

2011-12 ` ` ` `

A. CASH FLOW FROM OPERATING ACTIVITIESProfit/ ( Loss) For The Year Before Tax (17,78,38,123) (5,07,69,969)Adjustments for:- Depreciation - Current Year 1,94,10,692 1,96,12,238 - Prior Year (17,23,568)- Provisions/ Write offs under Exceptional Items 10,32,38,314 -- Profit on sale of fixed assets - (42,857)- Interest/dividend received (26,98,679) (10,62,975)- Interest paid 2,82,09,741 14,64,36,500 2,99,90,937 4,84,97,343 Operating Profit Before Working Capital Changes (3,14,01,623) (22,72,626)Adjustment for :- Trade & Other Receivables (51,48,730) 3,19,62,943 - Inventories 25,74,412 68,50,638 - Trade & Other Payables 39,16,690 13,42,372 20,08,259 4,08,21,840 NET CAsh FROm OPERATINg ACTIvITIEs (A) (3,00,59,251) 3,85,49,214

B. CASH FLOW FROM INVESTMENT ACTIVITIES- Purchase of Fixed Assets (1,93,89,905) (3,55,31,428)- sale of Fixed Assets - 42,857 - Advance To medispec Phamaceuticals Private Limited (14,73,394) 31,53,133 - Other Loans ( Refer Note 1.7) 1,32,85,000 (45,00,000)- Interest/Dividend received 26,98,679 10,62,975 NET CAsh FROm/(UsED IN) INvEsTINg ACTIvITIEs (B) (48,79,619) (3,57,72,463)

C. CASH FLOW FROM FINANCING ACTIVITIES- Proceeds from Issue Of shares 40,00,00,000 4,90,16,286 - Preference shares ( Refer Note 1.7) (2,00,00,000) (1,00,00,000)- Proceeds from ( Repayment) of Borrowings (15,15,84,180) (1,28,24,369)- Interest paid (2,83,46,971) (2,98,36,236)NET CAsh FROm/(UsED IN) FINANCINg ACTIvITIEs (C) 20,00,68,849 (36,44,319)NET INCREAsE IN CAsh AND CAsh EqUIvALENTs (A)+(B)+(C) 16,51,29,979 (8,67,568)

D. OPENING CASH AND CASH EQUIVALENTS (D) 1,32,36,624 1,41,04,192 E. CLOSING BALANCE OF CASH AND CASH EQUIVALENT (E) 17,83,66,603 1,32,36,624

Net Increase In Cash and Cash Equivalents (E-D) 16,51,29,979 (8,67,568)




N.RAMESH Partner

M. No. 16153


K.P.MURALIDR. PARANJOTHY DIRECTOR



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NOTES ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2013

29

As at 31.03.2013

As at 31.03.2012

` `

1. SHARE CAPITAL1.1 Authorised

1,20,00,000 (70,00,000) Equity Shares of ` 10/- each 12,00,00,000 7,00,00,000 3,00,000 (3,00,000) 15 % Preference Shares of `100/- each 3,00,00,000 3,00,00,000

1.2 Issued,Subscribed & Fully Paid Up 1,00,24,242 (60,24,242) Equity Shares of ` 10/- each 10,02,42,420 6,02,42,420 2,00,000 (2,00,000) 15 % Preference Shares of ` 100 /- each 2,00,00,000 2,00,00,000

1.3 Forfeited Shares Amount originally paid up 55,500 55,500

12,02,97,920 8,02,97,920 1.4 Reconciliation of Number of Shares

Particulars Equity Shares Preference Shares31.03.2013 31.03.2012 31.03.2013 31.03.2012

Shares outstanding at the beginning of the year 60,24,242 45,38,900 2,00,000 3,00,000 Shares Issued during the year 40,00,000 14,85,342 - -Shares redeemed during the year - - - 1,00,000 Shares outstanding at the end of the year 1,00,24,242 60,24,242 2,00,000 2,00,000

1.5 Details of Shareholders holding more than 5% of the Shares

Name of Shareholder

As at 31.03.2013 As at 31.03.2012No. of

Shares held

% of Holding

No. of Shares

held

% of Holding

A. EQUITY SHARES

gAvIs Pharmaceuticals LLC, UsA 40,00,000 39.90 - - Bangalore Pharmaceutical & Research Laboratory P Ltd 12,12,900 12.10 12,12,900 20.13 mr. s Jayaprakash mady 9,16,056 9.14 9,16,056 15.21 mrs. Kripa mady 6,71,261 6.70 6,71,261 11.14 synergia Consultants Pvt Ltd 4,95,800 4.95 6,61,500 10.98 mr. sural Thammaiah Raghavendra mady 4,07,750 4.07 4,07,750 6.77

B. PREFERENCE SHARES (Refer Note 1.7)Dr.sridhar mitta 2,00,000 100.00 2,00,000 100.00

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1.6 Rights, Preferences and Restrictions: Equity shares are on par with each other both with regard to payment of dividend and voting

rights.

1.7 Redemption of Preference Shares:

2,00,000 15% cumulative preference shares of ` 100 each which were due for redemption as on 17.02.2014 or within one month’s notice whichever is earlier, have been redeemed on 17.02.2013 out of proceeds of preference issue of 40,00,000 equity shares and said amount is disclosed under Note 18 as redemption moneys paid to the Preference Share holder. The redemption was made through the promoters who have mortgaged their properties to the Preference Share holder to secure the redemption of the Preference shares and have also taken over the balance of `1,32,85,000 due from the Preference shareholder to the company as on 31-03-2012. As the Preference Share Certificate has not been surrendered, the Board has decided as a matter of abundant precaution to issue a formal notice calling for the surrender of the Share Certificate and close the Preference Share Account only on expiry of the notice period or on receipt of Share Certificate whichever is earlier. Accordingly, liability for cumulative preference dividend in Note 19.4 (c) is taken as Nil.

1.8 Unpaid balance out of preference issue of ` 40 crores effected during the year is held in Bank Deposits ` 16,60,87,000 and ` 5,24,178 in Current Account.

2. RESERVE & SURPLUSAs at 31.03.2013 As at 31.03.2012

` `SECURITIES PREMIUM ACCOUNTOpening Balance 14,98,63,366 11,57,00,500 Additions during the year 36,00,00,000 3,41,62,866 Closing Balance 50,98,63,366 14,98,63,366 GENERAL RESERVEAs per previous Balance Sheet 4,09,83,740 4,09,83,740 SURPLUSOpening balance (5,51,58,884) (13,25,268)(+) Net Profit/(Net Loss) for the current year (17,20,15,021) (5,38,33,616)Closing Balance (22,71,73,905) (5,51,58,884)Total 32,36,73,201 13,56,88,222

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As at 31.03. 2013 As at 31.03. 2012 Non Current Current Non Current Current

3. LONG TERM BORROWINGS ` ` ` ` SECURED Term Loans from Banks

From State Bank of India - - 5,60,12,239 1,63,97,307 (The loans were earlier secured by way of

hypothecation of assets and equipment purchased out of bank finance and equitable mortgage on the fixed assets of the company situated at 54/1, Boodihal village, Nelamangala, Bangalore District and the personal guarantee of sri s.T.R. mady, Chairman and sri s Jayaprakash mady, managing Director.On closure of the loans these securities have been released)From other Bank - - - 8,612 Vehicle Loans - - 12,77,056 9,55,078 (Ealier secured by vehicles financed out of the loans) - - 5,72,89,295 1,73,60,997 UNSECURED Term loans from parties other than BanksNon Banking Finance Companies - 12,92,111 13,12,063 16,85,433 Deposits Inter Corporate Deposit - - 25,00,000 (Secured by pledge of shares in the company belonging to the Managing Director)Fixed Deposits 97,26,000 147,07,000 1,84,07,000 1,55,10,000

97,26,000 1,59,99,111 2,22,19,063 1,71,95,433 Total 97,26,000 1,59,99,111 7,95,08,358 3,45,56,430

3.1 Current maturities of long term borrowings are reported under Note 7(a)

3.2 Terms of Repayment Fixed Deposits are repayable on respective due dates

3.3 There are no defaults /continuing defaults in repayment of principal amount of the loan or interest as on the balance sheet date.

3.4 Aggregate amount of above loans guaranteed by the directors ` Nil (P.Y. `. 7,24,09,546)

3.5 The Company opted to pre-close most of the loans out of the proceeds of the preference issue of 40,00,000 equity shares made during the year.

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As at 31 .03.2013 As at 31.03. 2012` `

4. OTHER LONG TERM LIABILITIES Security Deposits 3,38,000 4,38,000

3,38,000 4,38,000

5. SHORT TERM BORROWINGS SECUREDLoans repayable on demandFrom BanksWorking Capital Loans - 6,63,10,451 (Working capital limits with State Bank of India were secured by hypothecation of stock in trade both present and future stock of raw materials, stock in process, cash and other current assets including money receivable,claims and bills receivable} and all other movable plant and machinery,furniture and fixtures, etc of the company both present and future and first charge by way of equitable mortgage on the fixed assets of the company situated at 54/1, Boodihal Village,Nelamangala,Bangalore District and the personal guarantee of Sri S.T.R. Mady, Chairman and Sri S Jayaprakash Mady, Managing Director. These securities have since been released on closure of this loan.)

- 6,63,10,451 UNSECURED Loans and advances from related parties - 39,11,616 Deposits Fixed Deposits 1,09,15,000 50,00,000 Inter Corporate Deposit 15,60,148 46,24,584

1,24,75,148 1,35,36,200 1,24,75,148 7,98,46,651

5.1 Aggregate amount of loans guaranteed by Director - ` Nil (6,63,10,451)

5.2 There is no default / continuing default in repayment of principal or interest as on the balance sheet date.

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As at 31 .03.2013 As at 31.03. 2012` `

6. TRADE PAYABLESTrade Payables 6,50,85,622 5,95,44,632

There is no information reportable under the micro, small, & medium Enterprises Development (msmED) Act, 2006.

6,50,85,622 5,95,44,632

7. OTHER CURRENT LIABILITIES(a) Current maturities of long-term debt (Refer Note No.3) 1,59,99,111 3,45,56,430 (b) Interest accrued but not due on borrowings 20,964 1,17,674 (c) Interest accrued and due on borrowings - 40,520

(d) Unpaid matured deposits and interest accrued thereon 54,27,000 13,00,000 (e) Other payables Due to Managing Directors - 672 Customer Advances/ Credit balances 2,81,36,245 2,53,21,216 Statutory Liabilities 66,86,951 94,96,434 Security Deposits 2,50,000 2,50,000 Others (See Note 7.2 below) 1,71,17,004 1,56,84,904

7,36,37,275 8,67,67,850

7.1 Amounts due to be credited to the Investor Education and Protection Fund as on 31-03-2013 ` Nil ( Nil)

7.2 Others include employee dues and accrued liabilities. These include balance of Company’s contribution to Super Annuation Scheme

(i) Balance of Company’s contribution to Super Annuation Scheme ̀ 19,49,567/- ( ̀ 19,49,567/-) out of balance outstanding on 31.03.2009 when the Company discontinued the Scheme.

(ii) Credit balance per books in one bank account ` 2,95,166/- ( ` 67,833/- Dr) which has not been reconciled.

8. SHORT TERM PROVISIONS Provision for employee benefits Gratuity - 36,27,887Earned Leave 18,79,249 17,62,427

18,79,249 53,90,314

8.1 Disclosures pursuant to AS-15 are given in Note 25.1

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9. F

IXED

ASS

ETS

Gro

ss B

lock

Acc

umul

ated

Dep

reci

atio

nN

et B

lock

Bal

ance

as

at 1

A

pril

2012

Add

i-tio

nsO

ther

Ad-

just

men

ts

(Ref

er

Not

e 9.

5)

Bal

ance

as

at 3

1st

Mar

ch

2013

Bal

ance

as

at 1

A

pril

2012

Dep

re-

ciat

ion

char

ged

for t

he

year

Oth

er A

d-ju

stm

ents

(R

efer

N

ote

9.5)

Bal

ance

as

at 3

1st

Mar

ch

2013

Bal

ance

as

at 3

1st

Mar

ch

2013

Bal

ance

as

at 3

1st

Mar

ch

2012

``

``

``

``

``

a. T

AN

GIB

LE A

SSET

S

Land

44,14

,081

- -

44,14

,081

- -

- -

44,14

,081

44,14

,081

Build

ings

10,12

,23,76

9 -

43,25

,263

10,55

,49,03

2 3,

76,62

,743

33,41

,605

22,05

,145

4,32

,09,49

3 6,

23,39

,539

6,35

,61,02

6

Plan

t and

Equ

ipmen

t 25

,80,14

,241

23,77

,515

(3,49

,71,05

0) 22

,54,20

,706

10,44

,74,77

2 1,

22,48

,192

(2,59

,05,29

2) 9,

08,17

,672

13,46

,03,03

4 15

,35,39

,469

Furn

iture

and F

ixtur

es 36

,83,26

5 32

,590

(6,04

,159)

31,11

,696

14,50

,044

2,11

,368

(6,71

,467)

9,89

,945

21,21

,751

22,33

,221

vehic

les 98

,17,66

3 -

(18,1

0,500

) 80

,07,16

3 43

,09,48

6 8,

23,31

2 (1

8,93,4

29)

32,39

,369

47,67

,794

55,08

,177

Offic

e equ

ipmen

t 15

,44,39

5 50

,500

(99,3

56)

14,95

,539

5,61

,742

66,97

7 (1

,25,81

6) 5,

02,90

3 9,

92,63

6 9,

82,65

3

gard

en 20

,73,09

1 -

- 20

,73,09

1 -

- -

- 20

,73,09

1 20

,73,09

1

R &

D Eq

uipme

nts 39

,69,59

2 -

(2,44

,672)

37,24

,920

16,25

,827

1,88

,556

(1,17

,523)

16,96

,860

20,28

,060

23,43

,765

Libra

ry 4,

04,18

0 55

,500

(9,28

8) 4,

50,39

2 1,

30,37

8 20

,501

(14,4

73)

1,36

,405

3,13

,987

2,73

,802

Tota

l 38

,51,44

,277

25,16

,105

(3,34

,13,76

2) 35

,42,46

,621

15,02

,14,99

2 1,

69,00

,511

(2,65

,22,85

5) 1,

40,59

2,648

21,3

6,53,9

73 2

3,49,2

9,285

b. IN

TAN

GIB

LE A

SSET

S

Bran

ds /tr

adem

arks

28,76

,751

- -

28,76

,751

25,75

,930

2,77

,091

(2)

28,53

,019

23,73

2 3,

00,82

1

Comp

uter s

oftwa

re 34

,52,19

0 -

- 34

,52,19

0 12

,57,18

3 5,

59,60

0 1

18,16

,784

16,35

,406

21,95

,007

Tech

nical

Know

how

59,00

,150

- -

59,00

,150

55,83

,320

3,16

,830

- 59

,00,15

0 -

3,16

,830

Accre

dition

1,35

,66,59

6 -

- 1,

35,66

,596

31,63

,062

13,56

,660

- 45

,19,72

2 90

,46,87

4 1,

04,03

,534

Tota

l 2,

57,95

,687

- -

2,57

,95,68

7 1,

25,79

,495

25,10

,180

(1)

1,50

,89,67

4 1,

07,06

,013

1,32

,16,19

2

c. C

APIT

AL IN

WO

RK IN

PRO

GRE

SS

- m

achin

ery

1,68

,15,61

2 1,

18,66

,421

- B

uildin

g 41

,82,18

3 31

,68,06

6

Tota

l -

- -

- -

- -

- 2,

09,97

,795

1,50

,34,48

7

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9.1.1 Land: There is a dispute on title of the land at Sarjarpur Road, Original Cost, ` 6,71,438. There has been a claimant to the said land who was successfull in transfering the Khata to his name and the Company has filed a Writ Petition in the Hon’ble High Court of Karntaka which is pending disposal.

9.1.2 Portion of vacant factory land at Bhudihal Village, Nelamangala Taluk measuring 82,000 Sqt has been given on lease to Bangalore Pharmaceuticals & Research Laboratories Pvt. Ltd.

9.2 Trademarks “Trademarks are under transfer to the company for which necessary applications have been made’’

9.3 Vehicle: Gross Block includes: Motor Car original cost ` 13,29,372/- standing in the name of the Managing Director.

9.4 Application Software is amortised over a period of six years.

9.5 During the year, fixed assets were physically verified and compared with book records. Based on such verification, the financial books and fixed asset register have been brought upto date, after making necessary adjustments.

Summary of the adjustments made are as below:

FIXED ASSETS

Under Gross Block Under Depreciation Under Net BlockReclassification

and other Adjustments

Assets Withdrawn

Reclassification and other

Adjustments

On Assets Withdrawn

Reclassification and other

Adjustments

Assets Withdrawn

` ` ` ` ` `Buildings 43,25,263 - 21,79,116 - 21,46,147 -Plant and Equipment (43,25,263) 3,06,45,495 (39,02,481) 2,21,77,855 (4,22,782) (84,67,640)Furniture and Fixtures - 6,04,159 - 5,90,242 - (13,917)Vehicles - 18,10,500 - 18,05,014 - (5,486)R & D Equipments - 2,44,672 - 1,17,523 - (1,27,149)Library - 9,288 - 9,288 - -

- 3,33,14,114 (17,23,365) 2,46,99,922 17,23,365 (86,14,192)

Amounts Disclosed in the Statement of Profit & Loss Account Under Note 27.2 Prior Period Items (17,23,365)Under Note 28.9 Exceptional Items 86,14,192

9.6 None of the Fixed Assets are subject matter of any charge. Action is being taken by the company to rectify the records in the Registrar of Companies/ Ministry of Company Affairs which shows/ continues to show a charge on 1.885 acres of land given on lease referred to in Note 9.1.2 above.

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As at 31.03.2013 As at 31.03.2012Number Value Number Value

` ` 10. INVESTMENTS

Trade Investments , Unquoted, at CostInvestment in Equity Shares of Medispec

Pharamceuticals Private Limited a Joint Venture Company 9,00,000 90,00,000 9,00,000 90,00,000

Less : Provision for dimunition in value - 90,00,000 - -Total 9,00,000 - 9,00,000 90,00,000

11. DEFERRED TAX ASSET

A. Deferred Tax Asset1. Carry Forward Depreciation 5,49,86,070 4,84,78,606 2. Carry forward Research & Development Expenditure u/s 35(4) 3,02,835 5,33,276 3. Expenditure not allowed as a deduction under tax laws

pending actual payment 21,90,351 37,32,418 5,74,79,256 5,27,44,300

B. Deferred Tax Liability Difference between book depreciation and tax depreciation 2,64,33,461 2,75,21,607 C. Net Deferred Tax Asset 3,10,45,795 2,52,22,693

11.1 The assessment of deferred tax asset is provisional and is subject to adjustments on company filing its income tax return, assessment of returned income, outcome of appeals, etc.

11.2 In light of steps taken by the company to retain the regulatory approval obtained for sales to US markets, regulatory approvals available for export to European markets and the current valuation of the company, the Management is virtually certain that the company will be able to earn taxable income in subsequent years to absorb deferred tax asset comprising carry forward depreciation and carry forward research and development expenditure.

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As at 31 .03.2013 As at 31.03. 2012` `

12. LONG TERM LOANS AND ADVANCESUnsecured, Considered GoodCapital Advances 1,52,28,075 43,17,584 Security Deposits 27,46,039 31,14,573 Loans and advances to related parties : Medispec Pharmaceutical (P) Ltd - 7,95,92,226Other Advances recoverable in cash or kind or for value to be receivedRecon Agrotech Limited (Former Subsidiary) - 17,78,845 Advance to Preference Shareholder - 1,32,85,000 Others 5,69,325 6,29,849 (a) 1,85,43,439 10,27,18,077 Considered Doubtful Loans and advances to related parties : Medispec Pharmaceutical (P) Ltd 8,10,65,620 -Others Recon Agrotech Limited (Former Subsidiary) 3,00,78,845 2,83,00,000 (b) 11,11,44,465 2,83,00,000 (a) + (b) 12,96,87,904 13,10,18,077 Less: Provision for doubtful loans and advances 11,11,44,465 2,83,00,000

1,85,43,439 10,27,18,077

13. OTHER NON CURRENT ASSETS

UNSECURED, CONSIDERED GOODTaxes Refundable 1,39,74,128 1,24,70,124

1,39,74,128 1,24,70,124

13.1Taxes Refundable includes payments made/ refunds adjusted to pending demands and interest thereon which are under appeal as detailed in Note 19.1.

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As at 31 .03.2013 As at 31.03. 2012 ` `

14. INVENTORIES* Raw Materials and components 1,49,43,525 1,81,28,941 Packing Materials and components 1,44,95,472 1,46,96,771 Work-in-progress 30,08,072 47,81,968 Finished goods (Including Purchased) 52,16,567 46,43,966 Stores and spares 39,96,254 43,25,847 Packing Materials in bonded warehouse 47,63,596 24,20,406* Valued as per Accounting Policy No. 29(d) 4,64,23,486 4,89,97,899

14.1 Include materials purchased for overseas market for supply against orders on hand, not processed pending receipt of regulatory approvals for which the management has taken necessary steps to address the concern and expects to obtain the approvals after inspection.

Raw Materials and components - ` 1,01,87,137 (` 1,06,87,538) Packing Materials and components - ` 26,75,100 (` 27,59,135) Packing Materials in bonded warehouse - ` 47,63,596 (` 24,20,406)

15. TRADE RECEIVABLESUnsecured, Considered Good:Debts outstanding for a period exceeding six months 31,68,821 97,08,239 Other debts 3,36,81,042 3,30,89,554

3,68,49,863 4,27,97,793

16. CASH AND CASH EQUIVALENTS

Balances with Banks In Deposit Accounts 17,68,08,276 97,54,812 In Current Accounts 15,46,224 34,77,011 Cash on hand 12,103 4,801

17,83,66,603 1,32,36,624

16.1 Balances with Banks in Deposit Accounts includes

a ` 3,06,000/- (` 3,23,773) pledged as margin towards bank guarantees b ` 1,04,15,276 (` 21,04,225) pledged as margin towards Letter of Credit facilities.

16.2 Bank deposits with more than 12 months maturity - Nil (Nil)

16.3 Balances in 3 (7) current accounts with banks which has not been operated during the year aggregating to ` 60,486/- ( ` 44,769/-) for which statement of accounts and confirmation has not been received.

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As at 31 .03.2013 As at 31.03. 2012` `

17. SHORT TERM LOANS AND ADVANCESOther Loans and Advances Recoverable In Cash or

Kind or for Value to be Received *Unsecured, considered good 64,58,093 50,58,519* Includes loans to staff, advances to suppliers, etc 64,58,093 50,58,519

18. OTHER CURRENT ASSETSRedemption Money paid to Preference Shareholder

(Refer Note 1.7) 2,00,00,000 - Prepaid Expenses 60,68,410 8,25,805 Input Tax Credits ( Refer Note 18.1) 37,54,158 39,74,449 Gratuity fund (Funded Status) 2,70,657 -

3,00,93,225 48,00,254

18.1 Input tax credits in respect of Cenvat, Service tax and Vat balances are under reconciliation.

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19. Contingent Liabilities and Commitments 19.1 Claims against the company not acknowledged as debt

NATURE OF CAsEFORUm WhERE CAsE Is

BEINg ADJUDICATEDvALUE INvOLvED/

POTENTIAL LIABILITYAMOUNT

PAIDAMOUNT NOT PAID REmARKs

` LAKh ` LAKh ` LAKh ` LAKhCLAIMS TOWARDS TAXESCOMPANY IN APPEALCENTRAL EXCISE1 valuation of Physician samples for the period Jan2005 to December 2006

CEsTAT, BANgALORE 44.95 (with interest as applicable) Penalty equal amount

44.95 (with interest as applicable) Penalty equal amount

2 Penalty under Rules 209 A of the Central Excise Rules

CEsTAT, AhmEDABAD 2.00 2.00

3 Claim of duty on removal of exempted products

CEsTAT, BANgALORE Tax of 168.28 ( plus interest as applicable) Penalty equal amount.

9.05 Tax of 168.28 (plus interest as applicable) Penalty equal amount

VAT / SALES TAX4 Difference in sales Tax for non submission of statutory Forms 2003-04 at mumbai

DCsT- Navi mumbai CsT 2.33 (Penalty 0.79)

1.75 CsT 1.49 (Penalty 0.79)

5 Difference in sales Tax for non submission of statutory Forms 2005-06

Joint Commissioner of Commercial Taxes- Appeals

4.60 4.60 -

6 Difference in sales Tax for non submission of statutory Forms 2006-07

Joint Commissioner of Commercial Taxes- Appeals

5.80 5.80 -

INCOME TAX7 Appeal against order of rectification passed by AO for Asst Year 2001-02

high Court of Karnataka 38.26 plus interest as applicable

70 (approx)

has been recovered out of refunds for subsequent assessment years

DEPARTMENT IN APPEALCENTRAL EXCISE8 Central Excise on sale of brands to Recon health Care

supreme Court of India 400 ( with Interest and penalty etc)

400 ( with Interest and penalty etc)

Liability if any will be on acount of Cadila healthcare Private Limited the purchaser

9 service Tax on transfer of Technical Knwhow to Recon health Care etc

high Court of Karnataka 128.08 ( with Inter-est and penalty etc)

128.08 ( with Inter-est and penalty etc)

Liability if any will be on acount of Cadila healthcare Private Limited the purchaser

INCOME TAX10 Taxability of transfer of Technical knowhow to Recon healthcare Limited

high Court of Karnataka Not possible to quantify

Not possible to quantify

OTHER CLAIMS 11 suit by Indian Oil Corporation demanding ` 9.3 lakhs towards non-submission of sales Tax Forms

City Civil Court 9.3

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As at 31 .03.2013 As at 31.03. 2012` lakhs ` lakhs

19.2 GuaranteesCorporate Guarantee issued in favour of bankers of joint venture company Medispec Pharmaceuticals (P) ltd 20.00 20.00

19.3 Other money for which the company is contingently liable (a) Sales Tax & Entry Tax :

The management is of the opinion that company will have no further liability / exposure arising from pending assessments for Sales Tax and Entry Tax for current and earlier years at erstwhile depots and at Bangalore, including tax payable on the products of Medispec Pharma (P) Ltd sold under co-marketing arrangements.

(b) Fringe Benefit Tax :The Commissioner of Income Tax, Bangalore III has in an order of revision set aside the Nil assessment made by the Assessing Officer for the Assessment year 2008-09 (year ended 31.03.2008 ). Same is under challenge before the ITAT. The assessment for the assessment year 2007-08 has also been since re-opened by the Assessing Officer.

19.4 Other Commitments : (a) Custom Duty :

On account of import of material under Advance License Scheme - -(b) On goods held in bonded ware house : 12.32 5.20 (c) Arrears of Cumulative Preference Dividend (Refer Note 1.9) - 219.24 (d) Letter of Credit (net of margin) - - (e) On Capital Account (not provided for) 106.05 163.94

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Current Year 2012 - 2013

`

Previous Year 2011 - 2012

`

20. REVENUE FROM OPERATIONS Sales: Formulations

- Gross Sales 10,50,64,496 16,97,02,442 - Less : Excise Duty * 1,80,16,323 1,66,53,148

8,70,48,173 15,30,49,294 Income from Services:

- Manufacturing Charges 9,79,39,850 6,71,09,150 - Formulation Development 2,21,88,195 2,20,30,651

- Other Operating Revenues (Analytical Charges,etc) 16,71,404 4,98,750 20,88,47,622 24,26,87,845

* Excise Duty which is collected separetaly and does not form part of revenue is added back to revenue for the purpose of arriving at Gross Sales above.

20.1 Formulation Development Fee `2,21,88,195 (`2,20,30,651) represents Technology Transfer Fee for development of dosage forms. Revenue from these contracts is generally being recognized in accordance with the payments falling due as per the payment milestones under the agreement, which method, in the opinion of the management, approximates to the proportionate completion method specified in Accounting Standard - 9 “Revenue Recognition”.

21. OTHER INCOME Interest 26,98,679 10,62,975 Lease Rent 5,80,800 5,28,000 Miscellaneous Income 1,54,178 - Profit on Sale of Fixed Assets - 42,857 Prior Period Items- (Net) (Refer Note 27.2) 76,871 -

35,10,528 16,33,832 22. COST OF MATERIAL CONSUMED

Raw Materials 3,23,03,203 4,30,38,306 (Bulk Drugs and other Pharmaceutical inputs) Packing materials 2,91,16,874 2,89,31,905 (Ampoules, vials, bottles,labels,cartons, shippers etc)

6,14,20,077 7,19,70,211

23. PURCHASE FINISHED GOODS (Formulations) 76,20,048 1,25,08,253

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`


`

24. CHANGES IN INVENTORIES OF FINISHED GOODS AND WORK-IN-PROGRESS ( Formulations) Closing Stock Finished Goods ( including Purchased Goods) 52,16,567 46,43,966 Semi-Finished Goods 30,08,072 47,81,968

82,24,639 94,25,934 Less: Opening Stock Finished Goods ( Including Purchased Goods) 46,43,966 25,26,624 Semi-Finished Goods 47,81,968 1,58,76,486

94,25,934 1,84,03,110 Increase / ( Decrease ) in Inventory (12,01,295) (89,77,176)

25. EMPLOYEE EXPENSES & BENEFITS Salaries & Wages 7,36,54,237 6,82,84,054 Contribution to Provident and Other Funds 35,59,123 43,71,033 Staff Welfare 22,10,242 22,48,468

7,94,23,602 7,49,03,555 25.1 a) Overview of Employees Benefits The compensation to employees for services rendered are as follows: i. Salaries and Wages including compensated absences. Compensated absences such

as eligibility towards earned leave are allowed to be accumulated as per company’s rules. Such earned leave can be encashed at the time of separation.

ii Bonus as per the Bonus Act, 1965. iii Contributions under defined contribution plans such as Provident Fund as per Employees

Provident and Miscellaneous Provisions Act, Employees Insurance Scheme, etc. iv Defined Benefit Plans such as Gratuity on cessation of employment. The Company has

taken a Master Policy from LIC to fund this defined benefit obligation. v Other employee benefits such as leave travel allowance. The above benefits are subject to eligibility and other criteria as per company’s rules.

The Company has discontinued the Superannuation Scheme at the close of 31.03.2009 and dues if any to a separating employee is met out of the unpaid contribuiton (referred to in Note 7.2).

b) Recognition and Measurement i Employee benefits are recognised on accrual basis. Liability to compensated absence

such as leave encashment are determined by multiplying the actual leave accumulated at the end of the year by the applicable component of salary.

ii Liability to defined benefit plan viz. Gratuity are valued on actuarial basis under Projected Unit Credit Method by LIC.

iii Liability under defined contribution schemes such as contribution to Provident Fund, ESI etc are measured based on the contribution due for the year.

iv Leave Travel Allowance is recognized based on claim. The unavailed allowance is not recognized as in the opinion of the management, the same will not be material

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As at 31 .03.2013`

As at 31.03. 2012`

c) Disclosures pursuant to AS-15 (Revised 2005)i. Leave Encashment

Opening Liability 17.62,427 14,78,494 Leave encashed during the year 2,55,161 2,33,471 Closing liability as on 31st March 2012 18,79,249 17,62,427 Charge to the Profit and Loss A/c 3,71,983 5,17,404

ii. GratuityTable Showing changes in present value of Obligation Present value of obligations as at beginning of year 39,34,385 35,47,017 Interest cost 3,14,751 2,83,761 Current Service Cost 4,64,993 4,93,749 Benefits Paid - (1,41,548)Actuarial (gain)/ loss on obligations (6,82,821) (2,48,594)Present value of obligations as at end of year 40,31,308 39,34,385 Table showing changes in the fair value of plan assetsFair value of plan assets at beginning of year 3,06,498 2,60,809 Expected return on plan assets 88,723 26,463 Contributions 39,06,744 1,60,774 Benefits Paid - (1,41,548)Actuarial gain/(loss) on Plan assetsFair value of plan assets at the end of year 43,01,965 3,06,498 Table showing fair value of plan assetsFair value of plan assets at beginning of year 3,06,498 2,60,809 Actual return on plan assets 88,723 26,463 Contributions 3,906,744 1,60,774 Benefits Paid - (141,548)Fair value of plan assets at the end of year 43,01,965 3,06,498 Funded status 2,70,657 (36,27,887)Excess of Actual over estimated return on plan assets NIL NIL (Actual rate of return = Estimated rate of return as ARD falls on 31st March)The amounts to be recognized in the balance sheet Present value of obligations as at the end of year 40,31,308 (39,34,385)Fair value of plan assets as at the end of the year 43,01,965 3,06,498 Funded status 2,70,657 (36,27,887)Net asset/ (liability) recognized in balance sheet 2,70,657 (36,27,887)Actuarial Gain/Loss recognizedActuarial (gain)/ loss for the year - plan assets NIL NIL Actuarial (gain)/ loss on obligations (6,82,821) 2,48,594 Actuarial (gain)/ loss recognized in the year (6,82,821) 2,48,594

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` `Expenses Recognised in statement of Profit and lossCurrent Service cost 4,64,993 4,93,749 Interest Cost 3,14,751 2,83,761 Expected return on plan assets (88,723) (26,463)Net Actuarial (gain)/ loss recognized in the year (6,82,821) (2,48,594)Expenses recognised in statement of Profit and loss 8,200 5,02,453

Experience Adjustments For the period ended31.03.13

` 31.03.12

` 31.03.11

` 31.03.10

`40,31,308 39,34,385 35,47,017 26,71,77943,01,965 3,06,498 2,86,754 1,98,158

2,78,657 (36,27,887) (32,60,263) (24,73,621)- - - -- 3,06,498 2,60,809 -

Defined benefit obligation Plan Assets Surplus / (Deficit) Experience adjustment on plan liability Experience adjustment on plan asset

Principal Actuarial assumptions at the Balance Sheet Date in respect of gratuity as per statement from LICParticulars As at 31.03.2013 As at 31.03.2012

Discount rate 8% 8%Salary Escalation 7% 7%Withdrawal Rate 1% to 3% 1% to 3%

Depending on age

Depending on age

Mortality Rate LIC (1994 - 96) LIC (1994 - 96)ultimate ultimate

The above figures are as furnished by LIC for purpose of disclosure under AS- 15.The estimates of salary increases furnished by the company to LIC for the purposes of the actuarial valuation, takes into account of inflation, seniority, promotion and other relevant factors.

25.2 The changes in the remuneration of the Managing Director effected pursuant to the Board meeting dated 12th Feb 2013 will be placed before the ensuing AGM for ratification.

26 Finance Cost Interest expense * 2,77,72,248 2,82,36,451 Other borrowing costs 4,37,493 17,54,486

2,82,09,741 2,99,90,937

* Includes interest paid for late remittances of statutory dues ` 15,34,448/-

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` `

27. OTHER EXPENSESAdvertisement & Sales Promotion 14,30,783 10,27,744 Auditors’s Remuneration 5,00,000 5,00,000 Commission Paid 13,84,405 5,60,455 Communication Expense 17,68,715 24,55,179 Director’s Sitting Fees 87,500 67,500 Outward Freight 6,53,839 11,40,096 Insurance 8,07,198 16,77,612 Legal and professional charges 76,37,150 24,05,350 Manufacturing Charges 7,05,611 9,24,187 Miscellaneous Expenses 87,67,772 47,50,477 Net gain or loss on foreign currency transaction and translation (other than considered as finance cost) 28,08,787 (8,23,651)Power 2,97,21,366 2,87,04,021 Prior Period Items - 5,83,690 Rent 22,79,440 23,93,280 Repairs and Maintenance :- Machinery 98,21,315 1,38,17,532 - Buildings 17,56,433 30,43,096 - Others 40,16,610 48,79,012 - Rates and Taxes 78,79,773 17,29,641 - Travelling Expense 34,10,322 27,29,452 - Vehicle Maintenance 42,35,485 44,45,338

8,96,72,504 7,70,10,011

27. 1 Details of Remuneration to AuditorsAs Auditor 3,90,000 3,90,000 For taxation matters 30,000 - For company law matters 25,000 - For management services - - For other services 55,000 1,10,000

5,00,000 5,00,000

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` `

2.7.2 Prior year items (Net) Details of Prior year items included under respective heads

A Income :Revenue from OperationsSales (4,51,750) - Manufacturing Charges (1,49,908) - Other Income - Interest Income 3,87,041 - Sub - Total ( A ) (2,14,617) -

B ExpenditureCost of Materials Consumed :Raw Material Consumed 10,33,473 1,15,394 Packing Material Consumed (2,88,860) 1,05,413 Employee Benefit ExpensesSalary, Wages & Bonus (2,12,003) (1,23,624)Contribution to Provident & Other Funds - 54,263 Staff Welfare 15,773 - Finance CostInterest Expense 53,192 21,554 Depreciation & Amortisation ExpenseDepreciation ( Refer Note 9.5) (17,23,567) - Other ExpensesAdvertisement & Sales Promotion (14,896) 35,766 Auditor’s Remuneration - 3,817 Legal & Professional Charges 39,818 34,500 Rates & Taxes 3,04,188 16,000 Repairs and Maintenance :Machinery 4,97,901 - Others 3,493 4,979 Miscellaneous Expenses - 3,15,628 Sub - Total ( B ) (2,91,488) 5,83,690 NET (Income)/ Expense ( A - B ) (76,871) 5,83,690

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28. OTHER DISCLOSURES

28.1 In terms of Accounting Standard 18 “Related Party Disclosures ” , ̂ the following relationships and related parties have been identified

Relationship Related Party1. Subsidiary/Holding Companies None2. Associates/Joint Ventures Medispec Pharmaceuticals (P) Ltd3. Co investors/ venturers None4. Enterprises/Individuals holding 20% or more of the voting power in the company directly or indirectly

Gavis Pharmaceuticals LLC - USA (From 31.01.2013) Bangalore Pharmaceutical & Research Laboratory (P) Ltd (Upto 30.01.2013)

5. Key Management Personnel Sri. S. Jayaprakash Mady, Managing Director6. Relatives of 4 or 5 S. Jayaprakash Mady (HUF)7. Enterprises in which any person described in 4 or 5 has 20% or more interest in the voting power directly or indirectly.

^ Refer Significant Accounting Policy regarding disclosure of related party transactions

+ The voting rights available to the Preference Shareholder pursuant to the provisions of Section 87(2) of the Companies Act, 1956 have not been considered as the investment made by him in the Company is considered as a financing activity.

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Transactions with Related Parties (Other than expenses re-imbursed)

Nature of Transactions Associates / Joint Venture

Key Management

Personnel

Relatives Enterprises

` ` ` `

1. Managerial Remuneration Nil 20,33,890 Nil Nil(NIL) (16,06,400) (NIL) (NIL)

2. Fixed Deposits/ Loans received and outstanding as on 31.03.2013

Nil(NIL)

75,00,000(40,00,000)

Nil ^(NIL)

N.A.*(39,11,616)

3. Lease Deposit Received Nil Nil Nil NIL(NIL) (NIL) (NIL) (1,00,000)

4. Outstanding Balances under Loans & Advances

8,10,65,620(7,95,92,226)

749(NIL)

Nil(NIL)

Nil(NIL)

5. Investment in Equity: NIL NIL NIL (a) Of Company in Associate No. of Shares 9,00,000 - - - (9,00,000) Face Value 90,00,000 - - -

(90,00,000) (b) Of Associate in Company No. of Shares 2,100 - - -

(2,100) Face Value 21,000 - - -

(21,000)

6. Guarantee & Collaterals* 20,00,000 Nil NIL Nil(20,00,000) (NIL) (NIL) (NIL)

7 Lease / Rent Paid Nil Nil 2,60,000 Nil(NIL) (NIL) (2,40,000) (NIL)

8. Sale of Raw Material Nil Nil Nil Nil (NIL) (NIL) (NIL) (NIL)

9. Interest Paid Nil Nil Nil ^ Nil(NIL) (4,40,000) (NIL) (12,28,288)

10. Lease Rent Received Nil Nil Nil 4,84,000 *(NIL) (NIL) (NIL) (5,28,000)

* Upto 31.01.2013 - Date of Preferential Issue ^ Refer Significant Accounting Policy regarding disclosure of related party transactions

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28.2 Segment Reporting: The Company recognizes only one business segment, viz formulations. All the operations are in India. Hence separate segment information in terms of Accounting Standard 17 “Segment Reporting” issued by the Institute of Chargted Accountants on India, is not given.

28.3 The company has no significant operating leasing arrangements requiring addiional disclosure as per AS-19:Leases. The Company has not entered into any financial leasing arrangement.


Previous Year

2011 - 2012` `

28.4 Earnings Per Share has been computed as under: a) Profit after tax (17,20,15,021) (5,38,33,616) b) Less: Preference Dividend and Tax thereon - (39,85,734) c) Profit after tax attributable to equity shares (17,20,15,021) (5,78,19,350) d) Total weighted average number of shares of ` 10 each 66,70,817 56,34,644 e) Earnings per Share (Basic) (25.79) (10.26) f) Total weighted average number of equity shares for Diluted EPS 66,70,817 56,34,644 g) Earnings per Share (Diluted) (25.79) (10.26)

28.5 Value of Import calculated on CIF Basis Raw Materials 26.94 28.10 Packing Materials 2.35 84.94 Capital Goods 9.71 128.33

39.00 241.37

28.6 Break up of Consumption Percentage PercentageQty Value Qty Value

Raw Materials Imported 16.66% 53.82 6.53% 28.10 Indigenous 83.34% 269.21 93.47% 402.28

100.00% 323.03 100.00% 430.38

Packing Materials & Consumables Imported 9.71% 28.28 29.36% 84.94 Indigenous 90.29% 262.89 70.64% 204.38

100.00% 291.17 100.00% 289.32

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` `

28.7 Earnings in Foreign Currency From Export of Goods calculated on FOB Basis 78.67 519.91 Formulation Development Fees 158.81 220.31

237.48 740.22

28.8 Expenditure in Foreign Currency Commision paid in respect of formulation development Contracts 9.78 4.12 Legal & Professional charges 28.52 - Travelling Expenses 1.55 1.61 Miscellaneous Expenses 9.30 -

49.15 5.73

28.9 Exceptional Items Bad debts written off 19,78,673 1,19,265 Advances written off 13,50,494 - Provision for dimunition in value of investments 90,00,000 - Sundry Creditors written back (5,49,790) - Provision for Doubtful Advances 8,28,44,465 - Book value of discarded Assets (Refer Note 9.5) 86,14,472 -

10,32,38,314 1,19,265

28.10 a) The Company has classified assets and liabilities as long term and short term in terms of revised Schedule VI largely based on objective criteria. However in a few cases the classification is based on Management perception which will be reviewed while compiling the financial statements for the ensuing financial year.

b) In the assessment of the Management the impact on the financial statements from ongoing review/ reconciliations of balances accounts referred to in note 7.2(ii), 16.3 & 18.1 and under the heads Trade Receivables, Trade Payables and Advances will not be significant.

c) Figures in brackets pertain to the previous year.

d) Previous year figures have been regrouped wherever necessary to be in conformity with current year’s figures.

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29.SIGNIFICANT ACCOUNTING POLICIES a) Fixed assets are stated at acquisition cost which comprises of purchase price, import duties,

levies and any directly attributable cost of bringing the asset to its working condition for its intended use and also include an appropriate share of expenditure (including cost of trial runs and finance charges) during construction / installation. Income (if any) from trial runs is reduced from the Project Cost. Fixed Assets required for Research & Development are capitalized and depreciated in the like manner as other fixed assets of the company. Intangible assets are likewise stated at acquisition cost.

Machinery Spares of the nature of capital spares/insurance spares are capitalized separately at the time of their purchase whether procured at the time of purchase of concerned fixed asset or subsequently, and are allocated on a systematic basis over a period not exceeding the useful life of the principal item i.e. the fixed asset to which they relate . When the related fixed asset is either discarded or sold, the written down value less disposal value, if any of the capital spares/insurance spares is written off.

b) Depreciation on tangible assets is provided on straight-line method at the rates as prescribed in Schedule XIV to the Companies Act, 1956. Intangible assets are amortized over their useful life as estimated by the management in accordance with AS-26. Depreciation on assets whose actual cost do not exceed Rs.5000/- is depreciated at the rate of 100%.

c) Current investments are carried at lower of cost or fair value. Long-term investments are carried at cost (except where in the opinion of the Directors, there is a decline in value, other than temporary, in which case appropriate provision is made for such reduction in value).

d) Inventories are valued at lower of cost and net realisable value. Stock of samples, stores, sales promotional materials and stationery are valued at cost. Cost is determined on FIFO basis.

e) Expenses incurred at premises taken on lease by the company on modification / partitions etc to meet the company’s requirements are expensed under repairs. Extensions / Additions are capitalised.

f) Prepaid expenses, which in the opinion of the management are not material in nature, are not carried forward and are generally absorbed in the year in which they are incurred.

g) Transactions during the year in foreign currencies are recorded at the rate prevailing on the transaction date. Net exchange difference arising on settlement of monetary items or on reporting the monetary items at the closing rate are recognized as income or expense.

h) All revenues, cost, assets and liabilities are recognised on accrual basis. Income from manufacturing charges is recognized based on stage of completion of manufacture. Excise duty payable on uncleared finished goods is accounted when they fall due by clearance from the factory.

i) Sales include excise duty and are net of discount and value added tax/sales tax. j) Employee Benefits a) Employee Benefits are recognised, measured and disclosed as per Accounting

Standard -15 (Revised 2005) – “Employee Benefits”. b) The company relies on the actuarial valuation made by LIC using Projected Unit Credit

Method for measurement of obligation towards Post Employment Benefits under Defined Benefit Plans such as Gratuity. Actuarial gains or losses are recognised in the Profit & Loss Account.

c) Long term benefits such as earned leave are determined based on the actual leave accumulated at the end of the year.

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d) Termination Benefits are expensed in the year of termination of employment. e) The benefits are after taking into consideration actuarial gains or losses. k) Dividend on chits is being accounted on the basis of auction. Amount foregone for prized chits

is amortized over the period of the chit. Unamortized balance is included under loans and advances.

l) Borrowing costs directly attributable to the acquisition or construction of a qualifying asset are capitalised as a part of the cost of the asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to the profit and loss account of the year in which they are incurred.

m) Income tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the Income tax law and deferred tax charge or credit (reflecting the tax effects of timing difference between accounting income and taxable income for the period ). The deferred tax charge or credit and corresponding deferred tax liability or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realization of such assets.

n) Provision is recognized for losses arising from claims, litigations, assessments, fines, penalties, etc., when it is probable that a liability has been incurred and the amount can be reasonably ascertained / estimated.

o) The basic earnings (loss) per share is computed by dividing the net profit or loss after tax attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. This is further adjusted for the effect of all dilutive potential equity shares for calculating diluted earnings per share.

p) Disclosure of related party relationships are made when control exists or where there have been related party transactions. For this purpose, transactions which are carried out on the same terms and conditions as applicable to the general public, such as acceptance of Fixed Deposits and payment of interest thereon, are not considered as related party transactions.

q) Leases: Assets acquired under finance leases are capitalized at the fair value of the leased asset at the inception of the lease and included within fixed assets. Such assets are depreciated as per the depreciation policy for such assets stated in Note 1(b) above.

r) Impairment of Assets As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine:

a. the provision for impairment loss, if any, required; or b. the reversal, if any, required of impairment loss recognized in previous periods.For and on behalf of the board, As per our report of even date For RAO & SWAMI



N.RAMESHPartner

M. No. 16153





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Wintac LimitedRegd. Office16/2, OVH Road,Basavangudi,Bangalore-560 004.

PLEASE COMPLETE THIS ATTENDANCE AND HAND IT OVER AT THE ENTRANCE OF THE MEETING HALL, Joint hsareholders may obtain additional Attendance Slips on request (Regd. Folio No. & Name of the shareholders & address as given on the Envelope in Block letters to be furnished below).

I hereby record my presence at the Twenty Third Annual General Meeting of the company on Wednesday, the 21st August 2013 at Pai Vijay Hall, 530/58, 33rd Cross 11th Main, 4th Block, Jayanagar,Bangalore-560 011.

SIGNATURE OF THE SHAREHOLDERS OR PROXY----------------------------------------------------------------------

Notes1) Shareholders/proxyholders are requested to bring the Attendance Slip with them when they come to

the meeting and hand it over at the entrance of the hall after affixing theri signature on it.2) Shareholders/Proxyholders who comes to attend the meeting are requested to bring their copies of the

Annual Report for references at the meeting.

---------------------------------------------------------------------------------------------------------------------------------------------Wintac Limited PROXY FORMRegd. Office 16/2, OVH Road, Basavanagudi, Bangalore - 560 004.

I/We...................................................................................................................................................................of............................................................................................................ in the district of................................. being a member/members of the above company hereby a point...................................................................of........................................................................................................................in the district of.....................or failing him.........................................................................................................................................................of..................................................................................................................in the district of.............................as my/our proxy to vote for me/us on my/our behalf at the Twenty Second Annual General Meeting of the Company, to be held on Wednesday, the 21st day of August, 2013.

Signed this..............................................................day of........................................................................2013

Affix` 1

Revenue Stamp

SignatureNote : the Proxy form should be deposited at the Registered Office of the Company, not less than Forty eight hours before the meeting.

Book-Post

To,

If Undelivered Please retun to

Wintac Limited54/1, Boodihal Village, NelamangalaTaluk, Bangalore District, Karnataka - 562 123

annual report - wintac limitedwintac limited 1 n o t i c e notice is hereby given that the...

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