q. Provisions
General
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
The company has made 100% provision for the investment made in the Transgene Biotek HK Limited (Subsidiary) for Rs. 92,20,09,728/- based on the documents provided to the company.
However, it came to be revealed, as per the statement by the management that entire GDR fund of USD 40.5 mil except for USD 0.6 mil received by the company was fraudulently siphoned out of its account at Investec Bank to entities such as M/s. Symmetric Sciences Inc etc. The management stated that it is pursuing the matter of recovering the entire amount of USD 39.9 mil lost from its account at Investec Bank taking help from different sources including an appeal to the Enforcement Directorate.
r. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery
of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the financial asset.
De-recognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised (i.e. removed from the Company's balance sheet) when:
i. The rights to receive cash flows from the asset have expired, or
ii. The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay toa third party under a 'pass-through' arrangement? And either
• the Company has transferred substantially all the risks and rewards of the asset, or
• the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below: Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Gains or losses on liabilities held for trading are recognised in the profit or loss.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
De-recognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Reclassification of financial assets and liabilities
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets and financial liabilities. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
27. Contingent Liabilities:
a. Reference is made about the long standing case at CESTAT, Chennai and the Honourable Member Ms.Sulekha Beevi C.S passed an order on 25th May 2017 stating that "the matter is stayed by the Honhle High Court of Madras. Both sides have not been able to submit when the matters are likely to be disposed by the Hon'ble High Court. Viewed in this light, we are of the considered opinion that it would be appropriate and prudent to close the file for the purpose of statistics. Both sides are at liberty to file application before the Tribunal to reopen the matter as and when the case is disposed by the Hon'ble High Court or in the case of change of circumstances." In view of the above order, no provision has been made in the current balance sheet but the management shall keep a cautious eye on the potential developments, if any and will act as per the requirements.
b. During the year 2016-17 the Company had received notice u/s 263 from the Principal Commissioner of the Income Tax for the Assessment year 2012-13 for which the company has filed its arguments. The appeal filed against the Income tax demand for FY 2011-12 (AY 2012-13) has been accepted and demand has been nullified by the department with order dated 24/08/2021. The provision has been created through Retained earnings in previous years hence reversed it through the same. However, the
income tax department has filed appeal to high court against this order. Hence the demand amount of Rs.5.96 Crores is treated as contingent liability.
c. The Department of Biotechnology has sanctioned a loan amount of Rs.4.07 Crores under Small Business Innovative Research Initiative (SBIRI) scheme currently called as BIRAC for the novel technology Upgradation for Orlistat production, for which a charge against movable and immovable assets acquired from utilization of the said loan amount has been created. An amount of Rs.30,06,135/- is demanded by SIBRI towards interest for which a provision has been made. However, the company has made a settlement offer to BIRAC. On a condition that such offer upon acceptance an offer of Rs. 20 Lakhs made, which was encashed during the previous financial years. However, company is yet to receive any written acceptance towards their proposal.
30. Related Party Disclosures Related Parties:
a) Key Managerial Personnel:
Dr. K. Koteswara Rao: Managing Director
b) Subsidiaries
Transgene Biotek HK Limited: Wholly Owned Subsidiary
Peroral Bio Private Limited: Wholly owned Subsidiary (Closed during the FY 2023-24)
34. Standards issued and effective from 01st April,2018 IND AS 115, Revenue from contracts with customers
In March 2018, the Ministry of Corporate Affairs has notified Ind AS 115, 'Revenue from Contracts with Customers', which effective for accounting is periods beginning on or after 1 April 2018. This comprehensive new standard will supersede existing revenue recognition guidance, and requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple-element arrangements Ind AS 115 is effective for annual reporting periods beginning on or after April 1, 2018. The Company intends to adopt Ind AS 115 effective April 1, 2018, using the modified retrospective method. The adoption of Ind AS 115 is not expected to have a significant impact on the Company's recognition of revenues.
35. Other Amendments to Indian Accounting Standards:
The Ministry of Corporate Affairs (MCA), on 28 March 2018, issued certain amendments to Ind AS. The amendments relate to the following standards:
Ind AS 21, The Effects of Changes in Foreign Exchange Rates - The amendment lays down the principle regarding advance payment or receipt of consideration denominated or priced in foreign currency and recognition of non-monetary prepayment asset or deferred income liability.
Ind AS 12, Income Taxes - The amendment explains that determining temporary differences and estimating probable future taxable profit against which deductible temporary differences are assessed for utilization are two separate steps and the carrying amount of an asset is relevant only to determining temporary differences.
Ind AS 28, Investments in Associates and Joint Ventures - The amendment clarifies when a venture capital, mutual fund, unit trust or similar entities elect to initially recognize the investments in associates and joint ventures.
Ind AS 112, Disclosure of Interests in Other Entities - The amendment clarifies that disclosure requirements for interests in other entities also apply to interests that are classified as Held for sale or discontinued operations in accordance with Ind AS 105.
Ind AS 40, Investment Property - The amendment clarifies when a property should be transferred to / from investment property. The amendments are effective 1 April 2018. The Company believes that the aforementioned amendments will not materially impact the financial position, performance or the cash flows of the Company
36. Critical estimates and judgements
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company's accounting policies.
The areas involving critical estimates or judgements are:
• Estimated useful life of intangible asset.
Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the company and that are believed to be reasonable under the circumstances.
37. Financial Instruments
Fair value hierarchy
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities that are not based on observable market data (Unobservable inputs).
A. The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of 31 March 2024:
38. In the opinion of the Board of Directors of the company the value on realization of Current Assets in the ordinary course of business will not be less than the amount at which they have been stated in the Balance Sheet as on 31st March, 2024.
39. Balances of Creditors, Debtors & Advances as on 31st March 2024 are subject to confirmation from the parties concerned.
40. Previous year figures have been regrouped and rearranged wherever necessary.
41. The figures have been rounded off to the nearest Rupee.
For Vasavi & Co For and on behalf of the board
Chartered Accountants M/s. Transgene Biotek Limited
F.R.N: 020965S
Sd/-
Vasavi Gollapudi Dr. K. KoteswaraRao Sujana kadiam
Proprietor Chairman& Managing Director Director
M.R.N: 249259 DIN: 02287235 DIN: 07167872
UDIN: 24249259BKHJNS6174 Place: Hyderabad Date: 30-05-2024
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