15.5 Disclosure as required by Ind AS 103 Business Combination
I. A Merger of Lyka Exports Limited with Lyka Labs Limited
The Hon’ble National Company Law Tribunal (‘NCLT’), Ahmedabad Bench, has sanctioned the Scheme of Amalgamation for the merger of Lyka Export Limited (the Transferor Company), with the Lyka Labs Limited (the Transferee Company), under Sections 230 to 232 of the Companies Act, 2013, vide its Order dated 16th March 2026.
In accordance with Appendix C of Ind AS 103 — Business Combinations, since both the Transferor Company and the Transferee Company were under common control, the merger has been accounted for using the Pooling of Interests Method.
Pursuant to the Scheme, 4,62,711 fully paid-up equity shares of Rs.10 each of the Company are to be allotted to the eligible shareholders of the erstwhile Lyka Export Limited. Alottment of these shares are pending as on reporting date, and the same is shown under other equity as “’’Shares pending issuance persuant to merger.
The accounting treatment pursuant to the scheme has been given effect to from the date required under IND AS 103 - Business Combinations, which is the beginning of the preceding period presented i.e. April 1, 2024. Accordingly, the figures for the year ended March 31, 2025 has been restated to give effect to the aforesaid merger.
B Issue of Shares/Consideration:
Post approval of the scheme, the Board of Directors approval of allotment of 4,62,711 fully paid up, equity shares of the Company, of face value Rs.10/- each, to eligible shareholders of Lyka Exports Limited (as on record date of June 4,2026 )
C Salient Features of the Scheme of Merger by Absorption
(i) Description of Companies and Background of Lyka Exports Limited
Lyka Exports Limited, Transferor Company (CIN: U51100GJ1992PLC023975) is a unlisted public limited company incorporated under the Company Act, 1956 having its registered office at Plot No C/4/10/B/2nd Floor Adarsh Industrial Complex Opp: S B I Ankleshwaer Bharuch-393002 (hereinafter referred to as the “Transferor Company ”). The Transferor Company is in the field of marketing and distribution of Generic Pharmaceutical Formulations pan India & across various segments. The Transferor Company is a subsidiary of Lyka Labs Limited (Transferee Company) with 72.8% of its shareholding held by Transferee Company
(ii) Appointed date
The appointed date for the purpose of this amalgamation is 1st April 2022.
(iii) Accounting Treatment
In accordance with the scheme approved, the accounting for this amalgamation has been done in accordance with the “Pooling of Interest Method” referred to in Appendix C - Business combinations of entities under common control of Indian Accounting Standard 103- “Business Combination” of the Companies (Indian Accounting Standards) Rules, 2015.
D Lyka Labs Limited has accounted for the Scheme in its books of accounts with effect from 1st April 2024 as explained in para (iii) above and accordingly has restated prior period comparative.
(i) With effect from 01st April 2024, all assets and liabilities appearing in the books of accounts of Lyka Exports Ltd. have been transferred to and vested in Lyka Labs Limited and have been recorded by Lyka Labs Limited at their respective carrying values.
(ii) The difference between the carrying values of net identifiable assets and liabilities of Lyka Exports Limited transferred to Lyka Labs Limited pursuant to this Scheme and the value of consideration paid, amounting to ^ 14.32 lakhs has been debited to Capital Reserve Account as per the provisions of Appendix C of Ind AS 103.
(iii) All inter company transactions have been eliminated on incorporation of the accounts of Lyka Exports Limited in Lyka Labs Limited.
E Disclosure in accordance with Appendix C of IND AS 103- Business combinations of entities under common control
Names and general nature of business of the combining entity
Lyka Exports Limited, Transferor Company (CIN: U51100GJ1992PLC023975) is a unlisted public limited company incorporated under the Company Act, 1956 having its registered office at Plot No C/4/10/B/2nd Floor Adarsh Industrial Complex Opp: S B I Ankleshwaer Bharuch-393002 (hereinafter referred to as the “Transferor Company ”). The Transferor Company is in the field of marketing and distribution of Generic Pharmaceutical Formulations pan India & across various segments. The Transferor Company is a subsidiary of Lyka Labs Limited (Transferee Company) with 72.8% of its shareholding held by Transferee Company
Lyka Labs Limited Transferee Company (CIN: L24230GJ1976PLC008738) is a listed public limited company incorporated under the Company Act, 1956 having its registered office at 4801/B & 4802/A, G.I.D.C. Industrial Estate, Ankleshwar-393002 (hereinafter referred to as the “Transferee Company”). The Transferee Company is engaged in the business of manufacturing and marketing of pharmaceutical products. The Transferee Company’s equity shares are listed on BSE Limited and National Stock Exchange of India Limited.
The date on which the transferee obtains control of the transferor
The transferors were already subsidiaries of the transferee and control existed from a prior date. The appointed date as per scheme is April 1,2022.
Description and number of shares issued, together with the percentage of each entity’s equity shares exchanged to effect the business combination
The Transferee Company shall issue and allot as per swap ratio to all the equity shareholders of the Transferor Company (other than the Transferee) whose names are registered in the Register of Members of the Transferor Company on the Record Date or his/her/its legal heirs, executors or administrators or, as the case may be, successors, a total of 4,62,711 equity shares of Rs.10 each in the ratio of 23 equity shares of the face value of Rs.10 each of the Transferee Company for every 100 equity shares of the face value of Rs.10 each held on the Record Date by such equity shareholders or their respective legal heirs, executors or administrators or, as the case may be, successors in the Transferor Company with rights attached thereto as mentioned in this Scheme
The amounts recognised as of the acquisition date for each major class of assets acquired and liabilities assumed.
16.1 Nature of Reserves:
Capital Reserves
The Capital reserve has been created from the forfeiture of equity warrants, receipts of subsidy for setting up the factories in backward areas for performing research on critical medicines for the betterment of the society and during merger, deficit of consideration paid over net assets taken over, if any is debited to Capital Reserve Securities Premium
Securities Premium account comprises of the premium on issue of shares. The reserve is utilised in accordance with the specific provision of the Companies Act, 2013.
General Reserves
The General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the General reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the General reserve will not be reclassified subsequently to the statement of profit and loss.
Details of terms of repayment and security provided for in respect of the Long-Term Borrowings as follows :
17.1 a) Term Loan I of ' 972.22 lakhs from Yes Bank Ltd. Repayble in 18 quarterly instalments starting from 30th April 2024. Interest @ EBLR 2.10% p.a.
b) Term Loan II of ' 856.11 lakhs from Yes Bank Ltd. Repayble in 18 quarterly instalments starting from 25th May 2026. Interest @ EBLR 2.10% p.a.
c) Above Term Loan is secured by i) first charged by way of Hypothication on Plant Machineries ii) Second charge by way of Hypothication on Inventory & Book debts. iii) Negative lien on Fixed Assets of the Company at 4801/B & 4802/A GIDC Ankleshwar, Gujarat.
17.2 Car Loan from various Bank/NBFC repayble in Equated Monthly Installment, interest on car loan ranges between 7.85% to 8.30% P.A. And secured by Vehicle.
17.3 Interst on Loan and Advances from related parties ranges between 10.70% p.a. to 11.00% p.a. (simple interest).
38 Contingent Liabilities are not provided for in respect of following:
(i) Demands were raised against the Company aggregating to ^ 680.62 Lakhs (as at 31st March 2025 ^ 680.62 Lakhs) plus interest thereon under the Drug Price Control Order 1979 by the Government of India and the same was contested by the Company. In the earlier years, the Company had received recovery notices for recovery of ^ 2,094.41 Lakhs (as at 31st March 2025 ^ 2,094.41 Lakhs) to be deposited into “Drug Price Equalisation Account”.
The Company has challenged the said notices in the writ petitions before the Hon’ble High Court of Gujarat. The Hon’ble High Court has admitted the writ petitions subject to the Company depositing certain amounts against the said demands. Accordingly, the Company has deposited ^ 1,032.45 Lakhs (as at 31st March 2025 ^ 1,032.45 Lakhs).
The Company expects favourable outcome in the said writ petitions and hence, the amounts paid have been treated as advances which are considered by the Company as good and recoverable.
(ii) (a) The Company has received an Order from the Gujarat Sales Tax Commissioner (Appeals) Baroda,
dated 24th January, 2011 in respect of Company’s appeal against the demand for Gujarat Sales Tax of ^ 1,324.08 Lakhs for the financial year 2002-2003 for non-submission of proof of export. The Commissioner of Sales Tax (Appeals) based on the facts as submitted, has revised the demand to ^ 85.44 Lakhs (as at 31st March 2025 ^ 85.44 Lakhs) against which Company has made payment of ^ 45.81 Lakhs (as at 31st March 2025 ^ 45.81 Lakhs) under protest. The Company has further contested this demand before the Sales Tax Tribunal. The matter is sub-judice and the payments of ^ 45.81 Lakhs (as at 31st March 2025 ^ 45.81 Lakhs) are considered by the Company as good and recoverable.
(b) There are disputed Sales Tax demands from state of Maharashtra in respect of prior years amounting to ^ 412.41 Lakhs (as at 31st March 2025 ^ 412.41 Lakhs) against which the Company has made payment of ^ 20.78 Lakhs (as at 31st March 2025 ^ 20.78 Lakhs) under protest. The Company has further contested these demands before the Sales Tax Commissioner / Tribunal. The matters are sub-judice and the payments of ^ 20.78 Lakhs for the Maharashtra state demand (as at 31st March 2025 ^ 20.78 Lakhs) are considered by the Company as good and recoverable.
(iii) Employees (Including Ex-Employees) Claims relating to ex-gratia and other benefits aggregating to ^ 433.66 Lakhs (as at 31st March 2025 ^ 433.66 Lakhs) as the matter is sub-judice.
(iv) The Company has received order from Income Tax Department raising demand aggregating to ^ 100.76 Lakhs (as at 31st March 2025 ^ 100.76 Lakhs) relating to prior years against which the Company has paid ^ 20.00 Lakhs (as at 31st March 2025 ^ 20.00 Lakhs). The matter is sub-judice and the payment of ^ 20.00 Lakhs (as at 31st March 2025 ^ 20.00 Lakhs) is considered by the Company as good and recoverable.
(v) That cheque dishonor cases under Section 138 of the Negotiable Instruments Act are currently pending against Company before the Metropolitan Magistrate Court at Mazgaon. In compliance with the law under Section 143-A of the NI Act and order dated 04/01/2022, without prejudice to its rights and contentions and under protest, Companyt has deposited 20% of the cheque amount, totaling ^124.26 lakhs, as interim compensation. The main complaint remains sub judice.
A Suit (commercial summary suit) has been filed against the Company in the Mumbai City Civil Court. The Ld. Court ordered the Company to deposit ^22.00 lakhs (as of 31st March 2025 ^ 22.00 lakhs) to be allowed to defend the case. In compliance of the order and to defend their case the Company has made the required deposit of ^22.00 lakhs (as of 31st March 2025 ^22.00 lakhs). The matter is pending and sub-judice. The company considers this amount is recoverable on disposal of the Suit.
In a commercial suit filed in the City Civil Court at Mazgaon, Mumbai, where the court ordered Company to furnish security for ^873.,26 lakhs by providing solvent sureties or a bank guarantee within two months. The Company has appealed this order in the Bombay High Court, seeking a stay on its operation. The High court of Bombay has granted interim stay to the order of furnishing security. The appeal is pending and sub-judice before the High Court of Bombay.
(vi) In compliance with the directions of the Hon’ble Bombay High Court, the Company has deposited ^61.26 lakhs with the Court. The application seeking stay of the order is currently pending adjudication before the Hon’ble Bombay High Court. Based on legal advice received, the management believes that the Company has a reasonable case on merits and, accordingly, no provision has been made in the financial statements.
39 Capital Expenditure:
(i) Tangible Project Capital Work-in-Progress ^ 185.60 Lakhs as at 31st March 2026, (as at 31st March 2025 ^ 20.14 Lakhs) During the year, the Company has capitalized ^ 6.11 Lakhs (as at 31st March 2025 ^ 2177.03 Lakhs) on completion of Lyolyphiztion phase I project at Ankleshwar.
(ii) During the year, the Company has capitalized ^ 96.12 Lakhs (as at 31st March 2025 ^ Nil Lakhs) as “SelfGenerated Intangible Assets” upon successful development of respective products.
40 During the year the Company has carried out impairment testing towards the exposure in the subsidiary Lyka BDR International Ltd. and based on the estimations of the carrying value, the Company has provided impairment amounting to Rs. 2301.44 lakhs. The same is shown as an Exceptional Item.
41 During the year, inventories include slow / non-moving raw-material and packing materials procured during the earlier years amounting to ^ 54.38 Lakhs (as at 31st March 2025 ^ 27.11 Lakhs), which are valued at lower of net realisable value or cost whichever is lower. The Company is evaluating to utilize / realize the same.
42 Employment and Retirement Benefits
(i) The actuarial valuation of the present value of the defined benefit obligation in respect of Gratuity has been carried out as at 31st March, 2026. The following tables set out the amounts recognized in the financial statements as at 31st March, 2026 for the defined benefit plans.
(ii) The Actuarial Valuation of the present value of the defined benefit obligation in respect of Gratuity carried out as at 31st March 2026 includes valuation for all the employees of Lyka BDR International Limited (Subsidiary) which were transferred on the payroll of Lyka Labs Limited(Parent company) and accordingly obligation relating to gratuity liability also stands transferred to the Lyka Labs Limited.
(c) Valuation technique to determine fair value
The following methods and assumptions were used to estimate the fair values of financial instruments :
(i) The management assesses that fair value of cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
(ii) The fair values of the equity investment which are quoted, are derived from quoted market prices in active markets. The Investments measured at fair value and falling under fair value hierarchy Level 3 are valued on the basis of valuation reports provided by external valuers with the exception of certain investments, where cost has been considered as an appropriate estimate of fair value because of a wide range of possible fair value measurements and cost represents the best estimate of fair values within that range. The carrying value of those investments are individually immaterial.
(d) Financial risk management objectives
The Company is exposed to market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The Company’s risk management strategies focus on the un-predictability of these elements and seek to minimise the potential adverse effects on its financial performance. The Company’s senior management which is supported by a Treasury Management Group (‘TMG’) manages these risks with a six monthly rolling basis due to which a natural hedge exist. TMG advises on financial risks and the appropriate financial risk governance framework for the Company and provides assurance to the Company’s senior management that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives.
All hedging activities are carried out by specialist teams that have the appropriate skills, experience and supervision. The Company’s policy is not to trade in derivatives for speculative purposes.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprises of risks relating to interest rate risk and other price risks such as equity price risk and commodity price risk. Financial instruments affected by market risks mainly include borrowings, deposits and investments.
Foreign currency risk management
Foreign exchange risk arises on future commercial transactions and on all recognised monetary assets and liabilities, which are denominated in a currency other than the functional currency of the Company. The Company’s management has set policy wherein exposure is identified, benchmark is set and monitored closely, and accordingly suitable hedges are undertaken. Policy also includes mandatory initial hedging requirements for exposure above a threshold.
The Company’s foreign currency exposure arises mainly from foreign exchange imports, exports and other income/expenses in foreign currency, primarily with respect to USD.
As at the end of the reporting period, the carrying amounts of the company’s foreign currency denominated monetary assets and liabilities in respect of the primary foreign currency i.e. USD and derivative to hedge the exposure, are as follows:
(e) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and other financial instruments.
Trade Receivable
Customer credit risk is managed by SCM team subject to the company’s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored and followed up.
Financial instruments and cash deposits
Credit risk from balances with banks is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.
Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. The Company’s objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate source of financing through the use of bank deposits and cash credit facilities. Processes and policies related to such risks are overseen by senior management. Management monitors the Company’s liquidity position through rolling forecasts on the basis of expected cash flows. The Company assessed the concentration of risk with respect to its debt and concluded it to be low.
(f) Excessive risk concentration
Concentrations arise when a number of counter parties are engaged in similar business activities, or activities in the same geographical region, or have economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Company’s performance to developments affecting a particular industry. Company believes that there is no such excessive risk concentration.
49 Capital Management
The Company’s objective when managing capital is to ensure the going concern operation and to maintain an efficient capital structure to reduce the cost of capital, support the corporate strategy and meet shareholders expectations. The policy of the company is to borrow through banks supported by committed borrowing facility to meet anticipated funding requirements. The capital structure is governed by policies approved by the Board of Directors.
52 Other Statutory Information
(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company do not have any transactions with companies struck off.
(iii) Company has created various charges in favour of Banks, Financial Institutions and Others for securing loan to the Company. The Company is in process of satisfaction of Charges and filing with the Registrar of Companies, Ahamadabad in respect of which dues are settled.
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(vii) The Company have no such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(viii) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.
(ix) The Company has not been declared as a Wilful Defaulter by any bank or financial institution or government or any government authority.
(x) The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all the relevant transactions recorded in the software. Further, there are no instance of audit trail feature being tampered with.
54 The figures for the previous year have been restated / rearranged wherever considered necessary.
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