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Notes to Accounts of Abbott India Ltd.

Mar 31, 2017

1.1 Basis of preparation

The financial statements are prepared on the accrual basis of accounting and in accordance with the Indian Accounting Standards (hereinafter referred to as the Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015.

For all periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with Accounting Standards notified under the section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP). Financial statements for the year ended March 31, 2016 have been restated to give comparative figures to the financial statements for the year ended March 31, 2017, being the first year for preparation of financial statements in accordance with Ind AS. The Company has adopted all the applicable Ind AS and the adoption was carried out in accordance with Ind AS 101 ''First-time adoption of Indian Accounting Standards''. (Also refer Note 46 on first-time adoption of Ind AS including reconciliation and description of the effect of the transition).

The financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities measured at fair value or amortised cost.

The financial statements are approved for issue by the Company’s Board of Directors on May 19, 2017.

2. COMPANY INFORMATION

Abbott India Limited (‘The Company’) is a public limited company domiciled and incorporated in India under the provisions of the Companies Act, 1913. The Company is listed and traded on the Bombay Stock Exchange and also traded on the National Stock Exchange. The registered office of the Company is 3-4, Corporate Park, Sion-Trombay Road, Mumbai - 400 071, India.

The Company is one of the leading multinational pharmaceutical companies in India and operates with an owned manufacturing facility in Goa and various independent contract/third party manufacturers based across the country. The Company sells its products through independent distributors primarily within India.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Company’s financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances existing when the financial statements were prepared. The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates is recognised in the year in which the estimates are revised and in any future year affected.

JUDGEMENTS

In the process of applying the Company’s accounting policies, management has made the following judgements which have significant effect on the amounts recognised in the financial statements :

Lease of plant and equipments not in legal form of lease

Significant judgement is required to apply lease accounting rule under Appendix C to Ind AS 17 ''Leases'' : whether an arrangement contains a lease. In assessing the applicability to arrangement entered into by the Company, management has exercised judgement to evaluate the right to use the underlying assets, substance of transaction including legally enforced arrangement and other significant terms and conditions of the arrangement to conclude whether the arrangement meets the criteria under Appendix C to Ind AS 17 ''Leases’. Consequently, the Company has considered an estimated portion of the total sales from reagents as rent towards the use of anaesthetic equipments. The estimated portion is arrived based on useful lives of the anaesthetic equipments and its expected maintenance cost.

ESTIMATES AND ASSUMPTIONS

The key assumptions concerning the future and other key sources of estimation at the reporting date, which may cause material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Discounting of security deposit

The Company has considered State Bank of India (SBI) base rate of respective periods in which transaction had occurred for measuring deposit, being financial assets, at amortised cost. Refer Note 26 - Interest income on security deposits.

Useful lives of Property, plant and equipment

The Company reviews the useful life of Property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods. Refer Note 2 (f) for management estimate of useful lives.

Defined benefit plans (Gratuity benefits)

The cost of the defined benefit gratuity plan and other post employment medical benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post employment benefit obligation.

The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at intervals in response to demographic changes. Future salary increase and gratuity increase are based on expected future inflation rates for the respective countries.

Further details about gratuity obligations are given in Note 38.

Share based compensation to employees

The fair value of restricted stock units plan is measured at the date of grant using the Black Scholes option pricing model. The estimate also requires determination of the most appropriate inputs to the valuation model, including the volatility, dividend yield, risk free interest rates, expected life of share option etc., which are disclosed in the Note 39.

Intangible asset under development

The Company capitalises an intangible assets under development for a project in accordance with the accounting policy. Initial capitalisation of costs is based on management’s judgement that technological and economic feasibility is confirmed, future economic benefits are probable, the Company has the intention and ability to complete and use the asset and the cost can be measured reliably.

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using appropriate valuation techniques. The inputs for these valuations are taken from observable sources where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of various inputs including liquidity risk, credit risk, volatility etc. Changes in assumptions/ judgements about these factors could affect the reported fair value of financial instruments. Also refer Note 43.

Provision for inventories

Provision is made in the financial statements for slow and non-moving items based on estimates regarding their usability. Further for finished goods and stock-in-trade, all inventories expiring within six months and not expected to be sold, have been fully provided for. Also refer Note 9.

Provision for doubtful debts

The impairment provision for trade receivables are based on assumptions about risk of default and expected loss rates. The Company uses judgements in making these assumptions and selecting the inputs to the impairment calculations, based on Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Also refer Note 10.

Provision for sales return and date expiry

The Company as per trade practice accepts returns from market which are primarily in the nature of expired or near expiry products. Provisions for such returns are estimated on the basis of historical experience and market conditions and are provided for accordingly. Also refer Note 24.

4. EMPLOYEE BENEFITS

(a) Defined contribution plans

i. Provident Fund/Employees’ Pension Fund

ii. Employees’ State Insurance

iii. Superannuation Fund

iv. Employees’ Deposit Linked Insurance Scheme

v. Group Life Insurance Cover

(b) Defined benefit plans

i. Gratuity: (Included as part of contribution to provident and other funds in Note 30 - Employee benefits expense)

Gratuity is payable to all eligible employees of the Company on retirement, death, permanent disablement and resignation in terms of the provision of the Payment of Gratuity Act, 1972 or Company’s Scheme whichever is more beneficial. Benefits would be paid at the time of the separation.

ii. Post Retirement Medical Benefits (PRMB) : (Included as part of staff welfare expenses in Note 30 - Employee benefits expense)

Under this scheme, select group of senior employees and their spouse are covered for hospitalisation benefits after the employee has retired from the Company. The cover is available to these beneficiaries until they are alive. The Company has procured a group hospitalisation cover from an insurance company for providing these benefits to these beneficiaries.

iii. Long Service Benefits (LSB) : (Included as part of salaries and wages in Note 30 - Employee benefits expense)

Under this scheme, long service benefits accrues to the employees, while in service and is payable upon completion of stipulated service with the Company.

5. SHARE BASED COMPENSATION TO EMPLOYEES

a) International Stock Ownership Plan (Stocks of Abbott Laboratories, USA, being Ultimate Holding Company)

Abbott Laboratories, USA has an ''Affiliate Employee Stock Purchase Plan'' (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of Abbott Laboratories, USA. Every employee who opts for the scheme contributes, by way of payroll deductions, up to 10% of his cash remuneration (i.e. basic salary for officers and basic salary and dearness allowance for staff category) towards purchase of shares on a monthly basis over the purchase cycle of six months.

The maximum that an employee can contribute to the plan is USD 12,500 per purchase cycle or USD 25,000 per calendar year. At the end of the cycle, accumulated payroll deductions are used to purchase shares at a discounted price. The purchase price of the share is 85% of the lesser of fair market value either on the first or last day of the purchase cycle. The shares of Abbott Laboratories, USA are listed with the New York Stock Exchange, USA and are purchased on behalf of the employees at market price less discount, allocated to participants as of last day of the purchase cycle. The concession in the price of the shares is entirely borne by Abbott Laboratories, USA.

During the year ended March 31, 2017, 15,967 shares (March 31, 2016 : 15,484 shares) were purchased by employees at weighted average fair value of US $ 33.99 (March 31, 2016 : US $ 34.62) per share.

b) Employees Stock Options Plan (Stocks of Abbott Laboratories, USA, being Ultimate Holding Company)

Abbott Laboratories, USA has an ''Incentive Stock Option Program'' whereby specified employees of its subsidiaries covered by the plan are granted an option to purchase shares of Abbott Laboratories, USA at a fixed price (grant price), which shall be at least 100% of the fair market value of the common share for a fixed period of time. All the options under this scheme have vested before April 01, 2015, and hence, as per the exemption availed in Ind AS 101 ''First-time adoption of Indian Accounting Standards'' (Refer Note 46 (ii)), no options compensation expenses are incurred by the Company during the year. The shares of Abbott Laboratories, USA are listed with the New York Stock Exchange, USA. The grants issued are vested in one third installments over a three year period and have a 10 years contractual life.

c) Employees Restricted Stock Options Plan (Stocks of Abbott Laboratories, USA, being Ultimate Holding Company)

Abbott Laboratories, USA as part of the ''Long Term Incentive Program'' has offered Restricted Stock Units (RSUs) to specified employees of its subsidiaries, whereby the employees covered by the plan are granted units. The units when vested, become shares of Abbott Laboratories, USA at a Nil Cost. The shares of Abbott Laboratories, USA are listed with the New York Stock Exchange, USA. The grants issued are vested in one third installments over a three year period. Pursuant to Ind AS 102 ''Share-based payment'', the fair value of the RSUs have been recorded by the Company. The fair value of the RSUs is estimated at the grant date using Black Scholes Option Pricing Model, taking into account the terms and conditions upon which such RSUs were granted.

6. COMMITMENTS AND CONTINGENCIES

a. Leases

Operating lease commitments — Company as lessee

The Company has obtained various residential/office premises (including furniture and fittings, therein as applicable) under operating lease or leave and licence agreements. These are generally not non-cancellable and range between 11 months to 5 years under leave and licence, or longer for other leases and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms. There are no restrictions imposed by these arrangements.

Lease payments are recognised in the Statement of Profit and Loss under ''Rent ''.

b. Operating lease commitments — Company as lessor

The Company has recognised contingent rent amounting toRs.39.05 Lakhs (March 31, 2016 :Rs.44.04 Lakhs) as income in the current period in accordance with Ind AS 17 ''Leases''. For further details on calculation of above mentioned contingent rent, refer Note 37.

d. Contingent liabilities

Claims against Company not acknowledged as debts

i ) In February 1996, the Government had made a tentative claim for a sum ofRs.11,11.66 Lakhs to be paid into the Drugs Prices Equalisation Account (DPEA) on account of unintended benefit allegedly enjoyed by the Company during the period May 1, 1981 to August 25, 1987. This was contested by the Company and subsequently during the year ended November 30, 2005, a final demand was received forRs.3,46.64 Lakhs (including interest ofRs.1,90.39 Lakhs upto March 31, 2004). The Company, being aggrieved of the said demand and based on legal advice obtained in this regard, contested the above final demand ofRs.3,46.64 Lakhs and filed a writ petition before the Bombay High Court to restrain the government from recovering the said amount. The Bombay High Court has admitted the writ petition and granted stay of the recovery of the amount subject to the Company furnishing a bank guarantee in respect of the principal amount of Rs.1,56.25 Lakhs. The said bank guarantee has been furnished. The Company however, out of abundant caution and based on its understanding of the facts and circumstances of the case provided for a sum of Rs.1,07.89 Lakhs (March 31, 2016 :Rs.1,03.99 Lakhs and April 1, 2015 :Rs.1,00.09 Lakhs) including interest liability till date.

It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings as it is determinable only on receipt of judgements/decisions pending with various forums/authorities.

7. SEGMENT REPORTING

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker, in deciding how to allocate resources and assessing performance. The Company''s chief operating decision maker is the Managing Director and the Company has only one reportable business segment i.e. ''Pharmaceuticals''.

8. RELATED PARTY DISCLOSURE

A) Parties where control exists :

Ultimate Holding Company : Abbott Laboratories, USA Holding Company : Abbott Capital India Ltd., UK

B) Other related parties with whom transactions have taken place during the year :

I) Fellow subsidiaries :

British Colloids Ltd., U.K.

Abbott Healthcare Products Ltd., U.K Abbott Healthcare Private Ltd., India Abbott International LLC, USA Abbott Laboratories S.A., Switzerland Abbott Products Operations AG., Switzerland Abbott Laboratories (Singapore) Pte Ltd., Singapore Abbott Manufacturing Pte Ltd., Singapore Abbott Lab (Malaysia) Sdn. Bhd.

Abbott Laboratories, De Mexico Abbott Laboratories S.A., Dubai

II) Key management personnel :

Mr. Ambati Venu, Managing Director (w.e.f. September 29, 2016)

Mr. Rehan A. Khan, Managing Director (till April 30, 2016)

Mr. Kaiyomarz Marfatia, Whole-Time Director (till February 29, 2016)

Mr. Munir Shaikh, Chairman

Mr. Rajendra Shah, Independent Director

Mr. Ranjan Kapur, Independent Director

Mr. Krishna Mohan Sahni, Independent Director

9. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s activities expose it to variety of financial risks namely market risk, credit risk and liquidity risk. The Company has various financial assets such as deposits, trade and other receivables and cash and bank balances directly related to their business operations. The Company’s principal financial liabilities comprise of trade and other payables. The Company’s senior management’s focus is to foresee the unpredictability and minimize potential adverse effects on the Company''s financial performance. The Company’s overall risk management procedures to minimise the potential adverse effects of financial market on the Company’s performance are as follows :

(a) 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 risk comprises three types of risks namely interest rate risk, currency risk and other price risk, such as commodity risk. The Company is not exposed to other price risk whereas the exposure to currency risk and interest risk is given below :

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s deposit accounts with banks.

(ii) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates and arises where transactions are done in foreign currencies. It arises mainly where receivables and payables exist due to transactions entered in foreign currencies.

The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies including use of derivatives like foreign exchange forward contracts to hedge foreign currency risk. The Company does not enter into financial instrument transactions for trading or speculative purposes. Unhedged exposure at any point of time during the year is not material.

Foreign currency sensitivity

The following table demonstrate the sensitivity to a reasonably possible change in USD and Euro exchange rates, being the most transacted currencies, with all other variables held constant. The exchange rate between Rupee and USD/Euro has changed substantially in the recent years and may fluctuate substantially in the future. Consequently the results of the Company’s operations could be affected as the Rupee appreciates/depreciates against these currencies.

(b) 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. Concentration of credit risk arises when counter parties are engaged in similar business activities or have similar economic features that would cause the ability to meet contractual obligations to be similarly affected by changes in economical, political or other conditions. Concentration of credit risk indicate the relative sensitivity of the Company’s performance to developments affecting a particular industry.

Credit risk of company arises principally from the trade debts, loans and advances, trade deposits, other receivables and balance with banks. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was Rs.1332,56.90 Lakhs as at March 31, 2017 (March 31, 2016 :Rs.1033,72.28 Lakhs and April 1, 2015 :Rs.822,00.57 Lakhs). Customer credit risk is managed for each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Further, significant sales of the Company are against advance payment/collection on delivery terms. Outstanding customer receivables are regularly monitored and any shipments to new overseas customers are generally covered by letters of credit or other forms of credit insurance. The management continuously monitors the credit exposure towards the customers and makes provision against those balances considered doubtful of recovery. The credit risk on liquid funds such as balances with banks in current and deposit accounts is limited because the counter parties are banks with reasonably high credit ratings.

The management believes that no further provision is necessary in respect of trade receivables based on historical trends of these customers. Further, the Company''s exposure to customers is diversified and no single customer has significant contribution to trade receivable balances.

Financial assets other than trade receivables and bank balances are not exposed to any material credit risk.

(c) Liquidity risk

Liquidity Risk is the risk that company will not be able to meet its financial obligations as they fall due. Liquidity risk arises because of the possibility that the Company could be required to pay its liabilities earlier than expected or encounters difficulty in raising funds to meet commitments associated with financial liabilities as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. The Company manages liquidity risk by maintaining sufficient cash and bank balance and availability of funding through adequate amount of committed credit facilities.

As at March 31, 2017, the Company’s financial liabilities of Rs.515,75.53 Lakhs (March 31, 2016 : 282,63.91 Lakhs and April 1, 2015 : 585,17.09 Lakhs) are all current and due in next financial year.

10. CAPITAL MANAGEMENT

For the purpose of the Company’s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to safeguard the Company’s ability to remain as a going concern and maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions, annual operating plans and long term and other strategic investment plans. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The current capital structure of the Company is equity based with no financing through borrowings. The Company is not subject to any externally imposed capital requirement.

No changes were made in the objectives, policies or processes for managing capital during the year ended March 31, 2017 and March 31, 2016.

11. FIRST TIME ADOPTION OF IND AS

These financial statements, for the year ended March 31, 2017, are the first the Company has prepared in accordance with guidance prescribed in Ind AS 101 ''First-time adoption of Indian Accounting Standards''. For periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under Section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for year ended on March 31, 2017, together with the comparative data as at and for the year ended March 31, 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening Balance Sheet was prepared as at April 1, 2015, the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Previous GAAP financial statements, including the Balance Sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31, 2016.

Ind AS 101 Exemptions applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions :

i Ind AS 101 permits a first time adopter to elect to continue with the carrying value for all its Property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per Previous GAAP and use that as its deemed cost at the date of transition after making necessary adjustments for decommissioning liability. This exemption is also used for intangible assets covered under Ind AS 38 ''Intangible assets''. Accordingly, the Company has opted to consider the carrying value for all of its Property, plant and equipments and intangibles as recognised in its Previous GAAP financials as its deemed cost at the transition date.

ii The Company is allowed to apply Ind AS 102 ''Share-based payment'' to equity instruments that remain unvested as of transition date. Accordingly, the Company has not applied Ind AS 102 to equity instruments in Share-based payment transactions pertaining to employees stock options plan (Refer Note 39 (b)) that vested before April 1, 2015.

iii Appendix C to Ind AS 17 ''Leases'' requires the Company to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemptions and has done the assessment of lease in contracts based on conditions as prevailing at the date of transition.

Estimates

The estimates at April 1, 2015 and at March 31, 2016 are consistent with those made for the same dates in accordance with Previous GAAP (after adjustments to reflect any differences in accounting policies).

The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1, 2015, the date of transition to Ind AS and as of March 31, 2016.

1 Discounting of provisions

Under Previous GAAP, the Company has accounted for provisions, including long term provisions, at the undiscounted amount. In contrast, Ind AS 37 ''Provisions, contingent liabilities and contingent assets'' requires that where the effect of time value of money is material, the amount of provision should be the present value of the expenditures expected to be required to settled the obligation. This led to a decrease in provision on the date of transition by Rs.4,68.12 Lakhs (March 31, 2016 :Rs.5,31.19 Lakhs) and which was adjusted against retained earnings.

A corresponding decrease of Rs.1,48.44 Lakhs (March 31, 2016 :Rs.1,70.17 Lakhs) is recognised in other non-current financial assets which represents the reimbursable portion of the above provision.

During the year ended March 31, 2016, the Company has recognised Rs.41.32 Lakhs in the Statement of Profit and Loss on account of discounting of provisions, of which Rs.2,13.28 Lakhs is added back to revenue and Rs.1,71.96 Lakhs is added to finance cost.

2 Proposed dividend

Under Previous GAAP, proposed dividends including Dividend Distribution Tax (DDT) are recognised as a liability in the year to which they relate, irrespective of when they are declared. Under Ind AS, a proposed dividend is recognised as a liability in the year in which it is declared by the Company (usually when approved by the shareholders in a general meeting) or paid.

In the case of the Company, the declaration of dividend occurs after year end. Therefore, the liability of Rs.79,28.30 Lakhs for the year ended March 31, 2015 recorded for dividend has been derecognised against retained earnings on April 1, 2015. The proposed dividends for the year ended on March 31, 2016 of Rs.89,51.30 Lakhs recognised under Previous GAAP was reduced from other payables with the corresponding impact in the retained earnings.

3 Reversal of sample inventory

Under Ind AS 2 ''Inventories'', the cost of production of the samples have to be expensed as and when manufactured/procured and are not to be carried forward in the Balance Sheet as ''Other current assets'' as the same does not meet the definition of an asset. Hence, sample inventory of Rs.5,91.39 Lakhs as on the transition date and Rs.5,94.01 Lakhs as on March 31, 2016 have been reversed with corresponding impact in retained earnings respectively and on account of above,Rs.2.62 Lakhs is debited in the Statement of Profit and Loss.

4 Employee share based compensation

Share options issued by Abbott Laboratories, USA to employees of the Company have to be treated as equity settled plan under Ind AS 102 ''Share-based payments''. Accordingly, the Company has recognised grant date fair value of the award over the vesting period with corresponding credit to equity contribution by the parent. Impact due to recognition of fair value as on transition date i.e. April 1, 2015 is Rs.2,74.87 Lakhs and as on March 31, 2016 i sRs.5,63.33 Lakhs.

5 Amortisation of security deposit

Under Ind AS 17 ''Leases'', security deposits paid are measured at amortised cost. This led to a recognition of non-current deferred lease asset of Rs.18.93 Lakhs on the transition date (March 31, 2016 : 22.56 Lakhs). Also, a decrease ofRs.21.22 Lakhs (March 31, 2016 :Rs.24.62 Lakhs) is recognised in Current Financial Assets - Loans as adjustments to security deposit due to their measurement at amortised cost. Net impact of Rs.2.29 Lakhs (March 31, 2016 :Rs.0.23 Lakhs) is adjusted against retained earnings on transition date. During the year ended March 31, 2016, the Company has expensed out deferred lease expenses of Rs.14.22 Lakhs and recorded interest income on security deposit of Rs.14.45 Lakhs.

6 Excise duty

Under Previous GAAP, sale of goods was presented as net of excise duty. However, under Ind AS 18 ''Revenue'', sale of goods includes excise duty. Excise duty on sale of goods is separately presented on the face of Statement of Profit and Loss. Thus, sale of goods under Ind AS has increased byRs.31,13.74 lakhs with a corresponding increase in expenses.

7 Employee benefits expense

As per Ind AS 19 on ''Employee Benefits'', actuarial gains and losses on post retirement defined benefits of Rs.1,53.09 Lakhs and tax thereon of Rs.52.98 Lakhs are recognised in other comprehensive income and not reclassified to the Statement of Profit and Loss in the subsequent period.

8 Deferred taxes

Previous GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 ''Income taxes'', requires entities to account for deferred taxes using the Balance Sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the Balance Sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Previous GAAP. In addition, the various transitional adjustments led to temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred tax adjustments are recognised in correlation to the underlying transaction in retained earnings. On the date of transition, the net impact in deferred tax assets is of Rs.94.83 Lakhs (March 31, 2016 :Rs.81.35 Lakhs)

During the year ended March 31, 2016, net decrease in deferred tax of Rs.66.46 Lakhs is debited to Statement of Profit and Loss.

9 Other comprehensive income

Under Previous GAAP, the Company has not presented Other Comprehensive Income (OCI) separately. Hence, it has reconciled Previous GAAP profit to total comprehensive income as per Ind AS 1 ''Presentation of financial statements''.

10 Statement of Cash Flows

The transition from Previous GAAP to Ind AS did not have a material impact on the Statement of Cash Flows.

11 Cash discount

Under Previous GAAP, cash discount was disclosed under revenue from operations under ''Revenue from operations''. As per Ind AS 2 ''Inventories'', cash discount is to be netted off against purchases during the year. Accordingly, cash discount ofRs.16,04.98 Lakhs for the year ended March 31, 2016 has been regrouped.

12 Regroupings

Balance of Rs. 61.36 Lakhs and Rs.71.23 Lakhs are on account of regroupings in the Previous GAAP for the year ended March 31, 2015 and March 31, 2016 respectively.

12A. STANDARDS ISSUED BUT NOT YET EFFECTIVE

The standards issued, but not yet effective upto the date of issuance of the Company’s financial statements is disclosed below. The Company shall adopt this standard when it becomes effective.

a) Ind AS 115 ''Revenue from Contracts with Customers''

Ind AS 115 was issued in February 2015 and establishes a five-step model to account for revenue arising from contracts with customer. Under Ind AS 115, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard may supersede few revenue recognition practices under current Ind AS. The Company is in the process of analysing the impact of the proposed standard. This standard will come into force from accounting period commencing on or after April 1, 2018. The Company shall adopt the new standard on the required effective date.

b) In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7 ‘Statement of Cash Flows’ and Ind AS 102 ‘Share-based payment.’ These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7 ‘Statement of Cash Flows’ and IFRS 2 ‘Share-based payment,’ respectively. The amendments are applicable to the Company from April 1, 2017.

Amendment to Ind AS 7 :

The amendment to Ind AS 7 ‘Statement of Cash Flows’, requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the Balance Sheet for liabilities arising from financing activities, to meet the disclosure requirement.

The Company is evaluating the requirements of the amendment and its effect on the financial statements.

Amendment to Ind AS 102 :

The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.

The Company is currently not having any cash settled share based payments. No impact is currently forseen.

13 The Company has bank overdraft arrangement secured by hypothecation of all stocks and book debts, against which there are no borrowings.

14 The Previous GAAP figures have been reclassified to conform to current year’s Ind AS presentation requirements.


Mar 31, 2015

1. COMPANY INFORMATION

Abbott India Limited (''The Company'') is a public limited company domiciled in India and is listed and traded on the Bombay Stock Exchange and also traded on the National Stock Exchange. The Company is one of the leading multinational pharmaceutical companies in India and operates with an owned manufacturing facility in Goa and various independent contracts / third party manufacturers based across the country. The Company sells its products through independent distributors primarily within India.

2. DISCLOSURE UNDER ACCOUNTING STANDARD - 15 EMPLOYEE BENEFITS

The Company has classified the various benefits provided to employees as under :

a) Defined Contribution Plans

i) Provident Fund / Employees'' Pension Fund

ii) Superannuation Fund

iii) Employees'' Deposit Linked Insurance Scheme

iv) Group Life Insurance Cover

b) Defined Benefit Plans

i) Gratuity : (Included as part of Contribution to Provident and Other Funds in Note 27 - Employee Benefits Expense)

Gratuity is payable to all eligible employees of the Company on retirement, death, permanent disablement and resignation in terms of the provision of the Payment of Gratuity Act 1972, or Company''s scheme whichever is more beneficial. Benefits would be paid at the time of the separation based on the respective schemes.

ii) Post Retirement Medical Benefits (PRMB) : (Included as part of Staff Welfare Expenses in Note 27 - Employee Benefits Expense)

Under this scheme, select group of senior employees and their spouses are covered for hospitalisation benefits after the employee has retired from the Company. The cover is available to these beneficiaries until they are alive. The Company has procured a group hospitalisation cover from an insurance company for providing these benefits to these beneficiaries.

The insurance premium payable in respect of each of the beneficiaries covered under this scheme is directly paid by the Company to the insurer. The insurance cover and premium varies from one beneficiary to another.

c) Other Long Term Defined Benefit Plans :

i) Compensated Absences (CA) : (Included as part of Salaries and Wages in Note 27 - Employee Benefits Expense)

Compensated benefit is payable to all the eligible employees of the Company on retirement, death, permanent disablement and resignation on the leave balance as per the Company Rules. Benefits would be paid at the time of separation based on last drawn base salary, variable dearness allowance and fixed dearness allowance.

ii) Long Service Benefits (LSB) : (Included as part of Salaries and Wages in Note 27 - Employee Benefits Expense)

Under this scheme, long service benefits accrue to the employees, while in service and is payable upon completion of stipulated service with the Company.

3. DISCLOSURES RELATING TO SHARE BASED COMPENSATION

A) International Stock Ownership Plan (Stocks of Abbott Laboratories, USA)

Abbott Laboratories, USA has an "Affiliate Employee Stock Purchase Plan" (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of Abbott Laboratories, USA. Every employee who opts for the scheme contributes, by way of payroll deductions, up to 10% of his cash remuneration towards purchase of shares on a monthly basis over the purchase cycle of 6 months.

The maximum that an employee can contribute to the plan is USD 12,500 per purchase cycle or USD 25,000 per calendar year. At the end of the cycle, accumulated payroll deductions are used to purchase shares at a discounted price. The purchase price of the share is 85% of the lesser of Fair Market Value either on the first or last day of the purchase cycle. The shares of Abbott Laboratories, USA are listed with the New York Stock Exchange, USA and are purchased on behalf of the employees at market price less discount, allocated to participants as of last day of the purchase cycle. The concession in the price of the shares is entirely borne by Abbott Laboratories, USA.

In view of the above, no stock compensation expenses are incurred by the Company. During the year ended March 31, 2015, 14,656 shares (March 2014 : 10,782 shares) were purchased by employees at weighted average fair value of US $ 32.99 (March 2014 : US $ 30.07) per share.

B) Employees Stock Options Plan (Stocks of Abbott Laboratories, USA)

Abbott Laboratories, USA has an "Incentive Stock Option Program" whereby specified employees of its subsidiaries covered by the plan are granted an option to purchase shares of Abbott Laboratories, USA at a fixed price (grant price), which shall be at least 100% of the Fair Market Value of the common share for a fixed period of time. Accordingly, no options compensation expenses are incurred by the Company during the period. The shares of Abbott Laboratories, USA are listed with the New York Stock Exchange, USA. The Grants issued are vested in one third installments over a three year period and have a 10 years contractual life.

(C) Employees Restricted Stock Options Plan (Stocks of Abbott Laboratories, USA)

Abbott Laboratories, USA as part of the "Long Term Incentive Program" has offered Restricted Stock Units to specified employees of its subsidiaries, whereby the employees covered by the plan are granted units. The units when vested, become shares of Abbott Laboratories, USA at a Nil Cost. The shares of Abbott Laboratories, USA are listed with the New York Stock Exchange, USA. The Grants issued are vested in one third installments over a three year period. No options compensation expenses have been incurred by the Company during the period.

4. CONTINGENT LIABILITIES

i) Claims against the Company not acknowledged as Debts :

a) In February 1996, the Government had made a tentative claim for a sum of Rs. 11,11.66 Lakhs to be paid into the Drugs Prices Equalisation Account (DPEA) on account of unintended benefit allegedly enjoyed by the Company during the period May 1, 1981 to August 25, 1987. This was contested by the Company and subsequently during the year ended November 30, 2005, a final demand was received for Rs. 3,46.64 Lakhs (including interest of Rs. 1,90.39 Lakhs upto March 31, 2004). The Company, being aggrieved of the said demand and based on legal advice obtained in this regard, contested the above final demand of Rs. 3,46.64 Lakhs and filed a Writ Petition before the Bombay High Court to restrain the Government from recovering the said amount. The Bombay High Court has admitted the Writ Petition and granted stay of the recovery of the amount of Rs. 3,46.64 Lakhs subject to the Company furnishing a Bank Guarantee in respect of the principal amount of Rs. 1,56.25 Lakhs. The said Bank Guarantee has been furnished. The Company however, out of abundant caution and based on its understanding of the facts and circumstances of the case provided for a sum of Rs. 1,00.09 Lakhs (March 2014 : Rs. 96.18 Lakhs) including interest liability till date.

As At As At March 31, March 31, 2015 2014

b) Sales Tax, Service Tax and Custom Duty demands under appeals 9,30.70 9,68.09

c) Reimbursements claimed by Third Party - 47.84

d) Bank Guarantees in respect of Sales Tax demand 2,49.33 2,40.96

ii) Capital Commitments :

Estimated amount of contracts remaining to be executed on capital account and not 6,83.46 1,67.81 provided (Net of advances)

5. SEGMENT REPORTING

In accordance with the principles given in Accounting Standard on Segment Reporting (AS 17) notified by Companies (Accounting Standards) Rules, 2006, the Company has one reportable business segment i.e "Pharmaceuticals". The Company has no other reportable segment. Further, significant business of the Company is within India hence there is no Geographical segment.

6. RELATED PARTY DISCLOSURE

A) Parties where control exists :

Ultimate Holding Company : Abbott Laboratories, USA Holding Company : Abbott Capital India Ltd., U.K.

7. The Company has Bank Overdraft arrangement secured by hypothecation of all stocks and book debts.

8. Previous period''s figures have been regrouped / reclassified to confirm to the current year''s classification.

The figures of the previous period were audited by a firm of Chartered Accountants other than S R B C & CO LLP.


Mar 31, 2014

1. COMPANY INFORMATION

Abbott India Limited (''The Company'') is a public limited company domiciled in India and is listed and traded on the Bombay Stock Exchange and also traded on the National Stock Exchange. The Company is one of the leading multinational pharmaceutical companies in India and operates with an owned manufacturing facility in Goa and various independent contract/ third party manufacturers based across the country. The Company sells its products through independent distributors primarily within India.

3. With effect from the current fnancial year, the Company has changed its accounting year from year ended December 31 to year ended March 31. Accordingly, these fnancial statements are prepared for a period of 15 months from January 1, 2013 to March 31, 2014. Hence, the fgures and Earnings per share for the current accounting period are not comparable with those of the previous accounting year.

2] Defined Benefit Plans

a. Gratuity : (Included as part of Contribution to Provident and other Funds in Note 27 - Employee benefits Expense)

Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and resignation in terms of the provision of the Payment of Gratuity Act 1972, or Company''s Scheme whichever is more Beneficial. benefits would be paid at the time of the separation based on the respective Schemes.

b. Post Retirement Medical Benefits (PRMB) : (Included as part of Staff welfare Expenses in Note 27 - Employee benefits Expense)

Under this scheme, select group of senior employees and their spouse are covered for hospitalization benefits after the employee has retired from the Company. The cover is available to these beneficiaries until they are alive. The Company has procured a group hospitalization cover from an insurance company for providing these benefits to these beneficiaries.

The insurance premium payable in respect of each of the beneficiaries covered under this scheme is directly paid by the Company to the insurer. The insurance cover and premium varies from one beneficiary to another.

c. Compensated Absences (CA) : (Included as part of Salaries and Wages in Note 27 - Employee benefits Expense) Compensated benefits is payable to all the eligible employees of the Company on superannuation, death, permanent disablement and resignation on the leave balance as per the Company Rules. benefits would be paid at the time of separation based on last drawn base salary, variable dearness allowance and fixed dearness allowance.

d. Long Service Benefits (LSB) : (Included as part of Salaries and Wages in Note 27 - Employee benefits Expense)

Under this scheme, long service benefits accrue to the employees, while in service and is payable upon completion of stipulated service with the Company.

29. DISCLOSURES RELATING TO SHARE BASED COMPENSATION

(A) International Stock Ownership Plan (Stocks of Abbott Laboratories, USA)

Abbott Laboratories, USA has an "Affliate Employee Stock Purchase Plan" (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of Abbott Laboratories, USA. Every employee who opts for the scheme contributes, by way of payroll deductions, up to 10% of his cash remuneration towards purchase of shares on a monthly basis over the purchase cycle of 6 months.

The maximum that an employee can contribute to the plan is USD 12,500 per purchase cycle or USD 25,000 per calendar year. At the end of the cycle, accumulated payroll deductions are used to purchase shares at a discounted price. The purchase price of the share is 85% of the lesser of Fair Market Value either on the frst or last day of the purchase cycle. The shares of Abbott Laboratories, USA are listed with the New York Stock Exchange, USA and are purchased on behalf of the employees at market price less discount, allocated to participants as of last day of the purchase cycle. The concession in the price of the shares is entirely borne by Abbott Laboratories, USA. In view of the above, no stock compensation expenses are incurred by the Company. During the period January 1, 2013 to March 31, 2014, 10,782 shares (2012 : 4,922 shares) were purchased by employees at weighted average fair value of US $ 30.07 (2012 : US $ 50.01) per share.

(B) Employees Stock Options Plan (Stocks of Abbott Laboratories, USA)

Abbott Laboratories, USA has an "Incentive Stock Option Program" whereby specified employees of its subsidiaries covered by the plan are granted an option to purchase shares of Abbott Laboratories, USA at a fixed price (grant price),which shall be at least 100% of the Fair Market Value of the common share for a fixed period of time. Accordingly, no options compensation expenses are incurred by the Company during the period. The shares of Abbott Laboratories, USA are listed with the New York Stock Exchange, USA. The Grants issued are vested in one third installments over a three year period and have a 10 years contractual life.

3. CONTINGENT LIABILITIES

(i) Claims against the Company not acknowledged as Debts :

a. In February 1996, the Government had made a tentative claim for a sum of Rs. 11,11.66 Lakhs to be paid into the Drugs Prices Equalisation Account (DPEA) on account of unintended benefit allegedly enjoyed by the Company during the period May 1, 1981 to August 25, 1987. This was contested by the Company and subsequently during the year ended November 30, 2005, a final demand was received for Rs. 3,46.64 Lakhs (including interest of Rs. 1,90.39 Lakhs upto March 31, 2004). The Company, being aggrieved of the said demand and based on legal advice obtained in this regard, contested the above final demand of Rs. 3,46.64 Lakhs and fled a Writ Petition before the Bombay High Court to restrain the Government from recovering the said amount. The Bombay High Court has admitted the Writ Petition and granted stay of the recovery of the amount of Rs. 3,46.64 Lakhs subject to the Company furnishing a Bank Guarantee in respect of the principal amount of Rs. 1,56.25 Lakhs. The said Bank Guarantee has been furnished. The Company however, out of abundant caution and based on its understanding of the facts and circumstances of the

4. SEGMENT REPORTING

The Company operates in one reportable business segment i.e "Pharmaceuticals" and one reportable geographical segment i.e. "Within India". Hence, no separate information for segment wise disclosure is applicable.

5. RELATED PARTY DISCLOSURE

A. Parties where control exists :

Ultimate Holding Company : Abbott Laboratories, USA Holding Company : Abbott Capital India Ltd., U.K.

B. Other related parties : (1) Fellow Subsidiaries :

Abbott Logistics BV, Netherlands

Abbott Laboratories Intl. Co., USA

Abbott Healthcare Private Limited, India

Abbott Truecare Pharma Private Limited, India

Abbott International LLC, USA

Abbvie Italy, Italy (Upto December 31, 2012)

Abbott Laboratories (Singapore) Pte Ltd., Singapore

Abbott Scandinavia AB

Abbott Laboratories S.A., DAFZ (Dubai Airport Free Zone), Dubai

Abbott Laboratories S.A., Spain

Abbvie Inc, USA (Upto December 31, 2012)

Abbott Healthcare Products B V, Netherlands

Abbvie Logistics BV, Netherlands (Upto December 31, 2012)

Abbott Laboratories S.A., USA

Abbott Laboratories Trading (Shanghai) Co. Ltd., China

Abbott Products Operations AG., Switzerland

Abbott Products GmbH., Germany

Abbott Laboratories, Philippines

Abbott Products SAS, France

British Colloids Ltd., U.K.

Abbvie PTE Ltd., Singapore (Upto December 31, 2012)

Abbott Healthcare Products Ltd., U.K.

Abbott Laboratories S.A., Ukraine

(2) Key Management Personnel :

(i) Mr Rehan A. Khan – Managing Director (with effect from May 15, 2012)

(ii) Mr K. M. Marfatia – Director

(iii) Mr V. Mohan – Managing Director (till May 14, 2012)


Dec 31, 2012

1. COMPANY INFORMATION

Abbott India Limited (The Company'') is a public limited company domiciled in India and is listed and traded on the Bombay Stock Exchange and also traded on the National Stock Exchange. The Company is one of the leading multinational pharmaceutical companies in India and operates with an owned manufacturing facility in Goa and various independent contract/ third party manufacturers based across the country. The Company sells its products through independent distributors primarily within India.

2. (a) During the previous year, the Scheme of Amalgamation (''Scheme'') of Solvay Pharma India Limited (hereinafter referred to as "Solvay Pharma") with the Company was sanctioned by the Hon''ble High Court of Bombay vide its Order dated July 15, 2011. A copy of the said order was filed with the Registrar of Companies on August 10, 2011 ("The Effective Date").

(b) The swap ratio for the merger was 2:3 i.e. every two shares of Solvay Pharma entitled their holder to three shares of Abbott India Limited. The fractional entitlement of shares (equivalent to 497 shares) have been paid in cash with reference to the price prevailing on the Date of Allotment.

(c) Under the Scheme, the amalgamation took place effective January 1, 2011 (The Appointed Date''). Accordingly, the "Statement of Profit and Loss for the year ended December 31, 2011" includes the results of Solvay Pharma.

(d) The amalgamation was accounted under the "pooling of interests" method as prescribed by Accounting Standard 14 (AS 14) "Accounting for Amalgamations". Accordingly, the assets, liabilities and other reserves of Solvay Pharma as at December 31, 2010 were taken over at their book values after adjusting the reserves for the financial effect of conflicting accounting policies between the Company and Solvay Pharma, additional share capital allotted by the Company (over the share capital of Solvay Pharma) and cash for fractional shares payable by the Company.

3. The financial statements for the year ended December 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI of the Companies Act, 1956, the financial statements for the year ended December 31, 2012 are prepared as per Revised Schedule VI of the Companies Act, 1956. Accordingly, the previous year figures have also been regrouped/ reclassified to conform to the current year''s classification.

There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at December 31, 2012. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined I to the extent such parties have been identified on the basis of information available with the Company.

With effect from January 1, 2012, the Company has retrospectively changed its method of providing depreciation on fixed assets from written down value (WDV) method to straight line method (SLM). As a result, an amount of Rs. 29,08.40 Lakhs, arising from the retrospective change in the method of providing depreciation till December 31, 2011, has been written back as an exceptional item in the Statement of Profit and Loss for the year ended December 31, 2012.

Further, with effect from January 1, 2012, the Company has revised the estimated useful life of its assets, on account of which the depreciation charge for the year is higher by Rs. 6,83.88 Lakhs.

4. DISCLOSURE UNDER ACCOUNTING STANDARD -15 ''EMPLOYEE BENEFITS'':

The Company has classified the various benefits provided to employees as under:

1] Defined Contribution Plans

a. Provident Fund/ Employees'' Pension Fund

b. Superannuation Fund

c. Employees'' Deposit Linked Insurance Scheme

d. Group Life Insurance Cover

2] Defined Benefit Plans

a. Gratuity

Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and resignation in terms of the provision of the Payment of Gratuity Act 1972, or Company''s Scheme whichever is more beneficial. Benefits would be paid at the time of the separation based on the respective Schemes

b. Post Retirement Medical Benefits (PRMB)

Under this scheme, select group of senior employees and their spouse are covered for hospitalisation benefit after the employee has retired from the Company. The cover is available to these beneficiaries until they are alive. The Company has procured a group hospitalisation cover from an insurance company for providing these benefits to these beneficiaries. The insurance premium payable in respect of each of the beneficiaries covered under this scheme is directly paid by the Company to the insurer. The insurance cover and premium varies from one beneficiary to another.

c. Compensated Absences (CA)

Compensated benefits is payable to all the eligible employees of the Company on superannuation, death, permanent disablement and resignation on the leave balance as per the Company Rules. Benefits would be paid at the time of separation based on last drawn base salary, variable dearness allowance and fixed dearness allowance.

d. Long Service Benefits (LSB)

Under this scheme, long service benefit accrues to the employees, while in service and is payable upon completion of stipulated service with the Company.

(E) Category of Plan Assets

The Company''s Plan Assets in respect of Gratuity are funded through the Group Schemes of the Life Insurance Corporation of India.

5. DISCLOSURES RELATING TO SHARE BASED COMPENSATION :

(A) International Stock Ownership Plan (Stocks of Abbott Laboratories, USA)

Abbott Laboratories, USA has an "Affiliate Employee Stock Purchase Plan" (employee share purchase plan) whereby specified employees of its subsidiaries have been given a right to purchase shares of Abbott Laboratories, USA. Every employee who opts for the scheme contributes, by way of payroll deductions, up to 10% of his cash remuneration (i.e. basic salary for Officers and basic salary & dearness allowance for Staff category) towards purchase of shares on a monthly basis over the purchase cycle of 6 months.

The maximum that an employee can contribute to the plan is USD 12,500 per purchase cycle or USD 25,000 per calendar year. At the end of the cycle, accumulated payroll deductions are used to purchase shares at a discounted price. The purchase price of the share is 85% of the lesser of Fair Market Value either on the first or last day of the purchase cycle. The shares of Abbott Laboratories, USA are listed with the New York Stock Exchange, USA and are purchased on behalf of the employees at market price less discount, allocated to participants as of last day of the purchase cycle. The concession in the price of the shares is entirely borne by Abbott Laboratories, USA.

In view of the above, no stock compensation expenses are incurred by the Company. During the year ended December 31, 2012, 4,922 shares (2011 : 425 shares) were purchased by employees at weighted average fair value of US $ 50.01 (2011 : US $ 38.42) per share.

(B) Employees Stock Options Plan (Stocks of Abbott Laboratories, USA)

Abbott Laboratories, USA has an "Incentive Stock Option Program" whereby specified employees of its subsidiaries covered by the plan are granted an option to purchase shares of Abbott Laboratories, USA at a fixed price (grant price),which shall be at least 100% of the Fair Market Value of the common share for a fixed period of time. Accordingly, no options compensation expenses are incurred by the Company during the year. The shares of Abbott Laboratories, USA are listed with the New York Stock Exchange, USA. The Grants issued are vested in one third installments over a three year period and have a 10 years contractual life.

6. CONTINGENT LIABILITIES :

(i) Claims against the Company not acknowledged as Debts :

a. In February 1996, the Government had made a tentative claim for a sum of Rs. 11,11.66 Lakhs to be paid into the Drugs Prices Equalisation Account (DPEA) on account of unintended benefit allegedly enjoyed by the Company during the period May 1,1981 to August 25,1987. This was contested by the Company and subsequently during the year ended November 30, 2005, a final demand was received for Rs. 3,46.64 Lakhs (including interest of Rs. 1,90.39 Lakhs upto March 31, 2004).The Company, being aggrieved of the said demand and based on legal advice obtained in this regard, contested the above final demand of Rs. 3,46.64 Lakhs and filed a Writ Petition before the Bombay High Court to restrain the Government from recovering the said amount. The Bombay High Court has admitted the Writ Petition and granted stay of the recovery of the amount of Rs. 3,46.64 Lakhs subject to the Company furnishing a Bank Guarantee in respect of the principal amount of Rs. 1,56.25 Lakhs. The said Bank Guarantee has been furnished. The Company

7. SEGMENT REPORTING :

The Company operates in one reportable business segment i.e. "Pharmaceuticals" and one reportable geographical segment i.e. "Within India". Hence, no separate information for segment wise disclosure is applicable.

8. RELATED PARTY DISCLOSURE :

A. Parties where control exists :

Ultimate Holding Company : Abbott Laboratories, USA Holding Company : Abbott Capital India Limited, U.K.

9. The Company has Bank Overdraft arrangement secured by hypothecation of all stocks and book debts.


Dec 31, 2010

1 With effect from current financial year the Company has changed its accounting year from year ended November 30 to year ended December 31. Accordingly these financial statements are prepared for a period of 13 months from December 01, 2009 to December 31, 2010. Hence the figures for the current accounting period are not comparable with those of the previous accounting year.

2 The Board of Directors of the Company has, at its meeting held on November 24, 2010, unanimously approved the draft Scheme of Amalgamation ("Scheme") of Solvay Pharma India Limited into Abbott India Limited under Sections 391 to 394 of the Companies Act, 1956. The swap ratio for the merger is 2 : 3 i.e. every two shares of Solvay Pharma India Limited will entitle their holder to three shares of Abbott India Limited. The scheme has been filed with and approved by the stock exchange and is subject to the shareholders and other statutory approvals. On receipt of the necessary approvals, the scheme of merger will be effective January 01, 2011. Accordingly the effect of the scheme will be reflected in the accounts for the year beginning January 01, 2011.

3 Contingent Liabilities:

a) In February 1996, the Government had made a tentative claim for a sum of Rs. 11,11.66 Lakhs to be paid into the Drugs Prices Equalisation Account (DPEA) on account of unintended benefit allegedly enjoyed by the Company during the period May 01, 1981 to August 25, 1987. This was contested by the Company and subsequently during the year ended November 30, 2005, a final demand was received for Rs. 3,46.64 Lakhs (including interest of Rs. 1,90.39 Lakhs upto March 31, 2004). The Company, being aggrieved of the said demand and based on legal advice obtained in this regard, contested the above final demand of Rs. 3,46.64 Lakhs and filed a Writ Petition before the Bombay High Court to restrain the Government from recovering the said amount. The Bombay High Court has admitted the Writ Petition and granted stay of the recovery of the amount of Rs. 3,46.64 Lakhs subject to the Company furnishing a Bank Guarantee in respect of the principal amount of Rs. 1,56.25 Lakhs.

The said Bank Guarantee has been furnished. The Company however, out of abundant caution and based on its understanding of the facts and circumstances of the case provided for a sum of Rs. 83.51 Lakhs (2009: Rs. 79.29 Lakhs) including interest liability till date.

20 Disclosure for Operating leases:

a) The Company has obtained various residential/ office premises (including furniture and fittings, therein as applicable) under operating lease or leave and license agreements. These are generally not non - cancellable and range between 11 months to 5 years under leave and licence, or longer for other leases and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms.

b) Lease payments are recognised in the Profit and Loss Account under "Rent" in Schedule 13 - Manufacturing, Administrative and Selling Expenses.

21 Excise duty deducted from turnover represents amount of excise duty collected by the Company on sale of goods manufactured by the Company. Excise duty of Rs. 87.39 Lakhs (2009 : Rs. 44.04 lakhs) included under Schedule 13 Manufacturing, Administrative and Selling Expenses represents the difference in amount of excise duty on closing stock and opening stock of finished goods and excise duty paid on the goods distributed as free goods/ medical samples.

22 The Company operates in one reportable business segment i.e "Pharmaceuticals" and one reportable geographical segment i.e. "Within India". Hence, no separate information for segment wise disclosure is applicable.

23 Related Party Disclosure

a Parties where control exists :

Ultimate Holding Company Abbott Laboratories, USA

Holding Company Abbott Capital India Ltd., UK

b Other related parties with whom transactions have taken place during the period if Abbott Logistics BV, Netherlands Abbott Laboratories S.A., USA Abbott GmbH & Co. KG, Germany Abbott Laboratories (Singapore) Pte Ltd, Singapore Abbott Laboratories Intl. Co., USA Abbott Australasia Pty. Ltd., Australia

Abbott Laboratories Ltd., Thailand

Abbott Healthcare Pvt. Ltd., India

Abbott Korea Ltd., Korea

Abbott SA-NV, Belgium

Abbott Laboratories S.A., China

Abbott Laboratories Ltd., UK

Abbott Mature Products International Ltd., Ireland

Abbott Laboratories S.A., DAFZ (Dubai Airport Free Zone), Dubai

Abbott Japan Co Ltd., Japan

Solvay Pharma India Ltd., India

Mr V Mohan - Managing Director •

Mr R Sonalker - Director - Finance i

Mr S Vasudevan (w.e.f February 02, 2009) - Director - Marketing

Mr A Bhatt - Regional Human Resources Director

Mr U D Chiniwala - Director - Risk & Financial Controlling

Mr K M Marfatia - Director - Legal & Secretarial

Mr L N Neti - Director - Supply Chain

Dr Z Madan (upto November 30, 2009) - Director - Medical

MrVMNagesh - Head-Quality

Mr Arun Khedkar (upto February 28, 2009) - Director - Business Development

The Company has decided that effective December 01, 2009, Key Management Person for this purpose shall

include only the Managing Director.

24 Employee Benefits:

The Accounting Standard-15 Employee Benefits as notified in the Companies (Accounting Standards) Rules 2006, has been adopted by the Company.

The Company has classified the various benefits provided to employees as under:

I. Defined Contribution Plans

a. Provident Fund/ Employees Pension Fund

b. Superannuation Fund

c. Employees Deposit Linked Insurance Scheme

d. Group Life Insurance Cover

II. Defined Benefit Plans

a. Contribution to Gratuity Fund

Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and resignation in terms of the provisions of The Payment of Gratuity Act 1972, or Companys Scheme whichever is more beneficial. Benefits would be paid at the time of the separation based on the respective Schemes.

b. Provision for Post Retirement Medical Benefits (PRMB)

Under this scheme, select group of senior employees and their spouse are covered for hospitalization benefit after the employee has retired from the Company. The cover is available to these beneficiaries until they are alive. The Company has procured a group hospitalization cover from an insurance company for providing these benefits to these beneficiaries. The insurance premium payable in respect of each of the beneficiary covered under this scheme is directly paid by the Company to the insurer. The insurance cover and premium varies from one beneficiary to another.

c. Provision for Compensated Absences (CA)

Compensated benefits is payable to all the eligible employees of the Company on superannuation, death, permanent disablement and resignation in terms of the provision of the leave balance as per the Company Rules. Benefits would be paid at the time of separation based on last drawn base salary, variable dearness allowance and fixed dearness allowance.

d. Provision for Long Service Benefits (LSB)

Under this scheme, long service benefit accrues to the employee, while he is in service and is payable to him upon completion of stipulated service with the Company.

In accordance with Accounting Standard -15, relevant disclosures are as under:

j. Leave Availment Pattern 5.00% (2009 : 5.00%) of the leave balance as at the valuation date and each subsequent year following the valuation date will be availed by the employee. The balance leave is assumed to be available for encashment on separation from the Company.

k. The estimates of future salary increases, considered in the actuarial valuation, is primarily based on account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

I. As this is the fourth year in which the Accounting Standard - 15 has been applied, the amounts of the present value of the obligation, fair value of plan assets, surplus or deficit in the plan and experience adjustment arising on plan liabilities and plan assets of past three years are as below:

25 A) International Stock Ownership Plan (Stocks of the Abbott Laboratories, USA)

Abbott Laboratories, USA has an "Affiliate Employee Stock Purchase Plan" (employee share purchase plan) whereby all permanent eligible employees of the Company have been given a right to purchase shares of the Company i.e. Abbott Laboratories, USA. Every employee who opts for the scheme contributes, by way of payroll deductions, up to 10% of his cash remuneration (i.e. basic salary for Officers and basic salary & dearness allowance for Staff category) towards purchase of shares on a monthly basis over the purchase cycle of 6 months.

The maximum that an individual can contribute to the plan is US$ 12,500 per purchase cycle or US$ 25,000 per calendar year. At the end of the cycle, accumulated payroll deductions are used to purchase shares at a discounted price. The purchase price of the share is 85% of the lesser of Fair Market Value either on the first or last day of the purchase cycle. The shares of Abbott Laboratories, USA are listed with the Securities Exchange Commission of USA and are purchased on behalf of the employees at market price less discount, allocated to participants as of on last day of the purchase cycle. The concession in the price of the shares is entirely borne by Abbott Laboratories, USA

In view of the above, no stock compensation expenses are incurred by the Company. During the period December 01, 2009 to December 31, 2010, 334 shares (2009 :287) were purchased by employees at weighted average fair value of US$ 39.90 (2009: US$ 42.06) per share.

B) Employees Stock Options Plan (Stocks of the Abbott Laboratories, USA)

Abbott Laboratories, USA has a "Incentive Stock Option Program" whereby the employees covered by the plan are granted an option to purchase shares of the Abbott Laboratories, USA at a fixed price (grant price),which shall be atleast 100% of the Fair Market Value of the common share for a fixed period of time. Accordingly, no options compensation expenses are incurred by the Company during the period. The shares of Abbott Laboratories, USA are listed with Securities Exchange Commission of USA. The Grants issued are vested in one third instalments over a three years period and have a 10 years contractual life.

26 The Company has Bank Overdraft arrangement secured by hypothecation of all stocks and book debts.

27 Disclosures under the Micro, Small and Medium Enterprises Development Act, 2006 :

a) An amount of Rs. 84.93 Lakhs (2009 : Rs. 66.98 Lakhs) and Rs. Nil (2009 : Rs. Nil) was due and outstanding to suppliers as at the end of the accounting period on account of Principal and Interest respectively.

b) No interest was paid during the period.

c) No interest is payable at the end of the period other than interest under Micro, Small and Medium Enterprises Development Act, 2006.

d) No amount of interest was accrued and unpaid at the end of the accounting period.

The above information and that given in Schedule 9 - "Current Liabilities and Provisions" regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

28 In respect of the amounts as mentioned under section 205C of the Companies Act, 1956, no dues are required to be credited to the Investor Education and Protection Fund as on December 31, 2010.

29 The revenue expenditure on Research and Development is Rs. 1,68.74 Lakhs (2009 : Rs. 1,11.08 Lakhs)

30 The figures of the previous year are regrouped / rearranged wherever considered necessary. Signatures to Schedules 1 to 15 which form an integral part of the Accounts.


Nov 30, 2009

1. Contingent Liabilities :

(a) In February 1996, the Government had made a tentative claim for a sum of Rs 11,11.66 Lakhs to be paid into the Drugs Prices Equalisation Account (DPEA) on account of unintended benefit allegedly enjoyed by the Company during the period May 1, 1981 to August 25, 1987. This was contested by the Company and subsequently during the year ended November 30, 2005, a final demand was received for Rs 3,46.64 Lakhs (including interest of Rs 1,90.39 Lakhs upto March 31, 2004).The Company, being aggrieved of the said demand and based on legal advice obtained in this regard, contested the above final demand of Rs 3,46.64 Lakhs and filed a Writ Petition before the Bombay High Court to restrain the Government from recovering the said amount. The Bombay High Court has admitted the Writ Petition and granted stay of the recovery of the amount of Rs 3,46.64 Lakhs subject to the Company furnishing a Bank Guarantee in respect of the principal amount of Rs 1,56.25 Lakhs.

The said Bank Guarantee has been furnished. The Company however, out of abundant caution and based on its understanding of the facts and circumstances of the case provided for a sum of Rs 79.29 Lakhs (2008 : Rs 75.39 Lakhs) including interest liability till date.

Year ended Year ended November 30, 2009 November 30, 2008 Rupees in Lakhs Rupees in Lakhs

(b) Claims against the Company, not acknowledged as debts in respect of :

(i) Excise on free samples on account of change in valuation method - 8.34

(ii) Income Tax demand under appeals on account of advertisement expenditure.................... 2,23.18 2,23.18

(iii) Sales Tax disallowances on account of disputed set off.. 9.16 -

(iv) Reimbursement claimed by third party............. 47.84 -

(c) Estimated amount of Contracts remaining to be executed on capital account and not provided for (net of advances)....................... 87.91 1,17.90

(d) In respect of the guarantees issued by the banks............. 2,56.65 1,11.55

2. Disclosure for Operating leases :

(a) The Company has obtained various residential/office premises (including furniture and fittings, therein as applicable) under operating lease or leave and license agreements. These are generally not non-cancellable and range between 11 months to 5 years under leave and licence, or longer for other leases and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms.

(b) Lease payments are recognised in the Profit and Loss Account under "Rent" in Schedule 14 - Manufacturing, Administrative and Selling Expenses.

3. Excise duty deducted from turnover represents amount of excise duty collected by the Company on sale of goods manufactured by the Company. Excise duty of Rs 44.04 lakhs (Debit) (2008 : Rs 30.95 lakhs - credit) included in Miscellaneous Expenses under Schedule 14 - Manufacturing, Administrative and Selling Expenses represents mainly the difference in amount of excise duty on closing stock and opening stock of finished goods and excise duty paid on the goods distributed as medical samples.

4. Consequent to the sale of the undertaking at Jejuri, Maharashtra, as a going concern in 2002, the eligibility certificate under the package scheme of incentives notified under Maharashtra Governments Resolution Number IDL-1088/(6603) IND-8, dated 30.09.1988 stood transferred to the purchaser as per order passed by Office of the Joint Director of Industries dated February 11, 2004. As the Sales Tax deferral benefit was being utilised by the Company, the Company had agreed to repay these amounts on the respective due dates to the purchaser. During the year, the Company has repaid the balance outstanding amount.

5. The Company operates in one reportable business segment i.e. "Pharmaceuticals" and one reportable geographical segment i.e. "Within India". Hence, no separate information for segment wise disclosure is applicable.

6. Related Party Disclosure :

(a) Parties where control exists :

Ultimate Holding Company - Abbott Laboratories, USA

Holding Company - Abbott Capital India Limited, UK

(b) Other related parties with whom transactions have taken place during the year:

(i) Fellow subsidiaries :

- Abbott Logistics BV, Netherlands

- Abbott GmbH & Co. KG, Germany

- Abbott Laboratories (Singapore) Pte Ltd., Singapore

- Abbott Laboratories Intl. Co., USA

- Abbott Equity Holdings Ltd., England

- Abbott Australasia Pty. Ltd., Australia

- Abbott Healthcare Pvt. Ltd., India

- Abbott Laboratories, Chicago IL

- Abbott Korea Ltd., Korea

- Abbott S. A., Belgium

- Abbott South Africa (Pty) Ltd., South Africa

- Abbott S.A., China

- Abbott Laboratories Ltd., UK

(ii) Key Management personnel :

Mr V Mohan - Managing Director

Mr R Sonalker - Director - Finance

Mr S Vasudevan (w.e.f. February 02, 2009) - Director - Marketing

Mr A Bhatt - Regional Human Resource Director

Mr U D Chiniwala - Director - Risk & Financial Controlling

Mr K M Marfatia - Director - Legal & Secretarial

Mr L N Neti - Director - Supply Chain

Dr Z Madan (upto November 30, 2009) - Director - Medical

Mr V M Nagesh - Head - Quality

Mr Arun Khedkar (upto February 28, 2009) - Director - Business Development

Mr S Jain (upto November 30, 2008) - Director - Marketing

Mr R Vohra (upto March 31, 2008) - Head - Strategy & Business Development

(iii) Relatives of Key Management Personnel :

Mrs V Jain - Wife of Mr S Jain

7. Employee Benefits :

The Accounting Standard-15 Employee Benefits as notified in the Companies (Accounting Standards) Rules 2006, has been adopted by the Company.

The Company has classified the various benefits provided to employees as under:

I. Defined Contribution Plans

(a) Provident Fund/Employees Pension Fund

(b) Superannuation Fund

(c) Employees Deposit Linked Insurance Scheme

(d) Group Life Insurance Cover

II. Defined Benefit Plans

(a) Contribution to Gratuity Fund

Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and resignation in terms of the provisions of The Payment of Gratuity Act, 1972 or Companys Scheme whichever is more beneficial. Benefits would be paid at the time of the separation based on the respective Schemes.

(b) Provision for Post Retirement Medical Benefits (PRMB)

Under this scheme, select group of senior employees and their spouse are covered for hospitalization benefit after the employee has retired from the Company. The cover is available to these beneficiaries until they are alive. The Company has procured a group hospitalization cover from an insurance company for providing these benefits to these beneficiaries. The insurance premium payable in respect of each of the beneficiary covered under this scheme is directly paid by the Company to the insurer. The insurance cover and premium varies from one beneficiary to another.

(c) Provision for Compensated Absences (CA)

Compensated benefits is payable to all the eligible employees of the Company on superannuation, death, permanent disablement and resignation in terms of the provision of the leave balance as per the Company Rules. Benefits would be paid at the time of separation based on last drawn base salary, variable dearness allowance and fixed dearness allowance.

(d) Provision for Long Service Benefits (LSB)

Under this scheme, long service benefit accrues to the employee, while he is in service and is payable to him upon completion of stipulated service with the Company.

(E) Category of Plan Assets

The Companys Plan Assets in respect of Gratuity are funded through the Group Schemes of the Life Insurance Corporation of India.

j. Leave Availment Pattern

5% (2008 : 5%) of the leave balance as at the valuation date and each subsequent year following the valuation date will be availed by the employee. The balance leave is assumed to be available for encashment on separation from the Company.

k. The estimates of future salary increases, considered in the actuarial valuation, is primarily based on account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

8. (a) International Stock Ownership Plan (Stocks of the Abbott Laboratories, USA)

Abbott Laboratories, USA has an "Affiliate Employee Stock Purchase Plan" (employee share purchase plan) whereby all permanent eligible employees of the Company have been given a right to purchase shares of the Company i.e. Abbott Laboratories, USA. Every employee who opts for the scheme contributes, by way of payroll deductions, up to 10% of his cash remuneration (i.e. basic salary for Officers and basic salary & dearness allowance for Staff category) towards purchase of shares on a monthly basis over the purchase cycle of 6 months.

The maximum that an individual can contribute to the plan is US$ 12,500 per purchase cycle or US$ 25,000 per calendar year. At the end of the cycle, accumulated payroll deductions are used to purchase shares at a discounted price. The purchase price of the share is 85% of the lesser of Fair Market Value either on the first or last day of the purchase cycle. The shares of Abbott Laboratories, USA are listed with the Securities Exchange Commission of USA and are purchased on behalf of the employees at market price less discount, allocated to participants as of on last day of the purchase cycle. The concession in the price of the shares is entirely borne by Abbott Laboratories, USA.

In view of the above, no stock compensation expenses are incurred by the Company. During the year ended November 30, 2009, 287 (2008: 406) shares were purchased by employees at weighted average fair value of $ 42.06 (2008 : $ 45.47) per share.

9. The Company has Bank Overdraft arrangement secured by hypothecation of all stocks and book debts.

10. Disclosures under the Micro, Small and Medium Enterprises Development Act, 2006 :

(a) An amount of Rs 66.98 Lakhs (2008 : Rs 19.04 Lakhs) and Rs Nil (2008 : Rs Nil) was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively.

(b) No interest was paid during the year.

(c) No interest is payable at the end of the year other than interest under Micro, Small and Medium Enterprises Development Act, 2006.

(d) No amount of interest was accrued and unpaid at the end of the accounting year.

The above information and that given in Schedule 10 - "Current Liabilities and Provisions" regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

11. In respect of the amounts as mentioned under Section 205C of the Companies Act, 1956, no dues are required to be credited to the Investor Education and Protection Fund as on November 30, 2009.

12. The revenue expenditure on Research and Development is Rs 5,93.57 Lakhs (2008 : Rs 4,48.15 Lakhs).

13. Disclosure as per Accounting Standards (AS-29) for provisions is as under:

The Company, based on prevailing trade practices, makes provision for the cost of replacement of its date expired and damaged products upon return of such products, subject to certain terms and conditions. It is made based on the best estimates of the management taking into consideration the type of products sold, the likely returns and the costs required to be incurred for such replacements.

14. The figures of the previous year are regrouped/rearranged wherever considered necessary.

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