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Notes to Accounts of Biocon Ltd.

Mar 31, 2014

1. Corporate information

Biocon Limited (''Biocon'' or ''the Company''), was incorporated at Bangalore in 1978 for manufacture of biotechnology products. Biocon is an integrated healthcare company engaged in manufacture of biotechnology products for the pharmaceutical sector. The Company is also engaged in research and development in the biotechnology sector. During the year ended March 31, 2007, the Company had received an approval for operation of SEZ Developer and for setting up SEZ Unit operations to be located within Biocon SEZ.

Syngene International Limited (''Syngene''), promoted by Dr Kiran Mazumdar Shaw, was incorporated at Bangalore in 1993. In March 2002, Biocon acquired 99.99 per cent of the equity shares of Syngene and, resultantly, Syngene became the subsidiary of Biocon. As at March 31, 2014, 12.31 % of the equity interest in Syngene is held by third. parties

On January 10, 2008, Biocon entered into an agreement with Dr. B.R. Shetty to set up a joint venture Company NeoBiocon FZ-LLC, with a 50% equity interest incorporated in Dubai (''NeoBiocon'').

The Company has also established Biocon Research Limited (''BRL''), a subsidiary of the Company to undertake research and development in novel and innovative drug initiatives.

During the year ended March 31, 2011, Biocon set up a wholly owned subsidiary company in Malaysia, Biocon Sdn. Bhd. (''Biocon Malaysia'') for development and manufacture of bio-pharmaceuticals.

During the year ended March 31, 2014, the Company has established Biocon Academy, a not for profit company under Companies Act, 1956 to provide educational courses, training and research in the biosciences, life sciences and all fields of study.

1.1 Scheme of arrangement

On July 25, 2012, the Board of Directors of the Company approved a scheme of amalgamation (''the Scheme'') of Biocon Biopharmaceuticals Limited ("BBL" / "Transferor Company"), a wholly owned subsidiary, with the Company under section 391 and 394 of the Companies Act, 1956. The Honorable High Court of Karnataka (''the Court'') approved the aforesaid Scheme with Appointed Date as April 01, 2012 vide its order dated July 12, 2013 ("the Order"). The copy of the Order was filed with the Registrar of Companies on August 8, 2013. BBL was originally incorporated on June 17, 2002 as a Joint Venture between Biocon and CIMAB SA (''CIMAB'') with Biocon holding 51 per cent of the share capital. During the year ended March 31, 2011, Biocon acquired the interest of the joint venture partner, CIMAB. Consequently, all the equity shares of BBL were held by Biocon.

Accordingly, the assets and liabilities, and Deficit in the Statement of Profit and Loss of BBL of Rs. 103 as at Appointed Date have been recorded at their carrying values under the Pooling of Interest method as prescribed by Accounting Standard 14 - Accounting for Amalgamation (''AS 14''), and difference between value of Biocon''s investment in BBL and the amount of BBL''s share capital amounting toRs. 35 has been debited to the Reserves and Surplus of the Company in accordance with AS 14.

Since the Scheme received the requisite approvals in the year ended March 31, 2014, profit after tax amounting to Rs. 55 (net of tax of Rs. 58), relating to operations of BBL from April 1, 2012 to March 31, 2013, have been accounted for in the statement of profit and loss for the year ended March 31, 2014, as a separate line item.

The difference between share capital of the Transferor Company as at March 31, 2012 of Rs. 176 and the amount of investment in the books of the Company of Rs. 211 has been debited to the surplus in the statement of profit and loss (refer note 4).

2. Basis of preparation

The financial statements have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the Accounting Standards, notified by the Companies Accounting Standards Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956 read with general circular 8/2014 dated April 4, 2014 issued by Ministry of Corporate Affairs. The financial statements have been prepared on an accrual basis and under the historical cost convention except in case of assets for which provision for impairment is made and revaluation is carried out.

For the purpose of administration of the employee stock option plans of the Company, the Company has established the Biocon India Limited Employee Welfare Trust (''ESOP Trust''). In accordance with the guidelines framed by the Securities and Exchange Board of India (''SEBI''), financial statements of the Company have been prepared as if the Company itself is administering the ESOP Scheme.

The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

3. Employee stock compensation

On September 27, 2001, Biocon''s Board of Directors approved the Biocon Employee Stock Option Plan (''ESOP Plan 2000'') for the grant of stock options to the employees of the Company and its subsidiaries /joint venture company. A Compensation Committee has been constituted to administer the plan through a trust established specifically for this purpose, called the Biocon India Limited Employee Welfare Trust (ESOP Trust).

The ESOP Trust shall make additional purchase of equity shares of the Company using the proceeds from the loan obtained from the Company, other cash inflows from allotment of shares to employees under the ESOP Plan and shall subscribe, when allotted to such number of shares as is necessary for transferring to the employees. The ESOP Trust may also receive shares from the promoters for the purpose of issuance to the employees under the ESOP Plan. The Compensation Committee shall determine the exercise price which will not be less than the face value of the shares.

Grant I

In September 2001 , the Company granted 71,510 options (face value of shares Rs. 5 each) under the ESOP Plan 2000 to be exercised at a grant price of Rs. 10 (before adjusting bonus and share split). The options vested with the employees equally over a four year period.

Grant II

In January 2004, the Company granted 142,100 options (face value of shares - Rs. 5 each) under ESOP Plan 2000 to be exercised at a price of Rs. 5 per share. The options vest with the employees equally over a four year period.

Grant III

In January 2004, the Board of Directors announced the Biocon Employee Stock Option Plan (ESOP Plan 2004) for the grant of stock options to the employees of the Company and its subsidiaries/joint venture company, pursuant to which the Compensation Committee on March 19, 2004 granted 422,000 options (face value of shares - Rs. 5 each) under the ESOP Plan 2004 to be exercised at a grant price of Rs. 315 being the issue price determined for the IPO through the book building process. The options vest with the employees equally over a four year period.

Grant IV

In July 2006, the Company approved the grant of 3,478,200 options (face value of shares - Rs. 5 each) to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 25%, 35% and 40% of the total grant at the end of first, second, third year from the date of the grant, respectively, with an exercise period of three years for each grant. The vesting conditions include service terms and performance grade of the employees. These options are exercisable at a discount of 20% to the market price of Company''s shares on the date of grant.

Grant V

In April 2008, the Company approved the grant of 813,860 options (face value of shares - Rs. 5 each) to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 25%, 35% and 40% of the total grant at the end of first, second, third year from the date of grant, respectively, with an exercise period of three years for each grant. The vesting conditions include service terms and performance grade of the employees. These options are exercisable at the market price of Company''s shares on the date of grant.

March 31, 2014 March 31, 2013

4. Contingent liabilities and commitments

(i) Contingent liabilities:

(a) Claims against the Company not acknowledged as debt 828 812 Includes taxation matters under dispute (Direct and Indirect taxes) Rs.480 (March 31, 2013 -Rs. 464)

The Company is involved in taxation and other disputes, lawsuits, proceedings etc. including patent and commercial matters that arise from time to time in the ordinary course of business. Management is of the view that such claims are not tenable and will not have any material adverse effect on the Company''s financial position and results of operations.

(b) Guarantees

(i) Corporate guarantees given in favour of the Central Excise Department in respect of certain performance obligations of the subsidiaries.

Syngene 218 218

BBL (refer note 1.1) - 131

Clinigene 27 27

Total 245 376

(ii) Corporate guarantee given by Syngene in favour of the CED in respect of certain performance obligations of Biocon. 465 465

(iii) Corporate guarantees given in favour of a bank towards loans obtained by Clinigene 60 75

(iv) Guarantees given by banks on behalf of the Company for financial and other contractual obligations of the Company. The necessary terms and conditions have been complied with and no liabilities have arisen. (refer note below) 115 554

Includes share of the Company in respect of guarantees issued by NeoBiocon (joint venture), of Rs. 1 (March 31, 2013 - Rs. 3)

(v) Corporate guarantees given in favour of a bank towards loans obtained by Biocon Malaysia 5,804 1,240

(ii) Commitments:

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for, net of advances 298 882

(b) Operating lease commitments Where the Company is a lessee:

(i) Rent

The Company has entered into various agreements for lease of building / office space which expires over a period up to March 2022. Some of these lease arrangements have price escalation clause. There are no restrictions imposed under the lease agreements. Gross rental expenses for the year aggregates to Rs. 22 (March 31, 2013 - Rs. 29). The committed lease rentals in the future are:

The committed lease rentals in future are as follows :

Not later than one year 18 17

Later than one year and not later than five years 43 31

Later than five years 25 19

(ii) Vehicles

The Company has taken vehicles for certain employees under operating leases, which expire over a period

upto October 2016. Gross rental expenses for the year aggregate to Rs. 9 (March 31, 2013 - Rs. 11) The committed lease rentals in future are as follows:

Not later than one year 4 9

Later than one year and not later than five years 3 10

Where the Company is a Lessor:

(i) Rent

The Company has leased out certain parts of its land & building (including fit outs), which expire over a period upto 2020. Gross rental income for the year aggregates to Rs. 101 (March 31, 2013 - Rs. 34). Further, minimum lease receipts under operating lease are as follows:

Not later than one year 67 34

Later than one year and not later than five years 239 135

Later than five years 81 105

Considering that the leased assets comprise of portion of factory buildings located within the Company''s factory premises, disclosure with regard to gross value of leased assets, accumulated depreciation and net book value of the same is not feasible.

(c) Other Commitments:

As at March 31, 2014 and 2013, the Company has committed to provide financial support to a subsidiary with regard to the operations of such company. Also refer note 14 (a).

5. Segmental information

Business segments

The primary reporting of the Company has been performed on the basis of business segment. The Company operates in a single business segment of Pharmaceuticals. Accordingly no additional disclosures are required as per Accounting Standard 17 on Segment Reporting.

Geographical segments

Secondary segmental reporting is performed on the basis of the geographical location of customers. The management views the Indian market and export markets as distinct geographical segments. The following is the distribution of the Company''s sale by geographical markets

6. Other notes

(a) The Company had entered into transactions of sale of products to a private company during the year ended March 31, 2013 and 2012 amounting to Rs. 28 and Rs. 17 respectively that required prior approval from Central Government under Section 297 of the Companies Act, 1956. These transactions, entered into at prevailing market prices were approved by the Board of Directors of the Company. During the year ended March 31, 2014, the Company has filed application with the Central Government for approval of such transactions and for compounding of such non-compliance.

(b) Recovery of product development costs from co-development partner (net) pertains to co-development partner''s share of expenses under the development agreements comprising of payroll costs, depreciation and amortisation and other expenses.

7. Prior years'' comparatives

The current year financial information include the state of affairs and operations of the Transferor Company, as described in note 1.1 above. Hence, the current year''s figures are strictly not comparable with the previous year''s figures. The Company has reclassified and regrouped the previous year figures to confirm to this year''s classification.


Mar 31, 2013

1. Corporate information

Biocon Limited (''Biocon'' or ''the Company''), was incorporated at Bangalore in 1978 for manufacture of biotechnology products. Syngene International Limited (''Syngene''), promoted by Dr. Kiran Mazumdar-Shaw, was incorporated at Bangalore in 1993. In March 2002, Biocon acquired 99.99 per cent of the equity shares of Syngene and, resultantly, Syngene became the subsidiary of Biocon. Clinigene International Limited (''Clinigene'') was incorporated on August 4, 2000 at Bangalore and became a wholly owned subsidiary of Biocon on March 31, 2001. In February 2012, Biocon sold its shareholding in Clinigene to Syngene.

On January 10, 2008, Biocon entered into an agreement with Dr. B. R. Shetty to set up a joint venture Company NeoBiocon FZ-LLC, with a 50% equity interest incorporated in Dubai (''NeoBiocon'').

The Company has also established Biocon Research Limited (''BRL''), a subsidiary of the Company to undertake research and development in novel and innovative drug initiatives.

Effective April 30, 2008, Biocon acquired 71% equity interest in AxiCorp GmbH, Germany (''AxiCorp'') through its newly incorporated wholly owned subsidiary company Biocon SA. Switzerland. In February 2009, Biocon SA acquired an additional 7.4% equity interest in AxiCorp. During the year ended March 31, 2012, Biocon SA sold its shareholding in AxiCorp to third parties.

Biocon Biopharmaceuticals Limited (formerly Biocon Biopharmaceuticals Private Limited), [''BBL''] was originally incorporated on June 17, 2002 as a Joint Venture between Biocon and CIMAB SA (''CIMAB'') with Biocon holding 51 per cent of the share capital. During the financial year ended March 31, 2011, Biocon acquired the interest of the joint venture partner, CIMAB. Consequently all the equity shares of BBL are held by Biocon.

During the year ended March 31, 2011, Biocon set up a wholly owned subsidiary company in Malaysia, Biocon Sdn. Bhd. (''Biocon Malaysia'') for development and manufacture of bio-pharmaceuticals.

Biocon is an integrated healthcare company engaged in manufacture of biotechnology products for the pharmaceutical sector. The Company is also engaged in research and development in the biotechnology sector. During the year ended March 31, 2007, the Company had received an approval for operation of SEZ Developer and for setting up SEZ Unit operations to be located within Biocon SEZ.

2. Basis of preparation

The financial statements have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the Accounting Standards, notified by the Companies Accounting Standards Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention except in case of assets for which provision for impairment is made and revaluation is carried out.

For the purpose of administration of the employee stock option plans of the Company, the Company has established the Biocon India Limited Employee Welfare Trust (''ESOP Trust''). In accordance with the guidelines framed by the Securities and Exchange Board of India (''SEBI''), financial statements of the Company have been prepared as if the Company itself is administering the ESOP Scheme.

The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year

3. Employee stock compensation

On September 27, 2001, Biocon''s Board of Directors approved the Biocon Employee Stock Option Plan (''ESOP Plan 2000'') for the grant of stock options to the employees of the Company and its subsidiaries / joint venture company. A Compensation Committee has been constituted to administer the plan through a trust established specifically for this purpose, called the Biocon India Limited Employee Welfare Trust (ESOP Trust).

The ESOP Trust shall make additional purchase of equity shares of the Company using the proceeds from the loan obtained from the Company, other cash inflows from allotment of shares to employees under the ESOP Plan and shall subscribe, when allotted to such number of shares as is necessary for transferring to the employees. The ESOP Trust may also receive shares from the promoters for the purpose of issuance to the employees under the ESOP Plan. The Compensation Committee shall determine the exercise price which will not be less than the face value of the shares.

Grant I

In September 2001, the Company granted 71,510 options (face value of shares Rs. 5 each) under the ESOP Plan 2000 to be exercised at a grant price of Rs. 10 (before adjusting bonus and share split). The options vested with the employees equally over a four year period.

Grant II

In January 2004, the Company granted 142,100 options (face value of shares - Rs. 5 each) under ESOP Plan 2000 to be exercised at a price of Rs. 5 per share. The options vest with the employees equally over a four year period.

Grant III

In January 2004, the Board of Directors announced the Biocon Employee Stock Option Plan (ESOP Plan 2004) for the grant of stock options to the employees of the Company and its subsidiaries / joint venture company, pursuant to which the Compensation Committee on March 19, 2004 granted 422,000 options (face value of shares - Rs. 5 each) under the ESOP Plan 2004 to be exercised at a grant price of Rs. 315 being the issue price determined for the IPO through the book building process. The options vest with the employees equally over a four year period.

Grant IV

In July 2006, the Company approved the grant of 3,478,200 options (face value of shares - Rs. 5 each) to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 25%, 35% and 40% of the total grant at the end of first, second, third year from the date of the grant, respectively, with an exercise period of three years for each grant. The vesting conditions include service terms and performance grade of the employees. These options are exercisable at a discount of 20% to the market price of Company''s shares on the date of grant.

4. Segmental information

Business segments

The primary reporting of the Company has been performed on the basis of business segment. The Company operates in a single business segment of Pharmaceuticals. Accordingly no additional disclosures are required as per Accounting Standard 17 on Segment Reporting.

Geographical segments

Secondary segmental reporting is performed on the basis of the geographical location of customers. The management views the Indian market and export markets as distinct geographical segments. The following is the distribution of the Company''s sale by geographical markets

5. Other Notes

(a) The Company has entered into transactions of sale of products to a private company amounting to Rs. 28, during the year ended March 31, 2013 (March 31, 2012 - Rs.17), that require prior approval from Central Government under Section 297 of the Companies Act, 1956. These transactions, entered into at prevailing market prices have been approved by the Board of Directors of the Company. The Company has filed an application with the Central Government for approval of such transactions and for condonation of delay in making such application in the year 2010-11 and 2011-12. In respect of transactions entered during the year ended March 31, 2013, the Company is in the process of filing an application with the Central Government for approval of such transactions and for condonation of delay in making such application.

6. Prior years'' comparatives

The previous years'' figures have been re-grouped, where necessary to conform to current years'' classification.


Mar 31, 2012

1. Corporate information

Biocon Limited ('Biocon' or 'the Company'), was incorporated at Bangalore in 1978 for manufacture of biotechnology products. Syngene International Limited ('Syngene'), promoted by Dr Kiran Mazumdar Shaw, was incorporated at Bangalore in 1993. In March 2002, Biocon acquired 99.99 per cent of the equity shares of Syngene and, resultantly, Syngene became the subsidiary of Biocon. Clinigene International Limited ('Clinigene') was incorporated on August 4, 2000 at Bangalore and became a wholly owned subsidiary of Biocon on March 31, 2001. In February 2012, Biocon has sold its shareholding in Clinigene to Syngene.

On January 10, 2008, Biocon entered into an agreement with Dr. B.R. Shetty to set up a joint venture Company NeoBiocon FZ-LLC, incorporated in Dubai ('NeoBiocon').

The Company has also established Biocon Research Limited ('BRL'), a subsidiary of the Company to undertake research and development in novel and innovative drug initiatives.

Effective April 30, 2008, Biocon acquired 71% equity interest in AxiCorp GmbH, Germany ('AxiCorp') through its newly incorporated wholly owned subsidiary company Biocon SA. Switzerland. In February 2009, Biocon SA acquired an additional 7.4% equity interest in AxiCorp. During the year ended March 31, 2012, Biocon SA sold its shareholding in AxiCorp to third parties.

Biocon Biopharmaceuticals Private Limited ('BBPL') was incorporated on June 17, 2002 as a Joint Venture between Biocon and CIMAB SA ('CIMAB') with Biocon holding 51 per cent of the share capital. During the financial year ended March 31, 2011, Biocon acquired the interest of the joint venture partner, CIMAB. Consequently all the equity shares of BBPL are held by Biocon.

During the year ended March 31, 2011, Biocon set up a wholly owned subsidiary company in Malaysia, Biocon Sdn. Bhd. ('Biocon Malaysia') for development and manufacture of bio-pharmaceuticals.

Biocon is an integrated healthcare company engaged in manufacture of biotechnology products for the pharmaceutical sector. The Company is also engaged in research and development in the biotechnology sector. During the year ended March 31, 2007, the Company had received an approval as the developer of Biocon SEZ at the Biocon Park facility and also received an approval for SEZ unit to be located within Biocon SEZ.

2. Basis of preparation

The financial statements have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the Accounting Standards, notified by the Companies Accounting Standards Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention except in case of assets for which provision for impairment is made and revaluation is carried out.

For the purpose of administration of the employee stock option plans of the Company, the Company has established the Biocon India Limited Employee Welfare Trust ('ESOP Trust'). In accordance with the guidelines framed by the Securities and Exchange Board of India ('SEBI'), financial statements of the Company have been prepared as if the Company itself is administering the ESOP Scheme.

The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year except for change in accounting policy as explained in 2.1(a) (i) below.

March 31, 2012 March 31, 2011

35. Contingent liabilities and commitments

(i) Contingent liabilities:

(a) Claims against the Company not acknowledged as debt

Taxation matters under appeal (Direct and Indirect taxes) 287 236

(b) Guarantees

(i) Corporate guarantees given in favour of the Central Excise Department in respect of certain performance obligations of the subsidiaries.

Syngene 218 218

BBPL 131 131

Clinigene 27 27

Total 376 376

(ii) Corporate guarantee given by Syngene in favour of the CED in respect of certain 465 465 performance obligations of Biocon.

(iii) Corporate guarantees given in favour of a bank towards loans obtained by Clinigene 77 67

(iv) Guarantee given for securing loan facilities granted to AxiCorp GmbH. 271 -

(v) Guarantees given by banks on behalf of the Company for financial and other contractual 505 161 obligations of the Company. The necessary terms and conditions have been complied with and no liabilities have arisen. (refer note below)

Note: Guarantees given by banks include a bank guarantee of Rs 377 (March 31, 2011 - Rs Nil) issued in favour of Bio-Xcell Sdn. Bhd. towards the balance consideration payable on account of free hold land acquired by Biocon Malaysia in Johar, Malaysia.

(ii) Commitments:

(a) Estimated amount of contracts remaining to be executed on capital account and not 568 405 provided for, net of advances

(b) Operating lease commitments Where the Company is a lessee:

(i) Rent

The Company has entered into various agreements for lease of building / office space which expires over a period upto May 2021. Some of these lease arrangements aggregate have price escalation clause. There are no restrictions imposed under the lease arrangements.

Gross rental expenses for the year aggregate to Rs 26 (March 31, 2011 - Rs 23).

The committed lease rentals in future are as follows:

Not later than one year 26 22

Later than one year and not later than five years 45 34

Later than five years 24 9

(ii) Vehicles

The Company has taken vehicles for employees under operating leases, which expire over a period upto November 2015. Gross rental expenses for the year aggregate to Rs 10 (March 31, 2011 - Rs 12).

The committed lease rentals in future are as follows:

Not later than one year 10 11

Later than one year and not later than five years 11 14

Where the Company is a Lessor:

(i) Rent

The Company has leased out certain parts of its building (including fit outs), which expire over a period upto 2020. Gross rental income for the year aggregates to Rs 29 (March 31, 2011 - Rs 26).

Further, minimum lease receipts under operating lease are as follows:

Not later than one year 26 28

Later than one year and not later than five years 113 112

Later than five years 50 79

Considering that the leased assets comprise of portion of factory buildings located within the Company's factory premises, disclosure with regard to gross value of leased assets, accumulated depreciation and net book value of the same is not feasible.

(c) Other Commitments:

As at March 31, 2012, the Company has committed to provide financial support to certain subsidiaries with regard to the operations of such companies. Also refer note 14 (a), 14 (c) and 14 (i). These commitments also existed in the previous year.

3. Segmental information

Business segments

The primary reporting of the Company has been performed on the basis of business segment. The Company operates in a single business segment of Pharmaceuticals. Accordingly no additional disclosures are required as per Accounting Standard 17 on Segment Reporting.

4. Other Notes

(a) The Company has entered into transactions of sale of products to a private company amounting to Rs 17, during the year ended March 31, 2012 (March 31, 2011 - Rs 3), that require prior approval from Central Government under Section 297 of the Companies Act, 1956. These transactions, entered into at prevailing market prices have been approved by the Board of Directors of the Company. The Company had filed an application with the Central Government for approval of such transactions and for condo nation of delay in making such application in the year 2010-11. In respect of transactions entered during the year ended March 31, 2012, the Company is in the process of filing an application with the Central Government for approval of such transactions and for condo nation of delay in making such application.

(b) In terms of Section 115O (6) of the Income Tax Act, 1961, the Company has not provided for Dividend Distribution Tax on interim dividend declared for the year ended March 31, 2011 to the extent such distributable profits pertain to the profits of the Company's SEZ Developer's operations under section 10AA of Income tax Act, 1961.

5. Prior years' comparatives

The previous years' figures have been re-grouped, where necessary to conform to current years' classification. Also refer note 2.1.a (i).


Mar 31, 2011

1. Background

Biocon Limited (Biocon or the Company), was incorporated at Bangalore in 1978 for manufacture of biotechnology products. Syngene International Limited (Syngene), promoted by Dr Kiran Mazumdar Shaw, was incorporated at Bangalore in 1993. In March 2002, Biocon acquired 99.99 per cent of the equity shares of Syngene and, resultantly, Syngene became the subsidiary of Biocon. Clinigene International Limited (Clinigene) was incorporated on August 4, 2000 at Bangalore and became a wholly owned subsidiary of Biocon on March 31, 2001.

On January 10, 2008, Biocon entered into an agreement with Dr. B.R. Shetty to set up a joint venture company NeoBiocon FZ-LLC, incorporated in Dubai (NeoBiocon).

The Company has also established Biocon Research Limited (BRL), a subsidiary of the Company to undertake research and development in novel and innovative drug initiatives.

Effective April 30, 2008, Biocon acquired 71% equity interest in AxiCorp GmbH, Germany (AxiCorp) through its newly incorporated wholly owned subsidiary company Biocon SA, Switzerland. In February 2009, Biocon SA acquired an additional 7.4% equity interest in AxiCorp. Also, refer note 5 of Schedule 17.

Biocon entered into an agreement with CIMAB SA (CIMAB) to set up a Joint Venture Company Biocon Biopharmaceuticals Private Limited (BBPL) to manufacture and market products and carry out research activities. BBPL was incorporated on June 17, 2002 with Biocon holding 51 per cent of share capital. In April 2010, Biocon SA acquired the 49% equity stake held by CIMAB SA in BBPL. In March 2011, Biocon purchased the 49% equity stake in BBPL from Biocon SA. Consequently, as at March 31, 2011 all the equity shares of BBPL are held by Biocon.

Biocon is an integrated healthcare company engaged in manufacture of biotechnology products for the pharmaceutical sector. The Company is also engaged in research and development in the biotechnology sector. During the year ended March 31, 2007, the Company had received an approval as the developer as Biocon SEZ at the Biocon Park facility and also received an approval for SEZ unit to be located within Biocon SEZ.

2. Employee stock compensation

On September 27, 2001, Biocons Board of Directors approved the Biocon Employee Stock Option Plan (‘ESOP Plan 2000) for the grant of stock options to the employees of the Company and its subsidiaries/joint venture company. A Compensation Committee has been constituted to administer the plan through a trust established specifically for this purpose, called the Biocon India Limited Employee Welfare Trust (ESOP Trust).

The ESOP Trust shall make additional purchase of equity shares of the Company using the proceeds from the loan obtained from the Company, other cash inflows from allotment of shares to employees under the ESOP Plan and shall subscribe, when allotted to such number of shares as is necessary for transferring to the employees. The ESOP Trust may also receive shares from the promoters for the purpose of issuance to the employees under the ESOP Plan. The Compensation Committee shall determine the exercise price which will not be less than the face value of the shares.

Grant I

In September 2001, the Company granted 71,510 options under the ESOP Plan 2000 to be exercised at a grant price of Rs. 10 (before adjusting bonus and share split). The options vested with the employees equally over a four year period.

Grant II

In January 2004, the Company granted 142,100 options (shares of Rs. 5 each) under ESOP Plan 2000 to be exercised at a price of Rs. 5 per share. The options vest with the employees equally over a four year period.

*adjusted for the effect of bonus shares

Grant III

In January 2004, the Board of Directors announced the Biocon Employee Stock Option Plan (ESOP Plan 2004) for the grant of stock options to the employees of the Company and its subsidiaries / joint venture company, pursuant to which the Compensation Committee on March 19, 2004 granted 422,000 options (face value of shares - Rs. 5 each) under the ESOP Plan 2004 to be exercised at a grant price of Rs. 315 being the issue price determined for the IPO through the book building process. The options vest with the employees equally over a four year period.

*adjusted for the effect of bonus shares

Grant IV

In July 2006, the Company approved the grant of 3,478,200 options (face value of shares - Rs. 5 each) to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 25%, 35% and 40% of the total grant at the end of first, second, third year from from the date of the grant, respectively, with an exercise period of three years for each grant. The vesting conditions include service terms and performance grade of the employees. These options are exercisable at a discount of 20% to the market price of Companys shares on the date of grant.

*adjusted for the effect of bonus shares.

Grant V

In April 2008, the Company approved the grant of 813,860 options (face value of shares - Rs. 5 each) to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 25%, 35% and 40% of the total grant at the end of first, second, third year from the date of grant, respectively, with an exercise period of three years for each grant. The vesting conditions include service terms and performance grade of the employees. These options are exercisable at the market price of Companys shares on the date of grant.

*adjusted for the effect of bonus shares.

The average market price of the Companys share during the year ended March 31, 2011 is Rs. 347 (March 31, 2010 Rs. 237) per share (after adjustment for the bonus shares)

3. Subsequent event

Consequent to an offer made by the minority shareholders of AxiCorp, on April 28, 2011 the Board of Directors of the Company accorded their in-principle approval for the sale of all the shares held by Biocon SA, Switzerland (‘Biocon SA) in AxiCorp to such group of shareholders. The consideration would be settled through a combination of cash and re-acquisition of the exclusive marketing rights of Insulin and Glargine for the German market.

* Exempted from the licensing provisions of the Industries (Development and Regulation) Act, 1951 in terms of notification No. S.O.477(E) dated July 25, 1991.

** Installed capacity has not been disclosed as these are variable and subject to changes in product mix and utilisation of manufacturing facilities, given the nature of operations.

March 31, March 31, 2011 2010 4. Contingent liabilities

(a) Taxation matters under appeal (Direct and Indirect taxes) 236,069 157,664

(b) (i) Corporate guarantees given in favour of the Central Excise Department (CED) in respect of 217,500 217,500 certain performance obligations of Syngene. Syngene has informed that necessary terms and conditions have been complied with and no liabilities have arisen.

(ii) Corporate guarantee given by Syngene in favour of the CED in respect of certain performance 465,000 465,000 obligations of Biocon.

(c) Corporate guarantees given in favour of the CED in respect of certain performance obligations of 131,352 131,352 BBPL. BBPL has informed that the necessary terms and conditions have been complied with and no liabilities have arisen.

(d) Corporate guarantees given in favour of the CED in respect of certain performance obligations of 27,205 27,205 Clinigene. Clinigene has informed that the necessary terms and conditions have been complied with and no liabilities have arisen.

(e) Corporate guarantees given in favour of the State Bank of India (SBI), towards Term loan granted to - 650,000 BBPL. BBPL has informed that the necessary terms and conditions have been complied with and no liabilities have arisen.

(f) Corporate guarantees given in favour of the State Bank of India (SBI), towards Term loan granted to - 14,270 Clinigene. Clinigene has informed that the necessary terms and conditions have been complied with and no liabilities have arisen.

(g) Corporate guarantees given in favour of the HDFC Bank Ltd., towards Packing Credit granted to 56,769 - Clinigene. Clinigene has informed that the necessary terms and conditions have been complied with and no liabilities have arisen.

(h) Corporate guarantees given in favour of the HDFC Bank Ltd., towards Short Term Demand Loan 10,000 - granted to Clinigene. Clinigene has informed that the necessary terms and conditions have been complied with and no liabilities have arisen.

(i) Certain claims made against the Company which the management of the Company believes are not - 21,026 tenable and hence, these claims have not been acknowledged as debts.

The Company evaluates these assumptions based on its long-term plans of growth and industry standards and the expected contribution to the fund during the year ending March 31, 2012, is approximately Rs. 26,278 (March 31, 2011 - Rs. 11,118) The nature of allocation of the fund is only in debt based mutual funds of high credit rating.

5. Segmental information

Business segments

The primary reporting of the Company has been performed on the basis of business segment. The Company operates in a single business segment of Pharmaceuticals. Accordingly no additional disclosures are required as per Accounting Standard 17 on Segment Reporting.

*All fixed assets and intangibles are located in India.

6. Other Notes

(a) The Company has entered into transactions of sale of products to a private company amounting to Rs. 2,980, during the year ended March 31, 2011 (March 31, 2010 - Rs. 1,812), that require prior approval from Central Government under Section 297 of the Companies Act, 1956. These transactions, entered into at prevailing market prices have been approved by the Board of Directors of the Company. The Company has fled an application with the Central Government for such approval and for condonation of delay in making such application.

(b) In terms of Section 115O (6) of the Income Tax Act, 1961, the Company has not provided for Dividend Distribution Tax on final dividend distributed for the year ended March 31, 2010 and for the interim dividend declared and final proposed dividend for the year ended March 31, 2011 to the extent such distributable profits pertain to the profits of the Companys SEZ Developers operations under Section 10AA of Income tax Act, 1961.

7. Prior years comparatives

The previous years figures have been re-grouped, where necessary to conform to current years classification.


Mar 31, 2010

1. Background

Biocon Limited (‘Biocon’ or ‘the Company’), was incorporated at Bangalore in 1978 for manufacture of biotechnology products. Syngene International Limited (‘Syngene’), promoted by Dr Kiran Mazumdar Shaw, was incorporated at Bangalore in 1993. In March 2002, Biocon acquired 99.99 per cent of the equity shares of Syngene and, resultantly, Syngene became the subsidiary of Biocon. Clinigene International Limited (‘Clinigene’) was incorporated on August 4, 2000 at Bangalore and became a wholly owned subsidiary of Biocon on March 31, 2001. Biocon entered into an agreement with CIMAB SA (‘CIMAB’) to set up a joint venture company Biocon Biopharmaceuticals Private Limited (‘BBPL’) to manufacture and market products using technology and to carry out research activities. BBPL was incorporated on June 17, 2002. Biocon has 51 per cent shareholding in BBPL.

On January 10, 2008, Biocon entered into an agreement with Dr. B.R. Shetty to set up a joint venture company NeoBiocon FZ-LLC, incorporated in Dubai (‘NeoBiocon’).

The Company has also established Biocon Research Limited, a subsidiary of the Company to undertake research and development in novel and innovative drug initiatives.

Effective April 30, 2008, Biocon acquired 71% equity interest in AxiCorp GmbH Germany, (Axicorp) through its newly incorporated wholly owned subsidiary company Biocon SA.,s Switzerland. In February 2009, Biocon SA acquired an additional 7.4% equity interest in AxiCorp GmbH.

Biocon is an integrated healthcare company engaged in manufacture of biotechnology products for the pharmaceutical sector. The Company is also engaged in research and development in the biotechnology sector. During the year ended March 31, 2007, the Company has received an approval as the developer as Biocon SEZ at the Biocon Park facility and also received an approval for SEZ unit to be located within Biocon SEZ.

2. Employee stock compensation

On September 27, 2001, Biocon’s Board of Directors approved the Biocon Employee Stock Option Plan (‘ESOP Plan 2000’) for the grant of stock options to the employees of the Company and its subsidiaries. A Compensation Committee has been constituted to administer the plan through a trust established specifically for this purpose, called the Biocon India Limited Employee Welfare Trust (ESOP Trust).

The ESOP Trust shall make additional purchase of equity shares of the Company using the proceeds from the loan obtained from the Company, other cash inflows from allotment of shares to employees under the ESOP Plan and shall subscribe, when allotted to such number of shares as is necessary for transferring to the employees. The ESOP Trust may also receive shares from the promoters for the purpose of issuance to the employees under the ESOP Plan. The Compensation Committee shall determine the exercise price which will not be less than the face value of the shares.

Grant I

In September 2001, the Company granted 71,510 options under the ESOP Plan 2000 to be exercised at a grant price of Rs 10 (before adjusting bonus and share split). The options vested with the employees equally over a four year period.

Grant II

In January 2004, the Company granted 142,100 options (shares of Rs 5 each ) under ESOP Plan 2000 to be exercised at a price of Rs 5 per share

The options vest with the employees equally over a four year period

Grant IV

In July 2006, the Company approved the grant of 3,478,200 options to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 25%, 35% and 40% of the total grant at the end of first, second, third year from July 2006, respectively, with an exercise period of three years for each grant. The vesting conditions include service terms and performance grade of the employees. These options are exercisable at a discount of 20% to the market price of Company’s’ shares on the date of grant

Grant V

In April 2008, the Company approved the grant of 813,860 options to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 25%, 35% and 40% of the total grant at the end of first, second, third year from July 2010, respectively, with an exercise period of three years for each grant. The vesting conditions include service terms and performance grade of the employees. These options are exercisable at the market price of Company’s’ shares on the date of grant.

(a) During the year ended March 31, 2009, the Company had entered into foreign exchange forward contracts to hedge highly probable forecasted transactions. The Company recorded mark to market losses in respect of foreign exchange forward contracts including realised gains/losses on termination/ cancellation of said contracts.

(b) During the year ended March 31, 2009, the Company recorded a write back of unutilised proviosionfor contingences relating to transfers of its enzyme business of Rs 20,000, created in earlier years.

3. Other Notes

(a) The Company has entered into transactions of sale of product to a private company amounting to Rs 1,812 , during the year ended March 31, 2010, that require prior approval from Central Government under Section 297 of the Companies Act, 1956. These transactions, entered into at prevailing market prices have been approved by the Board of Directors of the Company. The Company is in the process of fi ling an application with the Central Government for such approval and for condonation of delay in making such application.

(b) In terms of Section 1150 (6) of the Income Tax Act, 1961 for the year ended March 31,2010, the Company has not provided for Dividend Distribution Tax to the extent the proposed distributable profits pertain to the profits of the Companys SEZ Developers operations under section 10AA of Income tax Act, 1961.

4. Prior years comparatives The previous years figures have been re-grouped, where necessary to conform to current years classification.