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Notes to Accounts of Biocon Ltd.

Mar 31, 2017

1. Shares reserved for issue under options

For details of shares reserved for issue under the employee stock option plan (ESOP) of the Company, refer note 31.

2. Other equity Securities premium reserve

Securities premium is used to record the premium received on issue of shares. It is utilized in accordance with the provisions of the Companies Act, 2013. General reserve

General, reserve is used from time to time to transfer profits from retained earnings for appropriation purposes.

Retained earnings

The amount that can be distributed by the Company as dividends to its equity shareholders.

SEZ re-investment reserve

The SEZ re-investment reserve has been created out of profit of eligible SEZ units in terms of the provisions of section 10AA(l)(ii) of the Income-tax Act, 1961. The reserve has been utilized for acquiring new plant and machinery for the purpose of its business in terms of section 10AA(2) of the Income-tax Act, 1961.

Share based payment reserve

The Company has established various equity settled share based payment plans for certain categories of employees of the Company. Also refer note 31 for further details on these plans.

Treasury shares

Own equity instruments that are reacquired [treasury shares] are recognized at cost and deducted from equity.

Cash flow hedging reserves

The cash flow hedging reserve represents the cumulative effective portion of gains or losses (net of taxes, if any) arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges.

3. On February 9, 2000, the Company obtained an order from the Karnataka Sales Tax Authority for avowing an interest free deferment of sales tax (including turnover tax) for a period up to 12 years with respect to sales from its Hebbagodi manufacturing facility for an amount not exceeding Rs. 649. This is an interest free liability. The amount is repayable in 10 equal half yearly installments of Rs. 65 each starting from February 2012. The loan was repaid during the year.

4. During the year ended March 31, 2016, the Company had obtained an external commercial borrowing facility of USD 20 million from a bank. The term Loan facility is secured by first priority pari-passu charge on the plant and machinery of the proposed expanded facility Line in the existing facility with a carrying amount of Rs. 1,410. The long-term loan is repayable in 4 equal quarterly installments of USD 5 million each commencing from December 31, 2018 and carries an interest rate of LIBOR 0.95% p.a. During the year ended March 31, 2016, the Company had entered into interest rate swap to convert floating rate to fixed rate.

5. 0 n March 31, 2005, the Company entered into an agreement with the Council of Scientific and Industrial Research (''CSIR''), for an unsecured Loan of Rs.3 for carrying out part of the research and development project under the New Millennium Indian Technology Leadership Initiative (''NMITLI'') Scheme. The loan is repayable over 10 equal Annual installments of Rs. 0.3 starting from April 2009 and carry an interest rate of 3% p.a.

6. On March 31, 2009, the Department of Scientific and Industrial Research (RDSIR'') sanctioned financial assistance for a sum of Rs. 17 to the Company for part financing one of its research projects. The assistance is repayable in the form of royalty payments for three years post commercialization of the project in five equal Annual installments of Rs. 3 each, starting from April 1, 2013.

7. On August 25, 2010, the Department of Science and Technology (''DST'') under the Drugs and Pharmaceutical Research Programme (''DPRP'') has sanctioned financial assistance for a sum of rs. 70 to the Company for financing one of its research projects. The Loan is repayable over 10 Annual installments of Rs. 7 each starting from July 1, 2012, and carries an interest rate of 3% p.a.

8. I n respect of the financial assistance received under the aforesaid programmes (refer note (c) to (e) above), the Company is required to utilize the funds for the specified projects and is required to obtain prior approvals from the said authorities for disposal of assets/Intellectual property rights acquired/ developed under the above programmes.

The Company''s exposure to Liquidity, interest rate and currency risks are disclosed in note 39.

9. Employee stock compensation

10. Biocon ESOP Plan

0n 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. The Nomination and Remuneration Committee (''Remuneration Committee'') administers 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 Remuneration Committee shall determine the exercise price which will not be Less than the face value of the 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 and third year from the date of grant for existing employees and at the end of 3rd, 4th and 5th year from the date of grant for new employees. Exercise period is 3 years for each grant. The conditions for number of options granted 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 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 and third year from the date of grant for existing employees and at the end of 3rd, 4th and 5th year from the date of grant for new employees. Exercise period is 3 years for each grant. The conditions for number of options granted 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.

11. RSU Plan 2015

On March 11, 2015, Biocon''s Remuneration Committee approved the Biocon - Restricted Stock Units (RSUs) of Syngene (''RSU Plan 2015'') for the grant of RSUs to the employees of the Company and its subsidiaries other than Syngene. The Remuneration Committee administers the plan through a trust established specifically for this purpose, called the Biocon Limited Employee Welfare Trust (''RSU Trust''). For this purpose, on March 31, 2015, the Company transferred 2,000,000 equity shares of Syngene to RSU Trust.

In April 2015, the Company approved the grant to its employees under the RSU Plan 2015. The RSUs under this grant would vest to the employees as 10%, 20%, 30% and 40% of the total grant at the end of first, second, third and fourth year from the date of grant, respectively, with an exercise period ending one year from the end of Last vesting. The vesting conditions include service terms and performance grade of the employees. Exercise price of RSUs will be Nil.

12. During the year ended March 31, 2016, the Company sold its investment in the equity shares of Biocon Sdn. Bhd., a wholly owned subsidiary to Biocon Biologics Limited (UK) for a sum of Rs. 811. Gain arising from such sale of equity shares amounting to Rs. 99 [net of cost of such equity shares] is recorded as an exceptional gain in the standalone financial statements. Consequential tax of Rs. 21 is recorded on such gain.

13. During the year ended March 31, 2016, Syngene International Limited (''Syngene'') completed its Initial Public Offering (IPO), through an offer for sale of 22,000,000 equity shares of Rs. 10 each, by the Company. Gain arising from such sale of equity shares, net of related expenses and cost of equity shares, amounting to Rs. 962 is recorded as an exceptional gain in the standalone financial statements. Consequential tax of Rs. 1,042 is recorded on such gains is included within income tax expense.

MAT credit on above transaction was not recorded in the previous year due to uncertainty of utilization. During the current year, pursuant to change in the Income tax Law and other business restructuring, the Company believes that it will be able to utilize the MAT credit entitlement. Accordingly, during the year ended March 31, 2017, the Company has recorded MAT credit entitlement of Rs. 1,042 which is included within income tax expense of the current year.

14. Expenses incurred on behalf of the related party include recharge of software License fees and amount paid on behalf to vendors.

15. The Company''s SEZ Developer division has entered into agreements to Lease Land and provide certain facilities such as power, utilities etc to SEZ units of Biocon Research Limited and Syngene International Limited, in respect of which the Company recovers rent and facilities usage charges.

16. The Company has purchased consumables from Mazumdar Farms, a proprietary firm of relative of Director which are not disclosed above since the amounts are rounded off to Rupees million.

17. During the year, there is no transaction with Biocon India Limited Employees Welfare Trust {trust in which key management personnel were the Board of Trustees).

18. The above disclosures include related parties as per Ind AS 24 on “Related Party Disclosures" and Companies Act, 2013.

19. The remuneration to key management personnel doesn''t include the provisions made for gratuity and compensated absences, as they are obtained on an actuarial basis for the Company as a whole.

20. Share based compensation expense allocable to key management personnel is ^ 5 {March 31, 2016 – Rs. 10), which is not included in the remuneration disclosed above.

21. ALL transactions with these related parties are priced on an arm''s Length basis and none of the balances are secured.

22. Employee benefit plans

23. The Company has a defined benefit gratuity plan as per the Payment of Gratuity Act, 1972. Under this Legislation, employee who has completed five years of service is entitled to specific benefit. The Level of benefit provided depends on the employee’s Length of service and salary at retirement/ termination age. The gratuity plan is a funded plan and the Company make contributions to a recognized fund in India.

Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognized in the Company''s financial statements as at balance sheet date:

24. Measurement of fair values

Fair value of Liquid mutual funds are based on quoted price. Derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the market place.

Sensitivity analysis

For the fair values of forward contracts of foreign currencies, reasonably possible changes at the reporting date to one of the significant observable inputs, holding other inputs constant, would have the following effects.

25. Financial risk management

The Company has exposure to the following risks arising from financial instruments:

- Credit risk

- Liquidity risk

- Market risk

Risk management framework

The Company''s risk management is carried out by the treasury department under policies approved by the Board of Directors. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative and non-derivative financial instruments and investment of excess Liquidity.

26. Credit risk

Credit risk is the risk that the counterparty will not meet its obligation under a financial instrument or customer contract, Leading to financial Loss. The credit risk arises principally from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions and other financial instruments.

Customer credit risk is managed by each business unit subject to Company''s established policy, procedures and control relating to customer credit risk management. The Audit and Risk Management Committee has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, where available, and other publicly available financial information. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by Letters of credit or other forms of credit insurance.

27. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial Liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing Liquidity is to ensure, as far as possible, that it will have sufficient Liquidity to meet its Liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable Losses or risking damage to the Company''s reputation.

The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no Liquidity risk is perceived. In addition, the Company maintains the following Line of credit:

28. Cash credit facility from banks carrying interest rate ranging from 9.7% - 13% p.a. These facilities were repayable on demand and secured by pari-passu charge on inventories and trade receivables.

29. Unsecured foreign currency denominated loans from Banks amounting to Rs. Nil (March 31, 2016 - Rs. 2,253) carrying interest ranging from Nil (March 31, 2016 - LIBOR 0.10% to 0.20% p.a.). The facilities are repayable within 180 days from its origination.

30. Sensitivity

The Company policy is to maintain most of its borrowings at fixed rate using interest rate swaps to achieve this when necessary. They are therefore not subject to interest rate risk as defined under Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of change in market interest rates.

31. Capital management

The key objective of the Company''s capital management is to ensure that it maintains a stable capital structure with the focus on total equity to uphold investor, creditor, and customer confidence and to ensure future development of its business. The Company focused on keeping strong total equity base to ensure independence, security, as well as a high financial flexibility for potential future borrowings, if required without impacting the risk profile of the Company.

The Company''s goal is to continue to be able to return excess Liquidity to shareholders by continuing to distribute Annual dividends in future periods.

The amount of future dividends of equity shares will be balanced with efforts to continue to maintain an adequate Liquidity status.

32. First-time adoption of Ind AS

These standalone financial statements have been prepared in accordance with the Ind AS. For the purpose of transition from previous GAAP to Ind AS, the Company has followed the guidance prescribed under Ind AS 101 - First time adoption of Indian Accounting Standards (“Ind AS 101”), with effect from April 01, 2015 (“transition date”).

In preparing its Ind AS balance sheet as at April 1, 2015 and in presenting the comparative information for the year ended March 31, 2016, the Group has adjusted amounts reported previously in financial statements prepared in accordance with previous GAAP. This note explains how the transition from previous GAAP to Ind AS has affected the Company''s balance sheet, financial performance.

33. Optional exemptions availed and mandatory exceptions

In preparing these standalone financial statements, the Company has applied the below mentioned optional exemptions and mandatory exceptions. Optional exemptions availed

34. Deemed cost Investment in subsidiaries

As per Ind AS 101, the entity may elect to use the fair value of investment in subsidiaries at the date of transition as the deemed cost. Accordingly, the Company has recognized the fair value of a subsidiary as the deemed cost at the date of transition.

35. Business combination

Ind AS 101, provides the option to apply Ind AS 103, Business Combinations prospectively from the transition date or from a specific date prior to the transition date.

The Company has elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date has not been restated.

36. Share based payments

Ind AS 102 Share based Payment has not been applied to equity instruments in share based payment transactions that vested before April 1, 2014. For cash settled share based payment transactions, the Company has not applied Ind AS 102 to Liabilities that were settled before April 1, 2014.

Mandatory exemptions availed

37. Estimates

As per Ind AS 101, an entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with the previous GAAP unless there is objective evidence that those estimates were in error.

The Company''s estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the financial statements that were not required under the previous GAAP are Listed below:

- Fair valuation of financial instruments carried at FVTPL and/ or FVOCI.

- Impairment of financial assets based on the expected credit Loss model.

- Determination of the discounted value for financial instruments carried at amortized cost.

38. Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortized cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.

Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortized cost has been done retrospectively except where the same is impracticable.

39. Hedge accounting

Hedge accounting can only be applied prospectively from the transition date to transactions that satisfy the hedge accounting criteria in Ind AS 109, Financial Instruments, at the date of transition. Hedging relationships cannot be designated retrospectively, and the supporting documentation cannot be created retrospectively. As a result, only hedging relationships that satisfied the hedge accounting criteria as on the date of transition are reflected as hedges in the consolidated financial statements under Ind AS.

40. Difference on account of revenue recognition, net of related costs is primarily due to difference in timing of revenue recognition under Ind AS compared to previous GAAP and deferral of Licensing income on account of continuing obligations.

41. Impact due to derivative accounting in accordance with Ind AS 109.

42. Other adjustments on account of Employee benefit expenses (Share based payments, Actuarial gains/Losses), Mark to market adjustments on Mutual funds and Guarantee Income.

43. Represents income tax impact of Ind AS adjustments including corrections for earlier years.

44. Reduction in profit on sale of Syngene shares is primarily on account of fair valuation of investment in Syngene (a subsidiary) on the Ind AS transition date as deemed cost.

45. Actuarial Loss on defined benefit obligations (gratuity) taken to other comprehensive income under Ind AS as compared to the statement of profit and Loss under previous GAAP.

46. Impact on consolidation of ESOP Trust.

47. Business combination

During the year ended March 31, 2016, the Company acquired the business of pharmaceutical manufacturing unit of M/s Acacia Life sciences Private

Limited Located at Vishakhapatnam with effect from October 01, 2015 on a going concern basis for a consideration of Rs. 531 paid in cash. The transaction was accounted under Ind AS 103 “Business Combinations” as a business combination with the purchase price being allocated to identifiable assets and Liabilities at fair value.

48. Segmental information

In accordance with Ind AS 108 - Operating segments, segment information has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

49. Other notes

50. 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 had filed application with the Central Government for approval of such transactions and for compounding of such non-compliance and same is pending with Central Government as at March 31, 2017.

51. 0 he Company has paid the dividend distribution tax of Rs. Nil (March 31, 2016 - Rs. 107) on interim dividend after reducing the amount of dividend received by the Company from its subsidiaries.

52. Corporate Social Responsibility

As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at Least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities.

53 Gross amount required to be spent by the Company during the year is Rs. 90; and

54. Amount spent during the year on:

55. Events after reporting period

56. On April 27, 2017, the Board of Directors of the Company approved issue of bonus shares in the proportion of 2:1 i.e. 2 (two) bonus equity shares of Rs. 5 each for every 1 (one) fully paid-up equity shares held as on the record date, subject to the approval by the shareholders of the Company through postal ballot.

57. 0n April 27, 2017, the Board of Directors of the Company has proposed a final dividend of Rs. 3 per equity share on a pre-bonus share basis. The proposed dividend is subject to the approval of the shareholders in the Annual general meeting.


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.

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