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Notes to Accounts of Cipla Ltd.

Mar 31, 2016

1 Lease Accounting

Where the Company is a Lessee

The Company has obtained certain premises for its business operations (including furniture and fixtures, therein as applicable) under cancellable operating lease or leave and license agreements ranging from 11 months to 5 years or longer which are subject to renewal at mutual consent. The cancellable lease arrangements can be terminated by either party after giving due notice. Lease payments are recognised in the Statement of Profit and Loss under ''Rent'' in Note 28. Where the Company is a Lessor

The Company has given certain premises under operating lease or leave and license agreement. The Company retains substantially all risks and benefits of ownership of the leased asset and hence classified as operating lease. Lease income on such operating lease is recognised in Statement of Profit and Loss under ''Rent'' in Note 23.

2 Segment Information

In accordance with AS-17 "Segment Reporting", segment information has been given in the Consolidated Financial Statements of Cipla Ltd., and therefore, no separate disclosure on segment information is given in these financial statements.

3 The Government of India has served demand notices in March 1995 and May 1995 on the Company in respect of six bulk drugs, claiming that an amount of Rs.5.46 crore along with interest due thereon is payable into the DPEA under the Drugs (Prices Control) Order, 1979 on account of alleged unintended benefit enjoyed by the Company. The Company has filed its replies to the notices and has contended that no amount is payable into the DPEA under the Drugs (Prices Control) Order, 1979.

4 In 2003, the Company received notice of demand from the National Pharmaceutical Pricing Authority, Government of India on account of alleged overcharging in respect of certain drugs under the Drugs (Prices Control) Order, 1995. This was contested before the jurisdictional High Courts in Mumbai, Karnataka and Allahabad wherein it was held in favour of the Company. The orders of Hon''ble High Court of Allahabad and Bombay were challenged before the Hon''ble Supreme Court of India by the Government. Although in the challenge to the decision of the Hon''ble Bombay High Court, the Hon''ble Supreme Court of India restored the matter to the Hon''ble Bombay High Court in August 2003 for interpreting the Drug Policy on the basis of directions and principles laid down by them and the same was pending, in the challenge to the Hon''ble High Court of Allahabad''s order, in February 2013, the Hon''ble Supreme Court of India transferred the Bombay High Court petition also before itself for a final hearing on both the matters. In an earlier order, the Hon''ble Supreme Court has already restrained the Government from taking any coercive action against the Company. The Company has been legally advised that on the basis of these orders there is no probability of demand crystallising. Hence no provision is considered necessary in respect of notice of demand received by the company up to date aggregating to Rs.1768.51 crore.

5 Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosure.


Mar 31, 2015

1. Terms and Rights attached to Equity Shares

The Company has only one class of equity shares having a par value of Rs. 2 per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholder.

2. Equity shares reserved for issue under employee stock options

Refer Note 43 for number of stock options against which equity shares are to be issued by the Company upon vesting and exercise of those stock options by the option holders as per the relevant scheme(s).

3. Employee Benefits

i. Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, short term compensated absences, etc., and the expected cost of bonus, ex-gratia are recognised in the period in which the employee renders the related service.

ii. Long Term Employee Benefits

The disclosures as per the revised AS-15 are as under:

a. Brief description of the plans Defined Contribution Plan

The Company's defined contribution plan is Employees' Pension Scheme (under the provisions of Employees' Provident Funds and Miscellaneous Provisions Act, 1952) since the Company has no further obligation beyond making the contributions.

Defined Benefit and other Long term Benefit Plans

The Company has two schemes for long term benefits namely, Provident Fund and Gratuity:

* The Provident Fund plan, a funded scheme is operated by the Company's Provident Fund, which is recognised by the income tax authorities and administered through trustees/appropriate authorities. The Guidance Note on implementing the revised AS-15, "Employee Benefits (revised 2005)" issued by Accounting Standards Board (ASB) states benefit involving employer established provident funds, which require interest shortfalls to be recompensed, are to be considered as defined benefit plans. Accordingly, the Company has considered the provident fund as defined benefit plan.

* The Company provides for gratuity, a defined benefit plan based on actuarial valuation as of the Balance Sheet date, based upon which, the Company contributes all the ascertained liabilities to the Insurer Managed Funds.

The employees of the Company are also entitled to leave encashment. The provision is made based on actuarial valuation for leave encashment at the year end.

4. Lease Accounting

Where the Company is a Lessee

The Company has obtained certain premises for its business operations (including furniture and fixtures, therein as applicable) under cancellable operating lease or leave and license agreements ranging from 11 months to 5 years or longer which are subject to renewal at mutual consent. The cancellable lease arrangements can be terminated by either party after giving due notice. Lease payments are recognised in the Statement of Profit and Loss under 'Rent' in Note 28.

Where the Company is a Lessor

The Company has given certain premises under operating lease or leave and license agreement. The Company retains substantially all risks and benefits of ownership of the leased asset and hence classified as operating lease. Lease income on such operating lease is recognised in Statement of Profit and Loss under 'Rent' in Note 23.

5. Segment Information

In accordance with AS-17, "Segment Reporting", segment information has been given in the Consolidated Financial Statements of Cipla Ltd., and therefore, no separate disclosure on segment information is given in these financial statements.

Rs. in crore 2015 2014

6. Contingent Liabilities and Commitments (to the extent not provided for)

Contingent Liabilities

Claims against the Company not acknowledged as debt 15.85 4.82

Guarantees 126.95 152.38

Letters of Credit 49.30 9.32

Refund of Technical Know-how and Licensing Fees on account of non-compliance of certain obligations as per respective agreements - 2.95

Income Tax on account of disallowances/additions 108.42 100.29

Excise Duty/Service Tax on account of valuation/cenvat credit 108.47 80.93

Sales Tax on account of credit/classification 5.66 5.46

414.65 356.15

Commitments

Estimated amount of contracts unexecuted on Capital Account 367.10 200.88

Other Commitments 978.61 644.33

1345.71 845.21

1760.36 1201.36

7. The Government of India has served demand notices in March 1995 and May 1995 on the Company in respect of six bulk drugs, claiming that an amount of Rs. 5.46 crore along with interest due thereon is payable into the DPEA under the Drugs (Prices Control) Order, 1979 on account of alleged unintended benefit enjoyed by the Company. The Company has filed its replies to the notices and has contended that no amount is payable into the DPEA under the Drugs (Prices Control) Order, 1979.

8. In 2003, the Company received notice of demand from the National Pharmaceutical Pricing Authority, Government of India on account of alleged overcharging in respect of certain drugs under the Drugs (Price Control) Order, 1995. This was contested before the jurisdictional High Courts in Mumbai, Karnataka and Allahabad wherein it was held in favour of the Company. The orders of Hon'ble High Court of Allahabad and Bombay were challenged before the Hon'ble Supreme Court of India by the Government. Although in the challenge to the decision of the Hon'ble Bombay High Court, the Hon'ble Supreme Court of India restored the matter to the Hon'ble Bombay High Court in August 2003 for interpreting the Drug Policy on the basis of directions and principles laid down by them and the same was pending, in the challenge to the Hon'ble High Court of Allahabad's order, in February 2013, the Hon'ble Supreme Court of India transferred the Bombay High Court petition also before itself for a final hearing on both the matters. In an earlier order, the Hon'ble Supreme Court has already restrained the Government from taking any coercive action against the Company. The Company has been legally advised that on the basis of these orders there is no probability of demand crystallising. Hence no provision is considered necessary in respect of notice of demand received by the Company up to date aggregating to Rs. 1768.51 crore.

9. Related Party Disclosures

i. As per AS-18, "Related Party Disclosures", the related parties where control exists or where significant influence exists and with whom transaction have taken place are as below:

a. Subsidiary Companies including step-down subsidiaries, associate companies and joint venture:

Sr. Name of the Company No. Subsidiaries (held directly)

1. Cipla FZE

2. Goldencross Pharma Pvt. Ltd.

3. Cipla (Mauritius) Ltd.

4. Meditab Specialities Pvt. Ltd.

5. Cipla Medpro South Africa Proprietary Ltd.

6. Cipla Holding B.V.

7. Mabpharm Pvt. Ltd.*

8. Cipla (EU) Ltd.

9. Saba Investment Ltd.

10. Jay Precision Pharmaceuticals Pvt. Ltd.#

Subsidiaries (held indirectly)

11. Cipla (UK) Ltd.

12. Cipla Australia Pty. Ltd.

13. Medispray Laboratories Pvt. Ltd.

14. Sitec Labs Pvt. Ltd.

15. Four M Propack Pvt. Ltd.

16. Meditab Holdings Ltd.

17. Meditab Specialities New Zealand Ltd.

18. Meditab Pharmaceuticals South Africa Proprietary Ltd.

19. Cipla ilac Ticaret Anonim sirketi

20. Cipla USA Inc.

21. Cipla Kenya Ltd.

22. Cipla Malaysia Sdn. Bhd.

23. Cipla Europe NV

24. Cipla Quality Chemical Industries Ltd.

25. Cipla Croatia d.o.o. (Formerly known as Celeris d.o.o.)

26. Inyanga Trading 386 Proprietary Ltd.

27. Xeragen Laboratories Proprietary Ltd.

28. Galilee Marketing Proprietary Ltd.

29. Cipla Medpro Manufacturing Proprietary Ltd.

30. Cipla Medpro Holdings Proprietary Ltd.

31. Cipla Nutrition Proprietary Ltd.

32. Cipla Health Care Proprietary Ltd.

33. Cipla-Medpro Distribution Centre Proprietary Ltd.

34. Cipla-Medpro Proprietary Ltd.

35. Medpro Pharmaceutica Proprietary Ltd.

36. Cipla Life Sciences Proprietary Ltd.

37. Cipla Personal Care Proprietary Ltd.

38. Cipla Vet Proprietary Ltd.

39. Cipla Agrimed Proprietary Ltd.

40. Cipla Dibcare Proprietary Ltd.

41. Cipla Medpro Botswana Proprietary Ltd.

42. Med Man Care Proprietary Ltd.

43. Medpro Pharmaceutica Africa Proprietary Ltd.

44. Cape to Cairo Exports Proprietary Ltd.

45. Cipla Medpro ARV Proprietary Ltd.

46. Cipla Medpro Cardio Respiratory Proprietary Ltd.

47. Cipla Medpro Research and Development Proprietary Ltd.

48. Gardian Cipla Proprietary Ltd.

49. Medpro Gen Proprietary Ltd.

50. Medpro Holdings Proprietary Ltd.

51. Medpro-On-Line Proprietary Ltd.

52. Smith and Couzin Proprietary Ltd.

53. Breathe Free Lanka (Private) Ltd.

54. Cipla Canada Inc.

55. Medica Pharmaceutical Industries Company Ltd.

56. Al-Jabal For Drugs and Medical Appliances Company Ltd.

57. Cipla Pharma Lanka (Private) Ltd.

58. Cipla Pharma Nigeria Ltd.

Associates

59. Stempeutics Research Pvt. Ltd.

60. Biomab Holding Ltd.

61. Jiangsu Cdymax Pharmaceuticals Co. Ltd.®

62. Mabpharm Pvt. Ltd.**

Joint Venture

63. Aspen-Cipla Australia Pty, Ltd,

* With effect from 24th July 2014

# With effect from 26th February 2015 ® Upto 30th March 2015

** Upto 16th July 2014

b. Key Management Personnel

1. Mr. Subhanu Saxena - Managing Director and Global Chief Executive Officer

2. Mr. S. Radhakrishnan - Whole-time Director

3. Mr. Rajesh Garg - Executive Director and Global Chief Financial Officer

c. Entities over which Key Management Personnel are able to exercise significant influence

1. Cipla Foundation

10. During the year, the Company acquired 51% stake in Saba Investment Ltd., UAE, which in turn holds 99% stake in two entities in Yemen. Accordingly the Company's effective stake in the Yemen entities is 50.49%.

As per the share purchase agreement, a provision of USD 20.3 million (equivalent to Rs. 126.88 crore) has been accounted for and given effect in these financial statements towards additional consideration to be paid on achievement of agreed milestones.

11. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/ disclosure.


Mar 31, 2014

[1] Lease Accounting

Where the Company is a Lessee

The Company has obtained certain premises for its business operations (including furniture and fixtures, therein as applicable) under cancellable operating lease or leave and license agreements ranging from 11 months to 5 years or longer which are subject to renewal at mutual consent. The cancellable lease arrangements can be terminated by either party after giving due notice. Lease payments are recognised in the Statement of Profit and Loss under ''Rent''in Note 28.

Where the Company is a Lessor

The Company has given certain premises under operating lease or leave and license agreement. The Company retains substantially all risks and benefits of ownership of the leased asset and hence classified as Operating lease. Lease income on such operating lease is recognised in Statement of Profit and Loss under''Rent''in Note 23.

[2] Segment Information

In accordance with AS-17,"Segment Reporting" Segment information has been given in the Consolidated Financial Statements of Cipla Ltd., and therefore, no separate disclosure on segment information is given in these financial statements.

Rs. in crore

2014 2013

[3] Contingent Liabilities and Commitments (to the extent not provided for)

Contingent Liabilities

Claims against the Company not acknowledged as debt 4.82 6.51

Guarantees (refer Note) 152.38 2750.66

Letters of Credit 9.32 11.59

Refund of Technical Know-how and Licensing Fees on account of 2.95 2.54 non compliance of certain obligations as per respective agreements

Income Tax 100.29 191.78

Excise Duty/Service Tax 80.93 29.85

Sales Tax 5.46 3,99

356.15 2996.92 Commitments

Estimated Amount of Contracts unexecuted on Capital Account 200.88 171.89

Other Commitments 644.33 824.85

845.21 996.74

Note: Guarantees disclosed under Contingent Liabilities during previous year includes counter indemnity/guarantees furnished by the Company in an aggregate amount of ZAR 4520 million (approximately Rs.2667 crore) in relation to acquisition of Cipla Medpro South Africa (Pty) Ltd.

1201.36 3993.66

[4] The Government of India has served demand notices in March 1995 and May 1995 on the Company in respect of six bulk drugs, claiming that an amount of Rs.5.46 crore along with interest due thereon is payable into the DPEA under the Drugs (Prices Control) Order, 1979 on account of alleged unintended benefit enjoyed by the Company. The Company has filed its replies to the notices and has contended that no amount is payable into the DPEA under the Drugs (Prices Control) Order, 1979.

[5) In 2003, the Company received notice of demand from the National Pharmaceutical Pricing Authority, Government of India on account of alleged overcharging in respect of certain drugs under the Drugs (Prices Control) Order, 1995. This was contested before the jurisdictional High Courts in Mumbai, Karnataka and Allahabad wherein it was held in favour of the Company. The orders of Hon''ble High Court of Allahabad and Bombay were challenged before the Hon''ble Supreme Court of India by the Government. Although in the challenge to the decision of the Hon''ble Bombay High Court, the Hon''ble Supreme Court of India restored the matter to the Hon''ble Bombay High Court in August 2003 for interpreting the Drug Policy on the basis of directions and principles laid down by them and the same was pending, in the challenge to the Hon''ble High Court of Allahabad''s order, in February 2013, the Hon''ble Supreme Court of India transferred the Bombay High Court petition also before itself for a final hearing on both the matters. In an earlier order, the Hon''ble Supreme Court has already restrained the Government from taking any coercive action against the Company. The Company has been legally advised that on the basis of these orders there is no probability of demand crystallising. Hence no provision is considered necessary in respect of notice of demand received by the Company up to date aggregating to Rs.1768.51 crore.

6) Related Party Disclosures

i. The related parties where control exists or where significant influence exists and with whom transaction have taken place:

a. Subsidiary Companies including step-down subsidiaries, associate companies and joint venture:

Sr. No. Name of the Company

Subsidiaries (held directly)

1. CiplaFZE

2. Goldencross Pharma Pvt. Ltd.

3. Cipla (Mauritius) Ltd.

4. Meditab Specialities Pvt. Ltd.

5. Cipla Medpro South Africa (Pty) Ltd. (formerly Cipla Medpro South Africa Ltd.)*

6. Cipla Holding B.V.® Subsidiaries (held indirectly)

7. Cipla (UK) Ltd.

8. Cipla Australia Pty. Ltd.

9. Cipla (EU) Ltd.

10. Medispray Laboratories Pvt. Ltd.

11. Sitec Labs Pvt. Ltd.

12. Four M Propack Pvt. Ltd.

13. Meditab Holdings Ltd.

14. Meditab Pharmaceuticals South Africa (Pty) Ltd.

15. Meditab Specialities New Zealand Ltd.

16. Cipla NacTicaret Anonim Sirketi

17. Cipla USA Inc.

18. Cipla Kenya Ltd.

19. Cipla Malaysia Sdn. Bhd.

20. Cipla Europe NV*

21. Cipla Quality Chemical Industries Ltd. (formerly Quality Chemical Industries Ltd.) **

22. Celeris d.o.o. ***

23. Cipla Medpro Manufacturing Proprietary Ltd.*

24. Galilee Marketing Proprietary Ltd.*

25. Inyanga Trading 386 Proprietary Ltd.*

26. Xeragen Laboratories Proprietary Ltd.*

27. Cipla Medpro Holdings Proprietary Ltd.*

28. Cape to Cairo Exports Proprietary Ltd.*

29. Cipla Agrimed Proprietary Ltd.*

30. Cipla Dibcare Proprietary Ltd.*

31. Cipla Health Care Proprietary Ltd.*

32. Cipla Life Sciences Proprietary Ltd.*

33. Cipla-Medpro Proprietary Ltd.*

34. Cipla-Medpro Distribution Centre Proprietary Ltd.*

35. Cipla Medpro ARV Proprietary Ltd.*

36. Cipla Medpro Botswana Proprietary Ltd.*

37. Cipla Medpro Cardio Respiratory Proprietary Ltd.*

38. Cipla Medpro Research and Development Proprietary Ltd.*

39. Cipla Nutrition Proprietary Ltd.*

40. Cipla Personal Care Proprietary Ltd.*

41. Cipla Vet Proprietary Ltd.*

42. Gardian Cipla Proprietary Ltd.*

43. Medpro Gen Proprietary Ltd.*

44. Medpro Holdings Proprietary Ltd.*

45. Medpro Pharmaceutica Proprietary Ltd.*

46. Medpro Pharmaceutica Africa Proprietary Ltd.*

47. Medpro-On-Line Proprietary Ltd.*

48. Med Man Care Proprietary Ltd.*

49. Smith and Couzin Proprietary Ltd.* Associates

50. Quality Chemical Industries Ltd.**

51. Stempeutics Research Pvt. Ltd.

52. Mabpharm Pvt. Ltd. Joint Venture

53. Aspen-Cipla Australia Pty Ltd. ® With effect from 28/08/2013

* With effect from 30/09/2013 "With effect from 20/11/2013 *** With effect from 04/12/2013 -With effect from 15/07/2013 "from 01 /10/2010 upto 19/11/2013 b. Key Management Personnel:

1. Mr. M.K. Hamied - Executive Vice-Chairman

2. Mr. S. Radhakrishnan - Whole-time Director

3. Mr. Subhanu Saxena - Managing Director and Global Chief Executive Officer

c. Relatives of Key Management Personnel:

1. Dr.Y.K. Hamied

2. Mr. Kami I Hamied

3. Mrs. SaminaVaziralli

d. Entities over which Key Management Personnel are able to exercise significant influence:

1. Okasa Pvt. Ltd.

2. Okasa Pharma Pvt. Ltd.

3. Cipla Cancer and AIDS Foundation

4. Hamied Foundation (earlier known as Dr. K. A. Hamied Foundation)

5. Cipla Foundation

[7] Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosure.


Mar 31, 2013

1 Lease Accounting

Where the Company is a Lessee

The Company has obtained certain premises for its business operations (including furniture and fixtures, therein as applicable) under cancellable operating lease or leave and license agreements ranging from 11 months to 5 years or longer which are subject to renewal at mutual consent. The cancellable lease arrangements can be terminated by either party after giving due notice. Lease payments are recognised in the Statement of Profit and Loss under "Rent" in Note 28.

Where the Company is a Lessor

The Company has given certain premises under operating lease or leave and license agreement. The Company retains substantially all risks and benefits of ownership of the leased asset and hence classified as operating lease. Lease income on such operating lease is recognised in the Statement of Profit and Loss under "Rent'''' in Note 23.

2 Segment Information

In accordance with AS-17 "Segment Reporting", segment information has been given in the Consolidated Financial Statements of Cipla Limited., and therefore, no separate disclosure on segment information is given in these financial statements.

Note: On 15th May 2013 the shareholders of Cipla Medpro South Africa Ltd. ("Medpro"), a company incorporated in the Republic of South Africa and listed on JSE Ltd., have approved the Scheme of Arrangement ("Scheme") for Cipla Limited ("the Company") to acquire 100% of the ordinary share capital of Medpro at a price of ZAR 10 per share, and to settle all outstanding options to acquire Medpro shares. Based on Medpro''s current shares and share options outstanding, the total consideration payable would be approximately ZAR 4518 million (approximately Rs.2666 crore). Medpro is a distributor of the Company''s products in South Africa and certain neighbouring countries. Guarantees disclosed under contingent liabilities include counter indemnity/guarantees furnished by the Company in an aggregate amount of ZAR 4520 million (approximately Rs.2667 crore) in respect of bank guarantees which have been issued in connection with the Scheme by two South African banks in favour of the Takeover Regulation Panel, South Africa and which are valid until 10th September 2013. Implementation of the Scheme is still subject to regulatory and other approvals and conditions.

3 The Government of India has served demand notices in March 1995 and May 1995 on the Company in respect of six bulk drugs, claiming that an amount of Rs.5.46 crore along with interest due thereon is payable into the DPEA under the Drugs (Prices Control) Order, 1979 on account of alleged unintended benefit enjoyed by the Company. The Company has filed its replies to the notices and has contended that no amount is payable into the DPEA under the Drugs (Prices Control) Order, 1979.

4 In 2003, the Company received notice of demand from the National Pharmaceutical Pricing Authority, Government of India on account of alleged overcharging in respect of certain drugs under the Drug Price Control Order. This was contested before the jurisdictional High Courts in Mumbai, Karnataka and Allahabad wherein it was held in favour of the Company. The orders of Hon''ble High Court of Allahabad and Bombay were challenged before the Hon''ble Supreme Court of India by the Government. Although in the challenge to the decision of the Hon''ble Bombay High Court, the Hon''ble Supreme Court of India restored the matter to the Hon''ble Bombay High Court in August 2003 for interpreting the Drug Policy on the basis of directions and principles laid down by them and the same was pending, in the challenge to the Hon''ble High Court of Allahabad''s order, in Feb 2013, the Hon''ble Supreme Court of India transferred the Bombay High Court petition also before itself for a final hearing on both the matters. In an earlier order, the Hon''ble Supreme Court has already restrained the Government from taking any coercive action against the Company. The Company has been legally advised that on the basis of these orders there is no probability of demand crystallising. Hence no provision is considered necessary in respect of notice of demand aggregating to Rs.1654.92 crore (inclusive of principal amount for the period July 1995 to April 2009 and interest upto January 2012).

5 Related Party Disclosures

i. The related parties where control exists or where significant influence exists and with whom transactions have taken place:

a. Subsidiary Companies including step-down subsidiaries, associate companies and joint venture:

1. Cipla FZE

2. Goldencross Pharma Pvt. Ltd.

3. Cipla (Mauritius) Ltd.

4. Meditab Specialities Pvt. Ltd.

Subsidiaries (held indirectly)

5. Cipla (UK) Ltd.

6. Cipla Australia Pty Ltd. (formerly Cipla-Oz Pty Ltd.)

7. Cipla (EU) Ltd. (formerly STD Chemicals Ltd.)

8. Medispray Laboratories Pvt. Ltd.

9. Sitec Labs Pvt. Ltd.

10. Four M Propack Pvt. Ltd.

11. Meditab Holdings Ltd.

12. Meditab Pharmaceuticals South Africa (Pty) Ltd.

13. Meditab Specialities New Zealand Ltd.

14. Cipla i lag Ticaret Anonim §irketi

15. Cipla USA Inc. (w.e.f. 12th September 2012)

16. Cipla Kenya Ltd. (w.e.f. 8th October 2012)

17. Cipla Malaysia Sdn. Bhd. (w.e.f. 20th March 2013)

Associates

18. Quality Chemical Industries Ltd.

19. Stempeutics Research Pvt. Ltd.

20. Biomab Holding Ltd.

21. Mabpharm Pvt. Ltd. (w.e.f. 29th October 2012)

Joint Venture

22. Aspen-Cipla Australia Pty Ltd.

b. Key Management Personnel:

1. Dr. Y.K. Hamied - Chairman and Managing Director

2. Mr. M.K. Hamied - Joint Managing Director

3. Mr. S. Radhakrishnan - Whole-time Director

4. Mr. Subhanu Saxena - Chief Executive Officer (w.e.f. 1st February 2013)

c. Relatives of Key Management Personnel:

1. Mr. Kamil Hamied

2. Mrs. Samina Vaziralli

d. Entities over which Key Management Personnel are able to exercise significant influence:

1. Okasa Pvt. Ltd.

2. Okasa Pharma Pvt. Ltd.

3. Cipla Foundation

ii. Transactions during the year with related parties:


Mar 31, 2012

(1) Lease Accounting

Where the Company is a Lessee

The Company has obtained certain premises for its business operations (including furniture and fixtures, therein as applicable) under operating lease or leave and license agreements. These are generally not non-cancellable and range between 11 months to 5 years under leave and licence, or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms. Lease payments are recognised in the Statement of Profit and Loss under 'Rent' in Note 27.

Where the Company is a Lessor

The Company has given certain premises under operating lease or leave and license agreement. The Company retains substantially all risks and benefits of ownership of the leased asset and hence classified as operating lease. Lease income on such operating lease is recognised in the Statement of Profit and Loss under 'Rent' in Note 22.

(2) Segment Information

In accordance with AS-17 'Segment Reporting; segment information has been given in the Consolidated Financial Statements of Cipla Ltd., and therefore, no separate disclosure on segment information is given in these financial statements.

Rs.in crore

2012 2011

(3) Contingent Liabilities and Commitments (to the extent not provided for)

Contingent Liabilities

Claims against the Company not acknowledged as Debt 1.88 1.64

Guarantees 100.51 59.97

Letters of Credit 20.75 36.54

Refund of Technical Know-how/Fees on account of non- compliance of certain obligations as per respective agreements 27.19 7.45

Income Tax 179.73 204.44

Excise Duty/Service Tax 29.55 49.23

Sales Tax 3.64 4.02

363.25 363.29

Commitments

Estimated Amount of Contracts unexecuted on Capital Account 291.61 218.93

Other Commitments 665.21 528.74

956.82 747.67

1320.07 1110.96

(4) In a proceeding instituted against the Company for patent infringement of an animal health care product, the US District Court issued an injunction and the Federal Circuit Court at Washington upheld this order. Pursuant to this, the District Court is required to initiate hearings to determine the award for damages, which has not yet commenced. Therefore, it is now not possible to make any reliable estimate of the liability that may come about and accordingly no provision is made in the accounts. The Company is also examining further legal remedies as may be advised.

(5) The Government of India has served demand notices in March 1995 and May 1995 on the Company in respect of six bulk drugs, claiming that an amount of Rs.5.46 crore along with interest due thereon is payable into the DPEA under the Drugs (Prices Control) Order, 1979 on account of alleged unintended benefit enjoyed by the Company. The Company has filed its replies to the notices and has contended that no amount is payable into the DPEA under the Drugs (Prices Control) Order, 1979.

(6) In 2003, the Company received notice of demand from the National Pharmaceutical Pricing Authority, Government of India on account of alleged overcharging in respect of certain drugs under the Drug Price Control Order. This was contested before the jurisdictional High Courts wherein it was held in favour of the Company.

The orders were challenged before the Hon'ble Supreme Court by the Government. The Hon'ble Supreme Court by separate orders restored the matter to the jurisdictional High Court for interpreting the Drug Policy on the basis of directions and principles laid down by them and also restrained the Government from taking any coercive action against the Company. The Company has been legally advised that on the basis of these orders there is no probability of demand crystallising. Hence no provision is considered necessary in respect of notice of demand aggregating to Rs.1654.92 crore (inclusive of principal amount for the period July 1995 to April 2009 and interest upto January 2012).


Mar 31, 2010

1. The previous years figures have been recast/regrouped wherever necessary in order to conform to current years presentation.

2. Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances) Rs.255.75 crore (Previous year Rs.316.83 crore).

3. Contingent Liabilities

i. Financial and performance guarantees given by banks on behalf of the Company - Rs.63.72 crore (Previous year Rs.34.52 crore).

ii. Letters of credit issued by banks on behalf of the Company - Rs.42.60 crore (Previous year Rs.37.80 crore).

iii. Refund of Technical Know-how/fees on account of non compliance of certain obligations as per respective agreements - Rs.15.38 crore (Previous year Rs.44.05 crore).

iv. Claims against the Company not acknowledged as debts:

a. IncomeTax- Rs.115.35 crore (Previous year Rs.Nil).

The above Rs.115.35 crore represents claims where the Company has filed appeals apd expects a favourable outcome, based on decisions in earlier assessment years.

b. Excise Duty/Service Tax - Rs.47.80 crore (Previous year Rs.44.90 crore).

The above represents claims where, based on decisions in earlier years, the Company is of the opinion that the demand is not sustainable.

c. Sales Tax - Rs.0.86 crore (Previous year Rs.0.50 crore).

d. Others - Rs.4.11 crore (Previous year Rs.2.31 crore).

4. TheGovernment of India has served demand notices in March 1995 and May 1995 on the Company in respect of six bulk drugs, claiming that an amount of Rs.5.46 crore along with interest due thereon is payable into the DPEA under the Drugs (Prices Control) Order, 1979 on account of alleged unintended benefit enjoyed by the Company.The Company has filed its replies to the notices and has contended that no amount is payable into the DPEA under the Drugs (Prices Control) Order, 1979.

5. In 2003, the Company received notice of demand from the National Pharmaceuticai Pricing Authority, Government of India on account of alleged overcharging in respect of certain drugs under the Drug Price Control Order.This was contested before the jurisdictional High Courts wherein it was held in favour of the Company.

The orders were challenged before the Honble Supreme Court by the Government.The Honble Supreme Court by separate orders restored the matter to the jurisdictional High Court for interpreting the Drug Policy on the basis of directions and principles laid down by them and also restrained the Government from taking any coercive action against the Company. The Company has been legally advised that on the basis of these orders there is no probability of demand crystallising. Hence, no provision is considered necessary in respect of notice of demand aggregating to Rs.1157.12 crore (inclusive of interest) for the period July 1995 to April 2009.

6. The net difference in foreign exchange debited to the Profit and Loss Account is Rs.63.89 crore (Previous year Rs.228.37 crore).

7. Related Party Disclosures

i. The related parties are as under:

a. Subsidiary Company-CiplaFZE, U.A.E.

b. Key Management Personnel-

1. Dr.Y.K.Hamied- Chairman and Managing Director

2. Mr.M.K.Hamied-JointManaging Director

3. Mr.AmarLulla-JointManaging Director

c. Entities over which Key Management Personnel exercise significant influence-Cipla Public Charitable Trust, Cipla Cancer & Aids Foundation, Goldencross Pharma Pvt.Ltd.*,Mediorals Laboratories Pvt. Ltd.*, Medispray Laboratories Pvt. Ltd.*, Advanced Remedies Pvt. Ltd.* (*w.e.f. VMarch2010)

8. Employee Benefits

The Company has with effect from 1st April 2007, adopted Accounting Standard 15, Employee Benefits (revised 2005), issued by the Institute of Chartered Accountants of India (therevised AS-15).

i. Short Term Employee Benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, short term compensated absences, etc. and the expected cost of bonus, ex-gratia are recognised in the period in which the employee renders the related service.

ii. Long Term Employee Benefits

The disclosures as per the revised AS-15 are as under: a. Brief description of the plans

The Companys defined contribution plan is Employees Pension Scheme (under the provisions of EmployeesProvident Funds and Miscellaneous Provisions Act, 1952) since the Company has no further obligation beyond making the contributions. The Company has two schemes for long term benefits namely, Provident Fund and Gratuity:

- The Provident Fund plan, a funded scheme is operated by Companys Provident Fund Trust, which is recognised by the Income Tax authorities and administered through trustees/ appropriate authorities. The Guidance note on implementing the revised AS-15, Employee Benefits (revised 2005) issued by Accounting Standards Board (ASB) states benefit involving employer-established providentfunds, which require interest shortfalls to be recompensed, are to be considered as defined benefit plans. Pending the issuance of the guidance note from the Actuarial Society of lndia,the Companys actuary has expressed an inability, to reliably measure provident fund liabilities. Accordingly, theCompany is unable to present the related information.

- The Company provides for gratuitya defined benefit plan based on actuarial valuation as of the Balance Sheet date, based upon which, the Company contributes all the ascertained liabilities to the Insurer Managed Funds.

The employees of theCompany are also entitled to leave encashment and compensated absences as per the Companys policy.

9. During the year, the Company sold its intellectual property rights and technical know-how of "i-pill" an emergency contraceptive brand, to Pi ra ma I Healthcare Limited for the territory of India at an aggregate consideration of Rs.95 crore.

10. The shareholders in the Annual General Meeting held on 26th August 2009 approved the raising of long term funds by way of Qualified Institutions Placement (QIPs) in terms of Chapter VIII of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. In pursuance thereof, the Company has raised Rs.675.99 crore from Qualified Institutional Buyers (QIBs) and 2,56,30,000 equity shares having face value of Rs.2 each at a premium of Rs.261.75 per equity share, were issued and allotted to the investors on 29th September 2009. The funds thus raised have been used as per the terms of the issue.

 
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