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Notes to Accounts of Orchid Pharma Ltd.

Mar 31, 2016

1. Sales tax recoverable has been recorded on the basis of the claims submitted or in the process of being submitted, as per rules relating to EOU and which in the opinion of the Company are recoverable.

2. Excise duty on finished goods has been accounted on removal of goods from factory, wherever applicable. Finished goods at factory have been valued at cost exclusive of excise duty and no provision has been made for excise duty on such goods. The above treatment has no impact on Profit & Loss account.

a) ORCHID ESOP 2010 SCHEME

In terms of the resolution passed by the company at the AGM dated July 21, 2010 the shareholders approved the scheme formulated under “ORCHID-ESOP 2010" for allotting 10,00,000 options. Accordingly 9,01,000 options were granted to the eligible Employees and the Executive Director except the Promoter Director by the Compensation Committee of the Board of Directors at a meeting held on October 28, 2010. Each option is convertible into one equity share of Rs.10/- each at a price of Rs. 329.55 per share, being the closing share price of Orchid in the National Stock Exchange on October 27, 2010, the day prior to the date of the meeting.

Considering the fall in the price of the shares of the Company and in the interest of the employees, the Compensation Committee of the Board of Directors at its meeting held on November 1, 2011 considered reprising of 8,64,500 options in force on the said date from Rs. 329.55 to Rs.166.15 as per the closing share price of Orchid at National Stock Exchange on October 31, 2011. As at March 31, 2016, the outstanding options yet to be exercised under the said scheme is Nil.

b) ORCHID ESOP - DIRECTORS 2011 SCHEME

In terms of the resolution passed by the company at the AGM held on July 29, 2011 the shareholders approved a scheme formulated as “ORCHID ESOP - DIRECTORS 2011 SCHEME" for allotting 5,00,000 options to Directors of the Company. Accordingly 3,00,000 options were granted to the Directors of the Company including the Whole Time Director but excluding the Promoter Director, by the Compensation Committee of the Board of Directors at a meeting held on November 1, 2011. Each option is convertible into one equity share of Rs.10/- each at a price of Rs.166.15 per share, being the closing share price of Orchid in the National Stock Exchange Ltd on October 31, 2011, the day prior to the date of the meeting. Out of the total options granted, 240,000 options have already lapsed and 60,000 options are in force as at March 31, 2016 under ORCHID ESOP - DIRECTORS 2011 Scheme.

c) ORCHID ESOP - SENIOR MANAGEMENT 2011 SCHEME

In terms of the resolution passed by the company at the AGM held on July 29, 2011 the shareholders approved a scheme formulated as “ORCHID ESOP - SENIOR MANAGEMENT 2011 SCHEME" for allotting 10,00,000 options to senior employees of the Company out of which 7,50,000 options will be granted to the employees of the Company and 2,50,000 options will be granted to the employees of its subsidiary companies. Accordingly 42,700 options were granted to the Employees of the Company by the Compensation Committee of the Board of Directors at a meeting held on November 01, 2011. Each option is convertible into one equity share of Rs.10/- each at a price of Rs. 10/- each (i.e. At Par). 21,350 options are in force as at March 31, 2016 under ORCHID ESOP - SENIOR MANAGEMENT 2011 Scheme.

As per the terms of the CDR package, all Indian rupee loan from bank carries interest at SBI Base rate plus 100 Bps. These loans are repayable in 32 quarterly installments from 01/04/2015. These loans are secured by Pari Passu charge by way of joint mortgage on immovable and movable assets situated at Factory premises at SIDCO Industrial Area, Alathur and SIPCOT Industrial Park, Irungattukottai and current assets, subject to prior charges created/ to be created on current assets in favour of bankers and financial institutions for securing working capital borrowings. All term loans are additionally secured by personal guarantee of Shri K.Raghavendra Rao, Managing Director of the Company.

Terms of repayment of loan-All Foreign Currency term loan carries interest @ LIBOR plus 3 to 4.6%.The loan is repayable in 32 quarterly installments commencing from 01/04/2015. These loans are secured by Pari Passu charge by way of joint mortgage on immovable and movable assets situated at Factory premises at SIDCO Industrial Area, Alathur and SIPCOT Industrial Park, Irungattukottai and current assets, subject to prior charges created / to be created on current assets in favour of bankers and financial institutions for securing working capital borrowings. The term loans are additionally secured by personal guarantee of Shri K.Raghavendra Rao, Managing Director of the Company. The terms of the foreign currency term loan availed in Feb 2012 includes covenants pertaining to financial parameters such as limit on aggregate debt outstanding, debt service coverage ratio, ratio of net borrowings to EBDITA, Fixed assets coverage ratio, ratio of net borrowings to tangible networth etc., tested on the consolidated financial statements of the Company.

3 Segmental Reporting

The Company was disclosing segment information classifying the business as Bulk drugs and Formulations till the financial year 2004-05. However in view of integration of bulk actives and formulations business, with the commissioning of Generics formu lation facilities from the financial year 2005-06, the Company considers the business as one interrelated and integrated business of “Pharmaceutical products" and hence no separate segmental reporting is provided.

4 During the year, pursuant to the notification of Schedule II to the Companies Act, 2013 as applicable for the financial year beginning on or after 01/04/2014, the Company has revised the estimated useful life of some of its assets to align the useful life with those specified in Schedule II.

Pursuant to transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company has fully depreciated the carrying value of assets (determined after considering the revised useful life as prescribed by Schedule II), net of residual value, where the remaining useful life of the asset was determined to be nil as at 31/03/2015, and has adjusted an amount of Rs.1681.81 Lakhs against the opening balance of Reserves of the Company.

The Depreciation expense in the Statement of Profit and Loss for the year is lower by Rs.2,818.50 Lakhs consequent to the adoption of revised useful life as prescribed by Schedule II to the Companies Act, 2013.

5 Disclosure as required by Accounting Standard 15 (Revised) on Employee Benefits

A Defined Contribution Plan

i) The company contributes 12% of the salary for all eligible employees towards provided fund managed by the Central Government.

ii) The company also contributes a certain percentage of salary for all eligible employees in managerial cadre towards Superannuation Funds managed by Life Insurance Corporation of India

6. The company has paid managerial remuneration to its Managing Director amounting to Rs.68.20 Lakhs, which is within the limits prescribed by Schedule V to the Companies Act, 2013. The remuneration in respect of the Managing Director and Whole time director in excess of the limit prescribed under Schedule XIII to the Companies Act, 1956 during the previous year’s amounted to Rs.1,193.51 Lakhs The said excess is subject to the approval of the members in General Meeting and from the Central Government.

7. During the FY 2015-16, the name of the Company has been changed from “Orchid Chemicals & Pharmaceuticals Ltd." to “ Orchid Pharma Ltd." effective from 09/10/2015 vide approval from Registrar of Companies of even date.

8. Period and amount of continuing default as on the Balance sheet date

9. Previous year''s figures have been re-grouped wherever necessary to conform to current year''s classification.

10. Previous year figures are for 18 months and hence not strictly comparable with current year figures.


Mar 31, 2015

1. a) Orchid ESOP 2010 Scheme

In terms of the resolution passed by the Company at the AGM dated July 21,2010 the shareholders approved the scheme formulated under "ORCHID-ESOP 2010" for allotting 10,00,000 options. Accordingly 9,01,000 options were granted to the eligible Employees and the Executive Director except the Promoter Director by the Compensation Committee of the Board of Directors at a meeting held on October 28, 2010. Each option is convertible into one equity share of Rs.10/- each at a price of Rs.329.55 per share, being the closing share price of Orchid in the National Stock Exchange on October 27, 2010, the day prior to the date of the meeting.

Considering the fall in the price of the shares of the Company and in the interest of the employees, the Compensation Committee of the Board of Directors at its meeting held on November 1,2011 considered repricing of 8,64,500 options in force on the said date from Rs.329.55 to Rs.166.15 as per the closing share price of Orchid at National Stock Exchange on October 31,2011. Pursuant to exercise of options by the employees, 10,000 equity shares of Rs.10/- each were issued during the year 2012-13 and as at March 31,2015, the outstanding options yet to be exercised under the said scheme is Nil

b) Orchid ESOP - Directors 2011 Scheme

In terms of the resolution passed by the Company at the AGM held on July 29, 2011 the shareholders approved a scheme formulated as "ORCHID ESOP - DIRECTORS 2011 SCHEME" for allotting 5,00,000 options to Directors of the Company. Accordingly 3,00,000 options were granted to the Directors of the Company including the Whole Time Director but excluding the Promoter Director, by the Compensation Committee of the Board of Directors at a meeting held on November 1,2011. Each option is convertible into one equity share of Rs.10/- each at a price of Rs.166.15 per share, being the closing share price of Orchid in the National Stock Exchange on October 31,2011, the day prior to the date of the meeting. Out of the total options granted, 2,20,000 options have already lapsed and 80,000 options are in force as at March 31,2015 under ORCHID ESOP - DIRECTORS 2011 Scheme.

c) Orchid ESOP - Senior Management 2011 Scheme

In terms of the resolution passed by the Company at the AGM held on July 29, 2011 the shareholders approved a scheme formulated as "ORCHID ESOP - SENIOR MANAGEMENT 2011 SCHEME" for allotting 10,00,000 options to senior employees of the Company out of which 7,50,000 options will be granted to the employees of the Company and 2,50,000 options will be granted to the employees of its subsidiary companies. Accordingly 42,700 options were granted to the Employees of the Company by the Compensation Committee of the Board of Directors at a meeting held on November 01,2011. Each option is convertible into one equity share of Rs.10/- each at a price of Rs.10/- each (i.e. At Par). 32,025 options are in force as at March 31,2015 under ORCHID ESOP - SENIOR MANAGEMENT 2011 Scheme.

During the year the Company has closed one of its wholly owned subsidiary Orchid Singapore Pte. Ltd.

All whole time directors have been considered as Key Management Personnel as they are involved in planning, directing and controlling the activities of the reporting enterprise.

2. Extra-Ordinary Item are net of Taxes of Rs.14,525.69 Lakhs.

3. Segmental Reporting

The Company considers the business as one interrelated and integrated business of "Pharmaceutical products" and hence no separate segmental reporting is provided.

4. Disclosure as required by Accounting Standard 15 (Revised) on Employee Benefits

A Defined Contribution Plan

i) The Company contributes 12% of the salary for all eligible employees towards providend fund managed by the Central Government.

ii) The Company also contributes a certain percentage of salary for all eligible employees in managerial cadre towards Superannuation Funds managed by Life Insurance Corporation of India

5. The Governement of India, Ministry of Corporate Affairs has issued a notification under Sec 211(4) of Companies Act, 1956 dated 08th February 2011 exempting the disclosure of the quantitative details in compliance of Paras 3(i)(a), 3(ii)(a), 3(ii)(b), and 3(ii)(d) of Part II of Schedule VI of the Companies Act, 1956.

6. The Company has paid managerial remuneration to its Managing Director, and Whole time director amounting to Rs.225.23 Lakhs. The said remuneration in respect of the Managing Director, and Whole time director exceeds the limit prescribed under Schedule XIII by Rs.45.23 Lakhs (Previous year Rs.737.59 Lakhs). The said excess is subject to the approval of the members in General Meeting and from the Central Government.

7. The financial year of the Company has been extended by 6 months vide order of the Registrar of Companies dated 25/09/2014. Consequent to the extension of financial year by six months, the profit/Loss reported above was for a period of 18 months ending on 31.03.15.

8. In July 2014 the Company has completed the Business Transfer Agreement (BTA) with Hospira Healthcare India Private Limited for the sale and transfer of Orchid's Penicillin and Penem API business and the API facility located in Aurangabad (Maharashtra) together with an associated Process R&D infrastructure located in Chennai.

9. The Company has implemented the Corporate Debt Restructuring package as approved by the CDR Empowered Group (CDR EG) in July 2014. The restructuring package approved by CDR EG provided for reschedulement of the repayment of the principal amount borrowed over a period of 8 years commencing from 01/04/2015 with two years of repayment holiday, reduction in interest rate of all borrowings, carving out a portion of working capital facilities as Working Capital Term Loan, Funding of interest on restructured Termloans (two years) and working capital facilities (one year) commencing from 01/04/2013. Consequent to the reduction in interest rates, a sum of Rs.4197.70 Lakhs, being the excess provision of interest made in the financials has been reversed on implementation of CDR package.

10. In view of the CDR package implemented as mentioned in Note No: 46, the repayment obligations of the Company have been revised and the repayments would commence from 01/04/2015 only.

11. Previous year's figures have been re-grouped wherever necessary to conform to current year's classification.


Sep 30, 2013

1. Segmental Reporting

The Company was disclosing segment information classifying the business as Bulk drugs and Formulations till thefinancia year 2004-05. However in view of integration of bulk actives and formulations business, with the commissioning of Generics formulation facilities from the financial year 2005-06 , the Company considers the business as one interrelated and integrated business of "Pharmaceutical products" and hence no separate segmental reporting is provided.

2. Disclosure as required by Accounting Standard 15 (Revised) on Employee Benefits

A Defined Contribution Plan

i) The Company contributes 12% of the salary for all eligible employees towards provident fund managed by the Central Government, ii) The Company also contributes a certain percentage of salary for all eligible employees in managerial cadre towards

Superannuation Funds managed by Life Insurance Corporation of India

3. The Government of India, Ministry of Corporate Affairs has issued a notification under Section 211 (4) of Companies Act, 1956 dated 08th February 2011 exempting the disclosure of the quantitative details in compliance of Paras 3(i)(a), 3(ii)(a), 3(ii)(b), and 3(ii)(d) of Part II of Schedule VI of the Companies Act, 1956.

4. The Company has paid managerial remuneration to its Chairman and Managing Director, and Whole time director amounting to Rs 859.86 lakhs. The said remuneration in respect of the Chairman and Managing Director, and the Whole time director exceeds the limit prescribed under Schedule XIII by Rs 737.62 lakhs (Previous year Rs 196.31 lakhs). The said excess is subject to the approval of the members in General Meeting and from the Central Government.

5. The financial year of the Company has been extended by 6 months vide order of the Registrar of Companies dated 01/07/2013. Consequent to the extension of financial year by six months, the profit/Loss reported above was for a period of 18 months ending on 30.09.2013 and hence not comparable as such with figures for the previous year (i.e) 2011-12.

6. The Company has entered into a Business Transfer Agreement (BTA) dated August 29, 2012 with Hospira Healthcare India Private Limited for the sale and transfer of Orchid''s Penicillin and Penem API business and the API facility located in Aurangabad (Maharashtra) together with an associated Process R&D infrastructure located in Chennai. As the Business Transfer is not completed as at 30/09/2013, the results include the figures of those businesses also.

7. The Company has applied for Corporate Debt Restructuring and the application has been admitted on 24/08/2013. The accounts have been prepared without considering the restructuring package. The concessions to be given under the restructuring package including reschedulement of loan repayments, concession of interest rate etc. will be accounted in the year in which package is sanctioned and implemented.


Mar 31, 2012

1. During the year, Orchid Research Laboratories Limited (ORLL) was merged with Orchid Chemicals & Pharmaceuticals Limited (OCPL) in terms of High Court Order dated March 20, 2012 vide. Comp Pet No. 28 of 2012

The Honourable High Court of Madras sanctioned the Scheme of Amalgamation for merger of Orchid Research Laboratories Limited (ORLL) with Orchid Chemicals & Pharmaceuticals Limited (OCPL). The Financial statements have been prepared in accordance with the order of the High Court. The effective date of amalgamation for accounting purposes is March 30,2012. The appointed date is April 1, 2010.

Orchid Chemicals & Pharmaceuticals Limited was incorporated in India in July 1992 and started commercial production in February 1994. The Company manufactures Active Pharmaceuticals Ingredients as 100% export oriented unit and sells finished dosage forms (formulations) in domestic and export markets. The Company also has a full fledged R&D facilities.

Orchid Research Laboratories Limited (ORLL), India is engaged in pharmaceutical research and development.

Orchid Research Laboratories Limited was 100% subsidiary of OCPL. The share capital of ORLL was cancelled and no further issue of shares of OCPL was carried out.

The value of difference being surplus between the assets and liabilities of transferor Company transferred to the transferee Company, at book value, after making adjustment for inter corporate loans outstanding between transferor Company and transferee Company and as reduced by the cost of investment of the transferee Company in the equity shares of the transferor Company has been transferred to capital reserve in the books of the transferee Company in accordance with the above referred court order.

2. Sales Tax recoverable has been recorded on the basis of the claims submitted or in the process of being submitted, as per rules relating to EOU and which in the opinion of the Company are recoverable.

A) ORCHID-ESOP 2010 SCHEME

In terms of the resolution passed by the Company at the AGM held on July 21,2010 the shareholders approved the scheme formulated under"ORCHID-ESOP 2010"for allotting 1,000,000 options. Accordingly 901,000 options were granted to the eligible Employees and the Executive Director except the Promoter Director by the Compensation Committee of the Board of Directors at a meeting held on October 28,2010. Each option is convertible into one equity share of Rs 10/-each at a price of Rs 329.55 per share, being the closing share price of Orchid in the National Stock Exchange on October 27,2010, the day prior to the date of the meeting.

Considering the fall in the price of the shares of the Company and in the interest of the employees, the Compensation Committee of the Board of Directors at its meeting held on November 1,2011 considered repricing of 864,500 options in force on the said date from Rs 329.55 to Rs 166.15 as per the closing share price of Orchid at National Stock Exchange on October 31, 2011. Out of the total options granted, 47,000 options have already lapsed and the remaining granted options in force as at March 31, 2012 under ORCHID-ESOP 2010 Scheme are 854,000.

The one year vesting period for the scheme ended on October 27, 2011 and the employees can exercise their right to convert the options into equity shares from October 28, 2011 onwards. The options will lapse on October 28, 2013, if they are not exercised within a period of 2 years from the date of vesting of options. As at March 31, 2012, no options were exercised.

B) ORCHID-ESOP DIRECTORS 2011 SCHEME

In terms of the resolution passed by the Company at the AGM held on July 29, 2011 the shareholders approved a scheme formulated as "ORCHID-ESOP Directors 2011 SCHEME" for allotting 500,000 options to the Directors of the Company. Accordingly 300,000 options were granted to the Directors of the Company including the Whole Time Director but excluding the Promoter Director, by the Compensation Committee of the Board of Directors at a meeting held on November 01, 2011. Each option is convertible into one equity share of Rs 10/- each at a price of Rs 166.15 per share, being the closing share price of Orchid in the National Stock Exchange on October 31, 2011, the day prior to the date of the meeting. Out of the total options granted, 50,000 options have already lapsed and remaining granted options in force as of March 31, 2012 under ORCHID-ESOP Directors 2011 Scheme are 250,000.

C) ORCHID-ESOP SENIOR MANAGEMENT 2011 SCHEME

In terms of the resolution passed by the Company at the AGM held on July 29, 2011 the shareholders approved the scheme formulated as "ORCHID-ESOP Senior Management 2011 SCHEME" for allotting 1,000,000 options to the senior employees of the Company out of which 750,000 options will be granted to the employees of the Company and 250,000 options will be granted to the employees of its subsidiary companies. Accordingly 42,700 options were granted to the senior employees of the Company by the Compensation Committee of the Board of Directors at a meeting held on November 01, 2011. Each option is convertible into one equity share of Rs 10/- each at a price of Rs 10/- each (i.e. At Par). 42,700 options are in force as at March 31, 2012 under ORCHID-ESOP Senior Management 2011 Scheme."

@ amount due includes for all installments in the respective category

Terms of repayment of loan- All Indian rupee loan from bank carries interest @14.75% to 16.25% p.a. These loans are repayable in 36 to 54 equivated monthly and 8 to 18 quarterly installments from the date of the origination. These loans are secured by Pari Passu charge by way of joint mortgage on immovable and movable assets situated at Factory premises at SIDCO Industrial Area, Alathur, MIDC Industrial Area, Aurangabad, SIPCOT Industrial Park, Irungattukottai and R&D premises at Shozhanganallur and current assets, subject to prior charges created/ to be created on current assets in favour of bankers and financial institutions for securing working capital borrowings. Total term loans aggregating Rs 53,652.89 lakhs are additionally secured by personal guarantee of Shri K Raghavendra Rao, Chairman & Managing Director of the Company

Terms of repayment of loan- All Foreign Currency term loan carries interest @ LIBOR plus 3 to 4.6%. The loan is repayable in 8 to 24 quarterly and 10 half yearly installments from the date of the orgination. These loans are secured by Pari Passu charge by way of joint mortgage on immovable and movable assets situated at Factory premises at SIDCO Industrial Area, Alathur, MIDC Industrial Area, Aurangabad, SIPCOT Industrial Park, Irungattukottai and R&D premises at Shozhanganallur and current assets, subject to prior charges created/ to be created on current assets in favour of bankers and financial institutions for securing working capital borrowings. Total term loans aggregating Rs 54,187.20 lakhs are additionally secured by personal guarantee of Shri K Raghavendra Rao, Chairman & Managing Director of the Company. The terms of the foreign currency term loan availed in February 2012 includes covenants pertaning to financial parameters such as limit on aggregate debt outstanding, debt service coverage ratio, ratio of net borrowings to EBDITA, Fixed assets coverage ratio, ratio of net borrowings to tangible networth etc., tested on the consolidated financial statements of the Company

The Company raised FCCBs during 2006-07 aggregating to US$ 175 million (Rs 77,358.75 lakhs) with an option to the investor to convert the FCCBs into equity shares of the Company at an initial conversion price of Rs 348.335 per share at a fixed rate of exchange on conversion Rs 43.93 = US$ 1, at any time after April 9, 2007 and prior to February 18, 2012. Further the Company had an option of early redemption of these FCCBs in whole at any time on or after February 28, 2010 and prior to February 21, 2012, subject to certain conditions. Unless previously converted, redeemed or repurchased and cancelled, the FCCBs were to be redeemed on February 28,2012 at 142.77% of their principal amount. During the year 2008-09, the Company bought back FCCBs to the extent of US$ 37.80 million and the outstanding FCCBs as at March 31,2009 was US$ 137.20 million.

During the year 2009-10, the Company bought back FCCBs to the extent of US$ 19.778 million and the outstanding FCCBs as at March 31,2011 wasUS$ 117.422 million.

During the year 2011-12, the Company redeemed the outstanding FCCBs, including yield-to-maturity at 142.77% of the principa amount aggregating to US$ 167.64 million (Rs 82,408.00 lakhs) on the due date ie. February 28,2012.

The Company raised FCCBs during the year 2005-06 aggregating to US$ 42.50 million (Rs 19,284.50 lakhs) including a green shoe option of US$ 5 million (Rs 2,289.50 lakhs) with an option to the investor to convert the FCCBs into equity shares or global depository receipts at an initial conversion price of Rs 243.80 per share at a fixed rate of exchange on conversion Rs 44.94 = US$ 1. Out of the above, FCCBs amounting to US$ 22.79 million (Rs 10,241.82 lakhs) were converted.

Further, the Company had an option of early redemption of these FCCBs at any time after November 03, 2006 subject to certain conditions. Unless previously converted, redeemed or repurchased and cancelled, the FCCBs were to be redeemed on November 03, 2010 at 147.1688% of their principal a mount.

During 2008-09, the Company bought FCCBs to the extent of US$ 2.25 million and the outstanding FCCBs as at March 31,2010 was US$ 17.46 million. During the year 2010- 11, the Company redeemed the outstanding FCCBs, aggregating to US$ 25.69 million (Rs 11,409.52 lakhs) including yield-to-maturity, on the due date i.e. November 03, 2010.

Stores and Spares), Bills Receivable, Book Debts & all other movable property both present and future excluding such movables as may be permitted by the Banks/ Financial Institutions from time to time and by second charge on immovable properties after charges created/to be created on immovable assets in favour of Financial Institutions/Banks for securing term loans. The borrowings from banks are additionally secured by personal guarantee of Shri K Raghavendra Rao, Chairman & Managing Director of the Company

3. The accounts of Bexel Pharmaceuticals Inc., a subsidiary of the Company has been on the basis of Development Stage Company The Company will provide adequate financing to fund the ongoing projects during 2012-13 for a sum not exceeding Rs 15 crores.

The accounts of Diakron Pharmaceuticals Inc., a subsidiary of the Company has been on the basis of Development Stage Company. The Company will provide adequate financing to fund the ongoing projects during 2012-13 for a sum not exceeding Rs 10 crores.

4. AMOUNTS DUETO MICRO, SMALL AND MEDIUM ENTERPRISES

The Identification of Micro, Small and Medium Enterprises Suppliers as defined under "The Micro, Small and Medium Enterprises Development Act 2006"is based on the information available with the management. As certified by the Management, the amounts overdue as on March 31, 2012 to Micro, Small and Medium Enterprises on account of principal amount together with interest, aggregate to Rs Nil (Previous year Nil).

In accordance with Clause 29 of Accounting Standard (AS22) Deferred tax Assets and Deferred tax Liabilities have been setoff. Deferred tax assets in respect of unabsorbed depreciation and losses under tax laws have been recognised in view of the continued and consistant profitability of the Company.

5. SEGMENTAL REPORTING

The Company was disclosing segment information classifying the business as Bulk drugs and Formulations till the financial year 2004- 05. However in view of integration of bulk actives and formulations business, with the commissioning of Generics formulation facilities from the financial year 2005-06, the Company considers the business as one interrelated and integrated business of'Pharmaceutical products "and hence no separate segmental reporting is provided.

6. DISCLOSURE AS REQUIRED BY ACCOUNTING STANDARD 15 (REVISED) ON EMPLOYEE BENEFITS

A) Defined Contribution Plan

i) The Company contributes 12% of the salary for all eligible employees towards provident fund managed by the Central Government.

ii) The Company also contributes a certain percentage of salary for all eligible employees in managerial cadre towards Superannuation Funds managed by Life Insurance Corporation of India.

7. The Government of India, Ministry of Corporate Affairs has issued a notification under Section 211(4) of Companies Act, 1956 dated February 08,2011 exempting the disclosure of the quantitative details in compliance of Paras 3(i)(a), 3(ii)(a), 3(ii)(b) and 3(ii)(d) of Part II of Schedule VI of the Companies Act, 1956.

8. The Company has paid managerial remuneration to its Chairman and Managing Director, and Whole time Director amounting to Rs 657.80 lakhs The said remuneration in respect of the Chairman and Managing Director exceeds the limit prescribed under Schedule XIII by Rs 196.31 lakhs.The excess remuneration paid is subject to the approval of the members in General Meeting and from the Central Government.

9. Extraordinary item -net of tax represents write back of certain provisions made for rebates and discounts as the amounts have been fully realised during the year.

10. Previous year's figures have been re-grouped wherever necessary to conform to current year's classification.


Mar 31, 2011

1) Non - Monetary foreign currency items are carried at cost

2) All inter-related transactions are recognised at common rates.

3) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction.

4) Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts is recognised over the life of the contract.

The Company has exercised the option provided under the amendment to the Companies (Accounting Standards) Amendment Rules, 2006 dated March 31, 2009 (AS 11). (a) amount remaining unamortised in the financial statements as on March 31, 2011 is Nil (previous year (Rs 1,761.47 lakhs)) (b) The value of fixed assets adjusted for exchange gain is Rs 63.27 lakhs (Previous year Loss of Rs 775.05 lakhs) resulting in depreciation amount being less by Rs 2.58 lakhs (Previous year more by Rs 29.08 lakhs) (c) profit for the year is higher by Rs 3,459.67 lakhs (Previous year - loss lower by Rs 11,791.12 lakhs).

j) Subsidy on Fixed Assets

Subsidy received on fixed assets is credited to the cost of respective fixed assets.

5. The Company has filed an appeal against the demand made by the Income Tax department amounting to Rs Nil (Previous year Rs 98.94 lakhs). No provision has also been made for demand of interest amounting to Rs Nil (Previous year Rs 68.88 lakhs) as petition has already been filed for waiver of interest.

6. Foreign Currency Convertible Bonds (FCCBs) :

a) The Company raised FCCBs during 2006-07 aggregating to US$ 175 million (Rs 77,358.75 lakhs) with an option to the investor to convert the FCCBs into equity shares of the Company at an initial conversion price of Rs 348.335 per share at a fixed rate of exchange on conversion Rs 43.93 = US$ 1, at any time after April 9, 2007 and prior to February 18, 2012. Further the Company has an option of early redemption of these FCCBs in whole at any time on or after February 28, 2010 and prior to February 21, 2012, subject to certain conditions. Unless previously converted, redeemed or repurchased and cancelled, the FCCBs will be redeemed on February 28, 2012 at 142.77% of their principal amount.During the year 2008-09, the Company bought back FCCBs to the extent of US$ 37.80 million and the outstanding FCCBs as at March 31, 2009 was US$ 137.20 million.

During the year 2009-10, the Company bought back FCCBs to the extent of US$ 19.778 million. The outstanding FCCBs as at March 31, 2011 is US$ 117.422 million.

b) The Company raised FCCBs during the year 2005-06 aggregating to US$ 42.50 million (Rs 19,284.50 lakhs) including a green shoe option of US$ 5 million (Rs 2,289.50 lakhs) with an option to the investor to convert the FCCBs into equity shares or global depository receipts at an initial conversion price of Rs 243.80 per share at a fixed rate of exchange on conversion Rs 44.94 = US$ 1. Out of the above, FCCBs amounting to US$ 22.79 million (Rs 10,241.82 lakhs) have been so far converted.

During 2008-09, the Company bought FCCBs to the extent of US$ 2.25 million and the outstanding FCCB's as at March 31, 2010 is US$ 17.46 million. During the year 2010-11, the Company redeemed the outstanding FCCBs, aggregating to US$ 25.69 million (Rs 114.10 crore) including yield-to-maturity, on the due date i.e. November 03, 2010.

c) Provision has already been made for the entire premium payable on redemption of FCCBs by debiting the Securities Premium account (SPA). In the event that the conversion option is exercised by the holder of FCCBs in the future, the amount of premium charged to SPA will be suitably adjusted in the respective years.

The debit to share premium account for premium on FCCBs and for issue expenses have been made on the gross value without adjusting any tax impact. Tax benefits accruing to the Company on account of claiming such expenses will be credited to the SPA in the year in which the benefit is enjoyed by the Company.

The provision for premium on redemption of FCCBs debited to SPA is being restated at the exchange rate prevailing at the year end and the gain of Rs 288.73 lakhs (Previous year Rs 3,584.88 lakhs) on account of such restatement during the year is adjusted to the security premium account.

d) Even though the Company has provided for the premium on redemption of FCCBs as per note [c] above, the Company also makes provision for dividend in the books of account on the equity shares to be allotted upon conversion of FCCBs outstanding as at respective year end. Since the Company is obliged, as per SEBI guidelines, to pay dividend to those FCCBs holders who convert their FCCBs into equity after adoption of the financial statements and upto the book closure date.

7 Amounts Due to Micro, Small and Medium Enterprises

The Identification of Micro, Small and Medium Enterprises Suppliers as defined under "The Micro, Small and Medium Enterprises Development Act, 2006" is based on the Information available with the management. As certified by the Management, the amounts overdue as on March 31, 2011 to Micro, Small and Medium Enterprises on account of principal amount together with interest, aggregate to Rs Nil (Previous year Nil).

8 Excise duty on finished goods has been accounted on removal of goods from factory,wherever applicable. Finished goods at factory have been valued at cost exclusive of excise duty and no provision has been made for excise duty on such goods. The above treatment has no impact on Profit & Loss account.

Names of the related parties and description of relationship.

1. Subsidiary

Orchid Europe Limited, UK

Orchid Pharmaceuticals Inc., USA

Orgenus Pharma Inc., USA(Subsidiary of Orchid Pharmaceuticals Inc., USA.)

Orchid Pharma Inc / Karalex Pharma USA, (Subsidiary of Orchid Pharmaceuticals Inc., USA)

Orchid Research Laboratories Ltd., India (ORLL)

Orchid Pharmaceuticals SA (Proprietary) Limited, South Africa (OPL, SA)

Bexel Pharmaceuticals Inc., USA

Diakron Pharmaceuticals Inc., USA

Orchid Pharma Japan KK

2. Joint Venture NCPC Orchid Pharmaceuticals Company Limited, (NCPC, China)

3. Key Management Personnel Mr. K Raghavendra Rao, Chairman & Managing Director

Mr. S Krishnan, Executive Director & CFO

4. Relatives of Key Management Personnel

Mrs. R Vijayalakshmi (wife of Mr. K Raghavendra Rao)

Ms. R Divya and Ms. R Sowmya (daughters of Mr. K Raghavendra Rao)

5. Companies in which relatives of Key Management personnel exercise significant influence.

Spectrasoft Technologies Limited, India (Spectrasoft)

All whole time directors have been considered as Key Management Personnel as they are involved in planning, directing and controlling the activities of the reporting enterprise.

9 In terms of the resolution passed by the Company at the EGM dated October 21,1999 Employee Stock Option Scheme was extended to the employees of the Company. Accordingly options totalling 15,00,000 Nos were given to the employees as per the scheme formulated under "ORCHID-ESOP 99" scheme by the Compensation committee of the Board of Directors. Each option is convertible into one equity share of Rs 10/- each at a price of Rs 243.35 including premium for 6,00,000 Nos, Rs 252 including premium for 3,07,925 Nos, Rs 300.65 including premium for 2,92,075 nos and Rs 339.25 including premium for 3,00,000 nos.

A fair and reasonable adjustment in share price/ the number of options outstanding was made by the Company in respect of the Employee Stock Options granted but not exercised by the Employees due to the corporate actions of issue of bonus shares during October 2005. The total number of options outstanding and the price was adjusted so that the total value and options available to each option holder remained the same.

Consequently the revised and adjusted prices per share are Rs 162.24 (Rs 243.35), Rs 168.00 (Rs 252.00) and Rs 200.44 (Rs 300.65) respectively for 6,00,000 Nos, 3,07,925 Nos and 2,92,075 Nos of options granted by the Company.

For the 3,00,000 options granted during April 2006 at a price of Rs 339.25, the Compensation Committee of the Board of Directors considered repricing of the options in the interest of the employees, due to the fall in the price of the shares of the Company and accordingly approved a repricing of the options from Rs 339.25 to Rs 193.25 as per the closing price of Orchid at National Stock Exchange on August 11, 2006. The revision in the price has been approved by the shareholders at the Annual General Meeting held on July 19, 2007.

2,60,489 Options (net of lapsed options) were outstanding as at March 31, 2010 including the additional number of options adjusted, due to the bonus issue under ORCHID-ESOP 99 scheme.

During 2010-11, the outstanding 2,60,489 Options got lapsed.

In terms of the resolution passed by the Company at the AGM dated July 18, 2005 the shareholders approved the scheme formulated under "ORCHID-ESOP 2005" for allotting 10,00,000 Nos. Accordingly 6,10,000 options were given to the eligible directors and employees by the compensation committee of the Board of Directors at a meeting held on August 12, 2006. Each option is convertible into one equity share of Rs 10/- each at a price of Rs 193.25 per share including premium.

66,300 Options (net of lapsed options) were outstanding as at March 31, 2010 under ORCHID-ESOP 2005 Scheme.

During the year 2010-2011, the outstanding 66,300 Options got lapsed.

In terms of the resolution passed by the Company at the AGM dated July 21, 2010 the shareholders approved the scheme formulated under "ORCHID-ESOP 2010" for allotting 10,00,000 options. Accordingly 9,01,000 options were given to eligible Employees, including the Executive Director except the Promoter Director by the Compensation committee of the Board of Directors at a meeting held on October 28, 2010. Each option is convertible into one equity share of Rs 10/- each at a price of Rs 329.55 per share, being the closing share price of Orchid in the National Stock Exchange on October 27, 2010, the day prior to the date of the meeting. 8,98,000 Options were outstanding as at March 31, 2011 under ORCHID-ESOP 2010 Scheme.

No entries were passed in the books as the options were given at the market prices prevailing on the date of issuance of options.

10 During the 4th quarter of the FY 2009-10, Orchid completed the transaction for sale and transfer of its generic injectable finished dosage form pharmaceuticals business to Hospira. The sale and transfer transaction included Orchid's betalactam antibiotics injectables manufacturing complex and formulations R&D facility at Irungattukottai, Chennai as well as its generic injectable product portfolio and pipeline. The human resource base related to the transferred business also moved to the new entity.

11 a) Current tax includes Rs 122.70 lakhs (previous year Rs Nil) relating to prior years. b) Deferred Tax liability represents the following

Provision for Deferred tax for the year Rs (925.38) lakhs (Previous year Rs 7431.74 lakhs)

12 Segmental Reporting

The Company was disclosing segment information classifying the business as Bulk drugs and Formulations till the financial year 2004- 05. However in view of integration of bulk actives and formulations business, with the commissioning of Generics formulation facilities from the financial year 2005-06, the Company considers the business as one interrelated and integrated business of "Pharmaceutical products" and hence no separate segmental reporting is provided.

13 Disclosure as required by Accounting Standard 15 (Revised) on Employee Benefits A Defined Contribution Plan

i) The Company contributes 12% of the salary for all eligible employees towards provident fund managed by the Central Government.

ii) The Company also contributes 15% of salary, subject to a maximum of Rs 1,00,000, for all eligible employees in managerial cadre towards Superannuation Funds managed by Life Insurance Corporation of India

14 The bad and doubtful debts include value of debts amounting to Nil (Previous year Rs 1,615.11 lakhs) written off against the provision already made in earlier years.

15 The Government of India, Ministry of Corporate Affairs has issued a notification under section 211(4) of the Companies Act, 1956 dated February 8, 2011 exempting the disclosure of the quantitative details in compliance of Paras 3(i)(a), 3(ii)(a), 3(ii)(b), and 3(ii)(d) of Part II of Schedule VI of the Companies Act, 1956.

16 Previous year's figures have been re-grouped wherever necessary to conform to current year's classification.


Mar 31, 2010

1 Sales tax recoverable has been recorded on the basis of the claims submitted or in the process of being submitted, as per rules relating to EOU and which in the opinion of the Company are recoverable.

2 The Company has filed an appeal against the demand made by the Income Tax department amounting to Rs 98.94 lakhs-(Previous year Rs 98.94 lakhs). No provision has been made as the Company is confident of winning the appeal. No provision has also been made for demand of interest amounting to Rs 68.88 lakhs (Previous year Rs 68.88 lakhs) as petition has already been filed for waiver of interest.

3 Amounts Due to Micro, Small and Medium Enterprises

The Identification of Micro, Small and Medium Enterprises Suppliers as defined under "The Micro, Small and Medium Enterprises Development Act 2006" is based on the Information available with the management. As certified by the Management, the amounts overdue as on 31st March 2010 to Micro, Small and Medium Enterprises on account of principal amount together with interest, aggregate to Nil (Previous year Nil).

4 Excise duty on finished goods has been accounted on removal of goods from factory,wherever applicable. Finished goods at factory have been valued at cost exclusive of excise duty and no provision has been made for excise duty on such goods. The above treatment has no impact on Profit & Loss account.

5 In terms of the resolution passed by the Company at the EGM dated October 21,1999 Employee Stock Option Scheme was extended to the employees of the Company. Accordingly options totalling 1,500,000 Nos were given to the employees as per the scheme formulated under “ORCHID-ESOP 99" scheme by the Compensation committee of the Board of Directors. Each option is convertible into one equity share of Rs 10 each at a price of Rs 243.35 including premium for 600,000 Nos, Rs 252 including premium for 307,925 Nos, Rs 300.65 including premium for 292,075 nos and Rs 339.25 for 300,000 nos. No entries were passed in the books as the options were given at the market prices prevailing on the date of issuance of options.

A fair and reasonable adjustment in share price/ the number of options outstanding was made by the Company in respect of the Employee Stock Options granted but not exercised by the Employees due to the corporate actions of issue of bonus shares during October 2005. The total number of options outstanding and the price was adjusted so that the total value and options available to each option holder remained the same.

Consequently the revised and adjusted prices per share are Rs 162.24 (Rs 243.35), Rs 168.00 (Rs 252.00) and Rs 200.44 (Rs 300.65) respectively for 600,000 Nos, 307,925 Nos and 292,075 Nos of options granted by the Company. For the 300,000 options granted during April 2006 at a price of Rs 339.25, the Compensation Committee of the Board of Directors considered repricing of the options in the interest of the employees, due to the fall in the price of the shares of the Company and accordingly approved a repricing of the options from Rs 339.25 to Rs 193.25 as per the closing price of Orchid at National Stock Exchange on August 11, 2006. The revision in the price has been approved by the shareholders at the Annual General Meeting held on July 19, 2007. 260,489 Options (net of lapsed options) were outstanding as at March 31, 2010 including the additional number of options adjusted, due to the bonus issue under “ORCHID-ESOP 99” scheme.

In terms of the resolution passed by the Company at the AGM dated July 18, 2005 the shareholders approved the scheme formulated under “ORCHID-ESOP 2005”for allotting 1,000,000 Nos. Accordingly 610,000 options were given to the eligible directors and employees by the Compensation Committee of the Board of Directors at a meeting held on August 12, 2006. Each option is convertible into one equity share of Rs 10 each at a price of Rs 193.25 per share including premium. 66,300 Options (net of lapsed options) were outstanding as at March 31, 2010 under ORCHID ESOP 2005 Scheme.

6 During the 4th quarter of the fiscal under review, Orchid completed the transaction for sale and transfer of its generic injectable finished dosage forms pharmaceuticals business to Hospira. The sale and transfer transaction included Orchid’s betalactam antibiotics injectables manufacturing complex and formulations R&D facility at Irungattukottai, Chennai as well as its generic injectable product portfolio and pipeline. The human resource base related to the transferred business also moved to the new entity.

7 Segmental Reporting

The Company was disclosing segment information classifying the business as Bulk drugs and Formulations till the financial year 2004- 05. However in view of integration of bulk actives and formulations business, with the commissioning of Generics formulation facilities from the financial year 2005-06, the Company considers the business as one interrelated and integrated business of "Pharmaceutical products" and hence no separate segmental reporting is provided.

8 A Defined Contribution Plan

i) The Company contributes 12% of the salary for all eligible employees towards provident fund managed by the Central Government.

ii) The Company also contributes a certain percentage of salary for all eligible employees in managerial cadre towards Superannuation Funds managed by Life Insurance Corporation of India.

9 The bad and doubtful debts includes value of debts amounting to Rs 1,615.11 lakhs written off and adjusted against the provision made in earlier years.

10 The Company has made an application under Section 211(4) of the Companies Act, 1956 seeking exemption on the disclosure of the quantitative details in compliance of Paras 3(i)(a), 3(ii)(a), 3(ii)(b), and 3(ii)(d) of Part II of Schedule VI of the Companies Act, 1956 and pending receipt of the approval, the disclosures have been made in the same manner stipulated by the Department of Company Affairs while granting exemption from disclosure in earlier year

11 Sundry Debtors shown in the Balance sheet are subject to confirmations. The Company has sold its sterile injectable business to Hospira Healthcare India Private Limited during the year. Consequent to the sale of undertaking the company has terminated the dealings with some of the customers in regulated markets. The Company has received additional claims on account of such transfer for discounts and rebates and the customers are not confirming the balances subject to finalisation of settlement of claims. The Company has provided for an amount of Rs 80 crores for such claims during the year in addition to the provision made during the previous year of Rs 40 crores. The management is confident that the provisions so far made is adequate to cover all such claims.

12 Previous years figures have been re-grouped wherever necessary to conform to current years classification.

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