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Notes to Accounts of Piramal Enterprises Ltd.

Mar 31, 2017

1. GENERAL INFORMATION

Piramal Enterprises Limited (PEL) is one of India’s large diversified companies, with a presence in Healthcare, Healthcare Information Management and Financial Services.

In Healthcare, PEL is one of the leading players globally in CRAMS (custom research and manufacturing services) as well as in the critical care segment of inhalation and injectable anaesthetics. It also has a strong presence in the OTC segment in India.

PEL’s Healthcare Information Management business, Decision Resources Group, is amongst the top 20 US market research organizations which provide information services to the healthcare industry.

In Financial Services, PEL, including through its subsidiaries, provides comprehensive financing solutions to real estate companies. Structured Finance Group (SFG) also provides senior and mezzanine growth capital to various businesses across varied sectors that are integral part of India’s growth story. The Company also has strategic alliances with top global funds such as CPPIB Credit Investment Inc., APG Asset Management and Bain Capital Credit. PEL also has long term equity investments in Shriram Group, a leading financial conglomerate in India.

PEL is listed on the BSE Limited and the National Stock Exchange of India Limited in India.

2a. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTIES

The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

Fair Valuation:

Some of the company’s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset and liability, the company uses market observable data to the extent it is available. When Level 1 inputs are not available, the company engages third party qualified external valuers to establish the appropriate valuation techniques and inputs to the valuation model.

Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in Note 51.

Expected Credit Loss:

When determining whether the risk of default on a financial instrument has increased significantly since initial recognition, the company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the company’s historical experience and credit assessment and including forward-looking information.

The inputs used and process followed by the company in determining the increase in credit risk have been detailed in Note 46f.

Impairment loss in Investments carried at cost:

The Company conducts impairment reviews of investments in subsidiaries / associates / joint arrangements whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable or tests for impairment annually. Determining whether an asset is impaired requires an estimation of the recoverable amount, which requires the Company to estimate the value in use which base on future cash flows and a suitable discount rate in order to calculate the present value.

Useful life of Assets:

Property, plant and equipment and Intangible Assets represent a significant proportion of the assets of the Company. Depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company’s assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.

Deferred Taxes

Deferred tax is recorded on temporary differences between the tax bases of assets and liabilities and their carrying amounts, at the rates that have been enacted or substantively enacted at the reporting date. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers the expected reversal of deferred tax liabilities and projected future taxable income in making this assessment. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

Defined benefit plans:

The cost of the defined benefit plans and the present value of the defined benefit obligation are based on actuarial valuation using the projected unit credit method. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The Company has a documented Credit Risk Management Policy for its Pharmaceuticals Manufacturing and Services business. For every new customer (except established large pharma companies), Company performs a credit rating check using an external credit agency. If a customer clears the credit rating check, the credit limit for that customer is derived using internally documented scoring systems. The credit limits for all the customers are reviewed on an ongoing basis.

Of the Trade Receivables balance as at March 31, 2017 of Rs.513.07 Crores (as at March 31, 2016 of Rs.423.37 Crores and as at April 1, 2015 - Rs.341.22 Crores), the top 3 customers of the Company represent the balance of Rs.163.72 Crores as at March 31, 2017 (as at March 31, 2016 - Rs.137.47 Crores and as at April 1, 2015 - Rs.160.10 Crores). There are no other customers who represent more than 5% of total balance of Trade Receivables.

The Company has used a practical expedient by computing the expected credit loss allowance for External Trade Receivables based on a provision matrix. The provision matrix takes in to account historical credit loss experience and adjusted for forward-looking information. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as given in the provision matrix. The provision matrix at the end of the reporting period is as follows:

If the trade receivables (discounted) are not paid at maturity, the bank has right to request the Company to pay the unsettled balance. As the Company has not transferred the risks and rewards relating to these customers, it continues to recognize the full carrying amount of the receivables and has recognized the cash received on the transfer as a secured borrowing (Refer Note 21).

At the end of the reporting period, the carrying amount of the trade receivables that have been transferred but have not been de-recognized amounted to Rs.20.59 Crores (Previous year Rs.66.30 Crores) and the carrying value of associated liability is Rs.20.59 Crores (Previous year Rs.66.30 Crores) (Refer Note 21).

(iv) Terms and Rights attached to equity shares Equity Shares:

The Company has one class of equity shares having a par value of Rs.2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

On August 17, 2015, a dividend of Rs.20 per share (total dividend Rs.345.13 Crores and dividend distribution tax of Rs.70.26 crores) was paid to holders of fully paid equity shares. On March 21, 2016, a dividend of Rs.17.50 per share (total dividend of Rs.301.99 Crores and dividend distribution tax of Rs.61.48 crores) was paid to holders of fully paid equity shares.

A Dividend of Rs.21 per equity share (1050% of the face value of Rs.2/- each) amounting to Rs.362.38 Crores (Dividend Distribution Tax thereon of Rs.73.78 Crores) has been recommended by the Board of Directors which is subject to approval of the Shareholders.

During the year, the Company has capitalized borrowing costs of Rs.14.26 Crores (Previous year Rs.NIL) relating to projects, included in Capital Work in Progress. The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the Company’s general borrowings during the year, in this case 9.00% (Previous year NIL).

a) During the previous year, the Company had sold certain properties having a written down value of ‘11.07 crores for Rs.81.30 crores resulting in a net gain of Rs.70.23 crores

b) During the previous year, the Company sold its clinical research business known as PCR business. Property Plant & Equipment of this division along with the employees were transferred on a slump sale basis as a part of the transaction for a consideration of Rs.4.64 crores, resulting in a loss of Rs.2.60 crores.

3 EMPLOYEE BENEFITS :

Brief description of the Plans:

Other Long Term Employee Benefit Obligations

Leave Encashment, which are expected to be availed or encashed beyond 12 months from the end of the year are treated as other long term employee benefits. The Company’s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year.

Actuarial losses/ gains are recognised in the Statement of Profit and Loss in the year in which they arise. Long Term Service Awards are recognised as a liability at the present value of the defined benefit obligation as at the balance sheet date.

Defined Contribution plans

The Company’s defined contribution plans are Provident Fund (in case of certain employees), Superannuation, Employees State Insurance Fund and Employees’ Pension Scheme (under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions to such plans.

Post-employment benefit plans:

Gratuity for employees in India is as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India.

The Company’s Gratuity Plan is administered by an insurer and the Investments are made in various schemes of the trust. The Company funds the plan on a periodical basis.

In case of certain employees, The Provident fund is administered through an in-house trust. Periodic contributions to the trust are invested in various instruments considering the return, maturity, safety, etc., within the overall ambit of the Provident Fund Trust Rules and investment pattern notified through the Ministry of Labour investment guidelines for exempted provident funds.

These plans typically expose the Group to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk

The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. Plan investment is a mix of investments in government securities, and other debt instruments.

Interest risk

A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments.

Longevity risk

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments. In respect of certain employees, Provident Fund contributions are made to a Trust administered by the Company. The contributions made to the trust are recognised as plan assets. Plan assets in the Provident fund trust are governed by local regulations, including limits on contributions in each class of investments.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations, with the objective that assets of the gratuity / provident fund obligations match the benefit payments as they fall due. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

A large portion of assets consists of government and corporate bonds, although the Company also invests in equities, cash and mutual funds. The plan asset mix is in compliance with the requirements of the regulations in case of Provident fund.

The Company has no legal obligation to settle the deficit in the funded plan (Gratuity) with an immediate contribution or additional one off contributions. The Company intends to continue to contribute the defined benefit plans in line with the actuary’s latest recommendations.

The expected rate of return on plan assets is based on market expectations at the beginning of the year. The rate of return on long-term government bonds is taken as reference for this purpose.

In case of certain employees, the Provident Fund contribution is made to a Trust administered by the Company. In terms of the Guidance note issued by the Institute of Actuaries of India, the actuary has provided a valuation of Provident fund liability based on the assumptions listed above and determined that there is no shortfall at the end of each reporting period.

The Company’s Gratuity Plan is administered by an insurer and the Investments are made in various schemes of the trust. The Company funds the plan on a periodical basis. In case of certain employees, The Provident fund is administered through an in-house trust. Periodic contributions to the trust are invested in various instruments considering the return, maturity, safety, etc., within the overall ambit of the Provident Fund Trust Rules and investment pattern notified through the Ministry of Labour investment guidelines for exempted provident funds.

Weighted average duration of the defined benefit obligation is 7 years (Previous year 6 years)

The above sensitivity analysis are based on change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

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

The liability for Leave Encashment (Non - Funded) as at year end is Rs.30.93 crores (As at March 31, 2016 - Rs.27.67 crores, As at April 1, 2015 - Previous year Rs.24.89 Crores)

The liability for Long term Service Awards (Non - Funded) as at year end is Rs.2.09 crores (As at March 31, 2016 - Rs.1.97 crores, As at April 1, 2015 -Previous year Rs.0.88 Crores)

4 INFORMATION IN ACCORDANCE WITH THE REQUIREMENTS OF INDIAN ACCOUNTING STANDARD 24 ON RELATED PARTY DISCLOSURES.

1. List of related parties

A. Controlling Entities

The Ajay G. Piramal Foundation @

Piramal Life Sciences Limited - Senior Employees Stock Option Trust through its Trustee, Mr. Ajay G Piramal@

The Sri Krishna Trust through its Trustees, Mr.Ajay Piramal and Dr.(Mrs.) Swati A. Piramal (Previously held through its Corporate Trustees, Piramal Management Services Private Limited) @

Aasan Info Solutions (India) Private Limited @

Piramal Welfare Trust (Formerly known as The Piramal Enterprise Executives Trust) through its Trustee, Piramal Corporate Services Limited @

PRL Realtors LLP @

@There are no transactions during the year.

B. Subsidiaries

The Subsidiary companies including step down subsidiaries :

Other Intermediates:

Shriram Transport Finance Company Limited (Shriram Transport) (w.e.f. July 21, 2015)

Shriram City Union Finance Limited (Shriram City Union) (w.e.f. July 21, 2015)

Shriram Life Insurance Company Limited (Shriram Life) (w.e.f. July 21, 2015)

Shriram General Insurance Company Limited (w.e.f. July 21, 2015) @

Shriram Credit Company Limited (w.e.f. July 21, 2015) @

Bharat Re-insurance Brokers Private Limited (w.e.f. July 21, 2015) @

Shriram Overseas Investment Private Limited (w.e.f. July 21, 2015) @

Shriram Investments Holdings Limited (w.e.f. July 21, 2015) @

@ There are no transactions during the year with the above companies

D. Other related parties

Entities controlled by Key Management Personnel

Aasan Corporate Solutions Private Limited (Formerly known as Aasan Developers Private Limited) (Demerged from Piramal Estates) (Aasan Developers)

Gopikrishna Piramal Memorial Hospital (GPMH)

Piramal Corporate Services Limited (PCSL)

Piramal Estates Private Limited (Piramal Estates)

Piramal Glass Limited (PGL)

Piramal Forging Private Limited (Piramal Forging)

Piramal Security Private Limited (Piramal Security)

Piramal Hospitality Private Limited (Piramal Hospitality)

Topzone Mercantile Company LLP (Topzone)

PRL Developers Private Limited (PRL)

Piramal Water Private Limited PRL Agastya Private Limited Employee Benefit Trusts

Staff Provident Fund of Piramal Healthcare Limited (PPFT)

Piramal Healthcare Limited Employees Group Gratuity Assurance Scheme

E. Key Management Personnel and their relatives

Mr. Ajay G. Piramal Dr. (Mrs.) Swati A. Piramal Ms. Nandini Piramal Mr. Vijay Shah

Mr. Peter De Young [husband of Ms. Nandini Piramal]

F. Non Executive/Independent Directors

Dr. R. A. Mashelkar Mr. Gautam Banerjee Mr. Goverdhan Mehta Mr. N. Vaghul Mr. S. Ramadorai Mr. Deepak Satwalekar Mr. Keki Dadiseth Mr. Siddharth N Mehta

5 Property, Plant & Equipment, Capital Work In Progress, Brands and Trademarks, Non Convertible Debentures, Inter Corporate Deposits and Other Financial Assets amounting Rs.2653.38 Crores (As on March 31, 2016 Rs.2,436.74 Crores and as on April 1, 2015 Rs.463.83 Crores) are mortgaged / hypothecated as a security against long term secured borrowings as at March 31, 2017.

Inventories and Trade receivables amounting Rs.118.5 Crores (As on March 31, 2016 Rs.203.25 Crores and as on April 1, 2015 Rs.124.92 Crores) are hypothecated as a security against short term secured borrowings as at March 31, 2017.

6 Miscellaneous Expenditure in Note 34 includes Auditors’ Remuneration in respect of:

The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

7 The Company has advanced loans to its subsidiary companies. The disclosures pursuant to Regulation 34(3) read with para A of Schedule V to SEBI Listing Regulations, 2015:

8 The Company’s significant operating lease arrangements are mainly in respect of residential / office premises and computers. The aggregate lease rentals payable on these leasing arrangements are charged as rent under “Other Expenses” in Note 34.

These lease arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms.

9 Earnings Per Share (EPS) - EPS is calculated by dividing the profit attributable to the equity shareholders by the weighted average number of equity shares outstanding

10 CAPITAL RISK MANAGEMENT

The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings as detailed in notes 18, 21 and 22 offset by cash and bank balances) and total equity of the Company.

The Company determines the amount of capital required on the basis of annual as well as long term operating plans and other strategic investment plans. The funding requirements are met through non convertible debt securities or other long-term /short-term borrowings. The Company monitors the capital structure on the basis of total debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

The terms of the Secured and unsecured loans and borrowings contain certain financial covenants primarily requiring the Company to maintain certain financial ratios like Total Debt to Total Net Worth, Interest Coverage Ratio, Fixed Asset Cover ratio, Minimum net worth conditions, etc. The Company is broadly in compliance with the said covenants and the banks have generally waived / condoned such covenants.

11 RISK MANAGEMENT

The Company’s activities expose it to market risk, liquidity risk and credit risk. The Company has an independent and dedicated Enterprise Risk Management (ERM) system to identify, manage and mitigate business risks. Board has approved the Asset Liability Management Policy and the formation of Asset Liability Management Committee (ALCO). The ALCO includes the Company’s senior management and an external industry expert. It defines the strategy for managing liquidity and interest rate risks in the business.

a. Liquidity Risk Management

Liquidity Risk refers to insufficiency of funds to meet the financial obligations. Liquidity Risk Management implies maintenance of sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit lines to meet obligations when due.

The Company has formulated an Asset Liability Management Policy. The Asset Liability Management Committee (ALCO) is responsible for the management of the Company’s short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoring forecast and actual cash flows, and by assessing the maturity profiles of financial assets and liabilities. The Company has access to undrawn borrowing facilities at the end of each reporting period, as detailed below:

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the rate applicable as of reporting period ends respectively has been considered. The contractual maturity is based on the earliest date on which the Company may be required to pay.

The following table details the Company’s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company’s liquidity risk management as the liquidity is managed on a net asset and liability basis. Hence, maturities of the relevant assets have been considered below.

b. Interest Rate Risk Management

The Company is exposed to interest rate risk as it has assets and liabilities based on floating interest rates as well. The Company has an approved Asset and Liability Management Policy which empowers the Asset and Liability Management Committee (ALCO) to assess the interest rate risk run by it and provide appropriate guidelines to the Treasury to manage the risk. The ALCO reviews the interest rate risk on periodic basis and decides on the asset profile and the appropriate funding mix. The ALCO reviews the interest rate gap statement and the interest rate sensitivity analysis.

The sensitivity analyses below have been determined based on the exposure to interest rates for assets and liabilities at the end of the reporting period. For floating rate assets and liabilities, the analysis is prepared assuming the amount of the liabilities/assets outstanding at the end of the reporting period was outstanding for the whole year and the rates are reset as per the applicable reset dates. The basis risk between various benchmarks used to reset the floating rate assets and liabilities has been considered to be insignificant.

If interest rates related to borrowings had been 100 basis points higher/lower and all other variables were held constant, the Company’s

- Profit before tax for the year ended/Other Equity (pre-tax) as on March 31, 2017 would decrease/increase by Rs.10.71 Crores (Previous year Rs.28.95 Crores). This is mainly attributable to the Company’s exposure to borrowings at floating interest rates.

If interest rates related to loans given / debentures invested had been 100 basis points higher/lower and all other variables were held constant, the Company’s

- Profit before tax for the year ended/Other Equity (pre-tax) as on March 31, 2017 would increase/decrease by Rs.47.84 Crores (Previous year Rs.41.98 Crores). This is mainly attributable to the Company’s exposure to lendings at floating interest rates.

c. Other price risks

The Company is exposed to equity price risks arising from equity investments and classified in the balances sheet at fair value through Other Comprehensive Income.

Equity price sensitivity analysis:

The table below summarises the impact of increases/decreases on the Company’s Equity and OCI for the period. Analysis is based on the assumption that equity index had increased/decreased by 5% with all the other variables held constant, and these investments moved in the line with the index.

The Company has designated the following securities as FVTOCI Investments:

Shriram City Union Finance Limited Shriram Transport Finance Company Limited

The Company chose this presentation alternative because the investment were made for strategic purposes rather than with a view to profit on subsequent sale, and there are no plans to dispose of these investments.

d. Foreign Currency Risk Management

The Company is exposed to Currency Risk arising from its trade exposures and Capital receipt / payments denominated, in other than the Functional Currency. The Company has a detailed policy which includes setting of the recognition parameters, benchmark targets, the boundaries within which the treasury has to perform and also lays down the checks and controls to ensure the effectiveness of the treasury function. The Company has defined strategies for addressing the risks for each category of exposures (e.g. for exports, for imports, for loans, etc.). The centralised treasury function aggregates the foreign exchange exposure and takes prudent measures to hedge the exposure based on prevalent macro-economic conditions.

e. Accounting for cash flow hedge

The Company has taken foreign currency floating rate borrowings which are linked to LIBOR. For managing the foreign currency risk and interest rate risk arising from changes in LIBOR on such borrowings, the company has entered into cross-currency interest rate swap (CCIRS) for the entire loan liability. The Company has designated the CCIRS (hedging instrument) and the borrowing (hedged item) into a hedging relationship and applies hedge accounting.

Under the terms of the CCIRS, the Company pays interest at the fixed rate to the swap counterparty in INR and receives the floating interest payments based on LIBOR in foreign currency. As the critical terms of the hedged item and the hedging instrument (notional, interest periods, underlying and fixed rates) are matching and the interest cashflows are off-setting, an economic relationship exists between the two. This ensures that the hedging instrument and hedged item have values that generally move in the opposite direction.

Hedge Effectiveness Testing is assessed at designation date of the hedging relationship, and on an ongoing basis. The ongoing assessment is performed at a minimum at each reporting date or upon a significant change in circumstances affecting the hedge effectiveness requirements, whichever comes first.

The date on which CCIRS and the borrowings were designated into hedging relationship is later than the date on which the respective contracts were entered into. This timing difference has caused hedge ineffectiveness to a certain extent (where applicable), the effect of which has been recognised in profit or loss under the head Exchange gain/loss.

f. Credit Risk

Typically, the receivables of the Company can be classified in 2 categories:

1. Pharma Trade Receivables

2. Financial Services business Loan Book primarily comprising of Real estate developers, Infrastructure Companies and Others Please refer Note 10 for risk mitigation techniques followed for Pharma Trade Receivables. Risk mitigation measures for Financial Services business primarily comprising of Real Estate Developers and Strategic Investment Groups are explained in the note below.

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Risk management team has developed proprietary internal rating models to evaluate risk return trade-off for the loans and investments done by the Company. These models integrate probability of default and loss given default in to a single model and provide necessary inputs to the decision making committee.

Credit Risk Management

Credit risk management is achieved by considering various factors like :

- Cashflow at risk - This is an assessment of the standalone project or business from which interest servicing and principal repayment is expected to be done.

- Security cover - This is an assessment of the value of the security under stress scenario which is further adjusted for factors like liquidity, enforceability, transparency in valuation etc. of the collateral.

- Promoter strength - This is an assessment of the promoter from financial, management and performance perspective.

- Exit - This is an assessment of the liquidity of the loan or investment.

The output from each of the analysis is converted to a risk weight equivalent. Each of the four components of the risk analysis are assigned a specific weight which differ based on type of investment. The risk weight is then converted into capital requirement. The required capital and the return is combined to create a metric which is used for deal assessment.

Based on the above assessment the risk team categorises the deals in to the below Risk Grades

- Good Deals with very high risk adjusted returns

- Investment Grade Deals with high risk adjusted returns

- Management Review Grade Deals with risk adjusted returns required as per lending policy

- Not Advisable Grade Deals with lower than required risk adjusted returns

Further, a periodic review of the performance of the portfolio is also carried out by the Risk Group. The Risk Group adjusts the stress case considered during the initial approval based on actual performance of the deal, developments in the sector, regulatory changes etc. The deal level output is combined to form a portfolio snapshot. The trends from portfolio are used to provide strategic inputs to the management.

The credit risk on liquid funds and other financial instruments is limited because the counterparties are banks with high credit-ratings assigned credit-rating agencies or mutual funds.

Provision for Expected Credit Loss

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking parameters, which are both qualitative and quantitative. These parameters have been detailed in Note no.vi of Significant Accounting Policies. Based on the result yielded by the above assessment the Financial assets are classified into (1) Standard (Performing) Asset, (2) Significant Credit Deteriorated (Under-Performing) Asset (3) Default (Non-Performing) Asset (Credit Impaired). Macroeconomic information (such as regulatory changes, market interest rate or growth rates) is incorporated as part of the internal rating model. In general, it is presumed that credit risk has significantly increased since initial recognition if the payments are more than 30 days past due. For the purpose of expected credit loss analysis the Company defines default as any asset with more than 90 days overdues. This is also as per the rebuttable presumption provided by the standard.

As at April 1, 2015, a combination of both internal and external Probability of Default (PD) has been used by the Company since the asset portfolio was at a very nascent stage. The internal PD has been computed by dividing the default observed during the year with the number of investments present on the book at the start of the year. For External PD the Company has relied upon the 10 year PD data from external rating agency. For Loss given default (LGD), the Company has relied on internal and external information.

For the year ended March 31, 2017 and March 31, 2016 the Company has developed a PD Matrix after considering some parameters as stated below :

(1) Grade of the Borrower (2) Past Overdue History (3) Repeat Deal with the Borrower (4) Status from monthly Asset Monitoring report (5) Deal IRR (6) Deal Tenure remaining. Based on these parameters the Company has computed the PD. The Company has also built in model scorecards to determine the internal LGD. However, since there has been no default history to substantiate the internal LGD, the Company has made use of a combination of both internal as well as external LGD.

iii) The amounts of Financial Assets outstanding in the Balance Sheet along with the undrawn loan commitments (Refer Note 26) as at the end of the reporting period represent the maximum exposure to credit risk.

Description of Collateral held as security and other credit enhancements

The credit risk management policy of the Company prescribes a security cover of 200% of the proposed facility amount. The Company periodically monitors the quality as well as the value of the security to meet the prescribed limits. The collateral held by the Company varies on case to case basis and includes:

i) First / Subservient charge on the Land and / or Building of the project or other projects

ii) First / Subservient charge on the fixed and current assets of the borrower

iii) Hypothecation over receivables from funded project or other projects of the borrower

iv) Pledge on Shares of the borrower or their related parties

v) Guarantees of Promoters / Promoter Undertakings

vi) Post dated / Undated cheques

As at the reporting date, the ratio of value of the collateral held as security for the credit impaired financial assets to the exposure at default for these assets is higher than 1.

iv) The credit impaired assets as at the reporting dates were secured by charge on land and building and project receivables amounting to:

12 The Company conducts research and development to find new sustainable chemical routes for pharmaceutical & herbal products. The company is undertaking development activities for Oral Solids and Sterile Injectables, apart from other Active Pharmaceutical Ingredients.

The Company has research and development centers in Mumbai, Ennore and Ahmedabad.

Details of additions to Property Plant & Equipment & Intangibles under Development and qualifying Revenue Expenditure for Department of Scientific & Industrial Research (DSIR) approved research and development facilities / division of the Company at Mumbai, Ennore and Ahmedabad (with effect from September 23, 2016) for the year are as follows;

During the year ended March 31, 2015, the Company had decided to curtail investments in New Chemical Entity research.

Accordingly, Costs and write-downs associated with the scale-down incurred during the previous year, disclosed under Exceptional Income / (Expenses) (Refer Note 35), are mentioned below:

Provision for Onerous contracts represents the amounts provided for contracts where the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

Provision for Grants - Committed represent expected contributions to be paid in FY 2017-18 & 2018-19.

Provision for litigation / disputes represents claims against the Company not acknowledged as debts that are expected to materialise in respect of matters under litigation. Future cash outflows are determinable only on receipt of judgments/decisions pending with various forums/authorities.

13 INCOME TAXES RELATING TO OPERATIONS

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilized business loss and depreciation carry-forwards and tax credits. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilized.

The tax rate used for the reconciliations above is the corporate tax rate of 34.608% (for the year 2016-17 and 2015-16) payable by corporate entities in India on taxable profits under tax law in Indian jurisdiction.

In assessing the realizability of deferred tax assets, the Company considers the extent to which it is probable that the deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers the expected reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

Based on this, the Company believes that it is probable that the Company will realize the benefits of these deductible differences. The amount of deferred tax asset considered realizable, however, could be reduced in the near term if the estimates of future taxable income during the carry-forward period are reduced.

As at March 31, 2017, the Company has recognized Deferred Tax Asset of Rs.50.28 Crores on unused tax losses, considering profits in the past 2 years and reasonable certainty of realisation of such deferred tax asset in the future years. Deferred tax asset amounting to Rs.559.72 crores (excluding the amount already recognised to the extent of Deferred Tax Liabilities amounting Rs.57.49 Crores) and Rs.262.33 crores as at April 1, 2015 and March 31, 2016, respectively in respect of unused tax losses was not recognized by the Company, considering that the Company had a history of tax losses for recent years and these losses expire in various years through fiscal 2022.

The Company has calculated its tax liability for current domestic taxes after considering MAT. The excess tax paid under MAT provisions over and above normal tax liability can be carried forward and set-off against future tax liabilities computed under normal tax provisions. The Company was required to pay MAT during the current and previous year and accordingly, a deferred tax asset of Rs.236.30 crores and Rs.146.82 crores has been recognized in the statement of financial position as of March 31, 2016 and 2017 respectively, which can be carried forward for a period of 10 years (15 years w.e.f. current year) from the year of recognition.

14a. Transition to Ind AS Overall principle

The accounting policies set out in note 2 have been applied in preparing the financial statements for the year ended 31 March 2017, the comparative information presented in these financial statements for the year ended 31 March 2016 and in the preparation of an opening Ind AS balance sheet at 1 April 2015 (the Company’s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.

Exemptions and Exemptions availed:

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

Ind AS Optional Exemptions:

Deemed cost for property, plant and equipment and other intangible assets

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.

Designation of previously recognized financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basisofthe facts and circumstancesatthe date of transition to Ind AS. The Company has designated certain investments in equity share as held at FVOCI on the basis of the facts and circumstances that existed at the transition date.

Determining whether an arrangement contains a lease

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material.

The Company has elected to apply this exemption for such contracts/arrangements.

Ind AS Mandatory Exceptions:

Estimates:

An entity’s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1 April 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

A. Investment in preference shares carried at FVPL;

B. Investment in debt instruments carried at FVPL; and

C. Impairment of financial assets based on expected credit loss model.

Derecognition of financial assets and financial liabilities

Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entity’s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions. The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

The Company has determined the classification of Financial Assets in terms of whether they meet the amortized cost criteria, FVPL criteria or FVOCI criteria based on the facts and circumstances that existed as of transition date.

Impairment of financial assets:

The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date.

Notes

a) Under previous GAAP, long term investments were measured at cost less diminution in value which is other than temporary. Under INDAS, these financial assets have been classified as FVTOCI.On the date of transition to Ind AS,these financial assets have been measured at their fair value which is higher than the cost as per previous GAAP, resulting in an increase in the carrying amount by Rs.759.83 crores as at March 31,2016 and by Rs.1,452.47 croresas at April1,2015. Fair value changes with respect to investments in equity instruments designated as at FVOCI have been recognised in FVOCI - Equity investments reserve as at the date of transition and subsequently in the other comprehensive income for the year ended 31 March 2016. This increased other reserves by Rs.759.83 Crores as at 31 March 2016 (1 April 2015 - Rs.1452.47 Crores) and Other Comprehensive Income for the year ended March 31, 2016 decreased by Rs.692.64 Crores.

b) Under previous GAAP, there was no specific guidance on accounting for interest free rental deposits. Whereas in Ind AS, the prepaid rent is measured as the difference between the initial carrying amount of the deposit determined in accordance with Ind AS 109 and the amount of deposit given. The Company had given interest free security deposit of Rs.3.00 crores as on March 31, 2015 and the fair value on initial recognition was estimated to be Rs.2.05 crores. The difference of Rs.0.95 crores has been treated as prepaid rent under Ind AS and is recognised in Statement of Profit and Loss over the period of lease. After initial recognition, the rental deposit has been subsequently carried at amortized cost i.e. interest based on market rate has been recognised under the effective interest rate method as part of finance cost. The net effect of these changes is a decrease in total equity of Rs.0.03 crores as at March 31, 2016 and Rs.0.01 crores as at April 1, 2015 and Profit for the year ended March 31, 2016 decreased by Rs.0.02 Crores.

c) Under Ind AS, financial guarantee contracts are accounted as financial liabilities and measured initially at fair value and subsequently at the higher of i) amount of loss allowance determined in accordance with impairment requirements of Ind AS 109 and the amount initially recognised less when appropriate, the cumulative amount of income recognised in accordance with principles of Ind AS 18. Under previous GAAP, these were not recognised in the balance sheet. As these financial guarantee have been given towards loans taken by its Company entities, notional financial guarantee commission income has been recognized with the corresponding increase in the investment in the respective Company entities resulting into increase in investment by Rs.42.92 crores as at March 31, 2016 and Rs.28.02 crores as at April 1, 2015 with corresponding increase in Equity and Profit for the year ended March 31, 2016 increased by Rs.14.9 Crores.

d) Under Previous GAAP, borrowings were recorded at cost and transaction costs were charged to Statement of Profit and Loss as and when incurred. Under Ind AS, transaction cost incurred towards origination of borrowings is required to be deducted from the carrying amount of borrowings on initial recognition. These cost are recognised in the Statement of Profit and Loss over the tenure of the borrowing as part of interest expense by applying effective interest rate method. Accordingly, borrowings as at March 31, 2016 have been reduced by Rs.12.21 crores and Rs.3.84 crores as at April 1, 2015. The total equity increased by an equivalent amount and the profit for the year ended March 31, 2016 increased by Rs.8.37 Crores.

e) Under previous GAAP, premium paid for derivative contracts was amortized over the term of the derivative contracts whereas under Ind AS the derivative contracts are measured at FVTPL. Thus, the unamortized premium as of March 15 has been charged off to retained earnings and Derivative contracts have been recognized at Fair value resulting into net increase in Total Equity as on April 1, 2015 by Rs.7.73 Crores and as on March 31, 2016 by Rs.8.77 Crores. The profit for the year ended March 31, 2016 increased by Rs.1.14 Crores on account of the same.

f) Under Previous GAAP, dividend on equity shares recommended by the Board of Directors after the end of the reporting period but before the financial statements were approved for issue was recognised in the financial statement as a liability. Under Ind AS, such dividends are recognised when the same is approved by the members in a general meeting. The effect of this change is an increase in total equity as at March 31, 2016 of Rs.NIL and Rs.415.39 crores as at April 1, 2015 but does not affect the profit before tax and total profit for the year ended March 31, 2016 and March 31, 2015.

g) Under previous GAAP, investments, term loans and inter-corporate deposits were carried at cost whereas under IND AS investments are measured based on entity’s business model for managing the financial assets and contractual cash flow characteristics of the financial asset. The investments, term loans and inter-corporate deposits that meet the business model and contractual cash flow tests are measured at amortised cost and interest income is recognised as per effective interest rate method. Those investments, term loans and inter-corporate deposits that do not meet the business model and contractual cash flow test are measured at Fair Value. Thus considering the criteria of IND AS the investment, term loans and Inter-corporate deposits have decreased by Rs.143.32 crores as at March 31, 2016 and Rs.11.10 crores as at April 1, 2015. The total equity decreased by an equivalent amount. The profit for the year ended March 31, 2016 decreased by Rs.132.22 Crores on account of the same.

h) Under previous GAAP, the unrealized foreign exchange gains/losses on net investments were transferred to Foreign Currency Translation Reserve. However under Ind AS, such gains/losses should be recognized in statement of Profit & Loss in separate financial statements. Accordingly, the profit for the year ended March 31, 2016 increased by Rs.32.08 Crores.

i) Under Previous GAAP, provision for doubtful loans and receivables was calculated using incurred loss model. Under Ind AS, the provision on financial assets and commitments, including trade receivables needs to be calculated using the expected credit loss model. Accordingly, an additional provision was recognized as at March 31, 2016 of Rs.80.50 crores and Rs.58.80 crores as at April 1, 2015. As a result, the total equity was decreased by Rs.80.50 Crores and Rs.58.80 Crores as on March 31, 2016 & April 1, 2015 and the profit for the year ended March 31, 2016 decreased by Rs.21.70 Crores.

j) Deferred taxes have been recognised on adjustments made on transition to Ind AS.

k) Under Previous GAAP, no provision was accounted for Constructive obligations. Under Ind AS, provisions need to be accounted (at discounted value) for the Constructive obligations. Accordingly, an additional provision for Grants - Committed was recognised at Rs.28.83 crores as at March 31, 2016 and Rs.24.29 crores as at April 1, 2015 resulting in decrease in Total Equity on the respective dates. The unwinding of discounts in this case amounted Rs.4.54 Crores during the year ended March 31, 2016 resulting in decrease in profit for the year ended March 31, 2017 by equivalent amount.

l) Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended March 31, 2016 decreased by Rs.1.60 Crores. There is no impact on the total equity as at March 31, 2016.

m) Under Previous GAAP, there was no clear guidance on treatment of lease incentives. Under Ind AS, In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor’s expected inflationary cost increases. Accordingly, the total equity as on March 31, 2016 and the profit for the year ended March 31, 2016 decreased by Rs.7.93 Crores.

n) Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit and loss as ‘other comprehensive income’ includes remeasurements of defined benefit plans and fair value gains or (losses) on FVOCI equity instruments. The concept of other comprehensive income did not exist under previous GAAP.

The adjustments are primarily on account of Bank overdraft now considered as Cash and Cash Equivalents and other Ind AS reclassifications.

b) Fair Value Hierarchy and Method of Valuation

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the group has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Except for those financial instruments for which the carrying amounts are mentioned in the above table, the Company considers that the carrying amounts recognised in the financial statements approximate their fair values.

For financial assets that are measured at fair value, the carrying amounts are equal to the fair values.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for Debentures, Term Loans and Inter Corporate Deposits.

Valuation techniques used to determine the fair values:

i. The fair value of the preference shares has been calculated by using price to earnings method.

ii. The fair value of the optionally convertible debentures has been calculated by using price to earnings method observed for comparable peers in the industry.

iii. Discounted cash flow method has been used to determine the fair value. The yield used for discounting has been determined based on trades, market polls, levels for similar issuer with same maturity, spread over matrices, etc. For instruments where the returns are linked to the share price of the investee company the equity price has been derived using Monte Carlo simulation and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3rd party vendor for these data.

iv. This includes listed equity instruments and mutual funds which are fair valued using quoted prices and closing NAV in the market.

v. This includes forward exchange contracts and cross currency interest rate swap. The fair value of the forward exchange contract is determined using forward exchange rate at the balance sheet date. The fair value of cross currency interest rate swap is calculated as the present value of future cash flow based on observable yield curves and forward exchange rates.

vi. Discounted cash flow method has been used to determine the fair value. The discounting factor used has been arrived at after adjusting the rate of interest for the financial assets by the difference in the Government Securities rates from date of initial recognition to the reporting dates.

vii. Fair values of borrowings are based on discounted cash flow using a current borrowing rate. They are classified as Level 3 values hierarchy due to the use of unobservable inputs, including own credit risk.

d) Valuation Process

The Company engages external valuation consultants to fair value financial instruments measured at FVTPL . The main level 3 inputs used for preference shares and debentures are as follows:

1) For Non Convertible Debentures, Waterfall approach has been used to arrive at the yields for securities held by the Company. For determining the equity prices Monte Carlo simulations and local volatility model using the inputs like spot rate, volatility surface, term structures and risk free rates from globally accepted 3rd party vendor for these data have been used.

2) For Preference Shares and Optionally Convertible Debentures, considered the value as maximum of debt value or equity value as on valuation date. For computation of debt value, discounted cash flow method has been used. For computation of equity value, market approach - comparable company multiple approach, the price to earnings multiple of peer companies in particular has been used.

f) Management uses its best judgment in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of all the amounts that the Company could have realized or paid in sale transactions as of respective dates. As such, the fair value of the financial instruments subsequent to the respective reporting dates may be different from the amounts reported at each year end.

15 In accordance with Ind AS 108 ‘Operating Segments’, segment information has been given in the consolidated financial statements of the Company, which are presented in the same annual report and therefore, no separate disclosure on segment information is given in these financial statements.

16 The details of Specified Bank Notes (as defined in the MCA notification GSR 308(E) dated March 31, 2017) held and transacted during the period from November 8, 2016 to December 30, 2016 are as follows:

17 During the previous year, the Company identified a fraud committed by an employee in one of its divisions. The Company initiated an internal investigation in the matter. Based on the results of the investigation, it was concluded that the employee had misrepresented to various customers and raised forged invoices and credit notes to the extent of Rs.3.18 crores during the previous year. The Company had filed a criminal complaint with appropriate authorities and is pursuing the matter further. The Company had taken appropriate measures and had further strengthened internal processes and controls to prevent such cases. During the current year, the Company has recovered an amount of Rs.1.80 crores from such customers.

18 The Board


Mar 31, 2016

1. GENERAL INFORMATION

Piramal Enterprises Limited (the ''Company*) is engaged in the business of Pharmaceuticals including Research and Development, Financial Services and Information Management through its subsidiaries. The Company has manufacturing plants in India and sells in Domestic as well as International markets through its overseas subsidiaries and other distribution channels. The Company is a public limited company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

2. The Scheme of Amalgamation ("the Scheme") of Oxygen Bio Research Private Limited ("02H"), Piramal Pharmaceutical Development Services Private Limited ("PPDSPL") and PHL Capital Private Limited ("PHL Capital") (collectively referred to as "transferor companies") with the Company, under Sections 391 to 394 of the Companies Act, 1956 was sanctioned by the Hon''ble High Courts of Gujarat and Bombay on November 11, 2014 and November 28,2014 respectively. The Scheme became effective on December 12,2014 and December 27,2014 upon filing of the said orders with the Registrar of Companies, Gujarat and Maharashtra respectively.

Consequently, all the assets and liabilities of transferor companies were transferred to and vested in the Company with effect from April 01,2014 ("the Appointed Date").

The amalgamation was accounted for under the "pooling of interest" method referred to in Accounting Standard 14 - Accounting for Amalgamation, as prescribed by the Scheme.

Accordingly, all the assets, liabilities and other reserves of transferor companies as on April 01,2014 were aggregated with those of the Company at their respective book values. As prescribed by the Scheme no consideration was paid as the transferor Companies were wholly owned step down subsidiaries of the Company. Accordingly, the resultant difference amounting to Rs. 2,339.14 Crores was credited to capital reserve account during the previous year.

3 EMPLOYEE BENEFITS:

Brief description of the Plans:

The Company has various schemes for long-term benefits such as Provident Fund, Superannuation, Gratuity, Leave Encashment, Pension and Long-term Service Award. In case of funded schemes, the funds are recognized by the Income tax authorities and administered through trustees. The Company''s defined contribution plans are Provident Fund (in case of certain employees), Superannuation, Employees State Insurance Fund and Employees'' Pension Scheme (under the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions to such plans. The Company''s defined benefit plans include Provident Fund (in case of certain employees), Gratuity, Leave Encashment and Long-term Service Award.

4. The Company has with effect from October 1,2015 reclassified the foreign currency loans given to certain foreign subsidiaries as long term loans forming part of the Company''s net investment in an non-integral foreign operation. Accordingly, the Company has accounted for the exchange gain on revaluation of these loans amounting to Rs. 32.08 Crores (Previous year NIL) in Foreign Exchange Translation Reserve during the year.

5. Information in accordance with the requirements of Accounting Standard 18 on Related Party Disclosures.

1. List of related parties

A. Controlling Companies

The Ajay G. Piramal Foundation

Piramal Healthcare Limited-Senior Employee Option Schemed

Piramal Enterprises Limited-Trustees of Piramal Enterprises Executive Trusty

Piramal Life Sciences Limited - Senior Employees Stock Option Trust

The Sri Krishna Trust through its Trustees, Mr.Ajay Piramal and Dr.(Mrs.)Swati A. Piramal (Previously held through its Corporate Trustees, Piramal Management Services Private Limited)

There are no transactions during the year.

B. Subsidiary Companies/ Step down subsidiaries /Jointly Controlled Entities/ Associates and its intermediates Located in India

Allergan India Private Limited (Allergan)

Convergence Chemicals Private Limited (Convergence)

Novus Cloud Solutions Private Limited (q.(Upto April 1, 2015)

Zebra Management Services Private Limited (J), (w.e.f. April 1, 2015)

PEL Finhold Private Limited

PEL Asset Resurgence Advisory Private Limited (w.e.f. February 22, 2016)

Piramal Asset Reconstruction Private Limited (w.e.f. January 29, 2016)

Piramal Consumer Products Private Limited (w.e.f. March 23, 2016)

PHL Fininvest Private Limited (PHL Fininvest)

Piramal Finance Private Limited (formerly known as PHL Finance Private Limited (PHL Finance)) (Piramal Finance)

Piramal Foundation for Educational Leadership (PFEL)

Piramal Fund Management Private Limited (formerly known as Indiareit Fund Advisors Private Limited) (Piramal Fund)

Piramal Healthcare Foundation

Piramal Investment Advisory Services Private Limited (PIASPL)

Piramal Swasthya Management and Research Institute (formerly known as "Health Management and Research Institute") (PSMRI)

Piramal Systems & Technologies Private Limited (Piramal Systems)

Piramal Udgam Data Management Solutions (Udgam)

Shrilekha Financial Services (Partnership firm) (Shrilekha)

Shriram Capital Limited (Shriram Capital)

Shriram Transport Finance Company Limited (w.e.f.July 21, 2015) (Shriram Transport)

Shriram City Union Finance Limited (w.e.f.July 21, 2015) (Shriram City Union)

Shriram Life Insurance Company Limited (w.e.f.July 21, 2015) (Shriram Life)

Shriram General Insurance Company Limited (w.e.f.July 21, 2015)

Shriram Credit Company Limited (w.e.f.July 21, 2015) ft

Bharat Re-insurance Brokers Private Limited (w.e.f.July 21, 2015)

Shriram Overseas Investment Private Limited (w.e.f.July 21, 2015)

Shriram Investments Holdings Limited (w.e.f.July 21, 2015)

Located Outside India

Activate Networks Inc. ##

Bluebird Aero Systems Limited

Coldstream Laboratories Inc**

Decision Resources Group Asia Limited ##

Decision Resources Group UK Limited ##

Decision Resources Inc. (formerly Decision Resources LLC) **

Decision Resources International Inc. ##

DR/ Decision Resources LLC##

DR/MRG Holdings LLC##ft

DRG Analytics & Insights Private Limited (w.e.f. May 11, 2015) ##

DRG Holdco Inc (w.e.f. August 26, 2015) (DRG Holdco) **

DRG UK Holdco Limited ##

Healthcare Business Insights LLC (w.e.f. May 14, 2015) ##

Indiareit Investment Management Company*

Millennium Research Group ##

PEL-DRG Dutch Holdco BV (w.e.f. March 7, 2016)

Piramal Asset Management Private Limited (formerly known as ''INDIAREIT Asset Management Private Limited'') #

Piramal Critical Care Deutschland GmbH **

Piramal Dutch Holdings N.V. (Dutch Holdings)

Piramal Dutch IM Holdco BV (w.e.f. March 7, 2016)

Piramal Imaging GmbH *

Piramal Imaging SA*

Piramal IPP Holdings LLC (w.e.f. November 6, 2015) **

Piramal Technologies SA $

Piramal Critical Care Inc (PCCI) **

Piramal Critical Care Italia, SPA*

Piramal Critical Care Limited (formerly known as Piramal Life Sciences (UK) Limited) ** ft

Piramal Healthcare (Canada) Limited (Piramal Healthcare, Canada) **

Piramal Healthcare Inc. **

Piramal Healthcare Pension Trustees Limited **

Piramal Healthcare UK Limited (Piramal Healthcare UK) **

Piramal Holdings (Suisse) SA (Piramal Holdings)

Piramal Imaging Limited (formerly known as Oxygen Healthcare Limited) (Imaging UK) *

Piramal International

Piramal Pharma Inc**

Sigmatic Limited ##

Held through Shrilekha

Held through Shriram Capital

* Held through Piramal Holdings (Suisse) SA

** Held through Piramal Dutch Holdings N.V.

# Held through Piramal Fund Management Private Limited

$ Held through Piramal Systems & Technologies Private Limited

## Held through Decision Resources Inc

(^.Thereare no transactions during the year with the above companies.

C. Other related parties where common control exists

Aasan Developers and Constructions Private Limited (Demerged from Piramal Estates) (Aasan Developers)

Gopikrishna Piramal Memorial Hospital (GPMH)

Piramal Corporate Services Limited (PCSL)

Piramal Estates Private Limited (Piramal Estates)

Piramal Glass Limited (PGL)

Piramal Phytocare Limited (formerly known as Piramal Life Sciences Limited (PPL))

Piramal Realty Private Limited

Piramal Water Private Limited

Piramal Forging Private Limited (Piramal Forging)

Piramal Security Private Limited (Piramal Security)

Piramal Hospitality Private Limited (Piramal Hospitality)

Topzone Mercantile Company LLP (Topzone)

D. Key Management Personnel and their relatives

Mr. Ajay G. Piramal

Dr. (Mrs.) Swati A. Piramal

Ms. Nandini Piramal

Mr. Vijay Shah

Mr. Peter De Young [husband of Ms. Nandini Piramal]

6. The Company has advanced loans to its subsidiary companies. The disclosures pursuant to Regulation 34(3) read with para A of Schedule V to SEBI Listing Regulations, 2015: Amounts outstanding as at the year-end were:

7. The Company''s significant operating lease arrangements are mainly in respect of residential / office premises and computers. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Other Expenses" in Note 30.

These lease arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. The Company has placed a refundable deposit of Rs. 32.01 Crores (Previous Year Rs. 27.41 Crores) in respect of these leasing arrangements. Future lease rentals payable in respect of non-cancellable operating leases have been mentioned below:

8. The Company conducts research and development to find new sustainable chemical routes for pharmaceutical and herbal products. The Company is undertaking development activities for Oral Solids and Sterile Injectables, apart from other Active Pharmaceutical Ingredients. The Company has research and development centres in Mumbai, Ennore and Ahmedabad.

9. During the year, the Company identified a fraud committed by an employee in one of its divisions. The Company initiated an internal investigation in the matter. Based on the results of the investigation, it was concluded that the employee had misrepresented to various customers and raised forged invoices and credit notes to the extent of Rs. 3.18 Crores. The Company has filed a criminal complaint with appropriate authorities and will pursue the matter further. The Company has taken appropriate measures and has further strengthened internal processes and controls to prevent such cases.

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


Mar 31, 2014

1. GENERAL INFORMATION

Piramal Enterprises Limited (the ''Company'') is engaged in Pharmaceutical business including its Research and Development, Financial Services and Information Management business through its subsidiaries. The Company has manufacturing plants in India and sells in Domestic as well as International markets through various distribution channels. The Company is a public limited company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

2.1 Rights, preferences and restrictions attached to shares

Equity Shares:

The Company has one class of equity shares having a par value of Rs. 21- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

3.1 As per Section 117C of the Companies Act, 1956 the Company has not created Debenture Redemption Reserve during the year for Redeemable Non Convertible Debentures in the absence of profit.

C An erstwhile Contractor had made a claim before arbitration panel for Rs.7.85 Crores on Canere Actives and Fine Chemicals Private Limited (Canere) prior to its amalgamation with the Company, for unsettled dues for erection and commissioning of a manufacturing facility during the year 1999-2000. Canere has filed a counter claim of Rs.38.26 Crores on the Contractor for submitting inflated bills for work not done and for special and indirect damages caused due to negligence of the Contractor. The Arbitration panel has awarded net claim in favour of contractor resulting in total claim against Canere amounting to Rs. 3.00 Crores (including interest). The Company has gone into the appeal against said order in Civil Court. The Company has provided for the said liability, anticipating the event of Civil Judge upholding the orders passed by the Tribunal.

4. Employee Benefits :

Brief description of the Plans:

The Company has various schemes for long term benefits such as Provident Fund, Superannuation, Gratuity, Leave Encashment, Pension and Long Term Service Award. In case of funded schemes, the funds are recognised by the Income tax authorities and administered through trustees. The Company''s defined contribution plans are Provident Fund (in case of certain employees), Superannuation, Employees'' State Insurance Fund and Employees'' Pension Scheme (under the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions. The Company''s defined benefit plans include Provident fund (in case of certain employees), Gratuity, Pension, Leave Encashment and Long Term Service Award.

J. Expected employer''s contribution for the next year is Rs. 4.17 Crores (Previous Year Rs. 3.18 Crores) for Gratuity and Pension.

K. The liability for Leave Encashment (Non - Funded) as at year end is Rs. 18.03 crores (Previous year Rs. 19.48 Crores) (Refer Note 8 and 11).

The expected rate of return on plan assets is based on market expectations at the beginning of the year. The rate of return on long-term government bonds is taken as reference for this purpose.

5. In accordance with Accounting Standard-17 ''Segment Reporting'', segment information has been given in the consolidated financial statements of Piramal Enterprises Limited, and therefore, no separate disclosure on segment information is given in these financial statements.

6. Information in accordance with the requirements of Accounting Standard 18 on Related Party Disclosures.

1. List of related parties

A. Controlling Companies

The Swastik Safe Deposits and Investments Limited (upto August 6, 2013)*

The Ajay G. Piramal Foundation

PHL Holdings Private Limited (upto July 2, 2013)* (Refer Note 34)

Piramal Healthcare Limited - Senior Employee Option Scheme*

Piramal Enterprises Limited - Trustees of Piramal Enterprises Executive Trust*

Piramal Life Sciences Limited - Senior Employees Stock Option Trust *

Piramal Management Services Private Limited (Corporate Trustee of The Sri Krishna Trust)(w.e.f June 20,2013)*

*There are no transactions during the year.

B. Subsidiary Companies / Step down subsidiaries / Controlled Entities /Associates

- Located in India

PHL Fininvest Private Limited (PHL Fininvest)

Piramal Pharmaceutical Development Services Private Limited (PPDSPL) #

Oxygen Bioresearch Private Limited # @

PHL Capital Private Limited (PHL Capital) #

Piramal Finance Private Limited (formerly known as PHL Finance Private Limited (PHL Finance))*

PHL Infrastructure Finance Company Private Limited (PHL Infra)

Piramal Fund Management Private Limited (formerly known as Indiareit Fund Advisors Private Limited) # @

Piramal Systems & Technologies Private Limited (Piramal Systems)

Piramal Investment Advisory Services Private Limited (w.e.f June 13, 2013) # @

Piramal Udgam Data Management Solutions (w.e.f March 19, 2014) (Udgam)

Piramal Foundation for Education Leadership (w.e.f March 19, 2014) (PFEL)

Health Management and Research Institute (HMRI)

- Located Outside India

Piramal International @

Piramal Holdings (Suisse) SA (Piramal Holdings)

Piramal Pharma Inc**

Piramal Healthcare Inc. **

Piramal Investment Holdings (Canada) Inc.* @

(Upto August 31, 2013 - merged with Piramal Healthcare (Canada) Limited)

Piramal Life Sciences (UK) Limited * @

Piramal Healthcare UK Limited (Piramal Healthcare UK) *

Piramal Healthcare Pension Trustees Limited * @

Piramal Healthcare (Canada) Limited (Piramal Healthcare, Canada) *

Piramal Imaging Limited (formerly known as Oxygen Healthcare Limited)* @

Piramal Critical Care Italia, SPA*

Piramal Critical Care Inc (PCCI) **

Minrad EU ** @

Indiareit Investment Management Company # @

Piramal Technologies SA $ @

Piramal Imaging SA*

Piramal Imaging GmbH * @

Piramal Dutch Holdings N.V. @

Piramal Critical Care Deutschland GmbH * @

Piramal Resources Inc. (upto December 18, 2013 being the date of dissolution) @

DRI Holdco lnc**@

(Upto June 19, 2013 - merged with Decision Resources Inc.)

AMR/Arlington Medical Resources LLC $$ ## @

Arlington Medical International Inc $$ ## @

Biotrends Research Group LLC $$ ## @

Decision Resources Inc ** @

Decision Resources LLC(DRL) (Upto June 17,2013) ##

Decision Resources International Inc. ## @

Decision Resources Group UK Limited ## @

DR/ Decision Resources LLC ## @

DR/MRG Holdings LLC ## @

DRG UK Holdco Limited ## @

Fingertip Formulary LLC $$ ## @

Healthleaders LLC $$ ## @

Manhattan Research LLC $$ ## @

Pharmastrat LLC $$ ## @

Millennium Research Group Inc. ## @

Sigmatic Limited ## @

Decision Resources Group Asia Limited ## @

INDIAREIT Asset Management Private Limited (w.e.f August 26, 2013) # @

Bluebird Aero Systems Limited $ @

* Held through Piramal Holdings (Suisse) SA ** Held through Piramal Dutch Holdings N.V.

# Held through PHL Infrastructure Finance Company Private Limited $ Held through Piramal Systems & Technologies Private Limited ## Held through Decision Resources Inc

$$ Upto December 30, 2013 - Merged with Decision Resources Inc. @ There are no transactions during the year with the above Companies.

Note - Piramal Foundation for Education Leadership and Piramal Udgam Data Management Solutions are registered under section 25 of the Companies Act, 1956 and are limited by guarantee and not by shares. Piramal Enterprises Limited and its nominees are the members of these Companies.

Health Management & Research Institute is a society. The majority of the members of its governing body comprises nominees of Piramal Enterprises Limited

C. Other related parties where common control exists Piramal Glass Limited (PGL)

Piramal Phytocare Limited (formerly known as Piramal Life Sciences Limited (PPL))

Piramal Corporate Services Limited (PCSL)

Piramal Estates Private Limited (Piramal Estates)

Piramal Realty Private Limited *

India Venture Advisors Private Limited (India Venture)*

Allergan India Private Limited (Allergan)

* There are no transactions during the year.

D. Investing parties with whom the Company is a JV Partner Allergan Pharmaceuticals (Ireland) Ltd. Inc. (Allergan Ireland) Allergan Inc. (Holding Company of JV partner)*

* There are no transactions during the year.

E. Key Management Personnel and their relatives Mr. Ajay G. Piramal

Dr. (Mrs.) SwatiA. Piramal

Ms. Nandini Piramal

Mr. Vijay Shah

Mr. Peter De Young [husband of Ms. Nandini Piramal]

8 The Company''s significant leasing arrangements are mainly in respect of residential / office premises, computers and motor vehicles. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Other Expenses" in Note 30.

These leasing arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. The Company has placed a refundable deposit of Rs. 27.17 Crores (Previous Year Rs. 24.79 Crores) in respect of these leasing arrangements. Future lease rentals payable in respect of motor vehicles, office premises and computers on lease:

9 As a globally integrated healthcare Company, Piramal Enterprises is committed to original drug discovery to fight diseases, and aspire to provide novel, affordable drugs in India and across the world. The Drug Discovery and Development Unit of the Company focuses on the discovery and development of innovative small molecule medicines that matter to patients in the therapy areas of Oncology and Metabolic Disorders. The Company''s state-of-the-art Research Centre in Mumbai has comprehensive capabilities spanning target identification all the way through clinical development.

The unit has made significant progress, with an R&D pipeline having several molecules in different phases of development. After successful pre-clinical studies, the Company makes application to requisite regulatory authorities for conducting phase I/II/III studies. Currently major development programs are in phase I/I I studies. In Oncology, P276, P1446, P7170 and PL225B are in phase I/II studies. In Diabetes and Metabolic Disorder, P1736, P11187 and P7435 are in Phase I/I I studies.

10 During the year, the Company has received Rs. 2,665.83 Crores (Previous Year Rs. 925 Crores) through discounting of receivables. Finance charges on the same amounting to Rs. 178.32 Crores (Previous YearRs.48.94Crores) has been disclosed under "Finance Cost".

11 In view of the inadequacy of profits for the year ended March 31, 2013, Managerial remuneration paid to the Executive Directors amounting to Rs. 11.69 crores required approval from the Central Government which was received during the current year and this amount has been charged to the Statement of Profit and Loss during the year. During the Current year, the Company had applied for approval from the Central Government for the payment of remuneration to the Executive Directors w.e.f. April 1, 2013, against which the Central Government had approved remuneration of Rs. 1.48 crores to each Executive Director. The Company has filed applications to the Central Government for review of the said approvals and pending approval of the Central Government for the remuneration paid and in light of the inadequacy of profits in the current year, an amount of Rs. 9.03 crores paid is considered as an advance to Directors (held in trust).

12 The Company assesses all investments in Debentures, Term loans and Inter-corporate Deposits given for their recoverability and accordingly, makes provisions on these Assets of Financial Services Segment in respect of likely non-performing assets, as considered necessary. As a matter of prudence, the Company has provided for such assets based on past experience, emerging trends and estimates. This Provision has been separately disclosed as a Provision on Assets of Financial Services under Note 30 - Other Expenses.

13. Subsequent to the year-end :

a) the Company has divested its entire equity stake, comprising of 45,425,328 shares, in Vodafone India Limited to Prime Metals Limited, an indirect subsidiary of Vodafone Group Pic, for a total consideration of Rs. 8,900.00 Crores;

b) the Company has acquired an effective 20% equity stake in Shriram Capital Limited, a financial services company, for an aggregate consideration of Rs. 2,014.20 Crores; and

c) the Company has agreed to acquire 9.99% of the post-diluted equity share capital of Shriram City Union Finance Limited, by way of subscription to fresh shares pursuant to a preferential allotment, for an aggregate consideration of Rs. 790.00 Crores.

14 Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure. The figures for the previous year are not comparable with that of the current year on account of merger of PHL Holdings Private Limited during the year (Refer Note 34).


Mar 31, 2013

1. GENERAL INFORMATION

Piramal Enterprises Limited (the ''Company'') is engaged in pharmaceutical business including its research and development. The Company has diversified into Financial Services and Information Management business through its subsidaries. The Company has manufacturing plants in India and sells in Domestic as well as International markets through various distribution channels. The Company is a public limited company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

2. An erstwhile Contractor had made a claim before arbitration panel for Rs. 7.85 Crores on Canere Actives and Fine Chemicals Private Limited (Canere) prior to its amalgamation for unsettled dues for erection and commissioning of a manufacturing facility during the year 1999-2000. Canere has filed a counter claim of Rs. 38.26 Crores on the Contractor for submitting inflated bills for work not done and for special and indirect damages caused due to negligence of the Contractor. The Arbitration panel has awarded net claim in favour of contractor resulting in total claim against Canere amounting to Rs. 3.00 Crores (including interest). The Company has gone into the appeal against said order in Civil Court. The Company has provided for the said liability, anticipating the event of Civil Judge upholding the orders passed by the Tribunal.

3. Income Tax

In view of the tax / book losses under Income Tax, the Company has not provided for Income Tax/MAT. However, Current Tax includes Prior Period Tax on account of additional provision made on long term capital gain on sale of Domestic formulation business and for certain matters in disputes with Income Tax Department pertaining to earlier years.

4. The Board of Directors of the Company approved the Scheme of Amalgamation and Arrangement between PHL Holdings Private Limited (''PHPL'') and Piramal Enterprises Limited and their respective shareholders and creditors with effect from Appointed Date - January 01, 2013.

The said scheme has been approved by shareholders of both the Companies. Pursuant to the schemer-existing equity shares held by PHPL in the Company will stand cancelled and equivalent number of equity shares will be issued by the Company to the shareholders of PHPL as consideration. All costs arising out of or incurred in connection with and implementing this Scheme shall be borne by PHPL and / or its shareholders and no costs shall be borne by the Company. Further, there would not be any impact of the above scheme on the financial position of the Company.

The Scheme is currently pending for sanction with the Hon''ble Bombay High Court.

5, Employee Benefits :

Brief description of the Plans:

The Company has various schemes for long term benefits such as Provident Fund, Superannuation, Gratuity, Leave Encashment, Pension and Long Term Service Award. In case of funded schemes, the funds are recognised by the Income tax authorities and administered through trustees. The Company''s defined contribution plans are Superannuation, Employees State Insurance Fund and Employees'' Pension Scheme (under the provisions of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions. The Company''s defined benefit plans include Provident fund, Gratuity, Pension, Leave Encashment and Long Term Service Award.

6. In accordance with Accounting Standard-17 ''Segment Reporting'', segment information has been given in the consolidate financial statements of Piramal Enterprises Limited, and therefore, no separate disclosure on segment information is give in these financial statements.

7. Information in accordance with the requirements of Accounting Standard 18 on Related Party Disclosures prescribed by th Companies (Accounting Standards) Rules, 2006 (as amended).

1. List of related parties

A. Controlling Companies

The Swastik Safe Deposits and Investments Limited *

The Ajay G. Piramal Foundation*

Paramount Pharma Private Limited* (upto October 30, 2012)

BMK Laboratories Private Limited (upto October 30, 2012)

Cavaal Fininvest Private Limited* (upto October 30, 2012)

PHL Holdings Private Limited (formerly Known as Piramal International Private Limited)

Piramal Healthcare Limited - Senior Employee Option Scheme*

Piramal Enterprises Limited - Trustees of Piramal Enterprises Executive Trust*

Piramal Life Sciences Limited - Senior Employees Stock Option Trust *

*There are no transactions during the year.

B. Subsidiary Companies/ Step down subsidiaries

- Located in India

PHL Fininvest Private Limited (PHL Fininvest)

Piramal Pharmaceutical Development Services Private Limited (PPDSPL)

Oxygen Bioresearch Private Limited #

PHL Capital Private Limited (PHL Capital)

PHL Finance Private Limited (PHL Finance) $

PHL Infrastructure Finance Company Private Limited (PHL Infra) $

Indiareit Fund Advisors Private Limited $ @

Piramal Systems & Technologies Private Limited (Piramal Systems)

- Located Outside India

Piramal International @

Piramal Holdings (Suisse) SA (Piramal Holdings) ''

Piramal Pharma Inc (Formerly known as NPIL Pharma Inc, USA )*

Piramal Healthcare Inc.

Piramal Investment Holdings (Canada) Inc.*

Piramal Life Sciences (UK) Limited * @

Piramal Healthcare UK Limited (Piramal Healthcare UK) *

Piramal Healthcare Pension Trustees Limited * @

Piramal Healthcare (France) Limited * @ (upto August 7, 2012)

Piramal Healthcare (Canada) Limited (Piramal Healthcare, Canada) *

Oxygen Healthcare Limited, UK (Oxygen Healthcare) *

Piramal Critical Care Italia, SPA* @

Piramal Critical Care Inc (PCCI) **

Minrad EU **@

Indiareit Investment Management Company, Mauritius $ @

Piramal Technologies SA ## @

Piramal Imaging SA * @

Piramal Imaging GmbH * @ (formerly known as "Piramal Molecular Imaging Development GmbH") Piramal Dutch Holdings N.V. (w.e.f October 17, 2012) @

Piramal Critical Care Deutschland GmbH (w.e.f April 16, 2012) *

Piramal Resources Inc. (w.e.f. May 22, 2012) **@

DRI Holdco Inc (w.e.f. June 7, 2012) **@

AMR/Arlington Medical Resources LLC (w.e.f. June 7, 2012) **@

Arlington Medical International Inc (w.e.f. June 7, 2012) **@

Biotrends Research Group LLC (w.e.f. June 7, 2012) **@

Decision Resources Inc (w.e.f. June 7, 2012) ** @

Decision Resources LLC (w.e.f. June 7, 2012) (DRL) **

Decision Resources International Inc. (w.e.f. June 7, 2012) **@

Decision Resources Group UK Limited (w.e.f. November 21, 2012) **@

DR/ Decision Resources LLC (w.e.f. June 7, 2012) **@

DR/MRG Holdings LLC (w.e.f. June 7, 2012) **@

DRG UK Holdco Limited (w.e.f. November 21, 2012) **@

Fingertip Formulary LLC (w.e.f. June 7, 2012) **@

Healthleaders LLC (w.e.f. June 7, 2012) **@

Manhattan Research LLC (w.e.f. June 7, 2012) **@

Pharmastrat LLC (w.e.f. June 7, 2012) **@

Millenium Research Group (w.e.f. June 7, 2012) **@

Sigmatic Limited (w.e.f. December 03, 2012) **@

* Held through Piramal Holdings (Suisse) SA

** Held through Piramal Healthcare Inc.

# Held through Piramal Pharmaceutical Development Services Private Limited.

$ Held through PHL Capital Private Limited.

## Held through Piramal Systems and Technologies Private Limited.

@ There are no transactions during the year with the above Companies.

C. Other related parties where common control exists *

Piramal Glass Limited (PGL)

Piramal Life Sciences Limited (PLSL)

Piramal Corporate Services Private Limited (formerly known as "Piramal Enterprises Limited") (PCSPL) Piramal Estates Private Limited (formerly known as Piramal Realty Limited) (Piramal Estates)

India Venture Advisors Private Limited* (India Venture)

Allergan India Private Limited (Allergan)

Piramal Foundation for Educational Leadership (PFEL)

Health Management and Research Institute (HMRI)

* There are no transactions during the year.

D. Investing parties with whom the Company is a JV Partner Allergan Inc.*

* There are no transactions during the year with the above company.

E. Key Management Personnel and their relatives Mr. Ajay G. Piramal

Dr. (Mrs.) Swati A. Piramal Ms. Nandini Piramal Mr. Vijay Shah

Mr. Peter De Young [husband of Ms. Nandini Piramal]

8. The Company''s significant leasing arrangements are mainly in respect of residential / office premises, computers and motor vehicles. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Other Expenses" in Note 31.

These leasing arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. The Company has placed a refundable deposit of Rs. 19.43 Crores (Previous Year Rs. 13.36 Crores) in respect of these leasing arrangements. Future lease rentals payable in respect of motor vehicles, office premises and computers on lease:

9. During the year, the Company has received Rs. 925.00 Crores (Previous Year Rs. 1,854.44 Crores) through discounting of receivables. Finance charges on the same amounting to Rs. 48.94 Crores (Previous Year Rs. 111.74 Crores) has been disclosed under "Finance Cost".

10. In view of inadequacy of profits for the year ended March 31, 2013, managerial remuneration paid to Directors amounting to Rs. 11.69 Crores requires approval from Central Government which is being sought. Pending above, the amount paid is considered as an advance to Directors (held in trust).

11. As a globally integrated healthcare Company, Piramal Enterprises is committed to original drug discovery to fight diseases, and aspire to provide novel, affordable drugs in India and across the world. The Drug Discovery and Development Unit of Piramal Enterprises had set up a state-of-the-art research centre in Goregaon, Mumbai in 2004 and embarked upon an ambitious programme to discover and develop new chemical entities (NCEs) in select therapeutic areas, including Cancer, Inflammation, Diabetes / Metabolic Disorders and Infectious Diseases. The Company has leveraged India''s bio-diversity and vast pool of knowledge in traditional medicine to source new drug leads, and pursued dedicated medicinal chemistry efforts to discover NCEs to treat unmet medical needs. The Company is also taking herbal medication to the world by applying modern science and clinical validation techniques while preserving the holistic properties of natural medicine.

The Drug Discovery and Development Unit of Piramal Enterprises has made significant progress, with an R&D pipeline having several molecules in different phases of development. After successful pre-clinical studies, the Company makes application to requisite regulatory authorities for conducting phase I/I I/I 11 studies. Currently major development programs are in phase I/ll studies. In Oncology, P1446 and P276 are in phase I/ll study. In Diabetes and Metabolic Disorder, P1736 and P2202 are in Phase II study.

12. The figures for the year ended March 31, 2012 have been regrouped, wherever necessary.


Mar 31, 2012

1. GENERAL INFORMATION

Piramal Healthcare Limited (the 'Company') is engaged mainly in pharmaceutical business including its research and development. Recently the Company has diversified into financial services business by investing through subsidiaries in Real Estate Investment Trust and other Non Banking Finance Companies. The Company has manufacturing plants in India and sells in Domestic as well as International market through independent retailers and through clearing & forwarding agent. The Company is a public limited company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

2. The scheme of demerger of New Chemical Entity (NCE) of Piramal Life Sciences Limited (PLSL) into the Company on a going concern basis was sanctioned by the Hon'ble High Court of Bombay on November 25, 2011. The said scheme became effective on December 14, 2011 (the Effective Date), with an appointed date with effect from April 01, 2011.

2.1 Pursuant to the said scheme, the Company has issued one Equity Share of Rs 2/- each of the Company for four equity shares of Rs 10/- each held in PLSL, thereby allotting 53,52,585 Equity Shares to the shareholders of PLSL amounting to Rs 1.07 Crores. The shares were issued to shareholders on December 30, 2011 being a record date.

2.2 PLSL has carried on the business and activities relating to R&D NCE Unit in trust from the Appointed Date to the Effective Date. It has incurred revenue expenditure of Rs 137.62 Crores and spent an amount of Rs 15.49 Crores on Assets (net of liabilities) from the Appointed Date to the Effective Date. These amounts have been adjusted against the amounts receivable from PLSL to the extent of Rs 155.20 Crores. Balance amount of Rs 2.09 Crores has been received by the Company from PLSL in March 2012.

2.3 As a globally integrated healthcare company, Piramal Healthcare is committed to original drug discovery to fight diseases, and aspire to provide novel, affordable drugs in India and across the world. The Drug Discovery and Development Unit of Piramal Healthcare has set up a state-of-the-art research centre in Goregaon, Mumbai in 2004 and embarked upon an ambitious programme to discover and develop new chemical entities (NCEs) in select therapeutic areas, including Cancer, Inflammation, Diabetes / Metabolic Disorders and Infectious Diseases. The company has leveraged India's bio-diversity and vast pool of knowledge in traditional medicine to source new drug leads, and pursued dedicated medicinal chemistry efforts to discover NCEs to treat unmet medical needs. The Company is also taking herbal medication to the world by applying modern science and clinical validation techniques while preserving the holistic properties of natural medicine.

The Drug Discovery and Development unit of Piramal Healthcare has made significant progress, with an R&D pipeline having several molecules in different phases of development including one molecule in phase IV.

After successful pre-clinical studies, the company makes application to requisite regulatory authorities for conducting phase I/II/III studies. The company enters into agreement with different Clinical Research Organisations (CROs) for conducting Phase I and Phase II/III studies on human volunteers. The expenses related to phase I studies are relating to design and testing of a new or improved materials, products or processes and payments made to CROs. These expenses are recognized as an intangible asset and are carried forward under Intangible assets under development until the completion of the project as it is expected that such assets will generate future economic benefits.

Currently major development programs are in phase I/II studies. In Oncology, P1446 and P276 are in phase I/II study. In Diabetes and Metabolic Disorder, P1736-05 and P2202 are in Phase II study. In Inflammation, Tinefcon has completed Phase II study, Tinefcon - Psoriasis is in Phase IV studies. In infectious disease, PP9706642 is in phase II studies. The company has the product development option whereby it can sell/transfer it at development stage or engage a partner for further development. For certain studies, on development, the company will be entitled for milestone payments.

3.1 Rights, preferences and restrictions attached to shares Equity Shares:

The company has one class of equity shares having a par value of Rs 2/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

3.2 The Company had decided to buyback 41,802,629 equity shares during the financial year 2010-11 of which 4,10,97,100 equity shares were bought back through tender offer during the financial year 2010-11 aggregating amount of Rs 2,465.83 Crores, by utilizing Securities Premium Account and General Reserve to the extent of Rs 143.33 Crores and Rs 2,314.28 Crores respectively. Capital Redemption Reserve has been created out of General Reserve for Rs 8.22 Crores being the nominal value of shares bought back in terms of Section 77AA of the Companies Act, 1956. In compliance with the Foreign Exchange Management Act, 1999, buyback of 7,05,529 equity shares belonging to one overseas corporate body was then kept in abeyance pending Reserve Bank of India (RBI) approval.

During the year, on receipt of approval from RBI the Company has bought back the remaining 7,05,529 equity shares for an aggregate amount of Rs 42.33 Crores, by utilizing General Reserve of Rs 42.19 Crores. Capital Redemption Reserve has been created out of General Reserve for Rs 0.14 Crores being the nominal value of shares bought back in compliance with Section 77AA of the Companies Act, 1956.

4.1 As per Section 117C of the Companies Act, 1956 the Company has created Debenture Redemption Reserve during the year for Secured Redeemable Non Convertible Debentures issued in earlier year.

(a) Notes on Secured Loans

1. The Non-Convertible Debentures are secured on the movable properties of the Company (excluding working capital goods) and on the immovable properties of the Company situated at Gujarat, Mahad, Pithampur, Digwal and Bangalore.

2. Satisfaction of charges in respect of certain repaid loans are still awaited.

5. CONTINGENT LIABILITIES AND COMMITMENTS

A Contingent liabilities

1 Claims against the company not acknowledged as debt:

Demand dated June 5, 1984 the Government 0.61 0.61 has asked for payment to the credit of the Drugs Prices Equalization Account, the difference between the common sale price and the retention price on production of Vitamin 'A'Palmitate (Oily Form) from January 28, 1981 to March 31, 1985 not accepted by the Company. The Company has been legally advised that the demand is untenable.

2 Guarantees issued to Government authorities 1,089.36 966.83 and limited companies including guarantees issued on behalf of subsidiaries and performance guarantees.

3 Others

i. Appeals filed in respect of disputed demands:

Income Tax

- where the Company is in appeal 420.71 213.25

- where the Department is in appeal 171.08 178.93

Sales Tax 14.37 12.87

Central / State Excise 11.05 13.10

Labour Matters 0.29 0.24 Stamp Duty 4.05 4.05

Legal Cases 7.07 7.07

ii. Bills Discounted 24.00 21.70

iii. Unexpired Letters of Credit 13.21 9.02 Note: Future cash outflows in respect of 1

and 3(i) above are determinable only on receipt of judgements/decisions pending with various forums/authorities.

B Commitments

a. Estimated amount of contracts remaining 11.57 14.51 to be executed on capital account and not

provided for;

b. Other Commitments

7,05,529 Shares kept in Abeyance for - 42.33

Buyback of shares

Commitment to invest in non-convertible 157.00 -

debentures

Loan Commitments 19.00 -

6. Income Tax

6.1 Current Tax

Provision for income tax has been made on the basis of Section 115JB of the Income Tax Act, 1961 (Minimum Alternate Tax).

6.2 MAT Credit Entitlement

Prior Period tax credit of Rs 17.70 Crores is on account of increase in MAT credit entitlement pertaining to earlier period which is now available and utilized for AY 2011-12.

6.3 Deferred Tax

The Company has acquired carried forward tax losses of Rs 771.47 Crores on account of de-merger of NCE unit of Piramal Life Sciences Limited (PLSL) into the Company. The Company has not recognized deferred tax on the same in absence of virtual certainty for availability of taxable profits in the foreseeable future.

7. Employee Benefits :

Brief description of the Plans:

The Company has various schemes for long term benefits such as Provident Fund, Superannuation, Gratuity, Leave Encashment, Pension and Long Term Service Award. In case of funded schemes, the funds are recognized by the Income tax authorities and administered through trustees. The Company's defined contribution plans are Superannuation, Employees State Insurance Fund and Employees' Pension Scheme (under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions. The Company's defined benefit plans include Provident Fund, Gratuity, Pension, Leave Encashment and Long Term Service Award.

II. Disclosures for defined benefit plans based on actuarial reports as on March 31, 2012.

The Guidance on implementing Accounting Standard (AS - 15)(Revised 2005) "Employee Benefits" issued by Accounting Standards Board (ASB) states that provident funds set up by the employers which require the interest short fall to be met by the employers needs to be treated as defined benefit plan.

In terms of Guidance Note issued by The Institute of Actuaries of India, the actuary has provided a valuation of PF liability based on the assumptions listed below and determined that there is no shortfall as at March 31, 2012.

Assumptions used in determining the present value obligation of the interest rate guarantee under the Deterministic Approach:

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

J. Expected employer's contribution for the next year is Rs.1.77 Crores (Previous Year Rs.3.18 Crores) for Gratuity and Pension.

PK. The liability for Leave Encashment (Non - Funded) as at year end is Rs.16.00 Crores. (Previous year Rs.11.49 Crores)

The expected rate of return on plan assets is based on market expectations at the beginning of the year. The rate of return on long-term government bonds is taken as reference for this purpose.

8. The Company is engaged in pharmaceutical business (mainly consisting of manufacturing and sale of own and traded bulk drugs and formulations) which is considered the Primary reportable business segment. The Secondary Segments based on geographical segmentation are considered to be Businesses outside India and within India.

9. Related Party Disclosures:

A. Controlling Companies

The Swastik Safe Deposits and Investments Limited * (w.e.f. December 30, 2011)

The Ajay G. Piramal Foundation*

Paramount Pharma Private Limited*

BMK Laboratories Private Limited Cavaal Fininvest Private Limited*

PHL Holdings Private Limited (formerly Known as Piramal International Private Limited)* (w.e.f. September 29, 2011) Piramal Management Services Private Limited* (upto September 29, 2011)

Piramal Healthcare Limited - Employee Option Scheme* (PHL ESOP)

Piramal Enterprises Limited - Trustees of Piramal Enterprises Executive Trust*

Piramal Life Sciences Limited - Senior Employees Stock Option Trust (w.e.f. December 30, 2011)*

*There are no transactions during the year with the above Companies.

B. Subsidiary Companies

PHL Fininvest Private Limited (PHL Fin invest)

Piramal Diagnostic Services Private Limited (PDSL) (upto August 20, 2010, consequent to divestment of shareholding) Piramal Pharmaceutical Development Services Private Limited (PPDSPL)

Oxygen Bio Research Private Limited #

Piramal International©

Piramal Holdings (Switzerland) Limited (Piramal Holdings)

NPIL Pharma Inc, USA *

Piramal Healthcare Inc.

Piramal Investment Holdings (Canada) Inc.*

Piramal Life Sciences (UK) Limited * @

Piramal Healthcare UK Limited (Piramal Healthcare UK) *

Piramal Healthcare Pension Trustees Limited * @

Piramal Healthcare (France) Limited * @

Piramal Healthcare (Canada) Limited (Piramal Healthcare, Canada) *

Oxygen Healthcare Limited, UK (Oxygen Healthcare) *

Piramal Critical Care Italia, SPA * @

Piramal Critical Care Inc (PCCI) **

Minrad EU (France) **@

PHL Capital Private Limited (PHL Capital) (w.e.f. May 25, 2011)

PHL Finance Private Limited (PHL Finance) (w.e.f. July 27, 2011) $

PHL Infrastructure Finance Company Private Limited (PHL Infra) (w.e.f. September 16, 2011) $@ Indiareit Fund Advisors Private Limited (w.e.f. August 12, 2011) $ @

Piramal Systems & Technologies Private Limited (Piramal Systems) (w.e.f. November 29, 2011) Indiareit Investment Management Company,Mauritius (w.e.f. March 12, 2012) $ @

Piramal Technologies SA (w.e.f. March 13, 2012) ## @

Piramal Imaging SA (w.e.f. February 6, 2012) * @

Piramal Molecular Imaging Development GmbH (w.e.f. February 27, 2012) * @

* Held through Piramal Holdings (Switzerland) Limited.

** Held through Piramal Healthcare Inc.

* Held through Piramal Pharmaceutical Development Services Private Limited.

$ Held through PHL Capital Private Limited.

## Held through Piramal Systems and Technologies Private Limited.

@ There are no transactions during the year with the above Companies.

C. Other related parties where common control exists Piramal Glass Limited (PGL)

Piramal Life Sciences Limited (PLSL)

Piramal Enterprises Limited (PEL)

Piramal Estates Private Limited (formerly known as Piramal Realty Limited) (Piramal Estates) India Venture Advisors Private Limited* (India Venture)

Allergan India Private Limited (Allergan)

Arkray Piramal Medical Private Limited (Arkray) (upto September 30, 2010)

* There are no transactions during the year with the above Company.

D. Investing parties with whom the Company is a JV Partner Allergan Inc.*

ARKRAY Inc.*

* There are no transactions during the year with the above companies.

E. Key Management Personnel and their relatives Mr. Ajay G. Piramal

Dr. (Mrs.) Swati A. Piramal

Mr. N. Santhanam (upto December 31, 2011)

Ms. Nandini Piramal

Mr. Vijay Shah (w.e.f. January 1, 2012)

b) During the year the Company has advanced interest free loans aggregating to Rs 86.00 Crores (Previous Year Rs 91.10 Crores) [maximum outstanding during the year Rs 91.10 Crores (Previous Year Rs 91.10 Crores)] to Piramal Pharmaceuticals Development Services Private Limited.

c) The Company has advanced interest-bearing loans aggregating to Rs NIL (Previous Year Rs 347.00 Crores) [maximum outstanding during the year Rs NIL (Previous Year Rs 347.00 Crores)] to Piramal Life Sciences Limited. (Refer Note 3.2)

10. The Company's significant leasing arrangements are mainly in respect of residential / office premises, computers and motor vehicles. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Other Expenses" in Note 32.

11. There are no Derivative contracts outstanding as on March 31, 2012.

12. Recoveries deducted from expenses are on account of sharing of common expenses with Subsidiaries and Group Companies.

13. Details of additions to fixed assets and Revenue Expenditure for Department of Scientific & Industrial Research (DSIR) approved research and development facilities / division of the Company for the year ended March 31, 2012 are as follows;

14. During the year, the following investments were made by the Company;

a. 340,530,000 equity shares of Rs 10/- each amounting to Rs 340.53 Crores in PHL Capital Private Limited

b. 10,000 equity shares of Rs 10/- each amounting to Rs 0.01 Crores in Piramal Systems and Technologies Private Limited

c. 45,425,328 equity shares (10.97%) in Vodafone India Limited of Rs 10/- each acquired from ETHL Communications Holdings Limited for cash consideration of Rs 5,864.37 Crores.

15. During the year, the Company has received Rs 1,854.44 Crores through discounting of receivables. Finance charges on the same amounting to Rs 111.74 Crores has been disclosed under "Finance Cost".

Note:

1. Includes products processed by third parties.

2. Stocks are net of breakages and unsaleable stock.

3. Opening stocks, purchases & closing stocks are net of physician samples.

4. In terms of Press Note No. 4 (1994 Series) dated October 25, 1994 issued by the Department of Industrial Development, Ministry of Industry, Government of India and Notification No. S.O 137 (E) dated March 1, 1999 issued by the Department of Industrial Policy and Promotion, Ministry of Industry, Government of India, industrial licensing has been abolished in respect of Bulk Drugs and Formulations.

5. The Pharmaceuticals business comprises of Manufacturing and trading of bulk drugs and formulations.

16. The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31,2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to confirm to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements except for accounting for dividend on investments in subsidiaries.

17. The figures for the year ended March 31, 2012 are not comparable to the previous year ended March 31, 2011 on account of the demerger of R&D NCE unit of PLSL into the Company (Refer Note 3).


Mar 31, 2011

1. An erstwhile Contractor had made a claim before arbitration panel for Rs.78.5 Million on Canere Actives and Fine Chemicals Private Limited (Canere) prior to its amalgamation for unsettled dues for erection and commissioning of a manufacturing facility during the year 1999 -2000. Canere has filed a counter claim of Rs. 382.6 Million on the Contractor for submitting inflated bills for work not done and for special and indirect damages caused due to negligence of the Contractor. The Arbitration panel has awarded net claim in favour of contractor resulting in total claim against Canere amounting to Rs.30.0 Million (including interest). The Company has gone into the appeal against said order in Civil Court. The Company has provided for the said liability, anticipating the event of Civil Judge upholding the orders passed by the Tribunal.

2. The Company had entered into Business Transfer Agreement (BTA) with Abbott Healthcare Private Limited (Abbott), dated May 21, 2010 for sale of its Domestic formulation business ("Business") to Abbott on slump sale basis for net cash consideration for Rupee equivalent of USD 3.8 Billion of which Rupee equivalent of USD 2.2 Billion is received and balance Rupee equivalent of USD 1.6 Billion is receivable on deferred payment basis equally over the next four years. The transaction was concluded on September 07, 2010. The Company recognised a profit of Rs.159,946.2 Million on account of sale of the Business.

3. a. During the year the Company has sold its 97.5% holding (3,859,200 Equity Shares) of Piramal Diagnostic Services P r iv ate L i m ited ( P DSP L) to Super R el i g a re L im ited (SR L) for con s ider at ion of R s. 3, 629.7 M i l l ion . T he con s ider at ion has been discharged by cash of Rs.663.5 Million, Equity Shares of Super Religare Limited of Rs.1,316.2 Million (5,069,902 Rs.10/- each at a premium of Rs.249.62/-) and 16,500 10% cumulative redeemable non-convertible debentures of Rs.100,000/- each valuing Rs.1,650.0 Million for its 97.5% share in PDSPL. In addition SRL has assumed a liability of the Companys outstanding loan of Rs.2,277.1 Million in PDSPL. The Company recognized profit of Rs.2,783.0 Million on account of sale of the investment in the subsidiary.

b. Pursuant to the terms of Shareholders Agreement dated July 13, 2010, entered between the Company and Super Religare Limited (SRL), and pursuant to Promoters of SRL exercising their call option in accordance with the said agreement, the Company has sold its entire shareholding in SRL (as per Note 6(a) above), comprising 5,069,902 Equity Shares of Rs.10/- each, for a total consideration of Rs. 1,376.4 Million. The Company has recognized profit of Rs. 60.2 Million on account of sale of the investment in SRL Equity Shares.

4. The Company decided to buyback upto 4,18,02,629 equity shares of the face-value of Rs. 2/- each at a price of Rs.600/- per share aggregating to Rs.25,081.6 Million from the shareholders of the Company through a Tender Offer, in accordance with Section 77A of the Companies Act, 1956 and the Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 as amended.

The Company has bought back 4,10,97,100 equity shares through Tender Offer for an aggregate amount of Rs.24,658.3 Million, by utilizing Share Premium Account and General Reserve to the extent of Rs.1,433.3 Million and Rs.23,142.8 Million respectively. Capital Redemption Reserve has been created out of General Reserve for Rs.82.2 Million being the nominal value of shares bought back in terms of Section 77AA of the Companies Act, 1956.

In compliance with the Foreign Exchange Management Act, 1999, extinguishment of 7,05,529 shares belonging to one overseas corporate body have been kept in abeyance pending Reserve Bank of India (RBI) approval. Consequently, on receipt of RBI approval the shares will be bought back.

5. The Company held 7,500,000 equity shares as investment in Biosyntech Inc., Canada valued at Rs.223.2 Million which has filed for bankruptcy protection under the Bankruptcy and Insolvency Act, Canada.

Pending final liquidation order from the Court, the management is of the opinion that there is permanent diminution in the value amounting to Rs.223.2 Million and hence the same has been provided in the financial statements.

6. The Board of Directors has approved to shift its manufacturing operation of Vitamins and Fine Chemicals from its Thane Unit to Digwal & Mahad unit. Consequently it has been decided to shut down Thane plant effective September 30, 2010. The total closure cost of the plant (including VRS) is Rs.407.0 Million which has been provided in the financial statements.

7. As per Section 117C of the Companies Act, 1956 the Company has created Debenture Redemption Reserve for Secured Redeemable Non Convertible Debentures issued during the previous year and reversed Debenture Redemption Reserve for Secured Redeemable Non Convertible Debentures redeemed during the year.

8. The Current tax includes capital gain tax on sale of Domestic Formulations Business and sale of Investment in PDSPL of Rs. 36,699.9 Million.

9. (a) Major components of Deferred Tax Assets and Liabilities arising are:

(b) The Company has utilised the MAT Credit Entitlement outstanding in the books of Rs. 1,213.2 Million against the tax payable for the year ended March 31, 2011 (Refer Schedule 11).

(c) Prior Period Tax of Rs. 95.2 Million is on account of MAT credit adjusted.

10. Employee Benefits :

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

Brief description of the Plans:

The Company has various schemes for long term benefits such as Provident Fund, Superannuation, Gratuity, Leave Encashment, Pension and Long Term Service Award. In case of funded schemes, the funds are recognised by the Income tax authorities and administered through trustees. The Companys defined contribution plans are Provident fund, Superannuation, Employees State Insurance Fund and Employees Pension Scheme (under the provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952). The Company has no further obligation beyond making the contributions. The Companys defined benefit plans include Gratuity, Pension, Leave Encashment and Long Term Service Award. The Guidance on implementing Accounting Standard (AS – 15)(Revised 2005) "Employee Benefits" issued by Accounting Standards Board (ASB) states that provident funds set up by the employers which require the interest short fall to be met by the employers needs to be treated as defined benefit plan. However, as at the year end no shortfall remains unprovided for. As advised by an independent actuary, it is not practical or feasible to actuarially value the liability considering that the rate of interest as notified by the Government can vary annually. Further the pattern of investment for investible funds is as prescribed by the Government. Accordingly other related disclosures in respect of provident fund have not been made.

11. a. The Company is mainly engaged in pharmaceutical business (mainly consisting of manufacturing and sale of own and traded bulk drugs and formulations) which is considered the Primary reportable business segment as per Accounting Standard (AS 17) "Segment Reporting" issued by the Institute of Chartered Accountants of India. The Secondary Segments based on geographical segmentation are considered to be Businesses outside India and within India.

b. Income from Investments represents the income earned on the temporary investments made out of proceeds from sale of the Domestic For mu l at ion Business and the holding in Piramal Diag nostic Serv ices Private Limited . These temporary investments have been made due to surplus funds available in the interim and shall be deployed in businesses in due course.

12. Related Party Disclosures, as required by Accounting Standard (AS 18) – "Related Parties Disclosures" issued by the Institute of Chartered Accountants of India are given below:

b) During the year the Company has advanced interest free loans aggregating to Rs. 911.0 Million (Previous Year Rs. 368.9 Million) [maximum outstanding during the year Rs. 911.0 Million (Previous Year Rs. 473.3 Million)] to Piramal Pharmaceuticals Development Services Private Limited.

c) The Company has advanced interest-bearing loans aggregating to Rs. 3,470.0 Million (Previous Year Rs. NIL) [maximum outstanding during the year Rs. 3,470.0 Million (Previous Year Rs. 707.5 Million)] to Piramal Life Sciences Limited.

13. The Companys significant leasing arrangements are mainly in respect of residential / office premises, computer and motor vehicles. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Other Expenses" in Schedule 18.

These leasing arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. The Company has placed a refundable deposit of Rs. 130.0 Million (Previous Year Rs. 231.7 Million) in respect of these leasing arrangements. Future lease rentals payable in respect of motor vehicles, office premises and computers on lease:

14. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

15. There are no Derivative contracts outstanding as on March 31, 2011.

16. Earning Per Share (EPS) – EPS is calculated by dividing the profit attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. Numbers used for calculating basic and diluted earnings per equity share are as stated below:

17. The Companys intangible assets, other than Computer Software, comprise of Brands and Trademarks, Copyrights,

Technical Knowhow & Business IPR, Licenses and US FDA / TGA approvals acquired by the Company over the years. No internally generated intangible assets have been recognised in the books of accounts.

18. Recoveries deducted from expenses are on account of sharing of common expenses with Associate and Subsidiaries.

19. Details of additions to fixed assets and Revenue Expenditure for Department of Scientific & Industrial Research approved research and development facilities/division of the company for the year ended March 31, 2011 are as follows;

Note:

1 . Components and Spare referred to in Para 4D(C) of Schedule VI of the Companies Act, 1956 are assumed to be those incorporated in goods produced and not those used for maintenance of Plant & Machinery.

2. The Consumption figures are ascertained on the basis of Opening Stock plus Purchases less Closing Stock and are therefore after adjustment of excesses and shortages ascertained in physical count, unserviceable items etc.

1. Includes products processed by third parties.

2. Includes production for captive consumption of Bulk Drugs 98328 kgs (PY 91850 kgs) & Vitamins 110.27 mmu (PY 138.33 mmu)

3. Stocks are net of breakages & unsaleable stock.

4. Opening stocks, production, purchases & closing stocks are net of physician samples.

5. Licensed Capacity is not indicated as Industrial Licensing for all Bulk Drugs, Intermediates and their Formulations stands abolished in terms of Press Note No.4 (1994 series) dated 25th October, 1994 issued by the Department of Industrial Development, Ministry of Industry, Government of India.

6. Excludes free samples issued.

7. Variation in quantity/value is on account of change in product mix.

8. In terms of Press Note No. 4 (1994 series) dated October 25, 1994 issued by the Department of Industrial Development, Ministry of Industry, Government of India, and Notification No. S.O 137 (E) dated March 1, 1999 issued by the Department of Industrial Policy and Promotion, Ministry of Industry, Government of India, industrial licensing has been abolished in respect of Bulk Drugs and Formulations.

9. The Pharmaceuticals business comprises of Manufacturing and trading of bulk drugs and formulations.

10. Installed capacities of the formulation factories of the Company (except where continuous processes are involved) are on a triple shift basis are certified by the Management and have not been verified by the Auditors, this being a technical matter.

20. The figures for the year ended March 31, 2010 have been regrouped, wherever necessary.

21. The figures for the year ended March 31, 2011 are not comparable to the previous year ended March 31, 2010 on account of the sale of Domestic formulation business referred in note 5 above.

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