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Notes to Accounts of Sanofi India Ltd.

Dec 31, 2014

The financial statements have been prepared to comply in all material respects with the Accounting Standards notified and the relevant provisions of the Companies Act, 1956, read with General Circular 8/2014 dated 8 April 2014, issued by the Ministry of Corporate Affairs, in respect of Section 133 of the Companies Act, 2013. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which revaluation was carried out.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

2. The tax year for the Company being the year ending March 31, the provision for taxation for the year is the aggregate of the provision made for the three months ended March 31,2014 and the provision based on the profit for the remaining nine months up to December31,2014, the ultimate liability of which will be determined on the basis of the profit for the tax year April 1,2014 toMarch31,2015.

3 Balance with customs and excise authorities includes excise and CENVAT deposit Rs. 525 Lacs (2013 : Rs. 293 Lacs) with toll manufacturers.

4 Other commitments:

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 13,142 Lacs(2013: Rs. 14,844 Lacs).

5 Contingent Liabilities:

Particulars Dec 14 Dec 13 Rupees Lacs Rupees Lacs

Tax demands in respect of which*

Tax authorities have appealed against Income tax orders 3,476 6,162 which were ruled in favour of the Company

Company''s appeals are pending before appropriate authorities/ 8,348 8,613 the Company is in process of filing an appeal with appropriate authorities

* Contingent liabilities in respect of pending tax assessments in relation to similar matters are not determinable and hence not disclosed.

6 Related parties:

i. Parties where control exists:

a) Hoechst GmbH, Germany, holding Company (holds 60.38% of the equity share capital as at December 31, 2014)

b) Sanofi S.A., France, ultimate holding Company

vii) Basis used to determine expected rate of return on assets

Expected rate of return on investments is determined based on the assessment made by the Company at the beginning of the year on the return expected on its existing portfolio since these are generally held to maturity, along with the estimated incremental investments to be made during the year.

viii) General descriptions of significant defined Plans Gratuity Plan

Gratuity is payable to all eligible employees of the Company on superannuation, death and permanent disablement in terms of provisions of the Payment of Gratuity Act or as per the Company''s Scheme whichever is more beneficial. Benefit would be paid atthe time of separation based on the last drawn base salary Pension Plan

Under the Company''s Pension scheme, certain executives are eligible for fixed pension for five years, depending on their level atthe time of retirement on superannuation, death or early retirement with the consent of the Company.

Provident Fund

The Company manages the provident fund through a Provident Fund Trust for its employees (except Staff and Workmen at Ankleshwar, Nepal unit) which are permitted under The Employees'' Provident Fund and Miscellaneous Provisions Act, 1952. The Plan envisages contribution by employer and employees and guarantees interest at the rate notified by the Provident Fund Authority. The contribution by employer and employee, together with interest, are payable at the time of separation from service or retirement.

7 Operating leases:

Future lease commitments in respect of non-cancellable operating leases:

*Cars are obtained on operating lease. The lease is for a period of five years for cars and one fo fhree years for premises and fhere is no provision for renewal. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

8 Consequent upon the decision of the Supreme Court in the matter of prices of certain bulk drugs fixed by fhe Government of India under the Drug (Prices Control) Order, 1979, the Company paid an amount of Rs. 312 lacs in 1988 being the liability determined by the Special Team appointed by the Government. However, during 1990, fresh demands aggregating to Rs. 7,810 lacs alleged to be payable into the Drug Prices Equalisation Account (DPEA) were made by the Government on account of alleged unintended benefit enjoyed by the Company. The Government has also made certain claims for applicable interest. On a Writ Petition filed by the Company in 1991, the Bombay High Court passed an order whereby the demands were to be treated as show cause notices. The High Court directed the Company and the Government to furnish relevant data to each other based on which the Government was to rework the figures. The Government did not furnish the requisite data to the Company. In 1995, a furtherdemand of Rs. 795 lacs was made by the Government.

In the meantime, a Committee was constituted by the Government to determine the liabilities of the Drug Companies. The Company filed written submissions with the Committee and contended during the personal hearing that in the absence of the Government furnishing the requisite data as directed by the Bombay High Court, the Company was notin a position to make an effectual presentation before the Committee.

In January 1999, the Company filed an Application before the Bombay High Court seeking directions to the Government to furnish the requisite data. The Application is pending. In the meantime, the Committee has deferred further hearing of the Company''s case, until the Application is heard and decided by the Bombay High Court. In any event, the Company is contesting the above demand.

9 The Board of Directors of the Company had approved, in November 2014, sale of the commercial premises comprising five floors owned by the Company in a building called Hoechsf House in Nariman Point, Mumbai for a total consideration of Rs. 13,426 lacs. The transaction for sale of four floors was completed during the quarter ended December 31, 2014 and the transaction for the remaining one floor was completed in January 2015. The net profit of Rs. 6,656 lacs (net of tax Rs. 3,427 lacs) arising from the sale of four floors has been indicated in Exceptional item in statement of profit and loss for the year.

10 Previous year''s figures have been regrouped wherever necessary to conform to this year''s classification.


Dec 31, 2013

1. The tax year for the Company being the year ending March 31, the provision for taxation for the year is the aggregate of the provision made for the three months ended March 31, 201 3 and the provision based on the profit for the remaining nine months up to December 31, 2013, the ultimate liability of which will be determined on the basis of the profit for the tax year April 1, 2013 to March 31,2014.

2. Balance with customs and excise authorities includes excise and convert deposit Rs.293 Lacs (2012: Rs. 230 Lacs) with toll manufacturers.

3 Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 14,844 Lacs (2012: Rs. 2,388 Lacs).

4. Contingent Liabilities and commitments:

Dec 2013 Dec 2012 Rupees Lacs Rupees Lacs

Tax demands in respect of which*

Tax authorities have appealed against Income tax orders 6,162 6,162 which were ruled in favor of the Company

Company''s appeals are pending before appropriate authorities/ 8,613 5,782 the Company is in process of filing an appeal with appropriate authorities

* Contingent liabilities in respect of pending tax assessments in relation to similar matters are not determinable and hence not disclosed.

5. The operations of the Company represent a single primary business segment relating to pharmaceuticals. Secondary segment reporting is performed on the basis of location of the customers. All the business assets of the Company are situated in India except assets which are directly identifiable.

6. Related parties

i. Parties where control exists:

a) Hoechst GmbH, Germany, holding Company (holds 60.38% of the equity share capital as at December 31, 2013)

b) Sanofi S.A., France, ultimate holding Company

7. Consequent upon the decision of the Supreme Court in the matter of prices of certain bulk drugs fixed by the Government of India under the Drug (Prices Control) Order, 1979, the Company paid an amount of Rs. 312 lacs in 1988 being the liability determined by the Special Team appointed by the Government. However, during 1990, fresh demands aggregating to Rs. 7,810 lacs alleged to be payable into the Drug Prices Equalisation Account (DPEA) were made by the Government on account of alleged unintended benefit enjoyed by the Company. The Government has also made certain claims for applicable interest. On a Writ Petition filed by the Company in 1991, the Bombay High Court passed an order whereby the demands were to be treated as show cause notices. The High Court directed the Company and the Government to furnish relevant data to each other based on which the Government was to rework the figures. The Government did not furnish the requisite data to the Company. In 1995, a further demand of Rs.795 lacs was made by the Government.

In the meantime, a Committee was constituted by the Government to determine the liabilities of the Drug Companies. The Company filed written submissions with the Committee and contended during the personal hearing that in the absence of the Government furnishing the requisite data as directed by the Bombay High Court, the Company was not in a position to make an effectual presentation before the Committee.

In January 1999, the Company filed an Application before the Bombay High Court seeking directions to the Government to furnish the requisite data. The Application is pending. In the meantime, the Committee has deferred further hearing of the Company''s case, until the Application is heard and decided by the Bombay High Court. In any event, the Company is contesting the above demand.

8. The exceptional item pertains to profit earned on sale of "other than trade Investments".

9. Previous year''s figures have been regrouped wherever necessary to conform to this year''s classification.


Dec 31, 2012

Basis of preparation

The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which revaluation was carried out.

The Company has changed its name from Aventis Pharma Limited to Sanofi India Limited w.e.f. May 11, 2012.

During the year ended 31st December 2012, the revised schedule VI notified under the Companies Act 1956, has become applicable to the Company, for the preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. The Company has also reclassified the previous year''s figures in accordance with the requirements applicable in current year.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

a) Shares held by holding and ultimate holding company 13,904,722 (2011: 13,904,722) equity shares are held by Hoechst GmbH, Germany, holding company and 4,865 (2011: 4,865) Equity shares are held by Sanofi S.A., France ultimate holding company

b) Terms/rights attached to equity shares

The Company has only one class of equity shares having a face value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The final Dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 December 2012, the amount of per share dividend (including interim dividend of Rs. 4 (Dec 2011: Rs. 4)) recognized as distributions to equity shareholders was Rs 33 (Dec 2011: Rs. 33).

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

As per the records of the company, including its register of shareholder/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

1. The tax year for the Company being the year ending March 31, the provision for taxation for the year is the aggregate of the provision made for the three months ended March 31, 2012 and the provision based on the profit for the remaining nine months up to December 31, 2012, the ultimate liability of which will be determined on the basis of the profit for the tax year April 1, 2012 to March 31, 2013.

2. Balance with customs and excise authorities includes excise and cenvat deposit Rs. 230 Lacs (2011: Rs. 362 Lacs) with toll manufacturers.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs: 2,388 Lacs (2011: Rs. 2,569 Lacs).

4. Contingent Liabilities and commitments:

Dec 2012 Dec 2011 Rupees Lacs Rupees Lacs

Tax demands in respect of which*

- Tax authorities have appealed against Income tax orders 6,162 4,628 which were ruled in favour of the Company

- Company''s appeals are pending before appropriate authorities 5,782 9,730

* Contingent liabilities in respect of pending tax assessments in relation to similar matters are not determinable and hence not disclosed.

5. Related parties

i. Parties where control exists:

a) Hoechst GmbH, Germany, holding Company (holds 60.38% of the equity share capital as at December 31, 2012)

b) Sanofi S.A., France, ultimate holding Company

Vii) Basis used to determine expected rate of return on assets

Expected rate of return on investments is determined based on the assessment made by the Company at the beginning of the year on the return expected on its existing portfolio since these are generally held to maturity, along with the estimated incremental investments to be made during the year.

viii) General descriptions of significant defined Plans

Gratuity Plan

Gratuity is payable to all eligible employees of the Company on superannuation, death and permanent disablement in terms of provisions of the Payment of Gratuity Act or as per the Company''s Scheme whichever is more beneficial. Benefit would be paid at the time of separation based on the last drawn base salary

Pension Plan

Under the Company''s Pension scheme, certain executives are eligible for fixed pension for five years, depending on their level at the time of retirement on superannuation, death or early retirement with the consent of the Company.

Provident Fund

The Company manages the provident fund through a Provident Fund Trust for its employees (except Staff and Workmen at Ankleshwar unit) which are permitted under The Employees'' Provident Fund and Miscellaneous Provisions Act, 1952. The Plan envisages contribution by employer and employees and guarantees interest at the rate notified by the Provident Fund Authority. The contribution by employer and employee, together with interest, are payable at the time of separation from service or retirement.

*Cars are obtained on operating lease. The lease is for a period of five years for cars and one to three years for premises and there is no provision for renewal. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

** Premises and Cars are obtained on operating lease. There is no provision for renewal. There is no escalation clause in the lease agreement. There are no restrictions imposed by leased arrangements. There are no subleases.

Uncollectible minimum lease payments receivable at the balance sheet date Rs Nil (2011: Rs. Nil)

#The Company has leased out building on operating lease. The lease term is for a period ranging from 33-60 months and thereafter not renewable. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements.

Note: Figures in brackets are for the previous year.

i) Provision for indirect taxes represents differential excise duty, sales tax, custom duty and service tax in respect of which the claims are pending before various authorities for a considerable period of time and based on management''s estimate of claims provision is made on prudent basis that possible outflow of resources may arise in future.

ii) Provision for sales returns are on account of expected date expiry and breakages returns based on historical trends

iii) Other provisions on prudent basis are towards possible outflow of resources in respect of legal cases pending against the Company or in respect of contractual obligations of the Company.

6. Consequent upon the decision of the Supreme Court in the matter of prices of certain bulk drugs fixed by the Government of India under the Drug (Prices Control) Order, 1979, the Company paid an amount of Rs. 312 lacs in 1988 being the liability determined by the Special Team appointed by the Government. However, during 1990, fresh demands aggregating to Rs. 7,810 lacs alleged to be payable into the Drug Prices Equalisation Account (DPEA) were made by the Government on account of alleged unintended benefit enjoyed by the Company. The Government has also made certain claims for applicable interest. On a Writ Petition filed by the Company in 1991, the Bombay High Court passed an order whereby the demands were to be treated as show cause notices. The High Court directed the Company and the Government to furnish relevant data to each other based on which the Government was to rework the figures. The Government did not furnish the requisite data to the Company. In 1995, a further demand of Rs. 795 lacs was made by the Government.

In the meantime, a Committee was constituted by the Government to determine the liabilities of the Drug Companies. The Company filed written submissions with the Committee and contended during the personal hearing that in the absence of the Government furnishing the requisite data as directed by the Bombay High Court, the Company was not in a position to make an effectual presentation before the Committee.

In January 1999, the Company filed an Application before the Bombay High Court seeking directions to the Government to furnish the requisite data. The Application is pending. In the meantime, the Committee has deferred further hearing of the Company''s case, until the Application is heard and decided by the Bombay High Court. In any event, the Company is contesting the above demand.

7. During the previous year, the company had entered into Business Purchase Agreement with Universal Medicare Private Limited for purchase of marketing and distribution business of branded nutraceutical formulations in India on a going concern basis via slump sale effective from November 3, 2011 for a net consideration of Rs 56,707 lacs. The excess of consideration paid over net assets recorded and intangible assets recognised amounting to Rs 12,529 lacs was accounted as Goodwill.

8. Previous year''s figures have been regrouped wherever necessary to conform to this year''s classification.


Dec 31, 2011

1. Consequent upon the decision of the Supreme Court in the matter of prices of certain bulk drugs fixed by the Government of India under the Drug (Prices Control) Order, 1979, the Company paid an amount of Rs.31,200 thousands in 1988 being the liability determined by the Special Team appointed by the Government. However, during 1990, fresh demands aggregating to Rs.781,000 thousands alleged to be payable into the Drug Prices Equalisation Account (DPEA) were made by the Government on account of alleged unintended benefit enjoyed by the Company. The Government has also made certain claims for applicable interest. On a Writ Petition filed by the Company in 1991, the Bombay High Court passed an order whereby the demands were to be treated as show cause notices. The High Court directed the Company and the Government to furnish relevant data to each other based on which the Government was to rework the figures. The Government did not furnish the requisite data to the Company. In 1995, a further demand of Rs.79,500 thousands was made by the Government.

In the meantime, a Committee was constituted by the Government to determine the liabilities of the Drug Companies. The Company filed written submissions with the Committee and contended during the personal hearing that in the absence of the Government furnishing the requisite data as directed by the Bombay High Court, the Company was notin a position to make an effectual presentation before the Committee.

In January 1999, the Company filed an Application before the Bombay High Court seeking directions to the Government to furnish the requisite data. The Application is pending. In the meantime, the Committee has deferred further hearing of the Company's case, until the Application is heard and decided by the Bombay High Court. In any event, the Company is contesting the above demand.

2. The tax year for the Company being the year ending March 31, the provision for taxation for the year is the aggregate of the provision made for the three months ended March 31,2011 and the provision based on the profit for the remaining nine months up to December 31, 2011, the ultimate liability of which will be determined on the basis of the profit for the tax year April 1,2011 to March 31, 2012.

3. Balance with customs and excise authorities includes excise and cenvat deposit Rs. 36,176 thousands (2010: Rs. 30,713 thousands) with toll manufacturers.

4. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 256,882 thousands (2010: Rs. 200,164thousands).

5. Contingent Liabilities and commitments:

Dec 11 Dec 10 Rupees '000 Rupees '000

Tax demands in respect of which*

- Tax authorities have appealed against Income tax orders which were ruled 462,819 439,949 in favour of the Company

- Company's appeals are pending before appropriate authorities 973,009 713,697

- Contingent liabilities in respect of pending tax assessments in relation to similar matters are not determinable and hence not disclosed.

6. The operations of the Company represent a single primary business segment relating to pharmaceuticals. Secondary segment reporting is performed on the basis of location of the customers. All the business assets of the Company are situated in India except assets which are directly identifiable.

7. Related parties

i. Parties where control exists:

a) Hoechst GmbH, Germany, holding Company (holds 60.38% of the equity share capital as at December31, 2011)

b) Sanofi S.A., France, ultimate holding Company

* NA- Not Applicable

# 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.

vii) Basis used to determine expected rate of return on assets

Expected rate of return on investments is determined based on the assessment made by the Company at the beginning of the year on the return expected on its existing portfolio since these are generally held to maturity, along with the estimated incremental investments to be made during the year.

viii) General descriptions of significant defined Plans Gratuity Plan

Gratuity is payable to all eligible employees of the Company on superannuation, death and permanent disablement in terms of provisions of the Payment of Gratuity Act or as per the Company's Scheme, whichever is more beneficial. Benefit would be paid at the time of separation based on the last drawn base salary.

Pension Plan

Under the Company's Pension scheme, certain executives are eligible for fixed pension for five years, depending on their level at the time of retirement on superannuation, death or early retirement with the consent of the Company.

Provident Fund

The Company manages the provident fund through a Provident Fund Trust for its employees (except Staff and Workmen at Ankleshwar unit) which are permitted under The Employees' Provident Fund and Miscellaneous Provisions Act, 1952. The Plan envisages contribution by employer and employees and guarantees interest at the rate notified by the Provident Fund Authority. The contribution by employer and employee, together with interest, are payable at the time of separation from service or retirement.

*Premises and Cars are obtained on operating lease. The lease is for a period of five years for cars and one to three years for premises and there is no provision for renewal. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

** Premises and Cars are obtained on operating lease. There is no provision for renewal. There is no escalation clause in the lease agreement. There are no restrictions imposed by leased arrangements. There are no subleases.

Uncollectible minimum lease payments receivable at the balance sheet date Rs.Nil. (2010: Rs. Nil)

#The Company has leased out building on operating lease. The lease term is for a period ranging from 33-60 months and thereafter not renewable. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements.

Note: Figures in brackets are for the previous year.

i) Provision for indirect taxes represents differential excise duty, sales tax, custom duty and service tax in respect of which the claims are pending before various authorities for a considerable period of time and based on management's estimate of claims provision is made on prudent basis that possible outflow of resources may arise in future.

ii) Other provisions on prudent basis are towards possible outflow of resources in respect of legal cases pending against the Company or in respect of contractual obligations of the Company.

iii) Provision for sales returns are on account of expected date expiry and breakages returns based on historical trends.

iv) The management intends to continue legal actions against all the claims and defend its position.

The above excludes provision for leave encashment, gratuity, long service award, pension and provident fund (to the extent actuarially valued) which are determined on the basis of actuarial valuation done on an overall basis for the Company.

* Evaluated as per Income-tax Rules, wherever applicable

Production figures include goods manufactured at third party facilities and captive consumptions.

* Includes installed capacity of granules.

# Represents produced only at third party locations

* Represents used for captive consumption

** Included as part of raw materials

Notes: 1) Figures in Brackets relate to previous year.

2) Closing Stocks are after adjustments for in-transit breakages or damages, date expired products and free issues.

3) Others represents sale of intermediates and raw materials.

4) Cost of samples (manufactured and purchased) have been included in Materials Cost under Schedule 14 of financial statements.

8. Revenue expenditure on research and development (including depreciation and amortisation) aggregating to Rs. 40,071 thousands (Previous year - Rs. 36,591) is included under relevant heads in the Profit and Loss Account.

9. Reimbursement of expenses includes expenses recovered for common shared utilities and services from Bayer Crop Science Limited and Chiron Behring Vaccines Private Limited. Further, it also includes market support and clinical trials reimbursement from fellow subsidiaries.

10. Capital work in progress as at December 31,2011 includes intangibles under development amounting to Rs. 23,463 thousands (2010: Rs. 30,042 thousands)

11. Excise duty on sales amounting to Rs. 288,638 thousands (201 0: Rs. 223,062 thousands) has been reduced from sales in Profit & Loss Account and increase of excise duty on inventories, samples, etc. amounting to Rs.25,482 thousands (2010: Rs.18,679 thousands) has been considered as (income)/expense in Schedule 14 of financial statements.

12. During the year, the company entered into Business Purchase Agreement (the 'Agreement") with Universal Medicare Private Limited ('UML') for purchase of marketing and distribution business of branded nutraceutical formulations in India on a going concern basis via slump sale effective from November 3, 2011 for a consideration of Rs.5,670,700 thousands. Subsequently due to change in net working capital, the consideration was revised to Rs.5,612,195 thousands. Accordingly, Rs.58,505 thousands receivable from UML has been included under Loans & Advances in Schedule 9 of financial statements.

13. In the previous year, the Company sold its entire shareholding of 4,900,000 Equity Shares of Rs.10 each constituting 49% of the paid-up share capital of the Joint Venture Company (JVC), Chiron Behring Vaccines Private Limited to Novartis Pharma AG, (a nominee of Novartis Vaccines and Diagnostics Inc., the Company's partner in the JVC) for a sale consideration of Rs. 1,007,507 thousands on which the Company has earned a profit of Rs. 757,375 thousand (net of tax of Rs. 201,132 thousand) which was disclosed as an exceptional item.

14. Interest others shown under other income includes interest on inter-corporate loans, income tax refunds, employee loans, etc.

15. Previous year's figures have been regrouped wherever necessary to conform to this year's classification.


Dec 31, 2009

1. Consequent upon the decision of the Supreme Court in the matter of prices of certain bulk drugs fixed by the Government of India under the Drug (Prices Control) Order, 1979, the Company paid an amount of Rs.31,200 thousands in 1988 being the liability determined by the Special Team appointed by the Government. However, during 1990, fresh demands aggregating to Rs.781,000 thousands alleged to be payable into the Drug Prices Equalisation Account (DPEA) were made by the Government on account of alleged unintended benefit enjoyed by the Company. The Government has also made certain claims for applicable interest. On a Writ Petition filed by the Company in 1991, the Bombay High Court passed an order whereby the demands were to be treated as show cause notices. The High Court directed the Company and the Government to furnish relevant data to each other based on which the Government was to rework the figures. The Government did not furnish the requisite data to the Company. In 1995, a further demand of Rs.79,500 thousands was made by the Government.

In the meantime, a Committee was constituted by the Government to determine the liabilities of the Drug Companies. The Company filed written submissions with the Committee and contended during the personal hearing that in the absence of the Government furnishing the requisite data as directed by the Bombay High Court, the Company was not in a position to make an effectual presentation before the Committee.

In January 1999, the Company filed an Application before the Bombay High Court seeking directions to the Government to furnish the requisite data. The Application is pending. In the meantime, the Committee has deferred further hearing of the Companys case, until the Application is heard and decided by the Bombay High Court. In any event, the Company is contesting the above demand.

2. The tax year for the Company being the year ending March 31, the provision for taxation for the year is the aggregate of the provision made for the three months ended March 31, 2009 and the provision based on the profit for the remaining nine months up to December 31, 2009, the ultimate liability of which will be determined on the basis of the profit for the tax year April 1, 2009 to March 31, 2010.

3. Balance with customs and excise authorities includes excise and cenvat deposit Rs. 46,967 thousands (2008: Rs. 31,412 thousands) with toll manufacturers.

4. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs: 171,519 thousands (2008: Rs. 1 29,086 thousands).

5. Contingent Liabilities and commitments: Rupees000

Dec 2009 Dec 2008

Tax demands in respect of which*:

- Tax authorities have appealed against Income tax orders which were ruled in 708,399 637,929 favour of the Company

- Companys appeals are pending before appropriate authorities 696,733 739,326

* Contingent liabilities in respect of pending tax assessments in relation to similar matters are not determinable and hence not disclosed.

6. Related parties

i. Parties where control exists:

a) Hoechst GmbH, Germany, holding Company (holds 50.1% of the equity share capital as at December 31, 2009)

b) Sanofi-Aventis S.A., France, ultimate holding Company

ii. Other related parties with whom transactions have taken place during the year: -

a) Fellow subsidiaries

Sanofi-Aventis Sp. Zoo, Poland Sanofi-aventis australia pty Limited, Australia

Aventis Pharma S.A., France Sanofi-Aventis Deutschland GmbH, Germany

sanofi-aventis Lanka Ltd., Sri Lanka Sanofi-aventis Korea Co. Ltd., Korea

(formerly known as Aventis Pharma Limited) Sanofi-Aventis Egypt SAE, Egypt

Sanofi-Aventis Groupe S.A., France Sanofi-Aventis SpA, Italy

Sanofi Pasteur S.A., France Sanofi-Aventis US LLC, USA

Francopia S.A.R.L., France Sanofi-Aventis US Inc., USA Sanofi-Aventis Recherche & D6veloppement S.A., France Sanofi-Aventis Singapore Pte. Ltd., Singapore

Sanofi Winthrop Industrie S.A., France Sanofi-Aventis gestion S.A., Switzerland

Sanofi Chimie S A, France Sanofi-Synthelabo (India) Limited, India

Aventis Pharma Limited, UK Fisons Bangladesh Limited, Bangladesh

Winthrop Pharmaceuticals UK Ltd., UK Sanofi-aventis (Malaysia) SDN BHD., Malaysia

PT Aventis Pharma (Indonesia), Indonesia Chinoin Pharmaceutical and Chemical Works Co. Ltd., Hungary

Sanofi Pasteur India Private Limited, India Sanofi-Aventis Private Co. Ltd., Hungary

b) Joint venture:

Chiron Behring Vaccines Private Limited, India

c) Key management personnel of the company for the year

Name Category of Directorship

Dr. Shailesh Ayyangar Managing Director

Mr. Madhusudan Garimela Rao Executive Director till 26th October 2009

Mr. Christophe Germain Executive Director till 31st July 2009

Mr. Shirish Chandrakant Ghoge Executive Director till 26th October 2009

Mr. Michel Dargentolle Executive Director from 27th October 2009

vii) Basis used to determine expected rate of return on assets

Expected rate of return on investments is determined based on the assessment made by the Company at the beginning of the year on the return expected on its existing portfolio since these are generally held to maturity, along with the estimated incremental investments to be made during the year.

viii) General descriptions of significant defined Plans

Gratuity Plan

Gratuity is payable to all eligible employees of the Company on superannuation, death and permanent disablement in terms of provisions of the Payment of Gratuity Act or as per the Companys Scheme whichever is more beneficial. Benefit would be paid at the time of separation based on the last drawn base salary.

Pension Plan

Under the Companys Pension scheme, certain executives are eligible for fixed pension for five years, depending on their level at the time of retirement on superannuation, death or early retirement with the consent of the Company.

Provident Fund

The Company manages the provident fund through a Provident Fund Trust for its employees (except Staff and Workmen at Ankleshwar unit) which are permitted under The Employees Provident Fund and Miscellaneous Provisions Act, 1952. The Plan envisages contribution by employer and employees and guarantees interest at the rate notified by the Provident Fund Authority. The contribution by employer and employee, together with interest, are payable at the time of separation from service or retirement.

7. Reimbursement of expenses includes expenses recovered for common shared utilities and services from Bayer Crop science Limited and Chiron Behring Vaccines Private Limited. Further, it also includes market support and clinical trials reimbursement from fellow subsidiaries.

8. Capital work in progress as at December 31, 2009 includes intangibles under development amounting to Rs. 84,450 thousands (2008: Rs. 3,511 thousands)

9. Excise duty on sales amounting to Rs. 213,826 thousands (2008: Rs. 461,749 thousands) has been reduced from sales in profit & loss account and increase/(decrease) of excise duty on inventories, sample etc. amounting to Rs. (4,215) thousands (2008: Rs. (120,871) thousands) has been considered as (income)/expense in Schedule 13 of financial statements.

10. Previous years figures have been regrouped wherever necessary to conform to this years classification.

 
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