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Notes to Accounts of Sun Pharmaceutical Industries Ltd.

Mar 31, 2015

1 DISCLOSURES RELATING TO SHARE CAPITAL

i Rights, Preferences and Restrictions attached to Equity Shares

The Equity Shares of the Company, having par value of Rs. 1 per share, rank pari passu in all respects including voting rights and entitlement to dividend.

ii Reconciliation of the number of shares and amount outstanding at the beginning and at the end of reporting period

iii 1,035,581,955 (upto the end of previous year 1,035,581,955) Equity Shares of Rs. 1 each have been allotted as fully paid up bonus shares during the period of five years immediately preceding the date at which the Balance Sheet is prepared.

iv Number of stock options against which equity shares to be issued by the Company upon vesting and exercise of those stock options by the option holders as per the relevant scheme (Refer Note 56)

v Equity shares held by each shareholder holding more than 5 percent Equity Shares (excluding share suspense account) in the Company are as follows:

2 The net Exchange Loss of Rs. 3,861.1 Million (Previous Year Loss of Rs. 1,740.0 Million) is included in Revenue from Operations, Cost of Materials Consumed, Finance Cost and Other Expenses in the Statement of Profit and Loss, as applicable.

3 DISCLOSURES UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006:

(a) An amount of Rs. 94.0 Million (Previous Year Rs. 69.7 Million) and Rs. NIL (Previous Year Rs. NIL) was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively.

(b) No interest was paid during the year.

(c) No interest is payable at the end of the year under Micro, Small and Medium Enterprises Development Act, 2006.

(d) No amount of interest was accrued and unpaid at the end of the accounting year.

The above information and that given in Note 8 "Trade Payables" regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

4 ACCOUNTING STANDARD (AS-15) ON EMPLOYEE BENEFITS

Contributions are made to Recognised Provident Fund, Family Pension Fund, ESIC and other Statutory Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund are made only by the Company. The contributions are normally based on a certain proportion of the employee's salary. Amount recognised as expense in respect of these defined contribution plans, aggregate to Rs. 377.8 Million (Previous year Rs. 118.5 Million)

5 ACCOUNTING STANDARD (AS-19) ON LEASES

(a) The Company has given certain premises and Plant and Machinery under operating lease or leave and license agreements. These are generally not non-cancellable and range between 11 months to 10 years under leave and licence, or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has received refundable interest free security deposits where applicable in accordance with the agreed terms. (b) The Company has obtained certain premises for its business operations (including furniture and fittings, therein as applicable) under operating lease or leave and license agreements. These are generally not non-cancellable and range between 11 months to 10 years under leave and licence, or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms. (c) Lease receipts / payments are recognised in the Statement of Profit and Loss under "Lease Rental and Hire Charges" & "Rent" in Note 22A and 26 respectively. (d) The future minimum lease payments in respect of non cancellable operating leases as at March 31, 2015 are as under

6 Miscellaneous Expenses includes Nil (Previous year Rs. 433.9 Million) towards Product Settlement Expense.

7 Consequent to the amalgamation of erstwhile RLL into the Company as referred in Note 48, Zenotech Laboratories Limited ('Zenotech') became an associate of the Company. The erstwhile RLL had granted certain loans to Zenotech which were outstanding and inherited by the Company. The Company has not granted any further loans to Zenotech post effective date i.e. March 24, 2015. The balance of this inherited outstanding loan is Rs. 512.0 Million. The Company is in process of evaluating various options in relation to recovery of the outstanding loans and interest thereon of Rs. 88.8 million.

8 Intangible assets consisting of trademarks, designs, technical knowhow, non compete fees and other intangible assets are stated at cost of acquisition based on their agreements and are available to the Company in perpetuity. The amortisable amount of intangible assets is arrived at based on the management's best estimates of useful lives of such assets after due consideration as regards their expected usage, the product life cycles, technical and technological obsolescence, market demand for products, competition and their expected future benefits to the Company.

9 On 11th June, 2013, Sun Pharma Global FZE (SPG), a wholly owned subsidiary has entered into settlement agreement for USD 550.0 Million [including USD 44.0 Million borne by Sun Pharmaceutical Industries Inc (formerly known as Caraco Pharmaceutical Laboratories Ltd.)] with Pfizer Inc., USA; Wyeth LLC USA and Nycomed GmbH, Germany in settlement of the claim of patent infringement litigation related to generic version of "Protonix". SPG has entered into an agreement with a third party in terms of which the said party has agreed to bear damages on account of patent infringement to the extent of USD 400.0 Million (equivalent to Rs. 24,002.0 Million) in consideration of SPG agreeing to sell them pharmaceutical products at a negotiated discounted price for a specified period. Accordingly, a provision of USD 16.5 Million (Previous year USD 438.5 Million) equivalent to Rs. 1,031.7 Million (Previous Year Rs. 26,312.2 Million) [including other related expected discount and incidental expenses of USD 16.5 Million (Previous Year USD 38.5 Million) equivalent to Rs. 1,031.7 Million (Previous Year Rs. 2,310.2 Million)] towards estimated expected liability on this account, has been accounted for and given effect in these financial statements. The above charge of USD Nil (Previous year USD 506.0 Million) equivalent to Nil (Previous Year Rs. 28,756.0 Million) has been considered as exceptional item and Rs. 1,031.7 Million (Previous Year Rs. 2,381.2 Million) has been included in miscellaneous expenses.

10 Pursuant to the Scheme of Arrangement u/s 391 to 394 of the Companies Act 1956 for amalgamation of erstwhile Ranbaxy Laboratories Ltd (RLL) with the Company as sanctioned by the Hon'ble High Court of Gujarat and Hon'ble High Court of Punjab and Haryana on March 24, 2015 (effective date) all the assets, liabilities and reserves of RLL were transferred to and vested in the Company with effect from 1st April 2014, the appointed date. RLL along with its subsidiaries and associates was operating as an integrated international pharmaceutical organisation with business encompassing the entire value chain in the production, marketing and distribution of pharmaceutical products. The scheme has accordingly been given effect to in these financial statements.

The amalgamation has been accounted for under the "Pooling of Interest Method" as prescribed under Accounting Standard 14- "Accounting for Amalgamations" (AS 14) issued by the Institute of Chartered Accountants of India and as notified under section 133 of the Companies Act 2013 read with Rule 7 of the Companies Accounts Rules 2014. Accordingly and giving effect in compliance of the Scheme of Arrangement all the assets, liabilities and reserves of RLL, now considered a division of the Company, were recorded in the books of the Company at their carrying amounts and the form as at the appointed date in the books of RLL.

On April 10, 2015, In terms of the Scheme of Arrangement 0.80 equity share of Rs. 1 each (Number of Shares 334,956,764 including 187,583 Shares held by ESOP trust) of the Company has been allotted to the shareholders of RLL for every 1 share of Rs. 5 each (Number of Shares 418,461,476 including 234,479 shares held by ESOP trust) held by them in the share capital of RLL, after cancellation of 6,967,542 shares of RLL. These shares have been considered for the purpose of calculation of earnings per share appropriately. An amount of Rs. 1,792.4 Million being the excess of the amount recorded as share capital to be issued by the Company over the amount of the share capital of erstwhile RLL has been credited to Capital Reserve.

11 RLL had early adopted Accounting Standard (AS) 30 "Financial Instruments: Recognition and Measurement" and AS 31 "Financial Instruments: Presentation" for accounting of derivative instruments which are outside the scope of Accounting Standard 11 'The Effects of Changes in Foreign Exchange Rates' such as forward contracts to hedge highly probable forecast transactions, option contracts, currency swaps, interest rate swaps etc. In order to align with the Company's policy, derivative instruments are now accounted for in accordance with the announcement issued by the Institute of Chartered Accountants of India dated March 28, 2008. On the principles of prudence as enunciated in Accounting Standard 1 "Disclosure of Accounting Policies" which requires to provide losses in respect of all outstanding derivative instruments at the balance sheet date by marking them to market. Accordingly, the unrealized MTM gain of Rs. 905.4 Million as at April 1, 2014 has been reversed and MTM gain as at March 31, 2015 amounting to Rs. 1,121.0 Million has not been recognized in these financial statements

12 Out of a MAT credit of Rs. 8,222.7 Million which was written down by the erstwhile RLL during the quarter ended December 31, 2014, an amount of Rs. 7,517.0 Million has been recognized by the Company, on a reassessment by the Management at the year-end, based on convincing evidence that the combined amalgamated entity would pay normal income tax during the specified period and would therefore be able to utilize the MAT credit so recognised. Current tax for the year also includes Rs. 284.7 Million pertaining to earlier years.

13 Pursuant to the Scheme of Amalgamation u/s 391 to 394 of the Companies Act, 1956 and u/s 52 of the Companies Act, 2013 for amalgamation of erstwhile Sun Pharma Global Inc.(Transferor Company) with the Company, with effect from January 1, 2015 (appointed date), as sanctioned by the Hon'ble High Court of Gujarat, filed with the Registrar of Companies on August 6, 2015 (effective date), all the assets, liabilities, reserves and surplus of Transferor Company were transferred to and vested in the Company without any consideration, on going concern basis. Transferor Company is a wholly owned subsidiary of the company and was engaged in the business activities of strategic and non-strategic investments and financing mainly to its group subsidiary or associate companies worldwide. The amalgamation has been accounted for under the "Pooling of Interest Method" as prescribed under Accounting Standard 14- "Accounting for Amalgamations" (AS 14) issued by the Institute of Chartered Accountants of India and as notified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies Accounts Rules 2014. The scheme has been given effect to in these financial statements and accordingly; (i) The Financial Statements for the year ended March 31, 2015 which were earlier approved by Board of Directors on May 29, 2015 and audited by the statutory auditors of the Company have been revised. (ii) All the assets, liabilities, reserves and surplus of Transferor Company were recorded in the books of the Company at their carrying amounts and in the same form as at the appointed date. Transferor Company being a wholly owned subsidiary of the Company neither any shares are required to be issued nor any consideration is paid. The Equity Share Capital, Preference Share Capital, Share application money pending allotment and securities premium account of the Transferor Company and the carrying value of investment in Equity Shares, Preference Shares and Share application money of the Transferor Company in the books of the Transferee Company stands cancelled. Accordingly the difference of Rs. 6,498.8 Million between the amount of share capital of the Transferor Company and the consideration being Nil, after adjusting for the carrying value of Investments in the books of the Company is credited to Capital Reserve.

14 With regard to tangible assets, the Company has adopted the useful life of fixed assets as indicated in Part C of Schedule II of the Companies Act, 2013 and amendment thereto vide notification dated August 29, 2014 issued by the Ministry of Corporate Affairs. Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013, the carrying value of assets, net of residual value, where the remaining useful life of the asset was determined to be Nil as on April 1, 2014, have been fully depreciated and an amount of Rs. 491.8 Million has been charged to the Statement of Profit and Loss. The depreciation expense in the Statement of Profit and Loss for the year is higher by Rs. 3,069.9 Million consequent to the change in the useful life of the assets.

15 In March 2014, the US FDA issued an import alert to the Company for its cephalosporin facility located at Karkhadi, Gujarat in India. The warning letter pertaining to this import alert was issued by the US FDA in May 2014. The letter identifies practices at the facility which are non-compliant with current Good Manufacturing Practice (CGMP) regulations. The Company remains fully committed to compliance and corrective steps are on-going to address the observations made by the US FDA. The Company is committed to working co-operatively and expeditiously with the US FDA to resolve the matters indicated in its letter. Until these matters are resolved to the satisfaction of the US FDA, the US FDA may, in the near term, withhold approval of pending new drug applications from this facility. The contribution of this facility to Company's revenues is not significant.

16 The US FDA had, on January 23, 2014, prohibited from manufacturing and distributing APIs from its Toansa manufacturing facility and finished drug products containing APIs manufactured at this facility into the USA regulated market. Consequentially, the Toansa manufacturing facility is subject to certain terms of the Consent decree of permanent injunction entered into by the Company in January 2012.

In addition, the Department of Justice of the USA ('US DOJ'), United States Attorney's Office for the District of New Jersey had also issued an administrative subpoena dated March 13, 2014 seeking information primarily related to Toansa manufacturing facility for which a Form 483 containing findings of the US FDA was issued in January 2014. The Company is fully cooperating with this information request and is in dialogue with the US DOJ for submission of the requisite information.

17 In the absence of net profits in the Company for the year ended March 31, 2015 remuneration to the Managing Director and a Whole-time Director of the Company for the year ended March 31, 2015 is in excess of the limits specified under Schedule V of the Companies Act, 2013 by Rs. 20.7 Million. In this regard the Company has made necessary applications to the Central Government for approving of the amounts of maximum remuneration payable, which includes the excess amounts already paid / provided. Consequent to giving effect to the scheme of arrangement for the merger of Specified Undertaking of Sun Pharma Global FZE into the Company effective from May 1, 2013, resulting in the absence of net profits in the Company for the previous year ended March 31, 2014 (i) remuneration to the Managing Director and the Whole-time Directors of the Company has exceeded the limits specified under Schedule XIII to the Companies Act, 1956 by Rs. 44.7 Million; and (ii) commission of Rs. 6.4 Million for the previous year ended March 31, 2014, to the Non-Executive Directors of the Company is in excess, since there is absence of net profits for the previous year under section 309(4) read with section 309(5) of the Companies Act, 1956. The Company has made necessary applications to the Central Government for the waiver of the excess remuneration and commission for the previous year ended March 31, 2014. The Company has obtained approval from the shareholders of the Company in respect of the aforesaid remuneration and commission, as applicable for the years March 31, 2014 and 2015. The approval from the Central Government of India is awaited in respect of the said applications.

18 EMPLOYEE SHARE-BASED PAYMENT PLANS

Erstwhile Ranbaxy Laboratories Limited had the Employee Stock Option Schemes ("ESOSs") for the grant of stock options to its eligible employees and Directors of the Company and of its subsidiaries. The ESOSs are used to be administered by the Compensation Committee ("Committee"). Options are used to be granted at the discretion of the Committee to the selected employees depending upon certain criterion. As at 31 March 2015, there were two ESOSs, namely, "ESOS 2005" and "ESOP 2011". ESOS II discontinued on January 17, 2015.

ESOS II provided that the grant price of options would be determined at the average of the daily closing price of the erstwhile RLL's equity shares on the NSE during a period of 26 weeks preceding the date of the grant. ESOS 2005 provided that the grant price of options would be the latest available closing price on the stock exchange on which the shares of the erstwhile RLL were listed, prior to the date of the meeting of the Committee in which the options were granted. If the shares are listed on more than one stock exchange, then the stock exchange where there is highest trading volume on the said date shall be considered. The options vested evenly over a period of five years from the date of grant. Options lapse, if they were not exercised prior to the expiry date, which was ten years from the date of grant.

During the year ended December 31, 2011, a new ESOS scheme was introduced by erstwhile RLL viz "ESOP 2011" with effect from July 01, 2011. ESOP - 2011 provides that the grant price will be the face value of the equity share i.e. Rs. 5 per share. The options vested evenly over a period of three years from the date of grant. Options lapsed, if they were not exercised prior to the expiry date, which was three months from the date of the vesting. An ESOP Trust had been formed to administer ESOP-2011 scheme. Shares issued to the ESOP Trust were allocated to the eligible employees upon exercise of stock options from time to time. As per the opinion of the Expert Advisory Committee (EAC) of The Institute of Chartered Accountants of India, as on the reporting date, the shares issued to an ESOP Trust but yet to be allocated to the employees be shown as a deduction from the Share Capital with a corresponding adjustment to the loan receivable from ESOP Trust. Accordingly, the Company has adjusted shares held by the ESOP Trust on the reporting date as a deduction from the Share Suspense Account.

Pursuant to the Scheme of Amalgamation, Sun Pharmaceutical Industries Limited ('transferee company') formulated two Employee Stock Option Schemes namely (i) SUN Employee Stock Option Scheme-2015 (ii) SUN Employee Stock Option Plan-2015 (ESOS Schemes) among other things to grant to the eligible employees of erstwhile RLL ('transferor company') stock options. Further, the number of transferee options issued shall equal to the product of number of transferor options outstanding on effectiveness of Scheme multiplied by the Share exchange ratio (0.80) and each transferee option shall have an exercise price per equity share equal to transferor option exercise price per equity shares divided by the share exchange ratio (0.80) and fractions rounded of to the next higher whole number. The terms and conditions of ESOS Schemes of Sun Pharma are not less favourable than those of ESOS Schemes of erstwhile RLL. Under the ESOS Schemes of Sun Pharma, stock options have been issued to the eligible employees of erstwhile RLL.

19 DETAILS OF LONG TERM BORROWINGS AND CURRENT MATURITIES OF LONG TERM DEBT (included under Other Current Liabilities)

(I) External Commercial Borrowings (ECBs) has 6 loans of USD 288.0 Million equivalent to Rs. 18,001.4 Million (Previous Year Nil)

[(included in long term borrowings Rs. 11,625.9 Million (Previous Year Nil) and Rs. 6,375.5 Million (Previous Year Nil) in current maturity of long term debt.)] For the loans outstanding as at March 31, 2015, the terms of repayment for borrowings are as follows:

(a) USD 100 Million equivalent to Rs. 6,250.5 Million (Previous Year Nil). The loan was taken on June 4, 2013 and is repayable on June 3, 2018.

(b) USD 50 Million equivalent to Rs. 3,125.3 Million (Previous Year Nil). The loan was taken on September 20, 2012 and is repayable on September 19, 2017.

(c) USD 30 Million equivalent to Rs. 1,875.2 Million (Previous Year Nil). The loan was taken on June 30, 2011 and is repayable in 3 equal instalments at the end of 4th year, 5th year and 6th year.

(d) USD 30 Million equivalent to Rs. 1,875.2 Million (Previous Year Nil). The loan was taken on September 9, 2010 and is repayable on September 8, 2015.

(e) USD 50 Million equivalent to Rs. 3,125.3 Million (Previous Year Nil). The loan was taken on August 12, 2010 and is repayable on August 11, 2015.

(f) USD 28 Million equivalent to Rs. 1,750.1 Million (Previous Year Nil). Loan amounting to USD 40 Million equivalent to Rs. 2,500. 2 Million (Previous Year Nil) was taken on March 25, 2011 and is repayable fully by March 24, 2017 in 3 instalments viz., 30% each of the drawn amount at the end of 4th year and 5th year each and 40% of the drawn amount at the end of the 6th year. First instalment of USD 12 Million equivalent to Rs. 747.91 Million (Previous Year Nil) has been repaid in current year. The Company has not defaulted on repayment of loan and interest during the year.

(II) Rs. 5,000 Million (Previous Year Nil) redeemable non-convertible debentures issued by erstwhile RLL on November 23, 2012 for a period of 36 months at a coupon rate of 9.20% p.a. Such debentures are secured by a pari-passu first ranking charge on the Company's specified fixed assets so as to provide a fixed asset cover of 1.25x and are listed on the National Stock Exchange.

(III) Loan of Rs. 2,500 Million (Previous Year Nil). The loan is repayable on October 2, 2015. The Company has not defaulted on repayment of loan and interest during the year.

20 In respect of any present obligation as a result of past event that could lead to a probable outflow of resources, provisions has been made, which would be required to settle the obligation. The said provisions are made as per the best estimate of the management and disclosure as per Accounting Standard (AS) 29 - Provisions, Contingent Liabilities & Contingent Assets has been given below :

21 Expenditure related to Corporate Social Responsibility as per Section 135 of the Companies Act, 2013 read with Schedule VII thereof: Rs. 11.0 Million.

22 Previous year figures are regrouped wherever necessary. In view of the amalgamation as referred in Note 48 and Note 51 the figures for the current year are not comparable with the corresponding figures of the previous year.


Mar 31, 2014

Rs. in Million As at As at 31st March 2014 31st March, 2013

1 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)

i Contingent Liabilities

A Claims against the Company not acknowledged as debts 24.0 34.6

B Guarantees:

Guarantees given by the bankers on behalf of the Company 374.2 227.4

Corporate Guarantees 86.0 149.2

C Others:

Letters of Credit for Imports 2,103.2 463.2

Liabilities Disputed-Appeals filed with respect to :

Income Tax on account of Disallowances /Additions 4,927.8 2771.2

Sales Tax on account of Rebate/ Classification 48.5 48.4

Excise Duty on account of Valuation /Cenvat Credit 93.6 322.2

ESIC Contribution on account of applicability 0.2 0.2

Drug Price Equalisation Account [DPEA] on account of demand towards 14.0 14.0 unintended benefit, including interest thereon, enjoyed by the Company

Demand by (DGFT import duty with respect to import alleged to be in 14.6 13.9 excess of entitlement as per the Advanced Licence Scheme

ii Commitments

a Estimated amount of contracts remaining to be executed on capital 6,279.2 2,647.0 account [net of advances].

b Uncalled liability on partly paid investments 0.5 0.4

c Derivative related Commitments - Forward Foreign Exchange Contracts 4,200.0 4,342.4

2 DISCLOSURES RELATING TO SHARE CAPITAL

i Rights, Preferences and Restrictions attached to Equity Shares

The Equity Shares of the Company, having par value ofRs. 1 per share, rank pari passu in all respects including voting rights and entitlement to dividend.

iii 1,035,581,955 (Previous Year Nil) Equity Shares of Rs. 1 each have been allotted as fully paid up bonus shares during the period of five years immediately preceding the date at which the Balance Sheet is prepared.

3 The net Exchange Loss of Rs. 1,740.0 Million (Previous Year Loss of Rs. 39.9 Million) is included in Revenue from Operations, Cost of Materials Consumed and Other Expenses in the Statement of Profit and Loss, as applicable.

4 DISCLOSURES UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006:

(a ) An amount of Rs. 69.7 Million (Previous YearRs. 66.2 Million) andRs. NIL (Previous YearRs. NIL) was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively.

(b) No interest was paid during the year.

(c) No interest is payable at the end of the year under Micro, Small and Medium Enterprises Development Act, 2006.

(d ) No amount of interest was accrued and unpaid at the end of the accounting year.

The above information and that given in Note 8 "Trade Payables" regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

5 ACCOUNTING STANDARD (AS-15) ON EMPLOYEE BENEFITS

Contributions are made to Recognised Provident Fund, Family Pension Fund, ESIC and other Statutory Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund are made only by the Company. The contributions are normally based on a certain proportion of the employee''s salary. Amount recognised as expense in respect of these defined contribution plans, aggregate to Rs. 118.5 Million (Previous year Rs. 94.8 Million)

In respect of Gratuity, Contributions are made to LIC''s Recognised Group Gratuity Fund Scheme based on amount demanded by LIC of India. Provision for Gratuity is based on actuarial valuation done by independent actuary as at the year end. Actuarial Valuation for Compensated Absences is done as at the year end and the provision is made as per Company rules with corresponding charge to the Statement of Profit and Loss amounting toRs. 41.9 Million (Previous YearRs. 75.5 Million) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Commitments are actuarially determined using the ''Projected Unit Credit'' method. Gains and losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.

Category of Plan Assets : The Company''s Plan Assets in respect of Gratuity are funded through the Group Scheme of the LIC of India.

6 ACCOUNTING STANDARD (AS-19) ON LEASES

(a) The Company has given certain premises for its operations and Plant and Machinery under operating lease or leave and license agreements. These are generally not non-cancellable and range between 11 months to 5 years under leave and license, or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has received refundable interest free security deposits where applicable in accordance with the agreed terms, (b) The Company has obtained certain premises for its business operations (including furniture and fittings, therein as applicable) under operating lease or leave and license agreements. These are generally not non-cancellable and range between 11 months to 5 years under leave and license, or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms, (c) Lease receipts / payments are recognised in the Statement of Profit and Loss under "Rent" in Note 22 and 26 respectively.

7 Miscellaneous Expenses includes Rs. 433.9 Million (Previous year Nil) towards Product Settlement Expense.

8 Intangible assets consisting of trademarks, designs, technical knowhow, non compete fees and other intangible assets are stated at cost of acquisition based on their agreements and are available to the Company in perpetuity. The depreciable amount of intangible assets is arrived at based on the management''s best estimates of useful lives of such assets after due consideration as regards their expected usage, the product life cycles, technical and technological obsolescence, market demand for products, competition and their expected future benefits to the Company.

9 LEGAL PROCEEDINGS

The Company and / or its subsidiaries are involved in various legal proceedings including product liability, contracts, employment claims and other regulatory matters relating to conduct of its business. The Company carries product liability insurance / is contractually indemnified by the manufacturer, in an amount it believes is sufficient for its needs. In respect of other claims, the Company believes, these claims do not constitute material litigation matters and with its meritorious defences the ultimate disposition of these matters will not have material adverse effect on its Financial Statements.

10 Current Tax is net of write back of Provision for Fringe Benefit Tax (net) of Nil (Previous Year Rs. 0.2 Million) pertaining to earlier year.

11 Pursuant to the scheme of arrangement in the nature of demerger and transfer of specified undertaking of Sun Pharma Global FZE, a wholly owned subsidiary, into the Company w.e.f 1st May, 2013, without any consideration, For the year ended 31st March, 2014 on a going concern basis consisting of all the assets and liabilities pertaining to the said undertakings, being approved by shareholders of both the companies and subsequently approved by the Hon''ble High Court of Gujarat and completion of other regulatory compliances, the scheme has been given effect to in these financial statements and accordingly:

i. The Financial Statements for the year ended 31st March 2014 which were earlier approved by Board of Directors on 29th May, 2014 and audited by the statutory auditors of the Company have been revised.

ii. All the assets and liabilities pertaining to the said undertaking of Sun Pharma Global FZE stand transferred to and vested in the Company as a going concern, as at 1st May, 2013 at carrying values as disclosed in the notes to the revised Financial Statements of Sun Pharma Global FZE on which their auditors have issued a revised audit report dated 10th August, 2014 and the resultant difference amounting to Rs. 28,109.9 Million being the excess of assets over liabilities has been credited to Capital Reserve Account.

iii. On 11th June, 2013, Sun Pharma Global FZE (SPG), a wholly owned subsidiary has entered into settlement agreement for USD 550.0 Million (including USD 44.0 Million borne by Caraco Pharmaceutical Laboratories Ltd) with Pfizer Inc., USA;Wyeth LLC USA and Nycomed GmbH, Germany in settlement of the claim of patent infringement litigation related to generic version of "Protonix". SPG has entered into an agreement with a third party in terms of which the said party has agreed to bear damages on account of patent infringement to the extent of USD 400.0 Million (equivalent toRs. 24,002.0 Million) in consideration of SPG agreeing to sell them pharmaceutical products at a negotiated discounted price for a specified period. Accordingly, a provision of USD 438.5 Million (equivalent to Rs. 26,312.2 Million) [(including other related expected discount and incidental expenses of USD 38.5 Million (equivalent to Rs. 2,310.2 Million)] towards estimated expected liability on this account, has been accounted for and given effect in these financial statements. The above charge of USD 506.0 Million (equivalent to Rs. 28,756.0 Million) has been considered as exceptional item and Rs. 2,381.2 Million has been included in miscellaneous expenses.

12 In March 2014, the US FDA issued an import alert to the Company for its cephalosporin facility located at Karkhadi, Gujarat in India. The warning letter pertaining to this import alert was issued by the US FDA in May 2014. The letter identifies practices at the facility which are non-compliant with current Good Manufacturing Practice (cGMP) regulations. The Company remains fully committed to compliance and has already initiated several corrective steps to address the observations made by the US FDA. It is committed to working co-operatively and expeditiously with the US FDA to resolve the matters indicated in its letter. Until these matters are resolved to the satisfaction of the US FDA, the US FDA may, in the near term, withhold approval of pending new drug applications from this facility.

The contribution of this facility to Company''s revenues is not significant.

13 Consequent to giving effect to the Scheme of Arrangement as referred in Note 48 above, resulting in the absence of net profits in the company for the year; (i) remuneration to the Managing Director and the Whole-time Directors of the Company for the year ended 31st March, 2014 has exceeded the limits specified under Schedule XIII to the Companies Act, 1956 byRs. 44.7 Million; and (ii) commission of Rs. 6.4 Million for the year ended 31st March, 2014 to the Non-Executive Directors of the Company has exceeded in terms of section 309(4) read with section 309(5) of the Companies Act.1956. The Company is in the process of seeking approval from the shareholders of the Company and the Central Government of India in respect of the aforesaid amounts.

14 The Company enters into Forward Exchange Contracts being derivative instruments, which are not intended for trading or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date.

15 Previous years'' figures are regrouped wherever necessary.


Mar 31, 2013

1 The net Exchange Loss of Rs. 39.9 Million (Previous Year Rs. 618.5 Million) is included under Revenue from Operations, Other Income, Cost of Materials Consumed and Other Expenses in the Statement of Profit and Loss.

2 DISCLOSURES UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006:

(a) An amount of Rs. 66.2 Million (Previous Year Rs. 39.4 Million) and Rs. NIL (Previous Year Rs. NIL) was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively.

(b) No interest was paid during the year.

(c) No interest is payable at the end of the year under Micro, Small and Medium Enterprises Development Act, 2006.

(d) No amount of interest was accrued and unpaid at the end of the accounting year.

The above information and that given in Note 8 "Trade Payables" regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

3 RELATED PARTY DISCLOSURE (AS-18) - AS PER ANNEXURE ''A''

4 ACCOUNTING STANDARD (AS-15) ON EMPLOYEE BENEFITS

Contributions are made to Recognised Provident Fund, Family Pension Fund, ESIC and other Statutory Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund are made only by the Company. The contributions are normally based on a certain proportion of the employee''s salary. Amount recognised as expense in respect of these defined contribution plans, aggregate to Rs. 94.8 Million (Previous year Rs. 132.1 Million)

In respect of Gratuity, Contributions are made to LIC''s Recognised Group Gratuity Fund Scheme based on amount demanded by LIC of India. Provision for Gratuity is based on actuarial valuation done by independent actuary as at the year end. Actuarial Valuation for Compensated Absences is done as at the year end and the provision is made as per Company rules with corresponding charge to the Statement of Profit and Loss amounting to Rs. 75.5 Million (Previous Year Rs. 52.0 Million) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Commitments are actuarially determined using the ''Projected Unit Credit'' method. Gains and losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.

Category of Plan Assets : The Company''s Plan Assets in respect of Gratuity are funded through the Group Scheme of the LIC of India.

5 ACCOUNTING STANDARD (AS-19) ON LEASES

(a) The Company has given certain premises for its operations and Plant and Machinery under operating lease or leave and license agreements. These are generally not non-cancellable and range between 11 months to 5 years under leave and licence, or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has received refundable interest free security deposits where applicable in accordance with the agreed terms. (b) The Company has obtained certain premises for its business operations (including furniture and fittings, therein as applicable) under operating lease or leave and license agreements. These are generally not non-cancellable and range between 11 months to 5 years under leave and licence, or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms. (c) Lease receipts / payments are recognised in the Statement of Profit and Loss under "Rent" in Note 22 and 26 respectively.

6 As per the best estimate of the management, provision has been made towards breakages and expiry of products return, as per Accounting Standard (AS) 29 notified under the Companies (Accounting Standards) Rules, 2006.

7 Intangible assets consisting of trademarks, designs, technical knowhow, non compete fees and other intangible assets are stated at cost of acquisition based on their agreements and are available to the Company in perpetuity. The depreciable amount of intangible assets is arrived at based on the management''s best estimates of useful lives of such assets after due consideration as regards their expected usage, the product life cycles, technical and technological obsolescence, market demand for products, competition and their expected future benefits to the Company.

8 LEGAL PROCEEDINGS

The Company and / or its subsidiaries are involved in various legal proceedings including product liability, contracts, employment claims and other regulatory matters relating to conduct of its business. The Company carries product liability insurance / is contractually indemnified by the manufacturer, in an amount it believes is sufficient for its needs. In respect of other claims, the Company believes, these claims do not constitute material litigation matters and with its meritorious defences the ultimate disposition of these matters will not have material adverse effect on its Financial Statements.

9 Current Tax is net of write back of Provision for Fringe Benefit Tax (net) of Rs. 0.2 Million (Previous Year Rs. 0.6 Million) pertaining to earlier year.

10 During the year, the Company has received Government Grant of Nil (Previous Year Rs. 2.0 Million) and Nil (Previous Year Rs. 3.0 Million) in respect of Building and Plant and Equipment respectively.

11 Pursuant to the scheme of arrangement in the nature of spin off and transfer of Domestic Formulation undertaking of the Company to its wholly owned subsidiary, Sun Pharma Laboratories Ltd (SPLL - formerly known as Sun Resins & Polymers Private Ltd.) as approved by the Hon''ble High Court of Gujarat and the Hon''ble High Court of Bombay vide their Orders dated 3rd May, 2013, on and with effect from the close of the business hours on 31st March 2012, the appointed date, all the specified assets, movable, tangible and intangible assets, without any liabilities, pertaining to the Domestic Formulation undertaking stands transferred to and /or vested in the SPLL as a going concern without consideration. The scheme has been given effect to in the financial statements for the previous year ended 31st March, 2012 and accordingly, specified intangible assets, tangible and other assets of the Domestic Formulation undertaking having book value of Rs. 2,999.2 Million have been transferred to SPLL with corresponding debit to the Statement of Profit and Loss as an Exceptional Item.

12 The Company enters into Forward Exchange Contracts being derivative instruments, which are not intended for trading or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date.

13 Previous years'' figures are regrouped wherever necessary. Further, current years'' figures are not comparable with those of the previous year in view of the spin off as stated in Note 49.


Mar 31, 2012

1 DISCLOSURES RELATING TO SHARE CAPITAL

i Rights, Preferences and Restrictions attached to Equity Shares

The Equity Shares of the Company, having par value of Rs. 1 per share, rank pari passu in all respects including voting rights and entitlement to dividend.

ii Equity Shares held by each shareholder holding more than 5 percent Equity Shares in the Company are as follows:

2 The net Exchange Loss of Rs. 618.5 Million (Previous Year Gain of Rs. 307.3 Million) is included under Revenue from Operations, Other Income, Cost of Materials Consumed and Other Expenses in the Statement of Profit and Loss.

3 DISCLOSURES UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006:

(a) An amount of Rs. 39.4 Million (Previous Year Rs. 33.0 Million) and Rs. NIL (Previous Year Rs. NIL) was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively.

(b) No interest was paid during the year.

(c) No interest is payable at the end of the year under Micro, Small and Medium Enterprises Development Act, 2006.

(d) No amount of interest was accrued and unpaid at the end of the accounting year.

The above information and that given in Note 7 "Trade Payables" regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

4 RELATED PARTY DISCLOSURE (AS-18) - AS PER ANNEXURE ''A''

5 ACCOUNTING STANDARD (AS-15) ON EMPLOYEE BENEFITS

Contributions are made to Recognised Provident Fund, Family Pension Fund, ESIC and other Statutory Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund are made only by the Company. The contributions are normally based on a certain proportion of the employee''s salary. Amount recognised as expense in respect of these defined contribution plans, aggregate to Rs. 132.1 Million (Previous year Rs. 108.1 Million)

In respect of Gratuity, Contributions are made to LIC''s Recognised Group Gratuity Fund Scheme based on amount demanded by LIC of India. Provision for Gratuity is based on actuarial valuation done by independent actuary as at the year end. Actuarial Valuation for Compensated Absences is done as at the year end and the provision is made as per Company rules with corresponding charge to the Statement of Profit and Loss amounting to Rs. 52.0 Million (Previous Year Rs. 43.2 Million) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation. Commitments are actuarially determined using the ''Projected Unit Credit'' method. Gains and losses on changes in actuarial assumptions are accounted for in the Statement of Profit and Loss.

Category of Plan Assets : The Company''s Plan Assets in respect of Gratuity are funded through the Group Scheme of the LIC of India.

6 ACCOUNTING STANDARD (AS-19) ON LEASES

(a) The company has given certain premises for its operations and Plant and Machinery under operating lease or leave and license agreements. These are generally not non-cancellable and range between 11 months to 5 years under leave and licence, or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has received refundable interest free security deposits where applicable in accordance with the agreed terms. (b) The company has obtained certain premises for its business operations (including furniture and fittings, therein as applicable) under operating lease or leave and license agreements. These are generally not non-cancellable and range between 11 months to 5 years under leave and licence, or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms. (c) Lease receipts / payments are recognised in the Statement of Profit and Loss under "Rent" in Note 21 and 25 respectively.

7 As per the best estimate of the management, provision has been made towards breakages and expiry of products return, as per Accounting Standard (AS) 29 notified under the Companies (Accounting Standards) Rules, 2006.

8 Intangible assets consisting of trademarks, designs, technical knowhow, non compete fees and other intangible assets are stated at cost of acquisition based on their agreements and are available to the Company in perpetuity. The depreciable amount of intangible assets is arrived at based on the management''s best estimates of useful lives of such assets after due consideration as regards their expected usage, the product life cycles, technical and technological obsolescence, market demand for products, competition and their expected future benefits to the Company.

9 The financial statements of the Company for the year ended 31st March, 2012 were earlier approved by the Board of Directors at their meeting held on 29th May, 2012 on which the Statutory Auditors of the Company had issued their report dated 29th May, 2012. Subsequently, the Board of Directors approved the Scheme of Arrangement in the nature of spin off, of Domestic Formulation Undertaking of the Company, comprising specified assets, without any liabilities, pertaining to the said undertaking, on a going concern basis without consideration into Sun Pharma Laboratories Limited (SPLL - formerly known as Sun Resins & Polymers Private Ltd), a wholly owned subsidiary of the Company, effective from the close of the business hours on 31st March 2012, the appointed date. The aforesaid financial statements were not laid for adoption at the annual general meeting held on 8th November, 2012 and it was resolved to approve such financial statements only after the same are revised for giving effect to the aforesaid Scheme of Arrangement. Consequent to the Orders dated 3rd May, 2013 of the Hon''ble High Court of Gujarat and the Hon''ble High Court of Bombay sanctioning the said Scheme of Arrangement, the aforesaid financial statements are revised only to give effect to the said spin off, effective from 31st March, 2012 and assets having book value of Rs. 2,999.2 Million have been transferred to SPLL with corresponding debit to the Statement of Profit and Loss as an Exceptional Item.

10 LEGAL PROCEEDINGS

The Company and / or its subsidiaries are involved in various legal proceedings including product liability, contracts, employment claims and other regulatory matters relating to conduct of its business. The Company carries product liability insurance / is contractually indemnified by the manufacturer, in an amount it believes is sufficient for its needs. In respect of other claims, the Company believes, these claims do not constitute material litigation matters and with its meritorious defences the ultimate disposition of these matters will not have material adverse effect on its Financial Statements.

11 Current Tax is net of write back of Provision for Fringe Benefit Tax (net) of Rs. 0.6 Million (Previous year Rs. Nil) pertaining to earlier year.

12 During the year, the Company has received Government Grant of Rs. 2.0 Million (Previous year Rs. Nil) and Rs. 3.0 Million (Previous year Rs. Nil) in respect of Building and Plant and Equipment respectively.

13 The Company enters into Forward Exchange Contracts being derivative instruments, which are not intended for trading or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date.

A) The following are the outstanding Forward Exchange Contracts entered into by the Company as on 31st March, 2012

B) The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below: a) Amounts receivable in foreign currency on account of the following :

14 The Revised Schedule VI has been effective from 1st April, 2011 for the presentation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous years'' figures are restated / regrouped / rearranged wherever necessary in order to conform to current years'' groupings and classifications.

 
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