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Notes to Accounts of Wockhardt Ltd.

Mar 31, 2015

1. The Company has only one class of equity shares having a par value of Rs. 5/- per share. Each holder of equity shares is entitled to one vote per share held and is entitled to dividend, if declared at the Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Subject to the approval of shareholders at the Annual General Meeting, Board of Directors have recommended dividend of 0.01% (at the rate of Rs. 0.0005 per share of Rs. 5/- each) on 475,659,941 Non-convertible Cumulative Redeemable Preference shares of Rs. 5/- each and 121,454,927 Optionally Convertible Cumulative Redeemable Preference shares of Rs. 5/- each. During the year, Board of Directors of the Company have declared and paid interim dividend of 400% i.e Rs. 20 per share on equity shares of Rs. 5/- each, absorbing Rs. 220.08 crore. The Board recommends the said interim dividend of 400% as final dividend for the financial year 2014-15.

2. Shares reserved for issue under options:

Equity shares of 1,243,500 (Previous Year - 1,365,250 ) of face value Rs. 5 each have been reserved for issue under Wockhardt Stock Option Scheme-2011.

3. Issue of Preference Shares as per Corporate Debt Restructuring (CDR) Scheme:

Pursuant to approved CDR package against various liabilities,the Company has issued preference shares of Rs. 5/- each to Banks/ Financial Institutions on the following terms and conditions:

(i) 121,454,927 (Previous Year - 121,454,927) 0.01% Optionally Convertible Cumulative Redeemable Preference shares (OCCRPS Series 2) issued bilaterally to various Banks, on the following terms and conditions:

The Preference Share holders shall have the right to convert OCCRPS Series 2 along with accumulated dividend, into fully paid equity shares of the Company, in one or more tranches, commencing July 4, 2016 till December 31,2018, at conversion price as per the then applicable SEBI formula on the date of conversion. The said shares, in case not converted, shall get redeemed along with accumulated dividend on December 31,2018 without any redemption premium.

(ii) 32,265,110 (Previous Year - 32,265,110) 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 2), redeemable at a premium of 20% of the face value along with cumulative dividend on December 31, 2018.

(iii) 283,394,831 (Previous Year - 283,394,831) 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 3) issued bilaterally to various Banks, redeemable at a redemption premium calculated at 4% p.a. on simple basis along with cumulative dividend on December 31, 2018.

(iv) 160,000,000 (Previous Year - 160,000,000 ) 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 5), redeemable at a premium of 20% of the face value along with cumulative dividend on March 31, 2019.

4. Shares held by holding company:

Nil (Previous Year - 71,116,132) Equity Shares were held by Khorakiwala Holdings and Investments Private Limited - the holding company during previous year.

160,000,000 (Previous Year - 160,000,000) Non-Convertible Cumulative Redeemable Preference shares - Series 5 are held by

Khorakiwala Holdings and Investments Private Limited- the holding company during previous year.

5. (1) The term loan of USD 90 million is secured by first charge on pari passu basis on fixed assets, present and future, located at all locations other than Units at Baddi in Himachal Pradesh and Kadaiya in Daman. This term loan carrying interest rate of 6 months USD LIBOR plus 325 BPS p.a. is repayable in 20 equal quarterly installments commencing from April 01,2017.

(2) The term loan from others is secured by first charge on pari passu basis by hypothecation of movable properties of the company (except book debts) at all locations. This term loan from others with interest rate of 2% p.a. is repayable in 10 equal half yearly installments having commenced from September 2013.

(3) Interest free sales tax deferral loan is repayable in the month of May every year. This loan is repayable by May 2019.

(4) Loans from others with interest rate of 3% p.a. is repayable in 10 equal annual installments. Loan amounting Rs. 0.95 crore (Previous Year - Rs. 1.13 crore) is repayable by June 2019 and the balance Rs. 2.97 crore (Previous Year - Rs. 3.39 crore) by October 2021.

(5) Except as mentioned above, the Company has repaid all its term loans and the release of securities is in process.

6. (1) Working capital facilities from Banks are secured by way of :

(i) First charge on pari passu basis on present and future stock of raw materials, consumables, spares, semi-finished goods, finished goods, book debts and other current assets.

(ii) Second charge on pari passu basis by way of mortgage of immovable properties and hypothecation of movable assets, both present and future, at Plot No. L-1, D - 4, Chikhalthana in Aurangabad, Plot No. 138, Ankleshwar in Gujarat, Plot No. 87A, Bhimpore in Daman and Biotech Park H-14/2, B-15/2, both at MIDC Waluj, and E- 1/1 at MIDC, Shendra, in Aurangabad, and Jagraon in Punjab.

(2) Buyers'' credit availed from State Bank of India (SBI) are secured by way of first charge on the specific assets and by way of second charge on the entire current assets and second subservient charges on all fixed assets, present and future, located at all locations other than Units at Baddi in Himachal Pradesh and Kadaiya in Daman. Buyers'' credit availed from Yes Bank and ICICI Bank are secured by way of first pari passu charge on the entire current assets and second pari passu charge on all fixed assets located at all locations other than Units at Baddi in Himachal Pradesh and Kadaiya in Daman.The security on the above facilities is yet to be created.

7. EMPLOYEES STOCK OPTION SCHEME [ESOS]

The Compensation Committee of the Board of Directors has, under Wockhardt Stock Option Scheme -2011 (''the Scheme'') granted 60,000 options @ Rs. 397/- per option (Grant 1), another 60,000 options @ Rs. 365/- per option (Grant 2), 1,420,000 options @ Rs. 5/- per option (Grant 3), 350,000 options @ Rs. 5/- per option (Grant 4), 8,500 options @ Rs. 5/- per option (Grant 5), and 200,000 options @ Rs. 5/- per option (Grant 6) in accordance with the provisions of Securities and Exchange Board of India (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, to the selected employees (including Independent Directors) of the Company and its subsidiaries. The method of settlement is by issue of equity shares to the selected employees (including Independent Directors) who have exercised the options. The scheme shall be administered by the compensation committee of Board of directors.

The options issued vests in periods ranging 1 year and 7 years 3 months from the date of grant, and can be exercised during such period not exceeding 7 years.

8. AMALGAMATION OF WHOLLY OWNED SUBSIDIARY COMPANIES

Pursuant to the scheme of amalgamation (''the scheme'') of Wockhardt Biopharm Limited and Vinton Healthcare Limited, the unlisted wholly owned subsidiaries of the Company, with the Company under sections 391 to 394 of the Companies Act, 1956 sanctioned by the Hon''ble High Court, Bombay vide its order dated March 20, 2015, all assets and liabilities (excluding share capital) of the aforesaid subsidiaries were transferred in the Company effective April 01, 2014 (''the Appointed Date''). Accordingly the Scheme has been given effect to in these financial statements.

The main objects of Wockhardt Biopharm Limited include manufacturing, marketing, trading, packing of biotechnology products, pharmaceuticals and chemicals and, of Vinton Healthcare Limited include manufacturing, trading, packing, distribution of foods and other nutritional products. However, recently there were no operations in these subsidiaries.

The amalgamation has been accounted for under the ''Pooling of Interest'' method as prescribed by the Accounting Standard 14, ''Accounting for Amalgamations''. Accordingly the accounting treatment has been given as under:

a) The assets and liabilities as at April 01, 2014 amounting to Rs. 26.51 crore and Rs. 3.24 crore respectively were incorporated in the financial statement of the Company at its book value.

b) 10,000,000 equity shares and 982,819 7% Non-cumulative Redeemable Preference shares of Vinton Healthcare Limited, and 18,000,000 equity shares of Wockhardt Biopharm Limited, held as investment by the Company stands cancelled and the difference between the book value and face value of such shares amounting Rs. 27.11 crore has been credited to Capital Reserve.

c) Outstanding inter corporate balance as on April 01, 2014 amounting Rs. 9.40 crore has been cancelled.

d) Debit balances in the Statement of Profit and Loss as on April 01, 2014 amounting Rs. 5.16 crore of the above subsidiaries have been incorporated under ''Surplus/(Deficit) in Statement of Profit and Loss'' in Note 3 ''Reserves and Surplus''.

In view of the above amalgamation, the figures for the current year are not strictly comparable to those of the previous year.

9. Donations for Political purpose made during the year and included in Note 25 under "Miscellaneous expenses":

a) Bhartiya Janata Party Rs. 3.00 crore

b) Maharashtra Pradesh Congress Committee Rs. 2.00 crore

10. Corporate social responsibility (CSR) amount voluntarily spent (and paid fully) during the year by way of contribution to Wockhardt Foundation and included in Note 25 under "Miscellaneous expenses" being donation and other expenses amounts to Rs. 1.21 crore. (Also Refer note 44). No amount has been incurred by the Company towards construction/acquisition of any asset.

11. RELATED PARTY DISCLOSURES

As per Accounting Standard 18, the disclosure of transactions with the related parties are given below:

(a) Parties where control exists

Subsidiary Companies (including step down subsidiaries)

1 Wockhardt UK Holdings Limited (formerly, Wockhardt UK Limited)

2 CP Pharmaceuticals Limited

3 CP Pharma (Schweiz) AG

4 Wallis Group Limited

5 The Wallis Laboratory Limited

6 Wockhardt Farmaceutica Do Brasil Ltda

7 Wallis Licensing Limited

8 Wockhardt Biopharm Limited (amalgamated with the Company effective April 01,2014)

9 Vinton Healthcare Limited (amalgamated with the Company effective April 01,2014)

10 Wockhardt Infrastructure Development Limited

11 Z&Z Services GmbH (formerly, esparma GmbH)

12 Wockhardt Europe Limited

13 Wockhardt Nigeria Limited

14 Wockhardt USA LLC w.e.f. October 3, 2008 (formerly, Wockhardt USA Inc.)

15 Wockhardt UK Limited

16 Wockpharma Ireland Limited

17 Pinewood Laboratories Limited

18 Pinewood Healthcare Limited (w.e.f. November 23, 2012)

19 Nonash Limited

20 Laboratoires Negma S.A.S. (formerly, Negma Lerads S.A.S.)

21 Wockhardt France (Holdings) S.A.S.

22 Wockhardt Holding Corp.

23 Morton Grove Pharmaceuticals, Inc.

24 MGP Inc.

25 Laboratoires Pharma 2000 S.A.S. (formerly, Pharma 2000 S.A.S.)

26 Niverpharma S.A.S.

27 Negma Beneulex S.A.

28 Phytex S.A.S.

29 Wockhardt Farmaceutica SA DE CV. (w.e.f. November 9, 2012)

30 Wockhardt Services SA DE CV. (w.e.f. June 21, 2012)

31 Wockhardt Bio AG (formerly Wockhardt EU Operations (Swiss) AG)

Holding Company

Khorakiwala Holdings and Investments Private Limited (upto July 07, 2014)

Associate Company

Swiss Biosciences AG (under liquidation)

Other parties exercising control

Humuza Consultants (w.e.f. July 08, 2014)*

Habil Khorakiwala Trust (w.e.f. July 08, 2014)*

* Themisto Trustee Company Private Limited holds shares in the Company in its capacity as the trustee of Habil Khorakiwala Trust which in turn holds these shares in its capacity as the partner of the partnership firm Humuza Consultants.

(b) Other related party relationships where transactions have taken place during the year Enterprises over which Key Managerial Personnel exercise significant influence

Palanpur Holdings and Investments Private Limited

Khorakiwala Holdings and Investments Private Limited (w.e.f. July 08, 2014)

Dartmour Holdings Private Limited

Wockhardt Hospitals Limited

Amalthea Consultants (w.e.f. July 08, 2014)

Lysithea Consultants (w.e.f. July 08, 2014)

HNZ Consultants (w.e.f. July 08, 2014)

Merind Limited Wockhardt Foundation

Carol Info Services Limited (w.e.f. July 08, 2014)

Fellow Subsidiary

Carol Info Services Limited (upto July 07, 2014)

Key managerial personnel Dr. H. F. Khorakiwala, Chairman Dr. Huzaifa Khorakiwala, Executive Director Dr. Murtaza Khorakiwala, Managing Director Relatives of Key managerial personnel N. H. Khorakiwala

12. CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for)

(a) Demands by Central Excise authorities in respect of Classification/ Valuation/Cenvat Credit related disputes; stay orders have been obtained by the Company in case of demands which have been confirmed Rs. 30.45 crore (Previous Year - Rs. 9.22 crore).

(b) Demand by Income tax authorities Rs. 70.00 crore (Previous Year - Rs. 76.01 crore) disputed by the Company.

(c) Demand by Sales Tax authorities Rs. 12.60 crore (Previous Year - Rs. 0.57 crore) disputed by the Company (including Rs. 1.33 crore on account of amalgamation).

(d) Claims against Company not acknowledged as debt in respect of local body tax Rs. Nil (Previous Year - Rs. 10.28 crore).

(e) Claims against Company not acknowledged as debt in respect of electricity expense Rs. 4.65 crore (Previous Year - Rs. 4.05 crore).

(f) Demand from National Pharmaceutical Pricing Authority (NPPA) in respect of overcharging of certain products disputed by the Company Rs. 7.30 crore (Previous Year - Rs. Nil).

(g) Corporate Guarantee given on behalf of a subsidiary in respect of credit facilities amounts to Rs. 449.22 crore (Previous Year - Rs. 805.64 crore)

This comprises corporate guarantee given by the Company and Wockhardt UK Holdings Limited against loan of USD 71.88 million (USD 134.38 million) amounting to Rs. 449.22 crore (Previous Year - Rs. 805.64 crore) taken by Wockhardt Bio AG in earlier years. The said loan has been fully rescheduled and all lenders have acceded to the reschedulement.

This loan availed by the subsidiary is secured by:

(i) first ranking pari passu charge on immovable properties of Wockhardt Limited situated at Kadaiya in Daman and Baddi in Himachal Pradesh.

(ii) second ranking pari passu charge by way of hypothecation on all the current assets, movables, inventories and book debts of Wockhardt Limited.

Further, out of loan of Rs. 449.22 crore (Previous Year - Rs. 805.64 crore), security has been created in respect of term loan of USD 29.04 million (Previous Year - USD 54.30 million) amounting to Rs. 181.48 crore (Previous Year - Rs. 325.48 crore), in addition to aforesaid Security as follows:

(i) subservient charge on movable properties of Wockhardt Limited situated at Bhimpore in Daman, Ankleshwar, L-1, D-4, Chikhalthana and Biotech Park, Waluj in Aurangabad (except book debts and current assets).

(ii) subservient charge on movable properties of Wockhardt Infrastructure Development Limited situated at Shendra in Aurangabad (WIDL).

Also, an application has been made to Reserve Bank of India for obtaining its approval to create a subservient charge on fixed assets of WIDL and of the Company situated at all locations except Baddi in Himachal Pradesh and Kadaiya in Daman.

(h) Comfort to extend financial support, subject to certain approvals, to one of its subsidiaries towards credit facilities availed by the subsidiary, the impact of which is currently not ascertainable.

(i) The Company is involved in other disputes, lawsuits, claims, inquires and proceedings, including commercial matters that arise from time to time in the ordinary course of business. The Company believes that there are no such pending matters that are expected to have any material adverse effect on its financial statements in any given accounting period.

(j) Bank guarantees issued against various liabilities/obligations Rs. 31.72 crore (Previous Year - Rs. 20.92 crore).

(k) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 113.47 crore (Previous Year - Rs. 146.35 crore) after deducting advance on capital account of Rs. 17.37 crore (Previous Year - Rs. 20.94 crore).

13. The Company has initiated a number of improvement measures to ensure creation of a robust, sustainable and compliant operating framework on a consistent basis. As an outcome of completion of GMP remediation submitted by the Company during the year, US FDA conducted inspection at L1-Chikalthana site and at Waluj manufacturing facility in Aurangabad and Company received Form 483 deficiencies. The Company is in the process of implementing remedial measures. During the year, UK MHRA carried out inspection of Company''s manufacturing unit at Aurangabad and has lifted Statement of Non-Compliance (SNC). A Good Manufacturing Practice (GMP) certificate remains in force that allows products to be supplied to the UK market. Additionally, UK MHRA has restored the EU GMP certification of the Company''s potent product facility at Kadaiya.

During the year, the Company for two of its drugs WCK 771 and WCK 2349 received coveted Qualified Infectious Disease Product (QIDP) status from US FDA for its New Drug Discovery program in Anti-Infective research. QIDP status is granted to drugs which act against pathogens which have a high degree of unmet need in their treatment and are identified by Centre for Disease Control (a U.S. Government health and safety body). QIDP status allows for fast track review of the drug application by US FDA paving way for an early launch. QIDP status also grants a five year extensions to the drug patents in USA. This is the first instance for an Indian Pharmaceutical Company receiving a QIDP status.

14. Premium on redemption of preference shares will be provided for before redemption of the preference shares.

15. Pursuant to the amalgamation of Vinton Healthcare Limited and Wockhardt Biopharm Limited (Refer note 41), the figures of the current year are not strictly comparable to those of the previous year. Further, previous year figures have been regrouped where necessary to conform to current year''s classification.


Mar 31, 2014

1. INFORMATION PURSUANT TO CLAUSE 32 OF LISTING AGREEMENTS WITH STOCK EXCHANGES:

Loans and advances to subsidiaries in the nature of loans comprises of amounts recoverable from Wockhardt Infrastructure Development Limited" 9.88 crore (Previous Year - Rs. 52.68 crore) [maximum amount outstanding during the year Rs. 54.20 crore (Previous Year - Rs. 56.19crore)], Wockhardt Bio AG Rs. 0.25 crore (Previous Year - Rs. 0.21 crore) [maximum outstanding during the year Rs. 0.26 crore (Previous Year - Rs. 30.63 crore)], Wockhardt Holding Corp Rs. 68.95 crore (Previous Year - Rs. 62.42 crore) [maximum outstanding during the year Rs. 76.26 crore (Previous Year - '' 64.49 crore)].

Out of the above loans, interest on loan given to Wockhardt Holding Corp and Wockhardt Bio AG are based on spread plus LIBOR, as applicable. Hence, it is lower than the interest rate specified u/s 372A of the Companies Act,1956.

2. EXCEPTIONAL ITEMS

(i) During previous year, the management had reassessed the recognition criteria for capitalization of development cost based on its most recent experience of regulatory approvals, clinical trials, economic uncertainties, industry experience and business plans. This review indicated that the recognition criteria may not be met till the time regulatory approvals are received. Hence, the Company had revised its recognition criteria for developments costs and auditors had relied on the management judgment being technical in nature. Accordingly, the Company:

(a) had expensed off the carried forward cost of products under development as at June 30, 2012, amounting to Rs. 319.05 crore, to the Statement of Profit and Loss under the head ''Exceptional Item''during the previous year.

(b) had charged to the Statement of Profit and Loss, product development expenditure incurred during the period July 2012 to March 2013 amounting to Rs. 121.05 crore under respective expense heads.

(ii) Exceptional items for the year ended March 31,2013 also includes profit on sale of Nutrition business Rs. 607.23 crore (also Refer note 42)

3. SEGMENTAL REPORTING

As the Company''s annual report contains both Consolidated and Standalone Financial Statements, segmental information is presented only on the basis of Consolidated Financial Statement. (Refer note 32 of Consolidated Financial Statements).

4. EMPLOYEES STOCK OPTION SCHEME [ESOS]

The Compensation Committee of the Board of directors has, under Wockhardt Stock Option Scheme - 2011 (''the Scheme'') granted 60,000 options @ Rs. 397/- per option (Grant 1), another 60,000 options @ Rs. 365/- per option (Grant 2), 1,420,000 options @ Rs. 5/- per option (Grant 3), 350,000 options @ Rs. 5/- per option (Grant 4) and 8,500 options @ Rs. 5/- per option (Grant 5) in accordance with the provisions of Securities and Exchange Board of India (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, to the selected employees (including Independent Directors) of the Company and its subsidiaries. The method of settlement is by issue of equity shares to the selected employees (including Independent Directors) who have accepted the options. The scheme shall be administered by the compensation committee of Board of directors.

The options issued vests in periods ranging 1 year and 7 years 3 months from the date of grant, and can be exercised during such period not exceeding 7 years.

5. DISCONTINUED OPERATIONS

Pursuant to Business Transfer Agreement (BTA) dated August 2, 2011, the divestment of Nutrition business on a slump sale basis to Danone was completed on July 26, 2012. During the previous year, the Company has received the entire consideration of Rs. 648.31 crore (including purchase price adjustment) on the aforesaid divestment. The profit on account of the aforesaid transaction amounting to 607.23 crore has been shown as ''exceptional item!

6. RELATED PARTY DISCLOSURES (a) Parties where control exists

Subsidiary Companies (including step down subsidiaries)

1 Wockhardt UK Holdings Limited (formerly, Wockhardt UK Limited)

2 CP Pharmaceuticals Limited

3 CP Pharma (Schweiz) AG

4 Wallis Group Limited

5 The Wallis Laboratory Limited

6 Wockhardt Farmaceutica Do Brasil Ltda

7 Wallis Licensing Limited

8 Wockhardt Biopharm Limited

9 Vinton Healthcare Limited

10 Wockhardt Infrastructure Development Limited

11 Z&Z Services GmbH (formerly, esparma GmbH)

12 Wockhardt Europe Limited

13 Wockhardt Nigeria Limited

14 Wockhardt USA LLC w.e.f. October 3, 2008 (formerly, Wockhardt USA Inc.)

15 Wockhardt UK Limited

16 Wockhardt Cyprus Limited (Sold on September 30, 2013)

17 Wockpharma Ireland Limited

18 Pinewood Laboratories Limited

19 Pinewood Healthcare Limited (w.e.f. November 23, 2012)

20 Nonash Limited

21 Laboratoires Negma S.A.S. (formerly, Negma Lerads S.A.S.)

22 Wockhardt France (Holdings) S.A.S.

23 Esparma AG. (Sold on September 30, 2013)

24 Wockhardt Holding Corp.

25 Morton Grove Pharmaceuticals, Inc.

26 MGP Inc.

27 Laboratoires Pharma 2000 S.A.S. (formerly, Pharma 2000 S.A.S.).

28 Niverpharma S.A.S.

29 Negma Beneulex S.A.

30 Phytex S.A.S.

31 Wockhardt Farmaceutica SA DE CV. (w.e.f. November 9, 2012)

32 Wockhardt Services SA DE CV. (w.e.f. June 21, 2012)

33 Wockhardt Bio AG (formerly Wockhardt EU Operations (Swiss) AG)

Holding Company

Khorakiwala Holdings and Investments Private Limited

Associate Company

Swiss Biosciences AG

(b) Other related party relationships where transactions have taken place during the year Enterprises over which Key Managerial Personnel exercise significant infuence

Palanpur Holdings and Investments Private Limited Dartmour Holdings Private Limited Wockhardt Hospitals Limited Merind Limited Wockhardt Foundation

Fellow Subsidiary

Carol Info Services Limited

Key managerial personnel

Dr. H. F. Khorakiwala, Chairman

Dr. Huzaifa Khorakiwala, Executive Director

Dr. Murtaza Khorakiwala, Managing Director

Relatives of Key managerial personnel

N. H. Khorakiwala

7. The Company has taken ofce premises on operating lease. These leave and license agreements are generally for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. There are no restrictions imposed by lease arrangements. There are no subleases.

8. CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for)

(a) Demands by Central Excise authorities in respect of Classification/Valuation/Cenvat credit related disputes; stay orders have been obtained by the Company in case of demands which have been confirmed Rs. 9.22 crore (Previous Year - Rs. 9.62 crore). Further, demand from State excise authorities for excise duty on certain inputs disputed by the Company Rs. Nil (Previous Year -Rs. 12.55 crore).

(b) Demand by Income tax authorities Rs. 76.01 crore (Previous Year - Rs. 47.30 crore) disputed by the Company.

(c) Demand by Sales Tax authorities Rs. 0.57 crore (Previous Year - Rs. Nil) disputed by the Company.

(d) Corporate Guarantee given on behalf of various subsidiaries in respect of credit facilities amounts to Rs. 805.64 crore (Previous Year -Rs. 1,068.54 crore).

This comprises corporate guarantee given by the Company and Wockhardt UK Holdings Limited against loan of USD 134.38 million (Previous Year - USD 196.88 million) amounting to Rs. 805.64 crore (Previous Year - Rs. 1,068.54 crore) taken by Wockhardt Bio AG in earlier years. The said loan has been fully rescheduled and lenders aggregating 100% (Previous Year - 97.95%) of the loan value have acceded to the reschedulement.

This loan availed by the subsidiary is secured by:

(i) first ranking pari passu charge on immovable properties of Wockhardt Limited situated at Kadaiya in Daman and Baddi in Himachal Pradesh.

(ii) second ranking pari passu charge by way of hypothecation on all the current assets, movables, inventories and book debts of Wockhardt Limited

Further, out of loan of Rs. 805.64 crore (Previous Year - Rs. 1,068.54 crore), term loan of USD 54.30 million (Previous Year - 79.54 million) amounting to Rs. 325.48 crore (Previous Year - Rs. 431.69 crore), in addition to aforesaid security, is also secured by:

(i) subservient charge on movable properties of Wockhardt Limited situated at Bhimpore in Daman, Ankleshwar, L-1, D-4, Chikhalthana and Biotech Park, Waluj in Aurangabad (except book debts and current assets).

(ii) subservient charge on movable properties of Wockhardt Infrastructure Development Limited situated at Shendra in Aurangabad.

Also, the Company has made an application to Reserve Bank of India for obtaining its approval to create a subservient charge on fixed assets of the Company situated at all locations except Baddi in Himachal Pradesh and Kadaiya in Daman.

(e) Comfort to extend financial support, subject to certain approvals, to one of its subsidiaries towards credit facilities availed by the subsidiary, the impact of which is currently not ascertainable.

(f) Claims against Company not acknowledged as debt in respect of local body tax Rs. 10.28 crore (Previous Year - Rs. 10.28 crore).

(g) The Group is involved in other disputes, lawsuits, claims, inquires and proceedings, including commercial matters that arise from time to time in the ordinary course of business. The group believes that there are no such pending matters that are expected to have any material adverse efect on its financial statements in any given accounting period.

(h) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 146.35 crore (Previous Year - 116.82 crore) after deducting advance on capital account of Rs. 20.94 crore (Previous Year - Rs. 40.87 crore).

9. During the year, the Company has received regulatory alerts from USFDA on two of its manufacturing units located in Aurangabad. The said action did not affect the sale of inventories which were already lying in USA, thereby assuring no quality concerns on the products. Further, USFDA has also excluded 6 products and the supply of the same continues to the US market.

The Company has also received restricted GMP certifcate from the UKMHRA for its manufacturing facilities at Aurangabad & Daman. The UKMHRA has however, allowed the Company to manufacture and supply 21 products. The UKMHRA had also initiated drug recalls for the products manufactured at two Aurangabad facilities, but has categorically mentioned that the recalls were only precautionary and there was no risk to patient safety.

The above has resulted in a decline in the sales and Profitability during the year and inventory write of amounting to Rs. 69.33 crore has been charged to Wockhardt Bio AG.

During the year, the Company has reviewed its technical operations and as a result of the same has directed its energies into strengthening and upgrading its Quality & Manufacturing operations. The Company has initiated a number of improvement measures to ensure creation of a robust, sustainable and compliant operating framework on a consistent basis. Some of these measures include restructuring and strengthening Quality & Manufacturing functions, initiating extensive training programs for upgrading competencies and improving information system security and integrity.

10. Premium on redemption of preference shares will be provided for before redemption of the preference shares. Previous year figures have been regrouped where necessary to conform to current year''s classification.


Mar 31, 2013

1. INFORMATION PURSUANT TO CLAUSE 32 OF LISTING AGREEMENTS WITH STOCK EXCHANGES:

Loans and advances to subsidiaries in the nature of loans comprises of amounts recoverable from Wockhardt Infrastructure Development Limited Rs. 52.68 crore (Previous Year - Rs. 52.63 crore) [maximum amount outstanding during the year Rs. 56.19 crore (Previous Year - Rs. 57.95 crore)], Wockhardt Bio AG Rs. 0.21 crore (Previous Year - Rs. 27.78 crore) [maximum outstanding during the yearRs. 30.63 crore (Previous Year - Rs. 29.00 crore)], Wockhardt Holding Corp. Rs. 62.42 crore (Previous Year - Rs. 58.45 crore) [maximum outstanding during the year Rs. 64.49 crore (Previous Year -Rs. 61.04 crore)].

Out of the above loans, interest on loan given to Wockhardt Holding Corp. and Wockhardt Bio AG are based on spread plus LIBOR, as applicable. Hence, it is lower than the interest rate specified u/s 372A ofthe Companies Act, 1956.

2. EXCEPTIONAL ITEMS

(i) Hitherto, the Company had recognised product development cost as an intangible asset as and when incurred. The management has reassessed the recognition criteria for capitalization of development cost based on its most recent experience of regulatory approvals, clinical trials, economic uncertainties, industry experience and business plans. This review indicates that the recognition criteria may not be met till the time regulatory approvals are received. Hence, the Company has revised its recognition criteria for developments costs and auditors have relied on the management judgment being technical in nature. Accordingly, the Company:

(a) has expensed off the carried forward cost of products under development as at June 30, 2012, amounting to Rs. 319.05 crore, to the Statement of Profit and Loss under the head ''Exceptional Item''.

(b) has charged to the Statement of Profit and Loss, product development expenditure incurred during the period July 2012 to March 2013 amounting to Rs. 121.05 crore under respective expense heads.

(ii) Exceptional items for the year ended March 31, 2013 also includes profit on sale of Nutrition business Rs. 607.23 crore (also refer note 42).

(iii) Exceptional items of previous year mainly comprises of settlement of loan/disputed derivative liabilities Rs. 55.30 crore and provision for recompense Rs. 105.56 crore for period April 15, 2009 to March 31, 2011.

Recompense provision made in previous year has been reclassified as interest Rs. 54.44 crore being interest pertaining to Financial Year 2011-12 and balance provision of Rs. 105.56 crore has been considered as exceptional item being pertaining to period earlier to Financial Year 2011-12.

3. SEGMENTAL REPORTING

As the Company''s annual report contains both Consolidated and Standalone Financial Statements, segmental information is presented only on the basis of Consolidated Financial Statement. (Refer note 31 of Consolidated Financial Statements).

4. EMPLOYEES STOCK OPTION SCHEME [ESOS]

The Compensation Committee of the Board of directors has, under Wockhardt Stock Option Scheme -2011 (''the Scheme'') approved the grant of Stock Options convertible into equity shares ofRs. 5/- each as per the following:

(a) at its meeting held on November 12, 2011, 1,540,000 Stock Options convertible into 1,540,000 equity shares.

(b) at its meeting held on June 27, 2012, 350,000 Stock Options convertible into 350,000 equity shares.

(c) at its meeting held on March 7, 2013, 8,500 Stock Options convertible into 8,500 equity shares (Options granted to Independent Directors).

As per the Scheme, the Compensation committee has granted 60,000 options @ Rs. 397/- per option (Grant 1), another 60,000 options @ Rs. 365/- per option (Grant 2), 1,420,000 options @ Rs. 5/- per option (Grant 3), 350,000 options @ Rs. 5/- per option (Grant 4) and 8,500 options @ Rs. 5/- per option (Grant 5) in accordance with the provisions of Securities and Exchange Board of India (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, to the selected employees (including Independent Directors) of the Company and its subsidiaries. The method of settlement is by issue of equity shares to the selected employees (including Independent Directors) who have accepted the options.

5. DISCONTINUED OPERATIONS

Pursuant to Business Transfer Agreement (BTA) dated August 2, 2011, the divestment of Nutrition business on a slump sale basis to Danone was completed on July 26, 2012. The Company has received the entire consideration of Rs. 648.31 crore (including purchase price adjustment) on the aforesaid divestment. The profit on account of the aforesaid transaction amounting to Rs. 607.23 crore has been shown as ''Exceptional item''.

6. RELATED PARTY DISCLOSURES

(a) Parties where control exists

Wholly owned subsidiary companies (including step down subsidiaries)

1 Wockhardt UK Holdings Limited (formerly, Wockhardt UK Limited)

2 CP Pharmaceuticals Limited

3 CP Pharma (Schweiz) AG

4 Wallis Group Limited

5 The Wallis Laboratory Limited

6 Wockhardt Farmaceutica Do Brasil Ltda

7 Wallis Licensing Limited

8 Wockhardt Biopharm Limited

9 Vinton Healthcare Limited

10 Wockhardt Infrastructure Development Limited

11 Z&Z Services GmbH (formerly, esparma GmbH)

12 Wockhardt Europe Limited

13 Wockhardt Nigeria Limited

14 Wockhardt USA LLC w.e.f. October 3, 2008 (formerly, Wockhardt USA Inc.,)

15 Wockhardt Bio AG (formerly Wockhardt EU Operations (Swiss) AG)

16 Wockhardt UK Limited

17 Wockhardt Cyprus Limited

18 Wockpharma Ireland Limited

19 Pinewood Laboratories Limited

20 Nonash Limited

21 Laboratoires Negma S.A.S. (formerly, Negma Lerads S.A.S.)

22 Wockhardt France (Holdings) S.A.S.

23 Esparma AG.

24 Wockhardt Holding Corp.

25 Morton Grove Pharmaceuticals, Inc.

26 MGP Inc.

27 Girex S.A.S. (liquidated on October 6, 2011).

28 Mazal Pharmaceutique S.A.R.L. (liquidated on October 6, 2011)

29 Laboratoires Pharma 2000 S.A.S. (formerly, Pharma 2000 S.A.S.)

30 Hariphar S.C. (liquidated on November 28, 2012)

31 Niverpharma S.A.S.

32 Negma Beneulex S.A.

33 S.C.I. Salome (liquidated on November 14, 2012).

34 Phytex S.A.S.

35 Scomedia S.A.S. (sold on May 16, 2011).

36 Laboratoires Lerads S.A.S. (merged on November 28, 2012).

37 Wockhardt Farmaceutica SA DE CV. (w.e.f. November 9, 2012)

38 Wockhardt Services SA DE CV. (w.e.f. June 21, 2012)

Holding Company

Khorakiwala Holdings and Investments Private Limited

Associate Company

Swiss Biosciences AG

(b) Other related party relationships where transactions have taken place during the year Enterprises over which Key Managerial Personnel exercise significant influence

Palanpur Holdings and Investments Private Limited

Wockhardt Hospitals Limited

Merind Limited

Wockhardt Foundation

Fellow Subsidiary

Carol Info Services Limited

Key managerial personnel

Dr. H. F. Khorakiwala, Chairman

Dr. Huzaifa Khorakiwala, Executive Director

Dr. Murtaza Khorakiwala, Managing Director

7. The Company has taken office premises on operating lease. These leave and license agreements are generally for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. There are no restrictions imposed by lease arrangements. There are no subleases.

8. CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for)

(a) Demands by Central Excise authorities in respect of Classification/Valuation/Cenvat Credit related disputes; stay orders have been obtained by the Company in case of demands which have been confirmed Rs. 9.62 crore (Previous Year - Rs. 5.18 crore). Further, demand from State excise authorities for excise duty on certain inputs disputed by the Company Rs. 12.55 crore (Previous Year - Rs. Nil).

(b) Demand by Income tax authorities Rs. 47.30 crore (Previous Year - Rs. 41.63 crore) disputed by the Company.

(c) Corporate Guarantee given on behalf of various subsidiaries in respect of credit facilities amounts to Rs. 1,068.54 crore (Previous Year - Rs. 1,270.75 crore).

This comprises corporate guarantee given by the Company and Wockhardt UK Holdings Limited against loan of USD 196.88 million (Previous Year - USD 250 million) amounting to Rs. 1,068.54 crore (Previous Year - Rs. 1,270.75 crore) taken by Wockhardt Bio AG in earlier years. The said loan has been rescheduled and lenders aggregating 97.95% (Previous Year - 86.8%) of the loan value have acceded to the reschedulement.

This loan availed by the subsidiary is secured by:

(i) first ranking pari passu charge on immovable properties of Wockhardt Limited situated at Kadaiya in Daman and Baddi in Himachal Pradesh.

(ii) second ranking pari passu charge by way of hypothecation on all the current assets, movables, inventories and book debts of Wockhardt Limited.

Further, out of loan of Rs. 1,068.54 crore (Previous Year - Rs. 1,270.75 crore), term loan ofRs. 431.69 crore (Previous Year - Rs. 513.38 crore), in addition to aforesaid security, is also secured by :

(i) subservient charge on movable properties of Wockhardt Limited situated at Bhimpore in Daman, Ankleshwar, L-1, D-4, Chikhalthana and Biotech Park, Waluj in Aurangabad (except book debts and current assets).

(ii) subservient charge on movable properties of Wockhardt Infrastructure Development Limited situated at Shendra in Aurangabad.

Also, the Company has made an application to Reserve Bank of India for obtaining its approval to create a subservient charge on fixed assets of the Company situated at all locations except Baddi in Himachal Pradesh and Kadaiya in Daman.

(d) Comfort to extend financial support, subject to certain approvals, to one of its subsidiaries towards credit facilities availed by the subsidiary, the impact of which is currently not ascertainable.

(e) Claims against Company not acknowledged as debt in respect of local body tax Rs. 10.28 crore (Previous Year - Rs. Nil).

(f) The Group is involved in other disputes, lawsuits, claims, inquiries and proceedings, including commercial matters that arise from time to time in the ordinary course of business. The group believes that there are no such pending matters that are expected to have any material adverse effect on its financial statements in any given accounting period.

(g) Under the directions of the Hon''ble Bombay High Court, the Company has deposited USD 2.29 million (Rs. 12.12 crore) in the UK Court towards the disputed portion of the claim by the FCCB holders that primarily pertains to the Withholding Tax deducted by the Company on the default interest paid to the FCCB holders u/s 196 C of Income Tax Act, 1961.

(h) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 116.82 crore (Previous Year - Rs. 55.91 crore) after deducting advance on capital account of Rs. 40.87 crore (Previous Year - Rs. 15.97 crore).

9. Premium on redemption of preference shares will be provided for before redemption of the preference shares.

10. Previous year figures have been regrouped where necessary to conform to current year''s classification.


Mar 31, 2012

Notes:

(a) The Company has only one class of equity shares having a par value of Rs. 5/- per share. Each holder of equity shares is entitled to one vote per share held and is entitled to dividend, if declared at the Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(b) Issue of Preference Shares as per Corporate Debt Restructuring (CDR) Scheme:

During the year under review, 32,315,130 (Previous Year - 153,275,327) preference shares of Rs. 5/- each fully paid up were issued pursuant to approved CDR package against various liabilities of the Company to Banks/Financial Institutions as per the details given below.

(i) Nil (Upto Previous Year - 208,555,274) 0.01% Optionally Convertible Cumulative Redeemable Preference shares (OCCRPS Series 1), on the following terms and conditions:

The Preference Share holders shall have the right to convert OCCRPS Series 1, along with accumulated dividend, into fully paid equity shares of the Company, in one or more tranches, commencing October 25, 2015 till December 31, 2018, at conversion price as per the then applicable SEBI formula on the date of conversion. The said shares, in case not converted, shall get redeemed along with accumulated dividend on December 31, 2018 without any redemption premium. The Deemed Date of allotment is 25th October 2009.

(ii) Nil (Upto Previous Year - 237,994,675) 0.01% Optionally Convertible Cumulative Redeemable Preference shares (OCCRPS Series 2), on the following terms and conditions:

The Preference Share holders shall have the right to convert OCCRPS Series 2 along with accumulated dividend, into fully paid equity shares of the Company, in one or more tranches, commencing July 4, 2016 till December 31, 2018, at conversion price as per the then applicable SEBI formula on the date of conversion. The said shares, in case not converted, shall get redeemed along with accumulated dividend on December 31, 2018 without any redemption premium.

(iii) Nil (Upto Previous Year - 208,555,274) 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 1), which shall be redeemed at a premium of 38% of the face value along with cumulative dividend on December 31, 2018.

(iv) Nil (Upto Previous Year - 32,265,110) 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 2), which shall be redeemed at a premium of 20% of the face value along with cumulative dividend on December 31, 2018.

(v) Nil (Upto Previous Year - 555,320,909) 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 3), which shall be redeemed at a redemption premium calculated at 4% p.a. on simple basis along with cumulative dividend on December 31, 2018.

(vi) 32,315,130 (Upto Previous Year - 87,742,565) 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 4), which shall be redeemed along with cumulative dividend on September 30, 2018. However, in case the Company exits CDR, the Preference Shares shall be redeemed at the point of exit.

(vii) Nil (Upto Previous Year - 160,000,000) 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 5), which shall be redeemed at a premium of 20% of the face value along with cumulative dividend on March 31, 2019.

(c) Shares held by holding company:

69,716,132 (Previous Year - 69,716,132) Equity Shares are held by Khorakiwala Holdings and Investments Private Limited, the holding company.

160,000,000 (Previous Year - 160,000,000) Non-Convertible Cumulative Redeemable Preference shares - Series 5 are held by Khorakiwala Holdings and Investments Private Limited, the holding company.

Notes:

(a) Debentures are redeemable at par in four annual installments of Rs. 50 crore each starting from August 7, 2012.

Debentures are secured by first charge on pari passu basis:

(i) by way of mortgage of immovable properties and hypothecation of movable assets at Plot No. L-1, D-4, Chikhalthana, Aurangabad, Plot No. 138, Ankleshwar, Gujarat, Plot No. 87A, Bhimpore, Daman and Biotech Park H-14/2, MIDC Waluj, Aurangabad.

(ii) by way of mortgage of immovable properties and hypothecation of movable assets situated at Jagraon, Punjab.

(iii) by way of mortgage of immovable properties and hypothecation of movable assets of Company's wholly owned subsidiary i.e. Wockhardt Infrastructure Development Limited situated at Shendra, Aurangabad; and by way of second charge on pari passu basis on current assets of the company at all locations.

(b) Term Loans are secured as under:

(I) Pursuant to the approved Corporate Debt Restructuring Package, the rupee denominated term loans from banks/financial institutions amounting to Rs. 482.98 crore are secured by first charge on pari passu basis and rupee denominated term loans from banks/financial institutions amounting to Rs. 130.78 crore are secured by third charge on pari passu basis:

(i) by way of mortgage of immovable properties and hypothecation of movable assets at Plot No. L-1, D-4, Chikhalthana, Aurangabad, Plot No. 138, Ankleshwar, Gujarat, Plot No. 87A, Bhimpore, Daman and Biotech Park H-14/2, MIDC Waluj, Aurangabad.

(ii) by way of mortgage of immovable properties and hypothecation of movable assets situated at Jagraon, Punjab.

(iii) by way of mortgage of immovable properties and hypothecation of movable assets of Company's wholly owned subsidiary i.e. Wockhardt Infrastructure Development Limited situated at Shendra, Aurangabad.

Further, loans amounting to Rs. 482.98 crore are secured by second charge on pari passu basis and loans amounting to Rs. 130.78 crore are secured by third charge on pari passu basis on current assets of the company at all locations.

(II) Pursuant to the approved Corporate Debt Restructuring Package, the rupee denominated term loans from banks amounting to Rs. 17.47 crore are secured by third charge on pari passu basis:

(i) by way of mortgage of immovable properties at Plot No. L-1, D-4, Chikhalthana, Aurangabad, Plot No. 87A, Bhimpore, Daman and Biotech Park H-14/2, MIDC Waluj, Aurangabad and hypothecation of current assets of the Company at all locations.

(ii) by way of mortgage of immovable properties and hypothecation of movable assets situated at Jagraon, Punjab.

(iii) by way of mortgage of immovable properties and hypothecation of movable assets of Company's wholly owned subsidiary i.e. Wockhardt Infrastructure Development Limited situated at Shendra, Aurangabad.

(iv) the Company is in the process of creating charge on immovable property at Plot No. 138, Ankleshwar, Gujarat and movable assets of the Company at all locations.

(III) Pursuant to the approved Corporate Debt Restructuring Package, the rupee denominated loans from others amounting to Rs. 75.00 crore are secured by third charge on pari passu basis:

(i) by way of mortgage of immovable properties at Plot No. L-1, D-4, Chikhalthana, Aurangabad, Plot No. 87A, Bhimpore, Daman, Plot No. 138, Ankleshwar and Biotech Park H-14/2, MIDC Waluj, Aurangabad and by way of hypothecation of current assets of the company at all locations.

(ii) by way of mortgage of immovable properties and hypothecation of movable assets situated at Jagraon, Punjab.

(iii) by way of mortgage of immovable properties and hypothecation of movable assets of Company's wholly owned subsidiary i.e. Wockhardt Infrastructure Development Limited situated at Shendra, Aurangabad.

(iv) the Company is in the process of creating charge on movable assets of the Company at all locations.

(IV) The rupee denominated term loan from others amounting to Rs. 1.88 crore is secured by first charge on pari passu basis by hypothecation of movable properties of the company (except book debts) at all locations.

(V) Terms of repayment as per CDR scheme of rupee denominated term loans from banks/financial institutions are as under:

(i) Rupee term loans and Working capital term loans from banks with interest rate of 10% p.a. is repayable in 24 quarterly installments by April 2016.

(ii) Priority loans from banks with interest rate of 12% p.a. is repayable in 8 quarterly equal installments, by June 2012.

(iii) Short term loans from banks with interest rate of 10% p.a. is repayable in 20 quarterly equal installments by October 2018.

(VI) Terms of repayment of rupee denominated term loans from others are as under:

(i) Term loan from others amounting Rs. 75.00 crore with interest rate of 10% p.a. is repayable in 20 quarterly installments by October 2018 as per CDR scheme.

(ii) Term loan from others amounting Rs. 1.88 crore with interest rate of 2% p.a. is repayable in 10 equal half yearly installments beginning 1 year after completion of the project.

(c) Loans amounting to Rs. 906.22 crore are also secured by irrevocable personal guarantee by H.F. Khorakiwala, Chairman.

(d) As against the above secured loans taken, the promoters/promoter group have pledged shares numbering 70,158,917 as on March 31, 2012.

(e) Interest free sales tax deferral loan is repayable in the month of May every year. This loan is repayable by May 2019.

(f) Loans from others with interest rate of 3% p.a. is repayable in 10 annual installment. Loans amounting Rs. 1.89 crore is repayable by June 2019 and the balance Rs. 4.24 crore by October 2021.

Notes:

(a) Pursuant to the approved Corporate Debt Restructuring Package, the working capital facilities amounting to Rs. 222.28 crore are secured by way of second charge on pari passu basis:

(i) by way of mortgage of immovable properties and hypothecation of movable assets at Plot No. L-1, D-4, Chikhalthana, Aurangabad, Plot No. 138, Ankleshwar, Gujarat, Plot No. 87A, Bhimpore, Daman and Biotech Park H-14/2, MIDC Waluj, Aurangabad.

(ii) by way of mortgage of immovable properties and hypothecation of movable assets situated at Jagraon, Punjab.

(iii) by way of mortgage of immovable properties and hypothecation of movable assets of Company's wholly owned subsidiary i.e. Wockhardt Infrastructure Development Limited situated at Shendra, Aurangabad and by way of first charge on pari passu basis on current assets of the Company at all locations.

(b) Loans amounting to Rs. 222.28 crore are also secured by irrevocable personal guarantee by H.F. Khorakiwala, Chairman.

(c) As against the above secured loans taken, the promoters/promoter group have pledged shares numbering 70,158,917 as on March 31, 2012.

Notes:

(a) Loans and advances to related parties include Rs. 10.46 crore (Previous Year - Rs. 8.58 crore) given to Subsidiaries. (Refer note 29).

(b) The Company had made application to Central Government for payment of remuneration in excess of limits specified in Schedule XIII of the Companies Act, 1956, to Dr. H F Khorakiwala - Chairman. The Ministry of Corporate Affairs has approved a remuneration of Rs. 1.76 crore per annum, payable to Dr. H F Khorakiwala during the three year period commencing from January 1, 2009. As the said approval is not in line with remuneration proposed and approved by the shareholders, the Company has once again made an application to the Central Government for re-consideration of the same. Accordingly, the remuneration paid to Dr. H F Khorakiwala in excess of the above approval for the financial year ended March 31, 2012 amounting to Rs. 0.47 crore and for the earlier years Rs. 0.81 crore has been shown as recoverable under loans and advances to related parties.

1. INFORMATION PURSUANT TO CLAUSE 32 OF LISTING AGREEMENTS WITH STOCK EXCHANGES

Loans and advances to subsidiaries in the nature of loans comprises of amounts recoverable from Wockhardt Infrastructure Development Limited Rs. 52.63 crore (Previous Year - Rs. 53.58 crore) [maximum amount outstanding during the year Rs. 57.95 crore (Previous Year - Rs. 53.58 crore)], Wockhardt EU Operations (Swiss) AG Rs. 27.78 crore (Previous Year - Rs. 24.37 crore) [maximum outstanding during the year Rs. 29.00 crore (Previous Year - Rs. 25.67 crore)], Wockhardt Holding Corp Rs. 58.45 crore (Previous Year - Rs. 51.31 crore) [maximum outstanding during the year Rs. 61.04 crore (Previous Year - Rs. 54.08 crore)], Vinton Healthcare Limited Rs. Nil (Previous Year - Rs. Nil;) [maximum outstanding during the year Rs. Nil (Previous Year - Rs. 116.42 crore)]. Out of the above loans, interest on loan given to Wockhardt Holding Corp and Wockhardt EU Operations (Swiss) AG are based on spread plus LIBOR, as applicable. Hence, it is lower than the interest rate specified u/s 372A of the Companies Act,1956.

Optionally Convertible Cumulative Redeemable Preference Shares (OCCRPS) are not considered for calculating diluted earnings per share since conversion of shares is contingent in nature and number of shares cannot be currently ascertained, being dependant on price of equity shares as per SEBI formula prevailing on the date on which the holders of OCCrPs are entitled to convert.

2. EXCEPTIONAL ITEMS

Exceptional items for the year ended March 31, 2012 mainly comprises of settlement of loan/disputed derivative liabilities Rs. 55.3 crore and provision for cDr recompense Rs. 160 crore for period April 15, 2009 to March 31, 2012. Exceptional items of previous year comprise of settlement of loans and disputed derivatives Rs. 113.01 crore, crystallized derivative losses of Rs. 184.38 crore, reversal of marked to market provision Rs. 30.33 crore, amounts received on release of escrow on divestment of Animal Health Business Rs. 3.75 crore and aggregate of Rs. 29.57 crore towards provisions and loss of assets.

3. SEGMENTAL REPORTING

As the Company's annual report contains both Consolidated and Standalone Financial Statements, segmental information is presented only on the basis of Consolidated Financial Statement. (Refer note 29 of Consolidated Financial Statements).

Notes:

(a) Amounts recognized as an expense and included in note 21:

"Salaries and wages" includes gratuity Rs. 2.96 crore (Previous Year - Rs. 4.44 crore including Rs. 1.93 crore classified as exceptional item); and leave encashment Rs. 7.84 crore (Previous Year - Rs. 4.85 crore).

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

4. During the previous year, pursuant to approval of the Board vide resolution dated January 12, 2011 and of the Hon'ble High Court of Delhi vide its order dated April 28, 2011, the Scheme of Arrangement u/s. 391 to 394 of the Companies Act, by way of demerger of Nutrition Business of Vinton Healthcare Limited (a wholly owned subsidiary of Wockhardt Limited) into Wockhardt Limited was accordingly given effect to. The appointed date for the Scheme was January 1, 2011.

As per the Scheme of Demerger, Wockhardt Limited - (1) acquired certain assets (Rs. 295.41 crore) and liabilities (Rs. 0.44 crore) of Vinton Healthcare Limited at book value (2) cancelled proportionate investments in preference shares (Rs. 7.69 crore) of Vinton Healthcare Limited (3) adjusted loan given to Vinton Healthcare Limited of Rs. 116.42 crore and (4) credited, excess of book value of net assets acquired over adjusted value of investments/loans, to general reserve amounting to Rs. 175.28 crore.

5. EMPLOYEES STOCK OPTION SCHEME [ESOS]

The Compensation Committee of the Board of Directors at its meeting held on November 12, 2011 has approved the Grant of 1,540,000 Stock Options convertible into 1,540,000 equity shares of Rs. 5/- each under Wockhardt Stock Option Scheme - 2011 ('the Scheme'). As per the Scheme the Compensation committee has granted 60,000 options @ Rs. 397/- per option (Grant 1), another 60,000 options @ Rs. 365/- per option (Grant 2), and 1,420,000 options @ Rs. 5/- per option (Grant 3), in accordance with the provisions of Securities and Exchange Board of India (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, to the selected employees of the Company and its subsidiaries. The method of settlement is by issue of equity shares to the selected employees who have accepted the options.

6. The Company has taken office premises on operating lease. These leave and license agreements are generally for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. There are no restrictions imposed by lease arrangements. There are no subleases.

7. Corporate Debt Restructuring (CDR) Scheme is effective from April 15, 2009. The outstanding liabilities of the Company are substantially restructured under the aegis of CDR Scheme, which extends till 2018.

8. CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for)

(a) Demands by Central Excise authorities in respect of Classification/Valuation/Cenvat Credit related disputes; stay orders have been obtained by the Company in case of demands which have been confirmed Rs. 5.18 crore (Previous Year - Rs. 5.18 crore).

(b) Demand by Income tax authorities Rs. 41.63 crore (Previous Year - Rs. 77.35 crore) disputed by the Company.

(c) Corporate Guarantee given on behalf of various subsidiaries in respect of credit facilities amounts to Rs. 1,270.75 crore (Previous Year - Rs. 1,237.49 crore).

This comprises corporate guarantee given by the Company and Wockhardt UK Holdings Limited against loan of USD 250 million amounting Rs. 1,270.75 crore (Previous Year - Rs. 1,115.25 crore) taken by Wockhardt EU Operations (Swiss) AG in earlier years. The said loan is comprehensively covered under CDR Scheme and is being rescheduled. As on March 31, 2012 lenders aggregating 86.8% (Previous Year - 69%) of the loan value have acceded to the reschedulement.

This loan availed by the subsidiary is secured by:

(i) first ranking pari passu charge on immovable properties of Wockhardt Limited situated at Kadaiya, Daman and Baddi in Himachal Pradesh.

(ii) second ranking pari passu charge by way of hypothecation on all the current assets, movables, inventories and book debts of Wockhardt Limited.

Further, out of loan of Rs. 1,270.75 crore, term loan of Rs. 513.38 crore, in addition to aforesaid security, is also secured by:

(i) subservient charge on movable properties of Wockhardt Limited situated at Bhimpore (Daman), Ankleshwar, L-1, D-4, Chikhalthana and Biotech Park, Waluj, Aurangabad (except book debts and current assets).

(ii) subservient charge on movable properties of Wockhardt Infrastructure Development Limited situated at Shendra, Aurangabad.

Also, the Company has made an application to Reserve Bank of India for obtaining its approval to create a subservient charge on fixed assets of the Company situated at all locations except Baddi and Kadaiya in Daman.

(d) Claims against Company not acknowledged as debt in respect of disputed derivative contracts Rs. Nil (Previous Year - Rs. 332.25 crore).

(e) The Group is involved in other disputes, lawsuits, claims, inquires and proceedings, including commercial matters that arise from time to time in the ordinary course of business. The group believes that there are no such pending matters that are expected to have any material adverse effect on its financial statements in any given accounting period.

(f) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 55.91 crore (Previous Year - Rs. 32.87 crore) after deducting advance on capital account of Rs. 15.97 crore (Previous Year - Rs. 8.82 crore).

9. Zero Coupon Foreign Currency Convertible Bonds (FCCBs) along with premium were due for repayment in October 2009. In the petition for recovery and winding up against the Company, the Company has filed a consent decree in the Hon'ble High Court of Bombay and has agreed to pay the FCCB holders the amounts outstanding along with interest on reducing balance, by August 2012. The Company has been depositing with the High Court, the installments as per the dates specified by the Hon'ble High Court.

10. Premium on redemption of preference shares will be provided for before redemption of the preference shares.

11. Until the year ended March 31, 2011, the Company was using the pre-revised Schedule VI to the Companies Act, 1956 for preparation and presentation of financial statements. The Ministry of Corporate Affairs by notification in the official gazette revised the Schedule VI. This revised Schedule VI is applicable to the company from the financial year beginning April 1, 2011 and it requires comparative previous year numbers to be restated/regrouped. Accordingly, the company has made significant changes in the format of financial statements and disclosures.


Mar 31, 2011

1. Exceptional items comprise of settlement of loans and disputed derivatives Rs. 1,130.05 million, crystallized derivative losses of Rs. 1,843.79 million, reversal of marked to market provision Rs. 303.26 million, amounts received on release of escrow on divestment of Animal Health Business Rs. 37.50 million and aggregate of Rs. 295.67 million towards provisions and loss of assets. Exceptional items of previous period mainly comprises of Marked to Market/crystallised losses of Rs. 10,986.96 million, profit on sale of animal health division Rs. 1,570.97 million, profit on sale of intangible assets Rs. 156.43 million and gain on settlement of loan liability of Rs. 17.32 million.

2. SEGMENTAL REPORTING

As the Company's annual report contains both Consolidated and Standalone Financial Statements, segmental information is presented only on the basis of Consolidated Financial Statement. (Refer Note 23 of Consolidated Financial statement).

3. Product Development Expenses of Rs. 929.93 million (Previous Period - Rs. 900.15 million) incurred during the year are considered as capital expenditure to be capitalized as intangible assets.

4. The Company has taken office premises on operating lease. These leave and license agreements are generally for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. There are no restrictions imposed by lease arrangements. There are no subleases.

5. In view of the losses incurred by the Company during the year, debenture redemption reserve has not been created and premium on redemption of preference snares has not been provided for.

6. ISSUE OF PREFERENCE SHARES AS PER CORPORATE DEBT RESTRUCTURING (CDR) SCHEME:

(a) During the year, the Company has increased its authorised Preference Share Capital to Rs. 10,000 million from Rs. 8,000 million.

(b) During the year under review, 153,275,327 preference shares of Rs. 5/ - each fully paid up were issued pursuant to approved CDR package against various liabilities of the Company as per the details given below:

(i) Nil (Upto Previous Period - 208,555,274) 0.01% Optionally Convertible Cumulative Redeemable Preference shares (OCCRPS Series 1), on the following terms and conditions:

The Preference Share holders shall have the right to convert OCCRPS Series 1, along with accumulated dividend, into fully paid equity shares of the Company, in one or more tranches, commencing October 25, 2015 till December 31, 2018, at conversion price as per the then applicable SEBI formula on the date of conversion. The said shares, in case not converted, shall get redeemed along with accumulated dividend on December 31, 2018 without any redemption premium. The Deemed Date of allotment is 25th October 2009.

(ii) 22,386,344 (Upto Previous Period - 215,608,331) 0.01% Optionally Convertible Cumulative Redeemable Preference shares (OCCRPS Series 2), on the following terms and conditions:

The Preference Share holders shall have the right to convert OCCRPS Series 2 along with accumulated dividend, into fully paid equity shares of the Company, in one or more tranches, commencing July 4, 2016 till December 31, 2018, at conversion price as per the then applicable SEBI formula on the date of conversion. The said shares, in case not converted, shall get redeemed along with accumulated dividend on December 31, 2018 without any redemption premium.

(iii) Nil (Upto Previous Period - 208,555,274) 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 1), which shall be redeemed at a premium of 38% of the face value along with cumulative dividend on December 31, 2018.

(iv) 12,758,074 (Upto Previous Period - 19,507,036) 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 2), which shall be redeemed at a premium of 20% of the face value along with cumulative dividend on December 31, 2018.

(v) 52,234,803 (Upto Previous Period - 503,086,106) 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 3), which shall be redeemed at a redemption premium calculated at 4% p.a. on simple basis along with cumulative dividend on December 31, 2018.

(vi) 45,896,106 (Upto Previous Period - 41,846,459) 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 4), which shall be redeemed along with cumulative dividend on September 30, 2018. However, in case the Company exits CDR, the Preference Shares shall be redeemed at the point of exit.

(vii) 20,000,000 (Upto Previous Period - 140,000,000) 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 5), which shall be redeemed at a premium of 20% of the face value along with cumulative dividend on March 31, 2019.

7. RELATED PARTY DISCLOSURES (a) Parties where control exists

Wholly owned subsidiary companies (including step down subsidiaries)

1. Wockhardt UK Holdings Limited (formerly, Wockhardt UK Limited)

2. CP Pharmaceuticals Limited

3. CP Pharma (Schweiz) AG

4. Wallis Group Limited

5. The Wallis Laboratory Limited

6. Wockhardt Farmaceutica Do Brazil Ltda

7. Wallis Licensing Limited

8. Wockhardt Biopharm Limited

9. Vinton Healthcare Limited

10. Wockhardt Infrastructure Development Limited

11. Z&Z Services GmbH (formerly, esparma GmbH)

12. Wockhardt Europe Limited

13. Wockhardt Nigeria Limited

14. Wockhardt USA LLC w.e.f. October 3, 2008 (formerly, Wockhardt USA Inc.,)

15. Wockhardt EU Operations (Swiss) AG

16. Wockhardt UK Limited

17. Wockhardt Cyprus Limited

18. Wockpharma Ireland Limited

19. Pinewood Laboratories Limited

20. Nonash Limited

21. Atlantis USA Inc., (Dissolved on April 30, 2010)

22. Laboratoires Negma S.A.S. (formerly, Negma Lerads S.A.S.)

23. Wockhardt France (Holdings) S.A.S.

24. esparma AG

25. Wockhardt Holding Corp

26. Morton Grove Pharmaceuticals, Inc.

27. MGP Inc.

28. Girex S.A.S.

29. Mazal Pharmaceutique S.A.R.L.

30. Laboratoires Pharma 2000 S.A.S. (formerly, Pharma 2000 S.A.S.)

31. HaripharS.C

32. Niverpharma S.A.S.

33. Cap Dermatology S.A.R.L (merged with Niverpharma S.A.S. on November 2, 2010)

34. Negma Beneulex S.A.

35. S.C.I. Salome

36. DMH S.A.S. (Liquidated on March 25, 2011)

37. Phytex S.A.S.

38. Scomedia S.A.S.

39. Laboratoires Lerads S.A.S.

Holding Company

Khorakiwala Holdings and Investments Private Limited

Associate Company

Swiss Biosciences AG

(b) Other related party relationships where transactions have taken place during the year Enterprises over which Key Managerial Personnel exercise significant influence

Palanpur Holdings and Investments Private Limited Wockhardt Hospitals Limited Merind Limited

Fellow Subsidiary

Carol Info Services Limited

Key managerial personnel

Dr. H F Khorakiwala, Chairman

Dr. Huzaifa Khorakiwala, Executive Director

Dr. Murtaza Khorakiwala, Managing Director

Rajiv B. Gandhi, Whole Time Director (upto March 31, 2010)

8. Provision for Sales Return on Date Expiry - opening balance Rs. 105.41 million (Previous Period - Rs. 92.24 million), additions during the year Rs. 106.24 million (Previous Period - Rs. 120.29 million), utilised during the year Rs. 103.28 million (Previous Period -Rs. 107.12 million), closing balance Rs. 108.37 million (Previous Period -Rs. 105.41 million).

Provision has been recognised for expected sales return on date expiry of products sold during last two years. It is expected that all of this would be incurred within two years of the balance sheet date.

9. Corporate Debt Restructuring (CDR) Scheme is effective from April 15, 2009. The outstanding liabilities of the Company are substantially restructured under the aegis of CDR Scheme, which extends till 2018. The CDR Scheme comprehensively covers the FCCB liabilities and crystallized derivative/hedging liabilities.

10. Pursuant to approval of the Board vide resolution dated January 12, 2011 and of the Hon'ble High Court of Delhi vide its order dated April 28, 2011, the Scheme of Arrangement u/s. 391 to 394 of the Companies Act, by way of demerger of Nutrition Business of Vinton Healthcare Limited (a wholly owned subsidiary of Wockhardt Limited) in to Wockhardt Limited has been accordingly given effect to. The appointed date for the Scheme was January 1, 2011. As per the Scheme of Demerger, Wockhardt Limited - (1) acquired certain assets (Rs. 2,954.14 million) and liabilities (Rs. 4.42 million) of Vinton Healthcare Limited at book value (2) cancelled proportionate investments in preference shares (Rs. 76.86 million) of Vinton Healthcare Limited (3) adjusted loan given to Vinton Healthcare Limited of Rs. 1,164.18 million and (4) credited, excess of book value of net assets acquired over adjusted value of investments/loans, to general reserve amounting toRs. 1,752.76 million.

11. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 328.67 million (Previous Period - Rs. 43.65 million) after deducting advance on capital account of Rs. 88.19 million (Previous Period - Rs. 57.68 million).

12. CONTINGENT LIABILITIES NOT PROVIDED FOR:

(a) Demands by Central Excise authorities in respect of Classification/ Valuation/Cenvat Credit related disputes; stay orders have been obtained by the Company in case of demands which have been confirmed Rs. 51.80 million (Previous Period - Rs. 51.80 million).

(b) Demand by Income tax authorities Rs. 773.53 million (Previous Period - Rs. 815.90 million) disputed by the Company.

(c) Corporate Guarantee given on behalf of various subsidiaries in respect of bank facilities amounts to Rs. 12,374.93 million (Previous Period -Rs. 12,452.95 million).

This includes corporate guarantee given by the Company and Wockhardt UK Holdings Limited against loan of USD 250 million (Rs. 11,152.50 million) taken by Wockhardt EU Operations (Swiss) AG in earlier years. The said loan is being rescheduled and lenders aggregating 69% of the loan value have acceded to the reschedulement.

Out of Rs. 11,152.50 million loan availed by a subsidiary, loan of Rs. 4,505.61 million is secured by:

(i) first ranking pari-passu charge on movable and immovable properties of Wockhardt Limited situated at Kadaiya in

Daman and Baddi in Himachal Pradesh; (ii) second ranking charge by way of hypothecation on all the inventories and book debts of Wockhardt Limited; (iii) subservient charge on movable properties of Wockhardt Limited situated at Bhimpore (Daman), Ankleshwar, L-1, D-4,

Chikhalthana and Biotech Park, Waluj Aurangabad (except book debts & current assets); (iv) subservient charge on movable properties of Wockhardt Infrastructure Development Limited situated at Shendra,

Aurangabad;

and balance loan of Rs. 6,646.89 million is secured by: (i) first ranking pari-passu charge on movable and immovable properties of Wockhardt Limited situated at Kadaiya in Daman and Baddi in Himachal Pradesh; (ii) second ranking charge by way of hypothecation on all the inventories and book debts of Wockhardt Limited.

(d) In view of the losses incurred by the Company, no provision for dividend on Non Convertible Cumulative Redeemable Preference shares (NCRPS) Series 1 to 5 of Rs. 0.55 million and Optionally Convertible Cumulative Redeemable Preference Shares (OCCRPS) Series 1 to 2 of Rs. 0.26 million, has been made by the Company as on March 31, 2011.

(e) Certain derivative/hedging contracts entered into prior to March 31,2010 had been unilaterally terminated by the banks/financial institutions. The Company has disputed the same and continues to treat the demand of Rs. 3,322.51 million [including a demand of Rs. 669.15 million as guarantor for derivatives contracts executed in a subsidiary] (Previous Period - Rs. 8,483.22 million) as a contingent liability and has not acknowledged as a debt, since the liability cannot be currently ascertained even on a best effort basis till the final outcome of the matter.

The Company is of the view that these are contingent liabilities as these arise from past events and existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company and therefore, has not acknowledged these claims against Company as debts.

(f) The Group is involved in other disputes, lawsuits, claims, inquires and proceedings, including commercial matters that arise from time to time in the ordinary course of business. The group believes that there are no such pending matters that are expected to have any material adverse effect on its financial statements in any given accounting period.

Winding-up petitions have been filed by certain lenders/banks in the Bombay High Court and the Company has filed affidavit in reply. ICICI Bank, as empowered by CDR and Employee Union have filed intervention application against the winding-up. The matter is subjudice and outcome of which cannot be currently ascertained.

13. Zero Coupon Foreign Currency Convertible Bonds (FCCBs) along with premium were due for repayment in October, 2009. On March 11, 2011 the Hon'ble High Court of Bombay, admitted the winding-up petition filed by the Trustees to the Foreign Currency Convertible Bonds (FCCBs) issued by the Company. Pursuant to an appeal filed by the Company the divisional bench of the Hon'ble Bombay High Court has granted an ad-interim relief while requiring the Company to deposit a sum of Rs. 1,150 million with the Court, which has been complied with.

14. PREVIOUS YEAR COMPARATIVES

The current year annual accounts and reports of the Company are for a period of 12 months commencing from April 1, 2010 and ending on March 31, 2011. The figures in respect of the previous period relate to 15 months ended March 31, 2010. Further, as referred to in Note No. 33, the figures for the year ended March 31, 2011 are after considering the effect of the demerger of Nutrition Business of Vinton Healthcare Limited. Hence, figures for the two periods are not comparable.

15. Previous period figures have been regrouped to confirm to current year's presentation.


Mar 31, 2010

1. Exceptional items mainly comprises of Marked to Market/Realised loss of ? 10,986.96 million (Previous Year - ? 4,438.33 million), profit on sale of animal health division ? 1,570.97 million, profit on sale of intangible assets ? 156.43 million, gain on settlement of loan liability of ? 17.32 million.

2. SEGMENTAL REPORTING

As the Companys annual report contains both Consolidated Financial Statement and this financial statement, Segmental information is presented only on the basis of Consolidated Financial Statement. (Refer Note 23 of Consolidated Financial statement).

3. Product Development Expenses of? 900.15 million (Previous Year - ? 1,002.56 million) incurred during the period are considered as capital expenditure to be capitalized as intangible assets.

4. The Company has taken office premises on operating lease. These leave and licence agreements are generally for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. There are no restrictions imposed by lease arrangements. There are no subleases. Following are the details of operating leases:

5. In view of the losses incurred by the Company, capital redemption reserve has not been created for preference shares redeemable at premium at future dates.

6. ISSUE OF PREFERENCE SHARES AS PER CORPORATE DEBT RESTRUCTURING (CDR) SCHEME:

(a) During the period, Company has increased authorised share capital to ? 9,250 million from ? 1,250 million in the nature of Preference Share Capital.

(b) During the period under review, 1,337,158,480 preference shares of ? 51- each fully paid up were issued pursuant to approved CDR package against various liabilities of the Company as per the details given below:

(i) 208,555,274 0.01% Optionally Convertible Cumulative Redeemable Preference shares (OCCRPS Series 1), on the following terms and conditions:

The Preference Share holders shall have the right to convert OCCRPS Series 1, along with accumulated dividend, into fully paid equity shares of the Company, in one or more tranches, commencing October 25, 2015 till December 31, 2018, at conversion price as per the then applicable SEBI formula on the date of conversion. The said shares, in case not converted, shall get redeemed along with accumulated dividend on December 31, 2018 without any redemption premium. The Deemed Date of allotment is 25th October 2009.

(ii) 215,608,331 0.01% Optionally Convertible Cumulative Redeemable Preference shares (OCCRPS Series 2), on the following terms and conditions:

The Preference Share holders shall have the right to convert OCCRPS Series 2 along with accumulated dividend, into fully paid equity shares of the Company, in one or more tranches, commencing July 4, 2016 till December 31, 2018, at conversion price as per the then applicable SEBI formula on the date of conversion. The said shares, in case not converted, shall get redeemed along with accumulated dividend on December 31, 2018 without any redemption premium.

(iii) 208,555,274 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 1) which shall be redeemed at a premium of 38% of the face value along with cumulative dividend on December 31, 2018.

(iv) 19,507,036 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 2), which shall be redeemed at a premium of 20% of the face value along with cumulative dividend on December 31, 2018.

(v) 503,086,106 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 3), which shall be redeemed at a redemption premium calculated at 4% p.a. on simple basis along with cumulative dividend on December 31,2018.

(vi) 41,846,459 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 4), which shall be redeemed along with cumulative dividend on September 30, 2018. However, in case the Company exits CDR, the Preference Shares shall be redeemed at the point of exit.

(vii) 140,000,000 0.01% Non-Convertible Cumulative Redeemable Preference shares (NCRPS Series 5) which shall be redeemed at a premium of 20% of the face value along with cumulative dividend on March 31, 2019.

7. RELATED PARTY DISCLOSURES

(a) Parties where control exists

Wholly owned subsidiary companies

1. Wockhardt UK Holdings Limited (formerly, Wockhardt UK Limited)

2. CP Pharmaceuticals Limited

3. CP Pharma (Schweiz) AG

4. Wallis Group Limited

5. The Wallis Laboratory Limited

6. Wockhardt Farmaceutica Do Brazil Ltda

7. Wallis Licensing Limited

8. Wockhardt Biopharm Limited

9. Vinton Healthcare Limited

10. Wockhardt Infrastructure Development Limited

11. 2 & Z Service GmbH (formerly esparma GmbH)

12. Wockhardt Europe Limited

13. Wockhardt Nigeria Limited

14. Wockhardt USA LLC

15. Wockhardt EU Operations (Swiss) AG

16. Wockhardt UK Limited

17. Wockhardt Cyprus Limited

18. Wockpharma Ireland Limited

19. Pinewood Laboratories Limited

20. Nonash Limited

Holding company

Khorakiwala Holdings and Investments Private Limited

21. Atlantis USA Inc.,

22. Laboratoires Negma S.A.S. (formerly Negma Lerads S.A.S.)

23. Wockhardt France (Holdings) S.A.S.

24. esparma AG

25. Wockhardt Holding Corp.

26. Morton Grove Pharmaceuticals, Inc.

27. MGP Inc.

28. Girex S.A.S.

29. Mazal Pharmaceutique S.A.R.L.

30. Laboratoires Pharma 2000 S.A.S. (formerly Pharma 2000 S.A.S.)

31 Hariphar S.C.

32. Niverpharma S.A.S.

33 Cap Dermatology S.A.R.L.

34 Negma Beneulex S.A.

35 S.C.I. Salome 36 DMH S.A.S.

37. Phytex S.A.S.

38. Scomedia S.A.S.

39 Laboratoires Lerads S.A.S.

(b) Other related party relationships where transactions have taken place during the period Enterprises over which Key Managerial Personnel exercising significant influence

Palanpur Holdings and Investments Private Limited Wockhardt Hospitals Limited Merind Limited

Fellow Subsidiary

Carol Info Services Limited

Key management personnel

H. F. Khorakiwala, Chairman

Huzaifa Khorakiwala, Executive Director w.e.f. March 31, 2009 Murtaza Khorakiwala, Managing Director w.e.f. March 31, 2009 Rajiv B. Gandhi, Whole Time Director (upto March 31, 2010)

8. DISCLOSURE REGARDING DERIVATIVE INSTRUMENTS AND UNHEDGED FOREIGN CURRENCY EXPOSURE

The details of outstanding derivative contracts as on March 31, 2010 has been stated as per information available with the Company. Premium paid in respect of such contracts aggregating to ? 1,843.79 million included under Advances recoverable in cash or kind is unconfirmed and relevant documents in respect of such contracts are being put in place.

9. Provision for Sales Return on date Expiry - Opening Balance ? 92.24 million (Previous Year - ? 75 million), Additions during the period ? 120.29 million (Previous Year - ? 109.26 million), Utilised during the period ? 107.12 million (Previous Year - ? 92.02 million), Closing balance ? 105.41 million (Previous Year - ? 92.24 million).

Provision has been recognised for expected sales return on date expiry of products sold during last two years. It is expected that all of this would be incurred within two years of the balance sheet date.

10. Corporate Debt Restructuring (CDR) Scheme is effective from April 15, 2009. The outstanding liabilities of the Company are being restructured under the aegis of Corporate Debt Restructuring (CDR) Scheme. As required under the Scheme the Master Restructuring Agreement (MRA) and other necessary documents have been executed and effective. The CDR scheme comprehensively covers the FCCB liabilities and crystallized derivatives/hedging liabilities.

11. Estimated amount of Contracts remaining to be executed on capital account not provided for ? 43.65 million (Previous Year - ? 242.77 million) after deducting advance on capital account of ? 57.68 million (Previous Year - ? 62.82 million).

12. As per legal advice obtained, provisions of Sick Industrial Companies (Special Provisions) Act, 1985 are not applicable to the Company. During the year, the Company has transferred balance of General Reserve to Profit and Loss Account.

13. CONTINGENT LIABILITIES NOT PROVIDED FOR

(a) Demands by Central Excise authorities in respect of ClassificationA/aluation/Cenvat Credit related disputes; stay orders have been obtained by the Company in case of demands which have been confirmed ? 51.80 million (Previous Year - ? 84.97 million).

(b) Demand by Income tax authorities ? 815.90 million (Previous Year - ? 661.07 million) disputed by the Company.

(c) Corporate Guarantee given on behalf of various subsidiaries in respect of bank facilities amounts to ? 12,452.95 million (Previous Year - ? 13,739.04 million). This includes corporate guarantee given by the Company and Wockhardt UK Holdings Limited against loan of USD 250 million taken by Wockhardt EU Operations (Swiss) AG in earlier years. The said loan is also secured by a first pari-passu charge on the Baddi and Daman (Kadaiya) units of the Company and second pari passu charge on the current assets of the Company.

(d) In view of the losses incurred by the Company, no provision for dividend on Non-Convertible Cumulative Redeemable Preference shares (NCRPS) Series 1 to 5 of ? 0.07 million and Optionally Convertible Cumulative Redeemable Preference Shares (OCCRPS) Series 1 to 2 of ? 0.05 million, has been made by the Company.

(e) Certain derivative/hedging contracts have been unilaterally cancelled by the banks. The Company has treated the demand of ? 8,483.22 million (Previous Year - ? 4,895.24 million) as a contingent liability and has not acknowledged as debt, since the liability cannot be currently ascertained even on a best effort basis till the final outcome of the matter.

The Company is of the view that these are contingent liabilities as these arise from past events and existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within control of the Company and therefore, has not acknowledged these claims against Company as debts.

14. Winding up petitions are filed by certain lenders/banks in Bombay High Court and the company has filed affidavit in reply. ICICI Bank, as empowered by CDR and Employee Union have filed intervention application against the winding up. The matter is sub-judice and outcome of which cannot be currently ascertained.

15. PREVIOUS YEAR COMPARATIVES

The Board of Directors had approved a change in accounting year of the Company to commence from 1st April every year and to end on 31st March of the following year. Consequently, as a transitional arrangement, the current year annual accounts and reports of the Company are for a period of 15 months commencing from January 1, 2009 and ending on March 31, 2010. The figures in respect of the previous year, however, relate to 12 months ended December 31, 2008 and hence are not comparable.

 
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