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Notes to Accounts of AstraZeneca Pharma India Ltd.

Mar 31, 2023

Nature and purpose of reserves:(i) Capital reserve

Capital reserve represents voluntary non-repayable grant from AstraZeneca Pharmaceutical AB, Sweden to the Company during FY 2013-14. Consequent to subvention agreement (âthe agreementâ) dated May 7, 2013 between the Company and AstraZeneca Pharmaceutical AB (âthe Promoter Companyâ), the promoter company had provided a voluntary non-repayable financial grant in order to assist the Company in its efforts to establish presence and grow in the Indian market.

(ii) General reserve

General reserve represents appropriation of profits from retained earnings.

(iii) Employee share compensation reserve

The employee share compensation reserve is used to recognise the grant date fair value of restricted stock units issued to employees under ultimate holding companyâs long-term incentive stock compensation plan.

(iv) Retained earnings

Retained earnings comprises prior and current yearâs undistributed earnings after tax.

31. Segment reporting

The Company is engaged in the business of manufacture, distribution and marketing of pharmaceutical products and provides clinical trial services to an overseas group company. Chief Operating Decision Maker (CODM) reviews the Company level data for resource allocation and assessment of the Companyâs performance. As the Companyâs activities fall within a single business segment, separate segment wise disclosures are not applicable. The additional disclosures as required by IND AS 108 are as below:

*Indirect tax matters:

The matters are related to demands (including interest and penalties, where applicable) raised by the Indirect tax authorities related to service tax and goods and services tax (GST) for earlier financial years.

The demands relating to service tax have been raised on expenses incurred in foreign currency, reimbursements from overseas group companies, recovery of notice period pay from former employees and ineligible input tax credit claimed on certain expenses. The GST demand pertains to certain category of medicines supplied by the Company. The Company has filed appeals before the relevant authorities against the above demands, which are pending for adjudication.

The Company believes that it has a strong case on merits to contest the aforesaid demands and that the ultimate outcome of these proceedings will not have a material adverse effect on the Companyâs financial position and results of operations.

#Income Tax:

These matters are related to demands (including interest, where applicable) raised during the current year and in earlier years by the Income tax authorities in respect of transfer pricing adjustments on transactions with overseas group companies, disallowance of certain expenses incurred, taxability of subvention receipt and certain expense reimbursements and certain other disallowances. These adjustments are largely of a repetitive nature across multiple assessment years. The Company has filed appeals against these demands with various appellate forums, which are currently pending for adjudication.

The Company believes that its position on the aforesaid demands will likely be upheld in the appellate process and accordingly no provision has been made in the financial statements for such demands.

(ii) During the year ended March 31,2022, the Company had received a demand notice for an amount of ''1,573.9 million (and interest thereupon) under Trade Margin Rationalisation notification (âTMR notificationâ) from NPPA alleging overcharging of a patented anticancer drug sold during the period of March 8, 2019 to January 31, 2021. The said drug has been included with certain other anticancer medicines, on which trade margin caps are applicable under TMR notification. Based on evaluation, Management is of the view that the TMR notification is not applicable to the aforesaid patented drug and all applicable laws relating to the pricing of the product have been complied with. The Company has filed a Writ Petition before the High Court of Delhi challenging the NPPAâs demand notice and the matter is pending adjudication. Based on assessment, supported by external legal advice, Management has concluded that it has a strong case and the Company can defend its position. Accordingly, no provision has been made in these financial statements.

Note: It is not practical for the Company to estimate the timing of cash outflows, if any, in respect of the above matters, pending resolution of respective proceedings. The Company does not expect any reimbursement in respect of above matters.

(iii) Post employment defined benefit plans(A) GratuityBenefits payable for employees who have joined before August 1, 2014:

Employees who are in continuous service for a period of 3 years are eligible for gratuity benefit as per the terms of the Trust Deed. Terms of the benefit are as below:

For Non-Management staff: 15 days salary for each year of service, subject to maximum limit specified as per The Payment of Gratuity (Amendment) Act, 2018.

Payable on retirement, death or disability:

For Management staff: One monthâs salary last drawn by member for each year of service, without limit.

For Non-Management staff: One monthâs salary last drawn by member for each year of service, subject to maximum limit specified as per The Payment of Gratuity (Amendment) Act, 2018.

Benefits payable for employees who have joined on or after August 1, 2014:

Gratuity is payable in accordance with the provisions of The Payment of Gratuity (Amendment) Act, 2018.

(B) Provident fund (Defined benefit plan):

The Company operates a defined benefit plan for Provident fund for management staff. The minimum statutory rate at which the annual rate of interest is payable to the beneficiaries of such plan is administered by the Central Government. The Company is obligated to make good the shortfall in statutory rate prescribed by the Government and rate of interest declared by the trust. The Company also has an obligation to fund any shortfall in the fair value of plan assets as compared with the defined benefit obligation.

Sensitivities due to mortality and withdrawals are not material and hence impact of change is not disclosed.

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

36. Employees Restricted Stock Plan

The Ultimate Holding Company, AstraZeneca Plc. United Kingdom (AZUK), listed on London Stock Exchange had introduced a Long-Term Incentive Stock Compensation Plan in the form of Restricted Stock Units (RSUs) to attract and retain the employees. As per the plan, the awards are granted to qualifying management employees of the Company. One restricted stock unit represents one AZUK share. When the stock units vests after three years, restricted stock units are automatically exchanged for the same number of AZUK shares. Moreover, the RSUs do not expire. There is no performance criteria. After the vesting period, the employees are free to either hold or sell the shares.

38. Financial risk management objectives and policies

37. Financial instruments- accounting classification and fair value measurement

Set out below, is a comparison by class of the carrying amounts and fair value of the Companyâs financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:

The Companyâs principal financial liabilities comprise trade payables and other financial liabilities. The main purpose of these financial liabilities is to finance the Companyâs operations. The Companyâs principal financial assets include loans, trade and other receivables, cash and cash equivalents and other financial assets that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Companyâs senior management oversees the management of these risks. The Board of Directors review and agree on policies for managing each of these risks, which are summarised below.

i. Market riskForeign Currency Exposure

Foreign currency risk is the risk that the future cash flows of a financial asset or a financial liability will fluctuate because of changes in foreign exchange rates. The operations of the Company are carried out mainly in India. However, the Company exports services to foreign customers and receives certain services from foreign vendors which are denominated in USD, EUR and AUD. Hence the Company is currently exposed to the currency risk arising from fluctuations in the exchange rates between the above currencies and Indian rupee. The Company does not enter into any forward contracts considering the total exposure is not material to the operations of the Company. Foreign currency exposure which was not hedged, are as follows:

ii. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities primarily with respect to trade receivables, including balances with banks and other financial assets.

a. Trade Receivables

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. Customer credit risk is managed by each business unit subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on credit rating scorecard and individual credit limits are defined in accordance with this assessment. To manage this, the company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of account receivable. The terms of payment with the customers are less than 12 months and hence there is no significant financing component.

An impairment analysis is performed at each reporting date on an individual basis for third party receivables. The calculation is based on actual incurred historical data. The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables, Refer note 10.

iii. Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. The Company maintains flexibility in funding by maintaining appropriate level of funds in bank and liquid deposits. Financial liabilities includes trade payables and other financial liabilities, the amount is repayable generally in a period of 3 months to 1 year.

39. Capital management a. Risk management

For the purpose of the Companyâs capital management, capital includes issued equity capital and all other equity reserves. The primary objective of the Companyâs capital management is to maximise the shareholder value. The Company has not availed any borrowings and mainly funded through equity. The Company is subsidiary of AstraZeneca Pharmaceuticals AB, Sweden (Holding Company), the existing surplus funds along with the cash generated by the Company are sufficient to meet its current/non-current obligation and working capital requirements.

b. Cash and Bank balances, other financial assets

Credit risk from balances with banks and other financial assets is managed by the Companyâs treasury department in accordance with the Companyâs policy. Investments of surplus funds are made only with approved counter parties and within the limits assigned. Company follows a conservative philosophy and shall aim to invest surplus rupee funds in India only in time deposits with well-known and highly rated banks. The duration of such time deposits will not exceed 365 days other the margin money deposits. Management has evaluated and concluded that impact of credit losses on cash and bank balances and other financial assets is not likely to be material.

Sale of services:

In respect of clinical services and marketing support services, the Company is entitled to charge the customer an amount that corresponds directly with the value to the customer of the entityâs performance completed to date, measured based on the actual costs incurred by the Company in providing clinical services and marketing support services. Considering the nature of the arrangement, management has used the practical expedient in Ind AS 115 and has not disclosed the transaction price of unsatisfied performance obligations in respect of clinical trial services and marketing support services as at the year end.

(ii) Revenue from sale of tablets and injectables includes an amount of '' 306.9 (2022 : '' 128.3) which was classified as deferred revenue as at the end of previous year. Refer note 18.

(iii) Performance obligations and remaining performance obligations

Performance obligations of the Company to deliver goods are required to be satisfied within a period of 12 months or less. Accordingly, management has elected to use the practical expedient provided in Ind AS 115 and has not disclosed the transaction price of unsatisfied performance obligations as at the year end.

44. Additional regulatory information required by Schedule III

(i) Details of benami property held: No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

(ii) Wilful defaulter: The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

(iii) The Company did not have any loans or other borrowings availed from banker or financial instiutions during the current or previous year.

(iv) Compliance with number of layers of companies: The Company does not have any subsidiary company and hence provisions relating to layers perscribed under Companies Act, 2013 and Companies (Restriction on Number of Layers) Rules, 2017 (âLayering Rulesâ) are not applicable to the Company.

(v) Compliance with approved scheme(s) of arrangements: The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

(vi) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the group (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

(vii) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

(viii) There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

(ix) The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

(x) The Company has not revalued its Property, plant and equipment or intangible assets during the current or previous year.

(xi) The title deeds of all the immovable properties (other than properties where the company is the lessee and the lease agreements are duly executed in favour of the lessee), as disclosed in Note 3 to the financial statements, are held in the name of the Company.

(xii) There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.

(xiii) Relationship with struck off companies: The Company has following transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956:

45. Provident Fund - Supreme Court Judgement

The Company has evaluated the impact of Supreme Court (âSCâ) judgement dated February 28, 2019 in the case of Regional Provident Fund Commissioner (II) West Bengal v/s Vivekananda Vidyamandir and Others, in relation to exclusion of certain allowances from the definition of âbasic wagesâ of the relevant employees for the purposes of determining contribution to Provident Fund (âPFâ) under the Employeesâ Provident Fund & Miscellaneous Provisions Act, 1952. There are interpretation issues relating to the said SC judgement. Based on such evaluation, management has concluded that affect of the aforesaid judgement on the Company is not material and accordingly, no provision has been made in the financial statements.

46 The Board of Directors, at its meeting dated May 30, 2023, have recommended a dividend of ''16 (2022: ''8) per equity share aggregating to '' 400 (2022: '' 200) which is subject to approval of shareholders at the ensuing Annual General Meeting.

Mar 31, 2022

Nature and purpose of reserves:(i) Capital reserve

Capital reserve represents voluntary non repayable grant from AstraZeneca Pharmaceutical AB, Sweden to the Company during FY 2013-14. Consequent to subvention agreement (âthe agreementâ) dated May 7, 2013 between the Company and AstraZeneca Pharmaceutical AB (âthe Promoter Companyâ), the promoter company had provided a voluntary non repayable financial grant in order to assist the Company in its efforts to establish presence and grow in the Indian market.

(ii) General reserve

General reserve represents appropriation of profits from retained earnings.

(iii) Employee share compensation reserve

(iv) Retained earnings

Retained earnings comprises prior and current yearâs undistributed earnings after tax.

Note:

The amount is estimated on the basis of past experience of the pattern of sales returns. The Company has not recognised asset for âright to recover returned goodsâ under âOther current assetsâ as it estimates the value of the returned Inventory to be Nil.

(a) Provision for indirect tax matters is created in respect of likely adverse outcome of indirect tax cases pending against the Company. The provision is based on managementâs estimate of probable outflow on account of settlement after considering advice obtained from external consultants of the Company, where considered necessary. Management cannot estimate with certainty the timing of the final outcome.

(b) The Company had received a notice from Bruhat Bangalore Mahanagara Palike (BBMP) on August 7, 2014, followed by reminder notices, demanding '' 70.8 as improvement charges for its factory land. The Company filed a writ petition with the Honourable High Court of Karnataka (âCourtâ) challenging the levy of aforesaid improvement charges. The Court had granted an interim order of stay on said demand notice. The Companyâs writ petition remains pending in the Court, but based on legal advice, management, as a prudent accounting practice has provided for the amount claimed. The Company intends to pursue the necessary legal recourse in this matter. Management cannot estimate with certainty the timing of the final outcome.

* Indirect tax matters:

# Income Tax:

The aforesaid contingent liabilities do not include any possible liabilities arising from a draft order issued to the Company, during the year, by the assessing authority which contains certain transfer pricing adjustments aggregating to '' 475.8 (2021: '' 542.4) with approximate tax effect of '' 164.7 (2021: '' 187.7) (excluding interest and penalty, if any). The company has challenged the matter before the dispute resolution panel and the final order is yet to be passed by the Income Tax department.

The Company believes that its position on the aforesaid demands will likely be upheld in the appellate process and accordingly no provision has been made in the financial statements for such demands.

(ii) During the year, the Company received a demand notice for an amount of '' 1,573.9 million (and interest thereupon) under Trade Margin

Rationalisation notification (âTMR notificationâ) from National Pharmaceutical Pricing Authority (NPPA) alleging overcharging of a patented anti-cancer drug sold during the period of 8 March 2019 to 31 January 2021. The said drug has been included with certain other anti-cancer medicines, on which trade margin caps are applicable under TMR notification. Based on evaluation, Management is of the view that the TMR notification is not applicable to the aforesaid patented drug and all applicable laws relating to the pricing of the product have been complied with. The Company has filed a Writ Petition before the High Court of Delhi challenging the NPPAâs demand notice and the matter is pending adjudication. Based on assessment, supported by external legal advice, Management has concluded that it has a strong case and the Company can defend its position. Accordingly, no provision has been made in these financial statements.

Extension and termination options

Extension and termination options are included in various leasing arrangements for buildings. These are used to maximise operational flexibility in terms of managing assets used in the operations. All the extension and termination options are exercisable only by the Company.

The Company has not provided any residual value guarantees in any of the leasing arrangements.

(i) Defined contribution plans (Refer note 27)

The Company contributes to defined contribution plans such as provident fund, superannuation and other funds as mentioned below as required by statute or Company policy.

For Field Staff [Professional Sales Representative (PSR)]: 15 days salary for each year of service, subject to maximum limit specified as per The Payment of Gratuity (Amendment) Act, 2018.

Payable on retirement, death or disability:

For Management staff: One monthâs salary last drawn by member for each year of service, without limit.

For Non-Management staff: One monthâs salary last drawn by member for each year of service, subject to maximum limit specified as per The Payment of Gratuity (Amendment) Act, 2018.

For Field Staff (PSR): 15 days salary for each year of service, subject to maximum limit specified as per The Payment of Gratuity (Amendment) Act, 2018.

Benefits payable for employees who have joined on or after 01 August 2014:

Gratuity is payable in accordance with the provisions of The Payment of Gratuity (Amendment) Act, 2018.

(B) Provident fund (Defined benefit plan):

The Company operates a defined benefit plan for Provident fund for management staff. The minimum statutory rate at which the annual rate of interest is payable to the beneficiaries of such plan is administered by the Central Government. The Company is obligated to make good the shortfall in statutory rate prescribed by the Government and rate of interest declared by the trust. The Company also has an obligation to fund any shortfall in the fair value of plan assets as compared with the defined benefit obligation.

(i) The discount rate is based on the prevailing market yield on Government securities as at the balance sheet date for the estimated term of obligations.

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

(iii) IALM represents Indian Assured Lives Mortality.

i) Actuarial risk and sensitivity

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

Investment risk The present value of the defined benefit plan liability is calculated using a discount rate which is determined by

reference to market yields at the end of the reporting period on Government bonds. If the plan assets underperform this yield, this will create a deficit. The Company maintains plan asset for Gratuity through insurance company and for Provident fund is managed through trust.

Interest risk A decrease in the bond interest rate will increase the plan liability.

Longevity risk The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of

plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

Salary risk The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan

participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.

The Company ensures that the investment positions are managed within the asset-liability matching framework that has been developed to achieve long-term investments that are in line with the obligations under employee benefit plans. Within this framework, the Companyâs asset-liability matching objective is to match assets to the defined benefit obligations by investing in plan asset managed by an insurance company and through the Provident Fund trust.

Sensitivities due to mortality and withdrawals are not material and hence impact of change is not disclosed.

The Ultimate Holding Company, AstraZeneca Pic. United Kingdom (AZUK), listed on London Stock Exchange had introduced a LongTerm Incentive Stock Compensation Plan in the form of Restricted Stock Units (RSUs) to attract and retain the employees. As per the plan, the awards are granted to qualifying management employees of the Company. One restricted stock unit represents one AZUK share. When the stock units vests after three years, restricted stock units are automatically exchanged for the same number of AZUK shares. Moreover, the RSUs do not expire. There is no performance criteria. After the vesting period, the employees are free to either hold or sell the shares.

i. Market riskForeign Currency Exposure

Foreign currency risk is the risk that the future cash flows of a financial asset or a financial liability will fluctuate because of changes in foreign exchange rates. The operations of the Company are carried out mainly in India. However, the Company exports services to foreign customers and receives certain services from foreign vendors which are denominated in USD, GBP, EUR and AUD. Hence the Company is currently exposed to the currency risk arising from fluctuations in the exchange rates between the above currencies and Indian rupee. The Company does not enter into any forward contracts considering the total exposure is not material to the operations of the Company. Foreign currency exposure which was not hedged, are as follows:

a. Trade Receivables

b. Cash and Bank balances, other financial assets

iii. Liquidity risk

39. Capital management a. Risk management

All revenues of the Company are recognised at a point in time.

(ii) Revenue from sale of tablets and injectables includes an amount of '' 128.3 (2021 : '' 86.2) which was classified as deferred revenue as at the end of previous year. Refer note 18.

(iii) Performance obligations and remaining performance obligations

Performance obligations of the Company to deliver goods are required to be satisfied within a period of 12 months or less.

Accordingly, management has elected to use the practical expedient provided in Ind AS 115 and has not disclosed the transaction price of unsatisfied performance obligations as at the year end.

Sale of services:

In respect of clinical services, the Company is entitled to charge the customer an amount that corresponds directly with the value to the customer of the entityâs performance completed to date, measured based on the actual costs incurred by the Company in providing clinical services. Considering the nature of the arrangement, management has used the practical expedient in Ind AS 115 and has not disclosed the transaction price of unsatisfied performance obligations in respect of clinical trial services as at the year end.

44. Additional regulatory information required by Schedule III

(ii) Wilful defaulter: The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

(iii) Borrowings secured against current assets: The

Company did not have any loans or other borrowings availed from banker or financial instiutions during the current or previous year.

(iv) Compliance with number of layers of companies:

The Company does not have any subsidiary company and hence provisions relating to layers perscribed under Companies Act, 2013 and Companies (Restriction on Number of Layers) Rules, 2017 (âLayering Rulesâ) are not applicable to the Company.

(v) Compliance with approved scheme(s) of arrangements: The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

(vi) Utilisation of borrowed funds and share premium: The

Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the group (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

(All amounts in '' million, except per share and share data) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever

by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

(vii) Undisclosed income: There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

(viii) Details of crypto currency or virtual currency: The

Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

(ix) Valuation of Property, plant and equipment and investment property: The Company has not revalued its Property, plant and equipment (including right-of-use assets) during the current or previous year.

(x) Title deeds of immovable properties not held in name of the Company: The title deeds of all the immovable properties (other than properties where the company is the lessee and the lease agreements are duly executed in favour of the lessee), as disclosed in Note

3 to the financial statements, are held in the name of the Company.

(xi) Registration of charges or satisfaction with Registrar of Companies: There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.

45. Grant of Exclusive Distribution Rights

During the previous year, the Company had entered into a distribution agreement (the âagreementâ) with a customer for specified products (âProductsâ). Pursuant to this agreement, an upfront fee of '' Nil (2021: '' 50.0) was received from the customer towards marketing and promotion already carried out by the Company in order to create market presence for the products. Management determined that such marketing and promotion was a distinct service provided to the customer. The said upfront fee met the point in time recognition criteria as per Ind AS 115 and was recognised separately from the sale of products envisaged in the agreement.

46. Provident Fund - Supreme Court Judgement

The Company has evaluated the impact of Supreme Court (âSCâ) judgement dated 28 February, 2019 in the case of Regional Provident Fund Commissioner (II) West Bengal v/s Vivekananda Vidyamandir and Others, in relation to exclusion of certain allowances from the definition of âbasic wagesâ of the relevant employees for the purposes of determining contribution to Provident Fund (âPFâ) under the Employeesâ Provident Fund & Miscellaneous Provisions Act, 1952. There

are interpretation issues relating to the said SC judgement. Based on such evaluation, management has concluded that affect of the aforesaid judgement on the Company is not material and accordingly, no provision has been made in the financial statements.

47. Impact of COVID-19 pandemic

The Company has not experienced any significant impact on its operations, recoverability of carrying amounts of financial and non-financial assets and liquidity due to COVID 19 pandemic. As the pandemic continues to evolve, the Company will continue to closely monitor for any material changes to future economic conditions.

48. The Board of Directors, at its meeting dated 26 May, 2022, have recommended a final dividend of '' 8 per equity share aggregating to '' 200.0 which is subject to approval of shareholders at the ensuing Annual General Meeting.

49. Previous yearâs figures have been regrouped/ reclassified wherever necessary, to conform with the current year classification.

Mar 31, 2018

1. Segment reporting

The Company is engaged in the business of manufacture, distribution and marketing of pharmaceutical products and provides clinical trial services to an overseas group company. The Board of Directors have been identified as the Chief Operating Decision Maker (CODM). CODM reviews the Company level data for resource allocation and assessment of the Companyâs performance. As the Companyâs activities fall within single business segment, separate segment wise disclosures are not applicable. The additional disclosures as required by IND AS 108 are as below:

(b) Geographic information

Revenues generated from operations are from sales to customers both within and outside of India. Details of the same are stated below. The information below is based on the locations of the customers.

(c) Information about major customers

Revenue from sale of tablets of Rs 688.6 (2017: Rs 488.1) are derived from a customer operating in the pharma industry.

(d) Location of non-current assets

Non-current operating assets including property, plant and equipment and capital work-in-progress are all located in India.

* The Company has received a service tax demand of Rs 25.6 for the period April 2006 to March 2012 vide OIO 62/2014-15 dated July 31, 2014 on the expenditure incurred in foreign currency for various expenses such as registration fee, transportation, accommodation for attending conferences/seminars, meetings and trainings. The order has been passed by Commissioner confirming the demand along with interest and penalties, against which the Company has paid Rs 1.8 under protest as

on date and filed an appeal with Customs Excise and Service Tax Appellate Tribunal (âCESTATâ) on January 8, 2015 which is currently pending. Out of the above balance, the Company has provided Rs 12.8 and the balance amount of Rs 12.8 is considered as a contingent liability.

* The Company has received a service tax demand of Rs 4.9 for the period April 2012 to March 2013 vide OIO 92/ 2014-15 dated October 20, 2014 on the expenditure incurred in foreign currency for various expenses such as registration fee, transportation, accommodation for attending conferences/seminars, meetings and trainings. The order has been passed by Commissioner confirming the demand along with interest and penalties, against which the Company has paid Rs 0.2 under protest as

on date and filed an appeal with Customs Excise and Service Tax Appellate Tribunal (âCESTATâ) on March 17, 2015 which is currently pending. Out of the above balance, the Company has provided Rs 3.3 and the balance amount of Rs 1.6 is considered as a contingent liability.

* The Company has received a service tax demand of Rs 5.8 for the period April 2010 to November 2012 vide OIO 138/2015 dated December 17, 2015 disallowing input tax credit on services such as sponsorship, insurance, event management, waste disposal services. The order has been passed by Commissioner confirming the demand along with interest and penalties, against which the Company has paid Rs 0.4 under protest as on date and has filed an appeal with Commissioner of Central Excise (Appeals) on February 18, 2016 which is currently pending. Out of the above demand, the Company has provided Rs 2.9 and the balance amount of Rs 2.9 is considered as a contingent liability.

* The Company has received a service tax demand of Rs 3.4 for the period April 2013 to March 2016 vide OIO 3/2018 dated February 15, 2018 where in the Commissioner has held that Company is liable to pay service tax on notice period recovery from the resigned employees. The order has been passed by Assistant Commissioner (Central Tax) confirming the demand along with interest and penalties against which the Company has filed an appeal with Commissioner of Central Excise (Appeals) on April 20, 2018 which is currently pending. Out of the above demand, the Company has provided Rs 1.9 and the balance amount of Rs 1.5 is considered as a contingent liability.

* The Company has received a service tax demand of Rs 1.9 for the period April 2013 to March 2016 vide OIO 5/2018 dated February 15, 2018 where in the Commissioner has held that the Company has availed cenvat input credit beyond stipulated period of six months/one year. The order has been passed

by Assistant Commissioner (Central Tax) confirming the demand along with interest and penalties, against which the Company has reversed the cenvat input credit of Rs 1.0 under protest and has filed an appeal with Commissioner of Central Excise (Appeals) on May 1, 2018. The said demand of Rs 1.9 is considered as a contingent liability.

* The Company has received a service tax demand of Rs 3.4 for the period April 2015 to March 2016 vide OIO 4/2018 dated February 15, 2018 wherein the Commissioner has held that the foreign currency expenditure incurred by the Company towards reimbursement of salary cost is subject to service tax under reverse charge mechanism. The order has been passed by Assistant Commissioner (Central Tax) confirming the demand along with interest and penalties, against which the Company has filed an appeal with Commissioner of Central Excise (Appeals) on May 1, 2018. Out of the above demand, the Company has provided for Rs 3.2 and balance amount of Rs 0.2 is considered as a contingent liability.

* The Transfer Pricing Officer (âTPOâ) vide its Order dated January 28, 2013 for the period April 2008 to March 2009 made an adjustment to the clinical trial income of the Company by determining the armâs length margin at 43.73%. The Dispute Resolution Panel passed an unfavorable order against the Company on November 19, 2013 after which the AO confirmed the demand vide its Order dated December 30, 2013 amounting to Rs 84.3. The Company filed a submission before the Income Tax Appellate Tribunal (âITATâ) on February 28, 2014. The ITAT has passed an order on December 27, 2016 by giving relief on adjustments made with respect to armâs length margin for clinical trials income and Corporate Tax adjustments (Allowance for expenses in respect of sample distribution, grants, sponsorship). Based on ITAT order, the Assessing Officer (AO) on December 19, 2017 has passed the final order with a refund of '' 55.8 without considering certain tax payments/ tax adjustment already done by the Company. Accordingly, the Company has filed rectification petition on January 24, 2018 before the AO to rectify mistakes apparent from record.

# The Transfer Pricing Officer (âTPOâ) vide its Order dated December 22, 2013 for the period April 2009 to March 2010 made an adjustment to the clinical trial segment of the Company. The AO also carried out adjustments relating to disallowance of expenses in respect of sample distribution, grants, sponsorship, medical donations and equipment donation amounting to '' 49.4. The Company has filed an objection before the Dispute Resolution Panel (âDRPâ) on April 7, 2014 subsequent to which, the Assessing Officer (AO) on December 31, 2014 has passed the final order and has disallowed grants, sponsorship, medical donations and equipment donation and raised final demand of Rs 5.1. The Company has paid the amount of Rs 5.1 under protest and the entire amount is considered as a contingent liability.

# The Transfer Pricing Officer (âTPOâ) vide its Order dated January 30, 2015 for the period April 2010 to March 2011 made an adjustment to the clinical trials income of the Company.

The AO also carried out adjustments relating to disallowance of provision for doubtful advances, difference between interest income as per books and TDS certificate and disallowance of expenses in respect of sample distribution, grants, sponsorship, medical donations and equipment donation. The Company filed an appeal with the Dispute Resolution Panel (âDRPâ) on March 27, 2015, Post the hearing held with DRP during the year, the Assessing Officer (AO) on January 20, 2016 and August 29,

2016 has passed the final order confirming the liability of Rs 6.2 which has been disclosed as contingent liability. The Company has filed an appeal with Income Tax Appellate Tribunal (ITAT)

on March 17, 2016 challenging the disallowances made by the DRP which is currently pending.

# The Transfer Pricing Officer (âTPOâ) vide its Order dated January 29, 2016 for the period April 2011 to March 2012 has charged a markup on the receipt of reimbursement of expenses by the Company from overseas group companies.

The Assessing Officer (âAOâ) carried out adjustments relating to disallowance of expenses incurred on health care professionals, payout made to Director of Health Services against price difference, sales returns not supported by evidence, cost of samples, additional depreciation claim, SAD refund, VRS expenses and 40(a)(ia) Disallowance. The Company has filed an appeal with the DRP on March 18, 2016 and DRP passed an order on November 11, 2016. Subsequently the final order was issued by the AO dated December 13, 2016 reducing the net refund due to the Company to Rs 27.5. The Company has filed an appeal with ITAT on February 20, 2017 challenging the disallowances made by the DRP order and the entire amount of Rs 27.5 is considered as contingent liability.

(c) Other matters:

i) The Transfer Pricing Officer (âTPOâ) vide its Order dated October 27, 2016 for the period April 2012 to March 2013 has made adjustments under (a) manufacturing segment, (b) trading segment due to short fall in Arms Length Margin and (c) mark up on receipt of reimbursement of expenses by the Company from overseas group companies. The Assessing Officer (âAOâ) also carried out adjustments relating to disallowance of expenses incurred on health care professionals and cost of samples.

The Company has filed an appeal with the DRP on January 3, 2017 and DRP has passed an order on September 19, 2017. Subsequently the final order dated October 31, 2017 was issued by the AO reducing the business losses of the Company by Rs 328. The Company has filed an appeal with ITAT on December

19, 2017 challenging the disallowances and reduction of business loss made by the DRP

ii) The Transfer Pricing Officer (âTPOâ) vide its draft order dated December 4, 2017 for the period April 2013 to March 2014 has made adjustments under (a) Manufacturing Segment

(b) Clinical Trial Segment due to short fall in Arms Length Margin and (c) mark up on receipt of reimbursement of expenses by the Company from overseas group companies. The TPO has also considered subvention as revenue receipt. The Assessing Officer (âAOâ) also carried out adjustments relating to disallowance of expenses incurred on health care professionals and cost of samples and passed a draft assessment order dated December 29, 2017 wherein a demand of Rs 399 has been determined. The Company has filed its objections with the DRP on January 29, 2018 against this draft assessment order.

2. Related party disclosures

(i) Names of related parties and related party relationship (a) Related parties where control exists and/or where transactions have occurred:

Name_of_the_entity_Name_of_relationship_

Holding Company AstraZeneca Pharmaceuticals AB, Sweden

Holding Company of AstraZeneca Pharmaceuticals AB, Sweden AstraZeneca AB, Sweden

Holding Company of AstraZeneca AB, Sweden AstraZeneca Treasury Limited, United Kingdom

Ultimate Holding Company AstraZeneca Plc, United Kingdom

Fellow subsidiaries with whom the Company had transactions AstraZeneca Singapore Pte Ltd, Singapore

during the year AstraZeneca India Private Limited, India

AstraZeneca Pharmaceuticals LP, USA AstraZeneca UK Limited, United Kingdom IPR Pharmaceuticals Inc, Puerto Rico Employeesâ Benefit Plans AstraZeneca Pharma India Limited Employees Gratuity Fund Trust

AstraZeneca Pharma India Limited Management Staff Provident Fund Trust

b) Key Management Personnel

- Managing Director Mr.Sanjay Murdeshwar (resigned w.e.f. June 30, 2017)

Mr. Gagan Singh Bedi (appointed w.e.f. July 1, 2017)

- Director and Chief Financial Officer Mr. Rajesh Marwaha (appointed w.e.f. December 2, 2016)

- Non-Executive Directors Mr. Ian Brimicombe (resigned w.e.f. May 31, 2017)

Ms. Claire-Marie OâGrady (resigned w.e.f. December 2, 2016)

Mr. Gregory David Emil Mueller (appointed w.e.f. December 2, 2016)

Mr. Ian John Parish (appointed w.e.f. August 8, 2017)

c) Independent Directors Mr. Narayan K Seshadri

Ms. Kimsuka Narsimhan Ms. Revathy Ashok

Mr. D. E. Udwadia (resigned w.e.f. December 2, 2016)

Mr. K. S. Shah (resigned w.e.f. December 2, 2016)

35. Employee benefits

(i) Defined contribution plans

The Company contributes to defined contribution plans such as provident fund, superannuation and other funds as mentioned below as required by statute or Company policy.

In respect of such contributions, the Company has recognized the following amounts in statement of profit or loss:

(ii) Post employment defined benefit plans

(A) Gratuity

Benefits payable for employees who have joined before August 1, 2014:

Employees who are in continuous service for a period of 3 years are eligible for gratuity benefit as per the terms of the Trust Deed. Terms of the benefit are as below:

Payable on voluntary exit/termination:

For Management Staff:

For Non-Management staff: One monthâs salary for each year of service, subject to maximum limit specified as per the Payment of Gratuity (Amendment) Act, 2018.

For Field Staff [Professional Sales Representative (PSR)]: 15 days salary for each year of service, subject to maximum limit specified as per the Payment of Gratuity (Amendment) Act, 2018.

Payable on retirement, death or disability:

For Management staff: One monthâs salary last drawn by member for each year of service, without limit.

For Non-Management staff: One monthâs salary last drawn by member for each year of service, subject to maximum limit specified as per the Payment of Gratuity (Amendment) Act, 2018.

For Field Staff (PSR): 15 days salary for each year of service, subject to maximum limit specified as per the Payment of Gratuity (Amendment) Act, 2018.

Benefits payable for employees who have joined on or after August 1, 2014:

Gratuity is payable in accordance with the provisions of âThe Payment of Gratuity (Amendment) Act, 2018â.

(B) Provident fund (Defined benefit plan):

The Company operates a defined benefit plan for Provident fund for management staff. The minimum statutory rate at which the annual rate of interest is payable to the beneficiaries of such plan is administered by the Central Government. The Company is obligated to make good the shortfall in statutory rate prescribed by the Government and rate of interest declared by the trust. The Company also has an obligation to fund any shortfall in the fair value of plan assets as compared with the defined benefit obligation.

i) Actuarial risk and sensitivity

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

Investment risk The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on Government bonds. If the plan assets underperform this yield, this will create a deficit. The Company maintains plan asset for Gratuity through insurance company and for Provident fund is managed through trust.

Interest risk A decrease in the bond interest rate will increase the plan liability.

Longevity risk The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of

plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

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

Sensitivities due to mortality and withdrawals are not material and hence impact of change is not disclosed.

3. Employees Restricted Stock Plan

The Ultimate Holding Company, AstraZeneca Plc. United Kingdom (AZUK), listed on London Stock Exchange had introduced a Long Term Incentive Stock Compensation Plan in the form of Restricted Stock Units (RSUs) to attract and retain the employees. As per the plan, the awards are granted to qualifying management employees of the Company. One restricted stock unit represents one AZUK share. When the stock units vests after three years, restricted stock units are automatically exchanged for the same number of AZUK shares. Moreover, the RSUs do not expire. There is no performance criteria. After the vesting period, the employees are free to either hold or sell the shares.

Fair value of RSUs granted

The fair values were determined using a modified version of the binomial model. This method incorporated expected dividends but no other features into the measurements of fair value. The grant date fair values of share awards does not take into account service and non-market related performance conditions.

4. Financial instruments - accounting classification and fair value measurement

The management assessed that carrying amount of cash and cash equivalents, trade receivables, trade payables and other current liabilities approximate their fair values largely due to the short-term maturities of these instruments.

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

5. Financial risk management objectives and policies

i. Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices such as currency risk.

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2018 and March 31, 2017.

* Amount below rounding off norms adopted by the Company.

Foreign currency sensitivity

The following table demonstrates the sensitivity to a reasonable possible change in USD exchange rates, with all other variables held constant. The Companyâs exposure to foreign currency changes for all other currencies is not material.

The Company is not subject to any other market risk

ii. Credit risk

a. Trade Receivables

Credit risk arises from the possibility that counter party may not be able to settle their obligations as agreed. Customer credit risk is managed by each business unit subject to the Companyâs established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on credit rating scorecard and individual credit limits are defined in accordance with this assessment. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of account receivable.

The ageing analysis of the receivables (gross of provision) has been considered from the date the invoice falls due.

6. Capital management

For the purpose of the Companyâs capital management, capital includes issued equity capital and all other equity reserves. The primary objective of the Companyâs capital management is to maximize the shareholder value. The Company has not availed any borrowings and mainly funded through equity. The Company is subsidiary of AstraZeneca Pharmaceuticals AB, Sweden (Holding Company), the existing surplus funds along with the cash generated by the Company are sufficient to meet its current/non-current obligation and working capital requirements.

7. Corporate Social Responsibility

(a) Gross amount required to be spent by the Company during the year: '' 0.7 (2017: '' Nil)

8. The Company cash flow statement does not have any liabilities which have been classified under financing activities in the statement of cash flows. Accordingly, requirements of paragraphs 44 (A) to 44 (E) of Ind AS 7, Statement of Cash Flows relating to presentation of âNet Debt reconciliationâ is not applicable to the Company.

9. As previously disclosed, by way of a letter dated March 1,

2014, AstraZeneca Pharmaceuticals AB, the promoter of the Company had proposed a voluntary delisting of the Companyâs equity shares from the National Stock Exchange and the Bombay Stock Exchange. Such proposed delisting is subject to an on-going inquiry with SEBI and that inquiry has not yet been resolved. In any event, based on the passage of time, any potential future proposal for voluntary delisting of the Company would need to be conducted de novo.

10. First-time adoption of Ind AS

These financial statement for the year end March 31, 2018 are the first financial statement prepared in accordance with Ind AS.

The accounting policies set out in Note 2 have been applied in preparing the financial statement for year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of opening Ind AS balance sheet at April 1, 2016 (the Companyâs date of transition to Ind AS). The Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows is set out in the following tables and notes.

A. Exemptions and exceptions availed

Ind AS 101, First-time adoption of Indian Accounting Standards allows first time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. Set out below are the applicable Ind AS 101 optional exemptions applied in the transition from previous GAAP to Ind AS.

(All amounts in Rs million, except per share and share data)

AstraZeneca Pharma India Limited Notes to the Financial Statements

(a) Ind AS optional exemptions:

(i) Deemed cost

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

(ii) Share based payment

The Company has elected not to apply Ind AS 102, Share-based Payment, to Restricted Stock Units (RSU) that vested prior to the date of transition to Ind AS.

(a) Ind AS mandatory exceptions:

(i) Estimates

An entityâs estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with Indian GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at April 1, 2016 are consistent with the estimates as at the same date made in conformity with Indian GAAP. The Company made estimates for following items in

accordance with Ind AS at the date of transition as these were not required under Indian GAAP:

1) Impairment of financial assets based on expected credit loss model; and

2) Share-based payments. Refer Note C (i) below.

(ii) Derecognition of financial assets and liabilities:

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

(iii) Classification and measurement of financial assets:

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

B. Reconciliations between IGAAP and Ind AS

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.

(ii) Rent equalization reserve

As per Ind AS 17, Leases, the Company is not required to recognize lease rentals on a straight line basis, if the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases. The Companyâs lease escalations are in line with the general inflation rate, as a result the rent equalization reserve created under previous GAAP is reversed. Consequently, the total equity has increased by '' 8.2 as at April 1, 2016 and '' 10.7 as at March 31, 2017. Profit for the year ended March 31, 2017 has increased by '' 2.5.

(iii) Employee stock compensation plan

The ultimate holding company has allotted RSUs to the employees of the Company to attract and retain the certain employees. The Company recorded expense based on the recharge from AZ UK Limited, United Kingdom with the credit to payables. As per Ind AS 102, the Company has recorded fair value of RSUs provided to employees by the ultimate holding company at fair value of the RSUs on grant date over the vesting period. The amount recharged by the fellow subsidiary company is debited to employee share compensation reserve. Consequently, the total equity increased by Rs 26.2 as at April 1, 2016 and Rs 30.0 as at March 31, 2017. The profit for the year ended March 31, 2017 decreased by Rs 3.8.

(iv) Reclassification of net actuarial (gain)/loss on defined benefit plan to other comprehensive income

Under Ind AS, the actuarial gains and losses, return on plan assets, excluding the amounts included in the net interest expense on the net defined benefit liability and the impact of change in asset cieling are recognized in other comprehensive income instead of profit or loss. Under previous GAAP these remeasurement gains and losses were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended March 31, 2017 increased by Rs 10.5. There is no impact in total equity as at March 31, 2017 and April 1, 2016.

(v) Deferred Tax

Under IGAAP, deferred tax assets on unabsorbed depreciation and unused business losses were recognized only to the extent that there was virtual certainty supported by convincing evidence that sufficient future taxable income would be available against which such deferred tax assets could be realized. Ind AS requires deferred tax asset to be recognized for unused tax losses, unabsorbed depreciation and unused tax credits to the extent that it is probable that future taxable profits will be available against which such items can be utilized. As a result of change in the recognition of deferred tax asset on such items, equity as at April 1, 2016 has increased by Rs 463.5 and as at March 31, 2017 is Rs 402.2. The profit for the year ended March 31, 2017 has decreased by Rs 61.3.

(vi) Others

Other mainly include adjustment on account of discounting of non-current interest free security deposits, employee loans, fair value of equity instruments etc.

Financial Statements

(vii) Excise duty

Under previous GAAP, revenue from sale of products was presented net of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty, wherever applicable. The excise duty is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in increase in total revenue and total expenses for the year ended March 31, 2017 by Rs 49.5. There is no impact on the total equity and profit.

11. Previous yearâs figures have been regrouped/reclassified wherever necessary to conform with the current year classification.

Mar 31, 2017

Notes:

(a) Includes terminal compensation benefits paid during the year under the voluntary retirement scheme amounting to Rs, 91,890,248 (2016: Rs, Nil).

(b) Represents reimbursement of cost of Restricted Stock Units issued by AstraZeneca Plc, United Kingdom "the ultimate holding company" to the qualifying employees of the Company [Refer note 2.37].

(c) Employee benefit expenses shown above is net of reimbursable expenses recovered from related parties under appropriate line items [refer note 2.29].

* The Company had received a service tax demand of Rs, 23,883,332 for the period April 2006 to March 2012, on the expenditure incurred in foreign currency for various expenses such as registration fee, transportation, accommodation for attending conferences / seminars, meetings and trainings. The Commissioner vide OIO 62/2014 confirmed the demand along with interest and penalties, against which the Company has filed an appeal with Customs Excise and Service Tax Appellate Tribunal ("CESTAT") on 8 January 2015 which is currently pending. Out of the above balance, the Company has provided Rs, 11,064,245 as a matter of prudent accounting practice and the balance amount of Rs, 12,819,087 is considered as a contingent liability.

* The Company had received a service tax demand of Rs, 5,874,992 for the period April 2010 to November 2012 vide OIO 138/2015 disallowing input tax credit on services such as sponsorship, insurance, event management, waste disposal services. The order has been passed by Commissioner confirming the demand along with interest and penalties, against which the Company has paid Rs, 440,625 under protest as on date and has filed an appeal with Commissioner of Central Excise (Appeals) on 18 February 2016 which is currently pending. Out of the above demand, the Company has provided Rs, 2,937,496 as a matter of prudent accounting practice and the balance amount of Rs, 2,496,871 is considered as a contingent liability.

* The Transfer Pricing Officer ("TPO") vide its Order for the period April 2008 to March 2009 made an adjustment to the clinical trial income of the Company by determining the arm''s length margin at 43.73%. Moreover, the Assessing Officer ("AO") carried out adjustments relating to disallowance of provision for doubtful advances, difference between interest income as per books and TDS certificate and disallowance of expenses in respect of sample distribution, grants, sponsorship, medical donations and equipment donation. The Dispute Resolution Panel passed an unfavorable order against the Company on 19 November 2013 after which the AO confirmed the demand vide its Order dated 30 December 2013 amounting to '' 84,299,533. The Company filed a submission before the Income Tax Appellate Tribunal ("ITAT") on 28 February 2014. 50% of the total demand has been deposited under protest as per the order of the AO amounting to '' 42,149,817. The stay order on the balance tax demand expired on 4 August 2014, for which the Company filed an application with the ITAT. The Bench members heard both the parties and decided to club the stay matter along with the main hearing on technical merits and listed the matter for hearing on 9 July, 2015. The Department Representative informed the Bench that no coercive action will be initiated in the interim. The ITAT has passed an order on 27 December 2016 which was received by the Company on 10 January 2017. The ITAT has given relief on adjustments made with respect to arm''s length margin for clinical trials income and Corporate Tax adjustments (Allowance for expenses in respect of sample distribution, grants, sponsorship). The Company is currently in the process of filing an application before the AO/ TPO along with the relevant submissions requesting them to give effect to the order of ITAT. The Transfer Pricing Officer ("TPO") vide its Order for the period April 2010 to March 2011 made an adjustment to the clinical trials income of the Company. Moreover, the AO carried out adjustments relating to disallowance of provision for doubtful advances, difference between interest income as per books and TDS certificate and disallowance of expenses in respect of sample distribution, grants, sponsorship, medical donations and equipment donation. The Company filed an appeal with the Dispute Resolution Panel ("DRP") on 27 March 2015, Post the hearing held during the year, the DRP on 20 January 2016 has passed the final order confirming the final liability at Rs, 10,397,300. The Company has filed an appeal with ITAT on 17 March 2016 challenging the disallowances made by the DRP. The case is listed before the ITAT on 18 May 2017 for hearing.

The Transfer Pricing Officer ("TPO") vide its Order for the period April 2011 to March 2012 has charged a markup on the receipt of reimbursement of expenses by the Company from overseas group companies. Moreover, the Assessing Officer ("AO") carried out adjustments relating to disallowance of expenses incurred on health care professionals, payout made to DHS against price difference, sales returns not supported by evidence, cost of

(i) Names of related parties and description of relationship:

Holding Company AstraZeneca Pharmaceuticals AB, Sweden

Holding Company of AstraZeneca AstraZeneca AB, Sweden Pharmaceuticals AB, Sweden

Holding Company of AstraZeneca AB, Sweden AstraZeneca Treasury Limited, United Kingdom

Ultimate Holding Company AstraZeneca Plc, United Kingdom

Fellow subsidiaries AstraZeneca Singapore Pte Ltd, Singapore;

AstraZeneca Pharmaceuticals (Phils) Inc, Philippines; AstraZeneca India Private Limited, India; AstraZeneca Pty Ltd, Australia;

AstraZeneca Pharmaceutical Co. Ltd, China AstraZeneca Pharmaceuticals LP, USA;

IPR Pharmaceuticals Inc, Puerto Rico;

AstraZeneca GmbH, Germany;

AstraZeneca UK Limited, United Kingdom

Key management personnel

- Managing Director Sanjay Murdeshwar

- Whole time director Rajesh Marwaha (appointed w.e.f 2 December 2016)

- Directors Ian Brimicombe

Ms. Claire-Marie OâGrady (appointed w.e.f 6 November 2015 and resigned w.e.f 2 Dec 2016)

Rebekah Martin (resigned w.e.f 6 November 2015) Justin Ooi (resigned w.e.f 11 January 2016)

Gregory David Emil Mueller (appointed w.e.f 2 December 2016)

The Companyâs primary business segments are related to Healthcare (engages in the manufacture, trading and sale of pharmaceutical products) and Others (Clinical trial services to an overseas group company). The segmentation is based on the nature of activity involved in each segment, which is in line with the business risks attached with each segment, and having regard to the internal organization and management structure.

The accounting policies consistently used in the preparation of the financial statements are also applied to record revenue and expenditure in individual segments.

Revenue and direct expenses in relation to segments are categorized based on items that are individually identifiable to that segment, while other costs, wherever allocable, are apportioned to the segments on an appropriate basis.

Assets and liabilities in relation to segments are categorized based on items that are individually identifiable to that segment. Certain assets and liabilities are not specifically allocable to individual segments as these are used inter changeably. The Company therefore believes that it is not practicable to provide segment disclosures relating to such assets and liabilities and accordingly these are separately disclosed as âunallocatedâ. Such assets are primarily located in India.

Clinical trial services does not qualify as a separate segment as defined in AS - 17 - âSegment Reportingâ and hence has been disclosed as others.

(a) Lease rental expenses

The Company has operating lease arrangements for residential, office premises and vehicles. These lease arrangements range for a period between 11 months and 10 years, which include both cancellable and non-cancellable leases. The leases are renewable for a further period on mutually agreeable terms and also include rent escalation clauses.

(b) Lease rental Income

The Company has operating lease arrangement for office premises where in a portion of the area has been leased to a fellow subsidiary. This lease arrangement is for a duration of 11 months and is cancellable in nature. The lease is renewable for a further period on mutually agreeable terms and also includes rent escalation clause.

The Holding Company, AstraZeneca Plc. United Kingdom (AZUK), listed on London Stock Exchange had introduced a Long-Term Incentive Stock Compensation Plan in the form of Restricted Stock Units (RSUs) to attract and retain the best people. As per the plan, the awards granted to individuals are AstraZeneca Ordinary Shares registered and purchased on the London Stock Exchange. One restricted stock represents one AZUK share. When the stock vests after three years, restricted stock are automatically exchanged for the same number of AZUK shares. Moreover, the RSUs do not expire. There is no performance criteria. After the vesting period, the employees are free to either hold or sell the shares.

* Negative value represents reversal of cost for employee exits and forfeitures.

# Included in other expenses payable under other current liabilities.

1. Employee benefits-Gratuity plan (Defined benefit plan)

(a) Benefits payable for employees who have joined before 01 August 2014:

Eligibility for benefit: Every employee who has completed 3 years or more of service would be eligible for gratuity benefit as per the terms of the Trust Deed.

Payable on voluntary exit/termination:

For Management staff:

Completed years of service (years) Number of days eligible for every completed year of service

3 to 9 15 days salary for every year of service subject to the maximum limit as per Gratuity Act, 1972

10 to 14 3/4^th of monthâs salary for every year of service, without limit

15 and above One monthâs salary for every year of service, without limit

For Non-Management staff: For Non-Management staff:

One monthâs salary for each year of service, One monthâs salary last drawn by member for subject to maximum limit specified as per the each year of service, subject to maximum limit Gratuity Act, 1972. specified as per the Gratuity Act, 1972.

For Field staff (PSR): For Field staff (PSR):

15 days salary for each year of service, subject 15 days salary for each year of service, subject

to maximum limit specified as per the Gratuity to maximum limit specified as per the Gratuity

Act, 1972. Act, 1972.

Payable on retirement, death or disability:

For Management staff:

One monthâs salary last drawn by member for each year of service, without limit.

2. Employee benefits-Gratuity plan (continued)

Notes:

(a) The discount rate is based on the prevailing market yield on Government securities as at the balance sheet date for the estimated term of obligations

(b) The expected return on plan assets is determined considering several applicable factors mainly the composition of plan assets held, assessed risk of asset management, historical results of return on plan assets, and the companyâs policy for plan asset management

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

3. Employee benefits-Provident and other funds

(a) Contribution to provident and other funds (Defined contribution plans):

The Company contributes to defined contribution plans such as Provident fund, superannuation and other funds as mentioned below as required by statute/policy.

In respect of such contributions, the Company has recognized the following amounts in the Statement of Profit and Loss:

(b) Provident fund (Defined benefit plan):

The Company operates a defined benefit plan for Provident fund for management staff. The minimum statutory rate at which the annual rate of interest is payable to the beneficiaries of such plan is administered by the Central Government. The guidance on implementing AS 15, Employee Benefits (revised 2005) issued by Accounting Standard Board states that benefits involving employer established provident funds, which require interest shortfall to be compensated are to be considered as defined benefits plans. This is pursuant to the guidance note effective from 1 April 2011 issued by the Institute of Actuaries of India. The actuary has accordingly provided a valuation and based on the assumptions described below, there is no shortfall in the provident fund as at 31 March 2017.

Notes:

(a) The discount rate is based on the prevailing market yield on Government securities as at the balance sheet date for the estimated term of obligations

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

* Specified Bank Notes (SBNs) mean the bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees as defined under the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs no. S.O. 3407(E), dated the 8th November, 2016.

4. Corporate Social Responsibility Expenditure(CSR).

As per section 135 of The Companies Act 2013, a CSR committee has been formed by the company. As the average net profit of the company during the three immediate preceding financial years is negative, the Company was not required to spend on CSR activities during the current financial year.

5. Taxation:

(a) The Finance Act, 2001 has introduced, with effect from assessment year 2002-03 (effective April 1, 2001), detailed Transfer Pricing regulations for computing the taxable income and expenditure from âinternational transactionsâ between â associated enterprisesâ on an âarmâs lengthâ basis. These regulations, inter-alia, also require the maintenance of prescribed documents and information including furnishing a report from an accountant within due date of filing the Return of Income. For the year 31 March 2016, prescribed certificate of the accountant has been obtained and this did not envisage any tax liability. For the fiscal year ended 31 March 2017, the Company is in the process of obtaining the certificate of the Accountant. The Company does not envisage any tax implication arising based out of such study.

(b) The Company has accounted for Minimum Alternate Tax (MAT) expense amounting to '' 87,625,912 (2016: '' 5,046,583) and has not recognized MAT credit entitlement as on 31 March 2017 in the absence of convincing evidence that the Company will pay normal tax during the specified years in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax as issued by the ICAI.

(c) Deferred tax asset on timing differences, unabsorbed depreciation and business losses carried forward have not been recognized in these accounts in the absence of âvirtual certainty supported by convincing evidenceâ that sufficient future taxable income will be available for set off however, this position will be reassessed at every year end and the deferred tax asset will be accounted for, if appropriate.

6. In 2013-2014, the Promoter Company (AstraZeneca Pharmaceuticals AB Sweden), vide its letter dated 1 March 2014 had proposed voluntary delisting (the delisting proposal) offer to the public shareholders of the Company in accordance with the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (Delisting Regulations), with a view to delist the equity shares of the Company from the Bombay Stock Exchange Ltd. (BSE) and the National Stock Exchange of India Ltd. (NSE) where the equity shares of the Company are listed. The Board of Directors of the Company, in their meeting dated 15 March 2014 approved the delisting proposal submitted by the Promoter Company. Further, the Delisting Proposal was approved by the requisite majority of shareholders of the Company as required under Regulation 8 of SEBI (Delisting of Equity Shares) Regulations, 2009. The Company received in-principle approval of NSE and BSE for voluntary delisting of equity shares from the said exchanges.

A writ petition has been filed by two shareholders of the Company before the Honourable High Court of Judicature at Bombay (''''the Court''''), seeking inter-alia an order from the Court, restraining the Company and AstraZeneca Pharmaceuticals AB, Sweden ("AZPAB") from implementing the delisting proposal of AZPAB. The Court which heard the petition on 8 October 2014 has disposed the same, with the directions that the Petitioners as well as the Company and AZPAB are at liberty to prefer appeal against Securities Exchange Board of India (SEBI) Order dated 24 June 2014, to the Securities Appellate Tribunal (''SAT''), within six weeks; until the SAT hears and disposes of the Petitioners '' appeal, the Company and AZPAB, shall not take any further steps in the process of delisting of equity shares of the Company; and the SAT to hear and decide the appeals as expeditiously as possible and preferably by 28 February 2015.

Further, an appeal has also been filed by two shareholders of the Company before the SAT, Mumbai, against part of SEBI''s Order dated 24 June 2014, in relation to delisting proposal of AZPAB. At the hearing held on 5 May 2015, the SAT posted the matter to be heard on 9 July 2015 which was subsequently rescheduled for hearing on 11 August 2015. In the final hearing held on 11 September 2015, the Sat has disposed off the appeal directing SEBI to complete the investigation with in a period of six months from date of its order and pass appropriate order on merits. The SAT has further directed the Company and the Promoter not to proceed with the delisting of equity shares till the completion of investigation and passing of the above mentioned order on merits by SEBI. Also the SAT has directed the Company and the Promoters that if the order passed by SEBI on merits is adverse to the appellants, then they said order shall not be given effect to from the date of passing the said order till it is communicated to the appellants and four weeks thereafter.

7. Previous yearâs figures have been regrouped/ reclassified wherever necessary to conform to current year classification.

Mar 31, 2016

# The Company has received a service tax demand of Rs. 23,508,332 for the period April 2006 to March 2012, on the expenditure incurred in foreign currency for various expenses such as registration fee, transportation, accommodation for attending different conferences / seminars, meetings and trainings. The Commissioner vide OIO 62/2014 confirmed the demand along with interest and penalties, against which the Company has filed an appeal with Customs Excise and Service Tax Appellate Tribunal ("CESTAT") on 8 January 2015. Out of the above balance, the Company has provided Rs. 11,064,245 and the balance amount of Rs. 12,444,087 is considered to be contingent in nature.

# The Company has received a service tax demand of Rs. 5,874,992 for the period April 2010 to November 2012 vide

OIO 138/2015 disallowing input tax credit on services such as sponsorship, insurance, event management, waste disposal services. The order has been passed by Commissioner confirming the demand along with interest and penalties, against which the Company has paid Rs. 440,625 as payment under protest as on date and has filed an appeal with Commissioner of Central Excise (Appeals) on 18 February 2016. Out of the above balance, the Company has provided Rs. 2,937,496 and the balance amount of Rs. 2,496,871 is considered to be contingent in nature. The Company is currently awaiting the hearing for the same.

# The Transfer Pricing Officer ("TPO") vide its Order for the period April 2008 to March 2009 made an adjustment to the clinical trial segment of the Company by determining the arm''s length margin at 43.73%. Moreover, the Assessing Officer ("AO") carried out adjustments relating to disallowance of provision for doubtful advances, difference between interest income as per books and TDS certificate and disallowance of expenses in respect of sample distribution, grants, sponsorship, medical donations and equipment donation. The Dispute Resolution Panel passed an unfavorable order on 19 November 2013 after which the AO confirmed the demand vide its Order dated 30 December 2013 amounting to Rs. 84,299,533. The Company filed a submission before the Income Tax Appellate Tribunal ("ITAT") on 28 February 2014. 50% of the total demand has been deposited as per the order of the AO amounting to " 42,149,817. The stay order on the balance tax demand expired on 4 August 2014, for which the Company filed an application with the ITAT. The Bench members heard both the parties and decided to club the stay matter alongwith the main hearing on technical merits and listed the matter for hearing on 9 July, 2015. The Department Representative informed the Bench that no coercive action will be initiated in the interim. The hearing date has been rescheduled to 30 May 2016.

# The Transfer Pricing Officer ("TPO") vide its Order for the period April 2010 to March 2011 made an adjustment to the clinical trial segment of the Company. Moreover, the AO carried out adjustments relating to disallowance of provision for doubtful advances, difference between interest income as per books and TDS certificate and disallowance of expenses in respect of sample distribution, grants, sponsorship, medical donations and equipment donation. The Company filed an appeal with the Dispute Resolution Panel ("DRP") on 27 March 2015, Post the hearing held during the year, the DRP on 20 January 2016 has passed the final order confirming the final liability at Rs. 10,397,300. The Company has filed an appeal with ITAT on 17 March 2016 challenging the disallowances made by the DRP. The case is yet to be listed before ITAT for hearing.

# The Transfer Pricing Officer ("TPO") vide its Order for the period April 2011 to March 2012 has charged a markup on the receipt of reimbursement of expenses by the Company. Moreover, the AO carried out adjustments relating to disallowance of expenses incurred on health care professionals, payout made to DHS against price difference, sales returns not supported by evidence, cost of samples, additional depreciation claim, SAD refund, VRS expenses and 40(a)(ia) Disallowance. . The Company has filed an appeal with the Dispute Resolution Panel ("DRP") on 18 March 2016 and is currently awaiting hearing on the same. The adjustment as per the order have been reduced the refund claim by Rs. 85,036,946.

** The Company has received an assessment order from Delhi VAT Department (DVAT) wherein the department has disallowed certain sales returns amounting to Rs. 4,755,672 for the period of 2010-2011 and has imposed tax, interest and penalty amounting to Rs. 887,017. The Company has paid 10% of the total demand as payment under protest as on date and has filed an appeal with department contesting the disallowance of sales returns. Out of the above balance, the Company has provided Rs. 443,509 and the balance amount of Rs. 354,807 is considered to be contingent in nature.

** The Company has received re-assessment order from Punjab VAT Department for the period 2006-2007 wherein the department has a raised demand of Rs. 1,771,199 for the stock write off. On the grounds of period of limitation, the Company has filed a writ petition with the Honourable Punjab High Court and an appeal with Deputy Excise and Taxation Commissioner, Patiala Division, Patiala on 4 June 2015. Out of the above balance, the Company has provided Rs. 885,599 and the balance amount of Rs. 885,600 is considered to be contingent in nature. Till date there is no hearing in this case.

The Company is not carrying any provision for the cases other than those mentioned above in its books of account, as the Company is confident of successfully litigating the matters.

(c) Others

The Company had received a notice from Bruhat Bangalore Mahanagara Palike (BBMP) on 5 November 2012 demanding a payment of Rs. 155,804,930 as development charges for its factory land. The Company had filed a writ petition in the Honourable High Court of Karnataka challenging the levy of the aforesaid development charges and accordingly on 25 February 2013, the Company received a stay from the Honourable High Court of Karnataka on the payment of the aforesaid development charges. There is no further development on the said case during the year.

The Company had received a notice dated 07 August 2014 from Bruhat Bangalore Mahanagara Palike (BBMP) demanding Rs. 70,820,430 as improvement charges for its factory land. The Company filed a writ petition in the Honourable High Court of Karnataka challenging the levy of aforesaid improvement charges. Accordingly on

11 February 2015, the Company has received a stay from Honourable High Court of Karnataka for the execution of demand notice. The case is yet to be listed before the Honourable High Court of Karnataka for hearing as on date.

Notes:

1. Stock indicated above is net of provision to bring down the value of the inventories to their net realisable values and to account for obsolescence and includes stock inventory held for distribution as samples (disclosed under other current assets).

2. Turnover indicated above is net of excise duty. Turnover does not include the amount reversed for provision of DHS and other chargebacks amounting to Rs. 54,750,000 which has been adjusted in the current year sales.

3. Previous year figures are given in brackets.

1. Segment reporting

The primary segments of the Company are its business segments as follows:

(i) Healthcare - The Company engages in the manufacture, trading and sale of pharmaceutical products.

(ii) Clinical trial services - The Company renders clinical trial services on pharmaceuticals products to its group companies.

The accounting policies consistently used in the preparation of the financial statements are also applied to record revenue and expenditure in individual segments.

Revenue and direct expenses in relation to segments are categorised based on items that are individually identifiable to that segment, while other costs, wherever allocable, are apportioned to the segments on an appropriate basis. Certain income and expenses are not specifically allocable to individual segments as the underlying assets and services are used interchangeably. The Company therefore believes that it is not practicable to provide segment disclosures relating to such income and expenses and accordingly such expenses are separately disclosed as ''unallocated'' and directly charged against total income.

Assets and liabilities in relation to segments are categorised based on items that are individually identifiable to that segment. Certain assets and liabilities are not specifically allocable to individual segments as these are used interchangeably. The Company therefore believes that it is not practicable to provide segment disclosures relating to such assets and liabilities and accordingly these are separately disclosed as ''unallocated''. Assets are primarily located in India.

Clinical trial services do not qualify as separate segments as defined in AS - 17 - ''Segment Reporting'' and hence have been disclosed as others.

2. Leases

The Company is obligated under non-cancellable operating leases for residential and office premises. Total rental expense under non-cancellable operating leases amounted to Rs. 27,233,772 (previous year: Rs. 22,122,059) for the year ended 31 March 2016.

The Company is also obligated under cancellable lease for residential and office premises, which are renewable at the option of lessor and lessee. Total rental expense under cancellable operating lease entered amounted to Rs. 42,890,703 (previous year: Rs. 63,307,901) for the year ended 31 March 2016.

Further the Company is obligated under operating lease agreements for vehicles. Total lease rental expense under the said agreement amounted to Rs. 839,406 (previous year: Rs. 647,120) for the year ended 31 March 2016.

3. Employee stock compensation plan [AstraZeneca Plc., UK Restricted Stock Units]

The Holding Company, AstraZeneca Plc. United Kingdom (AZUK), listed on London Stock Exchange had introduced a Long-Term Incentive Stock Compensation Plan in the form of Restricted Stock Units (RSUs) to attract and retain the best people. As per the plan, the awards granted to individuals are AstraZeneca Ordinary Shares registered and purchased on the London Stock Exchange. One restricted stock represents one AZUK share. When the stock vests after three years, restricted stock are automatically exchanged for the same number of AZUK shares. Moreover, the RSUs do not expire. There is no performance criteria. After the vesting period, the employees are free to either hold or sell the shares.

4. Dues to micro and small enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum in accordance with the ''Micro, Small and Medium Enterprises Development Act, 2006 (''the Act''). Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2016 has been made in the financial statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier as at the balance sheet date.

5. Gratuity plan

The Company has the following defined Gratuity plan.

Leaving service benefit:

Eligibility for benefit: Every employee who has completed 3 years or more of service would be eligible for gratuity benefit as per the terms of the Trust Deed.

For Non-Management staff:

One month''s salary for each year of service, subject to maximum limit specified as per the Gratuity Act, 1972.

For Field staff (PSR):

15 days salary for each year of service, subject to maximum limit specified as per the Gratuity Act, 1972.

Normal retirement benefit, death and disability benefit:

For Management staff:

One month''s salary last drawn by member for each year of service, without limit.

For Non-Management staff:

One month''s salary last drawn by member for each year of service, subject to maximum limit specified as per the Gratuity Act, 1972.

For Field staff (PSR):

15 days salary for each year of service, subject to maximum limit specified as per the Gratuity Act, 1972.

6. Provident fund

The Company contributed Rs. 27,998,520 (previous year Rs. 31,019,778) towards provident fund during the year ended 31 March 2016.

The guidance on implementing AS 15, Employee Benefits (revised 2005) issued by Accounting Standard Board states that benefits involving employer established provident funds, which require interest shortfalls to be recompensed are to be considered as defined benefits plans. The Actuarial Society of India has issued the final guidance for measurement of provident fund liabilities for the year ended 31 March 2016. The actuary has accordingly provided a valuation and based on the below provided assumptions there is no shortfall as at 31 March 2016.

7. Management believes that the Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expenses and that of provision for taxation.

8. In 2013-2014, the Promoter Company (AstraZeneca Pharmaceuticals AB, Sweden), vide its letter dated 1 March 2014 had proposed voluntary delisting (the delisting proposal) offer to the public shareholders of the Company in accordance with the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (Delisting Regulations), with a view to delist the equity shares of the Company from the BSE Ltd. (BSE) and the National Stock Exchange of India Ltd. (NSE) where the equity shares of the Company are listed. The Board of Directors of the Company, in their meeting dated 15 March 2014 approved the delisting proposal submitted by the Promoter Company. Further, the Delisting Proposal was approved by the requisite majority of shareholders of the Company as required under Regulation 8 of SEBI (Delisting of Equity Shares) Regulations, 2009.The Company received in-principle approval of National Stock Exchange and Bombay Stock Exchange for voluntary delisting of equity shares from the said exchanges.

A writ petition has been filed by two shareholders of the Company before the Honourable High Court of Judicature at Bombay (''''the Court''''), seeking inter-alia an order from the Court, restraining the Company and AstraZeneca Pharmaceuticals AB, Sweden (''AZPAB") from implementing the delisting proposal of AZPAB. The Court which heard the petition on 8 October 2014 has disposed the same, with the directions that the Petitioners as well as the Company and AZPAB are at liberty to prefer appeal against Securities Exchange Board of India (SEBI) Order dated 24 June 2014, to the Securities Appellate Tribunal, within six weeks; until the SAT hears and disposes of the Petitioners" appeal, the Company and AZPAB, shall not take any further steps in the process of delisting of equity shares of the Company; and the SAT to hear and decide the appeals as expeditiously as possible and preferably by 28 February 2015. Further, an appeal has also been filed by two shareholders of the Company before the Securities Appellate Tribunal (SAT), Mumbai, against part of SEBI''s Order dated 24 June 2014, in relation to delisting proposal of AZPAB. At the hearing held on 5 May 2015, the SAT posted the matter to be heard on 9 July 2015 which was subsequently rescheduled for hearing on 11 August 2015. In the final hearing held on 11 September 2015, the SAT has disposed off the appeal directing SEBI to complete the investigation within a period of six months from date of its order and pass appropriate order on merits. The SAT has further directed the Company and the Promoter not to proceed with the delisting of equity shares till the completion of investigation and passing of the above mentioned order on merits by SEBI. Also the SAT has directed the Company and the Promoters that if the order passed by SEBI on merits is adverse to the appellants, then the said order shall not be given effect to from the date of passing the said order till it is communicated to the appellants and four weeks thereafter.

9. During the previous year ended 31 March 2015, the Company entered into agreements with group companies - AstraZeneca UK, London (AZ UK), AstraZeneca AB, Sweden (AZ PAB) IPR Pharmaceuticals Inc. Puerto Rico (AZ IPR). As per the terms and conditions, the Company will receive reimbursement of certain costs incurred for the marketing and promotion of the new launch products and support for the distribution of other products supplied by group companies, in accordance with the arm''s length return on revenues. Accordingly, the Company billed '' 677,579,383 to the group companies during the year ended 31 March 2015.Out of the total amount, Rs. 201,270,355 was towards the reimbursement of certain costs incurred for the marketing and promotion of the new launch product and the balance amount aggregating Rs. 476,309,028 towards support for the distribution of other products supplied by group companies, in accordance with the arm''s length return on revenues. The amount billed towards the transfer pricing adjustment had been accounted as other operating income and the reimbursement towards marketing and promotion cost has been reduced from the respective expenses.

Further, during the current quarter and year ended 31 March 2016, the Company has incurred Rs. 124,803,318 towards certain costs for the marketing and promotion of a new launch product. As the upfront fees received during the year for distribution and service agreements exceeds the expenses incurred towards marketing and promotion of the new launch product, the same have not been billed to the Group companies in the current year.

Mar 31, 2015

1 Contingent liabilities

(a) Claims against the company not acknowledged as debt

(Amount in Rs.) Particulars As at As at 31 March 2015 31 March 2014

Excise and service tax matters* 26,311,359 17,782,367

Income tax related # (net of payment under protest) 76,046,266 103,284,455

* The Company has received a service tax demand of Rs. 23,508,332 for the period April 2006 to March 2012, on the expenditure incurred in foreign currency for various expenses such as registration fee, transportation, accommodation for attending different conferences / seminars, meetings and trainings. The Commissioner vide OIO 62/2014 confirmed the demand along with interest and penalties, against which the Company has filed an appeal with Customs Excise and Service Tax Appellate Tribunal ("CESTAT") on 8 January 2015.

* The Company has received a service tax demand of Rs. 2,803,027 for the period April 2012 to March 2013, on the expenditure incurred in foreign currency for various expenses such as registration fee, transportation, accommodation for attending different conferences / seminars, meetings and trainings. The final order has been passed by Commissioner (Appeals) confirming the demand along with interest and penalties, against which the Company has filed an appeal with CESTAT on 17 March 2015.

# The Transfer Pricing Officer ("TPO") vide its Order for the period April 2008 to March 2009 made an adjustment to the clinical trial segment of the Company by determining the arm's length margin at 43.73%. Moreover, the Assessing Officer ("AO") carried out adjustments relating to disallowance of provision for doubtful advances, difference between interest income as per books and TDS certificate and disallowance of expenses in respect of sample distribution, grants, sponsorship, medical donations and equipment donation. The Dispute Resolution Panel passed an unfavorable order on 19 November 2013 after which the AO confirmed the demand vide its Order dated 30 December 2013 amounting to Rs. 84,299,533. The Company filed a submission before the Income Tax Appellate Tribunal ("ITAT") on 28 February 2014. 50% of the total demand has been deposited as per the order of the AO amounting to Rs. 42,149,717. The stay order on the balance tax demand expired on 4 August 2014, for which the Company filed an application with the ITAT. The Bench heard both the parties and decided to club the stay matter along with the main hearing to be held on 2 June 2015.

# The TPO vide its Order for the period April 2010 to March 2011 made an adjustment to the clinical trial segment of the Company. Moreover, the AO carried out adjustments relating to disallowance of provision for doubtful advances, difference between interest income as per books and TDS certificate and disallowance of expenses in respect of sample distribution, grants, sponsorship, medical donations and equipment donation. The Company has filed an appeal with the Dispute Resolution Panel on 27 March 2015 and is currently awaiting hearing on the same. The amount demanded as per the order is Rs. 33,896,450.

The Company is not carrying any provision for all the above mentioned amounts in its books of account, as the Company is confident of successfully litigating the matters.

(c) Others

The Company had received a notice from Bruhat Bangalore Mahanagara Palike (BBMP) on 5 November 2012 demanding a payment of Rs. 155,804,930 as development charges for its factory land. The Company had filed a writ petition in the Honourable High Court of Karnataka challenging the levy of the aforesaid development charges and accordingly on 25 February 2013, the Company received a stay from the Honourable High Court of Karnataka on the payment of the aforesaid development charges. There is no further development during the year.

During the current year, the Company has received a notice dated 07 August 2014 from Bruhat Bangalore Mahanagara Palike (BBMP) demanding Rs. 70,820,430 as improvement charges for its factory land. The Company has filed a writ petition in the Honourable High Court of Karnataka challenging the levy of aforesaid improvement charges. Accordingly on 11 February 2015, the Company has received a stay from Honourable High Court of Karnataka for the execution of demand notice. The case is yet to be listed before the Honourable High Court of Karnataka for hearing as on date.

2. Related parties

(i) Names of related parties and description of relationship:

Holding Company AstraZeneca Pharmaceuticals AB, Sweden

Holding Company of AstraZeneca

Pharmaceuticals AB, Sweden AstraZeneca AB, Sweden

Holding Company of AstraZeneca AB, Sweden AstraZeneca Treasury Limited, United Kingdom

Ultimate Holding Company AstraZeneca Plc, United Kingdom

Fellow subsidiaries AstraZeneca SDN Bhd, Malaysia;

AstraZeneca Singapore Pte Ltd, Singapore;

AstraZeneca Philippines;

AstraZeneca Belgium;

AstraZeneca India Private Limited;

PT AstraZeneca Indonesia;

AstraZeneca Pty Ltd, Australia;

AstraZeneca China;

AstraZeneca Pharmaceuticals LP USA;

AstraZeneca Thailand;

IPR Pharmaceuticals Inc;

AstraZeneca KK, Japan;

AstraZeneca Korea;

AstraZeneca Vietnam;

AstraZeneca GmbH;

AstraZeneca Ltd, United Kingdom;

Key management personnel

* Managing Director Sanjay Murdeshwar (appointed w.e.f 2 May 2013)

* Whole-time director Robert Ian Haxton (resigned w.e.f 14 December 2014)

* Directors Ian Brimicombe

Justin Ooi (appointed w.e.f 2 May 2013)

Rebekah Martin (appointed w.e.f 3 November 2014)

The primary segments of the Company are its business segments as follows:

(i) Healthcare - The Company engages in the manufacture, trading and sale of pharmaceutical products.

(ii) Clinical trial services - The Company renders clinical trial services on pharmaceuticals products to its group companies.

(iii) Co-promotional services - The Company rendered co-promotion services for pharmaceuticals products to Bristol Myers Squibb India Private Limited (BMS) till 31 January 2014. Effective 1 February 2014, AstraZeneca Group Companies has acquired the Global Diabetic business of Bristol-Myers Squibb Company. Consequent to the aforesaid acquisition, the Company has entered into a consignment sale agreement with BMS and accordingly sale of diabetic products by BMS in India for the periods post 1 February 2014 has been included as a part of sales of the Company.

The accounting policies consistently used in the preparation of the financial statements are also applied to record revenue and expenditure in individual segments.

Revenue and direct expenses in relation to segments are categorised based on items that are individually identifiable to that segment, while other costs, wherever allocable, are apportioned to the segments on an appropriate basis. Certain income and expenses are not specifically allocable to individual segments as the underlying assets and services are used interchangeably. The Company therefore believes that it is not practicable to provide segment disclosures relating to such income and expenses and accordingly such expenses are separately disclosed as 'unallocated' and directly charged against total income.

Assets and liabilities in relation to segments are categorised based on items that are individually identifiable to that segment. Certain assets and liabilities are not specifically allocable to individual segments as these are used interchangeably. The Company therefore believes that it is not practicable to provide segment disclosures relating to such assets and liabilities and accordingly these are separately disclosed as 'unallocated'. Assets are primarily located in India.

Clinical trial services and co-promotion services do not qualify as separate segments as defined in AS - 17 - 'Segment Reporting' and hence have been disclosed as others.

The Company is obligated under non-cancellable operating leases for residential and office premises. Total rental expense under non-cancellable operating leases amounted to Rs. 22,122,059 (previous year: Rs. 17,970,905) for the year ended 31 March 2015.

The Company is also obligated under cancellable lease for residential and office premises, which are renewable at the option of lessor and lessee. Total rental expense under cancellable operating lease entered amounted to Rs. 63,307,901 (previous year: Rs. 60,908,400) for the year ended 31 March 2015.

Further the Company is obligated under operating lease agreements for vehicles. Total lease rental expense under the said agreement amounted to Rs. 647,120 (previous year: Rs. 2,077,881) for the year ended 31 March 2015.

3. Employee stock compensation plan [AstraZeneca Plc., UK Restricted Stock Units]

The Holding Company, AstraZeneca Plc. United Kingdom (AZUK), listed on London Stock Exchange had introduced a Long-Term Incentive Stock Compensation Plan in the form of Restricted Stock Units (RSUs) to attract and retain the best people. As per the plan, the awards granted to individuals are AstraZeneca Ordinary Shares registered and purchased on the London Stock Exchange. One restricted stock represents one AZUK share. When the stock vests after three years, restricted stock are automatically exchanged for the same number of AZUK shares. Moreover, the RSUs do not expire. There is no performance criteria. After the vesting period, the employees are free to either hold or sell the shares.

The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum in accordance with the 'Micro, Small and Medium Enterprises Development Act, 2006 ('the Act'). Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2015 has been made in the financial statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier as at the balance sheet date.

4. Gratuity plan

The Company has the following defined Gratuity plan.

Leaving service benefit:

Eligibility for benefit: Every employee who has completed 3 years or more of service would be eligible for gratuity benefit as per the terms of the Trust Deed.

For Management staff:

Completed years of service (years) Number of days eligible for every completed year of service (days)

3 to 9 15 days salary subject to maximum limit as per Gratuity Act, 1972

10 to 14 3/4th of month's salary, without limit

15 and above One month's salary for every year of service, without limit

For Non-Management staff:

15 days salary for each year of service, subject to maximum limit specified as per the Gratuity Act, 1972.

Normal retirement benefit, death and disability benefit:

For Management staff:

One month's salary last drawn by member for each year of service, without limit.

For Non-Management staff:

One month's salary last drawn by member for each year of service, subject to maximum limit specified as per the Gratuity Act, 1972.

The Company contributed Rs. 31,019,778 (previous year Rs. 36,098,407) towards provident fund during the year ended 31 March 2015.

The guidance on implementing AS 15, Employee Benefits (revised 2005) issued by Accounting Standard Board states that benefits involving employer established provident funds, which require interest shortfalls to be recompensed are to be considered as defined benefits plans. The Actuarial Society of India has issued the final guidance for measurement of provident fund liabilities for the year ended 31 March 2015. The actuary has accordingly provided a valuation and based on the below provided assumptions there is no shortfall as at 31 March 2015.

5. Management believes that the Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Management is of the opinion that its international transactions are at arm's length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expenses and that of provision for taxation.

6. During the previous year, the Promoter Company (AstraZeneca Pharmaceuticals AB, Sweden), vide its letter dated 1 March 2014 had proposed voluntary delisting (the delisting proposal) offer to the public shareholders of the Company in accordance with the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (Delisting Regulations), with a view to delist the equity shares of the Company from the BSE Ltd. (BSE), Bangalore Stock Exchange Ltd. (BgSE) and the National Stock Exchange of India Ltd. (NSE) where the equity shares of the Company are listed. The Board of Directors of the Company, in their meeting dated 15 March 2014 had approved the delisting proposal submitted by the Promoter Company. Further, the Delisting Proposal has been approved by the requisite majority of shareholders of the Company as required under Regulation 8 of SEBI (Delisting of Equity Shares) Regulations, 2009.The Company has received in-principle approval of National Stock Exchange, Bombay Stock Exchange and Bangalore Stock Exchange, for voluntary delisting of equity shares from the said exchanges.

A writ petition has been filed by two shareholders of the Company before the Honourable High Court of Judicature at Bombay ("the Court"), seeking inter-alia an order from the Court, restraining the Company and AstraZeneca Pharmaceuticals AB, Sweden ("AZPAB") from implementing the delisting proposal of AZPAB. The Court which heard the petition on 8 October 2014 has disposed the same, with the directions that the Petitioners as well as the Company and AZPAB are at liberty to prefer appeal against Securities Exchange Board of India (SEBI) Order dated 24 June 2014, to the Securities Appellate Tribunal, within six weeks; until the SAT hears and disposes of the Petitioners' appeal, the Company and AZPAB, shall not take any further steps in the process of delisting of equity shares of the Company; and the SAT to hear and decide the appeals as expeditiously as possible and preferably by 28 February 2015. Further, an appeal has also been filed by two shareholders of the Company before the Securities Appellate Tribunal (SAT), Mumbai, against part of SEBI's Order dated 24 June 2014, in relation to delisting proposal of AZPAB. There has been no further update in the aforesaid case as on date. At the hearing held on 5 May 2015,the hearing has been posted on 9 July 2015.

7. During the financial year 2011-12, a First Information Report (FIR) was filed by the Central Bureau of Investigation ('CBI') against the Company on 23 February 2012 wherein it is alleged that the Company submitted a false affidavit with respect to rates quoted by the Company to the institution (Directorate of Health Services, Delhi). It is further alleged that unknown officers of the Directorate of Health Services, Delhi (DHS) and unknown officials of the Company and other private persons conspired to cancel the recovery proceedings by DHS. During the previous year, the investigation was concluded and a charge sheet was filed in the Court by CBI on 5 August 2013. Neither the Company nor any of its officials/ employees have been named as accused in the charge sheet.

8. During the current year, the Company entered into agreements with group companies - AstraZeneca UK, London (AZ UK) on 24 March 2015 , AstraZeneca AB, Sweden (AZ PAB) on 25 March 2015 and with IPR Pharmaceuticals Inc. Puerto Rico (AZ IPR) on 26 March 2015.The Company would receive from the group companies, the reimbursement of certain costs incurred for the marketing and promotion of the new launch products and support for the distribution of other products supplied by group companies, in accordance with the arm's length return on revenues. Accordingly, the Company has billed Rs. 677,579,383 to the group companies during the year ended 31 March 2015.Out of the total amount, Rs. 201,270,355

Mar 31, 2014

Terms and rights attached to equity shares

The Company has only one class of share referred to as equity shares having par value of Rs. 2 each. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of 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.

The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the Annual General Meeting. During the current year, the amount of per share dividend recognised as proposed distributions to equity shareholders is Rs. Nil per share (previous year: Rs. Nil per share).

Short-term provisions

* includes the following:

a) Provision for direct and indirect taxes is utilised to settle adverse outcomes of cases against the Company. The provisions are based on an advices obtained by the Company. The Company, however, cannot estimate with reasonable certainty the period of utilisation of the same.

b) Provision for sales return made for expected loss on account of sales return. The provision are based on reliable estimate based on past experience of the Company. The Company, however, cannot estimate with reasonable certainty the period of utilisation of the same.

c) Rs. 111,314,431 (previous year Rs. 123,865,443) representing provision created towards expected charge backs from certain customers. The provision has been created based on best estimate by the management. The Company, however, cannot estimate with reasonable certainty the period of utilisation of the same. In respect of this provision, the disclosures required by Acconting Standard 29 on "Provisions, Contingent Liabilities and Contingent Assets" (AS 29) have not been provided in accordance with paragraph 72 of AS 29.

Other non-current assets

* Represents compensation receivable from National Highway Authority of India (NHAI) with respect to land acquired from the Company in the financial year 2004 and 2011-12. The amount expected to be recovered within a period of twelve months from the balance sheet date was disclosed in note 2.15 - Other current assets in the previous year.

During the current year, the Company has received an amount of Rs. 100,045,017 against land acquired by NHAI during the financial year 2011-12 as against the original award of Rs. 76,454,406, accordingly, the gain arising on account of receipt of enhanced compensation has been recognised under the head other income.

During the current year, the Company has also received the compensation amounting to Rs. 13,704,037 in relation to land acquired by NHAI in the year 2004.

Other expense

Consequent to subvention agreement (Âthe agreement'') dated May 7, 2013 between the Company and AstraZeneca Pharmaceutical AB (Âthe Promoter Company''), the Promoter Company had agreed to provide a voluntary non repayable financial grant of approximately USD 22.5 million (Indian rupee equivalent 1,386,000,000) to USD 26.5 million (Indian rupee equivalent 1,632,400,000) over the three years period - financial year 2013-14 to financial year 2015-16 in order to assist the Company in its efforts to establish/ grow its presence in the Indian market despite the apprehended losses that it may suffer. As per the terms of the agreement, the first tranche of USD 14 million (Indian rupee equivalent 862,400,000) has been agreed to be provided to the Company during the financial year 2013-14) and for subsequent financial years, the Promoter Company would, at its discretion decide the amount to be paid under this agreement, bearing in mind the need for continuing this support and upon reviewing the Company''s financial position. Accordingly, the Company received the first tranche of USD 14 million (Indian rupee equivalent 862,400,000) during the current year.

The Promoter Company vide its letter dated March 1, 2014 informed the Board of Directors of the Company regarding the revision to the agreement, whereby restricting the payment under the agreement to USD 14 million and period covered under the agreement to financial year 2013-14. Accordingly, the Promoter Company vide letter dated April 25, 2014 has terminated the agreement effective March 25, 2014 on the grounds that the Company''s business and financial performance has been inline with more recent expectations, and that the Company shall not require any further grant for the financial years 2014-15 and 2015-16. Consequent to the termination of the agreement, out of the total subvention receipt amounting to USD 14 million (Indian rupee equivalent 862,400,000), the Company has credited subvention receipt amounting to Rs. 138,889,547 representing loss incurred by the Company for the current year to the statement of profit and loss and the balance subvention receipt amounting to Rs. 723,510,453 has been transferred to capital reserve.

Contingent liabilities

(a) Claims against the company not acknowledged as debt

(Amount in Rs.Rs.) Particulars As at As at 31 March 2014 31 March 2013

Excise and service tax matters 17,782,367 12,121,052 Income tax related 103,284,455 79,727,230

(b) Guarantees (Amount in Rs.)

Particulars As at As at 31 March 2014 31 March 2013

In respect of bank and other guarantees 26,913,831 25,263,035

(c) Others

The Company had received a notice from Bruhat Bangalore Mahanagara Palike (BBMP) on November 5, 2012 demanding a payment of Rs. 155,804,930 as development charges for its factory land. The Company has filed a writ petition in the Honorable High Court of Karnataka challenging the levy of the aforesaid development charges and accordingly on February 25, 2013, the Company received a stay from the Honorable High Court of Karnataka on the payment of the aforesaid development charges.

Details of goods manufactured and traded

Notes:

1. Stock indicated above is net of provision to bring down the value of the inventories to their net realisable values and to account for obsolescence and includes stock inventory held for distribution as samples.

2. Turnover indicated above is net of excise duty.

3. Previous year figures are given in brackets.

Segment Reporting

The primary segments of the Company are its business segments as follows:

(i) Healthcare - The Company engages in the manufacture, trading and sale of pharmaceutical products.

(ii) Clinical trial services - The Company renders clinical trial services on pharmaceuticals products to its group companies.

(iii) Co-promotional services - The Company rendered co-promotion services for pharmaceuticals products to Bristol Myers Squibb India Private Limited (BMS) till January 31, 2014. Effective February 1, 2014, AstraZeneca Group Companies has acquired the Global Diabetic business of Bristol-Myers Squibb Company. Consequent to the aforesaid acquisition, the Company has entered into a consignment sale agreement with BMS and accordingly sale of diabetic products by BMS in India for the period February 1, 2014 to March 31, 2014 has been included as part of the sales of the Company.

The accounting policies consistently used in the preparation of the financial statements are also applied to record revenue and expenditure in individual segments.

Revenue and direct expenses in relation to segments are categorised based on items that are individually identifiable to that segment, while other costs, wherever allocable, are apportioned to the segments on an appropriate basis. Certain income and expenses are not specifically allocable to individual segments as the underlying assets and services are used interchangeably. The Company therefore believes that it is not practicable to provide segment disclosures relating to such income and expenses and accordingly such expenses are separately disclosed as Âunallocated'' and directly charged against total income.

Assets and liabilities in relation to segments are categorised based on items that are individually identifiable to that segment. Certain assets and liabilities are not specifically allocable to individual segments as these are used interchangeably. The Company therefore believes that it is not practicable to provide segment disclosures relating to such assets and liabilities and accordingly these are separately disclosed as Âunallocated''. Assets are primarily located in India.

Note: Certain assets and liabilities of the Healthcare segment are interchangeably used for ÂOther'' segment for limited purposes. Identification of such assets and liabilities is not feasible. Hence, such assets have not been allocated to any segment.

Leases

The Company is obligated under non-cancellable operating leases for residential and office premises. Total rental expense under non-cancellable operating leases amounted to Rs. 17,970,905 (previous year: Rs. 16,563,098) for the year ended March 31, 2014.

The Company is also obligated under cancellable lease for residential and office premises, which are renewable at the option of lessor and lessee. Total rental expense under cancellable operating lease entered amounted to ? 60,908,400 (previous year: Rs. 49,378,022) for the year ended March 31, 2014.

Further the Company is obligated under operating lease agreements for vehicles. Total lease rental expense under the said agreement amounted to Rs. 2,077,881 (previous year: Rs. 1,227,418) for the year ended March 31, 2014.

Dues to Micro and Small Enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated August 26, 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum in accordance with the Micro, Small and Medium Enterprises Development Act, 2006 (Âthe Act''). Accordingly, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2014 has been made in the financial statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier as at the balance sheet date.

Provident fund

The Company contributed RS.36,098,407 (previous year RS. 33,143,402) towards provident fund during the year ended March 31, 2014.

The guidance on implementing AS 15, Employee Benefits (revised 2005) issued by Accounting Standard Boards that benefits involving employer established provident funds, which require interest shortfalls to be recompensed are to be considered as defined benefits plans. The Actuarial Society of India has issued the final guidance for measurement of provident fund liabilities for the year ended March 31, 2014. The actuary has accordingly provided a valuation and based on the below provided assumptions there is no shortfall as at March 31,2014.

* Management believes that the Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expenses and that of provision for taxation.

* During the current year, the Promoter Company (AstraZeneca Pharmaceuticals AB, Sweden), vide its letter dated March 1, 2014 has proposed voluntary delisting (the delisting proposal) offer to the public shareholders of the Company in accordance with the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (Delisting Regulations), with a view to delist the equity shares of the Company from the BSE Ltd. (BSE), Bangalore Stock Exchange Ltd. (BgSE) and the National Stock Exchange of India Ltd. (NSE) where the equity shares of the Company are listed. The Board of Directors of the Company, in their meeting dated March 15, 2014 approved the delisting proposal submitted by the Promoter Company. Subsequent to the balance sheet date, the Board of Directors of the Company, in their meeting dated May 5, 2014 has approved circulation of postal ballots to the shareholders of the Company to obtain shareholders approval on the delisting proposal.

* During the previous year, Mr. Robert Ian Haxton, a foreign national was appointed as Whole time Director of the Company and accordingly the Company on May 2,2013 had filed an application with the Central Government under the Companies Act, 1956 seeking approval for his appointment; During the current year, the Company has received the approval from the Central Government for appointment of Mr. Robert Ian Haxton as Whole time Director. Further, the Company has received the Central Government approval for appointment of Mr. Sanjay Murdeshwar, a non-resident Indian as Managing Director of the Company with effect from May 2, 2013.

* Remuneration paid to Mr. Sanjay Murdeshwar (Managing Director effective May 2, 2013) and Mr. Robert Ian Haxton (Whole Time Director effective 6 February 2013) for the current year, and remuneration paid to Mr Robert Ian Haxton (Whole Time Director), Mr. Anandh Balasundaram (Managing Director until August 31, 2013) and Ms. Ruby Lau (Whole Time Director until February 27, 2013) for the financial year 2012-13 was in accordance with the approval of the Board of Directors and the Remuneration Committee. The shareholders approval has also been obtained at the Annual General Meeting held on August 20, 2013.

* During the financial year 2011-12, a First Information Report (FIR) was filed by the Central Bureau of Investigation (ÂCBI'') against the Company on February 23, 2012 wherein it is alleged that the Company submitted a false affidavit with respect to rates quoted by the Company to the institution (Directorate of Health Services, Delhi). It is further alleged that unknown officers of the Directorate of Health Services, Delhi (DHS) and unknown officials of the Company and other private persons conspired to cancel the recovery proceedings by DHS. During the current year, the investigation was concluded and a charge sheet was filed in the Court by CBI on August 5, 2013. Neither the Company nor any of its officials/employees have been named as accused in the charge sheet.

Mar 31, 2013

1.1 Contingent liabilities

(a) Claims against the company not acknowledged as debt

(Amount in Rs.)

Particulars As at As at 31 March 2013 31 March 2012

Excise and service tax matters 12,121,052 2,665,077

Income tax related 79,727,230 -

(b) Guarantees

In respect of bank and other guarantees 25,263,035 18,341,417

(c) Others

The Company had received a notice from Bruhat Bangalore Mahanagara Palike (BBMP) on 5 November 2012 demanding a payment of Rs. 155,804,930 as development charges for its factory land. The Company has filed a writ petition in the Honorable High Court of Karnataka challenging the levy of the aforesaid development charges and accordingly on 25 February 2013, the Company received a stay from the Honorable High Court of Karnataka on the payment of the aforesaid development charges.

1.2 Sale of products for the year ended 31 March 2012 is net of prior period charge amounting to Rs. 143,000,000. This prior period charge pertains to expected charge back from customers for sales made in prior years.

1.3 Research expenditure (including depreciation) amounting to Rs. Nil (previous year: Rs. 14,412,244) incurred during the year has been charged to the respective heads of account in the statement of profit and loss.

1.4 Related parties

(i) Names of related parties and description of relationship:

Holding company AstraZeneca Pharmaceuticals AB, Sweden

Holding company of AstraZeneca

Pharmaceuticals AB, Sweden AstraZeneca AB, Sweden

Holding company of AstraZeneca AB, Sweden AstraZeneca Treasury Limited, United Kingdom

Ultimate holding company AstraZeneca Plc, United Kingdom

Fellow subsidiaries AstraZeneca SDN Bhd, Malaysia;

AstraZeneca Singapore Pte Ltd, Singapore; AstraZeneca Philippines;

AstraZeneca Belgium;

AstraZeneca India Private Limited;

PT AstraZeneca Indonesia;

AstraZeneca Pty Ltd, Australia;

AstraZeneca China;

AstraZeneca Pharmaceuticals LP USA;

AstraZeneca Thailand; and IPR Pharmaceuticals Inc

Key management personnel

- Managing Director Anandh Balasundaram (resigned w.e.f 31 August 2012)

- Whole-time director Ruby Lau (resigned w.e.f 27 February 2013) Robert Ian Haxton (appointed w.e.f 6 February 2013)

- Directors Ian Brimicombe

Luigi Felice Lacorte

1.4 Segment reporting

The primary segments of the Company are its business segments as follows:

(i) Healthcare - The Company engages in the manufacture, trading and sale of pharmaceutical products.

(ii) Clinical trial services - The Company renders clinical trial services on pharmaceutical products to its group companies.

(iii) Co-promotional services - The Company renders co-promotion services for pharmaceutical products to its customers.

The accounting policies consistently used in the preparation of the financial statements are also applied to record revenue and expenditure in individual segments.

Revenue and direct expenses in relation to segments are categorised based on items that are individually identifiable to that segment, while other costs, wherever allocable, are apportioned to the segments on an appropriate basis. Certain income and expenses are not specifically allocable to individual segments as the underlying assets and services are used interchangeably. The Company therefore believes that it is not practicable to provide segment disclosures relating to such income and expenses and accordingly such expenses are separately disclosed as ''unallocated'' and directly charged against total income.

Assets and liabilities in relation to segments are categorised based on items that are individually identifiable to that segment. Certain assets and liabilities are not specifically allocable to individual segments as these are used interchangeably. The Company therefore believes that it is not practicable to provide segment disclosures relating to such assets and liabilities and accordingly these are separately disclosed as ''unallocated''. Assets are primarily located in India.

Clinical trial services and co-promotion services do not qualify as separate segments as defined in AS - 17 - ''Segment Reporting'' and hence have been disclosed as others.

1.5 Leases

The Company is obligated under non-cancellable operating leases for residential and office premises. Total rental expense under non-cancellable operating leases amounted to Rs. 16,563,098 (previous year: Rs. 6,010,958 ) for the year ended 31 March 2013.

The Company is also obligated under cancellable lease for residential and office premises, which are renewable at the option of lessor and lessee. Total rental expense under cancellable operating lease entered amounted to Rs. 49,378,022 (previous year: Rs. 38,276,322 ) for the year ended 31 March 2013.

Further the Company is obligated under operating lease agreements for vehicles. Total lease rental expense under the said agreement amounted to Rs. 1,227,418 (previous year: Rs. 1,857,704) for the year ended 31 March 201 3.

1.6 Forward contracts entered for the hedging purpose, which were outstanding as on 31 March 2013 amounted to Rs. Nil (previous year: Rs. Nil). Foreign currency exposure as on 31 March 2013, which was not hedged, are as follows:

1.7 Dues to micro and small enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum in accordance with the Micro, Small and Medium Enterprises Development Act, 2006 (''the Act''). Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2013 has been made in the financial statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier as at the balance sheet date.

1.8 Gratuity plan

The Company has the following defined Gratuity plan.

Leaving service benefit:

Eligibility for benefit: Every employee who has completed 3 years or more of service would be eligible for gratuity benefit as per the terms of the Trust Deed.

For Non-Management staff:

15 days salary for each year of service, subject to maximum limit specified as per the Gratuity Act, 1972. Normal retirement benefit, death and disability benefit:

For Management staff:

One month''s salary last drawn by member for each year of service, without limit.

For Non-Management staff:

One month''s salary last drawn by member for each year of service, subject to maximum limit specified as per the Gratuity Act, 1972.

1.9 Provident fund

The Company contributed Rs. 33,143,402 (previous year Rs. 29,086,637) towards provident fund during the year ended 31 March 2013.

The guidance on implementing AS 15, Employee Benefits (revised 2005) issued by Accounting Standard Boards that benefits involving employer established provident funds, which require interest shortfalls to be recompensed are to be considered as defined benefits plans. The Actuarial Society of India has issued the final guidance for measurement of provident fund liabilities for the year ended 31 March 2013. The actuary has accordingly provided a valuation and based on the below provided assumptions there is no shortfall as at 31 March 2013.

1.10 Management believes that the Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expenses and that of provision for taxation.

1.11 The Board of Directors of the Company at its meeting held on 21 May 2013, approved the financial statements for the year ended 31 March 2013.

1.12 Mr Robert Ian Haxton, a foreign national was appointed as Whole time Director of the Company during the year. Subsequent to the balance sheet date, on May 2, 2013, the Company has filed an application with the Central Government under the Companies Act, 1956 seeking approval for his appointment; The application is pending before the Central Government. Further, approval of the shareholders in general meeting by a special resolution pursuant to the applicable provisions of Schedule XIII to the Companies Act, 1956 for his appointment as Wholetime Director and for the payment of remuneration to him will be sought at the ensuing Annual General Meeting.

1.13 In absence of profits for the year ended 31 March 2013, the remuneration committee has, pursuant to the applicable provisions of Schedule XIII to the Companies Act, 1956, approved the remuneration of Rs. 23 million paid to Mr Anandh Balasundaram, the former Managing Director for the period from 1 April 2012 to 31 August 2012 (date of his resignation) and Ms Ruby Lau, the former Whole Time Director for the period from 1 April 2012 to 27 February 2013 being the date of resignation. The expense has been charged to the statement of profit and loss for the year ended 31 March 2013. The remuneration is subject to the requisite approval of the shareholders.

1.14 At the end of the financial year 2011-12, the factory experienced interruptions to the supply of certain products. The Company has invested, and continues to invest, resources to remediate these interruptions. As a result of the remediation being carried out, the Company has succeded in gradually returning a majority of the products to the market. Revenues and the financial results for the current year ended 31 March 2013 were thus impacted.

1.15 During the previous year, a First Information Report (FIR) was filed by the Central Bureau of Investigation against the Company on 23 February 2012 wherein it is alleged that the Company submitted a false affidavit with respect to rates quoted by the Company to the institution (Directorate of Health Services, Delhi). It is further alleged that unknown officers of the Directorate of Health Services, Delhi (DHS) and unknown officials of the Company and other private persons conspired to cancel the recovery proceedings by DHS. The Company is fully cooperating with the ongoing investigations.

1.16 In order to assist the Company in its efforts to establish/grow its presence in the Indian market despite the significant losses incurred, AstraZeneca Pharmaceuticals AB Sweden, the promoter of the Company, has agreed to provide a voluntary non repayable financial grant of approximately USD 22.5 million (Indian rupee equivalent 1,192 million) to USD 26.5 million (Indian rupee equivalent 1,404 million) over the three years period financial year 2013-14 to financial year 2015-16 under a Subvention Agreement dated 7 May 2013. The first tranche of USD 14 million (Indian rupee equivalent 740 million) has been agreed to be provided to the Company during the financial year 2013-14.

[Exchange rate of Rs. 53 per USD is used for the conversion above].

1.17 The financial statements are presented in Indian Rupees (Rs.).

1.18 Previous year''s figures have been regrouped/ reclassified as per the current year''s presentation for the purpose of comparability. The following significant regroupings/ reclassifications of the previous year figures have been made:

Mar 31, 2012

1. Contingent liabilities

(a) Claims against the company not acknowledged as debt

(Amount in Rs.)

Particulars As at As at 31 March 2012 31 March 2011

Excise and service tax matters 2,665,077 2,665,077

(b) Guarantees (Amount in Rs.)

Particulars As at As at 31 March 2012 31 March 2011

In respect of bank guarantees 18,341,417 14,152,892

(c) Others

The Company had received a notice from Bruhat Bangalore Mahanagara Palike (BBMP) on 23 February 2011 demanding a payment of Rs. 113,328,767 as Land Improvement Charges towards its factory land. The Company fled a writ petition on 28 May 2011 before the High Court of Karnataka challenging the levy of the improvement charges and obtained an interim stay order on 2 June 2011 against cancellation by BBMP of the Khata of the factory land, if the improvement charges were not paid.

On 20 October 2011, the Company has received a notice from BBMP to stop the construction of the tablet production facility pending the construction license from BBMP. The Company's writ petition fled in the High Court of Karnataka challenging the notice and the High Court allowed the construction by granting a stay. Subsequent to the year end, on 20 April 2012, the high court has passed an order quashing the levy of differential improvement charges on different dimension of property. The Company is awaiting for a certified copy of the order.

2. As a measure of extra and abundant caution, the Company undertook a voluntary recall of steril products manufactured at its plant amounting to Rs. 26,826,401, following AstraZeneca's Global quality audit As a precautionary measure, the Company also voluntarily suspended production temporarily to review manufacturing practices at the plant resulting in a temporary interruption of supplies. Sales for the year ended 31 March 2012 is net of the returns received on account of the voluntary recall.

3. Research expenditure (including depreciation) amounting to Rs. 14,412,244 (previous period: Rs. 32,177,960 incurred during the year has been charged to the respective heads of account in the statement of proft and loss.

4. During the year, a First Information Report (FIR) was fled by the Central Bureau of Investigation agains the Company on 23 February 2012 wherein it is alleged that the Company submitted a false affdavit wit respect to rates quoted by the Company to the institution (Directorate of Health Services, Delhi). It is furthe alleged that unknown offcers of the Directorate of Health Services, Delhi (DHS) and unknown offcials of th Company conspired to cancel the recovery proceedings by DHS. The Company is fully cooperating with th ongoing investigations.

5.Related parties

(i) Names of related parties and description of relationship:

Holding company AstraZeneca Pharmaceuticals AB, Sweden

Holding company of AstraZeneca Pharmaceuticals AB, Sweden

AstraZeneca AB, Sweden

Holding company of AstraZeneca AB, Sweden AstraZeneca Treasury Limited, United Kingdom

Ultimate holding company AstraZeneca Plc, United Kingdom

Fellow subsidiaries

AstraZeneca SDN Bhd, Malaysia;

AstraZeneca Singapore Pte Ltd, Singapore;

AstraZeneca Philippines;

AstraZeneca Belgium;

AstraZeneca India Private Limited;

PT AstraZeneca Indonesia;

AstraZeneca Pty Ltd, Australia;

AstraZeneca China;

AstraZeneca Pharmaceuticals LP USA;

AstraZeneca Thailand; and

PR Pharmaceuticals Inc

Key management personnel

- Managing Director Anandh Balasundaram

- Directors Ian Brimicombe

Bhasker V Iyer (resigned w.e.f 23 February 2010) Mr. Luigi Felice Lacorte (appointed w.e.f 25 March 2010) Francis McNamara III (resigned w.e.f 30 September 2010) Ruby Lau (appointed w.e.f 10 November 2011)

6. Segment reporting

The primary segments of the Company are its business segments as follows:

(i) Healthcare - The Company engages in the manufacture, trading and sale of pharmaceutical products.

(ii) Clinical trial services - The Company renders clinical trial services on pharmaceuticals products to its group companies.

(iii) Co-promotional services Ã The Company renders co-promotion services for pharmaceuticals products to its customers.

The accounting policies consistently used in the preparation of the financial statements are also applied to record revenue and expenditure in individual segments.

Revenue and direct expenses in relation to segments are categorised based on items that are individually identifable to that segment, while other costs, wherever allocable, are apportioned to the segments on an appropriate basis. Certain income and expenses are not specifcally allocable to individual segments as the underlying assets and services are used interchangeably. The Company therefore believes that it is not practicable to provide segment disclosures relating to such income and expenses and accordingly such expenses are separately disclosed as 'unallocated' and directly charged against total income.

Assets and liabilities in relation to segments are categorised based on items that are individually identifable to that segment. Certain assets and liabilities are not specifcally allocable to individual segments as these are used interchangeably. The Company therefore believes that it is not practicable to provide segment disclosures relating to such assets and liabilities and accordingly these are separately disclosed as 'unallocated'. Assets are primarily located in India.

Clinical trial services and co-promotion services do not qualify as separate segments as defned in AS Ã 17 Ã 'Segment Reporting' and hence have been disclosed as others.

7. Leases

The Company is obligated under non-cancellable operating leases for residential and offce premises. Total rental expense under non-cancellable operating leases amounted to Rs. 6,010,958 (previous period: Rs. 1,809,856 ) for the year ended 31 March 2012.

The Company is also obligated under cancellable lease for residential and offce premises, which are renewable at the option of lessor and lessee. Total rental expense under cancellable operating lease entered amounted to Rs. 38,276,322 (previous period: Rs. 38,715,700 ) for the year ended 31 March 2012.

Further the Company is obligated under operating lease agreements for vehicles. Total lease rental expense under the said agreement amounted to Rs. 1,857,704 (previous period: Rs. 2,096,998) for the year ended 31 March 2012.

8. Dues to micro and small enterprises

The Ministry of Micro, Small and Medium Enterprises has issued an offce memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after fling of the Memorandum in accordance with the 'Micro, Small and Medium Enterprises Development Act, 2006 ('the Act'). Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2012 has been made in the financial statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier as at the balance sheet date.

9. Gratuity plan

The Company has the following defned Gratuity plan.

Leaving service benefit:

Eligibility for benefit: Every employee who has completed 3 years or more of service would be eligible for gratuity benefit as per the terms of the Trust Deed.

For Non-Management staff:

15 days salary for each year of service, subject to maximum limit specifed as per the Gratuity Act, 1972 .

Normal retirement benefit, death and disability benefit: For Management staff:

One month's salary last drawn by member for each year of service, without limit.

10. Provident fund

The Company contributed Rs. 29,086,637 towards provident fund during the year ended 31 March 2012

The guidance on implementing AS 15, Employee benefits (revised 2005) issued by Accounting Standard Boards that benefits involving employer established provident funds, which require interest shortfalls to be recompensed are to be considered as defned benefits plans. The Actuarial Society of India has issued the fnal guidance for measurement of provident fund liabilities for the year ended 31 March 2012. The actuary has accordingly provided a valuation and based on the below provided assumptions there is no shortfall as at 31 March 2012.

11. Management believes that the Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Management is of the opinion that its international transactions are at arm's length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expenses and that of provision for taxation.

12. The Board of Directors of the Company at its meeting held on 11 May 2012, approved the financial statements for the year ended 31 March 2012. The Board of Directors, at the said meeting, also recommended a fnal dividend of Rs. 3.50 on equity share of Rs. 2 each for the year ended 31 March 2012. The payment of the said dividend is subject to the approval of the shareholders at the Annual General Meeting.

13 A foreign national was appointed as Whole time Director of the Company during the year. The Company has fled an application with the Central Government under the Companies Act, 1956 seeking approval for the appointment of, and remuneration payable to, the said Director. The application is pending before the Central Government.

14 The comparatives in the financial statements for the period ended 31 March 2011 are for the period from 1 January 2010 to 31 March 2011 i.e. 15 months period. Since the current year numbers are for a year i.e. twelve months period, the previous period fgures may not be strictly comparable to the current year fgures.

15 Till the year ended 31 March 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended 31 March 2012, the revised Schedule VI notifed under the Companies Act 1956, has become applicable to the Company. The Company has reclassifed previous period fgures to conform to this year's classifcation. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of balance sheet.

Dec 31, 2009

1. Contingent liabilities and commitments (Amount in Rs.)

As at As at 31 December 2009 31 December 2008

Claims against the Company not acknowledged as debts in respect of:

a) Demands for payments into the credit of the Drugs Prices Equalisation Account under Drugs - 27,891,200 (Price Control) Order, 1979*

1,696,276 1,696,276

b) Excise and service tax matters Other commitments/ contingent liability

a) In respect of bank guarantees 9,436,611 6,639,659

b) Estimated amount of contracts remaining to be executed on capital account (net of advances) 3,481,145 5,702,119 and not provided for

* in the current year a favourable court order has been received.

2. The net compensation awarded amounting to Rs 19,691,797 by the National Highways Authorities of India (NHAI) vide the award dated 8 March 2004 for acquiring a portion of factory land, has been subsequently reduced to Rs 498,879 by an amended award dated 8 September 2006. The revised compensation is based on the cost at which the land was originally obtained from Karnataka Industrial Area Development Board. The Company has not accepted the amended award and has disputed the same. The Company has invoked the arbitration provision under the National Highways Act, 1956. Additionally the Company has also filed a writ petition before the honourable High Court of Karnataka on 9 October 2007, praying for the quashing of the amended award. As per legal advice received, the Company has adequate grounds for challenging the amended award.

3. Research and development expenditure (including depreciation) amounting to Rs 21,061,982 (previous year: Rs 23,609,724) incurred during the year has been charged to the respective heads of account in the profit and loss account.

4. Additional information pursuant to the provisions of paragraphs 3, 4C and 4D of part II of Schedule VI to the Companies Act, 1956 (Quantitative information has been compiled from records and technical data in respect of each class of goods manufactured/ purchased by the Company).

5. Related parties

(i) Names of related parties and description of relationship:

1. Holding company AstraZeneca Pharmaceuticals AB, Sweden Holding company of AstraZeneca Pharmaceuticals AB, Sweden AstraZeneca AB, Sweden

Holding company of AstraZeneca AB, Sweden AstraZeneca Treasury Limited, United Kingdom

Ultimate holding company AstraZeneca Plc, United Kingdom

2.Fellow subsidiaries AstraZeneca SDN Bhd, Malaysia;

AstraZeneca Singapore Pte Ltd, Singapore; AstraZeneca Philippines; AstraZeneca Belgium; AstraZeneca Korea; AstraZeneca Taiwan; AstraZeneca India Private Limited; PT AstraZeneca Indonesia; AstraZeneca Pty Ltd, Australia; AstraZeneca China; AstraZeneca Pharmaceuticals LP USA; AstraZeneca Thailand and IPR Pharmaceuticals Inc

3. Key management personnel

- Managing Director Anandh Balasundaram

- Directors Ian Brimicombe Graham Timothy Baker (resigned w.e.f 31 December 2008) Bhasker V Iyer (resigned w.e.f 23 February 2010) Francis McNamara III (appointed w.e.f 18 February 2009)

6. Segment reporting

The primary segments of the Company are its business segments as follows:

(i) Healthcare - The Company engages in the manufacture, trading and sale of pharmaceutical products.

(ii) Clinical trial services - The Company renders clinical trial services on pharmaceuticals products to its group companies.

The accounting policies consistently used in the preparation of the financial statements are also applied to record revenue and expenditure in individual segments.

Revenue and direct expenses in relation to segments are categorised based on items that are individually identifiable to that segment, while other costs, wherever allocable, are apportioned to the segments on an appropriate basis. Certain income and expenses are not specifically allocable to individual segments as the underlying assets and services are used interchangeably. The Company therefore believes that it is not practicable to provide segment disclosures relating to such income and expenses and accordingly such expenses are separately disclosed as ÃunallocatedÃ and directly charged against total income.

Assets and liabilities in relation to segments are categorised based on items that are individually identifiable to that segment. Certain assets and liabilities are not specifically allocable to individual segments as these are used interchangeably. The Company therefore believes that it is not practicable to provide segment disclosures relating to such assets and liabilities and accordingly these are separately disclosed as ÃunallocatedÃ. Assets are primarily located in India.

7. Forward contracts entered for the hedging purpose, which were outstanding as on 31 December 2009 amounted to Rs Nil (Previous year: Rs Nil). Foreign currency exposure as on 31 December 2009, which was not hedged, amounted to Rs. 131,078,346 (Previous year: Rs. 78,892,989).

8. The management has initiated the process of identifying enterprises which have provided goods and services to the Company and which qualify under the definition of micro and small enterprises, as defined under Micro, Small and Medium Enterprises Development Act, 2006. The Ministry of Micro, Small and Medium enterprises has issued an office Memorandum dated 26 August 2008 which recommends that the Micro and Small enterprises should mention in their correspondence with its customers the entrepreneurÃs Memorandum number as allocated after filing of the Memorandum. The Company has not received any claim for interest from any supplier under the said Act.

9. The Board of Directors, at their meeting held on 12 January 2008, pursuant to the scheme of arrangement sanctioned by the Honourable Karnataka High Court on 7 July 2007 and subsequent approval accorded by the Reserve Bank of India on 11 December 2007, allotted 8% secured fully paid-up redeemable non- convertible bonus debentures from the general reserve, in the ratio of one debenture of the face value of Rs 25 each for every equity share held by the shareholders of the Company as on 11 January 2008. The bonus debentures were listed on the Bangalore Stock Exchange Limited, Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The said bonus debentures and the interest thereon of Rs 50,000,000 were redeemed on 11 January 2009. An issue of bonus debentures would be treated as a Ãdeemed dividendÃ under the provisions of the Income-tax Act, 1956. Accordingly, the Company remitted Rs 106,218,750 as dividend distribution tax and has utilised general reserve for the payment of the same, pursuant to the scheme of arrangement sanctioned by the Honourable Karnataka High Court.

10. Management believes that the Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income-tax Act, 1961. Management is of the opinion that its international transactions are at armÃs length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expenses and that of provision for taxation

11. The Board of Directors of the Company at its meeting held on 23 February 2010, approved the financial statements for the year ended 31 December 2009. The Board of Directors, at the said meeting, also recommended a final dividend of Rs 10 on equity share of Rs 2 each for the year ended 31 December 2009.The Payment of the said dividend is subject to the approval of the shareholders at the Annual General Meeting.

12. The board of directors at their meeting held on 23 February 2010 have approved the change in the companyÃs statutory accounting year from ÃJanuary-DecemberÃ to ÃApril- MarchÃ. Accordingly, the next financial accounts and annual report shall be for a period of 15 months, i.e. from January 2010 to March 2011.

13. The comparative figures have been regrouped/ reclassified, wherever necessary, to conform to the current yearÃs presentation.

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