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Notes to Accounts of Aurobindo Pharma Ltd.

Mar 31, 2017

c. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par values of Rs.1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.

For the year ended 31 March 2017, the amount of dividend per share declared as distributions to equity shareholders was Rs.2.5 (March 31, 2016: Rs.2.5). Refer Note 14(c) for details of dividend declared/recognized in financial statements.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

D. Terms of borrowings

i. Secured term loans in foreign currency carry interest in the range of LIBOR plus 1% to 1.5%. Out of these loans, loans amounting to Rs.540.5 (March 31, 2016 Rs.1,104.3; April 1, 2015: Rs.1,562.5) are repayable in one (March 31, 2016: two; April 1, 2015: three) equal installments in 6th (March 31, 2016 5th, 6th, April 1, 2015: 4th, 5th and 6th) years from the respective final draw down, and loans amounting to Rs.648.5 (March 31, 2016 Rs.1,987.7; April 1, 2015: Rs.1,666.7) is repayable at the end of 4th, 5th and 6th years from the respective final draw down and loan amounting Rs. Nil (March 31, 2016 Rs. Nil; April 1, 2015: Rs.3,229.2) is repayable at the end of 5th year from the respective final draw down date.

ii. Deferred sales tax loan is interest free and payable in various installments as per sales tax deferment scheme. During the current year, the Company has repaid the entire amount of deferred sales tax loan.

iii. Term loans are secured by first pari passu charge on all the present and future fixed assets, both movable and immoveable property of the Company.

iv. All secured loans payable on demand and secured short term loans from banks are secured by first charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future).

1. COMMITMENTS AND CONTINGENCIES

A. Leases

Operating lease commitments - Company as lessee

i. The Company has operating leases agreements, which are mainly in the nature of lease of office premises for a period up to five years, with no restrictions and are renewable/cancellable at the option of either of the parties except for details in (ii) below. These leases include a general clause to enable upward revision of the rental charge on an annual basis according to the prevailing market conditions. There is no other escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the Statement of Profit and Loss is Rs.73.9 (March 31, 2016: Rs. 71.1). The Company has not recognized any contingent rent as expense in the Statement of Profit and Loss.

ii. The Company has entered into non cancellable leases for office premises in current year and previous year. These leases have remaining non cancellable period of 5 months (March 31, 2016: 17 months; April 1, 2015: 29 months). The lease includes an escalation clause in the lease agreement. Future minimum lease rentals under non cancellable operating leases are as follows:

Finance lease - Company has lessee

Building includes factory buildings acquired on finance lease. The lease term is for major part of the economic life of the buildings and the agreement is silent on renewal terms and transfer of legal title at the end of lease term.

The lease agreement did not specify minimum lease payments over the future period. The factory building has been acquired on lease at a consideration of Rs.25.5 (March 31, 2016: Rs.25.5; April1, 2015: Rs.25.5).

The net carrying amount of the buildings obtained on finance lease: Rs.9.5 (March 31, 2016: Rs.10.8; April1, 2015: Rs.12.1).

* in respect of above matters, future cash outflows in respect of contingent liabilities are determinable only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. The Company is contesting these demands and the management, including its advisors, believe that its position will likely be upheld in the appellate process. No expense has been accrued in the financial statements for the demands raised. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company’s financial position and results of operations.

# Excludes Rs.13.4 (March 31, 2016 Rs.13.4; April 1, 2015 Rs.13.4) where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. All these cases are under litigation and are pending with various authorities, expected timing of resulting outflow of economic benefits cannot be specified.

** Guarantees furnished towards business requirement in respective subsidiaries. The Company has assessed that it is only possible, but not probable, that outflow of economic resources will be required.

A The Company is involved in disputes, claims, governmental and/or regulatory inspection, inquires, including patents and commercial maters that arise from time to time in the ordinary course of business. The same are subject to uncertain future events not wholly within the control of the Company. The management does not expect the same to have materially adverse effect on its financial position, as it believes the likelihood of any loss is not probable.

2. SHARE BASED PAYMENTS

Employee Stock Option Plan ‘ES0P-2006''

The Company instituted an Employee Stock Option Plan ''ESOP-2006'' for issue of shares to eligible employees of the Company as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. The compensation committee of the Board of Directors accordingly, granted 3,240,500 options under eight grants of 175,000; 25,000; 90,000; 1,205,000; 300,000; 500,000; 915,500 and 30,000 options to eligible employees on October 30, 2006; July 31, 2007; October 31, 2007; December 16, 2011; June 19, 2012; January 09, 2013; January 28, 2013 and August 09, 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company and there are no cash settlement alternatives for the employees. Each option comprises of one underlying equity share of Rs.1 each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.120.70; Rs.132.35; Rs.114.50; Rs.91.60; Rs.106.05; Rs.200.70; Rs.187.40 and Rs.161.30 per share, respectively. The fair value of share options grants is estimated at the date of grant using Black-Scholes model, taking into account the terms and conditions upon which the share options were granted.

b. Disclosures related to defined benefit plan of the parent company

The Company has a defined benefit gratuity plan governed by the Payment of Gratuity Act, 1972. Every employee who has completed five years or more of service is entitled to gratuity on departure at 15 days last drawn salary for each completed year of service or part thereof in excess of six months.

The plan is funded with Life Insurance Corporation in the form of a qualifying insurance policy. The following tables summarize the components of net benefit expense recognized in the statement of profit and loss, the fund status and amounts recognized in the balance sheet:

Notes:

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

2. The Company expects to contribute Rs.65.0 (March 31, 2016: Rs.65.0) during the year ended March 31, 2018 (March 31, 2017) to the qualifying insurance policy.

3. The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period by varying one actuarial assumption, keeping all other actuarial assumptions constant.

3. In respect of the amounts mentioned under Section 125 of the Companies Act, 2013 there are no dues that are to be credited to the Investor Education and Protection Fund as at March 31, 2017 (March 31, 2016: Rs. Nil; (April 1, 2015: Rs. Nil).

4. Related party disclosures

Names of related parties and description of relationship Subsidiaries

1. APL Pharma Thai Limited, Thailand

2. ALL Pharma (Shanghai) Trading Company Limited, China

3. Aurobindo Pharma USA Inc., U.S.A.

4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5. Helix Healthcare B.V., The Netherlands

6. APL Holdings (Jersey) Limited, Jersey (Liquidated w.e.f. November 18, 2015)

7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil

8. APL Healthcare Limited, India

9. Auronext Pharma Private Limited, India

10. APL Research Centre Limited, India

11. Auro Pharma Inc., Canada

12. Aurobindo Pharma (Pty) Limited, South Africa

13. Aurobindo Pharma (Australia) Pty Limited, Australia (Liquidated w.e.f. April 10, 2015)

14. Agile Pharma B.V., The Netherlands

15. Auro Healthcare (Nigeria) Limited, Nigeria

16. Aurobindo ILAC Sanayi ve Ticaret Limited, Turkey

17. Aurobindo Pharma (Singapore) Pte Limited, Singapore (Liquidated w.e.f. December 31, 2015)

18. Aurobindo Pharma Japan K.K., Japan

19. Aurex B.V. (Formerly Pharmacin B.V.), The Netherlands

20. Aurobindo Pharma GmbH, Germany

21. Aurobindo Pharma (Portugal) Unipessoal LDA, Portugal

22. Laboratorios Aurobindo S.L., Spain

23. Aurobindo Pharma B.V., The Netherlands*

24. Aurobindo Pharma (Romania) s.r.l., Romania

25. Aurobindo Pharma (Italia) S.r.l., Italy

26. Aurobindo Pharma (Malta) Limited, Malta

27. APL IP Company Limited, Jersey (Liquidated w.e.f. November 18, 2015)

28. APL Swift Services (Malta) Limited, Malta

29. Milpharm Limited, U.K.

30. Aurolife Pharma LLC, U.S.A.

31. Auro Peptides Limited, India

32. Auro Medics Pharma LLC, U.S.A.

33. Aurobindo Pharma NZ Limited, New Zealand (Liquidated w.e.f. April 10, 2015)

34. Aurovida Farmaceutica S.A. DE C.V., Mexico

35. Curepro Parenterals Limited, India

36. Hyacinths Pharma Private Limited, India

37. Silicon life sciences Private Limited, India

38. AuroZymes Limited, India

39. Aurobindo Pharma Columbia S.A.S., Columbia

40. Aurovitas, Unipessioal LDA, Portugal

41. Arrow Generiques SAS, France

42. Actavis B.V., The Netherlands*

43. Auro Health LLC, U.S.A.

44. Aurobindo Antiboitics Limited, India

45. Pharmacin B.V. (Formerly Aurex B.V.), The Netherlands

46. Actavis France SAS, France (Merged with Arrow Generiques SAS w.e.f. April 1, 2015)

47. 1980 Puren Pharma GmbH (Formerly Actavis Management GmbH), Germany

48. Puren Pharma GmbH & Co., KG (Formerly Actavis Deutschland GmbH & Co., KG), Germany

49. Aurovitas Spain SA (Formerly Actavis Spain SA)

50. Natrol LLC, U.S.A.

51. Aurobindo Pharma Limited S.R.L., Dominican Republic (Liquidated w.e.f. December 18, 2014)

52. Aurovitas Pharma Polska, Poland (w.e.f. March 31, 2017)

53. Aurogen South Africa (Pty) Limited, South Africa (w.e.f. January 25, 2017)

54. Aurobindo Pharma USA LLC, U.S.A. (w.e.f. April 14, 2016)

55. Auro AR LLC USA, U.S.A. (w.e.f. May 2, 2017)

56. Auro Vaccines LLC, U.S.A. (w.e.f. January 27, 2017)

*Aurobindo Pharma B.V. was merged with Actavis B.V. Subsequently, the name of Actavis B.V. was changed to Aurobindo Pharma B.V. w.e.f. July 1, 2015.

Joint ventures

1. Novagen Pharma (Pty) Limited, South Africa (Joint benture of a subsidiary)

2. Eugia Pharma Specialities Limited

3. Tergene Biotech Private Limited, India (w.e.f. April 1, 2015)

Enterprises over which key management personnel or their relatives exercise significant influence

1. Pravesha Industries Private Limited, India

2. Sri Sai Packaging, India (Partnership firm)

3. Trident Chemphar Limited, India

4. Auropro Soft Systems Private Limited, India

5. Axis Clinicals Limited, India

6. Pranit Projects Private Limited, India

7. Pranit Packaging Private Limited, India

8. SGD Pharma India Limited (formerly Cogent Glass Limited), India

9. Orem Access Bio Inc, India

10. Veritaz Healthcare Limited, India

11. Alex Merchant PTE. LTD, Singapore

12. Trident Petrochemicals DMCC, Dubai

13. Axis Clinicals LLC, U.S.A.

14. Alex Merchant DMCC, Dubai

15. Crest Cellulose Private Limited, India

16. East Pharma Technologies, India (Partnership firm)

Key managerial personnel

1. Mr. K. Nithyananda Reddy, Whole-time Director

2. Dr. M. Sivakumaran, Whole-time Director

3. Mr. M. Madan Mohan Reddy, Whole-time Director

4. Mr. P. Sarath Chandra Reddy, Whole-time Director (From June 1, 2016)

5. Mr. N. Govindarajan, Managing Director

6. Mr. Santhanam Subramanian, Chief Financial Officer

7. Mr. A. Mohan Rami Reddy, Company Secretary (Upto May 31, 2016 )

8. Mr. B. Adi Reddy, Company Secretary (w.e.f. June 1, 2016)

9. Mr. K. Ragunathan, Independent Director

10. Mr. M. Sitarama Murty, Independent Director

11. Mr. D. Rajagopala Reddy, Independent Director

12. Dr. Avnit Bimal Singh, Independent Director

13. Mr. Rangaswamy Rathakrishnan Iyer, Independent Director

Relatives to key managerial personnel

1. Mr. P. Sarath Chandra Reddy (Son-in-law of Mr. K. Nithyananda Reddy, Whole-time Director) (Upto May 31, 2016)

2. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time Director)

Note: i. Managerial remuneration does not include provision for gratuity and leave encashment, which is determined for the Company as a whole.

ii. All transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances for trade receivable, trade payable and other payables are unsecured, interest free and settlement occurs in cash. The Company has not recorded any impairment of balances relating to amounts owed by related parties during the year ended March 31, 2017 (March 31, 2016: Rs. Nil; April 1, 2015: Rs. Nil). The assessment is undertaken each financial year through evaluating the financial position of the related party and the market in which the related party operates.

5. Details of advances due from private companies in which Company''s Director is a director:

Pranit Packaging Private Limited, India Rs. Nil (March 31, 2016: Rs. Nil; April 1, 2015: Rs.0.6).

6. i. Details of trade receivables due from private companies in which Company''s director is a director:

Pravesha Industries Private Limited, India Rs.0.1 (March 31, 2016: Rs.0.1; April 1, 2015; Rs. Nil).

ii. Details of trade receivables due from partnership firm in which Company''s director is a partner:

Sri Sai Packaging, India ?0.0 (March 31, 2016: Rs.0.0; April 1, 2015: Rs. Nil).

7. The Board of Directors at their meeting held on September 12, 2013 decided to transfer its injectable unit of the Company on a going concern basis comprising assets and liabilities pertaining to the said unit to its wholly owned subsidiary Curepro Parentals Limited w.e.f. April 1, 2014. The same was subject to requisite consent, approval or permission of the statutory or regulatory authorities. Pending such approvals, no effect of this scheme has been given in the above results. During the current year, the Board of Directors decided not to transfer the unit, considering the expansion and growth plans of the Company. The same is subject to the approval of appropriate authorities including Hon''ble High Court or Tribunal as the case may be.

a. Contingent liabilities of the above joint ventures Rs. Nil (March 31, 2016: Rs. Nil).

b. Capital commitments of the above joint ventures Rs.67.1 (March 31, 2016: Rs.120.8).

c. The joint ventures are engaged in distribution of pharmaceuticals products.

d. All figures presented above represent Company''s share only.

8. Significant accounting judgments, estimates and assumptions

The preparation of the Company''s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

A. Judgments

In the process of applying the Company''s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the financial statements.

i. Lease commitments - the Company as lessor

The company has entered into agreement to non cancellable leases for office premises. The Company has identified assets under operating and finance lease based on the factors indicated under Appendix C to Ind AS 17 and terms of the agreement, viz. economic life of the asset vs. lease term, ownership of the asset after the lease term.

ii. Lease commitments - the Company as lessee

The Company has entered into leases for land and office premises. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the land and office premises and the fair value of the asset, that it does not retain significant risks and rewards of ownership of the land and the office premises and accounts for the contracts as operating leases.

iii. Taxes

The Company has unused tax credits [(Minimum Alternate Tax (MAT)] credit of Rs.2,836.3 as on March 31, 2017 (March 31, 2016: Rs.2,193.5; April 1, 2015: Rs.2,610.1). The Company based on its business plan along with supporting convincing evidence including future projections of profit believes that the used tax credits would be utilized within the stipulated time period as per the Income Tax Act, 1961.

B. Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

i. Share-based payments

The grant date fair value of employee stock options granted is recognized as an employee expense over the period that the employee becomes unconditionally entitled to the options. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimation requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The Black Scholes valuation model has been used by the management for share-based payment transactions. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 32.

ii. Defined employee benefit plans (Gratuity)

The cost of the defined benefit gratuity plan and other accumulated leave entitlement and the present value of the gratuity obligation and accumulated leave obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates. Further details about gratuity obligations are given in Note 33.

iii. Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See Notes 47 and 48 for further disclosures.

iv. Depreciation on property, plant and equipment

Depreciation on property, plant and equipment is calculated on a straight-line basis based on the useful lives estimated by the management. Considering the applicability of Schedule II of Companies Act, 2013, the management has re-estimated useful lives and residual values of all its property, plant and equipment. The management believes that useful lives currently used fairly reflect its estimate of the useful lives and residual values of property, plant and equipment, though these in certain cases are different from lives prescribed under Schedule II of the Companies Act, 2013.

v. Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model.

vi. Intangible assets under development

The Company capitalizes acquired intangible asset under development for a project in accordance with the accounting policy. In determining the amounts to be capitalized, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits. The carrying amount of capitalized intangible asset under development was Rs.286.7 (March 31, 2016: Rs. Nil; April 1, 2015: Rs. Nil). The innovative nature of the product gives rise to some uncertainty as to whether the final approval for the products will be obtained.

vii. Inventories provision

The Company estimates provision against obsolescence of inventory by applying certain percentages over different age category of the batch wise inventory held at the end of the reporting period. Inputs to the model include ageing of inventory, expected loss rate considering past trend and future outlook and expected net realizable value. Inventories are net of such provisions.

9. Hedging activities and derivatives - Derivatives not designated as hedging instruments

The Company uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions, generally from one week to twelve months.

The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Further, management has assessed the fair value of the borrowings approximate their current value largely since they are carried at floating rate of interest.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Fair value hierarchy

The following table provides the fair value measurement hierarchy of the assets and liabilities measured at fair value on recurring basis:

10. Financial risk management objectives and policies

The Company''s principal financial liabilities, other than derivates, comprise borrowings, trade and other payable. The main purpose of these financial liabilities is to finance the Company operations. The Company''s principal financial assets, other than derivatives, include loans, trade and other receivables, and cash and cash equivalents derived directly from its operations.

The Company is exposed primarily to credit risk, liquidity risk and market risk (including currency risk, interest rate risk and other price risk), which may adversely impact the fair value of its financial instruments. The Company''s senior management oversees the management of these risks. The Company''s senior management is supported by a Risk Management Committee of the Board of Directors that advices on the financial risk and the appropriate financial risk governance framework. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

a. 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. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, loans and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk.

Trade receivables and other financial assets:

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the Management also evaluates the factors that may influence the credit risk of its customer base, including the default risk and country in which the customers operate. The management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if available, financial statements, credit agency information, industry information and in some case bank references. Sales limits are established for each customer and reviewed quarterly. The Company''s receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company assesses at each reporting date whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivables. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.

b. Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The following are the remaining contractual maturities of financial liabilities at reporting date:

c. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company''s exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.

i. Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company. The Company is subject to foreign exchange risk primarily due to its foreign currency revenues, expenses and borrowings. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro and GBP against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks and advises the management of any material adverse effect on the Company. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The information on foreign exchange risk from derivative instruments and non derivative instruments is as follows:

ii. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Company''s exposure to risk of change in market interest rates because it borrows funds at both fixed and floating interest rates. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings.

As the Company has no significant interest bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates.

Every 0.5% increase/decrease in the interest rate component applicable to the respective borrowings would effect the Company''s net profit before tax resulting in an expense/income of Rs.172.0 and Rs.177.4 for the year ended March 31, 2017 and March 31, 2016, respectively.

11. Capital management

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximize the shareholder value.

12. First time adoption of Ind AS

As stated in Note 2, these financial statements for the year ended March 31, 2017 are the first the Company has prepared in accordance with Ind AS. In preparing these financial statements, the Company''s opening balance sheet was prepared as at April 1, 2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31, 2016.

Exemptions applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

a. The Company has elected to continue with the carrying values under previous GAAP for all the items of property, plant and equipment as deemed cost at the date of the transition. The same election has been made in respect of intangible assets.

b. Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based for embedded leases based on conditions in place as at the date of transition.

c. Ind AS 101 requires a first-time adopter to apply derecognition requirements in Ind AS 109 prospectively to transactions occurring on or after the date of transition to Ind AS. Accordingly, the Company continues to de-recognize the financial assets and financial liabilities for transactions which have occurred before the date of transition to Ind AS.

d. The Company has opted to carry the investment in subsidiaries and associate at the previous GAAP carrying amount at the transition date.

e. Ind AS 102 Share-based Payment has not been applied to equity instruments in share-based payment transactions that vested before April 1, 2015.

f. As per Ind AS 101, the Company has elected not to restate business combinations that occurred before the date of transition.

Estimates

The estimates as at April 1, 2015 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from impairment of financial assets based on expected credit loss model where application of Indian GAAP did not require estimation. The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1, 2015 (transition date) and March 31, 2016.

i. Proposed dividend

Under Indian GAAP, proposed dividends including Dividend Distribution Tax thereon were recognized as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, a proposed dividend is recognized as a liability in the period in which it is declared by the company (usually when approved by shareholders in a general meeting) or paid. In the case of the Company, the declaration of dividend occurs after period end. Therefore, the liability recognized towards dividend as at March 31, 2016 and April 01, 2015 has been derecognized against retained earnings and recognized in the year of payment.

ii. Financial assets at amortized cost

Under Indian GAAP, the Company accounted for long term investments in unquoted preference shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Company has designated such investments as investments at amortized cost, and interest income on investments held at amortized cost is recorded using the effective interest rate. At the date of transition to Ind AS, such interest income has been recognized in other equity.

iii. Remeasure of actuarial gains/(losses)

Both under Indian GAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, were charged to profit or loss. Under Ind AS, remeasurements comprising of actuarial gains and losses are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI.

iv. Share based payments

Under Indian GAAP, the Company recognized only the intrinsic value for employee stock option plan as an expense. Under Ind AS, the Company is required to determine the fair value of share options using an appropriate model recognized over the vesting period. Accordingly, the same has been recognized as a separate component of equity in Employee stock option outstanding (ESOP) as at April 1, 2015 and March 31, 2016.

v. Valuation of foreign currency forward contracts

The Company had certain outstanding foreign currency forward contracts to hedge certain of its foreign currency financial assets. Under Indian GAAP, premium/discount on forward contracts are amortized over the period of forward contract and the outstanding forward contracts are restated as at the balance sheet date. However, under Ind AS 109, the foreign currency financial assets and liabilities are restated at closing rate and the derivative contracts are fair valued by recognizing the mark-to-market gain/loss on the forward contract in the statement of profit and loss. Further, premium/discounts on forward contracts are charged to the statement of profit and loss as and when they are incurred. Accordingly, the Company has charged off the unamortized premium on the outstanding forward contracts and fair valued the derivative contracts by recognizing the mark-to-market gain on the forward contract in the statement of profit and loss.

vi. Excise duty on sale of goods

Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is included as part of sales in the face of statement of profit and loss. Thus, sale of goods under Ind AS for the year ended March 31, 2016 has increased with a corresponding increase in other expenses.

vii. MAT credit entitlement

MAT credit entitlement is to be presented under loans and advance in accordance with Guidance Note on ''Accounting for Credit available in respect of MAT under the Income Tax Act, 1961'' issued by ICAI. However, as per Ind AS, MAT credit entitlement is generally recognized as a deferred tax asset with a corresponding deferred tax benefit in the statement of profit and loss. Accordingly, the Company has reclassified the MAT credit entitlement from loans and advances to deferred tax assets.

viii. Borrowings

Under Indian GAAP, the Company de-recognized bills discounted of trade receivables with banks and disclosed the same as contingent liabilities. However, under Ind AS, based on evaluation of risks and rewards and control, the same does not meet the criteria for de-recognition. Accordingly, the same has been recognized as borrowings as at April 1, 2015 and March 31, 2016.

ix. Deferred tax assets

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires accounting for deferred taxes using the balance sheet approach, which focuses on temporary difference between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP. In addition, the various transitional adjustments lead to temporary differences and the Company has accounted for such differences. Deferred tax adjustment are recognized in correlation to the underlying transaction either in retained earnings or a separate component in equity.

x. Trade receivables

Under Ind AS, impairment allowance has been determined based on Expected Credit Loss model (ECL).

xi. Other comprehensive income (OCI)

Under Indian GAAP, the Company had not presented other comprehensive income separately. Hence, it has reconciled Indian GAAP profit or loss to profit or profit or loss as per Ind AS. Further, Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.

xii. Cash flow statement

The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.

13. Segment reporting

In accordance with Indian Accounting Standard (Ind AS) 108 on Operating segments, segment information has been given in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these financial statements.


Mar 31, 2015

A. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par values of Rs.1 per share. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2015, the amount of dividend per share recognized as distribution to equity shareholders was Rs.4.5 (March 31, 2014: Rs.3) including interim dividend of Rs.4.5 (March 31, 2014: Rs.3).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

2. LONG-TERM BORROWINGS

i. Secured term loans in foreign currency carry interest in the range of LIBOR plus 2% to 2.5%. Out of these loans, loans amounting to Rs.4,270.8 (March 31, 2014: Rs.6,291.1) are repayable in 3 equal installments in 4th, 5th, 6th years from the respective final draw down dates, and loans amounting to Rs.2,187.5 (March 31, 2014: Rs.4,493.6) are repayable at the end of 5th year from the respective final draw down date.

ii. Deferred sales tax loan is interest free and payable in various installments as per sales tax deferment scheme. The last installment is payable in 2028-29.

iii. Term loans are secured by first pari passu charge on all the present and future fixed assets, both movable and immoveable property of the Company.

3. Capital and other commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for: Rs.3,538.0 (March 31 2014: Rs.1,272.7).

4. Contingent liabilities

Particulars As at As at March 31, 2015 March 31, 2014

Outstanding bank guarantees 718.5 771.8

Corporate guarantees for loans taken by 100% subsidiaries** 3,090.7 -

Claims arising from disputes not acknowledged as debts

- indirect taxes (excise duty and service tax)*# 272.4 223.3

Claims arising from disputes not acknowledged as debts - direct taxes* 308.8 105.0

Claims against the Company not acknowledged as debts - other duties/claims* 150.3 150.3

Bills discounted with banks 1,048.5 1,060.6

* in respect of above matters, future cash outflows in respect of contingent liabilities are determinable only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

# Excludes Rs.13.4 where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. All these cases are under litigation and are pending with various authorities, expected timing of resulting outflow of economic benefits cannot be specified.

**Business requirement in respective subsidiaries.

5. The income tax authorities had carried out search operations on the Company at certain locations in February, 2012. The Company has fully co-operated with the authorities and various statements were recorded during the course of these operations. In order to avoid possible litigations, without admitting any irregularities, the Company had decided to offer an additional income and to pay the resultant tax. Accordingly, provision for income tax of Rs.48.7 on this additional income had been made during the year 2011-12. The proceedings are in progress and no other material implications are expected by the management in this matter.

6. Employee stock options

a. Employee Stock Option Plan 'ESOP-2006'

The Company instituted an Employee Stock Option Plan 'ESOP-2006' as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The compensation committee accordingly, granted total 3,240,500 options under seven grants of 175,000, 25,000, 90,000, 1,205,000, 300,000, 500,000, 915,500 and 30,000 options to eligible employees on October 30, 2006, July 31, 2007, October 31, 2007, December 16, 2011, June 19, 2012, January 09, 2013, January 28, 2013 and August 9, 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying Equity Share of Rs.1 each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.120.70, Rs.132.35, Rs.114.50, Rs.91.60, Rs.106.05, Rs.200.70, Rs.187.40 and Rs.161.30 per share respectively and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

b. Disclosures as per Fair Value Method

The Company's net profit and earnings per share would have been as under, had the compensation cost for employees' stock options been recognized based on the fair value at the date of grant in accordance with 'Black Scholes' model.

7. Employee benefits

b. Disclosures related to defined benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days last drawn salary for each completed year of service.

The scheme is funded with an insurance company in the form of a qualifying insurance policy. The following tables summarize the components of net benefit expense recognized in the Statement of Profit and Loss, the fund status and Balance Sheet position:

8. In respect of the amounts mentioned under Section 125 of the Companies Act, 2013 there are no dues that are to be credited to the Investor Education and Protection Fund as at March 31, 2015 (March 31, 2014: Rs.NIL).

9. Related party disclosures

Names of related parties and description of relationship Subsidiaries

1. APL Pharma Thai Limited, Thailand

2. All Pharma (Shanghai) Trading Company Limited, China

3. Aurobindo Pharma USA Inc, U.S.A.

4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5. Helix Healthcare B.V., The Netherlands

6. APL Holdings (Jersey) Limited, Jersey

7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil

8. APL Healthcare Limited, India

9. Auronext Pharma Private Limited, India

10. APL Research Centre Limited, India

11. Auro Pharma Inc., Canada

12. Aurobindo Pharma (Pty) Limited, South Africa

13. Aurobindo Pharma (Australia) Pty Limited, Australia

14. Agile Pharma B.V., The Netherlands

15. Auro Healthcare (Nigeria) Limited, Nigeria

16. Aurobindo ILAC Sanayi ve Ticaret Limited, Turkey

17. Aurobindo Pharma (Singapore) Pte Limited, Singapore

18. Aurobindo Pharma Limited s.r.l., Dominican Republic (liquidated during the year)

19. Aurobindo Pharma Japan K.K., Japan

20. Pharmacin B.V., The Netherlands

21. Aurobindo Pharma GmbH, Germany

22. Aurobindo Pharma (Portugal) Unipessoal Lda, Portugal

23. Aurobindo Pharma France SARL, France (merged with Arrow Generics SAS, France w.e.f. April 1, 2014)

24. Laboratorios Aurobindo S. L., Spain

25. Agile Malta Holdings Limited, Malta (merged with Aurobindo Pharma (Malta) Limited w.e.f. December 31, 2014)

26. Aurobindo Pharma B.V, The Netherlands

27. Aurobindo Pharma (Romania) s.r.l, Romania

28. Aurobindo Pharma (Italia) S.r.l., Italy

29. Aurobindo Pharma (Malta) Limited, Malta

30. APL IP Company Limited, Jersey

31. APL Swift Services (Malta) Limited, Malta

32. Milpharm Limited, U.K.

33. Aurolife Pharma LLC, U.S.A.

34. Auro Peptides Limited, India

35. Auro Medics Pharma LLC, U.S.A.

36. Aurobindo Pharma NZ Limited, New Zealand

37. Aurovida Farmaceutica S.A. de C.V., Mexico

38. Curepro Parenterals Limited, India

39. Hyacinths Pharma Private Limited, India

40. Silicon Life Sciences Private Limited, India

41. AuroZymes Limited, India

42. Eugia Pharma Specialities Limited, India

43. Aurobindo Pharma Columbia S.A.S., Columbia

44. Aurovitas, Unipessioal Lda, Portugal (w.e.f. March 25, 2014)

45. Arrow Generiques S.A.S., France (w.e.f. April 1, 2014)

46. Actavis B.V., The Netherlands (w.e.f. April 1, 2014)

47. Auro Health LLC, U.S.A.

48. Aurobindo Antiboitics Limited, India

49. Aurovitas S.L., Spain (Incorporated during current year and closed w.e.f. December 2, 2014)

50. Aurex B.V., The Netherlands (Incorporated during current year)

51. Actavis France S.A.S., France (w.e.f. April 1, 2014)

52. Actavis Management GmbH, Germany (w.e.f. April 1, 2014)

53. Actavis Deutschland GmbH & Co, KG, Germany (w.e.f. April, 2014)

54. Aurovitas Spain S.A. (formerly Actavis Spain S.A.) (w.e.f. April 1, 2014)

55. Natrol LLC, U.S.A. (w.e.f. December 4, 2014)

56. Aurobindo Switzerland AG, Switzerland (Closed w.e.f. September 11, 2013)

57. Aurobindo Pharma (Poland) Sp.z.o.o., Poland (Closed w.e.f. June 28, 2013)

58. Agile Pharma (Malta) Limited, Malta (Closed w.e.f. October 9, 2013)

Joint ventures

1. Novagen Pharma (Pty) Limited, South Africa (Joint Venture of a Subsidiary)

Enterprises over which key management personnel or their relatives exercise significant influence

1. Pravesha Industries Private Limited, India

2. Sri Sai Packaging, India (Partnership firm)

3. Trident Chemphar Limited, India

4. Auropro Soft Systems Private Limited, India

5. Axis Clinicals Limited, India

6. Pranit Projects Private Limited, India

7. Pranit Packaging Private Limited, India

8. Cogent Glass Limited

9. Orem Access Bio Inc, India

10. Veritaz Healthcare Limited, India

11. Alex Merchant Pte. Limited, Singapore

12. Trident Petrochemicals DMCC, Dubai

Key managerial personnel

1. Mr. K. Nithyananda Reddy, Whole-time Director

2. Dr. M. Sivakumaran, Whole-time Director

3. Mr. M. Madan Mohan Reddy, Whole-time Director

4. Mr. N. Govindarajan, Managing Director

5. Mr. Sudhir B. Singhi, Chief Financial Officer (upto June 30, 2014)

6. Mr. Santhanam Subramanian, Chief Financial Officer (w.e.f. July 1, 2014)

7. Mr. A. Mohan Rami Reddy, Company Secretary

Relatives to key managerial personnel

1. Mr. P. Sarath Chandra Reddy (Son-in-law of Mr. K.Nithyananda Reddy, Wholetime Director)

2. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time Director)

10. Leases

a. Operating lease

i. Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/cancellable at the option of either of the parties except for details in (ii) below. There is no escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the Statement of Profit and Loss is Rs.74.3 (March 31, 2014: Rs.43.2 ).

The Company has not recognized any contingent rent as expense in the Statement of Profit and Loss.

b. Finance lease

Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs.25.6 (March 31, 2014: Rs.25.6).

The net carrying amount of the buildings obtained on finance lease: Rs.12.1 (March 31, 2014: Rs.13.3).

11. In accordance with paragraph 10 of Notified Accounting Standard 9 on Revenue Recognition, excise duty on sales amounting to Rs.1,497.5 (March 31, 2014: Rs.1,588.2) has been reduced from sales in Statement of Profit and Loss and excise duty on (increase)/decrease in closing stock of finished goods amounting to Rs.2.7 [March 31, 2014: (Rs.0.8)] has been (credited)/debited to the Statement of Profit and Loss.

12. Details of advances due from private companies in which Company's director is a director:

Auropro Soft Systems Private Limited, India Rs.Nil (March 31, 2014: Rs.0.08).

Pranit Projects Private Limited, India Rs.Nil (March 31, 2014: Rs.1.3).

Pranit Packaging Private Limited, India Rs.0.6 (March 31, 2014: Rs.Nil).

13. i. Details of trade receivables due from private companies in which Company's director is a director:

Pravesha Industries Private Limited, India Rs.Nil (March 31, 2014: Rs.0.06). ii. Details of trade receivables due from partnership firm in which Company's director is a partner:

Sri Sai Packaging, India Rs.Nil (March 31, 2014: Rs.Nil)

14. The Board of Directors at their meeting held on September 12, 2013 decided to transfer its injectable unit of the Company on a going concern basis comprising assets and liabilities pertaining to the said unit to its wholly owned subsidiary Curepro Parenterals Limited with effect from April 1, 2014. The same is subject to requisite consent, approval or permission of the statutory or regulatory authorities. Pending such approvals, no effect of this scheme has been given in the financial statements.

a. Contingent liabilities of the above joint ventures Rs. Nil (March 31, 2014: Rs.Nil).

b. Capital commitments of the above joint ventures Rs. Nil (March 31, 2014: Rs. Nil)

c. Novagen Pharma (Pty) Ltd incorporated in South Africa, is engaged in distribution of pharmaceuticals products.

d. Previous year's figures have been disclosed in italics.

e. All figures presented above represents Company's share only.

15. Segment reporting

In accordance with Accounting Standard 17 - Segment Reporting, segment information has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

16. The figures of previous year have been regrouped/rearranged, wherever necessary to conform to those of the current year.


Mar 31, 2014

1. Capital and other commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for - Rs.1,272.7 (March 31, 2013: Rs.211.5).



2. Contingent liabilities

Particulars As at As at March 31, 2014 March 31, 2013

Outstanding bank guarantees 771.8 486.3 Claims arising from disputes not acknowledged as debts

- Indirect taxes (excise duty and service tax)* 223.3 196.3

Claims arising from disputes not acknowledged as debts - direct taxes* 105.0 105.0

Claims against the Company not acknowledged as debts* 150.3 493.1

Bills discounted with banks 1,060.6 3,252.9

* in respect of above matters, future cash outfows in respect of contingent liabilities are determinable only on receipt of judgements pending at various forums/authorities.

3. The income tax authorities had carried out search operations on the Company at certain locations in February 2012. The Company has fully co-operated with the authorities and various statements were recorded during the course of these operations. In order to avoid possible litigations, without admitting any irregularities, the Company had decided to offer an additional income and to pay the resultant tax. Accordingly provision for income tax of Rs.48.7 on this additional income had been made during the year 2011-12. The proceedings are in progress and no other material implications are expected by the management in this matter.

4. Employee stock options

a. Employee Stock Option Plan ''ESOP-2006''

The Company instituted an Employee Stock Option Plan ''ESOP-2006'' as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The compensation committee accordingly, granted total 3,240,500 options under seven grants of 175,000; 25,000; 90,000; 1,205,000; 300,000; 500,000; 915,500 and 30,000 options to eligible employees on October 30, 2006; July 31, 2007; October 31, 2007; December 16, 2011; June 19, 2012; January 09, 2013; January 28, 2013 and August 9, 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying equity share of Rs.1 each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.120.70; Rs.132.35; Rs.114.50; Rs.91.60; Rs.106.05; Rs.200.70; Rs.187.40 and Rs.161.30 per share respectively and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

5. Employee benefits

b. Disclosures related to defined benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days last drawn salary for each completed year of service.

The scheme is funded with an insurance company in the form of a qualifying insurance policy. The following tables summarise the components of net benefit expense recognized in the Statement of Profit and Loss, the fund status and Balance Sheet position:

6. In respect of the amounts mentioned under Section 205C of the Companies Act, 1956 there are no dues that are to be credited to the Investor Education and Protection Fund as at March 31, 2014 Rs. Nil (March 31, 2013: Rs. Nil).

7. Related party disclosures

Names of related parties and description of relationship

Subsidiaries

1. APL Pharma Thai Limited, Thailand

2. All Pharma (Shanghai) Trading Company Limited, China

3. Aurobindo Pharma USA Inc, U.S.A.

4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5. Helix Healthcare B.V., The Netherlands

6. APL Holdings (Jersey) Limited, Jersey

7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil

8. APL Healthcare Limited, India

9. Auronext Pharma Private Limited, India

10. APL Research Centre Limited, India

11. Auro Pharma Inc. Canada

12. Aurobindo Pharma (Pty) Limited, South Africa

13. Aurobindo Pharma (Australia) Pty Limited, Australia

14. Agile Pharma B.V., The Netherlands

15. Aurobindo Switzerland AG, Switzerland (Closed w.e.f. September 11, 2013)

16. Auro Healthcare (Nigeria) Limited, Nigeria

17. Aurobindo ILAC Sanayi ve Ticaret Limited Sirketi, Turkey

18. Aurobindo Pharma (Singapore) Pte Limited, Singapore

19. Aurobindo Pharma Limited, s.r.l., Dominican Republic

20. Aurobindo Pharma Japan K.K., Japan

21. Pharmacin B.V., The Netherlands

22. Aurobindo Pharma GmbH, Germany

23. Aurobindo Pharma (Portugal) Unipessoal Lda, Portugal

24. Aurobindo Pharma France SARL, France

25. Laboratorios Aurobindo S. L., Spain

26. Agile Malta Holdings Limited, Malta

27. Aurobindo Pharma B.V., The Netherlands

28. Aurobindo Pharma (Romania) s.r.l., Romania

29. Aurobindo Pharma (Poland) Sp.z.o.o., Poland (Closed w.e.f. June 28, 2013)

30. Aurobindo Pharma (Italia) S.r.l., Italy

31. Agile Pharma (Malta) Limited, Malta (Closed w.e.f. October 9, 2013)

32. Aurobindo Pharma (Malta) Limited, Malta

33. APL IP Company Limited, Jersey

34. APL Swift Services (Malta) Limited, Malta

35. Milpharm Limited, U.K.

36. Aurolife Pharma LLC, U.S.A.

37. Auro Peptides Limited, India

38. Auro Medics Pharma LLC, U.S.A.

39. Aurobindo Pharma NZ Limited, New Zealand

40. Aurovida Farmaceutica S.A. de C.V., Mexico

41. Aurobindo Antibiotics Limited, India (w.e.f. July 10, 2012)

42. Auro Health LLC, U.S.A. (w.e.f. September 13, 2012)

43. Aurobindo Pharma Hungary Kereskedelmi KFT, Hungary (Closed w.e.f. September 13, 2012)

44. Curepro Parenterals Limited, India (w.e.f. April 19, 2013)

45. Hyacinths Pharma Private Limited, India (w.e.f. October 1, 2013)

46. Silicon Life Sciences Private Limited, India (w.e.f. October 11, 2013)

47. AuroZymes Limited, India (w.e.f. November 28, 2013)

48. Eugia Pharma Specialities Limited, India (w.e.f. September 16, 2013)

49. Aurobindo Pharma Columbia S.A.S., Columbia (w.e.f. January 28, 2014)

50. Aurovitas, Unipessoal Lda, Portugal (w.e.f. March 25, 2014)

Joint ventures

1. Novagen Pharma (Pty) Limited, South Africa (Joint venture of a subsidiary)

2. Zao Auros Pharma, Russia (Joint venture of a subsidiary) (Closed during the year without any operations)

Enterprises over which key management personnel or their relatives exercise significant influence

1. Pravesha Industries Private Limited, India

2. Sri Sai Packaging, India (Partnership firm)

3. Trident Chemphar Limited, India

4. Auropro Soft Systems Private Limited, India

5. Axis Clinicals Limited, India

6. Pranit Projects Private Limited, India

7. Pranit Packaging Private Limited, India

8. Cogent Glass Limited (formerly known as Matri Mirra Packaging Private Limited), India

9. Vaxer Pharma Limited, India

10. Orem Access Bio Inc, India

11. Veritaz Healthcare Limited, India

Key managerial personnel

1. Mr. P.V. Ramprasad Reddy, Director

(Resigned as Chairman w.e.f. June 1, 2012 and retired as Whole-time Director w.e.f. December 1, 2012)

2. Mr. K. Nithyananda Reddy, Whole-time Director

3. Dr. M. Sivakumaran, Whole-time Director

4. Mr. M. Madan Mohan Reddy, Whole-time Director

5. Mr. N. Govindarajan, Managing Director

6. Mr. Ravindra Shenoy, Joint Managing Director (Resigned w.e.f. November 9, 2012)

Relatives to key managerial personnel

1. Mr. P. Sarath Chandra Reddy (Son of Mr. P.V. Ramprasad Reddy, Director)

2. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time Director)

8. Leases

a. Operating lease

i. Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/cancellable at the option of either of the parties except for details in (ii) below. There is no escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the Statement of Profit and Loss is Rs.43.2 (March 31, 2013: Rs.17.1).

The Company has not recognized any contingent rent as expense in the Statement of Profit and Loss.

b. Finance lease

Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs.25.6 (March 31, 2013: Rs.25.6).

The net carrying amount of the buildings obtained on finance lease: Rs.13.3 (March 31, 2013: Rs.14.6).

9. In accordance with paragraph 10 of Notified Accounting Standard 9 on Revenue Recognition, excise duty on sales amounting to Rs.1,588.2 (March 31, 2013: Rs.1,444.0) has been reduced from sales in Statement of Profit and Loss and excise duty on (increase)/decrease in closing stock of finished goods amounting to (Rs.0.8) (March 31, 2013: Rs.4.2) has been (credited)/debited to the Statement of Profit and Loss.

10. Details of advances due from private companies in which Company''s Director is a director: Pravesha Industries Private Limited, India Rs.Nil (March 31, 2013: Rs.0.03).

Auropro Soft Systems Private Limited, India Rs.0.08 (March 31, 2013: Rs.Nil). Pranit Projects Private Limited, India Rs.1.3 (March 31, 2013: Rs.Nil).

11. i. Details of trade receivables due from private companies in which Company''s Director is a director:

Pravesha Industries Private Limited, India Rs.0.06 (March 31, 2013: Rs.Nil).

ii. Details of trade receivables due from partnership firm in which Company''s Director is a partner: Sri Sai Packaging, India Rs.Nil (March 31, 2013: Rs.Nil).

12. Segment reporting

In accordance with Accounting Standard 17 - Segment Reporting, segment information has been provided in the Consolidated Financial Statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

13. The figures of previous year have been regrouped/rearranged, wherever necessary to conform to those of the current year.


Mar 31, 2013

1. Capital and other commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for - Rs.211.5 (March 31, 2012: Rs.476.5).

2. Contingent liabilities

Particulars As at As at March 31, 2013 March 31, 2012

Outstanding bank guarantees 486.3 391.9

Claims arising from disputes not acknowledged as debts

- indirect taxes (excise duty and service tax)* 196.3 140.7

Claims arising from disputes not acknowledged as debts - direct taxes* 105.0 105.0

Claims against the Company not acknowledged as debts* 493.1 23.7

Bills discounted with banks 3,252.9 -

Corporate guarantee to bank for loan taken by 100% subsidiary - 1,589.8

* in respect of above matters, future cash outfows in respect of contingent liabilities are determinable only on receipt of judgements pending at various forums/authorities.

3. The income tax authorities had carried out search operations on the Company at certain locations during the previous year. The Company has fully co-operated with the authorities and various statements were recorded during the course of these operations. In order to avoid possible litigations, without admitting any irregularities, the Company had decided to offer an additional income and to pay the resultant tax. Accordingly, provision for income tax of Rs.48.7 on this additional income had been made in the previous year. The proceedings are in progress and no other material implications are expected by the management in this matter.

4. Employee stock options

a. Employee Stock Option Plan ''ESOP-2004''

The Company instituted an Employee Stock Option Plan ''ESOP-2004'' as per the special resolution passed in the 17th Annual General Meeting held on July 31, 2004. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 to grant options of 2,538,500 to eligible employees on August 1, 2004 and July 28, 2005. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying equity share of Rs.1 each. The said options vest on an annual basis at 15%, 20%, 25% and 40% over a period of four years and can be exercised over a period of six years from the date of grant of options.

The options have been granted at the then prevailing market price of Rs.72.52 per share and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

b. Employee Stock Option Plan ''ESOP-2006''

The Company instituted an Employee Stock Option Plan ''ESOP-2006'' as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Compensation Committee accordingly, granted total 3,210,500 options under seven grants of 175,000, 25,000, 90,000, 1,205,000, 300,000, 500,000 and 915,500 options to eligible employees on October 30, 2006, July 31, 2007, October 31, 2007, December 16, 2011, June 19, 2012, January 9, 2013 and January 28, 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying equity share of Rs.1 each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.120.70, Rs.132.35, Rs.114.50, Rs.91.60, Rs.106.05, Rs.200.70 and Rs.187.40 per share respectively and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

b. Disclosures related to defined benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days last drawn salary for each completed year of service.

The scheme is funded with an insurance company in the form of a qualifying insurance policy. The following tables summarise the components of net benefit expense recognized in the Statement of Profit and Loss, the fund status and Balance Sheet position:

5. Disclosure regarding derivative financial instruments

a. The aggregate amount of forward contracts entered into by the Company and remaining outstanding at year end are given below: Sell

US $ Nil, Rs.Nil (March 31,2012: US $ 18.0, Rs.915.8) - To hedge receivables in foreign currency.

US $ Nil, Rs.Nil (March 31,2012: US $ 27.0, Rs.1,373.6) - To hedge external commercial borrowing draw down.

b. Particulars of unhedged foreign currency exposure are detailed below at the exchange rate prevailing as at the Balance Sheet date:

6. In respect of the amounts mentioned under Section 205C of the Companies Act, 1956 there are no dues that are to be credited to the Investor Education and Protection Fund as at March 31, 2013 Rs.Nil (March 31, 2012: Nil)

7. Research and Development expenses

a. Details of Research and Development expenses incurred during the year, debited under various heads of Statement of Profit and Loss is given below:

8. Related party disclosures

Names of related parties and description of relationship Subsidiaries

1. APL Pharma Thai Limited, Thailand

2. ALL Pharma (Shanghai) Trading Company Limited, China

3. Aurobindo Pharma USA Inc., U.S.A.

4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5. Helix Healthcare B.V., The Netherlands

6. APL Holdings (Jersey) Limited, Jersey

7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil

8. APL Healthcare Limited, India

9. Auronext Pharma Private Limited, India

10. APL Research Centre Limited, India

11. Auro Pharma Inc., Canada

12. Aurobindo Pharma (Pty) Limited, South Africa

13. Aurobindo Pharma (Australia) Pty Limited, Australia

14. Agile Pharma B.V., The Netherlands

15. Aurobindo Switzerland AG, Switzerland

16. Auro Healthcare (Nigeria) Limited, Nigeria

17. Aurobindo ILAC Sanayi ve Ticaret Limited Sirketi, Turkey

18. Aurobindo Pharma (Singapore) Pte Limited, Singapore

19. Aurobindo Pharma Limited, s.r.l., Dominican Republic

20. Aurobindo Pharma Japan K.K., Japan

21. Pharmacin B.V., The Netherlands

22. Aurobindo Pharma GmbH, Germany

23. Aurobindo Pharma (Portugal) Unipessoal LDA, Portugal

24. Aurobindo Pharma (Bulgaria) EAD, Bulgaria

25. Aurobindo Pharma France SARL, France

26. Laboratorios Aurobindo S L, Spain

27. Agile Malta Holdings Limited, Malta

28. Aurobindo Pharma B.V., The Netherlands

29. Aurobindo Pharma (Romania) s.r.l., Romania

30. Aurobindo Pharma (Poland) Sp.z.o.o., Poland

31. Aurobindo Pharma (Italia) S.r.l., Italy

32. Agile Pharma (Malta) Limited, Malta

33. Aurobindo Pharma (Malta) Limited, Malta

34. APL IP Company Limited, Jersey

35. APL Swift Services (Malta) Limited, Malta

36. Milpharm Limited, U.K.

37. Aurolife Pharma LLC, U.S.A.

38. Auro Peptides Limited, India

39. Auro Medics Pharma LLC, U.S.A.

40. Aurobindo Pharma NZ Limited, New Zealand

41. Aurovida Farmaceutica SA DE CV, Mexico

42. Aurobindo Antibiotics Limited, India

43. Auro Health LLC, U.S.A. (w.e.f. September 13, 2012)

44. Aurobindo Pharma Hungary Kereskedelmi KFT, Hungary (Closed w.e.f. September 13, 2012)

Joint ventures

1. Novagen Pharma (Pty) Limited, South Africa (Joint venture of a subsidiary)

2. Zao Auros Pharma, Russia (Joint venture of a subsidiary) (Closed during the year without any operations)

Enterprises over which key management personnel or their relatives exercise significant influence

1. Pravesha Industries Private Limited, India

2. Sri Sai Packaging, India (Partnership firm)

3. Trident Chemphar Limited, India

4. Auropro Soft Systems Private Limited, India

5. Axis Clinicals Limited, India

6. Pranit Projects Private Limited, India

7. Pranit Packaging Private Limited, India

8. Matri Mirra Packaging Private Limited, India

9. Vaxer Pharma Limited, India

10. Silicon Life Sciences Private limited, India

11. Orem Access Bio Inc., India

Key managerial personnel

1. Mr. P.V. Ramprasad Reddy, Director

(Resigned as Chairman w.e.f. June 1, 2012 and retired as Whole-time Director w.e.f. December 1, 2012)

2. Mr. K. Nithyananda Reddy, Whole-time Director

3. Dr. M. Sivakumaran, Whole-time Director

4. Mr. M. Madan Mohan Reddy, Whole-time Director

5. Mr. N. Govindarajan, Managing Director

6. Mr. Ravindra Shenoy, Joint Managing Director (Resigned w.e.f. November 9, 2012)

Relatives to key managerial personnel

1. Mr. P. Sarath Chandra Reddy (Son of Mr. P.V. Ramprasad Reddy, Director)

2. Mrs. Kambam Kirthi Reddy (Daughter of Mr. K. Nithyananda Reddy, Whole-time Director)

3. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time Director)

9. Leases

a. Operating lease

Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/cancellable at the option of either of the parties. There is no escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the Statement of Profit and Loss is Rs.17.0 (March 31, 2012: Rs.23.7).

The Company has not recognized any contingent rent as expense in the Statement of Profit and Loss.

b. Finance lease

Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs.25.5 (March 31, 2012: Rs.25.5).

The net carrying amount of the buildings obtained on finance lease - Rs.14.6 (March 31, 2012: Rs.15.9).

10. In accordance with paragraph 10 of Notified Accounting Standard 9 on Revenue Recognition, excise duty on sales amounting to Rs.1,444.0 (March 31, 2012: Rs.972.8) has been reduced from sales in Statement of Profit and Loss and excise duty on increase/decrease in closing stock of finished goods amounting to Rs.4.2 [March 31, 2012: Rs.31.8 (credit)] has been debited to the Statement of Profit and Loss.

11. Details of advances due from private companies in which Company''s Director is a director.

Pravesha Industries Private Limited, India Rs.Nil (March 31, 2012: Rs.22.6)

12. i. Details of trade receivables due from private companies in which Company''s Director is a director.

Pravesha Industries Private Limited, India Rs.Nil (March 31, 2012: Rs.2.5)

ii. Details of trade receivables due from partnership firm in which Company''s Director is a partner.

Sri Sai Packaging, India Rs.Nil (March 31, 2012: Nil)

13. Interest in joint ventures

Details of interest in jointly controlled entities are given below:

a. Contingent liabilities of the above joint ventures Rs. Nil (March 31, 2012: Nil).

b. Capital commitments of the above joint ventures Rs. Nil (March 31, 2012: Nil).

c. Novagen Pharma (Pty) Limited, incorporated in South Africa, is engaged in distribution of pharmaceuticals products.

d. Previous year''s figures have been disclosed in italics.

e. All figures presented above represent Company''s share only.

14. Segment reporting

In accordance with Accounting Standard 17 - Segment Reporting, segment information has been provided in the Consolidated Financial Statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

15. The figures of previous year have been regrouped/rearranged, wherever necessary to conform to those of the current year.


Mar 31, 2012

A. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs1 per share. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2012 the amount of per share dividend recognized as distributions to equity shareholders was Rs1 (March 31, 2011: Rs2).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

i. Secured term loans in foreign currency carry interest in the range of LIBOR plus 2% to 2.5%. Out of these loans, loans amounting to Rs3,815.6 (March 31, 2011: Rs2,229.7) are repayable in 3 equal installments in 4th, 5th, 6th years from the respective final draw down dates, and loans amounting to Rs3,815.6 (March 31, 2011: Rs1,783.8) are repayable at the end of 5th year from the respective final draw down date.

ii. Unsecured term loans in foreign currency carry interest in the range of LIBOR plus 3% to 3.75%. These loans are repayable in 2012-13.

iii. Refer Note 30 for terms of issue of Foreign Currency Convertible Bonds ('FCCBs').

iv. Deferred sales tax loan is interest free and payable in various installments as per sales tax deferment scheme. The last installment is payable in 2025-26.

v. Term loans are secured by first pari passu charge on all the present and future fixed assets both movable and immoveable property of the Company.

Capital work-in-progress Rs5,580.8 (March 31, 2011: Rs5,367.3).

i. The title deeds of land and buildings aggregating to Rs148.4 (March 31, 2011: 140.6) are pending transfer to the Company's name.

ii. Capital work-in-progress include expenditure during construction period amounting to Rs1,226.5 (March 31, 2011: Rs692.7) (Refer Note 33).

iii. An amount of Rs4.5 (March 31, 2011: RsNil) is transferred from capital work-in-progress to assets held for sale.

iv. Depreciation for the year include Rs4.1 (March 31, 2011: Rs4.6) taken as pre-operative capital expenditure on capital projects pending capitalization.

v. Additions to fixed assets and capital work-in-progress during the year include value of capital expenditure towards research centre aggregating to Rs396.0 (March 31, 2011: Rs363.2) [Refer Note 37(b)].

vi. Details of finance lease (Refer Note 41).

Note:

i. The outstanding Tranche A and Tranche B Zero Coupon Foreign Currency Convertible Bonds ('FCCB' or 'Bonds') of USD 139.20 Million, issued in May 2006, were repaid in entirety on maturity during the year along with the redemption premium (Yield to Maturity) amounting to Rs3,198.6, inclusive of withholding taxes.

ii. During the previous year the Company has divested its 80.5% stake in Aurobindo (Datong) Bio-Pharma Company Limited, China, (ADBPL) one of its subsidiary.

1. Capital and other commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for - Rs476.5 (March 31, 2011: Rs1,980.1).

Company has given corporate guarantee for the loan extended by DBS, Singapore to Aurobinodo Pharma U.S.A. The loan amount outstanding as on March 31,2012 is Rs1,589.8 (March 31, 2011: RsNil).

2. Contingent liabilities

Particulars As at As at March 31, 2012 March 31, 2011

Outstanding bank guarantees 391.9 341.4 Claims arising from disputes not acknowledged as debts relating to

- indirect taxes (Excise duty & Service tax) 140.7 90.6

- direct taxes 105.0 100.0 Claims against the Company not acknowledged as debts 23.7 20.4 Premium on potential redemption of FCCBs Nil Refer

Note 3 (c)

3. Foreign Currency Convertible Bonds ('FCCBs'):

a. Terms of Issue

During the year ended March 31, 2007, the Company issued 150,000 zero coupon FCCBs due in 2011 (Tranche A Bonds) of USD 1,000 each and 50,000 Zero coupon FCCBs due in 2011 (Tranche B Bonds) of USD 1000 each, on the following terms:

Either convertible by the Tranche A bondholders at any time on or after June 27, 2006 but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011 and by the Tranche B bondholders at any time on or after May 17, 2007 (Conversion price setting date) but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011. Each Tranche A bond will be converted into fully paid up equity shares with par value of Rs5 per share at a fixed price of Rs1,014.06 per share at a fixed exchange rate conversion of Rs45.145 = USD 1. Each Tranche B bond will be converted into fully paid up equity shares with par value of Rs5 per share at a fixed price of Rs879.13 per share at a fixed exchange rate conversion of Rs45.145 = USD 1; or

Redeemable by the Company in respect of Tranche A bonds at the relevant Accreted Principal Amount, in whole but not in part at any time on or after November 16, 2008 and on or prior to May 10, 2011 and in respect of Tranche B bonds at the relevant Accreted Principal Amount, in whole but not in part at any time on or after May 17, 2009 and on or prior to May 10, 2011 as per the terms and conditions of the bonds mentioned in the Offering Circular;

Redeemable at 146.285% of its principal amount on maturity date in respect of Tranche A bonds and at 146.991% of its principal amount on maturity date in respect of Tranche B bonds if not redeemed or converted earlier.

b. Outstanding FCCBs

The outstanding FCCBs as at March 31, 2011 were 139,200, which were redeemed in full during the current year.

c. Redemption premium on potential redemption of FCCBs

As at March 31, 2011 the cumulative premium on potential redemption of FCCBs issued during the year ended March 31, 2007 aggregates to USD 70.2 equivalent to Rs3,132.0. The payment of such premium on redemption was contingent in nature, the outcome of which was dependent upon uncertain future events, hence no provision was considered. The outstanding FCCBs along with Yield to Maturity were redeemed during the current year.

4. Employee stock options

a. Employee Stock Option Plan 'ESOP-2004'

The Company instituted an Employee Stock Option Plan 'ESOP-2004' as per the special resolution passed in the 17th Annual General Meeting held on July 31, 2004. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 to grant options of 2,538,500 to eligible employees on August 1, 2004 and July 28, 2005. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying Equity Share of Rs1 each. The said options vest on an annual basis at 15%, 20%, 25% and 40% over a period of four years and can be exercised over a period of six years from the date of grant of options.

The options have been granted at the then prevailing market price of Rs72.52 per share and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

b. Employee Stock Option Plan 'ES0P-2006'

The Company instituted an Employee Stock Option Plan 'ESOP-2006' as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The compensation committee accordingly, granted total 1,495,000 options under four grants of 175,000, 25,000 , 90,000 and 1,205,000 options to eligible employees on October 30, 2006, July 31, 2007, October 31, 2007 and December 16, 2011 respectively. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying Equity Share of Rs1 each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs120.70, Rs132.35, Rs114.50 and Rs91.60 per share respectively and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

5. Employee benefits

a. Disclosures related to defined contribution plan

Provident fund contribution recognized as expense in the Statement of Profit and Loss Rs82.8 (March 31, 2011: Rs72.2).

b. Disclosures related to defined benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days last drawn salary for each completed year of service.

The scheme is funded with an insurance company in the form of a qualifying insurance policy. The following tables summarise the components of net benefit expense recognized in the Statement of Profit and Loss, the fund status and Balance Sheet position:

Notes:

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

ii. Percentage of plan assets as investments with insurer is 100%.

iii. The expected rate of return on assets is based on the expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

iv. The Company expects to contribute Rs25.0 (March 31, 2011: Rs60.0) to the qualifying insurance policy in 2012-13.

6. Disclosure regarding derivative financial instruments

a. The aggregate amount of forward contracts entered into by the Company and remaining outstanding at year end are given below: Sell US $ 18.0, Rs915.8 (March 31,2011: US $ Nil) - To hedge receivables in foreign currency.

US $ 27.0, Rs1,373.6 (March 31,2011: US $ Nil) - To hedge external commercial borrowing draw down.

Buy

US$ Nil (March 31, 2011: US $ 11.6, Rs519.3) - To hedge payables in foreign currency.

7. In respect of the amounts mentioned under Section 205C of the Companies Act, 1956 there are no dues that are to be credited to the Investor Education and Protection Fund as at March 31, 2012 (March 31, 2011: RsNil).

8. Related party disclosures

Names of related parties and description of relationship Subsidiaries

1. APL Pharma Thai Limited, Thailand

2. ALL Pharma (Shanghai) Trading Company Limited, China

3. Aurobindo Pharma U.S.A. Inc, U.S.A.

4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5. Helix Healthcare B.V., The Netherlands

6. APL Holdings (Jersey) Limited, Jersey

7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil

8. APL Health Care Limited, India

9. Auronext Pharma (Private) Limited, India

10. APL Research Centre Limited, India

11. Auro Pharma Inc., Canada

12. Aurobindo Pharma (Pty) Limited, South Africa

13. Aurobindo Pharma (Australia) Pty Limited, Australia

14. Agile Pharma B.V., The Netherlands

15. Aurobindo Pharma Hungary Kereskedelmi Kft, Hungary

16. Aurobindo Switzerland AG, Switzerland

17. Auro Healthcare (Nigeria) Limited, Nigeria

18. Aurobindo ILAC Sanayi ve Ticaret Limited, Turkey

19. Aurobindo Pharma (Singapore) Pte Limited, Singapore

20. Aurobindo Pharma Limited, s.r.l., Dominican Republic

21. Aurobindo Pharma Japan K.K., Japan

22. Pharmacin B.V., The Netherlands

23. Aurobindo Pharma GmbH, Germany

24. Aurobindo Pharma (Portugal) Unipessoal LDA, Portugal

25. Aurobindo Pharma (Bulgaria) EAD, Bulgaria

26. Aurobindo Pharma France SARL, France

27. Laboratorios Aurobindo S L, Spain

28. Agile Malta Holdings Limited, Malta

29. Aurobindo Pharma B.V., The Netherlands

30. Aurobindo Pharma (Romania) s.r.l., Romania

31. Aurobindo Pharma (Poland) Sp.z.o.o., Poland

32. Aurobindo Pharma (Italia) S.r.l., Italy

33. Agile Pharma (Malta) Limited, Malta

34. Aurobindo Pharma (Malta) Limited, Malta

35. APL IP Company Limited, Jersey

36. APL Swift Services (Malta) Limited, Malta

37. Milpharm Limited, U.K.

38. Aurolife Pharma LLC, U.S.A.

39. Auro Peptides Limited, India

40. Auro Medics Pharma LLC, U.S.A.

41. Aurobindo Pharma NZ Limited, New Zealand

42. Aurovida Farmaceutica SA DE CV, Mexico

43. Aurobindo (Datong) Bio-Pharma Company Limited, China

(Refer Note 27)

44. Aurex Generics Limited, U.K. (Liquidated w.e.f. March 31, 2011)

45. Zao Express Pharma, Russia (Liquidated w.e.f. April 1, 2010)

46. Aurobindo Pharma Aps, Denmark (Liquidated w.e.f. September 16, 2010)

47. Sia Aurobindo Baltics, Latvia (Liquidated w.e.f. November 26, 2010)

48. Aurobindo Pharma (Ireland) Limited, Ireland (Liquidated w.e.f. May 31, 2010)

Joint ventures

1. Aurosal Pharmaceuticals LLC, U.S.A. (Joint Venture of a Subsidiary) (Closed w.e.f. December 31, 2011)

2. Novagen Pharma (Pty) Limited, South Africa (Joint venture of a subsidiary)

3. Zao Auros Pharma, Russia (Joint venture of a subsidiary)

4. Cephazone Pharma LLC, U.S.A, (Joint venture of a subsidiary) (Disposed w.e.f. October 1, 2010)

Enterprises over which key management personnel or their relatives exercise significant influence

1. Pravesha Industries Private Limited, India

2. Sri Sai Packaging, India (Partnership firm)

3. Trident Chemphar Limited, India

4. Auropro Soft Systems Private Limited, India

5. Axis Clinicals Limited, India

6. Pranit Projects Private Limited, India (Formerly known as Pranit Happy Homes Private Limited)

7. Pranit Packaging Private Limited, India

8. Matri Mirra Packaging Private Limited, India

Key managerial personnel

1. Mr. P.V. Ramprasad Reddy, Chairman

2. Mr. K. Nithyananda Reddy, Managing Director

3. Dr. M. Sivakumaran, Whole-time Director

4. Mr. M. Madan Mohan Reddy, Whole-time Director

Relatives to key managerial personnel

1. Mr. P. Sarath Chandra Reddy (Son of Mr. P.V. Ramprasad Reddy, Chairman)

2. Mrs. Kambam Kirthi Reddy (Daughter of Mr. K. Nithyananda Reddy, Managing Director)

3. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time Director)

9. Leases

a. Operating lease

Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/ cancellable at the option of either of the parties. There is no escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the Statement of Profit and Loss is Rs23.8 (March 31, 2011: Rs19.4).

The Company has not recognized any contingent rent as expense in the Statement of Profit and Loss.

b. Finance lease

Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs25.6 (March 31, 2011: Rs55.2).

The net carrying amount of the buildings obtained on finance lease - Rs15.9 (March 31, 2011: Rs32.0).

10. In accordance with paragraph 10 of Notified Accounting Standard 9 on Revenue Recognition, excise duty on sales amounting to Rs972.8 (March 31, 2011: Rs968.7) has been reduced from sales in Statement of Profit and Loss and excise duty on increase/decrease in closing stock of finished goods amounting to Rs31.8 (March 31, 2011: Rs26.7) has been credited (March 31, 2011: debit) to the Statement of Profit and Loss.

11. The Company is in the process of applying to the Central government for approval of excess managerial remuneration amounting to Rs25.1 paid to four directors during the year beyond the limits specified in Part II of Section II (B) and Section III of Schedule XIII of the Companies Act, 1956. The Company believes that such approval will be obtained in due course and would not have any material impact upon the financial statements.

12. i. Details of advances due from private companies in which Company's Director is a director.

Pravesha Industries Private Limited, India Rs22.7 (March 31, 2011: Rs175.2)

ii. Details of advances due from partnership firm in which Company's Director is a partner.

Sri Sai Packaging, India RsNil (March 31, 2011: Rs8.4)

13. i. Details of trade receivables due from private companies in which Company's Director is a director.

Pravesha Industries Private Limited, India Rs2.5 (March 31, 2011: Rs6.2)

ii. Details of trade receivables due from partnership firm in which Company's Director is a partner.

Sri Sai Packaging, India RsNil (March 31, 2011: RsNil)

14. The Income Tax Authorities had carried out search operations on the Company at certain locations during the current year. The Company has fully co-operated with the authorities and various statements were recorded during the course of these operations. In order to avoid possible litigations, without admitting any irregularities, the Company has decided to offer an additional income of Rs150.0 for tax and to pay the resultant tax. Accordingly provision for income tax of Rs48.7 on this additional income has been made. The proceedings are in progress and no other material implications are expected by the management in this matter.

a. Contingent liabilities of the above joint ventures RsNil (March 31, 2011: Rs Nil).

b. Capital commitments of the above joint ventures RsNil (March 31, 2011: Rs Nil).

c. Aurosal Pharmaceuticals LLC, U.S.A. engaged in the development, manufacturing and distribution of pharmaceutical products, was closed on December 31, 2011.

d. Novagen Pharma (Pty) Limited incorporated in South Africa, is engaged in distribution of pharmaceuticals products.

e. Cephazone Pharma LLC, U.S.A. engaged in the production of sterile and non-sterile Cephalosporin's, was sold in the previous year.

f. ZAO Auros Pharma incorporated in Russia during the year, is engaged in distribution of pharmaceuticals products. There were no transactions during the year.

g. Previous year's figures have been disclosed in italics.

h. All figures presented above represent Company's share only.

15. Segment reporting

In accordance with Accounting Standard 17 - Segment Reporting, segment information has been provided in the Consolidated Financial Statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.


Mar 31, 2010

1. Capital commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for - Rs. 1168 (March 31, 2009: Rs. 709).

2. Contingent Liabilities

Particulars March 31, 2010 March 31, 2009

Premium on potential redemption of Foreign Currency Convertible Bonds Refer note Refer note

6(d) below 6(d) below

Outstanding bank guarantees 244.8 213.3

Bills discounted with banks - 62.8*

Claims arising from disputes relating to direct and indirect taxes

not acknowledged as debts 217.5 123.6

Dossier sales with refund clause 1,095.6 635.3

Claims against the Company not acknowledged as debts 4.9 4.9



- secured by personal guarantees of the Chairman and the Managing Director

3. Scheme of Arrangement under Sections 391 to 393 of the Companies Act, 1956

The shareholders of the Company vide a Court convened meeting held on May 21, 2009 approved a Scheme of Arrangement under Sections 391 to 393 read with Sections 100 to 103 and other applicable provisions of the Companies Act, 1956. The said Scheme provides for utilization of capital profit arising on buy-back and cancellation of Foreign Currency Convertible Bonds (FCCBs), the balances standing to the credit of Capital Reserve Account and Capital Redemption Reserve Account to adjust certain expenses as determined by the management detailed below. The aforesaid Scheme was filed before the Honble High Court of Andhra Pradesh.

In the current year, the Honble High Court of Andhra Pradesh has dismissed the Scheme filed by the Company. The Company has appealed against the Order of the High Court and the appeal is pending before the appellate body.

In the previous year, pending approval of the High Court, the Company had credited the entire capital profit on buyback and cancellation of FCCBs net of expenses, amounting to Rs. 36.2 as an exceptional item to the Profit and Loss Account. Similarly the capital profit on buy- back of FCCBs made during the year ended March 31, 2010 amounting to Rs. 21.9 has been credited to the Profit and Loss Account and has been disclosed as an exceptional item.

Acquisition and amalgamation of Trident Life Sciences Limited (Trident)

Trident is in the process of setting up a state-of-the-art facility for manufacturing injectables at Medak District in Andhra Pradesh. The Company acquired the entire equity shares of Trident Life Sciences Limited (Trident) on September 18, 2009. Pursuant to this acquisition, Trident became a wholly owned subsidiary of the Company.

In order to achieve the synergies of consolidation and to achieve cost optimization through reduction of administration and other operational cost, it was decided to amalgamate Trident with the Company with effect from October 1, 2009 (the appointed date). Accordingly, a Scheme of Amalgamation (the Scheme) of Trident with the Company under Sections 391 to 394 of the Companies Act, 1956 was approved by the shareholders of the Company at a Court convened meeting held on January 20, 2010. The Honble High Court of Andhra Pradesh approved the Scheme on March 30, 2010. The salient features of the Scheme are set out below:

- With effect from the appointed date, entire business and whole of the undertaking(s) of Trident including all its properties and assets, investments, licenses, permits, approvals, lease, tenancy rights, permissions, and all its debts, liabilities, contingent liabilities, duties and obligations shall vest with the Company;

- All assets and liabilities of Trident transferred to and vested shall be recorded in the books of the Company at their respective book values;

- The authorized equity share capital of Trident has got merged with the authorized equity share capital of the Company;

- All inter-company balances, if any, including share application money shall be eliminated; and

- The value of investment in the share capital of Trident appearing in the books of the Company shall stand cancelled. As Trident is a wholly owned subsidiary of the Company, the amalgamation does not involve any consideration.

4. Foreign Currency Convertible Bonds

The Company issued Foreign Currency Convertible Bonds (FCCBs) during the years ended March 31, 2006 and March 31, 2007. The details of such issue are given below:

a. FCCBs issued during the year ended March 31, 2006:

60,000 Zero Coupon Foreign Currency Convertible Bonds (bonds) due in 2010 of USD 1,000 each on the following terms:

- either convertible by the holders at any time on or after September 20, 2005 but prior to close of business (at the place the bonds are deposited for conversion) on August 8, 2010. Each bond will be converted into 83.12 fully paid up equity share with par value of Rs. 5 per share at a fixed price of Rs. 522.036 per share at a fixed exchange rate conversion of Rs. 43.3925= USD 1; or

- Redeemable in whole but not in part at the option of the Company at any time on or after February 25, 2008 and on or prior to August 1, 2010 as per the terms and conditions of the bonds mentioned in the Offering Circular;

- Redeemable on maturity date at 139.954% of its principal amount if not redeemed or converted earlier.

b. FCCBs issued during the year ended March 31, 2007:

150,000 zero coupon FCCBs due in 2011 (Tranche A Bonds) of USD 1,000 each and 50,000 Forward Conversion Convertible Bonds due in 2011 (Tranche B Bonds) of USD 1000 each were issued on the following terms:

- Either convertible by the Tranche A bondholders at any time on or after June 27, 2006 but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011 and by the Tranche B bondholders at any time on or after May 17, 2007 (Conversion price setting date) but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011. Each Tranche A bond will be converted into 44.52 fully paid up equity share with par value of Rs. 5 per share at a fixed price of X1,014.06 per share at a fixed exchange rate conversion of Rs. 45.145 = USD 1. Each Tranche B bond will be converted into 51.35 fully paid up equity shares with par value of Rs. 5 per share at a fixed price of Rs. 879.13 per share at a fixed exchange rate conversion of Rs.45.145 = USD 1; or

- Redeemable by the Company in respect of Tranche A bonds at the relevant Accreted Principal Amount, in whole but not in part at any time on or after November 16, 2008 and on or prior to May 10, 2011 and in respect of Tranche B bonds at the relevant Accreted Principal Amount, in whole but not in part at any time on or after May 17, 2009 and on or prior to May 10, 2011 as per the terms and conditions of the bonds mentioned in the Offering Circular;

- Redeemable at 146.285% of its principal amount on maturity date in respect of Tranche A bonds and at 146.991% of its principal amount on maturity date in respect of Tranche B bonds if not redeemed or converted earlier.

c. Outstanding FCCBs

- In respect of the bonds issued during the year ended March 31, 2006, 21,818 bonds of USD 1,000 each were converted into 1,813,539 equity shares of Rs. 5 each at premium of Rs. 517.036 during the year. The outstanding FCCBs as at March 31, 2010 is 31,782 bonds (March 31, 2009: 53,600). Subsequent to the Balance Sheet date, 6,714 bonds of USD 1,000 each were converted into equity shares and the conversion of 2,000 bonds of USD 1,000 each lodged with the Company is in progress.

- In respect of the bonds issued during the year ended March 31, 2007, 1,800 bonds (March 31, 2009: 59,000 bonds) of USD 1,000 each were cancelled pursuant to a buy back during the year. The outstanding FCCBs as at March 31, 2010 is 139,200 bonds (March 31, 2009: 141,000).

d. Redemption premium on potential redemption of FCCBs

- The cumulative premium on potential redemption of FCCBs issued during the years ended March 31, 2006 and March 31, 2007 aggregates to USD 58.6 (March 31, 2009: USD 53.2) equivalent to Rs. 2,632.6 (March 31, 2009: Rs. 2,699.4). The payment of premium on redemption is contingent in nature, the outcome of which is dependent on uncertain future events. Hence, no provision is considered in the accounts in respect of such premium for the year.

e. In the opinion of the Company, as the bonds are convertible into equity shares and accordingly, the creation of debenture redemption reserve is not required.

5. Employee benefits

a. Disclosures related to defined contribution plan

Provident fund contribution recognized as expense in the Profit and Loss Account is Rs. 57.5 (March 31, 2009: Rs. 47.5)

b. Disclosures related to defined benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days last drawn salary for each completed year of service.

6. Details of security given for secured loans

a. Term loans are secured by:

- First pari passu charge on the fixed assets of the Company located at various plants of the Company.

- Personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs. Nil (March 31, 2009: Rs. 750.0).

b. Other working capital loans from banks are secured by:

- First charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future).

- Second charge on all the fixed assets of the Company both present and future subject to charges created in favour of term lenders.

- Personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs. Nil (March 31, 2009: Rs. 7,379.8).

- Hire purchase loans from banks are secured by hypothecation of the related assets.

7. Unsecured loans

Short term loans from banks to the extent of Rs. Nil (March 31, 2009: Rs. 1,115.0) are personally guaranteed by the Chairman and the Managing Director of the Company.

8. Export incentives

Sales for the year includes export incentives on account of various schemes amounting to Rs. 515.7 (March 31, 2009: Rs. 393.0).

9. Related Party Disclosures

i. Names of related parties and description of relationship a. Subsidiaries

1. APL Pharma Thai Limited, Thailand

2. ALL Pharma (Shanghai) Trading Company Limited, China

3. Aurobindo Pharma USA Inc., U.S.A.

4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5. Aurobindo (Datong) Bio-pharma Company Limited China

6. Helix Healthcare B.V., The Netherlands

7. APL Holdings (Jersey) Limited, Jersey

8. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil

9. APL Healthcare Limited, India

10. APL Research Centre Limited, India

11. Aurex Generics Limited, U.K.

12. Auro Pharma Inc., Canada

13. Zao Aurobindo Pharma, Russia

14. Aurobindo Pharma (Pty) Limited, South Africa

15. Aurobindo Pharma (Australia) Pty Limited, Australia

16. Agile Pharma B.V., The Netherlands

17. Aurobindo Pharma Hungary Kereskedelmi Kft, Hungary

18. Aurobindo Switzerland AG, Switzerland

19. Auro Healthcare (Nigeria) Limited, Nigeria

20. Aurobindo ILAC Sanayi ve Ticaret Limited, Sirketi

21. Aurobindo Pharma Japan K.K., Japan

22. Pharmacin B.V., The Netherlands

23. Aurobindo Pharma GmbH, Germany

24. Aurobindo Pharma (Portugal) Unipessoal LDA, Portugal

25. Aurobindo Pharma ApS, Denmark

26. Sia Aurobindo Baltics, Latvia

27. Aurobindo Pharma (Bulgaria) EAD, Bulgaria

28. Aurobindo Pharma France SARL, France

29. Laboratorios Aurobindo S L, Spain

30. Agile Malta Holdings Limited, Malta

31. Aurobindo Pharma (Ireland) Limited

32. Aurobindo Pharma (Italia) S.r.l., Italy

33. Agile Pharma (Malta) Limited, Malta

34. Aurobindo Pharma (Malta) Limited, Malta

35. APL IP Company Limited, Jersey

36. APL Swift Services (Malta) Limited, Malta

37. Milpharm Limited, U.K.

38. Aurolife Pharma LLC, U.S.A.

39. Auronext Pharma Private Limited, India

40. Trident Life Sciences Limited, India*

-Amalgamated with the Company with effect from October 1, 2009.

b. Joint ventures

Aurosal Pharmaceuticals LLC, U.S.A. (Joint venture of a subsidiary)

Cephazone Pharma LLC, USA (Joint venture of a subsidiary)

Novagen Pharma (Pty) Limited, South Africa (Joint venture of a subsidiary)

c. Enterprises over which key management personnel or relatives exercise significant influence

Pravesha Industries Private Limited, India Sri Sai Packaging, India (Partnership firm) Trident Chemphar Limited, India Auropro Soft Systems Private Limited, India Axis Clinicals Limited, India RPR Trust, India

d. Key managerial personnel

Mr. P.V. Ramprasad Reddy, Chairman

Mr. K. Nithyananda Reddy, Managing Director

Dr. M. Sivakumaran, Whole-time Director

Mr. M. Madan Mohan Reddy, Whole-time Director

e. Relative to key managerial personnel

Ms. P. Suneela Rani (Wife of Mr. P.V. Ramprasad Reddy, Chairman)

Ms. K. Rajeswari (Wife of Mr. K. Nithyananda Reddy, Managing director)

Mr. P. Sarath Chandra Reddy (Son of Mr. P.V. Ramprasad Reddy, Chairman)

Mr. Penaka Rohit Reddy (Son of Mr. P.V. Ramprasad Reddy, Chairman)

Ms. Kambam Kirthi Reddy (Daughter of Mr. K. Nithyananda Reddy, Managing Director)

Ms. Spoorthi Kambam (Daughter of Mr. K. Nithyananda Reddy, Managing Director)

Mr. K. Suryaprakash Reddy (Brother of Mr. K. Nithyananda Reddy, Managing Director)

Mr. Prasad Reddy Kambam (Brother of Mr. K. Nithyananda Reddy, Managing Director)

Ms. Sashi S. Kumar (Wife of Dr. M. Sivakumaran, Whole-time Director)

Ms. Shilpa Sivakumaran (Daughter of Dr. M. Sivakumaran, Whole-time Director)

Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time Director)

10. Leases

a. Operating lease

Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/cancelable at the option of either of the parties. There is no escalation clause in the lease agreement. There are no sub-leases. The aggregate amount of operating lease payments recognized in the Profit and Loss Account Rs. 15.1 (March 31, 2009: Rs. 10.2).

b. Finance lease

Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs. 49.2 (March 31, 2009: Rs. 72.0).

The net carrying amount of the buildings obtained on finance lease - Rs. 32.3 (March 31, 2009: Rs. 53.5).

The Company has not recognized any contingent rent as expense in the statement of Profit and Loss Account.

There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no sub-leases.

11. In accordance with paragraph 10 of Notified Accounting Standard 9 on Revenue Recognition, excise duty on sales amounting to Rs. 673.3 (March 31, 2009: Rs. 904.2) has been reduced from sales in Profit and Loss Account and excise duty on increase/decrease in closing stock of finished goods amounting to Rs. 2.1 (March 31, 2009: Rs. 0.7) has been debited to (March 31, 2009: credit) in the Profit and Loss Account.

12. The Company has appointed an employee covered under Section 314 of the Companies Act, 1956. The employment is subject to an approval from the Central Government. The Company has filed an application for obtaining the approval and the same is pending with the Central Government. In the meanwhile, the Company has paid remuneration to the employee. The Company is confident of obtaining approval from the Central Government and believes that the risk of rejection of the employment contract by the Central Government is remote.

13. In accordance with Accounting Standard 17 - Segment Reporting, segment information has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

14. The current year figures include those relating to transferor company viz., Trident Life Sciences Limited and therefore the figures of the previous year are not comparable with those of the current year. Further, the figures of the previous year have been re-grouped/rearranged, wherever necessary to conform to those of the current year.

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