Notes to Accounts of Biocon Ltd.
Mar 31, 2023
Share based payment reserve
The Company has established equity settled share based payment plans for certain categories of employees of the Company and its subsidiaries/ joint venture company. Refer note 30 for further details on these plans.
Treasury shares
Own equity instruments that are reacquired [treasury shares] are recognised at cost and disclosed as deducted from equity.
Cash flow hedging reserves
The cash flow hedging reserve represents the cumulative effective portion of gains or losses (net of taxes, if any) arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges.
Other Items of other comprehensive income
Other Items of other comprehensive income represents mark to market gain or loss on financial assets classified as FVTOCI and re-measurements of the defined benefits plan.
(a) The Company has external commercial borrowing (ECB) from Bank repayable in 3 yearly instalments commencing from June 15, 2025 and carry interest @ Libor agreed spread per annum. The loan is secured by exclusive charge on the property, plant and equipment created out of the term loan facility.
(b) During the current year, the Company has issued 1,07,000 redeemable Non-Convertible Debentures (NCD) in 3 series each having a face value of '' 1,00,000 with a minimum return of 12% per annum plus agreed variable coupon payable upon redemption. The variable coupon is linked to the equity share price of a subsidiary. Tenure of the NCD is 5 years from the date of allotment or earlier based on put option terms. The NCD are secured by way of pledge over 3,81,13,557 equity shares of a subsidiary held by the Company. The NCD proceeds were utilised for repayment of mezzanine borrowing which was raised for investing in the subsidiary.
(c) The Company''s exposure to liquidity, interest rate and currency risks are disclosed in note 36.
30. Employee stock compensation
(a) Biocon ESOP Plan
On September 27, 2001, Biocon''s Board of Directors approved the Biocon Employee Stock Option Plan (''ESOP Plan 2000'') for the grant of stock options to the employees of the Company and its subsidiaries / joint venture company. The Nomination and Remuneration Committee (''Remuneration Committee'') administers the plan through a trust established specifically for this purpose, called the Biocon India Limited Employee Welfare Trust (ESOP Trust).
The ESOP Trust shall make additional purchase of equity shares of the Company using the proceeds from the loan obtained from the Company, other cash inflows from allotment of shares to employees under the ESOP Plan and shall subscribe, when allotted to such number of shares as is necessary for transferring to the employees. The ESOP Trust may also receive shares from the promoters for the purpose of issuance to the employees under the ESOP Plan. The Remuneration Committee shall determine the exercise price which will not be less than the face value of the shares.
(a) Expenses incurred on behalf of the related party include Salary cost, ESOP cost and amount paid on behalf of the related party to vendors.
(b) The Company''s SEZ Developer division has entered into agreements to lease land and provide certain facilities such as power, utilities etc. to SEZ units of Biocon Biologics Limited, Biocon Pharma Limited and Syngene International Limited, in respect of which the Company recovers rent and facilities usage charges.
(c) The above disclosures include related parties as per Ind AS 24 on "Related Party Disclosures" and Companies Act, 2013.
(d) The remuneration to key management personnel doesn''t include the provisions made for gratuity and compensated absences amounting to Rs 4, as they are obtained on an actuarial basis for the Company as a whole.
(e) Share based compensation expense allocable to key management personnel is '' 75 (March 31, 2022 - '' 65), which is not included in the remuneration disclosed above.
(f) All transactions with these related parties are priced on an arm''s length basis and none of the balances are secured.
(g) The loans to related parties is presented net of repayments due to multiple transactions. Loans repaid includes loan subsequently converted into preference shares. The loan given to subsidiaries are for Business purposes and interest rates are at arm''s length. The Loans are payables on demand.
The Company is subject to complexities with respect to various tax positions on deductibility of transactions and availability of tax incentives / exemptions, impact of group restructuring and on cross border transfer pricing arrangements. Judgment is required in assessing the range of possible outcomes for some of these tax matters, which could change over time as each of the matter progresses depending on experience on actual assessment proceedings by tax authorities and other judicial precedents. Based on its internal assessment supported by external legal counsel views, if any, the Company believes that it will be able to sustain its positions if challenged by the authorities and accordingly no additional provision is required for these matters.
Other than the matter disclosed above, the Company is involved in disputes, lawsuits, proceedings etc. including patent and commercial matters that arise from time to time in the ordinary course of business. Management is of the view that above matters are not tenable and will not have any material adverse effect on the Company''s financial position and results of operations.
(ii) Commitments:
(a) Estimated amount of contracts remaining to be executed on capital account and not 731 1,126
provided for, net of advances
(b) During FY 2019-20, the Company and Biocon Biologics Limited had entered into an agreement with Active Pine LLP (''Investor I) whereby the Investor has infused '' 5,363 against issuance of equity shares of a subsidiary company, Biocon Biologics Limited. As per the agreement, the Company will be required to provide various options to enable the Investor to exit over a period of time. In the event, such exit events do not occur, the Investor may require the Company, to buy them out at certain prices agreed under the arrangement.
(c) During FY 2020-21, the Company and Biocon Biologics Limited had entered into an agreement with Beta Oryx Limited, a wholly owned subsidiary of ADQ (Investor II) whereby the Investor has infused '' 5,550 against issuance of equity shares of a subsidiary company, Biocon Biologics Limited. As per the agreement, the Company will be required to provide various options to enable the Investor to exit over a period of time. In the event, such exit events do not occur, the Investor may require the Company, to buy them out at certain prices agreed under the arrangement.
(d) During FY 2020-21, the Company and Biocon Biologics Limited has entered into an agreement with Tata Capital Growth Fund II (Investor III) whereby the Investor has infused '' 2,250 against issuance of equity shares of a subsidiary company, Biocon Biologics Limited. As per the agreement, the Company will be required to provide various options to enable the Investor to exit over a period of time. In the event, such exit events do not occur, the Investor may require the Company, to buy them out at certain prices agreed under the arrangement.
(i) The Company has a defined benefit gratuity plan as per the Payment of Gratuity Act, 1972. Under this legislation, employee who has completed five
years of service is entitled to specific benefit. The level of benefits provided depends on the employee''s length of service and salary at retirement/ termination age and does not have any maximum monetary limit for payments. The gratuity plan is a funded plan and the Company makes contributions to a recognised fund in India.
The plans assets are maintained with HDFC Life in respect of gratuity scheme for certain employees of the Company. The details of investments maintained by Life Insurance Corporation are not available with the Company, hence not disclosed. The expected rate of return on plan assets is 7.3 % p.a. (31 March 2022: 6.1 % p.a.).
The cost of the defined benefit plans and other long term benefits are determined using actuarial valuations. Actuarial valuations involve making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases and mortality rate. Due to these complexity involved in the valuation it is highly sensitive to the changes in these assumptions. All assumptions are reviewed at reporting date. The present value of the defined benefit obligation and the related current service cost and planned service cost were measured using the projected unit cost method.
Sensitivity of significant actuarial assumptions is computed by varying one actuarial assumption used for the valuation of defined benefit obligation by one percentage, keeping all other actuarial assumptions constant. Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumption shown.
As of March 31, 2023 and March 31, 2022, the plan assets have been invested in insurer managed funds and the expected contribution to the fund during the year ending March 31, 2024, is approximately '' 74 (March 31, 2023 - '' 64).
(iv) Risk exposure
These defined benefit plans typically expose the Company to actuarial risks as under:
a) Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.
b) Interest rate risk: A decrease in bond interest rate will increase the plan liability.
c) Longevity risk: The present value of the defined plan liability is calculated by reference to the best estimate of the mortality of plan participants. An increase in the life expectancy will increase the plan''s liability.
d) Salary risk: Higher than expected increase in salary will increase the defined benefit obligation.
(a) The fair value of trade receivables, trade payables and other financial assets and liabilities is considered to be equal to the carrying amounts of these items due to their short - term nature.
(b) There have been no transfers between level 1, 2 and 3 needs to be made.
(c) The Company enters into derivative financial instruments with various counterparties. Derivatives are valued using valuation techniques in consultation with market expert. The most frequently applied valuation technique include forward pricing, swap models and Black Scholes Merton Model (for options valuation), using present value calculations. The models incorporate various inputs including foreign exchange forward rates, interest rate curve and forward rates curve..
* Investment in equity shares in subsidiaries, associate and joint venture and investment in preference shares of associates has been accounted at cost as per Ind AS 27 "Consolidated and Separate Financial Statements".
# These includes investment in preference shares in subsidiaries which are convertible (variable number of equity shares) / redeemable, at its face value, any time during the tenure of the instrument at the option of the holder. Owing to this feature, the instrument has been disclosed at its fair value which is equivalent to the face value.
B. Measurement of fair values
Fair value of liquid mutual funds are based on quoted price. Derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the market place.
Sensitivity analysis
For the fair values of forward contracts of foreign currencies, reasonably possible changes at the reporting date to one of the significant observable inputs, holding other inputs constant, would have the following effects in other comprehensive income (OCI).
(i) Risk management framework
The Company''s risk management is carried out by the treasury department under policies approved by the Board of Directors. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative and non-derivative financial instruments and investment of excess liquidity.
(ii) Credit risk
Credit risk is the risk that the counterparty will not meet its obligation under a financial instrument or customer contract, leading to financial loss. The credit risk arises principally from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions and other financial instruments.
Customer credit risk is managed by each business unit subject to Company''s established policy, procedures and control relating to customer credit risk management. The Audit and Risk Management Committee has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, where available, and other publicly available financial information. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance.
Receivable from one customer of the Company''s trade receivable is '' 1,634 (March 31, 2022 - Nil) which is more than 10 percent of the Company''s total trade receivables as at March 31, 2023.
Refer note 12 for ageing of trade receivables.
Other than trade receivables, the Company has no significant class of financial assets that is past due but not impaired.
The Company is no significantly exposed to geographical credit risk as the counterparties operate across various countries across the globe. Also refer geographical Revenues disclosure in Note 21.1.
Credit risk on cash and cash equivalent and derivatives is limited as the Company generally transacts with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies which are rated A or AAA. Investments primarily include investment in liquid mutual fund units, bonds and non-convertible debentures.
(iii) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.
The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
The following are the contractual maturities of financial liabilities and excluding interest payments. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay:
(b) Sensitivity
The Company policy is to maintain most of its borrowings at fixed rate using interest rate swaps to achieve this when necessary. They are therefore not subject to interest rate risk as defined under Ind AS 107.
The key objective of the Company''s capital management is to ensure that it maintains a stable capital structure with the focus on total equity to uphold investor, creditor, and customer confidence and to ensure future development of its business. The Company focused on keeping strong total equity base to ensure independence, security, as well as a high financial flexibility for potential future borrowings, if required without impacting the risk profile of the Company.
The Company''s goal is to continue to be able to return excess liquidity to shareholders by continuing to distribute annual dividends in future periods. The amount of future dividends of equity shares will be balanced with efforts to continue to maintain an adequate liquidity status.
41. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income-tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the financial year. The Company is required to update and put in place the information latest by the due date of filing its income tax return. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expenses and that of provision for tax.
42. Other Statutory Information
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property under Benami Transactions (Prohibition) Act, 1988 (45 of 1988).
(ii) The Company does not have any material transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company is not declared as wilful defaulter by any bank or financial institution or government or any government authority.
43. No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the company (Ultimate Beneficiaries).
Further, the company has not received any fund from any party(s) (Funding Party) with the understanding that the company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the funding party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
During the current year, the Company has sold 61,789,164 equity shares of Syngene International limited in the open market. The gain arising from sale of aforesaid equity shares amounting to ''28,628 has been recorded as an exceptional item.
46. On April 28, 2022, the Board of Directors of the Company proposed a final dividend of 10% i.e. '' 0.50 per equity share of face value of '' 5/- each as on the record date for distribution of final dividend. The same has been approved by the shareholders in the Annual General Meeting of the Company held on July 28, 2022 and distributed to the shareholders of the Company during the current year.
47. Events after reporting period
On May 23, 2023, the Board of Directors of the Company has proposed a final dividend of 30% i.e. '' 1.5 per equity share of face value of '' 5/- each as on the record date for distribution of final dividend. The proposed dividend is subject to approval of the shareholders in the ensuing Annual General Meeting of the Company. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.
Mar 31, 2022
(a) During the year, the Company has recognised rental income of '' 303 (March 31, 2021 '' 283) in the statement of profit and loss for investment property.
(b) The fair value of investment property is '' 2,194 (March 31,2021 '' 2,234), based on market observable data. The company has not engaged any registered valuer for determining the above fair value.
(c) Company''s investment properties consist of land and building in Bangalore.
(ii) Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of '' 5 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees.
I n 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, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.
The Company had allotted 600,000,000 equity shares of '' 5 each fully paid up as bonus shares on June 19, 2019 in the ratio of 1:1 (one equity shares of '' 5 each for every one equity share of '' 5 each held in the Company as on the record date i.e. June 13, 2019) by capitalisation of securities premium and general reserve. In accordance with Ind AS 33, the Earnings per share data adjusted to give effect to the bonus issue.
(v) Shares reserved for issue under options
For details of shares reserved for issue under the Share based payment plan of the company, please refer note 30.
Securities premium
Securities premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Companies Act, 2013. General reserve
General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes.
Retained earnings
The amount that can be distributed by the Company as dividends to its equity shareholders.
SEZ re-investment reserve
The Special Economic Zone (SEZ) re-investment reserve has been created out of profit of eligible SEZ units in terms of the provisions of section 10AA(1)(ii) of the Income-tax Act, 1961. The reserve has been utilised for acquiring new plant and machinery for the purpose of its business in terms of section 10AA(2) of the Income-tax Act, 1961.
Share based payment reserve
The Company has established equity settled share based payment plans for certain categories of employees of the Company and its subsidiaries / joint venture company. Refer note 30 for further details on these plans.
Treasury shares
Own equity instruments that are reacquired [treasury shares] are recognised at cost and disclosed as deducted from equity.
Cash flow hedging reserves
The cash flow hedging reserve represents the cumulative effective portion of gains or losses (net of taxes, if any) arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges.
Other Items of other comprehensive income
Other Items of other comprehensive income represents mark to market gain or loss on financial assets classified as FVTOCI and re-measurements of the defined benefits plan.
(a) During the year ended March 31, 2021, HDFC bank has sanctioned external commercial borrowing (ECB) facility of USD 25 million to the Company. During the current year, the Company has drawn ECB of USD 10 million, carrying interest @ Libor 1.75% per annum. The loan is repayable in 3 yearly instalments commencing from June 16, 2025. The loan is secured by exclusive charge on the property, plant and equipments created out of the term loan facility. The Company has entered into interest rate swap converting the floating rate to fixed rate of interest. [Refer note 36]
(b) On August 25, 2010, the Department of Science and Technology (''DST'') under the Drugs and Pharmaceutical Research Programme (''DPRP'') had sanctioned financial assistance for a sum of '' 70 to the Company for financing one of its research projects. The loan was repayable over 10 annual instalments of '' 7 each starting from July 1, 2012, and carried an interest rate of 3% p.a. The Company was required to utilise the funds for the specified projects and was required to obtain prior approvals from the said authorities for disposal of assets/ Intellectual property rights acquired/developed under the above programmes. The Company has repaid the loan during the year ended March 31, 2022
30. Employee stock compensation
(a) Biocon ESOP Plan
On September 27, 2001, Biocon''s Board of Directors approved the Biocon Employee Stock Option Plan (''ESOP Plan 2000'') for the grant of stock options to the employees of the Company and its subsidiaries / joint venture company. The Nomination and Remuneration Committee (''Remuneration Committee'') administers the plan through a trust established specifically for this purpose, called the Biocon India Limited Employee Welfare Trust (ESOP Trust).
The ESOP Trust shall make additional purchase of equity shares of the Company using the proceeds from the loan obtained from the Company, other cash inflows from allotment of shares to employees under the ESOP Plan and shall subscribe, when allotted to such number of shares as is necessary for transferring to the employees. The ESOP Trust may also receive shares from the promoters for the purpose of issuance to the employees under the ESOP Plan. The Remuneration Committee shall determine the exercise price which will not be less than the face value of the shares.
Grant V
In April 2008, the Company approved the grant to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 25%, 35% and 40% of the total grant at the end of first, second and third year from the date of grant for existing employees and at the end of 3rd, 4th and 5th year from the date of grant for new employees. Exercise period is 3 years for each grant. The conditions for number of options granted include service terms and performance grade of the employees. These options are exercisable at the market price of Company''s shares on the date of grant.
* Amounts are not presented since the amounts are rounded off to Rupees million.
(a) Expenses incurred on behalf of the related party include ESOP cost and amount paid on behalf of the related party to vendors.
(b) The Company''s SEZ Developer division has entered into agreements to lease land and provide certain facilities such as power, utilities etc. to
SEZ units of Biocon Biologics Limited, Biocon Pharma Limited and Syngene International Limited, in respect of which the Company recovers rent and facilities usage charges.
(c) The above disclosures include related parties as per Ind AS 24 on "Related Party Disclosures" and Companies Act, 2013.
(d) The remuneration to key management personnel doesn''t include the provisions made for gratuity and compensated absences, as they are obtained on an actuarial basis for the Company as a whole.
(e) Share based compensation expense allocable to key management personnel is '' 65 (March 31, 2021 - '' 71), which is not included in the remuneration disclosed above.
(f) All transactions with these related parties are priced on an arm''s length basis and none of the balances are secured.
(g) The loans to related parties is presented net of repayments due to multiple transactions. Loans repaid includes loan subsequently converted
into preference shares. The loan given to subsidiaries are for Business purposes and interest rates are at arm''s length. The Loans are
payables on demand.
The Company is subject to complexities with respect to various tax positions on deductibility of transactions and availability of tax incentives / exemptions, impact of group restructuring and on cross border transfer pricing arrangements. Judgment is required in assessing the range of possible outcomes for some of these tax matters, which could change over time as each of the matter progresses depending on experience on actual assessment proceedings by tax authorities and other judicial precedents. Based on its internal assessment supported by external legal counsel views, if any, the Company believes that it will be able to sustain its positions if challenged by the authorities and accordingly no additional provision is required for these matters.
Other than the matter disclosed above, the Company is involved in disputes, lawsuits, proceedings etc. including patent and commercial matters that arise from time to time in the ordinary course of business. Management is of the view that above matters are not tenable and will not have any material adverse effect on the Company''s financial position and results of operations.
(b) During FY 2019-20, the Company and Biocon Biologics Limited had entered into an agreement with Active Pine LLP (''Investor I) whereby the Investor has infused '' 5,363 against issuance of equity shares of a subsidiary company, Biocon Biologics Limited. As per the agreement, the Company will be required to provide various options to enable the Investor to exit over a period of time. In the event, such exit events do not occur, the Investor may require the Company, to buy them out at certain prices agreed under the arrangement.
(c) During the previous year, the Company and Biocon Biologics Limited had entered into an agreement with Beta Oryx Limited, a wholly owned subsidiary of ADQ (Investor II) whereby the Investor has infused '' 5,550 against issuance of equity shares of a subsidiary company, Biocon Biologics Limited. As per the agreement, the Company will be required to provide various options to enable the Investor to exit over a period of time. In the event, such exit events do not occur, the Investor may require the Company, to buy them out at certain prices agreed under the arrangement.
(d) During the previous year, the Company and Biocon Biologics Limited has entered into an agreement with Tata Capital Growth Fund II (Investor III) whereby the Investor has infused '' 2,250 against issuance of equity shares of a subsidiary company, Biocon Biologics Limited. As per the agreement, the Company will be required to provide various options to enable the Investor to exit over a period of time. In the event, such exit events do not occur, the Investor may require the Company, to buy them out at certain prices agreed under the arrangement.
(i) The Company has a defined benefit gratuity plan as per the Payment of Gratuity Act, 1972. Under this legislation, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the employee''s length of service and salary at retirement/termination age and does not have any maximum monetary limit for payments. The gratuity plan is a funded plan and the Company makes contributions to a recognised fund in India.
The plans assets are maintained with HDFC Life in respect of gratuity scheme for certain employees of the Company. The details of investments maintained by Life Insurance Corporation are not available with the Company, hence not disclosed. The expected rate of return on plan assets is 6.1 % p.a. (31 March 2021: 5.8% p.a.).
The cost of the defined benefit plans and other long term benefits are determined using actuarial valuations. Actuarial valuations involve making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases and mortality rate. Due to these complexity involved in the valuation it is highly sensitive to the changes in these assumptions. All assumptions are reviewed at reporting date. The present value of the defined benefit obligation and the related current service cost and planned service cost were measured using the projected unit cost method.
Sensitivity of significant actuarial assumptions is computed by varying one actuarial assumption used for the valuation of defined benefit obligation by one percentage, keeping all other actuarial assumptions constant. Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumption shown.
As of March 31, 2022 and March 31, 2021, the plan assets have been invested in insurer managed funds and the expected contribution to the fund during the year ending March 31, 2023, is approximately '' 64 (March 31, 2022 - '' 74).
(iv) Risk Exposure
These defined benefit plans typically expose the Company to actuarial risks as under:
a) I nvestment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is
determined by reference to market yields at the end of the reporting period on government bonds.
b) Interest rate risk: A decrease in bond interest rate will increase the plan liability.
c) Longevity risk: The present value of the defined plan liability is calculated by reference to the best estimate of the
mortality of plan participants. An increase in the life expectancy will increase the plan''s liability.
d) Salary risk: Higher than expected increase in salary will increase the defined benefit obligation.
(a) The fair value of trade receivables, trade payables and other financial assets and liabilities is considered to be equal to the carrying amounts of these items due to their short - term nature
(b) There have been no transfers between level 1, 2 and 3 needs to be made.
(c) The Company enters into derivative financial instruments with various counterparties. Derivatives are valued using valuation techniques in consultation with market expert. The most frequently applied valuation technique include forward pricing, swap models and Black Scholes Merton Model (for options valuation), using present value calculations. The models incorporate various inputs including foreign exchange forward rates, interest rate curve and forward rates curve.
* Investment in equity shares in subsidiaries, associate and joint venture and investment in preference shares of associates has been accounted at cost as per Ind AS 27 "Consolidated and Separate Financial Statements".
# These includes investment in preference shares in subsidiaries which are convertible (variable number of equity shares) / redeemable, at its face value, any time during the tenure of the instrument at the option of the holder. Owing to this feature, the instrument has been disclosed at its fair value which is equivalent to the face value.
B. Measurement of fair values
Fair value of liquid mutual funds are based on quoted price. Derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the market place.
Sensitivity analysis
(i) Risk management framework
The Company''s risk management is carried out by the treasury department under policies approved by the Board of Directors. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative and non-derivative financial instruments and investment of excess liquidity.
(ii) Credit risk
Credit risk is the risk that the counterparty will not meet its obligation under a financial instrument or customer contract, leading to financial loss. The credit risk arises principally from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions and other financial instruments.
Customer credit risk is managed by each business unit subject to Company''s established policy, procedures and control relating to customer credit risk management. The Audit and Risk Management Committee has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, where available, and other publicly available financial information. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance.
The Company establishes an allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables. The maximum exposure to credit risk as at reporting date is primarily from trade receivables amounting to '' 7,006 (March 31,2021: '' 6,054). The movement in allowance for impairment in respect of trade and other receivables during the year was as follows:
Receivable from none of the customers of the Company is more than 10 percent of the Company''s total trade receivables as at March 31, 2022 (March 31, 2021 two customers - '' 2,321).
Refer note 12 for ageing of trade receivables.
Other than trade receivables, the Company has no significant class of financial assets that is past due but not impaired.
Credit risk on cash and cash equivalent and derivatives is limited as the Company generally transacts with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies which are rated A or AAA. Investments primarily include investment in liquid mutual fund units, bonds and non-convertible debentures.
(iii) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.
The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived. The following are the contractual maturities of financial liabilities and excluding interest payments. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay:
(iv) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices, such as foreign exchange rates, interest rates and equity prices.
Foreign currency risk
The Company operates internationally and a major portion of the business is transacted in several currencies and consequently, the Company is exposed to foreign exchange risk through operating and borrowing activities in foreign currency. The Company holds derivative instruments such as foreign exchange forward, interest rate swaps and option contracts to mitigate the risk of changes in exchange rates and foreign currency exposure.
41. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income-tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the financial year. The Company is required to update and put in place the information latest by the due date of filing its income tax return. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expenses and that of provision for tax.
42. Other Statutory Information
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property under Benami Transactions (Prohibition) Act, 1988 (45 of 1988).
(ii) The Company does not have any material transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company is not declared as wilful defaulter by any bank or financial institution or government or any government authority.
43. No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Group to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Group (Ultimate Beneficiaries). Further, The Group has not received any fund from any party(s) (Funding Party) with the understanding that the Group shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Group ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
45. I n March 2020, the World Health Organisation declared COVID-19 to be a pandemic. The Company has adopted measures to curb the spread of infection in order to protect the health of its employees and ensure business continuity with minimal disruption.
The Company has considered internal and external information while finalising various estimates in relation to its financial statement captions upto the date of approval of the financial statements by the Board of Directors. The actual impact of the global health pandemic may be different from that which has been estimated, as the COVID -19 situation evolves in India and globally. The Company will continue to closely monitor any material changes to future economic conditions.
46. Events after reporting period
On April 28, 2022, the Board of Directors of the Company has proposed a final dividend of 10% i.e. '' 0.50 per equity share of face value of '' 5/- each as on the record date for distribution of final dividend. The proposed dividend is subject to approval of the shareholders in the ensuing Annual General Meeting of the Company. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.
47. Previous period figures have been re-grouped/ re-classified wherever necessary, to confirm to current period''s classification in order to comply with the requirements of the amended Schedule III to the Companies Act, 2013 effective from April 1, 2021.
Mar 31, 2021
14(b). Other equity
Securities premium
Securities premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Companies Act, 2013.
General reserve
General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes.
Retained earnings
The amount that can be distributed by the Company as dividends to its equity shareholders.
SEZ re-investment reserve
The SEZ re-investment reserve has been created out of profit of eligible SEZ units in terms of the provisions of section 10AA(1)(ii) of the Income-tax Act, 1961. The reserve has been utilised for acquiring new plant and machinery for the purpose of its business in terms of section 10AA(2) of the Income-tax Act, 1961.
Share based payment reserve
The Company has established equity settled share based payment plans for certain categories of employees of the Company. Refer note 30 for further details on these plans.
Treasury shares
Own equity instruments that are reacquired [treasury shares] are recognised at cost and disclosed as deducted from equity.
Cash flow hedging reserve
The cash flow hedging reserve represents the cumulative effective portion of gains or losses (net of taxes, if any) arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges.
Other Items of other comprehensive income
Other Items of other comprehensive income represents mark to market gain or loss on financial assets classified as FVTOCI and re-measurements of the defined benefits plan.
(a) On August 25, 2010, the Department of Science and Technology (''DST'') under the Drugs and Pharmaceutical Research Programme (''DPRP'') has sanctioned financial assistance for a sum of '' 70 to the Company for financing one of its research projects. The loan is repayable over 10 annual instalments of '' 7 each starting from July 1,2012, and carries an interest rate of 3% p.a. The Company is required to utilise the funds for the specified projects and is required to obtain prior approvals from the said authorities for disposal of assets/Intellectual property rights acquired/developed under the above programmes.
(b) The Company''s exposure to liquidity, interest rate and currency risks are disclosed in note 36.
30. Employee stock compensation
(a) Biocon ESOP Plan
On September 27, 2001, Biocon''s Board of Directors approved the Biocon Employee Stock Option Plan (''ESOP Plan 2000'') for the grant of stock options to the employees of the Company and its subsidiaries / joint venture company. The Nomination and Remuneration Committee (''Remuneration Committee'') administers the plan through a trust established specifically for this purpose, called the Biocon India Limited Employee Welfare Trust (ESOP Trust).
The ESOP Trust shall make additional purchase of equity shares of the Company using the proceeds from the loan obtained from the Company, other cash inflows from allotment of shares to employees under the ESOP Plan and shall subscribe, when allotted to such number of shares as is necessary for transferring to the employees. The ESOP Trust may also receive shares from the promoters for the purpose of issuance to the employees under the ESOP Plan. The Remuneration Committee shall determine the exercise price which will not be less than the face value of the shares.
Grant V
In April 2008, the Company approved the grant to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 25%, 35% and 40% of the total grant at the end of first, second and third year from the date of grant for existing employees and at the end of 3rd, 4th and 5th year from the date of grant for new employees. Exercise period is 3 years for each grant. The conditions for number of options granted include service terms and performance grade of the employees. These options are exercisable at the market price of Company''s shares on the date of grant.
of the option grant.
(b) RSU Plan 2015
On March 11, 2015, Biocon''s Remuneration Committee approved the Biocon - Restricted Stock Units (RSUs) of Syngene (''RSU Plan 2015'') for the grant of RSUs to the employees of the Company and its subsidiaries other than Syngene. The Remuneration Committee administers the plan through a trust, called the Biocon Limited Employee Welfare Trust. For this purpose, on March 31, 2015, the Company transferred 2,000,000 equity shares of Syngene to Biocon Limited Employees Welfare Trust.
In April 2015, the Company approved the grant to its employees under the RSU Plan 2015. The RSUs under this grant would vest to the employees as 10%, 20%, 30% and 40% of the total grant at the end of first, second, third and fourth year from the date of grant, respectively, with an exercise period ending one year from the end of last vesting. The vesting conditions include service terms and performance grade of the employees. Exercise price of RSUs will be Nil.
(b) RSU Plan 2019
On January 7, 2019, Biocon''s Nomination and Remuneration Committee (''NRC'') and the Board of Directors approved the Biocon Biologics -Restricted Stock Units (RSUs) of Biocon Biologics Limited (''RSU Plan 2019'') for grant of RSUs to employees of the Group. The NRC administers the plan though a trust called, Biocon Limited Employee Welfare Trust. For this purpose on January 8, 2020, the Company transferred 2,161,904 equity shares of Biocon Biologics Limited to Biocon Limited Employee Welfare Trust.
The RSUs under this grant would vest to the employees as 10%, 20%, 30% and 40% of the total grant at the end of first, second, third and fourth year, respectively, from the date of grant or from the date of occurrence of certain future events, whichever is later, with an exercise period ending one year from the end of last vesting. The vesting conditions include service terms and performance grade of the employees.
(d) RSU Plan 2020
On May 14, 2020, Biocon''s Nomination and Remuneration Committee (''NRC'') and the Board of Directors approved the Biocon Restricted Stock Units (RSUs) Long Term Incentive Plan Financial Year 2020-24 ("RSU Plan 2020") for grant of RSUs to present and/or future employees of the Company and its present and future subsidiary companies. The plan is implemented though a trust called, Biocon India Limited Employee Welfare Trust wherein the Company will issue shares to the trust by way of fresh allotment over a period of time.
The RSUs granted under this Plan shall vest over a period of time (service condition) and based upon the performance of the employee. The period of vesting shall be determined as per the date of grant and the maximum period of vesting shall not extend beyond August 1,2024. The actual number of RSUs to be vested each year for each Grantee shall be based on his individual performance conditions, the key parameters of which shall be measured through growth in revenue and profits, delivering on key strategic initiatives and shareholders'' value creation and such other conditions as may be determined by the Managing Director and Chief Executive Officer of the Company in accordance with the overall terms set by the NRC.
* Amounts are not presented since the amounts are rounded off to Rupees million.
# Indranil Sen was appointed as the Chief Financial Officer of Biocon Limited effective from April 28, 2021 and Anupam Jindal resigned as
Chief Financial Officer w.e.f April 28, 2021.
(a) Expenses incurred on behalf of the related party include ESOP cost and amount paid on behalf to vendors.
(b) The Company''s SEZ Developer division has entered into agreements to lease land and provide certain facilities such as power, utilities etc. to SEZ units of Biocon Biologics Limited, Biocon Pharma Limited and Syngene International Limited, in respect of which the Company recovers rent and facilities usage charges.
(c) The above disclosures include related parties as per Ind AS 24 on "Related Party Disclosures" and Companies Act, 2013.
(d) The remuneration to key management personnel doesn''t include the provisions made for gratuity and compensated absences, as they are obtained on an actuarial basis for the Company as a whole.
(e) Share based compensation expense allocable to key management personnel is '' 71 (March 31,2020 - '' 15), which is not included in the remuneration disclosed above.
(f) All transactions with these related parties are priced on an arm''s length basis and none of the balances are secured.
(g) The loans to related parties is presented net of repayments due to multiple transactions. Loans repaid includes loan subsequently converted into preference shares. The loan given to subsidiaries are for Business purposes and interest rates are at arm''s length. The Loans are payables on demand.
(h) The above disclosures includes related party transactions pertaining to discontinued operations.
The Company is subject to complexities with respect to various tax positions on deductibility of transactions and availability of tax incentives / exemptions, impact of group restructuring and on cross border transfer pricing arrangements. Judgment is required in assessing the range of possible outcomes for some of these tax matters, which could change over time as each of the matter progresses depending on experience on actual assessment proceedings by tax authorities and other judicial precedents. Based on its internal assessment supported by external legal counsel views, if any, the Company believes that it will be able to sustain its positions if challenged by the authorities and accordingly no additional provision is required for these matters.
Other than the matter disclosed above, the Company is involved in disputes, lawsuits, proceedings etc. including patent and commercial matters that arise from time to time in the ordinary course of business. Management is of the view that above matters are not tenable and will not have any material adverse effect on the Company''s financial position and results of operations.
(b) During the previous year, the Company and Biocon Biologics Limited has entered into an agreement with Active Pine LLP (''Investor I) whereby the Investor has infused '' 5,363 against issuance of equity shares of a subsidiary company, Biocon Biologics Limited. As per the agreement, the Company will be required to provide various options to enable the Investor to exit over a period of time. In the event, such exit events do not occur, the Investor may require the Company, to buy them out at certain prices agreed under the arrangement.
(c) During the current year, the Company and Biocon Biologics Limited has entered into an agreement with Beta Oryx Limited, a wholly owned subsidiary of ADQ (Investor II) whereby the Investor has infused '' 5,550 against issuance of equity shares of a subsidiary company, Biocon Biologics Limited. As per the agreement, the Company will be required to provide various options to enable the Investor to exit over a period of time. In the event, such exit events do not occur, the Investor may require the Company, to buy them out at certain prices agreed under the arrangement.
(d) During the current year, the Company and Biocon Biologics Limited has entered into an agreement with Tata Capital Growth Fund II (Investor III) whereby the Investor has infused '' 2,250 against issuance of equity shares of a subsidiary company, Biocon Biologics Limited. As per the agreement, the Company will be required to provide various options to enable the Investor to exit over a period of time. In the event, such exit events do not occur, the Investor may require the Company, to buy them out at certain prices agreed under the arrangement.
(i) The Company has a defined benefit gratuity plan as per the Payment of Gratuity Act, 1972. Under this legislation, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the employee''s length of service and salary at retirement/termination age and does not have any maximum monetary limit for payments. The gratuity plan is a funded plan and the Company makes contributions to a recognised fund in India.
The plan assets are maintained with HDFC Life Insurance Company Limited (HDFC Life) in respect of gratuity scheme for employees of the Company. The details of investments maintained by the HDFC Life are not available with the Company, hence not disclosed. The expected rate of return on plan assets is 5.6 % p.a. (31 March 2020: 5.8% p.a.). The Company actively monitors how the duration and expected yield of the investments are matching the expected outflows arising from the employee benefit obligations.
The cost of the defined benefit plans and other long term benefits are determined using actuarial valuations. Actuarial valuations involve making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases and mortality rate. Due to these complexity involved in the valuation it is highly sensitive to the changes in these assumptions. All assumptions are reviewed at reporting date. The present value of the defined benefit obligation and the related current service cost and planned service cost were measured using the projected unit cost method.
(iv) Risk Exposure
These defined benefit plans typically expose the Company to actuarial risks as under:
a) Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.
b) Interest rate risk: A decrease in bond interest rate will increase the plan liability.
c) Longevity risk: The present value of the defined plan liability is calculated by reference to the best estimate of the mortality of plan participants. An increase in the life expectancy will increase the plan''s liability.
d) Salary risk: Higher than expected increase in salary will increase the defined benefit obligation.
(a) The fair value of trade receivables, trade payables and other Current financial assets and liabilities is considered to be equal to the carrying amounts of these items due to their short - term nature
(b) There have been no transfers between level 1,2 and 3 needs to be made.
(c) The Company enters into derivative financial instruments with various counterparties. Derivatives are valued using valuation techniques in consultation with market expert. The most frequently applied valuation technique include forward pricing, swap models and Black Scholes Merton Model (for options valuation), using present value calculations. The models incorporate various inputs including foreign exchange forward rates, interest rate curve and forward rates curve.
* Investment in equity shares in subsidiaries and joint venture and investment in preference shares of associates has been accounted at cost as per Ind AS 27 "Consolidated and Separate Financial Statements".
# These preference shares in subsidiaries are convertible (variable number of equity shares) / redeemable, at its face value, any time during the tenure of the instrument at the option of the holder. Owing to this feature, the instrument has been disclosed at its fair value which is equivalent to the face value.
B. Measurement of fair values
Fair value of liquid mutual funds are based on quoted price. Derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the market place.
(i) Risk management framework
The Company''s risk management is carried out by the treasury department under policies approved by the Board of Directors. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative and non-derivative financial instruments and investment of excess liquidity.
(ii) Credit risk
Credit risk is the risk that the counterparty will not meet its obligation under a financial instrument or customer contract, leading to financial loss. The credit risk arises principally from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions and other financial instruments.
Customer credit risk is managed by each business unit subject to Company''s established policy, procedures and control relating to customer credit risk management. The Audit and Risk Management Committee has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, where available, and other publicly available financial information. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance.
The Company establishes an allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables. The maximum exposure to credit risk as at reporting date is primarily from trade receivables amounting to '' 5,880 (March 31, 2020: '' 5,732). The movement in allowance for impairment in respect of trade and other receivables during the year was as follows:
Other than trade receivables the Company has no significant class of financial assets that is past due but not impaired.
Receivables from two customers of the Company''s trade receivables is '' 2,321 (March 31, 2020 two customers - '' 1,893) which is more than 10 percent of the Company''s total trade receivables. Other than trade receivables, the Company has no significant class of financial assets that is past but not impaired.
Credit risk on cash and cash equivalent and derivatives is limited as the Company generally transacts with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies which are rated A1 or AAA . Investments primarily include investment in liquid mutual fund units, bonds and non-convertible debentures.
(iii) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.
The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
The following are the contractual maturities of financial liabilities and excluding interest payments. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay:
(iv) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices, such as foreign exchange rates, interest rates and equity prices.
Foreign currency risk
The Company operates internationally and a major portion of the business is transacted in several currencies and consequently, the Company is exposed to foreign exchange risk through operating and borrowing activities in foreign currency. The Company holds
Derivative financial instruments
The Company uses derivative financial instruments exclusively for hedging financial risks that arise from its commercial business or financing activities. The Company''s Treasury team manages its foreign currency risk by hedging forecasted transactions like sales, purchases and capital expenditures. When a derivative is entered for hedging, the Company matchs the terms of those derivatives to the underlying exposure. All identified exposures are managed as per the policy duly approved by the Board of Directors.
The key objective of the Company''s capital management is to ensure that it maintains a stable capital structure with the focus on total equity to uphold investor, creditor, and customer confidence and to ensure future development of its business. The Company focused on keeping strong total equity base to ensure independence, security, as well as a high financial flexibility for potential future borrowings, if required without impacting the risk profile of the Company.
The Company''s goal is to continue to be able to return excess liquidity to shareholders by continuing to distribute annual dividends in future periods.
The amount of future dividends of equity shares will be balanced with efforts to continue to maintain an adequate liquidity status.
(I) Sale of Biologics business
Consequent to the approvals received from the Board of Directors on October 26, 2017 and from the shareholders on December 07, 2017, the Company had transferred the business undertaking related to manufacturing and commercialisation of Biosimilar, Insulins and drug substance manufactured in the GPP facility under the Biologics segment of the Group on a going concern basis by way of slump sale to Biocon Biologics Limited (''BBL'') effective May 01,2019 for a consideration of '' 7,054.
(II) Sale of Branded Formulations India (BFI) business
Consequent to the approval received from the Company''s Board of Directors on June 17, 2019, the Company transferred Branded Formulations (''BFI'') business on a going concern basis by way of a slump sale to BBL effective August 01,2019 for a consideration of '' 621. Gain on disposal of assets / liabilities amounting to '' 121 which is exceptional in nature has been disclosed under the discontinued operations.
The combined results of the discontinued operations of the businesses disposed-off, are set out below.
In accordance with Ind AS 108 - Operating segments, 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.
a) The Company had entered into transactions of sale of products to a private company during the year ended March 31,2013 and 2012 amounting to '' 28 and '' 17 respectively that required prior approval from Central Government under Section 297 of the Companies Act, 1956. These transactions, entered into at prevailing market prices were approved by the Board of Directors of the Company. During the year ended March 31, 2014, the Company had filed application with the Central Government for approval of such transactions and for compounding of such non-compliance and same is pending with Central Government as at March 31,2021.
42. Corporate Social Responsibility
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities.
|
Sl. No. |
Particulars |
March 31,2021 |
March 31,2020 |
|
(a) |
Amount required to be spent by the Company during the year: |
66 |
79 |
|
(b) |
Amount spent during the year on: |
||
|
(i) |
Construction/acquisition of any asset |
3 |
- |
|
(ii) |
On purposes other than (i) above |
63 |
79 |
(a) During year ended March 31, 2020, pursuant to group entities restructuring the Company sold its investment in the equity shares of Biocon Biologics UK Limited (BUK), a wholly owned subsidiary to Biocon Biologics Limited (''BBL'') for a consideration of '' 10,810 and received dividend of '' 456 from BUK. Gain arising from such sale of equity shares, including dividend income, amounting to '' 820 is recorded as an exceptional item. Consequential tax of '' 166 is included within tax expense from continuing operations in standalone financial statements.
(b) During year ended March 31,2020, the Company has entered into a License Agreement with Bicara, a wholly owned subsidiary, pursuant to which the Company has granted a license to develop, manufacture and commercialize fusion proteins. Gain on such licensing of '' 550 has been recorded as an exceptional income. Consequential tax impact of '' 192 has been recorded in the standalone financial statements which is included within tax expense.
(c) Biocon Research Limited (''BRL'') was the wholly owned subsidiary of Biocon Limited and engaged primarily in providing research and development and scientific support services in Biosimilar to other group companies of Biocon Limited.
On April 01, 2019, the Board of Directors of the Company approved a Scheme of arrangement ("Scheme") for merger of BRL ("the Transferor") with Biocon Biologics Limited (''BBL'') ("the Transferee") under Section 230 to 232 of Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The National Company Law Tribunal vide its order dated February 04, 2020 approved the Scheme with appointed date of April 01,2019. In consideration Biocon limited has received 155,300,000 shares of BBL. The merger did not have any material impact on the standalone financial statement.
(d) During the year ended March 31,2020, the Company has sold Investment in equity shares of Biocon Biologics Healthcare SDN to its step down subsidiary Biocon Biologics UK Limited, for a consideration of '' MYR 100. Loss on such sale of equity amounting to '' 32 is recorded as an exceptional item.
(e) During year ended March 31, 2020, Biocon Employee Welfare Trust sold 812,249 equity shares of '' 10 each of Syngene International Limited (''Syngene'') in the open market. Gain arising from such sale of equity shares, net of related expense and cost of equity shares amounting to '' 259 has been recorded as exceptional item in the standalone financial statements.
(f) Consequent to the approvals received from the Board of Directors on October 26, 2017 and from the shareholders on December 07, 2017, the Company has transferred the business undertaking related to manufacturing and commercialisation of Biosimilars, Insulins and drug substance manufactured in the GPP facility under the Biologics segment of the Group on a going concern basis by way of slump sale to BBL effective May 01,2019 for a consideration of '' 7,054.
Also, consequent to the approval received from the Board of Directors on June 17, 2019, the Company transferred Branded Formulations (BFI) business on a going concern basis by way of a slump sale to BBL effective August 01,2019 for a consideration of '' 621. Gain on disposal of assets/ liabilities amounting to '' 121 which is exceptional in nature has been disclosed under the discontinued operations in the previous year.
44 . The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income-tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international transactions entered into with the associated enterprises during the financial year. The Company is required to update and put in place the information latest by the due date of filing its income tax return. The management is of the opinion that its international transactions are at arm''s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expenses and that of provision for tax.
45. I n March 2020, the World Health Organisation declared COVID-19 to be a pandemic. The Company has adopted measures to curb the spread of infection in order to protect the health of its employees and ensure business continuity with minimal disruption.
The Company has considered internal and external information while finalising various estimates in relation to its financial statement captions upto the date of approval of the financial statements by the Board of Directors. The actual impact of the global health pandemic may be different from that which has been estimated, as the COVID -19 situation evolves in India and globally. The Company will continue to closely monitor any material changes to future economic conditions.
46 . The previous year''s figures have been re-grouped/ reclassified, where necessary to confirm to current year''s classification.
As per our report of even date attached
for B S R & Co. LLP for and on behalf of the Board of Directors of Biocon Limited
Chartered Accountants
Firm Registration Number: 101248W/W-100022
S Sethuraman Kiran Mazumdar-Shaw Siddharth Mittal
Partner Executive Chairperson Managing Director & CEO
Membership No.: 203491 DIN: 00347229 DIN: 03230757
Mayank Verma Indranil Sen
Company Secretary Chief Financial Officer
Chennai Bengaluru
April 28, 2021 April 28, 2021
Mar 31, 2019
1. Company Overview
1.1 Reporting entity
Biocon Limited (âBioconâ or âthe Companyâ), is engaged in the manufacture of biotechnology products and research services. The Company is a public limited company incorporated and domiciled in India and has its registered office in Bengaluru, Karnataka, India. The Companyâs shares are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) in India.
1.2 Basis of preparation of financial statements
a) Statement of compliance
The standalone financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the âActâ) and other relevant provisions of the Act.
These standalone financial statements have been prepared for the Company as a going concern on the basis of relevant Ind AS that are effective at the Companyâs annual reporting date, March 31, 2019. These standalone financial statements were authorised for issuance by the Companyâs Board of Directors on April 25, 2019.
Details of the Companyâs accounting policies are included in Note 2.
b) Functional and presentation currency
These standalone financial statements are presented in Indian rupees (INR), which is also the functional currency of the Company. All amounts have been rounded-off to the nearest million, unless otherwise indicated.
c) Basis of measurement
These standalone financial statements have been prepared on the historical cost basis, except for the following items:
- Certain financial assets and liabilities (including derivative instruments) are measured at fair value;
- Net defined benefit assets/(liability) are measured at fair value of plan assets, less present value of defined benefit obligations;
d) Use of estimates and judgements
The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgements and assumptions. These estimates, judgements and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the standalone financial statements.
Judgements
Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements is included in the following notes:
- Note 1.2(b) â Assessment of functional currency;
- Note 2(a) and 36 â Financial instruments;
- Note 2(b), 2(c) and 2(d) â Useful lives of property, plant and equipment, intangible assets and investment property;
- Note 2(n) â Lease classification;
- Note 35 â measurement of defined benefit obligation; key actuarial assumptions;
- Note 30 â Share based payments; and
- Note 2(l) and 33 â Provision for income taxes and related tax contingencies and Evaluation of
- Note 31 â recoverability of deferred tax assets.
- Note 2(j) and 21 â Revenue Recognition: whether revenue from sale of product and licensing income is recognised over time or at a point in time;
1.3 Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending March 31, 2019 is included in the following notes:
â Note 2(g)(ii) - impairment test of non-financial assets; key assumptions underlying recoverable amounts including the recoverability of expenditure on internally-generated intangible assets;
â Note 18 and 33 - recognition of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used;
â Note 36 - impairment of financial assets; and
â Note 17 and 34 - recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources.
1.4 Measurement of fair values
I number of the Companyâs accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
â Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
â Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
â Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
W hen measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
â Note 30 - share based payment arrangements;
â Note 4 - investment property; and
â Note 2(a) and 36 - financial instruments.
(i) Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of RS.5 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.
The Company had allotted 400,000,000 equity shares of RS.5 each fully paid up as bonus shares on June 19, 2017 in the ratio of 2:1 (two equity shares of RS.5 each for every one equity share of RS.5 each held in the Company as on the record date i.e. June 17, 2017) by capitalisation of securities premium account.
2(a). Other equity
Securities premium
Securities premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the Companies Act, 2013.
General reserve
General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes.
Retained earnings
The amount that can be distributed by the Company as dividends to its equity shareholders.
SEZ re-investment reserve
The SEZ re-investment reserve has been created out of profit of eligible SEZ units in terms of the provisions of section 10AA(1)(ii) of the Income-tax Act, 1961. The reserve has been utilised for acquiring new plant and machinery for the purpose of its business in terms of section 10AA(2) of the Income-tax Act, 1961.
Share based payment reserve
The Company has established equity settled share based payment plans for certain categories of employees of the Company. Refer note 30 for further details on these plans.
Treasury shares
Own equity instruments that are reacquired [treasury shares] are recognised at cost and disclosed as deducted from equity.
Cash flow hedging reserves
The cash flow hedging reserve represents the cumulative effective portion of gains or losses (net of taxes, if any) arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges.
(a) During the year ended March 31, 2016, the Company had obtained an external commercial borrowing facility of USD 20 million from a bank. The term loan facility is secured by first priority pari-passu charge on the plant and machinery of the proposed expanded facility line in the existing facility with a carrying amount of RS.2,002. The long-term loan is repayable in 4 equal quarterly instalments of USD 5 million each commencing from December 31, 2018 and carries an interest rate of LIBOR 0.81% p.a. During the year ended March 31, 2016, the Company had entered into interest rate swap to convert floating rate to fixed rate.
(b) On August 25, 2010, the Department of Science and Technology (âDSTâ) under the Drugs and Pharmaceutical Research Programme (âDPRPâ) has sanctioned financial assistance for a sum of RS.70 to the Company for financing one of its research projects. The loan is repayable over 10 annual instalments of RS.7 each starting from July 1, 2012, and carries an interest rate of 3% p.a. The Company is required to utilise the funds for the specified projects and is required to obtain prior approvals from the said authorities for disposal of assets/Intellectual property rights acquired/developed under the above programmes.
The Companyâs exposure to liquidity, interest rate and currency risks are disclosed in note 36.
3.1 Performance obligation:
In relation to information about Companyâs performance obligations in contracts with customers [refer note 2(j)].
3.2 Effects on adoption of Ind AS 115
Pursuant to the requirements of Ind AS 115: Revenues from Contracts with Customers, the Company evaluated its open arrangements on out-licensing with reference to upfront non-refundable fees received in earlier periods and concluded that some of the performance obligations may not be distinct and hence would need to be bundled with the subsequent product supply obligations.
Accordingly, the Company has recognised an incremental deferred revenue relating to such open contracts. The adoption of this standard and the consequential impact on change in some of the licensing arrangements did not have a material impact on the Revenue from Operations and statement of profit and loss for the year ended March 31, 2019. The cumulative effect of transition recorded as of April 1, 2018 on retained earnings and financial position is stated in below table:
4. Employee stock compensation
(a) Biocon ESOP Plan
On September 27, 2001, Bioconâs Board of Directors approved the Biocon Employee Stock Option Plan (âESOP Plan 2000â) for the grant of stock options to the employees of the Company and its subsidiaries / joint venture company. The Nomination and Remuneration Committee (âRemuneration Committeeâ) administers the plan through a trust established specifically for this purpose, called the Biocon India Limited Employee Welfare Trust (ESOP Trust).
The ESOP Trust shall make additional purchase of equity shares of the Company using the proceeds from the loan obtained from the Company, other cash inflows from allotment of shares to employees under the ESOP Plan and shall subscribe, when allotted to such number of shares as is necessary for transferring to the employees. The ESOP Trust may also receive shares from the promoters for the purpose of issuance to the employees under the ESOP Plan. The Remuneration Committee shall determine the exercise price which will not be less than the face value of the shares.
Grant I
In April 2008, the Company approved the grant to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 25%, 35% and 40% of the total grant at the end of first, second and third year from the date of grant for existing employees and at the end of 3rd, 4th and 5th year from the date of grant for new employees. Exercise period is 3 years for each grant. The conditions for number of options granted include service terms and performance grade of the employees. These options are exercisable at the market price of Companyâs shares on the date of grant.
Grant II
In July 2014, the Company approved the grant to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 10%, 20%, 30% and 40% of the total grant at the end of first, second, third and fourth year from the date of grant, respectively, with an exercise period ending one year from the end of last vesting. The vesting conditions include service terms and performance grade of the employees. These options are exercisable at the closing market price of Companyâs shares existing on the date preceding to the date of grant.
Grant III
In July 2014, the Company approved the grant to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 10%, 20%, 30% and 40% of the total grant at the end of first, second, third and fourth year from the date of grant, respectively, with an exercise period ending one year from the end of last vesting. The vesting conditions include service terms and performance grade of the employees. These options are exercisable at the closing market price of Companyâs shares existing on the date preceding to the date of grant.
Grant IV
In July 2015, the Company approved the grant to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 10%, 20%, 30% and 40% of the total grant at the end of first, second, third and fourth year from the date of grant, respectively, with an exercise period ending one year from the end of last vesting. The vesting conditions include service terms and performance grade of the employees. These options are exercisable at the closing price as per National Stock Exchange as on the last day of the month preceding the month of first grant.
Grant V
In June 2016, the Company approved the grant to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 10%, 20%, 30% and 40% of the total grant at the end of first, second, third and fourth year from the date of grant, respectively, with an exercise period ending one year from the end of last vesting. The vesting conditions include service terms and performance grade of the employees. These options are exercisable at 50% of the closing price as per National Stock Exchange as on the preceding day to the date of grant.
Grant VI
In June 2016, the Company approved the grant to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 10%, 20%, 30% and 40% of the total grant at the end of first, second, third and fourth year from the date of grant, respectively, with an exercise period ending one year from the end of last vesting. The vesting conditions include service terms and performance grade of the employees. These options are exercisable at 50% of the closing price as per National Stock Exchange as on the preceding day to the date of grant.
Expected volatility is based on historical volatility of the market price of the Companyâs publicly traded equity shares during the expected term of the option grant.
(b) RSU Plan 2015
On March11, 2015, Bioconâs Remuneration Committee approved the Biocon - Restricted Stock Units (RSUs) of Syngene (âRSU Plan 2015â) for the grant of RSUs to the employees of the Company and its subsidiaries other than Syngene. The Remuneration Committee administers the plan through a trust, called the Biocon Limited Employee Welfare Trust. For this purpose, on March 31, 2015, the Company transferred 2,000,000 equity shares of Syngene to Biocon Limited Employees Welfare Trust.
In April 2015, the Company approved the grant to its employees under the RSU Plan 2015. The RSUs under this grant would vest to the employees as 10%, 20%, 30% and 40% of the total grant at the end of first, second, third and fourth year from the date of grant, respectively, with an exercise period ending one year from the end of last vesting. The vesting conditions include service terms and performance grade of the employees. Exercise price of RSUs will be Nil.
(b) RSU Plan 2019
On January 7, 2019, Bioconâs Nomination and Remuneration Committee (âNRCâ) and the Board of Directors approved the Biocon Biologics - Restricted Stock Units (RSUs) of Biocon Biologics India Limited (âRSU Plan 2019â) for grant of RSUs to employees of the Group. The NRC administers the plan though a trust called, Biocon Limited Employee Welfare Trust. As on March 31, 2019, the Company is in process of transferring equity shares of Biocon Biologics India Limited to Biocon Limited Employee Welfare Trust.
The RSUs under this grant would vest to the employees as 10%, 20%, 30% and 40% of the total grant at the end of first, second, third and fourth year, respectively, from the date of grant or from the date of occurrence of certain future events, whichever is later, with an exercise period ending one year from the end of last vesting. The vesting conditions include service terms and performance grade of the employees. The RSUâs were granted with an exercise price of RS.10 per option.
In light of recent judgment of Honorable Supreme Court dated 28, February 2019 on the definition of âBasic Wagesâ under the Employees Provident Funds & Misc. Provisions Act, 1952 and based on Companyâs evaluation, there are significant uncertainties and numerous interpretative issues relating to the judgement and hence, it is unclear as to whether the clarified definition of Basic Wages would be applicable prospectively or retrospectively. The amount of the obligation therefore cannot be measured with sufficient reliability for past periods and hence has currently been considered to be a contingent liability.
Other than the matter disclosed above, the Company is involved in taxation and other disputes, lawsuits, proceedings etc. including patent and commercial matters that arise from time to time in the ordinary course of business. Management is of the view that above claims are not tenable and will not have any material adverse effect on the Companyâs financial position and results of operations.
5. Employee benefit plans
(i) The Company has a defined benefit gratuity plan as per the Payment of Gratuity Act, 1972. Under this legislation, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the employeeâs length of service and salary at retirement/ termination age and does not have any maximum monetary limit for payments. The gratuity plan is a funded plan and the Company makes contributions to a recognised fund in India.
The following table sets out the status of the gratuity plan and the amounts recognised in the Companyâs financial statements as at balance sheet date:
Assumptions regarding future mortality experience are set in accordance with published statistics and mortality tables. The weighted average duration of the defined benefit obligation was 6 years (March 31, 2018 - 6 years).
The defined benefit plan exposes the Company to actuarial risks, such as longevity and interest rate risk.
Sensitivity of significant actuarial assumptions is computed by varying one actuarial assumption used for the valuation of defined benefit obligation by one percentage, keeping all other actuarial assumptions constant. Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumption shown.
As of March 31, 2019 and March 31, 2018, the plan assets have been invested in insurer managed funds and the expected contribution to the fund during the year ending March 31, 2020, is approximately RS.88 (March 31, 2019 - RS.55).
Maturity profile of defined benefit obligation
6. Financial instruments: Fair value and risk managements
A. Accounting classification and fair values
B. Measurement of fair values
Fair value of liquid mutual funds are based on quoted price. Derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the market place.
Sensitivity analysis
For the fair values of forward contracts of foreign currencies, reasonably possible changes at the reporting date to one of the significant observable inputs, holding other inputs constant, would have the following effects.
C. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk
- Liquidity risk
- Market risk
(i) Risk management framework
The Companyâs risk management is carried out by the treasury department under policies approved by the Board of Directors. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative and non-derivative financial instruments and investment of excess liquidity.
(ii) Credit risk
Credit risk is the risk that the counterparty will not meet its obligation under a financial instrument or customer contract, leading to financial loss. The credit risk arises principally from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions and other financial instruments.
Customer credit risk is managed by each business unit subject to Companyâs established policy, procedures and control relating to customer credit risk management. The Audit and Risk Management Committee has established a credit policy under which each new customer is analysed individually for creditworthiness before the Companyâs standard payment and delivery terms and conditions are offered. The Companyâs review includes external ratings, where available, and other publicly available financial information. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance.
The Company establishes an allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables. The maximum exposure to credit risk as at reporting date is primarily from trade receivables amounting to RS.9,018 (March 31, 2018: RS.7,399). The movement in allowance for impairment in respect of trade and other receivables during the year was as follows:
Receivable from one customer of the Companyâs trade receivables is RS.1,060 (March 31, 2018 - RS.1,281) which is more than 10 percent of the Companyâs total trade receivables.
Credit risk on cash and cash equivalent and derivatives is limited as the Company generally transacts with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units, bonds and non-convertible debentures.
(iii) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation.
The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
The table below provides details regarding the undiscounted contractual maturities of significant financial liabilities as of March 31, 2019:
(iv) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices, such as foreign exchange rates, interest rates and equity prices.
Foreign currency risk
The Company operates internationally and a major portion of the business is transacted in several currencies and consequently, the Company is exposed to foreign exchange risk through operating and borrowing activities in foreign currency. The Company holds derivative instruments such as foreign exchange forward, interest rate swaps and option contracts to mitigate the risk of changes in exchange rates and foreign currency exposure.
Sensitivity analysis
The sensitivity of profit or loss to changes in exchange rates arises mainly from foreign currency denominated financial instruments and the impact on other components of equity arises from foreign exchange forward/option contracts designated as cash flow hedges.
Cash flow and fair value interest rate risk
The Companyâs main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During the year ended March 31, 2019 and March 31, 2018 the Companyâs borrowings at variable rate were mainly denominated in USD.
(a) Interest rate risk exposure
The exposure of the Companyâs borrowing to interest rate changes at the end of the reporting period are as follows:
(b) Sensitivity
The Company policy is to maintain most of its borrowings at fixed rate using interest rate swaps to achieve this when necessary. They are therefore not subject to interest rate risk as defined under Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of change in market interest rates.
7. Capital management
The key objective of the Companyâs capital management is to ensure that it maintains a stable capital structure with the focus on total equity to uphold investor, creditor, and customer confidence and to ensure future development of its business. The Company focused on keeping strong total equity base to ensure independence, security, as well as a high financial flexibility for potential future borrowings, if required without impacting the risk profile of the Company.
The Companyâs goal is to continue to be able to return excess liquidity to shareholders by continuing to distribute annual dividends in future periods.
The amount of future dividends of equity shares will be balanced with efforts to continue to maintain an adequate liquidity status.
The capital structure as of March 31, 2019 and March 31, 2018 was as follows:
8. Segmental information
In accordance with Ind AS 108 - Operating segments, 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.
9. Other notes
(a) The Company had entered into transactions of sale of products to a private company during the year ended March 31, 2013 and 2012 amounting to RS.28 and RS.17 respectively that required prior approval from Central Government under Section 297 of the Companies Act, 1956. These transactions, entered into at prevailing market prices were approved by the Board of Directors of the Company. During the year ended March 31, 2014, the Company had filed application with the Central Government for approval of such transactions and for compounding of such non-compliance and same is pending with Central Government as at March 31, 2019.
10. Corporate Social Responsibility
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities.
(a) Gross amount required to be spent by the Company during the year is RS.84; and
(b) Amount spent during the year on:
11. Exceptional item
During year ended March 31, 2019, the Company sold 4,730,457 equity shares of RS.10 each of Syngene International Limited (âSyngeneâ) in the open market. Post the sale, the Company holding in equity shares of Syngene has reduced to 70.24%. Gain arising from such sale of equity shares, net of related expense and cost of equity shares amounting to RS.1,987 has been recorded as exceptional item in the standalone financial statements for financial year ended March 31, 2019.
12. Events after reporting period
(a) In April 25, 2019, the Board of Directors of the Company approved issue of bonus shares in the proportion of 1:1 i.e. 1 (one) bonus equity shares of RS.5 each for every 1 (one) fully paid-up equity shares held as on record date, subject to approval by the shareholders of the Company through postal ballot.
(b) In April 25, 2019, the Board of Directors of the Company has proposed a final dividend of RS.1 per equity share. The proposed dividend is subject to the approval of the shareholders in the Annual general meeting.
13. Disclosure on Specified Bank Notes (SBNs)
The disclosures regarding details of specified bank notes held and transacted during 8 November 2016 to 30 December 2016 have not been made since the requirement does not pertain to financial year ended March 31, 2019.
14. The previous yearâs figures have been re-grouped/ reclassified, where necessary to confirm to current yearâs classification.
Mar 31, 2018
14(b) Other equity
Securities premium reserve
Securities premium is used to record the premium received on issue of shares. It is utilized in accordance with the provisions of the Companies Act, 2013.
General reserve
General reserve is used from time to time to transfer profits from retained earnings for appropriation purposes.
Retained earnings
The amount that can be distributed by the Company as dividends to its equity shareholders.
SEZ Re-Investment Reserve
The SEZ Re-Investment Reserve has been created out of profit of eligible SEZ units in terms of the provisions of section 10AA(1)(ii) of the Income-tax Act, 1961. The reserve has been utilised for acquiring new plant and machinery for the purpose of its business in terms of section 10AA(2) of the Income-tax Act, 1961.
Share based payment reserve
The Company has established equity settled share based payment plans for certain categories of employees of the Company. Refer note 30 for further details on these plans.
Treasury shares
Own equity instruments that are reacquired [treasury shares] are recognized at cost and is disclosed as a deduction from equity.
Cash flow hedging reserves
The cash flow hedging reserve represents the cumulative effective portion of gains or losses (net of taxes, if any) arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges.
(a) During the year ended March 31, 2016, the Company had obtained an external commercial borrowing facility of USD 20 million from a bank. The term loan facility is secured by first priority pari-passu charge on the plant and machinery of the proposed expanded facility line in the existing facility with a carrying amount of Rs, 1,478. The long-term loan is repayable in 4 equal quarterly installments of USD 5 million each commencing from December 31, 2018 and carries an interest rate of LIBOR 0.95% p.a. During the year ended March 31, 2016, the Company had entered into interest rate swap to convert floating rate to fixed rate.
(b) On March 31, 2005, the Company entered into an agreement with the Council of Scientific and Industrial Research (Rs,CSIR''), for an unsecured loan of Rs, 3 for carrying out part of the research and development project under the New Millennium Indian Technology Leadership Initiative (''NMITLI'') Scheme. The loan is repayable over 10 equal annual installments of Rs, 0.3 starting from April 2009 and carry an interest rate of 3% p.a.
(c) On March 31, 2009, the Department of Scientific and Industrial Research (''DSIR'') sanctioned financial assistance for a sum of Rs, 17 to the Company for part financing one of its research projects. The assistance is repayable in the form of royalty payments for three years post commercialization of the project in five equal annual installments of Rs, 3 each, starting from April 1, 2013.
(d) On August 25, 2010, the Department of Science and Technology (''DST'') under the Drugs and Pharmaceutical Research Programme (''DPRP'') has sanctioned financial assistance for a sum of '' 70 to the Company for financing one of its research projects. The loan is repayable over 10 annual installments of '' 7 each starting from July 1, 2012, and carries an interest rate of 3% p.a.
(e) In respect of the financial assistance received under the aforesaid programmes (refer note (b) to (d) above), the Company is required to utilize the funds for the specified projects and is required to obtain prior approvals from the said authorities for disposal of assets/Intellectual property rights acquired/developed under the above programmes.
The Company''s exposure to liquidity, interest rate and currency risks are disclosed in note 36.
1. Employee stock compensation
(a) Biocon ESOP Plan
On September 27, 2001, Biocon''s Board of Directors approved the Biocon Employee Stock Option Plan (''ESOP Plan 2000'') for the grant of stock options to the employees of the Company and its subsidiaries/joint venture company. The Company recognizes the cost towards the options granted to the employees of the subsidiaries/joint venture company through equity settled method. The Nomination and Remuneration Committee (''Remuneration Committee'') administers the plan through a trust established specifically for this purpose, called the Biocon India Limited Employee Welfare Trust (ESOP Trust).
The ESOP Trust shall make additional purchase of equity shares of the Company using the proceeds from the loan obtained from the Company, other cash inflows from allotment of shares to employees under the ESOP Plan and shall subscribe, when allotted to such number of shares as is necessary for transferring to the employees. The ESOP Trust may also receive shares from the promoters for the purpose of issuance to the employees under the ESOP Plan. The Remuneration Committee shall determine the exercise price which will not be less than the face value of the shares.
Grant IV
In July 2006, the Company approved the grant of 3,478,200 options (face value of shares - '' 5 each) to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 25%, 35% and 40% of the total grant at the end of first, second and third year from the date of grant for existing employees and at the end of 3rd, 4th and 5th year from the date of grant for new employees. Exercise period is 3 years for each grant. The conditions for number of options granted include service terms and performance grade of the employees. These options are exercisable at a discount of 20% to the market price of Company''s shares on the date of grant.
Grant V
In April 2008, the Company approved the grant to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 25%, 35% and 40% of the total grant at the end of first, second and third year from the date of grant for existing employees and at the end of 3rd, 4th and 5th year from the date of grant for new employees. Exercise period is 3 years for each grant. The conditions for number of options granted include service terms and performance grade of the employees. These options are exercisable at the market price of Company''s shares on the date of grant.
Grant VIII
In July 2015, the Company approved the grant to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 10%, 20%, 30% and 40% of the total grant at the end of first, second, third and fourth year from the date of grant, respectively, with an exercise period ending one year from the end of last vesting. The vesting conditions include service terms and performance grade of the employees. These options are exercisable at the closing price as per National Stock Exchange as on the last day of the month preceding the month of first grant.
*adjusted for the effect of bonus shares Grant IX
In June 2016, the Company approved the grant to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 10%, 20%, 30% and 40% of the total grant at the end of first, second, third and fourth year from the date of grant, respectively, with an exercise period ending one year from the end of last vesting. The vesting conditions include service terms and performance grade of the employees. These options are exercisable at 50% of the closing price as per National Stock Exchange as on the preceding day to the date of grant.
Grant X
In June 2016, the Company approved the grant to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 10%, 20%, 30% and 40% of the total grant at the end of first, second, third and fourth year from the date of grant, respectively, with an exercise period ending one year from the end of last vesting. The vesting conditions include service terms and performance grade of the employees. These options are exercisable at 50% of the closing price as per National Stock Exchange as on the preceding day to the date of grant.
The average market price of the Company''s share during the year ended March 31, 2018 is Rs, 428 (March 31, 2017 - Rs, 870) per share after adjusting for the impact of bonus shares granted during the year.
Expected volatility is based on historical volatility of the market price of the Company''s publicly traded equity shares during the expected term of the option grant.
(b) RSU Plan 2015
On March 11, 2015, Biocon''s Remuneration Committee approved the Biocon - Restricted Stock Units (RSUs) of Syngene (''RSU Plan 2015'') for the grant of RSUs to the employees of the Company and its subsidiaries other than Syngene. The Remuneration Committee administers the plan through a trust established specifically for this purpose, called the Biocon Limited Employee Welfare Trust. For this purpose, on March 31, 2015, the Company transferred 2,000,000 equity shares of Syngene to Biocon Limited Employees Welfare Trust.
In April 2015, the Company approved the grant to its employees under the RSU Plan 2015. The RSUs under this grant would vest to the employees as 10%, 20%, 30% and 40% of the total grant at the end of first, second, third and fourth year from the date of grant, respectively, with an exercise period ending one year from the end of last vesting. The vesting conditions include service terms and performance grade of the employees. Exercise price of RSUs will be Nil.
Assumptions regarding future mortality experience are set in accordance with published statistics and mortality tables. The weighted average duration of the defined benefit obligation was 6 years (March 31, 2017 - 8 years).
The defined benefit plan exposes the Company to actuarial risks, such as longevity and interest rate risk.
Sensitivity of significant actuarial assumptions is computed by varying one actuarial assumption used for the valuation of defined benefit obligation by one percentage, keeping all other actuarial assumptions constant. Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumption shown.
As of March 31, 2018 and March 31, 2017, the plan assets have been invested in insurer managed funds and the expected contribution to the fund during the year ending March 31, 2019, is approximately '' 55 (March 31, 2018 - '' 51)
B. Measurement of fair values
Fair value of liquid mutual funds are based on quoted price. Derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the market place.
Sensitivity analysis
For the fair values of forward contracts of foreign currencies, reasonably possible changes at the reporting date to one of the significant observable inputs, holding other inputs constant, would have the following effects.
C. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk
- Liquidity risk
- Market risk
(i) Risk management framework
The Company''s risk management is carried out by the treasury department under policies approved by the Board of Directors. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative and non-derivative financial instruments and investment of excess liquidity.
(ii) Credit risk
Credit risk is the risk that the counterparty will not meet its obligation under a financial instrument or customer contract, leading to financial loss. The credit risk arises principally from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions and other financial instruments.
Customer credit risk is managed by each business unit subject to Company''s established policy, procedures and control relating to customer credit risk management. The Audit and Risk Management Committee has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, where available, and other publicly available financial information. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance.
Receivable from one customer of the Company''s trade receivables is Rs, 1,281 (March 31, 2017 - Rs, 785) which is more than 10 percent of the Company''s total trade receivables.
Credit risk on cash and cash equivalent and derivatives is limited as the Company generally transacts with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units, bonds and non-convertible debentures.
(iii) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.
The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
(iv) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices, such as foreign exchange rates, interest rates and equity prices.
Foreign currency risk
The Company operates internationally and a major portion of the business is transacted in several currencies and consequently, the Company is exposed to foreign exchange risk through operating and borrowing activities in foreign currency. The Company holds derivative instruments such as foreign exchange forward, interest rate swaps and option contracts to mitigate the risk of changes in exchange rates and foreign currency exposure.
(b) Sensitivity
The Company policy is to maintain most of its borrowings at fixed rate using interest rate swaps to achieve this when necessary. They are therefore not subject to interest rate risk as defined under Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of change in market interest rates.
37. Capital management
The key objective of the Company''s capital management is to ensure that it maintains a stable capital structure with the focus on total equity to uphold investor, creditor, and customer confidence and to ensure future development of its business. The Company focused on keeping strong total equity base to ensure independence, security, as well as a high financial flexibility for potential future borrowings, if required without impacting the risk profile of the Company.
The Company''s goal is to continue to be able to return excess liquidity to shareholders by continuing to distribute annual dividends in future periods.
The amount of future dividends of equity shares will be balanced with efforts to continue to maintain an adequate liquidity status.
2. Segmental information
In accordance with Ind AS 108 - Operating segments, 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.
3. Other notes
(a) The Company had entered into transactions of sale of products to a private company during the year ended March 31, 2013 and 2012 amounting to '' 28 and '' 17 respectively that required prior approval from Central Government under Section 297 of the Companies Act, 1956. These transactions, entered into at prevailing market prices were approved by the Board of Directors of the Company. During the year ended March 31, 2014, the Company had filed application with the Central Government for approval of such transactions and for compounding of such non-compliance and same is pending with Central Government as at March 31, 2018.
4. Corporate Social Responsibility
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities.
(a) Gross amount required to be spent by the Company during the year is '' 88; and
5. Events after reporting period
(a) On April 26, 2018, the Board of Directors of the Company has proposed a final dividend of '' 1 per equity share. The proposed dividend is subject to the approval of the shareholders in the Annual general meeting.
*For the purposes of this clause, the term ''Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the November 8, 2016.
6. The previous year''s figures have been re-grouped/reclassified, where necessary to confirm to current year''s classification.
Mar 31, 2017
1. Shares reserved for issue under options
For details of shares reserved for issue under the employee stock option plan (ESOP) of the Company, refer note 31.
2. Other equity Securities premium reserve
Securities premium is used to record the premium received on issue of shares. It is utilized in accordance with the provisions of the Companies Act, 2013. General reserve
General, reserve is used from time to time to transfer profits from retained earnings for appropriation purposes.
Retained earnings
The amount that can be distributed by the Company as dividends to its equity shareholders.
SEZ re-investment reserve
The SEZ re-investment reserve has been created out of profit of eligible SEZ units in terms of the provisions of section 10AA(l)(ii) of the Income-tax Act, 1961. The reserve has been utilized for acquiring new plant and machinery for the purpose of its business in terms of section 10AA(2) of the Income-tax Act, 1961.
Share based payment reserve
The Company has established various equity settled share based payment plans for certain categories of employees of the Company. Also refer note 31 for further details on these plans.
Treasury shares
Own equity instruments that are reacquired [treasury shares] are recognized at cost and deducted from equity.
Cash flow hedging reserves
The cash flow hedging reserve represents the cumulative effective portion of gains or losses (net of taxes, if any) arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges.
3. On February 9, 2000, the Company obtained an order from the Karnataka Sales Tax Authority for avowing an interest free deferment of sales tax (including turnover tax) for a period up to 12 years with respect to sales from its Hebbagodi manufacturing facility for an amount not exceeding Rs. 649. This is an interest free liability. The amount is repayable in 10 equal half yearly installments of Rs. 65 each starting from February 2012. The loan was repaid during the year.
4. During the year ended March 31, 2016, the Company had obtained an external commercial borrowing facility of USD 20 million from a bank. The term Loan facility is secured by first priority pari-passu charge on the plant and machinery of the proposed expanded facility Line in the existing facility with a carrying amount of Rs. 1,410. The long-term loan is repayable in 4 equal quarterly installments of USD 5 million each commencing from December 31, 2018 and carries an interest rate of LIBOR 0.95% p.a. During the year ended March 31, 2016, the Company had entered into interest rate swap to convert floating rate to fixed rate.
5. 0 n March 31, 2005, the Company entered into an agreement with the Council of Scientific and Industrial Research (''CSIR''), for an unsecured Loan of Rs.3 for carrying out part of the research and development project under the New Millennium Indian Technology Leadership Initiative (''NMITLI'') Scheme. The loan is repayable over 10 equal Annual installments of Rs. 0.3 starting from April 2009 and carry an interest rate of 3% p.a.
6. On March 31, 2009, the Department of Scientific and Industrial Research (RDSIR'') sanctioned financial assistance for a sum of Rs. 17 to the Company for part financing one of its research projects. The assistance is repayable in the form of royalty payments for three years post commercialization of the project in five equal Annual installments of Rs. 3 each, starting from April 1, 2013.
7. On August 25, 2010, the Department of Science and Technology (''DST'') under the Drugs and Pharmaceutical Research Programme (''DPRP'') has sanctioned financial assistance for a sum of rs. 70 to the Company for financing one of its research projects. The Loan is repayable over 10 Annual installments of Rs. 7 each starting from July 1, 2012, and carries an interest rate of 3% p.a.
8. I n respect of the financial assistance received under the aforesaid programmes (refer note (c) to (e) above), the Company is required to utilize the funds for the specified projects and is required to obtain prior approvals from the said authorities for disposal of assets/Intellectual property rights acquired/ developed under the above programmes.
The Company''s exposure to Liquidity, interest rate and currency risks are disclosed in note 39.
9. Employee stock compensation
10. Biocon ESOP Plan
0n September 27, 2001, Biocon''s Board of Directors approved the Biocon Employee Stock Option Plan (''ESOP Plan 2000'') for the grant of stock options to the employees of the Company and its subsidiaries/joint venture company. The Nomination and Remuneration Committee (''Remuneration Committee'') administers the plan through a trust established specifically for this purpose, called the Biocon India Limited Employee Welfare Trust (ESOP Trust).
The ESOP Trust shall make additional purchase of equity shares of the Company using the proceeds from the Loan obtained from the Company, other cash inflows from allotment of shares to employees under the ESOP Plan and shall subscribe, when allotted to such number of shares as is necessary for transferring to the employees. The ESOP Trust may also receive shares from the promoters for the purpose of issuance to the employees under the ESOP Plan. The Remuneration Committee shall determine the exercise price which will not be Less than the face value of the shares.
Grant IV
In July 2006, the Company approved the grant of 3,478,200 options (face value of shares - Rs. 5 each) to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 25%, 35% and 40% of the total grant at the end of first, second and third year from the date of grant for existing employees and at the end of 3rd, 4th and 5th year from the date of grant for new employees. Exercise period is 3 years for each grant. The conditions for number of options granted include service terms and performance grade of the employees. These options are exercisable at a discount of 20% to the market price of Company''s shares on the date of grant.
Grant V
In April 2008, the Company approved the grant to its employees under the existing ESOP Plan 2000. The options under this grant would vest to the employees as 25%, 35% and 40% of the total grant at the end of first, second and third year from the date of grant for existing employees and at the end of 3rd, 4th and 5th year from the date of grant for new employees. Exercise period is 3 years for each grant. The conditions for number of options granted include service terms and performance grade of the employees. These options are exercisable at the market price of Company''s shares on the date of grant.
11. RSU Plan 2015
On March 11, 2015, Biocon''s Remuneration Committee approved the Biocon - Restricted Stock Units (RSUs) of Syngene (''RSU Plan 2015'') for the grant of RSUs to the employees of the Company and its subsidiaries other than Syngene. The Remuneration Committee administers the plan through a trust established specifically for this purpose, called the Biocon Limited Employee Welfare Trust (''RSU Trust''). For this purpose, on March 31, 2015, the Company transferred 2,000,000 equity shares of Syngene to RSU Trust.
In April 2015, the Company approved the grant to its employees under the RSU Plan 2015. The RSUs under this grant would vest to the employees as 10%, 20%, 30% and 40% of the total grant at the end of first, second, third and fourth year from the date of grant, respectively, with an exercise period ending one year from the end of Last vesting. The vesting conditions include service terms and performance grade of the employees. Exercise price of RSUs will be Nil.
12. During the year ended March 31, 2016, the Company sold its investment in the equity shares of Biocon Sdn. Bhd., a wholly owned subsidiary to Biocon Biologics Limited (UK) for a sum of Rs. 811. Gain arising from such sale of equity shares amounting to Rs. 99 [net of cost of such equity shares] is recorded as an exceptional gain in the standalone financial statements. Consequential tax of Rs. 21 is recorded on such gain.
13. During the year ended March 31, 2016, Syngene International Limited (''Syngene'') completed its Initial Public Offering (IPO), through an offer for sale of 22,000,000 equity shares of Rs. 10 each, by the Company. Gain arising from such sale of equity shares, net of related expenses and cost of equity shares, amounting to Rs. 962 is recorded as an exceptional gain in the standalone financial statements. Consequential tax of Rs. 1,042 is recorded on such gains is included within income tax expense.
MAT credit on above transaction was not recorded in the previous year due to uncertainty of utilization. During the current year, pursuant to change in the Income tax Law and other business restructuring, the Company believes that it will be able to utilize the MAT credit entitlement. Accordingly, during the year ended March 31, 2017, the Company has recorded MAT credit entitlement of Rs. 1,042 which is included within income tax expense of the current year.
14. Expenses incurred on behalf of the related party include recharge of software License fees and amount paid on behalf to vendors.
15. The Company''s SEZ Developer division has entered into agreements to Lease Land and provide certain facilities such as power, utilities etc to SEZ units of Biocon Research Limited and Syngene International Limited, in respect of which the Company recovers rent and facilities usage charges.
16. The Company has purchased consumables from Mazumdar Farms, a proprietary firm of relative of Director which are not disclosed above since the amounts are rounded off to Rupees million.
17. During the year, there is no transaction with Biocon India Limited Employees Welfare Trust {trust in which key management personnel were the Board of Trustees).
18. The above disclosures include related parties as per Ind AS 24 on âRelated Party Disclosures" and Companies Act, 2013.
19. The remuneration to key management personnel doesn''t include the provisions made for gratuity and compensated absences, as they are obtained on an actuarial basis for the Company as a whole.
20. Share based compensation expense allocable to key management personnel is ^ 5 {March 31, 2016 â Rs. 10), which is not included in the remuneration disclosed above.
21. ALL transactions with these related parties are priced on an arm''s Length basis and none of the balances are secured.
22. Employee benefit plans
23. The Company has a defined benefit gratuity plan as per the Payment of Gratuity Act, 1972. Under this Legislation, employee who has completed five years of service is entitled to specific benefit. The Level of benefit provided depends on the employeeâs Length of service and salary at retirement/ termination age. The gratuity plan is a funded plan and the Company make contributions to a recognized fund in India.
Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the amounts recognized in the Company''s financial statements as at balance sheet date:
24. Measurement of fair values
Fair value of Liquid mutual funds are based on quoted price. Derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the market place.
Sensitivity analysis
For the fair values of forward contracts of foreign currencies, reasonably possible changes at the reporting date to one of the significant observable inputs, holding other inputs constant, would have the following effects.
25. Financial risk management
The Company has exposure to the following risks arising from financial instruments:
- Credit risk
- Liquidity risk
- Market risk
Risk management framework
The Company''s risk management is carried out by the treasury department under policies approved by the Board of Directors. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative and non-derivative financial instruments and investment of excess Liquidity.
26. Credit risk
Credit risk is the risk that the counterparty will not meet its obligation under a financial instrument or customer contract, Leading to financial Loss. The credit risk arises principally from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions and other financial instruments.
Customer credit risk is managed by each business unit subject to Company''s established policy, procedures and control relating to customer credit risk management. The Audit and Risk Management Committee 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, where available, and other publicly available financial information. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by Letters of credit or other forms of credit insurance.
27. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial Liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing Liquidity is to ensure, as far as possible, that it will have sufficient Liquidity to meet its Liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable Losses or risking damage to the Company''s reputation.
The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no Liquidity risk is perceived. In addition, the Company maintains the following Line of credit:
28. Cash credit facility from banks carrying interest rate ranging from 9.7% - 13% p.a. These facilities were repayable on demand and secured by pari-passu charge on inventories and trade receivables.
29. Unsecured foreign currency denominated loans from Banks amounting to Rs. Nil (March 31, 2016 - Rs. 2,253) carrying interest ranging from Nil (March 31, 2016 - LIBOR 0.10% to 0.20% p.a.). The facilities are repayable within 180 days from its origination.
30. Sensitivity
The Company policy is to maintain most of its borrowings at fixed rate using interest rate swaps to achieve this when necessary. They are therefore not subject to interest rate risk as defined under Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of change in market interest rates.
31. Capital management
The key objective of the Company''s capital management is to ensure that it maintains a stable capital structure with the focus on total equity to uphold investor, creditor, and customer confidence and to ensure future development of its business. The Company focused on keeping strong total equity base to ensure independence, security, as well as a high financial flexibility for potential future borrowings, if required without impacting the risk profile of the Company.
The Company''s goal is to continue to be able to return excess Liquidity to shareholders by continuing to distribute Annual dividends in future periods.
The amount of future dividends of equity shares will be balanced with efforts to continue to maintain an adequate Liquidity status.
32. First-time adoption of Ind AS
These standalone financial statements have been prepared in accordance with the Ind AS. For the purpose of transition from previous GAAP to Ind AS, the Company has followed the guidance prescribed under Ind AS 101 - First time adoption of Indian Accounting Standards (âInd AS 101â), with effect from April 01, 2015 (âtransition dateâ).
In preparing its Ind AS balance sheet as at April 1, 2015 and in presenting the comparative information for the year ended March 31, 2016, the Group has adjusted amounts reported previously in financial statements prepared in accordance with previous GAAP. This note explains how the transition from previous GAAP to Ind AS has affected the Company''s balance sheet, financial performance.
33. Optional exemptions availed and mandatory exceptions
In preparing these standalone financial statements, the Company has applied the below mentioned optional exemptions and mandatory exceptions. Optional exemptions availed
34. Deemed cost Investment in subsidiaries
As per Ind AS 101, the entity may elect to use the fair value of investment in subsidiaries at the date of transition as the deemed cost. Accordingly, the Company has recognized the fair value of a subsidiary as the deemed cost at the date of transition.
35. Business combination
Ind AS 101, provides the option to apply Ind AS 103, Business Combinations prospectively from the transition date or from a specific date prior to the transition date.
The Company has elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date has not been restated.
36. Share based payments
Ind AS 102 Share based Payment has not been applied to equity instruments in share based payment transactions that vested before April 1, 2014. For cash settled share based payment transactions, the Company has not applied Ind AS 102 to Liabilities that were settled before April 1, 2014.
Mandatory exemptions availed
37. Estimates
As per Ind AS 101, an entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with the previous GAAP unless there is objective evidence that those estimates were in error.
The Company''s estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the financial statements that were not required under the previous GAAP are Listed below:
- Fair valuation of financial instruments carried at FVTPL and/ or FVOCI.
- Impairment of financial assets based on the expected credit Loss model.
- Determination of the discounted value for financial instruments carried at amortized cost.
38. Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortized cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.
Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortized cost has been done retrospectively except where the same is impracticable.
39. Hedge accounting
Hedge accounting can only be applied prospectively from the transition date to transactions that satisfy the hedge accounting criteria in Ind AS 109, Financial Instruments, at the date of transition. Hedging relationships cannot be designated retrospectively, and the supporting documentation cannot be created retrospectively. As a result, only hedging relationships that satisfied the hedge accounting criteria as on the date of transition are reflected as hedges in the consolidated financial statements under Ind AS.
40. Difference on account of revenue recognition, net of related costs is primarily due to difference in timing of revenue recognition under Ind AS compared to previous GAAP and deferral of Licensing income on account of continuing obligations.
41. Impact due to derivative accounting in accordance with Ind AS 109.
42. Other adjustments on account of Employee benefit expenses (Share based payments, Actuarial gains/Losses), Mark to market adjustments on Mutual funds and Guarantee Income.
43. Represents income tax impact of Ind AS adjustments including corrections for earlier years.
44. Reduction in profit on sale of Syngene shares is primarily on account of fair valuation of investment in Syngene (a subsidiary) on the Ind AS transition date as deemed cost.
45. Actuarial Loss on defined benefit obligations (gratuity) taken to other comprehensive income under Ind AS as compared to the statement of profit and Loss under previous GAAP.
46. Impact on consolidation of ESOP Trust.
47. Business combination
During the year ended March 31, 2016, the Company acquired the business of pharmaceutical manufacturing unit of M/s Acacia Life sciences Private
Limited Located at Vishakhapatnam with effect from October 01, 2015 on a going concern basis for a consideration of Rs. 531 paid in cash. The transaction was accounted under Ind AS 103 âBusiness Combinationsâ as a business combination with the purchase price being allocated to identifiable assets and Liabilities at fair value.
48. Segmental information
In accordance with Ind AS 108 - Operating segments, 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.
49. Other notes
50. The Company had entered into transactions of sale of products to a private company during the year ended March 31, 2013 and 2012 amounting to Rs. 28 and Rs. 17 respectively that required prior approval from Central Government under Section 297 of the Companies Act, 1956. These transactions, entered into at prevailing market prices were approved by the Board of Directors of the Company. During the year ended March 31, 2014, the Company had filed application with the Central Government for approval of such transactions and for compounding of such non-compliance and same is pending with Central Government as at March 31, 2017.
51. 0 he Company has paid the dividend distribution tax of Rs. Nil (March 31, 2016 - Rs. 107) on interim dividend after reducing the amount of dividend received by the Company from its subsidiaries.
52. Corporate Social Responsibility
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at Least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities.
53 Gross amount required to be spent by the Company during the year is Rs. 90; and
54. Amount spent during the year on:
55. Events after reporting period
56. On April 27, 2017, the Board of Directors of the Company approved issue of bonus shares in the proportion of 2:1 i.e. 2 (two) bonus equity shares of Rs. 5 each for every 1 (one) fully paid-up equity shares held as on the record date, subject to the approval by the shareholders of the Company through postal ballot.
57. 0n April 27, 2017, the Board of Directors of the Company has proposed a final dividend of Rs. 3 per equity share on a pre-bonus share basis. The proposed dividend is subject to the approval of the shareholders in the Annual general meeting.
Mar 31, 2014
1. Corporate information
Biocon Limited (''Biocon'' or ''the Company''), was incorporated at
Bangalore in 1978 for manufacture of biotechnology products. Biocon is
an integrated healthcare company engaged in manufacture of
biotechnology products for the pharmaceutical sector. The Company is
also engaged in research and development in the biotechnology sector.
During the year ended March 31, 2007, the Company had received an
approval for operation of SEZ Developer and for setting up SEZ Unit
operations to be located within Biocon SEZ.
Syngene International Limited (''Syngene''), promoted by Dr Kiran
Mazumdar Shaw, was incorporated at Bangalore in 1993. In March 2002,
Biocon acquired 99.99 per cent of the equity shares of Syngene and,
resultantly, Syngene became the subsidiary of Biocon. As at March 31,
2014, 12.31 % of the equity interest in Syngene is held by third.
parties
On January 10, 2008, Biocon entered into an agreement with Dr. B.R.
Shetty to set up a joint venture Company NeoBiocon FZ-LLC, with a 50%
equity interest incorporated in Dubai (''NeoBiocon'').
The Company has also established Biocon Research Limited (''BRL''), a
subsidiary of the Company to undertake research and development in
novel and innovative drug initiatives.
During the year ended March 31, 2011, Biocon set up a wholly owned
subsidiary company in Malaysia, Biocon Sdn. Bhd. (''Biocon Malaysia'')
for development and manufacture of bio-pharmaceuticals.
During the year ended March 31, 2014, the Company has established
Biocon Academy, a not for profit company under Companies Act, 1956 to
provide educational courses, training and research in the biosciences,
life sciences and all fields of study.
1.1 Scheme of arrangement
On July 25, 2012, the Board of Directors of the Company approved a
scheme of amalgamation (''the Scheme'') of Biocon Biopharmaceuticals
Limited ("BBL" / "Transferor Company"), a wholly owned subsidiary, with
the Company under section 391 and 394 of the Companies Act, 1956. The
Honorable High Court of Karnataka (''the Court'') approved the aforesaid
Scheme with Appointed Date as April 01, 2012 vide its order dated July
12, 2013 ("the Order"). The copy of the Order was filed with the
Registrar of Companies on August 8, 2013. BBL was originally
incorporated on June 17, 2002 as a Joint Venture between Biocon and
CIMAB SA (''CIMAB'') with Biocon holding 51 per cent of the share
capital. During the year ended March 31, 2011, Biocon acquired the
interest of the joint venture partner, CIMAB. Consequently, all the
equity shares of BBL were held by Biocon.
Accordingly, the assets and liabilities, and Deficit in the Statement
of Profit and Loss of BBL of Rs. 103 as at Appointed Date have been
recorded at their carrying values under the Pooling of Interest method
as prescribed by Accounting Standard 14 - Accounting for Amalgamation
(''AS 14''), and difference between value of Biocon''s investment in BBL
and the amount of BBL''s share capital amounting toRs. 35 has been debited
to the Reserves and Surplus of the Company in accordance with AS 14.
Since the Scheme received the requisite approvals in the year ended
March 31, 2014, profit after tax amounting to Rs. 55 (net of tax of Rs. 58), relating to operations of BBL from April 1, 2012 to March 31, 2013,
have been accounted for in the statement of profit and loss for the
year ended March 31, 2014, as a separate line item.
The difference between share capital of the Transferor Company as at
March 31, 2012 of Rs. 176 and the amount of investment in the books of
the Company of Rs. 211 has been debited to the surplus in the statement
of profit and loss (refer note 4).
2. Basis of preparation
The financial statements have been prepared in accordance with
generally accepted accounting principles in India (Indian GAAP). The
Company has prepared these financial statements to comply in all
material respects with the Accounting Standards, notified by the
Companies Accounting Standards Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956 read with general
circular 8/2014 dated April 4, 2014 issued by Ministry of Corporate
Affairs. The financial statements have been prepared on an accrual
basis and under the historical cost convention except in case of assets
for which provision for impairment is made and revaluation is carried
out.
For the purpose of administration of the employee stock option plans of
the Company, the Company has established the Biocon India Limited
Employee Welfare Trust (''ESOP Trust''). In accordance with the
guidelines framed by the Securities and Exchange Board of India
(''SEBI''), financial statements of the Company have been prepared as if
the Company itself is administering the ESOP Scheme.
The accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year.
3. Employee stock compensation
On September 27, 2001, Biocon''s Board of Directors approved the Biocon
Employee Stock Option Plan (''ESOP Plan 2000'') for the grant of stock
options to the employees of the Company and its subsidiaries /joint
venture company. A Compensation Committee has been constituted to
administer the plan through a trust established specifically for this
purpose, called the Biocon India Limited Employee Welfare Trust (ESOP
Trust).
The ESOP Trust shall make additional purchase of equity shares of the
Company using the proceeds from the loan obtained from the Company,
other cash inflows from allotment of shares to employees under the ESOP
Plan and shall subscribe, when allotted to such number of shares as is
necessary for transferring to the employees. The ESOP Trust may also
receive shares from the promoters for the purpose of issuance to the
employees under the ESOP Plan. The Compensation Committee shall
determine the exercise price which will not be less than the face value
of the shares.
Grant I
In September 2001 , the Company granted 71,510 options (face value of
shares Rs. 5 each) under the ESOP Plan 2000 to be exercised at a grant
price of Rs. 10 (before adjusting bonus and share split). The options
vested with the employees equally over a four year period.
Grant II
In January 2004, the Company granted 142,100 options (face value of
shares - Rs. 5 each) under ESOP Plan 2000 to be exercised at a price of Rs.
5 per share. The options vest with the employees equally over a four
year period.
Grant III
In January 2004, the Board of Directors announced the Biocon Employee
Stock Option Plan (ESOP Plan 2004) for the grant of stock options to
the employees of the Company and its subsidiaries/joint venture
company, pursuant to which the Compensation Committee on March 19, 2004
granted 422,000 options (face value of shares - Rs. 5 each) under the
ESOP Plan 2004 to be exercised at a grant price of Rs. 315 being the
issue price determined for the IPO through the book building process.
The options vest with the employees equally over a four year period.
Grant IV
In July 2006, the Company approved the grant of 3,478,200 options (face
value of shares - Rs. 5 each) to its employees under the existing ESOP
Plan 2000. The options under this grant would vest to the employees as
25%, 35% and 40% of the total grant at the end of first, second, third
year from the date of the grant, respectively, with an exercise period
of three years for each grant. The vesting conditions include service
terms and performance grade of the employees. These options are
exercisable at a discount of 20% to the market price of Company''s
shares on the date of grant.
Grant V
In April 2008, the Company approved the grant of 813,860 options (face
value of shares - Rs. 5 each) to its employees under the existing ESOP
Plan 2000. The options under this grant would vest to the employees as
25%, 35% and 40% of the total grant at the end of first, second, third
year from the date of grant, respectively, with an exercise period of
three years for each grant. The vesting conditions include service
terms and performance grade of the employees. These options are
exercisable at the market price of Company''s shares on the date of
grant.
March 31,
2014 March 31,
2013
4. Contingent liabilities and commitments
(i) Contingent liabilities:
(a) Claims against the Company not
acknowledged as debt 828 812
Includes taxation matters under dispute
(Direct and Indirect taxes)
Rs.480 (March 31, 2013 -Rs. 464)
The Company is involved in taxation and
other disputes, lawsuits, proceedings etc.
including patent and commercial matters
that arise from time to time in the
ordinary course of business. Management
is of the view that such claims are not
tenable and will not have any material
adverse effect on the Company''s financial
position and results of operations.
(b) Guarantees
(i) Corporate guarantees given in favour
of the Central Excise Department in
respect of certain performance
obligations of the subsidiaries.
Syngene 218 218
BBL (refer note 1.1) - 131
Clinigene 27 27
Total 245 376
(ii) Corporate guarantee given by Syngene
in favour of the CED in respect of certain
performance obligations of Biocon. 465 465
(iii) Corporate guarantees given in favour
of a bank towards loans obtained by
Clinigene 60 75
(iv) Guarantees given by banks on behalf of
the Company for financial and other
contractual obligations of the Company.
The necessary terms and conditions have
been complied with and no liabilities
have arisen. (refer note below) 115 554
Includes share of the Company in respect
of guarantees issued by NeoBiocon
(joint venture), of Rs. 1 (March
31, 2013 - Rs. 3)
(v) Corporate guarantees given in favour of
a bank towards loans obtained by Biocon
Malaysia 5,804 1,240
(ii) Commitments:
(a) Estimated amount of contracts
remaining to be executed on capital
account and not provided for, net
of advances 298 882
(b) Operating lease commitments Where
the Company is a lessee:
(i) Rent
The Company has entered into various
agreements for lease of building /
office space which expires over
a period up to March 2022. Some of
these lease arrangements have price
escalation clause. There are no
restrictions imposed under the lease
agreements. Gross rental expenses
for the year aggregates to Rs. 22
(March 31, 2013 - Rs. 29). The committed
lease rentals in the future are:
The committed lease rentals in
future are as follows :
Not later than one year 18 17
Later than one year and not later
than five years 43 31
Later than five years 25 19
(ii) Vehicles
The Company has taken vehicles for
certain employees under operating
leases, which expire over a period
upto October 2016. Gross rental
expenses for the year aggregate to Rs. 9
(March 31, 2013 - Rs. 11) The
committed lease rentals in future are as
follows:
Not later than one year 4 9
Later than one year and not later than
five years 3 10
Where the Company is a Lessor:
(i) Rent
The Company has leased out certain parts
of its land & building (including fit
outs), which expire over a period upto
2020. Gross rental income for the year
aggregates to Rs. 101 (March 31, 2013 -
Rs. 34). Further, minimum lease
receipts under operating lease are
as follows:
Not later than one year 67 34
Later than one year and not later
than five years 239 135
Later than five years 81 105
Considering that the leased assets
comprise of portion of factory
buildings located within the
Company''s factory premises, disclosure
with regard to gross value of leased
assets, accumulated depreciation and net
book value of the same is not feasible.
(c) Other Commitments:
As at March 31, 2014 and 2013, the
Company has committed to provide
financial support to a subsidiary
with regard to the operations of such
company. Also refer note 14 (a).
5. Segmental information
Business segments
The primary reporting of the Company has been performed on the basis of
business segment. The Company operates in a single business segment of
Pharmaceuticals. Accordingly no additional disclosures are required as
per Accounting Standard 17 on Segment Reporting.
Geographical segments
Secondary segmental reporting is performed on the basis of the
geographical location of customers. The management views the Indian
market and export markets as distinct geographical segments. The
following is the distribution of the Company''s sale by geographical
markets
6. Other notes
(a) The Company had entered into transactions of sale of products to a
private company during the year ended March 31, 2013 and 2012 amounting
to Rs. 28 and Rs. 17 respectively that required prior approval from Central
Government under Section 297 of the Companies Act, 1956. These
transactions, entered into at prevailing market prices were approved by
the Board of Directors of the Company. During the year ended March 31,
2014, the Company has filed application with the Central Government for
approval of such transactions and for compounding of such
non-compliance.
(b) Recovery of product development costs from co-development partner
(net) pertains to co-development partner''s share of expenses under the
development agreements comprising of payroll costs, depreciation and
amortisation and other expenses.
7. Prior years'' comparatives
The current year financial information include the state of affairs and
operations of the Transferor Company, as described in note 1.1 above.
Hence, the current year''s figures are strictly not comparable with the
previous year''s figures. The Company has reclassified and regrouped the
previous year figures to confirm to this year''s classification.
Mar 31, 2013
1. Corporate information
Biocon Limited (''Biocon'' or ''the Company''), was incorporated at
Bangalore in 1978 for manufacture of biotechnology products. Syngene
International Limited (''Syngene''), promoted by Dr. Kiran Mazumdar-Shaw,
was incorporated at Bangalore in 1993. In March 2002, Biocon acquired
99.99 per cent of the equity shares of Syngene and, resultantly,
Syngene became the subsidiary of Biocon. Clinigene International
Limited (''Clinigene'') was incorporated on August 4, 2000 at Bangalore
and became a wholly owned subsidiary of Biocon on March 31, 2001. In
February 2012, Biocon sold its shareholding in Clinigene to Syngene.
On January 10, 2008, Biocon entered into an agreement with Dr. B. R.
Shetty to set up a joint venture Company NeoBiocon FZ-LLC, with a 50%
equity interest incorporated in Dubai (''NeoBiocon'').
The Company has also established Biocon Research Limited (''BRL''), a
subsidiary of the Company to undertake research and development in
novel and innovative drug initiatives.
Effective April 30, 2008, Biocon acquired 71% equity interest in
AxiCorp GmbH, Germany (''AxiCorp'') through its newly incorporated wholly
owned subsidiary company Biocon SA. Switzerland. In February 2009,
Biocon SA acquired an additional 7.4% equity interest in AxiCorp.
During the year ended March 31, 2012, Biocon SA sold its shareholding
in AxiCorp to third parties.
Biocon Biopharmaceuticals Limited (formerly Biocon Biopharmaceuticals
Private Limited), [''BBL''] was originally incorporated on June 17, 2002
as a Joint Venture between Biocon and CIMAB SA (''CIMAB'') with Biocon
holding 51 per cent of the share capital. During the financial year
ended March 31, 2011, Biocon acquired the interest of the joint venture
partner, CIMAB. Consequently all the equity shares of BBL are held by
Biocon.
During the year ended March 31, 2011, Biocon set up a wholly owned
subsidiary company in Malaysia, Biocon Sdn. Bhd. (''Biocon Malaysia'')
for development and manufacture of bio-pharmaceuticals.
Biocon is an integrated healthcare company engaged in manufacture of
biotechnology products for the pharmaceutical sector. The Company is
also engaged in research and development in the biotechnology sector.
During the year ended March 31, 2007, the Company had received an
approval for operation of SEZ Developer and for setting up SEZ Unit
operations to be located within Biocon SEZ.
2. Basis of preparation
The financial statements have been prepared in accordance with
generally accepted accounting principles in India (Indian GAAP). The
Company has prepared these financial statements to comply in all
material respects with the Accounting Standards, notified by the
Companies Accounting Standards Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention except in case of assets for which provision
for impairment is made and revaluation is carried out.
For the purpose of administration of the employee stock option plans of
the Company, the Company has established the Biocon India Limited
Employee Welfare Trust (''ESOP Trust''). In accordance with the
guidelines framed by the Securities and Exchange Board of India
(''SEBI''), financial statements of the Company have been prepared as if
the Company itself is administering the ESOP Scheme.
The accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year
3. Employee stock compensation
On September 27, 2001, Biocon''s Board of Directors approved the Biocon
Employee Stock Option Plan (''ESOP Plan 2000'') for the grant of stock
options to the employees of the Company and its subsidiaries / joint
venture company. A Compensation Committee has been constituted to
administer the plan through a trust established specifically for this
purpose, called the Biocon India Limited Employee Welfare Trust (ESOP
Trust).
The ESOP Trust shall make additional purchase of equity shares of the
Company using the proceeds from the loan obtained from the Company,
other cash inflows from allotment of shares to employees under the ESOP
Plan and shall subscribe, when allotted to such number of shares as is
necessary for transferring to the employees. The ESOP Trust may also
receive shares from the promoters for the purpose of issuance to the
employees under the ESOP Plan. The Compensation Committee shall
determine the exercise price which will not be less than the face value
of the shares.
Grant I
In September 2001, the Company granted 71,510 options (face value of
shares Rs. 5 each) under the ESOP Plan 2000 to be exercised at a grant
price of Rs. 10 (before adjusting bonus and share split). The options
vested with the employees equally over a four year period.
Grant II
In January 2004, the Company granted 142,100 options (face value of
shares - Rs. 5 each) under ESOP Plan 2000 to be exercised at a price of
Rs. 5 per share. The options vest with the employees equally over a
four year period.
Grant III
In January 2004, the Board of Directors announced the Biocon Employee
Stock Option Plan (ESOP Plan 2004) for the grant of stock options to
the employees of the Company and its subsidiaries / joint venture
company, pursuant to which the Compensation Committee on March 19, 2004
granted 422,000 options (face value of shares - Rs. 5 each) under the
ESOP Plan 2004 to be exercised at a grant price of Rs. 315 being the
issue price determined for the IPO through the book building process.
The options vest with the employees equally over a four year period.
Grant IV
In July 2006, the Company approved the grant of 3,478,200 options (face
value of shares - Rs. 5 each) to its employees under the existing ESOP
Plan 2000. The options under this grant would vest to the employees as
25%, 35% and 40% of the total grant at the end of first, second, third
year from the date of the grant, respectively, with an exercise period
of three years for each grant. The vesting conditions include service
terms and performance grade of the employees. These options are
exercisable at a discount of 20% to the market price of Company''s
shares on the date of grant.
4. Segmental information
Business segments
The primary reporting of the Company has been performed on the basis of
business segment. The Company operates in a single business segment of
Pharmaceuticals. Accordingly no additional disclosures are required as
per Accounting Standard 17 on Segment Reporting.
Geographical segments
Secondary segmental reporting is performed on the basis of the
geographical location of customers. The management views the Indian
market and export markets as distinct geographical segments. The
following is the distribution of the Company''s sale by geographical
markets
5. Other Notes
(a) The Company has entered into transactions of sale of products to a
private company amounting to Rs. 28, during the year ended March 31,
2013 (March 31, 2012 - Rs.17), that require prior approval from Central
Government under Section 297 of the Companies Act, 1956. These
transactions, entered into at prevailing market prices have been
approved by the Board of Directors of the Company. The Company has
filed an application with the Central Government for approval of such
transactions and for condonation of delay in making such application in
the year 2010-11 and 2011-12. In respect of transactions entered during
the year ended March 31, 2013, the Company is in the process of filing
an application with the Central Government for approval of such
transactions and for condonation of delay in making such application.
6. Prior years'' comparatives
The previous years'' figures have been re-grouped, where necessary to
conform to current years'' classification.
Mar 31, 2012
1. Corporate information
Biocon Limited ('Biocon' or 'the Company'), was incorporated at
Bangalore in 1978 for manufacture of biotechnology products. Syngene
International Limited ('Syngene'), promoted by Dr Kiran Mazumdar Shaw,
was incorporated at Bangalore in 1993. In March 2002, Biocon acquired
99.99 per cent of the equity shares of Syngene and, resultantly,
Syngene became the subsidiary of Biocon. Clinigene International
Limited ('Clinigene') was incorporated on August 4, 2000 at Bangalore
and became a wholly owned subsidiary of Biocon on March 31, 2001. In
February 2012, Biocon has sold its shareholding in Clinigene to
Syngene.
On January 10, 2008, Biocon entered into an agreement with Dr. B.R.
Shetty to set up a joint venture Company NeoBiocon FZ-LLC, incorporated
in Dubai ('NeoBiocon').
The Company has also established Biocon Research Limited ('BRL'), a
subsidiary of the Company to undertake research and development in
novel and innovative drug initiatives.
Effective April 30, 2008, Biocon acquired 71% equity interest in
AxiCorp GmbH, Germany ('AxiCorp') through its newly incorporated wholly
owned subsidiary company Biocon SA. Switzerland. In February 2009,
Biocon SA acquired an additional 7.4% equity interest in AxiCorp.
During the year ended March 31, 2012, Biocon SA sold its shareholding
in AxiCorp to third parties.
Biocon Biopharmaceuticals Private Limited ('BBPL') was incorporated on
June 17, 2002 as a Joint Venture between Biocon and CIMAB SA ('CIMAB')
with Biocon holding 51 per cent of the share capital. During the
financial year ended March 31, 2011, Biocon acquired the interest of
the joint venture partner, CIMAB. Consequently all the equity shares of
BBPL are held by Biocon.
During the year ended March 31, 2011, Biocon set up a wholly owned
subsidiary company in Malaysia, Biocon Sdn. Bhd. ('Biocon Malaysia')
for development and manufacture of bio-pharmaceuticals.
Biocon is an integrated healthcare company engaged in manufacture of
biotechnology products for the pharmaceutical sector. The Company is
also engaged in research and development in the biotechnology sector.
During the year ended March 31, 2007, the Company had received an
approval as the developer of Biocon SEZ at the Biocon Park facility and
also received an approval for SEZ unit to be located within Biocon SEZ.
2. Basis of preparation
The financial statements have been prepared in accordance with
generally accepted accounting principles in India (Indian GAAP). The
Company has prepared these financial statements to comply in all
material respects with the Accounting Standards, notified by the
Companies Accounting Standards Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention except in case of assets for which provision
for impairment is made and revaluation is carried out.
For the purpose of administration of the employee stock option plans of
the Company, the Company has established the Biocon India Limited
Employee Welfare Trust ('ESOP Trust'). In accordance with the
guidelines framed by the Securities and Exchange Board of India
('SEBI'), financial statements of the Company have been prepared as if
the Company itself is administering the ESOP Scheme.
The accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year except for
change in accounting policy as explained in 2.1(a) (i) below.
March 31, 2012 March 31, 2011
35. Contingent liabilities
and commitments
(i) Contingent liabilities:
(a) Claims against the Company
not acknowledged as debt
Taxation matters under appeal (Direct
and Indirect taxes) 287 236
(b) Guarantees
(i) Corporate guarantees given in
favour of the Central Excise
Department in respect of certain
performance obligations of the
subsidiaries.
Syngene 218 218
BBPL 131 131
Clinigene 27 27
Total 376 376
(ii) Corporate guarantee given by Syngene in favour of the CED in
respect of certain 465 465 performance obligations of Biocon.
(iii) Corporate guarantees given in favour of a bank towards loans
obtained by Clinigene 77 67
(iv) Guarantee given for securing loan facilities granted to AxiCorp
GmbH. 271 -
(v) Guarantees given by banks on behalf of the Company for financial
and other contractual 505 161 obligations of the Company. The necessary
terms and conditions have been complied with and no liabilities have
arisen. (refer note below)
Note: Guarantees given by banks include a bank guarantee of Rs 377
(March 31, 2011 - Rs Nil) issued in favour of Bio-Xcell Sdn. Bhd.
towards the balance consideration payable on account of free hold land
acquired by Biocon Malaysia in Johar, Malaysia.
(ii) Commitments:
(a) Estimated amount of contracts remaining to be executed on capital
account and not 568 405 provided for, net of advances
(b) Operating lease commitments Where the Company is a lessee:
(i) Rent
The Company has entered into various agreements for lease of building /
office space which expires over a period upto May 2021. Some of these
lease arrangements aggregate have price escalation clause. There are no
restrictions imposed under the lease arrangements.
Gross rental expenses for the year aggregate to Rs 26 (March 31, 2011 -
Rs 23).
The committed lease rentals in future are as follows:
Not later than one year 26 22
Later than one year and not
later than five years 45 34
Later than five years 24 9
(ii) Vehicles
The Company has taken vehicles for employees under operating leases,
which expire over a period upto November 2015. Gross rental expenses
for the year aggregate to Rs 10 (March 31, 2011 - Rs 12).
The committed lease rentals in future are as follows:
Not later than one year 10 11
Later than one year and not
later than five years 11 14
Where the Company is a Lessor:
(i) Rent
The Company has leased out certain parts of its building (including fit
outs), which expire over a period upto 2020. Gross rental income for
the year aggregates to Rs 29 (March 31, 2011 - Rs 26).
Further, minimum lease receipts under operating lease are
as follows:
Not later than one year 26 28
Later than one year and not
later than five years 113 112
Later than five years 50 79
Considering that the leased assets comprise of portion of factory
buildings located within the Company's factory premises, disclosure
with regard to gross value of leased assets, accumulated depreciation
and net book value of the same is not feasible.
(c) Other Commitments:
As at March 31, 2012, the Company has committed to provide financial
support to certain subsidiaries with regard to the operations of such
companies. Also refer note 14 (a), 14 (c) and 14 (i). These commitments
also existed in the previous year.
3. Segmental information
Business segments
The primary reporting of the Company has been performed on the basis of
business segment. The Company operates in a single business segment of
Pharmaceuticals. Accordingly no additional disclosures are required as
per Accounting Standard 17 on Segment Reporting.
4. Other Notes
(a) The Company has entered into transactions of sale of products to a
private company amounting to Rs 17, during the year ended March 31, 2012
(March 31, 2011 - Rs 3), that require prior approval from Central
Government under Section 297 of the Companies Act, 1956. These
transactions, entered into at prevailing market prices have been
approved by the Board of Directors of the Company. The Company had
filed an application with the Central Government for approval of such
transactions and for condo nation of delay in making such application in
the year 2010-11. In respect of transactions entered during the year
ended March 31, 2012, the Company is in the process of filing an
application with the Central Government for approval of such
transactions and for condo nation of delay in making such application.
(b) In terms of Section 115O (6) of the Income Tax Act, 1961, the
Company has not provided for Dividend Distribution Tax on interim
dividend declared for the year ended March 31, 2011 to the extent such
distributable profits pertain to the profits of the Company's SEZ
Developer's operations under section 10AA of Income tax Act, 1961.
5. Prior years' comparatives
The previous years' figures have been re-grouped, where necessary to
conform to current years' classification. Also refer note 2.1.a (i).
Mar 31, 2011
1. Background
Biocon Limited (Biocon or the Company), was incorporated at
Bangalore in 1978 for manufacture of biotechnology products. Syngene
International Limited (Syngene), promoted by Dr Kiran Mazumdar Shaw,
was incorporated at Bangalore in 1993. In March 2002, Biocon acquired
99.99 per cent of the equity shares of Syngene and, resultantly,
Syngene became the subsidiary of Biocon. Clinigene International
Limited (Clinigene) was incorporated on August 4, 2000 at Bangalore
and became a wholly owned subsidiary of Biocon on March 31, 2001.
On January 10, 2008, Biocon entered into an agreement with Dr. B.R.
Shetty to set up a joint venture company NeoBiocon FZ-LLC, incorporated
in Dubai (NeoBiocon).
The Company has also established Biocon Research Limited (BRL), a
subsidiary of the Company to undertake research and development in
novel and innovative drug initiatives.
Effective April 30, 2008, Biocon acquired 71% equity interest in
AxiCorp GmbH, Germany (AxiCorp) through its newly incorporated wholly
owned subsidiary company Biocon SA, Switzerland. In February 2009,
Biocon SA acquired an additional 7.4% equity interest in AxiCorp. Also,
refer note 5 of Schedule 17.
Biocon entered into an agreement with CIMAB SA (CIMAB) to set up a
Joint Venture Company Biocon Biopharmaceuticals Private Limited
(BBPL) to manufacture and market products and carry out research
activities. BBPL was incorporated on June 17, 2002 with Biocon holding
51 per cent of share capital. In April 2010, Biocon SA acquired the 49%
equity stake held by CIMAB SA in BBPL. In March 2011, Biocon purchased
the 49% equity stake in BBPL from Biocon SA. Consequently, as at March
31, 2011 all the equity shares of BBPL are held by Biocon.
Biocon is an integrated healthcare company engaged in manufacture of
biotechnology products for the pharmaceutical sector. The Company is
also engaged in research and development in the biotechnology sector.
During the year ended March 31, 2007, the Company had received an
approval as the developer as Biocon SEZ at the Biocon Park facility and
also received an approval for SEZ unit to be located within Biocon SEZ.
2. Employee stock compensation
On September 27, 2001, Biocons Board of Directors approved the Biocon
Employee Stock Option Plan (ÃESOP Plan 2000) for the grant of stock
options to the employees of the Company and its subsidiaries/joint
venture company. A Compensation Committee has been constituted to
administer the plan through a trust established specifically for this
purpose, called the Biocon India Limited Employee Welfare Trust (ESOP
Trust).
The ESOP Trust shall make additional purchase of equity shares of the
Company using the proceeds from the loan obtained from the Company,
other cash inflows from allotment of shares to employees under the ESOP
Plan and shall subscribe, when allotted to such number of shares as is
necessary for transferring to the employees. The ESOP Trust may also
receive shares from the promoters for the purpose of issuance to the
employees under the ESOP Plan. The Compensation Committee shall
determine the exercise price which will not be less than the face value
of the shares.
Grant I
In September 2001, the Company granted 71,510 options under the ESOP
Plan 2000 to be exercised at a grant price of Rs. 10 (before adjusting
bonus and share split). The options vested with the employees equally
over a four year period.
Grant II
In January 2004, the Company granted 142,100 options (shares of Rs. 5
each) under ESOP Plan 2000 to be exercised at a price of Rs. 5 per
share. The options vest with the employees equally over a four year
period.
*adjusted for the effect of bonus shares
Grant III
In January 2004, the Board of Directors announced the Biocon Employee
Stock Option Plan (ESOP Plan 2004) for the grant of stock options to
the employees of the Company and its subsidiaries / joint venture
company, pursuant to which the Compensation Committee on March 19, 2004
granted 422,000 options (face value of shares - Rs. 5 each) under the
ESOP Plan 2004 to be exercised at a grant price of Rs. 315 being the
issue price determined for the IPO through the book building process.
The options vest with the employees equally over a four year period.
*adjusted for the effect of bonus shares
Grant IV
In July 2006, the Company approved the grant of 3,478,200 options (face
value of shares - Rs. 5 each) to its employees under the existing ESOP
Plan 2000. The options under this grant would vest to the employees as
25%, 35% and 40% of the total grant at the end of first, second, third
year from from the date of the grant, respectively, with an exercise
period of three years for each grant. The vesting conditions include
service terms and performance grade of the employees. These options
are exercisable at a discount of 20% to the market price of Companys
shares on the date of grant.
*adjusted for the effect of bonus shares.
Grant V
In April 2008, the Company approved the grant of 813,860 options (face
value of shares - Rs. 5 each) to its employees under the existing ESOP
Plan 2000. The options under this grant would vest to the employees as
25%, 35% and 40% of the total grant at the end of first, second, third
year from the date of grant, respectively, with an exercise period of
three years for each grant. The vesting conditions include service
terms and performance grade of the employees. These options are
exercisable at the market price of Companys shares on the date of
grant.
*adjusted for the effect of bonus shares.
The average market price of the Companys share during the year ended
March 31, 2011 is Rs. 347 (March 31, 2010 Rs. 237) per share (after
adjustment for the bonus shares)
3. Subsequent event
Consequent to an offer made by the minority shareholders of AxiCorp, on
April 28, 2011 the Board of Directors of the Company accorded their
in-principle approval for the sale of all the shares held by Biocon SA,
Switzerland (ÃBiocon SA) in AxiCorp to such group of shareholders. The
consideration would be settled through a combination of cash and
re-acquisition of the exclusive marketing rights of Insulin and
Glargine for the German market.
* Exempted from the licensing provisions of the Industries (Development
and Regulation) Act, 1951 in terms of notification No. S.O.477(E) dated
July 25, 1991.
** Installed capacity has not been disclosed as these are variable and
subject to changes in product mix and utilisation of manufacturing
facilities, given the nature of operations.
March 31, March 31,
2011 2010
4. Contingent liabilities
(a) Taxation matters under appeal (Direct and
Indirect taxes) 236,069 157,664
(b) (i) Corporate guarantees given in favour
of the Central Excise Department (CED) in
respect of 217,500 217,500
certain performance obligations of Syngene.
Syngene has informed that necessary terms and
conditions have been complied with and no
liabilities have arisen.
(ii) Corporate guarantee given by Syngene in
favour of the CED in respect of certain
performance 465,000 465,000
obligations of Biocon.
(c) Corporate guarantees given in favour of
the CED in respect of certain performance
obligations of 131,352 131,352
BBPL. BBPL has informed that the necessary
terms and conditions have been complied
with and no liabilities have arisen.
(d) Corporate guarantees given in favour of
the CED in respect of certain performance
obligations of 27,205 27,205
Clinigene. Clinigene has informed that the
necessary terms and conditions have been
complied with and no liabilities have arisen.
(e) Corporate guarantees given in favour of
the State Bank of India (SBI), towards Term
loan granted to - 650,000
BBPL. BBPL has informed that the necessary
terms and conditions have been complied with
and no liabilities have arisen.
(f) Corporate guarantees given in favour of
the State Bank of India (SBI), towards Term
loan granted to - 14,270
Clinigene. Clinigene has informed that the
necessary terms and conditions have been
complied with and no liabilities have arisen.
(g) Corporate guarantees given in favour of
the HDFC Bank Ltd., towards Packing Credit
granted to 56,769 -
Clinigene. Clinigene has informed that the
necessary terms and conditions have been
complied with and no liabilities have arisen.
(h) Corporate guarantees given in favour of
the HDFC Bank Ltd., towards Short Term
Demand Loan 10,000 -
granted to Clinigene. Clinigene has informed
that the necessary terms and conditions have
been complied with and no liabilities
have arisen.
(i) Certain claims made against the Company
which the management of the Company believes
are not - 21,026
tenable and hence, these claims have not
been acknowledged as debts.
The Company evaluates these assumptions based on its long-term plans of
growth and industry standards and the expected contribution to the fund
during the year ending March 31, 2012, is approximately Rs. 26,278
(March 31, 2011 - Rs. 11,118) The nature of allocation of the fund is
only in debt based mutual funds of high credit rating.
5. Segmental information
Business segments
The primary reporting of the Company has been performed on the basis of
business segment. The Company operates in a single business segment of
Pharmaceuticals. Accordingly no additional disclosures are required as
per Accounting Standard 17 on Segment Reporting.
*All fixed assets and intangibles are located in India.
6. Other Notes
(a) The Company has entered into transactions of sale of products to a
private company amounting to Rs. 2,980, during the year ended March 31,
2011 (March 31, 2010 - Rs. 1,812), that require prior approval from
Central Government under Section 297 of the Companies Act, 1956. These
transactions, entered into at prevailing market prices have been
approved by the Board of Directors of the Company. The Company has fled
an application with the Central Government for such approval and for
condonation of delay in making such application.
(b) In terms of Section 115O (6) of the Income Tax Act, 1961, the
Company has not provided for Dividend Distribution Tax on final
dividend distributed for the year ended March 31, 2010 and for the
interim dividend declared and final proposed dividend for the year
ended March 31, 2011 to the extent such distributable profits pertain
to the profits of the Companys SEZ Developers operations under
Section 10AA of Income tax Act, 1961.
7. Prior years comparatives
The previous years figures have been re-grouped, where necessary to
conform to current years classification.
Mar 31, 2010
1. Background
Biocon Limited (ÃBioconà or Ãthe CompanyÃ), was incorporated at
Bangalore in 1978 for manufacture of biotechnology products. Syngene
International Limited (ÃSyngeneÃ), promoted by Dr Kiran Mazumdar Shaw,
was incorporated at Bangalore in 1993. In March 2002, Biocon acquired
99.99 per cent of the equity shares of Syngene and, resultantly,
Syngene became the subsidiary of Biocon. Clinigene International
Limited (ÃClinigeneÃ) was incorporated on August 4, 2000 at Bangalore
and became a wholly owned subsidiary of Biocon on March 31, 2001.
Biocon entered into an agreement with CIMAB SA (ÃCIMABÃ) to set up a
joint venture company Biocon Biopharmaceuticals Private Limited
(ÃBBPLÃ) to manufacture and market products using technology and to
carry out research activities. BBPL was incorporated on June 17, 2002.
Biocon has 51 per cent shareholding in BBPL.
On January 10, 2008, Biocon entered into an agreement with Dr. B.R.
Shetty to set up a joint venture company NeoBiocon FZ-LLC, incorporated
in Dubai (ÃNeoBioconÃ).
The Company has also established Biocon Research Limited, a subsidiary
of the Company to undertake research and development in novel and
innovative drug initiatives.
Effective April 30, 2008, Biocon acquired 71% equity interest in
AxiCorp GmbH Germany, (Axicorp) through its newly incorporated wholly
owned subsidiary company Biocon SA.,s Switzerland. In February 2009,
Biocon SA acquired an additional 7.4% equity interest in AxiCorp GmbH.
Biocon is an integrated healthcare company engaged in manufacture of
biotechnology products for the pharmaceutical sector. The Company is
also engaged in research and development in the biotechnology sector.
During the year ended March 31, 2007, the Company has received an
approval as the developer as Biocon SEZ at the Biocon Park facility and
also received an approval for SEZ unit to be located within Biocon SEZ.
2. Employee stock compensation
On September 27, 2001, BioconÃs Board of Directors approved the Biocon
Employee Stock Option Plan (ÃESOP Plan 2000Ã) for the grant of stock
options to the employees of the Company and its subsidiaries. A
Compensation Committee has been constituted to administer the plan
through a trust established specifically for this purpose, called the
Biocon India Limited Employee Welfare Trust (ESOP Trust).
The ESOP Trust shall make additional purchase of equity shares of the
Company using the proceeds from the loan obtained from the Company,
other cash inflows from allotment of shares to employees under the ESOP
Plan and shall subscribe, when allotted to such number of shares as is
necessary for transferring to the employees. The ESOP Trust may also
receive shares from the promoters for the purpose of issuance to the
employees under the ESOP Plan. The Compensation Committee shall
determine the exercise price which will not be less than the face value
of the shares.
Grant I
In September 2001, the Company granted 71,510 options under the ESOP
Plan 2000 to be exercised at a grant price of Rs 10 (before adjusting
bonus and share split). The options vested with the employees equally
over a four year period.
Grant II
In January 2004, the Company granted 142,100 options (shares of Rs 5
each ) under ESOP Plan 2000 to be exercised at a price of Rs 5 per
share
The options vest with the employees equally over a four year period
Grant IV
In July 2006, the Company approved the grant of 3,478,200 options to
its employees under the existing ESOP Plan 2000. The options under this
grant would vest to the employees as 25%, 35% and 40% of the total
grant at the end of first, second, third year from July 2006,
respectively, with an exercise period of three years for each grant.
The vesting conditions include service terms and performance grade of
the employees. These options are exercisable at a discount of 20% to
the market price of CompanyÃsà shares on the date of grant
Grant V
In April 2008, the Company approved the grant of 813,860 options to its
employees under the existing ESOP Plan 2000. The options under this
grant would vest to the employees as 25%, 35% and 40% of the total
grant at the end of first, second, third year from July 2010,
respectively, with an exercise period of three years for each grant.
The vesting conditions include service terms and performance grade of
the employees. These options are exercisable at the market price of
CompanyÃsà shares on the date of grant.
(a) During the year ended March 31, 2009, the Company had entered into
foreign exchange forward contracts to hedge highly probable forecasted
transactions. The Company recorded mark to market losses in respect of
foreign exchange forward contracts including realised gains/losses on
termination/ cancellation of said contracts.
(b) During the year ended March 31, 2009, the Company recorded a write
back of unutilised proviosionfor contingences relating to transfers of
its enzyme business of Rs 20,000, created in earlier years.
3. Other Notes
(a) The Company has entered into transactions of sale of product to a
private company amounting to Rs 1,812 , during the year ended March 31,
2010, that require prior approval from Central Government under Section
297 of the Companies Act, 1956. These transactions, entered into at
prevailing market prices have been approved by the Board of Directors
of the Company. The Company is in the process of fi ling an application
with the Central Government for such approval and for condonation of
delay in making such application.
(b) In terms of Section 1150 (6) of the Income Tax Act, 1961 for the
year ended March 31,2010, the Company has not provided for Dividend
Distribution Tax to the extent the proposed distributable profits
pertain to the profits of the Companys SEZ Developers operations
under section 10AA of Income tax Act, 1961.
4. Prior years comparatives
The previous years figures have been re-grouped, where necessary to
conform to current years classification.
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