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Directors Report of Cipla Ltd.

Mar 31, 2017

The Directors take pleasure in presenting the 81st Annual Report of the Company along with the audited financial statements for the year ended 31st March, 2017.

Company Overview

Cipla is a leading global pharmaceutical company which uses cutting-edge technology and innovation to meet the everyday needs of all patients. For over eight decades, the Company has emerged as one of the most respected pharmaceutical companies in India as well as in over 80 countries. The Company’s portfolio includes over 1500 products across a wide range of therapeutic categories with one uniform global standard of quality.

Whilst delivering a long-term sustainable business, the Company recognises its duty to provide affordable medicines. The Company’s pioneering role in HIV/ AIDS treatment in 2001 was recognised globally when it became the first pharmaceutical company to offer a triple combination anti-retroviral (ARV) therapy in Africa at less than a dollar a day, thereby ensuring access to life-saving medicines for millions of patients. The Company’s R&D focuses on developing innovative products and drug delivery systems.

Financial Summary and Company Affairs

(Rs. in Crore)

Year ended 31st March, 2016

Year ended 31st March, 2017

Standalone

Consolidated

Standalone

Consolidated

12117.72

13790.10

Gross total revenue

10974.58

14630.24

1743.97

1727.03

Profit before tax

1186.94

1222.17

1462.30

1359.99

Profit for the year

974.94

1006.39

(7.00)

(8.21)

Other comprehensive Income for the year (not to be reclassified to P&L)

6.93

7.46

5870.61

5782.98

Surplus brought forward from last balance sheet

7145.00

6953.84

-

-

Adjustment of tax on dividend of previous year

-

-

7325 92

7134 76

Profit available for appropriation

8126 87

796769

Appropriations

(160 62)

(160 62)

Dividend

(160 84)

(160 84)

(20.30)

(20.30)

Tax on dividend

(32 74)

(32 74)

7145.00

6953.84

Surplus carried forward

7933 29

7774 11

The details of the Company’s operations have been further discussed in detail in the Management Discussion and Analysis Report.

The Company adopted Indian Accounting Standards (‘Ind AS’) from 1st April, 2016 as prescribed under section 133 of the Companies Act, 2013 read with the relevant rules issued thereunder and other accounting principles generally accepted in India. The adoptions were carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards

Share Capital

During the year under review, 11,25,792 equity shares were issued and allotted under Employee Stock Option Schemes. Accordingly, the issued share capital of the Company as on 31st March, 2017 stood at Rs.161.10 crore divided into 80,55,13,469 equity shares of Rs.2/- each. The subscribed and paid-up share capital of the Company as on 31st March, 2017 stood at Rs.160.90 crore divided into 80,45,10,074 equity shares of Rs.2/- each.

Dividend

The Board recommend a final dividend of Rs.2/- per equity share (i.e. 100%) for the FY 2016-17. The dividend, if approved at the Annual General Meeting (AGM), will be paid to those members whose names appear in the Company’s Register of Members on Thursday, 27th July, 2017. The total dividend pay-out will amount to approximately Rs.161 crore (excluding dividend distribution tax) resulting in a pay-out of 16.50% of the standalone profit after tax of the Company.

General Reserve

The Company has not transferred any amount to the General Reserve for the financial year ended 31st March, 2017.

Management Discussion and Analysis Report

Pursuant to Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (SEBI Listing Regulations) the Management Discussion and Analysis Report for the year under review, is presented in a separate section, forming part of the Annual Report.

Corporate Social Responsibility (CSR)

Cipla has remained both patient-centred and community-focused. Cipla Foundation upholds the OneCipla Credo of ‘Caring for Life’, to empower the most vulnerable in society. As a vibrant and thriving global foundation, it endeavours to minimise gaps in access and affordability in quality healthcare, education, skill advancement and disaster response initiatives. Across geographies, Cipla Foundation is united and aligned with Cipla’s commitment and approach to enhance the quality of life.

The Company’s CSR Committee complies with the requirements of the Companies Act, 2013. The composition and terms of reference of the CSR Committee are provided in the Report on Corporate Governance, which forms part of the Annual Report. The Company’s Corporate Social Responsibility Policy, is available on the Company’s website at http://www.cipla.com/templates/ home tpl/images/Corporate Social Responsibility Policy.pdf

The Annual Report on CSR initiatives as required under section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended from time to time forms part of this report as Annexure I.

Business Responsibility Report

As mandated by the Securities and Exchange Board of India (SEBI), the Business Responsibility Report (BRR) forms part of the Annual Report. The BRR contains a detailed report on business responsibilities vis-a-vis the nine principles of the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business framed by the Ministry of Corporate Affairs.

Corporate Governance

Pursuant to the SEBI Listing Regulations, the Report on Corporate Governance for the year under review, is presented in a separate section, forming part of the Annual Report. A certificate from M/s. BNP & Associates, confirming compliance of conditions of Corporate Governance, as stipulated under the SEBI Listing Regulations, is annexed as Annexure II to this report.

Directors’ Responsibility Statement

Pursuant to section 134(3)(c) of the Companies Act, 2013 it is confirmed that the Directors have:

i. Followed applicable accounting standards in the preparation of the annual accounts and there are no material departures for the same;

ii. Selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2017 and of the profit of the Company for that period;

iii. Taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. Prepared the annual accounts on a going concern basis;

v. Laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

vi. Devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The details of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo as required under section 134(3)(m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed to this report as Annexure III.

Employee Stock Option Scheme

Presently the Company has one Employee Stock Option (ESOP) scheme, namely “Employee Stock Option Scheme 2013-A" which helps the Company to retain and attract the right talent. The Nomination and Remuneration Committee monitors the Company’s ESOP scheme. There is no change in the ESOP scheme during the financial year under review. The ESOP scheme is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

As required under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, the applicable disclosures as on 31st March, 2017 are available on the Company’s website at http://www.cipla.com/en/ investor-information/shareholder-information.html

Human Resources

Details of remuneration as required under section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure IV.

Particulars of employee remuneration as required under section 197(12) of the Companies Act, 2013 read with Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. However pursuant to the provisions of the first proviso to section 136(1) of the Companies Act, 2013, the Annual Report is being sent to shareholders excluding the aforementioned information. The information will be available on the Company’s website www.cipla.com and is available for inspection at the registered office of the Company during working hours 21 days before the Annual General Meeting. Any member interested in obtaining such information may write to the Company Secretary at the Registered Office of the Company.

Particulars of Loans, Guarantees and Investments

Particulars of loans, guarantees and investments under section 186 of the Companies Act, 2013 are provided in Note No. 48 to the standalone financial statements.

Extract of Annual Return

As required under sections 92(3) and 134(3)(a) of the Companies Act, 2013 read with Rule 12 of Companies (Management and Administration) Rules, 2014, the extract of Annual Return in Form MGT-9 forms part of this report as Annexure V.

Secretarial Audit Report

The Board had appointed M/s. BNP & Associates, Company Secretaries, Mumbai as the Secretarial Auditor for FY 201617. The Secretarial Audit Report for the financial year ended 31st March, 2017 is annexed to this report as Annexure VI. The report, confirms that the Company is in compliance with the applicable laws and does not contain any qualification, reservation or adverse remark.

Vigil Mechanism

The Company believes in upholding professional integrity and ethical behaviour in the conduct of its business. To uphold and promote these standards, the Company has formulated a Vigil Policy which serves as a mechanism for its Directors and employees to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Code of Conduct without fear of reprisal. The details of the Vigil Policy are available on the Company’s website at http://www.cipla.com/templates/ home tpl/images/Vigil Policy.pdf

A brief note on the highlights of the Vigil Policy and compliance with the Code of Conduct is also provided in the Report on Corporate Governance, which forms part of this Annual Report.

Contract and Arrangements with Related Parties

A detailed note on procedure adopted by the Company in dealing with contracts and arrangements with related parties is provided in the Report on Corporate Governance, which forms part of this Annual Report.

All contracts, arrangements and transactions entered by the Company with related parties during FY 2016-17 were in the ordinary course of business and on an arm’s length basis. During the year, the Company did not enter into any transaction, contract or arrangement with related parties, that could be considered material in accordance with the Company’s policy on related party transactions. Accordingly, the disclosure of related party transactions in Form AOC-2 is not applicable. However detailed disclosure on related party transactions as per IND AS-24 containing name of the related party and details of the transactions have been provided under Note No. 45 of the standalone financial statements on Page No. 150.

The policy on materiality of and dealing with Related Party transactions is available on the Company’s website at http://www.cipla.com/uploads/investor/1443000127 Policy-on-Related-Party-Transactions.pdf

Material changes and commitments affecting financial position between end of financial year and date of report

No material changes and commitments have occurred after the close of the year till the date of this report which may affect the financial position of the Company.

Significant and Material Orders

No significant or material orders were passed by the regulators or courts or tribunals which could impact the going concern status of the Company and its future operations.

Internal Financial Controls

The Board has adopted policies and procedures for ensuring orderly and efficient conduct of its business, including adherence to the Company’s policies, safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures.

Cipla has aligned its current systems of internal financial control with the requirement of Companies Act, 2013, on lines of globally accepted risk-based framework as issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. The Internal Control -Integrated Framework (2013) is intended to increase transparency and accountability in an organisation’s process of designing and implementing a system of internal control. The framework requires a company to identify and analyse risks and manage appropriate responses. The Company has successfully laid down the framework and ensured its effectiveness. During testing of such controls no reportable material weaknesses in the design or operation were observed.

During the year under review, there were no instances of fraud reported by the auditors under section 143(12) of the Companies Act, 2013 to the Audit Committee or the Board of Directors.

Risk Management

Risk Management is embedded in Cipla’s operating framework. The Company has a duly approved Risk Management Policy, which lays down broad guidelines for the appropriate authority to identify, assess, categorise and prioritise risks in a timely manner and formulate plans for mitigation of such risks.

The Risk Management framework is reviewed periodically by the Board and the Investment & Risk Management Committee, which includes discussing the overall risk management framework, key risks, mitigation plans etc, with the Management. The Internal Audit function is responsible for assisting the Investment & Risk Management Committee on an independent basis with a full status of the risk assessments and management. Operationally, management process to identify key risks across the organisation and prioritise relevant action plans to mitigate these risks.

Detailed discussion on Risk Management is part of the ‘Threats, Risks and Concerns’ section of the Management Discussion and Analysis, which forms part of this Annual Report. At present, in the opinion of the Board of Directors, there are no risks which may threaten the existence of the Company. However, the top risks and their mitigation plans are set out in the Management Discussion and Analysis Report.

Deposits

During FY 2016-17, the Company did not accept any deposit within the meaning of sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014 and therefore no amount of principal or interest was outstanding, as on the balance sheet closure date.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and the SEBI Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, the Directors individually and that of its Committees. A detailed disclosure on the manner of the Board evaluation undertaken by the Board has been provided in the Corporate Governance Report.

Subsidiaries, Associates and Joint Ventures

The Company had 54 subsidiaries, joint ventures and associates as on 31st March, 2017. Details of these subsidiaries, joint ventures and associates are set out on Page 270 of the Annual Report. Pursuant to section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statement of the subsidiary, associate and joint venture companies is given on Page 270 of the Annual Report. The statement also provides details of the performance and the financial position of each of the subsidiaries, joint ventures and associates. The consolidated financial statements presented in this Annual Report include financial results of the subsidiary companies.

During FY 2016-17, Cipla BioTec South Africa (Pty) Limited and CIPLA Algerie became subsidiaries of the Company and Four M Propack Pvt. Ltd., Cipla Canada Inc. and Cipla Medpro Research and Development Proprietary Ltd., ceased to be subsidiaries of the Company.

There was no change in the joint venture / associate companies during FY 2016-17.

Copies of the financial statement of the subsidiary companies will be available on the Company’s website www.cipla.com and will also be available for inspection by any member at the registered office of the Company during business hours. Copies of the said financial statements will be made available to any member of the Company and those of the respective subsidiary companies upon request.

The Policy for Determining Material Subsidiaries is available on the Company’s website at http://www.cipla.com/ uploads/investor/1443000071 Policy-for-determining-Material-Subsidiaries.pdf

Directors and Key Managerial Personnel

Ms. Samina Vaziralli was elevated to the position of Executive Vice-Chairperson by the Board w.e.f. 1st September, 2016. In view of the change in her role and responsibilities, the Board on the recommendation of the Nomination and Remuneration Committee and subject to the approval of the shareholders, had approved revision to the terms of her appointment including remuneration structure. The Board recommends the revision in the terms of appointment of Ms. Samina Vaziralli including remuneration structure for approval of shareholders.

During the year, Mr. Subhanu Saxena resigned as Managing Director and Global Chief Executive Officer w.e.f. close of business hours on 31st August, 2016. Mr. Umang Vohra relinquished office as Global Chief Financial Officer w.e.f. 1st August, 2016 and was appointed as Managing Director and Global Chief Executive Officer w.e.f. 1st September, 2016.

Ms. Ireena Vittal and Mr. Peter Lankau were appointed as Additional Directors of the Company to hold office as Independent Directors with effect from 1st December, 2016 and 10th January, 2017, respectively. They hold office up to the date of the ensuing AGM. The Company has received requisite notice from a member proposing the appointment of Ms. Ireena Vittal and Mr. Peter Lankau as Independent Directors of the Company for a period of five years with effect from the date of their respective appointment. Mr. S. Radhakrishnan retires by rotation and, being eligible, offers himself for re-appointment. The Board recommends the appointment of Ms. Ireena Vittal and Mr. Peter Lankau as Independent Directors and re-appointment of Mr. S. Radhakrishnan as Director liable to retire by rotation.

A brief resume of the Directors seeking appointment/ re-appointment is provided in the Notice of AGM.

Mr. Kedar Upadhye was appointed as Global Chief Financial Officer w.e.f. 1st August, 2016. Mr. Mital Sanghvi relinquished office as Company Secretary w.e.f. 9th February, 2017, as part of the planned transition and has now moved into a senior business finance role in the Company. Mr. Rajendra Chopra was appointed as Company Secretary w.e.f. 9th February, 2017.

The criteria for determining qualification, positive attributes and independence of a Director have been set out as Annexure VII.

The Remuneration Policy has been disclosed in the Report on Corporate Governance.

Declaration by Independent Directors

All Independent Directors of the Company have submitted requisite declarations confirming that they continue to meet the criteria of independence as prescribed under section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI Listing Regulations. The Independent Directors have also confirmed that they have complied with the Company’s Code of Conduct.

Neither the Managing Director nor the Whole-time Directors, received any remuneration or commission from any of the Company’s subsidiaries during the previous year.

Committees of Board, Number of Meetings of the Board and Board Committees

The Board currently has six committees, namely, Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee, Investment and Risk Management Committee and Securities Issuance Committee. All the recommendations made by the Committees of Board including the Audit Committee were accepted by the Board.

During the year under review, the Board met seven times. A detailed update on the Board, its composition, detailed charter including terms of reference of various Board Committees, number of Board and Committee meetings held during FY 2016-17 and attendance of the Directors at each meeting is provided in the Report on Corporate Governance, which forms part of this report.

Cost Auditor

Pursuant to the provisions of section 148 of the Companies Act, 2013, Mr. D. H. Zaveri, practising Cost Accountant (Fellow Membership No. 8971) has been re-appointed to conduct the audit of Company’s cost records for the financial year ended 31st March, 2017. Pursuant to section 148(6) of the Companies Act, 2013 and Rule 6(6) of the Companies (Cost Records and Audit) Rules, 2014, the Cost Audit Report, for the year ended 31st March, 2016, was filed with the Central Government within the prescribed time.

In accordance with the provisions of section 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, since the remuneration payable to the Cost Auditors for FY 2017-18 is required to be ratified by the shareholders, the Board recommends the same for approval by shareholders at the ensuing AGM.

Auditor

Walker Chandiok & Co LLP, Chartered Accountants was appointed as the Statutory Auditor of your Company at the last AGM held on 28th September, 2016 to hold the office till the conclusion of 85th AGM. As per the provisions of section 139 of the Companies Act, 2013, the appointment of Statutory Auditor is to be ratified by members at every AGM. The Company has received a certificate from the Statutory Auditor confirming that ratification of their appointment if made, will be in accordance with the provisions of section 141 of the Companies Act, 2013. The Board recommends the ratification of the appointment of Walker Chandiok & Co LLP, Chartered Accountants as the Statutory Auditor of the Company.

The Auditor’s Report for FY 2016-17 does not contain any qualification, reservation or adverse remark.

Acknowledgements

The Board wishes to place on record its appreciation to government authorities, banks, business partners, shareholders, medical practitioners and other stakeholders for the assistance, co-operation and encouragement extended to the Company. The Board would also like to place on record its deep sense of appreciation to the employees for their contribution and services.

On behalf of the Board

Date: 25th May, 2017 Y. K. Hamied

Place: Mumbai Chairman


Mar 31, 2016

The Directors take pleasure in presenting the Eightieth Annual Report of the Company along with the audited financial statements for the financial year ended 31st March 2016.

Financial Summary Rs. in core

Year ended Year ended 31st March 2015 31st March 2016

Stand alone Consoli dated Stand alone Consoli dated 10373 11620 Gross total revenue 12445 14067

1540 1654 Profit before tax 1740 2007

1181 1181 Profit for the year 1398 1506

5330 5412 Surplus brought forward from last balance sheet 6277 6358

- - Adjustment of tax on dividend of previous year 13 13

6511 6593 Profit available for appropriation 7688 7877

Appropriations:

161 161 Dividend 161 161

33 33 Tax on dividend 33 33

- - Transfer to general reserve - -

40 41 Adjustment of depreciation - -

6277 6358 Surplus carried forward 7494 7683

Dividend

The Directors recommend a dividend of Rs.2 per equity share (100%) for the year 2015-16. The dividend, if sanctioned at the Annual General Meeting, will be paid to those members whose names appear in the Company''s Register of Members on Wednesday, 14th September 2016. In respect of shares held in dematerialised form, the dividend will be payable on the basis of beneficial ownership as per details furnished by National Securities Depository Limited and Central Depository Services (India) Limited.



MANAGEMENT DISCUSSION AND ANALYSIS: 2015-16

Global Business Review

With a vibrant presence globally, Cipla is well-poised for growth that advances its goal of ensuring affordable access to healthcare for all.

To build a concrete foundation for sustainable long-term growth, the Company is investing heavily in its pipeline, making choices with respect to its operating model in certain markets and exploring initiatives to simplify the business. The financial year under review has been important for the Company to drive execution of these choices and enhance the resilience of its business model.

The Company''s revenue from operations on a consolidated basis during the financial year 2015-16 amounted to Rs.13,678 crore against Rs.11,345 crore in the previous year, recording a growth of 20.6%. The income from operations for the Company''s domestic business increased by 5.9%, from Rs.4,825 crore in the previous financial year to Rs.5,111 crore in the financial year under review. Total exports increased by 36.4% during the year to Rs.8,261 crore. During the year under review, EBIDTA margin reduced by 0.8 percentage points. This was primarily due to the change in product mix, higher investments in research and development, and ongoing complexity reduction initiatives. Profit for the year increased by 27.5% to Rs.1,506 crore from Rs.1,181 crore in the previous financial year.

India Ratings and Research Private Limited, a Fitch Group Company, assigned a Long-Term Issuer Rating of IND AAA with a stable outlook to the Company. The rating is the highest assigned in Fitch''s rating scale and indicates the highest degree of safety regarding timely servicing of financial obligations and lowest credit risk.

No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company.

India

As one of India''s leading pharmaceutical companies, Cipla is in a strong position to fulfill its commitment to provide modern and affordable medicines to patients. This year, despite pricing challenges and the impact of a weak monsoon, Cipla''s domestic revenues for its prescription business grew by 16% compared to the industry growth of 14%, as per IMS Health data.

The India business contributed ~40% to overall Company revenues, with new products contributing 4.5% of total India business revenues. The prescription business accounted for 81% of India business revenues and market share for this segment currently stands at 5.3%. The Company grew faster than the market in Anti- infectives, Gastrointestinal and Urology. The respiratory business saw strong uptake with over 20% growth in the COPD portfolio.

Cipla continues to focus on high-value opportunities to build out its specialty portfolio, through a mix of in-licensing and in-house innovation and development. In-licensing gained momentum in FY 2015-16 with 6 deals executed in oncology, respiratory and dermatology segments. The Company also initiated several high value innovation projects, of which a few are likely to be commercialized in FY 2016-17.

With the successful launch of Sofosbuvir in India for the treatment of Hepatitis-C, Cipla has expanded access to the drug with nearly 10,000 patients being treated under the brand name HepCvir in its first 12 months. Cipla continues to build out its Hepatitis franchise in order to improve access to breakthrough therapies for patients with HepCvir Ledipasvir / Daclatasvir combinations.

Cipla also entered new areas through a partnership model - Cutisera in cosmetology, Nasovac S in vaccines and Reteplase in the Anti-Thrombolytic segment.

In the coming years, the domestic business will continue to focus on enhancing depth of portfolio in priority therapy areas, and increasing sales force productivity with the rollout of Customer Relationship Management (CRM) and Sales Force Automation (SFA) systems.

Through this, Cipla aims to grow above market rate of growth and strengthen leadership position in priority therapy areas in the Indian market.

South Africa

Cipla is one of the largest pharmaceutical companies in South Africa, with a private market share of more than 5%. South Africa contributed 11.5% to the overall revenues on a consolidated basis. The business however was impacted due to the depreciation of the South African Rand in FY 2015-16. In local currency terms, South Africa business revenue has grown at ~25% in FY 2015-16 against the previous year. Cipla''s private market business has grown at 14% for the same period, with market leadership in the Respiratory, CNS and Oncology segments, and contributes over 60% of South Africa business revenue. The sales and distribution arrangement with Teva Pharmaceuticals (Pty) Ltd, an affiliate of Teva Pharmaceutical Industries Ltd., has gained traction through FY 2015-16 with strong performance on products such as Copaxone, further cementing the Company''s status as a preferred "Partner of Choice". Cipla has also introduced low cost vaccines in the South African market through an exclusive agreement with the Serum Institute of India. This is in line with the Company''s goal to advance healthcare for all in South Africa.

Cipla also won Government tenders in antiretrovirals (ARV), respiratory and newer areas such as mental health, cardiovascular and women''s health categories, achieving significant growth in the tender business over the previous year. The newly set up state-of-the-art distribution centre facility has doubled the Company''s existing capacity and conferred competitive advantage by helping to improve customer service levels, enhance compliance, and reduce the cost of distribution.

Capitalizing on its defined future portfolio, key development and in-licensing projects, and streamlined global organizational structure, Cipla South Africa will continue to leverage synergies from its international family. The Cipla brand inspires trust and has become a household name among consumers, pharmacies, prescribers and key opinion leaders. Going forward, several Sub-Saharan markets will also be covered by the South African organization.

North America

In the last quarter of financial year 2015-16, Cipla successfully completed the acquisition of two US-based entities, InvaGen Pharmaceuticals Inc. and Exelan Pharmaceuticals Inc. in a transaction valued at US$ 550 mn. InvaGen Pharmaceuticals is a high volume generics business platform that provides Cipla with a strong US-based manufacturing setup and access to large wholesalers/ retailers in the US. The platform includes 42 approved ANDAs and ~30 pipeline products that are expected to be approved over the next 4 years. It also has filed 5 potential first-to-file products which is expected to bring tremendous value in the coming 5-6 years. There are no material overlaps in the business, and the current portfolio and the pipeline is largely complementary to Cipla''s products. InvaGen Pharmaceuticals'' manufacturing footprint spans ~350,000 sq.ft. of GMP area with 3 units located in Long Island, New York, and a total production capacity of 12 billion tablets.

Exelan Pharmaceuticals is a sales and marketing company with a focus on generic pharmaceuticals for the government and institutional market. Both companies together had annual revenues of over US$ 230 mn as of December 2015.

This acquisition is aligned with Cipla''s global growth strategy to grow its presence in the US pharmaceutical market and increase its position amongst key pharmaceutical wholesalers and retailers. Having its own manufacturing base and supply chain will further strengthen Cipla''s presence in the US and its commitment to make high quality medication accessible to patients in the country. Cipla''s strategy in the US is to deliver its complex generics and respiratory portfolio of products.

The North American business contributed 15% to overall revenues (including the impact of acquisitions) and recorded 117% growth for the year. Growth was driven primarily by the Company''s partnership with Teva Pharmaceutical Industries Ltd. for Esomeprazole and the successful launch of its own label products in the US market.

Cipla currently has over 165 ANDAs filed in the US. Of these, the Company has approval for over 85.

As Cipla scales its US business next year it will target launch of five to seven products from the InvaGen pipeline and eight to ten products from Cipla''s pipeline, including some in limited competition areas. In parallel, the Company will continue to build on its successful partnerships for launch of first-to- market and differentiated generics such as Nexium and Pulmicort.

Cipla has already established a strong US team which has been deeply involved in Cipla''s launch of its own label products in the US as well as in the evaluation of inorganic growth opportunities such as InvaGen. This team shall drive the transition and integration work streams along with key InvaGen personnel. Cipla has a full integration plan in place that draws on its experience of a number of successful recent integrations such as in South Africa.

Europe

The European business contributed 4% to the overall revenues, recording a growth of 30% in revenues for the year on the back of its performance in both front-end and B2B markets.

Cipla is focused on adding innovative elements to products, services and information through research and partnerships. The Company''s flagship product, the salmeterol-fluticasone MDI, is now in the market in Sweden, Romania, Netherlands, Germany, Croatia, Czech Republic, Slovakia, Belgium and Hungary. The Company has further strengthened its respiratory platform with the launch of Mometasone, Fluticasone, Ipratropium Salbutamol respules and Ipratropium MDI across multiple European markets in FY 2015-16.

The Company continues to evolve its business model in Europe with the intention of balancing its portfolio with the best commercial options.

International - Rest of the World

International is defined as all export markets for Cipla excluding North America, Europe and South Africa. With a diverse range of more than 1,000 products and over 150 global partners across 100 countries, Cipla has a presence in Africa, the Middle East, Latin America, Asia Pacific, China, and Russia. International contributes 25% of Company revenues and grew by 14% over the last year.

In recent years, Cipla has implemented a business model change in 15 countries including Morocco, Algeria, Yemen, Sri Lanka and Uganda, adopting the direct-to-market (DTM) approach. DTM markets had robust growth of ~25% in FY 2015-16, over the previous year. This growth rate has been achieved despite continuing challenges related to the situation in Yemen and currency devaluation in several emerging markets. The Company now holds a leadership position in several markets such as Uganda, Sri Lanka, Yemen and North Africa.

Cipla''s business in partnership-led markets (B2B) saw a growth of 8% in FY 2015-16 over the previous year. The Company is proactively simplifying its businesses, rationalising markets where necessary, and focusing only on high-growth markets where it holds a leadership position.

The Cipla Global Access business recorded growth of 12% over the previous year and reflects Cipla''s continued commitment to the cause of ensuring access to life-saving medicines for patients worldwide.

STRATEGIC BUSINESS UNITS

Core areas of competence

Active Pharmaceutical Ingredients (APIs)

Cipla''s API legacy spans over five decades of having serviced the world''s largest pharmaceutical companies with more than 200 generic and complex APIs. Cipla takes pride in its state-of- the-art API plants which meet stringent quality and current good manufacturing practices (cGMP) requirements, all approved by the US FDA and other major international regulatory agencies.

With a total API manufacturing capacity of 1000 MT, the Company continues to be one of the significant API players in the industry, supporting internally as well as global customers. A substantial portion of the APIs manufactured by Cipla are consumed internally with a significant increase in consumption due to the new launches and front ending in several markets globally.

Revenue from external customers registered a year-on-year growth of 7%. More than 70% of the total sales were from regulated markets and over one-third of our API sales in FY 2015-16 were to the top generics players in the world. The gastroenterology and antiretroviral segments continue to be major contributors to the business.

Cipla continues to build its future pipeline of complex products with its established robust portfolio selection process, providing early launch capabilities along with Intellectual Property (IP) advantages. Deep vertical integration, scale and more importantly its investments in manufacturing and quality have helped the Company build a quality product pipeline.

Cipla APIs cover a broad spectrum of therapeutic categories with 23 Drug Master Files (DMF) filed in FY 2015-16 in various countries. Cipla is also ramping up its filings for regulated markets with a robust pipeline of over 40 APIs at various stages of development anticipated to be commercialised starting 2018. The Company is expected to continue the strong pipeline building momentum in the coming years as well.

Respiratory

Cipla Respiratory continues to bring effective and affordable therapy to patients suffering from diseases such as Asthma, COPD, PAH and Allergic Rhinitis. This year, Cipla Respiratory provided patients in 100 countries, the world''s largest portfolio of inhalation products with 28 drug formulations across a range of devices, to suit individual patient needs. In Europe, we launched several inhalation products, including the ICS-LABA, Salmeterol Fluticasone in a pMDI (metered dose inhaler). Cipla''s Respiratory Center of Excellence also made significant progress on the development of critical new products for the US and other priority markets.

Over the last 40 years, Cipla has invested significantly in creating three dedicated manufacturing sites for Respiratory. The Company manufactures four major dosage forms i.e. metered dose inhalers (pMDIs), dry powder inhalers (DPIs), nasal sprays and nebulisers in addition to a range of inhalation devices. This year, the Company was amongst the largest manufacturers of pMDIs with capacity to produce over 100 million inhalers. In addition, the Company has built a team of world-class specialists across Manufacturing, Quality Control, Quality Assurance, Supply-Chain who continue to collaborate seamlessly across functions.

Cipla Respiratory has unique end- to-end capability covering the value chain from API, formulation, device development and manufacturing to doctor and patient initiatives. The Company has played a leading role across countries in patient awareness, acceptance, compliance and usage, physician training, medical camps and counselling. In India, Cipla Respiratory has played a pioneering role in driving the conversion of patients from oral to inhaled therapy for the treatment of Respiratory disease. This year, the Company further strengthened and adapted where necessary its pioneering "BreatheFree" patient awareness and education programs across key markets outside India such as South Africa and Sri Lanka.

Cipla Respiratory has grown to almost ~US$ 400 mn, accounting for ~25% of the company''s revenues. Despite aggressive competition, the Company remains focused to retain leadership in serving patients suffering from Respiratory diseases across the world.

Cipla Global Access

Since its inception, Cipla''s ethos has been firmly rooted in the vision "None shall be denied". The Company strongly believes that access to high quality, affordable medicines is a basic human right.

Cipla Global Access (CGA) is an international tender based institutional business that concentrates on four key therapy areas: HIV/AIDS, Malaria, Multi drug-resistant tuberculosis, and Reproductive health.

Cipla is among the leading manufacturers of Anti-retroviral drugs in the world. In 2001, Cipla was the first pharmaceutical company to supply ARVs to countries with a high HIV burden at less than a dollar a day. Today Cipla has the highest number of Anti-retroviral products approved for the treatment of both children and adults. Recently a new manufacturing facility has been set up to meet the growing demand for ARV products and expect the plant to start commercial production by June 2016.

Cipla has developed the taste- masked Lopinavir/Ritonavir pellets (FDA approved in June 2015) and is going to be available shortly in 20 countries in the first year of launch in 2016. In parallel with this development, Cipla, in collaboration with DNDi (Drugs for Neglected Diseases initiative) and with funding support of UNITAID, is working to develop 4-in-1 taste- masked sprinkles formulations of the combination LPV/r (Lopinavir/ Ritonavir), 3TC (Lamivudine) and ABC (Abacavir) or AZT (Zidovudine). The clinical trials of the 4-in-1 formulation are run in Uganda and Kenya (Chapas study) to assess the clinical efficacy of the product and combination and the results will be made available in the coming years. However, to respond to the needs of the paediatric population and ensure that LPV/r-based products are on the market before 4-in-1 products become available, the LPV/r pellets are an alternative and a currently available option.

Cipla is also one of the largest suppliers of antimalarial drugs in the world. This portfolio covered treatment for over 80 million malaria patients across all the affected countries. The coverage is increasing every year and thus saving millions of lives. Cipla anti- malarial treatment costs less than a dollar for the entire course. Cipla has always been at the forefront in initiatives to identify, develop, manufacture and supply low cost treatment with artemisinin-based combination therapies (ACTs). Cipla is endeavouring to expand its portfolio to include more potent and safer anti-malarials, using novel drug delivery systems, such as Rectal Artesunate for which Cipla is submitting dossiers in several emerging markets. Rectal Artesunate is indicated in cases of severe malaria in children between 6 months to 6 years of age. It is a life-saving drug in cases where there are no health facilities offering parenteral treatment.

Reproductive health and family planning is an emerging segment. Cipla has aligned its strategy with international development initiatives to provide safe and effective contraceptive drugs to enable reach to over 120 million women.

Cipla has a strong second line TB drug portfolio for treating multidrug-resistant TB (MDR TB).

It is also aggressively expanding its MDR TB portfolio to meet the challenges of resistance fast developing among TB patients due to the high rate of dropouts. Till now, Cipla''s SLTB (Second Line Tuberculosis) drugs catered to a moderate patient base globally, but this is likely to increase significantly with the use of new diagnostic methods of detection of drug-resistant TB. Future development in the MDR TB therapy area will be focused on newer molecules which can significantly reduce treatment timelines. Currently, Cipla services around 70 countries in this area.

Cipla Global Access also caters to the developing world requirement for essential medications for infections caused by helminths, schistosomiasis and kala azar, which pose major health threats in low and middle income countries (LMIC).

In FY 2015-16, Cipla, as part of its access initiatives signed various non-exclusive, royalty based/ free licensing agreements with innovator companies such as Gilead, ViiV, BMS and Janssen. It allows for the manufacturing of generic active pharmaceutical ingredient and finished formulations of Anti-retroviral and drugs for treatment of Hepatitis C, a silent killer which till the introduction of the current treatment was difficult and expensive to treat.

Cipla has developed and fostered robust relationships with all the major global organizations, regulatory bodies, public institutions and funding agencies that work towards this common cause. Additionally, Cipla has partnered with several global scientific research organizations to develop innovative, effective and affordable formulations for these four therapeutic areas.

CIPLA NEW VENTURES

CNV continues to nurture exciting businesses with a high innovation quotient, preparing Cipla for a future beyond generics. It had notable achievements during the year, across its portfolio - a testimony to the care and attention that the company is devoting to its medium to long-term sustainability. In Cipla health, it has sowed the seeds of a FMCG enterprise focused on Good Science, Good Medicine. Cipla BioTec has a disruptive Biosimilar story.

Cipla BioTec

Less than 8% of patients eligible for biopharmaceutical treatment worldwide receive therapy. Access is not just a developing world issue; in the US and Europe less than 30% receive treatment. In many cases, patients are not treated due to the cost of biopharmaceuticals which can approach US$ 75,000 per year for treating cancer and autoimmune diseases. Biosimilars are now approved in all major world markets, however high prices still limit access.

Cipla BioTec (CBT) is building on Cipla''s heritage of affordability and access by developing biosimilars which will be approved in global markets and usher in a new wave of affordable products. CBT goal is to treat a million patients. The first product CBT124 is starting human clinical trials. CBT''s second product CBT127 is in development. CBT leverages the latest biopharmaceutical production technology to make its products affordable. This approach allows CBT to enable local production to make these life changing products. CBT is constructing commercial manufacturing capacity in two countries to implement its "World Class Products at Affordable Prices" and "Be Local" philosophy.

In line with this strategy, the Company in July 2016 announced the signing of a memorandum of understanding (MOU) between Cipla BioTec Pvt Ltd and Dube Tradeport Corporation for setting up South Africa''s first state-of- the-art biotech manufacturing facility, for the production of biosimilars, at a cost of a R1.3 bn. The factory, which will be located in the Department of Trade and Industries Special Economic Zone of Dube Tradeport in Durban, will manufacture biosimilar drugs made from living organisms and used in the treatment of cancer and other diseases. Construction is scheduled to start in early 2017, with full operations expected to commence in the third quarter of 2018.

Stempeutics

Regenerative Medicine is one of the new frontiers of treatment. Cipla through its strategic investment in Stempeutics, is making Regenerative Medicine a reality. Stempeutics received Limited Marketing Approval in India for Stempeucel® Stem Cell therapy to treat Buerger''s Disease. This is only the 5th Stem Cell Product approved worldwide and the first novel biologic product ever to be completely developed in India. Stempeucel® is covered by an extensive patent estate with issued patents in the US, EU, ANZ, Japan and India among other territories. Cipla in collaboration with Stempeutics has also launched Cutisera™, a novel skin care product using growth factors to help reduce wrinkles and dark spots.

CipTec

CipTec has initiated efforts to build a specialty pharmaceutical business in the US for Cipla. The CipTec team has evaluated several broad therapy areas such as oncology, neurology, dermatology, ophthalmology and gastrointestinal disorders before picking neurology as the therapy area of choice for further exploration.

Another key focus area for CipTec in 2015 was to support and build out Cipla''s first US venture investment - Chase Pharmaceuticals. Chase''s focus for 2015 was clinical validation of its lead asset CPC-201 for Alzheimer''s disease. CPC-201 was in a Phase 2a clinical trial throughout 2015.

This trial will complete in April 2016. The preliminary data shows that the drug has demonstrated vastly better tolerability and dose, and has also demonstrated promising signs regarding cognitive improvement and functional improvement in Alzheimer''s patients. CipTec participated in two additional rounds of funding for Chase to support clinical programs as well as key management hires.

Cipla Health - A Cipla initiative towards improving lives of Indian Consumers

The consumer healthcare business was spun-out into a separate company, Cipla Health Ltd (CHL), effective March 2016. CHL also attracted investment from a leading private equity fund, Fidelity (FIL Capital Investments) in April 2016.

Cipla incubated its consumer healthcare business two years ago with a vision to improve the lives of Indian consumers and leverage the trends of shifting focus in health from illness to wellness. A dedicated team was formed with professionals from diverse background of healthcare and FMCG, to lead this business. The first consumer brand Nicotex, a smoking cessation product, was first piloted in South India in January 2015 and was launched nationally in October 2015. The launch has been a great success, with Nicotex helping thousands of consumers towards quitting smoking.

Currently CHL is on a good momentum on business, with the Nicotex marketing campaign winning prestigious awards such as Effie Gold, Goa Fest - a big win for such a young brand. CHL aims to foray into other categories in the consumer healthcare space and offer a series of wellness products to Indian consumers in the coming years.

INTEGRATED PRODUCT DEVELOPMENT (IPD)

Investing for Future

Cipla''s Integrated Product Development (IPD) majorly includes development of APIs, formulations development, Analytical, Clinical, Regulatory, Device, Quality by Design and Pharmacovigilance functions.

Cipla''s R&D expense increased from 5.6% of total revenue in FY 2014-15 to 6.3% in FY 2015-16. As we invest for the future, our total project R&D spend has been rising steadily.

On the Development portfolio front, we have over 200 formulations development projects underway of which the top 50 projects address a market size of US$ 30 bn based on innovator sales. Of these top 50 projects, most projects account for the US and also include inhalation and injectable delivery forms including complex & first-to-file opportunities. Our new filings in formulation segment in FY 2015-16 stand at 7 ANDAs for North America, 19 filings (187 MAs) for Europe and over 700 filings for International markets in addition to 1000 renewals. We expect to file 20 to 25 ANDAs in FY 2016-17 including some respiratory and oncology filings with some potential first to file opportunities.

This year, Cipla has also received approvals of 4 ANDAs including Celecoxib. More than 100 MAs approval in Europe includes key approval of Fluticasone Salmeterol-MDI, Fluticasone MDI, Ipra Sal (Ipratropium Bromide Salbutamol Sulphate) Respules, Ipratropium in key EU Markets and more than 200 approvals in International (rest of the world) markets.

The Company has enhanced the depth of its respiratory offering this year with new product launches for Fluticasone Salmeterol, Mometasone, Fluticasone, Ipratropium Salbutamol Respules and Ipratropium MDI across multiple markets in Europe.

Cipla has completed expansion of its R&D Centre with new buildings and major laboratory facilities at Vikhroli, Mumbai. IPD has also expanded R&D applications across multiple technology platforms. These includes Implants, Ready to Dilute (RTD) injections, Depot injections, nanotechnology, unit dose nasal sprays, and spray patches. The Company is also investing in various API technologies like Green chemistry, Flow chemistry & Peptide synthesis.

Cipla has consistently enhanced efficiency across all IPD Functions through "Jagruti" transformation programmes, resulting in reduced timelines, development costs and more timely regulatory approvals.

MANUFACTURING

Cipla expanded its manufacturing footprint through the acquisition of InvaGen''s facility in the US, adding capacity of 12 billion units of oral solids.

In India, Cipla continued its focus on domestic and international markets through increased capacity of 3.2 billion units, out of which a state- of-the-art modern technology plant with a capacity of 1.2 billion units is dedicated for ARVs (Anti-retroviral) in sync with the organization''s vision of "None shall be denied". All manufacturing sites continued to focus on project improvement across asset and material productivity, energy efficiency and manpower utilization.

Serviceability of formulation products was significantly improved through releasing capacities by network balancing within units. The organization continued its focus on reducing process and product complexities by applying lean tools for business process simplification. Cipla''s Uganda plant increased portfolio capability to reduce the turn- around time for the African market.

Cipla commissioned additional API manufacturing capacity of 50 Metric Tonne/year specifically for Hydrogenation Process. The company scaled-up 15 key APIs, with continued focus on yield improvement, cycle time reduction and cost improvement projects. Cipla is continuously working on reduction of Volatile Organic Compounds by reducing solvent losses across Cipla sites.

The Company continues to upgrade its manufacturing facilities in terms of technology, automation, safety, environment and systems as well as procedures for energy and water conservation.

Quality

Cipla Quality as a centre of excellence assures a culture of compliance and follows systematic interventions to consistently meet or exceed quality standards.

Cipla''s focus during the year has been to enhance its Quality Management Systems to meet and/or exceed the current expectations of Regulatory Bodies such as US FDA, MHRA, TGA, MCC, APVMA, WHO, etc.

Cipla has all state-of-the-art manufacturing facilities that are cGMP compliant in conformity with national and international standards. Several dosage forms and APIs manufactured at the Company''s facilities continue to be approved by major international regulatory agencies.

These agencies include the US FDA, MHRA (UK), TGA (Australia), PIC (Germany), MCC (South Africa), APVMA (Australia), the Department of Health (Canada), ANVISA (Brazil), the Danish Medical Agency, and the WHO.

In addition, during the year, the first phase of Laboratory Information Management System (LIMS) has been completed across all Cipla Laboratories which significantly improves compliance in our laboratories.

Threats, Risks, Concerns

The pharmaceutical industry has always been under intense scrutiny by various regulatory authorities, both Indian and international. This trend continues resulting in regulatory standards being upgraded all the time.

The Company continues to track all these changes, increase vigilance, and strives to maintain the highest quality standards. Recent changes by the price regulator in India have resulted in significant challenges for the pharma industry. There is a lot of confusion in the interpretation of provisions of the Drugs (Prices Control) Order, 2013 and its implementation and this has affected the availability of some drugs. The Company is very concerned about these developments and is taking steps to resolve the issues through various forums.

Cipla has some pending legal cases related to alleged "overcharging" in respect of certain drugs under the Drugs (Prices Control) Order, 1995. The status of these cases as of the date of approval of financial statements have been summarised in the Notes to the accounts.

Further, vide Order dated 20th July 2016, the Hon''ble Supreme Court have transferred back the writ petitions to Hon''ble Bombay High Court along with directions that 50% of the alleged "overcharged" amount mentioned in its earlier Order dated 1st August 2003 should be deposited by the Petitioners in the Bombay Petitions, within 6 weeks. Accordingly, the Company will be depositing a sum of Rs.175.07 crore on or before 31st August 2016. The Company has been legally advised that on the merits of the cases that there is very little likelihood of these demands crystallising. Hence no provision is considered necessary in respect of notices of demand received by the Company up to date aggregating to Rs.1768.51 crore. However, any unfavourable outcome in these proceedings could have an adverse impact on the Company.

The Industry is concerned about the recent actions by the Ministry of Health in banning a large number of Fixed Dose Combinations, and this led to various litigations being filed by the industry associations and several companies in the court. A final judgment is still awaited.

Cipla operates in a number of markets where geo-political risks exist.

No significant or material orders have been passed by the Regulators or Courts or Tribunals which may impact the going concern status of the Company and its future operations.

Health Safety & Environment (HSE)

HSE measures remain a priority for Cipla. The company continues to upgrade HSE standard at all locations. ISO 50001 is implemented at Patalganga, Kurkumbh, Bengaluru, Goa and Indore locations, to benchmark energy conservation threshold levels for a greener environment.

Cipla''s manufacturing facilities at Goa, Bengaluru, Baddi, Indore, Kurkumbh, Patalganga and Sikkim are certified for ISO 14001 and OHSAS 18001 standards.

Hazards and risk associated with site activities are identified across all manufacturing locations and risk control and mitigation measures are continuously implemented. Our facilities have been regularly audited and HAZOP studies of new products have been done as part of continuous improvement in HSE systems. Online systems are in place to monitor applicable legal compliances. The Company organised specialised safety training such as process safety, road safety and behavioural safety to increase safety awareness at all working levels.

Safety week and electrical safety day were celebrated and fire service day was observed at the manufacturing units to create awareness among the employees. Fire safety and road safety training is conducted in schools nearby to our manufacturing facilities.

World Environment Earth Day were celebrated by conducting green drive programme of mass tree plantation. The Company continues to maintain modern, well-equipped effluent treatment plants and effluent testing system at its manufacturing facilities. Treated water from this facilities is recycled and used for utility or gardening.

The Company''s various locations have received HSE awards including best environment, health and safety practices, National award for Excellence in Energy Management and Greenco (Silver rating) award for Kurkumbh facility.

Internal Control Systems and their adequacy

The Company''s internal control procedures are adequate to ensure compliance with various policies, practices and statutes in keeping with the organization''s pace of growth and increasing complexity of operations.

The Company maintains a system of internal controls designed to provide reasonable assurance regarding the following:

- Effectiveness and efficiency of operations

- Adequacy of safeguards for assets

- Prevention and detection of frauds and errors

- Accuracy and completeness of the accounting records

- Timely preparation of reliable financial information

Key controls have been tested during the year and corrective and preventive actions are taken for any weakness.

The internal controls and governance process are duly reviewed for their adequacy, effectiveness through periodic audits by Cipla''s independent internal audit function supported by various internal auditors and are found to be adequate. Risk based internal audit plan is approved by the Audit Committee which also reviews adequacy and effectiveness of the Company''s internal financial controls. The Audit Committee is periodically briefed on the corrective and preventive action taken to mitigate identified risks. During the year under review, no fraud was reported by the auditors to the Audit Committee / Board of Directors.

Corporate Social Responsibility (CSR)

The CSR policy is available on the Company''s website at http://www.cipla.com/templates/ home_tpl/images/Corporate_Social_ Responsibility_Policy.pdf.

The Annual Report on CSR initiatives as required under section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended from time to time forms part of this Report as Annexure I.

Business Responsibility Report

As mandated by the Securities and Exchange Board of India (SEBI), a standalone Business Responsibility Report (BRR) forms part of the Annual Report and is available on the Company''s website at www.cipla.com. The BRR contains a detailed report on Business Responsibilities vis-à-vis the nine principles of the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business framed by the Union Ministry of Corporate Affairs. Any shareholder interested in obtaining a copy may write to the Company Secretary at the Registered Office of the Company.

CORPORATE MATTERS

Directors'' Responsibility Statement

Pursuant to section 134(3)(c) of the Companies Act, 2013 it is confirmed that the Directors have:

i. followed applicable accounting standards in the preparation of the annual accounts and there are no material departures for the same;

ii. selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2016 and of the profit of the Company for that period;

iii. taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. prepared the annual accounts on a going concern basis;

v. laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

vi. devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Corporate Governance

A report on Corporate Governance along with a certificate from Dr. K. R. Chandratre, Practising Company Secretary, regarding compliance with Clause 49 of the erstwhile Listing Agreement and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") forms part of this report.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

As required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, the relevant information and data are annexed to this report as Annexure II.

Disclosure under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment.

The policy has set guidelines on the redressal and enquiry process that is to be followed by complainants and the ICC, whilst dealing with issues related to sexual harassment at the workplace towards any employee. All employees (permanent, temporary, contractual and trainees) are covered under this policy. All employees are treated with dignity with a view to maintain a work environment free of sexual harassment whether physical, verbal or psychological.

A total of 14 cases were reported under the Prevention of Sexual Harassment Policy during the financial year 2015-16, out of which 2 cases were under investigation at the end of financial year. Subsequently, all the cases were satisfactorily addressed and appropriate action was taken.

Employee Stock Option Scheme

As required under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, the applicable disclosures as on 31st March 2016 are available on the Company''s website at http://www.cipla.com/en/ investor-information/shareholder- information.html.

There is no material change in the Employee Stock Option Schemes during the financial year under review and the Employee Stock Option Schemes are in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

Human Resources

The Human Resources function contributes to Cipla''s growth story by working as a strategic partner to the business. The technical and quality demands of pharma combined with our own vision to grow significantly over the next few years are driving the need for us to build an agile, engaged, and energized work force. While doing this, your Company continues to retain focus on Cipla values and its core philosophy of placing people before profits. Our core objective has been to build organizational capability through skill enhancement across levels, sales force training and enhancing competencies in line with changing business needs.

There has also been a focus on strengthening existing, middle and senior leadership.

The Company has institutionalized a robust performance management process; individual goals and key performance indicators have been aligned to organizational goals and imperatives.

In making "Caring for Life" translate to "Caring for employees", various employee centric interventions like people friendly policies and work- life balance have been launched. While serving global customers, employing people across the globe is an equally important aspect of our vision thereby building a truly global company. Employees are motivated through various skill-development, engagement and voluntary programs. We also ensure that employees are aligned with our organizational culture and values whilst never losing sight of our business objectives.

Details of remuneration as required under section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure III.

Particulars of employee remuneration as required under section 197(12) of the Companies Act, 2013 read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. Having regard to the provisions of the first proviso to section 136(1) of the Companies Act, 2013, the Annual Report excluding the said information is being sent to the members of the Company. The said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary at the Registered Office of the Company. The said information is also available on the Company''s website www.cipla.com.

Particulars of loans, guarantees or investments

Particulars of loans, guarantees and investments under section 186 of the Companies Act, 2013 are provided in Notes 13 and 40 to the financial statements.

Extract of Annual Return

As required under section 92(3) of the Companies Act, 2013, the extract of Annual Return in Form No. MGT-9 forms part of this Report as Annexure IV.

Secretarial Audit Report

The Board had appointed M/s. BNP & Associates as the secretarial auditor for the financial year 2015-16. The secretarial audit report for the financial year ended 31st March 2016 is annexed to this report as Annexure V. The report does not contain any qualification, reservation or adverse remark.

Vigil Mechanism

The Company believes in upholding professional integrity and ethical behavior in the conduct of its business. To uphold and promote these standards, the Company has formulated a Vigil Policy which serves as a mechanism for its directors and employees to report genuine concerns about unethical behavior, actual or suspected fraud or violation of the Code of Conduct without fear of reprisal. The details of Vigil Policy is available on the Company''s website at http://www. cipla.com/templates/home_tpl/ images/Vigil_Policy.pdf.

Contract and Arrangements with Related Parties

All contracts / arrangements / transactions entered by the Company with related parties during the financial year 2015-16 were in the ordinary course of business and on an arm''s length basis. During the year, no material related party transactions were entered into by the Company, the details of which are required to be provided under section 134(3)(h) of the Companies Act, 2013.

The policy on materiality of and dealing with related party transactions is available on the Company''s website at http://www.cipla.com/uploads/ investor/1443000127_Policy-on- Related-Party-Transactions.pdf.

Internal Financial Controls

The Board has adopted policies and procedures for ensuring orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures.

Cipla has aligned its current systems of internal financial control with the requirement of Companies Act, 2013, on lines of globally accepted risk based framework as issued by the Committee of Sponsoring Organisations (COSO) of the treadway commission. The Internal Control - Integrated Framework (the 2013 framework) is intended to increase transparency and accountability in an organisation''s process of designing and implementing a system of internal control. The framework requires a company to identify and analyse risks and manage appropriate responses. The Company has successfully laid down the framework and ensured its effectiveness, some of which are outlined below:

Cipla has a well-defined delegation of power with authority limits for approving revenue as well as expenditure. Processes for formulating and reviewing annual and long term business plans have been laid down.

The Company has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 that continue to apply under section 133 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and relevant provisions of the Companies Act, 1956, to the extent applicable. These are in accordance with generally accepted accounting principles in India. Changes in policies, if any, are approved by the Audit Committee in consultation with the Statutory Auditors.

Cipla uses a SAP ® (ERP) system to record data for accounting and management information purposes. The ERP system is configured to ensure all transactions are integrated seamlessly with the underlying books of account. It has continued its efforts to align all its processes and controls with global best practices.

The Management periodically reviews the financial performance of the Company against the approved plans across various parameters and takes action, wherever necessary.

Risk Management

The Company has constituted a Risk Management Committee under the Chairmanship of Mr. Subhanu Saxena, Managing Director and Global Chief Executive Officer. There are no risks which in the opinion of the Board threaten the existence of the Company. However, some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms part of this Report.

Deposits

During the financial year 2015-16, your Company has not accepted any deposit within the meaning of sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, the directors individually and that of its Committees. The manner in which the evaluation has been carried out is stated in the Corporate Governance Report.

Subsidiaries, Associates and Joint Ventures

The Company had 55 subsidiaries/ step-down subsidiaries and Associates as on 31st March 2016. The consolidated financial statements presented in this annual report include financial results of the subsidiary companies. The names of companies which have become or ceased to be Company''s subsidiaries or associates or joint ventures during the year under review is attached as Annexure VI.

The policy for determining material subsidiaries is put up on the website at http://www.cipla.com/uploads/ investor/1443000071_Policy-for- determining-Material-Subsidiaries.pdf.

A report on the performance and financial position of each of the subsidiaries, associates and joint venture forms part of Consolidated Financial Statement.

The financial statement of the Company including consolidated financial statements, financial statements of subsidiary companies are available on Company''s website www.cipla. com. These documents will also be available for inspection by any member at the Registered Office of the Company during business hours. The copy of the said financial statements will be made available to any member of the Company seeking such information.

Directors and Key Managerial Personnel

During the year under review, the members approved the appointment of Ms. Samina Vaziralli as a Whole-time Director designated as "Executive Director" for a period of five years with effect from 10th July 2015.

Dr. Nachiket Mor resigned from the Board of Directors effective 7th August 2015 due to his other commitments. The Directors place on record their appreciation of the contributions made by him as a member of the Board.

Ms. Naina Lal Kidwai has been appointed as an Additional Director with effect from 6th November 2015 and holds office up to the date of the ensuing Annual General Meeting.

Mr. S. Radhakrishnan has been re-appointed by the Board of Directors as a Whole-time Director for a period of two years with effect from 12th November 2015, subject to the approval of members at the ensuing Annual General Meeting.

Mr. M. K. Hamied retires by rotation and, being eligible, offers himself for re-appointment.

Mr. Subhanu Saxena is stepping down as the Director, Managing Director and Global Chief Executive Officer of the Company with effect from close of business hours on 31st August 2016.

At the meeting of the Board of the Directors held on 12th August 2016, Mr. Umang Vohra has been appointed as an Additional Director and Managing Director and Global Chief Executive Officer for a period of five years with effect from 1st September 2016, subject to the approval of members at the ensuing Annual General Meeting.

A brief resume of the Directors seeking appointment/ re-appointment is provided in the Notice.

Pursuant to the provisions of section 203(1) of the Companies Act, 2013, the Key Managerial Personnel of the Company during the year were as follows:-

- Mr. Subhanu Saxena - Managing Director and Global Chief Executive Officer

- Mr. Rajesh Garg - Director, Whole-time Director and Chief Financial Officer (Demitted office w.e.f. close of business hours on 12th June 2015.

Mr. Umang Vohra - Global Chief Operating Officer and Global Chief Financial Officer (Appointed w.e.f. 1st October 2015)

- Mr. Mital Sanghvi - Company Secretary

All Independent Directors of the Company have given declarations that they meet the criteria of independence as prescribed under section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI Listing Regulations.

The criteria for determining qualifications, positive attributes and independence of a director are attached as Annexure VII.

The salient aspects of Remuneration Policy have been outlined in the Report on Corporate Governance.

Neither the Managing Director nor the Whole-time Directors received any remuneration or commission from any of the Company''s subsidiaries.

Number of meetings of the Board

During the year under review, 8 Board Meetings were held. The details of the Board Meetings are stated in the Report on Corporate Governance.

Composition of Audit Committee

The details pertaining to composition of Audit Committee are included in the Report on Corporate Governance.

Cost Auditor

Pursuant to the provisions of section 148 of the Companies Act, 2013, Mr. D. H. Zaveri, a practising Cost Accountant (Fellow Membership No. 8971) has been appointed to conduct the audit of cost records of pharmaceutical products for the financial year ended 31st March 2016. Pursuant to section 148(6) of the Companies Act, 2013 and Rule 6(6) of the Companies (Cost Records and Audit) Rules, 2014, the Cost Audit Report, in Form CRA-4 (in XBRL mode), for the year ended 31st March 2015, under the head ''Drugs and Pharmaceuticals Industry'' was filed with the Central Government within the prescribed time.

Auditors

M/s. V Sankar Aiyar & Co. and M/s. R.G.N. Price & Co., joint statutory auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting (AGM). In accordance with the provisions of section 139 of the Companies Act, 2013 and the mandatory rotation of auditor requirement, it is proposed to appoint Walker Chandiok & Co LLP, Chartered Accountants, as statutory auditors of the Company to hold office from the conclusion of ensuing 80th AGM till the conclusion of 85th AGM.

The Auditors'' Report for the financial year 2015-16 does not contain any qualification, reservation or adverse remark.

On behalf of the Board

Y. K. Hamied

Chairman

12th August 2016


Mar 31, 2015

Dear Members,

The Directors take pleasure in presenting the Seventy-Ninth Annual Report of the Company along with the audited financial statements for the financial year ended 31st March 2015.

Financial Summary Rs. in crore

Year ended 31st March 2014

Standalone Consolidated

9836 10556 Gross total revenue

1818 1880 Profit before tax

1389 1389 Profit for the year

4269 4351 Surplus brought forward from last balance sheet

5658 5740 Profit available for appropriation Appropriations:

161 161 Dividend

27 27 Tax on dividend

140 140 Transfer to general reserve

- - Adjustment of depreciation

5330 5412 Surplus carried forward

Year ended 31st March 2015

Standalone Consolidated

Gross total revenue 10373 11620

Profit before tax 1540 1654

Profit for the year 1181 1181

Surplus brought forward from last 5330 5412 balance sheet

Profit available for appropriation 6511 6593 Appropriations:

Dividend 161 161

Tax on dividend 33 33

Transfer to general reserve - -

Adjustment of depreciation 40 41

Surplus carried forward 6277 6358

DIVIDEND

The Directors recommend a dividend of Rs. 2 per equity share (100%) for the year 2014-15. The dividend, if sanctioned at the Annual General Meeting, will be paid to those members whose names appear in the Company's Register of Members on Wednesday, 12th August 2015. In respect of shares held in dematerialised form, the dividend will be payable on the basis of beneficial ownership as per details furnished by National Securities Depository Limited and Central Depository Services (India) Limited.

Particulars of loans, guarantees or investments

Particulars of loans, guarantees and investments under Section 186 of the Companies Act, 2013 are provided in Notes 39 and 13 to the financial statements.

Extract of Annual Return

Extract of Annual Return in the prescribed format under the Companies Act, 2013 forms part of this Report as Annexure V.

Secretarial Audit Report

The Board had appointed M/s. BNP & Associates as the secretarial auditor for the financial year 2014-15. The secretarial audit report for the financial year ended 31st March 2015 is annexed to this report as Annexure VI. The report does not contain any qualification, reservation or adverse remark.

Vigil Mechanism

The Company believes in upholding professional integrity and ethical behavior in the conduct of its business. To uphold and promote these standards, the Company has formulated a Vigil Policy which serves as a mechanism for its directors and employees to report genuine concerns about unethical behavior, actual or suspected fraud or violation of the Code of Conduct without fear of reprisal. The details of Vigil Policy is available on the Company's website at http://www. cipla.com/CiplaSite/Media/PDF/ code_of_conduct/Vigil_Policy.pdf.

Contract and Arrangements with Related Parties

All contracts / arrangements / transactions entered by the Company with related parties during the financial year 2014-15 were in the ordinary course of business and on an arm's length basis. No material related party transactions were entered into by the Company during the year under review.

The policy on materiality of and dealing with related party transactions is available on the Company's website at http://www. cipla.com/CiplaSite/Media/PDF/ Policy/Policy_on_Related_Party_ Transactions.pdf.

Internal Financial Controls

The Company has in place adequate policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

Risk Management

As required under Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee comprising of executive directors under the Chairmanship of Mr. Subhanu Saxena.

There are no risks which in the opinion of the Board threaten the existence of your Company. However, some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms part of this Report.

Deposits

During the financial year 2014-15, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually and that of its Committees. The manner in which the evaluation has been carried out is stated in the Corporate Governance Report.

Subsidiaries, Associates and Joint Ventures

The Company had 62 subsidiaries/ step-down subsidiaries, Associates and Joint Ventures as on 31st March 2015. The consolidated financial statements presented in this annual report include financial results of the subsidiary companies.

The names of companies which have become or ceased to be Company's subsidiaries or associates or joint ventures during the year under review is attached as Annexure VII.

The policy for determining material subsidiaries is put up on the website at http://www.cipla.com/CiplaSite/ Media/PDF/Policy/Policy_on_Material_ Subsidiary.pdf.

A report on the performance and financial position of each of the subsidiaries, associates and joint venture forms part of Consolidated Financial Statement.

The financial statement of the Company including consolidated financial statements, financial statements of subsidiary companies are available on Company's website www.cipla.com. These documents will also be available for inspection by any member at the Registered Office of the Company during business hours. The copy of the said financial statements will be made available to any member of the Company seeking such information.

Directors and Key Managerial Personnel

Mr. Pankaj Patel resigned from the Board of Directors effective 3rd September 2014 due to his increasing professional commitments. Dr. H. R. Manchanda resigned from the Board of Directors effective 13th November 2014 due to his advancing age. Mr. V. C. Kotwal resigned from the Board of Directors effective 13th November 2014 due to his commitments. The Directors place on record their appreciation of the contributions made by them as members of the Board.

During the year under review, the members approved the appointments of Mr. Ashok Sinha, Dr. Peter Mugyenyi and Mr. Adil Zainulbhai as Independent Directors who are not liable to retire by rotation.

The members through Postal Ballot approved appointment of Ms. Punita Lal and Dr. Nachiket Mor appointed as Independent Directors effective 13th November 2014 who are not liable to retire by rotation.

The following officers have been designated as the Key Managerial Personnel of the Company pursuant to section 203(1) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

* Mr. Subhanu Saxena - Managing Director and Global Chief Executive Officer

* Mr. Rajesh Garg - Executive Director and Global Chief Financial Officer

* Mr. Mital Sanghvi - Company Secretary

During the year under review, there was no change in the Key Managerial Personnel of your Company.

Mr. Rajesh Garg demitted office as a Director, Whole-time Director and Chief Financial Officer with effect from close of business hours on 12th June 2015.

Ms. Samina Vaziralli has been appointed as an Additional Director with effect from 10th July 2015 and holds office up to the date of the ensuing Annual General Meeting. She has been appointed as Whole-time Director designated as "Executive Director" for a period of five years with effect from 10th July 2015 subject to the approval of the members at the ensuing Annual General Meeting.

Mr. Subhanu Saxena retires by rotation and, being eligible, offer himself for re-appointment. A brief resume of the Directors seeking appointment/re-appointment is provided in the Notice.

All Independent Directors of the Company have given declarations that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

The details of familiarisation programme for Independent Directors are put up on the website at http://www.cipla.com/CiplaSite/ Media/PDF/Policy/Familiarisation_ programme_for_Independent_ Directors.pdf.

The Nomination and Remuneration Committee have also formulated criteria for determining qualifications, positive attributes and independence of a director. The said criteria is attached as Annexure VIII.

The Board of Directors approved the Remuneration Policy on the recommendation of the Nomination and Remuneration Committee. The salient aspects of Remuneration Policy have been outlined in the Report on Corporate Governance.

Neither the Managing Director nor the Whole-time Directors received any remuneration or commission from any of the Company's subsidiaries.

Number of meetings of the Board

During the year under review, 8 Board Meetings were held. The details of the Board Meetings are stated in the Report on Corporate Governance.

Composition of Audit Committee

The details pertaining to composition of Audit Committee are included in the Report on Corporate Governance.

Cost Auditor

Pursuant to the provisions of Section 148 of the Companies Act, 2013, Mr. D.H. Zaveri, a practising Cost Accountant (Fellow Membership No. 8971) has been appointed to conduct the audit of cost records of pharmaceutical products for the financial year ended 31st March 2015. The due date for filing Cost Audit Report for the year ended 31st March 2014 was 27th September 2014 and the same was filed on 27th September 2014.

Auditors

Messrs V. Sankar Aiyar & Co. and Messrs R.G.N. Price & Co., joint statutory auditors of the company, retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

The Auditors' r eport does not contain any qualification, reservation or adverse remark. on behalf of the Board

Y. K. Hamied Chairman

9th July 2015


Mar 31, 2014

Dear Shareholders,

I would like to take this opportunity to reiterate some fundamental values of your Company. For Cipla, ensuring access to medicines at affordable prices is essential. Most leading countries have realised that despite government support, medicines are becoming increasingly more expensive and therefore difficult to buy. This present trend offers an opportunity for a pharmaceutical company like Cipla. At the same time it places a great responsibility on us to supply reliable, good quality medicines on a long-term sustainable basis. We need to demonstrate clearly our willingness to promote affordable medicines so that no one should be denied medication. Companies like ours, must promote efficient and well-run businesses but at the same time have a humanitarian approach to healthcare. We are one of the few industries directly involved in prolonging and saving lives.

We have always believed that free competition is the only way to ensure fair prices and better availability of drugs. Over the years, Cipla has overcome innumerable hurdles in many areas and we will continue to navigate the path ahead as best possible. We strongly believe that there should be no monopolies in healthcare; and in that context, India should adopt a pragmatic Intellectual Property Rights (IPR) policy including in-licensing within the present framework of our international obligations.

Many countries such as Brazil,Thailand, Indonesia and Malaysia have already introduced compulsory licensing provisions. The Republic of South Africa is seriously reconsidering their position on IPR in order to promote affordable healthcare. India must also examine the monopoly position of drugs and build safeguards to ensure that this does not happen. India has always stood for the promotion of knowledge and consideration for the greater good. Both our nation and our Company have deep-rooted foundations based on human values. We sincerely believe that Cipla has the opportunity to show this to the world.

Dr.Y.K.Hamied

The Directors take pleasure in presenting the Seventy-Eighth Annual Report of the Company along with the Audited Accounts for the financial year ended 31st March 2014.

Financial Summary

Rs. in crore

Year ended Year ended 31st March 2013 31st March 2014

Standalone Consolidated Standalone Consolidated

8524 8610 Gross total revenue 9760 10483

2012 2095 Profit before tax 1818 1880

1507 1545 Profit for the year 1389 1389

3110 3154 Surplus brought forward from last balance sheet 4269 4351

4617 4699 Profit available for appropriation 5658 5740

Appropriations:

161 161 Dividend 161 161

27 27 Tax on dividend 27 27

160 160 Transfer to general reserve 140 140

4269 4351 Surplus carried forward 5330 5412

DIVIDEND

The Directors recommend a dividend of Rs.2 per share on 80,29,21,357 equity shares of Rs.2 each for the year 2013-14 amounting to Rs.160,58,42,714.

MANAGEMENT DISCUSSION AND ANALYSIS: 2013-14 Global Business Review

With a footprint across five continents, Cipla is moving fast towards its goal of making affordable healthcare available to all.

The Company''s revenue from operations on a consolidated basis during the financial year 2013-14 amounted to Rs.10,218 crore against Rs.8,388 crore in the previous year, recording a growth of 21.8%. The income from operations for domestic business increased by 14.7%, from Rs.3,569 crore in the previous financial year to Rs.4,094 crore in the financial year under review. Total exports increased by 25.0% during the year to Rs.5,659 crore.

During the year under review, operating margin reduced by 5.4%. This was primarily due to the change in product mix, higher investments in R&D and talent acquisition. Asa result, profit for the year reduced by 10.1% toRs. 1,389 crore from Rs.1,545 crore in the previous financial year.

India Ratings and Research Private Limited, a Fitch Group Company, assigned a Long-Term Issuer Rating of ''IND AAA'' with a stable outlook to the Company. The rating is the highest assigned in Fitch''s rating scale and indicates the highest degree of safety regarding timely servicing of financial obligations and lowest credit risk.

Global Roundup

1. Robust revenue from operations growth (22% vs. previous year); crossed Rs.10,000 crore mark

2. Strong operating cash flow of more than 60% of operating profit for the year

3. More than 1,000 global filings

4. Completed three acquisitions

5. New organisation structure in place

6. Increase in efficiency and productivity levels in R&D and manufacturing India

As India''s second largest pharmaceutical company, Cipla is in a strong position to fulfil its commitment to provide modern medicine to everyone in the country. This year, despite the challenges, Cipla''s domestic branded generics business revenues grew 15.5% versus industry growth of 9%. The generics business also performed well.

Over the last six months the market share for Cipla''s branded generics grew 5.3%, rising steadily from the previously recorded 4.7%. Cipla continues to maintain its leadership in respiratory, paediatric and urology therapies. Legacy brands continue to perform well. The progressive product portfolio grew 23%, while the share of new product launches increased from 1.5% in Q1, 2012-13 to 3.5% in Q4, 2013-14. India business contributed 39.4% to overall revenues.

Cipla successfully launched Etacept, the Company''s first biosimilar for the treatment of rheumatoid arthritis. As part of an in-licensing transaction, Cipla entered into a strategic alliance to market MSD''s HIV drug, raltegravir, in India. Raltegravir is an important part of the third-line salvage regimen for HIV patients. It should be available to patients from mid-2015.

In the coming years, the domestic business will continue to focus on these themes:

- Growth ahead of market growth

- Strengthen our leadership in therapy and geography by empowering our people

- Increase sales force productivity with the rollout of Customer Relationship Management (CRM) and Sales Force Automation (SFA) systems.

South Africa

The Company completed the acquisition of 100% of the share capital of Cipla Medpro in South Africa at ZAR 10 per share amounting to a total investment of Rs.2,757 crore. This investment is aimed at further strengthening the Company''s commitment to the African continent, and is aligned with the strategy of ascending the value chain by managing a front- end sales force in a market outside India. The acquisition enables Cipla to strengthen Medpro''s position in the South African pharmaceutical market, support the optimisation of Medpro''s manufacturing capability and drive Medpro''s expansion into other African markets.

As one of the largest pharmaceutical companies in South Africa, Cipla Medpro has a market share of more than 5%. South Africa now contributes 13.2% to overall Cipla revenues on a consolidated basis. The Company has grown at 12% in the private market over the last three years. The Cipla brand inspires trust and has become a household name among consumers, pharmacies, prescribers and key opinion leaders.

The Company''s revolutionary three-in-one antiretroviral treatment has helped Cipla entrench itself at the forefront of the fight against HIV/AIDS in South Africa. Its manufacturing facility at Durban provides the Company a competitive edge and is the first Pharmaceutical Inspection Convention (PIC) compliant facility in the country.

Capitalising on its defined future portfolio, key development and in-licensing projects, and streamlined global organisational structure, Cipla will leverage synergies from its international family. Plans are on track and the integration across manufacturing supply chain, finance and human resources is complete. The Company has leveraged its skill and scale to drive down costs in areas such as procurement.

Europe

Cipla is making innovative, affordable medication accessible in over 30 countries across Europe. The European business contributed 5.7% to the overall revenues and recorded 40.9% growth for the year. As part of its European growth strategy, Cipla acquired Celeris, a pharmaceutical distribution company based in Croatia.

Cipla is focused on adding innovative elements to products, services and information through research and partnerships.

North America

In 2013-14 the Company''s active pipeline has expanded from 36 to more than 50 products including several key respiratory products and other complex generics. Cipla has 16 filings in North America this year and received 13 approvals.

Cipla intends to bring its intellectual capacity and range of product technologies directly to the US market both under the Cipla label and those of its partner organisations. North America business contributed 6.8% to overall revenues and recorded 18.2% growth for the year, excluding a one-off impact in FY 2012-13.

International (rest of the world)

With a diverse range of more than 1,000 products and 180 global partners across 120 countries, Cipla has a presence in Africa, the Middle East, Latin America, Asia Pacific, China, and Russia. International contributes 24.5% of global organisation revenues and grew 30.3% over last year. Cipla''s products are currently helping more than 1.7 million HIV patients, 55 million malaria patients, and 0.3 million patients in the area of reproductive and women''s health.

This year saw us increase our shareholding in Quality Chemical Industries Limited (QCIL), Uganda to 51%. The Company also strengthened its pan-African network of partners.

Strategic Business Units Core Areas of Competence

Restructuring the Company''s core business areas into Strategic Business Units presents an opportunity to streamline and innovate across Cipla''s global operations

Active Pharmaceutical Ingredients (API)

As the company that showed the way in manufacturing active pharmaceutical ingredients (APIs) in India, Cipla has expanded its portfolio to more than 200 products. Cipla''s state-of-the-art API plants meet stringent quality and current good manufacturing practices (cGMP) requirements and environment and safety standards. All of them are approved by various international regulatory agencies including US Food and Drug Administration (USFDA).

With the capacity to manufacture nearly 1,000 metric tonnes of APIs annually, the plants are geared to meet the diverse needs of both Indian and international customers. _

A significant portion of the APIs manufactured by Cipla are consumed internally. The third-party API business contributed 7.5% to the overall revenue and recorded 29% growth for the year.

Cipla has key strategic alliances in place with big pharmaceutical companies to support the development of new entities as an additional focus area. It has a robust portfolio process to create a pipeline of complex products.

The gastroenterology and antiretroviral segments continue to be major contributors to the business. By building deeper engagements, Cipla will develop and strengthen its key relationship with existing and new partners.

Respiratory

Cipla has delivered treatments for chronic obstructive airway diseases through innovative delivery mechanisms for over 30 years. This has resulted in the Company''s ability to meet diverse needs of various patient types all over the world. Cipla has further strengthened its capabilities in development and commercialisation and now has a dedicated team of world- class specialists focused on driving Respiratory care.

The Company offers more than 65 different inhaled products and has the world''s largest range of inhaled medications and devices. Across markets, Cipla offers a selection of metered dose inhalers (pMDIs) with dose indicators, innovative dry powder inhalers, nasal sprays, nebulisers, non-electrostatic spacers, and infant and baby masks. Today, the Company is one of the largest producers of pMDIs in the world.

Ensuring access and affordability is key to our mission, and over the years we have developed and implemented an operating model in several markets. This focuses on patient awareness and education, physician training, patient clinics, and counselling.

Global Access

Since its inception, Cipla''s ethos has been firmly rooted in the "None shall be denied" philosophy. The Company strongly believes that access to high quality, affordable medicines is a basic human right, and not just a privilege for a few.

Cipla Global Access (C-GA) concentrates on four key therapy areas: HIV/ AIDS, Malaria, Multi Drug-Resistant Tuberculosis, and Reproductive Health. In FY 2013-14, Cipla''s medicines in these therapies touched nearly 58 million lives. The Company aims to reach out to 80 million patients in these four therapies by 2020. Cipla has developed and fostered robust relationships with all the major global organisations and funding agencies that work toward this common cause. Additionally, Cipla has partnered with several global scientific research organisations to develop innovative, effective and affordable formulations for these four therapy areas.

Cipla is among the leading manufacturers of ARV drugs in the world. In 2001, we were the first pharmaceutical company to supply ARVs to countries with a high HIV burden at less than a dollar a day. In financial year 2013-14 alone, Cipla covered around 1.7 million HIV patients in 32 countries across the globe. Currently, we have 22 ARVs in our portfolio and about a dozen more in the development pipeline.

Cipla is one of the largest suppliers of antimalarial drugs in the world. We supplied nearly 55 million malaria treatments across all malaria endemic countries in FY 2013-14. Cipla has managed to quickly identify, develop, manufacture and supply low cost and state-of-the-art artemisinin-based combination therapy (ACTs) drugs in order to meet the challenge of drug-resistant malaria. All the ACTs supplied by Cipla are approved by WHO, and we are currently developing more antimalarials coupled with novel drug delivery systems.

The Company also has a strong second line TB (SLTB) portfolio, and is expanding its product portfolio for HIV/MDRTB co-infected patients. In FY 2013-14, Cipla''s SLTB drugs catered to a moderate patient base globally, and this base is likely to increase significantly with the arrival of new diagnostic methods. Future development in the TB therapy area will be focused on newer molecules which can significantly reduce treatment timelines. Cipla''s initiative also provides medication to 0.3 million patients in the area of reproductive and women''s health. Cipla has aligned its strategy with international development initiatives to provide safe and effective contraceptive drugs for 120 million more women by 2020. Cipla also makes medications for infections such as hepatitis and schistosomiasis which pose major health threats in the Least Developed Countries (LDC).

Cipla New Ventures (CNV) Incubators of Growth

This year Cipla launched its business-incubating unit, Cipla New Ventures (CNV). The division is aimed at bringing to Cipla a long-term direction for research and innovation in future therapies. Through Cipla New Ventures, the Company has started to build more innovation-led business streams with investments in biologicals, regenerative medicine, and consumer health. As an example, the Company recently invested in Chase Pharmaceuticals, an early stage drug development company in the US, focused on creating novel approaches to improve treatments for Alzheimer''s.

Integrated Product Development (IPD) Investing in Knowledge

Cipla''s IPD organisation includes formulations and API R&D, clinical, analytical, and regulatory functions.

Cipla''s R&D expense increased from 5.1% of total revenue in FY2012-13 to 5.4%in FY2013-14.TheCompany has undertaken a major expansion of its R&D Centre with new buildings and facilities at Vikhroli, Mumbai.

Overall Cipla made significant progress across these priority areas:

- Development and regulatory approval processes were on track. Currently, there are over 200 development projects underway indicating a robust pipeline. In FY 2013-14, we had over 90 filings for formulations in Europe and North America and over 1,000 filings in other international markets. We also received more than 50 approvals in Europe and North America and more than 800 approvals in other international markets.

- Cipla has increased efficiency across all teams resulting in reduced timelines, development costs and more timely regulatory approvals. Process improvements in R&D, analytics, regulatory, procurement and the new project management division have helped improve turnaround time and throughput levels.

- Cipla has filed several formulation patent applications and is working on developing nanotechnology-based oral systems, microsphere-based and suspension-based depot injections, and sprinkle technology.

- To help identify and define our portfolio priorities a portfolio screening process was established to evaluate high potential opportunities, evaluate product rationalisation opportunities and assess high return innovations, and in-licensing opportunities. Cipla''s Innovation Board, which was established with the intent of evaluating new and innovative opportunities has now completed a full year of operation.

Manufacturing

Taking it to the next level

Cipla''s productivity improved significantly in the past year. The manufacturing division delivered 25% more by volume as compared to FY 2012-13, while keeping costs at levels similar to last year.

In order to build a strong foundation for growth, Cipla launched Jaagruti, a programme for transformation across various functions. This programme is aimed at reducing business complexity and strengthening operations. Under this initiative the manufacturing division freed up valuable resources using strategies of network optimisation, energy efficiency, better management of human resources, and a review of capital and operational expenses.

This also involved conducting sustainability reviews for Cipla''s Goa and Kurkumbh operations with recommendations

being made in areas that could be improved. Jaagruti initiatives have also been extended to Cipla''s subsidiary locations in Satara, Kundaim and Sikkim.

Cipla''s operations in Cipla Medpro, South Africa and in Cipla QCIL, Uganda were also aligned with practices in India for greater uniformity across the Company''s global operations.

During the year under review, the Company has set up additional capacity for Active Pharmaceutical Ingredients (APIs) at Patalganga and Kurkumbh in Maharashtra. In particular, at Kurkumbh, Cipla has recently increased API capacity for antiretrovirals (ARVs). Besides the new facilities, all the existing facilities are upgraded regularly to meet current cGMP, safety and environmental standards. The Company has also scaled up its anti-cancer formulations facility at Goa.

Regulatory approvals: Several dosage forms and APIs manufactured at the Company''s facilities continue to enjoy the approval of major international regulatory agencies. These agencies include the US FDA, MHRA (UK), PIC (Germany), MCC (South Africa), TGA (Australia), the Department of Health (Canada), ANVISA (Brazil), SIDC (Slovak Republic), the Ministry of Health (Kingdom of Saudi Arabia), the Danish Medical Agency, and the WHO.

Threats, Risks, Concerns

The pharmaceutical industry is subject to constant scrutiny by regulatory authorities, both Indian and international. The Company continues to be vigilant in maintaining the highest quality standards.

The implementation of the new pricing regulations has impacted Cipla''s domestic business and the Company continues to take all measures to mitigate its effect.

With the recent change of the Central Government, the Indian pharmaceutical industry is eagerly awaiting new forward- looking policies which will encourage growth.

Cipla has some pending legal cases related to alleged overcharging in respect of certain drugs under the Drugs (Prices Control) Order, 1995. The aggregate amount of the demand notices received is about ^1,768.51 crore (inclusive of interest). The Company has been legally advised that based on several High Court decisions and considering the totality of facts and circumstances, these demand notices may not be enforceable. However, any unfavourable outcome in these proceedings could have an adverse impact on the Company.

Health, Safety & Environment (HSE)

HSE measures remain an utmost priority for Cipla. During the year under review, no major hazardous accident at the workplace was recorded. HSE benchmarking at Cipla is achieved by strict adherence to national and international standards.

Cipla''s manufacturing facilities including Goa, Bengaluru, Baddi, Indore, Kurkumbh, Patalganga and Sikkim, are certified for ISO 14001 and OHSAS 18001 standards. The Company continues to upgrade HSE standards at all locations. Specialised safety training programmes such as process safety, road safety, and behavioural safety are regularly imparted to increase safety awareness at all working levels. Safety Week, Fire Service Day and Electrical Safety Day are celebrated at the manufacturing units to create awareness among employees. Learning visits across different industrial sectors are conducted with a view to strengthen the HSE knowledge base and implement best HSE practices.

Villagers and school children living around the Company''s units across India also participate in such programmes. A well-equipped ambulance service is also made available to nearby villages in emergency situations. Medical camps covering various aspects like polio, asthma, blood donation, and dental are conducted in the surrounding villages. World Environment Day and Earth Day are celebrated by conducting a green drive programme of mass tree-plantation. The Company continues to maintain modern, well-equipped effluent treatment plant and effluent testing systems at its manufacturing facilities. Treated water from these zero-discharge facilities is recycled for utility purpose.

Internal Control Systems

The Company''s internal control procedures ensure compliance with various policies, practices and statutes in keeping with the organisation''s pace of growth and increasing complexity of operations. Cipla''s internal audit team carries out extensive audits throughout the year across all functional areas, and submits its reports to the Audit Committee of the Board of Directors.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Cipla''s Corporate Responsibility policy is aligned to the nine principles of the National Voluntary Guidelines on Social, Economic and Environmental Responsibilities, a global ISO 26000 accredited standard, endorsed by the Government of India.

The Company''s Corporate Responsibility policy seeks to ensure compliance with ethical standards in business practices, research and development, and marketing; addressing the challenges of improved access to medicines and their affordability; minimising environmental impacts and waste; and helping underprivileged communities to become resilient and self-reliant.

Initiatives executed in 2013-14 were grouped into five central themes of education, public health, occupational health and safety, environmental compliance, and employee welfare. The Company has an on-going drive to increase sustainability practices in energy, water conservation and waste minimisation across all its ISO 14001 certified plants. It supports health, welfare and educational activities in the communities around its facilities.

In the reporting period, Cipla donated medicines as a part of the relief work following the floods and landslides that hit Uttarakhand in northern India in June 2013.

In the last one year, Cipla offered grants to 23 NGOs, mainly engaged in education and health. The foundation helped with the construction of an English-medium school to provide education to more than 400 children of marginalised and vulnerable communities including those living with HIV/AIDS. Cipla extended financial support to underprivileged patients including children with thalassaemia needing bone marrow transplants. Cipla employees are encouraged to contribute to society through a volunteering programme. Last year employees helped to rebuild a school and distribute solar lanterns to households in the village of Papra in Uttarakhand.

The Cipla Palliative Care and Training Centre in Pune has been offering free palliative care since 1997 and has provided care to more than 8,500 patients.

Cipla was recognised at the Global CSR Excellence & Leadership Awards 2014 in the category of ''Organisations with Best Corporate Social Responsibility Practices''.

As mandated by the Securities and Exchange Board of India (SEBI), a standalone Business Responsibility Report (BRR) forms part of the Annual Report and is available on the Company''s website - www.cipla.com. The BRR contains a detailed report on Business Responsibilities vis-a-vis the nine principles of the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business framed by the Union Ministry of Corporate Affairs. Any shareholder interested in obtaining a copy may write to the Company Secretary at the Registered Office of the Company.

CORPORATE MATTERS

Responsibility Statement

Pursuant to section 217(2AA)of the Companies Act, 1956 it is confirmed that the Directors have:

i. followed applicable accounting standards in the preparation of the annual accounts;

ii. selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March 2014 and of the profit of the Company for that period;

iii. taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. prepared the annual accounts on a going concern basis.

Particulars of employees

Particulars of employees required to be furnished under section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, form part of this report. Any shareholder interested in obtaining a copy may write to the Company Secretary at the Registered Office of the Company.

Change of Registered Office

The Registered Office of the Company was shifted from Mumbai Central, Mumbai-400 008 to Cipla House, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai-400 013, effective 1n April 2014

Subsidiary Companies

The Company had 49 subsidiaries/step-down subsidiaries as on 31st March 2014. In accordance with the general circular issued by the Ministry of Corporate Affairs, the Balance Sheets, including annexures and attachments thereto of the Company''s subsidiaries, are not being attached with the annual report of the Company. The annual accounts of the subsidiary companies and the related detailed information will be made available to any member of the Company seeking such information. These documents will also be available for inspection by any member at the Registered Office of the Company and that of the respective subsidiary companies. The consolidated financial statements presented in this annual report include financial results of the subsidiary companies. A statement containing information on the Company''s subsidiaries is included in this annual report.

Corporate Governance

The Company is committed to good corporate governance practices. The report on corporate governance as stipulated under Clause 49 of the Listing Agreement forms part of this report.

Energy Conservation; R&D and Technology Absorption, Adaptation & Innovation; and Foreign Exchange Earnings & Outgo

As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the relevant information and data are annexed to this report.

Disclosure under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace in line with the requirements of The Sexual Harrasment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. The policy has set guidelines on the redressal and enquiry process that is to be followed by complainants and the ICC, whilst dealing with issues related to sexual harassment at the work place towards any women employees. All women employees (permanent, temporary, contractual and trainees) are covered under this policy. All employees are treated with dignity with a view to maintain a work environment free of sexual harassment whether physical, verbal or psychological.

The following is a summary of sexual harassment issues raised, attended and dispensed during the year 2013-14:

- No. of complaints received: 4

- No. of complaints disposed off: 4

- No. of cases pending for more than 90 days: Nil

- No. of workshops or awareness programme against sexual harassment carried out: 4

- Nature of action taken by the employer or District Officer: Out of 4 cases, one respondent was suspended, second was warned, third has resigned and the fourth was a contract employee who has also resigned.

Employee Stock Option Scheme

As required under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, the applicable disclosures as on 31st March 2014 are annexed to this report.

Directors

In March 2014, Mr. M.K. Hamied decided to move from an Executive position to the role of Non-Executive Vice-Chairman. He has contributed immensely to the company over the last 30 years and he will continue to contribute and support the Company.

Mr. Rajesh Garg was appointed as an Additional Director with effect from 1st April 2014 and holds office up to the date of the ensuing Annual General Meeting. He was appointed as Whole-time Director designated as "Executive Director and Global Chief Financial Officer" for a period of five years with effect from 1st April 2014 subject to the approval of the shareholders at the ensuing Annual General Meeting.

Dr. Peter Mugyenyi and Mr. Adil Zainulbhai were appointed as Additional Directors with effect from 12th February 2014 and 23rd July 2014 respectively. They hold office up to the date of the ensuing Annual General Meeting.

Dr. Ranjan Pai resigned from the Board of Directors effective 30th August 2013, due to his increasing business commitments. Mr. M.R. Raghavan resigned from the Board of Directors effective 23rd July 2014, due to increase in workload owing to various initiatives on the social front that he has been associated with. The Directors place on record their appreciation of their contributions as members of the Board.

A brief resume of the Directors seeking appointment/re-appointment is provided in the Notice.

Cost Auditors

Pursuant to the provisions of section 233B of the Companies Act, 1956 and with the prior approval of the Central Government, Mr. D.H. Zaveri, a practising Cost Accountant (Fellow Membership No. 8971) has been appointed to conduct the audit of cost records of pharmaceutical products for the financial year ended 31st March 2014. The due date for filing the Cost Audit Report for the year ended 31st March 2014 is 27th September 2014

The due date for filing Cost Audit Report for the year ended 31st March 2013 was 27th September 2013 and the same was filed on 27th September 2013.

Auditors

Messrs. V. Sankar Aiyar & Co. and Messrs. R.G.N. Price & Co., joint statutory auditors of the company, retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

On behalf of the Board,

Y.K. Hamied 23rd July 2014 Chairman


Mar 31, 2013

The Directors take pleasure in presenting the Seventy-Seventh Annual Report of the Company along with the Audited Accounts for the financial year ended 31st March 2013.

Financial Summary

Year ended Year ended 31st March 2012 31st March 2013

7223 Gross total revenue 8524

1421 Profit before tax 2012

1124 Profit after tax 1507

2298 Surplus brought forward from last balance sheet 3111

3422 Profit available for appropriation 4618

Appropriations:

160 Dividend 160

26 Tax on dividend 28

125 Transfer to general reserve 160

3111 Surplus carried forward 4270

Rs. in crore

DIVIDEND

The Directors recommend a dividend of Rs.2 per share on 80,29,21,357 equity shares of Rs.2 each for the year 2012-13 amounting to Rs.160.58 crore.

CORPORATE SOCIAL RESPONSIBILITY

''Caring for Life'' is the chief purpose of doing business at Cipla. Corporate Social Responsibility (CSR) in the Company is, therefore, seamlessly integrated into its products, processes and people - the three key essentials for doing responsible business.

Pursuing its commitment to make its products affordable and accessible, the Company, in November 2012, announced a breakthrough price reduction on its three generic anti-cancer drugs - Erlotinib (Erlocip), Docetaxel (Docetax) and Capecitabine (Capegard) - by up to 64%. The drugs are used for treating lung and pancreatic cancer, breast cancer, head & neck cancer, gastric cancer, bladder, colorectal and colon cancers. Earlier in May 2012, Cipla had slashed prices by up to 76% on Sorafenib (Soranib), Gefitinib (Gefticip) and Temozolomide (Temoside), used in treating cancers of the kidney, lung and brain. Also, Cipla extends its commitment to product responsibility by manufacturing drugs for rare diseases.

Further, the state-of-the-art ''Cipla Palliative Care and Training Centre'' in Pune is a specialised endeavour to contribute to the cause of cancer treatment, especially to those terminally ill cancer patients who suffer from unbearable pain and need palliative care. The Centre has been offering free palliative care to such patients for the last 16 years. It has so far provided comfort and solace to more than 8500 patients.

Sustainability is an important parameter of the growth journey at Cipla. Our sustainability initiatives, arising out of environmental concerns, include continuous efforts and improved practices in energy and water conservation and waste minimisation across the organisation.

Caring for communities is central to our CSR strategies. Under the social development plan, the Company continues to support several community welfare, health and educational activities essentially in communities surrounding the Company''s factories both directly and through charitable foundations. Our manufacturing plants located in the states of Maharashtra, Goa, Karnataka, Himachal Pradesh, Madhya Pradesh and Sikkim have initiated a wide spectrum of human development activities. The community projects implemented in the vicinity of the plants are done in response to the identified needs of the communities which are shared with the Company by the local stakeholders. The Company has not laid any boundary towards limiting its social commitments and thereby remains flexible in accommodating almost all legitimate requests being made by the local stakeholders. CSR initiatives in the Company, by and large, are underpinned by five pillars - Education, Public Health, Occupational Health & Safety, Environmental Compliance and Employee Welfare.

The Company goes beyond its immediate business areas and lends support to NGOs engaged in care & service management of HIV/AIDS and cancer anywhere in the country. The Company supports Manavaya, a Pune based NGO engaged in the caring and rehabilitation of abandoned children living with HIV/AIDS. Manavaya is supported for running a mobile health care unit which reaches out to the poor and disadvantaged communities of 10 villages in the outskirts of Pune. Snehalaya, an NGO working with destitute women including sex workers and their children living with HIV/AIDS in Ahmednagar, Maharashtra is being financially supported for the construction of an English medium school which will provide education to more than 400 children of marginalised and vulnerable communities including children living with HIV/AIDS.

As mandated by the Securities and Exchange Board of India (SEBI), a standalone Business Responsibility Report (BRR) forms part of the Annual Report and is available on the Company''s website http://www.cipla.com/Home/About-Us/Caring- for-the-Enviroment.aspx. The BRR contains a detailed report on Business Responsibilities vis-a-vis the nine principles of the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business framed by the Union Ministry of Corporate Affairs. Any shareholder interested in obtaining a copy may write to the Company Secretary at the Registered Office of the Company.

CORPORATE MATTERS

Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956 it is confirmed that the Directors have:

i. followed applicable accounting standards in the preparation of the annual accounts;

ii. selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March 2013 and of the profit of the Company for that period;

iii. taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv. prepared the annual accounts on a going concern basis.

Subsidiary Companies

The Company had 14 subsidiaries/step-down subsidiaries at the beginning of the year. During the financial year ended 31st March 2013, Cipla USA Inc., Cipla Kenya Limited and Cipla Malaysia Sdn. Bhd. became step-down subsidiaries of the Company.

In accordance with the general circular issued by the Ministry of Corporate Affairs, the Balance Sheets, including annexures and attachments thereto of the Company''s subsidiaries, are not being attached with the Annual Report of the Company. The annual accounts of the subsidiary companies and the related detailed information will be made available to any member of the Company seeking such information. These documents will also be available for inspection by any member at the Registered Office of the Company and that of the respective subsidiary companies. The consolidated financial statements presented in this Annual Report include financial results of the subsidiary companies. A statement containing information on the Company''s subsidiaries is included in this Annual Report.

Corporate Governance

The Company is committed to good corporate governance practices. The report on corporate governance as stipulated under Clause 49 of the Listing Agreement forms part of this report.

Disclosure of Particulars

As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the relevant information and data are annexed to this report.

Directors

Mr. Subhanu Saxena was appointed as an Additional Director with effect from 16th July 2013 and holds office up to the date of the ensuing Annual General Meeting. He was appointed as Managing Director designated as "Managing Director and Global Chief Executive Officer" for a period of five years with effect from 16th July 2013 subject to the approval of the shareholders at the ensuing Annual General Meeting. Consequent to the appointment of Mr. Subhanu Saxena as Managing Director, Mr. M.K. Hamied has been appointed as Whole-time Director designated as "Executive Vice- Chairman" for a period of two years with effect from 16th July 2013. As required under Schedule XIII to the Companies Act, 1956 an application will be made to the Central Government for the approval of appointment of Mr. Subhanu Saxena as Managing Director.

In February 2013, Dr. Y.K. Hamied decided to step-down as Managing Director of Cipla. Dr. Y.K. Hamied joined Cipla at the age of 24 and completed 52 years of distinguished service with the Company. From setting up the first ever API manufacturing facility in India, to getting first US FDA approval in the country, Dr. Y.K. Hamied pioneered the growth and development of the Indian Pharmaceutical industry. He has influenced several policy changes that have shaped public health and access across the world. He has been instrumental in making healthcare affordable by launching generic versions of AIDS, cancer and other life-saving medicines. In 2001, Dr. Y.K. Hamied reduced the prices of ARV drugs to ''a dollar a day'', providing access to millions of HIV patients across the world. Dr. Y.K. Hamied will continue to contribute and support Cipla as the Non-Executive Chairman of the Company.

Mr. Ramesh Shroff, liable to retire by rotation at the ensuing Annual General Meeting of the Company, has expressed his intention not to seek re-appointment due to his advancing age. The Directors place on record their appreciation of Mr. Shroff''s contribution as a member of the Board and Chairman of Audit Committee.

Mr. Ashok Sinha was appointed as an Additional Director with effect from 16th July 2013. He holds office up to the date of the ensuing Annual General Meeting.

Notices have been received from some members, proposing appointment of Mr. Subhanu Saxena and Mr. Ashok Sinha as Directors.

Mr. M.R. Raghavan and Mr. Pankaj Patel retire by rotation and, being eligible, offer themselves for re-appointment.

A brief resume of the Directors seeking appointment/re-appointment is provided in the Notice.

Cost Auditors

Pursuant to the provisions of section 233B of the Companies Act, 1956 and with the prior approval of the Central Government, Mr. D. H. Zaveri (Fellow Membership No. 8971) practising Cost Accountant, has been appointed to conduct the audit of cost records of pharmaceutical products for the financial year ended 31st March 2013. The due date for filing the Cost Audit Report for the year ended 31st March 2013 is 27th September 2013.

In terms of the circulars issued by Ministry of Corporate Affairs, the due date for filing the Cost Audit Report for the year ended 31st March 2012 with the Central Government was 28th February 2013. The Cost Audit Report was filed on 28th February 2013.

Auditors

Messrs. V. Sankar Aiyar & Co. and Messrs. R.G.N. Price & Co., joint statutory auditors of the Company, retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

On behalf of the Board,

Y.K. Hamied 15th July 2013 Chairman


Mar 31, 2012

The Directors take pleasure in presenting the Seventy-Sixth Annual Report of the Company along with the Audited Accounts for the financial year ended 31st March 2012.

Financial Summary

Year ended Year ended 31st March 2011 31st March 2012

6490 Gross total revenue 7223

1151 Profit before tax 1421

960 Profit after tax 1124

1699 Surplus brought forward from last balance sheet 2298

2659 Profit available for appropriation 3422

Appropriations: 64 Interim dividend -

160 Dividend 160

37 Tax on dividend 26

100 Transfer to general reserve 125

2298 Surplus carried forward 3111

Rs.in crore

DIVIDEND

The Directors recommend a dividend of Rs.2 per share on 80,29,21,357 equity shares of Rs.2 each for the year 2011-12 amounting to Rs.160.58 crore.

CORPORATE SOCIAL RESPONSIBILITY

Cipla launched the first-ever painless, non-invasive and radiation-free breast scanning technology called the 'No Touch Breast Scan' (NTBS) for detecting breast cancer at an early stage. The NTBS would be exclusively marketed by Cipla across various diagnostic centres and hospitals in India and has been already installed at Mumbai, Pune and Indore. This initiative would increase awareness, in particular among younger women, and facilitate regular scanning.

The Company had recently announced a breakthrough price reduction on select cancer drugs towards its commitment to make medicines affordable and accessible, particularly to cancer patients. Drugs constitute a significant proportion of the overall cost of cancer treatment and a reduction in costs can greatly relieve the burden. This initiative of price reduction is a humanitarian approach by Cipla to support cancer patients.

The Cipla Palliative Care and Training Centre in Pune continues to provide care to terminally-ill cancer patients and their families. As of date, the Centre has provided comfort and solace to more than 7,700 patients. The focus is on reaching out to more cancer patients who need palliative care and on integrating palliative medicine with curative therapy.

In addition, the Company continues to support several community welfare, health and educational activities, essentially in communities surrounding the Company's factories both directly and through its charitable trusts, by providing healthcare education, improvement of community infrastructure, scholarships, etc.

CORPORATE MATTERS Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956 it is confirmed that the Directors have:

i. followed applicable accounting standards in the preparation of the annual accounts;

ii. selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March 2012 and of the profit of the Company for that period;

iii. taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv. prepared the annual accounts on a going concern basis.

Subsidiary Companies

The Company had 13 subsidiaries/step-down subsidiaries at the beginning of the year. During the financial year ended 31st March 2012, Cipla ilag Ticaret Anonim §irketi became a step-down subsidiary of the Company.

In accordance with the general circular issued by the Ministry of Corporate Affairs, the Balance Sheets, including annexures and attachments thereto of the Company's subsidiaries, are not being attached with the Annual Report of the Company. The annual accounts of the subsidiary companies and the related detailed information will be made available to any member of the Company seeking such information. These documents will also be available for inspection by any member at the Registered Office of the Company and that of the respective subsidiary companies. The consolidated financial statements presented in this Annual Report include financial results of the subsidiary companies. A statement containing information on the Company's subsidiaries is included in this Annual Report.

Corporate Governance

Your Company is committed to good corporate governance practices. The report on corporate governance as stipulated under Clause 49 of the Listing Agreement forms part of this report.

Disclosure of Particulars

As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the relevant information and data are annexed to this report.

Directors

Dr. Ranjan Pai was appointed as an Additional Director with effect from 14th November 2011. He holds office upto the date of the ensuing Annual General Meeting. Notices have been received from some members, proposing his appointment as a Director.

Dr. H. R. Manchanda and Mr. V. C. Kotwal retire by rotation and, being eligible, offer themselves for re-appointment.

A brief resume of the said Directors is provided in the Notice.

Cost Auditors

Pursuant to the provisions of section 233B of the Companies Act, 1956 and with the prior approval of the Central Government, Mr. D.H. Zaveri (Fellow Membership No. 8971), practising Cost Accountant, has been appointed to conduct audit of cost records of bulk drugs and formulations for the financial year ended 31st March 2012. The Cost Audit Reports would be submitted to the Central Government within the prescribed time.

The Cost Audit Reports for bulk drugs and formulations for the year ended 31st March 2011 were filed with the Central Government on 1st October 2011.

Auditors

Messrs. V. Sankar Aiyar & Co. and Messrs. R.G.N. Price & Co., joint statutory auditors of the Company, retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

On behalf of the Board,

Y.K. Hamied

Mumbai, 7th June 2012 Chairman & Managing Director


Mar 31, 2011

Dear Members,

The Directors take pleasure in presenting the Seventy-Fifth Annual Report of the Company along with the Audited Accounts for the financial year ended 31st March 2011.

Financial Summary

Year ended Year ended

31st March 2010 31st March 2011

5,765 Sales and other income 6,483

1,230 profit before exceptional item and tax 1,151

95 Add: Exceptional item -

1,325 profit before tax 1,151

1,081 profit after tax 960

955 Surplus brought forward from last balance sheet 1,699

2,036 profit available for appropriation 2,659

Appropriations:

- Interim dividend 64

160 Final dividend 160

27 Tax on dividend 37

150 Transfer to general reserve 100

1,699 Surplus carried forward 2,298

Rupees in crore

DIVIDEND

On the occasion of its 75th anniversary, Cipla declared a special interim dividend of 80 paise per equity share (face value of Rs.2 each) in August 2010 amounting to Rs.74.90 crore (inclusive of dividend tax).

The Directors recommend a final dividend of Rs.2 per share on 80,29,21,357 equity shares of Rs.2 each for the year 2010-11 amounting to Rs.160.58 crore.

The total dividend payout for the year 2010-11 inclusive of dividend tax would aggregate to Rs.261.53 crore.

MANAGEMENT REVIEW: 2010-11 Industry Structure and Development

The financial year 2010-11 marked a resurgence in growth post the f nancial crisis. Higher investment spending, specially in the emerging markets, is pushing growth in the global economy. As a result, several countries are gradually returning to normal macroeconomic policies. However, the economic health in parts of Europe and the fiscal trends in some other countries is cause for concern and continues to impact the world economy.

The forecast for the Indian economy is positive with growth expected to touch 8.5 per cent in the current fiscal year. Yet, constant inflation in the country is taking its toll and rising global commodity prices is only compounding the problem.

The pharmaceutical industry in India retains its position of strength as the pharmacy capital of the world. It supplies an estimated one-third of all global pharmaceutical produce in terms of volume. In the financial year 2010-11, the Indian pharmaceutical industry grew more than 14 per cent, according to ORG IMS, though this growth was mainly driven by the top 50 companies.

A growing trend was that more Indian pharmaceutical companies focussed on semi-urban and rural markets for incremental growth opportunities. During the year, the industry also witnessed Indian pharma companies selling out to the multinationals.

Performance Review

During the year under review, the Company's total income from operations increased by 12 per cent. Domestic turnover rose by 12 per cent while export income went up by 16 per cent. profit after tax for the year was Rs.960 crore compared to Rs.1081 crore last year, excluding the one-time sale of the I-pill brand last year.

This year, there was a dip in operating margins of about 3 per cent, as a percentage of total revenue. This was mainly due to lower technical fees (Rs.60 crore compared to Rs.150 crore last year), as the development stage of several projects reached completion and the products have either been commercially launched or will be launched by the Company's partners. Another major reason for the decline is that the Indore SEZ factory is in its first year of operations and is still to reach its optimum capacity levels. Besides, the Rupee has appreciated compared to the US dollar which has in turn reduced earnings by about 4 per cent.

Products

The Company introduced many new drugs and formulations during the year. Some significant products are mentioned below:

- Entavir (entecavir tablets) - antiviral for hepatitis B

- Febucip (febuxostat tablets) - drug for gout

- Flosoft (fluorometholone acetate ophthalmic suspension) - topical steroid for eye inflammation

- Foracort (formoterol and budesonide autohaler) - asthma controller therapy in a new easy-to-use breath actuated inhaler

- Furamist AZ (fluticasone furoate and azelastine hydrochloride nasal spray) - new combination nasal spray for allergic rhinitis

- Imudrops (cyclosporine eye drops) - immunomodulatory drug for severe dry eye

- Lacsyp (lactitol monohydrate liquid syrup) - lactulose analogue for constipation and hepatic encephalopathy

- Levolin (levosalbutamol tartarate autohaler) - asthma reliever in an easy-to-use breath actuated inhaler

- Montair FX (montelukast and fexofenadine tablets) - antiallergic combination for rhinitis

- Moxicip KT (moxif oxacin and ketorolac eye drops) - topical combination for eye inflammation

- Panstal (pancreatin capsules) - digestive enzyme for pancreatic insufi ciency

- Paracip (paracetamol infusion) - for pain and fever management in intensive care units and hospitals

- Phosome (liposomal amphotericin injection) - high potency antifungal in a new targeted drug delivery system

- Pirfenex (pirfenidone tablets) - the first and only approved drug for idiopathic pulmonary f brosis (IPF)

- Prandial M (voglibose and metformin tablets) - combination antidiabetic

- Prasuvas (prasugrel tablets) - antiplatelet drug

- Pulmopres (tadalaf l tablets) - the first once-daily therapy for pulmonary arterial hypertension

- Rixmin (rifaximin tablets) - locally acting antibacterial for infectious diarrhoea

- Rokfos (zoledronic infusion) - once-yearly treatment for osteoporosis

- Rosulip-F (rosuvastatin and fenof brate tablets) - combination drug for mixed dyslipidemia

- Soranib (sorafenib tablets) - breakthrough drug for liver cancer

- Sornip (boswellic acid cream) - topical non-steroidal formulation for psoriasis

- Synthivan (atazanavir sulphate and ritonavir tablets) - two-drug combination antiretroviral for HIV/AIDS

- Triohale (formoterol fumarate, ciclesonide and tiotropium bromide rotacaps) - world's first triple-drug dry powder inhalation for COPD

- VC-15 (vitamin C serum) - antioxidant for dermatological conditions

- Vertipress (betahistine hydrochloride tablets) - therapy for vertigo

- Xovatra (travoprost eye drops) - prostaglandin analogue for glaucoma

- Zolmist (zolmitriptan nasal spray) - rapid-acting drug for migraine

Manufacturing Facilities

In April 2010, the Company commenced commercial production of pharmaceutical formulations at the Special Economic Zone (SEZ) project, at Indore, Madhya Pradesh. This project includes facilities for the manufacture of aerosols, respules, liquid orals, pre-filled syringes (PFS), nasal sprays, large volume parenterals (LVP), eye drops, tablets and capsules. The total investment for this project is about Rs.900 crore.

The Company is setting up API facilities at Bengaluru and Kurkumbh. It is also upgrading the API facilities at Patalganga. The total investment for these projects is about Rs.400 crore.

Regulatory Approvals

Several dosage forms and APIs manufactured at the Company's plants continued to enjoy the approval of major international regulatory agencies. These agencies included the US FDA, MHRA (UK), PIC (Germany), MCC (South Africa), TGA (Australia), Department of Health (Canada), ANVISA (Brazil), SIDC (Slovak Republic), Ministry of Health (Kingdom of Saudi Arabia), the Danish Medical Agency and the WHO.

Opportunities

Domestic Markets

According to ORG IMS, Cipla is one of the largest pharmaceutical companies in India. New technology and new products, including dosage forms, which are being introduced every year, offer significant growth opportunities for the Company.

Cipla is increasing its focus in various segments to meet the growing market needs in the future. The Company is giving a renewed focus to two therapeutic segments namely, oncology and neuropsychiatry.

The Company's venture on biotechnology products is making significant progress and the regulatory process is underway.

International Markets

Cipla's international business continues to be a major revenue driver for the Company. During the year under review, almost 55 per cent of the total income originated from international markets. As a result, Cipla contributed significant net foreign exchange earnings to the tune of USD 420 million.

The Company is in the process of consolidating and rationalising its international business and strategies are being reviewed to optimize value for its technology and product range.

The Company continues to forge partnerships and alliances with large generic pharmaceutical companies for product development and supply in developed markets.

Cipla continues its humanitarian mission of making afiordable medicines available to the entire world. It is today the largest single supplier of HIV and anti-malarial drugs in the world in terms of volume.

Threats, Risks, Concerns Patents

The Company is currently involved in a number of patent litigations at the pre grant, post grant, appellate board and at the level of the judicial courts. As anticipated, the number of patent litigations has gone up dramatically post Patents Amendment Act, 2005 and more so because companies are f ling frivolous patent applications and multiple applications with almost identical claims. The Appellate Board is saddled with a huge backlog of pending cases. Cipla, so far, has been successful in challenging a number of patent applications at different stages in the grant process.

The government is yet to decide conclusively on the issues of Data Exclusivity and Data Protection which are both "Trips Plus" measures. The European Union government is pushing for Trips Plus provisions and dilution of the Patents Act through bilateral agreements. There is a lot of uncertainty with regard to the government's position on these two vital issues.

Taking advantage of the new patents regime, the Company is witnessing an increase in the number of patented products being launched in India by multinational companies. A number of these products have been launched at exorbitant prices. Cipla has sought a voluntary license on anti-HIV drugs, Raltegravir and Rilpivirine and will continue to pursue the in-licensing route to bring the latest products to the Indian consumers at afiordable prices. The Government of India must also clearly spell out its policy on how it plans to control the prices of patented products which enjoys a monopoly.

India is considered the pharmaceutical hub of the world and the Government of India must try to preserve and promote the Indian industry in every which way.

In the light of these threats, Cipla is continuously fighting these issues on various fronts, not only to protect the interest of the Company but also of the Indian patients.

Drug Pricing

It is well over 15 years since the last drug policy was implemented which resulted in the Drugs Price Control Order 1995. The Government should re-haul the drug policy and bring it in line with the current market conditions. It must be fair, transparent and non-ambiguous. The drug policy should only seek to bring under price control, drugs which are not manufactured in India and those which enjoy 100 per cent monopoly.

The Indian market is highly dynamic and competitive and it is believed that market competition will ensure that drug prices are within the reach of the common man. Drug prices today in India are the lowest in the world even when compared to neighbouring countries like Bangladesh, Pakistan, etc.

As per newspaper reports, it appears that the Government of India is planning to bring under price control all the drugs which are listed in the National List of Essential Medicines. More than 350 drugs are expected to be covered. This will have an adverse impact on the Indian Pharmaceutical Industry which is already reeling under high inf ationary pressures. The proposed move will destroy the country's self-sufficiency in medicines.

Cipla has some pending legal cases on account of alleged overcharging in respect of certain drugs under the Drug Price Control Order. The aggregate amount of the demand notices received is about Rs.1230 crore (inclusive of interest). The Company has been legally advised that based on the directions given by the Supreme Court, there is no probability of the demand becoming payable by the Company. Any unfavourable outcome in these proceedings could have an adverse impact on the Company.

Regulatory Approvals

Our manufacturing facilities are regularly monitored and approved by various regulatory authorities across the globe. These authorities have become more vigilant and strict with respect to compliance. Periodically, the US FDA conducts routine audits of all approved facilities and accordingly several of our plants including Goa, Patalganga, Kurkumbh and Bengaluru were inspected by the US FDA. Currently, all facilities continue to be approved by the US FDA.

Exchange Rate Movements

During the year, the Indian Rupee appreciated by more than 3-4 per cent compared to the US Dollar. Such severe fluctuations in foreign currency exchange rates can have a significant impact on the Company's operations and financial results.

Safety Measures

The Company believes in Safety first – whether for its patients, plants and employees. Periodical safety audits are conducted at all units and regular reviews are done by safety committees with an objective of enhancing safety measures.

As always, the Company kept up high standards of occupational health, safety and environment preservation practices at all its manufacturing units. Various health, safety and environment awareness programmes were organised for employees, villagers and school children living around the Company's units at Sikkim, Baddi (Himachal Pradesh), Patalganga (Maharashtra), Kurkumbh (Maharashtra), Verna (Goa) and Bengaluru (Karnataka) with the objective of achieving and maintaining safety, health and environment standards. Training was imparted to school children, teachers and nearby villagers on road safety, home safety, hygiene and environment.

On World Environment Day and Earth Day, employees and government authorities went on a ‘Green Drive' at the factory premises to plant trees and reduce pollution. The Company continued to maintain modern, well-designed effluent treatment plants at its factories. Treated water from these "zero discharge" facilities is used for maintaining a green belt at all the locations.

Internal Control Systems

The Company's internal control procedures ensure compliance with various policies, practices and statutes in keeping with the organisation's pace of growth and increasing complexity of operations. Cipla's internal audit team carries out extensive audits throughout the year, across all functional areas and submits its reports to the Audit Committee of the Board of Directors.

Human Resources

Particulars of employees required to be furnished under section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, form part of this report. Any shareholder interested in obtaining a copy may write to the Company Secretary at the Registered office of the Company.

CORPORATE SOCIAL RESPONSIBILITY

On the occasion of Cipla's Platinum Jubilee, the Company announced setting up of the Cipla Foundation by contributing a sum of Rs.5 crore. The Foundation will aim to provide care and financial support to people in need of healthcare in India.

The Cipla Palliative Care and Training Centre in Pune continues to provide care to terminally ill cancer patients. As of date, the Centre has provided comfort and solace to more than 7000 patients. The focus is on reaching out to more cancer patients who need palliative care and on integrating palliative medicine with curative therapy.

The Cipla Palliative Care and Training Centre is recognised as a training resource by the Indian Association of Palliative Care (IAPC). Besides an IAPC certified training course for doctors and nurses, learning modules in palliative care are available for caregivers, volunteers and other interested groups. The Centre also runs a school for training nursing assistants which is offered free-of-charge to young boys and girls from economically weaker sections with the objective of providing an opportunity for skill development, leading to gainful employment.

Being in the forefront of the crusade against HIV/AIDS, the Company has supported Manavya, a Pune based organization which runs a home for children with HIV infection. Manavya operates a mobile dispensary in villages on the outskirts of Pune and this project is fully funded by the Company.

In addition, the Company continued to support several community welfare, health and educational activities essentially in communities surrounding the Company's factory locations, both directly and through its charitable trusts by providing healthcare education, improvement of community infrastructure, scholarships, etc.

CORPORATE MATTERS Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956 it is confirmed that the Directors have:

i. followed applicable accounting standards in the preparation of the annual accounts;

ii. selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of Affairs of the Company at the end of the financial year ended 31st March 2011 and of the profit of the Company for that period;

iii. taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv. prepared the annual accounts on a going concern basis.

Subsidiary Companies

In accordance with circular no. 2/2011 dated 8th February 2011 issued by the Ministry of Corporate Affairs, the Balance Sheets, including annexures and attachments thereto of the Company's subsidiaries, are not being attached with the Annual Report of the Company. The annual accounts of the subsidiary companies and the related detailed information will be made available to any member of the Company seeking such information. These documents will also be available for inspection by any member at the Registered office of the Company and that of the respective subsidiary companies. The consolidated financial statements presented in this Annual Report include financial information of the subsidiary companies. A statement containing information on the Company's subsidiaries is included in this Annual Report.

During the financial year ended 31st March 2011, the following companies were acquired as subsidiaries/step-down subsidiaries: Cipla (Mauritius) Limited, Cipla (UK) Limited, Cipla-Oz Pty Limited, Four M Propack Private Limited, Goldencross Pharma Private Limited, Medispray Laboratories Private Limited, Meditab Holdings Limited, Meditab Pharmaceuticals South Africa (Pty) Limited, Meditab Specialities New Zealand Limited, Meditab Specialities Private Limited, Sitec Labs Private Limited and STD Chemicals Limited.

Corporate Governance

The Company is committed to good corporate governance practices. The report on corporate governance as stipulated under Clause 49 of the Listing Agreement forms part of this report.

By and large, the Company is already complying with the recommendations of Corporate Governance Voluntary Guidelines 2009 issued by the Ministry of Corporate Affairs.

Disclosure of Particulars

As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the relevant information and data are annexed to this report.

Directors

The Company deeply regrets the sad demise of Mr. Amar Lulla on 22nd April 2011. The Board of Directors would like to place on record its sincere gratitude to Mr. Amar Lulla and appreciate his pioneering ef orts during his association with the Company for over three decades. He has been one of the key persons who played a significant role in enabling the Company to attain its current position.

Mr. S. Radhakrishnan was appointed as an Additional Director with ef ect from 12th November 2010 and holds office until the ensuing Annual General Meeting. He was appointed as Whole-time Director for a period of five years with effect from 12th November 2010, subject to the approval of shareholders at the ensuing Annual General Meeting. Mr. S. Radhakrishnan is a qualified Chartered Accountant, who has been with the Company for over 26 years and has vast experience in financial, commercial, legal and allied areas.

Mr. S.A.A. Pinto resigned from the Board of Directors effective 11th November 2010 due to health reasons. The Directors place on record their appreciation of his contribution as a member of the Board.

Mr. M.R. Raghavan and Mr. Pankaj Patel retire by rotation and, being eligible, offer themselves for re-appointment. A brief resume of the said directors is provided in the Notice.

Cost Auditors

Pursuant to the provisions of section 233B of the Companies Act, 1956 and with the prior approval of the Central Government, Mr. D.H. Zaveri (Fellow Membership No. 8971) practising Cost Accountant, has been appointed to conduct audit of cost records of bulk drugs and formulations for the year ended 31st March 2011. The Cost Audit Reports would be submitted to the Central Government within the prescribed time.

Pursuant to Rule 5 of the Cost Audit Report Rules, Cost Audit Reports for bulk drugs and formulations for the year ended 31st March 2010 were f led with the Central Government on 29th September 2010 and 30th September 2010 respectively.

Auditors

Messrs. V. Sankar Aiyar & Co and Messrs. R.G.N. Price & Co., joint statutory auditors of the Company, retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

On behalf of the Board,

Y. K. Hamied

Mumbai, 29th June 2011 Chairman & Managing Director

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