Mar 31, 2022
Rights, Preferences and Restrictions:
The Company has only one class of shares i.e. Equity Shares having a face value of '' 5 each. Every member present in person or by proxy shall on show of hands have one vote and upon a poll, the voting right shall be in proportion to his share of the paid up equity share capital of the Company. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
Other details of equity shares for a period of five years immediately preceding 31st March, 2022
The Company has neither allotted equity shares as fully paid up pursuant to contract(s) without payment being received in cash nor has the Company allotted equity shares as fully paid up bonus shares. Aggregate number of equity shares bought back: 7,270,000 (up to 31st March, 2021: 7,270,000)
Nature and Purpose of Other Equity Capital Redemption Reserve
Capital Redemption reserve was created consequent to the buy back of shares. In terms of Section 69 of the Act, the Company transfers a sum equal to nominal value of the shares bought back to Capital Redemption Reserve. The Reserve may be applied by the Company in paying up unissued shares of the Company to be issued to members of the Company as fully paid bonus shares.
15(a). Employee Benefit Obligations
(i) Defined Contribution Plans:
The Company''s contribution to Superannuation Fund and Employees'' Pension Scheme aggregating '' 14.4 million ( Previous year - '' 22.7 million) has been recognised as expense in the Statement of profit and loss for the year under the head Employee Benefits Expense [Refer Note 21].
(ii) Defined Benefit Plans:
General Description of Defined Benefit Plans:
(a) Gratuity
The Company provides for gratuity for employees as per the Payment of Gratuity Act, 1972. Employees who are in continuous service of 5 years are eligible for gratuity. The benefit payable is the amount calculated as per the Payment of Gratuity Act, 1972 or the Company scheme applicable to the employees. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. The gratuity plan is a funded plan and it is recognised by the Income-tax authorities and administered through trustees and/or LIC. Liability for Gratuity is provided on the basis of valuations, as at Balance Sheet date, carried out by an independent actuary.
(b) Provident Fund
Provident fund is Defined Benefit Plan that provides for lump sum amount to be paid to employees at the time of separation from the Company Both employee and employer (at a determined rate) contribute monthly to a Trust set up by the Company to manage the investments and distribute the amounts entitled to employees. The benefits are accumulated value of contributions made by the employee and the Company at the minimum interest rate as declared by the Employee Provident Fund Organisation for respective years. Valuation for interest rate guarantee is provided on the basis of valuations, as at Balance Sheet date, carried out by an independent actuary.
(c) Non-Contractual Pension Plan
The Pension Scheme is a Defined Benefit Plan with a minimum pension guarantee that provides for an annuity in the form of pension amount at retirement to a select category of employees. The fund is administered by LIC of India. Liability for Non-Contractual Pension Plan is provided on the basis of valuations, as at Balance Sheet date, carried out by an independent actuary.
(d) Post Retirement Medical Benefits (PRMB)
The PRMB scheme is a fixed monetary amount Defined Benefit Plan that provides for a payment made after retirement when a retiree claims medical benefits. The benefits are defined on the basis of amount claimed under medical expenses (valued as premium paid by the Company to the Insurance Company) upto a maximum limit after retirement. This is an unfunded defined benefit plan. Liability for Post Retirement Medical Benefits is provided on the basis of valuations, as at Balance Sheet date, carried out by an independent actuary
The above sensitivity analyses is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period. Expected aggregate contributions to post employment benefit plans for the year ending 31 March, 2023 are '' 132.7 million.
Risk exposure
Through its defined benefit obligation the Company is exposed to a number of risks, the most significant of which are detailed below-
Interest rate risk - The defined benefit obligation calculated uses a discount rate based on Government bonds. If bond yields fall, the defined benefit obligation will tend to increase.
Salary inflation risk - Higher than expected increase in salary will increase the defined benefit obligation.
Demographic risk - This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligations is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in financial analysis the retirement benefit of the short career employee typically costs less per year as compared to a long service employee.
Medical inflation risk - Higher than expected increase in premium will lead to increase in defined benefit obligations. The risk is mitigated by capping the benefit paid by insurance Company (limiting the premium amount for the Company).
Employee Benefit - Leave Obligations
Employee benefit expenses for the year include ('' 4.5 million) (FY 2020-21 '' 40.5 million) towards leave obligations and curtailment gain of '' 59.3 million.
Provision for leave obligation as on 31st March, 2022 is '' 193.2 million (as at 31st March, 2021, '' 225.2 million)
25. Contingent Liabilities and Commitments |
31st March, 2022 |
31st March, 2021 |
('' in million) |
('' in million) |
|
A Contingent Liabilities |
||
Claims against the Company not acknowledged as debt* |
||
Income-Tax matters |
||
(i) Matters decided in favor of the Company but disputed further by the income-tax authorities |
18.9 |
18.9 |
(ii) Matters decided against the Company in respect of which the Company has preferred an appeal |
114.8 |
115.0 |
(iii) Tax demands by assessing officer in respect of which Company has preferred an appeal |
2,977.0 |
2,983.1 |
Sales Tax matters |
610.2 |
571.2 |
Service Tax matters |
27.2 |
27.7 |
Excise matters |
â |
2.4 |
Drug Price Control Order 2013 [Refer Note 35] |
416.2 |
416.2 |
Claims from third party manufacturer in respect of Excise matters |
57.0 |
55.2 |
Others |
2.1 |
2.1 |
Note:
Future cash outflows in respect of the above are determinable only on receipt of judgements/decisions pending with various authorities/forums and/or final outcome of the matters.
* Including Interest and Penalty, where applicable.
B Commitments
(i) Amount of future minimum lease payments under non-cancellable operating lease is '' Nil (previous year '' 52.9 million)
Provision is made for the non-saleable sales returns of goods from the customers estimated on the basis of historical data of sales return trends with respect to the shelf life of various products, level of inventories in the distribution channel, specific events during the year, etc. Such provision for non-saleable sales returns is reduced from sale of products for the year
Provision for Contingencies: Provision for matter related to pricing dispute for products covered under DPCO and sales tax matters made for probable liabilities/claims arising out of pending disputes, litigations/commercial transactions with statutory authorities/third parties.
29. Segment Information
The Company has a single business segment namely âPharmaceutical Business'', and generates revenues from its operations in India. No single customer / group of customers under common control have combined revenue of more than 10% of total revenue from operations during the current year and the previous year.
34. Disclosures for Employee Share Based Payments
The Company offers its employees, share based payments in the form of a âSelectâ plan. The Equity Plan âSelectâ is a global equity incentive plan for eligible employees. This plan allows its participants to choose the form of their equity compensation in âRestricted Shares'' or âTradable Options'' of the ultimate holding company Novartis AG, Basel. The âSelectâ plan of the ultimate holding company is being managed and administered by the group company, Novartis Holding AG and the Company is compensating Novartis Holding AG for the Restricted Shares or Tradable Options acquired towards the grants made to the employees and accordingly these costs are being reflected in the financial statements.
There are two schemes under which employees are granted stock options:
(A) Tradable Stock Options, as per which the employee can sell the options to market maker once it is vested. Tradable Options have a contractual life of 10 years from the date of grant.
There were no tradable stock options outstanding as at 31st March, 2022 and 31st March, 2021 and no tradable stock options were granted during both these financial years.
35. (a) The Company has filed a Writ Petition on 8th May 2014 before the Hon''ble Delhi High Court challenging the move of the National Pharmaceuticals Pricing Authority (âNPPAâ) to include Voveran 50 GE Tablets, marketed by the Company, under price control in terms of the Drug Price Control Order 2013 (âDPCO 2013â).
During the pendency of the Writ Petition, the NPPA issued a Show Cause Notice dated 24th September, 2014 to the Company alleging over charge on sales of Voveran 50 GE Tablets by the Company. The Company responded to the show cause notice vide its letters dated 13th October, 2014 and 27th October, 2014. The NPPA issued a Demand Notice dated 31st October, 2014 directing the Company to pay '' 281.8 million (including interest) by 15th November, 2014. This demand has been challenged by the Company before the Hon''ble Delhi High Court by way of miscellaneous applications followed by an amended writ petition. The Hon''ble Delhi High Court passed order restraining the NPPA from taking coercive steps in respect of the aforesaid demand. Due to COVID-19 the Hon''ble Delhi High Court is taking up urgent cases filed during the pandemic, therefore there has been delay in taking up case. The tentative next date of hearing is 28th February 2023.
I n the opinion of the Company, Voveran 50 GE Tablet is not covered under the category of essential medicines under the National List of Essential Medicines and, hence, is a non-scheduled drug under DPCO, 2013. Therefore, Voveran 50 GE Tablet cannot be brought under the regime of price control under Paragraph 14 of the DPCO, 2013. Accordingly, no provision is considered necessary at this stage.
(b) The NPPA had issued a demand notice dated 20th/25th June, 2018 of '' 134.4 million (including interest) on the Company alleging over charge on sales of Tegrital CR 200 by the Company. This demand has been challenged by the Company before the Hon''ble Delhi High Court by filing a Writ Petition on 27th July, 2018 challenging the move of the NPPA to include Tegrital CR 200, marketed by the Company, under price control in terms of the DPCO 2013. The Hon''ble Delhi High Court had on 6th August, 2018 passed an order directing the NPPA not to give effect to the aforesaid impugned demand notice. Due to COVID-19 the Hon''ble Delhi High Court is taking up urgent cases filed during the pandemic, therefore there has been delay in taking up case. This writ petition was listed on 30th March, 2022, however due to paucity of time hearing has been adjourned to 11th October 2022.
In the opinion of the Company, the Price Revision Notification dated 28th April, 2014 would not apply to Tegrital CR 200 as it was not covered by the ambit of price notification in as much Tegrital CR 200 drug was not a âscheduled formulationâ under DPCO 2013. When Tegrital CR became a scheduled formulation w.e.f. 10th March, 2016, NPPA issued a separate Ceiling Price Notification on 29th March, 2016 for the said formulation, which amounts to admission on the part of NPPA that this formulation could be covered only by the subsequent Notification of 2016 and not by the prior Notification of 2014, on the basis whereof the impugned Demand has been raised by NPPA. Accordingly, no provision is considered necessary at this stage.
Security deposits is classified as Level 3 category item under the fair value hierarchy based on the valuation technique used to calculate the Fair value.
For the purpose of Fair valuation of Security Deposits the Company has used discounted cashflow method and considered discount rate of 9% being general bank borrowing rate prevalent in the market.
Increase in the discount rate would result in decrease in the fair value and vice-versa.
The Company has entered into an exclusive sales and distribution agreement of its Established Medicine Division (âEMDâ) with Dr. Reddy''s Laboratories Limited. This arrangement, amongst other things aims to further broaden access of these medicines beyond the current geographies to benefit many more patients, more efficiently, will significantly extend the reach of healthcare professionals, enhancing access of these medicines to more patients. This strategic business decision has led to the below exceptional items.
(a) In this regard, the Company has made a provision of '' 750.7 million in this year towards its erstwhile associates of EMD under Employee Separation Scheme. Part of the provision has been settled during the year
(b) The profit and loss for the year includes an expense of '' 496.4 million (net of re-evaluation of retirement obligations) under Employee Separation Scheme.
The Company''s activities expose it to credit risk, liquidity risk and market risk.
The Company''s financial risk management is an integral part of how to plan and execute its business strategies. Market risk is the loss of future earnings, fair values or future cash flows that may result from the change of a price of a financial instrument. The value of a financial instrument may change as a result of changes in the foreign currency exchange rates and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables.
The Company manages market risk through a treasury department, which evaluates and exercises independent control over the entire process of market risk management. The activities of this department include management of cash resources & ensuring compliance with market risk limits and policies.
(A) Credit Risk
The Company is exposed to credit risk, which is the risk that counterparty will default on its contractual obligation resulting in a financial loss to the Company. Credit risk arises from cash and cash equivalents, deposits with banks, as well as credit exposures to customers including outstanding receivables.
Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers.
(i) Trade and other receivables
Credit risk arises from the possibility that customers may not be able to settle their obligations as agreed. The Company manages credit risk through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
At 31st March, 2022, the Company had 2 customers (At 31st March, 2021 : 1 customer) that owed the Company more than '' 10 million each and accounted for approximately 52% (At 31st March, 2021 : 6%) of all the trade receivables, excluding related parties. The Company performs regular monitoring of credit limits and key performance indicators as agreed as well as manages the collection of receivables in order to minimize the credit risk exposure.
In furtherance to above, the Company has assessed the impact of the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised in respect of trade receivables.
Historical trends of impairment of trade receivables do not reflect any significant credit losses. The Company has further considered internal and external sources of information, specifically having regard to the current macro economic conditions and the global health pandemic to assess the impact on credit losses. Basis the information available as at the date of approval of these financial statements, the Company expects the historical trend of minimal credit losses to continue.
Credit risk on Cash and Cash Equivalents is limited as the Company generally invests in deposits with banks with high credit ratings assigned by international and domestic credit rating agencies.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding to meet obligations when due. Company''s treasury maintains flexibility in funding by maintaining sufficient cash and bank balances available to meet the working capital requirements. Bank balances are maintained with reputed banks. Management monitors rolling forecasts of the company''s liquidity position (comprising the unused cash and bank balances along with temporary investments in fixed deposits) on the basis of expected cash flows. This is generally carried out at Company level in accordance with practice and limits set by the Company. These limits vary to take into account the liquidity of the market in which the Company operates.
The tables below analyse the company''s financial liabilities into relevant maturity based on their remaining contractual maturities for all non-derivative financial liabilities.
The amounts disclosed in the table are the contractual cash flows. Balances approximate their carrying balances as the impact of discounting is not significant. The below excludes maturity analysis of lease liabilities which has been disclosed separately in Note 32.
Sensitivity interest rate increase by 1%; Profit will decrease by '' 0.1 million for the year ended 31st March, 2022 ('' 0.2 million for the year ended 31st March, 2021)
Sensitivity interest rate decrease by 1%; Profit will increase by '' 0.1 million for the year ended 31st March, 2022 ('' 0.2 million for the year ended 31st March, 2021)
The following table details the Company''s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company''s liquidity risk management as the liquidity is managed on a net asset and liability basis.
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD and CHF These transactions are mainly with the related parties only Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company''s functional currency (''). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the Company is to minimise the volatility of the '' cash flows of highly probable forecast transactions.
The Company actively monitors and seeks to reduce, where it deems it appropriate to do so, fluctuations in these exposures.
Risk management
The Company''s objectives when managing capital are to safeguard the company''s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure. The Company does not have any borrowings as at 31st March, 2022 and 31st March, 2021, and no borrowings were availed during the year and in previous year.
40. The Company has considered the possible effects that may result from the pandemic relating to COVID-19 on the carrying amounts of inventories, receivables and other assets. In assessing the recoverability of the assets, the Company has considered internal and external sources of information, available as at the date of approval of these financial statements, including subsequent recoveries, credit risk profile, macroeconomic forecasts, latest selling prices of products, orders on hand, margins etc. Based on the above assessment, the Company is of the view that the carrying amounts of the assets will be realised. The impact of COVID-19 on the Company''s financial statements may be different from that estimated as at the date of approval of these financial statements.
During the year ended 31st March, 2022, the Company continued to ensure uninterrupted supply of its products. The offices of the Company were open to operate under the guidelines issued by the local authorities. Sales employees had the option to work in the field subject to compliance with the guidelines issued and trainings conducted. All other associates had the option to work from home on digital platforms provided by the Company with need based working from office premises taking into consideration all safety guidelines. The impact assessment of COVID-19 is a continuing process given the uncertainties associated with its nature and duration. The Company will continue to monitor any material changes to future economic conditions.
*The figures for the year 2021-22 and balances as on March 31, 2022 are impacted with an exceptional item relating to a business transaction resulting in a net expense of '' 496.4 million and current liability of '' 501.8 million towards its erstwhile associates of EMD under employee separation scheme. This has been excluded for computation of the ratios above.
42. No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ) with the understanding that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
Mar 31, 2018
1(b). Employee Benefit Obligations
(i) Defined Contribution Plans:
The Company''s contribution to Superannuation Fund and Employeesâ Pension Scheme aggregating Rs, 32.6 million (Previous yearRs,33.0 million) has been recognised as expense in the Statement of profit and loss for the year under the head Employee Benefits Expense (Refer Note 23).
(ii) Defined Benefit Plans:
General Description of Defined Benefit Plans:
(a) Gratuity
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service of 5 years are eligible for gratuity. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act, 1972 or the Company scheme applicable to the employees. The benefit vests upon completion of five years of continuous service and once vested it is payable to employees on retirement or on termination of employment. In case of death while in service, the gratuity is payable irrespective of vesting. The gratuity plan is a funded plan and it is recognised by the Income-tax authorities and administered through trustees and/or LIC. Liability for Gratuity is provided on the basis of Valuations, as at Balance Sheet date, carried out by an independent actuary.
(b) Provident Fund
Provident fund is Defined Benefit Plan that provides for lump sum amount to be paid to employee at the time of separation from the Company Both employee and employer (at a determined rate) contribute monthly to a Trust set up by the Company to manage the investments and distribute the amounts entitled to employees. The benefits are accumulated value of contributions made by the employee and the Company at the minimum interest rate guarantee as declared by the Employee Provident Fund Organisation for respective years.
(c) Non-Contractual Pension Plan
The Pension Scheme is a Defined Benefit Plan with a minimum pension guarantee that provides for an annuity in the form of pension amount at retirement to a select category of employees. The fund is administered by LIC of India.
(d) Post-Retirement Medical Benefits (PRMB)
The PRMB scheme is a fixed monetary amount Defined Benefit Plan that provides for a lump sum payment made after retirement when a retiree claims medical benefits. The benefits are defined on the basis of amount claimed under medical expenses (valued as premium paid by the Company to the Insurance Company) up to a maximum limit after retirement.
14(b). Employee Benefit Obligations (contd.)
calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period except for the Mortality rate which has been updated based on revised guidance.
Expected contributions to post employment benefit plans for the year ending 31 March, 2019 are Rs,107.0 million.
The weighted average duration of the Post-Retirement Medical Benefits is 11 years (2017, 9 years) while in case of other Defined Benefit Obligations it''s 9 years (2017, 9 years).
Risk exposure
Through its defined benefit obligations the Company is exposed to number of risks the most significant of which are detailed below:
Interest rate risk â The defined benefit obligations calculated uses a discount rate based on Government bonds. If bond yields fall, the defined benefit obligations will tend to increase.
Salary inflation risk â Higher than expected increased in salary will increase the defined benefit obligation.
Demographic risk â This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligations is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in financial analysis the retirement benefit of the short career employee typically costs less per year as compared to a long service employee.
Medical inflation risk â Higher than expected increase in premium will lead to increase in defined benefit obligations. Although the risk is mitigated by capping the benefit paid by insurance Company (limiting the premium amount for the Company).
Note:
Future cash outflows in respect of the above are determinable only on receipt of judgements/ decisions pending with various authorities/forums and/or final outcome of the matters.
* Including Interest and Penalty, where applicable.
B Commitments
(i) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs,87.5 million (As at 31st March 2017 Nil).
(ii) Amount of future minimum lease payments under non-cancellable operating lease is Rs,363.6 million (previous year Rs, 66.2 million) â also Refer Note 34
Provision is made for the non-sellable sales returns of goods from the customers estimated on the basis of historical data of sales return trends with respect to the shelf life of various products. Such provision for non-sellable sales returns is reduced from sale of products for the year. Provision for Contingencies: Provision for pricing matters and sales tax matters made for probable liabilities/claims arising out of pending dispute, litigations/commercial transactions with statutory authorities/third parties. The outflow with regard to the said matters depends on the exhaustion of remedies available to the Company under the law and hence the Company is not able to reasonable ascertain the timing of the outflow.
2. Employee Benefit Obligations â Voluntary Retirement Costs represent the actuarial value as at 31st March 2018 of compensation payable under the Voluntary Retirement Schemes. [Refer Note 14(a)].
3. Disclosures as required under section 22 of the Micro, Small and Medium Enterprises Development Act, 2006. This information and that given in Note 13(b) â Trade Payables regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.
4. Segment Information
The Company has a single business segment namely âPharmaceutical Business.
5. Related Party Disclosures
(A) Enterprise where control exists
Holding Company Novartis AG, Basel, Switzerland
(B) Other Related Parties with whom the Company had transactions during the year and/or the previous year
(i) Fellow Subsidiaries Alcon Laboratories (India) Private Limited, India
Alcon Pharmaceuticals Limited, Switzerland Befico Limited, Bermuda (up to 31st October 2017)*
Novartis Investment Limited, Bermuda Novartis (Thailand) Limited, Thailand Novartis Corporation (Malaysia), Malaysia Novartis Healthcare Private Limited, India Novartis Holding AG, Switzerland Novartis International AG, Switzerland Novartis Pharma AG, Switzerland Novartis Pharmaceuticals Australia Pty Ltd, Australia Novartis Pharmaceuticals Corporation Inc., USA Sandoz Private Limited, India * Befico Limited, Bermuda has amalgamated into Novartis Investment Limited w.e.f 1st November 2017
(ii) Subsidiary of Joint GlaxoSmithKline Consumer Private Limited, India Venture in which the
holding Company is a venturer
(iii) List of other Novartis India Limited Contractual Employeesâ Pension Scheme related parties
(Post-employment
benefit plan of Novartis India Limited Employees'' Provident Fund
Novartis India Limited)
(C) Key Management R. Shahani (up to 28th February 2018)
Personnel
J. Zia M. Noble
D. Charak (up to 26th May 2016)
G. Tekchandani (Up to 12th August 2016)
Dr. R. Mehrotra J. Hiremath
S. Martyres (w.e.f. 19th April 2016)
C. Snook
# Includes leave encashment paid towards leave policy harmonisation undertaken in the FY 2016-17
* Excludes charge in relation to Restricted Shares and Tradable Options to the extent not vested
Notes:
1) No amounts have been written off/provided for or written back in respect of amounts receivable from or payable to the related parties.
2) Transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash.
6. Disclosures for Employee Share Based Payments
The Company offers its employees, share based payments in the form of a âSelectâ plan. The Equity Plan âSelectâ is a global equity incentive plan for eligible employees. This plan allows its participants to choose the form of their equity compensation in âRestricted Shares'' or âTradable Options'' of the ultimate holding company, Novartis AG, Basel. The âSelectâ plan of the ultimate holding company is being managed and administered by the group company, Befico Limited, Bermuda (up to 31st October 2017), Novartis Investment Limited (w.e.f. 1st November 2017) and Novartis Holding AG (w.e.f. 1st January 2018) and the Company is compensating Befico Limited, Novartis Investment Limited and Novartis Holding AG for the grants made to the employees and accordingly, these costs are being reflected in the financial statements.
There are two schemes under which employees are granted stock options:
(A) Tradable Stock Options, as per which the employee can sell the options to market maker once it is vested. Tradable Options have a contractual life of 10 years from the date of grant.
There were no tradable stock options granted during the financial years 2016-17 and 2017-18
(B) Restricted Shares are the shares of its ultimate holding company. These do not have voting rights until vested to employees. There is no time limit to sell the Restricted Shares once these are vested.
Fair Value of the Restricted Stock Units
The Fair Value of Restricted Stock Unit is equivalent to the market price of traded stock of Novartis AG as on date of grant.
7. The Company has filed a Writ Petition on 8th May 2014 before the Hon''ble Delhi High Court challenging the move of the National Pharmaceuticals Pricing Authority (âNPPAâ) to include Voveran 50 GE Tablets, marketed by the Company, under price control in terms of the Drug Price Control Order 2013 (âDPCO 2013â).
During the pendency of the Writ Petition the NPPA issued a Show Cause Notice dated 24th September, 2014 to the Company alleging over charge on sales of Voveran 50 GE Tablets by the Company. The Company responded to the show cause notice vide its letters dated 13th October 2014 and 27th October 2014. The NPPA issued a Demand Notice dated 31st October 2014 directing the company to pay '' 281.8 million (including interest) by 15th November 2014. This demand has been challenged by the Company before the Hon''ble Delhi High Court by way of miscellaneous application followed by an amended writ petition. The Hon''ble Delhi High Court passed order restraining the NPPA from taking coercive steps in respect of the aforesaid demand. The matter is posted for further hearing on 19th July 2018.
In the opinion of the company, Voveran 50 GE Tablet is not covered under the category of essential medicines under the National List of Essential Medicines and, hence, is a non-scheduled drug under DPCO, 2013. Therefore, Voveran 50 GE Tablet cannot be brought under the regime of price control under Paragraph 14 of the DPCO, 2013. Accordingly, no provision is considered necessary at this stage.
38. Fair value measurements
Fair valuation techniques and inputs used
(i) Fair Value Hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the company has classified its financial instruments into the three levels prescribed under the accounting standard.
Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date. A quoted market price in an active market provides the most reliable evidence of fair value and is used without adjustment to measure fair value whenever available, with limited exceptions.
Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 2 inputs include:
â quoted prices for similar assets or liabilities in active markets
â quoted prices for identical or similar assets or liabilities in markets that are not active
â inputs other than quoted prices that are observable for the asset or liability, for example
â interest rates and yield curves observable at commonly quoted intervals
â implied volatilities
â credit spreads
â inputs that are derived principally from or corroborated by observable market data by correlation or other means (âmarket - corroborated inputs'')
Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that relevant observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. An entity develops unobservable inputs using the best information available in the circumstances, which might include the entity''s own data, taking into account all information about market participant assumptions that is reasonably available.
(ii) Valuation technique used to determine fair value
Security deposits is classified as Level 3 category item under the fair value hierarchy based on the valuation technique used to calculate the Fair value.
For the purpose of Fair valuation of Security Deposits the Company has used discounted cash flow method and considered discount rate of 9% being general bank borrowing rate prevalent in the market.
Increase in the discount rate would result in decrease in the fair value and vice-versa.
The amount of Fair value of Security deposits given and accepted is considered to be insignificant in value and hence carrying value and fair value is considered as same.
The Company considers that the carrying amount of financial assets and financial liabilities recognised in the financial statements approximate their fair value.
9. Financial risk management
The Company''s activities expose it to credit risk, liquidity risk and market risk.
The Company''s financial risk management is an integral part of how to plan and execute its business strategies. Market risk is the loss of future earnings, fair values or future cash flows that may result from the change of a price of a financial instrument. The value of a financial instrument may change as a result of changes in the foreign currency exchange rates and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables.
The Company manages market risk through a treasury department, which evaluates and exercises independent control over the entire process of market risk management. The activities of this department include management of cash resources & ensuring compliance with market risk limits and policies.
(A) Credit Risk
The Company is exposed to credit risk, which is the risk that counterparty will default on its contractual obligation resulting in a financial loss to the company. Credit risk arises from cash and cash equivalents, deposits with banks, as well as credit exposures to customers including outstanding receivables.
(i) Credit Risk Management
Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers.
(ii) Trade and other receivables
Credit risk arises from the possibility that customers may not be able to settle their obligations as agreed. The Company manages credit risk through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
At 31st March 2018, the Company had 5 customers (At 31st March 2017: 4 customers) that owed the Company more than '' 10 million each and accounted for approximately 17% (At 31st March 2017 : 14%) of all the trade receivables..
In furtherance to above, the Company has assessed the impact of the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised in respect of trade receivables.
Historical trends of impairment of trade receivables do not reflect any significant credit losses. Given that the macroeconomic indicators affecting customers of the Company have not undergone any substantial change, the Company expects the historical trend of minimal credit losses to continue.
(iv) Cash and cash equivalents and deposits with banks
Credit risk on Cash and Cash Equivalents is limited as the Company generally invests in deposits with banks with high credit ratings assigned by international and domestic credit rating agencies.
(B) Liquidity Risk
(i) Liquidity risk management
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding to meet obligations when due and to close out market positions. Company''s treasury maintains flexibility in funding by maintaining sufficient cash and bank balances available to meet the working capital requirements. Management monitors rolling forecasts of the company''s liquidity position (comprising the unused cash and bank balances along with temporary investments in fixed deposits) on the basis of expected cash flows. This is generally carried out at Company level in accordance with practice and limits set by the Company. These limits vary to take into account the liquidity of the market in which the Company operates.
(ii) Maturities of financial liabilities
The tables below analyse the Company''s financial liabilities into relevant maturity based on their remaining contractual maturities for all non-derivative financial liabilities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances equal their carrying balances as the impact of discounting is not significant.
Sensitivity interest rate increase by 1%; Profit will decrease by '' 0.2 million for the year ended 31st March 2018 ( Rs,0.2 million for the year ended 31st March 2017).
Sensitivity interest rate decrease by 1%; Profit will increase by '' 0.2 million for the year ended 31st March 2018 (Rs, 0.2 million for the year ended 31st March 2017)
(iii) Maturities of financial assets:
The following table details the Company''s expected maturity for its non-derivative financial assets. The table has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Company''s liquidity risk management as the liquidity is managed on a net asset and liability basis.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances equal their carrying balances as the impact of discounting is not significant.
(C) Market Risk - Foreign Exchange:
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD, CHF and EUR. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company''s functional currency (''). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the Company is to minimise the volatility of the '' cash flows of highly probable forecast transactions.
The company actively monitors and seeks to reduce, where it deems it appropriate to do so, fluctuations in these exposures.
10. Capital management
Risk management
The Company''s objectives when managing capital are to safeguard the company''s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure.
11. During the financial year ended 31st March 2016, the Company had entered into Consignment Sales Agency Agreements (CSA) and Transitional Distribution Service Agreements (TDSA) with various parties. Pursuant to the above agreements, payable (net of deductibles) as at March 31, 2018 aggregating Nil (as at March, 2017 '' 22.3 million) have been included in âOther Current Financial Liabilities'' [Refer Note 13(a)] and receivable as at March 31, 2018 aggregating Nil (as at March, 2017 '' 9.1 million) have been included in âOther Financial Assets'' [Refer Note 3(b)].
12. Buyback of Shares
In accordance with Sec 68, 69, 70 and other applicable provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998 (as amended) (âSEBI Buy Back Regulationsâ), the Company concluded during the year, the buyback of 3,450,000 (previous year 3,820,000) equity shares of Rs, 5/- each fully paid up, as approved by the Board of Directors on 25th September 2017 (previous year 26th May, 2016) by way of tender offer through stock exchange mechanism for cash at price of Rs,670/- (previous year Rs,760/-) per equity share. This has resulted in a total cash outflow of Rs, 2,311.6 million (previous year Rs,2,903.2 million).
Pursuant to buyback the Company has adjusted premium on buyback of Rs, 665/- (previous year Rs,755/-) per share aggregating Rs, 2,294.3 million (previous year Rs,2,884.1 million), out of Securities Premium Reserve Nil (previous year Rs,228.8 million), from General Reserve Rs, 774.7 million (previous year Rs, 2,655.3 million) and from Retained earnings Rs,1,519.6 million (previous year Nil). Further, an amount of Rs,17.3 million (previous year Rs, 19.1 million) (equivalent to the face value of shares) has been transferred to Capital Redemption Reserve from the Retained earnings (previous year from the General Reserve). Buy-back expenses of Rs, 17.8 million (net of tax of Rs,9.4 million) have also been debited to the Retained earnings (previous year '' 23.8 million debited to the General Reserve).
13. Note on Income Tax Refund
During the year the Company has received interest on refund of Income tax for AY 1995-96. Interest income of Rs, 981.3 million received on such income tax refund is recognized as income in the Financial Statements (Refer Note 21) based on the management estimate of the amount the Company is entitled to receive in accordance with the provisions of the Income Tax Act, 1961. The Company has sought clarification with appropriate authorities for interest working. Pending receipt of clarification, balance amount of interest received has been included under other current liabilities (Refer Note 18).
14. The Ind AS financial statements of the Company for the year ended 31st March 2017, were audited by the Lovelock & Lewes, Chartered Accountants, the predecessor auditor.
15. Previous year figures have been regrouped/restated where necessary.
Mar 31, 2017
(ii) The company has only one class of shares i.e. Equity Shares having a face value of '' 5 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual general Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.
Nature and Purpose of Other Equity General Reserve
general Reserve is created out of profits of the Company. The reserve is created in accordance with the provisions of the Companies Act, 2013.
Securities Premium Account
Securities Premium Reserve is created when shares are issued at premium. During the year the Company has utilized the entire Securities Premium Reserve towards buy back of shares. The reserve is utilized in accordance with the provisions of the Act.
Capital Redemption Reserve
Capital Redemption reserve was created for buy back of shares. As per Section 69 of the Companies Act, 2013, the Company has transferred a sum equal to nominal value of the shares bought back to Capital Redemption Reserve. The Reserve may be applied by the Company in paying up unissued shares of the Company to be issued to members of the Company as fully paid bonus shares.
Share Options Outstanding Account
The Share Options Outstanding Account is used to recognize the grant date fair value of tradeable options / Restricted shares issued to employees under group global equity incentive plan.
Change of Estimate in Leave Policy
The Company has changed the Leave policy effective 1st April 2017. The changes are with respect to maximum carry forward of leave balance, the changes in salary base and the formula to calculate per day salary. Consequently maximum carry forward of leave balances have been calculated as per new policy as at 31st March 2017.
This has resulted in an additional charge to the Statement of Profit and Loss amounting to Rs.31.2 million (Previous year Nil).
(i) Defined Contribution:
The Company has Defined Contribution Plans for post employment benefits in the form of Superannuation Fund and Employees'' Pension Scheme which are recognized by the Income-tax authorities and administered through trustees and/or Life Insurance Corporation of India (LIC). Superannuation Fund which constitutes an insured benefit and Employees'' Pension Scheme are classified as Defined Contribution Plans as the Company has no further obligation beyond making the contributions. The Company''s contributions to Defined Contribution Plans are charged to the Statement of Profit and Loss as incurred.
Amount of Rs.33.0 million (FY 2015-16 Rs.41.4 million, FY 2014-15 Rs.41.3 million) is recognized as expense and included in the Note 16(a).
(ii) Other Long Term Benefit Plans:
(a) Leave obligations
The leave obligations cover the Company''s liability for earned leave.
The amount of the provision of Rs.41.9 million (31 March 2016 - Rs.24.3 million, 1 April 2015 - Rs.41.3 million), is presented as current which is settled by the Company based on the past trend in next 12 months. This is settled on resignation or retirement of the employee. Liability for Leave Obligation is provided basis of Valuations, as at Balance Sheet date, carried out by independent an actuary.
(b) Other Long-term Employee Benefit
The employees of the Company are entitled to other long-term benefit in the form of Long Service Awards as per the policy of the Company Liability for such benefit is provided on the basis of valuation, as at the Balance Sheet date, carried out by an independent actuary The actuarial valuation method used by independent actuary for measuring the liability is the Projected Unit Credit method.
(iii) Post Employment Obligations:
(a) Gratuity
The Company provides for gratuity for employees in India as per the Payment of gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and it is recognized by the Income-tax authorities and administered through trustees and/or LIC. Liability for gratuity is provided basis of Valuations, as at Balance Sheet date, carried out by an independent actuary.
(b) Provident Fund
Provident fund is Defined Benefit Plan that provides for lump sum amount at separation from the Company. The benefits are accumulated value of contributions made by the employee and the Company at the minimum interest rate guarantee as declared by the EPFO for respective years.
(c) Non-Contractual Pension Plan
The Pension Scheme is a Defined Benefit Plan with a minimum pension guarantee that provides for an annuity in the form of pension amount at retirement. The benefits are defined on the basis of fixed monetary amount and final accumulation of Defined Contribution Fund.
(d) Post Retirement Medical Benefits (PRMB)
The PRMB scheme is a fixed monetary amount Defined Benefit Plan that provides for a lumpsum payment made after retirement when a retiree claims medical benefits. The benefits are defined on the basis of amount claimed under medical expenses (valued as premium paid by the Company to the Insurance Company) up to a maximum limit after retirement.
The above sensitivity analyses is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period. Expected contributions to post employment benefit plans for the year ending 31 March 2018 are Rs.75.8 million.
The weighted average duration of the Benefit Obligation is 9 years (2016 â 8 years, 2015 â 10 years).
Risk exposure
Through its defined benefit plans the Company is exposed to number of risks the most significant of which are detailed below:
Inherent rate risk â The defined benefit obligation calculated uses a discount rate based on Government bonds. If bond yields fall, the defined benefit plan will tend to increase.
Salary Inflation risk â Higher than expected increased in salary will increase the defined benefit obligation.
Demographic risk â This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligations is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in financial analysis the retirement benefit of the short career employee typically costs less per year as compared to a long service employee.
Change in leave balances â This is the risk of variability if the results due to significant variations form expected accumulations from leave balance. All other aspects remaining same, higher than expected increase in leave balances will increase the defined benefit obligations.
Medical Inflation risk â Higher than increase in premium will lead to increase in defined benefit obligations. Although the risk is mitigated by capping the benefit paid by insurance Company (limiting the premium amount for the Company).
1. (a) Salaries, Wages and Bonus include Rs.2.8 million (Previous year Rs.6.0 million) paid/payable to employees under the voluntary Retirement Schemes.
(b) voluntary Retirement Costs represent the actuarial value as at 31st March 2017 of compensation payable under the voluntary Retirement Schemes. [Refer Note 15(a)]
2. Disclosures as required under the Micro, Small and Medium Enterprises Development Act, 2006. This information and that given in Note 14(b) - Trade Payables regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company
3. Disclosure on Specified Bank Notes (SBNs)
During the year, the Company had specified bank notes and other denomination notes as defined in the MCA notification G.S.R. 308(E) dated March 30 2017. Details of Specified Bank Notes (SBN) held and transacted during the period from 8th November 2016 to 30th December 2016, as per the notification are given below:
* For the purposes of this clause, the term âSpecified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of economic Affairs number S.O. 3407(E), dated the 8th November 2016.
4. Segment Information
Description of segments and principal activities
Post divestment of OTC and Animal Healthcare businesses, the Chief Operating Decision Maker views erstwhile Pharmaceuticals and Generics divisions as a single operating segment, i.e. Pharmaceuticals Segment for the purpose of making decisions about allocating resources and assessing its performance.
(a) Pharmaceuticals:
The Pharmaceuticals segment comprises a portfolio of prescription medicines which are provided to patients through healthcare professionals and mainly products of original research of the Novartis Group and Generics products which primarily focuses on the therapeutic segments such as Anti-TB, Anti-DUB (Gynecology), Antihistamines, Antibiotics, Anti-ulcerants, Anti-diabetes and Cardiovascular.
(b) OTC:
The OTC segment was mainly in the vMS (vitamins, minerals and nutritional supplements) and CoCoA (cough, cold and allergy) market segments. This business unit has been divested on 30 September 2015. [Refer Note 41].
(c) Animal Health:
The Animal Health segment had a presence primarily in the cattle and poultry market segments. This business unit has been divested on 31 December 2015. [Refer Note 41].
Significant customers
Revenues of approximately '' 1,049.3 million (Previous year '' 1,039.8 million) are derived from a single external customer (from entities under common control).
5. Earnings Per Share
Basic earnings per share has been calculated by dividing profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The Company has not issued any potential equity shares and accordingly, the basic earnings per share and diluted earnings per share are the same. Earnings per share has been computed as under:
6. Disclosures for Employee Share Based Payments
The Company offers its employees, share based payments in the form of a âSelectâ plan. The Equity Plan âSelectâ is a global equity incentive plan for eligible employees. This plan allows its participants to choose the form of their equity compensation in âRestricted Shares'' or âTradable Options'' of the ultimate holding company, Novartis AG, Basel. The âSelectâ plan of the ultimate holding company is being managed and administered by the group company, Befico Limited, Bermuda and the Company is compensating Befico Limited for the grants made to the employees with effect from January 2013 and accordingly, these costs are being reflected in the financial statements. The information given below, in respect of the âSelectâ plan has been determined and provided by the ultimate holding company.
There are two schemes under which employees are granted stock options:
(A) Tradable Stock Options, as per which the employee can sell the options to market maker once it is vested. Tradable Options have a contractual life of 10 years from the date of grant.
* The Fair value at the grant date is determined using Option Pricing valuation Model which takes into account exercise price, the term of the options, the price at the grant date and expected price volatility of the underlying shares, the expected dividend yield and the risk free interest rate for the term of the options.
(B) Restricted Shares are the shares of its ultimate holding company. These do not have voting rights until vested to employees. There is no time limit to sell the Restricted Shares once these are vested.
Fair Value of the Restricted Stock Units
The Fair value of Restricted Stock Unit is equivalent to the market price of traded stock of Novartis AG as on date of grant.
Expenses Arising from share based payment transactions
Total expenses arising from share-based payment transactions recognized in profit or loss as part of employee benefit expense were as follows:
7. The Company has filed a Writ Petition on 8th May 2014 before the Hon''ble Delhi High Court challenging the move of the National Pharmaceuticals Pricing Authority (âNPPAâ) to include voveran 50 GE Tablets, marketed by the Company, under price control in terms of the Drug Price Control Order 2013 (âDPCO 2013â).
During the pendency of the Writ Petition the NPPA issued a Show Cause Notice dated 24th September 2014 to the Company alleging over charge on sales of voveran 50 GE Tablets by the Company. The Company responded to the show cause notice vide its letters dated 13th October 2014 and 27th October 2014. The NPPA issued a Demand Notice dated 31st October 2014 directing the Company to pay '' 281.8 million (including interest) by 15th November 2014. This demand has been challenged before the Hon''ble Delhi High Court which granted a stay on the demand. The matter is posted for further hearing on 15th September 2017.
8. Note on Discontinued Operations and Assets held for sale
On 22nd April 2014, Novartis AG, Basel, Switzerland (Novartis) entered into the following agreements with GlaxoSmithKline plc, UK (GSK) and Em Lilly and Company, USA (Lilly):
(a) Combination of Novartis OTC with GSK Consumer Healthcare in a Joint Venture
Description
Novartis and GSK agreed to create a consumer healthcare business through a Joint venture between Novartis OTC and GSK Consumer Healthcare.
In connection with the divestment of the Novartis OTC business to GSK, the Board of Directors of Novartis India Limited (the âCompanyâ) in its meeting held on 13 January 2015 approved the slump sale of the Company''s OTC Division to GlaxoSmithKline Consumer Private Limited (âGSK CPLâ), a private unlisted company incorporated under the Companies Act, 2013 or another affiliate of GSK for a consideration of '' 1,097.3 million. Closing of this slump sale was subject to the receipt of all applicable legal and regulatory approvals, consents, permissions and sanctions as may be necessary from concerned authorities. On the basis of the approval received from the Foreign Investment Promotion Board, Government of India and the Competition Commission of India, the transaction for the transfer of the Company''s OTC Division to GSK CPL was completed on 30 September 2015. The Company made separate announcements on 13 January 2015, 28 August 2015 and 1 October 2015 to BSE Limited in this regard.
Financial performance and cash flow information
(i) The amount of revenue and expenses in respect of the ordinary activities attributable to the discontinued operation - OTC Division
(b) Divestment of Novartis Animal Health business to Lilly Description
As part of its global portfolio transformation, Novartis agreed on 22 April 2014 to divest its global Animal Health business to Lilly.
I n connection with the Global Animal Health Transaction, the Board of Directors of Novartis India Limited (the âCompanyâ) considered and approved on 7 November 2014, the transfer of the Company''s Animal Health Division as a going concern by way of a âslump sale'' to Elanco India Private Limited (âElanco Indiaâ), or another affiliate of Lilly, for a consideration of Rs.866.8 million. Closing of this slump sale was subject to the receipt of all applicable legal and regulatory approvals, consents, permissions and sanctions as may be necessary from concerned authorities. On the basis of the approval received from the Foreign Investment Promotion Board, Government of India and the Competition Commission of India, the transaction for the transfer of the Company''s Animal Health Division to Elanco India was completed on 31st December 2015. The Company made separate announcements on 7 November 2014, 27 May 2015, 10 July 2015, 16 September 2015 and 10 December 2015 to BSE Limited in this regard.
(i) Financial performance and cash flow information
The amount of revenue and expenses in respect of the ordinary activities attributable to the discontinued operation - Animal Health Division
9. First-time adoption of Ind AS
These are the Company''s first financial statements prepared in accordance with Ind AS.
The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from 1st April 2016, with a transition date of 1st April 2015. These financial statements for the year ended 31st March 2017 are the first the Company has prepared under Ind AS. For all periods up to and including the year ended 31st March, 2016, the Company prepared its financial statements in accordance with the previously applicable Indian GAAP (previous GAAP).
The adoption of Ind AS has been carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards. Ind AS 101 requires that all Ind AS standards and interpretations that are issued and effective for the first Ind As financial statements be applied retrospectively and consistently for all financial years presented. Accordingly, the Company has prepared financial statements which comply with Ind AS for year ended 31st March 2017, together with the comparative information as at and for the year ended 31st March 2016. The Company''s opening Ind AS Balance Sheet has been prepared as at 1st April 2015, the date of transition to Ind AS.
I n preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act. An explanation of how the transition from previous GAAp to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and notes.
A. Exemptions and exceptions availed
I n preparing these Ind AS financial statements, the Company has availed certain exemptions and exceptions in accordance with Ind AS 101, as explained below. The resulting difference between the carrying values of the assets and liabilities in the financial statements as at the transition date under Ind AS and previous GAAP have been recognized directly in equity. This note explains the adjustments made by the Company in restating its previous GAAP financial statements, including the Balance Sheet as at 1st April 2015 and the financial statements as at and for the year ended 31st March 2016.
A.1 Ind AS optional exemptions
Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
(a) Deemed cost for property, plant and equipment and intangible assets
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value.
(b) Share based payment transactions
Ind AS 101 provides an exemption that a first-time adopter is not required to apply Ind AS 102 Share-based Payment to equity instruments that were vested on or before the date of transition to Ind AS. Accordingly, the Company has elected to apply this exemption.
A.2 Ind AS mandatory exceptions
(a) Estimates
An entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at 1 April 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP
The Company has made estimates for Impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as these were not required under previous GAAP
(b) Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets (debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS. Consequently, the Company has applied the above assessment based on facts and circumstances existing at the transition date.
B. Reconciliations between previous GAAP and Ind AS
Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.
Reconciliation of Equity as at date of transition (1st April 2015)
Cash flow statement
There were no reconciliation items between cash flows prepared under previous GAAP and those prepared under Ind AS.
Notes to the Reconciliations
Note 10: Security Deposits
Under the previous GAAP interest free lease deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognized as prepaid rent. Consequent to this change, the amount of security deposits decreased by Rs.9.9 million as at 31 March 2016 (1 April 2015 - Rs.14.6 million). The prepaid rent increased by Rs.9.3 million as at 31 March 2016 (1 April 2015 - Rs.14.3 million). Total equity decreased by Rs.0.3 million as on 1 April 2015. The profit for the year and total equity as at 31 March 2016 decreased by Rs.0.3 million due to amortization of the prepaid rent of Rs.4.9 million which is partially off-set by the notional interest income of Rs.4.6 million recognized on security deposits.
Note 11: Impairment of Trade Receivables - Expected Credit Loss
As per Ind AS 109, the Company is required to apply expected credit loss model for recognizing the allowance for doubtful debts. As a result, the allowance for doubtful debts increased by Rs.0.2 million as at 31 March 2016 (1 April 2015 - Rs.0.2 million). Consequently, the total equity as at 31 March 2016 decreased by Rs.0.2 million (1 April 2015 - Rs.0.2 million) and profit for the year ended 31 March 2016 decreased by Nil.
Note 12: Employee Stock Option Expense
Under the previous GAAP the cost of equity-settled employee share-based plan were recognized using the intrinsic value method. Under Ind AS, the cost of equity settled share-based plan is recognized based on the fair value of the options as at the grant date. Consequently, the amount recognized in share option outstanding account decreased by Rs.69.4 million as at 31 March 2016 (1 April 2015 - Rs.72.7 million). No profit impact on the Statement of Profit and Loss.
Note 13: Excise Duty
Under the previous GAAP revenue from sale of products was presented exclusive of excise duty. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented on the face of the statement of profit and loss as part of expenses. This change has resulted in an increase in total revenue and total expenses for the year ended 31 March 2016 by Rs.1.3 million. There is no impact on the total equity and profit.
Note 14: Remeasurements of post-employment benefit obligations
Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended March 31 2016 decreased by Rs.2.9 million. There is no impact on the total equity as at March 31, 2016.
Note 15: Provision for Cash Discount
Under Ind AS, cash discount is recorded net of revenue. Provision has been made for cash discount taking into consideration future estimates and based on past trends. Consequently, the total equity as at 31 March 2016 increased by Rs.0.1 million (1 April 2015 - decreased by Rs.0.1 million) and profit for the year ended 31 March 2016 increased by Rs.0.2 million.
Note 16: Assets classified as held for sale and discontinued operations
The Board of Directors of the Company at its meeting held on January 13, 2015 approved the slump sale of the Company''s OTC Division to GlaxoSmithKline Consumer Private Limited (âGSK CPLâ), a private unlisted company incorporated under the Companies Act, 2013. On the basis of the approval received from the Foreign Investment Promotion Board, Government of India and the Competition Commission of India the slump sale transaction was completed on 30th September 2015.
The Board of Directors of the Company at its meeting held on November 7, 2014 approved the slump sale of the Company''s Animal Health Division to Elanco India. On the basis of the approval received from the Foreign Investment Promotion Board, Government of India and the Competition Commission of India the slump sale transaction was completed on 31st December 2015.
The concept of disposal group held for sale does not exist under previous GAAP Accordingly, assets and liabilities of disposal group have not been presented as held for sale and appropriately disclosed under respective assets & liabilities held in accordance with previous GAAP
Ind AS 105 âNon-current Assets Held for Sale and Discontinued Operationsâ requires disposal group to be identified as held for sale, if the carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable.
Based on Ind AS 105, in the opening balance sheet as on 1st April 2015 the assets and liabilities of OTC and Animal health businesses have been reported as held for sale. Consequently, the assets and liabilities of disposal group held for sale have been presented separately from the other assets and other liabilities respectively in the balance sheet. There is no impact on the total equity or profit as a result of this adjustment. Further, the operations of these businesses have been presented as discontinued operation under Ind AS and previous GAAP in the statement of profit and loss.
Based on above, the following assets and liabilities were classified as held for sale as at 31st March 2015:
Note 17: Proposed Dividend
Under previous GAAP proposed dividend was considered as an adjusting event, under Ind AS the same is considered as an non adjusting event.
Note 18: Other comprehensive income
Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as âother comprehensive income'' includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP
Note 19: Retained Earnings
Retained earnings as at 1st April 2015 have been adjusted consequent to the above Ind AS transition adjustment.
(i) Fair Value Hierarchy
This section explains the judgments and estimates made in determining the fair values of the financial instruments that are (a) recognized and measured at fair value and (b) measured at amortized cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard.
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.
Level 2: valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
(ii) Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
For the purpose of Fair valuation of Security Deposits the Company has used general bank borrowing rate prevalent in the market.
Security deposits is classified as Level 3 category item under the fair value hierarchy based on the valuation technique used to calculate the Fair value.
The carrying amounts of Other Financial Assets, Deposits with Banks, Unpaid Dividend Accounts, Recoverable from Related Parties, Cash and cash equivalents, Receivable under TDSA agreement, Trade Receivable, Payable to Related Parties, Payables for Property, Plant and Equipment, Trade Payables, Payables under TDSA Agreement and Unpaid dividend account are considered to be the same as their fair values, as they are current in nature.
The amount of Fair value of Security deposits given and accepted is considered to be insignificant in value and hence carrying value and fair value is considered as same.
20. Financial risk management
The Company''s activities expose it to market risk, liquidity risk and credit risk.
The Company''s financial risk management is an integral part of how to plan and execute its business strategies. The Company''s financial risk management policy is carried out by the treasury team under policies approved by the Board of Directors.
Market risk is the loss of future earnings, fair values or future cash flows that may result from the change of a price of a financial instrument. The value of a financial instrument may change as a result of changes in the foreign currency exchange rates and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables.
The Company manages market risk through a treasury department, which evaluates and exercises independent control over the entire process of market risk management. The activities of this department include management of cash resources & ensuring compliance with market risk limits and policies.
(A) Credit Risk
The Company is exposed to credit risk, which is the risk that counterparty will default on its contractual obligation resulting in a financial loss to the Company. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.
Credit Risk Management
Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations, and arises principally from the Companies receivables from customers.
Trade and other receivables
Credit risk arises from the possibility that customers may not be able to settle their obligations as agreed. To manage this risk, the Company periodically assesses the financial reliability of customers, taking into account their financial position, past experience and other factors. The Company manages credit risk through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
I n furtherance to above, the Company has assessed the impact of the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized in respect of Trade Receivables.
Historical trends of impairment of trade receivables do not reflect any significant credit losses. Given that the macro economic indicators affecting customers of the Company have not undergone any substantial change, the Company expects the historical trend of minimal credit losses to continue.
(B) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding to meet obligations when due and to close out market positions. Company''s treasury maintains flexibility in funding by maintaining sufficient cash and bank balances available to meet the working capital requirements. Management monitors rolling forecasts of the Company''s liquidity position (comprising the unused cash and bank balances along with temporary investments in fixed deposits) on the basis of expected cash flows. This is generally carried out at Company level in accordance with practice and limits set by the Company. These limits vary to take into account the liquidity of the market in which the Company operates.
Maturities of financial liabilities
The tables below analyze the Company''s financial liabilities into relevant maturity based on their contractual maturities for all non-derivative financial liabilities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
(C) Market Risk - Foreign Exchange
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD, CHF and EUR. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the Company''s functional currency (''). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the Company is to minimize the volatility of the '' cash flows of highly probable forecast transactions. The Company actively monitors and seeks to reduce, where it deems it appropriate to do so, fluctuations in these exposures.
(i) Foreign Currency Risk Exposure:
The Company has not entered into any derivative transactions during the year and there were no derivative transactions outstanding as on March 31, 2016 and 1st April 2015.
The Company''s exposure to foreign currency risk at the end of the reporting period expressed in '', is as follows
*Amount is below the rounding off norm adopted by the Company.
(ii) Sensitivity:
The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments.
21. Capital management
(a) Risk management
The Company''s objectives when managing capital are to safeguard the Company''s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure.
22. The Company has entered into Consignment Sales Agency Agreements (CSA) and Transitional Distribution Service Agreements (TDSA) with various parties. Pursuant to the above agreements, amounts collected on behalf of such parties and payable (net of deductibles and receivables) as at March 31, 2017 aggregating Rs.343.5 million (as at March 2016 Rs.637.2 million) have been included in âCash and Bank balances'' [Refer Note 10(a) and 10(b)], âOther Current Financial Liabilities'' [Refer Note 14(a)] and âOther Financial Assets'' [Refer Note 4]. Out of net payables, Rs.330.3 million is payable towards related parties (Previous year Rs.335.4 million).
23. Buyback of Shares
In accordance with Sec 68, 69, 70 and other applicable provisions of the Companies Act, 2013 and SEBI regulations and pursuant to the public announcement for buy back made by the Company, the Company initiated a buy back by way of tender offer through stock exchange mechanism for cash at price of Rs.760/- per equity share for an aggregate maximum amount of Rs.2,903.2 million.
Pursuant to buyback the Company has adjusted premium on buyback of Rs.755 per share aggregating Rs.2,884.1 million, out of Securities Premium Account Rs.228.8 million and from General Reserve Rs.2,655.3 million. Further, an amount of Rs.19.1 million (equivalent to the face value of shares) has been transferred to Capital Redemption Reserve. Buy-back expenses of Rs.23.8 million have also been debited to the General Reserve.
24. Previous year figures have been regrouped/restated where necessary.
Notes:
25. The above Cash Flow Statement has been prepared under the âIndirect Method'' as set out in the Accounting Standard (Ind AS) 7 Statement of Cash Flows.
26. For the additional information in relation to discontinued operations refer notes 41(a)(iii) & 41(b)(iii).
27. Previous year figures have been regrouped where necessary.
Mar 31, 2016
1. (a) Salaries, Wages and Bonus include Rs, 6.0 million (Previous year
Rs, 18.7 million) paid/payable to employees under the Voluntary
Retirement Schemes.
(b) Voluntary Retirement Costs represent the actuarial value as at 31st
March, 2016 of compensation payable under the Voluntary Retirement
Schemes. [Refer Note 4 and 7].
2. Disclosures as required under the Micro, Small and Medium
Enterprises Development Act, 2006. This information and that given in
Note 6 Â Trade Payables regarding Micro and Small Enterprises has been
determined to the extent such parties have been identified on the basis
of information available with the company.
Notes:
(a) Business Segments
The businesses comprise Pharmaceuticals, Generics, OTC and Animal
Health. The operational performance of the business is reviewed by the
management based on such segmentation.
(i) The Pharmaceuticals segment comprises a portfolio of prescription
medicines which are provided to patients through healthcare
professionals. These are mainly products of original research of the
Novartis Group.
(ii) The Generics segment comprises Retail Generics products. The
business unit primarily focuses on the therapeutic segments such as
Anti-TB, Anti-DUB (Gynaecology), Anti- histamines, Antibiotics,
Anti-ulcer ants, Anti-diabetes and Cardiovascular.
(iii) The Animal Health segment has a presence primarily in the cattle
and poultry market segments. This business unit has been divested on 31
December 2015. [Refer Note 51].
(iv) The OTC segment is mainly in the VMS (vitamins, minerals and
nutritional supplements) and CoCoA (cough, cold and allergy) market
segments. This business unit has been divested on 30 September 2015.
[Refer Note 51].
(b) Geographical Segments
Revenue is segregated into two segments namely India (sales to
customers within India) and Other Countries (sales to customers outside
India) on the basis of geographical location of customers for the
purpose of reporting geographical segments.
(c) The accounting policies adopted for segment reporting are in line
with the accounting policies adopted for the preparation of financial
statements as disclosed in Note 1 above.
3. Related Party Disclosures
(A) Enterprise where control exists Holding Company Novartis AG, Basel,
Switzerland
(B) Other Related Parties with whom the company had transactions during
the year and/or the previous year
(a) Fellow Subsidiaries Alcon Laboratories (India) Private Limited,
India
Alcon Pharmaceuticals Limited, Switzerland
Befico Limited, Bermuda
Novartis (Bangladesh) Limited, Bangladesh
Novartis (Singapore) Pte Ltd, Singapore
Novartis (Thailand) Limited, Thailand
Novartis Animal Health Inc, Switzerland
Novartis Asia Pacific Pharmaceuticals Pte. Limited, Singapore
Novartis Consumer Health Inc., USA
Novartis Consumer Health SA, Switzerland
Novartis Corporation (Malaysia) Sdn Bhd, Malaysia
Novartis Healthcare Private Limited, India
Novartis International AG, Switzerland
Novartis Korea Limited, South Korea
Novartis Pharma AG, Switzerland
Novartis Pharmaceuticals Corporation Inc., USA
Novartis South Africa (Pty) Ltd., South Africa
PT Novartis Indonesia, Indonesia
Sandoz International GmbH, Germany
Sandoz Private Limited, India
Shanghai Novartis Animal Health Co. Limited, China
Novartis Pharma Services Inc., Kenya
Novartis Pharmaceuticals East Hanover, USA
Novartis Singapore Pharmaceutical Manufacturing Pte. Ltd,
Singapore
Novartis Pharma K.K., Japan
Novartis Healthcare Philippines Inc., Philippines
(b) Entity under common
control Novartis Comprehensive Leprosy Care Association, India
(c) Key Management
Personnel R. Shahani
M. Patil
A. Matai (Up to 31st August, 2014) J. Zia (From 1st June, 2014) V.
Singhal (Up to 30th September, 2015) Dr. V. A. Kumar (Up to 31st
December, 2015) D. Charak M. Noble G. Tekchandani 46. Basic earnings
per share has been calculated by dividing profit for the year
attributable to equity shareholders by the weighted average number of
equity shares outstanding during the year. The company has not issued
any potential equity shares and accordingly, the basic earnings per
share and diluted earnings per share are the same. Earnings per share
has been computed as under:
4. Disclosures for Employee Share based Payments
The Institute of Chartered Accountants of India has issued a Guidance
Note on "Accounting for Employee Share based Payments" (''the Guidance
Note''), which is applicable to employee share based payment plans, the
grant date in respect of which falls on or after 1st April, 2005. The
company offers its employees, share based payments in the form of a
"Select" plan. The Equity Plan "Select" is a global equity incentive
plan for eligible employees. This plan allows it participants to choose
the form of their equity compensation in ''Restricted Shares'' or
''Tradable Options'' of the ultimate holding company, Novartis AG, Basel.
The "Select" plan of the ultimate holding company is being managed and
administered by the group company, Befico Limited, Bermuda and the
company is compensating Befico Limited for the grants made to the
employees with effect from January 2013 and accordingly, these costs
are being reflected in the financial statements. The information given
below, in respect of the "Select" plan has been determined and provided
by the ultimate holding company.
There are two schemes under which employees are granted stock options:
(A) Tradable Stock Options, as per which the employee can sell the
options to market maker once it is vested. Tradable Options have a
contractual life of 10 years from the date of grant.
(B) Restricted Shares are the shares of its ultimate holding company.
These do not have voting rights until vested to employees. There is no
time limit to sell the Restricted Shares once these are vested.
5. The Company has filed a Writ Petition on 8th May 2014 before the
Hon''ble Delhi High Court challenging the move of the National
Pharmaceuticals Pricing Authority ("NPPA") to include Voveran 50 GE
Tablets, marketed by the Company, under price control in terms of the
Drug Price Control Order 2013 ("DPCO 2013").
During the pendency of the Writ Petition the NPPA issued a Show Cause
Notice dated 24th September 2014 to the Company alleging over charge on
sales of Voveran 50 GE Tablets by the Company. The Company responded to
the show cause notice vide its letters dated 13th October 2014 and 27th
October 2014. The NPPA issued a Demand Notice dated 31st October 2014
directing the company to pay Rs, 281.8 million (including interest) by
15th November 2014. This demand has been challenged before the Hon''ble
Delhi High Court which granted a stay on the demand. The matter is
posted for further hearing on 13th July 2016.
6. Transactions with GSK and Lilly
On 22nd April 2014, Novartis AG, Basel, Switzerland (Novar tis) entered
into the following agreements with GlaxoSmithKline plc, UK (GSK) and
Eli Lilly and Company, USA (Lilly):
(a) Combination of Novartis OTC with GSK Consumer Healthcare in a Joint
Venture Novartis and GSK agreed to create a consumer healthcare
business through a Joint Venture between Novartis OTC and GSK Consumer
Healthcare.
In connection with the divestment of the Novartis OTC business to GSK,
the Board of Directors of Novartis India Limited (the "Company") in its
meeting held on 13th January 2015 approved the slump sale of the
Company''s OTC Division to GlaxoSmithKline Consumer Private Limited
("GSK CPL"), a private unlisted company incorporated under the
Companies Act, 2013 or another affiliate of GSK for a consideration of
Rs, 1,097.3 million. Closing of this slump sale was subject to the
receipt of all applicable legal and regulatory approvals, consents,
permissions and sanctions as may be necessary from concerned
authorities. On the basis of the approval received from the Foreign
Investment Promotion Board, Government of India and the Competition
Commission of India, the transaction for the transfer of the Company''s
OTC Division to GSK CPL was completed on 30th September 2015. The
Company made separate announcements on 13th January 2015, 28th August
2015 and 1st October 2015 to BSE Limited in this regard.
(i) The carrying amounts of the total assets and the total liabilities
attributable to the discontinued operation  OTC Division * 1st April,
2015 to 30th September, 2015
(b) Divestment of Novartis Animal Health business to Lilly As part of
its global portfolio transformation, Novartis agreed on 22nd April,
2014 to divest its global Animal Health business to Lilly.
In connection with the Global Animal Health Transaction, the Board of
Directors of Novartis India Limited (the "Company") considered and
approved on 7th November, 2014, the transfer of the Company''s Animal
Health Division as a going concern by way of a ''slump sale'' to Elanco
India Private Limited ("Elanco India"), or another affiliate of Lilly,
for a consideration of Rs, 866.8 million. Closing of this slump sale was
subject to the receipt of all applicable legal and regulatory
approvals, consents, permissions and sanctions as may be necessary from
concerned authorities. On the basis of the approval received from the
Foreign Investment Promotion Board, Government of India and the
Competition Commission of India, the transaction for the transfer of
the Company''s Animal Health Division to Elanco India was completed on
31st December, 2015. The Company made separate announcements on 7th
November, 2014, 27th May, 2015, 10th July, 2015, 16th September, 2015
and 10th December, 2015 to BSE Limited in this regard.
** 1st April, 2015 to 31st December, 2015
The differential between the total consideration and the net assets
transferred in relation to slump sale of the OTC and Animal Health
division''s net of cost in relation to these transactions have been
disclosed as Extraordinary Item.
7. The Company has entered into Consignment Sales Agency Agreements
(CSA) and Transitional Distribution Service Agreements (TDSA) with
various parties.
Pursuant to the above agreements, amounts collected on behalf of such
parties and payable (net of deductibles) as at 31st March, 2016
aggregating Rs, 637.2 million have been included in ''Cash and Bank
balances'' [Refer Note 16] and ''Other Current Liabilities'' [Refer Note
7].
8. Previous year figures have been regrouped/restated where necessary.
The figures for the year ended 31st March, 2016 are not comparable to
those of the previous year ended 31st March, 2015 on account of the
sale of OTC and Animal Health Divisions [Refer Note 51].
Mar 31, 2015
1. The company has only one class of shares i.e. Equity Shares having
a face value of Rs. 5 each. Each shareholder is eligible for one vote
per share held. The dividend proposed by the Board of Directors is
subject to the approval of the shareholders in the ensuing Annual
General Meeting. In the event of liquidation, the equity shareholders
are eligible to receive the remaining assets of the company after
distribution of all preferential amounts, in proportion to their
shareholding.
2. Of the above, 23,970,597 (Previous year - 23,970,597) shares are
held by Novartis AG, Basel, Switzerland, the holding company.
3. Contingent Liabilities
Claims against the company not acknowledged as debts Income-tax matters
(i) Matters decided in favour of the company
but disputed further by the income-tax
authorities 76.6 76.4
(ii) Matters decided against the company in
respect of which the company has preferred an
appeal 122.8 118.5
Sales tax matters 568.0 463.4
Service tax matters 4.5 4.5
Excise matters 3.0 3.0
Drug Price Control Order 2013 [Refer Note 51] 281.8 Â
Claims from third party manufacturers in
respect of Excise matters 39.0 38.0
Claims from Consumers 0.2 0.2
Others 2.1 2.1
Note:
Future cash outflows in respect of the above are determinable only on
receipt of judgements/decisions pending with various authorities/forums
and/or final outcome of the matters.
4. Estimated amount of contracts remaining to be executed on capital
account and not provided for - Rs. 0.2 million (Previous year Rs.
Nil).
5. (a) Salaries, Wages and Bonus include Rs. 18.7 million (Previous
year Rs. 18.8 million) paid/payable to employees under the Voluntary
Retirement Schemes.
(b) Voluntary Retirement Costs represent the actuarial value as at 31st
March, 2015 of compensation payable under the Voluntary Retirement
Schemes. [Refer Note 4 and 7].
6. Disclosures as required under the Micro, Small and Medium
Enterprises Development Act, 2006. This information and that given in
Note 6 - Trade Payables regarding Micro and Small Enterprises has been
determined to the extent such parties have been identified on the basis
of information available with the company.
7. Other Long-term Employee Benefit
The liability for Long Service Awards as at the year end Rs. 16.8
million (Previous year Rs. 15.1 million).
8. NOTES:
(a) Business Segments
The businesses comprise Pharmaceuticals, Generics, OTC and Animal
Health. The operational performance of the business is reviewed by the
management based on such segmentation.
(i) The Pharmaceuticals segment comprises a portfolio of prescription
medicines which are provided to patients through healthcare
professionals. These are mainly products of original research of the
Novartis Group.
(ii) The Generics segment comprises Retail Generics products. The
business unit primarily focuses on the therapeutic segments such as
Anti-TB, Anti-DUB (Gynaecology), Anti- histamines, Antibiotics,
Anti-ulcerants, Anti-diabetes and Cardiovascular.
(iii) The Animal Health segment has a presence primarily in the cattle
and poultry market segments.
(iv) The OTC segment is mainly in the VMS (vitamins, minerals and
nutritional supplements) and CoCoA (cough, cold and allergy) market
segments.
(b) Geographical Segments
Revenue is segregated into two segments namely India (sales to
customers within India) and Other Countries (sales to customers outside
India) on the basis of geographical location of customers for the
purpose of reporting geographical segments.
(c) The accounting policies adopted for segment reporting are in line
with the accounting policies adopted for the preparation of financial
statements as disclosed in Note 1 above.
9. Related Party Disclosures
(A) Enterprise where control exists
Holding Company Novartis AG, Basel, Switzerland
(B) Other Related Parties with whom the company had transactions during
the year and/or the previous year
(a) Fellow Subsidiaries
Alcon Laboratories (India) Private Limited,India
Alcon Pharmaceuticals Limited, Switzerland
Befico Limited, Bermuda
Chiron Behring Vaccines Private Limited, India
Novartis (Bangladesh) Limited, Bangladesh
Novartis (Singapore) Pte Ltd, Singapore
Novartis (Taiwan) Co. Ltd, Taiwan
Novartis (Thailand) Limited, Thailand
Novartis Animal Health Inc, Switzerland
Novartis Asia Pacific Pharmaceuticals Pte. Limited, Singapore
Novartis Consumer Health Inc., USA
Novartis Consumer Health SA, Switzerland
Novartis Corporation (Malaysia) Sdn Bhd, Malaysia
Novartis Healthcare Private Limited, India
Novartis Holding AG, Switzerland
Novartis International AG, Switzerland
Novartis Korea Limited, South Korea
Novartis Pharma AG, Switzerland
Novartis Pharmaceuticals Australia Pty Limited, Australia
Novartis Pharma GmbH, Germany
Novartis Pharmaceuticals Corporation Inc., USA
Novartis South Africa (Pty) Ltd., South Africa
PT Novartis Indonesia, Indonesia
Sandoz International GmbH, Germany
Sandoz Private Limited, India
Shanghai Novartis Animal Health Co. Limited, China
(b) Entity under common control
Novartis Comprehensive Leprosy Care Association, India
(c) Key Management Personnel
R. Shahani
P Gupta (Up to 30th September, 2013)
A. Matai (Up to 31st August, 2014)
J. Zia (From 1st June, 2014)
V Singhal Dr V A. Kumar
M. Patil (From 1st October, 2013)
D. Charak (From 23rd July, 2013)
M. Noble (From 1st October, 2013)
G. Tekchandani
(C) Disclosure of transactions between the company and related parties
and outstanding balances as at the year end:
10. Basic earnings per share has been calculated by dividing profit for
the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the year The company has not
issued any potential equity shares and accordingly, the basic earnings
per share and diluted earnings per share are the same. Earnings per
Share has been computed as under:
11. Disclosures for Employee Share based Payments
The Institute of Chartered Accountants of India has issued a Guidance
Note on "Accounting for Employee Share based Payments" (''the Guidance
Note''), which is applicable to employee share based payment plans, the
grant date in respect of which falls on or after 1st April, 2005. The
company offers its employees, share based payments in the form of a
"Select" plan. The Equity Plan "Select" is a global equity incentive
plan for eligible employees. This plan allows it participants to choose
the form of their equity compensation in ''Restricted Shares'' or
''Tradable Options'' of the ultimate holding company, Novartis AG, Basel.
The "Select" plan of the ultimate holding company is being managed and
administered by the group company, Befico Limited, Bermuda and the
company is compensating Befico Limited for the grants made to the
employees with effect from January 2013 and accordingly, these costs
are being reflected in the financial statements. The information given
below, in respect of the Select plan has been determined and provided
by the ultimate holding company
There are two schemes under which employees are granted stock options:
(A) A Tradable Stock Options, as per which the employee can sell the
options to market maker once it is vested. Tradable Options have a
contractual life of 10 years from the date of grant.
12. Current Tax (Net) for earlier years includes write back of
provision for current tax for the Assessment Year 1995-1996 amounting
to Rs. 139.3 million (previous year Rs. 387.7 million). The aforesaid
write backs are on account of favourable Orders of the Income Tax
Appellate Tribunal, received by the Company in the respective years,
for non-taxability of consideration from sale of its Oral Hygiene
Business.
13. The Company has filed a Writ Petition on 8th May, 2014 before the
Hon''ble Delhi High Court challenging the move of the National
Pharmaceuticals Pricing Authority ("NPPA") to include Voveran 50 GE
Tablets, marketed by the Company, under price control in terms of the
Drug Price Control Order 2013 ("DPCO 2013").
During the pendency of the Writ Petition the NPPA issued a Show Cause
Notice dated 24th September, 2014 to the Company alleging over charge
on sales of Voveran 50 GE Tablets by the Company. The Company
responded to the show cause notice vide its letters dated 13th October,
2014 and 27th October, 2014. The NPPA issued a Demand Notice dated 31st
October, 2014 directing the company to pay Rs. 281.8 million
(including interest) by 15th November, 2014. This demand has been
challenged before the Hon''ble Delhi High Court which granted a stay on
the demand. The matter is posted for further hearing on 10th August,
2015.
14. Transactions with GSK and Lilly
On 22nd April 2014, Novartis AG, Basel, Switzerland (Novartis) entered
into the following agreements with GlaxoSmithKline plc, UK (GSK) and
Eli Lilly and Company, USA (Lilly):
(a) Combination of Novartis OTC with GSK Consumer Healthcare in a Joint
Venture
Novartis and GSK have agreed to create a consumer healthcare business
through a Joint Venture between Novartis OTC and GSK Consumer
Healthcare. The transaction, except in respect of the Company''s OTC
Division, closed on 2nd March, 2015.
In connection with the divestment of the Novartis OTC business to GSK,
the Board of Directors (Board) of Novartis India Limited (Company) in
its meeting held on 13th January, 2015 approved the slump sale of the
Company''s OTC Division to GlaxoSmithKline Consumer Private Limited (GSK
CPL), a private unlisted company incorporated under the Companies Act,
2013 (or another affiliate of GSK) for a consideration of Rs. 1,097.3
million. Closing of this slump sale is subject to the receipt of all
applicable legal and regulatory approvals, consents, permissions and
sanctions as may be necessary from concerned authorities. The Company
had made a separate announcement on 13th January, 2015 to BSE Limited
in this regard.
(b) Divestment of Novartis Animal Health business to Lilly
As part of its global portfolio transformation, Novartis AG, Basel,
Switzerland ("Novartis AG") agreed on 22nd April 2014 to divest its
global Animal Health business to Eli Lilly and Company ("Lilly").
Closing of this global transaction was subject to receipt of applicable
anti-trust and regulatory approvals, as well as the satisfaction or
waiver (as applicable) of various other conditions (the "Global Animal
Health Transaction").
In connection with the Global Animal Health Transaction, the Board of
Directors of Novartis India Limited (the "Company") considered and
approved on 7th November 2014, the transfer of the Company''s Animal
Health Division as a going concern by way of a ''slump sale'' to Elanco
India Private Limited ("Elanco India"), or another affiliate of Lilly,
for a consideration of Rs. 866.8 million, on or before 22nd July 2015,
subject to the receipt of all applicable legal and regulatory
approvals, consents, permissions and sanctions as may be necessary from
concerned authorities, as well as the closing of the Global Animal
Health Transaction (the "Animal Health Transaction"). This approval of
the Company''s Board of Directors was disclosed to the Stock Exchange on
7th November 2014. The Global Animal Health Transaction closed globally
(but not with respect to India, as explained below) on 1st January
2015.
Closing of the Animal Health Transaction in India is conditional upon
the receipt by Elanco India of the written approval of the Foreign
Investment and Promotion Board, Government of India (the "FIPB").
Further to the FIPB''s response to Elanco India''s application that it
would not approve the Animal Health Transaction due to the existence of
the restrictions on competition explained below, and at Elanco India''s
request, the Company and Elanco India have executed a letter which
records the parties'' agreement that the terms of the Global Animal
Health Transaction agreed between Novartis AG and Lilly restricting the
competition by the Novartis AG group of companies in connection with
animal health activities, will not apply with respect to the Company
vis-a-vis Elanco India in India (the "Non-Compete Amendment Letter").
The Non-Compete Amendment Letter will be submitted by Elanco India to
the FIPB, together with a representation against the FIPB''s
non-approval of Elanco India''s application for the Animal Health
Transaction. The Company will continue to co-operate with Elanco India,
to the extent necessary, and monitor the FIPB process in this matter
and will provide further updates if and when required.
15. Previous year figures have been regrouped/restated where
necessary.
Mar 31, 2013
1. Estimated amount of contracts remaining to be executed on capital
account and not provided for Rs. 0.8 million [Previous year Rs. 1.4
million].
2. (a) Salaries, Wages and Bonus include Rs. 8.2 million [Previous
year Rs. 2.8 million] paid/payable to employees under the Voluntary
Retirement Schemes.
(b) Voluntary Retirement Costs represent the actuarial value as at 31st
March 2013 of compensation payable under the Voluntary Retirement
Schemes.
3. Disclosures as required under the Micro, Small and Medium
Enterprises Development Act, 2006. This information and that given in
Note 7 - Trade Payables regarding Micro and Small Enterprises has been
determined to the extent such parties have been identified on the basis
of information available with the company. This has been relied upon by
the auditors.
4. Basic earnings per share has been calculated by dividing profit
for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. The
company has not issued any potential equity shares and accordingly, the
basic earnings per share and diluted earnings per share are the same.
Earnings per Share has been computed as under:
5. Disclosures for Employee Share based Payments
The Institute of Chartered Accountants of India has issued a Guidance
Note on "Accounting for Employee Share based Payments" (''the Guidance
Note''), which is applicable to employee share based payment plans,
the grant date in respect of which falls on or after 1st April, 2005.
The company offers its employees, share based payments in the form of a
"Select" plan. The Equity Plan "Select" is a global equity
incentive plan for eligible employees. This plan allows it participants
to choose the form of their equity compensation in ''Restricted
Shares'' or ''Tradable Options'' of the ultimate holding company,
Novartis AG, Basel. The "Select" plan of the ultimate holding
company is being managed and administered by the group company, Befico
Limited, Bermuda, and the company is compensating Befico Limited for
the grants made to the employees with effect from January 2013 and
accordingly, these costs are being reflected in the financial
statements. The information given below, in respect of the Select plan
r-as peer* determined and provided by the ultimate holding company.
There are two schemes under which employees are granted stock options:
(A) A Tradable Stock Options, as per which the employee can sell it to
market maker once its vested. Tradable Options have a contractual life
of 10 years from the date of grant.
(B) Restricted Shares, which are the shares of its ultimate holding
company. This does not have voting rights until vested to employees.
Unlike Tradable Options, there is no time limit to sell the Restricted
Shares once these are vested.
6. Previous year figures have been regrouped where necessary.
Mar 31, 2012
1. Contingent Liabilities
Claims against the company not acknowledged as debts
Income-tax matters
(i) Matters decided in favour of
the company but disputed further by
the income-tax authorities 300.4 301.6
(ii) Matters decided against the
company in respect of which the
company has preferred an appeal 135.7 147.1
Sales tax matters 282.7 252.5
Service tax matter 3.3 3.3
Excise matters 3.0 5.1
Claims from third party manufacturers in
respect of Excise matters 34.6 32.9
Claim from a third party in respect of
Property tax matter - 699.8
Claims from Consumers 0.2 1.8
Others 2.1 2.1
Notes:
Future cash outflows in respect of the above are determinable only on
receipt of judgements/decisions pending with various authorities/forums
and/or final outcome of the matters.
2. Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advances) Rs 1.4 million [Previous
year Rs 7.9 million].
3. (a) Salaries, Wages and Bonus include Rs 2.8 million [Previous year
Rs 5.2 million] paid to employees under the Voluntary Retirement
Schemes.
(b) Voluntary Retirement Costs represent the actuarial value as at 31st
March 2012 of compensation payable under the Voluntary Retirement
Schemes.
4. Disclosures as required under the Micro, Small and Medium
Enterprises Development Act, 2006. This information and that given in
Note 7 - Trade Payables regarding Micro and Small Enterprises has been
determined to the extent such parties have been identified on the basis
of information available with the company. This has been relied upon by
the auditors.
Notes:
(a) Business Segments
The businesses comprise Pharmaceuticals, Generics, OTC and Animal
Health. The operational performance of the business is reviewed by the
management based on such segmentation.
(i) The Pharmaceuticals segment comprises a portfolio of prescription
medicines which are provided to patients through healthcare
professionals. These are mainly products of original research of the
Novartis Group.
(ii) The Generics segment comprises Retail Generics products. The
business unit primarily focuses on the therapeutic segments such as
Anti-TB, Anti-DUB (Gynaecology), Anti-histamines, Antibiotics,
Anti-ulcerants, Anti-diabetes and Cardiovascular.
(iii) The Animal Health segment has a presence primarily in the cattle
and poultry market segments.
(iv) The OTC segment is mainly in the VMS (vitamins, minerals and
nutritional supplements) and CoCoA (cough, cold and allergy) market
segments.
(b) Geographical Segments
Revenue is segregated into two segments namely India (sales to
customers within India) and Other Countries (sales to customers outside
India) on the basis of geographical location of customers for the
purpose of reporting geographical segments.
(c) The accounting policies adopted for segment reporting are in line
with the accounting policies adopted for the preparation of financial
statements as disclosed in Note 1 above.
5. Basic earnings per share has been calculated by dividing profit for
the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the year. The company has
not issued any potential equity shares and accordingly, the basic
earnings per share and diluted earnings per share are the same.
Earnings per Share has been computed as under:
6. The financial statements for the year ended 31st March, 2011 were
prepared as per the then applicable, pre-revised Schedule VI to the
Act. Consequent to the notification of Revised Schedule VI under the
Act, the financial statements for the year ended 31st March, 2012 are
prepared as per Revised Schedule VI. Accordingly, the previous year
figures have also been reclassified to conform to this year's
classification. The adoption of Revised Schedule VI for previous year
figures does not impact recognition and measurement principles followed
for preparation of financial statements.
Mar 31, 2011
1. Contingent Liabilities
As at As at
31st March
2011 31st March 2010
Rs'000 Rs'000
(a) Claims against the company not
acknowledged as debts
Income tax matters
(i) Matters decided in favour of the
company but disputed further by
the income tax authorities 301,612 305,766
(ii) Matters decided against the company
in respect of which the company has
preferred an appeal 147,103 128,649
Sales tax matters 227,408 180,762
Service tax matter 3,291 3,291
Excise matters 5,110 5,110
Claims from a third party
manufacturer in respect of Excise
matter 32,943 31,162
Claims from Consumers 1,758 1,758
Others 701,927 2,100
(b) Uncalled liability on partly paid
share in Hill Properties Limited 2 2
Notes:
(i) Future cash outflows in respect of (a) above are determinable only
on receipt of judgements/ decisions pending with various
authorities/forums and/or final outcome of the matters.
(ii) Future cash outflow in respect of (b) above is dependent on the
call to be made by Hill Properties Limited.
2. (a) Salaries, Wages and Bonus include Rs. 5,200(000) [Previous year
Rs. 2,800(000)] paid to employees under the Voluntary Retirement Schemes.
(b) Voluntary Retirement Costs represent the actuarial value as at 31st
March, 2011 of compensation payable under the Voluntary Retirement
Schemes. Amount payable within one year approximately Rs. 2,468(000)
[Previous year Rs. 3,124(000)].
3. Disclosures as required under the Micro, Small and Medium
Enterprises Development Act, 2006. This information and that given in
Schedule 11 - Liabilities regarding Micro and Small Enterprises has
been determined to the extent such parties have been identified on the
basis of information available with the company. This has been relied
upon by the auditors.
(e) Included in (d) above is - Nil [Previous year - Nil] being interest
on amounts outstanding as at the beginning of the accounting year.
(C) Other Long-term Employee Benefit
The liability for Long Service Awards as at the year end Rs.
6,859(000) [Previous year Rs. 7,230(000)].
(a) Business Segments
The businesses comprise Pharmaceuticals, Generics, OTC and Animal
Health. The operational performance of the business is reviewed by
the management based on such segmentation.
(i) The Pharmaceuticals segment comprises a portfolio of prescription
medicines which are provided to patients through healthcare professionals.
These are mainly products of original research of the Novartis Group.
(ii) The Generics segment comprises Retail Generics products. The business
unit primarily focuses on the therapeutic segments such as Anti-TB, Anti-DUB
(Gynaecology), Antihistamines,
Antibiotics, Anti-ulcerants, Anti-diabetes and Cardiovascular. (iii)
The Animal Health segment has a presence primarily in the cattle and
poultry market segments. (iv) The OTC segment is mainly in the VMS
(vitamins, minerals and nutritional supplements) and
CoCoA (cough, cold and allergy) market segments.
(b) Geographical Segments
Revenue is segregated into two segments namely India (sales to
customers within India) and Other Countries (sales to customers outside
India) on the basis of geographical location of customers for the
purpose of reporting geographical segments.
(c) The accounting policies adopted for segment reporting are in line
with the accounting policies adopted for the preparation of financial
statements as disclosed in Note 1 above.
4. Related Party Disclosures
(A) Enterprise where control exists Hoiding Company
Novartis AG, Basel, Switzerland
(8) Other Related Parties with whom (a) Fellow Subsidiaries
the company had transactions during the year
Novartis (Bangladesh) Limited, Bangladesh
Novartis (Thailand) Limited, Thailand
Novartis Animal Health GmbH, Austria
Novartis Animal Health, USA
Novartis Asia Pacific Pharmaceuticals Pte. Ltd., Singapore
Novartis Healthcare Private Limited, India
Novartis International AG, Basel, Switzerland
Novartis Pharma AG, Basel, Switzerland
Novartis Pharmaceuticals (HK) Limited, Hong Kong
Novartis Pharmaceuticals Corporation Inc., USA
Sandoz Private Limited, India
Shanghai Novartis Animal Health Co. Limited, China
(b) Key Management Personnel
R. Shahani
R Gupta
A. Matai
V. Singhal
Dr R R. Rao
A. Sharma (From 6th January, 2010)
(b) Significant leasing arrangements
(i) Either party shall be entitled at any time during the term to
terminate the agreement by giving three months' prior notice in
writing.
(ii) There is no provision for renewal.
5. Previous year figures have been regrouped where necessary.
Mar 31, 2010
1. Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advances) - Nil [Previous year Rs.
943(000)].
As at As at
31st March 2010 31st March 2009
Rs 000 Rs 000
2. Contingent Liabilities
(a) Claims against the company
not acknowledged as debts
Income tax matters
(i) Matters decided in favour of the
company but disputed further by the
income tax authorities 305,766 303,699
(ii) Matters decided against the
company in respect of which the
company has preferred an appeal 128,649 119,618
Sales tax matters 180,762 166,097
Service tax matter 3,291 -
Excise matters 5,110 5,110
Claims from a third party
manufacturer in
respect of Excise matter 31,162 667
Claims from Consumers 1,758 1,758
Others 2,100 2,100
(b) Uncalled liability on partly
paid share in Hill
Properties Limited 2 2
Notes:
(i) Future cash outflows in respect of (a) above are determinable only
on receipt of judgements/ decisions pending with various
authorities/forums and/or final outcome of the matters.
(ii) Future cash outflow in respect of (b) above is dependent on the
call to be made by Hill Properties Limited.
Notes to the Financial Statements
3. (a) Salaries, Wages and Bonus include Rs. 2,800(000) [Previous year
Rs. 5,253(000)] paid to employees under the Voluntary Retirement
Schemes.
(b) Voluntary Retirement Costs represent the actuarial value as at 31st
March, 2010 of compensation payable under the Voluntary Retirement
Schemes. Amount payable within one year approximately Rs. 3,124(000)
[Previous year Rs. 3,956(000)].
4. Disclosures as required under the Micro, Small and Medium
Enterprises Development Act, 2006. This information and that given in
Schedule 11 Ã Liabilities regarding Micro and Small Enterprises has
been determined to the extent such parties have been identified on the
basis of information available with the company. This has been relied
upon by the auditors.
Notes to the Financial Statements
5. Related Party Disclosures
(A) Enterprise where control exists
Holding Company Novartis AG, Basel, Switzerland
(B) Other Related Parties with whom the company had transactions during
the year
(a) Fellow Subsidiaries Hexal Pharma Private Limited
Novartis (Bangladesh) Limited, Bangladesh
Novartis (Thailand) Limited, Thailand
Novartis Animal Health GmbH, Austria
Novartis Asia Pacific Pharmaceuticals Pte. Ltd., Singapore
Novartis Consumer Health OTC, Hungary
Novartis Consumer Health, USA
Novartis Egypt S.A.E., Egypt
Novartis Farmaceutica S.A., Spain
Novartis Healthcare Philippines, Philippines
Novartis Healthcare Private Limited
Novartis International AG, Basel, Switzerland
Novartis Pharma (Pakistan) Limited, Pakistan
Novartis Pharma AG, Basel, Switzerland
Novartis Pharma Services Inc., Basel, Switzerland
Novartis Pharmaceuticals (HK) Limited, China
Novartis Pharmaceuticals Australia Pty. Ltd., Australia
Novartis Pharmaceuticals Corporation Inc., USA
Sandoz Phillipines Corporation, Phillipines
Sandoz Private Limited
Shanghai Novartis Animal Health Co. Limited, China
(b) Key Management Personnel R. Shahani
R Gupta
A. Matai
V. Singhal
Dr R R. Rao
A. Sharma (From 6th January, 2010)
Disclosure of transactions between the company and related parties and
outstanding balances as at the year end:
Notes:
1. The above cash flow statement has been prepared under the Indirect
Method as set out in the Accounting Standard - 3 on Cash Flow
Statements, notified under sub-section (3C) of Section 211 of the
Companies Act, 1956.
2. Cash and Cash Equivalents - Closing Balance include balances
aggregating to Rs. 12,280(000) [Previous year Rs. 11,655(000)] with
scheduled banks on current accounts in respect of unpaid dividend,
which are not available for use by the company
3. Previous year figures have been regrouped where necessary.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article