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Notes to Accounts of Pfizer Ltd.

Mar 31, 2017

Notes to the reconciliation:

1 Reversal of impact of straight- lining of lease rentals

Under Ind AS, to the extent that escalation in the rent agreement is in line with general inflation no straight- lining is required.

2 Discounting of security deposits

Under Indian GAAP, security deposits are carried at their face values. Under Ind AS, non-cancellable deposits (not statutory deposits in nature) are required to be measured at their fair values at inception using an appropriate discounting rate.

3 Proposed dividend

Under Indian GAAP, proposed dividends are recognized as a liability in the period to which they relate, irrespective of when they are declared. Under Ind-AS, a proposed dividend is recognized as a liability in the period in which it is declared by the company (usually when approved by shareholders in a general body meeting) or paid.

In the case of the Company, the declaration of dividend occurs after period end. Therefore, the liability recorded for this dividend has been derecognized against retained earnings.

4 Derecognition of physician samples from inventory

Under Ind AS, inventory manufactured and identified for distribution as physician''s samples is to be recognized as an expense in the period in which such inventory is manufactured.

5 Amortization of goodwill

Reversal of amortization of goodwill acquired in a Business Combination. Goodwill is not amortized and is mandatorily tested for impairment as per the requirements of Ind AS 36 Impairment of Assets.

6 Deferred tax on Ind AS Adjustments

This pertains to recognition of deferred tax on fair valuation of all the assets recognized in relation to the amalgamation of erstwhile Wyeth Limited, financial assets, goodwill and all other assets.

7 Actuarial gains and losses reclassified to OCI

As per Ind AS 19 - Employee Benefits, actuarial gains/ losses on defined benefit plans are reclassified to other comprehensive income (net of tax).

4 Exemptions available under Ind AS 101

In preparing these financial statements, the Company has availed itself of certain exemptions and exceptions in accordance with Ind AS 101 as explained below:

Exceptions from full retrospective application:

a) Estimates exceptions

Upon an assessment of the estimates made under Indian GAAP, the Company has concluded that there was no necessity to revise such estimates under Ind AS, except where estimates were required by Ind AS and not required by Indian GAAP.

b) Deemed Cost for Property, Plant & Equipment

The Company has elected 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.

c) Business Combination

Ind AS 101, provides the option to apply Ind AS 103, Business Combinations prospectively from the transition date or from a specific date prior to the transition date. The Company has elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date has not been restated.

8 Amalgamation of erstwhile Wyeth Limited with the Company during financial year 2014-15

In financial year 2014-15, the Scheme of Amalgamation (‘Scheme'') between the Company and erstwhile Wyeth Limited with an appointed date of 1 April 2013, whereby all the assets and liabilities of erstwhile Wyeth Limited which were transferred to and vested in the Company, have been recorded at their fair values from the appointed date.

The said Scheme received the approval of the Hon''ble High Court of Judicature at Mumbai on 31 October 2014 and subsequent to approvals by other relevant regulatory authorities; the Scheme became effective on 1 December 2014. Since the Scheme received all the requisite approvals after the financial statements for the year ended 31 March 2014 were authorized by the shareholders, the impact of amalgamation has been given in the financial year ended 31 March 2015 with effect from the appointed date.

In accordance with the provisions of the aforesaid Scheme,

(i) The approved share swap ratio was 7 equity shares of the face value of Rs,10 each fully paid up of the Company for every 10 equity shares of the face value of Rs,10 each fully paid up of erstwhile Wyeth Limited. Accordingly, for a total consideration of Rs,1,31,379 lakhs, the Company allotted and issued 1,59,06,292 equity shares of Rs,10 each to the shareholders of erstwhile Wyeth Limited in December 2014, and accounted for the share premium of Rs,1,29,879 lakhs in the financial year ended 31 March 2015.

(ii) The amalgamation was accounted under the “Purchase Method” as per Accounting Standard 14 - Accounting for Amalgamations,as referred to in the Scheme of Amalgamation approved by the High court.

(iii) The transfer of assets and liabilities of erstwhile Wyeth Limited at fair values was effected from “appointed date” of 1 April 2013 as defined in the Scheme.

(iv) Fair value of assets and liabilities acquired from Wyeth Limited aggregated to Rs,22,724 lakhs. The total purchase consideration paid was Rs,1,31,379 lakhs. The Company recognized identified intangible assets of Rs,42,720 lakhs and resultant goodwill of Rs,65,935 lakhs is tested for impairment annually.

(v) Related deferred tax impact has been recognized through retained earnings on 1 April 2015, given that the business combination has been effected prospectively from the transition date, as per the exemption available in Ind AS 101.

The Company has availed the deemed cost exemption under Ind AS 101- First time adoption of Indian Accounting Standards in relation to the investment property on the date of transition. Consequently the net block carrying amount as on 1 April 2015 has been considered as the gross block carrying amount on that date. Refer note below for the gross block value and the accumulated depreciation on 1 April 2015 under the previous GAAP

The rental income recognized, from the above investment properties, in the statement of profit and loss for the year ending 31 March 2017 and 31 March 2016 is Rs,639.14 lakhs in each year.

B. Measurement of fair values

i. The fair value of investment property is Rs,13,498.93 lakhs. The fair value has been determined by external, independent property valuers. The fair value measurement for all the investment properties has been categorized as a level 3 fair value based on the inputs to the valuation technique used. The independent valuers has adopted Land and Building method of valuation. The valuation has been arrived at considering the location of the property, market inquiries, sale instances etc.

The Company has availed the deemed cost exemption under Ind AS 101- First time adoption of Indian Accounting Standards in relation to the intangible assets on the date of transition. Consequently, the net block carrying amount as on 1 April 2015 has been considered as the gross block carrying amount on that date. Refer note below for the gross block value and the accumulated amortization on 1 April 2015 under the previous GAAP.

Impairment:

The shareholders of the Company approved the Scheme of Amalgamation (‘Scheme'') between the Company and erstwhile Wyeth Limited (“Wyeth business”) with an appointed date of 1 April 2013 whereby all the assets and liabilities of Wyeth business which were transferred to and vested in the Company have been recorded at their fair values from the appointed date. The goodwill pertains to the excess of purchase consideration over the fair values of the net assets taken over from Wyeth Limited.

The recoverable amount of the above CGU has been assessed using a value-in-use model. Value in use is calculated as the net present value of the projected post-tax cash flows plus a terminal value of the cash generating unit to which the goodwill is allocated. Initially a post-tax discount rate is applied to calculate the net present value of the post-tax cash flows.

The cash flow projections include specific estimates for five years developed using internal forecasts and a terminal growth rate thereafter of 5%. The planning horizon reflects the assumptions for short-to-mid term market developments.

Discount rate reflects the current market assessment of the risks. The discount rate is estimated based on the weighted average cost of capital for the Company. Post-tax discount rates used were 11.5% for the year ended 31 March 2017.

The values assigned to the key assumptions represent management''s assessment of future trends in the relevant industries and have been based on historical data from both external and internal sources.

The management believes that any reasonable possible change in the key assumptions would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash- generating unit.

i The Company has entered into an agreement for sale of Business undertaking at Thane as a going concern, on a slump sale basis for a consideration of Rs,17,800 lakhs, to be paid in installments, subject to fulfillment of the conditions precedent to the closing. The impact of the transaction would be reflected upon closure of the transaction. As on 31 March 2017, the Company has received an advance of Rs,15,000 lakhs as per the agreed terms and is disclosed under “Other Current Liabilities” in note 25. Upon the conclusion of the Business Transfer Agreement (BTA), all current workmen at Thane Plant shall be transferred to the buyer so as to facilitate manufacturing operations. The proposed transfer of business undertaking at the Thane plant shall not impact the supply of any of the Company''s medicines to patients as alternate supply arrangements are already in place. The property, plant and equipment pertaining to the plant have been disclosed under this head.

ii The Company intends to dispose off the office premises having a carrying value of Rs,526.69 lakhs as it no longer intends to utilize the same in the next 12 months and accordingly classified the asset as held for sale. Search for a suitable buyer is underway. No impairment loss was recognized on reclassification of the said premises as held for sale and the Company expects the fair value less cost to sell to be higher than carrying amount.

d There has been no movement in the equity shares outstanding at the beginning and end of the year.

e The Company has a single class of equity shares. Accordingly all the equity shares rank equally with regard to voting rights, dividends and share in the Company''s residual assets.

f Pursuant to the Scheme of Amalgamation of erstwhile Wyeth Limited with the Company 1,59,06,292 shares of face value Rs,10 each were issued during the year ended 31 March 2015 to the shareholders of erstwhile Wyeth Limited for consideration other than cash. During the five reporting periods immediately preceding the reporting date, no shares have been issued by capitalization of reserves as bonus shares.

9b Other Equity

Nature and purpose of reserves

i Securities premium account

Securities premium account is used to record the premium on issue of shares. This reserve is utilised in accordance with the said provisions of The Companies Act, 2013. This account also includes the share premium on shares issued to the shareholders of erstwhile Wyeth limited, pursuant to the Scheme of Amalgamation.

ii General reserve

General reserve forms part of the retained earnings and is permitted to be distributed to shareholders as part of dividend.

iii Capital reserve

The share- based payment reserve is used to recognise the value of equity settled share-based payments provided to the employees by the Pfizer Inc. the ultimate holding company and the Company is not liable for any recharge of the amount. Refer Note no. 38 for further details on the plan.

The amount represents purchase consideration payable to John Wyeth and Brother Limited, UK for the transfer of its undertaking in India to the erstwhile Wyeth Limited. The amount has been retained as an interest free unsecured loan as per the directives of the RBI in this regard pending appropriate clearance from the Income tax authorities.

b) Nature of provisions:

Provision for sales returns:

These represents provision towards saleable and non-saleable return expected to be made by the customers till the product expiry. Provision towards saleable return represents products which are expected to be returned in saleable condition while non-saleable return represents expected returns of products which are either expired or damaged, such that the sale of such products may not be possible.

Provision for demnads under DPCO:

These represents provision recognized by the Company towards unsettled compensations claimed under DPCO from the Company. Provision for customs and central excise:

These represents provision recognized by the Company towards claims raised by Customs and Excise authorities.

b) Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the management. This has been relied upon by the auditors.

c) The above includes amouts due to related parties Rs,28,081.43 lakhs (31 March 2016 : Rs,20,452.18 lakhs; 1 April 2015 : Rs,22,702.97 lakhs)

d) All trade payables are ‘current''. The Company''s exposure to currency and liquidity risks related to trade payables is disclosed in note 40.

The Company''s effective tax rates for the years ended 31 March 2017 and 2016 were 34.84% and 35.17%, respectively. Income tax expense was Rs,18,005.53 lakhs for the year ended 31 March 2017, as compared to income tax expense of Rs,16,544.17 lakhs for the year ended 31 March 2016.

The company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Significant management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered. Any changes in future taxable income would impact the recoverability of deferred tax assets.

37 Employee benefits

(A) Defined contribution plan:

During the year, the Company has contributed Rs,43.45 lakhs (March 2016: Rs,43 lakhs) towards employee''s superannuation fund.

(B) Defined Benefit Plan:

(i) Compensated absences

All eligible employees can carry forward and avail / encash leave as per Company''s rules.

(ii) Provident fund

The employee''s provident fund is administered by a Trust created specifically for the purpose. The employee''s and employer''s contributions are transferred to the trust. All liabilities arising on account of provident fund payouts on resignation or retirement from service or death while in service are made from the trust.

(iii) Gratuity plan

In accordance with the provisions of the Payment of Gratuity Act, 1972, the Company has a defined benefit plan which provides for gratuity payments. The plan provides a lump sum gratuity payment to eligible employees at retirement or termination of their employment. The amounts are based on the respective employee''s last drawn salary and the years of employment with the Company.

Liabilities in respect of the gratuity plan are determined by an actuarial valuation, based upon which the Company makes annual contributions to the Group Gratuity cum Life Assurance Schemes administered by the LIC of India, a funded defined benefit plan for qualifying employees. Trustees administer the contributions made by the Company to the gratuity scheme.

i. Movement in net defined benefit asset/ (obligation)

The following table shows a reconciliation from the opening balances to the closing balances for net defined benefit (asset) liability and its components

Nature and extent of Employee Share-based Payment Plans

Pfizer Inc., USA, as a part of the Long-term incentive awards offers certain Common stock (shares) to the employees of the Company and its subsidiaries. These shares are offered through grant of awards which is a combination of stock options (ESOP) and restricted stock units (RSU) under the Pfizer Inc. 2004 Stock plan. As per the plan, the vesting period of the stock options and the restricted stock units is 3 years from the grant date. As per the plan, the stock options have a term of 10 years from the grant date. All stock options and restricted stock units are settled through equity.

The employees of the Company have been issued nil (March 2016: 90,426) share options, 22,247 (March 2016: 18,085 ) restricted stock units, 1,403 (March 2016: 1,554) portfolio performance shares and 110,467 (March 2016: nil) total shareholder return units under the Pfizer Inc 2004 Share Option Plan by Pfizer Inc. USA. The cost incurred by Pfizer Inc pursuant to the said Pfizer Inc 2004 share option Plan for the year ended 31 March 2017 amounts to Rs,510.01 lakhs which has been debited to the statement of profit and loss.

i) Employee stock options (ESOP)

Employee stock option provides the employees of Pfizer Limited with a right to receive a unit of the stock of the Ultimate Holding Company at a predetermined exercise price upon fulfillment of vesting conditions.

The weighted average grant date fair value of par value options granted under Category A during the years ended 31 March 2017 and 2016 was nil and USD 4.30 per option, respectively.

The weighted average grant date fair value of par value options granted under Category C during the years ended 31 March 2017 and 2016 was USD 30.59 and USD 34.59 per PPSs, respectively.

iv) Total Shareholder Return Units (TSRUs)

TSRUs are awarded to senior and other key management, and, beginning in 2016, to certain other employees. TSRUs entitle the holders to receive a number of shares of our common stock with a value equal to the difference between the defined settlement price and the grant price, plus the dividends accumulated during the five -year or seven -year term, if and to the extent the total value is positive.

Pfizer measures the value of TSRU grants as of the grant date using a Monte Carlo simulation model. The values determined through this fair value methodology generally are amortized on a straight-line basis over the vesting term into Cost of sales, Selling, informational and administrative expenses , and/or Research and development expenses, as appropriate.

b) Valuation of stock options

The fair value of stock options granted during the period has been measured using the Black-Scholes-Merton option pricing model at the date of the grant. The Black-Scholes-Merton option-pricing model includes assumptions regarding dividend yields, expected volatility, expected terms and risk free interest rates. The key inputs and assumptions used are as follows:

Share price: The closing price on NSE as on the date of grant has been considered for valuing the options granted.

Exercise Price: Exercise Price is the market price or face value or such other price as determined by the Remuneration and Compensation Committee.

Expected Volatility: The historical volatility of the stock till the date of grant has been considered to calculate the fair value of the options.

Expected Option Life: Expected Life of option is the period for which the Company expects the options to be live. The minimum life of a stock option is the minimum period before which the options cannot be exercised and the maximum life is the period after which the options cannot be exercised.

Expected dividends: Expected dividend yield has been calculated as an average of dividend yields for the four financial years preceding the date of the grant.

Risk free interest rate: The risk free interest rate on the date of grant considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero coupon yield curve for Government Securities.

39 Leases

Operating leases a) Leases as lessee

The Company has taken certain facilities under operating lease arrangements. The lease can be terminated at the option of either parties by giving due notice. The rental expenses under operating leases “Other expenses” in the statement of profit and loss.

Lease Income recognized in the statement of profit and loss for the year in respect of sub let property is Nil (March 2016: Rs,229.18 lakhs)

10 Financial instruments

1. Financial instruments - Fair values and measurements Accounting classification and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities as at 31 March 2017, including their levels are presented below. It does not include the fair value information for financial assets and financial liabilities not measured at fair value if their carrying amount is a reasonable approximation of fair value.

2. Financial Risk Management - Objective and Policies

(i) Financial Risk Management Framework

The Company has exposure to the following risks arising from financial instruments:

- Credit risk

- Liquidity risk

- Market risk

- Currency risk

The Company''s Board of Directors have overall responsibility for the establishment and oversight of the Company''s risk management framework.

The Company''s risk management is carried out by the management in consultation with the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific risk areas.

The Audit Committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and adhoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

(ii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and from its financing activities including deposits with banks and other financial instruments. The Company establishes an allowance for expected credit loss and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.

a) Trade and other receivables

The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs,12,078.28 lakhs as at 31 March 2017 and Rs,14,229.78 lakhs as at 31 March 2016.

Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India.

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry, the country and the state in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed 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.

b) Expected credit loss assessment for customers

The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgment.

Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses.

c) Cash and bank balances

The Company held cash and bank balances of Rs,1,52,308.83 lakhs as at 31 March 2017 (31 March 2016: Rs,1,02,464.96 lakhs, 1 April 2015 : Rs,60,928.70 lakhs). Credit risk on cash and cash equivalents is limited as these are generally held or invested in deposits with banks and financial institutions with good credit ratings.

d) Investments

There are no significant investments made by the Company and hence credit risk is not material.

(iii) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements.

(iv) Market risk

Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables. We are exposed to market risk primarily related to foreign exchange rate risk. Thus, our exposure to market risk is a function of revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.

(v) Currency risk

The Company is exposed to currency risk on account of its operations. The functional currency of the Company is Indian Rupee. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may continue to fluctuate substantially in the future.

Every percentage point depreciation / appreciation in the exchange rate between the Indian Rupee and US dollar would not have a significant impact on profit and loss for the year ended 31 March 2017 and 31 March 2016.

11 Capital Management

The Company''s policy is to maintain a strong capital base to sustain future development of the business.

The Company has adequate cash and bank balances and continues to remain debt-free. The company monitors its capital by a careful scrutiny of the cash and bank balances, and a regular assessment of any debt requirements. In the absence of any debt, the maintenance of debt equity ratio etc. may not be of any relevance to the Company.

12 Pricing Litigations - Contingencies

(a) Ox tetracycline and other formulations

In respect of certain price fixation Orders of 1981 of the Government of India, the Supreme Court vide its Order of 22 March 1993 held that, pending disposal of the Company''s Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs,87.61 lakhs (March 2016: Rs,87.61 lakhs), less Rs,19.90 lakhs (March 2016: Rs,19.90 lakhs) already deposited, with the Union of India before 15 May 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs,43.80 lakhs (March 2016: Rs,43.80 lakhs) with interest at the rate of 15% per annum will have to be paid to the Government.

(b) Multivitamin Formulations

In respect of certain price fixation Orders of 1986 of the Government of India, the Supreme Court vide its Order dated 3 December 1992, held that, pending disposal of the Company''s Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs,98.00 lakhs (March 2016: Rs,98.00 lakhs) with the Union of India before 31 January 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs,49.00 lakhs (March 2016: Rs,49.00 lakhs) with interest at the rate of 15% per annum will have to be paid to the Government.

(c) Protinex

In yet another case, the Company had challenged in 1986 a price fixation Order of the Government of India by a Writ Petition before the High Court of Mumbai. The Hon''ble Court passed an ad interim and interim order staying the impugned order. The Petition, while it was still pending for hearing and final disposal, was withdrawn in 1989 on redressal of the Company''s grievances. After protracted correspondence on the subject, in 1993 the Government raised a demand of Rs,81.83 lakhs (March 2016: Rs,81.83 lakhs) on the Company for the period April 1986 to July 1989 and directed the Company to deposit the same into the Drug Prices Equalization Account (DPEA). Thereafter, the Drug Prices Liability Review (DPLR) Committee sent a letter dated 15 February 1996 seeking the Company''s submission/ representation against the reduced claim amount of Rs,33.87 lakhs (March 2016: Rs,33.87 lakhs)for the period April 1986 to August 1987 as intimated to the DPLR Committee by the Government of India. The Company has made its submissions to the DPLR Committee vide its letter of 29 March 1996 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case.

In the meantime, the Department of Chemicals and Petrochemicals vide their letter dated 11 February 1997 raised an additional demand of Rs,178.56 lakhs (March 2016: Rs,178.56 lakhs) for the earlier period of February 1984 to March 1986 over and above the revised claim of Rs,33.87 lakhs (March 2016: Rs,33.87 lakhs) for the period April 1986 to August 1987. Thus, the total demand raised now stands revised to Rs,212.43 lakhs (March 2016: Rs,212.43 lakhs). The DPLR Committee had, vide its letter dated 24 February 1997 invited the Company to make its submissions/ representations against the above said claim. The Company has made its submissions to the DPLR Committee vide its letter dated 14 May 1997 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case.

Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifications should be obtained from the Bombay High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any notice issued by the Government of India after 25 August 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date).

On a Notice of Motion filed by the Company in the said Writ Petition, the Bombay High Court has granted ad interim Order that “pending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No 49/1996 pending before the said Drug Prices Liability Review Committee be stayed.”

The Bombay High Court vide its judgement dated 22 December 2011 dismissed the Writ Petition filed by OPPI & IDMA and directed the companies who have been issued show cause notices to file appropriate replies and directed the government to pass appropriate orders accordingly.

(d) Vitamin and other formulations

The Government has arbitrarily determined the liability of the Company at Rs,1,466 lakhs (March 2016: Rs,1,466 lakhs) being the difference in price in respect of Vitamin and other formulations sold by the Company during the years 1983 to 1989. The Company has repudiated the liability on this account. The Company''s Solicitors have advised that the repudiation by the Company is legally sustainable. The Government has pursued the matter. The Company maintains its position that the claim by the Government is not legally sustainable.

(e) Chloramphenicol

The Government has arbitrarily determined the liability of the Company at Rs,145 lakhs (March 2016: Rs,145 lakhs) and Rs,14 lakhs (March 2016: Rs,14 lakhs) being the difference between the price of bulk drug Chloramphenicol powder and Chloramphenicol Palmitate respectively allowed in the formulation price and actual procurement price for the period 1979 to 1988. The Company has repudiated the liability on this account as advised by the Company''s Solicitors. The Company has also obtained a Stay order from the Hon''ble High Court of Mumbai against the demand.

Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifications should be obtained from the Bombay High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Notice issued by the Government of India after 25 August 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date).

Similar applications were filed as in the matter of Protinex before the Bombay High Court in Writ Petition filed by OPPI & IDMA and similar order was passed i.e. Case No 23/95 pending before the said Drug Prices Liability Review (DPLR) Committee was stayed. The OPPI & IDMA Writ Petition have been disposed with the direction as aforesaid.

(f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan Limited (merged with Parke-Davis (India) Limited in 1988 and Parke - Davis (India) Limited merged with Pfizer Limited in 2003) had classified Isokin Tablets, Isokin Liquid and Pyridium tablets as decontrolled products under the DPCO 1979. The categorization was, however, challenged by the Government in 1984 and a demand of Rs,113 lakhs (March 2016: Rs,113 lakhs) was raised against the Company. Against this demand an excise duty set off of Rs,7 lakhs (March 2016: Rs,7 lakhs) was allowed to the Company and a final demand of Rs,106 lakhs (March 2016: Rs,106 lakhs) was raised in 1987.

The Company had deposited an amount of Rs,30 lakhs (March 2016: Rs,30 lakhs) in February 1987 and Rs,25 lakhs (March 2016:Rs,25 lakhs) in May 1990 totaling to Rs,55 lakhs (March 2016: Rs,55 lakhs) in full and final settlement of the demand, as per the arguments set forth by the Company. The Government subsequently raised a demand of Rs,117 lakhs (March 2016: Rs,117 lakhs) towards interest on principal demand. (i.e. interest of Rs,43 lakhs (March 2016: Rs,43 lakhs) for Pyridium for the period 1982 to August 1995 and Rs,74 lakhs (March 2016: Rs,74 lakhs) for Isokin for the period 1982 to June 1997.

The Company filed a Writ Petition in the Andhra Pradesh High Court in September 1997 for staying all further proceedings against the Company. The High Court stayed the demand in respect of collection of interest but directed the Company to deposit the balance demand of Rs,51 lakhs (March 2016: Rs,51 lakhs) (which amount was deposited in November 1997).

The said Writ Petition has been heard and disposed off by final judgement of the Hon''ble Andhra Pradesh High Court, on 15 April 2011. The Hon''ble High Court has inter alia set aside all the demand notices and further directed the respondents to refund the monies paid under the interim orders.

The Union of India has preferred a Special Leave Petition (SLP) before the Hon''ble Supreme Court against the above judgement. In view of there being a discrepancy in the English and Hindi Notification of DPCO, 1979 in para 13(5) of the DPCO, 1979 the SLP came to be allowed vide order dated 12 April 2013 setting aside the impugned judgment and restoring the writ petition to file, to conduct appropriate enquiry and for hearing and fresh disposal. The matter now stands remanded back to the Andhra Pradesh High Court.

(g) Multivitamin Formulations:

The Government has arbitrarily raised a demand of Rs,182.38 lakhs (March 2016: Rs,182.38 lakhs) on account of alleged overpricing of certain multivitamin formulations marketed by erstwhile Pharmacia Healthcare Limited (merged with Pfizer Limited) for the period 1983 to 1986. The Company has repudiated the liability on this account as advised by its solicitors. The Company filed a Writ Petition No.814 of 1992 in the High Court at Mumbai. The Supreme Court of India, in a SLP filed by the Company held that pending disposal of Writ Petition filed before the High Court at Mumbai, the Company shall furnish an undertaking in respect of 50% of its liability and shall deposit the balance 50% aggregating to Rs,91.19 lakhs (March 2016: Rs,91.19 lakhs). This amount has been deposited with the Government of India and is included under the head “Long Term Loans and Advances”.

Pursuant to a Transfer Petition (Civil) no 475-496 of 2003 filed under Article 139A(1) of the Constitution of India, all pending writ petitions in respect of Drug Prices Equalization Account (DPEA) liabilities are now to be transferred to the Supreme Court to be heard and finally decided by the Supreme Court of India. Consequently as a result of the said transfer petition, Writ Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now be heard and disposed of by the Supreme Court.

The Supreme Court however, by order dated 3 May 2010 disposed off the Transfer Petition, directing the concerned High Courts to take up the writ petitions before them and dispose them on merits.

The Writ Petitions filed before the Hon''ble Bombay High Court came up for hearing on 1 February 2013. The Hon''ble Bombay High Court was of the view that the Orders passed by the Union may be set aside and the Union may be directed to decide the matters afresh keeping all the issues and contentions open. Consequently, as directed by the Hon''ble Court draft minutes of the order were prepared and circulated to the Advocates of the Union for their perusal.

In view of the disagreement between the parties on the draft minutes, on 12 March 2013 the Union sought to press for their Notice of Motion for all the matters to be listed for final hearing. Thereafter, the Hon''ble Bombay High Court passed an Order for the matters to be listed in due course and rejected the Notice of Motion of the Union.

Thereafter, the Union made an application before the Hon''ble Chief Justice for having this group of matters to be assigned to a Division Bench for expeditious hearing. However, till date no Order has been passed in the matter.

In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the legal opinion being in favor of the Company, and based on the assessment of the Management, no further provision is considered necessary over and above the sum of Rs,198.37 lakhs (March 2016: Rs,198.37 lakhs) which has been paid off in earlier years.

The Company would continue to seek legal recourse in all the above matters.

(h) The Government of India had served demand notices on erstwhile Wyeth Limited in respect of its product, claiming that an amount of Rs,4,507.07 lakhs (March 2016: Rs,4,507.07 lakhs) inclusive of interest of Rs,3,186.55 lakhs (March 2016: Rs,3,186.55 lakhs) is payable in respect of price fixation under the Drugs (Prices Control) Order 1979. The Company has disputed the demand. Without prejudice to its contention, the Company paid the principal amount of Rs,1,320.52 lakhs (March 2016: Rs,1,320.52 lakhs). The Company carries a provision of Rs,1,469.08 lakhs (March 2016: Rs,1,469.08 lakhs) in respect of the said demand. The Company has furnished corporate bonds for amount aggregating to Rs,3,186.55 lakhs (March 2016: Rs,3,186.55 lakhs) for interest.

(i) The Government of India had served demand notices on erstwhile Wyeth Limited in respect of its product, claiming that an amount of Rs,1,069.35 lakhs (March 2016: Rs,1,069.35 lakhs) inclusive of interest of Rs,832.47 lakhs (March 2016: Rs,832.47 lakhs) is payable in respect of price fixation under the Drugs (Prices Control) Order 1979. The Company has disputed the demand. Without prejudice to its contention, the Company has paid principal amount of Rs,236.88 lakhs (March 2016: Rs,236.88 lakhs) under protest. The Company carries a cumulative provision of Rs,40.50 lakhs (March 2016: Rs,40.50 lakhs) in the books of accounts. Corporate bonds for amount aggregating to Rs,832.47 lakhs (March 2016: Rs,832.47 lakhs) for interest has been furnished.

(j) The Government of India had served demand notices on erstwhile Wyeth Limited in respect of its certain bulk drugs, claiming that an amount of Rs,331.24 lakhs (March 2016: Rs,331.24 lakhs) inclusive of interest Rs,187.34 lakhs (March 2016: Rs,187.34 lakhs) is payable into the Drug Prices Equalization Account (DPEA) under the Drugs (Prices Control) Order, 1979 on account of alleged unintended benefit enjoyed by the Company. The Company has disputed the demand. Without prejudice to its contentions, the Company has paid an amount of Rs,45 lakhs (March 2016: Rs,45 lakhs) under protest.

(k) The Government of India had served a demand notice on erstwhile Wyeth Limited claiming an amount of Rs,1,726.35 lakhs (March 2016: Rs,1,726.35 lakhs) inclusive of interest of Rs,134.90 lakhs (March 2016: Rs,134.90 lakhs) due thereon for alleged non compliance under the Drugs (Prices Control) Order, 1995 in respect of production of Prednisolone based formulations. Without prejudice to its contentions, the Company has provided and paid Rs,1,287.93 lakhs (March 2016: Rs,1,287.93 lakhs) and disputed the balance demand.

The demands stated in (h),(i),(j) and (k) above aggregate to Rs,7,634.06 lakhs (March 2016: Rs,7,634.06 lakhs) inclusive of interest of Rs,4,341.26 lakhs (March 2016: Rs,4,341.26 lakhs) . Based on the legal opinions obtained in respect of these cases, the Company is of the opinion that the estimated liability in respect of these cases involved shall not exceed Rs,1,509.57 lakhs (March 2016: Rs,1,509.57 lakhs) provided in the books of accounts.

(l) Other Pricing related disputes

The government had raised demands on account of alleged non-adherence of certain price notifications on four products marketed / traded by the Company. The total liability in respect of these demands amounted to Rs,1,511.32 lakhs (March 2016: Rs,1,511.32 lakhs) against which the Company has made a provision of Rs,499 lakhs (March 2016: Rs,499 lakhs).

Based on the legal opinions obtained, the Company is of the opinion that the estimated liability in respect of these cases involved shall not exceed the amount provided in books of accounts.

13 Related Party Transactions:

I. Names of related parties and description of relationships

A. Parties where control exists:

Ultimate holding company:

Pfizer Inc., USA

B. Companies collectively exercising significant influence:

Pfizer East India B.V., Netherlands Wyeth LLC, USA

Wyeth Holdings Corporation, USA John Wyeth & Brother Limited, UK Warner - Lambert Company, LLC, USA Parke - Davis & Company, LLC, USA Pharmacia Corporation, USA

[Collectively holding 63.92% of the aggregate of equity share capital of the Company]

C. Fellow Subsidiaries with whom transactions have taken place during the year

Pfizer Export Company., Ireland

Pfizer Global Trading, Ireland

Pfizer Singapore Trading Pte Limited (Belgium Branch)

Pfizer Products India Private Limited, India

Pfizer Overseas LLC

Pfizer Corporation Hongkong Limited

Pfizer Limited, UK

Pfizer Canada Inc

Pfizer Investment Co. Ltd.

Pfizer Asia Manufacturing Pte Ltd

Pfizer Development LP

Pfizer Pharmaceuticals Korea Limited

Whitehall International Inc

Pfizer Intl Inc, New York

John Wyeth & Brother Limited, (India Branch)

Pfizer Innovative Supply Point Intl BVBA, Belgium Pfizer International Operations, France Pfizer Service Company BVBA, Belgium Wyeth Pharmaceuticals India Private Limited

D. Key Managerial Personnel

S. Sridhar Managing Director (w.e.f 18 March 2016)

Wholetime Director (13 May 2015 to 17 March 2016)

Whole-time Director and CFO (till 12 May 2015)

Aijaz Tobaccowalla Managing Director (up to 15 October 2015)

Ravi Prakash Bhagavathula Chief Financial Officer (w.e.f 13 May 2015 to 29 January 2017)

Wholetime Director and Chief Financial Officer (w.e.f 30 January 2017)

Vivek Dhariwal Wholetime Director

Dr Lakshmi Nadkarni Wholetime Director (up to 4 September 2015)

Dr. Anurita Majumdar Wholetime Director (w.e.f 4 November 2016)

Mr. R. A. Shah Independent Director

Mr. Pradeep Shah Independent Director

Mr. Uday Khanna Independent Director

Mr. Sunil Lalbhai Independent Director

* Management considers the service tax, duty of excise, duty of customs, sales tax / VAT and Income tax demands received from the authorities are not tenable against the Company, and therefore no provision for these tax contingencies has been made.

# Refer note 42 for pricing litigations contingencies.

14 Segment reporting

The Company has only one segment which is Pharmaceuticals and primarily operates in domestic market. The Company''s Managing Director, reviews the operating performance of the Company as a whole on a periodic basis. Therefore disclosure relating to segments is not applicable and accordingly not made.

15 Subsequent Events

There are no significant subsequent events that would require adjustments or disclosures in the financial statements as on the balance sheet date.

The Board of Directors of the Company has recommended a normal dividend of 150% (''15 per equity share of ''10 each) and a special dividend of 50% (''5 per equity share of ''10 each) on account of exceptional income during the year, aggregating to total dividend of 200% (''20 per equity share of ''10 each) for the year ended 31 March 2017.

16. Corporate Social Responsibility (CSR)

As per Section 135 of the Companies Act, 2013, a Company, meeting the applicability threshold, need to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are education of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the Company as per the Act.

* figures in bracket is of previous year.

17. Exceptional items Current year :

Exceptional items for the year ended 31 March 2017 includes income from sale of property and guesthouse (net of related expenses) and income from assignment of trademarks, net of related expenses.

Previous year:

Exceptional items of ''988.65 includes Income from surrender of lease rights at Express towers (net of related expenses) and expenses incurred in relation to proposed transfer of business undertaking at Thane plant. Exceptional items for the year ended 31 March 2015 were in relation to voluntary retirement scheme / other related costs at Thane plant.

18 Discontinuation of Corex Cough Syrup formulation

The Company has undertaken a comprehensive review of its respiratory offerings in order to better cover a broader range of indications through an expanded product portfolio. The Company has decided to discontinue the manufacturing of Corex Cough Syrup formulation (Codeine Phosphate 10mg Chlopheniramine Maleate 4 mg). The Corex syrup recorded a sale of Rs,18,645.20 lakhs during the year ended 31 March 2017 (March 2016: Rs,27,452.44 lakhs).


Mar 31, 2015

1 Contingent liabilities and commitments (to the extent not provided for) 31 March 2015 31 March 2014

(i) Contingent liabilities*

(a) Claimsnotacknowledgedasdebts 1,369.05 1,546.75

(b) Otherguarantees 754.04 486.79

(c) Other contingent liabilities in respect of:

1. ExciseDuty 2,086.10 1,029.07

2. Customsduty 171.72 40.54

3. Sales tax / VAT 13,187.38 9,594.84

4. Servicetax 193.11 193.11

5. Incometax 25,139.08 23,958.41

6. Pending labour matters contested invariouscourts 104.21 103.57

(ii) Commitments

Estimated amount of contracts remaining to be executed on capital account 2,453.46 292.61 and not provided for

* Management considers the service tax, excise duty, custom duty, sales tax / VAT and income tax demands received from the authorities are nottenable against the Companyand therefore no provision forthese tax contingencies has been made.

2 Segmental information

After considering the Amalgamation of Wyeth Limited effective 1 April 2013, the Company has concluded that it has only one segment which is Pharmaceuticals and the company primarily operates in domestic market, therefore disclosure relating to segments is not applicable and accordingly not made.

3 Disclosures as required by the Accounting Standard 18 on "Related Party Disclosures" are given below:

I. Names of Related Parties and description of Relationships

A. Parties where control exists:

Ultimate holding company:

Pfizer Inc., USA

B. Holding Company:

Pfizer East India B.V. (from 3 March 2014to16 December 2014)

C. Companies collectively exercising significant influence:

Pfizer East India B.V. (w.e.f. 17 December 2014) Wyeth LLC, USA (w.e.f. 17 December 2014) Wyeth Holdings Corporation, USA (w.e.f. 17 December 2014) John Wyeth & Brother Limited, UK ( w.e.f 17 December 2014) Warner - Lambert Company, LLC, USA Parke - Davis & Company, LLC, USA Pharmacia Corporation, USA PfizerCorporation, Panama (upto 2 March 2014) Pfizer Investments Netherlands, B. V. (upto 2 March 2014) [Collectively holding 63.92% of the aggregate of equity share capital of the Company]

D. Fellow Subsidiaries with whom transactions have taken place during the year

Pfizer Laboratories (Proprietory) Limited, South Africa Pfizer Enterprises SARL, Luxembourg Pfizer Export Company, Ireland PfizerGlobal Trading, Ireland

Pfizer Singapore Trading Pte Limited (Belgium Branch)

Pfizer Inc. Phillipines

Pfizer Private Limited, Singapore

Pfizer Products India Private Limited, India

Pfizer Corporation Austria Gesellschaft m.b.H

Pfizer Overseas LLC

PfizerCorporation Hongkong Limited

Pfizer Limited, UK

Pfizer Canada Inc

PfizerAustralia Pty Limited

PfizerAsia Manufacturing Pte Ltd

Pfizer Development LP

Pfizer Egypt S.A.E.

Pfizer Pharmaceuticals Korea Limited Whitehall International Inc Wyeth - Ayerst International LLC Wyeth Pharmaceuticals Inc Pfizer Service Company BVBA Pfizerlnternational LLC, USA Pfizer, S.A. de C.V.

John Wyeth & Brother Limited, (India Branch) (w.e.f.17 December 2014)

Wyeth Limited (Amalgamation effected with the Company in the current year)

Zoetis Pharmaceutical Research Private Limited (upto 24 June 2013)

Zoetis India Limited (upto 24 June 2013)

Zoetis Singapore PTE Ltd (upto 24 June 2013)

PfizerAnimal Pharma Private Limited (upto 24 June 2013)

E. Key Managerial Personnel

Aijaz Tobaccowalla - Managing Director

S. Sridhar - Wholetime Director and Chief Financial Officer (w.e.f 14 May 2013)

Vivek Dhariwal - Wholetime Director

Dr Lakshmi Nadkarni - Wholetime Director (w.e.f 14 February 2015)

4 Employee stock option scheme

The employees of the Company have been issued 86,712 (March 2014: 79,820) Share Options and 18,784 (March 2014:15,964) restricted stock units under the Pfizer Inc 2004 Share Option Plan by Pfizer Inc. The cost incurred by Pfizer Inc pursuant to the said Pfizer Inc 2004 Share Option Plan for the year ended 31 March 2015 amounts to Rs.497.69 lakhs (March 2014:Rs.282.29 lakhs). These amounts have not been charged to the Company by Pfizer Inc.

5 Expenditure on research and development

6 Corporate Social Responsibility

As per section 135 of the Companies Act, 2013, the Company has constituted a Corporate Social Responsibility (CSR) Committee. The first set of initiatives were launched during the year where the Company supported the Swachh Vidyalaya Campaign - a part of the Government''s national Swachh Bharat program. The Company also committed funds to build and refurbish sanitation facilities in 19 schools, particularly for girl students. The employees of the Company also volunteered in this program. The Company donated medicines to support the flood relief work in Jammu & Kashmir. The total amount spent by the Company towards CSR activities during the year is Rs.129.10 lakhs.

7 Previous year figures

Figures for the previous year are not comparable as the same does not include the effect of the Scheme of Amalgamation. Figures forthe previous years have been regrouped where necessary.


Mar 31, 2014

Background

The Company is a Public limited Company, incorporated under the Indian Companies Act, 1913, having its registered office in Mumbai, Maharashtra and is listed on BSE Ltd. and the National Stock Exchange of India Limited. The Company is engaged in manufacturing, marketing, trading and export of Pharmaceutical products. The Company has its own manufacturing facility at Thane and various independent contract / third party manufacturers based across the country. The Company sells its products through independent distributors primarily in India.

1. Drugs Prices Equalisation Account (DPEA)

(a) Oxytetracycline and other formulations

In respect of certain price fixation Orders of 1981 of the Government of India, the Supreme Court vide its Order of 22 March 1993 held that, pending disposal of the Company''s Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs. 87.61 lakhs (March 2013: Rs. 87.61 lakhs), less Rs. 19.90 lakhs (March 2013: Rs. 19.90 lakhs) already deposited, with the Union of India before 15 May 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs. 43.80 lakhs (March 2013: Rs. 43.80 lakhs) with interest at the rate of 15% per annum will have to be paid to the Government.

(b) Multivitamin Formulations

In respect of certain price fixation Orders of 1986 of the Government of India, the Supreme Court vide its Order dated 3 December 1992, held that, pending disposal of the Company''s Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs. 98.00 lakhs (March 2013: Rs. 98.00 lakhs) with the Union of India before 31 January 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs. 49.00 lakhs (March 2013: Rs. 49.00 lakhs)with interest at the rate of 15% per annum will have to be paid to the Government.

(c) Protinex

In yet another case, the Company had challenged in 1986 a price fixation Order of the Government of India by a Writ Petition before the High Court of Mumbai. The Honorable Court passed an ad interim and interim order staying the impugned order. The Petition, while it was still pending for hearing and final disposal, was withdrawn in 1989 on redressal of the Company''s grievances. After protracted correspondence on the subject, in 1993 the Government raised a demand of Rs. 81.83 lakhs (March 2013: Rs. 81.83 lakhs) on the Company for the period April 1986 to July 1989 and directed the Company to deposit the same into the DPEA. Thereafter, the Drug Prices Liability Review (DPLR) Committee sent a letter dated 15 February 1996 seeking the Company''s submission/ representation against the reduced claim amount of Rs. 33.87 lakhs (March 2013: Rs. 33.87 lakhs) for the period April 1986 to August 1987 as intimated to the DPLR Committee by the Government of India. The Company has made its submissions to the DPLR Committee vide its letter of 29 March 1996 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case.

In the meantime, the Department of Chemicals and Petrochemicals vide their letter dated 11 February 1997 raised an additional demand of Rs. 178.56 lakhs (March 2013: Rs. 178.56 lakhs) for the earlier period of February 1984 to March 1986 over and above the revised claim of Rs. 33.87 lakhs (March 2013: Rs. 33.87 lakhs) for the period April 1986 to August 1987. Thus, the total demand raised now stands revised to Rs. 212.43 lakhs (March 2013: Rs. 212.43 lakhs). The DPLR Committee had, vide its letter dated 24 February 1997 invited the Company to make its submissions/ representations against the above said claim. The Company has made its submissions to the DPLR Committee vide its letter dated 14 May 1997 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case.

Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifications should be obtained from the Mumbai High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Notice issued by the Government of India after 25 August 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date).

On a Notice of Motion filed by the Company in the said Writ Petition, the Mumbai High Court has granted ad interim Order that "pending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No 49/1996 pending before the said Drug Prices Liability Review Committee be stayed."

The Bombay High Court vide its judgement dated 22 December, 2011 dismissed the Writ Petition filed by OPPI & IDMA and directed the companies who have been issued show cause notices to file appropriate replies and directed the government to pass appropriate orders accordingly.

(d) Vitamin and other formulations

The Government has arbitrarily determined the liability of the Company at Rs. 1466 lakhs (March 2013: Rs. 1466 lakhs) being the difference in price in respect of Vitamin and other formulations sold by the Company during the years 1983 to 1989. The Company has repudiated the liability on this account. The Company''s Solicitors have advised that the repudiation by the Company is legally sustainable. The Government has pursued the matter. The Company maintains its position that the claim by the Government is not legally sustainable.

(e) Chloramphenicol

The Government has arbitrarily determined the liability of the Company at Rs. 145 lakhs (March 2013: Rs. 145 lakhs) and Rs. 14 lakhs (March 2013: Rs. 14 lakhs) being the difference between the price of bulk drug Chloramphenicol powder and Chloramphenicol Palmitate respectively allowed in the formulation price and actual procurement price for the period 1979 to 1988. The Company has repudiated the liability on this account as advised by the Company''s Solicitors. The Company has also obtained a Stay order from the Honorable High Court of Mumbai against the demand.

Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifications should be obtained from the Mumbai High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Notice issued by the Government of India after 25 August 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date).

Similar applications were filed as in the matter of Protinex before the Bombay High Court in Writ Petition filed by OPPI & IDMA and similar order was passed i.e Case No 23/95 pending before the said Drug Prices Liability Review Committee was stayed. The OPPI & IDMA Writ Petition have been disposed with the direction as aforesaid.

(f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan Limited (merged with Parke-Davis (India) Limited in 1988 and Parke - Davis (India) Limited merged with Pfizer Limited in 2003) had classified Isokin tablets, Isokin liquid and Pyridium tablets as decontrolled products under the DPCO 1979. The categorization was, however, challenged by the Government in 1984 and a demand of Rs. 113 lakhs (March 2013: Rs. 113 lakhs) was raised against the Company. Against this demand an excise duty set off of Rs. 7 lakhs (March 2013: Rs. 7 lakhs) was allowed to the Company and a final demand of Rs. 106 lakhs (March 2013: Rs. 106 lakhs) was raised in 1987.

The Company had deposited an amount of Rs. 30 lakhs (March 2013: Rs. 30 lakhs) in February 1987 and Rs. 25 lakhs (March 2013: Rs. 25 lakhs) in May 1990 totalling to an aggregate of Rs. 55 lakhs (March 2013: Rs. 55 lakhs) in full and final settlement of the demand, as per the arguments set forth by the Company. The Government subsequently raised a demand of Rs. 117 lakhs (March 2013: Rs. 117 lakhs) towards interest on principal demand. (i.e. interest of Rs. 43 lakhs (March 2013: Rs. 43 lakhs) for Pyridium for the period 1982 to August 1995 and Rs. 74 lakhs (March 2013: Rs. 74 lakhs) for Isokin for the period 1982 to June 1997).

The Company filed a Writ Petition in the Andhra Pradesh High Court in September 1997 for staying all further proceedings against the Company. The High Court stayed the demand in respect of collection of interest but directed the Company to deposit the balance demand of Rs. 51 lakhs (March 2013: Rs. 51 lakhs) (which amount was deposited in November 1997).

The said Writ Petition has been heard and disposed off by final judgement of the Hon''ble Hyderabad High Court, on 15 April 2011. The Hon''ble High Court has inter alia set aside all the demand notices and further directed the Respondents to refund the monies paid under the interim orders.

The Union of India has preferred a SLP before the Honorable Supreme Court against the above judgement. In view of there being a discrepancy in the English and Hindi Notification of DPCO, 1979 in para 13(5) of the DPCO, 1979 the Special Leave Petition came to be allowed vide order dated 12 April, 2013 setting aside the impugned judgment and restoring the writ petition to file, to conduct appropriate enquiry and for hearing and fresh disposal. The matter now stands remanded back to the Hyderabad High Court.

(g) Multivitamin Formulations:

The Government has arbitrarily raised a demand of Rs. 182.38 lakhs (March 2013: Rs. 182.38 lakhs) on account of alleged overpricing of certain multivitamin formulations marketed by erstwhile Pharmacia Healthcare Limited (merged with Pfizer Limited) for the period 1983 to 1986. The Company has repudiated the liability on this account as advised by its solicitors. The Company filed a Writ Petition No. 814 of 1992 in the High Court at Mumbai. The Supreme Court of India, in a Special Leave Petition (SLP) filed by the Company held that pending disposal of Writ Petition filed before the High Court at Mumbai, the Company shall furnish an undertaking in respect of 50% of its liability and shall deposit the balance 50% aggregating to Rs. 91.19 lakhs (March 2013: Rs. 91.19 lakhs). This amount has been deposited with the Government of India and is included under the head "Long Term Loans and Advances"

Pursuant to a Transfer Petition (Civil) no 475-496 of 2003 filed under Article 139A(1) of the Constitution of India, all pending writ petitions in respect of DPEA liabilities are now to be transferred to the Supreme Court to be heard and finally decided by the Supreme Court of India. Consequently as a result of the said transfer petition, Writ Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now be heard and disposed off by the Supreme Court.

The Supreme Court however, by order dated 3 May 2010 disposed off the Transfer Petition, directing that the concerned High Courts to take up the writ petitions before them and dispose them on merits.

The Writ Petitions filed before the Hon''ble Bombay High Court came up for hearing in the Hon''ble Bombay High Court on February 1, 2013. The Hon''ble Bombay High Court was of the view that the Orders passed by the Union may be set aside and the Union may be directed to decide the matters afresh keeping all the issues and contentions open. Consequently, as directed by the Hon''ble Court draft minutes of the order were prepared and circulated to the Advocates for the Union for their perusal.

In view of the disagreement between the parties on the draft minutes, on 12 March, 2013 the Union sought to press for their Notice of Motion for all the matters to be listed for final hearing. Thereafter, the Hon''ble Bombay High Court passed an Order for the matters to be listed in due course and rejected the Notice of Motion of the Union.

Thereafter, the Union made an application before the Hon''ble Chief Justice for having this group of matters to be assigned to a Division Bench for expeditious hearing. However, till date no Order has been passed in the matter. In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the legal opinion being in favor of the Company, and based on the assessment of the Management, no further provision is considered necessary over and above the sum of Rs. 198.37 lakhs (March 2013: Rs. 198.37 lakhs) which has been paid off in earlier years.

The Company would continue to seek legal recourse in all the above matters.

(h) Other Pricing related disputes

The government had raised various demands for alleged overcharging of prices on batches manufactured prior to the effective date of price notifications for certain products. The government had also raised demands on account of alleged non-adherence of certain price notifications on 4 products marketed / traded by the Company. The total liability in respect of these demands amounted to Rs. 2074.97 lakhs against which the Company has made a provision of Rs. 761 lakhs (March 2013: Rs. 280 lakhs).

Based on the legal opinions obtained during the year the Company is of the opinion that the estimated liability in respect of these cases involved shall not exceed the amount provided in books of accounts.

2. Contingent liabilities and Commitments (to the extent not provided for)

31 March 2014 31 March 2013

(i) Contingent liabilities

(a) Claims not acknowledged as debt 1546.75 1573.65

(b) Other guarantees 486.79 811.35

(c) Other contingent liabilities in respect of:

1. Excise Duty 1029.07 1028.97

2. Customs duty 40.54 40.54

3. Sales tax / VAT 9594.84 9674.60

4. Service tax 193.11 193.11

5. Income tax 23958.41 29326.72

6. Pending labour matters contested in various courts 103.57 103.57

(ii) Commitments

Estimated amount of contracts remaining to be executed on capital account 292.61 0.64 and not provided for

3. Exceptional items

The company had spun-off its animal health business operations on April 2, 2012 to Pfizer Animal Pharma Private Limited (''PAPPL''). Accordingly, the gain of Rs. 38252 lakhs arising on the slump sale of the said business was disclosed as ''Exceptional items'' during the year ended March 31, 2013. The Company had transferred on December 7, 2012, its 100% ownership in the wholly owned subsidiary, Pfizer Animal Pharma Private Limited to Zoetis India Limited (erstwhile Pfizer Animal Health India Limited), the then 100% indirect subsidiary of Pfizer Inc. for a consideration of Rs. 47160 lakhs. The gain on sale of investment of Rs. 3160 lakhs was disclosed as exceptional item for the year ended March 31, 2013.

The Company provides transitional support to PAPPL including support for manufacture of certain Animal Health products. The revenue for the year ended March 31, 2014 includes Rs. 4247 lakhs (March 31, 2013: Rs. 3292 lakhs) for sale of such products. Further the Company also provides consignment selling agent services (CSA) and other support functions. Other operating income for the year ended March 31, 2014 includes Rs. 1067 lakhs (March 31, 2013: Rs. 1278 lakhs) towards such CSA commission and support services.

Considering the above spin-off in April of previous year, the Company has concluded that beginning current year April 1, 2013 it has only one segment which is Pharmaceuticals and therefore disclosure relating to segments is not applicable and accordingly not made.

4. Employee stock option scheme

The employees of the Company have been issued 79,820 (March 2013: 1,13,163) Share Options and 15,964 (March 2013: 22,634 ) restricted stock units under the Pfizer Inc 2004 Share Option Plan by Pfizer Inc. The cost incurred by Pfizer Inc pursuant to the said Pfizer Inc 2004 Share Option Plan for the year ended 31 March 2014 amounts to Rs. 282.29 lakhs (March 2013: Rs. 237.07 lakhs). These amounts have not been charged to the Company by Pfizer Inc.

5. Merger

The Board of Directors ("The Board") approved the Scheme of Amalgamation of Wyeth Limited with the Company ("the Scheme") on November 23, 2013. The Board has approved a share swap ratio of 7 equity shares of the face value of Rs. 10 each fully paid up of Pfizer Limited for every 10 equity shares of the face value of Rs. 10 each fully paid up of Wyeth Limited. In terms of the Scheme, the Appointed Date is April 1, 2013. The Scheme of Amalgamation has been unanimously approved by the equity shareholders (100% in number and 100% in value) of those present and voting at the Court Convened Meeting held on April 16, 2014. The said Scheme has also been approved by an overwhelming majority of the minority shareholders by way of postal ballot and e-voting in terms of SEBI Circulars. Pending all other statutory approvals, no effect to the above Scheme has been given in the financial statements.

6. Previous year figures

Figures for the previous year have been regrouped where necessary.


Mar 31, 2013

Background

The Company is a Public limited Company, incorporated under the Indian Companies Act, 1913, having its registered office in Mumbai, Maharashtra and is listed on BSE Ltd. and the National Stock Exchange of India Limited. The Company is engaged in manufacturing, marketing, trading and export of Pharmaceutical products. The Company has its own manufacturing facility at Thane and various independent contract/third party manufacturers based across the country. The Company sells its products through independent distributors primarily in India.

1 Discontinuing operations

The Company incorporated Pfizer Animal Pharma Private Limited ("PAPPL"), Wholly-owned Subsidiary on 10 February, 2012 for temporary purpose in order to spin-off its animal health division in line with Pfizer Global Strategy and as a pre- step for subsequent sale to a wholly-owned subsidiary of Pfizer Inc (" Ultimate Holding Company").

The business operations of animal health division was transferred to the above subsidiary on 2 April, 2012 by way of slump sale for a consideration of Rs.42,428 lakhs. The gain of Rs.38,252 lakhs on the slump sale of the said business operation has been disclosed as exceptional income during the year.

Profit after tax attributable to discontinuing operations of the Company has been calculated using the effective tax rate of the Company

The Company has transferred on 7 December, 2012, its 100% ownership in the wholly owned subsidiary, Pfizer Animal Pharma Private Limited to Pfizer Animal Health India Limited, a 100% indirect subsidiary of Pfizer Inc. for a consideration of Rs.47,160 lakhs. The gain on sale of investment of Rs.3,160 lakhs is disclosed as exceptional item during the year.

In terms of para 11 (a) of AS 21, the Company is not required to consolidate the accounts of its wholly-owned subsidiary company, Pfizer Animal Pharma Private Limited, since the control of the same was held for a temporary period as a pre- step for subsequent sale.

2 Drugs Prices Equalisation Account (DPEA)

(a) Oxytetracycline and other formulations

In respect of certain price fixation Orders of 1981 of the Government of India, the Supreme Court vide its Order of 22 March 1993 held that, pending disposal of the Company''s Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs.87.61 lakhs, less Rs.19.90 lakhs already deposited, with the Union of India before 15 May 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs.43.80 lakhs with interest at the rate of 15% per annum will have to be paid to the Government.

(b) Multivitamin Formulations

In respect of certain price fixation Orders of 1986 of the Government of India, the Supreme Court vide its Order dated 3 December 1992, held that, pending disposal of the Company''s Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs.98.00 lakhs with the Union of India before 31 January 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs.49.00 lakhs with interest at the rate of 15% per annum will have to be paid to the Government.

(c) Protinex

In yet another case, the Company had challenged in 1986 a price fixation Order of the Government of India by a Writ Petition before the High Court of Mumbai. The Honorable Court passed an ad interim and interim order staying the impugned order. The Petition, while it was still pending for hearing and final disposal, was withdrawn in 1989 on redressal of the Company''s grievances. After protracted correspondence on the subject, in 1993 the Government raised a demand of Rs.81.83 lakhs on the Company for the period April 1986 to July 1989 and directed the Company to deposit the same into the DPEA. Thereafter, the Drug Prices Liability Review (DPLR) Committee sent a letter dated 15 February 1996 seeking the Company''s submission/ representation against the reduced claim amount of Rs.33.87 lakhs for the period April 1986 to August 1987 as intimated to the DPLR Committee by the Government of India. The Company has made its submissions to the DPLR Committee vide its letter of 29 March 1996 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case.

In the meantime, the Department of Chemicals and Petrochemicals vide their letter dated 11 February 1997 raised an additional demand of Rs.178.56 lakhs for the earlier period of February 1984 to March 1986 over and above the revised claim of Rs.33.87 lakhs for the period April 1986 to August 1987. Thus, the total demand raised now stands revised to Rs.212.43 lakhs. The DPLR Committee had, vide its letter dated 24 February 1997 invited the Company to make its submissions/ representations against the above said claim. The Company has made its submissions to the DPLR Committee vide its letter dated 14 May 1997 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case.

Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifications should be obtained from the Mumbai High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Notice issued by the Government of India after 25 August 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date).

On a Notice of Motion filed by the Company in the said Writ Petition, the Mumbai High Court has granted ad interim Order that "pending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No 49/1996 pending before the said Drug Prices Liability Review Committee be stayed"

The Bombay High Court vide its judgement dated 22 December, 2011 dismissed the Writ Petition filed by OPPI & IDMA and directed the companies who have been issued show cause notices to file appropriate replies and directed the government to pass appropriate orders accordingly.

(d) Vitamin and other formulations

The Government has arbitrarily determined the liability of the Company at Rs.1466 lakhs being the difference in price in respect of Vitamin and other formulations sold by the Company during the years 1983 to 1989. The Company has repudiated the liability on this account. The Company''s Solicitors have advised that the repudiation by the Company is legally sustainable. The Government has pursued the matter. The Company maintains its position that the claim by the Government is not legally sustainable.

(e) Chloramphenicol

The Government has arbitrarily determined the liability of the Company at Rs.145 lakhs and Rs.14 lakhs being the difference between the price of bulk drug Chloramphenicol powder and Chloramphenicol Palmitate respectively allowed in the formulation price and actual procurement price for the period 1979 to 1988. The Company has repudiated the liability on this account as advised by the Company''s Solicitors. The Company has also obtained a Stay order from the Honorable High Court of Mumbai against the demand.

Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifications should be obtained from the Mumbai High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Notice issued by the Government of India after 25 August 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date).

On a Notice of Motion filed by the Company in the said Writ Petition, the Mumbai High Court has granted ad interim Order that "pending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No 23/95 pending before the said Drug Prices Liability Review Committee be stayed"

The Bombay High Court vide its judgement dated 22 December, 2011 dismissed the Writ Petition filed by OPPI & IDMA and directed the companies who have been issued show cause notices to file appropriate replies and directed the government to pass appropriate orders accordingly.

(f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan Limited (merged with Parke-Davis (India) Limited in 1988 and Parke - Davis (India) Limited merged with Pfizer Limited in 2003) had classified ISOKIN TABLETS, ISOKIN LIQUID AND PYRIDIUM TABLETS as decontrolled products under the DPCO 1979. The categorization was, however, challenged by the Government in 1984 and a demand of Rs.113 lakhs was raised against the Company. Against this demand an excise duty set off of Rs.7 lakhs was allowed to the Company and a final demand of Rs.106 lakhs was raised in 1987.

The Company had deposited an amount of Rs.30 lakhs in February 1987 and Rs.25 lakhs in May 1990 totaling to an aggregate of Rs.55 lakhs in full and final settlement of the demand, as per the arguments set forth by the Company. The Government subsequently raised a demand of Rs.117 lakhs towards interest on principal demand. (i.e. interest of Rs.43 lakhs for Pyridium for the period 1982 to August 1995 and Rs.74 lakhs for Isokin for the period 1982 to June 1997).

The Company filed a Writ Petition in the Andhra Pradesh High Court in September 1997 for staying all further proceedings against the Company. The High Court stayed the demand in respect of collection of interest but directed the Company to deposit the balance demand of Rs.51 lakhs (which amount was deposited in November 1997).

The said Writ Petition has been heard and disposed off by final judgement of the Hon''ble Hyderabad High Court, on 15 April 2011. The Hon''ble High Court has inter alia set aside all the demand notices and further directed the Respondents to refund the monies paid under the interim orders.

The Union of India has preferred a SLP before the Honorable Supreme Court against the above judgement. In view of there being a discrepancy in the English and Hindi Notification of DPCO, 1979 in para 13(5) of the DPCO, 1979 the Special Leave Petition came to be allowed vide order dated 12th April, 2013 setting aside the impugned judgment and restoring the writ petition to file, to conduct appropriate enquiry and for hearing and fresh disposal. The matter now stands remanded back to the Hyderabad High Court."

(g) Multivitamin Formulations:

The Government has arbitrarily raised a demand of Rs.182.38 lakhs on account of alleged overpricing of certain multivitamin formulations marketed by erstwhile Pharmacia Healthcare Limited (merged with Pfizer Limited) for the period 1983 to 1986. The Company has repudiated the liability on this account as advised by its solicitors. The Company filed a Writ Petition No. 814 of 1992 in the High Court at Mumbai. The Supreme Court of India, in a Special Leave Petition (SLP) filed by the Company held that pending disposal of Writ Petition filed before the High Court at Mumbai, the Company shall furnish an undertaking in respect of 50% of its liability and shall deposit the balance 50% aggregating to Rs.91.19 lakhs. This amount has been deposited with the Government of India and is included under the head "Long Term Loans and Advances"

Pursuant to a Transfer Petition (Civil) no 475-496 of 2003 filed under Article 139A(1) of the Constitution of India, all pending writ petitions in respect of DPEA liabilities are now to be transferred to the Supreme Court to be heard and finally decided by the Supreme Court of India. Consequently as a result of the said transfer petition, Writ Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now be heard and disposed off by the Supreme Court.

The Supreme Court however, by order dated 3 May 2010 disposed off the Transfer Petition, directing that the concerned High Courts to take up the writ petitions before them and dispose them on merits.

The Writ Petitions filed before the Hon''ble Bombay High Court came up for hearing in the Hon''ble Bombay High Court on February 1, 2013. The Hon''ble Bombay High Court was of the view that the Orders passed by the Union may be set aside and the Union may be directed to decide the matters afresh keeping all the issues and contentions open. Consequently, as directed by the Hon''ble Court draft Minutes of the Order were prepared and circulated to the Advocates for the Union for their perusal.

In view of the disagreement between the parties on the draft Minutes, on 12th March, 2013 the Union sought to press for their Notice of Motion for all the matters to be listed for final hearing. Thereafter, the Hon''ble Bombay High Court passed an Order for the matters to be listed in due course and rejected the Notice of Motion of the Union.

Thereafter, the Union made an application before the Hon''ble Chief Justice for having this group of matters to be assigned to a Division Bench for expeditious hearing. However, till date no Order has been passed in the matter.

In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the legal opinion being in favor of the Company, and based on the assessment of the Management, no further provision is considered necessary over and above the sum of Rs.198.37 lakhs which has been paid off in earlier years.

The Company would continue to seek legal recourse in all the above matters.

3 Contingent liabilities and commitments (to the extent not provided for)

31 March 2013 31 March 2012

(i) Contingent liabilities

(a) Claims against the Company not acknowledged as debt Amount Amount unascertainable unascertainable

(b) Other guarantees 811.35 370.48

(c) Other contingent liabilities in respect of:

1. Excise Duty 1028.97 1037.67

2. Customs duty 40.54 40.54

3. Sales tax 9674.60 4150.32

4. Service tax 193.11 193.11

5. Income tax 29326.72 29070.00

6. Pending labour matters contested in various courts 103.57 103.57

(ii) Commitments

Estimated amount of contracts remaining to be executed on capital 0.64 24.30 account and not provided for

4 Disclosures as required by the Accounting Standard 18 on "Related Party Disclosures" are given below: I. Names of Related Parties and description of Relationships

A. Parties where control exists:

Ultimate holding company:

Pfizer Inc., USA

Companies collectively exercising significant influence:

Pfizer Corporation, Panama

Warner-Lambert Company, LLC, USA

Parke-Davis & Company, LLC, USA

Pharmacia Corporation, USA

Pfizer Investments Netherlands, B.V.

[Collectively holding 70.75% of the aggregate of equity share capital of the Company]

B. Fellow Subsidiaries with whom transactions have taken place during the year

Pfizer Asia Manufacturing Pte Limited, Singapore

Pfizer Laboratories(Proprietory)Limited South Africa

Pfizer Enterprises SARL, Luxembourg

Pfizer Export Company., Ireland

Pfizer Global Trading, Ireland

Pfizer Limited, United Kingdom

Pfizer Pharmaceutical India Private Limited., India

Pfizer Singapore Trading Pte Limited, Singapore

Pfizer Limited,Phillipines

Pfizer Private Limited.,Singapore

Pfizer Products India Private Limited, India

Pfizer Products Inc, USA

Pfizer Animal Health India Limited, India

AHP Manufacturing B.V. India

Wyeth Limited, India

Pfizer Suzhou Animal Health Private Limited

PAH Singapore PTE Ltd

Pfizer (Malaysia) Sdn Bhd

Pfizer Animal Pharma Private Limited

C. Subsidiaries with whom transactions have taken place during the year Pfizer Animal Pharma Private Limited (ceased to be subsidiary w.e.f 7 Dec 2012)

D. Executive Committee Members

* Kewal Handa (resigned w.e.f 15 Aug 2012)

* Aijaz Tobaccowalla (w.e.f 16 Aug 2012)

* Sunil Madhok (retired w.e.f 31 January 2013)

Chandrashekhar Nilkanth Potkar (Dr.)

Shiva P. Nair

Partha S. Ghosh

S. Venkatesh

Pradeep Patni (resigned w.e.f 13 June 2012)

Samir S. Kazi

* S. Sridhar (w.e.f 14 May 2013)

Suresh Subramanian

* Vivek Dhariwal (w.e.f 21 May 2012)

Sarita Bahl (Ms.)

Lakshmi Nadkarni (Dr.) (Mrs.)

* Executive Directors on the Board

5 Employee stock option scheme

The employees of the Company have been issued 1,13,163(March 2012: 78795) Share Options and 22,634 (March 2012: 15,763 ) restricted stock units under the Pfizer Inc 2004 Share Option Plan by Pfizer Inc. The cost incurred by Pfizer Inc pursuant to the said Pfizer Inc 2004 Share Option Plan for the year ended 31 March 2013 amounts to Rs.237.07 lakhs (March 2012: Rs.162.61 lakhs). These amounts have not been charged to the Company by Pfizer Inc.

6 Previous year figures

The sale of animal health business has been effective 2nd April, 2012, therefore the figures for the previous year are not comparable. Figures for previous year have been regrouped where necessary.


Mar 31, 2012

1.1 During the five reporting periods immediately preceeding the reporting date no shares have been issued by capitalisaton of reserves as bonus shares or for consideration other than cash.

1.2 The Company has a single class of equity shares. Accordingly all the equity shares rank equally with regard to voting rights, dividends and shares in the Company's residual assets.

3.1 Sale of services include amounts representing income from clinical research services aggregating Rs2038.61 lakhs (March 2011: Rs3620.76 lakhs and Rs5468.27 lakhs (March 2011: Rs3771.66 lakhs) representing support services rendered.

Currency: Rs in lakhs Defined contribution plan:

During the year / period, the Company has contributed Rs24.30 lakhs (March 2011: Rs27.80 lakhs) towards employees' superannuation fund.

General description of significant defined benefit plans

i) Gratuity plan

Gratuity is payable to all eligible employees of the Company on superannuation, death and permanent disablement, as per Company's rules or as per provisions of the Payment of Gratuity Act, 1972.

ii) Leave plan

All eligible employees can carry forward and avail / encash leave as per Company's rules subject to a maximum accumulation of 180 / 170 / 90 days in case of priviledge leave and 75 / 70 days in case of sick leave as per Company's rules.

iii) Provident fund

The employee's provident fund is administered by a Trust created specifically for the purpose. The employee's and employer's contributions are transferred to the trust. All liabilities arising on account of provident fund payouts on resignation or retirement from service or death while in service are made from the trust.

4 Discontinuing operations

The Company incorporated Pfizer Animal Pharma Private Limited ("PAPPL"), Wholly-owned Subsidiary on 10 February, 2012 for temporary purpose in order to spin-off its animal health business in line with Pfizer Global Strategy and as a pre- step for subsequent sale to a wholly-owned subsidiary of Pfizer Inc (" Ultimate Holding Company").

The Company had entered into a Business Transfer Agreement with PAPPL for sale / transfer of the animal health business on a slump sale basis. The transfer of the said business was completed on 2 April, 2012 for a consideration of Rs44000 lakhs, subject to adjustment for working capital.

Profit after tax attributable to discontinuing operations of the Company has been calculated using the effective tax rate of the Company.

In terms of para 11 (a) of AS 21, the Company is not required to consolidate the accounts of its wholly-owned subsidiary company, Pfizer Animal Pharma Private Limited, since the control of the same is held for a temporary period as a pre-step for subsequent sale.

5 Drugs Prices Equalisation Account (DPEA)

(a) Oxytetracycline and other formulations

In respect of certain price fixation Orders of 1981 of the Government of India, the Supreme Court vide its Order of 22 March 1993 held that, pending disposal of the Company's Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs87.61 lakhs, less Rs19.90 lakhs already deposited, with the Union of India before 15 May 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs43.80 lakhs with interest at the rate of 15% per annum will have to be paid to the Government.

(b) Multivitamin Formulations

In respect of certain price fixation Orders of 1986 of the Government of India, the Supreme Court vide its Order dated 3 December 1992, held that, pending disposal of the Company's Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs98.00 lakhs with the Union of India before 31 January 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs49.00 lakhs with interest at the rate of 15% per annum will have to be paid to the Government.

(c) Protinex

In yet another case, the Company had challenged in 1986 a price fixation Order of the Government of India by a Writ Petition before the High Court of Mumbai. The Honorable Court passed an ad interim and interim order staying the impugned order. The Petition, while it was still pending for hearing and final disposal, was withdrawn in 1989 on redressal of the Company's grievances. After protracted correspondence on the subject, in 1993 the Government raised a demand of Rs81.83 lakhs on the Company for the period April 1986 to July 1989 and directed the Company to deposit the same into the DPEA. Thereafter, the Drug Prices Liability Review (DPLR) Committee sent a letter dated 15 February 1996 seeking the Company's submission/ representation against the reduced claim amount of Rs33.87 lakhs for the period April 1986 to August 1987 as intimated to the DPLR Committee by the Government of India. The Company has made its submissions to the DPLR Committee vide its letter of 29 March 1996 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case.

In the meantime, the Department of Chemicals and Petrochemicals vide their letter dated 11 February 1997 raised an additional demand of Rs178.56 lakhs for the earlier period of February 1984 to March 1986 over and above the revised claim of Rs33.87 lakhs for the period April 1986 to August 1987. Thus, the total demand raised now stands revised to Rs212.43 lakhs. The DPLR Committee had, vide its letter dated 24 February 1997 invited the Company to make its submissions/ representations against the above said claim. The Company has made its submissions to the DPLR Committee vide its letter dated 14 May 1997 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case.

Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifications should be obtained from the Mumbai High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Notice issued by the Government of India after 25 August 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date).

On a Notice of Motion filed by the Company in the said Writ Petition, the Mumbai High Court has granted ad interim Order that "pending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No 49/ 1996 pending before the said Drug Prices Liability Review Committee be stayed."

The Bombay High Court vide its judgement dated 22 December, 2011 dismissed the Writ Petition filed by OPPI & IDMA and directed the Companies who have been issued show cause notices to file appropriate replies and directed the government to pass appropriate orders accordingly.

(d) Vitamin and other formulations

The Government has arbitrarily determined the liability of the Company at Rs1466 lakhs being the difference in price in respect of Vitamin and other formulations sold by the Company during the years 1983 to 1989. The Company has repudiated the liability on this account. The Company's Solicitors have advised that the repudiation by the Company is legally sustainable. The Government has pursued the matter. The Company maintains its position that the claim by the Government is not legally sustainable.

(e) Chloramphenicol

The Government has arbitrarily determined the liability of the Company at Rs145 lakhs and Rs14 lakhs being the difference between the price of bulk drug Chloramphenicol powder and Chloramphenicol Palmitate respectively allowed in the formulation price and actual procurement price for the period 1979 to 1988. The Company has repudiated the liability on this account as advised by the Company's Solicitors. The Company has also obtained a Stay order from the Honorable High Court of Mumbai against the demand.

Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifications should be obtained from the Mumbai High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Notice issued by the Government of India after 25 August 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date).

On a Notice of Motion filed by the Company in the said Writ Petition, the Mumbai High Court has granted ad interim Order that "pending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No 23/ 95 pending before the said Drug Prices Liability Review Committee be stayed".

The Bombay High Court vide its judgement dated 22 December, 2011 dismissed the Writ Petition filed by OPPI & IDMA and directed the Companies who have been issued show cause notices to file appropriate replies and directed the government to pass appropriate orders accordingly.

(f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan Limited (merged with Parke-Davis (India) Limited in 1988 and Parke - Davis (India) Limited merged with Pfizer Limited in 2003) had classified ISOKIN TABLETS, ISOKIN LIQUID AND PYRIDIUM TABLETS as decontrolled products under the DPCO 1979. The categorization was, however, challenged by the Government in 1984 and a demand of Rs113 lakhs was raised against the Company. Against this demand an excise duty set off of Rs7 lakhs was allowed to the Company and a final demand of Rs106 lakhs was raised in 1987.

The Company had deposited an amount of Rs30 lakhs in February 1987 and Rs25 lakhs in May 1990 totaling to an aggregate of Rs55 lakhs in full and final settlement of the demand, as per the arguments set forth by the Company. The Government subsequently raised a demand of Rs117 lakhs towards interest on principal demand. (i.e. interest of Rs43 lakhs for Pyridium for the period 1982 to August 1995 and Rs74 lakhs for Isokin for the period 1982 to June 1997).

The Company filed a Writ Petition in the Andhra Pradesh High Court in September 1997 for staying all further proceedings against the Company. The High Court stayed the demand in respect of collection of interest but directed the Company to deposit the balance demand of Rs51 lakhs (which amount was deposited in November 1997).

The said Writ Petition has been heard and disposed off by final judgement of the Hon'ble Hyderabad High Court, on 15 April 2011. The Hon'ble High Court has inter alia set aside all the demand notices and further directed the Respondents to refund the monies paid under the interim orders.

(g) Multivitamin Formulations:

The Government has arbitrarily raised a demand of Rs182.38 lakhs on account of alleged overpricing of certain multivitamin formulations marketed by erstwhile Pharmacia Healthcare Limited (merged with Pfizer Limited) for the period 1983 to 1986. The Company has repudiated the liability on this account as advised by its solicitors. The Company filed a Writ Petition No.814 of 1992 in the High Court at Mumbai. The Supreme Court of India, in a Special Leave Petition (SLP) filed by the Company held that pending disposal of Writ Petition filed before the High Court at Mumbai, the Company shall furnish an undertaking in respect of 50% of its liability and shall deposit the balance 50% aggregating to Rs91.19 lakhs. This amount has been deposited with the Government of India and is included under the head " Long term Loans and Advances".

Pursuant to a Transfer Petition (Civil) no 475-496 of 2003 filed under Article 139A(1) of the Constitution of India, all pending writ petitions in respect of DPEA liabilities are now to be transferred to the Supreme Court to be heard and finally decided by the Supreme Court of India. Consequently as a result of the said transfer petition, Writ Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now be heard and disposed off by the Supreme Court.

The Supreme Court however, by order dated 3 May 2010 disposed off the Transfer Petition, directing that the concerned High Courts to take up the writ petitions before them and dispose them on merits.

In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the legal opinion being in favor of the Company, and based on the assessment of the Management, no further provision is considered necessary over and above the sum of Rs198.37 lakhs which has been paid off in earlier years.

The Company would continue to seek legal recourse in all the above matters.

The Union of India has preferred a SLP before the Honorable Supreme Court agains the above judgement. The SLP is currently pending for admission before the Supreme Court.

31 March 2012 31 March 2011

6 Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent liabilities

(a) Claims against the Company not acknowledged as debt Amount Amount unascertainable unascertainable

(b) Other guarantees 370.48 403.20

(c) Other contingent liabilities in respect of

1. Excise duty 1037.67 1033.40

2. Customs duty 40.54 59.45

3. Sales tax 4150.32 1192.39

4. Service tax 193.11 193.11

5. Income tax 29070.00 31529.64

6. Pending labour matters contested in various courts 103.57 109.66

(ii) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for 24.30 206.41

Notes:

1 Business Segments: The business operations of the Company comprise Pharmaceuticals, Animal Health and Services. The business segments have been identified and reported taking into account, the nature of products and services, the differing risks and returns and the internal financial reporting systems.

The Pharmaceuticals business comprises of manufacturing of bulk drugs and formulations, trading of formulations and also includes rendering of marketing services.

The Animal Health business has a presence primarily in the large animal health and poultry market segments and also includes rendering of marketing services.

Services - Clinical Development Operations primarily include conducting clinical trials, new product development and undertaking comprehensive data management for new drug development.

2 Geographical Segments: For the purpose of geographical segments the consolidated sales are divided into two segments - India and other countries.

3. The accounting policies of the segment are the same as those described in the summary of significant accounting policies as referred to in Note 1 to the financial statements.

7. Disclosures as required by the Accounting Standard 18 on "Related Party Disclosures" are given below

I. Names of Related Parties and description of Relationships

A. Parties where control exists:

Ultimate holding company

Pfizer Inc., USA

Companies collectively exercising significant influence

Pfizer Corporation, Panama

Warner-Lambert Company, LLC, USA

Parke-Davis & Company, LLC, USA

Pharmacia Corporation, USA

Pfizer Investments Netherlands, B.V.

[Collectively holding 70.75% of the aggregate of equity share capital of the Company]

B. Fellow Subsidiaries with whom transactions have taken place during the year / period

Pfizer Asia Manufacturing Pte Limited, Singapore

Pfizer Corporation Hong Kong Limited, Hong Kong

Pfizer Enterprises SARL, Luxembourg

Pfizer Export Company, Ireland

Pfizer Global Trading, Ireland

Pfizer Limited, United Kingdom

Pfizer Overseas LLC., USA

Pfizer Pharmaceutical India Private Limited, India

Pfizer Singapore Trading Pte Limited, Singapore

Pfizer Limited,Phillipines

Pfizer Private Limited,Singapore

Pfizer Products India Private Limited, India

Pfizer International LLC.,USA

Pfizer Products Inc., USA

Pfizer Australia Pty Limited, Australia

Pfizer Laboratories(Proprietory)Limited, South Africa

Pfizer Animal Health India Limited, India

AHP Manufacturing B.V. India

Wyeth Limited, India

Wyeth Ayerst International LLC.

C. Subsidiaries with whom transactions have taken place during the year / period

Pfizer Animal Pharma Private Limited

D. Executive Committee Members

Kewal Handa *

Dr B M Gagrat *

Sunil Madhok

Chandrashekhar Nilkanth Potkar

Yash Goyal

Shiva P Nair

Partha S. Ghosh

Hiroo Mirchandani

Venkatesh S

Pradeep Patni

Samir S Kazi

Sridhar S

Suresh Subramanian

Vivek Dhariwal

Sarita Bahl (w.e.f. 1st February, 2012)

* Executive Directors on the Board.

III. Others

Under the terms of the agreement between Pfizer Inc. (Ultimate Holding Company) and the Company for conducting clinical trials and studies in India, Pfizer Inc., has agreed to indemnify, defend and hold the Company and its directors, employees and agents harmless against any and all liability, loss or damage they may suffer as a result of any claims, demands, costs, penalties, fines or judgments incurred or imposed against it arising out of any clinical trial and study or otherwise pursuant to the agreement

8 Employee stock option scheme

The employees of the Company have been issued 78795 (March 2011: 50490) Share Options and 15763 (March 2011: 10149) restricted stock units under the Pfizer Inc 2004 Share Option Plan by Pfizer Inc. The cost incurred by Pfizer Inc pursuant to the said Pfizer Inc 2004 Share Option Plan for the year ended 31 March 2012 amounts to Rs162.61 lakhs (March 2011: Rs47.87 lakhs). These amounts have not been charged to the Company by Pfizer Inc.

9 Previous period figures

The previous period figures relate to sixteen months period ended 31 March 2011, while the current period figures are for the year ended 31 March 2012. Accordingly, the current year figures are not comparable to those of the previous period.


Mar 31, 2011

Rs. in Lakhs Rs. in Lakhs 31 Mar 2011 30 Nov 2009 2 Contingent Liability

(a) In respect of the guarantees given to banks on behalf of :

(i) Other guarantees 403.20 114.27

(b) In respect of :

(i) Excise duty 1033.40 409.55

(ii) Customs duty 59.45 41.50

(iii) Sales tax 1192.39 638.97

(iv) Service tax 193.11 193.11

(v) Income tax 31529.64 8085.87

(vi) Pending labour matters contested in various courts 109.66 109.66

(vii) Claims against the Company not acknowledged as debts Amount Amount Unascertainable Unascertainable

(c) DPEA claims (Refer Note 7)

5 (c) Licensed and Installed Capacities

Notes:

A. In terms of Press Note No. 4 (1994 series) dated 25 October, 1994 issued by the Department of Industrial Development, Ministry of Industry, Government of India and Notification No. S.O. 137(E) dated 1 March 1999 issued by the Department of Industrial Policy and Promotion, Ministry of Industry, Government of India, industrial licensing has been abolished in respect of bulk drugs and formulations.

B. The installed capacity is as certified by the Management and not verified by the Auditors, this being a technical matter.

6 (a) Managerial remuneration under Section 198 of the Companies Act, 1956

1. Excludes gratuity and leave encashment benefits as the same are based on actuarial valuation.

2. Excludes ESOPs outstanding: 9183 (Nov 2009: Nil) & RSUs outstanding:1836 (Nov 2009: 3202) amounting to Rs. 13.47 lakhs (Nov 2009: Rs. 4.53 lakhs). (Refer Note 22 of Schedule 19, Notes to Accounts.)

6 (b) Computation of net profits for commission payable to the Directors u/s 349 of the Companies Act, 1956

The Company depreciates its fixed assets based on estimated useful lives which are lower or equal to the implicit estimated useful lives prescribed by Schedule XIV of the Companies Act 1956. Thus, the depreciation charged in the books is higher than that prescribed as the minimum by the Companies Act 1956. Hence, this higher value has been considered as a deduction for the computation of managerial remuneration above.

7 Drugs Prices Equalisation Account (DPEA)

(a) Oxytetracycline and Other Formulations

In respect of certain price fixation Orders of 1981 of the Government of India, the Supreme Court vide its Order of 22 March 1993 held that, pending disposal of the Companys Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of 787.61 lakhs, less 719.90 lakhs already deposited, with the Union of India before 15 May 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of 743.80 lakhs with interest at the rate of 15% per annum will have to be paid to the Government.

(b) Multivitamin Formulations

In respect of a certain price fixation Orders of 1986 of the Government of India, the Supreme Court vide its Order dated 3 December 1992, held that, pending disposal of the Companys Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of 798.00 lakhs with the Union of India before 31 January 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of 749.00 lakhs with interest at the rate of 15% per annum will have to be paid to the Government.

(c) Protinex

In yet another case, the Company had challenged in 1986 a price fixation Order of the Government of India by a Writ Petition before the High Court of Mumbai. The Honorable Court passed an ad interim and interim order staying the impugned order. The Petition, while it was still pending for hearing and final disposal, was withdrawn in 1989 on redressal of the Companys grievances. After protracted correspondence on the subject, in 1993 the Government raised a demand of Rs. 81.83 lakhs on the Company for the period April 1986 to July 1989 and directed the Company to deposit the same into the DPEA. Thereafter, the Drug Prices Liability Review (DPLR) Committee sent a letter dated 15 February 1996 seeking the Companys submission/ representation against the reduced claim amount of 733.87 lakhs for the period April 1986 to August 1987 as intimated to the DPLR Committee by the Government of India. The Company has made its submissions to the DPLR Committee vide its letter of 29 March 1996 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case.

In the meantime, the Department of Chemicals and Petrochemicals vide their letter dated 11 February 1997 raised an additional demand of 7178.56 lakhs for the earlier period of February 1984 to March 1986 over and above the revised claim of 733.87 lakhs for the period April 1986 to August 1987. Thus, the total demand raised now stands revised to 7212.43 lakhs. The DPLR Committee had, vide its letter dated 24 February 1997 invited the Company to make its submissions/ representations against the above said claim. The Company has made its submissions to the DPLR Committee vide its letter dated 14 May 1997 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case.

Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifications should be obtained from the Mumbai High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Notice issued by the Government of India after 25 August 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date).

On a Notice of Motion filed by the Company in the said Writ Petition, the Mumbai High Court has granted ad interim Order that "pending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No 49/ 1996 pending before the said Drug Prices Liability Review Committee be stayed."

(d) Vitamin and Other Formulations

The Government has arbitrarily determined the liability of the Company at 71466 lakhs being the difference in price in respect of Vitamin and other formulations sold by the Company during the years 1983 to 1989. The Company has repudiated the liability on this account. The Companys Solicitors have advised that the repudiation by the Company is legally sustainable. The Government has pursued the matter. The Company maintains its position that the claim by the Government is not legally sustainable.

(e) Chloramphenicol

The Government has arbitrarily determined the liability of the Company at 7145 lakhs and 714 lakhs being the difference between the price of bulk drug Chloramphenicol powder and Chloramphenicol Palmitate respectively allowed in the formulation price and actual procurement price for the period 1979 to 1988. The Company has repudiated the liability on this account as advised by the Companys Solicitors. The Company has also obtained a Stay order from the Honorable High Court of Mumbai against the demand.

Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifications should be obtained from the Mumbai High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Notice issued by the Government of India after 25 August 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date).

On a Notice of Motion filed by the Company in the said Writ Petition, the Mumbai High Court has granted ad interim Order that "pending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No 23/ 95 pending before the said Drug Prices Liability Review Committee be stayed".

(f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan Limited (merged with Parke-Davis (India) Limited in 1988 and Parke – Davis (India) Limited merged with Pfizer Limited in 2003) had classified ISOKIN TABLETS, ISOKIN LIQUID AND PYRIDIUM TABLETS as decontrolled products under the DPCO 1979. The categorization was, however, challenged by the Government in 1984 and a demand of Rs. 113 lakhs was raised against the Company. Against this demand an excise duty set off of Rs. 7 lakhs was allowed to the Company and a final demand of Rs. 106 lakhs was raised in 1987.

The Company had deposited an amount of Rs. 30 lakhs in February 1987 and Rs. 25 lakhs in May 1990 totaling to an aggregate of Rs. 55 lakhs in full and final settlement of the demand, as per the arguments set forth by the Company. The Government subsequently raised a demand of Rs. 117 lakhs towards interest on principal demand. (i.e. interest of Rs. 43 lakhs for Pyridium for the period 1982 to August 1995 and Rs. 74 lakhs for Isokin for the period 1982 to June 1997).

The Company filed a Writ Petition in the Andhra Pradesh High Court in September 1997 for staying all further proceedings against the Company. The High Court stayed the demand in respect of collection of interest but directed the Company to deposit the balance demand of Rs. 51 lakhs (which amount was deposited in November 1997).

The said Writ Petition has been heard and disposed of by final judgment of the Honble Hyderabad High Court, on 15 April, 2011. The Honble High Court has inter alia set aside all the demand notices and further directed the Respondents to refund the monies paid under the interim orders. The Company is awaiting a certified copy of the said judgement.

(g) Multivitamin Formulations:

The Government has arbitrarily raised a demand of Rs. 182.38 lakhs on account of alleged overpricing of certain multivitamin formulations marketed by erstwhile Pharmacia Healthcare Limited (merged with Pfizer Limited) for the period 1983 to 1986. The Company has repudiated the liability on this account as advised by its solicitors. The Company filed a Writ Petition No.814 of 1992 in the High Court at Mumbai. The Supreme Court of India, in a Special Leave Petition filed by the Company held that pending disposal of Writ Petition filed before the High Court at Mumbai, the Company shall furnish an undertaking in respect of 50% of its liability and shall deposit the balance 50% aggregating to Rs. 91.19 lakhs. This amount has been deposited with the Government of India and is included under the head "Loans and Advances".

Pursuant to a Transfer Petition (Civil) no 475-496 of 2003 filed under Article 139A(1) of the Constitution of India, all pending writ petitions in respect of DPEA liabilities are now to be transferred to the Supreme Court to be heard and finally decided by the Supreme Court of India. Consequently as a result of the said transfer petition, Writ Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now be heard and disposed off by the Supreme Court.

The Supreme Court however, by order dated 3 May, 2010 disposed of the Transfer Petition, directing that the concerned High Courts to take up the writ petitions before them and dispose them on merits.

In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the legal opinion being in favor of the Company, and based on the assessment of the Management, no further provision is considered necessary over and above the sum of Rs.198.37 lakhs which has been paid off in earlier years.

The Company would continue to seek legal recourse in all the above matters.

10 Disclosure for operating leases under Accounting Standard 19 – "Leases"

(a) Where the Company is a Lessee:

(i) The Company has taken various residential/godowns/office premises (including furniture and fittings, therein as applicable) under operating lease or leave and licence agreements. These are generally not non-cancellable and range between 11 months and 3 years under leave and licence, or longer for other leases and in certain cases are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms.

11 Assets held for disposal

The Company has identified the assets being guest house colony situated at Bharuch, Gujarat as retired from active use consequent to its ceasing manufacturing operations at Ankleshwar Gujarat. These assets are held for disposal and stated at lower of net book value and estimated net realizable value as reported under ‘Other current assets (Schedule 9).

12 Stock of Physicians samples is included under ‘Loans and advances (Schedule 10) Rs. 291.97 lakhs (Nov 2009 - 7210.86 lakhs).

14 Disclosures as required by the Accounting Standard 18 on "Related Party Disclosures" are given below: I Names of Related Parties and description of Relationships

A Parties where control exists:

Ultimate holding company Pfizer Inc., USA

Companies collectively Pfizer Corporation, Panama

exercising significant influence Warner-Lambert Company, LLC, USA

Parke-Davis & Company, LLC, USA

Pharmacia Corporation, USA

Pfizer Investments Netherlands, B. V.

[Collectively holding 70.75% of the aggregate of equity share capital of the Company]

Fellow Subsidiaries: (with whom transactions have taken place during the period/year)

Pfizer Asia Manufacturing Pte Limited, Singapore

Pfizer Corporation Hong Kong Limited, Hong Kong

Pfizer Enterprises SARL, Luxembourg

Pfizer Export Co., Ireland

Pfizer Global Trading, Ireland

Pfizer Limited, United Kingdom

Pfizer Overseas LLC, USA

Pfizer Pharmaceutical India Private Limited., India

Pfizer Singapore Trading Pte Limited, Singapore

Pfizer Limited, Philippines

Pfizer Private Limited., Singapore

Pfizer Products India Private Limited, India

Pfizer International LLC, USA

Pfizer Products Inc, USA

Pfizer Australia Pty Limited, Australia

Pfizer Laboratories (Pty) Limited, South Africa

Pfizer Animal Health India Limited, India

AHP Manufacturing B.V., India

Wyeth Limited, India

B Executive Committee Members

Mr. Kewal Handa * Dr. B.M. Gagrat * Ms. Hiroo Mirchandani

Mr. Pradeep Patni (w.e.f. 01/02/2010)

Mr. Suresh Subramanian (w.e.f. 18/03/2010)

Mr. Anjan Sen (resigned w.e.f. 01/09/2010)

Dr. Chandrashekhar Potkar

Ms. Dipali Talwar (resigned w.e.f. 16/05/2010)

Mr. Partha Ghosh

Mr. Samir Kazi (w.e.f. 01/06/2010)

Mr. S. Madhok

Mr. Shiva Nair (w.e.f. 01/04/2010)

Mr. S. Sridhar

Mr. S. Venkatesh

Mr. Uday Mohan (upto 17/10/2010)

Mr. Vivek Dhariwal (w.e.f. 01/03/2011)

Dr. Yash Goyal

* Executive Directors on the Board

III Others

Under the terms of the agreement between Pfizer Inc. (Ultimate Holding Company) and the Company for conducting clinical trials and studies in India, Pfizer Inc., has agreed to indemnify, defend and hold the Company and its directors, employees and agents harmless against any and all liability, loss or damage they may suffer as a result of any claims, demands, costs, penalties, fines or judgements incurred or imposed against it arising out of any clinical trial and study or otherwise pursuant to the agreement.

15 Disclosures as required by the Accounting Standard 17 on "Segment Reporting" are given below: Business Segments (Refer Note 1 below)

Notes:

1 Business Segments: The business operations of the Company comprise Pharmaceuticals, Animal Health and Services. The business segments have been identified and reported taking into account, the nature of products and services, the differing risks and returns and the internal financial reporting systems.

The Pharmaceuticals business comprises of manufacturing of bulk drugs and formulations, trading of formulations and also includes rendering of marketing services.

The Animal Health business has a presence primarily in the large animal health and poultry market segments and also includes rendering of marketing services.

Services - Clinical Development Operations primarily include conducting clinical trials, new product development and undertaking comprehensive data management for new drug development.

2 Geographical Segments: For the purpose of geographical segments the consolidated sales are divided into two segments - India and other countries.

3. The accounting policies of the segment are the same as those described in the summary of significant accounting policies as referred to in Schedule 18 to the Financial statements.

16 Disclosure relating to provisions

Personnel related provisions

Personnel related provision at the beginning of the year have been settled based on completion of negotiations and execution of the new contract.

The Company has made provision for pending assessments in respect of duties and other levies, the outflow of which would depend on the outcome of the respective events.

17 The Companys international transactions with related parties are at arms length as per the independent accountants report for the year ended 31 March 2010. Management believes that the Companys international transactions with related parties post 31 March 2010 continue to be at arms length and that the transfer pricing legislation will not have any impact on these financial statements.

18 The Company does not enter into any forward contract which is intended for trading or speculative purposes.

Defined Contribution Plan:

During the period, the Company has contributed Rs. 27.80 lakhs (Nov 2009 - Rs. 22.77 lakhs) towards Employees Superannuation Fund.

General description of significant defined benefit plans

i) Gratuity plan

Gratuity is payable to all eligible employees of the Company on superannuation, death and permanent disablement, as per Companys rules or as per provisions of the Payment of Gratuity Act, 1972.

ii) Leave plan

All eligible employees can carry forward and avail / encash leave on resignation, superannuation, death or permanent disablement subject to a maximum accumulation of 180 / 170 /90 days in case of privileged leave & 75 / 70 days in case of sick leave as per Companys rules.

iii) Provident Fund

The employees Provident fund is administered by a Trust created specifically for the purpose. The employees and employers

contributions are transferred to the Trust. All liabilities arising on account of provident fund payouts on resignation or retirement from service or death while in service are made from the Trust.

20 The Scheme of Amalgamation (‘the Scheme) of Duchem Laboratories Limited (the unlisted wholly-owned subsidiary) (herein after referred to as "Duchem") with the Company was sanctioned by the Honorable High Court at Mumbai by its Order passed on 26 February, 2010 and filed with the Registrar of Companies on 15 March, 2010. In accordance with the scheme all the assets,liabilities, duties and obligations of Duchem were transferred to and vested in the Company with effect from 1 December, 2008

(The Appointed Date). The Scheme has accordingly been given effect to in these financial statements which include the assets and liabilities of Duchem with effect from 1 December, 2008 and the results for the year ended 30 November, 2009. Pending completion of relevant formalities of transfer of assets, liabilities and arrangements acquired pursuant to the Scheme mentioned above, such assets, liabilities and arrangements remain in the name of erstwhile Duchem.

Erstwhile Duchem is engaged in the business of trading of pharmaceutical products. The primary segments for classification of business activities are the pharmaceuticals and animal health segments.

The amalgamation has been accounted for under the "pooling of interests" method as prescribed by Accounting Standard 14 (AS 14) "Accounting for Amalgamations". Accordingly, the assets, liabilities and other reserves of the erstwhile Duchem as at 1 December, 2008 have been taken over at their book values.

In terms of the above mentioned Scheme, book values of assets and liabilities are required to be adopted as at 1 December, 2008.

As per the Scheme of Amalgamation no consideration was paid to Duchem or its shareholders and the investment to the extent of entire 100% equity shareholding held by the Company and its nominees in Duchem stood cancelled.

In accordance with the Scheme of Amalgamation, the aggregate of the net assets of Duchem over the carrying value of investments in the Company shall be credited / debited to the Capital Reserve and balance of investments after adjustments with Capital Reserve, if any, against General Reserve / Profit and Loss account in the books of the Company. The balance in the Capital Reserve account if any shall be added to the General Reserve / Profit and Loss account in the books of the Company

Pursuant to the scheme of amalgamation approved as above, the debit balance in the Profit and Loss account of erstwhile Duchem aggregating Rs.171.24 lakhs as at 1 December, 2008 has been taken over.

Further, the provision for diminution other than temporary, in the value of investments aggregating Rs. 324 lakhs created by the Company in the earlier years is reversed and passed through General Reserves during the year ended 30 November, 2009.

21 The Board of Directors at its meeting held on 25 February, 2010 had approved the audited financial results of Pfizer Limited and the audited consolidated results including that of the unlisted wholly-owned subsidiary Duchem Laboratories Limited for the year ended 30 November, 2009. However, for reasons mentioned in Note 20 above, and in order to give effect to the Honorable Bombay High Courts Order dated 26 February, 2010, the Board of Directors at its meeting held on 19 March, 2010 have taken on record the audited financial results of the Company including the figures of erstwhile Duchem for the year ended 30 November, 2009.

22 The employees of the Company have been issued 50490 (Nov 2009: Nil) Share Options and 10149 (Nov 2009: 13966) restricted stock units under the Pfizer Inc 2004 Share Option Plan by Pfizer Inc. The cost incurred by Pfizer Inc pursuant to the said Pfizer Inc 2004 Share Option Plan for the 16 months ended 31 March, 2011 amounts to Rs. 47.87 lakhs ( Nov 2009: Rs.19.75 lakhs). These amounts have not been charged to the Company by Pfizer Inc.

23 (a) Charges towards provision of back office support to fellow subsidiaries, which were netted off against personnel cost amounting to Rs. 532.01 Lakhs for the year ended 30 November, 2009 have now been regrouped to Service Income. Consequential adjustments have been made to the segment disclosures.

(b) Rs. 817.31 lakhs has been regrouped from advances recoverable in cash or kind to balance with Customs, Port Trust and Excise on current accounts for the year ended 30 November, 2009.

(c) Rs. 730.02 lakhs has been regrouped from Miscellaneous expenses to Travelling expenses for the year ended 30 November, 2009.

24 The previous years figures relate to twelve months ended 30 November, 2009 while the current periods figures are sixteen months period ended 31 March 2011. Accordingly, the current periods figures are not comparable to those of the previous year.


Nov 30, 2009

Rupees in Lakhs Rupees in Lakhs 30 Nov 2009 30 Nov 2008

1 Estimated amount of contracts on capital account to be executed and not provided for 119.35 4177.68

2 Contingent Liability

(a) In respect of the guarantees given to banks on behalf of:

(i) Its subsidiary company - 2400.00

(ii) Other guarantees 114.27 107.14

(b) In respect of:

(i) Excise duty 409.55 420.78

(ii) Customs duty 41.50 40.54

(iii) Sales tax 638.97 627.24

(iv) Service tax 193.11 193.11

(v) Income tax 8085.87 743.62

(vi) Pending labour matters contested in various courts 109.66 122.66

(vii) Claims against the Company not acknowledged as debts Amount Amount Unascertainable Unascertainable

(c) DPEA claims (Refer Note 8)

3 Drugs Prices Equalisation Account (DPEA)

(a) oxytetracycline and other Formulations

In respect of certain price fixation Orders of 1981 of the Government of India, the Supreme Court vide its Order of 22 March, 1993 held that, pending disposal of the Company’s Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs. 87.61 lakhs, less Rs. 19.90 lakhs already deposited, with the Union of India before 15 May, 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs. 43.80 lakhs with interest at the rate of 15% per annum will have to be paid to the Government

(b) Multivitamin Formulations

In respect of a certain price fixation Orders of 1986 of the Government of India, the Supreme Court vide its Order dated 3 December, 1992, held that, pending disposal of the Company’s Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs. 98.00 lakhs with the Union of India before 31 January 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs. 49.00 lakhs with interest at the rate of 15% per annum will have to be paid to the Government

(c) Protinex

In yet another case, the Company had challenged in 1986 a price fixation Order of the Government of India by a Writ Petition before the High Court of Mumbai. The Honourable Court passed an ad interim and interim order staying the impugned order. The Petition, while it was still pending for hearing and final disposal, was withdrawn in 1989 on redressal of the Company’s grievances. After protracted correspondence on the subject, in 1993 the Government raised a demand of Rs. 81.83 lakhs on the Company for the period April 1986 to July 1989 and directed the Company to deposit the same into the DPEA. Thereafter, the Drug Prices Liability Review (DPLR) Committee sent a letter dated 15 February, 1996 seeking the Company’s submission / representation against the reduced claim amount of Rs. 33.87 lakhs for the period April 1986 to August 1987 as intimated to the DPLR Committee by the Government of India. The Company has made its submissions to the DPLR Committee vide its letter of 29 March, 1996 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case

In the meantime, the Department of Chemicals and Petrochemicals vide their letter dated 11 February, 1997 raised an additional demand of Rs. 178.56 lakhs for the earlier period of February 1984 to March 1986 over and above the revised claim of Rs. 33.87 lakhs for the period April 1986 to August 1987. Thus, the total demand raised now stands revised to Rs. 212.43 lakhs. The DPLR Committee had, vide its letter dated 24 February, 1997 invited the Company to make its submissions / representations against the above said claim. The Company has made its submissions to the DPLR Committee vide its letter dated 14 May, 1997 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case

Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifcations should be obtained from the Mumbai High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is fled by OPPI and IDMA jointly against any Notice issued by the Government of India after 25 August, 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date)

On a Notice of Motion fled by the Company in the said Writ Petition, the Mumbai High Court has granted ad interim Order that “pending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No. 49 / 1996 pending before the said Drug Prices Liability Review Committee be stayed.”

(d) Vitamin and other Formulations

The Government has arbitrarily determined the liability of the Company at Rs. 1466 lakhs being the difference in price in respect of Vitamin and other formulations sold by the Company during the years 1983 to 1989. The Company has repudiated the liability on this account. The Company’s Solicitors have advised that the repudiation by the Company is legally sustainable. The Government has pursued the matter. The Company maintains its position that the claim by the Government is not legally sustainable

(e) Chloramphenicol

The Government has arbitrarily determined the liability of the Company at Rs. 145 lakhs and Rs. 14 lakhs being the difference between the price of bulk drug Chloramphenicol powder and Chloramphenicol Palmitate respectively allowed in the formulation price and actual procurement price for the period 1979 to 1988. The Company has repudiated the liability on this account as advised by the Company’s Solicitors. The Company has also obtained a Stay order from the Honourable High Court of Mumbai against the demand

Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifcations should be obtained from the Mumbai High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is fled by OPPI and DMA jointly against any Notice issued by the Government of India after 25 August, 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date)

On a Notice of Motion fled by the Company in the said Writ Petition, the Mumbai High Court has granted ad interim Order that “pending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No. 23 / 95 pending before the said Drug Prices Liability Review Committee be stayed”

(f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan Limited (merged with Parke-Davis (India) Limited in 1988 and Parke-Davis (India) Limited merged with Pfizer Limited in 2003) had classified ISOKIN TABLETS, ISOKIN LIQUID AND PYRIDIUM TABLETS as decontrolled products under the DPCO 1979. The categorization was, however challenged by the Government in 1984 and a demand of Rs. 113 lakhs was raised against the Company. Against this demand an excise duty set off of Rs. 7 lakhs was allowed to the Company and a final demand of Rs. 106 lakhs was raised in 1987

The Company had deposited an amount of Rs. 30 lakhs in February 1987 and Rs. 25 lakhs in May 1990 totaling to an aggregate of Rs. 55 lakhs in full and final settlement of the demand, as per the arguments set forth by the Company The Government subsequently raised a demand of Rs. 117 lakhs towards interest on principal demand. (i.e. interest of Rs. 43 lakhs for Pyridium for the period 1982 to August 1995 and Rs. 74 lakhs for Isokin for the period 1982 to June 1997)

The Company fled a Writ Petition in the Andhra Pradesh High Court in September 1997 for staying all further proceedings against the Company. The High Court stayed the demand in respect of collection of interest but directed the Company to deposit the balance demand of Rs. 51 lakhs (which amount was deposited in November 1997)

(g) Multivitamin Formulations:

The Government has arbitrarily raised a demand of Rs. 182.38 lakhs on account of alleged overpricing of certain multivitamin formulations marketed by erstwhile Pharmacia Healthcare Limited (merged with Pfizer Limited) for the period 1983 to 1986. The Company has repudiated the liability on this account as advised by its solicitors. The Company fled a Writ Petition No. 814 of 1992 in the High Court at Mumbai. The Supreme Court of India, in a Special Leave Petition fled by the Company held that pending disposal of Writ Petition fled before the High Court at Mumbai, the Company shall furnish an undertaking in respect of 50% of its liability and shall deposit the balance 50% aggregating to Rs. 91.19 lakhs. This amount has been deposited with the Government of India and is included under the head “Loans and advances”

Pursuant to a Transfer Petition (Civil) No. 475-496 of 2003 fled under Article 139A(1) of the Constitution of India, all pending writ petitions in respect of DPEA liabilities are now to be transferred to the Supreme Court to be heard and finally decided by the Supreme Court of India. Consequently as a result of the said transfer petition, Writ Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now be heard and disposed off by the Supreme Court

In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the legal opinion being in favour of the Company, and based on the assessment of the Management, no further provision is considered necessary over and above the sum of Rs. 198.37 lakhs which has been paid off in earlier years

The Company would continue to seek legal recourse in all the above matters

11 Disclosure for operating leases under Accounting Standard 19 - “Leases”

(a) Where the Company is a Lessee:

(i) The Company has taken various residential / godowns / office premises (including furniture and fittings, therein as applicable) under operating lease or leave and licence agreements. These are generally not non-cancellable and range between 11 months and 3 years under leave and licence, or longer for other leases and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms

(ii) Lease payments are recognized in the Profit and Loss Account under “Rent” in Schedule 16

4 Stock of Physicians’ samples is included under ‘Loans and advances’ (Schedule 10) Rs. 210.86 lakhs (Nov 2008 Rs. 228.86 lakhs)

5 Disclosures as required by the Accounting Standard 18 on “Related Party Disclosures” are given below: I Names of Related Parties and description of Relationships

A Parties where control exists:

Ultimate holding company Pfizer Inc., USA

Companies collectively Pfizer Corporation, Panama exercising significant influence Warner-Lambert Company, LLC, USA

Parke-Davis & Company, LLC, USA Pharmacia Corporation, USA Pfizer Investments Netherlands, B. V. [Collectively holding 70.75% of the aggregate of equity share capital of the Company]

Fellow Subsidiaries: (with whom transactions have taken place during the year)

Pfizer Animal Health SA, Belgium Pfizer Pharmaceuticals Korea Limited, Korea

Pfizer Asia Manufacturing Pte Limited, Singapore Pfizer Singapore Trading Pte Limited, Singapore

Pfizer Corporation Hong Kong Limited, Hong Kong Pfizer Private Limited, Singapore

Pfizer Enterprises SARL, Luxembourg Pfizer Products India Private Limited, India

Pfizer Export Company, Ireland Pfizer International LLC, USA

Pfizer Global Trading, Ireland Pfizer Products Inc., USA

Pfizer Limited, United Kingdom Pfizer Agricare Sdn Bhd, Malaysia

Pfizer Laboratories (Proprietary) Limited, South Africa Pfizer Limited, China

Pfizer Overseas LLC, USA Pfizer Animal Health RSA, Durban, South Africa

Pfizer Pharmaceutical India Private Limited, India

B Executive Committee Members

Mr. Kewal Handa* Mr. Partha Ghosh

Dr. B.M. Gagrat* Mr. Anjan Sen

Mr. S. Madhok Ms. Hiroo Mirchandan

Ms. Dipali Talwar Mr. Uday Mohan

Mr. S. Venkatesh Dr. Yash Goyal

Dr. Chandrashekhar Potkar Mr. Venkat Iyer (resigned w.e.f. 30 November, 2009)

Mr. S. Sridhar Mr. Yugesh Goutam* (resigned w.e.f. 31 May, 2008)

* Executive Directors on the Board

III others

Under the terms of the agreement between Pfzer Inc. (Ultimate Holding Company) and the Company for conducting clinical trials and studies in India, Pfizer Inc., has agreed to indemnify, defend and hold the Company and its directors, employees and agents harmless against any and all liability, loss or damage they may suffer as a result of any claims, demands, costs, penalties, fines or judgments incurred or imposed against it arising out of any clinical trial and study or otherwise pursuant to the agreement

6 The Company’s international transactions with related parties are at arm’s length as per the independent accountants report for the year ended 31 March, 2009. Management believes that the Company’s international transactions with related parties post 31 March, 2009 continue to be at arm’s length and that the transfer pricing legislation will not have any impact on these financial statements

7 The Company’s promoters announced the global divestiture of the Consumer Healthcare Business in June 2006 to Johnson & Johnson. Consequently, the global closure was fixed on 20 December, 2006. Pursuant to the approval of the Board of Directors at their meeting held on 31 December, 2007 the Company has transferred its right to use the trademark / license pertaining to Benadryl, Caladryl, Benylin and Listerine and certain assets related thereto, for a total consideration of Rs. 21485.10 lakhs to Johnson & Johnson Limited. All the remaining products under the Consumer Healthcare Portfolio continues to be with the Company. Accordingly, profit on this transfer amounting to Rs. 21095.23 lakhs has been recognized in the previous year and accounted under the head “Exceptional items - Net”

8 Pfizer Investments Netherlands B.V. announced an Open Offer to acquire up to 10,078,143 shares of the Company on 10 June, 2009. Of the total of 88,10,234 shares acquired, 87,82,252 are currently held in the Escrow account for the benefit of Pfizer Investments Netherlands B.V. The same shall be transferred to Pfizer Investments Netherlands B.V. on completion of all formalities

9 The Company uses forward contracts to hedge its risks associated with foreign currency fluctuations having underlying transaction and relating to firm commitments or highly probable forecast transactions. The Company does not enter into any forward contract which is intended for trading or speculative purposes

22 The Company has with effect from 1 December, 2007, adopted Accounting Standard 15, Employee Benefits (revised 2005). Consequently an additional liability for employee benefits based on actuarial valuation as at 1 December, 2007 amounting to Rs. 455.69 lakhs ( net of deferred tax credit of Rs. 234.65 lakhs), has been adjusted against General reserve as at 1 December, 2007

Defined Contribution Plan:

During the year, the Company has contributed Rs. 22.77 lakhs (Nov 2008 : Rs. 22.01 lakhs) towards Employees’ Superannuation Fund General description of significant defined benefit plans

i) Gratuity plan

Gratuity is payable to all eligible employees of the Company on superannuation, death and permanent disablement as per Company’s rules or per provisions of the Payment of Gratuity Act, 1972

ii) Leave plan

All eligible employees can carry forward and avail / encash leave on resignation, superannuation, death or permanent disablement subject to a maximum accumulation of 180 / 170 days as per Company’s rules

iii) Provident Fund

The employee’s Provident fund is administered by a Trust created specifically for the purpose. The employee’s and employer’s contributions are transferred to the Trust. All liabilities arising on account of provident fund payouts on resignation or retirement from service or death while in service are made from the Trust

10 The Scheme of Amalgamation (‘the Scheme’) of Duchem Laboratories Limited (the unlisted wholly-owned subsidiary) (hereinafter referred to as “Duchem”) with the Company was sanctioned by the Honourable High Court at Mumbai by its Order passed on 26 February, 2010 and fled with the Registrar of Companies on 15 March, 2010. In accordance with the scheme all the assets, liabilities, duties and obligations of Duchem were transferred to and vested in the Company with effect from 1 December, 2008 (The Appointed Date’). The Scheme has accordingly been given effect to in these financial statements which include the assets and liabilities of Duchem with effect from 1 December, 2008 and the results for the year ended 30 November, 2009. Pending completion of relevant formalities of transfer of assets, liabilities and arrangements acquired pursuant to the Scheme mentioned above, such assets, liabilities and arrangements remain in the name of erstwhile Duchem Erstwhile Duchem is engaged in the business of trading of pharmaceutical products. The primary segments for classification of business activities are the pharmaceuticals and animal health segments

The amalgamation has been accounted for under the “pooling of interests” method as prescribed by Accounting Standard 14 (AS 14) “Accounting for Amalgamations”. Accordingly, the assets, liabilities and other reserves of the erstwhile Duchem as at 1 December, 2008 have been taken over at their book values

In terms of the above mentioned Scheme, book values of assets and liabilities are required to be adopted as at 1 December, 2008 As per the Scheme of Amalgamation no consideration was paid to Duchem or its shareholders and the investment to the extent of entire 100% equity shareholding held by the Company and its nominees in Duchem stood cancelled In accordance with the Scheme of Amalgamation, the aggregate of the net assets of Duchem over the carrying value of investments in the Company shall be credited / debited to the Capital reserve and balance of investments after adjustments with Capital Reserve, if any, against General Reserve / Profit and Loss Account in the books of the Company. The balance in the Capital Reserve account if any shall be added to the General Reserve / Profit and Loss Account in the books of the Company The resultant net assets as referred to in above paragraph is calculated as follows

Pursuant to the scheme of amalgamation approved as above, the debit balance in the Profit and Loss Account of erstwhile Duchem aggregating Rs. 171.24 lakhs as at 1 December, 2008 has been taken over Further, the provision for diminution other than temporary, in the value of investments aggregating Rs. 324.00 lakhs created by the Company in the earlier years is reversed and passed through General Reserves In view of the aforesaid amalgamation with effect from 1 December, 2008, the figures for the current year are strictly not comparable to those of the prior year

11 The Board of Directors at its meeting held on 25 February, 2010 had approved the audited financial results of Pfizer Limited and the audited consolidated results including that of the unlisted wholly-owned subsidiary Duchem Laboratories Limited for the year ended 30 November, 2009. However, for reasons mentioned in Note 23 above, and in order to give effect to the Honourable Bombay High Court’s Order dated 26 February, 2010, the Board of Directors at its meeting held on 19 March, 2010 taken on record the audited financial results of the Company including the figures of erstwhile Duchem for the year ended 30 November, 2009

12 Prior year figures have been regrouped wherever necessary to conform to current year’s presentation

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