Aurobindo Pharma Ltd. இன் கணக்கு குறிப்புகள்
Mar 31, 2023
1. The Board of Directors of the company at its meeting held on June 17, 2022 approved investment in GLS Pharma Limited (GLS) through subscription of 204,819 equity shares for an aggregate consideration of ''93.5 (constituting 17% of the equity share capital of GLS) and acquisition of 409,339 equity shares from the selling shareholders for an aggregate consideration of ''187 (constituting 34% of the equity share capital of GLS).
During the Quarter ended June 30, 2022 the company subscribed to 204,819 equity shares of GLS consequent to execution of share subscription and purchase agreement. During the year on satisfaction of the closing conditions, the company acquired the additional 409,339 equity shares. As at March 31, 2023 the company holds 51% of the equity shares in GLS.
2. Investment of ''4.1 (March 31, 2022 '' Nil) on account of fair valuation of corporate guarantee given by the Company on behalf of Lyfius Pharma Private Limited, a wholly - owned subsidiary of Aurobindo Antibiotics Private Limited
Provision for impairment
I nvestments are tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable amount of each investment. When the recoverable amount of the investment is less than its carrying amount, an impairment loss is recognised.
The recoverable amounts of the above investments have been assessed using a value-in-use model. Value in use is generally calculated as the net present value of the projected post-tax cash flows plus a terminal value of the business. Initially, a post-tax discount rate is applied to calculate the net present value of the post-tax cash flows. Key assumptions upon which the company has based its determinations of value-in-use include :
a. ) Estimated cash flows based on internal budgets and industry outlook for a period of five years and a terminal growth
rate thereafter.
b. ) A terminal value arrived at by extrapolating the last forecasted year cash flows to perpetuity, using a constant long-term
growth rate ranging from 0-1%. This long term growth rate takes into consideration external macroeconomic sources of data. Such long-term growth rate considered does not exceed that of the relevant business and industry sector.
c. ) The after tax discount rates used reflect the current market assessment of the risks specific to the investment, the discount
rate is estimated based on the weighted average cost of capital for respective investment. After tax discount rate used range from 14%-15%
The Company believes that any reasonably possible change in the key assumptions on which a recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit.
c) Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of ''1 per share. Each holder of equity shares is entitled to one vote per share.
The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend.
For the year ended March 31, 2023, the amount of interim dividend per share declared as distributions to equity shareholders was ''3.0 (March 31,2022: ''4.5).
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.
(C) Terms of borrowings
(i) All secured working capital demand loans are secured by first pari passu charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future) and carry interest rate in the range of 4% to 755% (March 31, 2022: interest of 4%).
(ii) All unsecured working capital demand loans carry interest rate in the range of 4.25% to 7.75% (March 31,2022:4.25%).
(iii) All secured packing credit foreign currency loans carry interest rate in the range of respective SOFR plus 0 to 15 basis points (March 31, 2022: respective LIBOR plus 10 to 25 basis points) with maturity within 6 months.
(iv) All unsecured packing credit foreign currency loans carry interest rate in the range of respective SOFR plus 0 to 160 basis points and respective EURIBOR plus 0 to 150 basis points for EURO and 4.7% linked to 3Month SONIA for GBP (March 31, 2022: respective LIBOR Minus (-5) to Plus 25 basis points) with maturity within 6 months.
(v) All unsecured bills discounted carry interest rate in the range of respective EURIBOR Plus 40 to 75 basis points (31 March 2022: respective LIBOR plus 0 to 2 basis points).
(vi) All secured bills discounted carry interest rate in the range of respective EURIBOR Plus 5 basis points.
(vii) Due to phasing out of LIBOR during the year ended 31 March 2022, Reserve Bank of India has replaced LIBOR with Secured Overnight Finance Rate (SOFR). This change does not have a material impact on carrying value of working capital loans.
Corporate guarantee given by the Company are in relation to its subsidiaries which aggregate to ''4,140 (March 31,2022 ''3,590). Subsidiaries have availed loan against the said corporate guarantee which have been considered as contingent liabilities (refer note 37).
In addition to the above, the Company along with a subsidiary is a party to certain pending disputes with regulatory authorities relating to allotment of certain lands that have taken place in earlier years. During the year 2018-19, pursuant to the order of the Honorable Appellate Tribunal, land belonging to APL Research Centre Limited, subsidiary, which were attached earlier, were released after placing a fixed deposit of ''131.6 with a bank as a security deposit with Enforcement Directorate. While the disposal of the cases are subject to final judgement from the Central Bureau of Investigation (CBI) Special Court, in the assessment of the Management and as legally advised, the allegations are unlikely to have a significant material impact on the financial statements of the Company.
38 HEDGING ACTIVITIES AND DERIVATIVES - DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
The Company uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions, generally from one week to twelve months.
For the purpose of the Companyâs capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Companyâs capital management is to maximise the shareholder value.
The Company monitors capital using âadjusted net debt to total equity ratioâ. For this purpose, adjusted net debt is defined as total borrowings, less cash and cash equivalents and other bank balances.
The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. The board of directors has established the Risk Management Committee, which is responsible for developing and monitoring the Companyâs risk management policies. The committee reports to the board of directors on its activities.
The Companyâs risk management policies are established to identify and analyse the risks being faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Companyâs activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Companyâs audit committee oversees how management monitors compliance with the Companyâs 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 ad hoc reviews of risk management controls and procedures, the result of which are reported to the audit committee.
The Company is exposed primarily to credit risk, liquidity risk and market risk (including fluctuations in foreign currency exchange rates , interest rate risk and other price risk). The Company uses derivative financial instruments such as forwards to minimise any adverse effect on its financial performance.
i. Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of credit worthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and credit worthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, loans and other financial assets. The Company establishes an allowance for doubtful receivables and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
Trade receivables
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the Management also evaluates the factors that may influence the credit risk of its customer base, including the default risk and country in which the customers operate. The Management has established a credit policy under which each new customer is analysed individually for credit worthiness before the Companyâs standard payment and delivery terms are offered. The Companyâs review includes external ratings, if available, financial statements, credit agency information, industry information and in some case bank references. Sales limits are established for each customer and reviewed quarterly.
The Companyâs receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. The Company assesses at each reporting date whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivables. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.
Loan given to subsidiaries
Credit risk related to loan given to subsidiaries is not expected to be material.
Other financial assets
The Company maintains exposure in cash and cash equivalents and derivative instruments with financial institutions. The Company has loan receivables outstanding from its wholly owned subsidiaries amounting to ''25,958.8 (31 March 2022 : ''8,229.4 ).
The Companyâs maximum exposure to credit risk as at 31 March 2023 and 31 March 2022 is the carrying value of each class of financial assets.
ii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation.
iii. Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Companyâs exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.
a) Foreign currency risk:
The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company. The Company is subject to foreign exchange risk primarily due to its foreign currency revenues, expenses and borrowings. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro and GBP against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks and advises the Management of any material adverse effect on the Company. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The information on foreign exchange risk from derivative instruments and non derivative instruments is as follows:
c) Commodity risk:
Exposure to market risk with respect to commodity prices primarily arises from the Companyâs purchase of active pharmaceutical ingredients and other raw material components for its products. These are commodity products, whose prices may fluctuate significantly over short periods of time. The prices of the Companyâs raw materials generally fluctuate in line with commodity cycles, although the prices of raw materials used in the Companyâs business are generally more volatile. Cost of raw materials forms the largest portion of the Companyâs cost of revenues. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. As of March 31, 2020, the Company had not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.
42 TRANSFER OF BUSINESS OF UNIT-10, UNIT-16, UNIT-4 AND UNIT-18
The Board of Aurobindo Pharma Limited on February 27, 2021 had approved the transfer of its oral formulations business comprised in Unit 10 located at Multiproduct Special Economic Zone, Naidupet, Mandal, SPSR Nellore District, Andhra Pradesh to its wholly-owned subsidiary APL Healthcare Limited through a slump sale. Undertaking was transferred for consideration of ''13,152.7 million.
The Board of Aurobindo Pharma Limited in their meeting held on May 31, 2021 approved Transfer of business undertaking comprised in Unit-16 of the Company located at TSIIC, SEZ, Polepally Village, Jadcherla Mandal, Mahbubnagar district, Telangana, to Eugia Sez Private Limited, India ( formerly known as Wytells Pharma Private Limited), a wholly owned step-down subsidiary of the Company and 100% subsidiary of Eugia Pharma Specialities Limited. Undertaking was transferred for consideration of ''2,941.2 million.
The Board of Aurobindo Pharma Limited in their meeting held on July 1, 2021 approved the transfer of business undertaking comprised in Unit-4 of the Company located at Pashamylaram, Pattancheru Mandal, Sangareddy district, Telangana, to Eugia Pharma Specialities Limited, a wholly owned subsidiary of the Company. Undertaking was transferred for consideration of ''9,383.2 million.
Due to the above transfers the Company has recorded a capital gain tax of ''251.7 million and a reversal of deferred tax amounting to ''610.7 million.
The Board of Directors of the Company as part of Companyâs Verticalization of Vaccines Business, in its meeting held on December 31, 2021 approved the sale and transfer of Unit 18 of the Company located at Survey No.69, 70, 71 & 72, Indrakaran Village, Kandi Mandal, Sangareddy District - 502203, Telangana, to Auro Vaccines Private Limited, a wholly owned subsidiary of the Company. This transfer is aimed at segregation of the vaccines business and subsidiarization of vaccines business in an special purpose vehicle. The slump sale of Unit 18 is effective from January 1, 2022 for a lumpsum consideration of ''3,275.5 million (on a cash free basis). Unit 18 is yet to commence commercial operations.
51 ADDITIONAL REGULATORY INFORMATION
The MCA vide notification dated March 24, 2021 has amended Schedule III of Companies Act. 2013 in respect of certain disclosures.
Amendments are applicable from April 1, 2021. The Company has incorporated the changes as per the said amendment in
the financial statements and has also changed comparative numbers wherever applicable.
(i) There are no proceeding initiated or pending against the Company as at March 31, 2023, under Benami Property Transactions Act, 1988 (as amended in 2016).
(ii) The Company is not declared a willful defaulter by any bank or financial Institution or other lender.
(iii) The Company has recorded all transactions in the books of account that has been surrendered. There are no previously unrecorded incomes and related assets that were considered during the year, no unrecorded incomes were identified as income for tax assessments.
(iv) The Company has not entered into any transaction with the companies struck off as per Section 248 of the Companies Act, 2013 or Section 560 of the Companies Act, 1956.
(v) The details of funds that have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).
(vi) The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(viii) All quarterly returns or statements of current assets are filed by the Company with banks or financial institutions and are in agreement with the books of account.
(ix) The loan has been utilised for the purpose for which it was obtained and no short term funds have been used for long term purpose.
(x) The Company has not traded or invested in Crypto currency or virtual currency during the financial year.
(xi) No scheme of arrangement has been approved by the competent authority in terms of sections 230 to 237 of the Companies Act, 2013 during the year.
53 The standalone financial statements of the Company for the year ended March 31,2022, were audited by the M/s BSR & Associates LLP, Chartered Accountants, the predecessor auditor, who have expressed an unmodified opinion vide their report dated May 30, 2022.
54 In connection with the preparation of the standalone financial statements for the year ended March 31,2023, the Board of Directors have confirmed the propriety of the contracts / agreements entered into by / on behalf of the Company and the resultant revenue earned / expenses incurred arising out of the same after reviewing the levels of authorisation and the available documentary evidences and the overall control environment. Further, the Board of Directors have also reviewed the realizable value of all the current assets of the Company and have confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these are recognised in the standalone financial statements. In addition, the Board has also confirmed the carrying value of the non-current assets in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these standalone financial statements in its meeting held on May 27, 2023 in accordance with the provisions of Companies Act, 2013.
Mar 31, 2022
Provision for impairment
Investments are tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable amount of each investment. When the recoverable amount of the investment is less than its carrying amount, an impairment loss is recognised.
The recoverable amounts of the above investments have been assessed using a value-in-use model. Value in use is generally calculated as the net present value of the projected post-tax cash flows plus a terminal value of the business. Initially, a post-tax discount rate is applied to calculate the net present value of the post-tax cash flows. Key assumptions upon which the Company has based its determinations of value-in-use include :
a) Estimated cash flows based on internal budgets and industry outlook for a period of five years and a terminal growth rate thereafter.
b) A terminal value arrived at by extrapolating the last forecasted year cash flows to perpetuity, using a constant long-term growth rate ranging from 0-1%. This long term growth rate takes into consideration external macroeconomic sources of data. Such long-term growth rate considered does not exceed that of the relevant business and industry sector.
c) The after tax discount rates used reflect the current market assessment of the risks specific to the investment, the discount rate is estimated based on the weighted average cost of capital for respective investment. After tax discount rate used range from 14%-15%
The Company believes that any reasonably possible change in the key assumptions on which a recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit.
c) Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of ''1 per share. Each holder of equity shares is entitled to one vote per share.
The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend.
For the year ended March 31, 2022, the amount of interim dividend per share declared as distributions to equity shareholders was ''4.5 (March 31, 2021: ''4.0).
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.
(C) Terms of borrowings
(i) All secured working capital demand loans are secured by first pari passu charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future) and carry interest rate in the range of 4% (March 31,2021: interest of Nil).
(ii) All unsecured working capital demand loans carry interest rate in the range of 4.25% (March 31,202: Nil).
(iii) All secured packing credit foreign currency loans carry interest rate in the range of respective LIBOR plus 10 to 25 basis points (March 31,2021: respective LIBOR plus 25 basis points) with maturity within 6 months.
(iv) All unsecured packing credit foreign currency loans carry interest rate in the range of respective LIBOR plus (-5) to 25 basis points (March 31,2021: respective LIBOR plus (-5) to 20 basis points) with maturity within 6 months.
(v) All unsecured bills discounted carry interest rate in the range of respective LIBOR Plus (0) to 2 bps (March 31,2021: respective LIBOR plus (10) to 2 basis points and fixed 30 basis points).
Revenue from sale of products is recognised at point in time as the goods are transferred. Revenues from sale of services recognised over time is insignificant.
The amount of revenue recognised from contract liabilities at the beginning of the year ''71.8 million (March 31,2021: ''169.3 million). Contract liability represents amount received against sale of products. These unsatisfied performance obligations are expected to be completed with in one year.
Notes:
(a) The Company benefits from the tax holiday available for units set up under the Special Economic Zone Act, 2005.These tax holidays are available for a period of fifteen years from the date of commencement of operations. Under the SEZ scheme, the unit which begins providing services on or after April 01, 2005 will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profit or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfillment of certain conditions. From April 01, 2011 units set up under SEZ scheme are subject to Minimum Alternate Tax (MAT).
(b) During the quarter ended March 31,2022, the Company elected to exercise the option permitted under Section 115BAA of the Income-tax Act, 1961 as introduced by the Taxation Laws (Amendment) Ordinance, 2019. Accordingly, the Company has recognised provision for income tax for the year ended March 31, 2022 and re-measured its deferred tax assets / liabilities based on the rate prescribed in the said Section. The impact of this change has been recognised in the statement of profit and loss over the period from April 01, 2021 to March 31, 2022.
(c) There are no unrecognised deferred tax assets and liabilities as at March 31, 2022 and March 31, 2021
30. COMMITMENTS AND CONTINGENCIESA. Leases
The Company has lease contracts for land and buildings. The lease term generally varies between 4 to 10 years. These contracts include extension and termination options.
The Company also has certain leases with lease terms of less than 12 months or with low value. The Company applies short term lease and lease of low value assets recognition exemption for these leases.
No expense has been accrued in the stand alone financial statements for the demands raised. The Management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company''s financial position and results of operations.
A The Company is involved in disputes, claims, Governmental and /or regulatory inspection, inquires, including patents and commercial maters that arise from time to time in the ordinary course of business. The same are subject to uncertain future events not wholly within the control of the Company. The Management does not expect the same to have materially adverse effect on its financial position, as it believes the likely hood of any loss is not probable.
** Financial guarantees furnished towards business requirement in respective subsidiaries. The Company has assessed that it is only possible, but not probable, that outflow of economic resources will be required.
In addition to the above, the Company along with a subsidiary is a party to certain pending disputes with regulatory authorities relating to the certain allotment of lands that have taken place in earlier years. During the year 2018-19, pursuant to the order of the Honorable Appellate Tribunal, the lands belonging APL Research Centre Limited, subsidiary, which were attached earlier, were released after placing a fixed deposit of ''131.6 as a security deposit with Enforcement Directorate. While the disposal of the cases are subject to final judgement from the CBI Special Court, in the assessment of the Management and as legally advised, the allegations are unlikely to have a significant material impact on the financial statements of the Company.
b) Disclosures related to defined benefit plan
The Company has a defined benefit gratuity plan governed by the Payment of Gratuity Act, 1972. Every employee who has completed five years or more of service is entitled to gratuity on departure at 15 days last drawn salary for each completed year of service or part thereof in excess of six months.
This defined benefit plan exposes the Company to actuarial risk, such as longevity risk, currency risk, interest rate risk and market (investment) risk.
The plan is funded with Life Insurance Corporation in the form of a qualifying insurance policy. The following tables summarise the components of net benefit expense recognised in the statement of profit and loss, the fund status and amounts recognised in the balance sheet:
Notes:
1. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
2. The Company expects to contribute ''288.8 (March 31, 2021: ''249.3) during the year ended March 31,2023 to the qualifying insurance policy.
3. The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period by varying one actuarial assumption, keeping all other actuarial assumptions constant.
Notes:
i) Managerial remuneration does not include provision for gratuity and leave encashment, which is determined for the Company as a whole.
i i) All transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances for trade receivable, trade payable and other payables are unsecured, interest free and settlement occurs in cash. The Company has not recorded any impairment of balances relating to amounts owed by related parties during the year ended March 31,2022 (March 31,2021), provision for bad and doubtful debts will be made on an aggregate basis i.e. not specific to party. The assessment is undertaken each financial year through evaluating the financial position of the related party and the market in which the related party operates.
38. HEDGING ACTIVITIES AND DERIVATIVES - DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
The Company uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions, generally from one week to twelve months.
For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Companyâs capital management is to maximise the shareholder value.
The Company monitors capital using ''adjusted net debt to total equity ratio''. For this purpose, adjusted net debt is defined as total borrowings, less cash and cash equivalents and other bank balances.
The Company has considered the possible effects that may result from the pandemic relating to COVID-19. With a view to ensure minimal disruption with respect to operations including production and distribution activities, the Company has taken several business continuity measures. While the Company has not experienced any significant difficulties with respect to market demand, liquidity, financing capital expansion projects, collections so far, the Company has assessed the financial impact of the Covid 19 situation particularly on the carrying amounts of receivables, inventories, property, plant and equipment and intangible assets. The Company has, as at the date of approval of these standalone financial results, used internal and external sources of information, including economic forecasts and estimates from market sources. On the basis of evaluation and current indicators of future economic conditions, the Company believes that it will be in a position to recover the carrying amounts of these assets and does not anticipate any material impact due to impairment to these financial and non-financial assets. However, the impact assessment of COVID-19 is a continuing process, given the uncertainties associated with its nature and duration. The Company will continue to monitor any material changes to future economic conditions.
ii. Transfer between Level 1 and 2
There have been no transfers from Level 2 to Level 1 or vice-versa in 2021-22 and no transfers in either direction in 2020-21.
The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. The board of directors has established the Risk Management Committee, which is responsible for developing and monitoring the Companyâs risk management policies. The committee reports to the board of directors on its activities.
The Company''s risk management policies are established to identify and analyse the risks being faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Company''s 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 result of which are reported to the audit committee.
The Company is exposed primarily to credit risk, liquidity risk and market risk (including currency risk, interest rate risk and other price risk). The Company uses derivative financial instruments such as forwards to minimise any adverse effect on its financial performance.
i. Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of credit worthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and credit worthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, loans and other financial assets. The Company establishes an allowance for doubtful receivables and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
Trade receivables
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the Management also evaluates the factors that may influence the credit risk of its customer base, including the default risk and country in which the customers operate. The Management has established a credit policy under which each new customer is analysed individually for credit worthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if available, financial statements, credit agency information, industry information and in some case bank references. Sales limits are established for each customer and reviewed quarterly.
The Company''s receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company assesses at each reporting date whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivables. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.
Loan given to subsidiaries
Credit risk related to loan given to subsidiaries is not expected to be material.
Other financial assets
The Company maintains exposure in cash and cash equivalents and derivative instruments with financial institutions. The Company has loan receivables outstanding from its wholly owned subsidiaries amounting to ''8,229.4 (March 31, 2021: ''4,363.5).
The Companyâs maximum exposure to credit risk as at March 31, 2022 and March 31, 2021 is the carrying value of each class of financial assets.
ii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation.
The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The following are the remaining contractual maturities of financial liabilities at reporting date:
iii. Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Companyâs exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.
The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company. The Company is subject to foreign exchange risk primarily due to its foreign currency revenues, expenses and borrowings. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro and GBP against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks and advises the Management of any material adverse effect on the Company. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The information on foreign exchange risk from derivative instruments and non derivative instruments is as follows:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Company''s exposure to risk of change in market interest rates because it borrows funds at both fixed and floating interest rates. The Company manages its interest rate risk by having a balances portfolio of fixed and variable rate loans and borrowings. As the Company has no significant interest bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates.
c) Commodity risk:
Exposure to market risk with respect to commodity prices primarily arises from the Companyâs purchase of active pharmaceutical ingredients and other raw material components for its products. These are commodity products, whose prices may fluctuate significantly over short periods of time. The prices of the Companyâs raw materials generally fluctuate in line with commodity cycles, although the prices of raw materials used in the Companyâs business are generally more volatile. Cost of raw materials forms the largest portion of the Companyâs cost of revenues. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. As of March 31, 2020, the Company had not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.
42. TRANSFER OF BUSINESS OF UNIT-17 AND R&D-3
The Board of Aurobindo Pharma Limited on June 03, 2020 had approved the transfer of Companyâs Biosimilar business and related R&D manufacturing facilities (Unit-17 and R&D-3) situated at survey No. 77 & 78, Indrakaran Village, Kandi Mandal, Sanga Reddy District, Telangana to its newly incorporated wholly owned subsidiary CuraTeQ Biologics Private Limited (CuraTeQ), through a slump sale. The above undertaking was transferred at book value amounting to ''4,256.2.
43. TRANSFER OF BUSINESS OF UNIT-10, UNIT-16, UNIT-4 AND UNIT-18
The Board of Aurobindo Pharma Limited on February 27, 2021 had approved the transfer of its oral formulations business comprised in Unit 10 located at Multiproduct Special Economic Zone, Naidupet, Mandal, SPSR Nellore District, Andhra Pradesh to its wholly-owned subsidiary APL Healthcare Limited through a slump sale. Undertaking was transferred for consideration of ''13,152.7 million.
The Board of Aurobindo Pharma Limited in their meeting held on May 31, 2021 approved Transfer of business undertaking comprised in Unit-16 of the Company located at TSIIC, SEZ, Polepally Village, Jadcherla Mandal, Mahbubnagar district, Telangana, to Wytells Pharma Private Limited, a wholly owned step-down subsidiary of the Company and 100% subsidiary of Eugia Pharma Specialities Limited. Undertaking was transferred for consideration of ''2,941.2 million.
The Board of Aurobindo Pharma Limited in their meeting held on July 01, 2021 approved the transfer of business undertaking comprised in Unit-4 of the Company located at Pashamylaram, Pattancheru Mandal, Sangareddy district, Telangana, to Eugia Pharma Specialities Limited, a wholly owned subsidiary of the Company. Undertaking was transferred for consideration of ''9,383.2 million.
Due to the above transfers the Company has recorded a capital gain tax of ''251.7 million and a reversal of deferred tax amounting to ''610.7 million.
The Board of Directors of the Company as part of Companyâs Verticalisation of Vaccines Business, in its meeting held on December 31, 2021 approved the sale and transfer of Unit 18 of the Company located at Survey No. 69, 70, 71 & 72, Indrakaran Village, Kandi Mandal, Sangareddy District - 502 203, Telangana, to Auro Vaccines Private Limited, a wholly owned subsidiary of the Company. This transfer is aimed at segregation of the vaccines business and subsidiarisation of vaccines business in an special purpose vehicle. The slump sale of Unit 18 is effective from January 01, 2022 for a lumpsum consideration of ''3,275.5 million(on a cash free basis). Unit 18 is yet to commence commercial operations.
During the financial year 2019-20, the Board of directors of the Company has approved for amalgamation of the five subsidiary Companies with Aurobindo Pharma Limited, the holding company with the appointed date of April 01, 2019. Accordingly, the amounts relating to year ended March 31, 2021 include the impact of the business combination.
52. ADDITONAL REGULATORY INFORMATION
The MCA vide notification dated March 24, 2021 has amended Schedule III of Companies Act. 2013 in respect of certain disclosures.
Amendments are applicable from April 1, 2021. The Company has incorporated the changes as per the said amendment in the
financial statements and has also changed comparative numbers wherever applicable.
(i) There are no proceeding initiated or pending against the Company as at March 31,2022, under Benami Property Transactions Act, 1988 (as amended in 2016).
(ii) The Company is not declared a wilful defaulter by any bank or financial Institution or other lender.
(iii) The Company has recorded all transactions in the books of account that has been surrendered. There are no previously unrecorded incomes and related assets that were considered during the year, no unrecorded incomes were identified as income for tax assessments.
(iv) The Company has not entered into any transaction with the companies struck off as per Section 248 of the Companies Act, 2013 or Section 560 of the Companies Act, 1956.
(v) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(vi) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(vii) All quarterly returns or statements of current assets are filed by the Company with banks or financial institutions and are in agreement with the books of account.
I n accordance with Indian Accounting Standard (Ind AS) 108 on Operating segments, segment information has been given in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these financial statements.
55. Previous period figures have been re-grouped / re-classified as follows:
Mar 31, 2021
Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of C1 per share. Each holder of equity shares is entitled to one vote per share.
The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend.
For the year ended March 31, 2021, the amount of interim dividend per share declared as distributions to equity shareholders was C4.0 (March 31, 2020: C3.0).
I n the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.
Terms of borrowings
(i) All unsecured cash credit facilities carry interest rate in the range of MCLR 30 bps (March 31, 2020: MCLR 0 bps to 75 bps).
(ii) All secured working capital demand loans are secured by first pari passu charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future) and carry interest rate in the range of Nil (March 31, 2020: interest of 6.25% to 8.75%).
(iii) All unsecured working capital demand loans carry interest rate in the range of Nil (March 31, 2020: 6% to 8.6%).
(iv) All secured packing credit foreign currency loans carry interest rate in the range of respective LIBOR plus 25 basis points. (March 31, 2020: respective LIBOR plus 45 to 60 basis points) with maturity within 6 months.
(v) All unsecured packing credit foreign currency loans carry interest rate in the range of respective LIBOR plus (5) to 20 basis points (March 31, 2020: respective LIBOR plus 12 to 60 basis points) with maturity within 6 months.
(vi) All unsecured bills discounted carry variable interest rate in the range of respective LIBOR plus -10 to 2 basis points and fixed interest rate 30 basis points (March 31, 2020: respective LIBOR plus 20 to 40 basis points).
(a) The Company benefits from the tax holiday available for units set up under the Special Economic Zone Act, 2005. These tax holidays are available for a period of fifteen years from the date of commencement of operations. Under the SEZ scheme, the unit which begins providing services on or after April 1, 2005 will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profit or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfillment of certain conditions. From April 1, 2011 units set up under SEZ scheme are subject to Minimum Alternate Tax (MAT).
(b) The Government of India, on September 20, 2019, vide the Taxation Laws (Amendment) Ordinance 2019, the Ordinance inserted a new Section 115BAA in the Income tax Act, 1961, which provides an option to the Company for paying income tax at reduced rates as per the provisions/conditions defined in the said section. The Company has evaluated the above Ordinance and based on its evaluation currently the management proposed to continue with the old tax rates.
(c) There are no unrecognised deferred tax assets and liabilities as at March 31, 2021 and March 31, 2020.
30 COMMITMENTS AND CONTINGENCIES
A. Leases
Effective April 1, 2019, the Company adopted Ind-AS 116, on all lease contracts existing on April 1, 2019 using the modified retrospective method with Right-of-use assets recognised at an amount equal to the lease liabilities in the balance sheet. The Right-of-use assets as on March 31, 2020 and March 31, 2021 have been presented as part of Property, plant and equipment.
* in respect of above matters, future cash outflows in respect of contingent liabilities are determinable only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. The Company is contesting these demands and the Management, including its advisors, believe that its position will likely be upheld in the appellate process. No expense has been accrued in the stand alone financial statements for the demands raised. The Management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company''s financial position and results of operations.
** Guarantees furnished towards business requirement in respective subsidiaries. The Company has assessed that it is only possible, but not probable, that outflow of economic resources will be required.
A The Company is involved in disputes, claims, Governmental and /or regulatory inspection, inquires, including patents and commercial maters that arise from time to time in the ordinary course of business. The same are subject to uncertain future events not wholly within the control of the Company. The management does not expect the same to have materially adverse effect on its financial position, as it believes the likely hood of any loss is not probable.
In addition to the above, the Company along with a subsidiary is a party to certain pending disputes with regulatory authorities relating to the certain allotment of lands that have taken place in earlier years. During the year 2018-19, pursuant to the order of the Honourable Appellate Tribunal, the lands belonging APL Research Centre Limited, subsidiary, which were attached earlier, were released after placing a fixed deposit of C131.6 as a security deposit with Enforcement Directorate. While the disposal of the cases are subject to final judgement from the CBI Special Court, in the assessment of the management and as legally advised, the allegations are unlikely to have a significant material impact on the financial statements of the Company.
Employee Stock Option Plan âESOP-2006â
The Company instituted an Employee Stock Option Plan âESOP-2006â for issue of shares to eligible employees of the Company as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. The compensation committee of the Board of Directors accordingly, granted 3,240,500 options under eight grants of 175,000, 25,000, 90,000, 1,205,000, 300,000, 500,000, 915,500 and 30,000 options to eligible employees on October 30, 2006, July 31, 2007, October 31,2007, December 16, 2011, June 19, 2012, January 9, 2013, January 28, 2013 and August 9, 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company and there are no cash settlement alternatives for the employees. Each option comprises of one underlying Equity Share of C1/- each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of C120.70, C132.35, C114.50, C91.60, C106.05, C200.70, C187.40 and C161.30 per share respectively. The fair value of share options grants is estimated at the date of grant using Black-Scholes model, taking into account the terms and conditions upon which the share options were granted.
b) Disclosures related to defined benefit plan
The Company has a defined benefit gratuity plan governed by the Payment of Gratuity Act, 1972. Every employee who has completed five years or more of service is entitled to gratuity on departure at 15 days last drawn salary for each completed year of service or part thereof in excess of six months.
This defined benefit plan exposes the Company to actuarial risk, such as longevity risk, currency risk, interest rate risk and market (investment) risk.
1. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
2. The Company expects to contribute C249.3 (March 31,2020: C207.3) during the year ended March 31,2022 to the qualifying insurance policy.
3. The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period by varying one actuarial assumption, keeping all other actuarial assumptions constant.
Note:
i) Managerial remuneration does not include provision for gratuity and leave encashment, which is determined for the Company as a whole.
ii) All transactions with related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances for trade receivable, trade payable and other payables are unsecured, interest free and settlement occurs in cash. The Company has not recorded any impairment of balances relating to amounts owed by related parties during the year ended March 31, 2021 (March 31, 2020), provision for bad and doubtful debts will be made on an aggregate basis i.e. not specific to party. The assessment is undertaken each financial year through evaluating the financial position of the related party and the market in which the related party operates.
40 HEDGING ACTIVITIES AND DERIVATIVES - DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
The Company uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions, generally from one week to twelve months.
For the purpose of the Companyâs capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Companyâs capital management is to maximise the shareholder value.
The Company has considered the possible effects that may result from the pandemic relating to COVID-19. With a view to ensure minimal disruption with respect to operations including production and distribution activities, the Company has taken several business continuity measures. While the Company has not experienced any significant difficulties with respect to market demand, liquidity, financing capital expansion projects, collections so far, the Company has assessed the financial impact of the Covid 19 situation particularly on the carrying amounts of receivables, inventories, property, plant and equipment and intangible assets. The Company has, as at the date of approval of these standalone financial results, used internal and external sources of information, including economic forecasts and estimates from market sources. On the basis of evaluation and current indicators of future economic conditions, the Company believes that it will be in a position to recover the carrying amounts of these assets and does not anticipate any material impact due to impairment to these financial and non-financial assets. However, the impact assessment of COVID-19 is a continuing process, given the uncertainties associated with its nature and duration. The Company will continue to monitor any material changes to future economic conditions.
43 FINANCIAL INSTRUMENTS - FAIR VALUE AND RISK MANAGEMENT
A. Accounting classifications and fair values
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy.
ii. Transfer between Level 1 and 2
There have been no transfers from Level 2 to Level 1 or vice-versa in 2020-21 and no transfers in either direction in 2019-20. C. Risk Management Framework
The Companyâs Board of Directors has overall responsibility for the establishment and oversight of the Companyâs Risk Management Framework. The Board of Directors has established the Risk Management Committee, which is responsible for developing and monitoring the Companyâs risk management policies. The committee reports to the board of directors on its activities.
The Companyâs risk management policies are established to identify and analyse the risks being faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Companyâs activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Companyâs Audit Committee oversees how management monitors compliance with the Companyâs 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 result of which are reported to the Audit Committee.
The Company is exposed primarily to credit risk, liquidity risk and market risk (including currency risk, interest rate risk and other price risk). The Company uses derivative financial instruments such as forwards to minimise any adverse effect on its financial performance.
i. Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of credit worthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and credit worthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, loans and other financial assets. The Company establishes an allowance for doubtful receivables and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
Trade receivables
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the Management also evaluates the factors that may influence the credit risk of its customer base, including the default risk and country in which the customers operate. The Management has established a credit policy under which each new customer is analysed individually for credit worthiness before the Companyâs standard payment and delivery terms and conditions are offered. The Companyâs review includes external ratings, if available, financial statements, credit agency information, industry information and in some case bank references. Sales limits are established for each customer and reviewed quarterly.
The Companyâs receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company assesses at each reporting date whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivables. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.
Other financial assets
The Company maintains exposure in cash and cash equivalents and derivative instruments with financial institutions. The Company has loan receivables outstanding from its wholly owned subsidiaries amounting to ?3,945.0(March 31, 2020 : C2,350.0).
The Companyâs maximum exposure to credit risk as at March 31, 2021 and March 31, 2020 is the carrying value of each class of financial assets.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation.
The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The following are the remaining contractual maturities of financial liabilities at reporting date:
iii. Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Companyâs exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.
a) Foreign Currency risk:
The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company. The Company is subject to foreign exchange risk primarily due to its foreign currency revenues, expenses and borrowings. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro and GBP against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks and advises the Management of any material adverse effect on the Company. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The information on foreign exchange risk from derivative instruments and non derivative instruments is as follows:
b) Interest rate risk:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Companyâs exposure to risk of change in market interest rates because it borrows funds at both fixed and floating interest rates. The Company manages its interest rate risk by having a balances portfolio of fixed and variable rate loans and borrowings. As the company has no significant interest bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates.
c) Commodity risk:
Exposure to market risk with respect to commodity prices primarily arises from the Companyâs purchase of active pharmaceutical ingredients and other raw material components for its products. These are commodity products, whose prices may fluctuate significantly over short periods of time. The prices of the Companyâs raw materials generally fluctuate in line with commodity cycles, although the prices of raw materials used in the Companyâs business are generally more volatile. Cost of raw materials forms the largest portion of the Companyâs cost of revenues. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. As of March 31, 2020, the Company had not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.
44 TRANSFER OF BUSINESS OF UNIT-17 & R&D-3
The Board of Aurobindo Pharma Limited on June 3, 2020 had approved the transfer of Companyâs Biosimilar business and related R&D manufacturing facilities (Unit-17 and R&D-3) situated at survey No. 77 & 78, Indrakaran Village, Kandi Mandal, Sanga Reddy District, Telangana to its newly incorporated wholly owned subsidiary CuraTeQ Biologics Private Limited (CuraTeQ), through a slump sale. The above undertaking was transferred at book value amounting to ?4,256.2.
45 TRANSFER OF BUSINESS OF UNIT-10
During the year, the Board of directors of the Company had approved to enter into a business transfer agreement with APL Healthcare Limited, a wholly owned subsidiary of the Company, to transfer, sell, assign, deliver or otherwise dispose of the oral formulations business comprised in Unit 10 located at Multiproduct Special Economic Zone, Naidupet, Mandal, SPSR Nellore District, Andhra Pradesh (âBusinessâ) on a slump sale basis as a going concern along with its assets and liabilities to APL Healthcare Limited as prescribed in such business transfer agreement effective April 1, 2021.â The company made an application to the Development Commissioner, VSEZ authorities, approval for which was received on April 8, 2021.
During the financial year 2019-20, the Board of directors of the Company has approved for amalgamation of the five subsidiary Companies with Aurobindo Pharma Limited, the holding company with the appointed date of April 1, 2019. Accordingly, a Scheme of Amalgamation for merger of APL Healthcare Limited, APL Research Centre Limited, Aurozymes Limited, Curepro Parenterals Limited, Hyacinths Pharma Private Limited and Silicon Life Sciences Private Limited (a stepdown wholly owned subsidiary) with the Company was filed before the Honâble National Company Law Tribunal, Hyderabad (NCLT). Further, during the year, a modified Scheme Amalgamation was filed with the Honâble NCLT by way of filing an Interlocutory application for removal and complete exclusion of the APL Healthcare Limited as a party to the Scheme of Amalgamation. The Honâble NCLT vide order dated March 30, 2021 has approved the modified scheme of amalgamation and a certified copy has been filed by the Company with the Registrar of Companies, Telangana April 29, 2021. Accordingly, the subsidiaries viz. APL Research Centre Limited, Aurozymes Limited, Curepro Parenterals Limited, Hyacinths Pharma Private Limited and Silicon Life Sciences Private Limited (a stepdown wholly owned subsidiary) have now been merged with Aurobindo Pharma Limited. The appointed date as per the NCLT approved Scheme is April 1, 2019, which is the same as the beginning of the preceding period in the financial statements and hence, in line with the Scheme, the combination has been accounted for from that date as per the requirements of Appendix C to Ind AS 103 âBusiness Combinationâ. Accordingly, the amounts relating to year ended March 31, 2021 include the impact of the business combination and the corresponding amounts for the year ended March 31, 2020 shown in the statement, have been restated after recognising the effect of the Scheme as above.
In accordance with Indian Accounting Standard (Ind AS) 108 on Operating segments, segment information has been given in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these financial statements.
Mar 31, 2019
Notes:
(a) The Company benefits from the tax holiday available for units set up under the Special Economic Zone Act, 2005. These tax holidays are available for a period of fifteen years from the date of commencement of operations. Under the SEZ scheme, the unit which begins providing services on or after 01 April 2005 will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profit or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfillment of certain conditions. From 01 April 2011 units set up under SEZ scheme are subject to Minimum Alternate Tax (MAT).
(b) During the year ended 31 March 2019 and 31 March 2018, the Company has paid dividend to shareholders, this has resulted in payment of dividend distribution tax to the taxation authorities. The Company believes that dividend distribution tax represents additional payment to tax authorities on behalf of shareholders. Hence, dividend distribution tax paid is charged to equity.
(c) There are no unrecognized deferred tax assets and liabilities as at 31 March 2019 and 31 March 2018.
1.COMMITMENTS AND CONTINGENCIES A. Leases
Operating lease commitments - Company as lessee
i) The Company has operating leases agreements, which are mainly in the nature of lease of office premises for a period up to five years, with no restrictions and are renewable/ cancellable at the option of either of the parties except for details in (ii) below. These leases include a general clause to enable upward revision of the rental charge on an annual basis according to the prevailing market conditions. There is no other escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the statement of profit and loss is Rs,92.1(31 March 2018: Rs,89.5). The Company has not recognized any contingent rent as expense in the statement of profit and loss.
Finance lease - Company as lessee
Buildings includes factory buildings acquired on finance lease. The lease term is for major part of the economic life of the buildings and the agreement is silent on renewal terms and transfer of legal title at the end of lease term.
The lease agreement did not specify minimum lease payments over the future period. The factory building has been acquired on lease at a consideration of ''25.5.
The net carrying amount of the buildings obtained on finance lease - Rs,6.8 (31 March 2018: Rs,8.1).
Lease commitments - the Company as less or
The Company has entered into agreement to non cancellable leases for office premises. The Company has identified assets under operating and finance lease based on the factors indicated under Appendix C to Ind AS 17 and terms of the agreement, viz., economic life of the asset vs. lease term, ownership of the asset after the lease term.
Lease commitments - the Company as lessee
The Company has entered into leases for land and office premises. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the land and office premises and the fair value of the asset, that it does not retain significant risks and rewards of ownership of the land and the office premises and accounts for the contracts as operating leases.
- in respect of above matters, future cash outflows in respect of contingent liabilities are determinable only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. The Company is contesting these demands and the Management, including its advisors, believe that its position will likely be upheld in the appellate process. No expense has been accrued in the stand alone financial statements for the demands raised. The Management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company''s financial position and results of operations.
-- Guarantees furnished towards business requirement in respective subsidiaries. The Company has assessed that it is only possible, but not probable, that outflow of economic resources will be required.
A The Company is involved in disputes, claims, Governmental and /or regulatory inspection, inquires, including patents and commercial maters that arise from time to time in the ordinary course of business. The same are subject to uncertain future events not wholly within the control of the Company. The management does not expect the same to have materially adverse effect on its financial position, as it believes the likely hood of any loss is not probable.
2.SHARE BASED PAYMENTS
Employee Stock Option Plan âESOP-2006â
The Company instituted an Employee Stock Option Plan âESOP-2006â for issue of shares to eligible employees of the Company as per the special resolution passed in the 19th Annual General Meeting held on 18 September 2006. The compensation committee of the Board of directors accordingly, granted 3,240,500 options under eight grants of 175,000, 25,000, 90,000, 1,205,000, 300,000, 500,000, 915,500 and 30,000 options to eligible employees on 30 October 2006, 31 July 2007, 31 October 2007, 16 December 2011, 19 June 2012, 09 January 2013, 28 January 2013 and 09 August 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company and there are no cash settlement alternatives for the employees. Each option comprises of one underlying Equity Share of Rs,1/- each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs,120.70, Rs,132.35, Rs,114.50, '' 91.60, Rs,106.05, Rs,200.70, Rs,187.40 and Rs,161.30 per share respectively. The fair value of share options grants is estimated at the date of grant using Black-Scholes model, taking into account the terms and conditions upon which the share options were granted.
- Includes Rs,4.0 (31 March 2018: Rs,19.3) transferred to capital work in progress -- Includes ''0.0 (31 March 2018: ''0.7) transferred to capital work in progress
b) Disclosures related to defined benefit plan
The Company has a defined benefit gratuity plan governed by the Payment of Gratuity Act, 1972. Every employee who has completed five years or more of service is entitled to gratuity on departure at 15 days last drawn salary for each completed year of service or part thereof in excess of six months.
This defined benefit plan exposes the Company to actuarial risk, such as longevity risk, currency risk, interest rate risk and market (investment) risk.
The plan is funded with Life Insurance Corporation in the form of a qualifying insurance policy. The following tables summaries the components of net benefit expense recognized in the statement of profit and loss, the fund status and amounts recognized in the balance sheet:
Discount rate : The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of obligations.
Salary escalation rate : The estimate of future salary increases considered takes into account the inflation, seniority, promotion and other related factors.
Notes:
1. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
2. The Company expects to contribute Rs,157.4 (31 March 2018: Rs,90.0) during the year ended 31 March 2020 to the qualifying insurance policy.
3. The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period by varying one actuarial assumption, keeping all other actuarial assumptions constant.
3. In respect of the amounts mentioned under Section 125 of the Companies Act, 2013 there are no dues that are to be credited to the Investor Education and Protection Fund as at 31 March 2019 (31 March 2018: '' Nil).
4. RELATED PARTY DISCLOSURES
Names of related parties and description of relationship Subsidiaries
1 APL Pharma Thai Limited, Thailand
2 All Pharma (Shanghai) Trading Company Limited, China
3 Aurobindo Pharma USA Inc., USA
4 Aurobindo Pharma Industria Farmaceutica Ltda, Brazil
5 Helix Healthcare B.V., The Netherlands
6 Aurobindo Pharma Produtos Farmaceuticos Limitada, Brazil
7 APL Healthcare Limited, India
8 Auronext Pharma Private Limited, India
9 APL Research Centre Limited, India
10 Auro Pharma Inc., Canada
11 Aurobindo Pharma (Pty) Limited, South Africa
12 Agile Pharma B.V, The Netherlands
13 Auro Healthcare (Nigeria) Limited, Nigeria (liquidated w.e.f.20 March 2019)
14 Aurobindo Ilac Sanayi Ve Ticaret Limited Sirketi, Turkey (liquidated w.e.f. 31 October 2017)
15 Aurobindo Pharma Japan K.K., Japan
16 Aurex B.V (formerly Pharmacin B.V.), The Netherlands
17 Aurobindo Pharma GmbH, Germany
18 Aurobindo Pharma (Portugal) Unipessoal Limitada., Portugal--
19 Laboratorios Aurobindo S.L., Spain
20 Aurobindo Pharma B.V, The Netherlands (formerly known as Actavis B.V.)
21 Aurobindo Pharma (Romania) S.r.l, Romania
22 Aurobindo Pharma (Italia) S.r.l, Italy
23 Aurobindo Pharma (Malta) Limited, Malta
24 APL Swift Services (Malta) Limited, Malta
25 Milpharm Limited, UK
26 Aurolife Pharma LLC, USA
27 Auro Peptides Limited, India
28 Auromedics Pharma LLC, USA
29 Aurovida Farmaceutica S.A. DE C.V., Mexico
30 Curepro Parenterals Limited, India
31 Hyacinths Pharma Private Limited, India
32 Silicon Life Sciences Private Limited, India
33 AuroZymes Limited, India
34 Aurobindo Pharma Colombia S.A.S, Columbia
35 Aurovitas, Unipessoal LDA, Portugal--
36 Arrow Generiques SAS, France
37 Auro Health LLC, USA
38 Pharmacin B.V. (formerly Aurex B.V), The Netherlands
39 1980 Puren Pharma GmbH (formerly Actavis Management GmbH), Germany
40 Puren Pharma GmbH & Co., KG (formerly Actavis Deutschland GmbH & Co., KG), Germany
41 Aurovitas Spain SA (formerly Actavis Spain SA), Spain
42 Natrol LLC, USA
43 Aurovitas Pharma Polska, Poland
44 Aurogen South Africa (Pty) Ltd, South Africa
45 Aurobindo Pharma USA LLC, USA (dissolved w.e.f. 31 March 2018, revived w.e.f. 6 June 2018)
46 Auro AR LLC, USA (w.e.f. 2 May 2017)
47 Auro Vaccines LLC, USA
48 Auro Logistics LLC, USA (w.e.f. 28 April 2017)
49 Acrotech Biopharma LLC, USA (w.e.f. 05 January 2018)
50 Generis Farmaceutica S.A, Portugal (w.e.f. 01 May 2017)
51 Mer Medicamentos, Lda, Portugal (w.e.f. 01 May 2017)--
39 RELATED PARTY DISCLOSURES (CONTINUED)
52 Generis Phar Unipessoal Lda., Portugal (w.e.f. 01 May 2017)
53 Farma APS - Promogao de Medicamentos, Unipessoal Lda. (w.e.f. 01 May 2017 and dissolved w.e.f. 25 January 2018)
54 Aurobindo Pharma Saudi Arabia Limited Company, Saudi Arabia (w.e.f.08 May 2017)
55 Auro Pharma India Private Limited, India (w.e.f. 20 December 2017)
56 Aurovitas Pharma Ceska Republica s.r.o , Czech Republic ( w.e.f. 23 December 2017)
57 Generis MZ, Lda., Mozambique (w.e.f. 01 May 2017 and dissolved w.e.f. 19 March 2018)
58 Aurovitas Pharma (Tazihou) Ltd, China (w.e.f. 29 January 2018)
59 Apotex Polska S.p. z.o.o., Poland (w.e.f. 8 February 2019)
60 APOTEX (CR) Spol. s.r.o. Czech Republic (w.e.f. 8 February 2019)
61 APOTEX ESPANA SL, Spain (w.e.f. 8 February 2019)
62 Apotex SA/NV Belgium (w.e.f. 8 February 2019)
63 Apotex Europe B.V, The Netherlands (w.e.f. 8 February 2019)
64 Apotex Nederland B.V., The Netherlands (w.e.f. 8 February 2019)
65 Sameko Farma B.V The Netherlands (w.e.f. 8 February 2019)
66 Leidapharm B.V The Netherlands (w.e.f. 8 February 2019)
67 Marel B.V The Netherlands (w.e.f. 8 February 2019)
68 Pharma Dossier B.V, The Netherlands (w.e.f. 8 February 2019)
69 Curateq Biologics GmbH, Switzerland (w.e.f. 20 March 2019)
70 Aurobindo Pharma FZ-LLC, Dubai (w.e.f. 6 January 2019)
71 Auro Science LLC, U.S.A (w.e.f.28 March 2019)
72 Auro Science (Pty) Ltd, Australia (w.e.f.25 September 2018)
--Mer Medicamentos, Lda, Portugal, Aurovitas, Unipessoal LDA, Portugal and Aurobindo Pharma (Portugal) Unipessoal Limitada., Portugal were merged with Generis Farmaceutica S.A., w.e.f. 01 April 2018.
Joint ventures
1 Novagen Pharma (Pty) Limited, South Africa (Joint Venture of a Subsidiary, Aurobindo Pharma (Pty) Limited, South Africa)
2 Eugia Pharma Specialities Limited, India
3 Tergene Biotech Private Limited, India (w.e.f. 01 April 2015)
4 Raidurgam Developers Limited, India (formerly known as Aurobindo Antibiotics limited, India)
5 Purple Bellflower (Pty)Ltd, Southafrica (w.e.f. 23 August 2018)
Enterprises over which key management personnel or their relatives exercise significant influence
1 Pravesha Industries Private Limited, India
2 Sri Sai Packaging, India (Partnership firm)
3 Trident Chemphar Limited, India
4 Auropro Soft Systems Private Limited, India
5 Axis Clinicals Limited, India
6 Pranit Projects Private Limited, India
7 Pranit Packaging Private Limited, India
8 SGD Pharma India Limited (formerly Cogent Glass Limited), India
9 Orem Access Bio Inc, India
10 Veritaz Healthcare Limited, India
11 Alex Merchant PTE. LTD, Singapore
12 Trident Petrochemicals DMCC, Dubai
13 Axis Clinicals LLC, USA
14 Alex Merchant DMCC, Dubai
15 Crest Cellulose Private Limited, India
16 East Pharma Technologies, India (Partnership firm)
17 Axis Clinicals Latina SA DE CV, Mexico
18 Viwyn Pharma Private limited, India
19 Gelcaps Industries, India
20 Aurobindo Foundation, India
39 RELATED PARTY DISCLOSURES (CONTINUED)
Key management personnel
1 Mr. K. Nithyananda Reddy, Whole-time Director
2 Dr. M. Sivakumaran, Whole-time Director
3 Mr. M. Madan Mohan Reddy, Whole-time Director
4 Mr. P. Sarath Chandra Reddy, Whole-time Director
5 Mr. N. Govindarajan, Managing Director
6 Mr. Santhanam Subramanian, Chief Financial Officer
7 Mr. B. Adi Reddy, Company Secretary
8 Mr. K. Ragunathan, Non-executive Chairman and Independent Director
9 Mr. M. Sitarama Murty, Independent Director
10 Dr. (Mrs.) Avnit Bimal Singh, Independent Director
11 Mr. Rangaswamy Radhakrishnan Iyer, Independent Director (Upto 09 December 2017)
12 Mr.P.Venkata Ramprasad Reddy, Non Executive promoter director
13 Mrs.Savitha Mahajan, Independent Director (w.e.f. 16 December 2017)
Relatives to key managerial personnel
1 Mr. Vishnu M Sriram (Son in law of Dr. M. Sivakumaran, Wholetime Director)
Note:
i) Managerial remuneration does not include provision for gratuity and leave encashment, which is determined for the Company as a whole.
ii) All transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances for trade receivable, trade payable and other payables are unsecured, interest free and settlement occurs in cash. The Company has not recorded any impairment of balances relating to amounts owed by related parties during the year ended 31 March 2019 (31 March 2018), provision for bad and doubtful debts will be made on an aggregate basis i.e. not specific to party. The assessment is undertaken each financial year through evaluating the financial position of the related party and the market in which the related party operates.
ii. Transfer between Level 1 and 2
There have been no transfers from Level 2 to Level 1 or vice-versa in 2018-19 and no transfers in either direction in 2017-18.
C. Risk management framework
The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The committee reports to the board of directors on its activities.
The Company''s risk management policies are established to identify and analyse the risks being faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Company''s 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 result of which are reported to the audit committee.
The Company is exposed primarily to credit risk, liquidity risk and market risk (including currency risk, interest rate risk and other price risk). The Company uses derivative financial instruments such as forwards to minimize any adverse effect on its financial performance.
i. Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of credit worthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and credit worthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, loans and other financial assets. The Company establishes an allowance for doubtful receivables and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
Trade receivables
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the Management also evaluates the factors that may influence the credit risk of its customer base, including the default risk and country in which the customers operate. The Management has established a credit policy under which each new customer is analysed individually for credit worthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if available, financial statements, credit agency information, industry information and in some case bank references. Sales limits are established for each customer and reviewed quarterly.
The Company''s receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company assesses at each reporting date whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivables. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.
Other financial assets
The Company maintains exposure in cash and cash equivalents and derivative instruments with financial institutions. The Company has loan receivables outstanding from its wholly owned subsidiaries amounting to Rs,1,410.5 (31 March 2018 : Rs,7.9).
The Company''s maximum exposure to credit risk as at 31 March 2019 and 31 March 2018 is the carrying value of each class of financial assets.
ii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.
The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The following are the remaining contractual maturities of financial liabilities at reporting date:
iii. Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company''s exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.
a) Foreign currency risk:
The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit and loss, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company. The Company is subject to foreign exchange risk primarily due to its foreign currency revenues, expenses and borrowings. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro and GBP against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks and advises the Management of any material adverse effect on the Company. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The information on foreign exchange risk from derivative instruments and non derivative instruments is as follows:
The summary of quantitative data about the Company''s exposure to currency risk (based on the notional amounts) as reported to the management is as follows:
Sensitivity analysis:
A reasonably possible strengthening (weakening) of the Indian Rupee against US dollars at 31 March would have affected the measurement of financial instruments denominated in US dollars and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.
b) Interest rate risk:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Company''s exposure to risk of change in market interest rates because it borrows funds at both fixed and floating interest rates. The Company manages its interest rate risk by having a balances portfolio of fixed and variable rate loans and borrowings. As the company has no significant interest bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates.
c) Commodity risk:
Exposure to market risk with respect to commodity prices primarily arises from the Company''s purchase of active pharmaceutical ingredients and other raw material components for its products. These are commodity products, whose prices may fluctuate significantly over short periods of time. The prices of the Company''s raw materials generally fluctuate in line with commodity cycles, although the prices of raw materials used in the Company''s business are generally more volatile. Cost of raw materials forms the largest portion of the Company''s cost of revenues. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. As of 31 March 2019, the Company had not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.
5.SEGMENT REPORTING
In accordance with Indian Accounting Standard (Ind AS) 108 on Operating segments, segment information has been given in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these financial statements.
Mar 31, 2018
1. CORPORATE INFORMATION
Aurobindo Pharma Limited (âthe Companyâ) is a public company domiciled in India and was incorporated under the provisions of the Companies Act applicable in India. The registered office of the Company is located at Plot No.2, Maitri Vihar, Ameerpet, Hyderabad - 500038, India and the Corporate office is located at The Water Mark Building, Plot No. 11, Survey No. 9, Hi-tech City, Hyderabad - 500084, India. The Companyâs shares are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) in India.
The Company is principally engaged in manufacturing and marketing of active pharmaceutical ingredients, generic pharmaceuticals and related services. The standalone financial statements for the year ended 31 March 2018 were approved by the Board of Directors and authorised for issue on 28 May 2018.
a) Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs.1 per share. Each holder of equity shares is entitled to one vote per share.
The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend.
For the year ended 31 March 2018, the amount of dividend per share declared as distributions to equity shareholders was Rs.2.5 (31 March 2017: Rs.2.5).
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.
(A) Terms of borrowings
(i) Secured term loans in foreign currency carry interest in the range of LIBOR plus 1.2% to 1.5%. Out of these loans, loans amounting to â Nil (31 March 2017: Rs.1,080.9) are repayable in Nil (31 March 2017: two) equal annual instalments and loan amounting to Rs.651.7 (31 March 2017: Rs.1,945.5) is repayable in equal half yearly installment of one (31 March 2017: three).
(ii) Term loans are secured by first pari passu charge on all the present and future property, plant and equipment, both movable and immovable property of the Company.
(iii) All secured demand loans are secured by first pari passu charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future). All secured packing credit foreign currency loans carry intrest rate in the range of LIBOR plus 20 to 50 basis points.
(iv) All unsecured packing credit foreign currency loans carry interest rate in the range of 1 monthâs LIBOR plus -20 to 50 basis points with maturity within 6 months.
Notes:
(a) The Company benefits from the tax holiday available for units set up under the Special Economic Zone Act, 2005.These tax holidays are available for a period of fifteen years from the date of commencement of operations. Under the SEZ scheme, the unit which begins providing services on or after 01 April 2005 will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profit or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfillment of certain conditions. From 01 April 2011 units set up under SEZ scheme are subject to Minimum Alternate Tax (MAT).
(b) During the year ended 31 March 2018 and 31 March 2017, the Company has paid dividend to shareholders, this has resulted in payment of dividend distribution tax to the taxation authorities. The Company believes that dividend distribution tax represents additional payment to tax authorities on behalf of shareholders. Hence, dividend distribution tax paid is charged to equity.
(c) There are no unrecognised deferred tax assets and liabilities as at 31 March 2018 and 31 March 2017.
2 COMMITMENTS AND CONTINGENCIES
A. Leases
Operating lease commitments - Company as lessee
i) The Company has operating leases agreements, which are mainly in the nature of lease of office premises for a period up to five years, with no restrictions and are renewable/ cancellable at the option of either of the parties except for details in (ii) below. These leases include a general clause to enable upward revision of the rental charge on an annual basis according to the prevailing market conditions. There is no other escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognised in the statement of profit and loss is Rs.89.5 (31 March 2017: Rs.73.9). The Company has not recognised any contingent rent as expense in the statement of profit and loss.
ii) The Company has entered into non cancellable leases for office premises in current year and previous year. These leases have remaining non cancellable period of 6 months (31 March 2017: 5 months). The lease includes an escalation clause in the lease agreement. Future minimum lease rentals under non cancellable operating leases are as follows:
Finance lease - Company as lessee
Buildings includes factory buildings acquired on finance lease. The lease term is for major part of the economic life of the buildings and the agreement is silent on renewal terms and transfer of legal title at the end of lease term.
The lease agreement did not specify minimum lease payments over the future period. The factory building has been acquired on lease at a consideration of Rs.25.5 (31 March 2017: Rs.25.5).
The net carrying amount of the buildings obtained on finance lease - Rs.8.2 (31 March 2017: Rs.9.5).
Lease commitments - the Company as lessor
The Company has entered into agreement to non cancellable leases for office premises. The Company has identified assets under operating and finance lease based on the factors indicated under Appendix C to Ind AS 17 and terms of the agreement, viz., economic life of the asset vs. lease term, ownership of the asset after the lease term.
Lease commitments - the Company as lessee
The Company has entered into leases for land and office premises. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the land and office premises and the fair value of the asset, that it does not retain significant risks and rewards of ownership of the land and the office premises and accounts for the contracts as operating leases.
* in respect of above matters, future cash outflows in respect of contingent liabilities are determinable only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. The Company is contesting these demands and the Management, including its advisors, believe that its position will likely be upheld in the appellate process. No expense has been accrued in the standalone financial statements for the demands raised. The Management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Companyâs financial position and results of operations.
** Guarantees furnished towards business requirement in respective subsidiaries. The Company has assessed that it is only possible, but not probable, that outflow of economic resources will be required.
A The Company is involved in disputes, claims, Governmental and /or regulatory inspection, inquires, including patents and commercial maters that arise from time to time in the ordinary course of business. The same are subject to uncertain future events not wholly within the control of the Company. The management does not expect the same to have materially adverse effect on its financial position, as it believes the likely hood of any loss is not probable.
3 SHARE BASED PAYMENTS
Employee Stock Option Plan âESOP-2006â
The Company instituted an Employee Stock Option Plan âESOP-2006â for issue of shares to eligible employees of the Company as per the special resolution passed in the 19th Annual General Meeting held on 18 September 2006. The compensation committee of the Board of directors accordingly, granted 3,240,500 options under eight grants of 175,000, 25,000, 90,000, 1,205,000, 300,000, 500,000, 915,500 and 30,000 options to eligible employees on 30 October 2006, 31 July 2007, 31 October 2007, 16 December 2011, 19 June 2012, 09 January 2013, 28 January 2013 and 09 August 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company and there are no cash settlement alternatives for the employees. Each option comprises of one underlying Equity Share of Rs.1/- each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.120.70, Rs.132.35, Rs.114.50, Rs.91.60, Rs.106.05, Rs.200.70, Rs.187.40 and Rs.161.30 per share respectively. The fair value of share options grants is estimated at the date of grant using Black-Scholes model, taking into account the terms and conditions upon which the share options were granted.
b) Disclosures related to defined benefit plan
The Company has a defined benefit gratuity plan governed by the Payment of Gratuity Act, 1972. Every employee who has completed five years or more of service is entitled to gratuity on departure at 15 days last drawn salary for each completed year of service or part thereof in excess of six months.
This defined benefit plan exposes the Company to acturial risk, such as longevity risk, currency risk, interest rate risk and market (investment) risk.
The plan is funded with Life Insurance Corporation in the form of a qualifying insurance policy. The following tables summarise the components of net benefit expense recognised in the statement of profit and loss, the fund status and amounts recognised in the balance sheet:
Discount rate : The discount rate is based on the prevailing market yields of Indian Governmet securities as at the balance sheet date for the estimated term of obligations.
Salary escalation rate : The estimate of future salary increases considered takes into account the inflation, seniority, promotion and other related factors.
Notes:
1. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
2. The Company expects to contribute Rs.90.0 (31 March 2017: Rs.65.0) during the year ended 31 March 2019 to the qualifying insurance policy .
3. The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period by varying one actuarial assumption, keeping all other actuarial assumptions constant.
4 In respect of the amounts mentioned under section 125 of the Companies Act, 2013 there are no dues that are to be credited to the Investor Education and Protection Fund as at 31 March 2018 (31 March 2017: â Nil).
5 RELATED PARTY DISCLOSURES
Names of related parties and description of relationship Subsidiaries
1 APL Pharma Thai Limited, Thailand
2 All Pharma (Shanghai) Trading Company Limited, China
3 Aurobindo Pharma USA Inc., USA
4 Aurobindo Pharma Industria Farmaceutica Ltda, Brazil
5 Helix Healthcare B.V., The Netherlands
6 Aurobindo Pharma Produtos Farmaceuticos Limitada, Brazil
7 APL Healthcare Limited, India
8 Auronext Pharma Private Limited, India
9 APL Research Centre Limited, India
10 Auro Pharma Inc., Canada
11 Aurobindo Pharma (Pty) Limited, South Africa
12 Agile Pharma B.V, The Netherlands
13 Auro Healthcare (Nigeria) Limited, Nigeria
14 Aurobindo Ilac Sanayi Ve Ticaret Limited Sirketi, Turkey (liquidated w.e.f. 31 October 2017)
15 Aurobindo Pharma Japan K.K., Japan
16 Aurex B.V (formerly Pharmacin B.V.), The Netherlands
17 Aurobindo Pharma GmbH, Germany
18 Aurobindo Pharma (Portugal) Unipessoal Limitada., Portugal**
19 Laboratorios Aurobindo S. L., Spain
20 Aurobindo Pharma B.V, The Netherlands (formerly known as Actavis B.V.)
21 Aurobindo Pharma (Romania) S.r.l, Romania
22 Aurobindo Pharma (Italia) S.r.l, Italy
23 Aurobindo Pharma (Malta) Limited, Malta
24 APL Swift Services (Malta) Limited, Malta
25 Milpharm Limited, UK
26 Aurolife Pharma LLC, USA
27 Auro Peptides Limited, India
28 Auromedics Pharma USA LLC, USA (dissolved w.e.f. 31 March 2018)
29 Aurovida Farmaceutica S.A. DE C.V., Mexico
30 Curepro Parenterals Limited, India
31 Hyacinths Pharma Private Limited, India
32 Silicon life sciences Private Limited, India
33 AuroZymes Limited, India
34 Aurobindo Pharma Colombia S.A.S, Columbia
35 Aurovitas, Unipessoal LDA, Portugal**
36 Arrow Generiques SAS, France
37 Auro Health LLC, USA
38 Pharmacin B.V. (formerly Aurex B.V.), The Netherlands
39 1980 Puren Pharma GmbH (formerly Actavis Management GmbH), Germany
40 Puren Pharma GmbH & Co., KG (formerly Actavis Deutschland GmbH & Co., KG), Germany
41 Aurovitas Spain SA (formerly Actavis Spain SA)
42 Natrol LLC, USA
43 Aurovitas Pharma Polska, Poland (w.e.f 31 March 2017)
44 Aurogen South Africa (Pty) Ltd, South Africa (w.e.f. 25 January 2017)
45 Aurobindo Pharma USA LLC, USA (w.e.f 14 April 2016 and dissolved w.e.f. 31 March 2018)
46 Auro AR LLC, USA (w.e.f. 2 May 2017)
47 Auro Vaccines LLC, USA (w.e.f. 27 January 2017)
48 Auro Logistics LLC, USA (w.e.f. 28 April 2017)
49 Acrotech Biopharma LLC, USA (w.e.f. 05 January 2018)
50 Generis Farmaceutica S.A, Portugal (w.e.f. 01 May 2017)
51 Mer Medicamentos, Lda, Portugal (w.e.f. 01 May 2017)**
52 Generis Phar Unipessoal Lda., Portugal (w.e.f. 01 May 2017)
53 Farma APS - Promogao de Medicamentos, Unipessoal Lda. (w.e.f. 01 May 2017 and dissolved w.e.f. 25 January 2018)
54 Aurobindo Pharma Saudi Arabia Limited Company (w.e.f 08 May 2017)
55 Auro Pharma India Private Limited, India (w.e.f 20 December 2017)
56 Aurovitas Pharma Ceska Republica s.r.o , Czech Republic ( w.e.f.23 December 2017)
57 Generis MZ, Lda., Mozambique (w.e.f. 01 May 2017 and dissolved w.e.f. 19 March 2018)
58 Aurovitas Pharma (Tazihou) Ltd, China( w.e.f. 29 January 2018)
**Mer Medicamentos, Lda, Portugal, Aurovitas, Unipessoal LDA, Portugal and Aurobindo Pharma (Portugal) Unipessoal Limitada., Portugal were merged with Generis Farmaceutica S.A., w.e.f. 01 April 2018.
Joint ventures
1 Novagen Pharma (Pty) Limited, South Africa (Joint Venture of a Subsidiary, Aurobindo Pharma (Pty) Limited, South Africa)
2 Eugia Pharma Specialities Limited, India
3 Tergene Biotech Private Limited, India (w.e.f. 01 April 2015)
4 Raidurgam developers limited, India (formerly known as Aurobindo Antibiotics limited, India)
Enterprises over which key management personnel or their relatives exercise significant influence
1 Pravesha Industries Private Limited, India
2 Sri Sai Packaging, India (Partnership firm)
3 Trident Chemphar Limited, India
4 Auropro Soft Systems Private Limited, India
5 Axis Clinicals Limited, India
6 Pranit Projects Private Limited, India
7 Pranit Packaging Private Limited, India
8 SGD Pharma India Limited (formerly Cogent Glass Limited), India
9 Orem Access Bio Inc, India
10 Veritaz Healthcare Limited, India
11 Alex Merchant PTE. LTD, Singapore
12 Trident Petrochemicals DMCC, Dubai
13 Axis Clinicals LLC, USA
14 Alex Merchant DMCC, Dubai
15 Crest Cellulose Private Limited, India
16 East Pharma Technologies, India (Partnership firm)
17 Axis Clinicals Latina SA DE CV, Mexico
18 Viwyn Pharma Private limited, India
19 Gelcaps Industries, India
Key managerial personnel
1 Mr. K. Nityananda Reddy, Whole-time Director
2 Dr. M. Sivakumaran, Whole-time Director
3 Mr. M. Madan Mohan Reddy, Whole-time Director
4 Mr. P. Sarath Chandra Reddy, Whole-time Director (from 01 June 2016)
5 Mr. N. Govindarajan, Managing Director
6 Mr. Santhanam Subramanian, Chief Financial Officer
7 Mr. A. Mohan Rami Reddy, Company Secretary (upto 31 May 2016 )
8 Mr. B. Adireddy, Company Secretary (w.e.f. 01 June 2016)
9 Mr. K. Ragunathan, Independent Director
10 Mr. M. Sitarama Murty, Independent Director
11 Mr. D. Rajagopala Reddy, Independent Director (Upto 08 February 2017 )
12 Dr. (Mrs.) Avnit Bimal Singh, Independent Director
13 Mr.Rangaswamy Rathakrishnan Iyer, Independent Director (Upto 09 December 2017)
14 Mr.P.Venkata Ramprasad Reddy, Non Executive promoter director
15 Mrs.Savitha Mahajan, Independent Diretor (w.e.f. 16 December 2017)
Relatives to key managerial personnel
1 Mr. Vishnu M Sriram (son-in-law of Dr. M. Sivakumaran, Wholetime Director)
j. Details of advances due from private companies in which Companyâs director is a director.
Pranit Packaging Private Limited, India â Nil (March 31, 2017 â Nil)
k. i) Details of trade receivables due from private companies in which Companyâs director is a director.
Pravesha Industries Private Limited, India âNil (March 31, 2017: â0.1)
ii) Details of trade receivables due from partnership firm in which Companyâs director is a partner.
Sri Sai Packaging, India âNil (March 31, 2017: â0.0)
6 The Board of Directors at their meeting held on 12 September 2013, had approved to transfer its Injectable Unit of the Company on a going concern basis comprising assets and liabilities pertaining to the said Unit to its wholly owned subsidiary viz., Curepro Parenterals Limited. The same was subject to requisite consents, approvals or permissions of the statutory or regulatory authorities. Pending such approvals, no effect of this Scheme has been given till date. The Board of Directors at their meeting held on 29 May 2017 decided not to transfer the Unit, considering the expansion and growth plans of the Company
7 HEDGING ACTIVITIES AND DERIVATIVES - DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
The Company uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions, generally from one week to twelve months.
A. Measurement of fair values
i. Valuation techinque and significant unobservable inputs
The following tables show the valuation techniques used in measuring Level 2 and Level 3 fair values, for financial instruments measured at fair value in the balance sheet, as well as the significant unobservable inputs used:
ii. Transfer between Level 1 and 2
There have been no transfers from Level 2 to Level 1 or vice-versa in 2017-18 and no transfers in either direction in 2016-17.
B. Risk management framework
The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. The board of directors has established the Risk Management Committee, which is responsible for developing and monitoring the Companyâs risk management policies. The committee reports to the board of directors on its activities.
The Companyâs risk management policies are estabilished to identify and analyse the risks being faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the companyâs activities. The Company, through its training and managment standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Companyâs audit committee oversees how management monitors compliance with the Companyâs risk management policies and procedures, and reviews the adequacy of the risk management framwork 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 managment controls and procedures, the result of which are reported to the audit committee.
The Company is exposed primarily to credit risk, liquidity risk and market risk (including currency risk, interest rate risk and other price risk). The Company uses derivative financial instruments such as forwards to minimise any adverse effect on its financial performance.
i. Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, loans and other financial assets. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
Trade receivables
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the Management also evaluates the factors that may influence the credit risk of its customer base, including the default risk and country in which the customers operate. The Management has established a credit policy under which each new customer is analysed individually for creditworthiness before the Companyâs standard payment and delivery terms and conditions are offered. The Companyâs review includes external ratings, if available, financial statements, credit agency information, industry information and in some case bank references. Sales limits are established for each customer and reviewed quarterly.
The Companies receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The company assesses at each reporting date whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivables. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.
Other financial assets
The Company maintains exposure in cash and cash equivalents and derivative instruments with financial institutions. The Company has loan receivables outstanding from its wholly owned subsidiaries amounting to Rs.7.9 (31 March 2017 : Rs.407.0).
The Companyâs maximum exposure to credit risk as at 31 March 2018 and 31 March 2017 is the carrying value of each class of financial assets.
ii. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation.
The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The following are the remaining contractual maturities of financial liabilities at reporting date:
iii. Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Companyâs exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.
a) Foreign Currency risk:
The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company. The Company is subject to foreign exchange risk primarily due to its foreign currency revenues, expenses and borrowings. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro and GBP against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks and advises the Management of any material adverse effect on the Company. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The information on foreign exchange risk from derivative instruments and non derivative instruments is as follows:
The summary of quantitative data about the Companyâs exposure to currency risk (based on the notional amounts) as reported to the management is as follows:
b) interest rate risk:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Companyâs exposure to risk of change in market interest rates because it borrows funds at both fixed and floating interest rates. The Company manages its interest rate risk by having a balances portfolio of fixed and variable rate loans and borrowings. As the company has no significant interest bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates.
c) commodity risk:
Exposure to market risk with respect to commodity prices primarily arises from the Companyâs purchase of active pharmaceutical ingredients and other raw material components for its products. These are commodity products, whose prices may fluctuate significantly over short periods of time. The prices of the Companyâs raw materials generally fluctuate in line with commodity cycles, although the prices of raw materials used in the Companyâs business are generally more volatile. Cost of raw materials forms the largest portion of the Companyâs cost of revenues. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. As of 31 March 2018, the Company had not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.
8 CAPITIAL MANAGEMENT
For the purpose of the Companyâs capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Companyâs capital management is to maximise the shareholder value.
9 SEGMENT REPORTING
In accordance with Indian Accounting Standard (Ind AS) 108 on Operating segments, segment information has been given in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these financial statements.
Mar 31, 2017
c. Terms/rights attached to equity shares
The Company has only one class of equity shares having a par values of Rs.1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.
For the year ended 31 March 2017, the amount of dividend per share declared as distributions to equity shareholders was Rs.2.5 (March 31, 2016: Rs.2.5). Refer Note 14(c) for details of dividend declared/recognized in financial statements.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.
D. Terms of borrowings
i. Secured term loans in foreign currency carry interest in the range of LIBOR plus 1% to 1.5%. Out of these loans, loans amounting to Rs.540.5 (March 31, 2016 Rs.1,104.3; April 1, 2015: Rs.1,562.5) are repayable in one (March 31, 2016: two; April 1, 2015: three) equal installments in 6th (March 31, 2016 5th, 6th, April 1, 2015: 4th, 5th and 6th) years from the respective final draw down, and loans amounting to Rs.648.5 (March 31, 2016 Rs.1,987.7; April 1, 2015: Rs.1,666.7) is repayable at the end of 4th, 5th and 6th years from the respective final draw down and loan amounting Rs. Nil (March 31, 2016 Rs. Nil; April 1, 2015: Rs.3,229.2) is repayable at the end of 5th year from the respective final draw down date.
ii. Deferred sales tax loan is interest free and payable in various installments as per sales tax deferment scheme. During the current year, the Company has repaid the entire amount of deferred sales tax loan.
iii. Term loans are secured by first pari passu charge on all the present and future fixed assets, both movable and immoveable property of the Company.
iv. All secured loans payable on demand and secured short term loans from banks are secured by first charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future).
1. COMMITMENTS AND CONTINGENCIES
A. Leases
Operating lease commitments - Company as lessee
i. The Company has operating leases agreements, which are mainly in the nature of lease of office premises for a period up to five years, with no restrictions and are renewable/cancellable at the option of either of the parties except for details in (ii) below. These leases include a general clause to enable upward revision of the rental charge on an annual basis according to the prevailing market conditions. There is no other escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the Statement of Profit and Loss is Rs.73.9 (March 31, 2016: Rs. 71.1). The Company has not recognized any contingent rent as expense in the Statement of Profit and Loss.
ii. The Company has entered into non cancellable leases for office premises in current year and previous year. These leases have remaining non cancellable period of 5 months (March 31, 2016: 17 months; April 1, 2015: 29 months). The lease includes an escalation clause in the lease agreement. Future minimum lease rentals under non cancellable operating leases are as follows:
Finance lease - Company has lessee
Building includes factory buildings acquired on finance lease. The lease term is for major part of the economic life of the buildings and the agreement is silent on renewal terms and transfer of legal title at the end of lease term.
The lease agreement did not specify minimum lease payments over the future period. The factory building has been acquired on lease at a consideration of Rs.25.5 (March 31, 2016: Rs.25.5; April1, 2015: Rs.25.5).
The net carrying amount of the buildings obtained on finance lease: Rs.9.5 (March 31, 2016: Rs.10.8; April1, 2015: Rs.12.1).
* in respect of above matters, future cash outflows in respect of contingent liabilities are determinable only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. The Company is contesting these demands and the management, including its advisors, believe that its position will likely be upheld in the appellate process. No expense has been accrued in the financial statements for the demands raised. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Companyâs financial position and results of operations.
# Excludes Rs.13.4 (March 31, 2016 Rs.13.4; April 1, 2015 Rs.13.4) where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. All these cases are under litigation and are pending with various authorities, expected timing of resulting outflow of economic benefits cannot be specified.
** Guarantees furnished towards business requirement in respective subsidiaries. The Company has assessed that it is only possible, but not probable, that outflow of economic resources will be required.
A The Company is involved in disputes, claims, governmental and/or regulatory inspection, inquires, including patents and commercial maters that arise from time to time in the ordinary course of business. The same are subject to uncertain future events not wholly within the control of the Company. The management does not expect the same to have materially adverse effect on its financial position, as it believes the likelihood of any loss is not probable.
2. SHARE BASED PAYMENTS
Employee Stock Option Plan âES0P-2006''
The Company instituted an Employee Stock Option Plan ''ESOP-2006'' for issue of shares to eligible employees of the Company as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. The compensation committee of the Board of Directors accordingly, granted 3,240,500 options under eight grants of 175,000; 25,000; 90,000; 1,205,000; 300,000; 500,000; 915,500 and 30,000 options to eligible employees on October 30, 2006; July 31, 2007; October 31, 2007; December 16, 2011; June 19, 2012; January 09, 2013; January 28, 2013 and August 09, 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company and there are no cash settlement alternatives for the employees. Each option comprises of one underlying equity share of Rs.1 each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.120.70; Rs.132.35; Rs.114.50; Rs.91.60; Rs.106.05; Rs.200.70; Rs.187.40 and Rs.161.30 per share, respectively. The fair value of share options grants is estimated at the date of grant using Black-Scholes model, taking into account the terms and conditions upon which the share options were granted.
b. Disclosures related to defined benefit plan of the parent company
The Company has a defined benefit gratuity plan governed by the Payment of Gratuity Act, 1972. Every employee who has completed five years or more of service is entitled to gratuity on departure at 15 days last drawn salary for each completed year of service or part thereof in excess of six months.
The plan is funded with Life Insurance Corporation in the form of a qualifying insurance policy. The following tables summarize the components of net benefit expense recognized in the statement of profit and loss, the fund status and amounts recognized in the balance sheet:
Notes:
1. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
2. The Company expects to contribute Rs.65.0 (March 31, 2016: Rs.65.0) during the year ended March 31, 2018 (March 31, 2017) to the qualifying insurance policy.
3. The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period by varying one actuarial assumption, keeping all other actuarial assumptions constant.
3. In respect of the amounts mentioned under Section 125 of the Companies Act, 2013 there are no dues that are to be credited to the Investor Education and Protection Fund as at March 31, 2017 (March 31, 2016: Rs. Nil; (April 1, 2015: Rs. Nil).
4. Related party disclosures
Names of related parties and description of relationship Subsidiaries
1. APL Pharma Thai Limited, Thailand
2. ALL Pharma (Shanghai) Trading Company Limited, China
3. Aurobindo Pharma USA Inc., U.S.A.
4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil
5. Helix Healthcare B.V., The Netherlands
6. APL Holdings (Jersey) Limited, Jersey (Liquidated w.e.f. November 18, 2015)
7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil
8. APL Healthcare Limited, India
9. Auronext Pharma Private Limited, India
10. APL Research Centre Limited, India
11. Auro Pharma Inc., Canada
12. Aurobindo Pharma (Pty) Limited, South Africa
13. Aurobindo Pharma (Australia) Pty Limited, Australia (Liquidated w.e.f. April 10, 2015)
14. Agile Pharma B.V., The Netherlands
15. Auro Healthcare (Nigeria) Limited, Nigeria
16. Aurobindo ILAC Sanayi ve Ticaret Limited, Turkey
17. Aurobindo Pharma (Singapore) Pte Limited, Singapore (Liquidated w.e.f. December 31, 2015)
18. Aurobindo Pharma Japan K.K., Japan
19. Aurex B.V. (Formerly Pharmacin B.V.), The Netherlands
20. Aurobindo Pharma GmbH, Germany
21. Aurobindo Pharma (Portugal) Unipessoal LDA, Portugal
22. Laboratorios Aurobindo S.L., Spain
23. Aurobindo Pharma B.V., The Netherlands*
24. Aurobindo Pharma (Romania) s.r.l., Romania
25. Aurobindo Pharma (Italia) S.r.l., Italy
26. Aurobindo Pharma (Malta) Limited, Malta
27. APL IP Company Limited, Jersey (Liquidated w.e.f. November 18, 2015)
28. APL Swift Services (Malta) Limited, Malta
29. Milpharm Limited, U.K.
30. Aurolife Pharma LLC, U.S.A.
31. Auro Peptides Limited, India
32. Auro Medics Pharma LLC, U.S.A.
33. Aurobindo Pharma NZ Limited, New Zealand (Liquidated w.e.f. April 10, 2015)
34. Aurovida Farmaceutica S.A. DE C.V., Mexico
35. Curepro Parenterals Limited, India
36. Hyacinths Pharma Private Limited, India
37. Silicon life sciences Private Limited, India
38. AuroZymes Limited, India
39. Aurobindo Pharma Columbia S.A.S., Columbia
40. Aurovitas, Unipessioal LDA, Portugal
41. Arrow Generiques SAS, France
42. Actavis B.V., The Netherlands*
43. Auro Health LLC, U.S.A.
44. Aurobindo Antiboitics Limited, India
45. Pharmacin B.V. (Formerly Aurex B.V.), The Netherlands
46. Actavis France SAS, France (Merged with Arrow Generiques SAS w.e.f. April 1, 2015)
47. 1980 Puren Pharma GmbH (Formerly Actavis Management GmbH), Germany
48. Puren Pharma GmbH & Co., KG (Formerly Actavis Deutschland GmbH & Co., KG), Germany
49. Aurovitas Spain SA (Formerly Actavis Spain SA)
50. Natrol LLC, U.S.A.
51. Aurobindo Pharma Limited S.R.L., Dominican Republic (Liquidated w.e.f. December 18, 2014)
52. Aurovitas Pharma Polska, Poland (w.e.f. March 31, 2017)
53. Aurogen South Africa (Pty) Limited, South Africa (w.e.f. January 25, 2017)
54. Aurobindo Pharma USA LLC, U.S.A. (w.e.f. April 14, 2016)
55. Auro AR LLC USA, U.S.A. (w.e.f. May 2, 2017)
56. Auro Vaccines LLC, U.S.A. (w.e.f. January 27, 2017)
*Aurobindo Pharma B.V. was merged with Actavis B.V. Subsequently, the name of Actavis B.V. was changed to Aurobindo Pharma B.V. w.e.f. July 1, 2015.
Joint ventures
1. Novagen Pharma (Pty) Limited, South Africa (Joint benture of a subsidiary)
2. Eugia Pharma Specialities Limited
3. Tergene Biotech Private Limited, India (w.e.f. April 1, 2015)
Enterprises over which key management personnel or their relatives exercise significant influence
1. Pravesha Industries Private Limited, India
2. Sri Sai Packaging, India (Partnership firm)
3. Trident Chemphar Limited, India
4. Auropro Soft Systems Private Limited, India
5. Axis Clinicals Limited, India
6. Pranit Projects Private Limited, India
7. Pranit Packaging Private Limited, India
8. SGD Pharma India Limited (formerly Cogent Glass Limited), India
9. Orem Access Bio Inc, India
10. Veritaz Healthcare Limited, India
11. Alex Merchant PTE. LTD, Singapore
12. Trident Petrochemicals DMCC, Dubai
13. Axis Clinicals LLC, U.S.A.
14. Alex Merchant DMCC, Dubai
15. Crest Cellulose Private Limited, India
16. East Pharma Technologies, India (Partnership firm)
Key managerial personnel
1. Mr. K. Nithyananda Reddy, Whole-time Director
2. Dr. M. Sivakumaran, Whole-time Director
3. Mr. M. Madan Mohan Reddy, Whole-time Director
4. Mr. P. Sarath Chandra Reddy, Whole-time Director (From June 1, 2016)
5. Mr. N. Govindarajan, Managing Director
6. Mr. Santhanam Subramanian, Chief Financial Officer
7. Mr. A. Mohan Rami Reddy, Company Secretary (Upto May 31, 2016 )
8. Mr. B. Adi Reddy, Company Secretary (w.e.f. June 1, 2016)
9. Mr. K. Ragunathan, Independent Director
10. Mr. M. Sitarama Murty, Independent Director
11. Mr. D. Rajagopala Reddy, Independent Director
12. Dr. Avnit Bimal Singh, Independent Director
13. Mr. Rangaswamy Rathakrishnan Iyer, Independent Director
Relatives to key managerial personnel
1. Mr. P. Sarath Chandra Reddy (Son-in-law of Mr. K. Nithyananda Reddy, Whole-time Director) (Upto May 31, 2016)
2. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time Director)
Note: i. Managerial remuneration does not include provision for gratuity and leave encashment, which is determined for the Company as a whole.
ii. All transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances for trade receivable, trade payable and other payables are unsecured, interest free and settlement occurs in cash. The Company has not recorded any impairment of balances relating to amounts owed by related parties during the year ended March 31, 2017 (March 31, 2016: Rs. Nil; April 1, 2015: Rs. Nil). The assessment is undertaken each financial year through evaluating the financial position of the related party and the market in which the related party operates.
5. Details of advances due from private companies in which Company''s Director is a director:
Pranit Packaging Private Limited, India Rs. Nil (March 31, 2016: Rs. Nil; April 1, 2015: Rs.0.6).
6. i. Details of trade receivables due from private companies in which Company''s director is a director:
Pravesha Industries Private Limited, India Rs.0.1 (March 31, 2016: Rs.0.1; April 1, 2015; Rs. Nil).
ii. Details of trade receivables due from partnership firm in which Company''s director is a partner:
Sri Sai Packaging, India ?0.0 (March 31, 2016: Rs.0.0; April 1, 2015: Rs. Nil).
7. The Board of Directors at their meeting held on September 12, 2013 decided to transfer its injectable unit of the Company on a going concern basis comprising assets and liabilities pertaining to the said unit to its wholly owned subsidiary Curepro Parentals Limited w.e.f. April 1, 2014. The same was subject to requisite consent, approval or permission of the statutory or regulatory authorities. Pending such approvals, no effect of this scheme has been given in the above results. During the current year, the Board of Directors decided not to transfer the unit, considering the expansion and growth plans of the Company. The same is subject to the approval of appropriate authorities including Hon''ble High Court or Tribunal as the case may be.
a. Contingent liabilities of the above joint ventures Rs. Nil (March 31, 2016: Rs. Nil).
b. Capital commitments of the above joint ventures Rs.67.1 (March 31, 2016: Rs.120.8).
c. The joint ventures are engaged in distribution of pharmaceuticals products.
d. All figures presented above represent Company''s share only.
8. Significant accounting judgments, estimates and assumptions
The preparation of the Company''s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
A. Judgments
In the process of applying the Company''s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the financial statements.
i. Lease commitments - the Company as lessor
The company has entered into agreement to non cancellable leases for office premises. The Company has identified assets under operating and finance lease based on the factors indicated under Appendix C to Ind AS 17 and terms of the agreement, viz. economic life of the asset vs. lease term, ownership of the asset after the lease term.
ii. Lease commitments - the Company as lessee
The Company has entered into leases for land and office premises. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the land and office premises and the fair value of the asset, that it does not retain significant risks and rewards of ownership of the land and the office premises and accounts for the contracts as operating leases.
iii. Taxes
The Company has unused tax credits [(Minimum Alternate Tax (MAT)] credit of Rs.2,836.3 as on March 31, 2017 (March 31, 2016: Rs.2,193.5; April 1, 2015: Rs.2,610.1). The Company based on its business plan along with supporting convincing evidence including future projections of profit believes that the used tax credits would be utilized within the stipulated time period as per the Income Tax Act, 1961.
B. Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
i. Share-based payments
The grant date fair value of employee stock options granted is recognized as an employee expense over the period that the employee becomes unconditionally entitled to the options. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimation requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The Black Scholes valuation model has been used by the management for share-based payment transactions. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 32.
ii. Defined employee benefit plans (Gratuity)
The cost of the defined benefit gratuity plan and other accumulated leave entitlement and the present value of the gratuity obligation and accumulated leave obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates. Further details about gratuity obligations are given in Note 33.
iii. Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See Notes 47 and 48 for further disclosures.
iv. Depreciation on property, plant and equipment
Depreciation on property, plant and equipment is calculated on a straight-line basis based on the useful lives estimated by the management. Considering the applicability of Schedule II of Companies Act, 2013, the management has re-estimated useful lives and residual values of all its property, plant and equipment. The management believes that useful lives currently used fairly reflect its estimate of the useful lives and residual values of property, plant and equipment, though these in certain cases are different from lives prescribed under Schedule II of the Companies Act, 2013.
v. Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model.
vi. Intangible assets under development
The Company capitalizes acquired intangible asset under development for a project in accordance with the accounting policy. In determining the amounts to be capitalized, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits. The carrying amount of capitalized intangible asset under development was Rs.286.7 (March 31, 2016: Rs. Nil; April 1, 2015: Rs. Nil). The innovative nature of the product gives rise to some uncertainty as to whether the final approval for the products will be obtained.
vii. Inventories provision
The Company estimates provision against obsolescence of inventory by applying certain percentages over different age category of the batch wise inventory held at the end of the reporting period. Inputs to the model include ageing of inventory, expected loss rate considering past trend and future outlook and expected net realizable value. Inventories are net of such provisions.
9. Hedging activities and derivatives - Derivatives not designated as hedging instruments
The Company uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions, generally from one week to twelve months.
The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Further, management has assessed the fair value of the borrowings approximate their current value largely since they are carried at floating rate of interest.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
Fair value hierarchy
The following table provides the fair value measurement hierarchy of the assets and liabilities measured at fair value on recurring basis:
10. Financial risk management objectives and policies
The Company''s principal financial liabilities, other than derivates, comprise borrowings, trade and other payable. The main purpose of these financial liabilities is to finance the Company operations. The Company''s principal financial assets, other than derivatives, include loans, trade and other receivables, and cash and cash equivalents derived directly from its operations.
The Company is exposed primarily to credit risk, liquidity risk and market risk (including currency risk, interest rate risk and other price risk), which may adversely impact the fair value of its financial instruments. The Company''s senior management oversees the management of these risks. The Company''s senior management is supported by a Risk Management Committee of the Board of Directors that advices on the financial risk and the appropriate financial risk governance framework. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
a. Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, loans and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk.
Trade receivables and other financial assets:
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the Management also evaluates the factors that may influence the credit risk of its customer base, including the default risk and country in which the customers operate. The management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if available, financial statements, credit agency information, industry information and in some case bank references. Sales limits are established for each customer and reviewed quarterly. The Company''s receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company assesses at each reporting date whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivables. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.
b. Liquidity risk
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The following are the remaining contractual maturities of financial liabilities at reporting date:
c. Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company''s exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.
i. Foreign currency exchange rate risk
The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company. The Company is subject to foreign exchange risk primarily due to its foreign currency revenues, expenses and borrowings. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro and GBP against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks and advises the management of any material adverse effect on the Company. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The information on foreign exchange risk from derivative instruments and non derivative instruments is as follows:
ii. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Company''s exposure to risk of change in market interest rates because it borrows funds at both fixed and floating interest rates. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings.
As the Company has no significant interest bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates.
Every 0.5% increase/decrease in the interest rate component applicable to the respective borrowings would effect the Company''s net profit before tax resulting in an expense/income of Rs.172.0 and Rs.177.4 for the year ended March 31, 2017 and March 31, 2016, respectively.
11. Capital management
For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximize the shareholder value.
12. First time adoption of Ind AS
As stated in Note 2, these financial statements for the year ended March 31, 2017 are the first the Company has prepared in accordance with Ind AS. In preparing these financial statements, the Company''s opening balance sheet was prepared as at April 1, 2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31, 2016.
Exemptions applied
Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:
a. The Company has elected to continue with the carrying values under previous GAAP for all the items of property, plant and equipment as deemed cost at the date of the transition. The same election has been made in respect of intangible assets.
b. Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based for embedded leases based on conditions in place as at the date of transition.
c. Ind AS 101 requires a first-time adopter to apply derecognition requirements in Ind AS 109 prospectively to transactions occurring on or after the date of transition to Ind AS. Accordingly, the Company continues to de-recognize the financial assets and financial liabilities for transactions which have occurred before the date of transition to Ind AS.
d. The Company has opted to carry the investment in subsidiaries and associate at the previous GAAP carrying amount at the transition date.
e. Ind AS 102 Share-based Payment has not been applied to equity instruments in share-based payment transactions that vested before April 1, 2015.
f. As per Ind AS 101, the Company has elected not to restate business combinations that occurred before the date of transition.
Estimates
The estimates as at April 1, 2015 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from impairment of financial assets based on expected credit loss model where application of Indian GAAP did not require estimation. The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1, 2015 (transition date) and March 31, 2016.
i. Proposed dividend
Under Indian GAAP, proposed dividends including Dividend Distribution Tax thereon were recognized as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, a proposed dividend is recognized as a liability in the period in which it is declared by the company (usually when approved by shareholders in a general meeting) or paid. In the case of the Company, the declaration of dividend occurs after period end. Therefore, the liability recognized towards dividend as at March 31, 2016 and April 01, 2015 has been derecognized against retained earnings and recognized in the year of payment.
ii. Financial assets at amortized cost
Under Indian GAAP, the Company accounted for long term investments in unquoted preference shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Company has designated such investments as investments at amortized cost, and interest income on investments held at amortized cost is recorded using the effective interest rate. At the date of transition to Ind AS, such interest income has been recognized in other equity.
iii. Remeasure of actuarial gains/(losses)
Both under Indian GAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, were charged to profit or loss. Under Ind AS, remeasurements comprising of actuarial gains and losses are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI.
iv. Share based payments
Under Indian GAAP, the Company recognized only the intrinsic value for employee stock option plan as an expense. Under Ind AS, the Company is required to determine the fair value of share options using an appropriate model recognized over the vesting period. Accordingly, the same has been recognized as a separate component of equity in Employee stock option outstanding (ESOP) as at April 1, 2015 and March 31, 2016.
v. Valuation of foreign currency forward contracts
The Company had certain outstanding foreign currency forward contracts to hedge certain of its foreign currency financial assets. Under Indian GAAP, premium/discount on forward contracts are amortized over the period of forward contract and the outstanding forward contracts are restated as at the balance sheet date. However, under Ind AS 109, the foreign currency financial assets and liabilities are restated at closing rate and the derivative contracts are fair valued by recognizing the mark-to-market gain/loss on the forward contract in the statement of profit and loss. Further, premium/discounts on forward contracts are charged to the statement of profit and loss as and when they are incurred. Accordingly, the Company has charged off the unamortized premium on the outstanding forward contracts and fair valued the derivative contracts by recognizing the mark-to-market gain on the forward contract in the statement of profit and loss.
vi. Excise duty on sale of goods
Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is included as part of sales in the face of statement of profit and loss. Thus, sale of goods under Ind AS for the year ended March 31, 2016 has increased with a corresponding increase in other expenses.
vii. MAT credit entitlement
MAT credit entitlement is to be presented under loans and advance in accordance with Guidance Note on ''Accounting for Credit available in respect of MAT under the Income Tax Act, 1961'' issued by ICAI. However, as per Ind AS, MAT credit entitlement is generally recognized as a deferred tax asset with a corresponding deferred tax benefit in the statement of profit and loss. Accordingly, the Company has reclassified the MAT credit entitlement from loans and advances to deferred tax assets.
viii. Borrowings
Under Indian GAAP, the Company de-recognized bills discounted of trade receivables with banks and disclosed the same as contingent liabilities. However, under Ind AS, based on evaluation of risks and rewards and control, the same does not meet the criteria for de-recognition. Accordingly, the same has been recognized as borrowings as at April 1, 2015 and March 31, 2016.
ix. Deferred tax assets
Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires accounting for deferred taxes using the balance sheet approach, which focuses on temporary difference between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP. In addition, the various transitional adjustments lead to temporary differences and the Company has accounted for such differences. Deferred tax adjustment are recognized in correlation to the underlying transaction either in retained earnings or a separate component in equity.
x. Trade receivables
Under Ind AS, impairment allowance has been determined based on Expected Credit Loss model (ECL).
xi. Other comprehensive income (OCI)
Under Indian GAAP, the Company had not presented other comprehensive income separately. Hence, it has reconciled Indian GAAP profit or loss to profit or profit or loss as per Ind AS. Further, Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.
xii. Cash flow statement
The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.
13. Segment reporting
In accordance with Indian Accounting Standard (Ind AS) 108 on Operating segments, segment information has been given in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these financial statements.
Mar 31, 2015
A. Terms/rights attached to equity shares
The Company has only one class of equity shares having a par values of
Rs.1 per share. Each holder of equity shares is entitled to one vote per
share.
The Company declares and pays dividends in Indian rupees. The dividend
proposed by the Board of Directors is subject to the approval of
shareholders in the ensuing Annual General Meeting.
During the year ended March 31, 2015, the amount of dividend per share
recognized as distribution to equity shareholders was Rs.4.5 (March 31,
2014: Rs.3) including interim dividend of Rs.4.5 (March 31, 2014: Rs.3).
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. However, no such
preferential amounts exist currently. The distribution will be in
proportion to the number of equity shares held by the shareholders.
2. LONG-TERM BORROWINGS
i. Secured term loans in foreign currency carry interest in the range
of LIBOR plus 2% to 2.5%. Out of these loans, loans amounting to
Rs.4,270.8 (March 31, 2014: Rs.6,291.1) are repayable in 3 equal
installments in 4th, 5th, 6th years from the respective final draw down
dates, and loans amounting to Rs.2,187.5 (March 31, 2014: Rs.4,493.6) are
repayable at the end of 5th year from the respective final draw down
date.
ii. Deferred sales tax loan is interest free and payable in various
installments as per sales tax deferment scheme. The last installment is
payable in 2028-29.
iii. Term loans are secured by first pari passu charge on all the
present and future fixed assets, both movable and immoveable property
of the Company.
3. Capital and other commitments
Estimated amount of contracts (net of advances) remaining to be
executed on capital account and not provided for: Rs.3,538.0 (March 31
2014: Rs.1,272.7).
4. Contingent liabilities
Particulars As at As at
March 31, 2015 March 31, 2014
Outstanding bank guarantees 718.5 771.8
Corporate guarantees for loans taken
by 100% subsidiaries** 3,090.7 -
Claims arising from disputes not
acknowledged as debts
- indirect taxes (excise duty
and service tax)*# 272.4 223.3
Claims arising from disputes not
acknowledged as debts - direct taxes* 308.8 105.0
Claims against the Company not
acknowledged as debts - other
duties/claims* 150.3 150.3
Bills discounted with banks 1,048.5 1,060.6
* in respect of above matters, future cash outflows in respect of
contingent liabilities are determinable only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within
the control of the Company.
# Excludes Rs.13.4 where it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation.
All these cases are under litigation and are pending with various
authorities, expected timing of resulting outflow of economic benefits
cannot be specified.
**Business requirement in respective subsidiaries.
5. The income tax authorities had carried out search operations on the
Company at certain locations in February, 2012. The Company has fully
co-operated with the authorities and various statements were recorded
during the course of these operations. In order to avoid possible
litigations, without admitting any irregularities, the Company had
decided to offer an additional income and to pay the resultant tax.
Accordingly, provision for income tax of Rs.48.7 on this additional
income had been made during the year 2011-12. The proceedings are in
progress and no other material implications are expected by the
management in this matter.
6. Employee stock options
a. Employee Stock Option Plan 'ESOP-2006'
The Company instituted an Employee Stock Option Plan 'ESOP-2006' as per
the special resolution passed in the 19th Annual General Meeting held
on September 18, 2006. This scheme has been formulated in accordance
with the Securities Exchange Board of India (Employee Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The
compensation committee accordingly, granted total 3,240,500 options
under seven grants of 175,000, 25,000, 90,000, 1,205,000, 300,000,
500,000, 915,500 and 30,000 options to eligible employees on October
30, 2006, July 31, 2007, October 31, 2007, December 16, 2011, June 19,
2012, January 09, 2013, January 28, 2013 and August 9, 2013
respectively. The method of settlement under scheme is by issue of
equity shares of the Company. Each option comprises of one underlying
Equity Share of Rs.1 each. The said options vest on an annual basis at
10%, 15%, 25% and 50% over a period of four years and can be exercised
over a period of six years from the date of grant of options. The
options have been granted at the then prevailing market price of
Rs.120.70, Rs.132.35, Rs.114.50, Rs.91.60, Rs.106.05, Rs.200.70, Rs.187.40 and
Rs.161.30 per share respectively and hence the question of accounting for
employee deferred compensation expenses does not arise as the Company
follows intrinsic value method.
b. Disclosures as per Fair Value Method
The Company's net profit and earnings per share would have been as
under, had the compensation cost for employees' stock options been
recognized based on the fair value at the date of grant in accordance
with 'Black Scholes' model.
7. Employee benefits
b. Disclosures related to defined benefit plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days last drawn salary for each completed year of service.
The scheme is funded with an insurance company in the form of a
qualifying insurance policy. The following tables summarize the
components of net benefit expense recognized in the Statement of Profit
and Loss, the fund status and Balance Sheet position:
8. In respect of the amounts mentioned under Section 125 of the
Companies Act, 2013 there are no dues that are to be credited to the
Investor Education and Protection Fund as at March 31, 2015 (March 31,
2014: Rs.NIL).
9. Related party disclosures
Names of related parties and description of relationship Subsidiaries
1. APL Pharma Thai Limited, Thailand
2. All Pharma (Shanghai) Trading Company Limited, China
3. Aurobindo Pharma USA Inc, U.S.A.
4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil
5. Helix Healthcare B.V., The Netherlands
6. APL Holdings (Jersey) Limited, Jersey
7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil
8. APL Healthcare Limited, India
9. Auronext Pharma Private Limited, India
10. APL Research Centre Limited, India
11. Auro Pharma Inc., Canada
12. Aurobindo Pharma (Pty) Limited, South Africa
13. Aurobindo Pharma (Australia) Pty Limited, Australia
14. Agile Pharma B.V., The Netherlands
15. Auro Healthcare (Nigeria) Limited, Nigeria
16. Aurobindo ILAC Sanayi ve Ticaret Limited, Turkey
17. Aurobindo Pharma (Singapore) Pte Limited, Singapore
18. Aurobindo Pharma Limited s.r.l., Dominican Republic (liquidated
during the year)
19. Aurobindo Pharma Japan K.K., Japan
20. Pharmacin B.V., The Netherlands
21. Aurobindo Pharma GmbH, Germany
22. Aurobindo Pharma (Portugal) Unipessoal Lda, Portugal
23. Aurobindo Pharma France SARL, France (merged with Arrow Generics
SAS, France w.e.f. April 1, 2014)
24. Laboratorios Aurobindo S. L., Spain
25. Agile Malta Holdings Limited, Malta (merged with Aurobindo Pharma
(Malta) Limited w.e.f. December 31, 2014)
26. Aurobindo Pharma B.V, The Netherlands
27. Aurobindo Pharma (Romania) s.r.l, Romania
28. Aurobindo Pharma (Italia) S.r.l., Italy
29. Aurobindo Pharma (Malta) Limited, Malta
30. APL IP Company Limited, Jersey
31. APL Swift Services (Malta) Limited, Malta
32. Milpharm Limited, U.K.
33. Aurolife Pharma LLC, U.S.A.
34. Auro Peptides Limited, India
35. Auro Medics Pharma LLC, U.S.A.
36. Aurobindo Pharma NZ Limited, New Zealand
37. Aurovida Farmaceutica S.A. de C.V., Mexico
38. Curepro Parenterals Limited, India
39. Hyacinths Pharma Private Limited, India
40. Silicon Life Sciences Private Limited, India
41. AuroZymes Limited, India
42. Eugia Pharma Specialities Limited, India
43. Aurobindo Pharma Columbia S.A.S., Columbia
44. Aurovitas, Unipessioal Lda, Portugal (w.e.f. March 25, 2014)
45. Arrow Generiques S.A.S., France (w.e.f. April 1, 2014)
46. Actavis B.V., The Netherlands (w.e.f. April 1, 2014)
47. Auro Health LLC, U.S.A.
48. Aurobindo Antiboitics Limited, India
49. Aurovitas S.L., Spain (Incorporated during current year and closed
w.e.f. December 2, 2014)
50. Aurex B.V., The Netherlands (Incorporated during current year)
51. Actavis France S.A.S., France (w.e.f. April 1, 2014)
52. Actavis Management GmbH, Germany (w.e.f. April 1, 2014)
53. Actavis Deutschland GmbH & Co, KG, Germany (w.e.f. April, 2014)
54. Aurovitas Spain S.A. (formerly Actavis Spain S.A.) (w.e.f. April 1,
2014)
55. Natrol LLC, U.S.A. (w.e.f. December 4, 2014)
56. Aurobindo Switzerland AG, Switzerland (Closed w.e.f. September 11,
2013)
57. Aurobindo Pharma (Poland) Sp.z.o.o., Poland (Closed w.e.f. June 28,
2013)
58. Agile Pharma (Malta) Limited, Malta (Closed w.e.f. October 9, 2013)
Joint ventures
1. Novagen Pharma (Pty) Limited, South Africa (Joint Venture of a
Subsidiary)
Enterprises over which key management personnel or their relatives
exercise significant influence
1. Pravesha Industries Private Limited, India
2. Sri Sai Packaging, India (Partnership firm)
3. Trident Chemphar Limited, India
4. Auropro Soft Systems Private Limited, India
5. Axis Clinicals Limited, India
6. Pranit Projects Private Limited, India
7. Pranit Packaging Private Limited, India
8. Cogent Glass Limited
9. Orem Access Bio Inc, India
10. Veritaz Healthcare Limited, India
11. Alex Merchant Pte. Limited, Singapore
12. Trident Petrochemicals DMCC, Dubai
Key managerial personnel
1. Mr. K. Nithyananda Reddy, Whole-time Director
2. Dr. M. Sivakumaran, Whole-time Director
3. Mr. M. Madan Mohan Reddy, Whole-time Director
4. Mr. N. Govindarajan, Managing Director
5. Mr. Sudhir B. Singhi, Chief Financial Officer (upto June 30, 2014)
6. Mr. Santhanam Subramanian, Chief Financial Officer (w.e.f. July 1,
2014)
7. Mr. A. Mohan Rami Reddy, Company Secretary
Relatives to key managerial personnel
1. Mr. P. Sarath Chandra Reddy (Son-in-law of Mr. K.Nithyananda Reddy,
Wholetime Director)
2. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time
Director)
10. Leases
a. Operating lease
i. Operating leases are mainly in the nature of lease of office
premises with no restrictions and are renewable/cancellable at the
option of either of the parties except for details in (ii) below. There
is no escalation clause in the lease agreement. There are no
sub-leases. There are no restrictions imposed by lease arrangements.
The aggregate amount of operating lease payments recognized in the
Statement of Profit and Loss is Rs.74.3 (March 31, 2014: Rs.43.2 ).
The Company has not recognized any contingent rent as expense in the
Statement of Profit and Loss.
b. Finance lease
Building includes factory buildings acquired on finance lease. The
agreement is silent on renewal terms and transfer of legal title at the
end of lease term.
The lease agreement did not specify minimum lease payments over the
future period. The factory building is acquired on lease at a
consideration of Rs.25.6 (March 31, 2014: Rs.25.6).
The net carrying amount of the buildings obtained on finance lease:
Rs.12.1 (March 31, 2014: Rs.13.3).
11. In accordance with paragraph 10 of Notified Accounting Standard 9
on Revenue Recognition, excise duty on sales amounting to Rs.1,497.5
(March 31, 2014: Rs.1,588.2) has been reduced from sales in Statement of
Profit and Loss and excise duty on (increase)/decrease in closing stock
of finished goods amounting to Rs.2.7 [March 31, 2014: (Rs.0.8)] has been
(credited)/debited to the Statement of Profit and Loss.
12. Details of advances due from private companies in which Company's
director is a director:
Auropro Soft Systems Private Limited, India Rs.Nil (March 31, 2014:
Rs.0.08).
Pranit Projects Private Limited, India Rs.Nil (March 31, 2014: Rs.1.3).
Pranit Packaging Private Limited, India Rs.0.6 (March 31, 2014: Rs.Nil).
13. i. Details of trade receivables due from private companies in which
Company's director is a director:
Pravesha Industries Private Limited, India Rs.Nil (March 31, 2014:
Rs.0.06). ii. Details of trade receivables due from partnership firm in
which Company's director is a partner:
Sri Sai Packaging, India Rs.Nil (March 31, 2014: Rs.Nil)
14. The Board of Directors at their meeting held on September 12, 2013
decided to transfer its injectable unit of the Company on a going
concern basis comprising assets and liabilities pertaining to the said
unit to its wholly owned subsidiary Curepro Parenterals Limited with
effect from April 1, 2014. The same is subject to requisite consent,
approval or permission of the statutory or regulatory authorities.
Pending such approvals, no effect of this scheme has been given in the
financial statements.
a. Contingent liabilities of the above joint ventures Rs. Nil (March 31,
2014: Rs.Nil).
b. Capital commitments of the above joint ventures Rs. Nil (March 31,
2014: Rs. Nil)
c. Novagen Pharma (Pty) Ltd incorporated in South Africa, is engaged in
distribution of pharmaceuticals products.
d. Previous year's figures have been disclosed in italics.
e. All figures presented above represents Company's share only.
15. Segment reporting
In accordance with Accounting Standard 17 - Segment Reporting, segment
information has been provided in the consolidated financial statements
of the Company and therefore no separate disclosure on segment
information is given in these standalone financial statements.
16. The figures of previous year have been regrouped/rearranged,
wherever necessary to conform to those of the current year.
Mar 31, 2014
1. Capital and other commitments
Estimated amount of contracts (net of advances) remaining to be
executed on capital account and not provided for - Rs.1,272.7 (March 31,
2013: Rs.211.5).
2. Contingent liabilities
Particulars As at As at
March 31, 2014 March 31, 2013
Outstanding bank guarantees 771.8 486.3
Claims arising from disputes
not acknowledged as debts
- Indirect taxes (excise
duty and service tax)* 223.3 196.3
Claims arising from disputes
not acknowledged as
debts - direct taxes* 105.0 105.0
Claims against the Company
not acknowledged as debts* 150.3 493.1
Bills discounted with banks 1,060.6 3,252.9
* in respect of above matters, future cash outfows in respect of
contingent liabilities are determinable only on receipt of judgements
pending at various forums/authorities.
3. The income tax authorities had carried out search operations on
the Company at certain locations in February 2012. The Company has
fully co-operated with the authorities and various statements were
recorded during the course of these operations. In order to avoid
possible litigations, without admitting any irregularities, the Company
had decided to offer an additional income and to pay the resultant tax.
Accordingly provision for income tax of Rs.48.7 on this additional income
had been made during the year 2011-12. The proceedings are in progress
and no other material implications are expected by the management in
this matter.
4. Employee stock options
a. Employee Stock Option Plan ''ESOP-2006''
The Company instituted an Employee Stock Option Plan ''ESOP-2006'' as per
the special resolution passed in the 19th Annual General Meeting held
on September 18, 2006. This scheme has been formulated in accordance
with the Securities Exchange Board of India (Employee Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The
compensation committee accordingly, granted total 3,240,500 options
under seven grants of 175,000; 25,000; 90,000; 1,205,000; 300,000;
500,000; 915,500 and 30,000 options to eligible employees on October
30, 2006; July 31, 2007; October 31, 2007; December 16, 2011; June 19,
2012; January 09, 2013; January 28, 2013 and August 9, 2013
respectively. The method of settlement under scheme is by issue of
equity shares of the Company. Each option comprises of one underlying
equity share of Rs.1 each. The said options vest on an annual basis at
10%, 15%, 25% and 50% over a period of four years and can be exercised
over a period of six years from the date of grant of options. The
options have been granted at the then prevailing market price of
Rs.120.70; Rs.132.35; Rs.114.50; Rs.91.60; Rs.106.05; Rs.200.70; Rs.187.40 and
Rs.161.30 per share respectively and hence the question of accounting for
employee deferred compensation expenses does not arise as the Company
follows intrinsic value method.
5. Employee benefits
b. Disclosures related to defined benefit plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days last drawn salary for each completed year of service.
The scheme is funded with an insurance company in the form of a
qualifying insurance policy. The following tables summarise the
components of net benefit expense recognized in the Statement of Profit
and Loss, the fund status and Balance Sheet position:
6. In respect of the amounts mentioned under Section 205C of the
Companies Act, 1956 there are no dues that are to be credited to the
Investor Education and Protection Fund as at March 31, 2014 Rs. Nil
(March 31, 2013: Rs. Nil).
7. Related party disclosures
Names of related parties and description of relationship
Subsidiaries
1. APL Pharma Thai Limited, Thailand
2. All Pharma (Shanghai) Trading Company Limited, China
3. Aurobindo Pharma USA Inc, U.S.A.
4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil
5. Helix Healthcare B.V., The Netherlands
6. APL Holdings (Jersey) Limited, Jersey
7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil
8. APL Healthcare Limited, India
9. Auronext Pharma Private Limited, India
10. APL Research Centre Limited, India
11. Auro Pharma Inc. Canada
12. Aurobindo Pharma (Pty) Limited, South Africa
13. Aurobindo Pharma (Australia) Pty Limited, Australia
14. Agile Pharma B.V., The Netherlands
15. Aurobindo Switzerland AG, Switzerland (Closed w.e.f. September 11,
2013)
16. Auro Healthcare (Nigeria) Limited, Nigeria
17. Aurobindo ILAC Sanayi ve Ticaret Limited Sirketi, Turkey
18. Aurobindo Pharma (Singapore) Pte Limited, Singapore
19. Aurobindo Pharma Limited, s.r.l., Dominican Republic
20. Aurobindo Pharma Japan K.K., Japan
21. Pharmacin B.V., The Netherlands
22. Aurobindo Pharma GmbH, Germany
23. Aurobindo Pharma (Portugal) Unipessoal Lda, Portugal
24. Aurobindo Pharma France SARL, France
25. Laboratorios Aurobindo S. L., Spain
26. Agile Malta Holdings Limited, Malta
27. Aurobindo Pharma B.V., The Netherlands
28. Aurobindo Pharma (Romania) s.r.l., Romania
29. Aurobindo Pharma (Poland) Sp.z.o.o., Poland (Closed w.e.f. June
28, 2013)
30. Aurobindo Pharma (Italia) S.r.l., Italy
31. Agile Pharma (Malta) Limited, Malta (Closed w.e.f. October 9,
2013)
32. Aurobindo Pharma (Malta) Limited, Malta
33. APL IP Company Limited, Jersey
34. APL Swift Services (Malta) Limited, Malta
35. Milpharm Limited, U.K.
36. Aurolife Pharma LLC, U.S.A.
37. Auro Peptides Limited, India
38. Auro Medics Pharma LLC, U.S.A.
39. Aurobindo Pharma NZ Limited, New Zealand
40. Aurovida Farmaceutica S.A. de C.V., Mexico
41. Aurobindo Antibiotics Limited, India (w.e.f. July 10, 2012)
42. Auro Health LLC, U.S.A. (w.e.f. September 13, 2012)
43. Aurobindo Pharma Hungary Kereskedelmi KFT, Hungary (Closed w.e.f.
September 13, 2012)
44. Curepro Parenterals Limited, India (w.e.f. April 19, 2013)
45. Hyacinths Pharma Private Limited, India (w.e.f. October 1, 2013)
46. Silicon Life Sciences Private Limited, India (w.e.f. October 11,
2013)
47. AuroZymes Limited, India (w.e.f. November 28, 2013)
48. Eugia Pharma Specialities Limited, India (w.e.f. September 16,
2013)
49. Aurobindo Pharma Columbia S.A.S., Columbia (w.e.f. January 28,
2014)
50. Aurovitas, Unipessoal Lda, Portugal (w.e.f. March 25, 2014)
Joint ventures
1. Novagen Pharma (Pty) Limited, South Africa (Joint venture of a
subsidiary)
2. Zao Auros Pharma, Russia (Joint venture of a subsidiary) (Closed
during the year without any operations)
Enterprises over which key management personnel or their relatives
exercise significant influence
1. Pravesha Industries Private Limited, India
2. Sri Sai Packaging, India (Partnership firm)
3. Trident Chemphar Limited, India
4. Auropro Soft Systems Private Limited, India
5. Axis Clinicals Limited, India
6. Pranit Projects Private Limited, India
7. Pranit Packaging Private Limited, India
8. Cogent Glass Limited (formerly known as Matri Mirra Packaging
Private Limited), India
9. Vaxer Pharma Limited, India
10. Orem Access Bio Inc, India
11. Veritaz Healthcare Limited, India
Key managerial personnel
1. Mr. P.V. Ramprasad Reddy, Director
(Resigned as Chairman w.e.f. June 1, 2012 and retired as Whole-time
Director w.e.f. December 1, 2012)
2. Mr. K. Nithyananda Reddy, Whole-time Director
3. Dr. M. Sivakumaran, Whole-time Director
4. Mr. M. Madan Mohan Reddy, Whole-time Director
5. Mr. N. Govindarajan, Managing Director
6. Mr. Ravindra Shenoy, Joint Managing Director (Resigned w.e.f.
November 9, 2012)
Relatives to key managerial personnel
1. Mr. P. Sarath Chandra Reddy (Son of Mr. P.V. Ramprasad Reddy,
Director)
2. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time
Director)
8. Leases
a. Operating lease
i. Operating leases are mainly in the nature of lease of office
premises with no restrictions and are renewable/cancellable at the
option of either of the parties except for details in (ii) below. There
is no escalation clause in the lease agreement. There are no
sub-leases. There are no restrictions imposed by lease arrangements.
The aggregate amount of operating lease payments recognized in the
Statement of Profit and Loss is Rs.43.2 (March 31, 2013: Rs.17.1).
The Company has not recognized any contingent rent as expense in the
Statement of Profit and Loss.
b. Finance lease
Building includes factory buildings acquired on finance lease. The
agreement is silent on renewal terms and transfer of legal title at the
end of lease term.
The lease agreement did not specify minimum lease payments over the
future period. The factory building is acquired on lease at a
consideration of Rs.25.6 (March 31, 2013: Rs.25.6).
The net carrying amount of the buildings obtained on finance lease:
Rs.13.3 (March 31, 2013: Rs.14.6).
9. In accordance with paragraph 10 of Notified Accounting Standard 9
on Revenue Recognition, excise duty on sales amounting to Rs.1,588.2
(March 31, 2013: Rs.1,444.0) has been reduced from sales in Statement of
Profit and Loss and excise duty on (increase)/decrease in closing stock
of finished goods amounting to (Rs.0.8) (March 31, 2013: Rs.4.2) has been
(credited)/debited to the Statement of Profit and Loss.
10. Details of advances due from private companies in which Company''s
Director is a director: Pravesha Industries Private Limited, India Rs.Nil
(March 31, 2013: Rs.0.03).
Auropro Soft Systems Private Limited, India Rs.0.08 (March 31, 2013:
Rs.Nil). Pranit Projects Private Limited, India Rs.1.3 (March 31, 2013:
Rs.Nil).
11. i. Details of trade receivables due from private companies in
which Company''s Director is a director:
Pravesha Industries Private Limited, India Rs.0.06 (March 31, 2013:
Rs.Nil).
ii. Details of trade receivables due from partnership firm in which
Company''s Director is a partner: Sri Sai Packaging, India Rs.Nil (March
31, 2013: Rs.Nil).
12. Segment reporting
In accordance with Accounting Standard 17 - Segment Reporting, segment
information has been provided in the Consolidated Financial Statements
of the Company and therefore no separate disclosure on segment
information is given in these standalone financial statements.
13. The figures of previous year have been regrouped/rearranged,
wherever necessary to conform to those of the current year.
Mar 31, 2013
1. Capital and other commitments
Estimated amount of contracts (net of advances) remaining to be
executed on capital account and not provided for - Rs.211.5 (March 31,
2012: Rs.476.5).
2. Contingent liabilities
Particulars As at As at
March 31, 2013 March 31, 2012
Outstanding bank guarantees 486.3 391.9
Claims arising from disputes
not acknowledged as debts
- indirect taxes (excise duty
and service tax)* 196.3 140.7
Claims arising from disputes not
acknowledged as debts - direct taxes* 105.0 105.0
Claims against the Company not
acknowledged as debts* 493.1 23.7
Bills discounted with banks 3,252.9 -
Corporate guarantee to bank for loan
taken by 100% subsidiary - 1,589.8
* in respect of above matters, future cash outfows in respect of
contingent liabilities are determinable only on receipt of judgements
pending at various forums/authorities.
3. The income tax authorities had carried out search operations on
the Company at certain locations during the previous year. The Company
has fully co-operated with the authorities and various statements were
recorded during the course of these operations. In order to avoid
possible litigations, without admitting any irregularities, the Company
had decided to offer an additional income and to pay the resultant tax.
Accordingly, provision for income tax of Rs.48.7 on this additional
income had been made in the previous year. The proceedings are in
progress and no other material implications are expected by the
management in this matter.
4. Employee stock options
a. Employee Stock Option Plan ''ESOP-2004''
The Company instituted an Employee Stock Option Plan ''ESOP-2004'' as per
the special resolution passed in the 17th Annual General Meeting held
on July 31, 2004. This scheme has been formulated in accordance with
the Securities Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 to grant options
of 2,538,500 to eligible employees on August 1, 2004 and July 28, 2005.
The method of settlement under scheme is by issue of equity shares of
the Company. Each option comprises of one underlying equity share of
Rs.1 each. The said options vest on an annual basis at 15%, 20%, 25%
and 40% over a period of four years and can be exercised over a period
of six years from the date of grant of options.
The options have been granted at the then prevailing market price of
Rs.72.52 per share and hence the question of accounting for employee
deferred compensation expenses does not arise as the Company follows
intrinsic value method.
b. Employee Stock Option Plan ''ESOP-2006''
The Company instituted an Employee Stock Option Plan ''ESOP-2006'' as per
the special resolution passed in the 19th Annual General Meeting held
on September 18, 2006. This scheme has been formulated in accordance
with the Securities Exchange Board of India (Employee Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The
Compensation Committee accordingly, granted total 3,210,500 options
under seven grants of 175,000, 25,000, 90,000, 1,205,000, 300,000,
500,000 and 915,500 options to eligible employees on October 30, 2006,
July 31, 2007, October 31, 2007, December 16, 2011, June 19, 2012,
January 9, 2013 and January 28, 2013 respectively. The method of
settlement under scheme is by issue of equity shares of the Company.
Each option comprises of one underlying equity share of Rs.1 each. The
said options vest on an annual basis at 10%, 15%, 25% and 50% over a
period of four years and can be exercised over a period of six years
from the date of grant of options. The options have been granted at the
then prevailing market price of Rs.120.70, Rs.132.35, Rs.114.50,
Rs.91.60, Rs.106.05, Rs.200.70 and Rs.187.40 per share respectively and
hence the question of accounting for employee deferred compensation
expenses does not arise as the Company follows intrinsic value method.
b. Disclosures related to defined benefit plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days last drawn salary for each completed year of service.
The scheme is funded with an insurance company in the form of a
qualifying insurance policy. The following tables summarise the
components of net benefit expense recognized in the Statement of Profit
and Loss, the fund status and Balance Sheet position:
5. Disclosure regarding derivative financial instruments
a. The aggregate amount of forward contracts entered into by the
Company and remaining outstanding at year end are given below: Sell
US $ Nil, Rs.Nil (March 31,2012: US $ 18.0, Rs.915.8) - To hedge
receivables in foreign currency.
US $ Nil, Rs.Nil (March 31,2012: US $ 27.0, Rs.1,373.6) - To hedge
external commercial borrowing draw down.
b. Particulars of unhedged foreign currency exposure are detailed
below at the exchange rate prevailing as at the Balance Sheet date:
6. In respect of the amounts mentioned under Section 205C of the
Companies Act, 1956 there are no dues that are to be credited to the
Investor Education and Protection Fund as at March 31, 2013 Rs.Nil
(March 31, 2012: Nil)
7. Research and Development expenses
a. Details of Research and Development expenses incurred during the
year, debited under various heads of Statement of Profit and Loss is
given below:
8. Related party disclosures
Names of related parties and description of relationship Subsidiaries
1. APL Pharma Thai Limited, Thailand
2. ALL Pharma (Shanghai) Trading Company Limited, China
3. Aurobindo Pharma USA Inc., U.S.A.
4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil
5. Helix Healthcare B.V., The Netherlands
6. APL Holdings (Jersey) Limited, Jersey
7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil
8. APL Healthcare Limited, India
9. Auronext Pharma Private Limited, India
10. APL Research Centre Limited, India
11. Auro Pharma Inc., Canada
12. Aurobindo Pharma (Pty) Limited, South Africa
13. Aurobindo Pharma (Australia) Pty Limited, Australia
14. Agile Pharma B.V., The Netherlands
15. Aurobindo Switzerland AG, Switzerland
16. Auro Healthcare (Nigeria) Limited, Nigeria
17. Aurobindo ILAC Sanayi ve Ticaret Limited Sirketi, Turkey
18. Aurobindo Pharma (Singapore) Pte Limited, Singapore
19. Aurobindo Pharma Limited, s.r.l., Dominican Republic
20. Aurobindo Pharma Japan K.K., Japan
21. Pharmacin B.V., The Netherlands
22. Aurobindo Pharma GmbH, Germany
23. Aurobindo Pharma (Portugal) Unipessoal LDA, Portugal
24. Aurobindo Pharma (Bulgaria) EAD, Bulgaria
25. Aurobindo Pharma France SARL, France
26. Laboratorios Aurobindo S L, Spain
27. Agile Malta Holdings Limited, Malta
28. Aurobindo Pharma B.V., The Netherlands
29. Aurobindo Pharma (Romania) s.r.l., Romania
30. Aurobindo Pharma (Poland) Sp.z.o.o., Poland
31. Aurobindo Pharma (Italia) S.r.l., Italy
32. Agile Pharma (Malta) Limited, Malta
33. Aurobindo Pharma (Malta) Limited, Malta
34. APL IP Company Limited, Jersey
35. APL Swift Services (Malta) Limited, Malta
36. Milpharm Limited, U.K.
37. Aurolife Pharma LLC, U.S.A.
38. Auro Peptides Limited, India
39. Auro Medics Pharma LLC, U.S.A.
40. Aurobindo Pharma NZ Limited, New Zealand
41. Aurovida Farmaceutica SA DE CV, Mexico
42. Aurobindo Antibiotics Limited, India
43. Auro Health LLC, U.S.A. (w.e.f. September 13, 2012)
44. Aurobindo Pharma Hungary Kereskedelmi KFT, Hungary (Closed w.e.f.
September 13, 2012)
Joint ventures
1. Novagen Pharma (Pty) Limited, South Africa (Joint venture of a
subsidiary)
2. Zao Auros Pharma, Russia (Joint venture of a subsidiary) (Closed
during the year without any operations)
Enterprises over which key management personnel or their relatives
exercise significant influence
1. Pravesha Industries Private Limited, India
2. Sri Sai Packaging, India (Partnership firm)
3. Trident Chemphar Limited, India
4. Auropro Soft Systems Private Limited, India
5. Axis Clinicals Limited, India
6. Pranit Projects Private Limited, India
7. Pranit Packaging Private Limited, India
8. Matri Mirra Packaging Private Limited, India
9. Vaxer Pharma Limited, India
10. Silicon Life Sciences Private limited, India
11. Orem Access Bio Inc., India
Key managerial personnel
1. Mr. P.V. Ramprasad Reddy, Director
(Resigned as Chairman w.e.f. June 1, 2012 and retired as Whole-time
Director w.e.f. December 1, 2012)
2. Mr. K. Nithyananda Reddy, Whole-time Director
3. Dr. M. Sivakumaran, Whole-time Director
4. Mr. M. Madan Mohan Reddy, Whole-time Director
5. Mr. N. Govindarajan, Managing Director
6. Mr. Ravindra Shenoy, Joint Managing Director (Resigned w.e.f.
November 9, 2012)
Relatives to key managerial personnel
1. Mr. P. Sarath Chandra Reddy (Son of Mr. P.V. Ramprasad Reddy,
Director)
2. Mrs. Kambam Kirthi Reddy (Daughter of Mr. K. Nithyananda Reddy,
Whole-time Director)
3. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time
Director)
9. Leases
a. Operating lease
Operating leases are mainly in the nature of lease of office premises
with no restrictions and are renewable/cancellable at the option of
either of the parties. There is no escalation clause in the lease
agreement. There are no sub-leases. There are no restrictions imposed
by lease arrangements. The aggregate amount of operating lease payments
recognized in the Statement of Profit and Loss is Rs.17.0 (March 31,
2012: Rs.23.7).
The Company has not recognized any contingent rent as expense in the
Statement of Profit and Loss.
b. Finance lease
Building includes factory buildings acquired on finance lease. The
agreement is silent on renewal terms and transfer of legal title at the
end of lease term.
The lease agreement did not specify minimum lease payments over the
future period. The factory building is acquired on lease at a
consideration of Rs.25.5 (March 31, 2012: Rs.25.5).
The net carrying amount of the buildings obtained on finance lease -
Rs.14.6 (March 31, 2012: Rs.15.9).
10. In accordance with paragraph 10 of Notified Accounting Standard 9
on Revenue Recognition, excise duty on sales amounting to Rs.1,444.0
(March 31, 2012: Rs.972.8) has been reduced from sales in Statement of
Profit and Loss and excise duty on increase/decrease in closing stock
of finished goods amounting to Rs.4.2 [March 31, 2012: Rs.31.8
(credit)] has been debited to the Statement of Profit and Loss.
11. Details of advances due from private companies in which Company''s
Director is a director.
Pravesha Industries Private Limited, India Rs.Nil (March 31, 2012:
Rs.22.6)
12. i. Details of trade receivables due from private companies in
which Company''s Director is a director.
Pravesha Industries Private Limited, India Rs.Nil (March 31, 2012:
Rs.2.5)
ii. Details of trade receivables due from partnership firm in which
Company''s Director is a partner.
Sri Sai Packaging, India Rs.Nil (March 31, 2012: Nil)
13. Interest in joint ventures
Details of interest in jointly controlled entities are given below:
a. Contingent liabilities of the above joint ventures Rs. Nil (March
31, 2012: Nil).
b. Capital commitments of the above joint ventures Rs. Nil (March 31,
2012: Nil).
c. Novagen Pharma (Pty) Limited, incorporated in South Africa, is
engaged in distribution of pharmaceuticals products.
d. Previous year''s figures have been disclosed in italics.
e. All figures presented above represent Company''s share only.
14. Segment reporting
In accordance with Accounting Standard 17 - Segment Reporting, segment
information has been provided in the Consolidated Financial Statements
of the Company and therefore no separate disclosure on segment
information is given in these standalone financial statements.
15. The figures of previous year have been regrouped/rearranged,
wherever necessary to conform to those of the current year.
Mar 31, 2012
A. Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of
Rs1 per share. Each holder of equity shares is entitled to one vote per
share.
The Company declares and pays dividends in Indian rupees. The dividend
proposed by the Board of Directors is subject to the approval of
shareholders in the ensuing Annual General Meeting.
During the year ended March 31, 2012 the amount of per share dividend
recognized as distributions to equity shareholders was Rs1 (March 31,
2011: Rs2).
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. However, no such
preferential amounts exist currently. The distribution will be in
proportion to the number of equity shares held by the shareholders.
i. Secured term loans in foreign currency carry interest in the range
of LIBOR plus 2% to 2.5%. Out of these loans, loans amounting to
Rs3,815.6 (March 31, 2011: Rs2,229.7) are repayable in 3 equal
installments in 4th, 5th, 6th years from the respective final draw down
dates, and loans amounting to Rs3,815.6 (March 31, 2011: Rs1,783.8) are
repayable at the end of 5th year from the respective final draw down
date.
ii. Unsecured term loans in foreign currency carry interest in the
range of LIBOR plus 3% to 3.75%. These loans are repayable in 2012-13.
iii. Refer Note 30 for terms of issue of Foreign Currency Convertible
Bonds ('FCCBs').
iv. Deferred sales tax loan is interest free and payable in various
installments as per sales tax deferment scheme. The last installment is
payable in 2025-26.
v. Term loans are secured by first pari passu charge on all the
present and future fixed assets both movable and immoveable property of
the Company.
Capital work-in-progress Rs5,580.8 (March 31, 2011: Rs5,367.3).
i. The title deeds of land and buildings aggregating to Rs148.4 (March
31, 2011: 140.6) are pending transfer to the Company's name.
ii. Capital work-in-progress include expenditure during construction
period amounting to Rs1,226.5 (March 31, 2011: Rs692.7) (Refer Note 33).
iii. An amount of Rs4.5 (March 31, 2011: RsNil) is transferred from
capital work-in-progress to assets held for sale.
iv. Depreciation for the year include Rs4.1 (March 31, 2011: Rs4.6)
taken as pre-operative capital expenditure on capital projects pending
capitalization.
v. Additions to fixed assets and capital work-in-progress during the
year include value of capital expenditure towards research centre
aggregating to Rs396.0 (March 31, 2011: Rs363.2) [Refer Note 37(b)].
vi. Details of finance lease (Refer Note 41).
Note:
i. The outstanding Tranche A and Tranche B Zero Coupon Foreign
Currency Convertible Bonds ('FCCB' or 'Bonds') of USD 139.20
Million, issued in May 2006, were repaid in entirety on maturity during
the year along with the redemption premium (Yield to Maturity)
amounting to Rs3,198.6, inclusive of withholding taxes.
ii. During the previous year the Company has divested its 80.5% stake
in Aurobindo (Datong) Bio-Pharma Company Limited, China, (ADBPL) one of
its subsidiary.
1. Capital and other commitments
Estimated amount of contracts (net of advances) remaining to be
executed on capital account and not provided for - Rs476.5 (March 31,
2011: Rs1,980.1).
Company has given corporate guarantee for the loan extended by DBS,
Singapore to Aurobinodo Pharma U.S.A. The loan amount outstanding as on
March 31,2012 is Rs1,589.8 (March 31, 2011: RsNil).
2. Contingent liabilities
Particulars As at As at
March 31, 2012 March 31, 2011
Outstanding bank guarantees 391.9 341.4
Claims arising from disputes
not acknowledged as debts
relating to
- indirect taxes (Excise duty
& Service tax) 140.7 90.6
- direct taxes 105.0 100.0
Claims against the Company not
acknowledged
as debts 23.7 20.4
Premium on potential redemption
of FCCBs Nil Refer
Note 3 (c)
3. Foreign Currency Convertible Bonds ('FCCBs'):
a. Terms of Issue
During the year ended March 31, 2007, the Company issued 150,000 zero
coupon FCCBs due in 2011 (Tranche A Bonds) of USD 1,000 each and 50,000
Zero coupon FCCBs due in 2011 (Tranche B Bonds) of USD 1000 each, on
the following terms:
Either convertible by the Tranche A bondholders at any time on or after
June 27, 2006 but prior to close of business (at the place the bonds
are deposited for conversion) on May 10, 2011 and by the Tranche B
bondholders at any time on or after May 17, 2007 (Conversion price
setting date) but prior to close of business (at the place the bonds
are deposited for conversion) on May 10, 2011. Each Tranche A bond
will be converted into fully paid up equity shares with par value of Rs5
per share at a fixed price of Rs1,014.06 per share at a fixed exchange
rate conversion of Rs45.145 = USD 1. Each Tranche B bond will be
converted into fully paid up equity shares with par value of Rs5 per
share at a fixed price of Rs879.13 per share at a fixed exchange rate
conversion of Rs45.145 = USD 1; or
Redeemable by the Company in respect of Tranche A bonds at the relevant
Accreted Principal Amount, in whole but not in part at any time on or
after November 16, 2008 and on or prior to May 10, 2011 and in respect
of Tranche B bonds at the relevant Accreted Principal Amount, in whole
but not in part at any time on or after May 17, 2009 and on or prior to
May 10, 2011 as per the terms and conditions of the bonds mentioned in
the Offering Circular;
Redeemable at 146.285% of its principal amount on maturity date in
respect of Tranche A bonds and at 146.991% of its principal amount on
maturity date in respect of Tranche B bonds if not redeemed or
converted earlier.
b. Outstanding FCCBs
The outstanding FCCBs as at March 31, 2011 were 139,200, which were
redeemed in full during the current year.
c. Redemption premium on potential redemption of FCCBs
As at March 31, 2011 the cumulative premium on potential redemption of
FCCBs issued during the year ended March 31, 2007 aggregates to USD
70.2 equivalent to Rs3,132.0. The payment of such premium on redemption
was contingent in nature, the outcome of which was dependent upon
uncertain future events, hence no provision was considered. The
outstanding FCCBs along with Yield to Maturity were redeemed during the
current year.
4. Employee stock options
a. Employee Stock Option Plan 'ESOP-2004'
The Company instituted an Employee Stock Option Plan 'ESOP-2004' as per
the special resolution passed in the 17th Annual General Meeting held
on July 31, 2004. This scheme has been formulated in accordance with
the Securities Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 to grant options
of 2,538,500 to eligible employees on August 1, 2004 and July 28, 2005.
The method of settlement under scheme is by issue of equity shares of
the Company. Each option comprises of one underlying Equity Share of Rs1
each. The said options vest on an annual basis at 15%, 20%, 25% and 40%
over a period of four years and can be exercised over a period of six
years from the date of grant of options.
The options have been granted at the then prevailing market price of
Rs72.52 per share and hence the question of accounting for employee
deferred compensation expenses does not arise as the Company follows
intrinsic value method.
b. Employee Stock Option Plan 'ES0P-2006'
The Company instituted an Employee Stock Option Plan 'ESOP-2006' as per
the special resolution passed in the 19th Annual General Meeting held
on September 18, 2006. This scheme has been formulated in accordance
with the Securities Exchange Board of India (Employee Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The
compensation committee accordingly, granted total 1,495,000 options
under four grants of 175,000, 25,000 , 90,000 and 1,205,000 options to
eligible employees on October 30, 2006, July 31, 2007, October 31, 2007
and December 16, 2011 respectively. The method of settlement under
scheme is by issue of equity shares of the Company. Each option
comprises of one underlying Equity Share of Rs1 each. The said options
vest on an annual basis at 10%, 15%, 25% and 50% over a period of four
years and can be exercised over a period of six years from the date of
grant of options. The options have been granted at the then prevailing
market price of Rs120.70, Rs132.35, Rs114.50 and Rs91.60 per share
respectively and hence the question of accounting for employee deferred
compensation expenses does not arise as the Company follows intrinsic
value method.
5. Employee benefits
a. Disclosures related to defined contribution plan
Provident fund contribution recognized as expense in the Statement of
Profit and Loss Rs82.8 (March 31, 2011: Rs72.2).
b. Disclosures related to defined benefit plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days last drawn salary for each completed year of service.
The scheme is funded with an insurance company in the form of a
qualifying insurance policy. The following tables summarise the
components of net benefit expense recognized in the Statement of Profit
and Loss, the fund status and Balance Sheet position:
Notes:
i. The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
ii. Percentage of plan assets as investments with insurer is 100%.
iii. The expected rate of return on assets is based on the expectation
of the average long term rate of return expected on investments of the
fund during the estimated term of the obligations.
iv. The Company expects to contribute Rs25.0 (March 31, 2011: Rs60.0) to
the qualifying insurance policy in 2012-13.
6. Disclosure regarding derivative financial instruments
a. The aggregate amount of forward contracts entered into by the
Company and remaining outstanding at year end are given below: Sell US
$ 18.0, Rs915.8 (March 31,2011: US $ Nil) - To hedge receivables in
foreign currency.
US $ 27.0, Rs1,373.6 (March 31,2011: US $ Nil) - To hedge external
commercial borrowing draw down.
Buy
US$ Nil (March 31, 2011: US $ 11.6, Rs519.3) - To hedge payables in
foreign currency.
7. In respect of the amounts mentioned under Section 205C of the
Companies Act, 1956 there are no dues that are to be credited to the
Investor Education and Protection Fund as at March 31, 2012 (March 31,
2011: RsNil).
8. Related party disclosures
Names of related parties and description of relationship Subsidiaries
1. APL Pharma Thai Limited, Thailand
2. ALL Pharma (Shanghai) Trading Company Limited, China
3. Aurobindo Pharma U.S.A. Inc, U.S.A.
4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil
5. Helix Healthcare B.V., The Netherlands
6. APL Holdings (Jersey) Limited, Jersey
7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil
8. APL Health Care Limited, India
9. Auronext Pharma (Private) Limited, India
10. APL Research Centre Limited, India
11. Auro Pharma Inc., Canada
12. Aurobindo Pharma (Pty) Limited, South Africa
13. Aurobindo Pharma (Australia) Pty Limited, Australia
14. Agile Pharma B.V., The Netherlands
15. Aurobindo Pharma Hungary Kereskedelmi Kft, Hungary
16. Aurobindo Switzerland AG, Switzerland
17. Auro Healthcare (Nigeria) Limited, Nigeria
18. Aurobindo ILAC Sanayi ve Ticaret Limited, Turkey
19. Aurobindo Pharma (Singapore) Pte Limited, Singapore
20. Aurobindo Pharma Limited, s.r.l., Dominican Republic
21. Aurobindo Pharma Japan K.K., Japan
22. Pharmacin B.V., The Netherlands
23. Aurobindo Pharma GmbH, Germany
24. Aurobindo Pharma (Portugal) Unipessoal LDA, Portugal
25. Aurobindo Pharma (Bulgaria) EAD, Bulgaria
26. Aurobindo Pharma France SARL, France
27. Laboratorios Aurobindo S L, Spain
28. Agile Malta Holdings Limited, Malta
29. Aurobindo Pharma B.V., The Netherlands
30. Aurobindo Pharma (Romania) s.r.l., Romania
31. Aurobindo Pharma (Poland) Sp.z.o.o., Poland
32. Aurobindo Pharma (Italia) S.r.l., Italy
33. Agile Pharma (Malta) Limited, Malta
34. Aurobindo Pharma (Malta) Limited, Malta
35. APL IP Company Limited, Jersey
36. APL Swift Services (Malta) Limited, Malta
37. Milpharm Limited, U.K.
38. Aurolife Pharma LLC, U.S.A.
39. Auro Peptides Limited, India
40. Auro Medics Pharma LLC, U.S.A.
41. Aurobindo Pharma NZ Limited, New Zealand
42. Aurovida Farmaceutica SA DE CV, Mexico
43. Aurobindo (Datong) Bio-Pharma Company Limited, China
(Refer Note 27)
44. Aurex Generics Limited, U.K. (Liquidated w.e.f. March 31, 2011)
45. Zao Express Pharma, Russia (Liquidated w.e.f. April 1, 2010)
46. Aurobindo Pharma Aps, Denmark (Liquidated w.e.f. September 16,
2010)
47. Sia Aurobindo Baltics, Latvia (Liquidated w.e.f. November 26,
2010)
48. Aurobindo Pharma (Ireland) Limited, Ireland (Liquidated w.e.f. May
31, 2010)
Joint ventures
1. Aurosal Pharmaceuticals LLC, U.S.A. (Joint Venture of a Subsidiary)
(Closed w.e.f. December 31, 2011)
2. Novagen Pharma (Pty) Limited, South Africa (Joint venture of a
subsidiary)
3. Zao Auros Pharma, Russia (Joint venture of a subsidiary)
4. Cephazone Pharma LLC, U.S.A, (Joint venture of a subsidiary)
(Disposed w.e.f. October 1, 2010)
Enterprises over which key management personnel or their relatives
exercise significant influence
1. Pravesha Industries Private Limited, India
2. Sri Sai Packaging, India (Partnership firm)
3. Trident Chemphar Limited, India
4. Auropro Soft Systems Private Limited, India
5. Axis Clinicals Limited, India
6. Pranit Projects Private Limited, India (Formerly known as Pranit
Happy Homes Private Limited)
7. Pranit Packaging Private Limited, India
8. Matri Mirra Packaging Private Limited, India
Key managerial personnel
1. Mr. P.V. Ramprasad Reddy, Chairman
2. Mr. K. Nithyananda Reddy, Managing Director
3. Dr. M. Sivakumaran, Whole-time Director
4. Mr. M. Madan Mohan Reddy, Whole-time Director
Relatives to key managerial personnel
1. Mr. P. Sarath Chandra Reddy (Son of Mr. P.V. Ramprasad Reddy,
Chairman)
2. Mrs. Kambam Kirthi Reddy (Daughter of Mr. K. Nithyananda Reddy,
Managing Director)
3. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time
Director)
9. Leases
a. Operating lease
Operating leases are mainly in the nature of lease of office premises
with no restrictions and are renewable/ cancellable at the option of
either of the parties. There is no escalation clause in the lease
agreement. There are no sub-leases. There are no restrictions imposed
by lease arrangements. The aggregate amount of operating lease payments
recognized in the Statement of Profit and Loss is Rs23.8 (March 31,
2011: Rs19.4).
The Company has not recognized any contingent rent as expense in the
Statement of Profit and Loss.
b. Finance lease
Building includes factory buildings acquired on finance lease. The
agreement is silent on renewal terms and transfer of legal title at the
end of lease term.
The lease agreement did not specify minimum lease payments over the
future period. The factory building is acquired on lease at a
consideration of Rs25.6 (March 31, 2011: Rs55.2).
The net carrying amount of the buildings obtained on finance lease -
Rs15.9 (March 31, 2011: Rs32.0).
10. In accordance with paragraph 10 of Notified Accounting Standard 9
on Revenue Recognition, excise duty on sales amounting to Rs972.8 (March
31, 2011: Rs968.7) has been reduced from sales in Statement of Profit
and Loss and excise duty on increase/decrease in closing stock of
finished goods amounting to Rs31.8 (March 31, 2011: Rs26.7) has been
credited (March 31, 2011: debit) to the Statement of Profit and Loss.
11. The Company is in the process of applying to the Central
government for approval of excess managerial remuneration amounting to
Rs25.1 paid to four directors during the year beyond the limits
specified in Part II of Section II (B) and Section III of Schedule XIII
of the Companies Act, 1956. The Company believes that such approval
will be obtained in due course and would not have any material impact
upon the financial statements.
12. i. Details of advances due from private companies in which
Company's Director is a director.
Pravesha Industries Private Limited, India Rs22.7 (March 31, 2011:
Rs175.2)
ii. Details of advances due from partnership firm in which Company's
Director is a partner.
Sri Sai Packaging, India RsNil (March 31, 2011: Rs8.4)
13. i. Details of trade receivables due from private companies in
which Company's Director is a director.
Pravesha Industries Private Limited, India Rs2.5 (March 31, 2011: Rs6.2)
ii. Details of trade receivables due from partnership firm in which
Company's Director is a partner.
Sri Sai Packaging, India RsNil (March 31, 2011: RsNil)
14. The Income Tax Authorities had carried out search operations on
the Company at certain locations during the current year. The Company
has fully co-operated with the authorities and various statements were
recorded during the course of these operations. In order to avoid
possible litigations, without admitting any irregularities, the Company
has decided to offer an additional income of Rs150.0 for tax and to pay
the resultant tax. Accordingly provision for income tax of Rs48.7 on
this additional income has been made. The proceedings are in progress
and no other material implications are expected by the management in
this matter.
a. Contingent liabilities of the above joint ventures RsNil (March 31,
2011: Rs Nil).
b. Capital commitments of the above joint ventures RsNil (March 31,
2011: Rs Nil).
c. Aurosal Pharmaceuticals LLC, U.S.A. engaged in the development,
manufacturing and distribution of pharmaceutical products, was closed
on December 31, 2011.
d. Novagen Pharma (Pty) Limited incorporated in South Africa, is
engaged in distribution of pharmaceuticals products.
e. Cephazone Pharma LLC, U.S.A. engaged in the production of sterile
and non-sterile Cephalosporin's, was sold in the previous year.
f. ZAO Auros Pharma incorporated in Russia during the year, is engaged
in distribution of pharmaceuticals products. There were no transactions
during the year.
g. Previous year's figures have been disclosed in italics.
h. All figures presented above represent Company's share only.
15. Segment reporting
In accordance with Accounting Standard 17 - Segment Reporting, segment
information has been provided in the Consolidated Financial Statements
of the Company and therefore no separate disclosure on segment
information is given in these standalone financial statements.
Mar 31, 2010
1. Capital commitments
Estimated amount of contracts (net of advances) remaining to be
executed on capital account and not provided for - Rs. 1168 (March 31,
2009: Rs. 709).
2. Contingent Liabilities
Particulars March 31, 2010 March 31, 2009
Premium on potential redemption
of Foreign Currency Convertible
Bonds Refer note Refer note
6(d) below 6(d) below
Outstanding bank guarantees 244.8 213.3
Bills discounted with banks - 62.8*
Claims arising from disputes
relating to direct and indirect
taxes
not acknowledged as debts 217.5 123.6
Dossier sales with refund clause 1,095.6 635.3
Claims against the Company not
acknowledged as debts 4.9 4.9
- secured by personal guarantees of the Chairman and the Managing
Director
3. Scheme of Arrangement under Sections 391 to 393 of the Companies
Act, 1956
The shareholders of the Company vide a Court convened meeting held on
May 21, 2009 approved a Scheme of Arrangement under Sections 391 to 393
read with Sections 100 to 103 and other applicable provisions of the
Companies Act, 1956. The said Scheme provides for utilization of
capital profit arising on buy-back and cancellation of Foreign Currency
Convertible Bonds (FCCBs), the balances standing to the credit of
Capital Reserve Account and Capital Redemption Reserve Account to
adjust certain expenses as determined by the management detailed below.
The aforesaid Scheme was filed before the Honble High Court of Andhra
Pradesh.
In the current year, the Honble High Court of Andhra Pradesh has
dismissed the Scheme filed by the Company. The Company has appealed
against the Order of the High Court and the appeal is pending before
the appellate body.
In the previous year, pending approval of the High Court, the Company
had credited the entire capital profit on buyback and cancellation of
FCCBs net of expenses, amounting to Rs. 36.2 as an exceptional item to
the Profit and Loss Account. Similarly the capital profit on buy- back
of FCCBs made during the year ended March 31, 2010 amounting to Rs.
21.9 has been credited to the Profit and Loss Account and has been
disclosed as an exceptional item.
Acquisition and amalgamation of Trident Life Sciences Limited
(Trident)
Trident is in the process of setting up a state-of-the-art facility for
manufacturing injectables at Medak District in Andhra Pradesh. The
Company acquired the entire equity shares of Trident Life Sciences
Limited (Trident) on September 18, 2009. Pursuant to this acquisition,
Trident became a wholly owned subsidiary of the Company.
In order to achieve the synergies of consolidation and to achieve cost
optimization through reduction of administration and other operational
cost, it was decided to amalgamate Trident with the Company with effect
from October 1, 2009 (the appointed date). Accordingly, a Scheme of
Amalgamation (the Scheme) of Trident with the Company under Sections
391 to 394 of the Companies Act, 1956 was approved by the shareholders
of the Company at a Court convened meeting held on January 20, 2010.
The Honble High Court of Andhra Pradesh approved the Scheme on March
30, 2010. The salient features of the Scheme are set out below:
- With effect from the appointed date, entire business and whole of the
undertaking(s) of Trident including all its properties and assets,
investments, licenses, permits, approvals, lease, tenancy rights,
permissions, and all its debts, liabilities, contingent liabilities,
duties and obligations shall vest with the Company;
- All assets and liabilities of Trident transferred to and vested shall
be recorded in the books of the Company at their respective book
values;
- The authorized equity share capital of Trident has got merged with
the authorized equity share capital of the Company;
- All inter-company balances, if any, including share application money
shall be eliminated; and
- The value of investment in the share capital of Trident appearing in
the books of the Company shall stand cancelled. As Trident is a wholly
owned subsidiary of the Company, the amalgamation does not involve any
consideration.
4. Foreign Currency Convertible Bonds
The Company issued Foreign Currency Convertible Bonds (FCCBs) during
the years ended March 31, 2006 and March 31, 2007. The details of such
issue are given below:
a. FCCBs issued during the year ended March 31, 2006:
60,000 Zero Coupon Foreign Currency Convertible Bonds (bonds) due in
2010 of USD 1,000 each on the following terms:
- either convertible by the holders at any time on or after September
20, 2005 but prior to close of business (at the place the bonds are
deposited for conversion) on August 8, 2010. Each bond will be
converted into 83.12 fully paid up equity share with par value of Rs. 5
per share at a fixed price of Rs. 522.036 per share at a fixed exchange
rate conversion of Rs. 43.3925= USD 1; or
- Redeemable in whole but not in part at the option of the Company at
any time on or after February 25, 2008 and on or prior to August 1,
2010 as per the terms and conditions of the bonds mentioned in the
Offering Circular;
- Redeemable on maturity date at 139.954% of its principal amount if
not redeemed or converted earlier.
b. FCCBs issued during the year ended March 31, 2007:
150,000 zero coupon FCCBs due in 2011 (Tranche A Bonds) of USD 1,000
each and 50,000 Forward Conversion Convertible Bonds due in 2011
(Tranche B Bonds) of USD 1000 each were issued on the following terms:
- Either convertible by the Tranche A bondholders at any time on or
after June 27, 2006 but prior to close of business (at the place the
bonds are deposited for conversion) on May 10, 2011 and by the Tranche
B bondholders at any time on or after May 17, 2007 (Conversion price
setting date) but prior to close of business (at the place the bonds
are deposited for conversion) on May 10, 2011. Each Tranche A bond will
be converted into 44.52 fully paid up equity share with par value of
Rs. 5 per share at a fixed price of X1,014.06 per share at a fixed
exchange rate conversion of Rs. 45.145 = USD 1. Each Tranche B bond
will be converted into 51.35 fully paid up equity shares with par value
of Rs. 5 per share at a fixed price of Rs. 879.13 per share at a fixed
exchange rate conversion of Rs.45.145 = USD 1; or
- Redeemable by the Company in respect of Tranche A bonds at the
relevant Accreted Principal Amount, in whole but not in part at any
time on or after November 16, 2008 and on or prior to May 10, 2011 and
in respect of Tranche B bonds at the relevant Accreted Principal
Amount, in whole but not in part at any time on or after May 17, 2009
and on or prior to May 10, 2011 as per the terms and conditions of the
bonds mentioned in the Offering Circular;
- Redeemable at 146.285% of its principal amount on maturity date in
respect of Tranche A bonds and at 146.991% of its principal amount on
maturity date in respect of Tranche B bonds if not redeemed or
converted earlier.
c. Outstanding FCCBs
- In respect of the bonds issued during the year ended March 31, 2006,
21,818 bonds of USD 1,000 each were converted into 1,813,539 equity
shares of Rs. 5 each at premium of Rs. 517.036 during the year. The
outstanding FCCBs as at March 31, 2010 is 31,782 bonds (March 31, 2009:
53,600). Subsequent to the Balance Sheet date, 6,714 bonds of USD 1,000
each were converted into equity shares and the conversion of 2,000
bonds of USD 1,000 each lodged with the Company is in progress.
- In respect of the bonds issued during the year ended March 31, 2007,
1,800 bonds (March 31, 2009: 59,000 bonds) of USD 1,000 each were
cancelled pursuant to a buy back during the year. The outstanding FCCBs
as at March 31, 2010 is 139,200 bonds (March 31, 2009: 141,000).
d. Redemption premium on potential redemption of FCCBs
- The cumulative premium on potential redemption of FCCBs issued during
the years ended March 31, 2006 and March 31, 2007 aggregates to USD
58.6 (March 31, 2009: USD 53.2) equivalent to Rs. 2,632.6 (March 31,
2009: Rs. 2,699.4). The payment of premium on redemption is contingent
in nature, the outcome of which is dependent on uncertain future
events. Hence, no provision is considered in the accounts in respect of
such premium for the year.
e. In the opinion of the Company, as the bonds are convertible into
equity shares and accordingly, the creation of debenture redemption
reserve is not required.
5. Employee benefits
a. Disclosures related to defined contribution plan
Provident fund contribution recognized as expense in the Profit and
Loss Account is Rs. 57.5 (March 31, 2009: Rs. 47.5)
b. Disclosures related to defined benefit plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days last drawn salary for each completed year of service.
6. Details of security given for secured loans
a. Term loans are secured by:
- First pari passu charge on the fixed assets of the Company located at
various plants of the Company.
- Personal guarantees given by the Chairman and the Managing Director
of the Company aggregating to Rs. Nil (March 31, 2009: Rs. 750.0).
b. Other working capital loans from banks are secured by:
- First charge by way of hypothecation of all the stocks, book debts
and other current assets (both present and future).
- Second charge on all the fixed assets of the Company both present and
future subject to charges created in favour of term lenders.
- Personal guarantees given by the Chairman and the Managing Director
of the Company aggregating to Rs. Nil (March 31, 2009: Rs. 7,379.8).
- Hire purchase loans from banks are secured by hypothecation of the
related assets.
7. Unsecured loans
Short term loans from banks to the extent of Rs. Nil (March 31, 2009:
Rs. 1,115.0) are personally guaranteed by the Chairman and the Managing
Director of the Company.
8. Export incentives
Sales for the year includes export incentives on account of various
schemes amounting to Rs. 515.7 (March 31, 2009: Rs. 393.0).
9. Related Party Disclosures
i. Names of related parties and description of relationship a.
Subsidiaries
1. APL Pharma Thai Limited, Thailand
2. ALL Pharma (Shanghai) Trading Company Limited, China
3. Aurobindo Pharma USA Inc., U.S.A.
4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil
5. Aurobindo (Datong) Bio-pharma Company Limited China
6. Helix Healthcare B.V., The Netherlands
7. APL Holdings (Jersey) Limited, Jersey
8. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil
9. APL Healthcare Limited, India
10. APL Research Centre Limited, India
11. Aurex Generics Limited, U.K.
12. Auro Pharma Inc., Canada
13. Zao Aurobindo Pharma, Russia
14. Aurobindo Pharma (Pty) Limited, South Africa
15. Aurobindo Pharma (Australia) Pty Limited, Australia
16. Agile Pharma B.V., The Netherlands
17. Aurobindo Pharma Hungary Kereskedelmi Kft, Hungary
18. Aurobindo Switzerland AG, Switzerland
19. Auro Healthcare (Nigeria) Limited, Nigeria
20. Aurobindo ILAC Sanayi ve Ticaret Limited, Sirketi
21. Aurobindo Pharma Japan K.K., Japan
22. Pharmacin B.V., The Netherlands
23. Aurobindo Pharma GmbH, Germany
24. Aurobindo Pharma (Portugal) Unipessoal LDA, Portugal
25. Aurobindo Pharma ApS, Denmark
26. Sia Aurobindo Baltics, Latvia
27. Aurobindo Pharma (Bulgaria) EAD, Bulgaria
28. Aurobindo Pharma France SARL, France
29. Laboratorios Aurobindo S L, Spain
30. Agile Malta Holdings Limited, Malta
31. Aurobindo Pharma (Ireland) Limited
32. Aurobindo Pharma (Italia) S.r.l., Italy
33. Agile Pharma (Malta) Limited, Malta
34. Aurobindo Pharma (Malta) Limited, Malta
35. APL IP Company Limited, Jersey
36. APL Swift Services (Malta) Limited, Malta
37. Milpharm Limited, U.K.
38. Aurolife Pharma LLC, U.S.A.
39. Auronext Pharma Private Limited, India
40. Trident Life Sciences Limited, India*
-Amalgamated with the Company with effect from October 1, 2009.
b. Joint ventures
Aurosal Pharmaceuticals LLC, U.S.A. (Joint venture of a subsidiary)
Cephazone Pharma LLC, USA (Joint venture of a subsidiary)
Novagen Pharma (Pty) Limited, South Africa (Joint venture of a
subsidiary)
c. Enterprises over which key management personnel or relatives
exercise significant influence
Pravesha Industries Private Limited, India Sri Sai Packaging, India
(Partnership firm) Trident Chemphar Limited, India Auropro Soft Systems
Private Limited, India Axis Clinicals Limited, India RPR Trust, India
d. Key managerial personnel
Mr. P.V. Ramprasad Reddy, Chairman
Mr. K. Nithyananda Reddy, Managing Director
Dr. M. Sivakumaran, Whole-time Director
Mr. M. Madan Mohan Reddy, Whole-time Director
e. Relative to key managerial personnel
Ms. P. Suneela Rani (Wife of Mr. P.V. Ramprasad Reddy, Chairman)
Ms. K. Rajeswari (Wife of Mr. K. Nithyananda Reddy, Managing director)
Mr. P. Sarath Chandra Reddy (Son of Mr. P.V. Ramprasad Reddy, Chairman)
Mr. Penaka Rohit Reddy (Son of Mr. P.V. Ramprasad Reddy, Chairman)
Ms. Kambam Kirthi Reddy (Daughter of Mr. K. Nithyananda Reddy, Managing
Director)
Ms. Spoorthi Kambam (Daughter of Mr. K. Nithyananda Reddy, Managing
Director)
Mr. K. Suryaprakash Reddy (Brother of Mr. K. Nithyananda Reddy,
Managing Director)
Mr. Prasad Reddy Kambam (Brother of Mr. K. Nithyananda Reddy, Managing
Director)
Ms. Sashi S. Kumar (Wife of Dr. M. Sivakumaran, Whole-time Director)
Ms. Shilpa Sivakumaran (Daughter of Dr. M. Sivakumaran, Whole-time
Director)
Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time
Director)
10. Leases
a. Operating lease
Operating leases are mainly in the nature of lease of office premises
with no restrictions and are renewable/cancelable at the option of
either of the parties. There is no escalation clause in the lease
agreement. There are no sub-leases. The aggregate amount of operating
lease payments recognized in the Profit and Loss Account Rs. 15.1
(March 31, 2009: Rs. 10.2).
b. Finance lease
Building includes factory buildings acquired on finance lease. The
agreement is silent on renewal terms and transfer of legal title at the
end of lease term.
The lease agreement did not specify minimum lease payments over the
future period. The factory building is acquired on lease at a
consideration of Rs. 49.2 (March 31, 2009: Rs. 72.0).
The net carrying amount of the buildings obtained on finance lease -
Rs. 32.3 (March 31, 2009: Rs. 53.5).
The Company has not recognized any contingent rent as expense in the
statement of Profit and Loss Account.
There is no escalation clause in the lease agreement. There are no
restrictions imposed by lease arrangements. There are no sub-leases.
11. In accordance with paragraph 10 of Notified Accounting Standard 9
on Revenue Recognition, excise duty on sales amounting to Rs. 673.3
(March 31, 2009: Rs. 904.2) has been reduced from sales in Profit and
Loss Account and excise duty on increase/decrease in closing stock of
finished goods amounting to Rs. 2.1 (March 31, 2009: Rs. 0.7) has been
debited to (March 31, 2009: credit) in the Profit and Loss Account.
12. The Company has appointed an employee covered under Section 314 of
the Companies Act, 1956. The employment is subject to an approval from
the Central Government. The Company has filed an application for
obtaining the approval and the same is pending with the Central
Government. In the meanwhile, the Company has paid remuneration to the
employee. The Company is confident of obtaining approval from the
Central Government and believes that the risk of rejection of the
employment contract by the Central Government is remote.
13. In accordance with Accounting Standard 17 - Segment Reporting,
segment information has been provided in the consolidated financial
statements of the Company and therefore no separate disclosure on
segment information is given in these standalone financial statements.
14. The current year figures include those relating to transferor
company viz., Trident Life Sciences Limited and therefore the figures
of the previous year are not comparable with those of the current year.
Further, the figures of the previous year have been
re-grouped/rearranged, wherever necessary to conform to those of the
current year.
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Aurobindo Pharma Ltd. குறித்த கூடுதல் தகவல்களை
-
Aurobindo Pharma Ltd. டூல்ஸ்
- பல்க் டீல்ஸ்
- பிளாக் டீல்ஸ்
-
Aurobindo Pharma Ltd. நிறுவன தகவல்கள்
- நிறுவன சுயவிவரம்
- நிறுவன வரலாறு
- நிர்வாக குழு
- மூலதன வடிவம்
- புராடெக்ட் மிக்ஸ்
- வங்கியாளர்/தணிக்கையாளர்/பதிவாளர்
-
நிறுவன வரலாறு
- போனஸ்
- மும்பை பங்குச் சந்தையில் விலை வரலாறு
- என்எஸ்இ விலை வரலாறு
-
Aurobindo Pharma Ltd. முக்கிய நிதியில் விகிதங்கள்
- விகிதங்கள்
-
Aurobindo Pharma Ltd. முடிவுகள்
- காலாண்டு முடிவுகள்
- அரையாண்டு முடிவுகள்
- 9 மாத முடிவுகள்
- வருடாந்திர முடிவுகள்
-
Aurobindo Pharma Ltd. நிதியியல் தகவல்கள்
- தணிக்கை முடிவுகள்
- பணப்பாய்வு
- இருப்பு நிலைக்குறிப்பு
-
Aurobindo Pharma Ltd. அறிக்கை
- கணக்கியல் கோட்பாடுகள்
- தணிக்கையாளர்கள் அறிக்கை
- இயக்குநர்கள் அறிக்கை
- கணக்கு குறிப்புகள்
-
Aurobindo Pharma Ltd. கார்ப்பரேட் அறிவிப்புகள்
- புத்தக முடிவு
- ஈவுத்தொகை
- நிர்வாகக் குழுக் கூட்டங்கள்
