Sun Pharmaceutical Industries Ltd. இன் கணக்கு குறிப்புகள்
Mar 31, 2023
Nature and purpose of each reserve
Capital reserve - During amalgamation / merger / acquisition, the excess of net assets taken, over the consideration paid, if any, is treated as capital reserve.
Securities premium - The amount received in excess of face value of the equity shares is recognised in securities premium. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium. It is utilised in accordance with the provisions of the Companies Act, 2013.
Amalgamation reserve - The reserve was created pursuant to scheme of amalgamation in earlier years.
Capital redemption reserve - The Company has recognised capital redemption reserve on buyback of equity shares from its retained earnings. The amount in capital redemption reserve is equal to nominal amount of the equity shares bought back.
General reserve: The reserve arises on transfer portion of the net profit pursuant to the earlier provisions of Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.
Equity instrument through OCI - The Company has elected to recognise changes in the fair value of certain investment in equity instrument in other comprehensive income. This amount will be reclassified to retained earnings on derecognition of equity instrument.
Debt instrument through OCI - This represents the cumulative gain and loss arising on fair valuation of debt instruments measured through other comprehensive income. This will be reclassified to statement of profit or loss on derecognition of debt instrument.
Foreign currency translation reserve - Exchange differences relating to the translation of the results and the net assets of the Company''s foreign operations from their functional currencies to the Company''s presentation currency (i.e. ^) are recognised directly in the other comprehensive income and accumulated in foreign currency translation reserve. Exchange difference in the foreign currency translation reserve are reclassified to statement of profit or loss account on the disposal of the foreign operation.
Effective portion of cash flow hedges - The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges.
The cumulative gain or loss recognised and accumulated under the cash flow hedge reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basis adjustment to the non-financial hedged item.
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximates the fair value because there is wide range of possible fair value measurements and the costs represents estimate of fair value within that range.
# These investments in equity instruments are not held for trading. Upon the application of Ind AS 109, the Company has chosen to designate these investments in equity instruments at fair value through other comprehensive income.
There were no transfers between Level 1 and 2 in the periods.
The management considers that the carrying amount of financial assets and financial liabilities carried at amortised cost approximates their fair value.
NOTE: 44 FINANCIAL RISK MANAGEMENT
The Company''s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company''s risk management assessment and policies and processes are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company''s activities.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers, loans and investments. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of counterparty to which the Company grants credit terms in the normal course of business.
Investments
The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have a good credit rating. The Company does not expect any significant losses from non-performance by these counter-parties, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.
Other than trade receivables, the Company has recognised an allowance of ? 15.3 Million (March 31, 2022: ? 15.3 Million) against past due loans including interest and ? 500 Million (March 31, 2022: ? 500.0 Million) of other receivables based on assessment regarding its future recoverability.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company''s reputation.
The Company has unutilised working capital lines from banks of ? 35,780.0 Million as on March 31, 2023 (March 31, 2022:
? 36,030.0 Million).
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchange rates and commodity prices) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and long-term debt. The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of its investments. Thus, the Company''s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.
The Company''s foreign exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily in US Dollars, Euros, South African Rand, Brazilian Real and Russian Rouble). As a result, if the value of the Indian rupee appreciates relative to these foreign currencies, the Company''s revenues and expenses measured in Indian rupees may decrease or increase and vice-versa. The exchange rate between the Indian rupee and these foreign currencies have changed substantially in recent periods and may continue to fluctuate substantially in the future. Consequently, the Company uses both derivative and non-derivative financial instruments, such as foreign exchange forward contracts, option contracts, currency swap contracts and foreign currency financial liabilities, to mitigate the risk of changes in foreign currency exchange rates in respect of its highly probable forecasted transactions and recognised assets and liabilities.
b) Sensitivity
For the years ended March 31, 2023 and March 31, 2022, every 5% strengthening in the exchange rate between the Indian rupee and the respective currencies for the above mentioned financial assets/liabilities would (decrease) / increase the Company''s profit and (decrease) / increase the Company''s equity by approximately ? (2,685.5) Million and ? (651.9) Million respectively. A 5% weakening of the Indian rupee and the respective currencies would lead to an equal but opposite effect.
In management''s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.
The Company is exposed to exchange rate risk that arises from its foreign exchange revenues and expenses, primarily in US Dollars, Euros, South African Rand, Brazilian Real and Russian Rouble. The Company uses foreign currency forward contracts, foreign currency option contracts and currency swap contracts (collectively, âderivativesâ) to mitigate its risk of changes in foreign currency exchange rates. The counterparty for these contracts is generally a bank or a financial institution.
Hedges of highly probable forecasted transactions
The Company designates its derivative contracts that hedge foreign exchange risk associated with its highly probable forecasted transactions as cash flow hedges and measures them at fair value. The effective portion of such cash flow hedges is recorded in other comprehensive income, and re-classified in the income statement as revenue in the period corresponding to the occurrence of the forecasted transactions. The ineffective portion of such cash flow hedges is immediately recorded in the statement of profit and loss.
In respect of the aforesaid hedges of highly probable forecasted transactions, the Company has recorded a net loss of ? 192.4 Million for the year ended March 31, 2023 and net loss of ? 492.4 Million for the year ended March 31, 2022 in other comprehensive income. The Company also recorded hedges as a component of revenue, loss of ? 1,076.9 Million for the year ended March 31, 2023 and gain of ? 1,128.3 Million for the year ended March 31, 2022 on occurrence of forecasted sale transaction.
Changes in the fair value of forward contracts and option contracts that economically hedge monetary assets and liabilities in foreign currencies, and for which no hedge accounting is applied, are recognised in the statement of profit and loss. The changes in fair value of the forward contracts and option contracts, as well as the foreign exchange gains and losses relating to the monetary items, are recognised in the statement of profit and loss.
As at March 31, 2023 and March 31, 2022, the Company has loan facilities which are either on fixed interest rates or are managed by interest rate swaps. Hence the Company is not exposed to interest rate risk.
Exposure to market risk with respect to commodity prices primarily arises from the Company''s purchases and sales of active pharmaceutical ingredients, including the raw material components for such active pharmaceutical ingredients. 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 active pharmaceutical ingredients 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 March 31, 2023, the Company had not entered into any material derivative contracts to hedge exposure to fluctuations in commodity prices.
NOTE: 47 EMPLOYEE BENEFIT PLANS Defined contribution plan
Contributions are made to Regional Provident Fund (RPF), Family Pension Fund, Employees State Insurance Scheme (ESIC) and other Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund and other Statutory Funds are made only by the Company. The contributions are normally based on a certain percentage of the employee''s salary. Amount recognised as expense in respect of these defined contribution plans, aggregate to ? 951.9 Million (March 31, 2022: ? 872.1 Million).
Defined benefit plana) Gratuity
In respect of Gratuity, a defined benefit plan, contributions are made to LIC''s Recognised Group Gratuity Fund Scheme. It is governed by the Payment of Gratuity Act, 1972. Under the Gratuity Act, employees are entitled to specific benefit at the time of retirement or termination of the employment on completion of five years or death while in employment. The level of benefit provided depends on the member''s length of service and salary at the time of retirement/ termination age. Provision for gratuity is based on actuarial valuation done by an independent actuary as at the year end. Each year, the Company reviews the level of funding in gratuity fund and decides its contribution. The Company aims to keep annual contributions relatively stable at a level such that the fund assets meets the requirements of gratuity payments in short to medium term.
b) Pension fund
The Company has an obligation towards pension, a defined benefit retirement plan, with respect to certain employees, who had already retired before March 01, 2013 and will continue to receive the pension as per the pension plan.
c) COVID-19 Employee children education support
The Company have undertaken an obligation to provide financial support towards education expenses of the children of those employees who have lost their lives due to the COVID-19 pandemic.
These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
i) Investment risk - The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the market yields on government bonds denominated in Indian Rupees. If the actual return on plan asset is below this rate, it will create a plan deficit. However, the risk is partially mitigated by investment in LIC managed fund.
ii) Interest rate risk - A decrease in the bond interest rate will increase the plan liability. However, this will be partially offset by an increase in the return on the plan''s debt investments.
iii) Longevity risk - The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.
iv) Salary risk - The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.
Actuarial Valuation for compensated absences is done as at the year end and the provision is made as per Company policy with corresponding charge to the statement of profit and loss amounting to ? 234.8 Million [March 31, 2022: ? 539.5 Million] and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation.
Obligation in respect of defined benefit plan and other long term employee benefit plans are actuarially determined as at the year end using the âProjected Unit Credit'' method. Gains and losses on changes in actuarial assumptions relating to defined benefit obligation are recognised in other comprehensive income whereas gains and losses in respect of other long term employee benefit plans are recognised in profit or loss.
Contract assets are initially recognised for revenue from sale of goods. Contract liabilities are on account of the upfront revenue received from customer for which performance obligation has not yet been completed.
The performance obligation is satisfied when control of the goods or services are transferred to the customers based on the contractual terms. Payment terms with customers vary depending upon the contractual terms of each contract.
The Company has recognised revenue of ? 3,239.1 Million from the amounts included under advance received from customers at the beginning of the year.
NOTE: 55
1 Intangible assets consisting of trademarks, designs, technical knowhow, non-compete fees and other intangible assets are available to the Company in perpetuity. The amortisable amount of intangible assets is arrived at based on the management''s best estimates of useful lives of such assets after due consideration as regards their expected usage, the product life cycles, technical and technological obsolescence, market demand for products, competition and their expected future benefits to the Company.
2 Exceptional items includes
a) The Company has recognised an impairment charge of ? 29,377.9 Million in relation to the Company''s investment in equity and preference shares of Sun Pharma Holdings, Mauritius, (âSPHâ) amounting to ? 127,673.7 Million in the standalone financial statements for the year ended March 31, 2023.
Investment by SPH in its step down subsidiaries, primarily in Taro, are determined as CGU as they derive their revenue from pharmaceutical products.
The recoverable value of CGU represents its Value-in-use. The Value-in-use is determined using the discounted cash flow method on projections using a post-tax rate of 8% while the post-tax discount rate in previous year was 7%. As per management assessment, the fair valuation of the CGU is lower than its carrying value which is on account of various reasons including but not limited to pricing pressure in the United States, delays in launch of generic products, etc. Accordingly, the valuation gap has been addressed by impairment to that extent.
b) Standalone financial statements for the year ended March 31, 2022 include a charge of ? 1,655.7 Million towards impairment of an acquired intangible asset under development.
c) The Company and certain of its subsidiaries were defendants in a number of class action lawsuits brought by purchasers and payors in the U.S. alleging violation of antitrust laws with respect to its ANDAs for Valganciclovir, Valsartan and Esomeprazole. The cases were transferred to the U.S. District Court for the District of Massachusetts for coordinated proceedings. With a view to resolve the dispute and avoid uncertainty, a settlement without any admission of guilt or violation of any statute, law, rule or regulation, or of any liability
or wrongdoing was reached with all of the plaintiff classes on March 23, 2022, for a total settlement amount of USD 485 Million of which USD 210 Million was borne by the Company along with its related legal charges of USD 8.3 Million pertaining to this lawsuit (equivalent to ? 16,549.6 Million inclusive of legal charges). The charge for the settlement was considered in the year ended March 31, 2022. The court granted final approval to the settlement and dismissed all of the cases in September 2022.
d) Consequent to the settlement of lawsuit mentioned in âcâ above, during the year ended March 31, 2022, the Company has reassessed the expected timing of utilisation of Minimum Alternate Tax (MAT) credit and based on this reassessment written off a MAT credit of ? 4,406.0 Million and disclosed the charge as an exceptional item.
3. Since the US FDA import alert at Karkhadi facility in March 2014, the Company has remained fully committed to implement all corrective measures to address the observations made by the US FDA with the help of third-party consultants. The Company had completed all the action items to address the US FDA warning letter observations issued in May 2014. The Company does not intend to use the Karkhadi facility for drug product manufacturing for the U.S. market. The contribution of this facility to Company''s revenues was negligible.
4. The US FDA, on January 23, 2014, had prohibited using API manufactured at Toansa facility for manufacture of finished drug products intended for distribution in the U.S. market. Consequentially, the Toansa manufacturing facility was subject to certain provisions of the consent decree of permanent injunction entered in January 2012 by erstwhile Ranbaxy Laboratories Ltd. (which was merged with Sun Pharmaceutical Industries Ltd. in March 2015). In addition, the United States Attorney''s Office for the District of New Jersey (US DOJ) had also issued an administrative subpoena, dated March 13, 2014, seeking information. The Company has fully cooperated and provided the requisite information to the US DOJ. All the Drug Master Files (DMF) from Toansa Facility for the U.S. market have been withdrawn, and the Company does not intend to use the facility for the U.S. market.
5. The Halol facility was placed under import alert in December 2022. US FDA has exempted 14 products from import alert, subject to certain conditions. Previously, the facility was inspected by US FDA in May 2022 and the inspection was classified as Official Action Indicated (OAI) in August 2022. The Company is in communication with the US FDA to resolve the outstanding issues underlying OAI status and import alert.
6. In September 2013, the US FDA had put the Mohali facility under import alert, and it was also subjected to certain provisions of the consent decree of permanent injunction entered in January 2012 by erstwhile Ranbaxy Laboratories Ltd. (which was merged with Parent Company in March 2015). In March 2017, the US FDA lifted the import alert
and indicated that the facility was in compliance with the requirements of cGMP provisions mentioned in the consent decree. The Mohali facility completed the five-year, post-certification provisions as required by the consent decree. The August 2022 US FDA inspection of Mohali facility was classified as Official Action Indicated (OAI) and subsequently, in April 2023, the US FDA issued a Non-Compliance letter to the Mohali facility. As a result, US FDA has directed the Company to take certain corrective actions at the Mohali facility before releasing further final product batches into the US. These actions include, among others, retaining an independent cGMP expert to conduct batch certifications of drugs manufactured at the Mohali facility and for shipment to the U.S. market.
7. In accordance with Ind AS 108 âOperating Segmentsâ, segment information has been given in the consolidated Ind AS financial statements, and therefore, no separate disclosure on segment information is given in these standalone financial statements.
8. During the year ended March 31, 2022, the Company had acquired additional 11.28% stake in Zenotech Laboratories Limited (Zenotech), a subsidiary of the Company, from Daiichi Sankyo Company Ltd. for a total consideration of
? 53.2 Million pursuant to a share purchase agreement. Post this acquisition, the Company''s shareholding in Zenotech increased from 57.56 % to 68.84%.
9. The date of implementation of the Code on Wages 2019 and the Code on Social Security, 2020 is yet to be notified by the Government. The Company will assess the impact of these Codes and give effect in the standalone financial statements when the Rules / Schemes thereunder are notified.
10. Corporate social responsibility (CSR)
As per section 135 of the Companies Act, 2013, the Company is required to spend at least 2% of its average net profits for the immediately preceding three financial years on corporate social responsibility activities. The CSR Committee of the Company monitors the CSR activities and the projects are undertaken in pursuance of the Company''s CSR Policy and the Annual Action Plan. Company''s Annual Action Plan for the financial year 2022-23 covered CSR activities in the areas - Healthcare; Education; Environment Conservation; Drinking Water Project; Disaster Relief and Rural Development Programme.
11. On March 01, 2023, the Company disclosed an information security incident that impacted some of the Company''s IT assets. The Company promptly took steps to contain and remediate the impact of the information security incident, including employing appropriate containment protocols to mitigate the threat, employing enhanced security measures and utilising global cyber security experts to ensure the integrity of the Company''s IT systems'' infrastructure and data. As part of the containment measures, the Company proactively isolated its network and initiated recovery procedures. As a result of these measures, certain business operations were also impacted.
Based on the Company''s investigation, the Company currently believes that the incident''s effects on its IT system include a breach of certain file systems and the theft of Company data and personal data. A ransomware group has claimed responsibility for this incident.
The Company has since strengthened its cybersecurity infrastructure and is in the process of implementing improvements to its cyber and data security systems to safeguard against such risks in the future. The Company is also implementing certain long-term measures to augment its security controls systems across the organization. The Company worked with legal counsel across relevant jurisdictions to notify applicable regulatory and data protection authorities, where considered required, and the Company believes there is no material legal non-compliance by the Company on account of the information security incident. The Company believes that all known impacts on its standalone financial statements for the year ended March 31, 2023 on account of this incident have been considered.
12. The Scheme of Amalgamation and Merger of Sun Pharma Global FZE (âthe Transferorâ), with the Company (âthe Schemeâ), inter-alia envisaged merger of the transferor into the Company. The scheme was approved by Hon''ble National Company Law Tribunal, Ahmedabad Bench on August 31, 2021 and became effective on October 01, 2021 upon completion of all the formalities.
Consequent to the amalgamation and merger prescribed by the Scheme, all the assets and liabilities of the transferor were transferred to and vested in the Company with effect from January 01, 2020 (âthe Appointed Dateâ). The amalgamation was accounted under the âpooling of interestâ method prescribed under Ind AS 103 - Business Combinations, as prescribed by the Scheme.
Accordingly all the assets, liabilities, and other reserves of the transferor as on January 01, 2020 were transferred to the Company as per the Scheme. As prescribed by the Scheme no consideration was paid as the transferor is a indirect wholly owned subsidiary of the Company. The resultant difference between the book value of assets and liabilities taken-over as on the appointed date on the existing carrying value has been credited to capital reserve amounting to ? 273.3 Million. Further, as prescribed in the scheme approved by the NCLT , the Company had recorded an impact of impairment in relation to the equity shares held by the Company in the subsidiary through which the Company holds equity shares of the Transferor amounting to ? 31,590.0 Million which has been debited to capital reserve account. Also, any gain or loss on translation of assets and liabilities to functional currency (i.e. ^) till the date of order was credited or debited to foreign currency translation reserve.
13. As part of the ongoing simplification of the group structure in India, the Board of Directors of the Company at its meeting held on May 30, 2022, approved the Scheme of Amalgamation for the merger of Wholly-owned Subsidiaries, Sun Pharmaceutical Medicare Limited, Green Eco Development Centre Limited, Faststone Mercantile Company Private Limited, Realstone Multitrade Private Limited and Skisen Labs Private Limited (collectively âTransferor Companiesâ), with Sun Pharmaceutical Industries Limited (âTransferee Companyâ) to be effective from such date as may be decided under the authorisation by the Board of Directors of the Transferor Companies and the Board of Directors of the Transferee Company and / or such other date as may be approved by the National Company Law Tribunal pursuant to the provisions of Sections 230 to 232 of Companies Act, 2013 and other relevant provisions of the Companies Act, 2013 and rules framed thereunder.
15. No proceeding have been initiated or pending against the Company under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the Rules made thereunder.
16. The Company has not traded or invested in crypto currency or virtual currency during the financial year.
17. The Company has not granted any loans or advances in the nature of loans to promoters, directors and KMPs, either severally or jointly with any other person. No trade or other receivable are due from directors of the company either severally or jointly with any other person.
18. The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961)
19. The Company has not been sanctioned working capital limits from banks or financial institutions during any point of time of the year on the basis of security of current assets.
20. The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
21. 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, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries. However , the Company, as a part of its treasury operations, invests/advances loans to fund the operations of its subsidiaries/associates/ joint venture which have further utilised these funds for their general corporate purposes/ working capital, etc. within the consolidated group of the Company and in the ordinary course of business. These transactions are done on arms length basis following a due approval process.
Further, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (âFunding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
24. Relationship with Struck off Companies
The Company does not have any transactions and balances with companies which are struck off except shares held by 10 shareholders holding 11,889 shares (March 31, 2022 - 8 shareholders holding 7,653 shares) having face value of ? 1 per share.
25. Figures for previous year have been regrouped / reclassified wherever considered necessary.
Mar 31, 2022
(i) Buildings include '' 8,620 (As at March 31, 2021 : '' 8,620) towards cost of shares in a co-operative housing society and also includes '' 1.1 Million (As at March 31, 2021 : '' 1.1 Million) and '' 1,133.0 Million (As at March 31, 2021 : '' 1,133.0 Million) towards cost of non-convertible preference shares of face value of '' 10/- each and compulsorily convertible debentures of face value of '' 10,000/- each in a Company respectively entitling the right of occupancy and use of premises and also includes '' 4.5 Million (March 31, 2021 : '' 4.5 Million) towards cost of flats not registered in the name of the Company but is entitled to right of use and occupancy.
(ii) For details of assets pledged as security refer Note 48.
(iii) The aggregate depreciation has been included under depreciation and amortisation expense in the Statement of Profit and Loss.
(i) The aggregate amortisation has been included under depreciation and amortisation expense in the Statement of Profit and Loss.
(ii) Refer Note 54 (1)
(iii) The recoverable amount of Goodwill have been determined based on value in use calculations which uses cash flow projections covering generally a period of five years which are based on key assumptions such as margins, expected growth rates based on past experience and Management''s expectations/ extrapolation of normal increase/ steady terminal growth rate and appropriate discount rates that reflects current market assessments of time value of money. The management believes that any reasonable possible change in key assumptions on which recoverable amount is based is not expected to cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash generating unit.
(i) Inventory write downs are accounted considering the nature of inventory, estimated shelf life, planned product discontinuances, price changes, ageing of inventory and introduction of competitive new products as well as the provisioning policy. Write downs of inventories amounted to ? 8,461.7 Million (March 31, 2021: ? 8,433.6 Million). The changes in write downs are recognised as an expense in the statement of profit and loss. The inventories with overseas contract manufacturers are stated as per the quantitative confirmations received from the respective parties.
(ii) For details of inventories pledged as security refer Note 48.
(iii) The cost of inventories recognised as an expense is disclosed in Notes 31, 32 and 35 and as purchases of stock-in-trade in the statement of profit and loss.
(i) Nil (upto March 31, 2021: 334,956,764) equity shares of '' 1 each have been allotted, pursuant to scheme of amalgamation, without payment being received in cash during the period of five years immediately preceding the date at which the Balance Sheet is prepared.
(ii) 7,500,000 (upto March 31, 2021: 7,500,000) equity shares of '' 1 each have been bought back during the period of five years immediately preceding the date at which the Balance Sheet is prepared. The shares bought back were cancelled.
(iii) Rights, Preference and Restrictions attached to equity shares: The equity shares of the Company, having par value of '' 1 per share, rank pari passu in all respects including voting rights and entitlement to dividend.
(i) Buildings include '' 8,620 (As at March 31, 2021 : '' 8,620) towards cost of shares in a co-operative housing society and also includes '' 1.1 Million (As at March 31, 2021 : '' 1.1 Million) and '' 1,133.0 Million (As at March 31, 2021 : '' 1,133.0 Million) towards cost of non-convertible preference shares of face value of '' 10/- each and compulsorily convertible debentures of face value of '' 10,000/- each in a Company respectively entitling the right of occupancy and use of premises and also includes '' 4.5 Million (March 31, 2021 : '' 4.5 Million) towards cost of flats not registered in the name of the Company but is entitled to right of use and occupancy.
(ii) For details of assets pledged as security refer Note 48.
(iii) The aggregate depreciation has been included under depreciation and amortisation expense in the Statement of Profit and Loss.
(i) The aggregate amortisation has been included under depreciation and amortisation expense in the Statement of Profit and Loss.
(ii) Refer Note 54 (1)
(iii) The recoverable amount of Goodwill have been determined based on value in use calculations which uses cash flow projections covering generally a period of five years which are based on key assumptions such as margins, expected growth rates based on past experience and Management''s expectations/ extrapolation of normal increase/ steady terminal growth rate and appropriate discount rates that reflects current market assessments of time value of money. The management believes that any reasonable possible change in key assumptions on which recoverable amount is based is not expected to cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash generating unit.
(i) Inventory write downs are accounted considering the nature of inventory, estimated shelf life, planned product discontinuances, price changes, ageing of inventory and introduction of competitive new products as well as the provisioning policy. Write downs of inventories amounted to ? 8,461.7 Million (March 31, 2021: ? 8,433.6 Million). The changes in write downs are recognised as an expense in the statement of profit and loss. The inventories with overseas contract manufacturers are stated as per the quantitative confirmations received from the respective parties.
(ii) For details of inventories pledged as security refer Note 48.
(iii) The cost of inventories recognised as an expense is disclosed in Notes 31, 32 and 35 and as purchases of stock-in-trade in the statement of profit and loss.
(i) Nil (upto March 31, 2021: 334,956,764) equity shares of '' 1 each have been allotted, pursuant to scheme of amalgamation, without payment being received in cash during the period of five years immediately preceding the date at which the Balance Sheet is prepared.
(ii) 7,500,000 (upto March 31, 2021: 7,500,000) equity shares of '' 1 each have been bought back during the period of five years immediately preceding the date at which the Balance Sheet is prepared. The shares bought back were cancelled.
(iii) Rights, Preference and Restrictions attached to equity shares: The equity shares of the Company, having par value of '' 1 per share, rank pari passu in all respects including voting rights and entitlement to dividend.
Nature and purpose of each reserve
Capital reserve - During amalgamation / merger / acquisition, the excess of net assets taken, over the consideration paid, if any, is treated as capital reserve.
Securities premium - The amount received in excess of face value of the equity shares is recognised in securities premium. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium. It is utilised in accordance with the provisions of the Companies Act, 2013.
Amalgamation reserve - The reserve was created pursuant to scheme of amalgamation in earlier years.
Capital redemption reserve - The Company has recognised capital redemption reserve on buyback of equity shares from its retained earnings. The amount in capital redemption reserve is equal to nominal amount of the equity shares bought back.
General reserve: The reserve arises on transfer portion of the net profit pursuant to the earlier provisions of Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.
Equity instrument through OCI - The Company has elected to recognise changes in the fair value of certain investment in equity instrument in other comprehensive income. This amount will be reclassified to retained earnings on derecognition of equity instrument.
Debt instrument through OCI - This represents the cumulative gain and loss arising on fair valuation of debt instruments measured through other comprehensive income. This will be reclassified to statement of profit or loss on derecognition of debt instrument.
Nature and purpose of each reserve
Capital reserve - During amalgamation / merger / acquisition, the excess of net assets taken, over the consideration paid, if any, is treated as capital reserve.
Securities premium - The amount received in excess of face value of the equity shares is recognised in securities premium. In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium. It is utilised in accordance with the provisions of the Companies Act, 2013.
Amalgamation reserve - The reserve was created pursuant to scheme of amalgamation in earlier years.
Capital redemption reserve - The Company has recognised capital redemption reserve on buyback of equity shares from its retained earnings. The amount in capital redemption reserve is equal to nominal amount of the equity shares bought back.
General reserve: The reserve arises on transfer portion of the net profit pursuant to the earlier provisions of Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.
Equity instrument through OCI - The Company has elected to recognise changes in the fair value of certain investment in equity instrument in other comprehensive income. This amount will be reclassified to retained earnings on derecognition of equity instrument.
Debt instrument through OCI - This represents the cumulative gain and loss arising on fair valuation of debt instruments measured through other comprehensive income. This will be reclassified to statement of profit or loss on derecognition of debt instrument.
recognised directly in the other comprehensive income and accumulated in foreign currency translation reserve. Exchange difference in the foreign currency translation reserve are reclassified to statement of profit or loss account on the disposal of the foreign operation.
Effective portion of cash flow hedges - The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss recognised and accumulated under the cash flow hedge reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basis adjustment to the non-financial hedged item.
|
NOTE : 38 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR) |
|||
|
'' in Million |
|||
|
As at March 31, 2022 |
As at March 31, 2021 |
||
|
i Contingent liabilities |
|||
|
a |
Claims against the Company not acknowledged as debts |
567.6 |
556.5 |
|
b |
Liabilities disputed - appeals filed with respect to : |
||
|
Income tax on account of disallowances / additions (Company appeals) * |
4,125.5 |
24,277.6 |
|
|
Sales tax on account of rebate / classification |
119.9 |
148.4 |
|
|
Goods and service tax / Excise duty / service tax on account of valuation / cenvat credit |
301.4 |
391.4 |
|
|
ESIC contribution on account of applicability |
130.5 |
130.5 |
|
|
c |
Drug Price Equalisation Account [DPEA] on account of demand towards unintended benefit enjoyed by the Company |
3,474.2 |
3,488.2 |
|
d |
Other matters - state electricity board, Punjab Land Preservation Act related matters etc. |
90.6 |
90.2 |
|
Note : includes interest till the date of demand, wherever applicable |
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e Legal proceedings
The Company and/or its subsidiaries are involved in various legal proceedings including product liability, contracts, employment claims, antitrust and other legal and regulatory matters relating to the conduct of its business. Some of the key matters are discussed below. Most of the legal proceedings involve complex issues, which are specific to the case and do not have precedents, and, hence, for a majority of these claims, it is not possible to make a reasonable estimate of the expected financial effect, if any, that will result from ultimate resolution of the proceedings. This is due to a number of factors, including: the stage of the proceedings and the overall length and the discovery process; the entitlement of the parties to an action to appeal a decision; the extent of the claims, including the size of any potential class, particularly when damages are not specified or are indeterminate; the possible need for further legal proceedings to establish the appropriate amount of damages, if any; the settlement posture of the other parties to the litigation, and any other factors that may have a material effect on the litigation. The Company makes its assessment of likely outcome based on the views of internal legal counsel and in consultation with external legal counsel representing the Company. The Company also believes that disclosure of the amount sought by plaintiffs would not be meaningful because historical evidence indicates that the amounts settled (if any) are significantly different than those claimed by plaintiffs. Some of the legal claims against the Company, if decided against the Company or settled by the Company, may result in significant impact on its results of operations.
Antitrust - Lipitor:
The Company and certain of its subsidiaries are defendants in a number of putative class action lawsuits and individual actions brought by purchasers and payors in the U.S. alleging that the Company and certain of its subsidiaries violated antitrust laws in connection with a 2008 patent settlement agreement with Pfizer concerning Atorvastatin. The cases have been transferred to the U.S. District Court for the District of New Jersey for coordinated proceedings. Discovery commenced in January
2020, but was stayed in March 2020 pending mediation. Pursuant to the mediator''s order of June 03,
2021, briefing on certain issues was completed by March 2022, and argument on these issues will likely occur in subsequent months.
Product Liability - Ranitidine/Zantac MDL:
In June 2020, the Company and certain of its subsidiaries were named as defendants in a complaint filed in the Zantac/Ranitidine Multi-District Litigation (âMDLâ) consolidated in the U.S. District Court for the Southern District of Florida. The lawsuits name over 100 defendants, including brand manufacturers, generic manufacturers, repackagers, distributors, and retailers, involving allegations of injury caused by nitrosamine impurities. Discovery in the MDL is ongoing. On July 8, 2021, the District Court granted the generic Defendants'' motion to dismiss, the effect of which was to dismiss the Company and its affiliates with prejudice. That decision is up on appeal. In addition to the federal court proceedings, two of the Company''s affiliates also have been named as defendants in state court actions pending in Illinois, Pennsylvania, New York, and California. Finally, certain of the Company''s subsidiaries are named in three putative class actions pending in three Canadian provinces. The action pending in British Columbia is taking the lead and is in the class certification stage.
Fine imposed for anti-competitive settlement agreement by European Commission:
On March 25, 2021, the Court of Justice of the European Union (âCJEUâ) issued a final judgment and upheld the European Commission''s (âECâ) decision dated June 19, 2013 that a settlement agreement between Ranbaxy (U.K.) Limited and Ranbaxy Laboratories Limited (together âRanbaxyâ) with Lundbeck was anti-competitive. Ranbaxy had made a provisional payment of the fine of Euro 10.3 Million on September 20, 2013. Since there are no further rights of appeal, this amount of '' 895.6 Million (inclusive of legal charges) was provided in the standalone financial statements for the year ended March 31, 2021.
The Company may now be subject to âfollow-onâ claims in national courts of some countries. However, the Company has not yet been served with a claim detailing the alleged causation and quantum of any purported damages. Accordingly, the Company is currently unable to estimate the potential liability which may arise on account of follow-on claims. The Company also believes, based on its internal assessment and that of its independent legal counsel, that it has favourable legal arguments in terms of defending any potential damages claim.
Note:
Future cash outflows in respect of the above matters are determinable only on receipt of judgements / decisions pending at various forums / authorities.
* Income tax matters where department has preferred an appeal against favourable order received by the Company amounted to '' 22,253.0 Million (March 31, 2021: '' 21,808.4 Million). These matters are sub-judice in various forums and pertains to various financial years.
ii Commitments
a Estimated amount of contracts remaining to be executed on capital account [net of advances] * b Uncalled liability on partly paid investments c Letters of credit for imports
* The Company is committed to pay milestone payments and royalty on certain contracts, however, obligation to pay is contingent upon fulfilment of contractual obligation by parties to the contract.
iii Guarantees given by the bankers on behalf of the Company
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximates the fair value because there is wide range of possible fair value measurements and the costs represents estimate of fair value within that range.
# These investments in equity instruments are not held for trading. Upon the application of Ind AS 109, the Company has chosen to designate these investments in equity instruments at fair value through other comprehensive income.
There were no transfers between Level 1 and 2 in the periods.
The management considers that the carrying amount of financial assets and financial liabilities carried at amortised cost approximates their fair value.
NOTE : 43 FINANCIAL RISK MANAGEMENT
The Company''s activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Company''s risk management assessment and policies and processes are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company''s activities.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers, loans and investments. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of counterparty to which the Company grants credit terms in the normal course of business.
The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have a good credit rating. The Company does not expect any significant losses from non-performance by these counterparties, and does not have any significant concentration of exposures to specific industry sectors or specific country risks
The Company has used expected credit loss (ECL) model for assessing the impairment loss. For the purpose, the Company uses a provision matrix to compute the expected credit loss amount. The provision matrix takes into account external and internal risk factors and historical data of credit losses from various customers.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company''s reputation.
The Company has unutilised working capital lines from banks of '' 36,030.0 Million as on March 31, 2022 (March 31, 2021 : '' 36,486.6 Million).
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchange rates and commodity prices) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and longterm debt. The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of its investments. Thus, the Company''s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.
The Company''s foreign exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily in US Dollars, Euros, South African Rand and Russian Rouble). As a result, if the value of the Indian rupee appreciates relative to these foreign currencies, the Company''s revenues and expenses measured in Indian rupees may decrease or increase and vice-versa. The exchange rate between the Indian rupee and these foreign currencies have changed substantially in recent periods and may continue to fluctuate substantially in the future. Consequently, the Company uses both derivative and non-derivative financial instruments, such as foreign exchange forward contracts, option contracts, currency swap contracts and foreign currency financial liabilities, to mitigate the risk of changes in foreign currency exchange rates in respect of its highly probable forecasted transactions and recognised assets and liabilities.
b) Sensitivity
For the years ended March 31, 2022 and March 31, 2021, every 5% strengthening of the Indian rupee against foreign currencies for the above mentioned financial assets/liabilities would (decrease) / increase the Company''s profit and (decrease) / increase the Company''s equity by approximately '' (651.9) Million and '' (1,310.8) Million respectively.
A 5% weakening of the Indian rupee and the respective currencies would lead to an equal but opposite effect.
In management''s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.
c) Derivative contracts
The Company is exposed to exchange rate risk that arises from its foreign exchange revenues and expenses, primarily in US Dollars, Euros, South African Rand and Russian Rouble. The Company uses foreign currency forward contracts, foreign currency option contracts and currency swap contracts (collectively, âderivativesâ) to mitigate its risk of changes in foreign currency exchange rates. The counterparty for these contracts is generally a bank or a financial institution.
Hedges of highly probable forecasted transactions
The Company designates its derivative contracts that hedge foreign exchange risk associated with its highly probable forecasted transactions as cash flow hedges and measures them at fair value. The effective portion of such cash flow hedges is recorded as in other comprehensive income, and re-classified in the income statement as revenue in the period corresponding to the occurrence of the forecasted transactions. The ineffective portion of such cash flow hedges is immediately recorded in the statement of profit and loss.
In respect of the aforesaid hedges of highly probable forecasted transactions, the Company has recorded a net loss of '' 492.4 Million for the year ended March 31, 2022 and net gain of '' 1,112.4 Million for the year ended March 31, 2021 in other comprehensive income. The Company also recorded hedges as a component of revenue, gain of '' 1,128.3 Million for the year ended March 31, 2022 and gain of '' 108.6 Million for the year ended March 31, 2021 on occurrence of forecasted sale transaction.
Changes in the fair value of forward contracts and option contracts that economically hedge monetary assets and liabilities in foreign currencies, and for which no hedge accounting is applied, are recognised in the statement of profit and loss. The changes in fair value of the forward contracts and option contracts, as well as the foreign exchange gains and losses relating to the monetary items, are recognised in the statement of profit and loss.
Interest rate risk
The Company has loan facilities on floating interest rate, which exposes the Company to risk of changes in interest rates. The Company''s Treasury Department monitors the interest rate movement and manages the interest rate risk by evaluating interest rate swaps etc. based on the market / risk perception.
As at March 31, 2022 and March 31, 2021, the Company has loan facilities which are either on fixed interest rates or are managed by interest rate swaps, hence the Company is not exposed to interest rate risk.
Exposure to market risk with respect to commodity prices primarily arises from the Company''s purchases and sales of active pharmaceutical ingredients, including the raw material components for such active pharmaceutical ingredients. 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 active pharmaceutical ingredients 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 March 31, 2022, the Company had not entered into any material derivative contracts to hedge exposure to fluctuations in commodity prices.
a) Disclosures under the Micro, Small and Medium Enterprises Development Act, 2006
The information regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.
Contributions are made to Regional Provident Fund (RPF), Family Pension Fund, Employees State Insurance Scheme (ESIC) and other Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund and other Statutory Funds are made only by the Company. The contributions are normally based on a certain percentage of the employee''s salary. Amount recognised as expense in respect of these defined contribution plans, aggregate to '' 872.1 Million (March 31, 2021 : '' 801.6 Million).
a) Gratuity
In respect of Gratuity, a defined benefit plan, contributions are made to LIC''s Recognised Group Gratuity Fund Scheme. It is governed by the Payment of Gratuity Act, 1972. Under the Gratuity Act, employees are entitled to specific benefit at the time of retirement or termination of the employment on completion of five years or death while in employment. The level of benefit provided depends on the member''s length of service and salary at the time of retirement/termination age. Provision for gratuity is based on actuarial valuation done by an independent actuary as at the year end. Each year, the Company reviews the level of funding in gratuity fund and decides its contribution.
The Company aims to keep annual contributions relatively stable at a level such that the fund assets meets the requirements of gratuity payments in short to medium term.
The Company has an obligation towards pension, a defined benefit retirement plan, with respect to certain employees, who had already retired before March 01, 2013 and will continue to receive the pension as per the pension plan.
c) COVID-19 Employee children education support
The Company has undertaken an obligation to provide financial support towards education expenses of the children of those employees who have unfortunately lost their lives due to the COVID-19 pandemic.
These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
i) Investment risk - The present value of the defined benefit plan liability is calculated using a discount rate
determined by reference to the market yields on government bonds denominated in Indian Rupees. If the actual return on plan asset is below this rate, it will create a plan deficit. However, the risk is partially mitigated by investment in LIC managed fund.
ii) Interest rate risk - A decrease in the bond interest rate will increase the plan liability. However, this will be partially offset by an increase in the return on the plan''s debt investments.
iii) Longevity risk - The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.
iv) Salary risk - The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.
Actuarial Valuation for compensated absences is done as at the year end and the provision is made as per Company policy with corresponding charge to the statement of profit and loss amounting to '' 539.5 Million [March 31, 2021 : '' 423.0 Million] and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation.
Obligation in respect of defined benefit plan and other long term employee benefit plans are actuarially determined as at the year end using the âProjected Unit Credit'' method. Gains and losses on changes in actuarial assumptions relating to defined benefit obligation are recognised in other comprehensive income whereas gains and losses in respect of other long term employee benefit plans are recognised in profit or loss.
b) The Company has given certain premises under operating lease or leave and license agreements. These are generally not non-cancellable and periods range between 11 months to 4 years under leave and license/lease and are renewable by mutual consent on mutually agreeable terms. The Company has received refundable interest free security deposits where applicable in accordance with the agreed terms.
Details of long term borrowings and current maturities of long term debt (included under short term borrowings)
(I) Unsecured External Commercial Borrowings (ECBs) has USD Nil loan (March 31, 2021 : USD 50 Million) equivalent to '' Nil (March 31, 2021 : '' 3,657.4 Million). For the ECB loans, the terms of repayment for borrowings are as follows:
(a) USD Nil (March 31, 2021 : USD 50 Million) equivalent to '' Nil (March 31, 2021 : '' 3,657.4 Million). The loan was taken on October 03, 2018 and was repayable in 2 equal installments of USD 25 Million each. The loan has been repaid during current year. The unsecured ECBs was availed at floating rate linked to Libor (0.66% as at March 31, 2021).
(II) Secured term loan from department of biotechnology of '' Nil (March 31, 2021 : '' 75.7 Million) was secured by hypothecation of movable assets of the Company. The loan has been repaid during current year.
(III) Unsecured loan from related party of '' 48,656.4 Million (March 31, 2021 : '' 44,427.3 Million). The loan is taken on March 31, 2021 and is repayable by March 31, 2026. The loan has been availed at 6.50%.
(IV) Unsecured loan from related party of USD Nil (March 31, 2021 : USD 91.5 Million) equivalent to ? Nil (March 31, 2021 :
? 6,693 Million). The loan has been repaid during current year.
The Company has not defaulted on repayment of loan and interest payment thereon during the year.
NOTE : 49 RELATED PARTY DISCLOSURES (IND AS 24) AS PER ANNEXURE âAâ
The preparation of the Company''s financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:
a) Litigations [Refer Note 2 (2.2) (m) and Note 38]
b) Revenue [Refer Note 2(2.2)(n)]
c) Impairment of goodwill and intangible assets [Refer Note 2(2.2) (g)]
The Company has recorded an additional amount of '' 667.4 Million (March 31, 2021 : '' 1,520.1 Million) as deferred revenue pursuant to the requirements of Ind AS 115. Revenue of '' 1,661.5 Million (March 31,2021 : '' 1,740.5 Million) has been recognised as Revenue from contract with customer pursuant to completion of performance obligation in respect of the above contracts.
Contract assets are initially recognised for revenue from sale of goods. Contract liabilities are on account of the upfront revenue received from customer for which performance obligation has not yet been completed.
The performance obligation is satisfied when control of the goods or services are transferred to the customers based on the contractual terms. Payment terms with customers vary depending upon the contractual terms of each contract
NOTE : 54
1 Intangible assets consisting of trademarks, designs, technical knowhow, non-compete fees and other intangible assets are available to the Company in perpetuity. The amortisable amount of intangible assets is arrived at based on the management''s best estimates of useful lives of such assets after due consideration as regards their expected usage, the product life cycles, technical and technological obsolescence, market demand for products, competition and their expected future benefits to the Company.
2 Exceptional items includes
a) On March 25, 2021 the CJEU (Court of Justice to the European Union) issued a final judgment and upheld the European Commission''s (âECâ) decision dated June 19, 2013 that a settlement agreement between Ranbaxy (U.K.) Limited and Ranbaxy Laboratories Limited (together âRanbaxyâ) with Lundbeck was anti-competitive. Ranbaxy had made a provisional payment of the fine of Euros 10.3 Million on September 20, 2013. Since there were no further rights of appeal, this amount of '' 895.6 Million (inclusive of legal charges) was debited to the standalone financial statement for the year ended March 31, 2021.
b) Standalone financial statements for the year ended March 31, 2022 include a charge of '' 1,655.7 Million towards impairment of an acquired intangible asset under development.
c) The Company and certain of its subsidiaries are defendants in a number of class action lawsuits brought by purchasers and payors in the U.S. alleging violation of antitrust laws with respect to its ANDAs for Valganciclovir, Valsartan and Esomeprazole. The cases were transferred to the U.S. District Court for the District of Massachusetts for coordinated
proceedings. With a view to resolve the dispute and avoid uncertainty, a settlement without any admission of guilt or violation of any statute, law, rule or regulation, or of any liability or wrongdoing was reached with all of the plaintiff classes on March 23, 2022, for a total settlement amount of USD 485 Million of which USD 210 Million was borne by the Company along with its related legal charges of USD 8.3 Million pertaning to this lawsuit (equivalent to '' 16,549.6 Million inclusive of legal charges). The settlement is subject to final approval by the Court.
d) Consequent to the settlement of lawsuit mentioned in âcâ above, during the year ended March 31, 2022, the Company has reassessed the expected timing of utilisation of Minimum Alternate Tax (MAT) credit and based on this reassessment written off a MAT credit of '' 4,406.0 Million and disclosed the charge as an exceptional item.
3 Since the USFDA import alert at Karkhadi facility in March 2014, the Company remained fully committed to implement all corrective measures to address the observations made by the USFDA with the help of third party consultant. The Company had completed all the action items to address the USFDA warning letter observations issued in May 2014. The Company is awaiting a re-inspection of the facility by the USFDA to resolve the import alert. The contribution of this facility to Company''s revenues was negligible.
4 The USFDA, on January 23, 2014, had prohibited using API manufactured at Toansa facility for manufacture of finished drug products intended for distribution in the U.S. market. Consequentially, the Toansa manufacturing facility was subject to certain provisions of the consent decree of permanent injunction entered in January 2012 by erstwhile Ranbaxy Laboratories Ltd (which was merged with Sun Pharmaceutical Industries Ltd in March 2015). In addition, the Department of Justice of the USA (âUS DOJ''), United States Attorney''s Office for the District of New Jersey had also issued an administrative subpoena dated March 13, 2014 seeking information. The Company continues to fully co-operate and provide requisite information to the US DOJ.
5 The December 2019 USFDA inspection of Halol facility was classified as Official Action Indicated (OAI). The Company was in continuous communication with the USFDA to resolve the outstanding issues and was awaiting a re-inspection by USFDA to resolve the OAI status. However, due to the COVID-19 pandemic and travel restrictions, the re-inspection was delayed. In April-May 2022, the USFDA inspected the Halol facility and issued Form-483 with 10 observations. The Company will be submitting a comprehensive response, including the corrective actions to be undertaken for addressing the observations, within the stipulated time to the USFDA.
6 In September 2013, the USFDA had put the Mohali facility under import alert and it was also subjected to certain provisions of the consent decree of permanent injunction entered in January 2012 by erstwhile Ranbaxy Laboratories Ltd (which was merged with parent company in March 2015). In March 2017, the USFDA lifted the import alert and indicated that the facility was in compliance with the requirements of cGMP provisions mentioned in the consent decree. The Mohali facility continues to demonstrate sustainable cGMP compliance and has completed the 5-year post certification provisions as required by the consent decree. The Company continues to receive approval of applications, manufacture and distribute products to the U.S from this facility.
7 In accordance with Ind AS 108 âOperating Segmentsâ, segment information has been given in the consolidated Ind AS financial statements, and therefore, no separate disclosure on segment information is given in these financial statements.
8 During the year, the Company has acquired additional 11.28 % stake in Zenotech Laboratories Limited (Zenotech), a subsidiary of the Company, from Daiichi Sankyo Company Ltd. for a total consideration of '' 53.23 Million pursuant to a share purchase agreement. Post this acquisition, the Company''s shareholding in Zenotech has increased from 57.56 % to 68.84 %.
9 The date of implementation of the Code on Wages 2019 and the Code on Social Security, 2020 is yet to be notified by the Government. The Company will assess the impact of these Codes and give effect in the standalone financial statements when the Rules/Schemes thereunder are notified.
10 Corporate social responsibility (CSR)
As per section 135 of the Companies Act, 2013, the Company is required to spend at least 2% of its average net profits for the immediately preceding three financial years on corporate social responsibility activities. The CSR
11 The Company continues to monitor the impact of COVID-19 on its business, including its impact on customers, supply-chain, employees and logistics. Due care has been exercised, in concluding on significant accounting judgements and estimates, including in relation to recoverability of receivables, assessment of impairment of goodwill and intangibles, investments and inventory, based on the information available to date, while preparing the Company''s standalone financial statements as on year ended March 31, 2022.
12 The Scheme of Amalgamation and Merger of Sun Pharma Global FZE (âthe Transferorâ), with the Company (âthe Schemeâ), inter-alia envisaged merger of the transferor into the Company. The Scheme was approved by Hon''ble National Company Law Tribunal, Ahmedabad Bench on August 31, 2021 and became effective on October 01, 2021 upon completion of all the formalities.
Consequent to the amalgamation and merger prescribed by the Scheme, all the assets and liabilities of the transferor were transferred to and vested in the Company with effect from January 01, 2020 (âthe Appointed Dateâ).
The amalgamation was accounted under the âpooling of interestâ method prescribed under Ind AS 103 - Business Combinations, as prescribed by the Scheme.
Accordingly all the assets, liabilities, and other reserves of the transferor as on January 01, 2020 were transferred to the Company as per the Scheme. As prescribed by the Scheme no consideration was paid as the transferor is a indirect wholly owned subsidiary of the Company. The resultant difference between the book value of assets and liabilities taken-over as on the appointed date on the existing carrying value has been credited to capital reserve amounting to ^ 273.3 Million. Further, as prescribed in the Scheme approved by the NCLT, the Company has recorded an impact of impairment in relation to the equity shares held by the Company in the subsidiary through which the Company holds equity shares of the Transferor amounting to ^ 31,590.0 Million which has been debited to capital reserve account. Also, any gain or loss on translation of assets and liabilities to functional currency (i.e. ^) till the date of order has been credited or debited to foreign currency translation reserve.
13 As part of the ongoing simplification of the group structure in India, the Board of Directors of the Company at its meeting held on May 30, 2022, approved the Scheme of Amalgamation for the merger of Wholly-owned Subsidiaries, Sun Pharmaceutical Medicare Limited, Green Eco Development Centre Limited, Faststone Mercantile Company Private Limited, Realstone Multitrade Private Limited and Skisen Labs Private Limited (collectively âTransferor Companiesâ), with Sun Pharmaceutical Industries Limited (âTransferee Companyâ) to be effective from such date as may be decided under the authorization by the Board of Directors of the Transferor Companies and the Board of Directors of the Transferee Company and / or such other date as may be approved by the National Company Law Tribunal pursuant to the provisions of Sections 230 to 232 of Companies Act, 2013 and other relevant provisions of the Companies Act, 2013 and rules framed thereunder.
15 No proceeding have been initiated or pending against the Company under the Benami Transactions (Prohibitions) Act, 1988 (45 of 1988) and the Rules made thereunder.
16 The Company has not traded or invested in crypto currency or virtual currency during the financial year.
17 The Company has not granted any loans or advances in the nature of loans to promoters, directors and KMPs, either severally or jointly with any other person.
18 The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
19 The Company has not been sanctioned working capital limits from banks or financial institutions during any point of time of the year on the basis of security of current assets.
20 The Company has not been declared wilful defaulter by any bank or financial institution or government or any other government authorities.
21. 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, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the
Ultimate Beneficiaries. However, the Company, as a part of its treasury operations, invests/advances loans to fund the operations of its subsidiaries/associates/ joint venture which have further utilised these funds for their general corporate purposes/ working capital, etc. within the consolidated group of the Company and in the ordinary course of business. These transactions are done on an arms'' length basis following a due approval process.
Further, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (âFunding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
24. Relationship with Struck off Companies
The Company does not have any transactions and balances with companies which are struck off except shares held by 8 shareholders holding 7,653 shares (March 31, 2021 - 7,833 shares) having face value of ? 1 per share.
25. Figures for previous year have been regrouped / reclassified wherever considered necessary.
Mar 31, 2021
2.1 Statement of compliance
These financial statements are separate financial statements of the Company (also called standalone financial statements). The Company has prepared financial statements for the year ended March 31, 2021 in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) together with the comparative period data as at and for the year ended March 31, 2020.
2.2 Basis of preparation and presentation
The financial statements have been prepared on the historical cost basis, except for: (i) certain financial instruments that are measured at fair values at the end of each reporting period; (ii) Non-current assets classified as held for sale which are measured at the lower of their carrying amount and fair value less costs to sell; (iii) derivative financial instrument and (iv) defined benefit plans - plan assets that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
The standalone financial statements are presented in '' and all values are rounded to the nearest Million (''000,000) upto one decimal, except when otherwise indicated.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 116, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1,
2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
The Company has consistently applied the following accounting policies to all periods presented in these financial statements.
3. Current vs. Non-current
The Company presents assets and liabilities in the balance sheet based on current / non-current classification. An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
A liability is current when:
⢠It is expected to be settled in normal operating cycle
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as noncurrent.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
b. Foreign currency
On initial recognition, transactions in currencies other than the Company''s functional currency (foreign currencies) are translated at exchange rates on the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate on that date. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous period are recognised in profit or loss in the period in which they arise except for:
⢠exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings (see note 2.2.r).
⢠exchange differences on transactions entered into in order to hedge certain foreign currency risks (see note 2.2.i below for hedging accounting policies).
⢠exchange differences relating to the translation of the results and the net assets of the Company''s foreign operations from their functional currencies to the Company''s presentation currency (i.e '') are recognised directly in the other comprehensive income and accumulated in foreign currency
translation reserve. Exchange difference in the foreign currency translation reserve are reclassified to statement of profit or loss account on the disposal of the foreign operation.
Non-monetary items that are measured in terms of historical cost in foreign currency are measured using the exchange rates at the date of initial transaction.
:. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker of the Company is responsible for allocating resources and assessing performance of the operating segments.
1 Property, plant and equipment
Items of property, plant and equipment are stated in balance sheet at cost less accumulated depreciation and accumulated impairment losses, if any. Freehold land is not depreciated.
Assets in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes purchase price, borrowing costs if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Subsequent expenditures are capitalised only when they increase the future economic benefits embodied in the specific asset to which they relate. Such assets are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other assets, commences when the assets are ready for their intended use.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of property, plant and equipment and is recognised in profit or loss.
Items of property, plant and equipment acquired through exchange of non-monetary assets are measured at fair value, unless the exchange transaction lacks commercial substance or the fair value of either the asset received or asset given up is not reliably measurable, in which case the acquired asset is measured at the carrying amount of the asset given up.
Depreciation is recognised on the cost of assets (other than freehold land and Capital work-in-progress) less their residual values on straight-line method over their useful lives as indicated in Part C of Schedule II of the Companies Act, 2013. Leasehold improvements are depreciated over period of the lease agreement or the useful life, whichever is shorter. Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
|
The estimated useful lives are as follows: |
|
|
Asset Category |
No. of years |
|
Factory Buildings |
10-30 |
|
Buildings other than Factory Buildings |
60 |
|
Buildings given under operating lease |
30 |
|
Plant and equipment |
3-25 |
|
Vehicles |
5-10 |
|
Office equipment |
2-5 |
|
Furniture and fixtures |
10 |
Software for internal use, which is primarily acquired from third-party vendors and which is an integral part of a tangible asset, including consultancy charges for implementing the software, is capitalised as part of the related tangible asset. Subsequent costs associated with maintaining such software are recognised as expense as incurred. The capitalised costs are amortised over the lower of the estimated useful life of the software and the remaining useful life of the tangible fixed asset.
e. Goodwill and Other Intangible assets Goodwill
Goodwill represents the excess of consideration transferred, together with the amount of noncontrolling interest in the acquiree, over the fair value of the Company''s share of identifiable net assets acquired. Goodwill is measured at cost less accumulated impairment losses.
Other Intangible assets that are acquired by the Company and that have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses, if any. Subsequent expenditures are capitalised only when they increase the future economic benefits embodied in the specific asset to which they relate.
Research and development
Expenditure on research activities undertaken with the prospect of gaining new scientific or technical knowledge and understanding are recognised as an expense when incurred. Development activities involve a plan or design for the production of new or substantially improved products and processes.
An internally-generated intangible asset arising from development is recognised if and only if all of the following have been demonstrated:
⢠development costs can be measured reliably;
⢠the product or process is technically and commercially feasible;
⢠future economic benefits are probable; and
⢠the Company intends to and has sufficient resources/ability to complete development and to use or sell the asset.
The expenditure to be capitalised include the cost of materials and other costs directly attributable to preparing the asset for its intended use. Other development expenditure is recognised in profit or loss as incurred.
Payments to third parties that generally take the form of up-front payments and milestones for in-licensed products, compounds and intellectual property are capitalised since the probability of expected future economic benefits criterion is always considered to be satisfied for separately acquired intangible assets.
Acquired research and development intangible assets which are under development, are recognised as InProcess Research and Development assets (âIPR&Dâ). IPR&D assets are not amortised, but evaluated for potential impairment on an annual basis or when there are indications that the carrying value may not be recoverable. Any impairment charge on such IPR&D assets is recognised in profit or loss. Intangible assets relating to products under development, other intangible assets not available for use and intangible assets having indefinite useful life are tested for impairment annually, or more frequently when there is
impairment. If any such indication exists, then the asset''s recoverable amount is estimated in order to determine the extent of the impairment loss, if any.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or the cash-generating unit for which the estimates of future cash flows have not been adjusted. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ).
An impairment loss is recognised in the profit or loss if the estimated recoverable amount of an asset or its cash generating unit is lower than its carrying amount. Impairment losses recognised in respect of cashgenerating units are allocated to reduce the carrying amount of the other assets in the unit on a pro-rata basis.
Goodwill is tested for impairment annually. Goodwill acquired in a business combination, for the purpose of impairment testing is allocated to cash-generating units that are expected to benefit from the synergies of the combination.
In respect of other asset, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
h. Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed
an indication that the assets may be impaired. All other intangible assets are tested for impairment when there are indications that the carrying value may not be recoverable.
The consideration for acquisition of intangible asset which is based on reaching specific milestone that are dependent on the Company''s future activity is recognised only when the activity requiring the payment is performed.
Subsequent expenditures are capitalised only when they increase the future economic benefits embodied in the specific asset to which they relate. All other expenditures, including expenditures on internally generated goodwill and brands, are recognised in the statement of profit and loss as incurred.
Amortisation is recognised on a straight-line basis over the estimated useful lives of intangible assets. Intangible assets that are not available for use are amortised from the date they are available for use.
The estimated useful lives for Product related intangibles and Other intangibles ranges from 3 to 20 years.
The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
De-recognition of intangible assets
Intangible assets are de-recognised either on their disposal or where no future economic benefits are expected from their use. Gain or loss arising on such de-recognition is recognised in profit or loss, and are measured as the difference between the net disposal proceeds, if any, and the carrying amount of respective intangible assets as on the date of de-recognition.
f. Investments in the nature of equity in subsidiaries and associates
The Company has elected to recognise its investments in equity instruments in subsidiaries and associates at h cost in the separate financial statements in accordance with the option available in Ind AS 27, âSeparate Financial Statements''. Impairment policy applicable on such investments is explained in Note 2.2.g.
g. Impairment of non-financial assets
The carrying amounts of the Company''s nonfinancial assets are reviewed at each reporting date to determine whether there is any indication of
NOTE 2 : SIGNIFICANT ACCOUNTING POLICIES
2.1 Statement of compliance
These financial statements are separate financial statements of the Company (also called standalone financial statements). The Company has prepared financial statements for the year ended March 31, 2021 in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) together with the comparative period data as at and for the year ended March 31, 2020.
2.2 Basis of preparation and presentation
The financial statements have been prepared on the historical cost basis, except for: (i) certain financial instruments that are measured at fair values at the end of each reporting period; (ii) Non-current assets classified as held for sale which are measured at the lower of their carrying amount and fair value less costs to sell; (iii) derivative financial instrument and (iv) defined benefit plans - plan assets that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
The standalone financial statements are presented in '' and all values are rounded to the nearest Million (''000,000) upto one decimal, except when otherwise indicated.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 116, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1,
2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
The Company has consistently applied the following accounting policies to all periods presented in these financial statements.
3. Current vs. Non-current
The Company presents assets and liabilities in the balance sheet based on current / non-current classification. An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
A liability is current when:
⢠It is expected to be settled in normal operating cycle
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as noncurrent.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
b. Foreign currency
On initial recognition, transactions in currencies other than the Company''s functional currency (foreign currencies) are translated at exchange rates on the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate on that date. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous period are recognised in profit or loss in the period in which they arise except for:
⢠exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings (see note 2.2.r).
⢠exchange differences on transactions entered into in order to hedge certain foreign currency risks (see note 2.2.i below for hedging accounting policies).
⢠exchange differences relating to the translation of the results and the net assets of the Company''s foreign operations from their functional currencies to the Company''s presentation currency (i.e '') are recognised directly in the other comprehensive income and accumulated in foreign currency
translation reserve. Exchange difference in the foreign currency translation reserve are reclassified to statement of profit or loss account on the disposal of the foreign operation.
Non-monetary items that are measured in terms of historical cost in foreign currency are measured using the exchange rates at the date of initial transaction.
:. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker of the Company is responsible for allocating resources and assessing performance of the operating segments.
1 Property, plant and equipment
Items of property, plant and equipment are stated in balance sheet at cost less accumulated depreciation and accumulated impairment losses, if any. Freehold land is not depreciated.
Assets in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes purchase price, borrowing costs if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Subsequent expenditures are capitalised only when they increase the future economic benefits embodied in the specific asset to which they relate. Such assets are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other assets, commences when the assets are ready for their intended use.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of property, plant and equipment and is recognised in profit or loss.
Items of property, plant and equipment acquired through exchange of non-monetary assets are measured at fair value, unless the exchange transaction lacks commercial substance or the fair value of either the asset received or asset given up is not reliably measurable, in which case the acquired asset is measured at the carrying amount of the asset given up.
Depreciation is recognised on the cost of assets (other than freehold land and Capital work-in-progress) less their residual values on straight-line method over their useful lives as indicated in Part C of Schedule II of the Companies Act, 2013. Leasehold improvements are depreciated over period of the lease agreement or the useful life, whichever is shorter. Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
|
The estimated useful lives are as follows: |
|
|
Asset Category |
No. of years |
|
Factory Buildings |
10-30 |
|
Buildings other than Factory Buildings |
60 |
|
Buildings given under operating lease |
30 |
|
Plant and equipment |
3-25 |
|
Vehicles |
5-10 |
|
Office equipment |
2-5 |
|
Furniture and fixtures |
10 |
Software for internal use, which is primarily acquired from third-party vendors and which is an integral part of a tangible asset, including consultancy charges for implementing the software, is capitalised as part of the related tangible asset. Subsequent costs associated with maintaining such software are recognised as expense as incurred. The capitalised costs are amortised over the lower of the estimated useful life of the software and the remaining useful life of the tangible fixed asset.
e. Goodwill and Other Intangible assets Goodwill
Goodwill represents the excess of consideration transferred, together with the amount of noncontrolling interest in the acquiree, over the fair value of the Company''s share of identifiable net assets acquired. Goodwill is measured at cost less accumulated impairment losses.
Other Intangible assets that are acquired by the Company and that have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses, if any. Subsequent expenditures are capitalised only when they increase the future economic benefits embodied in the specific asset to which they relate.
Research and development
Expenditure on research activities undertaken with the prospect of gaining new scientific or technical knowledge and understanding are recognised as an expense when incurred. Development activities involve a plan or design for the production of new or substantially improved products and processes.
An internally-generated intangible asset arising from development is recognised if and only if all of the following have been demonstrated:
⢠development costs can be measured reliably;
⢠the product or process is technically and commercially feasible;
⢠future economic benefits are probable; and
⢠the Company intends to and has sufficient resources/ability to complete development and to use or sell the asset.
The expenditure to be capitalised include the cost of materials and other costs directly attributable to preparing the asset for its intended use. Other development expenditure is recognised in profit or loss as incurred.
Payments to third parties that generally take the form of up-front payments and milestones for in-licensed products, compounds and intellectual property are capitalised since the probability of expected future economic benefits criterion is always considered to be satisfied for separately acquired intangible assets.
Acquired research and development intangible assets which are under development, are recognised as InProcess Research and Development assets (âIPR&Dâ). IPR&D assets are not amortised, but evaluated for potential impairment on an annual basis or when there are indications that the carrying value may not be recoverable. Any impairment charge on such IPR&D assets is recognised in profit or loss. Intangible assets relating to products under development, other intangible assets not available for use and intangible assets having indefinite useful life are tested for impairment annually, or more frequently when there is
impairment. If any such indication exists, then the asset''s recoverable amount is estimated in order to determine the extent of the impairment loss, if any.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or the cash-generating unit for which the estimates of future cash flows have not been adjusted. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ).
An impairment loss is recognised in the profit or loss if the estimated recoverable amount of an asset or its cash generating unit is lower than its carrying amount. Impairment losses recognised in respect of cashgenerating units are allocated to reduce the carrying amount of the other assets in the unit on a pro-rata basis.
Goodwill is tested for impairment annually. Goodwill acquired in a business combination, for the purpose of impairment testing is allocated to cash-generating units that are expected to benefit from the synergies of the combination.
In respect of other asset, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
h. Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed
an indication that the assets may be impaired. All other intangible assets are tested for impairment when there are indications that the carrying value may not be recoverable.
The consideration for acquisition of intangible asset which is based on reaching specific milestone that are dependent on the Company''s future activity is recognised only when the activity requiring the payment is performed.
Subsequent expenditures are capitalised only when they increase the future economic benefits embodied in the specific asset to which they relate. All other expenditures, including expenditures on internally generated goodwill and brands, are recognised in the statement of profit and loss as incurred.
Amortisation is recognised on a straight-line basis over the estimated useful lives of intangible assets. Intangible assets that are not available for use are amortised from the date they are available for use.
The estimated useful lives for Product related intangibles and Other intangibles ranges from 3 to 20 years.
The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
De-recognition of intangible assets
Intangible assets are de-recognised either on their disposal or where no future economic benefits are expected from their use. Gain or loss arising on such de-recognition is recognised in profit or loss, and are measured as the difference between the net disposal proceeds, if any, and the carrying amount of respective intangible assets as on the date of de-recognition.
f. Investments in the nature of equity in subsidiaries and associates
The Company has elected to recognise its investments in equity instruments in subsidiaries and associates at h cost in the separate financial statements in accordance with the option available in Ind AS 27, âSeparate Financial Statements''. Impairment policy applicable on such investments is explained in Note 2.2.g.
g. Impairment of non-financial assets
The carrying amounts of the Company''s nonfinancial assets are reviewed at each reporting date to determine whether there is any indication of
to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Noncurrent assets held for sale are not depreciated or amortised.
i. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the date the Company commits to purchase or sale the financial assets.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
⢠Debt instruments at amortised cost
⢠Debt instruments at fair value through other comprehensive income (FVTOCI)
⢠Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
⢠Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortised cost
A âdebt instrument'' is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in Other Income in the profit or loss. The losses arising from impairment are recognised in the profit or loss.
Debt instrument at FVTOCI
A âdebt instrument'' is measured as at FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The contractual terms of the instrument give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the other comprehensive income (OCI). However, the Company recognises interest income, impairment losses & reversals and foreign exchange gain or loss in the profit or loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to profit or loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorisation as at amortised cost or as FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to designate a debt instrument, which otherwise meets amortised cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as âaccounting mismatch'').
Debt instruments included within the FVTPL category are measured at fair value with all the changes in the profit or loss.
to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Noncurrent assets held for sale are not depreciated or amortised.
i. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the date the Company commits to purchase or sale the financial assets.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
⢠Debt instruments at amortised cost
⢠Debt instruments at fair value through other comprehensive income (FVTOCI)
⢠Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
⢠Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortised cost
A âdebt instrument'' is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in Other Income in the profit or loss. The losses arising from impairment are recognised in the profit or loss.
Debt instrument at FVTOCI
A âdebt instrument'' is measured as at FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The contractual terms of the instrument give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the other comprehensive income (OCI). However, the Company recognises interest income, impairment losses & reversals and foreign exchange gain or loss in the profit or loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to profit or loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorisation as at amortised cost or as FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to designate a debt instrument, which otherwise meets amortised cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as âaccounting mismatch'').
Debt instruments included within the FVTPL category are measured at fair value with all the changes in the profit or loss.
Equity instruments
All equity instruments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair value in OCI. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, including foreign exchange gain or loss and excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to profit or loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company''s balance sheet) when:
⢠The contractual rights to receive cash flows from the asset have expired, or
⢠The Company has transferred its rights to receive contractual cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-through'' arrangement, and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and
the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in OCI and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115.
The Company follows âsimplified approach'' for recognition of impairment loss allowance on trade receivables or any contractual right to receive cash or another financial asset.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables.
The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments
issued by the Company are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
Compound financial instruments
The component parts of compound financial instruments (convertible notes) issued by the Company are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and lease liabilities, financial guarantee contracts and derivative financial instruments.
Subsequent measurement
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
Financial liabilities at fair value through profit or loss
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or is designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred principally for the purpose of repurchasing in the near term or on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking. This category also includes derivative financial instruments that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For instruments not held-for-trading financial liabilities designated
as at FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognised in OCI, unless the recognition of the effects of changes in the liability''s credit risk in OCI would create or enlarge an accounting mismatch in profit or loss, in which case these effects of changes in credit risk are recognised in profit or loss. These gains/ losses are not subsequently transferred to profit or loss. All other changes in fair value of such liability are recognised in the statement of profit or loss.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost in subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest rate (EIR) method. Interest expense that is not capitalised as part of costs of an asset is included in the âFinance costs'' line item in the profit or loss.
After initial recognition, such financial liabilities are subsequently measured at amortised cost using the EIR method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the profit or loss.
Financial guarantee contracts
Financial guarantee contracts are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. If not designated as at FVTPL, are subsequently measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount initially recognised less cumulative amount of income recognised.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the
original liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
Embedded derivatives
Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of Ind AS 109 are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss, unless designated as effective hedging instruments.
Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
Derivative financial instruments and hedge accounting
Initial recognition and subsequent measurement
The Company uses derivative financial instruments, such as forward currency contracts, full currency swap, principal only swap, options and interest rate swaps to hedge its foreign currency risks and interest rate risks respectively. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value at the end of each reporting period. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the eff
Mar 31, 2019
Notes to the Standalone Financial Statements for the year ended March 31, 2019
|
NOTE : 46 EARNINGS PER SHARE |
||
|
As at March 31,2019 |
As at March 31, 2018 |
|
|
Profit for the year (Rs in Million) - used as numerator for calculating earnings per share |
8,166.0 |
3,056.4 |
|
Weighted average number of shares used in computing basic earnings per share (A) |
2,399,326,681 |
2,399,296,653 |
|
Add : Dilution effect of employee stock option (B) |
3,575 |
65,420 |
|
Weighted average number of shares used in computing diluted earnings per share (A B) |
2,399,330,257 |
2,399,362,073 |
|
Nominal value per share (in Rs) |
1 |
1 |
|
Basic earnings per share (in Rs) |
3.4 |
1.3 |
|
Diluted earnings per share (in Rs) |
3.4 |
1.3 |
NOTE : 47 EMPLOYEE BENEFIT PLANS
Defined contribution plan Contributions are made to Regional Provident Fund (RPF), Family Pension Fund, Employees State Insurance Scheme (ESIC) and other Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund and other Statutory Funds are made only by the Company. The contributions are normally based on a certain percentage of the employee''s salary. Amount recognised as expense in respect of these defined contribution plans, aggregate to Rs 702.9 Million (March 31, 2018 : Rs 676.3 Million).
|
Rs in Million |
||
|
Year ended March 31, 2019 |
Year ended March 31, 2018 |
|
|
Contribution to Provident Fund and Family Pension Fund |
600.1 |
566.3 |
|
Contribution to Superannuation Fund |
64.9 |
72.7 |
|
Contribution to ESIC and Employees Deposit Linked Insurance (EDLI) |
37.1 |
36.9 |
|
Contribution to Labour Welfare Fund |
0.8 |
0.4 |
Defined benefit plan
a) Gratuity
In respect of Gratuity, a defined benefit plan, contributions are made to LIC''s Recognised Group Gratuity Fund Scheme. It is governed by the Payment of Gratuity Act, 1972. Under the Gratuitiy Act, employees are entitled to specific benefit at the time of retirement or termination of the employment on completion of five years or death while in employment. The level of benefit provided depends on the member''s length of service and salary at the time of retirement/termination age. Provision for gratuity is based on actuarial valuation done by an independent actuary as at the year end. Each year, the Company reviews the level of funding in gratuity fund and decides its contribution. The Company aims to keep annual contributions relatively stable at a level such that the fund assets meets the requirements of gratuity payments in short to medium term.
b) Pension fund
The Company has an obligation towards pension, a defined benefit retirement plan, with respect to certain employees, who had already retired before March 01, 2013 and will continue to receive the pension as per the pension plan.
Risks
These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
i) Investment risk - The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the market yields on government bonds denominated in Indian Rupees. If the actual return on plan asset is below this rate, it will create a plan deficit. However, the risk is partially mitigated by investment in LIC managed fund.
ii) Interest rate risk - A decrease in the bond interest rate will increase the plan liability. However, this will be partially offset by an increase in the return on the plan''s debt investments.
iii) Longevity risk - The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.
iv) Salary risk - The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.
Other long term benefit plan
Actuarial Valuation for compensated absences is done as at the year end and the provision is made as per Company policy with corresponding (gain) / charge to the statement of profit and loss amounting to Rs. 275.6 Million [March 31, 2018 : Rs. (78.7) Million] and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation.
Obligation in respect of defined benefit plan and other long term employee benefit plans are actuarially determined as at the year end using the ''Projected Unit Credit'' method. Gains and losses on changes in actuarial assumptions relating to defined benefit obligation are recognised in other comprehensive income whereas gains and losses in respect of other long term employee benefit plans are recognised in profit or loss.
|
Rs. in Million |
||||
|
Year ended March 31, 2019 | |
Year ended March 31, 2018 |
|||
|
Pension Fund (Unfunded) |
Gratuity (Funded) |
Pension Fund (Unfunded) |
Gratuity (Funded) |
|
|
Expense recognised in the statement of profit and loss (Refer Note 34) |
||||
|
Current service cost |
- |
245.2 |
- |
266.8 |
|
Interest cost |
67.7 |
196.8 |
66.0 |
196.5 |
|
Expected return on plan assets |
- |
(191.1) |
- |
(131.5) |
|
Expense charged to the statement of profit and loss |
67.7 |
250.9 |
66.0 |
331.8 |
|
Remeasurement of defined benefit obligation recognised in other |
||||
|
comprehensive income |
||||
|
Actuarial loss / (gain) on defined benefit obligation |
64.9 |
(254.6) |
(44.4) |
(581.8) |
|
Actuarial gain on plan assets |
- |
24.7 |
- |
(38.1) |
|
Expense/(income) charged to other comprehensive income |
64.9 |
(229.9) |
(44.4) |
(619.9) |
|
Reconciliation of defined benefit obligations |
||||
|
Obligation as at the beginning of the year |
903.7 |
2,625.8 |
969.5 |
2,885.3 |
|
Current service cost |
- |
245.2 |
- |
266.8 |
|
Interest cost |
67.7 |
196.8 |
66.0 |
196.5 |
|
Benefits paid |
(87.0) |
(250.8) |
(87.4) |
(141.0) |
|
Actuarial (gains)/losses on obligations |
||||
|
- due to change in demographic assumptions |
(15.4) |
- |
(114.2) |
|
|
- due to change in financial assumptions |
35.7 |
(160.0) |
(50.0) |
(406.5) |
|
- due to experience |
29.2 |
(79.2) |
5.6 |
(61.1) |
|
Obligation as at the year end |
949.3 |
2,562.4 |
903.7 |
2,625.8 |
|
Rs. in Million |
||||
|
As at March 31, 2019 |
As at March 31, 2018 |
|||
|
Gratuity (Funded) |
Gratuity (Funded) |
|||
|
Reconciliation of liability/(asset) recognised in the Balance sheet |
||||
|
Present value of commitments (as per Actuarial Valuation) |
2,562.4 |
2,625.8 |
||
|
Fair value of plan assets |
(2,696.7) |
(2,550.4) |
||
|
Net (asset) / liability recognised in the financial statement |
(134.3) |
75.4 |
||
|
Rs. in Million |
||
|
Year ended March 31, 2019 |
Year ended March 31, 2018 |
|
|
Gratuity (Funded) |
Gratuity (Funded) |
|
|
Reconciliation of plan assets |
||
|
Plan assets as at the beginning of the year |
2,550.4 |
1,930.7 |
|
Expected return |
191.1 |
131.5 |
|
Actuarial gain |
(24.7) |
38.1 |
|
Employer''s contribution during the year |
230.7 |
591.1 |
|
Benefits paid |
(250.8) |
(141.0) |
|
Plan assets as at the year end |
2,696.7 |
2,550.4 |
|
As at March 31, 2019 | |
As at March 31, 2018 |
|||
|
Pension Fund (Unfunded) |
Gratuity (Funded) |
Pension Fund (Unfunded) |
Gratuity (Funded) |
|
|
Assumptions : |
||||
|
Discount rate |
7.10% |
7.10% |
7.50% |
7.50% |
|
Expected return on plan assets |
N.A. |
7.10% |
N.A. |
7.50% |
|
Expected rate of salary increase |
N.A. |
10.00% |
N.A. |
11.65% |
|
Interest rate guarantee |
N.A. |
N.A. |
N.A. |
N.A. |
|
Mortality |
Indian Assured Lives Mortality (2006-08) |
Indian Assured Lives Mortality (2006-08) |
Indian Assured Lives Mortality (2006-08) |
Indian Assured Lives Mortality (2006-08) |
|
Employee turnover |
N.A. |
15.80% |
N.A. |
15.00% |
|
Retirement Age (years) |
N.A. |
60 |
N.A. |
60 |
|
Rs. in Million |
||||
|
As at March 31, 2019 | |
As at March 31, 2018 |
|||
|
Pension Fund (Unfunded) |
Gratuity (Funded) |
Pension Fund (Unfunded) |
Gratuity (Funded) |
|
|
Sensitivity analysis: |
||||
|
The sensitivity analysis have been determined based on method that extrapolates the impact on defined benefit obligation as a reasonable change in key assumptions occurring at the end of the reporting period |
||||
|
Impact on defined benefit obligation Delta effect of 1% change in discount rate |
(76.3) |
(122.0) |
(68.2) |
(113.6) |
|
Delta effect of -1% change in discount rate |
85.5 |
134.4 |
80.2 |
125.8 |
|
Delta effect of 1% change in salary escalation rate |
- |
130.0 |
- |
119.8 |
|
Delta effect of -1% change in salary escalation rate |
- |
(120.5) |
- |
(110.5) |
|
Delta effect of 1% change in rate of employee turnover |
- |
(17.9) |
- |
(28.9) |
|
Delta effect of -1% change in rate of employee turnover |
- |
19.4 |
- |
31.7 |
|
Maturity analysis of projected benefit obligation for next |
||||
|
1st year |
88.4 |
566.0 |
87.4 |
461.2 |
|
2nd year |
87.5 |
353.5 |
100.3 |
292.4 |
|
3rd year |
86.7 |
355.0 |
115.2 |
305.2 |
|
4th year |
85.8 |
314.1 |
132.3 |
295.8 |
|
5th year |
84.8 |
303.6 |
151.9 |
273.8 |
|
Thereafter |
2,143.7 |
2,023.9 |
174.4 |
1,138.5 |
|
The major categories of plan assets are as under |
||||
|
Central government securities |
- |
9.9 |
- |
9.9 |
|
Bonds and securities of public sector / financial institutions |
67.3 |
- |
67.3 |
|
|
Insurer managed funds (Funded with LIC, break-up not available) |
1,669.1 |
- |
2,459.2 |
|
|
Surplus fund lying uninvested |
- |
950.4 |
- |
14.0 |
The contribution expected to be made by the Company for gratuity, during financial year ending March 31, 2020 is Rs 81.1 Million (Previous year: Rs 241.1 Million)___________________________________________________
NOTE: 48 LEASES
(a) The Company has given certain premises and plant and equipment under operating lease or leave and license agreements. These are generally not non-cancellable and periods range between 11 months to 10 years under leave and licence / lease and are renewable by mutual consent on mutually agreeable terms. The Company has received refundable interest free security deposits where applicable in accordance with the agreed terms, (b) The Company has obtained certain premises for its business operations (including furniture and fittings, therein as applicable) under operating lease or leave and license agreements. These are generally not non-cancellable and periods range between 11 months to 10 years under leave and licence, or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms. These refundable security deposits have been valued at amortised cost under relevant Ind AS (c) Lease receipts / payments are recognised in the statement of profit and loss under "Lease rental and hire charges" and "Rent" in Note 31 and 36 respectively. The Company does not have any lease payment commitment in non cancellable leases.
NOTE : 49 EMPLOYEE SHARE-BASED PAYMENT PLANS
The Company operates employee stock option scheme namely, SUN Employee Stock Option Scheme-2015 (SUN-ESOS 2015) for the grant of stock options to the eligible personnel. Options are granted at the discretion of the Committee to selected employees depending upon certain criterion. Each option comprises one underlying equity share.
The movement of the options (post split) granted under SUN-ESOS 2015
|
March 31, 2019 |
||||
|
Stock options (numbers) |
Range of exercise prices (Rs) |
Weighted-average exercise prices (Rs) |
Weighted-average remaining contractual life (years) |
|
|
Outstanding at the commencement of the year |
263,680 |
270.0-562.5 |
450.3 |
1.5 |
|
Exercised during the year $ |
(11,790) |
270.0-562.5 |
324.9 |
|
|
Lapsed during the year |
(93,151) |
270.0-562.5 |
275.0 |
|
|
Outstanding at the end of the year * |
158,739 |
562.5 |
562.5 |
0.9 |
|
Exercisable at the end of the year * |
158,739 |
562.5 |
562.5 |
0.9 |
* Includes options exercised, pending allotment
$ Weighted average share price on the date of exercise Rs. 492.6
|
March 31, 2018 |
||||
|
Stock options (numbers) |
Range of exercise prices (Rs.) |
Weighted-average exercise prices (Rs.) |
Weighted-average remaining contractual life (years) |
|
|
Outstanding at the commencement of the year |
401,678 |
270.0-562.5 |
462.9 |
1.9 |
|
Exercised during the year $ |
(18,893) |
270.0-562.5 |
480.5 |
|
|
Lapsed during the year |
(119,105) |
270.0-562.5 |
488.1 |
- |
|
Outstanding at the end of the year * |
263,680 |
270.0-562.5 |
450.3 |
1.5 |
|
Exercisable at the end of the year * |
263,680 |
270.0-562.5 |
450.3 |
1.5 |
* Includes options exercised, pending allotment
$ Weighted average share price on the date of exercise Rs. 565.1
NOTE: 50 BORROWINGS
Details of long term borrowings and current maturities of long term debt (included under other current financial liabilities)
(I) Unsecured External Commercial Borrowings (ECBs) has 6 loans aggregating of USD 290 Million (March 31, 2018 : USD 256 Million) equivalent to Rs. 20,036.1 Million (March 31, 2018 : Rs. 16,622.1 Million). For the ECB loans outstanding as at March 31, 2019, the terms of repayment for borrowings are as follows:
(a) USD 10 Million (March 31, 2018 : USD 26 Million) equivalent to Rs. 690.9 Million (March 31, 2018 : Rs. 1,688.2 Million). The loan was taken in tranches of USD 16 Million on March 24, 2017 and USD 10 Million on June 30, 2017. The first installment of USD 16 Million has been repaid during the year ended March 31, 2019 and last installment of USD 10 Million is due on June 28, 2019.
(b) USD 50 Million (March 31, 2018 : USD 50 Million) equivalent to Rs. 3,454.5 Million (March 31, 2018 : Rs. 3,246.5 Million). The loan was taken on August 11, 2015 and is repayable on August 08, 2019.
(c) USD 30 Million (March 31, 2018 : USD 30 Million) equivalent to Rs. 2,072.7 Million (March 31, 2018 : Rs. 1947.9 Million). The loan was taken on September 08, 2017 and is repayable on September 07, 2020.
(d) USD 50 Million (March 31, 2018 : USD 50 Million) equivalent to Rs. 3,454.5 Million (March 31, 2018 : Rs. 3,246.5 Million). The loan was taken on September 20, 2012 and is repayable in 2 equal installments of USD 25 Million each. The first installment of USD 25 Million is due on September 20, 2019 and last installment of USD 25 Million is due on September 18, 2020.
(e) USD 100 Million (March 31, 2018 : USD 100 Million) equivalent to Rs. 6,909.0 Million (March 31, 2018 : Rs. 6,493.0 Million). The loan was taken on June 04, 2013 and is repayable in 3 installments viz., the first installment of USD 30 Million is due on May 31, 2020, second installment of USD 30 Million is due on November 30, 2020 and last installment of USD 40 Million is due on November 30, 2021
(f) USD 50 Million (March 31, 2018 : USD Nil) equivalent to Rs. 3,454.5 Million (March 31, 2018 : Rs. Nil). The loan was taken on October 03, 2018 and is repayable in 2 equal installments of USD 25 Million each. The first installment of USD 25 Million is due on October 01, 2021 and last installment of USD 25 Million is due on October 03, 2022.
(II) Secured term loan from department of biotechnology of Rs. 108.2 Million (March 31, 2018 : Rs. 108.2 Million) has been secured by hypothecation of movable assets of the Company. The loan is repayable in 10 equal half yearly installments commencing from December 14, 2019, last installment is due on June 14, 2024.
The Company has not defaulted on repayment of loan and interest payment thereon during the year. The aforementioned unsecured ECBs are availed from various banks at floating rate linked to Libor (2.96% as at March 31, 2019) and secured loan from department of biotechnology have been availed at a range from 2% to 3%
NOTE : 51 RELATED PARTY DISCLOSURES (IND AS 24) AS PER ANNEXURE "A" NOTE: 52 LOANS/ADVANCES GIVEN TO SUBSIDIARIES AND ASSOCIATES
|
Rs. in Million |
||||
|
As at March 31, 2019 |
Maximum balance March 31, 2019 |
As at March 31,2018 |
Maximum balance March 31, 2018 |
|
|
Loans / advances outstanding from subsidiaries |
||||
|
Sun Pharmaceutical Medicare Limited, India |
2,575.0 |
2,575.0 |
- |
|
|
Zenotech Laboratories Limited, India |
204.6 |
258.0 |
53.4 |
53.4 |
|
Skisen Labs Private Limited, India |
0.1 |
0.1 |
- |
- |
|
Faststone Mercantile Company Private Limited, India |
- |
253.4 |
- |
- |
|
Loans / advances outstanding from an associate |
||||
|
Loans |
||||
|
Interest bearing with specified payment schedule: |
||||
|
Zenotech Laboratories Limited, India |
- |
- |
726.9 |
These loans have been granted to the above entities for the purpose of their business.
NOTE: 53
In respect of any present obligation as a result of past event that could lead to a probable outflow of resources, provisions has been made, which would be required to settle the obligation. The said provisions are made as per the best estimate of the management and disclosure as per Ind AS 37 - "Provisions, Contingent Liabilities and Contingent Assets" has been given below:
|
Rs. in Million |
||
|
Year ended March 31, 2019 |
Year ended March 31, 2018 |
|
|
Product and Sales related * |
Product and Sales related * |
|
|
At the commencement of the year |
25,815.3 |
24,997.0 |
|
Add: Transfer on merger [Refer Note 56 (11)] |
- |
2,272.6 |
|
Add: Provision for the year |
1,006.8 |
770.6 |
|
Add: Unwinding of discounts on provisions |
46.7 |
265.8 |
|
Add / (less): Foreign currency exchange fluctuation |
1,417.3 |
29.8 |
|
Less: Utilisation / settlement/ reversal |
(5,724.3) |
(2,520.5) |
|
At the end of the year |
22,561.8 |
25,815.3 |
(*) includes provision for trade commitments, discounts, rebates, price reduction and product returns
NOTE : 54 USE OF ESTIMATES, JUDGMENTS AND ASSUMPTIONS
The preparation of the Company''s financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:
a) Litigations [Refer Note 2 (2.2) (m) and Note 39]
b) Revenue [Refer Note 2(2.2)(n)]
NOTE : 55 REVENUE FROM CONTRACTS WITH CUSTOMERS
Ind AS 115 "Revenue from contracts with customers" was issued on March 28, 2018 and supersedes Ind AS 11 "Construction Contracts" and Ind AS 18 "Revenue" and it applies, with limited exceptions, to all revenue arising from contracts with its customers. The Company adopted Ind AS 115 using the modified retrospective method of adoption with the date of initial application of April 01, 2018 which does not require restatement of comparative period. The Company elected to apply the standard to all contracts as at April 01, 2018. There is no impact to be recognised at the date of initial application as an adjustment to the opening balance of retained earnings.
The reconciling items of revenue recognised in the statement of profit and loss with the contracted price are as follows
Rs. in Million
| Year ended larch 31, 2019 |
Year ended larch 31, 2018 |
|
|
Revenue as per contracted price, net of returns Less : |
118,830.5 |
116,294.3 |
|
Provision for sales return |
(643.1) |
(569.7) |
|
Rebates, discounts and price reduction |
(20,354.5) |
(27,980.5) |
|
(20,997.6) |
(28,550.2) |
|
|
Revenue from contracts with customers |
97,832.9 |
87,744.1 |
Revenue from contract with customers include sales made to Aditya Medisales Limited amounting to Rs. 30,913.7 Million (March 31, 2018: Rs 29,764.2 Million)
|
Rs in Million |
||
|
As at March 31, 2019 |
As at March 31, 2018 |
|
|
Contract balances |
||
|
Trade receivables |
50,314.7 |
52,714.4 |
|
Contract assets |
||
|
Contract liabilities |
3,014.1 |
404.7 |
Contract assets are initially recognised for revenue from sale of goods. Contract liabilities are on account of the upfront revenue received from customer for which performance obligation has not yet been completed.
The performance obligation is satisfied when control of the goods or services are transferred to the customers based on the contractual terms. Payment terms with customers vary depending upon the contractual terms of each contract.
NOTE: 56
1 During year ended March 31, 2018, Zenotech Laboratories Limited (''Zenotech''), an associate of the Company, undertook a rights issue of its equity shares in which the Company participated and subscribed to equity shares worth Rs 855 Million. On account of such participation, Zenotech became a subsidiary of the Company effective July 25, 2017. In compliance with the relevant provisions of Ind AS 103 "Business Combination", the Company had reversed impairment during year ended March 31, 2018 in the books to the extent of fair value of equity shares determined on the basis of rights issue price amounting to Rs 725.7 Million.
2 Intangible assets consisting of trademarks, designs, technical knowhow, non compete fees and other intangible assets are available to the Company in perpetuity. The amortisable amount of intangible assets is arrived at based on the management''s best estimates of useful lives of such assets after due consideration as regards their expected usage, the product life cycles, technical and technological obsolescence, market demand for products, competition and their expected future benefits to the Company.
3 In respect of an antitrust litigation, relating to a product Modafinil, the Company and one of its wholly-owned subsidiaries had previously entered into settlements with certain plaintiffs (Apotex Corporation, Retailer Purchasers and end-payor plaintiffs) for an aggregate amount of USD 150.5 Million. The equivalent Indian rupee liability of Rs 9,505.0 Million and Rs 240.0 Million was provided in the books of account in year ended March 31, 2018. The amount of Rs 9,505.0 Million was disclosed as an exceptional item.
During the current financial year, the Company has entered into settlement agreement with the Direct Purchaser Plaintiffs; while continuing to litigate as well as negotiate the case with the remaining one plaintiff. The Company has accounted for Rs 12,143.8 Million towards the settlement agreement and a likely amount payable to remaining plaintiff in the antitrust litigation relating to the product Modafinil.
4 Since the US-FDA import alert at Karkhadi facility in March 2014, the Company remained fully committed to implement all corrective measures to address the observations made by the US-FDA with the help of third party consultant. The Company has completed all the action items to address the US-FDA warning letter observations issued in May 2014. It is continuing to work closely and co-operatively with the US-FDA to resolve the matter for lifting the import alert. The contribution of this facility to Company''s revenues is not significant.
5 The US-FDA, on January 23, 2014, had prohibited using API manufactured at Toansa facility for manufacture of finished drug products intended for distribution in the U.S. market. Consequentially, the Toansa manufacturing facility was subject to certain provisions of the consent decree of permanent injunction entered in January 2012 by erstwhile Ranbaxy Laboratories Ltd (which was merged with Sun Pharmaceutical Industries Ltd in March 2015). In addition, the Department of Justice of the USA (''US DOJ''), United States Attorney''s Office for the District of New Jersey had also issued an administrative subpoena dated March 13, 2014 seeking information. The Company is continuing to fully co-operate and provide requisite information to the US DOJ.
6 In December 2015, the US-FDA issued a warning letter to the manufacturing facility at Halol. Post the November 2016 inspection, the US-FDA had re-inspected Halol facility and cleared the Halol site from the warning letter in June 2018. Since then, the US-FDA has started approval of products filed from Halol facility.
7 In September 2013, the US-FDA had put the Mohali facility under import alert and was also subjected to certain provisions of the consent decree of permanent injunction entered in January 2012 by erstwhile Ranbaxy Laboratories Ltd (which was merged with Sun Pharmaceutical Industries Ltd in March 2015).
In March 2017, the US-FDA lifted the import alert and indicated that the facility was in compliance with the requirements of cGMP provisions mentioned in the consent decree. The Mohali facility continues to demonstrate sustainable cGMP compliance as required by the consent decree. The Company continues to manufacture and distribute products to the U.S from this facility.
8 In accordance with Ind AS 108 "Operating Segments", segment information has been given in the consolidated Ind AS financial statements, and therefore, no separate disclosure on segment information is given in these financial statements.
9 Post implementation of Goods and Service Tax ("GST") with effect from July 01, 2017, revenue from contracts with customers is disclosed net of GST. Revenue from contracts with customers for the previous year included excise duty which was subsumed in GST. Revenue from contracts with customers for the year ended March 31, 2018 includes excise duty for the period ended June 30, 2017. Accordingly, revenue from contracts with customers for the year ended March 31, 2019 are not comparable with year ended March 31, 2018.
10 The Board of Directors of the Company at their meeting held on November 10, 2016 and the shareholders and unsecured creditors of the Company at their respective meetings held on June 20, 2017 approved the proposed scheme of arrangement u/s 230 to 232 of the Companies Act, 2013 for amalgamation of Sun Pharma Medisales Private Limited, Ranbaxy Drugs Limited, Gufic Pharma Limited and Vidyut Investments Limited into the Company with effect from April 01, 2017, the appointed date. On completion of all the formalities of the merger of the above companies with the Company, the said merger became effective September 08, 2017.
Consequent to the amalgamation prescribed by the Scheme, all the assets and liabilities of transferor companies were transferred to and vested in the Company with effect from April 01, 2017 ("the Appointed Date")
The amalgamation was accounted under the "pooling of interest" method prescribed under Ind AS 103 - Business Combinations, as prescribed by the Scheme.
Accordingly, all the assets, liabilities and other reserves of transferor companies were aggregated with those of the Company at their respective book values. As prescribed by the Scheme no consideration was paid as the transferor Companies were wholly owned subsidiaries of the Company. Accordingly, the resultant difference amounting to Rs 535.6 Million was credited to capital reserve account.
11 The Scheme of Arrangement between Sun Pharma Global FZE ("the Transferor"), and the Company ("the Scheme"), inter-alia envisaged merger of unbranded generic pharmaceutical undertaking of the transferor (Specified business) into the Company. The scheme was approved by Hon''ble National Company Law Tribunal, Ahmedabad Bench on October 31, 2018 and became effective on December 01, 2018 upon completion of all the formalities.
Consequent to the amalgamation prescribed by the Scheme, all the assets and liabilities of the specified business were transferred to and vested in the Company with effect from April 01, 2017 ("the Appointed Date").
The amalgamation was accounted under the "pooling of interest" method prescribed under Ind AS 103 - Business Combinations, as prescribed by the Scheme.
Accordingly all the assets, liabilities, and other reserves of the specified business as on April 01, 2017 were transferred to the Company as per the Scheme. As prescribed by the Scheme no consideration was paid as the transferor is a wholly owned subsidiary of the Company. Accordingly, the resultant difference between the book value of assets and liabilities taken-over as on the appointed date amounting to Rs 17,450.8 Million is credited to capital reserve account. Also, any gain or loss on translation of assets and liabilities to functional currency (i.e. Rs) till the date of order has been credited or debited to foreign currency translation reserve.
12 The Company vide its press release dated January 22, 2019, had announced the transition of India domestic formulations distribution business from Aditya Medisales Limited (AML), to a wholly owned subsidiary of Sun Pharma Laboratories Limited. Accordingly, a new wholly owned subsidiary, Sun Pharma Distributors Limited (SPDL), was incorporated on March 19, 2019. The phased transition to SPDL will be completed post receipt of all requisite regulatory approvals. During the quarter ended March 31, 2019 , the Company pursuant to this decision has taken over its unsold inventory amounting to Rs 3,380.6 Million from AML. The above-mentioned transition and change in distribution arrangement has led to one-time reduction in sales and consequent reduction in profit for the year ended on March 31, 2019. Pending receipt of regulatory approvals by SPDL in different jurisdictions for sale of pharmaceutical products, AML would act as an agent for the India domestic formulation business.
13 Expenditure related to Corporate Social Responsibility as per Section 135 of the Companies Act, 2013 read with Schedule VII thereof Rs 39.4 Million (March 31, 2018: Rs 27.0 Million).
14 The Board of Directors of the Company at its meeting held on May 25, 2018, had approved the Scheme of Arrangement between the Company, Sun Pharma (Netherlands) B.V. and Sun Pharmaceutical Holdings USA Inc. (both being wholly owned subsidiaries of the Company) which inter-alia, envisages spin-off w.e.f. April 01, 2017 of the specified investment undertaking 1 and 2 (as defined in the Scheme of Arrangement) of the Company. The scheme shall be effective post receipt of requisite approvals and accordingly, the standalone financial statements do not reflect the impact, if any, on account of the schemes.
|
As per our report of even date |
||
|
For S R B C & CO LLP |
For and on behalf of the Board of Directors of |
|
|
Chartered Accountants |
Sun Pharmaceutical Industries Limited |
|
|
ICAI Firm Registration No. : 324982E/E300003 |
||
|
per PAUL ALVARES |
DILIP S. SHANGHVI |
|
|
Partner |
Managing Director |
|
|
Membership No. : 105754 |
||
|
Mumbai, May 28, 2019 |
||
|
C. S. MURALIDHARAN |
SUDHIR V. VALIA |
|
|
Chief Financial Officer |
Wholetime Director |
|
|
SUNIL R. AJMERA |
SAILESH T. DESAI |
|
|
Company Secretary |
Wholetime Director Mumbai, May 28, 2019 |
Mar 31, 2018
1. GENERAL INFORMATION
Sun Pharmaceutical Industries Limited (âthe Companyâ) is a public limited company incorporated and domiciled in India, having it''s registered office at Vadodara, Gujarat, India and has its listing on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Company is in the business of manufacturing, developing and marketing a wide range of branded and generic formulations and Active Pharmaceutical Ingredients (APIs). The Company has various manufacturing locations spread across the country with trading and other incidental and related activities extending to the global markets.
The standalone financial statements were authorized for issue in accordance with a resolution of the directors on May 25, 2018.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Statement of compliance
These financial statements are separate financial statements of the Company (also called standalone financial statements). The Company has prepared financial statements for the year ended March 31, 2018 in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) together with the comparative period data as at and for the year ended March 31, 2017.
2.2 Basis of preparation and presentation
The financial statements have been prepared on the historical cost basis, except for: (i) certain financial instruments that are measured at fair values at the end of each reporting period;
(ii) Non-current assets classified as held for sale which are measured at the lower of their carrying amount and fair value less costs to sell; (iii) derivative financial instrument and (iv) defined benefit plans - plan assets that are measured at fair values at the end of each reporting period, as explained in the accounting policies below:
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
The standalone financial statements are presented in '' and all values are rounded to the nearest Million (Rs, 000,000) up to one decimal, except when otherwise indicated.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for
measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS
17, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
The Company has consistently applied the following accounting policies to all periods presented in these financial statements.
a. Current vs. Non-current
The Company presents assets and liabilities in the balance sheet based on current / non-current classification. An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realized within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
b. Foreign currency
On initial recognition, transactions in currencies other than the Company''s functional currency (foreign currencies) are translated at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate at that date. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous period are recognized in profit or loss in the period in which they arise except for:
- exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings (see note 2.2.r).
- exchange differences on transactions entered into in order to hedge certain foreign currency risks (see note 2.2.i below for hedging accounting policies).
Non-monetary items that are measured in terms of historical cost in foreign currency are measured using the exchange rates at the date of initial transaction.
c. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker of the Company is responsible for allocating resources and assessing performance of the operating segments.
d. Property, plant and equipment
Items of property, plant and equipment are stated in balance sheet at cost less accumulated depreciation and accumulated impairment losses, if any. Freehold land is not depreciated.
Assets in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate. Such assets are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other assets, commences when the assets are ready for their intended use.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of property, plant and equipment and is recognized in profit or loss.
Items of property, plant and equipment acquired through exchange of non-monetary assets are measured at fair value, unless the exchange transaction lacks commercial substance or the fair value of either the asset received or asset given up is not reliably measurable, in which case the acquired asset is measured at the carrying amount of the asset given up.
Depreciation is recognized on the cost of assets (other than freehold land and Capital work-in-progress) less their residual values on straight-line method over their useful lives as indicated in Part C of Schedule II of the Companies Act, 2013. Leasehold improvements are depreciated over period of the lease agreement or the useful life, whichever is shorter. Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Software for internal use, which is primarily acquired from third-party vendors and which is an integral part of a tangible asset, including consultancy charges for implementing the software, is capitalized as part of the related tangible asset. Subsequent costs associated with maintaining such software are recognized as expense as incurred. The capitalized costs are amortized over the lower of the estimated useful life of the software and the remaining useful life of the tangible fixed asset.
e. Goodwill and Intangible assets Goodwill
Goodwill represents the excess of consideration transferred, together with the amount of non-controlling interest in the acquire, over the fair value of the Company''s share of identifiable net assets acquired. Goodwill is measured at cost less accumulated impairment losses.
Intangible assets
Intangible assets that are acquired by the Company and that have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses, if any. Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate.
Research and development
Expenditure on research activities undertaken with the prospect of gaining new scientific or technical knowledge and understanding are recognized as an expense when incurred. Development activities involve a plan or design for the production of new or substantially improved products and processes. An internally-generated intangible asset arising from development is recognized if and only if all of the following have been demonstrated:
- development costs can be measured reliably;
- the product or process is technically and commercially feasible;
- future economic benefits are probable; and
- the Company intends to and has sufficient resources/ ability to complete development and to use or sell the asset.
The expenditure to be capitalized include the cost of materials and other costs directly attributable to preparing the asset for its intended use. Other development expenditure is recognized in profit or loss as incurred.
Payments to third parties that generally take the form of up-front payments and milestones for in-licensed products, compounds and intellectual property are capitalized since the probability of expected future economic benefits criterion is always considered to be satisfied for separately acquired intangible assets.
Acquired research and development intangible assets which are under development, are recognized as In Process Research and Development assets (âIPR&Dâ). IPR&D assets are not amortized, but evaluated for potential impairment on an annual basis or when there are indications that the carrying value may not be recoverable. Any impairment charge on such IPR&D assets is recognized in profit or loss. Intangible assets relating to products under development, other intangible assets not available for use and intangible assets having indefinite useful life are tested for impairment annually, or more frequently when there is an indication that the assets may be impaired. All other intangible assets are tested for impairment when there are indications that the carrying value may not be recoverable.
The consideration for acquisition of intangible asset which is based on reaching specific milestone that are dependent on the Company''s future activity is recognized only when the activity requiring the payment is performed.
Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate. All other expenditures, including expenditures on internally generated goodwill and brands, are recognized in the statement of profit and loss as incurred.
Amortisation is recognized on a straight-line basis over the estimated useful lives of intangible assets. Intangible or convention in the market place (regular way trades) are recognized on the date the Company commits to purchase or sale the financial assets.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
- Debt instruments at amortized cost
- Debt instruments at fair value through other comprehensive income (FVTOCI)
- Debt instruments and equity instruments at fair value through profit or loss (FVTPL)
- Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortized cost
A ''debt instrument'' is measured at the amortized cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in Other Income in the profit or loss. The losses arising from impairment are recognized in the profit or loss.
Debt instrument at FVTOCI
A ''debt instrument'' is measured as at FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The contractual terms of the instrument give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date
at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses and reversals and foreign exchange gain or loss in the profit or loss. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the equity to profit or loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch'').
Debt instruments included within the FVTPL category are measured at fair value with all the changes in the profit or loss.
Equity instruments
All equity instruments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair value in OCI. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, including foreign exchange gain or loss and excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to profit or loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e. removed from the Company''s balance sheet) when:
- The contractual rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive contractual cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in OCI and accumulated in equity is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 18.
The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables or any contractual right to receive cash or another financial asset.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance
on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.
Financial liabilities and equity instruments Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
Compound financial instruments
The component parts of compound financial instruments (convertible notes) issued by the Company are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Subsequent measurement
All financial liabilities are subsequently measured at amortized cost using the effective interest method or at FVTPL.
Financial liabilities at fair value through profit or loss Financial liabilities are classified as at FVTPL when the financial liability is held for trading or is designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred principally for the purpose of repurchasing in the near term or on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking. This category also includes derivative financial instruments that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Gains or losses on liabilities held for trading are recognized in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For instruments not held-for-trading financial liabilities designated as at FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI, unless the recognition of the effects of changes in the liability''s credit risk in OCI would create or enlarge an accounting mismatch in profit or loss, in which case these effects of changes in credit risk are recognized in profit or loss. These gains/ loss are not subsequently transferred to profit or loss. All other changes in fair value of such liability are recognized in the statement of profit or loss.
Financial liabilities subsequently measured at amortized cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost in subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest rate (EIR) method. Interest expense that is not capitalized as part of costs of an asset is included in the ''Finance costs'' line item in the profit or loss.
After initial recognition, such financial liabilities are subsequently measured at amortized cost using the EIR method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the profit or loss.
Financial guarantee contracts
Financial guarantee contracts are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to
the issuance of the guarantee. If not designated as at FVTPL, are subsequently measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount initially recognized less cumulative amount of income recognized.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.
Embedded derivatives
Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of Ind AS 109 are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognized in profit or loss, unless designated as effective hedging instruments.
Reclassification of financial assets
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognized gains, losses (including impairment gains or losses) or interest.
Derivative financial instruments and hedge accounting Initial recognition and subsequent measurement
The Company uses derivative financial instruments, such as forward currency contracts, full currency swap, options and interest rate swaps to hedge its foreign currency risks and interest rate risks respectively. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value at the end of each reporting period. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognized in OCI and later reclassified to profit or loss when the hedge item affects profit or loss or treated as basis adjustment if a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability.
For the purpose of hedge accounting, hedges are classified as:
- Fair value hedges when hedging the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment.
- Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognized firm commitment.
At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Company''s risk management objective and strategy for undertaking hedge, the hedging/economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrument''s fair value in offsetting the exposure to changes in the hedged item''s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
Hedges that meet the strict criteria for hedge accounting are accounted for, as described below:
(i) Fair value hedges
Changes in fair value of the designated portion of derivatives that qualify as fair value hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
(ii) Cash flow hedges
The effective portion of changes in the fair value of the hedging instrument is recognized in OCI in the cash flow hedge reserve, while any ineffective portion is recognized immediately in profit or loss. The Company uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions and firm commitments. Amounts recognized as OCI are transferred to profit or loss when the hedged transaction affects profit or loss, such as when a forecast sale occurs. When the hedged item is the cost of a non-financial asset or non-financial liability, the amounts recognized as OCI are transferred to the initial carrying amount of the non-financial asset or liability.
If the hedging instrument expires or is sold, terminated or exercised or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognized in OCI remains separately in equity until the forecast transaction occurs or the foreign currency firm commitment is met. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.
Treasury shares
The Company has created an Employee Benefit Trust (EBT) for providing share-based payment to its employees. The Company uses EBT as a vehicle for distributing shares to employees under the employee remuneration schemes. The Company treats EBT as its extension and shares held by EBT are treated as treasury shares.
Own equity instruments that are reacquired (treasury shares) are deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments. Consideration paid or received shall be recognized directly in equity.
Dividend distribution to equity holders of the Company
The Company recognizes a liability to make dividend distributions to equity holders of the Company when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity.
j. Leases
A lease that transfers substantially all the risks and rewards incidental to ownership to the lessee is classified as a finance lease. All other leases are classified as operating leases.
Company as a lessee
Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased assets or, if lower, at the present value of the minimum lease payments. The corresponding liability to the less or is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in profit or loss as finance costs. Contingent rentals are recognized as expenses in the periods in which they are incurred.
Operating lease payments are generally recognized as an expense in the profit or loss on a straight-line basis over the lease term. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the less orâs expected inflationary cost increases, such increases are recognized in the year in which such benefits accrue. Contingent rentals arising under operating leases are also recognized as expenses in the periods in which they are incurred.
Company as a less or
Rental income from operating lease is generally recognized on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the Company''s expected inflationary cost increases, such increases are recognized in the year in which such benefits accrue. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned.
Amounts due from lessees under finance leases are recorded as receivables at the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Company''s net investment outstanding in respect of the leases.
k. Inventories
Inventories consisting of raw materials and packing materials, work-in-progress, stock-in-trade, stores and spares and finished goods are measured at the lower of cost and net realisable value. The cost of all categories of inventories is based on the weighted average method.
Cost of raw materials and packing materials, stock-in-trade, stores and spares includes cost of purchases and other costs incurred in bringing the inventories to its present location and condition.
Cost of work-in-progress and finished goods comprises direct material, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and costs necessary to make the sale.
The factors that the Company considers in determining the allowance for slow moving, obsolete and other non-saleable inventory include estimated shelf life, planned product discontinuances, price changes, ageing of inventory and introduction of competitive new products, to the extent each of these factors impact the Company''s business and markets. The Company considers all these factors and adjusts the inventory provision to reflect its actual experience on a periodic basis
l. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
m. Provisions, contingent liabilities and contingent assets
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Restructuring
A provision for restructuring is recognized when the Company has a detailed formal restructuring plan and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditure arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.
Onerous contracts
Present obligations arising under onerous contracts are recognized and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefit expected to be received from the contract.
Contingent liabilities and contingent assets Contingent liability is disclosed for,
(i) Possible obligations which will be confirmed only by future events not wholly within the control of the Company, or
(ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are not recognized in the financial statements.
n. Revenue
Revenue from sale of goods is measured at the fair value of the consideration received or receivable. Revenue is stated exclusive of sales tax, value added tax, goods and service tax and net of returns, chargebackâs, rebates and other similar allowances. Revenue is inclusive of excise duty till the period, provision of excise duty was levied on sale of goods.
Sale of goods
Revenue from sale of goods is recognized when the significant risks and rewards of ownership have been transferred to the buyer, usually on delivery of goods, it is probable that the economic benefit will flow to the Company, the associated costs and possible return of goods can be estimated reliably, there is neither continuing management involvement to the degree usually associated with ownership nor effective control over the goods sold and the amount of revenue can be measured reliably. The Company is principal in all of its revenue arrangements, since it is the primary obligor in all of the revenue arrangements, as it has pricing latitude and is exposed to inventory and credit risks.
Provisions for chargeback, rebates, discounts and Medicaid payments are estimated and provided for in the year of sales and recorded as reduction of revenue.
Sales returns
The Company accounts for sales returns accrual by recording an allowance for sales returns concurrent with the recognition of revenue at the time of a product sale. This allowance is based on the Company''s estimate of expected sales returns. With respect to established products, the Company considers its historical experience of sales returns, levels of inventory in the distribution channel, estimated shelf life, product discontinuances, price changes of competitive products, and the introduction of competitive new products, to the extent each of these factors impact the Company''s business and markets. With respect to new products introduced by the Company, such products have historically been either extensions of an existing line of product where the Company has historical experience or in therapeutic categories where established products exist and are sold either by the Company or the Company''s competitors.
Rendering of services
Revenue from services rendered is recognized in the profit or loss as the underlying services are performed. Upfront non-refundable payments received are deferred and recognized as revenue over the expected period over which the related services are expected to be performed.
Royalties
Royalty revenue is recognized on an accrual basis in accordance with the substance of the relevant agreement (provided that it is probable that economic benefits will flow to the Company and the amount of revenue can be measured reliably). Royalty arrangements that are based on production, sales and other measures are recognized by reference to the underlying arrangement.
o. Dividend and interest income
Dividend income is recognized when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
p. Government grants
The Company recognizes government grants only when there is reasonable assurance that the conditions attached to them will be complied with, and the grants will be received. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, the Company deducts such grant amount from the carrying amount of the asset.
q. Employee benefits Defined benefit plans
The Company operates a defined benefit gratuity plan which requires contribution to be made to a separately administered fund.
The liability in respect of defined benefit plans is calculated using the projected unit credit method with actuarial valuations being carried out at the end of each annual reporting period. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds. The currency and term of the government bonds shall be consistent with the currency and estimated term of the post-employment benefit obligations. The current service cost of the defined benefit plan, recognized in the profit or loss as employee benefits expense, reflects the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes, curtailments and settlements. Past service costs are recognized in profit or loss in the period of a plan amendment. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in profit or loss. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to OCI in the period in which they arise and is reflected immediately in retained earnings and is not reclassified to profit or loss.
Termination benefits
Termination benefits are recognized as an expense at the earlier of the date when the Company can no longer withdraw the offer of those benefits and when the entity recognizes costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of termination benefits.
Short-term and other long-term employee benefits
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.
The Company''s net obligation in respect of other long term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and previous periods. That benefit is discounted to determine its present value.
Defined contribution plans
The Company''s contributions to defined contribution plans are recognized as an expense as and when the services are received from the employees entitling them to the contributions. The Company does not have any obligation other than the contribution made.
Share-based payment arrangements
The grant date fair value of options granted to employees is recognized as an employee expense, with a corresponding increase in equity, on a straight line basis, over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve.
For cash-settled share-based payments, a liability is recognized for the goods or services acquired, measured initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is premeasured, with any changes in fair value recognized in profit or loss for the year.
r. Borrowing costs
Borrowing costs that are directly attributable to the construction or production of a qualifying asset are capitalized as part of the cost of that asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs also include exchange differences to the extent regarded as an adjustment to the borrowing costs. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
s. Income tax
Income tax expense consists of current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized in OCI or directly in equity, in which case it is recognized in OCI or directly in equity respectively. Current tax is the expected tax payable on the taxable profit for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years. Current tax assets and tax liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and liabilities are offset if there is a legally enforceable right to set off corresponding current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority on the Company.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Withholding tax arising out of payment of dividends to shareholders under the Indian income tax regulations is not considered as tax expense for the Company and all such taxes are recognized in the statement of changes in equity as part of the associated dividend payment.
Minimum Alternate Tax (''MAT'') credit is recognized as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the period for which the MAT credit can be carried forward for set-off against the normal tax liability. MAT credit recognized as an asset is reviewed at each Balance Sheet date and written down to the extent the aforesaid convincing evidence no longer exists.
t. Earnings per share
The Company presents basic and diluted earnings per share (âEPSâ) data for its equity shares. Basic EPS is calculated by dividing the profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential ordinary shares, which includes all stock options granted to employees.
The number of equity shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.
u. Recent Accounting pronouncements
Standards issued but not yet effective and not early adopted by the Company
Ind AS 115, Revenue from Contracts with Customers
In March 2018, the Ministry of Corporate Affairs (âMCAâ) has notified Ind AS 115, Revenue from Contracts with Customers, which is effective for accounting periods beginning on or after April 1, 2018. This comprehensive new standard will supersede existing revenue recognition guidance, and requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple-element arrangements.
Ind AS 115 is effective for annual reporting periods beginning on or after April 1, 2018.
The Company intends to adopt Ind AS 115 effective April 1, 2018, using the modified retrospective method. The Company is evaluating the requirements of the standard and its impact on its financials.
Amendments to Ind AS 7 Statement of Cash Flows:
The amendments require entities to provide disclosure of changes in their liabilities arising from financing activities, including both changes arising from cash flows and noncash changes (such as foreign exchange gains or losses). The Company has provided the information for the current period in Cash Flow Statement. Since amendment is effect from April 1, 2017, no comparative period information is required.
Other Amendments:
On March 28, 2018, the MCA, issued certain amendments to Ind AS. The amendments relate to the following standards:
- Ind AS 40, Investment Property
- Ind AS 21, The Effects of Changes in Foreign Exchange Rates
- Ind AS 12, Income Taxes
- Ind AS 28, Investments in Associates and Joint Ventures
- Ind AS 112, Disclosure of Interests in Other Entities
The amendments are effective April 1, 2018. The Company believes that the aforementioned amendments will not materially impact the financial position, performance or the cash flows of the Company.
Footnotes
(i) Buildings include Rs, 8,620 (As at March 31, 2017 : Rs, 8,620) towards cost of shares in a co-operative housing society and also includes Rs, 1.1 Million (As at March 31, 2017 : Rs, 1.1 Million) and Rs, 1,133.0 Million (As at March 31, 2017 : Rs, 1,133.0 Million) towards cost of non-convertible preference shares of face value of Rs, 10/- each and compulsorily convertible debentures of face value of Rs, 10,000/- each in a Company respectively entitling the right of occupancy and use of premises and also includes Rs, 4.5 Million (March 31, 2017 : Rs, 4.5 Million) towards cost of flats not registered in the name of the Company but is entitled to right of use and occupancy.
(ii) For details of assets pledged as security refer Note 51
(iii) The aggregate depreciation has been included under depreciation and amortisation expense in the statement of profit and loss.
^Shareholding has been consolidated on the basis of PAN as per SEBI circular dated December 19, 2017.
(i) 1,035,581,955 (upto March 31, 2017: 1,035,581,955) equity shares of Rs, 1 each have been allotted as fully paid up bonus shares during the period of five years immediately preceding the date at which the Balance Sheet is prepared.
(ii) 334,956,764 (upto March 31, 2017: 334,956,764) equity shares of Rs, 1 each have been allotted, pursuant to scheme of amalgamation, without payment being received in cash during the period of five years immediately preceding the date at which the Balance Sheet is prepared.
(iii) 7,500,000 (upto March 31, 2017: 7,500,000), equity shares of Rs, 1 each have been bought back during the period of five years immediately preceding the date at which the Balance Sheet is prepared. The shares bought back in the previous year were cancelled immediately. [Refer Note 56(12)]
(iv) Rights, preference and restrictions attached to equity shares: The equity shares of the Company, having par value of Rs, 1 per share, rank pari passu in all respects including voting rights and entitlement to dividend.
(v) Refer Note 50 for number of employee stock options against which equity shares are to be issued by the Company / ESOP Trust upon vesting and exercise of those stock options.
Refer statement of changes in equity for detailed movement in other equity balance
Nature and purpose of each reserve
Capital reserve - During amalgamation / merger / acquisition, the excess of net assets taken, over the consideration paid, if any, is treated as capital reserve.
Securities premium reserve - The amount received in excess of face value of the equity shares is recognized in securities premium reserve.
In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium reserve. This reserve is utilised in accordance with the provisions of the Companies Act 2013.
Share options outstanding account - The fair value of the equity settled share based payment transactions is recognized to share options outstanding account.
Amalgamation reserve - The reserve was created pursuant to scheme of amalgamation in earlier years.
Capital redemption reserve - The Company has recognized capital redemption reserve on buyback of equity shares from its retained earnings. The amount in capital redemption reserve is equal to nominal amount of the equity shares bought back.
General reserve: The reserve arises on transfer portion of the net profit pursuant to the earlier provisions of the Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.
Equity instrument through OCI - The Company has elected to recognise changes in the fair value of certain investment in equity instrument in other comprehensive income. This amount will be reclassified to retained earnings on derecognition of equity instrument.
Debt instrument through OCI - This represents the cumulative gain and loss arising on fair valuation of debt instruments measured through other comprehensive income. This amount will be reclassified to profit or loss account on derecognition of debt instrument.
Effective portion of cash flow hedges - The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on the changes of the fair value of the designated portion of the hedging instruments that are recognized and accumulated under the cash flow hedge reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basis adjustment to the non-financial hedged item.
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximates the fair value because there is wide range of possible fair value measurements and the costs represents estimate of fair value within that range.
# These investments in equity instruments are not held for trading. Instead, they are held for medium or long-term strategic purpose. Upon the application of Ind AS 109, the Company has chosen to designate these investments in equity instruments as at fair value through other comprehensive income as the management believes that this provides a more meaningful presentation for medium or long-term strategic investments, than reflecting changes in fair value immediately in profit or loss.
There were no transfers between Level 1 and 2 in the periods.
The management considers that the carrying amount of financial assets and financial liabilities carried at amortized cost approximates their fair value
Mar 31, 2017
1. General information
Sun Pharmaceutical Industries Limited (âthe Companyâ) is a public limited company incorporated and domiciled in India and has its listing on the BSE Limited and National Stock Exchange of India Limited. The addresses of its registered office and principal place of business are disclosed in the introduction to the annual report. The Company is in the business of manufacturing, producing, developing and marketing a wide range of branded and generic formulations and Active Pharmaceutical Ingredients (APIs). The Company has various manufacturing locations spread across the country with trading and other incidental and related activities extending to the global markets.
2 SHARE CAPITAL
(i) 1,035,581,955 (upto March 31, 2016: 1,035,581,955; upto April 01, 2015: 1,035,581,955) equity shares of Rs.1 each have been allotted as fully paid up bonus shares during the period of five years immediately preceding the date at which the Balance Sheet is prepared.
(ii) 334,956,764 (upto March 31, 2016: 334,956,764; upto April 01, 2015: Nil) equity shares of Rs.1 each have been allotted, pursuant to scheme of amalgamation, without payment being received in cash during the period of five years immediately preceding the date at which the Balance Sheet is prepared. [Refer Note 59(4)]
(iii) 7,500,000 (upto March 31, 2016: Nil, upto April 01, 2015: Nil) equity shares of Rs.1 each have been bought back during the period of five years immediately preceding the date at which the Balance Sheet is prepared. The shares bought back in the current year were cancelled immediately. [Refer Note 59 (13)]
(iv) Rights, Preference and Restrictions attached to equity shares: The Equity Shares of the Company, having par value of Rs.1 per share, rank pari passu in all respects including voting rights and entitlement to dividend.
(v) Refer Note 50 for number of employee stock options against which equity shares are to be issued by the Company / ESOP Trust upon vesting and exercise of those stock options.
Nature and purpose of each reserve
Capital reserve - During amalgamation / merger / acquisition, the excess of net assets taken, over the consideration paid, if any, is treated as capital reserve.
Securities premium reserve - The amount received in excess of face value of the equity shares is recognised in Securities Premium Reserve.
In case of equity-settled share based payment transactions, the difference between fair value on grant date and nominal value of share is accounted as securities premium reserve. This reserve is utilised in accordance with the provisions of the Companies Act 2013.
Debenture redemption reserve - The Company is required to create a debenture redemption reserve out of the profits which is available for payment of dividend. This reserve was transferred to general reserve on redemption of debentures.
Share options outstanding account - The fair value of the equity settled share based payment transactions is recognised to share options outstanding account.
Amaglamation reserve - The reserve was created pursuant to scheme of amalgamation in earlier years.
Capital redemption reserve - The Company has recognised Capital Redemption Reserve on buy-back of equity shares from its retained earnings. The amount in Capital Redemption Reserve is equal to nominal amount of the equity shares bought back.
General reserve - The reserve arises on transfer portion of the net profit pursuant to the earlier provisions of Companies Act 1956. Mandatory transfer to general reserve is not required under the Companies Act 2013.
Equity instrument through OCI - The Company has elected to recognise changes in the fair value of certain investment in equity instrument in other comprehensive income. This amount will be reclassified to retained earnings on derecognition of equity instrument.
Effective portion of cash flow hedges - The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on the changes of the fair value of the designated portion of the hedging instruments that are recognised and accumulated under the cash flow hedge reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basis adjustment to the non-financial hedged item.
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximates the fair value because there is wide range of possible fair value measurements and the costs represents estimate of fair value within that range.
# These investments in equity instruments are not held for trading. Instead, they are held for medium or long-term strategic purpose. Upon the application of Ind AS 109, the Company has chosen to designate these investments in equity instruments as at fair value through other comprehensive income as the management believes that this provides a more meaningful presentation for medium or long-term strategic investments, than reflecting changes in fair value immediately in profit or loss.
There were no transfers between Level 1 and 2 in the periods.
The management considers that the carrying amount of financial assets and financial liabilities carried as amortised cost approximates their fair value.
Reconciliation of Level 3 fair value measurements
3 CAPITAL MANAGEMENT
The Companyâs capital management objectives are:
- to ensure the Companyâs ability to continue as a going concern; and
- to provide an adequate return to shareholders through optimisation of debts and equity balance.
The Company monitors capital on the basis of the carrying amount of debt less cash and cash equivalents as presented on the face of the financial statements. The Companyâs objective for capital management is to maintain an optimum overall financial structure.
4 CIAL RISK MANAGEMENT
The Companyâs activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Companyâs risk management assessment and policies and processes are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Companyâs activities.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companyâs receivables from customers, loans and investments. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of counterparty to which the Company grants credit terms in the normal course of business.
Investments
The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have a good credit rating. The Company does not expect any losses from non-performance by these counter-parties, and does not have any significant concentration of exposures to specific industry sectors or specific country risks.
Trade receivables
The Company has used expected credit loss (ECL) model for assessing the impairment loss. For the purpose, the Company uses a provision matrix to compute the expected credit loss amount. The provision matrix takes into account external and internal risk factors and historical data of credit losses from various customers.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Companyâs reputation.
The Company has unutilised working capital lines from banks of Rs.32,128.0 Million as on March 31, 2017, Rs.27,718.7 Million as on March 31, 2016, Rs.30,177.9 Million as on April 01, 2015
Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates, foreign currency exchange rates and commodity prices) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and long-term debt. The Company is exposed to market risk primarily related to foreign exchange rate risk, interest rate risk and the market value of its investments. Thus, the Companyâs exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.
Foreign exchange risk
The Companyâs foreign exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily in US Dollars, Euros, South African Rand and Russian Rouble) and foreign currency borrowings (primarily in US Dollars). As a result, if the value of the Indian rupee appreciates relative to these foreign currencies, the Companyâs revenues and expenses measured in Indian rupees may decrease or increase and vice-versa. The exchange rate between the Indian rupee and these foreign currencies have changed substantially in recent periods and may continue to fluctuate substantially in the future. Consequently, the Company uses both derivative and non-derivative financial instruments, such as foreign exchange forward contracts, option contracts, currency swap contracts and foreign currency financial liabilities, to mitigate the risk of changes in foreign currency exchange rates in respect of its highly probable forecasted transactions and recognized assets and liabilities.
a) Significant foreign currency risk exposure relating to trade receivables, cash and cash equivalents, borrowings and trade payables
b) Sensitivity
For the years ended March 31, 2017, March 31, 2016 and April 01, 2015, every 5% strengthening in the exchange rate between the Indian rupee and the respective currencies for the above mentioned financial assets/liabilities would decrease the Companyâs loss and increase the Companyâs equity by approximately Rs.1,760.6 Million, Rs.2,720.8 Million and Rs.2,360.9 Million respectively. A 5% weakening of the Indian rupee and the respective currencies would lead to an equal but opposite effect.
In managementâs opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period does not reflect the exposure during the year.
c) Derivative contracts
The Company is exposed to exchange rate risk that arises from its foreign exchange revenues and expenses, primarily in US Dollars, Euros, South African Rand and Russian Rouble, and foreign currency debt in primarily in US Dollars. The Company uses foreign currency forward contracts, foreign currency option contracts and currency swap contracts (collectively, âderivativesâ) to mitigate its risk of changes in foreign currency exchange rates. The counterparty for these contracts is generally a bank or a financial institution.
Hedges of highly probable forecasted transactions
The Company designates its derivative contracts that hedge foreign exchange risk associated with its highly probable forecasted transactions as cash flow hedges and measures them at fair value. The effective portion of such cash flow hedges is recorded as in other comprehensive income, and re-classified in the income statement as revenue in the period corresponding to the occurrence of the forecasted transactions. The ineffective portion of such cash flow hedges is immediately recorded in the statement of profit and loss.
In respect of the aforesaid hedges of highly probable forecasted transactions, the Company has recorded a loss of Rs.26.6 Million for the year ended March 31, 2017 and Rs.Nil for the year ended March 31, 2016 in other comprehensive income. The Company also recorded hedges as a component of revenue, loss of Rs.521.5 Million for the year ended March 31, 2017 and Rs.Nil for the year ended March 31, 2016 on occurrence of forecasted sale transaction.
Changes in the fair value of forward contracts and option contracts that economically hedge monetary assets and liabilities in foreign currencies, and for which no hedge accounting is applied, are recognised in the statement of profit and loss. The changes in fair value of the forward contracts and option contracts, as well as the foreign exchange gains and losses relating to the monetary items, are recognised in the statement of profit and loss.
Interest rate risk
The Company has loan facilities on floating interest rate, which exposes the Company to risk of changes in interest rates. The Companyâs Treasury Department monitors the interest rate movement and manages the interest rate risk by evaluating interest rate swaps etc. based on the market / risk perception.
For the years ended March 31, 2017 and March 31, 2016, every 50 basis point decrease in the floating interest rate component applicable to its loans and borrowings would decrease the Companyâs loss by approximately Rs.160.5 Million and Rs.221.5 Million respectively. A 50 basis point increase in floating interest rate would have led to an equal but opposite effect.
Commodity rate risk
Exposure to market risk with respect to commodity prices primarily arises from the Companyâs purchases and sales of active pharmaceutical ingredients, including the raw material components for such active pharmaceutical ingredients. 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 active pharmaceutical ingredients 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, 2017, the Company had not entered into any material derivative contracts to hedge exposure to fluctuations in commodity prices.
5 SURES UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006
The information regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.
6 YEE BENEFIT PLANS
Defined contribution plan
Contributions are made to Regional Provident Fund (RPF), Family Pension Fund, Employees State Insurance Scheme (ESIC) and other Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund and other Statutory Funds are made only by the Company. The contributions are normally based on a certain percentage of the employeeâs salary. Amount recognised as expense in respect of these defined contribution plans, aggregate to Rs.608.1 Million (Previous year Rs.587.9 Million).
The Company has an obligation towards provident fund with respect to certain employees upto March 31, 2015 which was recognised as defined benefit plan. From the previous year the contribution for the same is made to RPF and the Company does not have any obligation apart from such contribution. Accordingly, from previous year, the provident fund is recognised as defined contribution plan.
Defined benefit plan
a) Gratuity
In respect of Gratuity, a defined benefit plan, contributions are made to LICâs Recognised Group Gratuity Fund Scheme. It is governed by the Payment of Gratuity Act, 1972. Under the Gratuity Act, employees are entitled to specific benefit at the time of retirement or termination of the employment on completion of five years or death while in employment. The level of benefit provided depends on the memberâs length of service and salary at the time of retirement/termination age. Provision for Gratuity is based on actuarial valuation done by an independent actuary as at the year end. Each year, the Company reviews the level of funding in gratuity fund. The Company decides its contribution based on the results of its annual review. The Company aims to keep annual contributions relatively stable at a level such that the fund assets meets the requirements of gratuity payments in short to medium term.
b) Pension fund
The Company has an obligation towards pension, a defined benefit retirement plan, with respect to certain employees, who had already retired before March 01, 2013, will continue to receive the pension as per the pension plan.
These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.
i) Investment risk - The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the market yields on government bonds denominated in Indian Rupees. If the actual return on plan asset is below this rate, it will create a plan deficit. However, the risk is partially mitigated by investment in LIC managed fund.
ii) Interest rate risk - A decrease in the bond interest rate will increase the plan liability. However, this will be partially offset by an increase in the return on the planâs debt investments.
iii) Longevity risk - The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.
iv) Salary risk - The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.
Other long term benefit plan
Actuarial Valuation for Compensated Absences is done as at the year end and the provision is made as per Company rules with corresponding charge to the Statement of Profit and Loss amounting to Rs.331.0 Million (Previous Year Rs.313.8 Million) and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation.
Obligation in respect of defined benefit plan and other long term employee benefit plans are actuarially determined as at the year end using the âProjected Unit Creditâ method. Gains and losses on changes in actuarial assumptions relating to defined benefit obligation are recognised in other comprehensive income whereas gains and losses in respect of other long term employee benefit plans are recognised in the Statement of Profit and Loss.
7 LEASES
(a) The Company has given certain premises and plant and equipment under operating lease or leave and license agreements. These are generally not non-cancellable and periods range between 11 months to 10 years under leave and licence / lease and are renewable by mutual consent on mutually agreeable terms. The Company has received refundable interest free security deposits where applicable in accordance with the agreed terms. (b) The Company has obtained certain premises for its business operations (including furniture and fittings, therein as applicable) under operating lease or leave and license agreements. These are generally not non-cancellable and periods range between 11 months to 10 years under leave and licence, or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms. These refundable security deposits have been valued at amortised cost under relevant Ind AS (c) Lease receipts / payments are recognised in the statement of profit and loss under âLease rental and hire chargesâ & âRentâ in Note 32 and 37 respectively. (d) The future minimum lease payments in respect of assets taken on non-cancellable operating leases are as under -
8 EMPLOYEE SHARE-BASED PAYMENT PLANS
Erstwhile Ranbaxy Laboratories Limited (RLL) had Employee Stock Option Schemes (âESOSsâ) namely, Employees Stock Option Scheme -II (ESOS-II), Employees Stock Option Scheme 2005 (ESOS 2005) and Employees Stock Option Plan 2011 (ESOP 2011) for the grant of stock options to the eligible employees and Directors of the Erstwhile RLL and its subsidiaries. ESOS-II had been discontinued from 17th January, 2015. The ESOSs are administered by the Compensation Committee (âCommitteeâ). Options are granted at the discretion of the Committee to selected employees depending upon certain criterion. Each option comprises one underlying equity share.
ESOS 2005 provided that the grant price of options would be the latest available closing price on the stock exchange on which the shares of the erstwhile RLL were listed, prior to the date of the meeting of the Committee in which the options were granted. If the shares are listed on more than one stock exchange, then the stock exchange where there was highest trading volume on the said date were considered. The options vested evenly over a period of five years from the date of grant. Options lapse, if they are not exercised prior to the expiry date, which was ten years from the date of grant.
ESOP 2011 provided that the grant price of options would be the face value of the equity share i.e. Rs.5 per share. The options vested evenly over a period of three years from the date of grant. Options lapse, if they were not exercised prior to the expiry date, which was three months from the date of the vesting. An ESOP Trust had been formed to administer ESOP 2011. Shares issued to the ESOP Trust were allocated to the eligible employees upon exercise of stock options from time to time.
In accordance with the above approval of issuance of options, stock options have been granted from time to time.
The stock options outstanding as on June 30, 2005 are proportionately adjusted in view of the sub-division of equity shares of the Erstwhile RLL from the face value of Rs.10 each into 2 equity shares of Rs.5 each
Pursuant to the Scheme of Amalgamation, Sun Pharmaceutical Industries Limited (âtransferee companyâ) formulated two Employee Stock Option Schemes, namely, (i) SUN Employee Stock Option Scheme-2015 (SUN-ESOS 2015) to administer ESOS 2005 (ii) SUN Employee Stock Option Plan-2015 (SUN-ESOP 2015) to administer ESOP 2011. These scheme provide that the number of transferee options issued shall equal to the product of number of transferor options outstanding on effectiveness of Scheme multiplied by the Share exchange ratio (0.80) and each transferee option shall have an exercise price per equity share equal to transferor option exercise price per equity share divided by the share exchange ratio (0.80) and fractions rounded off to the next higher whole number. The terms and conditions of ESOS, of transferee company are not less favourable than those of ESOSs of erstwhile RLL. No new grants shall be made under these schemes and these schemes shall operate only for the purpose of administering the exercise of options already granted / vested on an employee pursuant to SUN-ESOS 2015 and SUN-ESOP 2015.
During the current year, the Company has recorded a Stock-based employee compensation expense of Rs.30.8 Million (March 31, 2016: Rs.90.6 Million). The amount has been determined under a fair value method wherein the grant date fair value of the options was calculated by using Black Scholes pricing model.
@@ Assumptions used are as applicable at the date of grant in the context of erstwhile RLL
The Black -Scholes option-pricing model was developed for estimating fair value of trade options that have no vesting restrictions and are fully transferable. Since options pricing models require use of subjective assumptions, changes therein can materially affect fair value of the options. The options pricing models do not necessary provide a reliable measurable of fair value of options. The volatility in the share price is based on volatility of historical stock price of the erstwhile RLL for last 60 months.
9 WINGS
(A) Details of long term borrowings and current maturities of long term debt (included under other current financial liabilities)
(I) Unsecured External Commercial Borrowings (ECBs) has 6 loans aggregating of USD 256 Million (March 31, 2016 : USD 266 Million, April 01, 2015 : USD 288 Million) equivalent to Rs.16,602.9 Million (March 31, 2016 : Rs.17,625.2 Million, April 01, 2015 : Rs.18,001.4 Million) [(included in long term borrowings Rs.7,523.2 Million (March 31, 2016 : Rs.15,902.4 Million, April 01, 2015 : Rs.11,625.9 Million) and in current maturity of long term debt Rs.9,079.7 Million (March 31, 2016 : Rs.1,722.8 Million, April 01, 2015 : Rs.6,375.5 Million))]. For the ECB loans outstanding as at March 31, 2017, the terms of repayment for borrowings are as follows:
(a) USD Nil (March 31, 2016 : USD Nil, April 01, 2015 : USD 50 Million) equivalent to Rs.Nil (March 31, 2016 : Rs.Nil,
April 01, 2015 : Rs.3,125.2 Million). The loan was taken on August 12, 2010. The outstanding amount has been repaid in previous year.
(b) USD Nil (March 31, 2016 : USD Nil, April 01, 2015 : USD 30 Million) equivalent to Rs.Nil (March 31, 2016 : Rs.Nil, April 01, 2015 : Rs.1,875.2 Million). The loan was taken on September 9, 2010. The outstanding amount has been repaid in previous year.
(c) USD 10 Million (March 31, 2016 : USD 20 Million, April 01, 2015 : USD 30 Million) equivalent to Rs.648.6 Million (March 31, 2016 : Rs.1,325.2 Million, April 01, 2015 : Rs.1,875.2 Million). The loan was taken on June 30, 2011 and is repayable in 3 equal installments of USD 10 Million each at the end of 4th year, 5th year and 6th year. Second installment of USD 10 Million has been repaid in current year and first installment of USD 10 Million was repaid in previous year. The last installment is due on June 30, 2017.
(d) USD 50 Million (March 31, 2016 : USD 50 Million, April 01, 2015 : USD 50 Million) equivalent to Rs.3,242.8 Million (March 31, 2016 : Rs.3,313.0 Million, April 01, 2015 : Rs.3,125.2 Million). The loan was taken on September 20, 2012 and is repayable on September 19, 2017.
(e) USD 100 Million (March 31, 2016 : USD 100 Million, April 01, 2015 : USD 100 Million) equivalent to Rs.6,485.5 Million (March 31, 2016 : Rs.6,626.0 Million, April 01, 2015: Rs.6,250.5 Million). The loan was taken on June 4, 2013 and is repayable on June 3, 2018.
(f) USD Nil (March 31, 2016 : USD 16 Million, April 01, 2015 : USD 28 Million) equivalent to Rs.Nil (March 31, 2016 : Rs.1,060.2 Million, April 01, 2015 : Rs.1,750.1 Million).
Loan of USD 40 Million was taken on March 25, 2011 and was repayable in 3 installments viz., 30% each of the drawn amount at the end of 4th year and 5th year and 40% of the drawn amount at the end of the 6th year.
The last installment of USD 16 Million has been repaid in current year. First and Second installment of USD 12 Million each has been repaid in previous years.
(g) USD 50 Million (March 31, 2016 : USD 50 Million, April 01, 2015 : USD Nil) equivalent to Rs.3,242.8 Million (March 31, 2016 : Rs.3,313.0 Million, April 01, 2015 : Rs.Nil). The loan was taken on August 11, 2015 and is repayable on August 11, 2017.
(h) USD 30 Million (March 31, 2016 : USD 30 Million, April 01, 2015 : USD Nil) equivalent to Rs.1,945.7 Million (March 31, 2016 : Rs.1,987.8 Million, April 01, 2015 : Rs.Nil). The loan was taken on September 09, 2015 and is repayable on September 08, 2017.
(i) USD 16 Million (March 31, 2016 : USD Nil, April 01, 2015 : USD Nil) equivalent to Rs.1,037.7 Million (March 31, 2016 : Rs.Nil, April 01, 2015 : Rs.Nil). The loan was taken on March 24, 2017 and is repayable on March 22, 2019.
(II) Unsecured Loan under Foreign Currency Non Resident (FCNR B) Scheme of USD 50 Million (March 31, 2016 : USD 50 Million, April 01, 2015 : USD Nil) equivalent to Rs.3,242.8 Million (March 31, 2016 : Rs.3,313.0 Million, April 01, 2015 : Rs.Nil). The loan was taken on August 19, 2015 and is repayable on August 18, 2017.
(III) Redeemable non-convertible debentures of Rs.Nil (March 31, 2016 : Rs.Nil, April 01, 2015 : Rs.5,000.0 Million) issued on November 23, 2012 for a period of 36 months at a coupon rate of 9.20% p.a. Such debentures were secured by a pari-passu first ranking charge on the Companyâs specified fixed assets so as to provide a fixed asset cover of 1.25x and were listed on the National Stock Exchange. The loan was taken on November 23, 2012 and has been repaid in previous year.
(IV) Unsecured term loan of Rs.Nil (March 31, 2016 : Rs.Nil, April 01, 2015 : Rs.2,500.0 Million) has been repaid in previous year.
(V) Secured term loan from department of biotechnology of Rs.108.2 Million (March 31, 2016 : Rs.77.3 Million, April 01, 2015 : Rs.77.3 Million) has been secured by hypothecation of assets and goods of the Company. The loan is repayable in 10 equal half yearly installments commencing from December 26, 2018, last installment is due on June 26, 2023.
The Company has not defaulted on repayment of loan and interest payment thereon during the year.
(B) Details of securities for Short term Borrowings are as follows:
First charge has been created on a pari-passu basis, by hypothecation of inventories and receivables, both present and future.
10 IME IND AS ADOPTION RECONCILIATION
Explanation to transition to Ind AS
Ind AS 101 -âFirst-time Adoption of Indian Accounting Standardsâ requires that all Ind AS and interpretations that are issued and effective for the first Ind AS financial statements which is for the year ended March 31, 2017 for the Company, be applied retrospectively and consistently for all financial years presented, except for the Company has availed certain exemptions and complied with the mandatory exceptions provided in Ind AS 101, as described below. The Company has recognised all assets and liabilities whose recognition is required by Ind AS and has not recognised items of assets or liabilities which are not permitted by Ind AS, reclassified items from previous GAAP to Ind AS as required under Ind AS and applied Ind AS in measurement of recognised assets and liabilities.
Set out below are the Ind AS 101 optional exemptions availed as applicable and mandatory exceptions applied in the transition from previous GAAP to Ind AS.
Derecognition of financial assets and financial liabilities
The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after the transition date.
Hedge accounting
At the date of transition to Ind AS, the Company has measured all derivatives at fair value through profit or loss and eliminated all deferred losses and gains arising on derivatives that were reported in accordance with previous GAAP assets or liabilities.
Classification and measurement of financial assets
The Company has assessed conditions for classification of the financial assets on the basis of the facts and circumstances that were exist on the date of transition to Ind AS.
Determining whether an arrangement contains a lease
The Company has applied Appendix C of Ind AS 17 âDetermining whether an Arrangement contains a Leaseâ to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date
Deemed cost of property, plant and equipment and intangible assets
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment and intangible assets recognised as at April 01, 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment and intangible assets.
Designation of previously recognised financial instruments
Ind AS 101 allows an entity to designate investments in equity instruments at FVOCI on the basis of the facts and circumstances as at the date of transition to Ind AS. The Company has elected to apply this exemption for its investments in certain equity instruments.
Compound financial instruments
Under Ind AS 32, the Company should split compound financial instruments into separate equity and liability components. Ind AS 101 provides that if the liability component is no longer outstanding at the date of transition, a first-time adopter does not have to separate it from the component instrument. The Company has elected to apply this exemption for its compound financial instruments.
Fair value measurement of financial assets and financial liabilities at initial recognition
The Company has applied the requirements in paragraph B5.1.2A (b) of Ind AS 109 prospectively to transactions entered into on or after the date of transition to Ind AS. This exemption has been availed by the Company.
Non - current assets held for sale and discontinued operations
Ind As 105 requires that asset classified as non - current as per Ind AS 1 are not reclassified as current assets until they meet criteria to be classified as held for sale. The adopter can opt to either value those assets at carrying amount or fair value less cost of sale at the transition date and record any difference between such amount and carrying value directly to retained earnings. The Company has applied for this exemption.
Business Combinations
Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.
The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.
Share-based payment transactions
As per previous GAAP, the Company had applied the fair value recognition and measurement principles similar to those prescribed under Ind AS 102 for all options granted before the Transition Date. Consequently, this exemption was not required to be applied.
Excise duty
Under the previous GAAP, excise duty was netted off against sale of products. However, under Ind AS, excise duty is included in sale of products and is separately presented as expense in the statement of profit and loss.
a) Derivative instruments at fair value through profit or loss
Under previous GAAP, derivative instruments entered into for hedging the foreign currency fluctuation risk were accounted for on the principles of prudence. Pursuant to this, losses, if any, on Mark to Market basis, were recognised and gains were not recognised. Under Ind AS, gains on derivative instruments have been measured at fair value through profit or loss and gains or losses are recognised in the statement of profit and loss.
b) Discounting / (unwinding of discount) of provisions
Under Ind AS, long term provisions are to be measured at present value at the date of transition.
c) Separately acquired intangible assets
Under Ind AS, separately acquired intangible assets shall be capitalised which were not eligible for capitalisation under previous GAAP.
d) Proposed dividend (including dividend distribution tax)
Under Ind AS, dividend to holders of equity instruments is recognised as a liability in the period in which the obligation to pay is established. Under previous GAAP, dividend proposed was recorded as a provision in the period to which it relates.
e) Expected credit loss
Under previous GAAP, the Group had created provision for doubtful debts based on specific amount for incurred losses. Under Ind AS, the allowance for doubtful debts has been determined based on expected credit loss model.
f) Employee benefits
Under previous GAAP, actuarial gains and losses were recognised in statement of profit and loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of net defined benefit liability / asset which is recognised in other comprehensive income in the respective periods.
g) Effect of transition to Ind AS on Standalone Cash Flow Statement for the year ended March 31, 2016
Net increase in cash and cash equivalents represents movement in cash credit facilities considered as a component of cash and cash equivalents under Ind AS which as per previous GAAP, was considered as financing activity. Other Ind AS adjustments are either non cash adjustments or are regrouping among the cash flows from operating, investing and financing activities and has no impact on the net cash flow for the year ended 31st March, 2016 as compared with the previous GAAP.
In respect of any present obligation as a result of past event that could lead to a probable outflow of resources, provisions has been made, which would be required to settle the obligation. The said provisions are made as per the best estimate of the management and disclosure as per Ind AS 37 - âProvisions, Contingent Liabilities and Contingent Assetsâ has been given below :
Expenditure related to Corporate Social Responsibility as per Section 135 of the Companies Act, 2013 read with Schedule VII thereof: Rs.24.1 Million (Previous Year Rs.116.5 Million).
11 ESTIMATES AND JUDGEMENTS
The preparation of the Companyâs financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:
1 Fair value measurement of Financial Instruments
When the fair values of financials assets and financial liabilities recorded in the financial statements cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques which involve various judgements and assumptions.
2 Useful lives of property, plant and equipment and intangible assets
Property, plant and equipment and intangible assets represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation and amortisation is derived after determining an estimate of an assetâs expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Companyâs assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset.
3 Assets and obligations relating to employee benefits
The employment benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost/ (income) include the discount rate, inflation and mortality assumptions. Any changes in these assumptions will impact upon the carrying amount of employment benefit obligations.
4 Tax expense [Refer Note 2(q)]
The Companyâs tax jurisdiction is India. Significant judgements are involved in determining the provision for income taxes, if any, including amount expected to be paid/recovered for uncertain tax positions. Further, significant judgement is exercised to ascertain amount of deferred tax asset (DTA) that could be recognised based on the probability that future taxable profits will be available against which DTA can be utilized and amount of temporary difference in which DTA can not be recognised on want of probable taxable profits.
5 Provisions [Refer Note 2(m)]
6 Write down in value of inventories (Refer Note 13)
7 Contingencies (Refer Note 40)
1 Consequent to the amalgamation of erstwhile Ranbaxy Laboratories Limited (RLL) into the Company as referred in Note 59(4), Zenotech Laboratories Limited (âZenotechâ) had become an associate of the Company. The erstwhile RLL had granted certain loans to Zenotech which were outstanding and inherited by the Company. The Company has not granted any further loans to Zenotech post effective date of amalgamation i.e. March 24, 2015. The balance of this inherited outstanding loan is Rs.512.0 Million. The Company is in process of evaluating various options in relation to recovery of the outstanding loans and interest thereon of Rs.214.9 Million (March 31, 2016 : Rs.151.5 Million, April 01, 2015 : Rs.88.8 Million).
2 Intangible assets consisting of trademarks, designs, technical knowhow, non-compete fees and other intangible assets are available to the Company in perpetuity. The amortisable amount of intangible assets is arrived at based on the managementâs best estimates of useful lives of such assets after due consideration as regards their expected usage, the product life cycles, technical and technological obsolescence, market demand for products, competition and their expected future benefits to the Company.
3 Exceptional item for previous year represents charge on account of impairment of certain Property, Plant and Equipment and Intangible assets. This charge had arisen on account of the integration and optimization exercise being carried out for certain manufacturing facilities. The recoverable amount of the said assets is its value in use which is determined for a period of less than one year.
4 Pursuant to the Scheme of Arrangement u/s 391 to 394 of the Companies Act 1956 for amalgamation of erstwhile RLL with the Company as sanctioned by the Honâble High Court of Gujarat and Honâble High Court of Punjab and Haryana on March 24, 2015 (effective date) all the assets, liabilities and reserves of erstwhile RLL were transferred to and vested in the Company with effect from April 1, 2014, the appointed date. Erstwhile RLL along with its subsidiaries and associates was operating as an integrated international pharmaceutical organisation with business encompassing the entire value chain in the production, marketing and distribution of pharmaceutical products. The scheme was accordingly been given effect to in the financial statements for the year ended March 31, 2015.
On April 10, 2015, in terms of the Scheme of Arrangement 0.80 equity share of Rs.1 each (Number of Shares 334,956,764 including 186,516 Shares held by ESOP trust) of the Company has been allotted to the shareholders of erstwhile RLL for every 1 share of Rs.5 each (Number of Shares 418,695,955 including 233,146 shares held by ESOP trust) held by them in the share capital of erstwhile RLL, after cancellation of 6,967,542 shares of erstwhile RLL. An amount of Rs.1,792.4 Million being the excess of share capital of erstwhile RLL over the amount recorded as the share capital (which was outstanding to be issued by the Company as on April 1, 2015 and disclosed as Share Suspense Account) was credited to Capital Reserve.
5 Out of a MAT credit entitlement of Rs.8,222.7 Million which was written down by the erstwhile RLL during the quarter ended December 31, 2014, an amount of Rs.7,517.0 Million was recognised by the Company in the year ended March 31, 2015, on a reassessment by the Management, based on convincing evidence that the combined amalgamated entity would pay normal income tax during the specified period and would therefore be able to utilize the MAT credit entitlement so recognised.
6 Since the US-FDA import alert at Karkhadi facility in March 2014, the Company remained fully committed to implement all corrective measures to address the observations made by the US-FDA with the help of third party consultant. Substantial progress has been made at the Karkhadi facility in terms of completing the action items to address the observations made by the US-FDA in its warning letter issued in May 2014. The Company is continuing to work closely and co-operatively with the US-FDA to resolve the matter. The contribution of this facility to Companyâs revenues is not significant.
7 The US-FDA, on January 23, 2014, had prohibited using API manufactured at Toansa facility for manufacture of finished drug products intended for distribution in the U.S. market. Consequentially, the Toansa manufacturing facility was subject to certain provisions of the consent decree of permanent injunction entered in January 2012 by erstwhile Ranbaxy Laboratories Ltd (which was merged with Sun Pharmaceutical Industries Ltd in March 2015). In addition, the Department of Justice of the USA (âUS DOJâ), United States Attorneyâs Office for the District of New Jersey had also issued an administrative subpoena dated March 13, 2014 seeking information primarily related to Toansa manufacturing facility for which a Form 483 containing findings of the US-FDA was issued in January 2014. The Company is continuing to fully cooperate and is in dialogue with the US DOJ, and continuing to provide requisite information.
8 In December 2015, the US-FDA issued a warning letter to the manufacturing facility at Halol. Subsequently, a re-inspection was carried out by the US-FDA in November 2016. At the conclusion of the inspection, FDA issued a Form 483 with nine observations. The Company has submitted its response documenting the corrective measures to resolve the 483 observations. The Company is providing regular updates to USFDA on the progress of the corrective actions. The Company is continuing to manufacture and distribute products to the U.S from Halol facility and at the same time working closely and co-operatively with the US-FDA to resolve the matter.
9 In September 2013, the US-FDA had put the Mohali facility under import alert and was also subjected to certain provisions of the consent decree of permanent injunction entered in January 2012 by erstwhile Ranbaxy Laboratories Ltd (which was merged with Sun Pharmaceutical Industries Ltd in March 2015). In November 2016, the US-FDA conducted a re-inspection of the Mohali facility post the completion of remediation work at the facility. As a result of this reinspection, in March 2017, the US-FDA lifted the import alert and indicated that the facility was in compliance with the requirements of cGMP provisions mentioned in the consent decree. The Mohali facility will continue to remain under consent decree under certain other provisions of the decree for a fixed period of time to demonstrate sustainable cGMP compliance.
10 In accordance with Ind AS 108 âOperating Segmentsâ, segment information has been given in the consolidated Ind AS financial statements, and therefore, no separate disclosure on segment information is given in these financial statements.
11 Remuneration to the Managing Director and the Whole-time Director(s) of the Company for the years ended March 31, 2015, March 31, 2016 and March 31, 2017 are higher by Rs.49.6 Million, Rs.29.6 Million and Rs.44.7 Million respectively than the amounts approved by the Central Government of India (Ministry of Corporate Affairs) on applications made by the Company to approve the maximum remuneration as approved by the members of the Company for the three years ended March 31, 2017, in excess of the limits specified under Schedule V to the Companies Act, 2013, in case of inadequacy of profits. The Company has re-represented to the office of the Ministry of Corporate Affairs (MCA) for approval of remuneration within the overall limits approved by the members of the Company for the years ended March 31, 2015 and March 31, 2016, and that for the year ended March 31, 2017, applications for revision in the remuneration, as approved by the members of the Company, has been made to the MCA. The responses in respect of the foregoing rerepresentation / applications for revision are awaited from the MCA. On receipt of the requisite approvals, the balance amount of remuneration for the aforesaid years, if any, as per their entitlement, shall be paid to the Managing Director and the Whole-time Director(s), as applicable, and the same shall be given effect to in the year in which the approval is received.
Excess remuneration, if any, after final approval in respect of the re-representation/applications for revision is received, shall be refunded by the respective Managing Director and the Whole-time Director(s).
12 As at March 31, 2017, the Company has received an amount of Rs.0.0 Million (Rs.7,177) towards share application money for 1,148 equity shares of the Company. The Company will allot these equity shares during the next financial year.
The Company has sufficient authorised capital to cover the allotment of these shares. Pending allotment of shares, the amounts are maintained in a designated bank account and are not available for use by the Company.
13 The Company completed buy-back of 7,500,000 equity shares of Rs.1 each (representing 0.31% of total pre buy-back paid up equity capital) on October 18, 2016, from the shareholders on a proportionate basis by way of a tender offer at a price of Rs.900 per equity share for an aggregate amount of Rs.67,500 Lakhs in accordance with the provisions of the Companies Act, 2013 and the SEBI (Buy Back of Securities) Regulations, 1998. This buy-back of equity shares was approved by the Board of Directors of the Company at its meeting held on June 23, 2016.
Footnote
1 Incorporated / Acquired during the year.
2 Merged with Sun Pharmaceutical Industries, Inc.
3 Dissolved / Liquidated during the year.
4 Merged with Sun Pharma Global FZE.
5 Investment sold during the previous year.
6 Taro Pharmaceutical India Private Limited is under liquidation.
7 Merged into Mutual Pharmaceutical Company, Inc. during the previous year .
8 Merged into URL Pharma Inc. during the previous year.
9 Thallion Pharmaceutical Inc., was acquired and merged with Taro Pharmaceuticals Inc. during the year.
10 Incorporated / Acquired during the year ended March 31, 2015.
11 Dissolved / Liquidated during the previous year.
12 Incorporated / Acquired during the previous year.
13 Thea Acquisition Corporation has been merged with Insite Vision Incorporated during the previous year.
14 Acquired and subsequently amalgamated in Taro Pharmaceuticals Inc. in the previous year.
15 Daiichi Sankyo (Thailand) Ltd.âs shares were sold during the year.
16 During the year Solrex Pharmaceuticals Company, a partnership firm has been converted into company which is known as Sun Pharma Medisales Private Limited.
17 Holds voting power of 81.87% (beneficial ownership 72.81%) [March 31, 2016 79.32% (beneficial ownership 68.98%)] [April 01, 2015 79.24% (beneficial ownership 68.87%)].
Mar 31, 2015
1 DISCLOSURES RELATING TO SHARE CAPITAL
i Rights, Preferences and Restrictions attached to Equity Shares
The Equity Shares of the Company, having par value of Rs. 1 per share,
rank pari passu in all respects including voting rights and entitlement
to dividend.
ii Reconciliation of the number of shares and amount outstanding at the
beginning and at the end of reporting period
iii 1,035,581,955 (upto the end of previous year 1,035,581,955) Equity
Shares of Rs. 1 each have been allotted as fully paid up bonus shares
during the period of five years immediately preceding the date at which
the Balance Sheet is prepared.
iv Number of stock options against which equity shares to be issued by
the Company upon vesting and exercise of those stock options by the
option holders as per the relevant scheme (Refer Note 56)
v Equity shares held by each shareholder holding more than 5 percent
Equity Shares (excluding share suspense account) in the Company are as
follows:
2 The net Exchange Loss of Rs. 3,861.1 Million (Previous Year Loss of
Rs. 1,740.0 Million) is included in Revenue from Operations, Cost of
Materials Consumed, Finance Cost and Other Expenses in the Statement of
Profit and Loss, as applicable.
3 DISCLOSURES UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES
DEVELOPMENT ACT, 2006:
(a) An amount of Rs. 94.0 Million (Previous Year Rs. 69.7 Million) and
Rs. NIL (Previous Year Rs. NIL) was due and outstanding to suppliers as
at the end of the accounting year on account of Principal and Interest
respectively.
(b) No interest was paid during the year.
(c) No interest is payable at the end of the year under Micro, Small
and Medium Enterprises Development Act, 2006.
(d) No amount of interest was accrued and unpaid at the end of the
accounting year.
The above information and that given in Note 8 "Trade Payables"
regarding Micro and Small Enterprises has been determined to the extent
such parties have been identified on the basis of information available
with the Company. This has been relied upon by the auditors.
4 ACCOUNTING STANDARD (AS-15) ON EMPLOYEE BENEFITS
Contributions are made to Recognised Provident Fund, Family Pension
Fund, ESIC and other Statutory Funds which covers all regular
employees. While both the employees and the Company make predetermined
contributions to the Provident Fund and ESIC, contribution to the
Family Pension Fund are made only by the Company. The contributions are
normally based on a certain proportion of the employee's salary. Amount
recognised as expense in respect of these defined contribution plans,
aggregate to Rs. 377.8 Million (Previous year Rs. 118.5 Million)
5 ACCOUNTING STANDARD (AS-19) ON LEASES
(a) The Company has given certain premises and Plant and Machinery
under operating lease or leave and license agreements. These are
generally not non-cancellable and range between 11 months to 10 years
under leave and licence, or longer for other lease and are renewable by
mutual consent on mutually agreeable terms. The Company has received
refundable interest free security deposits where applicable in
accordance with the agreed terms. (b) The Company has obtained certain
premises for its business operations (including furniture and fittings,
therein as applicable) under operating lease or leave and license
agreements. These are generally not non-cancellable and range between
11 months to 10 years under leave and licence, or longer for other
lease and are renewable by mutual consent on mutually agreeable terms.
The Company has given refundable interest free security deposits in
accordance with the agreed terms. (c) Lease receipts / payments are
recognised in the Statement of Profit and Loss under "Lease Rental and
Hire Charges" & "Rent" in Note 22A and 26 respectively. (d) The future
minimum lease payments in respect of non cancellable operating leases
as at March 31, 2015 are as under
6 Miscellaneous Expenses includes Nil (Previous year Rs. 433.9
Million) towards Product Settlement Expense.
7 Consequent to the amalgamation of erstwhile RLL into the Company as
referred in Note 48, Zenotech Laboratories Limited ('Zenotech') became
an associate of the Company. The erstwhile RLL had granted certain
loans to Zenotech which were outstanding and inherited by the Company.
The Company has not granted any further loans to Zenotech post
effective date i.e. March 24, 2015. The balance of this inherited
outstanding loan is Rs. 512.0 Million. The Company is in process of
evaluating various options in relation to recovery of the outstanding
loans and interest thereon of Rs. 88.8 million.
8 Intangible assets consisting of trademarks, designs, technical
knowhow, non compete fees and other intangible assets are stated at
cost of acquisition based on their agreements and are available to the
Company in perpetuity. The amortisable amount of intangible assets is
arrived at based on the management's best estimates of useful lives of
such assets after due consideration as regards their expected usage,
the product life cycles, technical and technological obsolescence,
market demand for products, competition and their expected future
benefits to the Company.
9 On 11th June, 2013, Sun Pharma Global FZE (SPG), a wholly owned
subsidiary has entered into settlement agreement for USD 550.0 Million
[including USD 44.0 Million borne by Sun Pharmaceutical Industries Inc
(formerly known as Caraco Pharmaceutical Laboratories Ltd.)] with
Pfizer Inc., USA; Wyeth LLC USA and Nycomed GmbH, Germany in settlement
of the claim of patent infringement litigation related to generic
version of "Protonix". SPG has entered into an agreement with a third
party in terms of which the said party has agreed to bear damages on
account of patent infringement to the extent of USD 400.0 Million
(equivalent to Rs. 24,002.0 Million) in consideration of SPG agreeing
to sell them pharmaceutical products at a negotiated discounted price
for a specified period. Accordingly, a provision of USD 16.5 Million
(Previous year USD 438.5 Million) equivalent to Rs. 1,031.7 Million
(Previous Year Rs. 26,312.2 Million) [including other related expected
discount and incidental expenses of USD 16.5 Million (Previous Year USD
38.5 Million) equivalent to Rs. 1,031.7 Million (Previous Year Rs.
2,310.2 Million)] towards estimated expected liability on this account,
has been accounted for and given effect in these financial statements.
The above charge of USD Nil (Previous year USD 506.0 Million)
equivalent to Nil (Previous Year Rs. 28,756.0 Million) has been
considered as exceptional item and Rs. 1,031.7 Million (Previous Year
Rs. 2,381.2 Million) has been included in miscellaneous expenses.
10 Pursuant to the Scheme of Arrangement u/s 391 to 394 of the
Companies Act 1956 for amalgamation of erstwhile Ranbaxy Laboratories
Ltd (RLL) with the Company as sanctioned by the Hon'ble High Court of
Gujarat and Hon'ble High Court of Punjab and Haryana on March 24, 2015
(effective date) all the assets, liabilities and reserves of RLL were
transferred to and vested in the Company with effect from 1st April
2014, the appointed date. RLL along with its subsidiaries and
associates was operating as an integrated international pharmaceutical
organisation with business encompassing the entire value chain in the
production, marketing and distribution of pharmaceutical products. The
scheme has accordingly been given effect to in these financial
statements.
The amalgamation has been accounted for under the "Pooling of Interest
Method" as prescribed under Accounting Standard 14- "Accounting for
Amalgamations" (AS 14) issued by the Institute of Chartered Accountants
of India and as notified under section 133 of the Companies Act 2013
read with Rule 7 of the Companies Accounts Rules 2014. Accordingly and
giving effect in compliance of the Scheme of Arrangement all the
assets, liabilities and reserves of RLL, now considered a division of
the Company, were recorded in the books of the Company at their
carrying amounts and the form as at the appointed date in the books of
RLL.
On April 10, 2015, In terms of the Scheme of Arrangement 0.80 equity
share of Rs. 1 each (Number of Shares 334,956,764 including 187,583
Shares held by ESOP trust) of the Company has been allotted to the
shareholders of RLL for every 1 share of Rs. 5 each (Number of Shares
418,461,476 including 234,479 shares held by ESOP trust) held by them
in the share capital of RLL, after cancellation of 6,967,542 shares of
RLL. These shares have been considered for the purpose of calculation
of earnings per share appropriately. An amount of Rs. 1,792.4 Million
being the excess of the amount recorded as share capital to be issued
by the Company over the amount of the share capital of erstwhile RLL
has been credited to Capital Reserve.
11 RLL had early adopted Accounting Standard (AS) 30 "Financial
Instruments: Recognition and Measurement" and AS 31 "Financial
Instruments: Presentation" for accounting of derivative instruments
which are outside the scope of Accounting Standard 11 'The Effects of
Changes in Foreign Exchange Rates' such as forward contracts to hedge
highly probable forecast transactions, option contracts, currency
swaps, interest rate swaps etc. In order to align with the Company's
policy, derivative instruments are now accounted for in accordance with
the announcement issued by the Institute of Chartered Accountants of
India dated March 28, 2008. On the principles of prudence as
enunciated in Accounting Standard 1 "Disclosure of Accounting Policies"
which requires to provide losses in respect of all outstanding
derivative instruments at the balance sheet date by marking them to
market. Accordingly, the unrealized MTM gain of Rs. 905.4 Million as at
April 1, 2014 has been reversed and MTM gain as at March 31, 2015
amounting to Rs. 1,121.0 Million has not been recognized in these
financial statements
12 Out of a MAT credit of Rs. 8,222.7 Million which was written down by
the erstwhile RLL during the quarter ended December 31, 2014, an amount
of Rs. 7,517.0 Million has been recognized by the Company, on a
reassessment by the Management at the year-end, based on convincing
evidence that the combined amalgamated entity would pay normal income
tax during the specified period and would therefore be able to utilize
the MAT credit so recognised. Current tax for the year also includes
Rs. 284.7 Million pertaining to earlier years.
13 Pursuant to the Scheme of Amalgamation u/s 391 to 394 of the
Companies Act, 1956 and u/s 52 of the Companies Act, 2013 for
amalgamation of erstwhile Sun Pharma Global Inc.(Transferor Company)
with the Company, with effect from January 1, 2015 (appointed date), as
sanctioned by the Hon'ble High Court of Gujarat, filed with the
Registrar of Companies on August 6, 2015 (effective date), all the
assets, liabilities, reserves and surplus of Transferor Company were
transferred to and vested in the Company without any consideration, on
going concern basis. Transferor Company is a wholly owned subsidiary of
the company and was engaged in the business activities of strategic and
non-strategic investments and financing mainly to its group subsidiary
or associate companies worldwide. The amalgamation has been accounted
for under the "Pooling of Interest Method" as prescribed under
Accounting Standard 14- "Accounting for Amalgamations" (AS 14) issued
by the Institute of Chartered Accountants of India and as notified
under section 133 of the Companies Act, 2013 read with Rule 7 of the
Companies Accounts Rules 2014. The scheme has been given effect to in
these financial statements and accordingly; (i) The Financial
Statements for the year ended March 31, 2015 which were earlier
approved by Board of Directors on May 29, 2015 and audited by the
statutory auditors of the Company have been revised. (ii) All the
assets, liabilities, reserves and surplus of Transferor Company were
recorded in the books of the Company at their carrying amounts and in
the same form as at the appointed date. Transferor Company being a
wholly owned subsidiary of the Company neither any shares are required
to be issued nor any consideration is paid. The Equity Share Capital,
Preference Share Capital, Share application money pending allotment and
securities premium account of the Transferor Company and the carrying
value of investment in Equity Shares, Preference Shares and Share
application money of the Transferor Company in the books of the
Transferee Company stands cancelled. Accordingly the difference of Rs.
6,498.8 Million between the amount of share capital of the Transferor
Company and the consideration being Nil, after adjusting for the
carrying value of Investments in the books of the Company is credited
to Capital Reserve.
14 With regard to tangible assets, the Company has adopted the useful
life of fixed assets as indicated in Part C of Schedule II of the
Companies Act, 2013 and amendment thereto vide notification dated
August 29, 2014 issued by the Ministry of Corporate Affairs. Pursuant
to the transition provisions prescribed in Schedule II to the Companies
Act, 2013, the carrying value of assets, net of residual value, where
the remaining useful life of the asset was determined to be Nil as on
April 1, 2014, have been fully depreciated and an amount of Rs. 491.8
Million has been charged to the Statement of Profit and Loss. The
depreciation expense in the Statement of Profit and Loss for the year
is higher by Rs. 3,069.9 Million consequent to the change in the useful
life of the assets.
15 In March 2014, the US FDA issued an import alert to the Company for
its cephalosporin facility located at Karkhadi, Gujarat in India. The
warning letter pertaining to this import alert was issued by the US FDA
in May 2014. The letter identifies practices at the facility which are
non-compliant with current Good Manufacturing Practice (CGMP)
regulations. The Company remains fully committed to compliance and
corrective steps are on-going to address the observations made by the
US FDA. The Company is committed to working co-operatively and
expeditiously with the US FDA to resolve the matters indicated in its
letter. Until these matters are resolved to the satisfaction of the US
FDA, the US FDA may, in the near term, withhold approval of pending new
drug applications from this facility. The contribution of this facility
to Company's revenues is not significant.
16 The US FDA had, on January 23, 2014, prohibited from manufacturing
and distributing APIs from its Toansa manufacturing facility and
finished drug products containing APIs manufactured at this facility
into the USA regulated market. Consequentially, the Toansa
manufacturing facility is subject to certain terms of the Consent
decree of permanent injunction entered into by the Company in January
2012.
In addition, the Department of Justice of the USA ('US DOJ'), United
States Attorney's Office for the District of New Jersey had also issued
an administrative subpoena dated March 13, 2014 seeking information
primarily related to Toansa manufacturing facility for which a Form 483
containing findings of the US FDA was issued in January 2014. The
Company is fully cooperating with this information request and is in
dialogue with the US DOJ for submission of the requisite information.
17 In the absence of net profits in the Company for the year ended
March 31, 2015 remuneration to the Managing Director and a Whole-time
Director of the Company for the year ended March 31, 2015 is in excess
of the limits specified under Schedule V of the Companies Act, 2013 by
Rs. 20.7 Million. In this regard the Company has made necessary
applications to the Central Government for approving of the amounts of
maximum remuneration payable, which includes the excess amounts already
paid / provided. Consequent to giving effect to the scheme of
arrangement for the merger of Specified Undertaking of Sun Pharma
Global FZE into the Company effective from May 1, 2013, resulting in
the absence of net profits in the Company for the previous year ended
March 31, 2014 (i) remuneration to the Managing Director and the
Whole-time Directors of the Company has exceeded the limits specified
under Schedule XIII to the Companies Act, 1956 by Rs. 44.7 Million; and
(ii) commission of Rs. 6.4 Million for the previous year ended March
31, 2014, to the Non-Executive Directors of the Company is in excess,
since there is absence of net profits for the previous year under
section 309(4) read with section 309(5) of the Companies Act, 1956. The
Company has made necessary applications to the Central Government for
the waiver of the excess remuneration and commission for the previous
year ended March 31, 2014. The Company has obtained approval from the
shareholders of the Company in respect of the aforesaid remuneration
and commission, as applicable for the years March 31, 2014 and 2015.
The approval from the Central Government of India is awaited in respect
of the said applications.
18 EMPLOYEE SHARE-BASED PAYMENT PLANS
Erstwhile Ranbaxy Laboratories Limited had the Employee Stock Option
Schemes ("ESOSs") for the grant of stock options to its eligible
employees and Directors of the Company and of its subsidiaries. The
ESOSs are used to be administered by the Compensation Committee
("Committee"). Options are used to be granted at the discretion of the
Committee to the selected employees depending upon certain criterion.
As at 31 March 2015, there were two ESOSs, namely, "ESOS 2005" and
"ESOP 2011". ESOS II discontinued on January 17, 2015.
ESOS II provided that the grant price of options would be determined at
the average of the daily closing price of the erstwhile RLL's equity
shares on the NSE during a period of 26 weeks preceding the date of the
grant. ESOS 2005 provided that the grant price of options would be the
latest available closing price on the stock exchange on which the
shares of the erstwhile RLL were listed, prior to the date of the
meeting of the Committee in which the options were granted. If the
shares are listed on more than one stock exchange, then the stock
exchange where there is highest trading volume on the said date shall
be considered. The options vested evenly over a period of five years
from the date of grant. Options lapse, if they were not exercised prior
to the expiry date, which was ten years from the date of grant.
During the year ended December 31, 2011, a new ESOS scheme was
introduced by erstwhile RLL viz "ESOP 2011" with effect from July 01,
2011. ESOP - 2011 provides that the grant price will be the face value
of the equity share i.e. Rs. 5 per share. The options vested evenly
over a period of three years from the date of grant. Options lapsed, if
they were not exercised prior to the expiry date, which was three
months from the date of the vesting. An ESOP Trust had been formed to
administer ESOP-2011 scheme. Shares issued to the ESOP Trust were
allocated to the eligible employees upon exercise of stock options from
time to time. As per the opinion of the Expert Advisory Committee (EAC)
of The Institute of Chartered Accountants of India, as on the reporting
date, the shares issued to an ESOP Trust but yet to be allocated to the
employees be shown as a deduction from the Share Capital with a
corresponding adjustment to the loan receivable from ESOP Trust.
Accordingly, the Company has adjusted shares held by the ESOP Trust on
the reporting date as a deduction from the Share Suspense Account.
Pursuant to the Scheme of Amalgamation, Sun Pharmaceutical Industries
Limited ('transferee company') formulated two Employee Stock Option
Schemes namely (i) SUN Employee Stock Option Scheme-2015 (ii) SUN
Employee Stock Option Plan-2015 (ESOS Schemes) among other things to
grant to the eligible employees of erstwhile RLL ('transferor company')
stock options. Further, the number of transferee options issued shall
equal to the product of number of transferor options outstanding on
effectiveness of Scheme multiplied by the Share exchange ratio (0.80)
and each transferee option shall have an exercise price per equity
share equal to transferor option exercise price per equity shares
divided by the share exchange ratio (0.80) and fractions rounded of to
the next higher whole number. The terms and conditions of ESOS Schemes
of Sun Pharma are not less favourable than those of ESOS Schemes of
erstwhile RLL. Under the ESOS Schemes of Sun Pharma, stock options have
been issued to the eligible employees of erstwhile RLL.
19 DETAILS OF LONG TERM BORROWINGS AND CURRENT MATURITIES OF LONG TERM
DEBT (included under Other Current Liabilities)
(I) External Commercial Borrowings (ECBs) has 6 loans of USD 288.0
Million equivalent to Rs. 18,001.4 Million (Previous Year Nil)
[(included in long term borrowings Rs. 11,625.9 Million (Previous Year
Nil) and Rs. 6,375.5 Million (Previous Year Nil) in current maturity of
long term debt.)] For the loans outstanding as at March 31, 2015, the
terms of repayment for borrowings are as follows:
(a) USD 100 Million equivalent to Rs. 6,250.5 Million (Previous Year
Nil). The loan was taken on June 4, 2013 and is repayable on June 3,
2018.
(b) USD 50 Million equivalent to Rs. 3,125.3 Million (Previous Year
Nil). The loan was taken on September 20, 2012 and is repayable on
September 19, 2017.
(c) USD 30 Million equivalent to Rs. 1,875.2 Million (Previous Year
Nil). The loan was taken on June 30, 2011 and is repayable in 3 equal
instalments at the end of 4th year, 5th year and 6th year.
(d) USD 30 Million equivalent to Rs. 1,875.2 Million (Previous Year
Nil). The loan was taken on September 9, 2010 and is repayable on
September 8, 2015.
(e) USD 50 Million equivalent to Rs. 3,125.3 Million (Previous Year
Nil). The loan was taken on August 12, 2010 and is repayable on August
11, 2015.
(f) USD 28 Million equivalent to Rs. 1,750.1 Million (Previous Year
Nil). Loan amounting to USD 40 Million equivalent to Rs. 2,500. 2
Million (Previous Year Nil) was taken on March 25, 2011 and is
repayable fully by March 24, 2017 in 3 instalments viz., 30% each of
the drawn amount at the end of 4th year and 5th year each and 40% of
the drawn amount at the end of the 6th year. First instalment of USD 12
Million equivalent to Rs. 747.91 Million (Previous Year Nil) has been
repaid in current year. The Company has not defaulted on repayment of
loan and interest during the year.
(II) Rs. 5,000 Million (Previous Year Nil) redeemable non-convertible
debentures issued by erstwhile RLL on November 23, 2012 for a period of
36 months at a coupon rate of 9.20% p.a. Such debentures are secured by
a pari-passu first ranking charge on the Company's specified fixed
assets so as to provide a fixed asset cover of 1.25x and are listed on
the National Stock Exchange.
(III) Loan of Rs. 2,500 Million (Previous Year Nil). The loan is
repayable on October 2, 2015. The Company has not defaulted on
repayment of loan and interest during the year.
20 In respect of any present obligation as a result of past event that
could lead to a probable outflow of resources, provisions has been
made, which would be required to settle the obligation. The said
provisions are made as per the best estimate of the management and
disclosure as per Accounting Standard (AS) 29 - Provisions, Contingent
Liabilities & Contingent Assets has been given below :
21 Expenditure related to Corporate Social Responsibility as per
Section 135 of the Companies Act, 2013 read with Schedule VII thereof:
Rs. 11.0 Million.
22 Previous year figures are regrouped wherever necessary. In view of
the amalgamation as referred in Note 48 and Note 51 the figures for the
current year are not comparable with the corresponding figures of the
previous year.
Mar 31, 2014
Rs. in Million
As at As at
31st March 2014 31st March, 2013
1 CONTINGENT LIABILITIES AND
COMMITMENTS (TO THE EXTENT
NOT PROVIDED FOR)
i Contingent Liabilities
A Claims against the Company not
acknowledged as debts 24.0 34.6
B Guarantees:
Guarantees given by the bankers on
behalf of the Company 374.2 227.4
Corporate Guarantees 86.0 149.2
C Others:
Letters of Credit for Imports 2,103.2 463.2
Liabilities Disputed-Appeals filed
with respect to :
Income Tax on account of Disallowances
/Additions 4,927.8 2771.2
Sales Tax on account of Rebate/
Classification 48.5 48.4
Excise Duty on account of Valuation
/Cenvat Credit 93.6 322.2
ESIC Contribution on account of
applicability 0.2 0.2
Drug Price Equalisation Account [DPEA]
on account of demand towards 14.0 14.0
unintended benefit, including interest
thereon, enjoyed by the Company
Demand by (DGFT import duty with respect
to import alleged to be in 14.6 13.9
excess of entitlement as per the Advanced
Licence Scheme
ii Commitments
a Estimated amount of contracts remaining
to be executed on capital 6,279.2 2,647.0
account [net of advances].
b Uncalled liability on partly
paid investments 0.5 0.4
c Derivative related Commitments -
Forward Foreign Exchange Contracts 4,200.0 4,342.4
2 DISCLOSURES RELATING TO SHARE CAPITAL
i Rights, Preferences and Restrictions attached to Equity Shares
The Equity Shares of the Company, having par value ofRs. 1 per share,
rank pari passu in all respects including voting rights and entitlement
to dividend.
iii 1,035,581,955 (Previous Year Nil) Equity Shares of Rs. 1 each have
been allotted as fully paid up bonus shares during the period of five
years immediately preceding the date at which the Balance Sheet is
prepared.
3 The net Exchange Loss of Rs. 1,740.0 Million (Previous Year Loss of Rs.
39.9 Million) is included in Revenue from Operations, Cost of Materials
Consumed and Other Expenses in the Statement of Profit and Loss, as
applicable.
4 DISCLOSURES UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES
DEVELOPMENT ACT, 2006:
(a ) An amount of Rs. 69.7 Million (Previous YearRs. 66.2 Million) andRs. NIL
(Previous YearRs. NIL) was due and outstanding to suppliers as at the end
of the accounting year on account of Principal and Interest
respectively.
(b) No interest was paid during the year.
(c) No interest is payable at the end of the year under Micro, Small
and Medium Enterprises Development Act, 2006.
(d ) No amount of interest was accrued and unpaid at the end of the
accounting year.
The above information and that given in Note 8 "Trade Payables"
regarding Micro and Small Enterprises has been determined to the extent
such parties have been identified on the basis of information available
with the Company. This has been relied upon by the auditors.
5 ACCOUNTING STANDARD (AS-15) ON EMPLOYEE BENEFITS
Contributions are made to Recognised Provident Fund, Family Pension
Fund, ESIC and other Statutory Funds which covers all regular
employees. While both the employees and the Company make predetermined
contributions to the Provident Fund and ESIC, contribution to the
Family Pension Fund are made only by the Company. The contributions are
normally based on a certain proportion of the employee''s salary. Amount
recognised as expense in respect of these defined contribution plans,
aggregate to Rs. 118.5 Million (Previous year Rs. 94.8 Million)
In respect of Gratuity, Contributions are made to LIC''s Recognised
Group Gratuity Fund Scheme based on amount demanded by LIC of India.
Provision for Gratuity is based on actuarial valuation done by
independent actuary as at the year end. Actuarial Valuation for
Compensated Absences is done as at the year end and the provision is
made as per Company rules with corresponding charge to the Statement of
Profit and Loss amounting toRs. 41.9 Million (Previous YearRs. 75.5
Million) and it covers all regular employees. Major drivers in
actuarial assumptions, typically, are years of service and employee
compensation. Commitments are actuarially determined using the
''Projected Unit Credit'' method. Gains and losses on changes in
actuarial assumptions are accounted for in the Statement of Profit and
Loss.
Category of Plan Assets : The Company''s Plan Assets in respect of
Gratuity are funded through the Group Scheme of the LIC of India.
6 ACCOUNTING STANDARD (AS-19) ON LEASES
(a) The Company has given certain premises for its operations and Plant
and Machinery under operating lease or leave and license agreements.
These are generally not non-cancellable and range between 11 months to
5 years under leave and license, or longer for other lease and are
renewable by mutual consent on mutually agreeable terms. The Company
has received refundable interest free security deposits where
applicable in accordance with the agreed terms, (b) The Company has
obtained certain premises for its business operations (including
furniture and fittings, therein as applicable) under operating lease or
leave and license agreements. These are generally not non-cancellable
and range between 11 months to 5 years under leave and license, or
longer for other lease and are renewable by mutual consent on mutually
agreeable terms. The Company has given refundable interest free
security deposits in accordance with the agreed terms, (c) Lease
receipts / payments are recognised in the Statement of Profit and Loss
under "Rent" in Note 22 and 26 respectively.
7 Miscellaneous Expenses includes Rs. 433.9 Million (Previous year Nil)
towards Product Settlement Expense.
8 Intangible assets consisting of trademarks, designs, technical
knowhow, non compete fees and other intangible assets are stated at
cost of acquisition based on their agreements and are available to the
Company in perpetuity. The depreciable amount of intangible assets is
arrived at based on the management''s best estimates of useful lives of
such assets after due consideration as regards their expected usage,
the product life cycles, technical and technological obsolescence,
market demand for products, competition and their expected future
benefits to the Company.
9 LEGAL PROCEEDINGS
The Company and / or its subsidiaries are involved in various legal
proceedings including product liability, contracts, employment claims
and other regulatory matters relating to conduct of its business. The
Company carries product liability insurance / is contractually
indemnified by the manufacturer, in an amount it believes is sufficient
for its needs. In respect of other claims, the Company believes, these
claims do not constitute material litigation matters and with its
meritorious defences the ultimate disposition of these matters will not
have material adverse effect on its Financial Statements.
10 Current Tax is net of write back of Provision for Fringe Benefit Tax
(net) of Nil (Previous Year Rs. 0.2 Million) pertaining to earlier year.
11 Pursuant to the scheme of arrangement in the nature of demerger and
transfer of specified undertaking of Sun Pharma Global FZE, a wholly
owned subsidiary, into the Company w.e.f 1st May, 2013, without any
consideration, For the year ended 31st March, 2014 on a going concern
basis consisting of all the assets and liabilities pertaining to the
said undertakings, being approved by shareholders of both the companies
and subsequently approved by the Hon''ble High Court of Gujarat and
completion of other regulatory compliances, the scheme has been given
effect to in these financial statements and accordingly:
i. The Financial Statements for the year ended 31st March 2014 which
were earlier approved by Board of Directors on 29th May, 2014 and
audited by the statutory auditors of the Company have been revised.
ii. All the assets and liabilities pertaining to the said undertaking
of Sun Pharma Global FZE stand transferred to and vested in the Company
as a going concern, as at 1st May, 2013 at carrying values as disclosed
in the notes to the revised Financial Statements of Sun Pharma Global
FZE on which their auditors have issued a revised audit report dated
10th August, 2014 and the resultant difference amounting to Rs. 28,109.9
Million being the excess of assets over liabilities has been credited
to Capital Reserve Account.
iii. On 11th June, 2013, Sun Pharma Global FZE (SPG), a wholly owned
subsidiary has entered into settlement agreement for USD 550.0 Million
(including USD 44.0 Million borne by Caraco Pharmaceutical Laboratories
Ltd) with Pfizer Inc., USA;Wyeth LLC USA and Nycomed GmbH, Germany in
settlement of the claim of patent infringement litigation related to
generic version of "Protonix". SPG has entered into an agreement with a
third party in terms of which the said party has agreed to bear damages
on account of patent infringement to the extent of USD 400.0 Million
(equivalent toRs. 24,002.0 Million) in consideration of SPG agreeing to
sell them pharmaceutical products at a negotiated discounted price for
a specified period. Accordingly, a provision of USD 438.5 Million
(equivalent to Rs. 26,312.2 Million) [(including other related expected
discount and incidental expenses of USD 38.5 Million (equivalent to Rs.
2,310.2 Million)] towards estimated expected liability on this account,
has been accounted for and given effect in these financial statements.
The above charge of USD 506.0 Million (equivalent to Rs. 28,756.0
Million) has been considered as exceptional item and Rs. 2,381.2 Million
has been included in miscellaneous expenses.
12 In March 2014, the US FDA issued an import alert to the Company for
its cephalosporin facility located at Karkhadi, Gujarat in India. The
warning letter pertaining to this import alert was issued by the US FDA
in May 2014. The letter identifies practices at the facility which are
non-compliant with current Good Manufacturing Practice (cGMP)
regulations. The Company remains fully committed to compliance and has
already initiated several corrective steps to address the observations
made by the US FDA. It is committed to working co-operatively and
expeditiously with the US FDA to resolve the matters indicated in its
letter. Until these matters are resolved to the satisfaction of the US
FDA, the US FDA may, in the near term, withhold approval of pending new
drug applications from this facility.
The contribution of this facility to Company''s revenues is not
significant.
13 Consequent to giving effect to the Scheme of Arrangement as referred
in Note 48 above, resulting in the absence of net profits in the
company for the year; (i) remuneration to the Managing Director and the
Whole-time Directors of the Company for the year ended 31st March, 2014
has exceeded the limits specified under Schedule XIII to the Companies
Act, 1956 byRs. 44.7 Million; and (ii) commission of Rs. 6.4 Million for
the year ended 31st March, 2014 to the Non-Executive Directors of the
Company has exceeded in terms of section 309(4) read with section
309(5) of the Companies Act.1956. The Company is in the process of
seeking approval from the shareholders of the Company and the Central
Government of India in respect of the aforesaid amounts.
14 The Company enters into Forward Exchange Contracts being derivative
instruments, which are not intended for trading or speculative
purposes, but for hedge purposes, to establish the amount of reporting
currency required or available at the settlement date.
15 Previous years'' figures are regrouped wherever necessary.
Mar 31, 2013
1 The net Exchange Loss of Rs. 39.9 Million (Previous Year Rs. 618.5
Million) is included under Revenue from Operations, Other Income, Cost
of Materials Consumed and Other Expenses in the Statement of Profit and
Loss.
2 DISCLOSURES UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES
DEVELOPMENT ACT, 2006:
(a) An amount of Rs. 66.2 Million (Previous Year Rs. 39.4 Million) and
Rs. NIL (Previous Year Rs. NIL) was due and outstanding to suppliers as
at the end of the accounting year on account of Principal and Interest
respectively.
(b) No interest was paid during the year.
(c) No interest is payable at the end of the year under Micro, Small
and Medium Enterprises Development Act, 2006.
(d) No amount of interest was accrued and unpaid at the end of the
accounting year.
The above information and that given in Note 8 "Trade Payables"
regarding Micro and Small Enterprises has been determined to the extent
such parties have been identified on the basis of information available
with the Company. This has been relied upon by the auditors.
3 RELATED PARTY DISCLOSURE (AS-18) - AS PER ANNEXURE ''A''
4 ACCOUNTING STANDARD (AS-15) ON EMPLOYEE BENEFITS
Contributions are made to Recognised Provident Fund, Family Pension
Fund, ESIC and other Statutory Funds which covers all regular
employees. While both the employees and the Company make predetermined
contributions to the Provident Fund and ESIC, contribution to the
Family Pension Fund are made only by the Company. The contributions are
normally based on a certain proportion of the employee''s salary. Amount
recognised as expense in respect of these defined contribution plans,
aggregate to Rs. 94.8 Million (Previous year Rs. 132.1 Million)
In respect of Gratuity, Contributions are made to LIC''s Recognised
Group Gratuity Fund Scheme based on amount demanded by LIC of India.
Provision for Gratuity is based on actuarial valuation done by
independent actuary as at the year end. Actuarial Valuation for
Compensated Absences is done as at the year end and the provision is
made as per Company rules with corresponding charge to the Statement of
Profit and Loss amounting to Rs. 75.5 Million (Previous Year Rs. 52.0
Million) and it covers all regular employees. Major drivers in
actuarial assumptions, typically, are years of service and employee
compensation. Commitments are actuarially determined using the
''Projected Unit Credit'' method. Gains and losses on changes in
actuarial assumptions are accounted for in the Statement of Profit and
Loss.
Category of Plan Assets : The Company''s Plan Assets in respect of
Gratuity are funded through the Group Scheme of the LIC of India.
5 ACCOUNTING STANDARD (AS-19) ON LEASES
(a) The Company has given certain premises for its operations and Plant
and Machinery under operating lease or leave and license agreements.
These are generally not non-cancellable and range between 11 months to
5 years under leave and licence, or longer for other lease and are
renewable by mutual consent on mutually agreeable terms. The Company
has received refundable interest free security deposits where
applicable in accordance with the agreed terms. (b) The Company has
obtained certain premises for its business operations (including
furniture and fittings, therein as applicable) under operating lease or
leave and license agreements. These are generally not non-cancellable
and range between 11 months to 5 years under leave and licence, or
longer for other lease and are renewable by mutual consent on mutually
agreeable terms. The Company has given refundable interest free
security deposits in accordance with the agreed terms. (c) Lease
receipts / payments are recognised in the Statement of Profit and Loss
under "Rent" in Note 22 and 26 respectively.
6 As per the best estimate of the management, provision has been made
towards breakages and expiry of products return, as per Accounting
Standard (AS) 29 notified under the Companies (Accounting Standards)
Rules, 2006.
7 Intangible assets consisting of trademarks, designs, technical
knowhow, non compete fees and other intangible assets are stated at
cost of acquisition based on their agreements and are available to the
Company in perpetuity. The depreciable amount of intangible assets is
arrived at based on the management''s best estimates of useful lives of
such assets after due consideration as regards their expected usage,
the product life cycles, technical and technological obsolescence,
market demand for products, competition and their expected future
benefits to the Company.
8 LEGAL PROCEEDINGS
The Company and / or its subsidiaries are involved in various legal
proceedings including product liability, contracts, employment claims
and other regulatory matters relating to conduct of its business. The
Company carries product liability insurance / is contractually
indemnified by the manufacturer, in an amount it believes is sufficient
for its needs. In respect of other claims, the Company believes, these
claims do not constitute material litigation matters and with its
meritorious defences the ultimate disposition of these matters will not
have material adverse effect on its Financial Statements.
9 Current Tax is net of write back of Provision for Fringe Benefit Tax
(net) of Rs. 0.2 Million (Previous Year Rs. 0.6 Million) pertaining to
earlier year.
10 During the year, the Company has received Government Grant of Nil
(Previous Year Rs. 2.0 Million) and Nil (Previous Year Rs. 3.0 Million)
in respect of Building and Plant and Equipment respectively.
11 Pursuant to the scheme of arrangement in the nature of spin off and
transfer of Domestic Formulation undertaking of the Company to its
wholly owned subsidiary, Sun Pharma Laboratories Ltd (SPLL - formerly
known as Sun Resins & Polymers Private Ltd.) as approved by the Hon''ble
High Court of Gujarat and the Hon''ble High Court of Bombay vide their
Orders dated 3rd May, 2013, on and with effect from the close of the
business hours on 31st March 2012, the appointed date, all the
specified assets, movable, tangible and intangible assets, without any
liabilities, pertaining to the Domestic Formulation undertaking stands
transferred to and /or vested in the SPLL as a going concern without
consideration. The scheme has been given effect to in the financial
statements for the previous year ended 31st March, 2012 and
accordingly, specified intangible assets, tangible and other assets of
the Domestic Formulation undertaking having book value of Rs. 2,999.2
Million have been transferred to SPLL with corresponding debit to the
Statement of Profit and Loss as an Exceptional Item.
12 The Company enters into Forward Exchange Contracts being derivative
instruments, which are not intended for trading or speculative
purposes, but for hedge purposes, to establish the amount of reporting
currency required or available at the settlement date.
13 Previous years'' figures are regrouped wherever necessary. Further,
current years'' figures are not comparable with those of the previous
year in view of the spin off as stated in Note 49.
Mar 31, 2012
1 DISCLOSURES RELATING TO SHARE CAPITAL
i Rights, Preferences and Restrictions attached to Equity Shares
The Equity Shares of the Company, having par value of Rs. 1 per share,
rank pari passu in all respects including voting rights and entitlement
to dividend.
ii Equity Shares held by each shareholder holding more than 5 percent
Equity Shares in the Company are as follows:
2 The net Exchange Loss of Rs. 618.5 Million (Previous Year Gain of
Rs. 307.3 Million) is included under Revenue from Operations, Other
Income, Cost of Materials Consumed and Other Expenses in the Statement
of Profit and Loss.
3 DISCLOSURES UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES
DEVELOPMENT ACT, 2006:
(a) An amount of Rs. 39.4 Million (Previous Year Rs. 33.0 Million) and
Rs. NIL (Previous Year Rs. NIL) was due and outstanding to suppliers as
at the end of the accounting year on account of Principal and Interest
respectively.
(b) No interest was paid during the year.
(c) No interest is payable at the end of the year under Micro, Small
and Medium Enterprises Development Act, 2006.
(d) No amount of interest was accrued and unpaid at the end of the
accounting year.
The above information and that given in Note 7 "Trade Payables"
regarding Micro and Small Enterprises has been determined to the extent
such parties have been identified on the basis of information available
with the Company. This has been relied upon by the auditors.
4 RELATED PARTY DISCLOSURE (AS-18) - AS PER ANNEXURE ''A''
5 ACCOUNTING STANDARD (AS-15) ON EMPLOYEE BENEFITS
Contributions are made to Recognised Provident Fund, Family Pension
Fund, ESIC and other Statutory Funds which covers all regular
employees. While both the employees and the Company make predetermined
contributions to the Provident Fund and ESIC, contribution to the
Family Pension Fund are made only by the Company. The contributions are
normally based on a certain proportion of the employee''s salary.
Amount recognised as expense in respect of these defined contribution
plans, aggregate to Rs. 132.1 Million (Previous year Rs. 108.1 Million)
In respect of Gratuity, Contributions are made to LIC''s Recognised
Group Gratuity Fund Scheme based on amount demanded by LIC of India.
Provision for Gratuity is based on actuarial valuation done by
independent actuary as at the year end. Actuarial Valuation for
Compensated Absences is done as at the year end and the provision is
made as per Company rules with corresponding charge to the Statement of
Profit and Loss amounting to Rs. 52.0 Million (Previous Year Rs. 43.2
Million) and it covers all regular employees. Major drivers in
actuarial assumptions, typically, are years of service and employee
compensation. Commitments are actuarially determined using the
''Projected Unit Credit'' method. Gains and losses on changes in
actuarial assumptions are accounted for in the Statement of Profit and
Loss.
Category of Plan Assets : The Company''s Plan Assets in respect of
Gratuity are funded through the Group Scheme of the LIC of India.
6 ACCOUNTING STANDARD (AS-19) ON LEASES
(a) The company has given certain premises for its operations and Plant
and Machinery under operating lease or leave and license agreements.
These are generally not non-cancellable and range between 11 months to
5 years under leave and licence, or longer for other lease and are
renewable by mutual consent on mutually agreeable terms. The Company
has received refundable interest free security deposits where
applicable in accordance with the agreed terms. (b) The company has
obtained certain premises for its business operations (including
furniture and fittings, therein as applicable) under operating lease or
leave and license agreements. These are generally not non-cancellable
and range between 11 months to 5 years under leave and licence, or
longer for other lease and are renewable by mutual consent on mutually
agreeable terms. The Company has given refundable interest free
security deposits in accordance with the agreed terms. (c) Lease
receipts / payments are recognised in the Statement of Profit and Loss
under "Rent" in Note 21 and 25 respectively.
7 As per the best estimate of the management, provision has been made
towards breakages and expiry of products return, as per Accounting
Standard (AS) 29 notified under the Companies (Accounting Standards)
Rules, 2006.
8 Intangible assets consisting of trademarks, designs, technical
knowhow, non compete fees and other intangible assets are stated at
cost of acquisition based on their agreements and are available to the
Company in perpetuity. The depreciable amount of intangible assets is
arrived at based on the management''s best estimates of useful lives
of such assets after due consideration as regards their expected usage,
the product life cycles, technical and technological obsolescence,
market demand for products, competition and their expected future
benefits to the Company.
9 The financial statements of the Company for the year ended 31st
March, 2012 were earlier approved by the Board of Directors at their
meeting held on 29th May, 2012 on which the Statutory Auditors of the
Company had issued their report dated 29th May, 2012. Subsequently,
the Board of Directors approved the Scheme of Arrangement in the nature
of spin off, of Domestic Formulation Undertaking of the Company,
comprising specified assets, without any liabilities, pertaining to the
said undertaking, on a going concern basis without consideration into
Sun Pharma Laboratories Limited (SPLL - formerly known as Sun Resins &
Polymers Private Ltd), a wholly owned subsidiary of the Company,
effective from the close of the business hours on 31st March 2012, the
appointed date. The aforesaid financial statements were not laid for
adoption at the annual general meeting held on 8th November, 2012 and
it was resolved to approve such financial statements only after the
same are revised for giving effect to the aforesaid Scheme of
Arrangement. Consequent to the Orders dated 3rd May, 2013 of the
Hon''ble High Court of Gujarat and the Hon''ble High Court of Bombay
sanctioning the said Scheme of Arrangement, the aforesaid financial
statements are revised only to give effect to the said spin off,
effective from 31st March, 2012 and assets having book value of Rs.
2,999.2 Million have been transferred to SPLL with corresponding debit
to the Statement of Profit and Loss as an Exceptional Item.
10 LEGAL PROCEEDINGS
The Company and / or its subsidiaries are involved in various legal
proceedings including product liability, contracts, employment claims
and other regulatory matters relating to conduct of its business. The
Company carries product liability insurance / is contractually
indemnified by the manufacturer, in an amount it believes is sufficient
for its needs. In respect of other claims, the Company believes, these
claims do not constitute material litigation matters and with its
meritorious defences the ultimate disposition of these matters will not
have material adverse effect on its Financial Statements.
11 Current Tax is net of write back of Provision for Fringe Benefit Tax
(net) of Rs. 0.6 Million (Previous year Rs. Nil) pertaining to earlier
year.
12 During the year, the Company has received Government Grant of Rs.
2.0 Million (Previous year Rs. Nil) and Rs. 3.0 Million (Previous year
Rs. Nil) in respect of Building and Plant and Equipment respectively.
13 The Company enters into Forward Exchange Contracts being derivative
instruments, which are not intended for trading or speculative
purposes, but for hedge purposes, to establish the amount of reporting
currency required or available at the settlement date.
A) The following are the outstanding Forward Exchange Contracts entered
into by the Company as on 31st March, 2012
B) The year end foreign currency exposures that have not been hedged by
a derivative instrument or otherwise are given below: a) Amounts
receivable in foreign currency on account of the following :
14 The Revised Schedule VI has been effective from 1st April, 2011 for
the presentation of financial statements. This has significantly
impacted the disclosure and presentation made in the financial
statements. Previous years'' figures are restated / regrouped /
rearranged wherever necessary in order to conform to current years''
groupings and classifications.
Mar 31, 2011
As at 31 st
March, 2011 As at 31st
March, 2010
Rs. in Million Rs. in Million
1 CONTINGENT LIABILITIES NOT PROVIDED FOR
Guarantees Given by the bankers on
behalf of the Company 160.1 106.4
Corporate Guarantees 46.0 51.5
Letters of Credit for Imports 166.7 505.5
Liabilities Disputed - Appeals filed
with respect to :
Income Tax on account of Disallowances /
Additions 290.2 446.6
Sales Tax on account of Rebate /
Classification 25.6 11.4
Excise Duty on account of Valuation /
Cenvat Credit 318.4 314.0
ESIC Contribution on account of
applicability 0.2 0.2
Drug Price Equalisation Account
[DPEA] on account of 14.0 14.0
demand towards unintended benefit,
including interest there on, enjoyed
by the Company
Demand by JDGFT import duty with respect to
import 11.5 11.1
alleged to be in excess of entitlement as
per the Advanced Licence Scheme
Other Claims against the Company not 15.3 6.7
acknowledged as debts
10 The net exchange gain of Rs. 307.3 Million (Previous Year gain of Rs.
36.4 Million) is included under various heads in the Profit and Loss
account.
11 Disclosures under the Micro, Small and Medium Enterprises
Development Act, 2006:
(a) An amount of Rs. 33.0 Million (Previous Year Rs.14.8 Million) and Rs. NIL
(Previous Year Rs. NIL) was due and outstanding to suppliers as at the
end of the accounting year on account of Principal and Interest
respectively.
(b) No interest was paid during the year.
(c) No interest is payable at the end of the year under Micro, Small
and Medium Enterprises Development Act, 2006.
(d) No amount of interest was accrued and unpaid at the end of the
accounting year.
The above information and that given in Schedule 12 - ÃCurrent
Liabilities and Provisionsà regarding Micro, Small and Medium
Enterprises has been determined to the extent such parties have been
identified on the basis of information available with the Company.This
has been relied upon by the auditors.
12 Disclosure with respect to Accounting Standards notified by the
Companies (Accounting Standards) Rules, 2006 :
(i) Related Party Disclosure - as per Annexure ÃA' Consequent to the
approval of the members of the Company and upon requisite regulatory
compliance, during the year, one equity share of Rs. 5 each of the
Company is sub-divided into five equity shares of Rs.1 each fully
paid-up. The Earnings Per Share of Rs.1 each has been restated for all
the corresponding periods in accordance with Accounting Standard
(AS-20) on ÃEarnings Per Shareà as notified under The Companies
(Accounting Standards) Rules, 2006.
(iv) Accounting Standard (AS-15) on Employee benefits
Contributions are made to Recognised Provident Fund/ Government
Provident Fund, Family Pension Fund, ESIC and other Statutory Funds
which covers all regular employees. While both the employees and the
Company make predetermined contributions to the Provident Fund and
ESIC, contribution to the Family Pension Fund are made only by the
Company. The contributions are normally based on a certain proportion
of the employee's salary. Amount recognised as expense in respect of
these defined contribution plans, aggregate to Rs. 108.1 Million
(Previous year Rs. 90.8 Million)
In respect of Gratuity, Contributions are made to LIC's Recognised
Group Gratuity Fund Scheme based on amount demanded by LIC of India.
Provision for Gratuity is based on actuarial valuation done by
independent actuary as at the year end. Actuarial Valuation for
Compensated Absences is done as at the year end and the provision is
made as per Company rules amounting to Rs. 43.2 Million (Previous Year Rs.
38.8 Million) and it covers all regular employees. Major drivers in
actuarial assumptions, typically, are years of service and employee
compensation. After the issuance of the Accounting Standard 15 on
ÃEmployee Benefits', commitments are actuarially determined using the
ÃProjected Unit Credit' method. Gains and losses on changes in
actuarial assumptions are accounted for in the Profit and Loss account.
(v) Accounting Standard (AS-19) on Operating Leases
(a) The company has obtained certain premises for its business
operations (including furniture and fittings, therein as applicable)
under operating lease or leave and license agreements. These are
generally not non-cancellable and range between 11 months to 5 years
under leave and licence, or longer for other lease and are renewable by
mutual consent on mutually agreeable terms. The Company has given
refundable interest free security deposits in accordance with the
agreed terms.
(b) Lease payments are recognised in the Profit and Loss Account under
ÃRentà in Schedule 17.
17 Intangible assets consisting of trademarks, designs, technical
knowhow, non compete fees and other intangible assets are stated at
cost of acquisition based on their agreements and are available to the
Company in perpetuity. The depreciable amount of intangible assets is
arrived at based on the management's best estimates of useful lives of
such assets after due consideration as regards their expected usage,
the product life cycles, technical and technological obsolescence,
market demand for products, competition and their expected future
benefits to the Company.
18 Legal Proceedings
The Company and / or its subsidiaries are involved in various legal
proceedings including product liability, contracts, employment claims
and other regulatory matters relating to conduct of its business. The
Company carries product liability insurance / is contractually
indemnified by the manufacturer, in an amount it believes is sufficient
for its needs. In respect of other claims, the Company believes, these
claims do not constitute material litigation matters and with its
meritorious defences the ultimate disposition of these matters will not
have material adverse effect on its Financial Statements.
19 Taro Pharmaceutical Industries Ltd (Taro), a pharmaceutical company,
incorporated in Israel became a subsidiary of the Company on September
20, 2010.
20 As per the best estimate of the management, no provision is required
to be made as per Accounting Standard (AS) 29 as notified by Companies
(Accounting Standards) Rules, 2006, in respect of any present
obligation as a result of a past event that could lead to a probable
outflow of resources, which would be required to settle the obligation.
22 The Company enters into Forward Exchange Contracts being derivative
instruments, which are not intended for trading or speculative
purposes, but for hedge purposes, to establish the amount of reporting
currency required or available at the settlement date.
23 Previous years' figures are restated / regrouped / rearranged
wherever necessary in order to conform to current years' groupings and
classifications.
Annexure ÃA' to Notes on Account
Names of related parties and description of relationship
1. Subsidaries
Alkaloida Chemical Company Zrt
Caraco Pharmaceutical Laboratories Ltd.
Chattem Chemical Inc.
Green Eco Development Centre Ltd.
OOO ÃSun Pharmaceutical Industriesà Ltd.
Sun Farmaceutica Ltda (upto 30th September, 2010)
TKS Farmaceutica Ltda.
Sun Pharma De Mexico S.A. DE C.V.
Sun Pharma De Venezuela, CA
Sun Pharma Global Inc.
Sun Pharmaceutical (Bangladesh) Ltd.
Sun Pharmaceutical Industries (Europe) B.V.
Sun Pharmaceutical Industries Inc.
Sun Pharmaceutical Spain, S.L.
Sun Pharmaceuticals France
Sun Pharmaceuticals Germany GmbH
Sun Pharma Global (FZE)
Sun Pharmaceuticals Italia S.R.L.
Sun Pharmaceuticals UK Ltd.
Taro Pharmaeutical Industries Ltd.
Sun Pharmaceutical Industries (Australia) Pty. Ltd.
Aditya Acquisition Company Ltd.
Sun Pharmaceuticals (SA) (Pty) Ltd.
Sun Global Canada Pty Ltd.
Sun Pharmaceutical Peru S.A.C.
Taro Development Corporation
Sun Development Corporation I (upto 20th September, 2010)
ZAO Sun Pharma Industries Ltd.
SPIL De Mexico S.A. DE C.V.
Caraco Pharma Inc.
3 Sky Line LLC
One Commerce Drive LLC
Taro Healthcare Ltd.
Taro Hungary Intellectual Property Licensing LLC
Taro Industries Ltd.
Taro International Ltd - Isaral
Taro Laboratories Ltd.
Taro Manufacturing Ltd.
Taro Pharmaceutical INC.
Taro Pharmaceutical India Pvt. Ltd.
Taro Pharmaceutical Laboratories INC.
Taro Pharmaceutical U.S.A., INC.
Taro Pharmaceuticals Europe B.V.
Taro Pharmaceuticals Ireland Ltd.
Taro Pharmaceuticals North America INC
Taro Pharmaceuticals UK Ltd.
Taro Research Institute Ltd.
Tarochem Ltd.
Morley and Company Inc.
Sun Laboratories FZE
Taro Pharmaceuticals Canada Ltd.
Sun Laboratories Inc.
Taro International Ltd - UK
2. Controlled Entity
Sun Pharma Exports
Sun Pharmaceutical Industries
Sun Pharma Sikkim
Sun Pharma Drugs
Universal Enterprise Pvt. Ltd.
3. Key Management Personnel
Mr. Dilip S. Shanghvi Chairman & Managing Director
Mr. Sudhir V. Valia Wholetime Director
Mr. Sailesh T. Desai Wholetime Director
Mr. S. Kalyanasundaram Chief Executive Officer and Wholetime Director
4. Relatives of Key Management Personnel
Mr. Aalok Shanghvi Son of Chairman and Managing Director
Ms. Khyati Valia Daughter of Wholetime Director
5. Enterprise under significant Influence of Key Management Personnel
or their relatives
Sun Petrochemicals Pvt. Ltd.
Navjivan Rasayan (Gujarat) Pvt. Ltd.
Sun Pharma Advanced Research Company Ltd.
Mar 31, 2010
As at 31st March, 2010 As at 31st March, 2009
Rs in Million Rs in Million
1 CONTINGENT LIABILITIES
NOT PROVIDED FOR
Guarantees Given by the
bankers on behalf 106.4 89.6
of the Company
Corporate Guarantees 51.5 91.2
Letters of Credit for Imports 505.5 399.6
Liabilities Disputed - Appeals
filed with respect to:
Income Tax on account of
Disallowances / Additions 446.6 154.1
Sales Tax on account of Rebate
/ Classification 11.4 11.6
Excise Duty on account of
Valuation / Cenvat Credit 314.0 242.8
Service Tax on account of
Import of Services -- 1.9
ESIC Contribution on account
of applicability 0.2 0.2
Drug Price Equalisation
Account [DPEA] 14.0 14.0
on account of demand towards
unintended benefit, including interest
there on, enjoyed by the Company
Demand by JDGFT import duty with
respect to 11.1 10.7
import alleged to be in excess
of entitlement as per the Advanced
Licence Scheme
Other Claims against the Company 6.7 6.5
not acknowledged as debts
2 The net exchange gain of Rs.36.4 Million (Previous Year gain of
Rs.759.6 Million) is included under various heads in the Profit & Loss
account.
3 Disclosures under the Micro, Small and Medium Enterprises
Development Act, 2006:
(a) An amount of Rs.14.8 Million (Previous Year Rs.2.1 Million) and Rs.
NIL (Previous Year NIL) was due and outstanding to suppliers as at the
end of the accounting year on account of Principal and Interest
respectively.
(b) No interest was paid during the year.
(c) No interest is payable at the end of the year under Micro, Small
and Medium Enterprises Development Act, 2006.
(d) No amount of interest was accrued and unpaid at the end of the
accounting year.
The above information and that given in Schedule 12 - "Current
Liabilities and Provisions" regarding Micro, Small and Medium
Enterprises has been determined to the extent such parties have been
identified on the basis of information available with the Company. This
has been relied upon by the auditors.
(v) Accounting Standard (AS-19) on Operating Leases
(a) The company has obtained certain premises for its business
operations (including furniture and fittings, therein as applicable)
under operating lease or leave and license agreements. These are
generally not non-cancellable and range between 11 months to 5 years
under leave and licence, or longer for other lease and are renewable by
mutual consent on mutually agreeable terms. The Company has given
refundable interest free security deposits in accordance with the
agreed terms.
(b) Lease payments are recognised in the Profit and Loss Account under
"Rent" in Schedule 18.
4 Intangible assets consisting of trademarks, designs, technical
knowhow, non compete fees and other intangible assets are stated at
cost of acquisition based on their agreements and are available to the
company in perpetuity. The depreciable amount of intangible assets is
arrived at based on the managementÃs best estimates of useful lives of
such assets after due consideration as regards their expected usage,
the product life cycles, technical and technological obsolescence,
market demand for products, competition and their expected future
benefits to the company.
5 Legal Proceedings
The Company and / or its subsidiaries are involved in various legal
proceedings including product liability, contracts, employment claims
and other regulatory matters relating to conduct of its business. The
Company carries product liability insurance / is contractually
indemnified by the manufacturer, in an amount it believes is sufficient
for its needs. In respect of other claims, the Company believes, these
claims do not constitute material litigation matters and with its
meritorious defences the ultimate disposition of these matters will not
have material adverse effect on its Financial Statements.
6 Alkaloida Chemical Company Zrt. (formerly known as Alkaloida
Chemical Company Exclusive Group Limited) (Alkaloida), a subsidiary of
the company has made a strategic investment in Taro Pharmaceutical
Industries Limited (Taro) a pharmaceutical company based in Israel and
holds 36.4% in the capital of Taro. On May 28, 2008 Alkaloida received
a notice from Taro regarding purported termination of the merger
agreement between Taro and Aditya Acquisition Company Ltd, an Israeli
incorporated subsidiary of Alkaloida. On the same date, Taro and some
of its directors had filed for a declaratory judgment in an Israeli
court seeking Alkaloida/Sun Pharma to conduct a special tender offer
which has been rejected by the Tel-Aviv District Court. The plaintiffs
have appealed this decision in the Supreme Court of Israel which has
temporarily prohibited closing of the Tender offer until it issues a
decision on the appeal. Alkaloida does not foresee any adverse impact
on its investment.
7 As per the best estimate of the management, no provision is required
to be made as per Accounting Standard (AS) 29 as notified by Companies
(Accounting Standards) Rules, 2006, in respect of any present
obligation as a result of a past event that could lead to a probable
outflow of resources, which would be required to settle the obligation.
8 The company enters into Forward Exchange Contracts being derivative
instruments, which are not intended for trading or speculative
purposes, but for hedge purposes, to establish the amount of reporting
currency required or available at the settlement date.
9 Previous yearsà figures are restated / regrouped / rearranged
wherever necessary in order to conform to current yearsà groupings and
classifications.
ACCOUNTING STANDARD (AS-18) " RELATED PARTY DISCLOSURE " Names of
related parties and description of relationship
1. Subsidaries
Sun Pharma Global Inc. BVI.
Sun Pharma Global - FZE
Sun Pharmaceutical (Bangladesh) Ltd.
Sun Pharma De Mexico S.A. DE C.V.
SPIL De Mexico S.A. DE C.V.
Sun Pharmaceutical Peru S.A.C.
Sun Farmaceutica Ltda - Brazil
Sun Pharmaceutical Industries Inc, USA
Sun Pharmaceuticals UK Ltd.
ALKALOIDA Chemical Company Zrt
(formerly known as Alkaloida Chemical Company Exclusive Group Limited)
Chattem Chemical Inc.
Zao Sun Pharma Industries Ltd. Russia
Sun Pharmaceutical Ind (Australia) PTY Ltd.
Aditya Acquisition Company Ltd. - Israel
Sun Development Corporation I
Sun Pharmaceutical Ind. Europe BV
OOO "Sun Pharmaceutical Industries" Ltd.
Sun Pharmaceuticals France
Sun Pharmaceuticals Germany GmbH
Sun Pharmaceuticals Italia S.R.L.
Sun Pharmaceutical Spain, SL.
Sun Pharmaceuticals (SA) (Pty) Ltd-South Africa
Caraco Pharmaceutical Laboratories Ltd - U.S.A
TKS Farmaceutica Ltda.
Sun Global Canada Pty. Ltd.
Caraco Pharma Inc.
2. Controlled Entity
Sun Pharma Exports Sun Pharmaceutical Industries Sun Pharma Sikkim
Universal Enterprise Pvt Ltd.
3. Key Management Personnel
Mr. Dilip S. Shanghvi Mr. Sudhir V. Valia Mr. Sailesh T. Desai
4. Relatives of Key Management Personnel
Mrs Vibha Shanghvi Wife of Chairman and Managing Director
Mrs Kumud Shanghvi Mother of Chairman and Managing Director
Mrs Meera Desai Wife of Wholetime Director
Mr Alok Shanghvi Son of Chairman and Managing Director
Ms Khyati Valia Daughter of Wholetime Director
5. Enterprise under significant Influence of Key Management Personnel
or their relatives
Sun Petrochemical Pvt. Ltd.
Sun Speciality Chemicals Pvt. Ltd. (upto 31-03-2009)
Navjivan Rasayan (Gujarat) Pvt. Ltd.
Sun Pharma Advanced Research Company Ltd.
Aditya Thermal Energy Pvt. Ltd.
Alfa Infraprop Pvt. Ltd.
Shantilal Shanghvi Foundation
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Sun Pharmaceutical Industries Ltd. குறித்த கூடுதல் தகவல்களை
-
Sun Pharmaceutical Industries Ltd. டூல்ஸ்
- பல்க் டீல்ஸ்
- பிளாக் டீல்ஸ்
-
Sun Pharmaceutical Industries 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
-
Sun Pharmaceutical Industries Ltd. முக்கிய நிதியில் விகிதங்கள்
- விகிதங்கள்
-
Sun Pharmaceutical Industries Ltd. முடிவுகள்
- காலாண்டு முடிவுகள்
- அரையாண்டு முடிவுகள்
- 9 மாத முடிவுகள்
- வருடாந்திர முடிவுகள்
-
Sun Pharmaceutical Industries Ltd. நிதியியல் தகவல்கள்
- தணிக்கை முடிவுகள்
- பணப்பாய்வு
- இருப்பு நிலைக்குறிப்பு
-
Sun Pharmaceutical Industries Ltd. அறிக்கை
- கணக்கியல் கோட்பாடுகள்
- தணிக்கையாளர்கள் அறிக்கை
- இயக்குநர்கள் அறிக்கை
- கணக்கு குறிப்புகள்
-
Sun Pharmaceutical Industries Ltd. கார்ப்பரேட் அறிவிப்புகள்
- புத்தக முடிவு
- ஈவுத்தொகை
- நிர்வாகக் குழுக் கூட்டங்கள்
