Description
The report for the financial year 2010 - 2011 of sun pharmaceuticals.
NATURAL PROGRESSION
Annual Report 2010-11
CONTENTS
Natural Progression
Lines depicting steps—incremental change, gradual growth, lines sloping upwards. Innumerable such steps adding up, to form a smooth growth pattern when seen from a distance. Progress shown with lines racing to the distance, to infinity. The cover shows an artist’s interpretation of the company’s progress
02 Key Performance Indicators 03 Ten Year Financial Highlights 04 Management Discussion and Analysis 22 Directors’ Report 25 Annexure to Directors’ Report 28 Auditors’ Report 32 Balance Sheet 33 Profit and Loss Account 34 Cash Flow Statement 69 Corporate Governance 83 Auditors’ Report Consolidated 84 Consolidated Balance Sheet 85 Consolidated Profit and Loss Account 86 Consolidated Cash Flow Statement 111 Statement Relating to Subsidiary ompanies
Corporate Information
Inside Back Cover
Disclaimer
Statements in this Management Discussion and Analysis describing the Company s objectives, projections, estimates, expectations, plans or predictions or industry conditions or events may be forward looking statements within the meaning of applicable securities laws andregulations. Actual results, performance or achievements could di?er materially from those expressed or implied. Important factors that couldmake a di?erence to the company s operations include global and Indian demand supply conditions, ?nished goods prices, feedstock availability and prices, and competitors pricing in the Company s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts businesses and other factors such as litigation and labour unrest or other di?culties. The Company assumes no responsibility to publicly update, amend, modify or revise any forward looking statements, on the basis of any subsequent development, new information or future events or otherwise except as required by applicable law. Unless the context otherwise requires, all references in this document to we , us or our refers to Sun Pharmaceutical Industries Limited and consolidated subsidiaries.
2010-11 was a good year for Sun Pharma,
as were the preceding years. Our financial performance was strong, we completed a significant acquisition, enriched the portfolio of products we offer in the US, strengthened our speciality rankings in India and rest of world markets, added to our intellectual capital, and yet again reaffirmed our commitment to high standards of corporate governance and stakeholder transparency. We are today the largest Indian company in the US generics space, the largest pharma company in India in chronic therapies, and an emerging force in the rest of the world markets. We believe each development over the past year, incremental as it may seem in isolation, is part of a natural growth trajectory that builds from strength to strength. We will endeavor to drive future value through our steadily growing base business, complemented with acquisitions and alliances, while retaining the same respect for the bottomline.
2001-02 7552 9812 9995 12301 18042 23745 35017 44808 42123 59913 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 93798 2010-11
4956
2001-02
2
2002-03
5141
(`. in Million)
(`. in Million)
2003-04
7540
2004-05
10366
Total Income
2005-06
14959
2006-07 48879 69414 77254
26747
Reserve and Surplus
2007-08
2008-09
Sun Pharmaceutical Industries Ltd.
2009-10
2010-11
2001-02 1707 2444 3446 4002 5730 8402 15509 18780 13470 19074 336 966 1268 1427 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2242 3096 2015 2787 2859 3320 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 14625 15328 2009-10 25234 2001-02 2002-03 2003-04 2004-05 2010-11 2008-09
2092
2001-02
2002-03
2682
(`. in Million)
(`. in Million)
2003-04
4518
Net Block
2004-05
5719
Pro?t After Tax
2005-06
8563
2006-07
9514
2007-08
10354
KEY PERFORMANCE INDICATORS
2008-09
2009-10
* During the ?nancial year 2002-03, each Equity shares of `.10/-each was split into two equity share of `.5/- each. (In `.) (`. in Million)
During the ?nancial year 2010-11, each Equity shares of `.5/-each was split into ?ve equity share of `.1/- each.
2010-11
2001-02
35.6
2002-03
26.4
2003-04
35.4
2004-05
21.3
2005-06 41.7 74.7 87.8 65.2
30.9
R & D Expenditure
2006-07
2007-08
2008-09
Earning Per Share - Basic*
2009-10
2010-11
17.5
Annual Report 2010 -11
3
PERFORMANCE AND FINANCIAL HIGHLIGHTS
TEN YEAR FINANCIAL HIGHLIGHTS
(`. in Million)
Consolidated
Particulars Operating Performance Income from Operations Total Income Pro?t after tax R&D Expenditure a) Capital b) Revenue c) % of Turnover Financial Position Equity Share Capital Reserve and Surplus Gross Block Net Block Investment Net Current Asset Stock Information Number of Shares Earnings per ShareBasic (In `)* Earning Per ShareDiluted (In `.)* 35.6 13.2 17.7 20.7 27.7 38.9 71.8 87.8 65.2 17.5 35.6 26.4 35.4 21.3 30.9 41.7 74.7 87.8 65.2 17.5 46,774,537 93,048,478 92,755,678 185,511,356 185,731,637 193,402,120 207,116,391 207,116,391 207,116,391 1,035,581,955 468 4956 3007 2092 818 2410 465 5141 4033 2682 38 3725 464 7540 6232 4518 1765 4808 928 10366 7806 5719 6485 16360 929 14959 12342 8563 3541 23006 967 26747 14252 9514 2543 26843 1036 48879 15960 10354 6565 33995 1036 69414 21476 14625 18595 35485 1036 77254 23340 15328 31664 28542 1036 93798 45520 25234 22310 45939 7505 7552 1707 336 197 139 5% 9725 9812 2444 966 363 603 12% 9847 9995 3446 1268 598 670 13% 11983 12301 4002 1427 418 1009 12% 17372 18042 5730 2015 481 1534 12% 22373 23745 8402 2787 347 2440 13% 34606 35017 15509 2859 134 2725 9% 43751 44808 18780 3320 222 3098 8% 38086 42123 13470 2242 159 2083 6% 57214 59913 19074 3096 236 2860 5% 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
* During the ?nancial year 2002-03, each Equity shares of `.10/-each was split into two equity share of `.5/- each. During the ?nancial year 2010-11, each Equity shares of `.5/-each was split into ?ve equity share of `.1/- each.
4
Sun Pharmaceutical Industries Ltd.
MANAGEMENT DISCUSSION AND ANALYSIS
THE GLOBAL PHARMA MARKET
Global Pharma quick facts 2010 Outlook
Global pharma market is expected to grow by 5-7% to reach US$ 880
billion in 2011
Global pharma market to reach US$
1.1 trillion by 2014
US pharma market will reach anywhere between US$ 320 and
350 billion by 2015
European markets to reach up to
US$ 160 billion by 2015
View of Ahmednagar Plant
(Source: IMS Health)
The global pharma market has registered 4.1% growth to reach US$856 billion. Global generic drug spending is estimated to be US$ 234
The 17 pharmerging countries of China, India, Russia, Brazil, Turkey, Venezuela, Poland, Argentina, Mexico, Vietnam, South Africa, Thailand, Indonesia, Romania, Egypt, Pakistan and Ukraine stood at US$ 150.5 billion. The Indian pharma market
A
GROWTH OF WORLDWIDE PHARMA SPENDING OVER THE YEARS
2006 2007 2008 6.1 2009 7.1 6.9 7 2010 4.1
2005
billion.
The US pharmaceutical market stood at US$310.6 billion. European markets of Germany, France, Italy, Spain and UK reached US$ 147.4 billion.
7.2
stood at US$ 12.3 billion.
(Source: IMS Health)
605
651
720
788
819
856
In US$ billions
In growth %
(Source: IMS Health)
Annual Report 2010 -11
5
Management Discussion and Analysis
Although global spending on medicines is expected to grow from US$ 856 billion in 2010 to reach around US$ 1,065-1,095 billion in 2015, the incremental growth in global medicine spending is expected to slow from the US$251 billion increment registered in 2006-10 to the expected US$ 210-240 billion increment during 2010-15. Patent expiries, increasing generic sales and budget controls may restrain successive growth in medicines spending globally, especially in developed markets. Between 2005 and 2015 the share of developed markets (US and EU 5) in global medicine spending is expected to fall, the share of pharmerging countries is expected to rise, and is expected to remain steady for Japan, rest of Europe and Canada. Pharmerging markets will witness the highest growth in the next ?ve years, driven by increased access through healthcare reforms and economic growth.
B
GLOBAL SPENDING ON MEDICINES
2006-10 2010 2011-15 2015 E
2005
C
SPENDING ON MEDICINES BY GEOGRAPHY
2005 $ 605 Bn
12
Pharmeriging
(In %) 2010 $ 856 Bn
$605Bn $251Bn $865Bn $210 240Bn
7 ROW
$1,065 1,095Bn
6 ROW 41 US 18
Pharmeriging
(Source: IMS Health)
1
S. Korea
36 US
11
Japan
1
S. Korea
7
Rest of Europe
11
Japan
20
EUS
2
Canada
7
Rest of Europe
3 17
EUS Canada
2015 Estimate $ 1,065 Bn - 1,095 Bn
7 ROW 31 US 28
Pharmeriging
2 2
S. Korea Canada
11
Japan
6
Rest of Europe
13
EUS
(Source: IMS Health)
6
Sun Pharmaceutical Industries Ltd.
BRANDED GENERICS VS. PATENTED DRUGS
Although a large number of branded products lost their patent protection during the year in the US , however, this did not trigger extensive growth in generic drugs (which are low cost therapeutic equivalents of patented or innovative drugs), on account of intense price competition. Pricing continues to be one of the most important issues in the pharma world, as a?ordable healthcare remains a priority for governments worldwide. The rising cost of new product development for new molecules on one hand, as well as spiraling healthcare budgets and mounting governmental pressure to reduce drug prices have prompted companies to ramp up their generic/ branded generic business (Source: IMS Health). Brands comprised about 2/3rd of the global pharmaceutical spending during the year 2010. As patents expire in developed markets, the share of branded or patented products is expected to decline in the coming years. Global generic drug spending is estimated to be US$ 234 billion in 2010 Global spending on generics to reach US$ 400-430 billion by 2015 US pharma spending to grow 0-3% by 2015 but US Generics market to grow at a CAGR of 10% by 2013 reaching US$ 108.5 billion by 2013 The global market share for patented medicines is expected to decline GLOBAL MARKET, SEGMENT WISE
2005 $ 605 Bn
10
Other
D
(In %) 2010 $ 856 Bn
9
Other
from 64% in 2010 to 53% by 2015
(Sources: IMS Health and Credit Suisse Report, April 2011)
20
Generic
27
Generic
It is expected that highest growth in generics spending would come from the US, Canada, UK, and South Korea. Japan may continue with the lowest generic share, despite signi?cant policy incentives to increase generic prescribing and dispensing.
64 70
Brand Brand
E
DEVELOPED MARKETS GENERIC SHARE
(In %)
Canada
24.3 27-28
2015 Estimate $ 1,065 Bn - 1,095 Bn
8
Other
France Germany
15.3
21-22
16.2
21-22
Italy
11.9
13-14
Japan 5 8-9
39
Generic
S Korea
53
Brand
31.7
34-35
Spain UK
(Source: IMS Health)
12.8
15-16
21.3
27-28
Note:
a) Generics includes branded generics b) Others includes OTC and non categorized products
US
13.4
21-22
2010 Generic Share
2015 Share Increase Estimate
(Source: IMS Health)
Annual Report 2010 -11
7
Management Discussion and Analysis
GROWTH SHIFTING TO PHARMERGING MARKETS
The 17 pharmerging countries are expected to contribute 28% to global market spending by 2015. Pharmerging markets are expected to double their spending on medicines to $285-315 billion by 2015, compared with $151 billion in 2010 (Source: IMS Health). The Asia Paci?c pharmaceutical market, comprising India, China, Malaysia, South Korea and Indonesia, has emerged as one of the fastest growing pharmaceutical markets. High growth, witnessed in emerging markets, has led to a focus shift for large pharma companies from regulated markets to emerging markets. It is expected that while growth in regulated markets will slow down, emerging markets would lead industry growth. Emerging markets have traditionally been characterized with one or more of the following: Relatively low entry barriers in terms of product registration requirements and intellectual property rights Price sensitivity Favorable regulatory environment Rising disposable incomes Likely increase in health insurance schemes Low manufacturing costs Competitive local industry presence The past decade has witnessed the industry scenario undergoing a transformation with the expansion by Big Pharma in India, China, Brazil, Russia and Latin America. Some of the challenges faced by Big Pharma in emerging countries, as well as some of the strategies that they've adopted to counter the challenges are as follows:
Future projections
Tier wise countries Incremental Pharma Market Growth (2008-13) US$ 40 billion + US$ 5-15 billion US$ 1-5 billion
Tier I Tier II
China Brazil Russia India Venezuela Poland Argentina Turkey Mexico Vietnam South Africa Thailand Indonesia Romania Egypt Pakistan Ukraine
Tier III
(Source: IMS Health)
Challenges
Increasing competition in generic segment Pricing issues Declining research and development (R&D) productivity
Strategies
O?ering low-cost generic products Cutting down costs Contract manufacturing Mergers & acquisitions Partnerships & alliances
8
Sun Pharmaceutical Industries Ltd.
CHRONIC THERAPY AREAS GLOBALLY
During the year, high volume sales were recorded for anti-cancers, antipsychotics, lipid regulators, proton pump inhibitors and antidepressants. A combination of changing lifestyle patterns, better diagnostic tools and increasing awareness and access, are leading to an increase in incidence and treatment sought for chronic diseases like hypertension, congestive heart failure, depression, asthma and diabetes all over the world. Additionally, factors like pollution and environment changes contribute to an increased incidence of asthma. Growth is expected to continue in generics, as well as in anti-diabetics, cardiovasculars, and anti-hypertensives in 2011. The prevalence of Type II diabetes is expected to increase in pharmerging countries, such as China, India and Brazil, because of a growing population and changing lifestyle conditions, as well as better access and diagnosis (Source: IMS Health).
G
2015: LEADING THERAPY AREA ESTIMATES (BRANDED PRODUCTS):
2015 $ 1,065 Bn - 1,095 Bn
29
Others
(in %)
27
Anti-cancer
7
Cardiovascular
17 10
Central Nervous System
Gastro-intestinal
10
Anti-infective
(Source: India Pharma 2015, McKinsey Research Report)
Formulation analytical area, SPARC
Annual Report 2010 -11
9
Management Discussion and Analysis
THE INDIAN PHARMACEUTICAL MARKET
Globally, the Indian pharmaceutical industry ranks 10th in terms of value and third in terms of volume (Source: India Pharma 2020, McKinsey Research Report). According to IMS Health, the Indian Pharma market was estimated to be around $12.3 billion in 2010.
Diabetes incidence to increase by 25% by 2020
(Source: India Pharma 2020, McKinsey Research Report)
Branded generics in India
India is largely a branded generics market, which makes up nearly 70-80% of the total pharmaceutical market, with a small percentage of unbranded generics being sold here (Source: India Pharma 2020, McKinsey Research Report). The country exports branded generics in large volumes, which are expected to grow at a CAGR of 21-23% during 2009-2014 (Source: Crisil, March 2010).
Cancer incidence to increase by 40% by 2020
(Source: India Pharma 2020, McKinsey Research Report)
People su?ering from hypertension would increase to
213.5 million in 2025
Formulations in India
Formulations are mostly manufactured for therapeutics, such as anti-diabetics, neuro/central nervous system (CNS), cardiovascular, respiratory and anti-infectives, with acute therapy products, such as anti-infectives and painkillers forming the largest share. The domestic formulations market, which stood at around ` 417 billion in 2009-10, is expected to grow further owing to better access, awareness, a?ordability, an increasing middle class population, urbanization, increasing e?orts by the government to o?er rudimentary health insurance, particularly in the rural areas. India exports formulations in large volumes to semi-regulated markets (SRM), such as Africa, Asia, CIS and Latin America (Source: Crisil, March 2010).
(Source: Mint, July 8, 2010)
Future projections
It is expected that by 2020, 73
million new households would
enter the middle and upper income bracket and nearly 650
million people would enjoy
health insurance cover. The Indian Government is expected to increase its health spending to 1.5% of the
Global Pharma in India
The Indian pharmaceutical market is highly fragmented with 300 large and 18,000 mid-sized and small companies. Some of the Indian pharma companies provide contract research and manufacturing services (CRAMS) to global pharma majors, who ?nd it more cost e?ective to outsource these activities. The last two years have witnessed a sudden expansion surge by multiple global pharma giants in India, like setting up o?ces and R&D centers, o?ering patented products at a special India price, building a portfolio of branded generics, and expanding their reach to rural India. The markets, which were intensely competitive to begin with, became even more so with these new and refocused companies becoming serious about their presence in the Indian market.
GDP by 2020
(Source: India Pharma 2020, McKinsey Research Report).
To grow at a CAGR of 12-14% between 2009 and 2015 to reach US$ 20-24 billion by 2015 To reach US$ 55 billion by 2020
(Source: India Pharma 2020, McKinsey Research Report)
Chronic therapy products in India
India is one of the fastest growing pharma markets, attributed to rising disposable incomes with increased a?ordability, gradually growing insurance penetration, greater life expectancy, rural penetration, and a shift in disease pro?le towards chronic lifestyle illnesses. Specialty and super specialty therapies are expected to continue growing faster than the rest of the market in the coming years. Increasing pressures of urbanisation, lifestyle changes and work stress are responsible for an increase in the incidence of chronic diseases. Cardiovascular diseases are expected to be the largest cause of deaths and disabilities in India by 2020.
10
Sun Pharmaceutical Industries Ltd.
OPERATIONAL HIGHLIGHTS 2010-11
Successful acquisition of Taro Pharma following three years of litigation and negotiations. Sun Pharma holds an economic stake of Brought exclusive products (Eloxatin and
66% and enjoys voting rights of 77% in Taro
Indian branded generics grew 37% to reach ` 23,800 million The API segment sales declined 4% to reach ` 5,212 million The emerging market branded generic business grew 32% to reach
Pantoprazole) to the US
market, these products enjoy limited competition. During the year, Research & Development expenditures stood at ` 3,096 million
` 6,444 million
International operations grew across 41 markets. Received approvals of 18 products from the USFDA, including complex products like Diltiazem HCL ER Capsules, Galantamine
HCL ER Capsules and Atomoxetine HCL Capsules.
SPARC Centre, Mumbai
Annual Report 2010 -11
11
Management Discussion and Analysis
FINANCIAL HIGHLIGHTS 2010-11
50%
Annual sales grew 50% to reach
14%
Sta? cost is 14% of net sales, largely on account of Taro s sta? cost
` 57,214 million
44%
EBITDA jumped 44% to reach
26%
Other expenditure is 26% of the net sales
` 19,670 million
34%
Net pro?t surged 34% to reach
31%
EBIT margin is at 31%
In the Panoli Plant
` 18,160 million
26%
Material cost stood at 26% of net sales
`
17.50
Diluted EPS is ` 17.50, signi?cantly up from `13 for the last year
Note:
a) b) Taro ?nancials have been consolidated for a little over 6 months in FY11 ?nancials (from 20th September, 2010 onwards) Financials include signi?cant components of non-recurring sales and pro?ts contributed by a few products sold in ?rst half of FY11
12
Sun Pharmaceutical Industries Ltd.
SEGMENT ANALYSIS
Analytical labs, SPARC Center
Our business can be divided into four segments:
Indian Branded Generics US Generics International Branded Generics (Rest of the world, except US) Active Pharmaceutical Ingredients (API)
H
2010-11 BUSINESS SEGMENTS REVENUE BREAK-UP (WITH TARO)
9
APIs
(in %)
11
International Branded Generics (Ex ? US)
42
India Branded Drugs
39
US Generics
Business Category
India Branded Drugs US Generics International Branded Generics (Ex ? US) APIs
(`. Million)
Sales
23,800 22,538 6,444 5,212
Annual Report 2010 -11
13
Management Discussion and Analysis
INDIAN BRANDED GENERICS
Revenue: ` 23,800 million YoY Growth: 37 % Revenue Share: 42% Manufacturing locations: Six
Highlights of the year
Revenues increased from ` 17,412 million in 2009-10 to ` 23,800 million in 2010-11 Market share at 4.3% in 201011, according to AWACS Launched 38 new products during the year Strengthened our prescription share Our top 10 brands contributed 15% to the domestic revenues Our top 50 brands contributed 52% to the domestic revenues
Segment identity
Sixth largest branded generics player in India by prescription share Ranked 1st based on share of prescriptions in six classes of specialists: psychiatrists, neurologists, cardiologists, ophthalmologists, orthopaedics and gastroenterologists. Market leader in chronic segments Over 50% of our brands feature among the top three brands for the molecule Product basket includes 537 formulations Marketing therapy-based products through 18 divisions and 2,700 sales representatives to 130,000 specialist doctors We specialize in technically complex products and o?ering a complete therapy basket, enabling us to remain competitive in a challenging market environment
I
THERAPY WISE BREAK-UP
4 5
Opthalmology Antiasthmatic & Antiallergic
(in %)
5
Musculo ? Skeletal & Pain
28
Neuro Psychiatry
Halol Plant
7
Gynecology & Urology
8
Others
11
Gastroenterology
19
Cardiology
14
Diabetology
(IMS data)
14
Sun Pharmaceutical Industries Ltd.
INDIAN BRANDED GENERICS
We continue with our emphasis on building customer relationships by facilitating academic interaction and continuing medical education. For instance, an epilepsy course was organized countrywide, with international speakers. CMEs and programs to share therapy advances in neurology, ophthalmology and respiratory were also organized. We also conducted over a hundred health camps for disease detection last year.
Future projections
Therapeutic segment Ranking (CMARC ranking, November 2010 February 2011)
1 1 1 1 1 2 1 4 2 2 8 8 18 6
Psychiatry Neurology Cardiology Orthopedic Ophthalmology Diabetology Gastroenterology Chest physicians Nephrology Consultant physicians Oncologists Urology ENT specialists Gynecology
Top ten brands in India
Brand
Pantocid Glucored Group Susten Aztor Pantocid-D Gemer Repace Group Strocit Clopilet Encorate chrono
Therapy
Proton pump inhibitor/ antiulcerant Oral antidiabetic Women's healthcare CVS, cholesterol reducing agent Proton pump inhibitor/ antiulcerant Oral antidiabetic CVS, Hypertension CNS, stroke CVS, anticlotting agent CNS, epilepsy
Annual Report 2010 -11
15
Management Discussion and Analysis
US GENERICS
Revenue: ` 22, 537.9 million
(Includes Taro Pharma sales from September 20, 2010)
Revenue Share: 39% Manufacturing locations:
Nine ? US (3) Canada (1), Israel (1), Hungary (1), and India (3)
Growth: 104% including Taro
Pharma sales for this year, oneo?s from exclusivity products with limited period sales, and acquisitions. Also two plants, the Detroit and Cranbury plants have not been operational for the past year.
The three formulation sites in India are approved for US generics, including a facility that holds approvals for injectables and eye drops. One of the US sites is designed to handle controlled substance formulations.
US Generics
Caraco Pharmaceutical Laboratories Ltd. (76% subsidiary that markets Sun Pharma ANDAs) privatized as of June 2011.
Sun Pharmaceutical Industries, Inc. (SPI) (Wholly owned subsidiary of Sun Pharma)
Taro Pharmaceutical Industries, Ltd. (66% subsidiary of Sun Pharma)
Segment identity
Successfully acquired Taro in September 2010 From 1997 to 2005, acquired Caraco, the plants and business of the erstwhile Able Labs, a semisolids plant in Ohio, and an API plant in Tennessee from Valeant Product basket includes a mix of generics with limited competition, and some with intensive competition Launched technically complex products, such as Amifostine, Lupreolide, Octreotide and Vecuronium
16
Sun Pharmaceutical Industries Ltd.
US GENERICS
Taro identity
Strong presence in dermatology where Taro is working actively to regain its leadership amidst heightened competition Major thrust on introducing globally accepted products, penetrating new markets, and strengthening the research and development pipeline The production facility at Canada is approved by the Ministry of Health and USFDA Delivering to high expectation remains the key challenge.
Therapy wise approvals
Therapeutic segment Number of approvals received till date
89 53 20 15 13 12 7 6 3 2 1 1 1 2
Skin CNS CVS Pain Allergy Oncology Metabolism Cough / Cold Antibiotic Urology Respiratory Gastro Endocrine Others
Caraco identity
Production facility continued to be non-operational; however, e?orts were on to accelerate compliance and meet FDA requirements; active involvement of consultants underway to achieve this Overall sales of distributed products has been good during the year Caraco to bene?t from an increased focus on generics in the US, post its resolution of FDA issues and restarting of manufacturing operations.
Highlights of the year
Grew revenues 104% from ` 11,069 million in 2009-10 to
` 22,537.9 million in 2010-11
Launched 18 new products during the year Filed 25 ANDAs and received approvals on 18 ANDAs during the year This takes the total to 377 ANDA ?led and 225 ANDA received, in all, across companies.
ANDA Approvals
Year
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 (with Taro)
Cumulative Cumulative Products Filed Products Approved
40 59 96 142 177 207 377 15 20 29 53 69 84 225
Annual Report 2010 -11
17
Management Discussion and Analysis
INTERNATIONAL BRANDED GENERICS (EX-US)
Revenue: ` 6,444.4 million Revenue Share: 11%
(includes Taro Pharma ROW sales Manufacturing locations: from September 20, 2010 onwards) One each in Mexico, Brazil, Growth: 32% Bangladesh; 3 sites in India also hold approvals to manufacture products for these markets.
Segment identity
Over 1,578 registered products and more than 900 products in the pipeline Chronic therapy areas are expected to continue growing faster than the rest of the market - increased demand for medicines of metabolic syndrome, obesity, diabetes, neurology, and respiratory More than 600 sales representatives including local personnel as part of the sales force; representatives make doctor calls, build a prescription- pull. Events and CMEs focused on creating lasting relationships through academic means in much the same way as we do in India The ?ling of products from the facilities at Mexico and Brazil has commenced We had initiated generic exports to select markets in Europe last year, which has continued this year as well, with approvals such as Docefrez and Gemcitabine
Presence
Present in 41 pharmaceutical markets across four continents High potential markets are Russia, China, Brazil, Mexico, ex-CIS nations and South Africa Future plan to selectively build a presence with di?cult or technically di?erentiated generics, such as injections, in certain European markets. Continue to bring di?erentiated branded generics to the rest of the world markets
Highlights of the year
Received registration for our drugs in the Philippines, Taiwan, Hong Kong and Australia At the close of the year, entered into an agreement with Merck to create a joint venture to market branded generics with a delivery system advantage, which would use our product development capability and their regulatory/market strength. The ?rst of these products is at least three years from market. The joint venture does not include current registrations by either company.
18
Sun Pharmaceutical Industries Ltd.
API
Revenue: ` 5,212 million Growth: (4)%
Revenue Share: 9% Manufacturing locations: Five
in India, one in the US, one in Hungary, and one in Israel
Segment identity
Backward integration to specialty API has helped us compete against global competitors for our formulations. We internally source API for most of our key products. Presence in over 56 countries, sales primarily to large companies or innovator companies. Dominant player in products like Pentoxifylline, Clomipramine and Mesalazine Manufacture over 170 APIs; most of these complex APIs are used in the manufacture of specialty or chronic pharmaceuticals in-house The Panoli and Ahmednagar facilities manufacture APIs for peptides, anticancers, steroids and sex hormones World-class facilities, accredited ISO 14001 and ISO 9002 Most of our plants have received approvals from USFDA and regulatory authorities of various developed countries Implemented value engineering, which helped improve equipment productivity, reduced process steps, improved chemistry and optimized manufacturing costs Plans to strengthen presence in Japan and China, and the API hubs of Germany and Italy The Hungary unit manufactures controlled substances The Tennessee plant holds quotas for controlled substances API manufacture in the US We scale up around 25 API processes annually 15 DMF/ CEPs ?led in 2010-11
Blender, API processing area
Highlights of the year
Revenues declined from ` 5,427.7 million in 2009-10 to ` 5212.2 million in 2010-11 Scaled up 28 new API during 2010-11 Received DMF/ CEP approvals for 15 APIs from various regulatory authorities in 2010-11
Annual Report 2010 -11
19
Management Discussion and Analysis
RESEARCH & DEVELOPMENT
377 cumulative ANDAs ?led 225 cumulative ANDAs approved 207 DMF / CEP cumulative applications ?led 127 DMF / CEP cumulative applications approved
SPARC Centre, Baroda
Research and development provides critical support for all our manufacturing and new product plans. It is undertaken at our state-of-the-art centres at Baroda and Mumbai. Additionally, Taro has R&D centres in Israel and Canada. We have over 983 quali?ed scientists. We are now well experienced in developing complex APIs as well as formulating complex, technology-intensive products, across dosage forms. Through our research and development activities, we are able to o?er complex products. This year, generic R&D spend is around 5% of net sales, partly on account of slowdown in development work related to generics at Cranbury and Caraco s sites. Our research team specializes in generics, ?nished dosage development, analytical development, biological support and chemistry or process development.
549 total patent applications submitted 248 total patents granted 25 ANDAs ?led in 2010 -11 18 ANDAs approved in 2010 -11 15 DMFs ?led in 2010 -11 15 DMFs approved in 2010 -11
R& D expenditure
Year
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 (includes Taro)
Investment in R&D R&D investment (as % (` in million) of net revenue)
2,015 2,787 2,859 3,320 2,242 3,096 12 13 9 8 6 6
Regulatory
Value chain functions encompass product development, manufacturing, marketing and quality compliance of regulatory requirements. We regularly update ourselves with the changing regulations across di?erent countries and adopt the norms accordingly. Operating in such a competitive environment, it is imperative to be the ?rst mover in adapting to the changing regulations. We adopt and periodically upgrade the regulatory norms across India.
The Baroda centre develops complex APIs and dosage forms for India, ROW markets, US and Europe; while the Mumbai centre focuses on developing di?erentiated dosage forms and generics for developed markets like the US and Europe. These laboratories are equipped with facilities that aid us in pharmacokinetics, formulation development, organic synthesis, clinical research and analytical development. Our team has developed several products that use delivery systems, such as metered dose inhalers, osmotic release formulations and nasal sprays.
20
Sun Pharmaceutical Industries Ltd.
QUALITY
The most important factor in a pharma company is to consistently maintain and improve quality. We are focused on quality-conscious regulated markets, and hence our products abide by the highest quality standards. Our Quality Management Team worldwide comprises over 1200 members. Nearly all our facilities have received quality accreditations from some of the world s most demanding regulatory bodies At Sun Pharma we are committed to ensure that every product we manufacture and distribute meets with and conforms over its shelf life to internationally accepted standards of quality, purity, e?cacy and safety. System and procedures are in place to ensure that each batch of the product manufactured by Sun Pharma is of right quality. In order to maintain quality consistently each plant has well de?ned procedures and systems in compliance with cGMP requirements that meet demanding regulatory requirements such as that of the USFDA, EMEA, MHRA, TGA, etc. Quality systems are well de?ned and validated to ensure consistency in deliveries. Quality unit at plant is independent from manufacturing and other support functions such as warehousing and engineering support. All quality personnel are quali?ed and well trained. Each site has a dedicated team of Quality personnel from quality assurance, quality engineering, quality control, and regulatory a?airs departments ensuring the strict adherence to the quality systems and procedures. This site quality team, at each manufacturing site, is guided by a Corporate Quality Unit (CQU). CQU ensures that all latest updates in GMP are being translated into Guidelines, SOPs and Protocols and at the sites Quality unit ensures that these guidelines, SOPs and protocols are implemented to deliver quality product consistently.
Granulation area, Dadra
Annual Report 2010 -11
21
Management Discussion and Analysis
INTELLECTUAL CAPITAL
We have largely been successful in attracting and retaining talent and creating opportunities for them to develop their technical skills as well as soft skills. One of the powerful drivers of our growth is the human resources team. Although one of the key challenges lies in retaining the junior level employees operating in R&D, manufacturing and on the ?eld. At Sun Pharma, we try to o?er a congenial environment for our people to help them to perform, lead and grow the organization. We have implemented an institutionalized system of promotions, known as Career Progression Program (CPP) which helps us choose our leaders from within the organization.
INTERNAL CONTROLS
Sun Pharma s de?ned organizational structure, documented policy guidelines and adequate internal controls ensure e?ciency of operations, compliance with internal policies, applicable laws and regulations, protection of resources and assets, and accurate reporting of ?nancial transactions. Moreover, the Company continuously upgrades these systems in line with the best available practices. The internal control system is supplemented by extensive internal audits, conducted by independent ?rms of Chartered Accountants to cover various operations on a continuous basis. The Company regularly upgrades its systems in line with the best available practices.
22
Sun Pharmaceutical Industries Ltd.
DIRECTORS’ REPORT
Your Directors take pleasure in presenting the Nineteenth Annual Report and Audited Accounts for the year ended March 31, 2011.
FINANCIAL RESULTS
(` in million except dividend per share and book value)
Year ended March 31, 2011 Total Income Pro?t after tax Dividend on Equity Shares Corporate Dividend tax Transfer to General Reserve Amount of dividend per equity share of `1/- each (Previous year per equity share of ` 5/- each) Book value per equity share of `1/each(Previous year per equity share of ` 5/- each) 32989 13838 3625 588 5000 3.5
Year ended March 31, 2010 26084 8987 2848 473 3000 13.75
65
276
Dividend
Your Directors are pleased to recommend an equity dividend of ` 3.50 per equity share of face value ` 1/- each (previous year ` 13.75 per equity share of face value ` 5/- each) for the year ended March 31, 2011.
Split of Equity Shares
As approved by the Shareholders of the Company by way of postal ballot conducted during November, 2010, the results of which were announced on November 12, 2010, the Equity Shares of ` 5/- each of the Company were subdivided into 5 Equity Shares of ` 1/- each during the year under review.
Your Directors recommended an equity dividend of ` 3.50 per equity share of face value ` 1/each for the year ended March 31, 2011. The Equity Shares of ` 5/- each were sub-divided into 5 Equity Shares of ` 1/- each during the year.
Management Discussion and Analysis
The management discussion and analysis on the operations of the Company is provided in a separate section and forms part of this report.
Annual Report 2010 -11
23
Directors Report
Your Company has a dedicated team of over 11200 multicultural employees at various locations across our corporate o?ce, associate companies, various R&D centers & 19 plant locations spread across three continents.
Human Resources
Human Resource development continues to be a key focus area at Sun Pharma and your Company takes great pride in the commitment, competence and vigor shown by its workforce in all realms of business. You have a dedicated team of over 11200 employees at various locations across our corporate o?ce, various R&D Centers & 19 plant locations (including associate companies) spread across three continents. The Company continues to take new initiatives to further align its HR policies to meet the growing needs of its business. A transparent work culture, quality of work and supportive environment induces discretionary behavior among employees which gives them the opportunity to personally succeed in a way that leads to collective organizational success. Your Directors truly appreciate the e?orts and contribution by Team Sun Pharma for maintaining and further accelerating the growth pace. Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, is available at the registered o?ce of your Company. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Report and Accounts are being sent to all shareholders of the Company and others entitled thereto excluding the aforesaid information. Any shareholder interested in obtaining a copy of this statement may write to the Company Secretary/Compliance O?cer at the Corporate O?ce or Registered O?ce address of the Company.
Information on Conservation of Energy, Technology Absorption, Foreign Exchange Earning and Outgo.
The additional information relating to energy conservation, technology absorption, foreign exchange earning and outgo, pursuant to Section 217(1) (e) of the Companies Act 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is given in Annexure and forms part of this Report.
Corporate Governance
Report on Corporate Governance and Certi?cate of the auditors of your Company regarding compliance of the conditions of Corporate Governance as stipulated in Clause 49 of the listing agreement with stock exchanges, are annexed.
Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. The information relating to each subsidiary including subsidiaries of subsidiaries, as required by the aforesaid circular, is disclosed in the Annual Report. The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company and its subsidiaries who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection by any investor at the Registered O?ce & Corporate / Head O?ce of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include ?nancial results of its subsidiary companies also.
Finance
CRISIL continued to rea?rm its highest rating of AAA/ Stable and P1+ , for your Company s Banking Facilities throughout the year enabling your Company to avail facilities from banks at attractive rates. The Company does not o?er any Fixed Deposit scheme.
Consolidated Accounts
In accordance with the requirements of Accounting Standard AS-21 prescribed by the Institute of Chartered Accountants of India, the Consolidated Accounts of the Company and its subsidiaries is annexed to this Report.
Subsidiaries
The Ministry of Corporate A?airs, Government of India, New Delhi has issued direction under Section 212(8) of the Companies Act, 1956 vide general circular No.2/2011 dated February 8, 2011 and in accordance with the same, the Balance Sheet, the Pro?t and Loss
24
Sun Pharmaceutical Industries Ltd.
Corporate Social Responsibility
At the close of a relatively event-free, disaster-free year, your Company persisted with participation in activities at the local, grassroots level across health and education. In the past, support has been o?ered towards disaster relief as well as participation in the facilitation of civic utilities around the plants/research centers. Your Company remains interested in these contributions.
Company and for preventing and detecting fraud and other irregularities; and, (iv) that the Directors have prepared the annual accounts for the ?nancial year ended March 31, 2011 on a going concern basis.
Auditors
Your Company s auditors, M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai, retire at the conclusion of the forthcoming Annual General Meeting. Your Company has received a letter from them to the e?ect that their re-appointment, if made, will be in accordance with the provisions of Section 224(1-B) of the Companies Act, 1956.
Directors
Shri Dilip S. Shanghvi, Shri Sailesh T. Desai and Shri S.Mohanchand Dadha retire by rotation and being eligible o?er themselves for re-appointment.
Directors Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby con?rmed: (i) that in the preparation of the annual accounts for the ?nancial year ended March 31, 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures; that the Directors have selected appropriate accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of a?airs of the Company at the end of the ?nancial year and on the pro?t of the Company for the year under review;
Cost Auditors
The Company has appointed Messrs. Kailash Sankhlecha & Associates, Cost Accountants, Vadodara as Cost Auditors of our Company for conducting Cost Audit in respect of Bulk Drugs & Formulations of your Company for the year ended March 31, 2011.
Acknowledgements
Your Directors wish to thank all stakeholders and business partners, your Company s bankers, ?nancial institutions, medical profession and business associates for their continued support and valuable co-operation. The Directors also wish to express their gratitude to investors for the faith that they continue to repose in the Company.
(ii)
For and on behalf of the Board of Directors
(iii) that the Directors have taken proper and su?cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the
Dilip S. Shanghvi Chairman & Managing Director May 28, 2011 Mumbai
Annual Report 2010-11
25
ANNEXURE (1) TO DIRECTOR’S REPORT
2010-11
2009-10
CONSERVATION OF ENERGY
A. Power and Fuel Consumption 1. Electricity (a) Purchased Unit (in ‘000 KWH) Total Amount ( in Millions) Rate ( / Unit) (b) Own Generation through Diesel Generator Units (in ’000 KWH) Units per Litre of Diesel Oil Cost ( / Unit) (c) Own Generation through Gas Units (in ‘000 KWH) Units per M3 of Gas Cost ( / Unit) 2. Furnace Oil Quantity (in ‘000 Litres) Total Amount ( in Millions) Average Rate Gas (for Steam) Gas Units (in ‘000 M3 ) Total Amount ( in Millions) Average Rate ( / Unit) Wood / Briquitte Quantity (in ‘000 Kgs) Total Amount ( in Millions) Average Rate ( / Unit)
26,775 151.5 5.7 2,702 3.1 12.9 45,219 10.8 5.5 771 20.5 26.6 6,395 119.8 18.7 29,008 65.8 2.3
43,396 245.8 5.7 2,783 3.0 11.1 24,852 10.6 4.2 2,591 62.7 24.2 9,891 151.6 15.3 8,852 19.9 2.2
3
4
B. Consumption per unit of production It is not feasible to maintain product category-wise energy consumption data, since we manufacture a large range of formulations and bulk drugs having different energy requirements. C. Energy conservation measures 1 2 3 4 Internal and External Energy Audits for improvisation and continuous monitoring of Power Factor. ML lamps are replaced by 20 W CFL lamps thereby saving power. Energy Efficient Gas fired Boiler installed, steam to fuel ratio improved and therfore reduction in gas consumption. Installation of Surface Aerator in Aeration tank – 1 of ETP and stopping of Root Blower hence power saving . Dissolve Oxygen level improved in Aerator tank. Hence improving effectiveness of biodegradation. 5 3TPH Briquette fire boiler installed & stopped furnace oil boiler saving of fossil fuel. 6 To utilize heat from economizer for Boiler by giving forced circulation instead of existing thermo gradient heat transfer. This saved steam by recovering heat from temp. 160 Deg. C to 120 Deg. C.
26
Sun Pharmaceutical Industries Limited
TECHNOLOGY ABSORPTION
A. Research and Development 1. Specific areas in which R&D is carried out by the Company Even several years after separating out our innovative research programs, we. continue to be one of the most aggressive investors and developers of generic-related pharmaceutical research and technology in the country, with research programs to support our generic business pursued at our modern R&D centres. Our expert scientist team is engaged in complex developmental research projects in process chemistry and dosage forms, including complex generics based on drug delivery systems at these research centres. This research activity supports the short, medium and long term business needs of the company, in India and all the other markets that your company invests in. Projects in formulation development and process chemistry help us introduce a large number of new and novel products to the Indian market including products with complexity or a technology edge.Process chemistry enables us to be integrated right up to the API stage for important products. This helps us maintain our leadership position in the Indian market with specialty formulations and derive market and cost advantage from API’s developed and scaled up In-house. Further, it helps us to compete in the international regulated markets across US / Europe. The team also works on projects involving complex drug delivery systems for India Complex API like steroids, sex hormones , peptides, carbohydrates and taxanes which require special skills and technology, are developed and scaled up for both API and dosage forms. This complete integration for some products works to the company’s advantage. These projects may offer higher value addition and sustained revenue streams. 2. Benefits derived as a result of the above R&D In 2010-11, 38 formulations were introduced across marketing divisions, (not including line extensions, but including complex products). All of these were based on technology developed in house. Technology for 28 API was commercialised. For some of the important API that we already manufacture, processes were streamlined so as to have more energy efficient or cost effective or environment friendly processes. Some of the new processes were non-infringing, so as to support our plans for ANDA filings for the US. A large part of our API sales is to the regulated market of US / Europe, and this earns valuable foreign exchange and also a reputation for quality and dependability. The company’s formulation brands are exported to 40 international markets where a local field force promotes the same. The Department of Scientific and Industrial Research, Ministry of Science and Technology of Government of India has granted approval to the in house research and development facility of your Company under the provision of the Income Tax Act, 1961. 3. Future plan of action A state of the art bioequivalence facility with a functional capacity of 220 beds with a well equipped, Phase I Clinical unit and ECG Core Laboratory for clinical studies and safety studies and has been expanded to more than 300 beds. Eighteen high capacity LCMS, fully computerised blood chemistry labs capable of comprehensive analysis are being used extensively for biostudies. This facility has been inspected and approved for India and for the US.
Annual Report 2010-11
27
Year ended 31st March, 2011 in Million 4. Expenditure on R&D a) b) c) d) Capital Revenue Total Total R&D expenditure as % of Total Turnover 236.1 1572.8 1808.9 9.4%
Year ended 31st March, 2010 in Million
159.0 1440.8 1599.8 8.8%
B. Technology Absorption, Adaptation and Innovation 1. Efforts in brief, made towards technology absorption, adaptation and innovation Year afer year, your company continues to invest on R&D revenue as well as capex. A large part of the spend is for complex products, ANDA filings for the US and API technologies that are complex and may require dedicated manufacturing sites. Investments have been made in creating research sites, employing scientifically skilled and experienced manpower, adding equipment and upgrading continuously the exposure and research understanding of the scientific team in the therapy areas of our interest. Laboratories and instrument facilities have been set up to initiate R&D activities in biotechnology for the development of biosimilars. 2. Benefits derived as a result of the above efforts e.g. product improvement, cost reduction, product development, import substitution (a) Market leader for several complex products. Offers complete baskets of products under speciality therapeutic classes. Strong pipeline of products for future introduction in India, emerging markets, as well as US and European generic market. (b) Not dependent on imported technology, can make high cost products available at competitive prices by using indigenously developed manufacturing processes and formulation technologies. (c) Offer products which are convenient and safe for administration to patients, products with a technology advantage. (d) We are among the few selected companies that have set up completely integrated manufacturing capability for the production of anticancer, hormones, peptide, cephalosporins and steroidal drugs. (e) The Company has benefited from reduction in cost due to import substitution and increased revenue through higher exports. 3. Your company has not imported technology during the last 5 years reckoned from the beginning of the financial year. C. Foreign Exchange Earnings and Outgo Year ended 31st March, 2011 in Million 1. Earnings 2. Outgo 9005.6 5156.8 Year ended 31st March, 2010 in Million 8508.3 4629.0
28
Sun Pharmaceutical Industries Limited
AUDITORS’ REPORT
TO THE MEMBERS OF SUN PHARMACEUTICAL INDUSTRIES LIMITED
1.
We have audited the attached Balance Sheet of SUN PHARMACEUTICAL INDUSTRIES LIMITED (“the Company”) as at 31st March, 2011, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: (i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
2.
3.
4.
(ii) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (iii) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account; (iv) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (v) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011; (b) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and (c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of written representations received from the Directors as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2011 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W) Rajesh K Hiranandani Partner (Membership No. 36920)
MUMBAI, 28th May, 2011
Annual Report 2010-11
29
ANNEXURE TO THE AUDITORS’ REPORT
(Referred to in paragraph 3 of our report of even date) (i) (ii) Having regard to the nature of the Company’s business/activities/result clauses vi, xiii, xiv, xvi, xviii, xix and xx of CARO are not applicable. In respect of its fixed assets: (a) (b) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification. The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.
(c) (iii)
In respect of its inventory: (a) As explained to us, the inventories (excluding inventories lying with third parties) were physically verified during the year by the Management at reasonable intervals. In respect of inventories lying with third parties, these have substantially been confirmed by them. In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business. In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.
(b)
(c) (iv) (v)
The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system. In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us: (a) (b) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered into the Register maintained under the said Section have been so entered. Where each of such transaction is in excess of 5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time, except in respect of certain purchases for which comparable quotations are not available and in respect of which we are unable to comment.
(vi)
(vii) In our opinion, the internal audit functions carried out during the year by firms of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business. (viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of manufacture of formulation and bulk drug products and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete. To the best of our knowledge and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records for any other products of the Company.
30
Sun Pharmaceutical Industries Limited
(ix)
According to the information and explanations given to us in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. There were no undisputed amounts payable in respect of Income-tax, Sales Tax, Service Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31st March, 2011 for a period of more than six months from the date they became payable. Details of dues of Income-tax, Sales Tax, Wealth Tax, Custom Duty and Excise Duty, which have not been deposited as at 31st March, 2011 on account of disputes, are given below: Nature of Dues Excise Duty, Interest and Penalty Forum where dispute is pending Assistant / Deputy / Joint Commissioner Tribunal Period to which the amount relates 2002-03, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10 1997-98, 1998-99, 1999-00, 2000-01, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 1998-99, 2001-02, 2006-07, 2007-08 2000-01 1994-95, 1998-99, 1999-00, 2000-01, 2002-03 1998-99, 2001-02, 2002-03, 2003-04, 2004-05 1981-82 to1985-86, 2003-04 1996-97, 2002-03 1997-98 2003-04, 2004-05, 2008-09 1987 to 1992 Amount involved ( In Million) 31.6
(b)
(c)
Statute The Central Excise Act, 1944
259.5
High Court Customs Act, 1962 Sales Tax Act (Various States) Custom Duty, Penalty and Interest Sales Tax, Interest and Penalty Settlement Commission Assistant / Deputy /Joint Commissioner Tribunal High Court Income Tax Act, 1961 Income tax and Interest Tribunal Commissioner Wealth Tax Act, 1957 Employee State Insurance Act, 1948 Drugs (Price Control) Order, 1979 Wealth tax Contribution and Interest Drug Price Equilisation Account liability and interest Commissioner Appellate authority
1.6 11.5 4.7 2.9 14.5 0.9 8.4 0.2 0.2
Drug Prices Liability Review Committee
1981-1987
14.0
There were no unpaid disputed dues in respect of service tax and cess during the year.
Annual Report 2010-11
31
(x) (xi)
The Company does not have any accumulated losses as at the end of the year. The Company has not incurred cash losses in the financial year and in the immediately preceding financial year. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks. The Company does not have any dues to financial institutions and has not issued any debentures.
(xii) In our opinion, the Company has maintained adequate records where it has granted loans and advances on the basis of security by way of pledge of shares. The Company has not granted any loans and advances on the basis of security by way of pledge of debentures and other securities. (xiii) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and financial institutions, are not prima facie prejudicial to the interests of the Company. (xiv) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that the funds raised on short-term basis have, prima facie, not been used during the year for long-term investment. (xv) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.
For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
MUMBAI, 28th May, 2011
Rajesh K Hiranandani Partner (Membership No. 36920)
32
Sun Pharmaceutical Industries Limited
BALANCE SHEET
AS AT 31ST MARCH, 2011
As at 31st March, 2011 Schedule in Million in Million
As at 31st March, 2010 in Million in Million
SOURCES OF FUNDS
Shareholders’ Funds Share Capital Reserves and Surplus Loan Funds Secured Loans Deferred Tax Liability (Net) TOTAL 1 2 3 4 1,035.6 65,769.7 66,805.3 505.3 1,285.1 68,595.7 1,035.6 56,144.2 57,179.8 294.9 1,153.3 58,628.0
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Depreciation / Amortisation / Impairment Net Block Capital Work-in-Progress (including advances on capital account) Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets TOTAL SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Schedules referred to herein form an integral part of the Financial Statements.
In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants S. KALYANASUNDARAM Wholetime Director & CEO For and on behalf of the Board DILIP S. SHANGHVI Chairman & Managing Director SUDHIR V. VALIA Wholetime Director RAJESH K. HIRANANDANI Partner Mumbai, 28th May, 2011 SUNIL R. AJMERA Company Secretary SAILESH T. DESAI Wholetime Director Mumbai, 28th May, 2011
5
12,687.6 4,743.7 7,943.9 2,280.6 10,224.5 36,014.2 6,182.6 5,426.2 12,509.0 183.7 5,525.8 29,827.3
11,597.6 4,192.4 7,405.2 921.5 8,326.7 40,516.9 5,701.4 5,532.9 888.7 57.9 3,661.3 15,842.2 2,633.0 3,424.8 6,057.8 22,357.0 68,595.7 9,784.4 58,628.0
6 7 8 9 10 11 12 3,139.3 4,331.0 7,470.3
19
Annual Report 2010-11
33
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 Schedule in Million in Million
Year ended 31st March, 2010 in Million in Million
INCOME
Income from Operations Gross Sales Less: Excise Duty Net Sales Other Operating Income Other Income 13 14 15 16 17 18 19,857.8 526.6 19,331.2 11,715.8 31,047.0 1,941.7 8,969.3 2,140.6 5,340.4 1,355.9 642.3 570.4 131.8 32,988.7 18,528.8 450.3 18,078.5 6,776.6 24,855.1 1,229.3 8,152.9 1,747.1 4,720.4 1,277.7 694.7 526.0 (20.9) 26,084.4
EXPENDITURE
Cost of Materials / Goods Personnel Cost Operating and Other Expenses Research and Development Expenditure Depreciation / Amortisation / Impairment PROFIT BEFORE TAXATION Provision for Taxation - Current Tax - Deferred Tax Charge / (Credit) (Net) PROFIT AFTER TAX BALANCE OF PROFIT BROUGHT FORWARD AMOUNT AVAILABLE FOR APPROPRIATION
18,448.5 14,540.2 702.2 13,838.0 18,891.5 32,729.5
16,592.8 9,491.6 505.1 8,986.5 16,225.9 25,212.4
APPROPRIATIONS
Proposed Dividend Corporate Dividend Tax Transfer to General Reserve BALANCE OF PROFIT CARRIED TO BALANCE SHEET EARNINGS PER SHARE (refer note B.12 (ii) of Schedule 19) Basic & Diluted ( ) Face Value per Equity share - 1 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Schedules referred to herein form an integral part of the Financial Statements.
In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants S. KALYANASUNDARAM Wholetime Director & CEO For and on behalf of the Board DILIP S. SHANGHVI Chairman & Managing Director SUDHIR V. VALIA Wholetime Director RAJESH K. HIRANANDANI Partner Mumbai, 28th May, 2011 SUNIL R. AJMERA Company Secretary SAILESH T. DESAI Wholetime Director Mumbai, 28th May, 2011
3,624.5 588.0
4,212.5 5,000.0 23,517.0 13.4
2,847.9 473.0
3,320.9 3,000.0 18,891.5 8.7
19
34
Sun Pharmaceutical Industries Limited
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 in Million A. Cash Flow From Operating Activities: Net Profit Before Tax Adjustments for: Depreciation / Amortisation / Impairment Interest Expense Interest Income Dividend Income ( 2,820) (Profit) / Loss on Fixed Assets Sold (net) (Profit) / Loss on sale of Investments Bad Debt Written off / (back) (net) Sundry Balance Written off / (back) (net) Provision for employee benefits Unrealised Foreign Exchange (Gain) / Loss Operating Profit Before Working Capital Changes Adjustments for Changes In Working Capital: Decrease in Sundry Debtors Increase in Other Receivables Increase in Inventories Increase / (Decrease) in Trade and Other Payables Cash Generated From Operations Taxes Paid Net Cash Generated From Operating Activities B. Cash Flow From Investing Activities: Purchase of Fixed Assets and Capital Work in Progress (including Capital Advances) Proceeds From Sale of Fixed Assets Proceeds From Sale of Investments Purchase of Investments Margin Money and Fixed Deposit with Banks Short Term Loans / Inter Corporate Deposits Received back / (given) (net) Interest Received Dividend Received ( 2,820) Net Cash Used in Investing Activities C. Cash Flow From Financing Activities: Increase in Cash Credit facility Interest Paid Dividend Paid Corporate Dividend Tax Paid Net Cash used in Financing Activities Net (Decrease) / Increase in Cash and Cash Equivalents Cash and Cash Equivalents as at the beginning of the year Cash and Cash Equivalents as at the year end 14,540.2 642.3 5.9 (1,265.2) (0.0) 4.5 (393.1) (1.6) 2.3 14.6 (62.6) 13,487.3 88.9 (446.6) (481.2) 397.0 13,045.4 (736.1) 12,309.3 (2,452.8) 5.3 126,346.8 (122,944.6) (12,003.7) (1,147.8) 1,139.4 0.0 (11,057.4) 210.4 (5.9) (2,841.0) (473.0) (3,109.5) (1,857.6) 2,079.1 221.5
Year ended 31st March, 2010 in Million 9,491.6 694.7 4.4 (1,052.9) (0.1) (6.3) 334.8 19.3 (19.8) 14.8 276.9 9,757.4 1,147.3 (39.1) (834.0) (3,083.7) 6,947.9 (487.9) 6,460.0 (1,268.6) 47.0 156,923.2 (169,335.4) 11,784.4 (1,114.6) 1,376.3 0.1 (1,587.6) 58.9 (4.4) (2,843.9) (484.0) (3,273.4) 1,599.0 480.1 2,079.1
Annual Report 2010-11
35
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 in Million Cash and Cash Equivalents Comprise: Cash and Cheques on hand and balances with Scheduled / Other banks (Refer Schedule 9 to the Financial Statements) Add : Investment in Certificate of Deposit having maturity less than 3 Months Less : Margin Money Deposit / Fixed deposit having maturity more than 3 Months Unrealised exchange (Gain) Cash and Cash Equivalents as restated as at the year end
Year ended 31st March, 2010 in Million
12,509.0 — 12,276.8 (10.7) 221.5
888.7 1,493.6 273.1 (30.1) 2,079.1
Notes: 1 2 Cash and cash equivalents includes available for use by the Company. 28.5 Million (Previous Year 22.2 Million) on account of Unclaimed dividend, which are not
Previous year’s figures are regrouped / reclassified wherever necessary in order to conform to current year’s groupings and classifications.
In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants S. KALYANASUNDARAM Wholetime Director & CEO
For and on behalf of the Board DILIP S. SHANGHVI Chairman & Managing Director SUDHIR V. VALIA Wholetime Director
RAJESH K. HIRANANDANI Partner Mumbai, 28th May, 2011
SUNIL R. AJMERA Company Secretary
SAILESH T. DESAI Wholetime Director Mumbai, 28th May, 2011
36
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 1 : SHARE CAPITAL
Authorised 1,500,000,000 Equity Shares of 1 each (Previous Year 300,000,000 Equity Shares of 1,500.0 5 each) 1,500.0 Issued, Subscribed and Paid-up 1,035,581,955 Equity Shares of 1 each (Previous Year 207,116,391 Equity Shares of 5 each) fully paid-up. Notes: Of the above : 1) 2) 808,150,050 Equity shares allotted as fully paid Bonus Shares by capitalisation of Securities Premium Account, Profit and Loss Account, Amalgamation Reserve and Capital Redemption Reserve Account. 4,136,330; 2,080,000; 4,775,810; 114,380; 185,190; 197,710 and 21,370 Equity Shares fully paid allotted to the shareholders of erstwhile Tamilnadu Dadha Pharmaceuticals Ltd, Milmet Laboratories Pvt. Ltd, Gujarat Lyka Organics Ltd, Sun Pharmaceutical Exports Ltd, Pradeep Drug Company Ltd, M.J.Pharmaceuticals Ltd and Phlox Pharmaceuticals Ltd. respectively, pursuant to Schemes of Amalgamations, without payment being received in cash. 108,003,805 Equity Shares allotted to the holders of Zero Coupon Foreign Currency Convertible Bond on exercise of conversion option. With effect from 27th November, 2010, one equity share of paid-up. 5 each fully paid-up was split into five equity share of 1 each fully 1,035.6 1,500.0 1,035.6 1,500.0
1,035.6
1,035.6
3) 4)
SCHEDULE 2 : RESERVES AND SURPLUS
Capital Reserve As per last Balance Sheet Securities Premium Account As per last Balance Sheet Capital Redemption Reserve As per last Balance Sheet General Reserve As per last Balance Sheet Add : Transferred from Profit and Loss Account Surplus As Per Profit And Loss Account 21,740.0 5,000.0 259.1 15,099.1 154.5 18,740.0 3,000.0 259.1 15,099.1 154.5
26,740.0 23,517.0 65,769.7
21,740.0 18,891.5 56,144.2
SCHEDULE 3 : SECURED LOANS
Cash Credit Facility from Banks (Secured by hypothecation of inventories and book debts.) 505.3 505.3 294.9 294.9
Annual Report 2010-11
37
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 4 : DEFERRED TAX LIABILITY (NET)
Deferred Tax Liability Depreciation on Fixed Assets Others Deferred Tax Assets Unpaid Liabilities Allowable on payment basis U/s 43B of Income Tax Act,1961 Others 1,346.0 8.4 41.5 27.8 69.3 1,285.1 1,246.3 5.2 69.2 29.0 98.2 1,153.3
1,354.4
1,251.5
SCHEDULE 5 : FIXED ASSETS
Particulars As At 01.04.10 I. TANGIBLE ASSETS Freehold Land Leasehold Land Buildings Plant and Machinery Vehicles Furniture and Fixtures Sub-Total II. INTANGIBLE ASSETS Trademarks, Designs and Other Intangible Assets Sub-Total TOTAL- I + II Previous Year 38.7 39.2 2,367.1 8,292.7 140.3 275.0 11,153.0 Gross Block (At Cost) Additions Deletions As at 10-11 10-11 31.03.11 — — 161.4 988.4 21.0 20.0 1,190.8 — — — 88.0 5.2 7.6 38.7 39.2 2,528.5 (a) 9,193.1 156.1 287.4 Depreciation / Amortisation / Impairment As at 01.04.10 — 4.0 437.4 3,273.3 43.8 117.2 3,875.7
in Million Net Block As at 31.03.10 38.7 35.2 1,929.7 5,019.4 96.5 157.8 7,277.3
For year On deletions As at As at 10-11 10-11 31.03.11 31.03.11 — 0.4 65.2 532.9 13.4 14.6 626.5 — — — 81.2 2.2 7.6 91.0 — 4.4 502.6 3,725.0 (b) 55.0 124.2 (b) 4,411.2 38.7 34.8 2,025.9 5,468.1 101.1 163.2 7,831.8
100.8 12,243.0
444.6 444.6 11,597.6 10,619.0
— — 1,190.8 1,148.0
— —
444.6 444.6
316.7 316.7 4,192.4 3,626.4
15.8 15.8 642.3 694.7 (b)
— — 91.0 128.7
332.5 (b) 332.5 4,743.7 4,192.4
112.1 112.1 7,943.9 7,405.2 2,280.6 10,224.5
127.9 127.9 7,405.2
100.8 12,687.6 169.4 11,597.6
Capital Work-in-Progress (including advances on capital account)
921.5 8,326.7
NOTES : (a) Buildings include 8,620 (Previous Year 8,620) towards cost of shares in a Co-operative Housing Society. y. 30.8 Million) including Nil (Previous Year 30.8 Million) on account of
(b) Includes Impairment of Impairment for the year.
30.8 Million (Previous Year
38
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 6 : INVESTMENTS
(I) LONG TERM INVESTMENTS (At Cost) A) Government Securities National Savings Certificates 10,000 (Previous Year 14,000) (Deposited with Government Authorities) B) Trade Investments Unquoted In Equity Shares Enviro Infrastructure Co. Ltd. 100,000 (Previous Year 100,000) Shares of 10 each fully paid C) Other Investments a) In Bonds Unquoted Rural Electrification Corporation Ltd. 500 (Previous Year 500) Bonds of 10,000 each fully paid b) In Debentures Quoted Barclays Investments & Loans (India) Ltd - 12.25 NCD 06OT10 Nil (Previous Year 250) Debentures of 1,000,000 each fully paid Market Value Nil (Previous Year 275.2 Million) ETHL Communications Holdings Ltd - NCD 22JL11 Nil (Previous Year 500) Debentures of 1,000,000 each fully paid Market Value Nil (Previous Year 446.4 Million) HCL Technologies Ltd - 7.55 NCD 25AG11 100 (Previous Year 100) Debentures of 1,000,000 each fully paid Market Value 99.8 Million (Previous Year 101.0 Million) Housing Development Finance Corporation Ltd 9.9 NCD 23DC18 250 (Previous Year 250) Debentures of 1,000,000 each fully paid Market Value 262.6 Million (Previous Year 269.7 Million) L&T Finance Ltd - 8.4 NCD 08MR13 122,464 (Previous Year 122,464) Debentures of 1,000 each fully paid Market Value 120.5 Million (Previous Year 123.1 Million) 0.0 0.0
1.0
1.0
5.0
5.0
—
250.0
—
437.2
100.0
100.0
250.0
250.0
122.5
122.5
Annual Report 2010-11
39
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million Tata Chemicals Ltd - 7.4 NCD 23NV11 250 (Previous Year 250) Debentures of 1,000,000 each fully paid Market Value 246.2 Million (Previous Year 250.4 Million) Unquoted Bajaj Infrastructure Development Company Ltd 10.75 NCD 04DC15 250 (Previous Year Nil) Debentures of 1,000,000 each fully paid c) In Subsidiary Companies In shares Quoted Caraco Pharmaceutical Laboratories Ltd. 8,382,666 (Previous Year 8,382,666) fully paid Common Shares of No Par Value Market Value 1,940.6 Million (Previous Year 2,249.5 Million) Unquoted Zao Sun Pharma Industries Ltd. 1,000 (Previous Year 1,000) Shares of Rubles 20 each fully paid Sun Pharma Global Inc. BVI 2,471,515 (Previous Year 2,362,820) Shares of US $ 1 each fully paid TKS Farmaceutica Ltda. 829,288 (Previous Year 829,288) quota of Capital Stock of Real (R$) 1 each fully paid. Sun Pharma De Mexico, S.A. DE C.V. 750 (Previous Year 750) Common Shares of no Face Value Sun Pharmaceutical Industries Inc. 5,000 (Previous Year 5,000) fully paid Common Stock of $ 1 Par Value Sun Pharmaceutical (Bangladesh) Ltd. 434,469 (Previous Year 434,469) Ordinary Shares of 100 Takas each fully paid. Share Application Money Sun Pharmaceutical Peru S.A.C. 21,734 (Previous Year 21,734) 149 (Previous Year 149) Ordinary Shares of Soles 10 each fully paid SPIL DE Mexico SA DE CV 100 (Previous Year 100) Nominative and free Shares of $500 Mexican Pesos each fully paid 0.2 9,628.9 in Million 250.0
As at 31st March, 2010 in Million in Million 250.0
250.0
—
303.9
303.9
0.2 9,405.0
18.3 3.3 0.2
18.3 3.3 0.2
36.5 31.6 0.0
36.5 31.6 0.0
0.2
0.2
40
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million OOO “Sun Pharmaceutical Industries” Ltd. Par value stock of 49,500 Rubles (Previous Year 49,500 Rubles) Green Eco Development Centre Ltd. 100,000 (Previous Year Nil) Shares of 10 each Sun Pharma De Venezuela, C.A. 1,000 (Previous Year Nil) Shares of Bolivars (Bs.F. )100 each In Debentures Unquoted Sun Pharma Global Inc. BVI Nil (Previous Year 50,000) 0% Optionally Fully Convertible Debentures of US$100 each fully paid d) In Capital of Partnership Firm Sun Pharma Exports* Sun Pharmaceutical Industries** Sun Pharma Sikkim*** Sun Pharma Drugs**** 67 (Previous Year 15.9 3,888.6 3,478.2 0.0 0.1 1.0 0.5 9,720.8 in Million
As at 31st March, 2010 in Million 0.1 — — 9,495.4 in Million
—
224.0
Nil)
7,382.7
15.9 4,236.8 2,992.2 —
7,244.9
e) In Mutual Fund (Units of Face Value of 10 Each) Unquoted Birla Sun Life Mutual Fund Birla Sun Life Fixed Term Plan-Series CC (13Months) 20,000,000 (Previous Year 20,000,000) Units Birla Sun Life Mutual Fund Birla Sun Life Fixed Term Plan-Series CF 25,000,000 (Previous Year Nil) Units Birla Sun Life Mutual Fund Birla Sun Life Fixed Term Plan-Series CG 25,000,000 (Previous Year Nil) Units Birla Sun Life Mutual Fund Birla Sun Life Fixed Term Plan-Series CI 50,000,000 (Previous Year Nil) Units Birla Sun Life Mutual Fund Birla Sun Life Fixed Term Plan - Series CJ 25,000,000 (Previous Year Nil) Units Birla Sun Life Mutual Fund Birla Sun Life Fixed Term Plan-Series CR 25,000,000 (Previous Year Nil) Units Birla Sun Life Mutual Fund Birla Sun Life Fixed Term Plan - Series CW 25,000,000 (Previous Year Nil) Units Canara Robeco Mutual Fund-Canara Robeco Fixed Maturity Plan-Series 5-13 Months (Plan A) 20,000,000 (Previous Year 20,000,000) Units DSP BlackRock Mutual FundDSP BlackRock FMP-13M-Series 3 25,000,000 (Previous Year 25,000,000) Units
200.0 250.0
200.0 —
250.0 500.0
— —
250.0 250.0 250.0 200.0 250.0
— — — 200.0 250.0
Annual Report 2010-11
41
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million DSP BlackRock Mutual FundDSP BlackRock FMP-12M-Series 9 25,000,000 (Previous Year Nil) Units DSP BlackRock Mutual FundDSP BlackRock FMP-12M-Series 10 25,000,000 (Previous Year Nil) Units DSP BlackRock Mutual FundDSP BlackRock FMP-12M-Series 11 25,000,000 (Previous Year Nil) Units DSP BlackRock Mutual FundDSP BlackRock FMP-12M-Series 15 25,000,000 (Previous Year Nil) Units Deutsche Mutual Fund-DWS Fixed Term Fund-Series 67 35,266,428 (Previous Year 35,266,428) Units Deutsche Mutual Fund-DWS Fixed Term Fund-Series 71 7,500,000 (Previous Year Nil) Units Deutsche Mutual Fund-DWS Fixed Term Fund-Series 73 15,000,000 (Previous Year Nil) Units Fidelity Mutual FundFidelity Fixed Maturity Plan Series IV - Plan E (370 days) 25,000,000 (Previous Year Nil) Units HDFC Mutual Fund- HDFC FMP 14M March 2010 25,000,000 (Previous Year 25,000,000) Units HDFC Mutual FundHDFC Floating Rate Income Fund-Long Term Plan 63,270,759 (Previous Year 63,270,759) Units HDFC Mutual Fund- HDFC FMP 370D February 2011(1) 25,000,000 (Previous Year Nil) Units HSBC Mutual Fund- HSBC Fixed Term Series 79 25,000,000 (Previous Year Nil) Units ICICI Prudential Mutual FundICICI Prudential FMP Series 53 - 1 Year Plan B 25,000,000 (Previous Year Nil) Units ICICI Prudential Mutual FundICICI Prudential FMP Series 53 - 1 Year Plan C 25,000,000 (Previous Year Nil) Units ICICI Prudential Mutual FundICICI Prudential FMP Series 53 - 1 Year Plan E 20,000,000 (Previous Year Nil) Units ICICI Prudential Mutual FundICICI Prudential FMP Series 55 - 1 Year Plan A 25,000,000 (Previous Year Nil) Units ICICI Prudential Mutual FundICICI Prudential FMP Series 55 - 1 Year Plan F 25,000,000 (Previous Year Nil) Units ICICI Prudential Mutual FundICICI Prudential FMP Series 56- 1 Year Plan D 25,000,000 (Previous Year Nil) Units in Million 250.0 250.0 250.0 250.0 352.7 75.0 150.0 250.0 250.0 1,000.1 250.0 250.0 250.1 250.0 200.0 250.0 250.0 250.0
As at 31st March, 2010 in Million in Million — — — — 352.7 — — — 250.0 1,000.1 — — — — — — — —
42
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million IDBI Mutual Fund-IDBI FMP 367 Days Series I (February 2011) - A 15,000,000 (Previous Year Nil) Units IDBI Mutual Fund-IDBI FMP 367 Days Series I (March 2011) - C 15,000,000 (Previous Year Nil) Units IDBI Mutual Fund-IDBI FMP 367 Days Series I (March 2011) - D 20,000,000 (Previous Year Nil) Units IDFC Mutual FundIDFC Fixed Maturity Plan-14 Months Series 1 25,000,000 (Previous Year 25,000,000) Units IDFC Mutual FundIDFC Fixed Maturity Plan-Yearly Series 42 20,000,000 (Previous Year Nil) Units JM Financial Mutual FundJM Fixed Maturity Fund - Series XIX - A 20,000,000 (Previous Year Nil) Units JM Financial Mutual FundJM Fixed Maturity Fund - Series XIX - C 10,000,000 (Previous Year Nil) Units JP Morgan Mutual FundJPMorgan India Fixed Maturity Plan 400D Series 1 25,000,000 (Previous Year Nil) Units JP Morgan Mutual FundJPMorgan India Fixed Maturity Plan 367D Series 1 25,000,000 (Previous Year Nil) Units Kotak Mutual Fund-Kotak FMP 13M Series 6 30,000,000 (Previous Year 30,000,000) Units Kotak Mutual Fund-Kotak FMP 370 Days Series 2 25,000,000 (Previous Year 25,000,000) Units Kotak Mutual Fund-Kotak FMP 370 Days Series 3 25,000,000 (Previous Year 25,000,000) Units Kotak Mutual Fund-Kotak FMP Series 28 25,000,000 (Previous Year Nil) Units Kotak Mutual Fund-Kotak FMP Series 29 25,000,000 (Previous Year Nil) Units Kotak Mutual Fund-Kotak FMP Series 43 25,000,000 (Previous Year Nil) Units L&T Mutual Fund- L&T Fixed Maturity Plan Series 12-Plan-15M-Mar10-I 20,213,915 (Previous Year 20,213,915) Units Principal Mutual Fund Principal PNB FMP - 367 Days - Series II 5,000,000 (Previous Year Nil) Units Religare Mutual Fund-Religare Fixed Maturity PlanSeries-III Plan D (370 Days) 15,000,000 (Previous Year Nil) Units in Million 150.0 150.0 200.0 250.0 200.0 200.0 100.0 250.0 250.0 300.0 250.0 250.0 250.0 250.0 250.0 202.1 50.0 150.0
As at 31st March, 2010 in Million in Million — — — 250.0 — — — — — 300.0 250.0 250.0 — — — 202.1 — —
Annual Report 2010-11
43
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million Religare Mutual Fund-Religare Fixed Maturity Plan Series IV - Plan E (370 Days) 25,000,000 (Previous Year Nil) Units Religare Mutual Fund-Religare Fixed Maturity Plan Series V - Plan A (368 Days) 25,000,000 (Previous Year Nil) Units Religare Mutual FundReligare FMP Series VI - Plan B (370 days) 20,000,000 (Previous Year Nil) Units Religare Mutual Fund-Religare Fixed Maturity PlanSeries VI - Plan E (367 days) 15,000,000 (Previous Year Nil) Units Reliance Mutual FundReliance FHF 9 - Series 6 - IP - Growth Nil (Previous Year 20,000,000) Units Reliance Mutual Fund Reliance Fixed Horizon Fund XVI Series 5 50,000,000 (Previous Year Nil) Units Reliance Mutual Fund Reliance Fixed Horizon Fund-XVII Series 1 25,000,000 (Previous Year Nil) Units Reliance Mutual Fund Reliance Fixed Horizon Fund-XIX Series 1 25,000,000 (Previous Year Nil) Units Reliance Mutual Fund Reliance Fixed Horizon Fund-XIX Series 11 25,000,000 (Previous Year Nil) Units SBI Mutual Fund-SDFS 370 Days - 8 50,000,000 (Previous Year Nil) Units SBI Mutual Fund-SDFS – 370 Days - 10 25,000,000 (Previous Year Nil) Units Sundaram Mutual FundSundram Fixed Term Plan-AQ 367 Days 25,000,000 (Previous Year Nil) Units f ) Others Unquoted Pass through Certificates Novo VIII Trust-Archie-Itsl-SR-A PTC 15JN10 500 (Previous Year 500) Units of 1,000,000 each fully paid Deposits Housing & Urban Development Corporation Ltd. Housing Development Finance Corporation Ltd. Total (I) in Million 250.0
As at 31st March, 2010 in Million in Million —
250.0
—
200.0
—
150.0
—
—
215.4
500.0
—
250.0
—
250.0
—
250.0
—
500.0 250.0 250.0
— — —
503.3
500.0
245.0 2,000.0 35,364.2
240.0 1,000.0 24,144.2
44
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million (II) CURRENT INVESTMENTS (At lower of cost and fair value) A) Certificate of Deposits (Units Face value 100,000 each) Quoted Axis Bank - CD 26AP10 Nil (Previous Year 2500) Units; Market Value Nil (Previous Year 248.8 Million) Corporation Bank - CD 22AP10 Nil (Previous Year 2,500) Units; Market Value Nil (Previous Year 248.9 Million) ICICI Bank - CD 20AP10 Nil (Previous Year 5,000) Units; Market Value Nil (Previous Year 497.9 Million) Punjab National Bank - CD 13AP10 Nil (Previous Year 2,500) Units; Market Value Nil (Previous Year 249.2 Million) Punjab & Sind Bank - CD 26AP10 Nil (Previous Year 2,500) Units; Market Value Nil (Previous Year 248.8 Million) B) In Mutual Fund Unquoted a) In Mutual Fund (Units of Face Value of 10 Each) BNP Mutual Fund - BNP Paribas Overnight-Inst Growth 13,281,359 (Previous Year Nil) Units Baroda Pioneer Mutual Fund Baroda Pioneer Advantage Fund-Inst Growth Nil (Previous Year 96,436,417) Units Birla Sun Life Mutual FundBSL Floating Rate Fund-Long Term-Instl-Growth Nil (Previous Year 39,039,425) Units Birla Sun Life Mutual Fund BSL Interval Income Fund-Instl-Quarterly Series 2-Growth Nil (Previous Year 43,331,340) Units Birla Sun Life Mutual FundBirla Sun Life Cash Manager-Institutional Plan-Growth Nil (Previous Year 129,963,805) Units Deutsche Mutual FundDWS Treasury Investment-Institutional Plan-Growth Nil (Previous Year 49,052,228) Units Deutsche Mutual FundDWS Cash Opportunities Fund Instl Plan-Growth Nil (Previous Year 87,423,512) Units DSP BlackRock Mutual FundDSP BlackRock Short Term Fund-Growth Nil (Previous Year 22,534,265) Units in Million
As at 31st March, 2010 in Million in Million
—
248.8
—
248.9
—
497.9
—
249.2
—
248.8
200.0 —
— 1,000.2
—
420.8
—
502.9
—
2,000.0
—
503.5
—
1,031.0
—
355.0
Annual Report 2010-11
45
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million Fidelity International Fidelity Ultra Short Term Debt Fund Super Instl-Growth Nil (Previous Year 20,982,694) Units Fortis Mutual Fund - Fortis Money Plus Instl-Growth Nil (Previous Year 72,003,792) Units IDFC Mutual Fund-IDFC Money Manager Fund-Investment Plan-Inst Plan B-Growth Nil (Previous Year 70,683,867) Units ICICI Prudential Mutual FundICICI Prudential Banking & PSU Debt Fund-Growth Nil (Previous Year 74,845,356) Units L&T Mutual Fund-C228 L&T Select Income FundFlexi Debt Institutional-Growth Nil (Previous Year 24,407,095) Units JM Mutual FundJM Money Manager Fund Regular Plan-Growth(168) Nil (Previous Year 59,649,545) Units JPMorgan Mutual FundJPMorgan India Short Term Income Fund-Growth Nil (Previous Year 30,000,000) Units Kotak Mutual FundKotak Quarterly Interval Plan Series 7-Growth Nil (Previous Year 45,620,854) Units Principal Mutual Fund Principal Money Manager Fund-Institutional Growth Plan Nil (Previous Year 47,630,388) Units Religare Mutual Fund-Religare Credit Opportunities FundInstitutional Growth Nil (Previous Year 96,891,263) Units UTI Mutual Fund-UTI FTIF Series II -Quarterly Interval Plan V-Insti - Growth Nil (Previous Year 24,998,000) Units b) In Mutual Fund (Units of Face Value of 100 Each) ICICI Prudential Mutual FundICICI Prudential Flexible Income Plan Premium-Growth Nil (Previous Year 5,840,702) Units ICICI Prudential Mutual FundICICI Prudential Liquid - Super IP - Growth 1,034,621 (Previous Year Nil) Units c) In Mutual Fund (Units of Face Value of 1000 Each) Taurus Mutual FundTaurus Liquid Fund-Super Inst Growth 47,397 (Previous Year Nil) Units in Million —
As at 31st March, 2010 in Million in Million 250.0
— —
1,000.1 1,013.0
—
752.0
—
250.0
—
750.1
—
300.0
—
500.0
—
500.0
—
1,000.2
—
250.0
—
1,000.1
150.0
—
50.0
—
46
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million Bharti Axa Mutual Fund Bharti AXA Treasury Advantage Fund-Instl Plan-Growth Nil (Previous Year 224,558) Units UTI Mutual Fund-UTI Liquid Cash Plan Inst Growth 155,331 (Previous Year Nil) Units Reliance Mutual FundReliance Money Manager Fund-Inst Option-Growth Nil (Previous Year 597,884) Units Shinsei Mutual FundShinsei Treasury Advantage Fund Growth Nil (Previous Year 489,039) Units Total ( II ) Total ( I+II ) in Million —
As at 31st March, 2010 in Million in Million 250.0
250.0 —
— 750.1
—
500.1
650.0 36,014.2
16,372.7 40,516.9
As at 31st March, 2011 Book Value AGGREGATE VALUE OF INVESTMENTS Quoted Unquoted *Partners Sun Pharmaceutical Industries Limited Solapur Organics Private Limited (1,081) (Previous Year (1,081)) Dilip S. Shanghvi (381) (Previous Year 1,026.4 34,987.8 Share 80% 10% 10% 97.5% 2.5% 97.5% 2.0% 0.5% Market Value 2,669.7
As at 31st March, 2010 Book Value 3,207.2 37,309.7 Market Value 5,208.9
Capital 15.9 0.0 0.0 3,888.6 133.5 3,478.2 311.1 30.5
Capital 15.9 0.0 0.0 4,236.8 121.7 2,992.2 94.7 23.2
(381))
**Partners Sun Pharmaceutical Industries Limited Sun Pharmaceutical Industries Key Employees’ Benefit Trust ***Partners Sun Pharmaceutical Industries Limited Sun Pharmaceutical Industries Key Employees’ Benefit Trust Sun Pharma Advanced Research Company Limited Key Employees’ Benefit Trust ****Partners Sun Pharmaceutical Industries Limited 67 (Previous Year Nil) Sun Pharmaceutical Industries Key Employees’ Benefit Trust (67) (Previous Year Nil)
98.0% 2.0%
0.0 (0.0)
— —
Annual Report 2010-11
47
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 7 : INVENTORIES
Consumables Stores Stock in Trade Raw Materials Packing Materials Finished Goods Work-in-Progress 155.5 2,876.0 539.9 968.1 1,643.1 2,553.3 352.2 774.9 1,856.2 164.8
6,027.1 6,182.6
5,536.6 5,701.4
SCHEDULE 8 : SUNDRY DEBTORS
(Unsecured-Considered Good, unless stated otherwise) Over Six Months Considered Good Considered Doubtful Other Debts Less: Provision for Doubtful Debts
851.5 76.2
927.7 4,574.7 5,502.4 76.2 5,426.2
799.8 77.9
877.7 4,733.1 5,610.8 77.9 5,532.9
SCHEDULE 9 : CASH AND BANK BALANCES
Cash / Cheques on hand Balances with Banks Scheduled Banks Current Accounts Deposit Accounts {Pledged 33.71 Million (Previous Year 7.1 Million)} Other Banks (refer note B.15 of Schedule 19) Current Accounts Deposit Accounts 3.6 86.9
220.8 12,276.8
12,497.6
163.7 273.1
436.8
7.8 —
7.8 12,509.0
10.5 354.5
365.0 888.7
SCHEDULE 10 : OTHER CURRENT ASSETS
Interest accrued on Investments 183.7 183.7 57.9 57.9
48
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 11 : LOANS AND ADVANCES
(Unsecured-Considered Good, unless stated otherwise) Advances and loans to subsidiaries (refer note B.16 of Schedule 19) Loans to Employees / Others {Secured Loans 751.2 Million (Previous Year 294.0 Million)} Considered Good Considered Doubtful Less: Provision for Doubtful Loans / Advances Advances Recoverable in Cash or in Kind or for Value to be received Advances to Suppliers Balances with Central Excise and Customs DEPB and Advance Licence Other Deposits Advance Payment of Income Tax {Net of Provision 1220.7 Million (Previous Year 1182.6 Million)} 61.2 1,404.3
3,055.2 9.5 3,064.7 9.5 3,055.2 359.3 333.0 770.9 209.5 90.9 645.8
414.0 9.5 423.5 9.5 414.0 251.1 228.0 667.9 137.2 78.7 480.1
5,525.8
3,661.3
SCHEDULE 12 : CURRENT LIABILITIES AND PROVISIONS
Current Liabilities Sundry Creditors Due to Micro and Small Enterprises (refer note B.11 of Schedule 19) Others Advance from Customers Security Deposits Investor Education and Protection Fund shall be credited by Unclaimed Dividend (not due) Other Liabilities Provisions Provision for Fringe Benefit Tax Net of Advance Tax 28.6 Million (Previous Year 48.8 Million) Proposed Dividend Corporate Dividend Tax Provision for employee benefits
33.0 2,865.6 95.5 21.9 30.4 92.9 0.6
14.8 2,220.5 284.8 19.3 23.5 70.1 0.6
3,139.3
2,633.0
3,624.5 588.0 117.9
4,331.0 7,470.3
2,847.9 473.0 103.3
3,424.8 6,057.8
Annual Report 2010-11
49
SCHEDULES TO THE FINANCIAL STATEMENTS
Year ended 31st March, 2011 in Million in Million
Year ended 31st March, 2010 in Million in Million
SCHEDULE 13 : OTHER OPERATING INCOME
Share of Income from Partnership Firms 11,715.8 11,715.8 6,776.6 6,776.6
SCHEDULE 14 : OTHER INCOME
Lease Rental and Hire Charges-TDS 0.2 Million (Previous Year 0.2 Million) Interest Income (net) (refer note B.5 of Schedule 19) TDS 97.8 Million (Previous Year 121.2 Million) Profit on Sale of Investments (net) (refer note B.14 of Schedule 19) Profit on Sale of Fixed Assets (net) Insurance Claims Sundry Balance Written Back (net) Dividend Income - Long Term Investment ( 2,820 ) Miscellaneous Income-TDS 0.7 Million (Previous Year 0.9 Million) 3.5 1,258.2 393.1 — 15.1 — 0.0 271.8 1,941.7 11.0 1,047.7 — 6.5 4.6 15.7 0.1 143.7 1,229.3
SCHEDULE 15 : COST OF MATERIALS / GOODS
Inventory of Raw and Packing material at the beginning of the year Purchases during the year - Raw and Packing Material - Finished Goods Inventory of Raw and Packing material at the end of the year Inventory of Finished Goods and Work-in-Progress at the beginning of the year Inventory of Finished Goods and Work-in-Progress at the end of the year (Increase) / Decrease of Finished Goods and Work-in-Progress 2,905.5 7,693.0 1,766.8 (3,415.9) 2,631.1 (2,611.2) 19.9 8,969.3 2,411.9 7,585.2 1,370.4 (2,905.5) 2,322.0 (2,631.1) (309.1) 8,152.9
8,949.4
8,462.0
SCHEDULE 16 : PERSONNEL COST
Salaries, Wages and Bonus Contribution to Provident and Other Funds Staff Welfare Expenses 1,761.7 118.8 260.1 2,140.6 1,464.5 137.2 145.4 1,747.1
50
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
Year ended 31st March, 2011 in Million in Million
Year ended 31st March, 2010 in Million in Million
SCHEDULE 17 : OPERATING AND OTHER EXPENSES
Stores and Spares Consumed Conversion and Other Manufacturing Charges Power and Fuel Rent Rates and Taxes Insurance Selling and Distribution Commission and Discount Repairs Building Plant and Machinery Others Printing and Stationery Travelling and Conveyance Overseas Travel and Export Promotion Communication Provision for Doubtful Debts / Advances Provision for Doubtful Debts Sundry Balances/Bad Debts written off (net) Less : Adjusted out of Provision of earlier years Professional and Consultancy Donations Loss on Sale of Investment (net) (refer note B.14 of Schedule 19) Loss on Sale of Fixed Assets (net) Excise duty on stock ( * ) Miscellaneous expenses 339.1 399.6 394.0 10.6 12.8 32.7 1,966.7 266.8 40.8 228.5 70.8 31.1 204.2 66.3 322.6 324.8 473.8 9.4 17.2 28.3 1,222.9 363.2
340.1 28.9 160.6 835.4 40.6
301.6 26.4 105.6 656.9 35.6
12.8 2.3 14.4
0.7 265.2 2.2 — 3.9 (2.7) 243.2 5,340.4
19.3 5.1 5.1
19.3 177.0 0.1 334.8 — 10.4 290.5 4,720.4
( * ) represents the difference between excise duty on opening and closing stock of finished goods.
Annual Report 2010-11
51
SCHEDULES TO THE FINANCIAL STATEMENTS
Year ended 31st March, 2011 in Million in Million
Year ended 31st March, 2010 in Million in Million
SCHEDULE 18 : RESEARCH AND DEVELOPMENT EXPENDITURE
Salaries, Wages and Bonus Contribution to Provident and Other Funds Staff Welfare Expenses Material, Stores and Spares Consumed Power and Fuel Rates and Taxes Insurance Repairs Building Plant and Machinery Others Printing and Stationery Travelling and Conveyance Communication Professional and Consultancy Loss on Sale of Fixed Assets (net) Miscellaneous Expenses Less : Interest Income (refer note B.5 of Schedule 19) Receipts from Research activities Miscellaneous Income Bad debt Recovered / Sundry balances written Back 391.5 19.5 59.3 644.3 5.1 3.5 1.9 6.1 33.1 22.5 5.5 43.8 22.0 329.6 14.8 30.0 543.7 7.3 4.0 1.3
61.7 12.4 14.6 13.9 100.5 0.6 244.0 1,572.8
71.3 11.8 9.8 16.0 154.8 0.2 246.2 1,440.8
1.1 188.6 27.2 —
216.9 1,355.9
0.8 157.7 0.5 4.1
163.1 1,277.7
52
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
SCHEDULE 19 : SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO FINANCIAL STATEMENTS A SIGNIFICANT ACCOUNTING POLICIES
I Basis of Accounting These financial statements are prepared under historical cost convention on an accrual basis in accordance with the Generally Accepted Accounting Principles in India and the Accounting Standards (AS) as notified under Companies (Accounting Standards) Rules, 2006. Use of estimates The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognised in the period in which the results are known / materialised. Fixed Assets and Depreciation / Amortisation Fixed Assets including intangible assets are stated at historical cost (net of cenvat credit) less accumulated depreciation/ amortisation thereon and impairment losses, if any. Depreciation on tangible assets is provided on Straight Line Method at the rates specified in Schedule XIV to The Companies Act, 1956. Assets costing 5,000/- or less are depreciated at hundred percent rate on prorata basis in the year of purchase. Intangible assets consisting of trademarks, designs, technical knowhow, noncompete fees and other intangible assets are amortised on Straight Line Method from the date they are available for use, over the useful lives of the assets (10/20 years), as estimated by the Management considering the terms of agreement. Leasehold land is amortised over the period of lease. Leases Lease rental for assets taken on operating lease are charged to the Profit And Loss Account in accordance with Accounting Standard 19 on Leases. Revenue Recognition Sales of products are recognised when risk and rewards of ownership of the products are passed on to the customers, which is generally on despatch of goods. Export sales are recognised on the basis of Bill of lading / Airway bill. Sales includes delayed payment charges and are stated net of returns and Vat / Sales Tax, if any. Investments Investments are classified into Current and Long Term Investments. Current Investments are valued at lower of cost and fair value. Long Term Investments are stated at cost less provision, if any, for other than temporary diminution in their value. Inventories Inventories consisting of raw and packing materials, stores and spares, work in progress and finished goods are stated at lower of cost (Raw and Packing Material - Specific Identificaiton Method; Stores and Spares - FIFO basis; Work in Progress and Finished Goods - Weighted Average Method) and net realisable value.
II
III
IV
V
VI
VII
VIII Research and Development The research and development cost is accounted in accordance with Accounting Standard – 26 ‘Intangible Assets’. All related revenue expenditure incurred on original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding up to the time when it is possible to demonstrate probable future economic benefits, is recognised as research expenses and charged off to the profit and loss account, as incurred. All subsequent expenditure incurred for product development on the application of research findings or other knowledge upon demonstration of probability of future economic benefits, prior to the commencement of production, to the extent identifiable and possible to segregate are accumulated and carried forward as development expenditure under Capital Work in Progress, to be capitalised as an intangible asset on completion of the project. In case a project does not proceed as per expectations / plans, the same is abandoned and the amount classified as development expenditure under Capital Work in Progress is charged off to the profit and loss account. IX Foreign Currency Transactions Transactions denominated in foreign currencies are recorded at the exchange rate that approximates the actual rate prevailing at the date of the transaction. Monetary items denominated in foreign currency at the year end are translated at year end rates.
Annual Report 2010-11
53
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
In respect of monetary items, which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognised as exchange difference and the premium on such forward contracts is recognised over the life of the forward contract. The exchange differences arising on settlement / translation are recognised in the Profit and Loss Account. X Derivative Accounting: Forward Contracts in the nature of highly probable forcasted transactions / firm commitments entered into for hedging the risk of foreign currency exposure are accounted for on the principles of prudence as enunciated in Accounting Standard 1 (AS-1) “Disclosure of Accounting Policies”. Pursuant to this, losses, if any, on Mark to Market basis, are recognised in the Profit and Loss Account and gains are not recognised on prudent basis. Taxes on Income Provision for taxation comprises of Current Tax and Deferred Tax. Current Tax provision has been made on the basis of reliefs and deductions available under the Income Tax Act, 1961. Deferred tax resulting from “timing differences” between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the assets can be realised in future. However, where there is unabsorbed depreciation or carry forward losses under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each Balance sheet date. Employee Benefits (a) The Company’s contribution in respect of provident fund is charged to Profit and Loss Account each year. (b) With respect to gratuity liability, Company contributes to Life Insurance Corporation of India (LIC) under LIC’s Group Gratuity policy. Gratuity liability as determined on actuarial basis by the independent valuer is charged to Profit and Loss Account. (c) Liability for accumulated compensated absences of employees is ascertained for on actuarial valuation basis and provided for as per the Company rules.
XI
XII
XIII Borrowing Costs Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised. Other borrowing costs are recognised as an expense in the period in which they are incurred. XIV Provisions, Contingent Liabilities and Contingent Assets Provisions are recognised only when there is a present obligation as a result of past events and when a reliable estimate of the amount of the obligation can be made. 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 can not be made. Contingent Assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised. XV Government Grants / Subsidy Government grants, if any, are accounted when there is reasonable assurance that the enterprise will comply with the conditions attached to them and it is reasonably certain that the ultimate collection will be made. Capital Subsidy in nature of Government Grants related to specific fixed assets is accounted for where collection is reasonably certain and the same is shown as a deduction from the gross value of the asset concerned in arriving at its book value and accordingly the depreciation is provided on the reduced book value.
XVI Impairment of Assets The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the lower of recoverable amount and the carrying amount that would have been determined had no impairment loss being recognised.
54
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
B
1
NOTES TO FINANCIAL STATEMENTS
CONTINGENT LIABILITIES NOT PROVIDED FOR Guarantees Given by the bankers on behalf of the Company Corporate Guarantees Letters of Credit for Imports Liabilities Disputed - Appeals filed with respect to : Income Tax on account of Disallowances / Additions Sales Tax on account of Rebate / Classification Excise Duty on account of Valuation / Cenvat Credit ESIC Contribution on account of applicability Drug Price Equalisation Account [DPEA] on account of demand towards unintended benefit, including interest there on, enjoyed by the Company Demand by JDGFT import duty with respect to import alleged to be in excess of entitlement as per the Advanced Licence Scheme Other Claims against the Company not acknowledged as debts 160.1 46.0 166.7 290.2 25.6 318.4 0.2 14.0 11.5 15.3 1,032.2 106.4 51.5 505.5 446.6 11.4 314.0 0.2 14.0 11.1 6.7 986.9
2 3
Estimated amount of contracts remaining to be executed on capital account [net of advances]. REMUNERATION TO DIRECTORS Managerial Remuneration U/s 198 of the Companies Act, 1956 Salaries and Allowances Contribution to Provident and Other Funds Perquisites and Benefits Commission Total
55.1 4.6 1.9 4.0 65.6
32.3 3.2 0.3 3.7 39.5
The above remuneration excludes Gratuity since the same is ascertained on an aggregate basis for the Company as a whole by way of acturial valuation and separate values attributable to Directors is not available. Computation of net profit U/s 198 read with Section 309(5) of the Companies Act, 1956 and calculation of commission payable to directors Profit Before Taxation Add : Depreciation as per Accounts Loss on Sale of Investments (net) Managerial Remuneration Directors Sitting Fees Provision for Doubtful Debts / Advances Less: Depreciation as per Section 350 of the Companies Act 1956 Sundry Balances / Bad Debts Written Off Profit on Sale of Investments (net) Net Profit 14,540.2 642.3 — 65.6 0.2 12.8 642.3 14.4 393.1 1,049.8 14,211.3 694.7 334.8 39.5 0.2 19.3 694.7 5.1 — 699.8 9,880.3 9,491.6
720.9
1,088.5
Annual Report 2010-11
55
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
As at 31st March, 2011 in Million Remuneration payable to Wholetime Directors including Managing Director Maximum payable @ 10% of Net Profit as per the Companies Act,1956 Maximum payable as approved by the Shareholders Actual paid as approved by the Board Commission payable to Non Executive Directors Maximum payable @ 1% of Net Profit as per the Companies Act,1956 Maximum payable @ 0.25 % (previous year @ 0.25 %) of Net Profit as approved by the Shareholders Actual paid as approved by the Board in Million
As at 31st March, 2010 in Million in Million
1,421.1 103.0 61.6 142.1 35.5 4.0 2010-11 in Million
988.0 63.0 35.8 98.8 24.7 3.7 2009-10 in Million
4
RESEARCH AND DEVELOPMENT EXPENDITURE Revenue Capital 1,355.9 236.1 1,277.7 159.0
5
Net Interest income 1,259.3 Million (Previous Year 1,048.5 Million) comprises : Interest income Bank Deposits Loan Current Investment Long term Investment Others 657.6 84.7 83.1 427.6 12.2 1,265.2 Interest Expense Fixed Loans Others 2.5 3.4 5.9 797.0 56.2 1.4 188.6 9.7 1,052.9 1.1 3.3 4.4 Quantity Value
6
INFORMATION RELATING TO CONSUMPTION OF MATERIALS Raw Materials and Packing Materials Raw Materials- (in ‘000 KGs) Raw Materials-(In Kilo Litres) Packing/Other Materials Total
Quantity
Value
12,521.5 24,362.9 *
6,555.7 626.9 7,182.6
14,016.7 25,826.7 *
6,452.3 639.3 7,091.6
*Information can not be furnished as the items involved are numerous. None of the items individually account for more than 10% of total consumption.
56
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
2010-11 in Million Imported and Indigenous Raw Materials and Packing Materials Imported Indigenous Total Stores and Spares Imported Indigenous Total 7 INFORMATION RELATING TO LICENSED CAPACITY AND PRODUCTION Formulation (Tablets/Capsules/Parenterals/Ointments) (Nos in Million) Licensed Capacity Installed Capacity* Actual Production (including loan license) Bulk Drugs/Chemicals Licensed Capacity Installed Capacity* (In Kilo Litres) Actual Production (including loan license) (In 000 Kgs) (*as certified by the Management) 8 % 41.44 58.56 100.00 0.53 99.47 100.00 Value 2,976.5 4,206.1 7,182.6 1.8 337.3 339.1 2010-11
2009-10 in Million % 44.38 55.62 100.00 1.03 98.97 100.00 Value 3,147.3 3,944.3 7,091.6 3.3 319.3 322.6 2009-10
Not Applicable 7,157.4 2,085.7 Not Applicable 1,181.7 2,252.5
Not Applicable 7,216.3 2,544.4 Not Applicable 1,093.6 2,227.2
INFORMATION RELATING TO TURNOVER, PURCHASE OF GOODS AND STOCKS Turnover Quantity Value Formulations (Qty Million) 2010-11 2009-10 2,473.0 2,788.1 15,918.0 13,884.2 361.2 268.1 1,751.7 1,329.0 206.0 181.6 388.7 362.4 180.0 206.0 Purchase of Goods Quantity Value Opening Stock Quantity Value
in Million Closing Stock Quantity Value
317.0 388.7
Bulk Drugs/Chemicals (Qty in ‘000 Kgs) 2010-11 2009-10 Others 2010-11 2009-10 Total 2010-11 2009-10 19,857.8 18,528.8 1,766.8 1,370.4 774.9 964.9 968.1 774.9 30.1 41.7 6.6 38.7 — — — — 2,252.7 2,294.1 3,909.7 4,602.9 13.1 10.2 8.5 2.7 134.0 190.7 386.2 602.5 146.9 134.0 651.1 386.2
Annual Report 2010-11
57
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 in Million 9 INCOME/EXPENDITURE IN FOREIGN CURRENCY Income Exports (FOB basis) Interest Others Expenditure Raw Materials (CIF basis) Packing Materials (CIF basis) Capital Goods (CIF basis) Spares and Components (CIF basis) Professional Charges Overseas Travel Others 10 The net exchange gain of account. 307.3 Million (Previous Year gain of 8,963.6 0.9 41.1 2,722.9 337.3 903.5 76.1 206.2 82.1 828.8 8,389.5 9.8 109.0 3,003.9 242.6 242.0 26.4 226.2 80.4 807.5 Year ended 31st March, 2010 in Million
36.4 Million) is included under various heads in the Profit and Loss
11 Disclosures under the Micro, Small and Medium Enterprises Development Act, 2006: (a) An amount of 33.0 Million (Previous Year 14.8 Million) and NIL (Previous Year NIL) was due and outstanding to o 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. 12 Disclosure with respect to Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 : (i) Related Party Disclosure - as per Annexure ‘A’ 2010-11 13,838.0 1,035,581,955 1 13.4 2009-10 8,986.5 1,035,581,955 1 8.7
(ii) Accounting Standard (AS-20) on Earnings Per Share Profit After Tax - used as Numerator for calculating Earnings per share Weighted Average number of Shares used in computing basic & diluted earnings per share Nominal Value Per Share (in ) Basic & Diluted Earnings Per Share (in )
Consequent to the approval of the members of the Company and upon requisite regulatory compliance, during the year, one equity share of 5 each of the Company is sub-divided into five equity shares of 1 each fully paid-up. The Earnings Per Share of 1 each has been restated for all the corresponding periods in accordance with Accounting Standard (AS-20) on “Earnings Per Share” as notified under The Companies (Accounting Standards) Rules, 2006.
58
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
2010-11 in Million (iii) Accounting Standard (AS-17) on Segment Reporting (a) Primary Segment The Company has identified “Pharmaceuticals” as the only primary reportable business segment. 10,171.8 9,686.0 19,857.8
2009-10 in Million
(b) Secondary Segment (by Geographical Segment) India Outside India Total Sales
9,348.8 9,180.0 18,528.8
In view of the interwoven/intermix nature of business and manufacturing facility, other segmental information is not ascertainable. (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 108.1 Million (Previous year 90.8 Million) Year ended 31st March, 2011 in Million Contribution to Provident Fund Contribution to Employees State Insurance Scheme (ESIC) and Employees Deposit Linked Insurance (EDLI) Contribution to Labour Welfare Fund 102.5 5.5 0.1 Year ended 31st March, 2010 in Million 87.4 3.3 0.1
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 43.2 Million (Previous Year 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 ‘Employee Benefits’, commitments are actuarially determined using the ‘Projected Unit Credit’ method. Gains and losses on changes in actuarial assumptions are accounted for in the Profit and Loss account.
Annual Report 2010-11
59
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
in Million Year ended 31st March, 2011 Category of Plan Assets : The Company’s Plan Assets in respect of Gratuity are funded through the Group Scheme of the LIC of India. In respect of gratuity (funded): Reconciliation of liability recognised in the Balance sheet Present value of commitments (as per Actuarial Valuation) Fair value of plan assets Net asset in the Balance sheet Movement in net liability recognised in the Balance sheet Net liability / (assets) as at the beginning of the year Net expense recognised in the Profit and Loss account Contribution during the year Net liability / (assets) in the Balance sheet Expense recognised in the Profit and Loss account Current service cost Interest cost Expected return on plan assets Actuarial loss Expense charged to the Profit and Loss account Return on plan assets Expected return on plan assets Actuarial gain Actual return on plan assets Reconciliation of defined-benefit commitments Commitments as at the beginning of the year Current service cost Interest cost Paid benefits Actuarial loss Commitments as at the year end Reconciliation of plan assets Plan assets as at the beginning of the year Expected return on plan assets Contributions during the year Paid benefits Actuarial gain Plan assets as at the year end 248.3 274.2 25.9 (15.8) 29.0 (39.1) (25.9) 25.2 18.3 (20.7) 6.2 29.0 20.7 3.3 24.0 212.7 25.2 18.3 (17.4) 9.5 248.3 228.5 20.7 39.1 (17.4) 3.3 274.2 212.7 228.5 15.8 (44.8) 60.2 (31.2) (15.8) 18.6 12.1 (16.5) 46.0 60.2 16.5 3.3 19.8 142.4 18.6 12.1 (9.7) 49.3 212.7 187.2 16.5 31.2 (9.7) 3.3 228.5 31st March, 2010
The actuarial calculations used to estimate commitments and expenses in respect of gratuity and compensated absences are based on the following assumptions which if changed, would affect the commitment’s size, funding requirements and expense: Discount rate Expected return on plan assets Expected rate of salary increase Mortality 8.25% 8.25% 6.00% 8.00% 8.00% 6.00%
LIC (1994-96) Ultimate
The estimates of future salary increases, considered in the actuarial valuation, take into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.
60
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
in Million Year ended 31st March, 2011 31st March, 2010 31st March, 2009 31st March, 2008 31st March, 2007 Experience adjustment On plan liabilities On plan assets Present value of benefit obligation Fair value of plan assets Excess of (obligation over plan assets) / plan assets over obligation 17.5 3.3 248.3 274.2 25.9 56.5 3.3 212.7 228.5 15.8 5.2 3.9 142.4 187.2 44.8 126.9 2.4 106.4 104.0 (2.4) 35.5 Million. 3.1 1.2 75.0 83.5 —
The contribution expected to be made by the Company during financial year ending 31st March, 2012 is
(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 17. 13 Investment Purchased and Sold during the Year Mutual Fund Units (Units of Face Value of 10 Each, unless stated otherwise) 2010-11 Units Purchase Value In Nos. in Million AIG Mutual Fund (*) Axis Mutual Fund (*) Baroda Pioneer Mutual Fund Bharti AXA Mutual Fund (*) Birla Sun Life Mutual Fund Canara Robeco Mutual Fund Daiwa Mutual Fund (*) DBS Chola Mutual Fund Deutsche Asset Management Deutsche Asset Management(**) DSP Mutual Fund DSP Mutual Fund (*) Fidelity Mutual Fund Fortis Mutual Fund HDFC Mutual Fund HSBC Mutual Fund ICICI Prudential Mutual Fund ICICI Prudential Mutual Fund (**) IDBI Mutual Fund IDFC Mutual Fund JM Mutual Fund JP Morgan Asset Management 416,710 1,009,567 259,183,237 445,569 1,776,929,287 89,332,745 289,577 — 492,226,715 2,884,076 50,000,000 1,289,746 19,607,689 230,265,112 71,110,348 3,452,371 328,068,526 66,974,317 196,116,534 126,971,449 261,515,878 503,324,578 466.7 1,050.7 2,750.1 500.0 24,953.3 1,050.0 315.0 — 5,756.5 365.0 500.0 1,733.1 250.0 3,259.0 1,260.1 50.0 3,414.4 9,343.0 1,980.1 1,509.7 3,660.1 6,121.1 Sales Value in Million 2009-10 Units Purchase Value In Nos. in Million — 470.0 4,880.8 1,450.1 19,875.2 426.0 — 870.0 11,705.9 — 1,330.1 3,060.0 3,320.2 10,960.4 12,245.1 — 15,070.2 7,218.1 — 4,383.1 2,574.1 3,415.2 Sales Value in Million — 470.6 4,893.2 1,453.1 19,922.8 426.5 — 873.0 11,767.2 — 1,339.7 3,060.4 3,333.2 11,002.3 12,282.6 — 15,114.3 7,220.9 — 4,407.5 2,580.2 3,428.8
470.7 — 1,051.8 467,443 2,758.7 471,961,898 500.9 1,323,588 25,009.0 1,313,064,099 1,051.9 38,822,296 315.1 — — 74,088,548 5,775.3 1,017,540,933 365.1 — 508.1 85,372,150 1,738.5 2,422,780 251.3 278,879,207 3,268.8 912,190,062 1,261.9 661,627,364 50.0 — 3,432.4 1,183,651,098 9,345.5 53,162,327 1,986.3 — 1,519.4 373,697,093 3,692.7 186,522,165 6,134.8 292,533,033
Annual Report 2010-11
61
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
in Million 2010-11 Units Purchase Value In Nos. in Million Kotak Mutual Fund L&T India Mutual Fund Morgan Stanely Mutual Fund Pramerica Mutual Fund Pramerica Mutual Fund (*) Principal Mutual Fund Reliance Mutual Fund Reliance Mutual Fund (*) Religare Mutual Fund SBI Mutual Fund Shinsei Mutual Fund Shinsei Mutual Fund (*) Sundaram BNP Paribas Mutual Fund Taruas Mutual Fund (*) Tata Mutual fund Templeton Mutual Fund (*) UTI Mutual Fund (*) (*) Units of Face Value of 1,000 Each (**) Units of Face Value of 100 Each Certificate of Deposit (Units of Face Value of 100,000 Each) IDBI Bank State Bank of Indore Axis Bank Oriental Bank of Commerce Bank of India Canara Bank Bank of Maharashtra Corporation Bank Allahabad Bank United Bank of India Punjab National Bank Central Bank of India Federal Bank ING Vysha Bank Debentures ETHL Communications Holdings Ltd. Units of Face Value of 1,000,000 Each Commercial Paper India Infoline Ltd. Units of Face Value of 425,171,798 60,132,981 9,438,860 66,398,567 3,006,177 63,827,588 276,801,181 198,472 141,430,843 149,868,573 — 2,559,701 74,059,634 771,222 — 2,166,895 558,745 6,860.2 700.0 100.0 665.0 3,060.0 810.0 4,205.0 250.0 1,730.7 2,320.0 — 2,690.6 1,390.0 810.0 — 3,085.0 593.4 Sales Value in Million 6,877.9 705.2 100.1 667.8 3,064.2 813.4 4,207.8 251.3 1,732.9 2,323.3 — 2,701.5 1,392.3 810.4 — 3,086.9 594.4 2009-10 Units Purchase Value In Nos. in Million 84,497,852 — 25,000,000 — — 519,967,061 544,884,579 4,539,867 614,014,034 — 112,570,172 2,794,682 31,608,298 — 17,775,366 1,869,343 3,415,543 1,470.0 — 250.0 — — 7,427.4 7,435.0 5,580.8 7,150.3 — 1,135.0 2,840.7 470.0 — 250.0 2,493.0 3,463.2 Sales Value in Million 1,472.1 — 250.1 — — 7,430.9 7,437.0 5,630.2 7,188.4 — 1,136.4 2,853.7 470.6 — 250.6 2,499.9 3,465.9
2,500 10,000 5,000 9,500 2,500 2,500 5,000 10,000 20,000 5,000 7,500 6,500 2,500 2,500 250
249.1 995.4 497.1 941.7 248.9 248.8 497.1 996.7 1,987.7 496.5 745.0 642.4 245.9 245.8 232.2
250.0 1,000.0 500.0 950.0 250.0 250.0 500.0 1,000.0 2,000.0 500.0 750.0 650.0 250.0 250.0 245.6
— — — — — — — — — — — — —
— — — — — — — — — — — — —
— — — — — — — — — — — — —
—
—
—
2,000 500,000 Each
995.5
998.4
—
—
—
62
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
2010-11 in Million 14 Profit / (Loss) on Sale of Investments (net) Profit / (Loss) on Sale of Current Investments (net) Profit / (Loss) on Sale of Long Term Investments (net) 15 Balances with Other Banks held in: Name of the Bank/Institution UBS AG Wealth Management-London 8,308 (Previous Year 8,631) Maximum Balance 8,631 (Previous Year 9,490) Credit Agricole (Suisse) S.A.Private Bank Vietnam Export Import Bank, Hochiminch Branch, Vietnam Standard Chartered, Shanghai Branch, China Moscow Bank, Moscow Branch, Moscow Belvnesheconom Bank, Minsk Branch, Belarus Tsesna Bank,Almaty Branch, Kazakhstan Ukreixm Bank, Kyiv Branch, Ukraine Total 16 Loans / Advances due from Subsidiaries Loans Green Eco Development Centre Ltd. Sun Pharma De Venezuela, C.A. Advances :Share Application Money to Sun Pharma Global Inc. BVI Sun Pharma De Mexico, S.A. DE C.V. Total 371.6 21.5 393.1 Balance As at Maximum Balance 31st March, 2011 2010-11 0.0 0.0
2009-10 in Million
(440.7) 105.9 (334.8) Balance As at Maximum Balance 31st March, 2010 2009-10 0.0 0.0
1.4 0.4 2.7 1.2 0.9 0.6 0.6 7.8
355.3 12.1 11.3 18.2 6.6 6.1 3.9
354.5 2.7 4.4 2.4 0.1 0.3 0.6 365.0
430.5 18.3 17.3 10.2 6.2 5.8 3.5
0.1 1.2 — 59.9 61.2
0.1 1.2 1,344.0 60.3
— — 1,344.0 60.3 1,404.3
— — 2,173.4 68.4
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.
Annual Report 2010-11
63
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 in Million 21 Remuneration to Auditors (excluding service tax) : Audit Fees In any other manner, for certification etc. Out of pocket expenses Total 6.6 0.2 0.1 6.9 6.6 0.2 0.1 6.9 Year ended 31st March, 2010 in Million
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. A) The following are the outstanding Forward Exchange Contracts entered into by the Company as on 31st March, 2011 Currency US Dollar Buy/Sell Sell Cross Currency Amount in Million As at 31st March, 2011 $310.0 Amount in Million As at 31st March, 2010 $175.0
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 : Currency Exports of Goods & Services US Dollar Euro XOF British Pound Swiss Franc US Dollar US Dollar As at 31st March, 2011 Amount in Million $20.6 € 3.5 XOF 6.1 £0.6 CHF 0.0 $1.3 — 917.5 221.3 0.6 40.9 0.7 59.9 — As at 31st March, 2010 Amount in Million $14.6 € 4.0 XOF 5.7 £0.7 — $1.3 $30.0 655.2 240.5 0.5 48.9 — 60.3 1,344.0
CHF 14,500 Loans Receivables Share Application Money b) Amounts payable in foreign currency on account of the following :
Import of Goods & Services £ 360 (Previous Year £ 3,821) CHF 8,260 AUD 5,311 CAD 3,743 25,693
Commission Payable
US Dollar Euro British Pound Swiss Franc Australian Dollar Canadian Dollar Chinese Yuan Japanese Yen US Dollar Euro
$5.7 € 0.1 £0.0 CHF 0.0 AUD 0.0 CAD 0.0 CNY 0.6 JPY 13.1 $4.2 € 1.3
254.3 9.2 0.0 0.4 0.2 0.2 3.8 7.1 188.0 80.5
$6.3 € 0.3 £0.0 — — — — JPY 9.4 $3.1 € 1.0
280.8 16.6 0.3 — — — — 4.4 139.6 58.4
23 Previous years’ figures are restated / regrouped / rearranged wherever necessary in order to conform to current years’ groupings and classifications.
64
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
Annexure ‘A’ to Notes on Account
ACCOUNTING STANDARD (AS-18) “ RELATED PARTY DISCLOSURE “ 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 “Sun Pharmaceutical Industries” 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.
Annual Report 2010-11
65
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
Annexure ‘A’ to Notes on Account
ACCOUNTING STANDARD (AS-18) “ RELATED PARTY DISCLOSURE “ Names of related parties and description of relationship 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. Mr. Dilip S. Shanghvi Mr. Sudhir V. Valia Mr. Sailesh T. Desai Mr. S. Kalyanasundaram Mr. Aalok Shanghvi Ms. Khyati Valia Chairman & Managing Director Wholetime Director Wholetime Director Chief Executive Officer and Wholetime Director Son of Chairman and Managing Director Daughter of Wholetime Director
3.
Key Management Personnel
4. 5.
Relatives of Key Management Personnel
Enterprise under significant Influence of Key Sun Petrochemicals Pvt. Ltd. Management Personnel or their relatives Navjivan Rasayan (Gujarat) Pvt. Ltd. Sun Pharma Advanced Research Company Ltd.
66
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
Annexure ‘A’ to Notes on Account
ACCOUNTING STANDARD (AS-18) “ RELATED PARTY DISCLOSURE “ Particulars Subsidiaries Controlled Entity Key Management Personnel Relatives of Key Management Personnel Enterprise under significant Influence of Key Management Personnel or their relatives
in Million
Total
31/03/11 Purchases of goods / DEPB Caraco Pharmaceutical Laboratories Ltd. Alkaloida Chemical Company Zrt Sun Pharmaceutical Industries Others Purchase of Fixed Assets Sun Pharmaceutical Industries Others Sale of goods / DEPB Caraco Pharmaceutical Laboratories Ltd. Sun Pharma Global (FZE) Sun Pharma Sikkim Others Sale of Fixed Assets Sun Pharma Sikkim Sun Petrochemicals Pvt. Ltd. Sun Pharma Advanced Research Company Ltd. Others Receiving of Service / Reimbursement of Expenses Services Sun Pharmaceutical Industries Sun Pharma Advanced Research Company Ltd. Reimbursement of Expenses Caraco Pharmaceutical Laboratories Ltd. Others Rendering of Service / Reimbursement of Expenses Services Caraco Pharmaceutical Laboratories Ltd. Sun Pharmaceutical Industries Inc. Others Reimbursement of Expenses Sun Pharma Global (FZE) Sun Pharma Advanced Research Company Ltd. Others Finance (including loans and equity contributions) Capital Contribution / (Withdrawal) Sun Pharma Global Inc. Sun Pharma Sikkim Sun Pharmaceutical Industries Others Sales of Investments Sun Pharma Global Inc. Loans given / Share Application Money Sun Pharma De Venezuela, CA Sun Pharma Global Inc. Others Loans Received back / Share Application Money Refund Sun Pharma Global Inc Others 70.1 22.8 47.3 — — 0.1 — 0.1 4,658.7 3,415.4 890.8 — 352.5 — — — — — — — — 89.8 74.8 15.0 16.3 16.3 — — 51.9 51.7 — 0.2 1.5 — — — 1.5 — — 1.4 1.3 — 0.1 1,344.0 1,344.0 —
31/03/10 31/03/11 103.4 78.3 25.0 — 0.1 — — — 3,651.0 2,134.1 871.6 — 645.3 — — — — — — — — 48.8 37.1 11.7 81.3 71.9 9.4 — 48.3 43.7 — 4.6 241.4 — — 229.5 11.9 4.6 4.6 — 821.6 — — 624.4 197.2 1.2 1.1 — — 0.1 20.7 20.7 — — — — — — — — 0.2 — — 0.2
31/03/10 31/03/11 31/03/10 31/03/11 31/03/10 31/03/11 414.3 — — 413.3 1.0 6.4 6.4 — 943.0 — — 630.3 312.7 0.3 0.1 — — 0.2 27.6 27.6 — — — — 2.3 — — 2.3 0.2 — — 0.2 (9,482.7) — (2,240.3) (7,253.9) 11.5 — — 6.0 — — 6.0 6.0 — 6.0 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 0.9 — — — 0.9 0.2 — 0.2 13.7 — — — 13.7 0.2 — — 0.2 — 95.2 — 95.2 0.5 — 0.5 — — — — 24.8 — 24.8 — — — — — — — — — — — — — — —
31/03/10 31/03/11 1.1 — — — 1.1 — — — 17.8 — — — 17.8 19.1 — 19.1 — — 12.4 — 12.4 1.1 — 1.1 3.8 — — 3.8 25.9 — 25.9 — 312.4 22.8 47.3 229.5 12.8 4.9 4.6 0.3 5,494.0 3,415.4 890.8 624.4 563.4 1.4 1.1 — 0.2 0.1 115.9 20.7 95.2 90.3 74.8 15.5 16.3 16.3 — — 76.9 51.7 24.8 0.4
31/03/10 518.8 78.3 25.0 413.3 2.2 6.4 6.4 — 4,611.8 2,134.1 871.6 630.3 975.8 19.4 0.1 19.1 — 0.2 40.0 27.6 12.4 49.9 37.1 12.8 87.4 71.9 9.4 6.1 74.4 43.7 25.9 4.8 (7,168.6) 2,314.1 (2,240.3) (7,253.9) 11.5 243.4 243.4 1,767.9 — 1,761.9 6.0 323.4 317.4 6.0
2,314.1 (12,139.5) 2,314.1 — — (10,916.3) — (1,223.2) — 0.0 243.4 243.4 1,761.9 — 1,761.9 — 317.4 317.4 — — — — — — — — — —
— (12,138.0) — — — (10,916.3) — (1,223.2) — 1.5 — — — — — — — — — — — 1.4 1.3 — 0.1 1,344.0 1,344.0 —
Annual Report 2010-11
67
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
Annexure ‘A’ to Notes on Account
ACCOUNTING STANDARD (AS-18) “ RELATED PARTY DISCLOSURE “ Particulars Subsidiaries Controlled Entity Key Management Personnel Relatives of Key Management Personnel Enterprise under significant Influence of Key Management Personnel or their relatives
in Million
Total
31/03/11 Corporate Guarantees Given / (Released) on behalf of (2,508.8) Sun Pharma Global Inc (2,508.8) Sun Pharma Sikkim — Sun Pharma Advanced Research Company Ltd. — Sun Pharmaceuticals Italia S.R.L. — Interest Income Sun Pharmaceutical Industries Sun Pharma Sikkim Rent Income Sun Pharmaceutical Industries Sun Pharma Sikkim Sun Pharma Advanced Research Company Ltd. Others Director’s Remuneration Mr. Dilip S. Shanghvi Mr. Sudhir V. Valia Mr. Sailesh T. Desai Mr. S. Kalyanasundaram Apprenticeship Stipend / Remuneration Mr. Aalok Shanghvi Ms. Khyati Valia Remuneration (Partner’s) Received Sun Pharmaceutical Industries Share of profit from Partnership Firm Sun Pharma Sikkim Sun Pharmaceutical Industries Others (3292) (Previous Year (800)) Outstanding Corporate Guarantee to Bank Sun Pharma De Mexico S.A. DE C.V. {Actual Utilised Nil (Previous Year Nil)} Sun Pharmaceutical (Bangladesh) Ltd. {Actual Utilised 18.4 Million (Previous Year 23.2 Million)} Sun Pharma Sikkim {Actual Utilised 27.6 Million (Previous Year 16.2 Million)} Sun Pharma Global Inc {Actual Utilised Nil (Previous Year Nil)} Others {Actual Utilised Nil (Previous Year 12.1 Million)} Outstanding receivables / Payables (Net) Caraco Pharmaceutical Laboratories Ltd. OOO “Sun Pharmaceutical Industries” Ltd. Others — — — — — — — — — — — — — — — — — — — — — — 282.8 133.6 133.6
31/03/10 31/03/11
31/03/10 31/03/11 31/03/10 31/03/11 31/03/10 31/03/11
31/03/10 31/03/11
31/03/10
15.7 — — — 15.7 — — — — — — — — — — — — — — — — — —
— — — — — 2.2 1.1 1.1 3.0 1.6 1.4 — — — — — — — — — — 62.0 62.0
200.0 — 200.0 — — 2.2 1.1 1.1 1.9 1.6 0.3 — — — — — — — — — — 150.7 150.7 6,625.9 4,515.5 2,110.4 (0.0) 200.0 — —
— — — — — — — — — — — — — 61.6 16.9 16.9 7.8 20.0 — — — — — — — — — — — —
— — — — — — — — — — — — — 35.8 15.0 15.0 5.8 — — — — — — — — — — — — —
— — — — — — — — — — — — — — — — — — 1.4 0.9 0.5 — — — — — — — — —
— — — — — — — — — — — — — — — — — — 0.8 0.5 0.3 — — — — — — — — —
— — — — — — — — 1.4 — — 1.3 0.1 — — — — — — — — — — — — — — — — —
(125.0) (2,508.8) — (2,508.8) — — (125.0) — — — — — — 0.7 — — 0.6 0.1 — — — — — — — — — — 2.2 1.1 1.1 4.4 1.6 1.4 1.3 0.1 61.6 16.9 16.9 7.8 20.0 1.4 0.9 0.5 62.0 62.0
90.7 — 200.0 (125.0) 15.7 2.2 1.1 1.1 2.6 1.6 0.3 0.6 0.1 35.8 15.0 15.0 5.8 — 0.8 0.5 0.3 150.7 150.7 6,625.9 4,515.5 2,110.4 (0.0) 2,993.3 134.4 134.4
— 11,653.9 — 10,786.3 — 867.6 — (0.0) 2,793.3 134.4 134.4 200.0 — —
— 11,653.9 — 10,786.3 — 867.6 — (0.0) — — — 482.8 133.6 133.6
— — 15.6 1,899.3 1,127.2 438.9 333.2
— 2,508.8 15.7 2,759.7 780.2 277.5 1,702.0
200.0 — — (0.1) — — (0.1)
200.0 — — (0.1) — — (0.1)
— — — (11.7) — — (11.7)
— — — (7.6) — — (7.6)
— — — (0.2) — — (0.2)
— — — (0.2) — — (0.2)
— — — 20.9 — — 20.9
— — — 48.4 — — 48.4
200.0 — 15.6 1,908.2 1,127.2 438.9 342.1
200.0 2,508.8 15.7 2,800.2 780.2 277.5 1,742.4
68
Sun Pharmaceutical Industries Limited
Information required as per Part IV of Schedule VI to The Companies Act, 1956
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
I. Registration Details Registration No. Balance Sheet Date 04/19050 31st March, 2011 II. Capital Raised during the year ( in Million) Public Issue NIL Bonus Issue NIL III. Position of Mobilisation and Deployment of Funds ( in Million) Total Liabilities 68595.7 Sources of Funds Paid up Capital 1035.6 Secured Loans 505.3 Deferred Tax Liability (Net) 1285.1 Application of Funds Net Fixed Assets 10224.5 Net Current Assets 22357.0 State Code 04 Right Issue NIL Private Placement NIL Total Assets 68595.7 Reserves and Surplus 65769.7 Unsecured Loans Nil
Investments 36014.2 Miscellaneous Expenditure NIL Accumulated Losses NIL Total Expenditure 18448.5 Profit After Tax 13838.0 Dividend Rate 350.0%
IV. Performance of the Company ( in Million) Total Income 32988.7 Profit Before Tax 14540.2 Earning Per Share ( ) 13.4 V. Generic Names of Three Principal Products of the Company (as per monetary terms) Item Code No. (ITC Code) Product Description 30049079 Rivastigmine 29420090 Pentoxifyline 30043200 Progestrone
For and on behalf of the Board
S. KALYANASUNDARAM Wholetime Director & CEO
DILIP S. SHANGHVI Chairman & Managing Director SUDHIR V. VALIA Wholetime Director
SUNIL R. AJMERA Company Secretary Mumbai, 28th May, 2011
SAILESH T. DESAI Wholetime Director Mumbai, 28th May, 2011
Annual Report 2010 -11
69
Corporate Governance
CORPORATE GOVERNANCE
In compliance with Clause 49 of the Listing Agreement with Stock Exchanges, the Company submits the report on the matters mentioned in the said Clause and lists the practices followed by the Company.
1. Company s Philosophy on Code of Corporate Governance
Sun Pharmaceutical Industries Limited s philosophy on corporate governance envisages working towards high levels of transparency, accountability, consistent value systems, delegation across all facets of its operations leading to sharply focused and operationally e?cient growth. The Company tries to work by these principles in all its interactions with stakeholders, including shareholders, employees, customers, suppliers and statutory authorities. Sun Pharmaceutical Industries Limited is committed to learn and adopt the best practices of corporate governance.
2. Board of Directors
The present strength of the Board of Directors of your Company is eight Directors. Composition and category of Directors is as follows: Inter-se Relationship between Directors Brother-in-law of Mr. Sudhir V. Valia Brother-in-law of Mr. Dilip S. Shanghvi ? ? ? ? ? ?
Category Promoter Executive Director Non-Promoter Executive Directors
Name of the Directors Mr. Dilip S. Shanghvi (Chairman and Managing Director) Mr. Sudhir V. Valia (Whole- time Director) Mr. Sailesh T. Desai (Whole- time Director) Mr. S. Kalyanasundaram* (Chief Executive O?cer & Whole-time Director)
Non Executive Independent Directors
Mr. S. Mohanchand Dadha Mr. Hasmukh S. Shah Mr. Keki M. Mistry Mr. Ashwin S. Dani
Number of Board Meetings held during the year ended March 31, 2011 and the dates on which held: 5 Board meetings were held during the year, as against the minimum requirement of 4 meetings. The dates on which the meetings were held during the year ended March 31, 2011 are as follows: May 24, 2010, July 28, 2010, September 24, 2010, October 30, 2010 and January 31, 2011.
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Sun Pharmaceutical Industries Ltd.
Attendance of each Director at the Board meetings, last Annual General Meeting (AGM), and number of other Directorships and Chairmanships/Memberships of Committee of each Director, is given below: Attendance Particulars for the year ended March 31, 2011 Board Meetings Mr. Dilip S. Shanghvi Mr. Sudhir V. Valia Mr. Sailesh T. Desai Mr. S. Mohanchand Dadha Mr. Hasmukh S. Shah Mr. Keki M. Mistry Mr. Ashwin S. Dani Mr. S. Kalyanasundaram 4 5 5 5 5 5 4 4 *No. of other directorships and committee memberships /chairmanships as of March 31, 2011 Committee Memberships** ? 1 ? ? 1 7 1 ? Committee Chairmanships ** ? 1 ? 1 1 2 2 ?
Name of the Director
Last AGM held on Other September 24, 2010 Directorships No Yes Yes Yes Yes Yes Yes Yes 1 5 1 3 6 12 6 ?
* The above list of other directorships does not include Directorships, Committee Memberships and Committee Chairmanships in Private, Foreign and Section 25 Companies. **The Committee Memberships and Chairmanships in other Companies include Memberships and Chairmanships of Audit and Shareholders / Investors Grievance Committee only.
3. Code of Conduct
The Board of Directors have laid down a code of conduct for all Board members and senior management of the Company. All the Directors and senior management personnel have a?rmed compliance with the code of conduct as approved and adopted by the Board of Directors and a declaration to this e?ect has been annexed to the Corporate Governance Report. The code of conduct has been posted on the website of the Company www.sunpharma.com.
4. Audit Committee
The Audit committee of the Company comprises of three independent non-executive Directors viz. Mr. Keki M. Mistry, Mr. S. Mohanchand Dadha and Mr. Hasmukh S. Shah. Mr. Keki M. Mistry is the Chairman of the committee. The constitution of Audit Committee also meets with the requirements under Section 292A of the Companies Act, 1956. Mr. Kamlesh H. Shah, Company Secretary of the Company was the Secretary of the Audit Committee upto March 31, 2011 & from April 1, 2011 Mr. Sunil R. Ajmera, the Company Secretary of the Company is the Secretary of the Audit Committee. The terms of reference of the Audit Committee interalia include overseeing the Company s ?nancial reporting process, reviewing the quarterly/ half-yearly/ annual ?nancial statements, reviewing with the management the ?nancial statements and adequacy of internal audit function, management letters issued by the statutory auditor, recommending the appointment/ re-appointment of statutory auditors and ?xation of audit fees, reviewing the signi?cant internal audit ?ndings/ related party transactions, reviewing the Management Discussion and Analysis of ?nancial condition and result of operations and also statutory compliance issues. The Committee acts as a link between the management, external and internal auditors and the Board of Directors of the Company. Executives from the Finance Department, Representatives of the Statutory Auditors and Internal Auditors are also invited to attend the Audit Committee Meetings. The Committee has discussed with the external auditors their audit methodology, audit planning and signi?cant observations/ suggestions made by them. In addition, the Committee has discharged such other role/ function as envisaged under Clause 49 of the Listing Agreement of the Stock Exchange and the provisions of Section 292A of the Companies Act, 1956.
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Four Audit Committee Meetings were held during the year ended March 31, 2011. The dates on which Meetings were held are as follows: May 24, 2010, July 28, 2010, October 30, 2010 and January 31, 2011. The attendance of each Member of the Committee is given below: Name of the Director Mr. Keki M. Mistry Mr. S. Mohanchand Dadha Mr. Hasmukh S. Shah Chairman / Member of the Committee Chairman Member Member No. of Audit Committee Meetings Attended 4 4 4
5. Remuneration Committee
The Company has not formed any Remuneration Committee of Directors. The Whole - time Directors remuneration is approved by the Board within the overall limit ?xed by the shareholders at their meetings. The payment of remuneration by way of commission to the Non- Executive Directors of the Company is within the total overall maximum limit of quarter percent of net pro?ts as worked under the provisions of Sections 349 & 350 of the Companies Act, 1956. This will be in addition to the sitting fees of ` 5,000/- payable to the Non Executive Directors for attending each meeting of the Board and/or of Committee thereof. The actual commission payable to the Non- Executive Directors of our Company severally and collectively as below mentioned has been decided by the Board of Directors of the Company at their Meeting held on January 31, 2011 which is within the overall limit ?xed as above by the Members of the Company. The details of the remuneration paid/payable to the Directors during the year 2010-2011 are given below: (Amount in `) Directors Mr. Dilip S. Shanghvi Mr. Sudhir V. Valia Mr. Sailesh T. Desai Mr. S. Mohanchand Dadha Mr. Hasmukh S. Shah Mr. Keki M. Mistry Mr. Ashwin S. Dani Mr. S.Kalyanasundaram # Salary includes Special Allowance. * Perquisites include House Rent Allowance, Leave Travel Assistance, Medical Reimbursement, contribution to Provident Fund and such other perquisites, payable to Directors. Besides this, all the Whole - time Directors are also entitled to encashment of leave and Gratuity at the end of tenure, as per the rules of the Company. Notes: a) The Agreement with each of the Executive Directors excluding Mr.S.Kalyanasundaram is for a period of 5 years. Either party to the agreement is entitled to terminate the Agreement by giving to the other party 30 days notice in writing. Salary # 1,26,48,000 1,26,48,000 48,72,000 84,00,000 Bonus 25,29,600 25,29,600 9,74,400 16,80,000 Perquisites* / Bene?ts 17,43,589 16,84,968 19,86,939 98,86,378 Commission 10,00,000 10,00,000 10,00,000 10,00,000 Sitting Fees 70,000 75000 45000 20000 Total 1,69,21,189 1,68,62,568 78,33,339 10,70,000 10,75,000 10,45,000 10,20,000 1,99,66,378
b) Mr.S. Kalyanasundaram has been appointed as Chief Executive O?cer & Whole-time Director of the Company for a period of ?ve years with e?ect from April 1, 2010. As per the terms of his employment, his appointment is terminable by either party giving to the other party advance notice of twelve months, provided that the Company may waive the notice by giving the remuneration for twelve months which the CEO would have received, had he remained in o?ce for the said twelve months. Further, the Company may at its discretion terminate the employment under certain speci?ed circumstances as per the terms of his employment. c) The Company presently does not have a scheme for grant of stock options either to the Executive Directors or employees.
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d) There is no separate provision for payment of severance fees to Whole-time Director(s) excluding Mr. S. Kalyanasundaram as mentioned under (b) above. Details of Equity Shares held by Non-Executive Directors as on March 31, 2011 Director Mr. S. Mohanchand Dadha Mr. Hasmukh S. Shah Mr. Keki M. Mistry Mr. Ashwin S. Dani No. of Shares held (including shares held jointly) 1,42,140 6,000 25,000 Nil
6. Shareholders /Investors Grievance Committee
The Board of the Company had constituted a Shareholders /Investors Grievance Committee, comprising of Mr. S. Mohanchand Dadha, Mr. Dilip S. Shanghvi, Mr. Sudhir V. Valia with Mr. Hasmukh S. Shah as the Chairman. The Committee, inter alia, approves issue of duplicate certi?cates and oversees and reviews all matters connected with the transfer of securities. The Committee looks into shareholders complaints like transfer of shares, non receipt of balance sheet, non receipt of declared dividends, etc. The Committee oversees the performance of the Registrar and Transfer Agents, and recommends measures for overall improvement in the quality of investor services. The Board of Directors has delegated the power of approving transfer of securities to M/s. Link Intime India Pvt. Ltd, and/or the Company Secretary of the Company. The Board has designated severally, Mr. Kamlesh H. Shah, Company Secretary (upto March 31, 2011), Mr. Sunil R. Ajmera, Company Secretary (from April 1, 2011) and Mr. Ashok I. Bhuta, D.G.M (Legal & Secretarial) as Compliance O?cers. Five meetings of the Shareholders /Investors Grievance Committee were held during the year ended March 31, 2011. The dates on which Meetings were held are as follows: May 24, 2010, July 28, 2010, September 24, 2010, October 30, 2010 and January 31, 2011. The attendance of each Member of the Committee is given below: Name of the Director Mr. Hasmukh S. Shah Mr. Sudhir V. Valia Mr. Dilip S. Shanghvi Mr. S. Mohanchand Dadha Investor Complaints : The total number of complaints received and resolved to the satisfaction of shareholders during the year under review, were 24. Chairman / Member of the Committee Chairman Member Member Member No. of Shareholders /Investors Grievance Committee Meetings attended 5 5 4 5
7. Committee of Directors (Allotment)
The Board of Directors of the Company had constituted the Committee of Directors (Allotment) at the Board Meeting held on October 30, 2010, comprising of Mr. Sailesh T. Desai, Mr. S. Mohanchand Dadha, Mr. Hasmukh S. Shah with Mr. Sudhir V. Valia as the Chairman. Mr. Kamlesh Shah, Company Secretary & Compliance O?cer acted as the Secretary and Compliance O?cer of the Committee and Mr. Ashok I. Bhuta, DGM (Legal & Secretarial) & Compliance O?cer acted as the Compliance O?cer of the Committee. The Committee inter alia had the powers to decide all matters relating to the issue and allotment of equity shares of ` 1/- each of the Company on sub-division/split of equity shares of ` 5/- each, to credit the equity shares so allotted through NSDL/ CDSL/ Other depository to the concerned bene?ciary account and to issue the subdivided share certi?cates to the shareholders holding the shares in physical form and to perform any or all of the acts, deeds, things and matters as may be required in connection with such issue, allotment and listing of equity shares of ` 1/- each. One meeting was held on November 29, 2010 during the year ended on March 31, 2011. Mr. Sudhir V. Valia, Mr. Sailesh T. Desai & Mr. Hasmukh S. Shah were present at the Meeting. The said Committee of Directors (Allotment) was discontinued and dissolved at the Board Meeting held on January 31, 2011.
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8. Subsidiary companies
The Company does not have any material non-listed Indian subsidiary company whose turnover or net worth (i.e., paid-up capital and free reserves) exceeds 20% of the consolidated turnover or net worth respectively, of the listed holding company and its subsidiaries in the immediately preceding accounting year. The ?nancial statements including investments made by the unlisted subsidiaries were placed before and reviewed by the Audit Committee of the Company. Copies of the Minutes of the Board Meetings of the unlisted subsidiary companies were placed at the Board Meetings of the Company held during the year. The Board of Directors of the Company, reviewed periodically, the statement of all signi?cant transactions and arrangements entered into by the unlisted subsidiary companies.
9. General Body Meetings
(i) Location and time of the General Meetings held during the last 3 years are as follows:
Year 2007-08
Meeting Sixteenth AGM
Location Hotel Taj Residency Akota Gardens, Akota Vadodara - 390 020. The Gateway Hotel Akota Gardens, Akota Vadodara ? 390 020. Prof. Chandravadan Mehta Auditorium, General Education Centre,The Maharaja Sayajirao University of Baroda, Pratapgunj, Vadodara ? 390 002.
Date June 6, 2008
Time 10.15 A.M.
2008-09
Seventeenth AGM
September 11, 2009 10.15 A.M.
2009-10
Eighteenth AGM
September 24, 2010 10.30 A.M.
(ii) Special Resolutions passed during the last three years: a) At the Sixteenth Annual General Meeting: 1. 2. 3. 4. Alteration of Clause V of the Memorandum of Association and Clause 4 of the Articles of Association of the Company, for re-classi?cation of Authorized Share Capital of the Company. Re-appointment of Mr. Sudhir V. Valia, Whole-time Director and approval of terms and conditions of appointment including remuneration. Re-appointment of Mr. Sailesh T. Desai, Whole-time Director and approval of terms and conditions of appointment including remuneration. Appointment of Mr. Aalok D. Shanghvi, relative of a Director to hold an o?ce or place of pro?t under Section 314 of the Companies Act, 1956 and increase in upper limit of remuneration upto a maximum of ` 20,00,000/- per annum from April 1, 2009 for a period of ?ve years.
b) At the Seventeenth Annual General Meeting: Appointment of Ms. Khyati S. Valia, relative of a Director to hold an o?ce or place of pro?t under Section 314 of the Companies Act, 1956 and increase in upper limit of remuneration upto a maximum of ` 20,00,000/- per annum from April 1, 2010 for a period of ?ve years. c) At the Eighteenth Annual General Meeting: Appointment of Mr. S. Kalyanasundaram as the Chief Executive O?cer (CEO) & Whole-time Director of the Company for a period of ?ve years e?ective from April 1, 2010 to March 31, 2015 and remuneration payable to him.
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Sun Pharmaceutical Industries Ltd.
(iii) Postal Ballot During the year, Postal Ballot was conducted to obtain the approval of shareholders by way of an ordinary and special resolutions for sub-division of face value of equity shares from ` 5/- each into 5 Equity Shares of ` 1/- each and alteration of the Memorandum of Association of the Company and alteration of the Articles of Association of the Company under Section 94 and other applicable provisions & Section 31 and other applicable provisions respectively which was also simultaneously conducted by way of e-voting and our Company became the ?rst Company to o?er e-voting facility to its shareholders through CDSL Ventures Ltd. Mr. Umesh Lakhani of Messrs. S.H.Bathiya & Associates, Chartered Accountants, Mumbai, was appointed as the Scrutinizer for conducting the postal ballot process and based on his report, the results were announced on November 12, 2010. The communication regarding the same was issued to the Stock Exchanges, an advertisement was released in Newspapers on November 16, 2010 and the information was also made available on the Company s website. The Equity Shares were sub-divided on November 29, 2010 based on the Record Date of November 26, 2010. Details of the Resolutions passed under the Postal Ballot are as follows: Resolution No.1 Description: Ordinary Resolution for sub-division of Equity Shares of the Company from face value of ` 5/- each into 5 Equity Shares of ` 1/- each and consequent alteration of the Memorandum of Association of the Company. Voting Pattern: Voting Votes in favour Votes not in favour Invalid Votes Total Resolution No.2 Description: Special Resolution for alteration of the Articles of Association of the Company consequent to the sub-division of the equity shares of the Company from face value of ` 5/- each into 5 Equity Shares of ` 1/- each Voting Pattern: Voting Votes in favour Votes not in favour Invalid Votes Total Number of Votes 161,372,288 488,477 134,387 161,995,152 Percentage of Total Votes 99.62 0.30 0.08 100.00 Number of Votes 161,395,356 488,032 112,043 161,995,431 Percentage of Total Votes 99.63 0.30 0.07 100.00
10. Disclosures
* No transaction of a material nature has been entered into by the Company with Directors or Management and their relatives, etc. that may have a potential con?ict with the interests of the Company. The Register of Contracts containing transactions, in which directors are interested, is placed before the Board of Directors regularly. The transaction with the related parties are disclosed in the Annexure A attached to the Annual Accounts. There were no instances of non-compliance by the Company on any matters related to the capital markets or penalties/ strictures imposed on the Company by the Stock Exchange or SEBI or any statutory authority during the last 3 ?nancial years.
*
Annual Report 2010 -11
75
Corporate Governance
* * * *
In the preparation of the ?nancial statements, the Company has followed the Accounting Standards as noti?ed by Companies (Accounting Standard) Rules, 2006. The Company has laid down procedures to inform Board members about the risk assessment and its minimization, which are periodically reviewed to ensure that risk control is exercised by the management e?ectively. During the year under review, the Company has not raised funds through any public, rights or preferential issue. Adoption/ Non Adoption of the Non- mandatory requirements : (i) (ii) The Company has not ?xed a period of nine years as the tenure of Independent Directors on the Board of the Company. The Company has not formed a remuneration committee of its Board of Directors.
(iii) The Company does not send half-yearly ?nancial results to the household of each shareholder as the same are published in the newspapers and also posted on the website of the Company and the websites of the BSE and NSE. (iv) The Company s Board comprise of perfect mix of Executive and Non Executive Independent Directors who are Company Executives and Professionals having in depth knowledge of pharmaceutical industry and/ or expertise in their area of specialisation. (v) The Company s Board of Directors endeavor to keep themselves updated with changes in global economy and legislation. They attend various workshops and seminars to keep themselves abreast with the changes in business environment.
(vi) At present the Company does not have a mechanism for evaluating its Non-Executive Directors by peer group. (vii) The Company has not adopted whistle blower policy. However, the Company has not denied access to any employee to approach the management on any issue. The Company has adopted a Code of Conduct for its Board of Directors and senior management which contains the requirements of the Whistle Blower Policy.
11. Means of Communication
* Website: The Company s website www.sunpharma.com contains a separate dedicated section INVESTOR where shareholders information is available. Full Annual Report is also available on the website in a user friendly and downloadable form. Apart from this, o?cial news releases, detailed presentations made to media, analysts etc., and the transcript of the conference calls are also displayed on the Company s website. Financial Results: The annual, half-yearly and quarterly results are regularly posted by the Company on its website www.sunpharma.com. These are also submitted to the Stock Exchanges in accordance with the Listing Agreement and published in leading newspapers like The Economic Times , Business Standard and Gujarati Edition of Financial Express . Annual Report: Annual Report containing inter alia Audited Annual Accounts, Consolidated Financial Statements, Directors Report, Auditors Report, and other important information is circulated to Members and others entitled thereto. The Management s Discussion and Analysis (MD&A) Report forms part of the Annual Report. Chairman s Communique: The Chairman s Speech is placed on the website of the Company. Reminder to Investors: Reminders for unpaid dividend or redemption amount on preference shares are sent to shareholders as per records every year. Corporate Filing and Dissemination System (CFDS): The CFDS portal jointly owned, managed and maintained by BSE and NSE is a single source to view information ?led by the listed companies. All disclosures and communications to BSE & NSE are ?led electronically through the CFDS portal. Hard copies of the said disclosures and correspondence are also ?led with the Exchanges. Announcements, Quarterly Results, Shareholding Pattern etc. of the Company regularly ?led by the Company, are also available on the website of The Bombay Stock Exchange Ltd. - www.bseindia.com, National Stock Exchange of India Ltd. - www.nseindia.com, and Corporate Filing & Dissemination System website www.corp?ling.co.in.
*
*
* * *
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Sun Pharmaceutical Industries Ltd.
12. General Shareholder Information
12.1 Annual General Meeting: Date and Time Venue Friday, September 16, 2011, at 10.30 a.m. General Education Centre, Prof. Chandravadan Mehta Auditorium The Maharaja Sayajirao University of Baroda,Pratapgunj, Vadodara-390002, Gujarat Results for quarter ending June 30, 2011 Last week of July 2011. Results for quarter ending September 30, 2011 ? Second week of November 2011. Results for quarter ending December 31, 2011 ? Last week of January 2012 . Audited Results for year ended March 31, 2012 ? 3rd or 4th week of May 2012. From Tuesday, September 6, 2011 to Friday, September 16, 2011 (both days inclusive). On or after September 20, 2011 At The Bombay Stock Exchange Ltd., (BSE) and The National Stock Exchange of India Ltd. (NSE). Listing Fees for the year ended 2011-12 have been paid to The Bombay Stock Exchange Ltd., and The National Stock Exchange of India Ltd, where the Company s Equity Shares continue to be listed.
12.2 Financial Calendar (tentative)
12.3 Details of Book Closure For Equity Shareholders: 12.4 Dividend Payment Date : 12.5 (i) (ii) Listing of Equity Shares on Stock Exchanges : Payment of Listing Fee:
12.6 Stock Code: Equity Shares (a) Trading Symbol The Bombay Stock Exchange Ltd., (Demat Segment): Trading Symbol National Stock Exchange (Demat Segment): (b) Demat ISIN Numbers in NSDL and CDSL for Equity Shares of ` 1/- each SUN PHARMA 524715 SUNPHARMA ISIN No. INE044A01036
Annual Report 2010 -11
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Corporate Governance
12.7 Stock Market Data Equity Shares: Bombay Stock Exchange Ltd. (BSE) (in `) Month s High Price April 2010 May 2010 June 2010 July 2010 August 2010 September 2010 October 2010 November 2010 December 2010 January 2011 February 2011 March 2011
(Source: BSE and NSE website)
National Stock Exchange of India Ltd. (NSE) (in `) Month s High Price 1,853.00* 1,674.00* 1,825.00* 1,840.00* 1,857.00* 2,034.75* 2,157.00* 2,383.95* 489.60+ 511.75+ 446.85+ 469.70+ Month s Low Price 1,511.00* 1,516.00* 1,651.30* 1,697.30* 1,700.05* 1,715.00* 2,010.00* 429.75+ 423.00+ 428.05+ 393.15+ 410.15+
Month s Low Price 1,559.00* 1,515.10* 1,644.40* 1,692.50* 1,705.50* 1,717.00* 2,019.25* 428.60+ 424.20+ 429.05+ 392.05+ 411.00+
1,846.00* 1,674.80* 1,825.00* 1,841.20* 1,814.95* 2,033.90* 2,154.90* 2,380.00* 489.30+ 511.45+ 448.00+ 465.00+
* For ` 5/- paid-up value + For ` 1/- paid-up value
Sun Pharma Equity Share Price verses BSE - Sensex
2500 25000
20069 20032 19621 20509 17559 16945 1661 17701 17868 17971 1784 1771 1760 2019 2107 2245 2425 2205 18328 19445 17823 2120 2210
Sun Pharma Share Price (`)
2000 1500 1000 500 0
20000 15000 10000 5000 0
1567
Apr 10
Sep 10
May 10
June 10
Aug 10
Nov 10
Dec 10
Feb 11
Jul 10
Oct 10
Jan 11
Closing Price of Sun Pharma s Share on BSE
BSE Sensex (Closing)
Note: For comparison purposes, the closing price of equity share of FV of ` 1/- each of our Company has been multiplied by factor 5 for the months November, 2010 to March, 2011 to fall in line with the closing price of equity share of FV of ` 5/- each for the months April to October, 2010.
Mar 11
BSE Sensex
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Sun Pharmaceutical Industries Ltd.
Sun Pharma Equity Share Price verses NSE - Nifty
3000 7000
6030 6018 2110 5863 2238 6135 5506 2425 2204 2118 5333 5834 2213 5278 5313 1785 5368 5402 2021 1571 1664 1769 1762
Sun Pharma Share Price (`)
2500 2000 1500
6000
5086
4000 3000
1000 500 0
2000 1000 0
May 10
Nov 10
Apr 10
Sep 10
Oct 10
Feb 11
June 10
Aug 10
Dec 10
Closing Price of Sun Pharma s Share on NSE
NSE - Nifty (Closing)
Note: For comparison purposes, the closing price of equity share of FV of ` 1/- each of our Company has been multiplied by factor 5 for the months November, 2010 to March, 2011 to fall in line with the closing price of equity share of FV of ` 5/- each for the months April to October, 2010
12.8
Share price performance in comparison to broad-based indices ? BSE Sensex and NSE Nifty. Share price performance relative to BSE Sensex based on share price on March 31, 2011. % Change in Period Year-on-Year 2 Years 3 Years 5 Years Sun Pharma Share Price 23.44% 98.59% 79.39% 154.96% Bse Sensex 10.94% 100.29% 24.29% 72.39% Sun Pharma Relative to Sensex 12.05% -1.70% 55.10% 82.57%
Share price performance relative to Nifty based on share price on March 31, 2011. % Change in Period Year-on-Year 2 Years 3 Years 5 Years Sun Pharma Share Price 23.47% 99.06% 79.97% 157.40% Nifty 11.14% 93.11% 23.22% 71.45% Sun Pharma Relative to Nifty 12.33% 5.95% 56.75% 85.95%
(Source: Compiled from data available on BSE and NSE website)
Mar 11
Jul 10
Jan 11
NSE - Nifty
5000
Annual Report 2010 -11
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Corporate Governance
12.9
Registrars & Transfer Agent (Share transfer and communication regarding share certi?cates, dividends and change of address) Mr. N. Mahadevan Iyer, Link Intime India Pvt. Ltd. C-13, Kantilal Maganlal Estate Pannalal Silk Mills Compound L.B.S. Marg, Bhandup (West), Mumbai ? 400 078. E-Mail: [email protected] [email protected] Tel: 022-25946970, Fax : 022- 25946969
12.10 Share Transfer System Presently, the share transfers which are received in physical form are processed and transferred by Registrar and Share Transfer Agents and the share certi?cates are returned within a period of 15 to 16 days from the date of receipt, subject to the documents being valid and complete in all respects. 12.11 Distribution of Shareholding as on March 31, 2011 No. of Equity Shares held Upto 5000 5001 - 10000 10001 - 20000 20001 - 30000 30001 - 40000 40001 - 50000 50001 - 100000 100001 and above Total No. of Accounts Numbers 69098 2059 321 123 70 42 97 343 72153 % to total accounts 95.77 2.85 0.44 0.17 0.10 0.06 0.13 0.48 100.00 Shares of face value ` 1/- each Number 21622851 12846430 4553476 3125615 2472707 1940745 6939259 982080872 1035581955 % to total shares 2.09 1.24 0.44 0.30 0.24 0.19 0.67 94.83 100.00
12.12 (a) Shareholding Pattern as on March 31, 2011 of Equity Shares as per Clause 35 of the Listing Agreement
Particulars A. B. C. E. F. G. I. J. Indian Promoters and Persons acting in Concert Mutual Funds and UTI Banks Financial Institutions and Insurance Companies Private Corporate Bodies Indian Public NRIs Foreign Companies Trusts Total
Percentage 63.72% 2.85 % 4.20 % 18.39 % 5.11 % 5.51 % 0.07 % 0.05 % 0.06 % 0.04 % 100.00 %
No. of Shares 659,828,200 29,492,245 43,558,538 190,403,388 52,888,652 57,092,796 768,755 490,292 646,450 412,639 1035,581,955
D. FIIs and Foreign Mutual Funds
H. Clearing Members
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Sun Pharmaceutical Industries Ltd.
Indian Promoters and Persons acting in Concert 63.72%
FIIs and Foreign Mutual Funds 18.39 % NRIs 0.07% Foreign Companies 0.06% Clearing Members 0.05% Trusts 0.04% Indian Public 5.51% Private Corporate Bodies 5.11% Banks Financial Institutions and Insurance Companies 4.20% Mutual Funds and UTI 2.85%
12.13 Dematerialisation of Shares About 99.15% of the outstanding Equity shares have been de-materialised up to March 31, 2011. Trading in Shares of the Company is permitted only in de-materialised form w.e.f. November 29, 1999 as per noti?cation issued by the Securities and Exchange Board of India (SEBI). Liquidity: Your Company s equity shares are fairly liquid and are actively traded on National Stock Exchange of India Ltd., (NSE) and The Bombay Stock Exchange Ltd. (BSE) Relevant data for the average daily turnover for the ?nancial year 20102011 is given below:
NSE Before split up of Equity Shares In no. of share (in Thousands) In value terms (` Millions) 191.893 After split up of Equity Shares 983.323
BSE Before split up of Equity Shares 23.955 After split up of Equity Shares 109.014 Before split up of Equity Shares 215.848*
NSE + BSE After split up of Equity Shares 1092.337 Combined e?ect for ` 1/- Equity Shares 2171.577
344.936
438.306
43.195
48.639
388.131
486.945
875.076
(Source: Compiled from data available on BSE and NSE website)
*To have a combined e?ect for face value of ` 1 /- of Equity Shares, the ?gure as shown under this column has been multiplied by a factor of ?ve and added. 12.14 Outstanding GDRs/ADRs/Warrants or any Convertible instruments, conversion date and likely impact on equity : The Company has not issued any GDRs/ ADRs / warrants or any other convertible instruments during the year and there are no FCCBs outstanding as at March 31, 2011. 12.15 Plant locations: 1. 2. 3. 4. 5. 6. 7. 8. Plot No.214 and 20, Govt. Industrial Area, Phase-II, Piparia, Silvassa ? 396 230. Plot No.223, Span Industrial Complex, Near R.T.O. Check Post, Dadra ? 396 191 (U.T) Plot No.25 and No.24/2,GIDC, Phase- IV,Panoli ? 395 116, Dist. Bharuch(Guj.). A-7 & A-8, MIDC Industrial Area, Ahmednagar ? 414 111, Maharashtra. Plot No. 4708, GIDC, Ankleshwar ? 393 002, Gujarat. Sathammai Village, Karunkuzhi Post, Maduranthakam T.K. Kanchipuram Dist. Tamilnadu ? 603 303. Halol-Baroda Highway, Halol, Gujarat ? 389350. Plot No. 817/A, Karkhadi ? 391 450, Taluka: Padra, Dist. Vadodara, Gujarat.
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12.16 (a)
Investor Correspondence For transfer/dematerialisation of Shares, payment of dividend on Shares, and any other query relating to the shares of the Company
For Shares held in Physical Form Mr. N. Mahadevan Iyer Link Intime India Pvt. Ltd. C-13, Kantilal Maganlal Estate Pannalal Silk Mills Compound L.B.S. Marg, Bhandup (West) Mumbai ? 400 078. E-Mail: [email protected] [email protected] Tel: 022-25946970-, Fax : 022- 25946969 For Shares held in Demat Form To the Depository Participant.
(b) (c)
E-mail id designated by the Company for Investor Complaints Any query on Annual Report
[email protected] Mr.Sunil R. Ajmera/ Mr.Ashok I. Bhuta/ Mr. Uday Baldota / Ms. Mira Desai, 17-B, Mahal Industrial Estate Mahakali Caves Road Andheri (East), Mumbai ? 400 093. [email protected] [email protected] [email protected] [email protected] [email protected]
For and on behalf of the Board DILIP S. SHANGHVI Chairman & Managing Director SUDHIR V. VALIA Whole-time Director SAILESH T. DESAI Whole-time Director Place: Mumbai, Date: May 28, 2011 S.KALYANASUNDARAM Whole-time Director & CEO
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Sun Pharmaceutical Industries Ltd.
ANNEXURE TO CORPORATE GOVERNANCE FOR THE YEAR ENDED MARCH 31, 2011 DECLARATION OF COMPLIANCE WITH CODE OF CONDUCT
I, Dilip S. Shanghvi, Chairman & Managing Director of Sun Pharmaceutical Industries Limited ( the Company ) hereby declare that, to the best of my information, all the Board Members and Senior Management Personnel of the Company have a?rmed their compliance and undertaken to continue to comply with the Code of Conduct laid down by the Board of Directors of the Company for Board members and senior management.
For Sun Pharmaceutical Industries Ltd., Dilip S. Shanghvi Chairman & Managing Director Date: May 28, 2011.
AUDITORS CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OF CORPORATE GOVERNANCE UNDER CLAUSE 49 OF THE LISTING AGREEMENT
To The Members of Sun Pharmaceutical Industries Limited, We have examined the compliance of conditions of Corporate Governance by Sun Pharmaceutical Industries Limited ( the Company ), for the year ended on March 31, 2011, as stipulated in Clause 49 of the Listing Agreement of the said Company with relevant stock exchanges (hereinafter referred to as Clause 49). The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination has been limited to a review of the procedures and implementation thereof, adopted by the Company for ensuring compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the ?nancial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Directors and the Management, we certify that the Company has complied, in all material respects, with the conditions of Corporate Governance as stipulated in Clause 49. We state that such compliance is neither an assurance as to the future viability of the Company nor the e?ciency or e?ectiveness with which the Management has conducted the a?airs of the Company. For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.117366W) Rajesh K. Hiranandani Partner MUMBAI, May 28, 2011 (Membership No.36920)
Annual Report 2010-11
83
AUDITORS’ REPORT
TO THE BOARD OF DIRECTORS OF SUN PHARMACEUTICAL INDUSTRIES LIMITED
1.
We have audited the attached Consolidated Balance Sheet of SUN PHARMACEUTICAL INDUSTRIES LIMITED (“the Company”) and its subsidiaries (the Company and its subsidiaries constitute “the Group”) as at 31st March, 2011, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement of the Group for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management and have been prepared on the basis of the separate financial statements/ consolidated financial statements in respect of certain subsidiary groups, and other financial information regarding components. Our responsibility is to express an opinion on these Consolidated Financial Statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We did not audit the financial statements of any of the 54 subsidiaries and also 2 of the partnership firms (listed in Note B1 on Schedule 20), whose financial statements reflect total assets of 50,497.4 Million as at 31st March, 2011, total revenues of 28,486.5 Million and net cash outflows amounting to 260.6 Million for the year ended on that date as considered in the Consolidated Financial Statements, comprising: a. Total assets of 23,453.1 Million as at 31st March, 2011, total revenues of 17,205.6 Million and net cash outflows amounting to o 331.9 Million for the year ended on that date in respect of 24 subsidiaries and 2 partnership firms, whose financial statements have been audited by other auditors and their reports have been furnished to us and our opinion in so far as it relates to the amounts included in respect of these subsidiaries and partnership firms is based solely on the reports of the other auditors. b. Total assets of 25,670.9 Million as at 31st March, 2011, total revenues of 9,946.3 Million and net cash inflows amounting to 61.1 Million o for the period from 20th September, 2010 (date of acquisition) to 31st March, 2011 in respect of a subsidiary group comprising of 21 subsidiaries, whose reporting date of 31st December, 2010 is different from the reporting date of the Company and the consolidated financial statements have been audited by other auditors. In terms of Accounting Standard 21, Consolidated Financial Statements as notified under the Companies (Accounting Standards) Rules, 2006 (“Accounting Standard 21”), adjustments have been made for significant transactions of the subsidiary group for the period from 1st January, 2011 to 31st March, 2011 on the basis of the report of their auditors. Our opinion in so far as it relates to the amounts included in respect of this subsidiary group is based solely on the reports of the other auditors furnished to us. Total assets of 1,369.3 Million as at 31st March, 2011, total revenues of 1,334.6 Million and net cash inflows amounting to 8.8 Million for o the year ended on that date in respect of 6 subsidiaries, whose reporting date is also of 31st December, 2010 and different from the reporting date of the Company and the financial statements have been audited by other auditors. In terms of Accounting Standard 21, adjustments have been made for significant transactions of these subsidiaries for the periods from 1st January, 2011 to 31st March, 2011 and 1st January, 2010 to 31st March, 2010, on the basis of their management accounts for the said periods. Our opinion in so far as it relates to the amounts included in respect of these subsidiaries is based solely on the reports of the other auditors furnished to us and the management accounts as aforesaid. c. Total assets of 4.1 Million as at 31st March, 2011, total revenues of Nil and net cash inflows amounting to 1.4 Million for the year ended o on that date in respect of 3 subsidiaries, whose financial statements have not been audited.
2.
3.
4. 5.
We report that the Consolidated Financial Statements have been prepared by the Company in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements as notified under the Companies (Accounting Standards) Rules, 2006. Based on our audit and on consideration of the separate Auditors’ Reports on individual financial statements of the Company and its aforesaid subsidiaries/consolidated financial statements in respect of certain subsidiary groups, and to the best our information and according to the explanations given to us, in our opinion, read with our comments in paragraphs 3(b) and 3(c) above, the Consolidated Financial Statements give a true and fair view in conformity with the accounting principles generally accepted in India: i. in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at 31st March, 2011; ii. in the case of the Consolidated Profit and Loss Account, of the profit of the Group for the year ended on that date; and iii. in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date.
For Deloitte Haskins & Sells Chartered Accountants (Registration No.117366W)
MUMBAI, 28th May, 2011
Rajesh K Hiranandani Partner (Membership No. 36920)
84
Sun Pharmaceutical Industries Limited
CONSOLIDATED BALANCE SHEET
AS AT 31ST MARCH, 2011
As at 31st March, 2011 Schedule in Million in Million
As at 31st March, 2010 in Million in Million
SOURCES OF FUNDS
Shareholders’ Funds Share Capital Reserves and Surplus Minority Interest Loan Funds Secured Loans Unsecured Loans Deferred Tax Liability (Net) Total 1 2 1,035.6 93,797.6 94,833.2 8,471.5 1,035.6 77,253.5 78,289.1 1,931.9
3 4 5 (a)
1,804.3 2,451.5
4,255.8 1,348.3 108,908.8
1,003.5 708.0
1,711.5 1,209.1 83,141.6
APPLICATION OF FUNDS
Fixed Assets Gross Block 6 Less: Depreciation/Amortisation/Impairment Net Block Capital Work-in-Progress (including advances on capital account) Goodwill on Consolidation (Refer note B.6 of schedule 20) Investments 7 Deferred Tax Assets (Net) 5 (b) Current Assets, Loans and Advances Inventories 8 Sundry Debtors 9 Cash and Bank Balances 10 Other Current Assets 11 Loans and Advances 12 Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets Total SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 20 Schedules referred to herein form an integral part of the Financial Statements.
In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants RAJESH K. HIRANANDANI Partner For and on behalf of the Board DILIP S. SHANGHVI Chairman & Managing Director S. KALYANASUNDARAM Wholetime Director & CEO SUDHIR V. VALIA Wholetime Director SAILESH T. DESAI Wholetime Director SUNIL R. AJMERA Company Secretary Mumbai, 28th May, 2011 Mumbai, 28th May, 2011
45,520.1 20,286.1 25,234.0 2,706.3
27,940.3 7,719.7 22,309.6 5,000.6
23,340.4 8,012.5 15,327.9 1,448.2
16,776.1 4,060.3 31,663.8 2,099.5
14,793.9 11,715.9 21,936.4 445.1 11,280.8 60,172.1 9,203.2 5,030.3 14,233.5 45,938.6 108,908.8
10,738.5 11,747.7 5,088.9 57.9 8,488.1 36,121.1 4,095.1 3,484.1 7,579.2 28,541.9 83,141.6
13
Annual Report 2010-11
85
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 Schedule in Million in Million
Year ended 31st March, 2010 in Million in Million
INCOME
Income from Operations Gross Sales Less : Excise Duty Net Sales Other Operating Income Other Income 58,065.8 851.5 57,214.3 — 57,214.3 2,698.8 14,606.9 6,728.9 13,318.6 2,860.0 2,040.6 851.2 433.2 38,861.4 775.1 38,086.3 1,988.2 40,074.5 2,048.2 10,977.3 4,007.9 9,372.9 2,083.1 1,533.1 1,106.4 (427.8)
14 15 16 17 18 19
59,913.1
42,122.7
EXPENDITURE
Cost of Materials / Goods Personnel Cost Operating and Other Expenses Research and Development Expenditure Depreciation / Amortisation / Impairment
39,555.0 20,358.1 1,284.4 19,073.7 913.1 18,160.6 38,211.7 56,372.3
27,974.3 14,148.4 678.6 13,469.8 (41.0) 13,510.8 31,021.8 44,532.6
PROFIT BEFORE TAXATION
Provision for Taxation - Current Tax - Deferred Tax Charge / (Credit) (Net) PROFIT AFTER TAX Minority Interest PROFIT FOR THE YEAR AFTER TAX AND MINORITY INTEREST BALANCE OF PROFIT BROUGHT FORWARD AMOUNT AVAILABLE FOR APPROPRIATIONS
APPROPRIATIONS
Proposed Dividend Corporate Dividend Tax Transfer to General Reserve BALANCE OF PROFIT CARRIED TO BALANCE SHEET EARNINGS PER SHARE (refer note B.8 of Schedule 20) Basic & Diluted ( ) Face value per Equity share - 1 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 20 Schedules referred to herein form an integral part of the Financial Statements.
In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants RAJESH K. HIRANANDANI Partner
3,624.5 588.0
4,212.5 5,000.0 47,159.8 17.5
2,847.9 473.0
3,320.9 3,000.0 38,211.7 13.0
For and on behalf of the Board DILIP S. SHANGHVI Chairman & Managing Director S. KALYANASUNDARAM Wholetime Director & CEO SUDHIR V. VALIA Wholetime Director SAILESH T. DESAI Wholetime Director SUNIL R. AJMERA Company Secretary
Mumbai, 28th May, 2011
Mumbai, 28th May, 2011
86
Sun Pharmaceutical Industries Limited
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 in Million
Year ended 31st March, 2010 in Million
A
Cash Flow From Operating Activities:
Net Profit Before Tax Adjustments for: Depreciation / Amortisation / Impairment Interest Expense Interest Income Dividend Income ( 2,820) Loss on Fixed Assets Sold (net) Profit on sale of Investments Provision for Doubtful Debts Sundry Balances / Bad Debts written off / back (net) Provision for employee benefits Unrealised Foreign Exchange Loss Operating Profit Before Working Capital Changes Adjustments for Changes In Working Capital: Decrease / (Increase) in Sundry Debtors Decrease / (Increase) in Other Receivables Increase in Inventories Increase in Trade and Other Payables Cash Generated From Operations Taxes Paid Net Cash Generated From Operating Activities 3,475.1 902.0 (712.6) 1,817.0 24,970.9 (1,076.8) 23,894.1 (3,057.1) (707.9) (981.5) 390.2 9,556.1 (1,744.8) 7,811.3 2,040.6 577.3 (1,918.9) (0.0) 14.3 (427.5) 12.9 (10.0) 654.6 (1,812.0) 19,489.4 1,533.1 61.5 (1,200.4) (0.1) 60.3 (73.3) 21.2 (18.4) 64.1 (684.0) 13,912.4 20,358.1 14,148.4
B. Cash Flow From Investing Activities:
Purchase of Fixed Assets and Capital Work in Progress (including Capital Advance) Proceeds From Sale of Fixed Assets Proceeds From Sale of Investments Purchase of Investments Margin Money and Fixed Deposit with Banks Short Term Loans / Inter Corporate Deposits received back / (given) (net) Acquisition of Subsidiaries Interest Received Dividend Received ( 2,820) Net Cash Used in Investing Activities (4,453.7) 283.8 126,427.0 (123,198.1) (14,789.8) (2,596.6) (4,689.3) 1,531.7 0.0 (21,485.0) (2,841.3) 89.3 153,969.6 (165,746.5) 11,782.5 (168.0) (806.9) 1,583.8 0.1 (2,137.4)
Annual Report 2010-11
87
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 in Million
Year ended 31st March, 2010 in Million
C. Cash Flow From Financing Activities:
Long Term Loan Taken / (Repaid) Short Term Loan Taken / (Repaid) Proceeds from / (Payment to) Minority Interest Paid Borrowing from banks Received / (Repaid) Dividend Paid Corporate Dividend Tax Paid Net Cash Used in Financing Activities Net (Decrease) / Increase in Cash and Cash Equivalents Cash and Bank balance taken over on acquisition of Subsidiaries Cash and Cash Equivalents as at the beginning of the year Cash and Cash Equivalents as at the year end Cash and Cash Equivalents Comprise: Cash and Cheques in hand and balances with Scheduled / Other banks (Refer Schedule 10 to the Financial Statements) Add : Investment in Certificate of Deposit having maturity less than 3 Months Less : Margin Money Deposit / Fixed deposit having maturity more than 3 Months Unrealised exchange (Gain) / Loss Cash and Cash Equivalents as restated as at the year end Notes: 1 2 Cash and cash equivalents includes available for use by the Company. 28.5 Million (Previous Year 22.2 Million) on account of Unclaimed dividend, which are not — 15,067.9 (10.7) 6,857.8 1,941.6 278.1 (30.4) 6,722.0 21,936.4 5,088.9 (2,204.0) 2.3 (69.2) (577.3) (1,585.0) (2,841.0) (473.0) (7,747.2) (5,338.1) 5,473.9 6,722.0 6,857.8 256.2 (6.9) 2.5 (61.5) (326.7) (2,843.9) (484.0) (3,464.3) 2,209.6 — 4512.4 6,722.0
Previous years’ figures are regrouped / reclassified wherever necessary in order to confirm to current years’ groupings and classifications.
For and on behalf of the Board DILIP S. SHANGHVI Chairman & Managing Director S. KALYANASUNDARAM Wholetime Director & CEO SUDHIR V. VALIA Wholetime Director SAILESH T. DESAI Wholetime Director SUNIL R. AJMERA Company Secretary
In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants RAJESH K. HIRANANDANI Partner
Mumbai, 28th May, 2011
Mumbai, 28th May, 2011
88
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 1 : SHARE CAPITAL
Authorised 1,500,000,000 Equity Shares of 1/- each (Previous Year 300,000,000 Equity Shares of 5 each) Issued, Subscribed and Paid Up 1,035,581,955 Equity Shares of 1 each (Previous Year 207,116,391 Equity Shares of 5 each) fully paid-up. Notes: Of the above : 1) 808,150,050 Equity shares allotted as fully paid Bonus Shares by capitalisation of Securities Premium Account, Profit and Loss Account, Amalgamation Reserve and Capital Redemption Reserve Account. 2) 4,136,330; 2,080,000; 4,775,810; 114,380; 185,190; 197,710 and 21,370 Equity Shares fully paid allotted to the shareholders of erstwhile Tamilnadu Dadha Pharmaceuticals Ltd, Milmet Laboratories Pvt. Ltd, Gujarat Lyka Organics Ltd, Sun Pharmaceutical Exports Ltd, Pradeep Drug Company Ltd, M.J.Pharmaceuticals Ltd. and Phlox Pharmaceuticals Ltd. respectively, pursuant to Schemes of Amalgamations, without payment being received in cash. 3) 108,003,805 Equity Shares allotted to the holders of Zero Coupon Foreign Currency Convertible Bond on exercise of conversion option. 4) With effect from 27th November, 2010, one equity share of paid-up. 5 each fully paid-up was split into five equity shares of 1 each fully 1,500.0 1,500.0 1,035.6 1,500.0 1,500.0 1,035.6
1,035.6
1,035.6
SCHEDULE 2 : RESERVES AND SURPLUS
Capital Reserve As per last Balance Sheet Securities Premium Account As per last Balance Sheet Capital Redemption Reserve As per last Balance Sheet General Reserve As per last Balance Sheet Add : Share in post acquisition profits of Taro Pharmaceutical industries Ltd Group (Taro), relating to step-by-step acquisition prior to date of acquisition of control. Add :Transferred from Profit and Loss Account Foreign Currency Translation Reserve on Consolidation As per last Balance Sheet Add/(Less) :Movement During the Year Surplus as per Profit and Loss Account 20,444.3 3,076.9 259.1 15,099.1 154.5 17,444.3 — 259.1 15,099.1 154.5
5,000.0 3,084.8 (480.9)
28,521.2
3,000.0 5,434.8 (2,350.0)
20,444.3
2,603.9 47,159.8 93,797.6
3,084.8 38,211.7 77,253.5
Annual Report 2010-11
89
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 3 : SECURED LOANS
(Refer Note B.7 of Schedule 20) Short Term Loan from Banks Cash Credit Facility from Banks 1,280.6 523.7 1,804.3 695.2 308.3 1,003.5
SCHEDULE 4 : UNSECURED LOANS
Long Term Debenture (5.8% Interest Plus CPI, maturing in 2014) Other than bank Loans Short Term From Banks Cash Credit Facility from Banks Others 340.0 54.5 8.3 1,902.9 145.8 217.1 25.5 6.0 — 459.4
402.8 2,451.5
248.6 708.0
SCHEDULE 5: DEFERRED TAX BALANCES
(Refer Note B.21 of Schedule 20) (a) Deferred Tax Liabilities (Net) (i) Depreciation on Fixed Assets (ii) Unpaid Liabilities (iii) Others 1,411.3 (43.6) (19.4) 1,348.3 (b) Deferred Tax Assets (Net)* (i) Depreciation on Fixed Assets (ii) Unpaid Liabilities (iii) Unabsorbed Loss (iv) Intangibles (v) Others (346.4) 1,763.0 1,857.3 973.5 753.2 5,000.6 * Includes 3193.7 Million (Previous Year Nil) taken over on acquisition of Taro o 1,302.8 (69.2) (24.5) 1,209.1 (231.6) — 1,021.4 1,078.8 230.9 2,099.5
90
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
SCHEDULE 6 : FIXED ASSETS
Particulars Gross Block (At Cost) Consoli- Taken over dation on acquiAs At Adjustsition 01.04.10 ment (d) I. TANGIBLE ASSETS Freehold Land 138.7 Leasehold Land 76.7 Buildings 5,975.0 Plant and Machinery 13,988.0 Vehicles 217.0 Furniture and Fixtures 484.8 Sub-Total I II. INTANGIBLE ASSETS Trademarks, Designs and Other Intangible Assets Sub-Total II TOTAL I + II Previous Year 20,880.2 Additions 10-11 Deletions/ Adjustment As at 10-11 31.03.11 Depreciation / Amortisation / Impairment
in Million Net Block
Consoli- Taken over Deletions/ dation on acqui- For the AdjustAs at Adjust sition year ment As at As at 01.04.10 ment (d) 10-11 10-11 31.03.11 31.03.11 — — 15.1 27.6 2.4 1.1 46.2 — — 63.1 0.8 1,599.5 361.1 6,136.2 1,201.0 13.1 26.5 309.8 34.6 8,121.7 1,624.0
As at 31.03.10
1.4 460.5 9.1 — 854.1 64.2 48.9 6,222.4 792.9 35.5 7,994.2 1,790.9 2.0 14.7 62.2 1.7 399.1 37.4 89.5 15,945.0 2,756.7
— 609.7 — 48.7 946.3 4.7 119.5 12,919.7 (a) 1,127.5 285.0 23,523.6 5,812.8 35.3 260.6 78.6 11.8 911.2 214.9 500.3 39,171.1 7,238.5
— — 609.7 138.7 0.9 67.7 878.6 72.0 47.2 3,056.0 9,863.7 4,847.5 144.0 13,033.6(b) 10,490.0 8,175.2 11.6 109.0 151.6 138.4 9.1 551.3(b) 359.9 269.9 212.8 16,817.6 22,353.5 13,641.7
2,460.2 2,460.2 23,340.4 21,476.1
(5.7) (5.7) 83.8 (703.5)
3,379.7 3,379.7 19,324.7
569.9 569.9 3,326.6
55.1 6,349.0 55.1 6,349.0 555.4 45,520.1 388.0 23,340.4
774.0 774.0 8,012.5 6,850.7
(5.0) (5.0) 41.2 (132.9)
2,327.4 2,327.4 10,449.1
416.6 416.6 2,040.6
44.5 3,468.5(b) 2,880.5 44.5 3,468.5 257.3 20,286.1 238.4 8,012.5 2,880.5
1,686.2 1,686.2
25,234.0 15,327.9 15,327.9 2,706.3 1,448.2
— 2,955.8
— 1,533.1 (b)
Capital Work-in-Progress (including advances on capital account) (c)
27,940.3 16,776.1 NOTES : (a) Buildings include 8,620 (Previous Year 8,620) towards cost of shares in a Co-operative Housing Society. y. 30.8 Million) including Nil (Previous Year 30.8 Million) on account of 4.4 Million ) on account of
(b) Includes Impairment of Impairment for the year.
30.8 Million (Previous Year
(c) Capital work-in-progress ( including advances on Capital Account ) includes preoperative expenses.
2.66 Million (Previous Year
(d) Represents assets and accumulated depreciation of TARO which became subsidiary during the year. Also refer note no. B.22 to Schedule 20.
Annual Report 2010-11
91
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 7 : INVESTMENTS
A. LONG TERM INVESTMENTS (At Cost) Quoted i) Equity Shares ii) Bonds iii) Zero Percent-Notes iv) Debentures Unquoted i) Government Securities ii) Equity Shares iii) Bonds iv) Debentures v) Passthrough Certificates vi) Deposits vii) Mutual Funds Total (A) B. CURRENT INVESTMENTS i) ii) Certificate of Deposits (Quoted) Mutual Funds (Unquoted) 445.2 650.0 1,095.2 22,309.6 BOOK VALUE 3,355.2 18,954.4 MARKET VALUE 5,808.3 BOOK VALUE 10,424.7 21,239.1 1,941.6 14,879.1 16,820.7 31,663.8 MARKET VALUE 15,557.7
1,096.6 52.1 1,038.9 722.5 164.0 152.9 5.0 250.0 503.3 2,258.0 14,971.1 21,214.4
5,885.1 52.5 1,135.8 1,409.7 0.0 148.9 5.0 — 500.0 1,240.0 4,466.1 14,843.1
Total (B) Total (A+B) AGGREGATE VALUE OF INVESTMENTS Quoted Unquoted
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 8 : INVENTORIES
Consumable Stores Stock in Trade Raw Materials Packing Materials Finished Goods Work-in-Progress 321.0 5,978.7 1,180.2 4,019.8 3,294.2 5,640.6 623.3 1,711.4 2,592.7 170.5
14,472.9 14,793.9
10,568.0 10,738.5
92
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 9 : SUNDRY DEBTORS
(Unsecured-Considered Good, unless stated otherwise) Over Six Months Considered Good Considered Doubtful Other Debts Less: Provision for Doubtful Debts 1,228.7 78.1 1,074.6 79.6
1,306.8 10,487.2 11,794.0 78.1 11,715.9
1,154.2 10,673.1 11,827.3 79.6 11,747.7 88.7
SCHEDULE 10 : CASH AND BANK BALANCES
Cash / Cheques on hand Balances with Banks Scheduled Banks Current Accounts Deposit Accounts {Pledged 33.71 (Previous Year 12.0) Million} Other Banks Current Accounts Deposit Accounts 6.7
5,551.6 15,067.9 20,619.5 1,278.6 31.6
175.2 278.1 453.3 4,155.4 391.5
1,310.2 21,936.4
4,546.9 5,088.9
SCHEDULE 11 : OTHER CURRENT ASSETS
Interest accrued on Investments 445.1 445.1 57.9 57.9
SCHEDULE 12 : LOANS AND ADVANCES
( Unsecured – Considered Good, unless stated otherwise ) Loan to Employees / Others {Secured Loans (Previous Year 294.0 Million)} Considered Good Considered Doubtful Less : Provision for Doubtful Advances Advances Recoverable in Cash or in Kind or for Value to be received Advances to Suppliers Balances with Central Excise and Customs DEPB and Advance Licences Other Deposits Advance Payment of Income Tax (Net of Provision) 751.2 Million 3,391.6 9.5 3,401.1 9.5 3,796.5 9.5 3,806.0 9.5
3,391.6 2,570.5 1,130.2 991.4 209.5 146.4 2,841.2 11,280.8
3,796.5 659.5 299.2 871.5 137.2 108.6 2,615.6 8,488.1
Annual Report 2010-11
93
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 13 : CURRENT LIABILITIES AND PROVISIONS
Current Liabilities Sundry Creditors Due to Micro and Small Enterprises Others Advances from Customers Security Deposits Investor Education and Protection Fund shall be credited by Unclaimed Dividend (Not Due) Temporary Overdrawn Bank balance as per Books Other Liabilities Interest accrued but not due on Loans Provisions Provision for Fringe Benefit Tax (Net of Advance Tax on FBT) Proposed Dividend Corporate Dividend Tax Provision for employee benefits
37.7 4,770.6 95.5 21.9 30.4 7.3 4,198.6 41.2 0.6 3,624.5 588.0 817.2
19.1 3,175.3 284.8 19.3 23.5 5.2 401.7 166.2 0.6 2,847.9 473.0 162.6
9,203.2
4,095.1
5,030.3 14,233.5
3,484.1 7,579.2
Year ended 31st March, 2011 in Million in Million — —
Year ended 31st March, 2010 in Million in Million 1,988.2 1,988.2
SCHEDULE 14 : OTHER OPERATING INCOME
Non-recurring (income) (Refer Note B.14 of Schedule 20)
SCHEDULE 15 : OTHER INCOME
Lease Rental and Hire Charges Interest Income (Net) (Refer Note B.5 of Schdule 20) Gain on Exchange Fluctuations Profit on Sale of Fixed Assets Profit on Sale of Investments (Net) (Refer Note B.17 of Schedule 20) Sundry Balances Written Back (Net) Insurance Claims Dividend Income - Long Term Investment ( 2,820 ) Miscellaneous Income 47.3 1,340.5 376.3 2.8 427.5 0.7 20.4 0.0 483.3 2,698.8 28.3 1,138.1 333.7 6.5 73.3 15.7 5.2 0.1 447.3 2,048.2
94
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
Year ended 31st March, 2011 in Million in Million
Year ended 31st March, 2010 in Million in Million
SCHEDULE 16 : COST OF MATERIALS / GOODS
Inventories of Raw & Packing material at the beginning of the year Purchases during the year - Raw & Packing Material - Finished goods Inventories of Raw and Packing Material at the end of the year Inventories taken over on acquisition of Taro Inventories of Finished Goods and Work-In-Progress at the beginning of the year Inventories of Finished Goods and Work-In-Progress at the end of the year 6,263.9 13,384.2 1,766.8 (7,158.9) 4,304.1 (7,314.0) (3,009.9) 14,606.9 5,637.7 10,557.5 1,370.4 (6,263.9) 3,979.7 (4,304.1) (324.4) 10,977.3 3,382.0 411.2 214.7 4,007.9 547.9 784.0 919.2 137.1 108.8 271.2 1,670.8 497.1 78.6 332.8 158.9
14,256.0 3,360.8
11,301.7 —
SCHEDULE 17 : PERSONNEL COST
Salaries,Wages and Bonus Contribution to Provident and Other Funds Staff Welfare Expenses 5,567.1 613.0 548.8 6,728.9
SCHEDULE 18 : OPERATING AND OTHER EXPENSES
Stores and Spares Consumed Conversion and Other Manufacturing Charges Power and Fuel Rent Rates and Taxes Insurance Selling and Distribution Commission and Discount Repairs Building Plant and Machinery Others Printing and Stationery Travelling and Conveyance Overseas Travel and Export Promotion Communication Provision for doubtful Debts / Advances Provision for doubtful Debts Sundry Balances/Bad Debts Written Off ( Net ) Less :- Adjusted out of Provision for earlier years Professional and Consultancy Donations Loss on Sale of Fixed Assets Excise Duty on Stock (*) Miscellaneous Expenses 600.1 1,089.7 946.0 182.1 156.5 325.7 3,414.4 1,328.4 120.7 484.7 160.3
765.7 71.7 278.0 913.5 123.5
570.3 54.0 170.5 735.4 71.9
12.9 5.1 14.4
3.6 2,070.8 3.3 16.5 (2.9) 1,032.0 13,318.6
21.2 6.5 5.1
22.6 1,273.7 111.7 66.5 7.2 1,353.0 9,372.9
(*) represents the difference between excise duty on opening and closing stock of finished goods.
Annual Report 2010-11
95
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
Year ended 31st March, 2011 in Million in Million
Year ended 31st March, 2010 in Million in Million
SCHEDULE 19 : RESEARCH AND DEVELOPMENT EXPENDITURE
Salaries,Wages and Bonus Contribution to Provident and Other Funds Staff Welfare Expenses Material, Stores and Spares Consumed Power and Fuel Rates and Taxes Rent Insurance Repairs Building Plant and Machinery Others Printing and Stationery Travelling and Conveyance Communication Professional and Consultancy Loss on Sale of Fixed Assets Miscellaneous Expenses Less: Interest Income (Refer Note B.5 of Schdule 20) Receipts from Research activities Miscellaneous Income Bad Debts Recovered / Sundry balances written Back 1,090.5 74.2 102.0 840.8 22.1 15.0 0.8 34.5 17.5 44.6 28.6 6.5 51.3 26.3 731.8 43.9 38.5 747.0 18.7 4.1 4.1 21.4
90.7 14.1 19.7 15.9 382.9 0.6 385.1 3,088.9
84.1 11.9 13.2 16.1 195.4 0.3 315.7 2,246.2
1.1 188.6 39.2 —
228.9 2,860.0
0.8 157.7 0.5 4.1
163.1 2,083.1
96
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
SCHEDULE 20: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS A SIGNIFICANT ACCOUNTING POLICIES:
1 Basis of Consolidation: The Consolidated Financial Statements relate to Sun Pharmaceutical Industries Limited (‘the Company’) and its Subsidiaries (together constitute ‘the Group’). The Consolidated Financial Statements have been prepared on the following basis: The financial statements of the Company and its Subsidiaries have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after eliminating intra-group balances, intra-group transactions and unrealised profits or losses as per Accounting Standard 21 ‘Consolidated Financial Statements’, as notified by the Companies (Accounting Standards) Rules, 2006. These financial statements have been prepared using uniform accounting policies for like transactions and other events in the similar circumstances. In case of foreign subsidiaries, being non-integral foreign operations, translation of financial statements for consolidation is done in accordance with the policy stated in Note 10 below. The consolidated financial statements of the Group include financial statements of certain subsidiaries prepared as of a different date from that of the Company’s financial statements. Adjustments for effects of significant transactions and events that have occurred between the date of the financial statements of these subsidiaries and the date of the Parent Company’s financial statements are made in the consolidated financial statements. The excess of cost of investment in the subsidiaries over the share of equity in the subsidiaries as at the date of making the investment is recognised in the financial statements as Goodwill. Goodwill arising out of consolidation is not amortised. However, the same is tested for impairment at each Balance Sheet date.The excess of share of equity of the subsidiaries over the cost of acquisition of the respective investments as at the date of making the investment is treated as Capital Reserve. For this purpose, share of equity is determined on the basis of the latest financial statements prior to the acquisition after making necessary adjustments for material events between the date of such financial statements and the date of respective acquisition. Minority Interest in the net assets of Subsidiaries consists of : i. the amount of equity attributable to the minorities at the date on which investment in Subsidiary is made and ii. the minorities’ share of movements in equity since the date the parent-subsidiary relationship came into existence. 2 Basis of Accounting The financial statements have been prepared under historical cost convention on an accrual basis and comply with the Accounting Standards as notified by Companies (Accounting Standards) Rules, 2006. Use of Estimates The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the year. Difference between the actual result and estimates are recognised in the year in which the results are known / materialised. Fixed Assets and Depreciation / Amortization Fixed Assets including Intangible assets are stated at historical cost (Net of cenvat credit) less accumulated depreciation / amortization thereon and impairment losses, if any. Depreciation on tangible assets is provided on Straight Line Method at the rates specified in Schedule XIV to the Companies Act, 1956 except for Caraco Pharmaceutical Laboratories Ltd. (Caraco),Taro Pharmaceutical Industries Ltd.(Taro), Alkaloida Chemical Company Zrt.,Sun Farmaceutica Ltda, Sun Pharmaceutical Industries (Australia) Pty. Ltd., Sun Pharmaceutical Industries (Europe) B.V., Sun Pharma Global (FZE), Sun Pharmaceutical Spain, SL., Sun Pharmaceuticals Italia S.R.L., Sun Pharmaceuticals Germany GmbH, Sun Pharmaceuticals France, TKS Farmaceutica Ltda. and Sun Pharmaceutical Industries Inc depreciation is computed using the Straight Line Method over the estimated useful lives of the related assets, which ranges from 3 to 100 years. Assets costing 5,000 or less are depreciated at 100% on pro-rata basis in the year of Purchase except, in case of Sun Pharmaceutical Spain, SL. where assets costing Euro 601 or less and in case of Sun Pharmaceuticals Italia S.R.L where assets costing Euro 516.46 or less are depreciated at 100% in the year of purchase. Leasehold
(i)
(ii) (iii)
(iv)
(v)
3
4
Annual Report 2010-11
97
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
land is amortised over the period of lease. At Taro, Leasehold improvements are depreciated using the straightline method over the shorter of their useful lives or the terms of leases generally 5 - 10 years. Intangible assets consisting of trademarks, designs, technical know-how, non compete fees and other intangible assets are amortized on Straight Line Method from the date they are available for use, at the rates as estimated by the Management considering the terms of agreement, which ranges from 3 to 20 years. 5 Leases In case of assets taken on operating lease, the lease rentals are charged to the Profit And Loss Account in accordance with Accounting Standard 19 on leases as notified by the Companies (Accounting Standards) Rules, 2006. Revenue Recognition Sales of products are recognised when risk and rewards of ownership of the products are passed on to the customers, which is generally on despatch of goods. Sales include delayed payment charges, and are stated net of returns, Vat /Sales Tax and provision for chargebacks, Medicaid, rebates, shelf stock adjustments, cash discounts and other sales deductions, made on the basis of management expectation taking into account past experience, customer experience, third-party prescription data, industry and regulatory changes and other relevant information which are revised as necessary. Investments Investments are classified into Current and Long Term Investments. Current Investments are valued at lower of cost and fair value. Long Term Investments are stated at cost less provision, if any, for other than temporary diminution in their value. Inventories Inventories consisting of raw and packing materials, stores and spares, work in progress and finished goods are stated at lower of cost (Raw and Packing Material - Specific Identificaiton Method; Stores and Spares - FIFO basis; Work in Progress and Finished Goods - Weighted Average Method) and net realisable value. In respect of Caraco Pharmaceutical Laboratories Ltd cost is determined on specific identification basis, in respect of Alkaloida Chemical Company Zrt and Sun Pharmaceutical Industries Inc cost is determined on FIFO basis, in respect of Taro Pharmaceutical Industries Ltd cost is determined on Average cost basis. Research and Development The research and development cost is accounted in accordance with Accounting Standard – 26 ‘Intangible Assets’. All related revenue expenditure incurred on original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding up to the time when it is possible to demonstrate probable future economic benefits, is recognised as research expenses and charged off to the profit and loss account, as incurred. All subsequent expenditure incurred for product development on the application of research findings or other knowledge upon demonstration of probability of future economic benefits, prior to the commencement of production, to the extent identifiable and possible to segregate are accumulated and carried forward as development expenditure under Capital Work in Progress, to be capitalised as an intangible asset on completion of the project. In case a project does not proceed as per expectations / plans, the same is abandoned and the amount classified as development expenditure under Capital Work in Progress is charged off to the profit and loss account. Foreign Currency Transactions and Traslation Transactions denominated in foreign currencies are recorded at the exchange rates that approximates the actual rate prevailing at the date of transaction. Monetary items denominated in foreign currency at the year end are translated at year end rates. In respect of monetary items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognised as exchange difference and the premium on such forward contracts is recognised over the life of the forward contract. The exchange differences arising on settlement / translation are recognised in the Profit and Loss account. The translation of the financial statements of non integral foreign operations is accounted for as under: a) All revenues and expenses are translated at average rate.
6
7
8
9
10
b) All monetary and non-monetary assets and liabilities are translated at the rate prevailing on the balance sheet. c) Resulting exchange difference is accumulated in Foreign Currency Translation Reserve on Consolidation until the disposal of the net investment in the said non integral foreign operation.
98
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
11
Taxes on Income Provision for taxation comprises of Current Tax and Deferred Tax. Current Tax provision has been made on the basis of reliefs and deductions available under relevent Tax laws. Deferred tax resulting from “timing differences” between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the assets can be realised in future. However, where there is unabsorbed depreciation or carry forward losses under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each Balance Sheet date. Employee Benefits (a) The Group’s contribution in respect of provident fund and other funds is charged to Profit and Loss Account each year. (b) With respect to gratuity liability, some of the entites in group contributes to Life Insurance Corporation of India (LIC) under LIC’s Group Gratuity policy. Gratuity liability as determined on actuarial basis by the independent valuer is charged to Profit and Loss Account. (c) Liability for accumulated compensated absences of employees is ascertained for on actuarial valuation basis and provided for as per group rules. Government Grants / Subsidy Government grants, if any, are accounted when there is reasonable assurance that the enterprise will comply with the conditions attached to them and it is reasonably certain that the ultimate collection will be made. Capital Subsidy in nature of Government Grants related to specific fixed assets is accounted for where collection is reasonably certain and the same is shown as a deduction from the gross value of the asset concerned in arriving at its book value and accordingly the depreciation is provided on the reduced book value. Derivative Accounting Forward Contracts in the nature of highly probable forcasted transactions / firm commitments entered into for hedging the risk of foreign currency exposure and other derivative contracts are accounted for on the principles of prudence as enunciated in Accounting Standard 1 (AS-1) “Disclosure of Accounting Policies”. Pursuant to this losses, if any on Mark to Market basis, are recognised in the Profit and loss Account and gains are not recognised on prudent basis. Borrowing Costs Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised. Other borrowing costs are recognised as an expense in the period in which they are incurred. Provisions, Contingent Liabilities and Contingent Assets Provisions are recognised only when there is a present obligation as a result of past events and when a reliable estimate of the amount of the obligation can be made. Contingent liability is disclosed for (i) Possible obligations which will be confirmed only by future events not wholly within the control of the Group 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 can not be made. Contingent Assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised. Impairment of Assets The Group assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the lower of recoverable amount and the carrying amount that would have been determined had no impairment loss been recognised. Common/Convertible Preferred Stock Issued Common/Convertible Preferred Stock is issued by Caraco from time to time in lieu of cash for directors fees and in exchange for fees towards formula for products developed by Parent & its affiliates and is recorded as compensatory expenses/research and development costs respectively.
12
13
14
15
16
17
18
Annual Report 2010-11
99
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
B 1
NOTES TO FINANCIAL STATEMENTS: The Consolidated Financial Statements present the consolidated accounts of Sun Pharmaceutical Industries Ltd with its following subsidiaries. Country of Incorporation Proportion of ownership interest for the year 2010-11 Proportion of ownership interest for the year 2009-10 Year End
Sr. No. Name of Subsidiaries
Direct Subsidiaries 1 2 3 4 5 6 7 8 9 10 11 12 13 Green Eco Development Center Ltd. Sun Pharma Global Inc. ZAO Sun Pharma Industries Ltd. Sun Pharmaceutical (Bangladesh) Ltd. Caraco Pharmaceutical Laboratories Ltd. (CARACO) TKS Farmaceutica Ltda Sun Pharma De Mexico S.A. DE C.V. Sun Pharmaceutical Industries Inc. Sun Farmaceutica Ltda SPIL De Mexico S.A. DE C.V. Sun Pharmaceutical Peru S.A.C. OOO “Sun Pharmaceutical Industries” Ltd. Sun Pharma de Venezuela, CA. Step down Subsidiaries 14 15 16 17 18 19 20 Caraco Pharma Inc. Chattem Chemicals Inc. Taro Development Corporation Sun Development Corporation I Alkaloida Chemical Company Zrt. Sun Pharmaceutical UK Ltd. Sun Pharmaceutical Industries (Australia) Pty. Ltd. United States of America United States of America United States of America United States of America Hungary United Kingdom Australia 75.83% 100.00% 100.00% — 99.99% 100.00% 100.00% 75.16% 100.00% — 100.00% 99.99% 100.00% 100.00% 31/03/2011 31/03/2011 31/03/2011 (See Foot note g) 31/03/2011 31/03/2011 31/03/2011 India British Virgin Islands Russia Bangladesh United States of America Brazil Mexico United States of America Brazil Mexico Peru Russia Venezuela 100.00% 100.00% 100.00% 72.50% 75.83% 90.14% 75.00% 100.00% — 100.00% 99.33% 99.00% 100.00% — 100.00% 100.00% 72.50% 75.16% 90.10% 75.00% 100.00% 99.94% 100.00% 99.33% 99.00% — 31/03/2011 31/03/2011 31/12/2010 (See Foot note e) 31/03/2011 31/03/2011 31/12/2010 (See Foot note f ) 31/12/2010 31/03/2011 (See Foot note f ) 31/12/2010 31/12/2010 31/12/2010 31/03/2011
100 Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
Sr. No. Name of Subsidiaries
Country of Incorporation
Proportion of ownership interest for the year 2010-11 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30%
Proportion of ownership interest for the year 2009-10 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% — — — — — — — — — — — — — — —
Year End
21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44
Aditya Acquisition Company Ltd.
Israel
31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/12/2010 (See Foot note b.) 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010
Sun Pharmaceutical Industries (Europe) B.V. The Netherlands Sun Pharmaceuticals Italia S.R.L. Sun Pharmaceutical Spain, SL. Sun Pharmaceuticals Germany GmbH Sun Pharmaceuticals France Sun Pharma Global (FZE) Sun Pharmaceuticals (SA) (Pty) Ltd. Sun Global Canada Pty. Ltd. Sun Laboratories Inc Morley and Company Inc Sun Laboratories FZE. Taro Pharmaceutical Industries Ltd.(TARO) Taro Pharmaceuticals Inc. Taro Pharmaceuticals U.S.A.,Inc. Taro Research Institute Ltd. Taro Pharmaceuticals North America, Inc. Taro Pharmaceuticals Europe B.V. Taro Pharmaceuticals Ireland Ltd. Taro International Ltd. Taro Pharmaceuticals UK Ltd. Taro Laboratories Ltd. Taro Hungary Intellectual Property Licensing LLC. 3 Skyline LLC Italy Spain Germany France U.A.E. South Africa Canada United States of America United States of America Sharjah, U. A. E. Israel Canada United States of America Israel Cayman Islands, British west Indies The Netherlands Ireland Israel United Kingdom United States of America Hungary United States of America
Annual Report 2010-11 101
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
Sr. No. Name of Subsidiaries
Country of Incorporation
Proportion of ownership interest for the year 2010-11 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30%
Proportion of ownership interest for the year 2009-10 — — — — — — — — —
Year End
45 46 47 48 49 50 51 52 53
One Commerce Drive LLC Taro Healthcare Limited Taro Industries Limited Taro Manufacturing Limited Tarochem Ltd. Taro Pharmaceutical Laboratories INC Taro Pharmaceuticals Canada, Ltd. Taro International Limited Taro Pharmaceutical India Private Ltd. Partnership Firm
United States of America United Kingdom United Kingdom United Kingdom Israel United States of America Canada United Kingdom India
31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/03/2011
54 55 56 57
Sun Pharmaceutical Industries Sun Pharma Exports Sun Pharma Sikkim Sun Pharma Drugs Controlled Entity
India India India India
97.50% 80.00% 97.50% 98.00%
97.50% 80.00% 97.50% —
31/03/2011 31/03/2011 31/03/2011 31/03/2011
58
Universal Enterprises (Pvt) Ltd.
India
97.50%
97.50%
31/03/2011
a. The Financial Statements of the Company and partnership firms at Sr. No. 54 and 56 are audited by Deloitte Haskins & Sells. The Financial Statements in respect of all Other subsidiaries and Partnership Firms are audited by other auditors except in respect of subsidiaries at Sr. No. 13,30 and 32 are unaudited and are consolidated on the basis of management accounts. b. The audited consolidated financial statements of Taro Pharmaceutical Industries Ltd and its 20 subsidiaries, listed under Sr.No. 33 to 53 above been drawn up for the year ended 31st December, 2010, where the reporting date is different from the reporting date of the Parent Company. The consolidated financial statements of this subsidiary group as on the date of the acquisition by the Parent Company on 20th September, 2010 have been prepared in accordance with the requirements of Accounting Standard 21, Consolidated Financial Statements as notified under the Companies (Accounting Standards) Rules, 2006 (“Accounting Standard 21”) by giving effects of significant transactions or other events that occur between the date of the latest available consolidated financial statements of the subsidiary group and the date of acquisition and reported upon by their auditors. Such consolidated financial statements of the subsidiary group for the period ended 31st December, 2010 have been further adjusted, in accordance with the said Accounting Standard 21, for significant transactions of the subsidiary group for the period from 1st January, 2011 to 31st March, 2011 on the basis of the reports of their auditors. The Group holds 66.30% and 77.30% of beneficial ownership and voting power respectively in the share capital of Taro Pharmaceutical Industries Ltd.
102 Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
c.
In respect of subsidiaries at Sr. No. 3, 6, 7, 10, 11 and 12, the reporting date is also as of 31st December, 2010 and different from the reporting date of the Parent Company and the financial statements have been audited by other auditors. In terms of Accounting Standard 21, adjustments have been made for significant transactions of these subsidiaries for the periods from 1st January, 2011 to 31st March, 2011 and 1st January, 2010 to 31st March, 2010, on the basis of their management accounts for the said periods.
d. Subsidiaries at Sr. No. 1, 13, 30, 32, and 57, have been incorporated during the year ended 31st March, 2011. e. The Company is in the process for Liquidation of ZAO Sun Pharma Industries Limited and has appointed Official Liquidator as per the terms of Resolution passed at the General Meeting of the Subsidiary held on 29th October, 2002. f. With effect from 01st October, 2010 Sun Farmaceutica Ltda has merged with Tks Farmaceutica Ltda.
g. With effect from 20th September, 2010 Sun Development Corporation I has merged with Taro Development Corporation. h. Significant Accounting Policies and Notes to these Consolidated Financial Statements are intended to serve as a means of informative disclosure and a guide for better understanding of the consolidated position of the Group. Recognising this purpose, the Group has disclosed only such policies and notes from the individual financial statements which fairly represent the needed disclosures. Lack of homogeneity and other similar considerations made it desirable to exclude some of them, which in the opinion of the management, could be better viewed when referred from the individual financial statements. As at 31st March, 2011 in Million 2 a) CONTINGENT LIABILITIES NOT PROVIDED FOR: Guarantees Given by the bankers on behalf of the Group Letters of Credit for Imports Liabilities Disputed - Appeals filed with respect to : Income Tax on account of Disallowances / Additions Withholding Tax due, relating to Employees of Taro Sales Tax on account of Rebate / Classification Excise Duty on account of Valuation / Cenvat Credit ESIC Contribution on account of applicability Drug Price Equalisation Account [DPEA] on account of demand towards unintended benefit , including interest there on, enjoyed by the Group Demand by JDGFT import duty with respect to import alleged to be in excess of entitlement as per the Advanced Licence Scheme Other Claims against the Group not acknowledged as debts (Includes 781.4 million pertaining to Taro) b) Estimated amount of contracts remaining to be executed on Capital Account (Net of Advances) 3 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 Group carries product liability insurance / is contractually indemnified by the manufacturer, for an amount it believes is sufficient for its needs. In respect of other claims, the group 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. 176.3 187.8 2,562.0 2,359.6 25.6 326.8 0.2 14.0 11.5 820.2 1,739.3 274.1 515.0 4,167.6 — 11.4 316.6 0.2 14.0 11.1 6.7 1,118.7 As at 31st March, 2010 in Million
Annual Report 2010-11 103
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
2010-11 in Million 4 RESEARCH AND DEVELOPMENT EXPENDITURE INCLUDE: On Revenue account On Capital account 5 Net Interest income Interest income Bank Deposits Loan Current Investment Long Term Investment Others 1341.6 Million (Previous Year 1,138.9 Million) comprises of : 928.8 84.7 134.7 427.6 343.1 1,918.9 Interest Expense Fixed Loans Others 212.7 364.6 577.3 6 Goodwill on consolidation ( Net ) comprises of: Goodwill in respect of Caraco Pharmaceutical Laboratories Ltd. Sun Farmaceutica Ltda Brazil (see note B 1(f )) TKS Framaceutica Ltda Universal Enterprises (P) Ltd. Taro Pharmaceutical Industries Ltd. Total (A) Less: Capital Reserve in respect of : Alkaloida Chemical Company Zrt. Total (B) Total ( A-B) 2,860.0 236.1
2009-10 in Million
2,083.1 159.0
963.2 128.6 1.4 99.4 7.8 1,200.4 57.8 3.7 61.5
5,012.0 — 400.1 7.5 3,182.6 8,602.2
4,563.5 44.8 327.0 7.5 — 4,942.8
882.5 882.5 7,719.7
882.5 882.5 4,060.3
7 Short-term Loan and Cash credit facility from Banks are secured by hypothecation of accounts receivable and inventory, mortgage covering the Groups’s manufacturing facility and equipment.
104 Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
Year ended 31st March, 2011 in Million 8 Accounting Standard (AS-20) on Earnings Per Share Profit After Tax Less : Minority Interest Profit used as Numerator for calculating Earnings per share Weighted Average number of Shares used in computing basic & diluted earnings per share Nominal value per share (in ) Basic and Diluted Earnings Per Share (in ) 19,073.7 913.1 18,160.6 1,035,581,955 1.0 17.5 13,469.8 (41.0) 13,510.8 1,035,581,955 1.0 13.0 Year ended 31st March, 2010 in Million
Consequent to the approval of the members of the Company and upon requisite regulatory compliance, during the year, one equity share of 5 each of the Company is sub-divided into five equity shares of 1 each fully paid-up. The Earnings Per Share e of 1 each has been restated for the previous year in accordance with Accounting Standard (AS-20) on “Earnings Per Share” as notified under The Companies (Accounting Standards) Rules, 2006. 9 Related Party Disclosure - as per Annexure ‘A’ annexed. a) Primary Segment The Group has identified “Pharmaceuticals” as the only primary reportable business segment. b) Secondary Segment (By Geographical Segment) India Outside India Total Sales in Million 24,947.2 33,118.6 58,065.8 in Million 18,506.6 20,354.8 38,861.4 10 Accounting Standard (AS-17) on Segment Reporting
In view of the interwoven / intermix nature of business and manufacturing facility, other segmental information is not ascertainable. 11 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 Group 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 Group. 12 (a) The Group 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 licences, or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Group has given refundable interest free security deposits in accordance with the agreed terms. (b) Lease receipts/payments are recognised in the Profit and Loss Account under “Rent” in Schedule 14 ,Schedule 18 and Schedule 19. (c) Operating lease Group as lessee The future minimum lease payments under non-cancellable operating lease - not later than one year 176.7 Million (Previous year 98.3 Million) - later than one year and not later than five years 477.1 Million (Previous year - later than five years 120.1 Million (Previous year 115.7 Million) Group as lessor The future minimum lease payments under non-cancellable operating lease - not later than one year 16 Million (Previous year 17.0 Million) - later than one year and not later than five years Nil (Previous year Nil) - later than five years Nil (Previous year Nil)
365.1 Million)
Annual Report 2010-11 105
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
Year ended 31st March, 2011 in Million 13 Remuneration to Auditors (excluding service tax) : Audit Fees In any other manner, for certification etc. Out of pocket expenses Total 142.8 2.5 0.2 145.5 27.3 0.5 0.2 28.0 Year ended 31st March, 2010 in Million
14 Other Operating Income includes upfront payment received in terms of settlement agreement for the grant of an exclusive license to the licensed patents and know how. 15 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 Contribution to Provident Fund Contribution to Employees State Insurance Scheme (ESIC) and Employees Deposit Linked Insurance (EDLI) Contribution to Labour Welfare Fund Employer’s Contribution to Family Pension Fund 115.4 Million (Previous year 96.5 Million) 106.3 6.2 0.1 2.8 90.3 3.9 0.1 2.2
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 47.4 Million (Previous Year 42.1 Million) and it covers all regular employees. Major drivers in actuarial assumptions, typically,, are years of service and employee compensation. After the issuance of Accounting Standard 15 on‘Employee Benefits’, commitments are actuarially determined using the ‘Projected Unit Credit’ method. Gains and losses on changes in actuarial assumptions are accounted for in the Profit and Loss account. Category of Plan Assets : The Company’s Plan Assets in respect of Gratuity are funded through the Group Scheme of the LIC of India. In respect of gratuity (funded):
106 Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
in Million Year ended 31st March, 2011 Reconciliation of liability recognised in the Balance sheet Present value of commitments (as per Actuarial Valuation) Fair value of plan assets Net asset in the Balance sheet Movement in net liability recognised in the Balance sheet Net liability / (assets) as at the beginning of the year Net expense recognised in the Profit and Loss account Contribution during the year Net liability / (assets) in the Balance sheet Expense recognised in the Profit and Loss account Current service cost Interest cost Expected return on plan assets Actuarial loss Expense charged to the Profit and Loss account Return on plan assets Expected return on plan assets Actuarial gain Actual return on plan assets Reconciliation of defined-benefit commitments Commitments as at the beginning of the year Current service cost Interest cost Paid benefits Actuarial loss Commitments as at the year end Reconciliation of plan assets Plan assets as at the beginning of the year Expected return on plan assets Contributions during the year Paid benefits Actuarial gain Plan assets as at the year end 31st March, 2010
257.3 284.2 27.0 (16.8) 30.6 (40.7) (27.0) 26.7 18.9 (21.4) 6.4 30.6 21.4 3.4 24.9 219.5 26.7 18.9 (17.6) 9.8 257.3 236.3 21.4 40.7 (17.6) 3.4 284.2
219.5 236.3 16.8 (46.3) 61.1 (31.7) (16.8) 19.8 12.5 (17.1) 45.8 61.1 17.1 3.4 20.5 148.1 19.8 12.5 (10.3) 49.2 219.5 194.4 17.1 31.7 (10.3) 3.4 236.3
The actuarial calculations used to estimate commitments and expenses in respect of gratuity and compensated absences are based on the following assumptions which if changed, would affect the commitment’s size, funding requirements and expense. Discount rate Expected return on plan assets Expected rate of salary increase Mortality 8.25% 8.00% 8.25% 8.00% 6.00% 6.00% LIC (1994-96) Ultimate
The estimates of future salary increases, considered in the actuarial valuation, take into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.
Annual Report 2010-11 107
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
in Million Year ended 31st March, 2011 31st March, 2010 31st March, 2009 31st March, 2008 31st March, 2007 Experience adjustment On plan liabilities On plan assets Present value of benefit obligation Fair value of plan assets Excess of (obligation over plan assets) / plan assets over obligation 18.1 3.4 257.3 284.2 27.0 57.2 3.4 219.5 236.3 16.8 5.4 4.1 148.1 194.3 46.2 127.4 2.5 111.0 107.0 (4.0) 3.2 1.2 76.0 85.4 0.8
The contribution expected to be made by the Company during financial year ending 31st March, 2012 is
38.7 Million.
The above disclosure is provided to the extend applicable and available from the individual Financial Statements of subsidiaries. 16 The following are the outstanding Derivative Contracts entered by the Company & some of its Subsidiaries as on 31st March, 2011. Nature of Derivative Contract Currency Buy / Sell Cross Currency
Amount in Million
As at 31st March, 2011 $ 315.0 $ 7.7 $ 1.0 2010-11 In Million 406.0 21.5 427.5
As at 31st March, 2010 $ 175.0 — — 2009-10 In Million (32.6) 105.9 73.3
Forward Contracts Cross Currency Swaps Interest Rate Swaps
US Dollar Israeli New Shekel US Dollar
Sell Buy Sell
RUPEES US Dollar US Dollar
17 Profit / (Loss) on Sale of Investments (net) Profit / (Loss) on Sale of Current Investments (net) Profit / (Loss) on Sale of Long Term Investments (net)
18 Caraco has announced the proposal of merger with another subsidiary of the Company, subject to the approval of Caraco’s stockholders. Upon such approval of this arrangement Caraco will become a wholly owned subsidiary of the Company. 19 As a result of the FDA action, Caraco Pharmaceutical Laboratories Ltd. (Caraco) had voluntarily ceased manufacturing operations. Caraco has engaged a consulting firm which is comprised of current good manufacturing practice (“cGMP”) experts, in accordance with the Consent Decree, and submitted a work plan to the FDA in October 2009 for remedial actions leading to resumption of its manufacturing operations. The FDA approved Caraco’s work plan on March 17, 2010 after reviewing and suggesting certain modifications. On June 24, 2010 the FDA notified Caraco that its protocol for third party cGMP certification and batch certification, detailing the activities to be conducted by the cGMP consultants, was acceptable. Caraco is in the process of implementing the corrective actions and remedial measures as stipulated in the work plan. 20 The consolidated Financial Statements includes total assets of 25,670.9 Million and total liabilities of 6,948.0 Million as on 31st March, 2011 and total revenues of 9,946.3 Million, Profit before Tax of 2,464.5 Million and Profit after Tax of 2,028.5 Million for the period from 20th September, 2010 to 31st March, 2011, consequent to acquisition of Taro Group with effect from 20th September, 2010.
108 Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
21 At the date of acquisition of Taro Group on 20th September, 2010, the Group has inter alia taken over net deferred tax assets aggregating 3193.7 Million of which 190.7 Million has already been set off as TARO Group has reported profit before tax of 2464.5 Million for the period from 20th September, 2010 to 31st March, 2011. The balance of such deferred tax assets comprises timing difference related to accrued expenses, net operating losses carried forward, amortisation and R & D expenses. TARO Group has a history of profitability except that tax losses had arisen in some of the years mainly on account of unanticipated extraordinary excessive product return. Based on this performance, favourable business environment, current product portfolio, new products under development and products having exclusivity period in the Unites States of America, the Management believes continuation of such profitability over future period, which represents virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised. 22 Taro Pharmaceutical Industries Ltd has closed during 2010, the manufacturing facility of its subsidiary in Ireland and decided to sell the facility. The related assets of 194.3 Million, Liabilities of 11.6 Million, Revenues of 11.9 Million and losses of 31.6 Million attributable to its Irish Subsidiary has been considered in the Consolidated Financial Statements. 23 With respect to payment under various loan agreements, TARO is not in compliance with certain financial reporting covenants and other provisions contained in the related loan agreements. Due to this, various creditors have the right to accelarete their indebtedness and certain creditors may elect to proceed against the collateral granted to them to secure such indebtedness. In the event such indebtedness is accelerated, Management believes that it has sufficient capacity to satisfy such obligation. Also with filling of Annual Reports of the company from 2007 to 2010, TARO would be in complince of all financial and reporting requirements under the debt instrument prospectively. 24 In terms of Collective bargaining agreement between Taro Pharmaceutical Industries Ltd (employer) with it’s employees at Israel, a one time payment of 66.78 Million has been accrued as on March 2011,which is to be divided among Taro Israeli Employees.. 25 As per the best estimate of the management, provision has been 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. 2010-11 In Million Provision* Opening balance Add: Taken over on acquisition of Taro Add: Provision for the year Less: Utilisation / Settlement Closing balance 19.3 4,470.4 7,497.2 (7,251.6) 4,735.3 2009-10 In Million 7.0 — 12.3 — 19.3
* The above includes provisions for Product returns, Chargebacks, Medicaid, cash discount and rebates and Pending Lawsuits, penalties and fines (air pollution,waste water). Provisions for returns, Medicaid and indirect rebates are included in current liabilities. All other sales deductions allowances are recorded as accounts reveivable reserves/provisions and reduced from debtors. The provisions for returns is included in current liabilities as substantially all of these returns will not be realized until after the year-end accounts receivable balances are settled. Medicaid and indirect rebates are included in current liabilities because the Company does not have direct customer relationships with any of the payees. 26 Statement regarding subsidiary companies as required under section 212 (8) of the Companies Act, 1956 pursuant to General Circular no. 2/2011 dated February 8th, 2011 issued by the Ministry of Corporate Affairs - As per Annexure 'B' 27 Figures pertaining to the subsidiary companies have been reclassified wherever necessary to bring them in line with the group financial statements. 28 Previous year’s figures are restated / regrouped / rearranged wherever necessary in order to confirm to current year’s groupings and classifications.
Annual Report 2010-11 109
ANNEXURE ‘A’ TO NOTES TO FINANCIAL STATEMENTS
(CONSOLIDATED)
ACCOUNTING STANDARD (AS-18) “ RELATED PARTY DISCLOSURE “
Names of related parties and description of relationship 1. Key Management Personnel Mr. Dilip S. Shanghvi Mr. Sudhir V. Valia Mr. Sailesh T. Desai Mr. S. Kalyanasundaram Mr. Aalok Shanghvi Ms. Khyati Valia Chairman & Managing Director Wholetime Director Wholetime Director Chief Executive Officer and Wholetime Director Son of Chairman and Managing Director Daughter of Wholetime Director
2. Relatives of Key Management Personnel 3. 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 Reanal Ltd Sugandh Management Consultancy in Million
Particulars
Key Management Personnel
Relatives of Key Management Personnel
Enterprise under Significant Influence of Key Management Personnel or their relatives 31/03/2011 1.1 0.9 0.2 0.2 0.2 13.7 1.7 12.0 0.2 0.2 — 95.2 95.2 0.5 0.5
Total
31/03/2011 31/03/2010 31/03/2011 Purchases of goods / DEPB Sun Petrochemical Pvt Ltd Reanal Ltd Purchase of Fixed Assets Sun Pharma Advanced Research Company Ltd Sale of goods / DEPB Sun Petrochemical Pvt Ltd Sun Pharma Advanced Research Company Ltd Sale of Fixed Asset Sun Pharma Advanced Research Company Ltd Sun Petrochemical Pvt Ltd Receiving of Service / Reimbursement Services Sun Pharma Advanced Research Company Ltd Reimbursement of Expenses Sun Pharma Advanced Research Company Ltd Rendering of Service / Reimbursement Services Sun Petrochemical Pvt Ltd — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
31/03/2010 — — — — — — — — — — — — — — —
31/03/2010 31/03/2011 31/03/2010 1.1 1.1 — — — 17.8 4.2 13.6 19.1 — 19.1 12.4 12.4 1.1 1.1 1.1 0.9 0.2 0.2 0.2 13.7 1.7 12.0 0.2 0.2 — 95.2 95.2 0.5 0.5 1.1 1.1 — — — 17.8 4.2 13.6 19.1 — 19.1 12.4 12.4 1.1 1.1
— —
— —
— —
— —
— —
3.8 3.8
— —
3.8 3.8
110 Sun Pharmaceutical Industries Limited
ANNEXURE ‘A’ TO NOTES TO FINANCIAL STATEMENTS
(CONSOLIDATED)
in Million Particulars Key Management Personnel Relatives of Key Management Personnel Enterprise under Significant Influence of Key Management Personnel or their relatives 31/03/2011 24.8 24.8 140.7 140.7 131.4 131.4 — — 1.4 0.1 1.3 — — — — — — — — 20.9 20.9 — — — — — Total
31/03/2011 31/03/2010 31/03/2011 Reimbursement of Expenses Sun Pharma Advanced Research Company Ltd Loans Given Sugandh Management Consultancy Loans Received back / Share Application Money Refund Sugandh Management Consultancy Corporate Guarantee Given/ (Released) on behalf Sun Pharma Advanced Research Company Ltd Rent Income Navjivan Rasayan (Gujarat) Pvt Ltd Sun Pharma Advanced Research Company Ltd Director’s Remuneration Mr. Dilip S. Shanghvi Mr. Sudhir V. Valia Mr. Sailesh T. Desai Mr. S. Kalyanasundaram Apprenticeship Stipend / Remuneration Mr. Aalok Shanghvi Ms. Khyati Valia Outstanding Receivables / (Payables) (Net) Sun Pharma Advanced Research Company Ltd Mr. Dilip S. Shanghvi Mr. Sudhir V. Valia Mr. Sailesh T. Desai Mr. S. Kalyanasundaram Others — — — — — — — — — — — 61.6 16.9 16.9 7.8 20.0 — — — (11.7) — (3.6) (3.6) (1.4) (3.1) — — — — — — — — — — — — 35.8 15.0 15.0 5.8 — — — — (7.6) — (3.2) (3.2) (1.2) — — — — — — — — — — — — — — — — — — 1.4 0.9 0.5 (0.2) — — — — — (0.2)
31/03/2010 — — — — — — — — — — — — — — — — 0.8 0.5 0.3 (0.2) — — — — — (0.2)
31/03/2010 31/03/2011 31/03/2010 25.9 25.9 413.9 413.9 113.9 113.9 (125.0) (125.0) 0.7 0.1 0.6 — — — — — — — — 48.4 47.1 — — — — 1.3 24.8 24.8 140.7 140.7 131.4 131.4 — — 1.4 0.1 1.3 61.6 16.9 16.9 7.8 20.0 1.4 0.9 0.5 9.0 20.9 (3.6) (3.6) (1.4) (3.1) (0.2) 25.9 25.9 413.9 413.9 113.9 113.9 (125.0) (125.0) 0.7 0.1 0.6 35.8 15.0 15.0 5.8 — 0.8 0.5 0.3 40.6 47.1 (3.2) (3.2) (1.2) — 1.1
Annual Report 2010-11 111
ANNEXURE ‘B’TO NOTES ON ACCOUNT
(CONSOLIDATED)
Statement regarding subsidiary companies as required under section 212 (8) of the Companies Act, 1956 pursuant to General Circular no. 2/2011 dated February 8th, 2011 issued by the Ministry of Corporate Affairs:
in Million
SR NO Name of the Subsidiary Company Reporting Curency Exchange Rate as on 31st March, 2011 1.00 44.52 1.57 0.61 44.52 27.27 3.74 44.52 27.27 3.74 15.87 1.57 10.50 Capital Reserve Total Assets Total Liabilities Investment Turnover other than Investment in Subsidiary — 2,480.1 — — 445.2 — — — — — — — — — — — 323.2 13,800.1 445.3 468.6 194.6 67.8 — — 292.6 — Profit / (Loss) before Taxation (0.1) 667.1 — 85.0 (562.9) (76.4) 56.9 (1,808.9) (5.7) — (7.5) (0.4) — Provision for Taxation — — — 30.7 (199.0) — 16.4 Profit / (Loss) after (0.1) 667.1 — 54.3 (363.9) (76.4) 40.5 Proposed Dividend
1 2 3 4 5 6 7 8 9 10 11 12 13
Green Eco Development Center Ltd. Sun Pharma Global Inc. Zao Sun Pharma Industries Ltd. Sun Pharmaceutical (Bangladesh) Ltd Caraco Pharmaceutical Laboratories Ltd TKS Farmaceutica Ltda Sun Pharma De Mexico S.A. DE C.V. Sun Pharmaceutical Industries Inc. Sun Farmaceutica Ltda SPIL De Mexico S.A. DE C.V. Sun Pharmaceutical Peru S.A.C OOO “Sun Pharmaceutical Industries” Ltd. Sun Pharma de Venezuela, CA. Caraco Pharma Inc. Chattem Chemicals Inc Taro Development Corporation Sun Development Corporation I Alkaloida Chemical Company Zrt. Sun Pharmaceutical UK Ltd. Sun Pharmaceutical Industries (Australia) Pty. Ltd. Aditya Acquisition Company Ltd. Sun Pharmaceutical Industries (Europe) B.V. Sun Pharmaceuticals Italia S.R.L. Sun Pharmaceutical Spain, SL. Sun Pharmaceuticals Germany GmbH
INR USD RRU TAKA USD Brazilian reais Mexican Pesos USD Brazilian reais Mexican Pesos Soles RRU Venezuelan Bolivan Fuerte (VEF) USD USD USD USD HUF GBP AUD Israeli New Shekel, NIS EURO EURO EURO EURO
1.0 110.1 0.0 36.6 6,306.4 152.0 3.8 0.2 — 0.2 0.0 0.1 1.1
(0.1) 28,058.9 (0.0) 125.3 255.5 (86.7) 66.0 (3,138.3) — — (22.1) 1.0 —
1.0 42,112.0 — 282.4 8,989.4 540.8 417.2 5,732.5 — 0.2 0.9 406.4 3.6
0.1 13,943.1 — 120.6 2,427.5 475.5 347.4 8,870.5 — — 23.0 405.3 2.6
— — — — — — — — — — — — —
(630.4) (1,178.5) — — — 0.6 — (5.7) — (7.5) (1.0) —
14 15 16 17 18 19 20 21 22 23 24 25
44.52 44.52 44.52 44.52 0.24 71.37 45.98 12.81 63.06 63.06 63.06 63.06
— 1,533.0 0.0 0.0 1,694.5 0.1 0.0 0.0 1.1 0.6 0.2 1.6
— 315.6 (0.0) (0.0) (1,124.7) (75.4) (0.8) (0.0) (115.8) 30.3 (103.3) (73.7)
— 1,930.3 884.5 884.4 24,033.2 152.7 0.1 — 123.3 142.8 128.1 124.6
— 81.7 884.5 884.5 23,463.3 228.0 1.0 0.0 238.0 112.0 231.2 196.7
— — — — 151.9 — — — — — — —
— 1,180.4 — — 865.8 220.1 — — 148.9 66.8 60.9 95.0
— 223.0 (0.0) — (642.7) (28.9) (0.6) 0.0 (45.7) (70.6) (67.3) (50.3)
— 46.7 — — — — — — — (18.2) (16.3) 6.3
— 176.3 (0.0) — (642.7) (28.9) (0.6) 0.0 (45.7) (52.4) (51.0) (56.6)
— — — — — — — — — — — —
112 Sun Pharmaceutical Industries Limited
ANNEXURE ‘B’TO NOTES ON ACCOUNT
(CONSOLIDATED)
Statement regarding subsidiary companies as required under section 212 (8) of the Companies Act, 1956 pursuant to General Circular no. 2/2011 dated February 8th, 2011 issued by the Ministry of Corporate Affairs:
in Million
SR NO Name of the Subsidiary Company Reporting Curency Exchange Rate as on 31st March, 2011 63.06 44.52 6.60 44.52 44.52 44.52 44.52 44.52 45.90 44.52 44.52 44.52 63.06 63.06 44.52 71.37 71.37 44.52 71.37 71.37 71.37 45.90 71.37 1.00 Capital Reserve Total Assets Total Liabilities Investment Turnover other than Investment in Subsidiary — — — — — — — — — 164.4 — — — — — — — — — — — — — — 5.7 6,333.5 — — — — — 7,836.4 5,803.6 13,634.9 986.3 1,045.8 — — 268.0 663.0 — — — — — — — — Profit / (Loss) before Taxation (29.6) 3,174.4 (0.0) (0.3) — — (0.0) 1,710.8 481.9 1,073.5 46.6 532.5 (3.2) (581.0) (17.8) (32.9) — (0.4) — — — — — — Provision for Taxation — — — — — — — 57.7 53.4 399.4 19.7 (45.0) (0.3) — — — — — — — — — — — Profit / (Loss) after Taxation (29.6) 3,174.4 (0.0) (0.3) — — (0.0) 1,653.1 428.5 674.1 26.9 577.5 (2.8) (581.0) (17.8) (32.9) — (0.4) — — — — — — Proposed Dividend
26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49
Sun Pharmaceuticals France Sun Pharma Global (FZE) Sun Pharmaceuticals (SA) (Pty) Ltd. Sun Global Canada Pty. Ltd. Sun Laboratories Inc. Morley and Company Inc. Sun Laboratories FZE. Taro Pharmaceutical Industries Ltd. Taro Pharmaceuticals Inc. Taro Pharmaceuticals U.S.A., Inc. Taro Research Institute Ltd. Taro Pharmaceuticals North America, Inc. Taro Pharmaceuticals Europe B.V. Taro Pharmaceuticals Ireland Ltd. Taro International Ltd. (Israel) Taro Pharmaceuticals UK Ltd. Taro Laboratories Ltd. Taro Hungary Intellectual Property Licensing LLC. Taro Healthcare Limited Taro Industries Limited Taro Manufacturing Limited Taro Pharmaceuticals Canada, Ltd. Taro International Limited - UK Taro Pharmaceutical India Private Ltd.
EURO USD ZAR USD USD USD USD USD CAD USD USD USD EURO EURO USD GBP GBP USD GBP GBP GBP CAD GBP INR
2.3 183.6 0.0 0.0 0.0 0.1 545.5 30.3 0.0 6.5 0.0 0.0 1.1 31.6 0.0 0.0 0.0 1.5 0.1 0.1 0.1 0.0 0.1 0.1
(68.2) 14,923.5 (0.0) — — — (0.0) 16,945.7 5,446.6 (4,146.4) (17.0) 2,276.6 (19.5) (3,812.4) (50.6) (526.5) — (1.6) — — — (0.0) — 1.0
20.6 16,409.9 0.0 0.4 0.0 0.1 545.4 21,360.3 6,407.4 10,724.2 1,016.2 2,751.4 2.7 250.7 244.9 631.5 0.0 4,528.2 0.1 0.1 0.1 0.1 0.1 1.4
86.6 1,302.7 0.0 0.4 0.0 — — 4,384.3 960.8 14,864.2 1,033.2 474.8 21.1 4,031.4 295.5 1,158.0 0.0 4,528.3 0.1 — — 0.1 — 0.3
— — — — — — — — — — — — — — — — — — — — — — — —
Note : 1 ‘0.0’ represents amount less than 0.05 million and rounded off. 2 The above does not include 3 Skyline LLC, One Commerce Drive LLC, Tarochem Ltd and Taro Pharmaceutical Laboratories INC being subsidiaries of Taro Pharmaceutical Industries Ltd as they have no operation and does not have any Assets, Liabilities or Equity as on the close of their Financial Year ending as on 31st December, 2010. 3 Figures disclosed above are as per the statutory year end of the respective subsidiaries and in respect of Taro Pharmaceutical Industries Ltd. and its subsidiaries, figures are for the year ended 31st December, 2010.
CORPORATE INFORMATION
BOARD OF DIRECTORS Mr. Dilip S. Shanghvi Chairman & Managing Director Mr. Sudhir V. Valia Whole-time Director Mr. S. Kalyanasundaram CEO and Whole-time Director (w.e.f.1st April, 2010) Mr. Sailesh T. Desai Whole-time Director Mr. S. Mohanchand Dadha Director Mr. Hasmukh S. Shah Director Mr. Keki M. Mistry Director Mr. Ashwin Dani Director COMPANY SECRETARY Mr. Kamlesh H. Shah (Upto 31st March, 2011) Mr.Sunil R. Ajmera (From 1st April, 2011) Email:[email protected] AUDITORS Deloitte Haskins & Sells Chartered Accountants, Mumbai BANKERS Bank of Baroda Bank of Nova Scotia Citibank N.A. ICICI Bank Ltd Kotak Mahindra Bank Ltd Standard Chartered Bank State Bank of India REGISTRARS & SHARE TRANSFER AGENTS
Link Intime India Pvt. Ltd. C/13, Kantilal Maganlal Estate, Pannalal Silk Mills Compound, L B S Marg, Bhandup (West), Mumbai ? 400 078 Tel: (022)-25946970 Fax: (022)-25946969 E-mail: [email protected] [email protected]
Additional Collection Center
203, 2nd Floor, Daver House, Dr. D. N Road, Next to Central Camera, Fort, Mumbai - 400 001. Tel- (022) 22694127
PLANTS
Plot No. 214, Plot no. 20, Govt. Industrial Area,Phase II, Piparia. Silvassa - 396 230, U.T. of D & NH Halol-Baroda Highway Near Anand Kendra, Halol, Dist. Panchmahal - 389350, Gujarat. Plot No. 24/2 & 25, GIDC, Phase-IV, Panoli - 394 116. Dist. Bharuch, Gujarat. A-7 & A-8, MIDC Ind. Area, Ahmednagar - 414 111, Maharashra. Plot No. 4708, GIDC. Ankleshwar - 393 002, Gujarat. Sathammai Village, Karunkuzhi Post, Maduranthakam TK, Kanchipuram District, Tamil Nadu - 603 303. Plot No. 223, Span Industrial Complex, Dadra - 396 191, U.T of D. & NH. Plot No. 817/A, Karkhadi, Taluka Padra, Dist. Vadodara - 391 450, Gujarat. Sun Pharma Sikkim, * Plot No. 754, Nandok Block, Setipool, P.O. Ranipool, Sikkim ? 737135. Sun Pharmaceutical Industries, * Survey No. 259/15, Dadra - 396 191, U.T. of D. & NH. Sun Pharmaceutical Industries, * 6-9 Export Promotion Industrial Park (EPIP), Kartholi, Bari Brahmana, Jammu - 181 133, J&K Sun Pharmaceutical Industries Inc., 705, E. Mulberry Street, Bryan, Ohio ? 43506, USA. Sun Pharmaceutical Industries Inc., 270 Prospect Plains Road, Cranbury, New Jersey ? 08512, USA. Caraco Pharmaceutical Laboratories Ltd., 1150 Elijah McCoy Drive, Detroit ? 48202, Michigan, USA. Sun Pharmaceutical (Bangladesh) Ltd., Chandana, Joydevpur, Gazipur, Bangladesh. Alkaloida Chemical Company Zrt, H-4440 Tiszavasvari , Kabay, Janos u.29, Hungary. TKS Farmaceutica Ltda., Rodovia GO-080, Km 02, Chacaras 01/02, Jardim Pompeia, Goiania/GO, Brazil CEP: 74690-170. Sun Pharma de Mexico S.A. de C.V, Av. Rio Churubusco No. 658, Col. El Sifon, Del. Iztapalapa, C.P 09400 Mexico, Distrito Federal Chattem Chemicals, Inc., 3708,St. Elmo Avenue, Chattanooga, TN 37409, USA Taro Pharmaceuticals Inc., 130 East Drive, Brampton, Ontario L6T 1C1, Canada Taro Pharmaceutical Industries Ltd., 14 Hakitor Street, P.O. Box 10347 Haifa Bay 26110, Israel
OFFICES
Registered Sun Pharma Advanced Research Centre (SPARC), Tandalja, Vadodara ? 390 020, Gujarat. Corporate Acme Plaza, Andheri Kurla Road, Andheri (East), Mumbai ? 400 059, Maharashtra .
RESEARCH CENTRES
Sun Pharma Advanced Research Centre (SPARC), Akota Road, Akota, Vadodara ? 390 020, Gujarat. F.P.27, Part Survey No. 27, C.S. No. 1050, TPS No. 24, Village Tandalja, District Vadodara - 390 020, Gujarat, India. 17-B, Mahal Industrial Estate, Mahakali Caves Road, Andheri (East) Mumbai - 400 093, Maharashtra Chemistry and Discovery Research Israel, 14 Hakitor Street, P.O. Box 10347 Haifa Bay 26110, Israel
* With partnership ?rm Sun Pharmaceutical Industries/Sun Pharma Sikkim.
Acme Plaza, Andheri - Kurla Rd, Andheri (E), Mumbai - 400 059. Tel : 91-22-66969696 Fax: 91-22-28212010 www.sunpharma.com
doc_231544881.pdf
The report for the financial year 2010 - 2011 of sun pharmaceuticals.
NATURAL PROGRESSION
Annual Report 2010-11
CONTENTS
Natural Progression
Lines depicting steps—incremental change, gradual growth, lines sloping upwards. Innumerable such steps adding up, to form a smooth growth pattern when seen from a distance. Progress shown with lines racing to the distance, to infinity. The cover shows an artist’s interpretation of the company’s progress
02 Key Performance Indicators 03 Ten Year Financial Highlights 04 Management Discussion and Analysis 22 Directors’ Report 25 Annexure to Directors’ Report 28 Auditors’ Report 32 Balance Sheet 33 Profit and Loss Account 34 Cash Flow Statement 69 Corporate Governance 83 Auditors’ Report Consolidated 84 Consolidated Balance Sheet 85 Consolidated Profit and Loss Account 86 Consolidated Cash Flow Statement 111 Statement Relating to Subsidiary ompanies
Corporate Information
Inside Back Cover
Disclaimer
Statements in this Management Discussion and Analysis describing the Company s objectives, projections, estimates, expectations, plans or predictions or industry conditions or events may be forward looking statements within the meaning of applicable securities laws andregulations. Actual results, performance or achievements could di?er materially from those expressed or implied. Important factors that couldmake a di?erence to the company s operations include global and Indian demand supply conditions, ?nished goods prices, feedstock availability and prices, and competitors pricing in the Company s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts businesses and other factors such as litigation and labour unrest or other di?culties. The Company assumes no responsibility to publicly update, amend, modify or revise any forward looking statements, on the basis of any subsequent development, new information or future events or otherwise except as required by applicable law. Unless the context otherwise requires, all references in this document to we , us or our refers to Sun Pharmaceutical Industries Limited and consolidated subsidiaries.
2010-11 was a good year for Sun Pharma,
as were the preceding years. Our financial performance was strong, we completed a significant acquisition, enriched the portfolio of products we offer in the US, strengthened our speciality rankings in India and rest of world markets, added to our intellectual capital, and yet again reaffirmed our commitment to high standards of corporate governance and stakeholder transparency. We are today the largest Indian company in the US generics space, the largest pharma company in India in chronic therapies, and an emerging force in the rest of the world markets. We believe each development over the past year, incremental as it may seem in isolation, is part of a natural growth trajectory that builds from strength to strength. We will endeavor to drive future value through our steadily growing base business, complemented with acquisitions and alliances, while retaining the same respect for the bottomline.
2001-02 7552 9812 9995 12301 18042 23745 35017 44808 42123 59913 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 93798 2010-11
4956
2001-02
2
2002-03
5141
(`. in Million)
(`. in Million)
2003-04
7540
2004-05
10366
Total Income
2005-06
14959
2006-07 48879 69414 77254
26747
Reserve and Surplus
2007-08
2008-09
Sun Pharmaceutical Industries Ltd.
2009-10
2010-11
2001-02 1707 2444 3446 4002 5730 8402 15509 18780 13470 19074 336 966 1268 1427 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2242 3096 2015 2787 2859 3320 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 14625 15328 2009-10 25234 2001-02 2002-03 2003-04 2004-05 2010-11 2008-09
2092
2001-02
2002-03
2682
(`. in Million)
(`. in Million)
2003-04
4518
Net Block
2004-05
5719
Pro?t After Tax
2005-06
8563
2006-07
9514
2007-08
10354
KEY PERFORMANCE INDICATORS
2008-09
2009-10
* During the ?nancial year 2002-03, each Equity shares of `.10/-each was split into two equity share of `.5/- each. (In `.) (`. in Million)
During the ?nancial year 2010-11, each Equity shares of `.5/-each was split into ?ve equity share of `.1/- each.
2010-11
2001-02
35.6
2002-03
26.4
2003-04
35.4
2004-05
21.3
2005-06 41.7 74.7 87.8 65.2
30.9
R & D Expenditure
2006-07
2007-08
2008-09
Earning Per Share - Basic*
2009-10
2010-11
17.5
Annual Report 2010 -11
3
PERFORMANCE AND FINANCIAL HIGHLIGHTS
TEN YEAR FINANCIAL HIGHLIGHTS
(`. in Million)
Consolidated
Particulars Operating Performance Income from Operations Total Income Pro?t after tax R&D Expenditure a) Capital b) Revenue c) % of Turnover Financial Position Equity Share Capital Reserve and Surplus Gross Block Net Block Investment Net Current Asset Stock Information Number of Shares Earnings per ShareBasic (In `)* Earning Per ShareDiluted (In `.)* 35.6 13.2 17.7 20.7 27.7 38.9 71.8 87.8 65.2 17.5 35.6 26.4 35.4 21.3 30.9 41.7 74.7 87.8 65.2 17.5 46,774,537 93,048,478 92,755,678 185,511,356 185,731,637 193,402,120 207,116,391 207,116,391 207,116,391 1,035,581,955 468 4956 3007 2092 818 2410 465 5141 4033 2682 38 3725 464 7540 6232 4518 1765 4808 928 10366 7806 5719 6485 16360 929 14959 12342 8563 3541 23006 967 26747 14252 9514 2543 26843 1036 48879 15960 10354 6565 33995 1036 69414 21476 14625 18595 35485 1036 77254 23340 15328 31664 28542 1036 93798 45520 25234 22310 45939 7505 7552 1707 336 197 139 5% 9725 9812 2444 966 363 603 12% 9847 9995 3446 1268 598 670 13% 11983 12301 4002 1427 418 1009 12% 17372 18042 5730 2015 481 1534 12% 22373 23745 8402 2787 347 2440 13% 34606 35017 15509 2859 134 2725 9% 43751 44808 18780 3320 222 3098 8% 38086 42123 13470 2242 159 2083 6% 57214 59913 19074 3096 236 2860 5% 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
* During the ?nancial year 2002-03, each Equity shares of `.10/-each was split into two equity share of `.5/- each. During the ?nancial year 2010-11, each Equity shares of `.5/-each was split into ?ve equity share of `.1/- each.
4
Sun Pharmaceutical Industries Ltd.
MANAGEMENT DISCUSSION AND ANALYSIS
THE GLOBAL PHARMA MARKET
Global Pharma quick facts 2010 Outlook
Global pharma market is expected to grow by 5-7% to reach US$ 880
billion in 2011
Global pharma market to reach US$
1.1 trillion by 2014
US pharma market will reach anywhere between US$ 320 and
350 billion by 2015
European markets to reach up to
US$ 160 billion by 2015
View of Ahmednagar Plant
(Source: IMS Health)
The global pharma market has registered 4.1% growth to reach US$856 billion. Global generic drug spending is estimated to be US$ 234
The 17 pharmerging countries of China, India, Russia, Brazil, Turkey, Venezuela, Poland, Argentina, Mexico, Vietnam, South Africa, Thailand, Indonesia, Romania, Egypt, Pakistan and Ukraine stood at US$ 150.5 billion. The Indian pharma market
A
GROWTH OF WORLDWIDE PHARMA SPENDING OVER THE YEARS
2006 2007 2008 6.1 2009 7.1 6.9 7 2010 4.1
2005
billion.
The US pharmaceutical market stood at US$310.6 billion. European markets of Germany, France, Italy, Spain and UK reached US$ 147.4 billion.
7.2
stood at US$ 12.3 billion.
(Source: IMS Health)
605
651
720
788
819
856
In US$ billions
In growth %
(Source: IMS Health)
Annual Report 2010 -11
5
Management Discussion and Analysis
Although global spending on medicines is expected to grow from US$ 856 billion in 2010 to reach around US$ 1,065-1,095 billion in 2015, the incremental growth in global medicine spending is expected to slow from the US$251 billion increment registered in 2006-10 to the expected US$ 210-240 billion increment during 2010-15. Patent expiries, increasing generic sales and budget controls may restrain successive growth in medicines spending globally, especially in developed markets. Between 2005 and 2015 the share of developed markets (US and EU 5) in global medicine spending is expected to fall, the share of pharmerging countries is expected to rise, and is expected to remain steady for Japan, rest of Europe and Canada. Pharmerging markets will witness the highest growth in the next ?ve years, driven by increased access through healthcare reforms and economic growth.
B
GLOBAL SPENDING ON MEDICINES
2006-10 2010 2011-15 2015 E
2005
C
SPENDING ON MEDICINES BY GEOGRAPHY
2005 $ 605 Bn
12
Pharmeriging
(In %) 2010 $ 856 Bn
$605Bn $251Bn $865Bn $210 240Bn
7 ROW
$1,065 1,095Bn
6 ROW 41 US 18
Pharmeriging
(Source: IMS Health)
1
S. Korea
36 US
11
Japan
1
S. Korea
7
Rest of Europe
11
Japan
20
EUS
2
Canada
7
Rest of Europe
3 17
EUS Canada
2015 Estimate $ 1,065 Bn - 1,095 Bn
7 ROW 31 US 28
Pharmeriging
2 2
S. Korea Canada
11
Japan
6
Rest of Europe
13
EUS
(Source: IMS Health)
6
Sun Pharmaceutical Industries Ltd.
BRANDED GENERICS VS. PATENTED DRUGS
Although a large number of branded products lost their patent protection during the year in the US , however, this did not trigger extensive growth in generic drugs (which are low cost therapeutic equivalents of patented or innovative drugs), on account of intense price competition. Pricing continues to be one of the most important issues in the pharma world, as a?ordable healthcare remains a priority for governments worldwide. The rising cost of new product development for new molecules on one hand, as well as spiraling healthcare budgets and mounting governmental pressure to reduce drug prices have prompted companies to ramp up their generic/ branded generic business (Source: IMS Health). Brands comprised about 2/3rd of the global pharmaceutical spending during the year 2010. As patents expire in developed markets, the share of branded or patented products is expected to decline in the coming years. Global generic drug spending is estimated to be US$ 234 billion in 2010 Global spending on generics to reach US$ 400-430 billion by 2015 US pharma spending to grow 0-3% by 2015 but US Generics market to grow at a CAGR of 10% by 2013 reaching US$ 108.5 billion by 2013 The global market share for patented medicines is expected to decline GLOBAL MARKET, SEGMENT WISE
2005 $ 605 Bn
10
Other
D
(In %) 2010 $ 856 Bn
9
Other
from 64% in 2010 to 53% by 2015
(Sources: IMS Health and Credit Suisse Report, April 2011)
20
Generic
27
Generic
It is expected that highest growth in generics spending would come from the US, Canada, UK, and South Korea. Japan may continue with the lowest generic share, despite signi?cant policy incentives to increase generic prescribing and dispensing.
64 70
Brand Brand
E
DEVELOPED MARKETS GENERIC SHARE
(In %)
Canada
24.3 27-28
2015 Estimate $ 1,065 Bn - 1,095 Bn
8
Other
France Germany
15.3
21-22
16.2
21-22
Italy
11.9
13-14
Japan 5 8-9
39
Generic
S Korea
53
Brand
31.7
34-35
Spain UK
(Source: IMS Health)
12.8
15-16
21.3
27-28
Note:
a) Generics includes branded generics b) Others includes OTC and non categorized products
US
13.4
21-22
2010 Generic Share
2015 Share Increase Estimate
(Source: IMS Health)
Annual Report 2010 -11
7
Management Discussion and Analysis
GROWTH SHIFTING TO PHARMERGING MARKETS
The 17 pharmerging countries are expected to contribute 28% to global market spending by 2015. Pharmerging markets are expected to double their spending on medicines to $285-315 billion by 2015, compared with $151 billion in 2010 (Source: IMS Health). The Asia Paci?c pharmaceutical market, comprising India, China, Malaysia, South Korea and Indonesia, has emerged as one of the fastest growing pharmaceutical markets. High growth, witnessed in emerging markets, has led to a focus shift for large pharma companies from regulated markets to emerging markets. It is expected that while growth in regulated markets will slow down, emerging markets would lead industry growth. Emerging markets have traditionally been characterized with one or more of the following: Relatively low entry barriers in terms of product registration requirements and intellectual property rights Price sensitivity Favorable regulatory environment Rising disposable incomes Likely increase in health insurance schemes Low manufacturing costs Competitive local industry presence The past decade has witnessed the industry scenario undergoing a transformation with the expansion by Big Pharma in India, China, Brazil, Russia and Latin America. Some of the challenges faced by Big Pharma in emerging countries, as well as some of the strategies that they've adopted to counter the challenges are as follows:
Future projections
Tier wise countries Incremental Pharma Market Growth (2008-13) US$ 40 billion + US$ 5-15 billion US$ 1-5 billion
Tier I Tier II
China Brazil Russia India Venezuela Poland Argentina Turkey Mexico Vietnam South Africa Thailand Indonesia Romania Egypt Pakistan Ukraine
Tier III
(Source: IMS Health)
Challenges
Increasing competition in generic segment Pricing issues Declining research and development (R&D) productivity
Strategies
O?ering low-cost generic products Cutting down costs Contract manufacturing Mergers & acquisitions Partnerships & alliances
8
Sun Pharmaceutical Industries Ltd.
CHRONIC THERAPY AREAS GLOBALLY
During the year, high volume sales were recorded for anti-cancers, antipsychotics, lipid regulators, proton pump inhibitors and antidepressants. A combination of changing lifestyle patterns, better diagnostic tools and increasing awareness and access, are leading to an increase in incidence and treatment sought for chronic diseases like hypertension, congestive heart failure, depression, asthma and diabetes all over the world. Additionally, factors like pollution and environment changes contribute to an increased incidence of asthma. Growth is expected to continue in generics, as well as in anti-diabetics, cardiovasculars, and anti-hypertensives in 2011. The prevalence of Type II diabetes is expected to increase in pharmerging countries, such as China, India and Brazil, because of a growing population and changing lifestyle conditions, as well as better access and diagnosis (Source: IMS Health).
G
2015: LEADING THERAPY AREA ESTIMATES (BRANDED PRODUCTS):
2015 $ 1,065 Bn - 1,095 Bn
29
Others
(in %)
27
Anti-cancer
7
Cardiovascular
17 10
Central Nervous System
Gastro-intestinal
10
Anti-infective
(Source: India Pharma 2015, McKinsey Research Report)
Formulation analytical area, SPARC
Annual Report 2010 -11
9
Management Discussion and Analysis
THE INDIAN PHARMACEUTICAL MARKET
Globally, the Indian pharmaceutical industry ranks 10th in terms of value and third in terms of volume (Source: India Pharma 2020, McKinsey Research Report). According to IMS Health, the Indian Pharma market was estimated to be around $12.3 billion in 2010.
Diabetes incidence to increase by 25% by 2020
(Source: India Pharma 2020, McKinsey Research Report)
Branded generics in India
India is largely a branded generics market, which makes up nearly 70-80% of the total pharmaceutical market, with a small percentage of unbranded generics being sold here (Source: India Pharma 2020, McKinsey Research Report). The country exports branded generics in large volumes, which are expected to grow at a CAGR of 21-23% during 2009-2014 (Source: Crisil, March 2010).
Cancer incidence to increase by 40% by 2020
(Source: India Pharma 2020, McKinsey Research Report)
People su?ering from hypertension would increase to
213.5 million in 2025
Formulations in India
Formulations are mostly manufactured for therapeutics, such as anti-diabetics, neuro/central nervous system (CNS), cardiovascular, respiratory and anti-infectives, with acute therapy products, such as anti-infectives and painkillers forming the largest share. The domestic formulations market, which stood at around ` 417 billion in 2009-10, is expected to grow further owing to better access, awareness, a?ordability, an increasing middle class population, urbanization, increasing e?orts by the government to o?er rudimentary health insurance, particularly in the rural areas. India exports formulations in large volumes to semi-regulated markets (SRM), such as Africa, Asia, CIS and Latin America (Source: Crisil, March 2010).
(Source: Mint, July 8, 2010)
Future projections
It is expected that by 2020, 73
million new households would
enter the middle and upper income bracket and nearly 650
million people would enjoy
health insurance cover. The Indian Government is expected to increase its health spending to 1.5% of the
Global Pharma in India
The Indian pharmaceutical market is highly fragmented with 300 large and 18,000 mid-sized and small companies. Some of the Indian pharma companies provide contract research and manufacturing services (CRAMS) to global pharma majors, who ?nd it more cost e?ective to outsource these activities. The last two years have witnessed a sudden expansion surge by multiple global pharma giants in India, like setting up o?ces and R&D centers, o?ering patented products at a special India price, building a portfolio of branded generics, and expanding their reach to rural India. The markets, which were intensely competitive to begin with, became even more so with these new and refocused companies becoming serious about their presence in the Indian market.
GDP by 2020
(Source: India Pharma 2020, McKinsey Research Report).
To grow at a CAGR of 12-14% between 2009 and 2015 to reach US$ 20-24 billion by 2015 To reach US$ 55 billion by 2020
(Source: India Pharma 2020, McKinsey Research Report)
Chronic therapy products in India
India is one of the fastest growing pharma markets, attributed to rising disposable incomes with increased a?ordability, gradually growing insurance penetration, greater life expectancy, rural penetration, and a shift in disease pro?le towards chronic lifestyle illnesses. Specialty and super specialty therapies are expected to continue growing faster than the rest of the market in the coming years. Increasing pressures of urbanisation, lifestyle changes and work stress are responsible for an increase in the incidence of chronic diseases. Cardiovascular diseases are expected to be the largest cause of deaths and disabilities in India by 2020.
10
Sun Pharmaceutical Industries Ltd.
OPERATIONAL HIGHLIGHTS 2010-11
Successful acquisition of Taro Pharma following three years of litigation and negotiations. Sun Pharma holds an economic stake of Brought exclusive products (Eloxatin and
66% and enjoys voting rights of 77% in Taro
Indian branded generics grew 37% to reach ` 23,800 million The API segment sales declined 4% to reach ` 5,212 million The emerging market branded generic business grew 32% to reach
Pantoprazole) to the US
market, these products enjoy limited competition. During the year, Research & Development expenditures stood at ` 3,096 million
` 6,444 million
International operations grew across 41 markets. Received approvals of 18 products from the USFDA, including complex products like Diltiazem HCL ER Capsules, Galantamine
HCL ER Capsules and Atomoxetine HCL Capsules.
SPARC Centre, Mumbai
Annual Report 2010 -11
11
Management Discussion and Analysis
FINANCIAL HIGHLIGHTS 2010-11
50%
Annual sales grew 50% to reach
14%
Sta? cost is 14% of net sales, largely on account of Taro s sta? cost
` 57,214 million
44%
EBITDA jumped 44% to reach
26%
Other expenditure is 26% of the net sales
` 19,670 million
34%
Net pro?t surged 34% to reach
31%
EBIT margin is at 31%
In the Panoli Plant
` 18,160 million
26%
Material cost stood at 26% of net sales
`
17.50
Diluted EPS is ` 17.50, signi?cantly up from `13 for the last year
Note:
a) b) Taro ?nancials have been consolidated for a little over 6 months in FY11 ?nancials (from 20th September, 2010 onwards) Financials include signi?cant components of non-recurring sales and pro?ts contributed by a few products sold in ?rst half of FY11
12
Sun Pharmaceutical Industries Ltd.
SEGMENT ANALYSIS
Analytical labs, SPARC Center
Our business can be divided into four segments:
Indian Branded Generics US Generics International Branded Generics (Rest of the world, except US) Active Pharmaceutical Ingredients (API)
H
2010-11 BUSINESS SEGMENTS REVENUE BREAK-UP (WITH TARO)
9
APIs
(in %)
11
International Branded Generics (Ex ? US)
42
India Branded Drugs
39
US Generics
Business Category
India Branded Drugs US Generics International Branded Generics (Ex ? US) APIs
(`. Million)
Sales
23,800 22,538 6,444 5,212
Annual Report 2010 -11
13
Management Discussion and Analysis
INDIAN BRANDED GENERICS
Revenue: ` 23,800 million YoY Growth: 37 % Revenue Share: 42% Manufacturing locations: Six
Highlights of the year
Revenues increased from ` 17,412 million in 2009-10 to ` 23,800 million in 2010-11 Market share at 4.3% in 201011, according to AWACS Launched 38 new products during the year Strengthened our prescription share Our top 10 brands contributed 15% to the domestic revenues Our top 50 brands contributed 52% to the domestic revenues
Segment identity
Sixth largest branded generics player in India by prescription share Ranked 1st based on share of prescriptions in six classes of specialists: psychiatrists, neurologists, cardiologists, ophthalmologists, orthopaedics and gastroenterologists. Market leader in chronic segments Over 50% of our brands feature among the top three brands for the molecule Product basket includes 537 formulations Marketing therapy-based products through 18 divisions and 2,700 sales representatives to 130,000 specialist doctors We specialize in technically complex products and o?ering a complete therapy basket, enabling us to remain competitive in a challenging market environment
I
THERAPY WISE BREAK-UP
4 5
Opthalmology Antiasthmatic & Antiallergic
(in %)
5
Musculo ? Skeletal & Pain
28
Neuro Psychiatry
Halol Plant
7
Gynecology & Urology
8
Others
11
Gastroenterology
19
Cardiology
14
Diabetology
(IMS data)
14
Sun Pharmaceutical Industries Ltd.
INDIAN BRANDED GENERICS
We continue with our emphasis on building customer relationships by facilitating academic interaction and continuing medical education. For instance, an epilepsy course was organized countrywide, with international speakers. CMEs and programs to share therapy advances in neurology, ophthalmology and respiratory were also organized. We also conducted over a hundred health camps for disease detection last year.
Future projections
Therapeutic segment Ranking (CMARC ranking, November 2010 February 2011)
1 1 1 1 1 2 1 4 2 2 8 8 18 6
Psychiatry Neurology Cardiology Orthopedic Ophthalmology Diabetology Gastroenterology Chest physicians Nephrology Consultant physicians Oncologists Urology ENT specialists Gynecology
Top ten brands in India
Brand
Pantocid Glucored Group Susten Aztor Pantocid-D Gemer Repace Group Strocit Clopilet Encorate chrono
Therapy
Proton pump inhibitor/ antiulcerant Oral antidiabetic Women's healthcare CVS, cholesterol reducing agent Proton pump inhibitor/ antiulcerant Oral antidiabetic CVS, Hypertension CNS, stroke CVS, anticlotting agent CNS, epilepsy
Annual Report 2010 -11
15
Management Discussion and Analysis
US GENERICS
Revenue: ` 22, 537.9 million
(Includes Taro Pharma sales from September 20, 2010)
Revenue Share: 39% Manufacturing locations:
Nine ? US (3) Canada (1), Israel (1), Hungary (1), and India (3)
Growth: 104% including Taro
Pharma sales for this year, oneo?s from exclusivity products with limited period sales, and acquisitions. Also two plants, the Detroit and Cranbury plants have not been operational for the past year.
The three formulation sites in India are approved for US generics, including a facility that holds approvals for injectables and eye drops. One of the US sites is designed to handle controlled substance formulations.
US Generics
Caraco Pharmaceutical Laboratories Ltd. (76% subsidiary that markets Sun Pharma ANDAs) privatized as of June 2011.
Sun Pharmaceutical Industries, Inc. (SPI) (Wholly owned subsidiary of Sun Pharma)
Taro Pharmaceutical Industries, Ltd. (66% subsidiary of Sun Pharma)
Segment identity
Successfully acquired Taro in September 2010 From 1997 to 2005, acquired Caraco, the plants and business of the erstwhile Able Labs, a semisolids plant in Ohio, and an API plant in Tennessee from Valeant Product basket includes a mix of generics with limited competition, and some with intensive competition Launched technically complex products, such as Amifostine, Lupreolide, Octreotide and Vecuronium
16
Sun Pharmaceutical Industries Ltd.
US GENERICS
Taro identity
Strong presence in dermatology where Taro is working actively to regain its leadership amidst heightened competition Major thrust on introducing globally accepted products, penetrating new markets, and strengthening the research and development pipeline The production facility at Canada is approved by the Ministry of Health and USFDA Delivering to high expectation remains the key challenge.
Therapy wise approvals
Therapeutic segment Number of approvals received till date
89 53 20 15 13 12 7 6 3 2 1 1 1 2
Skin CNS CVS Pain Allergy Oncology Metabolism Cough / Cold Antibiotic Urology Respiratory Gastro Endocrine Others
Caraco identity
Production facility continued to be non-operational; however, e?orts were on to accelerate compliance and meet FDA requirements; active involvement of consultants underway to achieve this Overall sales of distributed products has been good during the year Caraco to bene?t from an increased focus on generics in the US, post its resolution of FDA issues and restarting of manufacturing operations.
Highlights of the year
Grew revenues 104% from ` 11,069 million in 2009-10 to
` 22,537.9 million in 2010-11
Launched 18 new products during the year Filed 25 ANDAs and received approvals on 18 ANDAs during the year This takes the total to 377 ANDA ?led and 225 ANDA received, in all, across companies.
ANDA Approvals
Year
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 (with Taro)
Cumulative Cumulative Products Filed Products Approved
40 59 96 142 177 207 377 15 20 29 53 69 84 225
Annual Report 2010 -11
17
Management Discussion and Analysis
INTERNATIONAL BRANDED GENERICS (EX-US)
Revenue: ` 6,444.4 million Revenue Share: 11%
(includes Taro Pharma ROW sales Manufacturing locations: from September 20, 2010 onwards) One each in Mexico, Brazil, Growth: 32% Bangladesh; 3 sites in India also hold approvals to manufacture products for these markets.
Segment identity
Over 1,578 registered products and more than 900 products in the pipeline Chronic therapy areas are expected to continue growing faster than the rest of the market - increased demand for medicines of metabolic syndrome, obesity, diabetes, neurology, and respiratory More than 600 sales representatives including local personnel as part of the sales force; representatives make doctor calls, build a prescription- pull. Events and CMEs focused on creating lasting relationships through academic means in much the same way as we do in India The ?ling of products from the facilities at Mexico and Brazil has commenced We had initiated generic exports to select markets in Europe last year, which has continued this year as well, with approvals such as Docefrez and Gemcitabine
Presence
Present in 41 pharmaceutical markets across four continents High potential markets are Russia, China, Brazil, Mexico, ex-CIS nations and South Africa Future plan to selectively build a presence with di?cult or technically di?erentiated generics, such as injections, in certain European markets. Continue to bring di?erentiated branded generics to the rest of the world markets
Highlights of the year
Received registration for our drugs in the Philippines, Taiwan, Hong Kong and Australia At the close of the year, entered into an agreement with Merck to create a joint venture to market branded generics with a delivery system advantage, which would use our product development capability and their regulatory/market strength. The ?rst of these products is at least three years from market. The joint venture does not include current registrations by either company.
18
Sun Pharmaceutical Industries Ltd.
API
Revenue: ` 5,212 million Growth: (4)%
Revenue Share: 9% Manufacturing locations: Five
in India, one in the US, one in Hungary, and one in Israel
Segment identity
Backward integration to specialty API has helped us compete against global competitors for our formulations. We internally source API for most of our key products. Presence in over 56 countries, sales primarily to large companies or innovator companies. Dominant player in products like Pentoxifylline, Clomipramine and Mesalazine Manufacture over 170 APIs; most of these complex APIs are used in the manufacture of specialty or chronic pharmaceuticals in-house The Panoli and Ahmednagar facilities manufacture APIs for peptides, anticancers, steroids and sex hormones World-class facilities, accredited ISO 14001 and ISO 9002 Most of our plants have received approvals from USFDA and regulatory authorities of various developed countries Implemented value engineering, which helped improve equipment productivity, reduced process steps, improved chemistry and optimized manufacturing costs Plans to strengthen presence in Japan and China, and the API hubs of Germany and Italy The Hungary unit manufactures controlled substances The Tennessee plant holds quotas for controlled substances API manufacture in the US We scale up around 25 API processes annually 15 DMF/ CEPs ?led in 2010-11
Blender, API processing area
Highlights of the year
Revenues declined from ` 5,427.7 million in 2009-10 to ` 5212.2 million in 2010-11 Scaled up 28 new API during 2010-11 Received DMF/ CEP approvals for 15 APIs from various regulatory authorities in 2010-11
Annual Report 2010 -11
19
Management Discussion and Analysis
RESEARCH & DEVELOPMENT
377 cumulative ANDAs ?led 225 cumulative ANDAs approved 207 DMF / CEP cumulative applications ?led 127 DMF / CEP cumulative applications approved
SPARC Centre, Baroda
Research and development provides critical support for all our manufacturing and new product plans. It is undertaken at our state-of-the-art centres at Baroda and Mumbai. Additionally, Taro has R&D centres in Israel and Canada. We have over 983 quali?ed scientists. We are now well experienced in developing complex APIs as well as formulating complex, technology-intensive products, across dosage forms. Through our research and development activities, we are able to o?er complex products. This year, generic R&D spend is around 5% of net sales, partly on account of slowdown in development work related to generics at Cranbury and Caraco s sites. Our research team specializes in generics, ?nished dosage development, analytical development, biological support and chemistry or process development.
549 total patent applications submitted 248 total patents granted 25 ANDAs ?led in 2010 -11 18 ANDAs approved in 2010 -11 15 DMFs ?led in 2010 -11 15 DMFs approved in 2010 -11
R& D expenditure
Year
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 (includes Taro)
Investment in R&D R&D investment (as % (` in million) of net revenue)
2,015 2,787 2,859 3,320 2,242 3,096 12 13 9 8 6 6
Regulatory
Value chain functions encompass product development, manufacturing, marketing and quality compliance of regulatory requirements. We regularly update ourselves with the changing regulations across di?erent countries and adopt the norms accordingly. Operating in such a competitive environment, it is imperative to be the ?rst mover in adapting to the changing regulations. We adopt and periodically upgrade the regulatory norms across India.
The Baroda centre develops complex APIs and dosage forms for India, ROW markets, US and Europe; while the Mumbai centre focuses on developing di?erentiated dosage forms and generics for developed markets like the US and Europe. These laboratories are equipped with facilities that aid us in pharmacokinetics, formulation development, organic synthesis, clinical research and analytical development. Our team has developed several products that use delivery systems, such as metered dose inhalers, osmotic release formulations and nasal sprays.
20
Sun Pharmaceutical Industries Ltd.
QUALITY
The most important factor in a pharma company is to consistently maintain and improve quality. We are focused on quality-conscious regulated markets, and hence our products abide by the highest quality standards. Our Quality Management Team worldwide comprises over 1200 members. Nearly all our facilities have received quality accreditations from some of the world s most demanding regulatory bodies At Sun Pharma we are committed to ensure that every product we manufacture and distribute meets with and conforms over its shelf life to internationally accepted standards of quality, purity, e?cacy and safety. System and procedures are in place to ensure that each batch of the product manufactured by Sun Pharma is of right quality. In order to maintain quality consistently each plant has well de?ned procedures and systems in compliance with cGMP requirements that meet demanding regulatory requirements such as that of the USFDA, EMEA, MHRA, TGA, etc. Quality systems are well de?ned and validated to ensure consistency in deliveries. Quality unit at plant is independent from manufacturing and other support functions such as warehousing and engineering support. All quality personnel are quali?ed and well trained. Each site has a dedicated team of Quality personnel from quality assurance, quality engineering, quality control, and regulatory a?airs departments ensuring the strict adherence to the quality systems and procedures. This site quality team, at each manufacturing site, is guided by a Corporate Quality Unit (CQU). CQU ensures that all latest updates in GMP are being translated into Guidelines, SOPs and Protocols and at the sites Quality unit ensures that these guidelines, SOPs and protocols are implemented to deliver quality product consistently.
Granulation area, Dadra
Annual Report 2010 -11
21
Management Discussion and Analysis
INTELLECTUAL CAPITAL
We have largely been successful in attracting and retaining talent and creating opportunities for them to develop their technical skills as well as soft skills. One of the powerful drivers of our growth is the human resources team. Although one of the key challenges lies in retaining the junior level employees operating in R&D, manufacturing and on the ?eld. At Sun Pharma, we try to o?er a congenial environment for our people to help them to perform, lead and grow the organization. We have implemented an institutionalized system of promotions, known as Career Progression Program (CPP) which helps us choose our leaders from within the organization.
INTERNAL CONTROLS
Sun Pharma s de?ned organizational structure, documented policy guidelines and adequate internal controls ensure e?ciency of operations, compliance with internal policies, applicable laws and regulations, protection of resources and assets, and accurate reporting of ?nancial transactions. Moreover, the Company continuously upgrades these systems in line with the best available practices. The internal control system is supplemented by extensive internal audits, conducted by independent ?rms of Chartered Accountants to cover various operations on a continuous basis. The Company regularly upgrades its systems in line with the best available practices.
22
Sun Pharmaceutical Industries Ltd.
DIRECTORS’ REPORT
Your Directors take pleasure in presenting the Nineteenth Annual Report and Audited Accounts for the year ended March 31, 2011.
FINANCIAL RESULTS
(` in million except dividend per share and book value)
Year ended March 31, 2011 Total Income Pro?t after tax Dividend on Equity Shares Corporate Dividend tax Transfer to General Reserve Amount of dividend per equity share of `1/- each (Previous year per equity share of ` 5/- each) Book value per equity share of `1/each(Previous year per equity share of ` 5/- each) 32989 13838 3625 588 5000 3.5
Year ended March 31, 2010 26084 8987 2848 473 3000 13.75
65
276
Dividend
Your Directors are pleased to recommend an equity dividend of ` 3.50 per equity share of face value ` 1/- each (previous year ` 13.75 per equity share of face value ` 5/- each) for the year ended March 31, 2011.
Split of Equity Shares
As approved by the Shareholders of the Company by way of postal ballot conducted during November, 2010, the results of which were announced on November 12, 2010, the Equity Shares of ` 5/- each of the Company were subdivided into 5 Equity Shares of ` 1/- each during the year under review.
Your Directors recommended an equity dividend of ` 3.50 per equity share of face value ` 1/each for the year ended March 31, 2011. The Equity Shares of ` 5/- each were sub-divided into 5 Equity Shares of ` 1/- each during the year.
Management Discussion and Analysis
The management discussion and analysis on the operations of the Company is provided in a separate section and forms part of this report.
Annual Report 2010 -11
23
Directors Report
Your Company has a dedicated team of over 11200 multicultural employees at various locations across our corporate o?ce, associate companies, various R&D centers & 19 plant locations spread across three continents.
Human Resources
Human Resource development continues to be a key focus area at Sun Pharma and your Company takes great pride in the commitment, competence and vigor shown by its workforce in all realms of business. You have a dedicated team of over 11200 employees at various locations across our corporate o?ce, various R&D Centers & 19 plant locations (including associate companies) spread across three continents. The Company continues to take new initiatives to further align its HR policies to meet the growing needs of its business. A transparent work culture, quality of work and supportive environment induces discretionary behavior among employees which gives them the opportunity to personally succeed in a way that leads to collective organizational success. Your Directors truly appreciate the e?orts and contribution by Team Sun Pharma for maintaining and further accelerating the growth pace. Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, is available at the registered o?ce of your Company. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Report and Accounts are being sent to all shareholders of the Company and others entitled thereto excluding the aforesaid information. Any shareholder interested in obtaining a copy of this statement may write to the Company Secretary/Compliance O?cer at the Corporate O?ce or Registered O?ce address of the Company.
Information on Conservation of Energy, Technology Absorption, Foreign Exchange Earning and Outgo.
The additional information relating to energy conservation, technology absorption, foreign exchange earning and outgo, pursuant to Section 217(1) (e) of the Companies Act 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is given in Annexure and forms part of this Report.
Corporate Governance
Report on Corporate Governance and Certi?cate of the auditors of your Company regarding compliance of the conditions of Corporate Governance as stipulated in Clause 49 of the listing agreement with stock exchanges, are annexed.
Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. The information relating to each subsidiary including subsidiaries of subsidiaries, as required by the aforesaid circular, is disclosed in the Annual Report. The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company and its subsidiaries who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection by any investor at the Registered O?ce & Corporate / Head O?ce of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include ?nancial results of its subsidiary companies also.
Finance
CRISIL continued to rea?rm its highest rating of AAA/ Stable and P1+ , for your Company s Banking Facilities throughout the year enabling your Company to avail facilities from banks at attractive rates. The Company does not o?er any Fixed Deposit scheme.
Consolidated Accounts
In accordance with the requirements of Accounting Standard AS-21 prescribed by the Institute of Chartered Accountants of India, the Consolidated Accounts of the Company and its subsidiaries is annexed to this Report.
Subsidiaries
The Ministry of Corporate A?airs, Government of India, New Delhi has issued direction under Section 212(8) of the Companies Act, 1956 vide general circular No.2/2011 dated February 8, 2011 and in accordance with the same, the Balance Sheet, the Pro?t and Loss
24
Sun Pharmaceutical Industries Ltd.
Corporate Social Responsibility
At the close of a relatively event-free, disaster-free year, your Company persisted with participation in activities at the local, grassroots level across health and education. In the past, support has been o?ered towards disaster relief as well as participation in the facilitation of civic utilities around the plants/research centers. Your Company remains interested in these contributions.
Company and for preventing and detecting fraud and other irregularities; and, (iv) that the Directors have prepared the annual accounts for the ?nancial year ended March 31, 2011 on a going concern basis.
Auditors
Your Company s auditors, M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai, retire at the conclusion of the forthcoming Annual General Meeting. Your Company has received a letter from them to the e?ect that their re-appointment, if made, will be in accordance with the provisions of Section 224(1-B) of the Companies Act, 1956.
Directors
Shri Dilip S. Shanghvi, Shri Sailesh T. Desai and Shri S.Mohanchand Dadha retire by rotation and being eligible o?er themselves for re-appointment.
Directors Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby con?rmed: (i) that in the preparation of the annual accounts for the ?nancial year ended March 31, 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures; that the Directors have selected appropriate accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of a?airs of the Company at the end of the ?nancial year and on the pro?t of the Company for the year under review;
Cost Auditors
The Company has appointed Messrs. Kailash Sankhlecha & Associates, Cost Accountants, Vadodara as Cost Auditors of our Company for conducting Cost Audit in respect of Bulk Drugs & Formulations of your Company for the year ended March 31, 2011.
Acknowledgements
Your Directors wish to thank all stakeholders and business partners, your Company s bankers, ?nancial institutions, medical profession and business associates for their continued support and valuable co-operation. The Directors also wish to express their gratitude to investors for the faith that they continue to repose in the Company.
(ii)
For and on behalf of the Board of Directors
(iii) that the Directors have taken proper and su?cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the
Dilip S. Shanghvi Chairman & Managing Director May 28, 2011 Mumbai
Annual Report 2010-11
25
ANNEXURE (1) TO DIRECTOR’S REPORT
2010-11
2009-10
CONSERVATION OF ENERGY
A. Power and Fuel Consumption 1. Electricity (a) Purchased Unit (in ‘000 KWH) Total Amount ( in Millions) Rate ( / Unit) (b) Own Generation through Diesel Generator Units (in ’000 KWH) Units per Litre of Diesel Oil Cost ( / Unit) (c) Own Generation through Gas Units (in ‘000 KWH) Units per M3 of Gas Cost ( / Unit) 2. Furnace Oil Quantity (in ‘000 Litres) Total Amount ( in Millions) Average Rate Gas (for Steam) Gas Units (in ‘000 M3 ) Total Amount ( in Millions) Average Rate ( / Unit) Wood / Briquitte Quantity (in ‘000 Kgs) Total Amount ( in Millions) Average Rate ( / Unit)
26,775 151.5 5.7 2,702 3.1 12.9 45,219 10.8 5.5 771 20.5 26.6 6,395 119.8 18.7 29,008 65.8 2.3
43,396 245.8 5.7 2,783 3.0 11.1 24,852 10.6 4.2 2,591 62.7 24.2 9,891 151.6 15.3 8,852 19.9 2.2
3
4
B. Consumption per unit of production It is not feasible to maintain product category-wise energy consumption data, since we manufacture a large range of formulations and bulk drugs having different energy requirements. C. Energy conservation measures 1 2 3 4 Internal and External Energy Audits for improvisation and continuous monitoring of Power Factor. ML lamps are replaced by 20 W CFL lamps thereby saving power. Energy Efficient Gas fired Boiler installed, steam to fuel ratio improved and therfore reduction in gas consumption. Installation of Surface Aerator in Aeration tank – 1 of ETP and stopping of Root Blower hence power saving . Dissolve Oxygen level improved in Aerator tank. Hence improving effectiveness of biodegradation. 5 3TPH Briquette fire boiler installed & stopped furnace oil boiler saving of fossil fuel. 6 To utilize heat from economizer for Boiler by giving forced circulation instead of existing thermo gradient heat transfer. This saved steam by recovering heat from temp. 160 Deg. C to 120 Deg. C.
26
Sun Pharmaceutical Industries Limited
TECHNOLOGY ABSORPTION
A. Research and Development 1. Specific areas in which R&D is carried out by the Company Even several years after separating out our innovative research programs, we. continue to be one of the most aggressive investors and developers of generic-related pharmaceutical research and technology in the country, with research programs to support our generic business pursued at our modern R&D centres. Our expert scientist team is engaged in complex developmental research projects in process chemistry and dosage forms, including complex generics based on drug delivery systems at these research centres. This research activity supports the short, medium and long term business needs of the company, in India and all the other markets that your company invests in. Projects in formulation development and process chemistry help us introduce a large number of new and novel products to the Indian market including products with complexity or a technology edge.Process chemistry enables us to be integrated right up to the API stage for important products. This helps us maintain our leadership position in the Indian market with specialty formulations and derive market and cost advantage from API’s developed and scaled up In-house. Further, it helps us to compete in the international regulated markets across US / Europe. The team also works on projects involving complex drug delivery systems for India Complex API like steroids, sex hormones , peptides, carbohydrates and taxanes which require special skills and technology, are developed and scaled up for both API and dosage forms. This complete integration for some products works to the company’s advantage. These projects may offer higher value addition and sustained revenue streams. 2. Benefits derived as a result of the above R&D In 2010-11, 38 formulations were introduced across marketing divisions, (not including line extensions, but including complex products). All of these were based on technology developed in house. Technology for 28 API was commercialised. For some of the important API that we already manufacture, processes were streamlined so as to have more energy efficient or cost effective or environment friendly processes. Some of the new processes were non-infringing, so as to support our plans for ANDA filings for the US. A large part of our API sales is to the regulated market of US / Europe, and this earns valuable foreign exchange and also a reputation for quality and dependability. The company’s formulation brands are exported to 40 international markets where a local field force promotes the same. The Department of Scientific and Industrial Research, Ministry of Science and Technology of Government of India has granted approval to the in house research and development facility of your Company under the provision of the Income Tax Act, 1961. 3. Future plan of action A state of the art bioequivalence facility with a functional capacity of 220 beds with a well equipped, Phase I Clinical unit and ECG Core Laboratory for clinical studies and safety studies and has been expanded to more than 300 beds. Eighteen high capacity LCMS, fully computerised blood chemistry labs capable of comprehensive analysis are being used extensively for biostudies. This facility has been inspected and approved for India and for the US.
Annual Report 2010-11
27
Year ended 31st March, 2011 in Million 4. Expenditure on R&D a) b) c) d) Capital Revenue Total Total R&D expenditure as % of Total Turnover 236.1 1572.8 1808.9 9.4%
Year ended 31st March, 2010 in Million
159.0 1440.8 1599.8 8.8%
B. Technology Absorption, Adaptation and Innovation 1. Efforts in brief, made towards technology absorption, adaptation and innovation Year afer year, your company continues to invest on R&D revenue as well as capex. A large part of the spend is for complex products, ANDA filings for the US and API technologies that are complex and may require dedicated manufacturing sites. Investments have been made in creating research sites, employing scientifically skilled and experienced manpower, adding equipment and upgrading continuously the exposure and research understanding of the scientific team in the therapy areas of our interest. Laboratories and instrument facilities have been set up to initiate R&D activities in biotechnology for the development of biosimilars. 2. Benefits derived as a result of the above efforts e.g. product improvement, cost reduction, product development, import substitution (a) Market leader for several complex products. Offers complete baskets of products under speciality therapeutic classes. Strong pipeline of products for future introduction in India, emerging markets, as well as US and European generic market. (b) Not dependent on imported technology, can make high cost products available at competitive prices by using indigenously developed manufacturing processes and formulation technologies. (c) Offer products which are convenient and safe for administration to patients, products with a technology advantage. (d) We are among the few selected companies that have set up completely integrated manufacturing capability for the production of anticancer, hormones, peptide, cephalosporins and steroidal drugs. (e) The Company has benefited from reduction in cost due to import substitution and increased revenue through higher exports. 3. Your company has not imported technology during the last 5 years reckoned from the beginning of the financial year. C. Foreign Exchange Earnings and Outgo Year ended 31st March, 2011 in Million 1. Earnings 2. Outgo 9005.6 5156.8 Year ended 31st March, 2010 in Million 8508.3 4629.0
28
Sun Pharmaceutical Industries Limited
AUDITORS’ REPORT
TO THE MEMBERS OF SUN PHARMACEUTICAL INDUSTRIES LIMITED
1.
We have audited the attached Balance Sheet of SUN PHARMACEUTICAL INDUSTRIES LIMITED (“the Company”) as at 31st March, 2011, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: (i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
2.
3.
4.
(ii) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (iii) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account; (iv) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (v) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011; (b) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and (c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of written representations received from the Directors as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2011 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.
For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W) Rajesh K Hiranandani Partner (Membership No. 36920)
MUMBAI, 28th May, 2011
Annual Report 2010-11
29
ANNEXURE TO THE AUDITORS’ REPORT
(Referred to in paragraph 3 of our report of even date) (i) (ii) Having regard to the nature of the Company’s business/activities/result clauses vi, xiii, xiv, xvi, xviii, xix and xx of CARO are not applicable. In respect of its fixed assets: (a) (b) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification. The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.
(c) (iii)
In respect of its inventory: (a) As explained to us, the inventories (excluding inventories lying with third parties) were physically verified during the year by the Management at reasonable intervals. In respect of inventories lying with third parties, these have substantially been confirmed by them. In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business. In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.
(b)
(c) (iv) (v)
The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system. In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us: (a) (b) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered into the Register maintained under the said Section have been so entered. Where each of such transaction is in excess of 5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time, except in respect of certain purchases for which comparable quotations are not available and in respect of which we are unable to comment.
(vi)
(vii) In our opinion, the internal audit functions carried out during the year by firms of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business. (viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of manufacture of formulation and bulk drug products and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete. To the best of our knowledge and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records for any other products of the Company.
30
Sun Pharmaceutical Industries Limited
(ix)
According to the information and explanations given to us in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. There were no undisputed amounts payable in respect of Income-tax, Sales Tax, Service Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31st March, 2011 for a period of more than six months from the date they became payable. Details of dues of Income-tax, Sales Tax, Wealth Tax, Custom Duty and Excise Duty, which have not been deposited as at 31st March, 2011 on account of disputes, are given below: Nature of Dues Excise Duty, Interest and Penalty Forum where dispute is pending Assistant / Deputy / Joint Commissioner Tribunal Period to which the amount relates 2002-03, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10 1997-98, 1998-99, 1999-00, 2000-01, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 1998-99, 2001-02, 2006-07, 2007-08 2000-01 1994-95, 1998-99, 1999-00, 2000-01, 2002-03 1998-99, 2001-02, 2002-03, 2003-04, 2004-05 1981-82 to1985-86, 2003-04 1996-97, 2002-03 1997-98 2003-04, 2004-05, 2008-09 1987 to 1992 Amount involved ( In Million) 31.6
(b)
(c)
Statute The Central Excise Act, 1944
259.5
High Court Customs Act, 1962 Sales Tax Act (Various States) Custom Duty, Penalty and Interest Sales Tax, Interest and Penalty Settlement Commission Assistant / Deputy /Joint Commissioner Tribunal High Court Income Tax Act, 1961 Income tax and Interest Tribunal Commissioner Wealth Tax Act, 1957 Employee State Insurance Act, 1948 Drugs (Price Control) Order, 1979 Wealth tax Contribution and Interest Drug Price Equilisation Account liability and interest Commissioner Appellate authority
1.6 11.5 4.7 2.9 14.5 0.9 8.4 0.2 0.2
Drug Prices Liability Review Committee
1981-1987
14.0
There were no unpaid disputed dues in respect of service tax and cess during the year.
Annual Report 2010-11
31
(x) (xi)
The Company does not have any accumulated losses as at the end of the year. The Company has not incurred cash losses in the financial year and in the immediately preceding financial year. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks. The Company does not have any dues to financial institutions and has not issued any debentures.
(xii) In our opinion, the Company has maintained adequate records where it has granted loans and advances on the basis of security by way of pledge of shares. The Company has not granted any loans and advances on the basis of security by way of pledge of debentures and other securities. (xiii) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and financial institutions, are not prima facie prejudicial to the interests of the Company. (xiv) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that the funds raised on short-term basis have, prima facie, not been used during the year for long-term investment. (xv) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.
For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No. 117366W)
MUMBAI, 28th May, 2011
Rajesh K Hiranandani Partner (Membership No. 36920)
32
Sun Pharmaceutical Industries Limited
BALANCE SHEET
AS AT 31ST MARCH, 2011
As at 31st March, 2011 Schedule in Million in Million
As at 31st March, 2010 in Million in Million
SOURCES OF FUNDS
Shareholders’ Funds Share Capital Reserves and Surplus Loan Funds Secured Loans Deferred Tax Liability (Net) TOTAL 1 2 3 4 1,035.6 65,769.7 66,805.3 505.3 1,285.1 68,595.7 1,035.6 56,144.2 57,179.8 294.9 1,153.3 58,628.0
APPLICATION OF FUNDS
Fixed Assets Gross Block Less: Depreciation / Amortisation / Impairment Net Block Capital Work-in-Progress (including advances on capital account) Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets TOTAL SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Schedules referred to herein form an integral part of the Financial Statements.
In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants S. KALYANASUNDARAM Wholetime Director & CEO For and on behalf of the Board DILIP S. SHANGHVI Chairman & Managing Director SUDHIR V. VALIA Wholetime Director RAJESH K. HIRANANDANI Partner Mumbai, 28th May, 2011 SUNIL R. AJMERA Company Secretary SAILESH T. DESAI Wholetime Director Mumbai, 28th May, 2011
5
12,687.6 4,743.7 7,943.9 2,280.6 10,224.5 36,014.2 6,182.6 5,426.2 12,509.0 183.7 5,525.8 29,827.3
11,597.6 4,192.4 7,405.2 921.5 8,326.7 40,516.9 5,701.4 5,532.9 888.7 57.9 3,661.3 15,842.2 2,633.0 3,424.8 6,057.8 22,357.0 68,595.7 9,784.4 58,628.0
6 7 8 9 10 11 12 3,139.3 4,331.0 7,470.3
19
Annual Report 2010-11
33
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 Schedule in Million in Million
Year ended 31st March, 2010 in Million in Million
INCOME
Income from Operations Gross Sales Less: Excise Duty Net Sales Other Operating Income Other Income 13 14 15 16 17 18 19,857.8 526.6 19,331.2 11,715.8 31,047.0 1,941.7 8,969.3 2,140.6 5,340.4 1,355.9 642.3 570.4 131.8 32,988.7 18,528.8 450.3 18,078.5 6,776.6 24,855.1 1,229.3 8,152.9 1,747.1 4,720.4 1,277.7 694.7 526.0 (20.9) 26,084.4
EXPENDITURE
Cost of Materials / Goods Personnel Cost Operating and Other Expenses Research and Development Expenditure Depreciation / Amortisation / Impairment PROFIT BEFORE TAXATION Provision for Taxation - Current Tax - Deferred Tax Charge / (Credit) (Net) PROFIT AFTER TAX BALANCE OF PROFIT BROUGHT FORWARD AMOUNT AVAILABLE FOR APPROPRIATION
18,448.5 14,540.2 702.2 13,838.0 18,891.5 32,729.5
16,592.8 9,491.6 505.1 8,986.5 16,225.9 25,212.4
APPROPRIATIONS
Proposed Dividend Corporate Dividend Tax Transfer to General Reserve BALANCE OF PROFIT CARRIED TO BALANCE SHEET EARNINGS PER SHARE (refer note B.12 (ii) of Schedule 19) Basic & Diluted ( ) Face Value per Equity share - 1 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS Schedules referred to herein form an integral part of the Financial Statements.
In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants S. KALYANASUNDARAM Wholetime Director & CEO For and on behalf of the Board DILIP S. SHANGHVI Chairman & Managing Director SUDHIR V. VALIA Wholetime Director RAJESH K. HIRANANDANI Partner Mumbai, 28th May, 2011 SUNIL R. AJMERA Company Secretary SAILESH T. DESAI Wholetime Director Mumbai, 28th May, 2011
3,624.5 588.0
4,212.5 5,000.0 23,517.0 13.4
2,847.9 473.0
3,320.9 3,000.0 18,891.5 8.7
19
34
Sun Pharmaceutical Industries Limited
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 in Million A. Cash Flow From Operating Activities: Net Profit Before Tax Adjustments for: Depreciation / Amortisation / Impairment Interest Expense Interest Income Dividend Income ( 2,820) (Profit) / Loss on Fixed Assets Sold (net) (Profit) / Loss on sale of Investments Bad Debt Written off / (back) (net) Sundry Balance Written off / (back) (net) Provision for employee benefits Unrealised Foreign Exchange (Gain) / Loss Operating Profit Before Working Capital Changes Adjustments for Changes In Working Capital: Decrease in Sundry Debtors Increase in Other Receivables Increase in Inventories Increase / (Decrease) in Trade and Other Payables Cash Generated From Operations Taxes Paid Net Cash Generated From Operating Activities B. Cash Flow From Investing Activities: Purchase of Fixed Assets and Capital Work in Progress (including Capital Advances) Proceeds From Sale of Fixed Assets Proceeds From Sale of Investments Purchase of Investments Margin Money and Fixed Deposit with Banks Short Term Loans / Inter Corporate Deposits Received back / (given) (net) Interest Received Dividend Received ( 2,820) Net Cash Used in Investing Activities C. Cash Flow From Financing Activities: Increase in Cash Credit facility Interest Paid Dividend Paid Corporate Dividend Tax Paid Net Cash used in Financing Activities Net (Decrease) / Increase in Cash and Cash Equivalents Cash and Cash Equivalents as at the beginning of the year Cash and Cash Equivalents as at the year end 14,540.2 642.3 5.9 (1,265.2) (0.0) 4.5 (393.1) (1.6) 2.3 14.6 (62.6) 13,487.3 88.9 (446.6) (481.2) 397.0 13,045.4 (736.1) 12,309.3 (2,452.8) 5.3 126,346.8 (122,944.6) (12,003.7) (1,147.8) 1,139.4 0.0 (11,057.4) 210.4 (5.9) (2,841.0) (473.0) (3,109.5) (1,857.6) 2,079.1 221.5
Year ended 31st March, 2010 in Million 9,491.6 694.7 4.4 (1,052.9) (0.1) (6.3) 334.8 19.3 (19.8) 14.8 276.9 9,757.4 1,147.3 (39.1) (834.0) (3,083.7) 6,947.9 (487.9) 6,460.0 (1,268.6) 47.0 156,923.2 (169,335.4) 11,784.4 (1,114.6) 1,376.3 0.1 (1,587.6) 58.9 (4.4) (2,843.9) (484.0) (3,273.4) 1,599.0 480.1 2,079.1
Annual Report 2010-11
35
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 in Million Cash and Cash Equivalents Comprise: Cash and Cheques on hand and balances with Scheduled / Other banks (Refer Schedule 9 to the Financial Statements) Add : Investment in Certificate of Deposit having maturity less than 3 Months Less : Margin Money Deposit / Fixed deposit having maturity more than 3 Months Unrealised exchange (Gain) Cash and Cash Equivalents as restated as at the year end
Year ended 31st March, 2010 in Million
12,509.0 — 12,276.8 (10.7) 221.5
888.7 1,493.6 273.1 (30.1) 2,079.1
Notes: 1 2 Cash and cash equivalents includes available for use by the Company. 28.5 Million (Previous Year 22.2 Million) on account of Unclaimed dividend, which are not
Previous year’s figures are regrouped / reclassified wherever necessary in order to conform to current year’s groupings and classifications.
In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants S. KALYANASUNDARAM Wholetime Director & CEO
For and on behalf of the Board DILIP S. SHANGHVI Chairman & Managing Director SUDHIR V. VALIA Wholetime Director
RAJESH K. HIRANANDANI Partner Mumbai, 28th May, 2011
SUNIL R. AJMERA Company Secretary
SAILESH T. DESAI Wholetime Director Mumbai, 28th May, 2011
36
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 1 : SHARE CAPITAL
Authorised 1,500,000,000 Equity Shares of 1 each (Previous Year 300,000,000 Equity Shares of 1,500.0 5 each) 1,500.0 Issued, Subscribed and Paid-up 1,035,581,955 Equity Shares of 1 each (Previous Year 207,116,391 Equity Shares of 5 each) fully paid-up. Notes: Of the above : 1) 2) 808,150,050 Equity shares allotted as fully paid Bonus Shares by capitalisation of Securities Premium Account, Profit and Loss Account, Amalgamation Reserve and Capital Redemption Reserve Account. 4,136,330; 2,080,000; 4,775,810; 114,380; 185,190; 197,710 and 21,370 Equity Shares fully paid allotted to the shareholders of erstwhile Tamilnadu Dadha Pharmaceuticals Ltd, Milmet Laboratories Pvt. Ltd, Gujarat Lyka Organics Ltd, Sun Pharmaceutical Exports Ltd, Pradeep Drug Company Ltd, M.J.Pharmaceuticals Ltd and Phlox Pharmaceuticals Ltd. respectively, pursuant to Schemes of Amalgamations, without payment being received in cash. 108,003,805 Equity Shares allotted to the holders of Zero Coupon Foreign Currency Convertible Bond on exercise of conversion option. With effect from 27th November, 2010, one equity share of paid-up. 5 each fully paid-up was split into five equity share of 1 each fully 1,035.6 1,500.0 1,035.6 1,500.0
1,035.6
1,035.6
3) 4)
SCHEDULE 2 : RESERVES AND SURPLUS
Capital Reserve As per last Balance Sheet Securities Premium Account As per last Balance Sheet Capital Redemption Reserve As per last Balance Sheet General Reserve As per last Balance Sheet Add : Transferred from Profit and Loss Account Surplus As Per Profit And Loss Account 21,740.0 5,000.0 259.1 15,099.1 154.5 18,740.0 3,000.0 259.1 15,099.1 154.5
26,740.0 23,517.0 65,769.7
21,740.0 18,891.5 56,144.2
SCHEDULE 3 : SECURED LOANS
Cash Credit Facility from Banks (Secured by hypothecation of inventories and book debts.) 505.3 505.3 294.9 294.9
Annual Report 2010-11
37
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 4 : DEFERRED TAX LIABILITY (NET)
Deferred Tax Liability Depreciation on Fixed Assets Others Deferred Tax Assets Unpaid Liabilities Allowable on payment basis U/s 43B of Income Tax Act,1961 Others 1,346.0 8.4 41.5 27.8 69.3 1,285.1 1,246.3 5.2 69.2 29.0 98.2 1,153.3
1,354.4
1,251.5
SCHEDULE 5 : FIXED ASSETS
Particulars As At 01.04.10 I. TANGIBLE ASSETS Freehold Land Leasehold Land Buildings Plant and Machinery Vehicles Furniture and Fixtures Sub-Total II. INTANGIBLE ASSETS Trademarks, Designs and Other Intangible Assets Sub-Total TOTAL- I + II Previous Year 38.7 39.2 2,367.1 8,292.7 140.3 275.0 11,153.0 Gross Block (At Cost) Additions Deletions As at 10-11 10-11 31.03.11 — — 161.4 988.4 21.0 20.0 1,190.8 — — — 88.0 5.2 7.6 38.7 39.2 2,528.5 (a) 9,193.1 156.1 287.4 Depreciation / Amortisation / Impairment As at 01.04.10 — 4.0 437.4 3,273.3 43.8 117.2 3,875.7
in Million Net Block As at 31.03.10 38.7 35.2 1,929.7 5,019.4 96.5 157.8 7,277.3
For year On deletions As at As at 10-11 10-11 31.03.11 31.03.11 — 0.4 65.2 532.9 13.4 14.6 626.5 — — — 81.2 2.2 7.6 91.0 — 4.4 502.6 3,725.0 (b) 55.0 124.2 (b) 4,411.2 38.7 34.8 2,025.9 5,468.1 101.1 163.2 7,831.8
100.8 12,243.0
444.6 444.6 11,597.6 10,619.0
— — 1,190.8 1,148.0
— —
444.6 444.6
316.7 316.7 4,192.4 3,626.4
15.8 15.8 642.3 694.7 (b)
— — 91.0 128.7
332.5 (b) 332.5 4,743.7 4,192.4
112.1 112.1 7,943.9 7,405.2 2,280.6 10,224.5
127.9 127.9 7,405.2
100.8 12,687.6 169.4 11,597.6
Capital Work-in-Progress (including advances on capital account)
921.5 8,326.7
NOTES : (a) Buildings include 8,620 (Previous Year 8,620) towards cost of shares in a Co-operative Housing Society. y. 30.8 Million) including Nil (Previous Year 30.8 Million) on account of
(b) Includes Impairment of Impairment for the year.
30.8 Million (Previous Year
38
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 6 : INVESTMENTS
(I) LONG TERM INVESTMENTS (At Cost) A) Government Securities National Savings Certificates 10,000 (Previous Year 14,000) (Deposited with Government Authorities) B) Trade Investments Unquoted In Equity Shares Enviro Infrastructure Co. Ltd. 100,000 (Previous Year 100,000) Shares of 10 each fully paid C) Other Investments a) In Bonds Unquoted Rural Electrification Corporation Ltd. 500 (Previous Year 500) Bonds of 10,000 each fully paid b) In Debentures Quoted Barclays Investments & Loans (India) Ltd - 12.25 NCD 06OT10 Nil (Previous Year 250) Debentures of 1,000,000 each fully paid Market Value Nil (Previous Year 275.2 Million) ETHL Communications Holdings Ltd - NCD 22JL11 Nil (Previous Year 500) Debentures of 1,000,000 each fully paid Market Value Nil (Previous Year 446.4 Million) HCL Technologies Ltd - 7.55 NCD 25AG11 100 (Previous Year 100) Debentures of 1,000,000 each fully paid Market Value 99.8 Million (Previous Year 101.0 Million) Housing Development Finance Corporation Ltd 9.9 NCD 23DC18 250 (Previous Year 250) Debentures of 1,000,000 each fully paid Market Value 262.6 Million (Previous Year 269.7 Million) L&T Finance Ltd - 8.4 NCD 08MR13 122,464 (Previous Year 122,464) Debentures of 1,000 each fully paid Market Value 120.5 Million (Previous Year 123.1 Million) 0.0 0.0
1.0
1.0
5.0
5.0
—
250.0
—
437.2
100.0
100.0
250.0
250.0
122.5
122.5
Annual Report 2010-11
39
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million Tata Chemicals Ltd - 7.4 NCD 23NV11 250 (Previous Year 250) Debentures of 1,000,000 each fully paid Market Value 246.2 Million (Previous Year 250.4 Million) Unquoted Bajaj Infrastructure Development Company Ltd 10.75 NCD 04DC15 250 (Previous Year Nil) Debentures of 1,000,000 each fully paid c) In Subsidiary Companies In shares Quoted Caraco Pharmaceutical Laboratories Ltd. 8,382,666 (Previous Year 8,382,666) fully paid Common Shares of No Par Value Market Value 1,940.6 Million (Previous Year 2,249.5 Million) Unquoted Zao Sun Pharma Industries Ltd. 1,000 (Previous Year 1,000) Shares of Rubles 20 each fully paid Sun Pharma Global Inc. BVI 2,471,515 (Previous Year 2,362,820) Shares of US $ 1 each fully paid TKS Farmaceutica Ltda. 829,288 (Previous Year 829,288) quota of Capital Stock of Real (R$) 1 each fully paid. Sun Pharma De Mexico, S.A. DE C.V. 750 (Previous Year 750) Common Shares of no Face Value Sun Pharmaceutical Industries Inc. 5,000 (Previous Year 5,000) fully paid Common Stock of $ 1 Par Value Sun Pharmaceutical (Bangladesh) Ltd. 434,469 (Previous Year 434,469) Ordinary Shares of 100 Takas each fully paid. Share Application Money Sun Pharmaceutical Peru S.A.C. 21,734 (Previous Year 21,734) 149 (Previous Year 149) Ordinary Shares of Soles 10 each fully paid SPIL DE Mexico SA DE CV 100 (Previous Year 100) Nominative and free Shares of $500 Mexican Pesos each fully paid 0.2 9,628.9 in Million 250.0
As at 31st March, 2010 in Million in Million 250.0
250.0
—
303.9
303.9
0.2 9,405.0
18.3 3.3 0.2
18.3 3.3 0.2
36.5 31.6 0.0
36.5 31.6 0.0
0.2
0.2
40
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million OOO “Sun Pharmaceutical Industries” Ltd. Par value stock of 49,500 Rubles (Previous Year 49,500 Rubles) Green Eco Development Centre Ltd. 100,000 (Previous Year Nil) Shares of 10 each Sun Pharma De Venezuela, C.A. 1,000 (Previous Year Nil) Shares of Bolivars (Bs.F. )100 each In Debentures Unquoted Sun Pharma Global Inc. BVI Nil (Previous Year 50,000) 0% Optionally Fully Convertible Debentures of US$100 each fully paid d) In Capital of Partnership Firm Sun Pharma Exports* Sun Pharmaceutical Industries** Sun Pharma Sikkim*** Sun Pharma Drugs**** 67 (Previous Year 15.9 3,888.6 3,478.2 0.0 0.1 1.0 0.5 9,720.8 in Million
As at 31st March, 2010 in Million 0.1 — — 9,495.4 in Million
—
224.0
Nil)
7,382.7
15.9 4,236.8 2,992.2 —
7,244.9
e) In Mutual Fund (Units of Face Value of 10 Each) Unquoted Birla Sun Life Mutual Fund Birla Sun Life Fixed Term Plan-Series CC (13Months) 20,000,000 (Previous Year 20,000,000) Units Birla Sun Life Mutual Fund Birla Sun Life Fixed Term Plan-Series CF 25,000,000 (Previous Year Nil) Units Birla Sun Life Mutual Fund Birla Sun Life Fixed Term Plan-Series CG 25,000,000 (Previous Year Nil) Units Birla Sun Life Mutual Fund Birla Sun Life Fixed Term Plan-Series CI 50,000,000 (Previous Year Nil) Units Birla Sun Life Mutual Fund Birla Sun Life Fixed Term Plan - Series CJ 25,000,000 (Previous Year Nil) Units Birla Sun Life Mutual Fund Birla Sun Life Fixed Term Plan-Series CR 25,000,000 (Previous Year Nil) Units Birla Sun Life Mutual Fund Birla Sun Life Fixed Term Plan - Series CW 25,000,000 (Previous Year Nil) Units Canara Robeco Mutual Fund-Canara Robeco Fixed Maturity Plan-Series 5-13 Months (Plan A) 20,000,000 (Previous Year 20,000,000) Units DSP BlackRock Mutual FundDSP BlackRock FMP-13M-Series 3 25,000,000 (Previous Year 25,000,000) Units
200.0 250.0
200.0 —
250.0 500.0
— —
250.0 250.0 250.0 200.0 250.0
— — — 200.0 250.0
Annual Report 2010-11
41
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million DSP BlackRock Mutual FundDSP BlackRock FMP-12M-Series 9 25,000,000 (Previous Year Nil) Units DSP BlackRock Mutual FundDSP BlackRock FMP-12M-Series 10 25,000,000 (Previous Year Nil) Units DSP BlackRock Mutual FundDSP BlackRock FMP-12M-Series 11 25,000,000 (Previous Year Nil) Units DSP BlackRock Mutual FundDSP BlackRock FMP-12M-Series 15 25,000,000 (Previous Year Nil) Units Deutsche Mutual Fund-DWS Fixed Term Fund-Series 67 35,266,428 (Previous Year 35,266,428) Units Deutsche Mutual Fund-DWS Fixed Term Fund-Series 71 7,500,000 (Previous Year Nil) Units Deutsche Mutual Fund-DWS Fixed Term Fund-Series 73 15,000,000 (Previous Year Nil) Units Fidelity Mutual FundFidelity Fixed Maturity Plan Series IV - Plan E (370 days) 25,000,000 (Previous Year Nil) Units HDFC Mutual Fund- HDFC FMP 14M March 2010 25,000,000 (Previous Year 25,000,000) Units HDFC Mutual FundHDFC Floating Rate Income Fund-Long Term Plan 63,270,759 (Previous Year 63,270,759) Units HDFC Mutual Fund- HDFC FMP 370D February 2011(1) 25,000,000 (Previous Year Nil) Units HSBC Mutual Fund- HSBC Fixed Term Series 79 25,000,000 (Previous Year Nil) Units ICICI Prudential Mutual FundICICI Prudential FMP Series 53 - 1 Year Plan B 25,000,000 (Previous Year Nil) Units ICICI Prudential Mutual FundICICI Prudential FMP Series 53 - 1 Year Plan C 25,000,000 (Previous Year Nil) Units ICICI Prudential Mutual FundICICI Prudential FMP Series 53 - 1 Year Plan E 20,000,000 (Previous Year Nil) Units ICICI Prudential Mutual FundICICI Prudential FMP Series 55 - 1 Year Plan A 25,000,000 (Previous Year Nil) Units ICICI Prudential Mutual FundICICI Prudential FMP Series 55 - 1 Year Plan F 25,000,000 (Previous Year Nil) Units ICICI Prudential Mutual FundICICI Prudential FMP Series 56- 1 Year Plan D 25,000,000 (Previous Year Nil) Units in Million 250.0 250.0 250.0 250.0 352.7 75.0 150.0 250.0 250.0 1,000.1 250.0 250.0 250.1 250.0 200.0 250.0 250.0 250.0
As at 31st March, 2010 in Million in Million — — — — 352.7 — — — 250.0 1,000.1 — — — — — — — —
42
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million IDBI Mutual Fund-IDBI FMP 367 Days Series I (February 2011) - A 15,000,000 (Previous Year Nil) Units IDBI Mutual Fund-IDBI FMP 367 Days Series I (March 2011) - C 15,000,000 (Previous Year Nil) Units IDBI Mutual Fund-IDBI FMP 367 Days Series I (March 2011) - D 20,000,000 (Previous Year Nil) Units IDFC Mutual FundIDFC Fixed Maturity Plan-14 Months Series 1 25,000,000 (Previous Year 25,000,000) Units IDFC Mutual FundIDFC Fixed Maturity Plan-Yearly Series 42 20,000,000 (Previous Year Nil) Units JM Financial Mutual FundJM Fixed Maturity Fund - Series XIX - A 20,000,000 (Previous Year Nil) Units JM Financial Mutual FundJM Fixed Maturity Fund - Series XIX - C 10,000,000 (Previous Year Nil) Units JP Morgan Mutual FundJPMorgan India Fixed Maturity Plan 400D Series 1 25,000,000 (Previous Year Nil) Units JP Morgan Mutual FundJPMorgan India Fixed Maturity Plan 367D Series 1 25,000,000 (Previous Year Nil) Units Kotak Mutual Fund-Kotak FMP 13M Series 6 30,000,000 (Previous Year 30,000,000) Units Kotak Mutual Fund-Kotak FMP 370 Days Series 2 25,000,000 (Previous Year 25,000,000) Units Kotak Mutual Fund-Kotak FMP 370 Days Series 3 25,000,000 (Previous Year 25,000,000) Units Kotak Mutual Fund-Kotak FMP Series 28 25,000,000 (Previous Year Nil) Units Kotak Mutual Fund-Kotak FMP Series 29 25,000,000 (Previous Year Nil) Units Kotak Mutual Fund-Kotak FMP Series 43 25,000,000 (Previous Year Nil) Units L&T Mutual Fund- L&T Fixed Maturity Plan Series 12-Plan-15M-Mar10-I 20,213,915 (Previous Year 20,213,915) Units Principal Mutual Fund Principal PNB FMP - 367 Days - Series II 5,000,000 (Previous Year Nil) Units Religare Mutual Fund-Religare Fixed Maturity PlanSeries-III Plan D (370 Days) 15,000,000 (Previous Year Nil) Units in Million 150.0 150.0 200.0 250.0 200.0 200.0 100.0 250.0 250.0 300.0 250.0 250.0 250.0 250.0 250.0 202.1 50.0 150.0
As at 31st March, 2010 in Million in Million — — — 250.0 — — — — — 300.0 250.0 250.0 — — — 202.1 — —
Annual Report 2010-11
43
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million Religare Mutual Fund-Religare Fixed Maturity Plan Series IV - Plan E (370 Days) 25,000,000 (Previous Year Nil) Units Religare Mutual Fund-Religare Fixed Maturity Plan Series V - Plan A (368 Days) 25,000,000 (Previous Year Nil) Units Religare Mutual FundReligare FMP Series VI - Plan B (370 days) 20,000,000 (Previous Year Nil) Units Religare Mutual Fund-Religare Fixed Maturity PlanSeries VI - Plan E (367 days) 15,000,000 (Previous Year Nil) Units Reliance Mutual FundReliance FHF 9 - Series 6 - IP - Growth Nil (Previous Year 20,000,000) Units Reliance Mutual Fund Reliance Fixed Horizon Fund XVI Series 5 50,000,000 (Previous Year Nil) Units Reliance Mutual Fund Reliance Fixed Horizon Fund-XVII Series 1 25,000,000 (Previous Year Nil) Units Reliance Mutual Fund Reliance Fixed Horizon Fund-XIX Series 1 25,000,000 (Previous Year Nil) Units Reliance Mutual Fund Reliance Fixed Horizon Fund-XIX Series 11 25,000,000 (Previous Year Nil) Units SBI Mutual Fund-SDFS 370 Days - 8 50,000,000 (Previous Year Nil) Units SBI Mutual Fund-SDFS – 370 Days - 10 25,000,000 (Previous Year Nil) Units Sundaram Mutual FundSundram Fixed Term Plan-AQ 367 Days 25,000,000 (Previous Year Nil) Units f ) Others Unquoted Pass through Certificates Novo VIII Trust-Archie-Itsl-SR-A PTC 15JN10 500 (Previous Year 500) Units of 1,000,000 each fully paid Deposits Housing & Urban Development Corporation Ltd. Housing Development Finance Corporation Ltd. Total (I) in Million 250.0
As at 31st March, 2010 in Million in Million —
250.0
—
200.0
—
150.0
—
—
215.4
500.0
—
250.0
—
250.0
—
250.0
—
500.0 250.0 250.0
— — —
503.3
500.0
245.0 2,000.0 35,364.2
240.0 1,000.0 24,144.2
44
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million (II) CURRENT INVESTMENTS (At lower of cost and fair value) A) Certificate of Deposits (Units Face value 100,000 each) Quoted Axis Bank - CD 26AP10 Nil (Previous Year 2500) Units; Market Value Nil (Previous Year 248.8 Million) Corporation Bank - CD 22AP10 Nil (Previous Year 2,500) Units; Market Value Nil (Previous Year 248.9 Million) ICICI Bank - CD 20AP10 Nil (Previous Year 5,000) Units; Market Value Nil (Previous Year 497.9 Million) Punjab National Bank - CD 13AP10 Nil (Previous Year 2,500) Units; Market Value Nil (Previous Year 249.2 Million) Punjab & Sind Bank - CD 26AP10 Nil (Previous Year 2,500) Units; Market Value Nil (Previous Year 248.8 Million) B) In Mutual Fund Unquoted a) In Mutual Fund (Units of Face Value of 10 Each) BNP Mutual Fund - BNP Paribas Overnight-Inst Growth 13,281,359 (Previous Year Nil) Units Baroda Pioneer Mutual Fund Baroda Pioneer Advantage Fund-Inst Growth Nil (Previous Year 96,436,417) Units Birla Sun Life Mutual FundBSL Floating Rate Fund-Long Term-Instl-Growth Nil (Previous Year 39,039,425) Units Birla Sun Life Mutual Fund BSL Interval Income Fund-Instl-Quarterly Series 2-Growth Nil (Previous Year 43,331,340) Units Birla Sun Life Mutual FundBirla Sun Life Cash Manager-Institutional Plan-Growth Nil (Previous Year 129,963,805) Units Deutsche Mutual FundDWS Treasury Investment-Institutional Plan-Growth Nil (Previous Year 49,052,228) Units Deutsche Mutual FundDWS Cash Opportunities Fund Instl Plan-Growth Nil (Previous Year 87,423,512) Units DSP BlackRock Mutual FundDSP BlackRock Short Term Fund-Growth Nil (Previous Year 22,534,265) Units in Million
As at 31st March, 2010 in Million in Million
—
248.8
—
248.9
—
497.9
—
249.2
—
248.8
200.0 —
— 1,000.2
—
420.8
—
502.9
—
2,000.0
—
503.5
—
1,031.0
—
355.0
Annual Report 2010-11
45
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million Fidelity International Fidelity Ultra Short Term Debt Fund Super Instl-Growth Nil (Previous Year 20,982,694) Units Fortis Mutual Fund - Fortis Money Plus Instl-Growth Nil (Previous Year 72,003,792) Units IDFC Mutual Fund-IDFC Money Manager Fund-Investment Plan-Inst Plan B-Growth Nil (Previous Year 70,683,867) Units ICICI Prudential Mutual FundICICI Prudential Banking & PSU Debt Fund-Growth Nil (Previous Year 74,845,356) Units L&T Mutual Fund-C228 L&T Select Income FundFlexi Debt Institutional-Growth Nil (Previous Year 24,407,095) Units JM Mutual FundJM Money Manager Fund Regular Plan-Growth(168) Nil (Previous Year 59,649,545) Units JPMorgan Mutual FundJPMorgan India Short Term Income Fund-Growth Nil (Previous Year 30,000,000) Units Kotak Mutual FundKotak Quarterly Interval Plan Series 7-Growth Nil (Previous Year 45,620,854) Units Principal Mutual Fund Principal Money Manager Fund-Institutional Growth Plan Nil (Previous Year 47,630,388) Units Religare Mutual Fund-Religare Credit Opportunities FundInstitutional Growth Nil (Previous Year 96,891,263) Units UTI Mutual Fund-UTI FTIF Series II -Quarterly Interval Plan V-Insti - Growth Nil (Previous Year 24,998,000) Units b) In Mutual Fund (Units of Face Value of 100 Each) ICICI Prudential Mutual FundICICI Prudential Flexible Income Plan Premium-Growth Nil (Previous Year 5,840,702) Units ICICI Prudential Mutual FundICICI Prudential Liquid - Super IP - Growth 1,034,621 (Previous Year Nil) Units c) In Mutual Fund (Units of Face Value of 1000 Each) Taurus Mutual FundTaurus Liquid Fund-Super Inst Growth 47,397 (Previous Year Nil) Units in Million —
As at 31st March, 2010 in Million in Million 250.0
— —
1,000.1 1,013.0
—
752.0
—
250.0
—
750.1
—
300.0
—
500.0
—
500.0
—
1,000.2
—
250.0
—
1,000.1
150.0
—
50.0
—
46
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million Bharti Axa Mutual Fund Bharti AXA Treasury Advantage Fund-Instl Plan-Growth Nil (Previous Year 224,558) Units UTI Mutual Fund-UTI Liquid Cash Plan Inst Growth 155,331 (Previous Year Nil) Units Reliance Mutual FundReliance Money Manager Fund-Inst Option-Growth Nil (Previous Year 597,884) Units Shinsei Mutual FundShinsei Treasury Advantage Fund Growth Nil (Previous Year 489,039) Units Total ( II ) Total ( I+II ) in Million —
As at 31st March, 2010 in Million in Million 250.0
250.0 —
— 750.1
—
500.1
650.0 36,014.2
16,372.7 40,516.9
As at 31st March, 2011 Book Value AGGREGATE VALUE OF INVESTMENTS Quoted Unquoted *Partners Sun Pharmaceutical Industries Limited Solapur Organics Private Limited (1,081) (Previous Year (1,081)) Dilip S. Shanghvi (381) (Previous Year 1,026.4 34,987.8 Share 80% 10% 10% 97.5% 2.5% 97.5% 2.0% 0.5% Market Value 2,669.7
As at 31st March, 2010 Book Value 3,207.2 37,309.7 Market Value 5,208.9
Capital 15.9 0.0 0.0 3,888.6 133.5 3,478.2 311.1 30.5
Capital 15.9 0.0 0.0 4,236.8 121.7 2,992.2 94.7 23.2
(381))
**Partners Sun Pharmaceutical Industries Limited Sun Pharmaceutical Industries Key Employees’ Benefit Trust ***Partners Sun Pharmaceutical Industries Limited Sun Pharmaceutical Industries Key Employees’ Benefit Trust Sun Pharma Advanced Research Company Limited Key Employees’ Benefit Trust ****Partners Sun Pharmaceutical Industries Limited 67 (Previous Year Nil) Sun Pharmaceutical Industries Key Employees’ Benefit Trust (67) (Previous Year Nil)
98.0% 2.0%
0.0 (0.0)
— —
Annual Report 2010-11
47
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 7 : INVENTORIES
Consumables Stores Stock in Trade Raw Materials Packing Materials Finished Goods Work-in-Progress 155.5 2,876.0 539.9 968.1 1,643.1 2,553.3 352.2 774.9 1,856.2 164.8
6,027.1 6,182.6
5,536.6 5,701.4
SCHEDULE 8 : SUNDRY DEBTORS
(Unsecured-Considered Good, unless stated otherwise) Over Six Months Considered Good Considered Doubtful Other Debts Less: Provision for Doubtful Debts
851.5 76.2
927.7 4,574.7 5,502.4 76.2 5,426.2
799.8 77.9
877.7 4,733.1 5,610.8 77.9 5,532.9
SCHEDULE 9 : CASH AND BANK BALANCES
Cash / Cheques on hand Balances with Banks Scheduled Banks Current Accounts Deposit Accounts {Pledged 33.71 Million (Previous Year 7.1 Million)} Other Banks (refer note B.15 of Schedule 19) Current Accounts Deposit Accounts 3.6 86.9
220.8 12,276.8
12,497.6
163.7 273.1
436.8
7.8 —
7.8 12,509.0
10.5 354.5
365.0 888.7
SCHEDULE 10 : OTHER CURRENT ASSETS
Interest accrued on Investments 183.7 183.7 57.9 57.9
48
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 11 : LOANS AND ADVANCES
(Unsecured-Considered Good, unless stated otherwise) Advances and loans to subsidiaries (refer note B.16 of Schedule 19) Loans to Employees / Others {Secured Loans 751.2 Million (Previous Year 294.0 Million)} Considered Good Considered Doubtful Less: Provision for Doubtful Loans / Advances Advances Recoverable in Cash or in Kind or for Value to be received Advances to Suppliers Balances with Central Excise and Customs DEPB and Advance Licence Other Deposits Advance Payment of Income Tax {Net of Provision 1220.7 Million (Previous Year 1182.6 Million)} 61.2 1,404.3
3,055.2 9.5 3,064.7 9.5 3,055.2 359.3 333.0 770.9 209.5 90.9 645.8
414.0 9.5 423.5 9.5 414.0 251.1 228.0 667.9 137.2 78.7 480.1
5,525.8
3,661.3
SCHEDULE 12 : CURRENT LIABILITIES AND PROVISIONS
Current Liabilities Sundry Creditors Due to Micro and Small Enterprises (refer note B.11 of Schedule 19) Others Advance from Customers Security Deposits Investor Education and Protection Fund shall be credited by Unclaimed Dividend (not due) Other Liabilities Provisions Provision for Fringe Benefit Tax Net of Advance Tax 28.6 Million (Previous Year 48.8 Million) Proposed Dividend Corporate Dividend Tax Provision for employee benefits
33.0 2,865.6 95.5 21.9 30.4 92.9 0.6
14.8 2,220.5 284.8 19.3 23.5 70.1 0.6
3,139.3
2,633.0
3,624.5 588.0 117.9
4,331.0 7,470.3
2,847.9 473.0 103.3
3,424.8 6,057.8
Annual Report 2010-11
49
SCHEDULES TO THE FINANCIAL STATEMENTS
Year ended 31st March, 2011 in Million in Million
Year ended 31st March, 2010 in Million in Million
SCHEDULE 13 : OTHER OPERATING INCOME
Share of Income from Partnership Firms 11,715.8 11,715.8 6,776.6 6,776.6
SCHEDULE 14 : OTHER INCOME
Lease Rental and Hire Charges-TDS 0.2 Million (Previous Year 0.2 Million) Interest Income (net) (refer note B.5 of Schedule 19) TDS 97.8 Million (Previous Year 121.2 Million) Profit on Sale of Investments (net) (refer note B.14 of Schedule 19) Profit on Sale of Fixed Assets (net) Insurance Claims Sundry Balance Written Back (net) Dividend Income - Long Term Investment ( 2,820 ) Miscellaneous Income-TDS 0.7 Million (Previous Year 0.9 Million) 3.5 1,258.2 393.1 — 15.1 — 0.0 271.8 1,941.7 11.0 1,047.7 — 6.5 4.6 15.7 0.1 143.7 1,229.3
SCHEDULE 15 : COST OF MATERIALS / GOODS
Inventory of Raw and Packing material at the beginning of the year Purchases during the year - Raw and Packing Material - Finished Goods Inventory of Raw and Packing material at the end of the year Inventory of Finished Goods and Work-in-Progress at the beginning of the year Inventory of Finished Goods and Work-in-Progress at the end of the year (Increase) / Decrease of Finished Goods and Work-in-Progress 2,905.5 7,693.0 1,766.8 (3,415.9) 2,631.1 (2,611.2) 19.9 8,969.3 2,411.9 7,585.2 1,370.4 (2,905.5) 2,322.0 (2,631.1) (309.1) 8,152.9
8,949.4
8,462.0
SCHEDULE 16 : PERSONNEL COST
Salaries, Wages and Bonus Contribution to Provident and Other Funds Staff Welfare Expenses 1,761.7 118.8 260.1 2,140.6 1,464.5 137.2 145.4 1,747.1
50
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
Year ended 31st March, 2011 in Million in Million
Year ended 31st March, 2010 in Million in Million
SCHEDULE 17 : OPERATING AND OTHER EXPENSES
Stores and Spares Consumed Conversion and Other Manufacturing Charges Power and Fuel Rent Rates and Taxes Insurance Selling and Distribution Commission and Discount Repairs Building Plant and Machinery Others Printing and Stationery Travelling and Conveyance Overseas Travel and Export Promotion Communication Provision for Doubtful Debts / Advances Provision for Doubtful Debts Sundry Balances/Bad Debts written off (net) Less : Adjusted out of Provision of earlier years Professional and Consultancy Donations Loss on Sale of Investment (net) (refer note B.14 of Schedule 19) Loss on Sale of Fixed Assets (net) Excise duty on stock ( * ) Miscellaneous expenses 339.1 399.6 394.0 10.6 12.8 32.7 1,966.7 266.8 40.8 228.5 70.8 31.1 204.2 66.3 322.6 324.8 473.8 9.4 17.2 28.3 1,222.9 363.2
340.1 28.9 160.6 835.4 40.6
301.6 26.4 105.6 656.9 35.6
12.8 2.3 14.4
0.7 265.2 2.2 — 3.9 (2.7) 243.2 5,340.4
19.3 5.1 5.1
19.3 177.0 0.1 334.8 — 10.4 290.5 4,720.4
( * ) represents the difference between excise duty on opening and closing stock of finished goods.
Annual Report 2010-11
51
SCHEDULES TO THE FINANCIAL STATEMENTS
Year ended 31st March, 2011 in Million in Million
Year ended 31st March, 2010 in Million in Million
SCHEDULE 18 : RESEARCH AND DEVELOPMENT EXPENDITURE
Salaries, Wages and Bonus Contribution to Provident and Other Funds Staff Welfare Expenses Material, Stores and Spares Consumed Power and Fuel Rates and Taxes Insurance Repairs Building Plant and Machinery Others Printing and Stationery Travelling and Conveyance Communication Professional and Consultancy Loss on Sale of Fixed Assets (net) Miscellaneous Expenses Less : Interest Income (refer note B.5 of Schedule 19) Receipts from Research activities Miscellaneous Income Bad debt Recovered / Sundry balances written Back 391.5 19.5 59.3 644.3 5.1 3.5 1.9 6.1 33.1 22.5 5.5 43.8 22.0 329.6 14.8 30.0 543.7 7.3 4.0 1.3
61.7 12.4 14.6 13.9 100.5 0.6 244.0 1,572.8
71.3 11.8 9.8 16.0 154.8 0.2 246.2 1,440.8
1.1 188.6 27.2 —
216.9 1,355.9
0.8 157.7 0.5 4.1
163.1 1,277.7
52
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
SCHEDULE 19 : SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO FINANCIAL STATEMENTS A SIGNIFICANT ACCOUNTING POLICIES
I Basis of Accounting These financial statements are prepared under historical cost convention on an accrual basis in accordance with the Generally Accepted Accounting Principles in India and the Accounting Standards (AS) as notified under Companies (Accounting Standards) Rules, 2006. Use of estimates The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognised in the period in which the results are known / materialised. Fixed Assets and Depreciation / Amortisation Fixed Assets including intangible assets are stated at historical cost (net of cenvat credit) less accumulated depreciation/ amortisation thereon and impairment losses, if any. Depreciation on tangible assets is provided on Straight Line Method at the rates specified in Schedule XIV to The Companies Act, 1956. Assets costing 5,000/- or less are depreciated at hundred percent rate on prorata basis in the year of purchase. Intangible assets consisting of trademarks, designs, technical knowhow, noncompete fees and other intangible assets are amortised on Straight Line Method from the date they are available for use, over the useful lives of the assets (10/20 years), as estimated by the Management considering the terms of agreement. Leasehold land is amortised over the period of lease. Leases Lease rental for assets taken on operating lease are charged to the Profit And Loss Account in accordance with Accounting Standard 19 on Leases. Revenue Recognition Sales of products are recognised when risk and rewards of ownership of the products are passed on to the customers, which is generally on despatch of goods. Export sales are recognised on the basis of Bill of lading / Airway bill. Sales includes delayed payment charges and are stated net of returns and Vat / Sales Tax, if any. Investments Investments are classified into Current and Long Term Investments. Current Investments are valued at lower of cost and fair value. Long Term Investments are stated at cost less provision, if any, for other than temporary diminution in their value. Inventories Inventories consisting of raw and packing materials, stores and spares, work in progress and finished goods are stated at lower of cost (Raw and Packing Material - Specific Identificaiton Method; Stores and Spares - FIFO basis; Work in Progress and Finished Goods - Weighted Average Method) and net realisable value.
II
III
IV
V
VI
VII
VIII Research and Development The research and development cost is accounted in accordance with Accounting Standard – 26 ‘Intangible Assets’. All related revenue expenditure incurred on original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding up to the time when it is possible to demonstrate probable future economic benefits, is recognised as research expenses and charged off to the profit and loss account, as incurred. All subsequent expenditure incurred for product development on the application of research findings or other knowledge upon demonstration of probability of future economic benefits, prior to the commencement of production, to the extent identifiable and possible to segregate are accumulated and carried forward as development expenditure under Capital Work in Progress, to be capitalised as an intangible asset on completion of the project. In case a project does not proceed as per expectations / plans, the same is abandoned and the amount classified as development expenditure under Capital Work in Progress is charged off to the profit and loss account. IX Foreign Currency Transactions Transactions denominated in foreign currencies are recorded at the exchange rate that approximates the actual rate prevailing at the date of the transaction. Monetary items denominated in foreign currency at the year end are translated at year end rates.
Annual Report 2010-11
53
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
In respect of monetary items, which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognised as exchange difference and the premium on such forward contracts is recognised over the life of the forward contract. The exchange differences arising on settlement / translation are recognised in the Profit and Loss Account. X Derivative Accounting: Forward Contracts in the nature of highly probable forcasted transactions / firm commitments entered into for hedging the risk of foreign currency exposure are accounted for on the principles of prudence as enunciated in Accounting Standard 1 (AS-1) “Disclosure of Accounting Policies”. Pursuant to this, losses, if any, on Mark to Market basis, are recognised in the Profit and Loss Account and gains are not recognised on prudent basis. Taxes on Income Provision for taxation comprises of Current Tax and Deferred Tax. Current Tax provision has been made on the basis of reliefs and deductions available under the Income Tax Act, 1961. Deferred tax resulting from “timing differences” between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the assets can be realised in future. However, where there is unabsorbed depreciation or carry forward losses under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each Balance sheet date. Employee Benefits (a) The Company’s contribution in respect of provident fund is charged to Profit and Loss Account each year. (b) With respect to gratuity liability, Company contributes to Life Insurance Corporation of India (LIC) under LIC’s Group Gratuity policy. Gratuity liability as determined on actuarial basis by the independent valuer is charged to Profit and Loss Account. (c) Liability for accumulated compensated absences of employees is ascertained for on actuarial valuation basis and provided for as per the Company rules.
XI
XII
XIII Borrowing Costs Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised. Other borrowing costs are recognised as an expense in the period in which they are incurred. XIV Provisions, Contingent Liabilities and Contingent Assets Provisions are recognised only when there is a present obligation as a result of past events and when a reliable estimate of the amount of the obligation can be made. 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 can not be made. Contingent Assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised. XV Government Grants / Subsidy Government grants, if any, are accounted when there is reasonable assurance that the enterprise will comply with the conditions attached to them and it is reasonably certain that the ultimate collection will be made. Capital Subsidy in nature of Government Grants related to specific fixed assets is accounted for where collection is reasonably certain and the same is shown as a deduction from the gross value of the asset concerned in arriving at its book value and accordingly the depreciation is provided on the reduced book value.
XVI Impairment of Assets The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the lower of recoverable amount and the carrying amount that would have been determined had no impairment loss being recognised.
54
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
B
1
NOTES TO FINANCIAL STATEMENTS
CONTINGENT LIABILITIES NOT PROVIDED FOR Guarantees Given by the bankers on behalf of the Company Corporate Guarantees Letters of Credit for Imports Liabilities Disputed - Appeals filed with respect to : Income Tax on account of Disallowances / Additions Sales Tax on account of Rebate / Classification Excise Duty on account of Valuation / Cenvat Credit ESIC Contribution on account of applicability Drug Price Equalisation Account [DPEA] on account of demand towards unintended benefit, including interest there on, enjoyed by the Company Demand by JDGFT import duty with respect to import alleged to be in excess of entitlement as per the Advanced Licence Scheme Other Claims against the Company not acknowledged as debts 160.1 46.0 166.7 290.2 25.6 318.4 0.2 14.0 11.5 15.3 1,032.2 106.4 51.5 505.5 446.6 11.4 314.0 0.2 14.0 11.1 6.7 986.9
2 3
Estimated amount of contracts remaining to be executed on capital account [net of advances]. REMUNERATION TO DIRECTORS Managerial Remuneration U/s 198 of the Companies Act, 1956 Salaries and Allowances Contribution to Provident and Other Funds Perquisites and Benefits Commission Total
55.1 4.6 1.9 4.0 65.6
32.3 3.2 0.3 3.7 39.5
The above remuneration excludes Gratuity since the same is ascertained on an aggregate basis for the Company as a whole by way of acturial valuation and separate values attributable to Directors is not available. Computation of net profit U/s 198 read with Section 309(5) of the Companies Act, 1956 and calculation of commission payable to directors Profit Before Taxation Add : Depreciation as per Accounts Loss on Sale of Investments (net) Managerial Remuneration Directors Sitting Fees Provision for Doubtful Debts / Advances Less: Depreciation as per Section 350 of the Companies Act 1956 Sundry Balances / Bad Debts Written Off Profit on Sale of Investments (net) Net Profit 14,540.2 642.3 — 65.6 0.2 12.8 642.3 14.4 393.1 1,049.8 14,211.3 694.7 334.8 39.5 0.2 19.3 694.7 5.1 — 699.8 9,880.3 9,491.6
720.9
1,088.5
Annual Report 2010-11
55
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
As at 31st March, 2011 in Million Remuneration payable to Wholetime Directors including Managing Director Maximum payable @ 10% of Net Profit as per the Companies Act,1956 Maximum payable as approved by the Shareholders Actual paid as approved by the Board Commission payable to Non Executive Directors Maximum payable @ 1% of Net Profit as per the Companies Act,1956 Maximum payable @ 0.25 % (previous year @ 0.25 %) of Net Profit as approved by the Shareholders Actual paid as approved by the Board in Million
As at 31st March, 2010 in Million in Million
1,421.1 103.0 61.6 142.1 35.5 4.0 2010-11 in Million
988.0 63.0 35.8 98.8 24.7 3.7 2009-10 in Million
4
RESEARCH AND DEVELOPMENT EXPENDITURE Revenue Capital 1,355.9 236.1 1,277.7 159.0
5
Net Interest income 1,259.3 Million (Previous Year 1,048.5 Million) comprises : Interest income Bank Deposits Loan Current Investment Long term Investment Others 657.6 84.7 83.1 427.6 12.2 1,265.2 Interest Expense Fixed Loans Others 2.5 3.4 5.9 797.0 56.2 1.4 188.6 9.7 1,052.9 1.1 3.3 4.4 Quantity Value
6
INFORMATION RELATING TO CONSUMPTION OF MATERIALS Raw Materials and Packing Materials Raw Materials- (in ‘000 KGs) Raw Materials-(In Kilo Litres) Packing/Other Materials Total
Quantity
Value
12,521.5 24,362.9 *
6,555.7 626.9 7,182.6
14,016.7 25,826.7 *
6,452.3 639.3 7,091.6
*Information can not be furnished as the items involved are numerous. None of the items individually account for more than 10% of total consumption.
56
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
2010-11 in Million Imported and Indigenous Raw Materials and Packing Materials Imported Indigenous Total Stores and Spares Imported Indigenous Total 7 INFORMATION RELATING TO LICENSED CAPACITY AND PRODUCTION Formulation (Tablets/Capsules/Parenterals/Ointments) (Nos in Million) Licensed Capacity Installed Capacity* Actual Production (including loan license) Bulk Drugs/Chemicals Licensed Capacity Installed Capacity* (In Kilo Litres) Actual Production (including loan license) (In 000 Kgs) (*as certified by the Management) 8 % 41.44 58.56 100.00 0.53 99.47 100.00 Value 2,976.5 4,206.1 7,182.6 1.8 337.3 339.1 2010-11
2009-10 in Million % 44.38 55.62 100.00 1.03 98.97 100.00 Value 3,147.3 3,944.3 7,091.6 3.3 319.3 322.6 2009-10
Not Applicable 7,157.4 2,085.7 Not Applicable 1,181.7 2,252.5
Not Applicable 7,216.3 2,544.4 Not Applicable 1,093.6 2,227.2
INFORMATION RELATING TO TURNOVER, PURCHASE OF GOODS AND STOCKS Turnover Quantity Value Formulations (Qty Million) 2010-11 2009-10 2,473.0 2,788.1 15,918.0 13,884.2 361.2 268.1 1,751.7 1,329.0 206.0 181.6 388.7 362.4 180.0 206.0 Purchase of Goods Quantity Value Opening Stock Quantity Value
in Million Closing Stock Quantity Value
317.0 388.7
Bulk Drugs/Chemicals (Qty in ‘000 Kgs) 2010-11 2009-10 Others 2010-11 2009-10 Total 2010-11 2009-10 19,857.8 18,528.8 1,766.8 1,370.4 774.9 964.9 968.1 774.9 30.1 41.7 6.6 38.7 — — — — 2,252.7 2,294.1 3,909.7 4,602.9 13.1 10.2 8.5 2.7 134.0 190.7 386.2 602.5 146.9 134.0 651.1 386.2
Annual Report 2010-11
57
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 in Million 9 INCOME/EXPENDITURE IN FOREIGN CURRENCY Income Exports (FOB basis) Interest Others Expenditure Raw Materials (CIF basis) Packing Materials (CIF basis) Capital Goods (CIF basis) Spares and Components (CIF basis) Professional Charges Overseas Travel Others 10 The net exchange gain of account. 307.3 Million (Previous Year gain of 8,963.6 0.9 41.1 2,722.9 337.3 903.5 76.1 206.2 82.1 828.8 8,389.5 9.8 109.0 3,003.9 242.6 242.0 26.4 226.2 80.4 807.5 Year ended 31st March, 2010 in Million
36.4 Million) is included under various heads in the Profit and Loss
11 Disclosures under the Micro, Small and Medium Enterprises Development Act, 2006: (a) An amount of 33.0 Million (Previous Year 14.8 Million) and NIL (Previous Year NIL) was due and outstanding to o 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. 12 Disclosure with respect to Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 : (i) Related Party Disclosure - as per Annexure ‘A’ 2010-11 13,838.0 1,035,581,955 1 13.4 2009-10 8,986.5 1,035,581,955 1 8.7
(ii) Accounting Standard (AS-20) on Earnings Per Share Profit After Tax - used as Numerator for calculating Earnings per share Weighted Average number of Shares used in computing basic & diluted earnings per share Nominal Value Per Share (in ) Basic & Diluted Earnings Per Share (in )
Consequent to the approval of the members of the Company and upon requisite regulatory compliance, during the year, one equity share of 5 each of the Company is sub-divided into five equity shares of 1 each fully paid-up. The Earnings Per Share of 1 each has been restated for all the corresponding periods in accordance with Accounting Standard (AS-20) on “Earnings Per Share” as notified under The Companies (Accounting Standards) Rules, 2006.
58
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
2010-11 in Million (iii) Accounting Standard (AS-17) on Segment Reporting (a) Primary Segment The Company has identified “Pharmaceuticals” as the only primary reportable business segment. 10,171.8 9,686.0 19,857.8
2009-10 in Million
(b) Secondary Segment (by Geographical Segment) India Outside India Total Sales
9,348.8 9,180.0 18,528.8
In view of the interwoven/intermix nature of business and manufacturing facility, other segmental information is not ascertainable. (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 108.1 Million (Previous year 90.8 Million) Year ended 31st March, 2011 in Million Contribution to Provident Fund Contribution to Employees State Insurance Scheme (ESIC) and Employees Deposit Linked Insurance (EDLI) Contribution to Labour Welfare Fund 102.5 5.5 0.1 Year ended 31st March, 2010 in Million 87.4 3.3 0.1
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 43.2 Million (Previous Year 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 ‘Employee Benefits’, commitments are actuarially determined using the ‘Projected Unit Credit’ method. Gains and losses on changes in actuarial assumptions are accounted for in the Profit and Loss account.
Annual Report 2010-11
59
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
in Million Year ended 31st March, 2011 Category of Plan Assets : The Company’s Plan Assets in respect of Gratuity are funded through the Group Scheme of the LIC of India. In respect of gratuity (funded): Reconciliation of liability recognised in the Balance sheet Present value of commitments (as per Actuarial Valuation) Fair value of plan assets Net asset in the Balance sheet Movement in net liability recognised in the Balance sheet Net liability / (assets) as at the beginning of the year Net expense recognised in the Profit and Loss account Contribution during the year Net liability / (assets) in the Balance sheet Expense recognised in the Profit and Loss account Current service cost Interest cost Expected return on plan assets Actuarial loss Expense charged to the Profit and Loss account Return on plan assets Expected return on plan assets Actuarial gain Actual return on plan assets Reconciliation of defined-benefit commitments Commitments as at the beginning of the year Current service cost Interest cost Paid benefits Actuarial loss Commitments as at the year end Reconciliation of plan assets Plan assets as at the beginning of the year Expected return on plan assets Contributions during the year Paid benefits Actuarial gain Plan assets as at the year end 248.3 274.2 25.9 (15.8) 29.0 (39.1) (25.9) 25.2 18.3 (20.7) 6.2 29.0 20.7 3.3 24.0 212.7 25.2 18.3 (17.4) 9.5 248.3 228.5 20.7 39.1 (17.4) 3.3 274.2 212.7 228.5 15.8 (44.8) 60.2 (31.2) (15.8) 18.6 12.1 (16.5) 46.0 60.2 16.5 3.3 19.8 142.4 18.6 12.1 (9.7) 49.3 212.7 187.2 16.5 31.2 (9.7) 3.3 228.5 31st March, 2010
The actuarial calculations used to estimate commitments and expenses in respect of gratuity and compensated absences are based on the following assumptions which if changed, would affect the commitment’s size, funding requirements and expense: Discount rate Expected return on plan assets Expected rate of salary increase Mortality 8.25% 8.25% 6.00% 8.00% 8.00% 6.00%
LIC (1994-96) Ultimate
The estimates of future salary increases, considered in the actuarial valuation, take into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.
60
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
in Million Year ended 31st March, 2011 31st March, 2010 31st March, 2009 31st March, 2008 31st March, 2007 Experience adjustment On plan liabilities On plan assets Present value of benefit obligation Fair value of plan assets Excess of (obligation over plan assets) / plan assets over obligation 17.5 3.3 248.3 274.2 25.9 56.5 3.3 212.7 228.5 15.8 5.2 3.9 142.4 187.2 44.8 126.9 2.4 106.4 104.0 (2.4) 35.5 Million. 3.1 1.2 75.0 83.5 —
The contribution expected to be made by the Company during financial year ending 31st March, 2012 is
(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 17. 13 Investment Purchased and Sold during the Year Mutual Fund Units (Units of Face Value of 10 Each, unless stated otherwise) 2010-11 Units Purchase Value In Nos. in Million AIG Mutual Fund (*) Axis Mutual Fund (*) Baroda Pioneer Mutual Fund Bharti AXA Mutual Fund (*) Birla Sun Life Mutual Fund Canara Robeco Mutual Fund Daiwa Mutual Fund (*) DBS Chola Mutual Fund Deutsche Asset Management Deutsche Asset Management(**) DSP Mutual Fund DSP Mutual Fund (*) Fidelity Mutual Fund Fortis Mutual Fund HDFC Mutual Fund HSBC Mutual Fund ICICI Prudential Mutual Fund ICICI Prudential Mutual Fund (**) IDBI Mutual Fund IDFC Mutual Fund JM Mutual Fund JP Morgan Asset Management 416,710 1,009,567 259,183,237 445,569 1,776,929,287 89,332,745 289,577 — 492,226,715 2,884,076 50,000,000 1,289,746 19,607,689 230,265,112 71,110,348 3,452,371 328,068,526 66,974,317 196,116,534 126,971,449 261,515,878 503,324,578 466.7 1,050.7 2,750.1 500.0 24,953.3 1,050.0 315.0 — 5,756.5 365.0 500.0 1,733.1 250.0 3,259.0 1,260.1 50.0 3,414.4 9,343.0 1,980.1 1,509.7 3,660.1 6,121.1 Sales Value in Million 2009-10 Units Purchase Value In Nos. in Million — 470.0 4,880.8 1,450.1 19,875.2 426.0 — 870.0 11,705.9 — 1,330.1 3,060.0 3,320.2 10,960.4 12,245.1 — 15,070.2 7,218.1 — 4,383.1 2,574.1 3,415.2 Sales Value in Million — 470.6 4,893.2 1,453.1 19,922.8 426.5 — 873.0 11,767.2 — 1,339.7 3,060.4 3,333.2 11,002.3 12,282.6 — 15,114.3 7,220.9 — 4,407.5 2,580.2 3,428.8
470.7 — 1,051.8 467,443 2,758.7 471,961,898 500.9 1,323,588 25,009.0 1,313,064,099 1,051.9 38,822,296 315.1 — — 74,088,548 5,775.3 1,017,540,933 365.1 — 508.1 85,372,150 1,738.5 2,422,780 251.3 278,879,207 3,268.8 912,190,062 1,261.9 661,627,364 50.0 — 3,432.4 1,183,651,098 9,345.5 53,162,327 1,986.3 — 1,519.4 373,697,093 3,692.7 186,522,165 6,134.8 292,533,033
Annual Report 2010-11
61
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
in Million 2010-11 Units Purchase Value In Nos. in Million Kotak Mutual Fund L&T India Mutual Fund Morgan Stanely Mutual Fund Pramerica Mutual Fund Pramerica Mutual Fund (*) Principal Mutual Fund Reliance Mutual Fund Reliance Mutual Fund (*) Religare Mutual Fund SBI Mutual Fund Shinsei Mutual Fund Shinsei Mutual Fund (*) Sundaram BNP Paribas Mutual Fund Taruas Mutual Fund (*) Tata Mutual fund Templeton Mutual Fund (*) UTI Mutual Fund (*) (*) Units of Face Value of 1,000 Each (**) Units of Face Value of 100 Each Certificate of Deposit (Units of Face Value of 100,000 Each) IDBI Bank State Bank of Indore Axis Bank Oriental Bank of Commerce Bank of India Canara Bank Bank of Maharashtra Corporation Bank Allahabad Bank United Bank of India Punjab National Bank Central Bank of India Federal Bank ING Vysha Bank Debentures ETHL Communications Holdings Ltd. Units of Face Value of 1,000,000 Each Commercial Paper India Infoline Ltd. Units of Face Value of 425,171,798 60,132,981 9,438,860 66,398,567 3,006,177 63,827,588 276,801,181 198,472 141,430,843 149,868,573 — 2,559,701 74,059,634 771,222 — 2,166,895 558,745 6,860.2 700.0 100.0 665.0 3,060.0 810.0 4,205.0 250.0 1,730.7 2,320.0 — 2,690.6 1,390.0 810.0 — 3,085.0 593.4 Sales Value in Million 6,877.9 705.2 100.1 667.8 3,064.2 813.4 4,207.8 251.3 1,732.9 2,323.3 — 2,701.5 1,392.3 810.4 — 3,086.9 594.4 2009-10 Units Purchase Value In Nos. in Million 84,497,852 — 25,000,000 — — 519,967,061 544,884,579 4,539,867 614,014,034 — 112,570,172 2,794,682 31,608,298 — 17,775,366 1,869,343 3,415,543 1,470.0 — 250.0 — — 7,427.4 7,435.0 5,580.8 7,150.3 — 1,135.0 2,840.7 470.0 — 250.0 2,493.0 3,463.2 Sales Value in Million 1,472.1 — 250.1 — — 7,430.9 7,437.0 5,630.2 7,188.4 — 1,136.4 2,853.7 470.6 — 250.6 2,499.9 3,465.9
2,500 10,000 5,000 9,500 2,500 2,500 5,000 10,000 20,000 5,000 7,500 6,500 2,500 2,500 250
249.1 995.4 497.1 941.7 248.9 248.8 497.1 996.7 1,987.7 496.5 745.0 642.4 245.9 245.8 232.2
250.0 1,000.0 500.0 950.0 250.0 250.0 500.0 1,000.0 2,000.0 500.0 750.0 650.0 250.0 250.0 245.6
— — — — — — — — — — — — —
— — — — — — — — — — — — —
— — — — — — — — — — — — —
—
—
—
2,000 500,000 Each
995.5
998.4
—
—
—
62
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
2010-11 in Million 14 Profit / (Loss) on Sale of Investments (net) Profit / (Loss) on Sale of Current Investments (net) Profit / (Loss) on Sale of Long Term Investments (net) 15 Balances with Other Banks held in: Name of the Bank/Institution UBS AG Wealth Management-London 8,308 (Previous Year 8,631) Maximum Balance 8,631 (Previous Year 9,490) Credit Agricole (Suisse) S.A.Private Bank Vietnam Export Import Bank, Hochiminch Branch, Vietnam Standard Chartered, Shanghai Branch, China Moscow Bank, Moscow Branch, Moscow Belvnesheconom Bank, Minsk Branch, Belarus Tsesna Bank,Almaty Branch, Kazakhstan Ukreixm Bank, Kyiv Branch, Ukraine Total 16 Loans / Advances due from Subsidiaries Loans Green Eco Development Centre Ltd. Sun Pharma De Venezuela, C.A. Advances :Share Application Money to Sun Pharma Global Inc. BVI Sun Pharma De Mexico, S.A. DE C.V. Total 371.6 21.5 393.1 Balance As at Maximum Balance 31st March, 2011 2010-11 0.0 0.0
2009-10 in Million
(440.7) 105.9 (334.8) Balance As at Maximum Balance 31st March, 2010 2009-10 0.0 0.0
1.4 0.4 2.7 1.2 0.9 0.6 0.6 7.8
355.3 12.1 11.3 18.2 6.6 6.1 3.9
354.5 2.7 4.4 2.4 0.1 0.3 0.6 365.0
430.5 18.3 17.3 10.2 6.2 5.8 3.5
0.1 1.2 — 59.9 61.2
0.1 1.2 1,344.0 60.3
— — 1,344.0 60.3 1,404.3
— — 2,173.4 68.4
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.
Annual Report 2010-11
63
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 in Million 21 Remuneration to Auditors (excluding service tax) : Audit Fees In any other manner, for certification etc. Out of pocket expenses Total 6.6 0.2 0.1 6.9 6.6 0.2 0.1 6.9 Year ended 31st March, 2010 in Million
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. A) The following are the outstanding Forward Exchange Contracts entered into by the Company as on 31st March, 2011 Currency US Dollar Buy/Sell Sell Cross Currency Amount in Million As at 31st March, 2011 $310.0 Amount in Million As at 31st March, 2010 $175.0
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 : Currency Exports of Goods & Services US Dollar Euro XOF British Pound Swiss Franc US Dollar US Dollar As at 31st March, 2011 Amount in Million $20.6 € 3.5 XOF 6.1 £0.6 CHF 0.0 $1.3 — 917.5 221.3 0.6 40.9 0.7 59.9 — As at 31st March, 2010 Amount in Million $14.6 € 4.0 XOF 5.7 £0.7 — $1.3 $30.0 655.2 240.5 0.5 48.9 — 60.3 1,344.0
CHF 14,500 Loans Receivables Share Application Money b) Amounts payable in foreign currency on account of the following :
Import of Goods & Services £ 360 (Previous Year £ 3,821) CHF 8,260 AUD 5,311 CAD 3,743 25,693
Commission Payable
US Dollar Euro British Pound Swiss Franc Australian Dollar Canadian Dollar Chinese Yuan Japanese Yen US Dollar Euro
$5.7 € 0.1 £0.0 CHF 0.0 AUD 0.0 CAD 0.0 CNY 0.6 JPY 13.1 $4.2 € 1.3
254.3 9.2 0.0 0.4 0.2 0.2 3.8 7.1 188.0 80.5
$6.3 € 0.3 £0.0 — — — — JPY 9.4 $3.1 € 1.0
280.8 16.6 0.3 — — — — 4.4 139.6 58.4
23 Previous years’ figures are restated / regrouped / rearranged wherever necessary in order to conform to current years’ groupings and classifications.
64
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
Annexure ‘A’ to Notes on Account
ACCOUNTING STANDARD (AS-18) “ RELATED PARTY DISCLOSURE “ 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 “Sun Pharmaceutical Industries” 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.
Annual Report 2010-11
65
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
Annexure ‘A’ to Notes on Account
ACCOUNTING STANDARD (AS-18) “ RELATED PARTY DISCLOSURE “ Names of related parties and description of relationship 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. Mr. Dilip S. Shanghvi Mr. Sudhir V. Valia Mr. Sailesh T. Desai Mr. S. Kalyanasundaram Mr. Aalok Shanghvi Ms. Khyati Valia Chairman & Managing Director Wholetime Director Wholetime Director Chief Executive Officer and Wholetime Director Son of Chairman and Managing Director Daughter of Wholetime Director
3.
Key Management Personnel
4. 5.
Relatives of Key Management Personnel
Enterprise under significant Influence of Key Sun Petrochemicals Pvt. Ltd. Management Personnel or their relatives Navjivan Rasayan (Gujarat) Pvt. Ltd. Sun Pharma Advanced Research Company Ltd.
66
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
Annexure ‘A’ to Notes on Account
ACCOUNTING STANDARD (AS-18) “ RELATED PARTY DISCLOSURE “ Particulars Subsidiaries Controlled Entity Key Management Personnel Relatives of Key Management Personnel Enterprise under significant Influence of Key Management Personnel or their relatives
in Million
Total
31/03/11 Purchases of goods / DEPB Caraco Pharmaceutical Laboratories Ltd. Alkaloida Chemical Company Zrt Sun Pharmaceutical Industries Others Purchase of Fixed Assets Sun Pharmaceutical Industries Others Sale of goods / DEPB Caraco Pharmaceutical Laboratories Ltd. Sun Pharma Global (FZE) Sun Pharma Sikkim Others Sale of Fixed Assets Sun Pharma Sikkim Sun Petrochemicals Pvt. Ltd. Sun Pharma Advanced Research Company Ltd. Others Receiving of Service / Reimbursement of Expenses Services Sun Pharmaceutical Industries Sun Pharma Advanced Research Company Ltd. Reimbursement of Expenses Caraco Pharmaceutical Laboratories Ltd. Others Rendering of Service / Reimbursement of Expenses Services Caraco Pharmaceutical Laboratories Ltd. Sun Pharmaceutical Industries Inc. Others Reimbursement of Expenses Sun Pharma Global (FZE) Sun Pharma Advanced Research Company Ltd. Others Finance (including loans and equity contributions) Capital Contribution / (Withdrawal) Sun Pharma Global Inc. Sun Pharma Sikkim Sun Pharmaceutical Industries Others Sales of Investments Sun Pharma Global Inc. Loans given / Share Application Money Sun Pharma De Venezuela, CA Sun Pharma Global Inc. Others Loans Received back / Share Application Money Refund Sun Pharma Global Inc Others 70.1 22.8 47.3 — — 0.1 — 0.1 4,658.7 3,415.4 890.8 — 352.5 — — — — — — — — 89.8 74.8 15.0 16.3 16.3 — — 51.9 51.7 — 0.2 1.5 — — — 1.5 — — 1.4 1.3 — 0.1 1,344.0 1,344.0 —
31/03/10 31/03/11 103.4 78.3 25.0 — 0.1 — — — 3,651.0 2,134.1 871.6 — 645.3 — — — — — — — — 48.8 37.1 11.7 81.3 71.9 9.4 — 48.3 43.7 — 4.6 241.4 — — 229.5 11.9 4.6 4.6 — 821.6 — — 624.4 197.2 1.2 1.1 — — 0.1 20.7 20.7 — — — — — — — — 0.2 — — 0.2
31/03/10 31/03/11 31/03/10 31/03/11 31/03/10 31/03/11 414.3 — — 413.3 1.0 6.4 6.4 — 943.0 — — 630.3 312.7 0.3 0.1 — — 0.2 27.6 27.6 — — — — 2.3 — — 2.3 0.2 — — 0.2 (9,482.7) — (2,240.3) (7,253.9) 11.5 — — 6.0 — — 6.0 6.0 — 6.0 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 0.9 — — — 0.9 0.2 — 0.2 13.7 — — — 13.7 0.2 — — 0.2 — 95.2 — 95.2 0.5 — 0.5 — — — — 24.8 — 24.8 — — — — — — — — — — — — — — —
31/03/10 31/03/11 1.1 — — — 1.1 — — — 17.8 — — — 17.8 19.1 — 19.1 — — 12.4 — 12.4 1.1 — 1.1 3.8 — — 3.8 25.9 — 25.9 — 312.4 22.8 47.3 229.5 12.8 4.9 4.6 0.3 5,494.0 3,415.4 890.8 624.4 563.4 1.4 1.1 — 0.2 0.1 115.9 20.7 95.2 90.3 74.8 15.5 16.3 16.3 — — 76.9 51.7 24.8 0.4
31/03/10 518.8 78.3 25.0 413.3 2.2 6.4 6.4 — 4,611.8 2,134.1 871.6 630.3 975.8 19.4 0.1 19.1 — 0.2 40.0 27.6 12.4 49.9 37.1 12.8 87.4 71.9 9.4 6.1 74.4 43.7 25.9 4.8 (7,168.6) 2,314.1 (2,240.3) (7,253.9) 11.5 243.4 243.4 1,767.9 — 1,761.9 6.0 323.4 317.4 6.0
2,314.1 (12,139.5) 2,314.1 — — (10,916.3) — (1,223.2) — 0.0 243.4 243.4 1,761.9 — 1,761.9 — 317.4 317.4 — — — — — — — — — —
— (12,138.0) — — — (10,916.3) — (1,223.2) — 1.5 — — — — — — — — — — — 1.4 1.3 — 0.1 1,344.0 1,344.0 —
Annual Report 2010-11
67
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011
Annexure ‘A’ to Notes on Account
ACCOUNTING STANDARD (AS-18) “ RELATED PARTY DISCLOSURE “ Particulars Subsidiaries Controlled Entity Key Management Personnel Relatives of Key Management Personnel Enterprise under significant Influence of Key Management Personnel or their relatives
in Million
Total
31/03/11 Corporate Guarantees Given / (Released) on behalf of (2,508.8) Sun Pharma Global Inc (2,508.8) Sun Pharma Sikkim — Sun Pharma Advanced Research Company Ltd. — Sun Pharmaceuticals Italia S.R.L. — Interest Income Sun Pharmaceutical Industries Sun Pharma Sikkim Rent Income Sun Pharmaceutical Industries Sun Pharma Sikkim Sun Pharma Advanced Research Company Ltd. Others Director’s Remuneration Mr. Dilip S. Shanghvi Mr. Sudhir V. Valia Mr. Sailesh T. Desai Mr. S. Kalyanasundaram Apprenticeship Stipend / Remuneration Mr. Aalok Shanghvi Ms. Khyati Valia Remuneration (Partner’s) Received Sun Pharmaceutical Industries Share of profit from Partnership Firm Sun Pharma Sikkim Sun Pharmaceutical Industries Others (3292) (Previous Year (800)) Outstanding Corporate Guarantee to Bank Sun Pharma De Mexico S.A. DE C.V. {Actual Utilised Nil (Previous Year Nil)} Sun Pharmaceutical (Bangladesh) Ltd. {Actual Utilised 18.4 Million (Previous Year 23.2 Million)} Sun Pharma Sikkim {Actual Utilised 27.6 Million (Previous Year 16.2 Million)} Sun Pharma Global Inc {Actual Utilised Nil (Previous Year Nil)} Others {Actual Utilised Nil (Previous Year 12.1 Million)} Outstanding receivables / Payables (Net) Caraco Pharmaceutical Laboratories Ltd. OOO “Sun Pharmaceutical Industries” Ltd. Others — — — — — — — — — — — — — — — — — — — — — — 282.8 133.6 133.6
31/03/10 31/03/11
31/03/10 31/03/11 31/03/10 31/03/11 31/03/10 31/03/11
31/03/10 31/03/11
31/03/10
15.7 — — — 15.7 — — — — — — — — — — — — — — — — — —
— — — — — 2.2 1.1 1.1 3.0 1.6 1.4 — — — — — — — — — — 62.0 62.0
200.0 — 200.0 — — 2.2 1.1 1.1 1.9 1.6 0.3 — — — — — — — — — — 150.7 150.7 6,625.9 4,515.5 2,110.4 (0.0) 200.0 — —
— — — — — — — — — — — — — 61.6 16.9 16.9 7.8 20.0 — — — — — — — — — — — —
— — — — — — — — — — — — — 35.8 15.0 15.0 5.8 — — — — — — — — — — — — —
— — — — — — — — — — — — — — — — — — 1.4 0.9 0.5 — — — — — — — — —
— — — — — — — — — — — — — — — — — — 0.8 0.5 0.3 — — — — — — — — —
— — — — — — — — 1.4 — — 1.3 0.1 — — — — — — — — — — — — — — — — —
(125.0) (2,508.8) — (2,508.8) — — (125.0) — — — — — — 0.7 — — 0.6 0.1 — — — — — — — — — — 2.2 1.1 1.1 4.4 1.6 1.4 1.3 0.1 61.6 16.9 16.9 7.8 20.0 1.4 0.9 0.5 62.0 62.0
90.7 — 200.0 (125.0) 15.7 2.2 1.1 1.1 2.6 1.6 0.3 0.6 0.1 35.8 15.0 15.0 5.8 — 0.8 0.5 0.3 150.7 150.7 6,625.9 4,515.5 2,110.4 (0.0) 2,993.3 134.4 134.4
— 11,653.9 — 10,786.3 — 867.6 — (0.0) 2,793.3 134.4 134.4 200.0 — —
— 11,653.9 — 10,786.3 — 867.6 — (0.0) — — — 482.8 133.6 133.6
— — 15.6 1,899.3 1,127.2 438.9 333.2
— 2,508.8 15.7 2,759.7 780.2 277.5 1,702.0
200.0 — — (0.1) — — (0.1)
200.0 — — (0.1) — — (0.1)
— — — (11.7) — — (11.7)
— — — (7.6) — — (7.6)
— — — (0.2) — — (0.2)
— — — (0.2) — — (0.2)
— — — 20.9 — — 20.9
— — — 48.4 — — 48.4
200.0 — 15.6 1,908.2 1,127.2 438.9 342.1
200.0 2,508.8 15.7 2,800.2 780.2 277.5 1,742.4
68
Sun Pharmaceutical Industries Limited
Information required as per Part IV of Schedule VI to The Companies Act, 1956
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
I. Registration Details Registration No. Balance Sheet Date 04/19050 31st March, 2011 II. Capital Raised during the year ( in Million) Public Issue NIL Bonus Issue NIL III. Position of Mobilisation and Deployment of Funds ( in Million) Total Liabilities 68595.7 Sources of Funds Paid up Capital 1035.6 Secured Loans 505.3 Deferred Tax Liability (Net) 1285.1 Application of Funds Net Fixed Assets 10224.5 Net Current Assets 22357.0 State Code 04 Right Issue NIL Private Placement NIL Total Assets 68595.7 Reserves and Surplus 65769.7 Unsecured Loans Nil
Investments 36014.2 Miscellaneous Expenditure NIL Accumulated Losses NIL Total Expenditure 18448.5 Profit After Tax 13838.0 Dividend Rate 350.0%
IV. Performance of the Company ( in Million) Total Income 32988.7 Profit Before Tax 14540.2 Earning Per Share ( ) 13.4 V. Generic Names of Three Principal Products of the Company (as per monetary terms) Item Code No. (ITC Code) Product Description 30049079 Rivastigmine 29420090 Pentoxifyline 30043200 Progestrone
For and on behalf of the Board
S. KALYANASUNDARAM Wholetime Director & CEO
DILIP S. SHANGHVI Chairman & Managing Director SUDHIR V. VALIA Wholetime Director
SUNIL R. AJMERA Company Secretary Mumbai, 28th May, 2011
SAILESH T. DESAI Wholetime Director Mumbai, 28th May, 2011
Annual Report 2010 -11
69
Corporate Governance
CORPORATE GOVERNANCE
In compliance with Clause 49 of the Listing Agreement with Stock Exchanges, the Company submits the report on the matters mentioned in the said Clause and lists the practices followed by the Company.
1. Company s Philosophy on Code of Corporate Governance
Sun Pharmaceutical Industries Limited s philosophy on corporate governance envisages working towards high levels of transparency, accountability, consistent value systems, delegation across all facets of its operations leading to sharply focused and operationally e?cient growth. The Company tries to work by these principles in all its interactions with stakeholders, including shareholders, employees, customers, suppliers and statutory authorities. Sun Pharmaceutical Industries Limited is committed to learn and adopt the best practices of corporate governance.
2. Board of Directors
The present strength of the Board of Directors of your Company is eight Directors. Composition and category of Directors is as follows: Inter-se Relationship between Directors Brother-in-law of Mr. Sudhir V. Valia Brother-in-law of Mr. Dilip S. Shanghvi ? ? ? ? ? ?
Category Promoter Executive Director Non-Promoter Executive Directors
Name of the Directors Mr. Dilip S. Shanghvi (Chairman and Managing Director) Mr. Sudhir V. Valia (Whole- time Director) Mr. Sailesh T. Desai (Whole- time Director) Mr. S. Kalyanasundaram* (Chief Executive O?cer & Whole-time Director)
Non Executive Independent Directors
Mr. S. Mohanchand Dadha Mr. Hasmukh S. Shah Mr. Keki M. Mistry Mr. Ashwin S. Dani
Number of Board Meetings held during the year ended March 31, 2011 and the dates on which held: 5 Board meetings were held during the year, as against the minimum requirement of 4 meetings. The dates on which the meetings were held during the year ended March 31, 2011 are as follows: May 24, 2010, July 28, 2010, September 24, 2010, October 30, 2010 and January 31, 2011.
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Sun Pharmaceutical Industries Ltd.
Attendance of each Director at the Board meetings, last Annual General Meeting (AGM), and number of other Directorships and Chairmanships/Memberships of Committee of each Director, is given below: Attendance Particulars for the year ended March 31, 2011 Board Meetings Mr. Dilip S. Shanghvi Mr. Sudhir V. Valia Mr. Sailesh T. Desai Mr. S. Mohanchand Dadha Mr. Hasmukh S. Shah Mr. Keki M. Mistry Mr. Ashwin S. Dani Mr. S. Kalyanasundaram 4 5 5 5 5 5 4 4 *No. of other directorships and committee memberships /chairmanships as of March 31, 2011 Committee Memberships** ? 1 ? ? 1 7 1 ? Committee Chairmanships ** ? 1 ? 1 1 2 2 ?
Name of the Director
Last AGM held on Other September 24, 2010 Directorships No Yes Yes Yes Yes Yes Yes Yes 1 5 1 3 6 12 6 ?
* The above list of other directorships does not include Directorships, Committee Memberships and Committee Chairmanships in Private, Foreign and Section 25 Companies. **The Committee Memberships and Chairmanships in other Companies include Memberships and Chairmanships of Audit and Shareholders / Investors Grievance Committee only.
3. Code of Conduct
The Board of Directors have laid down a code of conduct for all Board members and senior management of the Company. All the Directors and senior management personnel have a?rmed compliance with the code of conduct as approved and adopted by the Board of Directors and a declaration to this e?ect has been annexed to the Corporate Governance Report. The code of conduct has been posted on the website of the Company www.sunpharma.com.
4. Audit Committee
The Audit committee of the Company comprises of three independent non-executive Directors viz. Mr. Keki M. Mistry, Mr. S. Mohanchand Dadha and Mr. Hasmukh S. Shah. Mr. Keki M. Mistry is the Chairman of the committee. The constitution of Audit Committee also meets with the requirements under Section 292A of the Companies Act, 1956. Mr. Kamlesh H. Shah, Company Secretary of the Company was the Secretary of the Audit Committee upto March 31, 2011 & from April 1, 2011 Mr. Sunil R. Ajmera, the Company Secretary of the Company is the Secretary of the Audit Committee. The terms of reference of the Audit Committee interalia include overseeing the Company s ?nancial reporting process, reviewing the quarterly/ half-yearly/ annual ?nancial statements, reviewing with the management the ?nancial statements and adequacy of internal audit function, management letters issued by the statutory auditor, recommending the appointment/ re-appointment of statutory auditors and ?xation of audit fees, reviewing the signi?cant internal audit ?ndings/ related party transactions, reviewing the Management Discussion and Analysis of ?nancial condition and result of operations and also statutory compliance issues. The Committee acts as a link between the management, external and internal auditors and the Board of Directors of the Company. Executives from the Finance Department, Representatives of the Statutory Auditors and Internal Auditors are also invited to attend the Audit Committee Meetings. The Committee has discussed with the external auditors their audit methodology, audit planning and signi?cant observations/ suggestions made by them. In addition, the Committee has discharged such other role/ function as envisaged under Clause 49 of the Listing Agreement of the Stock Exchange and the provisions of Section 292A of the Companies Act, 1956.
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Four Audit Committee Meetings were held during the year ended March 31, 2011. The dates on which Meetings were held are as follows: May 24, 2010, July 28, 2010, October 30, 2010 and January 31, 2011. The attendance of each Member of the Committee is given below: Name of the Director Mr. Keki M. Mistry Mr. S. Mohanchand Dadha Mr. Hasmukh S. Shah Chairman / Member of the Committee Chairman Member Member No. of Audit Committee Meetings Attended 4 4 4
5. Remuneration Committee
The Company has not formed any Remuneration Committee of Directors. The Whole - time Directors remuneration is approved by the Board within the overall limit ?xed by the shareholders at their meetings. The payment of remuneration by way of commission to the Non- Executive Directors of the Company is within the total overall maximum limit of quarter percent of net pro?ts as worked under the provisions of Sections 349 & 350 of the Companies Act, 1956. This will be in addition to the sitting fees of ` 5,000/- payable to the Non Executive Directors for attending each meeting of the Board and/or of Committee thereof. The actual commission payable to the Non- Executive Directors of our Company severally and collectively as below mentioned has been decided by the Board of Directors of the Company at their Meeting held on January 31, 2011 which is within the overall limit ?xed as above by the Members of the Company. The details of the remuneration paid/payable to the Directors during the year 2010-2011 are given below: (Amount in `) Directors Mr. Dilip S. Shanghvi Mr. Sudhir V. Valia Mr. Sailesh T. Desai Mr. S. Mohanchand Dadha Mr. Hasmukh S. Shah Mr. Keki M. Mistry Mr. Ashwin S. Dani Mr. S.Kalyanasundaram # Salary includes Special Allowance. * Perquisites include House Rent Allowance, Leave Travel Assistance, Medical Reimbursement, contribution to Provident Fund and such other perquisites, payable to Directors. Besides this, all the Whole - time Directors are also entitled to encashment of leave and Gratuity at the end of tenure, as per the rules of the Company. Notes: a) The Agreement with each of the Executive Directors excluding Mr.S.Kalyanasundaram is for a period of 5 years. Either party to the agreement is entitled to terminate the Agreement by giving to the other party 30 days notice in writing. Salary # 1,26,48,000 1,26,48,000 48,72,000 84,00,000 Bonus 25,29,600 25,29,600 9,74,400 16,80,000 Perquisites* / Bene?ts 17,43,589 16,84,968 19,86,939 98,86,378 Commission 10,00,000 10,00,000 10,00,000 10,00,000 Sitting Fees 70,000 75000 45000 20000 Total 1,69,21,189 1,68,62,568 78,33,339 10,70,000 10,75,000 10,45,000 10,20,000 1,99,66,378
b) Mr.S. Kalyanasundaram has been appointed as Chief Executive O?cer & Whole-time Director of the Company for a period of ?ve years with e?ect from April 1, 2010. As per the terms of his employment, his appointment is terminable by either party giving to the other party advance notice of twelve months, provided that the Company may waive the notice by giving the remuneration for twelve months which the CEO would have received, had he remained in o?ce for the said twelve months. Further, the Company may at its discretion terminate the employment under certain speci?ed circumstances as per the terms of his employment. c) The Company presently does not have a scheme for grant of stock options either to the Executive Directors or employees.
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d) There is no separate provision for payment of severance fees to Whole-time Director(s) excluding Mr. S. Kalyanasundaram as mentioned under (b) above. Details of Equity Shares held by Non-Executive Directors as on March 31, 2011 Director Mr. S. Mohanchand Dadha Mr. Hasmukh S. Shah Mr. Keki M. Mistry Mr. Ashwin S. Dani No. of Shares held (including shares held jointly) 1,42,140 6,000 25,000 Nil
6. Shareholders /Investors Grievance Committee
The Board of the Company had constituted a Shareholders /Investors Grievance Committee, comprising of Mr. S. Mohanchand Dadha, Mr. Dilip S. Shanghvi, Mr. Sudhir V. Valia with Mr. Hasmukh S. Shah as the Chairman. The Committee, inter alia, approves issue of duplicate certi?cates and oversees and reviews all matters connected with the transfer of securities. The Committee looks into shareholders complaints like transfer of shares, non receipt of balance sheet, non receipt of declared dividends, etc. The Committee oversees the performance of the Registrar and Transfer Agents, and recommends measures for overall improvement in the quality of investor services. The Board of Directors has delegated the power of approving transfer of securities to M/s. Link Intime India Pvt. Ltd, and/or the Company Secretary of the Company. The Board has designated severally, Mr. Kamlesh H. Shah, Company Secretary (upto March 31, 2011), Mr. Sunil R. Ajmera, Company Secretary (from April 1, 2011) and Mr. Ashok I. Bhuta, D.G.M (Legal & Secretarial) as Compliance O?cers. Five meetings of the Shareholders /Investors Grievance Committee were held during the year ended March 31, 2011. The dates on which Meetings were held are as follows: May 24, 2010, July 28, 2010, September 24, 2010, October 30, 2010 and January 31, 2011. The attendance of each Member of the Committee is given below: Name of the Director Mr. Hasmukh S. Shah Mr. Sudhir V. Valia Mr. Dilip S. Shanghvi Mr. S. Mohanchand Dadha Investor Complaints : The total number of complaints received and resolved to the satisfaction of shareholders during the year under review, were 24. Chairman / Member of the Committee Chairman Member Member Member No. of Shareholders /Investors Grievance Committee Meetings attended 5 5 4 5
7. Committee of Directors (Allotment)
The Board of Directors of the Company had constituted the Committee of Directors (Allotment) at the Board Meeting held on October 30, 2010, comprising of Mr. Sailesh T. Desai, Mr. S. Mohanchand Dadha, Mr. Hasmukh S. Shah with Mr. Sudhir V. Valia as the Chairman. Mr. Kamlesh Shah, Company Secretary & Compliance O?cer acted as the Secretary and Compliance O?cer of the Committee and Mr. Ashok I. Bhuta, DGM (Legal & Secretarial) & Compliance O?cer acted as the Compliance O?cer of the Committee. The Committee inter alia had the powers to decide all matters relating to the issue and allotment of equity shares of ` 1/- each of the Company on sub-division/split of equity shares of ` 5/- each, to credit the equity shares so allotted through NSDL/ CDSL/ Other depository to the concerned bene?ciary account and to issue the subdivided share certi?cates to the shareholders holding the shares in physical form and to perform any or all of the acts, deeds, things and matters as may be required in connection with such issue, allotment and listing of equity shares of ` 1/- each. One meeting was held on November 29, 2010 during the year ended on March 31, 2011. Mr. Sudhir V. Valia, Mr. Sailesh T. Desai & Mr. Hasmukh S. Shah were present at the Meeting. The said Committee of Directors (Allotment) was discontinued and dissolved at the Board Meeting held on January 31, 2011.
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8. Subsidiary companies
The Company does not have any material non-listed Indian subsidiary company whose turnover or net worth (i.e., paid-up capital and free reserves) exceeds 20% of the consolidated turnover or net worth respectively, of the listed holding company and its subsidiaries in the immediately preceding accounting year. The ?nancial statements including investments made by the unlisted subsidiaries were placed before and reviewed by the Audit Committee of the Company. Copies of the Minutes of the Board Meetings of the unlisted subsidiary companies were placed at the Board Meetings of the Company held during the year. The Board of Directors of the Company, reviewed periodically, the statement of all signi?cant transactions and arrangements entered into by the unlisted subsidiary companies.
9. General Body Meetings
(i) Location and time of the General Meetings held during the last 3 years are as follows:
Year 2007-08
Meeting Sixteenth AGM
Location Hotel Taj Residency Akota Gardens, Akota Vadodara - 390 020. The Gateway Hotel Akota Gardens, Akota Vadodara ? 390 020. Prof. Chandravadan Mehta Auditorium, General Education Centre,The Maharaja Sayajirao University of Baroda, Pratapgunj, Vadodara ? 390 002.
Date June 6, 2008
Time 10.15 A.M.
2008-09
Seventeenth AGM
September 11, 2009 10.15 A.M.
2009-10
Eighteenth AGM
September 24, 2010 10.30 A.M.
(ii) Special Resolutions passed during the last three years: a) At the Sixteenth Annual General Meeting: 1. 2. 3. 4. Alteration of Clause V of the Memorandum of Association and Clause 4 of the Articles of Association of the Company, for re-classi?cation of Authorized Share Capital of the Company. Re-appointment of Mr. Sudhir V. Valia, Whole-time Director and approval of terms and conditions of appointment including remuneration. Re-appointment of Mr. Sailesh T. Desai, Whole-time Director and approval of terms and conditions of appointment including remuneration. Appointment of Mr. Aalok D. Shanghvi, relative of a Director to hold an o?ce or place of pro?t under Section 314 of the Companies Act, 1956 and increase in upper limit of remuneration upto a maximum of ` 20,00,000/- per annum from April 1, 2009 for a period of ?ve years.
b) At the Seventeenth Annual General Meeting: Appointment of Ms. Khyati S. Valia, relative of a Director to hold an o?ce or place of pro?t under Section 314 of the Companies Act, 1956 and increase in upper limit of remuneration upto a maximum of ` 20,00,000/- per annum from April 1, 2010 for a period of ?ve years. c) At the Eighteenth Annual General Meeting: Appointment of Mr. S. Kalyanasundaram as the Chief Executive O?cer (CEO) & Whole-time Director of the Company for a period of ?ve years e?ective from April 1, 2010 to March 31, 2015 and remuneration payable to him.
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Sun Pharmaceutical Industries Ltd.
(iii) Postal Ballot During the year, Postal Ballot was conducted to obtain the approval of shareholders by way of an ordinary and special resolutions for sub-division of face value of equity shares from ` 5/- each into 5 Equity Shares of ` 1/- each and alteration of the Memorandum of Association of the Company and alteration of the Articles of Association of the Company under Section 94 and other applicable provisions & Section 31 and other applicable provisions respectively which was also simultaneously conducted by way of e-voting and our Company became the ?rst Company to o?er e-voting facility to its shareholders through CDSL Ventures Ltd. Mr. Umesh Lakhani of Messrs. S.H.Bathiya & Associates, Chartered Accountants, Mumbai, was appointed as the Scrutinizer for conducting the postal ballot process and based on his report, the results were announced on November 12, 2010. The communication regarding the same was issued to the Stock Exchanges, an advertisement was released in Newspapers on November 16, 2010 and the information was also made available on the Company s website. The Equity Shares were sub-divided on November 29, 2010 based on the Record Date of November 26, 2010. Details of the Resolutions passed under the Postal Ballot are as follows: Resolution No.1 Description: Ordinary Resolution for sub-division of Equity Shares of the Company from face value of ` 5/- each into 5 Equity Shares of ` 1/- each and consequent alteration of the Memorandum of Association of the Company. Voting Pattern: Voting Votes in favour Votes not in favour Invalid Votes Total Resolution No.2 Description: Special Resolution for alteration of the Articles of Association of the Company consequent to the sub-division of the equity shares of the Company from face value of ` 5/- each into 5 Equity Shares of ` 1/- each Voting Pattern: Voting Votes in favour Votes not in favour Invalid Votes Total Number of Votes 161,372,288 488,477 134,387 161,995,152 Percentage of Total Votes 99.62 0.30 0.08 100.00 Number of Votes 161,395,356 488,032 112,043 161,995,431 Percentage of Total Votes 99.63 0.30 0.07 100.00
10. Disclosures
* No transaction of a material nature has been entered into by the Company with Directors or Management and their relatives, etc. that may have a potential con?ict with the interests of the Company. The Register of Contracts containing transactions, in which directors are interested, is placed before the Board of Directors regularly. The transaction with the related parties are disclosed in the Annexure A attached to the Annual Accounts. There were no instances of non-compliance by the Company on any matters related to the capital markets or penalties/ strictures imposed on the Company by the Stock Exchange or SEBI or any statutory authority during the last 3 ?nancial years.
*
Annual Report 2010 -11
75
Corporate Governance
* * * *
In the preparation of the ?nancial statements, the Company has followed the Accounting Standards as noti?ed by Companies (Accounting Standard) Rules, 2006. The Company has laid down procedures to inform Board members about the risk assessment and its minimization, which are periodically reviewed to ensure that risk control is exercised by the management e?ectively. During the year under review, the Company has not raised funds through any public, rights or preferential issue. Adoption/ Non Adoption of the Non- mandatory requirements : (i) (ii) The Company has not ?xed a period of nine years as the tenure of Independent Directors on the Board of the Company. The Company has not formed a remuneration committee of its Board of Directors.
(iii) The Company does not send half-yearly ?nancial results to the household of each shareholder as the same are published in the newspapers and also posted on the website of the Company and the websites of the BSE and NSE. (iv) The Company s Board comprise of perfect mix of Executive and Non Executive Independent Directors who are Company Executives and Professionals having in depth knowledge of pharmaceutical industry and/ or expertise in their area of specialisation. (v) The Company s Board of Directors endeavor to keep themselves updated with changes in global economy and legislation. They attend various workshops and seminars to keep themselves abreast with the changes in business environment.
(vi) At present the Company does not have a mechanism for evaluating its Non-Executive Directors by peer group. (vii) The Company has not adopted whistle blower policy. However, the Company has not denied access to any employee to approach the management on any issue. The Company has adopted a Code of Conduct for its Board of Directors and senior management which contains the requirements of the Whistle Blower Policy.
11. Means of Communication
* Website: The Company s website www.sunpharma.com contains a separate dedicated section INVESTOR where shareholders information is available. Full Annual Report is also available on the website in a user friendly and downloadable form. Apart from this, o?cial news releases, detailed presentations made to media, analysts etc., and the transcript of the conference calls are also displayed on the Company s website. Financial Results: The annual, half-yearly and quarterly results are regularly posted by the Company on its website www.sunpharma.com. These are also submitted to the Stock Exchanges in accordance with the Listing Agreement and published in leading newspapers like The Economic Times , Business Standard and Gujarati Edition of Financial Express . Annual Report: Annual Report containing inter alia Audited Annual Accounts, Consolidated Financial Statements, Directors Report, Auditors Report, and other important information is circulated to Members and others entitled thereto. The Management s Discussion and Analysis (MD&A) Report forms part of the Annual Report. Chairman s Communique: The Chairman s Speech is placed on the website of the Company. Reminder to Investors: Reminders for unpaid dividend or redemption amount on preference shares are sent to shareholders as per records every year. Corporate Filing and Dissemination System (CFDS): The CFDS portal jointly owned, managed and maintained by BSE and NSE is a single source to view information ?led by the listed companies. All disclosures and communications to BSE & NSE are ?led electronically through the CFDS portal. Hard copies of the said disclosures and correspondence are also ?led with the Exchanges. Announcements, Quarterly Results, Shareholding Pattern etc. of the Company regularly ?led by the Company, are also available on the website of The Bombay Stock Exchange Ltd. - www.bseindia.com, National Stock Exchange of India Ltd. - www.nseindia.com, and Corporate Filing & Dissemination System website www.corp?ling.co.in.
*
*
* * *
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Sun Pharmaceutical Industries Ltd.
12. General Shareholder Information
12.1 Annual General Meeting: Date and Time Venue Friday, September 16, 2011, at 10.30 a.m. General Education Centre, Prof. Chandravadan Mehta Auditorium The Maharaja Sayajirao University of Baroda,Pratapgunj, Vadodara-390002, Gujarat Results for quarter ending June 30, 2011 Last week of July 2011. Results for quarter ending September 30, 2011 ? Second week of November 2011. Results for quarter ending December 31, 2011 ? Last week of January 2012 . Audited Results for year ended March 31, 2012 ? 3rd or 4th week of May 2012. From Tuesday, September 6, 2011 to Friday, September 16, 2011 (both days inclusive). On or after September 20, 2011 At The Bombay Stock Exchange Ltd., (BSE) and The National Stock Exchange of India Ltd. (NSE). Listing Fees for the year ended 2011-12 have been paid to The Bombay Stock Exchange Ltd., and The National Stock Exchange of India Ltd, where the Company s Equity Shares continue to be listed.
12.2 Financial Calendar (tentative)
12.3 Details of Book Closure For Equity Shareholders: 12.4 Dividend Payment Date : 12.5 (i) (ii) Listing of Equity Shares on Stock Exchanges : Payment of Listing Fee:
12.6 Stock Code: Equity Shares (a) Trading Symbol The Bombay Stock Exchange Ltd., (Demat Segment): Trading Symbol National Stock Exchange (Demat Segment): (b) Demat ISIN Numbers in NSDL and CDSL for Equity Shares of ` 1/- each SUN PHARMA 524715 SUNPHARMA ISIN No. INE044A01036
Annual Report 2010 -11
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Corporate Governance
12.7 Stock Market Data Equity Shares: Bombay Stock Exchange Ltd. (BSE) (in `) Month s High Price April 2010 May 2010 June 2010 July 2010 August 2010 September 2010 October 2010 November 2010 December 2010 January 2011 February 2011 March 2011
(Source: BSE and NSE website)
National Stock Exchange of India Ltd. (NSE) (in `) Month s High Price 1,853.00* 1,674.00* 1,825.00* 1,840.00* 1,857.00* 2,034.75* 2,157.00* 2,383.95* 489.60+ 511.75+ 446.85+ 469.70+ Month s Low Price 1,511.00* 1,516.00* 1,651.30* 1,697.30* 1,700.05* 1,715.00* 2,010.00* 429.75+ 423.00+ 428.05+ 393.15+ 410.15+
Month s Low Price 1,559.00* 1,515.10* 1,644.40* 1,692.50* 1,705.50* 1,717.00* 2,019.25* 428.60+ 424.20+ 429.05+ 392.05+ 411.00+
1,846.00* 1,674.80* 1,825.00* 1,841.20* 1,814.95* 2,033.90* 2,154.90* 2,380.00* 489.30+ 511.45+ 448.00+ 465.00+
* For ` 5/- paid-up value + For ` 1/- paid-up value
Sun Pharma Equity Share Price verses BSE - Sensex
2500 25000
20069 20032 19621 20509 17559 16945 1661 17701 17868 17971 1784 1771 1760 2019 2107 2245 2425 2205 18328 19445 17823 2120 2210
Sun Pharma Share Price (`)
2000 1500 1000 500 0
20000 15000 10000 5000 0
1567
Apr 10
Sep 10
May 10
June 10
Aug 10
Nov 10
Dec 10
Feb 11
Jul 10
Oct 10
Jan 11
Closing Price of Sun Pharma s Share on BSE
BSE Sensex (Closing)
Note: For comparison purposes, the closing price of equity share of FV of ` 1/- each of our Company has been multiplied by factor 5 for the months November, 2010 to March, 2011 to fall in line with the closing price of equity share of FV of ` 5/- each for the months April to October, 2010.
Mar 11
BSE Sensex
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Sun Pharmaceutical Industries Ltd.
Sun Pharma Equity Share Price verses NSE - Nifty
3000 7000
6030 6018 2110 5863 2238 6135 5506 2425 2204 2118 5333 5834 2213 5278 5313 1785 5368 5402 2021 1571 1664 1769 1762
Sun Pharma Share Price (`)
2500 2000 1500
6000
5086
4000 3000
1000 500 0
2000 1000 0
May 10
Nov 10
Apr 10
Sep 10
Oct 10
Feb 11
June 10
Aug 10
Dec 10
Closing Price of Sun Pharma s Share on NSE
NSE - Nifty (Closing)
Note: For comparison purposes, the closing price of equity share of FV of ` 1/- each of our Company has been multiplied by factor 5 for the months November, 2010 to March, 2011 to fall in line with the closing price of equity share of FV of ` 5/- each for the months April to October, 2010
12.8
Share price performance in comparison to broad-based indices ? BSE Sensex and NSE Nifty. Share price performance relative to BSE Sensex based on share price on March 31, 2011. % Change in Period Year-on-Year 2 Years 3 Years 5 Years Sun Pharma Share Price 23.44% 98.59% 79.39% 154.96% Bse Sensex 10.94% 100.29% 24.29% 72.39% Sun Pharma Relative to Sensex 12.05% -1.70% 55.10% 82.57%
Share price performance relative to Nifty based on share price on March 31, 2011. % Change in Period Year-on-Year 2 Years 3 Years 5 Years Sun Pharma Share Price 23.47% 99.06% 79.97% 157.40% Nifty 11.14% 93.11% 23.22% 71.45% Sun Pharma Relative to Nifty 12.33% 5.95% 56.75% 85.95%
(Source: Compiled from data available on BSE and NSE website)
Mar 11
Jul 10
Jan 11
NSE - Nifty
5000
Annual Report 2010 -11
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Corporate Governance
12.9
Registrars & Transfer Agent (Share transfer and communication regarding share certi?cates, dividends and change of address) Mr. N. Mahadevan Iyer, Link Intime India Pvt. Ltd. C-13, Kantilal Maganlal Estate Pannalal Silk Mills Compound L.B.S. Marg, Bhandup (West), Mumbai ? 400 078. E-Mail: [email protected] [email protected] Tel: 022-25946970, Fax : 022- 25946969
12.10 Share Transfer System Presently, the share transfers which are received in physical form are processed and transferred by Registrar and Share Transfer Agents and the share certi?cates are returned within a period of 15 to 16 days from the date of receipt, subject to the documents being valid and complete in all respects. 12.11 Distribution of Shareholding as on March 31, 2011 No. of Equity Shares held Upto 5000 5001 - 10000 10001 - 20000 20001 - 30000 30001 - 40000 40001 - 50000 50001 - 100000 100001 and above Total No. of Accounts Numbers 69098 2059 321 123 70 42 97 343 72153 % to total accounts 95.77 2.85 0.44 0.17 0.10 0.06 0.13 0.48 100.00 Shares of face value ` 1/- each Number 21622851 12846430 4553476 3125615 2472707 1940745 6939259 982080872 1035581955 % to total shares 2.09 1.24 0.44 0.30 0.24 0.19 0.67 94.83 100.00
12.12 (a) Shareholding Pattern as on March 31, 2011 of Equity Shares as per Clause 35 of the Listing Agreement
Particulars A. B. C. E. F. G. I. J. Indian Promoters and Persons acting in Concert Mutual Funds and UTI Banks Financial Institutions and Insurance Companies Private Corporate Bodies Indian Public NRIs Foreign Companies Trusts Total
Percentage 63.72% 2.85 % 4.20 % 18.39 % 5.11 % 5.51 % 0.07 % 0.05 % 0.06 % 0.04 % 100.00 %
No. of Shares 659,828,200 29,492,245 43,558,538 190,403,388 52,888,652 57,092,796 768,755 490,292 646,450 412,639 1035,581,955
D. FIIs and Foreign Mutual Funds
H. Clearing Members
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Sun Pharmaceutical Industries Ltd.
Indian Promoters and Persons acting in Concert 63.72%
FIIs and Foreign Mutual Funds 18.39 % NRIs 0.07% Foreign Companies 0.06% Clearing Members 0.05% Trusts 0.04% Indian Public 5.51% Private Corporate Bodies 5.11% Banks Financial Institutions and Insurance Companies 4.20% Mutual Funds and UTI 2.85%
12.13 Dematerialisation of Shares About 99.15% of the outstanding Equity shares have been de-materialised up to March 31, 2011. Trading in Shares of the Company is permitted only in de-materialised form w.e.f. November 29, 1999 as per noti?cation issued by the Securities and Exchange Board of India (SEBI). Liquidity: Your Company s equity shares are fairly liquid and are actively traded on National Stock Exchange of India Ltd., (NSE) and The Bombay Stock Exchange Ltd. (BSE) Relevant data for the average daily turnover for the ?nancial year 20102011 is given below:
NSE Before split up of Equity Shares In no. of share (in Thousands) In value terms (` Millions) 191.893 After split up of Equity Shares 983.323
BSE Before split up of Equity Shares 23.955 After split up of Equity Shares 109.014 Before split up of Equity Shares 215.848*
NSE + BSE After split up of Equity Shares 1092.337 Combined e?ect for ` 1/- Equity Shares 2171.577
344.936
438.306
43.195
48.639
388.131
486.945
875.076
(Source: Compiled from data available on BSE and NSE website)
*To have a combined e?ect for face value of ` 1 /- of Equity Shares, the ?gure as shown under this column has been multiplied by a factor of ?ve and added. 12.14 Outstanding GDRs/ADRs/Warrants or any Convertible instruments, conversion date and likely impact on equity : The Company has not issued any GDRs/ ADRs / warrants or any other convertible instruments during the year and there are no FCCBs outstanding as at March 31, 2011. 12.15 Plant locations: 1. 2. 3. 4. 5. 6. 7. 8. Plot No.214 and 20, Govt. Industrial Area, Phase-II, Piparia, Silvassa ? 396 230. Plot No.223, Span Industrial Complex, Near R.T.O. Check Post, Dadra ? 396 191 (U.T) Plot No.25 and No.24/2,GIDC, Phase- IV,Panoli ? 395 116, Dist. Bharuch(Guj.). A-7 & A-8, MIDC Industrial Area, Ahmednagar ? 414 111, Maharashtra. Plot No. 4708, GIDC, Ankleshwar ? 393 002, Gujarat. Sathammai Village, Karunkuzhi Post, Maduranthakam T.K. Kanchipuram Dist. Tamilnadu ? 603 303. Halol-Baroda Highway, Halol, Gujarat ? 389350. Plot No. 817/A, Karkhadi ? 391 450, Taluka: Padra, Dist. Vadodara, Gujarat.
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12.16 (a)
Investor Correspondence For transfer/dematerialisation of Shares, payment of dividend on Shares, and any other query relating to the shares of the Company
For Shares held in Physical Form Mr. N. Mahadevan Iyer Link Intime India Pvt. Ltd. C-13, Kantilal Maganlal Estate Pannalal Silk Mills Compound L.B.S. Marg, Bhandup (West) Mumbai ? 400 078. E-Mail: [email protected] [email protected] Tel: 022-25946970-, Fax : 022- 25946969 For Shares held in Demat Form To the Depository Participant.
(b) (c)
E-mail id designated by the Company for Investor Complaints Any query on Annual Report
[email protected] Mr.Sunil R. Ajmera/ Mr.Ashok I. Bhuta/ Mr. Uday Baldota / Ms. Mira Desai, 17-B, Mahal Industrial Estate Mahakali Caves Road Andheri (East), Mumbai ? 400 093. [email protected] [email protected] [email protected] [email protected] [email protected]
For and on behalf of the Board DILIP S. SHANGHVI Chairman & Managing Director SUDHIR V. VALIA Whole-time Director SAILESH T. DESAI Whole-time Director Place: Mumbai, Date: May 28, 2011 S.KALYANASUNDARAM Whole-time Director & CEO
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Sun Pharmaceutical Industries Ltd.
ANNEXURE TO CORPORATE GOVERNANCE FOR THE YEAR ENDED MARCH 31, 2011 DECLARATION OF COMPLIANCE WITH CODE OF CONDUCT
I, Dilip S. Shanghvi, Chairman & Managing Director of Sun Pharmaceutical Industries Limited ( the Company ) hereby declare that, to the best of my information, all the Board Members and Senior Management Personnel of the Company have a?rmed their compliance and undertaken to continue to comply with the Code of Conduct laid down by the Board of Directors of the Company for Board members and senior management.
For Sun Pharmaceutical Industries Ltd., Dilip S. Shanghvi Chairman & Managing Director Date: May 28, 2011.
AUDITORS CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OF CORPORATE GOVERNANCE UNDER CLAUSE 49 OF THE LISTING AGREEMENT
To The Members of Sun Pharmaceutical Industries Limited, We have examined the compliance of conditions of Corporate Governance by Sun Pharmaceutical Industries Limited ( the Company ), for the year ended on March 31, 2011, as stipulated in Clause 49 of the Listing Agreement of the said Company with relevant stock exchanges (hereinafter referred to as Clause 49). The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination has been limited to a review of the procedures and implementation thereof, adopted by the Company for ensuring compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the ?nancial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Directors and the Management, we certify that the Company has complied, in all material respects, with the conditions of Corporate Governance as stipulated in Clause 49. We state that such compliance is neither an assurance as to the future viability of the Company nor the e?ciency or e?ectiveness with which the Management has conducted the a?airs of the Company. For DELOITTE HASKINS & SELLS Chartered Accountants (Registration No.117366W) Rajesh K. Hiranandani Partner MUMBAI, May 28, 2011 (Membership No.36920)
Annual Report 2010-11
83
AUDITORS’ REPORT
TO THE BOARD OF DIRECTORS OF SUN PHARMACEUTICAL INDUSTRIES LIMITED
1.
We have audited the attached Consolidated Balance Sheet of SUN PHARMACEUTICAL INDUSTRIES LIMITED (“the Company”) and its subsidiaries (the Company and its subsidiaries constitute “the Group”) as at 31st March, 2011, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement of the Group for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management and have been prepared on the basis of the separate financial statements/ consolidated financial statements in respect of certain subsidiary groups, and other financial information regarding components. Our responsibility is to express an opinion on these Consolidated Financial Statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We did not audit the financial statements of any of the 54 subsidiaries and also 2 of the partnership firms (listed in Note B1 on Schedule 20), whose financial statements reflect total assets of 50,497.4 Million as at 31st March, 2011, total revenues of 28,486.5 Million and net cash outflows amounting to 260.6 Million for the year ended on that date as considered in the Consolidated Financial Statements, comprising: a. Total assets of 23,453.1 Million as at 31st March, 2011, total revenues of 17,205.6 Million and net cash outflows amounting to o 331.9 Million for the year ended on that date in respect of 24 subsidiaries and 2 partnership firms, whose financial statements have been audited by other auditors and their reports have been furnished to us and our opinion in so far as it relates to the amounts included in respect of these subsidiaries and partnership firms is based solely on the reports of the other auditors. b. Total assets of 25,670.9 Million as at 31st March, 2011, total revenues of 9,946.3 Million and net cash inflows amounting to 61.1 Million o for the period from 20th September, 2010 (date of acquisition) to 31st March, 2011 in respect of a subsidiary group comprising of 21 subsidiaries, whose reporting date of 31st December, 2010 is different from the reporting date of the Company and the consolidated financial statements have been audited by other auditors. In terms of Accounting Standard 21, Consolidated Financial Statements as notified under the Companies (Accounting Standards) Rules, 2006 (“Accounting Standard 21”), adjustments have been made for significant transactions of the subsidiary group for the period from 1st January, 2011 to 31st March, 2011 on the basis of the report of their auditors. Our opinion in so far as it relates to the amounts included in respect of this subsidiary group is based solely on the reports of the other auditors furnished to us. Total assets of 1,369.3 Million as at 31st March, 2011, total revenues of 1,334.6 Million and net cash inflows amounting to 8.8 Million for o the year ended on that date in respect of 6 subsidiaries, whose reporting date is also of 31st December, 2010 and different from the reporting date of the Company and the financial statements have been audited by other auditors. In terms of Accounting Standard 21, adjustments have been made for significant transactions of these subsidiaries for the periods from 1st January, 2011 to 31st March, 2011 and 1st January, 2010 to 31st March, 2010, on the basis of their management accounts for the said periods. Our opinion in so far as it relates to the amounts included in respect of these subsidiaries is based solely on the reports of the other auditors furnished to us and the management accounts as aforesaid. c. Total assets of 4.1 Million as at 31st March, 2011, total revenues of Nil and net cash inflows amounting to 1.4 Million for the year ended o on that date in respect of 3 subsidiaries, whose financial statements have not been audited.
2.
3.
4. 5.
We report that the Consolidated Financial Statements have been prepared by the Company in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements as notified under the Companies (Accounting Standards) Rules, 2006. Based on our audit and on consideration of the separate Auditors’ Reports on individual financial statements of the Company and its aforesaid subsidiaries/consolidated financial statements in respect of certain subsidiary groups, and to the best our information and according to the explanations given to us, in our opinion, read with our comments in paragraphs 3(b) and 3(c) above, the Consolidated Financial Statements give a true and fair view in conformity with the accounting principles generally accepted in India: i. in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at 31st March, 2011; ii. in the case of the Consolidated Profit and Loss Account, of the profit of the Group for the year ended on that date; and iii. in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date.
For Deloitte Haskins & Sells Chartered Accountants (Registration No.117366W)
MUMBAI, 28th May, 2011
Rajesh K Hiranandani Partner (Membership No. 36920)
84
Sun Pharmaceutical Industries Limited
CONSOLIDATED BALANCE SHEET
AS AT 31ST MARCH, 2011
As at 31st March, 2011 Schedule in Million in Million
As at 31st March, 2010 in Million in Million
SOURCES OF FUNDS
Shareholders’ Funds Share Capital Reserves and Surplus Minority Interest Loan Funds Secured Loans Unsecured Loans Deferred Tax Liability (Net) Total 1 2 1,035.6 93,797.6 94,833.2 8,471.5 1,035.6 77,253.5 78,289.1 1,931.9
3 4 5 (a)
1,804.3 2,451.5
4,255.8 1,348.3 108,908.8
1,003.5 708.0
1,711.5 1,209.1 83,141.6
APPLICATION OF FUNDS
Fixed Assets Gross Block 6 Less: Depreciation/Amortisation/Impairment Net Block Capital Work-in-Progress (including advances on capital account) Goodwill on Consolidation (Refer note B.6 of schedule 20) Investments 7 Deferred Tax Assets (Net) 5 (b) Current Assets, Loans and Advances Inventories 8 Sundry Debtors 9 Cash and Bank Balances 10 Other Current Assets 11 Loans and Advances 12 Less: Current Liabilities and Provisions Current Liabilities Provisions Net Current Assets Total SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 20 Schedules referred to herein form an integral part of the Financial Statements.
In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants RAJESH K. HIRANANDANI Partner For and on behalf of the Board DILIP S. SHANGHVI Chairman & Managing Director S. KALYANASUNDARAM Wholetime Director & CEO SUDHIR V. VALIA Wholetime Director SAILESH T. DESAI Wholetime Director SUNIL R. AJMERA Company Secretary Mumbai, 28th May, 2011 Mumbai, 28th May, 2011
45,520.1 20,286.1 25,234.0 2,706.3
27,940.3 7,719.7 22,309.6 5,000.6
23,340.4 8,012.5 15,327.9 1,448.2
16,776.1 4,060.3 31,663.8 2,099.5
14,793.9 11,715.9 21,936.4 445.1 11,280.8 60,172.1 9,203.2 5,030.3 14,233.5 45,938.6 108,908.8
10,738.5 11,747.7 5,088.9 57.9 8,488.1 36,121.1 4,095.1 3,484.1 7,579.2 28,541.9 83,141.6
13
Annual Report 2010-11
85
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 Schedule in Million in Million
Year ended 31st March, 2010 in Million in Million
INCOME
Income from Operations Gross Sales Less : Excise Duty Net Sales Other Operating Income Other Income 58,065.8 851.5 57,214.3 — 57,214.3 2,698.8 14,606.9 6,728.9 13,318.6 2,860.0 2,040.6 851.2 433.2 38,861.4 775.1 38,086.3 1,988.2 40,074.5 2,048.2 10,977.3 4,007.9 9,372.9 2,083.1 1,533.1 1,106.4 (427.8)
14 15 16 17 18 19
59,913.1
42,122.7
EXPENDITURE
Cost of Materials / Goods Personnel Cost Operating and Other Expenses Research and Development Expenditure Depreciation / Amortisation / Impairment
39,555.0 20,358.1 1,284.4 19,073.7 913.1 18,160.6 38,211.7 56,372.3
27,974.3 14,148.4 678.6 13,469.8 (41.0) 13,510.8 31,021.8 44,532.6
PROFIT BEFORE TAXATION
Provision for Taxation - Current Tax - Deferred Tax Charge / (Credit) (Net) PROFIT AFTER TAX Minority Interest PROFIT FOR THE YEAR AFTER TAX AND MINORITY INTEREST BALANCE OF PROFIT BROUGHT FORWARD AMOUNT AVAILABLE FOR APPROPRIATIONS
APPROPRIATIONS
Proposed Dividend Corporate Dividend Tax Transfer to General Reserve BALANCE OF PROFIT CARRIED TO BALANCE SHEET EARNINGS PER SHARE (refer note B.8 of Schedule 20) Basic & Diluted ( ) Face value per Equity share - 1 SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 20 Schedules referred to herein form an integral part of the Financial Statements.
In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants RAJESH K. HIRANANDANI Partner
3,624.5 588.0
4,212.5 5,000.0 47,159.8 17.5
2,847.9 473.0
3,320.9 3,000.0 38,211.7 13.0
For and on behalf of the Board DILIP S. SHANGHVI Chairman & Managing Director S. KALYANASUNDARAM Wholetime Director & CEO SUDHIR V. VALIA Wholetime Director SAILESH T. DESAI Wholetime Director SUNIL R. AJMERA Company Secretary
Mumbai, 28th May, 2011
Mumbai, 28th May, 2011
86
Sun Pharmaceutical Industries Limited
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 in Million
Year ended 31st March, 2010 in Million
A
Cash Flow From Operating Activities:
Net Profit Before Tax Adjustments for: Depreciation / Amortisation / Impairment Interest Expense Interest Income Dividend Income ( 2,820) Loss on Fixed Assets Sold (net) Profit on sale of Investments Provision for Doubtful Debts Sundry Balances / Bad Debts written off / back (net) Provision for employee benefits Unrealised Foreign Exchange Loss Operating Profit Before Working Capital Changes Adjustments for Changes In Working Capital: Decrease / (Increase) in Sundry Debtors Decrease / (Increase) in Other Receivables Increase in Inventories Increase in Trade and Other Payables Cash Generated From Operations Taxes Paid Net Cash Generated From Operating Activities 3,475.1 902.0 (712.6) 1,817.0 24,970.9 (1,076.8) 23,894.1 (3,057.1) (707.9) (981.5) 390.2 9,556.1 (1,744.8) 7,811.3 2,040.6 577.3 (1,918.9) (0.0) 14.3 (427.5) 12.9 (10.0) 654.6 (1,812.0) 19,489.4 1,533.1 61.5 (1,200.4) (0.1) 60.3 (73.3) 21.2 (18.4) 64.1 (684.0) 13,912.4 20,358.1 14,148.4
B. Cash Flow From Investing Activities:
Purchase of Fixed Assets and Capital Work in Progress (including Capital Advance) Proceeds From Sale of Fixed Assets Proceeds From Sale of Investments Purchase of Investments Margin Money and Fixed Deposit with Banks Short Term Loans / Inter Corporate Deposits received back / (given) (net) Acquisition of Subsidiaries Interest Received Dividend Received ( 2,820) Net Cash Used in Investing Activities (4,453.7) 283.8 126,427.0 (123,198.1) (14,789.8) (2,596.6) (4,689.3) 1,531.7 0.0 (21,485.0) (2,841.3) 89.3 153,969.6 (165,746.5) 11,782.5 (168.0) (806.9) 1,583.8 0.1 (2,137.4)
Annual Report 2010-11
87
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST MARCH, 2011
Year ended 31st March, 2011 in Million
Year ended 31st March, 2010 in Million
C. Cash Flow From Financing Activities:
Long Term Loan Taken / (Repaid) Short Term Loan Taken / (Repaid) Proceeds from / (Payment to) Minority Interest Paid Borrowing from banks Received / (Repaid) Dividend Paid Corporate Dividend Tax Paid Net Cash Used in Financing Activities Net (Decrease) / Increase in Cash and Cash Equivalents Cash and Bank balance taken over on acquisition of Subsidiaries Cash and Cash Equivalents as at the beginning of the year Cash and Cash Equivalents as at the year end Cash and Cash Equivalents Comprise: Cash and Cheques in hand and balances with Scheduled / Other banks (Refer Schedule 10 to the Financial Statements) Add : Investment in Certificate of Deposit having maturity less than 3 Months Less : Margin Money Deposit / Fixed deposit having maturity more than 3 Months Unrealised exchange (Gain) / Loss Cash and Cash Equivalents as restated as at the year end Notes: 1 2 Cash and cash equivalents includes available for use by the Company. 28.5 Million (Previous Year 22.2 Million) on account of Unclaimed dividend, which are not — 15,067.9 (10.7) 6,857.8 1,941.6 278.1 (30.4) 6,722.0 21,936.4 5,088.9 (2,204.0) 2.3 (69.2) (577.3) (1,585.0) (2,841.0) (473.0) (7,747.2) (5,338.1) 5,473.9 6,722.0 6,857.8 256.2 (6.9) 2.5 (61.5) (326.7) (2,843.9) (484.0) (3,464.3) 2,209.6 — 4512.4 6,722.0
Previous years’ figures are regrouped / reclassified wherever necessary in order to confirm to current years’ groupings and classifications.
For and on behalf of the Board DILIP S. SHANGHVI Chairman & Managing Director S. KALYANASUNDARAM Wholetime Director & CEO SUDHIR V. VALIA Wholetime Director SAILESH T. DESAI Wholetime Director SUNIL R. AJMERA Company Secretary
In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants RAJESH K. HIRANANDANI Partner
Mumbai, 28th May, 2011
Mumbai, 28th May, 2011
88
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 1 : SHARE CAPITAL
Authorised 1,500,000,000 Equity Shares of 1/- each (Previous Year 300,000,000 Equity Shares of 5 each) Issued, Subscribed and Paid Up 1,035,581,955 Equity Shares of 1 each (Previous Year 207,116,391 Equity Shares of 5 each) fully paid-up. Notes: Of the above : 1) 808,150,050 Equity shares allotted as fully paid Bonus Shares by capitalisation of Securities Premium Account, Profit and Loss Account, Amalgamation Reserve and Capital Redemption Reserve Account. 2) 4,136,330; 2,080,000; 4,775,810; 114,380; 185,190; 197,710 and 21,370 Equity Shares fully paid allotted to the shareholders of erstwhile Tamilnadu Dadha Pharmaceuticals Ltd, Milmet Laboratories Pvt. Ltd, Gujarat Lyka Organics Ltd, Sun Pharmaceutical Exports Ltd, Pradeep Drug Company Ltd, M.J.Pharmaceuticals Ltd. and Phlox Pharmaceuticals Ltd. respectively, pursuant to Schemes of Amalgamations, without payment being received in cash. 3) 108,003,805 Equity Shares allotted to the holders of Zero Coupon Foreign Currency Convertible Bond on exercise of conversion option. 4) With effect from 27th November, 2010, one equity share of paid-up. 5 each fully paid-up was split into five equity shares of 1 each fully 1,500.0 1,500.0 1,035.6 1,500.0 1,500.0 1,035.6
1,035.6
1,035.6
SCHEDULE 2 : RESERVES AND SURPLUS
Capital Reserve As per last Balance Sheet Securities Premium Account As per last Balance Sheet Capital Redemption Reserve As per last Balance Sheet General Reserve As per last Balance Sheet Add : Share in post acquisition profits of Taro Pharmaceutical industries Ltd Group (Taro), relating to step-by-step acquisition prior to date of acquisition of control. Add :Transferred from Profit and Loss Account Foreign Currency Translation Reserve on Consolidation As per last Balance Sheet Add/(Less) :Movement During the Year Surplus as per Profit and Loss Account 20,444.3 3,076.9 259.1 15,099.1 154.5 17,444.3 — 259.1 15,099.1 154.5
5,000.0 3,084.8 (480.9)
28,521.2
3,000.0 5,434.8 (2,350.0)
20,444.3
2,603.9 47,159.8 93,797.6
3,084.8 38,211.7 77,253.5
Annual Report 2010-11
89
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 3 : SECURED LOANS
(Refer Note B.7 of Schedule 20) Short Term Loan from Banks Cash Credit Facility from Banks 1,280.6 523.7 1,804.3 695.2 308.3 1,003.5
SCHEDULE 4 : UNSECURED LOANS
Long Term Debenture (5.8% Interest Plus CPI, maturing in 2014) Other than bank Loans Short Term From Banks Cash Credit Facility from Banks Others 340.0 54.5 8.3 1,902.9 145.8 217.1 25.5 6.0 — 459.4
402.8 2,451.5
248.6 708.0
SCHEDULE 5: DEFERRED TAX BALANCES
(Refer Note B.21 of Schedule 20) (a) Deferred Tax Liabilities (Net) (i) Depreciation on Fixed Assets (ii) Unpaid Liabilities (iii) Others 1,411.3 (43.6) (19.4) 1,348.3 (b) Deferred Tax Assets (Net)* (i) Depreciation on Fixed Assets (ii) Unpaid Liabilities (iii) Unabsorbed Loss (iv) Intangibles (v) Others (346.4) 1,763.0 1,857.3 973.5 753.2 5,000.6 * Includes 3193.7 Million (Previous Year Nil) taken over on acquisition of Taro o 1,302.8 (69.2) (24.5) 1,209.1 (231.6) — 1,021.4 1,078.8 230.9 2,099.5
90
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
SCHEDULE 6 : FIXED ASSETS
Particulars Gross Block (At Cost) Consoli- Taken over dation on acquiAs At Adjustsition 01.04.10 ment (d) I. TANGIBLE ASSETS Freehold Land 138.7 Leasehold Land 76.7 Buildings 5,975.0 Plant and Machinery 13,988.0 Vehicles 217.0 Furniture and Fixtures 484.8 Sub-Total I II. INTANGIBLE ASSETS Trademarks, Designs and Other Intangible Assets Sub-Total II TOTAL I + II Previous Year 20,880.2 Additions 10-11 Deletions/ Adjustment As at 10-11 31.03.11 Depreciation / Amortisation / Impairment
in Million Net Block
Consoli- Taken over Deletions/ dation on acqui- For the AdjustAs at Adjust sition year ment As at As at 01.04.10 ment (d) 10-11 10-11 31.03.11 31.03.11 — — 15.1 27.6 2.4 1.1 46.2 — — 63.1 0.8 1,599.5 361.1 6,136.2 1,201.0 13.1 26.5 309.8 34.6 8,121.7 1,624.0
As at 31.03.10
1.4 460.5 9.1 — 854.1 64.2 48.9 6,222.4 792.9 35.5 7,994.2 1,790.9 2.0 14.7 62.2 1.7 399.1 37.4 89.5 15,945.0 2,756.7
— 609.7 — 48.7 946.3 4.7 119.5 12,919.7 (a) 1,127.5 285.0 23,523.6 5,812.8 35.3 260.6 78.6 11.8 911.2 214.9 500.3 39,171.1 7,238.5
— — 609.7 138.7 0.9 67.7 878.6 72.0 47.2 3,056.0 9,863.7 4,847.5 144.0 13,033.6(b) 10,490.0 8,175.2 11.6 109.0 151.6 138.4 9.1 551.3(b) 359.9 269.9 212.8 16,817.6 22,353.5 13,641.7
2,460.2 2,460.2 23,340.4 21,476.1
(5.7) (5.7) 83.8 (703.5)
3,379.7 3,379.7 19,324.7
569.9 569.9 3,326.6
55.1 6,349.0 55.1 6,349.0 555.4 45,520.1 388.0 23,340.4
774.0 774.0 8,012.5 6,850.7
(5.0) (5.0) 41.2 (132.9)
2,327.4 2,327.4 10,449.1
416.6 416.6 2,040.6
44.5 3,468.5(b) 2,880.5 44.5 3,468.5 257.3 20,286.1 238.4 8,012.5 2,880.5
1,686.2 1,686.2
25,234.0 15,327.9 15,327.9 2,706.3 1,448.2
— 2,955.8
— 1,533.1 (b)
Capital Work-in-Progress (including advances on capital account) (c)
27,940.3 16,776.1 NOTES : (a) Buildings include 8,620 (Previous Year 8,620) towards cost of shares in a Co-operative Housing Society. y. 30.8 Million) including Nil (Previous Year 30.8 Million) on account of 4.4 Million ) on account of
(b) Includes Impairment of Impairment for the year.
30.8 Million (Previous Year
(c) Capital work-in-progress ( including advances on Capital Account ) includes preoperative expenses.
2.66 Million (Previous Year
(d) Represents assets and accumulated depreciation of TARO which became subsidiary during the year. Also refer note no. B.22 to Schedule 20.
Annual Report 2010-11
91
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 7 : INVESTMENTS
A. LONG TERM INVESTMENTS (At Cost) Quoted i) Equity Shares ii) Bonds iii) Zero Percent-Notes iv) Debentures Unquoted i) Government Securities ii) Equity Shares iii) Bonds iv) Debentures v) Passthrough Certificates vi) Deposits vii) Mutual Funds Total (A) B. CURRENT INVESTMENTS i) ii) Certificate of Deposits (Quoted) Mutual Funds (Unquoted) 445.2 650.0 1,095.2 22,309.6 BOOK VALUE 3,355.2 18,954.4 MARKET VALUE 5,808.3 BOOK VALUE 10,424.7 21,239.1 1,941.6 14,879.1 16,820.7 31,663.8 MARKET VALUE 15,557.7
1,096.6 52.1 1,038.9 722.5 164.0 152.9 5.0 250.0 503.3 2,258.0 14,971.1 21,214.4
5,885.1 52.5 1,135.8 1,409.7 0.0 148.9 5.0 — 500.0 1,240.0 4,466.1 14,843.1
Total (B) Total (A+B) AGGREGATE VALUE OF INVESTMENTS Quoted Unquoted
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 8 : INVENTORIES
Consumable Stores Stock in Trade Raw Materials Packing Materials Finished Goods Work-in-Progress 321.0 5,978.7 1,180.2 4,019.8 3,294.2 5,640.6 623.3 1,711.4 2,592.7 170.5
14,472.9 14,793.9
10,568.0 10,738.5
92
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 9 : SUNDRY DEBTORS
(Unsecured-Considered Good, unless stated otherwise) Over Six Months Considered Good Considered Doubtful Other Debts Less: Provision for Doubtful Debts 1,228.7 78.1 1,074.6 79.6
1,306.8 10,487.2 11,794.0 78.1 11,715.9
1,154.2 10,673.1 11,827.3 79.6 11,747.7 88.7
SCHEDULE 10 : CASH AND BANK BALANCES
Cash / Cheques on hand Balances with Banks Scheduled Banks Current Accounts Deposit Accounts {Pledged 33.71 (Previous Year 12.0) Million} Other Banks Current Accounts Deposit Accounts 6.7
5,551.6 15,067.9 20,619.5 1,278.6 31.6
175.2 278.1 453.3 4,155.4 391.5
1,310.2 21,936.4
4,546.9 5,088.9
SCHEDULE 11 : OTHER CURRENT ASSETS
Interest accrued on Investments 445.1 445.1 57.9 57.9
SCHEDULE 12 : LOANS AND ADVANCES
( Unsecured – Considered Good, unless stated otherwise ) Loan to Employees / Others {Secured Loans (Previous Year 294.0 Million)} Considered Good Considered Doubtful Less : Provision for Doubtful Advances Advances Recoverable in Cash or in Kind or for Value to be received Advances to Suppliers Balances with Central Excise and Customs DEPB and Advance Licences Other Deposits Advance Payment of Income Tax (Net of Provision) 751.2 Million 3,391.6 9.5 3,401.1 9.5 3,796.5 9.5 3,806.0 9.5
3,391.6 2,570.5 1,130.2 991.4 209.5 146.4 2,841.2 11,280.8
3,796.5 659.5 299.2 871.5 137.2 108.6 2,615.6 8,488.1
Annual Report 2010-11
93
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
As at 31st March, 2011 in Million in Million
As at 31st March, 2010 in Million in Million
SCHEDULE 13 : CURRENT LIABILITIES AND PROVISIONS
Current Liabilities Sundry Creditors Due to Micro and Small Enterprises Others Advances from Customers Security Deposits Investor Education and Protection Fund shall be credited by Unclaimed Dividend (Not Due) Temporary Overdrawn Bank balance as per Books Other Liabilities Interest accrued but not due on Loans Provisions Provision for Fringe Benefit Tax (Net of Advance Tax on FBT) Proposed Dividend Corporate Dividend Tax Provision for employee benefits
37.7 4,770.6 95.5 21.9 30.4 7.3 4,198.6 41.2 0.6 3,624.5 588.0 817.2
19.1 3,175.3 284.8 19.3 23.5 5.2 401.7 166.2 0.6 2,847.9 473.0 162.6
9,203.2
4,095.1
5,030.3 14,233.5
3,484.1 7,579.2
Year ended 31st March, 2011 in Million in Million — —
Year ended 31st March, 2010 in Million in Million 1,988.2 1,988.2
SCHEDULE 14 : OTHER OPERATING INCOME
Non-recurring (income) (Refer Note B.14 of Schedule 20)
SCHEDULE 15 : OTHER INCOME
Lease Rental and Hire Charges Interest Income (Net) (Refer Note B.5 of Schdule 20) Gain on Exchange Fluctuations Profit on Sale of Fixed Assets Profit on Sale of Investments (Net) (Refer Note B.17 of Schedule 20) Sundry Balances Written Back (Net) Insurance Claims Dividend Income - Long Term Investment ( 2,820 ) Miscellaneous Income 47.3 1,340.5 376.3 2.8 427.5 0.7 20.4 0.0 483.3 2,698.8 28.3 1,138.1 333.7 6.5 73.3 15.7 5.2 0.1 447.3 2,048.2
94
Sun Pharmaceutical Industries Limited
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
Year ended 31st March, 2011 in Million in Million
Year ended 31st March, 2010 in Million in Million
SCHEDULE 16 : COST OF MATERIALS / GOODS
Inventories of Raw & Packing material at the beginning of the year Purchases during the year - Raw & Packing Material - Finished goods Inventories of Raw and Packing Material at the end of the year Inventories taken over on acquisition of Taro Inventories of Finished Goods and Work-In-Progress at the beginning of the year Inventories of Finished Goods and Work-In-Progress at the end of the year 6,263.9 13,384.2 1,766.8 (7,158.9) 4,304.1 (7,314.0) (3,009.9) 14,606.9 5,637.7 10,557.5 1,370.4 (6,263.9) 3,979.7 (4,304.1) (324.4) 10,977.3 3,382.0 411.2 214.7 4,007.9 547.9 784.0 919.2 137.1 108.8 271.2 1,670.8 497.1 78.6 332.8 158.9
14,256.0 3,360.8
11,301.7 —
SCHEDULE 17 : PERSONNEL COST
Salaries,Wages and Bonus Contribution to Provident and Other Funds Staff Welfare Expenses 5,567.1 613.0 548.8 6,728.9
SCHEDULE 18 : OPERATING AND OTHER EXPENSES
Stores and Spares Consumed Conversion and Other Manufacturing Charges Power and Fuel Rent Rates and Taxes Insurance Selling and Distribution Commission and Discount Repairs Building Plant and Machinery Others Printing and Stationery Travelling and Conveyance Overseas Travel and Export Promotion Communication Provision for doubtful Debts / Advances Provision for doubtful Debts Sundry Balances/Bad Debts Written Off ( Net ) Less :- Adjusted out of Provision for earlier years Professional and Consultancy Donations Loss on Sale of Fixed Assets Excise Duty on Stock (*) Miscellaneous Expenses 600.1 1,089.7 946.0 182.1 156.5 325.7 3,414.4 1,328.4 120.7 484.7 160.3
765.7 71.7 278.0 913.5 123.5
570.3 54.0 170.5 735.4 71.9
12.9 5.1 14.4
3.6 2,070.8 3.3 16.5 (2.9) 1,032.0 13,318.6
21.2 6.5 5.1
22.6 1,273.7 111.7 66.5 7.2 1,353.0 9,372.9
(*) represents the difference between excise duty on opening and closing stock of finished goods.
Annual Report 2010-11
95
SCHEDULES TO THE FINANCIAL STATEMENTS
(CONSOLIDATED)
Year ended 31st March, 2011 in Million in Million
Year ended 31st March, 2010 in Million in Million
SCHEDULE 19 : RESEARCH AND DEVELOPMENT EXPENDITURE
Salaries,Wages and Bonus Contribution to Provident and Other Funds Staff Welfare Expenses Material, Stores and Spares Consumed Power and Fuel Rates and Taxes Rent Insurance Repairs Building Plant and Machinery Others Printing and Stationery Travelling and Conveyance Communication Professional and Consultancy Loss on Sale of Fixed Assets Miscellaneous Expenses Less: Interest Income (Refer Note B.5 of Schdule 20) Receipts from Research activities Miscellaneous Income Bad Debts Recovered / Sundry balances written Back 1,090.5 74.2 102.0 840.8 22.1 15.0 0.8 34.5 17.5 44.6 28.6 6.5 51.3 26.3 731.8 43.9 38.5 747.0 18.7 4.1 4.1 21.4
90.7 14.1 19.7 15.9 382.9 0.6 385.1 3,088.9
84.1 11.9 13.2 16.1 195.4 0.3 315.7 2,246.2
1.1 188.6 39.2 —
228.9 2,860.0
0.8 157.7 0.5 4.1
163.1 2,083.1
96
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
SCHEDULE 20: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS A SIGNIFICANT ACCOUNTING POLICIES:
1 Basis of Consolidation: The Consolidated Financial Statements relate to Sun Pharmaceutical Industries Limited (‘the Company’) and its Subsidiaries (together constitute ‘the Group’). The Consolidated Financial Statements have been prepared on the following basis: The financial statements of the Company and its Subsidiaries have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after eliminating intra-group balances, intra-group transactions and unrealised profits or losses as per Accounting Standard 21 ‘Consolidated Financial Statements’, as notified by the Companies (Accounting Standards) Rules, 2006. These financial statements have been prepared using uniform accounting policies for like transactions and other events in the similar circumstances. In case of foreign subsidiaries, being non-integral foreign operations, translation of financial statements for consolidation is done in accordance with the policy stated in Note 10 below. The consolidated financial statements of the Group include financial statements of certain subsidiaries prepared as of a different date from that of the Company’s financial statements. Adjustments for effects of significant transactions and events that have occurred between the date of the financial statements of these subsidiaries and the date of the Parent Company’s financial statements are made in the consolidated financial statements. The excess of cost of investment in the subsidiaries over the share of equity in the subsidiaries as at the date of making the investment is recognised in the financial statements as Goodwill. Goodwill arising out of consolidation is not amortised. However, the same is tested for impairment at each Balance Sheet date.The excess of share of equity of the subsidiaries over the cost of acquisition of the respective investments as at the date of making the investment is treated as Capital Reserve. For this purpose, share of equity is determined on the basis of the latest financial statements prior to the acquisition after making necessary adjustments for material events between the date of such financial statements and the date of respective acquisition. Minority Interest in the net assets of Subsidiaries consists of : i. the amount of equity attributable to the minorities at the date on which investment in Subsidiary is made and ii. the minorities’ share of movements in equity since the date the parent-subsidiary relationship came into existence. 2 Basis of Accounting The financial statements have been prepared under historical cost convention on an accrual basis and comply with the Accounting Standards as notified by Companies (Accounting Standards) Rules, 2006. Use of Estimates The presentation of financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the year. Difference between the actual result and estimates are recognised in the year in which the results are known / materialised. Fixed Assets and Depreciation / Amortization Fixed Assets including Intangible assets are stated at historical cost (Net of cenvat credit) less accumulated depreciation / amortization thereon and impairment losses, if any. Depreciation on tangible assets is provided on Straight Line Method at the rates specified in Schedule XIV to the Companies Act, 1956 except for Caraco Pharmaceutical Laboratories Ltd. (Caraco),Taro Pharmaceutical Industries Ltd.(Taro), Alkaloida Chemical Company Zrt.,Sun Farmaceutica Ltda, Sun Pharmaceutical Industries (Australia) Pty. Ltd., Sun Pharmaceutical Industries (Europe) B.V., Sun Pharma Global (FZE), Sun Pharmaceutical Spain, SL., Sun Pharmaceuticals Italia S.R.L., Sun Pharmaceuticals Germany GmbH, Sun Pharmaceuticals France, TKS Farmaceutica Ltda. and Sun Pharmaceutical Industries Inc depreciation is computed using the Straight Line Method over the estimated useful lives of the related assets, which ranges from 3 to 100 years. Assets costing 5,000 or less are depreciated at 100% on pro-rata basis in the year of Purchase except, in case of Sun Pharmaceutical Spain, SL. where assets costing Euro 601 or less and in case of Sun Pharmaceuticals Italia S.R.L where assets costing Euro 516.46 or less are depreciated at 100% in the year of purchase. Leasehold
(i)
(ii) (iii)
(iv)
(v)
3
4
Annual Report 2010-11
97
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
land is amortised over the period of lease. At Taro, Leasehold improvements are depreciated using the straightline method over the shorter of their useful lives or the terms of leases generally 5 - 10 years. Intangible assets consisting of trademarks, designs, technical know-how, non compete fees and other intangible assets are amortized on Straight Line Method from the date they are available for use, at the rates as estimated by the Management considering the terms of agreement, which ranges from 3 to 20 years. 5 Leases In case of assets taken on operating lease, the lease rentals are charged to the Profit And Loss Account in accordance with Accounting Standard 19 on leases as notified by the Companies (Accounting Standards) Rules, 2006. Revenue Recognition Sales of products are recognised when risk and rewards of ownership of the products are passed on to the customers, which is generally on despatch of goods. Sales include delayed payment charges, and are stated net of returns, Vat /Sales Tax and provision for chargebacks, Medicaid, rebates, shelf stock adjustments, cash discounts and other sales deductions, made on the basis of management expectation taking into account past experience, customer experience, third-party prescription data, industry and regulatory changes and other relevant information which are revised as necessary. Investments Investments are classified into Current and Long Term Investments. Current Investments are valued at lower of cost and fair value. Long Term Investments are stated at cost less provision, if any, for other than temporary diminution in their value. Inventories Inventories consisting of raw and packing materials, stores and spares, work in progress and finished goods are stated at lower of cost (Raw and Packing Material - Specific Identificaiton Method; Stores and Spares - FIFO basis; Work in Progress and Finished Goods - Weighted Average Method) and net realisable value. In respect of Caraco Pharmaceutical Laboratories Ltd cost is determined on specific identification basis, in respect of Alkaloida Chemical Company Zrt and Sun Pharmaceutical Industries Inc cost is determined on FIFO basis, in respect of Taro Pharmaceutical Industries Ltd cost is determined on Average cost basis. Research and Development The research and development cost is accounted in accordance with Accounting Standard – 26 ‘Intangible Assets’. All related revenue expenditure incurred on original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding up to the time when it is possible to demonstrate probable future economic benefits, is recognised as research expenses and charged off to the profit and loss account, as incurred. All subsequent expenditure incurred for product development on the application of research findings or other knowledge upon demonstration of probability of future economic benefits, prior to the commencement of production, to the extent identifiable and possible to segregate are accumulated and carried forward as development expenditure under Capital Work in Progress, to be capitalised as an intangible asset on completion of the project. In case a project does not proceed as per expectations / plans, the same is abandoned and the amount classified as development expenditure under Capital Work in Progress is charged off to the profit and loss account. Foreign Currency Transactions and Traslation Transactions denominated in foreign currencies are recorded at the exchange rates that approximates the actual rate prevailing at the date of transaction. Monetary items denominated in foreign currency at the year end are translated at year end rates. In respect of monetary items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognised as exchange difference and the premium on such forward contracts is recognised over the life of the forward contract. The exchange differences arising on settlement / translation are recognised in the Profit and Loss account. The translation of the financial statements of non integral foreign operations is accounted for as under: a) All revenues and expenses are translated at average rate.
6
7
8
9
10
b) All monetary and non-monetary assets and liabilities are translated at the rate prevailing on the balance sheet. c) Resulting exchange difference is accumulated in Foreign Currency Translation Reserve on Consolidation until the disposal of the net investment in the said non integral foreign operation.
98
Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
11
Taxes on Income Provision for taxation comprises of Current Tax and Deferred Tax. Current Tax provision has been made on the basis of reliefs and deductions available under relevent Tax laws. Deferred tax resulting from “timing differences” between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the assets can be realised in future. However, where there is unabsorbed depreciation or carry forward losses under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each Balance Sheet date. Employee Benefits (a) The Group’s contribution in respect of provident fund and other funds is charged to Profit and Loss Account each year. (b) With respect to gratuity liability, some of the entites in group contributes to Life Insurance Corporation of India (LIC) under LIC’s Group Gratuity policy. Gratuity liability as determined on actuarial basis by the independent valuer is charged to Profit and Loss Account. (c) Liability for accumulated compensated absences of employees is ascertained for on actuarial valuation basis and provided for as per group rules. Government Grants / Subsidy Government grants, if any, are accounted when there is reasonable assurance that the enterprise will comply with the conditions attached to them and it is reasonably certain that the ultimate collection will be made. Capital Subsidy in nature of Government Grants related to specific fixed assets is accounted for where collection is reasonably certain and the same is shown as a deduction from the gross value of the asset concerned in arriving at its book value and accordingly the depreciation is provided on the reduced book value. Derivative Accounting Forward Contracts in the nature of highly probable forcasted transactions / firm commitments entered into for hedging the risk of foreign currency exposure and other derivative contracts are accounted for on the principles of prudence as enunciated in Accounting Standard 1 (AS-1) “Disclosure of Accounting Policies”. Pursuant to this losses, if any on Mark to Market basis, are recognised in the Profit and loss Account and gains are not recognised on prudent basis. Borrowing Costs Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised. Other borrowing costs are recognised as an expense in the period in which they are incurred. Provisions, Contingent Liabilities and Contingent Assets Provisions are recognised only when there is a present obligation as a result of past events and when a reliable estimate of the amount of the obligation can be made. Contingent liability is disclosed for (i) Possible obligations which will be confirmed only by future events not wholly within the control of the Group 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 can not be made. Contingent Assets are not recognised in the financial statements since this may result in the recognition of income that may never be realised. Impairment of Assets The Group assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the lower of recoverable amount and the carrying amount that would have been determined had no impairment loss been recognised. Common/Convertible Preferred Stock Issued Common/Convertible Preferred Stock is issued by Caraco from time to time in lieu of cash for directors fees and in exchange for fees towards formula for products developed by Parent & its affiliates and is recorded as compensatory expenses/research and development costs respectively.
12
13
14
15
16
17
18
Annual Report 2010-11
99
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
B 1
NOTES TO FINANCIAL STATEMENTS: The Consolidated Financial Statements present the consolidated accounts of Sun Pharmaceutical Industries Ltd with its following subsidiaries. Country of Incorporation Proportion of ownership interest for the year 2010-11 Proportion of ownership interest for the year 2009-10 Year End
Sr. No. Name of Subsidiaries
Direct Subsidiaries 1 2 3 4 5 6 7 8 9 10 11 12 13 Green Eco Development Center Ltd. Sun Pharma Global Inc. ZAO Sun Pharma Industries Ltd. Sun Pharmaceutical (Bangladesh) Ltd. Caraco Pharmaceutical Laboratories Ltd. (CARACO) TKS Farmaceutica Ltda Sun Pharma De Mexico S.A. DE C.V. Sun Pharmaceutical Industries Inc. Sun Farmaceutica Ltda SPIL De Mexico S.A. DE C.V. Sun Pharmaceutical Peru S.A.C. OOO “Sun Pharmaceutical Industries” Ltd. Sun Pharma de Venezuela, CA. Step down Subsidiaries 14 15 16 17 18 19 20 Caraco Pharma Inc. Chattem Chemicals Inc. Taro Development Corporation Sun Development Corporation I Alkaloida Chemical Company Zrt. Sun Pharmaceutical UK Ltd. Sun Pharmaceutical Industries (Australia) Pty. Ltd. United States of America United States of America United States of America United States of America Hungary United Kingdom Australia 75.83% 100.00% 100.00% — 99.99% 100.00% 100.00% 75.16% 100.00% — 100.00% 99.99% 100.00% 100.00% 31/03/2011 31/03/2011 31/03/2011 (See Foot note g) 31/03/2011 31/03/2011 31/03/2011 India British Virgin Islands Russia Bangladesh United States of America Brazil Mexico United States of America Brazil Mexico Peru Russia Venezuela 100.00% 100.00% 100.00% 72.50% 75.83% 90.14% 75.00% 100.00% — 100.00% 99.33% 99.00% 100.00% — 100.00% 100.00% 72.50% 75.16% 90.10% 75.00% 100.00% 99.94% 100.00% 99.33% 99.00% — 31/03/2011 31/03/2011 31/12/2010 (See Foot note e) 31/03/2011 31/03/2011 31/12/2010 (See Foot note f ) 31/12/2010 31/03/2011 (See Foot note f ) 31/12/2010 31/12/2010 31/12/2010 31/03/2011
100 Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
Sr. No. Name of Subsidiaries
Country of Incorporation
Proportion of ownership interest for the year 2010-11 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30%
Proportion of ownership interest for the year 2009-10 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% — — — — — — — — — — — — — — —
Year End
21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44
Aditya Acquisition Company Ltd.
Israel
31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/03/2011 31/12/2010 (See Foot note b.) 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010
Sun Pharmaceutical Industries (Europe) B.V. The Netherlands Sun Pharmaceuticals Italia S.R.L. Sun Pharmaceutical Spain, SL. Sun Pharmaceuticals Germany GmbH Sun Pharmaceuticals France Sun Pharma Global (FZE) Sun Pharmaceuticals (SA) (Pty) Ltd. Sun Global Canada Pty. Ltd. Sun Laboratories Inc Morley and Company Inc Sun Laboratories FZE. Taro Pharmaceutical Industries Ltd.(TARO) Taro Pharmaceuticals Inc. Taro Pharmaceuticals U.S.A.,Inc. Taro Research Institute Ltd. Taro Pharmaceuticals North America, Inc. Taro Pharmaceuticals Europe B.V. Taro Pharmaceuticals Ireland Ltd. Taro International Ltd. Taro Pharmaceuticals UK Ltd. Taro Laboratories Ltd. Taro Hungary Intellectual Property Licensing LLC. 3 Skyline LLC Italy Spain Germany France U.A.E. South Africa Canada United States of America United States of America Sharjah, U. A. E. Israel Canada United States of America Israel Cayman Islands, British west Indies The Netherlands Ireland Israel United Kingdom United States of America Hungary United States of America
Annual Report 2010-11 101
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
Sr. No. Name of Subsidiaries
Country of Incorporation
Proportion of ownership interest for the year 2010-11 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30% 66.30%
Proportion of ownership interest for the year 2009-10 — — — — — — — — —
Year End
45 46 47 48 49 50 51 52 53
One Commerce Drive LLC Taro Healthcare Limited Taro Industries Limited Taro Manufacturing Limited Tarochem Ltd. Taro Pharmaceutical Laboratories INC Taro Pharmaceuticals Canada, Ltd. Taro International Limited Taro Pharmaceutical India Private Ltd. Partnership Firm
United States of America United Kingdom United Kingdom United Kingdom Israel United States of America Canada United Kingdom India
31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/12/2010 31/03/2011
54 55 56 57
Sun Pharmaceutical Industries Sun Pharma Exports Sun Pharma Sikkim Sun Pharma Drugs Controlled Entity
India India India India
97.50% 80.00% 97.50% 98.00%
97.50% 80.00% 97.50% —
31/03/2011 31/03/2011 31/03/2011 31/03/2011
58
Universal Enterprises (Pvt) Ltd.
India
97.50%
97.50%
31/03/2011
a. The Financial Statements of the Company and partnership firms at Sr. No. 54 and 56 are audited by Deloitte Haskins & Sells. The Financial Statements in respect of all Other subsidiaries and Partnership Firms are audited by other auditors except in respect of subsidiaries at Sr. No. 13,30 and 32 are unaudited and are consolidated on the basis of management accounts. b. The audited consolidated financial statements of Taro Pharmaceutical Industries Ltd and its 20 subsidiaries, listed under Sr.No. 33 to 53 above been drawn up for the year ended 31st December, 2010, where the reporting date is different from the reporting date of the Parent Company. The consolidated financial statements of this subsidiary group as on the date of the acquisition by the Parent Company on 20th September, 2010 have been prepared in accordance with the requirements of Accounting Standard 21, Consolidated Financial Statements as notified under the Companies (Accounting Standards) Rules, 2006 (“Accounting Standard 21”) by giving effects of significant transactions or other events that occur between the date of the latest available consolidated financial statements of the subsidiary group and the date of acquisition and reported upon by their auditors. Such consolidated financial statements of the subsidiary group for the period ended 31st December, 2010 have been further adjusted, in accordance with the said Accounting Standard 21, for significant transactions of the subsidiary group for the period from 1st January, 2011 to 31st March, 2011 on the basis of the reports of their auditors. The Group holds 66.30% and 77.30% of beneficial ownership and voting power respectively in the share capital of Taro Pharmaceutical Industries Ltd.
102 Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
c.
In respect of subsidiaries at Sr. No. 3, 6, 7, 10, 11 and 12, the reporting date is also as of 31st December, 2010 and different from the reporting date of the Parent Company and the financial statements have been audited by other auditors. In terms of Accounting Standard 21, adjustments have been made for significant transactions of these subsidiaries for the periods from 1st January, 2011 to 31st March, 2011 and 1st January, 2010 to 31st March, 2010, on the basis of their management accounts for the said periods.
d. Subsidiaries at Sr. No. 1, 13, 30, 32, and 57, have been incorporated during the year ended 31st March, 2011. e. The Company is in the process for Liquidation of ZAO Sun Pharma Industries Limited and has appointed Official Liquidator as per the terms of Resolution passed at the General Meeting of the Subsidiary held on 29th October, 2002. f. With effect from 01st October, 2010 Sun Farmaceutica Ltda has merged with Tks Farmaceutica Ltda.
g. With effect from 20th September, 2010 Sun Development Corporation I has merged with Taro Development Corporation. h. Significant Accounting Policies and Notes to these Consolidated Financial Statements are intended to serve as a means of informative disclosure and a guide for better understanding of the consolidated position of the Group. Recognising this purpose, the Group has disclosed only such policies and notes from the individual financial statements which fairly represent the needed disclosures. Lack of homogeneity and other similar considerations made it desirable to exclude some of them, which in the opinion of the management, could be better viewed when referred from the individual financial statements. As at 31st March, 2011 in Million 2 a) CONTINGENT LIABILITIES NOT PROVIDED FOR: Guarantees Given by the bankers on behalf of the Group Letters of Credit for Imports Liabilities Disputed - Appeals filed with respect to : Income Tax on account of Disallowances / Additions Withholding Tax due, relating to Employees of Taro Sales Tax on account of Rebate / Classification Excise Duty on account of Valuation / Cenvat Credit ESIC Contribution on account of applicability Drug Price Equalisation Account [DPEA] on account of demand towards unintended benefit , including interest there on, enjoyed by the Group Demand by JDGFT import duty with respect to import alleged to be in excess of entitlement as per the Advanced Licence Scheme Other Claims against the Group not acknowledged as debts (Includes 781.4 million pertaining to Taro) b) Estimated amount of contracts remaining to be executed on Capital Account (Net of Advances) 3 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 Group carries product liability insurance / is contractually indemnified by the manufacturer, for an amount it believes is sufficient for its needs. In respect of other claims, the group 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. 176.3 187.8 2,562.0 2,359.6 25.6 326.8 0.2 14.0 11.5 820.2 1,739.3 274.1 515.0 4,167.6 — 11.4 316.6 0.2 14.0 11.1 6.7 1,118.7 As at 31st March, 2010 in Million
Annual Report 2010-11 103
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
2010-11 in Million 4 RESEARCH AND DEVELOPMENT EXPENDITURE INCLUDE: On Revenue account On Capital account 5 Net Interest income Interest income Bank Deposits Loan Current Investment Long Term Investment Others 1341.6 Million (Previous Year 1,138.9 Million) comprises of : 928.8 84.7 134.7 427.6 343.1 1,918.9 Interest Expense Fixed Loans Others 212.7 364.6 577.3 6 Goodwill on consolidation ( Net ) comprises of: Goodwill in respect of Caraco Pharmaceutical Laboratories Ltd. Sun Farmaceutica Ltda Brazil (see note B 1(f )) TKS Framaceutica Ltda Universal Enterprises (P) Ltd. Taro Pharmaceutical Industries Ltd. Total (A) Less: Capital Reserve in respect of : Alkaloida Chemical Company Zrt. Total (B) Total ( A-B) 2,860.0 236.1
2009-10 in Million
2,083.1 159.0
963.2 128.6 1.4 99.4 7.8 1,200.4 57.8 3.7 61.5
5,012.0 — 400.1 7.5 3,182.6 8,602.2
4,563.5 44.8 327.0 7.5 — 4,942.8
882.5 882.5 7,719.7
882.5 882.5 4,060.3
7 Short-term Loan and Cash credit facility from Banks are secured by hypothecation of accounts receivable and inventory, mortgage covering the Groups’s manufacturing facility and equipment.
104 Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
Year ended 31st March, 2011 in Million 8 Accounting Standard (AS-20) on Earnings Per Share Profit After Tax Less : Minority Interest Profit used as Numerator for calculating Earnings per share Weighted Average number of Shares used in computing basic & diluted earnings per share Nominal value per share (in ) Basic and Diluted Earnings Per Share (in ) 19,073.7 913.1 18,160.6 1,035,581,955 1.0 17.5 13,469.8 (41.0) 13,510.8 1,035,581,955 1.0 13.0 Year ended 31st March, 2010 in Million
Consequent to the approval of the members of the Company and upon requisite regulatory compliance, during the year, one equity share of 5 each of the Company is sub-divided into five equity shares of 1 each fully paid-up. The Earnings Per Share e of 1 each has been restated for the previous year in accordance with Accounting Standard (AS-20) on “Earnings Per Share” as notified under The Companies (Accounting Standards) Rules, 2006. 9 Related Party Disclosure - as per Annexure ‘A’ annexed. a) Primary Segment The Group has identified “Pharmaceuticals” as the only primary reportable business segment. b) Secondary Segment (By Geographical Segment) India Outside India Total Sales in Million 24,947.2 33,118.6 58,065.8 in Million 18,506.6 20,354.8 38,861.4 10 Accounting Standard (AS-17) on Segment Reporting
In view of the interwoven / intermix nature of business and manufacturing facility, other segmental information is not ascertainable. 11 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 Group 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 Group. 12 (a) The Group 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 licences, or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Group has given refundable interest free security deposits in accordance with the agreed terms. (b) Lease receipts/payments are recognised in the Profit and Loss Account under “Rent” in Schedule 14 ,Schedule 18 and Schedule 19. (c) Operating lease Group as lessee The future minimum lease payments under non-cancellable operating lease - not later than one year 176.7 Million (Previous year 98.3 Million) - later than one year and not later than five years 477.1 Million (Previous year - later than five years 120.1 Million (Previous year 115.7 Million) Group as lessor The future minimum lease payments under non-cancellable operating lease - not later than one year 16 Million (Previous year 17.0 Million) - later than one year and not later than five years Nil (Previous year Nil) - later than five years Nil (Previous year Nil)
365.1 Million)
Annual Report 2010-11 105
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
Year ended 31st March, 2011 in Million 13 Remuneration to Auditors (excluding service tax) : Audit Fees In any other manner, for certification etc. Out of pocket expenses Total 142.8 2.5 0.2 145.5 27.3 0.5 0.2 28.0 Year ended 31st March, 2010 in Million
14 Other Operating Income includes upfront payment received in terms of settlement agreement for the grant of an exclusive license to the licensed patents and know how. 15 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 Contribution to Provident Fund Contribution to Employees State Insurance Scheme (ESIC) and Employees Deposit Linked Insurance (EDLI) Contribution to Labour Welfare Fund Employer’s Contribution to Family Pension Fund 115.4 Million (Previous year 96.5 Million) 106.3 6.2 0.1 2.8 90.3 3.9 0.1 2.2
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 47.4 Million (Previous Year 42.1 Million) and it covers all regular employees. Major drivers in actuarial assumptions, typically,, are years of service and employee compensation. After the issuance of Accounting Standard 15 on‘Employee Benefits’, commitments are actuarially determined using the ‘Projected Unit Credit’ method. Gains and losses on changes in actuarial assumptions are accounted for in the Profit and Loss account. Category of Plan Assets : The Company’s Plan Assets in respect of Gratuity are funded through the Group Scheme of the LIC of India. In respect of gratuity (funded):
106 Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
in Million Year ended 31st March, 2011 Reconciliation of liability recognised in the Balance sheet Present value of commitments (as per Actuarial Valuation) Fair value of plan assets Net asset in the Balance sheet Movement in net liability recognised in the Balance sheet Net liability / (assets) as at the beginning of the year Net expense recognised in the Profit and Loss account Contribution during the year Net liability / (assets) in the Balance sheet Expense recognised in the Profit and Loss account Current service cost Interest cost Expected return on plan assets Actuarial loss Expense charged to the Profit and Loss account Return on plan assets Expected return on plan assets Actuarial gain Actual return on plan assets Reconciliation of defined-benefit commitments Commitments as at the beginning of the year Current service cost Interest cost Paid benefits Actuarial loss Commitments as at the year end Reconciliation of plan assets Plan assets as at the beginning of the year Expected return on plan assets Contributions during the year Paid benefits Actuarial gain Plan assets as at the year end 31st March, 2010
257.3 284.2 27.0 (16.8) 30.6 (40.7) (27.0) 26.7 18.9 (21.4) 6.4 30.6 21.4 3.4 24.9 219.5 26.7 18.9 (17.6) 9.8 257.3 236.3 21.4 40.7 (17.6) 3.4 284.2
219.5 236.3 16.8 (46.3) 61.1 (31.7) (16.8) 19.8 12.5 (17.1) 45.8 61.1 17.1 3.4 20.5 148.1 19.8 12.5 (10.3) 49.2 219.5 194.4 17.1 31.7 (10.3) 3.4 236.3
The actuarial calculations used to estimate commitments and expenses in respect of gratuity and compensated absences are based on the following assumptions which if changed, would affect the commitment’s size, funding requirements and expense. Discount rate Expected return on plan assets Expected rate of salary increase Mortality 8.25% 8.00% 8.25% 8.00% 6.00% 6.00% LIC (1994-96) Ultimate
The estimates of future salary increases, considered in the actuarial valuation, take into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.
Annual Report 2010-11 107
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
in Million Year ended 31st March, 2011 31st March, 2010 31st March, 2009 31st March, 2008 31st March, 2007 Experience adjustment On plan liabilities On plan assets Present value of benefit obligation Fair value of plan assets Excess of (obligation over plan assets) / plan assets over obligation 18.1 3.4 257.3 284.2 27.0 57.2 3.4 219.5 236.3 16.8 5.4 4.1 148.1 194.3 46.2 127.4 2.5 111.0 107.0 (4.0) 3.2 1.2 76.0 85.4 0.8
The contribution expected to be made by the Company during financial year ending 31st March, 2012 is
38.7 Million.
The above disclosure is provided to the extend applicable and available from the individual Financial Statements of subsidiaries. 16 The following are the outstanding Derivative Contracts entered by the Company & some of its Subsidiaries as on 31st March, 2011. Nature of Derivative Contract Currency Buy / Sell Cross Currency
Amount in Million
As at 31st March, 2011 $ 315.0 $ 7.7 $ 1.0 2010-11 In Million 406.0 21.5 427.5
As at 31st March, 2010 $ 175.0 — — 2009-10 In Million (32.6) 105.9 73.3
Forward Contracts Cross Currency Swaps Interest Rate Swaps
US Dollar Israeli New Shekel US Dollar
Sell Buy Sell
RUPEES US Dollar US Dollar
17 Profit / (Loss) on Sale of Investments (net) Profit / (Loss) on Sale of Current Investments (net) Profit / (Loss) on Sale of Long Term Investments (net)
18 Caraco has announced the proposal of merger with another subsidiary of the Company, subject to the approval of Caraco’s stockholders. Upon such approval of this arrangement Caraco will become a wholly owned subsidiary of the Company. 19 As a result of the FDA action, Caraco Pharmaceutical Laboratories Ltd. (Caraco) had voluntarily ceased manufacturing operations. Caraco has engaged a consulting firm which is comprised of current good manufacturing practice (“cGMP”) experts, in accordance with the Consent Decree, and submitted a work plan to the FDA in October 2009 for remedial actions leading to resumption of its manufacturing operations. The FDA approved Caraco’s work plan on March 17, 2010 after reviewing and suggesting certain modifications. On June 24, 2010 the FDA notified Caraco that its protocol for third party cGMP certification and batch certification, detailing the activities to be conducted by the cGMP consultants, was acceptable. Caraco is in the process of implementing the corrective actions and remedial measures as stipulated in the work plan. 20 The consolidated Financial Statements includes total assets of 25,670.9 Million and total liabilities of 6,948.0 Million as on 31st March, 2011 and total revenues of 9,946.3 Million, Profit before Tax of 2,464.5 Million and Profit after Tax of 2,028.5 Million for the period from 20th September, 2010 to 31st March, 2011, consequent to acquisition of Taro Group with effect from 20th September, 2010.
108 Sun Pharmaceutical Industries Limited
SCHEDULES FORMING PART OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)
21 At the date of acquisition of Taro Group on 20th September, 2010, the Group has inter alia taken over net deferred tax assets aggregating 3193.7 Million of which 190.7 Million has already been set off as TARO Group has reported profit before tax of 2464.5 Million for the period from 20th September, 2010 to 31st March, 2011. The balance of such deferred tax assets comprises timing difference related to accrued expenses, net operating losses carried forward, amortisation and R & D expenses. TARO Group has a history of profitability except that tax losses had arisen in some of the years mainly on account of unanticipated extraordinary excessive product return. Based on this performance, favourable business environment, current product portfolio, new products under development and products having exclusivity period in the Unites States of America, the Management believes continuation of such profitability over future period, which represents virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised. 22 Taro Pharmaceutical Industries Ltd has closed during 2010, the manufacturing facility of its subsidiary in Ireland and decided to sell the facility. The related assets of 194.3 Million, Liabilities of 11.6 Million, Revenues of 11.9 Million and losses of 31.6 Million attributable to its Irish Subsidiary has been considered in the Consolidated Financial Statements. 23 With respect to payment under various loan agreements, TARO is not in compliance with certain financial reporting covenants and other provisions contained in the related loan agreements. Due to this, various creditors have the right to accelarete their indebtedness and certain creditors may elect to proceed against the collateral granted to them to secure such indebtedness. In the event such indebtedness is accelerated, Management believes that it has sufficient capacity to satisfy such obligation. Also with filling of Annual Reports of the company from 2007 to 2010, TARO would be in complince of all financial and reporting requirements under the debt instrument prospectively. 24 In terms of Collective bargaining agreement between Taro Pharmaceutical Industries Ltd (employer) with it’s employees at Israel, a one time payment of 66.78 Million has been accrued as on March 2011,which is to be divided among Taro Israeli Employees.. 25 As per the best estimate of the management, provision has been 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. 2010-11 In Million Provision* Opening balance Add: Taken over on acquisition of Taro Add: Provision for the year Less: Utilisation / Settlement Closing balance 19.3 4,470.4 7,497.2 (7,251.6) 4,735.3 2009-10 In Million 7.0 — 12.3 — 19.3
* The above includes provisions for Product returns, Chargebacks, Medicaid, cash discount and rebates and Pending Lawsuits, penalties and fines (air pollution,waste water). Provisions for returns, Medicaid and indirect rebates are included in current liabilities. All other sales deductions allowances are recorded as accounts reveivable reserves/provisions and reduced from debtors. The provisions for returns is included in current liabilities as substantially all of these returns will not be realized until after the year-end accounts receivable balances are settled. Medicaid and indirect rebates are included in current liabilities because the Company does not have direct customer relationships with any of the payees. 26 Statement regarding subsidiary companies as required under section 212 (8) of the Companies Act, 1956 pursuant to General Circular no. 2/2011 dated February 8th, 2011 issued by the Ministry of Corporate Affairs - As per Annexure 'B' 27 Figures pertaining to the subsidiary companies have been reclassified wherever necessary to bring them in line with the group financial statements. 28 Previous year’s figures are restated / regrouped / rearranged wherever necessary in order to confirm to current year’s groupings and classifications.
Annual Report 2010-11 109
ANNEXURE ‘A’ TO NOTES TO FINANCIAL STATEMENTS
(CONSOLIDATED)
ACCOUNTING STANDARD (AS-18) “ RELATED PARTY DISCLOSURE “
Names of related parties and description of relationship 1. Key Management Personnel Mr. Dilip S. Shanghvi Mr. Sudhir V. Valia Mr. Sailesh T. Desai Mr. S. Kalyanasundaram Mr. Aalok Shanghvi Ms. Khyati Valia Chairman & Managing Director Wholetime Director Wholetime Director Chief Executive Officer and Wholetime Director Son of Chairman and Managing Director Daughter of Wholetime Director
2. Relatives of Key Management Personnel 3. 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 Reanal Ltd Sugandh Management Consultancy in Million
Particulars
Key Management Personnel
Relatives of Key Management Personnel
Enterprise under Significant Influence of Key Management Personnel or their relatives 31/03/2011 1.1 0.9 0.2 0.2 0.2 13.7 1.7 12.0 0.2 0.2 — 95.2 95.2 0.5 0.5
Total
31/03/2011 31/03/2010 31/03/2011 Purchases of goods / DEPB Sun Petrochemical Pvt Ltd Reanal Ltd Purchase of Fixed Assets Sun Pharma Advanced Research Company Ltd Sale of goods / DEPB Sun Petrochemical Pvt Ltd Sun Pharma Advanced Research Company Ltd Sale of Fixed Asset Sun Pharma Advanced Research Company Ltd Sun Petrochemical Pvt Ltd Receiving of Service / Reimbursement Services Sun Pharma Advanced Research Company Ltd Reimbursement of Expenses Sun Pharma Advanced Research Company Ltd Rendering of Service / Reimbursement Services Sun Petrochemical Pvt Ltd — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
31/03/2010 — — — — — — — — — — — — — — —
31/03/2010 31/03/2011 31/03/2010 1.1 1.1 — — — 17.8 4.2 13.6 19.1 — 19.1 12.4 12.4 1.1 1.1 1.1 0.9 0.2 0.2 0.2 13.7 1.7 12.0 0.2 0.2 — 95.2 95.2 0.5 0.5 1.1 1.1 — — — 17.8 4.2 13.6 19.1 — 19.1 12.4 12.4 1.1 1.1
— —
— —
— —
— —
— —
3.8 3.8
— —
3.8 3.8
110 Sun Pharmaceutical Industries Limited
ANNEXURE ‘A’ TO NOTES TO FINANCIAL STATEMENTS
(CONSOLIDATED)
in Million Particulars Key Management Personnel Relatives of Key Management Personnel Enterprise under Significant Influence of Key Management Personnel or their relatives 31/03/2011 24.8 24.8 140.7 140.7 131.4 131.4 — — 1.4 0.1 1.3 — — — — — — — — 20.9 20.9 — — — — — Total
31/03/2011 31/03/2010 31/03/2011 Reimbursement of Expenses Sun Pharma Advanced Research Company Ltd Loans Given Sugandh Management Consultancy Loans Received back / Share Application Money Refund Sugandh Management Consultancy Corporate Guarantee Given/ (Released) on behalf Sun Pharma Advanced Research Company Ltd Rent Income Navjivan Rasayan (Gujarat) Pvt Ltd Sun Pharma Advanced Research Company Ltd Director’s Remuneration Mr. Dilip S. Shanghvi Mr. Sudhir V. Valia Mr. Sailesh T. Desai Mr. S. Kalyanasundaram Apprenticeship Stipend / Remuneration Mr. Aalok Shanghvi Ms. Khyati Valia Outstanding Receivables / (Payables) (Net) Sun Pharma Advanced Research Company Ltd Mr. Dilip S. Shanghvi Mr. Sudhir V. Valia Mr. Sailesh T. Desai Mr. S. Kalyanasundaram Others — — — — — — — — — — — 61.6 16.9 16.9 7.8 20.0 — — — (11.7) — (3.6) (3.6) (1.4) (3.1) — — — — — — — — — — — — 35.8 15.0 15.0 5.8 — — — — (7.6) — (3.2) (3.2) (1.2) — — — — — — — — — — — — — — — — — — 1.4 0.9 0.5 (0.2) — — — — — (0.2)
31/03/2010 — — — — — — — — — — — — — — — — 0.8 0.5 0.3 (0.2) — — — — — (0.2)
31/03/2010 31/03/2011 31/03/2010 25.9 25.9 413.9 413.9 113.9 113.9 (125.0) (125.0) 0.7 0.1 0.6 — — — — — — — — 48.4 47.1 — — — — 1.3 24.8 24.8 140.7 140.7 131.4 131.4 — — 1.4 0.1 1.3 61.6 16.9 16.9 7.8 20.0 1.4 0.9 0.5 9.0 20.9 (3.6) (3.6) (1.4) (3.1) (0.2) 25.9 25.9 413.9 413.9 113.9 113.9 (125.0) (125.0) 0.7 0.1 0.6 35.8 15.0 15.0 5.8 — 0.8 0.5 0.3 40.6 47.1 (3.2) (3.2) (1.2) — 1.1
Annual Report 2010-11 111
ANNEXURE ‘B’TO NOTES ON ACCOUNT
(CONSOLIDATED)
Statement regarding subsidiary companies as required under section 212 (8) of the Companies Act, 1956 pursuant to General Circular no. 2/2011 dated February 8th, 2011 issued by the Ministry of Corporate Affairs:
in Million
SR NO Name of the Subsidiary Company Reporting Curency Exchange Rate as on 31st March, 2011 1.00 44.52 1.57 0.61 44.52 27.27 3.74 44.52 27.27 3.74 15.87 1.57 10.50 Capital Reserve Total Assets Total Liabilities Investment Turnover other than Investment in Subsidiary — 2,480.1 — — 445.2 — — — — — — — — — — — 323.2 13,800.1 445.3 468.6 194.6 67.8 — — 292.6 — Profit / (Loss) before Taxation (0.1) 667.1 — 85.0 (562.9) (76.4) 56.9 (1,808.9) (5.7) — (7.5) (0.4) — Provision for Taxation — — — 30.7 (199.0) — 16.4 Profit / (Loss) after (0.1) 667.1 — 54.3 (363.9) (76.4) 40.5 Proposed Dividend
1 2 3 4 5 6 7 8 9 10 11 12 13
Green Eco Development Center Ltd. Sun Pharma Global Inc. Zao Sun Pharma Industries Ltd. Sun Pharmaceutical (Bangladesh) Ltd Caraco Pharmaceutical Laboratories Ltd TKS Farmaceutica Ltda Sun Pharma De Mexico S.A. DE C.V. Sun Pharmaceutical Industries Inc. Sun Farmaceutica Ltda SPIL De Mexico S.A. DE C.V. Sun Pharmaceutical Peru S.A.C OOO “Sun Pharmaceutical Industries” Ltd. Sun Pharma de Venezuela, CA. Caraco Pharma Inc. Chattem Chemicals Inc Taro Development Corporation Sun Development Corporation I Alkaloida Chemical Company Zrt. Sun Pharmaceutical UK Ltd. Sun Pharmaceutical Industries (Australia) Pty. Ltd. Aditya Acquisition Company Ltd. Sun Pharmaceutical Industries (Europe) B.V. Sun Pharmaceuticals Italia S.R.L. Sun Pharmaceutical Spain, SL. Sun Pharmaceuticals Germany GmbH
INR USD RRU TAKA USD Brazilian reais Mexican Pesos USD Brazilian reais Mexican Pesos Soles RRU Venezuelan Bolivan Fuerte (VEF) USD USD USD USD HUF GBP AUD Israeli New Shekel, NIS EURO EURO EURO EURO
1.0 110.1 0.0 36.6 6,306.4 152.0 3.8 0.2 — 0.2 0.0 0.1 1.1
(0.1) 28,058.9 (0.0) 125.3 255.5 (86.7) 66.0 (3,138.3) — — (22.1) 1.0 —
1.0 42,112.0 — 282.4 8,989.4 540.8 417.2 5,732.5 — 0.2 0.9 406.4 3.6
0.1 13,943.1 — 120.6 2,427.5 475.5 347.4 8,870.5 — — 23.0 405.3 2.6
— — — — — — — — — — — — —
(630.4) (1,178.5) — — — 0.6 — (5.7) — (7.5) (1.0) —
14 15 16 17 18 19 20 21 22 23 24 25
44.52 44.52 44.52 44.52 0.24 71.37 45.98 12.81 63.06 63.06 63.06 63.06
— 1,533.0 0.0 0.0 1,694.5 0.1 0.0 0.0 1.1 0.6 0.2 1.6
— 315.6 (0.0) (0.0) (1,124.7) (75.4) (0.8) (0.0) (115.8) 30.3 (103.3) (73.7)
— 1,930.3 884.5 884.4 24,033.2 152.7 0.1 — 123.3 142.8 128.1 124.6
— 81.7 884.5 884.5 23,463.3 228.0 1.0 0.0 238.0 112.0 231.2 196.7
— — — — 151.9 — — — — — — —
— 1,180.4 — — 865.8 220.1 — — 148.9 66.8 60.9 95.0
— 223.0 (0.0) — (642.7) (28.9) (0.6) 0.0 (45.7) (70.6) (67.3) (50.3)
— 46.7 — — — — — — — (18.2) (16.3) 6.3
— 176.3 (0.0) — (642.7) (28.9) (0.6) 0.0 (45.7) (52.4) (51.0) (56.6)
— — — — — — — — — — — —
112 Sun Pharmaceutical Industries Limited
ANNEXURE ‘B’TO NOTES ON ACCOUNT
(CONSOLIDATED)
Statement regarding subsidiary companies as required under section 212 (8) of the Companies Act, 1956 pursuant to General Circular no. 2/2011 dated February 8th, 2011 issued by the Ministry of Corporate Affairs:
in Million
SR NO Name of the Subsidiary Company Reporting Curency Exchange Rate as on 31st March, 2011 63.06 44.52 6.60 44.52 44.52 44.52 44.52 44.52 45.90 44.52 44.52 44.52 63.06 63.06 44.52 71.37 71.37 44.52 71.37 71.37 71.37 45.90 71.37 1.00 Capital Reserve Total Assets Total Liabilities Investment Turnover other than Investment in Subsidiary — — — — — — — — — 164.4 — — — — — — — — — — — — — — 5.7 6,333.5 — — — — — 7,836.4 5,803.6 13,634.9 986.3 1,045.8 — — 268.0 663.0 — — — — — — — — Profit / (Loss) before Taxation (29.6) 3,174.4 (0.0) (0.3) — — (0.0) 1,710.8 481.9 1,073.5 46.6 532.5 (3.2) (581.0) (17.8) (32.9) — (0.4) — — — — — — Provision for Taxation — — — — — — — 57.7 53.4 399.4 19.7 (45.0) (0.3) — — — — — — — — — — — Profit / (Loss) after Taxation (29.6) 3,174.4 (0.0) (0.3) — — (0.0) 1,653.1 428.5 674.1 26.9 577.5 (2.8) (581.0) (17.8) (32.9) — (0.4) — — — — — — Proposed Dividend
26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49
Sun Pharmaceuticals France Sun Pharma Global (FZE) Sun Pharmaceuticals (SA) (Pty) Ltd. Sun Global Canada Pty. Ltd. Sun Laboratories Inc. Morley and Company Inc. Sun Laboratories FZE. Taro Pharmaceutical Industries Ltd. Taro Pharmaceuticals Inc. Taro Pharmaceuticals U.S.A., Inc. Taro Research Institute Ltd. Taro Pharmaceuticals North America, Inc. Taro Pharmaceuticals Europe B.V. Taro Pharmaceuticals Ireland Ltd. Taro International Ltd. (Israel) Taro Pharmaceuticals UK Ltd. Taro Laboratories Ltd. Taro Hungary Intellectual Property Licensing LLC. Taro Healthcare Limited Taro Industries Limited Taro Manufacturing Limited Taro Pharmaceuticals Canada, Ltd. Taro International Limited - UK Taro Pharmaceutical India Private Ltd.
EURO USD ZAR USD USD USD USD USD CAD USD USD USD EURO EURO USD GBP GBP USD GBP GBP GBP CAD GBP INR
2.3 183.6 0.0 0.0 0.0 0.1 545.5 30.3 0.0 6.5 0.0 0.0 1.1 31.6 0.0 0.0 0.0 1.5 0.1 0.1 0.1 0.0 0.1 0.1
(68.2) 14,923.5 (0.0) — — — (0.0) 16,945.7 5,446.6 (4,146.4) (17.0) 2,276.6 (19.5) (3,812.4) (50.6) (526.5) — (1.6) — — — (0.0) — 1.0
20.6 16,409.9 0.0 0.4 0.0 0.1 545.4 21,360.3 6,407.4 10,724.2 1,016.2 2,751.4 2.7 250.7 244.9 631.5 0.0 4,528.2 0.1 0.1 0.1 0.1 0.1 1.4
86.6 1,302.7 0.0 0.4 0.0 — — 4,384.3 960.8 14,864.2 1,033.2 474.8 21.1 4,031.4 295.5 1,158.0 0.0 4,528.3 0.1 — — 0.1 — 0.3
— — — — — — — — — — — — — — — — — — — — — — — —
Note : 1 ‘0.0’ represents amount less than 0.05 million and rounded off. 2 The above does not include 3 Skyline LLC, One Commerce Drive LLC, Tarochem Ltd and Taro Pharmaceutical Laboratories INC being subsidiaries of Taro Pharmaceutical Industries Ltd as they have no operation and does not have any Assets, Liabilities or Equity as on the close of their Financial Year ending as on 31st December, 2010. 3 Figures disclosed above are as per the statutory year end of the respective subsidiaries and in respect of Taro Pharmaceutical Industries Ltd. and its subsidiaries, figures are for the year ended 31st December, 2010.
CORPORATE INFORMATION
BOARD OF DIRECTORS Mr. Dilip S. Shanghvi Chairman & Managing Director Mr. Sudhir V. Valia Whole-time Director Mr. S. Kalyanasundaram CEO and Whole-time Director (w.e.f.1st April, 2010) Mr. Sailesh T. Desai Whole-time Director Mr. S. Mohanchand Dadha Director Mr. Hasmukh S. Shah Director Mr. Keki M. Mistry Director Mr. Ashwin Dani Director COMPANY SECRETARY Mr. Kamlesh H. Shah (Upto 31st March, 2011) Mr.Sunil R. Ajmera (From 1st April, 2011) Email:[email protected] AUDITORS Deloitte Haskins & Sells Chartered Accountants, Mumbai BANKERS Bank of Baroda Bank of Nova Scotia Citibank N.A. ICICI Bank Ltd Kotak Mahindra Bank Ltd Standard Chartered Bank State Bank of India REGISTRARS & SHARE TRANSFER AGENTS
Link Intime India Pvt. Ltd. C/13, Kantilal Maganlal Estate, Pannalal Silk Mills Compound, L B S Marg, Bhandup (West), Mumbai ? 400 078 Tel: (022)-25946970 Fax: (022)-25946969 E-mail: [email protected] [email protected]
Additional Collection Center
203, 2nd Floor, Daver House, Dr. D. N Road, Next to Central Camera, Fort, Mumbai - 400 001. Tel- (022) 22694127
PLANTS
Plot No. 214, Plot no. 20, Govt. Industrial Area,Phase II, Piparia. Silvassa - 396 230, U.T. of D & NH Halol-Baroda Highway Near Anand Kendra, Halol, Dist. Panchmahal - 389350, Gujarat. Plot No. 24/2 & 25, GIDC, Phase-IV, Panoli - 394 116. Dist. Bharuch, Gujarat. A-7 & A-8, MIDC Ind. Area, Ahmednagar - 414 111, Maharashra. Plot No. 4708, GIDC. Ankleshwar - 393 002, Gujarat. Sathammai Village, Karunkuzhi Post, Maduranthakam TK, Kanchipuram District, Tamil Nadu - 603 303. Plot No. 223, Span Industrial Complex, Dadra - 396 191, U.T of D. & NH. Plot No. 817/A, Karkhadi, Taluka Padra, Dist. Vadodara - 391 450, Gujarat. Sun Pharma Sikkim, * Plot No. 754, Nandok Block, Setipool, P.O. Ranipool, Sikkim ? 737135. Sun Pharmaceutical Industries, * Survey No. 259/15, Dadra - 396 191, U.T. of D. & NH. Sun Pharmaceutical Industries, * 6-9 Export Promotion Industrial Park (EPIP), Kartholi, Bari Brahmana, Jammu - 181 133, J&K Sun Pharmaceutical Industries Inc., 705, E. Mulberry Street, Bryan, Ohio ? 43506, USA. Sun Pharmaceutical Industries Inc., 270 Prospect Plains Road, Cranbury, New Jersey ? 08512, USA. Caraco Pharmaceutical Laboratories Ltd., 1150 Elijah McCoy Drive, Detroit ? 48202, Michigan, USA. Sun Pharmaceutical (Bangladesh) Ltd., Chandana, Joydevpur, Gazipur, Bangladesh. Alkaloida Chemical Company Zrt, H-4440 Tiszavasvari , Kabay, Janos u.29, Hungary. TKS Farmaceutica Ltda., Rodovia GO-080, Km 02, Chacaras 01/02, Jardim Pompeia, Goiania/GO, Brazil CEP: 74690-170. Sun Pharma de Mexico S.A. de C.V, Av. Rio Churubusco No. 658, Col. El Sifon, Del. Iztapalapa, C.P 09400 Mexico, Distrito Federal Chattem Chemicals, Inc., 3708,St. Elmo Avenue, Chattanooga, TN 37409, USA Taro Pharmaceuticals Inc., 130 East Drive, Brampton, Ontario L6T 1C1, Canada Taro Pharmaceutical Industries Ltd., 14 Hakitor Street, P.O. Box 10347 Haifa Bay 26110, Israel
OFFICES
Registered Sun Pharma Advanced Research Centre (SPARC), Tandalja, Vadodara ? 390 020, Gujarat. Corporate Acme Plaza, Andheri Kurla Road, Andheri (East), Mumbai ? 400 059, Maharashtra .
RESEARCH CENTRES
Sun Pharma Advanced Research Centre (SPARC), Akota Road, Akota, Vadodara ? 390 020, Gujarat. F.P.27, Part Survey No. 27, C.S. No. 1050, TPS No. 24, Village Tandalja, District Vadodara - 390 020, Gujarat, India. 17-B, Mahal Industrial Estate, Mahakali Caves Road, Andheri (East) Mumbai - 400 093, Maharashtra Chemistry and Discovery Research Israel, 14 Hakitor Street, P.O. Box 10347 Haifa Bay 26110, Israel
* With partnership ?rm Sun Pharmaceutical Industries/Sun Pharma Sikkim.
Acme Plaza, Andheri - Kurla Rd, Andheri (E), Mumbai - 400 059. Tel : 91-22-66969696 Fax: 91-22-28212010 www.sunpharma.com
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