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SECURITIES AND EXCHANGE COMMISSION
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Not Applicable | ANDHRA PRADESH, INDIA | |
(Translation of Registrant’s name | (Jurisdiction of incorporation or | |
into English) | organization) |
Hyderabad, Andhra Pradesh 500 016, India
+91-40-23731946
(Address of principal executive offices)
7-1-27, Ameerpet, Hyderabad, Andhra Pradesh, India
(Name, telephone, e-mail and/or facsimile number and address of company contact person)
Title of Each Class | Name of Each Exchange on which Registered | |
American depositary shares, each representing one equity share | New York Stock Exchange | |
Equity Shares* | New York Stock Exchange |
* | Not for trading, but only in connection with the registration of American depositary shares, pursuant to the requirements of the Securities and Exchange Commission. |
Large accelerated filerþ | Accelerated filero | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting companyo |
U.S. GAAPo | International Financial Reporting Standards as issued þ | Othero | ||
by the International Accounting Standards Board |
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EX-99.1 | ||||||||
EX-99.2 | ||||||||
EX-99.3 | ||||||||
EX-99.4 |
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For the year ended March 31, | ||||||||||||
2009 | 2009 | 2008 | ||||||||||
(Rs. in millions, U.S.$ in millions except share and per share data) | ||||||||||||
U.S.$ Convenience | ||||||||||||
Translation | ||||||||||||
(Unaudited) | ||||||||||||
Revenues | U.S.$ | 1,365 | Rs. | 69,441 | Rs. | 50,006 | ||||||
Cost of revenues | 648 | 32,941 | 24,598 | |||||||||
Gross profit | 718 | 36,500 | 25,408 | |||||||||
Selling, general and administrative expenses | 413 | 21,020 | 16,835 | |||||||||
Research and development expenses | 79 | 4,037 | 3,533 | |||||||||
Impairment loss on other intangible assets | 62 | 3,167 | 3,011 | |||||||||
Impairment loss on goodwill | 213 | 10,856 | 90 | |||||||||
Other expense/(income), net | 5 | 254 | (402 | ) | ||||||||
Finance expense/(income), net | 23 | 1,186 | (521 | ) | ||||||||
Share of profit of equity accounted investees, net of income tax | — | 24 | 2 | |||||||||
Profit/(loss) before income tax | (79 | ) | (3,996 | ) | 2,864 | |||||||
Income tax (expense)/benefit | (23 | ) | (1,172 | ) | 972 | |||||||
Profit/(loss) for the period | U.S.$ | (102 | ) | Rs. | (5,168 | ) | Rs. | 3,836 | ||||
Earnings/(loss) per share | ||||||||||||
Basic | U.S.$ | (0.60 | ) | Rs. | (30.69 | ) | Rs. | 22.88 | ||||
Diluted | U.S.$ | (0.60 | ) | Rs. | (30.69 | ) | Rs. | 22.80 | ||||
Weighted average number of equity shares used in computing earnings per equity share* | ||||||||||||
Basic | 168,349,139 | 168,349,139 | 168,075,840 | |||||||||
Diluted | 168,349,139 | 168,349,139 | 168,690,774 |
* | Each ADR represents one equity share. |
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For the year ended March 31, | ||||||||||||
2009 | 2009 | 2008 | ||||||||||
(Rs. in millions, U.S.$ in millions) | ||||||||||||
Convenience | ||||||||||||
Translation in U.S.$ | ||||||||||||
(Unaudited) | ||||||||||||
Cash and cash equivalents | 110 | Rs. | 5,596 | Rs. | 7,421 | |||||||
Total assets | 1,647 | 83,792 | 85,634 | |||||||||
Total long term debt, excluding current portion | 199 | 10,132 | 12,698 | |||||||||
Total equity | 827 | Rs. | 42,045 | Rs. | 47,350 |
Year Ended | ||||||||
March 31, | Period End | Average | High | Low | ||||
2008 | 40.02 | 40.00 | 43.05 | 38.48 | ||||
2009 | 50.87 | 46.32 | 51.96 | 39.73 |
Month | High | Low | ||||||
October 2008 | 49.96 | 46.47 | ||||||
November 2008 | 50.12 | 47.25 | ||||||
December 2008 | 50.05 | 46.74 | ||||||
January 2009 | 49.07 | 48.25 | ||||||
February 2009 | 50.88 | 48.37 | ||||||
March 2009 | 51.96 | 50.21 |
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• | general market conditions, | ||
• | speculative trading in our shares and ADSs, and |
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• | developments relating to our peer companies in the pharmaceutical industry. |
• | We may fail to successfully integrate our acquisitions in accordance with our business strategy. | ||
• | The initial rationale for the acquisition may not remain viable due to a variety of factors, including unforeseen regulatory changes and market dynamics after the acquisition, and this may result in a significant delay and/or reduction in the profitability of the acquisition. | ||
• | Integration of acquisitions may divert management’s attention away from our primary product offerings, resulting in the loss of key customers and/or personnel, and may expose us to unanticipated liabilities. | ||
• | We may not be able to retain the skilled employees and experienced management that may be necessary to operate the businesses we acquire. If we cannot retain such personnel, we may not be able to locate or hire new skilled employees and experienced management to replace them. | ||
• | We may purchase a company that has contingent liabilities that include, among others, known or unknown patent or product liability claims. | ||
• | Our acquisition strategy may require us to obtain additional debt or equity financing, resulting in additional leverage, or increased debt obligations as compared to equity, and dilution of ownership. |
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• | We may purchase companies located in jurisdictions where we do not have operations and as a result we may not be able to anticipate local regulations and the impact such regulations have on our business. |
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• | changes in demand for our products; |
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• | the impact of seasons (weather severity, length and timing) on the price and availability of raw materials which we depend on; | ||
• | the timing of regulatory approvals and of launches of new products by us and our competitors, particularly where we obtain the 180-day period of market exclusivity in the United States provided under the Hatch-Waxman Act of 1984; | ||
• | changes in our pricing policies or those of our competitors; | ||
• | the magnitude and timing of our research and development investments; | ||
• | changes in the level of inventories maintained by our customers; | ||
• | the geographical mix of our sales and currency exchange rate fluctuations; | ||
• | adverse market events leading to impairment of any of our assets; and | ||
• | timing of our retailers’ promotional programs. |
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• | Through our Global Generics segment, we offer lower-cost alternatives to highly-priced innovator brands, both directly and through key partnerships. Generic drugs hold great promise for the future. The growing acceptance of generics and favorable legislation in many countries, combined with the large volume of branded products losing patent protection over the coming years, is expanding the generic pharmaceuticals market. Today, we have a strong presence both in highly regulated markets, such as the United States, United Kingdom and Germany, and in emerging markets, including India, Russia, Venezuela, Romania, and certain countries of the former Soviet Union (Belarus, Ukraine and Kazakhstan). Moreover, we are steadily building our presence in other key markets. Our capabilities span the entire value chain — from process development of the API to submission of the finished dosage dossier to the regulatory agencies — giving us control over the supply chain and the ability to offer high quality products at the right time and at competitive prices. Our generics business is supported by our integrated product development infrastructure which is dedicated to bringing new medicines to the market. We will continue to leverage our existing global platforms of product development, manufacturing and supply chain management to add to our product pipeline and address the growing needs of our customers in each of these markets. | ||
• | Through our Pharmaceutical Services and Active Ingredients (“PSAI”) segment, which consists of our API business and our Custom Pharmaceutical Services (“CPS”) business, we offer intellectual property advantaged, rapid product development and cost-effective manufacturing services to our customers — both generic companies and innovators. This allows us to help make medicines available to more people around the world. For our API business, our goal is to always enable our customers to be the first to launch a generic product and to provide value added services to help them remain competitive and profitable for the entire life-cycle of the product. Our CPS business serves several innovators, both big pharmaceutical and emerging biotechnology companies, and a large number of emerging pharmaceutical companies. Our CPS business aims to be the preferred partner for innovator companies by providing a complete range of services, such as process development and manufacturing services, that are necessary to take their innovations to the market with greater speed and efficiency and lower capital expenditures. | ||
• | Our Proprietary Products segment consists of new chemical entity (“NCE”) research and our Differentiated Formulations business. In each of these areas, we are building world-class capabilities and partnerships to accelerate the discovery and development of new and improved therapies. NCE research is focused on building a robust NCE pipeline in the areas of metabolic diseases, cardiovascular diseases, and antibacterials. Our Differentiated Formulations efforts involve applying novel formulation and drug delivery technologies to improve or repurpose products that have a sizable track record of human clinical use. Our most advanced Differentiated Formulations efforts are in dermatology, where we have launched several effective and innovative products through our wholly-owned subsidiary, Promius Pharma. | ||
• | To supplement our internal growth initiatives for each of these businesses, we are continuously exploring external business development opportunities, including acquisitions and alliances. |
Year Ended March 31, | ||||||||||||||||||||
Segment | 2008 | 2009 | ||||||||||||||||||
(Rs. in millions, U.S.$ in millions) | ||||||||||||||||||||
Pharmaceutical Services and Active Ingredients | Rs. | 16,623 | 33 | % | Rs. | 18,758 | 27 | % | U.S.$ | 369 | ||||||||||
Global Generics | 32,872 | 66 | % | 49,790 | 72 | % | 979 | |||||||||||||
Proprietary Products | 190 | — | % | 294 | — | % | 6 | |||||||||||||
Others | 321 | 1 | % | 599 | 1 | % | 11 | |||||||||||||
Total revenues | Rs. | 50,006 | 100 | % | Rs. | 69,441 | 100 | % | U.S.$ | 1,365 | ||||||||||
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Year Ended March 31, | ||||||||||||||||
2008 | 2009 | |||||||||||||||
BRAND | Revenues | % Total(1) | Revenues | % Total(1) | ||||||||||||
(Rs. in millions) | ||||||||||||||||
Omez | Rs. | 763 | 9 | % | Rs. | 776 | 9 | % | ||||||||
Nise | 626 | 8 | % | 605 | 7 | % | ||||||||||
Stamlo | 403 | 5 | % | 422 | 5 | % | ||||||||||
Stamlo beta | 305 | 4 | % | 301 | 4 | % | ||||||||||
Atocor | 244 | 3 | % | 269 | 3 | % | ||||||||||
Razo | 180 | 2 | % | 214 | 3 | % | ||||||||||
OMEZ-DSR | 166 | 2 | % | 210 | 2 | % | ||||||||||
Reditux | 154 | 2 | % | 199 | 2 | % | ||||||||||
Mintop | 150 | 2 | % | 172 | 2 | % | ||||||||||
Enam | 179 | 2 | % | 166 | 2 | % | ||||||||||
Others | 4,890 | 61 | % | 5,144 | 61 | % | ||||||||||
Total | Rs. | 8,060 | 100 | % | Rs. | 8,478 | 100 | % | ||||||||
(1) | Refers to the brand’s revenues from sales in India expressed as a percentage of our total revenues from sales in all of our therapeutic categories in India. |
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§ | The Indian pharmaceutical market, including retail and hospital sales, registered a growth of 10.1% during the year ended March 31, 2009. | ||
§ | The overall growth rate during the year ended March 31, 2009 was lower than the forecasted growth rate. | ||
§ | New products accounted for 6.5% of total Indian pharmaceutical sales during the year ended March 31, 2009. | ||
§ | The number of new products in the Indian pharmaceutical market remained steady at approximately 3,900, while 20% of the new products account for 70% of total sales from new products. | ||
§ | The top 300 existing brands grew at a rate of 11%, which was higher than the Indian pharmaceutical market’s overall average, and continued to account for 33% of the market’s total sales. | ||
§ | Approximately 800 existing brands (more than Rs.100 million in value) accounted for 50% of the market’s total sales and recorded a growth rate of more than 11% during the year ended March 31, 2009. | ||
§ | There is an increasing emergence of bio-similars to address the needs of patients in the oncology therapeutic area. |
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Year Ended March 31, | ||||||||||||||||
2008 | 2009 | |||||||||||||||
Revenues in | Revenues in | |||||||||||||||
Brand | millions | % Total(1) | millions | % Total(1) | ||||||||||||
Omez | Rs. | 849 | 21 | % | Rs. | 1,281 | 21 | % | ||||||||
Nise | 799 | 20 | % | 1,249 | 21 | % | ||||||||||
Ketorol | 797 | 20 | % | 1,078 | 18 | % | ||||||||||
Ciprolet | 550 | 13 | % | 701 | 12 | % | ||||||||||
Enam | 255 | 6 | % | 315 | 5 | % | ||||||||||
Cetrine | 199 | 5 | % | 339 | 6 | % | ||||||||||
Exifine | 140 | 3 | % | 210 | 3 | % |
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Year Ended March 31, | ||||||||||||||||
2008 | 2009 | |||||||||||||||
Revenues in | Revenues in | |||||||||||||||
Brand | millions | % Total(1) | millions | % Total(1) | ||||||||||||
Mitotax | 105 | 3 | % | 148 | 2 | % | ||||||||||
Bion | 62 | 2 | % | 171 | 3 | % | ||||||||||
Mycoflucan | 51 | 1 | % | 95 | 2 | % | ||||||||||
Others | 257 | 6 | % | 216 | 7 | % | ||||||||||
Total | Rs. | 4,064 | 100 | % | Rs. | 5,803 | 100 | % | ||||||||
(1) | Refers to the brand’s revenues from sales in Russia expressed as a percentage of our total revenues from all sales in Russia. |
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• | private insurance funds cannot refuse to provide health insurance to anyone who is without private health insurance coverage or who wants to switch from the public system; for these patients, private insurance funds need to offer basic rates in the future; | ||
• | insurance funds are encouraged to enter into contracts with doctors, pharmacies and the pharmaceutical industry designed to lower the costs for the supply of patients with medicinal products (e.g., rebate agreements with the pharmaceutical industry and pharmacists) and integrating different fields of care to lower medical treatment costs; | ||
• | insurance funds can cause drugs that are covered by rebate contracts with the pharmaceutical industry to be exempt from co-payments by patients; | ||
• | in filling prescriptions, pharmacists are required to give preference to drugs subject to rebates, unless the physician has explicitly excluded replacement of the prescribed drug; | ||
• | rebated medicinal products might, depending on individual agreements with physicians, be exempted from individual prescribing limits of the physicians (in Germany, physicians are given prescribing limits by insurance funds based on their number of patients, and if those limits are exceeded, the physicians can be penalized); | ||
• | patients included in integrated care routes (see above) shall preferably receive rebated medicinal products; and | ||
• | in making decisions pertaining to the prescription of drugs or filling of prescriptions, drugs will be evaluated not only from a benefit perspective but also from a cost perspective. |
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• | Metabolic disorders | ||
• | Cardiovascular disorders | ||
• | Bacterial infections |
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Compound | Therapeutic Area | Status | Development partner | Remarks | ||||
DRF 2593 | Metabolic disorders | Phase III | Rheoscience | In Phase III clinical testing for type 2 diabetes | ||||
Several compounds | Respiratory disorders | Phase I | Argenta | Targeted for Chronic Obstructive Pulmonary Disease | ||||
DRL 17822 | Metabolic disorders/Cardiovascular disorders | Phase I | N/A | Targeting dyslipidemia and atherosclerosis |
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USPTO(1) | USPTO(1) | PCT(2) | India | India | ||||||||||||||||
Category | (Filed) | (Granted) | (Filed) | (Filed) | (Granted) | |||||||||||||||
Anti-diabetic | 83 | 53 | 61 | 116 | 44 | |||||||||||||||
Anti-cancer | 17 | 8 | 14 | 45 | 15 | |||||||||||||||
Anti-bacterial | 8 | 5 | 10 | 21 | 4 | |||||||||||||||
Anti-inflammation/Cardiovascular | 38 | 18 | 26 | 20 | 1 | |||||||||||||||
Anti-ulcerant | 1 | 1 | — | 1 | ||||||||||||||||
Miscellaneous | 4 | 1 | 3 | 23 | 8 | |||||||||||||||
TOTAL | 151 | 86 | 114 | 226 | 72 |
(1) | “USPTO” means the United States Patent and Trademark Office. | |
(2) | “PCT” means the Patent Cooperation Treaty, an international treaty that facilitates foreign patent filings for residents of member countries when obtaining patents in other member countries. |
Stage of Development | Description | |
Preclinical | Animal studies and laboratory tests to evaluate safety and efficacy, demonstrate activity of a product candidate and identify its chemical and physical properties. | |
Phase I | Clinical studies to test safety and pharmacokinetic profile of a drug in humans. | |
Phase II | Clinical studies conducted with groups of patients to determine preliminary efficacy, dosage and expanded evidence of safety. | |
Phase III | Larger scale clinical studies conducted in patients to provide sufficient data for statistical proof of efficacy and safety. |
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Percentage of Direct/ | ||||||
Country of | Indirect Ownership | |||||
Name of Subsidiary | Incorporation | Interest | ||||
DRL Investments Limited | India | 100 | % | |||
Reddy Pharmaceuticals Hong Kong Limited | Hong Kong | 100 | % | |||
OOO JV Reddy Biomed Limited | Russia | 100 | % | |||
Reddy Antilles N.V. | Netherlands | 100 | % | |||
Reddy Netherlands B.V. | Netherlands | 100 | %(1) | |||
Reddy US Therapeutics, Inc. | U.S.A. | 100 | %(1) | |||
Dr. Reddy’s Laboratories, Inc. | U.S.A. | 100 | % | |||
Dr. Reddy’s Farmaceutica do Brasil Ltda | Brazil | 100 | % | |||
Cheminor Investments Limited | India | 100 | % | |||
Aurigene Discovery Technologies Limited | India | 100 | % | |||
Aurigene Discovery Technologies, Inc. | U.S.A. | 100 | %(3) | |||
Kunshan Rotam Reddy Pharmaceutical Co. Limited | China | 51.33 | %(4) | |||
Dr. Reddy’s Laboratories (EU) Limited | United Kingdom | 100 | % | |||
Dr. Reddy’s Laboratories (U.K.) Limited | United Kingdom | 100 | %(5) | |||
Dr. Reddy’s Laboratories (Proprietary) Limited | South Africa | 60 | % | |||
Reddy Cheminor S.A. | France | 100 | %(2) | |||
OOO Dr. Reddy’s Laboratories Limited | Russia | 100 | % | |||
Dr. Reddy’s Bio-sciences Limited | India | 100 | % | |||
Promius Pharma LLC (formerly Reddy Pharmaceuticals, LLC) | U.S.A. | 100 | %(6) | |||
Trigenesis Therapeutics, Inc. | U.S.A. | 100 | % | |||
Industrias Quimicas Falcon de Mexico, SA de CV | Mexico | 100 | % | |||
Reddy Holding GmbH | Germany | 100 | %(7) | |||
Lacock Holdings Limited | Cyprus | 100 | % | |||
betapharm Arzneimittel GmbH | Germany | 100 | %(8) | |||
beta Healthcare Solutions GmbH | Germany | 100 | %(8) | |||
beta institut fur sozialmedizinische Forschung und Entwicklung GmbH | Germany | 100 | %(8) | |||
Reddy Pharma Iberia SA | Spain | 100 | % | |||
Reddy Pharma Italia SPA | Italy | 100 | %(7) | |||
Dr. Reddy’s Laboratories (Australia) Pty Ltd. | Australia | 70 | % | |||
Dr. Reddy’s Laboratories SA | Switzerland | 100 | % | |||
Eurobridge Consulting B.V. | Netherlands | 100 | %(1) | |||
OOO DRS LLC | Russia | 100 | %(9) | |||
Aurigene Discovery Technologies(Malaysia) Sdn, Bhd | Malaysia | 100 | %(3) | |||
Dr. Reddy’s New Zealand Limited (formerly Affordable Healthcare Limited)(12) | New Zealand | 100 | %(10) | |||
Macred India Private Limited | India | 100 | % | |||
Dr. Reddy’s Laboratories Ilac Ticaret Limited | Turkey | 100 | % | |||
Perlecan Pharma Private Limited | India | 99.99 | % | |||
Dr. Reddy’s SRL (formerly Jet Generici SRL) | Italy | 100 | %(11) | |||
Chirotech Technology Limited | United Kingdom | 100 | %(5) | |||
Dr. Reddy’s Laboratories Louisiana LLC | U.S.A. | 100 | %(6) |
(1) | Indirectly owned through Reddy Antilles N.V. | |
(2) | Subsidiary under liquidation. | |
(3) | Indirectly owned through Aurigene Discovery Technologies Limited. | |
(4) | Kunshan Rotam Reddy Pharmaceutical Co. Limited is a subsidiary as we hold a 51.33% stake; however, we account for this investment by the equity method and do not consolidate it in our financial statements. | |
(5) | Indirectly owned through Dr. Reddy’s Laboratories (EU) Limited. |
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(6) | Indirectly owned through Dr. Reddy’s Laboratories, Inc. | |
(7) | Indirectly owned through Lacock Holdings Limited. | |
(8) | Indirectly owned through Reddy Holding GmbH. | |
(9) | Indirectly owned through Eurobridge Consulting B.V. | |
(10) | Indirectly owned through Dr. Reddy’s Laboratories SA. | |
(11) | Indirectly owned through Reddy Pharma Italia SPA | |
(12) | Effective as ofMay 19, 2009 |
Approximate | Built up | Installed | Actual | |||||||||||||||
Location | Area | Area | Certifications | Capacity | Production | |||||||||||||
(Square feet) | (Square feet) | |||||||||||||||||
Pharmaceutical Services and Active Ingredients | 3,912(9)(12) | 3,327(9)(12) | ||||||||||||||||
Bollaram, Andhra Pradesh, India | 734,013 | 191,558 | U.S. FDA and EuGMP | See above(12) | See above(12) | |||||||||||||
Bollaram, Andhra Pradesh, India | 648,173 | 346,622 | U.S. FDA and EuGMP | See above(12) | See above(12) | |||||||||||||
Bollaram, Andhra Pradesh, India | 285,235 | 204,556 | U.S. FDA and EuGMP | See above(12) | See above(12) | |||||||||||||
Jeedimetla, Andhra Pradesh, India | 228,033 | 102,464 | U.S. FDA and EuGMP | See above(12) | See above(12) | |||||||||||||
Miryalaguda, Andhra Pradesh, India | 3,402,907 | 414,553 | U.S. FDA and EuGMP | See above(12) | See above(12) | |||||||||||||
Pydibheemavaram, Andhra Pradesh, India | 8,523,466 | 972,490 | U.S. FDA and EuGMP | See above(12) | See above(12) | |||||||||||||
Pydibheemavaram, Andhra Pradesh, India(5) | 737,134 | 53,918 | See above(12) | See above(12) | ||||||||||||||
Miyapur, Andhra Pradesh, India | 113,256 | 85,736 | ISO 27001: 2005 Information Security Management System | N/A | N/A | |||||||||||||
Jeedimetla, Andhra Pradesh, India | 68,825 | 23,538 | ISO 27001: 2005 Information Security Management System | N/A | N/A | |||||||||||||
Cuernavaca, Mexico | 2,774,378 | 1,345,488 | (1) | 3,500(9) | 2,000(9) | |||||||||||||
Mirfield, United Kingdom | 1,785,960 | 653,400 | ISO 9001:2008, MHRA | |||||||||||||||
(UK) and U.S. FDA | (13) | (13) | ||||||||||||||||
Cambridge, United Kingdom(6) | 9,383 | 9,383 | N/A | N/A | ||||||||||||||
Global Generics | 3,440(7)(8)(14) | 4,298(7)(14) | ||||||||||||||||
Bollaram, Andhra Pradesh, India | 217,729 | 103,894 | (2) | See above(14) | See above(14) | |||||||||||||
Bachupally, Andhra Pradesh, India | 1,306,372 | 387,030 | (3) | See above(14) | See above(14) | |||||||||||||
Yanam, Pondicherry, India | 457,000 | 26,226 | — | See above(14) | See above(14) | |||||||||||||
Baddi, Himachal Pradesh, India | 765,542 | 148,711 | — | See above(14) | See above(14) | |||||||||||||
Bachupally, Andhra Pradesh, India | 798,982 | 41,891 | (2) | 13,852(10) | 4,309(10) | |||||||||||||
Bachupally, Andhra Pradesh, India(5) | 783,823 | 336,308 | (4) | 9,200(7)(11) | 4,770(7) | |||||||||||||
Beverley, East Yorkshire, United Kingdom | 81,000 | 32,500 | U.K. Medicine | |||||||||||||||
Control Agency, British | ||||||||||||||||||
Retail Consortium | N/A | N/A | ||||||||||||||||
Shreveport, Lousiana, United States | 1,817,123 | 258,709 | U.S. FDA | 5,875(7)(11) | 1,825(7) | |||||||||||||
Proprietary Products(11) | ||||||||||||||||||
Miyapur, Andhra Pradesh, India | 445,401 | 153,577 | — | N/A | N/A | |||||||||||||
Georgia, United States(6) | 24,733 | 24,733 | — | N/A | N/A |
(1) | U.S. FDA; Therapeutic Goods Administration, Australia; Danish Medicines Agency, Denmark; U.S. Prescription Drug Marketing Act; Ministry of Health, Labour and Welfare, Japan; Secretaría de Salud y Asistencia, Mexico. | |
(2) | Ministry of Health, Sudan; Ministry of Health, Uganda; Brazilian National Agency of Sanitary Surveillance (“ANVISA”), Brazil; National Medicines Agency, Romania; Ministry of Health, Ukraine; GCC group of countries. | |
(3) | Medicine Control Council, Republic of South Africa; The State Company for Marketing Drugs and Medical Appliances, Ministry of Health, Iraq; Sultanate of Oman, Ministry of Health, Muscat; Ministry of Health, Sudan; Ministry of Health, State of Bahrain; State Pharmaceutical Inspection, Republic of Latvia; Pharmaceutical and Herbal Medicines, Registration and Control Administrations, Ministry of Health, Kuwait. |
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National Medicines Agency, Romania; Ministry of Health, Ukraine; Ministry of Health, Indonesia; Health Authorities, Nigeria; Ministry of Health, Kirgystan; World Health Organization, cGMP; ANVISA, Brazil; Medicines and Health Care Products Regulatory Agencies (“MHRA”), U.K., British Retail Consortium; Danish Medicines Agency. | ||
(4) | U.S. FDA; Medicines and Healthcare Products Regulatory Agency, U.K.; Ministry of Health, UAE; Medicines Control Council, South Africa; ANVISA, Brazil; National Medicines Agency, Romania; Danish Medicines Agency, Environmental Management System ISO 14001; Occupational Health and Safety Management System — OHSAS 18001; Quality Management System-ISO 9001:2000. | |
(5) | 100% Export Oriented Units. However the income tax benefits under the Indian Income tax Act were exhausted as of the end of the year ended March 31, 2008 for our Generics facility at Bachupally. | |
(6) | Leased facilities. | |
(7) | Million units. | |
(8) | On a single shift basis. | |
(9) | Tons. | |
(10) | Grams. | |
(11) | Three shift basis | |
(12) | Represents the aggregate capacity and production for the first seven facilities listed in this table under PSAI. | |
(13) | Capacity and production at this facility is not separately tracked. | |
(14) | Represents the aggregate capacity and production for the first four facilities listed in this table under Global Generics. |
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• | Pharmaceutical Services and Active Ingredients (“PSAI”); | ||
• | Global Generics; and | ||
• | Proprietary Products. |
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• | Assessment of functional currency for foreign operations; | ||
• | Financial instruments; | ||
• | Measurement of recoverable amounts of cash-generating units; | ||
• | Provisions; | ||
• | Sales returns, rebates and charge back provisions; | ||
• | Evaluation of recoverability of deferred tax assets; | ||
• | Business combinations; and | ||
• | Contingencies. |
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(Rs. in millions) | (Rs. in millions) | |||||||||||||||||||||||||||||||
For the year ended March 31, 2009 | For the year ended March 31, 2008 | |||||||||||||||||||||||||||||||
Gross | ||||||||||||||||||||||||||||||||
Revenues | profit % | Gross | ||||||||||||||||||||||||||||||
% to | to | Revenues | Gross | profit % to | ||||||||||||||||||||||||||||
Revenues | total | Gross profit | revenues | Revenues | % to total | profit | revenues | |||||||||||||||||||||||||
Pharmaceutical Services and Active Ingredients | Rs. | 18,758 | 27 | % | Rs. | 5,595 | 30 | % | Rs. | 16,623 | 33 | % | Rs. | 5,645 | 34 | % | ||||||||||||||||
Global Generics | 49,790 | 72 | % | 30,448 | 61 | % | 32,872 | 66 | % | 19,567 | 60 | % | ||||||||||||||||||||
Proprietary Products | 294 | 0 | % | 196 | 67 | % | 190 | 0 | % | 109 | 57 | % | ||||||||||||||||||||
Others | 599 | 1 | % | 261 | 44 | % | 321 | 1 | % | 87 | 27 | % | ||||||||||||||||||||
Total | Rs. | 69,441 | 100 | % | Rs. | 36,500 | 53 | % | Rs. | 50,006 | 100 | % | Rs. | 25,408 | 51 | % | ||||||||||||||||
Percentage of Sales | Percentage | |||||||||||
For the year ended March 31, | Increase/(Decrease) | |||||||||||
2009 | 2008 | |||||||||||
Revenues | 100 | 100 | 39 | |||||||||
Gross profit | 53 | 51 | 44 | |||||||||
Selling, general and administrative expenses | 30 | 34 | 25 | |||||||||
Research and development expenses | 6 | 7 | 14 | |||||||||
Impairment loss on other intangible assets | 5 | 6 | 5 | |||||||||
Impairment loss on goodwill | 16 | — | NC | |||||||||
Other (income)/expense, net | — | (1 | ) | NC | ||||||||
Results from operating activities | (4 | ) | 5 | NC | ||||||||
Finance (income)/expense, net | 2 | (1 | ) | NC | ||||||||
Profit/(loss) before income taxes | (6 | ) | 6 | NC | ||||||||
Income tax (expense)/benefit, net | (2 | ) | 2 | NC | ||||||||
Profit/(loss) for the period | (7 | ) | 8 | NC |
NC = Not comparable |
• | Our overall revenues increased by 39% to Rs.69,441 million in the year ended March 31, 2009, from Rs.50,006 million in the year ended March 31, 2008. Excluding revenues from a unit of the Dow Chemical Company associated with its United Kingdom sites in Mirfield and Cambridge (hereinafter referred to as the “Dow Pharma Unit”), BASF’s manufacturing facility in Shreveport, Louisiana, U.S.A. and related pharmaceutical contract manufacturing business (hereinafter referred to as the “Shreveport facility”) and Jet Generici SRL (hereinafter referred to as “Jet Generici”), each of which was acquired in April 2008, revenues grew by 33% to Rs.66,644 million during the year ended March 31, 2009. During the year ended March 31, 2009, we launched sumatriptan (an authorized generic version of Imitrex®) in the United States, which accounted for Rs.7,188 million of our consolidated revenues. Excluding the revenues from sumatriptan and revenues from the Dow Pharma Unit, the Shreveport facility and Jet Generici, our revenues increased by 19% to Rs.59,456 million during the year ended March 31, 2009. |
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• | Revenues from our Pharmaceutical Services and Active Ingredients segment increased by 13% to Rs.18,758 million during the year ended March 31, 2009, from Rs.16,623 million during the year ended March 31, 2008. Excluding revenues from the Dow Pharma Unit acquired in April 2008 of Rs.1,021 million, revenues from this segment increased by 7% compared to the year ended March 31, 2008. The increase primarily resulted from growth in revenues from our “rest of the world” markets (i.e., all markets other than North America, Europe, Russia and other countries of the former Soviet Union and India) by 20% and from North America (the United States and Canada) by 16%. |
• | Revenues from our Global Generics segment increased by 51% to Rs.49,790 million during the year ended March 31, 2009, from Rs.32,872 million in the year ended March 31, 2008. The increase primarily resulted from an increase in revenues from North America (the United States and Canada), Russia and our “rest of the world” markets. Excluding revenues of Rs.1,684 million from the Shreveport facility and Rs.92 million from Jet Generici, each of which was acquired in April 2008, revenues from our Global Generics segment increased by 46% to Rs.48,014 million during the year ended March 31, 2009. During the year ended March 31, 2009, we launched sumatriptan (an authorized generic version of Imitrex®) in the United States, which accounted for Rs.7,188 million of our consolidated revenues. Excluding the revenues from sumatriptan sales and revenues from the Shreveport facility and Jet Generici, our Global Generics revenues grew by 24% to Rs.40,826 million during the year ended March 31, 2009. |
• | For the year ended March 31, 2009, we received 35% of our total revenues from North America (the United States and Canada), 26% of our revenues from Europe, 17% of our revenues from India, 11% of our revenues from Russia and other countries of the former Soviet Union and 11% of our revenues from other countries. |
• | The provision for sales returns created during the year ended March 31, 2009 was Rs.663 million, as compared to Rs.164 million during the year ended March 31, 2008. Consistent with our accounting policy for creating allowances for sales returns (referred to in Note 3.k. of our consolidated financial statements), we assess the provision for sales returns at every reporting period based on the historical trend of returns. Please refer to Note 23 of our consolidated financial statements for the changes to our sales returns provisions during the years ended March 31, 2008 and 2009. The increase in our sales return provision for the year ended March 31, 2009 as compared to the year ended March 31, 2008 was mainly attributable to: |
- | A 39% increase in our total sales in the year ended March 31, 2009 over the year ended March 31, 2008. Please refer to the discussion on revenues in this section for a more detailed analysis. Our increase in the provision for sales returns during the year ended March 31, 2009 was, in part, linked to this increase in our total sales. | ||
- | Furthermore, our estimates of expected future sales returns allowances varies in different geographic markets, based on their historical trends. Generally, our sales returns in our North America (the United States and Canada) generics business are higher than our sales returns in other businesses and geographies. Revenues from North America (the United States and Canada) within our Global Generics segment increased by 152% to Rs.19,843 million for the year ended March 31, 2009, from Rs.7,873 million in the year ended March 31, 2008. Please refer to the discussion on revenues in this section for a more detailed analysis. | ||
- | As mentioned above, in addition to assessing the adequacy of our allowance for sales returns based on sales returns percentages during historical periods, our assessment is also based upon sales returns processed at every reporting period. As we progressed through the year ended March 31, 2008, we noted a decline in our trend of returns and, accordingly, reevaluated our estimate. This assessment during the year ended March 31, 2008 resulted in a reversal of Rs.166 million from our opening allowance for sales returns. This change in the estimate for allowance for sales returns was primarily due to smaller than expected returns processed by us during the year ended March 31, 2008, as compared to our opening estimate based on historical trends. This reversal reduced our net provision for the year ended March 31, 2008 to Rs.164 million, which was significantly lower than our actual sales returns of Rs.284 million in the year ended March 31, 2008. Accordingly, our initial provision for sales returns in the year ended March 31, 2009 reflected our increased estimate for sales returns based upon actual returns in the prior fiscal year. In addition, as we progressed through the year ended March 31, 2009, there was a further increase in our trend of sales returns (from Rs.284 million in the year ended March 31, 2008 to Rs.475 million in the year ended March 31, 2009) which was also reflected in our estimate for sales return provision. |
For further information regarding our sales return provisions, see Note 23 to our consolidated financial statements. |
• | For the year ended March 31, 2009, on an average basis, the Indian rupee depreciated by approximately 14% against the U.S. dollar compared to the average exchange rate for the year ended March 31, 2008. This depreciation had a positive impact on our sales because of the increase in rupee realization from sales denominated in U.S. dollars. However, this positive impact was partially offset due to mark to market losses upon maturity of foreign currency derivative contracts, which were acquired to mitigate the risks of foreign currency volatility. The foregoing mark to market losses on foreign currency derivative contracts resulted in a net decrease in our revenues by Rs.1,455 million during the year ended March 31, 2009. Excluding the impact of such mark to market losses, our total revenues grew by 42% to Rs.70,896 for the year ended March 31, 2009 from Rs.50,006 million for the year ended March 31, 2008. |
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§ | Revised IAS 1, “Presentation of Financial Statements” (2007) introduces the term total comprehensive income, which represents changes in equity during a period other than those changes resulting from transactions with owners in their capacity as owners. Total comprehensive income may be presented in either a single statement of comprehensive income (effectively combining both the income statement and all non-owner changes in equity in a single statement), or in an income statement and a separate statement of comprehensive income. Revised IAS 1, which becomes mandatory for our March 31, 2010 consolidated financial statements, is expected to have a significant impact on the presentation of the consolidated financial statements. We plan to provide total comprehensive income in a single statement of comprehensive income for our March 31, 2010 consolidated financial statements. | ||
§ | Revised IAS 23, “Borrowing Costs” removes the option to expense borrowing costs and requires that an entity capitalize borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The revised IAS 23 will become mandatory for our March 31, 2010 consolidated financial statements. As we currently follow a policy of capitalizing borrowing costs, this new standard will not have any impact on our consolidated financial statements. | ||
§ | Amendments to IAS 32, “Financial Instruments: Presentation” and IAS 1, “Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation” require puttable instruments, and instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation, to be classified as equity if certain conditions are met. The amendments, which become mandatory for our March 31, 2010 consolidated financial statements, with retrospective application required, are not expected to have any material impact on our consolidated financial statements. | ||
§ | Revised IFRS 3, “Business Combinations” (2008) incorporates the following changes that are likely to be relevant to our operations: |
– | The definition of a business has been broadened, which is likely to result in more acquisitions being treated as business combinations. | ||
– | Contingent consideration will be measured at fair value, with subsequent changes therein recognized in profit or loss. | ||
– | Transaction costs, other than share and debt issue costs, will be expensed as incurred. | ||
– | Any pre-existing interest in the acquiree will be measured at fair value with the gain or loss recognized in profit or loss. | ||
– | Any non-controlling (minority) interest will be measured either at fair value or its proportionate interest in the identifiable assets and liabilities of the acquiree, on a transaction-by-transaction basis. |
Revised IFRS 3, which becomes mandatory for our March 31, 2011 consolidated financial statements, will be applied prospectively for all business combinations on or after April 1, 2010. | |||
§ | Amendments to IAS 27, “Consolidated and Separate Financial Statements” (2008) requires accounting for changes in ownership interests by us in a subsidiary, while maintaining control, to be recognized as an equity transaction. When we lose control of a subsidiary, any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognized in profit or loss. The amendments to IAS 27, which become mandatory for our March 31, 2011 consolidated financial statements, are not expected to have a significant impact on our consolidated financial statements. | ||
§ | Amendments to IFRS 2, “Share-based Payment – Vesting Conditions and Cancellations” clarify the definition of vesting conditions, introduce the concept of non-vesting conditions, require non-vesting conditions to be reflected in grant-date fair value and provide the accounting treatment for non-vesting conditions and cancellations. These amendments to IFRS 2 will become mandatory for our March 31, 2010 consolidated financial statements, with retrospective application. We are currently |
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in the process of evaluating the potential impact of the revised standard on our consolidated financial statements. | |||
§ | Amendments to IAS 39, “Financial Instruments: Recognition and Measurement: Eligible Hedged Items” deal with two situations where diversity in practice exists on the designation of inflation as a hedged risk and the treatment of ‘one-sided’ risks on hedged items. These amendments are effective for accounting periods beginning on or after July 1, 2009 and will be applicable for our March 31, 2011 consolidated financial statements. We are currently in the process of evaluating the potential impact of the revised standards on our consolidated financial statements. | ||
§ | IFRIC Interpretation 18, “Transfers of Assets from Customers,” defines the treatment for property, plant and equipment transferred by customers to companies or for cash received to be invested in property, plant and equipment that must be used either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services, or to do both. The item of property, plant and equipment is to be initially recognized by the company at fair value with a corresponding credit to revenue. If an ongoing service is identified as a part of the agreement, the period over which revenue shall be recognized for that service would be determined by the terms of the agreement with the customer. If the period is not clearly defined, then revenue should be recognized over a period no longer than the useful life of the transferred asset used to provide the ongoing service. This interpretation is to be applied prospectively to transfers of assets from customers received on or after July 1, 2009. Earlier application is permitted provided the valuations and other information needed to apply the information to past transfers were obtained at the time the transfer occurred. We would prospectively adopt this interpretation for all assets transferred after July 1, 2009. This Interpretation is not expected to have a significant impact on our consolidated financial statements. |
§ | IFRS 8, “Operating Segments” is applicable for annual periods beginning on or after July 1, 2009. This standard was early adopted by us as at March 31, 2009 as part of our initial transition to IFRS. IFRS 8 replaces IAS 14, “Segment Reporting”. IFRS 8 requires a “management approach”, under which segment information is presented on the same basis as that used for internal reporting provided to the chief operating decision maker. The application of this standard did not result in any significant change in our segmental disclosures as compared to our disclosures under U.S. GAAP (which is considered our previous GAAP under IFRS), which was substantially similar. Goodwill has been allocated in accordance with the requirements of this standard. |
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Year Ended March 31, | ||||||||
2009 | 2008 | |||||||
Rs. in millions | ||||||||
Net cash provided by/(used in): | ||||||||
Operating activities | Rs. | 4,505 | Rs. | 6,528 | ||||
Investing activities | (3,472 | ) | (9,367 | ) | ||||
Financing activities | (2,527 | ) | (7,865 | ) | ||||
Net increase/(decrease) in cash and cash equivalents | Rs. | (1,494 | ) | Rs. | (10,704 | ) | ||
Effect of exchange rate changes on cash | Rs. | (114 | ) | Rs. | (372 | ) | ||
• | Expenditures on property, plant and equipment of Rs.4,507 million during the year ended March 31, 2009, as compared to Rs.6,263 million in the year ended March 31, 2008; | ||
• | Net proceeds from sales of investment securities of Rs.4,377 million, as compared to a net expenditure for purchase of investment securities of Rs.3,382 million during the year ended March 31, 2008; and | ||
• | Cash paid for acquisition of businesses and our equity accounted investee of Rs.3,461 million during the year ended March 31, 2009. There were no such acquisitions during the year ended March 31, 2008. |
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Payments due by period | ||||||||||||||||||||
(Rs. in millions) | ||||||||||||||||||||
More | ||||||||||||||||||||
Less than | than | |||||||||||||||||||
Financial Contractual Obligations | Total | 1 year | 1-5 years | 5 years | Annual Interest Rate | |||||||||||||||
Short-term borrowings from banks | Rs. | 6,068 | Rs. | 6,068 | Rs. | — | — | 7.5% for rupee borrowings and LIBOR + 100 – 225 bps for foreign currency denominated loans | ||||||||||||
Long term debt | ||||||||||||||||||||
From Indian Renewable Energy Development Agency * | 7 | 6 | 1 | — | 2.00% | |||||||||||||||
Foreign currency loan (for betapharm acquisition) | 13,326 | 3,477 | 9,849 | — | EURIBOR + 70 bps LIBOR + 70 bps | |||||||||||||||
Total obligations | Rs. | 19,401 | Rs. | 9,551 | Rs. | 9,850 | — | |||||||||||||
* | Loan received at a subsidized rate of interest from Indian Renewable Energy Development Agency Limited promoting use of alternative sources of energy. |
• | Global Generics, where our research and development activities are directed at the development of product formulations, process validation, bioequivalence testing and other data needed to prepare a growing list of drugs that are equivalent to numerous brand name products for sale in the emerging markets or whose patents and regulatory exclusivity periods have expired or are nearing expiration in the highly regulated markets of the United States and Europe. Global Generics also include our biologics business, where research and development activities are directed at the development of biologics products for the emerging as well as highly regulated markets. Our new biologics research and development facility caters to the highest development standards, including cGMP, Good Laboratory Practices and bio-safety level IIA. |
• | Pharmaceutical Services and Active Ingredients, where our research and development activities concentrate on development of chemical processes for the synthesis of active pharmaceutical ingredients and intermediates (“API”) for use in our Global Generics |
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segment and for sales in the emerging and developed markets to third parties. Our research and development activities also support our custom pharmaceutical line of business, where we continue to leverage the strength of our process chemistry and finished dosage development expertise to target innovator as well as emerging pharmaceutical companies. The research and development is directed toward providing services to support the entire pharmaceutical value chain — from discovery all the way to the market. |
• | Proprietary Products, where we are actively pursuing discovery and development of NCEs. Our research programs focus on the following therapeutic areas: |
o | Metabolic disorders | ||
o | Cardiovascular disorders | ||
o | Bacterial infections |
• | In the years ended March 31, 2008 and 2009, we expended Rs.3,533 million and Rs.4,037 million, respectively, on research and development activities. |
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Payments Due by Period | ||||||||||||||||
(Rs. in millions) | ||||||||||||||||
Less than | More than | |||||||||||||||
Contractual Obligations | Total | 1 year | 1-5 years | 5 years | ||||||||||||
Operating lease obligations | 518 | 173 | 345 | — | ||||||||||||
Capital lease obligations | 300 | 18 | 44 | 238 | ||||||||||||
Purchase obligations | ||||||||||||||||
Agreements to purchase property and equipment and other capital commitments(1) | 996 | 996 | — | — | ||||||||||||
Borrowings from banks | 6,068 | 6,068 | — | — | ||||||||||||
Long term debt obligations | 13,333 | 3,483 | 9,850 | — | ||||||||||||
Estimated interest payable on long-term debt (2) | 529 | 271 | 258 | — | ||||||||||||
Post retirement benefits obligations (3) | 951 | 86 | 361 | 504 | ||||||||||||
Total contractual obligations | 22,814 | 11,095 | 10,977 | 742 |
(1) | These amounts are net of capital advances paid in respect of such purchases and are expected to be funded from internally generated funds. | |
(2) | Disclosure of estimated interest payments for future periods is only with respect to our long term debt obligations, as the projected interest payments with respect to our short term borrowings and other obligations cannot be reasonably estimated because they are subject to fluctuation in actual utilization of borrowings depending on our daily funding requirements. The estimated interest costs are based on March 31, 2009 applicable benchmark rates and are subject to fluctuation in the future. | |
(3) | Post retirement benefits obligations in the “More than 5 years” column are estimated for a maximum of 10 years. |
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Name(1) | Age (in yrs) | Position | ||||
Dr. K. Anji Reddy(2) | 70 | Chairman | ||||
Mr. G.V. Prasad(2),(3) | 49 | Chief Executive Officer and Vice Chairman | ||||
Mr. Satish Reddy(2),(4) | 42 | Chief Operating Officer and Managing Director | ||||
Mr. Anupam Puri | 63 | Director | ||||
Dr. J.P. Moreau | 61 | Director | ||||
Ms. Kalpana Morparia | 60 | Director | ||||
Dr. Omkar Goswami | 52 | Director | ||||
Mr. Ravi Bhoothalingam | 63 | Director | ||||
Dr. Bruce L. A. Carter (5) | 66 | Director |
(1) | Except for Dr. K. Anji Reddy, Mr. G.V. Prasad and Mr. Satish Reddy, all of the directors are independent directors under the corporate governance rules of the New York Stock Exchange. | |
(2) | Full-time director. | |
(3) | Son-in-law of Dr. K. Anji Reddy. | |
(4) | Son of Dr. K. Anji Reddy. | |
(5) | Dr. Bruce L. A. Carter joined the Board on July 21, 2008. |
Date of | ||||||||||||||
Education/ | Experience in | commencement of | Particulars of last | |||||||||||
Name and Designation | Degrees Held | Age | years | employment | employment | |||||||||
G.V. Prasad(1) Vice Chairman and Chief Executive Officer | B. Sc.(Chem. Eng.), M.S. (Indl. Admn.) | 49 | 25 | June 30, 1990 | Promoter Director, Benzex Labs Private Limited | |||||||||
Satish Reddy (2) Managing Director and Chief Operating Officer | B. Tech., M.S. (Medicinal Chemistry) | 42 | 17 | January 18, 1993 | Director, Globe Organics Limited | |||||||||
Abhijit Mukherjee President — Pharmaceutical Services and Active Ingredients | B. Tech. (Chem.) | 51 | 29 | January 15, 2003 | President, Atul Limited | |||||||||
Amit Patel, Senior Vice President — North America Generics | B.A.S, BS (Eco), MBA | 35 | 11 | August 6, 2003 | V P Corporate Development, CTIS Inc |
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Date of | ||||||||||||||
Education/ | Experience in | commencement of | Particulars of last | |||||||||||
Name and Designation | Degrees Held | Age | years | employment | employment | |||||||||
Dr. C. Cartikeya Reddy, Senior Vice President and Head of Biologics | B Tech, MS and PhD | 39 | 18 | July 20, 2004 | Senior Engineer, Genetech Inc. | |||||||||
Jaspal Singh Bajwa President — Branded Formulations (Rest Of the World)(3) | B.Sc., PGDM | 57 | 32 | April 10, 2003 | Executive Director and COO, Marico Industries Limited | |||||||||
Jeffrey Wasserstein Executive Vice President — Specialty Operations | B.A., J.D. | 50 | 26 | January 31, 2005 | EVP and Chief Business Officer - -Avigenics, Inc. | |||||||||
K. B. Sankara Rao Executive Vice President — Integrated Product Development | M. Pharma. | 55 | 31 | September 29, 1986 | Production Executive, Cipla Limited | |||||||||
Mr. Prabir Kumar Jha Senior Vice President and Global Chief of Human Resources | M.A., PGDM | 42 | 20 | November 29, 2002 | Regional HR Head-Mahindra British Telecom Ltd. | |||||||||
Raghu Cidambi Advisor | B.Sc., PGDBM, LLB. | 58 | 39 | October 1, 2001 | Director — Eenadu, Margadarsi Group | |||||||||
Dr. Rajinder Kumar President — Discovery Research, Development and Commercialization (4) | M.Sc., MBBS, PG Dip in Psychiatry and Neurology | 54 | 26 | April 30, 2007 | Chief Executive Officer and Founding Member, MeRaD Pharmaceuticals Ltd. | |||||||||
Saumen Chakraborty President – Corporate and Global Generics Operations | B.Sc. (H), PGDM | 48 | 25 | July 2, 2001 | Vice President, Tecumseh Products India Private Limited | |||||||||
V. S. Vasudevan President — European Generics Business | B. Com. ACA | 58 | 35 | April 1, 1986 | Finance Head, Standard Equity Fund Limited | |||||||||
Umang Vohra Chief Financial Officer | B.E., PGDM | 38 | 14 | February 18, 2002 | Manager, Pepsico India | |||||||||
Vilas Dholye Executive Vice President – Formulations Technical Operations | B.Tech (Chem) | 60 | 35 | December 18, 2000 | Vice President, Pidilite Industries Limited |
(1) | Son-in-law of Dr. K. Anji Reddy. | |
(2) | Son of Dr. K. Anji Reddy. | |
(3) | Ceased to be an employee effective as of May 31, 2009. | |
(4) | Ceased to be an employee effective as of June 30, 2009. |
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Number of | ||||||||||||||||||||||
Name of Directors | Attendance fees | Commission (3) | Salary | Perquisites | Total | Stock Options | ||||||||||||||||
Dr. K. Anji Reddy | Rs. — | Rs. | 75 | Rs. | 5 | Rs. | 1 | Rs. | 81 | — | ||||||||||||
Mr. G.V. Prasad | — | 40 | 4 | 1 | 45 | — | ||||||||||||||||
Mr. Satish Reddy | — | 40 | 4 | 1 | 45 | — | ||||||||||||||||
Mr. Anupam Puri | * | 3 | — | — | 3 | 3,000 | ||||||||||||||||
Dr. J.P. Moreau | * | 3 | — | — | 3 | 3,000 | ||||||||||||||||
Ms. Kalpana Morparia | * | 3 | — | — | 3 | 3,000 | ||||||||||||||||
Prof. Krishna G. Palepu (1) | * | 2 | — | — | 2 | — | ||||||||||||||||
Dr. Omkar Goswami | * | 3 | — | — | 3 | 3,000 | ||||||||||||||||
Mr. P.N. Devarajan | * | — | — | — | — | — | ||||||||||||||||
Mr. Ravi Bhoothalingam | * | 3 | — | — | 3 | 3,000 | ||||||||||||||||
Dr. Bruce L. A. Carter (2) | * | 2 | — | — | 2 | 3,000 |
* | Attendance fees were paid only to non-full time directors and ranged from Rs.10 thousand to Rs.70 thousand, depending upon their attendance in Board and committee meetings. As a result of rounding to the nearest million, such attendance fees do not appear in the above table. | |
(1) | Professor Krishna G. Palepu provided us with a notice of his resignation as a director and ceased to be a director effective January 20, 2009. | |
(2) | Dr. Bruce L. A. Carter joined as a member of our Board of Directors effective July 21, 2008. | |
(3) | For the year ended March 31, 2009, the Board of Directors recommended a fixed commission of Rs.2.5 million (U.S.$50,000) per director applicable to all the independent directors, a specific commission of Rs.0.5 million (U.S.$10,000) to the Chairman of the Audit Committee, Rs.0.3 million (U.S.$5,000) to the Chairman of each other Committee, and Rs.0.08 million (U.S.$1,500) to the members of each Committee. In addition, Rs.0.08 million (U.S.$1,500) was paid towards foreign travel to the directors residing outside India. |
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Compensation | Expiration | |||||||||||||||||||
(Rs. in | No. of Options | Fiscal Year of | Exercise | date | ||||||||||||||||
Name | millions) | held | Grant | Price (Rs.) | (See note no.) | |||||||||||||||
Abhijit Mukherjee | 14.6 | 2,500 | 2006 | 5 | (4 | ) | ||||||||||||||
2,000 | 2007 | 5 | (3 | ) | ||||||||||||||||
2,000 | 2007 | 5 | (4 | ) | ||||||||||||||||
2,000 | 2008 | 5 | (2 | ) | ||||||||||||||||
2,000 | 2008 | 5 | (3 | ) | ||||||||||||||||
2,000 | 2008 | 5 | (4 | ) | ||||||||||||||||
2,000 | 2009 | 5 | (1 | ) | ||||||||||||||||
2,000 | 2009 | 5 | (2 | ) | ||||||||||||||||
2,000 | 2009 | 5 | (3 | ) | ||||||||||||||||
2,000 | 2009 | 5 | (4 | ) | ||||||||||||||||
Amit Patel | 18.0 | 1,000 | 2005 | 442.50 | (1 | ) | ||||||||||||||
1,000 | 2005 | 442.50 | (2 | ) | ||||||||||||||||
1,000 | 2005 | 442.50 | (3 | ) | ||||||||||||||||
1,000 | 2005 | 442.50 | (4 | ) | ||||||||||||||||
700 | 2006 | 5 | (1 | ) | ||||||||||||||||
700 | 2006 | 5 | (2 | ) | ||||||||||||||||
1,250 | 2007 | 5 | (1 | ) | ||||||||||||||||
3,325 | 2008 | 5 | (1 | ) | ||||||||||||||||
3,325 | 2008 | 5 | (2 | ) | ||||||||||||||||
2,625 | 2008 | 5 | (3 | ) | ||||||||||||||||
1,375 | 2008 | 5 | (4 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (1 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (2 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (3 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (4 | ) | ||||||||||||||||
Cartikeya Reddy | 8.8 | 600 | 2006 | 5 | (1 | ) | ||||||||||||||
600 | 2006 | 5 | (2 | ) | ||||||||||||||||
600 | 2006 | 5 | (3 | ) | ||||||||||||||||
600 | 2006 | 5 | (4 | ) | ||||||||||||||||
500 | 2007 | 5 | (1 | ) | ||||||||||||||||
500 | 2007 | 5 | (2 | ) | ||||||||||||||||
500 | 2007 | 5 | (3 | ) | ||||||||||||||||
500 | 2007 | 5 | (4 | ) | ||||||||||||||||
1,000 | 2008 | 5 | (1 | ) | ||||||||||||||||
1,000 | 2008 | 5 | (2 | ) | ||||||||||||||||
1,000 | 2008 | 5 | (3 | ) | ||||||||||||||||
1,000 | 2008 | 5 | (4 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (1 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (2 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (3 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (4 | ) | ||||||||||||||||
Dr. Rajinder Kumar | 36.0 | 7,500 | 2008 | 5 | (1 | ) | ||||||||||||||
1,500 | 2009 | 5 | (1 | ) | ||||||||||||||||
1,500 | 2009 | 5 | (2 | ) |
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Compensation | Expiration | |||||||||||||||||||
(Rs. in | No. of Options | Fiscal Year of | Exercise | date | ||||||||||||||||
Name | millions) | held | Grant | Price (Rs.) | (See note no.) | |||||||||||||||
1,500 | 2009 | 5 | (3 | ) | ||||||||||||||||
1,500 | 2009 | 5 | (4 | ) | ||||||||||||||||
Jaspal S. Bajwa | 14.0 | 2,500 | 2006 | 5 | (4 | ) | ||||||||||||||
2,000 | 2007 | 5 | (3 | ) | ||||||||||||||||
2,000 | 2007 | 5 | (4 | ) | ||||||||||||||||
2,000 | 2008 | 5 | (2 | ) | ||||||||||||||||
2,000 | 2008 | 5 | (3 | ) | ||||||||||||||||
2,000 | 2008 | 5 | (4 | ) | ||||||||||||||||
2,000 | 2009 | 5 | (1 | ) | ||||||||||||||||
2,000 | 2009 | 5 | (2 | ) | ||||||||||||||||
2,000 | 2009 | 5 | (3 | ) | ||||||||||||||||
2,000 | 2009 | 5 | (4 | ) | ||||||||||||||||
Jeffrey Wasserstein | 24.3 | 3,500 | 2008 | 5 | (2 | ) | ||||||||||||||
3,500 | 2008 | 5 | (3 | ) | ||||||||||||||||
1,500 | 2008 | 5 | (4 | ) | ||||||||||||||||
1,500 | 2009 | 5 | (1 | ) | ||||||||||||||||
1,500 | 2009 | 5 | (2 | ) | ||||||||||||||||
1,500 | 2009 | 5 | (3 | ) | ||||||||||||||||
1,500 | 2009 | 5 | (4 | ) | ||||||||||||||||
K. B. Sankara Rao | 9.8 | 5,080 | 2006 | 5 | (4 | ) | ||||||||||||||
1,600 | 2007 | 5 | (3 | ) | ||||||||||||||||
1,600 | 2007 | 5 | (4 | ) | ||||||||||||||||
1,500 | 2008 | 5 | (2 | ) | ||||||||||||||||
1,500 | 2008 | 5 | (3 | ) | ||||||||||||||||
1,500 | 2008 | 5 | (4 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (1 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (2 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (3 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (4 | ) | ||||||||||||||||
Prabir Kumar Jha | 8.4 | 750 | 2006 | 5 | (4 | ) | ||||||||||||||
650 | 2007 | 5 | (3 | ) | ||||||||||||||||
650 | 2007 | 5 | (4 | ) | ||||||||||||||||
1,000 | 2008 | 5 | (2 | ) | ||||||||||||||||
1,000 | 2008 | 5 | (3 | ) | ||||||||||||||||
1,000 | 2008 | 5 | (4 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (1 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (2 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (3 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (4 | ) | ||||||||||||||||
Raghu Cidambi | 9.0 | 2,500 | 2006 | 5 | (4 | ) | ||||||||||||||
1,250 | 2007 | 5 | (3 | ) | ||||||||||||||||
1,250 | 2007 | 5 | (4 | ) | ||||||||||||||||
1,500 | 2008 | 5 | (2 | ) | ||||||||||||||||
1,500 | 2008 | 5 | (3 | ) | ||||||||||||||||
1,500 | 2008 | 5 | (4 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (1 | ) |
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Compensation | Expiration | |||||||||||||||||||
(Rs. in | No. of Options | Fiscal Year of | Exercise | date | ||||||||||||||||
Name | millions) | held | Grant | Price (Rs.) | (See note no.) | |||||||||||||||
1,250 | 2009 | 5 | (2 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (3 | ) | ||||||||||||||||
1,250 | 2009 | 5 | (4 | ) | ||||||||||||||||
Saumen Chakraborty | 15.0 | 2,500 | 2006 | 5 | (4 | ) | ||||||||||||||
2,000 | 2007 | 5 | (3 | ) | ||||||||||||||||
2,000 | 2007 | 5 | (4 | ) | ||||||||||||||||
2,000 | 2008 | 5 | (2 | ) | ||||||||||||||||
2,000 | 2008 | 5 | (3 | ) | ||||||||||||||||
2,000 | 2008 | 5 | (4 | ) | ||||||||||||||||
2,000 | 2009 | 5 | (1 | ) | ||||||||||||||||
2,000 | 2009 | 5 | (2 | ) | ||||||||||||||||
2,000 | 2009 | 5 | (3 | ) | ||||||||||||||||
2,000 | 2009 | 5 | (4 | ) | ||||||||||||||||
Umang Vohra | 5.5 | 600 | 2006 | 5 | (4 | ) | ||||||||||||||
750 | 2007 | 5 | (3 | ) | ||||||||||||||||
750 | 2007 | 5 | (4 | ) | ||||||||||||||||
750 | 2008 | 5 | (2 | ) | ||||||||||||||||
750 | 2008 | 5 | (3 | ) | ||||||||||||||||
750 | 2008 | 5 | (4 | ) | ||||||||||||||||
875 | 2009 | 5 | (1 | ) | ||||||||||||||||
875 | 2009 | 5 | (2 | ) | ||||||||||||||||
875 | 2009 | 5 | (3 | ) | ||||||||||||||||
875 | 2009 | 5 | (4 | ) | ||||||||||||||||
V.S. Vasudevan | 24.2 | 2,870 | 2003 | 531.51 | (2 | ) | ||||||||||||||
2,870 | 2003 | 531.51 | (3 | ) | ||||||||||||||||
2,870 | 2003 | 531.51 | (4 | ) | ||||||||||||||||
5,000 | 2004 | 441.50 | (1 | ) | ||||||||||||||||
5,000 | 2004 | 441.50 | (2 | ) | ||||||||||||||||
5,000 | 2004 | 441.50 | (3 | ) | ||||||||||||||||
5,000 | 2004 | 441.50 | (4 | ) | ||||||||||||||||
5,000 | 2005 | 442.50 | (1 | ) | ||||||||||||||||
5,000 | 2005 | 442.50 | (2 | ) | ||||||||||||||||
5,000 | 2005 | 442.50 | (3 | ) | ||||||||||||||||
5,000 | 2005 | 442.50 | (4 | ) | ||||||||||||||||
12,500 | 2006 | 362.50 | (1 | ) | ||||||||||||||||
12,500 | 2006 | 362.50 | (2 | ) | ||||||||||||||||
12,500 | 2006 | 362.50 | (3 | ) | ||||||||||||||||
12,500 | 2006 | 362.50 | (4 | ) | ||||||||||||||||
2,000 | 2007 | 5 | (3 | ) | ||||||||||||||||
2,000 | 2007 | 5 | (4 | ) | ||||||||||||||||
1,750 | 2008 | 5 | (2 | ) | ||||||||||||||||
1,750 | 2008 | 5 | (3 | ) | ||||||||||||||||
1,750 | 2008 | 5 | (4 | ) | ||||||||||||||||
1,500 | 2009 | 5 | (1 | ) | ||||||||||||||||
1,500 | 2009 | 5 | (2 | ) | ||||||||||||||||
1,500 | 2009 | 5 | (3 | ) |
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Compensation | Expiration | |||||||||||||||||||
(Rs. in | No. of Options | Fiscal Year of | Exercise | date | ||||||||||||||||
Name | millions) | held | Grant | Price (Rs.) | (See note no.) | |||||||||||||||
1,500 | 2009 | 5 | (4 | ) | ||||||||||||||||
Vilas M. Dholye | 7.2 | 2,770 | 2005 | 5 | (4 | ) | ||||||||||||||
900 | 2006 | 5 | (4 | ) | ||||||||||||||||
600 | 2007 | 5 | (3 | ) | ||||||||||||||||
600 | 2007 | 5 | (4 | ) | ||||||||||||||||
700 | 2008 | 5 | (2 | ) | ||||||||||||||||
700 | 2008 | 5 | (3 | ) | ||||||||||||||||
700 | 2008 | 5 | (4 | ) | ||||||||||||||||
400 | 2009 | 5 | (1 | ) | ||||||||||||||||
400 | 2009 | 5 | (2 | ) | ||||||||||||||||
400 | 2009 | 5 | (3 | ) | ||||||||||||||||
400 | 2009 | 5 | (4 | ) |
(1) | The expiration date is five years from the date of vesting. The options vest in one year. | |
(2) | The expiration date is five years from the date of vesting. The options vest in two years. | |
(3) | The expiration date is five years from the date of vesting. The options vest in three years. | |
(4) | The expiration date is five years from the date of vesting. The options vest in four years. |
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Expiration of Current | ||||||
Name | Term of Office | Term of Office | Period of Service | |||
Dr. K. Anji Reddy (1) | July 12, 2011 | 5 years | 25 years | |||
Mr. Satish Reddy (1) | September 30, 2012 | 5 years | 16 years | |||
Mr. G.V. Prasad (1) | January 30, 2011 | 5 years | 23 years | |||
Mr. Anupam Puri (2)(3) | Retirement by rotation | Due for retirement by rotation in 2011 | 7 years | |||
Dr. J. P. Moreau(2) | Retirement by rotation | Due for retirement by rotation in 2010 | 2 years | |||
Ms. Kalpana Morparia(2) | Retirement by rotation | Due for retirement by rotation in 2010 | 2 years | |||
Dr. Omkar Goswami (2) | Retirement by rotation | Due for retirement by rotation in 2009 | 8.5 years | |||
Mr. Ravi Bhoothalingam (2) | Retirement by rotation | Due for retirement by rotation in 2009 | 8.5 years | |||
Dr. Bruce L. A. Carter (2) | Retirement by rotation | Due for retirement by rotation in 2011 | 1 year |
(1) | Full time director. | |
(2) | Non-full time independent director. | |
(3) | Reappointed at the 24th Annual General Meeting of Shareholders held on July 22, 2008. |
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Table of Contents
• | Audit Committee. | ||
• | Compensation Committee. | ||
• | Governance Committee. | ||
• | Shareholders’ Grievance Committee. | ||
• | Management Committee. | ||
• | Investment Committee. |
• | Dr. Omkar Goswami (Chairman); | ||
• | Ms. Kalpana Morparia; and | ||
• | Mr. Ravi Bhoothalingam. |
• | Supervise the financial reporting process; | ||
• | Review our financial results, along with the related public filings, before recommending them to the Board; | ||
• | Review the adequacy of our internal controls, including the plan, scope and performance of our internal audit function; | ||
• | Discuss with management our major policies with respect to risk assessment and risk management; | ||
• | Hold discussions with our independent registered public accounting firm on the nature and scope of audits, and any views that they have about the financial control and reporting processes; | ||
• | Ensure compliance with accounting standards, and with listing requirements with respect to the financial statements; | ||
• | Recommend the appointment and removal of our independent registered public accounting firm and their fees; | ||
• | Review the independence of our independent registered public accounting firm; | ||
• | Ensure that adequate safeguards have been taken for legal compliance both for us and for our Indian and foreign subsidiaries; | ||
• | Review related party transactions; and | ||
• | Review the functioning of our whistle blower policies and procedures. |
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Table of Contents
• | Mr. Ravi Bhoothalingam (Chairman); | ||
• | Dr. J.P. Moreau; and | ||
• | Ms. Kalpana Morparia. |
• | Mr. Anupam Puri (Chairman); and | ||
• | Dr. Omkar Goswami. |
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Table of Contents
Rest of the | ||||||||||||||||
North America | Europe | World | Total | |||||||||||||
Manufacturing(1) | 105 | 89 | 3,686 | 3,880 | ||||||||||||
Sales and Marketing(2) | 85 | 235 | 3,594 | 3,914 | ||||||||||||
Research and Development | 18 | 24 | 1,455 | 1,497 | ||||||||||||
Others(3) | 121 | 197 | 1,619 | 1,937 | ||||||||||||
Total | 329 | 545 | 10,354 | 11,228 | ||||||||||||
Rest of the | ||||||||||||||||
North America | Europe | World | Total | |||||||||||||
Manufacturing(1) | — | 50 | 3,276 | 3,326 | ||||||||||||
Sales and Marketing(2) | 45 | 261 | 3,079 | 3,385 | ||||||||||||
Research and Development | 18 | — | 1,708 | 1,726 | ||||||||||||
Others(3) | 46 | 184 | 908 | 1,138 | ||||||||||||
Total | 109 | 495 | 8,971 | 9,575 | ||||||||||||
(1) | Includes quality, technical services and warehouse. | |
(2) | Includes business development. | |
(3) | Includes shared services, corporate business development and the intellectual property management team. |
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No. of Shares | % of Outstanding | No. of Options | Year of | Exercise | Expiration Date | |||||||||||||||||||
Name | Held (1), (3) | Capital | Held | Grant | Price | (See note no.) | ||||||||||||||||||
Dr. K. Anji Reddy (2),(4) | 800,956 | 0.48 | % | — | — | — | — | |||||||||||||||||
Mr. G.V. Prasad (4) | 1,365,840 | 0.81 | % | — | — | — | — | |||||||||||||||||
Mr. Satish Reddy (4) | 1,205,832 | 0.72 | % | — | — | — | — | |||||||||||||||||
Mr. Anupam Puri (including ADRs) | 10,500 | 0.01 | % | 1,500 | 2008 | 5 | (6 | ) | ||||||||||||||||
3,000 | 2009 | 5 | (5 | ) | ||||||||||||||||||||
Dr. J.P.Moreau | — | — | 3,000 | 2009 | 5 | (5 | ) | |||||||||||||||||
Dr. Omkar Goswami | 10,500 | .0.01 | % | 1,500 | 2006 | 5 | (8 | ) | ||||||||||||||||
3,000 | 2009 | 5 | (5 | ) | ||||||||||||||||||||
Ms.Kalpana Morparia | — | — | 3,000 | 2009 | 5 | (5 | ) | |||||||||||||||||
Ravi Bhoothalingam | 10,500 | 0.01 | % | 1,500 | 2006 | 5 | (8 | ) | ||||||||||||||||
3,000 | 2009 | 5 | (5 | ) | ||||||||||||||||||||
Dr. Bruce L.A.Carter (ADRs) | 4,000 | — | — | — | — | — | ||||||||||||||||||
Abhijit Mukherjee | 26,400 | 0.02 | % | 2,500 | 2006 | 5 | (8 | ) | ||||||||||||||||
2,000 | 2007 | 5 | (7 | ) | ||||||||||||||||||||
2,000 | 2007 | 5 | (8 | ) | ||||||||||||||||||||
2,000 | 2008 | 5 | (6 | ) | ||||||||||||||||||||
2,000 | 2008 | 5 | (7 | ) | ||||||||||||||||||||
2,000 | 2008 | 5 | (8 | ) | ||||||||||||||||||||
2,000 | 2009 | 5 | (5 | ) | ||||||||||||||||||||
2,000 | 2009 | 5 | (6 | ) | ||||||||||||||||||||
2,000 | 2009 | 5 | (7 | ) | ||||||||||||||||||||
2,000 | 2009 | 5 | (8 | ) | ||||||||||||||||||||
Amit Patel | — | — | 1,000 | 2005 | 442.50 | (5 | ) | |||||||||||||||||
1,000 | 2005 | 442.50 | (6 | ) | ||||||||||||||||||||
1,000 | 2005 | 442.50 | (7 | ) | ||||||||||||||||||||
1,000 | 2005 | 442.50 | (8 | ) | ||||||||||||||||||||
700 | 2006 | 5 | (5 | ) | ||||||||||||||||||||
700 | 2006 | 5 | (6 | ) | ||||||||||||||||||||
1,250 | 2007 | 5 | (5 | ) | ||||||||||||||||||||
3,325 | 2008 | 5 | (5 | ) | ||||||||||||||||||||
3,325 | 2008 | 5 | (6 | ) | ||||||||||||||||||||
2,625 | 2008 | 5 | (7 | ) | ||||||||||||||||||||
1,375 | 2008 | 5 | (8 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (5 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (6 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (7 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (8 | ) |
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Table of Contents
No. of Shares | % of Outstanding | No. of Options | Year of | Exercise | Expiration Date | |||||||||||||||||||
Name | Held (1), (3) | Capital | Held | Grant | Price | (See note no.) | ||||||||||||||||||
Cartikeya Reddy | — | — | 600 | 2006 | 5 | (5 | ) | |||||||||||||||||
600 | 2006 | 5 | (6 | ) | ||||||||||||||||||||
600 | 2006 | 5 | (7 | ) | ||||||||||||||||||||
600 | 2006 | 5 | (8 | ) | ||||||||||||||||||||
500 | 2007 | 5 | (5 | ) | ||||||||||||||||||||
500 | 2007 | 5 | (6 | ) | ||||||||||||||||||||
500 | 2007 | 5 | (7 | ) | ||||||||||||||||||||
500 | 2007 | 5 | (8 | ) | ||||||||||||||||||||
1,000 | 2008 | 5 | (5 | ) | ||||||||||||||||||||
1,000 | 2008 | 5 | (6 | ) | ||||||||||||||||||||
1,000 | 2008 | 5 | (7 | ) | ||||||||||||||||||||
1,000 | 2008 | 5 | (8 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (6 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (6 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (7 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (8 | ) | ||||||||||||||||||||
Dr. Rajinder Kumar | — | — | 7,500 | 2008 | 5 | (5 | ) | |||||||||||||||||
1,500 | 2009 | 5 | (5 | ) | ||||||||||||||||||||
1,500 | 2009 | 5 | (6 | ) | ||||||||||||||||||||
1,500 | 2009 | 5 | (7 | ) | ||||||||||||||||||||
1,500 | 2009 | 5 | (8 | ) | ||||||||||||||||||||
Jaspal S Bajwa | 20,000 | 0.02 | % | 2,500 | 2006 | 5 | (8 | ) | ||||||||||||||||
2,000 | 2007 | 5 | (7 | ) | ||||||||||||||||||||
2,000 | 2007 | 5 | (8 | ) | ||||||||||||||||||||
2,000 | 2008 | 5 | (6 | ) | ||||||||||||||||||||
2,000 | 2008 | 5 | (7 | ) | ||||||||||||||||||||
2,000 | 2008 | 5 | (8 | ) | ||||||||||||||||||||
2,000 | 2009 | 5 | (5 | ) | ||||||||||||||||||||
2,000 | 2009 | 5 | (6 | ) | ||||||||||||||||||||
2,000 | 2009 | 5 | (7 | ) | ||||||||||||||||||||
2,000 | 2009 | 5 | (8 | ) | ||||||||||||||||||||
Jeffrey Wasserstein | — | — | 3,500 | 2008 | 5 | (6 | ) | |||||||||||||||||
3,500 | 2008 | 5 | (7 | ) | ||||||||||||||||||||
1,500 | 2008 | 5 | (8 | ) | ||||||||||||||||||||
1,500 | 2009 | 5 | (5 | ) | ||||||||||||||||||||
1,500 | 2009 | 5 | (6 | ) | ||||||||||||||||||||
1,500 | 2009 | 5 | (7 | ) | ||||||||||||||||||||
1,500 | 2009 | 5 | (8 | ) |
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No. of Shares | % of Outstanding | No. of Options | Year of | Exercise | Expiration Date | |||||||||||||||||||
Name | Held (1), (3) | Capital | Held | Grant | Price | (See note no.) | ||||||||||||||||||
K. B. Sankara Rao | 55,724 | 0.04 | % | 5,080 | 2006 | 5 | (8 | ) | ||||||||||||||||
1,600 | 2007 | 5 | (7 | ) | ||||||||||||||||||||
1,600 | 2007 | 5 | (8 | ) | ||||||||||||||||||||
1,500 | 2008 | 5 | (6 | ) | ||||||||||||||||||||
1,500 | 2008 | 5 | (7 | ) | ||||||||||||||||||||
1,500 | 2008 | 5 | (8 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (5 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (6 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (7 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (8 | ) | ||||||||||||||||||||
Prabir Kumar Jha | 7,750 | 0.01 | % | 750 | 2006 | 5 | (8 | ) | ||||||||||||||||
650 | 2007 | 5 | (8 | ) | ||||||||||||||||||||
650 | 2007 | 5 | (8 | ) | ||||||||||||||||||||
1,000 | 2008 | 5 | (6 | ) | ||||||||||||||||||||
1,000 | 2008 | 5 | (7 | ) | ||||||||||||||||||||
1,000 | 2008 | 5 | (8 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (5 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (6 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (7 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (8 | ) | ||||||||||||||||||||
Raghu Cidambi | 27,500 | 0.02 | % | 2,500 | 2006 | 5 | (8 | ) | ||||||||||||||||
1,250 | 2007 | 5 | (7 | ) | ||||||||||||||||||||
1,250 | 2007 | 5 | (8 | ) | ||||||||||||||||||||
1,500 | 2008 | 5 | (6 | ) | ||||||||||||||||||||
1,500 | 2008 | 5 | (7 | ) | ||||||||||||||||||||
1,500 | 2008 | 5 | (8 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (5 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (6 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (7 | ) | ||||||||||||||||||||
1,250 | 2009 | 5 | (8 | ) | ||||||||||||||||||||
Saumen Chakraborty | 42,900 | 0.03 | % | 2,500 | 2006 | 5 | (8 | ) | ||||||||||||||||
2,000 | 2007 | 5 | (7 | ) | ||||||||||||||||||||
2,000 | 2007 | 5 | (8 | ) | ||||||||||||||||||||
2,000 | 2008 | 5 | (6 | ) | ||||||||||||||||||||
2,000 | 2008 | 5 | (7 | ) | ||||||||||||||||||||
2,000 | 2008 | 5 | (8 | ) | ||||||||||||||||||||
2,000 | 2009 | 5 | (5 | ) | ||||||||||||||||||||
2,000 | 2009 | 5 | (6 | ) | ||||||||||||||||||||
2,000 | 2009 | 5 | (7 | ) | ||||||||||||||||||||
2,000 | 2009 | 5 | (8 | ) |
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No. of Shares | % of Outstanding | No. of Options | Year of | Exercise | Expiration Date | |||||||||||||||||||
Name | Held (1), (3) | Capital | Held | Grant | Price | (See note no.) | ||||||||||||||||||
Umang Vohra | 5,390 | — | 600 | 2006 | 5 | (8 | ) | |||||||||||||||||
750 | 2007 | 5 | (7 | ) | ||||||||||||||||||||
750 | 2007 | 5 | (8 | ) | ||||||||||||||||||||
750 | 2008 | 5 | (6 | ) | ||||||||||||||||||||
750 | 2008 | 5 | (7 | ) | ||||||||||||||||||||
750 | 2008 | 5 | (8 | ) | ||||||||||||||||||||
875 | 2009 | 5 | (5 | ) | ||||||||||||||||||||
875 | 2009 | 5 | (6 | ) | ||||||||||||||||||||
875 | 2009 | 5 | (7 | ) | ||||||||||||||||||||
875 | 2009 | 5 | (8 | ) | ||||||||||||||||||||
V. S. Vasudevan | 8,620 | 0.01 | % | 2,870 | 2003 | 531.51 | (6 | ) | ||||||||||||||||
2,870 | 2003 | 531.51 | (7 | ) | ||||||||||||||||||||
2,870 | 2003 | 531.51 | (8 | ) | ||||||||||||||||||||
5,000 | 2004 | 441.50 | (5 | ) | ||||||||||||||||||||
5,000 | 2004 | 441.50 | (6 | ) | ||||||||||||||||||||
5,000 | 2004 | 441.50 | (7 | ) | ||||||||||||||||||||
5,000 | 2004 | 441.50 | (8 | ) | ||||||||||||||||||||
5,000 | 2005 | 442.50 | (5 | ) | ||||||||||||||||||||
5,000 | 2005 | 442.50 | (6 | ) | ||||||||||||||||||||
5,000 | 2005 | 442.50 | (7 | ) | ||||||||||||||||||||
5,000 | 2005 | 442.50 | (8 | ) | ||||||||||||||||||||
12,500 | 2006 | 362.50 | (5 | ) | ||||||||||||||||||||
12,500 | 2006 | 362.50 | (6 | ) | ||||||||||||||||||||
12,500 | 2006 | 362.50 | (7 | ) | ||||||||||||||||||||
12,500 | 2006 | 362.50 | (8 | ) | ||||||||||||||||||||
2,000 | 2007 | 5 | (7 | ) | ||||||||||||||||||||
2,000 | 2007 | 5 | (8 | ) | ||||||||||||||||||||
1,750 | 2008 | 5 | (6 | ) | ||||||||||||||||||||
1,750 | 2008 | 5 | (7 | ) | ||||||||||||||||||||
1,750 | 2008 | 5 | (8 | ) | ||||||||||||||||||||
1,500 | 2009 | 5 | (5 | ) | ||||||||||||||||||||
1,500 | 2009 | 5 | (6 | ) | ||||||||||||||||||||
1,500 | 2009 | 5 | (7 | ) | ||||||||||||||||||||
1,500 | 2009 | 5 | (8 | ) | ||||||||||||||||||||
Vilas M. Dholye | 4,970 | — | 2,770 | 2005 | 5 | (8 | ) | |||||||||||||||||
900 | 2006 | 5 | (8 | ) | ||||||||||||||||||||
600 | 2007 | 5 | (7 | ) | ||||||||||||||||||||
600 | 2007 | 5 | (8 | ) | ||||||||||||||||||||
700 | 2008 | 5 | (6 | ) | ||||||||||||||||||||
700 | 2008 | 5 | (7 | ) | ||||||||||||||||||||
700 | 2008 | 5 | (8 | ) | ||||||||||||||||||||
400 | 2009 | 5 | (5 | ) | ||||||||||||||||||||
400 | 2009 | 5 | (6 | ) | ||||||||||||||||||||
400 | 2009 | 5 | (7 | ) | ||||||||||||||||||||
400 | 2009 | 5 | (8 | ) |
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(1) | Shares held in their individual name only. | |
(2) | Does not include shares held beneficially. See Item 7.A. for beneficial ownership of shares by this individual. | |
(3) | All shares have voting rights. | |
(4) | Not eligible for grant of Stock Options. | |
(5) | The expiration date is five years from the date of vesting. The options vest in one year. | |
(6) | The expiration date is five years from the date of vesting. The options vest in two years. | |
(7) | The expiration date is five years from the date of vesting. The options vest in three years. | |
(8) | The expiration date is five years from the date of vesting. The options vest in four years. |
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• | Dr. K. Anji Reddy (Chairman), | ||
• | Mr. G .V. Prasad (Vice Chairman and Chief Executive Officer), | ||
• | Mr. Satish Reddy (Managing Director and Chief Operating Officer), | ||
• | Mrs. K. Samrajyam, wife of Dr. K. Anji Reddy, and Mrs. G. Anuradha, wife of Mr. G.V. Prasad (hereafter collectively referred as the “Family Members”), and | ||
• | Dr. Reddy’s Holdings Private Limited (a company in which Dr. K. Anji Reddy owns 40% of the equity and the remainder is held by Mr. G.V. Prasad, Mr. Satish Reddy and the Family Members) |
Equity Shares Beneficially Owned (1) | ||||||||
Number | Percentage | |||||||
Name | of Shares | of Shares | ||||||
Dr. K. Anji Reddy (2) | 40,779,284 | 24.21 | % | |||||
Mr. G.V. Prasad | 1,365,840 | 0.81 | % | |||||
Mr. Satish Reddy | 1,205,832 | 0.72 | % | |||||
Family Members | 1,116,856 | 0.66 | % | |||||
Subtotal | 44,467,812 | 26.40 | % | |||||
Others/public float | 124,000,965 | 73.60 | % | |||||
Total number of shares outstanding | 168,468,777 | 100.00 | % | |||||
(1) | Beneficial ownership is determined in accordance with rules of the U.S. Securities and Exchange Commission, which provides that shares are beneficially owned by any person who has or shares voting or investment power with respect to the shares. All information with respect to the beneficial ownership of any principal shareholder has been furnished by that shareholder and, unless otherwise indicated below, we believe that persons named in the table have sole voting and sole investment power with respect to all shares shown as beneficially owned, subject to community property laws where applicable. | |
(2) | Dr. Reddy’s Holdings Private Limited owns 39,978,328 of our equity shares. Dr. K. Anji Reddy owns 40% of Dr. Reddy’s Holdings Private Limited. The remainder is owned by Mr. G.V. Prasad, Mr. Satish Reddy and the Family Members. The entire amount beneficially owned by Dr. Reddy’s Holdings Private Limited is included in the amount shown as beneficially owned by Dr. K. Anji Reddy. An aggregate of 11,859,009 of such equity shares were pledged as on March 31, 2009. |
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March 31, 2009 | March 31, 2008 | March 31, 2007 | ||||||||||||||||||||||
No. of equity | % of equity | No. of equity | % of equity | No. of equity | % of equity | |||||||||||||||||||
Name | shares held | shares held | shares held | shares held | shares held | shares held | ||||||||||||||||||
Dr. Reddy’s Holdings Pvt. Limited | 39,978,328 | 23.74 | 37,798,290 | 22.48 | 37,798,290 | 22.51 | ||||||||||||||||||
Life Insurance Corporation of India | 21,723,498 | 12.89 | 20,619,743 | 12.26 | 13,323,325 | 7.93 |
• | Diana Hotels Limited for hotel services; | ||
• | A.R. Life Sciences Private Limited for processing services of raw materials and intermediates; | ||
• | Dr. Reddy’s Holdings Private Limited for the purchase and sale of active pharmaceutical ingredients; | ||
• | Dr. Reddy’s Foundation for Human and Social Development towards contributions for social development; | ||
• | Institute of Life Science towards contributions for social development; | ||
• | K.K Enterprises for packaging services for formulation products; | ||
• | SR Enterprises for transportation services; and | ||
• | Dr. Reddy’s Laboratories Gratuity Fund. |
(Amounts in Rs. Millions) | ||||||||
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Purchases from significant interest entities in the ordinary course | Rs. | 290 | Rs. | 219 | ||||
Sales to significant interest entities in the ordinary course | 135 | 88 | ||||||
Contribution to a significant interest entity towards social development and research and development | 124 | 114 | ||||||
Hotel expenses paid to significant interest entities | 13 | 13 | ||||||
Advances paid to significant interest entities for purchase of land (1) | 400 | 680 | ||||||
Short term loan taken from and repaid to significant interest entities | 60 | — | ||||||
Interest paid on loan taken from significant interest entities | 2 | — |
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Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Revenue from equity accounted investees | Rs.— | Rs.40 | ||||||
Reimbursement of research and development expenses from equity accounted investees | — | 90 | ||||||
Compensation paid to key management personnel | 460 | 464 | ||||||
Lease rental paid under cancellable operating leases to directors and their relatives | 26 | 25 |
(1) | This does not include amounts paid as at March 31, 2009 and 2008 of Rs.1,080 million and Rs.680 million, respectively, as advances towards the purchase of land from significant interest entities, which has been recorded under capital work-in-progress in our balance sheets. |
(Amounts in Rs. millions) | ||||||||
As at March 31, | ||||||||
2009 | 2008 | |||||||
Significant interest entities | Rs. | 43 | Rs. | 26 | ||||
Equity accounted investees | — | 27 | ||||||
Key management personnel | 5 | 5 | ||||||
We have the following amounts due to related parties: |
(Amounts in Rs. millions) | ||||||||
As at March 31, | ||||||||
2009 | 2008 | |||||||
Significant interest entities | Rs. | 68 | Rs. | 17 |
• | Report of Independent Registered Public Accounting Firm | ||
• | Consolidated balance sheets as of March 31, 2009 and 2008 | ||
• | Consolidated income statements for the years ended March 31, 2009 and 2008 | ||
• | Consolidated statements of changes in equity for the years ended March 31, 2009 and 2008 | ||
• | Consolidated cash flow statements for the years ended March 31, 2009 and 2008 | ||
• | Notes to the consolidated financial statements |
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BSE | NYSE | |||||||||||||||
Year | Price Per Equity Share(1) | Price Per ADS(1) | ||||||||||||||
Ended March 31, | High (Rs.) | Low (Rs.) | High (U.S.$) | Low (U.S.$) | ||||||||||||
2009 | 739.00 | 357.00 | 16.95 | 7.27 | ||||||||||||
2008 | 760.00 | 501.00 | 18.66 | 13.07 | ||||||||||||
2007 | 877.00 | 608.00 | 19.06 | 12.31 | ||||||||||||
2006 | 756.50 | 306.50 | 16.67 | 7.46 | ||||||||||||
2005 | 501.45 | 326.25 | 12.40 | 7.53 |
BSE | NYSE | |||||||||||||||
Price Per Equity Share | Price Per ADS | |||||||||||||||
Quarter Ended | High (Rs.) | Low (Rs.) | High (U.S.$) | Low (U.S.$) | ||||||||||||
June 30, 2007 | 757.00 | 608.90 | 17.49 | 14.97 | ||||||||||||
September 30, 2007 | 694.00 | 603.30 | 17.04 | 14.83 | ||||||||||||
December 31, 2007 | 748.00 | 580.00 | 18.52 | 14.76 | ||||||||||||
March 31, 2008 | 760.00 | 501.00 | 18.66 | 13.07 | ||||||||||||
June 30, 2008 | 739.00 | 575.10 | 16.95 | 14.35 | ||||||||||||
September 30, 2008 | 695.50 | 464.00 | 16.50 | 10.53 | ||||||||||||
December 31, 2008 | 557.00 | 387.05 | 11.55 | 7.45 | ||||||||||||
March 31, 2009 | 506.95 | 357.00 | 10.34 | 7.27 |
BSE | NYSE | |||||||||||||||
Price Per Equity Share(1) | Price Per ADS(1) | |||||||||||||||
Month Ended | High (Rs.) | Low (Rs.) | High (U.S.$) | Low (U.S.$) | ||||||||||||
October 31, 2008 | 557.00 | 395.00 | 11.55 | 7.70 | ||||||||||||
November 30, 2008 | 434.00 | 387.05 | 9.18 | 7.45 | ||||||||||||
December 31, 2008 | 495.90 | 422.05 | 10.31 | 8.64 | ||||||||||||
January 31, 2009 | 506.95 | 418.00 | 10.34 | 8.38 | ||||||||||||
February 29, 2009 | 479.85 | 386.90 | 9.64 | 7.97 | ||||||||||||
March 31, 2009 | 495.00 | 357.00 | 9.84 | 7.27 |
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+91-40-23731946. The summary of our Articles of Association and Memorandum of Association that is included in our registration statement on Form F-1 filed with the U.S. Securities and Exchange Commission’s (the “SEC”) on April 11, 2001, together with copies of the Articles of Association and Memorandum of Association that are included in our registration statement on Form F-1, are incorporated herein by reference.
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As of March 31, 2009, FII’s are holding 22.16% and NRI’s 1.86% of our equity shares.
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(i) | A person resident outside India, not being a Non-Resident Indian (“NRI”) or an overseas corporate body (“OCB”), may transfer by way of sale or gift the shares or convertible debentures held by him or it to any person resident outside India; | ||
(ii) | A Non-Resident Indian may transfer by way of sale or gift, the shares or convertible debentures held by that person to another Non-Resident Indian only; provided that the person to whom the shares are being transferred has obtained prior permission of the Government of India to acquire the shares if he has a previous venture or tie up in India through an investment in shares or debentures or a technical collaboration or a trade mark agreement or investment by whatever name called in the same field or allied field in which the Indian company whose shares are being transferred is engaged. | ||
Provided further that the restriction in clauses (i) and (ii) shall not apply to the transfer of shares to international financial institutions such as Asian Development Bank (“ADB”), International Finance Corporation (“IFC”), Commonwealth Development Corporation (“CDC”), Deutsche Entwicklungs Gesselschaft (“DEG”) and transfer of shares of an Indian company engaged in the Information Technology sector. | |||
(iii) | A person resident outside India holding the shares or convertible debentures of an Indian company in accordance with the said Regulations, (a) may transfer the same to a person resident in India by way of gift; or (b) may sell the same on a recognized Stock Exchange in India through a registered broker. |
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(i) | the shares are purchased on a recognized stock exchange; | ||
(ii) | the shares are purchased with the permission of the Custodian to the ADS offering of the Indian company and are deposited with the Custodian; | ||
(iii) | The custodian has been authorized to accept shares from non-resident investors for reissuance of ADSs; | ||
(iv) | the shares purchased for conversion into ADSs do not exceed the number of shares that were released by the Custodian pursuant to conversions of ADSs into equity shares under the Depositary Agreement; and | ||
(v) | a non-resident investor, broker, the Custodian and the Depositary comply with the provisions of the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depositary Receipt Mechanism) Scheme, 1993 and the related guidelines issued by the Central Government from time to time. |
• | a period or periods of at least 182 days; or | ||
• | at least 60 days and, within the four preceding fiscal years has been in India for a period or periods amounting to at least 365 days. |
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• | gains from a sale of ADSs outside India by a non-resident to another non-resident are not taxable in India; | ||
• | long-term capital gains realized by a resident from the transfer of the ADSs will be subject to tax at the rate of 10%, plus the applicable surcharge and education cess; short-term capital gains on such a transfer will be taxed at graduated rates with a maximum of 30%, plus the applicable surcharge and education cess; and | ||
• | long-term capital gains realized by a non-resident upon the sale of equity shares obtained from the conversion of ADSs are subject to tax at a rate of 10%, plus the applicable surcharge and education cess; and short-term capital gains on such transfer will be taxed at the maximum marginal rate of tax applicable to the seller, plus the applicable surcharge and education cess, if the sale of such equity shares is settled outside of a recognized stock exchange in India. | ||
• | long-term capital gain realized by a non-resident upon the sale of equity shares obtained from the conversion of ADSs is exempt from tax and any short term capital gain is taxed at 15%, plus the applicable surcharge and education cess, if the sale of such equity shares is settled on a recognized stock exchange and securities transaction tax (“STT”) is paid on such sale. |
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• | 75% or more of its gross income for the taxable year is passive income; or | ||
• | on average for the taxable year by value, or, if it is not a publicly traded corporation and so elects, by adjusted basis, if 50% or more of its assets produce or are held for the production of passive income. |
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• | pay an interest charge together with tax calculated at ordinary income rates (which may be higher than the ordinary income rates that otherwise apply to U.S. holders) on “excess distributions,” as the term is defined in relevant provisions of the U.S. tax laws, and on any gain on a sale or other disposition of ADSs or equity shares; | ||
• | if a “qualified electing fund election” (as the term is defined in relevant provisions of the U.S. tax laws) is made, include in their taxable income their pro rata share of undistributed amounts of our income; or | ||
• | if the equity shares are “marketable stock” and a mark-to-market election is made, mark-to-market the equity shares each taxable year and recognize ordinary gain and, to the extent of prior ordinary gain, ordinary loss for the increase or decrease in market value for such taxable year. |
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For the Year Ended March 31, | ||||||||
2009 | 2008 | |||||||
Foreign Currency Loans | Euribor +70bps or | Euribor +70-200 bps or | ||||||
Libor +70 bps | Libor +70 bps | |||||||
Rupee Term Loans* | 2 | % | 2 | % |
* | Loan received at a subsidized rate of interest from Indian Renewable Energy Development Agency Limited promoting use of alternative sources of energy. |
Foreign | Obligation | |||||||||||||||
Maturing in the year ending | Rupee term | currency | under finance | |||||||||||||
March 31, | loan | loan | lease | Total | ||||||||||||
2010 | Rs. | 6 | Rs. | 3,477 | Rs. | 18 | Rs. | 3,501 | ||||||||
2011 | 1 | 4,118 | 16 | 4,135 | ||||||||||||
2012 | — | 5,731 | 9 | 5,740 | ||||||||||||
2013 | — | — | 9 | 9 | ||||||||||||
2014 | — | — | 10 | 10 | ||||||||||||
Thereafter | — | — | 238 | 238 | ||||||||||||
Rs. | 7 | Rs. | 13,326 | Rs. | 300 | Rs. | 13,633 | |||||||||
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/s/ G. V. Prasad | /s/ Umang Vohra | |||
Vice-Chairman and Chief Executive Officer | Chief Financial Officer |
Dr. Reddy’s Laboratories Limited:
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Hyderabad, India
June 18, 2009.
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Year Ended | ||||||||||
Type of Service | March 31, 2009 | March 31, 2008 | Description of Services | |||||||
(Rs. in millions) | ||||||||||
Audit fees | Rs. | 57.28 | Rs. | 44.83 | Audit and review of financial statements | |||||
Audit related fees | — | 8.20 | Financial and tax due diligence services in the previous year | |||||||
Tax fees | 1.46 | 0.75 | Tax returns filing and transfer pricing related services | |||||||
All other fees | 0.11 | 2.39 | Statutory certifications, subscription to databases etc. | |||||||
Total | Rs. | 58.84 | Rs. | 56.17 | ||||||
(i) | establish an independent audit committee that has specified responsibilities; | |
(ii) | provide prompt certification by its chief executive officer of any material non-compliance with any corporate governance rules; | |
(iii) | provide periodic written affirmations to the NYSE with respect to its corporate governance practices; and | |
(iv) | provide a brief description of significant differences between its corporate governance practices and those followed by U.S. companies. |
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Standard for U.S. NYSE Listed Companies | Our practice | |
Listed companies must have a majority of “independent directors,” as defined by the NYSE. | We comply with this standard. Six of our nine directors are “independent directors,” as defined by the NYSE. | |
The non-management directors of each listed company must meet at regularly scheduled executive sessions without management. | We comply with this standard. Our non-management directors meet periodically without management directors in scheduled executive sessions. | |
Listed companies must have a nominating/corporate governance committee composed entirely of independent directors. The nominating/corporate governance committee must have a written charter that addresses the committee’s purpose and responsibilities, subject to the minimum purpose and responsibilities established by the NYSE, and an annual evaluation of the committee. | We have a Governance Committee composed entirely of independent directors which meets these requirements. The committee has a written charter that meets these requirements. We do not have a practice of evaluating the performance of the Governance Committee. | |
Listed companies must have a compensation committee composed entirely of independent directors. The compensation committee must have a written charter that addresses the committee’s purpose and responsibilities, subject to the minimum purpose and responsibilities established by the NYSE, and an annual evaluation of the committee. | We have a Compensation Committee composed entirely of independent directors which meets these requirements. The committee has a written charter that meets these requirements. We do not have a practice of evaluating the performance of our Compensation Committee. | |
Listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act | Our Audit Committee satisfies the requirements of Rule 10A-3 under the Exchange Act. | |
The audit committee must have a minimum of three members all being independent directors. The audit committee must have a written charter that addresses the committee’s purpose and responsibilities, subject to the minimum purpose and responsibilities established by the NYSE, and an annual evaluation of the committee. | We have an Audit Committee composed of three members, all being independent directors. The committee has a written charter that meets these requirements. We also have an internal audit function. We do not have a practice of evaluating the performance of our Audit Committee. | |
Each listed company must have an internal audit function. | We have an internal audit function. | |
Shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions thereto, with limited exceptions. | We comply with this standard. Our Employee Stock Option Plan was approved by our shareholders. | |
Listed companies must adopt and disclose corporate governance guidelines. | We have not adopted corporate governance guidelines. | |
All listed companies, U.S. and foreign, must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. | We comply with this standard. More details on our Code of Business Conduct and Ethics are given under Item 16.B. | |
Listed foreign private issuers must disclose any significant ways in which their corporate governance practices differ from those followed by domestic companies under NYSE listing standards. | This requirement is being addressed by way of this table. | |
Each listed company CEO must certify to the NYSE each year that he or she is not aware of any violation by the company of NYSE corporate governance listing standards, qualifying the certification to the extent necessary. | We do not have such practice. | |
Each listed company CEO must promptly notify the NYSE in writing after any executive officer of the listed company becomes aware of any material non-compliance with any applicable provisions of this Section 303A. | There are no such instances. | |
Each listed company must submit an executed Written Affirmation annually to the NYSE. In addition, each listed company must submit an interim Written Affirmation each time a change occurs to the board or any of the committees subject to Section 303A. The annual and interim Written Affirmations must be in the form specified by the NYSE. | We filed our most recent annual written affirmation on July 25, 2008. |
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F - 1 | ||
F - 2 | ||
F - 4 | ||
F - 5 | ||
F - 7 | ||
F - 9 |
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Dr. Reddy’s Laboratories Limited:
June 18, 2009
F - 1
Table of Contents
As of March 31, | ||||||||||||||||
Note | 2009 | 2009 | 2008 | |||||||||||||
Unaudited | ||||||||||||||||
Convenience | ||||||||||||||||
Translation into | ||||||||||||||||
U.S.$ (See | ||||||||||||||||
Note 2.d.) | ||||||||||||||||
Assets | ||||||||||||||||
Property, plant and equipment | 8 | U.S.$ | 410 | Rs. | 20,882 | Rs. | 16,765 | |||||||||
Goodwill | 9 | 144 | 7,300 | 16,997 | ||||||||||||
Other intangible assets | 10 | 292 | 14,879 | 16,756 | ||||||||||||
Investment in equity accounted associates | 11 | 5 | 262 | 237 | ||||||||||||
Deferred tax asset | 29 | 25 | 1,259 | 808 | ||||||||||||
Other non-current assets | 15 | 4 | 200 | 83 | ||||||||||||
Total non-current assets | U.S.$ | 880 | Rs. | 44,782 | Rs. | 51,646 | ||||||||||
Inventories | 13 | U.S.$ | 260 | Rs. | 13,226 | Rs. | 11,133 | |||||||||
Current tax assets | 1 | 58 | 177 | |||||||||||||
Trade receivables | 14 | 287 | 14,592 | 6,823 | ||||||||||||
Other current assets | 15 | 98 | 5,008 | 3,681 | ||||||||||||
Other investments | 12 | 10 | 530 | 4,753 | ||||||||||||
Cash and cash equivalents | 16 | 110 | 5,596 | 7,421 | ||||||||||||
Total current assets | U.S.$ | 767 | Rs. | 39,010 | Rs. | 33,988 | ||||||||||
Total assets | U.S.$ | 1,647 | Rs. | 83,792 | Rs. | 85,634 | ||||||||||
Equity | ||||||||||||||||
Share capital | 17 | U.S.$ | 17 | Rs. | 842 | Rs. | 841 | |||||||||
Share premium | 397 | 20,204 | 20,036 | |||||||||||||
Fair value reserve | — | 11 | (2 | ) | ||||||||||||
Foreign currency translation reserve | 43 | 2,168 | 1,567 | |||||||||||||
Share based payment reserve | 13 | 676 | 709 | |||||||||||||
Hedging reserve | (3 | ) | (156 | ) | (7 | ) | ||||||||||
Equity shares held by controlled trust | — | (5 | ) | (5 | ) | |||||||||||
Retained earnings | 360 | 18,305 | 24,211 | |||||||||||||
Total equity | U.S.$ | 827 | Rs. | 42,045 | Rs. | 47,350 | ||||||||||
Liabilities | ||||||||||||||||
Long-term loans and borrowings, excluding current portion | 19 | U.S.$ | 199 | Rs. | 10,132 | Rs. | 12,698 | |||||||||
Provisions | 23 | 1 | 42 | — | ||||||||||||
Other non-current liabilities | 25 | 7 | 350 | 321 | ||||||||||||
Deferred tax liabilities | 29 | 92 | 4,670 | 5,664 | ||||||||||||
Total non-current liabilities | U.S.$ | 299 | Rs. | 15,194 | Rs. | 18,683 | ||||||||||
F - 2
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CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
As of March 31, | ||||||||||||||||
Note | 2009 | 2009 | 2008 | |||||||||||||
Unaudited | ||||||||||||||||
Convenience | ||||||||||||||||
Translation into | ||||||||||||||||
U.S.$ (See | ||||||||||||||||
Note 2.d.) | ||||||||||||||||
Bank overdraft | 16 | 4 | 218 | 435 | ||||||||||||
Short-term loans and borrowings | 19 | 115 | 5,850 | 4,428 | ||||||||||||
Long-term loans and borrowings, current portion | 19 | 69 | 3,501 | 1,791 | ||||||||||||
Current tax liabilities | 12 | 632 | 340 | |||||||||||||
Trade payables | 24 | 118 | 5,987 | 5,427 | ||||||||||||
Derivative financial instruments | 32 | 7 | 332 | 105 | ||||||||||||
Provisions | 23 | 38 | 1,928 | 750 | ||||||||||||
Other current liabilities | 25 | 159 | 8,105 | 6,325 | ||||||||||||
Total current liabilities | U.S.$ | 522 | Rs. | 26,553 | Rs. | 19,601 | ||||||||||
Total liabilities | U.S.$ | 821 | Rs. | 41,747 | Rs. | 38,284 | ||||||||||
Total equity and liabilities | U.S.$ | 1,647 | Rs. | 83,792 | Rs. | 85,634 | ||||||||||
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For the year ended March 31, | ||||||||||||||||
Note | 2009 | 2009 | 2008 | |||||||||||||
Unaudited | ||||||||||||||||
Convenience | ||||||||||||||||
Translation into | ||||||||||||||||
U.S.$ (See Note 2.d.) | ||||||||||||||||
Revenues | 26 | U.S.$ | 1,365 | Rs. | 69,441 | Rs. | 50,006 | |||||||||
Cost of revenues | 648 | 32,941 | 24,598 | |||||||||||||
Gross profit | U.S.$ | 718 | Rs. | 36,500 | Rs. | 25,408 | ||||||||||
Selling, general and administrative expenses | 413 | 21,020 | 16,835 | |||||||||||||
Research and development expenses | 79 | 4,037 | 3,533 | |||||||||||||
Impairment loss on other intangible assets | 10 | 62 | 3,167 | 3,011 | ||||||||||||
Impairment loss on goodwill | 9 | 213 | 10,856 | 90 | ||||||||||||
Other expense/(income), net | 27 | 5 | 254 | (402 | ) | |||||||||||
Total operating expenses, net | U.S.$ | 773 | Rs. | 39,334 | Rs. | 23,067 | ||||||||||
Results from operating activities | (56 | ) | (2,834 | ) | 2,341 | |||||||||||
Finance expense | 28 | 33 | 1,668 | 1,080 | ||||||||||||
Finance income | 28 | (9 | ) | (482 | ) | (1,601 | ) | |||||||||
Finance expense/(income), net | 23 | 1,186 | (521 | ) | ||||||||||||
Share of profit of equity accounted investees, net of income tax | 11 | — | 24 | 2 | ||||||||||||
Profit/(loss) before income tax | (79 | ) | (3,996 | ) | 2,864 | |||||||||||
Income tax (expense)/benefit | 29 | (23 | ) | (1,172 | ) | 972 | ||||||||||
Profit/(loss) for the period | U.S.$ | (102 | ) | Rs. | (5,168 | ) | Rs. | 3,836 | ||||||||
Attributable to: | ||||||||||||||||
Equity holders of the Company | (102 | ) | (5,168 | ) | 3,846 | |||||||||||
Minority interest | — | — | (10 | ) | ||||||||||||
Profit/(loss) for the period | U.S.$ | (102 | ) | Rs. | (5,168 | ) | Rs. | 3,836 | ||||||||
Earnings/(loss) per share | 18 | |||||||||||||||
Basic | U.S.$ | (0.60 | ) | Rs. | (30.69 | ) | Rs. | 22.88 | ||||||||
Diluted | U.S.$ | (0.60 | ) | Rs. | (30.69 | ) | Rs. | 22.80 | ||||||||
Weighted average number of equity shares used in computing earnings per equity share | 18 | |||||||||||||||
Basic | 168,349,139 | 168,349,139 | 168,075,840 | |||||||||||||
Diluted | 168,349,139 | 168,349,139 | 168,690,774 |
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Foreign | ||||||||||||||||||||||||||||
Fair | currency | Share based | ||||||||||||||||||||||||||
Share | value | translation | payment | Hedging | ||||||||||||||||||||||||
Share capital | premium | reserve | reserve | reserve | reserve | |||||||||||||||||||||||
Shares | Amount | Amount | Amount | Amount | Amount | Amount | ||||||||||||||||||||||
Balance as of April 1, 2007 | 167,912,180 | Rs. | 840 | Rs. | 19,908 | Rs. | (125 | ) | Rs. | 344 | Rs. | 565 | Rs. | — | ||||||||||||||
Net change in fair value of other investments, net of tax expense of Rs.35 | — | — | — | 123 | — | — | — | |||||||||||||||||||||
Foreign currency translation differences, net of tax expense of Rs.42 | — | — | — | — | 1,223 | — | — | |||||||||||||||||||||
Effective portion of changes in fair value of cash flow hedges, net of tax benefit of Rs 3 | — | — | — | — | — | — | (7 | ) | ||||||||||||||||||||
Total income and expense directly recognized in equity | — | — | — | 123 | 1,223 | — | (7 | ) | ||||||||||||||||||||
Profit for the period | — | — | — | — | — | — | — | |||||||||||||||||||||
Total recognized income and expense | — | — | — | 123 | 1,223 | — | (7 | ) | ||||||||||||||||||||
Issue of equity shares on exercise of options | 260,566 | 1 | 128 | — | — | (114 | ) | — | ||||||||||||||||||||
Dividend paid | — | — | — | — | — | — | — | |||||||||||||||||||||
Share-based payment expense | — | — | — | — | — | 258 | — | |||||||||||||||||||||
Balance as of March 31, 2008 | 168,172,746 | Rs. | 841 | Rs. | 20,036 | Rs. | (2 | ) | Rs. | 1,567 | Rs. | 709 | Rs. | (7 | ) | |||||||||||||
Equity | ||||||||||||||||||||
shares held | Total | |||||||||||||||||||
by a | attributable | |||||||||||||||||||
controlled | Retained | to equity | Minority | |||||||||||||||||
trust* | earnings | share holders | interest | Total equity | ||||||||||||||||
Amount | Amount | Amount | Amount | Amount | ||||||||||||||||
Balance as of April 1, 2007 | Rs. | (5 | ) | Rs. | 21,102 | Rs. | 42,629 | Rs. | 10 | Rs. | 42,639 | |||||||||
Net change in fair value of other investments, net of tax expense of Rs.35 | — | — | 123 | — | 123 | |||||||||||||||
Foreign currency translation differences, net of tax expense of Rs.42 | — | — | 1,223 | — | 1,223 | |||||||||||||||
Effective portion of changes in fair value of cash flow hedges, net of tax benefit of Rs 3 | — | — | (7 | ) | — | (7 | ) | |||||||||||||
Total income and expense directly recognized in equity | — | — | 1,339 | — | 1,339 | |||||||||||||||
Profit for the period | — | 3,846 | 3,846 | (10 | ) | 3,836 | ||||||||||||||
Total recognized income and expense | — | 3,846 | 5,185 | (10 | ) | 5,175 | ||||||||||||||
Issue of equity shares on exercise of options | — | — | 15 | — | 15 | |||||||||||||||
Dividend paid | — | (737 | ) | (737 | ) | — | (737 | ) | ||||||||||||
Share-based payment expense | — | — | 258 | — | 258 | |||||||||||||||
Balance as of March 31, 2008 | Rs. | (5 | ) | Rs. | 24,211 | Rs. | 47,350 | Rs. | — | Rs. | 47,350 | |||||||||
* | The number of equity shares held by a controlled trust as of April 1, 2007, March 31, 2008, April 1, 2008 and March 31, 2009 was 82,800. |
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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions, except share and per share data)
Foreign | Share | |||||||||||||||||||||||||||
currency | based | |||||||||||||||||||||||||||
Share | Fair value | translation | payment | Hedging | ||||||||||||||||||||||||
Share capital | premium | reserve | reserve | reserve | reserve | |||||||||||||||||||||||
Shares | Amount | Amount | Amount | Amount | Amount | Amount | ||||||||||||||||||||||
Balance as of April 1, 2008 | 168,172,746 | Rs. | 841 | Rs. | 20,036 | Rs. | (2 | ) | Rs. | 1,567 | Rs. | 709 | Rs. | (7 | ) | |||||||||||||
Net change in fair value of other investments, net of tax expense of Rs.5 | — | — | — | 13 | — | — | — | |||||||||||||||||||||
Foreign currency translation differences, net of tax expense of Rs.41 | — | — | — | — | 601 | — | — | |||||||||||||||||||||
Effective portion of changes in fair value of cash flow hedges, net of tax benefit of Rs.78 | — | — | — | — | — | — | (149 | ) | ||||||||||||||||||||
Total income and expense directly recognized in equity | — | — | — | 13 | 601 | — | (149 | ) | ||||||||||||||||||||
Loss for the period | — | — | — | — | — | — | — | |||||||||||||||||||||
Total recognized income and expense | — | — | — | 13 | 601 | — | (149 | ) | ||||||||||||||||||||
Issue of equity shares on exercise of options | 296,031 | 1 | 168 | — | — | (164 | ) | — | ||||||||||||||||||||
Dividend paid | — | — | — | — | — | — | — | |||||||||||||||||||||
Share-based payment expense | — | — | — | — | — | 131 | — | |||||||||||||||||||||
Balance as of March 31, 2009 | 168,468,777 | Rs. | 842 | Rs. | 20,204 | Rs. | 11 | Rs. | 2,168 | Rs. | 676 | Rs. | (156 | ) | ||||||||||||||
Unaudited convenience translation into U.S.$ (See Note 2.d.) | U.S.$ | 17 | U.S.$ | 397 | U.S.$ | — | U.S.$ | 43 | U.S.$ | 13 | U.S.$ | (3 | ) |
Equity | ||||||||||||||||||||
shares held | Total | |||||||||||||||||||
by a | attributable | |||||||||||||||||||
controlled | Retained | to equity | Minority | Total | ||||||||||||||||
trust* | earnings | share holders | interest | equity | ||||||||||||||||
Amount | Amount | Amount | Amount | Amount | ||||||||||||||||
Balance as of April 1, 2008 | Rs. | (5 | ) | Rs. | 24,211 | Rs. | 47,350 | Rs. | — | Rs. | 47,350 | |||||||||
Net change in fair value of other investments, net of tax expense of Rs.5 | — | — | 13 | — | 13 | |||||||||||||||
Foreign currency translation differences, net of tax expense of Rs.41 | — | — | 601 | — | 601 | |||||||||||||||
Effective portion of changes in fair value of cash flow hedges, net of tax benefit of Rs.78 | — | — | (149 | ) | — | (149 | ) | |||||||||||||
Total income and expense directly recognized in equity | — | — | 465 | — | 465 | |||||||||||||||
Loss for the period | — | (5,168 | ) | (5,168 | ) | — | (5,168 | ) | ||||||||||||
Total recognized income and expense | — | (5,168 | ) | (4,703 | ) | — | (4,703 | ) | ||||||||||||
Issue of equity shares on exercise of options | — | — | 5 | — | 5 | |||||||||||||||
Dividend paid | — | (738 | ) | (738 | ) | — | (738 | ) | ||||||||||||
Share-based payment expense | — | — | 131 | — | 131 | |||||||||||||||
Balance as of March 31, 2009 | Rs. | (5 | ) | Rs. | 18,305 | Rs. | 42,045 | Rs. | — | Rs. | 42,045 | |||||||||
Unaudited convenience translation into U.S.$ (See Note 2.d.) | U.S.$ | — | U.S.$ | 360 | U.S.$ | 827 | U.S.$ | — | U.S.$ | 827 |
* | The number of equity shares held by a controlled trust as of April 1, 2007, March 31, 2008, April 1, 2008 and March 31, 2009 was 82,800. |
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For the year ended March 31, | ||||||||||||
2009 | 2009 | 2008 | ||||||||||
Unaudited | ||||||||||||
Convenience | ||||||||||||
translation into | ||||||||||||
U.S.$ (See Note | ||||||||||||
2.d.) | ||||||||||||
Cash flows from/(used in) operating activities: | ||||||||||||
Profit/(loss) for the period | U. S. $ | (102) | Rs. | (5,168 | ) | Rs. | 3,836 | |||||
Adjustments for: | ||||||||||||
Income tax expense/(benefit) | 23 | 1,172 | (972 | ) | ||||||||
Profit on sale of investments | (3 | ) | (136 | ) | (111 | ) | ||||||
Depreciation and amortization | 75 | 3,814 | 3,362 | |||||||||
Impairment loss on other intangible assets | 62 | 3,167 | 3,011 | |||||||||
Impairment loss on goodwill | 213 | 10,856 | 90 | |||||||||
Inventory write-downs | 16 | 833 | 328 | |||||||||
Allowance for doubtful trade receivables | 3 | 148 | 227 | |||||||||
(Profit)/loss on sale of property, plant and equipment, net | — | (15 | ) | 8 | ||||||||
Provision for sales returns | 13 | 663 | 164 | |||||||||
Share of profit of equity accounted investees | — | (24 | ) | (2 | ) | |||||||
Unrealized exchange (gain)/loss, net | (8 | ) | (416 | ) | 207 | |||||||
Interest expense, net | 14 | 688 | 329 | |||||||||
Share based payment expense | 3 | 131 | 258 | |||||||||
Negative goodwill on acquisition of business | (3 | ) | (150 | ) | — | |||||||
Changes in operating assets and liabilities: | ||||||||||||
Trade receivables | (144 | ) | (7,348 | ) | 608 | |||||||
Inventories | (38 | ) | (1,939 | ) | (3,908 | ) | ||||||
Other assets | 21 | 1,051 | 3,135 | |||||||||
Trade payables | (4 | ) | (223 | ) | 1,249 | |||||||
Other liabilities and provisions | 4 | 192 | (3,759 | ) | ||||||||
Income tax paid | (55 | ) | (2,791 | ) | (1,532 | ) | ||||||
Net cash from operating activities | U. S. $ | 89 | Rs. | 4,505 | Rs. | 6,528 | ||||||
Cash flows from/(used in) investing activities: | ||||||||||||
Expenditures on property, plant and equipment | (89 | ) | (4,507 | ) | (6,263 | ) | ||||||
Proceeds from sale of property, plant and equipment | 2 | 81 | 55 | |||||||||
Purchase of other investments | (236 | ) | (12,021 | ) | (15,860 | ) | ||||||
Proceeds from sale of other investments | 322 | 16,398 | 12,478 | |||||||||
Expenditures on other intangible assets | (5 | ) | (254 | ) | (422 | ) | ||||||
Payment of contingent consideration for acquisition of business | (2 | ) | (83 | ) | (86 | ) | ||||||
Cash paid for acquisition of business | (61 | ) | (3,089 | ) | — | |||||||
Cash paid for acquisition of equity accounted investee, net of cash acquired Rs.386 | (7 | ) | (372 | ) | — | |||||||
Interest received | 7 | 375 | 731 | |||||||||
Net cash used in investing activities | U. S. $ | (68) | Rs. | (3,472 | ) | Rs. | (9,367 | ) | ||||
Cash flows from/(used in) financing activities: | ||||||||||||
Interest paid | (22 | ) | (1,132 | ) | (1,128 | ) | ||||||
Proceeds from issuance of equity shares | — | 5 | 15 | |||||||||
Proceeds from short term loans and borrowings, net | 25 | 1,263 | 1,704 | |||||||||
Repayment of long term loans and borrowings | (38 | ) | (1,925 | ) | (7,719 | ) | ||||||
Dividend paid | (15 | ) | (738 | ) | (737 | ) | ||||||
Net cash used in financing activities | U. S. $ | (50) | Rs. | (2,527 | ) | Rs. | (7,865 | ) | ||||
Net decrease in cash and cash equivalents | (29 | ) | �� | (1,494 | ) | (10,704 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (2 | ) | (114 | ) | (372 | ) | ||||||
Cash and cash equivalents at the beginning of the period | 137 | 6,986 | 18,062 | |||||||||
Cash and cash equivalents at the end of the period | U. S. $ | 106 | Rs. | 5,378 | Rs. | 6,986 | ||||||
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Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions, except share and per share data)
Year ended March 31, | ||||||||||||
2009 | 2009 | 2008 | ||||||||||
Unaudited | ||||||||||||
Convenience | ||||||||||||
translation | ||||||||||||
into U.S.$ (See | ||||||||||||
Note 2.d.) | ||||||||||||
Property, plant and equipment purchased on credit during the year | U.S.$ | 8 | Rs. | 427 | Rs. | 199 | ||||||
Property, plant and equipment purchased under capital lease | — | — | 21 |
F - 8
Table of Contents
• | derivative financial instruments are measured at fair value; and |
• | available-for-sale financial assets are measured at fair value. |
F - 9
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
• | Note 3(b) — Assessment of functional currency for foreign operations | ||
• | Note 3(c) and 32 — Financial instruments | ||
• | Note 3(h) — Measurement of recoverable amounts of cash-generating units | ||
• | Note 3(j) — Provisions | ||
• | Note 3(k) — Sales returns, rebates and charge back provisions | ||
• | Note 3(m) — Evaluation of recoverability of deferred tax assets | ||
• | Note 7 — Business combinations | ||
• | Note 34 — Contingencies |
F - 10
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F - 11
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F - 12
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F - 13
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Buildings | ||
- Factory and administrative buildings | 25 – 50 years | |
- Ancillary structures | 3 – 15 years | |
Plant and equipment | 3 – 15 years | |
Furniture, fixtures and office equipment | 4 – 10 years | |
Vehicles | 4 – 5 years | |
Computer equipment | 3 – 5 years |
F - 14
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F - 15
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Trademarks | 3 – 12 years | |
Product related intangibles | 6 – 15 years | |
Beneficial toll manufacturing contract | 2 years | |
Non-competition arrangements | 1.5 – 10 years | |
Marketing rights | 3 – 16 years | |
Customer-related intangibles | 2 – 11 years | |
Technology related intangibles | 6 – 13 years | |
Other intangibles | 5 – 15 years |
F - 16
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F - 17
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F - 18
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F - 19
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F - 20
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F - 21
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
• | Revised IAS 1, “Presentation of Financial Statements”(2007), introduces the term total comprehensive income, which represents changes in equity during a period other than those changes resulting from transactions with owners in their capacity as owners. Total comprehensive income may be presented in either a single statement of comprehensive income (effectively combining both the income statement and all non-owner changes in equity in a single statement), or in an income statement and a separate statement of comprehensive income. Revised IAS 1, which becomes mandatory for the Company’s March 31, 2010 consolidated financial statements, is expected to have a significant impact on the presentation of the consolidated financial statements. The Company plans to provide total comprehensive income in a single statement of comprehensive income in its March 31, 2010 consolidated financial statements. |
• | Revised IAS 23, “Borrowing Costs”,removes the option to expense borrowing costs and requires that an entity capitalize borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The revised IAS 23 will become mandatory for the Company’s March 31, 2010 consolidated financial statements. As the Company currently follows a policy of capitalizing borrowing costs, this new standard will not have any material impact on the Company’s consolidated financial statements. |
F - 22
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
• | Amendments to IAS 32, “Financial Instruments: Presentation”,and IAS 1 “Presentation of Financial Statements — Puttable Financial Instruments and Obligations Arising on Liquidation”,require puttable instruments, and instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation, to be classified as equity if certain conditions are met. The amendments, which become mandatory for the Company’s March 31, 2010 consolidated financial statements, with retrospective application required, are not expected to have any material impact on the Company’s consolidated financial statements. | |
Revised IFRS 3, “Business Combinations” (2008), incorporates the following changes that are likely to be relevant to the Company’s operations: |
o | The definition of a business has been broadened, which is likely to result in more acquisitions being treated as business combinations. | ||
o | Contingent consideration will be measured at fair value, with subsequent changes therein recognized in profit or loss. | ||
o | Transaction costs, other than share and debt issue costs, will be expensed as incurred. | ||
o | Any pre-existing interest in the acquiree will be measured at fair value with the gain or loss recognized in profit or loss. | ||
o | Any non-controlling (minority) interest will be measured either at fair value or at its proportionate interest in the identifiable assets and liabilities of the acquiree, on a transaction-by-transaction basis. |
Revised IFRS 3, which becomes mandatory for the Company’s March 31, 2011 consolidated financial statements, will be applied prospectively for all business combinations on or after April 1, 2010. |
• | Amendments to IAS 27, “Consolidated and Separate Financial Statements”(2008), require accounting for changes in ownership interests by the Company in a subsidiary, while maintaining control, to be recognized as an equity transaction. When the Company loses control of a subsidiary, any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognized in profit or loss. The amendments to IAS 27, which become mandatory for the Company’s March 31, 2011 consolidated financial statements, are not expected to have a significant impact on the Company’s consolidated financial statements. |
• | Amendments to IFRS 2, “Share-based Payment—Vesting Conditions and Cancellations”, clarify the definition of vesting conditions, introduce the concept of non-vesting conditions, require non-vesting conditions to be reflected in grant-date fair value and provide the accounting treatment for non-vesting conditions and cancellations. The amendments to IFRS 2 will become mandatory for the Company’s March 31, 2010 consolidated financial statements, with retrospective application. The Company is currently in the process of evaluating the potential impact of the revised standard on the Company’s consolidated financial statements. |
• | Amendments to IAS 39, “Financial Instruments: Recognition and Measurement: Eligible Hedged Items”, deal with two situations where diversity in practice exists on the designation of inflation as a hedged risk and the treatment of ‘one-sided’ risks on hedged items. These amendments are effective for accounting periods beginning on or after July 1, 2009 and will be applicable for the Company’s March 31, 2011 consolidated financial statements. The Company is currently in the process of evaluating the potential impact of the revised standard on the Company’s consolidated financial statements. |
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Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
• | IFRIC Interpretation 18, “Transfers of Assets from Customers”, defines the treatment for property, plant and equipment transferred by customers to companies or for cash received to be invested in property, plant and equipment that must be used either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services, or to do both. The item of property, plant and equipment is to be initially recognized by the Company at fair value with a corresponding credit to revenue. If an ongoing service is identified as a part of the agreement, the period over which revenue shall be recognized for that service would be determined by the terms of the agreement with the customer. If the period is not clearly defined, then revenue should be recognized over a period no longer than the useful life of the transferred asset used to provide the ongoing service. This interpretation is to be applied prospectively to transfers of assets from customers received on or after July 1, 2009. Earlier application is permitted provided the valuations and other information needed to apply the information to past transfers were obtained at the time the transfer occurred. The Company intends to prospectively adopt this interpretation for all assets transferred after July 1, 2009. This interpretation is not expected to have a significant impact on the Company’s consolidated financial statements. |
• | IFRS 8, “Operating Segments”,is applicable for annual periods beginning on or after July 1, 2009. This standard was early adopted by the Company as at March 31, 2009. IFRS 8 replaces IAS 14, “Segment Reporting”. The new standard requires a “management approach”, under which segment information is presented on the same basis as that used for internal reporting provided to the chief operating decision maker. The application of this standard did not result in any significant change in the Company’s segmental disclosures as compared to its disclosures under U.S. GAAP (which is considered the Company’s previous GAAP under IFRS), which were substantially similar. Goodwill has been allocated in accordance with the requirements of this standard. |
i. | Business combinations exemption:The Company has applied the exemption as provided in IFRS 1 on non-application of IFRS 3,“Business Combinations”to business combinations consummated prior to April 1, 2007 (the “Transition Date”), pursuant to which goodwill arising from a business combination has been stated at the carrying amount prior to the date of transition under Previous GAAP. The Company has also applied the exemption for past business combinations to acquisitions of investments in associates consummated prior to the Transition Date. |
ii. | Fair value as deemed cost exemption:The Company has not elected to measure any item of property, plant and equipment at its fair value at the Transition Date; property, plant and equipment have been measured at cost in accordance with IFRS. |
F - 24
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
iii. | Employee benefits exemption:The Company has elected to apply the exemption as provided in IFRS 1 and has recognized cumulative actuarial gains and losses as of the Transition Date as an adjustment to the opening retained earnings. The Company will apply the corridor approach in subsequent periods. |
iv. | Cumulative translation differences exemption:The Company had accumulated the translation differences in a separate component of equity under Previous GAAP. Upon transition to IFRS, the treatment of recording translation differences in equity did not undergo any change and consequently the optional exemption of setting cumulative differences as zero and reclassifying the amount recognized in accordance with Previous GAAP as retained earnings as at the Transition Date was not required to be applied. |
v. | Compound financial instruments:The Company did not have any compound financial instrument as of the Transition Date. Consequently, upon adoption of IFRS the optional exemption allowed of non-segregation of the liability component, if such component was no longer outstanding on the Transition Date, is not applicable to the Company. |
vi. | Assets and liabilities of subsidiaries, associates and joint ventures exemption:All entities within the Company are transitioning to IFRS on the same date. Consequently, this exemption was not required to be applied. | |
vii. | Share-based payment transaction exemption:Under Previous GAAP, the Company had applied the fair value recognition and measurement principles similar to those prescribed under IFRS 2 for all options granted before the Transition Date. Consequently, this exemption was not required to be applied. | |
viii. | Fair value measurement of financial assets or liabilities at initial recognition:The Company has not applied the amendment offered by the revision of IAS 39,“Financial Instruments: Recognition and Measurement”, upon the initial recognition of the financial instruments measured at fair value through profit or loss where there is no active market. | |
ix. | Designation of financial assets and financial liabilities exemption:The Company did not have any financial assets or liabilities as of the Transition Date which were required to be designated, and which met the required criteria given in IFRS 1, as a financial asset or financial liability at fair value through profit or loss. |
x. | Changes in decommissioning liabilities included in the cost of property, plant and equipment exemption:The Company does not have any material decommissioning, restoration or similar liabilities in the cost of property, plant and equipment. Consequently, this exception is not applicable to the Company. |
xi. | Leases exemption:The Company does not have any arrangements containing a lease as defined under IFRIC 4,“Determining whether an arrangement contains a lease”.Consequently, this exemption is not applicable to the Company. | |
xii. | Financial asset or an intangible asset accounted for in accordance with IFRIC 12, Service Concession Arrangements exemption:The Company does not have any arrangements which would be classified as a service concession arrangement under IFRIC 12 “Service Concession Arrangements”.Consequently, this exemption is not applicable to the Company. | |
xiii. | Insurance contracts:The Company does not issue any insurance contracts. Consequently, this exemption is not applicable to the Company. |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
i. | Derecognition of financial assets and liabilities exception: Financial assets and liabilities derecognized before January 1, 2004 are not re-recognized under IFRS. No arrangements were identified that had to be assessed under this exception. |
ii. | Hedge accounting exception: The Company has not identified any hedging relationships existing as of the Transition Date. Consequently, this exception, of not reflecting in its opening IFRS statement of financial position a hedging relationship of a type that does not qualify for hedge accounting under IAS 39, is not applicable to the Company. | |
iii. | Estimates exception:Upon an assessment of the estimates made under Previous GAAP, the Company has concluded that there was no necessity to revise such estimates under IFRS, except where estimates were required by IFRS and not required by Previous GAAP. | |
iv. | Assets classified as held for sale and discontinued operations:The Company did not have any assets classified as held for sale, and therefore this exception is not applicable. |
As of | ||||||||||
Notes | April 1, 2007 | March 31, 2008 | ||||||||
Total equity under Previous GAAP | Rs. | 41,578 | Rs. | 47,067 | ||||||
Impairment of intangibles | A | 621 | 99 | |||||||
Amortization of intangibles | A | — | 26 | |||||||
Employee benefits | B | (24 | ) | 54 | ||||||
Share based payment | D | — | (53 | ) | ||||||
Tax adjustments | E | 454 | 170 | |||||||
Foreign currency differences on above adjustments and others | — | (13 | ) | |||||||
Equity under IFRS before reclassification of minority interest | 42,629 | 47,350 | ||||||||
Minority interest | F | 10 | — | |||||||
Total equity under IFRS | Rs. | 42,639 | Rs. | 47,350 | ||||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
For the year ended | ||||||
Notes | March 31, 2008 | |||||
Profit under Previous GAAP | Rs. | 4,678 | ||||
Impairment of intangibles | A | (522 | ) | |||
Amortization of intangibles | A | 26 | ||||
Employee benefits | B | 18 | ||||
Hedge accounting | C | (25 | ) | |||
Share based payment | D | (53 | ) | |||
Tax adjustments | E | (257 | ) | |||
Minority interest | F | (10 | ) | |||
Foreign currency differences on above adjustments and others | (19 | ) | ||||
Profit under IFRS | Rs. | 3,836 | ||||
F - 27
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F - 28
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F - 29
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F - 30
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
• | Pharmaceutical Services and Active Ingredients (“PSAI”); |
• | Global Generics; and |
• | Proprietary Products. |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Information about segments: | For the year ended March 31, | |||||||||||||||||||||||
Proprietary | ||||||||||||||||||||||||
PSAI | Global Generics** | Products | ||||||||||||||||||||||
Reportable segments | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||
Segment revenue(1) | Rs. | 18,758 | Rs. | 16,623 | Rs. | 49,790 | Rs. | 32,872 | Rs. | 294 | Rs. | 190 | ||||||||||||
Gross profit | Rs. | 5,595 | Rs. | 5,645 | Rs. | 30,448 | Rs. | 19,567 | Rs. | 196 | Rs. | 109 | ||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||
Research and development expenses | ||||||||||||||||||||||||
Impairment loss on other intangible assets | ||||||||||||||||||||||||
Impairment loss on goodwill | ||||||||||||||||||||||||
Other expense/(income), net | ||||||||||||||||||||||||
Results from operating activities | ||||||||||||||||||||||||
Finance expense/(income), net | ||||||||||||||||||||||||
Share of profit of equity accounted investees, net of income tax | ||||||||||||||||||||||||
Profit/(loss) before income tax | ||||||||||||||||||||||||
Income tax (expense)/benefit | ||||||||||||||||||||||||
Profit/(loss) for the period |
(1) | Segment revenue for the year ended March 31, 2009 does not include inter-segment revenues from PSAI to Global Generics which is accounted for at a cost of Rs.2,371 (as compared to Rs.2,916 for the year ended March 31, 2008) and inter-segment revenues from Global Generics to PSAI which is accounted for at cost of Rs.18 (as compared to Rs.47 for the year ended March 31, 2008). | |
** | Global Generics consists of: |
Formulations | Generics | Global Generics | ||||||||||||||||||||||
For the year ended March 31, | For the year ended March 31, | For the year ended March 31, | ||||||||||||||||||||||
Segments | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||
Revenue | Rs. | 18,075 | Rs. | 15,251 | Rs. | 31,715 | Rs. | 17,621 | Rs. | 49,790 | Rs. | 32,872 | ||||||||||||
Gross profit | 13,085 | 11,204 | 17,363 | 8,363 | 30,448 | 19,567 |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Information about segments: | For the year ended March 31, | |||||||||||||||
Others | Total | |||||||||||||||
Reportable segments | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Segment revenue(1) | Rs. | 599 | Rs. | 321 | Rs. | 69,441 | Rs. | 50,006 | ||||||||
Gross profit | Rs. | 261 | Rs. | 87 | Rs. | 36,500 | Rs. | 25,408 | ||||||||
Selling, general and administrative expenses | 21,020 | 16,835 | ||||||||||||||
Research and development expenses | 4,037 | 3,533 | ||||||||||||||
Impairment loss on other intangible assets | 3,167 | 3,011 | ||||||||||||||
Impairment loss on goodwill | 10,856 | 90 | ||||||||||||||
Other expense/(income), net | 254 | (402 | ) | |||||||||||||
Results from operating activities | (2,834 | ) | 2,341 | |||||||||||||
Finance expense/(income), net | 1,186 | (521 | ) | |||||||||||||
Share of profit of equity accounted investees, net of income tax | 24 | 2 | ||||||||||||||
Profit/(loss) before income tax | (3,996 | ) | 2,864 | |||||||||||||
Income tax (expense)/benefit | (1,172 | ) | 972 | |||||||||||||
Profit/(loss) for the period | Rs. | (5,168 | ) | Rs. | 3,836 | |||||||||||
(1) | Segment revenue for the year ended March 31, 2009 does not include inter-segment revenues from PSAI to Global Generics which is accounted for at a cost of Rs.2,371 (as compared to Rs.2,916 for the year ended March 31, 2008) and inter-segment revenues from Global Generics to PSAI which is accounted for at cost of Rs.18 (as compared to Rs.47 for the year ended March 31, 2008). |
F - 33
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
For the year ended March 31, | ||||||||
2009 | 2008 | |||||||
PSAI | Rs. | 20,188 | Rs. | 17,029 | ||||
Global Generics | 54,090 | 50,928 | ||||||
Proprietary Products | 1,018 | 703 | ||||||
Others | 8,496 | 16,974 | ||||||
Rs. | 83,792 | Rs. | 85,634 | |||||
For the year ended March 31, | ||||||||
2009 | 2008 | |||||||
PSAI | Rs. | 1,138 | Rs. | 838 | ||||
Global Generics | 2,399 | 2,319 | ||||||
Proprietary Products | 139 | 90 | ||||||
Others | 138 | 115 | ||||||
Rs. | 3,814 | Rs. | 3,362 | |||||
For the year ended March 31, | ||||||||
2009 | 2008 | |||||||
PSAI | Rs. | 3,465 | Rs. | 1,794 | ||||
Global Generics | 4,274 | 3,455 | ||||||
Proprietary Products | 183 | 216 | ||||||
Others | 143 | 1,295 | ||||||
Rs. | 8,065 | Rs. | 6,760 | |||||
F - 34
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
For the year ended March 31, | ||||||||
2009 | 2008 | |||||||
India | Rs. | 11,460 | Rs. | 10,451 | ||||
North America | 24,012 | 11,374 | ||||||
Russia and other countries of the former Soviet Union | 7,623 | 5,526 | ||||||
Europe | 18,047 | 15,863 | ||||||
Others | 8,299 | 6,792 | ||||||
Rs. | 69,441 | Rs. | 50,006 | |||||
As of March 31, | ||||||||
2009 | 2008 | |||||||
India | Rs. | 36,638 | Rs. | 38,933 | ||||
North America | 16,165 | 7,628 | ||||||
Russia and other countries of the former Soviet Union | 3,475 | 1,230 | ||||||
Europe | 26,569 | 37,296 | ||||||
Others | 945 | 547 | ||||||
Rs. | 83,792 | Rs. | 85,634 | |||||
For the year ended March 31, | ||||||||
2009 | 2008 | |||||||
India | Rs. | 4,740 | Rs. | 5,839 | ||||
North America | 1,503 | 315 | ||||||
Russia and other countries of the former Soviet Union | 74 | 4 | ||||||
Europe | 1,693 | 524 | ||||||
Others | 55 | 78 | ||||||
Rs. | 8,065 | Rs. | 6,760 | |||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Recognized values on | ||||
Particulars | acquisition | |||
Property, plant and equipment | Rs. | 741 | ||
Intangible assets | 801 | |||
Inventories | 231 | |||
Non-current liabilities, net | (71 | ) | ||
Deferred tax liabilities, net | (250 | ) | ||
Net identifiable assets and liabilities | Rs. | 1,452 | ||
Negative goodwill recognized in other expense/(income), net | (150 | ) | ||
Consideration paid in cash(1) | Rs. | 1,302 | ||
(1) | Total consideration paid includes direct acquisition costs of Rs.13. |
Customer-related intangible | 4-11 years | |||
Product-related intangibles | 6-13 years |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Recognized values on | ||||
Particulars | acquisition | |||
Property, plant and equipment | Rs. | 755 | ||
Intangible assets | 482 | |||
Inventories | 249 | |||
Deferred tax asset | 53 | |||
Net identifiable assets and liabilities | Rs. | 1,539 | ||
Goodwill on acquisition | 100 | |||
Consideration paid in cash(1) | Rs. | 1,639 | ||
(1) | Total consideration paid includes direct acquisition costs of Rs.31. |
Customer-related intangibles | 4 – 9 years | |||
Product-related intangibles | 9-10 years |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year ended March 31, 2009 | ||||
Revenue | Rs. 69,586 | |||
Profit/(loss) before tax | (4,063 | ) | ||
Profit/(loss) after tax | (5,206 | ) |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Recognized values | ||||
Particulars | on acquisition | |||
Current assets, net (includes Rs.386 of cash and cash equivalents) | Rs. | 408 | ||
Intangible assets | 82 | |||
Deferred tax asset | 268 | |||
Total consideration paid | Rs. | 758 | ||
F - 39
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Furniture, | ||||||||||||||||||||||||||||
fixtures and | ||||||||||||||||||||||||||||
Plant and | Computer | office | ||||||||||||||||||||||||||
Land | Buildings | equipment | equipment | equipment | Vehicles | Total | ||||||||||||||||||||||
Gross carrying value/Cost | ||||||||||||||||||||||||||||
Balance as at April 1, 2007 | Rs. | 876 | Rs. | 3,064 | Rs. | 9,975 | Rs. | 679 | Rs. | 937 | Rs. | 383 | Rs. | 15,914 | ||||||||||||||
Additions | 704 | 969 | 2,968 | — | 391 | 125 | 5,157 | |||||||||||||||||||||
Disposals | (15 | ) | (36 | ) | (269 | ) | — | (59 | ) | (52 | ) | (431 | ) | |||||||||||||||
Effect of changes in foreign exchange rates | (109 | ) | 150 | 14 | 210 | (402 | ) | (18 | ) | (155 | ) | |||||||||||||||||
Balance as at March 31, 2008 | 1,456 | 4,147 | 12,688 | 889 | 867 | 438 | 20,485 | |||||||||||||||||||||
Balance as at April 1, 2008 | 1,456 | 4,147 | 12,688 | 889 | 867 | 438 | 20,485 | |||||||||||||||||||||
Additions through business combination | 84 | 425 | 949 | — | 38 | — | 1,496 | |||||||||||||||||||||
Other additions | 405 | 938 | 2,784 | 227 | 159 | 106 | 4,619 | |||||||||||||||||||||
Disposals | (1 | ) | (5 | ) | (87 | ) | (11 | ) | (67 | ) | (54 | ) | (225 | ) | ||||||||||||||
Effect of changes in foreign exchange rates | (7 | ) | 76 | 125 | 10 | (87 | ) | (1 | ) | 116 | ||||||||||||||||||
Balance as at March 31, 2009 | 1,937 | 5,581 | 16,459 | 1,115 | 910 | 489 | 26,491 | |||||||||||||||||||||
Depreciation | ||||||||||||||||||||||||||||
Balance as at April 1, 2007 | — | 501 | 4,786 | 310 | 531 | 169 | 6,297 | |||||||||||||||||||||
Depreciation for the year | — | 162 | 1,293 | 81 | 156 | 82 | 1,774 | |||||||||||||||||||||
Disposals | (16 | ) | (264 | ) | — | (55 | ) | (33 | ) | (368 | ) | |||||||||||||||||
Effect of changes in foreign exchange rates | (14 | ) | (67 | ) | (1 | ) | 105 | (6 | ) | 17 | ||||||||||||||||||
Balance as at March 31, 2008 | — | 633 | 5,748 | 390 | 737 | 212 | 7,720 | |||||||||||||||||||||
Balance as at April 1, 2008 | — | 633 | 5,748 | 390 | 737 | 212 | 7,720 | |||||||||||||||||||||
Depreciation for the year | — | 206 | 1,701 | 173 | 137 | 94 | 2,311 | |||||||||||||||||||||
Disposals | — | (1 | ) | (47 | ) | (11 | ) | (59 | ) | (41 | ) | (159 | ) | |||||||||||||||
Effect of changes in foreign exchange rates | — | 1 | (36 | ) | 9 | 41 | 1 | 16 | ||||||||||||||||||||
Balance as at March 31, 2009 | — | 839 | 7,366 | 561 | 856 | 266 | 9,888 | |||||||||||||||||||||
Net carrying value | ||||||||||||||||||||||||||||
As at April 1, 2007 | 876 | 2,563 | 5,189 | 369 | 406 | 214 | 9,617 | |||||||||||||||||||||
As at March 31, 2008 | 1,456 | 3,514 | 6,940 | 499 | 130 | 226 | 12,765 | |||||||||||||||||||||
Add: Capital-work-in progress | 4,000 | |||||||||||||||||||||||||||
16,765 | ||||||||||||||||||||||||||||
As at March 31, 2009 | Rs. | 1,937 | Rs. | 4,742 | Rs. | 9,093 | Rs. | 554 | Rs. | 54 | Rs. | 223 | Rs. | 16,603 | ||||||||||||||
Add: Capital-work-in progress | Rs. | 4,279 | ||||||||||||||||||||||||||
Rs. | 20,882 |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As of March 31, | ||||||||
2009 | 2008 | |||||||
Opening balance(1) | Rs. | 17,087 | Rs. | 15,767 | ||||
Goodwill arising on business combinations | 262 | — | ||||||
Effect of translation adjustments | 897 | 1,320 | ||||||
Closing balance (1) | Rs. | 18,246 | Rs. | 17,087 | ||||
Less: Impairment loss(2) | (10,946 | ) | (90 | ) | ||||
Rs. | 7,300 | Rs. | 16,997 | |||||
(1) | This does not include goodwill arising upon investment in associate of Rs.181, which is included in the carrying value of the investment in the equity accounted investees. | |
(2) | The impairment loss of Rs.10,856 for the year ended March 31, 2009 relates to the Company’s German subsidiary, betapharm, which is part of the Global Generics segment (Refer to note 10 for details). The impairment loss of Rs.90 for the year ended March 31, 2008 relates to the Company’s Proprietary Products segment. |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Trademarks | ||||||||||||||||||||
Trademarks | with | Product | Beneficial toll | Technology | ||||||||||||||||
with finite | indefinite | related | manufacturing | related | ||||||||||||||||
useful life | useful life | intangibles | contracts | intangibles | ||||||||||||||||
Gross carrying value/cost | ||||||||||||||||||||
Balance as at April 1, 2007 | Rs. | 2,598 | Rs. | 5,749 | Rs. | 14,078 | Rs. | 666 | Rs. | — | ||||||||||
Additions | — | — | 352 | — | — | |||||||||||||||
Effect of changes in foreign exchange rates | (17 | ) | 766 | 447 | 64 | — | ||||||||||||||
Balance as at March 31, 2008 | 2,581 | 6,515 | 14,877 | 730 | — | |||||||||||||||
Balance as at April 1, 2008 | 2,581 | 6,515 | 14,877 | 730 | — | |||||||||||||||
Additions through business combinations | — | — | 138 | — | 716 | |||||||||||||||
Other additions | — | — | 145 | — | — | |||||||||||||||
Effect of changes in foreign exchange rates | (18 | ) | 411 | 811 | 46 | (59 | ) | |||||||||||||
Reclassifications | 6,926 | (6,926 | ) | — | — | — | ||||||||||||||
Balance as at March 31, 2009 | 9,489 | — | 15,971 | 776 | 657 | |||||||||||||||
Amortization/Impairment loss | ||||||||||||||||||||
Balance as at April 1, 2007 | 2,359 | — | 1,079 | 180 | — | |||||||||||||||
Amortization for the year | 177 | — | 1,083 | 303 | — | |||||||||||||||
Impairment loss | — | — | 3,011 | — | — | |||||||||||||||
Effect of changes in foreign exchange rates | (14 | ) | — | (150 | ) | — | — | |||||||||||||
Balance as at March 31, 2008 | 2,522 | — | 5,023 | 483 | — | |||||||||||||||
Balance as at April 1, 2008 | 2,522 | — | 5,023 | 483 | — | |||||||||||||||
Amortization for the year | 34 | — | 993 | 279 | 79 | |||||||||||||||
Impairment loss | — | — | 3,167 | — | — | |||||||||||||||
Effect of changes in foreign exchange rates | 2 | — | 84 | 14 | 4 | |||||||||||||||
Balance as at March 31, 2009 | 2,558 | — | 9,267 | 776 | 83 | |||||||||||||||
Net carrying amount | ||||||||||||||||||||
As at April 1, 2007 | 239 | 5,749 | 12,999 | 486 | — | |||||||||||||||
As at March 31, 2008 | 59 | 6,515 | 9,854 | 247 | — | |||||||||||||||
As at March 31, 2009 | Rs. | 6,931 | Rs. | — | Rs. | 6,704 | Rs. | — | Rs. | 574 | ||||||||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Customer | ||||||||||||
related | ||||||||||||
intangibles | Others | Total | ||||||||||
Gross carrying value/cost | ||||||||||||
Balance as at April 1, 2007 | Rs. | 178 | Rs. | 150 | Rs. | 23,419 | ||||||
Additions | 69 | — | 421 | |||||||||
Effect of changes in foreign exchange rates | (11 | ) | (4 | ) | 1,245 | |||||||
Balance as at March 31, 2008 | 236 | 146 | 25,085 | |||||||||
Balance as at April 1, 2008 | 236 | 146 | 25,085 | |||||||||
Additions through business combinations | 409 | 49 | 1,312 | |||||||||
Other additions | — | 190 | 335 | |||||||||
Effect of changes in foreign exchange rates | 62 | 2 | 1,255 | |||||||||
Reclassifications | — | — | — | |||||||||
Balance as at March 31, 2009 | 707 | 387 | 27,987 | |||||||||
Amortization/Impairment loss | ||||||||||||
Balance as at April 1, 2007 | 153 | 137 | 3,908 | |||||||||
Amortization for the year | 17 | 8 | 1,588 | |||||||||
Impairment loss | — | — | 3,011 | |||||||||
Effect of changes in foreign exchange rates | (9 | ) | (5 | ) | (178 | ) | ||||||
Balance as at March 31, 2008 | 161 | 140 | 8,329 | |||||||||
Balance as at April 1, 2008 | 161 | 140 | 8,329 | |||||||||
Amortization for the year | 63 | 55 | 1,503 | |||||||||
Impairment loss | — | — | 3,167 | |||||||||
Effect of changes in foreign exchange rates | 3 | 2 | 109 | |||||||||
Balance as at March 31, 2009 | 227 | 197 | 13,108 | |||||||||
Net carrying amount | ||||||||||||
As at April 1, 2007 | 25 | 13 | 19,511 | |||||||||
As at March 31, 2008 | 75 | 6 | 16,756 | |||||||||
As at March 31, 2009 | Rs. | 480 | Rs. | 190 | Rs. | 14,879 | ||||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
• | Revenue projections are based on the approved budgets for the fiscal year ending March 31, 2010, and take into account the expected long-term growth rate in the German generics industry. Accordingly, based on industry reports and other information, the Company has considered a constant 1% decline in revenue on a year-on-year basis for existing products and 3% growth for launch of new products. | |
• | The net cash flows have been discounted based on a post-tax discounting tax rate ranging from 7.28% to 9.18%. |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As of/for the year ended March 31, | ||||||||
2009 | 2008 | |||||||
Ownership | 51.3 | % | 51.3 | % | ||||
Total current assets | Rs. | 217 | Rs. | 184 | ||||
Total non-current assets | 427 | 324 | ||||||
Total assets | Rs. | 644 | Rs. | 508 | ||||
Equity | Rs. | 510 | Rs. | 462 | ||||
Total current liabilities | 133 | 45 | ||||||
Total non-current liabilities | 1 | 1 | ||||||
Total liabilities | Rs. | 134 | Rs. | 46 | ||||
Revenues | Rs. | 611 | Rs. | 878 | ||||
Expenses | 563 | 849 | ||||||
Profit for the year | Rs. | 48 | Rs. | 29 | ||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As of/for the year | ||||
ended March 31, 2008 | ||||
Ownership | 14.31 | % | ||
Total assets | Rs. | 425 | ||
Equity | 398 | |||
Total liabilities | 27 | |||
Income | 41 | |||
Expenses | (136 | ) | ||
Loss for the year | Rs. | (95 | ) | |
Gain/(loss) | ||||||||||||
recognized | ||||||||||||
Cost | directly in equity | Fair value | ||||||||||
Investments in units of mutual funds | Rs. | 517 | Rs. | — | Rs. | 517 | ||||||
Investment in equity securities | 3 | 10 | 13 | |||||||||
Rs. | 520 | Rs. | 10 | Rs. | 530 | |||||||
Gain/(loss) | ||||||||||||
recognized | ||||||||||||
Cost | directly in equity | Fair value | ||||||||||
Investments in units of mutual funds | Rs. | 3,508 | Rs. | 8 | Rs. | 3,516 | ||||||
Investment in debt securities | 1,250 | (32 | ) | 1,218 | ||||||||
Investment in equity securities | 3 | 16 | 19 | |||||||||
Rs. | 4,761 | Rs. | (8 | ) | Rs. | 4,753 | ||||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As of March 31, | ||||||||
2009 | 2008 | |||||||
Raw materials | Rs. | 3,518 | Rs. | 3,226 | ||||
Packing materials, stores and spares | 876 | 773 | ||||||
Work-in-progress | 2,976 | 2,346 | ||||||
Finished goods | 5,856 | 4,788 | ||||||
Total inventories | Rs. | 13,226 | Rs. | 11,133 | ||||
As of March 31, | ||||||||
2009 | 2008 | |||||||
Trade receivables due from related parties | Rs. | 43 | Rs. | 26 | ||||
Other trade receivables | 14,891 | 7,258 | ||||||
Rs. | 14,934 | Rs. | 7,284 | |||||
Less: Allowance for bad debt of trade receivables | (342 | ) | (461 | ) | ||||
Trade receivables, net | Rs. | 14,592 | Rs. | 6,823 | ||||
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Balance at the beginning of the year | Rs. | 461 | Rs. | 293 | ||||
Provision for bad debt | 148 | 227 | ||||||
Trade receivables written off and charged to allowance | (267 | ) | (59 | ) | ||||
Balance at the end of the year | Rs. | 342 | Rs. | 461 | ||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As of March 31, | ||||||||
2009 | 2008 | |||||||
Current | ||||||||
Prepaid expenses | Rs. | 243 | Rs. | 175 | ||||
Advance payments to vendors | 368 | 500 | ||||||
Balances and receivables from statutory authorities(1) | 2,207 | 1,440 | ||||||
Due from related parties | 5 | 5 | ||||||
Deposits | 144 | 134 | ||||||
Advance to employees | 39 | 55 | ||||||
Export benefits receivable(2) | 685 | 464 | ||||||
Others | 1,317 | 908 | ||||||
5,008 | 3,681 | |||||||
Non-current | ||||||||
Deposits | 117 | 75 | ||||||
Others | 83 | 8 | ||||||
200 | 83 | |||||||
Rs. | 5,208 | Rs. | 3,764 | |||||
(1) | Balances and receivables from statutory authorities primarily consists of amounts deposited with the excise authorities of India and the unutilized excise input credits on purchases. These are regularly utilized to offset the Indian excise liability on goods produced by the Company. Accordingly, these balances have been classified as current assets. | |
(2) | Refer to note 3.k. for details regarding export entitlements. |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As of March 31, | ||||||||
2009 | 2008 | |||||||
Cash balances | Rs. | 30 | Rs. | 21 | ||||
Current and time deposit balances with banks | 5,566 | 7,400 | ||||||
Cash and cash equivalents on the balance sheet | 5,596 | 7,421 | ||||||
Bank overdrafts used for cash management purposes | (218 | ) | (435 | ) | ||||
Cash and cash equivalents in the cash flow statement | Rs. | 5,378 | Rs. | 6,986 | ||||
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Par value per share | Rs. | 5 | Rs. | 5 | ||||
Authorised share capital | 1,000 | 1,000 | ||||||
Fully paid up capital | ||||||||
As at April 1 | 841 | 840 | ||||||
Add: Shares issued on exercise of stock options | 1 | 1 | ||||||
As at March 31 | Rs. | 842 | Rs. | 841 | ||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Issued equity shares as of April 1 | 168,172,746 | 167,912,180 | ||||||
Effect of shares issued on exercise of stock options | 176,393 | 163,660 | ||||||
Weighted average number of equity shares as of March 31 | 168,349,139 | 168,075,840 |
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Weighted average number of equity shares (Basic) | 168,349,139 | 168,075,840 | ||||||
Effect of outstanding stock options | — | 614,934 | ||||||
Weighted average number of equity shares (Diluted) | 168,349,139 | 168,690,774 |
As at March 31, | ||||||||
2009 | 2008 | |||||||
Rupee borrowings | 7.52 | % | 9.0 | % | ||||
Foreign currency borrowings | LIBOR+ 100 - 225bps | LIBOR+ 50-100 bps |
F - 50
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As at March 31, | ||||||||
2009 | 2008 | |||||||
Rupee term loan | Rs. | 7 | Rs. | 13 | ||||
Foreign currency loan | 13,326 | 14,184 | ||||||
Obligations under finance leases | 300 | 292 | ||||||
13,633 | 14,489 | |||||||
Less: Current portion | ||||||||
Rupee term loan | 6 | 6 | ||||||
Foreign currency loan | 3,477 | 1,773 | ||||||
Obligations under finance leases | 18 | 12 | ||||||
3,501 | 1,791 | |||||||
Non-current portion | ||||||||
Rupee term loan | 1 | 7 | ||||||
Foreign currency loan | 9,849 | 12,411 | ||||||
Obligations under finance leases | 282 | 280 | ||||||
Rs. | 10,132 | Rs. | 12,698 | |||||
F - 51
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
March 31, | ||||||||
2009 | 2008 | |||||||
Rupee borrowings | 2.00 | % | 2.00 | % | ||||
Foreign currency borrowings | EURIBOR + 70 bps and LIBOR+70 bps | EURIBOR + 70 bps-200 bps and LIBOR+70 bps |
Foreign | Obligation | |||||||||||||||
Maturing in the year ending | Rupee term | currency | under finance | |||||||||||||
March 31, | loan | loan | lease | Total | ||||||||||||
2010 | Rs. | 6 | Rs. | 3,477 | Rs. | 18 | Rs. | 3,501 | ||||||||
2011 | 1 | 4,118 | 16 | 4,135 | ||||||||||||
2012 | — | 5,731 | 9 | 5,740 | ||||||||||||
2013 | — | — | 9 | 9 | ||||||||||||
2014 | — | — | 10 | 10 | ||||||||||||
Thereafter | — | — | 238 | 238 | ||||||||||||
Rs. | 7 | Rs. | 13,326 | Rs. | 300 | Rs. | 13,633 | |||||||||
Foreign | Obligation | |||||||||||||||
Maturing in the year ending | Rupee term | currency | under finance | |||||||||||||
March 31, | loan | loan | lease | Total | ||||||||||||
2009 | Rs. | 6 | Rs. | 1,773 | Rs. | 12 | Rs. | 1,791 | ||||||||
2010 | 6 | 3,249 | 16 | 3,271 | ||||||||||||
2011 | 1 | 3,848 | 14 | 3,863 | ||||||||||||
2012 | — | 5,314 | 8 | 5,322 | ||||||||||||
2013 | — | — | 9 | 9 | ||||||||||||
Thereafter | — | — | 233 | 233 | ||||||||||||
Rs. | 13 | Rs. | 14,184 | Rs. | 292 | Rs. | 14,489 | |||||||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Present value of | Future | |||||||||||
minimum lease | minimum lease | |||||||||||
Particulars | payments | Interest | payments | |||||||||
Not later than one year | Rs. | 18 | Rs. | 7 | Rs. | 25 | ||||||
Between one and five years | 44 | 1 | 45 | |||||||||
More than five years | 238 | 1 | 239 | |||||||||
Rs. | 300 | Rs. | 9 | Rs. | 309 | |||||||
Present value of | Future | |||||||||||
minimum lease | minimum lease | |||||||||||
Particulars | payments | Interest | payments | |||||||||
Not later than one year | Rs. | 12 | Rs. | 9 | Rs. | 21 | ||||||
Between one and five years | 47 | 6 | 53 | |||||||||
More than five years | 233 | 1 | 234 | |||||||||
Rs. | 292 | Rs. | 16 | Rs. | 308 | |||||||
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Service cost | Rs. | 43 | Rs. | 35 | ||||
Interest cost | 27 | 22 | ||||||
Expected return on plan assets | (22 | ) | (17 | ) | ||||
Gratuity cost recognized in income statement | Rs. | 48 | Rs. | 40 | ||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As of March 31, | ||||||||
2009 | 2008 | |||||||
Present value of unfunded obligations | Rs. | 6 | Rs. | 3 | ||||
Present value of funded obligations | 398 | 319 | ||||||
Total present value of obligations | 404 | 322 | ||||||
Fair value of plan assets | (334 | ) | (289 | ) | ||||
Present value of net obligations | 70 | 33 | ||||||
Unrecognized actuarial gains and (losses) | (75 | ) | (22 | ) | ||||
Recognized (asset )/liability | Rs. | (5 | ) | Rs. | 11 | |||
As of March 31, | ||||||||
2009 | 2008 | |||||||
Defined benefit obligations at the beginning of the year | Rs. | 322 | Rs. | 260 | ||||
Service cost | 43 | 35 | ||||||
Interest cost | 27 | 22 | ||||||
Actuarial (gain)/loss | 45 | 37 | ||||||
Benefits paid | (33 | ) | (32 | ) | ||||
Defined benefit obligation at the end of the year | Rs. | 404 | Rs. | 322 | ||||
As of March 31, | ||||||||
2009 | 2008 | |||||||
Fair value of plan assets at the beginning of the year | Rs. | 289 | Rs. | 236 | ||||
Expected return on plan assets | 22 | 17 | ||||||
Employer contributions | 64 | 53 | ||||||
Benefits paid | (33 | ) | (32 | ) | ||||
Actuarial gain/(loss) | (8 | ) | 15 | |||||
Plan assets at the end of the year | Rs. | 334 | Rs. | 289 | ||||
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Defined benefit obligation | Rs. | 404 | Rs. | 322 | ||||
Plan assets | 334 | 289 | ||||||
Surplus/(deficit) | (70 | ) | (33 | ) | ||||
Experience adjustments on plan liabilities | 18 | 36 | ||||||
Experience adjustments on plan assets | (7 | ) | 15 |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Discount rate | 7.15 | % | 7.80 | % | ||||
Rate of compensation increase | 8% per annum for first 3 years and 6% per annum thereafter | 8% to 10% per annum for first 4 years and 6% per annum thereafter | ||||||
Expected long-term return on plan assets | 7.50 | % | 7.50 | % |
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Discount rate | 7.80 | % | 7.50 | % | ||||
Rate of compensation increase | 8% to 10% per annum for first 4 years and 6% per annum thereafter | 8% to 10% per annum for first 4 years and 6% per annum thereafter | ||||||
Expected long-term return on plan assets | 7.50 | % | 7.50 | % |
As ofMarch 31, | ||||||||
2009 | 2008 | |||||||
Debt securities | 4 | % | 7 | % | ||||
Funds managed by insurers | 95 | % | 92 | % | ||||
Others | 1 | % | 1 | % |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Service cost | Rs. | 12 | Rs. | 13 | ||||
Interest cost | 18 | 17 | ||||||
Expected return on plan assets | (15 | ) | (18 | ) | ||||
Actuarial (gain)/loss | 5 | — | ||||||
Pension cost recognized in income statement | Rs. | 20 | Rs. | 12 | ||||
As of March 31, | ||||||||
2009 | 2008 | |||||||
Present value of unfunded obligations | Rs. | 25 | Rs. | 50 | ||||
Present value of funded obligations | 219 | 203 | ||||||
Total present value of obligations | 244 | 253 | ||||||
Fair value of plan assets | (176 | ) | (213 | ) | ||||
Present value of net obligations | 68 | 40 | ||||||
Unrecognized actuarial losses | (102 | ) | (61 | ) | ||||
Recognized asset | Rs. | (34 | ) | Rs. | (21 | ) | ||
As of March 31, | ||||||||
2009 | 2008 | |||||||
Defined benefit obligations at the beginning of the year | Rs. | 253 | Rs. | 258 | ||||
Service cost | 12 | 13 | ||||||
Interest cost | 18 | 17 | ||||||
Actuarial (gain)/loss | — | 43 | ||||||
Benefits paid | (39 | ) | (78 | ) | ||||
Defined benefit obligation at the end of the year | Rs. | 244 | Rs. | 253 | ||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As of March 31, | ||||||||
2009 | 2008 | |||||||
Fair value of plan assets at the beginning of the year | Rs. | 213 | Rs. | 261 | ||||
Expected return on plan assets | 15 | 18 | ||||||
Employer contributions | 33 | 30 | ||||||
Benefits paid | (39 | ) | (78 | ) | ||||
Actuarial gain/(loss) | (46 | ) | (18 | ) | ||||
Plan assets at the end of the year | Rs. | 176 | Rs. | 213 | ||||
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Defined benefit obligation | Rs. | 244 | Rs. | 253 | ||||
Plan assets | 176 | 213 | ||||||
Surplus/(deficit) | (68 | ) | (40 | ) | ||||
Experience adjustments on plan liabilities | 80 | 40 | ||||||
Experience adjustments on plan assets | (46 | ) | (21 | ) |
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Discount rate | 9.5 | % | 7.5 | % | ||||
Rate of compensation increase | 4.5 | % | 4.5 | % | ||||
Expected long-term return on plan assets | 10.5 | % | 6.25 | % | ||||
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Discount rate | 7.5 | % | 7.5 | % | ||||
Rate of compensation increase | 4.5 | % | 4.5 | % | ||||
Expected long-term return on plan assets | 10.5 | % | 7.5 | % | ||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As ofMarch 31, | ||||||||
2009 | 2008 | |||||||
Equity | 47 | % | 47 | % | ||||
Others | 53 | % | 53 | % |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Number of | Number of | |||||||||||
Options granted | Options granted | |||||||||||
Particulars | Under category A | Under category B | Total | |||||||||
Options reserved under original Plan | 300,000 | 1,995,478 | 2,295,478 | |||||||||
Options exercised prior to stock dividend date (A) | 94,061 | 147,793 | 241,854 | |||||||||
Balance of shares that can be allotted exercise of options (B) | 205,939 | 1,847,685 | 2,053,624 | |||||||||
Options arising from stock dividend (C) | 205,939 | 1,847,685 | 2,053,624 | |||||||||
Options reserved after stock dividend (A+B+C) | 505,939 | 3,843,163 | 4,349,102 |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year ended March 31, 2009 | ||||||||||||||||
Weighted-average | ||||||||||||||||
Weighted- | remaining | |||||||||||||||
Shares arising | average | contractual life | ||||||||||||||
out of options | Range of exercise prices | exercise price | (months) | |||||||||||||
Outstanding at the beginning of the period | 158,780 | Rs. | 362.50 - 531.51 | 421.79 | 44 | |||||||||||
Granted during the year | 20,000 | 448 | 448 | 97 | ||||||||||||
Expired/forfeited during the period | (34,500 | ) | 441.5-442.5 | 441.92 | — | |||||||||||
Exercised during the period | (7,870 | ) | 441.5-531.5 | 474.32 | — | |||||||||||
Outstanding at the end of the period | 136,410 | Rs. | 362.50 - 531.51 | 417.51 | 42 | |||||||||||
Exercisable at the end of the period | 103,910 | Rs. | 362.50 - 531.51 | 418.26 | 30 | |||||||||||
Year ended March 31, 2009 | ||||||||||||||||
Weighted- average | ||||||||||||||||
Shares | Weighted- | remaining | ||||||||||||||
arising out | Range of exercise | average | contractual life | |||||||||||||
of options | prices | exercise price | (months) | |||||||||||||
Outstanding at the beginning of the period | 773,788 | Rs. | 5 | Rs. | 5 | 74 | ||||||||||
Granted during the period | 355,820 | 5 | 5 | 91 | ||||||||||||
Expired/forfeited during the period | (135,387 | ) | 5 | 5 | — | |||||||||||
Exercised during the period | (215,735 | ) | 5 | 5 | — | |||||||||||
Outstanding at the end of the period | 778,486 | 5 | 5 | 72 | ||||||||||||
Exercisable at the end of the period | 100,209 | Rs. | 5 | Rs. | 5 | 46 | ||||||||||
Year ended March 31, 2008 | ||||||||||||||||
Weighted- average | ||||||||||||||||
Shares | Weighted- | remaining | ||||||||||||||
arising out of | Range of exercise | average | contractual life | |||||||||||||
options | prices | exercise price | (months) | |||||||||||||
Outstanding at the beginning of the period | 191,580 | Rs. | 362.50 - 531.51 | Rs. | 427.9 | 54 | ||||||||||
Expired/forfeited during the period | (2,100 | ) | 442.5 | 442.5 | — | |||||||||||
Exercised during the period | (30,700 | ) | 441.5-531.51 | 458.32 | — | |||||||||||
Outstanding at the end of the period | 158,780 | 362.50 - 531.51 | 421.79 | 44 | ||||||||||||
Exercisable at the end of the period | 119,830 | 362.50 - 531.51 | 433.05 | 36 | ||||||||||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year ended March 31, 2008 | ||||||||||||||||
Weighted- average | ||||||||||||||||
Weighted- | remaining | |||||||||||||||
Shares arising | Range of exercise | average | contractual life | |||||||||||||
out of options | prices | exercise price | (months) | |||||||||||||
Outstanding at the beginning of the period | 889,252 | Rs. | 5 | Rs. | 5 | 77 | ||||||||||
Granted during the period | 386,060 | 5 | 5 | 91 | ||||||||||||
Forfeited during the period | (133,240 | ) | 5 | 5 | — | |||||||||||
Surrendered by employees during the period | (138,418 | ) | 5 | 5 | — | |||||||||||
Exercised during the period | (229,866 | ) | 5 | 5 | — | |||||||||||
Outstanding at the end of the period | 773,788 | 5 | 5 | 74 | ||||||||||||
Exercisable at the end of the period | 72,364 | 5 | 5 | 50 | ||||||||||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year ended March 31, 2009 | ||||||||||||||||
Weighted-average | ||||||||||||||||
Weighted- | remaining | |||||||||||||||
Shares arising | Range of | average | contractual life | |||||||||||||
out of options | exercise prices | exercise price | (months) | |||||||||||||
Outstanding at the beginning of the period | 182,778 | Rs. | 5 | Rs. | 5 | 73 | ||||||||||
Granted during the period | 74,400 | 5 | 5 | 89 | ||||||||||||
Expired/forfeited during the period | (28,175 | ) | 5 | 5 | — | |||||||||||
Exercised during the period | (72,426 | ) | 5 | 5 | — | |||||||||||
Outstanding at the end of the period | 156,577 | 5 | 5 | 71 | ||||||||||||
Exercisable at the end of the period | 24012 | Rs. | 5 | Rs. | 5 | 52 | ||||||||||
Year ended March 31, 2008 | ||||||||||||||||
Weighted-average | ||||||||||||||||
Shares | Weighted- | remaining | ||||||||||||||
arising out | Range of exercise | average | contractual life | |||||||||||||
of options | prices | exercise price | (months) | |||||||||||||
Granted during the period | 206,818 | 5 | 5 | 84 | ||||||||||||
Expired/forfeited during the period | (24,040 | ) | 5 | 5 | — | |||||||||||
Outstanding at the end of the period | 182,778 | Rs. | 5 | Rs. | 5 | 73 | ||||||||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year ended | Year ended | |||||||
March 31, 2009 | March 31, 2008 | |||||||
Expected volatility | 29.52 | % | 30.39 | % | ||||
Exercise price | Rs. | 24.68 | Rs. | 5.00 | ||||
Option life | 2.57 years | 2.25 years | ||||||
Risk-free interest rate | 7.80 | % | 8.03 | % | ||||
Expected dividends | 0.6 | % | 0.75 | % | ||||
Grant date share price | Rs. | 632.26 | Rs. | 667.52 | ||||
Year ended March 31, 2009 | ||||||||||||||||
Weighted-average | ||||||||||||||||
Weighted- | remaining | |||||||||||||||
Shares arising | Range of exercise | average | contractual life | |||||||||||||
out of options | prices | exercise price | (months) | |||||||||||||
Outstanding at the beginning of the period | 2,961,116 | Rs. | 10-14.99 | Rs. | 13.16 | 45 | ||||||||||
Expired/forfeited during the period | (44,853 | ) | 10-14.99 | 11.33 | — | |||||||||||
Outstanding at the end of the period | 2,916,263 | 10-14.99 | 13.99 | 33 | ||||||||||||
Exercisable at the end of the period | 1,899,941 | Rs. | 10-14.99 | Rs. | 13.85 | 26 | ||||||||||
Year ended March 31, 2008 | ||||||||||||||||
Weighted- average | ||||||||||||||||
Weighted- | remaining | |||||||||||||||
Shares arising | Range of exercise | average exercise | contractual life | |||||||||||||
out of options | prices | price | (months) | |||||||||||||
Outstanding at the beginning of the period | 1,183,583 | Rs. | 10 | Rs. | 10 | 62 | ||||||||||
Granted during the period | 1,877,369 | 14.99 | 14.99 | 42 | ||||||||||||
Expired/forfeited during the period | (99,836 | ) | 10 | 10 | — | |||||||||||
Outstanding at the end of the period | 2,961,116 | 10-14.99 | 13.16 | 45 | ||||||||||||
Exercisable at the end of the period | 1,260,815 | Rs. | 10-14.99 | Rs. | 14.75 | 33 | ||||||||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year ended | ||||
March 31, 2008 | ||||
Expected volatility | 57.38 | % | ||
Exercise price | Rs. | 10.00 | ||
Option life | 0.67 years | |||
Risk-free interest rate | 7.43 | % | ||
Grant date share price | Rs. | 29.03 |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As at March 31, | ||||||||
2009 | 2008 | |||||||
Sales returns | Rs. | 815 | Rs. | 627 | ||||
Environmental liability | 42 | — | ||||||
Legal | 1,113 | 123 | ||||||
Rs. | 1,970 | Rs. | 750 | |||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Allowance for | Environmental | |||||||||||||||
sales return(1) | Liability (2) | Legal (3) | Total | |||||||||||||
Balance as at April 1, 2008 | Rs. | 627 | Rs. | — | Rs. | 123 | Rs. | 750 | ||||||||
Provision made during the year, net | 663 | 990 | 1,653 | |||||||||||||
Provisions acquired in business combinations | — | 42 | — | 42 | ||||||||||||
Provision used during the year | (475 | ) | — | — | (475 | ) | ||||||||||
Balance as at March 31, 2009 | 815 | 42 | 1,113 | 1,970 | ||||||||||||
Current | 815 | — | 1,113 | 1,928 | ||||||||||||
Non-current | — | 42 | — | 42 | ||||||||||||
Rs. | 815 | Rs. | 42 | Rs. | 1,113 | Rs. | 1,970 | |||||||||
(1) | Provision for sales returns is accounted by recording a provision based on the Company’s estimate of expected sales returns. See note 3.k. for details. | |
(2) | As a result of the acquisition of a unit of The Dow Chemical Company (see note 7.a.), the Company assumed a liability for contamination of the Mirfield site acquired amounting to Rs.42. Because the seller is required to indemnify the Company for this liability, a corresponding asset has also been recorded in the balance sheet. | |
(3) | Provision for legal primarily consists of a settlement of legal claims by Eli Lilly amounting to Rs.916. See note 27 for details. |
Allowance for sales | ||||||||||||
return | Legal | Total | ||||||||||
Balance as at April 1, 2007 | Rs. | 747 | Rs. | 153 | Rs. | 900 | ||||||
Provision made during the year, net | 164 | — | 164 | |||||||||
Provision utilized during the year | (284 | ) | (30 | ) | (314 | ) | ||||||
Balance as at March 31, 2008 | 627 | 123 | 750 | |||||||||
Current | 627 | 123 | 750 | |||||||||
Non-current | — | — | — | |||||||||
Rs. | 627 | Rs. | 123 | Rs. | 750 | |||||||
As at March 31, | ||||||||
2009 | 2008 | |||||||
Trade payables due to related parties | Rs. | 68 | Rs. | 17 | ||||
Other trade payables | 5,919 | 5,410 | ||||||
Rs. | 5,987 | Rs. | 5,427 | |||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As at March 31, | ||||||||
2009 | 2008 | |||||||
Current | ||||||||
Advance from customers | Rs. | 863 | Rs. | 635 | ||||
Statutory dues payable | 724 | 322 | ||||||
Accrued expenses | 5,641 | 3,967 | ||||||
Deferred revenue | 3 | 2 | ||||||
Others | 874 | 1,399 | ||||||
8,105 | 6,325 | |||||||
Non-current | ||||||||
Statutory dues payable | Rs. | 53 | Rs. | 56 | ||||
Deferred revenue | 127 | 75 | ||||||
Others | 170 | 190 | ||||||
350 | 321 | |||||||
Rs. | 8,455 | Rs. | 6,646 | |||||
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Sales | Rs. | 68,381 | Rs. | 49,266 | ||||
Services | 1,060 | 740 | ||||||
Rs. | 69,441 | Rs. | 50,006 | |||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
(Profit)/loss on sale of property, plant and equipment, net | Rs. | (15 | ) | Rs. | 8 | |||
Sale of spent chemical | (211 | ) | (200 | ) | ||||
Negative goodwill on acquisition of business | (150 | ) | — | |||||
Miscellaneous income | (286 | ) | (210 | ) | ||||
Settlement of legal claim from innovator (1) | 916 | — | ||||||
Rs. | 254 | Rs. | (402 | ) | ||||
(1) | During the year ended March 31, 2008, Eli Lilly’s German patent covering olanzapine was invalidated by the German Patent Court. Eli Lilly, the innovator, appealed this decision before the German Federal Court of Justice. The Company’s German subsidiary, betapharm and certain other competitors had launched olanzapine products in Germany pending the decision from the German Federal Court of Justice. Eli Lilly filed an application for an interim order against betapharm claiming patent infringement at the court in Düsseldorf, Germany. However, in August 2008, the court decided not to grant the interim order due to lack of urgency. In December 2008, the Federal Court of Justice overruled the German Patent Court and decided to maintain the olanzapine patent in favor of Eli Lilly, the innovator. The Company subsequently stopped marketing this product in the German market. As part of the litigation, Eli Lilly claimed damages resulting from the sales of the Company’s olanzapine product. In settlement of such claims, the Company agreed to pay compensation to Eli Lilly in the amount of Rs.916. Accordingly, the Company has recorded a liability towards this claim in the amount of Rs.916. |
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Interest income | Rs. | (346 | ) | Rs. | (751 | ) | ||
Dividend and profit on sale of investments, net | (136 | ) | (111 | ) | ||||
Foreign exchange gain, net | — | (739 | ) | |||||
(482 | ) | (1,601 | ) | |||||
Foreign exchange loss, net | 634 | — | ||||||
Interest expense on borrowings | 1,034 | 1,080 | ||||||
1,668 | 1,080 | |||||||
Rs. | 1,186 | Rs. | (521 | ) | ||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
a. | Income tax (expense)/benefit recognized in the income statement |
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Current tax (expense) | ||||||||
Domestic | Rs. | (1,549 | ) | Rs. | (606 | ) | ||
Foreign | (1,182 | ) | (476 | ) | ||||
(2,731 | ) | (1,082 | ) | |||||
Deferred tax (expense)/benefit | ||||||||
Domestic | (166 | ) | (886 | ) | ||||
Foreign | 1,725 | 2,940 | ||||||
1,559 | 2,054 | |||||||
Total income tax (expense)/benefit in income statement | Rs. | (1,172 | ) | Rs. | 972 | |||
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Tax effect on changes in the fair value of other investments | Rs. | (5 | ) | Rs. | (35 | ) | ||
Tax effect on foreign currency translation differences | (41 | ) | (42 | ) | ||||
Tax effect on effective portion of change in fair value of cash flow hedges | 78 | 3 | ||||||
Rs. | 32 | Rs. | (74 | ) | ||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Profit/(loss) before income taxes | Rs. | (3,996 | ) | Rs. | 2,864 | |||
Enacted tax rates in India | 33.99 | % | 33.99 | % | ||||
Computed expected tax (expense)/benefit | 1,359 | (974 | ) | |||||
Effect of : | ||||||||
Differences between Indian and foreign tax rates | 24 | (87 | ) | |||||
Impairment of goodwill | (3,371 | ) | (31 | ) | ||||
Unrecognized deferred tax assets | (303 | ) | (185 | ) | ||||
Expenses not deductible for tax purposes | (119 | ) | (162 | ) | ||||
Share-based payment expense not deductible for tax purposes | (31 | ) | (64 | ) | ||||
Interest expense not deductible for tax purposes | (55 | ) | (270 | ) | ||||
Income exempt from income taxes(1) | 831 | 705 | ||||||
Foreign exchange differences | 30 | (20 | ) | |||||
Incremental deduction allowed for research and development costs (2) | 510 | 545 | ||||||
Effect of change in tax laws and rate (3) | 29 | 1,559 | ||||||
Others | (76 | ) | (44 | ) | ||||
Income tax (expense)/benefit | Rs. | (1,172 | ) | Rs. | 972 | |||
(1) | Income exempt from taxes above represents benefits from certain significant tax incentives provided to export oriented units (i.e., a unit that exports its production to customers outside India) and units located in certain specified less developed geographical areas under the Indian tax laws. These incentives presently pertain to an exemption from payment of Indian corporate income taxes for certain units of the Company for a period of ten consecutive years, beginning from the financial year when that particular unit commenced its operations (referred to as the ‘tax holiday’ period). These tax holiday periods for the Company’s units expire in various years ranging from the year ended March 31, 2008 through the year ending March 31, 2016. |
(2) | Incremental deduction allowed for research and development costs represents tax incentive provided by the Government of India for carrying out such activities. |
(3) | The effect of changes in tax laws and rate relating to the year ended March 31, 2008 primarily includes deferred tax benefit on account of reduction in income tax rates in Germany. |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As at | As at | As at | ||||||||||||||||||||||||||
April 1, 2007 | Additions | Recognition | March 31, 2008 | Additions | Recognition | March 31, 2009 | ||||||||||||||||||||||
Deductible temporary differences, net | 183 | — | — | 183 | — | — | 183 | |||||||||||||||||||||
Tax losses | 450 | 185 | — | 635 | 305 | (2 | ) | 938 | ||||||||||||||||||||
633 | 185 | — | 818 | 305 | (2 | ) | 1,121 | |||||||||||||||||||||
As of March 31, | ||||||||
2009 | 2008 | |||||||
Deferred tax assets | ||||||||
Inventories | Rs. | 480 | Rs. | 454 | ||||
Minimum alternate tax carry-forward | — | 25 | ||||||
Trade receivables | 175 | 267 | ||||||
Operating tax loss carry-forward | 1,126 | 335 | ||||||
Other current liabilities | 201 | 284 | ||||||
Others | 240 | 143 | ||||||
Total deferred tax assets | Rs. | 2,222 | Rs. | 1,508 | ||||
Deferred tax liabilities | ||||||||
Property, plant and equipment | Rs. | (969 | ) | Rs. | (1,025 | ) | ||
Other intangible assets | (4,437 | ) | (5,090 | ) | ||||
Others | (227 | ) | (249 | ) | ||||
Total deferred tax liabilities | Rs. | (5,633 | ) | Rs. | (6,364 | ) | ||
Net deferred tax asset/(liability) | Rs. | (3,411 | ) | Rs. | (4,856 | ) | ||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As at | Recognized | As at | ||||||||||||||
April 1, 2007 | Movement (1) | in equity | March 31, 2008 | |||||||||||||
Deferred tax assets | ||||||||||||||||
Inventories | Rs. | 981 | Rs. | (527 | ) | Rs. | — | Rs. | 454 | |||||||
Minimum alternate tax | — | 25 | — | 25 | ||||||||||||
Trade receivables | 187 | 80 | — | 267 | ||||||||||||
Operating loss carry-forward | 393 | (58 | ) | — | 335 | |||||||||||
Other current liabilities | 292 | (8 | ) | — | 284 | |||||||||||
Others | 186 | (8 | ) | (35 | ) | 143 | ||||||||||
Total deferred tax assets | 2,039 | (496 | ) | (35 | ) | 1,508 | ||||||||||
Deferred tax liabilities | ||||||||||||||||
Property, plant and equipment | (802 | ) | (223 | ) | — | (1,025 | ) | |||||||||
Other intangible assets | (7,482 | ) | 2,392 | — | (5,090 | ) | ||||||||||
Others | (300 | ) | 51 | — | (249 | ) | ||||||||||
Total deferred tax liabilities | (8,584 | ) | 2,220 | — | (6,364 | ) | ||||||||||
Net deferred tax assets/(liabilities) | Rs. | (6,545 | ) | Rs. | 1,724 | Rs. | (35 | ) | Rs. | (4,856 | ) | |||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Acquired in | ||||||||||||||||
business | ||||||||||||||||
combina- | As at | |||||||||||||||
Movement | Recognized in | tions/asset | March 31, | |||||||||||||
(1) | equity | acquisitions | 2009 | |||||||||||||
Deferred tax assets | ||||||||||||||||
Inventories | Rs. | 51 | — | Rs. | (25 | ) | Rs. | 480 | ||||||||
Minimum alternate tax | (25 | ) | — | — | — | |||||||||||
Trade receivables | (92 | ) | — | — | 175 | |||||||||||
Operating loss carry-forward | 523 | — | 268 | 1,126 | ||||||||||||
Other current liabilities | (83 | ) | — | — | 201 | |||||||||||
Others | 102 | (5 | ) | — | 240 | |||||||||||
Total deferred tax assets | 476 | (5 | ) | 243 | 2,222 | |||||||||||
Deferred tax liabilities | ||||||||||||||||
Property, plant and equipment | 3 | — | 53 | (969 | ) | |||||||||||
Other intangible assets | 878 | — | (225 | ) | (4,437 | ) | ||||||||||
Others | 22 | — | — | (227 | ) | |||||||||||
Total deferred tax liabilities | 903 | — | (172 | ) | (5,633 | ) | ||||||||||
Net deferred tax assets/(liabilities) | Rs. | 1,379 | Rs. | (5 | ) | Rs. | 71 | Rs. | (3,411 | ) | ||||||
As of March 31, | ||||||||
2009 | 2008 | |||||||
Less than one year | Rs. | 173 | Rs. | 162 | ||||
Between one and five years | 345 | 366 | ||||||
More than five years | — | — | ||||||
Rs. | 518 | Rs. | 528 | |||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
• | Diana Hotels Limited for availing hotel services; | |
• | A.R. Life Sciences Private Limited for availing processing services of raw materials and intermediates; | |
• | Dr. Reddy’s Holdings Private Limited for the purchase and sale of active pharmaceutical ingredients; | |
• | Dr. Reddy’s Foundation for Human and Social Development towards contributions for social development; | |
• | Institute of Life Science towards contributions for social development; | |
• | K.K Enterprises for availing packaging services for formulation products; and | |
• | SR Enterprises for transportation services. | |
• | Dr. Reddy’s Laboratories Gratuity Fund. |
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Purchases from significant interest entities | Rs. | 290 | Rs. | 219 | ||||
Sales to significant interest entities | 135 | 88 | ||||||
Contribution to a significant interest entity towards social development and research and development | 124 | 114 | ||||||
Hotel expenses paid to significant interest entities | 13 | 13 | ||||||
Advances paid to significant interest entities for purchase of land | 400 | 680 | ||||||
Short term loan taken and repaid to significant interest entities | 60 | — | ||||||
Interest paid on loan taken from significant interest entities | 2 | — | ||||||
Revenue from equity accounted investees | — | 40 | ||||||
Reimbursement of research and development expenses from equity accounted investees | — | 90 | ||||||
Lease rental paid to key management personnel and their relatives | 26 | 25 |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year ended March 31, | ||||||||
2009 | 2008 | |||||||
Salaries and other benefits | Rs. | 260 | Rs. | 225 | ||||
Contributions to defined contribution plans | 8 | 8 | ||||||
Commission to directors | 174 | 169 | ||||||
Share-based payments | 18 | 62 | ||||||
Total | Rs. | 460 | Rs. | 464 | ||||
As at March 31, | ||||||||
2009 | 2008 | |||||||
Significant interest entities | Rs. | 43 | Rs. | 26 | ||||
Equity accounted investees | — | 27 | ||||||
Key management personnel | 5 | 5 |
As at March 31, | ||||||||
2009 | 2008 | |||||||
Significant interest entities | Rs. | 68 | Rs. | 17 |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Trade and | Total | |||||||||||||||||||||||
Loans and | Available | other | carrying | Total fair | ||||||||||||||||||||
Note | receivables | for sale | payables | value | value | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Cash and cash equivalents | 16 | Rs. | 5,596 | Rs. | — | Rs. | — | Rs. | 5,596 | Rs. | 5,596 | |||||||||||||
Other investments | 12 | — | 530 | — | 530 | 530 | ||||||||||||||||||
Trade receivables | 14 | 14,592 | — | — | 14,592 | 14,592 | ||||||||||||||||||
Other assets | 15 | 2,627 | — | — | 2,627 | 2,627 | ||||||||||||||||||
Total | 22,815 | 530 | — | 23,345 | 23,345 | |||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Trade payables | 24 | — | — | 5,987 | 5,987 | 5,987 | ||||||||||||||||||
Derivative financial instruments | 32 | — | — | 332 | 332 | 332 | ||||||||||||||||||
Long-term loans and borrowings | 19 | 13,633 | 13,633 | 13,633 | ||||||||||||||||||||
Bank overdraft, short-term loans and borrowings | — | — | 6,068 | 6,068 | 6,068 | |||||||||||||||||||
Other liabilities and provisions | 25 | — | — | 9,363 | 9,363 | 9,363 | ||||||||||||||||||
Total | Rs. | — | Rs. | — | Rs. | 35,383 | Rs. | 35,383 | Rs. | 35,383 | ||||||||||||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Trade and | Total | |||||||||||||||||||||||
Loans and | Available | other | carrying | Total fair | ||||||||||||||||||||
Note | receivables | for sale | payables | value | value | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Cash and cash equivalents | 16 | Rs. | 7,421 | Rs. | — | Rs. | — | Rs. | 7,421 | Rs. | 7,421 | |||||||||||||
Other investments | 12 | — | 4,753 | — | 4,753 | 4,753 | ||||||||||||||||||
Trade receivables | 14 | 6,823 | — | — | 6,823 | 6,823 | ||||||||||||||||||
Other assets | 15 | 2,136 | — | — | 2,136 | 2,136 | ||||||||||||||||||
Total | 16,380 | 4,753 | — | 21,133 | 21,133 | |||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Trade payables | 24 | — | — | 5,427 | 5,427 | 5,427 | ||||||||||||||||||
Derivative financial instruments | 32 | — | — | 105 | 105 | 105 | ||||||||||||||||||
Long-term loans and borrowings | 19 | — | — | 14,489 | 14,489 | 14,489 | ||||||||||||||||||
Bank overdraft, short-term loans and borrowings | — | — | 4,863 | 4,863 | 4,863 | |||||||||||||||||||
Other liabilities and provisions | 25 | — | — | 6,940 | 6,940 | 6,940 | ||||||||||||||||||
Total | Rs. | — | Rs. | — | Rs. | 31,824 | Rs. | 31,824 | Rs. | 31,824 | ||||||||||||||
As of March 31, | ||||||||
2009 | 2008 | |||||||
Forward contracts | ||||||||
In U.S. Dollars (Sell) | Rs. | 3,398 | Rs. | 5,517 | ||||
In U.S. Dollars (Buy) | 152 | 3,089 | ||||||
In Euro (Sell )* | 540 | — | ||||||
In GBP (Sell)* | 580 | 878 | ||||||
Option contracts | ||||||||
In U.S. Dollars | 6,086 | 10,832 | ||||||
In GBP* | — | 399 |
* | Represents currency exchange contracts for U.S. Dollars. |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As of March 31, | ||||||||
2009 | 2008 | |||||||
Sell: | ||||||||
Not later than one month | Rs. | 3,351 | Rs. | 5,641 | ||||
Later than one month and not later than three months | 2,688 | 5,195 | ||||||
Later than three months and not later than six months | 1,522 | 1,015 | ||||||
Later than six month and not later than one year | 3,043 | 5,775 | ||||||
Total | 10,604 | 17,626 | ||||||
Buy: | ||||||||
Not later than one month | 152 | 1,284 | ||||||
Later than one month and not later than three months | — | 1,204 | ||||||
Later than three months and not later than six months | — | 601 | ||||||
Later than six month and not later than one year | — | — | ||||||
Total | Rs. | 152 | Rs. | 3,089 | ||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As of March 31, | ||||||||
Period (in days) | 2009 | 2008 | ||||||
1 – 90 | Rs. | 2,373 | Rs. | 1,795 | ||||
90 – 180 | 385 | 248 | ||||||
More than 180 | 229 | 149 | ||||||
Total | Rs. | 2,987 | Rs. | 2,192 |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Particulars | 2010 | 2011 | 2012 | 2013 | Thereafter | Total | ||||||||||||||||||
Trade payables | Rs. | 5,987 | Rs. | — | Rs. | — | Rs. | — | Rs. | — | Rs. | 5,987 | ||||||||||||
Derivative financial instruments | 332 | — | — | — | — | 332 | ||||||||||||||||||
Bank overdraft, short-term loans and borrowings | 6,068 | — | — | — | — | 6,068 | ||||||||||||||||||
Other liabilities and provisions | 9,291 | 9 | — | — | 63 | 9,363 |
Particulars | 2009 | 2010 | 2011 | 2012 | Thereafter | Total | ||||||||||||||||||
Trade payables | Rs. | 5,427 | — | — | — | — | Rs. | 5,427 | ||||||||||||||||
Derivative financial instruments | 105 | — | — | — | — | 105 | ||||||||||||||||||
Bank overdraft, short-term loans and borrowings | 4,863 | — | — | — | — | 4,863 | ||||||||||||||||||
Other liabilities and provisions | 6,749 | 191 | — | — | — | 6,940 |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
U.S. Dollars | Euro | Others(1) | Total | |||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents | Rs. | 870 | Rs. | 17 | Rs. | 372 | Rs. | 1,259 | ||||||||
Trade receivables | 8,578 | 857 | 2,921 | 12,356 | ||||||||||||
Other assets | 212 | 4 | 102 | 318 | ||||||||||||
Total | Rs. | 9,660 | Rs. | 878 | Rs. | 3,395 | Rs. | 13,933 | ||||||||
Liabilities | ||||||||||||||||
Trade payables | Rs. | 1,087 | Rs. | 97 | Rs. | 486 | Rs. | 1,670 | ||||||||
Long-term loans and borrowings | 560 | — | — | 560 | ||||||||||||
Bank overdraft, short-term loans and borrowings | 1,775 | — | — | 1,775 | ||||||||||||
Other liabilities and provisions | 1,914 | — | 386 | 2,300 | ||||||||||||
Total | Rs. | 5,336 | Rs. | 97 | Rs. | 872 | Rs. | 6,305 | ||||||||
(1) | Others include currencies such as Russian roubles, British pound sterling, New Zealand dollars, etc. |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
U.S. | ||||||||||||||||
Dollars | Euro | Others(1) | Total | |||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents | Rs. | 523 | Rs. | 41 | Rs. | 345 | Rs. | 909 | ||||||||
Trade receivables | 3,627 | 1,125 | 1,060 | 5,812 | ||||||||||||
Other assets | 174 | — | 129 | 303 | ||||||||||||
Total | Rs. | 4,324 | Rs. | 1,166 | Rs. | 1,534 | Rs. | 7,024 | ||||||||
Liabilities | ||||||||||||||||
Trade payables | Rs. | 1,035 | Rs. | 90 | Rs. | 88 | Rs. | 1,213 | ||||||||
Long-term loans and borrowings | 510 | — | — | 510 | ||||||||||||
Bank overdraft, short-term loans and borrowings | 4,100 | — | — | 4,100 | ||||||||||||
Other liabilities and provisions | 1,489 | — | 144 | 1,633 | ||||||||||||
Total | Rs. | 7,134 | Rs. | 90 | Rs. | 232 | Rs. | 7,456 | ||||||||
(1) | Others include currencies such as Russian roubles, British pounds sterling, New Zealand dollars, etc. |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F - 83
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F - 84
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F - 85
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
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Exhibit Number | Description of Exhibits | |
1.1.*/***/***** | Memorandum and Articles of Association of the Registrant dated February 4, 1984. | |
1.2.*/*** | Certificate of Incorporation of the Registrant dated February 24, 1984. | |
1.3.*/*** | Amended Certificate of Incorporation of the Registrant dated December 6, 1985. | |
2.1.* | Form of Deposit Agreement, including the form of American Depositary Receipt, among Registrant, Morgan Guaranty Trust Company as Depositary, and holders from time to time of American Depositary Receipts Issued there under, including the form of American Depositary. | |
4.1.* | Agreement by and between Dr. Reddy’s Laboratories Limited and Dr. Reddy’s Research Foundation regarding the undertaking of research dated February 27, 1997. | |
4.2.** | Dr. Reddy’s Laboratories Limited Employee Stock Option Scheme, 2002. | |
4.3**** | Sale and Purchase Agreement Regarding the Entire Share Capital of Beta Holding GmbH dated February 15th/16th 2006 | |
8. | List of subsidiaries of the Registrant. | |
23.1 | Consent of Independent Registered Public Accounting Firm | |
99.1 | Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
99.2 | Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
99.3 | Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
99.4 | Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
* | Previously filed on March 26, 2001 with the SEC along with Form F-1 | |
** | Previously filed on October 31, 2002 with the SEC along with Form S-8. | |
*** | Previously filed with the Company’s Form 20-F for the fiscal year ended March 31, 2003. | |
**** | Previously filed with the Company’s Form 20-F/A for the fiscal year ended March 31, 2006 pursuant to a request for confidential treatment. | |
***** | Previously filed with the Company’s Form 20-F for the fiscal year ended March 31, 2006. |
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DR. REDDY’S LABORATORIES LIMITED | ||||
By: | /s/ G.V. Prasad | |||
G.V. Prasad | ||||
Vice Chairman and Chief Executive Officer | ||||
By: | /s/ Umang Vohra | |||
Umang Vohra | ||||
Chief Financial Officer | ||||
July 6, 2009
115