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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 500 034, India
+91-40-49002900
(Address of principal executive offices)
8-2-337, Road No. 3, Banjara Hills, Hyderabad, Andhra Pradesh 500 034, 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* |
* | 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 filero | Smaller reporting companyo | |||
(Do not check if a smaller reporting company) |
U.S. GAAPo | International Financial Reporting Standards as issuedþ | Othero | ||
by the International Accounting Standards Board |
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Exhibit 8 | ||||||||
Exhibit 23.1 | ||||||||
Exhibit 99.1 | ||||||||
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Exhibit 99.3 | ||||||||
Exhibit 99.4 |
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For the Year Ended March 31, | ||||||||||||||||||||
2011 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||
( in millions, U.S.$ in millions except share and per share data) | ||||||||||||||||||||
Convenience | ||||||||||||||||||||
translation into | ||||||||||||||||||||
U.S.$ | ||||||||||||||||||||
Revenues | U.S.$ | 1,677 | 74,693 | 70,277 | 69,441 | 50,006 | ||||||||||||||
Cost of revenues | 773 | 34,430 | 33,937 | 32,941 | 24,598 | |||||||||||||||
Gross profit | U.S.$ | 904 | 40,263 | 36,340 | 36,500 | 25,408 | ||||||||||||||
Selling, general and administrative expenses | 532 | 23,689 | 22,505 | 21,020 | 16,835 | |||||||||||||||
Research and development expenses | 114 | 5,060 | 3,793 | 4,037 | 3,533 | |||||||||||||||
Impairment loss on other intangible assets | — | — | 3,456 | 3,167 | 3,011 | |||||||||||||||
Impairment loss on goodwill | — | — | 5,147 | 10,856 | 90 | |||||||||||||||
Other (income)/expense, net | (25 | ) | (1,115 | ) | (569 | ) | 254 | (402 | ) | |||||||||||
Results from operating activities | U.S.$ | 284 | 12,629 | 2,008 | (2,834 | ) | 2,341 | |||||||||||||
Finance (expense)/income, net | (4 | ) | (189 | ) | (3 | ) | (1,186 | ) | 521 | |||||||||||
Share of profit of equity accounted investees, net of income tax | — | 3 | 48 | 24 | 2 | |||||||||||||||
Profit/(loss) before income tax | 279 | 12,443 | 2,053 | (3,996 | ) | 2,864 | ||||||||||||||
Income tax (expense)/benefit | (31 | ) | (1,403 | ) | (985 | ) | (1,172 | ) | 972 | |||||||||||
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For the Year Ended March 31, | ||||||||||||||||||||
2011 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||
( in millions, U.S.$ in millions except share and per share data) | ||||||||||||||||||||
Convenience | ||||||||||||||||||||
translation into | ||||||||||||||||||||
U.S.$ | ||||||||||||||||||||
Profit/(loss) for the year | U.S.$ | 248 | 11,040 | 1,068 | (5,168 | ) | 3,836 | |||||||||||||
Earnings/(loss) per share | ||||||||||||||||||||
Basic | U.S.$ | 1.47 | 65.28 | 6.33 | (30.69 | ) | 22.88 | |||||||||||||
Diluted | U.S.$ | 1.46 | 64.95 | 6.30 | (30.69 | ) | 22.80 | |||||||||||||
Weighted average number of equity shares used in computing earnings/(loss) per equity share* | ||||||||||||||||||||
Basic | 169,128,649 | 168,706,977 | 168,349,139 | 168,075,840 | ||||||||||||||||
Diluted | 169,965,282 | 169,615,943 | 168,349,139 | 168,690,774 | ||||||||||||||||
Cash dividend per equity share ()** | — | 11.25 | 6.25 | 3.75 | 3.75 |
* | Each ADR represents one equity share. | |
** | Excludes corporate dividend tax |
As of March 31, | ||||||||||||
2011 | 2011 | 2010 | ||||||||||
( in millions, U.S.$ in millions) | ||||||||||||
Convenience translation | ||||||||||||
into U.S.$ | ||||||||||||
Cash and cash equivalents | U.S.$ | 129 | 5,729 | 6,584 | ||||||||
Total assets | 2,133 | 95,005 | 80,330 | |||||||||
Total long term debt, excluding current portion | 118 | 5,271 | 5,385 | |||||||||
Total equity | U.S.$ | 1,033 | 45,990 | 42,915 |
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 | ||||||||||||
2010 | 44.95 | 47.36 | 50.48 | 44.94 | ||||||||||||
2011 | 44.54 | 45.49 | 47.49 | 43.90 |
Month | High | Low | ||||||
October 2010 | 44.55 | 44.05 | ||||||
November 2010 | 45.83 | 43.90 | ||||||
December 2010 | 45.54 | 44.70 | ||||||
January 2011 | 45.92 | 44.59 | ||||||
February 2011 | 45.66 | 45.06 | ||||||
March 2011 | 45.24 | 44.54 |
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• | The PPACA imposes on pharmaceutical manufacturers a variety of additional rebates, discounts and fees. Among other things, the PPACA includes annual, non-deductible fees for entities that manufacture or import certain prescription drugs and biologics. The first year for which the fee will apply is calendar year 2011, and the fee will first due by September 30 of the following calendar year (i.e., 2012). This fee will be calculated based upon each organization’s percentage share of total branded prescription drug and biologics sales to U.S. government programs (such as Medicare, Medicaid and Veterans’ Affairs and Public Health Service discount programs), and authorized generic products would generally be treated as branded products. In addition, the PPACA changed the computations used to determine Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program by redefining the average manufacturer’s price (��AMP”), effective October 1, 2010, and by using 23.1% instead of 15% of AMP for most branded drugs and 13% instead of 11% of AMP for generic drugs, effective January 1, 2010. The PPACA also increased the number of healthcare entities eligible for discounts under the Public Health Service pharmaceutical pricing program. |
• | The PPACA has pro-generic provisions that could increase competition in the generic pharmaceutical industry and therefore adversely impact our selling prices or costs and reduce our profit margins. Among other things, the PPACA creates an abbreviated pathway to U.S. FDA approval of “biosimilar” biological products and allows the first interchangeable bio-similar biological product 18 months of exclusivity, which could increase competition for our bio-generics business. Conversely, the PPACA has some anti-generic provisions that could adversely affect our bio-generics business, including provisions granting the innovator of a biological drug product 12 years of exclusive use before generic drugs can be approved based on being biosimilar. |
• | The PPACA makes several important changes to the federal anti-kickback statute, false claims laws, and health care fraud statutes — that may make it easier for the government or whistleblowers to pursue such fraud and abuse violations. In addition, the PPACA increases penalties for fraud and abuse violations. If our past, present or future operations are found to be in violation of any of the laws described above or other similar governmental regulations to which we are subject, we may be subject to the applicable penalty associated with the violation which could adversely affect our ability to operate our business and our financial results. |
• | To further facilitate the government’s efforts to coordinate and develop comparative clinical effectiveness research, the PPACA establishes a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in such research. The manner in which the comparative research results would be used by third-party payors is uncertain. |
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• | pursuing new patents for existing products which may be granted just before the expiration of earlier patents, which could extend patent protection for additional years or otherwise delay the launch of generics; |
• | selling the brand product as an authorized generic, either by the brand company directly, through an affiliate or by a marketing partner; |
• | using the Citizen Petition process to request amendments to U.S. FDA standards or otherwise delay generic drug approvals; |
• | seeking changes to U.S. Pharmacopeia, an organization which publishes industry recognized compendia of drug standards; |
• | attaching patent extension amendments to non-related federal legislation; |
• | engaging in state-by-state initiatives to enact legislation that restricts the substitution of some generic drugs, which could have an impact on products that we are developing; and |
• | seeking patents on methods of manufacturing certain active pharmaceutical ingredients. |
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• | general market conditions, | ||
• | speculative trading in our shares and ADSs, and | ||
• | 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. |
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• | 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. |
• | 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; |
• | 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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• | our Global Generics segment, which includes branded and unbranded prescription and over-the-counter (“OTC”) drug products business; |
• | our Pharmaceutical Services and Active Ingredients (“PSAI”) segment, which consists of our Active Pharmaceutical Ingredients business and our Custom Pharmaceutical Services business; and |
• | our Proprietary Products segment, which consists of our Generic Biopharmaceuticals business, our New Chemical Entities (“NCEs”) business, our Differentiated Formulations business and our dermatology focused specialty business operated through Promius™ Pharma. |
• | Strengths in Science and Technology |
• | Product Offerings |
a) | Global Generics: Through our branded and unbranded Global Generics segment, we offer lower-cost alternatives to highly-priced innovator brands, both directly and through key partnerships. |
• | Branded Generics: We seek to have a portfolio that is strongly differentiated and offers compelling advantages to doctors and patients. |
• | Unbranded Generics: We aim to ensure that we deliver first to market products to our customers, including pharmacy chains and distributors, and that they have high product availability from us combined with low inventories, resulting in superior inventory turns while addressing the customers’ needs. |
b) | Pharmaceutical Services and Active Ingredients: Our Pharmaceutical Services and Active Ingredients (“PSAI”) business is comprised of our Active Pharmaceutical Ingredients (“API”) business and our Custom Pharmaceutical Services (“CPS”) business. |
• | Our product offerings in our API business are geared to offer intellectual property and technology-advantaged products to enable launches ahead of others at competitive prices. |
• | In our CPS business, we aim to offer niche product service capabilities, technology platforms, and competitive cost structures to innovator companies. |
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c) | Proprietary Products: Our Proprietary Products business is comprised of our Differentiated Formulations business and our New Chemical Entity (“NCE”) research business. |
• | Differentiated Formulations: Our emerging Differentiated Formulations portfolio, which consists of new, synergistic combinations as well as technologies that improve safety and/or efficacy by modifying pharmacokinetics of existing medicines, is focused on significant clinically unmet needs. We are also investigating new indications for existing medicines. |
• | New Chemical Entities (NCEs): We are also focused in the discovery, development and commercialization of novel small molecule agents in therapeutic areas such as bacterial infections, metabolic disorders and pain and inflammation. |
• | Execution Excellence (Building Blocks) |
• | Lean Manufacturing — Eliminating waste and reducing cycle time, with a focus on capacity constrained resources. |
• | Quality by Design—Building quality into all processes and using quality tools to eliminate process risks. |
• | Principles of the Theory of Constraints — We apply these principles primarily in supply chain and product development. This ensures high availability with low inventory through a pull-based logistics system. It also ensures speed in product development through critical chain project management. |
• | Leadership Development — Developing leaders, as well as enhancing leadership behavior across the organization. |
Year Ended March 31, | ||||||||||||||||||||||||||||
Segment | 2009 | 2010 | 2011 | |||||||||||||||||||||||||
Global Generics | 49,790 | 72 | % | 48,606 | 69 | % | 53,340 | 71 | % | U.S. $ | 1,198 | |||||||||||||||||
Pharmaceutical Services and Active Ingredients | 18,758 | 27 | % | 20,404 | 29 | % | 19,648 | 26 | % | 441 | ||||||||||||||||||
Proprietary Products | 294 | — | 513 | 1 | % | 532 | 1 | % | 12 | |||||||||||||||||||
Others | 599 | 1 | % | 754 | 1 | % | 1,173 | 2 | % | 26 | ||||||||||||||||||
Total Revenues | 69,441 | 100 | % | 70,277 | 100 | % | 74,693 | 100 | % | U.S. $ | 1,677 | |||||||||||||||||
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Year Ended March 31, | ||||||||||||||||||||||||
2009 | 2010 | 2011 | ||||||||||||||||||||||
Revenues in | Revenues in | Revenues in | ||||||||||||||||||||||
BRAND | millions | % Total(1) | millions | % Total(1) | millions | % Total(1) | ||||||||||||||||||
Omez | 776 | 9 | % | 928 | 9 | % | 1,065 | 9 | % | |||||||||||||||
Nise | 605 | 7 | % | 690 | 7 | % | 700 | 6 | % | |||||||||||||||
Stamlo | 422 | 5 | % | 473 | 5 | % | 507 | 4 | % | |||||||||||||||
Reditux | 199 | 2 | % | 232 | 2 | % | 405 | 3 | % | |||||||||||||||
Omez-DSR | 210 | 2 | % | 310 | 3 | % | 377 | 3 | % | |||||||||||||||
Stamlo Beta | 301 | 4 | % | 326 | 3 | % | 328 | 3 | % | |||||||||||||||
Razo | 214 | 3 | % | 247 | 2 | % | 285 | 2 | % | |||||||||||||||
Atocor | 269 | 3 | % | 274 | 3 | % | 278 | 2 | % | |||||||||||||||
Mintop | 172 | 2 | % | 196 | 2 | % | 209 | 2 | % | |||||||||||||||
Razo — D | 138 | 2 | % | 169 | 2 | % | 200 | 2 | % | |||||||||||||||
Others | 5,172 | 61 | % | 6,313 | 62 | % | 7,336 | 64 | % | |||||||||||||||
Total | 8,478 | 100 | % | 10,158 | 100 | % | 11,690 | 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. |
• | The Indian pharmaceutical market registered a growth of 15.3% during the year ended March 31, 2011. |
• | New products launched in the preceding 24 months accounted for 6.5% of total Indian pharmaceutical growth during the year ended March 31, 2011. |
• | The top 300 existing brands grew at a rate of 17%, which was marginally higher than the Indian pharmaceutical market’s overall average, and continued to account for 33% of the market’s total sales. |
• | Legacy brands are performing better than new molecules. |
• | There was an increasing emergence of bio-similar products to address the needs of patients in the oncology therapeutic area. |
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• | The Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945; |
• | The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954; |
• | The Narcotic Drugs and Psychotropic Substances Act, 1985; |
• | The Drugs (Price Control) Order, 1995, read in conjunction with the Essential Commodities Act, 1955; and |
• | The Medicinal and Toilet Preparations (Excise Duties) Act, 1955. |
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2009 | 2010 | 2011 | ||||||||||||||||||||||
Revenues in | Revenues in | Revenues in | ||||||||||||||||||||||
Brand | millions | % Total(1) | millions | % Total(1) | millions | % Total(1) | ||||||||||||||||||
Nise | 1,249 | 21 | % | 1,862 | 26 | % | 2,311 | 26 | % | |||||||||||||||
Omez | 1,281 | 21 | % | 1,458 | 20 | % | 1,554 | 18 | % | |||||||||||||||
Ketorol | 1,078 | 18 | % | 1,287 | 18 | % | 1,376 | 16 | % | |||||||||||||||
Ciprolet | 701 | 12 | % | 760 | 11 | % | 778 | 9 | % | |||||||||||||||
Senade | — | 0 | % | — | 0 | % | 598 | 7 | % | |||||||||||||||
Cetrine | 339 | 6 | % | 408 | 6 | % | 590 | 7 | % | |||||||||||||||
Enam | 315 | 5 | % | 337 | 5 | % | 299 | 3 | % | |||||||||||||||
Exifine | 210 | 4 | % | 220 | 3 | % | 217 | 2 | % | |||||||||||||||
Bion | 171 | 3 | % | 165 | 2 | % | 201 | 2 | % | |||||||||||||||
Mitotax | 148 | 2 | % | 107 | 1 | % | 120 | 1 | % | |||||||||||||||
Others | 311 | 8 | % | 628 | 8 | % | 898 | 9 | % | |||||||||||||||
Total | 5,803 | 100 | % | 7,232 | 100 | % | 8,942 | 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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• | The PPACA is anticipated to expand healthcare coverage to tens of millions of U.S. citizens, mostly those employed in smaller companies and the unemployed. The PPACA also reduces certain co-payments for Medicaid, a joint federal and state health insurance program for the poor. These changes should provide opportunities for us to increase our pharmaceutical products sales volumes in the long term. |
• | The PPACA also imposes new rules regarding insurance regulation and access. For example, there will be new regulations governing the insurance industry that will prohibit the denial of coverage due to pre-existing diseases, and ban placing lifetime value limits on insurance policy coverages. Indirectly, these reforms should also provide opportunities for us to improve our pharmaceutical products sales volumes in the long term. |
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• | In addition, the PPACA set forth new regulations relating to biological drugs. Among other things, the PPACA creates an abbreviated pathway to U.S. FDA approval of “bio-similar” biological products and allows the first interchangeable bio-similar product 18 months of exclusivity. These pro-generic provisions may provide increased opportunities for our bio-generics business, but also could increase competition in that field and thus adversely impact the selling prices, costs and/or profit margins for our bio-generics business. Conversely, the PPACA also has some anti-generic provisions, including provisions granting the innovator of a biological drug product 12 years of exclusive use before generic drugs can be approved based on being bio-similar. |
• | The PPACA imposes on pharmaceutical manufacturers a variety of additional rebates, discounts and fees. Among other things, the PPACA includes annual, non-deductible fees that go into effect in 2011 for entities that manufacture or import certain prescription drugs and biologics. This fee will be calculated based upon each organization’s percentage share of total branded prescription drug sales to U.S. government programs (such as Medicare, Medicaid and Veterans’ Affairs and Public Health Service discount programs), provided that the manufacturer must have at least $5 million in sales of branded prescription drugs (as defined in the PPACA) or biologics in order to be subject to the fee. Authorized generic products would generally be treated as branded products.The manufacturers’ fee for calendar year 2011 is based upon our sales of branded prescription drugs and biologics for the calendar year 2009, which were below the $5 million threshold, and thus we are not subject to the fee for calendar year 2011. In addition, the PPACA changes the computations used to determine Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program by redefining the average manufacturer’s price (“AMP”), effective October 1, 2010, and by using 23.1% instead of 15% of AMP for most branded drugs and 13% instead of 11% of AMP for generic drugs, effective January 1, 2010. The impact of the Medicaid rebate changes has been accounted for in our consolidated financial statements, but it was not material to our U.S. revenues. The PPACA also increases the number of healthcare entities eligible for discounts under the Public Health Service pharmaceutical pricing program. |
• | The PPACA makes several important changes to the federal anti-kickback statute, false claims laws, and health care fraud statutes that may make it easier for the government or whistleblowers to pursue such fraud and abuse violations. In addition, the PPACA increases penalties for fraud and abuse violations. |
• | To further facilitate the government’s efforts to coordinate and develop comparative clinical effectiveness research, the PPACA establishes a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in such research. The manner in which the comparative research results would be used by third-party payors is uncertain. |
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• | Historically, the pharmaceutical companies had been free to set the initial asking price for drugs in the German public health system, subject to certain mandatory rebates. Under this new law, a pharmaceutical company will determine the price for a new drug or new therapeutic indication for the first year after launch, but must submit to the Joint Federal Committee (the Gemeinsamer Bundesausschuss or “G-BA”) a benefit assessment dossier on the drug at or prior to its launch. The G-BA will analyze whether the drug shows an additional clinical benefit in comparison to a corresponding established drug (the “appropriate comparator therapy”). |
• | If an additional benefit is established, the pharmaceutical company must negotiate the price of the drug with the Federal Association of the health insurance funds. If no agreement is reached in the negotiation, then the price will be determined pursuant to an arbitration procedure. There must be a minimum term of one year. |
• | If no additional benefit is established, the drug is immediately included into a group of drugs with comparable pharmaceutical and therapeutic characteristics, for which maximum reimbursement prices have already been set. If this is not possible due to the drug’s novelty, then the pharmaceutical company must negotiate a reimbursement price with the Federal Association of the health insurance funds that may not exceed the costs of the appropriate comparator therapy. |
• | The prices determined pursuant to the above procedures will also apply to private insurance agencies, privately insured persons and self-payers, although they may negotiate further discounts. |
• | For drugs developed specifically to treat rare medical conditions that are designated as “orphan drugs”, the orphan drug will be presumed to have an additional benefit under certain circumstances. |
• | A new regulation for packaging size to be fully implemented by 2013. Standard sizes will be based upon the duration of therapies, instead of based on fixed quantity. Three different types of package sizes are now allowed: N1-packages for treatment periods of 10 days; N2-packages for treatment periods of 30 days; and N3-packages for treatment periods of 100 days. During the transition period, discrepancies of 20%, 10% and 5% will be respectively accepted for N1, N2 and N3 packages. |
• | The law increases the choice to patients by the use of co-payment as an option for patients opting for a non-rebated generic drug. |
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• | metabolic disorders; |
• | cardiovascular disorders; |
• | bacterial infections; |
• | dermatological indications; and |
• | pain and inflammation. |
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Compound | Therapeutic Area | Status | Remarks | |||
New Chemical Entities (NCEs) | ||||||
DRF 2593 | Metabolic disorders | Phase III | In Phase III clinical testing for Type 2 diabetes partnered with Nordic Biosciences | |||
DRL 17822 | Metabolic disorders/ Cardiovascular disorders | Phase II | Targeting dyslipidemia / atherosclerosis | |||
Differentiated and Specialty Formulations | ||||||
DRL-NAB-P2 | Onchomycosis | Phase III | In Phase III clinical testing for Onchomycosis | |||
DRL-NAB-P5 | Psoriasis | Clinical | Targeting Psoriasis | |||
DRL-NAB-P6 | Psoriasis | Clinical | Targeting Psoriasis | |||
DFA-02 | Anti-Infectives | Clinical | Targeting bacterial infections | |||
DFP-02 | Migraine | Clinical | Targeting Migraines |
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USPTO(1) | USPTO(1) | PCT(2) | India | India | ||||||||||||||||
Category | (Filed) | (Granted) | (Filed) | (Filed) | (Granted) | |||||||||||||||
Anti-diabetic | 85 | 15 | 62 | 117 | 45 | |||||||||||||||
Anti-cancer | 18 | 10 | 14 | 45 | 15 | |||||||||||||||
Anti-bacterial | 8 | 6 | 10 | 22 | 4 | |||||||||||||||
Anti-inflammation/Cardiovascular | 40 | 20 | 28 | 21 | 2 | |||||||||||||||
Anti-ulcerant | 1 | 1 | — | 1 | — | |||||||||||||||
Miscellaneous | 4 | 1 | 3 | 23 | 8 | |||||||||||||||
Differentiated formulations | 3 (provisional) | — | 4 | 2 (provisional) | — | |||||||||||||||
TOTAL | 159 | 53 | 121 | 231 | 74 | |||||||||||||||
(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 | %(10) | |||
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 | %(10) | |||
Dr. Reddy’s Laboratories (U.K.) Limited | United Kingdom | 100 | %(5) | |||
Dr. Reddy’s Laboratories (Proprietary) Limited | South Africa | 100 | %(12) | |||
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 | 100 | % | |||
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) | New Zealand | 100 | %(10) | |||
Dr. Reddy’s Laboratories Ilac Ticaret Limited | Turkey | 100 | % | |||
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) | |||
Dr. Reddy’s Pharma SEZ Limited | India | 100 | % | |||
Dr. Reddy’s Laboratories International SA | Switzerland | 100 | %(8) | |||
Idea2Enterprises (India) Pvt. Limited | India | 100 | % | |||
Dr. Reddy’s Laboratories Romania SRL | Romania | 100 | %(10) | |||
I-Ven Pharma Capital Limited | India | 100 | %(13) | |||
Dr. Reddy’s Venezuela, C.A | Venezula | 100 | %(13) | |||
Dr. Reddy’s Laboratories Tennessee, LLC | U.S.A | 100 | %(6) |
(1) | Indirectly owned through Reddy Antilles N.V. |
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(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. | |
(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) | We acquired the 40% non-controlling interest in August 2010. | |
(13) | Indirectly owned through DRL Investments Limited |
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Approximate | Built up | Installed | Actual | |||||||||||||||
Location | Area | Area | Certifications | Capacity | Production | |||||||||||||
(Square feet) | (Square feet) | |||||||||||||||||
Pharmaceutical Services and Active Ingredients | 3,831 | (8)(11) | 3,267 | (8)(11) | ||||||||||||||
Bollaram, Andhra Pradesh, India | 734,013 | 369,008 | U.S. FDA and EUGMP | See above(11) | See above(11) | |||||||||||||
Bollaram, Andhra Pradesh, India | 648,173 | 383,542 | U.S. FDA and EUGMP | See above(11) | See above(11) | |||||||||||||
Bollaram, Andhra Pradesh, India | 715,610 | 217,515 | U.S. FDA and EUGMP | See above(11) | See above(11) | |||||||||||||
Jeedimetla, Andhra Pradesh, India | 228,033 | 102,464 | U.S. FDA and EUGMP | See above(11) | See above(11) | |||||||||||||
Miryalaguda, Andhra Pradesh, India | 3,402,907 | 447,693 | U.S. FDA and EUGMP | See above(11) | See above(11) | |||||||||||||
Pydibheemavaram, Andhra Pradesh, India | 2,668,465 | 1,007,643 | U.S. FDA and EUGMP | See above(11) | See above(11) | |||||||||||||
Pydibheemavaram, Andhra Pradesh, India | 792,786 | 54,338 | See above(11) | See above(11) | ||||||||||||||
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 |
Approximate | Built up | Installed | Actual | |||||||||||||||
Location | Area | Area | Certifications | Capacity | Production | |||||||||||||
(Square feet) | (Square feet) | |||||||||||||||||
Cuernavaca, Mexico | 2,774,378 | 1,345,488 | (1) | 3,500 | (8) | 2,000 | (8) | |||||||||||
Mirfield, United Kingdom | 1,785,960 | 653,400 | ISO 9001:2008, MHRA (UK) and U.S. FDA | (12) | (12) | |||||||||||||
Cambridge, United Kingdom(5) | 9,383 | 9,383 | N/A | N/A | ||||||||||||||
Global Generics | 5,581 | (6)(7)(13) | 4,282 | (6)(13) | ||||||||||||||
Bollaram, Andhra Pradesh, India | 217,729 | 103,894 | (2) | See above(13) | See above(13) | |||||||||||||
Bachupally, Andhra Pradesh, India | 1,306,372 | 425,554 | (3) | See above(13) | See above(13) | |||||||||||||
Yanam, Pondicherry, India | 457,000 | 34,526 | — | See above(13) | See above(13) | |||||||||||||
Baddi, Himachal Pradesh, India | 786,261 | 148,711 | — | See above(13) | See above(13) | |||||||||||||
Bachupally, Andhra Pradesh, India | 798,982 | 105,924 | (2) | 13,852 | (9) | 6,951 | (9) | |||||||||||
Bachupally, Andhra Pradesh, India | 783,823 | 496,201 | (4) | 11,727 | (6)(10) | 6,656 | (6) | |||||||||||
Duvvada, Andhra Pradesh, India | 691,322 | 73,334 | N/A | N/A | ||||||||||||||
Visakhapatnam, Andhra Pradesh, India | ||||||||||||||||||
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 | 335,000 | U.S. FDA | 5,875 | (6)(10) | 2,078 | (6) | |||||||||||
Bristol, TN, United States | 1,742,400 | 390,000 | U.S. FDA | 2,460 | (6)(10) | 5 | (6) | |||||||||||
Proprietary Products(10) | ||||||||||||||||||
Miyapur, Andhra Pradesh, India | 445,401 | 153,577 | — | 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, Uganda; Brazilian National Agency of Sanitary Surveillance (“ANVISA”), Brazil; National Medicines Agency, Romania; Ministry of Health, Ukraine; Gulf Cooperation Council (“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, State of Bahrain; State Pharmaceutical Inspection, Republic of Latvia; Pharmaceutical and Herbal Medicines, Registration and Control Administrations, Ministry of Health, Kuwait. |
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. |
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(5) | Leased facilities. | |
(6) | Million units. | |
(7) | On a single shift basis. | |
(8) | Tons. | |
(9) | Grams. | |
(10) | Three shift basis | |
(11) | Represents the aggregate capacity and production for the first seven facilities listed in this table under PSAI. | |
(12) | Capacity and production at this facility is not separately tracked. | |
(13) | Represents the aggregate capacity and production for the first four facilities listed in this table under Global Generics. |
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ITEM 4A. | UNRESOLVED STAFF COMMENTS |
ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
• | Global Generics; |
• | Pharmaceutical Services and Active Ingredients (“PSAI”); 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 and contingencies; |
• | Sales returns, rebates and charge back provisions; |
• | Evaluation of recoverability of deferred tax assets; |
• | Business combinations; and |
• | Contingencies. |
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• | Chargebacks. Chargebacks are issued to wholesalers for the difference between our invoice price to the wholesaler and the contract price through which the product is resold in the retail part of the supply chain. The information that we consider for establishing a chargeback accrual includes the historical average chargeback rate over a period of time, current contract prices with wholesalers and other customers, and estimated inventory holding by the wholesaler. With this methodology, we believe that the results are more realistic and closest to the potential chargeback claims that may be received in the future period relating to inventory on which a claim is yet to be received as at the end of the reporting period. In addition, as part of our books closure process, a chargeback validation is performed in which we track and reconcile the volume of sold inventory for which we should carry an appropriate provision for chargeback. We procure the inventory holding statements and data through an electronic data interface with our wholesalers (representing approximately 90% of the total sales volumes on which chargebacks are applicable) as part of this reconciliation. On the basis of this volume reconciliation, chargeback accrual is validated. For the chargeback rate computation, we consider different contract prices for each product across our customer base. This chargeback rate is adjusted (if necessary) on a periodic basis for expected future price reductions. |
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• | Rebates. Rebates (direct and indirect) are generally provided to customers as an incentive to stock and sell our products. Rebate amounts are based on a customer’s purchases made during an applicable period. Rebates are paid to wholesalers, chain drug stores, health maintenance organizations or pharmacy buying groups under a contract with us. We determine our estimates of rebate accruals primarily based on the contracts entered into with our wholesalers and other direct customers and the information received from them for secondary sales made by them. For direct rebates, liability is accrued whenever we invoice to direct customers. For indirect rebates, the accruals are based on a representative weighted average percentage of the contracted rebate amount applied to inventory sold and delivered by us to wholesalers or other direct customers. |
• | Sales Return Allowances. We account for sales returns by recording a provision based on our estimate of expected sales returns. We deal in various products and operate in various markets. Accordingly, our estimate of sales returns is determined primarily by our experience in these markets. In respect of established products, we determine an estimate of sales returns provision primarily based on historical experience of such sales returns. Additionally, other factors that we consider in determining the estimate include levels of inventory in the distribution channel, estimated shelf life, product discontinuances, price changes of competitive products, and introduction of competitive new products, to the extent each of these factors impact our business and markets. We consider all of these factors and adjust the sales return provision to reflect our actual experience. With respect to new products introduced by us, those have historically been either extensions of an existing product line where we have historical experience or in a general therapeutic category where established products exist and are sold either by us or our competitors. |
We have not yet introduced products in a new therapeutic category where the sales returns experience of such products by us or our competitors (as we understand based on industry publications) is not known. The amount of sales returns for our newly launched products have not historically differed significantly from sales returns experience of the then current products marketed by us or our competitors (as we understand based on industry publications). Accordingly, we do not expect sales returns for new products to be significantly different from expected sales returns of current products. We evaluate sales returns of all our products at the end of each reporting period and record necessary adjustments, if any. |
• | Medicaid Payments. We estimate the portion of our sales that may get dispensed to customers covered under Medicaid programs based on the proportion of units sold in the previous two quarters for which a Medicaid claim could be received as compared to the total number of units sold in the previous two quarters. The proportion is based on an analysis of the actual Medicaid claims received for the preceding four quarters. In addition, we also apply the same percentage on the derived estimated inventory sold and delivered by us to our wholesalers and other direct customers to arrive at the potential volume of products on which a Medicaid claim could be received. We use this approach because we believe that it corresponds to the approximate six month time period it takes for us to receive claims from the various Medicaid programs. After estimating the number of units on which a Medicaid claim is to be paid, we use the latest available Medicaid reimbursement rate per unit to calculate the Medicaid accrual. In the case of new products, accruals are done based on specific inputs from our marketing team or data from the publications of IMS Health, a company which provides information on the pharmaceutical industry. |
• | Shelf Stock Adjustments. Shelf stock adjustments, which are common in our industry, are given to compensate our customers for falling prices due to additional competitive products. These take the form of contractually agreed “price protection” or “shelf stock adjustment” clauses in our agreements with direct customers. Such shelf stock adjustments are accrued and paid when the prices of certain products decline as a result of increased competition upon the expiration of limited competition or exclusivity periods. |
• | Cash Discounts. We offer cash discounts to our customers, generally at 2% of the gross sales price, as an incentive for paying within invoice terms, which generally range from 45 to 90 days. Accruals for such cash discounts do not involve any significant variables, and the estimates are based on the gross sales price and agreed cash discount percentage at the time of invoicing. |
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(a) | Estimated inventory — Inventory volumes on which a chargeback claim that is expected to be received in the future are determined using the validation process and methodology described above (see “Chargebacks” above). When such a validation process is performed, we note that the difference represents an immaterial variation. Therefore, we believe that our estimation process in regard to this variable is reasonable. |
(b) | Unit pricing rate — As at any point in time, inventory volumes on which we carry our chargeback accrual represents approximately 1.5 months of sales volumes. Therefore, the sensitivity of price changes on our chargeback accrual relates to only such volumes. Assuming that the chargebacks were processed within such period, we analyzed the impact of changes of prices for the periods beginning April 1, 2011, 2010 and 2009, respectively, and ended March 31, 2011, 2010 and 2009, respectively, on our estimated inventory levels computed based on the methodology mentioned above (see “Chargebacks” above). We noted that the impact on net sales on account of such price variation was negligible. |
Particulars | Chargebacks | Rebates | Medicaid | Sales Return | ||||||||||||
Beginning balance: April 1, 2008 | 59 | 26 | 4 | 6 | ||||||||||||
Current provisions relating to sales in current year | 440 | 47 | 4 | 5 | ||||||||||||
Provisions and adjustments relating to sales in prior years | * | (5 | ) | 2 | — | |||||||||||
Credits and payments** | (441 | ) | (38 | ) | (4 | ) | (3 | ) | ||||||||
Ending balance: March 31, 2009 | 58 | 30 | 6 | 8 | ||||||||||||
Beginning Balance: April 1, 2009 | 58 | 30 | 6 | 8 | ||||||||||||
Current provisions relating to sales in current year | 578 | 57 | 9 | 5 |
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Particulars | Chargebacks | Rebates | Medicaid | Sales Return | ||||||||||||
Provisions and adjustments relating to sales in prior years | * | 2 | (3 | ) | (1 | ) | ||||||||||
Credits and payments** | (580 | ) | (68 | ) | (9 | ) | (4 | ) | ||||||||
Ending Balance: March 31, 2010 | 56 | 21 | 3 | 8 | ||||||||||||
Beginning Balance: April 1, 2010 | 56 | 21 | 3 | 8 | ||||||||||||
Current provisions relating to sales in current year | 644 | 104 | 6 | 6 | ||||||||||||
Provisions and adjustments relating to sales in prior years | * | 2 | 1 | — | ||||||||||||
Credits and payments** | (620 | ) | (87 | ) | (6 | ) | (5 | ) | ||||||||
Ending Balance: March 31, 2011 | 80 | 40 | 4 | 9 |
* | Currently, we do not separately track provisions and adjustments, in each case to the extent relating to prior years for chargebacks. However, the adjustments are expected to be non-material. The volumes used to calculate the closing balance of chargebacks represent an average 1.5 months equivalent of sales, which corresponds to the pending chargeback claims yet to be processed. | |
** | Currently, we do not separately track the credits and payments, in each case to the extent relating to prior years for chargebacks, rebates, medicaid payments or sales returns. |
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• | development costs can be measured reliably, |
• | the product or process is technically and commercially feasible, |
• | future economic benefits are probable and ascertainable, and |
• | we intend to complete development and to use or sell the asset, and have sufficient resources to do so. |
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(a) | it is expected to account for more than 10% of our total research and development costs; and | ||
(b) | the costs and efforts to develop the project can be reasonably estimated and the product resulting from the project has a high probability of launch. |
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( in millions) | ||||||||||||||||||||||||
For the Year Ended March 31, | ||||||||||||||||||||||||
2009 | 2010 | 2011 | ||||||||||||||||||||||
Revenues | Revenues | Revenues | ||||||||||||||||||||||
% to | % to | % to | ||||||||||||||||||||||
Revenues | total | Revenues | total | Revenues | total | |||||||||||||||||||
Global Generics | 49,790 | 72 | 48,606 | 69 | 53,340 | 71 | ||||||||||||||||||
Pharmaceutical Services and Active Ingredients | 18,758 | 27 | 20,404 | 29 | 19,648 | 26 | ||||||||||||||||||
Proprietary Products | 294 | — | 513 | 1 | 532 | 1 | ||||||||||||||||||
Others | 599 | 1 | 754 | 1 | 1,173 | 2 | ||||||||||||||||||
Total | 69,441 | 100 | 70,277 | 100 | 74,693 | 100 | ||||||||||||||||||
( in millions) | ||||||||||||||||||||||||
For the Year Ended March 31, | ||||||||||||||||||||||||
2009 | 2010 | 2011 | ||||||||||||||||||||||
Gross profit | Gross profit | Gross profit | ||||||||||||||||||||||
% to | % to | % to | ||||||||||||||||||||||
Gross profit | Revenue | Gross profit | Revenue | Gross profit | Revenue | |||||||||||||||||||
Global Generics | 30,448 | 61 | 29,146 | 60 | 34,499 | 65 | ||||||||||||||||||
Pharmaceutical Services and Active Ingredients | 5,595 | 30 | 6,660 | 33 | 5,105 | 26 | ||||||||||||||||||
Proprietary Products | 196 | 67 | 396 | 77 | 382 | 72 | ||||||||||||||||||
Others | 261 | 44 | 138 | 18 | 277 | 24 | ||||||||||||||||||
Total | 36,500 | 53 | 36,340 | 52 | 40,263 | 54 | ||||||||||||||||||
Percentage of Sales | Percentage Increase/(Decrease) | |||||||||||||||||||
For the Year Ended March 31, | For the Year Ended March 31, | |||||||||||||||||||
2009 | 2010 | 2011 | 2009 to 2010 | 2010 to 2011 | ||||||||||||||||
Revenues | 100 | 100 | 100 | 1 | 6 | |||||||||||||||
Gross profit | 53 | 52 | 54 | — | — | |||||||||||||||
Selling, general and administrative expenses | 30 | 32 | 32 | 7 | 5 | |||||||||||||||
Research and development expenses | 6 | 5 | 7 | (6 | ) | 33 | ||||||||||||||
Impairment loss on other intangible assets | 5 | 5 | 0 | 9 | NC | |||||||||||||||
Impairment loss on goodwill | 16 | 7 | 0 | NC | NC | |||||||||||||||
Other (income)/expense, net | — | (1 | ) | (2 | ) | NC | NC | |||||||||||||
Results from operating activities | (4 | ) | 4 | 17 | NC | NC | ||||||||||||||
Finance income/(expense), net | (2 | ) | — | — | NC | NC | ||||||||||||||
Profit/(loss) before income taxes | (6 | ) | 4 | 17 | NC | NC | ||||||||||||||
Income tax (expense)/benefit, net | (2 | ) | (1 | ) | (2 | ) | NC | NC | ||||||||||||
Profit/(loss) for the period | (8 | ) | 3 | 15 | NC | NC |
NC = | Not comparable |
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• | Our overall consolidated revenues were74,693 million for the year ended March 31, 2011, an increase of 6% as compared to70,277 million for the year ended March 31, 2010. Revenue growth for the year ended March 31, 2011 was largely driven by our Global Generics segment. |
(in millions) | ||||||||||||||||||||||||
For the Year Ended March 31, | ||||||||||||||||||||||||
2009 | 2010 | 2011 | ||||||||||||||||||||||
Revenues | Revenues | Revenues | ||||||||||||||||||||||
% to | % to | % to | ||||||||||||||||||||||
Revenues | total | Revenues | total | Revenues | total | |||||||||||||||||||
North America (the United States and Canada) | 24,012 | 35 | 21,269 | 30 | 23,260 | 31 | ||||||||||||||||||
Europe | 18,047 | 26 | 16,779 | 24 | 16,058 | 21 | ||||||||||||||||||
Russia and other countries of the former Soviet Union | 7,623 | 11 | 9,119 | 13 | 10,858 | 15 | ||||||||||||||||||
India | 11,460 | 16 | 12,808 | 18 | 14,314 | 19 | ||||||||||||||||||
Others | 8,299 | 12 | 10,302 | 15 | 10,203 | 14 | ||||||||||||||||||
Total | 69,441 | 100 | 70,277 | 100 | 74,693 | 100 | ||||||||||||||||||
• | Revenues from our Global Generics segment were53,340 million for the year ended March 31, 2011, an increase of 10% as compared to48,606 million for the year ended March 31, 2010. North America (the United States and Canada), Germany, India and Russia were the four key markets for our Global Generics segment, contributing approximately 85% of the revenues of this segment for the year ended March 31, 2011. |
• | Revenues from our PSAI segment were19,648 million for the year ended March 31, 2011, representing a decrease of 4% from this segment’s revenues for the year ended March 31, 2010. |
• | During the year ended March 31, 2011, the average Indian rupee/U.S.$ exchange rate and the average Indian Rupee/Euro exchange rate appreciated by approximately 4% and 10%, respectively, compared to the average exchange rates in the year ended March 31, 2010. This change in the exchange rates resulted in lower reported revenue growth rates because of the decrease in rupee realization from sales in U.S. dollars and Euros. |
• | Our provision for sales returns during the year ended March 31, 2011 was731 million, as compared to932 million during the year ended March 31, 2010. This decrease in our provision was primarily due to lower sales returns processed by us during the year ended March 31, 2011, as compared to our earlier estimates. Consistent with our accounting policy for creating provisions for sales returns (discussed in Note 3.1 of our consolidated financial statements), we periodically assess the adequacy of our allowance for sales returns based on the criteria discussed in our Critical Accounting Policies, as well as sales returns actually processed during the year. As we progressed through the year ended March 31, 2011, we noted a decrease in our returns and, accordingly, reevaluated our estimate. The decrease in sales returns was partly attributed to a one-time return in the U.S. market due to a product odor issue during the year ended March 31, 2010 which did not re-occur during the year ended March 31, 2011. For further information regarding our sales return provisions, see Note 22 to our consolidated financial statements. |
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• | 2,112 million for product related intangibles; |
• | 5,147 million towards the carrying value of goodwill; and | ||
• | 1,211 million towards our trademark/brand — ‘beta’, which forms a significant portion of the intangible asset value of the betapharm cash generating unit. |
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• | A tax benefit that arose for the year ended March 31, 2010 in our German operations (primarily on account of the significant reversal of deferred tax liability on intangibles corresponding to the impairment charge recorded in betapharm) did not exist during the year ended March 31, 2011. |
• | A higher proportion of our profits for the year ended March 31, 2011 were taxed in jurisdictions with higher tax rates as compared to the year ended March 31, 2010. |
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• | Our overall revenues increased by 1% to70,277 million for the year ended March 31, 2010, as compared to69,441 million for the year ended March 31, 2009. Excluding revenues from sumatriptan (the authorized generic version of Imitrex®, for which we had exclusivity in the market for four months during the year ended March 31, 2009), our total revenues grew by 9% to67,734 million in the year ended March 31, 2010, as compared to62,253 million in the year ended March 31, 2009. For the year ended March 31, 2010, 82% of our total revenue was derived from markets outside of India, with 18% of our total revenue derived from India. The allocation of revenues among geographies changed considerably from the year ended March 31, 2009 to the year ended March 31, 2010, primarily due to decreased revenues from sales of sumatriptan in the United States. As a result, North America (the United States and Canada) accounted for 30% of our total revenues in the year ended March 31, 2010, as compared to 35% of our total revenues in the year ended March 31, 2009. Europe accounted for 24% of our total revenues for the year ended March 31, 2010, as compared to 26% for the year ended March 31, 2009. Russia and other countries of the former Soviet Union accounted for 13% of our total revenues for the year ended March 31, 2010, as compared to 11% for the year ended March 31, 2009. India accounted for 18% of our total revenues during the year ended March 31, 2010, as compared to 17% during the year ended March 31, 2009. |
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• | Revenues from our Global Generics segment were48,606 million for the year ended March 31, 2010, as compared to49,790 million for the year ended March 31, 2009. This decrease was primarily due to a decrease in revenues from sales of sumatriptan in the United States, from7,188 million for the year ended March 31, 2009 to2,543 million for the year ended March 31, 2010. This decrease in sumatriptan revenues was partially offset by increased revenues from our other markets, including India and Russia. |
• | Revenues from our Pharmaceutical Services and Active Ingredients segment increased by 9% to20,404 million during the year ended March 31, 2010, as compared to18,758 million during the year ended March 31, 2009. The increase primarily resulted from growth in revenues from Europe by 8% and 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 17%. |
• | For the year ended March 31, 2010, on an average basis, the Indian rupee depreciated by approximately 3% against the U.S. dollar compared to the average exchange rate for the year ended March 31, 2009. Excluding the impact of changes in foreign currency exchange rates and changes in the mark to market value of cash-flow hedges (i.e., derivative contracts to hedge against foreign currency risks), our total revenues fell by 1% to69,968 million for the year ended March 31, 2010, as compared to70,896 million for the year ended March 31, 2009. |
• | Our provision for sales returns during the year ended March 31, 2010 was932 million, as compared to663 million during the year ended March 31, 2009. This increase in our provision was primarily due to greater than expected returns processed by us during the year ended March 31, 2010, as compared to our earlier estimates. Consistent with our accounting policy for creating provisions for sales returns (discussed in Note 3.l. of our consolidated financial statements), we periodically assess the adequacy of our allowance for sales returns based on the criteria discussed in our Critical Accounting Policies, as well as sales returns actually processed during the year ended March 31, 2010. As we progressed through the year ended March 31, 2010, we noted an increase in our returns and, accordingly, reevaluated our estimate. The increase in sales returns was partly attributed to a one-time return in the U.S. market due to a product odor issue. In addition, the increase in sales returns was also significantly due to growth in our sales volumes and revenues. There was a 9% increase in our total revenues for the year ended March 31, 2010 over the year ended March 31, 2009, excluding the sales of sumatriptan. This increase in returns is reflected both in our higher incremental provision created and higher actual returns processed in the year ended March 31, 2010 as compared to the year ended March 31, 2009. For further information regarding our sales return provisions, see Note 22 to our consolidated financial statements. |
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• | 2,112 million for product related intangibles; |
• | 5,147 million towards the carrying value of goodwill; and |
• | 1,211 million towards our trademark/brand — ‘beta’, which forms a significant portion of the intangible asset value of the betapharm cash generating unit. |
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• | Our overall revenues increased by 39% to69,441 million in the year ended March 31, 2009, from50,006 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 in the United States of America 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% to66,644 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 for7,188 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% to59,456 million during the year ended March 31, 2009. |
• | Revenues from our Global Generics segment increased by 51% to49,790 million during the year ended March 31, 2009, from32,872 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 of1,684 million from the Shreveport facility and92 million from Jet Generici, each of which was acquired in April 2008, revenues from our Global Generics segment increased by 46% to48,014 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 for7,188 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% to40,826 million during the year ended March 31, 2009. |
• | Revenues from our Pharmaceutical Services and Active Ingredients segment increased by 13% to18,758 million during the year ended March 31, 2009, from16,623 million during the year ended March 31, 2008. Excluding revenues from the Dow Pharma Unit acquired in April 2008 of1,021 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%. |
• | 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. |
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• | 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. dollaers. 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 by1,455 million during the year ended March 31, 2009. Excluding the impact of such mark to market losses, our total revenues grew by 42% to70,896 million for the year ended March 31, 2009 from50,006 million for the year ended March 31, 2008. |
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• | IFRS 10, “Consolidated financial statements”. |
• | IFRS 11, “Joint arrangements”. |
• | IFRS 12, “Disclosure of interests in other entities”. |
• | IAS 27 (Revised 2011), “Consolidated and separate financial statements”, which has been amended for the issuance of IFRS 10 but retains the current guidance on separate financial statements. |
• | IAS 28 (Revised 2011), “Investments in associates”, which has been amended for conforming changes on the basis of the issuance of IFRS 10 and IFRS 11. |
• | It requires recognition of changes in the net defined benefit liability/(asset), including immediate recognition of defined benefit cost, disaggregation of defined benefit cost into components, recognition of re-measurements in other comprehensive income, plan amendments, curtailments and settlements. |
• | It introduced enhanced disclosures about defined benefit plans. |
• | It modified accounting for termination benefits, including distinguishing benefits provided in exchange for services from benefits provided in exchange for the termination of employment, and it affected the recognition and measurement of termination benefits. |
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• | It provided clarification regarding various issues, including the classification of employee benefits, current estimates of mortality rates, tax and administration costs and risk-sharing and conditional indexation features. |
• | It incorporated, without change, the IFRS Interpretations Committee’s requirements set forth in IFRIC 14 “IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”. |
Year Ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
in millions | ||||||||||||
Net cash provided by/(used in): | ||||||||||||
Operating activities | 8,009 | 13,226 | 4,505 | |||||||||
Investing activities | (8,658 | ) | (6,998 | ) | (3,472 | ) | ||||||
Financing activities | (377 | ) | (5,307 | ) | (2,527 | ) | ||||||
Net increase/(decrease) in cash and cash equivalents | (1,026 | ) | 921 | (1,494 | ) | |||||||
Effect of exchange rate changes on cash | 141 | 246 | (114 | ) | ||||||||
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• | A number of new products were launched in the year ended March 31, 2011, which required significant cash outflows. As a result of increased accounts receivable and inventory from these launches, our working capital balance increased during such period, but the resulting cash inflows were not fully realized during such period. |
• | Our business performance improved during the year ended March 31, 2010, resulting in earnings before interest expense, tax expense, depreciation, impairment and amortization of14,939 million, as compared to14,529 million and9,656 million for the years ended March 31, 2009 and 2008, respectively. |
• | During the year ended March 31, 2010, our accounts receivables collections improved and we collected accounts receivable due from sales of sumatriptan, which had been outstanding as at March 31, 2009. As a result, our accounts receivable balance as at March 31, 2010 was900 million less than the balance as at March 31, 2009. In contrast, our accounts receivable balance as at March 31, 2009 was7,348 million higher than the balance as at March 31, 2008. |
• | There was a smaller increase in our inventory during the year ended March 31, 2010 as compared to the year ended March 31, 2009. |
• | Cash paid for our acquisition from GlaxoSmithKline plc (“GSK”) of its penicillin-based antibiotics manufacturing facility in Bristol, Tennessee, United States, the product rights for the Augmentin® (branded and generic) and Amoxil® brands of oral penicillin-based antibiotics in the United States (GSK retained the existing rights for these brands outside the United States), certain raw material and finished goods inventory associated with Augmentin®, and certain transitional services from GSK, all for a total consideration of1,169 million. There were no expenditures for business acquisitions during the year ended March 31, 2010. |
• | Cash outflows for investments in property, plant and equipment for the year ended March 31, 2011 were9,066 million, an increase of4,937 million as compared to our investments in the year ended March 31, 2010. Increased investments in property, plant and equipment during the year ended March 31, 2011 was in line with our capacity expansion plans and establishment of new production facilities. |
• | The cash payment of2,530 million to the beneficial owners of I-VEN Pharma Capital Limited (“I-VEN”) for settlement of the payment due in respect of our exercise of the portfolio termination value option under our research and development agreement with I-VEN (as further described in Note 21 in the consolidated financial statements). |
• | The above mentioned cash outflows were partially offset by an increased cash inflow on account of sale of investments amounting to6,651 million. |
• | Net cash outflow on purchases of investment securities which were3,009 million for the year ended March 31, 2010, as compared to net cash inflows of4,377 million from sales of investment securities for the year ended March 31, 2009. |
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• | There were no cash outflows for acquisition of businesses during the year ended March 31, 2010, while we spent3,089 million during the year ended March 31, 2009 to acquire: a unit of the Dow Chemical Company associated with its United Kingdom sites in Mirfield and Cambridge; BASF’s manufacturing facility in Shreveport, Louisiana, U.S.A. and related pharmaceutical contract manufacturing business; and Jet Generici SRL. |
• | Our cash outflows for investment in property, plant and equipment for the year ended March 31, 2010 were4,129 million and were lower by378 million as compared to our investments in the year ended March 31, 2009. |
• | A12,541 million increase in short term borrowings during the year ended March 31, 2011, as compared to a decrease of83 million during the year ended March 31, 2010. The increase in short term borrowings was for our working capital needs and for re-payment of a loan taken to fund the acquisition of betapharm in Germany in the year ended March 31, 2006 (for further details, please refer to note 18 of the consolidated financial statements). |
• | Such increase in short term borrowings was offset by increases in cash outflow due to the repayment of long term debt of5,463 million (a loan taken to fund the acquisition of betapharm in Germany in the year ended March 31, 2006). |
• | A cash amount of525 million paid to acquire the remaining 40% non-controlling interest in our subsidiary, Dr. Reddy’s Laboratories (Proprietary) Limited, during the year ended March 31, 2011. |
Payments due by period | ||||||||||||||||
( in millions) | ||||||||||||||||
More | ||||||||||||||||
Less than | than | |||||||||||||||
Financial Contractual Obligations | Total | 1 year | 1-5 years | 5 years | ||||||||||||
Short-term borrowings from banks | 18,289 | 18,289 | — | — | ||||||||||||
Long term debt | ||||||||||||||||
Bonus debentures | 5,078 | — | 5,078 | — | ||||||||||||
Total obligations | 23,367 | 18,289 | 5,078 | — |
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(All amounts in millions) | ||||||||||||||||
As at March 31, 2011 | ||||||||||||||||
Weighted average | Average amount | Maximum amount | ||||||||||||||
Outstanding balance | interest rate | outstanding | outstanding | |||||||||||||
Rupee borrowings | 950 | 8.75% | 238 | 950 | ||||||||||||
Borrowings on transfer of receivables | 825 | LIBOR+75-100 bps | 387 | 978 | ||||||||||||
Other foreign currency borrowings | 16,514 | LIBOR+ 50 - 175 bps 5% to 8% | 12,022 | 17,071 | ||||||||||||
(All amounts in millions) | ||||||||||||||||
As at March 31, 2010 | ||||||||||||||||
Weighted average | Average amount | Maximum amount | ||||||||||||||
Outstanding balance | interest rate | outstanding | outstanding | |||||||||||||
Rupee borrowings | 42 | 5% | 2,102 | 3,940 | ||||||||||||
Borrowings on transfer of receivables | — | — | — | — | ||||||||||||
Other foreign currency borrowings | 5,562 | LIBOR+ 40 - 75 bps | 1,693 | 5,562 |
As at March 31, 2011 | ||||
Bonus debentures | 9.25 | % |
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• | 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 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 new molecules, sometimes referred to as a “new chemical entity” or “NCE”, and differentiated formulations. Our research programs focus on the following therapeutic areas: |
• | Metabolic disorders |
• | Cardiovascular disorders |
• | Bacterial infections |
• | Pain and inflammation |
• | In the years ended March 31, 2011, 2010 and 2009, we expended5,060 million,3,793 million and4,037 million, respectively, on research and development activities. |
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Payments Due by Period | ||||||||||||||||||||
( in millions) | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Contractual Obligations | Total | 1 year | 1-3 years | 3-5 years | 5 years | |||||||||||||||
Operating lease obligations | 631 | 216 | 285 | 130 | — | |||||||||||||||
Capital lease obligations | 256 | 12 | 20 | 31 | 193 | |||||||||||||||
Purchase obligations | ||||||||||||||||||||
Agreements to purchase property and equipment and other capital commitments(1) | 3,459 | 3,459 | — | — | — | |||||||||||||||
Borrowings from banks | 18,289 | 18,289 | — | — | — | |||||||||||||||
Long term debt obligations | 5,078 | — | 5,078 | — | — | |||||||||||||||
Estimated interest payable on long-term debt(2) | 1,399 | 470 | 929 | — | — | |||||||||||||||
Post retirement benefits obligations (3) | 1,339 | 105 | 205 | 256 | 773 | |||||||||||||||
Total contractual obligations | 30,451 | 22,551 | 6,517 | 417 | 966 |
(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, 2011 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 |
ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
Name(1) | Age (in yrs) | Position | ||||
Dr. K. Anji Reddy(2) | 72 | Chairman | ||||
Mr. G.V. Prasad(2),(3) | 51 | Chief Executive Officer and Vice Chairman | ||||
Mr. Satish Reddy(2),(4) | 44 | Chief Operating Officer and Managing Director | ||||
Mr. Anupam Puri | 65 | Director | ||||
Dr. J.P. Moreau | 63 | Director | ||||
Ms. Kalpana Morparia | 62 | Director | ||||
Dr. Omkar Goswami | 54 | Director | ||||
Mr. Ravi Bhoothalingam | 65 | Director | ||||
Dr. Bruce L. A. Carter | 68 | Director | ||||
Dr. Ashok S. Ganguly | 76 | 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. |
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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.) | 51 | 27 | June 30, 1990 | Promoter Director, Benzex Labs Private Limited | |||||
Satish Reddy(2) | B. Tech., M.S. | 44 | 19 | January 18, 1993 | Director, Globe | |||||
Managing Director and Chief Operating Officer | (Medicinal Chemistry) | Organics Limited | ||||||||
Abhijit Mukherjee President — Global Generics | B. Tech. (Chem.) | 53 | 31 | January 15, 2003 | President, Atul Limited | |||||
Amit Patel Senior Vice President — North America Generics | B.A.S, BS (Eco), MBA | 36 | 13 | August 6, 2003 | V P Corporate Development, CTIS Inc | |||||
Dr. Cartikeya Reddy Senior Vice President and Head of Biologics | B. Tech, M.S., Ph.D. | 41 | 20 | July 20, 2004 | Senior Engineer, Genetech Inc. | |||||
K. B. Sankara Rao Executive Vice President — Integrated | M. Pharma | 57 | 33 | September 29, 1986 | Production Executive, Cipla Limited | |||||
Product Development | ||||||||||
Saumen Chakraborty | B.Sc. (H), PGDM | 50 | 27 | July 2, 2001 | Vice President, | |||||
President and Global | Tecumseh Products | |||||||||
Head — Quality, HR and IT | India Private Limited | |||||||||
Umang Vohra Chief Financial Officer | B.E., MBA | 40 | 16 | February 18, 2002 | Manager, Pepsico India | |||||
Vilas Dholye Executive Vice President — Formulations Manufacturing | B. Tech. (Chem.) | 62 | 37 | December 18, 2000 | Vice President, Pidilite Industries Limited | |||||
Dr. Raghav Chari Senior Vice President — Proprietary Products | M.S. (Physics), Ph.D. | 41 | 14 | September 25, 2006 | Head Corporate Strategy, NPS Pharmaceuticals Limited | |||||
Dr. R. Ananthanarayanan President, Pharmaceutical Services and Active Ingredients | B.Pharm, Ph.D. | 46 | 23 | August 6, 2010 | President, Aurosource, USA |
(1) | Son-in-law of Dr. K. Anji Reddy. | |
(2) | Son of Dr. K. Anji Reddy. |
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Number of | ||||||||||||||||||||||||
Name of the Director | Attendance fees | Commission | Salary | Perquisites | Total | Stock Options(1) | ||||||||||||||||||
Dr. K. Anji Reddy | — | 100 | 5 | 1 | 106 | — | ||||||||||||||||||
Mr. G.V. Prasad | — | 73 | 4 | 1 | 78 | — | ||||||||||||||||||
Mr. Satish Reddy | — | 73 | 4 | 1 | 78 | — | ||||||||||||||||||
Mr. Anupam Puri | * | 3 | — | — | 3 | 2,400 | ||||||||||||||||||
Dr. J.P. Moreau | * | 3 | — | — | 3 | 2,400 | ||||||||||||||||||
Ms. Kalpana Morparia | * | 3 | — | — | 3 | 2,400 | ||||||||||||||||||
Dr. Omkar Goswami | * | 3 | — | — | 3 | 2,400 | ||||||||||||||||||
Mr. Ravi Bhoothalingam | * | 3 | — | — | 3 | 2,400 | ||||||||||||||||||
Dr. Bruce L. A. Carter | * | 3 | — | — | 3 | 2,400 | ||||||||||||||||||
Dr. Ashok S. Ganguly | * | 3 | — | — | 3 | 2,400 |
* | Attendance fees were paid only to non-full time directors and ranged from25 thousand to95 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) | The options granted to non-full time directors during the year ended March 31, 2011 have an exercise price of5 per option, vest in one year, and expire five years from the date of vesting. |
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Expiration | ||||||||||||||||||||
Compensation | No. of | Fiscal Year | Exercise | Date | ||||||||||||||||
Name | ( in millions) | Options held | of Grant | Price () | (See note no.) | |||||||||||||||
Abhijit Mukherjee | 20.7 | 2,000 | 2008 | 5 | (1) | |||||||||||||||
2,000 | 2009 | 5 | (1) | |||||||||||||||||
2,000 | 2009 | 5 | (2) | |||||||||||||||||
2,000 | 2010 | 5 | (1) | |||||||||||||||||
2,000 | 2010 | 5 | (2) | |||||||||||||||||
2,000 | 2010 | 5 | (3) | |||||||||||||||||
2,000 | 2011 | 5 | (1) | |||||||||||||||||
2,000 | 2011 | 5 | (2) | |||||||||||||||||
2,000 | 2011 | 5 | (3) | |||||||||||||||||
2,000 | 2011 | 5 | (4) | |||||||||||||||||
Amit Patel | 20.75 | 1,375 | 2008 | 5 | (1) | |||||||||||||||
1,250 | 2009 | 5 | (1) | |||||||||||||||||
1,250 | 2009 | 5 | (2) | |||||||||||||||||
1,500 | 2010 | 5 | (1) | |||||||||||||||||
1,500 | 2010 | 5 | (2) | |||||||||||||||||
1,500 | 2010 | 5 | (3) | |||||||||||||||||
1,250 | 2011 | 5 | (1) | |||||||||||||||||
1,250 | 2011 | 5 | (2) | |||||||||||||||||
1,250 | 2011 | 5 | (3) | |||||||||||||||||
1,250 | 2011 | 5 | (4) | |||||||||||||||||
Cartikeya Reddy | 12.07 | 1,000 | 2008 | 5 | (1) | |||||||||||||||
1,250 | 2009 | 5 | (1) | |||||||||||||||||
1,250 | 2009 | 5 | (2) | |||||||||||||||||
1,250 | 2010 | 5 | (1) | |||||||||||||||||
1,250 | 2010 | 5 | (2) | |||||||||||||||||
1,250 | 2010 | 5 | (3) | |||||||||||||||||
1,125 | 2011 | 5 | (1) | |||||||||||||||||
1,125 | 2011 | 5 | (2) | |||||||||||||||||
1,125 | 2011 | 5 | (3) | |||||||||||||||||
1,125 | 2011 | 5 | (4) |
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Expiration | ||||||||||||||||||||
Compensation | No. of | Fiscal Year | Exercise | Date | ||||||||||||||||
Name | ( in millions) | Options held | of Grant | Price () | (See note no.) | |||||||||||||||
K. B. Sankara Rao | 12.52 | 1,500 | 2008 | 5 | (1) | |||||||||||||||
1,250 | 2009 | 5 | (1) | |||||||||||||||||
1,250 | 2009 | 5 | (2) | |||||||||||||||||
1,250 | 2010 | 5 | (1) | |||||||||||||||||
1,250 | 2010 | 5 | (2) | |||||||||||||||||
1,250 | 2010 | 5 | (3) | |||||||||||||||||
875 | 2011 | 5 | (1) | |||||||||||||||||
875 | 2011 | 5 | (2) | |||||||||||||||||
875 | 2011 | 5 | (3) | |||||||||||||||||
875 | 2011 | 5 | (4) | |||||||||||||||||
Saumen Chakraborty | 18.57 | 2,000 | 2008 | 5 | (1) | |||||||||||||||
2,000 | 2009 | 5 | (1) | |||||||||||||||||
2,000 | 2009 | 5 | (2) | |||||||||||||||||
2,000 | 2010 | 5 | (1) | |||||||||||||||||
2,000 | 2010 | 5 | (2) | |||||||||||||||||
2,000 | 2010 | 5 | (3) | |||||||||||||||||
1,625 | 2011 | 5 | (1) | |||||||||||||||||
1,625 | 2011 | 5 | (2) | |||||||||||||||||
1,625 | 2011 | 5 | (3) | |||||||||||||||||
1,625 | 2011 | 5 | (4) | |||||||||||||||||
Umang Vohra | 11.42 | 750 | 2008 | 5 | (1) | |||||||||||||||
875 | 2009 | 5 | (1) | |||||||||||||||||
875 | 2009 | 5 | (2) | |||||||||||||||||
1,250 | 2010 | 5 | (1) | |||||||||||||||||
1,250 | 2010 | 5 | (2) | |||||||||||||||||
1,250 | 2010 | 5 | (3) | |||||||||||||||||
1,125 | 2011 | 5 | (1) | |||||||||||||||||
1,125 | 2011 | 5 | (2) | |||||||||||||||||
1,125 | 2011 | 5 | (3) | |||||||||||||||||
1,125 | 2011 | 5 | (4) | |||||||||||||||||
Vilas M. Dholye | 11.27 | 700 | 2008 | 5 | (1) | |||||||||||||||
400 | 2009 | 5 | (1) | |||||||||||||||||
400 | 2009 | 5 | (2) | |||||||||||||||||
1,250 | 2010 | 5 | (1) | |||||||||||||||||
1,250 | 2010 | 5 | (2) | |||||||||||||||||
1,250 | 2010 | 5 | (3) | |||||||||||||||||
875 | 2011 | 5 | (1) | |||||||||||||||||
875 | 2011 | 5 | (2) | |||||||||||||||||
875 | 2011 | 5 | (3) | |||||||||||||||||
875 | 2011 | 5 | (4) | |||||||||||||||||
Dr. Raghav Chari | 19.25 | 500 | 2008 | 5 | (1) | |||||||||||||||
750 | 2009 | 5 | (1) | |||||||||||||||||
750 | 2009 | 5 | (2) | |||||||||||||||||
1,000 | 2010 | 5 | (1) | |||||||||||||||||
1,000 | 2010 | 5 | (2) | |||||||||||||||||
1,000 | 2010 | 5 | (3) | |||||||||||||||||
1,125 | 2011 | 5 | (1) | |||||||||||||||||
1,125 | 2011 | 5 | (2) | |||||||||||||||||
1,125 | 2011 | 5 | (3) | |||||||||||||||||
1,125 | 2011 | 5 | (4) | |||||||||||||||||
Dr. Ananthnarayanan | 9.93 | — | — | — | — |
(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)(4) | July 12, 2016 | 5 years | 27 years | |||
Mr. Satish Reddy(1) | September 30, 2012 | 5 years | 18 years | |||
Mr. G.V. Prasad(1)(4) | January 29, 2016 | 5 years | 25 years | |||
Mr. Anupam Puri(2) | Retirement by rotation | Due for retirement by rotation in 2011 | 9 years | |||
Dr. J. P. Moreau(2)(3) | Retirement by rotation | Due for retirement by rotation in 2013 | 4 years | |||
Ms. Kalpana Morparia(2)(3) | Retirement by rotation | Due for retirement by rotation in 2014 | 4 years | |||
Dr. Omkar Goswami(2) | Retirement by rotation | Due for retirement by rotation in 2012 | 10.5 years | |||
Mr. Ravi Bhoothalingam(2) | Retirement by rotation | Due for retirement by rotation in 2012 | 10.5 years | |||
Dr. Bruce L. A. Carter(2) | Retirement by rotation | Due for retirement by rotation in 2011 | 3 years | |||
Dr. Ashok S. Ganguly(2) | Retirement by rotation | Due for retirement by rotation in 2013 | 1.5 year |
(1) | Full time director. | |
(2) | Non-full time independent director. | |
(3) | Reappointed at the 26th Annual General Meeting of Shareholders held on July 23, 2010. | |
(4) | Reappointed by the Board of Directors at their meeting held on January 25, 2011 for a further period of five years, subject to approval by our shareholders at their next annual general meeting scheduled on July 21, 2011. |
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• | Audit Committee. | ||
• | Nomination, Governance and Compensation Committee. | ||
• | Science, Technology and Operations Committee. | ||
• | Risk Management Committee. | ||
• | Shareholders’ Grievance Committee. | ||
• | Management Committee. | ||
• | Investment Committee. |
• | Dr. Omkar Goswami (Chairman); | ||
• | Ms. Kalpana Morparia; and | ||
• | Mr. Ravi Bhoothalingam. |
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• | 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; |
• | Review the functioning of our whistle blower policies and procedures; and |
• | Implement compliance with all applicable provisions of the Sarbanes-Oxley Act of 2002. |
• | Mr. Anupam Puri (Chairman); |
• | Dr. Bruce Carter; |
• | Dr. J.P. Moreau; | ||
• | Ms. Kalpana Morparia; | ||
• | Dr. Omkar Goswami; and | ||
• | Mr. Ravi Bhoothalingam. |
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• | Examine the structure, composition and functioning of the Board, and recommend changes, as necessary, to improve the Board’s effectiveness; |
• | Assess our policies and processes in key areas of corporate governance, other than those explicitly assigned to other Board Committees, with a view to ensuring that we are at the forefront of good corporate governance; and |
• | Regularly examine ways to strengthen our organizational health, by improving the hiring, retention, motivation, development, deployment and behavior of management and other employees. In this context, the Committee also reviews the framework and processes for motivating and rewarding performance at all levels of the organization, the resulting compensation awards, and make appropriate proposals for Board approval. In particular, it recommends all forms of compensation to be granted to our directors, executive officers and senior management employees. |
• | Mr. Anupam Puri (Chairman); | ||
• | Dr. Ashok S. Ganguly; | ||
• | Ms. Kalpana Morparia; and | ||
• | Mr. Ravi Bhoothalingam. |
• | Advise the Board and our management on scientific, medical and technical matters and operations involving our development and discovery programs (generic and proprietary), including major internal projects, business development opportunities, interaction with academic and other outside research organizations; |
• | Assist the Board and our management to stay abreast of novel scientific and technologies developments and innovations and anticipate emerging concepts and trends in therapeutic research and development, to help assure that we make well-informed choices in committing our resources; |
• | Assist the Board and our management in creation of valuable intellectual property; |
• | Review the status of non-infringement patent challenges; and |
• | Assist the Board and our management in building and nurturing science in our organization in accordance with our business strategy. |
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• | Dr. Ashok S. Ganguly (Chairman); | ||
• | Mr. Anupam Puri; | ||
• | Dr. Bruce L.A. Carter; and | ||
• | Dr. J.P. Moreau |
• | Ensure that it is apprised of the most significant risks along with the action management is taking and how it is ensuring effective Enterprise Risk Management; |
• | Discuss with senior management our Enterprise Risk Management and provide oversight as may be needed; and |
• | Review risk disclosure statements in any public documents or disclosures. |
• | Dr. Bruce L.A. Carter (Chairman); | ||
• | Dr. J.P. Moreau; and | ||
• | Dr. Omkar Goswami |
Rest of the | ||||||||||||||||
North America | Europe | World | Total | |||||||||||||
Manufacturing(1) | 232 | 74 | 5,992 | 6,298 | ||||||||||||
Sales and Marketing(2) | 119 | 88 | 4,640 | 4,847 | ||||||||||||
Research and Development | 8 | 30 | 1,890 | 1,928 | ||||||||||||
Others(3) | 61 | 159 | 1,630 | 1,850 | ||||||||||||
Total | 420 | 351 | 14,152 | 14,923 | ||||||||||||
Rest of the | ||||||||||||||||
North America | Europe | World | Total | |||||||||||||
Manufacturing(1) | 163 | 53 | 5,524 | 5,740 | ||||||||||||
Sales and Marketing(2) | 102 | 88 | 3,873 | 4,063 | ||||||||||||
Research and Development | 6 | 27 | 1,753 | 1,786 | ||||||||||||
Others(3) | 44 | 231 | 1,591 | 1,866 | ||||||||||||
Total | 315 | 399 | 12,741 | 13,455 | ||||||||||||
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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 | ||||||||||||
(1) | Includes quality, technical services and warehouse. | |
(2) | Includes business development. | |
(3) | Includes shared services, corporate business development and the intellectual property management team. |
No. of Shares | % of Outstanding | No. of Options | ||||||||||
Name | Held (1), (3) | Capital | Held | |||||||||
Dr. K. Anji Reddy (2),(4) | 600,956 | 0.36 | % | — | ||||||||
Mr. G.V. Prasad (4) | 1,365,840 | 0.81 | % | — | ||||||||
Mr. Satish Reddy (4) | 1,205,832 | 0.71 | % | — | ||||||||
Mr. Anupam Puri (ADRs)(5) | 16,498 | 0.01 | % | 2,402 | ||||||||
Dr. J.P.Moreau (ADRs)(5) | 6,000 | — | 2,400 | |||||||||
Dr. Omkar Goswami(5) | 18,000 | 0.01 | % | 2,400 | ||||||||
Ms. Kalpana Morparia(5) | 6,000 | — | 2,400 | |||||||||
Mr. Ravi Bhoothalingam(5) | 18,000 | 0.01 | % | 2,400 | ||||||||
Dr. Bruce L.A. Carter (ADRs)(5) | 7,000 | — | 2,400 | |||||||||
Dr. Ashok S. Ganguly(5) | — | — | 2,400 | |||||||||
Abhijit Mukherjee | 28,093 | 0.01 | % | 20,000 | ||||||||
Amit Patel | — | — | 13,375 | |||||||||
Cartikeya Reddy | 5,575 | — | 11,750 | |||||||||
K. B. Sankara Rao | 64,438 | 0.04 | % | 11,250 | ||||||||
R. Ananthanarayanan | — | — | — | |||||||||
Saumen Chakraborty | 24,500 | 0.02 | % | 18,500 | ||||||||
Umang Vohra | 5,990 | — | 10,750 | |||||||||
Vilas M. Dholye | 1,910 | — | 8,750 | |||||||||
Dr. Raghav Chari | — | — | 9,500 |
(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) | These options were granted in the years ended March 31, 2010 and 2011 with an exercise price of5 each. These options vests at the end of one year from the date of grant and expire at the end of five years from the date of vesting. |
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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 Limited (formerly known as 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). |
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Equity Shares Beneficially Owned (1) | ||||||||
Number | Percentage | |||||||
Name | of Shares | of Shares | ||||||
Dr. K. Anji Reddy (2) | 39,729,284 | 23.47 | % | |||||
Mr. G.V. Prasad | 1,365,840 | 0.81 | % | |||||
Mr. Satish Reddy | 1,205,832 | 0.71 | % | |||||
Family Members | 1,116,856 | 0.66 | % | |||||
Subtotal | 43,417,812 | 25.65 | % | |||||
Others/public float | 125,834,920 | 74.35 | % | |||||
Total number of shares outstanding | 169,252,732 | 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 Limited owns 39,128,328 of our equity shares. Dr. K. Anji Reddy owns 40% of Dr. Reddy’s Holdings 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 Limited is included in the amount shown as beneficially owned by Dr. K. Anji Reddy. An aggregate of 2,100,000 of such equity shares held by Dr. Reddy’s Holdings Limited were pledged as on March 31, 2011. |
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||||||||||||||
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 Limited | 39,128,328 | 23.12 | 39,128,328 | 23.17 | 39,978,328 | 23.74 | ||||||||||||||||||
Life Insurance Corporation of India and its associates | 13,579,378 | �� | 8.02 | 18,871,794 | 11.18 | 21,723,498 | 12.89 |
• | Green Park Hotel and Resorts Limited (formerly known as Diana Hotels Limited) for hotel services; |
• | A.R. Life Sciences Private Limited for processing services of raw materials and intermediates; |
• | Dr. Reddy’s Holdings Limited for the purchase and sale of active pharmaceutical ingredients; |
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• | 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 millions) | ||||||||||||
Year Ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Purchases from significant interest entities in the ordinary course | 486 | 275 | 290 | |||||||||
Sales to significant interest entities in the ordinary course | 391 | 156 | 135 | |||||||||
Services to significant interest entities | — | 4 | — | |||||||||
Contribution to a significant interest entity towards social development and research and development | 125 | 151 | 124 | |||||||||
Hotel expenses paid to significant interest entities | 20 | 13 | 13 | |||||||||
Advances paid to significant interest entities for purchase of land(1) | — | 367 | 400 | |||||||||
Short term loan taken from and repaid to significant interest entities | — | — | 60 | |||||||||
Interest paid on loan taken from significant interest entities | — | — | 2 | |||||||||
Compensation paid to key management personnel | 494 | 511 | 460 | |||||||||
Lease rental paid under cancellable operating leases to directors and their relatives | 29 | 27 | 26 |
(1) | This does not include amounts paid as at March 31, 2011, 2010 and 2009 of0 million,1,447 million and1,080 million, respectively, as advances towards the purchase of land from significant interest entities, which has been recorded under capital work-in-progress in our statement of financial position. |
• | During the year ended March 31, 2010, we exchanged a parcel of land owned by us for another parcel of land of equivalent size that adjoins our research facility, owned by our key management personnel. We concluded that this exchange transaction lacks commercial substance and have accordingly recorded the land acquired at the carrying amount of the land transferred, with no profit or loss being recorded. |
• | During the year ended March 31, 2010, we purchased land from a significant interest entity for a purchase price of21 million. |
(Amounts in millions) | ||||||||
As at March 31, | ||||||||
2011 | 2010 | |||||||
Significant interest entities | 114 | 44 | ||||||
Key management personnel | 5 | 5 |
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(Amounts in millions) | ||||||||
As at March 31, | ||||||||
2011 | 2010 | |||||||
Significant interest entities | 81 | 20 |
• | Report of Independent Registered Public Accounting Firm | ||
• | Consolidated statement of financial position as of March 31, 2011 and 2010 | ||
• | Consolidated income statement for the years ended March 31, 2011, 2010 and 2009 | ||
• | Consolidated statement of comprehensive income/(loss) for the years ended March 31, 2011, 2010 and 2009 | ||
• | Consolidated statement of changes in equity for the years ended March 31, 2011, 2010 and 2009 | ||
• | Consolidated cash flow statement for the years ended March 31, 2011, 2010 and 2009 | ||
• | Notes to the consolidated financial statements |
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• | Fully paid up bonus debentures carrying a face value of5 each were issued to our shareholders in the ratio of 6 bonus debentures for each equity share held by such shareholder on March 18, 2011. |
• | The bonus debentures are unsecured and are not convertible into our equity shares. |
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• | We delivered cash in the aggregate value of the bonus debentures into an escrow account of a merchant banker in India appointed by our Board of Directors. The merchant banker received such amount for and on behalf of and in trust for the shareholders who are entitled to receive bonus debentures. Upon receipt of such amount, the merchant banker paid the amount to us, for and on behalf of the shareholders as consideration for the allotment of debentures to them. |
• | These bonus debentures have a maturity of 36 months, at which time we must redeem them for cash in an amount equal to the face value of5 each, plus unpaid interest, if any. |
• | These bonus debentures carry an interest rate of 9.25% per annum, payable at the end of every 12, 24 and 36 months from the date of issue. |
• | These bonus debentures are listed on stock exchanges in India so as to provide liquidity for the holders. |
• | Issuance of these bonus debentures will be treated as a “deemed dividend” under section 2 (22) (b) of the Indian Income Tax Act, 1961 and accordingly, we will be required to pay a dividend distribution tax. |
• | Under Indian Corporate Law and as per the terms of the approved bonus debenture scheme, we have created a statutory reserve (the “Debenture Redemption Reserve”) in which we are required to deposit a portion of our profits made during each year prior to the maturity date of the bonus debentures until the aggregate amount retained in such reserve equals 50% of the face value of the debentures then issued and outstanding. The funds in the Debenture Redemption Reserve shall be used only to redeem the debentures for so long as they are issued and outstanding. |
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BSE | NYSE | |||||||||||||||
Year | Price Per Equity Share(1) | Price Per ADS(1) | ||||||||||||||
Ended March 31, | High () | Low () | High (U.S.$) | Low (U.S.$) | ||||||||||||
2011 | 1855.00 | 1160.00 | 41.80 | 24.17 | ||||||||||||
2010 | 1,317.90 | 476.10 | 29.23 | 9.17 | ||||||||||||
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 |
BSE | NYSE | |||||||||||||||
Price Per Equity Share | Price Per ADS | |||||||||||||||
Quarter Ended | High () | Low () | High (U.S.$) | Low (U.S.$) | ||||||||||||
June 30, 2009 | 800.00 | 476.10 | 16.98 | 9.17 | ||||||||||||
September 30, 2009 | 1,018.50 | 696.00 | 20.88 | 15.12 | ||||||||||||
December 31, 2009 | 1,241.90 | 891.50 | 26.54 | 18.55 | ||||||||||||
March 31, 2010 | 1,317.90 | 1,051.20 | 29.23 | 23.13 | ||||||||||||
June 30, 2010 | 1,515.00 | 1,160.00 | 33.14 | 24.17 | ||||||||||||
September 30, 2010 | 1,558.00 | 1,304.50 | 33.59 | 27.55 | ||||||||||||
December 31, 2010 | 1,855.00 | 1,445.00 | 41.80 | 32.92 | ||||||||||||
March 31, 2011 | 1,728.90 | 1,451.25 | 38.10 | 32.58 |
BSE | NYSE | |||||||||||||||
Price Per Equity Share(1) | Price Per ADS(1) | |||||||||||||||
Month Ended | High () | Low () | High (U.S.$) | Low (U.S.$) | ||||||||||||
October 31, 2010 | 1,670.00 | 1,445.00 | 38.06 | 32.92 | ||||||||||||
November 30, 2010 | 1,814.00 | 1,666.05 | 40.25 | 37.73 | ||||||||||||
December 31, 2010 | 1,855.00 | 1,618.00 | 41.80 | 34.85 | ||||||||||||
January 31, 2011 | 1,728.90 | 1,526.00 | 38.10 | 33.93 | ||||||||||||
February 28, 2011 | 1,640.00 | 1,451.25 | 35.64 | 32.58 | ||||||||||||
March 31, 2011 | 1,675.00 | 1,492.00 | 37.53 | 33.52 |
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(i) | A person resident outside India, not being a NRI or an 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 NRI may transfer by way of sale or gift, the shares or convertible debentures held by that person to another NRI 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. |
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(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. |
(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. |
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• | 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; |
• | 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%, excluding the applicable surcharge and education cess; and short-term capital gains on such a transfer will be taxed at the maximum marginal rate of tax applicable to the seller, excluding surcharges 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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For the Year Ended March 31, | |||||||||||||
2011 | 2010 | 2009 | |||||||||||
Foreign Currency Loans | — | Euribor +70bps and Libor +70 bps | Euribor +70bps or Libor +70 bps | ||||||||||
Rupee Term Loans* | — | 2 | % | 2 | % | ||||||||
Bonus Debentures | 9.25 | % | — | — |
* | Loan received at a subsidized rate of interest from Indian Renewable Energy Development Agency Limited promoting use of alternative sources of energy. |
Maturing in the | Foreign | Obligation | ||||||||||||||||||
year ending | Rupee term | currency | under finance | |||||||||||||||||
March 31, | loan | loan | lease | Debentures | Total | |||||||||||||||
2012 | — | — | 12 | — | 12 | |||||||||||||||
2013 | — | — | 10 | — | 10 | |||||||||||||||
2014 | — | — | 10 | 5,078 | 5,088 | |||||||||||||||
2015 | — | — | 10 | — | 10 | |||||||||||||||
2016 | — | — | 10 | — | 10 | |||||||||||||||
Thereafter | — | — | 204 | — | 204 | |||||||||||||||
— | — | 256 | 5,078 | 5,334 | ||||||||||||||||
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Category | ||||
(as defined by SEC) | Depositary actions | Associated Fee | ||
(a) Depositing or substituting the underlying shares | Issuing ADSs upon deposits of shares, including deposits and issuances in respect of share distributions, stock splits, rights, mergers, exchanges of securities or any other transaction or event or other distribution affecting the ADSs or the deposited shares. | U.S.$5.00 for each 100 ADSs (or portion thereof) evidenced by the new shares deposited. | ||
(b) Receiving or distributing dividends | Distribution of dividends. | U.S.$0.02 or less per ADSs (U.S.$2.00 per 100 ADSs). | ||
(c) Selling or exercising rights | Distribution or sale of securities. | U.S.$5.00 for each 100 ADSs (or portion thereof), the fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities. |
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Category | ||||
(as defined by SEC) | Depositary actions | Associated Fee | ||
(d) Withdrawing an underlying security | Acceptance of ADSs surrendered for withdrawal of deposited shares. | U.S.$5.00 for each 100 ADSs (or portion thereof) evidenced by the shares withdrawn. | ||
(e) Transferring, splitting or grouping receipts | Transfers, combining or grouping of depositary receipts. | U.S.$1.50 per ADS. | ||
(f) General depositary services, particularly those charged on an annual basis. | Other services performed by the depositary in administering the ADSs. | U.S.$0.02 per ADS (or portion thereof) not more than once each calendar year. | ||
(g) Other | Expenses incurred on behalf of holders in connection with: | The amount of such expenses incurred by the Depositary. | ||
• compliance with foreign exchange control regulations or any law or regulation relating to foreign investment; | ||||
• the depositary’s or its custodian’s compliance with applicable law, rule or regulation; | ||||
• stock transfer or other taxes and other governmental charges; | ||||
• cable, telex, facsimile transmission/delivery; | ||||
• expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars (which are paid out of such foreign currency); or | ||||
• any other charge payable by depositary or its agents. |
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Amount Reimbursed during | ||||
Category of Expenses | the Year Ended March 31, 2011 | |||
Legal and accounting fees incurred in connection with preparation of Form 20-F and ongoing SEC compliance and listing requirements | U.S.$547,082 | |||
Listing fees | None | |||
Investor relations | None | |||
Advertising and public relations | None | |||
Broker reimbursements(1) | None |
(1) | Broker reimbursements are fees payable to Broadridge Financial Solutions, Inc. and other service providers for the distribution of hard copy materials to beneficial ADS holders in the Depositary Trust Company. Corporate material includes information related to shareholders’ meetings and related voting instruction cards. |
Category Expenses | Amount Reimbursed during the Year Ended March 31, 2011 | |
Third-party expenses paid directly | U.S.$38,000 towards NYSE listing fee and U.S.$102,206 towards broker reimbursements, postage, printing and Depositary Trust Company report fees | |
Fees waived | Up to U.S.$300,000 per year. |
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/s/ G. V. Prasad | /s/ Umang Vohra |
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Dr. Reddy’s Laboratories Limited:
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Year Ended | ||||||||||||||
Type of Service | March 31, 2011 | March 31, 2010 | March 31, 2009 | Description of Services | ||||||||||
( in millions) | ||||||||||||||
Audit fees | 61.36 | 58.60 | 57.28 | Audit and review of financial statements | ||||||||||
Audit related fees | — | — | Financial and tax due diligence services | |||||||||||
Tax fees | 2.93 | 5.05 | 1.46 | Tax returns filing and transfer pricing related services | ||||||||||
All other fees | 1.45 | 2.37 | 0.11 | Statutory certifications, subscription to databases, etc. | ||||||||||
Total | 65.74 | 66.02 | 58.85 | |||||||||||
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(i) | establish an independent audit committee that has specified responsibilities; | |
(ii) | provide prompt certification by its chief executive officer of any 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. |
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. Seven of our ten 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 is made available on the listed company’s website and 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 Nomination, Governance and 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 the Nomination, Governance and Compensation Committee. | |
Listed companies must have a compensation committee composed entirely of independent directors. The compensation committee must have a written charter that is made available on the listed company’s website and 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 Nomination, Governance and 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 Nomination, Governance and Compensation Committee. |
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Standard for U.S. NYSE Listed Companies | Our practice | |
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 is made available on the listed company’s website and 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 Plans were 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 that is made available on the listed company’s website and, 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 a practice. | |
Each listed company CEO must promptly notify the NYSE in writing after any executive officer or director of the listed company becomes aware of any non-compliance with any applicable provisions of this Section 303A. | There have been no such instances. |
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Standard for U.S. NYSE Listed Companies | Our practice | |
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 that any of the following occurs: | We filed our most recent annual written affirmation, in the form specified by NYSE on September 28, 2010. | |
• an audit committee member who was deemed independent is no longer independent; | ||
• a member has been added to the audit committee; | ||
• the listed company or a member of its audit committee is eligible to rely on and is choosing to rely on a Securities Exchange Act Rule 10A-3 (“Rule 10A-3”) exemption; | ||
• the listed company or a member of its audit committee is no longer eligible to rely on or is choosing to no longer rely on a previously applicable Rule 10A-3 exemption; | ||
• a member has been removed from the listed company’s audit committee resulting in the company no longer having a Rule 10A-3 compliant audit committee; or | ||
• the listed company determined that it no longer qualifies as a foreign private issuer and will be considered a domestic company under Section 303A. | ||
The annual and interim Written Affirmations must be in the form specified by the NYSE. |
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ITEM 17. | FINANCIAL STATEMENTS |
ITEM 18. | FINANCIAL STATEMENTS |
F - 1 | ||||
F - 2 | ||||
F - 4 | ||||
F - 5 | ||||
F - 6 | ||||
F - 8 | ||||
F – 10 | ||||
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Dr. Reddy’s Laboratories Limited:
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As of | ||||||||||||||
Particulars | Note | March 31, 2011 | March 31, 2011 | March 31, 2010 | ||||||||||
Unaudited | ||||||||||||||
convenience | ||||||||||||||
translation into | ||||||||||||||
U.S.$ (See Note 2.d) | ||||||||||||||
ASSETS | ||||||||||||||
Current assets | ||||||||||||||
Cash and cash equivalents | 15 | U.S.$ | 129 | 5,729 | 6,584 | |||||||||
Other investments | 11 | 1 | 33 | 3,600 | ||||||||||
Trade receivables, net | 13 | 395 | 17,615 | 11,960 | ||||||||||
Inventories | 12 | 361 | 16,059 | 13,371 | ||||||||||
Derivative financial instruments | 31 | 18 | 784 | 573 | ||||||||||
Current tax assets | 10 | 442 | 530 | |||||||||||
Other current assets | 14 | 156 | 6,931 | 5,445 | ||||||||||
Total current assets | U.S.$ | 1,069 | 47,593 | 42,063 | ||||||||||
Non-current assets | ||||||||||||||
Property, plant and equipment | 7 | 666 | 29,642 | 22,459 | ||||||||||
Goodwill | 8 | 49 | 2,180 | 2,174 | ||||||||||
Other intangible assets | 9 | 293 | 13,066 | 11,799 | ||||||||||
Investment in equity accounted investees | 10 | 7 | 313 | 310 | ||||||||||
Deferred income tax assets | 28 | 43 | 1,935 | 1,282 | ||||||||||
Other non-current assets | 14 | 6 | 276 | 243 | ||||||||||
Total non-current assets | U.S.$ | 1,064 | 47,412 | 38,267 | ||||||||||
Total assets | U.S.$ | 2,133 | 95,005 | 80,330 | ||||||||||
LIABILITIES AND EQUITY | ||||||||||||||
Current liabilities | ||||||||||||||
Trade payables | 23 | U.S.$ | 190 | 8,480 | 9,322 | |||||||||
Current income tax liabilities | 28 | 1,231 | 1,432 | |||||||||||
Bank overdraft | 15 | 2 | 69 | 39 | ||||||||||
Short-term borrowings | 18 | 409 | 18,220 | 5,565 | ||||||||||
Long-term borrowings, current portion | 18 | — | 12 | 3,706 | ||||||||||
Provisions | 22 | 29 | 1,314 | 1,094 | ||||||||||
Other current liabilities | 24 | 262 | 11,689 | 7,864 | ||||||||||
Total current liabilities | U.S.$ | 921 | 41,015 | 29,022 | ||||||||||
Non-current liabilities | ||||||||||||||
Long-term loans and borrowings, excluding current portion | 18 | U.S.$ | 118 | 5,271 | 5,385 | |||||||||
Provisions | 22 | 1 | 41 | 39 | ||||||||||
Deferred tax liabilities | 28 | 45 | 2,022 | 2,720 | ||||||||||
Other liabilities | 24 | 15 | 666 | 249 | ||||||||||
Total non-current liabilities | U.S.$ | 180 | 8,000 | 8,393 | ||||||||||
Total liabilities | U.S.$ | 1,100 | 49,015 | 37,415 | ||||||||||
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in millions, except share and per share data)
As of | ||||||||||||||
Particulars | Note | March 31, 2011 | March 31, 2011 | March 31, 2010 | ||||||||||
Unaudited | ||||||||||||||
convenience | ||||||||||||||
translation into | ||||||||||||||
U.S.$ (See Note 2.d) | ||||||||||||||
Equity | ||||||||||||||
Share capital | 16 | U.S.$ | 19 | 846 | 844 | |||||||||
Share premium | 464 | 20,683 | 20,429 | |||||||||||
Other components of equity | 75 | 3,326 | 2,920 | |||||||||||
Share based payment reserve | 16 | 730 | 692 | |||||||||||
Equity shares held by controlled trust | — | (5 | ) | (5 | ) | |||||||||
Retained earnings | 458 | 20,391 | 18,035 | |||||||||||
Debenture redemption reserve | — | 19 | — | |||||||||||
Total equity attributable to: | ||||||||||||||
Equity holders of the Company | U.S.$ | 1,033 | 45,990 | 42,915 | ||||||||||
Non-controlling interests | — | — | — | |||||||||||
Total equity | U.S.$ | 1,033 | 45,990 | 42,915 | ||||||||||
Total liabilities and equity | U.S.$ | 2,133 | 95,005 | 80,330 | ||||||||||
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For the year ended March 31, | ||||||||||||||||||
Particulars | Note | 2011 | 2011 | 2010 | 2009 | |||||||||||||
Unaudited | ||||||||||||||||||
Convenience | ||||||||||||||||||
Translation | ||||||||||||||||||
into U.S.$ | ||||||||||||||||||
(See Note 2.d.) | ||||||||||||||||||
Revenues | 25 | U.S.$ | 1,677 | 74,693 | 70,277 | 69,441 | ||||||||||||
Cost of revenues | 773 | 34,430 | 33,937 | 32,941 | ||||||||||||||
Gross profit | U.S.$ | 904 | 40,263 | 36,340 | 36,500 | |||||||||||||
Selling, general and administrative expenses | 532 | 23,689 | 22,505 | 21,020 | ||||||||||||||
Research and development expenses | 114 | 5,060 | 3,793 | 4,037 | ||||||||||||||
Impairment loss on other intangible assets | 9 | — | — | 3,456 | 3,167 | |||||||||||||
Impairment loss on goodwill | 8 | — | — | 5,147 | 10,856 | |||||||||||||
Other (income)/expense, net | 26 | (25 | ) | (1,115 | ) | (569 | ) | 254 | ||||||||||
Total operating expenses, net | U.S.$ | 620 | 27,634 | 34,332 | 39,334 | |||||||||||||
Results from operating activities | 284 | 12,629 | 2,008 | (2,834 | ) | |||||||||||||
Finance expense | 27 | (8 | ) | (362 | ) | (372 | ) | (1,668 | ) | |||||||||
Finance income | 27 | 4 | 173 | 369 | 482 | |||||||||||||
Finance (expense)/income, net | (4 | ) | (189 | ) | (3 | ) | (1,186 | ) | ||||||||||
Share of profit of equity accounted investees, net of income tax | 10 | — | 3 | 48 | 24 | |||||||||||||
Profit/(loss) before income tax | 279 | 12,443 | 2,053 | (3,996 | ) | |||||||||||||
Income tax (expense)/benefit | 28 | (31 | ) | (1,403 | ) | (985 | ) | (1,172 | ) | |||||||||
Profit/(loss) for the year | 248 | 11,040 | 1,068 | (5,168 | ) | |||||||||||||
Attributable to: | ||||||||||||||||||
Equity holders of the Company | 248 | 11,040 | 1,068 | (5,168 | ) | |||||||||||||
Non-controlling interests | — | — | — | — | ||||||||||||||
Profit/(loss) for the year | 248 | 11,040 | 1,068 | (5,168 | ) | |||||||||||||
Earnings/(loss) per share | 17 | |||||||||||||||||
Basic | U.S.$ | 1.47 | 65.28 | 6.33 | (30.69 | ) | ||||||||||||
Diluted | U.S.$ | 1.46 | 64.95 | 6.30 | (30.69 | ) | ||||||||||||
Weighted average number of equity shares used in computing earnings/(loss) per equity share | 17 | |||||||||||||||||
Basic | 169,128,649 | 168,706,977 | 168,349,139 | |||||||||||||||
Diluted | 169,965,282 | 169,615,943 | 168,349,139 |
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For the year ended March 31, | ||||||||||||||||
Particulars | 2011 | 2011 | 2010 | 2009 | ||||||||||||
Unaudited | ||||||||||||||||
Convenience | ||||||||||||||||
Translation | ||||||||||||||||
into U.S.$ | ||||||||||||||||
(See Note | ||||||||||||||||
2.d.) | ||||||||||||||||
Profit/(loss) for the year | U.S.$ | 248 | 11,040 | 1,068 | (5,168 | ) | ||||||||||
Other comprehensive income/(loss) | ||||||||||||||||
Changes in fair value of available for sale financial instruments | U.S.$ | — | 7 | 13 | 18 | |||||||||||
Foreign currency translation adjustments | 9 | 421 | 241 | 642 | ||||||||||||
Effective portion of changes in fair value of cash flow hedges, net | 1 | 37 | 745 | (227 | ) | |||||||||||
Income tax on other comprehensive income | (1 | ) | (59 | ) | (102 | ) | 32 | |||||||||
Other comprehensive income/(loss) for the year, net of income tax | U.S.$ | 9 | 406 | 897 | 465 | |||||||||||
Total comprehensive income/(loss) for the year | U.S.$ | 257 | 11,446 | 1,965 | (4,703 | ) | ||||||||||
Attributable to: | ||||||||||||||||
Equity holders of the Company | 257 | 11,446 | 1,965 | (4,703 | ) | |||||||||||
Non-controlling interests | — | — | — | — | ||||||||||||
Total comprehensive income/(loss) for the year | U.S.$ | 257 | 11,446 | 1,965 | (4,703 | ) | ||||||||||
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Foreign | ||||||||||||||||||||||||
Share | currency | |||||||||||||||||||||||
Share capital | premium | Fair value | translation | Hedging | ||||||||||||||||||||
Particulars | Shares | Amount | Amount | reserve | reserve | reserve | ||||||||||||||||||
Balance as of April 1, 2008 | 168,172,746 | 841 | 20,036 | (2 | ) | 1,567 | (7 | ) | ||||||||||||||||
Issue of equity shares on exercise of options | 296,031 | 1 | 168 | — | — | — | ||||||||||||||||||
Net change in fair value of other investments, net of tax expense of5 | — | — | — | 13 | — | — | ||||||||||||||||||
Foreign currency translation differences, net of tax expense of41 | — | — | — | — | 601 | — | ||||||||||||||||||
Effective portion of changes in fair value of cash flow hedges, net of tax benefit of78 | — | — | — | — | — | (149 | ) | |||||||||||||||||
Share based payment expense | — | — | — | — | — | — | ||||||||||||||||||
Dividend paid (including corporate dividend tax) | — | — | — | — | — | — | ||||||||||||||||||
Profit/(loss) for the period | — | — | — | — | — | — | ||||||||||||||||||
Acquisition of non-controlling interests | — | — | — | — | — | — | ||||||||||||||||||
Issuance of bonus debentures (including corporate dividend tax) | — | — | — | — | — | — | ||||||||||||||||||
Debenture Redemption Reserve | — | — | — | — | — | — | ||||||||||||||||||
Balance as of March 31, 2009 | 168,468,777 | 842 | 20,204 | 11 | 2,168 | (156 | ) | |||||||||||||||||
Balance as of April 1, 2009 | 842 | 20,204 | 11 | 2,168 | (156 | ) | ||||||||||||||||||
Issue of equity share on exercise of options | 168,468,777 | 2 | 225 | |||||||||||||||||||||
Net change in fair value of other investments, net of tax expense of— | 376,608 | — | — | 13 | — | — | ||||||||||||||||||
Foreign currency translation differences, net of tax benefit of150 | — | — | — | — | 391 | — | ||||||||||||||||||
Effective portion of changes in fair value of cash flow hedges, net of tax benefit of252 | — | — | — | — | — | 493 | ||||||||||||||||||
Share based payment expense | — | — | — | — | — | — | ||||||||||||||||||
Dividend paid (including corporate dividend tax) | — | — | — | — | — | — | ||||||||||||||||||
Profit/(loss) for the period | — | — | — | — | — | — | ||||||||||||||||||
Acquisition of non-controlling interests | — | — | — | — | — | — | ||||||||||||||||||
Issuance of bonus debentures (including corporate dividend tax) | — | — | — | — | — | — | ||||||||||||||||||
Debenture Redemption Reserve | — | — | — | — | — | — | ||||||||||||||||||
Balance as of March 31, 2010 | 168,845,385 | 844 | 20,429 | 24 | 2,559 | 337 | ||||||||||||||||||
Balance as of April 1, 2010 | 168,845,385 | 844 | 20,429 | 24 | 2,559 | 337 | ||||||||||||||||||
Issue of equity shares on exercise of options | 407,347 | 2 | 254 | — | — | — | ||||||||||||||||||
Net change in fair value of other investments, net of tax expense of— | — | — | — | 7 | — | — | ||||||||||||||||||
Foreign currency translation differences, net of tax expense of59 | — | — | — | — | 362 | — | ||||||||||||||||||
Effective portion of changes in fair value of cash flow hedges, net of tax expense of— | — | — | — | — | — | 37 | ||||||||||||||||||
Share based payment expense | — | — | — | — | — | — | ||||||||||||||||||
Dividend paid (including corporate dividend tax) | — | — | — | — | — | — | ||||||||||||||||||
Profit/(loss) for the period | — | — | — | — | — | — | ||||||||||||||||||
Acquisition of non-controlling interests | — | — | — | — | — | — | ||||||||||||||||||
Issuance of bonus debentures (including corporate dividend tax) | — | — | — | — | — | — | ||||||||||||||||||
Debenture Redemption Reserve | — | — | — | — | — | — | ||||||||||||||||||
Balance as of March 31, 2011 | 169,252,732 | 846 | 20,683 | 31 | 2,921 | 374 | ||||||||||||||||||
Convenience translation into U.S. $ | 19 | 464 | 1 | 66 | 8 | |||||||||||||||||||
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in millions, except share and per share data)
Equity shares | ||||||||||||||||||||||||
Share based | held by a | Debenture | Non- | |||||||||||||||||||||
payment | controlled | Redemption | controlling | |||||||||||||||||||||
reserve | trust* | Retained earnings | reserve | interests | Total | |||||||||||||||||||
Particulars | Amount | Amount | Amount | Amount | Amount | Amount | ||||||||||||||||||
Balance as of April 1, 2008 | 709 | (5 | ) | 24,211 | — | — | 47,350 | |||||||||||||||||
Issue of equity shares on exercise of options | (164 | ) | — | — | — | — | 5 | |||||||||||||||||
Net change in fair value of other investments, net of tax expense of5 | — | — | — | — | — | 13 | ||||||||||||||||||
Foreign currency translation differences, net of tax expense of41 | — | — | — | — | — | 601 | ||||||||||||||||||
Effective portion of changes in fair value of cash flow hedges, net of tax benefit of78 | — | — | — | — | — | (149 | ) | |||||||||||||||||
Share based payment expense | 131 | — | — | — | — | 131 | ||||||||||||||||||
Dividend paid (including corporate dividend tax) | — | — | (738 | ) | — | — | (738 | ) | ||||||||||||||||
Profit/(loss) for the period | — | — | (5,168 | ) | — | — | (5,168 | ) | ||||||||||||||||
Acquisition of non-controlling interests | — | — | — | — | — | — | ||||||||||||||||||
Issuance of bonus debentures (including corporate dividend tax) | — | — | — | — | — | — | ||||||||||||||||||
Debenture Redemption Reserve | — | — | — | — | — | — | ||||||||||||||||||
Balance as of March 31, 2009 | 676 | (5 | ) | 18,305 | — | — | 42,045 | |||||||||||||||||
Balance as of April 1, 2009 | 676 | (5 | ) | 18,305 | — | — | 42,045 | |||||||||||||||||
Issue of equity share on exercise of options | (210 | ) | — | — | — | — | 17 | |||||||||||||||||
Net change in fair value of other investments, net of tax expense of— | — | — | — | — | — | 13 | ||||||||||||||||||
Foreign currency translation differences, net of tax expense of150 | — | — | — | — | — | 391 | ||||||||||||||||||
Effective portion of changes in fair value of cash flow hedges, net of tax benefit of252 | — | — | — | — | — | 493 | ||||||||||||||||||
Share based payment expense | 226 | — | — | — | — | 226 | ||||||||||||||||||
Dividend paid (including corporate dividend tax) | — | — | (1,233 | ) | — | — | (1,233 | ) | ||||||||||||||||
Profit/(loss) for the period | — | — | 1,068 | — | — | 1,068 | ||||||||||||||||||
Acquisition of non-controlling interests | — | — | (105 | ) | — | — | (105 | ) | ||||||||||||||||
Issuance of bonus debentures (including corporate dividend tax) | — | — | — | — | — | — | ||||||||||||||||||
Debenture Redemption Reserve | — | — | — | — | — | — | ||||||||||||||||||
Balance as of March 31, 2010 | 692 | (5 | ) | 18,035 | — | — | 42,915 | |||||||||||||||||
Balance as of April 1, 2010 | 692 | (5 | ) | 18,035 | — | — | 42,915 | |||||||||||||||||
Issue of equity shares on exercise of options | (227 | ) | — | — | — | — | 29 | |||||||||||||||||
Net change in fair value of other investments, net of tax expense of— | — | — | — | — | — | 7 | ||||||||||||||||||
Foreign currency translation differences, net of tax expense of59 | — | — | — | — | — | 362 | ||||||||||||||||||
Effective portion of changes in fair value of cash flow hedges, net of tax expense of— | — | — | — | — | — | 37 | ||||||||||||||||||
Share based payment expense | 265 | — | — | — | — | 265 | ||||||||||||||||||
Dividend paid (including corporate dividend tax) | — | — | (2,219 | ) | — | — | (2,219 | ) | ||||||||||||||||
Profit/(loss) for the period | — | — | 11,040 | — | — | 11,040 | ||||||||||||||||||
Acquisition of non-controlling interests | — | — | (525 | ) | — | — | (525 | ) | ||||||||||||||||
Issuance of bonus debentures (including corporate dividend tax) | — | — | (5,921 | ) | — | — | (5,921 | ) | ||||||||||||||||
Debenture Redemption Reserve | — | — | (19 | ) | 19 | — | — | |||||||||||||||||
Balance as of March 31, 2011 | 730 | (5 | ) | 20,391 | 19 | — | 45,990 | |||||||||||||||||
Convenience translation into U.S. $ | 16 | — | 458 | — | — | 1,033 | ||||||||||||||||||
* | The number of equity shares held by a controlled trust as of April 1, 2008, March 31, 2009, April 1, 2009, March 31, 2010, April 1, 2010 and March 31, 2011. |
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For the year ended March 31, | ||||||||||||||||
2011 | 2011 | 2010 | 2009 | |||||||||||||
Unaudited | ||||||||||||||||
Convenience | ||||||||||||||||
translation into | ||||||||||||||||
U.S.$ (See Note | ||||||||||||||||
2.d.) | ||||||||||||||||
Cash flows from/(used in) operating activities: | ||||||||||||||||
Profit/(loss) for the year | U.S.$ | 248 | 11,040 | 1,068 | (5,168 | ) | ||||||||||
Adjustments for: | ||||||||||||||||
Income tax expense/(benefit) | 31 | 1,403 | 985 | 1,172 | ||||||||||||
Dividend and profit on sale of investments | (2 | ) | (68 | ) | (48 | ) | (136 | ) | ||||||||
Depreciation and amortization | 93 | 4,148 | 4,160 | 3,814 | ||||||||||||
Impairment loss on other intangible assets | — | — | 3,456 | 3,167 | ||||||||||||
Impairment loss on goodwill | — | — | 5,147 | 10,856 | ||||||||||||
Inventory write-downs | 28 | 1,237 | 1,011 | 833 | ||||||||||||
Allowance for doubtful trade receivables | 4 | 162 | 169 | 148 | ||||||||||||
Loss/(Profit) on sale of property, plant and equipment, net | (6 | ) | (271 | ) | 24 | (15 | ) | |||||||||
Provision for sales returns | 16 | 731 | 932 | 663 | ||||||||||||
Share of profit of equity accounted investees | — | (3 | ) | (48 | ) | (24 | ) | |||||||||
Unrealized exchange (gain)/loss, net | (24 | ) | (1,072 | ) | 399 | (416 | ) | |||||||||
Interest expense, net | 4 | 200 | 123 | 688 | ||||||||||||
Share based payment expense | 6 | 265 | 226 | 131 | ||||||||||||
Negative goodwill on acquisition of business | (2 | ) | (73 | ) | — | (150 | ) | |||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Trade receivables | (103 | ) | (4,579 | ) | 900 | (7,348 | ) | |||||||||
Inventories | (81 | ) | (3,624 | ) | (1,593 | ) | (1,939 | ) | ||||||||
Other assets | — | (19 | ) | (2,130 | ) | 1,051 | ||||||||||
Trade payables | 26 | 1,154 | 1,251 | (223 | ) | |||||||||||
Other liabilities and provisions | 7 | 330 | 25 | 192 | ||||||||||||
Income tax paid | (66 | ) | (2,952 | ) | (2,831 | ) | (2,791 | ) | ||||||||
Net cash from operating activities | U.S.$ | 180 | 8,009 | 13,226 | 4,505 | |||||||||||
Cash flows from/(used in) investing activities: | ||||||||||||||||
Expenditures on property, plant and equipment | (204 | ) | (9,066 | ) | (4,129 | ) | (4,507 | ) | ||||||||
Proceeds from sale of property, plant and equipment | 8 | 348 | 61 | 81 | ||||||||||||
Purchase of other investments | (201 | ) | (8,960 | ) | (24,111 | ) | (12,021 | ) | ||||||||
Proceeds from sale of other investments | 283 | 12,602 | 21,102 | 16,398 | ||||||||||||
Expenditure on other intangible assets | (57 | ) | (2,540 | ) | (154 | ) | (254 | ) | ||||||||
Payment of contingent consideration for acquisition of business | — | — | — | (83 | ) | |||||||||||
Cash paid for acquisition of business, net of cash acquired | (26 | ) | (1,169 | ) | — | (3,089 | ) | |||||||||
Cash paid for acquisition of equity accounted investee, net of cash acquired | — | — | — | (372 | ) | |||||||||||
Interest received | 3 | 127 | 233 | 375 | ||||||||||||
Net cash used in investing activities | U.S.$ | (194 | ) | (8,658 | ) | (6,998 | ) | (3,472 | ) | |||||||
Cash flows from/(used in) financing activities: | ||||||||||||||||
Interest paid | (8 | ) | (366 | ) | (449 | ) | (1,132 | ) | ||||||||
Proceeds from issuance of equity shares | 1 | 29 | 17 | 5 | ||||||||||||
Proceeds from short term loans and borrowings, net | 281 | 12,541 | (83 | ) | 1,263 | |||||||||||
Repayment of long term loans and borrowings | (201 | ) | (8,942 | ) | (3,479 | ) | (1,925 | ) | ||||||||
Dividend paid (including corporate dividend tax)(1) | (69 | ) | (3,063 | ) | (1,233 | ) | (738 | ) | ||||||||
Transfers into escrow account for issuance of bonus debentures (1) | (114 | ) | (5,078 | ) | — | — | ||||||||||
Proceeds from issuance of bonus debentures(1) | 114 | 5,078 | ||||||||||||||
Costs of issuance of bonus debentures(1) | (1 | ) | (51 | ) | — | — | ||||||||||
Cash paid for acquisition of non-controlling interests | (12 | ) | (525 | ) | (80 | ) | — | |||||||||
Net cash used in financing activities | U.S.$ | (8 | ) | (377 | ) | (5,307 | ) | (2,527 | ) | |||||||
Net increase/(decrease) in cash and cash equivalents | (23 | ) | (1,026 | ) | 921 | (1,494 | ) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 3 | 141 | 246 | (114 | ) | |||||||||||
Cash and cash equivalents at the beginning of the period | 147 | 6,545 | 5,378 | 6,986 | ||||||||||||
Cash and cash equivalents at the end of the period | U.S.$ | 127 | 5,660 | 6,545 | 5,378 | |||||||||||
(1) | Refer to Note 34 below for further details on the bonus debentures scheme. |
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CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions, except share and per share data)
Year Ended March 31, | ||||||||||||||||
2011 | 2011 | 2010 | 2009 | |||||||||||||
Unaudited | ||||||||||||||||
Convenience | ||||||||||||||||
translation into | ||||||||||||||||
U.S.$ (See Note | ||||||||||||||||
2.d.) | ||||||||||||||||
Property, plant and equipment and intangibles purchased on credit during the year, including contingent consideration on purchase of intangibles | U.S.$ | 46 | 2,055 | 2,990 | 427 | |||||||||||
Property, plant and equipment purchased under capital lease | — | 7 | — | — | ||||||||||||
Contingent consideration payable on acquisition of non-controlling interests | — | — | 25 | — |
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• | derivative financial instruments that are measured at fair value; |
• | financial instruments that are designated as being at fair value through profit or loss account upon initial recognition are measured at fair value; |
• | available-for-sale financial assets are measured at fair value; |
• | employee defined benefit assets are recognized as the net total of the fair value of plan assets, plus unrecognized past service cost and unrecognized actuarial losses, less unrecognized actuarial gains and the present value of the defined benefit obligation; and |
• | long term borrowings, except obligations under finance leases that are measured at amortized cost using the effective interest rate method. |
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• | Note 3(b) — Assessment of functional currency for foreign operations | |
• | Note 3(c) and 31 — Financial instruments | |
• | Notes 3(f) and 8 — Measurement of recoverable amounts of cash-generating units | |
• | Note 3(k) — Provisions and contingencies | |
• | Note 3(l) — Sales returns, rebates and charge back provisions | |
• | Note 3(n) — Evaluation of recoverability of deferred tax assets | |
• | Note 6 — Business combinations | |
• | Note 37 — Contingencies |
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F-14
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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 |
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• | development costs can be measured reliably, |
• | the product or process is technically and commercially feasible, |
• | future economic benefits are probable and ascertainable, and |
• | the Company intends to and has sufficient resources to complete development and to use or sell the asset. |
(a) | it is expected to account for more than 10% of the Company’s total research and development costs; and | ||
(b) | the costs and efforts to develop the project can be reasonably estimated and the product resulting from the project has a high probability of launch. |
F-16
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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 | 3 - 13 years | |
Other intangibles | 5 - 15 years |
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F-19
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• | In November 2009, the IASB issued IFRS 9, “Financial instruments”, to introduce certain new requirements for classifying and measuring financial assets. IFRS 9 divides all financial assets that are currently in the scope of IAS 39 into two classifications — those measured at amortized cost and those measured at fair value. The standard, along with proposed expansion of IFRS 9 for classifying and measuring financial liabilities, de-recognition of financial instruments, impairment, and hedge accounting, will be applicable for annual periods beginning on or after January 1, 2013, although entities are permitted to adopt earlier. The Company is evaluating the impact which this new standard will have on the Company’s consolidated financial statements. |
• | In November 2009, the IASB issued IFRIC 19, “Extinguishing Financial Liabilities with Equity Instruments”; to introduce requirements when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entity’s shares and other equity instruments to settle the financial liability fully or partially. This interpretation is effective from annual periods beginning on or after July 1, 2010. |
• | In May 2011, the IASB issued new standards and amendments on consolidated financial statements and joint arrangements. The following are new standards and amendments: |
• | IFRS 10, “Consolidated financial statements”. | ||
• | IFRS 11, “Joint arrangements”. | ||
• | IFRS 12, “Disclosure of interests in other entities”. | ||
• | IAS 27 (Revised 2011), “Consolidated and separate financial statements”, which has been amended for the issuance of IFRS 10 but retains the current guidance on separate financial statements. | ||
• | IAS 28 (Revised 2011), “Investments in associates”, which has been amended for conforming changes on the basis of the issuance of IFRS 10 and IFRS 11. |
All the standards mentioned above are effective for annual periods beginning on or after January 1, 2013; earlier application is permitted as long as each of the other standards in this group is also early applied. The Company is in the process of determining the impact of these amendments on its consolidated financial statements. |
• | On June 16, 2011 the IASB issued an amendment to IAS-19“Employee benefits”,which amended the standard as follows: |
• | It requires recognition of changes in the net defined benefit liability/(asset), including immediate recognition of defined benefit cost, disaggregation of defined benefit cost into components, recognition of re-measurements in other comprehensive income, plan amendments, curtailments and settlements. |
• | It introduce enhanced disclosures about defined benefit plans. |
• | It modified accounting for termination benefits, including distinguishing benefits provided in exchange for services from benefits provided in exchange for the termination of employment, and it affected the recognition and measurement of termination benefits. |
• | It provided clarification regarding various issues, including the classification of employee benefits, current estimates of mortality rates, tax and administration costs and risk-sharing and conditional indexation features. |
• | It incorporated, without change, the IFRS Interpretations Committee’s requirements set forth in IFRIC 14 “IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”. |
These amendments are effective for annual periods beginning on or after January 1, 2013; earlier application is permitted. The Company is in the process of determining the impact of these amendments on its consolidated financial statements. |
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• | Pharmaceutical Services and Active Ingredients (“PSAI”); |
• | Global Generics; and |
• | Proprietary Products. |
For the years ended March 31, | ||||||||||||||||||||||||||||||||||||
Proprietary | ||||||||||||||||||||||||||||||||||||
Information about segments: | PSAI | Global Generics | Products | |||||||||||||||||||||||||||||||||
Reportable segments | 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||||||||||
Segment revenue(1) | 19,648 | 20,404 | 18,758 | 53,340 | 48,606 | 49,790 | 532 | 513 | 294 | |||||||||||||||||||||||||||
Gross profit | 5,105 | 6,660 | 5,595 | 34,499 | 29,146 | 30,448 | 382 | 396 | 196 | |||||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||||||||||||
Research and development expenses | ||||||||||||||||||||||||||||||||||||
Impairment loss on other intangible assets | ||||||||||||||||||||||||||||||||||||
Impairment loss on goodwill | ||||||||||||||||||||||||||||||||||||
Other (income)/expense, 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 year |
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For the years ended March 31, | ||||||||||||||||||||||||
Information about segments: | Others | Total | ||||||||||||||||||||||
Reportable segments | 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | ||||||||||||||||||
Segment revenue(1) | 1,173 | 754 | 599 | 74,693 | 70,277 | 69,441 | ||||||||||||||||||
Gross profit | 277 | 138 | 261 | 40,263 | 36,340 | 36,500 | ||||||||||||||||||
Selling, general and administrative expenses | 23,689 | 22,505 | 21,020 | |||||||||||||||||||||
Research and development expenses | 5,060 | 3,793 | 4,037 | |||||||||||||||||||||
Impairment loss on other intangible assets | — | 3,456 | 3,167 | |||||||||||||||||||||
Impairment loss on goodwill | — | 5,147 | 10,856 | |||||||||||||||||||||
Other expense/(income), net | (1,115 | ) | (569 | ) | 254 | |||||||||||||||||||
Results from operating activities | 12,629 | 2,008 | (2,834 | ) | ||||||||||||||||||||
Finance (expense)/income, net | (189 | ) | (3 | ) | (1,186 | ) | ||||||||||||||||||
Share of profit of equity accounted investees, net of income tax | 3 | 48 | 24 | |||||||||||||||||||||
Profit/(loss) before income tax | 12,443 | 2,053 | (3,996 | ) | ||||||||||||||||||||
Income tax(expense)/benefit | (1,403 | ) | (985 | ) | (1,172 | ) | ||||||||||||||||||
Profit/(loss) for the year | 11,040 | 1,068 | (5,168 | ) | ||||||||||||||||||||
(1) | Segment revenue for the year ended March 31, 2011 does not include inter-segment revenues from PSAI to Global Generics which is accounted for at a cost of3,146 (as compared to2,780 and2,371 for the years ended March 31, 2010 and 2009, respectively) and inter-segment revenues from Global Generics to PSAI which is accounted for at a cost of9 (as compared to17 and18 for the years ended March 31, 2010 and 2009, respectively). |
For the year ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
India | 11,690 | 10,158 | 8,478 | |||||||||
North America | 18,996 | 16,817 | 19,843 | |||||||||
Russia and other countries of the former Soviet Union | 10,858 | 9,119 | 7,623 | |||||||||
Europe | 8,431 | 9,643 | 11,886 | |||||||||
Others | 3,365 | 2,869 | 1,960 | |||||||||
53,340 | 48,606 | 49,790 | ||||||||||
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For the year ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
PSAI | 1,413 | 1,360 | 1,138 | |||||||||
Global Generics | 2,437 | 2,476 | 2,399 | |||||||||
Proprietary Products | 109 | 141 | 139 | |||||||||
Others | 189 | 183 | 138 | |||||||||
4,148 | 4,160 | 3,814 | ||||||||||
For the year ended March 31, | ||||||||
2011 | 2010 | |||||||
PSAI | 3,940 | 1,652 | ||||||
Global Generics | 5,944 | 5,033 | ||||||
Proprietary Products | 1,831 | 15 | ||||||
Others | 556 | 623 | ||||||
12,271 | 7,323 | |||||||
For the year ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
India | 14,314 | 12,808 | 11,460 | |||||||||
North America | 23,260 | 21,269 | 24,012 | |||||||||
Russia and other countries of the former Soviet Union | 10,858 | 9,119 | 7,623 | |||||||||
Europe | 16,058 | 16,779 | 18,047 | |||||||||
Others | 10,203 | 10,302 | 8,299 | |||||||||
74,693 | 70,277 | 69,441 | ||||||||||
As of March 31, | ||||||||
2011 | 2010 | |||||||
India | 52,056 | 46,994 | ||||||
North America | 20,222 | 12,090 | ||||||
Russia and other countries of the former Soviet Union | 4,824 | 3,608 | ||||||
Europe | 17,051 | 16,871 | ||||||
Others | 852 | 767 | ||||||
95,005 | 80,330 | |||||||
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For the year ended March 31, | ||||||||
2011 | 2010 | |||||||
India | 8,875 | 6,866 | ||||||
North America | 3,249 | 258 | ||||||
Russia and other countries of the former Soviet Union | 12 | 11 | ||||||
Europe | 111 | 169 | ||||||
Others | 24 | 19 | ||||||
12,271 | 7,323 | |||||||
For the year ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Clopidogrel | 1,458 | 1,118 | 1,143 | |||||||||
Atorvastatin | 1,371 | 292 | 208 | |||||||||
Naproxen | 1,194 | 490 | 1,068 | |||||||||
Gemcitabine | 991 | 1,224 | 697 | |||||||||
Ciprofloxacin | 853 | 1,054 | 1,031 | |||||||||
Finasteride | 750 | 1,204 | 1,127 | |||||||||
Ramipril | 662 | 559 | 815 | |||||||||
Escitalopram Oxalate | 627 | 224 | 121 | |||||||||
Ranitidine | 568 | 487 | 355 | |||||||||
Rabeprazole | 528 | 717 | 419 | |||||||||
Others | 10,646 | 13,035 | 11,774 | |||||||||
Total | 19,648 | 20,404 | 18,758 | |||||||||
For the year ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Omeprazole | 8,501 | 6,289 | 5,231 | |||||||||
Nimesulide | 3,543 | 2,874 | 2,165 | |||||||||
Fexofenadine (hcl and pseudoephedrine) | 2,432 | 1,673 | 2,855 | |||||||||
Ciprofloxacin | 2,302 | 2,178 | 1,572 | |||||||||
Ketorolac | 1,811 | 1,593 | 1,297 | |||||||||
Tacrolimus | 1,739 | — | — | |||||||||
Simvastatin | 1,361 | 2,047 | 2,350 | |||||||||
Ranitidine | 1,298 | 1,157 | 809 | |||||||||
Ibuprofen | 1,194 | 1,100 | 1,000 | |||||||||
Ceterizine | 1,096 | 730 | 638 | |||||||||
Others | 28,063 | 28,981 | 31,873 | |||||||||
Total | 53,340 | 48,606 | 49,790 | |||||||||
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Recognized values on | ||||
Particulars | acquisition | |||
Property, plant and equipment | 688 | |||
Intangible assets | 321 | |||
Inventories | 146 | |||
Other assets | 132 | |||
Deferred tax liability | (45 | ) | ||
Net identifiable assets and liabilities | 1,242 | |||
Negative goodwill recognized in other expense/(income), net(1) | (73 | ) | ||
Consideration paid in cash | 1,169 | |||
(1) | The negative goodwill on acquisition is attributable mainly to lower amounts paid towards intangible and other assets. |
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Recognized values on | ||||
Particulars | acquisition | |||
Current assets, net (includes386 of cash and cash equivalents) | 408 | |||
Intangible assets | 82 | |||
Deferred tax asset | 268 | |||
Total consideration paid | 758 | |||
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Furniture, | ||||||||||||||||||||||||||||
fixtures and | ||||||||||||||||||||||||||||
Plant and | Computer | office | ||||||||||||||||||||||||||
Land | Buildings | equipment | equipment | equipment | Vehicles | Total | ||||||||||||||||||||||
Balance as at April 1, 2009 | 1,937 | 5,581 | 16,459 | 1,115 | 910 | 489 | 26,491 | |||||||||||||||||||||
Additions through business combination | — | — | — | — | — | — | — | |||||||||||||||||||||
Other additions | 98 | 579 | 2,866 | 186 | 83 | 92 | 3,904 | |||||||||||||||||||||
Disposals | — | (20 | ) | (219 | ) | (127 | ) | (25 | ) | (89 | ) | (480 | ) | |||||||||||||||
Effect of changes in foreign exchange rates | (15 | ) | (173 | ) | (33 | ) | (33 | ) | 17 | 1 | (236 | ) | ||||||||||||||||
Balance as at March 31, 2010 | 2,020 | 5,967 | 19,073 | 1,141 | 985 | 493 | 29,679 | |||||||||||||||||||||
Balance as at April 1, 2010 | 2,020 | 5,967 | 19,073 | 1,141 | 985 | 493 | 29,679 | |||||||||||||||||||||
Additions through business combination | 56 | 435 | 170 | 10 | 6 | — | 677 | |||||||||||||||||||||
Other additions | 1,542 | 1,513 | 4,569 | 213 | 307 | 194 | 8,338 | |||||||||||||||||||||
Disposals | (33 | ) | (26 | ) | (154 | ) | (115 | ) | (24 | ) | (98 | ) | (450 | ) | ||||||||||||||
Effect of changes in foreign exchange rates | 13 | 20 | 68 | 10 | 4 | — | 115 | |||||||||||||||||||||
Balance as at March 31, 2011 | 3,598 | 7,909 | 23,726 | 1,259 | 1,278 | 589 | 38,359 | |||||||||||||||||||||
Depreciation | ||||||||||||||||||||||||||||
Balance as at April 1, 2009 | — | 839 | 7,366 | 561 | 856 | 266 | 9,888 | |||||||||||||||||||||
Depreciation for the year | — | 236 | 1,990 | 232 | 120 | 103 | 2,681 | |||||||||||||||||||||
Disposals | — | (10 | ) | (152 | ) | (130 | ) | (22 | ) | (81 | ) | (395 | ) | |||||||||||||||
Effect of changes in foreign exchange rates | — | (14 | ) | (15 | ) | (21 | ) | (36 | ) | (1 | ) | (87 | ) | |||||||||||||||
Balance as at March 31, 2010 | — | 1,051 | 9,189 | 642 | 918 | 287 | 12,087 | |||||||||||||||||||||
Balance as at April 1, 2010 | — | 1,051 | 9,189 | 642 | 918 | 287 | 12,087 | |||||||||||||||||||||
Depreciation for the year | — | 271 | 2,229 | 225 | 125 | 112 | 2,962 | |||||||||||||||||||||
Disposals | — | (18 | ) | (135 | ) | (113 | ) | (23 | ) | (84 | ) | (373 | ) | |||||||||||||||
Effect of changes in foreign exchange rates | — | 6 | 18 | 11 | 4 | (1 | ) | 38 | ||||||||||||||||||||
Balance as at March 31, 2011 | — | 1,310 | 11,301 | 765 | 1,024 | 314 | 14,714 | |||||||||||||||||||||
Net carrying value | ||||||||||||||||||||||||||||
As at April 1, 2009 | 1,937 | 4,742 | 9,093 | 554 | 54 | 223 | 16,603 | |||||||||||||||||||||
As at March 31, 2010 | 2,020 | 4,916 | 9,884 | 499 | 67 | 206 | 17,592 | |||||||||||||||||||||
Add: Capital-work-in progress | 4,867 | |||||||||||||||||||||||||||
22,459 | ||||||||||||||||||||||||||||
As at March 31, 2011 | 3,598 | 6,599 | 12,425 | 494 | 254 | 275 | 23,645 | |||||||||||||||||||||
Add: Capital-work-in progress | 5,997 | |||||||||||||||||||||||||||
29,642 |
(1) | Capital-work-in progress as on March 31, 2011 includes11 acquired through business combination. |
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As of March 31, | ||||||||
2011 | 2010 | |||||||
Opening balance(1) | 18,267 | 18,246 | ||||||
Goodwill arising on business combinations | — | — | ||||||
Effect of translation adjustments | 6 | 21 | ||||||
Closing balance (1) | 18,273 | 18,267 | ||||||
Less: Impairment loss(2) | (16,093 | ) | (16,093 | ) | ||||
2,180 | 2,174 | |||||||
(1) | This does not include goodwill arising upon investment in associate of181, as at March 31, 2011 and 2010, which is included in the carrying value of the investment in the equity accounted investees. | |
(2) | The impairment loss includes0 and5,147 for the years ended March 31, 2011 and 2010, respectively, which relates to the Company’s German subsidiary, betapharm, which is part of the Global Generics segment (refer to Note 9 for details). |
• | PSAI- Active Pharmaceutical operations | ||
• | Global Generics- North America Operations | ||
• | Global Generics- Italy Operations | ||
• | Global Generics- Branded Formulations | ||
• | Global Generics- European Operations | ||
• | Global Generics- betapharm CGU | ||
• | Global Generics- Shreveport Operations |
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As of March 31, | ||||||||
2011 | 2010 | |||||||
PSAI- Active Pharmaceutical operations | 997 | 997 | ||||||
Global Generics- North America Operations | 731 | 731 | ||||||
Global Generics- Italy Operations | 157 | 157 | ||||||
Global Generics- Branded Formulations | 168 | 168 | ||||||
Others | 127 | 121 | ||||||
2,180 | 2,174 | |||||||
a) | Estimated cash flows for five years based on formal/approved internal management budgets. |
b) | Terminal value arrived by extrapolating last forecasted year cash flows to perpetuity, using a constant long-term growth rate of 0%. This long-term growth rate takes into consideration external macroeconomic sources of data. Such long-term growth rate considered does not exceed that of the relevant business and industry sector. |
c) | The post-tax discount rates used are based on the Company’s weighted average cost of capital. |
d) | Value-in-use is calculated using after tax assumptions. The use of after tax assumptions does not result in a value-in-use that is materially different from the value-in-use that would result if the calculation was performed using before tax assumptions. The after tax discount rate used is 11%. The before tax discount rate, determined based on the value-in-use derived from the use of after tax assumptions, is 12%. |
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Trademarks | Product | Beneficial toll | ||||||||||||||
with finite | related | manufacturing | Technology | |||||||||||||
useful life | intangibles | contracts | related intangibles | |||||||||||||
Gross carrying value/cost | ||||||||||||||||
Balance as at April 1, 2009 | 9,489 | 15,971 | 776 | 657 | ||||||||||||
Additions through business combinations | — | — | — | — | ||||||||||||
Other additions | — | 2,701 | — | — | ||||||||||||
Effect of changes in foreign exchange rates | (719 | ) | (1,317 | ) | (80 | ) | (41 | ) | ||||||||
Balance as at March 31, 2010 | 8,770 | 17,355 | 696 | 616 | ||||||||||||
Balance as at April 1, 2010 | 8,770 | 17,355 | 696 | 616 | ||||||||||||
Additions through business combinations | — | 321 | — | — | ||||||||||||
Other additions | — | 1,777 | — | 14 | ||||||||||||
Deletions | — | (3 | ) | — | — | |||||||||||
Effect of changes in foreign exchange rates | 301 | 550 | 34 | 116 | ||||||||||||
Balance as at March 31, 2011 | 9,071 | 20,000 | 730 | 746 | ||||||||||||
Amortization/Impairment loss | ||||||||||||||||
Balance as at April 1, 2009 | 2,558 | 9,267 | 776 | 83 | ||||||||||||
Amortization for the year | 577 | 596 | — | 97 | ||||||||||||
Impairment loss | 1,211 | 2,112 | — | |||||||||||||
Effect of changes in foreign exchange rates | (174 | ) | (948 | ) | (80 | ) | (14 | ) | ||||||||
Balance as at March 31, 2010 | 4,172 | 11,027 | 696 | 166 | ||||||||||||
Balance as at April 1, 2010 | 4,172 | 11,027 | 696 | 166 | ||||||||||||
Amortization for the year | 418 | 573 | — | 84 | ||||||||||||
Impairment loss | — | — | — | — | ||||||||||||
Effect of changes in foreign exchange rates | 100 | 405 | 34 | 5 | ||||||||||||
Balance as at March 31, 2011 | 4,690 | 12,005 | 730 | 255 | ||||||||||||
Net carrying amount | ||||||||||||||||
As at April 1, 2009 | 6,931 | 6,704 | — | 574 | ||||||||||||
As at March 31, 2010 | 4,598 | 6,328 | — | 450 | ||||||||||||
As at March 31, 2011 | 4,381 | 7,995 | — | 491 | ||||||||||||
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Customer | ||||||||||||
related | ||||||||||||
intangibles | Others | Total | ||||||||||
Gross carrying value/cost | ||||||||||||
Balance as at April 1, 2009 | 707 | 387 | 27,987 | |||||||||
Additions through business combinations | — | — | — | |||||||||
Other additions | 12 | 118 | 2,831 | |||||||||
Effect of changes in foreign exchange rates | (51 | ) | (8 | ) | (2,216 | ) | ||||||
Balance as at March 31, 2010 | 668 | 497 | 28,602 | |||||||||
Balance as at April 1, 2010 | 668 | 497 | 28,602 | |||||||||
Additions through business combinations | — | — | 321 | |||||||||
Other additions | 13 | — | 1,804 | |||||||||
Deletions | — | (50 | ) | (53 | ) | |||||||
Effect of changes in foreign exchange rates | 5 | (78 | ) | 928 | ||||||||
Balance as at March 31, 2011 | 686 | 369 | 31,602 | |||||||||
Amortization/Impairment loss | ||||||||||||
Balance as at April 1, 2009 | 227 | 197 | 13,108 | |||||||||
Amortization for the year | 155 | 54 | 1,479 | |||||||||
Impairment loss | 133 | — | 3,456 | |||||||||
Effect of changes in foreign exchange rates | (21 | ) | (3 | ) | (1,240 | ) | ||||||
Balance as at March 31, 2010 | 494 | 248 | 16,803 | |||||||||
Balance as at April 1, 2010 | 494 | 248 | 16,803 | |||||||||
Amortization for the year | 66 | 45 | 1,186 | |||||||||
Impairment loss | — | — | — | |||||||||
Effect of changes in foreign exchange rates | 2 | 1 | 547 | |||||||||
Balance as at March 31, 2011 | 562 | 294 | 18,536 | |||||||||
Net carrying amount | ||||||||||||
As at April 1, 2009 | 480 | 190 | 14,879 | |||||||||
As at March 31, 2010 | 174 | 249 | 11,799 | |||||||||
As at March 31, 2011 | 124 | 75 | 13,066 | |||||||||
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• | Revenue projections are based on the approved revised budgets for the fiscal year ended March 31, 2011, based on management’s analysis of current orders booked and the actual performance of Betapharm during recent months. These projections take into account the expected long term growth rate in the German generics industry. Accordingly, based on the industry reports and other information, the Company projects a constant 1% decline in revenue on a year-on-year basis for betapharm’s existing products. |
• | The net cash flows have been discounted based on a post-tax discounting tax rate ranging from 7.44% to 9.34%. |
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As of/for the year ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Ownership | 51.3 | % | 51.3 | % | 51.3 | % | ||||||
Total current assets | 548 | 428 | 427 | |||||||||
Total non-current assets | 190 | 191 | 217 | |||||||||
Total assets | 738 | 619 | 644 | |||||||||
Equity | 379 | 373 | 298 | |||||||||
Total current liabilities | 359 | 245 | 345 | |||||||||
Total non-current liabilities | — | 1 | 1 | |||||||||
Total liabilities | 359 | 246 | 346 | |||||||||
Revenues | 818 | 791 | 611 | |||||||||
Expenses | 812 | 697 | 563 | |||||||||
Profit for the year | 6 | 94 | 48 |
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Gain/(loss) | ||||||||||||
recognized | ||||||||||||
directly in | ||||||||||||
Cost | equity | Fair value | ||||||||||
Investment in units of mutual funds | — | — | — | |||||||||
Investment in equity securities | 3 | 30 | 33 | |||||||||
Investment in certificate of deposits | — | — | — | |||||||||
3 | 30 | 33 | ||||||||||
Gain/(loss) | ||||||||||||
recognized | ||||||||||||
directly in | ||||||||||||
Cost | equity | Fair value | ||||||||||
Investments in units of mutual funds | 3,276 | — | 3,276 | |||||||||
Investment in equity securities | 3 | 22 | 25 | |||||||||
Investment in certificate of deposits | 298 | 1 | 299 | |||||||||
3,577 | 23 | 3,600 | ||||||||||
As of March 31, | ||||||||
2011 | 2010 | |||||||
Raw materials | 4,777 | 4,000 | ||||||
Packing materials, stores and spares | 1,115 | 979 | ||||||
Work-in-progress | 4,220 | 3,883 | ||||||
Finished goods | 5,947 | 4,509 | ||||||
Total inventories | 16,059 | 13,371 | ||||||
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As of March 31, | ||||||||
2011 | 2010 | |||||||
Trade receivables due from related parties | 101 | 44 | ||||||
Other trade receivables | 17,973 | 12,332 | ||||||
18,074 | 12,376 | |||||||
Less: Allowance for doubtful trade receivables | (459 | ) | (416 | ) | ||||
Trade receivables, net | 17,615 | 11,960 | ||||||
Year Ended March 31, | ||||||||
2011 | 2010 | |||||||
Balance at the beginning of the year | 416 | 342 | ||||||
Provision for doubtful trade receivables | 162 | 169 | ||||||
Trade receivables written off and charged to allowance | (119 | ) | (95 | ) | ||||
Balance at the end of the year | 459 | 416 | ||||||
As of March 31, | ||||||||
2011 | 2010 | |||||||
Current | ||||||||
Prepaid expenses | 512 | 270 | ||||||
Advance payments to vendors | 491 | 586 | ||||||
Balances and receivables from statutory authorities(1) | 3,228 | 2,727 | ||||||
Due from related parties | — | 5 | ||||||
Deposits | 118 | 118 | ||||||
Advance to employees | 44 | 46 | ||||||
Export benefits receivable(2) | 1,156 | 571 | ||||||
Others | 1,382 | 1,122 | ||||||
6,931 | 5,445 | |||||||
Non-current | ||||||||
Deposits | 228 | 197 | ||||||
Others | 48 | 46 | ||||||
276 | 243 | |||||||
7,207 | 5,688 | |||||||
(1) | Balances and receivables from statutory authorities primarily consist 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 and service tax liability on goods produced by and services provided by the Company. Accordingly, these balances have been classified as current assets. | |
(2) | Refer to Note 3.l. for details regarding export entitlements. |
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As of March 31, | ||||||||
2011 | 2010 | |||||||
Cash balances | 10 | 9 | ||||||
Balances with banks | 5,247 | 3,296 | ||||||
Time deposit balances with banks | 472 | 3,279 | ||||||
Cash and cash equivalents on the statements of financial position | 5,729 | 6,584 | ||||||
Bank overdrafts used for cash management purposes | (69 | ) | (39 | ) | ||||
Cash and cash equivalents in the cash flow statement | 5,660 | 6,545 | ||||||
• | 20 and19 as of March 31, 2011 and 2010, respectively, representing amounts in the Company’s unclaimed dividend account, which are therefore restricted; |
• | 150 million as of March 31, 2011, representing amounts in an escrow account for settlement of the payment due in respect of the Company’s exercise of the portfolio termination value option under its research and development agreement with I-VEN Pharma Capital Limited (Refer to Note 21 for details); and |
• | 83 as of March 31, 2011, representing amounts deposited as security for a bond executed for an environmental liability relating to the Company’s site in Mirfield, United Kingdom (Refer to Note 22 for details). |
Year Ended March 31, | ||||||||
2011 | 2010 | |||||||
Par value per share | 5 | 5 | ||||||
Authorized share capital | 1,200 | 1,200 | ||||||
Fully paid up capital | ||||||||
As at April 1 | 844 | 842 | ||||||
Add: Shares issued on exercise of stock options | 2 | 2 | ||||||
As at March 31 | 846 | 844 | ||||||
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Year Ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Issued equity shares as of April 1 | 168,845,385 | 168,468,777 | 168,172,746 | |||||||||
Effect of shares issued on exercise of stock options | 283,264 | 238,200 | 176,393 | |||||||||
Weighted average number of equity shares as of March 31 | 169,128,649 | 168,706,977 | 168,349,139 |
Year Ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Weighted average number of equity shares (Basic) | 169,128,649 | 168,706,977 | 168,349,139 | |||||||||
Dilutive effect of outstanding stock options | 836,633 | 908,966 | — | |||||||||
Weighted average number of equity shares (Diluted) | 169,965,282 | 169,615,943 | 168,349,139 |
As at | ||||||||
March 31, 2011 | March 31, 2010 | |||||||
Rupee borrowings | 8.75 | % | 5.00 | % | ||||
Borrowings on transfer of receivables | LIBOR+75-100 | bps | — | |||||
Foreign currency borrowings | LIBOR+ 50 - 175 | bps | LIBOR+ 40 -75 | bps | ||||
EURIBOR+50-100 | bps | |||||||
5% to 8 | % |
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18. | Loans and borrowings (continued) |
As at March 31, | ||||||||
2011 | 2010 | |||||||
Rupee term loan(1) | — | �� | 1 | |||||
Foreign currency loan(2), (3) | — | 8,838 | ||||||
Obligations under finance leases | 256 | 252 | ||||||
Bonus debentures | 5,027 | — | ||||||
5,283 | 9,091 | |||||||
Less: Current portion | ||||||||
Rupee term loan(1) | — | 1 | ||||||
Foreign currency loan(2), (3) | — | 3,690 | ||||||
Obligations under finance leases | 12 | 15 | ||||||
12 | 3,706 | |||||||
Non-current portion | ||||||||
Rupee term loan(1) | — | — | ||||||
Foreign currency loan(2), (3) | — | 5,148 | ||||||
Obligations under finance leases | 244 | 237 | ||||||
Bonus debentures | 5,027 | — | ||||||
5,271 | 5,385 | |||||||
(1) | “Rupee term loan” represents a loan from the Indian Renewable Energy Development Agency Limited which is secured by way of hypothecation of specific movable assets pertaining to the Company’s solar grid interactive power plant located in Bachupally, Hyderabad. The outstanding amount of such loan was fully re-paid during the year ended March 31, 2011. Consequently, the financial liability has been derecognized during the current period. | |
(2) | “Foreign currency loan” represents the carrying amount of a Euro denominated loan originally received from Citibank, N.A., Hong Kong in March 2006 to fund the acquisition of betapharm. As part of the facility, the Company had incurred an amount of429 as initial debt issuance costs, which is being amortized over the debt period using the effective interest method. On December 22, 2010, the Company repaid the loan prior to its maturity by making a payment of7,111. The Company obtained a release letter from Citibank for such loan satisfaction on January 4, 2011. Accordingly, the loan liability has been derecognized from the consolidated financial statements and the difference between the carrying amount of the loan (at amortized cost) and the amount paid on the date of satisfaction amounting to73 has been recognized as loss on extinguishment of debt disclosed within finance cost in the consolidated statement of income. | |
With respect to this loan, the Company was required to comply with certain financial covenants, which includes limits on capital expenditures and/maintenance of financial ratios (computed based on the Company’s Indian GAAP financial statements) as defined in the loan agreement. Such financial ratio requirements include: (a) Consolidated Net Debt to Consolidated Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”) not to exceed 3.5:1, and (b) Consolidated EBITDA to Consolidated Interest Expenses shall not be less than 3.75:1. The Company was in compliance with such financial covenants up to the date of satisfaction of the loan. |
(3) | During the year ended March 31, 2011, the Company repaid8,926 of foreign currency loans (consisting of Euro 141 and U.S.$8),1 of Rupee term loans and14 of obligations under capital leases. During the year ended March 31, 2010, the Company repaid3,457 of foreign currency loans (consisting of Euro 50 and U.S.$3),6 of rupee term loans and16 of obligations under finance leases. |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
March 31, | ||||||||
2011 | 2010 | |||||||
Proceeds from issuance of bonus debentures | 5,078 | — | ||||||
Issuance cost | (51 | ) | — | |||||
Initial recognized amount | 5,027 | — | ||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Rupee borrowings | — | % | 2.00 | % | ||||
Foreign currency borrowings | — | % | EURIBOR + 70 bps and LIBOR+70 bps | |||||
Bonus debentures | 9.25 | % | — |
Foreign | Obligation | |||||||||||||||||||
Maturing in the year ending | Rupee term | currency | under finance | |||||||||||||||||
March 31, | loan | loan | lease | Debentures | Total | |||||||||||||||
2012 | — | — | 12 | — | 12 | |||||||||||||||
2013 | — | 10 | — | 10 | ||||||||||||||||
2014 | — | — | 10 | 5,078 | 5,088 | |||||||||||||||
2015 | — | — | 10 | — | 10 | |||||||||||||||
2016 | — | — | 10 | — | 10 | |||||||||||||||
Thereafter | — | — | 204 | — | 204 | |||||||||||||||
— | — | 256 | 5,078 | 5,334 | ||||||||||||||||
Obligation | ||||||||||||||||
Maturing in the year ending | Rupee term | Foreign | under finance | |||||||||||||
March 31, | loan | currency loan | lease | Total | ||||||||||||
2011 | 1 | 3,690 | 15 | 3,706 | ||||||||||||
2012 | — | 5,148 | 8 | 5,156 | ||||||||||||
2013 | — | — | 8 | 8 | ||||||||||||
2014 | — | — | 8 | 8 | ||||||||||||
2015 | — | — | 9 | 9 | ||||||||||||
Thereafter | — | — | 204 | 204 | ||||||||||||
1 | 8,838 | 252 | 9,091 | |||||||||||||
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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 | ||||||||||||
minimum lease | Future minimum | |||||||||||
Particulars | payments | Interest | lease payments | |||||||||
Not later than one year | 12 | 2 | 14 | |||||||||
Between one and five years | 51 | 6 | 57 | |||||||||
More than five years | 193 | 1 | 194 | |||||||||
256 | 9 | 265 | ||||||||||
Present value of | ||||||||||||
minimum lease | Future minimum | |||||||||||
Particulars | payments | Interest | lease payments | |||||||||
Not later than one year | 15 | 1 | 16 | |||||||||
Between one and five years | 33 | — | 33 | |||||||||
More than five years | 204 | 1 | 205 | |||||||||
252 | 2 | 254 | ||||||||||
Year Ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Service cost | 63 | 52 | 43 | |||||||||
Interest cost | 37 | 30 | 27 | |||||||||
Expected return on plan assets | (33 | ) | (25 | ) | (22 | ) | ||||||
Recognized net actuarial (gain)/loss | 2 | 6 | — | |||||||||
Gratuity cost recognized in income statement | 69 | 63 | 48 | |||||||||
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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, | ||||||||
2011 | 2010 | |||||||
Present value of unfunded obligations | 25 | 21 | ||||||
Present value of funded obligations | 585 | 452 | ||||||
Total present value of obligations | 610 | 473 | ||||||
Fair value of plan assets | (490 | ) | (449 | ) | ||||
Present value of net obligations | 120 | 24 | ||||||
Unrecognized actuarial gains and (losses) | (134 | ) | (60 | ) | ||||
Recognized (asset)/liability | (14 | ) | (36 | ) | ||||
As of March 31, | ||||||||
2011 | 2010 | |||||||
Defined benefit obligations at the beginning of the year | 473 | 404 | ||||||
Service cost | 63 | 52 | ||||||
Interest cost | 37 | 30 | ||||||
Actuarial (gain)/loss | 81 | 18 | ||||||
Benefits paid | (44 | ) | (31 | ) | ||||
Defined benefit obligation at the end of the year | 610 | 473 | ||||||
As of March 31, | ||||||||
2011 | 2010 | |||||||
Fair value of plan assets at the beginning of the year | 449 | 334 | ||||||
Expected return on plan assets | 33 | 25 | ||||||
Employer contributions | 47 | 94 | ||||||
Benefits paid | (44 | ) | (31 | ) | ||||
Actuarial gain/(loss) | 5 | 27 | ||||||
Plan assets at the end of the year | 490 | 449 | ||||||
Year Ended March 31, | ||||||||||||||||
2011 | 2010 | 2009 | 2008 | |||||||||||||
Defined benefit obligation | 610 | 473 | 404 | 322 | ||||||||||||
Plan assets | 490 | 449 | 334 | 289 | ||||||||||||
Surplus/(deficit) | (120 | ) | (24 | ) | (70 | ) | (33 | ) | ||||||||
Experience adjustments on plan liabilities | 28 | 28 | 18 | 36 | ||||||||||||
Experience adjustments on plan assets | 5 | 27 | (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, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Discount rate | 7.95 | % | 7.50 | % | 7.15 | % | ||||||
Rate of compensation increase | 9% per annum for first 2 years and 8% per annum thereafter | 8% per annum for first 2 years and 6% per annum thereafter | 8% per annum for first 3 years and 6% per annum thereafter | |||||||||
Expected long-term return on plan assets | 7.50 | % | 7.50 | % | 7.50 | % |
Year Ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Discount rate | 7.50 | % | 7.15 | % | 7.80 | % | ||||||
Rate of compensation increase | 8% per annum for first 2 years and 6% per annum thereafter | 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 | % | 7.50 | % |
As of March 31, | ||||||||
2011 | 2010 | |||||||
Debt securities | — | 1 | % | |||||
Funds managed by insurers | 99 | % | 96 | % | ||||
Others | 1 | % | 3 | % |
Year Ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Service cost | 16 | 14 | 12 | |||||||||
Interest cost | 25 | 24 | 18 | |||||||||
Expected return on plan assets | (27 | ) | (20 | ) | (15 | ) | ||||||
Actuarial (gain)/loss | 6 | 8 | 5 | |||||||||
Pension cost recognized in income statement | 20 | 26 | 20 | |||||||||
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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, | ||||||||
2011 | 2010 | |||||||
Present value of unfunded obligations | 27 | 26 | ||||||
Present value of funded obligations | 332 | 284 | ||||||
Total present value of obligations | 359 | 310 | ||||||
Fair value of plan assets | (259 | ) | (249 | ) | ||||
Present value of net obligations | 100 | 61 | ||||||
Unrecognized actuarial losses | (127 | ) | (91 | ) | ||||
Recognized asset | (27 | ) | (30 | ) | ||||
As of March 31, | ||||||||
2011 | 2010 | |||||||
Defined benefit obligations at the beginning of the year | 310 | 244 | ||||||
Service cost | 16 | 14 | ||||||
Interest cost | 25 | 24 | ||||||
Actuarial (gain)/loss | 26 | 34 | ||||||
Benefits paid | (18 | ) | (6 | ) | ||||
Defined benefit obligation at the end of the year | 359 | 310 | ||||||
As of March 31, | ||||||||
2011 | 2010 | |||||||
Fair value of plan assets at the beginning of the year | 249 | 176 | ||||||
Expected return on plan assets | 27 | 20 | ||||||
Employer contributions | 17 | 21 | ||||||
Benefits paid | (18 | ) | (6 | ) | ||||
Actuarial gain/(loss) | (16 | ) | 38 | |||||
Plan assets at the end of the year | 259 | 249 | ||||||
Year Ended March 31, | ||||||||||||||||
2011 | 2010 | 2009 | 2008 | |||||||||||||
Defined benefit obligation | 359 | 310 | 244 | 253 | ||||||||||||
Plan assets | 259 | 249 | 176 | 213 | ||||||||||||
Surplus/(deficit) | (100 | ) | (61 | ) | (68 | ) | (40 | ) | ||||||||
Experience adjustments on plan liabilities | 12 | 1 | 80 | 40 | ||||||||||||
Experience adjustments on plan assets | (23 | ) | 35 | (46 | ) | (21 | ) |
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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, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Discount rate | 7.75 | % | 7.91 | % | 9.50 | % | ||||||
Rate of compensation increase | 4.50 | % | 4.50 | % | 4.50 | % | ||||||
Expected long-term return on plan assets | 9.75 | % | 10.50 | % | 10.50 | % |
Year Ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Discount rate | 7.91 | % | 9.50 | % | 7.50 | % | ||||||
Rate of compensation increase | 4.50 | % | 4.50 | % | 4.50 | % | ||||||
Expected long-term return on plan assets | 10.50 | % | 10.50 | % | 10.50 | % |
As of March 31, | ||||||||
2011 | 2010 | |||||||
Equity | 51 | % | 51 | % | ||||
Others | 49 | % | 49 | % |
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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, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Service cost | 6 | — | — | |||||||||
Interest cost | 4 | — | — | |||||||||
Expected return on plan assets | — | — | — | |||||||||
Actuarial (gain)/loss | — | — | — | |||||||||
Past service cost | — | 53 | — | |||||||||
Pension cost recognized in income statement | 10 | 53 | — | |||||||||
As of March 31, | ||||||||
2011 | 2010 | |||||||
Present value of unfunded obligations | 69 | 53 | ||||||
Present value of funded obligations | — | — | ||||||
Total present value of obligations | 69 | 53 | ||||||
Fair value of plan assets | — | — | ||||||
Present value of net obligations | 69 | 53 | ||||||
Unrecognized actuarial losses | (8 | ) | — | |||||
Recognized Liability | 61 | 53 | ||||||
As of March 31, | ||||||||
2011 | 2010 | |||||||
Defined benefit obligations at the beginning of the year | 53 | — | ||||||
Service cost | 6 | — | ||||||
Interest cost | 4 | — | ||||||
Actuarial (gain)/loss | 8 | — | ||||||
Past service cost | — | 53 | ||||||
Benefits paid | (2 | ) | — | |||||
Defined benefit obligation at the end of the year | 69 | 53 | ||||||
Year Ended March 31, | ||||||||||||||||
2011 | 2010 | 2009 | 2008 | |||||||||||||
Defined benefit obligation | 69 | 53 | — | — | ||||||||||||
Plan assets | — | — | — | — | ||||||||||||
Surplus/(deficit) | (69 | ) | (53 | ) | — | — | ||||||||||
Experience adjustments on plan liabilities | 1 | — | — | — | ||||||||||||
Experience adjustments on plan assets | — | — | — | — |
F-48
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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, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Discount rate | 7.95 | % | 7.50 | % | — | |||||||
Rate of compensation increase | 9% per annum for first 2 years and 8% per annum thereafter | 8% per annum for first 2 years and 6% per annum thereafter | — | |||||||||
Expected long-term return on plan assets | — | — | — |
2011 | 2010 | 2009 | ||||||||||
Discount rate | 7.50 | % | 7.50 | % | — | |||||||
Rate of compensation increase | 8% per annum for first 2 years and 6% per annum thereafter | 8% per annum for first 2 years and 6% per annum thereafter | — | |||||||||
Expected long-term return on plan assets | — | — | — |
F-49
Table of Contents
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 under | |||||||||||
Particulars | under category A | 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 | |||||||||
F-50
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year Ended March 31, 2011 | ||||||||||||||||
Weighted- | Weighted-average | |||||||||||||||
Shares arising | Range of exercise | average exercise | remaining contractual | |||||||||||||
Category A — Fair Market Value Options | out of options | prices | price | life (months) | ||||||||||||
Outstanding at the beginning of the period | 100,000 | 362.50-531.51 | 403.02 | 38 | ||||||||||||
Granted during the year | — | — | — | — | ||||||||||||
Expired/forfeited during the period | (9,000 | ) | 373.50-531.51 | 443.73 | — | |||||||||||
Exercised during the period | (70,000 | ) | 362.50-442.50 | 385.36 | — | |||||||||||
Outstanding at the end of the period | 21,000 | 373.50-448 | 444.45 | 67 | ||||||||||||
Exercisable at the end of the period | 11,000 | 373.50-448 | 441.23 | 55 | ||||||||||||
Year Ended March 31, 2011 | ||||||||||||||||
Weighted- | Weighted- average | |||||||||||||||
Shares arising | Range of exercise | average exercise | remaining contractual | |||||||||||||
Category B — Par Value Options | out of options | prices | price | life (months) | ||||||||||||
Outstanding at the beginning of the period | 785,007 | 5.00 | 5.00 | 72 | ||||||||||||
Granted during the period | 284,070 | 5.00 | 5.00 | 91 | ||||||||||||
Expired/forfeited during the period | (78,620 | ) | 5.00 | 5.00 | — | |||||||||||
Exercised during the period | (293,296 | ) | 5.00 | 5.00 | — | |||||||||||
Outstanding at the end of the period | 697,161 | 5.00 | 5.00 | 72 | ||||||||||||
Exercisable at the end of the period | 52,106 | 5.00 | 5.00 | 41 | ||||||||||||
Year Ended March 31, 2010 | ||||||||||||||||
Weighted- | Weighted-average | |||||||||||||||
Shares arising | Range of exercise | average exercise | remaining contractual | |||||||||||||
Category A — Fair Market Value Options | out of options | prices | price | life (months) | ||||||||||||
Outstanding at the beginning of the period | 136,410 | 362.50-531.51 | 417.51 | 42 | ||||||||||||
Granted during the year | — | — | — | — | ||||||||||||
Expired/forfeited during the period | (3,670 | ) | 442.50- 531.51 | 512.11 | — | |||||||||||
Exercised during the period | (32,740 | ) | 373.50- 531.51 | 451.17 | — | |||||||||||
Outstanding at the end of the period | 100,000 | 362.50-531.51 | 403.02 | 38 | ||||||||||||
Exercisable at the end of the period | 80,000 | 362.50-531.51 | 391.78 | 27 |
Year Ended March 31, 2010 | ||||||||||||||||
Weighted- | Weighted- average | |||||||||||||||
Shares arising | Range of exercise | average exercise | remaining contractual | |||||||||||||
Category B — Par Value Options | out of options | prices | price | life (months) | ||||||||||||
Outstanding at the beginning of the period | 778,486 | 5.00 | 5.00 | 72 | ||||||||||||
Granted during the period | 359,840 | 5.00 | 5.00 | 91 | ||||||||||||
Expired/forfeited during the period | (83,608 | ) | 5.00 | 5.00 | — | |||||||||||
Exercised during the period | (269,711 | ) | 5.00 | 5.00 | — | |||||||||||
Outstanding at the end of the period | 785,007 | 5.00 | 5.00 | 72 | ||||||||||||
Exercisable at the end of the period | 79,647 | 5.00 | 5.00 | 41 |
F-51
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year Ended March 31, 2011 | ||||||||||||||||
Weighted- | Weighted-average | |||||||||||||||
Shares arising | Range of exercise | average exercise | remaining contractual | |||||||||||||
Category B — Par Value Options | out of options | prices | price | life (months) | ||||||||||||
Outstanding at the beginning of the period | 112,390 | 5.00 | 5.00 | 74 | ||||||||||||
Granted during the period | 58,660 | 5.00 | 5.00 | 89 | ||||||||||||
Expired/forfeited during the period | (2,440 | ) | 5.00 | 5.00 | — | |||||||||||
Exercised during the period | (44,051 | ) | 5.00 | 5.00 | — | |||||||||||
Outstanding at the end of the period | 124,559 | 5.00 | 5.00 | 74 | ||||||||||||
Exercisable at the end of the period | 3,364 | 5.00 | 5.00 | 49 | ||||||||||||
Year Ended March 31, 2010 | ||||||||||||||||
Weighted- | Weighted-average | |||||||||||||||
Shares arising | Range of exercise | average exercise | remaining contractual | |||||||||||||
Category B — Par Value Options | out of options | prices | price | life (months) | ||||||||||||
Outstanding at the beginning of the period | 156,577 | 5.00 | 5.00 | 71 | ||||||||||||
Granted during the period | 74,600 | 5.00 | 5.00 | 91 | ||||||||||||
Expired/forfeited during the period | (44,630 | ) | 5.00 | 5.00 | — | |||||||||||
Exercised during the period | (74,157 | ) | 5.00 | 5.00 | — | |||||||||||
Outstanding at the end of the period | 112,390 | 5.00 | 5.00 | 74 | ||||||||||||
Exercisable at the end of the period | 2,250 | 5.00 | 5.00 | 47 | ||||||||||||
F-52
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year Ended | Year Ended | |||||||
March 31, 2011 | March 31, 2010 | |||||||
Expected volatility | 34.34 | % | 36.45 | % | ||||
Exercise price | 5 | 5 | ||||||
Option life | 2.43 years | 2.44 years | ||||||
Risk-free interest rate | 6.04 | % | 5.05 | % | ||||
Expected dividends | 0.4 | % | 0.82 | % | ||||
Grant date share price | 1,242.55 | 612.95 |
F-53
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year Ended March 31, 2011 | ||||||||||||||||
Weighted- | Weighted-average | |||||||||||||||
Shares arising | Range of exercise | average exercise | remaining contractual | |||||||||||||
out of options | prices | price | life (months) | |||||||||||||
Outstanding at the beginning of the period | 1,012,331 | 10-14.99 | 11.95 | 34 | ||||||||||||
Granted during the year | — | — | — | — | ||||||||||||
Exercised during the year | — | — | — | — | ||||||||||||
Expired/forfeited during the period | (3,241 | ) | 10-14.99 | 11.63 | — | |||||||||||
Outstanding at the end of the period | 1,009,090 | 10-14.99 | 11.94 | 21 | ||||||||||||
Exercisable at the end of the period | 1,009,090 | 10-14.99 | 11.94 | 21 |
Year Ended March 31, 2010 | ||||||||||||||||
Weighted- | Weighted-average | |||||||||||||||
Shares arising | Range of exercise | average exercise | remaining contractual | |||||||||||||
out of options | prices | price | life (months) | |||||||||||||
Outstanding at the beginning of the period | 2,916,263 | 10-14.99 | 13.99 | 33 | ||||||||||||
Granted during the year | — | — | — | — | ||||||||||||
Exercised during the year | (1,899,943 | ) | 10 | 10 | — | |||||||||||
Expired/forfeited during the period | (3,989 | ) | 10-14.99 | 11.63 | ||||||||||||
Outstanding at the end of the period | 1,012,331 | 10-14.99 | 11.95 | 34 | ||||||||||||
Exercisable at the end of the period | 850,237 | 10-14.99 | 11.36 | 31 |
F-54
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F-55
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As at March 31, | ||||||||
2011 | 2010 | |||||||
Sales returns | 980 | 839 | ||||||
Environmental liability | 41 | 39 | ||||||
Legal | 334 | 255 | ||||||
1,355 | 1,133 | |||||||
Allowance for | Environmental | |||||||||||||||
Particulars | sales return(1) | Liability (2) | Legal | Total | ||||||||||||
Balance as at April 1, 2010 | 839 | 39 | 255 | 1,133 | ||||||||||||
Provision made during the year | 731 | 2 | 79 | 812 | ||||||||||||
Provisions acquired in business combinations | — | — | — | — | ||||||||||||
Provision used during the year | (590 | ) | — | — | (590 | ) | ||||||||||
Balance as at March 31, 2011 | 980 | 41 | 334 | 1,355 | ||||||||||||
Current | 980 | — | 334 | 1,314 | ||||||||||||
Non-current | — | 41 | — | 41 | ||||||||||||
980 | 41 | 334 | 1,355 | |||||||||||||
(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, the Company assumed a liability for contamination of the Mirfield site acquired amounting to39. Because the seller is required to indemnify the Company for this liability, a corresponding asset has also been recorded in the statements of financial position. During the year ended March 31, 2011, the Company was required to provide security for such environmental liabilities and, accordingly, the Company has deposited83 as additional security. |
Allowance for | Environmental | |||||||||||||||
Particulars | sales return | Liability | Legal | Total | ||||||||||||
Balance as at April 1, 2009 | 815 | 42 | 1,113 | 1,970 | ||||||||||||
Provision made during the year | 932 | — | 119 | 1,051 | ||||||||||||
Provisions acquired in business combinations | — | — | — | — | ||||||||||||
Provision used during the year | (908 | ) | (3 | ) | (977 | ) | (1,888 | ) | ||||||||
Balance as at March 31, 2010 | 839 | 39 | 255 | 1,133 | ||||||||||||
Current | 839 | — | 255 | 1,094 | ||||||||||||
Non-current | — | 39 | — | 39 | ||||||||||||
839 | 39 | 255 | 1,133 | |||||||||||||
F-56
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Allowance for | Environmental | |||||||||||||||
Particulars | sales return | Liability | Legal | Total | ||||||||||||
Balance as at April 1, 2008 | 627 | — | 123 | 750 | ||||||||||||
Provision made during the year | 663 | — | 990 | 1,653 | ||||||||||||
Provisions acquired in business combinations | — | 422 | — | 42 | ||||||||||||
Provision utilized 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 | ||||||||||||
815 | 42 | 1,113 | 1,970 | |||||||||||||
As at March 31, | ||||||||
2011 | 2010 | |||||||
Trade payables due to related parties | 81 | 20 | ||||||
Trade payables | 8,399 | 9,302 | ||||||
8,480 | 9,322 | |||||||
As at March 31, | ||||||||
2011 | 2010 | |||||||
Current | ||||||||
Advance from customers | 399 | 245 | ||||||
Statutory dues payable | 235 | 372 | ||||||
Accrued expenses | 7,140 | 5,743 | ||||||
Deferred revenue | 104 | 107 | ||||||
Others | 3,811 | 1,397 | ||||||
11,689 | 7,864 | |||||||
Non-current | ||||||||
Statutory dues payable | 45 | 48 | ||||||
Deferred revenue | 328 | 42 | ||||||
Others | 293 | 159 | ||||||
666 | 249 | |||||||
12,355 | 8,113 | |||||||
Year Ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Sales | 72,952 | 68,616 | 68,381 | |||||||||
Services | 1,741 | 1,661 | 1,060 | |||||||||
74,693 | 70,277 | 69,441 | ||||||||||
F-57
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year Ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Loss/(Profit) on sale of property, plant and equipment, net | (271 | ) | 24 | (15 | ) | |||||||
Sale of spent chemical | (255 | ) | (209 | ) | (211 | ) | ||||||
Negative goodwill on acquisition of business | (73 | ) | — | (150 | ) | |||||||
Miscellaneous income | (596 | ) | (432 | ) | (286 | ) | ||||||
Settlement of legal claim from innovator (1) (2) | 80 | 48 | 916 | |||||||||
(1,115 | ) | (569 | ) | 254 | ||||||||
(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 the amount of916. Accordingly, the Company has recorded a liability towards this claim the amount of916. During the year ended March 31, 2010, the Company paid such amount. | |
(2) | During the year ended March 31, 2011, the Company recorded an amount of80 as its best estimate of the probable liability arising out of the Company’s olanzapine litigation in Canada (Refer to Note 37 for details). The total provision as at March 31, 2011 on this matter is128. |
Year Ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Interest income | 105 | 249 | 346 | |||||||||
Dividend and profit on sale of investments, net | 68 | 48 | 136 | |||||||||
Foreign exchange gain, net | — | 72 | — | |||||||||
173 | 369 | 482 | ||||||||||
Foreign exchange loss, net | (57 | ) | — | (634 | ) | |||||||
Interest expense on borrowings | (232 | ) | (372 | ) | (1,034 | ) | ||||||
Loss on extinguishment of debt | (73 | ) | — | — | ||||||||
(362 | ) | (372 | ) | (1,668 | ) | |||||||
(189 | ) | (3 | ) | (1,186 | ) | |||||||
F-58
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Year Ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Current tax (expense) | ||||||||||||
Domestic | (2,253 | ) | (2,552 | ) | (1,549 | ) | ||||||
Foreign | (673 | ) | (684 | ) | (1,182 | ) | ||||||
(2,926 | ) | (3,236 | ) | (2,731 | ) | |||||||
Deferred tax (expense)/benefit | ||||||||||||
Domestic | 698 | 79 | (166 | ) | ||||||||
Foreign | 825 | 2,172 | 1,725 | |||||||||
1,523 | 2,251 | 1,559 | ||||||||||
Total income tax (expense)/benefit in income statement | (1,403 | ) | (985 | ) | (1,172 | ) | ||||||
Year Ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Tax effect on changes in the fair value of other investments | — | — | (5 | ) | ||||||||
Tax effect on foreign currency translation differences | (59 | ) | 150 | (41 | ) | |||||||
Tax effect on effective portion of change in fair value of cash flow hedges | — | (252 | ) | 78 | ||||||||
(59 | ) | (102 | ) | 32 | ||||||||
2011 | 2010 | 2009 | ||||||||||
Profit/(loss) before income taxes | 12,443 | 2,053 | (3,996 | ) | ||||||||
Enacted tax rates in India | 33.22 | % | 33.99 | % | 33.99 | % | ||||||
Computed expected tax (expense)/benefit | (4,134 | ) | (698 | ) | 1,359 | |||||||
Effect of: | ||||||||||||
Differences between Indian and foreign tax rates | 791 | 562 | 24 | |||||||||
Impairment of goodwill | — | (1,598 | ) | (3,371 | ) | |||||||
Unrecognized deferred tax assets | (230 | ) | (134 | ) | (303 | ) | ||||||
Expenses not deductible for tax purposes | (207 | ) | (87 | ) | (119 | ) | ||||||
Share-based payment expense not deductible for tax purposes | (72 | ) | (55 | ) | (31 | ) | ||||||
Interest expense not deductible for tax purposes | (18 | ) | (32 | ) | (55 | ) | ||||||
Income exempt from income taxes(1) | 714 | 746 | 831 | |||||||||
Foreign exchange differences | 105 | (142 | ) | 30 | ||||||||
Incremental deduction allowed for research and development costs (2) | 1,422 | 409 | 510 | |||||||||
Effect of change in tax laws and rate | 103 | (77 | ) | 29 | ||||||||
Others | 123 | 121 | (76 | ) | ||||||||
Income tax (expense)/benefit | (1,403 | ) | (985 | ) | (1,172 | ) | ||||||
(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 specified eligible period (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, 2011 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. |
F-59
Table of Contents
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, | Expired/ | March 31, | Expired/ | March 31, | ||||||||||||||||||||||||
2009 | Additions | Recognition | 2010 | Additions | Recognition | 2011 | ||||||||||||||||||||||
Deductible temporary differences, net | 183 | (53 | ) | (6 | ) | 124 | 10 | — | 134 | |||||||||||||||||||
Tax losses | 938 | 206 | (13 | ) | 1,131 | 220 | (176 | ) | 1,175 | |||||||||||||||||||
1,121 | 153 | (19 | ) | 1,255 | 230 | (176 | ) | 1,309 | ||||||||||||||||||||
F-60
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
As of March 31, | ||||||||
2011 | 2010 | |||||||
Deferred tax assets | ||||||||
Inventories | 819 | 602 | ||||||
Trade receivables | 174 | 233 | ||||||
Operating tax loss carry-forward | 1,233 | 950 | ||||||
Other current liabilities | 137 | 100 | ||||||
Minimum alternate tax | 862 | — | ||||||
Others | 286 | 294 | ||||||
Total deferred tax assets | 3,511 | 2,179 | ||||||
Deferred tax liabilities | ||||||||
Property, plant and equipment | (700 | ) | (589 | ) | ||||
Other intangible assets | (2,463 | ) | (2,464 | ) | ||||
Others | (435 | ) | (564 | ) | ||||
Total deferred tax liabilities | (3,598 | ) | (3,617 | ) | ||||
Net deferred tax asset/(liability) | (87 | ) | (1,438 | ) | ||||
As at | Recognized in | Acquired in business | As at | |||||||||||||||||
April 1, 2009 | Movement(1) | equity | combination | March 31, 2010 | ||||||||||||||||
Deferred tax assets | ||||||||||||||||||||
Inventories | 480 | 122 | — | — | 602 | |||||||||||||||
Minimum alternate tax | — | — | — | — | — | |||||||||||||||
Trade receivables | 175 | 58 | — | — | 233 | |||||||||||||||
Operating loss carry-forward | 1,126 | (176 | ) | — | — | 950 | ||||||||||||||
Other current liabilities | 201 | (101 | ) | — | — | 100 | ||||||||||||||
Others | 240 | (71 | ) | 125 | — | 294 | ||||||||||||||
Total deferred tax assets | 2,222 | (168 | ) | 125 | — | 2,179 | ||||||||||||||
Deferred tax liabilities | ||||||||||||||||||||
Property, plant and equipment | (969 | ) | 380 | — | — | (589 | ) | |||||||||||||
Other intangible assets | (4,437 | ) | 1,973 | — | — | (2,464 | ) | |||||||||||||
Others | (227 | ) | (84 | ) | (253 | ) | — | (564 | ) | |||||||||||
Total deferred tax liabilities | (5,633 | ) | 2,269 | (253 | ) | — | (3,617 | ) | ||||||||||||
Net deferred tax assets/(liabilities) | (3,411 | ) | 2,101 | (128 | ) | — | (1,438 | ) | ||||||||||||
F-61
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Acquired in | ||||||||||||||||
Recognized in | business | As at | ||||||||||||||
Movement(1) | equity | combination | March 31, 2011 | |||||||||||||
Deferred tax assets | ||||||||||||||||
Inventories | 217 | — | — | 819 | ||||||||||||
Minimum alternate tax | 862 | — | — | 862 | ||||||||||||
Trade receivables | (59 | ) | — | — | 174 | |||||||||||
Operating loss carry-forward(2) | 283 | — | — | 1,233 | ||||||||||||
Other current liabilities | 37 | — | — | 137 | ||||||||||||
Others | (8 | ) | — | — | 286 | |||||||||||
Total deferred tax assets | 1,332 | — | — | 3,511 | ||||||||||||
Deferred tax liabilities | ||||||||||||||||
Property, plant and equipment | (111 | ) | — | — | (700 | ) | ||||||||||
Other intangible assets | 46 | — | (45 | ) | (2,463 | ) | ||||||||||
Others | 198 | (69 | ) | — | (435 | ) | ||||||||||
Total deferred tax liabilities | 133 | (69 | ) | (45 | ) | (3,598 | ) | |||||||||
Net deferred tax assets/(liabilities) | 1,465 | (69 | ) | (45 | ) | (87 | ) | |||||||||
(1) | Movement during the years ended March 31, 2011 and 2010 includes the amounts of58 and150, respectively, which represent exchange differences arising due to foreign currency translations. | |
(2) | The year ended March 31, 2010 included an adjustment of268, relating to the legal reorganization to amalgamate its wholly-owned subsidiary, Perlecan Pharma Private Limited, into the Company as explained above in Note 6 of these consolidated financial statements. |
As of March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Less than one year | 216 | 162 | 173 | |||||||||
Between one and five years | 415 | 318 | 345 | |||||||||
More than five years | — | — | — | |||||||||
631 | 480 | 518 | ||||||||||
F-62
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
• | Green Park Hotel and Resorts Limited (formerly known as Diana Hotels Limited) for hotel services; | |
• | A.R. Life Sciences Private Limited for availing processing services of raw materials and intermediates; | |
• | Dr. Reddy’s Holdings 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; | |
• | SR Enterprises for transportation services; and | |
• | Dr. Reddy’s Laboratories Gratuity Fund. |
Year Ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Purchases from significant interest entities | 486 | 275 | 290 | |||||||||
Sales to significant interest entities | 391 | 156 | 135 | |||||||||
Services to significant interest entities | — | 4 | — | |||||||||
Contribution to a significant interest entity towards social development and research and development | 125 | 151 | 124 | |||||||||
Hotel expenses paid to significant interest entities | 20 | 13 | 13 | |||||||||
Advances paid to significant interest entities for purchase of land | — | 367 | 400 | |||||||||
Short term loan taken and repaid to significant interest entities | — | — | 60 | |||||||||
Interest paid on loan taken from significant interest entities | — | — | 2 | |||||||||
Lease rental paid to key management personnel and their relatives | 29 | 27 | 26 |
• | During the year ended March 31, 2010, the Company exchanged a parcel of land owned by it for another parcel of land of equivalent size that adjoins its research facility, owned by the Company’s key management personnel. The Company concluded that this exchange transaction lacks commercial substance and has accordingly recorded the land acquired at the carrying amount of the land transferred, with no profit or loss being recorded. | ||
• | During the year ended March 31, 2010, the Company purchased land from a significant interest entity for a purchase price of21. |
Year Ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Salaries and other benefits | 161 | 228 | 260 | |||||||||
Contributions to defined contribution plans | 10 | 7 | 8 | |||||||||
Commission to directors | 267 | 240 | 174 | |||||||||
Share-based payments | 56 | 36 | 18 | |||||||||
Total | 494 | 511 | 460 | |||||||||
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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, | ||||||||
2011 | 2010 | |||||||
Significant interest entities | 114 | 44 | ||||||
Key management personnel | 5 | 5 |
As at March 31, | ||||||||
2011 | 2010 | |||||||
Significant interest entities | 81 | 20 | ||||||
Key management personnel | 1 | — |
Trade | Derivate | Total | ||||||||||||||||||||||||||
Loans and | Available | and other | financial | carrying | ||||||||||||||||||||||||
Note | receivables | for sale | payables | instruments | value | Total fair value | ||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||
Cash and cash equivalents | 15 | 5,729 | — | — | — | 5,729 | 5,729 | |||||||||||||||||||||
Other investments | 11 | — | 33 | — | — | 33 | 33 | |||||||||||||||||||||
Trade receivables | 13 | 17,615 | — | — | — | 17,615 | 17,615 | |||||||||||||||||||||
Derivative financial asset | — | — | — | 784 | 784 | 784 | ||||||||||||||||||||||
Other assets | 14 | 1,820 | — | — | — | 1,820 | 1,820 | |||||||||||||||||||||
Total | 25,164 | 33 | — | 784 | 25,981 | 25,981 | ||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||
Trade payables | 23 | — | — | 8,480 | — | 8,480 | 8,480 | |||||||||||||||||||||
Derivative financial liability | — | — | — | — | — | — | ||||||||||||||||||||||
Long-term loans and borrowings | 18 | — | — | 5,283 | — | 5,283 | 5,283 | |||||||||||||||||||||
Bank overdraft, short-term loans and borrowings | — | — | 18,289 | — | 18,289 | 18,289 | ||||||||||||||||||||||
Other liabilities and provisions | 22 & 24 | — | — | 12,315 | — | 12,315 | 12,315 | |||||||||||||||||||||
Total | — | — | 44,367 | — | 44,367 | 44,367 | ||||||||||||||||||||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Trade and | Derivate | |||||||||||||||||||||||||||
Loans and | Available | other | financial | Total carrying | Total fair | |||||||||||||||||||||||
Note | receivables | for sale | payables | instruments | value | value | ||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||
Cash and cash equivalents | 15 | 6,584 | — | — | — | 6,584 | 6,584 | |||||||||||||||||||||
Other investments | 11 | — | 3,600 | — | — | 3,600 | 3,600 | |||||||||||||||||||||
Trade receivables | 13 | 11,960 | — | — | — | 11,960 | 11,960 | |||||||||||||||||||||
Derivative financial asset | — | — | — | 573 | 573 | 573 | ||||||||||||||||||||||
Other assets | 14 | 2,869 | — | — | — | 2,869 | 2,869 | |||||||||||||||||||||
Total | 21,413 | 3,600 | — | 573 | 25,586 | 25,586 | ||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||
Trade payables | 23 | — | — | 9,322 | — | 9,322 | 9,322 | |||||||||||||||||||||
Derivative financial instruments | — | — | — | — | — | — | ||||||||||||||||||||||
Long-term loans and borrowings | 18 | — | — | 9,091 | — | 9,091 | 9,091 | |||||||||||||||||||||
Bank overdraft, short-term loans and borrowings | — | — | 5,604 | — | 5,604 | 5,604 | ||||||||||||||||||||||
Other liabilities and provisions | 22 & 24 | — | — | 8,379 | — | 8,379 | 8,379 | |||||||||||||||||||||
Total | — | — | 32,396 | — | 32,396 | 32,396 | ||||||||||||||||||||||
Particulars | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Available for sale — Financial asset — Investments in units of mutual funds | — | — | — | — | ||||||||||||
Available for sale — Financial asset-Investment in equity securities | 33 | — | — | 33 | ||||||||||||
Available for sale — Financial asset-Investment in certificate of deposits | — | — | — | — | ||||||||||||
Derivative financial instruments- gains on outstanding foreign exchange forward and option contracts | — | 784 | — | 784 |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
Particulars | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Available for sale — Financial asset - Investments in units of mutual funds | 3,276 | — | — | 3,276 | ||||||||||||
Available for sale — Financial asset-Investment in equity securities | 25 | — | — | 25 | ||||||||||||
Available for sale — Financial asset-Investment in certificate of deposits | — | 299 | — | 299 | ||||||||||||
Derivative financial instruments- gains on outstanding foreign exchange forward and option contracts | — | 573 | — | 573 |
As of March 31, | ||||||||
2011 | 2010 | |||||||
Forward contracts | ||||||||
In U.S. Dollars (Sell) | 10,346 | 7,453 | ||||||
In U.S. Dollars (Buy) | 201 | — | ||||||
In Euro (Sell )* | 317 | — | ||||||
In GBP (Sell)* | — | — | ||||||
Option contracts | ||||||||
In U.S. Dollars | 15,385 | 18,589 |
* | 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, | ||||||||
2011 | 2010 | |||||||
Sell: | ||||||||
Not later than one month | 6,382 | 8,980 | ||||||
Later than one month and not later than three months | 7,180 | 3,053 | ||||||
Later than three months and not later than six months | 3,790 | 4,580 | ||||||
Later than six month and not later than one year | 8,696 | 9,429 | ||||||
Total | 26,048 | 26,042 | ||||||
Buy: | ||||||||
Not later than one month | 201 | — | ||||||
Later than one month and not later than three months | — | — | ||||||
Later than three months and not later than six months | — | — | ||||||
Later than six month and not later than one year | — | — | ||||||
Total | 201 | — | ||||||
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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) | 2011 | 2010 | ||||||
1 – 90 | 3,218 | 2,604 | ||||||
90 – 180 | 275 | 224 | ||||||
More than 180 | 130 | 118 | ||||||
Total | 3,623 | 2,946 | ||||||
Particulars | 2012 | 2013 | 2014 | 2015 | Thereafter | Total | ||||||||||||||||||
Trade payables | 8,480 | — | — | — | — | 8,480 | ||||||||||||||||||
Bank overdraft, short-term loans and borrowings | 18,289 | — | — | — | — | 18,289 | ||||||||||||||||||
Other liabilities and provisions | 12,117 | — | — | — | 293 | 12,410 |
Particulars | 2011 | 2012 | 2013 | 2014 | Thereafter | Total | ||||||||||||||||||
Trade payables | 9,322 | — | — | — | — | 9,322 | ||||||||||||||||||
Bank overdraft, short-term loans and borrowings | 5,604 | — | — | — | — | 5,604 | ||||||||||||||||||
Other liabilities and provisions | 8,220 | — | — | — | 159 | 8,379 |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
• | an approximately1,592 increase/decrease in the Company’s hedging reserve and an approximately1,057 increase/decrease in the Company’s net profit as at March 31, 2011; | ||
• | an approximately1,888 increase/decrease in the Company’s hedging reserve and an approximately746 increase/decrease in the Company’s net profit as at March 31, 2010; and | ||
• | an approximately617 increase/decrease in the Company’s hedging reserve and an approximately448 increase/decrease in the Company’s net profit as at March 31, 2009. |
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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 | 3,002 | 49 | 977 | 4,028 | ||||||||||||
Trade receivables | 8,136 | 977 | 4,410 | 13,523 | ||||||||||||
Other assets | 68 | 3 | 200 | 271 | ||||||||||||
Total | 11,206 | 1,029 | 5,587 | 17,822 | ||||||||||||
Liabilities: | ||||||||||||||||
Trade payables | 303 | 2 | 275 | 580 | ||||||||||||
Long-term loans and borrowings | 7 | — | — | 7 | ||||||||||||
Bank overdraft, short-term loans and borrowings | 12,613 | 2,378 | 2,271 | 17,262 | ||||||||||||
Other liabilities and provisions | 1,031 | 2 | 1,295 | 2,328 | ||||||||||||
Total | 13,954 | 2,382 | 3,841 | 20,177 | ||||||||||||
(1) | Others include currencies such as Russian roubles, British pound sterling, Swiss franc, New Zealand dollars, Venezuela bolivar, etc. |
U.S. Dollars | Euro | Others(1) | Total | |||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents | 515 | — | 1,232 | 1,747 | ||||||||||||
Trade receivables | 4,591 | 667 | 3,662 | 8,920 | ||||||||||||
Other assets | 154 | 3 | 175 | 332 | ||||||||||||
Total | 5,260 | 670 | 5,069 | 10,999 | ||||||||||||
Liabilities: | ||||||||||||||||
Trade payables | 996 | 76 | 166 | 1,238 | ||||||||||||
Long-term loans and borrowings | 354 | — | — | 354 | ||||||||||||
Bank overdraft, short-term loans and borrowings | 4,580 | — | — | 4,580 | ||||||||||||
Other liabilities and provisions | 1,634 | — | 707 | 2,341 | ||||||||||||
Total | 7,564 | 76 | 873 | 8,513 | ||||||||||||
(1) | Others include currencies such as Russian roubles, British pounds sterling, Swiss francs, New Zealand dollars, Venezuela bolivar, etc. |
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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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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
No. of | ||||||||||||||||||
instruments | Aggregate | Redemption | ||||||||||||||||
Particulars | issued | Face value | Currency | Interest Rate | Maturity | Face Amount | price | |||||||||||
Unsecured, non-convertible, redeemable debentures | 1,015,516,392 | 5 each | (Indian Rupee) | 9.25% per annum | 36 months | 5,078 | 5 each (plus interest) |
• | Fully paid up bonus debentures carrying a face value of5 each were issued to the Company’s shareholders in the ratio of 6 bonus debentures for each equity share held by such shareholders on March 18, 2011. | ||
• | The bonus debentures are unsecured and are not convertible into equity shares of the Company. | ||
• | The Company delivered cash in the aggregate value of the bonus debentures into an escrow account of a merchant banker in India appointed by the Company’s Board of Directors. The merchant banker received such amount for and on behalf of and in trust for the shareholders who are entitled to receive bonus debentures. Upon receipt of such amount, the merchant banker paid the amount to the Company, for and on behalf of the shareholders as consideration for the allotment of debentures to them. | ||
• | These bonus debentures have a maturity of 36 months, at which time the Company must redeem them for cash in an amount equal to the face value of5 each plus unpaid interest, if any. | ||
• | These bonus debentures carry an interest rate of 9.25% per annum. The interest on the debentures shall be paid at the end of every 12, 24, and 36 months from the date of issue. | ||
• | These bonus debentures are listed on stock exchanges in India so as to provide liquidity for the holders. | ||
• | Issuance of these bonus debentures will be treated as a “deemed dividend” under section 2 (22) (b) of the Indian Income Tax Act, 1961 and accordingly, the Company will be required to pay a dividend distribution tax. | ||
• | Under Indian Corporate Law and as per the terms of the approved bonus debenture scheme, the Company has created a statutory reserve (the “Debenture Redemption Reserve”) in which it is required to deposit a portion of its profits made during each year prior to the maturity date of the bonus debentures until the aggregate amount retained in such reserve equals 50% of the face value of the debentures then issued and outstanding. The funds in the Debenture Redemption Reserve shall be used only to redeem the debentures for so long as they are issued and outstanding. |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
• | For fund repatriation — to the extent the CADIVI has issued approvals in the form of approvals of Autorización de Liquidación de Divisas (“ALD”) and which have been sent to and received by the Banco Central de Venezuela by December 31, 2010; and | ||
• | For foreign currency acquisition — to the extent the CADIVI had issued an Authorization of Foreign Currency Acquisition (“AAD”) by December 31, 2010 and the approval relates to imports for the health and food sectors or certain other specified purposes. |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F-74
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F-75
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F-76
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
F-77
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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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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in millions, except share and per share data and where otherwise stated)
For the year ended March 31, 2011 | ||||||||||||||||
Research and | ||||||||||||||||
Selling, general and | development | |||||||||||||||
Particulars | Cost of revenues | administrative expenses | expenses | Total | ||||||||||||
Employee benefits | 5,037 | 7,964 | 1,108 | 14,109 | ||||||||||||
Depreciation and amortization | 2,172 | 1,635 | 341 | 4,148 |
For the year ended March 31, 2010 | ||||||||||||||||
Research and | ||||||||||||||||
Selling, general and | development | |||||||||||||||
Particulars | Cost of revenues | administrative expenses | expenses | Total | ||||||||||||
Employee benefits | 4,162 | 7,840 | 841 | 12,843 | ||||||||||||
Depreciation and amortization | 1,878 | 1,925 | 357 | 4,160 |
For the year ended March 31, 2009 | ||||||||||||||||
Research and | ||||||||||||||||
Selling, general and | development | |||||||||||||||
Particulars | Cost of revenues | administrative expenses | expenses | Total | ||||||||||||
Employee benefits | 3,571 | 6,214 | 740 | 10,525 | ||||||||||||
Depreciation and amortization | 1,474 | 1,887 | 453 | 3,814 |
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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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Item 19. | EXHIBITS |
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. | ||
1.4. ***** | Amendment to Memorandum and Articles of Association of the Registrant dated June 12, 2009 (regarding an increase in our authorized share capital pursuant to the amalgamation of Perlecan Pharma Private Limited into Dr. Reddy’s Laboratories Limited, its parent company). | ||
1.5. | Amendment to Memorandum and Articles of Association of the Registrant dated July 19, 2010. | ||
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. | ||
2.2. | Order of the Hon’bl High Court of Andhra Pradesh, India dated July 19, 2010 (regarding Amendment to Memorandum and Articles of Association of the Registrant and capitalization or utilization of undistributed profit or retained earnings or security premium account or any other reserve or fund in connection with our bonus debentures). | ||
2.3. | Scheme of Arrangement between the Registrant and its members for issue of bonus debentures, including Notice of Meeting of Members to approve same dated April 29, 2010 and Explanatory Statement dated April 29, 2010. | ||
2.4. | Debenture Trust Deed dated March 16, 2011 between the Registrant and IDBI Trusteeship Services Limited (regarding trustee services for our bonus debentures). | ||
2.5. | Liquidity Facility Services Agreement dated April 2, 2011 between the Registrant and DSP Merill Lynch Capital Limited (regarding liquidity facility for our bonus debentures). | ||
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 | ||
4.4.****** | Dr. Reddy’s Employees ADR Stock Option Scheme, 2007. | ||
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. | |
****** | Previously filed with the Company’s Form 20-F for the fiscal year ended March 31, 2010. | |
******* | Previously filed on March 5, 2007 with the SEC along with Form S-8. |
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DR. REDDY’S LABORATORIES LIMITED | ||||||
By: | /s/ G.V. Prasad | |||||
Vice Chairman and Chief Executive Officer | ||||||
By: | /s/ Umang Vohra | |||||
Chief Financial Officer |
July 20, 2011
146