Lupin Pharmacare Ltd.

AUDITED ACCOUNTS

FOR THE YEAR ENDED

MARCH 31,2010
-

LUPIN PHARMACARE LIMITED

i59, CsS. T=Read- --------v v Xaiina.

Santacruz (East), Mumbai 400 098.

Deloitte Haskins & Sells

Chartered AccountanU 12, Dr. Annie Besant Road Opp. Shiv Sagar Estate Worli, Mumbai 400 010 India

Tel: +91 (22) 6667 9000 Fax: +91 (22) 6667 9100

AUDITORS' REPORT
TO THE MEMBERS OF LUPIN PHARMACARF: LIMITED

1. We have audited the attached Balance Sheet of LUPIN PILUXMACBRE LIMITED rthe Company") as at 3 lS'March 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain resomb!e asslxzmce bout whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor's Report) Order, 2003 (CARO) i2sued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows:

(a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account; (d) in our opinion, the Balance Sheet, the Profit and Loss account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 21 l(3C) of the Companies Act, 1956;

Deloitte Haskins & Sells

(e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(i)

in the case of the Balance Sheet, of the state of affzirs of the Company as at 3 1* March, 2010;

(ii) (iii)

in the case of the Profit and Loss Account, of the Loss of the Company for the year ended on that date; and
in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

5. On the basis of written representations received from the Directors, as on 3 I* March, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on 31* March, 2010 fiom being appointed as a director in terns of Section 274(1)(g) of the Companies Act, 1956. For DmeErE " - S m
& S-JmS .

Chartered Accountants (Registration No. 117366W)

M. S. Dlimgdhikari Partner Membership Number: 30802

MUMBAT,28fi April, 20 10

Deloitte Haskins & Sells

ANNEXURE TO TBE AUDITOR'S REPORT

(Referred to in Paragraph 3 of our report of even date)

i) Having regard to the nature of the Company's business /activities during the year clauses (iii), (v), (vi), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xviii), (xix) and (xx) of CAR0 are not applicable. In respect of its fixed assets (a) The Company has maintained proper records showing full particulars, iiicludig q ~ ~ t i t a t i detzils and sihtlon of the fixed assets. ve
(b) The fured assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of the fixed assets at reasonable intervals. According. to the information and explanations given to us, no material . diszie~macs =&iced OI? s ~ ve~icztion. h

ii)

(c) In our opinion and according to the information and explanatioxs given to us, the Company has not made any disposal of fixed assets during the year. iii) In respect of its inventory: (a) As explained to us, the inventories were physically verified during the year by the Management cit reasonable intervals.
(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

Deloitte Haskins & Sells

iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard t o purchases of inventory and fixed assets The Company has not commenced its business operations up to the year end (Refer note no. 2.3 of Schedule no. 13) and accordingly there is no commercial sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system. In our opinion, the internal audit functions carried out during the year by firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business. According to the information and explanations given to us, the Company's project for setting up of formulations plant is at advanced stage of construction and the Company has not commenced the commercial production and hence, maintenance of cost records is not applicable during the year under audit. a. The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and any other material statutory dues, applicable to it with the appropriate authorities. According to the information and explanation given to us, no undisputed amounts payable in respect of aforesaid were in arrears, as at 3 1st March, 2010 for a period of more than six months fiom the date they became payable. b. According to information and explanations given to us there are no dues of sales tax, income t q service t w ctistoms duty, wealth t w excise duty and cess, which have not been deposited with the appropriate authorities on account of any dispute. viii) The Company has not completed five years from the date of its registration and hence clause (x) of paragraph 4 of the Order is not applicable to the company.

v)

vi)

vii)

Deloitte Haskins & Sells

ix) In accordance with the terms of arrangement with the holding company, all the amounts payable to the creditors for the projects under commissioning, are fbnded by the holding company by way of long term unsecured loan. Considering this, in our opinion and according to information and explanations given to us, and on an overall examination of the Balance Sheet, we report that hnds raised on short term basis have not been used during the year for long term investment. To the best of our knowledge and according to the information and explanations given to us, no fiaud by the Company and no material fraud on the Company has been noticed or reported during the year.

x)

For Deloitte Haskins & Sells. Chartered Accountants (Registration No. 117366'613

M. S. Dharmadhikari Yartner Membership Number: 30802

Mumbai, dated : 28th April, 20 10

Page No. 1

LUPIN PHARMACARE LIMITED

BALANCE SHEET AS AT 31st MARCH 2010 Schedules I. SOURCES OF FUNDS SHAREHOLDERS'FUNDS Share Capital Reserves and Surplus
1 2 10,500,000 89,874,526 100,374,526 10,500,000 89,874,526 100,374,526

As at 31.03.201 0 Amount i n Rs.

As a t 31.03.2009 Amount i n Rs.

LOAN FUNDS Unsecured Loans

2,059,297,869 2,059,297,869

1,030,708,202 1,030,708,202

TOTAL II. APPLICATION OF FUNDS FIXED ASSETS Gross Block Less: Depreciation and Amortisation Net Block Capital Work in Progress
4

2,159,672,395

1 I

1,131,082,728

95,283,381 10,075,851 85,207,530 1,727,904,117 1,813,111,647

91,928,052 5,521,746 86,406,306 929,131,814 1,015,538,120 44,812,059 3,669,198 29,002,742 77,483,999 46,777,236 1,920,987 48,698,223 28,785,776 86,758,832

CURRENT ASSETS, LOANS AND ADVANCES Inventories Cash and Bank Balances Loans and Advances LESS: CURRENT LIABILITIES AND PROVISIONS Current Liabilities Provisions

5 6 7 8

63,758,774 498,520 25,024,622 89,281,916 110,899,586 3,245,551 114,145,137

NET CURRENT LIABILI'TIES I ASSETS Profit and Loss Account TOTAL Sisnificant Accountinq Policies and Notes t o Accounts

(24,863,221)
371,423,969

2,159,672,395

1 I

Ill 31,082,728

13

In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board of Directors

MSDharmadhikari Partner Place : Mumbai Dated : April 28, 2010

- W.XZihlal K. Sharma
Director

Nilesh Gupta Director

Page No. 2

L UPIN PHARMACARE LIMITED

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH, 2010 Current Year ended
31.03.2010

Previous Year ended

31.03.2009

I
I
I

Schedules INCOME Other Income EXPENDITURE Personnel Expenses [ ~ e f enote no. 2.3 (b) of schedule 13 ] r Othei Expenses [ Refer note no. 2.3 (b) of schedule 13 ] Research and Development Expenses [ Refer note no. 2.3 (c) of schedule 13 ] Interest and Finance Charges Loss before Tax Provision for Taxation Current Tax - Deferred Tax Fringe Benefit Tax N e t Loss after Tax Balance brought forward from previous year
9

Amount in Rs.

Amount in Rs.

Balance Carried to Balance Sheet

Earnings Per Share Basic ana Diluiea [Refer note no. 2.8 of Schedule 131 Face Value of Equity Shares (in Rs.) Significant Accounting Policies and Notes to Accounts

In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board of Directors

MSDharmadhikari Partner Place : Mumbai Dated : April 28, 2010

Dr. Kamal K. Sharma Director

Nilesh Gupta Director

LUPIN PHARMACARE LIMITED

Cash flow statement for the year ended 31st March, 2010
Current year ended 31.03.2010 Amount In Rs A. Cash Flow from Operating Activities Loss before Tax Adjustments for: Depreciation [included in Research and Development Expenses (Refer Schedule 12)] lnterest on Fixed Deposits with Banks Loss on disposal of fixed asset 0perating.Loss before working capital changes Adjustments for: Inventories Other Receivables Trade and Other Payables Cash used in Operations Direct Taxes Paid ( Net ) Fringe Benefit Tax Paid Net Cash used in Operating activities (Refer note 1 below) (284,685,112) 573,053 (413) 23,332 (284,089,140) (18,946,715) 4,028,120 41,147,847 26,229,252 (87.1 37) (83,025) (258,030,050) Previous Year ended 31.03.2009 Amount In Rs (85,800.355) 240,239 (427,373) (85,987,489) (44,812,059) (19,800,263) 15,011,153. (49,601,169) (102.061) (222,000) (135,912,719)

I
I;
I'

B. Cesh F!nw frem !.n.vnsting Activities

Capital work in progress Additions to Fixed Assets I lnterest on Fixed Deposits with Banks Net Cash used i n Investing Activities Cash Flow from Financing Activities Unsecured Loan received ?!et cash geiiewteb tisiii Fiiisiiciiig Activities Net (decrease)lincrease in cash and cash equivalents Cash and Cash equivalents as at the beginning of the period (3,170,678) 498,520 2,561,781 3,669,198 (773,730,708) 413 (773,730,295) (712,938,143) 427,373 (712,510,770)

C.

1,028,589,667

850,985.270

1I

Cash and Cash equivalents as at the end of the period

Notes : 1 Pending commencement of the commercial production, cash flow arising from Reaserch and Development activities and administration expenses have been considered as cash flow arising from operating activities. 2 Cash and cash equivalents represent bank balance in current account and deposit account (Refer Schedule 6 of the Balance Sheel) 3 The above Cash Flow Statement has been prepared under the 'Indirect Method as set out in the Accounting Standard 3 (AS-3), "Cash Flow Stdement"

In terms of our report attached

For Deloitte Haskins 8 Sells Chactewd Accountant% For and o n behalf of &ard of Directors

M. S. Dharrnadhikari Pa.ner

Dr. Kamal K. harrna Director

Nilesh Gupa
Director

Place : Murnbai Dated :April 28. 2010

Paae No. 4

LUPIN PHARMACARE LIMITED

SCHEDULES FORMING PART OF THE BALANCE SHEET As at
31.03.2010

As at 31.03.2009

Amount In Rs. SCHEDULE 1 -SHARE CAPITAL Authorlsed :

2,000,000 Equity Shares of Rs 101- each

Amount i n Rs.

Issued, Subscribed and Paid-up

1,050,000 Equity Shares of Rs 101- each fully paid-up 10.500,OOO 10,500,000 10,500,000 10,500,000

TOTAL Note : All the above equity shares are held by "Lupin Limited, the Holding Company and its nominees

I
I

SCHEDULE 2 RESERVES AND SURPLUS Securities Premium Account Balance as per last Balance Sheet TOTAL

SCHEDULE 3 UNSECURED LOANS Other Loans and Advances - From Holding Company Lupin Limled TOTAL
2,059,297,869 1,030,708,202

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Page No. 6

LUPIN PHARMACARE LIMITED

SCHEDULES FORMING PART OF THE BALANCE SHEET
As at 31.03.2010 Amount i n Rs.

31.03.2009 Amount in Rs.

SCHEDULE 5 -INVENTORIES Stock-in-trade - Raw Materials

II

- Packing Materials
Consumable Stores. Spares and Fuel TOTAL

SCHEDULE 6 CASH AND BANK BALANCES Bank Balances :

- With Scheduled Banks

In Current Accounts In Deposii Account TOTAL Notes : Fixed Deposit Receipt of Rs. 50001- ( Previous Year Rs. 50001-) lcdged with the Government of India. Bank Balance in deposit account Includes interest accrued on fixed deposit aggregating Rs.1,020/- ( Previous Year Rs. 6071-). 492,500 6,020 498,520

( SCHEDULE 7 - LOANS AND ADVANCES

Unsecured, considered good unless 6therwlse stated Advances recoverable in cash or in kind or for value to be received, considered good Deposits Advance payment of Income Tax TOTAL

I
1I

SCHEDULE 8 -CURRENT LIABILITIES AND PROVISIONS Current Liabilities Sundry Creditors -Total outstanding dues of Micro Enterprises and Srnall Enterprises Total outstanding dues of creditors other than Micro Enterprises and Srnall Enterprises [ includes temporary overdrawn bank balances as per books of account Rs. 22,626,5401- ( PreviousYear Rs. 31,346,3451-)] Other Liabilities

TOTAL Provisions For Gratuity For CompensatedAbsences For Taxation ( net of Advance Tax) For Fringe Benefit Tax [net of Advance Tax!

TOTAL

LUPIN PHARMACARE LIMITED

SCHEDULES FORMING PART OF THE PROFITAND LOSS ACCOUNT Current Year ended 31.03.2010 Amount i n Rs. SCHEDOLE 9 -OTHER INCOME lnsurance Claim Received [in respect of loss due to flood (Refer Schedule 11 below)] Interest on Fixed Deposits with Banks [Tax Deducted at Source Rs. Nil (previous year Rs.97,863/-)] Miscellaneous Income TOTAL SCHEDULE 10 PERSONNEL EXPENSES [Refer note no.2.3 (b) of Schedule 131 . Salaries, Wages and Bonus Contribution to Provident, Gratuity and Other Funds Welfare Expenses TOTAL SCHEDULE 11 -OTHER EXPENSES [Refer note no.2.3 (b) of Schedule 131 Loss due lo Flood Loss of lnvenlory - Repairs and Maintenance - Buildings , - Plzn! 2nd Mac!!inery - Others Current Year ended 31.03.201 0 Amount in Rs. Previous Year ended 31.03.2009 Amount in Rs.

Insurance Audit Fees (indudes service tax Rs.51.5721-, previous year Rs.51,560/-) Repairs and Maintenance Others Rent Freight and Forwarding Lease Rent and Hire Chlrges Postage and Telephone Expenses Travelling and Conveyance Legal and Professional Charges Training and Manpower Training Guest House m e n s e s License and Registration Contract Labour Charges Exchange Difference Miscellaneous Expenses (indudes Printing and Stationery, Vehicle Expenses etc.) TOTAL

Page No. 8

LUPIN PHARMACARE LIMITED

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT Current Year ended 31.03.2010 Amount in Rs. Prevlbus Year ended 31.03.2909 Amount in Rs.

SCHEDULE 12 RESEARCH AND DEVELOPMENT EXPENSES [ Refer note -no.2.3 (c) of Schedule 13 ] Cost o f Materials Raw and Packing Materials Consumed Personnel Expenses Salaries, Wages and Bonus Contributionto Provident , Gratuity and Other Funds Welfare Expenses Consumable Stores and Spares Repairs and Maintenance Buildings Plant and Machinery Others Insurance Power and Fuel Contract Labour Charges Freight and Forwarding Lease Rent and Hire Charges Postage and Telephone Expenses Travelling and Conveyance Legal and Professional Charges Clinical and Analytical Charges Exchange Rate Difference (net) Depreciation Miscellaneous Expenses (includes Printing and Stationery, Vehicle Expenses, General Expenses etc.)

47,472,961 3,119,338 8,438,935

'

'

1'7,466,016 524,384 2,503,463

Lupin Pharmacare Limited

SCHEDULE " 13": SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF ACCOUNTS 1.
1)

Significant Accounting Policies:

Basis of preparation of Financial Statements : The accompanying financial statements have been prepared as per the historical cost convention and in accordance with generally accepted accounting principles in India, the provisions of the Companies Act, 1956 and the applicable accounting standards issued by the Institute of Chartered Accountants of India. Use of Estimates : The preparation of financial statement requires estimates and assumptions that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between the actual results and the estimates are recognized in the period in which the same are known / materialized. Fixed Assets : Fixed Assets are stated at cost, less accumulated depreciation and accumulated impairment losses, if any. Expenses directly attributable to the project prior to commencement of commercial production are classified as Project Development Expenditure and disclosed under Capital Work-in-Progress (net of related income earned, if any, during the project development stage).

2)

3)

4)

Depreciation and Amortisation : Depreciation on fixed assets is provided on straight line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, ? 956, except for the Leasehold Land, which is amoeised over the period of.lease. Foreign Currency Transactions : i) Transactions in foreign currency are recorded at the original rate of exchange in forceat the time transactions are effected. ii) Exchange difference arising on settlements during the year of short term monetary items denominated in foreign currency; and exchange difference arising on the reporting of short term monetary items denominated in foreign currency which are outstanding at the yearend using the exchange rates prevailing at the balance sheet date, are recognized in the Profit and Loss Account. iii) In terms of the Notification relating to AS 11 issued by the Ministry of Corporate Affairs in March 2009: a) The exchange difference arising on reporting of the "Long Terrn Foreign Currency Monetary Items" at the rates different from those at which they were initially recorded during the period or reported in the previous financial statements and the exchange difference on settlement of such items, in so far as such items relate to the acquisition of a depreciable capital asset, are added or deducted as the case may be, frorn the cost of the respective asset and depreciated over the balance life of those assets and b) In other cases, these are accumulated in a "Foreign Currency Monetary Item Translation Difference Account" and amortised over the balance period of such long term assetlliability but not beyond 31st March, 2011.

5)

6)

Inventories: Stock-in-trade and stock of consumable stores, spares and furnace oil are valued at lower of cost and net realisable value. Cost is computed based on moving weighted average in respect of all procured materials. Cost also includes all charges incurred for bringing the inventories to their present location and condition.

7)

Employee Benefits : a) Post Employment Benefits and Other Long Term Benefits. i) Defined Contribution Plan Company's contribution for the year paidlpayable to defined contribution retirement benefit schemes are charged to Profit and Loss Account. ii) Defined Benefit and Other Long Term Benefit Plans Company's liabilities towards defined benefit plans and other long term benefits viz. gratuity and compensated absences expected to occur after twelve months, is determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recognised in the Profit and Loss account in the period of occurrence of such gains and losses. Past service cost is recognised immediately to the extent of benefits are vested, otherwise it is amortised on straight-line basis over the remaining average period until the benefits become vested. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the scheme. b) Short-term employee benefits Shgrt-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised undiscounted during the period employee renders services. These benefits include performance incentives.

8)

Research and Development Revenue expenditure incurred on research and development is charged to the Profit ar~d Loss account in the year it is incurred and Capital expenditure there on is included in the respective heads under the fixed assets. Taxes on lncome : lncome Taxes are accounted for in accordance with Accounting Standard 22 on "Accounting for Taxes on Income", (AS 22). Tax expense comprises both current tax and deferred tax. Current tax is measured at the amount expected to be paid or recovered from the tax authorities using applicable tax rates. Deferred tax assets and liabilities are recognized for future tax consequence attributable to timing difference between taxable income and accounting income that are measured at relevant enacted tax rates. At each balance sheet date the company reassesses unrecognised deferred tax assets, to the extent they become reasonably certain or virtually certain of realisation, as the case may be.

9)

10)

Fringe Benefit Tax: Fringe Benefit Tax was recognized in accordance with the relevant provisions of the Income Tax Act, 1961 and the Guidance note on Fringe Benefit Tax issued by the Institute of Chartered Accountants of India (ICAI).

11)

Provisions, Contingent Liabilities and Contingent Assets : Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the Notes to Accounts. Contingent Assets are neither recognised nor disclosed in the financial statements. Notes to Accounts:

2 2.1

Company Overview:

The Company was incorporated on 1 0 January 2007 in India under the provisions of the ~ Companies Act, 1956 mainly to manufacture and market pharmaceutical products in advanced markets. 2.2 Considering the definition of reportable business segment and reportable geographical segment contained in Accounting Standard 17 (AS 17) "Segment Reporting", the management is of the opinion that there is only one reportable business segment viz. 'Pharmaceutical' and one geographical segment, the results of which are disclosed in the financial statements. The Company is setting up a formulation plant in a Special Econornic Zone at Pithampur, Indore, Madhya Pradesh. a) The expenditure incurred during the construction period and directly attributable to the Project is classified as "Project Development Expendituren. Such expenses will be apportioned to the cost of the respective fixed Assets on commissioning of the Plant. Necessary details as per part II of Schedule VI of the Companies Act, 1956 have been disclosed below : Project Development Expenditure (included under Capital Work-in-Progress (schedule 4)): l-:-. .--- in dupees ,

---Opening Balance
-

.-

55,369,753

Payments to and ~rovisions Employees for - Salaries, Wages and Bonus - Contribution to Provident, Gratuity and Other Funds. - Welfare and other expenses Rent Rates and Taxes Insurance Lease Rent and Hire Charges Printing and Stationery License and Registration Maintenance Charges Travelling and Conveyance Expenses Legal and Professional lees Miscellaneous Expenses 1 Depreciation Power and Fuel Closing Balance
-

2,648,934 231,259 347,616

5,766,564 173,130 826,541 594,500 2.500 250,109 13,489,768 876,655 252,768 5,979,220 1,252,356 3,590,417 5,858,662 3,522,134 4,278,821 55,369,753

4,799,204 26,879

1,479,377 132,176 852,740 3,495,391 3,986,720 4,706,703 78,076,752

b) Personnel Expenses Rs. 2,725,8941- (Previous year Rs. 653,8981-) (Schedule 10) and other expenses Rs. 83,062,2841- (Previous year Rs. 598,3791-) (Schedule 11),

which are in the nature of general and administrative costs and not directly attributable to the project, are charged to Profit and Loss Account. c) Research and development expenditure debited to Profit and Loss Account aggregating Rs. 233,053,2311- (Previous year Rs. 84,975,4511-) (refer Schedule 12) represents costs incurred on various stability testing, test runs and experimental production of exhibit batches of various products which the company may manufacture on successful commissioning of the plant for commercial production and upon obtaining necessary regulatory approvals. Presently, the plant has only the test batch manufacturing license. It is still to be commissioned and start commercial production. As soon as, the plant is ready for commercial production, all the expenses other than those referred to in (b) and (c) above, will be allocated1 apportioned to the cost of respective fixed assets and capitalized. 2.4 2.5 Estimated amount of contracts remaining to be executed on capital account and not provided for net of advances, Rs. 256,861,1661- (Previous Year Rs. 348,195,4641-) Contingent Liabilities : VAT demand of Rs. 1,032,4901- (Previous Year Rs. 1,032,4901-) raised under the State VAT Act, disputed in appeal and pending decision before higher authorities. The Company has paid Rs. 1,032,4901- (Previous year Rs. 1,032,4901-) included in Loans and Advances (Schedule 7). The Company expects to succeed in the matter. Additional information pursuant to the Provisions of Paragraphs 4D of part II of schedule VI to the Companies Act, 1956 for production of experimental batches and exhibit production. a) Consumption of Materials: 2009-2010 2009-2010 Quantity (Unit Value Rs. in Kgs) 2008-2009 2008-2009 Quantity (Unit Value Rs. in Kgs) 63.399 9,402,244 4.228 31.OOO 5,121,140 2,352,758 2,294,064

2.6

Item

Minocycline Hydrochloride USP ( Archimica) Dihydroxy Ketone (For 17.107 Drospirenone) Methoxydienone Estra-4, 9 Diene-3, 17 27 Dione 3 Keto 17 Hydroxy(For 8.125 desogestral) Others
TOTAL

2,472,378 15,995,355 5,909,567 33,779,544

2,592,914 12,360,876

b) Value of lmported and lndigenous consumption:

i) Consumption of Materials:

YO
Imported . Indigenous
I

90.52 9.48

2009 - 2010 Amount in Rs. 30,575,947 3,203,597

I

% 76.21 23.79
I

2008 - 2009 Amount in Rs. 9,420,703 2,940,173

I

TOTAL

100.00

33,779,544

1 100.00

12,360,876

ii) Consumption of Stores and Spares : 2009 - 2010 YO Amount in Rs. Imported 2.65 2,197,748 Indigenous 97.35 80,759,940
I
I

YO

2008 - 2009 Amount in Rs.

100.00

26,808,518
I

TOTAL c) CIF Value of Imports: Capital Goods Raw Materials Packing Materials Stores and Spares 2.7 Auditors Remuneration:

) 100.00

82,957,688

100.00 1

26,808,518

2009-2010 112,324,119 33,793,896 3,014,115 2,197,748

2008 -2009 11,670,040 29,965,929 295,144

Particulars a) As Audit Fees b) Reimburseme~i of out-ofpocket expenses Total *excluding service tax 2.8

For the Year ended 31" March 2010 in Rs. * 500,000 700 500,700

For the Year ended 31"' March 2009 in Rs. * 500,000

500,000

Earnings Per Share (EPS) is calculated as follows: Particulars Net Loss after tax attributable to Equity Shareholders Weighted average number of equity shares - Basic and Diluted Basic and Diluted Earnings per share For the Year ended 31'' March 2010 in Rs. (284,665,137) 1,050,000 For the Year ended 31'' March 2009 in Rs. (86,249,929) 1,050,000

(271.1 1)

(82.14)

2.9

Post Employment Benefits (i) Defined contribution plans: The Company makes contributions towards provident fund and superannuation fund to a defined contribution retirement benefit plan for qualifying employees. The superannuation fund is administered by the Life Insurance Corporation of India (LIC). Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefits. The provident fund plan is operated by the "Lupin Ltd Employees Provident Fund Trust" (the "Trust"). Eligible employees receive benefits from the said ~kovident Fund Trust. Both the employees and the Ccmpany make mcnthiy ccr,:rlbu~icns tc the Provident Fund Plzr: equal to a specified percentage of the covered employee's salary. The minimum interest

rate payable by the Trust to the beneficiaries every year is being notified by the Government. The Company has an obligation to make good the short fall, if any, between the return from the investments of the trust and the notified interest rate. The Guidance Note on Implementing AS 15, Employee benefits (revised 2005) issued by Accounting Standards Board (ASB) states that benefit plans involving employer established provident funds, which require interest shortfalls to be recompensed are to be considered as defined benefit plans. Pending the issuance of the guidance note from the Actuarial Society of India, the Company's actuary has expressed an inability to reliably measure provident fund liabilities. Accordingly, the Company is unable to exhibit the related information. The Company recognized Rs. 1,367;496/- (Previous year Rs. 322,235/-) for provident fund contributions in the Profit and Loss Account. (ii) Defined benefit plan The Company makes annual contributions to the Lupin Limited Employees' Group Gratuity cum Life Assurance Scheme administered by the LIC, a funded defined benefit plan for qualifying employees. The scheme provides for payment to vested employees as under:
-

a) On Normal retirement/ early retirement/ withdrawal/resignation: As per the provisions of Payment of Gratuity Act, 1972 with vesting period of 5 years of service. b) On death in service: As per the provisions of Payment of Gratuity Act, 1972 without any vesting period. The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were carried cut zs at Mzrch 31,2C)'i0 by the LlC. The pieseiii value of the defined benefit obligations and the related current service cost and past service cost, were measured using the Projected Unit Credit Method. The following table sets out the status of the gratuity plan and the amounts the Company's financial statements as at March 31, 2010. recognized in

Sr. Ns

Particulars

Gratuity (Funded)

As on
31.03.2010

As on
31.03.2009 Rs.

Rs.

I)

Reconciliation in present value of sbliaations (FVO) defined benefit obligation :

Present value of obligations as at beginning of year Current Service Cost Interest Cost Actuarial (gain) 1 losses Benefits paid PVO on transfer of the employees to the Company PVO at end of the year II)
Chanqe in fair value of plan assets :

2,516,962 376,287 96,637 (218,093) (212,756) 2,559,037

317,914 237,685 258,138 (642,843) 2,346,068 2,516,962

,

- .

Fair value of plan assets at beginning of year Expected return on plan assets Actuarial gain/(losses)

1,901,369 149,769

202,894

Note : The Company is covered under the "Group Gratuity Scheme" of the Holding Company, Lupin Limited (LL). LL has obtained actuarial valuation certificate in respect of gratuity for all the entities covered under the aforesaid scheme, on a composite basis. The afcresaic! detzi!s have been derived based on alloczti~n proportion of salary cost of the in concerned companies covered under the Scheme.
2.1 0

Related Parties Disclosure Note:

Lupin Limited (Holding Company)

a) Name of Related parties and description of relationship: Company whose control exists

b) Transactions with the Related parties:

Sr. Transaction No. Purchases of Raw Materials 1. Purchase of Equipment 2. ~isceilaneous income 5. Unsecured Loan received 4.

Description of Relationship Holding Company Holding Company Holding Cornpany Holding Company

Amount (Rs) Amount (Rs) 2008-09 2009-10 8,873,580 15,696,784 1,115,603 8,275,813 31,19,855 1,028,589,667 850,985,270

c) Balances due to Related parties: -

I.
2.

Unsecured Loan balance Creditor balance

Holding Company Holding Company

2,059,297,869 618,094

1,030,708,202.

Note: Related party relationship is as identified by the Company and relied upon by the Auditors.

2.1 1

The information regarding Micro, Small and Medium Enterprises has been determined to the extent s ~ c h parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors. Vide a Scheme of Amalgamation, Lupin Pharmacare Limited, Lupin Herbal Limited and Novodigm Limited (wholly owned subsidiaries of Lupin Limited) have filed petitions before the Honourable High Courts of Mumbai 1 Gujarat for amalgamation with Lupin Limited, the appointed date being April 1, 2009. Vide its Order dated January 8, 2010, the Honourable High Court of Judicature at Mumbai sanctioned the scheme of amalgamation between Lupin Pharmacare Limited and Lupin Herbal Limited with Lupin Limited subject, to the order to be passed by the Honourable High Court of Gujarat sanctioning the scheme of amalgamation between Novodigm Limited and Lupin Limited. The order af the Honourable High Court of Gujarat is awaited. Pending such Order, no effect has been given in these accounts to the Scheme of Amalgamation.

2.1 3 2.14

Previous year figures are regrouped wherever required. Figures in bracket are for the previous year.

Signature to schedules 1 to 13

For and on behalf of the Board of Directors

Dr. Kamal K. Sharflha Director Place : Mumbai Dated : April 28, 2010

Nilesh Gupta .Director