LUPIN PHARMACARE LIMITED

Transcription

1 Lupin Pharmacare Ltd. AUDITED ACCOUNTS FOR THE YEAR ENDED MARCH 31,2010 LUPIN PHARMACARE LIMITED 159, C. S. T. Road, Kalina, Santacruz (East), Mumbai

2 Deloitte Haskins & Sells Chartered Accountants 12. Dr. Annie Besant Road Opp. Shiv Sagar Estate Worli, Mumbai India Tel: +91 (22) Fax: +91 (22) AUDITORS' REPORT TO THE MEMBERS OF LUPIN PHARMACARE LIMITED 1. We have audited the attached Balance Sheet of LUPIN PHARMACARE LIMITED ('(the Company") as at 31S' 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. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 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) iisued 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 (3C) of the Companies Act, 1956;

3 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) (ii) (iii) in the case of the Balance Sheet, of the state of affairs of the Company as at 3 1" arch, 2010; 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 1"' March, 2010 taken on record by the Board of Directors, none of the Directors is disqualified as on 31"' March, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, For ~ ~~017% HASKINS & SELLS Chartered Accountants (Registration No W) MUMBAI, 2~~ April, 2010 M. S. Dharmadhikari Partner Membership Number: 30802

4 Deloitte Haskins & Sells ANNEXURE TO THE 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), (mi), (xviii), (xix) and (xx) of CAR0 are not applicable.. ii) In respect of its fixed assets (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification. (c) In our opinion and according to the information and explanations 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 at 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.

5 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 to 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. v) 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. vi) vii) 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, Incometax, SalesTax, 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 1 st March, 2010 for a period of more than six months from the date they became payable. b. According to information and explanations given to us there are no dues of sales tax, income tax, service tax, customs duty, wealth tax, 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.

6 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 funded 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 funds raised on short term basis have not been used during the year for long term investment. x) 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. For Deloitte Haskins & Sells Chartered Accountants (Registration No W) Mumbai, dated : 28th April, 2010 M. S. Dharmadhikari Partner Membership Number: 30802

7 Page No. 1 LUPIN PHARMACARE LIMITED BALANCE SHEET AS AT 31st MARCH 2010 As at As at I. SOURCES OF FUNDS Schedules Amount in Rs. Amount in Rs. SHAREHOLDERS' FUNDS Share Capital 1 10,500,000 10, Reserves and Surplus 2 89,874,526 89,874, ,374, ,374,526 LOAN FUNDS Unsecured Loans 3 2,059,297,869 1,030,708,202 II. APPLICATION OF FUNDS 2,059,297,869 1,030,708,202 TOTAL I 2,159,672,395 1 I 1,131,082,728 1 FIXED ASSETS 4 Gross Block 95,283,381 91,928,052 Less: Depreciation and Amortisation 10,075,851 5,521,746 Net Block 85,207,530 86,406,306 Capital Work in Progress 1,727,904, ,131,814 1,813,111,647 1,015,538,120 CURRENT ASSETS, LOANS AND ADVANCES Inventories 5 63,758,774 44,812,059 Cash and Bank Balances 6 498,520 3,669,198 Loans andadvances 7 25,024,622 29,002,742 89,281,916 77,483,999 LESS: CURRENT LIABILITIES AND PROVISIONS 8 Current Liabilities 110,899,586 46,777,236 Provisions 3,245,551 1,920, ,145,137 48,698,223 NET CURRENT LIABILITIES I ASSETS (24,863,221) 28,785,776 Profit and Loss Account 371,423,969 86,758,832 TOTAL I 2,159,672,395 1 I 1,131,082,728 1 Sianificant Accountinu Policies and Notes to Accounts 13 In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants 95 $.;"! M.S.Dharmadhikari Partner For and on behalf of the Board of Directors. a1 K. Sharma L7.. Director Nilesh Gupta Director Place : Mumbai Dated : April 28, 2010 '&,I

8 Page No. 2 I LUPIN PHARMACARE LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH, 2010 INCOME Other Income Schedules 9 Current Previous Year ended Year ended Amount in Rs. Amount in Rs. EXPENDITURE Personnel Expenses [ Refer note no. 2.3 (b) of schedule 13 ] Other 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 Net Loss after Tax Balance brought forward from previous year Balance Carried to Balance Sheet Earnings Per Share Basic and Diluted [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 I M.S.Dharmadhikari Dr. Kamal K. Sharma Nilesh Gupta Partner V I 1 Place : Mumbai Dated : April 28, 2010

9 LUPIN PHARMACARE LIMITED Cash flow statement for the year ended 31st March, 2010 A. Cash Flow from Operating Activities Loss before Tax Adjustments for: Depreciation [included in Research and Development Expenses (Refer Schedule 12)] Interest 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) B. Cash Flow from lnvesting Activities Additions to Fixed Assets I Capital work in progress Interest on Fixed Deposits with Banks Net Cash used in Investing Activities C. Cash Flow from Financing Activities Unsecured Loan received Net cash generated from Financing Activities Net (decrease)lincrease in cash and cash equivalents Cash and Cash equivalents as at the beginning of the period 1 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 Sheet) 3 The above Cash Flow Statement has been prepared under the 'Indirect Method" as set out in the Accounting Standard 3 (AS3), "Cash Flow Statement" 11 In terms of our report attached II 11 For Deloitte Haskins b Sells M. S. Dharmadhikari Partner Place : Mumbai Dated : April Director I Director II

10 I LUPIN PHARMACARE LIMITED SCHEDULES FORMING PART OF THE BALANCE SHEET SCHEDULE I SHARE CAPITAL Page No. 4 AS at As at Amount in Rs. Amount in Rs. I Authorised : 2, Equity Shares of Rs 101 each Issued, Subscribed and Paidup 1,050,000 Equity Shares of Rs 101 each fully paidup TOTAL Note : All the above equity shares are held by "Lupin Limited", the Holding Company and its nominees SCHEDULE 2 RESERVES AND SURPLUS Securities Premium Account Balance as per last Balance Sheet I SCHEDULE 3 UNSECURED LOANS Other Loans and Advances From Holding Company Lupin Limited TOTAL TOTAL 2,059,297,869 1,030,708,202 I

11 86,406,306 NET BLOCK ( Amount In Rs.) Capital WorkinProgress 1,727, ,131,814 TOTAL 1,813,111,647 1,015,538,120 LUPIN PHARMACARE LIMITED SCHEDULES FORMING PART OF THE BALANCE SHEET SCHEDULE 4 FIXED ASSETS Page No. 5 GROSS BLOCK DEPRECIATION AND AMORTISATION PARTICULARS Leasehold Land Equipment (Computers etc.) Furniture and Fixtures TOTAL Previous year As at As at April 01, Additions Deductions March 31, ,382,000 86,382,000 4,633,254 1,926,960 6,560, ,798 1,457, ,341,167 91,928,052 3,384,329 29,000 95,283,381 86, ,323,388 91, Up to For the Up to March 31, Year Deductions March 31, , ,879,400 7,513,191 * 339, , , ,214 1,113, ,655,547 5,521,746 4,559,773 5,668 10,075,851 1,759,373 3,762,373 5, AS at As at March 31, March 31, ,868,809 81,748,209 5, ,293, , ,207,530 86,406,306 'Amounts written off In respect of leasehold land for the period of lease which has expired. Notes : I. Depreciation for the year includes Rs. 3,986,7201 (previous year Rs.3,522,134/) being depreciation capitalised as pre operative expenses, and depreciation Rs (Previous Year ) charged to Profit and Loss Account as part of Research and Development Expenses. (Refer Note no.2.3 (a) and (c) of Schedule 13) 2. Capital workinprogress includes capital advances, building under construction, construction material and machinery equipment under installation at site and project development expenditure

12 LUPIN PHARMACARE LIMITED SCHEDULES FORMING PART OF THE BALANCE SHEET SCHEDULE 5 INVENTORIES As at As at Amount in Rs. Amount in Rs. Stockintrade Raw Materials Packing Materials Consumable Stores, Spares and Fuel TOTAL SCHEDULE 6 CASH AND BANK BALANCES Bank Balances : With Scheduled Banks In Current Accounts 492,500 3,663,591 In Deposit Account 6,020 5,607 TOTAL 498,520 3,669,198 Notes : Fixed Deposit Receipt of Rs ( Previous Year Rs ) lodged with the Government of India. Bank Balance in deposit account includes interest accrued on fixed deposit aggregating Rs.1.020l ( Previous Year Rs. 6071). SCHEDULE 7 LOANS AND ADVANCES Unsecured, considered good unless otherwise stated Advances recoverable in cash or in kind or for value to be received, considered good Deposits Advance payment of Income Tax TOTAL SCHEDULE 8 CURRENT LIABILITIES AND PROVISIONS Current Liabilities Sundry Creditors Total outstanding dues of Micro Enterprises and Small Enterprises Total outstanding dues of creditors other than Micro Enterprises and Small Enterprises [ includes temporary overdrawn bank balances as per books of account Rs. 22,626,5401 ( Previous Year Rs. 31,346,3451)] Other Liabilities ' TOTAL For Gratuity For Compensated Absences For Taxation ( net of Advance Tax) For Fringe Benefit Tax (net of Advance Tax) TOTAL

13 I Page No. 7 LUPIN PHARMACARE LIMITED SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT SCHEDULE 9 OTHER INCOME Insurance 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. Current Current Previous Year ended Year ended Year ended Amount in Rs. Amount in Rs. Amount in Rs. 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 to Flood Loss of Inventory Repairs and Maintenance Buildings Plant and Machinerv Others Insurance 1,006,290 1,888 Audit Fees ,500 (includes service tax Rs , previous year Rs.51,500/) Repairs and Maintenance Others 6, Rent 719,465 Freight and Forwarding 118,506 Lease Rent and Hire Charges 4,571,619 Postage and Telephone Expenses 1,286,430 Travelling and Conveyance 2,642,850 Legal and Professional Charges 101,104 Training and Manpower Training 1,077,222 Guest House Expenses 2,082,975 License and Registration 298,509 Contract Labour Charges 272,417 Exchange Difference Miscellaneous Expenses 1,001,520 44,991 (includes Printing and Stationery, Vehicle Expenses etc.) TOTAL 83,062, ,379

14 Paae No. 8 LLlPlN PHARMACARE IIMITED SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT SCHEDULE 12 RESEARCH AND DEVELOPMENT EXPENSES [ Refer note no. 2.3 (c) of Schedule 131 Current Previous Year ended Year ended Amount in Rs. Amount in Rs. Cost of Materials Raw and Packing Materials Consumed 33, ,360,876 Personnel Expenses Salaries, Wages and Bonus 47,412,961 17,466,016 Contribution to Provident, Gratuity and Other Funds 3,119, Welfare Expenses 8,438,935 2, Consumable Stores and Spares 82,957,688 26,808,518 Repairs and Maintenance Buildings 3,830,390 Plant and Machinery 4,829,973 Others 4,896,216 Insurance 316,006 Power and Fuel 31,882,035 21,181,773 Contract Labour Charges 4,063, ,556 Freight and Forwarding 408,673 27,343 Lease Rent and Hire Charges 103, ,308 Postage and Telephone Expenses 149,562 77,453 Travelling and Conveyance 2, ,198 Legal and Professional Charges 104,888 5,386 Clinical and Analytical Charges 1, Exchange Rate Difference (net) 36,105 Depreciation 573, ,239 Miscellaneous Expenses 2,673,027 1,422,874 (includes Printing and Stationery, Vehicle Expenses, General Expenses etc.) TOTAL 233,053,231., 84,975,451

15 Lupin Pharmacare Limited SCHEDULE " 13": SIGNIFICANT ACCOUN'TING POIICIES AND NOTES FORMING PART OF ACCOUNTS 1. Significant Accounting Policies: 1) 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. 2) 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 1 materialized. 3) 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 WorkinProgress (net of related income earned, if any, during the project development stage). 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, 1956, except for the Leasehold Land, which is amortised over the period of.lease. 5) Foreign Currency Transactions : i) Transactions in foreign currency are recorded at the original rate of exchange in force at 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 Term 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, from 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 31 st March,

16 6) Inventories: Stockintrade 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 Lonq 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 straightline 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 a,nd reductions in future contributions to the scheme. b) Shortterm employee benefits Shortterm 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 and Loss account in the year it is incurred and Capital expenditure there on is included in the respective heads under the fixed assets. 9) 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. d 10) Fringe Benefit Tax: Fringe Benefit Tax was recognized in accordance with the relevant provisions of the lncome Tax Act, 1961 and the Guidance note on Fringe Benefit Tax issued by the Institute of Chartered Accountants of India (ICAI).

17 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. 2 Notes to Accounts: 2.1 Company Overview: The Company was incorporated on loth 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. 2.3 The Company is setting up a formulation plant in a Special Economic Zone at Pithampur, Indore, Mad hya Pradesh. a) The expenditure incurred during the construction period and directly attributable to the Project is classified as "Project Development Expenditure". 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 WorkinProgress (schedule 4)): Figures in Rupees Opening Balance 55,369,753 8,655,608 Payments to and Provisions for Eniployees Salaries, Wages and Bonus Contribution to Provident, Gratuity and Other Funds. Welfare and other expenses 2,648, , ,616 5,766, , ,541 1 Rent I I License and Registration Maintenance Charges Legal and Professional fees Miscellaneous Expenses Depreciation Power and Fuel Closing Balance 1,479, ,740 3,495,391 3,986,720 4,706,703 78,076, ,768 5,979,220 3,590,417 5,858,662 3,522,134 4,278,821 55,369,753 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 1 I),

18 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 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) 2.5 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. 2.6 Additional information purs~~ant 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: Item Minocycline Hydrochloride USP ( Archimica) Dihydroxy Ketone (For Drospirenone) Methoxydienone Estra4, 9 Diene3, 17 Dione 3 Keto 17 Hydroxy(For desogestral) Others TOTAL Quantity (Unit in Kgs) Value Rs. 9,402,244 2,472,378 15,995,355 5,909,567 33,779, Quantity (Unit in Kgs) OOO Value Rs. 5,121,140 2,352,758 2,294,064 2,592,914 12,360,876 b) Value of lmported and Indigenous consumption: Pd A i) Consumption of Materials: % I Amount in Rs. % 1 Amount in Rs. Imported ,575, ,420,703 Indigenous ,203, ,940,173 1 I I I TOTAL ,779, ,360,876

19 ii) Consumption of Stores and Spares : YO Imported 2.65 Indigenous Amount in Rs. 2,197,748 80,759, % Amount in Rs ,808,518 I I I I 1 TOTAL ,957, ,808,518 c) CIFValue of Imports: Capital Goods Raw Materials Packing Materials Stores and Spares ,324,119 33,793,896 3,014,115 2,197, ,670,040 29,965, , Auditors Remuneration: Particulars a) As Audit Fees b) Reimbursement of outofpocket expenses Total * excluding service tax For the Year ended 31S' March 2010 in Rs. * 500, ,700 For the Year ended 31St March 2009 in Rs. * 500, , Earnings Per Share (EPS) is calculated as follows: 1 Particulars For the Year ended I For the Year ended I Net Loss after tax attributable to Equity Shareholders Weighted average number of equity shares Basic and Diluted 31 St March 2010 in Rs. (284,665,137) 1,050,000 31St March 2009 in Rs. (86,249,929) 1,050,000 Basic and Diluted Earnings per share (271.I 1) (82.14) 2.9 Post Employment Benefits (i) Defined contribution plans: d 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 (IIC). 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 Provident Fund Trust. Both the employees and the Company make monthly contributions to the Provident Fund Plan equal to a specified percentage of the covered employee's salary. The minimuminterest

20 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. 1,367,4961 (Previous year Rs. 322,2351) 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/ withdrawallresignation: 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 out as at March 31,2010 by the IIC. The present 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, recognized in Sr. No Particulars Gratuity (Funded) I) Reconciliation in present value of obligations (PVO) defined benefit obligation : Present value of obligations as at 2,516,962 Current Service Cost Interest Cost Actuarial (gain) I losses 376,287 96,637 (218,093) 31 7, , ,138 PVO on transfer of the employees to the, 2,346,068 Company PVO at end of the year 2,559,037 2,516,962 I Fair value of plan assets at beginning of year Expected return on plan assets Actuarial gain/(losses) 1,901, , ,894

21 n of the Plan Assets is not 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 aforesaid details have been derived based on allocation in proportion of salary cost of the concerned companies covered under the Scheme Related Parties Disclosure Note: a) Name of Related parties and description of relationship: Company whose control exists Lupin Limited (Holding Company) b) Transactions with the Related parties: Sr. Transaction Description of No. Relationship 1. Purchases of Raw Materials Holding Company 15,696,784 8,873, Unsecured Loan received Holding Company 1,028,589, ,985,270

22 c) Balances due to Related parties: Unsecured Loan balance Creditor balance Holding Company Holding Company 2,059,297, ,094 1,030,708,202 Note: Related party relationship is as identified by the Company and relied upon by the Auditors The information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors 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 / Gujarat for amalgamation with Lupin Limited, the appointed date being April 4, 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 of the Honourable High Court of Gujarat is awaited. Pending such Order, no effect has been given in these accounts to the Scheme of Amalgamation 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 Nilesh Gupta Place : Mumbai Dated : April 28, 2010