NOVODIGM LIMITED AUDITED ACCOUNTS FOR THE YEAR ENDED. MARCH 3lSt, 2010

Transcription

1 NOVODIGM LIMITED AUDITED ACCOUNTS FOR THE YEAR ENDED MARCH 3lSt, 2010

2 TO THE BOARD OF DIRECTORS OF NOVODIGM LIMITED Chartered Accountants 1. We have audited the attached Balance Sheet of Novodigm Limited as at 31st March 2010, the Profit and Loss Account and also the Cash Flow Statement of the Company for the year ended on that date annexed 'thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements basedon our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We certify that: 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 appears fiom our examination of the books; c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this certificate are in agreement with the books of account; d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the accounting standards referred to in subsection (3C) of Section 21 1 of the Companies Act,. 1956; e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the significant accounting policies and notes thereon 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 affairs of the Company as at 31'' March, 2010; ii) in the case of the Profit and Loss Account, of the loss for the year ended on that date; and iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. 1, 4. We have been informed that Novodigm Limited has filed a petition before the Honourable High Court of Gujarat for amalgamation with the Lupin Limited, holding company, the appointed date being April 1, This certificate is issued upon specific request from the Company to enable consolidation of financial statements of Novodigm Ltd. with Lupin Ltd. The audit report under the provisions of the Companies Act, 1956 shall be issued when called upon to do so by the Board of Directors of Novodigm Ltd. Place : Vadodara Date : ~ 4 April, ' ~ 2010 For K. C. Mehta & Co. Chartered Accountants mw Vishal P. Doshi Partner Membership No nd Floor, Meghdhanush, Race Course, Vadodara , INDIA Phone: / Fax: Branch: 101, Cosmos Court, Above Waman Hari Pethe, S.V. Road, Vile Parle (West), Mumbai , INDIA Phone: office@kcmehta.com; website:

3 NOVODIGM LIMITED BALANCE SHEET AS AT MARCH 31,2010 SOURCES OF FUNDS As at As at Schedules / Rupees' 000 Rupees'000 SHAREHOLDERS'FUNDS Share Capital Reserves and Surplus LOAN FLINDS Secured Loans Unsecured Loans DEFERRED TAX LIABILITIES (Net) APPLICATION OF FUNDS FIXED ASSETS Gross Block Less: Depreciation and Amortisation. Net Block Capital Work in Progress CURRENTASSETS,LOANSANDADVANCES Inventories Sundry Debtors Cash and Bank Balances Loans and Advances LESS: CURRENT LIABILITIES AND PROVISIONS Current Liabilities Provisions NET CURRENT ASSETS Significant Accounting Policies and Notes to Accounts 18 As per our attached report of even date For K. C. Mehta & Co. Chartered Accountants For and on behalf of the Board of Directors Vishal P. Doshi Partner Membership No. 101 Director ~moi~adre' Place : Vadodara.:.>:..,... roiil.zc!l$~r e : Mumbai Place : Mumbai Company Secretary Date : ""'"'&(ate : Date : ~aie :

4 NOVODIGM LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH,2010 INCOME Schedules 1 Previous Year ended Rupees' 000 ( Sales (Gross) I 484, ,629 1 Less: Excise Duty Sales (Net) Other Income Current Year ended Rupees' 000 ( EXPENDITURE I I I Cost of Materials Personnel Expenses Manufacturing and Other Expenses Interest and Finance Charges Depreciation and Amortisation Profiff (Loss) before Tax Provision for Taxation Current Tax ( including wealth tax ) MAT Credit Deferred Tax Fringe Benefit Tax Net Profitl(Loss) after Tax Less : Prior Period Adjustment Add : Surplus/(Deficit) brought forward from previous year Balance Carried to Balance Sheet 40, ,648 I Earning per Share ( in Rs.) Basic & Diluted Face Value of Equity Shares (Rs.) Significant Accounting Policies and Notes to Accounts 18 As Der our attached reoort of even date d on behalf of the Board of Directors Membership No. 1 Am01 Gadre Place : Vadodara Place : Mumbai Place : Mumbai Company Secretary Date : Date : Date : Date :

5 NOVODIGM LIMITED CASH FLOW STATEMENT Year ended1 Year ended 1 I I 31st March, st March, (A) CASH FLOW FROM OPERATING ACTIVITIES Net Profit I (Loss) before tax and Extra Ordinary items Adjustment for Noncash items I items required to be disclosed Separately : Add : Depreciation (Net) lnterest Expenses Loss on sale of fixed assets( Net ) lnterest on Deposit with Bank Prior Period Adjustment Dividend lncome Exch.Fluct.Others ( Derivative Liability) Operating Profit before change in working capital Rs. '000 Rs. '000 I Adjustment for change in working capital and provisions : I I I Sundry Debtors Inventories LoansandAdvances Creditors Other Current Liabilities, Provisions Cash Generated from operations lncome Tax Paid Fringe Benefit Tax paid Net Cash Generated from operating activities (B) CASH FLOW FROM INVESTING ACTIVITIES Purchase' of Fixed Assets Sale of Fixed Assets Dividend lncome Net Cash used in Investing Activities (C) CASH FLOW FROM FINANCING ACTIVITIES lncrease 1 (Decrease) in Working Capital loans lncrease / (Decrease) in Term I HP loans lncrease I (Decrease) in Unsecured Loans I Deposit from others lnterest Payments lnterest on Deposit with Bank Net Cash used in financing activities Net Change in Cash and Cash equivalents (A+B+C) 458 (13921) 1

6 Cash and Cash equivalents (Opening Balance ) Cash and Cash equivalents (Closing Balance ) Net Change in Cash and Cash equivalents Notes : 1 Cash and Cash equivalents comprise of: Cash On hand Balance in Current Accounts : In Current Accounts Fixed Deposits (Margin Money) 2 Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard (AS) 3 "Cash Flow Statements". As per our attached report of even date (13921) For K. C. Mehta & Co. For and on behalf of the Board of Directors Chartered PA Accountants Vishal P. Doshi Partner Membership No. 10 ~mzl ~Tdre ' Place : Vadodara ace : Mumbai Place : Mumbai Company Secretary Date : Date : Date : Date :

7 NOVODIGM LIMITED SCHEDULES FORMING PART OF THEBALANCE SHEET As at Rupees' 000 SCHEDULE 1 SHARE CAPITAL Authorised : 30,00,000 Equity Shares of Rs. 101 each Issued, Subscribed and Paldup 23.84,783 Equity Shares of Rs. 101 each fully paid up Note : All the above shares are held by the holding company MIS. Lupin Limited and its nominees. SCHEDULE 2 RESERVES AND SURPLUS Cash Flow Hedge Reserve Balance as per last Balance Sheet Add : Debited during the year Securities Premium Account Balance as per last Balance Sheet Profit 8 Loss Account SCHEDULE 3 SECURED LOANS Term Loans From Banks Foreign Currency Loans Rupee Loans Cash Credit, Packing Credit and Post Shlpment Credit facilities from banks Notes : 1 Foreign Currency Loans & Rupee Loans are secured by hypothecation of Fixed Assets and Equitable mortgage of Company's Factory Land & Building at Dabhasa. 2 Loans from Banks in cash credit, packing credit and post shipment credit facilities are secured by hypothecation of Inventories and Book debts. From Holding company I

8 SCHEDULE 5 : FIXED ASSETS (Amt. '000 ) Note : (1) Addition to Fixed Assets includes items of Fixed Assets aggregating to Rs.1723 Thousand ( Previous year Rs.2485 Thousand ) for Research and Development activities of the Company. (2) Capital Work In Progress includingadvances of Rs Thousand ( Previous year Rs Thousand ) 26, ,226 3,190 1, , , , ,801 10,802 1, , ,698 2, , , ,265 7,594 2, , , ,940 NOVODIGM LIMITED SCHEDULES FORMING PART OF BALANCE SHEET AS AT MARCH 31,2010 Assets Land and Land Development AS AT GROSS BLOCK (AT COST) Additions Adjustment 1 Deduction As At ,781 AS AT g DEPRECIATION For The Period Adjustments1 As At As At NET BLOCK 11,781 As At ,781 Building 135,419 66, ,805 20,881 5,152 Plant Machinery & Equipments 366, ,154 10, , , ,041 9,324 Furniture and Fixtures 9,945 4,047 13,992 2, Vehicles 4, ,477 1, Total Previous Year 527, , , ,379 11,435 4, , , , ,681 26,370 37,064 9, Add : Capital Work in progress

9 NOVODIGM LIMITED SCHEDULES FORMING PART OF THE BALANCE SHEET SCHEDULE 6 INVESTMENTS Number Face Value Long Term Investments (At cost I carrying amount unless otherwise stated) (a) In Government Securities Unquoted (Non Trade) National Saving Certificates (Deposit with Government authorities) As at Rupees' 000 As at Rupees' 000 (b) In Shares Others Unquoted (Trade) Enviro lnfrastucture Co. Ltd. (fully paid up) 100, Notes : Aggregate value of Unquoted Investments SCHEDULE 7 INVENTORIES (As taken, valued and certified by management) Raw Materials Packing Materials. WorkinProcess Finished Goods (including Traded Goods) Consumable Stores, Spares and Fuel SCHEDULE 8 SUNDRY DEBTORS (Unsecured, considered good unless otherwise stated.) Debts outstanding for a period exceeding six months Others Note : Sundry Debtors include debts due from Holding Company Rs Thousand (Previous Year Rs Thousand ) SCHEDULE 9 CASH AND BANK BALANCES Cash in hand Bank Balances : With Scheduled Banks In Current Accounts In Deposit Accounts With Others In Current Account ( Uma CoOperative Bank Ltd, maximum amount due is Rs. 27 thousand, Previous Year Rs. 27 thousand )!: Lalance in deposit accounts include interest amed on deposit amounting to Rs. Thousand (previous Year Rs. 6 Thousand )

10 NOVODIGM LIMITED SCHEDULES FORMING PART OF THE BALANCE SHEET SCHEDULE 10 LOANS AND ADVANCES (Unsecured, considered good unless otherwise stated.) Advances recoverable in cash or in kind or for value to be received Deposits With Vendors With Government departments Balances with Customs and Excise Authorities MAT Credit As at Ruoees' 000 As at Ru~ees' 000 Current Liabilities Sundry Creditors Total outstanding due to Micro and Small Enterprises 1,722 Total outstanding due to Creditors other than Micro and Small Enterprises 96,100 Other Liabilities 8,217 19,197 88, ,019 2rovisions For Gratuity For Leave Encashment For Taxation (net of advance tax) For Fringe Benefit Tax ( net of advance tax ) 1,562 12, , , ,244 11, , ,717

11 NOVODIGM LIMITED SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT 1 SCHEDULE 12 OTHER INCOME I I I Income from Research Services Interest on Deposits with Banks (Gross) ( Tax deducted at Source Rs. 6, Previous year Rs.42 thousand ) Other lnterest (Gross) ( Tax deducted at Source Rs.53, Previous year Rs. ) Exchange Rate Difference (Net) Dividend lncome Profit on Sale of Fixed Assets (Net) Miscellaneous lncome Current Year ended Rupees' 000 I SCHEDULE 13 COST OF MATERIALS I I Raw Materials Consumed Packing Materials Consumed Opening Stock : Finished Goods Work in Process Closing Stock : Finished Goods Work in Process Decrease in Stock of Finished Goods and WorkinProcess Previous Year ended Rupees' 000 I SCHEDULE I4 PERSONNEL EXPENSES I I Salaries, Wages and Bonus Contribution to Provident, Gratuity and Other Funds Welfare Expenses SCHEDULE 15 MANUFACTURING AND OTHER EXPENSES Processing Charges Consumable Stores and Spares Repairs and Maintenance : Plant and Machinery Others Contract Labour Charges Rent Rates and Taxes Insurance Power and Fuel Excise Duty (Net) Exchange Rate Difference ( Net ) Selling and Promotion Expenses Commission, Brokerage and Discount Freight and Forwarding Lease Rent and Hire Charges Postage and Telephone Expenses Travelling and Conveyance Legal and Professional Charges Donations Clinical and Analytical Charges Loss on Sale I Discard of Fixed Assets ( Net ) Miscellaneous Expenses (includes printing and stationery, books and periodicals, audit fees, etc.)

12 NOVODIGM LIMITED SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT SCHEDULE 16 INTEREST AND FINANCE CHARGES Interest on Fixed Loans Others Current Year ended Rupees' 000 Previous Year ended Rupees' 000 SCHEDULE 17 PRIOR PERIOD ADJUSTMENTS Salary Wages & Bonus Vehicle Expenses Excise duty Carriage Inward Bank charges Rates & Taxes Sales Promotion Advertisement Other lncomelexpenses

13 NOVODIGM LIMITED SCHEDULE 18 SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT A) SIGNIFICANT ACCOUNTING POLICIES a) Basis of Preparation of Financial Statements: The financial statements are prepared as per historical cost convention and in accordance with the generally accepted accounting principles in India, the provisions of the Companies Act, 1956 and the applicable accounting standards. b) Use of Estimates: The preparation of financial statements 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 recognised in the period in which the same are known Imaterialised. c) Fixed Assets: Fixed Assets are stated at cost, net of CENVAT/VAT credit, if any, after reducing accumulated depreciation until the date of the Balance Sheet. Direct cost are capitalised until the asset are ready for use and include financial cost relating to any borrowing attributable to acquisition. Capital work in progress includes the cost of fixed assets that are not yet ready for the intended use, advance3 paid to acquire fixed assets and the cost of assets not put to use before the Balance Sheet Date. d) Depreciation and Amortisation: Depreciation on Fixed Assets has been provided on straight line method as per the rates prescribed in Schedule XIV to the Companies Act, e) Intangible Assets: Intangible Assets are recognised only if it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortisation and accumulated impairment losses, if any.

14 f) Foreign Currency Transactions I Translation: Foreign currency transactions are recorded at the rate of exchange prevailing on the date of the transactions. At the year end, all the monetary assets and liabilities denominated in foreign currency are restated at the closing exchange rates. Exchange differences resulting from the settlement of such transactions and from the translation of such monetary assets and liabilities are recognised in the Profit and Loss account. In case of forward exchange contracts entered into to hedge the foreign currency exposure in respect of monetary items, the difference between the exchange rate on the date of such contracts and the year end rate is recognised in Profit and Loss Account. Any profitlloss arising on cancellation of forward exchange contract is recognised as income or expense of the year. Premium/discount arising on such forward exchange contract is amortised as incomelexpense over the life of contract. g) Derivative instruments and hedge accounting: Forward and Option Contracts, in the nature of highly probable forecast transactions, entered into by the Company for hedging the risks of foreign currency exposure are accounted based on recognition and measurement principles stated in Accounting Standard 30 (AS 30) "Financial Instruments: Recognition and Measurements" and the principles of prudence as enunciated in Accounting standard 1 (AS 1) "Disclosure of Accounting Policies". The amount removed from the Cash Flow Hedge Reserve, on the occurrence of the hedged transaction, is included in the Profit & Loss Account, against the related hedged item. h) Investments: Longterm investments are stated at cost which includes cost of acquisition and related expenses. Provision for diminution in the value of longterm investments is made only if such decline is other than temporary. Current investments are carried at cost or fair value, whichever is lower. i) Inventories: Stockintrade and stock of consumables stores, spaies 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 and comprises of materials and appropriate share of utilities and other overheads in respect of workinprocess and finished goods. Cost also includes all charges incurred for bringing the inventories to their present location and condition.

15 j) Revenue recognition: i) Revenue from sale of goods is recognised when the significant risks and rewards in respect of ownership of products are transferred by the Company. ii) Revenue from product sales is stated net of returns, sales tax and applicable trade discounts and allowances. iii) Income from research services is recognised as revenue when earned in accordance with the terms of the relevant agreements. iv) Insurance or other claims is recognised only when it is reasonably certain that the ultimate collection will be made. v) Dividend from investment is recognised as revenue when right to receive the payment is established vi) Interest income is recognised on time proportion basis. k) Export Benefits: Export benefits available under prevalent schemes are accrued in the year in which the goods are exported and are accounted to the extent considered receivable. 1) Excise Duty: Excise Duty is accounted on the basis of payments made in respect of goods cleared and provision is made for goods lying in bonded warefiouses. m) Employee benefits: a) Postemployment benefits i) Defined Contribution plan Company's contribution paidlpayable for the year to defined contribution retirement benefit schemes are charged to Profit and Loss Account. ii) Defined Benefit plan Company's liabilities towards defined benefit schemes are 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 that the benefits are already vested and 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. 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 incentive 3

16 c. Long term employee benefits Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as an actuarially determined liability at present value of the defined benefit obligation at the balance sheet date. n) Taxes on Income: Income Taxes are accounted for in accordance with Accounting Standard 22 (AS 22) "Accounting for Taxes on Income". 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 the applicable tax rates. Minimum Alternate Tax (MAT) credit entitlement is recognised as an asset by crediting the Profit and Loss Account and disclosing an equivalent amount as an asset under 'Loans and Advances' in accordance with guidance note on "Accounting for Credit Available in respect of Minimum Alternate Tax under the Income Tax Act, 196l"issued by the Institute of Chartered Accountants of India. Deferred tax assets and liabilities are recognised for future tax consequence attributable to timing differences 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. o) Provisions, Contingent Liabilities and Contingent Assets: Provisions involving substantial degree of estimation in measurement are recognised 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. p) Borrowing Costs: Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue. q) Impairment of assets: An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to profit and loss account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

17 r) Research and Development : Revenue expenditure incurred on research and development is charged to the respective heads In the Profit and Loss account, in the year it is incurred and Capital expenditure there on is included in the respective heads under Fixed Assets. B) NOTES TO ACCOUNTS 1. Petition for amalgamation of Novodigm Limited (NL) with Lupin Limited (LL) Holding Company has been moved in the Hon'ble High Court of Judicature at Ahmedabad, for the Scheme of Amalgamation proposed by the Management of Novodigm Limited & Lupin Limited, which is pending for decision with the Hon'ble High Court at Ahmedabad. Upon the Scheme coming into effect, on and fkom the appointed date, the undertaking of the Transferor Company Novodigm Limited, with all its assets and liabilities shall be transferred to Transferee Company Lupin Limited. The appointed date of the scheme is 01/04/2009. Necessary effect of the above proposed scheme will be consider as and when the same is approved by the Hon'ble High Court. 2. Estimated amount of contracts remaining to be executed on capital account and not provided for, net of advances, Rs Thousand (Previous year Rs Thousand). 3. Contingent Liabilities: Letters of Credit issued by Banks Sales Tax Demand in Appeal / dispute Pending cases before Labour Court Excise duty, Service tax disputed in appeals and pending decisions before higher authorities

18 4. Auditors' Remuneration: Audit Tax Audit Certifications Other Services : Taxation Matter Others Total (Excluding of Service Tax ) (Rs.'000) Segment Reporting: The Company is exclusively in the Pharmaceutical business segment and has only one reportable business segment. 6. The value of realisation of Current Assets, Loans and Advances in the ordinary course of business will not be less than the value at which they are stated in the Balance Sheet. 7. The balances of Debtors, Creditors are subject to adjustments, if any, on reconciliation /settlement. 8. Export benefits 1 incentives accounted on accrual basis in respect of Duty Drawback for Furnace Oil and CST Refind on outside state purchase of Capital goods, Raw Materials, Consurnables, Packing and Fuel amount to Rs. Thousand and Rs.2253 Thousand respectively (Previous Year Rs.151 Thousand and Rs.3576 Thousand respectively). 9. Deferred tax provision: The deferred tax assets/ (liabilities) arising out of significant timing differences are as under: (Rs.'000) Particulars As at As at Deferred Tax Assets: Disallowance under section 43B of Income Tax Act. Arnortisation under section 35D of Income Tax Act. Total Net Deferred Tax Liability

19 10. Managerial Remuneration: 9 Notes: Salarv and Allowances Contribution to Provident and Other Funds (1) The Provision for gratuity and leave encashment is made on the basis of actuarial valuation, for all the employees of the company, including for the managerial personnel. Proportionate amount of gratuity and leave encashment is not included in the above disclosure, since the exact amount is not ascertainable. (2) The remuneration paid to Managerial Personnel is in excess of limit specified under Section 198 read with Section 309 and schedule XI11 of the Companies Act, The aggregate amount of revenue expenditure incurred during the year on Research and Development and shown in the respective heads of account is Rs Thousand (Previous Year Rs Thousand). 12. Employee Benefits. (i) Defined contribution plans The Company makes contribution towards provident fund and superannuation fund to defined contribution retirement benefit plan for qualifying employees. The superannuation fund is administered by the trust owned and managed by Lupin Limitedthe holding Company. 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 Company has recognised an amount of Rs.3577 Thousand as expenses under the defined contribution plan in the Profit & Loss account for the year ended 3 1 St March, (Previous year Rs Thousand). (ii) Defined benefit plan The Company makes annual contributions to the Novodigm Limited Employees' Group Gratuity of the LIC, a funded defined benefit plan for qualifying employees. The scheme provides for payment to vested employees as under: a) On Normal retirement1 early retirement/ withdrawallresignation: As per the provisions of Payment of Gratuity Act, 1972 with vesting period of 5 years of service.

20 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 and leave encashment were carried out at March, 31, 2010 by an actuary. 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, which recognises each period of service as giving rise to additional unit of benefit entitlement and measures each unit separately to build up the final obligation. The following table sets out the status of the gratuity plan and leave encashment and the amounts recognised in the Company's financial statements as at March 3 1, Sr. / I Particulars Gratuity (Funded)) No Reconciliation in present value of obli~ations PVO) defined benefit obligation : Current Service Cost Interest Cost Benefits paid PVO at the beginning of the year IT) I 1 year Change in fair value of plan assets : Expected return on plan assets Actuarial gainl(1osses) Contributions by the employer Benefits paid Fair value of plan assets at beginning of the year Fair value of plan assets at end of the I I I I I 111) 1 Reconciliation of PVO and fair (60) (222) 1587 (328) (43 3) value of plan assets: 1 PVO at end of period I 1 Fair Value of planned assets at end of I year Funded status Unrecognised actuarial gain/ (loss) 4783 (1562) 3093 (9 8 6) 1834 (2539) 8

21 Net asset, (liability) recognised in the (1562) balance sheet IV) Net cost for the year ended March 31 : Current Service cost Interest cost Expected return on plan assets V) Category of assets as at March 31 : Insurer Managed Funds (1 00%) VI Actual return on the plan assets VII) Assumption used in accounting for the gratuity plan: Discount rate (%) Salary escalation rate (%) Expected rate of return on plan assets The Company has entered into Forward Exchange Contracts, being derivative instruments for hedge purpose and not intended for trading or speculation purposes, to establish the amount of currency in Indian rupees required or available at the settlement date of certain payables and receivables. The following are the outstanding Forward Exchange Contracts entered into by the Company: Currency US$ US$ Buy or Sell BUY Sell Cross Currency Indian Rupees Indian Rupees Amount is US $ March 31,2010 March 3 1, The yearend foreign currency exposures that have not been hedged by a derivate instrument or otherwise are given as below: a. Amount receivable in foreign currency on account of the following Particulars As on Rs.'000 ( Amount in As on / Foreign I Rs.'000 1 Amount in Currency Export of goods USD EURO b. Amount payable in foreign currency on account of the following

22 b. Amount payable in foreign currency on account of the following Particulars Import of goods, services and expenses Secured Loans payable Other Payables As on Rs.' Amount in Foreign Currency As on Rs.' Amount in Foreign Currency Foreign Currency USD GBP JPY EURO USD USD 14. Derivative Financial Instruments: The Company enters into forward contracts in order to hedge and manage its foreign currency exposures towards future export earning. Such derivative contracts which are in the nature of highly probable forecast transactions are entered into by the Company for hedging purposes only, and are accordingly classified as cash flow hedges. The breakup there of is as under: Particulars Forward Contracts As at Amount in US$ As at Arnount in US$ Based on the Announcement of the Institute of Chartered Accountants of India "Accounting for Derivatives "along with the principles of prudence as enunciated in Accounting Standard 1 (AS1) "Disclosure of Accounting Policies" Company has accounted for derivative forward and option contracts as fair values, considering the principles of recognition and measurement stated in Accounting standard 30 (AS30) "Financial instruments: Recognition and measurement." On that basis, changes in the fair value of the derivative instruments as at March 3 1, 2010 aggregating to Rs. Thousands (Previous Year Rs.7482 ~hoisands) designated as effective have been credited to Cash Flow Hedge Reverse Account and Rs. Thousands (Previous Year Rs.40 Thousands) is debited to the Profit and Loss Account, being the ineffective portion thereof. 15. Based on the information available with the company, the balance due to Micro and Small Enterprise as defined under the "Micro, Small and Medium Enterprise Development Act, 2006" is Rs.220 Thousand ( Previous Year Rs.1722 Thousand). Payment made to suppliers beyond the due dates during the year was Rs.7873 Thousand (Previous Year Rs Thousand). No interest during the period has been paid to Micro and Small Enterprise on delayed payments. Further Interest Accrued during the year and remaining unpaid at the year end which is not provided in the

23 1 that due to contractual terms interest for the delay in payment to those parties will not be required to be paid. 16. Basic and diluted earning per share is calculated as under: (Rs.'000) 17. Related Party Disclosures : Disclosures as required by Accounting Standard 18 are given below: Name of Related Parties Nature of Relationship 1. Lupin Limited Holding Company 2. Dr C Prabhakar Key Management Personnel I Nature of Transaction. ( Holding I Key Mgt. ( Total 1 Transaction during. the year Company personnel i Purchase Of Goods I I (131291) Purchase of Fixed Assets 298 (2507) (> Sale of Goods (230494) (1 Sale of Fixed Assets (680) (1 Expenses recovered (2507) (230494) ( 680 > Loan taken (24 84) (4747). (723 1) Balances as on 31St March Balance Recoverable Balance Payables Loan Outstanding (99691) (35597) (> (> (99691) (35597) * Figure in brackets are for previous year

24 18. Miscellaneous income includes profit of Rs 128 Thousand (Previous Year Rs 68 Thousand) on account of High Seas transactions. 19. Additional information pursuant to the Provisions of Paragraphs 3,4C, and 40 of part I1 of Schedule VI to the Companies Act, a) Consumption of Raw Materials: Item Unit Quantity (Rs.'000) (Rs.'000) Quantity (Rs.'000) Methyl 2 bromobutyrate S(+)2Amino Butyric Acid HCL Others M.T. M.T b) Value of Imported and Indigenous consumption: i) Consumption of Raw Material: 1 Imwrted Indigenous % I (Rs. in 000) % I (Rs. in 000) I I I I ii) Consumption of Stores and Spares: (RS. 7000) 1 % I (Rs. in 000) 1 % 1 (Rs. in000) 1 Imported Indigenous

25 c) CIF Value of Imports: (Rs.'000) i) Capital goods ii) Raw Materials iii) Others d) Expenditure in Foreign currencies on account of: 1 iv'l Advertisement 267 I I I ' 3372 e) Earnings in Foreign exchange on account of: i) FOB value of Exports ii) Income from Research Services (Rs.'OOO) I

26 20. Additional information pursuant to para (3) and (4) of Part I1 of schedule VI to the Companies Act; (RS.'OOO) (A) Particulars Ca~acitv Licensed Capacity Installed Ca~acitv Fine Chemicals (Pharmaceutical Products) Production 1 Purchases Fine Chemicals Unit N.A. Year ended 31St March, 2010 Quantity (Pharmaceutical Products) I MT Sales : Manufactured goods Stock of Finished Goods Opening Stock Fine Chemicals (Pharmaceutical Products) Closing. Stock KL 159 MT MT MT Fine Chemicals (Pharmaceutical Products) 1 MT Year ended 31St March, 2010 Value Year ended 3 lst March, 2009 Quantity 21. Figures of the previous year have been regrouped 1 reclassified wherever necessary. Year ended 3 lst March, 2009 Value For K.C.Mehta & Co. Chartered Accountants For and on behalf of the Board of Directors Partner # v, Anlol Gadre Place: Vadodara Place: Mumbai Place: Mumabi Company Secretary Date: Date: Date: Date: