Independent Auditor's Report

Transcription

1 Independent Auditor's Report 182 To the Members of Report on the Audit of Consolidated Ind AS Financial Statements We have audited the accompanying consolidated Ind AS financial statements of (hereinafter referred to as the Holding Company ) and its subsidiaries (the Holding Company and its subsidiaries together referred to as the Group ), which comprise the Consolidated Balance Sheet as at 31 March 2018, the Consolidated Statement of Profit and Loss, Consolidated Statement of Changes in Equity and the Statement of Consolidated Cash Flow, for the year then ended, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the consolidated Ind AS financial statements ). Management's Responsibility for the Consolidated Ind AS Financial Statements The Holding Company's Board of Directors is responsible for the preparation of these consolidated Ind AS financial statements in terms of the requirements of the Companies Act, 2013 (hereinafter referred to as the Act ) that give a true and fair view of the consolidated state of affairs, consolidated profit and other comprehensive income, consolidated statement of changes in equity and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act. The respective Board of Directors of the companies included in the Group are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated Ind AS financial statements by the Directors of the Holding Company, as aforesaid. In preparing the consolidated Ind AS financial statements, the respective Board of Directors of the companies included in the Group are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor's Responsibility Our responsibility is to express an opinion on these consolidated Ind AS financial statements based on our audit. While conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143 (10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated Ind AS financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated Ind AS financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Company's preparation of the consolidated Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made, as well as evaluating the overall presentation of the consolidated Ind AS financial statements. We are also responsible to conclude on the appropriateness of management s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of Group to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor s report to the related disclosures in the consolidated Ind AS financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause Group to cease to continue as a going concern. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the consolidated Ind AS financial statements. Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid

2 Independent Auditor's Report Annual Report Independent Auditor's Report (Continued) 183 consolidated Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group as at 31 March 2018, and their consolidated profit and other comprehensive income, consolidated statement of changes in equity and consolidated cash flows for the year ended on that date. Report on Other Legal and Regulatory Requirements 1. As required by Section 143(3) of the Act, we report, to the extent applicable, that: a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated Ind AS financial statements. b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated Ind AS financial statements have been kept so far as it appears from our examination of those books. c) The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss, the Consolidated Statement of Cash Flow and Consolidated Statement of Changes in Equity dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated Ind AS financial statements. d) In our opinion, the aforesaid consolidated Ind AS financial statements comply with the Indian Accounting Standards specified under section 133 of the Act. e) On the basis of the written representations received from the directors of the Holding Company as on 31 March 2018 taken on record by the Board of Directors of the Holding Company and on the basis of the relevant assertion contained in the audit reports on standalone financial statements of the Holding Company and each of its subsidiary companies incorporated in India, none of the directors of any such company are disqualified as on 31 March 2018 from being appointed as a director in terms of Section 164(2) of the Act. f) g) With respect to the adequacy of the internal financial controls with reference to financial statements of the Holding Company, its subsidiary companies incorporated in India and the operating effectiveness of such controls, refer to our separate Report in Annexure A. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditor s) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: i. The consolidated Ind AS financial statements disclose the impact of pending litigations on the consolidated financial position of the Group. Refer Note 37 (B) and 37 (C) to the consolidated Ind AS financial statements. ii. The Group did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses. iii. There has been no delay in transferring amounts to the Investor Education and Protection Fund by the Holding Company and its subsidiary companies which are incorporated in India during the year ended 31 March iv. The disclosures in the consolidated Ind AS financial statements regarding holdings as well as dealings in specified bank notes by the holding company and subsidiaries incorporated in India during the period from 8 November 2016 to 30 December 2016 have not been made since they do not pertain to the financial year ended 31 March However amounts as appearing in the audited consolidated Ind AS financial statements for the period ended 31 March 2017 have been disclosed. For B S R & Co. LLP Chartered Accountants ICAI Firm Registration Number: W/W Pravin Tulsyan Place: Noida Partner Date: 9 May 2018 Membership No.:

3 184 Annexure A to the Independent Auditor s Report of even date on Consolidated Ind AS Financial Statements of Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act In conjunction with our audit of consolidated Ind AS financial statements of ( the Holding Company ) as of and for the year ended 31 March 2018, we have audited the internal financial controls with reference to financial statements of the Holding Company and its subsidiary companies incorporated in India, as of that date. Management s Responsibility for Internal Financial Controls The respective Board of Directors of the Holding Company and its subsidiary companies incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal controls with reference to financial statements criteria established by the Holding Company and its subsidiary companies incorporated in India considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note ) issued by the Institute of Chartered Accountants of India ( ICAI ). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective company s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act. Auditor s Responsibility Our responsibility is to express an opinion on the Holding Company s and its subsidiary companies incorporated in India, internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial reporting included obtaining an understanding of internal financial controls with reference to financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal controls based on the assessed risk. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the consolidated Ind AS financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Holding Company s and its subsidiary companies incorporated in India, internal financial controls system with reference to financial statements. Meaning of Internal Financial Controls with reference to Financial Statements A Company s internal financial control with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial statements and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company s internal financial control with reference to financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Company s assets that could have a material effect on the financial statements. Inherent Limitations of Internal Financial Controls with reference to Financial Statements Because of the inherent limitations of internal financial controls with reference to financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to

4 Independent Auditor's Report Annual Report Annexure A to the Independent Auditor s Report of even date on Consolidated Ind AS Financial Statements of 185 financial statements to future periods are subject to the risk that the internal financial control with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Opinion In our opinion, the Holding Company and its subsidiary companies incorporated in India have, in all material respects, an adequate internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at 31 March 2018, based on the internal control with reference to financial statements criteria established by the Holding Company and its subsidiary companies incorporated in India, considering the essential components of internal control stated in the Guidance Note issued by the ICAI. For B S R & Co. LLP Chartered Accountants ICAI Firm Registration Number: W/W Pravin Tulsyan Place: Noida Partner Date: 9 May 2018 Membership No.:

5 Consolidated Balance Sheet as at 31 March Notes As at ASSETS Non-current assets Property, plant and equipment 3 31, , Capital work-in-progress 3 3, , Goodwill 4 18, , Other intangible assets 4 3, , Intangible assets under development 4 3, , Financial assets i. Investments 5 1, , ii. Loans iii. Other financial assets Deferred tax assets (net) 8 1, , Income tax assets (net) Other non-current assets Total non-current assets 64, , Current assets Inventories 10 13, , Financial assets i. Trade receivables 11 11, , ii. Cash and cash equivalents 12(a) 2, , iii. Other bank balances 12(b) iv. Loans v. Other financial assets Income tax assets (net) Other current assets 13 3, , Total current assets 31, , Total assets 96, , EQUITY AND LIABILITIES Equity Equity share capital Other equity 40, , Equity attributable to owners of the Company 40, , Non-controlling interest (515.22) (473.88) Total equity 40, , Liabilities Non-current liabilities Financial liabilities i. Borrowings 16(a) 30, , ii. Other financial liabilities 19 2, , Provisions 17 1, Deferred tax liabilities (net) 8 1, , Other non-current liabilities Total non-current liabilities 35, , Current liabilities Financial liabilities i. Borrowings 16(b) 2, , ii. Trade payables 18 11, , iii. Other financial liabilities 19 4, , Other current liabilities Provisions Current tax liabilities (net) Total current liabilities 20, , Total liabilities 55, , Total equity and liabilities 96, , The accompanying notes form an integral part of the consolidated financial statements As per our report of even date attached For B S R & Co. LLP Chartered Accountants ICAI Firm registration number: W/W For and on behalf of the Board of Directors of Pravin Tulsyan Partner Membership No.: Shyam S. Bhartia Chairman DIN: Place: Noida Rajiv Shah R. Sankaraiah Hari S. Bhartia Date: 9 May 2018 Company Secretary Executive Director-Finance Co-Chairman and Managing Director DIN:

6 Consolidated Financial Statements Annual Report Consolidated Statement of Profit and Loss for the year ended 31 March 2018 Notes For the year ended Revenue from operations 21 75, , Other income Total income 75, , Expenses Cost of materials consumed 23 26, , Purchases of stock-in-trade 2, , Changes in inventories of finished goods, stock-in-trade and work-in-progress 24 (521.98) (1,152.24) Excise duty on sales , Employee benefits expense 25 15, , Finance costs 26 2, , Depreciation, amortisation and impairment expense 27 4, , Other expenses 28 15, , Total expenses 67, , Profit before tax 8, , Tax expense 29 - Current tax 3, , MAT credit entitlement (142.78) (639.53) - Deferred tax (credit)/charge (794.42) Total tax expense 2, , Profit for the year 6, , Other comprehensive income Items that will not be reclassified to profit or loss Changes in fair value of equity investments which are classified at fair value through OCI Remeasurement of defined benefit obligations (44.76) (42.42) Income tax relating to items that will not be reclassified to profit or loss (20.02) Items that will be reclassified to profit or loss Exchange differences on translation of foreign operations (632.73) Income tax relating to items that will be reclassified to profit or loss (632.73) Other comprehensive income/(loss) for the year, net of tax (577.06) Total comprehensive income for the year 6, , Profit is attributable to: Owners of the Company 6, , Non-controlling interests (83.88) (10.27) 6, , Other comprehensive income/(loss) is attributable to: Owners of the Company (575.70) Non-controlling interests (0.08) (1.36) (577.06) Total comprehensive income is attributable to: Owners of the Company 7, , Non-controlling interests (83.96) (11.63) 6, , Earnings per equity share of ` 1 each 47 Basic (`) Diluted (`) The accompanying notes form an integral part of the consolidated financial statements 187 As per our report of even date attached For B S R & Co. LLP Chartered Accountants ICAI Firm registration number: W/W For and on behalf of the Board of Directors of Pravin Tulsyan Partner Membership No.: Shyam S. Bhartia Chairman DIN: Place: Noida Rajiv Shah R. Sankaraiah Hari S. Bhartia Date: 9 May 2018 Company Secretary Executive Director-Finance Co-Chairman and Managing Director DIN:

7 188 Consolidated Statement of Changes in Equity for the year ended 31 March 2018 A. Equity share capital (` inmillion) Balance as at 1 April Shares transferred by ESOP trust to employees on exercise of stock options 0.35 Balance as at 31 March Shares transferred by ESOP trust to employees on exercise of stock options 0.04 Balance as at 31 March B. Other equity Total Attributable to owners of the Company Attributable to Noncontrolling interest Total attributable to owners of the Company Reserves and surplus (2) Items of Other Comprehensive Income (2) Foreign currency translation reserve Equity instruments through OCI Retained earnings Foreign currency monetary item translation difference account Share based payment reserve (3) Debenture redemption reserve Legal reserve General reserve Amalgamation reserve Capital redemption reserve Securities premium reserve Capital reserve Balance as at 1 April , , (34.49) 16, , (462.33) 29, Profit/(loss) for the year , , (10.27) 5, (27.76) (631.91) (575.70) (1.28) (4) (576.98) , (631.91) 5, (11.55) 5, Other comprehensive income/ (loss) Total comprehensive income/ (loss) for the year (20.49) Employee stock option exercised/ forefeited/lapsed Dividend (477.84) - - (477.84) - (477.84) Tax on dividend (1) (97.28) - - (97.28) - (97.28) Employee stock option expense (3) Transfer to debenture redemption (374.60) reserve Transfer to legal reserve (1.20) Exchange loss during year on long (52.33) (52.33) - (52.33) term foreign currency term loan Amortised during the year Adjustment on account of consolidation of ESOP Trust Balance as at 31 March , , (19.67) 20, , (473.88) 33, Profit/(loss) for the year , , (83.88) 6, Other comprehensive income/ (28.82) (0.08) (loss) Total comprehensive income/ , , (83.96) 6, (loss) for the year Employee stock option exercised/ (3.20) forefeited/lapsed Dividend (477.84) - - (477.84) - (477.84) Tax on dividend (1) (97.28) - - (97.28) - (97.28) Transfer to debenture redemption (374.60) reserve Transfer to legal reserve (2.45) Exchange gain during year on long term foreign currency term loan Amortised during the year (25.25) (25.25) - (25.25) Transaction with non-controlling (42.62) (42.62) interest (5) Adjustment on account of consolidation of ESOP Trust Balance as at 31 March , , , , (515.22) 40,194.29

8 Consolidated Financial Statements Annual Report Consolidated Statement of Changes in Equity for the year ended 31 March 2018 (Continued) Notes: (1) During the year ended 31 March 2018 and 31 March 2017, the Company has paid dividend to its shareholders. This has resulted in payment of Dividend Distribution Tax (DDT) to the taxation authorities. The Company believes that DDT represents additional payment to taxation authority on behalf of the shareholders. Hence DDT paid is charged to equity. (2) Refer note 15 for nature and purpose of other equity. (3) Refer note 45 for employee stock option related transations. (4) Including impact of conversion of opening balance of non-controlling interest at closing foreign exchange rate. (5) Refer note 2(b). The accompanying notes form an integral part of the consolidated financial statements As per our report of even date attached For and on behalf of the Board of Directors of For B S R & Co. LLP Chartered Accountants ICAI Firm registration number: W/W Pravin Tulsyan Shyam S. Bhartia Partner Chairman Membership No.: DIN: Place: Noida Rajiv Shah R. Sankaraiah Hari S. Bhartia Date: 9 May 2018 Company Secretary Executive Director-Finance Co-Chairman and Managing Director DIN:

9 Consolidated Statement of Cash Flows for the year ended 31 March For the year ended A. Cash flow from operating activities Net profit before tax 8, , Adjustments: Depreciation, amortisation and impairment expense 4, , Loss on sale/ disposal/ discard of property, plant and equipment (net) Finance costs 2, , Employee share-based payment expense Amortisation of foreign currency monetary item translation difference (25.25) Unrealised foreign exchange (gain)/loss (3.74) Interest income (51.30) (87.79) Income/gain on investments at fair value through P&L (75.88) - Dividend on investments (0.14) (1.47) 6, , Operating cash flow before working capital changes 15, , Increase in trade receivables, loans, other financial assets and other assets (1,404.10) (835.94) Increase in inventories (1,348.78) (328.82) Increase in trade payables, other financial liabilities, other liabilities and provisions 2, , Cash generated from operations 15, , Income tax paid (net of refund) (2,578.40) (1,439.35) Net cash generated from operating activities 13, , B. Cash flow from investing activities Purchase of property, plant and equipment, other intangible assets (4,890.85) (4,641.94) (including capital work-in-progress and intangible assets under development) Sale of property, plant and equipment Purchase of investments (195.72) (112.33) Sale of investments Payment for acquisition of business (Refer Note 41) (1,305.12) - Movement in other bank balances* (9.79) Interest received Dividend received Net cash used in investing activities (6,176.96) (4,503.95) C. Cash flow arising from financing activities # Proceeds from issue of shares by Trust on exercise of stock options Proceeds from long term borrowings** - 21, Repayment of long term borrowings** (6,143.82) (20,453.52) Repayment of short term borrowings (net) (134.63) (4,936.93) Receipt of capital subsidy Dividend paid (including dividend distribution tax) (560.30) (558.65) Finance costs paid (2,182.83) (2,291.17) Net cash used in financing activities (9,011.35) (6,858.67)

10 Consolidated Financial Statements Annual Report Consolidated Statement of Cash Flows for the year ended 31 March 2018 (Contd.) For the year ended D. Effect of exchange rate changes (150.48) Net (decrease)/increase in cash and cash equivalents (A+B+C+D) (2,122.68) 1, Add: cash and cash equivalents at the beginning of year 4, , Cash and cash equivalents at the end of the year (Refer note 12 (a)) 2, , * ` million (31 March 2017: ` million) has restricted use. ** Revolver facility of Jubilant HollisterStier LLC is presented on net basis. # Refer note 16 (c) for changes in liabilities arising from financing activities. Note: Consolidated Statement of Cash Flows has been prepared under the indirect method as set out in the Ind AS 7 "Statement of Cash Flows". The accompanying notes form an integral part of the consolidated financial statements As per our report of even date attached For B S R & Co. LLP Chartered Accountants ICAI Firm registration number: W/W For and on behalf of the Board of Directors of Pravin Tulsyan Partner Membership No.: Shyam S. Bhartia Chairman DIN: Place: Noida Rajiv Shah R. Sankaraiah Hari S. Bhartia Date: 9 May 2018 Company Secretary Executive Director-Finance Co-Chairman and Managing Director DIN:

11 Notes to the consolidated financial statements for the year ended 31 March Corporate Information ( the Company or the Parent Company ) is a public limited company domiciled in India and incorporated under the provisions of Companies Act, Its shares are listed on BSE Limited and National Stock Exchange of India Limited. The registered office of the Company is situated at Bhartiagram, Gajraula, District Amroha, Uttar Pradesh The consolidated financial statements of the Company as at and for the year ended on 31 March 2018 comprise the financial statements of Company and its subsidiaries (together referred to as "the Group"). The Group is an integrated global pharmaceutical and life sciences company engaged in pharmaceuticals, life science ingredients and drug discovery solutions. The pharmaceuticals segment, through its wholly owned subsidiary Jubilant Pharma Limited, is engaged in manufacture and supply of APIs, solid dosage formulations, radiopharmaceuticals, allergy therapy products and contract manufacturing of sterile and non-sterile products through 6 USFDA approved manufacturing facilities in India, USA and Canada and a network of over 50 radio-pharmacies in the US. The life science ingredients segment is engaged in specialty intermediates, nutritional products and life science chemicals through 5 manufacturing facilities in India. The drug discovery solutions segment provides proprietary in-house innovation & collaborative research and partnership for out-licensing through 3 world class research centres in India and USA. The Group is well recognized as a Partner of Choice by leading pharmaceuticals and life sciences companies globally. 2. Significant accounting policies This note provides a list of the significant accounting policies adopted in the preparation of these consolidated financial statements. The accounting policies adopted are consistent with those of the previous financial year except for adoption of the following amendment in the Ind AS 7 effective from the current year. The said amendment requires the Group to provide disclosures which will enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and noncash changes. The adoption of the above amendment to the Standard does not have any significant impact on the financial position or performance of the Group. (a) Basis of preparation (i) Statement of compliance The consolidated financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013 ( the Act ) and other relevant provisions of the Act. All the amounts included in the financial statements are reported in millions of Indian Rupees ( Rupees or ` ) and are rounded to the nearest million, except per share data and unless stated otherwise. The consolidated financial statements have been authorized for issue by the Company s Board of Directors on 9 May (ii) Historical cost convention The consolidated financial statements have been prepared under historical cost convention on accrual basis, unless otherwise stated. (iii) Effective 1 April 2015, the Group had transitioned to Ind AS while the consolidated financial statements were being prepared in accordance with the Companies (Accounting Standards) Rules, 2006 (previous GAAP) till 31 March 2016 and the transition was carried out in accordance of Ind AS 101 "First time adoption of Indian Accounting Standards". While carrying out transition, in addition to the mandatory exemptions, the Group had elected to certain exemption which are listed as below: a) The Group had opted to continue with the carrying value for all of its property, plant and equipment and intangible assets as recognised in the financial statements prepared under previous GAAP and use the same as deemed cost in the financial statement as at the transition date. b) The Group had elected to exercise the option under Ind AS 21 for accounting of Exchange differences pertaining to long term foreign currency monetary items that are related to acquisition of depreciable/ amortisable assets to adjust in the carrying amount of the related property, plant and equipment and intangible assets in the consolidated financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP. Accordingly, amortization and depreciation on exchange fluctuation capitalized is charged over the remaining useful life of the respective assets. Further, exchange differences arising on other long-term foreign currency monetary items are accumulated in 'Foreign Currency Monetary Item Translation Difference Account' (FCMITDA), and are amortised over the balance period of the relevant foreign currency item. c) The Group had deemed the cumulative translation differences for all foreign operation to be zero as at the date of

12 Consolidated Financial Statements Annual Report transition date, by transferring cumulative differences to retained earnings. d) The Group had elected to apply Ind AS accounting for business combinations prospectively from 1 April As such previous GAAP balances relating to business combinations consummated before that date, including goodwill, have been carried forward. (b) Principles of consolidation The consolidated financial statements comprises the financial statement of the Company, and the entities controlled by the Company. Control is achieved when the Group has: (i) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee) (ii) Exposure, or rights, to variable returns from its involvement with the investee, and (iii) The ability to use its power over the investee to affect its returns. Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: The details of the consolidated entities are as follows: (i) The contractual arrangement with the other vote holders of the investee (ii) Rights arising from other contractual arrangements (iii) The Group s voting rights and potential voting rights (iv) The size of the Group s holding of voting rights relative to the size and dispersion of the holdings of the other voting rights holders. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary. Consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. If a member of the Group uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to that Group member s financial statements in preparing the consolidated financial statements to ensure conformity with the Group s accounting policies. 193 Sr. No. Name Country of Incorporation Name of Parent Percentage of ownership 1 Jubilant Pharma Limited (1) Singapore 100% 2 Draximage Limited, Cyprus (1) Cyprus Jubilant Pharma Limited 100% 3 Draximage Limited, Ireland (1)* Ireland Jubilant Pharma Limited 100% (w.e.f 30 January 2017) Draximage Limited, Cyprus (upto 29 January 2017) 4 Draximage LLC (merged into Jubilant USA Jubilant Pharma Limited 100% Draximage (USA) Inc. w.e.f. 1 April 2017)* (1) (w.e.f 30 January 2017) Draximage Limited, Cyprus (upto 29 January 2017) 5 Jubilant DraxImage (USA) Inc.* (1) USA Jubilant Pharma Limited (w.e.f 30 January 2017) Draximage Limited, Cyprus (upto 29 January 2017) 100% 6 Deprenyl Inc., USA (merged into Jubilant Draximage (USA) Inc. w.e.f. 1 April 2017)* (1) USA Jubilant Pharma Limited (w.e.f 30 January 2017) Draximage Limited, Cyprus (upto 29 January 2017) 7 Jubilant DraxImage Inc. (1) Canada Jubilant Pharma Limited 100% Canada Inc. (1) Canada Jubilant DraxImage Inc. 100% Canada Inc. (1) Canada Jubilant DraxImage Inc. 100% 100%

13 194 Sr. No. Name Country of Incorporation Name of Parent Percentage of ownership 10 DAHI Animal Health (UK) Limited (liquidated UK Jubilant DraxImage Inc. 100% w.e.f. 19 December 2017) (1) 11 Draximage (UK) Limited (1) UK Jubilant DraxImage Inc. 100% 12 Jubilant Pharma Holdings Inc. (1) USA Jubilant Pharma Limited 84.48% Jubilant Generics Limited 15.52% 13 Jubilant Clinsys Inc. (1) USA Jubilant Pharma Holdings Inc. 100% 14 Cadista Holdings Inc. (1) USA Jubilant Pharma Holdings Inc. 100% 15 Jubilant Cadista Pharmaceuticals Inc. (1) USA Cadista Holdings Inc. 100% 16 Jubilant Life Sciences International Pte. Singapore 100% Limited (2) 17 HSL Holdings Inc. (1) USA Jubilant Pharma Holdings Inc. 100% 18 Jubilant HollisterStier LLC (1) USA HSL Holdings Inc. 100% 19 Jubilant Life Sciences (Shanghai) Limited* (2) China Jubilant Life Sciences 100% International Pte. Limited (w.e.f 23 September 2016) Jubilant Pharma Limited (upto 22 September 2016) 20 Jubilant Pharma NV (1) Belgium Jubilant Generics Limited 77.65% Jubilant Pharma Limited 22.35% 21 Jubilant Pharmaceuticals NV (1) Belgium Jubilant Pharma NV 99.81% Jubilant Pharma Limited 0.19% 22 PSI Supply NV (1) Belgium Jubilant Pharma NV 99.50% Jubilant Pharma Limited 0.50% 23 Jubilant Life Sciences (USA) Inc. (2) USA 100% 24 Jubilant Life Sciences (BVI) Limited (3) BVI Drug Discovery and 100% Development Solutions Limited 25 Jubilant Biosys (BVI) Limited (3) BVI Jubilant Life Sciences (BVI) 100% Limited 26 Jubilant Biosys (Singapore) Pte. Limited (3) Singapore Jubilant Biosys (BVI) Limited 100% 27 Jubilant Biosys Limited (3) India Jubilant Biosys (Singapore) Pte % Limited 28 Jubilant Discovery Services LLC^ (3) USA Jubilant Innovation (USA) Inc. 100% (w.e.f. 4 December 2017) Drug Discovery and Development Solutions Limited (w.e.f. 21 November 2017 till 3 December 2017) Jubilant Biosys Limited (upto 20 November 2017) 29 Jubilant Drug Development Pte. Limited (3) Singapore Jubilant Life Sciences (BVI) 100% Limited 30 Jubilant Chemsys Limited (3) India Jubilant Drug Development Pte. 100% Limited 31 Jubilant Clinsys Limited* (3) India Jubilant Chemsys Limited 100% (w.e.f 31 August 2017) Jubilant Drug Development Pte. Limited (upto 30 August 2017) 32 Jubilant Infrastructure Limited (2) India 100% 33 Jubilant First Trust Healthcare Limited (1) India 100% 34 Jubilant Pharma Trading Inc. (1) USA Jubilant Pharma Holdings Inc. 100% 35 Jubilant Innovation (BVI) Limited BVI Drug Discovery and 100% (liquidated w.e.f. 12 January 2018) (3) Development Solutions Limited 36 Jubilant Innovation Pte. Limited* (3) Singapore Drug Discovery and Development Solutions Limited (w.e.f. 22 November 2017) Jubilant Innovation (BVI) Limited (Upto 21 November 2017) 100%

14 Consolidated Financial Statements Annual Report Sr. No. Name Country of Incorporation Name of Parent Percentage of ownership 37 Jubilant DraxImage Limited* (1) India Jubilant Pharma Limited 100% (w.e.f. 6 February 2017) Draximage Limited, Cyprus (upto 5 February 2017) 38 Jubilant Innovation (India) Limited* (3) India Drug Discovery and 100% Development Solutions Limited (w.e.f. 17 November 2017) Jubilant Innovation (BVI) Limited (Upto 16 November 2017) 39 Jubilant Innovation (USA) Inc.* (3) USA Drug Discovery and 100% Development Solutions Limited (w.e.f. 17 November 2017) Jubilant Innovation (BVI) Limited (Upto 16 November 2017) 40 Jubilant HollisterStier Inc. (1) USA HSL Holdings Inc. 100% 41 Draxis Pharma LLC (1) USA Jubilant HollisterStier Inc. 100% 42 Jubilant Life Sciences (Switzerland) AG (liquidated w.e.f. 8 November 2017)* (2) Switzerland Jubilant Life Sciences International Pte. Limited (w.e.f. 23 September 2016) Jubilant Pharma Limited (upto 22 September 2016) 100% 43 Drug Discovery and Development Solutions Singapore 100% Limited (3) 44 Jubilant Drug Discovery & Development Services Inc.* (3) Canada Drug Discovery and Development Solutions Limited (w.e.f. 19 September 2017) Jubilant Innovation Pte. Limited (upto 18 September 2017) 45 Jubilant HollisterStier General Partnership # (1) Canada Jubilant HollisterStier Inc % Draxis Pharma LLC 0.01% 46 Draximage General Partnership # (1) Canada Jubilant DraxImage Inc 90% Canada Inc. 10% 47 Vanthys Pharmaceutical Development India Jubilant Innovation Pte. Limited 100% Private Limited (3) 48 Jubilant Generics Limited (1) India Jubilant Pharma Limited 100% 49 Jubilant Life Sciences NV (2) Belgium 100% (One share, representing 0.001% holding is held by Jubilant Infrastructure Limited) 50 Jubilant Pharma Australia Pty Limited (1) Australia Jubilant Pharma Limited 100% 51 Jubilant Draximage Radiopharmacies Inc. USA Jubilant Pharma Holdings Inc. 100% (incorporated w.e.f 8 March 2017) (1) 52 Jubilant Employee Welfare Trust India - * Transferred between two subsidiaries of the Company as transactions between entities under common control. # Partnership firms, in which two subsidiaries of the Parent Company are partners. ^On transfer of shares from Jubilant Biosys Limited to Drug Discovery and Development Solutions Limited, it became wholly owned subsidiary of the Company and the said transaction has been recorded as transaction with noncontrolling interest. Further on 4 December 2017, Jubilant Discovery Services Inc. has been converted into limited liability company named as Jubilant Discovery Services LLC. (1) Represents entities engaged in Pharmaceuticals business. (2) Represents entities engaged in Life Sciences Ingredients business. (3) Represents entities engaged in Drug Discovery Solution business. 100% 195

15 196 (c) Consolidation procedure a) Combine like items of assets, liabilities, equity, income, expenses and cash flows of the parent with those of its subsidiaries. b) Offset (eliminate) the carrying amount of the parent s investment in each subsidiary and the parent s portion of equity of each subsidiary. Business combinations policy explains how to account for any related goodwill. c) Eliminate in full, intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the Group (profits or losses resulting from intragroup transactions that are recognised in assets, such as inventory and fixed assets, are eliminated in full). Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. Ind AS 12 Income Taxes applies to temporary differences that arise from the elimination of profits and losses resulting from intragroup transactions. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. Non-controlling interest in the results and the equity of subsidiaries are shown separately in the Consolidated Statement of Profit and Loss, Consolidated Statement of Changes in Equity and Consolidated Balance Sheet. The Group treats transactions with noncontrolling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised within equity. (d) Current versus non-current classification The Group presents assets and liabilities in the Balance Sheet based on current/ non-current classification. An asset is treated as current when: It is expected to be realised or intended to be sold or consumed in normal operating cycle; It is held primarily for the purpose of trading; It is expected to be realised within twelve months after the reporting period; or It is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. The Group classifies all other assets as non-current. A liability is current when: It is expected to be settled in normal operating cycle; It is held primarily for the purpose of trading; It is due to be settled within twelve months after the reporting period; or There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The Group classifies all other liabilities as noncurrent. Deferred tax assets and liabilities are classified as non-current assets and liabilities, respectively. The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. Each entity of the Group has identified twelve months as its operating cycle for the purpose of current-non-current classification of assets and liabilities. (e) Business combinations Business combinations (other than common control business combinations) are accounted for using the purchase (acquisition) method. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. The cost of acquisition also includes the fair value of any contingent consideration. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at fair value at the date of acquisition. Transaction costs incurred in connection with a business combination are expensed as incurred. The excess of the consideration transferred over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised in other comprehensive income and accumulated in equity as capital reserve provided there is clear evidence of the underlying reasons for classifying the business combination as a bargain purchase. Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that

16 Consolidated Financial Statements Annual Report common control was established; for this purpose comparatives are revised. The assets and liabilities acquired are recognized at their carrying amounts. The identity of the reserves is preserved and they appear in the consolidated financial statements of the Group in the same form in which they appeared in the financial statement of the acquired entity. The differences, if any, between the consideration and the amount of share capital of the acquired entity is transferred to capital reserve. (f) Property, plant and equipment (PPE) and intangible assets (i) Property, plant and equipment Freehold land is carried at cost. All other items of property, plant and equipment are stated at cost, which includes capitalized finance costs, less accumulated depreciation and any accumulated impairment loss. Cost includes expenditure that is directly attributable to the acquisition of the items. The cost of an item of a PPE comprises its purchase price including import duty, and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition of its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price. Expenditure incurred on startup and commissioning of the project and/or substantial expansion, including the expenditure incurred on trial runs (net of trial run receipts, if any) up to the date of commencement of commercial production are capitalised. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. Advances paid towards acquisition of property, plant and equipment outstanding at each Consolidated Balance Sheet date, are shown under other non-current assets and cost of assets not ready for intended use before the year end, are shown as capital work-in-progress. (ii) Intangible assets Goodwill arising on business combinations is disclosed separately in the balance sheet and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Internally generated goodwill is not recognised as an asset. With regard to other internally generated intangible assets: - Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the Consolidated Statement of Profit and Loss as incurred. - Development expenditure including regulatory cost and legal expenses leading to product registration/ market authorisation relating to the new and/or improved product and/or process development capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use the asset. The expenditure capitalised includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use, and directly attributable finance costs (in the same manner as in the case of tangible fixed assets). Other development expenditure is recognised in the Consolidated Statement of Profit and Loss as incurred. Intangible assets (including intangible assets under development) that are acquired and implementation of software system are measured initially at cost. After initial recognition, an intangible asset is carried at its cost less accumulated amortisation and any accumulated impairment loss. Subsequent expenditure is capitalised only when it increases the future economic benefits from the specific asset to which it relates. (iii) Depreciation and amortization methods, estimated useful lives and residual value For Indian entities, depreciation is provided on straight line basis on the original cost/ acquisition cost of assets or other amounts substituted for cost of fixed assets as per the useful life specified in Part 'C' of Schedule II of the Act, read with notification dated 29 August 2014 of the Ministry of Corporate Affairs, except for the following classes of fixed assets which are depreciated based on the internal technical assessment of the management as under: 197