2007 - Piramal

Transcription

2007 - Piramal

The
Vision
To become the most admired Indian pharmaceutical company with
leadership in market share, research and profits by:
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Building distinctive sales & marketing capabilities
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Evolving from licensing to globally launching our patented products
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Inculcating a high performance culture
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Being the partner of choice for global pharmaceutical companies
Always adhering to our values, based on our obligations as the trustees of
our customers, employees, shareholders and society
contents
contents
Chairman’s Letter
2
Balance Sheet
44
Management Discussion & Analysis
4
Profit & Loss Account
45
Corporate Governance
15
Cash Flow Statement
46
Notice
27
Schedules
48
Directors’ Report
29
Notes to Accounts
55
Auditors’ Report
40
Consolidated Financial Statements
69
Nicholas Piramal India Limited
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Chairman‘s Letter
Dear Shareholders,
The Financial Year 2006-07 marked a strong performance by our Company.
I am pleased to report that Total Operating Income for the year grew 55.0% to Rs. 24.7 billion compared to
Rs. 15.9 billion for the year ended 31 March 2006. Operating Profit for the year grew 83.0% to Rs. 3.8 billion. Profit
after tax grew 80.7% to Rs. 2.2 billion compared to Rs. 1.2 billion in FY2006. Earnings per share were Rs. 10.3 per
share vs. Rs. 5.8 in FY2006.
The strong performance has been achieved on the back of increased traction in our custom manufacturing business.
Global sales (outside India) for the year were up by 214.1% to Rs. 10.6 billion in FY2007 from Rs. 3.4 billion in
FY2006. With this, global sales (outside India) now account for 43.1% of our total sales.
We had acquired Avecia Pharmaceuticals, U.K., in December 2005, for a consideration of GBP 11.8 million. The
business then had sales of GBP 36.0 million and operating loss of GBP 4.6 million. I am pleased to report that we have
been able to add significant value to Avecia with our business development efforts, and well-thought measures to bring
down costs - by efficient raw material sourcing and rationalization of fixed costs. As a result, Avecia has turnedaround
and is now profitable.
During the year, we also acquired a world-class manufacturing facility of Pfizer, Inc. at Morpeth in U.K. This site has
approval from USFDA as well as UK-MHRA and has full range of pharmaceutical operations such as finished APIs,
finished dosages with containment suites, process development for APIs and finished dosages, packaging and worldwide
distribution abilities. We secured the facility along with a long-term supply arrangement to Pfizer upto November
2011. With the acquisition of this facility, our Company has become the biggest supplier within Pfizer’s Global Sourcing
network. The acquisition of Morpeth is consistent with our intent of becoming a global leader in Custom Manufacturing
across the Pharmaceutical Value Chain.
During the year, our Custom Manufacturing revenues from Indian facilities increased from Rs. 206.4 million in FY2006
to Rs. 767.4 million registering an impressive growth of 271.8%. We have received a number of new contracts at our
facilities in India. I am pleased to report that after starting ground-up in 2003, within a time span of four years, our
company has become a leading global Custom Manufacturing Company, across Custom Synthesis, APIs and Finished
Dosage.
Globally, large players in the pharmaceutical industry are under pressure to reduce their manufacturing costs as more
blockbusters are replaced by their generic versions, and the new ones are hard to come by. As a result, we are seeing
increasing interest from innovator companies to outsource their production. We believe that Indian companies with
their significant cost advantage and capabilities in manufacturing as per the highest standards, will be the beneficiaries
of increased outsourcing.
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The domestic formulations market registered good growth this year. With the strong growth in Indian economy, we
believe that we will continue to see healthy growth going forward in the domestic formulations market, as rising
incomes result in a larger part of the population having access to medication. However, the proposed new drug policy,
if implemented, would increase the span of price controls, and this could lead to significant challenges for the industry
going forward.
Our domestic formulations business continued to register healthy growth. Branded formulations Sales were up by
11.9% to Rs. 11.7 billion from Rs. 10.5 billion in FY2006. Our top-10 brands have recorded a growth of 12.7%. We
launched twenty-two new products during the year. As a result of our strong brand-building efforts and innovative
marketing techniques, Sales from new products (launched during the last 24 months) have reached 5.2% of total
branded formulations sales and seven new brands have become market leaders in their category. During the year, we
also successfully completed migration of manufacturing from Pithampur to our new facility at Baddi.
Our Company continued to expand its R&D program in FY2007, committing 5.1% of Total Operating Income to
R&D revenue expenditure. The R&D pipeline has expanded significantly; we now have two phyto-pharmaceutical
molecules in Phase II clinical trials. Besides, clinical trials for our lead oncology molecule P276-00, which is in Phase
I/II, also started in India. During the year, we signed an innovative drug development agreement with Eli Lilly &
Company, USA, wherein Eli Lilly has given us a novel patented pre-clinical drug candidate for development in the
metabolic disorders segment. We will design and execute the global clinical development program for this candidate
up to beginning of Phase III, and in return, we could receive milestone payments. We will also get royalties and
commercialization rights in select markets on successful launch of the first compound.
You will recollect that we undertook a major strategic planning exercise in FY2004, christened Agya Chakra. This
strategic plan reflected the high growth aspirations and ethos of our Company. As we look back over the past three
years, we realize the major ground covered by our Company in building our domestic formulations, custom
manufacturing, and R&D businesses. We have remained committed to our business plan, in spite of facing many
challenges, and it is in year FY2007, that we are now beginning to see its rewards. Today, we have emerged as a global
company that is poised to harness significant opportunities ahead.
Thank you,
Ajay G. Piramal
Chairman
Date : 26th April, 2007
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Management Discussion & Analysis
FY2007: (consolidated) at a glance
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Summary - consolidated:
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Net Sales
: Rs. 24.7 billion
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Operating Profit
: Rs. 3.8 billion
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Net Profit
: Rs. 2.2 billion
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Gross margin (sales less material costs)
: From 58.2% to 64.4%
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R&D spend
: From 4.9% to 5.1%
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Operating Profit Margin (OPM)
: From 13.1% to 15.5%
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Net Profit Margin (PAT)
: From 7.6% to 8.8%
Revenue and Profit - consolidated:
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Net Sales growth:
• Aggregate
• Organic & Continuing businesses
Domestic branded formulations growth
Global Sales* growth
Operating Profit growth
Net Profit growth
55.0%
17.0%
11.9%
214.1%
83.0%
80.7%
Operations highlights - consolidated:
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Domestic branded formulations:
•
Field force of 2,986; 14 Marketing Divisions, 7 Specialist Divisions
•
Twenty two new products & line extensions launched, new products (launched last 24 months) form 5.2% of sales
•
Top-10 brands grew by 12.7% in FY2007
Global Sales & Custom Manufacturing:
•
Global Sales were 43.1% of sales
•
Turnaround of Avecia Pharmaceuticals, UK, operations achieved
•
Acquisition of Pfizer’s Manufacturing facility at Morpeth, UK
Research & Development:
•
Lead molecule in Oncology Phase I/II progressing well, simultaneous trials started in India
•
Two new molecules – Sphira and Hespiderm currently undergoing Phase II clinical studies in India
•
Landmark in-licensing agreement for a novel, patented pre-clinical drug candidate signed with Eli Lilly & Company, USA
Allied Businesses:
•
Pathlabs business growth 54.5%
•
Pathlabs business acquired 6 new Laboratories
*Note: Global Sales are sales outside India
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:
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:
:
:
MANAGEMENT DISCUSSION & ANALYSIS
NPIL financial highlights: Consolidated
Particulars
Year
FY2007
Rs. million
FY2006
Rs. million
Growth
%
24,719.3
15,944.9
55.0
3,834.7
2,095.7
83.0
15.5
13.1
—
3,838.6
2,377.7
61.4
305.1
173.0
76.4
OPBT
2,711.4
1,234.6
119.6
PBT before exceptional items
2,715.3
1,516.6
79.0
PAT
2,180.5
1,206.5
80.7
10.3
5.8
77.6
Total Operating Income
OPBIDTA
OPM %
EBIDTA
Interest (Net)
EPS Rs.
Particulars
31 March 2007
31 March 2006
Debt / Equity ratio
0.65
0.38
ROCE %
20.7
14.3
RONW %
20.6
12.2
EVA (annualized) (Rs. million)
682.7
182.5
Net Sales / Net Fixed Assets ratio
2.0
1.5
Inventory (days*)
62
61
Receivables (days*)
52
52
Note: * Days have been worked on the basis of gross sales. From the current year, gross sales also include other operating income and exclude sales tax. The numbers
for previous year have been restated accordingly.
Review of the year ended 31 March 2007: (Consolidated)
The operating results discussion in the Management Discussion and Analysis Section refers to Consolidated Financial Statements, unless stated
otherwise.
Driven by consolidation of the newly acquired entities, FY2007 Total Operating Income grew by 55.0% to Rs. 24.7 billion compared with FY2006
Net Sales of Rs. 15.9 billion. Total Operating Income from organic & continuing businesses (i.e. excluding erstwhile Avecia and Morpeth revenues)
grew by 17.0% to Rs. 17.3 billion, compared with FY2006 total operating income of Rs. 14.8 billion.
Rs. million
No.
1
2
3
Sales
Net Sales - aggregate
Less:
Sales from NPIL Pharmaceuticals (UK) Ltd.
Sales from Torcan Chemical Company, Canada
Net Sales - continuing businesses (1–2–3)
Organic & Continuing Sales growth
Consolidated Net Sales
FY2007
FY2006
24,719.3
15,824.9
6,302.0
1,142.3
17,275.0
17.0%
748.0
311.8
14,765.1
Note : Sales of NPIL Pharmaceuticals (UK) Limited include Sales generated from the Morpeth, UK facility for the period 19 June 2006 to 31 March 2007. The
Morpeth, UK facility was acquired as an asset purchase by NPIL Pharmaceuticals (UK) Limited
For the year ended 31 March 2007, Operating Profit Before Interest, Depreciation and Tax (OPBIDTA) was also higher at Rs. 3.8 billion, an
increase of 83.0% over FY2006 OPBIDTA of Rs. 2.1 billion. Operating Margin increased to 15.5%, compared with 13.1% for FY2006. The increase
in operating profits and margins has been achieved mainly due to the traction in custom manufacturing sales, which grew by 214.1% during the year.
A significant factor behind the higher margins was the turnaround achieved at Avecia Pharmaceuticals operations (‘Avecia’). Avecia had a negative
OPBIDTA of Rs. 247.0 million in FY2006, for the period 02 December 2005 to 31 March 2006.
Net Interest increased by 76.4% to Rs. 305.1 million, compared with Rs. 173.0 million in FY2006. Total Debt (considering preference shares as
Debt) as on 31 March 2007 was Rs. 6.8 billion, compared with Rs. 3.6 billion for FY2006. Debt/Equity ratio (considering preference shares as Debt)
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was 0.65 in FY2007, compared to 0.38 in FY2006. The Debt level and interest costs for FY2007 were higher as we used internal funds and debt to
finance capital expenditure for the year and for acquisition of Pfizer’s Morpeth facility.
Depreciation for the year was Rs. 818.2 million compared to Rs. 688.1 million in FY2006.
Income Tax and Fringe Benefit Tax for FY2007 was Rs. 388.9 million, compared with Rs. 238.1 million in FY2006.
Profit After Tax after exceptional items (net of tax) was Rs. 2.2 billion in FY2007 as compared to Rs. 1.2 billion in FY2006, registering a growth of
80.7%.
Earnings per share for FY2007 were Rs. 10.3 per share vs. Rs. 5.8 per share in FY2006, an increase of 77.6%.
Net Sales analysis (Consolidated):
NPIL’s domestic branded formulations business, which at Rs. 11.7 billion contributed 47.5% of Total Operating Income, increased 11.9% over
FY2006. Global Sales - growing to 43.1% of Total Operating Income – were Rs. 10.6 billion as compared to Rs. 3.4 billion for FY2006.
Change in Reporting Format:
Starting FY2007, we have changed the reporting format for global sales to align it with revenue segments of our global Custom Manufacturing
business . The global sales are now sub-divided into:
1.
PDS (Pharmaceutical Development Services): This includes Process Development Services for API and Formulations.
2.
PMS (Pharmaceutical Manufacturing Services): This includes commercial-scale Custom Manufacturing contracts for APIs and Formulations.
3.
MMBB (Marketable Molecules and Building Blocks): This includes off-patent APIs and Formulations products, Inhalation Anaesthetic products,
Vitamin-A products and other catalogue products.
Vitamins sales in domestic market are now reported under Custom Manufacturing Operations (CMO) category in the India sales break-up. The
sales from Diagnostics business, which were earlier included in India Sales under separate headings, have now been clubbed with the Others
category within India Sales.
The break-up of aggregate Net Sales as per the new format is as under:
Rs. million
No. Net Sales break-up
I
II
India Sales:
1
Formulations
2
CMO
3
Pathlabs
4
Others
SUB-TOTAL
Global Sales:
1
PDS
2
PMS
3
MMBB
4
Others
SUB-TOTAL
TOTAL
% sales
Year ended
FY2007
31-Mar-07
31-Mar-06
% growth
47.5
3.3
2.8
3.3
56.9
11,741.5
826.0
695.0
810.1
14,072.6
10,496.5
944.8
449.7
663.9
12,554.9
11.9
(12.6)
54.5
22.0
12.1
5.9
26.9
9.2
1.1
43.1
100.0
1,458.6
6,648.4
2,266.1
273.7
10,646.7
24,719.3
413.6
904.1
1,890.4
181.1
3,389.3
15,944.2
252.7
635.3
19.9
51.1
214.1
55.0
Notes:
1. Custom Manufacturing revenues from Indian assets, consisting of AMO, Allergan contracts and PDS-India revenues, were Rs. 767.4 million in
FY2007, compared with Rs. 206.4 million in FY2006.
2. The income of Rs. 178.0 million towards agreement related to the Joint Venture with Alliance Boots is included under “Others” segment of
India Sales.
Domestic Branded Formulations
Market commentary and Industry Outlook:
Backed by a strong growth in GDP, the Indian Pharmaceutical industry experienced a strong growth rate of 14.3% during the year (ORG IMS MAT
March 2007). An important contributor to industry growth in FY2007 was the spread of epidemics such as Dengue and Chickungunya, which led to
a sharp increase in sales of antibiotics and painkillers during the first half of the year. A redeeming feature of growth during the year was the rise in
volumes contributing to bulk of the 14.3% growth. On the new products front, there has been a fair amount of innovation by Indian companies in the
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area of combination therapy.
The domestic pharmaceuticals industry is centered on branded generics, and is intensely competitive. Top-10 companies account for only 37% of the
market. The new patent regime which came into effect from January 2005 disallows generic copies of any drug patented after 1995. Given this
industry structure, we expect brands franchise; field force strength and product innovation to be key success factors in the coming years. Industry
studies suggest that modern medicine still covers less than a third of the population. We believe that coverage will substantially improve in the
coming years because of higher economic growth and focus of pharmaceutical companies to increase service to semi-urban and rural areas. If this
happens, the domestic pharmaceuticals industry would continue to grow faster than GDP.
Nicholas Piramal consolidated formulations performance:
During the year, NPIL’s domestic branded formulations grew 11.9% in aggregate terms to Rs. 11.7 billion as compared to Rs. 10.5 billion for FY2006.
Launch of Healthcare division:
We have created a new division as a 100% subsidiary named NPIL Healthcare Pvt. Ltd., targeting Mass Market Branded Formulations (MMBF).
Currently, we are in a pilot phase. We have recruited 400 people who will service about 50,000 General Practioners in 12 states.
Formulations sales analysis: Consolidated portfolio
Rs. million
Therapy area analysis
No.
Therapeutic area
Nicholas Piramal
1 Respiratory
2 Anti-Infective
3 Cardio Vascular System
4 Central Nervous System
5 Nutritionals
6 Biotech
7 Anti-Diabetic
8 Gastro-intestinal
9 Dermatology
10 NSAIDs
11 Others
II Allergan India
11 Ophthalmology
III NPIL Healthcare
12 MMBF
Total Branded Formulations
Company Financials year ended
ORG-IMS
MAT-Mar-07
Sales wt.
%
FY2007
Rs. million
FY2006
Rs. million
Growth
%
Market
growth%
20.0
12.7
12.5
11.4
8.6
1.4
5.9
4.4
4.1
5.3
9.7
2,348.8
1,488.8
1,468.2
1,335.9
1,004.9
166.1
697.8
511.2
475.8
619.6
1,133.2
1,983.8
1,397.9
1,281.2
1,265.1
885.8
136.5
601.9
442.6
396.5
539.8
1,182.0
18.4
6.5
14.6
5.6
13.5
21.7
15.9
15.5
20.0
14.8
(4.1)
12.9
15.1
11.0
12.8
10.1
—
17.6
14.7
16.1
22.2
—
3.2
377.1
383.3
(1.6)
15.6
1.0
100.0
113.9
11,741.3
—
10,496.5
—
11.9
—
14.3
I
Notes:
1.
Market data source: ORG-IMS, no similar market data available for Biotech segment.
2.
On 17 July 2005, Allergan India sold its Medical Optics business in India to Advanced Medical Optics, Inc., USA (“AMO”) for a consideration of Rs. 436.2
million. Sales from this business segment were Rs. 69.3 million in FY2007. As a result, the Ophthalmology segment shows a decline of 1.6%. Adjusting for this
discontinued business, the sales in Ophthalmology segment have grown by 7.7%.
3.
Adjusting for the decline in OTC/Allergan businesses, NPIL’s core branded formulations business grew by 14.0%.
Portfolio performance: Joint Ventures & Subsidiaries
Allergan India Limited (‘AIL’):
AIL is a 51:49 Joint Venture between Allergan Inc., USA and Nicholas Piramal. It specializes in sales and marketing of ethical Ophthalmology
products. On 17 July 2005, Allergan India sold its Medical Optics business in India to Advanced Medical Optics, Inc., USA (AMO) for a consideration
of Rs. 436.2 million. Sales from this business segment were Rs. 69.3 million in FY2007.
As a result, during FY2007, the Net Sales of AIL degrew by 1.9% to Rs. 767.7 million (FY2006 Net Sales: Rs. 782.3 million) PBIDT for FY2007 was
Rs.104.6 million, compared with FY2006 Rs. 448.8 million, a degrowth of 76.7%, mainly because of a one time income of Rs. 311.2 million in
FY2006 on sale of discontinued operations. Profit after tax for FY2007 was Rs. 43.9 million, compared with FY2006 value of Rs. 310.5 million, a
degrowth of 85.8%.
Nicholas Piramal Consumer Products Pvt. Ltd. (‘NPCPPL’):
(formerly Boots Piramal Healthcare Pvt. Ltd.(‘BPHPL’))
On September 29, 2006, NPIL acquired the balance 51.0% equity stake held by The Boots Company Plc, a subsidiary of Alliance Boots Plc, in the
Joint Venture Company, Boots Piramal Healthcare Private Limited. BPHPL’s marketing rights for the brands Strepsils, Clearasil and Sweetex in
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India were transferred to Reckitt Benckisser India Limited. Further as a part of this arrangement, NPIL received a one-time sum of Rs. 178.0 million
from Alliance Boots/Reckit Benckisser.
BPHPL has since become a wholly owned subsidiary of the company and has been renamed as Nicholas Piramal Consumer Products Pvt. Ltd.
(NPCPPL). NPCPPL will continue to actively market and distribute its own Over The Counter (OTC) products viz. Saridon, Polychrol and Lacto
Calamine. In addition, NPCPPL also plans to launch OTC brands in new therapy areas as well as transition some of NPIL’s Rx brands to OTC by
leveraging its sales and marketing team.
Net Sales for NPCPPL for FY2007 was Rs. 506.1 million, PBIDT was Rs. 34.4 million and PAT was Rs. 26.7 million.
Core Brand Analysis:
Sales of top-10 brands was 29.8% of the consolidated total branded formulations sales and that of the top-30 brands was 55.7% of the total branded
formulations sales. Sales from Lifestyle segment (which include therapy areas of CVS, CNS, Anti-diabetic and Biotech) contributed to 31.2% of the
total branded formulations sales.
Brands portfolio expansion:
New Products launch:
Nicholas Piramal launched 22 new products (including extensions) during FY2007. Sales from new products (launched during the past 24 months)
were Rs. 611.2 million during the year. Seven new brands have become market leaders in their respective sub-segments.
DPCO:
Products under the Drug Price Control Order (DPCO) contributed 14.1% of domestic branded formulations sales in FY2007, against 14.5% in
FY2006.
Field Force (standalone):
Nicholas’ Formulations field force of 2,986 personnel continues to be one of the largest in the Indian Pharmaceutical industry. We believe our
investment in field force is one of our key strengths. Our vast yet specialized field presence also adds to our in-licensing attractiveness. Nicholas
Piramal now has 14 Divisions, out of which 7 focus on specific therapies.
Sharper therapy-wise focus has enabled us to attain high coverage in specialty doctor segments. Our Multi-specialty Divisions, meanwhile, focus on
General Practitioners and build mass consumption brands and primary care products.
NPIL has a tertiary field layer of two Franchisee Divisions: First division comprising of 116 persons which markets older brands to General Practitioners
in semi-urban and rural areas; and second division comprising of 168 persons that does retail order booking for big brands.
No. of people
No. Formulations Division
I.
FY2007
FY2006
515
537
348
284
23
249
22
532
558
381
273
—
—
20
1,978
1,829
211
191
216
234
116
30
10
214
181
237
244
106
24
8
SUB-TOTAL
1,008
1,014
TOTAL
2,986
2,778
Multi-specialty & Institutional
1
Multi-Specialty
2
Actis
3
Aakar (Ethical)
4
Anant (Specialty)
5
Drishti
6 Zivon*
7
Nepal
TA Focus
General Medicine/Orthopaedic
Respiratory/Paediatrics
General Medicine
General Medicine/Pain management
General Medicine (and some specialty products)
General Medicine
SUB-TOTAL
II.
8
Dedicated
8
Cardex
9
Cadence
10 Extra Care
11 Cognex
12 Glotek
13 Biotek
14 Carex
Cardiovascular
Cardiovascular
Diabetology
Neuro-Psychiatry
Dermatology/Gynaecology
Nephrology/Oncology
Critical Care/Anaesthesiology
Global Sales and Custom Manufacturing Business Group
Market commentary:
The Global Custom Manufacturing market has shown good growth as large pharmaceutical companies face rising cost-pressures and patent expiry of
block-buster drugs; and are forced to look at improving manufacturing efficiencies. The market is still in consolidation mode and the year witnessed
a number of merger/acquisition transactions.
The outsourcing industry is expected to continue growing faster than global pharmaceuticals industry over the next 5-7 years, driven by need for
increased outsourcing by pharmaceutical companies. Hitherto, western companies have led the outsourcing industry. However, it is expected that
Asian companies will gain market share and importance because of their cost advantage and chemistry innovation skills. The industry might
experience consolidation in geographical and value chain terms, with Asian companies trying to gain customer relationships, while Western companies
try to secure lower-cost manufacturing assets.
Nicholas Piramal performance:
International sales grew 214.1%, driven by consolidation of revenues from Avecia and Morpeth. and higher custom manufacturing revenues from
Indian assets. Sales from contracts from Indian Assets and PDS business out of India for FY2007 aggregated Rs. 767.4 million, as compared to
Rs. 206.4 million in FY2006. Sales for AMO and Allergan contracts reached steady state during the year. During FY2007, we have secured a
number of additional contracts related to Indian assets, which are yet to commence revenues.
Within the MMBB segment, we successfully shifted production of Inhalation Anesthetic products from Rhodia UK facilities to our plant at Digwal,
Hyderabad. We also successfully underwent a USFDA inspection of two of our Custom Manufacturing sites at Pithampur in India (formulations) and
Grangemouth in United Kingdom (High Potency APIs).
Acquisition of Pfizer’s Facility at Morpeth, UK
In keeping with our intent of being a leader in the custom manufacturing space, we have acquired the manufacturing facility of Pfizer, Inc. located at
Morpeth, Northumberland, UK. The site was one of Pfizer’s global, high-quality, integrated facilities. It has end-to-end production and supply chain
capabilities that cover APIs, Finished dosage, Packaging and Distribution. This facility came with a supply agreement till November 2011.
Morpeth’s team of about 450 people has rich experience in new product launch, site technical transfer and operational excellence initiatives such as
JIT & Right-First-Time. Its facilities are approved by USFDA and UKMHRA. Morpeth is a supply hub for certain Pfizer products supplied to USA,
Europe and Japan. With the acquisition of Morpeth, NPIL has gained strategic entry into the global sourcing network of Pfizer, Inc. Nicholas Piramal
is now one of the world’s leading Pharmaceuticals Outsourcing Companies, across Custom Synthesis, APIs and Finished Dosage.
Turnaround of Avecia Operations:
We had acquired Avecia Pharmaceuticals, UK (‘Avecia’) on 02 December 2005. For the period ended 31st March, 2006, Avecia had OBIDTA loss
of Rs. 247.0 million. During FY2007, we have been successful in growing the revenues substantially. This combined with integration of materials
sourcing from Indian assets and fixed costs rationalization has resulted in Avecia reporting a positive Net Profit for FY2007 from both its Canadian
and UK operations.
Research & Development program
Research & Development:
During the year, our R&D pipeline has shown significant traction. Our lead oncology molecule P276-00 that was in clinical trials in Canada is now
undergoing simultaneous clinical trials in India. Two phyto-pharmaceutical molecules, Sphira and Hespiderm, have progressed to Phase-II and are
currently undergoing clinical trials in India. Ten other candidates are in pre-clinical stage.
During the year, we signed an agreement with Eli Lilly and Company, USA, wherein Eli Lilly has licensed to us for development, a novel, patented,
pre-clinical drug candidate in the metabolic disorders segment. We will design and execute the global clinical development programme of this
optimized lead and take it upto beginning of Phase III. In return, we would potentially receive milestone payments upon successful completion of
Phase I and II by us and upon registration and launch by Eli Lilly. If the molecule is successfully launched, we will also get commercialization rights
for select markets and get royalties on global sales.
During the year, Nicholas Piramal entered into a plant-screening agreement with Napo Pharmaceuticals, Inc. USA, (‘Napo’) a company which is
focused on developing and commercializing proprietary pharmaceuticals for the global marketplace. As part of the agreement, NPIL will utilize its
High Throughput Screening facility and Natural Product Chemistry expertise along with biological testing capabilities to identify active compounds
from Napo’s library of medicinal plant extracts from tropical regions. Napo and NPIL will jointly own all products that are developed under the
agreement.
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We continue to invest significant resources in our R&D program. R&D expenditure during the year was up by 63.1% to Rs. 1.3 billion from Rs. 775.3
million in FY2006.
Risks to Businesses:
Product risk:
Any product failure would create significant liability and adversely affect our company.
New Drug Price Control Policy:
The Government of India is considering implementation of a new drug policy, which would considerably expand purview of price-control over drugs.
Price control will adversely affect the profitability of our company.
Client concentration risk and Revenue volatility in CMG business:
Since our business model is based on contracts with customers any set back for the client company product will adversely affect our revenues and
hence profits as well.
Discovery research spend:
Our Company spends about 5% of its Revenues and significant capital expenditure on proprietary projects in Discovery Research and Process
Development. These projects are high-risk high-reward investments, and there is no assurance of success. Should any project fail, the amounts
capitalized towards the project will be written off in that accounting year.
Human Resources
Nicholas Piramal aims to recruit and retain quality professionals and provide them with a high performance environment. The Company follows a
detailed performance management system. Employees are rewarded with performance-linked variable pay and stock options.
During the period under review, total manpower increased to 7,542 from 6,891 in FY2006, while aggregate field force (formulations + other
businesses) increased to 3,221 from 3,208. R&D team size increased to 387 from 350.
No. Function
a.
b.
c.
Field staff (formulations + other businesses)
R&D staff
Others
Total NPIL standalone manpower
NPIL Pharmaceuticals (UK) Ltd.*
Torcan Chemical Ltd.
Total NPIL Consolidated Manpower
FY2007
FY2006
+/(–)
3,221
387
3,204
6,812
587
143
7,542
3,208
350
2,992
6,550
199
142
6,891
13
37
212
262
388
1
651
*The increase in people has been due to acquisition of Pfizer’s manufacturing facility at Morpeth, which employed 450 persons at the time of its
acquisition.
Pathlabs:
During the review period, NPIL Pathlabs acquired 6 new laboratories. We have, in addition, acquired the remaining 40 per cent stake in our joint
venture NPIL – Dr Phadke Pathalogy Laboratory & Inferility Center Pvt. Ltd. in Mumbai. We also entered into a strategic alliance with Doctors
Diagnostic & Research Centre, the largest diagnostic center in Kerala with 34 labs across the state. During the year, we entered the high-end health
imaging services by acquiring Jhankaria Imaging, a leading radiology and imaging center in Mumbai.
Net sales from Pathlabs increased by 54.5% from Rs. 449.7 million in FY2006 to Rs. 695.0 million in FY2007. Total Operating Income for Pathlabs
grew by 54.5% from Rs. 449.7 million in FY2006 to Rs. 695.0 million. Operating Profit for the year was up by 14.4% to Rs. 118.2 million. However,
acquisition of new labs and setting up of greenfield facilities have resulted in higher interest costs and depreciation.
Disclaimer:
Certain statements included in this report may be forward looking and would involve a number of risks, uncertainities and other factors that could
cause actual results to differ materially from those suggested by the forward-looking statements.
10
FINANCIAL HIGHLIGHTS (Consolidated)
Income Statement (Consolidated)
Rs. million
Total Income
Total Operating Income
– Gross
– Net
Non Operating Other Income
Total
PBIDT
Operating Profit
Operating Profit as a % to Total Operating Income
Non Operating Other Income
Total
PBIDT as a % of Total Income
Interest (net)
Depreciation
Exceptional Items
Profit Before Tax
Tax
– Current
– Mat Credit Entitlement
– Deferred
– Fringe Benefits
Total Tax
Profit After Tax
Earnings Per Share (Rs.) (Face value Rs. 2/-)
Earnings Per Share before exceptional items
(net of tax) (Rs.)
FY2007
FY2006
25,720.5
24,719.3
3.9
24,723.2
16,903.9
15,944.2
282.0
16,226.2
3,834.7
15.5%
3.9
3,838.6
15.5%
305.1
818.2
43.1
2,672.2
2,095.7
13.1%
282.0
2,377.7
14.7%
173.0
688.1
32.7
1,483.9
314.8
(113.1)
158.1
29.1
388.9
2,180.5
10.3
226.4
(131.9)
113.6
30.0
238.1
1,206.5
5.8
10.5
6.o
Growth %
52.2
55.0
(98.6)
52.4
83.0
(98.6)
61.4
76.4
18.9
80.1
80.7
77.6
75.0
Net Sales
Consolidated Net Sales/Service during the year registered an increase of 55.0% over the previous year. Detailed analysis of Net Sales is given earlier
in the report.
Non-Operating Other Income
The decrease in non-operating other income is mainly because last year’s non-operating income included one-off profit on spin-off of AMO-India
business from Allergan-India.
Operating Profit Before Interest, Depreciation and Tax (OPBIDTA)
Operating PBIDT increased from Rs. 2,095.7 million to Rs. 3,834.7 million, registering a growth of 83.0%. Operating margin as a percentage of total
income also increased to 15.5% from 13.1%. The increase was mainly due to high growth of CMG sales and turnaround of Avecia operations.
Operating profit for FY2007 was also higher on account of one time receipt of an income of Rs. 178.0 million towards termination of joint venture
with Alliance Boots PLC.
Net Interest
Net Interest was up by 76.4% from Rs. 173.0 million to Rs. 305.1 million in FY2007 on account of higher loan funds.
11
Depreciation
Depreciation charges increased by 18.9% at Rs. 818.2 million compared to Rs. 688.1 million in FY2006. Higher depreciation was on account of the
capital expenditure NPIL incurred in FY2006 and FY2007. However, the depreciation charge for the year FY2007 was after the following adjustments:
1.
The carrying value of assets and liabilities of Torcan Chemical Company has been aligned to their fair values. Consequent to the above
realignment of asset values, there is a decrease in depreciation expense to the tune of Rs. 88.8 million in FY2007. Of this amount,
Rs. 66.1 million pertaining to the year ended March 31, 2007 is reflected in depreciation and the balance Rs. 22.7 million is also included under
depreciation.
2.
Hitherto, the excess of cost to the Company of its investment in its subsidiary companies (whether arising on acquisition or amalgamation, if
any) was recognized as goodwill and amortized over a period of ten years. However, during the year ended March 31, 2007, this policy has been
changed whereby amortization to amalgamation goodwill only in accordance with the applicable Accounting Standards. However, such investment
in the subsidiary company is periodically tested for impairment. The impact of the above change in the accounting policy is decrease in depreciation
and consequent increase in profit to the tune of Rs. 95.5 million, of which Rs.61.8 million pertaining to the current year ended March 31, 2007,
is included in depreciation and the balance Rs. 33.7 million is also included under depreciation.
Exceptional Items
Exceptional Items during the year include mainly VRS and related expenses.
Taxation
Current tax rate did not significantly change. NPIL was entitled to MAT credit during FY2007.
Profit After Tax
Profit After Tax increased from Rs. 1,206.5 million to Rs. 2,180.5 million registering a growth of 80.7%.
Earning Per Share (EPS)
EPS [before exceptional items (net of tax)] and EPS after exceptional items were Rs. 10.5 and Rs. 10.3 respectively as compared to Rs. 6.0 and
Rs. 5.8 for the previous year.
Balance Sheet (Consolidated)
Rs. million
Particulars
Liabilities
Share Capital
– Equity
– Preference
Reserves & Surplus
Minority Interest
Loan Funds
Deferred Tax Liability
Total Liabilities
Assets
Net Fixed Assets
Investments
Net Working Capital
Total Assets
As at
March 31, 2007
As at
March 31, 2006
418.0
418.0
383.7
10,060.3
5.0
6,392.2
893.2
18,152.4
533.7
9,191.8
30.2
3,114.4
835.9
14,124.0
12,237.5
287.3
5,627.6
18,152.4
10,417.7
287.3
3,419.0
14,124.0
Share Capital
During the year, we have redeemed 1,500,000 6% Non Cumulative Redeemable Preference Shares of Rs. 100 each. As a result, Preference Share
capital has come down by Rs. 150.0 million. However, the equity share capital has remained unchanged at Rs. 418.0 million.
Loan Funds
During the year, loan funds increased by Rs. 3,277.8 million as we funded our capital expenditure incurred during the year and Morpeth acquisition
with a mix of internal funds and new debt.
12
Fixed Assets
During the year, NPIL increased gross fixed assets by Rs. 4.5 billion, including acquired fixed assets. The major items of capital expenditure were
as under:
No.
Expense Head
Rs. million
1.
2.
3.
4.
5.
Research & Development
Digwal facility expansion
Baddi facility (Building & Plant & Machinery)
Pathlabs – acquisitions
Other fixed assets additions (including Morpeth)
195.1
801.3
1,446.4
575.1
1,503.8
Total
4,521.7
Investment
During the year, the Company’s investments remained unchanged at Rs. 287.3 million.
Net Working Capital (Consolidated)
Rs. million
Particulars
Raw/Packing Materials
No. of days
Finished Goods
No. of days
Receivables
No. of days
Net Working Capital
No. of days
As at
March 31, 2007
As at
March 31, 2006
1,926.1
27
1,528.0
22
3,673.4
52
5,627.6
80
1,138.1
25
908.2
20
2,429.3
52
3,419.0
74
Notes:
1.
2.
All the above ratios have been calculated on the basis of Gross Sales (i.e. net sales + excise duty) and it also includes other operating income, but it excludes sales
tax. The previous years’ numbers have been restated accordingly.
The Net Working Capital days has increased from 74 to 80 on account of higher proportion of sales from international acquisitions, which have lower material
costs and hence lower level of creditors.
Return on Capital Employed (ROCE) (Consolidated)
Rs. million
Particulars
Net Fixed Assets*
Net Current Assets*
Capital Employed * (excluding investments)
PBIT (Excluding Dividend and Profit on sale of assets)
ROCE (%)
As at
March 31, 2007
As at
March 31, 2006
11,327.6
8,848.0
3,179.2
2,064.4
14,506.7
10,912.4
3,000.0
1,557.9
20.7
14.3
*Average
Return on Capital Employed increased to 20.7% from 14.3% last year as operating margins increased on higher sales.
13
Economic Value Added (EVA) (Consolidated)
Particulars
Rs. million
FY2007
FY2006
2,180.5
1,206.5
260.7
152.1
36.8
27.5
2,478.0
1,386.1
14,794.0
11,242.5
39
28
Average Rate of Interest
6.4%
5.1%
Cost of Debt (post tax)
5.5%
4.48%
7.71%
7.05%
8.0%
7.0%
Cost of Beta Variant (Source: DSPML)
1.09%
0.86%
Cost of Equity
16.4%
13.1%
12.1%
10.7%
1,795.3
1,203.6
682.7
182.5
PAT for the Year
Add: Interest (net of tax)
Add: Exceptional Items (net of tax)
NOPAT (1)
Capital Employed (2)
Gearing %
Cost of Equity
Long Term Govt. Bonds (Source: DSPML)
Market Risk
WACC (3)
Cost of Capital (2x3=4)
EVA (1–4)
EVA increased to Rs. 682.7 million in FY2007 from Rs.182.5 million in FY2006. The EVA has been calculated here after netting off the exceptional
income, accordingly the figure for the last year has been restated.
14
CORPORATE GOVERNANCE
Corporate Governance
Introduction
A report for the financial year ended 31st March, 2007 on the compliance by the Company with the Corporate Governance requirements under
Clause 49 of the Listing Agreement, is furnished below.
1.
Company’s Philosophy on Corporate Governance
Corporate Governance is the combination of voluntary practices and compliance with laws and regulations leading to effective control and
management of the organisation. Good Corporate Governance leads to long term shareholder value and enhances interest of other stake
holders. It brings into focus the fiduciary and the trusteeship role of the Board to align and direct the actions of the organisation towards
creating wealth and shareholder value.
2.
Board of Directors
The Company’s Board as of date, consists of 10 members, of which majority are independent non-executive directors, who are leading professionals
in their respective fields. The Board comprises of three (3) executive directors, one (1) non-executive director and six (6) independent directors.
The constitution of the Board is given below :
Name of Director
Category*
[Designation]
Other
Directorships
Membership of
other Board Committees
as Member
as Chairman
as Member
as Chairman
Ajay G. Piramal
ED – Promoter [Chairman]
1
7
—
1
Keki Dadiseth
Rajesh Khanna
ID
NED
6
6
—
—
2
7
1
—
Y. H. Malegam
Dr. Swati A. Piramal
10
—
4
4
S. Ramadorai
ID
ED – Promoter Group[Director
(Strategic Alliances and Communications)]
ID
12
9
—
2
1
5
—
2
R. A. Shah
Deepak Satwalekar
ID
ID
17
6
3
—
7
4
4
2
N. Vaghul
Michael Fernandes
ID
ED – [Executive Director
(Custom Manufacturing Group)]
6
—
4
—
5
—
3
—
Urvi A. Piramal
(upto 28th June, 2006)
Harsh Piramal
NED – Promoter Group
—
—
—
—
NED – Promoter Group
—
—
—
—
—
—
—
—
—
—
—
—
ID
G. P. Goenka
Vijay Shah
ED – Chief Operating Officer
(upto 30th April, 2006)
Note : * ED – Executive Director; NED– Non-executive Director; ID– Independent Director;
This includes directorships in public limited companies and subsidiaries of public limited companies and excludes directorships in
private limited companies, overseas companies and companies under section 25 of the Companies Act,1956.
This relates to Committees referred to in clause 49 of the Listing Agreement, viz. Audit Committee and Investors Grievance
Committee. This also includes Remuneration Committee which is not to be considered for purpose of computing maximum limits
under clause 49.
Includes alternate directorships.
Details of directorships/board committee memberships of these directors are not mentioned as they have ceased to be directors of
the Company during FY2007.
15
3.
Attendance of Directors at Board Meetings and Annual General Meeting
The Board of Directors met ten times during the financial year, on the following dates:
3rd April, 2006
6th April, 2006
25th April, 2006
28th June, 2006
20th July, 2006
18th October, 2006
8th December, 2006
18th January, 2007
16th February, 2007
17th February, 2007
The Company placed before the Board the budgets, annual operating plans, performance of the business and various other information, including
those specified under Annexure 1A of Clause 49 of the Listing Agreement, from time to time.
The attendance of Directors at the Board Meetings and the last Annual General Meeting held on 28th June, 2006 were as under:
Name of Director
Board Meetings
AGM
Held during their tenure
Attended
Ajay G. Piramal
10
10
3
Keki Dadiseth
10
7
—
Rajesh Khanna
10
9
3
Y. H. Malegam
10
9
—
10
8
3
S. Ramadorai
10
7
3
R. A. Shah
10
9
3
Deepak Satwalekar
10
7
3
N. Vaghul
10
10
3
Michael Fernandes
10
7
3
Urvi A. Piramal (upto 28th June, 2006)
3
—
—
Harsh Piramal (upto 28th June, 2006)
3
—
—
G. P. Goenka (upto 28th June, 2006)
3
—
—
Vijay Shah (upto 30th April, 2006)
3
2
—
4.
Code of Conduct
The Company has formulated and implemented a Code of Conduct for Board Members and Senior Management of the Company. Requisite
annual affirmations of compliance with the respective Codes have been made by the Directors and Senior Management of the Company.
5.
Audit Committee
During the financial year 2006-07, six Audit Committee Meetings were held on the following dates, including before finalisation of annual
accounts and adoption of quarterly financial results by the Board:
24th April, 2006
18th October, 2006
16
19th July, 2006
18th January, 2007
14th September, 2006
8th March, 2007
The constitution of the Committee and the attendance of each member of the Committee is given below:
Name
Designation
Category
Profession
Committee Meetings
Held during
their tenure
Attended
R. A. Shah
Chairman
Independent Director
Solicitor
6
6
Y. H. Malegam
Member
Chartered Accountant
6
6
N. Vaghul
Member
Service
6
6
The Company Secretary, Mr. Leonard D’Souza is the secretary to the Committee.
The terms of reference of the Audit Committee include those specified under Clause 49 of the Listing Agreement as well as under section 292A
of the Companies Act, 1956, such as :
6.
a)
To hold periodic discussions with the Statutory Auditors and Internal Auditors of the Company concerning the accounts of the Company,
internal control systems, scope of audit and observations of the Auditors / Internal Auditors;
b)
To review compliance with internal control systems;
c)
To review the quarterly, half-yearly and annual financial results of the Company before submission to the Board;
d)
To investigate into any matter in relation to items specified in section 292A of the Companies Act, 1956 or as may be referred to it by the
Board and for this purpose, to seek any relevant information contained in the records of the Company and also seek external professional
advice, if necessary;
e)
To make recommendations to the Board on any matter relating to the financial management of the Company, including the Audit Report.
Compensation Committee
The Compensation Committee reviews and makes recommendations on annual salaries, performance linked bonus, stock options, perquisites
and other employment conditions for executive Directors. The Committee takes into consideration remuneration practices followed by leading
companies as well as information provided by reputed consultants while determining the overall remuneration package. The annual variable
commission in the form of ‘Performance Linked Bonus’ to executive Directors as also Stock Options to be granted to non-promoter executive
Directors, are linked to the performance of the Company in general and the individual performance of the executive Directors for the relevant
year measured against specific Key Result Areas, which are aligned to the Company’s objectives.
Non-executive Directors are paid remuneration by way of Commission and Sitting Fees. The payment of Commission is decided by the Committee
broadly on the basis of Board Meetings and Committee Meetings attended by the Non-executive Directors and their respective contribution to
the Company and also the overall performance of the Company.
The Compensation Committee met four times during the year, on 24th April, 2006, 18th August, 2006, 18th October, 2006 and 18th January,
2007.
The members of the Committee are :
Name
Designation
Category
No. of meetings attended
N. Vaghul
Chairman
4
R. A. Shah
Member
4
S. Ramadorai
Member
2
Ajay G. Piramal
Member
Executive Director
4
17
7.
Remuneration of Directors
Details of remuneration paid / payable to the directors for the year ended March 31, 2007 are as follows :
(Rupees)
Director
Relationship with
other directors
Business relationship
with the Company
Ajay G. Piramal
Husband of
Promoter
Keki Dadiseth
None
None
Rajesh Khanna
None
Representative of
Strategic Investor
Y. H. Malegam
None
None
Wife of
Mr. Ajay G. Piramal
Director-Strategic
Alliances and
Communications–
Promoter Group
S. Ramadorai
None
None
R. A. Shah
None
Sr. Partner,
Crawford Bayley & Co.,
the Company’s Solicitors
Deepak Satwalekar
None
N. Vaghul
Sitting fees*
Salary &
Perquisites
Performance
Linked Bonus /
Commission
Total
—
1,84,60,210
2,00,00,000
3,84,60,210
70,000
—
7,00,000
7,70,000
—
—
—
—
1,50,000
—
9,00,000
10,50,000
—
1,00,65,000
1,00,00,000
2,00,65,000
90,000
—
7,00,000
7,90,000
1,90,000
—
9,00,000
10,90,000
None
90,000
—
7,00,000
7,90,000
None
None
2,00,000
—
9,00,000
11,00,000
Michael Fernandes
None
Executive Director –
Custom Manufacturing
Group
—
1,06,06,957
35,00,000
1,41,06,957
Urvi A. Piramal
Sister in-law of
Mr. Ajay G. Piramal
Promoter Group
—
—
—
—
Harsh Piramal
Son of
Mrs. Urvi A. Piramal
Promoter Group
—
—
—
—
G. P. Goenka
None
None
—
—
—
—
Chief Operating Officer
—
6,36,733
—
6,36,733
Vijay Shah
None
(upto 30th April, 2006)
*
includes sitting fees paid for Committee Meetings
Notes:
(a) The terms of appointment of the following executive Directors as approved by shareholders, are contained in the Agreements executed with
them by the Company, as follows:
Mr. Ajay G. Piramal
Dr. (Mrs) Swati A. Piramal
Mr. Michael Fernandes
:
:
:
Agreement dated 24th June, 2002.
Agreement dated 14th January, 2003.
Agreement dated 1st July, 2006.
(b) No loans and advances have been given to any Director of the Company.
(c) As per the prevailing policy, Stock Options are granted only to non-promoter executive directors. Accordingly, during the year ended 31st
March 2007, 16,800 Stock Options were granted to Mr. Michael Fernandes – Executive Director – (Custom Manufacturing Group). In
addition, Mr. Michael Fernandes was also given grants of 16,000 shares.
Out of the Options so granted, depending on his performance, achievement of key results areas and other criteria, the compensation committee
would determine the actual number of stock options that would vest in his favour. Out of the total Options so approved for vesting, 25%
would vest immediately, 25% would vest 1 year thereafter and the balance 50% would vest after the 2nd year from date of approval for
vesting. On such vesting taking place, the Stock Options are exercisable by him within a period of 5 years from vesting, failing which the
same would lapse.
18
It may be noted in this regard that since the NPIL ESOP Scheme is implemented through the ESOP Trust and the shares given by the ESOP
Trust against exercise of stock options are those that have been acquired by the ESOP Trust from existing shareholders and no new shares are
issued by the Company, there will not be any increase in the share capital of the Company, nor will there be any impact on the Earnings Per
Share or other ratios relating to share capital, as a result of exercise of the Stock Options.
(d) Shareholding of Non-executive Directors
Mr. R. A. Shah holds 3,43,393 Equity Shares in the Company.
8.
Investors Grievance Committee
The Investors Grievance Committee met four times during the year, on 25th April, 2006, 20th July, 2006, 18th October, 2006 and 18th
January, 2007. As of date, following are the members of this Committee:
Name
Designation
Category
Deepak Satwalekar
Chairman
Rajesh Khanna
Member
Non-Executive Director
Michael Fernandes
Member
Executive Director
Mr. Leonard D’Souza, the Company Secretary, is the Compliance Officer.
Investor Grievances
The following table shows the nature of complaints received from shareholders during 2006-07 and 2005-06. There were no complaints
pending as on 31st March, 2007.
Nature of Complaints
2006-07
2005-06
Dividend
16
15
Non-receipt of Share Certificates
8
21
Rights Issue
6
279
Others
24
28
Total
54
343
The complaints are generally replied to within 7 days from their lodgment with the Company.
The Company has designated the email id ‘[email protected]’ exclusively for the purpose of registering complaints by
investors electronically. This email id has been displayed on the Company’s website i.e. www.nicholaspiramal.com.
9.
General Body Meetings
The location and time of the Annual General Meetings held during the last 3 years are as follows :
Annual General
Meeting (AGM)
57th AGM
58th AGM
59th AGM
Date
24th June, 2004
7th July, 2005
28th June, 2006
Time
3.00 p.m.
3.00 p.m.
3.00 p.m.
Venue
No. of Special
Resolutions passed
All the AGMs were held at
Yashwantrao Chavan Pratisthan,
Opposite Mantralaya, Mumbai 400 021
1
2
4
The special resolutions were passed on show of hands.
Postal Ballot
During the year, the Company sought shareholders approval through Postal Ballot on the following two occasions:
A) The Company had sought approval of the members as set out in the notice dated 28th April, 2006 for :
(a) raising funds by issue of appropriate securities [Special Resolution u/s 81(1A)] (referred to as “Resolution No.1” in the following
table);
(b) raising existing borrowing limits [Ordinary Resolution u/s 293(1)(d)] (referred to as “Resolution No.2” in the following table);
(c) making loans and/or giving any guarantee(s) and/or providing security in connection with the loan(s) made to and/or to make
investments in bodies corporate [Special Resolution u/s 372(A)] (referred to as “Resolution No.3” in the following table); and
19
(d) creating mortgages, etc. [Ordinary Resolution u/s 293(1)(a)] (referred to as “Resolution No.4” in the following table).
Particulars
No. and % of votes cast in favour
No. and % of votes cast against
Resolution No.1
12,02,79,353
(95.73%)
53,59,418
(4.27%)
Resolution No.2
12,04,23,825
(95.73%)
53,76,128
(4.27%)
Resolution No.3
12,04,23,836
(95.73%)
53,73,990
(4.27%)
Resolution No.4
12,04,12,156
(95.72%)
53,83,755
(4.28%)
All the aforesaid four resolutions were passed with overwhelming requisite majority.
Mr. N. L. Bhatia, senior practicing Company Secretary, was appointed as Scrutinizer for conducting the Postal Ballot exercise.
B)
Approval of the members was also sought through Postal Ballot by a notice dated 30th January, 2007 by Special Resolutions for :
1.
re-appointment of and payment of remuneration to Mr. Ajay G. Piramal as Chairman for a further period of 5 years with effect from
1st April, 2007 (referred to as Resolution No.1 in the following table);
2.
the Employees Stock Ownership Plan 2006 and for granting Stock Options to the Employees and Directors of the Company and its
subsidiaries (referred to as Resolution No.2 in the following table); and
3.
the variations in Options and terms thereof granted for the financial year ended 31st March 2006 (referred to as Resolution No.3 in
the following table).
Particulars
No. and % of votes cast in favour
No. and % of votes cast against
Resolution No.1
15,43,86,823
(99.98%)
33,162
(0.02%)
Resolution No.2
13,70,95,058
(88.85%)
1,72,07,709
(11.15%)
Resolution No.3
13,90,08,091
(90.09%)
1,52,91,143
(9.91%)
All the aforesaid three special resolutions were passed with overwhelming requisite majority.
Mr. N. L. Bhatia, senior practicing Company Secretary, was appointed as Scrutinizer for conducting the Postal Ballot exercise.
Procedure for Postal Ballot
After receiving the approval of the Board/ Committee of Directors, the Notice, Explanatory Statement alongwith the Postal Ballot Form and
reply-paid self-addressed envelope were dispatched to the members to enable them to consider and vote for or against the proposal within a
period of 30 days from the date of dispatch. Calender of Events of the Postal Ballot process was filed with the Registrar of Companies, Maharashtra
within the stipulated period. After the last date of receipt of Postal Ballot, the Scrutinizer, after due verification, submitted his report. Thereafter,
the results of the Postal Ballot were declared by the Chairman/ Authorised Persons. The same were posted on the website of the Company and
at the Registered Office of the Company.
At present, there is no proposal for passing any special resolution through postal ballot.
10. Note on Directors re-appointment
Mr. R.A.Shah and Mr. N.Vaghul are retiring by rotation at the ensuing Annual General Meeting (AGM) and are eligible for re-appointment.
Brief details concerning these Directors are given below:
Mr. R. A. Shah
Mr. R. A. Shah, 75, is an eminent Solicitor and Senior Partner of Messrs. Crawford Bayley & Co. He specializes in a broad spectrum of
Corporate Laws in general, with special focus on foreign investments, joint ventures, technology and licence agreements, intellectual property
rights, mergers and acquisitions, industrial licensing, anti trust and competition laws. He is on the Board of several reputed companies.
20
Mr. R. A. Shah is a member of the Managing Committee of the Bombay Chamber of Commerce, Indo German Chamber of Commerce and
President of the Society of Indian Law Firms (Western Region).
His other directorships in public limited companies in India are:
Sr. No.
Name of the Company
Membership of Board / Board Committees
1.
Pfizer Limited
–
–
Chairman
Chairman – Audit Committee
2.
Godfrey Philips India Limited
–
Chairman
3.
Clariant Chemicals (India) Limited
–
–
Chairman
4.
Colgate-Palmolive India Limited
–
–
Vice Chairman
5.
Abbott India Limited
–
–
Director
Member – Audit Committee
6.
Asian Paints (India) Limited
–
Director
7.
ACC Limited
–
Director
8.
The Bombay Dyeing & Mfg. Co. Limited
–
–
–
Director
Member – Remuneration Committee
9.
BASF India Limited
–
–
Director
10.
Deepak Fertilizers & Petrochemicals Corporation Limited
–
Director
11.
Lupin Limited
–
–
Director
Member – Remuneration/Compensation Committee
12.
Wockhardt Limited
–
–
Director
Alternate Member – Audit Committee
13.
Procter & Gamble Hygiene and Healthcare Limited
–
–
Director
14.
Atul Limited
–
Alternate Director
15.
BASF Polyurethanes India Limited
–
Alternate Director
16.
Century Enka Limited
–
–
Alternate Director
Alternate Member – Audit Committee
17.
Modicare Limited
–
Alternate Director
18.
RPG Life Sciences Limited
–
Alternate Director
19.
Scharder Duncan Limited
–
Alternate Director
20.
Uhde India Limited
–
Alternate Director
Mr. R. A. Shah holds 3,43,393 equity shares in the Company.
Mr. N. Vaghul
Mr. N. Vaghul, 71, is the Chairman of ICICI Bank Limited. He was the Chairman of ICICI Limited from September 1985 until it merged with
ICICI Bank Limited in 2001. He also served as Chief Executive Officer of ICICI until 1996. Mr. Vaghul has been a visiting professor at the
Leonard N. Strn School of Business at New York University since 1998. Mr. N.Vaghul holds a B.Commerce in Banking from Madras University.
21
His other directorships in public limited companies in India are:
Sr. No.
Name of the Company
Membership of Board / Board Committees
1.
ICICI Bank Limited
–
–
Chairman
Chairman – Remuneration Committee
2.
Mahindra & Mahindra Limited
–
–
Director
Chairman – Compensation Committee
3.
Mahindra World City Developers Limited
–
–
–
Chairman
Member – Remuneration Committee
4.
Wipro Limited
–
–
–
Director
Member – Compensation Committee
5.
Air India Limited
–
–
Director
6.
Air India Air Transport Services Limited
–
Director
7.
Air India Engineering Services Limited
–
Director
8.
Apollo Hospitals Enterprise Limited
–
–
Director
Member – Compensation Committee
9.
Himatsingka Seide Limited
–
Chairman
10.
Asset Reconstruction Company India Limited
–
Chairman
Mr. N. Vaghul does not hold any shares in the Company.
11. Disclosures
– No transaction of material nature has been entered into by the Company with its Directors or Management and their relatives, etc. that
may have a potential conflict with the interests of the Company. The Register of Contracts/statement of related party transactions, is
placed before the Board/Audit Committee regularly;
–
Transactions with related parties are disclosed in Note No. 12 of Schedule 22 to the Accounts in the Annual Report;
–
There has been no instance of non-compliance by the Company on any matter related to capital markets. Hence, the question of penalties
or strictures being imposed by SEBI or the Stock Exchanges or any other statutory authority does not arise;
–
The Company has implemented a Whistle Blower Policy for its Baddi Manufacturing Facility and its CFA locations.
Compliance with Mandatory / Non-mandatory Requirements
• The Company has complied with all the applicable mandatory requirements of Clause 49 of the Listing Agreement.
•
The Company is also in compliance with the non-mandatory requirements as specified in Annexure1D to Clause 49 of the Listing
Agreement regarding tenure of Directors, constitution of remuneration committee, unqualified financial statements, training of Board
Members, establishment of mechanism for evaluating non-executive directors and Whistle Blower Policy.
12. Means of Communication
• The annual, half-yearly and quarterly results are regularly posted by the Company on its website www.nicholaspiramal.com. These are also
submitted to the Stock Exchanges in accordance with the Listing Agreement, posted on the Electronic Data Filing and Retrieval (EDIFAR)
System of SEBI and published in leading newspapers. The Company also regularly holds Analysts Meet where presentations are made on
financial results as well as major events. These presentations are simultaneously posted on the Company’s website for dissemination to
investors.
•
Management Discussion & Analysis forms part of this Annual Report.
13. General Shareholder Information
a) Annual General Meeting
– Date and Time
– Venue
22
:
:
Thursday, 14th June, 2007 at 3.00 p.m.
Walchand Hirachand Hall
Indian Merchants’ Chamber Building,
IMC Marg, Churchgate, Mumbai 400 020.
b)
Financial Calendar
Financial reporting for
Quarter ending 30th June, 2007
:
25th July, 2007
:
25th October, 2007
:
18th January, 2008
Year ending 31st March, 2008
:
24th April, 2008
Annual General Meeting
for the year ending 31st March, 2008
:
In June/July 2008
Date of book closure
:
4th June, 2007 to 14th June, 2007
d)
Dividend Payment Date
:
15th June 2007
e)
Registered Office
:
Nicholas Piramal Tower,
Ganpatrao Kadam Marg,
Lower Parel, Mumbai 400013.
f)
Listing of Equity Shares
on Stock Exchanges
:
The Bombay Stock Exchange Limited
(code : 500302);
The National Stock Exchange of India Limited
(code : NICOLASPIR);
Half year ending
30th September, 2007
Quarter ending
31st December, 2007
c)
The shares of the Company have been voluntarily delisted from Ahmedabad Stock
Exchange pursuant to shareholders approval accorded at the 59th AGM held on 28th
June, 2006.
g)
Reuters code
:
NICH.BO
h)
Bloomberg code
:
NP:IN
i)
Stock market data
Bombay Stock Exchange
National Stock Exchange
Month
High
(Rs.)
Low
(Rs.)
Monthly
volume
High
(Rs.)
Low
(Rs.)
Monthly
volume
Apr-2006
282.80
222.50
17,80,780
282.20
225.00
35,51,279
May-2006
245.95
165.00
18,48,455
245.00
165.00
40,01,270
June-2006
197.90
150.40
12,56,006
198.50
148.10
34,47,917
July-2006
212.80
182.15
7,48,854
214.00
185.50
17,28,880
Aug-2006
234.00
195.95
19,56,347
239.80
196.00
35,93,905
Sept-2006
238.90
203.35
15,95,207
238.40
203.55
34,40,894
Oct-2006
252.95
224.15
16,97,476
265.05
224.45
22,19,631
Nov-2006
244.80
223.00
19,92,751
245.00
222.00
35,93,771
Dec-2006
268.00
230.30
10,66,792
268.50
228.00
27,47,965
Jan-2007
283.90
235.45
14,18,449
285.00
235.10
32,00,279
Feb-2007
266.00
205.00
4,30,269
265.80
200.00
13,70,890
Mar-2007
254.90
195.10
6,21,001
254.95
195.15
17,03,329
23
j)
Stock Performance vs BSE Sensex and NSE-50
The performance of the Company’s Equity Shares relative to the BSE Sensitive Index (BSE Sensex) and S&P CNX Nifty (NSE-50) is
graphically represented in the chart below.
k)
Share Transfer Agents
Amtrac Management Services Limited
Nasik Processing Unit
Plot No.101/102, MIDC, Satpur, Nasik 422007.
Tel.: (0253)- 2354032 – 2363372
Fax : (0253)-2351126
(From Mumbai the dialing code is 95253 instead of 0253)
e-Mail : [email protected]
Mumbai Administrative Office
Peninsula Centre,
Dr. S. S. Rao Road,
Parel, Mumbai-400 012
Tel : 24105685
e-Mail : [email protected]
l)
Share Transfer System
To expedite the share transfer process in the physical segment, authority has been delegated to the Share Transfer Committee, which
comprises of:
Mr. Ajay G. Piramal
Chairman
Mr. R. A. Shah
Member
Member
For administrative convenience and to facilitate speedy approvals, authority has also been delegated to senior executives to approve share
transfers upto specified limits. Share transfers/transmissions approved by the Committee and/or the authorised executives are placed at the
Board Meeting from time to time.
In case of shares held in physical form, all transfers are completed within 12 days from the date of receipt of complete documents. As at
31st March 2007 there were no Equity Shares pending for transfer. Also, there were no demat requests pending as on 31st March, 2007.
24
m) Distribution of Equity Shareholding as on 31st March 2007
Slab of shareholdings
Shareholders
%
No. of Shares
%
1 to 100
46,598
52.08
19,01,876
0.91
101 to 200
11,579
12.94
16,43,781
0.79
201 to 500
19,935
22.28
62,72,042
3.00
501 to 1000
7,310
8.17
53,36,563
2.56
1001 to 5000
3,586
4.00
62,38,934
2.98
5001 to 10000
203
0.23
13,88,426
0.66
10001 to 20000
98
0.11
13,46,540
0.64
20001 to 30000
30
0.03
7,31,161
0.35
30001 to 40000
15
0.02
5,32,898
0.26
40001 to 50000
8
0.01
3,71,438
0.18
50001 to 100000
29
0.03
20,11,290
0.96
Above 100000
86
0.10
18,12,38,184
86.71
89477
100.00
20,90,13,133
100.00
Total
According to categories of Equity Shareholders as on 31st March, 2007.
Sr.
No.
Category of Shareholders
(A)
Shareholding of Promoter and Promoter Group
(B)
Public shareholding
1
Number of
Shareholders
38
10,46,98,447
(a) Mutual Funds/ UTI
27
25,67,501
(b) Financial Institutions / Banks
32
50,063
Institutions
(c) Insurance Companies
(d) Foreign Institutional Investors
Sub-Total
2
Number
of shares
6
1,25,48,474
78
3,00,24,252
143
4,51,90,290
1,143
3,37,18,198
88,140
2,40,10,046
Non-Institutions
(a) Bodies Corporate
(b) Individuals
(i) holding nominal share capital up to Rs 1 lakh
(ii) holding nominal share capital in excess of Rs. 1 lakh
13
13,96,152
89,296
5,91,24,396
Total Public Shareholding
89,439
10,43,14,686
TOTAL
89,477
20,90,13,133
Sub-Total
n)
Dematerialisation of shares
As on 31st March 2007, 19,60,40,370 equity shares (93.79% of the total number of shares) are in dematerialised form as compared to
19,36,04,803 equity shares (92.63% of the total number of shares) as on 31st March 2006.
o)
Outstanding GDRs/ADRs/Warrants
or any convertible instruments
There are no outstanding
convertible warrants/instruments.
25
p)
Plant Locations
INDIA:
– Plot No. 67-70, Sector II, Pithampur 454 775, M.P.
– Plot No.K-1, Additional M.I.D.C, Mahad, Dist. Raigad, Maharashtra
– L.B.S. Marg, Mulund (West) Mumbai 400 080.
– Balkum, Thane 400 608.
– Ennore Express Highway, Chennai 600 057.
– Digwal Village, Medak District, Andhra Pradesh
– Baddi, Himachal Pradesh
– R&D Centre, Goregaon, Mumbai, Maharashtra
– Pawne Mahape, Navi Mumbai, Maharashtra
– Plot 903/904, GIDC Industrial Estate, Ankleshwar, Gujarat
– Plot No.6505/3, Sachin - 394 230, Surat
OVERSEAS:
NPIL Pharmaceuticals (UK) Ltd
n
n
n
n
n
Morpeth, UK
Huddersfield, West Yorkshire, UK
Grangemouth, Stirlingshire, UK
Blackley, Manchester, UK
Billingham, Cleveland, UK
Torcan Chemical Limited (Canada)
n
Aurora, Ontario, Canada
Investors Correspondence
Leonard D’Souza
Company Secretary
Nicholas Piramal Tower
Ganpatrao Kadam Marg, Lower Parel, Mumbai 400013.
Tel: 91-22-30466666 • Fax: 91-22-24902363
Email: [email protected]
Certificate on Corporate Governance
The Members of
We have examined the compliance of conditions of Corporate Governance by Nicholas Piramal India Limited for the year ended 31st March, 2007
as stipulated in clause 49 of the Listing Agreement of Stock Exchanges.
The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and
implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the
conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.
We state that in respect of investor grievances during the year ended March 31, 2007, no investor grievances are pending against the Company, as
per the records maintained by the Company and presented to the Investors / Shareholders Grievance Committee.
For N. L. Bhatia & Associates
Practicing Company Secretary
Place : Mumbai
Date : 26th April, 2007
26
N. L. Bhatia
Partner
NOTICE
NOTICE is hereby given that the 60th Annual General Meeting of the Members of Nicholas Piramal India Limited will be held at Walchand
Hirachand Hall, Indian Merchants’ Chamber Building, IMC Marg, Churchgate, Mumbai 400 020 on Thursday the 14th day of June, 2007
at 3.00 p.m. to transact the following business:
1.
To receive, consider and adopt the audited Balance Sheet as at and the Profit and Loss Account for the year ended on 31st March, 2007 and the
Reports of the Directors and Auditors thereon.
2.
To declare final dividends on preference and equity shares.
3.
To appoint a Director in place of Mr. R.A.Shah, who retires by rotation and is eligible for re-appointment.
4.
To appoint a Director in place of Mr. N. Vaghul, who retires by rotation and is eligible for re-appointment.
5.
To appoint Auditors to hold office from the conclusion of this Meeting until the conclusion of the next Annual General Meeting and to fix their
remuneration.
NOTES:
1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND
VOTE INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER.
2.
The Register of Members and Share Transfer Books of the Company has been declared closed from Monday, the 4th June, 2007 to Thursday,
the 14th June, 2007 (both days inclusive).
3.
Final Dividend on equity shares as recommended by the Directors for the financial year ended 31st March, 2007 when declared at the Meeting,
will be paid on and from 15th June, 2007. The interim dividends at respective coupon rates paid on preference shares during the financial year
ended 31st March, 2007 are confirmed as final dividend.
4.
Directors
Mr. R.A.Shah and Mr. N.Vaghul are retiring by rotation at this Annual General Meeting and are eligible for re-appointment.
The information to be provided for these Directors under Clause 49 of the Listing Agreement, is given in the Corporate Governance Section of
this Annual Report.
5.
Facility of electronic credit of dividend directly to the respective bank accounts of our shareholders through Electronic Clearing Service (ECS),
is available. This facility is currently available at the locations specified in the Mandate Form separately enclosed in this Annual Report. This
is in addition to the Bank Mandate Facility that already exists whereby bank account details are printed on the dividend warrants. Shareholders
who would like to avail of the ECS Mandate Facility or the Bank Mandate Facility (if not done earlier) are requested to complete and submit
the Mandate Form that is separately enclosed in this Annual Report, so as to reach the Company’s Share Transfer Agent latest by 4th June,
2007. Kindly note that shareholders holding shares in dematerialised form would receive their dividend directly to the bank account nominated
by them to their Depository Participant, as per SEBI directives.
6.
Those members who have so far not encashed their dividend warrants for the below mentioned financial years, may claim or approach the
Company for the payment thereof as the same will be transferred to the Investor Education and Protection Fund of the Central Government,
pursuant to section 205C of the Companies Act, 1956 on the respective dates mentioned thereagainst. Intimation in this regard is being sent
to the concerned shareholders periodically. Kindly note that after such dates, the members will loose their right to claim such dividend.
Financial Year ended
31.03.2000
31.03.2001
31.03.2002
31.03.2003
31.03.2004
31.03.2005
31.03.2006
31.03.2007
*
Due date of transfer
10.06.2007
21.10.2007*
05.08.2008
05.08.2008*
21.07.2009
14.07.2010
25.07.2011
07.08.2012
29.07.2013
15.04.2014 (Interim Dividend)
These refer to the due dates for transfer of dividend declared by erstwhile Rhone-Poulenc India Limited (RPIL) which was merged with the
Company.
27
NOTICE
7.
Pursuant to Section 205C of the Companies Act, 1956 all unclaimed dividends for the financial years ended 31st March, 1996 to 31st March,
1999 and Interim dividend declared by erstwhile RPIL for the financial year ended 31st March, 2000 have been transferred to the Investor
Education and Protection Fund.
8.
Pursuant to Section 205A of the Companies Act, 1956 all unclaimed dividends upto the financial year ended 31st March, 1995 have been
transferred to the General Revenue Account of the Central Government. Shareholders who have not encashed the dividend warrants for the
said period(s) are requested to claim the same from the Central Government in the prescribed form.
9.
Section 109A of the Companies Act, 1956 provides for Nomination by the shareholders of the Company in the prescribed Form No. 2B.
Shareholders are requested to avail this facility.
10. Over the years, as a result of allotment of shares arising out of earlier mergers, it is possible that multiple folios have been created. We request
you to consolidate multiple folios existing in the same names and in identical order. Consolidation of folios does not amount to transfer of
shares and therefore, no stamp duty or other expenses are payable by you. Many of the shareholders have already done so. In case you decide
to consolidate your folios, you are requested to forward your share certificates to the Company’s Share Transfer Agent at their Nasik address.
Registered Office :
Nicholas Piramal Tower,
Ganpatrao Kadam Marg,
Lower Parel, Mumbai 400 013.
Dated: 26th April, 2007
28
By Order of the Board
Leonard D’Souza
Company Secretary
DIRECTORS’ REPORT
Directors’ Report
Dear Shareholders,
We take pleasure in presenting the 60th Annual Report and Audited Accounts for the Year ended 31st March 2007.
Rs. million
PERFORMANCE HIGHLIGHTS: (Standalone)
Year ended 31 March
Total operating income
OPBIDTA
% margin
Non-operating other income
EBIDTA
Less:
Interest (Net)
Depreciation
Profit before tax and Exceptional items
Less:
Extraordinary items including restructuring cost
Less:
Income tax provision
– Current
– Deferred
– MAT Credit Entitlement
– Fringe Benefits Tax
Profit after tax
% margin
Add:
Profit brought forward from previous year
Profit available for appropriation
Appropriations:
Interim Dividend Paid
– Preference Shares (On redemption)
– Equity Shares
– Preference Shares
– Distribution Tax thereon
Proposed Dividend
– Equity Shares
– Preference Shares
– Distribution Tax thereon
Transfer to General Reserve
Transfer from Debenture Redemption Reserve
Transfer to Capital Redemption Reserve
Balance carried to balance sheet
Earnings per share (Basic/Diluted) (Rs.)
2007
2006 %Growth
16,379.0
3,018.6
18.4
19.8
3,038.4
14,182.1
2,275.3
16.0
312.3
2,587.6
15.5
32.7
(93.7)
17.4
109.0
705.0
2,224.4
135.2
577.2
1,875.2
(19.4)
22.1
18.6
—
32.7
341.6
265.5
166.0
(111.6)
21.7
1,882.8
11.5
139.0
125.9
120.2
(131.9)
24.8
1,703.5
12.1
3,039.3
4,922.1
2,161.7
3,865.2
3.7
627.1
19.2
91.2
—
—
—
—
104.5
—
17.8
700.0
—
150.0
3,208.6
8.9
627.1
28.2
91.9
170.4
(91.7)
—
3,039.3
8.2
145.8
10.5
29
DIRECTORS’ REPORT
DIVIDEND
Preference Shares:
The following interim dividends which were paid during the financial year ended 31st March 2007 are confirmed as final dividend:
1.
on 15,00,000 – 6% Non Cumulative Redeemable Preference Shares of Rs.100 each (since redeemed), @6% for the period 1st April 2006 to
31st August 2006, being the date of redemption of these Preference Shares;
2.
on 15,00,000 – 5% Cumulative Redeemable Preference Shares of Rs.100 each, @ 5% for the year ended 31st March, 2007;
3.
on 2,33,72,280 – 5% Cumulative Redeemable Preference Shares of Rs.10/- each, @5% for the year ended 31st March, 2007.
Equity Shares:
The Board has recommended final Equity Dividend at 25% (i.e. Rs.0.50 per share) on 20,90,17,606 equity shares of Rs.2 each, which will be paid to
eligible members on 15th June, 2007, after approval by the shareholders at the forthcoming Annual General Meeting. This is in addition to the
interim equity dividend at 150% (i.e. Rs.3 per equity share of Rs.2 each) which was declared and paid during FY2007. Thus, the total Equity
Dividend for FY2007 works out to 175% (i.e. Rs.3.50 per share).
The total cash outflow on account of equity dividend and preference dividend payments, including distribution tax, will be Rs.863.5 million. (FY2006
Rs.747.2 million)
The Board recommends the above dividends for declaration / confirmation by the members.
OPERATIONS REVIEW:
Net Sales for the year grew 15.5% to Rs. 16.4 billion compared with Rs. 14.2 billion for the year ended 31 March 2006. Operating Profit (OPBIDTA)
grew 32.7% to Rs. 3.0 billion.
Profit After Tax grew by 10.5% to Rs. 1.9 billion compared to Rs. 1.7 billion for the previous year. Earnings per share for the year was Rs. 8.9 per share
vs. Rs. 8.2 per share in FY2006.
A detailed discussion of operations for the year ended 31st March 2007 is given in the Management Discussion and Analysis section.
RESEARCH & DEVELOPMENT:
Our lead molecule P276-00 that was in clinical trials in Canada has now begun simultaneous clinical trials in India as well. Two more phytopharmaceutical molecules Sphira and Hespiderm have moved to Phase-II and are currently undergoing clinical trials in India.
During the year, we signed an agreement with Eli Lilly and Company, wherein Eli Lilly has licensed to us, a novel, patented, pre-clinical drug
candidate in a metabolic disorders segment for development. We will design and execute the global clinical development program of this optimized
lead to take it upto beginning of Phase III. We would potentially receive milestone payments upon successful completion of Phase I and II by us and
upon registration and launch by Eli Lilly. If the molecule is successfully launched we will also get the commercialization rights in select markets and
royalties on global sales.
Total R&D expenditure during the year was Rs.1,074.0 million, including capital expenditure of Rs. 195.1 million. The corresponding previous year
spends were Rs. 911.5 million and Rs. 272.2 million respectively. During the year, research and development staff increased to 387 from 350 in
FY2006.
SUBSIDIARY COMPANIES:
Pathlabs:
We continued to build our Pathlabs business by acquiring new laboratories and building greenfield facilities. During FY2007 we acquired 6 new
laboratories and we also acquired the remaining 40% stake in our joint venture NPIL – Dr Phadke Pathalogy Laboratory & Infertility Center Pvt.
Ltd. in Mumbai. During the year, we entered high-end health imaging services by acquiring Jhankaria Imaging, a leading radiology and imaging
center in Mumbai.
We also entered in to a 50% joint venture with Doctors Diagnostic & Research Centre (DDRC) during the year. DDRC is the largest diagnostics
network in Kerala with 34 labs across the state. The new venture will have under its wing some of the most advanced diagnostic analysis available.
30
DIRECTORS’ REPORT
The Total Operating Income for Pathlabs grew by 54.5% from Rs. 449.7 million in FY2006 to Rs. 695.0 million. Operating Profit for the year was up
by 14.4% to Rs. 118.2 million. However, acquisition of new labs and setting up greenfield facilities have resulted in higher interest costs and depreciation.
NPIL Pharmaceuticals (UK) Ltd.:
During the year, we continued to expand our global footprint in the custom manufacturing business and acquired Pfizer’s manufacturing facility at
Morpeth which came with a supply arrangement till November 2011. As a result, the net sales for FY2007 for NPIL Pharmaceuticals (UK) Ltd. was
Rs. 6.3 billion as against Rs. 748.0 million for FY2006, Operating profit for the year was Rs. 707.9 million as compared to an operating loss of
Rs. 254.0 million and PAT for the year was Rs. 515.0 million as compared to net loss of Rs. 281.7 million for FY2006. The financials however are
strictly not comparable on a like-to-like basis as we did not have revenues from Morpeth facility in FY2006, and the revenues from the erstwhile
Avecia operation had come only for four months, in FY2006.
We were able to achieve the turnaround of erstwhile Avecia operations during the year. This was achieved because of the following reasons:
1.
Significantly higher capacity utilization
2.
More efficient procurement of raw materials by Avecia’s integration with Indian assets; and
3.
Rationalization of fixed costs
Torcan Chemical Limited:
Net Sales for FY2007 for Torcan was Rs. 1.1 billion as compared to Rs. 311.8 million for FY2006, Operating Profit for the year was Rs. 106.1 million
as compared to Rs. 7.0 million for FY2006, and PAT was Rs. 65.5 million as compared to a net loss of Rs. 18.7 million for FY2006.
Note:
The Central Government has granted exemption under section 212(8) of the Companies Act 1956, from attaching to the Balance Sheet of the
Company, the Accounts and other documents of its subsidiaries. However, the Consolidated Financial Statements of the Company, which include
the results of the said subsidiaries, are included in this Annual Report. Further, a statement containing the particulars prescribed under the terms of
the said exemption for each of the Company’s subsidiaries is also enclosed. Copies of the audited annual accounts of the Company’s subsidiaries, can
also be sought by any investor of the Company or its subsidiaries on making a written request to the Company Secretary at the registered office of the
Company in this regard. The Annual Accounts of the subsidiary companies are also available for inspection for any investor at the Company’s and/
or the concerned subsidiaries’ registered office.
JOINT VENTURES:
Allergan India Limited (‘AIL’)
AIL is a 51:49 Joint Venture between Allergan Inc., USA and Nicholas Piramal. On 17 July 2005, AIL sold its Medical Optics business in India to
Advanced Medical Optics, Inc. USA, (AMO) for a consideration of Rs. 436.2 million. Sales from this business segment were Rs. 69.3 million in
FY2006. As a result during FY2007, the Net Sales of AIL degrew at 1.9% to Rs.767.7 million (FY2006 Net Sales: Rs. 782.3 million) PBIDT for
FY2007 was Rs.104.6 million, compared with FY2006 Rs. 448.8 million, a degrowth of 76.7% mainly because there was a one time income of
Rs.311.2 million in FY2006 due to income on sale of discontinued operations. Profit after tax for FY2007 was Rs. 43.9 million, compared with
FY2006 value of Rs.310.5 million, a degrowth of 85.8%.
Nicholas Piramal Consumer Products Pvt. Ltd (‘NPCPPL’)
(formerly Boots Piramal Healthcare Pvt. Ltd. (‘BPHPL’))
On September 29, 2006, NPIL acquired the balance 51% equity stake held by The Boots Company PLC, a subsidiary of Alliance Boots plc, in the
Joint Venture Company, Boots Piramal Healthcare Private Limited. BPHPL’s marketing rights in the brands Strepsils, Clearasil and Sweetex in India
were transferred to Reckitt Benckisser India Limited (RBI). Further as a part of this arrangement, NPIL has received a one-time sum of Rs. 178.0
million from Alliance Boots/Reckit Benckisser.
BPHPL has become a wholly owned subsidiary of the company and has been renamed as Nicholas Piramal Consumer Products Pvt. Ltd. (NPCPPL).
NPCPPL will continue to actively market and distribute its own Over The Counter (OTC) products viz. Saridon, Polychrol and Lacto Calamine. In
addition, NPCPPL also plans to launch OTC brands in new therapy areas as well as transition some of NPIL’s Rx brands to OTC by leveraging its
sales and marketing team.
Net Sales for NPCPPL for FY2007 was Rs. 506.1 million, PBIDT was Rs. 34.4 million and PAT was Rs. 26.7 million.
31
DIRECTORS’ REPORT
INDUSTRY OUTLOOK:
Backed by a strong growth in GDP, the Indian Pharmaceutical industry has experienced a strong growth rate of 14.3% (ORG IMS MAT March
2007). An important contributor to industry growth in FY2007 was the unfortunate spread of epidemics such as Dengue and Chickungunya, which
led to a sharp increase in sales of antibiotics and painkillers during the first half of the year. A redeeming feature of growth during the year was
volumes contributing to bulk of the 14.3% growth. On the new products front, there has been a fair amount of innovation by Indian companies in the
area of combination therapy.
The Global Custom Manufacturing market has also shown good growth as large pharmaceutical companies face rising cost-pressures and patent
expiry of block-buster drugs and are forced to look at improving manufacturing efficiencies. The market is still in consolidation mode and this year
saw a number of mergers/acquisitions transactions.
INTERNAL CONTROL SYSTEM:
The Audit Committee of the Board addresses significant issues raised by the Internal Auditors and the Statutory Auditors.
HUMAN RESOURCES:
We had staff strength of 6,812 employees (FY2006: 6,550 employees) as at 31 March 2007.
Function
Total Manpower
(a) Field staff
(b) R&D staff
(c) Others
FY2007
FY2006
+/(-)
6,812
3,221
387
3,204
6,550
3,208
350
2,992
262
13
37
212
Any shareholder interested in obtaining a copy of the statement of particulars of employees referred to in section 217(2A) of the Companies Act
1956, may write to the Company Secretary at the Registered Office of the Company.
Stock Options disclosures pursuant to the applicable requirements of the Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 are given in the Annexure to this Report.
DIRECTORS’ RESPONSIBILITY STATEMENT:
As required under section 217(2AA) of the Companies Act, 1956 we hereby state:
a)
that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating
to material departures, if any;
b)
that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2007 and its profits for the year ended on
that date;
c)
that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions
of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d)
that the Directors have prepared the annual accounts on a going concern basis.
DIRECTORS:
Mr. R.A. Shah and Mr. N. Vaghul retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment, which the Board
recommends.
CORPORATE GOVERNANCE:
The Company has complied with the applicable provisions of Corporate Governance under clause 49 of the Listing Agreement with the Stock
Exchanges. A separate report on Corporate Governance compliance is included as a part of the Annual Report alongwith the Certificate from Mr.
N.L. Bhatia, Practicing Company Secretary.
In compliance with the Corporate Governance requirements, the Company has implemented a Code of Conduct for all its Board members, who
have affirmed compliance thereto. A Code of Conduct has also been formulated and implemented for the senior management of the Company. The
said Codes of Conduct have been posted on the Company’s website.
32
DIRECTORS’ REPORT
FIXED DEPOSIT:
We have discontinued accepting / renewing fixed deposits. Unclaimed Fixed Deposits from the public / shareholders as on 31st March 2007 amounted
to Rs. 199,000 (FY2006: Rs.254,000)
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION:
Particulars required under Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 is given in the annexure to this Report.
AUDITORS:
Shareholders are requested to appoint the Auditors to the Company. Messrs. Price Waterhouse, Mumbai retire as Auditors of the Company at the
ensuing Annual General Meeting and are eligible for reappointment.
ACKNOWLEDGEMENTS:
We take this opportunity to thank the employees for their dedicated service and contribution to the Company. Our sincere appreciation is also due
to the medical profession and distributors for the patronage of our products.
We also thank our strategic alliance and joint venture partners, banks, financial institutions and other business associates for their continued support
towards conduct of efficient operations of the Company.
By Order of the Board
Ajay G. Piramal
Chairman
Mumbai: 26 April 2007
33
ANNEXURE TO DIRECTORS’ REPORT
Particulars under Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 for
the year ended 31st March 2007
Conservation of Energy
During the year, the Company introduced the following measures to conserve energy:
Pithampur
n
Reduction in power consumption by regulating power usage on high power motors of Air Handling Units;
n
Installation of additional capacitors to improve Power Factor, leading to additional rebates in power bills;
n
Reduction in power consumption by installation of electronic ballast over conventional copper ballast;
Mahad
n
Steam consumption has been optimized by installation of steam flow meters to measure and control consumption;
n
Reduction in power consumption by installing timer devices to loading and unloading device of air compressors;
Haemaccel Plant
n
Reduction in power consumption by rationalising run time of pumps and equipments during shift operation;
Digwal Plant
n
Reduction in power consumption through impeller trimming of cooling tower pumps;
n
Reduction in power consumption by installing variable frequency drives on certain reactors and centrifuges;
n
‘Sleep mode’ installed in Air Handling Units of Multi Purpose Plant and Finished Pharma Area, leading to conservation of power during nonoperational time;
n
Steam condensate recycled to boiler, leading to savings in water and coal consumption;
VFCD Plant
n
VAC (Vapour Absorption Chiller) machine installed and commissioned for getting chilled water, replacing electrical driven reciprocating
compressors;
n
‘Screw Compressors’ installed with energy efficient motors for ‘brine chilling’ replacing reciprocating compressors, resulting in increased efficiency
with conservation of energy;
n
New Reactors commissioned with energy efficient ‘Planetary / Helical’ gear boxes instead of worm gear-boxes, resulting in conservation of
energy;
Ennore Plant
n
Implementation of separate system for Steam Condensate Recovery, resulting in conservation of energy;
n
Reduction in power consumption by installation of energy efficient motors in Bulk Cooling Tower and Ejector Cooling Tower;
n
Installation of power factor correction capacitors for high Horse Power Motors, thereby minimising distribution losses;
n
Modification of Street Light control with ‘Twilight Switch Lighting System’ resulting in conservation of power;
Baddi Plant
n
Cooling water circulation pump for air compressor switched off by providing water connection from water chiller condenser circuit, thereby
resulting in savings in power consumption;
n
Switching off one chilling plant by monitoring environmental conditions;
n
Switching off cooling tower fans in winter.
34
FORM A
For the
year ended
31st March, 2007
For the
year ended
31st March, 2006
A. Power and Fuel Consumption
1. Gas and Electricity
(a) (i) Gas
Unit ( 000 M3 )
Total Amount (Rs. in Lakhs)
Rate/Unit (Rs.)
(ii) Electricity
Unit (000)
Rate/Unit (Rs.)
(b) Own Generation
Diesel Generator
Unit (000)
Rate / Unit (Rs.)
2. Coal
Qty. (Tons)
Total Cost (Rs. in Lakhs)
Cost / Unit (Rs.)
3. Furnace Oil
Qty. (K.Ltrs )
Average / K ltrs. (Rs.)
4. Other
(i) Hydle Power
Qty. (000M3)
Average Rate (Rs.)
(ii) HSD OIL
Qty.(K. Ltrs)
Total Cost (Rs. In Lakhs)
Average Rate / Ltr. (Rs.)
(iii) HSD OIL (Biomass)
Qty. (Tons)
Average Rate / Kg. (Rs.)
(iv) Husk
Qty. (Tons)
Average Rate / Kg. (Rs.)
B.
413.5
39.8
9.6
394.5
35.0
8.9
52,148.9
2,154.8
4.1
42,010.5
1,689.4
4.0
2,767.0
303.7
11.0
1,011.4
139.7
13.8
19,559.0
598.5
3.1
13,887.6
380.1
2.7
1,152.9
237.6
20,604.3
2,724.6
434.7
15,954.7
3,950.0
147.2
3.7
—
—
—
394.8
136.6
34.6
113.5
34.5
30.4
4,419.0
147.2
3.3
1,582.0
52.3
3.3
2,898.3
78.9
2.7
—
—
—
Consumption per unit of Production
The operations of the Company not being power intensive and since it involves multiple products, disclosure of consumption figures per unit of
production is not meaningful.
35
FORM B
1.
Specific areas in which R&D work is being carried out by the Company
n
New Chemical Entities (NCEs)
– Discovery and development of new chemical entities (NCEs) in the following therapeutic areas:
• Oncology
• Inflammation
• Diabetes / Metabolic Syndrome • Infectious Diseases
–
2.
3.
There are several functional groups that support NCE research, including high-throughput screening, medicinal chemistry, analytical
sciences, molecular & cellular biology, pharmacology, biomarkers and clinical development.
n
Natural Products: Developing a collection of extracts derived from microbes and plants isolated from diverse habitats to acquire a unique
source of diverse chemical compounds for NCE discovery.
n
Process Chemistry: Development of cost-effective and environmentally friendly processes for scaled-up manufacture of active
pharmaceutical ingredients (API) / bulk drugs for internal (NCE) and external (CMG) clients.
n
Pharmaceutical R&D: Development of conventional and novel dosage formulations of drug products across all major therapeutic areas
for internal and external clients.
Benefits derived as a result of the above
• Commercialization of NCEs will solve major health problems by offering new drugs to satisfy unmet medical needs in India and abroad.
Future plan of Action
New Chemical entities (NCEs):
n
Oncology:
– Complete ongoing human clinical trials for lead drug candidate P276-00, a tumor-selective, intra-venous injectible formulation;
– Begin Phase I/II human clinical trials for an herbal extract given orally for drug-resistant tumors;
– Complete pre-clinical development of an orally bio-available drug candidate that is back-up molecule to P276-00;
Inflammation:
– Complete additional human clinical trials for an herbal extract given orally for Rheumatoid Arthritis and other indications;
– Submit an Investigational New Drug (IND) application, obtain regulatory approval and conduct Phase I human clinical trials for an
oral, small molecule, pro-drug analogue of aspirin;
– Select pre-clinical development candidate for an oral, small molecule drug for Rheumatoid Arthritis;
Infectious Diseases:
– Complete human clinical trials for an herbal extract applied topically for skin fungal infections.
– Submit an Investigational New Drug (IND) application, obtain regulatory approval and conduct Phase I human clinical trials for a
highly potent antibiotic drug candidate to be used in hospital settings using an intra-venous, injectible formulation.
n
n
n
n
4.
Expenditure on R&D
–
–
–
–
5.
Diabetes / Metabolic Disorder:
– A candidate for an oral, small molecule drug for overcoming insulin resistance has been selected for clinical development.
Natural Products: Conclude partnerships and screening collaborations with biotechnology and pharmaceutical companies to maximize
the value of extracts collection.
Process Chemistry: Continue to support internal (NCE) and external (CMG) clients.
Pharmaceutical R&D: Continue rapid and cost-effective development of conventional as well as controlled release and topical dosage
formulations of drugs for domestic and export markets.
Novel Drug Delivery Systems (NDDS): Select one or two key platform technologies for further research and development
Capital
Recurring
Total
Total R&D Expenditure as a percentage to sales
(Rs. in million)
195.1
878.9
1,074.0
6.7%
Technology Absorption, Adaptation and Innovation
Pithampur Plant
– Installation of Pulse Jet Bag Filters on coal fired boiler to improve the quality of emissions;
– Installation of FTNIR instruments for identification of raw materials in containers, thereby strengthening quality assurance;
36
–
–
Developed indigenous components for form-fill-seal machines leading to cost savings on account of spares;
Reduction in consumption of packaging material through value engineering;
Mahad Plant
– Reduction in batch cycle time in hormone tablets through improvements in packaging machines.
Haemaccel Plant
– Import substitution for bottle pack machine leading to cost savings on account of spares;
– Reduction in consumption of packaging material through value engineering;
VFCD Plant
– Introduction of ‘IMTP’ packing, replacing conventional ‘Pall Rings’ in distillation column, resulting in improved efficiency;
– Reduction in cycle time by introducing higher capacity condenser;
– Process modifications carried out resulting in reduction in batch cycle time.
Digwal Plant
– Improved processes developed for manufacturing certain APIs;
– Improved recovery and recycle of solvents in the manufacture of APIs;.
Ennore Plant
– Implemented new process technology for one of our API’s, resulting in improved efficiency;
– Reverse Osmosis (RO) Plant commissioned and functioning efficiently, facilitating regeneration and recycling of effluent for gardening
and utility application. Conservation of water has also been achieved by installation of RO plant.
Baddi Plant
– Alterations in process piping to reduce cycle time in Liquid manufacturing area
6.
Foreign Exchange Earnings and Outgo
During the year, foreign exchange earnings were Rs. 2.9 billion as against outgo of Rs. 2.5 billion.
37
DISCLOSURES REGARDING STOCK OPTIONS
Pursuant to the applicable requirements, if any, of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 (“the SEBI Guidelines”), following disclosures are made in connection with the “Nicholas Piramal India Ltd.Employee Stock Ownership Plan -2002” [“ESOP 2002”], which was in force for Options granted upto the financial year ended 31st March 2006 and
the “Nicholas Piramal India Ltd.- Employee Stock Ownership Plan -2006” [“ESOP 2006”] which is presently in force, for Options granted for the
financial year ended 31st March 2007.
Sr.No
Details
Disclosures
(i)
(ii)
Options Granted for FY2007
Pricing Formula
4,63,200
The option price is determined by the Trustees of the Nicholas Piramal
India Limited Senior Employees Stock Option Scheme (‘ESOP Trust’)
and is subject to a limit not exceeding the higher of:
(a) market price on the date of grant ; or
(b) average of the price prevailing for the type of share or other security
in respect of which the option is granted during the 3 (three)
months immediately preceding the date on which the option is
offered to the Employee; or
(c) the issue price of any such shares or securities if the same have
been issued within three months prior to the option.
Options granted during the financial year ended 31st March 2007, were
at an exercise price of Rs.60 per share which was determined by the
Trustees of the ESOP Trust, taking into consideration several factors,
including the cost of acquiring the shares by the ESOP Trust.
(iii)
Options Vested during FY2007
Options
1,57,250
3,86,400
1,03,030
Nil
Relating to Financial Year
FY-04
FY-05
FY-06 [see Note 2 below]
FY-07
(iv)
Options Exercised during FY2007
Options
1,11,750
2,44,900
82,769
Nil
FY-04
FY-05
FY-07
(v)
Total number of shares arising as a result of
exercise of options
Same as Options exercised, as each Option entitles the holder
thereof to 1 equity share. [see note 1 below]
(vi)
Options Lapsed
Nil
(vii)
Variation of terms of Options
Please see Note 2 below
(viii)
Total number of Options in force
Options
8,800
2,84,850
1,85,351
4,59,800
(ix)
Employee-wise details of options granted
– senior managerial personnel
All Stock Options that have been granted by the Company as
aforesaid, have been granted to senior managerial personnel.
– employees who receives a grant in any one year of
option amounting to 5% or more of options granted
during that year
The following employees have received a grant amounting to 5% or
more of Options granted during FY07 :
1. Dr. Somesh Sharma – Chief Scientific Officer;
2. Mr. N. Santhanam – Group President, Finance & Legal and Chief
Financial Officer.
None
– identified employees who were granted options during
any one year equal to or exceeding 1% of the issued
capital (excluding outstanding warrants and conversions)
of the Company at the time of grant
38
FY-04
FY-05
FY-07
Note :
1.
Since the NPIL ESOP Scheme is implemented by the ESOP Trust and the shares issued by the ESOP Trust against exercise of stock options are
those that have been acquired by the ESOP Trust from existing shareholders and not fresh shares issued by the Company, there will not be any
increase in the share capital of the Company, nor will there be any impact on the Earnings Per Share or other ratios relating to share capital as
a result of such exercise of Stock Options.
2.
The following variation in terms were carried out in respect of Options granted under the ESOP 2002, for the financial year ended 31st March
2006, which was approved by the shareholders through Postal Ballot on 14th March 2007:
(i)
Reduction in the exercise price from Rs.250 per Option to Rs.60 per Option i.e. by 76%;
(ii) Corresponding reduction by 76% in the quantum of Options granted;
(iii) Extension of the exercise period from one year to five years;
(iv) Revision of the vesting period in 3 annual installments, from 40:30:30 percent to 25:25:50 percent. Accordingly, out of the total Options
approved for vesting in each employee for the financial year ended 31st March 2006, 25% was immediately vested, 25% would vest after
one year (in 2007) and the balance 50% would vest after two years (in 2008).
Consequently, the number of Options relating to FY2006 reported in this table, reflect the revised number of Options.
39
STANDALONE FINANCIAL STATEMENTS
AUDITORS’ REPORT TO THE MEMBERS OF NICHOLAS PIRAMAL INDIA LIMITED
1.
We have audited the attached Balance Sheet of Nicholas Piramal India Limited, as at March 31, 2007, and the related Profit and Loss Account
and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements
based on our audit.
2.
We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and
perform the audit to obtain 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 statements presentation.
We believe that our audit provides a reasonable basis for our opinion.
3.
As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s Report) (Amendment) Order, 2004,
(together the ‘Order’) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of ‘The Companies Act, 1956’ of
India (the ‘Act’) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the
information and explanations given to us, we give 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 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 from our examination of those
books;
(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of
account;
(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting
standards referred to in sub-section (3C) of Section 211 of the Act;
(e) On the basis of written representations received from the directors of the Company, as on March 31, 2007 and taken on record by the
Board of Directors of the Company, none of the directors is disqualified as on March 31, 2007 from being appointed as a director in terms
of clause (g) of sub-section (1) of Section 274 of the Act;
(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with
the notes thereon and attached thereto give in the prescribed manner the information required by the Act and give a true and fair view in
conformity with the accounting principles generally accepted in India:
(i)
in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2007;
(ii)
in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
(iii)
in the case of Cash Flow Statement, of the cash flows for the year ended on that date.
Mumbai, Dated: April 26, 2007
40
Partha Ghosh
Partner
Membership Number F-55913
For and on behalf of
Price Waterhouse
Chartered Accountants
ANNEXURE TO AUDITORS’ REPORT
[Referred to in paragraph 3 of the Auditors’ Report of even date to the members of Nicholas Piramal India Limited on the financial statements for the
year ended March 31, 2007]
1.
(a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.
(b) The fixed assets are physically verified by the management according to a phased programme designed to cover all the items over a period
of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the
programme, a portion of the fixed assets has been physically verified by the management during the year and no material discrepancies
between the book records and the physical inventory have been noticed.
(c) In our opinion, a substantial part of fixed assets has not been disposed off by the Company during the year.
2.
(a) The inventory (excluding stocks with third parties and materials in transit) has been physically verified by the management during the
year. In respect of inventory lying with third parties, these have been confirmed by them. In our opinion, the frequency of verification is
reasonable.
(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The
discrepancies noticed on physical verification of inventory as compared to book records were not material and have been properly dealt
with in the books of account.
3.
(a) The Company has granted unsecured loans, to five Companies covered in the register maintained under Section 301 of the Act. The
maximum amount involved during the year and the year-end balance of such loans aggregates to Rs.58,717 lakhs and Rs.6,729 lakhs
respectively.
(b) In our opinion, the rate of interest and other terms and conditions of such loans are not prima facie prejudicial to the interest of the
Company.
(c) In respect of the aforesaid loans, the parties are repaying the principal amounts as stipulated and are also regular in payment of interest,
where applicable.
(d) In respect of the aforesaid loans granted, there is no overdue amount more than Rupees One Lakh.
(e) The company has taken unsecured loans, from one company covered in the registered maintained under Section 301 of the Act. The
maximum amount involved during the year and the year–end balance of such loan aggregates to Rs.300 lakhs and Rs.300 lakhs respectively.
(f) In our opinion, the rate of interest and other terms and conditions of such loan is not prima facie prejudicial to the interest of the Company.
(g) In respect of the aforesaid loans, the Company is regular in repaying the principal amounts as stipulated and is also regular in payment of
interest.
4.
In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items of inventory
purchased and services received are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations,
there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of
inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books of account and records of
the Company and according to the information and explanations given to us, we have neither come across nor have been informed of any
continuing failure to correct major weaknesses in the aforesaid internal control system.
41
5.
(a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in
Section 301 of the Act have been entered in the register required to be maintained under that section.
(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or
arrangements and exceeding the value of Rupees Five Lakhs in respect of any party during the year have been made at prices which are
reasonable having regard to the prevailing market prices at the relevant time.
6.
In our opinion and according to the information and explanations given to us, the company has complied with the provisions of Sections 58A
and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits
accepted from the public which have matured and are remaining unpaid as at March 31, 2007. According to the information and explanations
given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or
any other Tribunal on the Company in respect of the aforesaid deposits.
7.
In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.
8.
We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the
Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act
and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a
detailed examination of the records with a view to determine whether they are accurate or complete.
9.
(a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company
is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’
State Insurance, Income-tax, Wealth Tax, Sales-Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues as
applicable, with the appropriate authorities in India.
(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of Wealth
Tax, Service Tax, Customs Duty and Cess which have not been deposited on account of any dispute.
The particulars of dues of Excise Duty, Sales-Tax and Income-tax as at March 31, 2007 which have not been deposited on account of a
dispute are as follows –
Name of the
statute
Nature of
dues
The Central
Excise Act,
1944 (*)
Excise duty including
interest and penalty,
as applicable
Central Sales
Tax Act and
Local Sales
Tax Act (*)
Income-tax
Act, 1961 (*)
Sales Tax including
interest and
penalty, as applicable
Income tax including
interest and penalty,
as applicable
*Net of amount deposited
42
Amount
(Rs. Lakhs)
Periods to which
the amount relates
Forum where the
dispute is pending
125
1994-2005
Appellate
Authority – upto
Commissioner’s Level
1236
1
1989-2004
1994-1995
82
1998-2000
CESTAT
High Court of
Judicature at Indore
The Supreme Court
of India
1865
1998-2004
74
1991-2002
5703
2001-2002 to
2006-2007
234
1999-2000 to
2003-2004
Appellate
Authority–upto
Joint Commissioner
Level
Tribunal
Appellate
Authority–upto
Commissioner’s
level
Income Tax
Appellate Tribunal
10. The Company has no accumulated losses as at March 31, 2007 and it has not incurred any cash losses in the financial year ended on that date
or in the immediately preceding financial year.
11. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in
repayment of dues to any financial institution or bank as at the balance sheet date.
12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
13. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to the Company.
14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.
15. In our opinion, and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company,
for loans taken by others from banks or financial institutions during the year, are not prejudicial to the interest of the Company.
16. In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the
purposes for which they were obtained.
17. On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the information and explanations
given to us, there are no funds raised on a short-term basis, which have been used for long–term investment.
18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301
of the Act during the year.
19. The Company has not issued any debentures.
20. The management has disclosed the end use of money raised by rights issue (Refer note 5 of Schedule 22) and the same has been verified by us.
21. During the course of our examination of the books of account and records of the Company, carried out in accordance with the generally
accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance
of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.
Mumbai, Dated: April 26, 2007
Partha Ghosh
Partner
Membership Number F-55913
Price Waterhouse
43
Balance Sheet as at March 31, 2007
As at
March 31, 2007
Rs. in Million
Schedule
No.
As at
March 31, 2006
Rs. in Million
SOURCES OF FUNDS
Shareholders’ Funds
Share Capital
Equity Shares
Preference Shares
1
1
Reserves & Surplus
2
418.0
383.7
801.7
9,762.2
418.0
533.7
951.7
8,742.9
10,563.9
Loan Funds
Secured Loans
Unsecured Loans
3
4
1,793.3
2,168.8
9,694.6
1,620.5
312.0
3,962.1
Deferred Tax Liability (Net)
Less : Deferred Tax Assets
1,033.6
162.1
1,932.5
858.5
153.0
871.5
15,397.5
TOTAL
705.5
12,332.6
APPLICATION OF FUNDS
Fixed Assets
Gross Block
Less : Depreciation
Net Block
Capital Work In Progress
5
Investments
Current Assets, Loans and Advances
Inventories
Sundry Debtors
Cash and Bank Balances
Other Current Assets
Loans and Advances
6
11,525.6
2,824.1
8,701.5
459.7
7
8
9
10
11
Less: Current Liabilities and Provisions
Current Liabilities
Provisions
12
13
8,918.4
2,166.0
6,752.4
1,754.5
9,161.2
1,265.0
2,264.8
2,298.8
220.5
86.5
2,677.6
2,114.5
1,747.5
109.2
72.9
1,888.5
7,548.2
5,932.6
2,328.7
248.2
2,049.7
846.6
2,576.9
Net Current Assets
TOTAL
NOTES TO THE FINANCIAL STATEMENTS
8,506.9
789.4
2,896.3
4,971.3
15,397.5
3,036.3
12,332.6
22
Schedules referred to above and notes attached there to form an integral part of the Balance Sheet.
This is the Balance Sheet referred to in our report of even date.
Partha Ghosh
Partner
Membership No. F–55913
Price Waterhouse
Mumbai, April 26, 2007
44
Ajay G Piramal
Keki Dadiseth
Rajesh Khanna
Y H Malegam
Dr. Swati A Piramal
S Ramadorai
Chairman
Director
Director
Director
Director – Strategic Alliances & Communications
Director
R A Shah
Deepak Satwalekar
N Vaghul
Michael Fernandes
N Santhanam
Leonard D’Souza
Director
Director
Director
Executive Director (CMG)
Chief Financial Officer
Company Secretary
Profit and Loss Account for the Year Ended March 31, 2007
Year Ended
March 31, 2007
Rs. in Million
Schedule
No.
INCOME
Sales and Services
Less : Excise Duty
Net Sales
Other Income
14
17,032.8
1,019.0
16,013.8
385.0
Year Ended
March 31, 2006
Rs. in Million
15,040.2
977.4
14,062.8
431.6
16,398.8
EXPENDITURE
Materials
Staff Cost
Research and Development Expenses
Other Expenses
(Increase)/Decrease in WIP/Finished Goods
15
16
17
18
19
PROFIT BEFORE INTEREST, DEPRECIATION AND TAX
Less : Interest (net)
PROFIT BEFORE DEPRECIATION AND TAX
Less : Depreciation
PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS
Less : Exceptional Items - Expenses
PROFIT BEFORE TAX
Less: Provision for Taxation - Current [includes prior period tax
Rs. 2.5 Million (Previous year Rs. 7.5 Million) and
Wealth tax provision Rs. 1.0 Million (Previous year Rs. 1.5 Million)]
(Refer note 9, Sch. 22)
MAT Credit Entitlement (Refer note 10, Sch.22)
Deferred Tax (Refer note 10, Sch.22)
Fringe Benefits Tax
PROFIT FOR THE YEAR
Balance Profit Brought Forward
NET PROFIT AVAILABLE FOR APPROPRIATION
Proposed Dividend on Equity Shares
–
Interim (Refer note 22(iv) Sch. 22)
–
Final
Distribution Tax Thereon (Refer note 22 (iv) Sch. 22)
Dividend Paid on Preference Shares (Refer note 22(ii) Sch. 22)
Proposed Dividend on Preference Shares
–
Interim (Refer note 22(iv) Sch. 22)
–
Final
Distribution Tax Thereon (Refer note 22 (ii) & (iv) Sch. 22)
Transfer to Capital Redemption Reserve (Refer note 22 (ii), Sch. 22)
6,683.8
1,857.9
878.9
4,154.1
(214.3)
14,494.4
5,325.3
1,519.1
639.3
3,750.9
672.2
13,360.4
3,038.4
109.0
2,929.4
705.0
2,224.4
—
2,224.4
20
21
11,906.8
2,587.6
135.2
2,452.4
577.2
1,875.2
32.7
1,842.5
265.5
125.9
(111.6)
166.0
21.7
(131.9)
120.2
24.8
341.6
1,882.8
3,039.3
4,922.1
139.0
1,703.5
2,161.7
3,865.2
627.1
104.5
105.7
3.7
—
627.1
87.9
—
19.2
—
3.3
700.0
—
150.0
—
28.2
4.0
170.4
(91.7)
—
BALANCE CARRIED TO BALANCE SHEET
Earning Per Share (Basic/Diluted) (Rs.) (Face value of Rs. 2/- each)
22
Schedules referred to above and notes attached there to form an integral part of the Profit and Loss Account.
1,713.5
3,208.6
8.9
825.9
3,039.3
8.2
This is the Profit and Loss Account referred to in our report of even date.
Partha Ghosh
Partner
Price Waterhouse
Ajay G Piramal
Keki Dadiseth
Rajesh Khanna
Y H Malegam
Dr. Swati A Piramal
S Ramadorai
Chairman
Director
Director
Director
Director
R A Shah
Deepak Satwalekar
N Vaghul
Michael Fernandes
N Santhanam
Leonard D’Souza
Director
Director
Director
Company Secretary
45
Cash Flow Statement for the Year Ended March 31, 2007
Year Ended
March 31, 2007
Rs. in Million
A.
Year Ended
March 31, 2006
Rs. in Million
CASH FLOW FROM OPERATING ACTIVITIES
Profit before tax
2,224.4
1,842.5
Depreciation
705.0
577.2
Interest Expense
398.4
262.2
Interest Income
(289.4)
(127.0)
(18.9)
(207.8)
39.2
(13.8)
—
(90.1)
Loss on Impairment of Brands
22.2
—
Provision for Bad & Doubtful Debts
85.0
70.0
Provision for Employees Retirement Benefits
25.9
(13.5)
(35.0)
28.9
—
32.7
Operating Profit Before Working Capital Changes
3,156.8
2,361.3
Adjustments For Changes In Working Capital :
–
(INCREASE) in Sundry Debtors
(647.9)
(407.1)
–
(INCREASE) in Other Receivables
(509.5)
(545.8)
–
(INCREASE)/DECREASE in Inventories
(150.3)
549.7
–
INCREASE / (DECREASE) in Trade and Other Payables
272.2
(130.0)
Cash Generated From Operations
2,121.3
1,828.1
–
(448.0)
(222.0)
1,673.3
1,606.1
Adjustments for:
Dividend on Investments
(Profit)/Loss on Fixed Assets sold (net)
Profit on Sale of Investments (net)
Unrealised foreign exchange (gain)/loss
Exceptional Items
Taxes Paid (Net of Refunds)
Net Cash Before Exceptional Items
–
Exceptional Items
—
(32.7)
1,673.3
1,573.4
Purchase of Fixed Assets
(2,727.1)
(1,582.7)
Capital Work in Progress
1,294.8
(702.7)
Proceeds from Sale of Fixed Assets
11.6
146.4
Proceeds from Sale of Investments
—
165.6
(475.6)
(606.6)
271.5
133.8
Net Cash From Operating Activities (A)
B.
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Investments
Interest Received
Net Cash (Used in) Investing Activities (B)
46
18.9
207.8
(1,605.9)
(2,238.4)
Cash Flow Statement for the Year Ended March 31, 2007
C.
Year Ended
March 31, 2007
Rs. in Million
Year Ended
March 31, 2006
Rs. in Million
—
—
(437.0)
(667.9)
68,794.7
52,388.5
(66,932.4)
(52,530.6)
(0.1)
—
2,543.8
1,637.2
(1,903.0)
(2,464.1)
—
3,281.6
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Long Term Borrowings
Receipts [Excludes Exchange Fluctuation of Rs.0.6 Million
(Previous year Rs.10.7 Million) on reinstatement of Foreign Currency Loan]
Payments
Proceeds from Short Term Borrowings
Receipts [Excludes Exchange Fluctuation of Rs. Nil
Payments
Payments for Fixed Deposits
Proceeds from Cash Credits
Receipts [Excludes Exchange Fluctuation of Rs.19.2 Million
Payments
Proceeds from Rights Issue
Redemption of Preference Shares
(150.0)
—
Interest Paid
(383.7)
(263.1)
(1,305.3)
(598.3)
(183.1)
(84.0)
43.9
699.3
Net Increase in Cash & Cash Equivalents (A)+(B)+(C)
111.3
34.3
Cash and Cash Equivalents As At 31.03.2006
109.2
74.9
Cash and Cash Equivalents As At 31.03.2007
220.5
109.2
9.7
8.6
Dividend Paid
Dividend Tax Paid
Net Cash From Financing Activities (C)
Cash and Cash Equivalents Comprise
Cash and Cheques on hand
Balance with Scheduled Banks
210.8
100.6
220.5
109.2
Notes :
1
The above Cash Flow Statement has been prepared under the ‘Indirect Method’ set out in Accounting Standard–3 issued by the Institute of Chartered Accountants
of India.
2
Cash and cash equivalents includes Rs.70.8 Million which are not available for use by the Company.
(Refer Schedule 9 in the accounts)
This is the Cash Flow Statement referred to in our report of even date.
Partha Ghosh
Partner
Price Waterhouse
Ajay G Piramal
Keki Dadiseth
Rajesh Khanna
Y H Malegam
Dr. Swati A Piramal
S Ramadorai
Chairman
Director
Director
Director
Director
R A Shah
Deepak Satwalekar
N Vaghul
Michael Fernandes
N Santhanam
Leonard D’Souza
Director
Director
Director
Company Secretary
47
Schedules forming part of the Balance Sheet as at March 31, 2007
1.
SHARE CAPITAL
AUTHORISED
25,00,00,000 (25,00,00,000) Equity Shares of Rs. 2/- each
30,00,000 (30,00,000) Preference Shares of Rs. 100/- each
2,40,00,000 (2,40,00,000) Preference Shares of Rs. 10/- each
10,50,00,000 (10,50,00,000 ) Unclassified Shares of Rs. 2/- each
ISSUED & SUBSCRIBED
20,90,13,133 (20,90,13,133) Equity Shares of Rs. 2/- each
Nil (15,00,000) 6% Non Cumulative Redeemable Preference Shares
of Rs. 100/- each . (Refer note 22(ii), Sch. 22)
Preference shares are redeemable on the expiry of 4 years from the Appointed
Date January 01, 2003, with an option for both the Company and the
shareholder for early redemption, but not before March 31, 2004
15,00,000 (15,00,000) 5% Cumulative Redeemable Preference Shares of Rs. 100/- each
Date October 01, 2003, with an option for the Company for early redemption,
but not before March 31, 2005
2,33,72,280 (2,33,72,280) 5% Cumulative Redeemable Preference Shares of Rs. 10/- each
Date December 01, 2003, with an option for the Company for early redemption,
TOTAL
Note :
Of the above :
1.
3,90,85,590 (3,90,85,590) Equivalent Equity Shares of Rs.2/- each were allotted as fully
paid bonus shares by capitalisation of Share Premium / General Reserve.
2.
82,50,000 (82,50,000) Equivalent Equity Shares of Rs.2/- each were allotted to erstwhile
shareholders of Gujarat Glass Limited on amalgamation.
3.
shareholders of Boehringer Mannheim India Limited on amalgamation.
4.
shareholders of Sumitra Pharmaceuticals and Chemicals Limited as per the scheme of
arrangement.
5.
3,75,25,020(3,75,25,020) Equivalent Equity Shares of Rs. 2/- each were allotted to erstwhile
shareholders of Piramal Healthcare Limited (PHL) as per the scheme of arrangement.
6.
The erstwhile Piramal Healthcare Limited shareholders held 9,62,180 warrants with a right
to convert into 75 Equivalent Equity Shares of the company for every two warrants held on
payment of Rs. 10/- in Cash per Equity Share. Out of this 9,52,644 (9,52,644) warrants were
converted into 3,57,24,155 (3,57,24,155) shares resulting in the Issued and Subscribed Capital
increasing by Rs.71.4 Million (Rs. 71.4 Million). The remaining 9,536 warrants were cancelled.
7.
1,57,50,000 (1,57,50,000) Equivalent Equity Shares of Rs. 2/- each were allotted to the
erstwhile Shareholders of Rhone-Poulenc India Limited on its merger with the Company.
8.
The Company’s Right Issue Offer of 1,90,01,601 equity shares of Rs. 2/- each for Rs. 175/each (including a Share Premium of Rs. 173/- each) for cash aggregating to Rs. 3,325.3
Million (Rs.3,325.3 Million) opened for subscription on August 01, 2005 and closed on August
30, 2005. The offer was oversubscribed 1.2 times. Pursuant to the same, 1,89,97,128
(1,89,97,128) equity shares of Rs. 2/- each fully paid up were allotted on September 25,
2005. Allotment of the balance 4,473 (4,473) Equity Shares of Rs. 2/- each has been kept in
abeyance pending receipt of necessary documentation for establishing title to these Shares.
48
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
500.0
300.0
240.0
210.0
1,250.0
500.0
300.0
240.0
210.0
1,250.0
418.0
—
418.0
150.0
150.0
150.0
233.7
233.7
801.7
951.7
2.
RESERVES AND SURPLUS
CAPITAL SUBSIDY
As per last Balance Sheet
CAPITAL RESERVE
SHARE PREMIUM ACCOUNT
Add : On Right Issue
Less : Right Issue Expenses
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
4.0
4.0
16.2
16.2
3,243.6
—
—
—
3,286.5
42.9
3,243.6
GENERAL RESERVE
Add: Transferred from Profit and Loss Account
2,439.8
700.0
3,243.6
2,269.4
170.4
3,139.8
CAPITAL REDEMPTION RESERVE (Refer note 22(ii), Sch. 22)
—
150.0
2,439.8
—
—
150.0
DEBENTURE REDEMPTION RESERVE
Less : Transferred to Profit and Loss Account
—
—
PROFIT & LOSS ACCOUNT
As per Annexed Profit and Loss Account
TOTAL
3.
SECURED LOANS
Cash Credit from Banks (Includes Packing Credit Loans/Buyers Credit)
Term Loan From Bank
TOTAL
Note
1
2
—
91.7
91.7
—
—
3,208.6
9,762.2
3,039.3
8,742.9
1,570.9
222.4
1,793.3
951.0
669.5
1,620.5
Notes on Secured Loans
1.
Cash Credit facilities including Packing Credit in Foreign Currency (PCFC) are secured by hypothecation of stocks and book debts.
2.
Term Loan from Banks are secured by the following:a.
ECB loan of Rs.222.4 Million (US$ 5.0 Million)[Previous year Rs.446.3 Million (US$ 10.0 Million)] from BNP Paribas, Singapore has been secured by first
charge of immovable property of the company situated at various manufacturing locations and further secured by hypothecation of the moveable assets of
the company, both present and future (save and except book debts) subject to prior charge on certain specified moveable assets created in favour of banks
for securing working capital requirements.
b.
ECB loan of Rs. Nil [Previous year Rs.223.2 Million (US$ 5.0 Million)] from Citibank has been secured by first charge of immovable property of the
company situated at various manufacturing locations and further secured by hypothecation of the moveable assets of the company, both present and future
(save and except book debts) subject to prior charge on certain specified moveable assets created in favour of banks for securing working capital requirements.
Satisfaction of charges in respect of loans repaid during the year and certain old loans are still awaited.
3.
4.
UNSECURED LOANS
Fixed Deposits (Refer note 21, Sch. 22)
[Payable within a year Rs.Nil (Previous year Rs. Nil)]
Loan from Subsidiary
Banks [Payable within a year Rs.2138.6 Million, (Previous year Rs.223.2 Million)]
TOTAL
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
0.2
0.3
30.0
2,138.6
—
311.7
2,168.8
312.0
49
50
5.
23.0
—
120.3
769.0
1,757.2
46.1
5.8
2,727.1
193.4
15.2
342.5
1,240.3
4,283.2
240.3
45.2
8,918.4
7,488.3
Previous Year
152.6
119.9
13.0
—
—
7.2
58.8
5.6
—
35.3
Deductions
COST
8,918.4
11,525.6
38.0
15.2
462.8
2,002.1
5,981.6
280.8
216.4
2,528.7
As at
31/03/2007
(A)
1,660.8
2,166.0
18.6
2.4
—
219.5
1,041.2
81.9
79.7
722.7
Opening
As at
01/04/2006
577.2
705.0
3.0
0.2
—
89.5
315.1
15.1
27.5
254.6
For the
Year
72.0
46.9
6.7
—
—
1.6
21.7
3.8
—
13.1
Deductions
2,166.0
2,824.1
14.9
2.6
—
307.4
1,334.6
93.2
107.2
964.2
As at
31/03/2007
(B)
DEPRECIATION / AMORTISATION
(Rs. in Million)
1,754.5
8,506.9
9,161.2
6,752.4
26.6
12.8
342.5
1,020.8
3,242.0
158.4
113.7
1,835.6
459.7
8,701.5
23.1
12.6
462.8
1,694.7
4,647.0
187.6
109.2
1,564.5
As at
31/03/2006
NET BLOCK
As at
31/03/2007
(A–B)
Capital Work in Progress [including Capital Advances, and Interest capitalised Rs.Nil (Previous Year Rs. 31.1 Million)] and
Research and Development cost of Rs. 81.6 Million (Previous year Rs. 43.9 Million)
(includes know-how acquired and pending for commercial production)
Refer note 1(ii), Sch. 22
Refer note 1(iv), Sch. 22
Refer note 1(v), Sch. 22
*The Brands are in the process of being registered in the name of the Company , for which the necessary application has been made with trade mark registry.
** A part of the land purchased at Baddi and land, building and motor vehicle purchased at Hyderabad is in the process of being registered in the name of the Company.
1,582.7
5.7
Additions
2,558.3
Opening
As at
01/04/2006
Intangible Assets
Brand/Know-how/
Intellectual Property
Rights *
Computer Software
Tangible Assets
Land Leasehold
Land Freehold **
Building
Plant & Machinery
Furniture & Fixtures &
Office Equipment
Motor Vehicle /
Transport
Grand Total
Particulars
FIXED ASSETS
6. INVESTMENTS (Long Term, Non Trade)
A) Units (Quoted)
Units of Unit Trust of India - 6.75% Tax Free US 64 Bonds
B) Shares of Companies
a) Subsidiary Companies (Unquoted)
i. Piramal International, Mauritius
ii. NPIL Fininvest Private Limited
iii. NPIL Laboratories and Diagnostics Private Limited
(Refer note 8(b), Sch.22)
iv. NPIL–Dr.Phadke Pathology Laboratory and
Infertility Center Private Limited
(Refer note 8(a), Sch. 22)
v. NPIL Holdings (Switzerland) Limited, Switzerland
vi. Nicholas Piramal Consumer Products
Private Limited (Refer note 7, Sch. 22)
b) Others (Quoted)
i. Biosyntech Inc., Canada
ii. Dalmia Cements Limited - Rs. 220.00 (Rs. 220.00)
c) Others (Unquoted)
i. Allergan India Private Limited
ii. Nicholas Piramal Consumer Products Private
Limited (Refer note 7, Sch. 22)
As at
As at
March 31, 2007 March 31, 2006
Rs. in Million
Rs. in Million
Nos. as at
Nos. as at
March 31, 2007 March 31, 2006
Face
Value
Rupees
3105
3105
100.00
0.3
0.3
1025000
221552
1025000
221552
1 USD
10.00
35.9
2.2
35.9
2.2
2988600
2500000
10.00
396.4
60.8
300000
11000
180000
11000
10.00
1000 CHF
195.8
383.4
55.8
383.4
5000000
—
10.00
24.5
—
7500000
400
7500000
400
0.001 CAD
2.00
223.2
—
223.2
—
3920000
3920000
10.00
39.2
39.2
—
2450000
10.00
—
1,300.9
35.9
1,265.0
24.5
825.3
35.9
789.4
Less : Provision for diminution in value of Investment
As at
March 31, 2007
Cost Market Value
Rs. in Million Rs. in Million
1.
2.
Aggregate value of quoted investments
Aggregate value of unquoted investments
TOTAL
7. INVENTORIES
(As certified by the Management)
Raw & Packing Materials
Work-in-progress
Finished Goods
Engineering Stores
TOTAL
223.5
1,041.5
1,265.0
As at
March 31, 2006
Cost
Market Value
Rs. in Million
Rs. in Million
223.5
565.9
789.4
136.0
139.5
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
738.8
463.1
1,010.0
52.9
2,264.8
783.5
389.4
898.0
43.6
2,114.5
51
As at
March 31, 2007
Rs. in Million
8.
SUNDRY DEBTORS
i. Over six months
Secured – considered good
Unsecured – considered good
– considered doubtful
Less : Provision for doubtful debts
1.7
75.0
391.2
467.9
391.2
As at
March 31, 2006
Rs. in Million
1.7
179.9
306.2
487.8
306.2
76.7
ii. Others – Considered good
Secured
Unsecured
TOTAL
[Includes due from Allergan India Private Limited Rs.27.8 Million (Previous Year Rs. 23.0 Million)]
9.
CASH AND BANK BALANCES
i. Cash and Cheques on Hand
ii. Balance with Scheduled Banks
–
Current Account
–
Current Account in respect of Unclaimed Dividend Warrants
–
Current Account in respect of Right Issue Refund Orders
–
Others
TOTAL
10. OTHER CURRENT ASSETS
Interest, Rent & Claims Receivable
TOTAL
11. LOANS AND ADVANCES
Unsecured & Considered Good unless otherwise stated
Advances recoverable in cash or in kind or for value to be received
Advance to NPIL Senior Employees Stock Option Scheme Trust
Advance Tax Less Provision
MAT Credit Entitlement (Refer note 10, Sch. 22)
Loan to Subsidiaries
Advance to Subsidiaries
Other Deposits
Balance with Customs, Port Trust and Excise Authorities on Current Account
TOTAL
12. CURRENT LIABILITIES
Sundry Creditors for Capital goods, Materials & Expenses
Small Scale Industrial Undertakings (Refer note 17(a) and 17(b), Sch. 22)
Others
Advances from Customers
Investor Education and Protection Fund Shall be Credited by
– Unpaid Dividend (Refer note 21, Sch. 22)
Rights Issue Money Refundable to Shareholders
Interest Accrued But Not Due
Other Liabilities
TOTAL
13. PROVISIONS
Provision for Wealth Tax less Payment
Tax Payable on Proposed Dividend
Provision for Employees Retirement Benefits (Refer note 18, Sch.22)
TOTAL
52
34.4
2,187.7
181.6
31.3
1,534.6
2,222.1
2,298.8
1,565.9
1,747.5
9.7
8.6
139.5
69.6
1.2
0.5
220.5
76.6
20.1
3.4
0.5
109.2
86.5
86.5
72.9
72.9
258.2
168.5
316.2
243.5
927.1
242.5
487.4
34.2
2,677.6
480.3
—
154.8
131.9
481.6
141.1
466.8
32.0
1,888.5
1.9
1,996.4
17.6
1.6
1,821.5
12.1
69.6
1.2
23.0
219.0
2,328.7
20.1
3.4
8.3
182.7
2,049.7
104.5
—
2.5
17.8
123.4
248.2
627.1
28.2
1.9
91.9
97.5
846.6
Schedules annexed to and forming part of the Profit and Loss Account for the year ended March 31, 2007
Year Ended
March 31, 2007
Rs. in Million
Year Ended
March 31, 2006
Rs. in Million
18.9
—
—
18.4
29.7
0.9
6.1
178.0
133.0
385.0
207.8
13.8
90.1
21.3
15.5
0.6
7.0
—
75.5
431.6
4,041.5
2,642.3
6,683.8
2,983.6
2,341.7
5,325.3
1,654.8
97.6
105.5
1,857.9
1,340.6
83.0
95.5
1,519.1
878.9
878.9
639.3
639.3
405.4
146.5
394.8
381.7
130.0
309.8
14. OTHER INCOME
Dividend on Investments from Subsidiaries/Joint Ventures
Profit on Sale of Assets (net)
Profit on Sale of Investment
Processing Charges Received
Services & Commission
Rent Received[Tax Deducted at Source Rs.Nil (Previous year Rs. Nil)]
Export Incentive
Claim received from Boots PLC (Refer note 7(c), Sch. 22)
Miscellaneous Income
TOTAL
15. MATERIALS
Raw and Packing Materials
Purchase of Trading Goods
TOTAL
16. STAFF COST (Net of Recoveries)
Salaries, Wages, Bonus and Gratuity
Contribution to Provident and Other Funds
Staff Welfare
TOTAL
17. RESEARCH AND DEVELOPMENT EXPENSES
R & D Expenses
TOTAL
18. OTHER EXPENSES (Net of Recoveries)
Processing Charges
Stores and Spares Consumed
Power, Fuel & Water Charges
Repairs and Maintenance
Buildings
Plant and Machinery
Others
46.8
87.3
2.6
46.2
70.9
1.9
136.7
Rent
Premises
Other Assets
Rates & Taxes (includes Excise Duty)
Insurance
Travelling Expenses
Directors’ Commission
Directors’ Fees
Provision for Doubtful Debts
Loss on Sale of Assets (net)
Advertisement and Business Promotion Expenses
Freight
Clearing and Forwarding Expenses
Claims
Legal and Professional Charges
Miscellaneous Expenses (Refer note 16, Sch. 22)
TOTAL
197.0
183.5
119.0
195.0
81.5
380.5
147.6
33.4
551.5
28.3
0.8
85.0
21.8
22.2
566.8
189.9
247.8
97.6
135.8
561.7
4,154.1
276.5
252.4
25.8
444.0
23.3
0.7
70.0
—
—
491.2
198.3
209.6
193.9
146.9
477.8
3,750.9
53
Year Ended
March 31, 2007
Rs. in Million
19. (INCREASE) / DECREASE IN
WORK - IN - PROGRESS AND FINISHED GOODS
OPENING STOCKS :
Work-in-Progress
Finished Goods
Less : Excise Duty
389.4
898.0
98.3
Year Ended
March 31, 2006
Rs. in Million
285.3
1,743.2
167.2
1,189.1
CLOSING STOCKS :
Work-in-Progress
Finished Goods
Less : Excise Duty
463.1
1,010.0
69.7
389.4
898.0
98.3
1,403.4
(214.3)
TOTAL
20. INTEREST (Net)
Interest on Fixed Loans & Debentures
Interest on Others
1,861.3
300.2
98.2
1,189.1
672.2
212.8
49.4
398.4
Less: Interest Received :
(i) On Term Deposits with Limited Companies
& Others [Tax Deducted at Source Rs.53.8 Million
(Previous year Rs.21.6 Million)]
(ii) On Income Tax Refund
(iii) On Receivables and Others
TOTAL
21. EXCEPTIONAL ITEMS
Voluntary Retirement Cost
TOTAL
54
240.7
—
48.7
262.2
73.0
13.0
41.0
289.4
109.0
127.0
135.2
—
—
32.7
32.7
Schedules forming part of the Financial Statements for the year ended March 31, 2007
22. NOTES TO THE FINANCIAL STATEMENTS
1.
SIGNIFICANT ACCOUNTING POLICIES
i)
Basis of Accounting
The financial statements are prepared under historical cost convention on an accrual basis and comply with the accounting standards issued by the
Institute of Chartered Accountants of India referred to in Section 211 (3C) of the Companies Act, 1956 (the Act).
ii)
Fixed Assets
Intangibles
Brands/know-how (including US FDA / TGA approvals and Business Application Software intended for long term use) are recorded at their acquisition
cost and in case of assets acquired on merger, at their carrying values.
Tangibles
All fixed assets are stated at cost of acquisition, less accumulated depreciation. In the case of fixed assets acquired for new projects / expansion, interest
cost on borrowings and other related expenses incurred upto the date of completion of project are capitalised.
iii)
Sales
The Company recognises sales at the point of dispatch of goods to the customer. Sales are net of discounts, sales tax, excise duty and returns.
iv)
Depreciation
Intangibles
Brands/know-how (including US FDA / TGA approvals) / Intellectual Property Rights are amortised from the month of product launch / commercial
production, over their estimated economic life not exceeding ten years.
Computer Software is being depreciated on straight line method at the rates specified in Schedule XIV of the Companies Act, 1956.
Tangibles
Depreciation on fixed assets has been provided on straight line method at the rates specified in Schedule XIV of the Companies Act, 1956. Diagnostic
equipments placed with customers are amortised over a period of 60 months.
Depreciation on additions / deletions of assets during the year is provided on a pro-rata basis.
v)
Research and Development
Research and development costs, including technical know-how fees, incurred for development of products are expensed as incurred, except for
development costs (costs incurred once the phase one trials commence) which relate to the design and testing of new or improved materials, products
or processes which are recognised as an intangible asset to the extent that it is expected that such assets will generate future economic benefits. Such
development costs are carried forward under Capital Work in Progress until the completion of the project. Research and Development expenditure of
a capital nature is added to the fixed assets.
vi)
Leave Encashment
Provision for leave encashment is determined on the basis of actuarial valuation.
vii) Retirement Benefits
The Company’s contribution in respect of Provident Fund and Superannuation Fund are charged against revenue every year. In respect of Gratuity,
the Company’s contribution to the approved funds is charged against the revenue.
viii) Voluntary Retirement Scheme (VRS)
Compensation paid on voluntary retirement scheme are charged off in the year in which they are incurred.
ix)
Investments
Long term investments are valued at cost with an appropriate provision for permanent diminution in value.
x)
Valuation of Inventories
Raw materials, packing materials, stores and work-in-progress are valued at cost. Finished goods are valued at lower of cost or net realisable value.
Excise Duty on goods manufactured by the Company and remaining in inventory is included as a part of valuation of finished goods.
xi)
Foreign Exchange Fluctuations
The transactions in foreign exchange are accounted at the exchange rate prevailing on the date of transactions. Any exchange gains or losses arising
out of the subsequent fluctuations are accounted for in the Profit and Loss Account.
xii) Excise Duty
The excise duty in respect of closing inventory of finished goods is included as part of inventory. The material consumed is net of Central Value Added
Tax (CENVAT) credits.
Nicholas Piramal India Limited 55
Schedule 22 (Contd.)
xiii) Income Tax
Current Tax
Current tax is determined as the amount of tax payable in respect of taxable income for the year.
Deferred Taxation
Deferred Tax resulting from timing differences between book and tax profits is accounted for under the liability method, at the current rate of tax, to
the extent that the timing differences are expected to crystallise.
Fringe Benefit Tax
Provision for Fringe Benefit Tax has been made in accordance with the applicable Income Tax Laws prevailing for relevant assessment years.
xiv) Impairment of Assets
The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the
Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit
to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an
impairment loss and is recognised in the profit and loss account. If at the balance sheet date there is an indication that if a previously assessed
impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.
xv) Provisions and Contingent Liabilities
The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a
reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a
present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the
likelihood of outflow of resources is remote, no provision or disclosure is made.
2.
3.
Estimated Amount of outstanding contracts / Capital Commitment
Contingent Liability:
a.
Demand dated June 5, 1984 the Government has asked for payment to the
credit of the Drugs Prices Equalisation Account, the difference between
the common sale price and the retention price on production of Vitamin ‘A’
Palmitate (Oily Form) from January 28, 1981 to March 31, 1985 not
accepted by the Company. The Company has been legally advised that the
demand is untenable.
b.
Demand dated December 12, 2005 the district Controller has asked
Boehringer Mannheim India Limited (since merged with Company) for
payment in relation to a liability arising out of Drug Price Controller Order,
1979. The Company is of the opinion that the demand is not legally tenable.
c.
Guarantees issued to Government authorities and limited companies
including guarantees issued on behalf of subsidiaries and performance guarantees.
d.
Appeals filed in respect of disputed demands:
Income Tax
–
where the Company is in appeal
–
where the department is in appeal
Sales Tax
Central / State Excise
Labour Matters
Stamp Duty
Legal Cases
Bills Discounted
e.
56
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
188.1
898.0
6.1
6.1
31.3
31.3
6,124.7
1,263.8
870.9
1,525.4
196.1
152.6
36.9
40.5
70.7
391.4
997.0
1,031.7
66.0
134.2
33.9
40.5
—
338.7
4.
An erstwhile Contractor has made a claim before arbitration panel for Rs.80.0 Million on Canere Actives and Fine Chemicals Private Limited (Canere) prior
to its amalgamation for unsettled dues for erection and commissioning of a manufacturing facility during the year 1999-2000. Canere has filed a counter
claim of Rs.382.6 Million on the Contractor for submitting inflated bills for work not done and for special and indirect damages caused due to negligence of
the Contractor. No award has yet been made by the Arbitration panel.
5.
During the previous year, the Company concluded its Rights Issue offering through which 19,001,601 equity shares of Rs.2/- each (allotment of 4,473 equity
shares of Rs.2/- each held in abeyance) were issued by the Company at a premium of Rs.173/- per share. The utilisation of the rights issue proceeds as at
March 31, 2007 was as follows :
(Rs. in Million)
No.
Purpose
Use of Funds as
projected
Actual funds used as at
March 31, 2007
1
New Formulations manufacturing facility at Baddi
244.0
244.0
2
Establishing new facility for manufacturing Inhalation Anesthetic products at Hyderabad
270.0
270.0
3
Capital Expenditure for R & D
750.0
602.0
4
General Corporate Purpose including Strategic Initiatives
2,061.0
606.6
Total
3,325.0
1,722.6
Pending utilisation, the balance funds have been used in the repayment of short-term loans and cash credit.
6.
The Company has, through its subsidiary NPIL Pharmaceuticals (UK) Limited (held through wholly owned subsidiary NPIL Holdings (Switzerland) Limited),
acquired the pharmaceutical manufacturing facility of Pfizer located at Morpeth, UK effective June 19, 2006. Pursuant to the same the subsidiary has also
executed a long-term manufacturing and supply contract with Pfizer.
7.
On September 29, 2006, the Company acquired the balance 51% equity stake (25,50,000 equity shares of Rs. 10/- each) in its 49:51 joint venture Company
Boots Piramal Healthcare Private Limited [now known as Nicholas Piramal Consumer Products Private Limited (NPCPPL)] for an aggregate consideration
of Re.1/-. Pursuant to the same:
8.
9.
a)
The Joint Venture’s marketing rights in the brands Strepsils, Clearasil and Sweetex in India were transferred to Reckitt Benckiser India Limited.
b)
NPCPPL has become the wholly owned subsidiary of the Company which will continue to actively market and distribute its own Over The Counter
(OTC) products viz. Saridon, Polycrol and Lacto Calamine. In addition, the Company also plans to launch OTC brands in new therapy areas as well
as transition some of its Rx brands to OTC through leveraging the said subsidiary’s sales and marketing.
c)
As a part of the arrangement, The Boots Company PLC (Boots PLC) / Reckitt Benckiser India Limited have paid the Company an aggregate sum of
Rs. 178.0 Million in settlement of past claims which has been included under the Head “Other Income”.
d)
As at March 31, 2007, the accumulated losses of Nicholas Piramal Consumer Products Private Limited (NPCPPL) aggregates to Rs.133.9 Million
against the shareholders’ funds of Rs.50.0 Million resulting in wiping off the entire shareholders funds as at March 31, 2007. The Company’s focus
continues to remain with NPCPPL and has chalked out ambitious growth plans. Taking into consideration the above and also its commitment for the
continued support to NPCPPL financially and otherwise, the Company does not consider it necessary to provide for diminution in value of its investment
of Rs. 24.5 Million.
a.
On July 14, 2006, the Company acquired the balance 40% equity stake (1,20,000 equity shares of Rs. 10/- each) in its 60:40 joint venture Company
NPIL – Dr. Phadke Pathology Laboratory & Infertility Center Pvt. Ltd. for an aggregate consideration of Rs.140.0 Million. Pursuant to the same the
said Company has become a wholly owned subsidiary of the Company.
b.
On March 12, 2007, the Company has invested Rs. 335.6 Million in its subsidiary Company NPIL Laboratories and Diagnostic Private Limited by
subscribing to fresh issue of 488,600 Equity Shares of Rs. 10/- each.
In view of the set off of the accumulated losses / unabsorbed depreciation of Rs.33.3 Million available to the Company under section 72A of the Income Tax
Act, 1961 (the Act) and also exemption from Income Tax available on profits and gains derived by the Company from its new manufacturing facility at
Baddi, Himachal Pradesh, under section 80-IC of the Act, the Company is liable to tax under section 115JB of the Act, which has been provided for and is
in accordance with the Accounting Standard and guidelines issued by the Institute from time to time.
10. Major components of deferred tax assets and liabilities arising are:
(Rs. in Million)
As at March 31, 2007
Deferred
Tax
Assets
Deferred
Tax
Liabilities
Deferred
Tax
Assets
Deferred
Tax
Liabilities
On account of timing differences
–
–
–
–
Depreciation
VRS
Others
Total
—
10.7
114.8
36.6
162.1
1,033.6
—
—
—
1,033.6
—
32.2
86.2
34.6
153.0
858.5
—
—
—
858.5
–
MAT Credit Entitlement (Refer Sch.11)
243.5
—
131.9
—
11. The Company is mainly engaged in pharmaceutical business (mainly consisting of manufacturing and sale of own and traded bulk drugs and formulations)
which is considered the Primary reportable business segment as per Accounting Standard - AS 17 “Segment Reporting” issued by the Institute of Chartered
Accountants of India. The Secondary Segments based on geographical segmentation are considered to be Businesses outside India and within India.
57
Details
(Rs. in Million)
Within India
Outside India
Inter – Segment
Total
March
2007
March
2006
March
2007
March
2006
March
2007
March
2006
March
2007
March
2006
Revenues
13,543.1
12,292.9
2,855.7
2,201.5
—
—
16,398.8
14,494.4
Carrying amounts of Segment Assets
17,096.4
14,541.4
1,040.1
840.5
—
—
18,136.5
15,381.9
2,727.1
1,582.7
—
—
—
—
2,727.1
1,582.7
Additions to Fixed and Intangible Assets
12. Related Party Disclosures, as required by Accounting Standard 18 – AS 18 “Related Parties Disclosures” by the Institute of Chartered Accountants of India
are given below:
A. Controlling Companies
–
Glass Engineers Private Limited*
–
Legend Pharma Private Limited*
–
Nandan Piramal Investments Private Limited*
–
Piramal Texturising Private Limited*
–
Swati Piramal Investments Private Limited*
–
Vulcan Investments Private Limited*
–
NPIL Holdings Private Limited*
*There are no transactions during the year with the above Companies.
B.
Subsidiary Companies
–
Piramal International, Mauritius
–
NPIL Fininvest Private Limited (NPIL Fininvest)
–
NPIL Healthcare Private Limited (NPIL Healthcare)#
–
NPIL Laboratories and Diagnostics Private Limited (NPIL Labs)
–
NPIL – Dr. Phadke Pathology Laboratory and Infertility Center Private Limited (NPIL Dr. Phadke)
–
NPIL – Dr. Golwilkar Laboratories Private Limited ( Upto June 30, 2005)
–
NPIL Pharma Inc. US*
–
NPIL Life Sciences Limited, UK*
–
NPIL Holdings (Switzerland) Limited, Switzerland
–
NPIL Holdings (Canada) 2006 Inc.*
–
Torcan Chemical Limited, Canada *
–
NPIL Pharmaceuticals (UK) Limited, UK (NPIL Pharma)*
–
NPIL Overseas Limited, UK*
–
NPIL Pharmaceuticals Pension Trustees Limited, UK *
–
Nicholas Piramal Consumer Products Private Limited (formerly known as Boots Piramal Healthcare Private Limited)(NPCP)
# Held through NPIL Fininvest Private Limited
* Held through NPIL Holdings (Switzerland) Limited, Switzerland
C.
Other related parties where common control exists
–
Allergan India Private Limited (Allergan) [Joint Venture]
–
Piramal Healthcare Private Limited (subsidiary of Piramal Enterprises Limited) (merged with PEL during the year)
–
Kojam Fininvest Limited**
–
Gujarat Glass Private Limited (Gujarat Glass)
–
DDRC Wellspring Pathlabs Private Limited@ [Joint Venture]
–
Peninsula Land Limited**
–
The Swastik Safe Deposit & Investments Limited (Swastik Safe)
–
Piramal Enterprises Limited (Piramal Enterprises)
**There are no transactions during the year with the above Companies.
@ Held through NPIL Laboratories and Diagnostics Private Limited
D.
58
Directors, Key Management Personnel and their relatives
–
Mr. Ajay G. Piramal
–
Mr. Keki Dadiseth
–
–
Mr. G. P. Goenka (upto June 28, 2006)
–
Mr. Rajesh Khanna
–
Mr. Y. H. Malegam
–
–
–
–
–
–
–
–
–
–
–
E.
Mrs. Urvi Piramal (upto June 28, 2006)
Mr. Harsh Piramal (upto June 28, 2006)
Mr. S Ramadorai
Mr. Deepak Satwalekar
Mr. R. A. Shah
Mr. Vijay Shah (upto April 30, 2006)
Mr. N. Vaghul
Mr. N. Santhanam
Dr. Somesh Sharma
Mr. Praneet Singh
Investing Parties with whom NPIL is / was a JV Partner
–
Allergan Inc
–
Boots Plc (upto September 29, 2006)
(Rs. in Million)
Details of Transactions
Subsidiaries
2007
Purchase of Goods
– NPCP
– Gujarat Glass
– Allergan
– Piramyd Retail & Mercantising Private Limited
(not related party during the year)
– Others
Associates
2006
Key Management Personnel
2007
2006
2007
2006
Total
2007
2006
544.5
—
—
—
—
—
—
214.8
84.2
398.3
—
—
—
—
—
—
—
—
544.5
214.8
84.2
398.3
—
—
—
14.5
—
—
—
—
0.1
—
—
—
—
—
—
14.5
0.1
—
TOTAL
Sale of Goods
– Allergan
– NPCP
– NPIL Pharma
– Others
559.0
—
299.0
398.4
—
—
858.0
398.4
—
132.4
37.5
12.6
—
—
—
6.0
309.5
—
—
—
291.7
125.0
—
—
—
—
—
—
—
—
—
—
309.5
132.4
37.5
12.6
291.7
125.0
—
6.0
TOTAL
Rendering of Services
– Allergan
182.5
6.0
309.5
416.7
—
—
492.0
422.7
—
—
1.4
2.6
—
—
1.4
2.6
—
—
1.4
2.6
—
—
1.4
2.6
1.7
—
—
3.3
—
—
—
98.0
—
—
38.1
9.1
—
—
—
—
—
—
1.7
98.0
—
3.3
38.1
9.1
1.7
3.3
98.0
47.2
—
—
99.7
50.5
—
—
—
2.2
—
—
—
2.2
—
—
—
2.2
—
—
—
2.2
4,943.2
710.0
10.2
75.9
1,397.4
132.4
2,221.5
258.0
11.4
75.9
359.3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4,943.2
710.0
10.2
75.9
1,397.4
132.4
2,221.5
258.0
11.4
75.9
359.3
—
7,269.1
2,926.1
—
—
—
—
7,269.1
2,926.1
TOTAL
Receiving of Services
– NPIL Labs
– Piramal Enterprises
– Thundercloud Technologies
(not related party during the year)
TOTAL
Rent Paid
– Piramal Healthcare (not related party during the year)
TOTAL
Finance granted (including loans and Equity
contribution in cash or in kind)
– NPIL Fininvest
– NPIL Labs
– NPIL Dr. Phadke
– NPIL Pharma Inc
– NPIL Holdings (Switzerland) Limited
– NPIL Healthcare
TOTAL
59
(Rs. in Million)
Subsidiaries
2007
Interest Received
– NPIL Fininvest
– NPCP
– NPIL Labs
– Others
TOTAL
Finance taken (including Loans and Equity
contribution in cash or in kind)
– NPCP
TOTAL
Interest Paid
– NPCP
TOTAL
Management Contracts including for
Deputation of Employees – Services rendered
– NPCP
TOTAL
Remuneration
– Mr. Ajay Piramal
– Dr. Swati A Piramal
– Mr. Vijay Shah
– Mr. Michael Fernandes
– Dr. Somesh Sharma
– Others
TOTAL
Others – Payments
– Swastik Safe
TOTAL
Others – Receipts
– NPCP (Reimbursement on account of
Claims, Discounts and Others)
– Others
TOTAL
Receivable
– NPIL Labs
– NPIL Pharma Inc
– Allergan
– NPIL Holdings (Switzerland) Limited
– NPIL Healthcare
– Others
TOTAL
Payable
– NPCP
– Others
TOTAL
60
2006
Associates
2007
2006
2007
2006
Total
2007
2006
153.1
2.7
60.5
26.7
43.7
—
25.1
7.8
—
—
—
—
—
14.7
—
—
—
—
—
—
—
—
—
—
153.1
2.7
60.5
26.7
43.7
14.7
25.1
7.8
243.0
76.6
—
14.7
—
—
243.0
91.3
30.0
30.0
—
—
—
—
—
—
—
—
—
—
30.0
30.0
—
—
0.1
—
—
—
—
—
0.1
—
0.1
—
—
—
—
—
0.1
—
—
—
—
—
—
—
0.4
0.4
—
—
—
—
—
—
0.4
0.4
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
38.4
20.2
0.6
15.3
16.8
19.0
110.3
29.2
14.7
13.2
2.0
11.8
11.4
82.3
38.4
20.2
0.6
15.3
16.8
19.0
110.3
29.2
14.7
13.2
2.0
11.8
11.4
82.3
—
—
—
—
10.3
10.3
6.7
6.7
—
—
—
—
10.3
10.3
6.7
6.7
100.3
—
100.3
125.3
4.5
129.8
—
—
—
—
—
—
—
—
—
—
—
—
100.3
—
100.3
125.3
4.5
129.8
456.5
92.8
—
378.1
135.9
111.0
1,174.3
285.9
84.1
—
251.1
—
10.4
631.5
—
—
27.8
—
—
0.2
28.0
—
—
23.0
—
—
0.3
23.3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
456.5
92.8
27.8
378.1
135.9
111.2
1,202.3
285.9
84.1
23.0
251.1
—
10.7
654.8
33.5
—
33.5
—
—
—
—
10.0
10.0
64.8
5.3
70.1
—
—
—
—
—
—
33.5
10.0
43.5
64.8
5.3
70.1
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
31.3
25.3
33.5
3.2
6.5
74.5
4.8
0.8
80.1
26.5
2.5
4.8
59.1
3.8
0.7
63.6
13. Managerial Remuneration
A. To Chairman and Executive Directors
a.
Salaries
b.
Commission [Rs.10.0 Million (Previous year Rs. 7.0 Million)
included under Research and Development Expenses]
c.
Contribution to Provident and Superannuation Fund
d.
Other Perquisites
B. To Other Directors – Commission
C. Director’s Fees
Total Managerial Remuneration
D. Computation of Net Profit u/s 198 / 349 of the Companies Act, 1956
Profit before Tax and Exceptional Items
Less: Exceptional Items
Profit on Sale of Assets (net)
Profit on Sale of Investments (net)
2,224.4
—
—
—
1,875.2
32.7
13.8
90.1
2,224.4
Add: Managerial Remuneration
Loss on Sale of Assets (net)(Rs.17.4 Million included under Research and
Development Expenses)
Net Profit u/s 198 / 349 of the Companies Act, 1956
l)
Commission to Chairman / Executive Directors restricted to
ll) Commission to Non wholetime Directors @ 1% of Net profit u/s 349,
Rs.24.5 Million Restricted to
14. a. Value of imports calculated on CIF basis:
i.
Raw Materials
ii.
Capital Goods
iii. Traded Goods / reagents
b. Expenditure in Foreign Currency
i.
Subscription
ii.
Travelling
iii. Royalty
iv. Professional Fees
v.
Processing Charges
vi. Others
15. Earnings in Foreign Currency
i. Exports of Goods calculated on FOB basis
ii. Research Income
iii. Others
16. Miscellaneous Expenditure includes Auditors’ Remuneration in respect of:
Statutory Auditors:
a) Audit Fees
b) Certification Fees / Other Services
c) Reimbursement of Out of pocket Expenses
80.1
85.0
39.2
1,738.6
63.6
70.0
—
22.2
—
226.5
2,450.9
33.5
4.8
133.6
1,872.2
26.5
3.8
1,641.8
234.0
305.6
1,295.6
249.8
201.0
22.8
19.4
—
59.3
188.1
29.1
0.5
11.4
15.6
7.1
177.4
77.7
2,855.7
9.9
20.1
2,201.5
13.3
31.7
7.6
6.0
0.1
8.3*
2.3
0.1
*Includes fees of earlier year.
61
17. a.
Total Amount due to Small Scale Industrial Undertaking is Rs.1.9 Million (Previous Year Rs. 1.6 Million). The names of the small scale industrial
undertakings to whom the Company owes a sum which is outstanding for more than 30 days are:
Party
Swastik Industries
Agnel Engineering Industries (Rs.13826)
Girnari Moulders (Rs.15245)
Mrugal Enterprise (Rs.45192)
Radhe Multi Forms (Rs.22880)
Sacanu Enterprises (Rs.30374)
Sunraj Industries (Rs.1872)
Universal Products (Rs.3292)
Deep Pharm-Chem Private Limited
Bombay Carbondioxidegas CPR (Rs.14722)
Jagruti Chemical Industries
Sima Products
Novex Poly Films Private Limited
Quality Industries (Rs.43027)
Adams Fine Chemicals Private Limited
As at
March 31, 2007
Rs. in Million
—
—
—
—
—
—
—
—
0.3
—
0.3
0.3
0.2
—
0.8
As at
March 31, 2006
Rs. in Million
0.2
—
—
—
—
—
—
—
—
—
—
—
—
—
—
The above information regarding small scale industrial undertaking 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.
b.
Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force on October 2, 2006, certain disclosures are required
to be made relating to Micro, Small and Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about
their coverage under the Act. Since the relevant information is not readily available, no disclosures have been made in the Accounts.
18. The Company has opted for the Group Gratuity –Cum–Life Assurance Scheme of HDFC. The Company’s contribution to this scheme is charged to the
Profit and Loss Account for the year. The difference between the actuarial valuation and funds with HDFC has been adequately provided for in the Profit
and Loss Account.
19. a)
The Company has advanced interest-bearing loans to its subsidiary companies, except as stated in (b) below, during the year.
Amounts outstanding as at the year-end were:
NPIL Laboratories and Diagnostics Private Limited
NPIL – Dr. Phadke Pathology Laboratory and Infertility Center Private Limited
NPIL Holdings (Switzerland) Limited
NPIL Fininvest Private Limited
NPIL Healthcare Private Limited.#
The maximum amount due during the year were:
NPIL Fininvest Private Limited
NPIL Laboratories and Diagnostics Private Limited
NPIL – Dr. Phadke Pathology Laboratory and Infertility Center Private Limited
NPIL Healthcare Private Limited#
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
451.9
10.2
254.2
4.5
132.4
258.0
10.2
137.5
—
—
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
4,943.2
710.0
10.2
132.4
1,397.4
2,221.5
258.0
11.4
—
359.3
b) The Company has advanced interest free loans aggregating to Rs.75.6 Million (Previous year 75.7 Million) [excluding foreign exchange loss of Rs.1.7
Million (Previous year foreign exchange gain of Rs. 0.2 Million) ][maximum outstanding during the year Rs.75.9 Million (Previous year Rs. 75.7
Million)] to NPIL Pharma Inc., which was outstanding at the year-end. The same will be redeemed in a bullet installment three years from the date of
the loan.
62
c)
The Company has not advanced any loan to its associates.
20. The Company’s significant leasing arrangements are mainly in respect of residential / office premises, computers and motor vehicles. The aggregate lease
rentals payable on these leasing arrangements are charged as rent under “Other Expenses” in Schedule 18.
These leasing arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms. The
Company has placed a refundable deposit of Rs.369.6 Million (Previous Year Rs.397.6 Million) in respect of these leasing arrangements. Future lease rentals
payable in respect of vehicles, equipments and computers on lease:
Payable:
As at
March 31, 2007
Rs. in Million
Not Later than one year
Later than one year but not later than five years
Later than five years
As at
March 31, 2006
Rs. in Million
86.6
86.6
—
107.5
189.2
—
21. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.
22.
i)
Earning Per Share (EPS) – EPS is calculated by dividing the profit attributable to the equity shareholders by the average number of equity shares
outstanding during the year. Numbers used for calculating basic and diluted earnings per equity share are as stated below:
For the
Year ended
March 31, 2007
1.
2.
3.
4.
5.
6.
7.
8.
Profit before tax and exceptional Items (Rs. in Million)
Exceptional Items (Rs. in Million)
Profit after tax (Rs. in Million)
Preference dividend and distribution tax thereon (Rs. in Million)
Profit attributable to Equity Shareholders (Rs. in Million)
Weighted Number of Shares (nos.)
EPS after exceptional items (Rs.)
Face value per share (Rs.)
For the
Year ended
March 31, 2006
2,224.4
—
1,882.8
26.2
1,856.6
209,013,133
8.9
2.0
1,875.2
32.7
1,703.5
32.2
1,671.3
203,381,203
8.2
2.0
ii)
Pursuant to a Board resolution dated July 20, 2006 the Company has redeemed the 15,00,000 6% Non Cumulative Redeemable Preference Shares of
Rs. 100/- each in the current year. Proportionate dividend (including dividend tax) upto the date of redemption amounting to Rs.4.2 Million was paid
on the above preference shares in the current year (for the year ended March 31, 2006 Rs.10.2 Million). The Company has transferred an equivalent
amount of Rs.150.0 Million to the Capital Redemption Reserve.
iii)
The Company has unredeemed preference shares of Rs.383.7 Million on which dividend for the year (inclusive of Dividend Tax) amounts to Rs.22.0
Million (for the year ended March 31, 2006 Rs. 22.0 Million). This has been considered in determining the EPS for the year ended March 31, 2007.
iv)
On March 15, 2007 the Company has declared an Interim Dividend of Rs.3 per equity share (i.e.@ 150%) on 209,017,606 equity shares of Rs.2/each and on preference shares amounting to Rs.19.2 Million. The total cash outflow on account of these dividends payments, including distribution
tax, was Rs.736.9 Million.
23. The Company’s intangible assets, other than Computer Software, comprise of Brands and Trademarks, Technical Knowhow & Business IPR and US FDA/
TGA approvals acquired by the Company over the years. No internally generated intangible assets have been recognised in the books of accounts.
(Rs. in Million)
Nature of Assets
Useful Life
Amortisation Method
Gross Block as on April 01, 2006
Accumulated Amortisation as on April 01, 2006
WDV as on April 01, 2006
Additions during the year
Impairment (net of Accumulated Amortisation)
Amortisation for the year
WDV as on March 31, 2007
Capital Commitment as on March 31, 2007
Brands and
Trademarks
Technical Knowhow
and Business IPR
US FDA / TGA
Approvals
10 Years
SLM
1,913.6
615.5
1,298.1
5.7
22.2
190.1
1,091.5
—
10 Years
SLM
450.6
55.1
395.5
—
—
45.1
350.4
—
10 Years
SLM
194.1
52.1
142.0
—
—
19.4
122.6
—
63
24. Recoveries deducted from expenses are on account of sharing of common expenses with Joint Venture / Associate and Subsidiaries.
25. The Finance Act, 2001 has introduced, with effect from Assessment Year 2002-2003 (effective April 01, 2001), detailed Transfer Pricing Regulations for
computing the taxable income and expenditure from ‘International transaction’ between ‘Associated enterprises’ on an ‘arm’s length’ basis. These regulation,
inter alia, also require the maintenance of prescribed documents and information including furnishing a report from an Accountant on or before October 31,
2006.
For the year March 31, 2006, the Company had undertaken a transfer pricing study and obtained the prescribed certificate of the Accountant to comply
with the said transfer pricing regulations which did not envisage any tax liability.
For the Accounting year ended March 31, 2007, the Company is in the process of carrying out a study to comply with the said Transfer Pricing Regulations
and does not envisage any further tax liability.
26. Extracts of Assets and Liabilities as on March 31, 2007 and Income and Expenses for the year ended March 31, 2007 related to the interest of the Company
(without elimination of the effect of transactions between the Company and Allergan India Private Limited) have been extracted from the audited accounts
of Allergan India Private Limited.
(Rs. in Million)
Particulars
Assets
Net Fixed Assets (including CWIP)
Allergan India
Private Limited
26.1
Investments
—
Deferred Tax Asset
3.8
Inventories
31.9
Sundry Debtors
16.1
Cash & Bank Balances
18.5
Loans and Advances
—
24.1
Liabilities
Secured Loans
1.3
Unsecured Loans
—
2.0
Current Liabilities
Provisions
47.2
2.8
Income
Net Sales
Other Income
376.2
1.0
Expenses
64
Materials
190.2
Staff Cost
42.6
Other Expenses
95.0
(Increase) / Decrease in WIP / Finished Goods
(1.5)
Interest (Net)
(0.2)
Depreciation
11.4
Provision for Taxation (including Deferred and Fringe Benefit Tax)
18.1
27. Capacity, Production, Sales and Stocks
Class of Goods Manufactured : Pharmaceuticals, Bulk Drugs, Chemicals, Tools and Skin Care Products
Category
UOM
Installed
Capacity
Opening Stock
Quantity
Value
(3 & 4)
(Rs. in
Million)
Production
Quantity
(1, 2 & 4)
Quantity
(4 & 6)
Purchases
Value
(Rs. in
Million)
Quantity
(5)
Sales
Value
(Rs. in
Million)
Closing Stock
Quantity
Value
(3 & 4)
(Rs. in
Million)
TRADED
Creams & Powder
Kgs
—
—
45,388.0
(96,415.0)
43.9
(133.5)
—
—
347,561.1
(292,049.1)
293.7
(268.9)
340,411.3
(311,657.1)
584.3
(599.0)
37,342.1
(45,388.0)
38.9
(43.9)
Vials
Ltrs
—
—
23,360.5
(74,038.8)
33.7
(49.3)
—
—
3,945.3
(62,759.8)
97.7
(121.9)
7,698.9
(112,300.4)
152.6
(206.0)
374.9
(23,360.5)
20.0
(33.7)
Tablets & Capsules
Mios
—
—
316.8
(882.0)
246.6
(630.4)
—
—
2,566.7
(2,069.0)
1,401.7
(1,324.3)
1,622.1
(2,192.1)
2,639.5
(2,912.0)
1,199.0
(316.8)
180.4
(246.6)
Liquids, Drops &
Solutions
Ltrs
—
—
533,932.0
(955,459.9)
94.8
(185.6)
—
—
2,819,983.1
(1,638,721.1)
534.5
(342.6)
2,597,027.2
(1,911,360.6)
756.8
(599.5)
724,320.4
(533,932.0)
92.8
(94.8)
—
—
—
—
110.8
(147.2)
—
—
—
—
314.7
(284.0)
—
—
619.1
(455.5)
—
—
116.6
(110.8)
Others
MANUFACTURED
Tablets
Mios
11,495.0
(6,550.0)
329.9
(815.1)
114.2
(260.7)
4,974.8
(3,723.7)
—
—
—
—
4,487.5
(3,756.6)
4,130.1
(3,063.0)
687.4
(329.9)
207.8
(114.2)
Capsules
Mios
580.0
(655.0)
15.7
(32.5)
20.4
(39.0)
330.6
(158.5)
—
—
—
—
279.4
(164.5)
541.4
(431.7)
53.7
(15.7)
59.9
(20.4)
Liquids
KLs
26,147.4
(14,744.0)
590.0
(1,010.1)
129.8
(193.2)
9,877.7
(8,641.2)
—
—
—
—
9,606.8
(9,299.8)
3,537.1
(3,032.8)
715.4
(590.0)
145.6
(129.8)
Powders,Creams
& Ointments
MTs
—
—
7.4
(15.7)
9.4
(22.6)
67.3
(38.9)
—
—
—
—
70.2
(51.4)
285.1
(126.8)
4.1
(7.4)
11.9
(9.4)
Bulk Drug &
Intermediates (2)
MTs
1,696.2
(920.0)
16.9
(61.8)
22.3
(42.3)
1,415.6
(719.0)
—
—
—
—
858.2
(644.5)
1,667.6
(1,470.2)
63.7
(16.9)
48.0
(22.3)
Vitamin A in various
mmu
Forms & Combinations (2)
276.0
(276.0)
7.0
(1.7)
40.8
(9.6)
180.4
(197.0)
—
—
—
—
146.2
(139.0)
625.5
(543.6)
8.4
(7.0)
39.9
(40.8)
—
—
—
—
31.3
(29.8)
—
—
—
—
—
—
—
—
474.7
(622.7)
—
—
48.2
(31.3)
Others
Grand Total
898.0
(1,743.2)
2,642.3
(2,341.7)
16,013.8
(14,062.8)
1,010.0
(898.0)
Note :
1.
2.
3.
4.
5.
Includes products processed by third parties.
Includes production for captive consumption of Bulk Drugs 430416 kgs (Previous Year 133146 kgs). & Vitamins 32.90 mmu (previous 53 mmu)
Stocks are net of breakages & unsaleable stock.
Opening stocks, production & closing stocks are net of physician samples.
Licensed Capacity is not indicated as Industrial Licensing for all Bulk Drugs, Intermediates and their Formulations stands abolished in terms of Press Note No.4
(1994 series) dated 25th October, 1994 issued by the Department of Industrial Development, Ministry of Industry, Government of India.
6. Excludes free samples issued
7. Variation in quantity/value is on account of change in product mix.
8. In terms of Press Note No. 4 (1994 Series) dated October 25, 1994 issued by the Department of Industrial Development, Ministry of Industry, Government of
India, and Notification No. S.O 137 (E) dated March 1, 1999 issued by the Department of Industrial Policy and Promotion, Ministry of Industry, Government of
India, industrial licensing has been abolished in respect of Bulk Drugs and Formulations.
9. The Pharmaceuticals business comprises of manufacturing and trading of bulk drugs and formulations.
10. Installed capacities of the formulation factories of the Company (except where continous processes are involved are on a triple shift basis) are as certified by the
Management and have not been verified by the Auditors, this being a technical matter.
65
MATERIALS CONSUMED
UOM
QUANTITY
YEAR ENDED
31.03.07
31.03.06
Rs. in Million
YEAR ENDED
31.03.07
31.03.06
Codeine Phosphate
Kgs
8,145.2
7,364.7
280.9
252.9
Catalase powder non-animal
Kgs
1,264.4
1,930.9
150.7
82.6
Halothane technical grade
Kgs
192,350.8
216,892.8
123.1
120.5
Lactulose concentrate usp
Kgs
716,100.1
696,150.0
91.0
88.4
Others
3,395.8
2,439.2
Total
4,041.5
2,983.6
Whereof:
%
Imported at Landed Cost
Indigenous
Total
%
982.6
24.3
752.2
25.2
3,058.9
75.7
2,231.4
74.8
4,041.5
2,983.6
Notes :
1
Components and Spare referred to in Para 4D (c) of Schedule VI of the Companies Act,1956 are assummed to be those incorporated in goods produced and not
those used for maintenance of Plant & Machinery.
2
The Consumption figures are ascertained on the basis of Opening Stock plus Purchases less Closing Stock and are therefore after adjustment of excesses and
shortages ascertained in physical count, unservicebale items etc.
28. Refer Annexure for additional information to Part IV of Schedule VI to the Act.
29. The figures for the year ended March 31, 2006 have been regrouped, wherever necessary.
Signatures to Schedules 1 to 22 which form an integral part of the Financial Statements
Partha Ghosh
Partner
Price Waterhouse
66
Ajay G Piramal
Keki Dadiseth
Rajesh Khanna
Y H Malegam
Dr. Swati A Piramal
S Ramadorai
Chairman
Director
Director
Director
Director
R A Shah
Deepak Satwalekar
N Vaghul
Michael Fernandes
N Santhanam
Leonard D’Souza
Director
Director
Director
Company Secretary
Additional Information pursuant to Part IV of Schedule VI to the Act
Balance Sheet Abstract And Company’s General Business Profile
I.
Registration Details
Registration No.
5719
Balance Sheet Date
31 03 07
Date
Month
State Code
Year
II Capital raised during the year (Amount in Rs. Thousands)
Public Issue
NIL
Rights Issue
NIL
Bonus Issue
NIL
III
11
NIL
Private Placement
NIL
Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)
Total Liabilities including share holders fund
18136554
Total Assets
18136554
Sources of Funds
Paid up Capital
801749
Secured Loans
1793314
Reserves & Surplus
9762909
Unsecured Loans
2168774
Application of Funds
Net Fixed Assets
Investments
9161241
1265049
Net Current Assets
Miscellaneous Expenditure
4971971
NIL
Accumulated Losses
NIL
IV
Performance of Company (Amount in Rs. Thousands)
Turnover
14173908
+ – Profit / Loss Before Tax
and exceptional items
+ – Profit / Loss After Tax
+2224803
+1883247
Earnings per Share in Rs.
(Profit for the year / Paid up Equity)
Dividend Rate %
8.88
V
Total Expenditure
16398711
175
Generic Names of Three Principal Products / Services of the Company (as per monetary terms)
Item Code No.
Product Description
Item Code No.
Product Description
Item Code No.
Product Description
300440
PHENSEDYL
300310
HAEMACCEL
300310
STEMETIL
67
68
14.24
(35.36)
8 Provision for taxation
9 Profit after taxation
—
CHF
35.63
—
(6.12)
GBP
85.12
—
2.35
0.28
2.63
5.33
184.50
1,002.83
1.18
817.15
31.03.2007
USD
43.48
—
(91.29)
0.05
(91.24)
—
321.30
148.00
(177.65)
4.35
31.03.2007
NPIL
Pharma Inc.
GBP
85.12
—
(38.76)
—
(38.76)
4,631.51
63.84
3,764.36
4,206.41
(1,062.24)
1,504.28
31.12.2006
NPIL Pharmaceuticals
(UK) Limited*
GBP
85.12
—
—
—
—
6.83
—
GBP 1
—
GBP 1
31.12.2006
NPIL Overseas
Limited*
—
—
—
—
0.08
—
—
(36.79)
36.79
31.03.2007
GBP
85.12
—
—
—
—
—
–
GBP 1
—
GBP 1
NPIL Pharmaceuticals
Pension Trustees
Limited*
31.12.2006
For the purposes of the consolidated financial statements included in this annual report, the accounts of the company have been rolled forward to March 31, 2007. The details provided herein, however, are based on the statutory
financial year.
Local Currency
Exchange Rate Used
10 Proposed / Interim Dividend
9 Profit after taxation
8 Provision for taxation
(6.12)
7 Profit / (Loss) before taxation
Details of Investment
– 2,500 Equity Shares of Reaxa Limited, UK
5
65.81
1,639.39
Total Liabilities
4
6 Turnover
2,025.19
(6.12)
3 Total Assets
391.93
2 Reserves
31.12.2006
Financial Year ended on
1 Capital
NPIL Holdings
(Suisse) SA*
Name of the
Subsidiary Company
NPIL Life
Sciences Limited
—
26.66
4.39
31.05
547.09
(Rs. in Million)
Piramal
International
USD
—
(99.69)
0.52
(99.17)
113.85
159.33
75.38
(133.95)
50.00
31.03.2007
Nicholas Piramal
Consumer Products
Private Limited
Local Currency
0.45
1.74
0.46
2.20
155.38
170.32
70.74
(99.68)
0.10
31.03.2007
NPIL Healthcare
Private Limited
43.48
—
8.36
8.68
17.04
204.15
4.49
18.79
23.94
2.94
2.22
31.03.2007
NPIL Fininvest
Private Limited
Exchange Rate Used
—
(21.12)
7 Profit / (Loss) before taxation
10 Proposed / Interim Dividend
447.47
6 Turnover
94.69
171.76
74.07
3.00
NPIL - Dr. Phadke
Pathalogy Laboratory
and Infertility Center
Private Limited
31.03.2007
Note :
Details of two subsidiaries namely NPIL Holdings Canada 2006 Inc. and Torcan Chemical Limited are not provided since the first accounting period will end on November 30, 2007.
*
625.15
4 Total Liabilities
70.00
999.56
3 Total Assets
5 Details of Investment
– 2,50,000 Equity Shares of DDRC
Wellspring Pathlabs Private Limited
– 4,49,199 Equity Shares of
Kojam Finvest Limited
30.28
344.13
2 Reserves
31.03.2007
Financial Year ended on
1 Capital
NPIL Laboratories
and Diagnostics
Private Limited
Name of the
Subsidiary Company
Statement Pursuant to Approval u/s 212 (8) of the Companies Act, 1956
CONSOLIDATED FINANCIAL STATEMENTS
Auditors’ Report to the Board of Directors of Nicholas Piramal India Limited on the Consolidated
Financial Statements of Nicholas Piramal India Limited and its Subsidiaries
1.
We have audited (refer para 3) the attached consolidated Balance Sheet of Nicholas Piramal India Limited and its subsidiaries (the
Group), as at March 31, 2007, and also the consolidated Profit and Loss Account and the consolidated Cash Flow Statement for the year
ended on that date annexed thereto. These consolidated financial statements are the responsibility of Nicholas Piramal India Limited’s
management and have been prepared by the management on the basis of separate financial statements and other financial information
regarding components. Our responsibility is to express an opinion on these financial statements based on our audit.
2.
We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan
and perform the audit to obtain 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 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 did not audit the financial statements of subsidiaries and joint ventures, whose financial statements reflect the Group’s share of total
assets of Rs. 7201.7 million as at March 31, 2007 and the Group’s share of total revenues of Rs. 8538.9 million and net cash outflow
amounting to Rs. 565.0 million for the year ended on that date as considered in the consolidated financial statements. These financial
statements and other information of the subsidiaries and joint ventures have been audited by other auditors whose reports have been
furnished to us, and our opinion, in so far as it relates to the amounts included in respect of these subsidiaries and joint ventures is based
solely on the reports of other auditors.
4.
We report that the consolidated financial statements have been prepared by the Nicholas Piramal India Limited’s management in accordance
with the requirements of Accounting Standard 21, Consolidated Financial Statements and Accounting Standard 27, Financial Reporting
of Joint Ventures issued by the Institute of Chartered Accountants of India.
5.
Based on our audit and on consideration of the reports of other auditors on separate financial statements and on the other financial
information of the components, in our opinion and to the best of our information and according to the explanation given to us, the attached
consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) in the case of the consolidated Balance Sheet, of the state of affairs of Nicholas Piramal India Limited Group as at March 31, 2007;
(b) in the case of the consolidated Profit and Loss Account, of the profit of Nicholas Piramal India Limited Group for the year ended on
that date; and
(c) in the case of the consolidated Cash Flow Statement, of the cash flows of Nicholas Piramal India Limited Group for the year ended on
that date.
Place: Mumbai
Date : April 26, 2007
Partha Ghosh
Partner
Membership No: F-55913
Price Waterhouse
69
Balance Sheet as at March 31, 2007
As at
March 31, 2007
Rs. in Million
Schedule
No.
As at
March 31, 2006
Rs. in Million
I. SOURCES OF FUNDS
Shareholders’ Funds
Share Capital
Equity Shares
Preference Shares
1
1
Reserves & Surplus
2
418.0
383.7
801.7
10,060.3
Minority Interest
Loan Funds
Secured Loans
Unsecured Loans
3
4
418.0
533.7
951.7
9,191.8
10,862.0
10,143.5
5.0
30.2
4,216.3
2,175.9
2,717.9
396.5
6,392.2
Deferred Tax Liability (Net)
Less: Deferred Tax Asset
1,060.0
166.8
3,114.4
1,007.1
171.2
893.2
18,152.4
TOTAL
835.9
14,124.0
II. APPLICATION OF FUNDS
Fixed Assets
Gross Block
Less: Depreciation
Net Block
5
Investments
Current Assets, Loans and Advances
Inventories
Sundry Debtors
Cash and Bank Balances
Loans and Advances
6
7
8
9
10
11
4,401.9
3,673.4
505.9
114.1
1,798.3
10,493.6
2,775.7
2,429.3
952.9
66.5
1,534.7
7,759.1
Less: Current Liabilities and Provisions
Current Liabilities
Provisions
12
13
4,550.5
315.5
4,866.0
3,276.5
1,063.6
4,340.1
16,012.6
4,307.6
11,705.0
532.5
12,600.6
3,950.8
8,649.8
1,767.9
12,237.5
287.3
Net Current Assets
Miscellaneous Expenditure
(To the extent not written off or adjusted)
TOTAL
10,417.7
287.3
5,627.6
—
3,419.0
—
18,152.4
14,124.0
22
Schedules referred to above and notes attached there to form an integral part of the Balance Sheet
This is the Balance Sheet referred to in our report of even date.
Partha Ghosh
Partner
Ajay G Piramal
Chairman
Keki Dadiseth
Director
Rajesh Khanna
Director
Price Waterhouse
Y H Malegam
Director
Dr. Swati A Piramal Director – Strategic Alliances & Communications
70
S Ramadorai
Director
R A Shah
Deepak Satwalekar
N Vaghul
Michael Fernandes
N Santhanam
Leonard D’Souza
Director
Director
Director
Company Secretary
Profit and Loss Account for the year ended March 31, 2007
Year Ended
March 31, 2007
Rs. in Million
Schedule
No.
INCOME
Sales and Services
Less : Excise Duty
Net Sales
Other Income
14
25,203.0
1,001.2
24,201.8
521.4
Year Ended
March 31, 2006
Rs. in Million
16,784.6
959.7
15,824.9
401.3
24,723.2
EXPENDITURE
Materials
Staff Cost
Research & Development Expenses
Other Expenses
(Increase)/Decrease in WIP/Finished Goods
15
16
17
18
19
PROFIT BEFORE INTEREST, DEPRECIATION AND TAX
Less : Interest (Net)
PROFIT BEFORE DEPRECIATION AND TAX
Less : Depreciation (Refer note 5 and 12(a) Sch. 22)
PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS
Less : Exceptional Items - Expenses
PROFIT BEFORE TAX
Less : Provision for Taxation - Current [includes prior period tax Rs.2.5 Million
(Previous Year Rs.7.5 Million) and Wealth Tax provision Rs.1.0 Million
(Previous Year Rs.1.5 Million)] (Refer note 15, Sch.22)
Less : MAT Credit Entitlement (Refer note 16, Sch.22)
Less : Deferred Tax (Refer note 16, Sch.22)
Less : Fringe Benefits Tax
PROFIT BEFORE MINORITY INTEREST
Minority Interest
CONSOLDIATED PROFIT BEFORE PRIOR PERIOD ITEMS
Prior Period Items (Net of Tax) (ReferNote 7(e), Sch.22)
CONSOLDIATED PROFIT AFTER PRIOR PERIOD ITEMS
Balance Profit Brought Forward
NET PROFIT AVAILABLE FOR APPROPRIATION
– Interim (Refer note 20(d), Sch.22)
– Final
Distribution Tax Thereon (Refer note 20(d), Sch.22)
Dividend Paid on Preference Shares (Refer note 20(b), Sch.22)
– Interim (Refer note 20(d), Sch.22)
– Final
Distribution Tax Thereon (Refer note 20(b) & (d), Sch.22)
Transfer to Capital Redemption Reserve (Refer note 20(b), Sch.22)
9,000.1
4,200.1
1,264.6
6,628.5
(208.7)
16,226.2
5,906.3
1,926.7
775.3
4,472.3
767.9
20,884.6
3,838.6
305.1
3,533.5
818.2
2,715.3
43.1
2,672.2
20
21
13,848.5
2,377.7
173.0
2,204.7
688.1
1,516.6
32.7
1,483.9
314.8
226.4
(113.1)
158.1
29.1
(131.9)
113.6
30.0
388.9
2,283.3
0.8
2,282.5
102.0
2,180.5
2,724.9
4,905.4
238.1
1,245.8
3.9
1,241.9
35.4
1,206.5
2,344.3
3,550.8
627.1
104.5
105.7
3.7
—
627.1
87.9
—
19.2
—
3.3
—
150.0
700.0
—
28.2
4.0
(91.7)
—
170.4
BALANCE CARRIED TO BALANCE SHEET
Earnings Per Share (Basic / Diluted) (Rs.) (Face Value of Rs.2/- each)
1,713.5
3,191.9
10.3
825.9
2,724.9
5.8
22
Schedules referred to above and notes attached there to form an integral part of the Profit and Loss Account
This is the Profit and Loss Account referred to in our report of even date.
Partha Ghosh
Partner
Ajay G Piramal
Chairman
Keki Dadiseth
Director
Rajesh Khanna
Director
Price Waterhouse
Y H Malegam
Director
Dr. Swati A Piramal Director – Strategic Alliances & Communications
S Ramadorai
Director
R A Shah
Deepak Satwalekar
N Vaghul
Michael Fernandes
N Santhanam
Leonard D’Souza
Director
Director
Director
Company Secretary
71
Cash Flow Statement for the year ended March 31, 2007
Year Ended
March 31, 2007
Rs. in Million
Year Ended
March 31, 2006
Rs. in Million
2,672.2
1,483.9
Depreciation
818.2
688.1
Interest Expense
519.2
270.4
Interest Income
(214.1)
(97.4)
A. CASH FLOW FROM OPERATING ACTIVITIES
Profit before tax
Adjustments for:
(0.9)
(0.5)
Loss / (Profit) on sale of Fixed Assets (net)
40.7
(11.8)
22.2
—
(Profit) on Sale of Investments (net)
—
(86.2)
Bad Debts Written off
0.3
0.3
88.5
71.8
Provision for Doubtful Debts Written Back
—
(17.6)
Provision no longer required, Written Back
(38.0)
—
1.8
1.4
(127.1)
(11.5)
(52.0)
31.9
43.1
32.7
3,744.1
2,355.5
(1,293.7)
(676.5)
67.6
(51.8)
(368.4)
758.7
Provision for Doubtful Advances
Provision for Employee Retirement Benefits
Unrealised foreign exchange (gain) / loss
Exceptional Items
Operating Profit Before Working Capital Changes
Adjustments for Changes in Working Capital :
–
(INCREASE) in Sundry Debtors
–
(INCREASE)/DECREASE in Other Receivables
–
(INCREASE)/DECREASE in Inventories
–
INCREASE/(DECREASE) in Trade and Other Payables
854.4
(397.7)
Cash Generated From Operations
3,034.0
1,988.2
–
(507.7)
(329.6)
Taxes Paid (Net of Refunds)
Net Cash Before Exceptional Items
2,526.3
1,658.6
–
Exceptional Items
(43.1)
(32.7)
–
Prior Period Items (Excluding deferred tax adjustment of Rs.13.3 Million
(Previous year Rs.11.9 Million))
(88.7)
(47.3)
2,394.5
1,578.6
Purchase of Fixed Assets
(3,466.7)
(1,774.1)
1,235.4
(681.5)
Net Cash From Operating Activities (A)
B. CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from Sale of Fixed Assets
14.8
148.0
Purchase of Investments
—
(223.2)
Proceeds from Sale of Investments
—
152.8
166.5
94.1
0.9
0.5
Interest Received
72
Amount Paid on Acquisition
(1,962.4)
(226.9)
Net Cash (Used in) Investing Activities (B)
(4,011.5)
(2,510.3)
Cash Flow Statement for the year ended March 31, 2007 (Contd.)
Year Ended
March 31, 2007
Rs. in Million
Year Ended
March 31, 2006
Rs. in Million
1,274.9
400.4
(437.0)
(771.2)
68,764.4
52,389.1
(66,986.4)
(52,480.6)
(0.1)
—
2,567.4
2,337.6
(1,903.0)
(2,464.1)
—
3,281.6
C. CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Long Term Borrowings
Receipts [Excludes Exchange Fluctuation of Rs.0.6 Million (Previous
Year Rs.10.7 Million) on reinstatement of Foreign Currency Loan]
Payments
Proceeds from Short Term Borrowings
Receipts [Excludes Exchange Fluctuation of Rs.Nil (Previous
Year Rs.5.3 Million) on reinstatement of Foreign Currency Loan]
Payments [Excludes Exchange Fluctuation of Rs.Nil (Previous
Year Rs.Nil) on reinstatement of Foreign Currency Loan]
Proceeds from Fixed Deposits (net)
Proceeds from Cash Credits
Receipts [Excludes Exchange Fluctuation of Rs. 19.2 Million
(Previous Year Rs.1.7 Million) on reinstatement of Foreign Currency Loan]
Payments
Proceeds from Rights Issue
Proceeds from Issue of shares (shares issued to minority shareholders)
Redemption of Preference Shares
Interest Paid
Dividend Paid
27.5
—
(150.0)
—
(501.9)
(274.1)
(1,307.7)
(600.7)
Dividend Tax Paid
(183.5)
(84.0)
Net Cash From Financing Activities (C)
1,164.6
1,734.0
Net Increase / (Decrease) in Cash & Cash Equivalents (A)+(B)+(C)
(452.4)
802.3
Cash and Cash Equivalents as at 31.03.2006
952.9
155.1
Cash and Cash Equivalents transferred pursuant to Sale of Subsidiary
—
(5.3)
Cash and Cash Equivalents acquired pursuant to acquisition (Refer note 4 below)
5.4
0.8
505.9
952.9
Cash and Cash Equivalents as at 31.03.2007
Cash and Cash Equivalents Comprise
Cash and Cheques on hand
Balance with Scheduled Banks
16.5
10.9
489.4
942.0
505.9
952.9
Notes:
1. The above Cash Flow Statement has been prepared under the ‘Indirect Method’ set out in Accounting Standard – 3 issued by the Institute of Chartered
Accountants of India.
2. Cash and cash equivalents includes Rs.70.8 Million which are not available for use by the Company. (Refer Schedule 9 in the accounts)
3. Figures in bracket indicate cash outflow.
4
The above Cash Flow Statement does not include assets (other than cash and cash equivalents) / liabilities acquired on acquisition of:
(a) Manufacturing facility located at Morpeth U.K., (Refer note 10, Sch.22)
(b) NPIL – Dr. Phadke Pathology Laboratory and Infertility Center Private Limited (balance 40% equity stake acquired) (Refer note 8, Sch.22)
(c) DDRC Wellspring Pathlabs Private Limited (50% equity stake acquired) (Refer note 9(a), Sch.22)
(d) Nicholas Piramal Consumer Products Private Limited (balance 51% equity stake acquired) (Refer note 7, Sch.22)
This is the Cash Flow Statement referred to in our report of even date.
Partha Ghosh
Partner
Price Waterhouse
Ajay G Piramal
Keki Dadiseth
Rajesh Khanna
Y H Malegam
Dr. Swati A Piramal
S Ramadorai
Chairman
Director
Director
Director
Director
R A Shah
Deepak Satwalekar
N Vaghul
Michael Fernandes
N Santhanam
Leonard D’Souza
Director
Director
Director
Company Secretary
73
I.
SHARE CAPITAL
AUTHORISED
25,00,00,000 (25,00,00,000) Equity Shares of Rs.2/- each
30,00,000 (30,00,000) Preference Shares of Rs.100/- each
2,40,00,000 (2,40,00,000) Preference Shares of Rs.10/- each
10,50,00,000 (10,50,00,000 ) Unclassified Shares of Rs.2/- each
ISSUED & SUBSCRIBED
20,90,13,133 (20,90,13,133) Equity Shares of Rs.2/- each
Nil (15,00,000) 6% Non Cumulative Redeemable Preference Shares
of Rs.100/- each (Refer note 20(b), Sch.22)
Date January 01, 2003, with an option for both the Company and the
shareholder for early redemption, but not before March 31, 2004
15,00,000 (15,00,000) 5% Cumulative Redeemable Preference Shares of
Rs.100/- each.
Date October 01, 2003, with an option for the Company for early redemption,
2,33,72,280 (2,33,72,280) 5% Cumulative Redeemable Preference Shares of
Rs.10/- each
Preference Shares are redeemable on the expiry of 5 years from the Appointed
Date December 01, 2003, with an option for the company for early redemption
but not before March 31, 2005.
TOTAL
Note :
Of the above :
1.
3,90,85,590 (3,90,85,590) Equivalent Equity Shares of Rs.2/- each were allotted as fully
paid bonus shares by capitalisation of Share Premium / General reserve
2.
shareholders of Gujarat Glass Limited on amalgamation.
3.
shareholders of Boehringer Mannheim India Limited on amalgamation.
4.
shareholders of Sumitra Pharmaceuticals and Chemicals Limited as per the scheme of
arrangement.
5.
3,75,25,020 (3,75,25,020) Equivalent Equity Shares of Rs.2/- each were allotted to erstwhile
shareholders of Piramal Healthcare Limited (PHL) as per scheme of arrangement.
6.
The erstwhile Piramal Healthcare Limited shareholders held 9,62,180 warrants with a right
to convert into 75 Equivalent Equity Shares of the Company for every two warrants held on
payment of Rs. 10/- in Cash per Equity Share. Out of this 9,52,644 (9,52,644) warrants were
converted into 3,57,24,155 (3,57,24,155) shares resulting in the Issued and Subscribed Capital
increasing by Rs.71.4 Million (Rs. 71.4 Million). The remaining 9,536 warrants were cancelled.
7.
1,57,50,000 (1,57,50,000) Equivalent Equity Shares of Rs.2/- each were allotted to the
erstwhile Shareholders of Rhone-Poulenc India Limited on its merger with the Company.
8.
The Company’s Right Issue Offer of 1,90,01,601 equity shares of Rs.2/- each for Rs.175/each (including a Share Premium of Rs.173/- each) for cash aggregating to Rs.3,325.3 Million
(Rs.3,325.3 Million) opened for subscription on August 01, 2005 and closed on August 30,
2005. The offer was oversubscribed 1.2 times. Pursuant to the same, 1,89,97,128 (1,89,97,128)
equity shares of Rs.2/- each fully paid up were allotted on September 25, 2005. Allotment of
the balance 4,473 (4,473) Equity Shares of Rs. 2/- each has been kept in abeyance pending
receipt of necessary documentation for establishing title to these Shares.
74
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
500.0
300.0
240.0
210.0
1,250.0
500.0
300.0
240.0
210.0
1,250.0
418.0
—
418.0
150.0
150.0
150.0
233.7
233.7
801.7
951.7
2.
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
4.0
4.0
RESERVES AND SURPLUS
CAPITAL SUBSIDY
CAPITAL RESERVE
Add: Additions pursuant to acquisition
Less: Amalgamation Adjustments (Refer Note 12(a), Sch.22)
844.3
—
454.0
16.2
828.1
—
390.3
CAPITAL REDEMPTION RESERVE ACCOUNT
Add: Transferred from the Profit and Loss Account (Refer note 20(b), Sch.22)
844.3
—
—
—
150.0
150.0
SHARE PREMIUM ACCOUNT
Add: During the year (Refer note 14(b), Sch.22)
Less: Rights Issue Expenses
3,243.6
22.4
—
—
—
3,286.5
42.9
3,266.0
GENERAL RESERVE
Less: Transferred to Reserve Fund u/s 45-IC(1) of RBI Act 1934
2,320.2
700.0
0.3
3,243.6
2,150.0
170.4
0.2
3,019.9
DEBENTURE REDEMPTION RESERVE
Less: Transferred to Profit and Loss Account
2,320.2
91.7
91.7
—
—
—
—
RESERVE FUND U/S 45-IC(1) OF RBI ACT 1934
Add : Transferred from Profit and Loss Account
1.0
0.3
0.8
0.2
1.3
EXCHANGE RESERVE
Add : Created During the year
PROFIT & LOSS ACCOUNT
As per annexed Profit and Loss Account
TOTAL
3.
SECURED LOANS
Note
Cash Credit / Overdraft from Banks (Includes Packing Credit Loans / Buyers Credit)
1
Term Loan From Banks
2
Finance Leases
3
Zero Coupon Redeemable Preference Shares of Rs.10/- each
alloted as fully paid up pursuant to Memorandum of Succession for
consideration other than cash. (Refer note 9(b), Sch.22)
TOTAL
53.8
(16.9)
1.0
12.5
41.3
36.9
53.8
3,191.9
10,060.3
2,724.9
9,191.8
2,294.6
1,886.6
1.3
33.8
1,651.4
1,064.3
2.2
—
4,216.3
2,717.9
75
Notes on Secured Loans
1.
2.
(a)
Cash Credit facilities including Packing Credit in Foreign Currency (PCFC) are secured by hypothecation of stocks and book debts.
(b)
Overdraft facility of GBP 10.0 Million (Rs.851.2 Million)(outstanding as at March 31, 2007 Rs.723.8 Million) availed by NPIL Pharmaceuticals (UK) Ltd.
from HSBC Bank Plc is secured by a corporate guarantee issued by the Company. It is further secured by a First Equitable charge over all present and future
freehold and leasehold property; Fixed charge over, among other things, book and other debts, chattels, goodwill and uncalled capital, both present and
future. The First Floating charge over all assets and undertaking both present and future would be provided by NPIL Pharmaceuticals (UK) Limited.
Term Loans from Banks are secured by the following:a.
ECB loan of Rs.222.4 Million (US$ 5.0 Million)[Previous year Rs.446.3 Million (US$ 10.0 Million)] from BNP Paribas, Singapore has been secured by first
charge of immovable property of the company situated at various manufacturing locations and further secured by hypothecation of the moveable assets of
the Company, both present and future (save and except book debts) subject to prior charge on certain specified moveable assets created in favour of banks
for securing working capital requirements.
b.
ECB loan of Rs.Nil [Previous year Rs.223.2 Million (US$ 5.0 Million)] from Citibank has been secured by first charge of immovable property of the company
situated at various manufacturing locations and further secured by hypothecation of the moveable assets of the Company, both present and future (save and
except book debts) subject to prior charge on certain specified moveable assets created in favour of banks for securing working capital requirements.
c.
Term Loan of Rs.386.4 Million (CAD 10.2 Million) [Previous Year Rs.390.3 Million (CAD 10.2 Million)] availed by Torcan Chemical Limited (erstwhile
NPIL Holdings (Canada) Ltd.) from Citibank NA is secured by a corporate guarantee issued by the Company.
d.
Term Loan of Rs.1,277.3 Million (GBP 15.0 Million) [Previous Year Rs.Nil (GBP Nil)] availed by the Company from Bank of America is secured by a
corporate guarantee issued by the Company.
e.
Term Loan of Rs.0.5 Million (Previous Year Rs.0.8 Million) is secured by way of hypothecation of vehicles in case of NPIL – Dr. Phadke Pathology Laboratory
& Infertility Center Private Limited.
f.
Revolving credit facility of Rs. Nil (CAD Nil) [Previous Year Rs.3.7 Million (CAD 0.1 Million)] availed by Torcan Chemical Limited (erstwhile NPIL
Holdings (Canada) Inc.) from Citibank NA is secured by a corporate guarantee issued by the Company.
3.
Finance lease is secured by the relevant vehicles acquired under lease.
4.
Satisfaction of charges in respect of loans repaid during the year and certain old loans are still awaited.
4. UNSECURED LOANS
Fixed Deposits
[Payable within a year Rs.NIL (Previous year Rs.NIL)]
Banks
[Payable within a year Rs.2,138.6 Million (Previous year Rs.223.2 Million)]
Loan from Other Companies [Payable within a year Rs.Nil (Previous year Rs.527.0 Million)]
TOTAL
76
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
0.2
0.3
2,138.6
311.7
37.1
84.5
2,175.9
396.5
193.4
Computer Software
1,055.0
—
3,466.7
—
9.7
89.5
2,186.7
813.5
121.4
—
23.2
222.7
1,108.9
—
16.2
6.2
588.7
462.5
—
—
—
35.3
16,012.6
3.4
58.2
414.8
8,225.8
2,266.5
1,143.4
15.1
216.6
3,668.8
3,950.8
2.1
23.4
111.4
2,451.9
422.2
2.2
2.2
79.7
855.7
0.7
(0.1)
0.2
—
0.6
—
—
—
—
—
3,951.5
2.0
23.6
111.4
2,452.5
422.2
2.2
2.2
79.7
855.7
Opening Consolidation
Revised
as at Adjustment Opening as at
01.04.2006
# 01.04.2006
2.5
—
0.7
0.4
1.4
—
—
—
—
—
Acquisition
***
0.8
4.4
25.2
404.6
93.7
0.5
0.2
27.6
261.2
—
9.7
3.9
330.1
109.0
—
—
—
11.9
For the Deductions /
Year Adjustments
$
84.7
12,599.8
3.4
1.5
8.7
104.7
61.2
634.7
—
—
244.2
As at
31.03.2007
(A)
Previous Year
8,025.9
(91.3)
7,934.6
3,108.0
1,774.1
216.1
12,600.6
1,799.4
—
1,799.4
1,548.0
688.1
Capital Work in Progress [including Capital Advances, and Interest capitalised Rs.Nil (Previous Year Rs. 31.1Million)] and
Research and Development cost of Rs. 81.6 Million (Previous year Rs. 43.9 Million)
(includes know-how acquired and pending for commercial production)
Refer note 1(iv)(a), Sch. 22
Refer note 1(iv)(c), Sch. 22
Refer note 1(iv)(g), Sch. 22
$ Refer note 12(a), Sch.22
# Refer note 7(e), Sch.22
## Refer note 5, 7(g), 8, 9(a), 11, 12(b), Sch.22
*The Brands are in the process of being registered in the name of the Company , for which the necessary application has been made with trade mark registry.
** A part of the land purchased at Baddi and land, building and motor vehicle purchased at Hyderabad are in the process of being registered in the name of the Company.
***Refer note 7(g), 9(a) and 10, Sch.22
@ In case of NPCPPL, Plant and Machinery comprises of dies lying at third party location.
@ In case of Allergan India Private Limited, Plant and Machinery amounting to Rs.13.7 Million with a net written down value of Rs.Nil, being no longer under active use, have been removed from the fixed assets block.
(0.8)
(0.3)
63.2
322.8
6,523.1
1,854.3
387.3
15.1
193.4
3,237.2
Additions Deductions /
Adjustments
$
DEPRECIATION / AMORTISATION
464.6
3.7
Motor Vehicle/ Lease
(0.6)
—
0.1
—
—
—
—
—
Acquisition
***
COST
818.2
63.8
Motor Vehicle/
Transport**
12,600.6
322.8
Furniture & fixtures &
Office Equipment
Grand Total
6,523.0
Plant & Machinery @
387.3
1,854.3
Land Freehold**
Building**
15.1
Land Leasehold
Tangible Assets
3,237.2
Opening Consolidation
Revised
as at Adjustment Opening as at
01.04.2006
# 01.04.2006
Brand/Know-how/
Intellectual Property
Rights/Goodwill* ##
Intangible Assets
Particulars
5. FIXED ASSETS
3,950.8
4,307.6
2.8
19.0
133.1
2,528.4
406.9
2.7
2.4
107.3
1,105.0
As at
31.03.2007
(B)
1,767.9
10,417.7
12,237.5
8,649.8
1.6
40.4
211.4
4,071.1
1,432.1
385.1
12.9
113.7
2,381.5
As at
31.03.2006
532.5
11,705.0
0.6
39.2
281.7
5,697.4
1,859.6
1,140.7
12.7
109.3
2,563.8
As at
31.03.2007
(A-B)
NET BLOCK
(Rs. in Million)
77
6. INVESTMENTS (Long Term, Non Trade)
Nos.
as at
March 31, 2007
Nos.
as at
March 31, 2006
Face
Value
Rupees
As at
As at
March 31, 2007 March 31, 2006
Rs. in Million
Rs. in Million
A)
Units (Quoted)
Units of Unit Trust of India - 6.75% Tax Free US 64 Bonds
3105
3105
10.00
0.3
0.3
B)
Others (Unquoted)
Reaxa Limited, U.K. (Refer Note 13, Sch. 22)
2500
2500
0.10 GBP
59.3
59.3
C)
Trade Investment (Quoted)
Dalmia Cements Limited Rs. 220.0 (Rs.220.0)
400
400
2.00
—
—
449199
10.00
4.5
4.5
7500000 0.001 CAD
223.2
223.2
287.3
287.3
Kojam Fininvest Limited
449199
BioSyntech Inc., Canada
7500000
TOTAL
1.
Aggregate value of quoted investments
2.
Aggregate value of unquoted investments
TOTAL
78
Cost
Rs. in Million
As at
March 31, 2007
Market Value
Rs. in Million
Cost
Rs. in Million
As at
March 31, 2006
Market Value
Rs. in Million
228.0
225.0
228.0
238.7
59.3
59.3
287.3
287.3
7.
8.
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
1,926.0
727.3
1,528.0
220.6
4,401.9
1,138.2
662.3
908.2
67.0
2,775.7
INVENTORIES
(As certified by the Management)
Raw & Packing Materials
Work-in-progress
Finished Goods [includes Stock in Transit Rs.8.3 Million (Previous year Rs.1.4 Million)]
Engineering Stores
TOTAL
SUNDRY DEBTORS
i. Over six months
Less: Provision for doubtful debts*
1.7
81.6
422.0
1.7
183.0
316.6
505.3
422.0
501.3
316.6
83.3
ii. Others
Less : Provision for doubtful debts*
[* includes Rs.14.9 Million on account of NPCPPL and write off of Rs.1.8 Million
bad debts of Allergan India Private Limited during the year]
TOTAL
9.
CASH AND BANK BALANCES
i. Cash and Cheques on Hand
ii. Balance with Scheduled Banks
–
Current account
–
Current account in respect of Unclaimed Dividend Warrants
–
Current Account in respect of Rights Issue Refund Orders
–
Escrow Account (Refer note 11, Sch.22)
–
Others
TOTAL
10. OTHER CURRENT ASSETS
Interest, Rent & Claims Receivable
TOTAL
34.4
3,555.7
0.3
3,590.4
0.3
184.7
47.1
2,197.5
4.1
2,248.7
4.1
3,590.1
2,244.6
3,673.4
2,429.3
16.5
10.9
414.8
69.6
1.2
—
3.8
505.9
679.2
20.1
3.4
232.4
6.9
952.9
114.1
114.1
66.5
66.5
79
As at
March 31, 2007
Rs. in Million
11. LOANS AND ADVANCES
Advances recoverable in cash or in kind or for value to be received
Unsecured & Considered Good
Considered Doubtful
Less: Provision for doubtful advances**
Advance to NPIL Senior Employees Stock Option Scheme Trust
Advance Tax Less Provision
MAT Credit Entitlement (Refer note 16, Sch.22)
Inter Corporate Deposits
Less: Provision for doubtful Iner Corporate Deposits (Refer note 7(i), Sch.22)
Other Deposits
Balance with Customs, Port Trust and Excise Authorities on Current Account
[** includes Rs.2.7 Million on account of NPCPPL and write back of provision
of Rs.0.2 Million on account of Allergan India Private Limited during the year]
TOTAL
12. CURRENT LIABILITIES
Sundry Creditors for Capital goods, Materials & Expenses
– Small Scale Industrial Undertakings
– Others
Advances from customers
Investor Education and Protection Fund Shall be Credited by
– Unpaid Dividend
Rights Issue money refundable to shareholders
Interest Accrued But Not Due
Other Liabilities
TOTAL
13. PROVISIONS
Provision for Wealth Tax less payment
Tax Payable on Proposed Dividend
Provision for Employees Retirement benefits (Refer note 11, Sch.22)
TOTAL
80
504.7
5.7
510.4
5.7
As at
March 31, 2006
Rs. in Million
666.4
1.4
667.8
1.4
504.7
168.5
327.1
245.0
83.0
83.0
666.4
—
162.7
131.9
55.4
—
—
515.4
37.6
55.4
484.0
34.3
1,798.3
1,534.7
1.9
2,968.2
18.5
2.9
2,660.8
12.3
69.6
1.2
25.5
1,465.6
4,550.5
20.1
3.4
8.2
568.8
3,276.5
104.5
—
2.5
17.8
190.7
315.5
627.1
28.2
1.9
91.9
314.5
1,063.6
Year Ended
March 31, 2007
Rs. in Million
Year Ended
March 31, 2006
Rs. in Million
0.9
—
—
1.2
18.4
29.7
0.9
178.0
6.1
—
27.3
258.9
521.4
0.5
11.8
86.2
17.6
21.3
15.5
0.6
—
7.0
152.5
—
88.3
401.3
15. MATERIALS
Raw and Packing Materials
Purchase of Trading Goods
TOTAL
6,267.9
2,732.2
9,000.1
3,345.6
2,560.7
5,906.3
16. STAFF COST (Net of Recoveries)
(Refer Note 23, Sch.22)
Salaries, Wages, Bonus and Gratuity
Contribution to Provident and other funds
Staff Welfare
TOTAL
3,907.2
112.8
180.1
4,200.1
1,727.3
91.0
108.4
1,926.7
17. RESEARCH AND DEVELOPMENT EXPENSES
R & D Expenses
TOTAL
1,264.6
1,264.6
775.3
775.3
14. OTHER INCOME
Profit on sale of Assets (net)
Profit on sale of Investment
Provision for doubtful debts written back
Processing Charges Received
Services & Commission
Rent Received
Claim received from Boots PLC (Refer note 7(c), Sch.22)
Export Incentive
Profit on sale of business
Provision no longer required, written back
Miscellaneous Income
TOTAL
81
18. OTHER EXPENSES (Net of Recoveries)
(Refer Note 23, Sch.22)
Processing Charges
Stores and Spares consumed
Power, Fuel & Water Charges
Repairs and Maintenance
Buildings
Plant and Machinery
Others
Year Ended
March 31, 2007
Rs. in Million
Year Ended
March 31, 2006
Rs. in Million
405.4
394.8
815.4
381.7
190.7
337.5
63.2
129.2
229.1
47.1
78.3
32.5
421.5
Rent
Premises
Other assets
Rates & Taxes (includes Excise Duty)
Insurance
Travelling expenses
Directors’ Commission
Directors’ Fees
Bad Debts Written Off
Provision for Doubtful Advances
Loss on sale of Fixed Assets (net)
Loss on impairement of Brands
Advertisement and Business Promotion Expenses
Freight
Clearing and Forwarding Expenses
Claims
Legal and Professional Charges
Miscellaneous expenses
TOTAL
19. (INCREASE) / DECREASE IN WORK-IN-PROGRESS AND FINISHED GOODS
OPENING STOCKS :
Work-in-progress
Finished goods
Less : Excise Duty on opening stock
234.4
208.6
157.9
221.4
85.0
443.0
209.6
130.6
712.9
28.3
0.8
88.5
0.3
1.8
23.3
22.2
753.2
221.3
276.0
138.0
734.3
807.3
6,628.5
662.3
908.2
98.3
306.4
258.9
35.7
511.4
23.3
0.7
71.8
0.3
1.4
—
—
527.2
199.2
227.1
193.9
404.4
642.8
4,472.3
285.3
1,748.6
167.1
1,472.2
Stock Transferred on Sale of Subsidiary
Finished Goods
Adjustments for NPCPPL
Finished Goods (Refer Note 7(e), Sch.22)
Acquired on Acquisition
Work-in-progress (Refer Note 10, Sch.22)
Finished Goods (Refer Note 7, 9 & 10, Sch.22)
Stock Transferred on Sale of Business
Finished Goods
1,866.8
—
(2.4)
(1.6)
2.9
95.8
410.5
266.9
144.1
(38.2)
—
504.7
CLOSING STOCKS :
Work-in-progress
Finished Goods
Less : Excise Duty on closing stock
(Increase)/Decrease in WIP/ Finished Goods
82
727.3
1,528.0
69.7
373.3
662.3
908.2
98.3
2,185.6
(208.7)
1,472.2
767.9
Year Ended
March 31, 2007
Rs. in Million
20. INTEREST (Net)
Interest on Fixed loan & Debentures
Interest on Others
386.3
132.9
Year Ended
March 31, 2006
Rs. in Million
216.6
53.8
519.2
Less: Interest Received :
(i) On term deposits with Limited Companies & others
(ii) On Income Tax Refund
(iii) On Receivables and Others
TOTAL
21. EXCEPTIONAL ITEMS
Voluntary Retirement Cost
TOTAL
157.4
1.7
55.0
270.4
43.4
13.0
41.0
214.1
305.1
97.4
173.0
43.1
43.1
32.7
32.7
83
Schedules forming part of the Financial Statements for the year ended March 31, 2007
22. NOTES TO THE FINANCIAL STATEMENTS
1.
SIGNIFICANT ACCOUNTING POLICIES
i)
Basis of Accounting
The financial statements are prepared under the historical cost convention and comply with the applicable Accounting Standards in the country of
incorporation.
ii)
Principles of consolidation
a.
The consolidated financial statements relate to Nicholas Piramal India Limited, its Subsidiary Companies and Joint Venture Companies. The
consolidated financial statements have been prepared on the following basis:
1.
In respect of Subsidiary Companies, the financial statements have been consolidated on a line-by-line basis by adding together the book
values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and unrealised profits / losses on
intra-group transactions as per Accounting Standard – AS 21 “Consolidated Financial Statements”.
2.
In case of Joint Venture Companies, the financial statements have been consolidated as per Accounting Standard – AS 27 “Financial
Reporting of Interests in Joint Ventures”.
3.
The excess of cost to the Company of its investment in the Subsidiary Company is recognized in the financial statements as Goodwill,
which is tested for impairment on every balance sheet date (Refer Note 5). The excess of Company’s share of equity and reserves of the
Subsidiary Company over the cost of acquisition is treated as Capital Reserve.
4.
These consolidated financial statements have been prepared using uniform accounting policies for like transactions and other events in
similar circumstances. However, in case of depreciation it was not practicable to use uniform accounting policies in case of following
subsidiaries as mentioned below:
Company
Accounting Policy Used
Written Down
Value of Assets
(Rs. in Million)
% of total Assets
NPIL
Depreciation is calculated so as to write off the cost of an asset,
Pharmaceuticals
less its estimated residual value, over the useful economic life of
(UK) Limited.
the assets, using the straight line method as follows.
(Refer Note 1(b)) Land and Building – 10%
Plant and Machinery – 10%
Motor Vehicles – 25%
333.8
2.9%
Torcan Chemical Depreciation is provided over the estimated economic life of the
Limited.
asset, using the declining balance method as follows
(Refer Note 1(b)) Land Improvements and Building – 10%
Plant and Machinery – 13.91% – 20%
Furniture and Fixtures – 20%
225.3
1.9%
Allergan India
Private Limited
(Refer Note 1(b))
Depreciation is provided over the estimated economic life of the
asset, using the straight line method as follows
Data Processing equipments (included under Plant and Machinery) – 33.33%
Office equipments – 18%
Furniture and fittings office – 12.86%
Furniture and fittings residence – 20%
Plant and Machinery – 20%
Vehicles (including on lease) – 25%
Brands Aquisition and Technical knowhow – 10%
Product Development cost – 25%
Leasehold Improvements are written off over the lower
of the useful life of the assets and the remaining period of the lease.
24.87
0.2%
DDRC Wellspring
Pathlabs Private
Limited
(Refer Note 1(b))
Depreciation is provided over the estimated economic life of
the asset, using the declining balance method as follows
Goodwill (except goodwill arising on consolidation) – 10%
Plant and Machinery – 13.91% - 20%
Furniture & Fittings – 18.10%
Computers – 40%
Vehicles – 25.89%
73.5
0.6%
Depreciation in case of aforesaid subsidiaries / joint venture has been provided, as depicted above, at rates equal to or higher than those prescribed
by the Indian Companies Act, 1956 and applied by the Company.
84
b.
The Subsidiary Companies and Joint Venture Companies considered in the consolidated financial statements are:
Name of the Company
Country of
incorporation
% voting power
held as at
March 31, 2007
NPIL Laboratories and Diagnostics Private Limited (Refer note 14(b))
India
98.7%
DDRC Wellspring Pathlabs Private Limited@ (Refer Note 1(ii)(d))
India
50.0%
NPIL – Dr. Phadke Pathology Laboratory & Infertility Center Private Limited
(Refer note 1(ii)(c))
India
100.0%
NPIL Fininvest Private Limited (NFL)
India
100.0%
NPIL Healthcare Private Limited #
India
100.0%
Mauritius
100.0%
India
100.0%
Piramal International (PI)
Nicholas Piramal Consumer Products Private Limited (Refer Note 1(ii)(e))
Allergan India Private Limited (Allergan)
India
49.0%
Switzerland
100.0%
NPIL Life Sciences Limited*
U.K.
100.0%
NPIL Pharma Inc. (NPI)*
U.S.A
100.0%
NPIL Holdings Canada 2006 Inc. (Refer note 1(ii) (f))*
Canada
100.0%
Torcan Chemical Limited (erstwhile NPIL Holdings (Canada) Inc.)(Refer Note 1(ii)(g))*
Canada
100.0%
NPIL Pharmaceuticals (UK) Limited*
U.K.
100.0%
NPIL Pharmaceutical Pension Trustees Limited*
U.K.
100.0%
NPIL Overseas Limited*
U.K.
100.0%
# held through NPIL Fininvest Private Limited.
* held through NPIL Holdings (Switzerland) Limited.
@held through NPIL Laboratories and Diagnostics Private Limited
c.
d.
e.
f.
g.
iii)
During the year ended March 31, 2007, the Company acquired the balance 40% equity share capital of NPIL-Dr. Phadke Pathology Laboratory
& Infertility Center Private Limited on July 14, 2006 pursuant to which the same has become a wholly owned subsidiary of the Company.
Pursuant to an agreement dated July 15, 2006, NPIL Laboratories and Diagnostics Private Limited (NPIL Labs), a wholly owned subsidiary of the
Company, has entered into a Joint Venture Agreement to pick up a 50% stake in DDRC Wellspring Pathlabs Private Limited. The operations of
the joint venture from the date of agreement till the year-end have been included in these consolidated financial statements.
During the year ended March 31, 2007, the Company acquired the balance 51% equity share capital of Boots Piramal Healthcare Private
Limited on September 29, 2006 pursuant to which the same has become a wholly owned subsidiary of the Company and renamed as Nicholas
Piramal Consumer Products Private Limited.
During the year ended March 31, 2007, a new subsidiary NPIL Holdings Canada 2006 Inc was incorporated in Canada. The operations of the
subsidiary from the date of incorporation till the year-end have been included in these consolidated financial statements. (Refer Note 12(b))
Pursuant to a board resolution dated December 02, 2005 and the agreement (duly sanctioned under the Canada Business Corporations Act)
dated December 01, 2006 with appointed date of amalgamation as December 02, 2005, 511778 NB Inc and Torcan Chemical Limited have
been amalgamated with NPIL Holdings Canada Inc., effective December 02, 2005. The amalgamated entity has been renamed as Torcan
Chemical Limited.
Exchange Adjustments
In case of PI, NPI, NPIL Life Sciences Ltd, NPIL Holdings (Switzerland) Limited, NPIL Holdings Canada 2006 Inc., Torcan Chemical Limited, NPIL
Pharmaceuticals (UK) Limited, NPIL Overseas Limited and NPIL Pharmaceutical Pension Trustees Limited the summarized revenue and expense
transactions at the year end reflected in Profit & Loss Account have been translated into Indian Rupees at an average of average monthly exchange
rate.
The assets and liabilities in the Balance Sheet have been translated into Indian Rupees at the closing exchange rate at the year end. The resultant
translation exchange gain / loss has been disclosed as Exchange Reserves in Reserves and Surplus.
iv)
Other Significant Accounting Policies
a.
Fixed Assets
Intangibles
Brands/know-how (including US FDA / TGA approvals and Business Application Software intended for long term use) are recorded at their
acquisition cost and in case of assets acquired on merger, at their carrying values.
In case of Allergan Product Development Costs, which relate to design and testing of new or improved products or processes, are recognized as
an intangible asset if it is expected that such a assets will generate future economic benefits, and amortised over their useful life, not exceeding
ten years.
Tangibles
All fixed assets are stated at cost of acquisition, less accumulated depreciation. In the case of fixed assets acquired for new projects / expansion,
85
b.
interest cost on borrowings and other related expenses upto the date of completion of project incurred towards acquiring fixed assets are capitalised.
Sales
The Company recognises sales at the point of dispatch of goods to the customer. Sales are net of discounts, sales tax, excise duty and returns.
In case of NPIL Holdings (Switzerland) Limited and its subsidiaries, revenue related to materials for sale and resale is recognized as goods are
shipped, exclusive of VAT. Billings in advance of work performed are included in deferred revenue. Revenue from Research and Development
contracts is recognized under the percentage of completion method. Revenue recognized under this method is included in unbilled revenue if it
is not invoiced by the year-end. Provision is made for all anticipated losses as soon as these are ascertained.
In case of NPIL Laboratories and Diagnostics Private Limited and NPIL – Dr. Phadke Pathology Laboratory & Infertility Center Private Limited,
medical testing charges consists of fees received for various test conducted in pathology and are recognised on accrual basis when the samples are
received for test, net of discounts, if any.
c.
Depreciation
Intangibles
Brands/know-how (including US FDA / TGA approvals) /Intellectual Property Rights are amortised from the month of product launch / commercial
production, over their estimated economic life not exceeding ten years.
Computer Software is being depreciated on straight line method at the rates specified in Schedule XIV of the Companies Act, 1956.
Tangibles
Depreciation on fixed assets has been provided on straight line method at the rates specified in Schedule XIV of the Companies Act, 1956.
Diagnostic equipments placed with customers are amortised over a period of 60 months.
Depreciation on additions / deletions of assets during the year is provided on a pro-rata basis.
d.
Leases
Finance Leases
In case of Allergan, leases which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased
item, are capitalised at the lower of fair value and present value of the minimum lease payment at the inception of the lease term and disclosed
as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of
return. Finance charges are charged directly against the income. Lease management fees, legal charges and other initial direct cost are capitalised.
If there is no reasonable certainty that the Company will obtain the ownership by the end of the leased term, capitalised leased assets are
depreciated over the shorter of estimated useful life of the asset or the lease term.
Operating Leases
Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against
profits as per the terms of the lease agreement over the lease period.
e.
Investments
Long term investments are valued at cost with an appropriate provision for permanent diminution in value.
f.
Valuation of Inventories
Raw materials, packing materials, stores and work-in-progress are valued at cost. Finished goods are valued at lower of cost or net realisable
value. Excise Duty on goods manufactured by the Company and remaining in inventory is included as a part of valuation of finished goods.
g.
Research and Development
Research and development costs, including technical know-how fees, incurred for development of products are expensed as incurred, except for
development costs (costs incurred once the phase one trials commence) which relate to the design and testing of new or improved materials,
products or processes which are recognised as an intangible asset to the extent that it is expected that such assets will generate future economic
benefits. Such development costs are carried forward under Capital Work in Progress until the completion of the project. Research and Development
expenditure of a capital nature is added to the fixed assets.
h.
Government Assistance
In case of Torcan Chemical Limited, government assistance in the form of income tax research and development tax credits, earned on qualifying
expenditures, is recognised when realized. Income tax investment tax credits related to fixed assets are accounted for as a reduction in the cost
of related assets.
i.
Leave Encashment
Provision for leave encashment is determined on the basis of actuarial valuation.
In case of NFL, provision for leave encashment is determined on fair estimated basis.
j.
Retirement Benefits
The Company’s contribution in respect of Provident Fund and Superannuation Fund are charged against revenue every year. In respect of
Gratuity, the Company’s contribution to the approved funds is charged against the revenue.
86
In case of Torcan Chemical Limited, the contribution in respect of Pension Plan for Employees of Torcan Chemical Limited is charged to revenue
every year.
NPIL Pharmaceuticals (UK) Ltd. has a Defined Benefit scheme and a Defined Contribution scheme. The assets of the schemes are held separately
from those of the Company. In case of defined benefit schemes, assets are measured using market values. Liabilities are measured using a project
unit method and discounted at the current rate of return of high quality corporate bond of equivalent term and currency. Costs and liabilities are
assessed in accordance with the advice of independent qualified actuaries. The pension scheme surplus (to the extent that it is recoverable) or
deficit is recognised in full. The movement in the scheme surplus/deficit is split between operating charges, finance items and, in the statement
of total recognised gains and losses, actuarial gains and losses. In the case of Defined Contribution schemes, the amount charged to Profit and
Loss Account represents the contributions payable to the scheme in the period, as determined by independent qualified agencies.
In case of NPIL Pharma Inc, the Company adopts a 401 (k) plan. Employees become eligible for participation after three months of service with
NPIL Pharma Inc. Contributions by NPIL Pharma Inc are discretionary.
k.
Voluntary Retirement Scheme (VRS)
Compensation paid on voluntary retirement scheme are charged off in the year in which they are incurred.
l.
Foreign Exchange Fluctuations
The transactions in foreign exchange are accounted at the exchange rate prevailing on the date of transactions. Any exchange gains or losses
arising out of the subsequent fluctuations are accounted for in the Profit and Loss Account.
On Consolidation
In case of NPIL Holdings (Switzerland) Limited, the summarized revenue and expense transactions at the period end reflected in Profit & Loss
Account have been translated into the reporting currency at the average exchange rate prevailing during the period.
In case of NPIL Holdings (Switzerland) Limited, Non Integral Foreign Operations, the assets and liabilities in the Balance Sheet have been
translated into the reporting currency at the closing exchange rate at the year end. The resultant translation exchange gain / loss have been
disclosed as Exchange Reserves in Reserves and Surplus. In case of Integral Foreign Operations, monetary items denominated in foreign currency
are translated into the reporting currency at the exchange rates in effect at the balance sheet date and non-monetary items are translated at rates
of exchange in effect when the assets were acquired or obligations incurred. The resultant translation exchange gain / loss have been included in
Profit and Loss Account.
m.
Excise Duty
The excise duty in respect of closing inventory of finished goods is included as part of inventory. The material consumed is net of Central Value
Added Tax (CENVAT) credits.
n.
Taxation
Current Tax
Current tax is determined as the amount of tax payable in respect of taxable income for the year.
Deferred Taxation
Deferred Tax resulting from timing differences between book and tax profits is accounted for under the liability method, at the current rate of tax,
to the extent that the timing differences are expected to crystallise.
Fringe Benefit Tax
Provision for Fringe Benefit Tax has been made in accordance with the applicable Income Tax Laws prevailing for relevant assessment years.
o.
Impairment of Assets
The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the
Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating
unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is
treated as an impairment loss and is recognised in the Profit and Loss Account. If at the balance sheet date there is an indication that if a
previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.
p.
Provisions and Contingent Liabilities
The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present
obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.
q.
Segment reporting policies
Identification of segments: The Company’s operating businesses are organised and managed separately according to the nature of products and
services provided, with each segment representing strategic business unit that offers different products and serves different markets. The analysis
of geographical segments is based on the areas in which major operating divisions of the Company operate.
Basis of allocation: Assets, liabilities, income and expenditure of each segment is in accordnace with the companies operating businesses.
87
2.
Estimated Amount of outstanding contracts / Capital Commitment
3.
Contingent Liability :
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
200.0
915.8
a.
Demand dated June 5, 1984 the Government has asked for payment to
the credit of the Drugs Prices Equalisation Account, the difference between
the common sale price and the retention price on production of Vitamin
‘A’ Palmitate (Oily Form) from January 28, 1981 to March 31, 1985 not
accepted by the Company. The Company has been legally advised that
the demand is untenable.
6.1
6.1
b.
Demand dated December 12, 2005 the District Controller has asked
Boehringer Mannheim India Limited (since merged with the Company)
for payment in relation to a liability arising out of Drug Price Control Order,
1979. The Company is of the opinion that the demand is not legally tenable.
31.3
31.3
c.
Guarantees issued to Government authorities and limited companies
and performance guarantees.
Appeals filed in respect of disputed demands:
Income Tax
– where the Company is in appeal
127.9
63.6
880.4
997.0
1,525.4
204.8
152.6
36.9
40.5
70.7
391.4
70.0
1,031.7
80.6
134.2
33.9
40.5
—
338.7
—
d.
– where the department is in appeal
Sales Tax
Central Excise
Labour Matters
Stamp Duty
Legal Cases
Bills Discounted
Balance Share Premium payable on call for the shares acquired in
DDRC Wellspring Pathlabs Pvt. Ltd.
e.
f.
4.
An erstwhile Contractor has made a claim before arbitration panel for Rs.80.0 Million on Canere Actives and Fine Chemicals Private Limited
(Canere) prior to its amalgamation for unsettled dues for erection and commissioning of a manufacturing facility during the year 1999-2000. Canere
has filed a counter claim of Rs.382.6 Million on the Contractor for submitting inflated bills for work not done and for special and indirect damages
caused due to negligence of the Contractor. No award has yet been made by the Arbitration panel.
5.
Hitherto, the excess of cost to the Company of its investment in its subsidiary companies (whether arising on acquisition or amalgamation, if any) was
recognized as goodwill and amortized over a period of ten years. However during the year ended March 31, 2007, this policy has been changed to
confine amortization to only amalgamation goodwill in accordance with the applicable Accounting Standards. However, such investment in the
subsidiary company is periodically tested for impairment.
The impact of the above change in the accounting policy is decrease in depreciation and consequent increase in profit to the tune of Rs.94.9 Million,
of which Rs.61.2 Million pertaining to the current year ended March 31, 2007, is included in depreciation and the balance Rs.33.7 Million is also
included under depreciation.
6.
During the previous year, the Company concluded its Rights Issue offering through which 19,001,601 equity shares of Rs.2/- each (allotment of 4473
equity shares of Rs.2/- each held in abeyance) were issued by the company at a premium of Rs.173/- per share. The utilisation of the rights issue
proceeds as at March 31, 2007 was as under:
(Rs. in Million)
No.
88
Purpose
Use of Funds
as projected
Actual funds used
as at March 31, 2007
1
New Formulations manufacturing facility at Baddi
244.0
244.0
2
Establishing new facility for manufacturing Inhalation
Anesthetic products at Hyderabad
270.0
270.0
750.0
602.0
3
Capital Expenditure for R & D
4
General Corporate Purpose including Strategic Initiatives
2,061.0
606.6
Total
3,325.0
1,722.6
Pending utilisation, the balance funds have been used in the repayment of short-term loans and cash credit.
7.
On September 29, 2006, the Company acquired the balance 51% equity stake (25,50,000 equity shares of Rs. 10/- each) in its 49:51 joint venture
Company Boots Piramal Healthcare Private Limited [now known as Nicholas Piramal Consumer Products Private Limited (NPCPPL)] for an aggregate
consideration of Re.1/-. Pursuant to the same:
a)
The Joint Venture’s marketing rights in the brands Strepsils, Clearasil and Sweetex in India were transferred to Reckitt Benckiser India Limited.
b)
NPCPPL has become the wholly owned subsidiary of the Company which will continue to actively market and distribute its own Over The
Counter (OTC) products viz. Saridon, Polycrol and Lacto Calamine. In addition, the Company also plans to launch OTC brands in new therapy
areas as well as transition some of its Rx brands to OTC through leveraging the said subsidiary’s sales and marketing.
c)
As a part of the arrangement, The Boots Company PLC (Boots PLC) / Reckitt Benckiser India Limited have paid the Company an aggregate sum
of Rs. 178.0 Million in settlement of past claims which has been included under the Head “Other Income”.
d)
The consolidated results for the year ended March 31, 2007 include the proportionate share (49%) of Income / Expense for the period from April
01, 2006 to September 29, 2006 in respect of NPCPPL which was a joint venture company till September 29, 2006 and the results of the balance
period of the year have been included in full in the year ended March 31, 2007
e)
As the Company had not received the accounts of Boots Piramal Healthcare Private Limited (BPHL) (now NPCPPL) for the year ended March
31, 2006 while finalising the consolidated financial results of the Company for the year ended March 31, 2006, the said consolidated financial
accounts did not include the proportionate share of Income / Expenses of BPHL. The Company has now received the Audited Financial
Statements of BPHL for the year ended March 31, 2006 following which the proportionate share (49%) of the loss of the said joint venture of
Rs.102.0 Million has been included in the Consolidated Financial Statements for the year ended March 31, 2007 and is disclosed under the head
“Prior Period Items”. Further, the difference between the closing balances as on March 31, 2005 and March 31, 2006 have been disclosed as
consolidation adjustments in the respective schedules.
f)
Due to the discontinuance of dealing in the brands of The Boots Company PLC, viz., Strepsils, Clearasil, Icy and Sweetex, the Joint Venture has
incurred an expenditure (proportionate share 49%) of Rs.17.8 Million (Previous year Rs. Nil ) comprising mainly of non saleable inventory held
by the Company Rs 20.0 Million (Previous Year Rs.Nil) included in “Claims” in Schedule 18, moulds and dies used in the manufacture of the
brands transferred Rs.0.6 Million (Previous Year Rs.Nil) included in “Loss on sale of assets” in Schedule 18, obsolete raw material/packing
material lying at the third party suppliers Rs.1.3 Million (Previous Year Rs.Nil) included in “Claims” in Schedule 18 and write back / (off) (net)
of amounts payabl / receivable to The Boots Company PLC amounting to Rs.4.1 Million (Previous Year Rs.Nil) included in Advertisement and
Business Promotion Expenses and Miscellaneous Expenses in Schedule 18.
g)
The excess of the consideration of Rs.49.2 Million paid for the 51% equity stake in NPCPPL over the negative net worth as on September 29,
2006 has been accounted for as Goodwill on consolidation.
h)
As at March 31, 2007, the accumulated losses of NPCPPL aggregates to Rs.133.9 Million against the shareholders’ funds of Rs.50.0 Million
resulting in wiping off the entire shareholders funds as at March 31, 2007. The Company’s focus continues to remain with NPCPPL and has
chalked out ambitious growth plans thereby ensuring continued support to NPCPPL financially and otherwise.
i)
During the earlier years, NPCPPL had found certain accounting and financial irregularities perpetrated by the erstwhile CFO and an employee
from the Accounts department of NPCPPL whose services were terminated subsequently. Pursuant to internal enquiries conducted by NPCPPL
and investigation performed by a firm of independent accountants, NPCPPL had identified the nature of the irregularities and had recorded in
the previous years’ financial statements:
–
Monies advanced to various parties by way of inter corporate deposits and discounting bills of exchange aggregating to Rs.144.6 Million.
Pending recovery of these amounts, the interest income, if any, on such balances had not been recorded in the financial statements of the
previous years of NPCPPL.
–
Misappropriation of assets of Rs.3.6 Million for personal use, of which Rs.1.4 Million was considered as recoverable from the erstwhile CFO
and Rs.2.2 Million had been expensed and included in the financial statements of the previous years of NPCPPL: and
During the year ended March 31, 2006 the Company had recovered Rs.61.6 Million against such outstanding debits and also an amount of
Rs.0.8 Million in respect of an asset misappropriated for personal use. Consequently, the Company had fully provided for the balances outstanding
amounting to Rs.83.0 Million after deducting there from the credits pending adjustments amounting to Rs.36.8 Million, the net provision of
Rs.46.2 Million has been made in the financial statements of NPCPPL.
The balance amounts of outstanding debits and amounts misappropriated have not been recovered till date. NPCPPL is contemplating initiating
legal action against the parties involved.
j)
NPCPPL had paid managerial remuneration to its Chief Executive Officer for the year ended March 31, 2005 and March 31, 2006, which
exceeded the limits prescribed under the Companies Act, 1956 by Rs.2.5 Million and Rs.0.8 Million respectively. NPCPPL is in process of filing
an application to the Central Government for the excess remuneration so paid.
89
8.
On July 14, 2006, the Company acquired the balance 40% equity stake (1,20,000 equity shares of Rs. 10/- each) in its 60:40 joint venture company NPIL–
Dr. Phadke Pathology Laboratory & Infertility Center Private Limited for an aggregate consideration of Rs.140.0 Million. Pursuant to the same the said
company has become a wholly owned subsidiary of the Company. The excess of the consideration of Rs.111.7 Million paid over the net worth as on July 14,
2006 has been accounted for as Goodwill.
9.
a)
Pursuant to an agreement dated July 15, 2006, NPIL Laboratories and Diagnostics Private Limited (NPIL Labs), a wholly owned subsidiary of the
Company, has entered into a Joint Venture Agreement to pick up a 50% stake in DDRC Wellspring Pathlabs Private Limited for an aggregate
consideration of Rs.70.0 Million. The proportionate share of NPIL Labs in the Income / Expense of the said Joint Venture has been included in these
Consolidated Financial Results on a line-by-line basis. The excess of the consideration of Rs.33.8 Million paid by NPIL Labs over the proportionate
share of net worth as on July 15, 2006 has been accounted for as goodwill.
b)
During the year, DDRC Wellspring Pathlabs Private Limited (DWPL) allotted 67,50,000 Zero Coupon Redeemable Preference Shares of the face
value of Rs.10/- per share. The proportionate share of the Group (50%) is included under the head of Secured Loans for the purpose of Consolidated
Financial Statements.
10. NPIL Holdings (Switzerland) Ltd. through its wholly owned subsidiary NPIL Pharmaceuticals (UK) Limited acquired effective June 19, 2006, the assets and
liabilities of the pharmaceutical manufacturing business facility of Pfizer Inc. located at Morpeth, UK.
11. Pursuant to the Share Purchase Agreement executed in the previous year with Avecia Ltd., an amount of Rs.232.4 Million (GBP 3.0 Million) was deposited
in an Escrow account pending determination of the final pension deficit of NPIL Pharmaceuticals (UK) Ltd. as of the business transfer date. However,
pending such determination but based on the representations received from the actuaries a reasonable estimate of Rs.209.2 Million (GBP 2.7 Million) was
made and the excess of Rs.23.2 Million (GBP 0.3 Million) payable to Avecia Ltd. as per the above Share Purchase Agreement was provided for.
The final pension deficit has been determined at Rs. 204.9 Million (GBP 2.4 Million) and a further sum of Rs.22.8 Million (GBP 0.3 Million) has been
provided for as payable to Avecia Ltd. as per the Share Purchase Agreement. The said amount has been paid during the year and added to the amount of
goodwill. Professional expenses of Rs.13.7 Million (GBP 0.6 Million) for acquisition of NPIL Pharmaceuticals (UK) Limited were crystallized and paid during
the year. These expenses have also been included in the goodwill amount.
12. a)
Pursuant to a board resolution dated December 02, 2005 and the agreement (duly sanctioned under the Canada Business Corporations Act) dated
December 01, 2006 with appointed date of amalgamation as December 02, 2005, 511778 NB Inc and Torcan Chemical Limited have been amalgamated
with NPIL Holdings Canada Inc., effective December 02, 2005. The amalgamated entity has been renamed as Torcan Chemical Limited.
The net assets and liabilities of both the companies as of the effective date of amalgamation have been accordingly taken over by NPIL Holdings
(Canada) Inc. Prior to the amalgamation, the assets and liabilities of both the subsidiaries were stated at their historical cost. However, pursuant to the
amalgamation, the carrying value of assets and liabilities has been aligned to their fair values and the resultant impact of Rs.454.0 Million (net of
deferred tax of Rs.114.1 Million) has been adjusted against the capital reserve accounted for in the previous year on the acquisition of the above
subsidiaries. Consequent to the above realignment of asset values, there is a decrease in depreciation expense and consequent increase in profit to the
tune of Rs.88.8 Million in the current year. Of this amount, 66.1 Million pertaining to the year ended March 31, 2007 is reflected in depreciation and
the balance Rs.22.7 Million pertaining to the previous year is also included in depreciation.
b)
Further, as a part of the restructuring process 100% equity stake in erstwhile NPIL Holdings (Canada) Inc. held by NPIL Holdings (Switzerland)
Limited has been transferred to NPIL Holdings Canada 2006 Inc., a wholly owned subsidiary of NPIL Holdings (Switzerland) Limited incorporated on
November 17, 2006. Expenses amounting to Rs.3.7 Million (CAD 0.1 Million) incurred pursuant to transfer of shares have been included as a part of
goodwill.
c)
Similarly, as a part of the restructuring process, 94% equity stake in NPIL Life Sciences Limited held by erstwhile NPIL Holdings (Canada) Inc. has
been transferred to NPIL Holdings Canada 2006 Inc.
13. NPIL Pharmaceuticals (UK) Limited’s investment in its associate; Reaxa Limited; a company incorporated in the UK was subject to the Equity Method of
Accounting till the previous year. Effective April 01, 2006 the Company ceased to have significant influence in Reaxa Limited as a result of which the
associate is accounted for in accordance with Accounting Standard (AS – 13) – “Accounting for investments”. The carrying value of investments as on
March 31, 2006 was based on the accounts as of the business transfer date i.e. December 03, 2005. There is no significant adjustment required to be made
to the carrying value of investment for the period December 03, 2005 to March 31, 2006. Accordingly, the carrying value of the investment as on March 31,
2006 is considered appropriate and considered at cost.
14. a)
Pursuant to a Board Resolution dated March 12, 2007, the Company has invested Rs.335.6 Million in its subsidiary company NPIL Laboratories and
Diagnostic Private Limited by subscribing to a fresh issue of 488,600 Equity Shares of Rs.10/- each.
b)
NPIL Laboratories and Diagnostics Private Limited has for a sum of Rs.27.5 Million further issued 39,600 Equity Shares of Rs.10/- each to a third party
on March 30, 2007. The said issue has resulted in the reduction of the equity share holding of the company in NPIL Laboratories and Diagnostics
Private Limited to 98.7%.
Minority Interest allocable to the above third party based on the net worth of NPIL Laboratories and Diagnostics Private Limited as on the investment
date amounts to Rs.5.0 Million.
c)
90
During the year, NPIL Laboratories and Diagnostic Private Limited acquired Altimate Diagnostic Private Limited with effect from April 01, 2006,
Medbean Scan Private Limited with effect from July 15, 2006, Gyan Pathology and X-Ray with effect from July 15, 2006, Dr. Jhankharia’s Imaging
Center with effect from January 01, 2007, Diagnostic Medical Center Private Limited with effect from January 01, 2007, Naruka Imaging Center with
effect from January 01, 2007 and Skylab (Assam) Private Limited with effect from March 01, 2007.
15. In view of the set off of the accumulated losses / unabsorbed depreciation of Rs.33.3 Million available to the Company (Nicholas Piramal India Limited)
under section 72A of the Income Tax Act, 1961 (the Act) and also exemption from Income Tax available on profits and gains derived by the Company from
its new manufacturing facility at Baddi, Himachal Pradesh, under section 80-IC of the Act, the Company is liable to tax under section 115JB of the Act,
which has been provided for and is in accordance with the Accounting Standard and guidelines issued by the Institute from time to time.
16. Major components of deferred tax assets and liabilities arising are:
(Rs. in Million)
Deferred
Deferred
Tax
Tax
Assets
Liabilities
On account of timing differences
– Depreciation
– VRS
– Provision for doubtful debts
– Others
Total
– MAT Credit Availed (Refer Sch.11)
—
10.7
115.7
40.4
166.8
245.0
1,060.0
—
—
—
1,060.0
—
Deferred
Deferred
Tax
Tax
Assets
Liabilities
—
33.6
—
137.6
171.2
131.9
1,007.1
—
—
—
1,007.1
—
Deferred Tax Liability of Rs.114.1 Million pertaining to NPIL Holdings (Switzerland) Limited is written back and Differred Tax Assets of Rs.13.3 Million
pertaining to NPCPPL is written off.
In case of NPCPPL, the Company has not recognized deferred tax assets during the year as there is no virtual certainty of realization of the assets in the future
in accordance with the Accounting Standards and guidelines issued by the Institute of Chartered Accountants from time to time.
17. The Company is engaged in pharmaceutical business (mainly consisting of manufacturing and sale of own and traded bulk drugs and formulations) and
Other Business which is considered the Primary reportable business segment as per Accounting Standard - AS 17 “Segment Reporting” issued by the
Institute of Chartered Accountants of India. The Secondary Segments based on geographical segmentation are considered to be Businesses outside India
and within India.
(Rs. in Million)
Details
Revenue
– External
– Inter – Segment
Total Revenue
Result
Profit Before Interest, Depreciation and Tax
Pharmaceuticals
March
March
2007
2006
Other Business
March
March
2007
2006
Inter – Segment
March
March
2007
2006
Total
March
March
2007
2006
24,037.6
15,776.0
685.6
450.2
—
—
24,723.2
589.8
335.0
10.2
—
600.0
335.0
—
16,226.2
—
24,627.4
16,111.0
695.8
450.2
600.0
335.0
24,723.2
16,226.2
3,721.5
2,275.6
117.1
102.1
—
—
3,838.6
2,377.7
Less : Interest (Net)
238.6
144.0
66.5
29.0
—
—
305.1
173.0
Less : Depreciation
781.3
646.7
36.9
41.4
—
—
818.2
688.1
2,701.6
1,484.9
13.7
31.7
—
—
2,715.3
1,516.6
Profit Before Tax and Exceptional Items
Less : Exceptional Items
Profit Before Tax
Less : Provision for Tax
43.1
32.7
—
—
—
—
43.1
32.7
2,658.5
1,452.2
13.7
31.7
—
—
2,672.2
1,483.9
365.6
212.8
23.3
25.3
—
—
388.9
238.1
2,292.9
1,239.4
(9.6)
6.4
—
—
2,283.3
1,245.8
March
2007
March
2006
March
2007
March
2006
March
2007
March
2006
March
2007
March
2006
Other Information
Segment Assets
23,151.6
18,719.1
1,316.5
565.7 (1,282.9)
(649.5)
23,185.2
18,635.3
Segment Liabilities
12,902.8
8,766.8
703.3
440.5 (1,282.9)
(649.5)
12,323.2
8,557.8
Capital Expenditure
1,727.7
2,356.5
503.6
133.7
—
—
2,231.3
2,490.2
Depreciation
781.3
646.7
36.9
41.4
—
—
818.2
688.1
Non Cash Expenses
Other than Depreciation
134.1
73.1
2.2
2.7
—
—
136.3
75.8
Profit after Tax
91
SECONDARY SEGMENTS
Details
Within India
March
March
2007
2006
Outside India
March
March
2007
2006
Inter - Segment
March
March
2007
2006
Total
March
March
2007
2006
Revenues
14,564.1
12,957.6
10,214.3
3,268.6
(55.2)
—
24,723.2
16,226.2
Carrying amount of Segment Assets
16,900.3
14,708.6
6,881.6
4,288.1
(596.7)
(361.4)
23,185.2
18,635.3
3,239.1
1,737.0
227.6
37.1
—
—
3,466.7
1,774.1
Additions to Fixed and Intangible Assets
18. Related Party Disclosures, as required by Accounting Standard 18 – AS 18 “Related Parties Disclosures” by the Institute of Chartered Accountants of India
are given below:
A.
Controlling Companies
–
Glass Engineers Private Limited*
–
Legend Pharma Private Limited*
–
Nandan Piramal Investments Private Limited*
–
Piramal Texturising Private Limited*
–
Swati Piramal Investments Private Limited*
–
Vulcan Investments Private Limited*
–
NPIL Holdings Private Limited*
*There are no transactions during the year with the above Companies.
B.
Other related parties where common control exists
–
Piramal Healthcare Private Limited (subsidiary of Piramal Enterprises Limited) (merged with PEL during the year)
–
Kojam Fininvest Limited**
–
Gujarat Glass Limited (Gujarat Glass)
–
Peninsula Land Limited**
–
The Swastik Safe Deposit & Investments Limited (Swastik Safe)
–
Piramal Enterprises Limited (Piramal Enterprises)
**There are no transactions during the year with the above Companies.
C.
92
Directors, Key Management Personnel and their relatives
–
Mr. Ajay G. Piramal
–
Mr. Keki Dadiseth
–
–
Mr. G. P. Goenka (upto June 28, 2006)
–
Mr. Rajesh Khanna
–
Mr. Y. H. Malegam
–
–
Mrs. Urvi Piramal (upto June 28, 2006)
–
Mr. Harsh Piramal (upto June 28, 2006)
–
Mr. S Ramadorai
–
Mr. Deepak Satwalekar
–
Mr. R. A. Shah
–
Mr. Vijay Shah (upto April 30, 2006)
–
Mr. N. Vaghul
–
Mr. N. Santhanam
–
Dr. Somesh Sharma
–
Mr. Praneet Singh
D.
Investing Parties with whom the Company is / was a JV Partner
–
Allergan Inc
–
Boots Plc (upto September 29, 2006)
(Rs. in Million)
2007
Associates
2006
2007
2006
214.8
—
—
0.1
—
—
214.8
0.1
98.0
—
Total
2007
2006
—
—
214.8
—
—
0.1
—
—
214.8
0.1
38.1
9.1
—
—
—
—
98.0
—
38.1
9.1
98.0
47.2
—
—
98.0
47.2
—
2.2
—
—
—
2.2
—
2.2
—
—
—
2.2
—
—
—
—
—
—
—
—
—
—
—
—
38.4
20.2
0.6
15.3
16.8
19.0
29.2
14.7
13.2
2.0
11.8
11.4
38.4
20.2
0.6
15.3
16.8
19.0
29.2
14.7
13.2
2.0
11.8
11.4
—
—
110.3
82.3
110.3
82.3
Others – Payments
–
Swastik Safe
10.3
6.7
—
—
10.3
6.7
TOTAL
10.3
6.7
—
—
10.3
6.7
0.2
—
0.2
0.1
—
—
—
—
0.2
—
0.2
0.1
0.2
0.3
—
—
0.2
0.3
7.8
2.2
—
—
4.9
0.1
—
—
—
—
—
—
7.8
2.2
—
—
4.9
0.1
10.0
5.0
—
—
10.0
5.0
Purchase of Goods
–
Gujarat Glass
–
Pyramid Retail and Merchandising Private
Limited (Not related party during the year)
TOTAL
Receiving of Services
–
Piramal Enterprises
–
Thundercloud Technologies
(Not a related party during the year)
TOTAL
Rent Paid
–
Piramal Healthcare
TOTAL
Remuneration, Commission and Sitting Fees
–
Mr. Ajay Piramal
–
Dr. Swati A Piramal
–
Mr. Vijay Shah
–
–
Dr Somesh Sharma
–
Others
TOTAL
Receivable
–
Piramal Enterprises Limited
–
Piramal Healthcare
TOTAL
Payable
–
Gujrat Glass
–
Swastik Safe
–
Thundercloud Technologies
TOTAL
93
19. The Company’s significant leasing arrangements are mainly in respect of residential / office premises, computers and motor vehicles. The aggregate lease
rentals payable on these leasing arrangements are charged as rent under “Other Expenses” in Schedule 18.
These leasing arrangements are in most cases renewable by mutual consent, on mutually agreeable terms. The Company has placed a refundable deposit of
Rs.381.2 Million (Previous Year Rs.404.3 Million) in respect of these leasing arrangements. Future lease rentals payable in respect of vehicles, equipments
and computers on lease:
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
104.1
119.1
133.7
216.2
66.9
24.4
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
a) Total Minimum Lease Rentals Payable
1.4
2.3
b) Future Interest included in (a) above
0.1
0.3
c) Present Value of Minimum Lease Rentals (a-b)
1.3
2.0
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
0.8
1.0
0.6
1.3
—
—
As at
March 31, 2007
Rs. in Million
As at
March 31, 2006
Rs. in Million
0.7
0.7
0.6
1.3
—
—
Payable :
In respect of vehicles taken under finance lease, the details of lease terms are as under:
Lease Rentals Payable:
The Present Value of finance lease obligations is as follows:
20. a)
Earning Per Share (EPS) – EPS is calculated by dividing the profit attributable to the equity shareholders by the average number of equity shares
outstanding during the year. Numbers used for calculating basic and diluted earnings per equity share are as stated below:
1.
2.
3.
4.
5.
6.
7.
b)
94
Profit after tax and Prior Period Items but before minority interest (Rs. in Million)
Minority Interest (Rs. in Million)
Preference dividend and distribution tax thereon (Rs. in Million)
Profit attributable to Equity Shareholders of the Company (Rs. in Million)
Weighted Number of Shares (nos.)
EPS after exceptional items (Rs.)
Face value per share (Rs.)
For the Year ended
March 31, 2007
For the Year ended
March 31, 2006
2,181.3
0.8
26.2
2,154.3
209,013,133
10.3
2.0
1,210.4
3.9
32.2
1,174.3
203,381,203
5.8
2.0
Pursuant to a Board resolution dated July 20, 2006 the Company has redeemed the 15,00,000 6% Non Cumulative Redeemable Preference Shares of
Rs.100/- each in the current year. Proportionate dividend (including dividend tax) upto the date of redemption amounting to Rs.4.2 Million was paid
on the above preference shares in the current year (for the year ended March 31, 2006 Rs.10.2 Million). The Company has transferred an equivalent
amount of Rs.150.0 Million to the Capital Redemption Reserve.
c)
The Company has unredeemed preference shares of Rs.383.7 Million on which dividend for the year (inclusive of Dividend Tax) amounts to Rs.22.0
Million (for the year ended March 31, 2006 Rs. 22.0 Million). This has been considered in determining the EPS for the year ended March 31, 2007.
d)
On March 15, 2007 the Company has declared an Interim Dividend of Rs.3 per equity share (i.e.@ 150%) on 209,017,606 equity shares of Rs.2/each and on preference shares amounting to Rs.19.2 Million. The total cash outflow on account of these dividends payments, including distribution
tax, was Rs. 736.9 Million.
21. NPIL Laboratories and Diagnostic Private Limited has disputed the coverage of ESIC for its Kolkata unit from inception till November 2002. Pending
outcome of the hearing an amount of Rs.1.5 Million has been provided for in the books from the period commencing December 01, 2000.
22. The Company’s intangible assets, other than Computer Software and goodwill, comprise of Brands and Trademarks, Technical Knowhow & Business IPR
and US FDA/ TGA approvals acquired by the Company’s over the years. No internally generated intangible assets have been recognized in the books of
accounts.
(Rs. in Million)
Nature of Assets
Useful Life
Ammortisation Method
Gross Block as on April 01, 2006
Accumulated Amortisation as on April 01, 2006
WDV as on April 01, 2006
Additions during the year
Impairment (net of Accumulated Amortisation)
Amortisation for the year
WDV as on March 31, 2007
Capital Commitment as on March 31, 2007
Brands and
Trademarks
Technical
Knowhow &
Business IPR
US FDA /
TGA
Approvals
10 Years
10 Years
10 Years
SLM
SLM
SLM
1,943.9
497.4
194.1
634.5
88.6
52.1
1,309.4
408.8
142.0
8.2
5.5
—
22.2
—
—
193.5
50.2
19.4
1,101.9
364.1
122.6
—
—
—
23. Recoveries deducted from expenses are on account of sharing of common expenses with Joint Ventures / Associate and Other Companies.
24. In case of Allergan, selected employees are granted stock options of its parent Company based upon performance and criticality to the business and long term
potential of its parent Company.
The Institute of Chartered Accountants of India has issued a Guidance Note on Accounting for Employee Share – Based Payments, which is applicable to
employees share based payment plans, the grant date in respect of which falls on or after April 01, 2005. The Management of Allergan is of the opinion that
the ESOP scheme is managed and administered by the parent company for its own benefit and does not have any settlement obligations on Allergan.
Accordingly, Allergan is of the opinion that the same is not required to be accounted for as per the said Guidance Note.
25. Dividend Income of Rs.18.9 Million for the year ended March 31, 2007 received by NPIL from its Subsidiaries / Joint ventures has been considered as part
of the income on a stand alone basis. However, in the consolidated financial statements only the share of the profit of the subsidiaries / Joint ventures for the
year ended March 31, 2007 has been considered.
26. The results for the year ended March 31, 2007 are not strictly comparable with that of the previous year as the current year’s figure:
a)
Include the operations of NPIL Pharmaceuticals (UK) Limited, UK and Torcan Chemical Limited, Canada which were acquired on December 02,
2005 for the whole year.
b) Include the operation of the pharmaceutical manufacturing facility of Pfizer Inc. located at Morpeth, UK pursuant to its acquisition by the company
effective June 19, 2006.
c) Include the full operations of Nicholas Piramal Consumer Products Private Limited from September 29, 2006 pursuant to it becoming a wholly owned
subsidiary of the company effective September 29, 2006.
The previous year’s figure does not include the operations of NPCPPL due to reasons mentioned in note 7(e) above.
d) Include the full operations of NPIL – Dr. Phadke Pathology Laboratory & Infertility Center Private Limited from July 14, 2006 pursuant to it becoming
a wholly owned subsidiary of the company effective July 14, 2006.
27. The previous year’s figures have been re-grouped, wherever necessary.
Signatures to Schedules 1 to 22 which form an integral part of the Financial Statements
Partha Ghosh
Partner
Price Waterhouse
Ajay G Piramal
Keki Dadiseth
Rajesh Khanna
Y H Malegam
Dr. Swati A Piramal
S Ramadorai
Chairman
Director
Director
Director
Director
R A Shah
Deepak Satwalekar
N Vaghul
Michael Fernandes
N Santhanam
Leonard D’Souza
Director
Director
Director
Company Secretary
95
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96

2007 - Piramal

Transcription

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