For Office Use:

Grade

Managerial accounting - 1

Assignment No. 1

Analysis Report on

‘Ipca Laboratories Ltd.’

Submitted by:-

Name: Abhishek Agrawal

Roll no: 151301

Section: C

Batch: MBA-FT (2015-17)

Institute of Management, Nirma University

Date of Submission: July 21, 2015

UNDERTAKING

To Whom It May Concern:

I, Abhishek Agrawal hereby declare that this assignment is my original work and is not copied

from anyone/ anywhere. If found similar to other sources, I shall take complete responsibility of the

action, taken thereof by, Administration.

Signature:

Name: Abhishek Agrawal

Roll no.: 151301

Section: c

Batch: MBA-FT (2015-17)

Date: July 21, 2015

1. What is the company’s business? Explain in about 300 words.

Ipca Laboratories Limited, based in India, manufactures and supplies active

pharmaceutical ingredients and pharmaceutical formulations for various therapeutic segments. The

company offers formulations and ingredients in therapeutic areas of anti-hypertensive, anthelmintic,

anti-malarial, diuretic, and NSAIDs. It also provides generic and branded formulations in various

dosage forms, such as dry powders for suspension, oral solids and liquids, and various injectables.

The company provides formulations for cardiovascular, anti-diabetic, NSAIDs , cardio-diabetic,

rheumatology, orthopedics, gastro-intestinal, anti-bacterial, respiratory, neuropsychiatry, anti-

malarial, anti-pyretic, cough, central nervous system drugs, pain management, dermatology,

urology, and geriatric areas, as well as oral and injectable antibiotics surgical and non-surgical

needs. The company manufactures approximately 150 formulations. The company also exports its

products to approximately 120 countries worldwide and also makes some formulations for many

companies based in Europe. In April 2005, Ipca entered into a Joint Venture agreement with

Chongqing Holley Holding Co., Ltd. of China. This joint venture mainly targets malaria by use of

artemisinin and artemisinin derivatives. This joint venture supplies mainly to International

Institutions, NGOs, and Government and Semi-Government bodies across the globe. Ipca also

partnered with Ranbaxy pharmaceuticals to develop generic drugs. Ipca Laboratories Limited was

incorporated in 1949 and is based in Mumbai, India.

2. What are its main products and services? Name some of the company’s brands, if any.

The company engages in producing and exporting the anti-malarial drug compounds

like Chloroquine, Amodiaquine, Primaquine, Artemether, Arteether and Artesunate and their

formulations. Company earns major part of their revenue from anti-malerial drugs. The company

also manufactures active pharmaceutical ingredients (API), such as Atenolol, Chloroquine

Phosphate, Furosemide, and Pyrantel Salts.  The company also offers formulations of Hydroxy

Chloroquine Sulphate under the brand ‘HCQS’; Aceclofenac under the brand ‘Zerodol’ and an

injectable anti-biotic combination under the brand ‘Sultax’ in the Indian market. Ipca manufacture

approximately 150 formulations amd dosage forms include tablets, oral liquids, dry powders for

suspension, capsules and injectables (liquid & dry). Company also produces anti-hypertensives,

anti-bacterials, cardio vascular drugs, central nervous system drugs, non steroidal anti-inflammatory

drugs (NSAID) and cough preparations.it also sells propanolol in US market. Few famous products

are Lariago (anti-malarial), Perinorm (anti-emetic), Eltocin and Imox (anti-biotic).

3. Who are likely to be the company’s major suppliers?

Information is not available.

4. Who are likely to be the company’s major customers? Does the company export its products?

To which countries?

Break-up of Sales (` Crores) (net of excise duty & sales tax)

Break-up of sales (in Crore rupees ) (net of excise duty & sales tax)

2013-14 2012-13

Domestic Export

s

Total Growth Domesti

c

Exports Total Growth

Formulations 969.42 1447.57 2416.99 17% 878.10 1194.18 2072.2

8

18%

APIs &

Intermediates

164.54 600.23 764.77 15% 144.64 521.90 666.54 21%

Net Total

Sales

1133.96 2047.80 3181.76 16% 1022.74 1716.08 2738.8

2

19%

Ipca sells product in Indian market and also exports in other markets. Company exports

mainly to Europe, Africa and America continents. It also exports to Asia, CIS, Australia and

Newzealand.

Continent-wise export 2013-14 In crore rupees

Formulations APIs and

Intermediates

Total % to exports

Europe 378.46 215.08 593.54 29%

Africa 529.83 36.25 566.08 28%

America 254.20 165.46 419.66 20%

Asia 66.88 175.48 242.36 12%

CIS 165.82 4.41 170.23 8%

Australasia 52.38 3.55 55.93 3%

Total 1447.57 600.23 2047.80 100%

The Company markets branded formulations in countries like Uganda, Ghana, Ivory

Coast, Burkina Faso, Zimbabwe, Sudan, Tanzania, Kenya, Ethiopia and Nigeria through dedicated

field force. The Company exports its APIs to USA, Canada and South American countries and

formulations to USA, Canada, Panama, West Indies and few South American countries in this sub-

continent.

5. How many employees does it have? Why is this information important?

According to a report published in July,2014 it has 12,127 employees including 6219 in

marketing and distribution. The number of employees of a company is a useful measure of the

growth of the company. It tells us that the company is working on various new products or trying to

revamp its existing products and the employees are dedicated towards this task.

6. Read the ‘Contents’ page. Mark the items that relate to financial statements as ‘FS’ (Financial

Statement) and the rest as ‘NFS’ (Non-Financial Statement). What information does the company

provide in items that you have marked as ‘NFS’? Is this information useful? How? Who is the

intended audience? Will they be able to understand the information? Give highlights of ANY

THREE major ‘NFS’ items.

Following items fall under Non-Financial statement category:

1. Management

2. Contacts

3. Notice

4. Report on corporate governance

5. Proxy form/ Attendance slip

Following items fall under Financial statement category:

1. Auditors’ Report

2. Standalone Accounts

3. Auditors’ Report on Consolidated Accounts

4. Consolidated Accounts

5. Details of Subsidiaries

Items that fall under Non-financial statement category provides information

related to the working of the company.

1. “Management” provides information about the Board of directors, corporate management

team, Company secretary and auditors.

2. “Contacts” provide the address and contact details of Registered office, Corporate office,

Research and development center, registrar and share transfer agents.

3. “Notice” provides the information related to Annual General Meeting and the issues to be

discussed in the Annual General Meeting. It also provides the information about the new

directors to be appointed.

4. “Report on corporate governance” describes about the companies philosophy on corporate

governance and the details about the board of directors, audit committee, stakeholder’s

relationship committee, general body meetings.

5. “proxy form/ attendance slip” this is meant to be used for Annual General Meeting. If

someone is attending the meeting then he can record his presence thru the Attendance slip or

else he can ask someone else to attend the meeting thru proxy form.

This information is intended to be used by shareholders and it is written in simple

language so they will be able to understand, what is going to be discussed in the meeting and if they

need more information about the company whom they should contact.

7. When was the annual general meeting to be held? What were the items to be discussed?

64th ANNUAL GENERAL MEETING of Ipca Laboratories Limited will be held at Shri

Bhaidas Maganlal Sabhagriha, Swami Bhaktivedanta Marg, J.V.P.D. Scheme, Vile Parle (W),

Mumbai 400 056 on Thursday, 31st July, 2014 at 3.30 p.m.. following issues were to be discussed:

1. To receive, consider and adopt the Balance Sheet of the Company as at 31st March, 2014

and the Statement of Profit & Loss for the year ended on that date and the Reports of the

Directors and Auditors thereon.

2. To declare / confirm payment of dividend on equity shares.

3 To appoint a Director in place of Mr. Ajit Kumar Jain (DIN 00012657) who retires by

rotation and being eligible, offers himself for re-appointment.

4. To appoint a Director in place of Mr. Pranay Godha (DIN 00016525) who retires by rotation

and being eligible, offers himself for re-appointment.

5. To appoint Auditors to hold office until the conclusion of the next Annual General Meeting

and to fix their remuneration.

8. Identify the company’s reporting entities.

The Shareholders, employees, potential Investors, bankers, creditors, and the

subsidiaries are the company’s reporting entities.

9. How is the information in the notes to the financial statements useful? Give five examples of

how the notes explain the items in the financial statement.

Notes provide the information related to the meeting. Examples:

1. It states that 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 of the

Company.

2. The Register of Members and Share Transfer Books of the Company will remain closed

from Tuesday, 22nd July, 2014 to Thursday, 31st July, 2014.

3. It provides the information that if a dividend is declared then who will be eligible to get

benefit.

4. It also says what will happen to the shares (which were owned by the directors) after the

retirement of the director.

5. Explanatory statement under Section 102 of the Companies Act, 2013 in respect of special

business is also attached in the annexure to the notes.

10. Identify ANY THREE matters covered by the accounting policies/estimates and write their

current year ending balances.

ITEMS AMOUNT(IN CRORES)

FIXED ASSETS 1471.01

INVESTMENTS .15

DEPRECIATION & AMORTIZATION 100.89

INVENTORIES 838.30

EMPLOYEE BENEFOT EXPENSES 477.86

EXCISE DUTY 32.04

FOREIGN EXHANGE EXPENSES 72.10

BORROWING COST 30

TAXATION 151.72

CASH AND CASH EQUIVAENTS 69.48

EARNING PER SHARE 37.83

PROVISIONS 14.49

CONTINGENT LIABILITY 147.11

GRAND TOTAL 3442.98

11. Who is/are responsible for the information in the financial statements? Write names(s).

Board of directors and the corporate management team is responsible for the

information in the financial statements.

Premchand Godha Chairman & Managing Director

Ajit Kumar Jain Joint Managing Director

Pranay Godha Executive Director

Prashant Godha Executive Director

Babulal Jain Director

Anand T. Kusre Director

Dev Parkash Yadava Director

Dr. Ramakanta Panda Director

Harish P. Kamath Company secretary

12. Think of information that you think would be useful but not disclosed in the financial statements.

Why do you think the information is not disclosed?

The information that is crucial to decision making has not been mentioned in detail in the

financial statements. That is because of it can affect their market, customers and suppliers.

13. Think of information not reported in the financial statements but would be available internally.

Any merger or acquisition that the company is planning in the future is not available in

the financial statement but may be available thru internal sources to the share holder.

14. Who are the company’s auditors?

Auditors - Natvarlal Vepari & Co., Chartered Accountants

Cost Auditors - ABK & Associates, Cost Accountants

15. To whom is the auditor’s report addressed? Why?

Auditor’s report is addressed to the members of Ipca laboratories ltd. to generate confidence

in the members of the company and the share holders at large.

16. List the main items on which the auditors report. Give details of three items that significantly affect

the financial statements.

Auditors report mainly on the following items:

Balance Sheet,

Statement of Profit and Loss

Cash Flow Statement

Accounting Policies

Other explanatory information.

Items that affect the financial statement:

Income statement summarizes revenue and expenses.

Cash flow summarizes cash receipts and cash payments.

Balance sheet lists a business's assets, liabilities and equity.

17. How much was the auditor’s remuneration? Give the detailed breakup of the same.

Auditor’s remuneration

For the Year Ended 31st March,

2014 (in Rs. Lakhs)

For the Year Ended 31st March,

2013 (in Rs. Lakhs)

As Statutory Audit 34 34As Tax Auditors 6 -For Certification 7 8Out of Pocket expenses 6 3Total 53 45

18. Highlight the concerns raised by the auditors in their report. Give details of such items.

In the auditor’s opinion and to the best of their information and according to the

explanations given to the auditors, the financial statements give the information required by the

Companies Act in the manner so required and give a true and fair view in conformity with the

accounting principles generally accepted in India:

(a) In the case of the Balance Sheet, of the State of Affairs of the Company as at 31st March, 2014;

(b) In the case of the Statement of Profit and Loss, of the Profit for the year ended on that date; and

(c) In the case of the Cash Flow Statement, of the cash flow for the year ended on that date.

They did not audit the financial statements of:

(a) Subsidiaries whose financial statements reflect total assets of 141.79 crores as at 31st March,

2014 and total revenue of 84.30 crores for the year then ended;

(b) Joint Venture whose financial statement reflect total assets of 16.02 crores as at 31st March,

2014 and total revenue of 15.27 crores for the year then ended, the Company’s share of such joint

venture in the total asset being 7.85 crores and in the total revenue being 2.63 crores for the period

1st December, 2013 to 31st March, 2014

19. What are the company’s major items of revenues? How these items have changed in percentage

terms as compared to the previous financial year?

Domestic Branded Formulations - Therapeutic Contribution

Therapeutic segment 2013-14 2012-13

Non steroidal anti-inflammatory drugs (NSAID) 35% 32%

Cardiovasculars & Anti-diabetics 24% 25%

Anti-malarials 14% 17%

Anti-bacterials 6% 6%

Gastro Intestinal (G I) products 5% 6%

Cough Preparations 4% 5%

Dermatology 4% 3%

Neuro Psychiatry 3% 3%

Neutraceuticals 2% 1%

Urology 1% 1%

Others 2% 1%

Total 100% 100%

Formulation Exports - Therapeutic Contribution

Therapeutic Group 2013-14 2012-13

Anti-malarials 35% 37%

Cardiovasculars & Anti-diabetics 31% 29%

Non steroidal Anti-inflammatory drugs (NSAID) 17% 17%

Anti-bacterials 10% 9%

Anthelmintics 3% 4%

Gastro Intestinal (G.I) products 1% 1%

Cough Preparations 1% 1%

Central Nervous System (CNS) products 1% 1%

Others 1% 1%

Total 100% 100%

Formulation Exports - Therapeutic Contribution

Branded Formulations – Thera

20. State the revenue recognition policy of the company for sales revenue.

Revenue is recognised to the extent that it is probable that the economic benefits will

flow to the company and the revenue can be reliably measured.Revenue from sale of goods is

recognised when significant risks and rewards in respect of ownership of products are transferred to

the customers. Revenue from domestic sales is recognised on delivery of products to customers

from the factories of the company. Revenue from export sales is recognised when the significant

risks and rewards of ownership are transferred to the customers, which is based upon the terms of

the applicable contract. Revenue from product sales is stated exclusive of returns, sales tax and

applicable trade discounts and allowances.

21. Identify the sources of company’s gains and other non-operating income. What is the

proportion of these items in relation to the total income and Net Profit After Tax?

Gains/Non-operating Income 2013-14 2012-13

Interest income 13.17 8.54

Dividend income from current investments 0.01 1.31

Net gain on foreign currency transactions and translations 72.10 63.28

Total Income 3256.25 2797.08

Net Profit After Tax 477.37 331.39

Proportion to Total Income 0.026189 0.026145

Proportion to Net Profit After Tax 0.178645 0.220676

22. Locate any references to accounting principles related to revenues in the financial statements

and related information. Write the details of the same.

The financial statements have been prepared in accordance with the generally accepted

accounting principles in India under the historical cost convention on an accrual basis to comply in

all material respects with the notified Accounting Standards by the Companies (Accounting

Standards) Rules, 2006, other pronouncements of the Institute of Chartered Accountants of India,

the relevant provisions of the Companies Act, 2013 and also the guidelines issued by the Securities

and Exchange Board of India (SEBI). The accounting policies have been consistently applied by the

Company and are consistent with those used in the previous year. The financial statements are

presented in Indian rupees.

23. When does the company recognize revenue from services? Why?

Service income is recognised as per the terms of the contracts with customers when the

related services are performed or the agreed milestones are achieved.

24. When does the company recognize dividend income? Why?

Dividend on shares held by the company is recognised when the right of the company to

receive the same is established.

25. What are the major items of expenses? How these items have changed in percentage terms as

compared to the previous financial year?

2013-14 2012-13 % change

Cost of materials consumed 1097.51 1044.75 5.05 %

Employee benefit Expenses 477.86 376.57 26.89%

Tax Expense 151.72 129.98 16.72%

26. Identify the company’s losses and other non-operating expenses. What is the proportion of these

items in relation to the total expenses and Net Profit After Tax?

Source of company’s gains is Sales of goods,sales of service. Proportion of these items in

relation to the total income and Net Profit After Tax is 0.99.

27. What was the total amount spent on employees? What is the percentage change in this amount

as compared to the previous year?

The total amount spent on employees was 477.86 crores for the year 2013-14.

Percentage change in this amount as compared to 2012-13 is 26.89%.

28. How much did the company spend on advertising, sales promotion and general marketing?

What is the proportion of these items in relation to the total expenses, Net Profit After Tax and sales

Revenues?

The company spent 107.22 crores on sales promotion,marketing. Proportion of these

items related to total expenses is 0.04 i.e. 4%. Proportion of these items related to Net Profit after

Tax is 0.22 i.e. 22.46%.Proportion of these items related to sales revenue is 0.032 i.e 3.2 %.

29. What is the absolute amount and proportion of finance costs to the total revenues? What is the

change in this absolute amount and proportion as compared to the previous year?

Absolute amount of financial costs is 24.58 crores. Proportion of finance costs to total

revenues is 0.0075. Change in absolute amount as compared to previous year is -21.47%. Change in

proportion as compared to previous year is -31%.

30. Identify the top three weighing expense-heads in relation to the sales revenues.What are the

accounting policies pertaining to these three heads of expenses?

The top three weighing expense-heads in relation to the sales revenues are cost of

material consumed,employee benefit expenses,power fuel and water charges.

Employee Benefits:

i) Retirement benefit in the form of provident fund is a defined contribution scheme and

contributions are charged to the Statement of Profit and Loss for the year/period when the

contributions are due.

ii) Gratuity being a defined benefit obligation is provided on the basis of an actuarial valuation

made at the end of each year/period using the projected unit credit method.

iii) Leave encashment is recognised on the basis of an actuarial valuation made at the end of each

year.

iv) Actuarial gains/losses are immediately taken to Statement of Profit and Loss and are not

deferred.

v) Leave Travel Assistance (LTA) liability has been provided on the basis of actual accumulated

obligation.

Cost of raw materials consumed

Cost is determined as given below:

Raw Materials and PackingMaterials-

a) At Cost net of CENVAT/VAT computed on First-in-First-out method.

b) API produced for captive consumption are valued at cost.

Work-in-process and Finished Goods- At cost including material cost net of CENVAT, labour cost

and all overheads other than selling and distribution overheads. Excise duty is considered as cost for

finished goods wherever applicable.

Stores and Spares - Stores and spare parts are valued at purchase cost computed on First-in-First-out

method.

31. What is the percentage of depreciation/amortization expense in relation to the gross block

value of the fixed assets and total expenses? What is the depreciation method and accounting

estimates involved in charging depreciation in fixed assets?

Percentage of depreciation expense in relation to the gross block value of the fixed assets

and total expenses is 2.44 %. Depreciation on fixed assets of the Company is charged on straight

line method over the useful life of assets estimated by the management.

Assets Estimated useful life (Years)

Leasehold Land Period of Lease

Buildings 28 to 58

Plant and Machinery and R&D Equipments 9 to 20

Computers 6

Furniture and Fixtures 10

Vehicles 6

Leasehold Improvements Period of Lease

32. List three assets having highest proportion in the total assets of the company.Write their

percentage weight in the total assets.

Following assets have the highest proportion;

1. Plant and machinery -1135.07 crores , % weight in total assets = 35.28%

2. Inventories -838.20 crores , % weight in total assets = 26.05%

3. Trade receivables- 448.49 crores , % weight in total assets =13.94%

33. How does the company measure its fixed assets? What is the amount of fixed assets purchased

during the year? What is the proportion in total assets? Is this proportion significant? Why?

Tangible / Intangible assets are recorded at cost of acquisition or construction. Cost of

acquisition comprises its purchase price including import duties and other non-refundable taxes or

levies and any directly attributable cost of bringing the asset to its working condition for its

intended use; any trade discount and rebates are deducted in arriving at the purchase price.

Revalued assets are recorded at revalued amounts.

Amount of fixed assets purchased during the year is 328.91crores. The proportion in

total assets is 21.57 %. Yes, the proportion is significant because fixed assets form a major

proportion of assets.

34. What is the amount of fixed assets sold/discarded during the year? What is its proportion in the

total assets? Is this proportion significant? Why?

The amount of fixed assets sold/discarded during the year is 5.38 crore. The proportion

in total assets is 0.004. This proportion is not significant as it accounts to just 0.4% of total assets.

35. What is the amount of capital work in progress finished and transformed to the fixed assets

during the year?

The amount of capital work in progress finished and transformed to the fixed assets

during the year is 41.48 crores.

36. What is the proportion of intangible assets in the total assets of the company? How does the

company measure intangible assets? Give two examples of the company’s intangible assets.

Proportion of intangible assets in the total assets of the company is 2.09%. Examples

of the company’s intangible assets are Goodwill, Software and Know how. Intangible Assets are

recorded at cost of acquisition or construction.

37. What is the proportion of long term investments in the total assets? What is the change in this

proportion compared to previous year?

Proportion of long term investment in the total assets is 0.0131. The change in this

proportion compared to previous year is 0.0008.

38. List three most significant investments venues. What is the book value and market value of

these investments?

Three most significant investments venues are:

1. Ipca Pharmaceuticals, Inc. USA ; face value- no par value

2. Trophic Wellness Pvt. Ltd. ; Face value- Rs 10.

3. Ipca Laboratories (U.K.) Ltd. U.K. ; face value- STG 1

39. What is the proportion of investments in subsidiary companies in the total investments? Is there

any change in the amount of investment in subsidiary companies as compared to previous year?

Proportion of investment in subsidiary companies is 51.37%. Yes, there is a

change.In 2012-13,the proportion was 62.69%.

40. What is the proportion of current assets in the total assets? What is the change in this proportion

compared to previous year?

Proportion of current assets in the total assets is 0.49 (49.22%). Change in this

proportion compare to previous year is -1.90 %.

41. What is the proportion of cash in total assets? What is the change in this proportion compared

to previous year? Is there any cash in transit? How much?

Proportion of cash in the total assets is 0.02. Change in this proportion compare to

previous year is 0.00136.

42. What is the proportion of accounts receivables in relation to the credit sales of the company?

What percentage of the company’s receivables is classified as doubtful? What is the change in this

proportion compared to previous year?

Percentage of the company’s receivables is classified as doubtful is 0.02%. There

were no receivables classified as doubtful in 2013.

43. What percentage of the company’s receivables is due for more than six months? What is the

change in this proportion compared to previous year?

Percentage of the company’s receivables is due for more than six months is

2.84%. The change in this proportion compared to previous year 0.26.

44. What is the proportion of inventories in the total assets? What is the change in this proportion

compared to previous year?

Proportion of inventories in the total assets is 0.26 (26.05 %).

Change in this proportion compared to previous year is -0.01.

45. How does the company measure its inventories? Is there any change in the inventory

measurement as compared to previous year? If yes, give details.

Raw Materials and Packing Materials:

a) At Cost net of CENVAT/VAT computed on First-in-First-out method.

b) API produced for captive consumption is valued at cost.

Work-in-process and Finished Goods:

At cost including material cost net of CENVAT, labour cost and all overheads

other than selling and distribution overheads. Excise duty is considered as cost for finished goods

wherever applicable.

Stores and Spares:

Stores and spare parts are valued at purchase cost computed on First-in-First-

out method. No, there is no change.

46. What is the absolute amount and proportion in relation to sales revenue of raw materials

consumed during the year? What is the change in such amount and proportion as compared to

previous year?

2013-14 2012-13Raw material 333.16 301.52Total sales 3,181.76 2,738.82Proportion 0.10470 0.11009

Absolute amount of raw materials has increased in one year but sales increased more

so the proportion value has dropped over the year

47. What is the amount of short term investment? What is the percentage change in short term

investment as compared to previous year? How does the company measure short term investment?

List three venues of short term investments for the company.

Short term investment is 0.15 crore. Percentage change in short term investment as

compared to previous year is 0. Short term Investments are stated at cost or fair value whichever is

lower. Short term investment was made in Aurobindo Pharma Ltd.

48. What is the proportion of current liabilities in total liabilities? What is the change in proportion

as compared to previous year ?

The proportion of current liabilities in total liabilities is 0.63. The change in

proportion as compared to previous year is 0.077.

49. List three most significant current liabilities. What is the percentage change in these current

liabilities as compared to previous year?

Three most significant current liabilities are: Trade payables (337.36), Short term

borrowings (137.96), current maturities of non-current liabilities (164.42). Percentage change in

these liabilities as compared to previous year is 27.08%, -12.2%, 75.72% respectively.

50. What is the proportion of trade payables in total liabilities? What is the change in this

proportion as compared to previous year?

The proportion of trade payables in total liabilities is 0.273. The change in this

proportion as compared to previous year is 0.039.

51. What is the company’s contingent liability?

Contingent liabilities are liabilities that may be incurred by an entity depending on

the outcome of uncertain future event such as a court case. Contingent liability is 549.71 crores.

52. What is the proportion of long term liabilities in total liabilities? What is the change in this

proportion as compared to previous year? List three most significant source of long term liability.

The proportion of long term liabilities in total liabilities is 0.367. The change in this

proportion as compared to previous year is -0.080. Three most significant source of long term

liabilities are: long-term borrowings, deferred tax liabilities, long term provisions.

53. What is the proportion of share capital in the total liability? Is there any change in the amount

of share capital as compared to previous year? What is the source of this change?

Proportion of share capital in the total liability is 0.0078. No, there is no change.

54. What is the face value of the equity share? Has the company issued any shares for services or

non cash assets? If yes, give details.

Face value of equity shares is Rs. 2.00. No, company has not issued any shares for

services or non cash assets.

55. What is the proportion of reserves in total liabilities? What is the change in this proportion as

compared to previous year?

The proportion of reserves in total liabilities is 0.6081. The change in this

proportion as compared to previous year is 0.0285.

56. How much is the basic and Diluted EPS and dividend per share?

Basic EPS and Diluted EPS is same in this case. Basic EPS is Rs 37.83. Dividend

per share is Rs. 5.

57. Give details of three most significant items mentioned in Corporate Governance Report.

The report on corporate governance briefly explains company’s philosophy

towards corporate governance, information about the current board of directors and code of conduct

for directors, gives dates on which board meetings were held, and also tells us about the

composition and category of the board of directors who attended the meetings.

1. Company’s philosophy of Corporate Governance is to ensure:

i) That the Board and top management of the Company are fully appraised of the affairs of the

Company that is aimed at assisting them in the efficient conduct of the Company’s business so as to

meet Company’s obligation to the stakeholders.

ii) That the Board exercises its fiduciary responsibilities towards shareholders and creditors so as to

ensure high accountability.

iii) That all disclosure of information to present and potential investors is maximised.

iv)That the decision making process in the organisation is transparent and are backed by

documentary evidences.

2. Board of Directors:

This point gives the details about the meeting held in the past and also describes

about each of the director. It also gives details about the work experience of the director, how many

meetings they have attended, how many companies they are handling as director.

3. Audit Committee:

This point gives the details about the Name of Members and Chairman of the audit

committee. Also throws light on Terms of Reference & Composition. The Audit Committee of the

Company currently comprises of Mr. Babulal Jain, Chairman of the Committee, Mr. Anand T.

Kusre, Dr. V. V. Subba Rao and Mr. Dev Parkash Yadava (appointed w.e.f 29th May, 2014), all

being Independent Directors with independent judgment in the deliberation and decisions of the

Board as well as Audit Committee and Mr. Prashant Godha, Executive Director. All members of the

Audit Committee have knowledge on financial matters and the Chairman of the Audit Committee is

a senior Chartered Accountant in practice having accounting and financial management expertise.

Dr. V. V. Subba Rao resigned as the member of the Board / Committees w.e.f. close of business

hours on 29th May, 2014.

58. Give details of three most significant items mentioned in Business Responsivity Report

59. Give details of three most significant items mentioned in Corporate Social Responsibility

Report.

The Company is committed to good corporate citizenship. As a part of its

corporate social responsibility, the Company continues to undertake a range of activities in respect

of healthcare and education to improve living conditions of people living in the neighbourhood of

its manufacturing facilities. During the year under report, the Company has also supported

healthcare and educational projects undertaken by charitable institutions and organizations. The

Company considers safety, environment and health as the management responsibility. Regular

employee training programmes are carried out in the manufacturing facilities on safety and

environment.

60. Give details of three most significant items mentioned in MDA.

The three most significant items mentioned in the management discussion analysis

are:

a) Industry Structure and Development:

The global pharmaceutical market is now estimated to be US $960 billion and is

growing at a rate of about 3% per annum. US, Japan and Europe constitute about 75% of the global

pharmaceutical market and are growing at a slower annual rate mainly due to loss of exclusivity,

lesser new product approvals and price erosions due to generics competition.

In contrast, pharmaceutical market of emerging economies like India are growing

at a much faster rate of 10% – 12% per annum driven by improved per capita income, increased

access and rising awareness of modern medicines and strengthening of healthcare infrastructure.

Out of the global pharmaceutical market, generic formulations contribute about US$ 150 billion and

are growing at about 8% per annum. US is the largest market contributing 45% and Canada, Japan

and Europe collectively contributing another 35% of the world generic formulation business.

b) Outlook, Risks and Concerns:

Though in the world pharmaceutical market, India has a negligible share by value,

India is recognized as one of the leading global players with large number of drug master files and

dossier registrations for Active Pharmaceutical Ingredients (APIs) and formulations with

manufacturing facilities approved by regulatory authorities of the various countries.

Indian companies are focusing on global generic and API business, R & D activities

and contract research and manufacturing alliances. India is also fast emerging as a preferred

pharmaceuticals manufacturing location.

Several large selling drugs going off patent over next few years and increasing use

of pharmaceutical generics in developed markets to reduce healthcare cost will provide attractive

growth opportunities to generics manufacturers and thus Indian pharmaceutical industry is poised

for an accelerated growth in the coming years.

However, poor public healthcare funding and infrastructure, low per capita

consumption of medicines in developing and under developed countries including India, currency

fluctuations, inflation and resultant all round increase in input costs are few causes of concern.

c) Financial Performance and Operations Review:

The Company had another successful financial year with a net total income of Rs.

3256.25 crores as against Rs. 2797.08 crores in the previous year, a growth of 16%. The Company's

focus on formulations business resulted into increase in overall formulation sales to Rs. 2416.99

crores, an increase of 17% over previous year formulations sales of Rs. 2072.28 crores. The

Company further expanded its coverage with introduction of new formulations, both in the domestic

and export markets, especially in the fast growing life style related therapeutic segments. The

Active Pharmaceutical Ingredient (API) business also increased by 15% to Rs. 764.77 crores.

During the financial year under report, the Earnings before interest, depreciation and foreign

exchange transactions / translation loss increased by 29% to Rs. 826.66 crores as against Rs. 639.95

crores in the previous financial year. The operations have resulted in a net profit of Rs. 477.37

crores during the financial year under report as against Rs. 331.39 crores in the previous financial

year, an increase of 44%. Due to steep depreciation of Indian Rupee vis–a–vis major currencies,

during the financial year under report, the Company incurred a foreign exchange

translations/transactions loss of Rs. 72.10 crores (previous year – loss of Rs. 63.28 crores