AstraZeneca Pharma

1.  Contingent liabilities 
     and commitments                           As at        As at
                                      31 December 2008 31 December 2007
 
 Claims against the Company not 
 acknowledged as debts in respect of:
 
 a)Demands for payments into the 
 credit of the Drugs                       27,891,200       26,776,014
 Prices Equalisation Account 
 under Drugs (Price Control) Order, 
 1979, which are being contested
 by the Company (including a case 
 involving a demand of Rs 5,107,549, 
 where the Central Government has 
 referred the matter to the division
 bench of the honourable High Court 
 of Karnataka,which has been rejected 
 by the division bench. The Central 
 Government has now made an application
 for transfer of this matter to the 
 Supreme Court).
 On another matter of Ibuprufen, the 
 Company has received a further demand 
 of Rs 10,051,948 towards interest for 
 the period from 1986 to 2004, which 
 is also contested and disputed by the
 Company. Contingent liability is 
 inclusive of interest
 accrued on the demand.
 
 b) Excise and service tax matters             1,696,276    1,696,276
 Other commitments / contingent liability
 
 a) In respect of bank guarantees              6,639,659    4,497,013
 
 b) Estimated amount of contracts 
 remaining to be                               5,702,119   14,808,434
 executed on capital account 
 (net of advances) and
 not provided for
 
 2.  The net compensation awarded amounting to Rs 19,691,797 by the
 National Highways Authorities of India (NHAI) vide the award dated 8
 March 2004 for acquiring a portion of factory land, has been
 subsequently reduced to Rs 498,879 by an amended award dated 8
 September 2006. The revised compensation is based on the cost at which
 the land was originally obtained from Karnataka Industrial Area
 Development Board.  The Company has not accepted the amended award and
 has disputed the same. The Company has invoked the arbitration
 provision under the National Highways Act, 1956. Additionally the
 Company has also filed a writ petition before the honourable High Court
 of Karnataka on 9 October 2007, praying for the quashing of the amended
 award. As per legal advice received, the Company has adequate grounds
 for challenging the amended award.
 
 3.  Research and development expenditure (including depreciation)
 amounting to Rs 23,609,724 (previous year: Rs 23,475,350) incurred
 during the year has been charged to the respective heads of account in
 the profit and loss account.
 
 4.  Segment reporting
 
 The primary segments of the Company are its business segments as
 follows:
 
 (i) Healthcare - The Company engages in the manufacture and sale of
 pharmaceutical products.
 
 (ii)Clinical trial services - The Company renders clinical trial
 services on pharmaceuticals products to its group companies.
 
 The accounting policies consistently used in the preparation of the
 financial statements are also applied to record revenue and expenditure
 in individual segments.
 
 Revenue and direct expenses in relation to segments are categorised
 based on items that are individually identifiable to that segment,
 while other costs, wherever allocable, are apportioned to the segments
 on an appropriate basis.  Certain income and expenses are not
 specifically allocable to individual segments as the underlying assets
 and services are used interchangeably. The Company therefore believes
 that it is not practicable to provide segment disclosures relating to
 such income and expenses and accordingly such expenses are separately
 disclosed as unallocated and directly charged against total income.
 
 Assets and liabilities in relation to segments are categorised based on
 items that are individually identifiable to that segment. Certain
 assets and liabilities are not specifically allocable to individual
 segments as these are used interchangeably. The Company therefore
 believes that it is not practicable to provide segment disclosures
 relating to such assets and liabilities and accordingly these are
 separately disclosed as unallocated. Assets are primarily located in
 India.
 
 5. The management has initiated the process of identifying enterprises
 which have provided goods and services to the Company and which qualify
 under the definition of micro and small enterprises, as defined under
 Micro, Small and Medium Enterprises Development Act, 2006. Accordingly,
 the disclosure in respect of the amounts payable to such enterprises as
 at 31 December 2008 has been made in the financial statements based on
 information received and available with the Company. Further in the
 view of the management, the impact of interest, if any, that may be
 payable in accordance with the provisions of the Act is not expected to
 be material. The Company has not received any claim for interest from
 any supplier under the said Act.
 
 6. The Board of Directors, at their meeting held on 12 January 2008,
 pursuant to the scheme of arrangement sanctioned by the Honourable
 Karnataka High Court on 7 July 2007 and subsequent approval accorded by
 the Reserve Bank of India on 11 December 2007, allotted 8% secured
 fully paid-up redeemable non-convertible bonus debentures from the
 general reserve, in the ratio of one debenture of the face value of Rs
 25 each for every equity share held by the shareholders of the Company
 as on 11 January 2008. The bonus debentures have been listed on the
 Bangalore Stock Exchange Limited, Bombay Stock Exchange Limited and
 National Stock Exchange of India Limited, The said bonus debentures and
 the interest thereon of Rs 50,000,000 were redeemed on 11 January 2009.
 An issue of bonus debentures would be treated as a deemed dividend
 under the provisions of the Income-tax Act, 1956. Accordingly, the
 Company has remitted Rs 106,218,750 as dividend distribution tax and
 has utilised general reserve for the payment of the same, pursuant to
 the scheme of arrangement sanctioned by the Honourable Karnataka High
 Court.
 
 7. The Board of Directors of the Company at its meeting held on 18
 February 2009, approved the financial statements for the year ended 31
 December 2008. The Board of Directors, at the said meeting, also
 recommended a final dividend of Rs 15 on equity share of Rs 2 each for
 the year ended 31 December 2008.The Payment of the said dividend is
 subject to the approval of the shareholders at the Annual General
 Meeting.
 
 8.  Management believes that the Company has established a
 comprehensive system of maintenance of information and documents as
 required by the transfer pricing legislation under sections 92-99F of
 the Income-tax Act, 1961. Management is of the opinion that its
 international transactions are at arms length so that the aforesaid
 legislation will not have any impact on the financial statements,
 particularly on the amount of tax expenses and that of provision for
 taxation.
 
 9.  The comparative figures have been regrouped/ reclassified,
 wherever necessary, to conform to the current years presentation.