Lupin

1.  Estimated amount of contracts remaining to be executed on capital
 account and not provided for, net of advances, Rs. 680.0 million
 (previous year Rs. 274.1 million).
 
 2.    Contingent Liabilities:
 
                                                    As at        As at
                                               31.03.2009   31.03.2008
 
 a)    Income tax demands in respect of 
 earlier years under dispute,                        46.9        151.7
 pending in appeals [including Rs. Nil 
 (previous year Rs. 113.7
 million) consequent to department preferring 
 an appeal on the
 favourable order passed by the C.I.T. (Appeals)].
 Amount paid there against and included under Schedule 10
 Advances recoverable in cash or in kind  Rs.  38.0 million
 (previous year Rs. 38.0 million)
 
 b)   Excise duty, Service tax and Sales tax 
 demands disputed in appeals                        118.3       117.0
 and pending decisions. Amount paid there against and included
 under Schedule 10 Rs. 13.8 million (previous year Rs. 8.9 million)
 
 c)    Claims   against   the   Company   
 not   acknowledged   as   debts                    298.9       301.4
 [excluding interest and penalty, if any, (amount unascertained) in
 respect of a claim included in aforesaid] and [including Rs. Nil
 (previous year Rs. 28.9 million) excluding interest being amount
 unascertained, demanded under Drug Price Control Order 1979,
 payable into Drug Price Equalisation Account towards unintended
 benefit enjoyed by the Company. The Company has replied to the
 notices and contended that no amount is payable and the matter
 is also pending decision, before various Courts on the appeals
 filed by the Associations of which the Company is a member].
 Amount paid there against without admitting liability and
 included under Schedule 10 Rs. 64.2 million (previous year
 Rs. 72.6 million).
 
 d)   Counter  guarantee  given  to  
 GIDC  in  connection  with   loan                    7.5        7.5
 sanctioned  by a financial institution  to a company,  jointly
 promoted by an Association of Industries (of which, the Company
 is a member) and GIDC.
 
 e)   Guarantee given in respect of standby 
 Letter of Credit issued by the                     164.8
 Companys bankers in connection with the credit facilities to its
 subsidiaries aggregating Rs. 239.0 million (previous year Rs. Nil).
 
 f)    Letter of Comfort issued by the 
 Company towards the credit                         246.2
 facilities sanctioned by the bankers of a wholly owned subsidiary
 aggregating Rs. 425.3 million (previous year Rs. Nil).
 
 3.  During the year, the Company through its wholly owned subsidiary
 Lupin Holdings B.V., Netherlands (LHBV), acquired/subscribed to the
 equity stake of the following:
 
 i) 100% equity stake of Hormosan Pharma GmbH, Germany at a total cost
 of Rs. 310.7 million.
 
 ii) 60% equity stake of Pharma Dynamics (Proprietary) Ltd., South
 Africa at a total cost of Rs. 901.2 million.
 
 iii) 51% equity stake (including stake subscribed to) of Multicare
 Pharmaceuticals Philippines Inc., Philippines at a total cost of Rs.
 250.6 million.
 
 iv) 36.65% equity stake of Generic Health Pty Ltd., Australia at a
 total cost of Rs. 204.5 million.
 
 v) Balance 9.7% equity stake of Kyowa Pharmaceutical Industry Co. Ltd.,
 Japan at a total cost of Rs. 135.1 million making it a wholly owned
 subsidiary of LHBV.
 
 The above acquisitions/subscription are based on the net assets values,
 the future projected revenues, operating profits and cash flows, etc.
 of the Investee Companies.
 
 4.  Segment Reporting:
 
 The Company has presented data relating to its segments based on its
 consolidated financial statements, which are presented in the same
 Annual Report. Accordingly, in terms of the provisions of Accounting
 Standard 17 (AS 17) Segment Reporting, no disclosures related to
 segments are presented in its standalone financial statements.
 
 5. Post Employment Benefits:
 
 (i) Defined Contribution Plans:
 
 The Company makes contributions towards provident fund and
 superannuation fund to a defined contribution retirement benefit plan
 for qualifying employees. The superannuation fund is administered by
 the Life Insurance Corporation of India (LIC). Under the plan, the
 Company is required to contribute a specified percentage of payroll
 cost to the retirement benefit plan to fund the benefits.
 
 The provident fund plan is operated by the Lupin Ltd Employees
 Provident Fund Trust (the Trust).  Eligible employees receive
 benefits from the said Trust. Both the employees and the Company make
 monthly contributions to the Provident Fund Plan equal to a specified
 percentage of the covered employees salary. The minimum interest rate
 payable by the Trust to the beneficiaries every year is being notified
 by the Government. The Company has an obligation to make good the short
 fall, if any, between the return from the investments of the Trust and
 the notified interest rate.
 
 The Guidance Note on Implementing Accounting Standard 15 (AS-15),
 Employee benefits (revised 2005) issued by Accounting Standards Board
 (ASB) states that benefit plans involving employer established
 provident funds, which require interest shortfalls to be recompensed
 are to be considered as defined benefit plans. Pending the issuance of
 the guidance note from the Actuarial Society of India, the Companys
 actuary has expressed an inability to reliably measure provident fund
 liabilities. Accordingly, the Company is unable to exhibit the related
 information.
 
 The Company recognised Rs. 78.5 million (previous year Rs. 65.2
 million) for provident fund contributions and Rs. 54.9 million
 (previous year Rs. 43.2 million) for superannuation contribution in the
 Profit and Loss Account.
 
 (ii) Defined Benefit Plan:
 
 The Company makes annual contributions to the Lupin Limited Employees
 Group Gratuity cum Life Assurance Scheme administered by the LIC, a
 funded defined benefit plan for qualifying employees. The scheme
 provides for payment to vested employees as under:
 
 a) On normal retirement/ early retirement/ withdrawal/resignation:
 
 As per the provisions of Payment of Gratuity Act, 1972 with vesting
 period of 5 years of service.
 
 b) On death in service:
 
 As per the provisions of Payment of Gratuity Act, 1972 without any
 vesting period.
 
 The most recent actuarial valuation of plan assets and the present
 value of the defined benefit obligation for gratuity were carried out
 as at March 31,2009 by the LIC. The present value of the defined
 benefit obligations and the related current service cost and past
 service cost, were measured using the Projected Unit Credit Method.
 
 6. During the year, the Company has restructured the operations of its
 manufacturing plant located at Aurangabad by announcing a Voluntary
 Retirement Scheme (VRS) to permanent workers. Applications of 251
 permanent workers were accepted and the termination benefits along with
 discounted value of pension payable under the said Scheme aggregating
 Rs. 322.1 million have been recognised and included under the head
 Personnel Expenses.
 
 7. Derivative Financial Instruments:
 
 The Company enters into forward and option contracts in order to hedge
 and manage its foreign currency exposures towards future export
 earnings. Such derivative contracts (including contracts for a period
 extending beyond the financial year 2009-10) which are in the nature of
 highly probable forecast transactions are entered into by the Company
 for hedging purposes only, and are accordingly classified as cash flow
 hedges.
 
 8.  The aggregate amount of revenue expenditure incurred during the
 year on Research and Development and shown in the respective heads of
 account is Rs. 1905.0 million (previous year Rs. 1546.4 million).
 
 9.  a) On January 6, 2006 the Company issued 1000 foreign currency
 convertible bonds (FCCBs) of a Face Value of US$ 100000 each
 aggregating US $ 100.0 million. As per the terms of the issue, the
 holders have an option to convert FCCB into Equity Shares at an initial
 conversion rate of Rs. 1134.08 per equity share at a fixed exchange
 rate subject to certain adjustments as per the terms of the issue.
 However, as a result of the issue of bonus shares in an earlier year in
 the ratio of one for one, the numbers of underlying shares have doubled
 consequent to the reduction in the conversion price by half i.e. Rs.
 567.04 per share.  Further, under certain conditions, the Company,
 after January 6, 2009 but before December 28, 2010, has an option for
 earlier redemption of the bonds, in the whole, but not in part. Unless
 previously converted or redeemed or purchased and cancelled, the
 Company will redeem these bonds at a premium of 34.74 per cent at the
 end of the five years from the date of issue i.e. on January 7, 2011.
 As at March 31, 2009, 273 bonds (previous year 203 bonds) have been
 converted into 2227169 equity shares (previous year 1656100 equity
 shares) of Rs. 10/- each.
 
 b) The FCCBs as detailed above are hybrid instruments with an option of
 conversion into specified number of shares and an underlying foreign
 currency liability with redemption at a premium in the event of non
 conversion at the end of the period. A number of factors would
 influence the conversion decision including movement in the quoted
 price of the Companys shares, the rate of exchange, interest rates in
 the market, the growth in financial performance and profitability of
 the company and the performance of the industry in which Company
 operates, etc. In the opinion of the Company, the lesser number of
 conversions into equity shares as compared to the previous year is a
 temporary aberration due to the current economic conditions. The
 Company expects that the Bond holders would continue to opt for
 conversion rather than redemption and consequently no premium is
 expected to be payable and therefore, the same is not provided for.
 However, in the event of redemption, the premium payable would be
 adjusted against the balance in the Securities Premium Account.
 
 c) For the reasons stated in (b) above, the FCCB liability in respect
 of 727 bonds (previous year 797 bonds) as at the year end is continued
 to be considered as a non monetary liability in terms of Accounting
 Standard 11 (AS-11) (Revised)  The effects of changes in Foreign
 Exchange Rates and accordingly the same is not restated at the year
 end exchange rate.
 
 10.  Out of the net proceeds of the FCCBs issued in an earlier year of
 Rs. 4396.7 million (approx) (USD 98.3 million) (net of underwriting
 discounts and commissions etc.), the entire unutilised balance of Rs.
 1998.5 million (USD 50 million) as at the end of previous year has been
 utilised during the year towards capital expenditure and for overseas
 investments as per the terms of the issue.
 
 11.  The information regarding Micro Enterprises and Small Enterprises
 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.
 
 Amount due to vendors under Micro Enterprises and Small Enterprises for
 the year ended March 31, 2009 is Rs. 64.1 million, interest Rs. Nil
 (previous year Rs. 43.1 million, interest Rs. Nil), interest paid
 during the year Rs.Nil(previousyearRs.Nil).
 
 12. Previous year figures have been regrouped wherever necessary to
 correspond with the figures of the current year.