Pfizer

1 Contingent Liability
                                      Rupees in Lakhs   Rupees in Lakhs
                                        30th Nov 2008     30th Nov 2007
 
 (a) In respect of the guarantees
     given to banks on behalf of :
 (i) Its subsidiary company                  2400.00           2400.00
 (ii) Other guarantees                        107.14            119.59
 (b) In respect of :
 (i) Excise duty                              420.78            544.82
 (ii) Customs duty                             40.54             40.54
 (iii) Sales tax                              627.24           3946.78
 (iv) Service tax                             193.11            193.11
 (v) Income tax                               743.62            743.62
 (vi) Pending labour matters contested 
      in various courts                       122.66            122.66
 (vii) Claims against the Company not 
       acknowledged as debts                    Amount           Amount
                                       Unascertainable  Unascertainable
 
 (c) DPEA claims (Refer Note 2)
 
 2 Drugs Prices Equalisation Account (DPEA)
 
 (a) Oxytetracycline and Other Formulations
 
 In respect of certain price fixation Orders of 1981 of the Government
 of India, the Supreme Court vide its Order of 22nd March, 1993 held
 that, pending disposal of the Company’s Writ Petition in the High Court
 of Mumbai, the Company may deposit 50% of the impugned amount of Rs.
 87.61 lakhs, less Rs. 19.90 lakhs already deposited, with the Union of
 India before 15th May, 1993 which has been done. In the event that the
 Company succeeds before the High Court of Mumbai, this amount will be
 returned within one month from the date of the decision of the High
 Court with interest at the rate of 15% per annum. However, if the
 Company loses the Writ Petition, the balance amount of Rs. 43.80 lakhs
 with interest at the rate of 15% per annum will have to be paid to the
 Government.
 
 (b) Multivitamin Formulations
 
 In respect of a certain price fixation Orders of 1986 of the Government
 of India, the Supreme Court vide its Order dated 3rd December, 1992,
 held that, pending disposal of the Company’s Writ Petition in the High
 Court of Mumbai, the Company may deposit 50% of the impugned amount of
 Rs. 98.00 lakhs with the Union of India before 31st January, 1993 which
 has been done. In the event that the Company succeeds before the High
 Court of Mumbai, this amount will be returned within one month from the
 date of the decision of the High Court with interest at the rate of 15%
 per annum. However, if the Company loses the Writ Petition, the balance
 amount of Rs 49.00 lakhs with interest at the rate of 15% per annum
 will have to be paid to the Government.
 
 (c) Protinex
 
 In yet another case, the Company had challenged in 1986 a price
 fixation Order of the Government of India by a Writ Petition before the
 High Court of Mumbai. The Honourable Court passed an ad interim and
 interim order staying the impugned order.  The Petition, while it was
 still pending for hearing and final disposal, was withdrawn in 1989 on
 redressal of the Company’s grievances. After protracted correspondence
 on the subject, in 1993 the Government raised a demand of Rs 81.83
 lakhs on the Company for the period April 1986 to July 1989 and
 directed the Company to deposit the same into the DPEA.  Thereafter,
 the Drug Prices Liability Review (DPLR) Committee sent a letter dated
 15th February, 1996 seeking the Company’s submission/ representation
 against the reduced claim amount of Rs 33.87 lakhs for the period April
 1986 to August 1987 as intimated to the DPLR Committee by the
 Government of India. The Company has made its submissions to the DPLR
 Committee vide its letter of 29th March, 1996 claiming that no amount
 whatsoever is due and payable having regard to the facts and relevant
 material of the case.
 
 In the meantime, the Department of Chemicals and Petrochemicals vide
 their letter dated 11th February, 1997 raised an additional demand of
 Rs 178.56 lakhs for the earlier period of February 1984 to March 1986
 over and above the revised claim of Rs. 33.87 lakhs for the period
 April 1986 to August 1987. Thus, the total demand raised now stands
 revised to Rs. 212.43 lakhs. The DPLR Committee had, vide its letter
 dated 24th February, 1997 invited the Company to make its submissions/
 representations against the above said claim. The Company has made its
 submissions to the DPLR Committee vide its letter dated 14th May, 1997
 claiming that no amount whatsoever is due and payable having regard to
 the facts and relevant material of the case.
 
 Pursuant to the submissions made by the Company, the DPLR Committee
 directed by an Order on 17th November, 1998 that clarifications should
 be obtained from the Mumbai High Court on whether the Interim Stay
 granted in the Civil Writ Petition Number 2368 of 1996 is applicable to
 this matter. (This Writ Petition is filed by OPPI and IDMA jointly
 against any Notice issued by the Government of India after 25th August,
 1987 to any member of the OPPI or IDMA, initiating proceedings for
 recovery of an amount demanded in respect of a period prior to that
 date).
 
 On a Notice of Motion filed by the Company in the said Writ Petition,
 the Mumbai High Court has granted ad interim Order that “pending the
 hearing and final disposal of this Notice of Motion, further
 proceedings in the said Case No 49/1996 pending before the said Drug
 Prices Liability Review Committee be stayed.”
 
 (d) Vitamin and Other Formulations
 
 The Government has arbitrarily determined the liability of the Company
 at Rs. 1466 lakhs being the difference in price in respect of Vitamin
 and other formulations sold by the Company during the years 1983 to
 1989. The Company has repudiated the liability on this account. The
 Company’s Solicitors have advised that the repudiation by the Company
 is legally sustainable.  The Government has pursued the matter. The
 Company maintains its position that the claim by the Government is not
 legally sustainable.
 
 (e) Chloramphenicol
 
 The Government has arbitrarily determined the liability of the Company
 at Rs 145 lakhs and Rs. 14 lakhs being the difference between the price
 of bulk drug Chloramphenicol powder and Chloramphenicol Palmitate
 respectively allowed in the formulation price and actual procurement
 price for the period 1979 to 1988. The Company has repudiated the
 liability on this account as advised by the Company’s Solicitors. The
 Company has also obtained a Stay order from the Honourable High Court
 of Mumbai against the demand.
 
 Pursuant to the submissions made by the Company, the DPLR Committee
 directed by an Order on 17th November, 1998 that clarifications should
 be obtained from the Mumbai High Court on whether the Interim Stay
 granted in the Civil Writ Petition Number 2368 of 1996 is applicable to
 this matter. (This Writ Petition is filed by OPPI and IDMA jointly
 against any Notice issued by the Government of India after 25th August,
 1987 to any member of the OPPI or IDMA, initiating proceedings for
 recovery of an amount demanded in respect of a period prior to that
 date).
 
 On a Notice of Motion filed by the Company in the said Writ Petition,
 the Mumbai High Court has granted ad interim Order that “pending the
 hearing and final disposal of this Notice of Motion, further
 proceedings in the said Case No 23/95 pending before the said Drug
 Prices Liability Review Committee be stayed”.
 
 (f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan
 Limited (merged with Parke-Davis (India) Limited in 1988 and Parke –
 Davis (India) Limited merged with Pfizer Limited in 2003) had
 classified ISOKIN TABLETS, ISOKIN LIQUID AND PYRIDIUM TABLETS as
 decontrolled products under the DPCO 1979. The categorization was,
 however, challenged by the Government in 1984 and a demand of Rs. 113
 lakhs was raised against the Company. Against this demand an excise
 duty set off of Rs. 7 lakhs was allowed to the Company and a final
 demand of Rs. 106 lakhs was raised in 1987.
 
 The Company had deposited an amount of Rs.30 lakhs in February 1987 and
 Rs.25 lakhs in May 1990 totaling to an aggregate of Rs.55 lakhs in full
 and final settlement of the demand, as per the arguments set forth by
 the Company. The Government subsequently raised a demand of Rs.117
 lakhs towards interest on principal demand. (i.e. interest of Rs. 43
 lakhs for Pyridium for the period 1982 to August 1995 and Rs.74 lakhs
 for Isokin for the period 1982 to June 1997).
 
 The Company filed a Writ Petition in the Andhra Pradesh High Court in
 September 1997 for staying all further proceedings against the Company.
 The High Court stayed the demand in respect of collection of interest
 but directed the Company to deposit the balance demand of Rs. 51 lakhs
 (which amount was deposited in November 1997).
 
 (g) Multivitamin Formulations:
 
 The Government has arbitrarily raised a demand of Rs.182.38 lakhs on
 account of alleged overpricing of certain multivitamin formulations
 marketed by erstwhile Pharmacia Healthcare Limited (merged with Pfizer
 Limited) for the period 1983 to 1986.  The Company has repudiated the
 liability on this account as advised by its solicitors. The Company
 filed a Writ Petition No.814 of 1992 in the High Court at Mumbai. The
 Supreme Court of India, in a Special Leave Petition filed by the
 Company held that pending disposal of Writ Petition filed before the
 High Court at Mumbai, the Company shall furnish an undertaking in
 respect of 50% of its liability and shall deposit the balance 50%
 aggregating to Rs. 91.19 lakhs. This amount has been deposited with the
 Government of India and is included under the head “Loans and
 advances”.
 
 Pursuant to a Transfer Petition (Civil) no 475-496 of 2003 filed under
 Article 139A(1) of the Constitution of India, all pending writ
 petitions in respect of DPEA liabilities are now to be transferred to
 the Supreme Court to be heard and finally decided by the Supreme Court
 of India. Consequently as a result of the said transfer petition, Writ
 Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now
 be heard and disposed off by the Supreme Court.
 
 In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the
 legal opinion being in favour of the Company, and based on the
 assessment of the Management, no further provision is considered
 necessary over and above the sum of Rs.198.37 lakhs which has been paid
 off in earlier years.
 
 The Company would continue to seek legal recourse in all the above
 matters.
 
 3 The Company’s international transactions with related parties are at
 arm’s length as per the independent accountants report for the year
 ended 31st March, 2008. Management believes that the Company’s
 international transactions with related parties post 31st March, 2008
 continue to be at arm’s length and that the transfer pricing
 legislation will not have any impact on these financial statements.
 
 4 The Company’s promoters announced the global divestiture of the
 Consumer Healthcare Business in June 2006 to Johnson & Johnson.
 Consequently, the global closure was fixed on 20th December, 2006.
 Pursuant to the approval of the Board of Directors at their meeting
 held on 31st December, 2007 the Company has transferred its right to
 use the trademark / license pertaining to Benadryl, Caladryl, Benylin
 and Listerine and certain assets related thereto, for a total
 consideration of Rs. 21485.10 lakhs to Johnson & Johnson Limited. All
 the remaining products under the Consumer Healthcare Portfolio
 continues to be with the Company. Accordingly, profit on this transfer
 amounting to Rs. 21095.23 lakhs has been recognized in the current year
 and accounted under the head “Exceptional items – Net”.
 
 5 The Company has with effect from 1st December, 2007, adopted
 Accounting Standard 15, Employee Benefits (revised 2005).  Consequently
 an additional liability for employee benefits based on actuarial
 valuation as at 1st December, 2007 amounting to Rs 455.69 lakhs (net of
 deferred tax credit of Rs 234.65 lakhs), has been adjusted against
 General reserve as at 1st December, 2007.
 
 6 Prior year figures have been regrouped wherever necessary to conform
 to current year’s presentation.