Sun Pharmaceutical Industries

As at 31st March, 2009 As at 31st March, 2008
 
                                     Rs in Million       Rs in Million
 
 1 CONTINGENT LIABILITIES NOT PROVIDED FOR
 
 Guarantees Given by the bankers on 
 behalf of the Company                    89.6                 68.3
 Corporate Guarantees                     91.2                101.7
 Letters of Credit for Imports           399.6                158.6
 Liabilities Disputed - 
 Appeals filed with respect to :
 Income Tax on account of 
 Disallowances / Additions               154.1                147.0
 Sales Tax on account of 
 Rebate / Classfications                  11.6                 29.4
 Excise Duty on account of 
 Valuation / Cenvat Credit               242.8                198.7
 Service Tax on account of 
 Import of Services                        1.9                   -
 ESIC Contribution on account of 
 applicability                             0.2                  0.3
 Drug Price Equalisation Account 
 [DPEA] on account of demand
 towards unintended benefit, 
 including interest there on,
 enjoyed by the Company                   14.0                14.0
 Demand by JDGFT import duty with 
 respect to import alleged to
 be in excess of entitlement as per 
 the Advanced Licence Scheme              10.7               10.3
 Other Claims against the Company not 
 acknowledged as debts                     6.5                3.2
 
 2 The net exchange gain of Rs. 759.6 Million (Previous Year gain of
 Rs.169.0 Million) is included under various heads in the Profit & Loss
 account.
 
 3 Disclosures under the Micro, Small and Medium Enterprises
 Development Act, 2006:
 
 (a) An amount of Rs.NIL( PY:NIL) and RsNIL (PYNIL) was due and
 outstanding to suppliers as at the end of the accounting year on
 account of Principal and Interest respectively.
 
 (b) No interest was paid during the year.
 
 (c) No interest is payable at the end of the year under Micro, Small
 and Medium Enterprises Development Act, 2006.
 
 (d) No amount of interest was accrued and unpaid at the end of the
 accounting year.
 
 The above information and that given in Schedule 13 - “Current
 Liabilities and Provisions” regarding Micro Small and Medium
 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.
 
 In respect of Gratuity, Contributions are made to LIC’s Recognised
 Group Gratuity Fund Scheme based on amount demanded by LIC of India.
 Provision for Gratuity is based on actuarial valuation done by
 independent actuary as at the year end. Actuarial Valuation for
 Compensated Absences is done as at the year end and the provision is
 made as per Company rules amounting to Rs. 31.0 Million (Previous Year
 Rs. 23.2 Million) and it covers all regular employees. Major drivers in
 actuarial assumptions, typically, are years of service and employee
 compensation. After the issuance of the Accounting Standard 15 on
 ‘Employee Benefits’, commitments are actuarially determined using the
 ‘Projected Unit Credit’ method. Gains and losses on changes in
 actuarial assumptions are accounted for in the Profit and Loss account.
 
 Category of Plan Assets : The Company’s Plan Assets in respect of
 Gratuity are funded through the Group Scheme of the LIC of India.
 
 (v) Accounting Standard (AS-19) on Operating Leases
 
 (a) The company has obtained certain premises for its business
 operations (including furniture and fittings, therein as applicable)
 under operating lease or leave and license agreements. These are
 generally not non-cancellable and range between 11 months to 5 years
 under leave and licence, or longer for other lease and are renewable by
 mutual consent on mutually agreeable terms. The Company has given
 refundable interest free security deposits in accordance with the
 agreed terms.
 
 (b) Lease payments are recognised in the Profit and Loss Account under
 “Rent” in Schedule 19.
 
 4 Intangible assets consisting of trademarks, designs, technical
 knowhow, non compete fees and other intangible assets are stated at
 cost of acquisition based on their agreements and are available to the
 company in perpetuity. The depreciable amount of intangible assets is
 arrived at based on the management’s best estimates of useful lives of
 such assets after due consideration as regards their expected usage,
 the product life cycles, technical and technological obsolescence,
 market demand for products, competition and their expected future
 benefits to the company.
 
 5 The Company has invested USD 25.0 Million [Rs. 1,271.3
 Million)(Previous Year Rs. 995.5 Million] in Credit Linked Notes(CLN)
 of Deutsche Bank Ag, London. The maturity value of the said notes is
 dependent on the performance of a reference entity and inter-alia on
 happening of certain credit events as defined in CLN term sheet. In
 view of the fact that the said investment is Long Term and that no
 credit event has arisen as at the balance sheet date, diminution in
 value of investment is not considered necessary.
 
 6 During the year, in terms of approval by the shareholders of the
 Company in the Annual General Meeting, the authorised share capital of
 Rs.1,500.0 Million was reclassified to 300,000,000 Equity Shares of
 Rs.5 each.
 
 7 Alkaloida Chemical Company Exclusive Group Limited (Alkaloida), a
 subsidiary of the company has made a strategic investment in Taro
 Pharmaceutical Industries Limited (Taro) a pharmaceutical company based
 in Israel and holds 36.4% in the capital of Taro. On May 28, 2008
 Alkaloida received a notice from Taro regarding purported termination
 of the merger agreement between Taro and Aditya Acquisition Company
 Ltd, an Israeli incorporated subsidiary of Alkaloida.  On the same
 date, Taro and some of its directors had filed for a declaratory
 judgment in an Israeli court seeking Alkaloida/Sun Pharma to conduct a
 special tender offer which has been rejected by the Tel-Aviv District
 Court. The plaintiffs have appealed this decision in the Supreme Court
 of Israel which has temporarily prohibited closing of the Tender offer
 until it issues a decision on the appeal. Alkaloida does not foresee
 any adverse impact on its investment.
 
 8 As per the best estimate of the management, no provision is required
 to be made as per Accounting Standard (AS) 29 as notified by Companies
 (Accounting Standards) Rules, 2006, in respect of any present
 obligation as a result of a past event that could lead to a probable
 outflow of resources, which would be required to settle the obligation.
 
 9 The company enters into Forward Exchange Contracts being derivative
 instruments, which are not intended for trading or speculative
 purposes, but for hedge purposes, to establish the amount of reporting
 currency required or available at the settlement date.
 
 10 Previous years’ figures are restated / regrouped / rearranged
 wherever necessary in order to confirm to current years’ groupings and
 classifications.
 
 ANNEXURE TO NOTES ON ACCOUNT
 
 ACCOUNTING STANDARD (AS-18) RELATED PARTY DISCLOSURE”
 
 Note :
 
 Names of related parties and description of relationship
 
 1.  Subsidiaries Sun Pharma Global Inc. BVI.
 
 Sun Pharma Global - FZE
 
 Sun Pharmaceutical (Bangladesh) Ltd.
 
 Sun Pharma De Mexico S.A. DE C.V.
 
 SPIL De Mexico S.A. DE C.V.
 
 Sun Pharmaceutical Peru S.A.C.
 
 Sun Farmaceutica Ltda - Brazil
 
 Sun Pharmaceutical Industries Inc , USA
 
 Caraco Pharmaceutical Laboratories Ltd - U.S.A
 
 Sun Pharmaceuticals UK Ltd
 
 ALKALOIDA Chemical Company exclusive group Limited
 
 Chattem Chemical Inc.
 
 Zao Sun Pharma Industries Ltd. Russia
 
 Sun Pharmaceutical Ind (Australia) PTY Ltds
 
 Aditya Acquisition Company Ltd - Israel
 
 Sun Development Corporation I
 
 Sun Pharmaceutical Ind. Europe BV
 
 Sun Pharmaceutical Industries Ltd.
 
 Sun Pharmaceuticals France
 
 Sun Pharmaceuticals Germany GmbH
 
 Sun Pharmaceuticals Italia S.R.L.
 
 Sun Pharmaceutical Spain, SL.
 
 Sun Pharmaceuticals (SA) (Pty) Ltd-South Africa
 
 2.  Controlled Entity Sun Pharma Exports
 
 Sun Pharmaceutical Industries 
 
 Sun Pharma Sikkim Universal EnterprisePvt. Ltd.
 
 3.  Key Management Personnel Mr Dilip S Shanghvi
 
 Mr Sudhir V. Valia
 
 Mr Sailesh T. Desai
 
 4.  Relatives of Key Management Personnel Mrs Vibha Shanghvi Wife of
 Chairman and Managing Director
 
 Mrs Kumud Shanghvi Mother of Chairman and Managing Director
 
 Mrs Meera Desai Wife of Wholetime Director
 
 Mr Alok Shanghvi Son of Chairman and Managing Director
 
 Ms Khyati Valia Daughter of Wholetime Director
 
 5.  Enterprise under significant Influence of Key Sun Petrochemical Pvt
 . Ltd.
 Management Personnel or their relatives Sun Speciality Chemicals Pvt.
 Ltd.
 
 Navjivan Rasayan (Gujarat) Pvt. Ltd.
 
 Sun Pharma Advanced Research Company Ltd.
 
 Shantilal Shanghvi Foundation