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Piramal Enterprises Ltd.

BSE: 500302 | NSE: PEL |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE140A01024 | SECTOR: Pharmaceuticals

BSE Live

Jun 01, 13:35
1079.10 108.70 (11.20%)
Volume
AVERAGE VOLUME
5-Day
71,419
10-Day
85,190
30-Day
99,938
116,076
  • Prev. Close

    970.40

  • Open Price

    981.00

  • Bid Price (Qty.)

    1078.75 (89)

  • Offer Price (Qty.)

    1079.65 (27)

NSE Live

Jun 01, 13:35
1079.00 111.30 (11.50%)
Volume
AVERAGE VOLUME
5-Day
2,032,402
10-Day
1,973,061
30-Day
2,342,256
2,433,777
  • Prev. Close

    967.70

  • Open Price

    988.70

  • Bid Price (Qty.)

    1079.00 (384)

  • Offer Price (Qty.)

    1079.75 (76)

Annual Report

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Director’s Report

Dear Shareholders, We take pleasure in presenting the 60th Annual Report and Audited Accounts for the Year ended 31st March 2007. PERFORMANCE HIGHLIGHTS: (Standalone) Rs.million Year ended 31 March 2007 2006 %Growth Total operating income 16,379.0 14,182.1 15.5 OPBIDTA 3,018.6 2,275.3 32.7 % margin 18.4 16.0 - Non-operating other income 19.8 312.3 (93.7) EBIDTA 3,038.4 2,587.6 17.4 Less: Interest (Net) 109.0 135.2 (19.4) Depreciation 705.0 577.2 22.1 Profit before tax and Exceptional items 2,224.4 1,875.2 18.6 Less: Extraordinary itemsincluding restructuring cost 32.7 - Less: Income tax provision 341.6 139.0 145.8 Current 265.5 125.9 - Dferred 166.0 120.2 - MAT Credit Entitlement (111.6) (131.9) - Fringe Benefits Tax 21.7 24.8 - Profit after tax 1,882.8 1,703.5 10.5 % margin 11.5 12.1 - Add: Profit brought forward from previous year 3,039.3 2,161.7 - Profit available for appropriation 4,922.1 3,865.2 - Appropriations: Interim Dividend Paid Preference Shares (On redemption) 3.7 - - Equity Shares 627.1 - - Preference Shares 19.2 - - Distribution Tax thereon 91,2 - - Proposed Dividend Equity Shares 104.5 627.1 - Preference Shares - 28.2 - Distribution Tax thereon 17.8 91.9 - Transfer to General Reserve 700.0 170.4 - Transfer from Debenture Redemption Reserve - (91.7) - Transfer to Capital Redemption Reserve 150,0 - Balance carried to balance sheet 3,208.6 3,039.3 - Earnings per share (Basic/Diluted) (Rs.) 8,9 8.2 - DIVIDEND Preference Shares: The following interim dividends which were paid during the financial year ended 31st March 2007 are confirmed as final dividend: 1. on 15,00,000 - 6% Non Cumulative Redeemable Preference Shares of Rs.100 each (since redeemed), @6% for the period 1st April 2006 to 31st August 2006, being the date of redemption of these Preference Shares; 2. on 15,00,000 - 5% Cumulative Redeemable Preference Shares of Rs.100 each, @ 5% for the year ended 31st March, 2007; 3. on 2,33,72,280 - 5% Cumulative Redeemable Preference Shares of Rs.l0/ each, @5% for the year ended 31st March, 2007. Equity Shares: The Board has recommended final Equity Dividend at 25% (i.e. Rs.0.50 per share) on 20,90,17,606 equity shares of Rs.2 each, which will be paid to eligible members on 15th June, 2007, after approval by the shareholders at the forthcoming Annual General Meeting. This is in addition to the interim equity dividend at 150% (i.e. Rs.3 per equity share of Rs.2 each) which was declared and paid during FY2007. Thus the total Equity Dividend for FY2007 works out to 175% (i.e. Rs.3.50 per share). The total cash outflow on account of equity dividend and preference dividend payments, including distribution tax, will be Rs.863.5 million. (FY2006 Rs.747.2 million) The Board recommends the above dividends for declaration / confirmation by the members. OPERATIONS REVIEW: Net Sales for the year grew 15.5% to Rs. 16.4 billion compared with Rs. 14.2 billion for the year ended 31 st March 2006. Operating Profit (OPBIDTA) grew 32.7% to Rs. 3.0 billion. Profit After Tax grew by 10.5% to Rs. 1.9 billion compared to Rs. 1.7 billion for the previous year. Earnings per share for the year was Rs. 8.9 per share vs. Rs. 8.2 per share in FY2006. A detailed discussion of operations for the year ended 31st March 2007 is given in the Management Discussion and Analysis section. RESEARCH & DEVELOPMENT: Our lead molecule P276-00 that was in clinical trials in Canada has now begun simultaneous clinical trials in India as well. Two more phyto- pharmaceutical molecules Sphira and Hespiderm have moved to Phase-II and are currently undergoing clinical trials in India. During the year, we signed an agreement with Eli Lilly and Company, wherein Eli Lilly has licensed to us, a novel, patented, pre-clinical drug candidate in a metabolic disorders segment for development. We will design and execute the global clinical development program of this optimized lead to take it upto beginning of Phase III. We would potentially receive milestone payments upon successful completion of Phase I and II by us and upon registration and launch by Eli Lilly. If the molecule is successfully launched we will also get the commercialization rights in select markets and royalties on global sales. Total R& D expenditure during the year was Rs.l,074.0 million, including capital expenditure of Rs. 195.1 million. The corresponding previous year spends were Rs. 911.5 million and Rs. 272.2 million respectively. During the year, research and development staff increased to 387 from 350 in FY2006. SUBSIDIARY COMPANIES: Pathlabs: We continued to build our Pathlabs business by acquiring new laboratories and building greenfield facilities. During FY2007 we acquired 6 new laboratories and we also acquired the remaining 40% stake in our joint venture NPIL - Dr Phadke Pathalogy Laboratory & Infertility Center Pvt. Ltd. in Mumbai. During the year, we entered high-end health imaging services by acquiring Jhankaria Imaging, a leading radiology and imaging center in Mumbai. We also entered in to a 50% joint venture with Doctors Diagnostic & Research Centre (DDRC) during the year. DDRC is the largest diagnostics network in Kerala with 34 labs across the state. The new venture will have under its wing some of the most advanced diagnostic analysis available. The Total Operating Income for Pathlabs grew by 54.5% from Rs. 449.7 million in FY2006 to Rs. 695.0 million. Operating Profit for the year was up by 14.4% to Rs. 118.2 million. However, acquisition of new labs and setting up greenfield facilities have resulted in higher interest costs and depreciation. Npil Pharmaceutlcals (UK) Ltd.: During the year, we continued to expand our global footprint in the custom manufacturing business and acquired Pfizers manufacturing facility at Morpeth which came with a supply arrangement till November 2011. As a result, the net sales for FY2007 for NPIL Pharmaceuticals (UK) Ltd. was Rs. 6.3 billion as against Rs. 748.0 million for FY2006, Operating profit for the year was Rs. 707.9 million as compared to an operating loss of Rs. 254.0 million and PAT for the year was Rs. 515.0 million as compared to net loss of Rs. 281.7 million for FY2006. The financial however are strictly not comparable on a like-to-like basis as we did not have revenues from Morpeth facility in FY2006, and the revenues from the erstwhile Avecia operation had come only for four months, in FY2006. We were able to achieve the turnaround of erstwhile Avecia operations during the year. This was achieved because of the following reasons: 1. Significantly higher capacity utilization 2. More efficient procurement of raw materials by Avecias integration with Indian assets; and 3. Rationalization of fixed costs Tor can Chemical Limited: Net Sales for FY2007 for Tor can was Rs. 1.1 billion as compared to Rs. 311.8 million for FY2006, Operating Profit for the year was Rs. 106.1 million as compared to Rs. 7.0 million for FY2006, and PAT was Rs. 65.5 million as compared to a net loss of Rs. 18.7 million tor FY2006. Note: The Central Government has granted exemption under section 212(8) of the Companies Act 1956, from attaching to the Balance Sheet of the Company, the Accounts and other documents of its subsidiaries. However, the Consolidated Financial Statements of the Company, which include the results of the said subsidiaries, are included in this Annual Report. Further, a statement containing the particulars prescribed under the terms of the said exemption for each of the Companys subsidiaries is also enclosed. Copies of the audited annual accounts of the Companys subsidiaries, can also be sought by any investor of the Company or its subsidiaries on making a written request to the Company Secretary at the registered office of the Company in this regard. The Annual Accounts of the subsidiary companies are also available for inspection tor any investor at the Companys and/ or the concerned subsidiaries registered office. JOINT VENTURES: Allergan India Limited (ail) AIL is a 51:49 Joint Venture between Allergan Inc., USA and Nicholas Piramal. On 17 July 2005, AIL sold its Medical Optics business in India to Advanced Medical Optics, Inc. USA, (AMO) for a consideration of Rs. 436.2 million. Sales from this business segment were Rs. 69.3 million in FY2006. As a result during FY2007, the Net Sales of AIL degrew at 1.9% to Rs.767.7 million (FY2006 Net Sales: Rs. 782.3 million) PBIDT for FY2007 was Rs. 104.6 million, compared with FY2006 Rs. 448.8 million, a degrowth of 76.7% mainly because there was a one time income of Rs.311.2 million in FY2006 due to income on sale of discontinued operations. Profit after tax for FY2007 was Rs. 43.9 million, compared with FY2006 value of Rs.310.5 million, a degrowth of 85.8%. Nicholas Piramal Consumer Products Pvt. Ltd (NPCPPL:) (formerly Boots Piramal Healthcare Pvt. Ltd. (BPHPL)) On September 29, 2006, NPIL acquired the balance 51% equity stake held by The Boots Company PLC, a subsidiary of Alliance Boots pic, in the Joint Venture Company, Boots Piramal Healthcare Private Limited. BPHPLs marketing rights in the brands Strepsils, Clearasil and Sweetex in India were transferred to Reckitt Benckisser India Limited (RBI). Further as a part of this arrangement, NPIL has received a one-time sum of Rs. 178.0 million from Alliance Boots/Reckit Benckisser. BPHPL has become a wholly owned subsidiary of the company and has been renamed as Nicholas Piramal Consumer Products Pvt. Ltd. (NPCPPL). NPCPPL will continue to actively market and distribute its own Over The Counter (OTC) products viz. Saridon, Polychrol and Lacto Calamine. In addition, NPCPPL also plans to launch OTC brands in new therapy areas as well as transition some of NPILs Rx brands to OTC by leveraging its sales and marketing team. Net Sales for NPCPPL for FY2007 was Rs. 506.1 million, PBIDT was Rs. 34.4 million and PAT was Rs. 26.7 million. INDUSTRY OUTLOOK: Backed by a strong growth in GDP, the Indian Pharmaceutical industry has experienced a strong growth rate of 14.3% (ORG IMS MAT March 2007). An important contributor to industry growth in FY2007 was the unfortunate spread of epidemics such as Dengue and Chickungunya, which led to a sharp increase in sales of antibiotics and painkillers during the first half of the year. A redeeming feature of growth during the year was volumes contributing to bulk of the 14.3% growth. On the new products front, there has been a fair amount of innovation by Indian companies in the area of combination therapy. The Global Custom Manufacturing market has also shown good growth as large pharmaceutical companies face rising cost-pressures and patent expiry of block-buster drugs and are forced to look at improving manufacturing efficiencies. The market is still in consolidation mode and this year saw a number of mergers/acquisitions transactions. INTERNAL CONTROL SYSTEM: The Audit Committee of the Board addresses significant issues raised by the Internal Auditors and the Statutory Auditors. HUMAN RESOURCES: We had staff strength of 6,812 employees (FY2006: 6,550 employees) as at 31 March 2007. Function FY2007 FY2006 +/(-) Total Manpower 6,812 6,550 262 (a) Field staff 3,221 3,208 13 (b) R&D staff 387 350 37 (c) Others 3,204 2,992 212 Any shareholder interested in obtaining a copy of the statement of particulars of employees referred to in section 217(2A) of the Companies Act 1956, may write to the Company Secretary at the Registered Office of the Company. Stock Options disclosures pursuant to the applicable requirements of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are given in the Annexure to this Report. DIRECTORS RESPONSIBILITY STATEMENT: As required under section 217(2AA) of the Companies Act, 1956 we hereby state: a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; b) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2007 and its profits for the year ended on that date; c) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) that the Directors have prepared the annual accounts on a going concern basis. DIRECTORS: Mr. R.A. Shah and Mr. N. Vaghul retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment, which the Board recommends. CORPORATE GOVERNANCE: The Company has complied with the applicable provisions of Corporate Governance under clause 49 of the Listing Agreement with the Stock Exchanges. A separate report on Corporate Governance compliance is included as a part of the Annual Report alongwith the Certificate from Mr. N.L. Bhatia, Practicing Company Secretary. In compliance with the Corporate Governance requirements, the Company has implemented a Code of Conduct for all its Board members, who have affirmed compliance thereto. A Code of Conduct has also been formulated and implemented for the senior management of the Company. The said Codes of Conduct have been posted on the Companys website. FIXED DEPOSIT: We have discontinued accepting / renewing fixed deposits. Unclaimed Fixed Deposits from the public /shareholders as on 31st March 2007 amounted to Rs. 199,000 (FY2006: Rs.254,000) CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION: Particulars required under Section 217(1) (e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in the annexure to this Report. AUDITORS: Shareholders are requested to appoint the Auditors to the Company. Messrs. Price Waterhouse, Mumhai retire as Auditors of the Company at the ensuing Annual General Meeting and are eligihle for reappointment. ACKNOWLEDGEMENTS: We take this opportunity to thank the employees for their dedicated service and contribution to the Company. Our sincere appreciation is also due to the medical profession and distributors for the patronage of our products. We also thank our strategic alliance and joint venture partners, banks, financial institutions and other business associates for their continued support towards conduct of efficient operations of the Company. By Order of the Board Ajay G. Piramal Chairman Mumbai: 26 April 2007

Director’s Report