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
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
Extraordinary itemsincluding restructuring cost 32.7 -
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 -
Profit brought forward from previous year 3,039.3 2,161.7 -
Profit available for appropriation 4,922.1 3,865.2 -
Interim Dividend Paid
Preference Shares (On redemption) 3.7 - -
Equity Shares 627.1 - -
Preference Shares 19.2 - -
Distribution Tax thereon 91,2 - -
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.
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
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.
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
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
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.
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
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.
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.
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
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
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
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.
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.
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.
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
By Order of the Board
Ajay G. Piramal
Mumbai: 26 April 2007