We take pleasure in presenting the 61st Annual Report and Audited
Accounts for the Year ended 31st March 2008.
At the outset, we are pleased to inform you that pursuant to your
approval by Special Resolution which was passed through Postal Ballot
and the Fresh Certificate of Incorporation consequent upon Change of
Name issued by the Registrar of Companies, Maharashtra, the name of
the Company has been changed from Nicholas Piramal India Limited to
Piramal Healthcare Limited (PHL).
PERFORMANCE HIGHLIGHTS: (Standalone) (Rs. in Million)
Year ended March 31 2008 2007 %Growth
Total operating income 19,300.2 16,379.0 17.8
OPBIDTA 4,124.9 3,018.6 36.6
% margin 21.4 18.4
Non-operating other income 80.5 19.8 306.6
EBIDTA 4,205.4 3,038.4 38.4
Interest (Net) 173.0 109.0 58.7
Depreciation 704.8 705.0 (0.0)
Profit before tax and Exceptional items 3,327.6 2,224.4 49.6
Income tax provision 312.8 341.6 (8.4)
- Current 400.3 265.5
- Deferred 52.7 166.0
- MAT Credit Entitlement (170.2) (111.6)
- Fringe Benefits Tax 30.0 21.7
Profit after tax 3,014.8 1,882.8 60.1
% margin 15.6 11.5
Profit brought forward from previous year 3,208.6 3,039.3
Profit available for appropriation 6,223.4 4,922.1
Interim Dividend Paid
- Preference Share (On Redemption) 13.4 3.7
- Equity Shares -- 627.1
- Preference Shares -- 19.2
- Dividend Distribution Tax thereon 2.3 91.2
- Equity Shares 877.9 104.5
- Dividend Distribution Tax thereon 149.2 17.8
Transfer to General Reserve 1,626.7 700.0
Transfer to Capital Redemption Reserve 345.3 150.0
Balance carried to Balance Sheet 3,208.6 3,208.6
Earnings per share (Basic / Diluted) (Rs.) 14.3 8.9
The Company had on 9th January, 2008 redeemed the following Preference
Shares alongwith pro-rata dividend @5% from 1st April 2007 upto i 9th
January 2008, being the date of redemption, which is confirmed as final
a) 15,00,000 - 5% Cumulative Redeemable Preference Shares of Rs.100
each (Series I Preference Shares).
b) 2,33,72,280 - 5% Cumulative Redeemable Preference Shares of Rs.10
each (Series II Preference Shares).
The Board has recommended final Equity Dividend at 210% (i.e. Rs. 4.20
per share) on 20,90,13,144 equity shares of Rs.2A each, which will be
paid to eligible members on June 27, 2008, after approval by the
shareholders at the forthcoming Annual General Meeting.
The total cash outflow on account of equity dividend & preference
dividend payments, including distribution tax, will be Rs. 1,042.8
million. (FY2007 Rs.863.5 million)
The Board recommends the above dividends for declaration/confirmation
by the members.
De-Merger of New Chemical Entity (NCE) Research Unit:
During the year, the Companys NCE Research Unit was demerged to
Piramal Life Sciences Limited (TLSL) [formerly known as NPIL Research
and Development Limited] under a Composite Scheme of Arrangement
(Demerger Scheme) duly sanctioned by the Honble Bombay High Court.
The Appointed Date under the Demerger Scheme was 1st April, 2007 and
the Effective Date was 21st January, 2008.
Members of the Company have been issued and allotted on 25th February,
2008, one PLSL share of Rs.10 for every 10 equity shares of Rs.2/- each
held in the Company as on 22nd February, 2008, which was the Record
Date. The shares of PLSL are in the process of being listed on the
Exchanges where the Company is listed i.e. BSE and NSE.
Merger of Diagnostic Services (Pathlabs) subsidiaries
During the year, all the pathlabs operations were consolidated in one
subsidiary, viz. NPIL Laboratories and Diagnostics Pvt. Ltd., which
name has now been changed to Piramal Diagnostic Services Private
Limited (PDSL). Accordingly, NPIL Dr. Phadke Pathology Laboratory and
Infertility Center Pvt Ltd (wholly-owned subsidiary of the Company) and
Rana Diagnostics Pvt Ltd (which was acquired by PDSL during FY08 and
was its wholly- owned subsidiary) merged with PDSL under a Scheme of
Arrangement and Amalgamation sanctioned by the Honable Bombay High
Merger of NPCPPL and NPIL Healthcare:
During the year, the Companys wholly-owned subsidiaries, Nicholas
Piramal Consumer Products Private Limited (NPCPPL) and NPIL Healthcare
Private Limited (NHPL) merged with the Company under a Scheme of
Amalgamation sanctioned by the Honable Bombay High Court with effect
from 1st April, 2007 which was the Appointed Date under the Scheme.
They being wholly owned subsidiaries, no new shares have been issued by
the Company pursuant to the Scheme.
Total Operating income for the year grew 17.8% to Rs 19.3 billion
compared with Rs. 16.4 billion for the year ended 31 March 2007.
Operating Profit (OPBIDTA) grew 36.6% to Rs.4.1 billion.
Profit After Tax grew by 60.1% to Rs. 3.0 billion compared to Rs. 1.9
billion for the previous year. Earnings per share for the year was Rs.
14.3 per share vs. Rs. 8.9 in FY2007.
A detailed discussion of operations for the year ended 31st March 2008
is given in the Management Discussion and Analysis section.
RESEARCH & DEVELOPMENT:
With the de-merger of the Companys New Chemical Entity (NCE) R&D
division, the Company has discontinued all its activities relating to
NCE R&D. The Company however, continues to conduct Research and
Development related to:
- Development of conventional and novel dosage forms for drug products
across all the major therapeutic areas for the domestic market;
- Preformulation and formulation development and clinical manufacturing
of NCEs for external clients;Process optimisation / research and scale
up, for the early phase projects from clients;
- Development of cost effective and environmentally friendly process
for commercial manufacturing of active pharmaceutical ingredients
(APIs) 6k / or their intermediates.
As a result, Total R&D expenditure during the year has come down
significantly during the year. It was Rs. 352.8 million, including
capital expenditure of Rs. 76.9 million. The corresponding previous
year spends were Rs. 1,074.0 million and Rs. 195.1 million
respectively. The research and development staff has also accordingly
reduced to 131 people in FY2008 from 386 in FY2007.
Piramal Diagnostic Services Private Limited (PDSL):
We are aggressively building up this business. During the year we
acquired 16 new laboratories and completed a three-way merger between
Rana Diagnostics, Dr. Phadkes Laboratories and PDSL. PDSL also
received during the year the prestigious certification from College of
American Pathologists (CAP). The company can now take on pathology work
related to Clinical Research Organisations.
The Total Operating Income for Pathlabs grew by 71.8% from Rs. 695.0
million in FY2007 to Rs. 1.2 billion in FY2008. Operating Profit for
the year was up by 112.5% to Rs 251.2 million from Rs. 118.2 million in
FY2007. Acquisition of new labs and setting up Greenfield facilities
have resulted in higher interest costs and depreciation.
NPIL Pharmaceuticals (UK) Ltd.:
Starting from this year, we have increased our focus on improving
profitability in this business. The net sales for FY2008 for NPIL
Pharmaceuticals (UK) Ltd. grew by 14.3% to Rs. 7.2 billion as against
Rs. 6.3 billion for FY07. Operating profit for the year was up by 23.8%
to Rs. 876.3 million as compared to an operating profit of Rs. 707.9
million in FY07. We have incurred one-time exceptional charge of Rs.
341.8 million during the year. As a result, PAT for the year was lower
at 365.2 million, as compared to Rs. 515.0 million FY07.
Torcan Chemical Limited:
Adverse movement of Canadian Dollar against the US Dollar has
significantly affected Torcans performance this year. Canadian Dollar
had appreciated by 11% during the year. As a result, Net Sales for FY08
for Torcan was lower at Rs. 917 million as compared to Rs. 1.1 billion
for FY07, Operating loss for the year was Rs. 9.2 million as compared
to the operating profit of Rs. 106.1 million for FY07 and Net Loss for
the year was Rs.68.2 million as compared to Net Profit of Rs. 65.2
million for FY07. We are now utilizing our Ennore facilities to
complement Torcans offerings and to make it more competitive.
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
for any investor at the Companys and/or concerned subsidiaries
Allergan India Limited (AIL)
AIL is a 51:49 Joint Venture between Allergan Inc., USA and Piramal
Healthcare Limited. Net Sales of AIL grew by 19.0% to Rs. 913.3 million
(FY2007 Net Sales; 767.1 million) PBIDT for FY2008 was up by 102% to
Rs.211.7 million as compared to Rs.104.6 million in FY2007. Profit
after tax for FY2008 was up by 150.0% to Rs. 109.8 million as compared
to Rs. 43.9 million for FY2007.
The domestic pharmaceutical market continued to grow well as a result
of rising income levels. As per ORG-IMS MAT March, the growth for the
year was 14.8%. Chronic therapies continue to grow faster than acute.
The year has seen players making investment in field-force to tap the
rural markets. No major price increases were seen during the year,
instead the focus has been on penetrating the markets.
The Global Custom Manufacturing market continued to show good growth.
Increased acceptance of Indian companies as manufacturing partners has
resulted in higher growth. Larger pharmaceutical companies are now
increasingly looking at outsourcing their manufacturing operations;
faced by rising cost-pressures and patent expiry of blockbuster drugs.
The year also marked the entrance of some Indian companies in the
custom manufacturing business. However, custom manufacturing market is
large and growing. The lead-times are also longer in this business
which create a significant entry barrier.
INTERNAL CONTROL SYSTEM:
The Company has a sound internal control system, which ensures that all
assets are protected against loss from unauthorized use and all
transactions are recorded and reported correctly. The internal control
systems are further supplemented by internal audit carried out by an
independent firm of Chartered Accountants and periodical review by
management. The Audit Committee of the Board addresses significant
issues raised by both, the Internal Auditors and the Statutory
HUMAN RESOURCES MANAGEMENT:
Employees are vital to our Company. We have created a favorable work
environment that encourages innovation and meritocracy. We had staff
strength of 7,061 employees (31 March 2007: 6,745 employees) as at 31
Function March 200 8 31 March 2007 +/(-)
Total Manpower 7,061 6,745 316
(a) Field staff 3,789 3,154 635
(b) R&D staff 131 387 -256*
(c) Others 3,141 3,204 -63
*Reduction is on account of transfer to Piramal Life Sciences Limited
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.
CORPORATE SOCIAL RESPONSIBILITY:
In the Piramal Group, we believe we exist to care for the world we
share and serve. We aim to offer sustainable support to populations in
need through programmes in disease prevention, education, development,
hygiene and access to healthcare. As a Group, our Corporate Social
Responsibility initiatives, channelled through the Piramal Foundation,
are focused on the search for solutions to the most pressing challenges
In partnership with Indicorps, the Piramal Foundation has established a
Grassroots Development Laboratory (GDL) in the village of Bagar,
Rajasthan. Talented young change makers from around the world are
empowered to implement scaleable and sustainable innovations in
healthcare, education, livelihood, technology utilization, rural
enterprise and community development - some of Indias toughest
development challenges. This has resulted in the establishment of the
Bagar Employment Institute, the Bagar Employment Exchange, an
award-winning women-staffed rural BPO and an entrepreneurial,
sustainable pilot programme for affordable, purified drinking water in
rural areas. The Indian School of Education implements programmes such
as a principals training programme in Rajasthan, and the Gandhi
Fellowship, which will place highly talented new graduates in roles
that assist government schools in effecting educational improvement in
The Piramal Prize for Innovations that Democratize Healthcare is a
competitive initiative in partnership with the Indian Institute of
Management, Ahmedabad, that encourages innovators to explore and
implement breakthrough ideas. It will incubate sustainable, scaleable
business models that will make the highest standards of health
accessible to Indias rural and marginalized urban communities.
The Pratham India Education Initiative, seeded by UNICEF and the Mumbai
Municipal Corporation, was initiated in 1994 to spread primary
education. The societal mission, Every child in school and learning,
and its replication in other parts of the country has attracted diverse
supporters and volunteers.
The Gopikrishna Piramal Memorial Hospital, built in 1982, focuses on
serving handicapped children and those with chronic conditions, such as
arthritis or kidney disease. This facility also conducts ophthalmology
and pediatrics camps in slum areas. The Dialysis Training Institute,
where dialysis technicians are certified and trained, has received
major acclaim from the government.
Give India is a non-profit organization dedicated to help the public
contribute to causes of their choice. Through the Piramal Groups
association with Give India, our employees are provided the opportunity
to donate part of their monthly salary to abet and champion one of the
diverse social causes espoused and listed by the NGO. The Piramal Group
then matches this contribution.
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 31 March 2008 and its profit 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. Y.H. Malegam and Mr. Deepak Satwalekar retire by rotation at the
ensuing Annual General Meeting and are eligible for re-appointment,
which the Board recommends.
The following changes in the Board of Directors took place during FY08:
* Mr. Rajesh Khanna - Director and Mr. Michael J. Fernandes - Executive
Director (CMG) ceased to be Directors of the Company. Your Board places
on record its appreciation of the contributions made by these Directors
during their tenure with the Company;
* Mr. N. Santhanam - Group President Finance & Legal and Chief
Financial Officer was elevated to the Board and appointed as Executive
Director & CFO for a period of 3 years w.e.f.25th October 2007;
Dr. Swati A. Piramal was re-appointed as Director - Strategic Alliances
& Communications during the year, for a further period of five years
w.e.f.20th November 2007.
The re-appointment / appointment of Dr. Swati A. Piramal and Mr. N.
Santhanam were approved by members at the Extra Ordinary General
Meeting held on 23rd November 2007.
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 had discontinued accepting / renewing fixed deposits. Unclaimed
Fixed Deposits from the public / shareholders as on 31st March 2008
amounted toRs. 175,000 (FY2007: Rs.199,000)
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. Messrs. Price
Waterhouse, Mumbai retire as Auditors of the Company at the ensuing
Annual General Meeting and are eligible 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, business associates and our shareholders for
their continued support towards conduct of efficient operations of the
By Order of the Board
Ajay G. Piramal
16 May 2008