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A Oneindia Venture

Nifty 25,966.40 +0.58%

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Sensex 84,929.36 +0.53%

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Sensex 84,929.36 +0.53%

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Notes to Accounts of Aurobindo Pharma Ltd.

Mar 31, 2025

m. Provisions contingent liabilities and contingent
assets

Provisions are recognised when the Company has
a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow
of resources embodying economic benefits will
be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
When the Company expects some or all of a provision
to be reimbursed, for example, under an insurance
contract, the reimbursement is recognised as a
separate asset, but only when the reimbursement is
virtually certain. The expense relating to a provision
is presented in the statement of profit and loss net of
any reimbursement.

If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate

that reflects, when appropriate, the risks specific to
the liability. When discounting is used, the increase in
the provision due to the passage of time is recognised
as a finance cost.

Onerous contracts

A contract is considered to be onerous when the
expected economic benefits to be derived by the
Company from the contract are lower than the
unavoidable cost of meeting its obligations under
the contract. The provision for an onerous contract
is measured at the present value of the lower of the
expected cost of terminating the contract and the
expected net cost of continuing with the contract.
Before such a provision is made, the Company
recognises any impairment loss on the assets
associated with that contract.

Contingent liabilities

Provision in respect of loss contingencies relating to
claims, litigations, assessments, fines and penalties
are recognised when it is probable that a liability
has been incurred and the amount can be estimated
reliably. Contingent liabilities are recognised when
there is a possible obligation arising from past
events, the existence of which will be confirmed only
by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control
of the Company or a present obligation that arises
from past events where it is either not probable that
an outflow of resources will be required to settle the
obligation or a reliable estimate of the amount cannot
be made.

n. Cash and cash equivalents

Cash and cash equivalents in the balance sheet
comprises of cheques, cash at banks and on hand and
short-term deposits with an original maturity of three
months or less, which are subject to an insignificant
risk of changes in value. For the purpose of the
statement of cash flows, cash and cash equivalents
consist of cash and short-term deposits, as defined
above, net of outstanding bank overdrafts as they
are considered an integral part of the Company''s
cash Management.

o. Borrowing cost

Borrowing costs consist of interest and other
costs that an entity incurs in connection with the
borrowing of funds. Borrowing cost also includes

exchange differences to the extent regarded as an
adjustment to the borrowing costs. Borrowing costs
directly attributable to the acquisition, construction
or production of an asset that necessarily takes a
substantial period of time to get ready for its intended
use or sale are capitalised as part of cost of the asset.
All other borrowing costs are expensed in the period
in which they occur.

p. Impairment of non-financial assets

The Company assesses, at each reporting date,
whether there is an indication of impairment. If any
indication exists, or when annual impairment testing
for an asset is required, the Company estimates the
asset''s recoverable amount. An asset''s recoverable
amount is the higher of an asset''s or cash-generating
unit''s (CGU) fair value less costs of disposal and its
value in use. Recoverable amount is determined
for an individual asset, unless the asset does not
generate cash inflows that are largely independent
of those from other assets or groups of assets. When
the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired
and is written down to its recoverable amount.

In assessing value in use, the estimated future cash
flows are discounted to their present value using
a pre-tax discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset. In determining fair value
less costs of disposal, recent market transactions are
taken into account. If no such transactions can be
identified, an appropriate valuation model is used.
These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded
companies or other available fair value indicators.

The Company bases its impairment calculation on
detailed budgets and forecast calculations, which are
prepared separately for each of the Company''s CGUs
to which the individual assets are allocated. These
budgets and forecast calculations generally cover a
period of five years. Impairment losses of continuing
operations, are recognised in the statement of profit
and loss.

amount. A previously recognised impairment
loss is reversed only if there has been a change
in the assumptions used to determine the asset''s
recoverable amount since the last impairment loss
was recognised. The reversal is limited so that the
carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount
that would have been determined, net of depreciation,
had no impairment loss been recognised for the asset
in prior periods/ years. Such reversal is recognised
in the statement of profit and loss unless the asset
is carried at a revalued amount, in which case, the
reversal is treated as a revaluation increase.

Goodwill is tested for impairment annually and when
circumstances indicate that the carrying value may be
impaired. Impairment is determined for goodwill by
assessing the recoverable amount of each CGU (or
Group of CGUs) to which the goodwill relates. When
the recoverable amount of the CGU is less than its
carrying amount, an impairment loss is recognised.
Impairment losses relating to goodwill cannot be
reversed in future periods.

q. Financial instruments

A financial instrument is any contract that gives
rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.

Financial assets

Initial recognition and measurement

All financial assets are recognised initially at fair value
plus, in the case of financial assets not recorded at fair
value through profit or loss, transaction costs that are
attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require
delivery of assets within a time frame established by
regulation or convention in the market place (regular
way trades) are recognised on the trade date, i.e., the
date that the Company commits to purchase or sell
the asset.

Subsequent measurement

However, such election is allowed only if doing so
reduces or eliminates a measurement or recognition
inconsistency (referred to as ''accounting mismatch'').
The Company has not designated any debt instrument
at FVTPL. Debt instruments included within the FVTPL
category are measured at fair value with all changes
recognized in the statement of profit and loss.

Equity instruments:

All equity investments in subsidiaries are measured at
cost less impairment. All equity investments in scope
of Ind AS 109 - Financial Instruments are measured
at fair value. Equity investments which are held for
trading are classified as FVTPL. For all other equity
investments, the Company may make an irrevocable
election to present in OCI subsequent changes in
fair value. The Company makes such election on an
instrument by instrument basis. The classification is
made on initial recognition and is irrevocable.

If the Company decides to classify an equity
instrument at FVOCI, then all fair value changes on
the instrument, excluding dividends, are recognised
in OCI. There is no recycling of amounts from OCI
to statement of profit and loss, even on sale of
investment. However, the Company may transfer
the cumulative gain/loss within equity. Equity
instruments included within the FVTPL category are
measured at fair value with all changes recognised in
the statement of profit and loss.

Derecognition

A financial asset (or, where applicable, a part of a
financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e. removed from
the Company''s balance sheet) when:

i) the rights to receive cash flows from the asset
have expired, or

ii) the Company has transferred its rights to receive
cash flows from the asset, and the Company
has transferred substantially all the risks and
rewards of the asset, or the Company has
neither transferred nor retained substantially
all the risks and rewards of the asset, but has
transferred control of the asset.

Impairment of financial assets

In accordance with Ind AS 109- Financial instruments,
the Company applies expected credit loss (ECL) model

for measurement and recognition of impairment loss
on the following financial assets:

(i) Financial assets that are debt instruments, and
are measured at amortised cost, e.g. loans,
deposits, debt securities, etc.

(ii) Trade receivables that result from transactions
that are within the scope of Ind AS 115- Revenue
from contracts with customers.

The Company follows ''simplified approach'' for
recognition of impairment loss allowance for trade
receivables. The application of simplified approach
does not require the Company to track changes in
credit risk. Rather, it recognises impairment loss
allowance based on lifetime ECLs at each reporting
date, right from its initial recognition.

For recognition of impairment loss on other financial
assets and risk exposure, the Company determines
whether there has been a significant increase in the
credit risk since initial recognition. If credit risk has
not increased significantly, 12-month ECL is used to
provide for impairment loss. However, if credit risk
has increased significantly, lifetime ECL is used. If, in
a subsequent period, credit quality of the instrument
improves such that there is no longer a significant
increase in credit risk since initial recognition,
then the entity reverts to recognising impairment
loss allowance based on 12-month ECL (simplified
approach). Lifetime ECL are the expected credit
losses resulting from all possible default events
over the expected life of a financial instrument. The
12-month ECL is a portion of the lifetime ECL which
results from default events that are possible within
12 months after the reporting date.

ECL is the difference between all contractual cash
flows that are due to the Company in accordance
with the contract and all the cash flows that the
entity expects to receive (i.e., all cash shortfalls),
discounted at the original EIR (effective interest rate).
When estimating the cash flows, an entity is required
to consider:

(i) All contractual terms of the financial instrument
(including prepayment, extension, call and
similar options) over the expected life of the
financial instrument. However, in rare cases
when the expected life of the financial instrument
cannot be estimated reliably, then the entity is

required to use the remaining contractual term
of the financial instrument

(ii) Cash flows from the sale of collateral held or
other credit enhancements that are integral to
the contractual terms.

As a practical expedient, the Company uses a provision
matrix to determine impairment loss allowance on
portfolio of its trade receivables.The provision matrix
is based on its historically observed default rates
over the expected life of the trade receivables and
is adjusted for forward-looking estimates. At every
reporting date, the historical observed default rates
are updated and changes in the forward-looking
estimates are analysed.

ECL impairment loss allowance (or reversal)
recognized during the period is recognized as
income/ expense in the statement of profit and
loss. This amount is reflected under the head other
expenses/other income in the statement of profit
and loss. ECL is presented as an allowance, i.e., as
an integral part of the measurement of those assets
in the balance sheet. The allowance reduces the net
carrying amount. Until the asset meets write-off
criteria, the Company does not reduce impairment
allowance from the gross carrying amount.

For assessing increase in credit risk and impairment
loss, the Company combines financial instruments on
the basis of shared credit risk characteristics with the
objective of facilitating an analysis that is designed
to enable significant increases in credit risk to be
identified on a timely basis. The Company does not
have any purchased or originated credit-impaired
(POCI) financial assets, i.e., financial assets which are
credit impaired on purchase/ origination.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition,
as financial liabilities at fair value through profit
or loss, loans and borrowings, payables, or as
derivatives designated as hedging instruments in
an effective hedge, as appropriate. All financial
liabilities are recognised initially at fair value and,
in the case of loans and borrowings and payables,
net of directly attributable transaction costs. The
Company''s financial liabilities include trade and

other payables, loans and borrowings including
bank overdrafts, financial guarantee contracts and
derivative financial instruments.

Subsequent measurement

The measurement of financial liabilities depends on
their classification, as described below:

Financial liabilities at fair value through profit
or loss

Financial liabilities at fair value through profit or loss
include financial liabilities designated upon initial
recognition at fair value through profit or loss.

Financial liabilities designated upon initial
recognition at fair value through profit or loss are
designated as such at the initial date of recognition,
and only if the criteria in Ind AS 109 are satisfied.
For liabilities designated as FVTPL, fair value gains/
losses attributable to changes in own credit risk
are recognized in OCI. These gains/ loss are not
subsequently transferred to statement of profit
and loss. However, the Company may transfer the
cumulative gain or loss within equity. All other
changes in fair value of such liability are recognised
in the statement of profit and loss.

Derecognition

A financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the terms
of an existing liability are substantially modified,
such an exchange or modification is treated as
the derecognition of the original liability and the
recognition of a new liability. The difference in the
respective carrying amounts is recognised in the
statement of profit and loss.

Financial liabilities at amortised cost (Loans and
borrowings)

This is the category most relevant to the Company.
After initial recognition, interest-bearing loans
and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and
losses are recognised in profit or loss when the
liabilities are derecognised as well as through the EIR
amortisation process.

Amortised cost is calculated by taking into account
any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The
EIR amortisation is included as finance costs in the
statement of profit and loss.

Reclassification of financial assets

The Company determines classification of financial
assets and liabilities on initial recognition. After
initial recognition, no reclassification is made for
financial assets which are equity instruments and
financial liabilities. For financial assets which are
debt instruments, a reclassification is made only if
there is a change in the business model for managing
those assets. Changes to the business model are
expected to be infrequent. The Company''s senior
Management determines the change in the business
model as a result of external or internal changes
which are significant to the Company''s operations.
Such changes are evident to the external parties.
A change in the business model occurs when the
Company either begins or ceases to perform an
activity that is significant to its operations. If the
Company reclassifies financial assets, it applies the
reclassification prospectively from the reclassification
date which is the first day of the immediately next
reporting period following the change in business
model.The Company does not restate any previously
recognised gains, losses (including impairment gains
or losses) or interest.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and
the net amount is reported in the balance sheet if
there is a currently enforceable legal right to offset
the recognised amounts and there is an intention to
settle on a net basis, to realise the assets and settle
the liabilities simultaneously.

. Derivative financial instruments

The Company uses derivative financial instruments,
such as forward currency contracts to hedge its
foreign currency risks. Such derivative financial
instruments are initially recognised at fair value on
the date on which a derivative contract is entered into
and are subsequently re-measured at fair value.

Derivatives are carried as financial assets when the
fair value is positive and as financial liabilities when
the fair value is negative. The forward contracts that
meet the definition of a derivative under Ind AS 109
are recognised in the statement of profit and loss.
Any gains or losses arising from changes in the fair
value of derivatives are taken directly to profit or loss.

s. Dividend distribution to equity holders of the
Company

The Company recognises a liability to make dividend
distribution to equity holders when the distribution
is authorised and the distribution is no longer at the
discretion of the Company. As per the Corporate laws
in India, a final dividend distribution is authorised
when it is approved by the shareholders whereas
for interim dividend when authorised by board of
directors of the Company. A corresponding amount
is recognised directly in equity. Non cash distribution
are measured at fair value of the assets distributed
with fair value re-measurement recognised directly
in equity.

t. Discontinued Operations

operation meets the criteria to be classified as held for
sale. The Company considers the guidance in Ind AS
105 Non-Current assets held for sale and discontinued
operations to assess whether a divestment asset
would qualify the definition of ''component'' prior to
classification into discontinued operation

u. Ministry of Corporate Affairs ("MCA") notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards)
Rules as issued from time to time.

For the year ended March 31,2025, MCA has notified
Ind AS - 117 Insurance Contracts and amendments
to Ind AS 116 - Leases, relating to sale and leaseback
transactions, applicable to the Company w.e.f.
April 1, 2024. The Company has reviewed the new
pronouncements and based on its evaluation has
determined that it does not have any significant
impact in its financial statements

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired.
The recoverable amounts of the cash generating units (CGU) have been assessed using a value-in-use model. Value-
in-use is generally calculated as the net present value of the projected post-tax cash flows plus a terminal value of the
CGU to which the goodwill is allocated. Initially, a post-tax discount rate is applied to calculate the net present value of
the post-tax cash flows.

Key assumptions upon which the company has based its determinations of value-in-use include :

a) Estimated cash flows for five years, based on management''s projections.

b) A terminal value arrived at by extrapolating the last forecasted year cash flows to perpetuity, using a constant longÂ¬
term growth rate ranging from 0-2%.This long term growth rate takes into consideration external macroeconomic
sources of data. Such long-term growth rate considered does not exceed that of the relevant business and
industry sector.

c) The after tax discount rates used are based on the Company''s weighted average cost of capital.

d) The after tax discount rate used range from 15%-18% for various cash generating units.

The Company believes that any reasonably possible change in the key assumptions on which a recoverable amount
is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cashÂ¬
generating unit.

Note:

1. The Board of Directors of the Company at its meeting held on August 10, 2024 approved further investment in
GLS Pharma Limited through acquisition of 590,361 equity shares from the selling shareholders for an aggregate
consideration of '' 225 (constituting 49% of the equity share capital of GLS) following which GLS has become the
wholly owned subsidiary of the Company with effect from October 25, 2024.

2. Investment of ''4.1(March 31,2023 ''4.1) on account of fair valuation of corporate guarantee given by the Company
on behalf of Lyfius Pharma Private Limited, a wholly - owned subsidiary of Aurobindo Antibiotics Private Limited

3. Provision made during the year is pertains to investements in Tergene Biotech Private Limited

Provision for impairment

"Investments are tested for impairment annually and when circumstances indicate that the carrying value may be
impaired. Impairment is determined by assessing the recoverable amount of each investment. When the recoverable
amount of the investment is less than its carrying amount, an impairment loss is recognised.

The recoverable amounts of the above investments have been assessed using a value-in-use model. Value in use is
generally calculated as the net present value of the projected post-tax cash flows plus a terminal value of the business.
Initially, a post-tax discount rate is applied to calculate the net present value of the post-tax cash flows.

Key assumptions upon which the company has based its determinations of value-in-use include :

a) Estimated cash flows based on internal budgets and industry outlook for a period of five years and a terminal growth
rate thereafter.

c) The after tax discount rates used reflect the current market assessment of the risks specific to the investment, the
discount rate is estimated based on the weighted average cost of capital for respective investment. After tax discount
rate used range from 15%-18%

* in respect of above matters, future cash outflows in respect of contingent liabilities are determinable only by the occurrence or
non occurrence of one or more uncertain future events not wholly within the control of the Company.The Company is contesting
these demands (including certain demands which are not treated as contingent based on assessment) and the Management,
including its advisors, believe that its position will likely be upheld in the appellate process. No expense has been accrued
in the stand alone financial statements for the demands raised. The Management believes that the ultimate outcome of this
proceeding will not have a material adverse effect on the Companyâs financial position and results of operations. The above
does not include show cause notices received by the Company against which no demand has been levied by the department.

^A The Company is involved in disputes, claims, Governmental and /or regulatory inspection, inquires, including patents and
commercial maters that arise from time to time in the ordinary course of business. The same are subject to uncertain future
events not wholly within the control of the Company. The Management does not expect the same to have materially adverse
effect on its financial position, as it believes the likely hood of any loss is not probable.

Corporate guarantee (includes Debt shortfall undertaking) given by the Company are in relation to its subsidiaries
which aggregate to '' 9,220 (March 31, 2024''17,630). Subsidiaries have availed loan against the said corporate
guarantee which have been considered as contingent liabilities (refer note 37).

In addition to the above, the Company along with a subsidiary is a party to certain pending disputes with regulatory
authorities relating to allotment of certain lands that have taken place in earlier years. During the year 2018Â¬
19, pursuant to the order of the Honorable Appellate Tribunal, land belonging to APL Research Centre Limited,
subsidiary, which were attached earlier, were released after placing a fixed deposit of ''131.6 with a bank as a security
deposit with Enforcement Directorate. While the disposal of the cases are subject to final judgement from the
Central Bureau of Investigation (CBI) Special Court, in the assessment of the Management and as legally advised,
the allegations are unlikely to have a significant material impact on the financial statements of the Company.

This defined benefit plan exposes the Company to actuarial risk, such as investment risk, interest rate risk,
longevity risk and salary risk.

Investment Risk - The present value of the defined benefit plan liability denominated in Indian Rupee is
calculated using a discount rate determined by reference to market yields at the end of the reporting period
on government bonds.

Interest Risk - A decrease in the bond interest rate will increase the plan liability; however, this will be partially
offset by an increase in the return on the plan Assets.

Longevity risk - The present value of the defined benefit plan liability is calculated by reference to the best
estimate of the mortality of plan participants both during and after their employment. An increase in the life
expectancy of the plan participants will increase the plan''s liability.

Salary risk- The present value of the defined benefit plan liability is calculated by reference to the future salaries
of plan participants. As such, an increase in the salary of the plan participants will increase the plan''s liability.

The plan is funded with Life Insurance Corporation in the form of a qualifying insurance policy. The following
tables summarise the components of net benefit expense recognised in the statement of profit and loss, the
fund status and amounts recognised in the balance sheet:

b) Disclosures related to defined benefit plan

In respect of Gratuity, a defined benefit plan, the plan is funded with Life Insurance Corporation in the form
of a qualifying insurance policy governed by the payment of Gratuity Act, 1972. Under the Gratuity Act, Every
employee who has completed five years or more of service is entitled to gratuity on departure at 15 days last
drawn salary for each completed year of service or part thereof in excess of six months. The level of benefit
provided depends on the member''s length of service and salary at the time of retirement/termination age.
Provision for gratuity is based on actuarial valuation done by an independent actuary as at the year end. Each
year, the Company reviews the level of funding in gratuity fund and decides its contribution. The Company
aims to keep annual contributions relatively stable at a level such that the fund assets meets the requirements
of gratuity payments in short to medium term.

ii. Transfer between Level 1 and 2

There have been no transfers between Level 1 and
Level 2 or vice-versa in 2024-25 and no transfers in
either direction in 2023-24.

C. Risk management framework

The Company''s board of directors has overall
responsibility for the establishment and oversight
of the Company''s risk management framework.
The board of directors has established the Risk
Management Committee, which is responsible for
developing and monitoring the Company''s risk
management policies. The committee reports to the
board of directors on its activities.

The Company''s risk management policies are
established to identify and analyse the risks being
faced by the Company, to set appropriate risk limits
and controls and to monitor risks and adherence
to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market
conditions and the Company''s activities. The
Company, through its training and management
standards and procedures, aims to maintain a
disciplined and constructive control environment
in which all employees understand their roles
and obligations.

The Company''s audit committee oversees
how management monitors compliance with
the Company''s risk management policies and
procedures, and reviews the adequacy of the risk
management framework in relation to the risks faced
by the Company. The audit committee is assisted in
its oversight role by internal audit. Internal audit
undertakes both regular and ad hoc reviews of risk
management controls and procedures, the result of
which are reported to the audit committee.

The Company is exposed primarily to credit risk,
liquidity risk and market risk (including fluctuations
in foreign currency exchange rates , interest rate risk
and other price risk). The Company uses derivative
financial instruments such as forwards to minimise
any adverse effect on its financial performance.

i. Credit risk

well as concentration of risks. Credit risk is controlled
by analysing credit limits and credit worthiness
of customers on a continuous basis to whom the
credit has been granted after obtaining necessary
approvals for credit. Financial instruments that are
subject to concentrations of credit risk principally
consist of trade receivables, investments, derivative
financial instruments, cash and cash equivalents,
loans and other financial assets. The Company
establishes an allowance for doubtful receivables and
impairment that represents its estimate of incurred
losses in respect of trade and other receivables
and investments.

Trade receivables

The Company''s receivables turnover is quick and
historically, there was no significant default on
account of trade and other receivables.The Company
assesses at each reporting date whether a financial
asset or a group of financial assets is impaired.
Expected credit losses are measured at an amount
equal to the 12 months expected credit losses or at an
amount equal to the life time expected credit losses
if the credit risk on the financial asset has increased
significantly since initial recognition. The Company
has used a practical expedient by computing the
expected credit loss allowance for trade receivables
based on a provision matrix. The provision matrix
takes into account historical credit loss experience
and is adjusted for forward looking information. The
maximum exposure to credit risk at the reporting date
is the carrying value of trade and other receivables.
The Company does not hold collateral as security.
The Company evaluates the concentration of risk with
respect to trade receivables as low, as its customers
are located in several jurisdictions and operate in
largely independent markets.

Loan given to subsidiaries

Credit risk related to loan given to subsidiaries is not expected to be material.

Other financial assets

The Company maintains exposure in cash and cash equivalents and derivative instruments with financial institutions.
The Company has loan receivables outstanding from its wholly owned subsidiaries amounting to ''16,506.6 (March
31, 2024 : '' 14,261.4 ).

The Company''s maximum exposure to credit risk as at March 31, 2025 and March 31, 2024 is the carrying value of
each class of financial assets.

ii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with
its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to
managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when
they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage
to the Company''s reputation.

The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for
use as per requirements.The Company manages liquidity risk by maintaining adequate reserves, banking facilities
and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the
maturity profiles of financial assets and liabilities.The following are the remaining contractual maturities of financial
liabilities at reporting date:

iii. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices. Such changes in the values of financial instruments may result from changes in the
foreign currency exchange rates, interest rates, credit, liquidity and other market changes.The Company''s exposure
to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.

a) Foreign currency risk:

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or
loss, where any transaction references more than one currency or where assets / liabilities are denominated
in a currency other than the functional currency of the Company.The Company is subject to foreign exchange
risk primarily due to its foreign currency revenues, expenses and borrowings. Considering the countries
and economic environment in which the Company operates, its operations are subject to risks arising from
fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro
and GBP against the functional currency of the Company. The Company, as per its risk management policy,
uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which
evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks
and advises the Management of any material adverse effect on the Company. It hedges a part of these risks
by using derivative financial instruments in line with its risk management policies.The information on foreign
exchange risk from derivative instruments and non derivative instruments is as follows:

I nterest rate sensitivity analysis: The sensitivity analysis below has been determined based on the exposure to
interest rates at the end of the reporting period for floating rate borrowings only. For floating rate borrowings, the
analysis is prepared assuming the amount of the borrowing outstanding at the end of the reporting period was
outstanding for the entire year. A 0.5% increase or decrease is used when reporting interest rate risk internally
to key management personnel and represents management''s assessment of the reasonably possible change in
interest rates.

If interest rates had been 0.5% higher/lower and all other variables were held constant, the Company''s Profit for
the year ended March 31,2025 would decrease/increase by '' 226.3, (March 31,2024: ''140.9). Equity net of tax is Rs
167.6 (March 31,2024''111.2).This is mainly attributable to the Company''s exposure to interest rates on its variable
rate borrowings.

c) Commodity risk:

Exposure to market risk with respect to commodity prices primarily arises from the Company''s purchase of active
pharmaceutical ingredients and other raw material components for its products. These are commodity products,
whose prices may fluctuate significantly over short periods of time. The prices of the Company''s raw materials
generally fluctuate in line with commodity cycles, although the prices of raw materials used in the Company''s
business are generally more volatile. Cost of raw materials forms the largest portion of the Company''s cost of
revenues. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing
policies. As of March 31, 2025, the Company has not entered into any derivative contracts to hedge exposure to
fluctuations in commodity prices.

42 TRANSFER OF API BUSINESS

The board at its meeting held on February 9, 2023 and April 01, 2023 had approved the transfer of certain active
pharmaceutical ingredients (API) business units to its wholly owned subsidiary, Apitoria Pharma Private Limited
(APPL) (formerly known as Auro Pharma India Private Limited") on a going concern basis by way of a slump sale
w.e.f April 1, 2023 subject to certain conditions precedent including receipt of requisite approval. Consequent to
receipt of such approvals, the Company and APPL entered into a amended agreement to make the transfer effective
from October 1, 2023.

43 AMALGAMATION OF MVIYES PHARMA VENTURES PRIVATE LIMITED AND AURONEXT PHARMA
PRIVATE LIMITED.

The Company obtained approval from the Hyderabad bench of National Company Law Tribunal on April 29,
2024 for the scheme of amalgamation between Mviyes Pharma Ventures Private Limited (Transferor Company I),
Auronext Pharma Private Limited (Transferor Company II), (both wholly owned subsidiaries) and Aurobindo Pharma
Limited (Transferee Company) with an appointed date of April 01, 2023. The transaction being a common control
business combination, has been accounted under the Pooling of Interest Method in accordance with Ind AS 103 -
Business combination.

44 The Board of Directors, at its meeting held on July 18, 2024 approved a proposal to buyback 5,136,986 fully paid-
up equity shares amounting to '' 7,500.0 million [Buyback Size, excluding transaction costs and applicable taxes]
at a price of '' 1,460 per share from the eligible equity shareholders. The buyback was offered to all eligible equity
shareholders including the promoters and promoter group of the Company on proportionate basis through the
"Tender offer" route in accordance with Securities and Exchange Board of India [Buyback of Securities] Regulations,
2018, as amended and other applicable laws. The Buyback period was from July 18, 2024 to August 28, 2024. The
Company had bought back and extinguished 5,136,986 equity shares, comprising of 0.88% of pre-buyback paid
up equity share capital of the Company. The buyback resulted in a cash outflow of '' 9,302.4 million [including
applicable taxes and transaction costs]. The Company has utilized its Securities Premium and General Reserve for
Buyback of shares. In accordance with Section 69 of the Companies Act, 2013, the Company has credited "Capital
Redemption Reserve" with an amount of to '' 5.1 million, being amount equivalent to the face value of the Equity
Shares bought back as an appropriation from General Reserve

51 ADDITIONAL REGULATORY INFORMATION REQUIRED BY SCHEDULE III OF COMPANIES ACT, 2013.
Other Statutory Information:

(i) No proceedings have been initiated on or are pending against the Company for holding benami property under
the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder

(ii) The Company is not declared a willful defaulter by any bank or financial Institution or other lender.

(iii) There is no income surrendered or disclosed as income during the current or previous year in the tax
assessments under the Income Tax Act, 1961, that has not been recorded in the books of accounts

(iv) The Company has no transaction with the companies struck off under the Companies Act, 2013 or Companies
Act, 1956.

(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity (ies), inluding
foreign entities (intermediaries) with the understanding that the intermediary shall;

a) directly or indirectly lend or invest in other persons or entities idendtified in any manner whatsoever by
or on behalf of the Company (Ultimate beneficary) or

b) provide any guaranty,security or the like to or on behalf of ultimate beneficiaries

(vi) The company has not received any fund from any person (s) or entity (ies), including foreign entities (Funding
party) with the understanding (whehter recorded in writing or otherwise) that the company shall;

a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or
on behalf of the Funding party (Ultimate beneficiaries) or

b) provide any gurantee,security or the like on behalf of the ultimate beneficiaries

(vii) There are no charges or satisfaction which are yet to be registered with Registrar of Companies beyond the
statutory period.

(viii) All quarterly returns or statements of current assets are filed by the Company with banks or financial institutions
are in agreement with the books of account.

(ix) The loan has been utilised for the purpose for which it was obtained and no short term funds have been used
for long term purpose.

(x) The Company has not traded or invested in Crypto currency or virtual currency during the current or previous year

(xi) The Company has not entered into any scheme of arrangements other than disclosed in note 42 and 43 of this
financials statements which has an accounting impact on current or previous year.

(xii) The Company has complied with the number of layers prescribed under the Companies Act, 2013, read with
the Companies (Restriction on number of layers) Rules, 2017

*The ratios reported for the current year are not comparable with that of the previous year on account of transfer of API
Business (refer note 42)

52 In connection with the preparation of the standalone financial statements for the year ended March 31, 2025, the
Board of Directors have confirmed the propriety of the contracts / agreements entered into by / on behalf of the
Company and the resultant revenue earned / expenses incurred arising out of the same after reviewing the levels
of authorisation and the available documentary evidences and the overall control environment. Further, the Board
of Directors have also reviewed the realizable value of all the current assets of the Company and have confirmed
that the value of such assets in the ordinary course of business will not be less than the value at which these are
recognised in the standalone financial statements. In addition, the Board has also confirmed the carrying value of
the non-current assets in the financial statements. The Board, duly taking into account all the relevant disclosures
made, has approved these standalone financial statements in its meeting held on May 26, 2025 in accordance with
the provisions of Companies Act, 2013.

For and on behalf of the Board of Directors of

Aurobindo Pharma Limited

K. Nithyananda Reddy M. Madan Mohan Reddy

Vice Chairman & Managing Director Director

DIN-01284195 DIN-01284266

Santhanam Subramanian B. Adi Reddy

Chief Financial Officer Company Secretary

Membership No: 13709

Place: Hyderabad

Date: May 26, 2025

Mar 31, 2024

m. Provisions contingent liabilities and contingent assets

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Onerous contracts

A contract is considered to be onerous when the expected economic benefits to be derived by the Company from the contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before such a provision is made, the Company recognises any impairment loss on the assets associated with that contract.

Contingent liabilities

Provision in respect of loss contingencies relating to claims, litigations, assessments, fines and penalties are recognised when it is probable that a liability

has been incurred and the amount can be estimated reliably. Contingent liabilities are recognised when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.

n. Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprises of cheques, cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash Management.

o. Borrowing cost

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of cost of the asset. All other borrowing costs are expensed in the period in which they occur.

p. Impairment of non-financial assets

The Company assesses, at each reporting date, whether there is an indication of impairment. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. Impairment losses of continuing operations, are recognised in the statement of profit and loss.

An assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverabls amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior periods/years. Such reversal is recognised in the statement of profit and loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or Group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.

q. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets

Initial recognition and measurement

All financial assets excluding trade receivables are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

Subsequent measurement

Any financial instrument, which does not meet the criteria for categorization at amortized cost or at FVTOCI (fair value through other comprehensive income), is classified at FVTPL (fair value through profit and loss). In addition, the company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch''). The Company has not designated any debt instrument at FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.

Equity instruments:

All equity investments in subsidiaries are measured at cost less impairment. All equity investments in scope of Ind AS 109 - Financial Instruments are measured at fair value. Equity investments which are held for trading are classified as FVTPL. For all other equity investments, the Company may make an irrevocable election to present in OCI subsequent changes in fair value. The Company makes such election on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable.

If the Company decides to classify an equity instrument at FVOCI, then all fair value changes on the instrument, excluding dividends, are recognised in OCI. There is no recycling of amounts from OCI to statement of profit and loss, even on sale of investment. However, the Company may transfer the cumulative gain/loss within equity. Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the statement of profit and loss.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company''s balance sheet) when:

i) the rights to receive cash flows from the asset have expired, or

ii) the Company has transferred its rights to receive cash flows from the asset, and the Company has transferred substantially all the risks and rewards of the asset, or the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Impairment of financial assets In accordance with Ind AS 109 - Financial instruments, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets:

(i) Financial assets that are debt instruments, and are measured at amortised cost, e.g. loans, deposits, debt securities, etc.

(ii) Trade receivables that result from transactions that are within the scope of Ind AS 115 -Revenue from contracts with customers.

The Company follows ''simplified approach'' for recognition of impairment loss allowance for trade receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL (simplified approach). Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which

results from default events that are possible within 12 months after the reporting date.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR (effective interest rate). When estimating the cash flows, an entity is required to consider:

(i) All contractual terms of the financial instrument (including prepayment, extension, call and similar options) over the expected life of

the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument

(ii) Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/expense in the statement of profit and loss. This amount is reflected under the head other expenses/other income in the statement of profit and loss. ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.

For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis. The Company does not have any purchased or originated credit-impaired (POCI) financial assets, i.e., financial assets which are credit impaired on purchase/origination.

Financial liabilities

Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.

The Company enters into supplier credit arrangements (acceptances) whereby lenders such as banks and financial institutions make payments to supplier''s banks for import of raw materials. The banks and financial institutions are subsequently repaid by the Company at a later date. These arrangements are in the nature of credit extended in normal operating cycle and these arrangements for raw materials are recognised as Acceptances under other financial liabilities. Interest borne by the Company on such arrangements is accounted as finance costs.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities designated upon initial recognition at fair value through profit or loss.

For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/loss are not subsequently transferred to statement of profit and loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit and loss.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.

Financial liabilities at amortised cost (Loans and borrowings)

This is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.

Reclassification of financial assets The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior Management determines the change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to the external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.

Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

r. Derivative financial instruments

The Company uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value.

Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. The forward contracts that meet the definition of a derivative under Ind AS 109 are recognised in the statement of profit and loss. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss.

s. Dividend distribution to equity holders of the Company

The Company recognises a liability to make dividend distribution to equity holders when the distribution is authorised and the distribution is no longer at the

discretion of the Company. As per the Corporate laws in India, a final dividend distribution is authorised when it is approved by the shareholders whereas for interim dividend when authorised by board of directors of the Company. A corresponding amount is recognised directly in equity. Non cash distribution are measured at fair value of the assets distributed with fair value re-measurement recognised directly in equity.

t. Discontinued Operations

A discontinued operation is a ''component'' of the Company''s business that represents a separate line of business that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon the earlier of disposal or when the operation meets the criteria to be classified as held for sale. The Company considers the guidance in Ind AS 105 Non-Current assets held for sale and discontinued operations to assess whether a divestment asset would qualify the definition of ''component'' prior to classification into discontinued operation.

Provision for impairment

Investments are tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable amount of each investment. When the recoverable amount of the investment is less than its carrying amount, an impairment loss is recognised.

The recoverable amounts of the above investments have been assessed using a value-in-use model. Value in use is generally calculated as the net present value of the projected post-tax cash flows plus a terminal value of the business. Initially, a post-tax discount rate is applied to calculate the net present value of the post-tax cash flows. Key assumptions upon which the company has based its determinations of value-in-use include :

a. ) Estimated cash flows based on internal budgets and industry outlook for a period of five years and a terminal

growth rate thereafter.

b. ) A terminal value arrived at by extrapolating the last forecasted year cash flows to perpetuity, using a constant

long-term growth rate ranging from 0-1%. This long term growth rate takes into consideration external macroeconomic sources of data. Such long-term growth rate considered does not exceed that of the relevant business and industry sector.

c. ) The after tax discount rates used reflect the current market assessment of the risks specific to the investment,

the discount rate is estimated based on the weighted average cost of capital for respective investment. After tax discount rate used range from 14%-15%

The Company believes that any reasonably possible change in the key assumptions on which a recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cashgenerating unit.

ii. Transfer between Level 1 and 2

There have been no transfers between Level 1 and Level 2 or vice-versa in 2023-24 and no transfers in either direction in 2022-23.

C. Risk management framework

The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework.

The board of directors has established the Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The committee reports to the board of directors on its activities.

The Company''s risk management policies are established to identify and analyse the risks being faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company''s audit committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the result of which are reported to the audit committee.

The Company is exposed primarily to credit risk, liquidity risk and market risk (including fluctuations in foreign currency exchange rates , interest rate risk and other price risk). The Company uses derivative financial instruments such as forwards to minimise any adverse effect on its financial performance.

i. Credit risk

Credit risk is controlled by analysing credit limits and credit worthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, loans and other financial assets. The Company establishes an allowance for doubtful receivables and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.

Trade receivables

The Company''s receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. The Company assesses at each reporting date whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivables. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.

Loan given to subsidiaries

Credit risk related to loan given to subsidiaries is not expected to be material.

Other financial assets

The Company maintains exposure in cash and cash equivalents and derivative instruments with financial institutions. The Company has loan receivables outstanding from its wholly owned subsidiaries amounting to H 14,261.4 (March 31, 2023 : H 25,958.8 ).

The Company''s maximum exposure to credit risk as at March 31, 2024 and March 31, 2023 is the carrying value of each class of financial assets.

ii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.

iii. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company''s exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.

a) Foreign currency risk:

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company. The Company is subject to foreign exchange risk primarily due to its foreign currency revenues, expenses and borrowings. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro and GBP against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks and advises the Management of any material adverse effect on the Company. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The information on foreign exchange risk from derivative instruments and non derivative instruments is as follows:

Interest rate sensitivity analysis: The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period for floating rate borrowings only. For floating rate borrowings, the analysis is prepared assuming the amount of the borrowing outstanding at the end of the reporting period was outstanding for the entire year. A 0.5% increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management''s assessment of the reasonably possible change in interest rates.

If interest rates had been 0.5% higher/lower and all other variables were held constant, the Company''s Profit for the year ended March 31, 2024 would decrease/increase by ?140.9 (for the year ended March 31, 2023: decrease/ increase by ?165.8). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

c) Commodity risk:

Exposure to market risk with respect to commodity prices primarily arises from the Company''s purchase of active pharmaceutical ingredients and other raw material components for its products. These are commodity products, whose prices may fluctuate significantly over short periods of time. The prices of the Company''s raw materials generally fluctuate in line with commodity cycles, although the prices of raw materials used in the Company''s business are generally more volatile. Cost of raw materials forms the largest portion of the Company''s cost of revenues. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. As of March 31, 2024, the Company has not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.

42. TRANSFER OF API BUSINESS

The board at its meeting held on February 9, 2023 and April 01, 2023 had approved the transfer of certain active pharmaceutical ingredients (API) business units to its wholly owned subsidiary, Apitoria Pharma Private Limited (APPL) (formerly known as Auro Pharma India Private Limitedâ) on a going concern basis by way of a slump sale w.e.f. April 1, 2023 subject to certain conditions precedent including receipt of requisite approval. Consequent to receipt of such approvals, the Company and APPL entered into a amended agreement to make the transfer effective from October 1, 2023.

43. AMALGAMATION OF MVIYES PHARMA VENTURES PRIVATE LIMITED AND AURONEXT PHARMA PRIVATE LIMITED.

The Company has filed a scheme of amalgamation, under section 230 to 232 and other applicable provisions of the Companies Act, 2013 for the amalgamation between M/s Mviyes Pharma Ventures Private Limited (Transferor Company I), M/s Auronext Pharma Private Limited (Transferor Company II), wholly owned subsidiaries and Aurobindo Pharma Limited (Transferee Company) with an appointed date of April 01, 2023.

The Scheme of amalgamation was sanctioned by the Hyderabad bench of National Company Law Tribunal on April 29, 2024. Accordingly the impact of M/s Mviyes Pharma Ventures Private Limited and M/s Auronext Pharma Private Limited has been included in the standalone financial statements for the previous period presented.

The transaction being a common control business combination, has been accounted under the Pooling of Interest Method in accordance with Ind AS 103 - Business combination. Accordingly, the assets and liabilities are reflected in the books of Company at their respective carrying value and prior period amounts have been restated as if the business combination had occurred from the beginning of the preceding period.

51. ADDITIONAL REGULATORY INFORMATION REQUIRED BY SCHEDULE III OF COMPANIES ACT, 2013.

Other Statutory Information:

(i) No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder

(ii) The Company is not declared a willful defaulter by any bank or financial Institution or other lender.

(iii) There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of accounts

(iv) The Company has no transaction with the companies struck off under the Companies Act, 2013 or Companies Act, 1956.

(v) The details of funds that have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediariesâ) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).

52. As per the requirements of Rule 3(1) of the Companies (Accounts) Rules, 2014, the Company is required to use only such accounting software for the purpose of maintaining its books of accounts that have a feature of recording audit trail of each and every transaction, creating an edit log of each change made in the books of account along with the date when such changes were made and who made those changes within such accounting software and ensuring that the audit trail cannot be disabled.

The Company uses accounting software for maintaining the books of accounts, which have the feature of recording audit trail (edit log) facility and the same have operated throughout the year for all relevant transactions recorded in the accounting software used for maintenance of accounting and payroll records. Further no instance of audit trail feature being tampered with was noted in respect of the software.

53. In connection with the preparation of the standalone financial statements for the year ended March 31, 2024, the Board of Directors have confirmed the propriety of the contracts/agreements entered into by/on behalf of the Company and the resultant revenue earned/expenses incurred arising out of the same after reviewing the levels of authorisation and the available documentary evidences and the overall control environment. Further, the Board of Directors have also reviewed the realizable value of all the current assets of the Company and have confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these

are recognised in the standalone financial statements. In addition, the Board has also confirmed the carrying value of the non-current assets in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these standalone financial statements in its meeting held on May 25, 2024 in accordance with the provisions of Companies Act, 2013.

For and on behalf of the Board of Directors of

Aurobindo Pharma Limited

K. Nithyananda Reddy M. Madan Mohan Reddy

Vice Chairman & Managing Director Director

DIN-01284195 DIN-01284266

Santhanam Subramanian B. Adi Reddy

Chief Financial Officer Company Secretary

Membership No:13709

Place: Hyderabad

Date: May 25, 2024

Mar 31, 2023

1. The Board of Directors of the company at its meeting held on June 17, 2022 approved investment in GLS Pharma Limited (GLS) through subscription of 204,819 equity shares for an aggregate consideration of ''93.5 (constituting 17% of the equity share capital of GLS) and acquisition of 409,339 equity shares from the selling shareholders for an aggregate consideration of ''187 (constituting 34% of the equity share capital of GLS).

During the Quarter ended June 30, 2022 the company subscribed to 204,819 equity shares of GLS consequent to execution of share subscription and purchase agreement. During the year on satisfaction of the closing conditions, the company acquired the additional 409,339 equity shares. As at March 31, 2023 the company holds 51% of the equity shares in GLS.

2. Investment of ''4.1 (March 31, 2022 '' Nil) on account of fair valuation of corporate guarantee given by the Company on behalf of Lyfius Pharma Private Limited, a wholly - owned subsidiary of Aurobindo Antibiotics Private Limited

Provision for impairment

I nvestments are tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable amount of each investment. When the recoverable amount of the investment is less than its carrying amount, an impairment loss is recognised.

The recoverable amounts of the above investments have been assessed using a value-in-use model. Value in use is generally calculated as the net present value of the projected post-tax cash flows plus a terminal value of the business. Initially, a post-tax discount rate is applied to calculate the net present value of the post-tax cash flows. Key assumptions upon which the company has based its determinations of value-in-use include :

a. ) Estimated cash flows based on internal budgets and industry outlook for a period of five years and a terminal growth

rate thereafter.

b. ) A terminal value arrived at by extrapolating the last forecasted year cash flows to perpetuity, using a constant long-term

growth rate ranging from 0-1%. This long term growth rate takes into consideration external macroeconomic sources of data. Such long-term growth rate considered does not exceed that of the relevant business and industry sector.

c. ) The after tax discount rates used reflect the current market assessment of the risks specific to the investment, the discount

rate is estimated based on the weighted average cost of capital for respective investment. After tax discount rate used range from 14%-15%

The Company believes that any reasonably possible change in the key assumptions on which a recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit.

c) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of ''1 per share. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

For the year ended March 31, 2023, the amount of interim dividend per share declared as distributions to equity shareholders was ''3.0 (March 31,2022: ''4.5).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

(i) All secured working capital demand loans are secured by first pari passu charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future) and carry interest rate in the range of 4% to 755% (March 31, 2022: interest of 4%).

(ii) All unsecured working capital demand loans carry interest rate in the range of 4.25% to 7.75% (March 31,2022:4.25%).

(iii) All secured packing credit foreign currency loans carry interest rate in the range of respective SOFR plus 0 to 15 basis points (March 31, 2022: respective LIBOR plus 10 to 25 basis points) with maturity within 6 months.

(iv) All unsecured packing credit foreign currency loans carry interest rate in the range of respective SOFR plus 0 to 160 basis points and respective EURIBOR plus 0 to 150 basis points for EURO and 4.7% linked to 3Month SONIA for GBP (March 31, 2022: respective LIBOR Minus (-5) to Plus 25 basis points) with maturity within 6 months.

(v) All unsecured bills discounted carry interest rate in the range of respective EURIBOR Plus 40 to 75 basis points (31 March 2022: respective LIBOR plus 0 to 2 basis points).

(vi) All secured bills discounted carry interest rate in the range of respective EURIBOR Plus 5 basis points.

(vii) Due to phasing out of LIBOR during the year ended 31 March 2022, Reserve Bank of India has replaced LIBOR with Secured Overnight Finance Rate (SOFR). This change does not have a material impact on carrying value of working capital loans.

Corporate guarantee given by the Company are in relation to its subsidiaries which aggregate to ''4,140 (March 31,2022 ''3,590). Subsidiaries have availed loan against the said corporate guarantee which have been considered as contingent liabilities (refer note 37).

In addition to the above, the Company along with a subsidiary is a party to certain pending disputes with regulatory authorities relating to allotment of certain lands that have taken place in earlier years. During the year 2018-19, pursuant to the order of the Honorable Appellate Tribunal, land belonging to APL Research Centre Limited, subsidiary, which were attached earlier, were released after placing a fixed deposit of ''131.6 with a bank as a security deposit with Enforcement Directorate. While the disposal of the cases are subject to final judgement from the Central Bureau of Investigation (CBI) Special Court, in the assessment of the Management and as legally advised, the allegations are unlikely to have a significant material impact on the financial statements of the Company.

38 HEDGING ACTIVITIES AND DERIVATIVES - DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS

The Company uses foreign currency denominated borrowings and foreign exchange forward contracts to manage some of its transaction exposures. The foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions, generally from one week to twelve months.

39 CAPITAL MANAGEMENT

For the purpose of the Companyâs capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Companyâs capital management is to maximise the shareholder value.

The Company monitors capital using âadjusted net debt to total equity ratioâ. For this purpose, adjusted net debt is defined as total borrowings, less cash and cash equivalents and other bank balances.

C. Risk management framework

The Companyâs board of directors has overall responsibility for the establishment and oversight of the Companyâs risk management framework. The board of directors has established the Risk Management Committee, which is responsible for developing and monitoring the Companyâs risk management policies. The committee reports to the board of directors on its activities.

The Companyâs risk management policies are established to identify and analyse the risks being faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Companyâs activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Companyâs audit committee oversees how management monitors compliance with the Companyâs risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the result of which are reported to the audit committee.

The Company is exposed primarily to credit risk, liquidity risk and market risk (including fluctuations in foreign currency exchange rates , interest rate risk and other price risk). The Company uses derivative financial instruments such as forwards to minimise any adverse effect on its financial performance.

i. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of credit worthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and credit worthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, loans and other financial assets. The Company establishes an allowance for doubtful receivables and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.

Trade receivables

The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the Management also evaluates the factors that may influence the credit risk of its customer base, including the default risk and country in which the customers operate. The Management has established a credit policy under which each new customer is analysed individually for credit worthiness before the Companyâs standard payment and delivery terms are offered. The Companyâs review includes external ratings, if available, financial statements, credit agency information, industry information and in some case bank references. Sales limits are established for each customer and reviewed quarterly.

The Companyâs receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. The Company assesses at each reporting date whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivables. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.

Loan given to subsidiaries

Credit risk related to loan given to subsidiaries is not expected to be material.

Other financial assets

The Company maintains exposure in cash and cash equivalents and derivative instruments with financial institutions. The Company has loan receivables outstanding from its wholly owned subsidiaries amounting to ''25,958.8 (31 March 2022 : ''8,229.4 ).

The Companyâs maximum exposure to credit risk as at 31 March 2023 and 31 March 2022 is the carrying value of each class of financial assets.

ii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation.

iii. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Companyâs exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.

a) Foreign currency risk:

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company. The Company is subject to foreign exchange risk primarily due to its foreign currency revenues, expenses and borrowings. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro and GBP against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks and advises the Management of any material adverse effect on the Company. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The information on foreign exchange risk from derivative instruments and non derivative instruments is as follows:

c) Commodity risk:

Exposure to market risk with respect to commodity prices primarily arises from the Companyâs purchase of active pharmaceutical ingredients and other raw material components for its products. These are commodity products, whose prices may fluctuate significantly over short periods of time. The prices of the Companyâs raw materials generally fluctuate in line with commodity cycles, although the prices of raw materials used in the Companyâs business are generally more volatile. Cost of raw materials forms the largest portion of the Companyâs cost of revenues. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. As of March 31, 2020, the Company had not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.

42 TRANSFER OF BUSINESS OF UNIT-10, UNIT-16, UNIT-4 AND UNIT-18

The Board of Aurobindo Pharma Limited on February 27, 2021 had approved the transfer of its oral formulations business comprised in Unit 10 located at Multiproduct Special Economic Zone, Naidupet, Mandal, SPSR Nellore District, Andhra Pradesh to its wholly-owned subsidiary APL Healthcare Limited through a slump sale. Undertaking was transferred for consideration of ''13,152.7 million.

The Board of Aurobindo Pharma Limited in their meeting held on May 31, 2021 approved Transfer of business undertaking comprised in Unit-16 of the Company located at TSIIC, SEZ, Polepally Village, Jadcherla Mandal, Mahbubnagar district, Telangana, to Eugia Sez Private Limited, India ( formerly known as Wytells Pharma Private Limited), a wholly owned step-down subsidiary of the Company and 100% subsidiary of Eugia Pharma Specialities Limited. Undertaking was transferred for consideration of ''2,941.2 million.

The Board of Aurobindo Pharma Limited in their meeting held on July 1, 2021 approved the transfer of business undertaking comprised in Unit-4 of the Company located at Pashamylaram, Pattancheru Mandal, Sangareddy district, Telangana, to Eugia Pharma Specialities Limited, a wholly owned subsidiary of the Company. Undertaking was transferred for consideration of ''9,383.2 million.

Due to the above transfers the Company has recorded a capital gain tax of ''251.7 million and a reversal of deferred tax amounting to ''610.7 million.

The Board of Directors of the Company as part of Companyâs Verticalization of Vaccines Business, in its meeting held on December 31, 2021 approved the sale and transfer of Unit 18 of the Company located at Survey No.69, 70, 71 & 72, Indrakaran Village, Kandi Mandal, Sangareddy District - 502203, Telangana, to Auro Vaccines Private Limited, a wholly owned subsidiary of the Company. This transfer is aimed at segregation of the vaccines business and subsidiarization of vaccines business in an special purpose vehicle. The slump sale of Unit 18 is effective from January 1, 2022 for a lumpsum consideration of ''3,275.5 million (on a cash free basis). Unit 18 is yet to commence commercial operations.

51 ADDITIONAL REGULATORY INFORMATION

The MCA vide notification dated March 24, 2021 has amended Schedule III of Companies Act. 2013 in respect of certain disclosures.

Amendments are applicable from April 1, 2021. The Company has incorporated the changes as per the said amendment in

the financial statements and has also changed comparative numbers wherever applicable.

Other Statutory Information:

(i) There are no proceeding initiated or pending against the Company as at March 31, 2023, under Benami Property Transactions Act, 1988 (as amended in 2016).

(ii) The Company is not declared a willful defaulter by any bank or financial Institution or other lender.

(iii) The Company has recorded all transactions in the books of account that has been surrendered. There are no previously unrecorded incomes and related assets that were considered during the year, no unrecorded incomes were identified as income for tax assessments.

(iv) The Company has not entered into any transaction with the companies struck off as per Section 248 of the Companies Act, 2013 or Section 560 of the Companies Act, 1956.

(v) The details of funds that have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries).

(vi) The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(vii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(viii) All quarterly returns or statements of current assets are filed by the Company with banks or financial institutions and are in agreement with the books of account.

(ix) The loan has been utilised for the purpose for which it was obtained and no short term funds have been used for long term purpose.

(x) The Company has not traded or invested in Crypto currency or virtual currency during the financial year.

(xi) No scheme of arrangement has been approved by the competent authority in terms of sections 230 to 237 of the Companies Act, 2013 during the year.

53 The standalone financial statements of the Company for the year ended March 31,2022, were audited by the M/s BSR & Associates LLP, Chartered Accountants, the predecessor auditor, who have expressed an unmodified opinion vide their report dated May 30, 2022.

54 In connection with the preparation of the standalone financial statements for the year ended March 31,2023, the Board of Directors have confirmed the propriety of the contracts / agreements entered into by / on behalf of the Company and the resultant revenue earned / expenses incurred arising out of the same after reviewing the levels of authorisation and the available documentary evidences and the overall control environment. Further, the Board of Directors have also reviewed the realizable value of all the current assets of the Company and have confirmed that the value of such assets in the ordinary course of business will not be less than the value at which these are recognised in the standalone financial statements. In addition, the Board has also confirmed the carrying value of the non-current assets in the financial statements. The Board, duly taking into account all the relevant disclosures made, has approved these standalone financial statements in its meeting held on May 27, 2023 in accordance with the provisions of Companies Act, 2013.

Mar 31, 2022

Provision for impairment

The recoverable amounts of the above investments have been assessed using a value-in-use model. Value in use is generally calculated as the net present value of the projected post-tax cash flows plus a terminal value of the business. Initially, a post-tax discount rate is applied to calculate the net present value of the post-tax cash flows. Key assumptions upon which the Company has based its determinations of value-in-use include :

a) Estimated cash flows based on internal budgets and industry outlook for a period of five years and a terminal growth rate thereafter.

b) A terminal value arrived at by extrapolating the last forecasted year cash flows to perpetuity, using a constant long-term growth rate ranging from 0-1%. This long term growth rate takes into consideration external macroeconomic sources of data. Such long-term growth rate considered does not exceed that of the relevant business and industry sector.

c) The after tax discount rates used reflect the current market assessment of the risks specific to the investment, the discount rate is estimated based on the weighted average cost of capital for respective investment. After tax discount rate used range from 14%-15%

The Company believes that any reasonably possible change in the key assumptions on which a recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit.

c) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of ''1 per share. Each holder of equity shares is entitled to one vote per share.

For the year ended March 31, 2022, the amount of interim dividend per share declared as distributions to equity shareholders was ''4.5 (March 31, 2021: ''4.0).

(ii) All unsecured working capital demand loans carry interest rate in the range of 4.25% (March 31,202: Nil).

(iii) All secured packing credit foreign currency loans carry interest rate in the range of respective LIBOR plus 10 to 25 basis points (March 31,2021: respective LIBOR plus 25 basis points) with maturity within 6 months.

(iv) All unsecured packing credit foreign currency loans carry interest rate in the range of respective LIBOR plus (-5) to 25 basis points (March 31,2021: respective LIBOR plus (-5) to 20 basis points) with maturity within 6 months.

(v) All unsecured bills discounted carry interest rate in the range of respective LIBOR Plus (0) to 2 bps (March 31,2021: respective LIBOR plus (10) to 2 basis points and fixed 30 basis points).

Revenue from sale of products is recognised at point in time as the goods are transferred. Revenues from sale of services recognised over time is insignificant.

The amount of revenue recognised from contract liabilities at the beginning of the year ''71.8 million (March 31,2021: ''169.3 million). Contract liability represents amount received against sale of products. These unsatisfied performance obligations are expected to be completed with in one year.

Notes:

(a) The Company benefits from the tax holiday available for units set up under the Special Economic Zone Act, 2005.These tax holidays are available for a period of fifteen years from the date of commencement of operations. Under the SEZ scheme, the unit which begins providing services on or after April 01, 2005 will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profit or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfillment of certain conditions. From April 01, 2011 units set up under SEZ scheme are subject to Minimum Alternate Tax (MAT).

(b) During the quarter ended March 31,2022, the Company elected to exercise the option permitted under Section 115BAA of the Income-tax Act, 1961 as introduced by the Taxation Laws (Amendment) Ordinance, 2019. Accordingly, the Company has recognised provision for income tax for the year ended March 31, 2022 and re-measured its deferred tax assets / liabilities based on the rate prescribed in the said Section. The impact of this change has been recognised in the statement of profit and loss over the period from April 01, 2021 to March 31, 2022.

30. COMMITMENTS AND CONTINGENCIESA. Leases

The Company has lease contracts for land and buildings. The lease term generally varies between 4 to 10 years. These contracts include extension and termination options.

The Company also has certain leases with lease terms of less than 12 months or with low value. The Company applies short term lease and lease of low value assets recognition exemption for these leases.

No expense has been accrued in the stand alone financial statements for the demands raised. The Management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company''s financial position and results of operations.

^A The Company is involved in disputes, claims, Governmental and /or regulatory inspection, inquires, including patents and commercial maters that arise from time to time in the ordinary course of business. The same are subject to uncertain future events not wholly within the control of the Company. The Management does not expect the same to have materially adverse effect on its financial position, as it believes the likely hood of any loss is not probable.

** Financial guarantees furnished towards business requirement in respective subsidiaries. The Company has assessed that it is only possible, but not probable, that outflow of economic resources will be required.

In addition to the above, the Company along with a subsidiary is a party to certain pending disputes with regulatory authorities relating to the certain allotment of lands that have taken place in earlier years. During the year 2018-19, pursuant to the order of the Honorable Appellate Tribunal, the lands belonging APL Research Centre Limited, subsidiary, which were attached earlier, were released after placing a fixed deposit of ''131.6 as a security deposit with Enforcement Directorate. While the disposal of the cases are subject to final judgement from the CBI Special Court, in the assessment of the Management and as legally advised, the allegations are unlikely to have a significant material impact on the financial statements of the Company.

b) Disclosures related to defined benefit plan

The Company has a defined benefit gratuity plan governed by the Payment of Gratuity Act, 1972. Every employee who has completed five years or more of service is entitled to gratuity on departure at 15 days last drawn salary for each completed year of service or part thereof in excess of six months.

This defined benefit plan exposes the Company to actuarial risk, such as longevity risk, currency risk, interest rate risk and market (investment) risk.

The plan is funded with Life Insurance Corporation in the form of a qualifying insurance policy. The following tables summarise the components of net benefit expense recognised in the statement of profit and loss, the fund status and amounts recognised in the balance sheet:

Notes:

1. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

2. The Company expects to contribute ''288.8 (March 31, 2021: ''249.3) during the year ended March 31,2023 to the qualifying insurance policy.

3. The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period by varying one actuarial assumption, keeping all other actuarial assumptions constant.

Notes:

i) Managerial remuneration does not include provision for gratuity and leave encashment, which is determined for the Company as a whole.

i i) All transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances for trade receivable, trade payable and other payables are unsecured, interest free and settlement occurs in cash. The Company has not recorded any impairment of balances relating to amounts owed by related parties during the year ended March 31,2022 (March 31,2021), provision for bad and doubtful debts will be made on an aggregate basis i.e. not specific to party. The assessment is undertaken each financial year through evaluating the financial position of the related party and the market in which the related party operates.

38. HEDGING ACTIVITIES AND DERIVATIVES - DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS

39. CAPITAL MANAGEMENT

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Companyâs capital management is to maximise the shareholder value.

The Company monitors capital using ''adjusted net debt to total equity ratio''. For this purpose, adjusted net debt is defined as total borrowings, less cash and cash equivalents and other bank balances.

40. COVID-19 IMPACT ANALYSIS

The Company has considered the possible effects that may result from the pandemic relating to COVID-19. With a view to ensure minimal disruption with respect to operations including production and distribution activities, the Company has taken several business continuity measures. While the Company has not experienced any significant difficulties with respect to market demand, liquidity, financing capital expansion projects, collections so far, the Company has assessed the financial impact of the Covid 19 situation particularly on the carrying amounts of receivables, inventories, property, plant and equipment and intangible assets. The Company has, as at the date of approval of these standalone financial results, used internal and external sources of information, including economic forecasts and estimates from market sources. On the basis of evaluation and current indicators of future economic conditions, the Company believes that it will be in a position to recover the carrying amounts of these assets and does not anticipate any material impact due to impairment to these financial and non-financial assets. However, the impact assessment of COVID-19 is a continuing process, given the uncertainties associated with its nature and duration. The Company will continue to monitor any material changes to future economic conditions.

ii. Transfer between Level 1 and 2

There have been no transfers from Level 2 to Level 1 or vice-versa in 2021-22 and no transfers in either direction in 2020-21.

C. Risk management framework

The Company''s risk management policies are established to identify and analyse the risks being faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company''s audit committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and adhoc reviews of risk management controls and procedures, the result of which are reported to the audit committee.

The Company is exposed primarily to credit risk, liquidity risk and market risk (including currency risk, interest rate risk and other price risk). The Company uses derivative financial instruments such as forwards to minimise any adverse effect on its financial performance.

i. Credit risk

Trade receivables

The Company''s receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company assesses at each reporting date whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivables. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.

Loan given to subsidiaries

Credit risk related to loan given to subsidiaries is not expected to be material.

Other financial assets

The Company maintains exposure in cash and cash equivalents and derivative instruments with financial institutions. The Company has loan receivables outstanding from its wholly owned subsidiaries amounting to ''8,229.4 (March 31, 2021: ''4,363.5).

The Companyâs maximum exposure to credit risk as at March 31, 2022 and March 31, 2021 is the carrying value of each class of financial assets.

ii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation.

The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The following are the remaining contractual maturities of financial liabilities at reporting date:

iii. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Companyâs exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company. The Company is subject to foreign exchange risk primarily due to its foreign currency revenues, expenses and borrowings. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro and GBP against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks and advises the Management of any material adverse effect on the Company. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The information on foreign exchange risk from derivative instruments and non derivative instruments is as follows:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Company''s exposure to risk of change in market interest rates because it borrows funds at both fixed and floating interest rates. The Company manages its interest rate risk by having a balances portfolio of fixed and variable rate loans and borrowings. As the Company has no significant interest bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates.

c) Commodity risk:

42. TRANSFER OF BUSINESS OF UNIT-17 AND R&D-3

The Board of Aurobindo Pharma Limited on June 03, 2020 had approved the transfer of Companyâs Biosimilar business and related R&D manufacturing facilities (Unit-17 and R&D-3) situated at survey No. 77 & 78, Indrakaran Village, Kandi Mandal, Sanga Reddy District, Telangana to its newly incorporated wholly owned subsidiary CuraTeQ Biologics Private Limited (CuraTeQ), through a slump sale. The above undertaking was transferred at book value amounting to ''4,256.2.

43. TRANSFER OF BUSINESS OF UNIT-10, UNIT-16, UNIT-4 AND UNIT-18

The Board of Aurobindo Pharma Limited in their meeting held on May 31, 2021 approved Transfer of business undertaking comprised in Unit-16 of the Company located at TSIIC, SEZ, Polepally Village, Jadcherla Mandal, Mahbubnagar district, Telangana, to Wytells Pharma Private Limited, a wholly owned step-down subsidiary of the Company and 100% subsidiary of Eugia Pharma Specialities Limited. Undertaking was transferred for consideration of ''2,941.2 million.

The Board of Aurobindo Pharma Limited in their meeting held on July 01, 2021 approved the transfer of business undertaking comprised in Unit-4 of the Company located at Pashamylaram, Pattancheru Mandal, Sangareddy district, Telangana, to Eugia Pharma Specialities Limited, a wholly owned subsidiary of the Company. Undertaking was transferred for consideration of ''9,383.2 million.

Due to the above transfers the Company has recorded a capital gain tax of ''251.7 million and a reversal of deferred tax amounting to ''610.7 million.

The Board of Directors of the Company as part of Companyâs Verticalisation of Vaccines Business, in its meeting held on December 31, 2021 approved the sale and transfer of Unit 18 of the Company located at Survey No. 69, 70, 71 & 72, Indrakaran Village, Kandi Mandal, Sangareddy District - 502 203, Telangana, to Auro Vaccines Private Limited, a wholly owned subsidiary of the Company. This transfer is aimed at segregation of the vaccines business and subsidiarisation of vaccines business in an special purpose vehicle. The slump sale of Unit 18 is effective from January 01, 2022 for a lumpsum consideration of ''3,275.5 million(on a cash free basis). Unit 18 is yet to commence commercial operations.

44. MERGER OF SUBSIDIARIES

52. ADDITONAL REGULATORY INFORMATION

The MCA vide notification dated March 24, 2021 has amended Schedule III of Companies Act. 2013 in respect of certain disclosures.

Amendments are applicable from April 1, 2021. The Company has incorporated the changes as per the said amendment in the

financial statements and has also changed comparative numbers wherever applicable.

Other Statutory Information:

(i) There are no proceeding initiated or pending against the Company as at March 31,2022, under Benami Property Transactions Act, 1988 (as amended in 2016).

(ii) The Company is not declared a wilful defaulter by any bank or financial Institution or other lender.

(iv) The Company has not entered into any transaction with the companies struck off as per Section 248 of the Companies Act, 2013 or Section 560 of the Companies Act, 1956.

(v) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (âIntermediariesâ) with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(vi) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(vii) All quarterly returns or statements of current assets are filed by the Company with banks or financial institutions and are in agreement with the books of account.

54. SEGMENT REPORTING

I n accordance with Indian Accounting Standard (Ind AS) 108 on Operating segments, segment information has been given in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these financial statements.

55. Previous period figures have been re-grouped / re-classified as follows:

Mar 31, 2021

Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of C1 per share. Each holder of equity shares is entitled to one vote per share.

For the year ended March 31, 2021, the amount of interim dividend per share declared as distributions to equity shareholders was C4.0 (March 31, 2020: C3.0).

I n the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

Terms of borrowings

(i) All unsecured cash credit facilities carry interest rate in the range of MCLR 30 bps (March 31, 2020: MCLR 0 bps to 75 bps).

(ii) All secured working capital demand loans are secured by first pari passu charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future) and carry interest rate in the range of Nil (March 31, 2020: interest of 6.25% to 8.75%).

(iii) All unsecured working capital demand loans carry interest rate in the range of Nil (March 31, 2020: 6% to 8.6%).

(iv) All secured packing credit foreign currency loans carry interest rate in the range of respective LIBOR plus 25 basis points. (March 31, 2020: respective LIBOR plus 45 to 60 basis points) with maturity within 6 months.

(v) All unsecured packing credit foreign currency loans carry interest rate in the range of respective LIBOR plus (5) to 20 basis points (March 31, 2020: respective LIBOR plus 12 to 60 basis points) with maturity within 6 months.

(vi) All unsecured bills discounted carry variable interest rate in the range of respective LIBOR plus -10 to 2 basis points and fixed interest rate 30 basis points (March 31, 2020: respective LIBOR plus 20 to 40 basis points).

(a) The Company benefits from the tax holiday available for units set up under the Special Economic Zone Act, 2005. These tax holidays are available for a period of fifteen years from the date of commencement of operations. Under the SEZ scheme, the unit which begins providing services on or after April 1, 2005 will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profit or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfillment of certain conditions. From April 1, 2011 units set up under SEZ scheme are subject to Minimum Alternate Tax (MAT).

(b) The Government of India, on September 20, 2019, vide the Taxation Laws (Amendment) Ordinance 2019, the Ordinance inserted a new Section 115BAA in the Income tax Act, 1961, which provides an option to the Company for paying income tax at reduced rates as per the provisions/conditions defined in the said section. The Company has evaluated the above Ordinance and based on its evaluation currently the management proposed to continue with the old tax rates.

30 COMMITMENTS AND CONTINGENCIES

A. Leases

Effective April 1, 2019, the Company adopted Ind-AS 116, on all lease contracts existing on April 1, 2019 using the modified retrospective method with Right-of-use assets recognised at an amount equal to the lease liabilities in the balance sheet. The Right-of-use assets as on March 31, 2020 and March 31, 2021 have been presented as part of Property, plant and equipment.

* in respect of above matters, future cash outflows in respect of contingent liabilities are determinable only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. The Company is contesting these demands and the Management, including its advisors, believe that its position will likely be upheld in the appellate process. No expense has been accrued in the stand alone financial statements for the demands raised. The Management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company''s financial position and results of operations.

** Guarantees furnished towards business requirement in respective subsidiaries. The Company has assessed that it is only possible, but not probable, that outflow of economic resources will be required.

^A The Company is involved in disputes, claims, Governmental and /or regulatory inspection, inquires, including patents and commercial maters that arise from time to time in the ordinary course of business. The same are subject to uncertain future events not wholly within the control of the Company. The management does not expect the same to have materially adverse effect on its financial position, as it believes the likely hood of any loss is not probable.

In addition to the above, the Company along with a subsidiary is a party to certain pending disputes with regulatory authorities relating to the certain allotment of lands that have taken place in earlier years. During the year 2018-19, pursuant to the order of the Honourable Appellate Tribunal, the lands belonging APL Research Centre Limited, subsidiary, which were attached earlier, were released after placing a fixed deposit of C131.6 as a security deposit with Enforcement Directorate. While the disposal of the cases are subject to final judgement from the CBI Special Court, in the assessment of the management and as legally advised, the allegations are unlikely to have a significant material impact on the financial statements of the Company.

31 SHARE BASED PAYMENTS

Employee Stock Option Plan âESOP-2006â

The Company instituted an Employee Stock Option Plan âESOP-2006â for issue of shares to eligible employees of the Company as per the special resolution passed in the 19^th Annual General Meeting held on September 18, 2006. The compensation committee of the Board of Directors accordingly, granted 3,240,500 options under eight grants of 175,000, 25,000, 90,000, 1,205,000, 300,000, 500,000, 915,500 and 30,000 options to eligible employees on October 30, 2006, July 31, 2007, October 31,2007, December 16, 2011, June 19, 2012, January 9, 2013, January 28, 2013 and August 9, 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company and there are no cash settlement alternatives for the employees. Each option comprises of one underlying Equity Share of C1/- each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of C120.70, C132.35, C114.50, C91.60, C106.05, C200.70, C187.40 and C161.30 per share respectively. The fair value of share options grants is estimated at the date of grant using Black-Scholes model, taking into account the terms and conditions upon which the share options were granted.

b) Disclosures related to defined benefit plan

This defined benefit plan exposes the Company to actuarial risk, such as longevity risk, currency risk, interest rate risk and market (investment) risk.

2. The Company expects to contribute C249.3 (March 31,2020: C207.3) during the year ended March 31,2022 to the qualifying insurance policy.

Note:

i) Managerial remuneration does not include provision for gratuity and leave encashment, which is determined for the Company as a whole.

ii) All transactions with related parties are made on terms equivalent to those that prevail in armâs length transactions. Outstanding balances for trade receivable, trade payable and other payables are unsecured, interest free and settlement occurs in cash. The Company has not recorded any impairment of balances relating to amounts owed by related parties during the year ended March 31, 2021 (March 31, 2020), provision for bad and doubtful debts will be made on an aggregate basis i.e. not specific to party. The assessment is undertaken each financial year through evaluating the financial position of the related party and the market in which the related party operates.

40 HEDGING ACTIVITIES AND DERIVATIVES - DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS

41 CAPITIAL MANAGEMENT

42 COVID-19 IMPACT ANALYSIS

43 FINANCIAL INSTRUMENTS - FAIR VALUE AND RISK MANAGEMENT

A. Accounting classifications and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy.

ii. Transfer between Level 1 and 2

There have been no transfers from Level 2 to Level 1 or vice-versa in 2020-21 and no transfers in either direction in 2019-20. C. Risk Management Framework

The Companyâs Board of Directors has overall responsibility for the establishment and oversight of the Companyâs Risk Management Framework. The Board of Directors has established the Risk Management Committee, which is responsible for developing and monitoring the Companyâs risk management policies. The committee reports to the board of directors on its activities.

The Companyâs Audit Committee oversees how management monitors compliance with the Companyâs risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and adhoc reviews of risk management controls and procedures, the result of which are reported to the Audit Committee.

i. Credit risk

Trade receivables

The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the Management also evaluates the factors that may influence the credit risk of its customer base, including the default risk and country in which the customers operate. The Management has established a credit policy under which each new customer is analysed individually for credit worthiness before the Companyâs standard payment and delivery terms and conditions are offered. The Companyâs review includes external ratings, if available, financial statements, credit agency information, industry information and in some case bank references. Sales limits are established for each customer and reviewed quarterly.

The Companyâs receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company assesses at each reporting date whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivables. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.

Other financial assets

The Company maintains exposure in cash and cash equivalents and derivative instruments with financial institutions. The Company has loan receivables outstanding from its wholly owned subsidiaries amounting to ?3,945.0(March 31, 2020 : C2,350.0).

The Companyâs maximum exposure to credit risk as at March 31, 2021 and March 31, 2020 is the carrying value of each class of financial assets.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation.

The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The following are the remaining contractual maturities of financial liabilities at reporting date:

iii. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Companyâs exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.

a) Foreign Currency risk:

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company. The Company is subject to foreign exchange risk primarily due to its foreign currency revenues, expenses and borrowings. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro and GBP against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks and advises the Management of any material adverse effect on the Company. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The information on foreign exchange risk from derivative instruments and non derivative instruments is as follows:

b) Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Companyâs exposure to risk of change in market interest rates because it borrows funds at both fixed and floating interest rates. The Company manages its interest rate risk by having a balances portfolio of fixed and variable rate loans and borrowings. As the company has no significant interest bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates.

c) Commodity risk:

44 TRANSFER OF BUSINESS OF UNIT-17 & R&D-3

The Board of Aurobindo Pharma Limited on June 3, 2020 had approved the transfer of Companyâs Biosimilar business and related R&D manufacturing facilities (Unit-17 and R&D-3) situated at survey No. 77 & 78, Indrakaran Village, Kandi Mandal, Sanga Reddy District, Telangana to its newly incorporated wholly owned subsidiary CuraTeQ Biologics Private Limited (CuraTeQ), through a slump sale. The above undertaking was transferred at book value amounting to ?4,256.2.

45 TRANSFER OF BUSINESS OF UNIT-10

During the year, the Board of directors of the Company had approved to enter into a business transfer agreement with APL Healthcare Limited, a wholly owned subsidiary of the Company, to transfer, sell, assign, deliver or otherwise dispose of the oral formulations business comprised in Unit 10 located at Multiproduct Special Economic Zone, Naidupet, Mandal, SPSR Nellore District, Andhra Pradesh (âBusinessâ) on a slump sale basis as a going concern along with its assets and liabilities to APL Healthcare Limited as prescribed in such business transfer agreement effective April 1, 2021.â The company made an application to the Development Commissioner, VSEZ authorities, approval for which was received on April 8, 2021.

46 MERGER OF SUBSIDIARIES

During the financial year 2019-20, the Board of directors of the Company has approved for amalgamation of the five subsidiary Companies with Aurobindo Pharma Limited, the holding company with the appointed date of April 1, 2019. Accordingly, a Scheme of Amalgamation for merger of APL Healthcare Limited, APL Research Centre Limited, Aurozymes Limited, Curepro Parenterals Limited, Hyacinths Pharma Private Limited and Silicon Life Sciences Private Limited (a stepdown wholly owned subsidiary) with the Company was filed before the Honâble National Company Law Tribunal, Hyderabad (NCLT). Further, during the year, a modified Scheme Amalgamation was filed with the Honâble NCLT by way of filing an Interlocutory application for removal and complete exclusion of the APL Healthcare Limited as a party to the Scheme of Amalgamation. The Honâble NCLT vide order dated March 30, 2021 has approved the modified scheme of amalgamation and a certified copy has been filed by the Company with the Registrar of Companies, Telangana April 29, 2021. Accordingly, the subsidiaries viz. APL Research Centre Limited, Aurozymes Limited, Curepro Parenterals Limited, Hyacinths Pharma Private Limited and Silicon Life Sciences Private Limited (a stepdown wholly owned subsidiary) have now been merged with Aurobindo Pharma Limited. The appointed date as per the NCLT approved Scheme is April 1, 2019, which is the same as the beginning of the preceding period in the financial statements and hence, in line with the Scheme, the combination has been accounted for from that date as per the requirements of Appendix C to Ind AS 103 âBusiness Combinationâ. Accordingly, the amounts relating to year ended March 31, 2021 include the impact of the business combination and the corresponding amounts for the year ended March 31, 2020 shown in the statement, have been restated after recognising the effect of the Scheme as above.

47 SEGMENT REPORTING

In accordance with Indian Accounting Standard (Ind AS) 108 on Operating segments, segment information has been given in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these financial statements.

Mar 31, 2019

Notes:

(a) The Company benefits from the tax holiday available for units set up under the Special Economic Zone Act, 2005. These tax holidays are available for a period of fifteen years from the date of commencement of operations. Under the SEZ scheme, the unit which begins providing services on or after 01 April 2005 will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profit or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfillment of certain conditions. From 01 April 2011 units set up under SEZ scheme are subject to Minimum Alternate Tax (MAT).

(b) During the year ended 31 March 2019 and 31 March 2018, the Company has paid dividend to shareholders, this has resulted in payment of dividend distribution tax to the taxation authorities. The Company believes that dividend distribution tax represents additional payment to tax authorities on behalf of shareholders. Hence, dividend distribution tax paid is charged to equity.

1.COMMITMENTS AND CONTINGENCIES A. Leases

Operating lease commitments - Company as lessee

i) The Company has operating leases agreements, which are mainly in the nature of lease of office premises for a period up to five years, with no restrictions and are renewable/ cancellable at the option of either of the parties except for details in (ii) below. These leases include a general clause to enable upward revision of the rental charge on an annual basis according to the prevailing market conditions. There is no other escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the statement of profit and loss is Rs,92.1(31 March 2018: Rs,89.5). The Company has not recognized any contingent rent as expense in the statement of profit and loss.

Finance lease - Company as lessee

Buildings includes factory buildings acquired on finance lease. The lease term is for major part of the economic life of the buildings and the agreement is silent on renewal terms and transfer of legal title at the end of lease term.

The lease agreement did not specify minimum lease payments over the future period. The factory building has been acquired on lease at a consideration of ''25.5.

The net carrying amount of the buildings obtained on finance lease - Rs,6.8 (31 March 2018: Rs,8.1).

Lease commitments - the Company as less or

The Company has entered into agreement to non cancellable leases for office premises. The Company has identified assets under operating and finance lease based on the factors indicated under Appendix C to Ind AS 17 and terms of the agreement, viz., economic life of the asset vs. lease term, ownership of the asset after the lease term.

Lease commitments - the Company as lessee

The Company has entered into leases for land and office premises. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the land and office premises and the fair value of the asset, that it does not retain significant risks and rewards of ownership of the land and the office premises and accounts for the contracts as operating leases.

- in respect of above matters, future cash outflows in respect of contingent liabilities are determinable only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. The Company is contesting these demands and the Management, including its advisors, believe that its position will likely be upheld in the appellate process. No expense has been accrued in the stand alone financial statements for the demands raised. The Management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company''s financial position and results of operations.

-- Guarantees furnished towards business requirement in respective subsidiaries. The Company has assessed that it is only possible, but not probable, that outflow of economic resources will be required.

^A The Company is involved in disputes, claims, Governmental and /or regulatory inspection, inquires, including patents and commercial maters that arise from time to time in the ordinary course of business. The same are subject to uncertain future events not wholly within the control of the Company. The management does not expect the same to have materially adverse effect on its financial position, as it believes the likely hood of any loss is not probable.

2.SHARE BASED PAYMENTS

Employee Stock Option Plan âESOP-2006â

The Company instituted an Employee Stock Option Plan âESOP-2006â for issue of shares to eligible employees of the Company as per the special resolution passed in the 19th Annual General Meeting held on 18 September 2006. The compensation committee of the Board of directors accordingly, granted 3,240,500 options under eight grants of 175,000, 25,000, 90,000, 1,205,000, 300,000, 500,000, 915,500 and 30,000 options to eligible employees on 30 October 2006, 31 July 2007, 31 October 2007, 16 December 2011, 19 June 2012, 09 January 2013, 28 January 2013 and 09 August 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company and there are no cash settlement alternatives for the employees. Each option comprises of one underlying Equity Share of Rs,1/- each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs,120.70, Rs,132.35, Rs,114.50, '' 91.60, Rs,106.05, Rs,200.70, Rs,187.40 and Rs,161.30 per share respectively. The fair value of share options grants is estimated at the date of grant using Black-Scholes model, taking into account the terms and conditions upon which the share options were granted.

- Includes Rs,4.0 (31 March 2018: Rs,19.3) transferred to capital work in progress -- Includes ''0.0 (31 March 2018: ''0.7) transferred to capital work in progress

b) Disclosures related to defined benefit plan

This defined benefit plan exposes the Company to actuarial risk, such as longevity risk, currency risk, interest rate risk and market (investment) risk.

The plan is funded with Life Insurance Corporation in the form of a qualifying insurance policy. The following tables summaries the components of net benefit expense recognized in the statement of profit and loss, the fund status and amounts recognized in the balance sheet:

Discount rate : The discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of obligations.

Salary escalation rate : The estimate of future salary increases considered takes into account the inflation, seniority, promotion and other related factors.

Notes:

2. The Company expects to contribute Rs,157.4 (31 March 2018: Rs,90.0) during the year ended 31 March 2020 to the qualifying insurance policy.

3. In respect of the amounts mentioned under Section 125 of the Companies Act, 2013 there are no dues that are to be credited to the Investor Education and Protection Fund as at 31 March 2019 (31 March 2018: '' Nil).

4. RELATED PARTY DISCLOSURES

Names of related parties and description of relationship Subsidiaries

1 APL Pharma Thai Limited, Thailand

2 All Pharma (Shanghai) Trading Company Limited, China

3 Aurobindo Pharma USA Inc., USA

4 Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5 Helix Healthcare B.V., The Netherlands

6 Aurobindo Pharma Produtos Farmaceuticos Limitada, Brazil

7 APL Healthcare Limited, India

8 Auronext Pharma Private Limited, India

9 APL Research Centre Limited, India

10 Auro Pharma Inc., Canada

11 Aurobindo Pharma (Pty) Limited, South Africa

12 Agile Pharma B.V, The Netherlands

13 Auro Healthcare (Nigeria) Limited, Nigeria (liquidated w.e.f.20 March 2019)

14 Aurobindo Ilac Sanayi Ve Ticaret Limited Sirketi, Turkey (liquidated w.e.f. 31 October 2017)

15 Aurobindo Pharma Japan K.K., Japan

16 Aurex B.V (formerly Pharmacin B.V.), The Netherlands

17 Aurobindo Pharma GmbH, Germany

18 Aurobindo Pharma (Portugal) Unipessoal Limitada., Portugal--

19 Laboratorios Aurobindo S.L., Spain

20 Aurobindo Pharma B.V, The Netherlands (formerly known as Actavis B.V.)

21 Aurobindo Pharma (Romania) S.r.l, Romania

22 Aurobindo Pharma (Italia) S.r.l, Italy

23 Aurobindo Pharma (Malta) Limited, Malta

24 APL Swift Services (Malta) Limited, Malta

25 Milpharm Limited, UK

26 Aurolife Pharma LLC, USA

27 Auro Peptides Limited, India

28 Auromedics Pharma LLC, USA

29 Aurovida Farmaceutica S.A. DE C.V., Mexico

30 Curepro Parenterals Limited, India

31 Hyacinths Pharma Private Limited, India

32 Silicon Life Sciences Private Limited, India

33 AuroZymes Limited, India

34 Aurobindo Pharma Colombia S.A.S, Columbia

35 Aurovitas, Unipessoal LDA, Portugal--

36 Arrow Generiques SAS, France

37 Auro Health LLC, USA

38 Pharmacin B.V. (formerly Aurex B.V), The Netherlands

39 1980 Puren Pharma GmbH (formerly Actavis Management GmbH), Germany

40 Puren Pharma GmbH & Co., KG (formerly Actavis Deutschland GmbH & Co., KG), Germany

41 Aurovitas Spain SA (formerly Actavis Spain SA), Spain

42 Natrol LLC, USA

43 Aurovitas Pharma Polska, Poland

44 Aurogen South Africa (Pty) Ltd, South Africa

45 Aurobindo Pharma USA LLC, USA (dissolved w.e.f. 31 March 2018, revived w.e.f. 6 June 2018)

46 Auro AR LLC, USA (w.e.f. 2 May 2017)

47 Auro Vaccines LLC, USA

48 Auro Logistics LLC, USA (w.e.f. 28 April 2017)

49 Acrotech Biopharma LLC, USA (w.e.f. 05 January 2018)

50 Generis Farmaceutica S.A, Portugal (w.e.f. 01 May 2017)

51 Mer Medicamentos, Lda, Portugal (w.e.f. 01 May 2017)--

39 RELATED PARTY DISCLOSURES (CONTINUED)

52 Generis Phar Unipessoal Lda., Portugal (w.e.f. 01 May 2017)

53 Farma APS - Promogao de Medicamentos, Unipessoal Lda. (w.e.f. 01 May 2017 and dissolved w.e.f. 25 January 2018)

54 Aurobindo Pharma Saudi Arabia Limited Company, Saudi Arabia (w.e.f.08 May 2017)

55 Auro Pharma India Private Limited, India (w.e.f. 20 December 2017)

56 Aurovitas Pharma Ceska Republica s.r.o , Czech Republic ( w.e.f. 23 December 2017)

57 Generis MZ, Lda., Mozambique (w.e.f. 01 May 2017 and dissolved w.e.f. 19 March 2018)

58 Aurovitas Pharma (Tazihou) Ltd, China (w.e.f. 29 January 2018)

59 Apotex Polska S.p. z.o.o., Poland (w.e.f. 8 February 2019)

60 APOTEX (CR) Spol. s.r.o. Czech Republic (w.e.f. 8 February 2019)

61 APOTEX ESPANA SL, Spain (w.e.f. 8 February 2019)

62 Apotex SA/NV Belgium (w.e.f. 8 February 2019)

63 Apotex Europe B.V, The Netherlands (w.e.f. 8 February 2019)

64 Apotex Nederland B.V., The Netherlands (w.e.f. 8 February 2019)

65 Sameko Farma B.V The Netherlands (w.e.f. 8 February 2019)

66 Leidapharm B.V The Netherlands (w.e.f. 8 February 2019)

67 Marel B.V The Netherlands (w.e.f. 8 February 2019)

68 Pharma Dossier B.V, The Netherlands (w.e.f. 8 February 2019)

69 Curateq Biologics GmbH, Switzerland (w.e.f. 20 March 2019)

70 Aurobindo Pharma FZ-LLC, Dubai (w.e.f. 6 January 2019)

71 Auro Science LLC, U.S.A (w.e.f.28 March 2019)

72 Auro Science (Pty) Ltd, Australia (w.e.f.25 September 2018)

--Mer Medicamentos, Lda, Portugal, Aurovitas, Unipessoal LDA, Portugal and Aurobindo Pharma (Portugal) Unipessoal Limitada., Portugal were merged with Generis Farmaceutica S.A., w.e.f. 01 April 2018.

Joint ventures

1 Novagen Pharma (Pty) Limited, South Africa (Joint Venture of a Subsidiary, Aurobindo Pharma (Pty) Limited, South Africa)

2 Eugia Pharma Specialities Limited, India

3 Tergene Biotech Private Limited, India (w.e.f. 01 April 2015)

4 Raidurgam Developers Limited, India (formerly known as Aurobindo Antibiotics limited, India)

5 Purple Bellflower (Pty)Ltd, Southafrica (w.e.f. 23 August 2018)

Enterprises over which key management personnel or their relatives exercise significant influence

1 Pravesha Industries Private Limited, India

2 Sri Sai Packaging, India (Partnership firm)

3 Trident Chemphar Limited, India

4 Auropro Soft Systems Private Limited, India

5 Axis Clinicals Limited, India

6 Pranit Projects Private Limited, India

7 Pranit Packaging Private Limited, India

8 SGD Pharma India Limited (formerly Cogent Glass Limited), India

9 Orem Access Bio Inc, India

10 Veritaz Healthcare Limited, India

11 Alex Merchant PTE. LTD, Singapore

12 Trident Petrochemicals DMCC, Dubai

13 Axis Clinicals LLC, USA

14 Alex Merchant DMCC, Dubai

15 Crest Cellulose Private Limited, India

16 East Pharma Technologies, India (Partnership firm)

17 Axis Clinicals Latina SA DE CV, Mexico

18 Viwyn Pharma Private limited, India

19 Gelcaps Industries, India

20 Aurobindo Foundation, India

39 RELATED PARTY DISCLOSURES (CONTINUED)

Key management personnel

1 Mr. K. Nithyananda Reddy, Whole-time Director

2 Dr. M. Sivakumaran, Whole-time Director

3 Mr. M. Madan Mohan Reddy, Whole-time Director

4 Mr. P. Sarath Chandra Reddy, Whole-time Director

5 Mr. N. Govindarajan, Managing Director

6 Mr. Santhanam Subramanian, Chief Financial Officer

7 Mr. B. Adi Reddy, Company Secretary

8 Mr. K. Ragunathan, Non-executive Chairman and Independent Director

9 Mr. M. Sitarama Murty, Independent Director

10 Dr. (Mrs.) Avnit Bimal Singh, Independent Director

11 Mr. Rangaswamy Radhakrishnan Iyer, Independent Director (Upto 09 December 2017)

12 Mr.P.Venkata Ramprasad Reddy, Non Executive promoter director

13 Mrs.Savitha Mahajan, Independent Director (w.e.f. 16 December 2017)

Relatives to key managerial personnel

1 Mr. Vishnu M Sriram (Son in law of Dr. M. Sivakumaran, Wholetime Director)

Note:

i) Managerial remuneration does not include provision for gratuity and leave encashment, which is determined for the Company as a whole.

ii) All transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances for trade receivable, trade payable and other payables are unsecured, interest free and settlement occurs in cash. The Company has not recorded any impairment of balances relating to amounts owed by related parties during the year ended 31 March 2019 (31 March 2018), provision for bad and doubtful debts will be made on an aggregate basis i.e. not specific to party. The assessment is undertaken each financial year through evaluating the financial position of the related party and the market in which the related party operates.

ii. Transfer between Level 1 and 2

There have been no transfers from Level 2 to Level 1 or vice-versa in 2018-19 and no transfers in either direction in 2017-18.

C. Risk management framework

The Company''s board of directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The board of directors has established the Risk Management Committee, which is responsible for developing and monitoring the Company''s risk management policies. The committee reports to the board of directors on its activities.

The Company''s risk management policies are established to identify and analyse the risks being faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company''s audit committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and adhoc reviews of risk management controls and procedures, the result of which are reported to the audit committee.

The Company is exposed primarily to credit risk, liquidity risk and market risk (including currency risk, interest rate risk and other price risk). The Company uses derivative financial instruments such as forwards to minimize any adverse effect on its financial performance.

i. Credit risk

Trade receivables

Other financial assets

The Company maintains exposure in cash and cash equivalents and derivative instruments with financial institutions. The Company has loan receivables outstanding from its wholly owned subsidiaries amounting to Rs,1,410.5 (31 March 2018 : Rs,7.9).

The Company''s maximum exposure to credit risk as at 31 March 2019 and 31 March 2018 is the carrying value of each class of financial assets.

ii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.

The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The following are the remaining contractual maturities of financial liabilities at reporting date:

iii. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company''s exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.

a) Foreign currency risk:

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit and loss, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company. The Company is subject to foreign exchange risk primarily due to its foreign currency revenues, expenses and borrowings. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro and GBP against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks and advises the Management of any material adverse effect on the Company. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The information on foreign exchange risk from derivative instruments and non derivative instruments is as follows:

The summary of quantitative data about the Company''s exposure to currency risk (based on the notional amounts) as reported to the management is as follows:

Sensitivity analysis:

A reasonably possible strengthening (weakening) of the Indian Rupee against US dollars at 31 March would have affected the measurement of financial instruments denominated in US dollars and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

b) Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Company''s exposure to risk of change in market interest rates because it borrows funds at both fixed and floating interest rates. The Company manages its interest rate risk by having a balances portfolio of fixed and variable rate loans and borrowings. As the company has no significant interest bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates.

c) Commodity risk:

Exposure to market risk with respect to commodity prices primarily arises from the Company''s purchase of active pharmaceutical ingredients and other raw material components for its products. These are commodity products, whose prices may fluctuate significantly over short periods of time. The prices of the Company''s raw materials generally fluctuate in line with commodity cycles, although the prices of raw materials used in the Company''s business are generally more volatile. Cost of raw materials forms the largest portion of the Company''s cost of revenues. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. As of 31 March 2019, the Company had not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.

5.SEGMENT REPORTING

In accordance with Indian Accounting Standard (Ind AS) 108 on Operating segments, segment information has been given in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these financial statements.

Mar 31, 2018

1. CORPORATE INFORMATION

Aurobindo Pharma Limited (âthe Companyâ) is a public company domiciled in India and was incorporated under the provisions of the Companies Act applicable in India. The registered office of the Company is located at Plot No.2, Maitri Vihar, Ameerpet, Hyderabad - 500038, India and the Corporate office is located at The Water Mark Building, Plot No. 11, Survey No. 9, Hi-tech City, Hyderabad - 500084, India. The Companyâs shares are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) in India.

The Company is principally engaged in manufacturing and marketing of active pharmaceutical ingredients, generic pharmaceuticals and related services. The standalone financial statements for the year ended 31 March 2018 were approved by the Board of Directors and authorised for issue on 28 May 2018.

a) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.1 per share. Each holder of equity shares is entitled to one vote per share.

For the year ended 31 March 2018, the amount of dividend per share declared as distributions to equity shareholders was Rs.2.5 (31 March 2017: Rs.2.5).

(A) Terms of borrowings

(i) Secured term loans in foreign currency carry interest in the range of LIBOR plus 1.2% to 1.5%. Out of these loans, loans amounting to â Nil (31 March 2017: Rs.1,080.9) are repayable in Nil (31 March 2017: two) equal annual instalments and loan amounting to Rs.651.7 (31 March 2017: Rs.1,945.5) is repayable in equal half yearly installment of one (31 March 2017: three).

(ii) Term loans are secured by first pari passu charge on all the present and future property, plant and equipment, both movable and immovable property of the Company.

(iii) All secured demand loans are secured by first pari passu charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future). All secured packing credit foreign currency loans carry intrest rate in the range of LIBOR plus 20 to 50 basis points.

(iv) All unsecured packing credit foreign currency loans carry interest rate in the range of 1 monthâs LIBOR plus -20 to 50 basis points with maturity within 6 months.

Notes:

(a) The Company benefits from the tax holiday available for units set up under the Special Economic Zone Act, 2005.These tax holidays are available for a period of fifteen years from the date of commencement of operations. Under the SEZ scheme, the unit which begins providing services on or after 01 April 2005 will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profit or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfillment of certain conditions. From 01 April 2011 units set up under SEZ scheme are subject to Minimum Alternate Tax (MAT).

(b) During the year ended 31 March 2018 and 31 March 2017, the Company has paid dividend to shareholders, this has resulted in payment of dividend distribution tax to the taxation authorities. The Company believes that dividend distribution tax represents additional payment to tax authorities on behalf of shareholders. Hence, dividend distribution tax paid is charged to equity.

2 COMMITMENTS AND CONTINGENCIES

A. Leases

Operating lease commitments - Company as lessee

i) The Company has operating leases agreements, which are mainly in the nature of lease of office premises for a period up to five years, with no restrictions and are renewable/ cancellable at the option of either of the parties except for details in (ii) below. These leases include a general clause to enable upward revision of the rental charge on an annual basis according to the prevailing market conditions. There is no other escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognised in the statement of profit and loss is Rs.89.5 (31 March 2017: Rs.73.9). The Company has not recognised any contingent rent as expense in the statement of profit and loss.

ii) The Company has entered into non cancellable leases for office premises in current year and previous year. These leases have remaining non cancellable period of 6 months (31 March 2017: 5 months). The lease includes an escalation clause in the lease agreement. Future minimum lease rentals under non cancellable operating leases are as follows:

Finance lease - Company as lessee

The lease agreement did not specify minimum lease payments over the future period. The factory building has been acquired on lease at a consideration of Rs.25.5 (31 March 2017: Rs.25.5).

The net carrying amount of the buildings obtained on finance lease - Rs.8.2 (31 March 2017: Rs.9.5).

Lease commitments - the Company as lessor

Lease commitments - the Company as lessee

* in respect of above matters, future cash outflows in respect of contingent liabilities are determinable only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. The Company is contesting these demands and the Management, including its advisors, believe that its position will likely be upheld in the appellate process. No expense has been accrued in the standalone financial statements for the demands raised. The Management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Companyâs financial position and results of operations.

^A The Company is involved in disputes, claims, Governmental and /or regulatory inspection, inquires, including patents and commercial maters that arise from time to time in the ordinary course of business. The same are subject to uncertain future events not wholly within the control of the Company. The management does not expect the same to have materially adverse effect on its financial position, as it believes the likely hood of any loss is not probable.

3 SHARE BASED PAYMENTS

Employee Stock Option Plan âESOP-2006â

The Company instituted an Employee Stock Option Plan âESOP-2006â for issue of shares to eligible employees of the Company as per the special resolution passed in the 19th Annual General Meeting held on 18 September 2006. The compensation committee of the Board of directors accordingly, granted 3,240,500 options under eight grants of 175,000, 25,000, 90,000, 1,205,000, 300,000, 500,000, 915,500 and 30,000 options to eligible employees on 30 October 2006, 31 July 2007, 31 October 2007, 16 December 2011, 19 June 2012, 09 January 2013, 28 January 2013 and 09 August 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company and there are no cash settlement alternatives for the employees. Each option comprises of one underlying Equity Share of Rs.1/- each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.120.70, Rs.132.35, Rs.114.50, Rs.91.60, Rs.106.05, Rs.200.70, Rs.187.40 and Rs.161.30 per share respectively. The fair value of share options grants is estimated at the date of grant using Black-Scholes model, taking into account the terms and conditions upon which the share options were granted.

b) Disclosures related to defined benefit plan

This defined benefit plan exposes the Company to acturial risk, such as longevity risk, currency risk, interest rate risk and market (investment) risk.

The plan is funded with Life Insurance Corporation in the form of a qualifying insurance policy. The following tables summarise the components of net benefit expense recognised in the statement of profit and loss, the fund status and amounts recognised in the balance sheet:

Discount rate : The discount rate is based on the prevailing market yields of Indian Governmet securities as at the balance sheet date for the estimated term of obligations.

Salary escalation rate : The estimate of future salary increases considered takes into account the inflation, seniority, promotion and other related factors.

Notes:

2. The Company expects to contribute Rs.90.0 (31 March 2017: Rs.65.0) during the year ended 31 March 2019 to the qualifying insurance policy .

4 In respect of the amounts mentioned under section 125 of the Companies Act, 2013 there are no dues that are to be credited to the Investor Education and Protection Fund as at 31 March 2018 (31 March 2017: â Nil).

5 RELATED PARTY DISCLOSURES

Names of related parties and description of relationship Subsidiaries

1 APL Pharma Thai Limited, Thailand

2 All Pharma (Shanghai) Trading Company Limited, China

3 Aurobindo Pharma USA Inc., USA

4 Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5 Helix Healthcare B.V., The Netherlands

6 Aurobindo Pharma Produtos Farmaceuticos Limitada, Brazil

7 APL Healthcare Limited, India

8 Auronext Pharma Private Limited, India

9 APL Research Centre Limited, India

10 Auro Pharma Inc., Canada

11 Aurobindo Pharma (Pty) Limited, South Africa

12 Agile Pharma B.V, The Netherlands

13 Auro Healthcare (Nigeria) Limited, Nigeria

14 Aurobindo Ilac Sanayi Ve Ticaret Limited Sirketi, Turkey (liquidated w.e.f. 31 October 2017)

15 Aurobindo Pharma Japan K.K., Japan

16 Aurex B.V (formerly Pharmacin B.V.), The Netherlands

17 Aurobindo Pharma GmbH, Germany

18 Aurobindo Pharma (Portugal) Unipessoal Limitada., Portugal**

19 Laboratorios Aurobindo S. L., Spain

20 Aurobindo Pharma B.V, The Netherlands (formerly known as Actavis B.V.)

21 Aurobindo Pharma (Romania) S.r.l, Romania

22 Aurobindo Pharma (Italia) S.r.l, Italy

23 Aurobindo Pharma (Malta) Limited, Malta

24 APL Swift Services (Malta) Limited, Malta

25 Milpharm Limited, UK

26 Aurolife Pharma LLC, USA

27 Auro Peptides Limited, India

28 Auromedics Pharma USA LLC, USA (dissolved w.e.f. 31 March 2018)

29 Aurovida Farmaceutica S.A. DE C.V., Mexico

30 Curepro Parenterals Limited, India

31 Hyacinths Pharma Private Limited, India

32 Silicon life sciences Private Limited, India

33 AuroZymes Limited, India

34 Aurobindo Pharma Colombia S.A.S, Columbia

35 Aurovitas, Unipessoal LDA, Portugal**

36 Arrow Generiques SAS, France

37 Auro Health LLC, USA

38 Pharmacin B.V. (formerly Aurex B.V.), The Netherlands

39 1980 Puren Pharma GmbH (formerly Actavis Management GmbH), Germany

40 Puren Pharma GmbH & Co., KG (formerly Actavis Deutschland GmbH & Co., KG), Germany

41 Aurovitas Spain SA (formerly Actavis Spain SA)

42 Natrol LLC, USA

43 Aurovitas Pharma Polska, Poland (w.e.f 31 March 2017)

44 Aurogen South Africa (Pty) Ltd, South Africa (w.e.f. 25 January 2017)

45 Aurobindo Pharma USA LLC, USA (w.e.f 14 April 2016 and dissolved w.e.f. 31 March 2018)

46 Auro AR LLC, USA (w.e.f. 2 May 2017)

47 Auro Vaccines LLC, USA (w.e.f. 27 January 2017)

48 Auro Logistics LLC, USA (w.e.f. 28 April 2017)

49 Acrotech Biopharma LLC, USA (w.e.f. 05 January 2018)

50 Generis Farmaceutica S.A, Portugal (w.e.f. 01 May 2017)

51 Mer Medicamentos, Lda, Portugal (w.e.f. 01 May 2017)**

52 Generis Phar Unipessoal Lda., Portugal (w.e.f. 01 May 2017)

53 Farma APS - Promogao de Medicamentos, Unipessoal Lda. (w.e.f. 01 May 2017 and dissolved w.e.f. 25 January 2018)

54 Aurobindo Pharma Saudi Arabia Limited Company (w.e.f 08 May 2017)

55 Auro Pharma India Private Limited, India (w.e.f 20 December 2017)

56 Aurovitas Pharma Ceska Republica s.r.o , Czech Republic ( w.e.f.23 December 2017)

57 Generis MZ, Lda., Mozambique (w.e.f. 01 May 2017 and dissolved w.e.f. 19 March 2018)

58 Aurovitas Pharma (Tazihou) Ltd, China( w.e.f. 29 January 2018)

**Mer Medicamentos, Lda, Portugal, Aurovitas, Unipessoal LDA, Portugal and Aurobindo Pharma (Portugal) Unipessoal Limitada., Portugal were merged with Generis Farmaceutica S.A., w.e.f. 01 April 2018.

Joint ventures

1 Novagen Pharma (Pty) Limited, South Africa (Joint Venture of a Subsidiary, Aurobindo Pharma (Pty) Limited, South Africa)

2 Eugia Pharma Specialities Limited, India

3 Tergene Biotech Private Limited, India (w.e.f. 01 April 2015)

4 Raidurgam developers limited, India (formerly known as Aurobindo Antibiotics limited, India)

Enterprises over which key management personnel or their relatives exercise significant influence

1 Pravesha Industries Private Limited, India

2 Sri Sai Packaging, India (Partnership firm)

3 Trident Chemphar Limited, India

4 Auropro Soft Systems Private Limited, India

5 Axis Clinicals Limited, India

6 Pranit Projects Private Limited, India

7 Pranit Packaging Private Limited, India

8 SGD Pharma India Limited (formerly Cogent Glass Limited), India

9 Orem Access Bio Inc, India

10 Veritaz Healthcare Limited, India

11 Alex Merchant PTE. LTD, Singapore

12 Trident Petrochemicals DMCC, Dubai

13 Axis Clinicals LLC, USA

14 Alex Merchant DMCC, Dubai

15 Crest Cellulose Private Limited, India

16 East Pharma Technologies, India (Partnership firm)

17 Axis Clinicals Latina SA DE CV, Mexico

18 Viwyn Pharma Private limited, India

19 Gelcaps Industries, India

Key managerial personnel

1 Mr. K. Nityananda Reddy, Whole-time Director

2 Dr. M. Sivakumaran, Whole-time Director

3 Mr. M. Madan Mohan Reddy, Whole-time Director

4 Mr. P. Sarath Chandra Reddy, Whole-time Director (from 01 June 2016)

5 Mr. N. Govindarajan, Managing Director

6 Mr. Santhanam Subramanian, Chief Financial Officer

7 Mr. A. Mohan Rami Reddy, Company Secretary (upto 31 May 2016 )

8 Mr. B. Adireddy, Company Secretary (w.e.f. 01 June 2016)

9 Mr. K. Ragunathan, Independent Director

10 Mr. M. Sitarama Murty, Independent Director

11 Mr. D. Rajagopala Reddy, Independent Director (Upto 08 February 2017 )

12 Dr. (Mrs.) Avnit Bimal Singh, Independent Director

13 Mr.Rangaswamy Rathakrishnan Iyer, Independent Director (Upto 09 December 2017)

14 Mr.P.Venkata Ramprasad Reddy, Non Executive promoter director

15 Mrs.Savitha Mahajan, Independent Diretor (w.e.f. 16 December 2017)

Relatives to key managerial personnel

1 Mr. Vishnu M Sriram (son-in-law of Dr. M. Sivakumaran, Wholetime Director)

j. Details of advances due from private companies in which Companyâs director is a director.

Pranit Packaging Private Limited, India â Nil (March 31, 2017 â Nil)

k. i) Details of trade receivables due from private companies in which Companyâs director is a director.

Pravesha Industries Private Limited, India âNil (March 31, 2017: â0.1)

ii) Details of trade receivables due from partnership firm in which Companyâs director is a partner.

Sri Sai Packaging, India âNil (March 31, 2017: â0.0)

6 The Board of Directors at their meeting held on 12 September 2013, had approved to transfer its Injectable Unit of the Company on a going concern basis comprising assets and liabilities pertaining to the said Unit to its wholly owned subsidiary viz., Curepro Parenterals Limited. The same was subject to requisite consents, approvals or permissions of the statutory or regulatory authorities. Pending such approvals, no effect of this Scheme has been given till date. The Board of Directors at their meeting held on 29 May 2017 decided not to transfer the Unit, considering the expansion and growth plans of the Company

7 HEDGING ACTIVITIES AND DERIVATIVES - DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS

A. Measurement of fair values

i. Valuation techinque and significant unobservable inputs

The following tables show the valuation techniques used in measuring Level 2 and Level 3 fair values, for financial instruments measured at fair value in the balance sheet, as well as the significant unobservable inputs used:

ii. Transfer between Level 1 and 2

There have been no transfers from Level 2 to Level 1 or vice-versa in 2017-18 and no transfers in either direction in 2016-17.

B. Risk management framework

The Companyâs risk management policies are estabilished to identify and analyse the risks being faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the companyâs activities. The Company, through its training and managment standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Companyâs audit committee oversees how management monitors compliance with the Companyâs risk management policies and procedures, and reviews the adequacy of the risk management framwork in relation to the risks faced by the company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and adhoc reviews of risk managment controls and procedures, the result of which are reported to the audit committee.

i. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, loans and other financial assets. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.

Trade receivables

The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the Management also evaluates the factors that may influence the credit risk of its customer base, including the default risk and country in which the customers operate. The Management has established a credit policy under which each new customer is analysed individually for creditworthiness before the Companyâs standard payment and delivery terms and conditions are offered. The Companyâs review includes external ratings, if available, financial statements, credit agency information, industry information and in some case bank references. Sales limits are established for each customer and reviewed quarterly.

The Companies receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The company assesses at each reporting date whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivables. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.

Other financial assets

The Company maintains exposure in cash and cash equivalents and derivative instruments with financial institutions. The Company has loan receivables outstanding from its wholly owned subsidiaries amounting to Rs.7.9 (31 March 2017 : Rs.407.0).

The Companyâs maximum exposure to credit risk as at 31 March 2018 and 31 March 2017 is the carrying value of each class of financial assets.

ii. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companyâs approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companyâs reputation.

The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The following are the remaining contractual maturities of financial liabilities at reporting date:

iii. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Companyâs exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.

a) Foreign Currency risk:

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the Company. The Company is subject to foreign exchange risk primarily due to its foreign currency revenues, expenses and borrowings. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro and GBP against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks and advises the Management of any material adverse effect on the Company. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The information on foreign exchange risk from derivative instruments and non derivative instruments is as follows:

The summary of quantitative data about the Companyâs exposure to currency risk (based on the notional amounts) as reported to the management is as follows:

b) interest rate risk:

c) commodity risk:

Exposure to market risk with respect to commodity prices primarily arises from the Companyâs purchase of active pharmaceutical ingredients and other raw material components for its products. These are commodity products, whose prices may fluctuate significantly over short periods of time. The prices of the Companyâs raw materials generally fluctuate in line with commodity cycles, although the prices of raw materials used in the Companyâs business are generally more volatile. Cost of raw materials forms the largest portion of the Companyâs cost of revenues. Commodity price risk exposure is evaluated and managed through operating procedures and sourcing policies. As of 31 March 2018, the Company had not entered into any derivative contracts to hedge exposure to fluctuations in commodity prices.

8 CAPITIAL MANAGEMENT

9 SEGMENT REPORTING

In accordance with Indian Accounting Standard (Ind AS) 108 on Operating segments, segment information has been given in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these financial statements.

Mar 31, 2017

c. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par values of Rs.1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.

For the year ended 31 March 2017, the amount of dividend per share declared as distributions to equity shareholders was Rs.2.5 (March 31, 2016: Rs.2.5). Refer Note 14(c) for details of dividend declared/recognized in financial statements.

D. Terms of borrowings

i. Secured term loans in foreign currency carry interest in the range of LIBOR plus 1% to 1.5%. Out of these loans, loans amounting to Rs.540.5 (March 31, 2016 Rs.1,104.3; April 1, 2015: Rs.1,562.5) are repayable in one (March 31, 2016: two; April 1, 2015: three) equal installments in 6th (March 31, 2016 5th, 6th, April 1, 2015: 4th, 5th and 6th) years from the respective final draw down, and loans amounting to Rs.648.5 (March 31, 2016 Rs.1,987.7; April 1, 2015: Rs.1,666.7) is repayable at the end of 4th, 5th and 6th years from the respective final draw down and loan amounting Rs. Nil (March 31, 2016 Rs. Nil; April 1, 2015: Rs.3,229.2) is repayable at the end of 5th year from the respective final draw down date.

ii. Deferred sales tax loan is interest free and payable in various installments as per sales tax deferment scheme. During the current year, the Company has repaid the entire amount of deferred sales tax loan.

iii. Term loans are secured by first pari passu charge on all the present and future fixed assets, both movable and immoveable property of the Company.

iv. All secured loans payable on demand and secured short term loans from banks are secured by first charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future).

1. COMMITMENTS AND CONTINGENCIES

A. Leases

Operating lease commitments - Company as lessee

i. The Company has operating leases agreements, which are mainly in the nature of lease of office premises for a period up to five years, with no restrictions and are renewable/cancellable at the option of either of the parties except for details in (ii) below. These leases include a general clause to enable upward revision of the rental charge on an annual basis according to the prevailing market conditions. There is no other escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the Statement of Profit and Loss is Rs.73.9 (March 31, 2016: Rs. 71.1). The Company has not recognized any contingent rent as expense in the Statement of Profit and Loss.

ii. The Company has entered into non cancellable leases for office premises in current year and previous year. These leases have remaining non cancellable period of 5 months (March 31, 2016: 17 months; April 1, 2015: 29 months). The lease includes an escalation clause in the lease agreement. Future minimum lease rentals under non cancellable operating leases are as follows:

Finance lease - Company has lessee

Building includes factory buildings acquired on finance lease. The lease term is for major part of the economic life of the buildings and the agreement is silent on renewal terms and transfer of legal title at the end of lease term.

The lease agreement did not specify minimum lease payments over the future period. The factory building has been acquired on lease at a consideration of Rs.25.5 (March 31, 2016: Rs.25.5; April1, 2015: Rs.25.5).

The net carrying amount of the buildings obtained on finance lease: Rs.9.5 (March 31, 2016: Rs.10.8; April1, 2015: Rs.12.1).

* in respect of above matters, future cash outflows in respect of contingent liabilities are determinable only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. The Company is contesting these demands and the management, including its advisors, believe that its position will likely be upheld in the appellate process. No expense has been accrued in the financial statements for the demands raised. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Companyâs financial position and results of operations.

# Excludes Rs.13.4 (March 31, 2016 Rs.13.4; April 1, 2015 Rs.13.4) where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. All these cases are under litigation and are pending with various authorities, expected timing of resulting outflow of economic benefits cannot be specified.

^A The Company is involved in disputes, claims, governmental and/or regulatory inspection, inquires, including patents and commercial maters that arise from time to time in the ordinary course of business. The same are subject to uncertain future events not wholly within the control of the Company. The management does not expect the same to have materially adverse effect on its financial position, as it believes the likelihood of any loss is not probable.

2. SHARE BASED PAYMENTS

Employee Stock Option Plan âES0P-2006''

The Company instituted an Employee Stock Option Plan ''ESOP-2006'' for issue of shares to eligible employees of the Company as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. The compensation committee of the Board of Directors accordingly, granted 3,240,500 options under eight grants of 175,000; 25,000; 90,000; 1,205,000; 300,000; 500,000; 915,500 and 30,000 options to eligible employees on October 30, 2006; July 31, 2007; October 31, 2007; December 16, 2011; June 19, 2012; January 09, 2013; January 28, 2013 and August 09, 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company and there are no cash settlement alternatives for the employees. Each option comprises of one underlying equity share of Rs.1 each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.120.70; Rs.132.35; Rs.114.50; Rs.91.60; Rs.106.05; Rs.200.70; Rs.187.40 and Rs.161.30 per share, respectively. The fair value of share options grants is estimated at the date of grant using Black-Scholes model, taking into account the terms and conditions upon which the share options were granted.

b. Disclosures related to defined benefit plan of the parent company

The plan is funded with Life Insurance Corporation in the form of a qualifying insurance policy. The following tables summarize the components of net benefit expense recognized in the statement of profit and loss, the fund status and amounts recognized in the balance sheet:

Notes:

2. The Company expects to contribute Rs.65.0 (March 31, 2016: Rs.65.0) during the year ended March 31, 2018 (March 31, 2017) to the qualifying insurance policy.

3. In respect of the amounts mentioned under Section 125 of the Companies Act, 2013 there are no dues that are to be credited to the Investor Education and Protection Fund as at March 31, 2017 (March 31, 2016: Rs. Nil; (April 1, 2015: Rs. Nil).

4. Related party disclosures

Names of related parties and description of relationship Subsidiaries

1. APL Pharma Thai Limited, Thailand

2. ALL Pharma (Shanghai) Trading Company Limited, China

3. Aurobindo Pharma USA Inc., U.S.A.

4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5. Helix Healthcare B.V., The Netherlands

6. APL Holdings (Jersey) Limited, Jersey (Liquidated w.e.f. November 18, 2015)

7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil

8. APL Healthcare Limited, India

9. Auronext Pharma Private Limited, India

10. APL Research Centre Limited, India

11. Auro Pharma Inc., Canada

12. Aurobindo Pharma (Pty) Limited, South Africa

13. Aurobindo Pharma (Australia) Pty Limited, Australia (Liquidated w.e.f. April 10, 2015)

14. Agile Pharma B.V., The Netherlands

15. Auro Healthcare (Nigeria) Limited, Nigeria

16. Aurobindo ILAC Sanayi ve Ticaret Limited, Turkey

17. Aurobindo Pharma (Singapore) Pte Limited, Singapore (Liquidated w.e.f. December 31, 2015)

18. Aurobindo Pharma Japan K.K., Japan

19. Aurex B.V. (Formerly Pharmacin B.V.), The Netherlands

20. Aurobindo Pharma GmbH, Germany

21. Aurobindo Pharma (Portugal) Unipessoal LDA, Portugal

22. Laboratorios Aurobindo S.L., Spain

23. Aurobindo Pharma B.V., The Netherlands*

24. Aurobindo Pharma (Romania) s.r.l., Romania

25. Aurobindo Pharma (Italia) S.r.l., Italy

26. Aurobindo Pharma (Malta) Limited, Malta

27. APL IP Company Limited, Jersey (Liquidated w.e.f. November 18, 2015)

28. APL Swift Services (Malta) Limited, Malta

29. Milpharm Limited, U.K.

30. Aurolife Pharma LLC, U.S.A.

31. Auro Peptides Limited, India

32. Auro Medics Pharma LLC, U.S.A.

33. Aurobindo Pharma NZ Limited, New Zealand (Liquidated w.e.f. April 10, 2015)

34. Aurovida Farmaceutica S.A. DE C.V., Mexico

35. Curepro Parenterals Limited, India

36. Hyacinths Pharma Private Limited, India

37. Silicon life sciences Private Limited, India

38. AuroZymes Limited, India

39. Aurobindo Pharma Columbia S.A.S., Columbia

40. Aurovitas, Unipessioal LDA, Portugal

41. Arrow Generiques SAS, France

42. Actavis B.V., The Netherlands*

43. Auro Health LLC, U.S.A.

44. Aurobindo Antiboitics Limited, India

45. Pharmacin B.V. (Formerly Aurex B.V.), The Netherlands

46. Actavis France SAS, France (Merged with Arrow Generiques SAS w.e.f. April 1, 2015)

47. 1980 Puren Pharma GmbH (Formerly Actavis Management GmbH), Germany

48. Puren Pharma GmbH & Co., KG (Formerly Actavis Deutschland GmbH & Co., KG), Germany

49. Aurovitas Spain SA (Formerly Actavis Spain SA)

50. Natrol LLC, U.S.A.

51. Aurobindo Pharma Limited S.R.L., Dominican Republic (Liquidated w.e.f. December 18, 2014)

52. Aurovitas Pharma Polska, Poland (w.e.f. March 31, 2017)

53. Aurogen South Africa (Pty) Limited, South Africa (w.e.f. January 25, 2017)

54. Aurobindo Pharma USA LLC, U.S.A. (w.e.f. April 14, 2016)

55. Auro AR LLC USA, U.S.A. (w.e.f. May 2, 2017)

56. Auro Vaccines LLC, U.S.A. (w.e.f. January 27, 2017)

*Aurobindo Pharma B.V. was merged with Actavis B.V. Subsequently, the name of Actavis B.V. was changed to Aurobindo Pharma B.V. w.e.f. July 1, 2015.

Joint ventures

1. Novagen Pharma (Pty) Limited, South Africa (Joint benture of a subsidiary)

2. Eugia Pharma Specialities Limited

3. Tergene Biotech Private Limited, India (w.e.f. April 1, 2015)

Enterprises over which key management personnel or their relatives exercise significant influence

1. Pravesha Industries Private Limited, India

2. Sri Sai Packaging, India (Partnership firm)

3. Trident Chemphar Limited, India

4. Auropro Soft Systems Private Limited, India

5. Axis Clinicals Limited, India

6. Pranit Projects Private Limited, India

7. Pranit Packaging Private Limited, India

8. SGD Pharma India Limited (formerly Cogent Glass Limited), India

9. Orem Access Bio Inc, India

10. Veritaz Healthcare Limited, India

11. Alex Merchant PTE. LTD, Singapore

12. Trident Petrochemicals DMCC, Dubai

13. Axis Clinicals LLC, U.S.A.

14. Alex Merchant DMCC, Dubai

15. Crest Cellulose Private Limited, India

16. East Pharma Technologies, India (Partnership firm)

Key managerial personnel

1. Mr. K. Nithyananda Reddy, Whole-time Director

2. Dr. M. Sivakumaran, Whole-time Director

3. Mr. M. Madan Mohan Reddy, Whole-time Director

4. Mr. P. Sarath Chandra Reddy, Whole-time Director (From June 1, 2016)

5. Mr. N. Govindarajan, Managing Director

6. Mr. Santhanam Subramanian, Chief Financial Officer

7. Mr. A. Mohan Rami Reddy, Company Secretary (Upto May 31, 2016 )

8. Mr. B. Adi Reddy, Company Secretary (w.e.f. June 1, 2016)

9. Mr. K. Ragunathan, Independent Director

10. Mr. M. Sitarama Murty, Independent Director

11. Mr. D. Rajagopala Reddy, Independent Director

12. Dr. Avnit Bimal Singh, Independent Director

13. Mr. Rangaswamy Rathakrishnan Iyer, Independent Director

Relatives to key managerial personnel

1. Mr. P. Sarath Chandra Reddy (Son-in-law of Mr. K. Nithyananda Reddy, Whole-time Director) (Upto May 31, 2016)

2. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time Director)

Note: i. Managerial remuneration does not include provision for gratuity and leave encashment, which is determined for the Company as a whole.

ii. All transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances for trade receivable, trade payable and other payables are unsecured, interest free and settlement occurs in cash. The Company has not recorded any impairment of balances relating to amounts owed by related parties during the year ended March 31, 2017 (March 31, 2016: Rs. Nil; April 1, 2015: Rs. Nil). The assessment is undertaken each financial year through evaluating the financial position of the related party and the market in which the related party operates.

5. Details of advances due from private companies in which Company''s Director is a director:

Pranit Packaging Private Limited, India Rs. Nil (March 31, 2016: Rs. Nil; April 1, 2015: Rs.0.6).

6. i. Details of trade receivables due from private companies in which Company''s director is a director:

Pravesha Industries Private Limited, India Rs.0.1 (March 31, 2016: Rs.0.1; April 1, 2015; Rs. Nil).

ii. Details of trade receivables due from partnership firm in which Company''s director is a partner:

Sri Sai Packaging, India ?0.0 (March 31, 2016: Rs.0.0; April 1, 2015: Rs. Nil).

7. The Board of Directors at their meeting held on September 12, 2013 decided to transfer its injectable unit of the Company on a going concern basis comprising assets and liabilities pertaining to the said unit to its wholly owned subsidiary Curepro Parentals Limited w.e.f. April 1, 2014. The same was subject to requisite consent, approval or permission of the statutory or regulatory authorities. Pending such approvals, no effect of this scheme has been given in the above results. During the current year, the Board of Directors decided not to transfer the unit, considering the expansion and growth plans of the Company. The same is subject to the approval of appropriate authorities including Hon''ble High Court or Tribunal as the case may be.

a. Contingent liabilities of the above joint ventures Rs. Nil (March 31, 2016: Rs. Nil).

b. Capital commitments of the above joint ventures Rs.67.1 (March 31, 2016: Rs.120.8).

c. The joint ventures are engaged in distribution of pharmaceuticals products.

d. All figures presented above represent Company''s share only.

8. Significant accounting judgments, estimates and assumptions

The preparation of the Company''s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

A. Judgments

In the process of applying the Company''s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the financial statements.

i. Lease commitments - the Company as lessor

The company has entered into agreement to non cancellable leases for office premises. The Company has identified assets under operating and finance lease based on the factors indicated under Appendix C to Ind AS 17 and terms of the agreement, viz. economic life of the asset vs. lease term, ownership of the asset after the lease term.

ii. Lease commitments - the Company as lessee

iii. Taxes

The Company has unused tax credits [(Minimum Alternate Tax (MAT)] credit of Rs.2,836.3 as on March 31, 2017 (March 31, 2016: Rs.2,193.5; April 1, 2015: Rs.2,610.1). The Company based on its business plan along with supporting convincing evidence including future projections of profit believes that the used tax credits would be utilized within the stipulated time period as per the Income Tax Act, 1961.

B. Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

i. Share-based payments

The grant date fair value of employee stock options granted is recognized as an employee expense over the period that the employee becomes unconditionally entitled to the options. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimation requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The Black Scholes valuation model has been used by the management for share-based payment transactions. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 32.

ii. Defined employee benefit plans (Gratuity)

The cost of the defined benefit gratuity plan and other accumulated leave entitlement and the present value of the gratuity obligation and accumulated leave obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates. Further details about gratuity obligations are given in Note 33.

iii. Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See Notes 47 and 48 for further disclosures.

iv. Depreciation on property, plant and equipment

Depreciation on property, plant and equipment is calculated on a straight-line basis based on the useful lives estimated by the management. Considering the applicability of Schedule II of Companies Act, 2013, the management has re-estimated useful lives and residual values of all its property, plant and equipment. The management believes that useful lives currently used fairly reflect its estimate of the useful lives and residual values of property, plant and equipment, though these in certain cases are different from lives prescribed under Schedule II of the Companies Act, 2013.

v. Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model.

vi. Intangible assets under development

The Company capitalizes acquired intangible asset under development for a project in accordance with the accounting policy. In determining the amounts to be capitalized, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits. The carrying amount of capitalized intangible asset under development was Rs.286.7 (March 31, 2016: Rs. Nil; April 1, 2015: Rs. Nil). The innovative nature of the product gives rise to some uncertainty as to whether the final approval for the products will be obtained.

vii. Inventories provision

The Company estimates provision against obsolescence of inventory by applying certain percentages over different age category of the batch wise inventory held at the end of the reporting period. Inputs to the model include ageing of inventory, expected loss rate considering past trend and future outlook and expected net realizable value. Inventories are net of such provisions.

9. Hedging activities and derivatives - Derivatives not designated as hedging instruments

The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Further, management has assessed the fair value of the borrowings approximate their current value largely since they are carried at floating rate of interest.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Fair value hierarchy

The following table provides the fair value measurement hierarchy of the assets and liabilities measured at fair value on recurring basis:

10. Financial risk management objectives and policies

The Company''s principal financial liabilities, other than derivates, comprise borrowings, trade and other payable. The main purpose of these financial liabilities is to finance the Company operations. The Company''s principal financial assets, other than derivatives, include loans, trade and other receivables, and cash and cash equivalents derived directly from its operations.

The Company is exposed primarily to credit risk, liquidity risk and market risk (including currency risk, interest rate risk and other price risk), which may adversely impact the fair value of its financial instruments. The Company''s senior management oversees the management of these risks. The Company''s senior management is supported by a Risk Management Committee of the Board of Directors that advices on the financial risk and the appropriate financial risk governance framework. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

a. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, loans and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk.

Trade receivables and other financial assets:

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the Management also evaluates the factors that may influence the credit risk of its customer base, including the default risk and country in which the customers operate. The management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company''s standard payment and delivery terms and conditions are offered. The Company''s review includes external ratings, if available, financial statements, credit agency information, industry information and in some case bank references. Sales limits are established for each customer and reviewed quarterly. The Company''s receivables turnover is quick and historically, there was no significant default on account of trade and other receivables. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The Company assesses at each reporting date whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivables. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and operate in largely independent markets.

b. Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The following are the remaining contractual maturities of financial liabilities at reporting date:

c. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes. The Company''s exposure to market risk is primarily on account of foreign currency exchange rate risk and interest rate risk.

i. Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company. The Company is subject to foreign exchange risk primarily due to its foreign currency revenues, expenses and borrowings. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Euro and GBP against the functional currency of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company has a treasury team which evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks and advises the management of any material adverse effect on the Company. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies. The information on foreign exchange risk from derivative instruments and non derivative instruments is as follows:

ii. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Company''s exposure to risk of change in market interest rates because it borrows funds at both fixed and floating interest rates. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings.

As the Company has no significant interest bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates.

Every 0.5% increase/decrease in the interest rate component applicable to the respective borrowings would effect the Company''s net profit before tax resulting in an expense/income of Rs.172.0 and Rs.177.4 for the year ended March 31, 2017 and March 31, 2016, respectively.

11. Capital management

For the purpose of the Company''s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximize the shareholder value.

12. First time adoption of Ind AS

As stated in Note 2, these financial statements for the year ended March 31, 2017 are the first the Company has prepared in accordance with Ind AS. In preparing these financial statements, the Company''s opening balance sheet was prepared as at April 1, 2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31, 2016.

Exemptions applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

a. The Company has elected to continue with the carrying values under previous GAAP for all the items of property, plant and equipment as deemed cost at the date of the transition. The same election has been made in respect of intangible assets.

b. Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangements based for embedded leases based on conditions in place as at the date of transition.

c. Ind AS 101 requires a first-time adopter to apply derecognition requirements in Ind AS 109 prospectively to transactions occurring on or after the date of transition to Ind AS. Accordingly, the Company continues to de-recognize the financial assets and financial liabilities for transactions which have occurred before the date of transition to Ind AS.

d. The Company has opted to carry the investment in subsidiaries and associate at the previous GAAP carrying amount at the transition date.

e. Ind AS 102 Share-based Payment has not been applied to equity instruments in share-based payment transactions that vested before April 1, 2015.

f. As per Ind AS 101, the Company has elected not to restate business combinations that occurred before the date of transition.

Estimates

The estimates as at April 1, 2015 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies) apart from impairment of financial assets based on expected credit loss model where application of Indian GAAP did not require estimation. The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1, 2015 (transition date) and March 31, 2016.

i. Proposed dividend

Under Indian GAAP, proposed dividends including Dividend Distribution Tax thereon were recognized as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, a proposed dividend is recognized as a liability in the period in which it is declared by the company (usually when approved by shareholders in a general meeting) or paid. In the case of the Company, the declaration of dividend occurs after period end. Therefore, the liability recognized towards dividend as at March 31, 2016 and April 01, 2015 has been derecognized against retained earnings and recognized in the year of payment.

ii. Financial assets at amortized cost

Under Indian GAAP, the Company accounted for long term investments in unquoted preference shares as investment measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, the Company has designated such investments as investments at amortized cost, and interest income on investments held at amortized cost is recorded using the effective interest rate. At the date of transition to Ind AS, such interest income has been recognized in other equity.

iii. Remeasure of actuarial gains/(losses)

Both under Indian GAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, were charged to profit or loss. Under Ind AS, remeasurements comprising of actuarial gains and losses are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI.

iv. Share based payments

Under Indian GAAP, the Company recognized only the intrinsic value for employee stock option plan as an expense. Under Ind AS, the Company is required to determine the fair value of share options using an appropriate model recognized over the vesting period. Accordingly, the same has been recognized as a separate component of equity in Employee stock option outstanding (ESOP) as at April 1, 2015 and March 31, 2016.

v. Valuation of foreign currency forward contracts

The Company had certain outstanding foreign currency forward contracts to hedge certain of its foreign currency financial assets. Under Indian GAAP, premium/discount on forward contracts are amortized over the period of forward contract and the outstanding forward contracts are restated as at the balance sheet date. However, under Ind AS 109, the foreign currency financial assets and liabilities are restated at closing rate and the derivative contracts are fair valued by recognizing the mark-to-market gain/loss on the forward contract in the statement of profit and loss. Further, premium/discounts on forward contracts are charged to the statement of profit and loss as and when they are incurred. Accordingly, the Company has charged off the unamortized premium on the outstanding forward contracts and fair valued the derivative contracts by recognizing the mark-to-market gain on the forward contract in the statement of profit and loss.

vi. Excise duty on sale of goods

Under Indian GAAP, sale of goods was presented as net of excise duty. However, under Ind AS, sale of goods includes excise duty. Excise duty on sale of goods is included as part of sales in the face of statement of profit and loss. Thus, sale of goods under Ind AS for the year ended March 31, 2016 has increased with a corresponding increase in other expenses.

vii. MAT credit entitlement

MAT credit entitlement is to be presented under loans and advance in accordance with Guidance Note on ''Accounting for Credit available in respect of MAT under the Income Tax Act, 1961'' issued by ICAI. However, as per Ind AS, MAT credit entitlement is generally recognized as a deferred tax asset with a corresponding deferred tax benefit in the statement of profit and loss. Accordingly, the Company has reclassified the MAT credit entitlement from loans and advances to deferred tax assets.

viii. Borrowings

Under Indian GAAP, the Company de-recognized bills discounted of trade receivables with banks and disclosed the same as contingent liabilities. However, under Ind AS, based on evaluation of risks and rewards and control, the same does not meet the criteria for de-recognition. Accordingly, the same has been recognized as borrowings as at April 1, 2015 and March 31, 2016.

ix. Deferred tax assets

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires accounting for deferred taxes using the balance sheet approach, which focuses on temporary difference between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP. In addition, the various transitional adjustments lead to temporary differences and the Company has accounted for such differences. Deferred tax adjustment are recognized in correlation to the underlying transaction either in retained earnings or a separate component in equity.

x. Trade receivables

Under Ind AS, impairment allowance has been determined based on Expected Credit Loss model (ECL).

xi. Other comprehensive income (OCI)

Under Indian GAAP, the Company had not presented other comprehensive income separately. Hence, it has reconciled Indian GAAP profit or loss to profit or profit or loss as per Ind AS. Further, Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.

xii. Cash flow statement

The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.

13. Segment reporting

In accordance with Indian Accounting Standard (Ind AS) 108 on Operating segments, segment information has been given in the consolidated financial statements of the Company, and therefore no separate disclosure on segment information is given in these financial statements.

Mar 31, 2016

1. Capital and other commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for Rs.2,901.3 (March 31, 2015: Rs.3,538.0).

2. Employee Stock Option Plan ''ESOP-2006''

The Company instituted an Employee Stock Option Plan ''ESOP-2006'' as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The compensation committee accordingly, granted total 3,240,500 options under seven grants of 175,000; 25,000; 90,000; 1,205,000; 300,000; 500,000; 915,500 and 30,000 options to eligible employees on October 30, 2006; July 31, 2007; October 31, 2007; December 16, 2011; June 19, 2012; January 9, 2013; January 28, 2013 and August 9, 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying equity share of Rs.1 each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.120.70, Rs.132.35, Rs.114.50, Rs.91.60, Rs.106.05, Rs.200.70, Rs.187.40 and Rs.161.30 per share respectively and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

3. In respect of the amounts mentioned under Section 125 of the Companies Act, 2013 there are no dues that are to be credited to the Investor Education and Protection Fund as at March 31, 2016 (March 31, 2015: Rs.Nil).

4. Related party disclosures

Names of related parties and description of relationship

Subsidiaries

1. APL Pharma Thai Limited, Thailand

2. All Pharma (Shanghai) Trading Company Limited, China

3. Aurobindo Pharma USA Inc., U.S.A.

4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5. Helix Healthcare B.V., The Netherlands

6. APL Holdings (Jersey) Limited, Jersey (Liquidated w.e.f. November 18, 2015)

7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil

8. APL Healthcare Limited, India

9. Auronext Pharma Private Limited, India

10. APL Research Centre Limited, India

11. Auro Pharma Inc., Canada

12. Aurobindo Pharma (Pty) Limited, South Africa

13. Aurobindo Pharma (Australia) Pty Limited, Australia (Liquidated w.e.f. April 10, 2015)

14. Agile Pharma B.V., The Netherlands

15. Auro Healthcare (Nigeria) Limited, Nigeria

16. Aurobindo Ilac Sanayi Ve Ticaret Limited, Turkey

17. Aurobindo Pharma (Singapore) Pte Limited, Singapore (Liquidated w.e.f. December 31, 2015)

18. Aurobindo Pharma Japan K.K., Japan

19. Aurex B.V. (formerly Pharmacin B.V.), The Netherlands

20. Aurobindo Pharma GmbH, Germany

21. Aurobindo Pharma (Portugal) Unipessoal lda., Portugal

22. Laboratorios Aurobindo S.L., Spain

23. Agile Malta Holdings Limited, Malta (Merged with Aurobindo Pharma (Malta) Limited w.e.f. January 1, 2015)

24. Aurobindo Pharma B.V., The Netherlands*

25. Aurobindo Pharma (Romania) s.r.l., Romania

26. Aurobindo Pharma (Italia) S.r.l., Italy

27. Aurobindo Pharma (Malta) Limited, Malta

28. APL IP Company Limited, Jersey (Liquidated w.e.f. November 18, 2015)

29. APL Swift Services (Malta) Limited, Malta

30. Milpharm Limited, U.K.

31. Aurolife Pharma LLC, U.S.A.

32. Auro Peptides Limited, India

33. Auro Medics Pharma LLC, U.S.A.

34. Aurobindo Pharma NZ Limited, New Zealand (Liquidated w.e.f. April 10, 2015)

35. Aurovida Farmaceutica S.A. DE C.V., Mexico

36. Curepro Parenterals Limited, India

37. Hyacinths Pharma Private Limited, India

38. Silicon Life Sciences Private Limited, India

39. AuroZymes Limited, India

40. Eugia Pharma Specialities Limited, India

41. Aurobindo Pharma Columbia S.A.S., Columbia

42. Aurovitas Unipessioal LDA, Portugal

43. Arrow Generiques SAS, France (w.e.f April 1, 2014)

44. Actavis B.V., The Netherlands*

45. Auro Health LLC, U.S.A.

46. Aurobindo Antibiotics Limited, India

47. Aurovitas S.L., Spain (Incorporated during previous year and closed w.e.f. December 2, 2014)

48. Pharmacin B.V. (Formerly Aurex B.V.), The Netherlands

49. Actavis France SAS, France (Merged with Arrow Generiques SAS w.e.f. April 1, 2015)

50. 1980 Puren Pharma GmbH (Formerly Actavis Management GmbH), Germany (w.e.f. April 1, 2014)

51. Puren Pharma GmbH & Co. KG (formerly Actavis Deutschland GmbH & Co. KG), Germany (w.e.f. April 1, 2014)

52. Aurovitas Spain SA (formerly Actavis Spain SA) (w.e.f. April 1, 2014)

53. Natrol LLC, U.S.A. (w.e.f. December 4, 2014)

54. Tergene Biotech Private Limited, India (w.e.f. April 1, 2015)

55. Aurobindo Pharma Limited S.R.L., Dominican Republic (Liquidated w.e.f. December 18, 2014)

* Aurobindo Pharma B.V. was merged with Actavis B.V. Subsequently, the name of Actavis B.V. was changed to Aurobindo Pharma B.V. w.e.f. July 1, 2015.

Joint ventures

1. Novagen Pharma (Pty) Limited, South Africa (Joint Venture of a Subsidiary)

Enterprises over which key management personnel or their relatives exercise significant influence

1. Pravesha Industries Private Limited, India

2. Sri Sai Packaging, India (Partnership firm)

3. Trident Chemphar Limited, India

4. Auropro Soft Systems Private Limited, India

5. Axis Clinicals Limited, India

6. Pranit Projects Private Limited, India

7. Pranit Packaging Private Limited, India

8. Cogent Glass Limited, India

9. Orem Access Bio Inc, India

10. Veritaz Healthcare Limited, India

11. Alex Merchant Pte. Limited, Singapore

12. Trident Petrochemicals DMCC, Dubai

Key managerial personnel

1. Mr. K. Nithyananda Reddy, Whole-time Director

2. Dr. M. Sivakumaran, Whole-time Director

3. Mr. M. Madan Mohan Reddy, Whole-time Director

4. Mr. N. Govindarajan, Managing Director

5. Mr. Sudhir B. Singhi, Chief Financial Officer (upto June 30, 2014)

6. Mr. Santhanam Subramanian, Chief Financial Officer (w.e.f. July 1, 2014)

7. Mr. A. Mohan Rami Reddy, Company Secretary

Relatives to key managerial personnel

1. Mr. P. Sarath Chandra Reddy (Son-in-law of Mr. K. Nithyananda Reddy, Whole-time Director)

2. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time Director)

5. Leases

a. Operating lease

i. Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/cancellable at the option of either of the parties except for details in (ii) below. There is no escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the Statement of Profit and Loss is Rs.71.1 (March 31, 2015: Rs.74.3).

The Company has not recognized any contingent rent as expense in the Statement of Profit and Loss.

ii. The Company has entered into non-cancellable leases for office premises in current year and previous year. These leases have remaining non- cancellable period of 17 months (March 31, 2015: 29 months). The lease includes an escalation clause in the lease agreement. Future minimum lease rentals under non-cancellable operating leases are as follows:

b. Finance lease

Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs.25.5 (March 31, 2015: Rs.25.5).

The net carrying amount of the buildings obtained on finance lease - Rs.10.8 (March 31, 2015: Rs.12.1).

6. In accordance with paragraph 10 of Notified Accounting Standard 9 on Revenue Recognition, excise duty on sales amounting to Rs.1,565.8 (March 31, 2015: Rs.1,497.4) has been reduced from sales in Statement of Profit and Loss and excise duty on increase/decrease in closing stock of finished goods amounting to Rs.12.2 (March 31, 2015: Rs.2.7) has been debited to the Statement of Profit and Loss.

7. Details of advances due from private companies in which Company''s Director is a director: Pranit Packaging Private Limited, India Rs.Nil (March 31, 2015: Rs.0.6).

8. i. Details of trade receivables due from private companies in which Company''s Director is a director:

Pravesha Industries Private Limited, India Rs.0.1 (March 31, 2015: Rs.Nil) ii. Details of trade receivables due from partnership firm in which Company''s Director is a partner: Sri Sai Packaging, India Rs.0.02 (March 31, 2015: Rs.0.02)

9. The Board of Directors at their meeting held on September 12, 2013 decided to transfer its injectable unit of the Company on a going concern basis comprising assets and liabilities pertaining to the said unit to its wholly owned subsidiary Curepro Parenterals Limited with effect from April 1, 2014. The same is subject to requisite consent, approval or permission of the statutory or regulatory authorities. Pending such approvals, no effect of this scheme has been given in the financial statements.

10. Segment reporting

In accordance with Accounting Standard 17 - Segment Reporting, segment information has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

11. The figures of previous year have been regrouped/rearranged, wherever necessary to conform to those of the current year.

Mar 31, 2015

A. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par values of Rs.1 per share. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2015, the amount of dividend per share recognized as distribution to equity shareholders was Rs.4.5 (March 31, 2014: Rs.3) including interim dividend of Rs.4.5 (March 31, 2014: Rs.3).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

2. LONG-TERM BORROWINGS

i. Secured term loans in foreign currency carry interest in the range of LIBOR plus 2% to 2.5%. Out of these loans, loans amounting to Rs.4,270.8 (March 31, 2014: Rs.6,291.1) are repayable in 3 equal installments in 4th, 5th, 6th years from the respective final draw down dates, and loans amounting to Rs.2,187.5 (March 31, 2014: Rs.4,493.6) are repayable at the end of 5th year from the respective final draw down date.

ii. Deferred sales tax loan is interest free and payable in various installments as per sales tax deferment scheme. The last installment is payable in 2028-29.

iii. Term loans are secured by first pari passu charge on all the present and future fixed assets, both movable and immoveable property of the Company.

3. Capital and other commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for: Rs.3,538.0 (March 31 2014: Rs.1,272.7).

4. Contingent liabilities

Particulars As at As at March 31, 2015 March 31, 2014

Outstanding bank guarantees 718.5 771.8

Corporate guarantees for loans taken by 100% subsidiaries** 3,090.7 -

Claims arising from disputes not acknowledged as debts

- indirect taxes (excise duty and service tax)*# 272.4 223.3

Claims arising from disputes not acknowledged as debts - direct taxes* 308.8 105.0

Claims against the Company not acknowledged as debts - other duties/claims* 150.3 150.3

Bills discounted with banks 1,048.5 1,060.6

* in respect of above matters, future cash outflows in respect of contingent liabilities are determinable only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

# Excludes Rs.13.4 where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. All these cases are under litigation and are pending with various authorities, expected timing of resulting outflow of economic benefits cannot be specified.

**Business requirement in respective subsidiaries.

5. The income tax authorities had carried out search operations on the Company at certain locations in February, 2012. The Company has fully co-operated with the authorities and various statements were recorded during the course of these operations. In order to avoid possible litigations, without admitting any irregularities, the Company had decided to offer an additional income and to pay the resultant tax. Accordingly, provision for income tax of Rs.48.7 on this additional income had been made during the year 2011-12. The proceedings are in progress and no other material implications are expected by the management in this matter.

6. Employee stock options

a. Employee Stock Option Plan ''ESOP-2006''

The Company instituted an Employee Stock Option Plan ''ESOP-2006'' as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The compensation committee accordingly, granted total 3,240,500 options under seven grants of 175,000, 25,000, 90,000, 1,205,000, 300,000, 500,000, 915,500 and 30,000 options to eligible employees on October 30, 2006, July 31, 2007, October 31, 2007, December 16, 2011, June 19, 2012, January 09, 2013, January 28, 2013 and August 9, 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying Equity Share of Rs.1 each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.120.70, Rs.132.35, Rs.114.50, Rs.91.60, Rs.106.05, Rs.200.70, Rs.187.40 and Rs.161.30 per share respectively and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

b. Disclosures as per Fair Value Method

The Company''s net profit and earnings per share would have been as under, had the compensation cost for employees'' stock options been recognized based on the fair value at the date of grant in accordance with ''Black Scholes'' model.

7. Employee benefits

b. Disclosures related to defined benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days last drawn salary for each completed year of service.

The scheme is funded with an insurance company in the form of a qualifying insurance policy. The following tables summarize the components of net benefit expense recognized in the Statement of Profit and Loss, the fund status and Balance Sheet position:

8. In respect of the amounts mentioned under Section 125 of the Companies Act, 2013 there are no dues that are to be credited to the Investor Education and Protection Fund as at March 31, 2015 (March 31, 2014: Rs.NIL).

9. Related party disclosures

Names of related parties and description of relationship Subsidiaries

1. APL Pharma Thai Limited, Thailand

2. All Pharma (Shanghai) Trading Company Limited, China

3. Aurobindo Pharma USA Inc, U.S.A.

4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5. Helix Healthcare B.V., The Netherlands

6. APL Holdings (Jersey) Limited, Jersey

7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil

8. APL Healthcare Limited, India

9. Auronext Pharma Private Limited, India

10. APL Research Centre Limited, India

11. Auro Pharma Inc., Canada

12. Aurobindo Pharma (Pty) Limited, South Africa

13. Aurobindo Pharma (Australia) Pty Limited, Australia

14. Agile Pharma B.V., The Netherlands

15. Auro Healthcare (Nigeria) Limited, Nigeria

16. Aurobindo ILAC Sanayi ve Ticaret Limited, Turkey

17. Aurobindo Pharma (Singapore) Pte Limited, Singapore

18. Aurobindo Pharma Limited s.r.l., Dominican Republic (liquidated during the year)

19. Aurobindo Pharma Japan K.K., Japan

20. Pharmacin B.V., The Netherlands

21. Aurobindo Pharma GmbH, Germany

22. Aurobindo Pharma (Portugal) Unipessoal Lda, Portugal

23. Aurobindo Pharma France SARL, France (merged with Arrow Generics SAS, France w.e.f. April 1, 2014)

24. Laboratorios Aurobindo S. L., Spain

25. Agile Malta Holdings Limited, Malta (merged with Aurobindo Pharma (Malta) Limited w.e.f. December 31, 2014)

26. Aurobindo Pharma B.V, The Netherlands

27. Aurobindo Pharma (Romania) s.r.l, Romania

28. Aurobindo Pharma (Italia) S.r.l., Italy

29. Aurobindo Pharma (Malta) Limited, Malta

30. APL IP Company Limited, Jersey

31. APL Swift Services (Malta) Limited, Malta

32. Milpharm Limited, U.K.

33. Aurolife Pharma LLC, U.S.A.

34. Auro Peptides Limited, India

35. Auro Medics Pharma LLC, U.S.A.

36. Aurobindo Pharma NZ Limited, New Zealand

37. Aurovida Farmaceutica S.A. de C.V., Mexico

38. Curepro Parenterals Limited, India

39. Hyacinths Pharma Private Limited, India

40. Silicon Life Sciences Private Limited, India

41. AuroZymes Limited, India

42. Eugia Pharma Specialities Limited, India

43. Aurobindo Pharma Columbia S.A.S., Columbia

44. Aurovitas, Unipessioal Lda, Portugal (w.e.f. March 25, 2014)

45. Arrow Generiques S.A.S., France (w.e.f. April 1, 2014)

46. Actavis B.V., The Netherlands (w.e.f. April 1, 2014)

47. Auro Health LLC, U.S.A.

48. Aurobindo Antiboitics Limited, India

49. Aurovitas S.L., Spain (Incorporated during current year and closed w.e.f. December 2, 2014)

50. Aurex B.V., The Netherlands (Incorporated during current year)

51. Actavis France S.A.S., France (w.e.f. April 1, 2014)

52. Actavis Management GmbH, Germany (w.e.f. April 1, 2014)

53. Actavis Deutschland GmbH & Co, KG, Germany (w.e.f. April, 2014)

54. Aurovitas Spain S.A. (formerly Actavis Spain S.A.) (w.e.f. April 1, 2014)

55. Natrol LLC, U.S.A. (w.e.f. December 4, 2014)

56. Aurobindo Switzerland AG, Switzerland (Closed w.e.f. September 11, 2013)

57. Aurobindo Pharma (Poland) Sp.z.o.o., Poland (Closed w.e.f. June 28, 2013)

58. Agile Pharma (Malta) Limited, Malta (Closed w.e.f. October 9, 2013)

Joint ventures

1. Novagen Pharma (Pty) Limited, South Africa (Joint Venture of a Subsidiary)

Enterprises over which key management personnel or their relatives exercise significant influence

1. Pravesha Industries Private Limited, India

2. Sri Sai Packaging, India (Partnership firm)

3. Trident Chemphar Limited, India

4. Auropro Soft Systems Private Limited, India

5. Axis Clinicals Limited, India

6. Pranit Projects Private Limited, India

7. Pranit Packaging Private Limited, India

8. Cogent Glass Limited

9. Orem Access Bio Inc, India

10. Veritaz Healthcare Limited, India

11. Alex Merchant Pte. Limited, Singapore

12. Trident Petrochemicals DMCC, Dubai

Key managerial personnel

1. Mr. K. Nithyananda Reddy, Whole-time Director

2. Dr. M. Sivakumaran, Whole-time Director

3. Mr. M. Madan Mohan Reddy, Whole-time Director

4. Mr. N. Govindarajan, Managing Director

5. Mr. Sudhir B. Singhi, Chief Financial Officer (upto June 30, 2014)

6. Mr. Santhanam Subramanian, Chief Financial Officer (w.e.f. July 1, 2014)

7. Mr. A. Mohan Rami Reddy, Company Secretary

Relatives to key managerial personnel

1. Mr. P. Sarath Chandra Reddy (Son-in-law of Mr. K.Nithyananda Reddy, Wholetime Director)

2. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time Director)

10. Leases

a. Operating lease

i. Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/cancellable at the option of either of the parties except for details in (ii) below. There is no escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the Statement of Profit and Loss is Rs.74.3 (March 31, 2014: Rs.43.2 ).

The Company has not recognized any contingent rent as expense in the Statement of Profit and Loss.

b. Finance lease

Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs.25.6 (March 31, 2014: Rs.25.6).

The net carrying amount of the buildings obtained on finance lease: Rs.12.1 (March 31, 2014: Rs.13.3).

11. In accordance with paragraph 10 of Notified Accounting Standard 9 on Revenue Recognition, excise duty on sales amounting to Rs.1,497.5 (March 31, 2014: Rs.1,588.2) has been reduced from sales in Statement of Profit and Loss and excise duty on (increase)/decrease in closing stock of finished goods amounting to Rs.2.7 [March 31, 2014: (Rs.0.8)] has been (credited)/debited to the Statement of Profit and Loss.

12. Details of advances due from private companies in which Company''s director is a director:

Auropro Soft Systems Private Limited, India Rs.Nil (March 31, 2014: Rs.0.08).

Pranit Projects Private Limited, India Rs.Nil (March 31, 2014: Rs.1.3).

Pranit Packaging Private Limited, India Rs.0.6 (March 31, 2014: Rs.Nil).

13. i. Details of trade receivables due from private companies in which Company''s director is a director:

Pravesha Industries Private Limited, India Rs.Nil (March 31, 2014: Rs.0.06). ii. Details of trade receivables due from partnership firm in which Company''s director is a partner:

Sri Sai Packaging, India Rs.Nil (March 31, 2014: Rs.Nil)

14. The Board of Directors at their meeting held on September 12, 2013 decided to transfer its injectable unit of the Company on a going concern basis comprising assets and liabilities pertaining to the said unit to its wholly owned subsidiary Curepro Parenterals Limited with effect from April 1, 2014. The same is subject to requisite consent, approval or permission of the statutory or regulatory authorities. Pending such approvals, no effect of this scheme has been given in the financial statements.

a. Contingent liabilities of the above joint ventures Rs. Nil (March 31, 2014: Rs.Nil).

b. Capital commitments of the above joint ventures Rs. Nil (March 31, 2014: Rs. Nil)

c. Novagen Pharma (Pty) Ltd incorporated in South Africa, is engaged in distribution of pharmaceuticals products.

d. Previous year''s figures have been disclosed in italics.

e. All figures presented above represents Company''s share only.

15. Segment reporting

In accordance with Accounting Standard 17 - Segment Reporting, segment information has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

16. The figures of previous year have been regrouped/rearranged, wherever necessary to conform to those of the current year.

Mar 31, 2014

1. Capital and other commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for - Rs.1,272.7 (March 31, 2013: Rs.211.5).

2. Contingent liabilities

Particulars As at As at March 31, 2014 March 31, 2013

Outstanding bank guarantees 771.8 486.3 Claims arising from disputes not acknowledged as debts

- Indirect taxes (excise duty and service tax)* 223.3 196.3

Claims arising from disputes not acknowledged as debts - direct taxes* 105.0 105.0

Claims against the Company not acknowledged as debts* 150.3 493.1

Bills discounted with banks 1,060.6 3,252.9

* in respect of above matters, future cash outfows in respect of contingent liabilities are determinable only on receipt of judgements pending at various forums/authorities.

3. The income tax authorities had carried out search operations on the Company at certain locations in February 2012. The Company has fully co-operated with the authorities and various statements were recorded during the course of these operations. In order to avoid possible litigations, without admitting any irregularities, the Company had decided to offer an additional income and to pay the resultant tax. Accordingly provision for income tax of Rs.48.7 on this additional income had been made during the year 2011-12. The proceedings are in progress and no other material implications are expected by the management in this matter.

4. Employee stock options

a. Employee Stock Option Plan ''ESOP-2006''

The Company instituted an Employee Stock Option Plan ''ESOP-2006'' as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The compensation committee accordingly, granted total 3,240,500 options under seven grants of 175,000; 25,000; 90,000; 1,205,000; 300,000; 500,000; 915,500 and 30,000 options to eligible employees on October 30, 2006; July 31, 2007; October 31, 2007; December 16, 2011; June 19, 2012; January 09, 2013; January 28, 2013 and August 9, 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying equity share of Rs.1 each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.120.70; Rs.132.35; Rs.114.50; Rs.91.60; Rs.106.05; Rs.200.70; Rs.187.40 and Rs.161.30 per share respectively and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

5. Employee benefits

b. Disclosures related to defined benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days last drawn salary for each completed year of service.

The scheme is funded with an insurance company in the form of a qualifying insurance policy. The following tables summarise the components of net benefit expense recognized in the Statement of Profit and Loss, the fund status and Balance Sheet position:

6. In respect of the amounts mentioned under Section 205C of the Companies Act, 1956 there are no dues that are to be credited to the Investor Education and Protection Fund as at March 31, 2014 Rs. Nil (March 31, 2013: Rs. Nil).

7. Related party disclosures

Names of related parties and description of relationship

Subsidiaries

1. APL Pharma Thai Limited, Thailand

2. All Pharma (Shanghai) Trading Company Limited, China

3. Aurobindo Pharma USA Inc, U.S.A.

4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5. Helix Healthcare B.V., The Netherlands

6. APL Holdings (Jersey) Limited, Jersey

7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil

8. APL Healthcare Limited, India

9. Auronext Pharma Private Limited, India

10. APL Research Centre Limited, India

11. Auro Pharma Inc. Canada

12. Aurobindo Pharma (Pty) Limited, South Africa

13. Aurobindo Pharma (Australia) Pty Limited, Australia

14. Agile Pharma B.V., The Netherlands

15. Aurobindo Switzerland AG, Switzerland (Closed w.e.f. September 11, 2013)

16. Auro Healthcare (Nigeria) Limited, Nigeria

17. Aurobindo ILAC Sanayi ve Ticaret Limited Sirketi, Turkey

18. Aurobindo Pharma (Singapore) Pte Limited, Singapore

19. Aurobindo Pharma Limited, s.r.l., Dominican Republic

20. Aurobindo Pharma Japan K.K., Japan

21. Pharmacin B.V., The Netherlands

22. Aurobindo Pharma GmbH, Germany

23. Aurobindo Pharma (Portugal) Unipessoal Lda, Portugal

24. Aurobindo Pharma France SARL, France

25. Laboratorios Aurobindo S. L., Spain

26. Agile Malta Holdings Limited, Malta

27. Aurobindo Pharma B.V., The Netherlands

28. Aurobindo Pharma (Romania) s.r.l., Romania

29. Aurobindo Pharma (Poland) Sp.z.o.o., Poland (Closed w.e.f. June 28, 2013)

30. Aurobindo Pharma (Italia) S.r.l., Italy

31. Agile Pharma (Malta) Limited, Malta (Closed w.e.f. October 9, 2013)

32. Aurobindo Pharma (Malta) Limited, Malta

33. APL IP Company Limited, Jersey

34. APL Swift Services (Malta) Limited, Malta

35. Milpharm Limited, U.K.

36. Aurolife Pharma LLC, U.S.A.

37. Auro Peptides Limited, India

38. Auro Medics Pharma LLC, U.S.A.

39. Aurobindo Pharma NZ Limited, New Zealand

40. Aurovida Farmaceutica S.A. de C.V., Mexico

41. Aurobindo Antibiotics Limited, India (w.e.f. July 10, 2012)

42. Auro Health LLC, U.S.A. (w.e.f. September 13, 2012)

43. Aurobindo Pharma Hungary Kereskedelmi KFT, Hungary (Closed w.e.f. September 13, 2012)

44. Curepro Parenterals Limited, India (w.e.f. April 19, 2013)

45. Hyacinths Pharma Private Limited, India (w.e.f. October 1, 2013)

46. Silicon Life Sciences Private Limited, India (w.e.f. October 11, 2013)

47. AuroZymes Limited, India (w.e.f. November 28, 2013)

48. Eugia Pharma Specialities Limited, India (w.e.f. September 16, 2013)

49. Aurobindo Pharma Columbia S.A.S., Columbia (w.e.f. January 28, 2014)

50. Aurovitas, Unipessoal Lda, Portugal (w.e.f. March 25, 2014)

Joint ventures

1. Novagen Pharma (Pty) Limited, South Africa (Joint venture of a subsidiary)

2. Zao Auros Pharma, Russia (Joint venture of a subsidiary) (Closed during the year without any operations)

Enterprises over which key management personnel or their relatives exercise significant influence

1. Pravesha Industries Private Limited, India

2. Sri Sai Packaging, India (Partnership firm)

3. Trident Chemphar Limited, India

4. Auropro Soft Systems Private Limited, India

5. Axis Clinicals Limited, India

6. Pranit Projects Private Limited, India

7. Pranit Packaging Private Limited, India

8. Cogent Glass Limited (formerly known as Matri Mirra Packaging Private Limited), India

9. Vaxer Pharma Limited, India

10. Orem Access Bio Inc, India

11. Veritaz Healthcare Limited, India

Key managerial personnel

1. Mr. P.V. Ramprasad Reddy, Director

(Resigned as Chairman w.e.f. June 1, 2012 and retired as Whole-time Director w.e.f. December 1, 2012)

2. Mr. K. Nithyananda Reddy, Whole-time Director

3. Dr. M. Sivakumaran, Whole-time Director

4. Mr. M. Madan Mohan Reddy, Whole-time Director

5. Mr. N. Govindarajan, Managing Director

6. Mr. Ravindra Shenoy, Joint Managing Director (Resigned w.e.f. November 9, 2012)

Relatives to key managerial personnel

1. Mr. P. Sarath Chandra Reddy (Son of Mr. P.V. Ramprasad Reddy, Director)

2. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time Director)

8. Leases

a. Operating lease

i. Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/cancellable at the option of either of the parties except for details in (ii) below. There is no escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the Statement of Profit and Loss is Rs.43.2 (March 31, 2013: Rs.17.1).

The Company has not recognized any contingent rent as expense in the Statement of Profit and Loss.

b. Finance lease

Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs.25.6 (March 31, 2013: Rs.25.6).

The net carrying amount of the buildings obtained on finance lease: Rs.13.3 (March 31, 2013: Rs.14.6).

9. In accordance with paragraph 10 of Notified Accounting Standard 9 on Revenue Recognition, excise duty on sales amounting to Rs.1,588.2 (March 31, 2013: Rs.1,444.0) has been reduced from sales in Statement of Profit and Loss and excise duty on (increase)/decrease in closing stock of finished goods amounting to (Rs.0.8) (March 31, 2013: Rs.4.2) has been (credited)/debited to the Statement of Profit and Loss.

10. Details of advances due from private companies in which Company''s Director is a director: Pravesha Industries Private Limited, India Rs.Nil (March 31, 2013: Rs.0.03).

Auropro Soft Systems Private Limited, India Rs.0.08 (March 31, 2013: Rs.Nil). Pranit Projects Private Limited, India Rs.1.3 (March 31, 2013: Rs.Nil).

11. i. Details of trade receivables due from private companies in which Company''s Director is a director:

Pravesha Industries Private Limited, India Rs.0.06 (March 31, 2013: Rs.Nil).

ii. Details of trade receivables due from partnership firm in which Company''s Director is a partner: Sri Sai Packaging, India Rs.Nil (March 31, 2013: Rs.Nil).

12. Segment reporting

In accordance with Accounting Standard 17 - Segment Reporting, segment information has been provided in the Consolidated Financial Statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

13. The figures of previous year have been regrouped/rearranged, wherever necessary to conform to those of the current year.

Mar 31, 2013

1. Capital and other commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for - Rs.211.5 (March 31, 2012: Rs.476.5).

2. Contingent liabilities

Particulars As at As at March 31, 2013 March 31, 2012

Outstanding bank guarantees 486.3 391.9

Claims arising from disputes not acknowledged as debts

- indirect taxes (excise duty and service tax)* 196.3 140.7

Claims arising from disputes not acknowledged as debts - direct taxes* 105.0 105.0

Claims against the Company not acknowledged as debts* 493.1 23.7

Bills discounted with banks 3,252.9 -

Corporate guarantee to bank for loan taken by 100% subsidiary - 1,589.8

* in respect of above matters, future cash outfows in respect of contingent liabilities are determinable only on receipt of judgements pending at various forums/authorities.

3. The income tax authorities had carried out search operations on the Company at certain locations during the previous year. The Company has fully co-operated with the authorities and various statements were recorded during the course of these operations. In order to avoid possible litigations, without admitting any irregularities, the Company had decided to offer an additional income and to pay the resultant tax. Accordingly, provision for income tax of Rs.48.7 on this additional income had been made in the previous year. The proceedings are in progress and no other material implications are expected by the management in this matter.

4. Employee stock options

a. Employee Stock Option Plan ''ESOP-2004''

The Company instituted an Employee Stock Option Plan ''ESOP-2004'' as per the special resolution passed in the 17th Annual General Meeting held on July 31, 2004. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 to grant options of 2,538,500 to eligible employees on August 1, 2004 and July 28, 2005. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying equity share of Rs.1 each. The said options vest on an annual basis at 15%, 20%, 25% and 40% over a period of four years and can be exercised over a period of six years from the date of grant of options.

The options have been granted at the then prevailing market price of Rs.72.52 per share and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

b. Employee Stock Option Plan ''ESOP-2006''

The Company instituted an Employee Stock Option Plan ''ESOP-2006'' as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Compensation Committee accordingly, granted total 3,210,500 options under seven grants of 175,000, 25,000, 90,000, 1,205,000, 300,000, 500,000 and 915,500 options to eligible employees on October 30, 2006, July 31, 2007, October 31, 2007, December 16, 2011, June 19, 2012, January 9, 2013 and January 28, 2013 respectively. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying equity share of Rs.1 each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.120.70, Rs.132.35, Rs.114.50, Rs.91.60, Rs.106.05, Rs.200.70 and Rs.187.40 per share respectively and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

b. Disclosures related to defined benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days last drawn salary for each completed year of service.

The scheme is funded with an insurance company in the form of a qualifying insurance policy. The following tables summarise the components of net benefit expense recognized in the Statement of Profit and Loss, the fund status and Balance Sheet position:

5. Disclosure regarding derivative financial instruments

a. The aggregate amount of forward contracts entered into by the Company and remaining outstanding at year end are given below: Sell

US $ Nil, Rs.Nil (March 31,2012: US $ 18.0, Rs.915.8) - To hedge receivables in foreign currency.

US $ Nil, Rs.Nil (March 31,2012: US $ 27.0, Rs.1,373.6) - To hedge external commercial borrowing draw down.

b. Particulars of unhedged foreign currency exposure are detailed below at the exchange rate prevailing as at the Balance Sheet date:

6. In respect of the amounts mentioned under Section 205C of the Companies Act, 1956 there are no dues that are to be credited to the Investor Education and Protection Fund as at March 31, 2013 Rs.Nil (March 31, 2012: Nil)

7. Research and Development expenses

a. Details of Research and Development expenses incurred during the year, debited under various heads of Statement of Profit and Loss is given below:

8. Related party disclosures

Names of related parties and description of relationship Subsidiaries

1. APL Pharma Thai Limited, Thailand

2. ALL Pharma (Shanghai) Trading Company Limited, China

3. Aurobindo Pharma USA Inc., U.S.A.

4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5. Helix Healthcare B.V., The Netherlands

6. APL Holdings (Jersey) Limited, Jersey

7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil

8. APL Healthcare Limited, India

9. Auronext Pharma Private Limited, India

10. APL Research Centre Limited, India

11. Auro Pharma Inc., Canada

12. Aurobindo Pharma (Pty) Limited, South Africa

13. Aurobindo Pharma (Australia) Pty Limited, Australia

14. Agile Pharma B.V., The Netherlands

15. Aurobindo Switzerland AG, Switzerland

16. Auro Healthcare (Nigeria) Limited, Nigeria

17. Aurobindo ILAC Sanayi ve Ticaret Limited Sirketi, Turkey

18. Aurobindo Pharma (Singapore) Pte Limited, Singapore

19. Aurobindo Pharma Limited, s.r.l., Dominican Republic

20. Aurobindo Pharma Japan K.K., Japan

21. Pharmacin B.V., The Netherlands

22. Aurobindo Pharma GmbH, Germany

23. Aurobindo Pharma (Portugal) Unipessoal LDA, Portugal

24. Aurobindo Pharma (Bulgaria) EAD, Bulgaria

25. Aurobindo Pharma France SARL, France

26. Laboratorios Aurobindo S L, Spain

27. Agile Malta Holdings Limited, Malta

28. Aurobindo Pharma B.V., The Netherlands

29. Aurobindo Pharma (Romania) s.r.l., Romania

30. Aurobindo Pharma (Poland) Sp.z.o.o., Poland

31. Aurobindo Pharma (Italia) S.r.l., Italy

32. Agile Pharma (Malta) Limited, Malta

33. Aurobindo Pharma (Malta) Limited, Malta

34. APL IP Company Limited, Jersey

35. APL Swift Services (Malta) Limited, Malta

36. Milpharm Limited, U.K.

37. Aurolife Pharma LLC, U.S.A.

38. Auro Peptides Limited, India

39. Auro Medics Pharma LLC, U.S.A.

40. Aurobindo Pharma NZ Limited, New Zealand

41. Aurovida Farmaceutica SA DE CV, Mexico

42. Aurobindo Antibiotics Limited, India

43. Auro Health LLC, U.S.A. (w.e.f. September 13, 2012)

44. Aurobindo Pharma Hungary Kereskedelmi KFT, Hungary (Closed w.e.f. September 13, 2012)

Joint ventures

1. Novagen Pharma (Pty) Limited, South Africa (Joint venture of a subsidiary)

2. Zao Auros Pharma, Russia (Joint venture of a subsidiary) (Closed during the year without any operations)

Enterprises over which key management personnel or their relatives exercise significant influence

1. Pravesha Industries Private Limited, India

2. Sri Sai Packaging, India (Partnership firm)

3. Trident Chemphar Limited, India

4. Auropro Soft Systems Private Limited, India

5. Axis Clinicals Limited, India

6. Pranit Projects Private Limited, India

7. Pranit Packaging Private Limited, India

8. Matri Mirra Packaging Private Limited, India

9. Vaxer Pharma Limited, India

10. Silicon Life Sciences Private limited, India

11. Orem Access Bio Inc., India

Key managerial personnel

1. Mr. P.V. Ramprasad Reddy, Director

(Resigned as Chairman w.e.f. June 1, 2012 and retired as Whole-time Director w.e.f. December 1, 2012)

2. Mr. K. Nithyananda Reddy, Whole-time Director

3. Dr. M. Sivakumaran, Whole-time Director

4. Mr. M. Madan Mohan Reddy, Whole-time Director

5. Mr. N. Govindarajan, Managing Director

6. Mr. Ravindra Shenoy, Joint Managing Director (Resigned w.e.f. November 9, 2012)

Relatives to key managerial personnel

1. Mr. P. Sarath Chandra Reddy (Son of Mr. P.V. Ramprasad Reddy, Director)

2. Mrs. Kambam Kirthi Reddy (Daughter of Mr. K. Nithyananda Reddy, Whole-time Director)

3. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time Director)

9. Leases

a. Operating lease

Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/cancellable at the option of either of the parties. There is no escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the Statement of Profit and Loss is Rs.17.0 (March 31, 2012: Rs.23.7).

The Company has not recognized any contingent rent as expense in the Statement of Profit and Loss.

b. Finance lease

Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs.25.5 (March 31, 2012: Rs.25.5).

The net carrying amount of the buildings obtained on finance lease - Rs.14.6 (March 31, 2012: Rs.15.9).

10. In accordance with paragraph 10 of Notified Accounting Standard 9 on Revenue Recognition, excise duty on sales amounting to Rs.1,444.0 (March 31, 2012: Rs.972.8) has been reduced from sales in Statement of Profit and Loss and excise duty on increase/decrease in closing stock of finished goods amounting to Rs.4.2 [March 31, 2012: Rs.31.8 (credit)] has been debited to the Statement of Profit and Loss.

11. Details of advances due from private companies in which Company''s Director is a director.

Pravesha Industries Private Limited, India Rs.Nil (March 31, 2012: Rs.22.6)

12. i. Details of trade receivables due from private companies in which Company''s Director is a director.

Pravesha Industries Private Limited, India Rs.Nil (March 31, 2012: Rs.2.5)

ii. Details of trade receivables due from partnership firm in which Company''s Director is a partner.

Sri Sai Packaging, India Rs.Nil (March 31, 2012: Nil)

13. Interest in joint ventures

Details of interest in jointly controlled entities are given below:

a. Contingent liabilities of the above joint ventures Rs. Nil (March 31, 2012: Nil).

b. Capital commitments of the above joint ventures Rs. Nil (March 31, 2012: Nil).

c. Novagen Pharma (Pty) Limited, incorporated in South Africa, is engaged in distribution of pharmaceuticals products.

d. Previous year''s figures have been disclosed in italics.

e. All figures presented above represent Company''s share only.

14. Segment reporting

In accordance with Accounting Standard 17 - Segment Reporting, segment information has been provided in the Consolidated Financial Statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

15. The figures of previous year have been regrouped/rearranged, wherever necessary to conform to those of the current year.

Mar 31, 2012

A. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs1 per share. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.

During the year ended March 31, 2012 the amount of per share dividend recognized as distributions to equity shareholders was Rs1 (March 31, 2011: Rs2).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

i. Secured term loans in foreign currency carry interest in the range of LIBOR plus 2% to 2.5%. Out of these loans, loans amounting to Rs3,815.6 (March 31, 2011: Rs2,229.7) are repayable in 3 equal installments in 4th, 5th, 6th years from the respective final draw down dates, and loans amounting to Rs3,815.6 (March 31, 2011: Rs1,783.8) are repayable at the end of 5th year from the respective final draw down date.

ii. Unsecured term loans in foreign currency carry interest in the range of LIBOR plus 3% to 3.75%. These loans are repayable in 2012-13.

iii. Refer Note 30 for terms of issue of Foreign Currency Convertible Bonds (''FCCBs'').

iv. Deferred sales tax loan is interest free and payable in various installments as per sales tax deferment scheme. The last installment is payable in 2025-26.

v. Term loans are secured by first pari passu charge on all the present and future fixed assets both movable and immoveable property of the Company.

Capital work-in-progress Rs5,580.8 (March 31, 2011: Rs5,367.3).

i. The title deeds of land and buildings aggregating to Rs148.4 (March 31, 2011: 140.6) are pending transfer to the Company''s name.

ii. Capital work-in-progress include expenditure during construction period amounting to Rs1,226.5 (March 31, 2011: Rs692.7) (Refer Note 33).

iii. An amount of Rs4.5 (March 31, 2011: RsNil) is transferred from capital work-in-progress to assets held for sale.

iv. Depreciation for the year include Rs4.1 (March 31, 2011: Rs4.6) taken as pre-operative capital expenditure on capital projects pending capitalization.

v. Additions to fixed assets and capital work-in-progress during the year include value of capital expenditure towards research centre aggregating to Rs396.0 (March 31, 2011: Rs363.2) [Refer Note 37(b)].

vi. Details of finance lease (Refer Note 41).

Note:

i. The outstanding Tranche A and Tranche B Zero Coupon Foreign Currency Convertible Bonds (''FCCB'' or ''Bonds'') of USD 139.20 Million, issued in May 2006, were repaid in entirety on maturity during the year along with the redemption premium (Yield to Maturity) amounting to Rs3,198.6, inclusive of withholding taxes.

ii. During the previous year the Company has divested its 80.5% stake in Aurobindo (Datong) Bio-Pharma Company Limited, China, (ADBPL) one of its subsidiary.

1. Capital and other commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for - Rs476.5 (March 31, 2011: Rs1,980.1).

Company has given corporate guarantee for the loan extended by DBS, Singapore to Aurobinodo Pharma U.S.A. The loan amount outstanding as on March 31,2012 is Rs1,589.8 (March 31, 2011: RsNil).

2. Contingent liabilities

Particulars As at As at March 31, 2012 March 31, 2011

Outstanding bank guarantees 391.9 341.4 Claims arising from disputes not acknowledged as debts relating to

- indirect taxes (Excise duty & Service tax) 140.7 90.6

- direct taxes 105.0 100.0 Claims against the Company not acknowledged as debts 23.7 20.4 Premium on potential redemption of FCCBs Nil Refer

Note 3 (c)

3. Foreign Currency Convertible Bonds (''FCCBs''):

a. Terms of Issue

During the year ended March 31, 2007, the Company issued 150,000 zero coupon FCCBs due in 2011 (Tranche A Bonds) of USD 1,000 each and 50,000 Zero coupon FCCBs due in 2011 (Tranche B Bonds) of USD 1000 each, on the following terms:

Either convertible by the Tranche A bondholders at any time on or after June 27, 2006 but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011 and by the Tranche B bondholders at any time on or after May 17, 2007 (Conversion price setting date) but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011. Each Tranche A bond will be converted into fully paid up equity shares with par value of Rs5 per share at a fixed price of Rs1,014.06 per share at a fixed exchange rate conversion of Rs45.145 = USD 1. Each Tranche B bond will be converted into fully paid up equity shares with par value of Rs5 per share at a fixed price of Rs879.13 per share at a fixed exchange rate conversion of Rs45.145 = USD 1; or

Redeemable by the Company in respect of Tranche A bonds at the relevant Accreted Principal Amount, in whole but not in part at any time on or after November 16, 2008 and on or prior to May 10, 2011 and in respect of Tranche B bonds at the relevant Accreted Principal Amount, in whole but not in part at any time on or after May 17, 2009 and on or prior to May 10, 2011 as per the terms and conditions of the bonds mentioned in the Offering Circular;

Redeemable at 146.285% of its principal amount on maturity date in respect of Tranche A bonds and at 146.991% of its principal amount on maturity date in respect of Tranche B bonds if not redeemed or converted earlier.

b. Outstanding FCCBs

The outstanding FCCBs as at March 31, 2011 were 139,200, which were redeemed in full during the current year.

c. Redemption premium on potential redemption of FCCBs

As at March 31, 2011 the cumulative premium on potential redemption of FCCBs issued during the year ended March 31, 2007 aggregates to USD 70.2 equivalent to Rs3,132.0. The payment of such premium on redemption was contingent in nature, the outcome of which was dependent upon uncertain future events, hence no provision was considered. The outstanding FCCBs along with Yield to Maturity were redeemed during the current year.

4. Employee stock options

a. Employee Stock Option Plan ''ESOP-2004''

The Company instituted an Employee Stock Option Plan ''ESOP-2004'' as per the special resolution passed in the 17th Annual General Meeting held on July 31, 2004. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 to grant options of 2,538,500 to eligible employees on August 1, 2004 and July 28, 2005. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying Equity Share of Rs1 each. The said options vest on an annual basis at 15%, 20%, 25% and 40% over a period of four years and can be exercised over a period of six years from the date of grant of options.

The options have been granted at the then prevailing market price of Rs72.52 per share and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

b. Employee Stock Option Plan ''ES0P-2006''

The Company instituted an Employee Stock Option Plan ''ESOP-2006'' as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The compensation committee accordingly, granted total 1,495,000 options under four grants of 175,000, 25,000 , 90,000 and 1,205,000 options to eligible employees on October 30, 2006, July 31, 2007, October 31, 2007 and December 16, 2011 respectively. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying Equity Share of Rs1 each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs120.70, Rs132.35, Rs114.50 and Rs91.60 per share respectively and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

5. Employee benefits

a. Disclosures related to defined contribution plan

Provident fund contribution recognized as expense in the Statement of Profit and Loss Rs82.8 (March 31, 2011: Rs72.2).

b. Disclosures related to defined benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days last drawn salary for each completed year of service.

The scheme is funded with an insurance company in the form of a qualifying insurance policy. The following tables summarise the components of net benefit expense recognized in the Statement of Profit and Loss, the fund status and Balance Sheet position:

Notes:

i. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

ii. Percentage of plan assets as investments with insurer is 100%.

iii. The expected rate of return on assets is based on the expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

iv. The Company expects to contribute Rs25.0 (March 31, 2011: Rs60.0) to the qualifying insurance policy in 2012-13.

6. Disclosure regarding derivative financial instruments

a. The aggregate amount of forward contracts entered into by the Company and remaining outstanding at year end are given below: Sell US $ 18.0, Rs915.8 (March 31,2011: US $ Nil) - To hedge receivables in foreign currency.

US $ 27.0, Rs1,373.6 (March 31,2011: US $ Nil) - To hedge external commercial borrowing draw down.

Buy

US$ Nil (March 31, 2011: US $ 11.6, Rs519.3) - To hedge payables in foreign currency.

7. In respect of the amounts mentioned under Section 205C of the Companies Act, 1956 there are no dues that are to be credited to the Investor Education and Protection Fund as at March 31, 2012 (March 31, 2011: RsNil).

8. Related party disclosures

Names of related parties and description of relationship Subsidiaries

1. APL Pharma Thai Limited, Thailand

2. ALL Pharma (Shanghai) Trading Company Limited, China

3. Aurobindo Pharma U.S.A. Inc, U.S.A.

4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5. Helix Healthcare B.V., The Netherlands

6. APL Holdings (Jersey) Limited, Jersey

7. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil

8. APL Health Care Limited, India

9. Auronext Pharma (Private) Limited, India

10. APL Research Centre Limited, India

11. Auro Pharma Inc., Canada

12. Aurobindo Pharma (Pty) Limited, South Africa

13. Aurobindo Pharma (Australia) Pty Limited, Australia

14. Agile Pharma B.V., The Netherlands

15. Aurobindo Pharma Hungary Kereskedelmi Kft, Hungary

16. Aurobindo Switzerland AG, Switzerland

17. Auro Healthcare (Nigeria) Limited, Nigeria

18. Aurobindo ILAC Sanayi ve Ticaret Limited, Turkey

19. Aurobindo Pharma (Singapore) Pte Limited, Singapore

20. Aurobindo Pharma Limited, s.r.l., Dominican Republic

21. Aurobindo Pharma Japan K.K., Japan

22. Pharmacin B.V., The Netherlands

23. Aurobindo Pharma GmbH, Germany

24. Aurobindo Pharma (Portugal) Unipessoal LDA, Portugal

25. Aurobindo Pharma (Bulgaria) EAD, Bulgaria

26. Aurobindo Pharma France SARL, France

27. Laboratorios Aurobindo S L, Spain

28. Agile Malta Holdings Limited, Malta

29. Aurobindo Pharma B.V., The Netherlands

30. Aurobindo Pharma (Romania) s.r.l., Romania

31. Aurobindo Pharma (Poland) Sp.z.o.o., Poland

32. Aurobindo Pharma (Italia) S.r.l., Italy

33. Agile Pharma (Malta) Limited, Malta

34. Aurobindo Pharma (Malta) Limited, Malta

35. APL IP Company Limited, Jersey

36. APL Swift Services (Malta) Limited, Malta

37. Milpharm Limited, U.K.

38. Aurolife Pharma LLC, U.S.A.

39. Auro Peptides Limited, India

40. Auro Medics Pharma LLC, U.S.A.

41. Aurobindo Pharma NZ Limited, New Zealand

42. Aurovida Farmaceutica SA DE CV, Mexico

43. Aurobindo (Datong) Bio-Pharma Company Limited, China

(Refer Note 27)

44. Aurex Generics Limited, U.K. (Liquidated w.e.f. March 31, 2011)

45. Zao Express Pharma, Russia (Liquidated w.e.f. April 1, 2010)

46. Aurobindo Pharma Aps, Denmark (Liquidated w.e.f. September 16, 2010)

47. Sia Aurobindo Baltics, Latvia (Liquidated w.e.f. November 26, 2010)

48. Aurobindo Pharma (Ireland) Limited, Ireland (Liquidated w.e.f. May 31, 2010)

Joint ventures

1. Aurosal Pharmaceuticals LLC, U.S.A. (Joint Venture of a Subsidiary) (Closed w.e.f. December 31, 2011)

2. Novagen Pharma (Pty) Limited, South Africa (Joint venture of a subsidiary)

3. Zao Auros Pharma, Russia (Joint venture of a subsidiary)

4. Cephazone Pharma LLC, U.S.A, (Joint venture of a subsidiary) (Disposed w.e.f. October 1, 2010)

Enterprises over which key management personnel or their relatives exercise significant influence

1. Pravesha Industries Private Limited, India

2. Sri Sai Packaging, India (Partnership firm)

3. Trident Chemphar Limited, India

4. Auropro Soft Systems Private Limited, India

5. Axis Clinicals Limited, India

6. Pranit Projects Private Limited, India (Formerly known as Pranit Happy Homes Private Limited)

7. Pranit Packaging Private Limited, India

8. Matri Mirra Packaging Private Limited, India

Key managerial personnel

1. Mr. P.V. Ramprasad Reddy, Chairman

2. Mr. K. Nithyananda Reddy, Managing Director

3. Dr. M. Sivakumaran, Whole-time Director

4. Mr. M. Madan Mohan Reddy, Whole-time Director

Relatives to key managerial personnel

1. Mr. P. Sarath Chandra Reddy (Son of Mr. P.V. Ramprasad Reddy, Chairman)

2. Mrs. Kambam Kirthi Reddy (Daughter of Mr. K. Nithyananda Reddy, Managing Director)

3. Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time Director)

9. Leases

a. Operating lease

Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/ cancellable at the option of either of the parties. There is no escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the Statement of Profit and Loss is Rs23.8 (March 31, 2011: Rs19.4).

The Company has not recognized any contingent rent as expense in the Statement of Profit and Loss.

b. Finance lease

Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs25.6 (March 31, 2011: Rs55.2).

The net carrying amount of the buildings obtained on finance lease - Rs15.9 (March 31, 2011: Rs32.0).

10. In accordance with paragraph 10 of Notified Accounting Standard 9 on Revenue Recognition, excise duty on sales amounting to Rs972.8 (March 31, 2011: Rs968.7) has been reduced from sales in Statement of Profit and Loss and excise duty on increase/decrease in closing stock of finished goods amounting to Rs31.8 (March 31, 2011: Rs26.7) has been credited (March 31, 2011: debit) to the Statement of Profit and Loss.

11. The Company is in the process of applying to the Central government for approval of excess managerial remuneration amounting to Rs25.1 paid to four directors during the year beyond the limits specified in Part II of Section II (B) and Section III of Schedule XIII of the Companies Act, 1956. The Company believes that such approval will be obtained in due course and would not have any material impact upon the financial statements.

12. i. Details of advances due from private companies in which Company''s Director is a director.

Pravesha Industries Private Limited, India Rs22.7 (March 31, 2011: Rs175.2)

ii. Details of advances due from partnership firm in which Company''s Director is a partner.

Sri Sai Packaging, India RsNil (March 31, 2011: Rs8.4)

13. i. Details of trade receivables due from private companies in which Company''s Director is a director.

Pravesha Industries Private Limited, India Rs2.5 (March 31, 2011: Rs6.2)

ii. Details of trade receivables due from partnership firm in which Company''s Director is a partner.

Sri Sai Packaging, India RsNil (March 31, 2011: RsNil)

14. The Income Tax Authorities had carried out search operations on the Company at certain locations during the current year. The Company has fully co-operated with the authorities and various statements were recorded during the course of these operations. In order to avoid possible litigations, without admitting any irregularities, the Company has decided to offer an additional income of Rs150.0 for tax and to pay the resultant tax. Accordingly provision for income tax of Rs48.7 on this additional income has been made. The proceedings are in progress and no other material implications are expected by the management in this matter.

a. Contingent liabilities of the above joint ventures RsNil (March 31, 2011: Rs Nil).

b. Capital commitments of the above joint ventures RsNil (March 31, 2011: Rs Nil).

c. Aurosal Pharmaceuticals LLC, U.S.A. engaged in the development, manufacturing and distribution of pharmaceutical products, was closed on December 31, 2011.

d. Novagen Pharma (Pty) Limited incorporated in South Africa, is engaged in distribution of pharmaceuticals products.

e. Cephazone Pharma LLC, U.S.A. engaged in the production of sterile and non-sterile Cephalosporin''s, was sold in the previous year.

f. ZAO Auros Pharma incorporated in Russia during the year, is engaged in distribution of pharmaceuticals products. There were no transactions during the year.

g. Previous year''s figures have been disclosed in italics.

h. All figures presented above represent Company''s share only.

15. Segment reporting

In accordance with Accounting Standard 17 - Segment Reporting, segment information has been provided in the Consolidated Financial Statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

Mar 31, 2011

1. Capital commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for - Rs.1,980 (March 31, 2010: Rs.1,168).

2. Contingent liabilities

Particulars March 31, 2011 March 31, 2010

Premium on potential redemption of Foreign Currency Convertible Bonds(FCCBs) Refer note Refer note

6(d) below 6(d) below

Outstanding bank guarantees 341.4 244.8

Claims arising from disputes relating to direct and indirect taxes not acknowledged as debts 190.6 217.5

Claims against the company not acknowledged as debts 20.4 4.9

3. Sub-division of shares

In the current year with effect from February 11, 2011, the Companys equity shares of face value Rs.5 each have been subdivided into five equity shares of face value Rs.1 each. Consequently, the basic and diluted earnings per share, dividend, and nominal value of shares of the previous year have been recalculated and disclosed accordingly.

4. Foreign Currency Convertible Bonds

The Company issued Foreign Currency Convertible Bonds (FCCBs) during the years ended March 31, 2006 and March 31, 2007. The details of such issue are given below:

a. FCCBs issued during the year ended March 31, 2006:

60,000 Zero Coupon FCCBs due in 2010 of USD 1,000 each on the following terms:

. either convertible by the holders at any time on or after September 20, 2005 but prior to close of business (at the place the bonds are deposited for conversion) on August 8, 2010. Each bond will be converted into fully paid up equity shares with par value of Rs.5 per share at a fixed price of Rs.522.036 per share at a fixed exchange rate conversion of Rs.43.3925 = USD 1; or

. redeemable in whole but not in part at the option of the Company at any time on or after February 25, 2008 and on or prior to August 1, 2010 as per the terms and conditions of the bonds mentioned in the Offering Circular;

. redeemable on maturity date at 139.954% of its principal amount if not redeemed or converted earlier.

b. FCCBs issued during the year ended March 31, 2007:

150,000 Zero Coupon FCCBs due in 2011 (Tranche A Bonds) of USD 1,000 each and 50,000 FCCBs due in 2011 (Tranche B Bonds) of USD 1,000 each were issued on the following terms:

. either convertible by the Tranche A bondholders at any time on or after June 27, 2006 but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011 and by the Tranche B bondholders at any time on or after May 17, 2007 (Conversion price setting date) but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011. Each Tranche A bond will be converted into fully paid up equity shares with par value of Rs.5 per share at a fixed price of Rs.1,014.06 per share at a fixed exchange rate conversion of Rs.45.145 = USD 1. Each Tranche B bond will be converted into fully paid up equity shares with par value of Rs.5 per share at a fixed price of Rs.879.13 per share at a fixed exchange rate conversion of Rs.45.145 = USD 1; or

. redeemable by the Company in respect of Tranche A bonds at the relevant accreted principal amount, in whole but not in part at any time on or after November 16, 2008 and on or prior to May 10, 2011 and in respect of Tranche B bonds at the relevant Accreted Principal Amount, in whole but not in part at any time on or after May 17, 2009 and on or prior to May 10, 2011 as per the terms and conditions of the bonds mentioned in the Offering Circular;

. redeemable at 146.285% of its principal amount on maturity date in respect of Tranche A bonds and at 146.991% of its principal amount on maturity date in respect of Tranche B bonds if not redeemed or converted earlier.

c. Outstanding FCCBs

. In respect of the bonds issued during the year ended March 31, 2006, 29,664 bonds of USD 1,000 each were converted into 2,465,714 equity shares of Rs.5 each at premium of Rs.517.036 during the year (before sub-division of shares), and 2,118 bonds of USD 1,000 each were redeemed on maturity date during the year. The outstanding FCCBs as at March 31, 2011 is Nil (March 31, 2010: 31,782).

. In respect of the bonds issued during the year ended March 31, 2007, the outstanding FCCBs as at March 31, 2011 is 139,200 bonds of USD 1,000 each (March 31, 2010: 139,200).

d. Redemption premium on potential redemption of FCCBs

. The cumulative premium on potential redemption of FCCBs issued during the years ended March 31, 2006 and March 31, 2007 aggregates to USD 70.2 (March 31, 2010: USD 58.6) equivalent to Rs.3,132.0 (March 31, 2010: Rs.2,632.6). The payment of premium on redemption is contingent in nature, the outcome of which is dependent upon uncertain future events. Hence, no provision is considered in the accounts in respect of such premium for the year.

e. In the current year with effect from February 11, 2011, the Companys equity shares of face value Rs.5 each have been subdivided into five equity shares of face value Rs.1 each. The conversion price and the number of shares for conversion mentioned in above paragraphs for outstanding FCCBs will be adjusted accordingly effective February 11, 2011 as per the Offering Circular.

f. In the opinion of the Company, as the bonds are convertible into equity shares and accordingly, the creation of debenture redemption reserve is not required.

5. Employee stock options (Refer Note 5 above)

a. Employee Stock Option Plan ESOP-2004

The Company instituted an Employee Stock Option Plan ESOP-2004 as per the special resolution passed in the 17th Annual General Meeting held on July 31, 2004. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 to grant options of 507,700 to eligible employees on August 1, 2004 and July 28, 2005. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying Equity Share of Rs.5 each. The said options vest on an annual basis at 15%, 20%, 25% and 40% over a period of four years and can be exercised over a period of six years from the date of grant of options.

The options have been granted at the then prevailing market price of Rs.362.60 per share and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

b. Employee Stock Option Plan ESOP-2006

The Company instituted an Employee Stock Option Plan ESOP-2006 as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The compensation committee accordingly, granted total 58,000 options under three grants of 35,000, 5,000 and 18,000 options to eligible employees on October 30, 2006, July 31, 2007 and October 31, 2007 respectively. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying Equity Share of Rs.5 each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.603.50, Rs.661.75 and Rs.572.50 per share respectively and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

6. Employee benefits

a. Disclosures related to defined contribution plan

Provident fund contribution recognized as expense in the Profit and Loss Account is Rs.72.2 (March 31, 2010: Rs.57.5).

b. Disclosures related to defined benefit plan

The Company has a defined benefit gratuity ptan. Every Employee who has completed five years or more of service gets a gratuity on departure at 15 days last drawn salary for each completed year of service.

7. Details of security given for secured loans

a. Term loans are secured by:

. first pari passu charge on all the present and future fixed assets of the Company both movable and immoveable property.

b. Other working capital loans from banks are secured by:

. first charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future).

. second charge on all the fixed assets of the Company both present and future subject to charges created in favor of term lenders.

8. Export incentives

Sales for the year include export incentives on account of various schemes amounting to Rs.504.2 (March 31, 2010: Rs.515.7).

9. Disclosure regarding derivative financial instruments

a. The aggregate amount of forward contracts entered into by the Company and remaining outstanding at year end are given below:

Sell

US $ Nil (March 31, 2010: US $ 16.0, INR 718.4) - To hedge receivables in foreign currency.

Buy

US $ 11.6, INR 519.3 (March 31, 2010: Nil) - To hedge payables in foreign currency.

10. Sundry creditors

a. In respect of the amounts mentioned under Section 205C of the Companies Act, 1956 there are no dues that are to be credited to the Investor Education and Protection Fund as at March 31, 2011 (March 31, 2010: Rs.Nil).

11. Related party disclosures

i. Names of related parties and description of relationship a. Subsidiaries

1. APL Pharma Thai Limited, Thailand

2. ALL Pharma (Shanghai) Trading Company Limited, China

3. Aurobindo Pharma USA Inc, U.S.A.

4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5. Aurobindo (Oatong) Bio-Pharma Company Limited, China*

6. Helix Healthcare B.V., The Netherlands

7. APL Holdings (Jersey) Limited, Jersey

8. Aurobindo Pharma Produtos Farmaceuticos Limitada, Brazil

9. APL Health Care Limited, India

10. Auronext Pharma Private Limited, India

11. APL Research Centre Limited, India

12. Aurex Generics Limited, U.K. (Liquidated w.e.f. March 31, 2011)

13. Auro Pharma Inc., Canada

14. Zao Express Pharma, Russia (Liquidated w.e.f. April 1, 2010)

15. Aurobindo Pharma (Pty) Limited, South Africa

16. Aurobindo Pharma (Australia) Pty Limited, Australia

17. Agile Pharma B.V., The Netherlands

18. Aurobindo Pharma Hungary Kereskedelmi Kft, Hungary

19. Aurobindo Switzerland AG, Switzerland

20. Auro Healthcare (Nigeria) Limited, Nigeria

21. Aurobindo ILAC Sanayi ve Ticaret Limited Sirketi, Turkey

22. Aurobindo Pharma (Singapore) Pte Limited, Singapore

23. Aurobindo Pharma Limited, s.r.l. Dominican Republic

24. Aurobindo Pharma Japan K.K., Japan

25. Pharmacin B.V., The Netherlands

26. Aurobindo Pharma GmbH, Germany

27. Aurobindo Pharma (Portugal) Unipessoal LDA, Portugal

28. Aurobindo Pharma ApS, Denmark (Liquidated w.e.f. September 16, 2010)

29. Sia Aurobindo Baltics, Latvia (Liquidated w.e.f. November 26, 2010)

30. Aurobindo Pharma (Bulgaria) EAD, Bulgaria

31. Aurobindo Pharma France SARL, France

32. Laboratories Aurobindo S L, Spain

33. Agile Malta Holdings Limited, Malta

34. Aurobindo Pharma (Ireland) Limited, Ireland (Liquidated w.e.f. May 31, 2010)

35. Aurobindo Pharma B.V., The Netherlands

36. Aurobindo Pharma (Romania) s.r.l., Romania

37. Aurobindo Pharma (Poland) Sp.z.o.o., Poland

38. Aurobindo Pharma (Italia) S.r.l. Italy

39. Agile Pharma (Malta) Limited, Malta

40. Aurobindo Pharma (Malta) Limited, Malta

41. APL IP Company Limited, Jersey

42. APL Swift Services (Malta) Limited, Malta

43. Milpharm Limited, U.K.

44. Aurolife Pharma LLC, U.S.A.

* Refer note 4 above.

b. Joint ventures

Aurosal Pharmaceuticals LLC, U.S.A. (Joint venture of a subsidiary)

Cephazone Pharma LLC, U.S.A. (Joint venture of a subsidiary)*

Novagen Pharma (Pty) Limited, South Africa (Joint venture of a subsidiary)

* Disposed w.e.f. October 1, 2010)

c. Enterprises over which key management personnel or relatives exercise significant influence

Pravesha Industries Private Limited, India

Sri Sai Packaging, India (Partnership firm)

Trident Chemphar Limited, India

Auropro Soft Systems Private Limited, India

Axis Clinicals Limited, India

RPR Trust, India

Pranit Happy Homes Private Limited, India

Pranit Packaging Private Limited, India

d. Key managerial personnel

Mr. P.V. Ramprasad Reddy, Chairman

Mr. K. Nithyananda Reddy, Managing Director

Dr. M. Sivakumaran, Whole-time Director

Mr. M. Madan Mohan Reddy, Whole-time Director

e. Relative to key managerial personnel

Ms. P. Suneela Rani (Wife of Mr. P.V. Ramprasad Reddy, Chairman)

Ms. K. Rajeswari (Wife of Mr. K. Nithyananda Reddy, Managing Director)

Mr. P. Sarath Chandra Reddy (Son of Mr. P.V. Ramprasad Reddy, Chairman)

Mr. P. Rohit Reddy (Son of Mr. P.V. Ramprasad Reddy, Chairman)

Ms. Kambam Kirthi Reddy (Daughter of Mr. K. Nithyananda Reddy, Managing Director)

Ms. Spoorthi Kambam (Daughter of Mr. K. Nithyananda Reddy, Managing Director)

Mr. K. Suryaprakash Reddy (Brother of Mr. K. Nithyananda Reddy, Managing Director)

Mr. Prasad Reddy Kambam (Brother of Mr. K. Nithyananda Reddy, Managing Director)

Ms. Sashi S. Kumar (Wife of Dr. M. Sivakumaran, Whole-time Director)

Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time Director)

12. Leases

a. Operating lease

Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/ cancelable at the option of either of the parties. There is no escalation clause in the lease agreement. There are no sub-leases. There are no restrictions imposed by lease arrangements. The aggregate amount of operating lease payments recognized in the Profit and Loss Account is Rs.19.4 (March 31, 2010: Rs.15.1).

The Company has not recognized any contingent rent as expense in the statement of Profit and Loss Account.

b. Finance lease

Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs.55.2 (March 31, 2010: U9.Z).

The net carrying amount of the buildings obtained on finance lease - Rs.32.0 (March 31, 2010: Rs.32.3).

13. In accordance with paragraph 10 of Notified Accounting Standard 9 on Revenue Recognition, excise duty on sales amounting to Rs.968.6 (March 31, 2010: Rs.673.3) has been reduced from sales in Profit and Loss Account and excise duty on increase in closing stock of finished goods amounting to Rs.26.7 (March 31, 2010: Rs.2.1) has been debited to the Profit and Loss Account.

14. In accordance with Accounting Standard 17 - Segment Reporting, segment information has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

The figures of the previous year have been re-grouped/rearranged, wherever necessary to conform to those of the current year.

Mar 31, 2010

1. Capital commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for - Rs. 1168 (March 31, 2009: Rs. 709).

2. Contingent Liabilities

Particulars March 31, 2010 March 31, 2009

Premium on potential redemption of Foreign Currency Convertible Bonds Refer note Refer note

6(d) below 6(d) below

Outstanding bank guarantees 244.8 213.3

Bills discounted with banks - 62.8*

Claims arising from disputes relating to direct and indirect taxes

not acknowledged as debts 217.5 123.6

Dossier sales with refund clause 1,095.6 635.3

Claims against the Company not acknowledged as debts 4.9 4.9

- secured by personal guarantees of the Chairman and the Managing Director

3. Scheme of Arrangement under Sections 391 to 393 of the Companies Act, 1956

The shareholders of the Company vide a Court convened meeting held on May 21, 2009 approved a Scheme of Arrangement under Sections 391 to 393 read with Sections 100 to 103 and other applicable provisions of the Companies Act, 1956. The said Scheme provides for utilization of capital profit arising on buy-back and cancellation of Foreign Currency Convertible Bonds (FCCBs), the balances standing to the credit of Capital Reserve Account and Capital Redemption Reserve Account to adjust certain expenses as determined by the management detailed below. The aforesaid Scheme was filed before the Honble High Court of Andhra Pradesh.

In the current year, the Honble High Court of Andhra Pradesh has dismissed the Scheme filed by the Company. The Company has appealed against the Order of the High Court and the appeal is pending before the appellate body.

In the previous year, pending approval of the High Court, the Company had credited the entire capital profit on buyback and cancellation of FCCBs net of expenses, amounting to Rs. 36.2 as an exceptional item to the Profit and Loss Account. Similarly the capital profit on buy- back of FCCBs made during the year ended March 31, 2010 amounting to Rs. 21.9 has been credited to the Profit and Loss Account and has been disclosed as an exceptional item.

Acquisition and amalgamation of Trident Life Sciences Limited (Trident)

Trident is in the process of setting up a state-of-the-art facility for manufacturing injectables at Medak District in Andhra Pradesh. The Company acquired the entire equity shares of Trident Life Sciences Limited (Trident) on September 18, 2009. Pursuant to this acquisition, Trident became a wholly owned subsidiary of the Company.

In order to achieve the synergies of consolidation and to achieve cost optimization through reduction of administration and other operational cost, it was decided to amalgamate Trident with the Company with effect from October 1, 2009 (the appointed date). Accordingly, a Scheme of Amalgamation (the Scheme) of Trident with the Company under Sections 391 to 394 of the Companies Act, 1956 was approved by the shareholders of the Company at a Court convened meeting held on January 20, 2010. The Honble High Court of Andhra Pradesh approved the Scheme on March 30, 2010. The salient features of the Scheme are set out below:

- With effect from the appointed date, entire business and whole of the undertaking(s) of Trident including all its properties and assets, investments, licenses, permits, approvals, lease, tenancy rights, permissions, and all its debts, liabilities, contingent liabilities, duties and obligations shall vest with the Company;

- All assets and liabilities of Trident transferred to and vested shall be recorded in the books of the Company at their respective book values;

- The authorized equity share capital of Trident has got merged with the authorized equity share capital of the Company;

- All inter-company balances, if any, including share application money shall be eliminated; and

- The value of investment in the share capital of Trident appearing in the books of the Company shall stand cancelled. As Trident is a wholly owned subsidiary of the Company, the amalgamation does not involve any consideration.

4. Foreign Currency Convertible Bonds

The Company issued Foreign Currency Convertible Bonds (FCCBs) during the years ended March 31, 2006 and March 31, 2007. The details of such issue are given below:

a. FCCBs issued during the year ended March 31, 2006:

60,000 Zero Coupon Foreign Currency Convertible Bonds (bonds) due in 2010 of USD 1,000 each on the following terms:

- either convertible by the holders at any time on or after September 20, 2005 but prior to close of business (at the place the bonds are deposited for conversion) on August 8, 2010. Each bond will be converted into 83.12 fully paid up equity share with par value of Rs. 5 per share at a fixed price of Rs. 522.036 per share at a fixed exchange rate conversion of Rs. 43.3925= USD 1; or

- Redeemable in whole but not in part at the option of the Company at any time on or after February 25, 2008 and on or prior to August 1, 2010 as per the terms and conditions of the bonds mentioned in the Offering Circular;

- Redeemable on maturity date at 139.954% of its principal amount if not redeemed or converted earlier.

b. FCCBs issued during the year ended March 31, 2007:

150,000 zero coupon FCCBs due in 2011 (Tranche A Bonds) of USD 1,000 each and 50,000 Forward Conversion Convertible Bonds due in 2011 (Tranche B Bonds) of USD 1000 each were issued on the following terms:

- Either convertible by the Tranche A bondholders at any time on or after June 27, 2006 but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011 and by the Tranche B bondholders at any time on or after May 17, 2007 (Conversion price setting date) but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011. Each Tranche A bond will be converted into 44.52 fully paid up equity share with par value of Rs. 5 per share at a fixed price of X1,014.06 per share at a fixed exchange rate conversion of Rs. 45.145 = USD 1. Each Tranche B bond will be converted into 51.35 fully paid up equity shares with par value of Rs. 5 per share at a fixed price of Rs. 879.13 per share at a fixed exchange rate conversion of Rs.45.145 = USD 1; or

- Redeemable by the Company in respect of Tranche A bonds at the relevant Accreted Principal Amount, in whole but not in part at any time on or after November 16, 2008 and on or prior to May 10, 2011 and in respect of Tranche B bonds at the relevant Accreted Principal Amount, in whole but not in part at any time on or after May 17, 2009 and on or prior to May 10, 2011 as per the terms and conditions of the bonds mentioned in the Offering Circular;

- Redeemable at 146.285% of its principal amount on maturity date in respect of Tranche A bonds and at 146.991% of its principal amount on maturity date in respect of Tranche B bonds if not redeemed or converted earlier.

c. Outstanding FCCBs

- In respect of the bonds issued during the year ended March 31, 2006, 21,818 bonds of USD 1,000 each were converted into 1,813,539 equity shares of Rs. 5 each at premium of Rs. 517.036 during the year. The outstanding FCCBs as at March 31, 2010 is 31,782 bonds (March 31, 2009: 53,600). Subsequent to the Balance Sheet date, 6,714 bonds of USD 1,000 each were converted into equity shares and the conversion of 2,000 bonds of USD 1,000 each lodged with the Company is in progress.

- In respect of the bonds issued during the year ended March 31, 2007, 1,800 bonds (March 31, 2009: 59,000 bonds) of USD 1,000 each were cancelled pursuant to a buy back during the year. The outstanding FCCBs as at March 31, 2010 is 139,200 bonds (March 31, 2009: 141,000).

d. Redemption premium on potential redemption of FCCBs

- The cumulative premium on potential redemption of FCCBs issued during the years ended March 31, 2006 and March 31, 2007 aggregates to USD 58.6 (March 31, 2009: USD 53.2) equivalent to Rs. 2,632.6 (March 31, 2009: Rs. 2,699.4). The payment of premium on redemption is contingent in nature, the outcome of which is dependent on uncertain future events. Hence, no provision is considered in the accounts in respect of such premium for the year.

e. In the opinion of the Company, as the bonds are convertible into equity shares and accordingly, the creation of debenture redemption reserve is not required.

5. Employee benefits

a. Disclosures related to defined contribution plan

Provident fund contribution recognized as expense in the Profit and Loss Account is Rs. 57.5 (March 31, 2009: Rs. 47.5)

b. Disclosures related to defined benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days last drawn salary for each completed year of service.

6. Details of security given for secured loans

a. Term loans are secured by:

- First pari passu charge on the fixed assets of the Company located at various plants of the Company.

- Personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs. Nil (March 31, 2009: Rs. 750.0).

b. Other working capital loans from banks are secured by:

- First charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future).

- Second charge on all the fixed assets of the Company both present and future subject to charges created in favour of term lenders.

- Personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs. Nil (March 31, 2009: Rs. 7,379.8).

- Hire purchase loans from banks are secured by hypothecation of the related assets.

7. Unsecured loans

Short term loans from banks to the extent of Rs. Nil (March 31, 2009: Rs. 1,115.0) are personally guaranteed by the Chairman and the Managing Director of the Company.

8. Export incentives

Sales for the year includes export incentives on account of various schemes amounting to Rs. 515.7 (March 31, 2009: Rs. 393.0).

9. Related Party Disclosures

i. Names of related parties and description of relationship a. Subsidiaries

1. APL Pharma Thai Limited, Thailand

2. ALL Pharma (Shanghai) Trading Company Limited, China

3. Aurobindo Pharma USA Inc., U.S.A.

4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil

5. Aurobindo (Datong) Bio-pharma Company Limited China

6. Helix Healthcare B.V., The Netherlands

7. APL Holdings (Jersey) Limited, Jersey

8. Aurobindo Pharma Produtos Farmaceuticos Ltda, Brazil

9. APL Healthcare Limited, India

10. APL Research Centre Limited, India

11. Aurex Generics Limited, U.K.

12. Auro Pharma Inc., Canada

13. Zao Aurobindo Pharma, Russia

14. Aurobindo Pharma (Pty) Limited, South Africa

15. Aurobindo Pharma (Australia) Pty Limited, Australia

16. Agile Pharma B.V., The Netherlands

17. Aurobindo Pharma Hungary Kereskedelmi Kft, Hungary

18. Aurobindo Switzerland AG, Switzerland

19. Auro Healthcare (Nigeria) Limited, Nigeria

20. Aurobindo ILAC Sanayi ve Ticaret Limited, Sirketi

21. Aurobindo Pharma Japan K.K., Japan

22. Pharmacin B.V., The Netherlands

23. Aurobindo Pharma GmbH, Germany

24. Aurobindo Pharma (Portugal) Unipessoal LDA, Portugal

25. Aurobindo Pharma ApS, Denmark

26. Sia Aurobindo Baltics, Latvia

27. Aurobindo Pharma (Bulgaria) EAD, Bulgaria

28. Aurobindo Pharma France SARL, France

29. Laboratorios Aurobindo S L, Spain

30. Agile Malta Holdings Limited, Malta

31. Aurobindo Pharma (Ireland) Limited

32. Aurobindo Pharma (Italia) S.r.l., Italy

33. Agile Pharma (Malta) Limited, Malta

34. Aurobindo Pharma (Malta) Limited, Malta

35. APL IP Company Limited, Jersey

36. APL Swift Services (Malta) Limited, Malta

37. Milpharm Limited, U.K.

38. Aurolife Pharma LLC, U.S.A.

39. Auronext Pharma Private Limited, India

40. Trident Life Sciences Limited, India*

-Amalgamated with the Company with effect from October 1, 2009.

b. Joint ventures

Aurosal Pharmaceuticals LLC, U.S.A. (Joint venture of a subsidiary)

Cephazone Pharma LLC, USA (Joint venture of a subsidiary)

Novagen Pharma (Pty) Limited, South Africa (Joint venture of a subsidiary)

c. Enterprises over which key management personnel or relatives exercise significant influence

Pravesha Industries Private Limited, India Sri Sai Packaging, India (Partnership firm) Trident Chemphar Limited, India Auropro Soft Systems Private Limited, India Axis Clinicals Limited, India RPR Trust, India

d. Key managerial personnel

Mr. P.V. Ramprasad Reddy, Chairman

Mr. K. Nithyananda Reddy, Managing Director

Dr. M. Sivakumaran, Whole-time Director

Mr. M. Madan Mohan Reddy, Whole-time Director

e. Relative to key managerial personnel

Ms. P. Suneela Rani (Wife of Mr. P.V. Ramprasad Reddy, Chairman)

Ms. K. Rajeswari (Wife of Mr. K. Nithyananda Reddy, Managing director)

Mr. P. Sarath Chandra Reddy (Son of Mr. P.V. Ramprasad Reddy, Chairman)

Mr. Penaka Rohit Reddy (Son of Mr. P.V. Ramprasad Reddy, Chairman)

Ms. Kambam Kirthi Reddy (Daughter of Mr. K. Nithyananda Reddy, Managing Director)

Ms. Spoorthi Kambam (Daughter of Mr. K. Nithyananda Reddy, Managing Director)

Mr. K. Suryaprakash Reddy (Brother of Mr. K. Nithyananda Reddy, Managing Director)

Mr. Prasad Reddy Kambam (Brother of Mr. K. Nithyananda Reddy, Managing Director)

Ms. Sashi S. Kumar (Wife of Dr. M. Sivakumaran, Whole-time Director)

Ms. Shilpa Sivakumaran (Daughter of Dr. M. Sivakumaran, Whole-time Director)

Mr. Vishnu M. Sriram (Son-in-law of Dr. M. Sivakumaran, Whole-time Director)

10. Leases

a. Operating lease

Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/cancelable at the option of either of the parties. There is no escalation clause in the lease agreement. There are no sub-leases. The aggregate amount of operating lease payments recognized in the Profit and Loss Account Rs. 15.1 (March 31, 2009: Rs. 10.2).

b. Finance lease

Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs. 49.2 (March 31, 2009: Rs. 72.0).

The net carrying amount of the buildings obtained on finance lease - Rs. 32.3 (March 31, 2009: Rs. 53.5).

The Company has not recognized any contingent rent as expense in the statement of Profit and Loss Account.

There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no sub-leases.

11. In accordance with paragraph 10 of Notified Accounting Standard 9 on Revenue Recognition, excise duty on sales amounting to Rs. 673.3 (March 31, 2009: Rs. 904.2) has been reduced from sales in Profit and Loss Account and excise duty on increase/decrease in closing stock of finished goods amounting to Rs. 2.1 (March 31, 2009: Rs. 0.7) has been debited to (March 31, 2009: credit) in the Profit and Loss Account.

12. The Company has appointed an employee covered under Section 314 of the Companies Act, 1956. The employment is subject to an approval from the Central Government. The Company has filed an application for obtaining the approval and the same is pending with the Central Government. In the meanwhile, the Company has paid remuneration to the employee. The Company is confident of obtaining approval from the Central Government and believes that the risk of rejection of the employment contract by the Central Government is remote.

13. In accordance with Accounting Standard 17 - Segment Reporting, segment information has been provided in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

14. The current year figures include those relating to transferor company viz., Trident Life Sciences Limited and therefore the figures of the previous year are not comparable with those of the current year. Further, the figures of the previous year have been re-grouped/rearranged, wherever necessary to conform to those of the current year.

Mar 31, 2009

1. Capital commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for Rs.709.0 (Rs.1,212.2).

2. Contingent Liabilities

2008-2009 2007-2008

a. Claims against the Company not acknowledged as debts 4.9 4.9 b. Outstanding bank guarantees 213.3 256.2 c. Bills discounted with banks 62.8 323.4 (Secured by personal guarantees of the Chairman and the Managing Director) d. Direct and indirect taxes 123.6 263.5 e. Dossier sales 125.3 131.3

f. During the financial year 2005-06, the Company had issued 60,000 zero coupon Foreign Currency Convertible Bonds of USD 1,000 each. The bonds are redeemable at a premium of 39.954% of its principal amount on the maturity date, or in whole at any time on or after February 25, 2008 and on or prior to August 1, 2010 at a minimum of 130% of the accreted principal amount if the bonds are not converted earlier. There are 53,600 FCCBs outstanding as at the date of Balance Sheet. The payment of premium on redemption is contingent in nature, the outcome of which is dependant on uncertain future events. Hence, no provision is considered in the accounts in respect of such premium for the year amounting to USD 3.9 million (USD 3.9 million) equivalent to Rs.320.8 (Rs.128.2) and the cumulative premium amounts to USD 15.6 million (USD 11.7 million) equivalent to Rs.790.2 (Rs.469.4) at the prevailing exchange rate as at Balance Sheet date.

g. During the financial year 2006-07, the Company has issued 150,000 zero coupon Foreign Currency Convertible Bonds due 2011 (Tranche A Bonds) of USD 1,000 each and 50,000 Forward Conversion Convertible Bonds due 2011 (Tranche B Bonds) of USD 1000 each. Tranche A Bonds and Tranche B Bonds are redeemable at 146.285% and 146.991% respectively of its principal amount on the maturity date. There are 141,000 FCCBs outstanding as at the date of Balance Sheet. The payment of premium on redemption is contingent in nature, the outcome of which is dependant on uncertain future events. Hence, no provision is considered in the accounts in respect of such premium for the year amounting to USD 2.8 million (USD 18.6 million) equivalent to Rs.510.8 (Rs.691.4) and the cumulative premium amounts to USD 37.7 million (USD 34.9) equivalent to Rs.1,909.2 (Rs.1,398.3) at the prevailing exchange rate as at Balance Sheet date.

i. Employee Stock Option Scheme

a. Employee Stock Option Plan ESOP-2004

The Company instituted an Employee Stock Option Plan "ESOP-2004" as per the special resolution passed in the 17th Annual General Meeting held on July 31, 2004. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 to grant options of 507,700 to eligible employees on August 1, 2004 and July 28, 2005. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying Equity Share of Rs.5 each. The said options vest on an annual basis at 15%, 20%, 25% and 40% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.362.60 per share and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

b. Employee Stock Option Plan ESOP-2006

The Company instituted an Employee Stock Option Plan "ESOP-2006" as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The compensation committee accordingly, granted total 58,000 options under three grants of 35,000, 5,000 and 18,000 options to eligible employees on December 30, 2006, July 31, 2007 and October 31, 2007 respectively. The method of settlement under scheme is by issue of equity shares of the Company. Each option comprises of one underlying Equity Share of Rs.5 each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.603.50, Rs.661.75 and Rs. 572.50 per share respectively and hence the question of accounting for employee deferred compensation expense does not arise as the Company follows intrinsic value method.

ii. During the financial year 2005-06, the Company issued 60,000 Zero Coupon Foreign Currency Convertible Bonds due 2010 of USD 1,000 each. Each bond is convertible into 83.12 fully paid equity shares with par value of Rs.5 per share at a fixed price of Rs.522.036 per share, on or after September 20, 2005 but prior to close of business hours on August 8, 2010. There are 53,600 outstanding bonds as at March 31, 2009.

iii. During the financial year 2006-07, the Company has issued 150,000 Zero Coupon Foreign Currency Convertible bonds (Tranche A bonds) and 50,000 Forward Conversion Convertible Bonds (Tranche B Bonds) due 2011 of USD 1,000 each. Each tranche A bond is convertible into 44.52 fully paid equity share with par value of Rs.5 per share at a fixed price of Rs.1014.06 per share, on or after June 27, 2006 but prior to close of business hours on May 10, 2011. Each tranche B bond is convertible into 51.35 fully paid equity share with par value of Rs.5 per share at a fixed price of Rs.879.13 per share, on or after May 17, 2007 but prior to close of business hours on May 10, 2011. There are 141,000 outstanding bonds as at March 31, 2009.

3. Scheme of Arrangement pending High Court Order:

Pursuant to the approval of the shareholders to the Scheme of Arrangement between the Company and its shareholders at the court convened meeting held on May 21, 2009, the Company filed a petition with the HonÂble High Court of Judicature of Andhra Pradesh at Hyderabad to sanction the said Scheme under Sections 391 to 393 read with Sections 100 to 103 and other applicable provisions of the Companies Act, 1956. In terms of the said Scheme, it is proposed to credit the capital profit arising on buy-back and cancellation of Foreign Currency Convertible Bonds (FCCB) and the amount standing to the credit of Capital Reserve Account as on March 31, 2008 to an account called the "Reconstruction Reserve Account". The Scheme provides for the utilization of the said "Reconstruction Reserve Account" along with "Capital Redemption Reserve Account", outstanding as on March 31, 2008 to adjust certain "Expenses" as defined in the Scheme such as diminution in value of investments, obsolete or unrealizable fixed assets, current assets, loans and advances as determined by the management.

The HonÂble High Court of Judicature of Andhra Pradesh at Hyderabad heard the Companys petition on July 27, 2009 and the matter is reserved for order. Pending pronouncement of the Order, the Company has credited an amount of Rs.1,044.9 being capital profit on buyback and cancellation of FCCBs and debited certain "Expenses" aggregating to Rs.1,008.7 (net of taxes) as exceptional item in the Profit and Loss Account, aggregating to net of Rs.36.2 as detailed below. The effect to the Scheme will be incorporated in the financial statements of the year in which the Court Order is made effective.

4. Retirement benefits

a. Disclosures related to defined contribution plan

Provident fund contribution recognized as expense in the Profit and Loss Account Rs.47.5 (Rs.41.1).

b. Disclosures related to defined benefit plan

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days last drawn salary for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarise the components of net benefit expense recognized in the Profit and Loss Account, the fund status and Balance Sheet position.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The Company expects to contribute Rs.40.0 to gratuity in 2009-10.

5. Secured loans

a. Term loans are secured by:

- first pari passu charge on the fixed assets of the Company located at various plants of the Company.

- personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs.750.0 (Rs.Nil).

b. Other working capital loans from banks are secured by:

- first charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future).

- second charge on all the fixed assets of the Company both present and future subject to charges created in favour of term lenders.

- personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs.7,379.8 (Rs.4,275.3).

c. Hire purchase loans from banks are secured by hypothecation of the related assets.

6. Unsecured loans

a. Short term loan

Short term loans from banks to the extent of Rs.1,115.0 (Rs.370.9) are personally guaranteed by the Chairman and the Managing Director of the Company.

b. Foreign Currency Convertible Bonds

1. 60,000 Zero Coupon Foreign Currency Convertible Bonds (bonds) due 2010 of USD 1,000 each issued in financial year 2005-06 are:

i. either convertible by the holders at any time on or after September 20, 2005 but prior to close of business (at the place the bonds are deposited for conversion) on August 8, 2010. Each bond will be converted into 83.12 fully paid up equity share with par value of Rs.5 per share at a fixed price of Rs.522.036 per share at a fixed exchange rate conversion of Rs.43.3925= USD 1.

ii. or redeemable in whole but not in part at the option of the Company at any time on or after February 25, 2008 and on or prior to August 1, 2010 as per the terms and conditions of the bonds mentioned in the Offering Circular.

iii. redeemable on maturity date at 139.954% of its principal amount if not redeemed or converted earlier.

iv. in the opinion of the Company, since bonds are convertible into equity shares, the creation of Debenture Redemption Reserve is not required.

v. out of the above 4,500 bonds of USD 1,000 each were converted into 374,046 equity shares of Rs.5 each at premium of Rs.517.036 during the year 2007-08 and 1,900 bonds were cancelled through FCCB buyback procedure during the year. The total FCCB bonds outstanding as at March 31, 2009 are 53,600.

7. During the financial year 2006-07, the Company has issued 150,000 zero coupon Foreign Currency Convertible Bonds due 2011 (Tranche A Bonds) of USD 1,000 each and 50,000 Forward Conversion Convertible Bonds due 2011 (Tranche B Bonds) of USD 1,000 each, which are:

i. either convertible by the Tranche A bondholders at any time on or after June 27, 2006 but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011 and by the Tranche B bondholders at any time on or after May 17, 2007 (Conversion price setting date) but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011. Each Tranche A bond will be converted into 44.52 fully paid up equity share with par value of Rs.5 per share at a fixed price of Rs.1,014.06 per share at a fixed exchange rate conversion of Rs.45.145 = USD 1. Each Tranche B bond will be converted into 51.35 fully paid up equity shares with par value of Rs.5 per share at a fixed price of Rs.879.13 per share at a fixed exchange rate conversion of Rs.45.145 = USD 1.

ii. or redeemable by the Company in respect of Tranche A bonds at the relevant Accreted Principal Amount, in whole but not in part at any time on or after November 16, 2008 and on or prior to May 10, 2011 and in respect of Tranche B bonds at the relevant Accreted Principal Amount, in whole but not in part at any time on or after May 17, 2009 and on or prior to May 10, 2011 as per the terms and conditions of the bonds mentioned in the Offering Circular.

iii. redeemable at 146.285% of its principal amount on maturity date in respect of Tranche A bonds and at 146.991% of its principal amount on maturity date in respect of Tranche B bonds if not redeemed or converted earlier.

iv. in the opinion of the Company bonds are convertible into equity shares, the creation of Debenture Redemption Reserve is not required.

v. out of the above 59,000 bonds of USD 1,000 each were cancelled through FCCB buyback procedure during the year. The total FCCB bonds outstanding as at March 31, 2009 are 141,000.

8. Related Party Disclosures

a. Names of related parties and description of relationship Subsidiaries

1. APL Pharma Thai Ltd, Thailand

2. ALL Pharma (Shanghai) Trading Company Limited, China

3. Aurobindo Pharma USA Inc, U.S.A.

4. Aurobindo Pharma Industria Farmaceutica Ltda, Brazil (formerly AB Farmo Industria Farmaceutica Ltda, Brazil)

5. Aurobindo (Datong) Bio-pharma Company Limited, China

6. Helix Healthcare B.V., The Netherlands

7. APL Holdings (Jersey) Limited, Jersey

8. Aurobindo Pharma Produtos Farmaceuticos Ltda,Brazil

9. APL Healthcare Limited, India

10. APL Research Centre Limited, India

11. Aurex Generics Limited, U.K.

12. Auro Pharma Inc. Canada

13. Zao Aurobindo Pharma, Russia

14. Aurobindo Pharma (PTY) Limited, South Africa

15. Aurobindo Pharma (Australia) PTY Limited, Australia

16. Agile Pharma B.V., The Netherlands

17. Aurobindo Pharma Hungary Kereskedelmi KFT, Hungary

18. Aurobindo Switzerland AG, Switzerland

19. Auro Healthcare (Nigeria) Limited, Nigeria

20. Aurobindo Pharma Japan K.K., Japan

21. Pharmacin B.V., The Netherlands

22. Aurobindo Pharma (Portugal) Unipessoal LDA, Portugal

23. Aurobindo Pharma ApS, Denmark

24. Sia Aurobindo Baltics, Latvia

25. Aurobindo Pharma (Bulgaria) EAD, Bulgaria

26. Aurobindo Pharma France SARL, France

27. Pharmacin International B.V., The Netherlands*

28. Laboratorios Aurobindo S L, Spain

29. Agile Malta Holdings Limited, Malta

30. Aurobindo Pharma (Ireland) Limited

31. Aurobindo Pharma (Italia) S.r.l. Italy

32. Agile Pharma (Malta) Limited, Malta

33. Aurobindo Pharma (Malta) Limited., Malta

34. APL IP Company Limited, Jersey

35. APL Swift Services (Malta) Limited

36. Milpharm Limited, U.K.

37. Aurolife Pharma LLC, U.S.A.

* Liquidated on December 22, 2008

Joint Ventures

Aurosal Pharmaceuticals LLC, U.S.A. (Joint venture of a subsidiary) Cephazone Pharma LLC, U.S.A. (Joint venture of a subsidiary)

Enterprises over which significant influence exists

Pravesha Industries Private Limited, India

Trident Life Sciences Limited, India

Sri Sai Packaging, India (Partnership firm)

Trident Chemphar Limited, India

Auropro Soft Systems Private Limited, India

Key Management Personnel

Mr. P.V. Ramprasad Reddy, Chairman

Mr. K. Nithyananda Reddy, Managing Director

Dr. M. Sivakumaran, Whole-time Director

Mr. M. Madan Mohan Reddy, Whole-time Director

Mr. B. Sivaprasad Reddy, Non-Executive Director*

Mr. Lanka Srinivas, Non-Executive Director**

* Whole-time director upto July 01, 2007 and resigned from directorship with effect from September 27, 2007.

** Resigned from directorship with effect from October 17, 2007.

Key Management Person Relative

Ms. P. Suneela Rani (Wife of Mr. P.V. Ramprasad Reddy, Chairman)

Ms. K. Rajeswari (Wife of Mr. K. Nithyananda Reddy, Managing director)

Ms. B. Shilpa (Daughter of Mr. B. Sivaprasad Reddy, Whole-time Director)*

Mr. P. Sarath Chandra Reddy (Son of Mr. P.V. Ramprasad Reddy, Chairman)

Mr. P. Rohit Reddy (Son of Mr. P.V. Ramaprasad Reddy, Chairman)

Ms. K. Kirthi Reddy (Daughter of Mr. K. Nithyananda Reddy, Managing Director)

Mr. K. Suryaprakash Reddy (Brother of Mr. K. Nithyananda Reddy, Managing Director)

Mr. K. Prasad Reddy (Brother of Mr. K. Nithyananda Reddy, Managing Director)

Ms. Sashi S. Kumar (wife of Dr. M. Sivakumaran, Whole-time Director)

*Not a relative of key management personnel in the current year.

9. Leases

a. Operating lease

Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/cancelable at mutual consent. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no sub-leases.

Lease payments recognized in the Profit and Loss Account Rs.10.2 (Rs.7.2).

b. Finance lease

i. Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

ii. The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs.72.0 (Rs.64.7).

iii. The net carrying amount of the buildings obtained on finance lease Rs.53.5 (Rs.53.4).

iv. The Company has not recognized any contingent rent as expense in the statement of Profit and Loss Account.

v. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no sub-leases.

10. Disclosure regarding derivative instruments

a. There are no forward contracts outstanding as at March 31, 2009:

24. In accordance with para 10 of Notified Accounting Standard 9 on Revenue Recognition, excise duty on sales amounting to Rs.904.2 (Rs.1,163.9) has been reduced from sales in Profit and Loss Account and excise duty on increase/decrease in closing stock of finished goods amounting to Rs.0.7 (Rs.20.7) has been considered as income in Schedule 20 to the financial statements.

b. Contingent liabilities of the above joint ventures Rs.Nil (Rs.Nil).

c. Capital commitments of the above joint ventures Rs.Nil (Rs.Nil).

d. Previous year figures have been disclosed in italics.

e. Both the aforesaid entities are incorporated in U.S.A.

11. In accordance with Accounting Standard 17 - Segment Reporting, segment information has been given in the Consolidated Financial Statements of the Company and therefore no separate disclosure on segment information is given in these financial statements.

12. The figures of the previous year have been re-grouped/rearranged, wherever necessary to conform to those of current year.

Mar 31, 2008

1. Capital Commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for Rs.1,212.2 (Rs.178.6).

2. Contingent Liabilities

2007-2008 2006-2007

a. Claims against the company not acknowledged as debts 4.9 4.9

b. Outstanding bank guarantees on account of:

i. Subsidiary Company - 4.6

ii.Others 256.2 64.0

c. Bills discounted with banks 323.5 400.5

d. Outstanding letters of credit for import of materials 444.9 518.3

e. Direct and Indirect Taxes 263.5 210.7

f. Dossier sales 131.3 110.9

g. During the financial year 2005-2006, the Company had issued 60,000 Zero Coupon Foreign Currency Convertible Bonds of USD 1,000 each. The bonds are redeemable at a premium of 39.954% of its principal amount on the maturity date, or in whole at any time on or after February 25, 2008 and on or prior to August 1, 2010 at a minimum of 130% of the accreted principal amount if the bonds are not converted earlier. There are 55,500 FCCB Bonds outstanding as at the date of the Balance Sheet. The payment of premium on redemption is contingent in nature, the outcome of which is dependant on uncertain future events. Hence, no provision is considered in the accounts in respect of such premium for the year amounting to USD 3.85 million (USD 4.79 million) equivalent to Rs.128.2 (Rs.204.7) and the cumulative premium amounts to USD 11.7 million (USD 7.85 million) equivalent to Rs.469.4 (Rs.341.2) at the prevailing exchange rate as at the Balance Sheet date.

h. During the financial year 2006-2007, the Company has issued 150,000 Zero Coupon Foreign Currency Convertible Bonds due 2011 (Tranche A Bonds) of USD 1,000 each and 50,000 Forward Conversion Convertible Bonds due 2011 (Tranche B Bonds) of USD 1000 each. Tranche A Bonds and Tranche B Bonds are redeemable at 146.285% and 146.991% respectively of its principal amount on the maturity date. Accordingly, the payment of premium on redemption is contingent in nature, the outcome of which is dependant on uncertain future events. Hence, no provision is considered in the accounts in respect of such premium for the year amounting to USD 18.60 million (USD 16.27 million) equivalent to Rs.691.4 (Rs.706.9) and the cumulative premium amounts to USD 34.87 million equivalent to Rs.1,398.3 at the prevailing exchange rate as at the Balance Sheet date.

3. Amalgamation of APL Life Sciences Limited (Life Sciences) and Senor Organics Private Limited (Senor) with the Company during the financial year 2006-2007

a. Pursuant to the approval of the shareholders of the Company at the Extra-ordinary General Meeting held on February 20, 2007, the Honble High Court of Judicature Andhra Pradesh at Hyderabad vide its Order passed on June 21, 2007 sanctioned the Scheme of Arrangement (Scheme) under Sections 391 to 394 read with Section 78 and Section 100 of the Companies Act, 1956 between Life Sciences and Senor, wholly owned subsidiaries of the Company, with the Company, with effect from April 01, 2006, and confirmed the utilisation of Securities Premium Account towards adjustment of the reduction in the carrying value of certain assets. Accordingly, the erstwhile Life Sciences and Senor have amalgamated with the Company with effect from April 1, 2006. All the assets, liabilities and reserves of the erstwhile Life Sciences and Senor, were transferred to and vest with the Company. The Company has since made the necessary filings with the Registrar of Companies, Andhra Pradesh.

b. Life Sciences was engaged in the business of trading in pharmaceuticals, chemicals and solvent products. Senor was engaged in the business of active pharmaceutical ingredients and drug intermediates.

c. The amalgamation has been accounted for under the pooling of interests method as prescribed under Accounting Standard 14 issued by the Institute of Chartered Accountants of India. Accordingly, the assets, liabilities and reserves of the erstwhile Life Sciences and Senor as at April 1, 2006, have been taken over at their respective book values.

d. Erstwhile Life Sciences and Senor, being Wholly Owned Subsidiaries of the Company, no equity shares were issued by the Company to effect the amalgamation.

e. The difference between the value of the investments and the underlying net assets of the amalgamating companies taken over amounting to Rs.0.7 adjusted against Securities Premium Account as per the scheme during 2006-2007.

4. Secured Loans

a. Term loans are secured by:

- first charge on the immovable properties both present and future, by equitable mortgage by deposit of title deeds by way of constructive delivery of the Companys lands wherever situated.

- first charge on all the movable assets (save and except book debts), both present and future subject to prior charges created in favour of the Companys bankers to secure working capital requirements.

- personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs.Nil (Rs.802.1).

b. Other working capital loans from banks are secured by:

- first charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future).

- second charge on all the fixed assets of the Company both present and future subject to charges created in favour of term lenders.

- personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs.4,275.3 (Rs.5,183.7).

c. Hire purchase loans from banks are secured by hypothecation of the related assets.

5. Unsecured loans

a. Short Term Loan

Short term loans from banks aggregating to Rs.370.9 (Rs.900.0) are personally guaranteed by the Chairman and the Managing Director of the Company.

b. Foreign Currency Convertible Bonds

1. 60,000 Zero Coupon Foreign Currency Convertible Bonds (bonds) due 2010 of USD 1,000 each issued in financial year 2005-06 are:

i. either convertible by the holders at any time on or after September 20, 2005 but prior to close of business (at the place the bonds are deposited for conversion) on August 8, 2010. Each bond will be converted into 83.12 fully paid up equity share with par value of Rs.5 per share at a fixed price of Rs.522.036 per share at a fixed exchange rate conversion of Rs.43.3925 = USD 1.

ii. or redeemable in whole but not in part at the option of the Company at any time on or after February 25, 2008 and on or prior to August 1, 2010 as per the terms and conditions of the bonds mentioned in the Offering Circular.

iii. redeemable on maturity date at 139.954% of its principal amount if not redeemed or converted earlier.

iv. in the opinion of the Company, bonds are convertible into equity shares, the creation of Debenture Redemption Reserve is not required.

v. out of the above 4,500 bonds of USD 1,000 each were converted into 374,046 equity shares of Rs.5 each at premium of Rs.517.036 during the year, and the total FCC8 bonds outstanding as at March 31, 2008 are 55,500.

2. During the financial year 2006-07, the Company has issued 150,000 Zero Coupon Foreign Currency Convertible Bonds due 2011 (Tranche A Bonds) of USD 1,000 each and 50,000 Forward Conversion Convertible Bonds due 2011 (Tranche B Bonds) of USD 1000 each, which are:

i. either convertible by the Tranche A bondholders at any time on or after June 27, 2006 but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011 and by the Tranche B bondholders at any time on or after May 17, 2007 (Conversion price setting date) but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011. Each Tranche A bond will be converted into 44.52 fully paid up equity share with par value of Rs.5 per share at a fixed price of Rs.1,014.06 per share at a fixed exchange rate conversion of Rs.45.145 = USD 1. Each Tranche B bond will be converted into share of Rs.5 per share at an initial conversion price to be determined on Conversion Price Setting Date with a fixed rate of exchange on conversion of Rs.45.145 = USD 1.

ii. or redeemable by the Company in respect of Tranche A bonds at the relevant Accreted Principal Amount, in whole but not in part at any time on or after November 16, 2008 and on or prior to May 10, 2011 and in respect of Tranche B bonds at the relevant Accreted Principal Amount, in whole but not in part at any time on or after May 17, 2009 and on or prior to May 10, 2011 as per the terms and conditions of the bonds mentioned in the Offering Circular.

iii. redeemable at 146.285% of its principal amount on maturity date in respect of Tranche A bonds and at 146,991% of its principal amount on maturity date in respect of Tranche B bonds if not redeemed or converted earlier.

iv. in the opinion of the Company, bonds are convertible into equity shares, the creation of Debenture Redemption Reserve is not required.

6. Sundry Creditors

a. In respect of the amounts mentioned under Section 205C of the Companies Act, 1956 no dues are to be credited to the Investor Education and Protection Fund as at March 31, 2008.

b. The Company has accrued interest of Rs.1.6 (Rs.0.3) on principal amount of Rs.22.4 overdue to Micro, Small and Medium enterprises to the extent identified and the unpaid amount as at year end is Rs.1.9 (Rs.0.3).

7. Export Incentives

Sales include export incentives on account of various schemes amounting to Rs.164.0 (Rs.86.3).

8. Miscellaneous Expenses under Schedule 20 include an amount of Rs.Nil (Rs.59.4) incurred towards claim for invocation of corporate guarantee given to a bank on behalf of erstwhile joint venture.

9. Leases

a. Operating Lease

Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/cancelable at mutual consent. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no sub-leases.

b. Finance Lease

i. Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

ii. The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs.64.7 (Rs.64.7).

iii. The net carrying amount of the buildings obtained on finance lease Rs.53.4 (Rs.56.0).

iv. The Company has not recognised any contingent rent as expense in the statement of Profit and Loss Account.

v. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no sub- leases.

10. In accordance with para 10 of Notified Accounting Standard 9 on Revenue Recognition, excise duty on sales amounting to Rs.1,163.9 (Rs.1,011.5) has been reduced from sales in Profit and Loss Account and excise duty on increase/decrease in stock amounting to Rs.35.1 (Rs.19.4) has been considered as income in Schedule 16 of the financial statements.

Mar 31, 2007

Investments include investment in subsidiaries Rs.1,190.5 (Rs.228.5)

During the year, sale of fixed assets includes Rs.100.0 received in cash on account of sale of one of the business units.

The amalgamation of the erstwhile APL Life Sciences Limited and Senor Organics (Private) Limited is considered as non cash transaction.

Utilisation of Securities Premium Account pursuant to High Court of Judicature, Andhra Pradesh as detailed in Note 6 of Schedule 22 is a non cash transaction and has been dealt accordingly for this Cash Flow Statement.

Previous year's figures have been regrouped/rearranged to conform to those of the current year.

Of the above Equity Shares -

a. 34,703,200 Equity Shares of Rs.5 each were allotted as bonus shares by capitalisation of Securities Premium Account.

b. 1,341,000 Equity Shares of Rs.5 each were allotted for consideration other than cash.

c. The title deeds of Land and Buildings aggregating to Rs.90.1 (Rs.109.1) are pending transfer to the Company's name.

d. Include Rs.0.3 being the value of shares in co-operative housing societies, and net of government grant received Rs.Nil (Rs.0.8).

e. Includes foreign exchange fluctuations capitalised Rs.Nil (Rs.0.4) and net of government grant received Rs.Nil (Rs.8.0).

f. Include capital advances of Rs.76.9 (Rs.85.8), foreign exchange fluctuations Rs.Nil (Rs.0.7) and expenditure during construction period Rs.11.1 (Rs.11.1)

g. Gross Block deletions include Rs.306.6 and deletions in depreciation block include Rs.186.6 adjusted pursuant to High Court of Judicature, Andhra Pradesh at Hyderabad vide Order dated June 21, 2007 (Refer Note 6 on Schedule 22).

h. Additions during the year include Rs.154.9 (Rs.23.7) towards Research Centre capital expenditure.

Capital Commitments

Estimated amount of Contracts (net of advances) remaining to be executed on capital account and not provided for Rs.178.6 (Rs.553.2).

Contingent Liabilities

a. Claims against the company not acknowledged as debts

b. Outstanding Bank Guarantees on account of:

i. Subsidiary Company

ii. Guarantee given for Citadel Aurobindo Biotech Limited (erstwhile 50% Joint Venture company)

iii. Others

c. Bills discounted with Banks

d. Outstanding letters of credit for import of materials

e. Direct and indirect taxes

f. Dossier sales

g. The Employee Provident Fund Organisation (EPFO) has on September 9, 2005 issued a clarification as per which provident fund contributions should be deducted on leave encashment paid on or after May 1, 2005 and further clarified that recovery of PF contribution on leave encashment for the period October 1, 1994 to April 30, 2005 be kept in abeyance. The Company has complied with the said clarification and contributed PF on leave encashment after May 1, 2005. However, for the period October 1, 1994 to April 30, 2005 no provision has been made in the books of accounts as the Company's liability if any towards such contribution is presently not certain.

h. During the financial year 2005-06, the company had issued 60,000 zero coupon Foreign Currency Convertible Bonds of USD 1,000 each. The bonds are redeemable at a premium of 39.954% of its principal amount on the maturity date, or in whole at any time on or after February 25, 2008 and on or prior to August 1, 2010 at a minimum of 130% of the accreted principal amount if the bonds are not converted earlier. The payment of premium on redemption is contingent in nature, the outcome of which is dependant on uncertain future events. Hence, no provision is considered in the accounts in respect of such premium for the year amounting to USD 4.8 million (USD 3.06 million) equivalent to Rs.204.7 (Rs.136.5) and the cumulative premium amounts to USD 7.9 million equivalent to Rs.341.2 at the prevailing exchange rate as at the Balance Sheet date.

i. During the year, the company has issued 150.,000 zero coupon Foreign Currency Convertible Bonds due 2011 (Tranche A Bonds) of USD 1,000 each and 50,000 Forward Conversion Convertible Bonds due 2011 (Tranche B Bonds) of USD 1,000 each. Tranche A Bonds and Tranche B Bonds are redeemable at 146.285% and 146.991% respectively of its principal amount on the maturity date. Accordingly, the payment of premium on redemption is contingent in nature, the outcome of which is dependant on uncertain future events. Hence, no provision is considered in the accounts in respect of such premium for the year amounting to USD 16.3 million equivalent to Rs.707.0 at the prevailing exchange rate as at the Balance Sheet date.

j. Employee Stock Option Scheme

a. Employee Stock Option Plan "ESOP-2004"

The Company instituted an Employee Stock Option Plan "ESOP-2004" as per the special resolution passed in the 17th Annual General Meeting held on July 31, 2004. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 to grant options of 507,700 to eligible employees. Each option comprises of one underlying Equity Share of Rs.5 each. The said options vest on an annual basis at 15%, 20%, 25% and 40% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.362.60 per share and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic value method.

b. Employee Stock Option Plan "ESOP-2006"

The Company instituted an Employee Stock Option Plan "ESOP-2006" as per the special resolution passed in the 19th Annual General Meeting held on September 18, 2006. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The compensation committee accordingly, granted options of 35,000 to eligible employees. Each option comprises of one underlying Equity Share of Rs.5 each. The said options vest on an annual basis at 10%, 15%, 25% and 50% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at the then prevailing market price of Rs.603.50 per share and hence the question of accounting for employee deferred compensation expense does not arise as the Company follows intrinsic value method.

ii. During the Financial Year 2005-06, the Company issued 60,000 Zero Coupon Foreign Currency Convertible Bonds due 2010 of USD 1000 each. Each bond is convertible into 83.12 fully paid equity share with par value of Rs.5 per share at a fixed price of Rs.522.036 per share, on or after September 20, 2005 but prior to close of business hours on August 8, 2010.

iii. During the year, the Company has issued 150,000 Zero Coupon Foreign Currency Convertible Bonds (Tranche A bonds) and 50,000 Forward Conversion Convertible Bonds (Tranche B Bonds) due 2011 of USD 1000 each. Each Tranche A Bond is convertible into 44.52 fully paid equity share with par value of Rs.5 per share at a fixed price of Rs.1014.06 per share, on or after June 27, 2006 but prior to close of business hours on May 10, 2011. Each Tranche B Bond is convertible into fully paid equity share with par value of Rs.5 per share at an initial conversion price to be determined on conversion price setting date on or after May 17, 2007 but prior to close of business hours on May 10, 2011.

Amalgamation of AP Life Sciences Limited (Life Sciences) and Senor Organics Private Limited (Senor) with the Company

a. Pursuant to the approval of the shareholders of the Company at the Extra-ordinary General Meeting held on February 20, 2007, the Hon'ble High Court of Judicature Andhra Pradesh at Hyderabad vide its Order passed on June 21, 2007 sanctioned the Scheme of Arrangement (Scheme) under Section 391 to 394 read with Section 78 and Section 100 of the Companies Act, 1956 between Life Sciences and Senor, wholly owned subsidiaries of the Company, with the Company, with effect from April 01, 2006, and confirmed the utilisation of Securities Premium Account towards adjustment of the reduction in the carrying value of certain assets. Accordingly, the erstwhile Life Sciences and Senor have amalgamated with the Company with effect from April 01, 2006. All the assets, liabilities and reserves of the erstwhile Life Sciences and Senor, were transferred to and vest with the Company. The Company has since made the necessary filings with the Registrar of Companies, Andhra Pradesh.

b. Life Sciences was engaged in the business of trading in pharmaceutical, chemicals and solvent products. Senor was engaged in the business of active pharmaceutical ingredients and drug intermediates.

c. The amalgamation has been accounted for under the "pooling of interests" method as prescribed under Accounting Standard 14 issued by the Institute of Chartered Accountants of India. Accordingly, the assets, liabilities and reserves of the erstwhile Life Sciences and Senor as at April 01, 2006, have been taken over at their respective book values.

d. Erstwhile Life Sciences and Senor, being Wholly Owned Subsidiaries of the Company, no equity shares were issued by the Company to effect the amalgamation.

e. The difference between the value of the investments and the underlying net assets of the amalgamating companies taken over amounting to Rs.0.7 adjusted against Securities Premium Account as per the scheme.

Retirement Benefits

The Company has adopted the Revised Accounting Standard 15 "Employee Benefits", the Company has preferred earlier adoption of the standard effective April 01, 2006. Pursuant to such adoption, the transitional obligation of Rs.11.2 (net of deferred tax Rs.5.8) has been adjusted to General Reserve. Since this being the first year of adoption of revised Accounting Standard 15 "Employee Benefits" previous corresponding figures are not furnished.

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days last drawn salary for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The Company expects to contribute Rs.14.4 to gratuity in 2007-08.

Secured Loans

a. Term loans are secured by:

* first charge on the immovable properties both present and future, by equitable mortgage by deposit of title deeds by way of constructive delivery of the Company's lands wherever situated.

* first charge on all the movable assets (save and except book debts), both present and future subject to prior charges created in favour of the Company's bankers to secure working capital requirements.

* personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs.802.1 (Rs.2,257.1).

* Other working capital loans from banks are secured by:

* first charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future).

* second charge on all the fixed assets of the Company both present and future subject to charges created in favour of term lenders.

* personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs.5,183.7 (Rs.3,291.7).

* Hire purchase loans from banks are secured by hypothecation of the related assets.

Unsecured loans

a. Short Term Loan

Short term loans from banks aggregating to Rs.900.0 (Rs.2,175.0) are personally guaranteed by the Chairman and the Managing Director of the Company.

b. Foreign Currency Convertible Bonds

1. 60,000 Zero Coupon Foreign Currency Convertible Bonds (bonds) due 2010 of USD 1,000 each issued in financial year 2005-06 are:

i. either convertible by the holders at any time on or after September 20, 2005 but prior to close of business (at the place the bonds are deposited for conversion) on August 8, 2010. Each bond will be converted into 83.12 fully paid up equity share with par value of Rs.5 per share at a fixed price of Rs.522.036 per share at a fixed exchange rate conversion of Rs.43.3925=USD 1

ii. or redeemable in whole but not in part at the option of the Company at any time on or after February 25, 2008 and on or prior to August 1, 2010 as per the terms and conditions of the bonds mentioned in the Offering Circular.

iii. redeemable on maturity date at 139.954% of its principal amount if not redeemed or converted earlier.

iv. in the opinion of the Company, bonds are convertible into equity shares, the creation of Debenture Redemption Reserve is not required.

During the year, the Company has issued 150,000 zero coupon Foreign Currency Convertible Bonds due 2011 (Tranche A Bonds) of USD 1,000 each and 50,000 Forward Conversion Convertible Bonds due 2011 (Tranche B Bonds) of USD 1,000 each, which are:

i. either convertible by the Tranche A bondholders at any time on or after June 27, 2006 but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011 and by the Tranche B bondholders at any time on or after May 17, 2007 (Conversion price setting date) but prior to close of business (at the place the bonds are deposited for conversion) on May 10, 2011. Each Tranche A bond will be converted into 44.52 fully paid up equity share with par value of Rs.5 per share at a fixed price of Rs.1,014.06 per share at a fixed exchange rate conversion of Rs.45.145 = USD 1. Each Tranche B bond will be converted into share of Rs.5 per share at an initial conversion price to be determined on Conversion Price Setting Date with a fixed rate of exchange on conversion of Rs.45.145 = USD 1

ii. or redeemable by the Company in respect of Tranche A bonds at the relevant Accreted Principal Amount, in whole but not in part at any time on or after November 16, 2008 and on or prior to May 10, 2011 and in respect of Tranche B bonds at the relevant Accreted Principal Amount, in whole but not in part at any time on or after May 17, 2009 and on or prior to May 10, 2011 as per the terms and conditions of the bonds mentioned in the Offering Circular.

iii. redeemable at 146.285% of its principal amount on maturity date in respect of Tranche A bonds and at 146.991% of its principal amount on maturity date in respect of Tranche B bonds if not redeemed or converted earlier.

iv. in the opinion of the Company bonds are convertible into equity shares, the creation of Debenture Redemption Reserve is not required.

The above information and the amount given in the Current Liabilities (Schedule 13) regarding Small Scale Industrial Undertakings has been determined to the extent such parties have been identified on the basis of information available with the Company.

In respect of the amounts mentioned under Section 205C of the Companies Act, 1956 no dues are to be credited to the Investor Education and Protection Fund as at March 31, 2007.

The Company has accrued interest of Rs.0.3 due to Micro, Small and Medium enterprises to the extent identified and the same is unpaid as at the Balance Sheet date.

Donation

Donation of Rs.1.6 (Rs.1.3) disclosed under Schedule 20 includes contribution made to Andhra Pradesh Congress Committee Rs.0.5 (Rs.0.5), Communist Party of India (Marxist) Rs.0.2 (Rs.Nil) and Communist Party of India Rs.0.1 (Rs.Nil).

Miscellaneous Expenses include an amount of Rs.59.4 incurred towards claim for invocation of corporate guarantee given to a bank on behalf of erstwhile Joint Venture.

Leases

a. Operating Lease

Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable/cancelable at mutual consent. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no sub-leases.

b. Finance Lease

i. Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

ii. The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs.64.7 (Rs.64.7).

iii. The net carrying amount of the buildings obtained on finance lease Rs.56.0 (Rs.58.6).

iv. The Company has not recognised any contingent rent as expense in the statement of Profit and Loss Account.

v. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements.

There are no sub-leases.

During the year, the Company has changed its policy of accounting for product development costs as "Intangible Assets" since in the opinion of the management it is prudent and conservative to expense such items upon incurrence. Accordingly, an amount of Rs.538.7 up to March 31,2007 has been expensed during the year by charge of Rs.536.9 to Securities Premium Account as per Sanction of Andhra Pradesh High Court Order and balance Rs.1.8 to Profit and Loss Account. Further various expenditure eligible for capitalization as product development costs amounting to Rs.18.8 have been directly debited to Profit and Loss Account. Had this been capitalised, the profit for the year would have been higher by Rs.20.7.

In accordance with ASI 14 (Revised) on 'Disclosure of Revenue from Sales Transactions' issued by the Institute of Chartered Accountants of India, excise duty on sales amounting to Rs.1,011.5 (Rs.769.9) has been reduced from sales in the Profit and Loss Account and excise duty on increase/decrease in stock amounting to Rs.19.4 (Rs.26.5) has been considered as income in Schedule 16 of financial statements.

Licensed capacities not stated in view of abolition of industrial licensing for all of the above Bulk Pharmaceutical Substances (including intermediates) and Dosage Forms vide Notification No. F. No 10(II)/92-LP dated October 25, 1994 issued by the Government of India.

The capacity mentioned above is annual capacity based on maximum utilisation of plant and machinery. Based on product mix the quantity of installed capacity may vary.

The annual installed capacities are as certified by management and not verified by the Auditors, being a technical matter,

Production includes quantities processed by loan licensees.

The current year figure include those relating to transferor companies viz., APL Life Sciences Limited and Senor Organics Private Limited and therefore the figures of the previous year are not comparable with those of the current year. Further, the figures of the previous year have been re-grouped/rearranged, wherever necessary to conform to those of current year. '

Mar 31, 2006

NOTES TO ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2006

1. Capital Commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for Rs.553.2 (Rs.550.7)

2. Contingent Liabilities not provided for

2005-2006 2004-2005

a. Claims against the company not acknowledged as debts 1.8 2.8 b. Outstanding Bank Guarantees on account of: i. Subsidiary company 508.9 588.7 ii. Guarantee given for Citadel Aurobindo Biotech Ltd (erstwhile 50% Joint Venture company) 400.0 400.0 iii. Others 49.0 47.2 c. Bills discounted with Banks 452.3 373.9 d. Outstanding letters of credit for import of materials 56.2 132.0 e. Direct and indirect taxes 300.9 221.7 f. Product licensing 40.6 19.5

g. During the period the company has issued 60,000 zero coupon Foreign Currency Convertible Bonds of US$ 1,000 each. The bonds are redeemable at a premium of 39.954% of its principal amount on the maturity date, or in whole at any time on or after February 25, 2008 and on or prior to August 1, 2010 at atleast 130% of the accreted principal amount if the bonds are not converted earlier. Accordingly, the payment of premium on redemption is contingent in nature, the outcome of which is dependant on uncertain future events. Hence, no provision is considered in the accounts in respect of such premium for the year amounting to US$ 3,058,910 equivalent to Rs.136.5 (Rs. Nil) at the prevailing exchange rate as on March 31, 2006.

h. The Employee Provident Fund Organisation (EPFO) has on September 9, 2005 issued a clarification as per which provident fund contributions should be deducted on leave encashment paid on or after May 1, 2005 and further clarified that recovery of PF contribution on leave encashment for the period October 1, 1994 to April 30, 2005 be kept in abeyance. The Company has complied with the said clarification and contributed PF on leave encashment after May 1, 2005. However, for the period October 1, 1994 to April 30, 2005 no provision was made in the books of accounts as the Company's liability towards such contribution is presently not ascertainable.

3. Share Capital

i. The Company has received balance consideration of Rs.587.5 (Rs.Nil) on account of preferential allotment of 2,500,000 (Rs.Nil) equity shares of face value of Rs.5 each at a premium of Rs.370 each on conversion of share warrants allotted during the financial year 2003-04.

ii. Employee Stock Option Scheme

The Company instituted an Employee Stock Option Plan "ESOP-2004" as per the special resolution passed in the 17th Annual General Meeting held on July 31, 2004. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Compensation committee accordingly, granted options of 507,700 to eligible employees. Each option comprises of one underlying equity share of Rs.5 each. The said options vest on an annual basis at 15%, 20%, 25% and 40% over a period of four years and can be exercised over a period of six years from the date of grant of options. The options have been granted at prevailing market price of Rs.362.60 per share and hence the question of accounting for employee deferred compensation expenses does not arise as the Company follows intrinsic method.

4. Reserves and Surplus

The Company had entered into a joint venture agreement with Citadel Fine Pharmaceutical Limited, dated March 27, 2002 and transferred its ethical allopathic branded formulations business to Citadel Aurobindo Biotech Limited (the JV Company) with restrictive clause of not competing in designated markets.

The resultant non-compete fee of Rs.300.0 was directly taken to Capital Reserve Account in the financial year 2001-02 being in the nature of capital receipt, as it was of an exceptional nature which was not earned in the regular course of business.

The said joint venture agreement was terminated during the year. Consequent to such termination the non-compete fee amounting to Rs.300.0 not being recoverable has been adjusted to the Capital Reserve, effectively reversing the initial recognition entry passed in the year 2001-02.

5. Secured Loans

a. Debentures are secured by:

* registered mortgage of immovable property situated at Thane, Maharashtra.

* first pari passu charge by equitable mortgage by deposit of title deeds by way of constructive delivery of all the Company's immovable property wherever situated including plant and machinery, spares, tools and accessories both present and future.

* first charge by way of hypothecation ranking pari-passu with term loans of all the movable assets (save and except book debts), both present and future subject to prior charges created in favour of the Company's bankers to secure working capital requirements.

b. Term loans are secured by:

* first charge ranking pari-passu with debentures on the immovable properties both present and future, by equitable mortgage by deposit of title deeds by way of constructive delivery of the Company's lands wherever situated.

* first charge ranking pari-passu with debentures on all the movable assets (save and except book debts), both present and future subject to prior charges created in favour of the Company's bankers to secure working capital requirements.

* personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs.2,257.1 (Rs.2,890.7)

c. Other working capital loans from banks are secured by:

* first charge, ranking pari-passu by way of hypothecation of all the stocks, book debts and other current assets (both present and future).

* second charge on all the immovable properties of the Company subject to charges created in favour of term lenders and debenture holders.

* personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs.3,291.7 (Rs.2,602.6).

6. Unsecured loans

a. Short Term Loans:

Short Term Loans from banks aggregating to Rs.2,175.0 (Rs.1,300.0) are personally guaranteed by the Chairman and the Managing Director of the Company.

b. Foreign Currency Convertible Bonds:

60,000 Zero Coupon Foreign Currency Convertible bonds (bonds) due 2010 of US$ 1,000 each are:

i. convertible by the holders at any time on or after September 20, 2005 but prior to close of business (at the place the bonds are deposited for conversion) on August 8, 2010. Each bond will be converted into 83.12 fully paid up equity share with par value of Rs.5 per share at a fixed price of Rs.522.036 per share at a fixed exchange rate conversion of Rs.43.3925 = US$ 1.

ii. redeemable in whole but not in part at the option of the Company at any time on or after February 25, 2008 and on or prior to August 1, 2010 as per the terms and conditions of the bonds mentioned in the Offering circular.

iii. redeemable on maturity date at 139.954% of its principal amount if not redeemed or converted earlier.

iv. the Company is of the opinion that since the bonds are convertible into equity shares, the creation of Debenture Redemption Reserve is not required.

7. Investments

There has been a diminution in the value of investments made in subsidiary companies, namely Aurobindo Datong Bio-Pharma Co. Limited, China and Aurobindo Tongling (Datong) Pharmaceutical Co. Limited to an extent of Rs.546.9 (Rs.373.3) and Rs.63.4 (Rs.37.1) respectively, on the basis of net asset value of the said subsidiaries, as at March 31, 2006. An amount of Rs.1121.7 (Rs.889.7) and Rs.191.9 (Rs.Nil) is due from each of the said companies on account of loans granted by the Company. The management considers these investments as strategic in nature and, considering the nature of the industry and gestation period involved, the management is of the opinion that the diminution in value is temporary and no provision is necessary for such diminution.

8. Sundry Debtors and Loans and Advances include receivables from Citadel Aurobindo Biotech Limited (CABL) towards non-compete fee Rs.Nil (Rs.300.0) and towards sale of brands Rs.128.9 (Rs.129.8) and Loan Rs.30.0 (Rs.30.0) respectively. Due to termination of Joint Venture Agreement during the current year, the Company has fully provided for Rs.158.9 (Rs.Nil) in books of account.

9. Sundry Creditors

a. The names of the small scale industrial undertakings to whom the Company owes amounts outstanding for more than 30 days are:

Lisa Ampoules & Vials (P) Ltd Plastic Shapers Global Electronics Ravi Industries Rolon Seals Fine Fabs Pvt Ltd Polomon Instruments Pvt. Ltd Forbes Marshall Paper Pack Industries (Hyd) Limited

b. In respect of the amounts mentioned under Section 205C of the Companies Act, 1956 no dues are to be credited to the Investor Education and Protection Fund as at March 31, 2006.

10. Export Incentives

Sales include export incentives on account of Duty Exemption Pass Book Scheme and Target Plus Scheme Rs.235.5 (Rs.57.4).

11. Donations

Donation of Rs.1.3 (Rs.1.5) disclosed under Schedule 22 includes contribution made to Andhra Pradesh Congress Committee Rs.0.5 (Rs.Nil).

12. Credit available in respect of Minimum Alternative Tax

During the year the Company has recognised Minimum Alternative Tax Credit amounting to Rs.80.9 (Rs.Nil) on excess of income tax liability computed as per provisions of Sec.115JB over the normal provisions of Income Tax Act, 1961 as per Guidance note on Accounting for Credit available in respect of Minimum Alternative Tax under Income Tax Act, 1961 issued by the Institute of Chartered Accountants of India.

Subsequent to the Balance Sheet date the Company has issued Foreign Currency Convertible Bonds as under; however, the transaction do not affect the Capital used to produce the net profit or loss for the year, hence Earnings per Share was not adjusted for the transaction.

US$ 150 Million Convertible Bonds due 2011 (the "Tranche A Bonds") and USD 50 Million Convertible Bonds due 2011 ("Tranche B Bonds").

The issue of the Bonds was authorised by a resolution of the Board of Directors of the Company passed on April 1, 2006 and by a resolution of shareholders of the Company passed on April 27, 2006.

Unless previously redeemed, converted or repurchased and cancelled, the Company will redeem the Tranche A Bonds at 146.285 per cent of its principal amount on the Maturity date, and the Tranche B Bonds at 146.991 per cent of its principal amount on the Maturity date.

In respect of the Tranche A Bonds the Conversion Price (as defined in "Terms and Conditions of the Tranche A Bonds - Conversion") will initially be Rs.1014.06 per share with a fixed rate of exchange on conversion of Rs.45.145 =1 USD. The Conversion Price is subject to adjustment in certain circumstances in the manner provided in such Conditions.

In respect of Tranche B Bonds the Conversion Price (as defined in "Terms and Conditions of Tranche B Bonds - Conversion") will initially be the price per share determined on the Conversion Price Setting date (as defined in "Terms and Conditions of the Tranche B Bonds - Conversion") in accordance with the formula set out in Conditions.

13. Leases

a. Operating Lease

Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable at mutual consent. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no sub-leases.

b. Finance Lease

i. Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

ii. The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs.64.7 (Rs.64.7) which includes an amount of Rs.Nil (Rs.19.3) towards expenditure incurred on renovation.

iii. The net carrying amount of the buildings obtained on finance lease Rs.58.6 (Rs. 61.2).

iv. The Company has not recognised any contingent rent as expense in the statement of Profit & Loss Account.

v. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no sub-leases.

Signed on : 27th June, 2006

Mar 31, 2005

Of the above Equity shares -

a. 34,703,200 Equity Shares of Rs.5 each were allotted as bonus shares by capitalisation of Securities Premium Account,

b. 1,341,000 Equity Shares of Rs.5 each were allotted for consideration other than cash.

c. 2,500,000 Equity Share warrants issued to promoters are to be converted into Equity Shares by August 3, 2005 at the option of warrant holders.

d. During the year, the Company pursuant to special resolution passed at the Annual General Meeting held on July 31, 2004 established a stock option scheme ESOP 2004. As per the scheme, 507,700 (Nil) Options have been allocated for grant to the eligible employees. Each option comprises of one underlying equity share of Rs.5 each. The said options are to be vested on annual basis at 15%, 20%, 25% and 40% over a period of four years.

1. Capital Commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for Rs.550.7 (Rs.217.5 )

2. Contingent Liabilities not provided for

a. Claims against the company not acknowledged as debts b. Outstanding-Bank Guarantees on account of: i. Subsidiary Company ii. Guarantee given for Citadel Aurobindo Biotech Ltd, 50% Joint Venture iii. Others c. Bills discounted with Banks d. Outstanding letters of credit for import of materials e. Direct and Indirect Taxes f. Product licensing

3. Share Capital

The Company has received Rs.Nil (Rs.1,432.0) on account of preferential allotment of Nil (4,270,000) equity shares of face value of Rs.5 each and upfront consideration towards Nil (2,500,000) equity share warrants allotted during the previous year.

4. Secured Loans

a. Debentures are secured by:

* registered mortgage of immovable property situated at Thane, Maharashtra.

* first pari passu charge by equitable mortgage by deposit of title deeds by way of constructive delivery of all the Company's immovable property wherever situated including Plant and Machinery, spares, tools and accessories both present and future.

* first charge by way of hypothecation ranking pari-passu with term loans of all the movable assets (save and except book debts), both present and future subject to prior charges created in favour of the Company's Bankers to secure working capital requirements.

b. Term loans are secured by:

* first charge ranking pari-passu with debentures on the immovable properties both present and future, by equitable mortgage by,deposit of title deeds by way of constructive delivery of the Company's lands wherever situated.

* first charge ranking pari-passu with debentures on all the movable assets (save and except book debts), both present and future subject to prior charges created in favour of the Company's bankers to secure working capital requirements.

* personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs.2,890.7 (Rs.1,568.9).

c. Other working capital loans from banks are secured by:

* first charge, ranking pari-passu by way of hypothecation of all the stocks, book debts and other current assets (both present and future).

* second charge on all the immovable properties of the Company subject to charges created in favour of term lenders and debenture holders.

* personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs.2,602.6 (Rs.2,255.6).

5. Intangible Assets

During the year, the Company has changed its accounting policy with respect to treatment of Product Development costs The accounting policy adopted by the Company is in conformity with the "Accounting Standard 26: Intangible Assets" issued by the Institute of Chartered Accountants of India. The Company has capitalized an amount of Rs.167.3. The said cost was hitherto expensed in the period in which it was incurred. The change in accounting policy resulted in increase of the profit for the year and decrease of Research and Development costs by said amount.

6. There has been a diminution in the value of investments made in subsidiary companies, namely APL Holdings Inc., and Aurobindo Datong Bio-Pharma Co. Ltd, China to an extent of Rs.112.5 (Rs.21.2) and Rs.373.3 (Rs.295.7) respectively, on the basis of net asset value of the said subsidiaries, as at March 31, 2005. An amount of Rs.116.3 (Rs.94.2) and Rs.889.7 (Rs.690.6) is due from each of the said companies on account of loans granted by the Company. Considering the nature of the industry and gestation period involved, the management of the Company is of the opinion that the diminution in value is temporary in nature and no provision is necessary for such diminution.

7. Sundry Debtors and Loans and Advances include receivables from Joint Venture Company primarily on account of non compete fee, sale of brands of Rs.429.8 (Rs.458.9) and Loan Rs.30.0 (Rs.30.0) respectively. In terms of the agreement entered with the said Joint Venture Company, this amount is recoverable over a period of four years. Based upon the future projected business of the said Company, the management is of the opinion that the said amount is fully recoverable.

8. Donations

Donation of Rs.1.5(Rs.0.9) disclosed under Schedule 22 includes contribution made to political parties Rs. Nil (CPI State Council Rs.0.03).

9. Employee Stock Option Scheme

During the year, the Company has instituted an Employee Stock Option Plan "ESOP-2004" as per the special resolution passed in the 17th Annual General Meeting held on July 31, 2004. This scheme has been formulated in accordance with the Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Compensation committee accordingly, granted options of 507,700 to eligible employees. Each option comprises of one underlying Equity Share of Rs.5 each. The said options vest on an annual basis at 15%, 20%, 25% and40% over a period of 11 " four years and can be exercised over a period of six years from the date of grant of options.

The options have been granted at prevailing market price of Rs.362.60 per share and hence the question of accounting for employee deferred compensation expenses does not arise.

10. Interest in Joint Venture

The Company has 50% interest in the assets, liabilities, expenses and output of the Citadel Aurobindo Biotech Limited, incorporated in India, which is involved in marketing of formulations.

a. Operating Lease

Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable at mutual consent. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no sub-leases.

b. Finance Lease

i. Building includes factory buildings acquired on finance lease. The agreement is silent on renewal terms and transfer of legal title at the end of lease term.

ii. The lease agreement did not specify minimum lease payments over the future period. The factory building is acquired on lease at a consideration of Rs.64.7 (Rs.31.4) which includes an amount of Rs.19.2 (Rs.11.4) towards expenditure incurred on renovation.

iii. The net carrying amount of the buildings obtained on finance lease Rs.61.2 (Rs.29.6).

iv. The Company has not recognised any contingent rent as expense in the statement of Profit & Loss Account.

v. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no sub-leases.

Notes:

a. Licensed capacities not stated in view of abolition of industrial licensing for all of the above Bulk Pharmaceutical Substances (including intermediates) and Dosage Forms vide Notification No. F. No 10(II)/92-LP dated October 25, 1994 issued by the Government of India.

b. The capacity mentioned above is annual capacity based on maximum utilisation of plant and machinery.

c. The annual installed capacities are as certified by the management and not verified by the auditors, being a technical matter.

d. Production includes quantities processed by loan licensees.

11. Figures in brackets represent those relating to the previous year.

12. Previous year's figures have been regrouped/rearranged to conform to those of the current year.

Mar 31, 2004

A. 34,703,200 (17,351,600) Equity Shares of Rs.5 (Rs.10) each were allotted as bonus shares by capitalisation of Share Premium Account.

b. 1,341,000 (670,500) Equity Shares of Rs.5 (Rs.10) each were allotted for consideration other than cash.

c. 1,900,000 (580,000) Equity Shares of Rs.5 (Rs.10) each at a premium of Rs.108 (Rs.216) each were allotted to the promoters during the year on exercise of warrants held.

d. The shareholders at the Annual General Meeting held on 12th September, 2003 approved the subdivision of Equity Shares of face value of Rs.10 each into two Equity Shares of face value of Rs.5 each. Subsequent to the subdivision the authorised Equity Shares of 50,000,000 of Rs.10 each have been divided into 100,000,000 Equity Shares of Rs.5 each.

EQUITY SHARE WARRANTS

Upfront consideration of Rs.140 (Rs.22.6) per warrant received towards preferential allotment of 2,500,000 (950,000) Equity Share Warrants of Rs.375 (Rs.226) each. These warrants are to be converted into 2,500,000 (950,000) Equity Shares of Rs.5 (Rs.10) each at a premium of Rs.370 (Rs.216) per Equity Share on exercise of option by the warrant holders on or before 3rd August, 2005 (11th October, 2003).

Notes

a. The title deeds of Land and Buildings aggregating to Rs.43.9 (Rs.43.9) acquired on amalgamation are pending transfer to the Company's name.

b. Land acquired includes leasehold land of Rs.28.4 (Rs.0.3).

c. Include Rs.0.3 (Rs.0.3) being the value of shares in co-operative housing societies, leasehold buildings of Rs.16.7 (Rs.Nil) and net of government grant received Rs.0.7 (Rs.Nil).

d. Includes Foreign Exchange Fluctuations capitalised Rs.0.3 (Rs.0.3) and net of government grant received Rs.1.3 (Rs.Nil)

e. Include capital advances of Rs.82.5 (Rs.89.5), acquired on amalgamation of Rs.Nil (Rs.80.3) and expenditure during construction period Rs.34.4 (Rs.51.2).

1. Secured Loans

a. Debentures are secured by:

* first charge on the immovable property situated at Thane, Maharashtra and further joint mortgage by deposit o1 title deeds by way of constructive delivery of the Company's lands situated at Hyderabad, Rangareddy and Medat districts, Andhra Pradesh, ranking paripassu with Term Loans.

* first charge ranking pari-passu with Term Loans on the movable assets (save and except book debts), both present and future subject to charges created in favour of the Company's Bankers to secure Working Capital requirements.

b. Term loans are secured by:

* first charge ranking pari-passu with Debentures on the immovable properties both present and future, and joint mortgage by deposit of title deeds of the Company's lands at Hyderabad, Rangareddy and Medak districts, Andhra Pradesh.

* first charge ranking pari-passu with Debentures on the movable assets (save and except book debts), both present and future subject to charges created in favour of the Company's Bankers to secure working capital requirements.

* personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs.1,568.9 (Rs.1,803.3)

c. Other working capital loans from Banks are secured by:

* first charge, ranking pari-passu by way of hypothecation of all the stocks, book debts and other current assets (both present and future).

* second charge on all the immovable properties of the Company subject to charges created in favour of term lenders and debenture holders.

* personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs.2,255.5 (Rs.1,234.1).

2. Unsecured loans

Other loans disclosed under Short Term Loans aggregating to Rs.418.0 (Rs.534.5) are personally guaranteed by the Chairman and the Managing Director of the Company.

3. Leases

a. Operating Lease

Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable at mutual consent. There is no escalation caluse in the lease agreement. There were no restrictions imposed on the lease. There were no sub-leases.

b. Finance Lease

i. Building includes factory buildings acquired on finance lease. The lease term is for 66.3 years and the agreement is silent on renewal terms and transfer of legal title at the end of lease term.

ii. The said lease agreement did not specify the minimum lease payments over the future period. The factory-building was acquired on lease at a consideration of Rs.16.7 (including an amount of Rs.11.4 towards expenditure incurred on renovation).

iii. The net carrying amount of the buildings obtained on finance lease is Rs.16.7 (Rs. Nil).

iv. The Company has not recognized any contingent rent as income in the Profit & Loss Account.

v. There is no escalation clause in the lease agreement. There were no restrictions imposed on the lease. There were no sub-leases.

4. Previous year's figures have been regrouped/rearranged to conform to those of the current year.

Mar 31, 2003

Share Capital

a) 17,351,600 Equity Shares of Rs.10 each fully paid-up were allotted as bonus shares by capitalisation of Share Premium Account.

b) 670,500 (670,500) Equity Shares were allotted for consideration other than cash.

c) 580,000 (470,000) Equity Shares of Rs.10 each at a premium of Rs.216 each were issued to the promoters during the year.

Fixed Assets

a) The title deeds of Land and Buildings aggregating to Rs.43.9 (Rs.38.2) acquired on amalgamation are pending transfer to the Company's name

b) Land acquired on amalgmation includes leasehold land of Rs.0.3 (Rs.Nil).

c) Buildings include Rs.0.3 (Rs.0.3) being the value of shares in co-operative housing societies.

d) Includes Foreign Exchange Fluctuations capitalised Rs.0.3 (Rs.0.04).

e) Capital Work-in-progress includes capital advances of Rs.89.5 (Rs.48.9).

f) Capital Work-in-progress amount of Rs.80.3 (Rs.Nil) acquired on amalgamation.

g) Includes expenditure during construction period Rs.51.2 (Rs.23.9)

Other notes

1. Significant Account Policy - Available in its field

2. Capital Commitments

Estimated amount of Contracts (net of advances) remaining to be executed on capital account and not provided for Rs.174.0 (Rs.158.2).

Rs. Millions 3. Contingent Liabilities not provided for 2002-03 2001-02

a) Outstanding Bank Guarantees on account of: i) Subsidiary Company 432.3 5.2 ii) Guarantee given for Citadel Aurobindo Biotech Ltd., 50% Joint Venture 460.0 - iii) Others 27.3 75.6 b)Bills discounted with Banks 604.2 1.443.2 c) Outstanding letters of credit for imports of materials 236.5 357.9 d) Income tax matters 13.9 2.5

4. Share Capital

a) The Company has received an amount of Rs.593.9 (Rs.116.8) on account of preferential allotment of 2,580,000 (470,000) Equity Shares and upfront consideration towards 530,000 (470,000) share warrants allotted during the year. The details of utilisation/investment of the said amount is as under:

2002-03 2001-02

For Investment in Wholly Owned Subsidiaries / Joint Ventures 348.1 48.9 For capital purchases 245.8 50.6 Unutilised amount lying with Banks - 17.4 TOTAL 593.9 116.9

b) 950,000 (470,000) Equity share warrants issued to the promoters are to be converted into Equity shares by llth October, 2003 at the option of warrant holders

5. Amalgamation of Ram't Pharma Limited (RPL) and Calac Private Limited (Calac) with the Company

a) The scheme of amalgamation of RPL and Calac with the Company was approved by the shareholders in the Court convened meeting held on 2nd Janurary, 2003. The said scheme of amalgamation was approved by the Hon'ble High Courts of Andhra Pradesh on 9th April, 2003, and by the Hon'ble High Court of Madras on 25th April, 2003 respectively. Accordingly, the erstwhile RPL and Calac have amalgamated with the Company with effect from 1st April, 2002. All the assets and liabilities of the erstwhile RPL and Calac, were transferred to and vested in the Company. The Company has since made the necessary filings with the Registrars of Companies, Andhra Pradesh and Tamil Nadu.

b) RPL and Calac were both primarily engaged in the business of manufacturing, processing and marketing of pharmaceuticals.

c) The amalgamation has been accounted for under the "pooling of interests" method as prescribed under Accounting Standard 14 issued by the Institute of Chartered Accountants of India. Accordingly, the assets, liabilities and other reserves of the erstwhile RPL and Calac as at 1st April, 2002, have been taken over at their respective book values, subject to adjustments made for the differences in Accounting Policies between the companies. The changes in the Accounting Policies related to:

i) Change to the Straight Line method from the Written Down Value method of depreciation followed by Calac on certain block of assets.

ii) Accounting for taxes on income as per Accounting Standard 22 issued by the Institute of Chartered Accountants of India, for RPL and Calac.

Accordingly Rs.16.1 (Net) has been reduced from the General Reserve taken over.

d) Calac being a wholly owned subsidiary of RPL and RPL, in turn being a wholly owned subsidiary of the Company, no equity shares were issued by the Company.

e) The erstwhile RPL was the beneficiary of 219,800 equity shares of the Company held in trust by Ranit Pharma Securities Trust. Pursuant to the scheme of amalgamation, the Company has become the beneficiary of the said shares held by Ranit Pharma Securities Trust. Accordingly, the book value of the shares held in trust amounting to Rs.56.0 has been disclosed under loans and advances in Schedule 11.

f) Adjustments on amalgamation relate to the difference between the value of the investments and the underlying net assets of the amalgamating companies taken over.

6. Secured Loans

a) Debentures are secured by:

* first charge on the immovable property situated at Thane, Maharashtra and further joint mortgage by deposit of title deeds by way of constructive delivery of the Company's lands situated at Hyderabad, Rangareddy and Medak districts, Andhra Pradesh, ranking paripassu with Term Loans.

* second charge ranking pari-passu with Term Loans on the movable assets (save and except book debts), both present and future subject to. charges created in favour of the Company's Bankers to secure Working Capital requirements.

Term loans are secured by:

* first charge ranking pari-passu with Debentures on the immovable properties both present and future, and joint mortgage by deposit of title deeds of the Company's lands at Hyderabad, Rangareddy and Medak districts, Andhra Pradesh.

Â second charge ranking pari-passu with Debentures on the movable assets (save and except book debts), both present and future subject to charges created in favour of the Company's Bankers to secure working capital requirements.

* personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs.1,803.3 (Rs.1,062.3).

c) The Working capital loans taken over from the erstwhile Ranit Pharma Limited on amalgamation are secured by first charge on the whole of the movable properties and further secured by second charge by mortgage by deposit of title deeds of immovable properties taken over.

d) Other working capital loans from -Banks are secured by

- first charge, ranking pari-passu by way of hypothecation of all the stocks, book debts and other current assets (both present and future).

Â second charge on all the immovable properties of the Company subject to charges created in favour of term lenders and debenture holders.

- personal guarantees given by the Chairman and the Managing Director of the Company aggregating to Rs.l,234.1 (Rs.512.0)

7. Unsecured loans

Other loans aggregating to Rs.534.5 (Rs.Nil) are personally guaranteed by the Chairman and the Managing Director of the Company.

Rs. Millions

8. Expenditure during construction period

Particulars 2002-03 2001-02

Balance brought forward 23.9 0.8 Add: Expenditure incurred during construction period 42.3 11.0 Borrowing cost capitalised 60.0 13.1 0126.2 24.9 Less: Consumption of intermediates (trial run) 12.3 - Allocated to fixed assets 62.7 1.0 Balance carried forward 51.2 24.9

9. Investments

a) During the year, the Company has purchased /acquired on amalgamation and sold/redeemed the following investments:

Description 2002-03 2001-02 Nos. Nos.

Mutual Fund Units Prudential ICICI Liquid plan 15,944,051 12,476,228 IDBI Mutual Fund - Liquid option 47,627,316 14,846,928 Zurich Mutual Fund 4,238,294 - HDFC Mutual Fund 10,640,813 - IL & FS Mutual Fund 12,323,325 - Franklin Templeton Treasury Management 23,992 - Birla Cash Plus 2,215,891 - SBI Magnum - Insta Cash Fund - 2,980,576 UTI Money Market Fund - 617,686 Shares Canara Bank 40,600 - Andhra Bank * 284,900 - Sharp Organics (P) Ltd * 320,000 - Debentures redeemed Lyka Labs* 2,500 - * Acquired on amalgamation

There has been a diminution in the value of long-term investments assessed on the basis of net asset value of the following subsidiaries as at 31st March, 2003. Due provision has been made to recognise this diminution.

Name of the Subsidiary 2002-03 2001-02

AB Farmo Quimica Ltda, Brazil 14.0 - Aurobindo (H.K.) Ltd, Hong Kong 44.0 - 58.0 -

Rs. Millions Closing Balance Maximum outstanding as at 31st March at any time during the year ended 31st March

2003 2002 2003 2002

10. Sundry Debtors include Dues from companies under the same management Name of the Company Andhra Organics Limited 0.2 0.2 Sharp Organics Private Limited - 0.1

11. Cash & Bank balances include

Balances with other banks on current account Name of the Bank

Vietcom Bank, Vietnam 0.4 0.4 0.4 0.4 Vheshtorg Bank, Moscow 0.3 0.4 0.5 0.5 Bank of Nova Scotia, Costarica 0.4 0.8 1.0 0.8 Citibank N.A. Tanzania 0.3 0.1 0.7 0.8

12. Loans and Advances include

Dues from companies under the same management Name of the Company

Andhra Organics Limited 17.1 10.4 24.7 10.4 Sharp Organics Private Limited 8.1 10.4 Pravesha Machine Works (P) Ltd., 0.7 4.3

13. Sundry Creditors include

a) The names of the small scale industrial undertakings to whom the Company owes amounts outstanding for more than 30 days are

Champion Industries Corporation LG Thermoflo Systems (P) Ltd Navya engineering Company Ravi Industries Siflon Polymers Cooling People Pune (P) Ltd Lisa Ampoules & Vials (P) Ltd Plastic Shapers Sree Krishna Prasad Graphic Pvt. Ltd. Global Electronics Lakshmi Engg.Enterprises Polymer House Rolon Seals Southern Plantaids (P) Ltd Amar Roto Prints Milan Art Printers Sai Roto Coverters Khemas Engineers Lance Engineering Power Tech (Hyd) Ltd S V R Industries Vaiktro Enterprises Hyderabad Packaging Paper Pack Industries , Singham'a Offset Printers

- Gain on account of exchange differences on export bills discounted to be recognised in the Profit & Loss Account of subsequent accounting period - Rs.3.3 (Rs.12.5).

c) In respect of the amounts mentioned under Section 205 C of the Companies Act, 1956 no dues are to be credited - to the Investor Education and Protection Fund as at 31st March, 2003.

Rs. Millions

14. Deferred Taxes

Deferred Tax assets/(liabilities) consist of :- Particulars 31st March, 2003 31st March, 2002

On account of depreciation (398.4) (254.3) Provision for doubtful debts 22.9 21.2 Provision for leave encashment 9.0 6.4 Provision for gratuity 7.0 4.8 Disallowances under section 43B of Income Tax Act, 1961 - 0.8 Total (359.5) (221.2)

15. Software License and Implementation expenses

During the year the Company is graduating over to an ERP system, which is under implementation. The Company has incurred Rs.15.3 towards such implementation. As a conservative measure, the management has charged off the expenditure incurred.

16. Export Incentives

Sales include export incentives of Rs.100.5 (Rs.297.6).

17. Research and Development Expenses

Research & Development expenses included under various heads of expenses are Rs.145.3 (Rs.80.1).

18. Remuneration to Whole-time Directors (included in Schedule 21)

Particulars 2002-03 2001-02

Salary 5.8 4.7 Contribution to Provident Fund - 0.1 Perquisites 1.5 2.8 Total 7.3 7.6

Note : The above figures do not include provision for gratuity and leave encashment payable to the Directors, as the same is actuarially determined for the Company as a whole.

19. Remuneration to Statutory Auditors included in Schedule 21 (including service tax)

Particulars 2002-03 2001.02

Other Audit Services 1.07 0.21 Certification charges 0.10 0.08 Reimbursement of out of pocket expenses 0.04 0.03 Total 2.83 1.27

20. Donation

Donation of Rs.0.04 disclosed under Schedule 21 includes contribution made to Bharatiya Janata Party Rs.0.025 and Telangana Rasthra Samithi Rs.0.005 [Communist Party of India (Marxist)-Rs.O.l]

Rs. Millions

21. Earnings per share Earnings per share is computed based on the following: Particulars 31st March, 2003 31st March, 2002

a) Profit after taxation considered for calculation of basic and diluted earnings per share (Rs.) 1,031.4 685.1 Weighted average number of Equity Shares considered for calculation of basic earnings per share 22,687,217 20,215,397 Add: Effect of dilution on account of convertible Share warrants issued on number of shares 2,268 268 c) Weighted average number of Equity Shares considered for calculation of diluted earnings per share 22,689,485 20,215,665

22. Interest in Joint venture

The Company holds 50% of the paid up equity capital of the Citadel Aurobindo Biotech Limited, incorporated in India, which is involved in manufacturing and marketing of formulations.

The Company's share of the assets, liabilities, income and expenses of the jointly controlled entity are as follows at 31st March, 2003. (Based on unaudited financial statements certified by the Board of Directors of Citadel Aurobindo Biotech Limited)

Particulars 31st March, 2003 31st March, 2002

Assets 683.2 160.0 Liabilities 683.2 160.0 Revenue 233.6 0.1 Depreciation 15.9 - Other expenses 307.5 0.3 Profit/( Loss) before tax (89.9) (0.2) Capital Commitments - -

Mar 31, 2002

Share Capital:

a) 17,351,600 Equity Shares of Rs. 10 each fully paid-up were allotted as bonus shares by capitalisation of Share Premium Account.

b) 670,500 (Previous year - 472,500) Equity Shares of Rs. 10 each fully paid-up were allotted for consideration other than cash. These include 198,000 Equity Shares allotted during the year pursuant to the scheme of amalgamation with the erstwhile Sri Chakra Remedies Limited.

c) 470,000 Equity shares of Rs. 10 each at a premium of Rs. 216 each were issued to the promoters during the year.

Fixed Assets:

(a) The title deeds of Land and Buildings aggregating to Rs. 38.2 (Previous year - Rs. 38.2) acquired on amalgamation are pending transfer in the Companys name.

(b) Includes Rs. 0.7 (Previous year - Rs. 1.4) towards land development costs.

(c) Include a property acquired in a co-operative housing society, shares in respect of which are pending transfer in the Companys name.

(d) Includes foreign exchange fluctuations capitalised Rs. 04 (Previous year - Rs. 0.5)

(e) Include vehicles acquired on hire purchase Rs. Nil (Previous year - Rs. 0.5)

(f) Includes expenses incidental to construction Rs. 23.9 (Previous year - Rs. 0.8)

(g) Additions and Capital Work-in-progress include borrowing costs in respect of qualifying assets Rs. 13.1 (Previous year - Rs. Nil) (h) Sales/Adjustments under gross block include transfer of assets of Rs. 47.5 (Previous year - Rs. Nil) to Capital Work-in-progress and sales/adjustments under depreciation include transfer of related Depreciation Reserve of Rs. 16.4 (Previous year - Rs. Nil) to Capital Work-in-progress.

Other Notes:

1. Capital Commitments

Estimated amount of Contracts (net of advances) remaining to be executed on capital account and not provided for Rs. 158.2 (Previous Year - Rs. 35.8).

2. Contingent Liabilities

Rs. in Miilions Current Year Previous Year

a) Outstanding Bank Guarantees on account of:

A subsidiary Company 5.2 4.9

Others 75.6 65.6

b) Bills discounted with Banks 1,443.2 1,347.1

c) Outstanding letters of credit for imports of materials 357.9 106.4

d) Income tax matters 2.5 7.3

3. Leases

The Company has no finance leases. Operating leases are mainly in the nature of lease of office premises with no restrictions and are renewable at mutual consent. As at the Balance Sheet date, the Company is committed to make the following payments in respect of operating leases:

a) Not later than one year 0.7 3.5

b) Later than one year and not later than five years 0.3 Nil

c) Later than five years 0.07 Nil

4. Share Capital

a) The Company has received an amount of Rs. 116.8 on account of preferential allotment of 470,000 Equity Shares and upfront consideration towards 470,000 share warrants during the year. The details of utilisation/investment of the said amount is as under:

Rs.

For Investment in Joint Ventures 48.9

For capital purchases 50.6

Unutilised amount lying with Banks 17.4

Total 116.9

b) 470,000 Equity Shares of Rs. 10 each (relating to 470,000 Equity share warrants to be converted into Equity Shares within eighteen months from the respective dates of allotment of warrants at the option of warrant holders) are to be issued to the promoters.

5. Debenture Redemption Reserve

In terms of circular No. 9/2002 dated 18th April 2002 of the Department of Company Affairs, in the case of privately placed debentures, 25% of the value of the privately placed debentures is required to be maintained in Debenture Redemption Reserve. As the balance in the Debenture Redemption Reserve of the Company as at 1st April 2001 is higher than the above prescribed minimum, no amounts have been transferred to such reserve during the year.

6. Secured Loans

a) Term loans are secured by a first charge on the immovable properties both present and future and joint mortgage by deposit of title deeds by way of constructive delivery of the Companys lands, immovable properties and fixed assets situated in Hyderabad, Rangareddy and Medak districts, Andhra Pradesh and second charge on all other movable assets (save and except book debts), both present and future subject to charges created in favour of Companys bankers to secure working capital requirements and also personally guaranteed by the Managing Director of the Company.

b) Debentures are secured by a first charge ranking pari passu on the immovable property situated at Thane, Maharashtra and further joint mortgage by deposit of title deeds by way of constructive delivery of the Companys lands, immovable properties and fixed assets situated in Hyderabad, Rangareddy and Medak districts, Andhra Pradesh and second charge on all other movable assets, both present and future, subject to charges created in favour of Companys bankers to secure working capital requirements.

c) The Working capital loans from banks are secured by first charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future) ranking pari passu and second charge on all the immovable properties, certain current assets and personally guaranteed by some of the Directors.

7. Manufacturing unit at Pondicherry

During the year, as a part of the Companys restructuring programme, in respect of the Companys manufacturing unit located at Pondicherry, some of the assets were transferred to other units of the Company and the rest were disposed off. Such sale/disposal is subject to shareholders approval as required under the provisions of Section 293(l)(a) of the Companies Act, 1956.

8. Investments

a) During the year, the Company has purchased and sold the following units of Mutual funds - Description Number of Units SBI Magnum-Insta Cash Fund 2,980,575.78 Prudential ICICI Liquid plan 12,476,228.07 IDBI Mutual Fund - Liquid option 14,846,928.17 UTI Money Market Fund 317,686.23

b) There has been a diminution in the value of investment made in one of the subsidiary companies, namely Aurobindo Farmaceutica Do Brasil Ltda., Brazil to the tune of Rs. 9.6 on the basis of net asset value of the said subsidiary as at 31st March 2002. As the subsidiary was set up only in the year 2001 and considering the strategic nature of this investment, the diminution in value is considered temporary in nature and hence no provision is considered necessary for such diminution as at 31st March 2002.

9. Setting up of a Joint Venture

a) In terms of the agreement for Joint venture dated 27th March 2002, and as approved by the Board of Directors, the Companys ethical allopathic branded formulations business was transferred to Citadel Aurobindo Biotech Limited ("CABL or joint venture"), a joint venture Company. The transfer consisted of sale of specified brands, transfer of current assets and assets & liabilities relating to the employees, to be taken over, of the said business. The assets and liabilities were agreed to be transferred at actual historical cost as at 27th March 2002. The statutory and regulatory benefits relating to the said employees in the form of gratuity, provident fund and leave encashment accruals have not been identified and transferred and continue to be part of the liabilities of the Company as at 31st March 2002. Necessary documentation in respect of assignment of debts and liabilities transferred is pending.

b) The values of specified brands taken over at Rs. 100.0 and non-compete fee of Rs. 300.0, covering the designated markets, comprising in the consideration payable for takeover of the related formulations business by the joint venture Company, are as mutually agreed to between the parties to the joint venture and have been relied upon by the Auditors.

c) Non-compete fee of Rs. 300.0 has been directly taken to Capital Reserves in Schedule 2, as in the opinion of the management, this is in the nature of a capital receipt.

d) As per the terms of the joint venture agreement referred to above, the Company as at 31st March 2002, has an obligation to make an investment of Rs. 10.0 in the form of 100,000 Equity shares of Rs. 100 each in the joint venture.

Closing Balance Maximum outstanding as at 31st March at any time during the Year Ended 31st March 2002 2001 2002 2001

10. Sundry Debtors include

Dues from companies under the same management

Name of the Company

Ranit Pharama Limited Nil 0.8 168.8 8.1

Vasmi Organics Private Limited Nil 1.0 Nil 71.1

Sharp Organics Private Limited Nil 0.4 1.9 0.5

11. Cash & Bank balances include

Balances with Non-scheduled banks on current account

Name of the Bank

Vietcom Bank, Vietnam 0.4 0.1 0.4 0.5

Vheshtorg Bank, Moscow 0.5 0.0 0.5 1.0

Bank of Nova Scotia, Costarica 0.8 Nil 0.8 0.9

Citibank N. A. Tanzania 0.1 0.0 0.8 0.3

Catholic Syrian Bank Nil 0.0 0.0 0.0

12. Loans and Advances include

Dues from companies under the same management

Name of the Company

Calac Private Limited Nil 2.1 Nil 17.4

Pravesha Machine Works (P) Ltd Nil 3.0 Nil 17.6

Andhra Organics Limited 10.4 Nil 10.4 Nil

13. Sundry Creditors include

a) Total amount due to Small Scale Industrial Undertakings - Rs. 4.9 (Previous year - Rs. 3.4). The names of the small scale industrial undertakings to whom the Company owed and outstanding for more than 30 days are

Rupees in full Name of the Party As at As at 31st March, 2002 31st March, 2001

Champion Industries Corporation 2,238 2,238

Global Electronics 418,344 -

Khemas Engineers 128,721 138,773

LG Thermoflo Systems (P) Ltd 20,000 88,264

Lakshmi Engg. Enterprises 10,869 12,793

Lance Engineering 31,821 31,961

Navya Engineering Company 9,903 -

Polymer House 3,072 11,474

Power Tech (Hyd) Ltd 770 770

Ravi Industries 175,356 172,241

Ralon Seals 15,771 93,852

S V R Industries 34,900 -

Siflon Polymers 52,294 89,800

Southern Plaintaids (P) Ltd 29,050 1,000

Vaiktro Enterprises 17,991 -

Cooling People Pune (P) Ltd - 533,064

Amar Roto Prints 122,804 13,644

Hyderabad Packagings 15,686 140,279

Lisa Ampoules & Viasls (P) Ltd 262,947 -

Milan Art Printers 69,905 576,421

Paper Pack Industries 300,707 152,704

Plastic shapers 137,326 88,538

Sai Roto Coverters 376 3,684

Singhania Offset Printers 178,953 237,863

Sree Krishna Prasad Graphic Pvt. Ltd. 795,110 6,914

Total 2,834,912 2,396,277

b) Gain on account of exchange differences on export bills discounted to be recognised in the Profit and Loss Account of subsequent accounting period - Rs. 12.5 (Previous Year - Rs. 12.2)

14. Deferred Taxes

In compliance with Accounting Standard (AS-22) relating to "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, the Company has adjusted the deferred tax liability (net) arising out, of timing differences for the period up to 31st March 2001 of Rs. 183.2 in General Reserves. Deferred Tax Liability accruing during the year aggregating to Rs. 38.0 has been recognised in the Profit & Loss Account.

15. Export Incentives

Sales include export incentives of Rs. 297.6 (Previous Year - Rs. 235.8).

16. Research and Development Expenses

Research & Development expenses included under various heads of expenses are Rs. 80.1 (Previous Year- Rs. 57.9).

17. Directors Remuneration included in Schedule 21

Rs. Particulars Year Ended 2001-2002 2000-2001

Salary 4.7 4.8

Contribution to provident fund 0.1 0.1

Perquisites 2.9 1.1

Total 7.7 6.0

Notes:

a) Commission, to the Chairman and the Managing Director, payable as per their respective terms of appointment has been waived by the said Directors for the period up to which it was payable (i. e. upto 28th June, 2001) and hence no provision has been made for the same in the accounts. Accordingly, the statement showing the computation of net profits in accordance with Section 349 of the Companies Act, 1956 has not been furnished.

b) The above figures do not include provision for gratuity and leave encashment payable to the Directors, as the same is actuarially determined for the Company as a whole.

18. Remuneration to Auditors included in Schedule 22 (including service tax)

Rupees in full Particulars Year Ended 2001-2002 2000-2001

Audit fee 945,000 735,000

Other Services 210,000 157,500

Certification Charges 84,520 -

Reimbursement of out of pocket expenses 35,398 10,567

Total 1,274,918 903,067

19. Donation

Donation of Rs. 0.4 disclosed under Schedule 22 includes contribution made to Communist Party of India (Marxist) - Rs. 0.1.

20. Extraordinary Item

Extraordinary item represents consideration towards sale of brands made to the joint venture company as referred in note 10 (b) above.

21. Earnings per share

Earnings per share is computed based on the following:

Rupees in full Particulars Year Ended Year Ended 31st March 2002 31st March 2001

a) Profit after taxation considered for calculation of basic and diluted earnings per share 685,088,657 683,133,341

b) Weighted average number of Equity Shares considered for calculation of basic earnings per share 20,215,397 20,200,000

Add: Effect of dilution on account of convertible Share warrants issued on number of shares 268 -

c) Weighted average number of equity Shares considered for calculation of diluted earnings per share 20,215,665 20,200,000

22. Related Party Transactions

a) During the year, the Company has entered into transactions with related parties. The transactions together with the related balances as at 31st March 2002 are presented in the following table:

Rs. Millions Nature of Trans. Subsidiaries Joint Companies Key Total Ventures Over which Manage- Significant ment Influence Personl exists

Purchase of Goods 52.1 - 535.9 - 588.0

Sale of Goods 1,072.6 34.5 86.1 - 1,193.2

Purchase of fixed assets 0.6 - 43.5 - 44.1

Sale of fixed assets - - 40.5 - 40.5

Sale of Brands - 100.0 - - 100.0

Non-Compete Fees received - 300.0 - - 300.0

Receiving of services - - 129.6 7.6 137.2

Transfer of current assets - 172.9 - - 172.9

Transfer of current liabil. - 24.4 - - 24.4

Interest/Dividend received 2.6 5.6 13.4 - 21.6

Finance (including loans and equity contributions in cash or in kind) 511.6 351.0 0.6 - 863.2

Guarantees and collaterals 5.2 - - - 5.2

Total 1,644.7 988.4 849.6 7.6 3,490.3

Balance as on 31st March 2002 - Debit/(Credit) 1,562.1 1,105.9 (15.6) - -

b) Names of related parties and description of relationships

Subsidiaries

APL Chemi Natura Limited, India

APL Pharma That Limited, Thailand

Aurobindo USA LLC, Miami, USA

Aurobindo (HK) Limited, Hongkong

APL Holdings Inc. California, USA

Aurobindo Farmaceutica Do Brasil Ltda, Brazil

A B Farmo Quimica Ltda, Brazil

Aurobindo (Datong) Bio-pharma Co. Ltd, China

Joint Ventures

Aurobindo Tongling (Datong) Pharmaceutical Co Ltd, China

Citadel Aurobindo Biotech Limited, India

Companies over which significant influence exists

Ranit Pharma Limited, India

Pravesha Machine Works (P) Ltd, India

Andhra Organics Limited, India

Calac Private Limited, India

Sharp Organics Private limited, India

Ranit Agro Private Limited, India

Key Management Personnel

P. V. Ramaprasad Reddy, Chairman

K. Nityananda Reddy, Managing Director

M. Sivakumaran, Whole-time Director

A. Sivaram Prasad, Whole-time Director (Resigned from the Board on 19th March, 2002)

B. Siva Prasad Reddy, Whole-time Director

A. J. Kamath, Director (Resigned from the Board on 19th March, 2002)

Lanka Srinivas, Whole-time Director (up to 19th March, 2002) and Additional Director (effective from 21st March, 2002)

Additional information pursuant to the provisions of paragraph 3, 4C and 4D of part II of Schedule VI to the Companies Act, 1956.

23. Installed Capacity and Actual Production

Category (Unit of Installed Capacity Actual Production measurement) for the Year Ended for the Year Ended 31st March 31st March 2002 2001 2002 2001

Bulk Drugs and Drug intermediates

Bulk Drugs and Drug Intermediates (Tonnes) 6,961 4,679 5,230 4,974

Formulations

Tablets & Capsules (Nos. in Lakhs) 7,620 11,340 6,270 3,190

Syrups* (Ltrs.) 270,000 270,000 138,330 187,446

Injectibles (Nos.) 60,000,000 60,000,000 4,678,781 3,575,668

Notes:

a) Licensed Capacities not stated in view of abolition of industrial licensing for all of the above Bulk Pharmaceutical Substances (including intermediates) and Dosage Forms vide Notification No. F. No 10(11)/92-LP dated 25th October 1994 issued by the Government of India.

b) The Capacity mentioned above is annual capacity based on maximum utilisation of plant and machinery.

c) The Annual installed capacities are as certified by the management and not verified by the Auditors, being a technical matter.

d) Production includes quantities processed by third parties.

24. Previous years figures have been regrouped/rearranged to conform to those of the current year.

Mar 31, 2001

SHARE CAPITAL

Of the above Equity Shares

a) 1,73,51,600 (Previous year - 73,50,600) Equity Shares of Rs. 10 each fully paid-up were alloted as bonus shares by capitalisation of Share Premium Account.

b) 4,72,500 (Previous year - 4,72,500) Equity Shares of Rs. 10 each fully paid-up were alloted for consideration other than cash.

FIXED ASSETS

a. The title deeds of Land and Buildings aggregating to Rs. 3,82.40 lakhs acquired on amalgamation are pending transfer in the Company's name.

b. Include Rs. 13.96 lakhs (Previous year - Rs. Nil) towards land development costs.

c. Include a property acquired in a Co-operative Housing Society, shares in respect of which are pending transfer in the Company's name.

d. Includes foreign exchange fluctuations capitalised Rs. 5.32 lakhs (Previous year - Rs. Nil).

e. Include vehicles acquired on hire purchase Rs. 5.44 lakhs (Previous year - Rs. 11.33 lakhs).

f. Includes expenses incidental to construction Rs. 8.18 lakhs (Previous year - Rs. 1.18 lakhs).

OTHER NOTES

1. Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for Rs. 358.02 lakhs (Previous Year - Rs. 165.97 lakhs).

2. Contingent Liabilities

a) Outstanding Bank Guarantees on account of :

A subsidiary Company - Rs. 49.34 lakhs (Previous Year - Rs. Nil)

Others - Rs. 6,55.54 lakhs (Previous Year - Rs. 2,08.31 lakhs)

b) Bills discounted with Banks - Rs. 134,71.43 lakhs (Previous Year - Rs.117,67.96 lakhs)

c) Outstanding letters of credit for imports of materials - Rs. 10,64.46 lakhs (Previous Year - Rs. 34,10.03 lakhs)

d) Income tax matters - Rs. 73.48 lakhs (Previous Year - Rs. Nil)

3. Amalgamation of Sri Chakra Remedies Limited with the Company

a) Pursuant to the Scheme approved by the Hon'ble High Court of Andhra Pradesh on April 3, 2001, the erstwhile Sri Chakra Remedies Limited (SCRL) has amalgamated with the Company effective from April 1, 2000. Accordingly, all the assets and liabilities of the erstwhile SCRL, were transferred to and vested in the Company and the Company has since made the necessary filings with the Registrar of Companies, Andhra Pradesh.

b) The amalgamation has been accounted for under the "pooling of interests" method as prescribed under Accounting Standard (AS) 14 issued by the Institute of Chartered Accountants of India. Accordingly, the assets, liabilities and other reserves of the erstwhile SCRL as at April 1, 2000, have been taken over at their book values.

c) Pursuant to the scheme of Amalgamation, 1,98,000 Equity shares of Rs. 10 each are to be issued to the shareholders of SCRL, in the ratio of 3 shares of the Company for every 100 shares held in SCRL. Notices have been delivered to the Hyderabad Stock Exchange, with the record date being fixed as June 12, 2001. Pending this allotment of shares, an amount of Rs. 19.80 lakhs has been included in Share Capital Suspense.

4. Secured Loans

a) Term loans taken over from the erstwhile Sri Chakra Remedies Limited in amalgamation are secured on the whole of the movable properties (both present and future), save and except book debts and further secured by mortgage by deposit of title deeds of certain immovable properties taken over. The charges so created are subject to the charge created/to be created in favour of bankers to secure working capital requirements.

b) Other term loans are secured by a first charge on the immovable properties (excluding assets at Pondicherry unit) both present and future and joint mortgage by deposit of title deeds by way of constructive delivery of the Company's lands, immovable properties and fixed assets situated in Hyderabad, Rangareddy and Medak districts, Andhra Pradesh and second charge on all other movable assets (save and except book debts), both present and future subject to charges created in favour of the Company's bankers to secure working capital requirements and also personally guaranteed by the Managing Director of the Company.

c) Debentures are secured by a first charge ranking pari passu on the immovable property situated at Thane, Maharashtra and further joint mortgage by deposit of title deeds by way of constructive delivery of the Company's lands, immovable properties and fixed assets situated in Hyderabad, Rangareddy and Medak districts, Andhra Pradesh and second charge on all other movable assets (excluding assets of Pondicherry unit), both present and future subject to charges created in favour of the Company's bankers to secure working capital requirements.

d) The working capital loans from banks are secured by first charge by way of hypothecation of all the stocks, book debts and other current assets (both present and future) ranking pari passu and all the fixed assets of the Pondicherry unit & second charge on all the immovable properties of other units, certain current assets and personally guaranteed by some of the Directors.

5. The following changes have been made in the accounting policies during the year

a) Benefits under Advance license have been accounted for on the purchase of imported materials as against the policy hitherto followed of accounting for benefits/obligations on accrual basis at the end of the year. As a result of this change, the value of inventories as at March 31, 2001 and the profit for the year is lower by Rs. 878.48 lakhs.

b) Leave encashment liability which was hitherto accounted for on actual payment basis, has now been provided for on actuarial valuation, resulting in an increase in provisions as at March 31, 2001 and decrease in profit for the year by Rs. 113.71 lakhs.

c) Exchange gain/loss on export bills discounted, which was hitherto accounted for entirely in the period in which such gain/loss arose, instead of prorating the same over the period of usance of such bills, is now prorated and accounted over the usance period. Consequently, the exchange fluctuation gain and sundry debtors are higher and the profit for the year is lower by Rs. 78.63 lakhs.

d) Unlike in the past, interest on import bills has not been considered in the valuation of raw materials. The impact on account of such treatment on the value of inventories as at March 31, 2001 and on the profit for the year has not been ascertained.

e) The Company had hitherto been accounting for customs duty on imported materials at the time of clearance of such goods from bonded warehouse. During the year, the Company has provided for customs duty aggregating to Rs.740.84 lakhs in respect of materials lying in the bonded warehouse as at the ended of the year. The same has also been considered in the valuation of inventories. This change in the method of accounting, however, has no impact on the profit for the year.

6. Finished goods stocks in respect of the formulations division, lying at the domestic sales depots are under reconciliation with the respective depot records

7. Sundry Creditors include

a) Rs. 20.97 lakhs payable to small scale industrial undertakings to the extent such parties have been identified on the basis of information available with the Company, which has been relied upon by the Auditors. Cooling People Pune Pvt. Ltd. is the only small-scale industrial undertaking, computed on a unit-wise basis, to whom the Company owed a sum exceeding Rs. 1.00 lakh representing retention money, which was outstanding for more than 30 days at the Balance Sheet date.

b) Gain on account of exchange differences on export bills discounted to be recognised in the Profit and Loss Account of subsequent accounting period Rs.1,22.17 lakhs (Previous Year - Rs. Nil)

8. Sales include export incentives of Rs.23,57.65 lakhs (Previous Year - Rs.5,70.43 lakhs).

9. Purchases of Raw Materials considered in Schedule 17 are inclusive of interest on import bills amounting to Rs.4,26.73 lakhs

10. Research & Development expenses included under various heads of expenses are Rs.5,79.32 lakhs (Previous Year Rs.1,56.69 lakhs).

11. Previous years figures have been regrouped and rearranged wherever necessary.

Mar 31, 2000

1. Redeemable Non-Convertible Preference Shares :

Nature of Preference Shares and terms of redemption

Face Value : Rs. 100 per Preference Share

S. No. No. of Dividend Institutions Date of Issue Redeemable at the Shares % end of

(i) 50,000 12.5 Canara Bank 26.12.1997 3 Years with a put & call option at the end of 18 months

(ii) 4,50,000 12.0 SBI Capital 17.11.1998 3 Years with a put Markets Limited & call option at the end of 18 months

(iii) 4,00,000 12.0 Global Trust Bank 28.11.1998 18 months Limited

2. Secured Redeemable Non-Convertible Debentures

(A) Nature of Debentures and terms of redemption.

Face Value : Rs. 100 per Debenture

S.No. No. of Interest Institutions Date of Issue Redeemable in Debentures % equal Instalments

(i) 5,00,000 15.25 Unit Trust of 13.02.1998 End of 3rd, 4th & India 5th year.

(ii) 5,00,000 15.25 SBI Mutual Fund 30.03.1998 End of 3rd, 4th & 5th year.

(iii) 5,00,000 15.00 Life Insurance 11.06.1998 End of 4th, 5th & Corporation of 6th year. India

(B) Security :

The Debentures are secured by way of first pari passu charge on the fixed assets of the Company excluding assets of the Pondicherry Unit and lease hold building of Unit III Kukatpally, Hyderabad and Second charge on all other movable assets of the Company excluding assets of Pondicherry Unit subject to charge created in favour of the bankers.

3. The Working Capital loans from banks are secured by hypothecation of present and future stocks of Raw Materials, Stock-in-process, Finished Goods, Stores and Spares and Book Debts of the Company and personally guaranteed by some of the Directors and also secured by first charge on the fixed assets of the Pondicherry Unit and second charge on the Fixed Assets of the other Units.

4. The Term Loans from IFCI Limited, ICICI Limited and Export-Import Bank of India are secured by way of first charge on the immovable assets of the Company, excluding assets of Pondicherry Unit and leasehold building of Unit III Kukatpally, both present and future, and by way of hypothecation of all movable (save and except book debts) including movable machinery, spares and tools, both present and future, subject to charge created in favour of bankers on the current assets of the Company and also personally guaranteed by some of the Directors.

5. As regards compliance of provisions relating to dues to the Small Scale Industries in terms of the Companies (Amendment) Act, 1999, the Company has sent letters to the creditors to intimate whether they are Small Scale Industrial Units. The Company is yet to receive the required information from them. Hence, the Company could not quantify the dues, if any, to the Small Scale Units.

6. Balances under Sundry Debtors, Sundry Creditors, Loans & Advances, Payables or Receivable are subject to confirmations to be received from some of the parties.

7. Figures for 1998-1999 have been regrouped and reclassified wherever necessary to be in conformity with the current year.

Mar 31, 1999

1) Includes 11,02,500 Equity Shares of Rs. 10/- each issued as fully paid Bonus Shares by capitalisation of Share Premium in the year 1994-95.

2) Includes 4,72,500 Equity Shares of Rs. 10/- each allotted as fully paid Equity Shares to the erstwhile Shareholders of amalgamating Company during the year 1994-95 pursuant to the Scheme of amalgamation without payment being received in cash.

3) Includes 47,25,000 Equity Shares of Rs. 10/- each issued as fully paid Bonus Shares by Capitalisation of Share Premium in the year 1998-99.

A) Security :

The Debentures are secured by way of first pari passu charge on the fixed assets of the company excluding assets of the Pondicherry unit and lease hold building of Unit III Kukatpally, Hyderabad and second charge on all other movable assets of the company, excluding assets of Pondicherry Unit subject to charge created in favour of the bankers.

4. The Working Capital loans from banks are secured by hypothecation of present and future stocks of Raw Materials, Stock-in-process, finished goods, stores and spares and Book Debts of the Company and personally guaranteed by some of the Directors and also secured by first charge on the fixed assets of the Pondicherry unit and second charge on the fixed assets of the other units.

5. The Term Loans from IFCI Limited, ICICI Limited and Export-Import Bank of India are secured by way of first charge on the immovable assets of the company, excluding assets of Pondicherry Unit and leasehold building of Unit III Kukatpally, both present and future, and by way of hypothecation of all movables (save and except book debts) including movable machinery, spares and tools, both present and future, subject to charge created in favour of bankers on the current assets of the company and also personally guaranteed by some of the Directors.

6. As regards to compliance of provisions relating to the dues to the Small Scale Industries in terms of the Companies (Amendment) Act, 1999, the Company has sent letters to the Creditors to confirm whether they are Small Scale Industrial Units. The Company is yet to receive the confirmations from them. Hence, the company could not quantify the dues, if any to the Small Scale Units.

7. Balances under Sundry debtors, Sundry Creditors, Loans & Advances, Payable or receivable are subject to confirmations to be received from some of the parties.

Mar 31, 1998

1. The Working Capital loans from banks are secured by hypothecation of present and future stocks of Raw Materials, Stock-in-process, finished goods, stores and spares and Book Debts of the Company and personally guaranteed by some of the Directors and also secured by first charge on the fixed assets of the Pondicherry unit and second charge on the fixed assets of the other units.

2. The Foreign currency and Rupee Term Loans from Industrial Finance Corporation of India Limited are secured by way of first charge on the immovable assets of the company, excluding assets of Pondicherry Unit, both present and future, and by way of hypothecation of all movables (save and except book debts) including movable machinery, spares and tools, both present and future, subject to charge created in favour of bankers on the current assets of the company.

3. Capital

i. Out of the unissued Share Capital, an amount of Rs.5,00,00,000 has been converted into Preference Share Capital consisting of 5,00,000 Preference Shares of Rs.100/- each during the year and has alloted 50,000 12.5% Redeemable Non-Convertible Preference Shares of Rs.100/- each to Canara Bank on 26th December, 1997 which are redeemable between 3 to 5 years with a put and call option at the end of 18 months and 36 months from the date of allotment.

ii. The Company has issued 5,00,000 15.25% Secured Redeemable Non-Convertible Debentures of Rs.100/- each to Unit Trust of India on 13th February, 1998 which are redeemable at par in three equal instalments at the end of 3rd, 4th, 5th year from the date of allotment, and issued 5,00,000 15.25% Secured Redeemable Non-Convertible Debentures of Rs.100/- each to Stock Holding Corporation of India Ltd A/c SBI Mutual Fund on 20th March, 1998 which are redeemable at par in three equal instalments at the end of 3rd, 4th, 5th year from the date of allotment.

The Debentures are to be secured by way of first pari passu charge on the fixed assets of the company excluding assets of the Pondicherry unit and lease hold building of Unit III Kukatpally, Hyderabad and second charge on all other movable assets of the company, excluding assets of Pondicherry Unit subject to charge created in favour of the bankers. The company is in a process of creation of security.

Mar 31, 1997

1. The Working Capital loans from banks are secured by hypothecation of present and future stocks of Raw Materials, Stock-in-process, finished goods, stores and spares and Book Debts of the Company and personally guaranteed by some of the Directors and also secured by first charge on the fixed assets of the Pondicherry unit and second charge on the fixed assets of the other units.

2. The Term Loan from Industrial Finance Corporation of India Limited is secured by equitable mortgage of Land and Buildings situated at all the units except at Pondicherry and also by second charge on the current assets of the Company.

3. Balances under Sundry Debtors, Sundry Creditors, Loans & Advances, Payable or receivable are subject to confirmations to be received from some of the parties.

4. Figures for the previous year have been regrouped and reclassified wherever necessary to be in conformity with the current year.

Mar 31, 1996

* The Working Capital loans from banks are secured by hypothecation of present and future stocks of Raw Materials, Stock-in-process finished goods, stores and spares and Book Debts of the Company and personally Guaranteed by some of the Directors and also secured by first charge on the fixed assets of the pondicherry unit. The second charge on the fixed assets at the other units is to be created.

* The Term Loans from Financial Institutions are secured by equitable mortgage of Land and Buildings situated at all the units except at Pondicherry and also by second charge on the current assets of the Company.

* Balances under Sundry Debtors, Sundry Creditors, Loans & Advances payable or receivable are subject to confirmations to be received from some of the Parties.

* Figures for the previous year have been regrouped and reclassified wherever necessary to be in confirmity with the current year.

Mar 31, 1995

01. The scheme of amaglamation of Chaitanya Organics Pvt. Ltd. with the company with effect from 01.04.94 was sanctioned by the Honourable High Court of Andhra Pradesh vide its order dated 02.03.95. Since the transfer date is 01.04.94 and final order was received during the current year itself, the full effect of amalgamation is given in the accounts of the company. In view of the above figures for the current year represent the operations of the company including operations of the amalgamated company, whereas the figures for the previous year represent figures relating the operations of the company only. Therefore, the figures for the current year are not comparable with figures of the previous year.

Mar 31, 1994

INFORMATION NOT AVAILABLE

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