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Notes to Accounts of Pfizer Ltd.
Mar 31, 2025
The recoverable amount of the above CGU has been assessed using a value-in-use model. Value in use is calculated as the net present value of the projected pre-tax cash flows plus a terminal value of the cash generating unit to which the goodwill is allocated. Initially a pre-tax discount rate is applied to calculate the net present value of the pre-tax cash flows.
The cash flow projections include specific estimates for five years developed using internal forecasts and a terminal growth rate thereafter of 2% (31 March 2024: 2%). The planning horizon reflects the assumptions for short-to-mid term market developments.
Discount rate reflects the current market assessment of the risks. The discount rate is estimated based on the weighted average cost of capital for the Company. Pre-tax discount rate used for the year ended 31 March 2025 was 16.20% (31 March 2024: 16.36%).
The values assigned to the key assumptions represent management''s assessment of future trends in the pharmaceuticals industry and have been based on historical data from both external and internal sources.
The Company has conducted analysis of the sensitivity of the impairment test to changes in the key assumptions used to determine the recoverable amount of CGU to which goodwill is allocated.The management believes that any reasonably possible change in the key assumptions on which the recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the related CGU.
1. Includes asset (inventory) recoverable from customers for saleable returns of ?0.35 crore towards finished goods (31 March 2024 ''0.79 crore) and ''1.35 crore towards Stock-in-trade (31 March 2024: ''1.54 crore).
2. The Company writes down the value of inventories towards slow moving, non-moving and non-saleable inventory (expired/damaged) based on historical experience of such items and any recent trends that may suggest realizable amount could differ from historical amounts. Charge in the statement of profit and loss on account of write down of inventory during the year is ''11.34 crore (31 March 2024: ''21.05 crore).
The Company has only one class of equity shares having a par value of '' 10/- per share. Every member holding equity shares therein shall have voting rights in proportion to the member''s share of the paid up equity share capital. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting except interim dividend, if any. In the event of liquidation of the Company, the holders of equity shares would be entitled to receive remaining assets of the Company, after distribution of all the preferential amounts. The distribution will be in proportion to the number of equity shares held by the equity shareholders.
(vi) During the five reporting periods immediately preceding the reporting date no shares have been issued for consideration other than cash.
(vii) During the five reporting periods immediately preceding the reporting date, no shares have been issued by capitalization of reserves as bonus shares.
(viii) During the five reporting periods immediately preceding the reporting date, no shares have been bought back.
(ix) Shares held by the Ultimate holding company and subsidiaries of the Ultimate holding Company in aggregate
Nature and purpose of reserves
(i) Securities premium
Securities premium account is used to record the premium on issue of shares. This reserve can be utilized in accordance with the said provisions of The Companies Act, 2013. This account also includes the share premium on shares issued to the shareholders of erstwhile Wyeth limited, pursuant to the Scheme of Amalgamation.
(ii) General reserve
General reserve forms part of the retained earnings and is permitted to be distributed to shareholders as part of dividend.
(iii) Capital reserve
The share-based payment reserve is used to recognize the value of equity settled share-based payments provided to the employees by Pfizer Inc. the ultimate holding company and the Company is not liable for any recharge of the amount. Refer note 33 for further details on the plan.
(iv) Retained earnings
The amount that can be distributed by the Company as dividends to its equity shareholders. Refer Statement of changes in equity.
(v) Remeasurements of the net defined benefit plans
The amount represents remeasurement of defined benefit plans.
arise in the ordinary course of business. A provision is recognised for legal cases if the company assesses that it is probable that an outflow of economic resources will be required. These provisions have not been discounted as it is not practicable for the Company to estimate the timing of the provision utilization and cash outflows, if any, pending resolution.
The amount represents purchase consideration payable to related party John Wyeth and Brother Limited, UK for the transfer of its undertaking in India to erstwhile Wyeth Limited. The amount has been retained as an interest free unsecured loan as per the directives of the Reserve Bank of India in this regard pending appropriate clearance from the income tax authorities.
b) Nature of provisions:
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.
Anticipated Sales returns:
This represents provision towards saleable and non-saleable return expected to be made by the customers till the product expiry. Provision towards saleable return represents products which are expected to be returned in saleable condition while non-saleable return represents expected returns of products which are either expired or damaged, such that the sale of such products may not be possible. Management estimate the provision based on historical returns and any recent trends that may suggest future returns could differ from historical amounts.
Provision for demands under DPCO:
This represents provision recognized by the Company towards unsettled compensations claimed under DPCO from the Company.The provisions for demand under DPCO comprises numerous separate cases that
b) Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the management.
c) Outstanding dues of creditors other than micro and small enterprises include amounts due to related parties ''23.51 crore (31 March 2024: ''36.55 crore) (Refer note 37)
d) All trade payables are ''current''. The Company''s exposure to currency and liquidity risks related to trade payables is disclosed in note 35.
The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
Management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered. Any changes in future taxable income would impact the recoverability of deferred tax assets.
32 Employee benefits
(A) Defined contribution plan:
During the year, the Company has contributed ''0.22 crore (31 March 2024: ''0.23 crore) towards employees'' superannuation fund and ''17.69 crore towards Provident Fund (31 March 2024: ''3.44 crore). During the previous year, Pfizer Limited Employees'' Provident Fund which was administered by a trust, has been transferred to Employees'' Provident Fund Organisation. Necessary permission was granted by Regional Provident Fund Commissioner for such transfer and started complying as an un-exempt entity from 1 January 2024 onwards. There was no shortfall in the fund as on the date of transfer.
(B) Long-term employee benefit - Compensated absences
All eligible employees can carry forward and avail / encash leave as per Company''s rules.
(C) Defined benefit plan:
(i) Provident fund
During the previous year, Pfizer Limited Employees Provident Fund which was administered by a trust, has been transferred to Emloyees'' Provident Fund Organisation. Necessary permission was granted by Regional Provident Fund Commissioner for such transfer and started complying as an un-exempt entity from 1January 2024 onwards. There was no shortfall in the fund as on the date of transfer.
Till 31 December 2023, the employee''s provident fund had been administered by a Trust created specifically for the purpose. The employee''s and employer''s contributions had been transferred to the trust. All liabilities arising on account of provident fund payouts on resignation or retirement from service or death while in service were made from the trust.
(ii) Gratuity plan
In accordance with the provisions of the Payment of Gratuity Act, 1972, the Company has a defined benefit plan which provides for gratuity payments. The plan provides a lump sum gratuity payment to eligible employees at retirement or termination of their employment. The amounts are based on the respective employee''s last drawn salary and the years of employment with the Company.
Liabilities in respect of the gratuity plan are determined by an actuarial valuation, based upon which the Company makes annual contributions to the Group Gratuity cum Life Assurance Schemes administered by the LIC of India, a funded defined benefit plan for qualifying employees. Trustees administer the contributions made by the Company to the gratuity scheme.
The plans expose these companies to a number of actuarial risks such as investment risk, interest rate risk,longevity risk and inflation risk. The companies have developed policy guidelines for the allocation of assets to different classes with the objective of controlling risk and maintaining the right balance between risk and long-term returns in order to limit the cost to these companies of the benefits provided. To achieve this, investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.
The employees of the Company have been issued 45,953 (31 March 2024: 44,182) restricted stock units, 5,716 (31 March 2024: 3,741) portfolio performance shares and 71,734 (31 March 2024: 52,069) total shareholder return units under the Pfizer Inc., 2019 Share Option Plan by Pfizer Inc.
33 Share-based payment arrangements
a) Employee stock options - equity settled
Certain employees of the Company are eligible for stock options, restricted stock units, portfolio performance shares and total shareholder return units granted by Pfizer Inc.(Ultimate holding company). The Company has accounted ''13.66 crore crore (31 March 2024: ''14.45 crore) for share-based payment transactions among group entities in accordance with Ind AS 102, ''Share-based Payments''.
Nature and extent of employee share-based payment plans
Pfizer Inc., as a part of the long-term incentive awards offers certain common stock (shares) to the employees of Pfizer Inc., and its subsidiaries. These shares are offered through grant of awards which is a combination of restricted stock units, portfolio performance shares and total shareholder return units under the Pfizer Inc. 2019 Stock plan. As per the plan, the vesting period of the stock options and the restricted stock units is 3 years from the grant date and the stock options have a term of 10 years from the grant date.All stock options and restricted stock units are settled through equity.All these share based plans are settled by holding company and hence the Company doesnt have any obligation to settle.
The weighted average remaining contractual life of the ESOP outstanding at the year end is 0.85 years.
(ii) Restricted stock units (RSUs)
RSUs which, when vested entitle the holder to receive a specified number of shares of Pfizer Inc. including shares resulting from dividend equivalents paid on such RSUs, are accounted for using a fair value based method at the date of grant. The value of each RSU grant is estimated on the grant date. The fair value based method utilizes the closing price of Pfizer Inc. common stock on the date of grant. The exercise price of the RSU is Nil.
The weighted average remaining contractual life of the RSUs outstanding at the year end is 1.41 years.
The weighted average grant date fair value of RSUs granted during the year ended 31 March 2025 is US $25.75 per RSU (31 March 2024: US $ 41.11 per RSU).
(iii) Portfolio performance shares (PPSs)
PPSs provide an opportunity to receive shares of Pfizer Inc.''s common stock contingent upon Pfizer Inc.''s achievement of pre set goals related to long term pipeline portfolio delivery over a five year performance period.
The weighted average remaining contractual life of the PPS outstanding at the year end is 2.73 years.
The weighted average grant date fair value of PPSs option granted during the years ended 31 March 2025 is US $25.75 per PPS (31 March 2024: US $ 42.30 per PPS).
(iv) Total Shareholder Return Units (TSRUs)
TSRUs are awarded to senior and other key management, and, beginning in 2016, to certain other employees. TSRUs entitle the holders to receive a number of shares of Pfizer Inc. with a value equal to the difference between the defined settlement price and the grant price, plus the dividends accumulated during the five-year or seven-year term, if and to the extent the total value is positive.
Value of TSRU grants is measured as of the grant date using a Monte Carlo simulation model. The values determined through this fair value methodology generally are amortized on a straight-line basis over the vesting term.
b) Valuation of Restricted stock units
The fair value of Restricted stock units granted during the period has been measured using the closing price of common stock as of the grant date.
c) Valuation of Portfolio performance shares
The fair value of Portfolio performance units granted during the period has been measured using the intrinsic value method using the closing price of common stock as of the grant date.
d) Valuation of Total Shareholder Return Units
The fair value of Total Shareholder Return Units granted during the period has been measured using a Monte Carlo simulation method as of the grant date.The weighted average assumptions used in valuation of TSRU''s were as follows:
34 Leases
(a) Company as a Lessee
The Company''s lease asset classes primarily consist of leases for land and buildings. The lease period for these contracts varies from 1 year to 6 years except for Goa plant having a lease period of 99 years and in certain cases, mainly relating to rent of (parts of) buildings, with extension options. The Right-of-use assets and Lease liabilities as disclosed below, do not include short term and low value leases. In general, as usual with leases, the Company''s obligations under its leases are secured by the lessor''s title to or legal ownership of the leased assets.
B. Measurement of fair values
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of following:
Level 1 - category includes financial assets and liabilities, that are measured in whole or in significant part by reference to published quotes in an active market.
Level 2 - category includes financial assets and liabilities measured using a valuation technique based on assumptions that are supported by prices from observable current market transactions. These include assets and liabilities for which pricing is obtained via pricing services, but where prices have not been determined in an active market, financial assets with fair values based on broker quotes and assets that are valued using the Company''s own valuation models whereby the material assumptions are market observable.
Level 3 - category includes financial assets and liabilities measured using valuation techniques based on non-market observable inputs. This means that fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. However, the fair value measurement objective remains the same, that is, to estimate an exit price from the perspective of the Company.
2. Financial risk management - objective and policies
(i) Financial risk management framework
The Company has exposure to the following risks arising from financial instruments:
- Credit risk
- Liquidity risk
- Market risk
- Currency risk
The Company''s Board of Directors have overall responsibility for the establishment and oversight of the Company''s risk management framework.
The Company''s risk management is carried out by the management in consultation with the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific risk areas.
The Audit Committee oversees how management monitors compliance with the Company''s risk management policies and procedures, and reviews the adequacy of the above financial 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 results of which are reported to the Audit Committee.
(ii) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and from its financing activities including deposits with banks and other financial instruments. The Company establishes an allowance for expected credit loss and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
a) Trade receivables
The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to ''193.09 crore as at 31 March 2025 (31 March 2024: ''187.61 crore).
Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India. The majority of the Company''s trade receivables are due for maturity within 7 - 30 days from the date of billing to the customer.
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry, the country and the state in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
b) Expected credit loss assessment for customers and loans
The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgement.
Exposures to customers and loans outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. The company provided for expected credit loss based on lifetime expected credit loss. (simplified approach).
c) Cash and bank balances
The Company held cash and bank balances of ?2,800.98 crore as at 31 March 2025 (31 March 2024: ?2,046.71 crore).Credit risk on cash and bank balances is limited as these are generally held or invested in deposits with banks with good credit ratings.
d) Investments
There are no significant investments made by the Company and hence credit risk is not significant.
(iii) 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 principal sources of liquidity are cash and bank balances and the cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements.
(iv) Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables. We are exposed to market risk primarily related to foreign exchange rate risk. Thus, our exposure to market risk is a function of revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.
(v) Currency risk
The Company is exposed to currency risk on account of its operations. The functional currency of the Company is Indian Rupee. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may continue to fluctuate substantially in the future.
Every percentage point depreciation / appreciation in the exchange rate between the Indian Rupee and foreign currency would not have a significant impact on statement of profit and loss for the year ended 31 March 2025.
* Amount below currency one lakh 36 Capital management a) Risk management
The Company''s policy is to maintain a strong capital base to sustain future development of the business.
The Company has adequate cash and bank balances and continues to remain debt-free. The Company monitors its capital by a careful scrutiny of the cash and bank balances, and a regular assessment of any debt requirements. In the absence of any debt, the maintenance of debt equity ratio etc. may not be of any relevance to the Company.
a) Pricing litigations - Contingencies
The government had raised certain pricing related demands on Pfizer Limited and the erstwhile Parke-Davis (India) Ltd., Pharmacia Healthcare Limited and Wyeth Limited (which entities merged with Pfizer Limited), in respect of certain price fixation orders and other allied matters under various Drug (Prices Control) Orders (DPCO), viz., DPCO 1979, DPCO 1987, DPCO 1995 and DPCO 2013. These demands include alleged differential price demand on procurement of bulk drugs below the notified price, disputes on categorization of products, overcharging on the allegation of not following certain price control orders, allegation of delayed implementation of price ceiling notifications, etc. The Company had repudiated these demands and initiated legal proceedings to defend the Company against these alleged demands. Based on the legal assessment of these matters, certain provisions have already been made in the books, wherever necessary. The Company also has made certain deposits against these demands pursuant to directions from High Court(s).
Terms and conditions of transactions with related parties
Transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions.There have been no guarantees provided or received for any related party receivables or payables.
38 Contingent liabilities and commitments (to the extent not provided for)
The Company has reviewed all its pending litigations and proceedings periodically. Pending resolution of the respective proceedings, it is not practicable for the Company to estimate reliabily the timings and impact of cash outflows, if any, in respect of contingent liabilities reported below as it is determinable only on receipt of judgements/decisions pending with various forums/authorities. Wherever applicable, the amount includes interest upto the date of respective orders received by the Company.
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A summary of the alleged pricing demands are given hereunder: |
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Currency: '' in crore |
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|
Name of Statute |
Period of dispute |
Authority before whom dispute is pending |
Nature of dispute |
Total demand |
Amount paid |
Contingent Liability |
|
DPCO 1979 / DPCO 1987 |
1979-1988 |
Drug Prices Liability Review Committee |
Alleged differential bulk drug price and arbitrary retrospective demand |
16.25 |
16.25 |
|
|
DPCO 1979 |
1981-1988 |
Hon''ble Bombay High Court |
Alleged differential price demand |
59.45 |
18.97 |
43.29 |
|
DPCO 1979 |
1983-1985 |
Hon''ble Bombay High Court |
Alleged differential bulk drug procurement price |
3.85 |
0.45 |
3.85 |
|
DPCO 1979 |
1984-1986 |
Drug Prices Liability Review Committee |
Alleged demand on Food product based on wrong classification |
2.12 |
2.12 |
|
|
DPCO 1995 |
2004 |
Hon''ble Bombay High Court |
Alleged non-maintenance of raw material consumption ratio |
17.26 |
12.88 |
4.38 |
|
DPCO 1995 |
2006-2007 |
Various authorities |
Applicability of price control notification & allied matters |
2.91 |
- |
0.11 |
|
DPCO 1995 |
2009-2010 |
Hon''ble Delhi High Court |
Alleged delayed implementation of price order |
0.51 |
0.08 |
0.08 |
|
DPCO 2013 |
2015-2017 |
Hon''ble Bombay High Court |
Price increase due to excise duty revision alleged as price increase in excess of permissible limit |
48.46 |
48.46 |
|
|
DPCO 2013 |
2016-2017 |
Hon''ble Bombay High Court |
Alleged delayed implementation of price order |
6.97 |
- |
6.97 |
|
Total |
157.78 |
32.38 |
125.51 |
|||
|
(157.78)* |
(32.38)* |
(125.51)* |
||||
|
* figures in bracket is of 31 March 2024 |
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Difference of ''32.27 crore (31 March 2024: ''32.27 crore) between total demand and contingent liabilities represents provision of ''19.39 crore (31 March 2024: ''19.39 crore) and an amount of ''12.88 crore that was charged to statement of profit and loss in earlier years.
Considering the merit of the cases and basis the legal opinion received, the Company believes it has strong chance of success and the probability of an unfavourable outcome against the Company with respect to the contingent liability on DPCO matters disclosed above has been considered to be remote.
b) Sales tax/VAT litigations - Contingencies
The Company has various litigations under Sales Tax/Value Added Tax laws, outstanding at various forums against disallowances and demands raised by various State authorities. Considering the issues under dispute, the available factual evidence and the relevant judicial precedents, the Company is of the view that no further provision is required over and above the amount already provided in the books of accounts (Refer note 21). Provision recognized in the books, represent a best estimate of the potential liability. Against these bank guarantee of ''11.54 crore ( 31 March 2024 ''13.98 crore) has been issued to government authorities.
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Currency: '' in crore |
|||
|
As at 31 March 2025 |
As at 31 March 2024 |
||
|
c) Income Tax and other matters |
|||
|
1. |
Income tax * |
154.85 |
199.35 |
|
2. |
Property tax** |
26.88 |
26.88 |
|
3. |
Service tax |
16.23 |
16.23 |
|
4. |
Duty of excise |
6.31 |
6.31 |
|
5. |
Duty of customs |
2.72 |
2.72 |
|
6. |
Pending labour matters contested in various courts |
0.81 |
0.96 |
|
Currency: '' in crore |
|||||
|
Forum where dispute is Pending |
Period to which the Amount relates |
Nature of dues |
Total demand |
Amount paid under Protest |
Contingent Liability |
|
Assessing officer |
2011-12, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17, 2017-18 |
Pending statutory declaration forms and others |
0.85 |
0.41 |
0.18 |
|
Assistant Commissioner |
1986-87, 2004-05, 2010-11, 2011-12, 2013-14, 2014-15, 2015-16, 2016-17, 2017-18 |
Pending statutory declaration forms, input tax credit and others |
0.73 |
0.14 |
0.50 |
|
Additional commissioner |
1997-98, 1998-99, 2002-03, 2009-10, 2010-11, 2011-12, 2014-15, 2016-17, 2017-18 |
Pending statutory declaration forms, disallowance of credit notes and others |
3.74 |
2.34 |
0.78 |
|
Deputy Commissioner |
1993-94, 1994-95, 1995-96, 1996-97, 2001-02, 2002-03, 2003-04, 200607, 2007-08, 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17, 2017-18 |
Pending statutory declaration forms, disallowance of credit note and input tax credit and others |
17.88 |
7.16 |
3.55 |
|
Joint Commissioner |
1987-88, 1994-95, 1996-97, 1997-98, 1998-99, 2001-02, 2003-04, 200405, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17, 2017-18 |
Pending statutory declaration forms, disallowance of credit note and input tax credit and others |
83.67 |
38.43 |
3.79 |
|
Various Tribunals |
1996-97, 2006-07, 2007-08, 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15, 2015-16, 2016-17, 2017-18 |
Pending statutory declaration forms, disallowance of credit note and input tax credit and others |
123.89 |
63.72 |
14.43 |
|
Hon''ble High court |
2012-13 |
Pending statutory declaration forms and others |
5.05 |
1.65 |
3.03 |
|
Hon''ble Supreme court |
1992-93 |
Levy of tax and interest |
0.10 |
- |
0.10 |
|
Total |
235.91 |
113.85 |
26.36 |
||
|
(274.91)* |
(117.11)* |
(45.29)* |
|||
|
* figures in bracket is of 31 March 2024 |
|||||
* The matter is with respect to disallowance of certain expenses,tax deducted at source, transfer pricing adjustment etc. and same has been pending with various authorities.
**The Company has been challenging the property tax bills received from Navi Mumbai Municipal Corporation (NNMC) for the period 2010-2024 in respect of its Thane premises for which an amount of '' 4.31 crore was paid in 2016, The matter is currently sub-judice.On a Writ Petition filed by the Company, the Hon''ble Bombay High Court directed the Company to deposit the outstanding amount of ''24.34 crore with Hon''ble Bombay High Court. The Company has accordingly deposited the said amount with Hon''ble Bombay High Court.The Company has received a legal opinion stating that it has a good chance of success in the pending litigation. Hence the amount ''26.88 crore (net of ''1.77 crore charged to the statement of profit and loss in earlier years) has been disclosed as contingent liability.
|
Currency: '' in crore |
||
|
As at 31 March 2025 |
As at 31 March 2024 |
|
|
d) Commitments |
||
|
i. Estimated amount of contracts remaining to be executed on capital account and not provided for |
0.94 |
0.74 |
|
ii. Bank guarantees |
4.12 |
5.73 |
39 Segment reporting
The Company has only one segment which is Pharmaceuticals and primarily operates in domestic market. The Managing Director of the Company has been identified as the Chief Operating Decision Maker. The Company''s Managing Director, reviews the operating performance of the Company as a whole on a periodic basis. Therefore disclosure relating to segments is not applicable and accordingly not made.
Difference of ''209.55 crore (31 March 2024: ''229.62 crore) between total demand and contingent liabilities represents provision of ''32.42 crore ( 31 March 2024: ''38.03 crore ) and remaining balance is with respect to the cases for which the probability of the outcome against the Company has been considered to be remote.
Information about major customers contributing more than 10% of company''s total revenue & receivable
Revenue from one customer of Pharmaceuticals business in India represents ''590.41 crore of the Company''s total revenue (31 March 2024: ''693.99 crore).
Receivable from one customer of Pharmaceuticals business in India represents ''19.18 crore of the Company''s total receivable (31 March 2024: ''66.33 crore).
40 Subsequent events
There are no significant subsequent events that would require adjustments or disclosures except as disclosed below in the financial statements as on the reporting date.
a) The Board of Directors have recommended a final dividend of ''35 per equity share of ''10 each (350%) and a special dividend of ''100 per equity share of ''10 each (100%), in view of 75th year of Pfizer in India and a special dividend of ''30 per equity share of ''10/- each (300%) in view of the gain on transfer of assignment of leasehold land and building constructed on such land thereon, totaling to a dividend of ''165 per equity share of ''10 each (1650%) for the financial year ended March 31, 2025. These proposed dividends amounting to ''754.84 crore are subject to the approval of the shareholders in the annual general meeting and is not recognized at the end of the reporting period.
(ix) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
42 Other Statutory information
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company has entered into transactions with companies struck offunder Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.
(x) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
(xi) No funds have been received by the Company from any person(s) or entity(ies), including foreign entities (''the Funding Parties''), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
43 Corporate social responsibility (CSR)
The Company meets the criteria specified under Section 135 of the Companies Act, 2013 and has formed a Corporate Social Responsibility (CSR) Committee to monitor the CSR activities implemented as per the CSR Policy of the Company. The Company spends in each financial year at least 2% of its average net profit for the immediately preceding three financial years as per provisions of Section 135 of the Act and in compliance of its CSR policy. The projects are aligned to promote Indian innovation and Indian intellectual property with a focus on healthcare; undertake awareness and access programs in partnership with NGOs, government and healthcare providers in areas such as women and child health, among others; support Government, national and/or state programs and priorities with linkages to healthcare; and participate in disaster relief activities.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(vi) No funds have been advanced or loaned or invested by the Company to or in any person(s) or entity(ies), including foreign entities (''the intermediaries''), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (''the Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries.
(vii) The Company has not been declared willful defaulter by any bank or financial institution or government or government authority.
(viii) The Company has complied with the requirements of the number of layers prescribed under clause (87) of section 2 of the Companies Act, 2013 read with Companies (Restriction on number of Layers) Rules, 2017.
*Includes ''2.75 crore for the year ended 31 March 2023, ''3.49 crore for the year ended 31 March 2024 and ''8.54 crore for the year ended 31 March 2025.
** Amount required to be spent for CSR for financial year ended 31 March 2025 is ''15.76 crore. The excess amount of ''0.25 crore pertaining to the year ended 31 March 2022 has been adjusted against the current year required spent.
44 Exceptional items
A During the year ended 31 March 2025
(i) Sale of Leasehold rights and Building at Thane
In the previous year, the Company had entered into an agreement to assign and assume the Lease of Maharashtra Industrial Development Corporation ("MIDC") Land and Sale of Building constructed on such land for transferring and assigning Pfizer''s unexpired leasehold rights in the land situated at Thane and sale of structures and buildings constructed thereon, to Zoetis Pharmaceutical Research Private Limited, for a lumpsum consideration of ''264.40 crore, of which ''52.88 crore was received as an advance. The said assets were classified as held for sale. During the year, the Company has received requisite approvals from MIDC and has completed the transfer and sale of said assets. Net gain of ''172.81 crore is disclosed as an ''Exceptional items'' in the Statement of Profit and Loss.
B During the year ended 31 March 2024 (i) VAT Provisions
For the year ended March 31, 2024, the exceptional item is in relation to provision for old pending VAT / CST litigations. The Company opted for Maharashtra VAT Amnesty Scheme for certain years and had received final settlement orders. Pursuant to the said orders, the Company had written back an excess provision of ''7.95 crore.
Mar 31, 2024
The recoverable amount of the above CGU has been assessed using a value-in-use model. Value in use is calculated as the net present value of the projected pre-tax cash flows plus a terminal value of the cash generating unit to which the goodwill is allocated. Initially a pre-tax discount rate is applied to calculate the net present value of the pre-tax cash flows.
The cash flow projections include specific estimates for five years developed using internal forecasts and a terminal growth rate thereafter of 2% (31 March 2023: 2%). The planning horizon reflects the assumptions for short-to-mid term market developments.
Discount rate reflects the current market assessment of the risks. The discount rate is estimated based on the weighted average cost of capital for the Company. Pre-tax discount rate used for the year ended 31 March 2024 was 16.36% (31 March 2023: 16.36%).
The values assigned to the key assumptions represent management''s assessment of future trends in the pharmaceuticals industry and have been based on historical data from both external and internal sources.
The management believes that any reasonable possible change in the key assumptions would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit.
1. Includes asset (inventory) recoverable from customers for saleable returns of '' 0.79 crore towards finished goods (31 March 2023 ? 0.87 crore) and ? 1.54 crore towards Stock-in-trade (31 March 2023: ? 1.71 crore)
2. The Company writes down the value of inventories towards slow moving, non-moving and non-saleable inventory (expired/ damaged) based on historical experience of such items and any recent trends that may suggest realizable amount could differ from historical amounts. Charge in the statement of profit and loss on account of write down of inventory during the year is '' 21.05 crore (31 March 2023: '' 17.30 crore).
(i) In the previous year, the Company had intended to sell the Lease of MIDC Land and Sale of Building constructed on such land and accordingly, was classified as Asset held for sale as at 31 March 2023. During the year, the Company had entered into an agreement to assign and assume the Lease of MIDC Land and Sale of Building constructed on such land for transferring and assigning Pfizer''s unexpired leasehold rights in the land situated at Thane and sale of structures and buildings constructed thereon, to Zoetis Pharmaceutical Research Private Limited, for a lumpsum consideration of '' 264.40 crore, of which '' 52.88 crore has been received as an advance. Completion of transaction is subject to requisite approvals from concerned regulatory authorities, including the Maharashtra Industrial Development Corporation and accordingly, no effect of the said agreement has been given in these financial statements. The said land and buildings has continued to be classified as asset held for sale as at March 31, 2024.
(v) The rights, preferences and restrictions attaching to equity shares including restrictions on the distribution of dividends and the repayment of capital.
The Company has only one class of equity shares having a par value of '' 10/- per share. Every member holding equity shares therein shall have voting rights in proportion to the member''s share of the paid up equity share capital. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting except interim dividend, if any. In the event of liquidation of the Company, the holders of equity shares would be entitled to receive remaining assets of the Company, after distribution of all the preferential amounts. The distribution will be in proportion to the number of equity shares held by the equity shareholders.
(vi) During the five reporting periods immediately preceding the reporting date no shares have been issued for consideration other than cash.
(vii) During the five reporting periods immediately preceding the reporting date, no shares have been issued by capitalization of reserves as bonus shares.
(viii) During the five reporting periods immediately preceding the reporting date, no shares have been bought back.
(ix) Shares held by the Ultimate holding company and subsidiaries of the Ultimate holding Company in aggregate
Nature and purpose of reserves
(i) Securities premium
Securities premium account is used to record the premium on issue of shares. This reserve can be utilized in accordance with the said provisions of The Companies Act, 2013. This account also includes the share premium on shares issued to the shareholders of erstwhile Wyeth limited, pursuant to the Scheme of Amalgamation.
(ii) General reserve
General reserve forms part of the retained earnings and is permitted to be distributed to shareholders as part of dividend.
(iii) Capital reserve
The share-based payment reserve is used to recognize the value of equity settled share-based payments provided to the employees by Pfizer Inc. the ultimate holding company and the Company is not liable for any recharge of the amount. Refer note 33 for further details on the plan.
(iv) Retained earnings
The amount that can be distributed by the Company as dividends to its equity shareholders. Refer Statement of changes in equity.
(v) Remeasurements of the net defined benefit plans
The amount represents remeasurement of defined benefit plans.
b) Nature of provisions:
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.
Anticipated Sales returns:
This represents provision towards saleable and non-saleable return expected to be made by the customers till the product expiry. Provision towards saleable return represents products which are expected to be returned in saleable condition while non-saleable return represents expected returns of products which are either expired or damaged, such that the sale of such products may not be possible. Management estimate the provision based on historical returns and any recent trends that may suggest future returns could differ from historical amounts.
Provision for demands under DPCO:
This represents provision recognized by the Company towards unsettled compensations claimed under DPCO from the Company. The provisions for demand under DPCO comprises numerous separate cases that arise in the ordinary course of business. A provision is recognised for legal cases if the company assesses that it is probable that an outflow of economic resources will be required. These provisions have not been discounted as it is not practicable for the Company to estimate the timing of the provision utilization and cash outflows, if any, pending resolution.
Provision for Customs and Central Excise:
This represents provision recognized by the Company towards demand raised by Customs and Excise authorities. The provisions for demand under Customs and Central Excise comprises numerous separate cases that arise in the ordinary course of business. A provision is recognised for legal cases if the company assesses that it is probable that an outflow of economic resources will be required. These provisions have not been discounted as it is not practicable for the Company to estimate the timing of the provision utilization and cash outflows, if any, pending resolution.
The amount represents purchase consideration payable to related party John Wyeth and Brother Limited, UK for the transfer of its undertaking in India to erstwhile Wyeth Limited. The amount has been retained as an interest free unsecured loan as per the directives of the Reserve Bank of India in this regard pending appropriate clearance from the income tax authorities.
The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
Management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered. Any changes in future taxable income would impact the recoverability of deferred tax assets.
(A) Defined contribution plan:
During the year, the Company has contributed '' 0.23 crore (31 March 2023: ?0.31 crore) towards employee''s superannuation fund and '' 3.44 crore towards Provident Fund (31 March 2023: nil). During the current year, Pfizer Limited Employees Provident Fund which is administered by a trust, has been transferred to Emloyees'' Provident Fund Organisation. Necessary permission has been granted by Regional Provident Fund Commissioner for such transfer and start complying as an un-exempt entity from 1 January 2024 onwards. There is no shortfall in the fund as on the date of transfer.
(B) Long-term employee benefit - Compensated absences
All eligible employees can carry forward and avail / encash leave as per Company''s rules.
(C) Defined benefit plan:
(i) Provident fund
During the current year, Pfizer Limited Employees Provident Fund which is administered by a trust, has been transferred to Emloyees'' Provident Fund Organisation. Necessary permission has been granted by Regional Provident Fund Commissioner for such transfer and start complying as an un-exempt entity from 1 January 2024 onwards. There is no shortfall in the fund as on the date of transfer.
Till 31 December 2023, the employee''s provident fund was administered by a Trust created specifically for the purpose. The employee''s and employer''s contributions were transferred to the trust. All liabilities arising on account of provident fund payouts on resignation or retirement from service or death while in service were made from the trust.
In accordance with the provisions of the Payment of Gratuity Act, 1972, the Company has a defined benefit plan which provides for gratuity payments. The plan provides a lump sum gratuity payment to eligible employees at retirement or termination of their employment. The amounts are based on the respective employee''s last drawn salary and the years of employment with the Company.
Liabilities in respect of the gratuity plan are determined by an actuarial valuation, based upon which the Company makes annual contributions to the Group Gratuity cum Life Assurance Schemes administered by the LIC of India, a funded defined benefit plan for qualifying employees. Trustees administer the contributions made by the Company to the gratuity scheme.
The plans expose these companies to a number of actuarial risks such as investment risk, interest rate risk,longevity risk and inflation risk. The companies have developed policy guidelines for the allocation of assets to different classes with the objective of controlling risk and maintaining the right balance between risk and longterm returns in order to limit the cost to these companies of the benefits provided. To achieve this, investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.
The Company expects to contribute nil (31 March 2023 : nil) to the gratuity trust during the financial year 202425.
The gratuity plan is a funded plan and the Company makes contributions to recognised ''Life Insurance Corporation (Insurer) in India.
a) Employee stock options - equity settled
Certain employees of the Company are eligible for stock options, restricted stock units, portfolio performance shares and total shareholder return units granted by Pfizer Inc.(Ultimate holding company). The Company has accounted '' 14.45 crore (31 March 2023: '' 12.70 crore) for share-based payment transactions among group entities in accordance with Ind AS 102, ''Share-based Payments''.
Nature and extent of employee share-based payment plans
Pfizer Inc., as a part of the long-term incentive awards offers certain common stock (shares) to the employees of Pfizer Inc., and its subsidiaries. These shares are offered through grant of awards which is a combination of restricted stock units, portfolio performance shares and total shareholder return units under the Pfizer Inc. 2019 Stock plan. As per the plan, the vesting period of the stock options and the restricted stock units is 3 years from the grant date and the stock options have a term of 10 years from the grant date. All stock options and restricted stock units are settled through equity.All these share based plans are settled by holding company and hence the Company doesnt have any obligation to settle. The employees of the Company have been issued 44,182 (31 March 2023: 24,357) restricted stock units, 3,741
(ii) Restricted stock units (RSUs)
RSUs which, when vested entitle the holder to receive a specified number of shares of Pfizer Inc. including shares resulting from dividend equivalents paid on such RSUs, are accounted for using a fair value based method at the date of grant. The value of each RSU grant is estimated on the grant date. The fair value based method utilizes the closing price of Pfizer Inc. common stock on the date of grant. The exercise price of the RSU is Nil.
(iii) Portfolio performance shares (PPSs)
PPSs provide an opportunity to receive shares of Pfizer Inc.''s common stock contingent upon Pfizer Inc.''s achievement of pre set goals related to long term pipeline portfolio delivery over a five year performance period.
(iv) Total Shareholder Return Units (TSRUs)
TSRUs are awarded to senior and other key management, and, beginning in 2016, to certain other employees. TSRUs entitle the holders to receive a number of shares of Pfizer Inc. with a value equal to the difference between the defined settlement price and the grant price, plus the dividends accumulated during the five-year or seven-year term, if and to the extent the total value is positive.
The weighted average grant date fair value of TSRUs granted during the year ended 31 March 2024 is US $ 41.57 per TSRU (31 March 2023: US $ 45.96 per TSRU)
b) Valuation of Restricted stock units
The fair value of Restricted stock units granted during the period has been measured using the closing price of common stock as of the grant date.
c) Valuation of Portfolio performance shares
The fair value of Portfolio performance units granted during the period has been measured using the intrinsic value method using the closing price of common stock as of the grant date.
d) Valuation of Total Shareholder Return Units
The fair value of Total Shareholder Return Units granted during the period has been measured using a Monte Carlo simulation method as of the grant date. The weighted average assumptions used in valuation of TSRU''s were as follows:
(a) Company as a Lessee
The Company''s lease asset classes primarily consist of leases for land and buildings. The lease period for these contracts varies from 1 year to 6 years except for Goa plant having a lease period of 99 years and in certain cases, mainly relating to rent of (parts of) buildings, with extension options. The Right-of-use assets and Lease liabilities as disclosed below, do not include short term and low value leases. In general, as usual with leases, the Company''s obligations under its leases are secured by the lessor''s title to or legal ownership of the leased assets.
Right-of-Use Assets
The movement in Right-of-use assets has been disclosed in Note 4.
Lease Liabilities
Movement in Lease Liabilities as from 1 April 2023
Rent paid for short term leases was ''0.33 crore for the year ended 31 March 2024 (31 March 2023 : ''0.19 crore). During the year the total cash out flows for leases, including the payments relating to short term and low value leases, are ''51.43 crore (31 March 2023 : ''48.14 crore)
The table below provides details regarding the contractual maturities of lease liabilities as at 31 March 2024 and 31 March 2023 on an undiscounted basis:
The Company does not face a significant liquidity risk with regard to its lease liablities as the current assets are sufficient to meet the obligations related to lease liablities as and when they fall due.
(b) Company as a Lessor
Lease rental receipts recognised in the statement of profit and loss account is ''6.39 crore for the year ended 31 March 2024 (31 March 2023 : ''6.39 crore)
1. Financial instruments - Fair values and measurements A. Accounting classification and fair values
1. Financial instruments - Fair value and measurements B. Measurement of fair values
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of following:
Level 1 - category includes financial assets and liabilities, that are measured in whole or in significant part by reference to published quotes in an active market.
Level 2 - category includes financial assets and liabilities measured using a valuation technique based on
The following table shows the carrying amounts and fair values of financial assets and financial liabilities as at 31 March 2024, including their levels are presented below. It does not include the fair value information for financial assets and financial liabilities not measured at fair value if their carrying amount is a reasonable approximation of fair value.
assumptions that are supported by prices from observable current market transactions. These include assets and liabilities for which pricing is obtained via pricing services, but where prices have not been determined in an active market, financial assets with fair values based on broker quotes and assets that are valued using the Company''s own valuation models whereby the material assumptions are market observable.
Level 3 - category includes financial assets and liabilities measured using valuation techniques based on non-market observable inputs. This means that fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. However, the fair value measurement objective remains the same, that is, to estimate an exit price from the perspective of the Company.
2. Financial risk management - Objective and policies
(i) Financial risk management framework
The Company has exposure to the following risks arising from financial instruments:
- Credit risk
- Liquidity risk
- Market risk
- Currency risk
The Company''s Board of Directors have overall responsibility for the establishment and oversight of the Company''s risk management framework.
The Company''s risk management is carried out by the management in consultation with the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific risk areas.
The 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 results of which are reported to the Audit Committee.
(ii) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and from its financing activities including deposits with banks and other financial instruments. The Company establishes an allowance for expected credit loss and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
a) Trade receivables
The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to ''187.61 crore as at 31 March 2024 (31 March 2023: ''151.73 crore).
Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India.
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry, the country and the state in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
b) Expected credit loss assessment for customers and loans
The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgement.
Exposures to customers and loans outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. The Company provided for expected credit loss based on lifetime expected credit loss. (simplified approach).
The following table provides information about the exposure to credit risk and ECL''s for trade receivables from individual customers:
c) Cash and bank balances
The Company held cash and bank balances of ?2,046.71 crore as at 31 March 2024 (31 March 2023: ?1,859.52 crore). Credit risk on cash and bank balances is limited as these are generally held or invested in deposits with banks with good credit ratings.
d) Investments
There are no significant investments made by the Company and hence credit risk is not material.
(iii) 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 principal sources of liquidity are cash and bank balances and the cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements.
(iv) Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables. We are exposed to market risk primarily related to foreign exchange rate risk. Thus, our exposure to market risk is a function of revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.
(v) Currency risk
The Company is exposed to currency risk on account of its operations. The functional currency of the Company is Indian Rupee. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may continue to fluctuate substantially in the future.
Every percentage point depreciation / appreciation in the exchange rate between the Indian Rupee and foreign currency would not have a significant impact on statement of profit and loss for the year ended 31 March 2024.
a) Risk management
The Company''s policy is to maintain a strong capital base to sustain future development of the business.
The Company has adequate cash and bank balances and continues to remain debt-free. The Company monitors its capital by a careful scrutiny of the cash and bank balances, and a regular assessment of any debt requirements. In the absence of any debt, the maintenance of debt equity ratio etc. may not be of any relevance to the Company.
b) Dividend
(i) Equity Shares
Final Dividend for the year ended 31 March 2023 of ?40 per fully paid share (31 March 2022: ?35 for fully paid share). The said dividend was paid on September 15, 2023.
Terms and conditions of transactions with related parties
Transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. There have been no guarantees provided or received for any related party receivables or payables.
38 Contingent liabilities and commitments (to the extent not provided for)
a) Pricing litigations - Contingencies
The government had raised certain pricing related demands on Pfizer Limited and the erstwhile Parke-Davis (India) Ltd., Pharmacia Healthcare Limited and Wyeth Limited (which entities merged with Pfizer Limited), in respect of certain price fixation orders and other allied matters under various Drug (Prices Control) Orders (DPCO), viz., DPCO 1979, DPCO 1987, DPCO 1995 and DPCO 2013. These demands include alleged differential price demand on procurement of bulk drugs below the notified price, disputes on categorization of products, overcharging on the allegation of not following certain price control orders, allegation of delayed implementation of price ceiling notifications, etc. The Company had repudiated these demands and initiated legal proceedings to defend the Company against these alleged demands. Based on the legal assessment of these matters, certain provisions have already been made in the books, wherever necessary. The Company also has made certain deposits against these demands pursuant to directions from High Court(s).
Based on the legal opinion received by the Company and the assessment of the management, the Company is of the view that no further provisions are considered necessary over and above the sum of ''19.39 crore (31 March 2023: ''20.45 crore) and provision recognised represent a best estimate of liability. A summary of the alleged pricing demands are given hereunder:
During the current year,the company has received favorable order from Hyderabad High Court for Isokin & Pyridium. Accordingly, provision for principal demand of ''1.06 crore has been written back. Penalty amount of ?1.17crore has been reduced from contingent liability.
During the previous year, the Company had transferred contingent liability on account of Amlogard amounting to ''3.75 crore as a part of transfer of Upjohn business.
Difference between total demand and contingent liabilities of ''32.27 crore ( 31 March 2023: ''33.33 crore ) represents provision of ''19.39 crore ( 31 March 2023: '' 20.45 crore ) and remaining balance is with respect to the cases for which the probability of the outcome against the Company has been considered to be remote.
b) Sales tax/VAT litigations - Contingencies
The Company has various litigations under Sales Tax/Value Added Tax laws, outstanding at various forums against disallowances and demands raised by various State authorities. Considering the issues under dispute, the available factual evidence and the relevant judicial precedents, the Company is of the view that no further provision is required over and above the amount already provided in the books of accounts (Refer note 21). Provision recognized in the books, represent a best estimate of the potential liability. Against these bank guarantee of ?13.98 crore ( 31 March 2023 ?16.9 crore) has been issued to government authorities.
* The matter is with respect to disallowance of certain expenses,tax deducted at source, transfer pricing adjustment etc. and same has been pending with various authorities.
Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgements/decisions pending with various forums/authorities.
The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable.
**The Company has been challenging the property tax bills received from Navi Mumbai Municipal Corporation (NNMC) for the period 2010-2024 in respect of its Thane premises for which an amount of ? 4.31 crore was paid in 2016. The matter is currently sub-judice. On a Writ Petition filed by the Company, the Hon''ble Bombay High Court directed the Company to deposit the outstanding amount of ? 24.34 crore with Hon''ble Bombay High Court.The Company has accordingly deposited the said amount with Hon''ble Bombay High Court.The Company has received a legal opinion stating that it has a good chance of success in the pending litigation. Hence the said outstanding amount ?24.34 crores has been disclosed as contingent liability.
The Company has only one segment which is Pharmaceuticals and primarily operates in domestic market. The Managing Director of the Company has been identified as the Chief Operating Decision Maker. The Company''s Managing Director, reviews the operating performance of the Company as a whole on a periodic basis. Therefore disclosure relating to segments is not applicable and accordingly not made.
There are no non-current assets outside of India as at 31 March 2024 (31 March 2023: Nil).
Information about major customers contributing more than 10% of company''s total revenue & receivable
Revenue from one customer of Pharmaceuticals business in India represents ? 693.99 crore of the Company''s total revenue (31 March 2023: ? 670.03 crore).
Receivable from one customer of Pharmaceuticals business in India represents ? 66.33 crore of the Company''s total receivable (31 March 2023: ? 62.93 crore).
There are no significant subsequent events that would require adjustments or disclosures except as disclosed below in the financial statements as on the reporting date.
a) Dividend not recognized at the end of the reporting period ? 160.13 crore. Board of Directors have recommended a final dividend of ? 35 per fully paid share. This proposed dividend is subject to the approval of the shareholders in the annual general meeting.
None of the above mentioned struck off companies are related party of the Company.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(vi) No funds have been advanced or loaned or invested by the Company to or in any person(s) or entity(ies), including foreign entities (''the intermediaries''), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (''the Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries.
(vii) The Company has not been declared willful defaulter by any bank or financial institution or government or government authority.
(viii) The Company has complied with the requirements of the number of layers prescribed under clause (87) of section 2 of the Companies Act, 2013 read with Companies (Restriction on number of Layers) Rules, 2017.
(ix) The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
(x) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.
(xi) No funds have been received by the Company from any person(s) or entity(ies), including foreign entities (''the Funding Parties''), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(ii) Voluntary retirement scheme and restructuring
In the previous year, the Company had declared a Pfizer Voluntary Retirement Scheme 2022 (VRS) for eligible field employees in April 2022. ?129.85 crore on account of Voluntary Retirement Scheme (VRS) and an additional charge of ?6.48 crore (net) on account of restructuring to drive business transformation was disclosed under ''Exceptional items'' for the year ended March 31, 2023
(iii) Sale of business undertaking at Thane
The Company had entered into an agreement (BTA) in the year 2015 for sale of business undertaking at Thane on a slump sale basis for a consideration of ?178.00 crore, subject to fulfillment of the conditions
42 Other Statutory information
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company has entered into transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.
Details of struck off companies with whom the Company has transaction during the year or outstanding balance:
A During the year ended 31 March 2024
(i) VAT Provisions
In relation to the provision for old pending VAT/CST litigation, which was recognized in the quarter ended March 31, 2023 and was disclosed as an Exceptional Item (Refer Note B(iv), the Company has, during the year, opted to avail Maharashtra VAT Amnesty Scheme for certain years and has received final Settlement Orders. Pursuant to the said Orders, the Company has written back excess provision of '' 7.95 crore.
B During the year ended 31 March 2023
(i) Transfer of Upjohn business
In the financial year ended 31 March 2022, the Company had entered into a business transfer agreement (BTA) with Mylan Pharmaceuticals Private Limited (Mylan) on September 30, 2021 to transfer certain primarily off-patented and generic established medicines business (Upjohn Business) as a going concern for a consideration of ?180.48 crore.
The Company had transferred its Upjohn Business comprising of six brands which included Lyrica, Viagra, Celebrex, Amlogard, Daxid and Dilantin along with related business assets and liabilities to Mylan, effective August 1, 2022. A gain of ?188.92 crore on this transaction was disclosed as ''Exceptional items'' during the year ended March 31, 2023.
precedent to the closing. During the previous year the Company had paid ?43.08 crore towards premium to MIDC in respect of the approved land. The requisite approval for the transfer of the said undertaking was received during the previous year. Subsequently assignment deed was executed and the business undertaking was transferred to the buyer effective 24 February 2023.
During the previous year, the Company re-evaluated and reassessed its risk relating to the pending old VAT / CST litigations. Basis the re-evaluation done, an amount of ?86.71 crore had been accrued during the year ended 31 March ,2023.
44 Corporate social responsibility (CSR)
The Company meets the criteria specified under Section 135 of the Companies Act, 2013 and has formed a Corporate Social Responsibility (CSR) Committee to monitor the CSR activities implemented as per the CSR Policy of the Company. The Company spends in each financial year at least 2% of its average net profit for the immediately preceding three financial years as per provisions of Section 135 of the Act and in compliance of its CSR policy.
Mar 31, 2023
The rental income recognized, from the above investment property, in statement of profit and loss for the year ending 31 March 2023 is ?6.39 crore (31 March 2022: ?6.39 crore) (Refer note 26).
Company has incurred the direct operating expenses ''0.49 crore (31 March 2022 ''0.49 crore) arising from investment property as mentioned above.
B. MEASUREMENT OF FAIR VALUES
i As at 31 March 2022, the fair values of the property is ''234.23 crore. These valuations are based on valuations performed by an accredited independent valuer. The fair value measurement for all the investment properties has been categorized as a level 3 fair value based on the inputs to the valuation technique used. The independent valuers have adopted Land and Building method of valuation. The valuation has been arrived at considering the location of the property, market enquiries, sale instances etc.
The recoverable amount of the above CGU has been assessed using a value-in-use model. Value in use is calculated as the net present value of the projected pre-tax cash flows plus a terminal value of the cash generating unit to which the goodwill is allocated. Initially a pre-tax discount rate is applied to calculate the net present value of the pre-tax cash flows.
The cash flow projections include specific estimates for five years developed using internal forecasts and a terminal growth rate thereafter of 2% (31 March 2022: 2%). The planning horizon reflects the assumptions for short-to-mid term market developments.
Discount rate reflects the current market assessment of the risks. The discount rate is estimated based on the weighted average cost of capital for the Company. Pre-tax discount rate used for the year ended 31 March 2023 was 16.36% (31 March 2022: 11.06%).
The values assigned to the key assumptions represent management''s assessment of future trends in the relevant industries and have been based on historical data from both external and internal sources.
The management believes that any reasonable possible change in the key assumptions would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit.
1. Includes asset (inventory) recoverable from customers for saleable returns of ''0.87 crore towards finished goods (31 March 2022 ''1.54 crore ) and ''1.71 crore towards Stock-in-trade (31 March 2022: ''2.07 crore)
2. The Company writes down the value of inventories towards slow moving, non-moving and non-saleable inventory (expired/damaged) based on historical experience of such items and any recent trends that may suggest realizable amount could differ from historical amounts. Charge in the statement of profit and loss on account of write down of inventory during the year is ?17.30 crore (31 March 2022: ?31.35 crore).
(v) The rights, preferences and restrictions attaching to equity shares including restrictions on the distribution of dividends and the repayment of capital.
The Company has only one class of equity shares having a par value of ''10/- per share. Every member holding equity shares therein shall have voting rights in proportion to the member''s share of the paid up equity share capital. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting except interim dividend, if any. In the event of liquidation of the Company, the holders of equity shares would be entitled to receive remaining assets of the Company, after distribution of all the preferential amounts. The distribution will be in proportion to the number of equity shares held by the equity shareholders.
(vi) During the five reporting periods immediately preceding the reporting date no shares have been issued for consideration other than cash.
(vii) During the five reporting periods immediately preceding the reporting date, no shares have been issued by capitalization of reserves as bonus shares.
(viii) During the five reporting periods immediately preceding the reporting date, no shares have been bought back.
Nature and purpose of reserves
(i) Securities premium
Securities premium account is used to record the premium on issue of shares. This reserve can be utilized in accordance with the said provisions of The Companies Act, 2013. This account also includes the share premium on shares issued to the shareholders of erstwhile Wyeth limited, pursuant to the Scheme of Amalgamation.
(ii) General reserve
General reserve forms part of the retained earnings and is permitted to be distributed to shareholders as part of dividend.
(iii) Capital reserve
The share-based payment reserve is used to recognize the value of equity settled share-based payments provided to the employees by Pfizer Inc. the ultimate holding company and the Company is not liable for any recharge of the amount. Refer note no.36 for further details on the plan.
(iv) Retained earnings
The amount that can be distributed by the Company as dividends to its equity shareholders. Refer Statement of changes in equity.
(v) Remeasurements of the net defined benefit plans
The amount represents remeasurement of defined benefit plans.
B) NATURE OF PROVISIONS:
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.
Anticipated sales returns:
This represents provision towards saleable and non-saleable return expected to be made by the customers till the product expiry. Provision towards saleable return represents products which are expected to be returned in saleable condition while non-saleable return represents expected returns of products which are either expired or damaged, such that the sale of such products may not be possible. Management estimate the provision based on historical returns and any recent trends that may suggest future returns could differ from historical amounts.
Provision for demands under DPCo:
This represents provision recognized by the Company towards unsettled compensations claimed under DPCO from the Company.The provisions for demand under DPCO comprises numerous separate cases that arise in the ordinary course of business. A provision is recognised for legal cases if the company assesses that it is probable that an outflow of economic resources will be required. These provisions have not been discounted as it is not practicable for the Company to estimate the timing of the provision utilization and cash outflows, if any, pending resolution.
Provision for customs and central excise:
This represents provision recognized by the Company towards demand raised by Customs and Excise authorities.The provisions for demand under Customs and Central Excise comprises numerous separate cases that arise in the ordinary course of business. A provision is recognised for legal cases if the company assesses that it is probable that an outflow of economic resources will be required. These provisions have not been discounted as it is not practicable for the Company to estimate the timing of the provision utilization and cash outflows, if any, pending resolution.
The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
Management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered. Any changes in future taxable income would impact the recoverability of deferred tax assets.
(A) DEFINED CONTRIBUTION PLAN:
During the year, the Company has contributed ?0.31 crore (31 March 2022: ?0.53 crore) towards employee''s superannuation fund.
(B) long-term employee benefit - compensated absences
All eligible employees can carry forward and avail / encash leave as per Company''s rules.
(C) DEFINED BENEFIT PLAN:
(i) Provident fund
The employee''s provident fund is administered by a Trust created specifically for the purpose. The employee''s and employer''s contributions are transferred to the trust. All liabilities arising on account of provident fund payouts on resignation or retirement from service or death while in service are made from the trust.
In respect of all employees, provident fund contributions are made to a trust administered by the Company. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. The liability in respect of the shortfall of interest earnings of the Fund is determined on the basis of an actuarial valuation.
All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent actuary using the projected unit credit method. The classification of the Company''s net obligation into current and non-current is as per the actuarial valuation report.
In accordance with Indian law, all eligible employees of the Company in India are entitled to receive benefits under the provident fund plan in which both the employee and employer (at a determined rate) contribute monthly to a trust set up by the Company to manage the investments and distribute the amounts entitled to employees. This plan is a defined benefit plan as the Company is obligated to provide its members a rate of return which should, at the minimum, meet the interest rate declared by Government administered provident fund. A part of the Company''s contribution is transferred to Government administered pension fund. Any shortfall of interest are recognised as an expense in "Other comprehensive income". In accordance with an actuarial valuation of provident fund liabilities on the basis of guidance issued by Actuarial Society of India.
36 SHARE-BASED PAYMENT ARRANGEMENTS A) EMPLOYEE STOCK OPTIONS - EQUITY SETTLED
Certain employees of the Company are eligible for stock options, restricted stock units, portfolio performance shares and total shareholder return units granted by Pfizer Inc.(Ultimate holding company).
The Company has accounted ?12.70 crore (31 March 2022: ?11.76 crore) for share-based payment transactions among group entities in accordance with Ind AS 102, ''Share-based Payments''.
nature and extent of employee share-based payment plans
Pfizer Inc., as a part of the long-term incentive awards offers certain common stock (shares) to the employees of Pfizer Inc., and its subsidiaries. These shares are offered through grant of awards which is a combination of restricted stock units, portfolio performance shares and total shareholder return units under the Pfizer Inc. 2019 Stock plan. As per the plan, the vesting period of the stock options and the restricted stock units is 3 years from the grant date and the stock options have a term of 10 years from the grant date. All stock options and restricted stock units are settled through equity.All these share based plans are settled by holding company and hence the Company doesnt have any obligation to settle.
The employees of the Company have been issued 24,357 (31 March 2022: 32,643) restricted stock units, 2,573 (31 March 2022:2,741) portfolio performance shares and 36,370 (31 March 2022: 65,785) total shareholder return units under the Pfizer Inc., 2019 Share Option Plan by Pfizer Inc.
(i) Employee stock options (ESoP)
Employee stock option provides the employees of Pfizer Limited with a right to receive a unit of the stock of Pfizer Inc., at a predetermined exercise price upon fulfillment of vesting conditions.
The weighted average remaining contractual life of the PPS outstanding at the year end is 3.11 years.
The weighted average grant date fair value of PPSs option granted during the years ended 31 March 2022 is US $33.82 per PPS (31 March 2021: US $34.10 per PPS).
(iv) Total Shareholder Return Units (TSRUs)
TSRUs are awarded to senior and other key management, and, beginning in 2016, to certain other employees. TSRUs entitle the holders to receive a number of shares of our common stock with a value equal to the difference between the defined settlement price and the grant price, plus the dividends accumulated during the five-year or seven-year term, if and to the extent the total value is positive.
We measure the value of TSRU grants as of the grant date using a Monte Carlo simulation model. The values determined through this fair value methodology generally are amortized on a straight-line basis over the vesting term.
b) Valuation of stock options
The fair value of Restricted stock units granted during the period has been measured using the closing price of common stock as of the grant date.
c) Valuation of Portfolio performance shares
The fair value of Portfolio performance units granted during the period has been measured using the intrinsic value method using the closing price of common stock as of the grant date.
(A) company as a lessee
The Company''s lease asset classes primarily consist of leases for land and buildings. The lease period for these contracts varies from 1 year to 6 years except for Goa plant having a lease period of 99 years and in certain cases, mainly relating to rent of (parts of) buildings, with extension options. The Right-of-use assets and Lease liabilities as disclosed below, do not include short term and low value leases. In general, as usual with leases, the Company''s obligations under its leases are secured by the lessor''s title to or legal ownership of the leased assets.
Right-of-use Assets
The movement in Right-of-use assets has been disclosed in Note 4.
B. Measurement of fair values
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of following:
Level 1 - category includes financial assets and liabilities, that are measured in whole or in significant part by reference to published quotes in an active market.
Level 2 - category includes financial assets and liabilities measured using a valuation technique based on assumptions that are supported by prices from observable current market transactions. These include assets and liabilities for which pricing is obtained via pricing services, but where prices have not been determined in an active market, financial assets with fair values based on broker quotes and assets that are valued using the Company''s own valuation models whereby the material assumptions are market observable.
Level 3 - category includes financial assets and liabilities measured using valuation techniques based on non-market observable inputs. This means that fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. However, the fair value measurement objective remains the same, that is, to estimate an exit price from the perspective of the Company.
2. FINANCIAL RISK MANAGEMENT - OBJECTIVE AND POLICIES
(i) Financial risk management framework
The Company has exposure to the following risks arising from financial instruments:
- Credit risk
- Liquidity risk
- Market risk
- Currency risk
The Company''s Board of Directors have overall responsibility for the establishment and oversight of the Company''s risk management framework.
The Company''s risk management is carried out by the management in consultation with the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific risk areas.
The 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 results of which are reported to the Audit Committee.
(ii) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and from its financing activities including deposits with banks and other financial instruments. The Company establishes an allowance for expected credit loss and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
a) Trade receivables
The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to ¥151.73 crore as at 31 March 2023 (31 March 2022: ¥142.55 crore).
Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India.
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry, the country and the state in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
b) Expected credit loss assessment for customers and loans
The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgement.
Exposures to customers and loans outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. The company provided for expected credit loss based on lifetime expected credit loss. (simplified approach).
c) Cash and bank balances
The Company held cash and bank balances of ?1,859.52 crore as at 31 March 2023 (31 March 2022: ?1,643.44 crore).Credit risk on cash and bank balances is limited as these are generally held or invested in deposits with banks with good credit ratings.
d) Investments
There are no significant investments made by the Company and hence credit risk is not material.
(iii) 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 principal sources of liquidity are cash and bank balances and the cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements.
(iv) Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables. We are exposed to market risk primarily related to foreign exchange rate risk. Thus, our exposure to market risk is a function of revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.
(v) Currency risk
The Company is exposed to currency risk on account of its operations. The functional currency of the Company is Indian Rupee. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may continue to fluctuate substantially in the future.
a) Risk management
The Company''s policy is to maintain a strong capital base to sustain future development of the business.
The Company has adequate cash and bank balances and continues to remain debt-free. The Company monitors its capital by a careful scrutiny of the cash and bank balances, and a regular assessment of any debt requirements. In the absence of any debt, the maintenance of debt equity ratio etc. may not be of any relevance to the Company.
b) Dividend
(i) equity Shares
Final Dividend for the year ended 31 March 2022 of ?35 for fully paid share (31 March 2021: ?30 for fully paid share). The company has declared a special (interim) dividend of ?30 per equity share for the year ended 31 March 2023 in view of the gain on account of sale of Upjohn business. The said interim (Special) dividend was paid on September 30, 2022.
41 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)
A) PRICING LITIGATIONS - CONTINGENCIES
The government had raised certain pricing related demands on Pfizer Limited and the erstwhile Parke-Davis (India) Ltd., Pharmacia Healthcare Limited and Wyeth Limited (which entities merged with Pfizer Limited), in respect of certain price fixation orders and other allied matters under various Drug (Prices Control) Orders (DPCO), viz., DPCO 1979, DPCO 1987, DPCO 1995 and DPCO 2013. These demands include alleged differential price demand on procurement of bulk drugs below the notified price, disputes on categorization of products, overcharging on the allegation of not following certain price control orders, allegation of delayed implementation of price ceiling notifications, etc. The Company had repudiated these demands and initiated legal proceedings to defend the Company against these alleged demands. Based on the legal assessment of these matters, certain provisions have already been made in the books, wherever necessary. The Company also has made certain deposits against these demands pursuant to directions from High Court(s).
Based on the legal opinion received by the Company and the assessment of the management, the Company is of the view that no further provisions are considered necessary over and above the sum of ?20.45 crore (31 March 2022: ?20.45 crore) and provision recognised represent a best estimate of liability. A summary of the alleged pricing demands are given hereunder:
There are no non-current assets outside of India as at 31 March 2023 (31 March 2022: Nil).
Information about major customers contributing more than 10% of company''s total revenue & receivable
Revenue from one customer of Pharmaceuticals business in India represents ''670.03 crore of the Company''s total revenue.
Receivable from one customer of Pharmaceuticals business in India represents ''62.93 crore of the Company''s total receivable
There are no significant subsequent events that would require adjustments or disclosures except as disclosed below in the financial statements as on the reporting date.
a) Dividend not recognized at the end of the reporting period ''183.00 crore. Board of Directors have recommended a final dividend of ''35 per fully paid share and a special dividend of ''5 per fully paid share in view of the gain on sale of business undertaking at Thane for the financial year ended March 31, 2023. This proposed dividend is subject to the approval of the shareholders in the annual general meeting.
45 OTHER STATUTORY INFORMATION
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company did not have any material transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the financial year.
iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period,
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
(vi) No funds have been advanced or loaned or invested by the Company to or in any person(s) or entity(ies), including foreign entities (''the intermediaries''), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (''the Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries.
(vii) No funds have been received by the Company from any person(s) or entity(ies), including foreign entities (''the Funding Parties''), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(I) TRANSFER OF UPJOHN BUSINESS
The Company had entered into a business transfer agreement (BTA) with Mylan Pharmaceuticals Private Limited (Mylan) on September 30, 2021 to transfer certain primarily off-patented and generic established medicines business (Upjohn Business) as a going concern for a consideration of ''180.48 crore.
The Company has transferred its Upjohn Business comprising of six brands which included Lyrica, Viagra, Celebrex, Amlogard, Daxid and Dilantin along with related business assets and liabilities to Mylan, effective August 1, 2022. A gain of ''188.92 crore on this transaction is disclosed as ''Exceptional items'' during the year ended March 31, 2023.
(ii) voluntary retirement scheme and restructuring
The Company has declared a Pfizer Voluntary Retirement Scheme 2022 (VRS) for eligible field employees in April 2022. ''129.85 crore on account of Voluntary Retirement Scheme (VRS) and an additional charge of ''6.48 crore (net) on account of restructuring to drive business transformation is disclosed under ''Exceptional items'' for the year ended March 31, 2023
(iii) sale of business undertaking at thane
The Company had entered into an agreement (BTA) in the year 2015 for sale of business undertaking at Thane on a slump sale basis for a consideration of ''178.00 crore, subject to fulfillment of the conditions precedent to the closing. The Company had received the consideration of ''178.00 crore, as advance payment as per the agreed terms and was disclosed under "Other Current Liabilities" (note 23) in the previous year. During the year the Company has paid ''43.08 crore towards premium to MIDC in respect of the approved land. The requiste approval for the transfer of the said undertaking was received during the year. Subsequently assignment deed was executed and the business undertaking has been transferred to the buyer effective 24 February 2023.
(IV) VAT PROVISIONS
During the year, the Company has re-evaluated and reassessed its risk relating to the pending old VAT / CST litigations. Basis the re-evaluation done, an amount of ''86.71 crore has been accrued for the year ending 31 March, 2023
47 CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company meets the criteria specified under Section 135 of the Companies Act, 2013 and has formed a Corporate Social Responsibility (CSR) Committee to monitor the CSR activities implemented as per the CSR Policy of the Company. The Company spends in each financial year at least 2% of its average net profit for the immediately preceding three financial years as per provisions of Section 135 of the Act and in compliance of its CSR policy.
Mar 31, 2022
The rental income recognized, from the above investment property, in statement of profit and loss for the year ending 31 March 2022 is ?6.39 crore (31 March 2021: ?6.39 crore) (Refer note 26).
The aforementioned investment property is leased under short term operating lease agreement, hence no lease disclosure given, as required by Ind As 116 "Leases"
B. Measurement of fair values
i As at 31 March 2022 and 31 March 2021, the fair values of the properties are ?234.23 crore and ?234.23 crore respectively. These valuations are based on valuations performed by Sundeep H.B. & Co., an accredited independent valuer. Sundeep H.B. & Co.is a registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. The fair value measurement for all the investment properties has been categorized as a level 3 fair value based on the inputs to the valuation technique used. The independent valuers have adopted Land and Building method of valuation. The valuation has been arrived at considering the location of the property, market enquiries, sale instances etc.
The recoverable amount of the above CGU has been assessed using a value-in-use model. Value in use is calculated as the net present value of the projected post-tax cash flows plus a terminal value of the cash generating unit 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.
The cash flow projections include specific estimates for five years developed using internal forecasts and a terminal growth rate thereafter of 2 % (31 March 2021: 2%). The planning horizon reflects the assumptions for short-to-mid term market developments.
Discount rate reflects the current market assessment of the risks. The discount rate is estimated based on the weighted average cost of capital for the Company. Post-tax discount rate used for the year ended 31 March 2022 was 8.75% (31 March 2021: 8.75%).
The values assigned to the key assumptions represent management''s assessment of future trends in the relevant industries and have been based on historical data from both external and internal sources.
The management believes that any reasonable possible change in the key assumptions would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit.
1. Includes asset (inventory) recoverable from customers for saleable returns of ''1.54 crore towards finished goods (31 March 2021 '' 1.79 crore ) and '' 2.07 crore towards Stock-in-trade (31 March 2021:'' 1.96 crore).
2. The Company writes down the value of inventories towards slow moving, non-moving and non-saleable inventory (expired/damaged) based on historical experience of such items and any recent trends that may suggest realizable amount could differ from historical amounts. Charge in the statement of profit and loss on account of write down of inventory during the year is '' 31.35 crore (31 March 2021: '' 17.07 crore).
(i) The Company has entered into an agreement (BTA) for sale of business undertaking at Thane on a slump sale basis for a consideration of ?178.00 crore, subject to fulfillment of the conditions precedent to the closing. The impact of the transaction would be reflected upon closure of the transaction. The Company had received the consideration of ?178.00 crore, as advance payment as per the agreed terms and is disclosed under "Other Current Liabilities" in note 23. Upon conclusion of the BTA, the business undertaking including workmen at Thane Plant shall be transferred to the buyer. The property, plant and equipment pertaining to the plant have been disclosed under this head.The Company has received part approval from MIDC for transfer of the business undertaking save and except certain portion of the land which is subject to pending proceedings. The Company has paid an amount of ?21.50 crore in the financial year ended 31 March 2020, towards transfer premium to MIDC in respect of the approved land transfer. The Company has represented to the MIDC and government for granting approval for transfer of the entire land and accordingly has sought extension from MIDC to transfer the approved land.
(v) The rights, preferences and restrictions attaching to equity shares including restrictions on the distribution of dividends and the repayment of capital.
The Company has only one class of equity shares having a par value of ?10/- per share. Every member holding equity shares therein shall have voting rights in proportion to the member''s share of the paid up equity share capital. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing Annual General Meeting except interim dividend, if any. In the event of liquidation of the Company, the holders of equity shares would be entitled to receive remaining assets of the Company, after distribution of all the preferential amounts. The distribution will be in proportion to the number of equity shares held by the equity shareholders.
(vi) During the five reporting periods immediately preceding the reporting date no shares have been issued for consideration other than cash.
(vii) During the five reporting periods immediately preceding the reporting date, no shares have been issued by capitalization of reserves as bonus shares.
Nature and purpose of reserves
(i) Securities premium
Securities premium account is used to record the premium on issue of shares. This reserve can be utilized in accordance with the said provisions of The Companies Act, 2013. This account also includes the share premium on shares issued to the shareholders of erstwhile Wyeth limited, pursuant to the Scheme of Amalgamation.
(ii) General reserve
General reserve forms part of the retained earnings and is permitted to be distributed to shareholders as part of dividend.
(iii) Capital reserve
The share-based payment reserve is used to recognize the value of equity settled share-based payments provided to the employees by Pfizer Inc. the ultimate holding company and the Company is not liable for any recharge of the amount. Refer note no.36 for further details on the plan.
(iv) Retained earnings
The amount that can be distributed by the Company as dividends to its equity shareholders. Refer Statement of changes in equity.
b) Nature of provisions:
Provision for sales returns:
This represents provision towards saleable and non-saleable return expected to be made by the customers till the product expiry. Provision towards saleable return represents products which are expected to be returned in saleable condition while non-saleable return represents expected returns of products which are either expired or damaged, such that the sale of such products may not be possible. Management estimate the provision based on historical returns and any recent trends that may suggest future returns could differ from historical amounts.
Provision for demands under DPCO:
This represents provision recognized by the Company towards unsettled compensations claimed under DPCO from the Company.
b) Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the management.
c) Other trade payables include amounts due to related parties ?95.19 crore (31 March 2021: ?138.85 crore) (Refer note 40)
d) All trade payables are ''current''. The Company''s exposure to currency and liquidity risks related to trade payables is disclosed in note 38.
The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
Management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered. Any changes in future taxable income would impact the recoverability of deferred tax assets.
(A) Defined contribution plan:
During the year, the Company has contributed ?0.53 crore (31 March 2021: ?0.52 crore) towards employee''s superannuation fund.
(B) Long-term employee benefit - Compensated absences
All eligible employees can carry forward and avail / encash leave as per Company''s rules.
(C) Defined benefit plan:
(i) Provident fund
The employee''s provident fund is administered by a Trust created specifically for the purpose. The employee''s and employer''s contributions are transferred to the trust. All liabilities arising on account of provident fund payouts on resignation or retirement from service or death while in service are made from the trust.
(ii) Gratuity plan
The Plan is governed by the Payment of Gratuity Act, 1972. Under the Gratuity Act, employees are entitled to specific benefit at the time of retirement or termination of the employment on completion of five years or death while in employment. The level of benefit provided depends on the member''s length of service and salary at the time of retirement/termination age.
Liabilities in respect of the gratuity plan are determined by an actuarial valuation, based upon which the Company makes annual contributions to the Group Gratuity cum Life Assurance Schemes administered by the LIC of India, a funded defined benefit plan for qualifying employees. Trustees administer the contributions made by the Company to the gratuity scheme.
|
Currency: ? in crore |
||
|
As at |
As at |
|
|
31 March 2022 |
31 March 2021 |
|
|
Defined benefit obligation |
98.06 |
99.26 |
|
Fair value of plan assets |
97.20 |
90.51 |
|
net defined benefit assets/ (obligation) |
(0.86) |
(8.75) |
The plans expose these companies to a number of actuarial risks such as investment risk, interest rate risk,longevity risk and inflation risk. The companies have developed policy guidelines for the allocation of assets to different classes with the objective of controlling risk and maintaining the right balance between risk and long-term returns in order to limit the cost to these companies of the benefits provided. To achieve this, investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.
(i) Movement in net defined benefit asset/ (obligation)
The following table shows a reconciliation from the opening balances to the closing balances for net defined benefit (asset) liability and its components
36 SHARE-BASED PAYMENT ARRANGEMENTS
a) Employee stock options - equity settled
Certain employees of the Company are eligible for stock options, restricted stock units, portfolio performance shares and total shareholder return units granted by Pfizer Inc.(Ultimate holding company).
The Company has accounted ?11.76 crore (31 March 2021: ?10.56 crore) for share-based payment transactions among group entities in accordance with Ind AS 102, ''Share-based Payments''.
nature and extent of employee share-based payment plans
Pfizer Inc., as a part of the long-term incentive awards offers certain common stock (shares) to the employees of Pfizer Inc., and its subsidiaries. These shares are offered through grant of awards which is a combination of restricted stock units, portfolio performance shares and total shareholder return units under the Pfizer Inc. 2004 Stock plan. As per the plan, the vesting period of the stock options and the restricted stock units is 3 years from the grant date and the stock options have a term of 10 years from the grant date.All stock options and restricted stock units are settled through equity.
The employees of the Company have been issued 32,643 (31 March 2021: 22,240) restricted stock units, 2,741 (31 March 2021:2,446) portfolio performance shares and 65,785 (31 March 2021: 131,309) total shareholder return units under the Pfizer Inc., 2004 Share Option Plan by Pfizer Inc.
As part of the Upjohn spin off, all Pfizer Long term incentive was adjusted and Pfizer stockholders received a dividend of Viatris stock. The number of the shares colleagues held at the closing were increased and the grant prices for stock options and TSRUs were decreased.
The weighted average grant date fair value of stock options granted during the years ended 31 March 2022 is Nil (31 March 2021: Nil).
(ii) Restricted stock units (RSUs)
RSUs which, when vested entitle the holder to receive a specified number of shares of the Ultimate Holding Company including shares resulting from dividend equivalents paid on such RSUs, are accounted for using a fair value based method at the date of grant. The value of each RSU grant is estimated on the grant date. The fair value based method utilizes the closing price of the Ultimate Holding Company''s common stock on the date of grant. The exercise price of the RSU is Nil.
The weighted average grant date fair value of PPSs option granted during the years ended 31 March 2022 is US $33.82 per PPS (31 March 2021: US $34.10 per PPS).
(iv) Total Shareholder Return Units (TSRUs)
TSRUs are awarded to senior and other key management, and, beginning in 2016, to certain other employees. TSRUs entitle the holders to receive a number of shares of our common stock with a value equal to the difference between the defined settlement price and the grant price, plus the dividends accumulated during the five-year or seven-year term, if and to the extent the total value is positive.
We measure the value of TSRU grants as of the grant date using a Monte Carlo simulation model. The values determined through this fair value methodology generally are amortized on a straight-line basis over the vesting term.
b) Valuation of stock options
The fair value of stock options granted during the period has been measured using the Black-Scholes-Merton option pricing model at the date of the grant. The Black-Scholes-Merton option-pricing model. includes assumptions regarding dividend yields, expected volatility, expected terms and risk free interest rates. The key inputs and assumptions used are as follows:
Share price: The closing price on NYSE as on the date of grant has been considered for valuing the options granted.
Exercise price: Exercise Price is the market price or face value or such other price as determined by the Pfizer Inc.''s Remuneration and Compensation Committee.
expected volatility: The historical volatility of the stock till the date of grant has been considered to calculate the fair value of the options.
expected option life: Expected life of option is the period for which the Company expects the options to be live. The minimum life of a stock option is the minimum period before which the options cannot be exercised and the maximum life is the period after which the options cannot be exercised.
expected dividends: Expected dividend yield has been calculated as an average of dividend yields for the four financial years preceding the date of the grant.
Risk free interest rate: The risk free interest rate on the date of grant considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero coupon yield curve for Government Securities.
These assumptions reflect management''s best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside of the Company''s control. As a result, if other assumptions had been used in the current period, stock-based compensation expense could have been materially impacted. Further, if management uses different assumptions in future periods, stock based compensation expense could be materially impacted in future years. The estimated fair value of stock options is charged to income on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards. The weighted average inputs used in computing the fair value of options granted were as follows:
c) Valuation of Restricted stock units
The fair value of Restricted stock units granted during the period has been measured using the closing price of our common stock as of the grant date.
d) Valuation of Portfolio performance shares
The fair value of Portfolio performance units granted during the period has been measured using the intrinsic value method using the closing price of our common stock as of the grant date.
e) Valuation of Total Shareholder Return units
The fair value of Total Shareholder Return Units granted during the period has been measured using a Monte Carlo simulation method as of the grant date.
(a) Company as a Lessee
The Company''s lease asset classes primarily consist of leases for land and buildings. The lease period for these contracts varies from 1 year to 6 years except for Goa plant having a lease period of 99 years and in certain cases, mainly relating to rent of (parts of) buildings, with extension options. The Right-of-use assets and Lease liabilities as disclosed below, do not include short term and low value leases. In general, as usual with leases, the Company''s obligations under its leases are secured by the lessor''s title to or legal ownership of the leased assets.
B. Measurement of fair values
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of following:
Level 1 - category includes financial assets and liabilities, that are measured in whole or in significant part by reference to published quotes in an active market.
Level 2 - category includes financial assets and liabilities measured using a valuation technique based on assumptions that are supported by prices from observable current market transactions. These include assets and liabilities for which pricing is obtained via pricing services, but where prices have not been determined in an active market, financial assets with fair values based on broker quotes and assets that are valued using the Company''s own valuation models whereby the material assumptions are market observable.
Level 3 - category includes financial assets and liabilities measured using valuation techniques based on non-market observable inputs. This means that fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. However, the fair value measurement objective remains the same, that is, to estimate an exit price from the perspective of the Company.
2. Financial risk management - objective and policies
(i) Financial risk management framework
The Company has exposure to the following risks arising from financial instruments:
- Credit risk
- Liquidity risk
- Market risk
- Currency risk"
The Company''s Board of Directors have overall responsibility for the establishment and oversight of the Company''s risk management framework.
The Company''s risk management is carried out by the management in consultation with the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific risk areas.
The 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 results of which are reported to the Audit Committee.
(ii) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and from its financing activities including deposits with banks and other financial instruments. The Company establishes an allowance for expected credit loss and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
a) Trade receivables
The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to ?124.27 crore as at 31 March 2022 (31 March 2o2l: ?108.77 crore).
Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India.
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry, the country and the state in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
b) Expected credit loss assessment for customers and loans
The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgement.
Exposures to customers and loans outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. The company provided for expected credit loss based on lifetime expected credit loss. (simplified approach).
c) Cash and bank balances
The Company held cash and bank balances of ?1,633.33 crore as at 31 March 2022 (31 March 2021: ?1,115.10 crore).Credit risk on cash and bank balances is limited as these are generally held or invested in deposits with banks with good credit ratings.
d) Investments
There are no significant investments made by the Company and hence credit risk is not material.
(iii) 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 principal sources of liquidity are cash and bank balances and the cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements.
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables. We are exposed to market risk primarily related to foreign exchange rate risk. Thus, our exposure to market risk is a function of revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.
The Company is exposed to currency risk on account of its operations. The functional currency of the Company is Indian Rupee. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may continue to fluctuate substantially in the future.
a) Risk management
The Company''s policy is to maintain a strong capital base to sustain future development of the business.
The Company has adequate cash and bank balances and continues to remain debt-free. The Company monitors its capital by a careful scrutiny of the cash and bank balances, and a regular assessment of any debt requirements. In the absence of any debt, the maintenance of debt equity ratio etc. may not be of any relevance to the Company.
b) Dividend
(i) equity Shares
Final Dividend for the year ended 31 March 2021 of ?30 for fully paid share (31 March 2020: ?10.00 for fully paid share). The company has declared a special dividend of ?5 per equity share for the year ended 31 March 2021.
41 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR) a) Pricing litigations - Contingencies
The government had raised certain pricing related demands on Pfizer Limited and the erstwhile Parke-Davis (India) Ltd., Pharmacia Healthcare Limited and Wyeth Limited (which entities merged with Pfizer Limited), in respect of certain price fixation orders and other allied matters under various Drug (Prices Control) Orders (DPCO), viz., DPCO 1979, DPCO 1987, DPCO 1995 and DPCO 2013. These demands include alleged differential price demand on procurement of bulk drugs below the notified price, disputes on categorization of products, overcharging on the allegation of not following certain price control orders, allegation of delayed implementation of price ceiling notifications, etc. The Company had repudiated these demands and initiated legal proceedings to defend the Company against these alleged demands. Based on the legal assessment of these matters, certain provisions have already been made in the books, wherever necessary. The Company also has made certain deposits against these demands pursuant to directions from High Court(s).
Based on the legal opinion received by the Company and the assessment of the management, the Company is of the view that no further provisions are considered necessary over and above the sum of ?20.45 crore (31 March 2021: ?20.45 crore) and that the estimated liability in respect of these cases shall not exceed the amount provided in the books of accounts. A summary of the alleged pricing demands are given hereunder:
b) Sales tax/VAT litigations - Contingencies
The Company has outstanding litigations pertaining to Sales Tax/Value Added Tax of various assessment years which the Company has challenged at various forums. These litigations pertain to non-submission of documentary evidence at the time of assessment, litigations involving question of law and certain disallowance made by authorities in assessment orders. Based on the external consultants advise, the Company is of the view that no further provisions are considered necessary over and above the amount already provided in the books of accounts (Refer note 24). Against these bank guarantee of ?17.62 crore (31 March 2021 ?12.69 crore) has been issued to government authorities.
The Company has only one segment which is Pharmaceuticals and primarily operates in domestic market. The Managing Director of the Company has been identified as the Chief Operating Decision Maker. The Company''s Managing Director, reviews the operating performance of the Company as a whole on a periodic basis. Therefore disclosure relating to segments is not applicable and accordingly not made.
43 CONSUMER HEALTH PRODUCTS- WIND DOWN
Pfizer Inc.(Ultimate holding company) and GSK Plc entered into an agreement in 2018 to merge their consumer healthcare businesses into a single joint venture to form GSK Consumer Healthcare (GSKCH). This consists 2 brands - Anacin and Anne French. Subsequent to GSKCH''s deliberations on the Pfizer Consumer Health (PCH) India business, Pfizer Limited has taken appropriate steps to wind down the PCH business in India. In the current year the Company has been reimbursed the actual wind down cost and compensation based on the fair value of PCH Products as determined by the independent valuers.
The Company completed the wind down activities for its Consumer health business. The compensation of ?27.50 crore derived based on the fair value of PCH Products as determined by the independent valuers, net of intangibles write off ?3.14 crore is included in ''Other Income'' in the previous year. The aforementioned compensation along with the wind down cost of ?11.65 crore has been reimbursed in the current year.
There are no significant subsequent events that would require adjustments or disclosures except as disclosed below in the financial statements as on the reporting date.
a) Dividend not recognized at the end of the reporting period ?160.12 crore. Board of Directors have recommended a normal dividend of ?35 per fully paid share for the year ended 31 March 2022.This proposed dividend is subject to the approval of the shareholders in the annual general meeting.
b) The Company has declared a Pfizer Voluntary Retirement Scheme 2022 (VRS) for eligible field employees in April 2022. This being a subsequent event, there is no financial impact for the year ended 31 March 2022.
46 OTHER STATUTORY INFORMATION
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.
(vi) No funds have been advanced or loaned or invested by the Company to or in any person(s) or entity(ies), including foreign entities (''the intermediaries''), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner
whatsoever by or on behalf of the Company (''the Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries.
(vii) No funds have been received by the Company from any person(s) or entity(ies), including foreign entities (''the Funding Parties''), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
47 CORPORATE SOCIAL RESPONSIBILITY (CSR)
Pursuant to the Companies (Amendment) Act, 2019, notified on January 22, 2021, any CSR amount remaining unspent, pursuant to any ongoing projects, shall be transferred by the Company within a period of 30 days from the end of the financial year to a separate bank account to be called as the Unspent Corporate Social Responsibility Account, and such amount shall be spent by the Company in pursuance of its CSR obligations within a period of three financial years from the date of such transfer.
The amount debited to statement of profit and loss account includes contributions of '' 13.25 crore (31 March 2021: '' 2.11 crore) to CSR implementing agency, with the main objective of working in the areas of social, economic and environmental issues.
During the previous year, the unpent csr amount of ?10.95 crore was deposited in Unspent Corporate Social Responsibility account which was earmarked for financial year ended 31 March 2021 out of which ?3.47 crore was spent during the current year and the balance amount of ?7.48 crore is disclosed under the head " Bank balance other than cash and cash equivalents" to be spent in the subsequent year.
During the financial year ended 31 March 2021, an amount of ?4.63 crore was voluntarily deposited in Unspent Corporate Social Responsibility account which was earmarked for financial year ended 31 March 2020, out of which ?2.98 crore was spent during the previous year and the balance amount of ?1.65 crore was spent during the year.
Mar 31, 2021
(i) The Company has entered into an agreement (BTA) for sale of business undertaking at Thane on a slump sale basis for a consideration of ? 178.00 crore, to be paid in installments, subject to fulfillment of the conditions precedent to the closing. The impact of the transaction would be reflected upon closure of the transaction.The Company had received the consideration of ? 178.00 crore, as advance payment as per the agreed terms and is disclosed under "Other Current Liabilities" in note 22. Upon the conclusion of the BTA, the business undertaking including workmen at Thane Plant shall be transferred to the buyer.The property, plant and equipment pertaining to the plant have been disclosed under this head.The company has received the necessary approval from MIDC for the transfer of the business undertaking including the land, plant and machinery and employees, save and except certain portion of the land which is subject to pending proceedings.The Company has paid an amount of '' 21.50 crore in the previous year towards premium to MIDC to execute the transfer.The Company has represented to the MIDC and government for granting approval for transfer of the entire land and accordingly has sought extension to transfer the approval land from MIDC.
(ii) Office premises not in active use is expected to be disposed in twelve months and accordingly classified as the asset held for sale. Search for a suitable buyer is underway. No impairment loss was recognized on reclassification of the said premises as held for sale and the Company expects the fair value less cost to sell to be higher than carrying amount.
(iv) There has been no movement in the equity shares outstanding at the beginning and end of the year.
(v) The Company has a single class of equity shares. Accordingly all the equity shares rank equally with regards to voting rights, dividends and share in the Company''s residual assets.
(vi) During the five reporting periods immediately preceding the reporting date no shares have been issued for consideration other than cash.
(vii) During the five reporting periods immediately preceding the reporting date, no shares have been issued by capitalization of reserves as bonus shares.
17b OTHER EQUITY
Nature and purpose of reserves
(i) Securities premium
Securities premium account is used to record the premium on issue of shares. This reserve can be utilized in accordance with the said provisions of The Companies Act, 2013. This account also includes the share premium on shares issued to the shareholders of erstwhile Wyeth limited, pursuant to the Scheme of Amalgamation.
(ii) General reserve
General reserve forms part of the retained earnings and is permitted to be distributed to shareholders as part of dividend.
(iii) Capital reserve
The share-based payment reserve is used to recognize the value of equity settled share-based payments provided to the employees by Pfizer Inc. the ultimate holding company and the Company is not liable for any recharge of the amount. Refer note no.35 for further details on the plan.
(iv) Retained earnings
The amount that can be distributed by the Company as dividends to its equity shareholders. Refer Statement of changes in equity.
b) Nature of provisions:
Provision for sales returns:
This represents provision towards saleable and non-saleable return expected to be made by the customers till the product expiry. Provision towards saleable return represents products which are expected to be returned in saleable condition while non-saleable return represents expected returns of products which are either expired or damaged, such that the sale of such products may not be possible. Management estimate the provision based on historical returns and any recent trends that may suggest future returns could differ from historical amounts.
Provision for demands under DPCO:
This represents provision recognized by the Company towards unsettled compensations claimed under DPCO from the Company.
Provision for customs and central excise:
This represents provision recognized by the Company towards claims raised by Customs and Excise authorities.
34 EMPLOYEE BENEFITS
(A) Defined contribution plan:
During the year, the Company has contributed ? 0.52 crore (31 March 2020: ? 0.53 crore) towards employee''s superannuation fund.
(B) Long-term employee benefit - Compensated absences
All eligible employees can carry forward and avail / encash leave as per Company''s rules.
(C) Defined benefit plan:
(i) Provident fund
The employee''s provident fund is administered by a Trust created specifically for the purpose. The employee''s and employer''s contributions are transferred to the trust. All liabilities arising on account of provident fund payouts on resignation or retirement from service or death while in service are made from the trust.
35 SHARE-BASED PAYMENT ARRANGEMENTS
a) Employee stock options - equity settled
Certain employees of the Company are eligible for stock options, restricted stock units, portfolio performance shares and total shareholder return units granted by Pfizer Inc.(Ultimate holding company).
The Company has accounted ? 10.56 crore (31 March 2020: ? 8.04 crore) for share-based payment transactions among group entities in accordance with Ind AS 102, ''Share-based Payments''.
Nature and extent of employee share-based payment plans
Pfizer Inc., as a part of the long-term incentive awards offers certain common stock (shares) to the employees of Pfizer Inc., and its subsidiaries. These shares are offered through grant of awards which is a combination of restricted stock units, portfolio performance shares and total shareholder return units under the Pfizer Inc. 2004 Stock plan. As per the plan, the vesting period of the stock options and the restricted stock units is 3 years from the grant date and the stock options have a term of 10 years from the grant date.All stock options and restricted stock units are settled through equity. The employees of the Company have been issued 22,240 (31 March 2020: 19,523) restricted stock units, 2,446 (31 March 2020:1,370) portfolio performance shares and 131,309 (31 March 2020: 101,285) total shareholder return units under the Pfizer Inc., 2004 Share Option Plan by Pfizer Inc."
As part of the Upjohn spin off, all Pfizer Long term incentive was adjusted and Pfizer stockholders received a dividend of Viatris stock. The number of the shares colleagues held at the closing were increased and the grant prices for stock options and TSRUs were decreased.
b) Valuation of stock options
(iv) Total Shareholder Return Units (TSRUs)
TSRUs are awarded to senior and other key management, and, beginning in 2016, to certain other employees. TSRUs entitle the holders to receive a number of shares of our common stock with a value equal to the difference between the defined settlement price and the grant price, plus the dividends accumulated during the five-year or seven-year term, if and to the extent the total value is positive.
The fair value of stock options granted during the period has been measured using the Black-Scholes-Merton option pricing model at the date of the grant. The Black-Scholes-Merton option-pricing model. includes assumptions regarding dividend yields, expected volatility, expected terms and risk free interest rates. The key inputs and assumptions used are as follows:
Share price: The closing price on NYSE as on the date of grant has been considered for valuing the options granted.
Exercise price: Exercise Price is the market price or face value or such other price as determined by the Pfizer Inc.''s Remuneration and Compensation Committee.
Expected volatility: The historical volatility of the stock till the date of grant has been considered to calculate the fair value of the options.
Expected option life: Expected life of option is the period for which the Company expects the options to be live. The minimum life of a stock option is the minimum period before which the options cannot be exercised and the maximum life is the period after which the options cannot be exercised.
Expected dividends: Expected dividend yield has been calculated as an average of dividend yields for the four financial years preceding the date of the grant.
Risk free interest rate: The risk free interest rate on the date of grant considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero coupon yield curve for Government Securities.
These assumptions reflect management''s best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside of the Company''s control. As a result, if other assumptions had been used in the current period, stock-based compensation expense could have been materially impacted. Further, if management uses different assumptions in future periods, stock based compensation expense could be materially impacted in future years. The estimated fair value of stock options is charged to income on a straight-line basis over
c) Valuation of Restricted stock units
The fair value of Restricted stock units granted during the period has been measured using the closing price of our common stock as of the grant date.
d) Valuation of Portfolio performance shares
The fair value of Portfolio performance units granted during the period has been measured using the intrinsic value method using the closing price of our common stock as of the grant date.
e) Valuation of Total Shareholder Return Units
The fair value of Total Shareholder Return Units granted during the period has been measured using a Monte Carlo simulation method as of the grant date.
i LEASES
The Company''s lease asset classes primarily consist of leases for land and buildings. The lease period for these contracts varies from 1 year to 6 years except for Goa plant having a lease period of 99 years and in certain cases, mainly relating to rent of (parts of) buildings, with extension options. The Right-of-use assets and Lease liabilities as disclosed below, do not include short term and low value leases. In general, as usual with leases, the Company''s obligations under its leases are secured by the lessor''s title to or legal ownership of the leased assets.
2. Financial risk management - objective and policies
(i) Financial risk management framework
The Company has exposure to the following risks arising from financial instruments:
- Credit risk
- Liquidity risk
- Market risk
- Currency risk
The Company''s Board of Directors have overall responsibility for the establishment and oversight of the Company''s risk management framework.
The Company''s risk management is carried out by the management in consultation with the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific risk areas.
The 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 results of which are reported to the Audit Committee.
(ii) Credit risk
c) Cash and bank balances
The Company held cash and bank balances of ? 1,115.10 crore as at 31 March 2021 (31 March 2020: ? 2,219.87 crore).Credit risk on cash and bank balances is limited as these are generally held or invested in deposits with banks with good credit ratings.
d) Investments
There are no significant investments made by the Company and hence credit risk is not material.
(iii) 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 principal sources of liquidity are cash and bank balances and the cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements.
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and from its financing activities including deposits with banks and other financial instruments. The Company establishes an allowance for expected credit loss and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
a) Trade receivables
The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to ? 129.69 crore as at 31 March 2021 (31 March 2020: ? 172.03 crore).
Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India.
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry, the country and the state in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
b) Expected credit loss assessment for customers and loans
The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgement.
Exposures to customers and loans outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. The company provided for expected credit loss based on lifetime expected credit loss. (simplified approach).
(iv) Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables. We are exposed to market risk primarily related to foreign exchange rate risk. Thus, our exposure to market risk is a function of revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.
a) Risk management
The Company''s policy is to maintain a strong capital base to sustain future development of the business.
The Company has adequate cash and bank balances and continues to remain debt-free. The Company monitors its capital by a careful scrutiny of the cash and bank balances, and a regular assessment of any debt requirements. In the absence of any debt, the maintenance of debt equity ratio etc. may not be of any relevance to the Company.
b) Dividend
(i) Equity Shares
Final Dividend for the year ended 31 March 2020 of ? 10 for fully paid share (31 March 2019: ? 22.50 for fully paid share).The company has declared a special (interim) dividend of ? 320 per fully paid share for the year ended 31 March 2020.
Dividend distribution tax on final dividend for March 2020 is Nil (31 March 2019: ? 21.16 crore).
39 PRICING LITIGATIONS - CONTINGENCIES
The government had raised certain pricing related demands on Pfizer Limited and the erstwhile Parke-Davis (India) Ltd., Pharmacia Healthcare Limited and Wyeth Limited (which entities merged with Pfizer Limited), in respect of certain price fixation orders and other allied matters under various Drug (Prices Control) Orders (DPCO), viz., DPCO 1979, DPCO 1987, DPCO 1995 and DPCO 2013. These demands include alleged differential price demand on procurement of bulk drugs below the notified price, disputes on categorization of products, overcharging on the allegation of not following certain price control orders, allegation of delayed implementation of price ceiling notifications, etc. The Company had repudiated these demands and initiated legal proceedings to defend the Company against these alleged demands. Based on the legal assessment of these matters, certain provisions have already been made in the books, wherever necessary. The Company also has made certain deposits against these demands pursuant to directions from High Court(s).
Based on the legal opinion received by the Company and the assessment of the management, the Company is of the view that no further provisions are considered necessary over and above the sum of ? 20.45 crore (31 March 2020: ? 20.45 crore) and that the estimated liability in respect of these cases shall not exceed the amount provided in the books of accounts. A summary of the alleged pricing demands are given hereunder:
44 CONSUMER HEALTH PRODUCTS- WIND DOWN
Pfizer Inc.(Ultimate holding company) and GSK Pic entered into an agreement in 2018 to merge their consumer healthcare businesses into a single joint venture to form GSK Consumer Healthcare (GSKCH). This consists 2 brands - Anacin and Anne French. Subsequent to GSKCH''s deliberations on the Pfizer Consumer Health (PCH) India business, Pfizer Limited has been requested to take appropriate steps to wind down the PCH business in India. Consequently, the Company will be reimbursed actual wind down cost and a compensation based on the fair value of PCH Products as determined by the independent valuers.
The Company completed the wind down activities for its Consumer health business. The compensation of '' 27.50 crore derived based on the fair value of PCH Products as determined by the independent valuers, net of intangibles write off '' 3.14 crore is included in ''Other Income''. The aforementioned compensation along with the wind down cost of '' 11.65 crore that would be reimbursed is carried forward in the Balance Sheet as "Other Current Assets".
45 SUBSEQUENT EVENTS
There are no significant subsequent events that would require adjustments or disclosures except dividend as disclosed below in the financial statements as on the reporting date.
Dividend not recognized at the end of the reporting period '' 160.13 crore. Board of Directors have recommended a normal dividend of ? 30 per fully paid share for the year ended 31 March 2021.In addition to the above, the Board of Directors have recommended special dividend of ? 5 per fully paid share for the year ended 31 March 2021.This proposed dividend is subject to the approval of the shareholders in the annual general meeting.
46 CORPORATE SOCIAL RESPONSIBILITY (CSR)
Pursuant to the Section 135 of the Companies Act, 2013 and rules made thereunder as amended from time to time, any CSR amount remaining unspent, pursuant to any ongoing projects, shall be transferred by the Company within a period of 30 days from the end of the financial year to a separate bank account to be called as the Unspent Corporate Social Responsibility Account, and such amount shall be spent by the Company in pursuance of its CSR obligations within a period of three financial years from the date of such transfer.
Mar 31, 2019
1 BACKGROUND
Pfizer Limited, âThe Companyâ, is a Public Limited Company, incorporated under the Indian Companies Act, 1913, having its registered office in Mumbai, Maharashtra and is listed on the BSE Limited and the National Stock Exchange of India Limited. The Company is engaged in manufacturing, marketing, trading and export of pharmaceutical products. The Company has its own manufacturing facility at Goa and Thane. Thane plant is classified as assets held for sale (Refer note 16). The Company has various independent contract / third party manufacturers based across the country. The Company sells its products through independent distributors primarily in India.
2 BASIS OF PREPARATION
a) Statement of compliance
The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 (as amended) notified under section 133 of the Companies Act, 2013 (âthe Actâ) and other relevant provisions of the Act. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy in use.
b) Functional and presentation currency
These financial statements are presented in Indian Rupee (''), which is also the Companyâs functional currency. All amounts have been rounded off to the nearest crore or decimals thereof, unless otherwise indicated.
c) Basis of measurement
The financial statements have been prepared under the historical cost basis except for the following items:
d) Use of estimates and judgements
The preparation of financial statements in conformity with Indian Accounting Standards (Ind AS) requires management to make estimates, judgements and assumptions that affect the application of the accounting policies and the reported amounts of assets, liabilities, income and expenses and the disclosures of contingent liabilities on the date of financial statements. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. Estimates and underlying assumptions are reviewed on an ongoing basis. Application of accounting policies that requires critical accounting estimates involving complex and subjective judgements and the use of assumption in these financial statements have been disclosed in Note 3.
Critical estimates and judgements
Information about estimates and judgements made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is included in the following notes:
Note 4, 5 and 6 â Useful lives of property, plant and equipment, intangible assets, investment property and impairment testing for goodwill
Note 10 â Provision for inventory obsolescence
Note 18 and 23 â Provision for sales return and sales tax/VAT
Note 34 â Assets and obligations relating to employee benefits
Note 35 â Share based payments
Note 37 â Provision for expected credit loss
e) Current and non-current classification
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in Schedule III of the Act. Based on the nature of itâs activities and the time between the acquisition of assets for processing and their realization in cash or cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.
f) Measurement of fair values
A number of accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirely in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
Further information about the assumptions made in measuring fair values is included in the following notes:
Note 3 - Share based payment arrangements Note 5 - Investment property Note 37 - Financial instruments.
Notes:
1. Includes assets recoverable from customers of Rs.1.62 crore (31 March 2018: Rs.0.12 crore)
2. The Company writes down the value of inventories towards slow moving, non-moving, expired and non-saleable inventory based on historical experience of such items and any recent trends that may suggest realizable amount could differ from historical amounts. Charge in the profit or loss on account of write down of inventory during the year is Rs.18.61 crore (31 March 2018: Rs.3.73 crore).
(i) The Company has entered into an agreement (BTA) for sale of business undertaking at Thane on a slump sale basis for a consideration of Rs.178.00 crore, to be paid in installments, subject to fulfillment of the conditions precedent to the closing. The impact of the transaction would be reflected upon closure of the transaction. As on 31 March 2019, the Company had received an advance of Rs.178.00 crore (31 March 2018: Rs.178.00 crore) as per the agreed terms and is disclosed under âOther Current Liabilitiesâ in note 22. Upon the conclusion of the BTA, all remaining workmen at Thane Plant shall be transferred to the buyer so as to facilitate manufacturing operations. The property, plant and equipment pertaining to the plant have been disclosed under this head.
(ii) Office premises not in active use is expected to be disposed in twelve months and accordingly classified as the asset held for sale. Search for a suitable buyer is underway. No impairment loss was recognized on reclassification of the said premises as held for sale and the Company expects the fair value less cost to sell to be higher than carrying amount.
* Amount below '' one lakh
(iv) There has been no movement in the equity shares outstanding at the beginning and end of the year.
(v) The Company has a single class of equity shares. Accordingly all the equity shares rank equally with regards to voting rights, dividends and share in the Companyâs residual assets.
(vi) Pursuant to the Scheme of Amalgamation of erstwhile Wyeth Limited with the Company 15,906,292 shares of face value Rs.10 each were issued during the year ended 31 March 2015 to the shareholders of erstwhile Wyeth Limited for consideration other than cash.
(vii) During the five reporting periods immediately preceding the reporting date, no shares have been issued by capitalization of reserves as bonus shares.
4a OTHER EQUITY
Nature and purpose of reserves
(i) Securities premium
Securities premium account is used to record the premium on issue of shares. This reserve is utilized in accordance with the said provisions of The Companies Act, 2013. This account also includes the share premium on shares issued to the shareholders of erstwhile Wyeth limited, pursuant to the Scheme of Amalgamation.
(ii) General reserve
General reserve forms part of the retained earnings and is permitted to be distributed to shareholders as part of dividend.
(iii) Capital reserve
The share-based payment reserve is used to recognize the value of equity settled share-based payments provided to the employees by Pfizer Inc. the ultimate holding company and the Company is not liable for any recharge of the amount. Refer Note no. 35 for further details on the plan.
(iv) Retained earnings
The amount that can be distributed by the Company as dividends to its equity shareholders.
5 PROVISIONS- NON CURRENT
a) Movement in provisions:
b) Nature of provisions:
Provision for sales returns:
This represents provision towards saleable and non-saleable return expected to be made by the customers till the product expiry. Provision towards saleable return represents products which are expected to be returned in saleable condition while non-saleable return represents expected returns of products which are either expired or damaged, such that the sale of such products may not be possible. Management estimate the provision based on historical returns and any recent trends that may suggest future returns could differ from historical amounts.
Provision for demands under DPCO:
This represents provision recognized by the Company towards unsettled compensations claimed under DPCO from the Company.
Provision for customs and central excise:
This represents provision recognized by the Company towards claims raised by Customs and Excise authorities.
The amount represents purchase consideration payable to John Wyeth and Brother Limited, UK for the transfer of its undertaking in India to erstwhile Wyeth Limited. The amount has been retained as an interest free unsecured loan as per the directives of the Reserve Bank of India in this regard pending appropriate clearance from the income tax authorities.
6 TRADE PAYABLES
Notes:
a) Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006
b) Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the management.
c) The above includes amounts due to related parties Rs.273.33 crore (31 March 2018: Rs.307.67 crore)
d) All trade payables are âcurrentâ. The Companyâs exposure to currency and liquidity risks related to trade payables is disclosed in note 37.
Provision for sales tax/ VAT
These represents provision recognized by the Company towards claims raised by Sales Tax authorities and VAT authorities as applicable in each state.
Refer note 18 for the nature and basis of the balance provisions.
Sales for the year ended 31 March 2018 includes excise duty up to 30 June 2017 and sales post 1 July 2017 is reported net of Goods and Service Tax.
Set out below is the disaggregation of the revenue and reconciliation to profit and loss account:
The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
Management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered. Any changes in future taxable income would impact the recoverability of deferred tax assets.
7 EMPLOYEE BENEFITS
(A) Defined contribution plan:
During the year, the Company has contributed Rs.0.46 crore (31 March 2018: Rs.0.51 crore) towards employeeâs superannuation fund.
(B) Long-term employee benefit - Compensated absences
All eligible employees can carry forward and avail / encash leave as per Companyâs rules.
(C) Defined benefit plan:
(i) Provident fund
The employeeâs provident fund is administered by a Trust created specifically for the purpose. The employeeâs and employerâs contributions are transferred to the trust. All liabilities arising on account of provident fund payouts on resignation or retirement from service or death while in service are made from the trust.
* The net surplus in the provident fund trust as per the actuarial report is Rs.7.78 crore as at 31 March 2019 leading to a nil liability for the company.
(ii) Gratuity plan
In accordance with the provisions of the Payment of Gratuity Act, 1972, the Company has a defined benefit plan which provides for gratuity payments. The plan provides a lump sum gratuity payment to eligible employees at retirement or termination of their employment. The amounts are based on the respective employeeâs last drawn salary and the years of employment with the Company.
Liabilities in respect of the gratuity plan are determined by an actuarial valuation, based upon which the Company makes annual contributions to the Group Gratuity cum Life Assurance Schemes administered by the LIC of India, a funded defined benefit plan for qualifying employees. Trustees administer the contributions made by the Company to the gratuity scheme.
(i) Movement in net defined benefit asset/ (obligation)
The following table shows a reconciliation from the opening balances to the closing balances for net defined benefit (asset) liability and its components
(iv) Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.
The sensitivity analysis above has 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.
(v) Expected future cash flows
The expected future cash flows in respect of gratuity as at 31 March 2019 were as follows
8 SHARE-BASED PAYMENT ARRANGEMENTS
a) Employee stock options - equity settled
Certain employees of the Company are eligible for stock options, restricted stock units, portfolio performance shares and total shareholder return units granted by Pfizer Inc.
The Company has accounted Rs.8.34 crore (31 March 2018: Rs.7.56 crore) for share-based payment transactions among group entities in accordance with Ind AS 102, âShare-based Paymentsâ.
Nature and extent of employee share-based payment plans
Pfizer Inc., as a part of the long-term incentive awards offers certain common stock (shares) to the employees of Pfizer Inc., and its subsidiaries. These shares are offered through grant of awards which is a combination of stock options and restricted stock units under the Pfizer Inc. 2004 Stock plan. As per the plan, the vesting period of the stock options and the restricted stock units is 3 years from the grant date and the stock options have a term of 10 years from the grant date. All stock options and restricted stock units are settled through equity.
The employees of the Company have been issued Nil (31 March 2018: 1,247) share options, 23,251 (31 March 2018: 21,727) restricted stock units, 896 (31 March 2018: 940) portfolio performance shares and 121,001 (31 March 2018: 117,792) total shareholder return units under the Pfizer Inc., 2004 Share Option Plan by Pfizer Inc.
(i) Employee stock options (ESOP)
Employee stock option provides the employees of Pfizer Limited with a right to receive a unit of the stock of Pfizer Inc., at a predetermined exercise price upon fulfillment of vesting conditions.
The weighted average remaining contractual life of the ESOP at the year end is 5.2 years.
The weighted average grant date fair value of stock options granted during the years ended 31 March 2019 is Nil (31 March 2018: US$ 34.06 per option).
(ii) Restricted stock units (RSUs)
RSUs which, when vested entitle the holder to receive a specified number of shares of the Ultimate Holding Company including shares resulting from dividend equivalents paid on such RSUs, are accounted for using a fair value based method at the date of grant. The value of each RSU grant is estimated on the grant date. The fair value based method utilizes the closing price of the Ultimate Holding Companyâs common stock on the date of grant. The exercise price of the RSU is Nil.
The weighted average remaining contractual life of the RSUs outstanding at the year end is 1.30 years.
The weighted average grant date fair value of RSUs granted during the year ended 31 March 2019 is US $ 35.74 per RSU (31 March 2018: US $ 34.06 per RSU).
(iii) Portfolio performance shares (PPSs)
PPSs provide an opportunity to receive shares of Pfizer common stock contingent upon the companyâs achievement of pre set goals related to long term pipeline portfolio delivery over a five year performance period.
The weighted average remaining contractual life of the PPSs outstanding at the year end is 3.0 years.
The weighted average grant date fair value of PPSs option granted during the years ended 31 March 2019 is US $35.74 per PPS (31 March 2018: US $34.06 per PPS).
(iv) Total Shareholder Return Units (TSRUs)
TSRUs are awarded to senior and other key management, and, beginning in 2016, to certain other employees. TSRUs entitle the holders to receive a number of shares of our common stock with a value equal to the difference between the defined settlement price and the grant price, plus the dividends accumulated during the five-year or seven-year term, if and to the extent the total value is positive.
We measure the value of TSRU grants as of the grant date using a Monte Carlo simulation model. The values determined through this fair value methodology generally are amortized on a straight-line basis over the vesting term.
The weighted average remaining contractual life of the TSRUs outstanding at the year end is 4.7 years.
The weighted average grant date fair value of TSRUs granted during the year ended 31 March 2019 is US $ 35.74 per TSRU (31 March 2018: US $ 34.06 per TSRU)
b) Valuation of stock options
The fair value of stock options granted during the period has been measured using the Black-Scholes-Merton option pricing model at the date of the grant. The Black-Scholes-Merton option-pricing model. includes assumptions regarding dividend yields, expected volatility, expected terms and risk free interest rates. The key inputs and assumptions used are as follows:
Share price: The closing price on NYSE as on the date of grant has been considered for valuing the options granted.
Exercise price: Exercise Price is the market price or face value or such other price as determined by the Pfizer Inc.âs Remuneration and Compensation Committee.
Expected volatility: The historical volatility of the stock till the date of grant has been considered to calculate the fair value of the options.
Expected option life: Expected life of option is the period for which the Company expects the options to be live. The minimum life of a stock option is the minimum period before which the options cannot be exercised and the maximum life is the period after which the options cannot be exercised.
Expected dividends: Expected dividend yield has been calculated as an average of dividend yields for the four financial years preceding the date of the grant.
Risk free interest rate: The risk free interest rate on the date of grant considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero coupon yield curve for Government Securities.
These assumptions reflect managementâs best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside of the Companyâs control. As a result, if other assumptions had been used in the current period, stock-based compensation expense could have been materially impacted. Further, if management uses different assumptions in future periods, stock based compensation expense could be materially impacted in future years. The estimated fair value of stock options is charged to income on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards. The weighted average inputs used in computing the fair value of options granted were as follows:
9 LEASES
Operating leases Leases as lessee
The Company has taken certain facilities under operating lease arrangements. The lease can be terminated at the option of either parties by giving due notice. The rental expenses under operating leases âOther expensesâ in the profit or loss.
10 FINANCIAL INSTRUMENTS
1. Financial instruments - Fair values and measurements Accounting classification and fair values
The following table shows the carrying amounts and fair values of financial assets and financial liabilities as at 31 March 2019, including their levels are presented below. It does not include the fair value information for financial assets and financial liabilities not measured at fair value if their carrying amount is a reasonable approximation of fair value.
The following table shows the carrying amounts and fair values of financial assets and financial liabilities as at 31 March 2018, including their levels are presented below. It does not include the fair value information for financial assets and financial liabilities not measured at fair value if their carrying amount is a reasonable approximation of fair value.
2. Financial risk management - objective and policies
(i) Financial risk management framework
The Company has exposure to the following risks arising from financial instruments:
- Credit risk
- Liquidity risk
- Market risk
- Currency risk
The Companyâs Board of Directors have overall responsibility for the establishment and oversight of the Companyâs risk management framework.
The Companyâs risk management is carried out by the management in consultation with the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific risk areas.
The 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 results of which are reported to the Audit Committee.
(ii) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companyâs receivables from customers and from its financing activities including deposits with banks and other financial instruments. The Company establishes an allowance for expected credit loss and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
a) Trade and other receivables
The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs.171.66 crore as at 31 March 2019 (31 March 2018: Rs.154.80 crore).
Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India.
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry, the country and the state in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
b) Expected credit loss assessment for customers
The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgement.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. The company provided for expected credit loss based on lifetime expected credit loss. (simplified approach).
The movement in the allowance for credit loss in respect of trade and other receivables during the year was as follows
c) Cash and bank balances
The Company held cash and bank balances of Rs.1,914.34 crore as at 31 March 2019 (31 March 2018: Rs.1,771.86 crore). Credit risk on cash and bank balances is limited as these are generally held or invested in deposits with banks with good credit ratings.
d) Investments
There are no significant investments made by the Company and hence credit risk is not material.
(iii) 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 principal sources of liquidity are cash and bank balances and the cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements.
Exposure to liquidity risk
Undiscounted contractual maturities of significant financial liabilities
(iv) Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Companyâs income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables. We are exposed to market risk primarily related to foreign exchange rate risk. Thus, our exposure to market risk is a function of revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.
(v) Currency risk
The Company is exposed to currency risk on account of its operations. The functional currency of the Company is Indian Rupee. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may continue to fluctuate in the future.
Every percentage point depreciation / appreciation in the exchange rate between the Indian Rupee and US dollar would not have a significant impact on profit or loss for the year ended 31 March 2019.
11 CAPITAL MANAGEMENT
a) Risk management
The Companyâs policy is to maintain a strong capital base to sustain future development of the business.
The Company has adequate cash and bank balances and continues to remain debt-free. The Company monitors its capital by a careful scrutiny of the cash and bank balances, and a regular assessment of any debt requirements. In the absence of any debt, the maintenance of debt equity ratio etc. may not be of any relevance to the Company.
b) Dividend
(i) Equity Shares
Final Dividend for the year ended 31 March 2018 of Rs.20 for fully paid share (31 March 2017: Rs.20 for fully paid share). Dividend distribution tax on final dividend for March 2018 Rs.18.81crore (31 March 2017: Rs.18.62 crore).
(ii) Dividend not recognized at the end of reporting period Rs.102.94 crore
Board of directors have recommended final dividend of Rs.22.50 per fully paid share for the year ended 31 March 2019. This proposed dividend is subject to the approval of the shareholders in the annual general meeting.
12 PRICING LITIGATIONS - CONTINGENCIES
The government had raised certain pricing related demands on Pfizer Limited and the erstwhile Parke-Davis (India) Ltd., Pharmacia Healthcare Limited and Wyeth Limited (which entities merged with Pfizer Limited), in respect of certain price fixation orders and other allied matters under various Drug (Prices Control) Orders (DPCO), viz., DPCO 1979, DPCO 1987, DPCO 1995 and DPCO 2013. These demands include alleged differential price demand on procurement of bulk drugs below the notified price, disputes on categorization of products, overcharging on the allegation of not following certain price control orders, allegation of delayed implementation of price ceiling notifications, etc. The Company had repudiated these demands and initiated legal proceedings to defend the Company against these alleged demands. Based on the legal assessment of these matters, certain provisions have already been made in the books, wherever necessary. The Company also has made certain deposits against these demands pursuant to directions from High Court(s).
Based on the legal opinion received by the Company and the assessment of the management, the Company is of the view that no further provisions are considered necessary over and above the sum of Rs.20.81 crore (31 March 2018, Rs.22.03 crore) and that the estimated liability in respect of these cases shall not exceed the amount provided in the books of accounts. A summary of the alleged pricing demands are given hereunder:
13 RELATED PARTY TRANSACTIONS
I. Names of related parties and description of relationships
A. Parties where control exists:
Ultimate holding company:
Pfizer Inc., USA
B. Companies collectively exercising significant influence:
Pfizer East India B.V., Netherlands Wyeth LLC, USA
Wyeth Holdings Corporation, USA John Wyeth & Brother Limited, UK Warner - Lambert Company, LLC, USA Parke - Davis & Company, LLC, USA Pharmacia Corporation, USA
[Collectively holding 63.92% of the aggregate of equity share capital of the Company]
C. Fellow subsidiaries with whom transactions have taken place during the year
Pfizer Products India Private Limited, India Pfizer Innovative Supply Point Intl BVBA, Belgium Pfizer Service Company BVBA, Belgium Pfizer Worldwide Services, Ireland
D. Key managerial personnel
Mr. S. Sridhar - Managing Director
Mr. Milind Patil - Chief Financial Officer (w.e.f 16 August 2018) Wholetime Director (w.e.f 14 November 2018)
Mr. Vivek Dhariwal - Wholetime Director
Dr. Anurita Majumdar - Wholetime Director (upto 8 March 2019)
Mr. R A Shah - Independent Director
Mr. Pradip Shah - Independent Director
Mr. Uday Khanna - Independent Director
Mr. Sunil Lalbhai - Independent Director
Ms.Meena Ganesh - Independent Director ( w.e.f 8 March 2019)
Mr. Ravi Prakash Bhagavathula - Chief Financial Officer (upto 31 March 2018) Wholetime Director (upto 28 February 2018) Mr. Akhilesh Iyer - Relative of Key Managerial Person (w.e.f 20 February 2019)
14 SALES TAX/VAT LITIGATIONS - CONTINGENCIES
The Company has outstanding litigations pertaining to Sales Tax/Value Added Tax of various assessment years which the Company has challenged at various forums. These litigations pertain to non-submission of documentary evidence at the time of assessment, litigations involving question of law and certain disallowance made by authorities in assessment orders. Based on the external consultants advise, the Company is of the view that no further provisions are considered necessary over and above the amount already provided in the books of accounts (Refer note 23). Against these bank guarantee of Rs.21.1 crore has been issued to government authorities.
15 OTHER CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)
(i) Contingent liabilities*
* Management considers the service tax, duty of excise, duty of customs and Income tax demands received from the authorities as not tenable against the Company, and therefore no provision for these tax contingencies has been made.
(ii) Commitments
(iii) Contingent liability relating to determination of provident fund liability, based on a recent judgement from Honâble Supreme Court, is not determinable at present, due to uncertainty on the impact of the judgement in absence of further clarification relating to applicability. The Company will continue to assess any further developments in this matter for their implications on financial statements, if any, which, based on the number of employees, is not expected to be significant.
16 SEGMENT REPORTING
The Company has only one segment which is Pharmaceuticals and primarily operates in domestic market. The Managing Director of the Company has been identified as the Chief Operating Decision Maker. The Companyâs Managing Director, reviews the operating performance of the Company as a whole on a periodic basis. Therefore disclosure relating to segments is not applicable and accordingly not made.
There are no non-current assets outside of India as at 31 March 2019 (31 March 2018: Nil).
17 SUBSEQUENT EVENTS
There are no significant subsequent events that would require adjustments or disclosures in the financial statements as on the reporting date.
18 CORPORATE SOCIAL RESPONSIBILITY (CSR)
As per Section 135 of the Companies Act, 2013, (âthe Actâ) a Company, meeting the applicability threshold, need to spend at least 2% of its average net profit for the immediately preceding three financial years on CSR activities. The areas for CSR activities are education of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the Company as per the Act.
The gross amount required to be spent by the Company during the year is Rs.10.48 crore. The details of the amounts spent during the year on CSR activities are as follows
Mar 31, 2018
1 BACKGROUND
Pfizer Limited, âThe Companyâ, is a Public Limited Company, incorporated under the Indian Companies Act, 1913, having its registered office in Mumbai, Maharashtra and is listed on the BSE Limited and the National Stock Exchange of India Limited. The Company is engaged in manufacturing, marketing, trading and export of pharmaceutical products. The Company has its own manufacturing facility at Goa and Thane. Thane plant is classified as assets held for sale. The Company has various independent contract / third party manufacturers based across the country. The Company sells its products through independent distributors primarily in India.
2 BASIS OF PREPARATION
a) Statement of compliance
The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS ) as per the Companies (Indian Accounting Standards) Rules, 2015 (as amended) notified under section 133 of the Companies Act, 2013 (âthe Actâ) and other relevant provisions of the Act.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy in use.
b) Functional and presentation currency
These financial statements are presented in Indian Rupee (â), which is also the Companyâs functional currency. All amounts have been rounded off to the nearest crore or decimals thereof, unless otherwise indicated.
c) Basis of measurement
The financial statements have been prepared under the historical cost basis except for the following items:
d) Use of estimates and judgements
The preparation of financial statements in conformity with Indian Accounting Standards (Ind AS) requires management to make estimates, judgements and assumptions that affect the application of the accounting policies and the reported amounts of assets, liabilities, income and expenses and the disclosures of contingent liabilities on the date of financial statements. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. Estimates and underlying assumptions are reviewed on an ongoing basis. Application of accounting policies that requires critical accounting estimates involving complex and subjective judgements and the use of assumptions in these financial statements have been disclosed in Note 3.
Critical estimates and judgements
Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is included in the following notes:
Note 4, 5 and 6 â Useful lives of property, plant and equipment, intangible assets, investment property and impairment testing for goodwill
Note 10 â Provision for inventory obsolescence
Note 18 and 23 â Provision for sales return
Note 34 â Assets and obligations relating to employee benefits
Note 35 â Share based payments
Note 37 â Provision for expected credit loss
e) Current and non-current classification
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in Schedule III of the Act. Based on the nature of itâs activities and the time between the acquisition of assets for processing and their realization in cash or cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.
f) Measurement of fair values
A number of accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
Note 35 - Share based payment arrangements Note 5 - Investment property Note 37 - Financial instruments.
3 INVESTMENT PROPERTY
A. Reconciliation of carrying amount
The changes in the carrying value of investment property for the year ended 31 March 2018 are as follows:
The rental income recognized, from the above investment properties, in profit or loss for the year ending 31 March 2018 is Rs.6.39 crore. (31 March 2017: Rs.6.39 crore)
B. Measurement of fair values
i. The fair value of investment property is Rs.134.99 crore as at 31 March 2018. The fair value has been determined by external, independent property valuers. The fair value measurement for all the investment properties has been categorized as a level 3 fair value based on the inputs to the valuation technique used. The independent valuers have adopted Land and Building method of valuation. The valuation has been arrived at considering the location of the property, market enquiries, sale instances etc.
4 INTANGIBLE ASSETS
The changes in the carrying value of intangible assets for the year ended 31 March 2018 are as follows:
The changes in the carrying value of intangible assets for the year ended 31 March 2017 are as follows:
Impairment:
The shareholders of the Company approved the Scheme of Amalgamation (âSchemeâ) between the Company and erstwhile Wyeth Limited (âWyeth businessâ) with an appointed date of 1 April 2013 whereby all the assets and liabilities of Wyeth business which were transferred to and vested in the Company have been recorded at their fair values from the appointed date. The goodwill pertains to the excess of purchase consideration over the fair values of the net assets taken over from Wyeth Limited, prior to transition to Ind AS.
For the purposes of impairment testing, carrying amount of goodwill has been allocated to the following Cash Generating Unit (CGU) as follows:
The recoverable amount of the above CGU has been assessed using a value-in-use model. Value in use is calculated as the net present value of the projected post-tax cash flows plus a terminal value of the cash generating unit 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.
The cash flow projections include specific estimates for five years developed using internal forecasts and a terminal growth rate thereafter of 2% (31 March 2017: 5%). The planning horizon reflects the assumptions for short-to-mid term market developments.
Discount rate reflects the current market assessment of the risks. The discount rate is estimated based on the weighted average cost of capital for the Company. Post-tax discount rate used for the year ended 31 March 2018 was 12.5% (31 March 2017: 11.5%) .
The values assigned to the key assumptions represent managementâs assessment of future trends in the relevant industries and have been based on historical data from both external and internal sources.
The management believes that any reasonable possible change in the key assumptions would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit.
Notes:
1. Includes assets recoverable from customers of Rs.0.12 crore (31 March 2017: Rs.2.79 crore)
2. The Company writes down the value of inventories towards slow moving, non-moving, expired and non-saleable inventory based on historical experience of such items and any recent trends that may suggest realizable amount could differ from historical amounts. Charge in the profit or loss on account of write down of inventory during the year is Rs.3.73 crore (31 March 2017: Rs.23.96 crore).
The above includes amounts due from related parties Rs.15.03 crore (31 March 2017: Rs.9.53 crore) The Companyâs exposure to credit and currency risks, and loss allowances are disclosed in note 37.
(i) The Company has entered into an agreement (BTA) for sale of business undertaking at Thane on a slump sale basis for a consideration of Rs.178.00 crore, to be paid in installments, subject to fulfillment of the conditions precedent to the closing. The impact of the transaction would be reflected upon closure of the transaction. As on 31 March 2018, the Company has received an advance of Rs.178.00 crore (31 March 2017: Rs.150.00 crore) as per the agreed terms and is disclosed under âOther Current Liabilitiesâ in note 22. Upon the conclusion of the BTA, all remaining workmen at Thane Plant shall be transferred to the buyer so as to facilitate manufacturing operations. The property, plant and equipment pertaining to the plant have been disclosed under this head.
(ii) The Company intends to dispose off the premises having a carrying value of Rs.0.14 crore as it no longer intends to utilize the same in the next 12 months and accordingly classified the asset as held for sale. Search for a suitable buyer is underway. No impairment loss was recognized on reclassification of the said premises as held for sale and the Company expects the fair value less cost to sell to be higher than carrying amount.
* Rounded off
d There has been no movement in the equity shares outstanding at the beginning and end of the year.
e The Company has a single class of equity shares. Accordingly, all the equity shares rank equally with regards to voting rights, dividends and share in the Companyâs residual assets.
f Pursuant to the Scheme of Amalgamation of erstwhile Wyeth Limited with the Company 15,906,292 shares of face value Rs.10 each were issued during the year ended 31 March 2015 to the shareholders of erstwhile Wyeth Limited for consideration other than cash. During the five reporting periods immediately preceding the reporting date, no shares have been issued by capitalization of reserves as bonus shares.
g The details of shareholders holding more than 5% shares in the company is as below:
h Details of equity shares held by the holding company, the ultimate holding company, their subsidiaries and associates:
5a OTHER EQUITY
Nature and purpose of reserves
(i) Securities premium account
Securities premium account is used to record the premium on issue of shares. This reserve is utilized in accordance with the said provisions of The Companies Act, 2013. This account also includes the share premium on shares issued to the shareholders of erstwhile Wyeth limited, pursuant to the Scheme of Amalgamation.
(ii) General reserve
General reserve forms part of the retained earnings and is permitted to be distributed to shareholders as part of the dividend.
(iii) Capital reserve
The share-based payment reserve is used to recognize the value of equity settled share-based payments provided to the employees by Pfizer Inc., the ultimate holding company and the Company is not liable for any recharge of the amount. Refer note 35 for further details on the plan.
b) Nature of provisions:
Provision for sales returns:
This represents provision towards saleable and non-saleable returns expected to be made by the customers till the product expiry. Provision towards saleable returns represent products which are expected to be returned in saleable condition while non-saleable returns represent expected returns of products which are either expired or damaged, such that the sale of such products may not be possible. Management estimates the provision based on historical returns and any recent trends that may suggest future returns could differ from historical amounts.
Provision for demands under DPCO:
This represents provision recognized by the Company towards unsettled compensations claimed under DPCO from the Company.
Provision for Customs and Central Excise:
This represents provision recognized by the Company towards claims raised by Customs and Excise authorities.
The amount represents purchase consideration payable to John Wyeth and Brother Limited, UK for the transfer of its undertaking in India to erstwhile Wyeth Limited. The amount has been retained as an interest free unsecured loan as per the directives of the Reserve Bank of India in this regard pending appropriate clearance from the income tax authorities.
6 TRADE AND OTHER PAYABLES
Notes:
a) Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006
b) Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the management.
c) The above includes amounts due to related parties Rs.307.67 crore (31 March 2017: Rs.280.81 crore)
d) All trade payables are âcurrentâ. The Companyâs exposure to currency and liquidity risks related to trade payables is disclosed in note 37.
Provision for sales tax/ VAT
These represents provision recognized by the Company towards claims raised by Sales Tax authorities and VAT authorities as applicable in each state.
Refer note 18 for the nature and basis of the balance provisions.
Sales for the year ended 31 March 2018 includes excise duty up to 30 June 2017 and sales for the period 1 July 2017 upto 31 March 2018 is reported net of Goods and Service Tax.
The Companyâs effective tax rates for the years ended 31 March 2018 is 34.28% (31 March 2017: 34.84%). Income tax expense was Rs.187.84 crore for the year ended 31 March 2018 (31 March 2017: Rs.180.05 crore).
The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
Management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered. Any changes in future taxable income would impact the recoverability of deferred tax assets.
7 EMPLOYEE BENEFITS
(A) Defined contribution plan:
During the year, the Company has contributed Rs.0.51 crore (31 March 2017: Rs.0.43 crore) towards employeeâs superannuation fund.
(B) Long-term employee benefit - compensated absences
All eligible employees can carry forward and avail / encash leave as per Companyâs rules.
(C) Defined benefit plan:
(i) Provident fund
The employeeâs provident fund is administered by a Trust created specifically for the purpose. The employeeâs and employerâs contributions are transferred to the trust. All liabilities arising on account of provident fund payouts on resignation or retirement from service or death while in service are made from the trust.
(ii) Gratuity plan
In accordance with the provisions of the Payment of Gratuity Act, 1972, the Company has a defined benefit plan which provides for gratuity payments. The plan provides a lump sum gratuity payment to eligible employees at retirement or termination of their employment. The amounts are based on the respective employeeâs last drawn salary and the years of employment with the Company.
Liabilities in respect of the gratuity plan are determined by an actuarial valuation, based upon which the Company makes annual contributions to the Group Gratuity cum Life Assurance Schemes administered by the LIC of India, a funded defined benefit plan for qualifying employees. Trustees administer the contributions made by the Company to the gratuity scheme.
(a) Movement in net defined benefit asset/ (obligation)
The following table shows a reconciliation from the opening balances to the closing balances for net defined benefit (asset)/ liability and its components:
(d) Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.
The sensitivity analysis above has 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.
8 SHARE-BASED PAYMENT ARRANGEMENTS
a) Employee stock options - equity settled
Certain employees of the Company are eligible for stock options, restricted stock units, portfolio performance shares and total shareholder return units granted by Pfizer Inc.
The Company has accounted Rs.7.56 crore (31 March 2017: Rs.5.10 crore) for share-based payment transactions among group entities in accordance with Ind AS 102, Share-based Payments.
Nature and extent of employee share-based payment plans
Pfizer Inc., as a part of the long-term incentive awards offers certain common stock (shares) to the employees of Pfizer Inc., and its subsidiaries. These shares are offered through grant of awards which is a combination of stock options and restricted stock units under the Pfizer Inc. 2004 Stock plan. As per the plan, the vesting period of the stock options and the restricted stock units is 3 years from the grant date and the stock options have a term of 10 years from the grant date. All stock options and restricted stock units are settled through equity. The employees of the Company have been issued 1,247 (31 March 2017: Nil) share options, 21,727 (31 March 2017: 22,247) restricted stock units, 940 (31 March 2017: 1,403) portfolio performance shares and 117,792 (31 March 2017: 110,467) total shareholder return units under the Pfizer Inc., 2004 Share Option Plan by Pfizer Inc.
(i) Employee stock options (ESOPs)
Employee stock options provides the employees of Pfizer Limited with a right to receive a unit of the stock of Pfizer Inc., at a predetermined exercise price upon fulfilment of vesting conditions.
The weighted average grant date fair value of stock options granted during the years ended 31 March 2018 is US $ 34.06 per option (31 March 2017: Nil).
(ii) Restricted stock units (RSUs)
RSUs which, when vested entitle the holder to receive a specified number of shares of the Ultimate Holding Company including shares resulting from dividend equivalents paid on such RSUs, are accounted for using a fair value based method at the date of grant. The value of each RSU grant is estimated on the grant date. The fair value based method utilizes the closing price of the Ultimate Holding Companyâs common stock on the date of grant. The exercise price of the RSU is Nil.
The weighted average remaining contractual life of the RSUs outstanding at the year end is 1.30 years.
The weighted average grant date fair value of RSUs granted during the year ended 31 March 2018 is US $ 34.06 per RSU (31 March 2017: US $ 30.59 per RSU).
(iii) Portfolio performance shares (PPSs)
PPSs provide an opportunity to receive shares of Pfizer common stock contingent upon the companyâs achievement of pre-set goals related to long-term pipeline portfolio delivery over a five year performance period.
The weighted average remaining contractual life of the PPSs outstanding at the year end is 3.0 years.
The weighted average grant date fair value of PPSs options granted during the years ended 31 March 2018 is US $34.06 per PPS (31 March 2017: US $30.59 per PPS.)
(iv) Total Shareholder Return Units (TSRUs)
TSRUs are awarded to senior and other key management, and, beginning in 2016, to certain other employees. TSRUs entitle the holders to receive a number of shares of our common stock with a value equal to the difference between the defined settlement price and the grant price, plus the dividends accumulated during the five-year or seven-year term, if and to the extent the total value is positive.
We measure the value of TSRU grants as of the grant date using a Monte Carlo simulation model. The values determined through this fair value methodology generally are amortized on a straight-line basis over the vesting term.
The weighted average grant date fair value of TSRUs granted during the year ended 31 March 2018 is US $ 34.06 per TSRU (31 March 2017: US $ 30.59 per TSRU)
b) Valuation of stock options
The fair value of stock options granted during the period has been measured using the Black-Scholes-Merton option pricing model at the date of the grant. The Black-Scholes-Merton option-pricing model includes assumptions regarding dividend yields, expected volatility, expected terms and risk free interest rates. The key inputs and assumptions used are as follows:
Share price: The closing price on NYSE as on the date of grant has been considered for valuing the options granted.
Exercise price: Exercise Price is the market price or face value or such other price as determined by the Pfizer Inc.âs Remuneration and Compensation Committee.
Expected volatility: The historical volatility of the stock till the date of grant has been considered to calculate the fair value of the options.
Expected option life: Expected life of option is the period for which the Company expects the options to be live. The minimum life of a stock option is the minimum period before which the options cannot be exercised and the maximum life is the period after which the options cannot be exercised.
Expected dividends: Expected dividend yield has been calculated as an average of dividend yields for the four financial years preceding the date of the grant.
Risk free interest rate: The risk free interest rate on the date of grant considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero coupon yield curve for Government Securities.
These assumptions reflect managementâs best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside of the Companyâs control. As a result, if other assumptions had been used in the current period, stock-based compensation expense could have been materially impacted. Further, if management uses different assumptions in future periods, stock based compensation expense could be materially impacted in future years. The estimated fair value of stock options is charged to income on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards. The weighted average inputs used in computing the fair value of options granted were as follows:
9 LEASES
Operating leases
a) Leases as lessee
The Company has taken certain facilities under operating lease arrangements. The lease can be terminated at the option of either parties by giving due notice. The rental expenses under operating leases are disclosed under âOther expensesâ in the profit or loss.
Future minimum lease payments under non - cancellable operating leases is as follows :
b) Leases as lessor
The Company has sub let some of its leased property during the year on operating lease. The lease terms are in the range of 1 - 3 years. The information in respect of the same is as follows:
Lease income recognized in the profit or loss for the year in respect of sub let property is Nil (31 March 2017: Nil)
10 FINANCIAL INSTRUMENTS
1. Financial instruments - Fair values and measurements
Accounting classification and fair values
The following table shows the carrying amounts and fair values of financial assets and financial liabilities as at 31 March 2018, including their levels are presented below. It does not include the fair value information for financial assets and financial liabilities not measured at fair value if their carrying amount is a reasonable approximation of fair value.
* Rounded off.
The following table shows the carrying amounts and fair values of financial assets and financial liabilities as at 31 March 2017, including their levels are presented below. It does not include the fair value information for financial assets and financial liabilities not measured at fair value if their carrying amount is a reasonable approximation of fair value.
2. Financial risk management - objective and policies
(i) Financial risk management framework
The Company has exposure to the following risks arising from financial instruments:
- Credit risk
- Liquidity risk
- Market risk
- Currency risk
The Companyâs Board of Directors have overall responsibility for the establishment and oversight of the Companyâs risk management framework.
The Companyâs risk management is carried out by the management in consultation with the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific risk areas.
The 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 results of which are reported to the Audit Committee.
(ii) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companyâs receivables from customers and from its financing activities including deposits with banks and other financial instruments. The Company establishes an allowance for expected credit loss and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
a) Trade and other receivables
The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs.154.80 crore as at 31 March 2018 (31 March 2017: Rs.110.32 crore).
Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India.
The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry, the country and the state in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
b) Expected credit loss assessment for customers
The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgement.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. The company provided for expected credit loss based on lifetime expected credit loss. (simplified approach).
The movement in the allowance for credit loss in respect of trade and other receivables during the year was as follows
c) Cash and bank balances
The Company held cash and bank balances of Rs.1,771.86 crore as at 31 March 2018 (31 March 2017: Rs.1,523.09 crore). Credit risk on cash and bank balances is limited as these are generally held or invested in deposits with banks with good credit ratings.
d) Investments
There are no significant investments made by the Company and hence credit risk is not material.
(iii) 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 principal sources of liquidity are cash and bank balances and the cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements.
Exposure to liquidity risk
Undiscounted contractual maturities of significant financial liabilities
(iv) Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Companyâs income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables. We are exposed to market risk primarily related to foreign exchange rate risk. Thus, our exposure to market risk is a function of revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.
Currency risk
The Company is exposed to currency risk on account of its operations. The functional currency of the Company is Indian Rupee. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may continue to fluctuate substantially in the future.
Exposure to currency risk
The foreign currency risk from financial instruments as at 31 March 2018 are as follows:
Every percentage point depreciation / appreciation in the exchange rate between the Indian Rupee and US dollar would not have a significant impact on profit or loss for the year ended 31 March 2018.
11 CAPITAL MANAGEMENT
a) Risk management
The Companyâs policy is to maintain a strong capital base to sustain future development of the business.
The Company has adequate cash and bank balances and continues to remain debt-free. The Company monitors its capital by a careful scrutiny of the cash and bank balances, and a regular assessment of any debt requirements. In the absence of any debt, the maintenance of debt equity ratio etc. may not be of any relevance to the Company.
b) Dividend
(i) Equity Shares
Final Dividend for the year ended 31 March 2017 of Rs.20 for fully paid share (31 March 2016: Rs.15 for fully paid share). Dividend distribution tax on final dividend for March 2017 Rs.18.62 crore (31 March 2016: Rs.13.97 crore).
(ii) Dividend not recognized at the end of reporting period Rs.91.50 Crore
Board of directors have recommended final dividend of Rs.20 per fully paid share for the year ended 31 March 2018. This proposed dividend is subject to the approval of the shareholders in the annual general meeting.
12 PRICING LITIGATIONS - CONTINGENCIES
(a) Oxytetracycline and other formulations
In respect of certain price fixation Orders of 1981 of the Government of India, the Honâble Supreme Court vide its Order of 22 March 1993 held that, pending disposal of the Companyâs Writ Petition in the Honâble High Court of Bombay, the Company may deposit 50% of the impugned amount of Rs.0.88 crore (31 March 2017: Rs.0.88 crore), less Rs.0.2 crore (31 March 2017: Rs.0.2 crore) already deposited, with the Government of India before 15 May 1993 which has been done. In the event that the Company succeeds before the Honâble High Court of Bombay, this amount will be returned within one month from the date of the decision of the Honâble High Court of Bombay with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs.0.44 crore (31 March 2017: Rs.0.44 crore) with interest at the rate of 15% per annum will have to be paid to the Government of India.
(b) Multivitamin Formulations
In respect of certain price fixation Orders of 1986 of the Government of India, the Honâble Supreme Court vide its Order dated 3 December 1992, held that, pending disposal of the Companyâs Writ Petition in the Honâble High Court of Bombay, the Company may deposit 50% of the impugned amount of Rs.0.98 crore (31 March 2017: Rs.0.98 crore) with the Government of India before 31 January 1993 which has been done. In the event that the Company succeeds before the Honâble High Court of Bombay, this amount will be returned within one month from the date of the decision of the Honâble High Court of Bombay with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs.0.49 crore (31 March 2017: Rs.0.49 crore) with interest at the rate of 15% per annum will have to be paid to the Government of India.
(c) Protinex
In yet another case, the Company had challenged in 1986 a price fixation Order of the Government of India by a Writ Petition before the Honâble High Court of Bombay. The Honâble High Court of Bombay passed an ad interim and interim order staying the impugned order. The Petition, while it was still pending for hearing and final disposal, was withdrawn in 1989 on redressal of the Companyâs grievances. After protracted correspondence on the subject, in 1993 the Government of India raised a demand of Rs.0.82 crore (31 March 2017: Rs.0.82 crore) on the Company for the period April 1986 to July 1989 and directed the Company to deposit the same into the Drug Prices Equalization Account (DPEA). Thereafter, the Drug Prices Liability Review (DPLR) Committee sent a letter dated 15 February 1996 seeking the Companyâs submission/ representation against the reduced claim amount of Rs.0.34 crore (31 March 2017: Rs.0.34 crore) for the period April 1986 to August 1987 as intimated to the DPLR Committee by the Government of India. The Company has made its submissions to the DPLR Committee vide its letter of 29 March 1996 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case.
In the meantime, the Department of Chemicals and Petrochemicals vide their letter dated 11 February 1997 raised an additional demand of Rs.1.78 crore (31 March 2017: Rs.1.78 crore) for the earlier period of February 1984 to March 1986 over and above the revised claim of Rs.0.34 crore (31 March 2017: Rs.0.34 crore) for the period April 1986 to August 1987. Thus, the total demand raised now stands revised to Rs.2.12 crore (31 March 2017: Rs.2.12 crore). The DPLR Committee had, vide its letter dated 24 February 1997 invited the Company to make its submissions/ representations against the above said claim. The Company has made its submissions to the DPLR Committee vide its letter dated 14 May 1997 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case.
Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifications should be obtained from the Honâble High Court of Bombay on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any notice issued by the Government of India after 25 August 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date).
On a Notice of Motion filed by the Company in the said Writ Petition, the Honâble High Court of Bombay has granted ad interim order that âpending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No 49/1996 pending before the said Drug Prices Liability Review Committee be stayed.â
The Honâble High Court of Bombay vide its judgement dated 22 December 2011 dismissed the Writ Petition filed by OPPI & IDMA and directed the companies who have been issued show cause notices to file appropriate replies and directed the government to pass appropriate orders accordingly.
(d) Vitamin and other formulations
The Government of India has arbitrarily determined the liability of the Company at Rs.14.66 crore (31 March 2017: Rs.14.66 crore) being the difference in price in respect of Vitamin and other formulations sold by the Company during the years 1983 to 1989. The Company has repudiated the liability on this account. The Companyâs Solicitors have advised that the repudiation by the Company is legally sustainable. The Government of India has pursued the matter. The Company maintains its position that the claim by the Government of India is not legally sustainable.
(e) Chloramphenicol
The Government of India has arbitrarily determined the liability of the Company at Rs.1.45 crore (31 March 2017: Rs.1.45 crore) and Rs.0.14 crore (31 March 2017: Rs.0.14 crore) being the difference between the price of bulk drug Chloramphenicol powder and Chloramphenicol Palmitate respectively allowed in the formulation price and actual procurement price for the period 1979 to 1988. The Company has repudiated the liability on this account as advised by the Companyâs Solicitors. The Company has also obtained a Stay order from the Honâble High Court of Bombay against the demand.
Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifications should be obtained from the Honâble High Court of Bombay on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Notice issued by the Government of India after 25 August 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date).
Similar applications were filed as in the matter of Protinex before the Honâble High Court of Bombay in Writ Petition filed by OPPI & IDMA and similar order was passed i.e. Case No 23/95 pending before the said Drug Prices Liability Review (DPLR) Committee was stayed. The OPPI & IDMA Writ Petition have been disposed with the direction as aforesaid.
(f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan Limited (merged with Parke-Davis (India) Limited in 1988 and Parke - Davis (India) Limited merged with Pfizer Limited in 2003) had classified Isokin Tablets, Isokin Liquid and Pyridium tablets as decontrolled products under the DPCO 1979. The categorization was, however, challenged by the Government of India in 1984 and a demand of Rs.1.13 crore (31 March 2017: Rs.1.13 crore) was raised against the Company. Against this demand an excise duty set off of Rs.0.07 crore (31 March 2017: Rs.0.07 crore) was allowed to the Company and a final demand of Rs.1.06 crore (31 March 2017: Rs.1.06 crore) was raised in 1987.
The Company had deposited an amount of Rs.0.3 crore (31 March 2017: Rs.0.3 crore) in February 1987 and Rs.0.25 crore (31 March 2017: Rs.0.25 crore) in May 1990 totalling to Rs.0.55 crore (31 March 2017: Rs.0.55 crore) in full and final settlement of the demand, as per the arguments set forth by the Company. The Government of India subsequently raised a demand of Rs.1.17 crore (31 March 2017: Rs.1.17 crore) towards interest on principal demand. (i.e. interest of Rs.0.43 crore (31 March 2017: Rs.0.43 crore) for Pyridium for the period 1982 to August 1995 and Rs.0.74 crore (31 March 2017: Rs.0.74 crore) for Isokin for the period 1982 to June 1997.
The Company filed a Writ Petition in the Honâble High Court of Andhra Pradesh in September 1997 for staying all further proceedings against the Company. The Honâble High Court of Andhra Pradesh stayed the demand in respect of collection of interest but directed the Company to deposit the balance demand of Rs.0.51 crore (31 March 2017: Rs.0.51 crore) (which amount was deposited in November 1997).
The said Writ Petition has been heard and disposed off by final judgement of the Honâble High Court of Andhra Pradesh, on 15 April 2011. The Honâble High Court of Andhra Pradesh has inter alia set aside all the demand notices and further directed the respondents to refund the monies paid under the interim orders.
The Government of India has preferred a Special Leave Petition (SLP) before the Honâble Supreme Court against the above judgement. In view of there being a discrepancy in the English and Hindi Notification of DPCO, 1979 in para 13(5) of the DPCO, 1979 the SLP came to be allowed vide order dated 12 April 2013 setting aside the impugned judgment and restoring the writ petition to file, to conduct appropriate enquiry and for hearing and fresh disposal. The matter now stands remanded back to the Honâble High Court of Andhra Pradesh.
(g) Multivitamin Formulations:
The Government of India has arbitrarily raised a demand of Rs.1.82 crore (31 March 2017: Rs.1.82 crore) on account of alleged overpricing of certain multivitamin formulations marketed by erstwhile Pharmacia Healthcare Limited (merged with Pfizer Limited) for the period 1983 to 1986. The Company has repudiated the liability on this account as advised by its solicitors. The Company filed a Writ Petition No.814 of 1992 in the Honâble High Court of Bombay. The Supreme Court, in a SLP filed by the Company held that pending disposal of Writ Petition filed before the Honâble High Court of Bombay, the Company shall furnish an undertaking in respect of 50% of its liability and shall deposit the balance 50% aggregating to Rs.0.91 crore (31 March 2017: Rs.0.91 crore). This amount has been deposited with the Government of India and is included under the head âLong Term Loans and Advancesâ.
Pursuant to a Transfer Petition (Civil) no 475-496 of 2003 filed under Article 139A(1) of the Constitution of India, all pending writ petitions in respect of Drug Prices Equalization Account (DPEA) liabilities are now to be transferred to the Honâble Supreme Court to be heard and finally decided by the Honâble Supreme Court of India. Consequently, as a result of the said transfer petition, Writ Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now be heard and disposed of by the Honâble Supreme Court.
The Honâble Supreme Court however, by order dated 3 May 2010 disposed off the Transfer Petition, directing the concerned High Courts to take up the writ petitions before them and dispose them on merits.
The Writ Petitions filed before the Honâble High Court of Bombay came up for hearing on 1 February 2013. The Honâble High Court of Bombay was of the view that the Orders passed by the Government of India may be set aside and the Government of India may be directed to decide the matters afresh keeping all the issues and contentions open. Consequently, as directed by the Honâble High Court of Bombay draft minutes of the order were prepared and circulated to the Advocates of the Government of India for their perusal.
In view of the disagreement between the parties on the draft minutes, on 12 March 2013 the Government of India sought to press for their Notice of Motion for all the matters to be listed for final hearing. Thereafter, the Honâble High Court of Bombay passed an Order for the matters to be listed in due course and rejected the Notice of Motion of the Government of India.
Thereafter, the Government of India made an application before the Honâble Chief Justice for having this group of matters to be assigned to a Division Bench for expeditious hearing. However, till date no Order has been passed in the matter.
In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the legal opinion being in favor of the Company, and based on the assessment of the Management, no further provision is considered necessary over and above the sum of Rs.1.98 crore (31 March 2017: Rs.1.98 crore)which has been paid off in earlier years.
The Company would continue to seek legal recourse in all the above matters.
(h) The Government of India had served demand notices on erstwhile Wyeth Limited in respect of its product, claiming that an amount of Rs.45.07 crore (31 March 2017: Rs.45.07 crore) inclusive of interest of Rs.31.87 crore (31 March 2017: Rs.31.87 crore) is payable in respect of price fixation under the Drugs (Prices Control) Order 1979. The Company has disputed the demand. Without prejudice to its contention, the Company paid the principal amount of Rs.13.21 crore (31 March 2017: Rs.13.21 crore). The Company carries a provision of Rs.14.69 crore (31 March 2017: Rs.14.69 crore) in respect of the said demand. The Company has furnished corporate bonds for amount aggregating to Rs.31.87 crore (31 March 2017: Rs.31.87 crore) for interest.
(i) The Government of India had served demand notices on erstwhile Wyeth Limited in respect of its product, claiming that an amount of Rs.10.69 crore (31 March 2017: Rs.10.69 crore) inclusive of interest of Rs.8.32 crore (31 March 2017: Rs.8.32 crore) is payable in respect of price fixation under the Drugs (Prices Control) Order 1979. The Company has disputed the demand. Without prejudice to its contention, the Company has paid principal amount of Rs.2.36 crore (31 March 2017: Rs.2.36 crore) under protest. The Company carries a cumulative provision of Rs.0.41 crore (31 March 2017: Rs.0.41 crore) in the books of accounts. Corporate bonds for amount aggregating to Rs.8.32 crore (31 March 2017: Rs.8.32 crore) for interest has been furnished.
(j) The Government of India had served demand notices on erstwhile Wyeth Limited in respect of its certain bulk drugs, claiming that an amount of Rs.3.31 crore (31 March 2017: Rs.3.31 crore) inclusive of interest Rs.1.87 crore (31 March 2017: Rs.1.87 crore) is payable into the Drug Prices Equalization Account (DPEA) under the Drugs (Prices Control) Order, 1979 on account of alleged unintended benefit enjoyed by the Company. The Company has disputed the demand. Without prejudice to its contentions, the Company has paid an amount of Rs.0.45 crore (31 March 2017: Rs.0.45 crore) under protest.
(k) The Government of India had served a demand notice on erstwhile Wyeth Limited claiming an amount of Rs.17.26 crore (31 March 2017: Rs.17.26 crore) inclusive of interest of Rs.1.34 crore (31 March 2017: Rs.1.34 crore) due thereon for alleged non compliance under the Drugs (Prices Control) Order, 1995 in respect of production of Prednisolone based formulations. Without prejudice to its contentions, the Company has provided and paid Rs.12.88 crore (31 March 2017: Rs.12.88 crore) and disputed the balance demand.
The demands stated in (h), (i), (j) and (k) above aggregate to Rs.76.34 crore (31 March 2017: Rs.76.34 crore) inclusive of interest of Rs.43.41 crore (31 March 2017: Rs.43.41 crore) . Based on the legal opinions obtained in respect of these cases, the Company is of the opinion that the estimated liability in respect of these cases involved shall not exceed Rs.15.10 crore (31 March 2017: Rs.15.10 crore) provided in the books of accounts.
(l) Other pricing related disputes
The government had raised demands on account of alleged non-adherence of certain price notifications on four products marketed / traded by the Company. The total liability in respect of these demands amounted to Rs.15.11 crore (31 March 2017: Rs.15.11 crore) against which the Company has made a provision of Rs.4.99 crore (31 March 2017: Rs.4.99 crore).
Based on the legal opinions obtained, the Company is of the opinion that the estimated liability in respect of these cases involved shall not exceed the amount provided in books of accounts.
13 RELATED PARTY TRANSACTIONS
A Names of related parties and description of relationships A Parties where control exists:
Ultimate holding company:
Pfizer Inc., USA
B. Companies collectively exercising significant influence:
Pfizer East India B.V., Netherlands Wyeth LLC, USA
Wyeth Holdings Corporation, USA John Wyeth & Brother Limited, UK Warner - Lambert Company, LLC, USA Parke - Davis & Company, LLC, USA Pharmacia Corporation, USA
[Collectively holding 63.92% of the aggregate of equity share capital of the Company]
C. Fellow subsidiaries with whom transactions have taken place during the year
Pfizer Products India Private Limited, India Pfizer Investment Co. Ltd., China Pfizer Innovative Supply Point Intl BVBA, Belgium Pfizer Service Company BVBA, Belgium Pfizer Worldwide Services, Ireland
D. Key managerial personnel
S. Sridhar - Managing Director
Ravi Prakash Bhagavathula - Chief Financial Officer (up to 31 March 2018)
Wholetime Director (w.e.f 30 January 2017 to 28 February 2018) Vivek Dhariwal - Wholetime Director
Dr. Anurita Majumdar - Wholetime Director (w.e.f 4 November 2016)
Mr. R A Shah - Independent Director Mr. Pradeep Shah - Independent Director Mr. Uday Khanna - Independent Director Mr. Sunil Lalbhai - Independent Director
* Management considers the service tax, duty of excise, duty of customs, sales tax / VAT and Income tax demands received from the authorities are not tenable against the Company, and therefore no provision for these tax contingencies has been made.
# Refer note 39 for pricing litigations contingencies.
14 SEGMENT REPORTING
The Company has only one segment which is Pharmaceuticals and primarily operates in domestic market. The Managing Director of the Company has been identifed as the Chief Operating Decision Maker. The Companyâs Managing Director, reviews the operating performance of the Company as a whole on a periodic basis. Therefore, disclosure relating to segments is not applicable and accordingly not made.
The details of geographical segment for the year ended 31 March 2018 and 31 March 2017 is as under
There are no non-current assets outside of India as at 31 March 2018 (31 March 2017: Nil).
15 SUBSEQUENT EVENTS
There are no significant subsequent events that would require adjustments or disclosures in the financial statements as on the reporting date.
16 CORPORATE SOCIAL RESPONSIBILITY (CSR)
As per Section 135 of the Companies Act, 2013, (âthe Actâ) a Company, meeting the applicability threshold, need to spend at least 2% of its average net profit for the immediately preceding three financial years on CSR activities. The areas for CSR activities are education of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the Company as per the Act.
The gross amount required to be spent by the Company during the year is Rs.8.22 crore. The details of the amounts spent during the year on CSR activities are as follows:
17 EXCEPTIONAL ITEMS
Exceptional items for the year ended 31 March 2017 includes income of Rs.26.97 crore from sale of property and guest house (net of related expenses) and Rs.103.46 crore from assignment of trademarks (net of related expenses).
Mar 31, 2017
Notes to the reconciliation:
1 Reversal of impact of straight- lining of lease rentals
Under Ind AS, to the extent that escalation in the rent agreement is in line with general inflation no straight- lining is required.
2 Discounting of security deposits
Under Indian GAAP, security deposits are carried at their face values. Under Ind AS, non-cancellable deposits (not statutory deposits in nature) are required to be measured at their fair values at inception using an appropriate discounting rate.
3 Proposed dividend
Under Indian GAAP, proposed dividends are 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 body meeting) or paid.
In the case of the Company, the declaration of dividend occurs after period end. Therefore, the liability recorded for this dividend has been derecognized against retained earnings.
4 Derecognition of physician samples from inventory
Under Ind AS, inventory manufactured and identified for distribution as physician''s samples is to be recognized as an expense in the period in which such inventory is manufactured.
5 Amortization of goodwill
Reversal of amortization of goodwill acquired in a Business Combination. Goodwill is not amortized and is mandatorily tested for impairment as per the requirements of Ind AS 36 Impairment of Assets.
6 Deferred tax on Ind AS Adjustments
This pertains to recognition of deferred tax on fair valuation of all the assets recognized in relation to the amalgamation of erstwhile Wyeth Limited, financial assets, goodwill and all other assets.
7 Actuarial gains and losses reclassified to OCI
As per Ind AS 19 - Employee Benefits, actuarial gains/ losses on defined benefit plans are reclassified to other comprehensive income (net of tax).
4 Exemptions available under Ind AS 101
In preparing these financial statements, the Company has availed itself of certain exemptions and exceptions in accordance with Ind AS 101 as explained below:
Exceptions from full retrospective application:
a) Estimates exceptions
Upon an assessment of the estimates made under Indian GAAP, the Company has concluded that there was no necessity to revise such estimates under Ind AS, except where estimates were required by Ind AS and not required by Indian GAAP.
b) Deemed Cost for Property, Plant & Equipment
The Company has elected to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.
c) Business Combination
Ind AS 101, provides the option to apply Ind AS 103, Business Combinations prospectively from the transition date or from a specific date prior to the transition date. The Company has elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date has not been restated.
8 Amalgamation of erstwhile Wyeth Limited with the Company during financial year 2014-15
In financial year 2014-15, the Scheme of Amalgamation (âScheme'') between the Company and erstwhile Wyeth Limited with an appointed date of 1 April 2013, whereby all the assets and liabilities of erstwhile Wyeth Limited which were transferred to and vested in the Company, have been recorded at their fair values from the appointed date.
The said Scheme received the approval of the Hon''ble High Court of Judicature at Mumbai on 31 October 2014 and subsequent to approvals by other relevant regulatory authorities; the Scheme became effective on 1 December 2014. Since the Scheme received all the requisite approvals after the financial statements for the year ended 31 March 2014 were authorized by the shareholders, the impact of amalgamation has been given in the financial year ended 31 March 2015 with effect from the appointed date.
In accordance with the provisions of the aforesaid Scheme,
(i) The approved share swap ratio was 7 equity shares of the face value of Rs,10 each fully paid up of the Company for every 10 equity shares of the face value of Rs,10 each fully paid up of erstwhile Wyeth Limited. Accordingly, for a total consideration of Rs,1,31,379 lakhs, the Company allotted and issued 1,59,06,292 equity shares of Rs,10 each to the shareholders of erstwhile Wyeth Limited in December 2014, and accounted for the share premium of Rs,1,29,879 lakhs in the financial year ended 31 March 2015.
(ii) The amalgamation was accounted under the âPurchase Methodâ as per Accounting Standard 14 - Accounting for Amalgamations,as referred to in the Scheme of Amalgamation approved by the High court.
(iii) The transfer of assets and liabilities of erstwhile Wyeth Limited at fair values was effected from âappointed dateâ of 1 April 2013 as defined in the Scheme.
(iv) Fair value of assets and liabilities acquired from Wyeth Limited aggregated to Rs,22,724 lakhs. The total purchase consideration paid was Rs,1,31,379 lakhs. The Company recognized identified intangible assets of Rs,42,720 lakhs and resultant goodwill of Rs,65,935 lakhs is tested for impairment annually.
(v) Related deferred tax impact has been recognized through retained earnings on 1 April 2015, given that the business combination has been effected prospectively from the transition date, as per the exemption available in Ind AS 101.
The Company has availed the deemed cost exemption under Ind AS 101- First time adoption of Indian Accounting Standards in relation to the investment property on the date of transition. Consequently the net block carrying amount as on 1 April 2015 has been considered as the gross block carrying amount on that date. Refer note below for the gross block value and the accumulated depreciation on 1 April 2015 under the previous GAAP
The rental income recognized, from the above investment properties, in the statement of profit and loss for the year ending 31 March 2017 and 31 March 2016 is Rs,639.14 lakhs in each year.
B. Measurement of fair values
i. The fair value of investment property is Rs,13,498.93 lakhs. The fair value has been determined by external, independent property valuers. The fair value measurement for all the investment properties has been categorized as a level 3 fair value based on the inputs to the valuation technique used. The independent valuers has adopted Land and Building method of valuation. The valuation has been arrived at considering the location of the property, market inquiries, sale instances etc.
The Company has availed the deemed cost exemption under Ind AS 101- First time adoption of Indian Accounting Standards in relation to the intangible assets on the date of transition. Consequently, the net block carrying amount as on 1 April 2015 has been considered as the gross block carrying amount on that date. Refer note below for the gross block value and the accumulated amortization on 1 April 2015 under the previous GAAP.
Impairment:
The shareholders of the Company approved the Scheme of Amalgamation (âScheme'') between the Company and erstwhile Wyeth Limited (âWyeth businessâ) with an appointed date of 1 April 2013 whereby all the assets and liabilities of Wyeth business which were transferred to and vested in the Company have been recorded at their fair values from the appointed date. The goodwill pertains to the excess of purchase consideration over the fair values of the net assets taken over from Wyeth Limited.
The recoverable amount of the above CGU has been assessed using a value-in-use model. Value in use is calculated as the net present value of the projected post-tax cash flows plus a terminal value of the cash generating unit 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.
The cash flow projections include specific estimates for five years developed using internal forecasts and a terminal growth rate thereafter of 5%. The planning horizon reflects the assumptions for short-to-mid term market developments.
Discount rate reflects the current market assessment of the risks. The discount rate is estimated based on the weighted average cost of capital for the Company. Post-tax discount rates used were 11.5% for the year ended 31 March 2017.
The values assigned to the key assumptions represent management''s assessment of future trends in the relevant industries and have been based on historical data from both external and internal sources.
The management believes that any reasonable possible change in the key assumptions would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash- generating unit.
i The Company has entered into an agreement for sale of Business undertaking at Thane as a going concern, on a slump sale basis for a consideration of Rs,17,800 lakhs, to be paid in installments, subject to fulfillment of the conditions precedent to the closing. The impact of the transaction would be reflected upon closure of the transaction. As on 31 March 2017, the Company has received an advance of Rs,15,000 lakhs as per the agreed terms and is disclosed under âOther Current Liabilitiesâ in note 25. Upon the conclusion of the Business Transfer Agreement (BTA), all current workmen at Thane Plant shall be transferred to the buyer so as to facilitate manufacturing operations. The proposed transfer of business undertaking at the Thane plant shall not impact the supply of any of the Company''s medicines to patients as alternate supply arrangements are already in place. The property, plant and equipment pertaining to the plant have been disclosed under this head.
ii The Company intends to dispose off the office premises having a carrying value of Rs,526.69 lakhs as it no longer intends to utilize the same in the next 12 months and accordingly classified the asset as held for sale. Search for a suitable buyer is underway. No impairment loss was recognized on reclassification of the said premises as held for sale and the Company expects the fair value less cost to sell to be higher than carrying amount.
d There has been no movement in the equity shares outstanding at the beginning and end of the year.
e The Company has a single class of equity shares. Accordingly all the equity shares rank equally with regard to voting rights, dividends and share in the Company''s residual assets.
f Pursuant to the Scheme of Amalgamation of erstwhile Wyeth Limited with the Company 1,59,06,292 shares of face value Rs,10 each were issued during the year ended 31 March 2015 to the shareholders of erstwhile Wyeth Limited for consideration other than cash. During the five reporting periods immediately preceding the reporting date, no shares have been issued by capitalization of reserves as bonus shares.
9b Other Equity
Nature and purpose of reserves
i Securities premium account
Securities premium account is used to record the premium on issue of shares. This reserve is utilised in accordance with the said provisions of The Companies Act, 2013. This account also includes the share premium on shares issued to the shareholders of erstwhile Wyeth limited, pursuant to the Scheme of Amalgamation.
ii General reserve
General reserve forms part of the retained earnings and is permitted to be distributed to shareholders as part of dividend.
iii Capital reserve
The share- based payment reserve is used to recognise the value of equity settled share-based payments provided to the employees by the Pfizer Inc. the ultimate holding company and the Company is not liable for any recharge of the amount. Refer Note no. 38 for further details on the plan.
The amount represents purchase consideration payable to John Wyeth and Brother Limited, UK for the transfer of its undertaking in India to the erstwhile Wyeth Limited. The amount has been retained as an interest free unsecured loan as per the directives of the RBI in this regard pending appropriate clearance from the Income tax authorities.
b) Nature of provisions:
Provision for sales returns:
These represents provision towards saleable and non-saleable return expected to be made by the customers till the product expiry. Provision towards saleable return represents products which are expected to be returned in saleable condition while non-saleable return represents expected returns of products which are either expired or damaged, such that the sale of such products may not be possible.
Provision for demnads under DPCO:
These represents provision recognized by the Company towards unsettled compensations claimed under DPCO from the Company. Provision for customs and central excise:
These represents provision recognized by the Company towards claims raised by Customs and Excise authorities.
b) Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the management. This has been relied upon by the auditors.
c) The above includes amouts due to related parties Rs,28,081.43 lakhs (31 March 2016 : Rs,20,452.18 lakhs; 1 April 2015 : Rs,22,702.97 lakhs)
d) All trade payables are âcurrent''. The Company''s exposure to currency and liquidity risks related to trade payables is disclosed in note 40.
The Company''s effective tax rates for the years ended 31 March 2017 and 2016 were 34.84% and 35.17%, respectively. Income tax expense was Rs,18,005.53 lakhs for the year ended 31 March 2017, as compared to income tax expense of Rs,16,544.17 lakhs for the year ended 31 March 2016.
The company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
Significant management judgement is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income and the period over which deferred income tax assets will be recovered. Any changes in future taxable income would impact the recoverability of deferred tax assets.
37 Employee benefits
(A) Defined contribution plan:
During the year, the Company has contributed Rs,43.45 lakhs (March 2016: Rs,43 lakhs) towards employee''s superannuation fund.
(B) Defined Benefit Plan:
(i) Compensated absences
All eligible employees can carry forward and avail / encash leave as per Company''s rules.
(ii) Provident fund
The employee''s provident fund is administered by a Trust created specifically for the purpose. The employee''s and employer''s contributions are transferred to the trust. All liabilities arising on account of provident fund payouts on resignation or retirement from service or death while in service are made from the trust.
(iii) Gratuity plan
In accordance with the provisions of the Payment of Gratuity Act, 1972, the Company has a defined benefit plan which provides for gratuity payments. The plan provides a lump sum gratuity payment to eligible employees at retirement or termination of their employment. The amounts are based on the respective employee''s last drawn salary and the years of employment with the Company.
Liabilities in respect of the gratuity plan are determined by an actuarial valuation, based upon which the Company makes annual contributions to the Group Gratuity cum Life Assurance Schemes administered by the LIC of India, a funded defined benefit plan for qualifying employees. Trustees administer the contributions made by the Company to the gratuity scheme.
i. Movement in net defined benefit asset/ (obligation)
The following table shows a reconciliation from the opening balances to the closing balances for net defined benefit (asset) liability and its components
Nature and extent of Employee Share-based Payment Plans
Pfizer Inc., USA, as a part of the Long-term incentive awards offers certain Common stock (shares) to the employees of the Company and its subsidiaries. These shares are offered through grant of awards which is a combination of stock options (ESOP) and restricted stock units (RSU) under the Pfizer Inc. 2004 Stock plan. As per the plan, the vesting period of the stock options and the restricted stock units is 3 years from the grant date. As per the plan, the stock options have a term of 10 years from the grant date. All stock options and restricted stock units are settled through equity.
The employees of the Company have been issued nil (March 2016: 90,426) share options, 22,247 (March 2016: 18,085 ) restricted stock units, 1,403 (March 2016: 1,554) portfolio performance shares and 110,467 (March 2016: nil) total shareholder return units under the Pfizer Inc 2004 Share Option Plan by Pfizer Inc. USA. The cost incurred by Pfizer Inc pursuant to the said Pfizer Inc 2004 share option Plan for the year ended 31 March 2017 amounts to Rs,510.01 lakhs which has been debited to the statement of profit and loss.
i) Employee stock options (ESOP)
Employee stock option provides the employees of Pfizer Limited with a right to receive a unit of the stock of the Ultimate Holding Company at a predetermined exercise price upon fulfillment of vesting conditions.
The weighted average grant date fair value of par value options granted under Category A during the years ended 31 March 2017 and 2016 was nil and USD 4.30 per option, respectively.
The weighted average grant date fair value of par value options granted under Category C during the years ended 31 March 2017 and 2016 was USD 30.59 and USD 34.59 per PPSs, respectively.
iv) Total Shareholder Return Units (TSRUs)
TSRUs are awarded to senior and other key management, and, beginning in 2016, to certain other employees. TSRUs entitle the holders to receive a number of shares of our common stock with a value equal to the difference between the defined settlement price and the grant price, plus the dividends accumulated during the five -year or seven -year term, if and to the extent the total value is positive.
Pfizer measures the value of TSRU grants as of the grant date using a Monte Carlo simulation model. The values determined through this fair value methodology generally are amortized on a straight-line basis over the vesting term into Cost of sales, Selling, informational and administrative expenses , and/or Research and development expenses, as appropriate.
b) Valuation of stock options
The fair value of stock options granted during the period has been measured using the Black-Scholes-Merton option pricing model at the date of the grant. The Black-Scholes-Merton option-pricing model includes assumptions regarding dividend yields, expected volatility, expected terms and risk free interest rates. The key inputs and assumptions used are as follows:
Share price: The closing price on NSE as on the date of grant has been considered for valuing the options granted.
Exercise Price: Exercise Price is the market price or face value or such other price as determined by the Remuneration and Compensation Committee.
Expected Volatility: The historical volatility of the stock till the date of grant has been considered to calculate the fair value of the options.
Expected Option Life: Expected Life of option is the period for which the Company expects the options to be live. The minimum life of a stock option is the minimum period before which the options cannot be exercised and the maximum life is the period after which the options cannot be exercised.
Expected dividends: Expected dividend yield has been calculated as an average of dividend yields for the four financial years preceding the date of the grant.
Risk free interest rate: The risk free interest rate on the date of grant considered for the calculation is the interest rate applicable for a maturity equal to the expected life of the options based on the zero coupon yield curve for Government Securities.
39 Leases
Operating leases a) Leases as lessee
The Company has taken certain facilities under operating lease arrangements. The lease can be terminated at the option of either parties by giving due notice. The rental expenses under operating leases âOther expensesâ in the statement of profit and loss.
Lease Income recognized in the statement of profit and loss for the year in respect of sub let property is Nil (March 2016: Rs,229.18 lakhs)
10 Financial instruments
1. Financial instruments - Fair values and measurements Accounting classification and fair values
The following table shows the carrying amounts and fair values of financial assets and financial liabilities as at 31 March 2017, including their levels are presented below. It does not include the fair value information for financial assets and financial liabilities not measured at fair value if their carrying amount is a reasonable approximation of fair value.
2. Financial Risk Management - Objective and Policies
(i) Financial Risk Management Framework
The Company has exposure to the following risks arising from financial instruments:
- Credit risk
- Liquidity risk
- Market risk
- Currency risk
The Company''s Board of Directors have overall responsibility for the establishment and oversight of the Company''s risk management framework.
The Company''s risk management is carried out by the management in consultation with the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific risk areas.
The 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 results of which are reported to the Audit Committee.
(ii) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and from its financing activities including deposits with banks and other financial instruments. The Company establishes an allowance for expected credit loss and impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
a) Trade and other receivables
The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs,12,078.28 lakhs as at 31 March 2017 and Rs,14,229.78 lakhs as at 31 March 2016.
Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in India.
The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry, the country and the state in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
b) Expected credit loss assessment for customers
The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgment.
Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses.
c) Cash and bank balances
The Company held cash and bank balances of Rs,1,52,308.83 lakhs as at 31 March 2017 (31 March 2016: Rs,1,02,464.96 lakhs, 1 April 2015 : Rs,60,928.70 lakhs). Credit risk on cash and cash equivalents is limited as these are generally held or invested in deposits with banks and financial institutions with good credit ratings.
d) Investments
There are no significant investments made by the Company and hence credit risk is not material.
(iii) 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 principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements.
(iv) Market risk
Market risk is the risk that changes in market prices - such as foreign exchange rates, interest rates and equity prices - will affect the Company''s income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables. We are exposed to market risk primarily related to foreign exchange rate risk. Thus, our exposure to market risk is a function of revenue generating and operating activities in foreign currency. The objective of market risk management is to avoid excessive exposure in our foreign currency revenues and costs.
(v) Currency risk
The Company is exposed to currency risk on account of its operations. The functional currency of the Company is Indian Rupee. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may continue to fluctuate substantially in the future.
Every percentage point depreciation / appreciation in the exchange rate between the Indian Rupee and US dollar would not have a significant impact on profit and loss for the year ended 31 March 2017 and 31 March 2016.
11 Capital Management
The Company''s policy is to maintain a strong capital base to sustain future development of the business.
The Company has adequate cash and bank balances and continues to remain debt-free. The company monitors its capital by a careful scrutiny of the cash and bank balances, and a regular assessment of any debt requirements. In the absence of any debt, the maintenance of debt equity ratio etc. may not be of any relevance to the Company.
12 Pricing Litigations - Contingencies
(a) Ox tetracycline and other formulations
In respect of certain price fixation Orders of 1981 of the Government of India, the Supreme Court vide its Order of 22 March 1993 held that, pending disposal of the Company''s Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs,87.61 lakhs (March 2016: Rs,87.61 lakhs), less Rs,19.90 lakhs (March 2016: Rs,19.90 lakhs) already deposited, with the Union of India before 15 May 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs,43.80 lakhs (March 2016: Rs,43.80 lakhs) with interest at the rate of 15% per annum will have to be paid to the Government.
(b) Multivitamin Formulations
In respect of certain price fixation Orders of 1986 of the Government of India, the Supreme Court vide its Order dated 3 December 1992, held that, pending disposal of the Company''s Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugned amount of Rs,98.00 lakhs (March 2016: Rs,98.00 lakhs) with the Union of India before 31 January 1993 which has been done. In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amount of Rs,49.00 lakhs (March 2016: Rs,49.00 lakhs) with interest at the rate of 15% per annum will have to be paid to the Government.
(c) Protinex
In yet another case, the Company had challenged in 1986 a price fixation Order of the Government of India by a Writ Petition before the High Court of Mumbai. The Hon''ble Court passed an ad interim and interim order staying the impugned order. The Petition, while it was still pending for hearing and final disposal, was withdrawn in 1989 on redressal of the Company''s grievances. After protracted correspondence on the subject, in 1993 the Government raised a demand of Rs,81.83 lakhs (March 2016: Rs,81.83 lakhs) on the Company for the period April 1986 to July 1989 and directed the Company to deposit the same into the Drug Prices Equalization Account (DPEA). Thereafter, the Drug Prices Liability Review (DPLR) Committee sent a letter dated 15 February 1996 seeking the Company''s submission/ representation against the reduced claim amount of Rs,33.87 lakhs (March 2016: Rs,33.87 lakhs)for the period April 1986 to August 1987 as intimated to the DPLR Committee by the Government of India. The Company has made its submissions to the DPLR Committee vide its letter of 29 March 1996 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case.
In the meantime, the Department of Chemicals and Petrochemicals vide their letter dated 11 February 1997 raised an additional demand of Rs,178.56 lakhs (March 2016: Rs,178.56 lakhs) for the earlier period of February 1984 to March 1986 over and above the revised claim of Rs,33.87 lakhs (March 2016: Rs,33.87 lakhs) for the period April 1986 to August 1987. Thus, the total demand raised now stands revised to Rs,212.43 lakhs (March 2016: Rs,212.43 lakhs). The DPLR Committee had, vide its letter dated 24 February 1997 invited the Company to make its submissions/ representations against the above said claim. The Company has made its submissions to the DPLR Committee vide its letter dated 14 May 1997 claiming that no amount whatsoever is due and payable having regard to the facts and relevant material of the case.
Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifications should be obtained from the Bombay High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any notice issued by the Government of India after 25 August 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date).
On a Notice of Motion filed by the Company in the said Writ Petition, the Bombay High Court has granted ad interim Order that âpending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No 49/1996 pending before the said Drug Prices Liability Review Committee be stayed.â
The Bombay High Court vide its judgement dated 22 December 2011 dismissed the Writ Petition filed by OPPI & IDMA and directed the companies who have been issued show cause notices to file appropriate replies and directed the government to pass appropriate orders accordingly.
(d) Vitamin and other formulations
The Government has arbitrarily determined the liability of the Company at Rs,1,466 lakhs (March 2016: Rs,1,466 lakhs) being the difference in price in respect of Vitamin and other formulations sold by the Company during the years 1983 to 1989. The Company has repudiated the liability on this account. The Company''s Solicitors have advised that the repudiation by the Company is legally sustainable. The Government has pursued the matter. The Company maintains its position that the claim by the Government is not legally sustainable.
(e) Chloramphenicol
The Government has arbitrarily determined the liability of the Company at Rs,145 lakhs (March 2016: Rs,145 lakhs) and Rs,14 lakhs (March 2016: Rs,14 lakhs) being the difference between the price of bulk drug Chloramphenicol powder and Chloramphenicol Palmitate respectively allowed in the formulation price and actual procurement price for the period 1979 to 1988. The Company has repudiated the liability on this account as advised by the Company''s Solicitors. The Company has also obtained a Stay order from the Hon''ble High Court of Mumbai against the demand.
Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on 17 November 1998 that clarifications should be obtained from the Bombay High Court on whether the Interim Stay granted in the Civil Writ Petition Number 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Notice issued by the Government of India after 25 August 1987 to any member of the OPPI or IDMA, initiating proceedings for recovery of an amount demanded in respect of a period prior to that date).
Similar applications were filed as in the matter of Protinex before the Bombay High Court in Writ Petition filed by OPPI & IDMA and similar order was passed i.e. Case No 23/95 pending before the said Drug Prices Liability Review (DPLR) Committee was stayed. The OPPI & IDMA Writ Petition have been disposed with the direction as aforesaid.
(f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan Limited (merged with Parke-Davis (India) Limited in 1988 and Parke - Davis (India) Limited merged with Pfizer Limited in 2003) had classified Isokin Tablets, Isokin Liquid and Pyridium tablets as decontrolled products under the DPCO 1979. The categorization was, however, challenged by the Government in 1984 and a demand of Rs,113 lakhs (March 2016: Rs,113 lakhs) was raised against the Company. Against this demand an excise duty set off of Rs,7 lakhs (March 2016: Rs,7 lakhs) was allowed to the Company and a final demand of Rs,106 lakhs (March 2016: Rs,106 lakhs) was raised in 1987.
The Company had deposited an amount of Rs,30 lakhs (March 2016: Rs,30 lakhs) in February 1987 and Rs,25 lakhs (March 2016:Rs,25 lakhs) in May 1990 totaling to Rs,55 lakhs (March 2016: Rs,55 lakhs) in full and final settlement of the demand, as per the arguments set forth by the Company. The Government subsequently raised a demand of Rs,117 lakhs (March 2016: Rs,117 lakhs) towards interest on principal demand. (i.e. interest of Rs,43 lakhs (March 2016: Rs,43 lakhs) for Pyridium for the period 1982 to August 1995 and Rs,74 lakhs (March 2016: Rs,74 lakhs) for Isokin for the period 1982 to June 1997.
The Company filed a Writ Petition in the Andhra Pradesh High Court in September 1997 for staying all further proceedings against the Company. The High Court stayed the demand in respect of collection of interest but directed the Company to deposit the balance demand of Rs,51 lakhs (March 2016: Rs,51 lakhs) (which amount was deposited in November 1997).
The said Writ Petition has been heard and disposed off by final judgement of the Hon''ble Andhra Pradesh High Court, on 15 April 2011. The Hon''ble High Court has inter alia set aside all the demand notices and further directed the respondents to refund the monies paid under the interim orders.
The Union of India has preferred a Special Leave Petition (SLP) before the Hon''ble Supreme Court against the above judgement. In view of there being a discrepancy in the English and Hindi Notification of DPCO, 1979 in para 13(5) of the DPCO, 1979 the SLP came to be allowed vide order dated 12 April 2013 setting aside the impugned judgment and restoring the writ petition to file, to conduct appropriate enquiry and for hearing and fresh disposal. The matter now stands remanded back to the Andhra Pradesh High Court.
(g) Multivitamin Formulations:
The Government has arbitrarily raised a demand of Rs,182.38 lakhs (March 2016: Rs,182.38 lakhs) on account of alleged overpricing of certain multivitamin formulations marketed by erstwhile Pharmacia Healthcare Limited (merged with Pfizer Limited) for the period 1983 to 1986. The Company has repudiated the liability on this account as advised by its solicitors. The Company filed a Writ Petition No.814 of 1992 in the High Court at Mumbai. The Supreme Court of India, in a SLP filed by the Company held that pending disposal of Writ Petition filed before the High Court at Mumbai, the Company shall furnish an undertaking in respect of 50% of its liability and shall deposit the balance 50% aggregating to Rs,91.19 lakhs (March 2016: Rs,91.19 lakhs). This amount has been deposited with the Government of India and is included under the head âLong Term Loans and Advancesâ.
Pursuant to a Transfer Petition (Civil) no 475-496 of 2003 filed under Article 139A(1) of the Constitution of India, all pending writ petitions in respect of Drug Prices Equalization Account (DPEA) liabilities are now to be transferred to the Supreme Court to be heard and finally decided by the Supreme Court of India. Consequently as a result of the said transfer petition, Writ Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now be heard and disposed of by the Supreme Court.
The Supreme Court however, by order dated 3 May 2010 disposed off the Transfer Petition, directing the concerned High Courts to take up the writ petitions before them and dispose them on merits.
The Writ Petitions filed before the Hon''ble Bombay High Court came up for hearing on 1 February 2013. The Hon''ble Bombay High Court was of the view that the Orders passed by the Union may be set aside and the Union may be directed to decide the matters afresh keeping all the issues and contentions open. Consequently, as directed by the Hon''ble Court draft minutes of the order were prepared and circulated to the Advocates of the Union for their perusal.
In view of the disagreement between the parties on the draft minutes, on 12 March 2013 the Union sought to press for their Notice of Motion for all the matters to be listed for final hearing. Thereafter, the Hon''ble Bombay High Court passed an Order for the matters to be listed in due course and rejected the Notice of Motion of the Union.
Thereafter, the Union made an application before the Hon''ble Chief Justice for having this group of matters to be assigned to a Division Bench for expeditious hearing. However, till date no Order has been passed in the matter.
In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the legal opinion being in favor of the Company, and based on the assessment of the Management, no further provision is considered necessary over and above the sum of Rs,198.37 lakhs (March 2016: Rs,198.37 lakhs) which has been paid off in earlier years.
The Company would continue to seek legal recourse in all the above matters.
(h) The Government of India had served demand notices on erstwhile Wyeth Limited in respect of its product, claiming that an amount of Rs,4,507.07 lakhs (March 2016: Rs,4,507.07 lakhs) inclusive of interest of Rs,3,186.55 lakhs (March 2016: Rs,3,186.55 lakhs) is payable in respect of price fixation under the Drugs (Prices Control) Order 1979. The Company has disputed the demand. Without prejudice to its contention, the Company paid the principal amount of Rs,1,320.52 lakhs (March 2016: Rs,1,320.52 lakhs). The Company carries a provision of Rs,1,469.08 lakhs (March 2016: Rs,1,469.08 lakhs) in respect of the said demand. The Company has furnished corporate bonds for amount aggregating to Rs,3,186.55 lakhs (March 2016: Rs,3,186.55 lakhs) for interest.
(i) The Government of India had served demand notices on erstwhile Wyeth Limited in respect of its product, claiming that an amount of Rs,1,069.35 lakhs (March 2016: Rs,1,069.35 lakhs) inclusive of interest of Rs,832.47 lakhs (March 2016: Rs,832.47 lakhs) is payable in respect of price fixation under the Drugs (Prices Control) Order 1979. The Company has disputed the demand. Without prejudice to its contention, the Company has paid principal amount of Rs,236.88 lakhs (March 2016: Rs,236.88 lakhs) under protest. The Company carries a cumulative provision of Rs,40.50 lakhs (March 2016: Rs,40.50 lakhs) in the books of accounts. Corporate bonds for amount aggregating to Rs,832.47 lakhs (March 2016: Rs,832.47 lakhs) for interest has been furnished.
(j) The Government of India had served demand notices on erstwhile Wyeth Limited in respect of its certain bulk drugs, claiming that an amount of Rs,331.24 lakhs (March 2016: Rs,331.24 lakhs) inclusive of interest Rs,187.34 lakhs (March 2016: Rs,187.34 lakhs) is payable into the Drug Prices Equalization Account (DPEA) under the Drugs (Prices Control) Order, 1979 on account of alleged unintended benefit enjoyed by the Company. The Company has disputed the demand. Without prejudice to its contentions, the Company has paid an amount of Rs,45 lakhs (March 2016: Rs,45 lakhs) under protest.
(k) The Government of India had served a demand notice on erstwhile Wyeth Limited claiming an amount of Rs,1,726.35 lakhs (March 2016: Rs,1,726.35 lakhs) inclusive of interest of Rs,134.90 lakhs (March 2016: Rs,134.90 lakhs) due thereon for alleged non compliance under the Drugs (Prices Control) Order, 1995 in respect of production of Prednisolone based formulations. Without prejudice to its contentions, the Company has provided and paid Rs,1,287.93 lakhs (March 2016: Rs,1,287.93 lakhs) and disputed the balance demand.
The demands stated in (h),(i),(j) and (k) above aggregate to Rs,7,634.06 lakhs (March 2016: Rs,7,634.06 lakhs) inclusive of interest of Rs,4,341.26 lakhs (March 2016: Rs,4,341.26 lakhs) . Based on the legal opinions obtained in respect of these cases, the Company is of the opinion that the estimated liability in respect of these cases involved shall not exceed Rs,1,509.57 lakhs (March 2016: Rs,1,509.57 lakhs) provided in the books of accounts.
(l) Other Pricing related disputes
The government had raised demands on account of alleged non-adherence of certain price notifications on four products marketed / traded by the Company. The total liability in respect of these demands amounted to Rs,1,511.32 lakhs (March 2016: Rs,1,511.32 lakhs) against which the Company has made a provision of Rs,499 lakhs (March 2016: Rs,499 lakhs).
Based on the legal opinions obtained, the Company is of the opinion that the estimated liability in respect of these cases involved shall not exceed the amount provided in books of accounts.
13 Related Party Transactions:
I. Names of related parties and description of relationships
A. Parties where control exists:
Ultimate holding company:
Pfizer Inc., USA
B. Companies collectively exercising significant influence:
Pfizer East India B.V., Netherlands Wyeth LLC, USA
Wyeth Holdings Corporation, USA John Wyeth & Brother Limited, UK Warner - Lambert Company, LLC, USA Parke - Davis & Company, LLC, USA Pharmacia Corporation, USA
[Collectively holding 63.92% of the aggregate of equity share capital of the Company]
C. Fellow Subsidiaries with whom transactions have taken place during the year
Pfizer Export Company., Ireland
Pfizer Global Trading, Ireland
Pfizer Singapore Trading Pte Limited (Belgium Branch)
Pfizer Products India Private Limited, India
Pfizer Overseas LLC
Pfizer Corporation Hongkong Limited
Pfizer Limited, UK
Pfizer Canada Inc
Pfizer Investment Co. Ltd.
Pfizer Asia Manufacturing Pte Ltd
Pfizer Development LP
Pfizer Pharmaceuticals Korea Limited
Whitehall International Inc
Pfizer Intl Inc, New York
John Wyeth & Brother Limited, (India Branch)
Pfizer Innovative Supply Point Intl BVBA, Belgium Pfizer International Operations, France Pfizer Service Company BVBA, Belgium Wyeth Pharmaceuticals India Private Limited
D. Key Managerial Personnel
S. Sridhar Managing Director (w.e.f 18 March 2016)
Wholetime Director (13 May 2015 to 17 March 2016)
Whole-time Director and CFO (till 12 May 2015)
Aijaz Tobaccowalla Managing Director (up to 15 October 2015)
Ravi Prakash Bhagavathula Chief Financial Officer (w.e.f 13 May 2015 to 29 January 2017)
Wholetime Director and Chief Financial Officer (w.e.f 30 January 2017)
Vivek Dhariwal Wholetime Director
Dr Lakshmi Nadkarni Wholetime Director (up to 4 September 2015)
Dr. Anurita Majumdar Wholetime Director (w.e.f 4 November 2016)
Mr. R. A. Shah Independent Director
Mr. Pradeep Shah Independent Director
Mr. Uday Khanna Independent Director
Mr. Sunil Lalbhai Independent Director
* Management considers the service tax, duty of excise, duty of customs, sales tax / VAT and Income tax demands received from the authorities are not tenable against the Company, and therefore no provision for these tax contingencies has been made.
# Refer note 42 for pricing litigations contingencies.
14 Segment reporting
The Company has only one segment which is Pharmaceuticals and primarily operates in domestic market. The Company''s Managing Director, reviews the operating performance of the Company as a whole on a periodic basis. Therefore disclosure relating to segments is not applicable and accordingly not made.
15 Subsequent Events
There are no significant subsequent events that would require adjustments or disclosures in the financial statements as on the balance sheet date.
The Board of Directors of the Company has recommended a normal dividend of 150% (''15 per equity share of ''10 each) and a special dividend of 50% (''5 per equity share of ''10 each) on account of exceptional income during the year, aggregating to total dividend of 200% (''20 per equity share of ''10 each) for the year ended 31 March 2017.
16. Corporate Social Responsibility (CSR)
As per Section 135 of the Companies Act, 2013, a Company, meeting the applicability threshold, need to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are education of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the Company as per the Act.
* figures in bracket is of previous year.
17. Exceptional items Current year :
Exceptional items for the year ended 31 March 2017 includes income from sale of property and guesthouse (net of related expenses) and income from assignment of trademarks, net of related expenses.
Previous year:
Exceptional items of ''988.65 includes Income from surrender of lease rights at Express towers (net of related expenses) and expenses incurred in relation to proposed transfer of business undertaking at Thane plant. Exceptional items for the year ended 31 March 2015 were in relation to voluntary retirement scheme / other related costs at Thane plant.
18 Discontinuation of Corex Cough Syrup formulation
The Company has undertaken a comprehensive review of its respiratory offerings in order to better cover a broader range of indications through an expanded product portfolio. The Company has decided to discontinue the manufacturing of Corex Cough Syrup formulation (Codeine Phosphate 10mg Chlopheniramine Maleate 4 mg). The Corex syrup recorded a sale of Rs,18,645.20 lakhs during the year ended 31 March 2017 (March 2016: Rs,27,452.44 lakhs).
Mar 31, 2015
1 Contingent liabilities and commitments (to the extent not provided
for)
31 March 2015 31 March 2014
(i) Contingent liabilities*
(a) Claimsnotacknowledgedasdebts 1,369.05 1,546.75
(b) Otherguarantees 754.04 486.79
(c) Other contingent liabilities
in respect of:
1. ExciseDuty 2,086.10 1,029.07
2. Customsduty 171.72 40.54
3. Sales tax / VAT 13,187.38 9,594.84
4. Servicetax 193.11 193.11
5. Incometax 25,139.08 23,958.41
6. Pending labour matters
contested invariouscourts 104.21 103.57
(ii) Commitments
Estimated amount of contracts
remaining to be executed on
capital account 2,453.46 292.61
and not provided for
* Management considers the service tax, excise duty, custom duty, sales
tax / VAT and income tax demands received from the authorities are
nottenable against the Companyand therefore no provision forthese tax
contingencies has been made.
2 Segmental information
After considering the Amalgamation of Wyeth Limited effective 1 April
2013, the Company has concluded that it has only one segment which is
Pharmaceuticals and the company primarily operates in domestic market,
therefore disclosure relating to segments is not applicable and
accordingly not made.
3 Disclosures as required by the Accounting Standard 18 on "Related
Party Disclosures" are given below:
I. Names of Related Parties and description of Relationships
A. Parties where control exists:
Ultimate holding company:
Pfizer Inc., USA
B. Holding Company:
Pfizer East India B.V. (from 3 March 2014to16 December 2014)
C. Companies collectively exercising significant influence:
Pfizer East India B.V. (w.e.f. 17 December 2014)
Wyeth LLC, USA (w.e.f. 17 December 2014)
Wyeth Holdings Corporation, USA (w.e.f. 17 December 2014)
John Wyeth & Brother Limited, UK ( w.e.f 17 December 2014)
Warner - Lambert Company, LLC, USA Parke - Davis & Company, LLC, USA
Pharmacia Corporation, USA
PfizerCorporation, Panama (upto 2 March 2014)
Pfizer Investments Netherlands, B. V. (upto 2 March 2014)
[Collectively holding 63.92% of the aggregate of equity
share capital of the Company]
D. Fellow Subsidiaries with whom transactions have taken place during
the year
Pfizer Laboratories (Proprietory) Limited, South Africa Pfizer
Enterprises SARL, Luxembourg Pfizer Export Company, Ireland
PfizerGlobal Trading, Ireland
Pfizer Singapore Trading Pte Limited (Belgium Branch)
Pfizer Inc. Phillipines
Pfizer Private Limited, Singapore
Pfizer Products India Private Limited, India
Pfizer Corporation Austria Gesellschaft m.b.H
Pfizer Overseas LLC
PfizerCorporation Hongkong Limited
Pfizer Limited, UK
Pfizer Canada Inc
PfizerAustralia Pty Limited
PfizerAsia Manufacturing Pte Ltd
Pfizer Development LP
Pfizer Egypt S.A.E.
Pfizer Pharmaceuticals Korea Limited Whitehall International Inc Wyeth
- Ayerst International LLC Wyeth Pharmaceuticals Inc Pfizer Service
Company BVBA Pfizerlnternational LLC, USA Pfizer, S.A. de C.V.
John Wyeth & Brother Limited, (India Branch) (w.e.f.17 December 2014)
Wyeth Limited (Amalgamation effected with the Company in the current
year)
Zoetis Pharmaceutical Research Private Limited (upto 24 June 2013)
Zoetis India Limited (upto 24 June 2013)
Zoetis Singapore PTE Ltd (upto 24 June 2013)
PfizerAnimal Pharma Private Limited (upto 24 June 2013)
E. Key Managerial Personnel
Aijaz Tobaccowalla - Managing Director
S. Sridhar - Wholetime Director and Chief Financial Officer (w.e.f 14
May 2013)
Vivek Dhariwal - Wholetime Director
Dr Lakshmi Nadkarni - Wholetime Director (w.e.f 14 February 2015)
4 Employee stock option scheme
The employees of the Company have been issued 86,712 (March 2014:
79,820) Share Options and 18,784 (March 2014:15,964) restricted stock
units under the Pfizer Inc 2004 Share Option Plan by Pfizer Inc. The
cost incurred by Pfizer Inc pursuant to the said Pfizer Inc 2004 Share
Option Plan for the year ended 31 March 2015 amounts to Rs.497.69 lakhs
(March 2014:Rs.282.29 lakhs). These amounts have not been charged to the
Company by Pfizer Inc.
5 Expenditure on research and development
6 Corporate Social Responsibility
As per section 135 of the Companies Act, 2013, the Company has
constituted a Corporate Social Responsibility (CSR) Committee. The
first set of initiatives were launched during the year where the
Company supported the Swachh Vidyalaya Campaign - a part of the
Government''s national Swachh Bharat program. The Company also committed
funds to build and refurbish sanitation facilities in 19 schools,
particularly for girl students. The employees of the Company also
volunteered in this program. The Company donated medicines to support
the flood relief work in Jammu & Kashmir. The total amount spent by the
Company towards CSR activities during the year is Rs.129.10 lakhs.
7 Previous year figures
Figures for the previous year are not comparable as the same does not
include the effect of the Scheme of Amalgamation. Figures forthe
previous years have been regrouped where necessary.
Mar 31, 2014
Background
The Company is a Public limited Company, incorporated under the Indian
Companies Act, 1913, having its registered office in Mumbai,
Maharashtra and is listed on BSE Ltd. and the National Stock Exchange
of India Limited. The Company is engaged in manufacturing, marketing,
trading and export of Pharmaceutical products. The Company has its own
manufacturing facility at Thane and various independent contract /
third party manufacturers based across the country. The Company sells
its products through independent distributors primarily in India.
1. Drugs Prices Equalisation Account (DPEA)
(a) Oxytetracycline and other formulations
In respect of certain price fixation Orders of 1981 of the Government
of India, the Supreme Court vide its Order of 22 March 1993 held that,
pending disposal of the Company''s Writ Petition in the High Court of
Mumbai, the Company may deposit 50% of the impugned amount of Rs. 87.61
lakhs (March 2013: Rs. 87.61 lakhs), less Rs. 19.90 lakhs (March 2013:
Rs. 19.90 lakhs) already deposited, with the Union of India before 15
May 1993 which has been done. In the event that the Company succeeds
before the High Court of Mumbai, this amount will be returned within
one month from the date of the decision of the High Court with interest
at the rate of 15% per annum. However, if the Company loses the Writ
Petition, the balance amount of Rs. 43.80 lakhs (March 2013: Rs. 43.80
lakhs) with interest at the rate of 15% per annum will have to be paid
to the Government.
(b) Multivitamin Formulations
In respect of certain price fixation Orders of 1986 of the Government
of India, the Supreme Court vide its Order dated 3 December 1992, held
that, pending disposal of the Company''s Writ Petition in the High Court
of Mumbai, the Company may deposit 50% of the impugned amount of Rs.
98.00 lakhs (March 2013: Rs. 98.00 lakhs) with the Union of India
before 31 January 1993 which has been done. In the event that the
Company succeeds before the High Court of Mumbai, this amount will be
returned within one month from the date of the decision of the High
Court with interest at the rate of 15% per annum. However, if the
Company loses the Writ Petition, the balance amount of Rs. 49.00 lakhs
(March 2013: Rs. 49.00 lakhs)with interest at the rate of 15% per annum
will have to be paid to the Government.
(c) Protinex
In yet another case, the Company had challenged in 1986 a price
fixation Order of the Government of India by a Writ Petition before the
High Court of Mumbai. The Honorable Court passed an ad interim and
interim order staying the impugned order. The Petition, while it was
still pending for hearing and final disposal, was withdrawn in 1989 on
redressal of the Company''s grievances. After protracted correspondence
on the subject, in 1993 the Government raised a demand of Rs. 81.83
lakhs (March 2013: Rs. 81.83 lakhs) on the Company for the period April
1986 to July 1989 and directed the Company to deposit the same into the
DPEA. Thereafter, the Drug Prices Liability Review (DPLR) Committee
sent a letter dated 15 February 1996 seeking the Company''s submission/
representation against the reduced claim amount of Rs. 33.87 lakhs
(March 2013: Rs. 33.87 lakhs) for the period April 1986 to August 1987
as intimated to the DPLR Committee by the Government of India. The
Company has made its submissions to the DPLR Committee vide its letter
of 29 March 1996 claiming that no amount whatsoever is due and payable
having regard to the facts and relevant material of the case.
In the meantime, the Department of Chemicals and Petrochemicals vide
their letter dated 11 February 1997 raised an additional demand of Rs.
178.56 lakhs (March 2013: Rs. 178.56 lakhs) for the earlier period of
February 1984 to March 1986 over and above the revised claim of Rs.
33.87 lakhs (March 2013: Rs. 33.87 lakhs) for the period April 1986 to
August 1987. Thus, the total demand raised now stands revised to Rs.
212.43 lakhs (March 2013: Rs. 212.43 lakhs). The DPLR Committee had,
vide its letter dated 24 February 1997 invited the Company to make its
submissions/ representations against the above said claim. The Company
has made its submissions to the DPLR Committee vide its letter dated 14
May 1997 claiming that no amount whatsoever is due and payable having
regard to the facts and relevant material of the case.
Pursuant to the submissions made by the Company, the DPLR Committee
directed by an Order on 17 November 1998 that clarifications should be
obtained from the Mumbai High Court on whether the Interim Stay granted
in the Civil Writ Petition Number 2368 of 1996 is applicable to this
matter. (This Writ Petition is filed by OPPI and IDMA jointly against
any Notice issued by the Government of India after 25 August 1987 to
any member of the OPPI or IDMA, initiating proceedings for recovery of
an amount demanded in respect of a period prior to that date).
On a Notice of Motion filed by the Company in the said Writ Petition,
the Mumbai High Court has granted ad interim Order that "pending the
hearing and final disposal of this Notice of Motion, further
proceedings in the said Case No 49/1996 pending before the said Drug
Prices Liability Review Committee be stayed."
The Bombay High Court vide its judgement dated 22 December, 2011
dismissed the Writ Petition filed by OPPI & IDMA and directed the
companies who have been issued show cause notices to file appropriate
replies and directed the government to pass appropriate orders
accordingly.
(d) Vitamin and other formulations
The Government has arbitrarily determined the liability of the Company
at Rs. 1466 lakhs (March 2013: Rs. 1466 lakhs) being the difference in
price in respect of Vitamin and other formulations sold by the Company
during the years 1983 to 1989. The Company has repudiated the liability
on this account. The Company''s Solicitors have advised that the
repudiation by the Company is legally sustainable. The Government has
pursued the matter. The Company maintains its position that the claim
by the Government is not legally sustainable.
(e) Chloramphenicol
The Government has arbitrarily determined the liability of the Company
at Rs. 145 lakhs (March 2013: Rs. 145 lakhs) and Rs. 14 lakhs (March
2013: Rs. 14 lakhs) being the difference between the price of bulk drug
Chloramphenicol powder and Chloramphenicol Palmitate respectively
allowed in the formulation price and actual procurement price for the
period 1979 to 1988. The Company has repudiated the liability on this
account as advised by the Company''s Solicitors. The Company has also
obtained a Stay order from the Honorable High Court of Mumbai against
the demand.
Pursuant to the submissions made by the Company, the DPLR Committee
directed by an Order on 17 November 1998 that clarifications should be
obtained from the Mumbai High Court on whether the Interim Stay granted
in the Civil Writ Petition Number 2368 of 1996 is applicable to this
matter. (This Writ Petition is filed by OPPI and IDMA jointly against
any Notice issued by the Government of India after 25 August 1987 to
any member of the OPPI or IDMA, initiating proceedings for recovery of
an amount demanded in respect of a period prior to that date).
Similar applications were filed as in the matter of Protinex before the
Bombay High Court in Writ Petition filed by OPPI & IDMA and similar
order was passed i.e Case No 23/95 pending before the said Drug Prices
Liability Review Committee was stayed. The OPPI & IDMA Writ Petition
have been disposed with the direction as aforesaid.
(f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan
Limited (merged with Parke-Davis (India) Limited in 1988 and Parke -
Davis (India) Limited merged with Pfizer Limited in 2003) had
classified Isokin tablets, Isokin liquid and Pyridium tablets as
decontrolled products under the DPCO 1979. The categorization was,
however, challenged by the Government in 1984 and a demand of Rs. 113
lakhs (March 2013: Rs. 113 lakhs) was raised against the Company.
Against this demand an excise duty set off of Rs. 7 lakhs (March 2013:
Rs. 7 lakhs) was allowed to the Company and a final demand of Rs. 106
lakhs (March 2013: Rs. 106 lakhs) was raised in 1987.
The Company had deposited an amount of Rs. 30 lakhs (March 2013: Rs. 30
lakhs) in February 1987 and Rs. 25 lakhs (March 2013: Rs. 25 lakhs) in
May 1990 totalling to an aggregate of Rs. 55 lakhs (March 2013: Rs. 55
lakhs) in full and final settlement of the demand, as per the arguments
set forth by the Company. The Government subsequently raised a demand
of Rs. 117 lakhs (March 2013: Rs. 117 lakhs) towards interest on
principal demand. (i.e. interest of Rs. 43 lakhs (March 2013: Rs. 43
lakhs) for Pyridium for the period 1982 to August 1995 and Rs. 74 lakhs
(March 2013: Rs. 74 lakhs) for Isokin for the period 1982 to June
1997).
The Company filed a Writ Petition in the Andhra Pradesh High Court in
September 1997 for staying all further proceedings against the Company.
The High Court stayed the demand in respect of collection of interest
but directed the Company to deposit the balance demand of Rs. 51 lakhs
(March 2013: Rs. 51 lakhs) (which amount was deposited in November
1997).
The said Writ Petition has been heard and disposed off by final
judgement of the Hon''ble Hyderabad High Court, on 15 April 2011. The
Hon''ble High Court has inter alia set aside all the demand notices and
further directed the Respondents to refund the monies paid under the
interim orders.
The Union of India has preferred a SLP before the Honorable Supreme
Court against the above judgement. In view of there being a
discrepancy in the English and Hindi Notification of DPCO, 1979 in para
13(5) of the DPCO, 1979 the Special Leave Petition came to be allowed
vide order dated 12 April, 2013 setting aside the impugned judgment and
restoring the writ petition to file, to conduct appropriate enquiry and
for hearing and fresh disposal. The matter now stands remanded back to
the Hyderabad High Court.
(g) Multivitamin Formulations:
The Government has arbitrarily raised a demand of Rs. 182.38 lakhs
(March 2013: Rs. 182.38 lakhs) on account of alleged overpricing of
certain multivitamin formulations marketed by erstwhile Pharmacia
Healthcare Limited (merged with Pfizer Limited) for the period 1983 to
1986. The Company has repudiated the liability on this account as
advised by its solicitors. The Company filed a Writ Petition No. 814 of
1992 in the High Court at Mumbai. The Supreme Court of India, in a
Special Leave Petition (SLP) filed by the Company held that pending
disposal of Writ Petition filed before the High Court at Mumbai, the
Company shall furnish an undertaking in respect of 50% of its liability
and shall deposit the balance 50% aggregating to Rs. 91.19 lakhs (March
2013: Rs. 91.19 lakhs). This amount has been deposited with the
Government of India and is included under the head "Long Term Loans and
Advances"
Pursuant to a Transfer Petition (Civil) no 475-496 of 2003 filed under
Article 139A(1) of the Constitution of India, all pending writ
petitions in respect of DPEA liabilities are now to be transferred to
the Supreme Court to be heard and finally decided by the Supreme Court
of India. Consequently as a result of the said transfer petition, Writ
Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now
be heard and disposed off by the Supreme Court.
The Supreme Court however, by order dated 3 May 2010 disposed off the
Transfer Petition, directing that the concerned High Courts to take up
the writ petitions before them and dispose them on merits.
The Writ Petitions filed before the Hon''ble Bombay High Court came up
for hearing in the Hon''ble Bombay High Court on February 1, 2013. The
Hon''ble Bombay High Court was of the view that the Orders passed by the
Union may be set aside and the Union may be directed to decide the
matters afresh keeping all the issues and contentions open.
Consequently, as directed by the Hon''ble Court draft minutes of the
order were prepared and circulated to the Advocates for the Union for
their perusal.
In view of the disagreement between the parties on the draft minutes,
on 12 March, 2013 the Union sought to press for their Notice of Motion
for all the matters to be listed for final hearing. Thereafter, the
Hon''ble Bombay High Court passed an Order for the matters to be listed
in due course and rejected the Notice of Motion of the Union.
Thereafter, the Union made an application before the Hon''ble Chief
Justice for having this group of matters to be assigned to a Division
Bench for expeditious hearing. However, till date no Order has been
passed in the matter. In view of matters (a), (b), (c), (e), (f) and
(g) being subjudice, the legal opinion being in favor of the Company,
and based on the assessment of the Management, no further provision is
considered necessary over and above the sum of Rs. 198.37 lakhs (March
2013: Rs. 198.37 lakhs) which has been paid off in earlier years.
The Company would continue to seek legal recourse in all the above
matters.
(h) Other Pricing related disputes
The government had raised various demands for alleged overcharging of
prices on batches manufactured prior to the effective date of price
notifications for certain products. The government had also raised
demands on account of alleged non-adherence of certain price
notifications on 4 products marketed / traded by the Company. The
total liability in respect of these demands amounted to Rs. 2074.97
lakhs against which the Company has made a provision of Rs. 761 lakhs
(March 2013: Rs. 280 lakhs).
Based on the legal opinions obtained during the year the Company is of
the opinion that the estimated liability in respect of these cases
involved shall not exceed the amount provided in books of accounts.
2. Contingent liabilities and Commitments (to the extent not provided
for)
31 March 2014 31 March 2013
(i) Contingent liabilities
(a) Claims not acknowledged as debt 1546.75 1573.65
(b) Other guarantees 486.79 811.35
(c) Other contingent liabilities in
respect of:
1. Excise Duty 1029.07 1028.97
2. Customs duty 40.54 40.54
3. Sales tax / VAT 9594.84 9674.60
4. Service tax 193.11 193.11
5. Income tax 23958.41 29326.72
6. Pending labour matters
contested in various courts 103.57 103.57
(ii) Commitments
Estimated amount of contracts remaining to be executed on capital
account 292.61 0.64 and not provided for
3. Exceptional items
The company had spun-off its animal health business operations on April
2, 2012 to Pfizer Animal Pharma Private Limited (''PAPPL''). Accordingly,
the gain of Rs. 38252 lakhs arising on the slump sale of the said
business was disclosed as ''Exceptional items'' during the year ended
March 31, 2013. The Company had transferred on December 7, 2012, its
100% ownership in the wholly owned subsidiary, Pfizer Animal Pharma
Private Limited to Zoetis India Limited (erstwhile Pfizer Animal Health
India Limited), the then 100% indirect subsidiary of Pfizer Inc. for a
consideration of Rs. 47160 lakhs. The gain on sale of investment of
Rs. 3160 lakhs was disclosed as exceptional item for the year ended
March 31, 2013.
The Company provides transitional support to PAPPL including support
for manufacture of certain Animal Health products. The revenue for the
year ended March 31, 2014 includes Rs. 4247 lakhs (March 31, 2013: Rs.
3292 lakhs) for sale of such products. Further the Company also
provides consignment selling agent services (CSA) and other support
functions. Other operating income for the year ended March 31, 2014
includes Rs. 1067 lakhs (March 31, 2013: Rs. 1278 lakhs) towards such
CSA commission and support services.
Considering the above spin-off in April of previous year, the Company
has concluded that beginning current year April 1, 2013 it has only one
segment which is Pharmaceuticals and therefore disclosure relating to
segments is not applicable and accordingly not made.
4. Employee stock option scheme
The employees of the Company have been issued 79,820 (March 2013:
1,13,163) Share Options and 15,964 (March 2013: 22,634 ) restricted
stock units under the Pfizer Inc 2004 Share Option Plan by Pfizer Inc.
The cost incurred by Pfizer Inc pursuant to the said Pfizer Inc 2004
Share Option Plan for the year ended 31 March 2014 amounts to Rs.
282.29 lakhs (March 2013: Rs. 237.07 lakhs). These amounts have not
been charged to the Company by Pfizer Inc.
5. Merger
The Board of Directors ("The Board") approved the Scheme of
Amalgamation of Wyeth Limited with the Company ("the Scheme") on
November 23, 2013. The Board has approved a share swap ratio of 7
equity shares of the face value of Rs. 10 each fully paid up of Pfizer
Limited for every 10 equity shares of the face value of Rs. 10 each
fully paid up of Wyeth Limited. In terms of the Scheme, the Appointed
Date is April 1, 2013. The Scheme of Amalgamation has been unanimously
approved by the equity shareholders (100% in number and 100% in value)
of those present and voting at the Court Convened Meeting held on April
16, 2014. The said Scheme has also been approved by an overwhelming
majority of the minority shareholders by way of postal ballot and
e-voting in terms of SEBI Circulars. Pending all other statutory
approvals, no effect to the above Scheme has been given in the
financial statements.
6. Previous year figures
Figures for the previous year have been regrouped where necessary.
Mar 31, 2013
Background
The Company is a Public limited Company, incorporated under the Indian
Companies Act, 1913, having its registered office in Mumbai,
Maharashtra and is listed on BSE Ltd. and the National Stock Exchange
of India Limited. The Company is engaged in manufacturing, marketing,
trading and export of Pharmaceutical products. The Company has its own
manufacturing facility at Thane and various independent contract/third
party manufacturers based across the country. The Company sells its
products through independent distributors primarily in India.
1 Discontinuing operations
The Company incorporated Pfizer Animal Pharma Private Limited
("PAPPL"), Wholly-owned Subsidiary on 10 February, 2012 for temporary
purpose in order to spin-off its animal health division in line with
Pfizer Global Strategy and as a pre- step for subsequent sale to a
wholly-owned subsidiary of Pfizer Inc (" Ultimate Holding Company").
The business operations of animal health division was transferred to
the above subsidiary on 2 April, 2012 by way of slump sale for a
consideration of Rs.42,428 lakhs. The gain of Rs.38,252 lakhs on the
slump sale of the said business operation has been disclosed as
exceptional income during the year.
Profit after tax attributable to discontinuing operations of the
Company has been calculated using the effective tax rate of the Company
The Company has transferred on 7 December, 2012, its 100% ownership in
the wholly owned subsidiary, Pfizer Animal Pharma Private Limited to
Pfizer Animal Health India Limited, a 100% indirect subsidiary of
Pfizer Inc. for a consideration of Rs.47,160 lakhs. The gain on sale of
investment of Rs.3,160 lakhs is disclosed as exceptional item during
the year.
In terms of para 11 (a) of AS 21, the Company is not required to
consolidate the accounts of its wholly-owned subsidiary company, Pfizer
Animal Pharma Private Limited, since the control of the same was held
for a temporary period as a pre- step for subsequent sale.
2 Drugs Prices Equalisation Account (DPEA)
(a) Oxytetracycline and other formulations
In respect of certain price fixation Orders of 1981 of the Government
of India, the Supreme Court vide its Order of 22 March 1993 held that,
pending disposal of the Company''s Writ Petition in the High Court of
Mumbai, the Company may deposit 50% of the impugned amount of Rs.87.61
lakhs, less Rs.19.90 lakhs already deposited, with the Union of India
before 15 May 1993 which has been done. In the event that the Company
succeeds before the High Court of Mumbai, this amount will be returned
within one month from the date of the decision of the High Court with
interest at the rate of 15% per annum. However, if the Company loses
the Writ Petition, the balance amount of Rs.43.80 lakhs with interest
at the rate of 15% per annum will have to be paid to the Government.
(b) Multivitamin Formulations
In respect of certain price fixation Orders of 1986 of the Government
of India, the Supreme Court vide its Order dated 3 December 1992, held
that, pending disposal of the Company''s Writ Petition in the High Court
of Mumbai, the Company may deposit 50% of the impugned amount of
Rs.98.00 lakhs with the Union of India before 31 January 1993 which has
been done. In the event that the Company succeeds before the High Court
of Mumbai, this amount will be returned within one month from the date
of the decision of the High Court with interest at the rate of 15% per
annum. However, if the Company loses the Writ Petition, the balance
amount of Rs.49.00 lakhs with interest at the rate of 15% per annum
will have to be paid to the Government.
(c) Protinex
In yet another case, the Company had challenged in 1986 a price
fixation Order of the Government of India by a Writ Petition before the
High Court of Mumbai. The Honorable Court passed an ad interim and
interim order staying the impugned order. The Petition, while it was
still pending for hearing and final disposal, was withdrawn in 1989 on
redressal of the Company''s grievances. After protracted correspondence
on the subject, in 1993 the Government raised a demand of Rs.81.83
lakhs on the Company for the period April 1986 to July 1989 and
directed the Company to deposit the same into the DPEA. Thereafter, the
Drug Prices Liability Review (DPLR) Committee sent a letter dated 15
February 1996 seeking the Company''s submission/ representation against
the reduced claim amount of Rs.33.87 lakhs for the period April 1986 to
August 1987 as intimated to the DPLR Committee by the Government of
India. The Company has made its submissions to the DPLR Committee vide
its letter of 29 March 1996 claiming that no amount whatsoever is due
and payable having regard to the facts and relevant material of the
case.
In the meantime, the Department of Chemicals and Petrochemicals vide
their letter dated 11 February 1997 raised an additional demand of
Rs.178.56 lakhs for the earlier period of February 1984 to March 1986
over and above the revised claim of Rs.33.87 lakhs for the period April
1986 to August 1987. Thus, the total demand raised now stands revised
to Rs.212.43 lakhs. The DPLR Committee had, vide its letter dated 24
February 1997 invited the Company to make its submissions/
representations against the above said claim. The Company has made its
submissions to the DPLR Committee vide its letter dated 14 May 1997
claiming that no amount whatsoever is due and payable having regard to
the facts and relevant material of the case.
Pursuant to the submissions made by the Company, the DPLR Committee
directed by an Order on 17 November 1998 that clarifications should be
obtained from the Mumbai High Court on whether the Interim Stay granted
in the Civil Writ Petition Number 2368 of 1996 is applicable to this
matter. (This Writ Petition is filed by OPPI and IDMA jointly against
any Notice issued by the Government of India after 25 August 1987 to
any member of the OPPI or IDMA, initiating proceedings for recovery of
an amount demanded in respect of a period prior to that date).
On a Notice of Motion filed by the Company in the said Writ Petition,
the Mumbai High Court has granted ad interim Order that "pending the
hearing and final disposal of this Notice of Motion, further
proceedings in the said Case No 49/1996 pending before the said Drug
Prices Liability Review Committee be stayed"
The Bombay High Court vide its judgement dated 22 December, 2011
dismissed the Writ Petition filed by OPPI & IDMA and directed the
companies who have been issued show cause notices to file appropriate
replies and directed the government to pass appropriate orders
accordingly.
(d) Vitamin and other formulations
The Government has arbitrarily determined the liability of the Company
at Rs.1466 lakhs being the difference in price in respect of Vitamin
and other formulations sold by the Company during the years 1983 to
1989. The Company has repudiated the liability on this account. The
Company''s Solicitors have advised that the repudiation by the Company
is legally sustainable. The Government has pursued the matter. The
Company maintains its position that the claim by the Government is not
legally sustainable.
(e) Chloramphenicol
The Government has arbitrarily determined the liability of the Company
at Rs.145 lakhs and Rs.14 lakhs being the difference between the price
of bulk drug Chloramphenicol powder and Chloramphenicol Palmitate
respectively allowed in the formulation price and actual procurement
price for the period 1979 to 1988. The Company has repudiated the
liability on this account as advised by the Company''s Solicitors. The
Company has also obtained a Stay order from the Honorable High Court of
Mumbai against the demand.
Pursuant to the submissions made by the Company, the DPLR Committee
directed by an Order on 17 November 1998 that clarifications should be
obtained from the Mumbai High Court on whether the Interim Stay granted
in the Civil Writ Petition Number 2368 of 1996 is applicable to this
matter. (This Writ Petition is filed by OPPI and IDMA jointly against
any Notice issued by the Government of India after 25 August 1987 to
any member of the OPPI or IDMA, initiating proceedings for recovery of
an amount demanded in respect of a period prior to that date).
On a Notice of Motion filed by the Company in the said Writ Petition,
the Mumbai High Court has granted ad interim Order that "pending the
hearing and final disposal of this Notice of Motion, further
proceedings in the said Case No 23/95 pending before the said Drug
Prices Liability Review Committee be stayed"
The Bombay High Court vide its judgement dated 22 December, 2011
dismissed the Writ Petition filed by OPPI & IDMA and directed the
companies who have been issued show cause notices to file appropriate
replies and directed the government to pass appropriate orders
accordingly.
(f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan
Limited (merged with Parke-Davis (India) Limited in 1988 and Parke -
Davis (India) Limited merged with Pfizer Limited in 2003) had
classified ISOKIN TABLETS, ISOKIN LIQUID AND PYRIDIUM TABLETS as
decontrolled products under the DPCO 1979. The categorization was,
however, challenged by the Government in 1984 and a demand of Rs.113
lakhs was raised against the Company. Against this demand an excise
duty set off of Rs.7 lakhs was allowed to the Company and a final
demand of Rs.106 lakhs was raised in 1987.
The Company had deposited an amount of Rs.30 lakhs in February 1987 and
Rs.25 lakhs in May 1990 totaling to an aggregate of Rs.55 lakhs in full
and final settlement of the demand, as per the arguments set forth by
the Company. The Government subsequently raised a demand of Rs.117
lakhs towards interest on principal demand. (i.e. interest of Rs.43
lakhs for Pyridium for the period 1982 to August 1995 and Rs.74 lakhs
for Isokin for the period 1982 to June 1997).
The Company filed a Writ Petition in the Andhra Pradesh High Court in
September 1997 for staying all further proceedings against the Company.
The High Court stayed the demand in respect of collection of interest
but directed the Company to deposit the balance demand of Rs.51 lakhs
(which amount was deposited in November 1997).
The said Writ Petition has been heard and disposed off by final
judgement of the Hon''ble Hyderabad High Court, on 15 April 2011. The
Hon''ble High Court has inter alia set aside all the demand notices and
further directed the Respondents to refund the monies paid under the
interim orders.
The Union of India has preferred a SLP before the Honorable Supreme
Court against the above judgement. In view of there being a discrepancy
in the English and Hindi Notification of DPCO, 1979 in para 13(5) of
the DPCO, 1979 the Special Leave Petition came to be allowed vide order
dated 12th April, 2013 setting aside the impugned judgment and
restoring the writ petition to file, to conduct appropriate enquiry and
for hearing and fresh disposal. The matter now stands remanded back to
the Hyderabad High Court."
(g) Multivitamin Formulations:
The Government has arbitrarily raised a demand of Rs.182.38 lakhs on
account of alleged overpricing of certain multivitamin formulations
marketed by erstwhile Pharmacia Healthcare Limited (merged with Pfizer
Limited) for the period 1983 to 1986. The Company has repudiated the
liability on this account as advised by its solicitors. The Company
filed a Writ Petition No. 814 of 1992 in the High Court at Mumbai. The
Supreme Court of India, in a Special Leave Petition (SLP) filed by the
Company held that pending disposal of Writ Petition filed before the
High Court at Mumbai, the Company shall furnish an undertaking in
respect of 50% of its liability and shall deposit the balance 50%
aggregating to Rs.91.19 lakhs. This amount has been deposited with the
Government of India and is included under the head "Long Term Loans and
Advances"
Pursuant to a Transfer Petition (Civil) no 475-496 of 2003 filed under
Article 139A(1) of the Constitution of India, all pending writ
petitions in respect of DPEA liabilities are now to be transferred to
the Supreme Court to be heard and finally decided by the Supreme Court
of India. Consequently as a result of the said transfer petition, Writ
Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now
be heard and disposed off by the Supreme Court.
The Supreme Court however, by order dated 3 May 2010 disposed off the
Transfer Petition, directing that the concerned High Courts to take up
the writ petitions before them and dispose them on merits.
The Writ Petitions filed before the Hon''ble Bombay High Court came up
for hearing in the Hon''ble Bombay High Court on February 1, 2013. The
Hon''ble Bombay High Court was of the view that the Orders passed by the
Union may be set aside and the Union may be directed to decide the
matters afresh keeping all the issues and contentions open.
Consequently, as directed by the Hon''ble Court draft Minutes of the
Order were prepared and circulated to the Advocates for the Union for
their perusal.
In view of the disagreement between the parties on the draft Minutes,
on 12th March, 2013 the Union sought to press for their Notice of
Motion for all the matters to be listed for final hearing. Thereafter,
the Hon''ble Bombay High Court passed an Order for the matters to be
listed in due course and rejected the Notice of Motion of the Union.
Thereafter, the Union made an application before the Hon''ble Chief
Justice for having this group of matters to be assigned to a Division
Bench for expeditious hearing. However, till date no Order has been
passed in the matter.
In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the
legal opinion being in favor of the Company, and based on the
assessment of the Management, no further provision is considered
necessary over and above the sum of Rs.198.37 lakhs which has been paid
off in earlier years.
The Company would continue to seek legal recourse in all the above
matters.
3 Contingent liabilities and commitments (to the extent not provided
for)
31 March 2013 31 March 2012
(i) Contingent liabilities
(a) Claims against the Company
not acknowledged as debt Amount Amount
unascertainable unascertainable
(b) Other guarantees 811.35 370.48
(c) Other contingent
liabilities in respect of:
1. Excise Duty 1028.97 1037.67
2. Customs duty 40.54 40.54
3. Sales tax 9674.60 4150.32
4. Service tax 193.11 193.11
5. Income tax 29326.72 29070.00
6. Pending labour matters
contested in various courts 103.57 103.57
(ii) Commitments
Estimated amount of contracts
remaining to be executed on capital 0.64 24.30
account and not provided for
4 Disclosures as required by the Accounting Standard 18 on "Related
Party Disclosures" are given below: I. Names of Related Parties and
description of Relationships
A. Parties where control exists:
Ultimate holding company:
Pfizer Inc., USA
Companies collectively exercising significant influence:
Pfizer Corporation, Panama
Warner-Lambert Company, LLC, USA
Parke-Davis & Company, LLC, USA
Pharmacia Corporation, USA
Pfizer Investments Netherlands, B.V.
[Collectively holding 70.75% of the aggregate of equity share capital
of the Company]
B. Fellow Subsidiaries with whom transactions have taken place during
the year
Pfizer Asia Manufacturing Pte Limited, Singapore
Pfizer Laboratories(Proprietory)Limited South Africa
Pfizer Enterprises SARL, Luxembourg
Pfizer Export Company., Ireland
Pfizer Global Trading, Ireland
Pfizer Limited, United Kingdom
Pfizer Pharmaceutical India Private Limited., India
Pfizer Singapore Trading Pte Limited, Singapore
Pfizer Limited,Phillipines
Pfizer Private Limited.,Singapore
Pfizer Products India Private Limited, India
Pfizer Products Inc, USA
Pfizer Animal Health India Limited, India
AHP Manufacturing B.V. India
Wyeth Limited, India
Pfizer Suzhou Animal Health Private Limited
PAH Singapore PTE Ltd
Pfizer (Malaysia) Sdn Bhd
Pfizer Animal Pharma Private Limited
C. Subsidiaries with whom transactions have taken place during the
year Pfizer Animal Pharma Private Limited (ceased to be subsidiary
w.e.f 7 Dec 2012)
D. Executive Committee Members
* Kewal Handa (resigned w.e.f 15 Aug 2012)
* Aijaz Tobaccowalla (w.e.f 16 Aug 2012)
* Sunil Madhok (retired w.e.f 31 January 2013)
Chandrashekhar Nilkanth Potkar (Dr.)
Shiva P. Nair
Partha S. Ghosh
S. Venkatesh
Pradeep Patni (resigned w.e.f 13 June 2012)
Samir S. Kazi
* S. Sridhar (w.e.f 14 May 2013)
Suresh Subramanian
* Vivek Dhariwal (w.e.f 21 May 2012)
Sarita Bahl (Ms.)
Lakshmi Nadkarni (Dr.) (Mrs.)
* Executive Directors on the Board
5 Employee stock option scheme
The employees of the Company have been issued 1,13,163(March 2012:
78795) Share Options and 22,634 (March 2012: 15,763 ) restricted stock
units under the Pfizer Inc 2004 Share Option Plan by Pfizer Inc. The
cost incurred by Pfizer Inc pursuant to the said Pfizer Inc 2004 Share
Option Plan for the year ended 31 March 2013 amounts to Rs.237.07 lakhs
(March 2012: Rs.162.61 lakhs). These amounts have not been charged to
the Company by Pfizer Inc.
6 Previous year figures
The sale of animal health business has been effective 2nd April, 2012,
therefore the figures for the previous year are not comparable. Figures
for previous year have been regrouped where necessary.
Mar 31, 2012
1.1 During the five reporting periods immediately preceeding the
reporting date no shares have been issued by capitalisaton of reserves
as bonus shares or for consideration other than cash.
1.2 The Company has a single class of equity shares. Accordingly all
the equity shares rank equally with regard to voting rights, dividends
and shares in the Company's residual assets.
3.1 Sale of services include amounts representing income from clinical
research services aggregating Rs2038.61 lakhs (March 2011: Rs3620.76
lakhs and Rs5468.27 lakhs (March 2011: Rs3771.66 lakhs) representing
support services rendered.
Currency: Rs in lakhs Defined contribution plan:
During the year / period, the Company has contributed Rs24.30 lakhs
(March 2011: Rs27.80 lakhs) towards employees' superannuation fund.
General description of significant defined benefit plans
i) Gratuity plan
Gratuity is payable to all eligible employees of the Company on
superannuation, death and permanent disablement, as per Company's
rules or as per provisions of the Payment of Gratuity Act, 1972.
ii) Leave plan
All eligible employees can carry forward and avail / encash leave as
per Company's rules subject to a maximum accumulation of 180 / 170 / 90
days in case of priviledge leave and 75 / 70 days in case of sick leave
as per Company's rules.
iii) Provident fund
The employee's provident fund is administered by a Trust created
specifically for the purpose. The employee's and employer's
contributions are transferred to the trust. All liabilities arising on
account of provident fund payouts on resignation or retirement from
service or death while in service are made from the trust.
4 Discontinuing operations
The Company incorporated Pfizer Animal Pharma Private Limited
("PAPPL"), Wholly-owned Subsidiary on 10 February, 2012 for
temporary purpose in order to spin-off its animal health business in
line with Pfizer Global Strategy and as a pre- step for subsequent sale
to a wholly-owned subsidiary of Pfizer Inc (" Ultimate Holding
Company").
The Company had entered into a Business Transfer Agreement with PAPPL
for sale / transfer of the animal health business on a slump sale
basis. The transfer of the said business was completed on 2 April, 2012
for a consideration of Rs44000 lakhs, subject to adjustment for working
capital.
Profit after tax attributable to discontinuing operations of the
Company has been calculated using the effective tax rate of the
Company.
In terms of para 11 (a) of AS 21, the Company is not required to
consolidate the accounts of its wholly-owned subsidiary company, Pfizer
Animal Pharma Private Limited, since the control of the same is held
for a temporary period as a pre-step for subsequent sale.
5 Drugs Prices Equalisation Account (DPEA)
(a) Oxytetracycline and other formulations
In respect of certain price fixation Orders of 1981 of the Government
of India, the Supreme Court vide its Order of 22 March 1993 held that,
pending disposal of the Company's Writ Petition in the High Court of
Mumbai, the Company may deposit 50% of the impugned amount of Rs87.61
lakhs, less Rs19.90 lakhs already deposited, with the Union of India
before 15 May 1993 which has been done. In the event that the Company
succeeds before the High Court of Mumbai, this amount will be returned
within one month from the date of the decision of the High Court with
interest at the rate of 15% per annum. However, if the Company loses
the Writ Petition, the balance amount of Rs43.80 lakhs with interest at
the rate of 15% per annum will have to be paid to the Government.
(b) Multivitamin Formulations
In respect of certain price fixation Orders of 1986 of the Government
of India, the Supreme Court vide its Order dated 3 December 1992, held
that, pending disposal of the Company's Writ Petition in the High Court
of Mumbai, the Company may deposit 50% of the impugned amount of Rs98.00
lakhs with the Union of India before 31 January 1993 which has been
done. In the event that the Company succeeds before the High Court of
Mumbai, this amount will be returned within one month from the date of
the decision of the High Court with interest at the rate of 15% per
annum. However, if the Company loses the Writ Petition, the balance
amount of Rs49.00 lakhs with interest at the rate of 15% per annum will
have to be paid to the Government.
(c) Protinex
In yet another case, the Company had challenged in 1986 a price
fixation Order of the Government of India by a Writ Petition before the
High Court of Mumbai. The Honorable Court passed an ad interim and
interim order staying the impugned order. The Petition, while it was
still pending for hearing and final disposal, was withdrawn in 1989 on
redressal of the Company's grievances. After protracted correspondence
on the subject, in 1993 the Government raised a demand of Rs81.83 lakhs
on the Company for the period April 1986 to July 1989 and directed the
Company to deposit the same into the DPEA. Thereafter, the Drug Prices
Liability Review (DPLR) Committee sent a letter dated 15 February 1996
seeking the Company's submission/ representation against the reduced
claim amount of Rs33.87 lakhs for the period April 1986 to August 1987
as intimated to the DPLR Committee by the Government of India. The
Company has made its submissions to the DPLR Committee vide its letter
of 29 March 1996 claiming that no amount whatsoever is due and payable
having regard to the facts and relevant material of the case.
In the meantime, the Department of Chemicals and Petrochemicals vide
their letter dated 11 February 1997 raised an additional demand of
Rs178.56 lakhs for the earlier period of February 1984 to March 1986
over and above the revised claim of Rs33.87 lakhs for the period April
1986 to August 1987. Thus, the total demand raised now stands revised
to Rs212.43 lakhs. The DPLR Committee had, vide its letter dated 24
February 1997 invited the Company to make its submissions/
representations against the above said claim. The Company has made its
submissions to the DPLR Committee vide its letter dated 14 May 1997
claiming that no amount whatsoever is due and payable having regard to
the facts and relevant material of the case.
Pursuant to the submissions made by the Company, the DPLR Committee
directed by an Order on 17 November 1998 that clarifications should be
obtained from the Mumbai High Court on whether the Interim Stay granted
in the Civil Writ Petition Number 2368 of 1996 is applicable to this
matter. (This Writ Petition is filed by OPPI and IDMA jointly against
any Notice issued by the Government of India after 25 August 1987 to
any member of the OPPI or IDMA, initiating proceedings for recovery of
an amount demanded in respect of a period prior to that date).
On a Notice of Motion filed by the Company in the said Writ Petition,
the Mumbai High Court has granted ad interim Order that "pending the
hearing and final disposal of this Notice of Motion, further
proceedings in the said Case No 49/ 1996 pending before the said Drug
Prices Liability Review Committee be stayed."
The Bombay High Court vide its judgement dated 22 December, 2011
dismissed the Writ Petition filed by OPPI & IDMA and directed the
Companies who have been issued show cause notices to file appropriate
replies and directed the government to pass appropriate orders
accordingly.
(d) Vitamin and other formulations
The Government has arbitrarily determined the liability of the Company
at Rs1466 lakhs being the difference in price in respect of Vitamin and
other formulations sold by the Company during the years 1983 to 1989.
The Company has repudiated the liability on this account. The
Company's Solicitors have advised that the repudiation by the Company
is legally sustainable. The Government has pursued the matter. The
Company maintains its position that the claim by the Government is not
legally sustainable.
(e) Chloramphenicol
The Government has arbitrarily determined the liability of the Company
at Rs145 lakhs and Rs14 lakhs being the difference between the price of
bulk drug Chloramphenicol powder and Chloramphenicol Palmitate
respectively allowed in the formulation price and actual procurement
price for the period 1979 to 1988. The Company has repudiated the
liability on this account as advised by the Company's Solicitors. The
Company has also obtained a Stay order from the Honorable High Court of
Mumbai against the demand.
Pursuant to the submissions made by the Company, the DPLR Committee
directed by an Order on 17 November 1998 that clarifications should be
obtained from the Mumbai High Court on whether the Interim Stay granted
in the Civil Writ Petition Number 2368 of 1996 is applicable to this
matter. (This Writ Petition is filed by OPPI and IDMA jointly against
any Notice issued by the Government of India after 25 August 1987 to
any member of the OPPI or IDMA, initiating proceedings for recovery of
an amount demanded in respect of a period prior to that date).
On a Notice of Motion filed by the Company in the said Writ Petition,
the Mumbai High Court has granted ad interim Order that "pending the
hearing and final disposal of this Notice of Motion, further
proceedings in the said Case No 23/ 95 pending before the said Drug
Prices Liability Review Committee be stayed".
The Bombay High Court vide its judgement dated 22 December, 2011
dismissed the Writ Petition filed by OPPI & IDMA and directed the
Companies who have been issued show cause notices to file appropriate
replies and directed the government to pass appropriate orders
accordingly.
(f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan
Limited (merged with Parke-Davis (India) Limited in 1988 and Parke -
Davis (India) Limited merged with Pfizer Limited in 2003) had
classified ISOKIN TABLETS, ISOKIN LIQUID AND PYRIDIUM TABLETS as
decontrolled products under the DPCO 1979. The categorization was,
however, challenged by the Government in 1984 and a demand of Rs113
lakhs was raised against the Company. Against this demand an excise
duty set off of Rs7 lakhs was allowed to the Company and a final demand
of Rs106 lakhs was raised in 1987.
The Company had deposited an amount of Rs30 lakhs in February 1987 and
Rs25 lakhs in May 1990 totaling to an aggregate of Rs55 lakhs in full and
final settlement of the demand, as per the arguments set forth by the
Company. The Government subsequently raised a demand of Rs117 lakhs
towards interest on principal demand. (i.e. interest of Rs43 lakhs for
Pyridium for the period 1982 to August 1995 and Rs74 lakhs for Isokin
for the period 1982 to June 1997).
The Company filed a Writ Petition in the Andhra Pradesh High Court in
September 1997 for staying all further proceedings against the Company.
The High Court stayed the demand in respect of collection of interest
but directed the Company to deposit the balance demand of Rs51 lakhs
(which amount was deposited in November 1997).
The said Writ Petition has been heard and disposed off by final
judgement of the Hon'ble Hyderabad High Court, on 15 April 2011. The
Hon'ble High Court has inter alia set aside all the demand notices
and further directed the Respondents to refund the monies paid under
the interim orders.
(g) Multivitamin Formulations:
The Government has arbitrarily raised a demand of Rs182.38 lakhs on
account of alleged overpricing of certain multivitamin formulations
marketed by erstwhile Pharmacia Healthcare Limited (merged with Pfizer
Limited) for the period 1983 to 1986. The Company has repudiated the
liability on this account as advised by its solicitors. The Company
filed a Writ Petition No.814 of 1992 in the High Court at Mumbai. The
Supreme Court of India, in a Special Leave Petition (SLP) filed by the
Company held that pending disposal of Writ Petition filed before the
High Court at Mumbai, the Company shall furnish an undertaking in
respect of 50% of its liability and shall deposit the balance 50%
aggregating to Rs91.19 lakhs. This amount has been deposited with the
Government of India and is included under the head " Long term Loans
and Advances".
Pursuant to a Transfer Petition (Civil) no 475-496 of 2003 filed under
Article 139A(1) of the Constitution of India, all pending writ
petitions in respect of DPEA liabilities are now to be transferred to
the Supreme Court to be heard and finally decided by the Supreme Court
of India. Consequently as a result of the said transfer petition, Writ
Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now
be heard and disposed off by the Supreme Court.
The Supreme Court however, by order dated 3 May 2010 disposed off the
Transfer Petition, directing that the concerned High Courts to take up
the writ petitions before them and dispose them on merits.
In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the
legal opinion being in favor of the Company, and based on the
assessment of the Management, no further provision is considered
necessary over and above the sum of Rs198.37 lakhs which has been paid
off in earlier years.
The Company would continue to seek legal recourse in all the above
matters.
The Union of India has preferred a SLP before the Honorable Supreme
Court agains the above judgement. The SLP is currently pending for
admission before the Supreme Court.
31 March
2012 31 March
2011
6 Contingent liabilities and commitments
(to the extent not provided for)
(i) Contingent liabilities
(a) Claims against the Company not
acknowledged as debt Amount Amount
unascertainable unascertainable
(b) Other guarantees 370.48 403.20
(c) Other contingent liabilities in respect of
1. Excise duty 1037.67 1033.40
2. Customs duty 40.54 59.45
3. Sales tax 4150.32 1192.39
4. Service tax 193.11 193.11
5. Income tax 29070.00 31529.64
6. Pending labour matters contested in
various courts 103.57 109.66
(ii) Commitments
Estimated amount of contracts remaining to
be executed on capital account and not
provided for 24.30 206.41
Notes:
1 Business Segments: The business operations of the Company comprise
Pharmaceuticals, Animal Health and Services. The business segments
have been identified and reported taking into account, the nature of
products and services, the differing risks and returns and the internal
financial reporting systems.
The Pharmaceuticals business comprises of manufacturing of bulk drugs
and formulations, trading of formulations and also includes rendering
of marketing services.
The Animal Health business has a presence primarily in the large animal
health and poultry market segments and also includes rendering of
marketing services.
Services - Clinical Development Operations primarily include conducting
clinical trials, new product development and undertaking comprehensive
data management for new drug development.
2 Geographical Segments: For the purpose of geographical segments the
consolidated sales are divided into two segments - India and other
countries.
3. The accounting policies of the segment are the same as those
described in the summary of significant accounting policies as referred
to in Note 1 to the financial statements.
7. Disclosures as required by the Accounting Standard 18 on "Related
Party Disclosures" are given below
I. Names of Related Parties and description of Relationships
A. Parties where control exists:
Ultimate holding company
Pfizer Inc., USA
Companies collectively exercising significant influence
Pfizer Corporation, Panama
Warner-Lambert Company, LLC, USA
Parke-Davis & Company, LLC, USA
Pharmacia Corporation, USA
Pfizer Investments Netherlands, B.V.
[Collectively holding 70.75% of the aggregate of equity share capital
of the Company]
B. Fellow Subsidiaries with whom transactions have taken place during
the year / period
Pfizer Asia Manufacturing Pte Limited, Singapore
Pfizer Corporation Hong Kong Limited, Hong Kong
Pfizer Enterprises SARL, Luxembourg
Pfizer Export Company, Ireland
Pfizer Global Trading, Ireland
Pfizer Limited, United Kingdom
Pfizer Overseas LLC., USA
Pfizer Pharmaceutical India Private Limited, India
Pfizer Singapore Trading Pte Limited, Singapore
Pfizer Limited,Phillipines
Pfizer Private Limited,Singapore
Pfizer Products India Private Limited, India
Pfizer International LLC.,USA
Pfizer Products Inc., USA
Pfizer Australia Pty Limited, Australia
Pfizer Laboratories(Proprietory)Limited, South Africa
Pfizer Animal Health India Limited, India
AHP Manufacturing B.V. India
Wyeth Limited, India
Wyeth Ayerst International LLC.
C. Subsidiaries with whom transactions have taken place during the
year / period
Pfizer Animal Pharma Private Limited
D. Executive Committee Members
Kewal Handa *
Dr B M Gagrat *
Sunil Madhok
Chandrashekhar Nilkanth Potkar
Yash Goyal
Shiva P Nair
Partha S. Ghosh
Hiroo Mirchandani
Venkatesh S
Pradeep Patni
Samir S Kazi
Sridhar S
Suresh Subramanian
Vivek Dhariwal
Sarita Bahl (w.e.f. 1st February, 2012)
* Executive Directors on the Board.
III. Others
Under the terms of the agreement between Pfizer Inc. (Ultimate Holding
Company) and the Company for conducting clinical trials and studies in
India, Pfizer Inc., has agreed to indemnify, defend and hold the
Company and its directors, employees and agents harmless against any
and all liability, loss or damage they may suffer as a result of any
claims, demands, costs, penalties, fines or judgments incurred or
imposed against it arising out of any clinical trial and study or
otherwise pursuant to the agreement
8 Employee stock option scheme
The employees of the Company have been issued 78795 (March 2011: 50490)
Share Options and 15763 (March 2011: 10149) restricted stock units
under the Pfizer Inc 2004 Share Option Plan by Pfizer Inc. The cost
incurred by Pfizer Inc pursuant to the said Pfizer Inc 2004 Share
Option Plan for the year ended 31 March 2012 amounts to Rs162.61 lakhs
(March 2011: Rs47.87 lakhs). These amounts have not been charged to the
Company by Pfizer Inc.
9 Previous period figures
The previous period figures relate to sixteen months period ended 31
March 2011, while the current period figures are for the year ended 31
March 2012. Accordingly, the current year figures are not comparable to
those of the previous period.
Mar 31, 2011
Rs. in Lakhs Rs. in Lakhs
31 Mar 2011 30 Nov 2009
2 Contingent Liability
(a) In respect of the guarantees
given to banks on behalf of :
(i) Other guarantees 403.20 114.27
(b) In respect of :
(i) Excise duty 1033.40 409.55
(ii) Customs duty 59.45 41.50
(iii) Sales tax 1192.39 638.97
(iv) Service tax 193.11 193.11
(v) Income tax 31529.64 8085.87
(vi) Pending labour matters
contested in various courts 109.66 109.66
(vii) Claims against the Company
not acknowledged as debts Amount Amount
Unascertainable Unascertainable
(c) DPEA claims (Refer Note 7)
5 (c) Licensed and Installed Capacities
Notes:
A. In terms of Press Note No. 4 (1994 series) dated 25 October, 1994
issued by the Department of Industrial Development, Ministry of
Industry, Government of India and Notification No. S.O. 137(E) dated 1
March 1999 issued by the Department of Industrial Policy and Promotion,
Ministry of Industry, Government of India, industrial licensing has
been abolished in respect of bulk drugs and formulations.
B. The installed capacity is as certified by the Management and not
verified by the Auditors, this being a technical matter.
6 (a) Managerial remuneration under Section 198 of the Companies Act,
1956
1. Excludes gratuity and leave encashment benefits as the same are
based on actuarial valuation.
2. Excludes ESOPs outstanding: 9183 (Nov 2009: Nil) & RSUs
outstanding:1836 (Nov 2009: 3202) amounting to Rs. 13.47 lakhs (Nov
2009: Rs. 4.53 lakhs). (Refer Note 22 of Schedule 19, Notes to
Accounts.)
6 (b) Computation of net profits for commission payable to the
Directors u/s 349 of the Companies Act, 1956
The Company depreciates its fixed assets based on estimated useful
lives which are lower or equal to the implicit estimated useful lives
prescribed by Schedule XIV of the Companies Act 1956. Thus, the
depreciation charged in the books is higher than that prescribed as the
minimum by the Companies Act 1956. Hence, this higher value has been
considered as a deduction for the computation of managerial
remuneration above.
7 Drugs Prices Equalisation Account (DPEA)
(a) Oxytetracycline and Other Formulations
In respect of certain price fixation Orders of 1981 of the Government
of India, the Supreme Court vide its Order of 22 March 1993 held that,
pending disposal of the Companys Writ Petition in the High Court of
Mumbai, the Company may deposit 50% of the impugned amount of 787.61
lakhs, less 719.90 lakhs already deposited, with the Union of India
before 15 May 1993 which has been done. In the event that the Company
succeeds before the High Court of Mumbai, this amount will be returned
within one month from the date of the decision of the High Court with
interest at the rate of 15% per annum. However, if the Company loses
the Writ Petition, the balance amount of 743.80 lakhs with interest at
the rate of 15% per annum will have to be paid to the Government.
(b) Multivitamin Formulations
In respect of a certain price fixation Orders of 1986 of the Government
of India, the Supreme Court vide its Order dated 3 December 1992, held
that, pending disposal of the Companys Writ Petition in the High Court
of Mumbai, the Company may deposit 50% of the impugned amount of 798.00
lakhs with the Union of India before 31 January 1993 which has been
done. In the event that the Company succeeds before the High Court of
Mumbai, this amount will be returned within one month from the date of
the decision of the High Court with interest at the rate of 15% per
annum. However, if the Company loses the Writ Petition, the balance
amount of 749.00 lakhs with interest at the rate of 15% per annum will
have to be paid to the Government.
(c) Protinex
In yet another case, the Company had challenged in 1986 a price
fixation Order of the Government of India by a Writ Petition before the
High Court of Mumbai. The Honorable Court passed an ad interim and
interim order staying the impugned order. The Petition, while it was
still pending for hearing and final disposal, was withdrawn in 1989 on
redressal of the Companys grievances. After protracted correspondence
on the subject, in 1993 the Government raised a demand of Rs. 81.83
lakhs on the Company for the period April 1986 to July 1989 and
directed the Company to deposit the same into the DPEA. Thereafter, the
Drug Prices Liability Review (DPLR) Committee sent a letter dated 15
February 1996 seeking the Companys submission/ representation against
the reduced claim amount of 733.87 lakhs for the period April 1986 to
August 1987 as intimated to the DPLR Committee by the Government of
India. The Company has made its submissions to the DPLR Committee vide
its letter of 29 March 1996 claiming that no amount whatsoever is due
and payable having regard to the facts and relevant material of the
case.
In the meantime, the Department of Chemicals and Petrochemicals vide
their letter dated 11 February 1997 raised an additional demand of
7178.56 lakhs for the earlier period of February 1984 to March 1986
over and above the revised claim of 733.87 lakhs for the period April
1986 to August 1987. Thus, the total demand raised now stands revised
to 7212.43 lakhs. The DPLR Committee had, vide its letter dated 24
February 1997 invited the Company to make its submissions/
representations against the above said claim. The Company has made its
submissions to the DPLR Committee vide its letter dated 14 May 1997
claiming that no amount whatsoever is due and payable having regard to
the facts and relevant material of the case.
Pursuant to the submissions made by the Company, the DPLR Committee
directed by an Order on 17 November 1998 that clarifications should be
obtained from the Mumbai High Court on whether the Interim Stay granted
in the Civil Writ Petition Number 2368 of 1996 is applicable to this
matter. (This Writ Petition is filed by OPPI and IDMA jointly against
any Notice issued by the Government of India after 25 August 1987 to
any member of the OPPI or IDMA, initiating proceedings for recovery of
an amount demanded in respect of a period prior to that date).
On a Notice of Motion filed by the Company in the said Writ Petition,
the Mumbai High Court has granted ad interim Order that "pending the
hearing and final disposal of this Notice of Motion, further
proceedings in the said Case No 49/ 1996 pending before the said Drug
Prices Liability Review Committee be stayed."
(d) Vitamin and Other Formulations
The Government has arbitrarily determined the liability of the Company
at 71466 lakhs being the difference in price in respect of Vitamin and
other formulations sold by the Company during the years 1983 to 1989.
The Company has repudiated the liability on this account. The Companys
Solicitors have advised that the repudiation by the Company is legally
sustainable. The Government has pursued the matter. The Company
maintains its position that the claim by the Government is not legally
sustainable.
(e) Chloramphenicol
The Government has arbitrarily determined the liability of the Company
at 7145 lakhs and 714 lakhs being the difference between the price of
bulk drug Chloramphenicol powder and Chloramphenicol Palmitate
respectively allowed in the formulation price and actual procurement
price for the period 1979 to 1988. The Company has repudiated the
liability on this account as advised by the Companys Solicitors. The
Company has also obtained a Stay order from the Honorable High Court of
Mumbai against the demand.
Pursuant to the submissions made by the Company, the DPLR Committee
directed by an Order on 17 November 1998 that clarifications should be
obtained from the Mumbai High Court on whether the Interim Stay granted
in the Civil Writ Petition Number 2368 of 1996 is applicable to this
matter. (This Writ Petition is filed by OPPI and IDMA jointly against
any Notice issued by the Government of India after 25 August 1987 to
any member of the OPPI or IDMA, initiating proceedings for recovery of
an amount demanded in respect of a period prior to that date).
On a Notice of Motion filed by the Company in the said Writ Petition,
the Mumbai High Court has granted ad interim Order that "pending the
hearing and final disposal of this Notice of Motion, further
proceedings in the said Case No 23/ 95 pending before the said Drug
Prices Liability Review Committee be stayed".
(f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan
Limited (merged with Parke-Davis (India) Limited in 1988 and Parke Ã
Davis (India) Limited merged with Pfizer Limited in 2003) had
classified ISOKIN TABLETS, ISOKIN LIQUID AND PYRIDIUM TABLETS as
decontrolled products under the DPCO 1979. The categorization was,
however, challenged by the Government in 1984 and a demand of Rs. 113
lakhs was raised against the Company. Against this demand an excise
duty set off of Rs. 7 lakhs was allowed to the Company and a final
demand of Rs. 106 lakhs was raised in 1987.
The Company had deposited an amount of Rs. 30 lakhs in February 1987
and Rs. 25 lakhs in May 1990 totaling to an aggregate of Rs. 55 lakhs
in full and final settlement of the demand, as per the arguments set
forth by the Company. The Government subsequently raised a demand of
Rs. 117 lakhs towards interest on principal demand. (i.e. interest of
Rs. 43 lakhs for Pyridium for the period 1982 to August 1995 and Rs. 74
lakhs for Isokin for the period 1982 to June 1997).
The Company filed a Writ Petition in the Andhra Pradesh High Court in
September 1997 for staying all further proceedings against the Company.
The High Court stayed the demand in respect of collection of interest
but directed the Company to deposit the balance demand of Rs. 51 lakhs
(which amount was deposited in November 1997).
The said Writ Petition has been heard and disposed of by final judgment
of the Honble Hyderabad High Court, on 15 April, 2011. The Honble
High Court has inter alia set aside all the demand notices and further
directed the Respondents to refund the monies paid under the interim
orders. The Company is awaiting a certified copy of the said judgement.
(g) Multivitamin Formulations:
The Government has arbitrarily raised a demand of Rs. 182.38 lakhs on
account of alleged overpricing of certain multivitamin formulations
marketed by erstwhile Pharmacia Healthcare Limited (merged with Pfizer
Limited) for the period 1983 to 1986. The Company has repudiated the
liability on this account as advised by its solicitors. The Company
filed a Writ Petition No.814 of 1992 in the High Court at Mumbai. The
Supreme Court of India, in a Special Leave Petition filed by the
Company held that pending disposal of Writ Petition filed before the
High Court at Mumbai, the Company shall furnish an undertaking in
respect of 50% of its liability and shall deposit the balance 50%
aggregating to Rs. 91.19 lakhs. This amount has been deposited with
the Government of India and is included under the head "Loans and
Advances".
Pursuant to a Transfer Petition (Civil) no 475-496 of 2003 filed under
Article 139A(1) of the Constitution of India, all pending writ
petitions in respect of DPEA liabilities are now to be transferred to
the Supreme Court to be heard and finally decided by the Supreme Court
of India. Consequently as a result of the said transfer petition, Writ
Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now
be heard and disposed off by the Supreme Court.
The Supreme Court however, by order dated 3 May, 2010 disposed of the
Transfer Petition, directing that the concerned High Courts to take up
the writ petitions before them and dispose them on merits.
In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the
legal opinion being in favor of the Company, and based on the
assessment of the Management, no further provision is considered
necessary over and above the sum of Rs.198.37 lakhs which has been paid
off in earlier years.
The Company would continue to seek legal recourse in all the above
matters.
10 Disclosure for operating leases under Accounting Standard 19 Ã
"Leases"
(a) Where the Company is a Lessee:
(i) The Company has taken various residential/godowns/office premises
(including furniture and fittings, therein as applicable) under
operating lease or leave and licence agreements. These are generally
not non-cancellable and range between 11 months and 3 years under leave
and licence, or longer for other leases and in certain cases are
renewable by mutual consent on mutually agreeable terms. The Company
has given refundable interest free security deposits in accordance with
the agreed terms.
11 Assets held for disposal
The Company has identified the assets being guest house colony situated
at Bharuch, Gujarat as retired from active use consequent to its
ceasing manufacturing operations at Ankleshwar Gujarat. These assets
are held for disposal and stated at lower of net book value and
estimated net realizable value as reported under ÃOther current assets
(Schedule 9).
12 Stock of Physicians samples is included under ÃLoans and advances
(Schedule 10) Rs. 291.97 lakhs (Nov 2009 - 7210.86 lakhs).
14 Disclosures as required by the Accounting Standard 18 on "Related
Party Disclosures" are given below: I Names of Related Parties and
description of Relationships
A Parties where control exists:
Ultimate holding company Pfizer Inc., USA
Companies collectively Pfizer Corporation, Panama
exercising significant influence Warner-Lambert Company, LLC, USA
Parke-Davis & Company, LLC, USA
Pharmacia Corporation, USA
Pfizer Investments
Netherlands, B. V.
[Collectively holding 70.75%
of the aggregate of equity share
capital of the Company]
Fellow Subsidiaries: (with whom transactions have taken place during
the period/year)
Pfizer Asia Manufacturing Pte Limited, Singapore
Pfizer Corporation Hong Kong Limited, Hong Kong
Pfizer Enterprises SARL, Luxembourg
Pfizer Export Co., Ireland
Pfizer Global Trading, Ireland
Pfizer Limited, United Kingdom
Pfizer Overseas LLC, USA
Pfizer Pharmaceutical India Private Limited., India
Pfizer Singapore Trading Pte Limited, Singapore
Pfizer Limited, Philippines
Pfizer Private Limited., Singapore
Pfizer Products India Private Limited, India
Pfizer International LLC, USA
Pfizer Products Inc, USA
Pfizer Australia Pty Limited, Australia
Pfizer Laboratories (Pty) Limited, South Africa
Pfizer Animal Health India Limited, India
AHP Manufacturing B.V., India
Wyeth Limited, India
B Executive Committee Members
Mr. Kewal Handa * Dr. B.M. Gagrat * Ms. Hiroo Mirchandani
Mr. Pradeep Patni (w.e.f. 01/02/2010)
Mr. Suresh Subramanian (w.e.f. 18/03/2010)
Mr. Anjan Sen (resigned w.e.f. 01/09/2010)
Dr. Chandrashekhar Potkar
Ms. Dipali Talwar (resigned w.e.f. 16/05/2010)
Mr. Partha Ghosh
Mr. Samir Kazi (w.e.f. 01/06/2010)
Mr. S. Madhok
Mr. Shiva Nair (w.e.f. 01/04/2010)
Mr. S. Sridhar
Mr. S. Venkatesh
Mr. Uday Mohan (upto 17/10/2010)
Mr. Vivek Dhariwal (w.e.f. 01/03/2011)
Dr. Yash Goyal
* Executive Directors on the Board
III Others
Under the terms of the agreement between Pfizer Inc. (Ultimate Holding
Company) and the Company for conducting clinical trials and studies in
India, Pfizer Inc., has agreed to indemnify, defend and hold the
Company and its directors, employees and agents harmless against any
and all liability, loss or damage they may suffer as a result of any
claims, demands, costs, penalties, fines or judgements incurred or
imposed against it arising out of any clinical trial and study or
otherwise pursuant to the agreement.
15 Disclosures as required by the Accounting Standard 17 on "Segment
Reporting" are given below: Business Segments (Refer Note 1 below)
Notes:
1 Business Segments: The business operations of the Company comprise
Pharmaceuticals, Animal Health and Services. The business segments
have been identified and reported taking into account, the nature of
products and services, the differing risks and returns and the internal
financial reporting systems.
The Pharmaceuticals business comprises of manufacturing of bulk drugs
and formulations, trading of formulations and also includes rendering
of marketing services.
The Animal Health business has a presence primarily in the large animal
health and poultry market segments and also includes rendering of
marketing services.
Services - Clinical Development Operations primarily include conducting
clinical trials, new product development and undertaking comprehensive
data management for new drug development.
2 Geographical Segments: For the purpose of geographical segments the
consolidated sales are divided into two segments - India and other
countries.
3. The accounting policies of the segment are the same as those
described in the summary of significant accounting policies as referred
to in Schedule 18 to the Financial statements.
16 Disclosure relating to provisions
Personnel related provisions
Personnel related provision at the beginning of the year have been
settled based on completion of negotiations and execution of the new
contract.
The Company has made provision for pending assessments in respect of
duties and other levies, the outflow of which would depend on the
outcome of the respective events.
17 The Companys international transactions with related parties are at
arms length as per the independent accountants report for the year
ended 31 March 2010. Management believes that the Companys
international transactions with related parties post 31 March 2010
continue to be at arms length and that the transfer pricing
legislation will not have any impact on these financial statements.
18 The Company does not enter into any forward contract which is
intended for trading or speculative purposes.
Defined Contribution Plan:
During the period, the Company has contributed Rs. 27.80 lakhs (Nov
2009 - Rs. 22.77 lakhs) towards Employees Superannuation Fund.
General description of significant defined benefit plans
i) Gratuity plan
Gratuity is payable to all eligible employees of the Company on
superannuation, death and permanent disablement, as per Companys rules
or as per provisions of the Payment of Gratuity Act, 1972.
ii) Leave plan
All eligible employees can carry forward and avail / encash leave on
resignation, superannuation, death or permanent disablement subject to
a maximum accumulation of 180 / 170 /90 days in case of privileged
leave & 75 / 70 days in case of sick leave as per Companys rules.
iii) Provident Fund
The employees Provident fund is administered by a Trust created
specifically for the purpose. The employees and employers
contributions are transferred to the Trust. All liabilities arising on
account of provident fund payouts on resignation or retirement from
service or death while in service are made from the Trust.
20 The Scheme of Amalgamation (Ãthe Scheme) of Duchem Laboratories
Limited (the unlisted wholly-owned subsidiary) (herein after referred
to as "Duchem") with the Company was sanctioned by the Honorable High
Court at Mumbai by its Order passed on 26 February, 2010 and filed with
the Registrar of Companies on 15 March, 2010. In accordance with the
scheme all the assets,liabilities, duties and obligations of Duchem
were transferred to and vested in the Company with effect from 1
December, 2008
(The Appointed Date). The Scheme has accordingly been given effect to
in these financial statements which include the assets and liabilities
of Duchem with effect from 1 December, 2008 and the results for the
year ended 30 November, 2009. Pending completion of relevant
formalities of transfer of assets, liabilities and arrangements
acquired pursuant to the Scheme mentioned above, such assets,
liabilities and arrangements remain in the name of erstwhile Duchem.
Erstwhile Duchem is engaged in the business of trading of
pharmaceutical products. The primary segments for classification of
business activities are the pharmaceuticals and animal health segments.
The amalgamation has been accounted for under the "pooling of
interests" method as prescribed by Accounting Standard 14 (AS 14)
"Accounting for Amalgamations". Accordingly, the assets, liabilities
and other reserves of the erstwhile Duchem as at 1 December, 2008 have
been taken over at their book values.
In terms of the above mentioned Scheme, book values of assets and
liabilities are required to be adopted as at 1 December, 2008.
As per the Scheme of Amalgamation no consideration was paid to Duchem
or its shareholders and the investment to the extent of entire 100%
equity shareholding held by the Company and its nominees in Duchem
stood cancelled.
In accordance with the Scheme of Amalgamation, the aggregate of the net
assets of Duchem over the carrying value of investments in the Company
shall be credited / debited to the Capital Reserve and balance of
investments after adjustments with Capital Reserve, if any, against
General Reserve / Profit and Loss account in the books of the Company.
The balance in the Capital Reserve account if any shall be added to the
General Reserve / Profit and Loss account in the books of the Company
Pursuant to the scheme of amalgamation approved as above, the debit
balance in the Profit and Loss account of erstwhile Duchem aggregating
Rs.171.24 lakhs as at 1 December, 2008 has been taken over.
Further, the provision for diminution other than temporary, in the
value of investments aggregating Rs. 324 lakhs created by the Company
in the earlier years is reversed and passed through General Reserves
during the year ended 30 November, 2009.
21 The Board of Directors at its meeting held on 25 February, 2010 had
approved the audited financial results of Pfizer Limited and the
audited consolidated results including that of the unlisted
wholly-owned subsidiary Duchem Laboratories Limited for the year ended
30 November, 2009. However, for reasons mentioned in Note 20 above, and
in order to give effect to the Honorable Bombay High Courts Order
dated 26 February, 2010, the Board of Directors at its meeting held on
19 March, 2010 have taken on record the audited financial results of
the Company including the figures of erstwhile Duchem for the year
ended 30 November, 2009.
22 The employees of the Company have been issued 50490 (Nov 2009: Nil)
Share Options and 10149 (Nov 2009: 13966) restricted stock units under
the Pfizer Inc 2004 Share Option Plan by Pfizer Inc. The cost incurred
by Pfizer Inc pursuant to the said Pfizer Inc 2004 Share Option Plan
for the 16 months ended 31 March, 2011 amounts to Rs. 47.87 lakhs ( Nov
2009: Rs.19.75 lakhs). These amounts have not been charged to the
Company by Pfizer Inc.
23 (a) Charges towards provision of back office support to fellow
subsidiaries, which were netted off against personnel cost amounting to
Rs. 532.01 Lakhs for the year ended 30 November, 2009 have now been
regrouped to Service Income. Consequential adjustments have been made
to the segment disclosures.
(b) Rs. 817.31 lakhs has been regrouped from advances recoverable in
cash or kind to balance with Customs, Port Trust and Excise on current
accounts for the year ended 30 November, 2009.
(c) Rs. 730.02 lakhs has been regrouped from Miscellaneous expenses to
Travelling expenses for the year ended 30 November, 2009.
24 The previous years figures relate to twelve months ended 30
November, 2009 while the current periods figures are sixteen months
period ended 31 March 2011. Accordingly, the current periods figures
are not comparable to those of the previous year.
Nov 30, 2009
Rupees in Lakhs Rupees in Lakhs
30 Nov 2009 30 Nov 2008
1 Estimated amount of contracts
on capital account to be
executed and not
provided for 119.35 4177.68
2 Contingent Liability
(a) In respect of the guarantees given to banks on behalf of:
(i) Its subsidiary company - 2400.00
(ii) Other guarantees 114.27 107.14
(b) In respect of:
(i) Excise duty 409.55 420.78
(ii) Customs duty 41.50 40.54
(iii) Sales tax 638.97 627.24
(iv) Service tax 193.11 193.11
(v) Income tax 8085.87 743.62
(vi) Pending labour matters
contested in various courts 109.66 122.66
(vii) Claims against the Company
not acknowledged as debts Amount Amount
Unascertainable Unascertainable
(c) DPEA claims (Refer Note 8)
3 Drugs Prices Equalisation Account (DPEA)
(a) oxytetracycline and other Formulations
In respect of certain price fixation Orders of 1981 of the Government
of India, the Supreme Court vide its Order of 22 March, 1993 held that,
pending disposal of the CompanyÃs Writ Petition in the High Court of
Mumbai, the Company may deposit 50% of the impugned amount of Rs. 87.61
lakhs, less Rs. 19.90 lakhs already deposited, with the Union of India
before 15 May, 1993 which has been done. In the event that the Company
succeeds before the High Court of Mumbai, this amount will be returned
within one month from the date of the decision of the High Court with
interest at the rate of 15% per annum. However, if the Company loses
the Writ Petition, the balance amount of Rs. 43.80 lakhs with interest
at the rate of 15% per annum will have to be paid to the Government
(b) Multivitamin Formulations
In respect of a certain price fixation Orders of 1986 of the Government
of India, the Supreme Court vide its Order dated 3 December, 1992, held
that, pending disposal of the CompanyÃs Writ Petition in the High Court
of Mumbai, the Company may deposit 50% of the impugned amount of Rs.
98.00 lakhs with the Union of India before 31 January 1993 which has
been done. In the event that the Company succeeds before the High Court
of Mumbai, this amount will be returned within one month from the date
of the decision of the High Court with interest at the rate of 15% per
annum. However, if the Company loses the Writ Petition, the balance
amount of Rs. 49.00 lakhs with interest at the rate of 15% per annum
will have to be paid to the Government
(c) Protinex
In yet another case, the Company had challenged in 1986 a price
fixation Order of the Government of India by a Writ Petition before the
High Court of Mumbai. The Honourable Court passed an ad interim and
interim order staying the impugned order. The Petition, while it was
still pending for hearing and final disposal, was withdrawn in 1989 on
redressal of the CompanyÃs grievances. After protracted correspondence
on the subject, in 1993 the Government raised a demand of Rs. 81.83
lakhs on the Company for the period April 1986 to July 1989 and
directed the Company to deposit the same into the DPEA. Thereafter, the
Drug Prices Liability Review (DPLR) Committee sent a letter dated 15
February, 1996 seeking the CompanyÃs submission / representation
against the reduced claim amount of Rs. 33.87 lakhs for the period
April 1986 to August 1987 as intimated to the DPLR Committee by the
Government of India. The Company has made its submissions to the DPLR
Committee vide its letter of 29 March, 1996 claiming that no amount
whatsoever is due and payable having regard to the facts and relevant
material of the case
In the meantime, the Department of Chemicals and Petrochemicals vide
their letter dated 11 February, 1997 raised an additional demand of Rs.
178.56 lakhs for the earlier period of February 1984 to March 1986 over
and above the revised claim of Rs. 33.87 lakhs for the period April
1986 to August 1987. Thus, the total demand raised now stands revised
to Rs. 212.43 lakhs. The DPLR Committee had, vide its letter dated 24
February, 1997 invited the Company to make its submissions /
representations against the above said claim. The Company has made its
submissions to the DPLR Committee vide its letter dated 14 May, 1997
claiming that no amount whatsoever is due and payable having regard to
the facts and relevant material of the case
Pursuant to the submissions made by the Company, the DPLR Committee
directed by an Order on 17 November 1998 that clarifcations should be
obtained from the Mumbai High Court on whether the Interim Stay granted
in the Civil Writ Petition Number 2368 of 1996 is applicable to this
matter. (This Writ Petition is fled by OPPI and IDMA jointly against
any Notice issued by the Government of India after 25 August, 1987 to
any member of the OPPI or IDMA, initiating proceedings for recovery of
an amount demanded in respect of a period prior to that date)
On a Notice of Motion fled by the Company in the said Writ Petition,
the Mumbai High Court has granted ad interim Order that Ãpending the
hearing and final disposal of this Notice of Motion, further
proceedings in the said Case No. 49 / 1996 pending before the said Drug
Prices Liability Review Committee be stayed.Ã
(d) Vitamin and other Formulations
The Government has arbitrarily determined the liability of the Company
at Rs. 1466 lakhs being the difference in price in respect of Vitamin
and other formulations sold by the Company during the years 1983 to
1989. The Company has repudiated the liability on this account. The
CompanyÃs Solicitors have advised that the repudiation by the Company
is legally sustainable. The Government has pursued the matter. The
Company maintains its position that the claim by the Government is not
legally sustainable
(e) Chloramphenicol
The Government has arbitrarily determined the liability of the Company
at Rs. 145 lakhs and Rs. 14 lakhs being the difference between the
price of bulk drug Chloramphenicol powder and Chloramphenicol Palmitate
respectively allowed in the formulation price and actual procurement
price for the period 1979 to 1988. The Company has repudiated the
liability on this account as advised by the CompanyÃs Solicitors. The
Company has also obtained a Stay order from the Honourable High Court
of Mumbai against the demand
Pursuant to the submissions made by the Company, the DPLR Committee
directed by an Order on 17 November 1998 that clarifcations should be
obtained from the Mumbai High Court on whether the Interim Stay granted
in the Civil Writ Petition Number 2368 of 1996 is applicable to this
matter. (This Writ Petition is fled by OPPI and DMA jointly against any
Notice issued by the Government of India after 25 August, 1987 to any
member of the OPPI or IDMA, initiating proceedings for recovery of an
amount demanded in respect of a period prior to that date)
On a Notice of Motion fled by the Company in the said Writ Petition,
the Mumbai High Court has granted ad interim Order that Ãpending the
hearing and final disposal of this Notice of Motion, further
proceedings in the said Case No. 23 / 95 pending before the said Drug
Prices Liability Review Committee be stayedÃ
(f) Pursuant to the repeal of DPCO 1970, erstwhile Warner-Hindustan
Limited (merged with Parke-Davis (India) Limited in 1988 and
Parke-Davis (India) Limited merged with Pfizer Limited in 2003) had
classified ISOKIN TABLETS, ISOKIN LIQUID AND PYRIDIUM TABLETS as
decontrolled products under the DPCO 1979. The categorization was,
however challenged by the Government in 1984 and a demand of Rs. 113
lakhs was raised against the Company. Against this demand an excise
duty set off of Rs. 7 lakhs was allowed to the Company and a final
demand of Rs. 106 lakhs was raised in 1987
The Company had deposited an amount of Rs. 30 lakhs in February 1987
and Rs. 25 lakhs in May 1990 totaling to an aggregate of Rs. 55 lakhs
in full and final settlement of the demand, as per the arguments set
forth by the Company The Government subsequently raised a demand of Rs.
117 lakhs towards interest on principal demand. (i.e. interest of Rs.
43 lakhs for Pyridium for the period 1982 to August 1995 and Rs. 74
lakhs for Isokin for the period 1982 to June 1997)
The Company fled a Writ Petition in the Andhra Pradesh High Court in
September 1997 for staying all further proceedings against the Company.
The High Court stayed the demand in respect of collection of interest
but directed the Company to deposit the balance demand of Rs. 51 lakhs
(which amount was deposited in November 1997)
(g) Multivitamin Formulations:
The Government has arbitrarily raised a demand of Rs. 182.38 lakhs on
account of alleged overpricing of certain multivitamin formulations
marketed by erstwhile Pharmacia Healthcare Limited (merged with Pfizer
Limited) for the period 1983 to 1986. The Company has repudiated the
liability on this account as advised by its solicitors. The Company
fled a Writ Petition No. 814 of 1992 in the High Court at Mumbai. The
Supreme Court of India, in a Special Leave Petition fled by the Company
held that pending disposal of Writ Petition fled before the High Court
at Mumbai, the Company shall furnish an undertaking in respect of 50%
of its liability and shall deposit the balance 50% aggregating to Rs.
91.19 lakhs. This amount has been deposited with the Government of
India and is included under the head ÃLoans and advancesÃ
Pursuant to a Transfer Petition (Civil) No. 475-496 of 2003 fled under
Article 139A(1) of the Constitution of India, all pending writ
petitions in respect of DPEA liabilities are now to be transferred to
the Supreme Court to be heard and finally decided by the Supreme Court
of India. Consequently as a result of the said transfer petition, Writ
Petitions referred to in (a), (b), (c), (e), (f) and (g) above will now
be heard and disposed off by the Supreme Court
In view of matters (a), (b), (c), (e), (f) and (g) being subjudice, the
legal opinion being in favour of the Company, and based on the
assessment of the Management, no further provision is considered
necessary over and above the sum of Rs. 198.37 lakhs which has been
paid off in earlier years
The Company would continue to seek legal recourse in all the above
matters
11 Disclosure for operating leases under Accounting Standard 19 -
ÃLeasesÃ
(a) Where the Company is a Lessee:
(i) The Company has taken various residential / godowns / office
premises (including furniture and fittings, therein as applicable)
under operating lease or leave and licence agreements. These are
generally not non-cancellable and range between 11 months and 3 years
under leave and licence, or longer for other leases and are renewable
by mutual consent on mutually agreeable terms. The Company has given
refundable interest free security deposits in accordance with the
agreed terms
(ii) Lease payments are recognized in the Profit and Loss Account under
ÃRentà in Schedule 16
4 Stock of Physiciansà samples is included under ÃLoans and advancesÃ
(Schedule 10) Rs. 210.86 lakhs (Nov 2008 Rs. 228.86 lakhs)
5 Disclosures as required by the Accounting Standard 18 on ÃRelated
Party Disclosuresà are given below: I Names of Related Parties and
description of Relationships
A Parties where control exists:
Ultimate holding company Pfizer Inc., USA
Companies collectively Pfizer Corporation, Panama exercising
significant influence Warner-Lambert Company, LLC, USA
Parke-Davis & Company, LLC, USA
Pharmacia Corporation, USA
Pfizer Investments Netherlands, B. V.
[Collectively holding 70.75% of the aggregate of
equity share capital of the Company]
Fellow Subsidiaries: (with whom transactions have taken place during
the year)
Pfizer Animal Health
SA, Belgium Pfizer Pharmaceuticals Korea Limited, Korea
Pfizer Asia Manufacturing
Pte Limited, Singapore Pfizer Singapore Trading Pte Limited, Singapore
Pfizer Corporation Hong
Kong Limited, Hong Kong Pfizer Private Limited, Singapore
Pfizer Enterprises SARL,
Luxembourg Pfizer Products India Private Limited, India
Pfizer Export Company,
Ireland Pfizer International LLC, USA
Pfizer Global Trading,
Ireland Pfizer Products Inc., USA
Pfizer Limited, United
Kingdom Pfizer Agricare Sdn Bhd, Malaysia
Pfizer Laboratories
(Proprietary) Limited,
South Africa Pfizer Limited, China
Pfizer Overseas LLC, USA Pfizer Animal Health RSA, Durban, South Africa
Pfizer Pharmaceutical
India Private Limited,
India
B Executive Committee Members
Mr. Kewal Handa* Mr. Partha Ghosh
Dr. B.M. Gagrat* Mr. Anjan Sen
Mr. S. Madhok Ms. Hiroo Mirchandan
Ms. Dipali Talwar Mr. Uday Mohan
Mr. S. Venkatesh Dr. Yash Goyal
Dr. Chandrashekhar Potkar Mr. Venkat Iyer (resigned w.e.f. 30 November,
2009)
Mr. S. Sridhar Mr. Yugesh Goutam* (resigned w.e.f. 31 May, 2008)
* Executive Directors on the Board
III others
Under the terms of the agreement between Pfzer Inc. (Ultimate Holding
Company) and the Company for conducting clinical trials and studies in
India, Pfizer Inc., has agreed to indemnify, defend and hold the
Company and its directors, employees and agents harmless against any
and all liability, loss or damage they may suffer as a result of any
claims, demands, costs, penalties, fines or judgments incurred or
imposed against it arising out of any clinical trial and study or
otherwise pursuant to the agreement
6 The CompanyÃs international transactions with related parties are at
armÃs length as per the independent accountants report for the year
ended 31 March, 2009. Management believes that the CompanyÃs
international transactions with related parties post 31 March, 2009
continue to be at armÃs length and that the transfer pricing
legislation will not have any impact on these financial statements
7 The CompanyÃs promoters announced the global divestiture of the
Consumer Healthcare Business in June 2006 to Johnson & Johnson.
Consequently, the global closure was fixed on 20 December, 2006.
Pursuant to the approval of the Board of Directors at their meeting
held on 31 December, 2007 the Company has transferred its right to use
the trademark / license pertaining to Benadryl, Caladryl, Benylin and
Listerine and certain assets related thereto, for a total consideration
of Rs. 21485.10 lakhs to Johnson & Johnson Limited. All the remaining
products under the Consumer Healthcare Portfolio continues to be with
the Company. Accordingly, profit on this transfer amounting to Rs.
21095.23 lakhs has been recognized in the previous year and accounted
under the head ÃExceptional items - NetÃ
8 Pfizer Investments Netherlands B.V. announced an Open Offer to
acquire up to 10,078,143 shares of the Company on 10 June, 2009. Of the
total of 88,10,234 shares acquired, 87,82,252 are currently held in the
Escrow account for the benefit of Pfizer Investments Netherlands B.V.
The same shall be transferred to Pfizer Investments Netherlands B.V. on
completion of all formalities
9 The Company uses forward contracts to hedge its risks associated
with foreign currency fluctuations having underlying transaction and
relating to firm commitments or highly probable forecast transactions.
The Company does not enter into any forward contract which is intended
for trading or speculative purposes
22 The Company has with effect from 1 December, 2007, adopted
Accounting Standard 15, Employee Benefits (revised 2005). Consequently
an additional liability for employee benefits based on actuarial
valuation as at 1 December, 2007 amounting to Rs. 455.69 lakhs ( net of
deferred tax credit of Rs. 234.65 lakhs), has been adjusted against
General reserve as at 1 December, 2007
Defined Contribution Plan:
During the year, the Company has contributed Rs. 22.77 lakhs (Nov 2008
: Rs. 22.01 lakhs) towards Employeesà Superannuation Fund General
description of significant defined benefit plans
i) Gratuity plan
Gratuity is payable to all eligible employees of the Company on
superannuation, death and permanent disablement as per CompanyÃs rules
or per provisions of the Payment of Gratuity Act, 1972
ii) Leave plan
All eligible employees can carry forward and avail / encash leave on
resignation, superannuation, death or permanent disablement subject to
a maximum accumulation of 180 / 170 days as per CompanyÃs rules
iii) Provident Fund
The employeeÃs Provident fund is administered by a Trust created
specifically for the purpose. The employeeÃs and employerÃs
contributions are transferred to the Trust. All liabilities arising on
account of provident fund payouts on resignation or retirement from
service or death while in service are made from the Trust
10 The Scheme of Amalgamation (Ãthe SchemeÃ) of Duchem Laboratories
Limited (the unlisted wholly-owned subsidiary) (hereinafter referred to
as ÃDuchemÃ) with the Company was sanctioned by the Honourable High
Court at Mumbai by its Order passed on 26 February, 2010 and fled with
the Registrar of Companies on 15 March, 2010. In accordance with the
scheme all the assets, liabilities, duties and obligations of Duchem
were transferred to and vested in the Company with effect from 1
December, 2008 (The Appointed DateÃ). The Scheme has accordingly been
given effect to in these financial statements which include the assets
and liabilities of Duchem with effect from 1 December, 2008 and the
results for the year ended 30 November, 2009. Pending completion of
relevant formalities of transfer of assets, liabilities and
arrangements acquired pursuant to the Scheme mentioned above, such
assets, liabilities and arrangements remain in the name of erstwhile
Duchem Erstwhile Duchem is engaged in the business of trading of
pharmaceutical products. The primary segments for classification of
business activities are the pharmaceuticals and animal health segments
The amalgamation has been accounted for under the Ãpooling of
interestsà method as prescribed by Accounting Standard 14 (AS 14)
ÃAccounting for AmalgamationsÃ. Accordingly, the assets, liabilities
and other reserves of the erstwhile Duchem as at 1 December, 2008 have
been taken over at their book values
In terms of the above mentioned Scheme, book values of assets and
liabilities are required to be adopted as at 1 December, 2008 As per
the Scheme of Amalgamation no consideration was paid to Duchem or its
shareholders and the investment to the extent of entire 100% equity
shareholding held by the Company and its nominees in Duchem stood
cancelled In accordance with the Scheme of Amalgamation, the aggregate
of the net assets of Duchem over the carrying value of investments in
the Company shall be credited / debited to the Capital reserve and
balance of investments after adjustments with Capital Reserve, if any,
against General Reserve / Profit and Loss Account in the books of the
Company. The balance in the Capital Reserve account if any shall be
added to the General Reserve / Profit and Loss Account in the books of
the Company The resultant net assets as referred to in above paragraph
is calculated as follows
Pursuant to the scheme of amalgamation approved as above, the debit
balance in the Profit and Loss Account of erstwhile Duchem aggregating
Rs. 171.24 lakhs as at 1 December, 2008 has been taken over Further,
the provision for diminution other than temporary, in the value of
investments aggregating Rs. 324.00 lakhs created by the Company in the
earlier years is reversed and passed through General Reserves In view
of the aforesaid amalgamation with effect from 1 December, 2008, the
figures for the current year are strictly not comparable to those of
the prior year
11 The Board of Directors at its meeting held on 25 February, 2010 had
approved the audited financial results of Pfizer Limited and the
audited consolidated results including that of the unlisted
wholly-owned subsidiary Duchem Laboratories Limited for the year ended
30 November, 2009. However, for reasons mentioned in Note 23 above, and
in order to give effect to the Honourable Bombay High CourtÃs Order
dated 26 February, 2010, the Board of Directors at its meeting held on
19 March, 2010 taken on record the audited financial results of the
Company including the figures of erstwhile Duchem for the year ended 30
November, 2009
12 Prior year figures have been regrouped wherever necessary to conform
to current yearÃs presentation
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Stocks To Buy Today, Dec 12: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Friday -
Market Outlook 2026: Kotak Securities Sees Nifty 50 at 30,000; THESE 4 Sectors Lead Rally, Gold To Stay Strong -
Stocks To Buy Today, Dec 10: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Wednesday -
D-Street Bleeds For 2nd Day! Sensex Slumps 678 Pts; Nifty Cracks 25,800; Why Stock Market Is Falling Today? -
Stocks To Buy Today, Dec 9: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Tuesday -
Stocks To Buy Today, Dec 8: Top 4 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Monday -
Stock Market Alert! Major Pre-Open Session Change From Dec 8: Full Timings, Rules & All You Need To Know -
Bank Nifty Surges: RBI’s 25 bps Rate Cut Triggers Strong Upside in Major Banking Stocks -
Closing Bell: Sensex Ends 158 pts Higher, Nifty Climbs Above 26,000; Hero MotoCorp, HAL Up 2% Each -
Stocks To Buy Today, Dec 4: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Thursday
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