Matrix Laboratories Limited Annual Report

1
C O N T E N T S
DIRECTORS’ REPORT 3
FINANCIAL SECTION
Auditors’ Report 15
Balance Sheet & Profit and Loss Account 19
Cash Flow Statement 21
Schedules to the Accounts 23
CONSOLIDATED FINANCIAL STATEMENTS
Auditors’ Report on the Consolidated Financial Statements 60
Consolidated Balance Sheet & Profit and Loss Account 61
Consolidated Cash Flow Statement 63
Schedules to the Consolidated Accounts 65
STATEMENT PURSUANT TO SECTION 212 OF THE
COMPANIES ACT, 1956. 87
CORPORATE INFORMATION 88
2
Profile of Directors
The Board of Directors of the Company comprises members who have vast experience
in the fields of
science, technology and management.
(2) Mr. S. Srinivasan
Chief Executive Officer & Managing Director
Mr. S. Srinivasan is an Engineering graduate with Masters in Management from IRM
A Anand and
is also a member of the Institute of Cost and Works Accountants of India.
He has handled various assignments spanning through a number of functional areas
such as Finance,
Sales and Marketing, Business Development and Strategic Planning during his 20 y
ears industrial
experience.
(3) Dr. B. Hari Babu
Chief Operating Officer & Executive Director
Dr. B. Hari Babu holds a Masters Degree and is a PhD in Organic Chemistry from A
ndhra University.
He started his Professional career with Research and Development, followed by wo
rking in Regulatory
Affairs, QA and Production in Various API Companies.
Dr. Hari Babu is currently the Chief Operating Officer and Executive Director of
Matrix and has
assisted the company into becoming a world class manufacturer in the pharmaceuti
cal industry. He has
more than 17 years of experience in the pharmaceutical industry.
(4) Mr. Sanjeev Sethi
Director
Mr. Sanjeev Sethi has a Masters in Pharmaceutical Sciences from Punjab Universit
y, Chandigarh.
He has 20 years experience in the Pharmaceuticals Industry, in leading companies
like Ranbaxy, Delhi
(Formulations Development & IRA) & Sandoz, Vienna (Dy. Head R&D).
Mr. Sethi is currently the Head of Global Generics R&D, Mylan Inc. Prior to this
, he was holding
the position of Executive Vice President Finished Dosage Forms, Technical Operat
ions at Matrix. He
has to his credit 40 international patents.
(1) Mr. Rajiv Malik
Director
Mr. Rajiv Malik is the Chief Operating Officer for Mylan Inc., USA. In addition
to his role at
Mylan, Mr. Malik served as Managing Director and interim Chief Executive Officer
of Matrix
Laboratories Limited until 30th June, 2008.
Mr. Malik brings with him over 27 years of experience in the global generic phar
maceutical industry.
Mr. Malik earned his masters degree in pharmaceutical technology from Punjab Uni
versity and has
more than 60 process patents to his credit.
3
DIRECTORS REPORT
Your Directors are pleased to present their Report for the year ended March 31,
2010, along with the Balance Sheet and Profit and
Loss Account.
Financial Results
The financial performance of your Company on both a stand-alone and a consolidat
ed basis for the year ended March 31, 2010 is
summarised below:
Rs. Million
Particulars Stand-alone basis Consolidated basis
2009-10 2008-09 2009-10 2008-09
Net sales 18680.26 14790.24 27768.20 22738.48
Profit before Interest, Depreciation, Tax & Exceptional items 3459.13 3568.27 50
43.75 3604.66
Interest 509.81 569.18 1204.53 1470.99
Depreciation & Amortisation 562.64 429.37 1032.78 908.91
Profit before tax and Exceptional Items 2386.69 2569.72 2806.44 1224.76
Exceptional Items 606.08 – 3924.99 –
Tax Expense (854.43) (680.21) (1346.40) (878.40)
Minority Interest and share of loss in associate – – (357.82) (46.41)
Net profit for the year 2138.34 1889.51 5027.21 299.95
Add: Profit Brought forward 2864.21 974.70 (397.06) (697.01)
Total available for appropriation and being carried forward 5002.55 2864.21 4630
.15 (397.06)
Review of Operations
Your Company posted yet another impressive year of
performance. During the year under review, the turnover, on a
stand alone basis, increased by 26%, while the net profit
increased by 13% over the previous financial year. On a
consolidated basis, the sales increased by 22% over the previous
year. The increase in sales was mainly due to the increase in
Finished Dosage Form product sales in both ARV segment
(Anti retro virals) and Non-ARV segments.
During the year under review, your Company filed 8 US Drug
Master Files (DMFs) and 20 EU DMFs / Certificates of
Suitability to European Pharmacopoeia (CEPs). With these
filings, as on March 31, 2010, the cumulative number of DMFs
filed by your Company, together with its subsidiaries and
associates is 119 US DMFs and 116 EU DMFs / CEPs.
During the year, your Company has filed 28 ANDAs with the
FDA, 20 with European regulatory agencies, 1 with the WHO,
12 with Canada regulatory agencies and 10 with Australian
regulatory agencies. Aggregate filings covering Finished Dosage
Forms during the year were 96 in numbers.
Cumulatively, your Company made the filings of 89 ANDAs
with the FDA, 36 regulatory filings with European regulatory
agencies, 30 filings with the WHO, 14 with Canadian regulatory
agencies and 13 with Australian regulatory agencies, 12 with
New Zealand and 13 with RSA aggregating to 207 regulatory
submissions. During the year under review, your Company
secured approvals for 10 ANDAs from the FDA, 10 from the
WHO, 4 from the European regulatory agencies and 5 from
Australian regulatory agencies (TGA).
During the year, the Company had acquired a new
manufacturing facility from Vivin Laboratories Private Limited
which is situated at Jawaharlal Nehru Pharma City,
Visakhapatnam to increase its manufacturing capacities of
Active Pharmaceutical Ingredients (APIs).
On April 14, 2010 your Company entered into a definitive
agreement for purchase of business undertaking, comprising
of research & development and manufacturing of APIs from
Mylan India Pvt. Ltd., whose registered office is at Plot
No.1A/2, MIDC Industrial Estate, Taloja, Panvel, District
Raigad, Maharashtra - 410 208. The transaction was closed
during the month of June, 2010.
Dividend
Keeping in view the ongoing expansion cum modernisation
and other significant capital expenditure programmes on the
anvil to augment production capacities / modernization of its
facilities, your Directors have, after due deliberations, decided
to plough back profits and hence, do not recommend any
dividend for the financial year 2009-10.
Divestments
Fine Chemicals Corporation (Pty) Limited
Your Company had entered into agreements in October, 2008
for the termination of the joint venture agreements with Aspen
Pharmacare Holdings Limited ("Aspen"). The Astrix
Laboratories Limited ("Astrix") and Fine Chemicals
Corporation (Pty) Limited ("FCC") joint ventures were held
50:50 by Aspen and your Company along with their respective
subsidiaries. Under the terms of the termination agreements,
50% of the Company s stake in FCC was bought by Aspen.
4
50% Aspen s stake in Astrix was assigned by Matrix to its parent
company (49%) and to a fellow subsidiary (1%).
The transaction was closed with effect from May 31, 2009.
With effect from June 1, 2009, the composition of Board of
Directors of Astrix is under the control of your Company.
The financials of Astrix are consolidated line by line with effect
from June 1, 2009 in the consolidated results of your Company.
Concord Biotech Limited
On December 4, 2009, your Company sold its 52.38% equity
stake comprising of 13,27,070 Equity Shares of Rs.10/- each
in Concord Biotech Limited (Concord) to the Promoters of
Concord. Concord has thus, ceased to be a subsidiary of the
Company with effect from the said date. The Company
recorded a gain of Rs. 342 million on consolidated basis and
Rs. 606 million on stand alone basis on the sale of the said
equity shares.
Restructuring of subsidiaries of your Company
Your Company held 100% equity interest in Matrix Laboratories
BVBA, Belgium (formerly known as Matrix Laboratories NV)
through its wholly owned subsidiary Matrix Laboratories BV,
Netherlands. Matrix Laboratories BVBA held 100% equity
interest in Docpharma and its group companies ( Docpharma
Group ). The shareholding of your Company in Matrix
Laboratories BVBA came down to 39.99% as of December
29, 2009 on account of the conversion of debt, held by ultimate
Holding Company and its Subsidiaries in Matrix Laboratories
BVBA to equity. Consequently, your Company s interest in
Docpharma Group also came down to 39.99%.
The Company deconsolidated Matrix Laboratories BVBA (the
operations of the Docpharma Group) as of January 1, 2010
and recorded a gain of Rs 4014 million on deconsolidation.
The gain is principally on account of the conversion of the
debt held by the Mylan Group. The carrying cost of the
investment in Matrix Laboratories BVBA is nil as a provision
for diminution in value of the investment was made during the
year ended March 31, 2008.
Your Company has obtained the approval of the shareholders
as well as the approval of Reserve Bank of India (RBI) for sale
and transfer of Matrix Laboratories BV together with its direct
and indirect subsidiaries comprising of Matrix Laboratories
BVBA and Docpharma and its subsidiaries to Mylan
Luxembourg 2 Sarl, a wholly owned subsidiary of Mylan Inc.,
the ultimate parent company of your Company. The transfer
would be effected at a fair value arrived at by an independent
valuer.
Delisting of equity shares from Stock Exchanges
The equity shares of your Company were delisted from the
Bombay Stock Exchange (BSE) and The National Stock
Exchange of India Limited (NSE) ("collectively Stock
Exchanges") with effect from August 21, 2009, in terms of the
Securities and Exchange Board of India (Delisting of Securities)
Guidelines, 2003.
Changes in Capital Structure
Issue of shares on exercise of Employee Stock Options
During the year under review, the Company has allotted
1,725,170 equity shares of Rs.2/- each pursuant to exercise of
stock options. Consequent to the above, the paid-up share
capital of the company as at March 31, 2010 increased to
Rs. 309.22 millions.
Notes on Subsidiaries
Your Company has 10 subsidiaries (including step down
subsidiaries) as on March 31, 2010.
Pursuant to section 212(8) of the Companies Act, 1956, the
Central Government vide its letter no. 47/249/2010-CL-III
dated July 6, 2010 granted exemption from attaching to the
Balance Sheet of the Company, the Accounts and other
documents of each of its subsidiaries. However, the
Consolidated Financial Statements of the Company, which
include the results of the said subsidiaries, form part of this
Annual Report. A statement containing certain particulars of
the subsidiaries, as stipulated by the Government of India,
Ministry of Corporate Affairs while granting such exemption,
are attached to the Annual Report. Copies of the annual
accounts of the Company s subsidiaries can be sought by any
investor of the Company on making a written request to the
Company at the Registered Office of the Company in this
regard. The Annual Accounts of the subsidiary companies are
also available for inspection to any investor at the Company s
registered office.
Consolidated Financial Statements
In accordance with the Accounting Standard AS-21 on
Consolidated Financial Statements, the audited Consolidated
Financial Statements are attached to this Annual Report.
Fixed Deposits
Your Company has not accepted / renewed any fixed deposits
under Section 58A of the Companies Act, 1956 during the
year 2009-2010.
Directors
Appointment of Dr. B. Hari Babu and Mr. Sanjeev Sethi
as Additional Directors
Dr. B. Hari Babu and Mr. Sanjeev Sethi were appointed as
additional directors of the Company effective October 7, 2009
and will hold office of directorship till the ensuing Annual
General Meeting of the Company. Due notice(s) under Section
257 of the Companies Act, 1956 have been received from
members proposing their appointment as directors of the
Company. It is proposed to appoint them as Directors of the
Company liable to retire by rotation.
Dr. Hari Babu was also appointed as Chief Operating
Officer and Executive Director of the Company effective
October 7, 2009.
Cessation of Directors
During the year under review, M/s. Robert J. Coury, N. Prasad,
C. Ramakrishna, K. R. V. Subrahmanian, Prof P. V. Indiresan
and Dr. Fred E. Cohen ceased to be Directors of the
Company.
Your Board places on record its appreciation of the valuable
services rendered by the above-mentioned Directors, during
their tenure.
Re-appointment of Directors by rotation
In accordance with the provisions of the Companies Act, 1956,
M/s. Rajiv Malik and S. Srinivasan retire by rotation at the
ensuing Annual General Meeting of your Company and, being
5
eligible, offer themselves for re-appointment.
Your Board of Directors recommend the appointment of
M/s. Rajiv Malik and Srinivasan, as Directors of the Company.
Auditors
M/s. Deloitte Haskins & Sells, Chartered Accountants, Statutory
Auditors of the Company, hold office until the conclusion of
ensuing Annual General Meeting and are eligible for
re-appointment. The Company has received a certificate from
M/s. Deloitte Haskins & Sells, Chartered Accountants, under
Section 224 (1) of the Companies Act, 1956, confirming their
eligibility and willingness to accept the office of the Statutory
Auditors for the financial year 2010-2011, if re-appointed. Your
Board recommends the appointment of M/s. Deloitte Haskins
& Sells, as Statutory Auditors of the Company for the financial
year 2010-2011.
Cost Audit
Pursuant to Section 233B of the Companies Act, 1956, the
Central Government has prescribed Cost Audit of the
Company s Bulk Drugs Units. Subject to the approval of the
Central Government, the Board has appointed M/s. Sagar &
Associates as Cost Auditors of the Company for the financial
year 2010-2011. The Cost Auditors Report shall be submitted
to the Central Government as required under the provisions
of the Companies Act, 1956.
Directors Responsibility Statement
As required under Section 217 (2AA) of the Companies Act,
1956, your directors confirm having:
i) Followed the applicable accounting standards with proper
explanation relating to material departures in the
preparation of the Annual Accounts;
ii) Selected such accounting policies and applied them
consistently and made judgements and estimates that are
reasonable and prudent so as to give a true and fair view
of the state of affairs of your Company at the end of the
financial year 2009-2010 and of the profit of your
Company for that period;
iii) Taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding
the assets of your Company and for preventing and
detecting fraud and other irregularities; and
iv) Prepared the Annual Accounts on a going-concern basis.
Companies (Disclosure of Particulars in the Report of
Board of Directors) Rules, 1988
Information in accordance with the provisions of Section
217(1)(e) of the Companies Act, 1956, read with Companies
(Disclosure of Particulars in the Report of Board of Directors)
Rules, 1988 relating to the conservation of energy, technology
absorption and foreign exchange earnings and outgo is given
in the annexure II forming part of this report.
Particulars of employees
The details of the employees drawing remuneration exceeding
the limits prescribed under the provisions of Section 217 (2A)
of the Companies Act, 1956 is given in the annexure III forming
part of this Report.
Employee Stock Option Scheme
During the year with the approval of the Members, "Employee
Stock Option Plans" (ESOP Plans) were amended to provide
for immediate vesting of all outstanding stock options, revised
reset prices in case the employees acquire the shares within a
period of 6 months from the date of delisting. Further, the
employees right to purchase the shares from the Company
have been substituted with the right to purchase equity shares
from Matrix ESOP Trust.
There were no fresh stock options granted by the Company to
any employees / Directors under the ESOP Plans during the
year. However, during the year under review, 1,725,170 stock
options were exercised and equivalent number of equity shares
were issued and allotted under the ESOP Scheme. As on date
there are no outstanding stock options which are exercisable.
The details of the options granted up to March 31, 2010,
pursuant to clause 12 of Securities and Exchange Board of
India (Employee Stock Options Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 are set out in the
annexure - I to this Report.
Transfer of Unpaid / Unclaimed dividend to Investor
Education Protection Fund
Pursuant to the provisions of Section 205A (5) of the
Companies Act, 1956, the dividend declared for the financial
years 2001-02 and 2002-03, which remained unclaimed for a
period of seven years has been transferred by the Company to
the Investor Education and Protection Fund established by
the Central Government.
Acknowledgements
Your Directors wish to express their grateful appreciation for
the co-operation and support received from the Government
of India, Governments of Andhra Pradesh and Maharashtra,
Banks viz., Export Import Bank of India, State Bank of India,
Andhra Bank, The Bank of Nova Scotia, HDFC Bank, ABN
Amro Bank, HSBC Bank, Deutsche Bank, Yes Bank and
IndusInd Bank. Your Directors also thank the vendors,
customers, consultants, auditors and others who have been
assisting your Company in the various facets of its operations.
Your Directors also wish to place on record their sincere
appreciation to its parent company Mylan Inc., for its support
in implementing the organizational goals.
The Directors also wish to place on record their sincere
appreciation of the employees at all levels for their dedicated
contribution towards the growth of your Company.
For and on behalf of the Board of Directors
Place: Secunderabad S. Srinivasan
Date: July 30, 2010. Chief Executive Officer &
Managing Director
Dr. B. Hari Babu
Chief Operating Officer &
Executive Director
6
ANNEXURE I TO THE REPORT OF THE DIRECTORS
Statement as at 31st March 2010, pursuant to Clause 12 (Disclosure in the Direct
ors Report) of the Securities and Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guide
lines, 1999.
2005 2006
a) Number of options granted (a) 30,00,000 (c) 6,66,000
(b) 10,88,000 (d) 1,55,000
(e) 4,91,500
Total Number of Options granted 54,00,500
b) i) Pricing Formula 20% discount on the average weekly high and low of the clo
sing price of
the shares, quoted on the National Stock Exchange of India Limited,
during the six months prior to the date of granting of options.
ii) Original Exercise Price (Rs.) (a) 143.136 (c) 171.00
(b) 144.63 (d) 199.00
(e) 210.00
iii) Reset Exercise Price (Rs.) (a) 107.29 (c) 114.94
(b) 106.21 (d) 125.91
(e) 129.13
c) Total number of Options vested 3,108,601
d) Total number of Options exercised 3,108,601
e) Total number of Ordinary shares arising
as a result of exercise of options 1,725,170 of Rs. 2/ - each
f) Total number of Options lapsed 2,291,899
g) Variation of terms of Options During the year, amongst others, the ESOP Plans
have been amended to
provide for immediate vesting of all outstanding stock options, revised
reset prices in case the employees acquire the shares within a period of 6
months from the date of delisting. Further, the employees right to purchase
the shares from the Company have been substituted with the right to
purchase equity shares from Matrix ESOP Trust.
h) Money realised by exercise of Options Rs. 1942.75 lakhs
i) Total number of options in force Nil
j) Employee wise details of options
Granted:
i) Details of options granted to senior
managerial personnel during the year NA
ii) Any other employee who received
a grant in any one year of Options
amounting to 5% or more of the
Options granted during the year. NA
7
iii) Identified employees who were
granted Options during any one year
equal to or exceeding 1% of the
issued capital (excluding outstanding
warrants and conversions) of the
Company at the time of grant. NA
k Diluted Earnings per share (EPS) pursuant
to issue of shares on exercise of Options
calculated in accordance with Accounting
Standard (AS) 20 EPS . Rs.9.83
l) Where the Company has calculated the As part of the process for delisting of
the Equity shares of the
employees compensation cost using the Company, the employee stock option plans (
ESOP plans) have been
intrinsic value of the stock options, the modified, to provide for immediate ves
ting of outstanding stock
difference between the employee options and revision of exercise price. Further
the employees right to
compensation cost so computed and the purchase the shares from the Company was s
ubstituted with the right
employee compensation cost that shall be to purchase equity shares from Matrix E
SOP Trust. Consequent to the
recognized if it had used the fair value of modifications to the ESOP plans a to
tal charge of Rs. 80.30 Millions
the options, shall be disclosed. is recorded under employee cost.
The impact of this difference on profits on
EPS of the Company be also be disclosed.
m) Weighted average exercise price of Options
granted during the year whose
(a) Exercise price equals market price. NA
(b) Exercise price is greater than
market price. NA
(c) Exercise price is less than market price NA
n) Weighed average fair value of Options
granted during the year whose
(a) Exercise price equals market price. NA
(b) Exercise price is greater
than market price. NA
(c) Exercise price is less than market price. NA
o) A description of the method and
significant assumptions used during the
year to estimate the fair values of Options
granted during the year No Options have been granted during the Financial Year 2
009-2010.
Place: Secunderabad S. Srinivasan Dr. B. Hari Babu
Date: July 30, 2010. Chief Executive Officer & Chief Operating Officer &
Managing Director Executive Director
8
ANNEXURE II TO THE DIRECTORS REPORT
Information required under the Companies (Disclosure of Particulars in the Repor
t of the Board of Directors) Rules, 1988.
FORM A
A. Conservation of Energy
Your Company continued periodical auditing of all the installations internally t
o find new opportunities for reducing the
wastage of electrical and thermal energy.
Your Company, in addition to the measures implemented last year, has identified
and commissioned the following energy
saving devices / equipment, during the year under review:
1. Replacement of existing reactor based distillation units in the effluent trea
tment plants by energy efficient multiple effect
evaporator.
2. Replacement of existing high vaccum steam ejector systems with electrical ope
rated dry vaccum pumps, there by reducing
the operating cost by almost 50%.
3. Recycling of water from the effluent treatment plants into cooling towers the
reby avoiding usage of fresh water.
Particulars of Power & Fuel consumption for the year 2009-2010
Current Year Previous Year
31.03.2010 31.03.2009
A. POWER AND FUEL CONSUMPTION
1. Electricity
(a) Purchased
Units (KWH) 64,402,133 51,843,686
Total amount (Rs. millions) 254.64 190.23
Rate per Unit (Rs.) 3.95 3.67
(b) Own generation
(i) Through Diesel Generators
Diesel consumed (in litres) 4,289,176 2,187,311
Units (KWH) 13,464,021 5,924,441
Units per litre of diesel oil 3.14 2.71
Total Value (Rs. millions) 149.66 78.16
Cost per Unit (Rs.) 11.12 13.19
(ii) Through Steam turbine/generators
Units (KWH) Nil Nil
Units per litre of fuel oil / gas. Nil Nil
Cost per Unit (Rs.) Nil Nil
2. Coal
Quantity (tonnes) 27,362 16,062
Cost (Rs. millions) 103.86 62.71
Average rate per tonne 3,795.83 3,903.90
9
3. Furnace Oil
Quantity (litres) 4,092,458 4,409,421
Total cost (Rs. millions) 97.18 109.46
Average rate per litre 23.75 24.82
4. Others/Internal generation 7.38 4.82
B. Consumption per unit of production
Particulars Standard Current year Previous year
Product (with details) Since the Company manufactures a wide range of APIs, inte
rmediates
Units and finished dosage forms, it is not practicable to give consumption
Electricity per unit of production.
Diesel
FORM B
Disclosures of particulars with respect to Technology Absorption
A. RESEARCH AND DEVELOPMENT
Matrix has been focusing on intellectual property-based research and development
activity with the objective to develop novel
routes and non-infringing processes to facilitate the Company s first-mover adva
ntage across markets. Matrix is equipped
with a strong API and FDF R&D teams.
Specific areas in Research & Development carried out by the Company:
New product development by organic synthesis.
Improvement in process for existing products.
Development of new patent non-infringing processes.
Development of polymorphs or generic drug substances.
Impurity profiling of drug substances.
Analytical method development of intermediates and finished products.
Minimizing the effluent generation with the development of suitable processes.
Development of generic finished dosage forms (FDFs).
Benefits derived as a result of the above Research & Development
Yield improvement resulting in cost reduction for existing products.
Introduction of new products in the markets - both APIs and FDFs.
Meet the stringent needs of international customers and Regulatory authorities.
31.03.2010 31.03.2009
10
B. EXPENDITURE ON RESEARCH & DEVELOPMENT
Rs. Millions
31.03.2010 31.03.2009
(a) Capital 329.33 437.89
(b) Recurring 2,329.44 1,776.51
(c) Total 2,658.77 2,214.40
(d) Total R & D expenditure as a % of net sales 14.23% 14.97%
C. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
Efforts, in brief, made towards technology absorption, adaptation and innovation
:
a) Technology developed in-house has been scaled up and commercial production su
ccessfully established.
b) Various novel processes /products have been developed in-house for some gener
ic drug molecules, which are different
from the existing processes/ products so far patented.
Benefits derived as a result of the above:
Capabilities in developing technology for new products and novel processes / pro
ducts have helped entry into advanced
markets such as USA, Canada and Europe.
Imported technology:
No technology has been imported
FORM C
D. FOREIGN EXCHANGE EARNINGS AND OUTGO
Rs. Million
Particulars Current Year Previous Year
31.03.2010 31.03.2009
Foreign exchange earnings 15393.75 12430.67
Foreign exchange outgo 6069.30 4274.35
Net foreign exchange earnings 9324.45 8156.32
Place: Secunderabad S. Srinivasan Dr. B. Hari Babu
Date: July 30, 2010. Chief Executive Officer & Chief Operating Officer &
11
ANNEXURE III TO THE DIRECTORS REPORT
FOR THE FINANCIAL YEAR ENDED MARCH 31, 2010
Particulars of Employees under Section 217 (2A) of the Companies Act, 1956 and f
orming part of the Directors Report
Name Age Qualification Designation Date of Experi- Gross Last Employment
Joining ence Remu-
(years) neration
Rs.
Millions
A Jyothi Basu 40 M.Sc Associate Vice President 08/03/2000 17 3.34 Global Bulk Dr
ugs
A Murali Krishna 53 M.Sc Vice President 07/02/2003 27 3.88 Natco Pharma Limited
Abhijit Mukund Deshmukh 38 PhD Vice President 06/20/2005 13 4.94 Sandoz Pvt Limi
ted
Anirudh Deshpande 47 B.Sc, MBA Senior Vice President 05/21/2007 23 7.27 Aurobind
o Pharma Limited
Appasaheb H Kandagal 35 B.E. General Manager 01/19/2009 14 2.44 Ranbaxy Laborato
ries Ltd
Arvind Shankar Kanda 34 B.E., MBA Senior General Manager 01/19/2006 13 2.65 Dr R
eddy s Laboratories Ltd
Awdhesh Maheshwari 43 M.Sc., MBA Senior General Manager 08/03/2006 22 2.93 Medle
y Pharmaceutical
B Hari Babu 46 PhD COO & Executive Director 01/01/2001 17 13.61 Vera Laboratorie
s Limited
Battina V N S Siva Kumar 49 M.Sc Senior General Manager 03/11/2005 24 2.72 Oman
Chem & Pharmaceuticals
C Sai Krishnan 38 B.Sc, PGDMM General Manager 04/05/2001 15 2.49 Nestle India Lt
d
Debashish Datta 58 PhD Senior Vice President 01/01/2008 27 7.52 Merck Developmen
t Centre Pvt Ltd
G Venkata Rao 48 B.Com Senior General Manager 02/24/1995 26 2.40 Standard Organi
cs Ltd
Gopi Krishnan Shivraj 44 B.Com, MBA Associate Vice President 05/12/2006 19 2.76
Alembic Ltd
Imtiyaz Basade 44 M.Pharm Senior Vice President 10/01/2007 21 6.27 Orchid Chemic
als &
Pharmaceuticals Ltd
Indu Bhushan 46 M.Pharm Senior Vice President 09/03/2007 23 8.40 Dr. Reddy s Lab
oratories Limited
Jagannatha Reddy Amaram 53 M.Tech, MBA Vice President 08/21/2006 33 4.93 Neuland
Laboratories Ltd
K Madhukiran Reddy 37 B.Sc, PGIT General Manager 12/05/2001 14 2.49 Siris Ltd
Kameshwar Bhardwaj 34 M.Pharm Associate Vice President 06/27/2005 10 3.13 Ranbax
y Laboratories Ltd
L V Satyanarayana 40 B. Tech Vice President 01/01/2001 17 4.35 Vorin Laboratorie
s Limited
M Sharat Babu 41 M.Com, MBA Senior General Manager 10/25/1993 17 2.78 –
Manoj Kumar P 37 M.Pharm Senior General Manager 08/16/2007 12 3.22 Jubilant Orga
nosys Ltd
12
Madhurika Nalluri 55 B.Sc, BL Senior General Manager 12/22/2004 31 2.51 Andhra B
ank
Mohan Ravidutt Sharma 53 MLS, LLB (Gen) Senior Vice President 09/06/2006 31 9.08
Ranbaxy Laboratories Limited
Muralidhar Reddy Nomula 44 M.Sc, MBA Associate Vice President 06/20/2008 20 2.80
Dr Reddys Laboratories Ltd
Narayanan Sadasivan 44 CA , ICWA Associate Vice President 04/01/2008 18 2.97 Mer
ck Development Centre Pvt Ltd
Nirmal Kiran Lakkapragada 39 M.Sc General Manager 06/06/2008 16 2.42 Pfizer Limi
ted
Nitinkumar Shyamsundar Bhattad 35 M.Pharm Associate Vice President 08/29/2005 11
3.33 Sandoz Pvt Ltd
Pramod Kumar Singh 45 M.Pharm Senior Vice President 02/11/2006 20 6.75 Ranbaxy L
aboratories Ltd
Ramarao Dirisala 42 M.Pharm Senior General Manager 12/12/2008 14 2.64 Aurobindo
Pharma Ltd
Rajesh Gupta 47 M.Pharm Senior Vice President 10/24/2005 20 5.89 Sandoz Pvt Ltd
Ramakrishna Bangaru 46 M.Pharm Senior Vice President 11/26/2005 19 5.70 Sandoz P
vt Ltd
Rajiv Anant Desai 48 PhD, MBA Vice President 09/01/2008 18 5.19 Orchid Chemicals
S Srinivasan 44 BE (Hons), AICWA, MBA CEO & Managing Director 06/23/1994 21 16.1
1 Venky s India Ltd
Sarada Kalyani Bhagawati 42 CA, ICWA Vice President 04/20/2006 19 4.09 Idea Cell
ular Ltd
Sreenivasa Rao S 47 M.Sc Senior General Manager 03/14/2003 22 2.65 Granules Indi
a Limited
Srinivasa Rao Telaprolu 42 B.E. Associate Vice President 08/27/2007 19 2.59 Ranb
axy Laboratories Limited
Shobha Sreenivasan 55 CA Vice President 01/03/1994 18 4.59 S V Rangan, Chartered
Accountant
Subramanian Sethuraman Iyer 51 M.Sc, PhD Senior General Manager 05/11/2005 21 2.
67 Orchid Chemicals & Pharmaceuticals
Limited
Sunil Madhukar Kulkarni 50 BS (Process Engg.),
DIS, Dip in Mgmt Associate Vice President 06/06/2007 27 3.08 Hikal Ltd
Suresh Sarangan 47 B.Sc(Tech), M.Sc(Engg) Associate Vice President 03/26/2009 21
3.43 Wockhardt Ltd
Swadesh Saxena 47 M.Sc Associate Vice President 10/06/2008 26 3.56 Ranbaxy Labor
atories Limited
V Sheela 39 ACS, LL.M, MBA Senior General Manager 05/11/1998 15 3.05 Tejasviny R
asayns Ltd
V Siva Ram Prasad 47 M.Sc, PhD Associate Vice President 04/03/2003 20 2.68 Vani
Chemicals
V Srinivas 46 B.Sc Associate Vice President 08/31/2000 22 2.77 Rajyalakshmi Labs
Ltd
V Umamaheswara Rao 49 PhD Vice President 08/20/1997 20 5.24 Standard Organics Lt
d
Yasir Y Rawjee 44 PhD Senior Vice President 02/18/2004 16 7.42 QualPharma Associ
ate
Joining ence Remu-
(years) neration
Rs.
Million
13
Particulars of Employees under Section 217 (2A) of the Companies Act, 1956 and f
orming part of the Directors Report
Employed for a part of the year and in receipt of remuneration aggregating Rs. 2
,00,000/- or more per month
Joining ence Remu-
(years) neration
Rs.
Million
Dinesh Shenoy 37 M.Pharm, PhD General Manager 02/04/2010 10 0.40 Cadila Pharmace
uticals Ltd
Govind Shanker Pandey 43 M.Pharm Vice President 02/09/2010 12 0.58 Ranbaxy Labor
atories Limited
Lokesh Nagpal 40 B.E, PGDBM Senior General Manager 09/24/2009 15 1.51 Zuelling P
harma India Pvt Ltd
Pallab De 49 M.Sc Senior Vice President 02/01/2010 24 1.09 Wockhardt Limited
Rajeev Mukundan 37 B.A, LLB, LLM General Counsel &
Chief Compliance Officer 09/01/2009 15 4.51 UBS Services Centre (India) Pvt Ltd
Rama Shankar 44 M.Sc, PhD Associate Vice President 09/23/2009 16 1.90 Aurobindo
Pharma Limited
Research Centre
Ramesh R V 41 B.E. Senior Vice President 04/08/2009 18 6.45 Dr. Reddy s Laborato
ries Limited
Sanjay Bhatia 44 B.E.,PGDIE Associate Vice President 04/05/2009 22 4.69 Ranbaxy
Laboratories Limited
Sunil Govind Uttarwar 39 B.E. Senior General Manager 03/08/2010 16 0.16 Elder Ph
armaceuticals Ltd
Suryanarayana Venkata Mulukutla 49 M.Sc, PhD Vice President 06/03/2009 20 3.96 P
fizer Pharmaceutical India Pvt Ltd
Susanto Banerjee 44 B.Com (Hons), CA Senior Vice President &
Head Finance 12/01/2009 19 2.77 Mphasis Limited
Deepak Gurudas Haldankar* 55 B Sc. PhD (Honorary) Senior Vice President 11/06/20
06 32 3.61 Dabur Pharma Ltd
Sandip Choudhury* 55 CA Chief Financial Officer 07/09/2007 20 10.34 FMC Corporat
ion
Ranjan Pandey* 45 B.Sc, PGDPMIR Associate Vice President 01/05/2009 20 2.40 Reli
ance Retail Limited
P S Ramaswamy* 62 PhD Vice President 11/05/2003 26 0.38 Morepen Labs Ltd
* Ceased to be the employees of the company during the financial year
Notes:
1. None of the above mentioned persons are related to any other Director of the
Company
2. The above details are also available at the registered office of the Company
for inspection between 10.00 A.M. to 1.00 P.M. on all working days up to the las
t date of the AGM.
Place : Secunderabad S. Srinivasan Dr. B. Hari Babu
Date : July 30, 2010. Chief Executive Officer & Chief Operating Officer &
14
FINANCIAL SECTION
15
AUDITORS REPORT
To the Members of
MATRIX LABORATORIES LIMITED
1. We have audited the attached Balance Sheet of MATRIX
LABORATORIES LIMITED ("the Company") as at
31st March, 2010, the Profit and Loss Account and the
Cash Flow Statement of the Company for the year ended
on that date, both annexed thereto. These financial
statements are the responsibility of the Company s
Management. Our responsibility is to express an opinion
on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing
standards generally accepted in India. Those Standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting
the amounts and the disclosures in the financial statements.
An audit also includes assessing the accounting principles
used and the significant estimates made by the
Management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
3. As required by the Companies (Auditor s Report) Order,
2003 (CARO) issued by the Central Government in terms
of Section 227(4A) of the Companies Act, 1956, we
enclose in the Annexure a statement on the matters
specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in
paragraph 3 above, we report as follows:
(a) we have obtained all the information and
explanations which to the best of our knowledge
and belief were necessary for the purposes of our
audit;
(b) in our opinion, proper books of account as required
by law have been kept by the Company so far as it
appears from our examination of those books;
(c) the Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement dealt with by this report
are in agreement with the books of account;
(d) in our opinion, the Balance Sheet, the Profit and Loss
Account and the Cash Flow Statement dealt with by
this report are in compliance with the Accounting
Standards referred to in Section 211(3C) of the
Companies Act, 1956;
(e) in our opinion and to the best of our information
and according to the explanations given to us, the
said accounts give the information required by the
Companies Act, 1956 in the manner so required and
give a true and fair view in conformity with the
accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state
of affairs of the Company as at 31st March,
2010;
(ii) in the case of the Profit and Loss Account, of
the profit of the Company for the year ended
on that date and
(iii) in the case of the Cash Flow Statement, of the
cash flows of the Company for the year ended
on that date.
5. On the basis of the written representations received from
the Directors as on 31st March, 2010 taken on record by
the Board of Directors, none of the Directors is
disqualified as on 31st March, 2010 from being appointed
as a director in terms of Section 274(1)(g) of the
Companies Act, 1956.
For DELOITTE HASKINS & SELLS
Chartered Accountants
Registration No. 008072S
Ganesh Balakrishnan
Place : Secunderabad Partner
Date : June 14, 2010 Membership No.201193
16
Annexure To The Auditors Report
(Referred to in paragraph 3 of our report of even date)
(i) Having regard to the nature of the Company s business /
activities / results, clauses 4(x), 4(xii), 4(xiii), 4(xiv), 4(xix)
and 4(xx) of CARO are not applicable.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records
showing full particulars, including quantitative details
and situation of a major portion of fixed assets.
(b) Some of the fixed assets were physically verified
during the year by the Management in accordance
with a programme of verification which, in our
opinion, provides for physical verification of major
fixed assets at reasonable intervals having regard to
the size of the Company and the nature of its assets.
According to the information and explanation given
to us, no material discrepancies were noticed on such
verification.
(c) The fixed assets disposed off during the year, in our
opinion, do not constitute a substantial part of the
fixed assets of the Company and such disposal has,
in our opinion, not affected the going concern status
of the Company.
(iii) In respect of its inventories:
(a) As explained to us, the inventories were physically
verified during the year by the Management at
reasonable intervals.
(b) In our opinion and according to the information
and explanation given to us, the procedures of
physical verification of inventories followed by the
Management were reasonable and adequate in
relation to the size of the Company and the nature
of its business.
(c) In our opinion and according to the information
and explanations given to us, the Company has
maintained proper records of its inventories and no
material discrepancies were noticed on physical
verification.
(iv) The Company has neither granted nor taken any loans,
secured or unsecured, to/from companies, firms or other
parties listed in the Register maintained under Section 301
of the Companies Act, 1956.
(v) In our opinion and according to the information and
explanations given to us, there are adequate internal
control systems commensurate with the size of the
Company and the nature of its business with regard to
purchases of inventory and fixed assets and the sale of
goods and services. During the course of our audit, we
have not observed any major weakness in such internal
control system.
(vi) According to the information and explanations given to
us, we are of the opinion that there are no contracts or
arrangements which need to be entered in the register
maintained under section 301 of the Act. In view of this,
paragraphs 4 v (a) and 4 v (b) of CARO are not applicable.
(vii) In our opinion and according to the information and
explanations given to us, the Company has complied with
the provisions of Sections 58A and 58AA or any other
relevant provisions of the Companies Act, 1956 and the
Companies (Acceptance of Deposits) Rules, 1975 with
regard to the deposits accepted from the public. According
to the information and explanations given to us, no order
has been passed by the Company Law Board or the
National Company Law Tribunal or the Reserve Bank of
India or any Court or any other Tribunal.
(viii) In our opinion, the internal audit functions carried out
during the year by a Company appointed by the
management have been commensurate with the size of
the Company and the nature of its business.
(ix) We have broadly reviewed the books of account
maintained by the Company pursuant to the rules made
by the Central Government for the maintenance of cost
records under Section 209(1) (d) of the Companies Act,
1956 in respect of manufacture of bulk drugs and
formulations and are of the opinion that prima facie the
prescribed accounts and records have been made and
maintained. We have, however, not made a detailed
examination of the records with a view to determining
whether they are accurate or complete. To the best of
our knowledge and according to the information and
explanations given to us, the Central Government has not
prescribed the maintenance of cost records for any other
products of the Company.
(x) According to the information and explanations given to
us in respect of statutory dues:
(a) The Company has generally been regular in
depositing undisputed dues, including Provident
Fund, Investor Education and Protection Fund,
Employees State Insurance, Income-tax, Sales Tax,
Value added Tax, Wealth Tax, Service Tax, Works
Contract Tax, Custom Duty, Excise Duty, Cess and
other material statutory dues applicable to it with
the appropriate authorities.
(b) There were no undisputed amounts payable in
respect of Income-tax, Wealth Tax, Works Contract
Tax, Provident Fund, Employees State Insurance,
Investor Education and Protection Fund, Value
Added Tax, Service Tax, Custom Duty, Excise Duty,
Cess and other material statutory dues in arrears as
at 31st March, 2010 for a period of more than six
months from the date they became payable.
17
Statute Nature of Dues Forum where Period to Amount
Dispute is pending which the involved
amount (Rs. in
relates Millions)
Sales Tax Sales Tax Appellate Tribunal 2000-2001 0.60
Andhra Pradesh General Sales Tax Sales Tax Appellate Tribunal 2001-2002 0.51
Sales Tax Act, 1956 Sales Tax Sales Tax Appellate Tribunal 2003-2004 1.08
Andhra Pradesh Value Value Added Tax Andhra Pradesh High Court 2005-2006 152.08
Added Tax Act, 2005 Value Added Tax Appellate Deputy Commissioner 2007-2008 8.86
Finance Act, 1994 Service Tax Customs, Excise & Service
Tax Appellate Tribunal 2003-2004 18.78
Income Tax Income Tax Apellate Tribunal 2000-2001 0.29
Income Tax Act, 1961 Income Tax Income Tax Apellate Tribunal 2001-2002 2.92
Income Tax Act, 1961 Income Tax Commissioner of Income Tax
(Appeals) 2004-2005 17.38
Excise duty Appellate Tribunal (CESTAT) 2003-2004 to
2005-2006 1.39
Excise duty Appellate Tribunal (CESTAT) 2005-2006 5.21
Central Excise Act, 1944 Excise duty Appellate Tribunal (CESTAT) 2006-2007 1.27
Excise duty Department of Central Excise
and Customs 2007-2008 0.51
Excise duty Appellate Tribunal (CESTAT) 2008-2009 12.37
Excise duty Deputy Commissioner of Central
Excise and Customs 2008-2009 0.22
Excise duty Assistant Commissioner of
Central Excise and Customs 2008-2009 0.20
Customs duty Andhra Pradesh High Court 1995-1996 36.00
Customs duty Appellate Tribunal (CESTAT) 1998-1999 3.56
Customs Act, 1962 Customs duty Andhra Pradesh High Court 1999-2000 2.21
(c) Details of dues of Income-tax, Sales Tax, Value Added Tax, Wealth Tax, Servi
ce Tax, Custom Duty, Excise Duty and
Cess which have not been deposited as on 31st March, 2010 on account of disputes
are given below:
18
(xi) In our opinion and according to the information
and explanations given to us, the Company has not
defaulted in the repayment of dues to banks.
(xii) In our opinion and according to the information
and explanations given to us, the terms and
conditions of the guarantees given by the Company
for loans taken by others from banks are not prima
facie prejudicial to the interests of the Company.
(xiii) In our opinion and according to the information
and explanations given to us, the term loans have
been applied for the purposes for which they were
obtained.
(xiv) In our opinion and according to the information
and explanations given to us and on an overall
examination of the Balance Sheet, we report that
funds raised on short-term basis have not been used
during the year for long- term investment.
(xv) According to the information and explanations
given to us, the Company has not made preferential
allotment of shares to parties and companies
covered in the Register maintained under Section
301 of the Companies Act, 1956.
(xvi) To the best of our knowledge and according to the
information and explanations given to us, no fraud
by the Company and no fraud on the Company
has been noticed or reported during the year.
For DELOITTE HASKINS & SELLS
Registration No.008072S
Ganesh Balakrishnan
Place : Secunderbad Partner
Date : June 14, 2010 Membership No. 201193
19
Rs. Millions
Note As At As At
Particulars Schedule Reference 31st March 31st March
Schedule 3.02 2010 2009
SOURCES OF FUNDS
Shareholders funds
Share Capital 1.01 312.68 309.23
Stock Options 10 – 82.73
Reserves and Surplus 1.02 11,209.18 8,384.02
11,521.86 8,775.98
Loan Funds
Secured Loans 1.03 3 4,502.92 4,488.47
Unsecured Loans 1.04 3 1,616.13 1,989.62
6,119.05 6,478.09
Deferred Tax Liability (net) 12 947.10 757.05
TOTAL 18,588.01 16,011.12
APPLICATION OF FUNDS
Fixed Assets
Gross Block 1.05 11,304.40 8,322.99
Less : Depreciation & Amortisation 1.05 (2,721.34) (2,191.04)
Net Block 1.05 8,583.06 6,131.95
Capital Work-in-Progress (includes Capital Advance) 2(b) 1,334.14 1,475.07
TOTAL 9,917.20 7,607.02
Investments 1.06 1,766.57 2,318.98
Current Assets, Loans & Advances
a. Inventories 1.07 6,335.13 3,763.87
b. Sundry Debtors 1.08 4,843.89 4,914.11
c. Cash & Bank Balances 1.09 86.01 20.00
d. Loans & Advances 1.10 1,657.38 1,052.08
12,922.41 9,750.06
Less: Current Liabilities & Provisions
a. Current Liabilities 1.11 5,818.25 3,332.04
b. Provisions 1.12 199.92 332.90
6,018.17 3,664.94
Net Current Assets 6,904.24 6,085.12
TOTAL 18,588.01 16,011.12
Significant Accounting Policies and Notes to the Accounts 3.01 & 3.02
BALANCE SHEET
As at 31st March 2010
As per our report of even date attached For and on behalf of the Board
For Deloitte Haskins & Sells
Chartered Accountants Susanto Banerjee S.Srinivasan
Head Finance Chief Executive Officer &
Managing Director
Ganesh Balakrishnan
Partner B.Nagaraj Goud Dr.B.Hari Babu
Company Secretary Chief Operating Officer &
Executive Director
Place : Secunderabad
Date : June 14, 2010
20
INCOME
Gross Sales 18,804.98 14,947.62
Less : Excise Duty (124.72) (157.38)
Net Sales 4(d)&14(b) 18,680.26 14,790.24
Income from potential patent infringement suit 9 – 134.57
Conversion Income 137.98 96.51
Other Income 2.01 8 85.95 218.53
18,904.19 15,239.85
EXPENDITURE
Materials Consumed 2.02 9,162.29 7,047.32
Manufacturing Expenses 2.03 1,451.24 1,113.17
Personnel Cost 2.04 10(a) 1,344.25 958.41
Administrative, Selling & Other Expenses 2.05 1,256.03 849.72
Research & Development Expenditure (including depreciation) 2.06 2,329.44 1,776.
51
Interest & Finance Cost 2.07 509.81 569.18
Depreciation & Amortisation (excluding R&D) 1.05 464.44 355.82
16,517.50 12,670.13
Profit before Tax and Exceptional Item 2,386.69 2,569.72
Profit on Sale of subsidiary 22 606.08 –
Profit before Tax 2,992.77 2,569.72
Tax Expense 2.08 854.43 680.21
Profit after Tax 2,138.34 1,889.51
Balance brought forward from previous year 2,864.21 974.70
Balance carried to Balance Sheet 5,002.55 2,864.21
Earnings per share (Face Value of Rs. 2/- each) - Rs.
On Profit after Tax
— Before Exceptional Item
— Basic 13 9.83 12.22
— Diluted 9.83 12.22
— After Exceptional Item
— Basic 13 13.71 12.22
— Diluted 13.71 12.22
Significant Accounting Policies and Notes to the Accounts 3.01 & 3.02
PROFIT AND LOSS ACCOUNT
For the Year Ended 31st March 2010 Rs. Millions
Note Year Ended Year Ended
Particulars Schedule Reference 31st March 31st March
Schedule 3.02 2010 2009
Managing Director
Ganesh Balakrishnan
Executive Director
21
Rs. Millions
Year Ended Year Ended
Particulars 31st March 31st March
2010 2009
A CASH FLOW FROM OPERATING ACTIVITIES
Net Profit before tax and exceptional items 2,386.69 2,569.72
Adjustments for :
Wealth Tax 0.09 0.19
Depreciation & Amortisation 562.64 429.37
Employee Stock Option Expense 80.30 3.56
Interest - (net) 492.60 519.11
Deferred Income (23.48) –
Deferred Income - Potential Patent Infringement Settlement – (134.57)
Unrealised Gain on Exchange Difference - (net) (89.42) (1.33)
Loss on disposal / retirement of Fixed Assets (net) 4.43 7.18
Operating profit before Working Capital changes 3,413.85 3,393.23
Adjustments for :
Inventories (2,571.26) (702.30)
Sundry Debtors 12.83 (2,651.54)
Loans and Advances (743.31) (56.94)
Trade Payables and Other Liabilities 2,711.85 1,032.43
Cash generated from operations 2,823.96 1,014.88
Direct Tax paid - Net of Refund (768.45) (331.12)
Wealth Tax Paid (0.19) (0.32)
Settlement on Restructuring the Supply Agreement 234.83 –
Net cash flow from Operating activities 2,290.15 683.44
B CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (2,921.44) (2,298.23)
Sale Proceeds from Fixed Assets 4.84 21.78
Proceeds from Sale of Subsidiary 1,158.49 –
Investment in Subsidiary (0.01) –
Interest Received 16.81 53.00
Net cash used in Investing activities (1,741.31) (2,223.45)
CASH FLOW STATEMENT
For the Year Ended 31st March 2010
22
Rs. Millions
2010 2009
CASH FLOW STATEMENT
For the Year Ended 31st March 2010 (Contd...)
Managing Director
Ganesh Balakrishnan
Executive Director
C CASH FLOW FROM FINANCING ACTIVITIES
Repayment of Sales Tax Deferment (2.87) (3.64)
Proceeds from / (Repayment of) Long Term Loan - (net) 160.00 (70.00)
Proceeds from / (Repayment of) Bank Borrowings - (net) (857.05) 1,196.51
(Advance to)/Repayment of Loans from/to Subsidiary 88.92 (66.44)
Loan from Holding Company 461.37 957.24
Interest Paid (527.47) (557.20)
Proceeds from Issue of Equity Capital 3.45 0.05
Securities Premium Received 190.82 3.83
Net cash from/used in Financing activities (482.83) 1,460.35
Net Increase/(Decrease) in Cash and Cash equivalents 66.01 (79.66)
Cash and Cash equivalents at the beginning of the year 20.00 99.66
Cash and Cash equivalents at the end of the year * 86.01 20.00
* Includes Restricted balances of Rs 33.43 Millions as at 31st March 2010 (31st
March 2009 : Rs 14.02 Millions)
23
SCHEDULES TO THE ACCOUNTS
SCHEDULE 1.01
SHARE CAPITAL
Authorised
200,000,000 Equity shares of face value Rs.2/- each. 400.00 400.00
Issued, Subscribed and Paid up
156,338,811 Equity shares of Rs.2/- each fully paid up
(31st March 2009 :154,613,641 Equity shares of Rs.2/-each) 312.68 309.23
312.68 309.23
Of the above :
14,999,350 shares represent after subdivision of 2,999,870 Equity shares
of Rs.10/- per share which were issued as fully paid up to the shareholders
of the erstwhile Vorin Laboratories Limited, Medicorp Technologies
India Limited, Vera Laboratories Limited, Fine Drugs and Chemicals
Limited, Medikon Laboratories Limited and Calibre Engineering Private
Limited on their respective amalgamation with the Company, for
consideration other than cash.
74,841,605 shares were issued as fully paid bonus shares by utilisation of
Rs.149.68 Millions from Securities Premium account.
151,461,255 shares (31st March 2009 - 110,024,634) are held by MP
Laboratories (Mauritius) Limited, the Holding Company, a wholly owned
subsidiary of Mylan Inc, the Ultimate Holding Company
Rs. Millions
Note As At As At
Particulars Reference 31st March 31st March
Schedule 3.02 2010 2009
24
As at 31st March 2010 Rs. Millions
Note As At As At
Schedule 3.02 2010 2009
SCHEDULE 1.02
RESERVES AND SURPLUS Opening Additions (Utilisation)
Central Subsidy 6.03 – – 6.03 6.03
Securities Premium 4594.34 353.85 – 4,948.19 4,594.34
General Reserve 568.78 – – 568.78 568.78
Investment Allowance Reserve 0.05 – – 0.05 0.05
Revenue Reserves (as per scheme
of Amalgamation) 350.61 – – 350.61 350.61
Cash Flow Hedge Account
(refer note 9 of schedule 3.01) – 332.97 – 4(d) & 4(e) 332.97 –
Profit and Loss Account 5,002.55 2,864.21
11,209.18 8,384.02
SCHEDULE 1.03
SECURED LOANS
From Banks
– Term Loans 3 (a) & 3 (c) 653.64 490.00
– Working Capital Loans 3(b) 3,849.28 3,998.47
4,502.92 4,488.47
SCHEDULE 1.04
UNSECURED LOANS
Short term Loans
– From Bank 3 (d) 250.00 1,000.00
Other Loans
– Sales Tax Deferment 3(d) 29.51 32.38
– Loan from Holding Company 1,336.62 957.24
1,616.13 1,989.62
25
Schedule 1.05 : Fixed Assets - Other than Research & Development (R&D)
Rs. Millions
Gross Block (At Cost) Depreciation / Amortisation Net Block
Description As at 1st Additions/ Deletions As at 31st As at 1st For the Deletion
s/ As at 31st As at 31st As at 31st
April 2009 Adjustments * March 2010 April 2009 Year Adjustments* March 2010 Marc
h 2010 March 2009
Tangible
Land - Freehold 249.28 107.50 – 356.78 – – – – 356.78 249.28
Land - Leasehold 15.38 – – 15.38 0.72 0.17 – 0.89 14.49 14.66
Buildings 1,453.21 552.72 – 2,005.93 232.93 54.58 – 287.51 1,718.42 1,220.28
Plant & Machinery * 4,102.22 1,566.42 3.49 5,665.15 1,185.37 266.65 2.11 1,449.9
1 4,215.24 2,916.85
Electrical Equipment 413.69 114.92 0.48 528.13 154.94 30.10 0.23 184.81 343.32 2
58.75
Lab Equipment * 462.51 249.69 5.57 706.63 133.97 49.41 7.56 175.82 530.81 328.54
Office Equipment 73.56 13.13 3.79 82.90 37.22 7.00 1.90 42.32 40.58 36.34
Furniture & Fittings 130.97 51.71 0.31 182.37 55.77 14.63 0.31 70.09 112.28 75.2
0
Computers* 178.30 24.58 5.07 197.81 105.94 23.26 4.61 124.59 73.22 72.36
Vehicles* 45.09 3.90 12.87 36.12 29.22 7.34 9.30 27.26 8.86 15.87
Library 1.05 – – 1.05 1.05 – – 1.05 – –
Intangible
Trade Marks 20.00 – – 20.00 20.00 – – 20.00 – –
Software 17.65 9.12 – 26.77 8.48 6.45 – 14.93 11.84 9.17
Patents 17.05 – – 17.0 5 4.68 1.70 – 6.38 10.67 12.37
Others (Non compete fee) 4.00 – 4.00 – 0.85 3.15 4.00 – – 3.15
Total-Other than R&D 7,183.96 2,693.69 35.58 9,842.07 1,971.14 464.44 30.02 2,40
5.56 7,436.51 5,212.82
5,850.60 1,395.71 62.35 7,183.96 1,652.89 355.82 37.57 1,971.14 5,212.82 4,197.7
1
*Includes transfers interse
26
Schedule 1.05 : Fixed Assets – Research & Development (R&D)
Rs. Millions
h 2010 March 2009
Tangible
Land 1.88 – – 1.88 – – – – 1.88 1.88
Buildings 137.67 0.88 – 138.55 7.80 4.57 – 12.37 126.18 129.87
Plant & Machinery* 112.64 6.52 – 119.16 12.50 6.13 – 18.63 100.53 100.14
Electrical Equipment 42.12 1.65 – 43.77 5.19 3.43 – 8.62 35.15 36.93
Lab Equipment* 699.37 289.32 – 988.69 148.19 63.26 (2.98) 214.43 774.26 551.18
Office Equipment 14.69 3.12 1.53 16.28 3.35 1.63 0.50 4.48 11.80 11.34
Furniture & Fittings 73.32 13.57 – 86.89 18.62 8.62 – 27.24 59.65 54.70
Computers 32.32 9.36 0.08 41.60 10.19 5.74 0.07 15.86 25.74 22.13
Vehicles* 12.56 (1.40) 4.42 6.74 8.47 1.86 4.73 5.60 1.14 4.09
Intangible
Software 12.46 6.31 – 18.77 5.59 2.96 – 8.55 10.22 6.87
Total -R & D 1,139.03 329.33 6.03 1,462.33 219.90 98.20 2.32 315.78 1,146.55 919
.13
706.12 437.89 4.98 1,139.03 147.15 73.55 0.80 219.90 919.13 558.97
27
Summary : Fixed Assets
Rs. Millions
h 2010 March 2009
Other than R&D 7,183.96 2,693.69 35.58 9,842.07 1,971.14 464.44 30.02 2,405.56 7
,436.51 5,212.82
5,850.60 1,395.71 62.35 7,183.96 1,652.89 355.82 37.57 1,971.14 5,212.82 4,197.7
1
R&D 1,139.03 329.33 6.03 1,462.33 219.90 98.20 2.32 315.78 1,146.55 919.13
706.12 437.89 4.98 1,139.03 147.15 73.55 0.80 219.90 919.13 558.97
Total 8,322.99 3,023.02 41.61 11,304.40 2,191.04 562.64 32.34 2,721.34 8,583.06
6,131.95
6,556.72 1,833.60 67.33 8,322.99 1,800.04 429.37 38.37 2,191.04 6,131.95 4,756.6
8
Summary : Fixed Assets
Rs. Millions
h 2010 March 2009
Tangible Assets 8,251.83 3,007.59 37.61 11,221.81 2,151.44 548.38 28.34 2,671.48
8,550.33 6,100.39
6,492.87 1,826.29 67.33 8,251.83 1,767.61 422.20 38.37 2,151.44 6,100.39 4,725.2
6
Intangible Assets 71.16 15.43 4.00 82.59 39.60 14.26 4.00 49.86 32.73 31.56
63.85 7.31 – 71.16 32.43 7.17 – 39.60 31.56 31.42
Total 8,322.99 3,023.02 41.61 11,304.40 2,191.04 562.64 32.34 2,721.34 8,583.06
6,131.95
6,556.72 1,833.60 67.33 8,322.99 1,800.04 429.37 38.37 2,191.04 6,131.95 4,756.6
8
Note : Figures in italics relate to the previous year
28
Rs. Millions
Note As At As At
Schedule 3.02 2010 2009
SCHEDULE 1.06
INVESTMENTS - Unquoted No.of Equity Face
shares fully Value
paidup
Long Term Investments
(At cost less provision for diminution in value).
Trade Investments
Shares
- Jeedimetla Effluent Treatment Ltd. 8,593 Rs.100 0.90 0.90
- Patancheru Envirotech Ltd. 134,998 Rs.10 1.35 1.35
- Sterling Bio Chem Pvt Ltd. 14,400 Rs.10 –* –*
Others
- 5.5% Non convertible Redeemable
Taxable Bonds- Series- VI
of Rural Electrification Corporation Ltd 5,180 Rs.10,000 51.80 51.80
Investment in Associate :
- Explora SA 1,548 CHF 500 130.64 130.64
Investment in Subsidiaries :
- Matrix Laboratories BVBA 1 EURO 1 –** –**
- Matrix Laboratories BV 101,302,028 EURO 1 5,571.07 5,571.07
Less : Provision for diminution in value (4,011.83) (4,011.83)
- Concord Biotech Limited
(31st March 2009 - 1,327,070 shares) **** – Rs.10 22 – 552.42
- Astrix Laboratories Ltd Class A Shares 2,262,500 Rs.10 21
Class B Shares*** 999 Rs.10 22.64 22.63
1,766.57 2,318.98
* Rs.1500, ** Rs 52.39, rounded off to nil
*** Alloted on 29th March 2010
**** Sold during the year
29
Rs. Millions
Note As At As At
Schedule 3.02 2010 2009
SCHEDULE 1.07
INVENTORIES
Stores and Spares 238.05 138.97
Raw Materials 1,643.13 1,056.80
Work-in-process 3,971.58 2,225.67
Finished Goods 474.04 342.43
Excise Duty on Finished Goods 8.33 –
6,335.13 3,763.87
SCHEDULE 1.08
SUNDRY DEBTORS (Unsecured)
Over six months :
Considered Good 171.85 257.13
Considered Doubtful 10.73 8.66
Others :
Considered Good 4,672.04 4,656.98
Considered Doubtful – –
4,854.62 4,922.77
Less: Provision for Doubtful Debts (10.73) (8.66)
4,843.89 4,914.11
Of the above :
4,854.62 4,922.77
30
Rs. Millions
Note As At As At
Schedule 3.02 2010 2009
SCHEDULE 1.09
CASH AND BANK BALANCES
Cash on hand 0.89 1.00
Balances with Scheduled banks :
Current Accounts including Cheques on hand 51.69 4.97
Dividend Accounts 6.72 7.62
Deposit Accounts 26.71 6.40
Balance with Non Scheduled banks
Current Account 19 – 0.01
86.01 20.00
SCHEDULE 1.10
LOANS AND ADVANCES (Unsecured)
Interest Accrued on Investments 2.14 2.14
Advances & Loans to Subsidiaries 155.84 244.76
Advances - recoverable in cash or in kind for value to be received
Supplies / Services 75.06 75.47
Others 696.18 378.90
Advance Tax including Fringe Benefit Tax & Tax Deducted at Source 49.40 42.90
[Net of provision of Rs.690.30 Millions (Previous year Rs.698.30 Millions)]
MAT Credit Receivable – 55.98
Balance with Central Excise & Customs 216.15 138.00
Deposits - Others 65.87 57.75
Prepaid Expenses 76.76 65.22
Cash Flow Hedge Asset 4(d) & 4(e) 332.70 –
1,670.10 1,061.12
Less : Provision for doubtful advances (12.72) (9.04)
1,657.38 1,052.08
Of the above : Considered Good 1,657.38 1,052.08
1,670.10 1,061.12
31
SCHEDULE 1.11
CURRENT LIABILITIES
Sundry Creditors :
Dues to Micro & Small Enterprises 18 21.33 4.28
Dues to other than Micro & Small Enterprises
- For Goods & Services 3,080.47 2,286.01
- For Capital Works 152.47 59.35
- Others 456.29 386.06
Due to Subsidiary Companies 1,441.90 216.83
Employee Benefits 165.20 104.80
Deferred Income 8(c) & 9 219.16 5.33
Advances from customers 49.84 147.18
Interest accrued but not due on loans 30.95 30.48
Liability towards Investor Education and Protection Fund
under Section 205 C of the Companies Act,1956
Not due:
- Unclaimed Dividends 6.70 7.61
- Unclaimed Matured Deposits – 0.01
Other Liabilities 193.94 84.10
5,818.25 3,332.04
SCHEDULE 1.12
PROVISIONS
Income Tax 131.44 285.00
[Net of Advance payment of Rs.1325.73 Millions
(Previous year Rs.507.79 Millions)]
Employee Benefits 15 68.48 47.90
199.92 332.90
Rs. Millions
Note As At As At
Schedule 3.02 2010 2009
32
Rs. Millions
Schedule 3.02 2010 2009
SCHEDULE 2.01
OTHER INCOME
Interest on Bank and other accounts (Gross) 8(a) 17.21 50.07
[Tax Deducted at Source Rs 6.59 Millions -
(Previous year Rs 4.20 Millions)]
Miscellaneous Income 8(b) 45.26 168.46
Income from settlement 8(c) 23.48 –
85.95 218.53
SCHEDULE 2.02
MATERIALS CONSUMED
Raw Materials 10,576.04 7,285.89
Packing Materials 337.96 194.11
Purchase of Finished Goods for Resale 125.81 233.60
11,039.81 7,713.60
(Increase) / Decrease in stock
Closing Stock
Work in process 3,971.58 2,225.67
4,453.95 2,568.10
Opening Stock
Work in process 2,225.67 1,737.26
2,568.10 1,898.18
(1,885.85) (669.92)
(Increase)/Decrease in Excise duty on Finished Goods-
Stock differential 8.33 3.64
9,162.29 7,047.32
33
Rs. Millions
Schedule 3.02 2010 2009
SCHEDULE 2.03
MANUFACTURING EXPENSES
Stores, Spares & Consumables 529.43 376.25
Power & Fuel 612.71 445.38
Repairs & Maintenance
- Plant & Machinery 55.92 40.81
- Buildings 60.16 18.17
- Others 129.83 106.34
Processing Charges 194.36 229.31
Effluent Treatment Charges 77.91 48.75
Lease Rental Charges - Factory & Others – 0.03
Less : Expenses included under R&D Others (209.08) (151.87)
1,451.24 1,113.17
SCHEDULE 2.04
PERSONNEL COST
Salaries, Wages & Bonus 1,025.23 785.02
Contribution to Provident & Other funds 45.61 34.65
Staff Welfare 10 (a) 244.71 109.06
Gratuity, Superannuation etc., 15 43.76 41.33
Less : Expenses Capitalised towards capital projects (15.06) (11.65)
1,344.25 958.41
34
Rs. Millions
Schedule 3.02 2010 2009
SCHEDULE 2.05
ADMINISTRATIVE, SELLING & OTHER EXPENSES
Rent 16( c) 22.35 10.29
Insurance 59.15 52.18
Office Maintenance 34.85 31.20
Rates & Taxes 13.33 18.70
Printing & Stationary 26.57 22.50
Communication 27.81 23.71
Travelling & Conveyance 74.87 73.44
Legal & Professional Fees 153.71 85.29
General Expenses 17.11 13.40
Bank Charges 33.40 19.86
ECGC Premium 17.98 12.59
Commission & Selling Expenses 347.52 280.79
Carriage Outward 270.28 170.26
Directors Sitting Fee 6 0.24 0.66
Directors Remuneration 6 21.52 18.40
Auditors Remuneration 7 8.30 9.31
Recruitment Expenses 8.89 8.40
Bad / Doubtful debts & advances (net) 7.98 (8.44)
Loss on disposal / retirement of Fixed Assets (net) 4.43 7.18
Exchange Fluctuation (net) 105.74 –
1,256.03 849.72
SCHEDULE 2.06
RESEARCH & DEVELOPMENT EXPENDITURE
Materials 726.83 394.77
Bio Studies 421.88 393.83
Chemicals & Consumables 207.69 237.11
Salaries, Wages & Bonus 17 (a) 453.71 344.03
Others 17 (b) 421.13 333.22
2,329.44 1,776.51
35
SCHEDULE 2.07
INTEREST AND FINANCE COST
On Working Capital Loans 89.28 71.11
On Fixed Loans 318.39 461.47
Others 120.28 41.57
Less : Interest Capitalised (18.14) (4.97)
509.81 569.18
SCHEDULE 2.08
TAX EXPENSE
Income tax for the year
- Current Tax 650.88 445.25
- Deferred Tax 12 190.05 253.73
- Fringe Benefit Tax – 9.26
- Adjustment relating to MAT Credit – (43.23)
840.93 665.01
Tax relating to previous years
- Current Tax 13.50 15.20
854.43 680.21
Rs. Millions
Schedule 3.02 2010 2009
SCHEDULE: 3.01
SIGNIFICANT ACCOUNTING POLICIES
1. Accounting Convention
The financial statements are prepared under the historical
cost convention on accrual basis and in accordance with
accounting principles generally accepted in India and as
per applicable accounting standards notified by the
Companies (Accounting Standards) Rules, 2006.
2. Fixed Assets
Tangible Assets
Fixed Assets are stated at cost (net of CENVAT & VAT)
less depreciation. Cost includes installation and
expenditure during construction, including freight,
insurance, borrowing costs and incidental expenses relating
to acquisition. Premium on leasehold land is amortised
over the period of the lease. Fixed Asset costing less than
Rs.5000 are fully depreciated in the year of purchase.
Depreciation is provided pro-rata on straight-line method
as per the rates and in the manner prescribed in Schedule
XIV to the Companies Act, 1956, except in respect of
the following where the rates applied are higher than
Schedule XIV rates: -
Office Equipments 10 % & 33.33%
Vehicles 20 %
Interiors in leased office premises 20 %
Furniture & Fittings 8.33 %
Intangible Assets
Intangible Assets are stated at cost less amortisation. These
are amortised on a straight line basis using the following
rates such that the related assets are depreciated over their
economical useful lives.
Patents 10 %
Software 20 to 50%
Non compete fee 10 %
36
3. Investments
Investments are stated at cost of acquisition. Provision
for diminution in value of long-term investments, other
than temporary, is made in the accounts.
4. Inventories
Raw materials, Stores & Spares and Work-in-process are
valued at cost using monthly weighted average cost
method. Appropriate share of utilities and other
overheads are included in the cost of Work-in-process
and Finished goods. Semi-finished goods included in
Work-in-process are valued at cost. Materials in transit
are valued at cost. Inventories are valued at cost or net
realizable value whichever is lower.
5. Deferred Tax
Deferred Tax is accounted for by computing the tax effect
of timing differences, which arise during the year and
reverse in subsequent periods.
Deferred Tax assets on accumulated losses and
unabsorbed depreciation are recognized only to the extent
that there is virtual certainty of realization of such assets
in future.
6. Employee Benefits
Liability for employee benefits, both short and long term,
for present and past services, which are due as per the
terms of employment are recorded in accordance with
Accounting Standard AS-15 "Employee Benefits" notified
by the Companies (Accounting Standards) Rules, 2006.
a) Gratuity
The Company has an obligation towards gratuity, a
defined benefit retirement plan covering eligible
employees. The plan provides for a lump sum
payment to vested employees on retirement, death
while in employment or on termination of
employment in an amount equivalent to 15 days (30
days for post 30 years of service) salary payable for
each completed year of service. Vesting occurs upon
completion of five years of service. Contributions
to Gratuity fund are made to recognized funds
managed by the Life Insurance Corporation of India.
The Company accounts for the liability for future
Gratuity benefits on the basis of an independent
actuarial valuation. Actuarial gains or losses are
recognized immediately in the profit and loss
account.
b) Superannuation
The Company has a superannuation plan, which is a
defined contribution plan. Under the plan, the
Company contributes up to 15% of the eligible
employees salary to the fund each year. Contributions
are made to recognized funds managed by the Life
Insurance Corporation of India. The Company
recognizes such contributions as an expense when
incurred. The Company has no further obligation
beyond this contribution.
c) Provident Fund
In accordance with applicable local laws, eligible
employees of the Company are entitled to receive
benefits under the provident fund, a defined
contribution plan to which both the employee and
employer contribute monthly at a determined rate
(currently at 12% of an employee s salary). These
contributions are either made to the respective
Regional Provident Fund Commissioner and the
Central Provident Fund under the state pension
scheme, and are expensed as incurred.
d) Liability for Leave
Liability for leave is treated as a short term liability
and is accounted for as and when earned by the
employee.
7. Revenue Recognition
a) Revenue from sale of goods is recognised when
significant risks and rewards in respect of ownership
of products are transferred by the Company.
b) Gross Sales are inclusive of excise duty.
c) Export incentive under the Duty Entitlement Pass
Book Scheme is recognized on accrual basis.
d) In respect of ANDA/Dossier licensing revenue is
recognized as per the milestones achieved under the
arrangement. In respect of product development
services, revenue is recognized on accrual basis as
the services are rendered.
8. Research & Development (R&D)
Revenue expenditure (including depreciation) on R&D is
charged to revenue in the year in which it is incurred.
Capital expenditure, if any, on R&D is added to fixed
assets.
9. Foreign Currency Transactions
Transactions in foreign currencies are translated at the
exchange rates prevailing on the dates of transactions and
in case of purchase of materials and sale of goods, the
exchange gains/losses on settlements during the year, are
credited/charged to Profit and Loss Account.
Monetary assets and liabilities denominated in foreign
currencies are translated at the rates prevailing on the date
of Balance sheet. Exchange gains/losses including those
relating to fixed assets are dealt with in the Profit and
Loss Account.
Premium or discount on forward contracts is amortized
over the life of such contracts and is recognised as income
or expense.
SCHEDULE: 3.01 SIGNIFICANT ACCOUNTING POLICIES (Contd...)
37
Derivative Instruments and Hedge Accounting
The Company uses foreign currency forward contracts
to hedge its risks associated with foreign currency
fluctuations relating to certain firm commitments and
forecasted transactions. The Company designates these
as cash flow hedges.
The use of foreign currency forward contracts is governed
by the Company s policies approved by the board of
directors, which provide written principles on the use of
such financial derivatives consistent with the Company s
risk management strategy. The Company does not use
derivative financial instruments for speculative purposes.
Foreign currency forward contract derivative instruments
are initially measured at fair value, and are remeasured at
subsequent reporting dates. Changes in the fair value of
these derivatives that are designated and effective as hedges
of future cash flows are recognised directly in Cash Flow
Hedge Account in Reserves &Surplus and the ineffective
portion is recognized immediately in profit and loss
account.
Changes in the fair value of derivative financial
instruments that do not qualify for hedge accounting are
recognized in profit and loss account as they arise.
Hedge accounting is discontinued when the hedging
instrument expires or is sold, terminated, or exercised, or
no longer qualifies for hedge accounting. At that time for
forecasted transactions, any cumulative gain or loss on
the hedging instrument recognised in Cash Flow Hedge
Account in Reserves & Surplus is retained there until the
forecasted transaction occurs. If a hedged transaction is
no longer expected to occur, the net cumulative gain or
loss recognised in Cash Flow Hedge Account in Reserves
& Surplus is transferred to profit and loss account for the
year.
10. Employee Stock Option Schemes (ESOP)
The Company accounted for compensation expense
under the Employee Stock Option Schemes using the
intrinsic value method as per the Guidance Note
"Accounting for Employee Share-based Payments" issued
by the Institute of Chartered Accountants of India. The
difference between the market price and the exercise price
as at the date of the grant is treated as compensation
expense and charged over the vesting period.
11. Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized till the
date the assets put to use. All other borrowing costs are
charged to revenue.
12. Leases
Leases that do not transfer substantially all of the risks
and rewards of ownership are classified as operating leases.
Lease payments under an operating lease are recognized
as expense in the statement of profit and loss on a straight
line basis over the lease term.
13. Earning Per Share
The basic earning per share ("EPS") is calculated by
dividing the Profit / (Loss) after Tax by the weighted
average number of Equity Shares outstanding. The diluted
EPS is calculated after adjusting the weighted average
number of Equity shares to give effect to the potential
equity shares on the stock options outstanding.
14. Provisions and contingent liabilities
Provisions involving substantial degree of estimation in
measurement are recognized when there is a present
obligation as a result of past events and if it is probable
that these liabilities can be properly estimated at the period
end. Contingent liabilities are not recognized but are
disclosed in the notes as an item where, substantial
estimation is dependent on the happening of another event
which cannot be adequately judged during the period end.
SCHEDULE: 3.02
Notes to the Balance Sheet & Profit And Loss Account
1. Contingent Liabilities
a) Claims against the Company not acknowledged as
debts:
Income Tax and Indirect Taxes claims disputed
by the Company relating to issues of
applicability and classification: Rs.311.84
Millions (31st March 2009: Rs.303.94 Millions)
Local Authority Taxes claims disputed by the
Company relating to issues of applicability and
determination: Rs.4.13 Millions (31st March
2009: Rs.4.07 Millions)
Claims arising from contractual disputes:
Rs.0.95 Millions (31st March 2009: Rs.0.89
Million)
b) The Company has given corporate guarantees to
various banks for facilitating sanction of working
capital loans to its subsidiaries viz., Matrix Pharma
Group (Xiamen)Ltd, Matrix Laboratories Xiamen Ltd,
Jiangsu Matrix Pharmaceutical Chemical Co. Ltd
(formerly known as Dafeng Mchem Pharmaceutical
Chemical Co. Ltd) aggregating : Rs.1,573.25 Millions
(31st March 2009:Rs.659.49 Millions). The amount
outstanding against such guarantees as at 31st March
2010 aggregate to Rs.576.80 Millions (31st March
2009 : Rs.586.96 Millions)
38
c) The Company has reached an in principle agreement with a party in connection
with a dispute on termination of supply
agreement being arbitrated under auspices of the London Court of International A
rbitration and has made adequate
provisions in the books of accounts for the year ended 31st March 2010 on the se
ttlement amount so agreed.
d) During the course of the year, the European Commission had stated that it ini
tiated proceedings against Matrix and
other companies which entered into agreements with the innovator relating to a p
roduct. Matrix is cooperating with the
Commission in connection with the investigation. As it is not possible to determ
ine with any degree of certainty any
potential liability associated with these proceedings, no amounts have been reco
rded in the Company s financial statements.
However, Management believes that the ultimate outcome of this matter is not exp
ected to have a material adverse
impact on the company s financial statements.
2 a) Estimated amount of contracts remaining to be executed on capital account a
nd not provided for: Rs.402.28 Millions
(31st March 2009: Rs.718.93 Millions); net of advances Rs.230.00 Millions (31st
March 2009: Rs.351.52 Millions).
b) Capital work in progress includes capital advances of Rs.398.32 Millions (31s
t March 2009 : Rs. 593.45 Millions)
3. Secured Loans & Unsecured Loans
a) Long term loans are secured or are in the process of being secured pari passu
by first charge on fixed assets and second
charge on current assets.
b) Working Capital facilities are secured pari passu by first charge on current
assets and second charge on fixed assets except
one bank, where the facility is secured by first charge on fixed assets and curr
ent assets.
c) Amounts repayable within twelve months in respect of secured long term loan f
rom banks: Rs.196.25 Millions
(31st March 2009: Rs.140.00 Millions)
d) Amounts repayable within twelve months in respect of unsecured loans: Rs.252.
33 Millions (31st March 2009: Rs.1,002.87
Millions)
4. Derivatives
Derivatives and unhedged foreign exchange exposures.
a) The Company uses forward contracts to hedge its risks associated with foreign
fluctuations relating to certain commitments.
The company does not use the forward contracts and forecasted transactions for s
peculative purpose.
As at 31st March 2010 As at 31st March 2009
Foreign Foreign
Cross No of Currency Rupee No of Currency Rupee
Currency Currency Nature Contracts (Millions) (Millions) Contracts ( Millions) (
Millions)
On Balance Sheet
EUR USD Sell – – – 1 1.00 67.22
EUR INR Sell 3 8.00 487.08 5 5.00 336.09
JPY INR Buy 13 2570.38 1237.03 5 1,922.73 985.65
JPY USD Buy 2 500.09 240.67 – – –
USD INR Sell 6 16.00 719.20 – – –
b) The year end foreign currency exposures on balance sheet that have not been h
edged by a derivative instrument or
otherwise are as follows:
US Dollar Rupee US Dollar Rupee
Equivalent Equivalent Equivalent Equivalent
Particulars ( Millions) ( Millions) ( Millions) ( Millions)
A. Amount receivable on account of
Export of Goods 54.87 2,466.63 73.44 3,725.57
Loan given – – 3.27 165.74
B. Amount Payable on account of
Import of Goods & Services 22.71 1020.87 15.31 776.54
Capital Imports – – 0.04 2.26
Loans Payable 37.91 1,704.22 39.65 2,011.62
SCHEDULE: 3.02 Notes to the Balance Sheet & Profit and Loss Account (Contd...)
39
c) Premium on forward contracts to be recognized in the profit and loss account
in subsequent accounting period amounts
to Rs.5.46 Millions (31st March 2009:Rs.9.83 Millions)
d) Amounts accumulated in Cash Flow Hedge Account as of 31st March 2010 on accou
nt of effective portion of the
hedges are Rs.332.97 Millions. Effective portion of cash flow hedge contracts ma
tured during the year are included in
sales amounting to Rs.19.10 Millions (31st March 2009: Rs.Nil)
e) Forward contracts on Forecasted Transactions.
Foreign Foreign
Cross No of Currency Rupee No of Currency Rupee
Currency Currency Nature Contracts (Millions) (Millions) Contracts ( Millions) (
Millions)
USD INR Sell 138 258.00 11,597.10 – – –
5. Related Party Disclosures
Related Parties and Nature of Relationship
a) Ultimate Holding Company - Mylan Inc. USA
b) Holding Company - MP Laboratories (Mauritius) Ltd
c) Subsidiaries - Enterprises where control exists:
Percentage of
Ownership
interest
Sl Name Country of 31st 31st
No Incorporation March March
2010 2009
Subsidiaries of Matrix Laboratories Limited, India
1. Concord Biotech Limited (1) India 0% 52.38%
2. Matrix Laboratories BV Netherlands 100% 100%
Subsidiaries of Matrix Laboratories BV
3. Matrix Laboratories Inc USA 100% 100%
4. Matrix Laboratories (Singapore) Pte Ltd Singapore 100% 100%
5. Matrix Laboratories BVBA (5)&(6) Belgium 39.99% 100%
Subsidiaries of Matrix Laboratories
(Singapore) Pte Ltd
6. Matrix Pharma Group (Xiamen) Ltd Peoples Republic of China 100% 100%
Subsidiaries of Matrix Pharma Group
(Xiamen) Ltd (2)
7. Jiangsu Matrix Pharmaceutical Chemical Co. Ltd (3) Peoples Republic of China
100% 95%
8. Mchem Research & Development Company Ltd Peoples Republic of China 100% 100%
9. Shanghai Fine Source Company Ltd. Peoples Republic of China 100% 100%
10. Matrix Laboratories(Xiamen) Limited (4) Peoples Republic of China 98% 93%
(Xiamen) Limited
11. Xiamen Beacon Pharmaceutical Manufacturing Co., Ltd Peoples Republic of Chin
a 100% 100%
BVBA-Belgium (5)&(6)
12 Docpharma BVBA, Belgium(5)&(7) Belgium 39.99% 100%
40
Subsidiaries of Docpharma
BVBA, Belgium (5)&(7)
13. Value Pharma International (5)&(8) Belgium – 100%
14. Vascucare NV (5)&(8) Belgium – 100%
15. Vascumed NV (5)&(8) Belgium – 100%
16. Aktupharma NV (5) Belgium 39.99% 100%
17. Nutripharma NV (5) Belgium 39.99% 100%
18. Docpharma Luxembourg - SARL (5) Luxemburg 39.99% 100%
19. Servipharma SA (5) Luxemburg 39.99% 100%
20. Apothecon BV (5) Netherlands 39.99% 100%
21. A Pharma BV (5) Netherlands 39.99% 100%
22. DAA Pharma SA (5) Switzerland 39.99% 100%
23. Farma 1 SARL (5) Italy 39.99% 100%
24. DCI Pharma SA (5) France 39.99% 100%
25. Hospithera SA (5) Belgium 39.99% 100%
26. Aprime SA (5) & (8) Belgium – 100%
27. AB Medical PRS BV (5) Netherlands 39.99% 100%
(1) Investment in Concord Biotech Limited has been sold on 4th December 2009. Re
fer Note 22 of Schedule 3.02.
(2) Reflects the effective holding interest of Matrix Laboratories (Singapore) P
te Ltd.
(3) Dafeng Mchem Pharmaceutical Chemical Company Ltd has been renamed as Jiangsu
Matrix Pharmaceutical Chemical Co. Ltd. Shareholding in
Jiangsu Matrix Pharmaceutical Chemical Co. Ltd increased from 95% to 100% during
the year consequent upon acquisition of minority interest.
(4) Shareholding in Matrix Laboratories (Xiamen) Limited increased from 93% to 9
8% during the year consequent upon additional investment in
Equity by Matrix Laboratories (Singapore) Pte Ltd
(5) As of 29th December 2009, Matrix Laboratories BV, Netherlands shareholding i
n Matrix Laboratories NV - Belgium and its step down
subsidiaries came down from 100% to 39.99%. This is due to conversion of a porti
on of the Debt held by the Ultimate Holding Company and
a fellow subsidiary to Equity.
(6) Matrix Laboratories BVBA was formerly known as Matrix Laboratories NV
(7) Docpharma BVBA was formerly known as Docpharma NV
(8) During the year, Value Pharma International, Vascucare NV, Vascumed NV and A
prime SA were merged with Docpharma BVBA (formerly
known as Docpharma NV) with retroactive effect from 1st April 2009.
d) Fellow Subsidiaries
Sl. No Name
1. Mylan Pharmaceuticals Inc.
2. Mylan Pharmaceuticals ULC (1)
3. Mylan Seiyaku Inc
4. Gerard Laboratories Ltd
5. Alphapharm Pty. Ltd.
6. Mylan India Pvt Ltd
7. Mylan (UK) Ltd (2)
8. Mylan Technologies Inc.
9. Mylan SAS
(1) Merged entity formerly known as Genpharma Inc & Genpharma ULC
(2) Formerly known as Generics (UK) Ltd.
Percentage of
Ownership
interest
Sl Name Country of 31st 31st
No Incorporation March March
2010 2009
41
e) Associates
Name Country of Incorporation % of Interest
31st March 2010 31st March 2009
Explora SA Switzerland 27.64% 27.64%
Uteron Pharma SA 1 Belgium 0% 25.47%
Belgiedata B.V.B.A.BE 2 Belgium – 30.00%
(1) During the year the holding in Uteron Pharma SA has been sold off.
(2) There is a reduction in % of interest in Belgiedata B.V.B.A.BE to 12% and it
is no longer an associate with effect from 29th December 2009.
f) Key Management Personnel
Mr.S.Srinivasan - Chief Executive Officer & Managing Director
Dr.B.Hari Babu - Chief Operating Officer & Executive Director
(with effect from 7th October 2009)
g) Joint Ventures* (Rs. Millions)
Astrix Laboratories Fine Chemical Corporation
Particulars Limited (Proprietary) Ltd.
Country of Incorporation India Republic of South Africa
2009-10 2008-09 2009-10 2008-09
Percentage of holding 50% 50% 50% 50%
Assets – 1,632.14 – 589.78
Liabilities – 486.53 – 26.18
Income 492.50 1,912.99 103.68 594.73
Expenditure 431.61 1,779.63 92.63 504.89
Contingent Liabilities – 20.00 – –
Capital Commitments – 1.99 – 29.94
* Joint Venture upto 31st May 2009. (Refer note 21 of schedule 3.02)
* As per Accounting Standard 27 - Financial Reporting of Interest in Joint Ventu
res as specified in the Companies (Accounting Standards)
Rules, 2006.
42
Sales
Alphapharm Pty Ltd – – – – – – 207.20 49.94 – – – –
Apothecon BV – – – – 7.28 – – – 2.87 – – –
Astrix Laboratories Ltd – – – – 96.52 – – – 29.85 330.34 – –
Jiangsu Matrix Pharmaceutical Chemical Co Ltd * – – – – – 7.61 – – – – – –
Docpharma BVBA $ – – – – 15.20 42.88 – – 15.08 – – –
Genpharma Inc – – – – – – – 90.94 – – – –
Gerard Laboratories Ltd – – – – – – 285.23 105.75 – – – –
Matrix Laboratories Inc – – – – 1,102.66 771.72 – – – – – –
Mylan India Pvt Ltd – – – – – – 13.09 8.43 – – – –
Mylan Pharmaceuticals Inc. – – – – – – 1,048.21 364.43 – – – –
Mylan Pharmaceuticals SL – – – – – – – 1.05 – – – –
Mylan SAS – – – – – – 3.02 – – – – –
Mylan Pharmaceuticals ULC @ – – – – – – 239.11 – – – – –
Matrix Laboratories (Xiamen) Ltd – – – – (14.43) 87.67 – – – – – –
Matrix Pharma Group (Xiamen) Ltd – – – – – 28.36 – – – – – –
Sale of Dosier/Product development
Mylan Pharmaceuticals Inc. – – – – – – 2,043.49 1,395.20 – – – –
Mylan Inc. 197.90 1,026.42 – – – – – – – – – –
Interest Received
Matrix Laboratories BV – – – – 6.31 6.76 – – – – – –
Matrix Pharma Group (Xiamen) Ltd – – – – 1.19 14.23 – – – – – –
Interest Paid
MP Laboratories (Mauritius) Ltd – – 65.206 13.88 – – – – – – – –
5 (h) Related Party Transactions Rs. Millions
Ultimate Holding Fellow Associates Key Management
Transactions / Balances Holding Company Subsidiaries Subsidiaries & Joint Person
nel and
Company Ventures their relatives
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09
2009-10 2008-09
43
Sales Commission paid
Matrix Laboratories Inc – – – – 0.96 2.67 – – – – – –
Income Including Management Fee
Purchases
Astrix Laboratories Ltd – – – – 1,952.76 – – – 492.82 1,334.75 – –
Concord Biotech Limited – – – – 5.80 2.85 – – – – – –
Jiangsu Matrix Pharmaceutical Chemical Co Ltd * – – – – 60.88 112.46 – – – – – –
Docpharma BVBA $ – – – – – 5.65 – – – – – –
Mylan (UK) Ltd # – – – – – – 36.93 8.76 – – – –
Genpharma Inc – – – – – – – 1.23 – – – –
Mylan Pharmaceuticals ULC @ – – – – – – 7.74 50.77 – – – –
Mylan Technologies Inc – – – – – – 0.60 – – – –
Matrix Laboratories Inc – – – – 0.04 – – – – – – –
Mylan Pharmaceuticals Inc. – – – – – – 40.50 29.82 – – – –
Matrix Laboratories (Xiamen) Ltd – – – – 115.60 127.76 – – – – – –
Conversion Income
nel and
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09
2009-10 2008-09
44
Remuneration
S.Srinivasan – – – – – – – – – – 15.85 3.64
Dr.B.Hari babu – – – – – – – – – – 5.67 –
Jagdish Viswanath Dore – – – – – – – – – – – 6.30
Rajiv Malik – – – – – – – – – – – 2.70
Reimbursement of Expenses for Services (Net) –
Astrix Laboratories Ltd – – – – (25.10) – – – (5.62) (21.42) – –
Alphapharm Pty Ltd – – – – – – 0.20 – – – – –
Concord Biotech Limited – – – – (0.07) 0.12 – – – – – –
Docpharma BVBA $ – – – – – 2.94 – – 5.06 – – –
Gerard Laboratories Ltd – – – – – – (2.23) – – – – –
Matrix Laboratories BV – – – – – 2.98 – – – – – –
Matrix Laboratories Inc – – – – (4.04) (4.21) – – – – – –
Matrix Laboratories BVBA – – – – – 3.05 – – – – – –
Matrix Laboratories (Xiamen) Ltd – – – – – (0.06) – – – – – –
MP Laboratories (Mauritius) Ltd – – 5.08 – – – – – – – – –
Mylan Pharmaceuticals Inc. – – – – – – (16.55) (18.74) – – – –
Mylan Inc. (22.25) 4.79 – – – – – – – – – –
Mylan Seiyaku Inc – – – – – – – (0.80) – – – –
Advances & Loans to
Matrix Laboratories BV – – – – – 158.89 – – – – – –
nel and
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09
2009-10 2008-09
45
Loan From
MP Laboratories (Mauritius) Ltd – – 461.37 957.24 – – – – – – – –
Investments in Equity
Astrix Laboratories Ltd – – – – – – – – 0.01 – – –
Amounts Outstanding against
Corporate Guarantees
Balances Outstanding Advances & Loans
Receivable
Apothecon BV – – – – – – – – 2.81 – – –
Astrix Laboratories Ltd – – – – 25.82 – – – – 116.20 – –
Concord Biotech Limited – – – – – 0.10 – – – – – –
Jiangsu Matrix Pharmaceutical Chemical Co Ltd * – – – – – 7.83 – – – – – –
Docpharma BVBA $ – – – – – 19.38 – – 19.79 – – –
Genpharma Inc – – – – – – – 11.41 – – – –
Gerard Laboratories Ltd – – – – – – 76.74 63.67 – – – –
Matrix Laboratories Inc – – – – 200.96 44.07 – – – – – –
Matrix Laboratories BVBA – – – – – 3.11 – – 2.82 – – –
Matrix Laboratories (Singapore) Pte Ltd – – – – 0.43 – – – – – – –
MP Laboratories (Mauritius) Ltd – – 4.77 – – – – – – – – –
Mylan Pharmaceuticals ULC @ – – – – – – 68.66 – – – – –
Mylan India Pvt Ltd * – – – – – – 0.71 1.86 – – – –
nel and
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09
2009-10 2008-09
46
Mylan Inc. 13.86 948.91 – – – – – – – – – –
Mylan Pharmaceuticals Inc. – – – – – – 609.70 0.46 – – – –
Mylan Pharmaceuticals SL – – – – – – – 0.58 – – – –
Matrix Laboratories (Xiamen) Ltd – – – – 38.31 218.57 – – – – – –
Balances Outstanding Payable
Astrix Laboratories Ltd – – – – (1,313.46) – – – – (736.97) – –
Concord Biotech Limited – – – – – (0.01) – – – – – –
Docpharma BVBA $ – – – – – (6.30) – – (5.71) – – –
Mylan (UK) Ltd # – – – – – – (6.25) (8.71) – – – –
Genpharma Inc – – – – – – – (0.04) – – – –
Mylan Pharmaceuticals ULC @ – – – – – – (5.78) (5.76) – – – –
Matrix Laboratories Inc – – – – (1.04) (5.35) – – – – – –
Mylan India Pvt Ltd – – – – – – (5.69) (0.02) – – – –
Mylan Inc. (23.53) (28.94) – – – – – – – – – –
Matrix Pharma Group (Xiamen) Ltd – – – – (91.87) (179.25) – – – – – –
Mylan Pharmaceuticals Inc. – – – – – – (21.88) (188.43) – – – –
Mylan Technologies Inc – – – – – – (0.15) – – – – –
Matrix Laboratories (Xiamen) Ltd – – – – (35.53) (25.93) – – – – – –
Other Receivables/(Payables)
MP Laboratories (Mauritius) Ltd – – (1,358.52) (970.57) – – – – – – – –
* Formerly known as Dafeng Mchem Pharmaceuticals
# Formerly known as Generics UK
@ Formerly known as Gen Pharma ULC
$ Formerly known as Docpharma NV
nel and
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09
2009-10 2008-09
47
6. Managerial Remuneration Rs. Millions
Particulars 2009-10 2008-09
Salaries & Pay Performance Allowance 17.91 8.01
Contribution to Provident & Superannuation Funds 2.40 1.33
Perquisites & Allowances 1.21 0.77
Commission to non whole-time directors – 5.76
Encashment of leave to a retired whole-time director – 2.18
Gratuity Paid to a retired whole-time director – 0.35
Directors Sitting Fees 0.24 0.66
Total 21.76 19.06
The above does not include contribution to the approved group gratuity fund for
Chief Executive Officer & Managing
Director and Chief Operating Officer & Executive Director as separate figures ar
e not available.
Computation of Net Profit in accordance with Section 309(5) of the Companies Act
, 1956
Rs. Millions
Add:
Managerial Remuneration 21.76 19.06
Provision for bad/doubtful debts & Advances 15.68 12.54
Provision for Wealth Tax 0.09 0.19
Depreciation 562.65 429.37
Assets Written off 2.98 9.06
Bad Debts Written off 0.33 0.99
Legal Settlement 26.97 –
Net Loss on Sale of Asset 4.43 7.18
(Less):
Bad debts and advances written back 8.04 21.97
Depreciation under Section 350 of the Companies Act, 1956 552.49 418.84
Profit on Sale of Subsidiary 606.08 –
Net Profit as per Section 309 (5) 2,461.05 2,607.30
Commission
Non-whole-time Directors - 1 % of Net Profit restricted to – 5.76
Total Commission – 5.76
7. Auditors Remuneration (excluding Service Tax) Rs. Millions
Audit fees 5.00 3.95
Other Services
Limited Reviews 1.90 2.85
Statutory Certification 0.11 0.13
Other 1.10 2.30
Reimbursement of expenses 0.19 0.08
Total 8.30 9.31
48
8. Included in Other Income (Schedule) are the following:
a) Interest on Long Term Investments Rs.2.85 Millions (2008-09: Rs.2.85 Millions
), Interest on Income tax refund : Rs. Nil
( 2008-09 : Rs 7.69 Millions)
b) The Profit and Loss Account includes a net credit of Rs.Nil (2008-09: net cre
dit of Rs.110.96 Millions) on account of
Exchange Differences.
c) The company has received Rs.234.83 Millions towards settlement on restructuri
ng the supply agreement during the year
out of which Rs.23.48 Millions has been recognised as income during the year and
the balance is Rs. 211.35 Millions as
on 31st March 2010.
9. The Company had settled a Potential Patent infringement suit favorably and re
ceived Rs.978.72 Millions. Of this, Rs.Nil
(2008-09: Rs.134.57 Millions) has been recognized as Income for the year (Rs.978
.72 Millions to date) (Previous Years and till 31st
March 2009: Rs.978.72 Millions).
10. Employees Stock Option Scheme (ESOP)
a) The company formulated a Employee Stock Option Plans for granting 3,000,000 s
tock options in tranche I, 1,088,000
in tranche II, 666,000 in tranche III and 491,500 in tranche IV of Rs. 2/- each
to eligible employees / directors of the
Company (excluding promoters). An amount of Rs. 80.30 Millions (2008-09 - Rs. 3.
56 Millions) is charged under Personnel
Cost and has been accounted in accordance with the Guidance Note "Accounting for
Employee Share-based Payments"
issued by the Institute of Chartered Accountants of India.
b) The shareholders of the Company approved 7,000,000 stock options under Employ
ees Stock Option Scheme, representing
7,000,000 equity shares of Rs. 2/- each to the employees and directors of the Co
mpany.
c) The Compensation Committee of the Board of Directors of the Company at its me
eting held on 5th February 2005,
granted 3,000,000 stock options at an exercise price of Rs. 143.136 per option,
on 28th July 2005, granted 1,088,000
stock options at an exercise price of Rs.144.63 per option, on 27th February 200
6 granted 666,000 stock options at an
exercise price of Rs. 171 per option and on 27th August 2006 granted 491,500 sto
ck options at an exercise price of
Rs.210 per option.
d) The shareholders of the Company approved 1,000,000 stock options under Employ
ees Stock Option Scheme representing
1,000,000 equity shares of Rs.2/- each to the employees and directors of the sub
sidiary companies. The Compensation
Committee of the Board of Directors of the Company at its meeting held on 11th M
ay 2006 granted 155,000 stock
options at an exercise price of Rs.199 per option.
e) The above prices were determined in accordance with the pricing formula appro
ved by the shareholders i.e. 20%
discount on the average of weekly high and low of the closing price of the share
s, quoted on the National Stock
Exchange of India Limited during the 6 months prior to the date of granting of o
ptions. The option can be exercised
over a period of five years from the date of respective vesting.
f) As part of the process for delisting of the Equity shares of the Company, the
employee stock option plans (ESOP plans)
have been modified, to provide for immediate vesting of outstanding stock option
s and revision of exercise price.
Further the employees right to purchase the shares from the Company was substit
uted with the right to purchase equity
shares from Matrix ESOP Trust. Consequent to the modifications to the ESOP plans
a total charge of Rs. 80.30 Millions
is recorded under employee cost.
g) Method used for accounting for share based payment plan:
The company has used the intrinsic value method to account for the compensation
cost of stock option to employees of
the company. Intrinsic value is the amount by which the quoted market price of t
he underlying share exceeds the exercise
price of the option.
49
Movement in the options under ESOP 2004 & ESOP 2006 Plans
ESOP 2004 Plan ESOP 2006 Plan
Options Weighted Options Weighted
Particulars average exercise average exercise
price per stock price per stock
option option
Rs. Rs.
Options outstanding as at 1st April 2009 1,764,345 – 75,000 –
Options exercisable as at 1st April 2009 1,509,709 – 37,500 –
Exercised options during the year 1,650,170 – 75,000 –
Lapsed options during the year 114,175 – – –
Options outstanding as at 31st March 2010 – – – –
Options exercisable as at 31st March 2010 – – – –
h) Fair Value Methodology
The fair value of options used to compute pro forma net income and earnings per
equity share have been estimated on
the date of grant using Black-Scholes model.
Rs. Millions
Particulars 2008-09
Profit after Taxation -as reported 1,889.51
Add: Stock-based employee compensation 3.56
Less: Stock- based compensation expenses determined
under fair value method (Proforma) (7.71)
Net Profit - Proforma 1,885.36
Earnings per Share on profit Rs.
Basic – as reported 12.22
– Proforma 12.19
Diluted – as reported 12.22
– Proforma 12.19
For 2009-10 - Refer note no. 10 (f)
i) The key assumptions used in Black-Scholes model for calculating fair value ar
e: risk-free interest rate ranging between
6.33% and 7.77%, expected life: 3 to 6 years, expected volatility of shares: 40%
to 76.56% and expected growth life in
dividend: 2.97 %. The range variables detailed herein represent the highs and th
e lows of the assumptions during the
pendency of the grant dates.
50
11. Segment Reporting
a) The activities of the Company relate to only one business segment i.e. Pharma
ceuticals
b) Information relating to Secondary Segment
Rs. Millions
Segment Revenue Segment Assets
Particulars Sales Debtors
As at As at
2009-10 2008-09 31st March 2010 31st March 2009
USA & Canada 7,268.37 39% 5,395.27 36% 1,444.58 30% 1,705.29 35%
Europe 4,120.10 22% 4,062.58 28% 815.90 17% 1,260.97 26%
West Asia/Latin
America & Africa 3,236.61 17% 2,026.90 14% 938.77 19% 637.15 13%
Others 1,012.10 5% 915.02 6% 314.89 7% 525.43 11%
Outside India 15,637.18 84% 12,399.77 84% 3,514.14 73% 4,128.84 84%
Within India 3,043.08 16% 2,390.47 16% 1,329.75 27% 785.27 16%
Total 18,680.26 100% 14,790.24 100% 4,843.89 100% 4,914.11 100%
Note: Segment assets other than debtors are within India
12. Composition of Deferred Tax Liability
Rs. Millions
Particulars
As at 31st Movement As at 31st
March 2009 during the year March 2010
Deferred tax Liability
Relating to Fixed Assets (including R & D Assets) (887.40) (292.46) (1,179.86)
Total (887.40) (292.46) (1,179.86)
Deferred Tax Assets
Provision for Doubtful Debts 6.96 2.71 9.67
Section 145A related disallowance 60.89 5.49 66.38
Deferred Income – 71.85 71.85
Others fiscal differences 62.50 22.36 84.86
Total 130.35 102.41 232.76
Net Deferred Tax Liability (757.05) (190.05) (947.10)
51
13. Earnings per Share
2009-10 2008-09
Profit after Taxation before exceptional item (Rs.Millions) 1,532.26 1,889.51
Profit after Taxation (Rs. Millions) 2,138.34 1,889.51
Weighted average number of equity shares outstanding 155,951,239 154,605,975
Effect of potential equity shares on stock options outstanding –
Weighted average number of equity shares – Basic 155,951,239 154,605,975
– Diluted 155,951,239 154,605,975
Earning per share on profit after taxation before exceptional item
(Face Value:Rs.2/ each - Rs
– Basic 9.83 12.22
– Diluted 9.83 12.22
Earning per share on profit after taxation - (Face Value Rs 2/- each) - Rs.
– Basic 13.71 12.22
– Diluted 13.71 12.22
14. Additional information pursuant to the provisions of Paragraph 3, 4C and 4D
of Part II of Schedule VI to the
Companies Act.
(a) Capacities & Production
2009-10 2008-09
Class of Goods Unit Installed Actual Installed Actual
Capacity2 Production Capacity2 Production
Active Pharmaceutical Ingredients3 MT 1,544.56 1,084.36 1,449.13 1,023.38
Tablets & Capsules Million 4,000.00 1,778.80 2,300.00 605.06
Notes :
1. Licensed capacity is not applicable in terms of the Government of India Notif
ication No. 477(E) dated 25th
July 1991.
2. As certified by the management and accepted by the auditors
3. Includes captive consumption and conversion for others
52
(b) Turnover, Opening and Closing Stocks
2009-10 2008-09
Particulars Unit Qty Rs.Millions Qty Rs.Millions
Sales
Domestic
Bulk Drugs Manufacturing MT 257.34 2,706.87 187.76 1,746.28
Tablets & Capsules Million pieces 5.39 37.94 5.50 56.67
Others MT 557.87 298.26 1,705.59 587.52
Total Domestic 3,043.07 2,390.47
Export
Bulk Drugs Manufacturing MT 418.69 5,032.42 473.93 5,496.44
Bulk Drugs Trading MT 26.06 139.24 25.61 269.65
Tablets & Capsules Million pieces 1,636.42 7,943.81 544.50 4,212.09
Others 2,521.72 2,421.59
Total Export 15,637.19 12,399.77
Total Sales 18,680.26 14,790.24
Opening Stock
Bulk Drugs MT 17.97 136.84 30.26 138.96
Closing Stock
Bulk Drugs MT 14.42 181.63 17.97 136.84
c) Purchase of Traded Goods
2009-10 2008-09
Particulars Unit Qty Rs.Millions Qty Rs.Millions
Purchase of traded goods MT 27.65 125.81 21.81 233.60
d) Consumption of Raw Materials
2009-10 2008-09
Particulars MT Rs. Millions MT Rs. Millions
Ethyl Acetate 2,953.59 139.11 3,091.97 155.31
Tetrahydrofuran 1,528.63 160.28 1,844.74 219.25
Toluene 3,262.52 143.60 3,952.94 185.64
Cyclopropyl Acetylene 64.53 171.84 60.51 159.84
Others 10,688.04 6,960.62
Total 11,302.87 7,680.66
53
(e) Consumption of directly imported and indigenously obtained Raw Materials, St
ores & Spares and
Components
2009-10 2008-09
Particulars Rs. Millions % Rs. Millions %
Raw Materials
– Imported 4,233.22 37.45% 3,023.47 39.36%
– Indigenous 7,069.65 62.55% 4,657.19 60.64%
Total 11,302.87 100.00% 7,680.66 100.00%
Stores & Spares
– Imported 248.44 33.70% 157.64 25.70%
– Indigenous 488.68 66.30% 455.72 74.30%
Total 737.12 100.00% 613.36 100.00%
f) CIF Value of Imports Rs. Millions
Raw Material (including Spare parts) 4,726.51 3,397.57
Capital Goods 811.99 522.28
g) Expenditure in Foreign Currency ( on accrual basis) Rs. Millions
Commission 157.04 150.07
Professional Charges 38.97 15.20
Legal Charges 48.46 33.86
Royalty 104.37 72.70
Interest 65.21 13.88
Others 116.75 68.79
(h) Earnings in Foreign Exchange (on accrual basis) Rs. Millions
FOB Value of Exports 15,372.54 12,242.36
Potential Patent Infringement suit – 134.57
Interest 7.49 20.99
Guarantee Commission 12.32 22.84
Other Earnings 1.40 9.91
54
15. Disclosures as required under Accounting Standard AS-15
Accounting standard AS-15 "Employee Benefits" notified by the Companies (Account
ing Standards) Rules, 2006, employee
benefits have been determined in accordance with the Standard
Description of Employee Benefits
a) Gratuity
This is a defined benefit plan as detailed in Note 6(a) of Schedule 3.01 and the
liability for which is determined on the
basis of actuarial valuation and is funded with Gratuity fund managed by Life In
surance Corporation of India.
b) Scheme Description
The Scheme provides for a lump sum benefit, subject to a vesting period of 5 yea
rs in case of early separation, based on
final salary and years of service.
c) Actuarial valuation method: - Projected Unit Credit
d) Leave Benefits
Leave benefit to employees is considered a short term liability which is determi
ned in accordance with the provisions of
AS-15 - Employee Benefits.
e) Disclosures required in accordance with the AS-15 are set out in the table be
low:
Components of Employer Expense Rs. Millions
Current Service Cost 22.45 11.88
Interest on Defined Benefit Obligation 9.80 6.41
Expected Return on Plan Assets (4.83) (3.51)
Actuarial Losses/(Gains) 12.59 16.56
Past Service Cost 0.42 9.00
Total expense recognised in the Statement of Profit & Loss Account 40.43 40.34
Actual Contribution & Benefit Payments Rs. Millions
Actual Benefit Payments (2.43) (4.16)
Actual Contributions 19.64 16.03
Net Asset/(Liability) recognized in Balance Sheet Rs. Millions
Present Value of Defined Benefit Obligation 147.23 104.40
Fair Value of Plan Assets (78.96) (56.50)
Unrecognized Past Service Cost (1.06) (1.48)
(Net Asset) / Liability recognized in Balance Sheet 67.21 46.42
55
Change in Defined Benefit Obligations (DBO) Rs. Millions
Present Value of DBO at Beginning of Year 104.40 63.09
Current Service Cost 22.45 11.88
Interest Cost 9.80 6.41
Actuarial (Gains)/Losses 13.01 16.70
Benefits Paid (2.43) (4.16)
Past Service Cost – 10.48
Present Value of DBO at the End of Year 147.23 104.40
Change in Fair Value of Plan Assets during the year Rs. Millions
Plan Assets at Beginning of Year 56.50 40.98
Acturial Gain / (Losses) 0.42 0.14
Expected Return on Plan Assets 4.83 3.51
Actual Company Contributions 19.64 16.03
Benefits Paid (2.43) (4.16)
Plan Assets at the End of Year 78.96 56.50
Asset Information Rs. Millions
Insurer Managed Funds 78.96 56.50
Plan Assets at the End of Year 78.96 56.50
The Gratuity Scheme is invested in a Group-cum-Life Assurance cash accumulation
policy offered by Life Insurance
Corporation (LIC) of India. The invested return earned on the policy comprises b
onus declared by LIC having regard
to LIC s investment earnings. The information on the allocation of the fund into
major asset classes and expected return
on each major class are not readily available. We understand that LIC s overall
portfolio of assets is well diversified and
as such, the long-term return on the policy is expected to be higher than the ra
te of return on Central Government
bonds.
Actuarial Assumptions
Discount Rate: 8.30% (2008-09 : 7.85 %)
Expected Return on Plans Assets: 7.50 % (2008-09: 7.50 %)
The estimates of future salary increases, considered in actuarial valuations tak
e account of inflation, seniority,
promotion and other relevant factors such as supply and demand factors in the em
ployment market.
f) The Company has made the actuarial valuation based on the proposed increased
limit of gratuity payable Rs.1.00 Million.
16. Disclosure in respect of Operating Leases
a) A general description of leasing arrangements.
The company has entered into leasing arrangements in respect of operating leases
for premises, equipments and vehicles.
These leasing arrangements which are cancellable range between 11 months and 3 y
ears generally, and are usually renewable
by mutual consent on mutually agreed terms.
56
b) Total of minimum lease payments
Rs. Millions
Due not later than one year 26.65 23.38
Due later than one year but not later than five years 91.42 76.90
Later than five years 29.29 58.48
Total 147.36 158.76
c) Lease payments recognised in the statement of profit and loss for the year: R
s.49.33 Millions (2008-09: Rs.31.30 Millions)
17. Research & Development Expenditure (Schedule 2.06)
a) Salaries and wages include Contribution to provident and other funds Rs. 38.9
1 Millions (2008-09: Rs 41.35 Millions).
b) Others include
Rs.Millions
Staff Welfare 13.85 12.77
Insurance 8.04 3.23
Rates and Taxes 2.95 6.88
Repairs and Maintenance - Building 0.09 0.07
Repairs and Maintenance - Plant and Machinery 12.57 15.12
Rent {Refer Note 16 (c)} 26.98 31.06
18. Sundry creditors include in respect of Micro, Small and Medium Enterprises D
evelopment Act, 2006
Rs. Millions
Sl.No. Particulars 2009-10 2008-09
(a) (i) Principal amount remaining unpaid at the end of accounting year 21.17 4.
25
(ii) Interest due on above 0.16 0.03
Total (i) + (ii) 21.33 4.28
(b) Amount of interest paid by the buyer along with amount of the
payment made to the supplies beyond the appointed date 226.55 178.58
(c) Amount of interest accrued and remaining unpaid at the end
of financial year 3.52 1.14
(d) Amount of interest due and payable for the period of delay in making
payment (which have been paid but beyond the due date during the year)
but without adding interest specified under this act. Nil Nil
(e) Amount of further interest remaining due and payable even in the
succeeding years until such date that the same is actually paid to
the small enterprise. 2.16 0.83
57
19. Maximum amount in current account with ABN Amro , Vienna a non scheduled ban
k, Rs.0.01 Million (Previous year Rs.0.06
Million)
20. The equity shares of the Company were delisted from the Bombay StockExchange
(BSE) and National Stock Exchange of
India Limited (NSE) inaccordance with the Securities andExchange Board of India
(Delisting ofSecurities) Guidelines,
2003 with effect from 21st August 2009.
21. Matrix Laboratories Limited ("Matrix") had entered into agreements in Octobe
r 2008 for the termination of the joint venture
agreements with Aspen Pharmacare Holdings Limited ("Aspen"). The Astrix Laborato
ries Limited ("Astrix") and Fine Chemicals
Corporation (Pty) Limited ("FCC") joint ventures were held 50:50 by Aspen and Ma
trix along with their respective subsidiaries.
Under the terms of the termination agreements, 50% Matrix s stake in FCC has bee
n bought by Aspen. 50% Aspen s stake in
Astrix has been assigned by Matrix to its parent company to the extent of 49% an
d the balance 1% to a fellow subsidiary. The
transaction has been closed with effect from 31st May 2009. With effect from 1st
June 2009, the composition of Board of
Directors of Astrix is under the control of Matrix.
22. Matrix Laboratories Limited ("Matrix") held 52.38% in Concord Biotech Limite
d (Concord) . This investment was sold
during the year and the transaction has been closed on 4th December 2009.
The exceptional item of Rs 606.08 Millions represents profit on sale of Concord.
23. Matrix Laboratories Limited ("Matrix"), held 100% in Matrix Laboratories, NV
, Belgium through its subsidiary ,Matrix
Laboratories , BV, Netherlands. The shareholding of Matrix in Matrix Laboratorie
s, NV, Belgium came down to 39.99% as of
29th December 2009. This is on account of the conversion of debt, held by ultima
te Holding Company and its subsidiaries in
Matrix Laboratories NV, Belgium, to Equity. The carrying cost of the investment
in Matrix Laboratories NV Belgium is Rs.Nil
as a provision for diminution in value of investment was made during the year en
ded 31st March 2008.
24. a) The Company entered into a definitive agreement in April 2010, for purcha
se of business undertaking, comprising of
research & development and manufacturing of Active Pharmaceutical Ingredients (A
PIs), from Mylan India Pvt. Ltd.,
whose registered office is at Plot No.1A/2, MIDC Indl. Estate, Taloja, Panvel, D
ist. Raigad, Maharashtra-410 208. The
transaction has been closed with effect from 1st June 2010.
b) The Company has entered into a Memorandum of Understanding in June 2010, with
another pharmaceutical company,
for sale of one of its manufacturing facilities in Hyderabad. This transaction i
s not expected to have any material impact
on the financials of the Company.
25. Figures have been rounded off to the nearest ten thousand.
26. Previous year s figures have been regrouped and reclassified wherever necess
ary to conform to current year s classification.
For and on behalf of the Board
Susanto Banerjee S.Srinivasan
Head - Finance Chief Executive Officer
& Managing Director
Place : Secunderabad B.Nagaraj Goud Dr.B.Hari Babu
Date : June 14, 2010 Company Secretary Chief Operating Officer &
Executive Director
58
BALANCE SHEET ABSTRACT
And Company s General Business Profile
(As per Schedule VI, part IV of the Companies Act, 1956)
I Registration Details
Registration Number : 01-05146 State Code : 01
Balance Sheet Date : March 31, 2010
II Capital Raised during the year
(Amount in Rs.Millions)
Public Issue : Nil Rights Issue : Nil
Bonus Issue : Nil Private Placement
(Preferential Allotment) : 0.02
*Issue of shares upon exercise
of options under ESOP - 2004 : 3.50
III Position of Mobilisation and Deployment of
Funds ( Amount in Rs.Millions)
Total Liabilities : 24,606.18 Total Assets : 24,606.18
Sources of Funds
Paid-up Share Capital : 312.68 Stock Options : –
Reserves & Surplus : 11,209.18 Secured Loans : 4,502.92
Unsecured Loans : 1,616.13 Deferred Tax Liability : 947.10
Current Liabilities : 6,018.17
Application of Funds
Net Fixed Assets : 9,917.20 Investments : 1,766.57
Current Assets : 12,922.41 Miscellaneous Expenditure : –
IV Performance of the Company
(Amount in Rs.Millions)
Turnover (Gross Revenue) : 18,904.19 Total Expenditure : 16,517.50
Profit before Tax : 2,992.77 Profit After Tax : 2,138.34
Earnings per share
- Basic : 13.71
- Diluted : 13.71
Dividend Rate (%) : Nil
V Generic Names of Three Principal Products /
Services of the Company (as per monetary terms)
Item Code No. (ITC Code) : 2933.59.90
Product Description : Valacyclovir
Item Code No. (ITC Code) : 2932.99.00
Product Description : Citalopram
Item Code No.(ITC Code) : 2933.59.90
Product Description : Acyclovir
Managing Director
B.Nagaraj Goud Dr.B.Hari Babu
Executive Director
59
CONSOLIDATED
FINANCIAL STATEMENTS
60
Auditors’ Report on the Consolidated Financial Statements
To the Board of Directors
MATRIX LABORATORIES LIMITED
1. We have audited the attached Consolidated Balance Sheet
of Matrix Laboratories Limited ("the Company"),
its subsidiaries and jointly controlled entities as at 31st
March, 2010, the Consolidated Profit and Loss Account
and the Consolidated Cash Flow Statement of the Group
for the year ended on that date, both annexed thereto.
The Consolidated Financial Statements include
investments in associates accounted on the equity method
in accordance with Accounting Standard 23 (Accounting
for Investments in Associates in Consolidated Financial
Statements) and the jointly controlled entities accounted
in accordance with Accounting Standard 27 (Financial
Reporting of Interests in Joint Ventures) as notified under
the Companies (Accounting Standards) Rules, 2006. These
financial statements are the responsibility of the
Company s Management and have been prepared on the
basis of the separate financial statements and other
financial information regarding components. Our
responsibility is to express an opinion on these
Consolidated Financial Statements based on our audit.
2. We conducted our audit in accordance with the auditing
standards generally accepted in India. Those Standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting
the amounts and the disclosures in the financial statements.
An audit also includes assessing the accounting principles
used and the significant estimates made by the
Management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
3. We did not audit the financial statements of certain
subsidiaries and joint ventures, whose financial statements
reflect total assets of Rs.2,187.54 Millions as at 31st March,
2010, total revenues of Rs.7,345.33 Millions and net cash
outflows amounting to Rs.255.89 Millions, net of
eliminations, for the year ended on that date as considered
in the Consolidated Financial Statements. These financial
statements have been audited by other auditors whose
reports have been furnished to us and our opinion in so
far as it relates to the amounts included in respect of these
subsidiaries and joint ventures is based solely on the
reports of the other auditors.
4. We report that the Consolidated Financial Statements have
been prepared by the Company in accordance with the
requirements of Accounting Standard 21 (Consolidated
Financial Statements), Accounting Standard 23
(Accounting for Investment in Associates in Consolidated
Financial Statements) and Accounting Standard 27
(Financial Reporting of Interests in Joint Ventures) as
notified under the Companies (Accounting Standards)
Rules, 2006.
5. Based on our audit and on consideration of the separate
audit reports on individual financial statements of the
Company, its aforesaid subsidiaries, joint ventures and
associates and to the best of our information and
according to the explanations given to us, in our opinion,
the Consolidated Financial Statements give a true and fair
view in conformity with the accounting principles generally
accepted in India:
(i) in the case of the Consolidated Balance Sheet, of
the state of affairs of the Group as at March 31,
2010;
(ii) in the case of the Consolidated Profit and Loss
Account, of the profit of the Group for the year
ended on that date and
(iii) in the case of the Consolidated Cash Flow Statement,
of the cash flows of the Group for the year ended
on that date.
Registration No. 008072S
Ganesh Balakrishnan
Place : Secunderabad Partner
Date : June 14, 2010 Membership No.201193
61
SOURCES OF FUNDS
Shareholders Funds
Share Capital 1.01 312.68 309.23
Stock Options – 82.73
Reserves & Surplus 1.02 11,841.59 6,614.60
12,154.27 7,006.56
Minority Interest 1,443.58 283.22
Loan Funds
Secured Loans 1.03 6,798.58 7,008.20
Unsecured Loans 1.04 2,475.86 13,241.98
9,274.44 20,250.18
Deferred Tax Liability (Net) 1,130.57 891.11
TOTAL 24,002.86 28,431.07
APPLICATION OF FUNDS
Goodwill on Consolidation (Refer Note 11 of Schedule 3.02) 1.05 1,177.45 8,574.5
3
Fixed Assets
Gross Block 1.06 15,329.38 14,638.12
Less : Depreciation & Amortisation 1.06 (4,000.04) (4,357.19)
Net Block 1.06 11,329.34 10,280.93
Capital Work-in-progress (includes Capital Advances) 1,342.79 1,802.85
12,672.13 12,083.78
Investments 1.07 174.19 423.86
Current Assets, Loans & Advances
a. Inventories 1.08 7,932.64 6,001.30
b. Sundry Debtors 1.09 5,630.79 6,526.35
c. Cash & Bank Balances 1.10 240.11 702.05
d. Loans & Advances 1.11 1,892.53 1,534.29
15,696.07 14,763.99
Less: Current Liabilities & Provisions
a. Current Liabilities 1.12 5,453.47 7,190.76
b. Provisions 1.13 263.51 621.39
5,716.98 7,812.15
Net Current Assets 9,979.09 6,951.84
Profit & Loss Account – 397.06
TOTAL 24,002.86 28,431.07
Significant Accounting Policies and Notes 3.01 & 3.02
CONSOLIDATED BALANCE SHEET
As at 31st March 2010 Rs. Millions
As At As At
Particulars Schedule 31st March 31st March
2010 2009
Managing Director
Ganesh Balakrishnan
Executive Director
62
INCOME
Gross Sales 28,064.94 22,946.13
Less: Excise Duty & Taxes (296.74) (207.65)
Net Sales 27,768.20 22,738.48
Income from Potential Patent Infringement Suit – 134.57
Conversion Income 15.96 48.25
Other Income 2.01 128.58 257.22
27,912.74 23,178.52
EXPENDITURE
Materials Consumed 2.02 13,213.56 11,292.75
Manufacturing Expenses 2.03 2,366.93 1,800.19
Personnel Cost 2.04 2,609.80 2,417.65
Administrative, Selling & Other expenses 2.05 2,285.34 2,129.31
Research & Development Expenditure 2.06 2,608.19 2,142.26
Interest 2.07 1,204.53 1,470.99
Depreciation & Amortisation 1.06 817.95 700.61
25,106.30 21,953.76
Profit before Tax and Exceptional Items 2,806.44 1,224.76
Exceptional Items (Refer note 11 of Schedule 3.02) 3,924.99 –
Tax Expense 2.08 1,346.40 878.40
Profit after Tax & before minority interest and share of associate 5,385.03 346.
36
Less : Minority Interest (357.82) (43.63)
Less : Share of Associate s (loss) – (2.78)
Profit after Tax 5,027.21 299.95
Balance brought forward from Previous years (397.06) (697.01)
Balance carried to Balance Sheet 4,630.15 (397.06)
Earnings per share (Face value of Rs.2/- each) - Rs.
On Profit after Tax :
Before Exceptional Items
– Basic & Diluted 7.07 1.94
After Exceptional Items
– Basic & Diluted 32.24 1.94
Significant Accounting Policies and Notes 3.01 & 3.02
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Rs. Millions
Particulars Schedule 31st March 31st March
2010 2009
Managing Director
Ganesh Balakrishnan
Executive Director
63
CASH FLOW FROM OPERATING ACTIVITIES
Profit before tax, minority interest, share of associate & exceptional items 2,8
06.44 1,224.76
Adjustments for :
Provision for Wealth Tax 0.09 0.22
Depreciation & Amortisation 1,032.78 908.91
Dividend Income (5.28) (1.77)
Employee Stock Option expense 80.30 3.56
Interest Net 1,179.91 1,470.99
Deferred Income (23.48) (134.57)
Unrealized (gain) / loss on account of Exchange Differences (92.23) 10.91
(Profit) / Loss on disposal of Assets (2.35) (34.17)
Operating profit before Working Capital changes 4,976.18 3,448.84
Adjustments for :
Inventories (2,929.49) (181.12)
Sundry Debtors 199.99 (2,381.11)
Loans and Advances (1,111.78) (14.82)
Trade Payables and Other Liabilities 3,301.60 1,093.73
Cash generated from operations 4,436.50 1,965.52
Direct Taxes paid (net of refund) (1,306.41) (394.26)
Wealth Tax Paid (0.19) (0.32)
Settlement on restructuring the supply agreement 234.83 –
Net cash flow from Operating activities 3,364.73 1,570.94
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (3,305.28) (2,909.62)
Sale Proceeds from Fixed Assets 14.40 109.31
Puchase of current investments (96.66) (120.34)
Proceeds from Sale of Long term Investments 2,239.46 –
Investment in Associates/subsidiaries (0.02) –
Interest Received 86.12 64.68
Dividend Income from Current Investments 5.27 1.77
Net cash used in Investing activities (1,056.71) (2,854.20)
CASH FLOW STATEMENT
Rs. Millions
2010 2009
64
CASH FLOW STATEMENT
For the Year Ended 31st March 2010 (Contd...)
Rs. Millions
2010 2009
CASH FLOW FROM FINANCING ACTIVITIES
Repayment of Sales Tax Deferment (2.87) (3.64)
Decrease in Term Loans 125.12 (298.44)
Increase in Bank Borrowings / Other Loans (1,727.63) 2,694.20
Interest Paid (1,126.13) (776.32)
Proceeds from Issue of Equity Capital 3.45 0.05
Securities Premium Received 190.82 3.83
Net cash from /(used in) Financing activities (2,537.24) 1,619.68
Effects of exchange differences on translation of foreign currency cash and cash
equivalents (232.72) (315.55)
Net Increase / (Decrease) in Cash and Cash equivalents (461.94) 20.87
Cash and Cash equivalents at the beginning of the year 702.05 681.18
Cash and Cash equivalents at the end of the year
(Includes restricted balance of Rs. 35.47 Millions)
(31st March 2009 - Rs. 18.20 Millions) 240.11 702.05
Managing Director
Ganesh Balakrishnan
Executive Director
65
SCHEDULES TO THE CONSOLIDATED ACCOUNTS
SCHEDULE 1.01
SHARE CAPITAL
Authorised
200,000,000 Equity shares of face value Rs. 2/- each. 400.00 400.00
Issued, Subscribed and Paidup
156,338,811 Equity shares of Rs.2/- each fully paid up
(31st March 2009 : 154,613,641 Equity shares of Rs.2/- each) 312.68 309.23
Of the above Equity Shares:
151,461,255 shares (31st March 2009 - 110,024,634) are held
by MP Laboratories (Mauritius) Ltd, the holding company, a wholly
owned subsidiary of Mylan Inc, the Ultimate Holding Company.
312.68 309.23
SCHEDULE 1.02
RESERVES AND SURPLUS Opening Additions (Utilisation)
Central Subsidy 6.03 – – 6.03 6.03
Securities Premium 4594.34 353.85 – 4,948.19 4,594.34
General Reserve 568.78 – – 568.78 568.78
Investment Allowance Reserve 0.05 – – 0.05 0.05
Revenue Reserves
(as per scheme of Amalgamation) 350.61 – – 350.61 350.61
Capital Reserve 810.12 – – 810.12 810.12
Cashflow Hedge Account
(Refer note 7 of Schedule 3.01) 332.96 –
Foreign Currency Translation Reserve 194.70 284.67
Profit and Loss Account 4,630.15 –
11,841.59 6,614.60
SCHEDULE 1.03
SECURED LOANS
From Banks
– Term Loans 1,922.57 2,584.38
– Working Capital Loans 4,876.01 4,423.82
6,798.58 7,008.20
SCHEDULE 1.04
UNSECURED LOANS
Short term loans
From Banks 330.91 1,060.36
Other Loans
Sales Tax Deferment 29.51 32.38
Loans from Ultimate Holding Company and fellow subsidiaries 2,115.44 12,149.24
2,475.86 13,241.98
SCHEDULE 1.05
GOODWILL ON CONSOLIDATION
Goodwill on consolidation - Opening 8,574.53 13,762.50
Less : Provision for impairment of Goodwill, net off Exchange fluctuation – (5,187
.97)
Less : Deconsolidation of Goodwill, net off Exchange fluctuation (Refer note 11
of Schedule 3.02) (7,397.08) –
1,177.45 8,574.53
Rs. Millions
As At As At
2010 2009
66
Rs. Millions
Description As at 1st Additions/ Deletions Adjust- As at 31st As at 1st For the
Deletions Adjust- As at 31st As at 31st As at 31st
April 2009 Adjustments * ments** March 2010 April 2009 Period ments** March 2010
March 2010 March 2009
Tangible Assets
Land-Freehold 290.88 109.62 – (3.60) 396.90 – – – – – 396.90 290.88
Land-Leasehold 84.82 (7.85) – – 76.97 11.56 0.21 – – 11.77 65.20 73.26
Buildings 2,410.99 519.81 15.00 (30.23) 2,885.57 370.46 81.78 14.94 (20.51) 416.
79 2,468.78 2,040.53
Plant & Machinery 5,966.58 1,952.29 21.38 (716.48) 7,181.01 1,841.97 383.74 17.0
1 (378.20) 1,830.50 5,350.51 4,124.61
Electrical Equipment 496.29 126.83 0.48 22.22 644.86 171.60 40.06 0.23 2.20 213.
63 431.23 324.69
Lab Equipment 1,272.42 560.28 5.57 (57.10) 1,770.03 313.60 124.31 4.58 (15.29) 4
18.04 1,351.99 958.82
Office Equipment 132.22 17.50 9.90 (28.58) 111.24 72.31 10.49 5.86 (23.03) 53.91
57.33 59.91
Furniture & Fittings 347.97 64.53 12.84 (94.02) 305.64 172.21 30.36 12.84 (76.18
) 113.55 192.09 175.76
Computers 324.25 38.41 27.53 (77.36) 257.77 211.29 35.76 27.05 (68.89) 151.11 10
6.66 112.96
Vehicles 87.80 1.51 19.00 (12.43) 57.88 59.59 10.25 15.44 (8.73) 45.67 12.21 28.
21
Total-Tangible assets 11,414.22 3,382.93 111.70 (997.58) 13,687.87 3,224.59 716.
96 97.95 (588.63) 3,254.97 10,432.90 8,189.63
Intangible Assets
Software 190.31 18.38 – (144.06) 64.63 110.20 34.53 – (114.83) 29.90 34.73 80.11
DMFs & Knowhow 2,454.45 (3.93) 29.68 (913.04) 1,507.80 744.98 185.04 30.61 (227.
47) 671.94 835.86 1,709.47
Patents 534.76 54.87 – (540.59) 49.04 249.77 21.20 – (247.78) 23.19 25.85 284.99
Others 24.38 2.28 3.96 (22.66) 0.04 7.65 4.27 4.12 (7.76) 0.04 – 16.73
Trademarks 20.00 – – – 20.00 20.00 – – – 20.00 – –
Total-Intangible Assets 3,223.90 71.60 33.64 (1,620.35) 1,641.51 1,132.60 245.04
34.73 (597.84) 745.07 896.44 2,091.30
Total-Fixed Assets 14,638.12 3,454.53 145.34 (2,617.93) 15,329.38 4,357.19 962.0
0 132.68 (1,186.47) 4,000.04 11,329.34 10,280.93
11,922.96 2,944.42 229.26 – 14,638.12 3,324.33 1,089.06 56.20 – 4,357.19 10,280.93 8
,598.63
*Includes transfers interse and exchange differences arising on translation of o
pening balances of overseas subsidiaries aggregating to Rs.123.92 Millions (31st
March 2009 : Rs.180.15 Millions)
** includes adjustments on account of deconsolidation of Subsidiaries/Joint Vent
ure and full consolidation of Joint Venture (Refer Note 11 of Schedule 3.02)
Notes : 1) Depreciation & Amortisation
Depreciation & Amortisation on R&D Assets(Refer Schedule 2.06) 214.83
Depreciation & Amortisation on others 817.95
1,032.78
Exchange Differences arising on translation of opening balances (70.78)
of overseas subsidiaries and transfers interse.
Total 962.00
2) Figures in italics relate to the previous year
Schedule 1.06 : Fixed Assets
67
SCHEDULE 1.07
INVESTMENTS
A. Long Term Investments - Unquoted (At cost less provision for diminution in va
lue)
– In Associates
– Explora - Cost of Investment
(net of share of post acquisition loss of Rs. 10.50 Millions ;
Previous year : Rs 10.50 Millions) 120.13 120.13
– Matrix Laboratories BVBA - Cost of Investment * 4,953.93
Less : Provision for diminution in value * (4,953.93) – –
– Others * – 129.33
– Others 54.06 54.06
B. Current Investments - Unquoted (At lower of cost and fair value)
– Units of Mutual Funds – 120.34
* Refer Note 11( C ) of Schedule 3.02
174.19 423.86
SCHEDULE 1.08
INVENTORIES
Stores and Spares 278.97 248.98
Raw Materials 2,322.59 1,582.32
Work-in-process 4,836.37 2,701.94
Finished Goods 494.71 1,468.06
7,932.64 6,001.30
SCHEDULE 1.09
SUNDRY DEBTORS (Unsecured)
Over six months :
Considered Good 420.51 422.66
Others :
5,727.78 6,750.63
Less: Provision for Doubtful Debts (96.99) (224.28)
5,630.79 6,526.35
SCHEDULE 1.10
CASH AND BANK BALANCES
Cash on hand 1.24 3.08
Balances with banks :
Current Accounts including cheques on hand 207.66 555.64
Deposit Accounts 31.21 143.33
240.11 702.05
Rs. Millions
As At As At
2010 2009
68
SCHEDULE 1.11
LOANS AND ADVANCES (Unsecured)
Interest Accrued on Investments 2.14 2.14
Advances - recoverable in cash or in kind for value to be received
- Supplies / Services 87.03 89.01
- Others 777.36 840.34
Cashflow Hedge Asset (Refer note 7 of Schedule 3.01) 332.70 -
Loan to Fellow subsidiary 167.80 -
Advance Tax including Tax Deducted at Source (net of provisions) 74.57 155.99
MAT Credit Receivable 15.76 63.13
Balance with Central Excise & Customs 285.28 209.10
Deposits - Others 71.50 69.75
Prepaid Expenses 91.11 113.87
1,905.25 1,543.33
Less : Provision for Doubtful Advances (12.72) (9.04)
1,892.53 1,534.29
1,905.25 1,543.33
SCHEDULE 1.12
CURRENT LIABILITIES
Sundry Creditors :
Dues to others
- For Goods & Services 3,966.48 3,645.08
- For Capital Works 167.21 137.70
- Others 577.52 597.74
Employee Benefits 175.00 109.52
Deferred Income 227.16 102.94
Advances from Customers 75.14 168.25
Interest accured but not due on loans 49.09 1,273.95
Liability towards Investor Education and Protection Fund
under Section 205 C of the Companies Act,1956
Not due:
- Unpaid Dividends 6.70 7.61
- Unclaimed Matured Deposits - 0.01
Other Liabilities 209.17 1,147.96
5,453.47 7,190.76
SCHEDULE 1.13
PROVISIONS
Income Tax (net of advance tax) 188.42 538.35
Others (including Employee Benefits) 75.09 83.04
263.51 621.39
Rs. Millions
As At As At
2010 2009
69
SCHEDULE 2.01
OTHER INCOME
Interest on Bank and other accounts 24.63 34.59
Dividend from Current Investments 5.28 1.77
Miscellaneous Income 96.32 125.17
Profit on Sale of Fixed Assets (Net) 2.35 34.17
Exchange Difference (Net) – 61.52
128.58 257.22
SCHEDULE 2.02
MATERIALS CONSUMED
Raw Materials 11,644.52 7,647.70
Packing Material 353.62 210.57
Purchase of Finished Goods for Resale 2,376.50 3,540.59
14,374.64 11,398.86
Increase in Stock
Closing Stock
Work-in-process 4,836.37 2,701.94
Finished Goods 494.71 1,468.06
5,331.08 4,170.00
Opening Stock
Work-in-process 2,701.94 2,158.54
Finished Goods 1,468.06 1,905.35
4,170.00 4,063.89
(1,161.08) (106.11)
13,213.56 11,292.75
SCHEDULE 2.03
MANUFACTURING EXPENSES
Stores, Spares & Consumables 615.64 469.67
Power & Fuel 859.05 643.33
Repairs & Maintenance
- Plant & Machinery 83.39 72.82
- Buildings 67.60 24.75
- Others 144.24 113.88
Processing Charges 696.77 559.12
Effluent Treatment Charges 109.32 68.53
Lease Rental Charges - Factory & Others – 0.03
Less : Expenses included under R & D Others (209.08) (151.94)
2,366.93 1,800.19
2010 2009
70
SCHEDULE 2.04
PERSONNEL COST
Salaries, Wages & Bonus 2,199.14 2,174.15
Contribution to Provident and other funds 53.47 40.62
Staff Welfare 298.71 151.02
Gratuity, Superannuation etc., 73.54 63.51
Less : Expenses Capitalised towards capital projects (15.06) (11.65)
2,609.80 2,417.65
SCHEDULE 2.05
ADMINISTRATIVE, SELLING & OTHER EXPENSES
Rent 111.60 131.64
Insurance 76.38 78.12
Office Maintenance 77.71 59.28
Rates & Taxes 37.81 42.31
Printing & Stationary 42.98 45.68
Communication 49.20 50.12
Travelling & Conveyance 103.99 105.25
Legal & Professional fee 399.73 361.65
General Expenses 140.38 122.33
Bank Charges 53.98 92.29
ECGC Premium 36.23 18.29
Commission & Selling expenses 514.10 577.42
Carriage Outward 406.53 272.96
Directors Sitting fee 0.24 0.66
Directors Remuneration 22.14 38.33
Auditors Remuneration 38.36 37.16
Recruitment Expenses 15.86 11.61
Bad / Doubtful Debts & Advances (net) 6.60 84.21
Exchange Differences (net) 151.52 -
2,285.34 2,129.31
SCHEDULE 2.06
RESEARCH & DEVELOPMENT EXPENDITURE
Raw Materials 935.54 633.50
Salaries & Wages 539.04 459.91
Others 918.78 840.55
2,608.19 2,142.26
2010 2009
71
Rs. Millions
2010 2009
SCHEDULE 2.07
INTEREST
On Term Loans 669.17 924.42
On Working Capital Loans 147.03 379.51
Others 406.47 172.03
Less : Interest Capitalised (18.14) (4.97)
1,204.53 1,470.99
SCHEDULE 2.08
TAX EXPENSE
Income Tax for the year
- Current Tax 1,126.71 630.88
- Deferred Tax 207.65 265.76
- Fringe Benefit Tax – 9.79
- Adjustment relating to MAT Credit (1.46) (43.23)
1,332.90 863.20
Tax relating to previous years
- Current Tax 13.50 15.20
1,346.40 878.40
72
SCHEDULE: 3.01
SIGNIFICANT ACCOUNTING POLICIES
1. Accounting Convention
The consolidated financial statements are prepared under
the historical cost convention on accrual basis in accordance
with accounting principles generally accepted in India and
as per the applicable accounting standards notified by the
Companies (Accounting Standards) Rules, 2006.
2. Fixed Assets
Fixed Assets are stated at cost less depreciation. Cost
includes installation and expenditure during construction,
including freight, insurance, borrowing costs and incidental
expenses relating to acquisition. Premium on leasehold
land is amortised over the period of the lease. Depreciation
on fixed assets is provided on straight-line method as per
the rates and in the manner prescribed in Schedule XIV
to the Companies Act, 1956, except in respect of the
following where the rates applied by the company are
higher than Schedule XIV rates:
Office Equipments 10 % & 33.33%
Vehicles 20 %
Interiors in leased office premises 20 %
Furniture & Fittings 8.33 %
The fixed assets of some of the subsidiaries are
depreciated on straight line method using the following
Buildings 3.34 to 10 %
Plant, Machinery and Equipment 5.28 to 33.33%
Furniture and Vehicles 6.33 to 33.33 %
Intangible Assets
Intangible Assets are stated at cost less amortisation. These
are amortised on a straight line basis using the following
Drug Master Files(DMFs),
Patents and Registration files 10 %
Registration expenses 20%
Software 16.21% to 50%
Non compete fee 10 %
3. Investments
Investments are stated at cost of acquisition. Provision
for diminution in value of long-term investments, other
than temporary, is made in the accounts. Current
investments are valued at cost or fair value whichever is
lower.
4. Inventories
Raw materials, Stores & Spares and Work-in-process are
valued at cost using weighted average cost/FIFO method.
Inventories are valued at cost or net realizable value
whichever is lower.
5. Research & Development (R&D)
Revenue expenditure (including depreciation) on R&D is
charged to revenue in the year in which it is incurred.
Capital expenditure, if any, on R&D is added to fixed
assets and depreciated/amortized over the economic
useful life of the assets.
6. Employee Benefits
Liability for employee benefits, both short term and long
term, for present and past services which are due as per
the terms of the employment are recorded in accordance
with the Accounting Standard (AS) 15 "Employee
Benefits" notified by the Companies (Accounting
Standards) Rules, 2006.
In respect of certain overseas subsidiaries, contributions
payable under employee social security schemes which are
defined contribution schemes, are charged to the profit
and loss account.
7. Foreign Exchange Transactions
Transactions in foreign currencies are translated at the
exchange rates prevailing on the dates of transactions and
in case of purchase of materials and sale of goods, the
exchange gains/losses on settlements during the year, are
charged to Profit and Loss Account.
Monetary assets and liabilities denominated in foreign
currencies are translated at the rates prevailing on the date
of Balance sheet. Exchange gains/losses including those
relating to fixed assets are dealt with in the Profit and
Loss Account.
Premium or discount on the forward contracts is
amortised over the life of such contracts and is recognised
as income or expense.
The financial statements of subsidiaries and joint ventures
are consolidated using the following conversion rates into
Indian rupees:
a) All assets and liabilities, both monetary and non
monetary are translated at the closing rates.
b) All revenue and expenditure items are translated using
the average rates for the period of consolidation.
c) The resulting net exchange difference is carried in
the "Foreign Currency Translation Reserve Account".
d) Contingent liabilities are translated using the closing
rates.
Derivative Instruments and Hedge Accounting
The Company uses foreign currency forward contracts
to hedge its risks associated with foreign currency
73
fluctuations relating to certain firm commitments and
forecasted transactions. The Company designates these
as cash flow hedges.
The use of foreign currency forward contracts is governed
by the Company s policies approved by the board of
directors, which provide written principles on the use of
such financial derivatives consistent with the Company s
risk management strategy. The Company does not use
derivative financial instruments for speculative purposes.
Foreign currency forward contract derivative instruments
are initially measured at fair value, and are re-measured at
subsequent reporting dates. Changes in the fair value of
these derivatives that are designated and effective as hedges
of future cash flows are recognised directly in Cash Flow
Hedge Account in Reserves & Surplus and the ineffective
portion is recognized immediately in profit and loss
account.
Changes in the fair value of derivative financial
instruments that do not qualify for hedge accounting are
recognized in profit and loss account as they arise.
Hedge accounting is discontinued when the hedging
instrument expires or is sold, terminated, or exercised, or
no longer qualifies for hedge accounting. At that time for
forecasted transactions, any cumulative gain or loss on
the hedging instrument recognised in Cash Flow Hedge
Account in Reserves & Surplus is retained there until the
forecasted transaction occurs. If a hedged transaction is
no longer expected to occur, the net cumulative gain or
loss recognised in Cash Flow Hedge Account in Reserves
& Surplus is transferred to profit and loss account for the
year.
8. Income Tax Expense
Current tax expense is calculated in accordance with the
applicable tax regulations of the respective country for
the entities.
Deferred tax is accounted for by computing the tax effect
of timing differences, which arise during the year and
reverse in subsequent periods. Deferred Tax assets on
accumulated losses and unabsorbed depreciation are
recognized only to the extent that there is virtual certainty
of realization of such assets in future.
9. Revenue Recognition
a) Revenue from sale of goods is recognised when
significant risks and rewards in respect of ownership
of products are transferred by the company.
b) Sales are inclusive of Excise duty, VAT/Sales Tax
and exchange difference on sales transactions.
c) Export incentive under the Duty Entitlement Pass
Book Scheme is recognized on accrual basis.
d) In respect of ANDA/Dossier licensing and supply
arrangements, revenue is recognized as per the
milestones achieved under the arrangement. In
respect of product development services, revenue is
recognized on accrual basis as the services are
rendered.
10. Employee Stock Option Schemes
The Company accounts for compensation expense under
the Employee Stock Option schemes using the intrinsic
value method as per the Guidance Note "Accounting for
Employee Share-based Payments" issued by the Institute
of Chartered Accountants of India. The difference
between the market price and the exercise price as at the
date of the grant is treated as compensation expense and
charged over the vesting period.
11. Leases
Leases that do not transfer substantially all of the risks
and rewards of ownership are classified as operating leases.
Lease payments under an operating lease are recognized
as expense in the statement of profit and loss on a straight
line basis over the lease term.
12. Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized till the
date the assets are put to use. All other borrowing costs
are charged to revenue.
13. Provisions and contingent liabilities
Provisions involving substantial degree of estimation in
measurement are recognized when there is a present
obligation as a result of past events and if it is probable
that these liabilities can be properly estimated at the period
end. Contingent liabilities are not recognized but are
disclosed in the notes as an item where, substantial
estimation is dependent on the happening of another event
which cannot be adequately judged during the period end.
The basic earning per share ("EPS") is calculated by
dividing the Profit/ (Loss) after Tax after Minority Interest
by the weighted average number of Equity Shares
outstanding. The diluted EPS is calculated after adjusting
the weighted average number of Equity Shares to give
effect to the potential Equity Shares on the Stock Options
outstanding.
15. Goodwill
Goodwill on acquisition is tested for impairment annually
and where the recoverable amount is less than the carrying
value of the related investment, such reduction is recorded
as an impairment loss.
SCHEDULE: 3.01
Significant Accounting Policies (Contd...)
74
SCHEDULE: 3.02
Notes to the Balance Sheet & Profit and Loss Account
MP Laboratories (Mauritius) Ltd is the Holding Company and Mylan Inc USA is the
Ultimate Holding Company of Matrix
Laboratories Limited.
1. Principles of Consolidation:
The Consolidated Financial Statements relate to Matrix Laboratories Limited ("th
e Company") and its Subsidiary Companies,
Joint ventures and Associates.
The Consolidated Financial Statements have been prepared on the following basis:
The financial statements of the Company and its subsidiary companies have been c
ombined on a line-by-line basis by
adding together the book values of like items of assets, liabilities, income and
expenses, after eliminating intra-group
balances, intra-group transactions and the resulting unrealized profits or losse
s as per Accounting Standard 21 - Consolidated
Financial Statements notified by the Companies (Accounting Standards) Rules, 200
6.
In case of foreign subsidiaries, all assets and liabilities, both monetary and n
on monetary are translated at the closing
rates. All revenue and expenditure items are translated using the average rates
for the period of consolidation. The
resulting net exchange difference is carried in the "Foreign Currency Translatio
n Reserve Account".
Investments in Associate Companies have been accounted under the Equity Method a
s per Accounting Standard 23 -
Accounting for Investment in Associates in Consolidated Financial Statements not
ified by the Companies (Accounting
Standards) Rules, 2006.
Interests in Joint Ventures have been accounted by using the proportionate conso
lidation method as per Accounting
Standard 27 - Financial Reporting of Interests in Joint Ventures notified by the
Companies (Accounting Standards)
Rules, 2006.
The financial statements of subsidiaries, joint ventures and associates used in
the consolidation are drawn up to the same
reporting date as that of the Company i.e. 31st March, 2010 except for subsidiar
ies/ joint ventures which have been
deconsolidated. (Refer Note 11 of Schedule 3.02).
The excess of cost to the company, of its investment in the subsidiary company a
nd joint venture over company s
portion of equity, is recognized in the financial statements as Goodwill.
The excess of company s portion of equity of the subsidiary and joint venture on
the acquisition date over its cost of
investment is treated as capital reserve.
Minority interest in the net assets of consolidated subsidiaries consists of:
a) The amount of equity attributable to minorities at the date on which investme
nt in a subsidiary is made; and
b) The minorities share of movements in equity since the date the parent / subs
idiary relationship came into existence.
Minority Interest s share of net profit for the year, of consolidated subsidiari
es, is identified and adjusted against the
profit after tax of the group.
2. The Subsidiaries, Joint Ventures and Associates (which along with Matrix Labo
ratories Limited, the parent, constitutes the
"Group") considered in the preparation of these consolidated financial statement
s are:
75
Subsidiaries
Country of Percentage of
Name Incorporation Ownership interest
31st March 31st March
2010 2009
Subsidiaries of Matrix Laboratories Ltd., India
1. Concord Biotech Limited(1) India – 52.38%
2. Matrix Laboratories BV Netherlands 100% 100%
Subsidiaries of Matrix Laboratories BV
3. Matrix Laboratories Inc USA 100% 100%
4. Matrix Laboratories (Singapore) Pte Ltd Singapore 100% 100%
5. Matrix Laboratories BVBA(5)&(6) Belgium 39.99% 100%
Subsidiaries of Matrix Laboratories (Singapore) Pte Ltd
6. Matrix Pharma Group (Xiamen) Ltd Peoples Republic of China 100% 100%
Subsidiaries of Matrix Pharma Group (Xiamen) Ltd(2)
7. Jiangsu Matrix Pharmaceutical Chemical Co. Ltd(3) Peoples Republic of China 1
00% 95%
8. Mchem Research & Development Company Ltd Peoples Republic of China 100% 100%
9. Shanghai Fine Source Company Ltd. Peoples Republic of China 100% 100%
10. Matrix Laboratories (Xiamen) Limited(4) Peoples Republic of China 98% 93%
Subsidiaries of Matrix Laboratories (Xiamen) Limited
11. Xiamen Beacon Pharmaceutical Manufacturing Co., Ltd Peoples Republic of Chin
a 100% 100%
Subsidiaries of Matrix Laboratories BVBA-Belgium(5)&(6)
12. Docpharma BVBA, Belgium(5)&(7) Belgium 39.99% 100%
Subsidiaries ofDocpharma BVBA, Belgium(5)&(7)
13. Value Pharma International(5)&(8) Belgium – 100%
14. Vascucare NV(5)&(8) Belgium – 100%
15. Vascumed NV(5)&(8) Belgium – 100%
16. Aktupharma NV(5) Belgium 39.99% 100%
17. Nutripharma NV(5) Belgium 39.99% 100%
18. Docpharma Luxembourg - SARL(5) Luxemburg 39.99% 100%
19. Servipharma SA(5) Luxemburg 39.99% 100%
20. Apothecon BV(5) Netherlands 39.99% 100%
21. A Pharma BV(5) Netherlands 39.99% 100%
22. DAA Pharma SA(5) Switzerland 39.99% 100%
23. Farma 1 SARL(5) Italy 39.99% 100%
24. DCI Pharma SA(5) France 39.99% 100%
25. Hospithera SA(5) Belgium 39.99% 100%
26. Aprime SA(5)&(8) Belgium – 100%
27. AB Medical PRS BV(5) Netherlands 39.99% 100%
(1) Investment in Concord Biotech Limited has been sold on 4th December, 2009. R
efer Note 11 (b) of Schedule 3.02.
(2) Reflects the effective holding interest of Matrix Laboratories (Singapore) P
te Ltd.
(3) Dafeng Mchem Pharmaceutical Chemical Company Ltd has been renamed as Jiangsu
Matrix Pharmaceutical Chemical Co. Ltd. Shareholding in Jiangsu
Matrix Pharmaceutical Chemical Co. Ltd increased from 95% to 100% during the yea
r consequent upon acquisition of minority interest.
(4) Shareholding in Matrix Laboratories (Xiamen) Limited increased from 93% to 9
8% during the year consequent upon additional investment in Equity by
Matrix Laboratories (Singapore) Pte Ltd
(5) As of 29th December, 2009, Matrix Laboratories BV, Netherlands shareholding
in Matrix Laboratories NV - Belgium and its step down subsidiaries came
down from 100% to 39.99%. This is due to conversion of a portion of the Debt hel
d by the Ultimate Holding Company and a fellow subsidiary to Equity.
Refer Note 11 (c) of Schedule 3.02.
(6) Matrix Laboratories BVBA was formerly known as Matrix Laboratories NV
(7) Docpharma BVBA was formerly known as Docpharma NV
(8) During the year, Value Pharma International, Vascucare NV, Vascumed NV, and
Aprime SA were merged with Docpharma BVBA (formerly known as
Docpharma NV) with retroactive effect from 1st April, 2009.
SCHEDULE: 3.02
Notes to the Balance Sheet & Profit and Loss Account (Contd...)
76
Joint Ventures
Country of
% of Interest
Name Incorporation 31st March 2010 31st March 2009
Astrix Laboratories Limited * India 50% 50%
Fine Chemicals Corporation (Proprietary) Ltd. * Republic of South Africa – 50%
* Refer Note 11 (a) of Schedule 3.02.
Associates
Country of
% of Interest
Name Incorporation 31st March 2010 31st March 2009
Explora SA Switzerland 27.64% 27.64%
Uteron Pharma SA * Belgium – 25.47%
Belgiedata B.V.B.A.BE ** Belgium – 30.00%
* During the year the holding in Uteron Pharma SA has been sold.
** There is a reduction in % of interest in Belgiedata B.V.B.A.BE to 12% and it
is no longer an associate with effect from
29th December, 2009.Refer Note 11 (c) of Schedule 3.02.
3. Matrix Laboratories Limited became a subsidiary of MP Laboratories (Mauritius
) Limited effective 8th January, 2007. The
ultimate holding company is Mylan Inc., (USA).
The equity shares of the Company were delisted from the Bombay Stock Exchange (B
SE) and National Stock Exchange of
India Limited (NSE) in accordance with the Securities and Exchange Board of Indi
a (Delisting of Securities) Guidelines, 2003
with effect from 21st August, 2009.
As part of the process for delisting of the Equity shares of the Company, the em
ployee stock option plans (ESOP plans) have
been modified, to provide for immediate vesting of outstanding stock options and
revision of exercise price. Further the
employees right to purchase the equity shares from the Company was substituted
with the right to purchase equity shares
from Matrix ESOP Trust. Consequent to the modifications to the ESOP plans a tota
l charge of Rs. 80.30 Millions is recorded
under personnel cost.
4. Joint Ventures considered for consolidation:
The aggregate amount of assets, liabilities, income and expenses related to the
Group s share in the Joint Ventures included in
the consolidated financial statements are as under:
Particulars Astrix Laboratories Fine Chemical Corporation
Limited* (Proprietary) Ltd.*
Country of Incorporation India South Africa
Percentage of holding 50% 50% – 50%
2009-10 2008-09 2009-10 2008-09
Assets – 1,632.14 – 589.78
Liabilities – 486.53 – 26.18
Income 492.50 1,912.99 103.68 594.73
Expenditure 431.61 1,779.63 92.63 504.89
Contingent Liabilities – 20.00 – –
Capital Commitments – 1.99 – 29.94
*Joint Venture upto 31st May, 2009. Refer Note 11 (a) of Schedule 3.02.
5. Key Management Personnel
Mr. S.Srinivasan – Managing Director & Chief Executive Officer
Dr.B.Hari Babu – Chief Operating Officer & Executive Director (with effect from 7t
h October, 2009)
6. Related Party Transactions:
The transactions with related parties are given below. The transactions with sub
sidiaries are eliminated on consolidation.
SCHEDULE: 3.02
77
Sales
Alphapharm Pty Ltd – – – – 207.20 49.94 – – – –
Apothecon BV – – – – – – 2.87 – –
Astrix Laboratories Ltd – – – – – – 29.85 330.34 – –
Docpharma BVBA $ – – – – – – 15.08 – – –
Gen Pharma Inc – – – – – 90.94 – – – –
Gerard Laboratories – – – – 285.23 105.75 – – – –
Mylan India Pvt Ltd – – – – 13.09 8.43 – – – –
Mylan Pharmaceuticals Inc. – – – – 1,048.21 364.43 – – – –
Mylan Pharmaceuticals SL – – – – – 1.05 – – – –
Mylan SAS – – – – 3.02 – – – – –
Mylan Pharmaceuticals ULC @ – – – – 239.11 – – – – –
Sale of Dosier/Product development
Mylan Pharmaceuticals Inc. – – – – 2,043.49 1,395.20 – – – –
Mylan Inc 197.90 1,026.42 – – – – – – – –
Interest Paid
MP Laboratories(Mauritius) Ltd – – 65.21 13.88 – – – – – –
Income Including Management Fee –
Purchases
Alphapharm – – – – 19.53 0.07 – – – –
Astrix Laboratories Ltd – – – – – – 492.82 1,334.75 – –
Mylan UK # – – – – 36.93 8.76 – – – –
Gen Pharma Inc – – – – – 1.23 – – – –
SCHEDULE: 3.02 Notes to the Balance Sheet & Profit and Loss Account (Contd...) R
s. Millions
Ultimate Holding Holding Fellow Subsidiaries Associates & Key Management
Transactions / Balances Company Company Joint Ventures Personnel and
their relatives
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09
78
s. Millions
their relatives
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09
Mylan Pharmaceutical ULC @ – – – – 7.74 50.77 – – – –
Mylan Technologies Inc – – – – 0.60 – – – – –
Mylan Pharmaceuticals Inc. – – – – 40.50 29.82 – – – –
Conversion Income – – – – – – – – – –
Remuneration
S.Srinivasan – – – – – – – – 15.85 3.65
Dr.B.Hari Babu – – – – – – – – 5.68 –
Jagdish Viswanath Dore – – – – – – – – – 6.30
Rajiv Malik – – – – – – – – – 2.70
Reimbursement of Expenses for Services (Net)
Astrix Laboratories Ltd – – – – – – (5.62) (21.42) – –
Alphapharm – – 0.20 – – – –
Docpharma BVBA $ – – – – – – 5.06 – – –
Gerard Laboratories – – – – (2.23) – – – – –
MP Laboratories(Mauritius) Ltd – – 5.08 – – – – – – –
Mylan Pharmaceuticals Inc – – – – (16.55) (18.74) – – – –
Mylan Inc. (22.25) 4.79 – – – – – – – –
Mylan Seiyaku Inc – – – – – (0.80) – – – –
Loan From
MP Laboratories(Mauritius) Ltd – – 461.37 957.24 – – – – – –
Investments in Equity
Astrix Laboratories Limited – – – – – – 0.01 – – –
Balances Outstanding Advances & Loans Receivable
Alphapharm – – – – 45.36 5.27 – – – –
79
Apothecon BV – – – – – – 2.81 – – –
Astrix Laboratories Ltd – – – – – – – 116.20 – –
Docpharma BVBA $ – – – – – – 19.79 – – –
Genpharma Inc – – – – – 11.41 – – – –
Gerard Laboratories – – – – 76.74 63.67 – – – –
Matrix Laboratories BVBA – – – – – – 2.82 – – –
MP Laboratories(Mauritius) Ltd – – 4.77 – – – – – – –
Mylan Pharmaceutical ULC @ – – – – 68.66 – – – – –
Myaln India Pvt Ltd * – – – – 0.71 1.86 – – – –
Mylan Inc. 13.86 948.91 – – – – – – – –
Mylan Pharmaceuticals Inc – – – – 609.70 0.46 – – – –
Mylan Pharmaceuticals SL – – – – – 0.58 – – – –
Balances Outstanding Payable
Astrix Laboratories Ltd – – – – – – – (736.97) – –
Docpharma BVBA $ – – – – – – (5.71) – – –
Mylan UK # – – – – (6.25) (8.71) – – – –
Genpharma Inc – – – – – (0.04) – – – –
Mylan Pharmaceutical ULC @ – – – – (5.78) (5.76) – – – –
Mylan India Pvt Ltd – – – – (5.69) (0.02) – – – –
Mylan Inc. (23.53) (28.94) – – – – – – – –
Mylan Pharmaceuticals Inc – – – – (21.88) (188.43) – – – –
Mylan Technologies Inc – – – – (0.15) – – – – –
Other Receivables/(Payables)
MP Laboratories(Mauritius) Ltd – – (1,358.52) (970.57) – – – – – –
Subsidiaries and Joint Ventures
Matrix Laboraotories Inc sales to Mylan Pharmaceuticals Inc. – – – – 689.10 477.88 – – – –
s. Millions
their relatives
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09
80
s. Millions
their relatives
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09
Matrix Laboratories Inc sales to Mylan Inc. 528.73 104.34 – – – – – – – –
Matrix Laboratories BV - Interest Expense to
Mylan Luxemberg SARL2 – – – – 15.03 6.92 – – – –
Matrix Pharma Group, China sales to Astrix Laboratories Ltd – – – – – – 109.66 255.66 – –
Matrix Pharma Group,China Purchases from
Expenses reimbursement by Mylan Inc to
Docpharma BVBA $ (27.01) (4.11) – – – – – – – –
Expenses reimbursement by Fellow Subsidiaries
to Docpharma BVBA $ – – – – – 40.87 – – – –
Docpharma BVBA Interest expense to Mylan Inc. – 609.39 – – – – – – – –
Docpharma BVBA Interest expense to
Mylan Luxemberg SARL2 – – – – 505.65 111.47 – – – –
Matrix Pharma Group,China Interest expense to
Interest expense of Matrix Laboratories(Singapore)
Pte Ltd on loan from Mylan Luxemberg SARL2 – – – – 5.80 – – – – –
Interest income by Matrix Laboratories BV on
Deposit with Mylan Luxemberg SARL2 – – – – (0.09) – – – – –
Matrix Laboratories BV Interest expense on
Loan taken from Docpharma BVBA $ – – – – – – 0.95 – – –
Matrix Pharma Group,China Payable to
Matrix Pharma Group,China. Receivable from
Astrix Laboratories Ltd – – – – – – – 100.19 – –
Interest payable by Matrix Pharma Group,China to
Matrix Laboratories Inc (payable)/ Receivable to
Mylan Pharmaceuticals Inc. – – – – 55.42 (11.72) – – – –
81
s. Millions
their relatives
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09
Matrix Laboratories Inc (Payable)/receivable from Mylan Inc 102.85 – – – – – – – – –
Loan from Mylan Inc to Docpharma BVBA $ – (8,906.29) – – – – – – – –
Loan from Mylan luxemberg sarl 2 to Docpharma BVBA $ – – – – – (1,803.78) – – – –
Loan from Mylan luxemberg sarl 2 to Matrix Laboratories BV – – – – – (481.94) – – – –
Docpharma BVBA Interest payable to Mylan Inc. – (1,050.54) – – – – – – – –
Docpharma BVBA Interest payable to Mylan Luxemberg sarl 2 – – – – – (114.94) – – – –
Matrix Laboratories BV Interest payable to Mylan lumxemberg sarl2. – – – – – (6.61) – – – –
Docpharma BVBA Other receivables from Mylan Inc. – 0.20 – – – – – – – –
Docpharma BVBA Other receivables from fellow subsidiaries – – – – – 7.60 – – – –
Loan from Mylan luxemberg sarl 2 to Matrix
Laboratories (Singapore) Pte Ltd – – – – (595.59) – – – – –
Matrix Laboratories(Singapore) Pte Ltd Interest payable
on loan from Mylan luxemberg sarl2 – – – – (5.59) – – – – –
Matrix Laboratories BV Deposit with Mylan luxemberg sarl2 – – – – 167.72 – – – – –
Interest Receivable by Matrix Laboratories BV on
Deposit with Mylan luxemberg sarl2 – – – – 0.08 – – – – –
Matrix Laboratories BV Loan payable to Docpharma BVBA $ – – – – – – 177.65 – – –
Matrix Laboratories BV interest on loan payable to
Docpharma BVBA $ – – – – – – 3.74 – – –
Interest expense levied by Astrix Laboratories Ltd on
Matrix Laboratories Ltd – – – – – – 1.39 – – –
Expenses reimbursed by Mylan Inc to
Matrix Pharma Group, China 5.72 – – – – – – – – –
Other receivables of Matrix Pharma Group,
China from Mylan Inc 4.30 – – – – – – – – –
# Formerly known as Generics UK
@ Formerly known as Gen Pharma ULC
$ Formerly known as Docpharma NV
82
SCHEDULE: 3.02
7. Segment Information:
The Company operates in two business segments viz; Pharmaceuticals and Medical S
upplies.
For the year ended 31st March, 2010
Rs. Millions
Particulars Pharma- Medical Unallocable Elimination Consolidated
ceuticals* Supplies* items
External Sales (Net) 26,134.19 1,634.01 – – 27,768.20
Inter - segment sales 5,512.40 – – (5,512.40) –
TOTAL SALES 31,646.59 1,634.01 – (5,512.40) 27,768.20
Other income 139.01 5.53 – – 144.54
SEGMENT REVENUES 31,785.60 1,639.54 – (5,512.40) 27,912.74
Segment result 5,007.45 36.29 – – 5,043.74
SEGMENT RESULT 5,007.45 36.29 – – 5,043.74
Interest Expense – – 1,204.53 – 1,204.53
Depreciation & Amortisation 1,011.90 20.87 – – 1,032.77
Profit before tax 3,995.55 15.42 (1,204.53) – 2,806.44
Income tax expense 1,346.40 – – – 1,346.40
Profit after tax before Minority
Interest, share of Associate &
Exceptional Item 2,649.15 15.42 (1,204.53) – 1,460.04
Exceptional Items-(Income) (3,924.99) – – – (3,924.99)
Profit After Tax Before Share of
Associate, Minority Interest &
After Exceptional Item 6,574.14 15.42 (1,204.53) – 5,385.03
OTHER INFORMATION
Segment Assets 22,825.41 – – – 22,825.41
Joint venture Assets – – – – –
Unallocated Corporate Assets – – 1,177.45 – 1,177.45
Total Assets 22,825.41 – 1,177.45 – 24,002.86
Segment Liabilities 10,405.01 – – – 10,405.01
Joint venture Liabilities – – – – –
Unallocated Corporate Liabilities – – 1,443.58 – 1,443.58
Total Liabilities 10,405.01 – 1,443.58 – 11,848.59
Capital Expenditure-Additions 3,279.85
Non cash Expenses other than
depreciation 1,825.30
*Segment assets and liabilities for Pharmaceuticals and Medical Supplies busines
ses pertaining to the Docpharma Group have
been deconsolidated as of 29th December, 2009. Refer note 11 ( c) of Schedule 3.
02.
For the year ended 31st March, 2010
Rs. Millions
Geographical Segments Segment Revenue Capital Expenditure
Within India 5,091.54 3,054.65
Outside India 22,676.66 225.20
TOTAL 27,768.20 3,279.85
83
SCHEDULE: 3.02
For the year Ended 31st March, 2009
Rs. Millions
Particulars Pharma– Medical Unallocable Elimination Consolidated
ceuticals Supplies items
External Sales (Net) 20,743.30 1,995.18 – – 22,738.48
Inter - segment sales 2,847.83 – – (2,847.83) –
TOTAL SALES 23,591.13 1,995.18 – (2,847.83) 22,738.48
Other income 227.05 78.42 134.57 – 440.04
SEGMENT REVENUES 23,818.18 2,073.60 134.57 (2,847.83) 23,178.52
Segment result 3,360.83 109.26 134.57 – 3,604.66
SEGMENT RESULT 3,360.83 109.26 134.57 – 3,604.66
Interest Expense – – 1,470.99 – 1,470.99
Depreciation & Amortisation 880.03 28.88 – – 908.91
Profit before tax 2,480.80 80.38 (1,336.42) – 1,224.76
Income tax expense 878.20 0.20 – – 878.40
Profit after tax before Minority
Interest, share of Associate&
before Exceptional Item 1,602.60 80.18 (1,336.42) – 346.36
OTHER INFORMATION
Segment Assets 16,818.54 419.03 – – 17,237.57
Joint venture Assets 2,221.91 – – – 2,221.91
Unallocated Corporate Assets – – 8,574.53 – 8,574.53
Total Assets 19,040.45 419.03 8,574.53 – 28,034.01
Segment Liabilities 20,568.41 60.16 – – 20,628.57
Joint venture Liabilities 512.72 – – – 512.72
Unallocated Corporate Liabilities – – 283.22 – 283.22
Total Liabilities 21,081.13 60.16 283.22 – 21,424.51
Capital Expenditure -Additions 3,525.45 – – – –
Non cash Expenses other
than depreciation 1,661.57 – – – –
For the year Ended 31st March, 2009
Rs. Millions
Geographical Segments Segment Revenue Capital Expenditure
Within India 3,140.14 2,282.88
Outside India 19,598.34 1,242.57
TOTAL 22,738.48 3,525.45
8. Secured Loans & Unsecured Loans
Long term loans are secured or are in the process of being secured pari passu by
a first charge on fixed assets and second
charge on current assets.
Working Capital facilities are secured pari passu by first charge on current ass
ets and second charge on fixed assets except
one bank, where the facility is secured by first charge on fixed assets and curr
ent assets.
Working capital facilities availed by subsidiaries in China from various banks a
re either secured by way of assets mortgaged
locally or corporate guarantee provided by Matrix Laboratories Limited, India.
84
SCHEDULE: 3.02
Unsecured loans include intercompany loans from Parent company and a fellow subs
idiary as of 31st March, 2010.
Unsecured loans as of 31st March, 2009 included Intercompany loans from ultimate
holding company and a fellow subsidiary
to Matrix Laboratories BVBA, Belgium (formerly known as Matrix Laboratories NV,
Belgium). Matrix Laboratories BVBA,
Belgium is deconsolidated wef 1st January, 2010 - refer Note 11 of Schedule 3.02
.
9. a) The Company had settled a potential Patent infringement suit favorably and
received Rs.978.72 Millions. Of this, Rs Nil
(2008-09: Rs 134.57 Millions) has been recognized as Income for the year (Rs. 97
8.72 Millions to date) (Previous Years and
till 31st March 2009: Rs.978.72 Millions).
b) The company has received Rs.234.83 Millions towards settlement on restructuri
ng the supply agreement during the year,
out of which Rs.23.48 Million has been recognized as income during the year and
the balance is Rs. 211.35 Millions as on
31st March 2010.
10. a) The Company entered into a definitive agreement in April 2010, for purcha
se of business undertaking, comprising of
research & development and manufacturing of Active Pharmaceutical Ingredients (A
PIs), from Mylan India Pvt. Ltd.,
whose registered office is at Plot No.1A/2, MIDC Indl. Estate, Taloja, Panvel, D
ist. Raigad, Maharashtra-410 208. The
transaction has been closed with effect from 1st June, 2010.
b) The Company has entered into a Memorandum of Understanding in June 2010, with
another pharmaceutical company,
for sale of one of its manufacturing facilities in Hyderabad. This transaction i
s not expected to have any material impact
on the financials of the Company.
11. Exceptional Items:
Rs Millions
(a) Loss on sale of investment in Joint Venture (430.85)
(b) Profit on Sale of investment in Subsidiary 341.91
(c) Gain on deconsolidation of Subsidiary 4,013.93
Total 3,924.99
(a) Loss on sale of investment in Joint Venture:
Matrix Laboratories Limited ("Matrix") had entered into agreements in October 20
08 for the termination of the joint
venture agreements with Aspen Pharmacare Holdings Limited ("Aspen"). The Astrix
Laboratories Limited ("Astrix")
and Fine Chemicals Corporation (Pty) Limited ("FCC") joint ventures were held 50
:50 by Aspen and Matrix along with
their respective subsidiaries. Under the terms of the termination agreements, 50
% Matrix s stake in FCC has been
bought by Aspen. 50% Aspen s stake in Astrix has been assigned by Matrix to its
parent company to the extent of 49%
and the balance 1% to a fellow subsidiary. The transaction has been closed with
effect from 31st May, 2009. The financial
statements of Astrix were consolidated using the Proportionate consolidation met
hod upto 31st May, 2009. With effect
from 1st June, 2009, the financial statements of Astrix are being consolidated l
ine by line by Matrix as the composition
of Board of Directors of Astrix is under the control of Matrix.
The exceptional item of Rs (430.85) million represents loss on sale of FCC.
(b) Profit on sale of investment in Subsidiary:
Matrix Laboratories Limited ("Matrix") held 52.38% in Concord Biotech Limited (C
oncord). This investment was sold
during the year and the transaction has been closed on 4th December, 2009. The f
inancial statements were consolidated
line by line upto 30th November, 2009.
The exceptional item of Rs 341.91 million represents profit on sale of Concord.
(c) Gain on deconsolidation of Subsidiary:
Matrix Laboratories Limited ("Matrix"), held 100% in Matrix Laboratories BVBA, B
elgium through its subsidiary, Matrix
Laboratories BV, Netherlands. The shareholding of Matrix in Matrix LaboratoriesB
VBA, Belgium came down to 39.99%
as of 29th December, 2009. This is on account of the conversion of debt, held by
ultimate Holding Company and its
subsidiaries in Matrix Laboratories BVBA, Belgium, to Equity.
The financial statements of Matrix Laboratories BVBA Belgium and its subsidiarie
s were consolidated line by line upto
31st December, 2009 being the Convenience Accounts Date. With effect from 1st Ja
nuary, 2010, the investment in
85
SCHEDULE: 3.02
Matrix Laboratories BVBA Belgium is being accounted under the Equity Method by M
atrix. The carrying cost of the
investment in Matrix Laboratories BVBA Belgium is nil as a provision for diminut
ion in value of investment was made
during the year ended 31st March, 2008.
The exceptional item of Rs 4,013.93 million represents gain on account of decons
olidation of the financials of Matrix
Laboratories, BVBA, Belgium.
12. Composition of Deferred Tax Liability
Rs. Millions
As at Movement As at
Particulars 31st March during 31st March
2009 the year 2010
Deferred Tax Liability
Relating to Fixed Assets (including R&D Assets) (1,024.46) (349.47) (1,373.93)
Total (1,024.46) (349.47) (1,373.93)
Deferred Tax Assets
Provision for Doubtful Debts 6.96 2.71 9.67
Section 145A related disallowance 61.54 7.36 68.90
Deferred Income – 71.85 71.85
Other fiscal differences 64.85 28.09 92.94
Total 133.35 110.01 243.36
Net Deferred Tax Liability (891.11) (239.46) (1,130.57)
Profit available for equity share holders before exceptional item (Rs. million)
1,102.22 299.95
Profit available for equity share holders after exceptional item (Rs. million) 5
,027.21 299.95
Weighted average number of equity shares - Basic and Diluted 155,951,239 154,605
,975
Earning per share on Profit after Tax before exceptional items
(Face Value: Rs. 2/ each) - Basic and Diluted - Rs. 7.07 1.94
Earning per share on Profit after Tax -
(Face Value: Rs. 2/ each) - Basic and Diluted - Rs. 32.24 1.94
14. Contingent Liabilities - Rs. Millions
Particulars 31st March 2010 31st March 2009
(a) Bills discounted with banks 14.73 4.52
(b) Claims against the company not acknowledged as debts 347.88 811.17
Estimated amount of contracts remaining to be executed on capital account not pr
ovided for (net of advances) Rs. 412.70
(31st March,2009 - Rs. 535.49 Millions)
86
The Company has reached an in principle agreement with a party in connection wit
h a dispute on termination of supply
agreement being arbitrated under auspices of the London Court of International A
rbitration and has made adequate provisions
in the books of accounts for the year ended 31st March, 2010 on the settlement a
mount so agreed.
During the course of the year, the European Commission had stated that it initia
ted proceedings against Matrix and other
companies which entered into agreements with the innovator relating to a product
. Matrix is cooperating with the Commission
in connection with the investigation. As it is not possible to determine with an
y degree of certainty any potential liability
associated with these proceedings, no amounts have been recorded in the Company
s financial statements. However, Management
believes that the ultimate outcome of this matter is not expected to have a mate
rial adverse impact on the Company s financial
statements.
15. Figures are in Rs. Millions and have been rounded off to the nearest ten tho
usand.
16. Previous years figures have been regrouped and reclassified wherever necess
ary to conform to current year s classification.
Previous years figures are not comparable due to deconsolidation / consolidatio
n of certain investments in subsidiaries /
Joint Ventures during the year 2009-10. Refer Note 11 of Schedule 3.02.
Managing Director
B.Nagaraj Goud Dr.B.Hari Babu
Executive Director
SCHEDULE: 3.02
87
Rs. Millions
Issued & Reserves Total Total Invest- Turnover Profit/ Provision Profit/ Propose
d
Sl. Name of the Subsidiary Subscribed Assets Liabilities ments+ (Loss) for (Loss
) Dividend
No. Share before Taxation after
Capital Taxation Taxation
1 Astrix Laboratories Limited, India 45.26 2,781.03 4,178.29 4,178.29 – 4,578.67 8
10.83 275.77 535.06 –
2 Matrix Laboratories BV, Netherlands 6,167.75 (4,741.69) 1,747.63 1,747.63 – – (36.
80) – (36.80) –
3 Xiamen Mchem Pharma (Group)Ltd., China 605.29 (392.09) 949.98 949.98 1.84 1,10
2.46 (113.37) – (113.37) –
4 Jiangsu Matrix Pharmaceutical
Chemical Co Ltd, China* 88.35 (30.86) 120.63 120.63 – 1,151.71 57.65 – 57.65 –
5 Matrix Laboratories (Xiamen) Limited, China** 678.98 (757.76) 985.81 985.81 – 1,
801.08 131.01 – 131.01 –
6 Mchem Research &Development
Company. Ltd., China 32.92 26.14 59.06 59.06 13.17 – (3.67) – (3.67) –
7 Shanghai Fine Source Company Ltd., China 65.85 (16.44) 49.40 49.40 – – (0.04) – (0.0
4) –
8 Xiamen Beacon Pharmaceutical
Manufacturing Co Ltd.,China 36.87 (52.69) 15.82 15.82 – 15.97 0.41 – 0.41 –
9 Matrix Laboratories (Singapore)
Pte Ltd., Singapore 1,409.33 3.32 2,013.82 2,013.82 597.10 – 0.39 – 0.39 –
10 Matrix Laboratories Inc., U.S.A 25.85 67.60 93.45 93.45 – 1,738.95 43.39 17.45
25.94 –
Note: Sl.No. 2 Converted into Indian Rupees at the Exchange Rate, 1 EUR =60.8848
for Balance Sheet items and Rs. 67.0644 for P&L items
Sl.Nos. 3–8 Converted into Indian Rupees at the Exchange Rate, 1 RMB = Rs.6.5846 f
or Balance Sheet items and Rs.6.9477 for P&L items
Sl.No. 9 Converted into Indian Rupees at the Exchange Rate, 1 SGD = Rs.32.1278 f
or Balance sheet items and Rs.33.2448 for P&L items
Sl.No. 10 Converted into Indian Rupees at the Exchange Rate, 1 USD = Rs.44.9500
for Balance sheet items and Rs. 47.4460 for P&L items
*Dafeng Mchem Pharmaceutical Chemical Company Ltd has been renamed as "Jiangsu M
atrix Pharmaceutical Chemical Co Ltd"
** Xiamen Mchem Laboratories Company Ltd has been renamed as "Matrix Laboratorie
s(Xiamen) Limited"
+Investments other than investments in Subsidiaries
Statement Pursuant to Section 212 of the Companies Act, 1956
88
CORPORATE INFORMATION
BOARD OF DIRECTORS
Mr. Rajiv Malik, Director
Mr. S. Srinivasan, Chief Executive Officer & Managing Director
Dr. B. Hari Babu, Chief Operating Officer & Executive Director
Mr. Sanjeev Sethi, Director
Head-Finance
Susanto Banerjee
Company Secretary
B. Nagaraj Goud
Auditors
M/s. Deloitte Haskins & Sells
Gowra Grand, III floor
1-8-1-384 & 385, Sardar Patel Road
Secunderabad - 500 003
Audit Committee
Mr. Rajiv Malik, Chairman
Mr. S. Srinivasan, Member
Mr. Sanjeev Sethi, Member
Registered Office
1-1-151/1, Sairam Towers
IVth Floor, Alexander Road
Secunderabad - 500 003
Andhra Pradesh, INDIA
Ph : +91-40-27700363, 30496666, 30494444
Fax : +91-40-27700343
R&T Agents (Physical & Demat)
M/s Venture Capital & Corporate
Investments Private Limited
(Unit: Matrix Laboratories Limited)
12-10-167, Bharatnagar, Hyderabad - 500 018
India. Phone : +91-40-23818475 / 476
Fax : +91-40-23868024
e-mail : info@vccilindia.com
WORKS
Survey No. 10, Gaddapotharam Village
Kazipally Industrial Estate
Jinnaram Mandal
Medak District - 502 319
Plot Nos 38, 39, 40, 49, 50 & 51
Phase - IV, IDA Jeedimetla
Hyderabad - 500 055
Plot No.36, Phase IV
IDA Jeedimetla
Quthbullapur Mandal
R.R.Dist, Andhra Pradesh
Plot No. 16/B/1
S.V. Co-operative Indistrial Estate, Jeedimetla
Quthbullapur Mandal
R.R. Dist - 500 055
Survey No: 10/A, Model Industrial Estate
Gaddapotharam, Jinnaram Mandal
Plot Nos. 14, 99 and 100, Chemical Zone
Pashamylaram, Patancheru Mandal
G. Chodavaram Village
Poosapatirega mandal
Vizianagaram District - 535 204
Plot No. 5
Road No. 12, J. N. Pharma City
Tadi Village, Parawada Mandal
Visakhapatnam District
Andhra Pradesh - 531 021
Plot No. 1A/2,
MIDC, Taloja
Dist. Raigad, Maharashtra - 410 208
Formulations Plant
Plot No: F-4 & F-12, MIDC
Malegaon, Sinnar Dist
Nashik, Maharashtra
R&D Centres
Plot No. 34/A, Anrich Industrial Estate Bollarum,
Medak District
Plot Nos.38,39,40,49,50&51
Phase IV, IDA Jeedimetla
Hyderabad, Andhra Pradesh.
Survey No. 10 & 42, Gaddapotharam, Kazipally
Industrial Area, Jinnaram Mandal, Medak District,
Andhra Pradesh.
Clinical Research Centre, Saradhi Chambers
A-4, Rukminipuri, Beside Poulomi Hospital
Dr. A.S. Rao Nagar, Hyderabad - 500 062

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