2010-11 Consolidated Financial Statement AR

7/31/2019 2010-11 Consolidated Financial Statement AR

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Annual Report 2010 -11 3

PERFORMANCE AND FINANCIAL HIGHLIGHTS

TEN YEAR

FINANCIAL HIGHLIGHTS

Particulars 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Operating

Performance

Income from Operations 7505 9725 9847 11983 17372 22373 34606 43751 38086 57214

Total Income 7552 9812 9995 12301 18042 23745 35017 44808 42123 59913

Profit after tax 1707 2444 3446 4002 5730 8402 15509 18780 13470 19074

R&D Expenditure 336 966 1268 1427 2015 2787 2859 3320 2242 3096

a) Capital 197 363 598 418 481 347 134 222 159 236

b) Revenue 139 603 670 1009 1534 2440 2725 3098 2083 2860

c) % of Turnover 5% 12% 13% 12% 12% 13% 9% 8% 6% 5%

Financial Position

Equity Share Capital 468 465 464 928 929 967 1036 1036 1036 1036

Reserve and Surplus 4956 5141 7540 10366 14959 26747 48879 69414 77254 93798

Gross Block 3007 4033 6232 7806 12342 14252 15960 21476 23340 45520

Net Block 2092 2682 4518 5719 8563 9514 10354 14625 15328 25234

Investment 818 38 1765 6485 3541 2543 6565 18595 31664 22310

Net Current Asset 2410 3725 4808 16360 23006 26843 33995 35485 28542 45939

Stock Information

Number of Shares 46,774,537 93,048,478 92,755,678 185,511,356 185,731,637 193,402,120 207,116,391 207,116,391 207,116,391 1,035,581,955

Earnings per Share-

Basic (In `)* 35.6 26.4 35.4 21.3 30.9 41.7 74.7 87.8 65.2 17.5

Earning Per Share-

Diluted (In `.)* 35.6 13.2 17.7 20.7 27.7 38.9 71.8 87.8 65.2 17.5

Consolidated

* During the financial year 2002-03, each Equity shares of .10/-each was split into two equity share of`.5/- each.

During the financial year 2010-11, each Equity shares of`.5/-each was split into five equity share of`.1/- each.

(`. in Million)


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KEY PERFORMANCE

INDICATORS

2001-02

2092

2682 4

518

5719

8563

9514

10354

14625

15328

25234

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2001-02

35.

6

26.4

35.4

21.3

30.9

41.7

74.7

87.8

65.2

17.5

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2001-02

4956

5141

7540

10366

14959

26747

48879

69414

77254

93798

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

(`. in Million) (`. in Million) (In `.)

Reserve and Surplus Net Block Earning Per Share - Basic*

Total Income

(`. in Million) (`. in Million) (`. in Million)

Profit After Tax R & D Expenditure

2001-02

336

966

1268

1427

2

015

2787

2859

3320

2242

3096

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2001-02

1707

2444

3446

4002

5730

8402

15509

18780

13470

19074

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2001-02

7552

9812

9995

12301 1

8042

23745

35

017

44808

42123

59913

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2 Sun Pharmaceutical Industries Ltd.

* During the financial year 2002-03, each Equity shares of .10/-each was split into two equity share of`.5/- each.

During the financial year 2010-11, each Equity shares of`.5/-each was split into five equity share of`.1/- each.


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Ann ual Repo rt 2010-11 11 1

SR NO Name o f the Subsidiary Company Rep o r t i n g Exch an g e Cap i tal Reser ve To tal To tal Investm ent Tu r no ver Pro f i t / Pro visio n Pro f i t / Pr o po sedCu r en cy Rat e as o n Assets Liab il it ies other than (Loss) f o r (Loss) Div id en d

31st March, Investment in b ef o r e Taxat io n af t er2011 Subsidiary Taxat io n

1 Green Eco Develo p m en t INR 1.00 1.0 (0.1) 1.0 0.1 (0.1) (0.1) Center Ltd.

2 Su n Ph arm a Glo b al In c. USD 44.52 110.1 28,058.9 42,112.0 13,943.1 2,480.1 667.1 667.1

3 Zao Su n Ph arm a RRU 1.57 0.0 (0.0) Industries Ltd.

4 Su n Ph arm aceu t ical TAKA 0.61 36.6 125.3 282.4 120.6 323.2 85.0 30.7 54.3

(Bangladesh) Ltd

5 Caraco Pharm aceu t ical USD 44.52 6,306.4 255.5 8,989.4 2,427.5 445.2 13,800.1 (562.9) (199.0) (363.9) Laboratories Ltd

6 TKS Farm aceu tica Ltd a Brazilian 27.27 152.0 (86.7) 540.8 475.5 445.3 (76.4) (76.4) reais

7 Su n Ph arm a M exican 3.74 3.8 66.0 417.2 347.4 468.6 56.9 16.4 40.5 D e M exi co S.A . D E C.V. Peso s

8 Su n Ph arm aceu t ical USD 44.52 0.2 (3,138.3) 5,732.5 8,870.5 194.6 (1,80 8.9) (63 0.4) (1,17 8.5 ) Industries Inc.

9 Su n Farm aceu tica Ltd a Brazilian 27.27 67.8 (5.7) (5.7) reais

10 SPIL De M exico M exican 3.74 0.2 0.2 S.A. DE C.V. Pesos

11 Su n Ph arm aceu t ical So les 15.87 0.0 (22.1) 0.9 23.0 (7.5) (7.5) Peru S.A.C

12 OOO Su n Pharm aceut ical RRU 1.57 0.1 1.0 406.4 405.3 292.6 (0.4) 0.6 (1.0) Industries Ltd .

13 Su n Ph arm a de Venezuelan 10.50 1.1 3.6 2.6 Ven ezu ela, CA. Bo livan

Fuert e (VEF)

14 Caraco Ph arm a In c. USD 44.52

15 Ch at tem Ch em icals In c USD 44.52 1,533.0 315.6 1,930.3 81.7 1,180.4 223.0 46.7 176.3

16 Taro Develo p m ent USD 44.52 0.0 (0.0) 884.5 884.5 (0.0) (0.0) Corporat ion

17 Su n Develo pm en t USD 44.52 0.0 (0.0) 884.4 884.5 Corporat ion I

18 Alkalo id a Ch em ical HUF 0.24 1,694.5 (1,124.7) 24,033.2 23,463.3 151.9 865.8 (642.7) (642.7)

Company Zrt.19 Sun Pha r mac eu t i c a l UK L td . GBP 71.37 0.1 (75.4) 152.7 228.0 220.1 (28.9) (28.9)

20 Sun Pharmaceutical AUD 45.98 0.0 (0.8) 0.1 1.0 (0.6) (0.6) Industr ies (Australia) Pty. Ltd .

21 Ad itya Acq u isit io n Israeli New 12.81 0.0 (0.0) 0.0 0.0 0.0 Co m p an y Ltd . Sh ekel, NIS

22 Su n Ph arm aceu t ical EURO 63.06 1.1 (115.8) 123.3 238.0 148.9 (45.7) (45.7) Indu stries (Euro pe) B.V.

23 Su n Ph arm aceu t icals EURO 63.06 0.6 30.3 142.8 112.0 66.8 (70.6) (18.2) (52.4) Ital ia S.R.L.

24 Su n Ph arm aceu t ical EURO 63.06 0.2 (103.3) 128.1 231.2 60.9 (67.3) (16.3) (51.0) Spain, SL.

25 Su n Ph arm aceu t icals EURO 63.06 1.6 (73.7) 124.6 196.7 95.0 (50.3) 6.3 (56.6) Germany Gm bH

in Million

ANNEXURE B TO NOTES ON ACCOUNT

Stat ement regarding subsidiary comp anies as required und er sect ion 212 (8) of t he Comp anies Act, 1956

pursuant t o General Circular no. 2/2011 dated February 8th, 2011 issued b y t he Min ist ry of CorporateAffairs:

(CONSOLIDATED)


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Sun Pharmaceutical Industries Limited11 2

SR NO Name o f the Subsidiary Company Rep o r ti n g Exch an g e Cap i t al Reser ve To tal To tal Investment Tu rno ver Pro f i t / Pro visio n Pro f i t / Pr o po sedCu r en cy Rat e as o n Assets Liab il it ies o ther than (Loss) f o r (Loss) Div id en d

31st March, Investment in b ef o r e Taxat io n af t er2011 Subsidiary Taxat io n Taxat io n

in Million

26 Su n Pharm aceut icals EURO 63.06 2.3 (68.2) 20.6 86.6 5.7 (29.6) (29.6) France

27 Su n Ph arm a Glob al (FZE) USD 44.52 183.6 14,923.5 16,409.9 1,302.7 6,333.5 3,174.4 3,174.4

28 Su n Pharm aceut icals ZAR 6.60 0.0 (0.0) 0.0 0.0 (0.0) (0.0) (SA) (Pty) Ltd .

29 Sun Global Canada Pty . L td. USD 44.52 0.0 0.4 0.4 (0.3) (0.3)

30 Su n Lab o rato ries Inc. USD 44.52 0.0 0.0 0.0

31 Mo rley and Com pany Inc. USD 44.52 0.1 0.1

32 Su n Lab o rato ries FZE. USD 44.52 545.5 (0.0) 545.4 (0.0) (0.0)

33 Taro Pharm aceut ical USD 44.52 30.3 16,945.7 21,360.3 4,384.3 7,836.4 1,710.8 57.7 1,653.1 Industries Ltd.

34 Taro Ph arm aceu t icals Inc. CAD 45.90 0.0 5,446.6 6,407.4 960.8 5,803.6 481.9 53.4 428.5

35 Taro Pharm aceut icals USD 44.52 6.5 (4,146.4) 10,724.2 14,864.2 164.4 13,634.9 1,073.5 399.4 674.1 U.S.A., Inc.

36 Taro Research Institute Ltd. USD 44.52 0.0 (17.0) 1,016.2 1,033.2 986.3 46.6 19.7 26.9

37 Taro Pharm aceut icals USD 44.52 0.0 2,276.6 2,751.4 474.8 1,045.8 532.5 (45.0) 577.5 North America, Inc.

38 Taro Pharm aceut icals EURO 63.06 1.1 (19.5) 2.7 21.1 (3.2) (0.3) (2.8) Europe B.V.

39 Taro Pharm aceut icals EURO 63.06 31.6 (3,812.4) 250.7 4,031.4 (581.0) (581.0) Ireland Ltd.

40 Taro In tern atio nal Ltd . USD 44.52 0.0 (50.6) 244.9 295.5 268.0 (17.8) (17.8) (Israel)

41 Taro Pharm aceut icals GBP 71.37 0.0 (526.5) 631.5 1,158.0 663.0 (32.9) (32.9) UK Ltd.

42 Taro Labo rato ries Ltd . GBP 71.37 0.0 0.0 0.0

43 Taro Hu n gary In tellectu al USD 44.52 1.5 (1.6) 4,528.2 4,528.3 (0.4) (0.4) Property Licensing LLC.

44 Taro Health care Lim ited GBP 71.37 0.1 0.1 0.1

45 Taro In d u st ries Lim ited GBP 71.37 0.1 0.1

46 Taro M an ufact u ring GBP 71.37 0.1 0.1 Limited

47 Taro Pharm aceut icals CAD 45.90 0.0 (0.0) 0.1 0.1 Canada, Ltd.

48 Taro In ternat io n al GBP 71.37 0.1 0.1 Limited - UK

49 Taro Pharm aceut ical INR 1.00 0.1 1.0 1.4 0.3 India Private Ltd .

Note :

1 0.0 represents amount less than 0 .05 mi l lion and rounded o f f .

2 The above d oes not includ e 3 Skyline LLC, One Com m erce Drive LLC, Tarochem Ltd and Taro Pharmaceutical Labo ratories INC being subsidiaries of Taro PharmaceuticalIndustries Ltd as they have n o o peration and d oes not have any Assets, Liabilities or Equity as on the close of th eir Financial Year ending as on 31st Decem ber, 2010.

3 Figures disclosed abov e are as per the statuto ry year end o f the respective sub sidiaries and in respect of Taro Pharmaceutical Indu stries Ltd. and its subsidiaries, figures

are for the year end ed 31st Decem ber, 2010.

ANNEXURE B TO NOTES ON ACCOUNT

Statemen t regarding subsidiary comp anies as required und er sect ion 212 (8) of t he Comp anies Act, 1956

pur suant t o General Circular no. 2/2011 dated February 8th , 2011 issued b y t he Min ist ry of CorporateAffairs:

(CONSOLIDATED)


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82 Sun Pharmaceutical Industries Ltd.

ANNEXURE TO CORPORATE GOVERNANCE FOR THE

YEAR ENDED MARCH 31, 2011

DECLARATION OF COMPLIANCE WITH CODE OF CONDUCT

I, Dilip S. Shanghvi, Chairman & Managing Director of Sun Pharmaceutical Industries Limited (the Company) hereby declarethat, to the best of my information, all the Board Members and Senior Management Personnel of the Company have affi rmed

their compliance and undertaken to continue to comply with the Code of Conduct laid down by the Board of Directors of theCompany for Board members and senior management.

For Sun Pharmaceutical Industries Ltd.,

Dilip S. Shanghvi

Chairman & Managing Director

Date: May 28, 2011.

AUDITORS CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OF CORPORATE

GOVERNANCE UNDER CLAUSE 49 OF THE LISTING AGREEMENT

To The Members of

Sun Pharmaceutical Industries Limited,

We have examined the compliance of conditions of Corporate Governance by Sun Pharmaceutical Industries Limited (theCompany), for the year ended on March 31, 2011, as stipulated in Clause 49 of the Listing Agreement of the said Company with

relevant stock exchanges (hereinafter referred to as Clause 49).

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination has beenlimited to a review of the procedures and implementation thereof, adopted by the Company for ensuring compliance of the

conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of theCompany.

In our opinion and to the best of our information and according to the explanations given to us and the representations madeby the Directors and the Management, we certify that the Company has complied, in all material respects, with the conditions of

Corporate Governance as stipulated in Clause 49.

We state that such compliance is neither an assurance as to the future viability of the Company nor the effi ciency oreffectiveness with which the Management has conducted the affairs of the Company.

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Registration No.117366W)

Rajesh K. Hiranandani

Partner

MUMBAI, May 28, 2011 (Membership No.36920)


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Ann ual Repo rt 2010-11 83

TO THE BOARD OF DIRECTORS OF SUN PHARMACEUTICAL INDUSTRIES LIMITED

AUDITORS REPORT

1. We have aud ited t he attach ed Con solidated Balance Sheet o f SUN PHARMA CEUTICAL INDUSTRIES LIMITED (the Com pany) and its sub sidiaries(the Com pany and its sub sidiaries con stitute the Group) as at 31st March, 2011, the Con solidated Profit and Loss Accoun t and the ConsolidatedCash Flow Statem ent o f the Group for the year ended o n th at date, bo th ann exed th ereto. These financial statem ents are the respon sibility of th eCom panys Man agem ent and h ave been prepared on t he basis of the separate financial statem ents/ co nsolidated fin ancial statem ents in respectof certain subsidiary groups, and other f inancial information regarding components. Our responsibi l i ty is to express an opinion on theseConsolidated Financial Statements based on our audit.

2 . We conduc ted ou r audi t in accordance w i th the audi t ing s tandards general ly accepted in Ind ia . Those Standards requi re that we p lan andperform th e audit to obt ain reasonable assurance about w hether the f inancial statements are free of m aterial misstatement. An aud it inc ludesexamin ing , on a test basis, eviden ce sup po rting t he am ou nts and th e disclosures in th e financial statem ents. An aud it also inclu des assessing t heaccounting pr inc iples used and the s ignif icant est imates made by the Management, as wel l as evaluat ing the overal l f inancial s tatementpresentation. We believe that our audit provides a reasonable basis for our opinion.

3. We did n ot audit th e f inancial statements of any of the 54 subsidiaries and also 2 of t he partnership f i rms ( listed in No te B1 on Schedule 20), wh osefinancial statem ents reflect tot al assets of 50,497.4 Million as at 31st March, 2011, tot al revenues of 28,486.5 Million and n et cash ou tflow s

amo unting t o 260.6 Mil l ion fo r the year ended o n that date as considered in the Consol idated Financial Statement s, com prising:

a. Tota l assets of 23,453.1 M i l l ion as at 31s t March, 2011, to t a l revenues of 17,205.6 Mi l l ion and net cash ou t f low s amo un t ing too331.9 Million for the year ended on that date in respect of 24 subsidiaries and 2 partnership firms, whose financial statements have been

audited b y other auditors and th eir reports have been furnished to u s and our opinio n in so far as i t relates to the am oun ts inc luded in respectof these subsidiaries and partnership firms is based solely on the reports of the other auditors.

b . Total assets of 25,670.9 M illion as at 31st March, 2011, tot al revenues of 9,946.3 M illion and net cash inflow s amo un ting too 61.1 M illionfor the per iod from 20th September, 2010 (date of acquis i t ion) to 31st March, 2011 in respect of a subsidiary group compris ing of 21subsidiaries, w hose report ing date of 31st Decem ber, 2010 is di f ferent from the report ing date of the Com pany and the co nsol idated f inanciastatem ents have been aud ited by o ther aud itors. In terms of Accou ntin g Stand ard 21, Consolidated Financial Statem ents as no tified un der theCompanies (Accounting Standards) Rules, 2006 (Accounting Standard 21), adjustments have been made for significant transactions of thesub sidiary grou p fo r the period from 1st Janu ary, 2011 to 31st March, 2011 on th e basis of th e report o f their aud itors. Our op inion in so far asit relates to the amounts included in respect of this subsidiary group is based solely on the reports of the other auditors furnished to us.

Total assets of 1,369.3 Million as at 31st March, 2011, tot al revenues of 1,334.6 Million and n et cash inflo w s amo un ting t oo 8.8 M illion fo

the year ended o n th at date in respect o f 6 sub sidiaries, w ho se report ing d ate is also of 31st Decem ber, 2010 and d ifferent from the repo rtingdate of th e Comp any and th e f inancial s tatemen ts have been audited b y oth er auditors. In terms of Accou nting Standard 21, adjustm ents havebeen m ade fo r sign ificant transactions of th ese subsidiaries for th e period s from 1st January, 2011 to 31st March, 2011 and 1st January, 2010 to31st March, 2010, on the basis of their management accounts for the said periods. Our opinion in so far as it relates to the amounts includedin respect o f these sub sidiaries is based solely on t he repo rts of t he ot her audit ors furnished to u s and t he m anagem ent accou nts as aforesaid

c. Total assets of 4.1 M illion as at 31st March, 2011, tot al revenues of Nil and net cash inflow s amo un ting too 1.4 M illion for the year end edon that date in respect of 3 subsidiaries, whose financial statements have not been audited.

4. We report that the Consol idated Financial Statements have been prepared by the Com pany in accordance with the requirem ents of AccountingStand ard (AS) 21, Consolidated Financial Statemen ts as no tified u nd er th e Com panies (Accoun ting Stand ards) Rules, 2006.

5. Based on o ur audit and on considerat ion of the separate Auditors Reports on indiv idual f inancial statemen ts of the Com pany and i ts aforesaidsubsidiaries/ consol idated f inancial statement s in respect o f certain subsidiary groups, and to the b est o ur inform ation and according t o th eexplanation s given to us, in ou r opinio n, read w ith ou r com m ents in paragraphs 3(b) and 3(c) above, the Consolidated Financial Statem ents givea true and fair v iew in conform ity with the accoun ting p r inc iples general ly accepted in India:

i. in the case of th e Con solidated Balance Sheet, of the state of affairs of the Group as at 31st March , 2011;

i i . in the case of the Consol idated Prof i t and Loss Account, of the prof i t of the Group for the year ended o n that d ate; and

i i i . in th e case of th e Consol idated Cash Flow Statement, of the cash f lows of th e Group for the year end ed o n th at date.

For Deloit te Haskins & SellsChartered Accoun tants

(Registration No.117366W

Rajesh K HiranandanPartne

MUMBAI, 28th M ay, 2011 (M em bersh ip No . 36920


7/33

Sun Pharmaceutical Industries Limited84

In terms of ou r report attached

SUDHIR V. VALIA

Wholetime Director

SAILESH T. DESAI

Wholetime Director

SUNIL R. AJMERA

Comp any Secretary

Mumbai, 28th May, 2011

S. KALYANASUNDARAM

Wholetime Director & CEO


RAJESH K. HIRANANDANIPartner


As at 3 1st March, 2011 As at 31st M arch, 2010

Schedule in Million in Million in M illion in M illion

AS AT 31ST MARCH, 2011

CONSOLIDATED BALANCE SHEET

SOURCES OF FUNDSSharehold ers FundsShare Capital 1 1,035.6 1,035.6Reserves an d Surp lus 2 93,797.6 94,833.2 77,253.5 78,289.1

Minority Interest 8,471.5 1,931.9

Loan Funds

Secured Loan s 3 1,804.3 1,003.5

Unsecured Loans 4 2,451.5 4,255.8 708.0 1,711.5

Deferred Tax Liab i lit y (Net ) 5 (a) 1,348.3 1,209.1Total 108,908.8 83,141.6

APPLICATION OF FUNDSFixed AssetsGross Block 6 45,520.1 23,340.4Less: Depreciation/Amortisation/Impairment 20,286.1 8,012.5

Net Block 25,234.0 15,327.9Capital Work-in-Progress (includin g advan ces on cap ital accou nt) 2,706.3 27,940.3 1,448.2 16,776.1

Goodwill on Consolidation (Refer note B.6 of sched ule 20) 7,719.7 4,060.3

Investments 7 22,309.6 31,663.8

Deferred Tax Assets (Net ) 5 (b ) 5,000.6 2,099.5

Curren t Assets, Loans and Advances

Inventories 8 14,793.9 10,738.5Sun dry Debtors 9 11,715.9 11,747.7Cash an d Bank Balanc es 10 21,936.4 5,088.9Oth er Current Assets 11 445.1 57.9Loans and Adv ances 12 11,280.8 8,488.1

60,172.1 36,121.1

Less: Current Liabi li t ies and Pro visions 13Current Liabilities 9,203.2 4,095.1Provisions 5,030.3 3,484.1

14,233.5 7,579.2Net Current Asset s 45,938.6 28,541.9

Tot al 108,908.8 83,141.6

SIGNIFICANT ACCOUNTING POLICIES AND

NOTES TO THE FINANCIAL STATEMENTS 20Schedu les referred t o h erein form an int egral part of t heFinancial Statements.

DILIP S. SHAN GHVI


For and o n b ehalf of the Board


8/33


Year ended 31st M arch, 2011 Year ende d 31st M arch, 2010

Schedule in Million in Million in M illion in M illion

CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 ST M ARCH, 2011

INCOME

Incom e from OperationsGross Sales 58,065.8 38,861.4

Less : Excise D ut y 851.5 775.1

Net Sales 57,214.3 38,086.3Other Operating Incom e 14 1,988.2

57,214.3 40,074.5Other Incom e 15 2,698.8 59,913.1 2,048.2 42,122.7

EXPENDITURECost of M aterials / Goo ds 16 14,606.9 10,977.3Personn el Cost 17 6,728.9 4,007.9Operating an d Oth er Expen ses 18 13,318.6 9,372.9Research and Developm ent Expendit ure 19 2,860.0 2,083.1Depreciat ion / Am ort isat ion / Im pairm ent 2,040.6 39,555.0 1,533.1 27,974.3

PROFIT BEFORE TAXATION 20,358.1 14,148.4Provision for Taxation - Current Tax 851.2 1,106.4

- Deferred Tax Charg e / (Credit ) (Net ) 433.2 1,284.4 (427.8) 678.6

PROFIT AFTER TAX 19,073.7 13,469.8

M inority Interest 913.1 (41.0)

PROFIT FOR THE YEAR AFTER TAX AND M INORITY INTEREST 18,160.6 13,510.8

BALANCE OF PROFIT BROUGHT FORWARD 38,211.7 31,021.8AMOUNT AVAILABLE FOR APPROPRIATIONS 56,372.3 44,532.6

APPROPRIATIONSProposed Dividen d 3,624.5 2,847.9Corporate Dividen d Tax 588.0 4,212.5 473.0 3,320.9

Transfer to Gen eral Reserve 5,000.0 3,000.0

BALANCE OF PROFIT CARRIED TO BALANCE SHEET 47,159.8 38,211.7

EARNINGS PER SHARE(refer not e B.8 of Sched ule 20)Basic & Dilu ted ( ) 17.5 13.0Face value per Equ ity sh are - 1

SIGNIFICANT ACCOUNTING POLICIES AND

NOTES TO THE FINANCIAL STATEM ENTS 20Schedu les referred to h erein form an int egral part of th eFinanc ial Statem ent s.

In terms of our report attached

SUDHIR V. VALIA

Wholetime Director

SAILESH T. DESAI

Wholetime Director

SUNIL R. AJMERA

Company Secretary


S. KALYANASUNDARAM





DILIP S. SHAN GHVI


For and on behalf of th e Board


9/33


A Cash Flow From Operat ing Act iv it ies:

Net Profit Before Tax 20,358.1 14,148.4

Adjustmen ts for:

Depreciation / Am ortisation / Imp airm ent 2,040.6 1,533.1

Interest Expense 577.3 61.5

Interest Incom e (1,918.9) (1,200.4)

D iv idend Income ( 2 ,820) (0.0) (0.1)

Loss on Fixed Assets Sold (net ) 14.3 60.3

Profi t on sale of Investm ents (427.5) (73.3)

Provision for Doub tful Debt s 12.9 21.2

Sun dry Balances / Bad Deb ts writt en off / b ack (net ) (10.0) (18.4)

Provision for em ployee b enefits 654.6 64.1

Unrealised Foreign Exchang e Loss (1,812.0) (684.0)

Operat ing Profit Before Working Capital Changes 19,489.4 13,912.4

Adjustm ents for Changes In Worki ng Capit al:

Decrease / (Inc rease) in Sund ry Debt ors 3,475.1 (3,057.1)

Decrease / (Increase) in O th er Receivables 902.0 (707.9)

Increase in Invent ories (712.6) (981.5)

Increase in Trade and Oth er Payables 1,817.0 390.2

Cash Generated From Operat ions 24,970.9 9,556.1

Taxes Paid (1,076.8) (1,744.8)

Net Cash Generat ed From Operat ing Act ivit ies 23,894.1 7,811.3

B. Cash Flow From Invest ing Act iv it ies:

Purch ase of Fixed A ssets and Capit al Work in Progress (includ ing Capit al Advan ce) (4,453.7) (2,841.3)

Proceed s From Sale of Fixed Assets 283.8 89.3

Proceed s From Sale of Investm ent s 126,427.0 153,969.6

Purchase of Investm ent s (123,198.1) (165,746.5)

M argin M oney and Fixed Depo sit w ith Banks (14,789.8) 11,782.5

Sho rt Term Loans / In ter Corporate Dep osits received back / (given ) (net ) (2,596.6) (168.0)

Acq uisition of Sub sidiaries (4,689.3) (806.9)

Interest Received 1,531.7 1,583.8

Dividend Received ( 2,820) 0.0 0.1

Net Cash Used in Invest ing Act ivit ies (21,485.0) (2,137.4)

FOR THE YEAR ENDED 31ST MARCH, 2011

CONSOLIDATED CASH FLOW STATEMENT

Year ended Year end ed31st March, 2011 31st March, 2010

in Million in M il lion


10/33


Year ended Year end ed31st March, 2011 31st March, 2010


C. Cash Flow From Financing Act iv i t ies:

Long Term Loan Taken / (Repaid) (2,204.0) 256.2

Sh ort Term Loan Taken / (Rep aid) 2.3 (6.9)

Proceeds from / (Payment to) Min ority (69.2) 2.5

Interest Paid (577.3) (61.5)

Borrow ing from ban ks Received / (Repaid) (1,585.0) (326.7)

Dividend Paid (2,841.0) (2,843.9)Corporate Dividen d Tax Paid (473.0) (484.0)

Net Cash Used in Financing Act ivit ies (7,747.2) (3,464.3)

Net (Decrease) / Increase in Cash and Cash Equivalent s (5,338.1) 2,209.6

Cash and Bank balance t aken over on acquisit ion of Subsidiaries 5,473.9

Cash and Cash Equivalents as at the beginning of t he year 6,722.0 4512.4

Cash and Cash Equivalents as at t he year end 6,857.8 6,722.0

Cash an d Cash Equ ivalent s Com pr ise:

Cash and Cheques in han d and balances with Scheduled / Other banks 21,936.4 5,088.9(Refer Sch edule 10 to th e Financial Statem ents)

Add : Investmen t in Certi ficate of Deposit having m aturity less than 3 M on ths 1,941.6

Less : M argin M oney Deposit / Fixed depo sit having m aturity m ore than 3 M ont hs 15,067.9 278.1

Unrealised exchang e (Gain) / Loss (10.7) (30.4)

Cash and Cash Equivalent s as rest ated as at the year end 6,857.8 6,722.0

Notes:

1 Cash and cash equivalents includ es 28.5 M illion (Previous Year 22.2 M illion) on accoun t of Unclaimed d ividend, wh ich are no tavailable for use by th e Com pany.

2 Previous years figures are regrouped / reclassified wherever necessary in order to confirm to current years groupings andclassifications.

FOR THE YEAR ENDED 31 ST M ARCH, 2011

CONSOLIDATED CASH FLOW STATEMENT

In terms of our report attached

SUDHIR V. VALIA

Wholetime Director

SAILESH T. DESAI

Wholetime Director

SUNIL R. AJMERA

Company Secretary


S. KALYANASUNDARAM





DILIP S. SHAN GHVI


For and on behalf of th e Board


11/33


(CONSOLIDATED)

SCHEDULES TO THE FINANCIAL STATEMENTS


in Million in Million in M illion in M illion

SCHEDULE 1 : SHARE CAPITAL

Authorised1,500,000,000 Equ ity Sh ares of 1/ - each 1,500.0 1,500.0

(Previo us Year 300,000,000 Equ ity Sh ares of 5 each )

1,500.0 1,500.0

Issued , Sub scribed and Paid Up1,035,581,955 Eq ui ty Sh ares of 1 each 1,035.6 1,035.6

(Previo us Year 207,116,391 Equ ity Sh ares of 5 each )ful ly paid-up .

1,035.6 1,035.6

Notes:Of the above :

1) 808,150,050 Equ ity shares allotted as fully paid Bonu s Shares by cap italisation of Securities Prem ium Accou nt , Profit and LossAccou nt , Am algamat ion Reserve and Capital Redem pt ion Reserve Accoun t.

2) 4,136,330; 2,080,000; 4,775,810; 114,380; 185,190; 197,710 an d 21,370 Equ ity Shares fully p aid allott ed to th e shareho lders of erstw h ileTam ilnadu Dadh a Pharm aceuticals Ltd , M ilm et Labo ratories Pvt. Ltd , Gujarat Lyka Organ ics Ltd , Sun Pharm aceutical Expo rts Ltd,Pradeep Drug Company Ltd, M.J.Pharmaceuticals Ltd. and Phlox Pharmaceuticals Ltd. respectively, pursuant to Schemes ofAm algam ations, w ithou t paymen t being received in cash.

3) 108,003,805 Equ ity Shares al lott ed to t he h olders of Zero Coup on Foreign Currency Con vertible Bon d on exercise of con version

opt ion.4) With effect from 27th Novem ber, 2010, one equity share of 5 each ful ly paid-up w as spl i t int o f ive equity shares of 1 each ful ly

paid-up.

SCHEDULE 2 : RESERVES AND SURPLUS

Capi tal ReserveAs per last Balance Sheet 259.1 259.1

Securiti es Prem ium AccountAs per last Balance Sheet 15,099.1 15,099.1

Capi tal Redem pt io n ReserveAs per last Balance Sheet 154.5 154.5

General ReserveAs per last Balance Sheet 20,444.3 17,444.3

Ad d : Share in p ost acq uisition pro fits of Taro 3,076.9 Pharm aceutical indu stries Ltd Group (Taro),relating t o step-by-step acqu isit ion p rior to date ofacquisit ion o f control.Ad d :Transferred from Profit and Loss Accoun t 5,000.0 28,521.2 3,000.0 20,444.3

Foreig n Currency Translation Reserve on Consoli dati onAs per last Balance Sheet 3,084.8 5,434.8Add / (Less) :M ovem ent Du ring t he Year (480.9) 2,603.9 (2,350.0) 3,084.8

Surplus as per Profit and Loss Account 47,159.8 38,211.7

93,797.6 77,253.5


12/33



As at 31st M arch, 2011 As at 31st M arch, 2010


SCHEDULE 3 : SECURED LOANS

(Refer No te B.7 of Sch edu le 20)

Sho rt Term Loan from Banks 1,280.6 695.2

Cash Credit Facility from Ban ks 523.7 308.3

1,804.3 1,003.5

SCHEDULE 4 : UNSECURED LOANS

Long Term

Debent ure (5.8% Interest Plus CPI, m aturin g in 2014) 1,902.9

Other than b ank Loans 145.8 459.4

Shor t Term

From Banks 340.0 217.1

Cash Credit Facility from Ban ks 54.5 25.5

Others 8.3 402.8 6.0 248.6

2,451.5 708.0

SCHEDULE 5: DEFERRED TAX BALANCES

(Refer No te B.21 of Sched ule 20)

(a) Deferred Tax Liabilities (Net)

(i ) Depreciat ion on Fixed Assets 1,411.3 1,302.8

(i i) Unpaid Liabil it ies (43.6) (69.2)

(i ii ) Others (19.4) (24.5)

1,348.3 1,209.1

(b) Deferred Tax Assets (Net)*

(i ) Depreciat ion on Fixed Assets (346.4) (231.6)

(i i) Unpaid Liabil it ies 1,763.0

(i ii ) Unabsorbed Loss 1,857.3 1,021.4

(iv) Intangibles 973.5 1,078.8

(v) Ot hers 753.2 230.9

5,000.6 2,099.5

* Includ es 3193.7 M illion (Previous Year Nil) taken over on acquisition of Taroo

(CONSOLIDATED)


13/33



SCHEDULE 6 : FIXED ASSETS

Part iculars Gross Block (At Cost ) Depreciat ion / Am ort isat ion / Impairm ent Net Block

Consoli- Taken over Deletions/ Consoli- Taken over Deletions/d at ion on acqui- Ad d i- Ad ju st - dat io n on acq ui- Fo r the Ad ju st -

As At Ad ju st - sit io n t io n s m en t As at As at Ad just sit io n year m en t As at As at As at01.04.10 m en t (d ) 10-11 10-11 31.03.11 01.04.10 m e n t (d ) 10-11 10-11 31.03.11 31.03.11 31.03.10

I. TANGIBLE ASSETS

Freeho ld Land 138.7 1.4 460.5 9.1 609.7 609.7 138.7

Leaseho ld Land 76.7 854.1 64.2 48.7 946.3 4.7 63.1 0.8 0.9 67.7 878.6 72.0

Buildings 5,975.0 48.9 6,222.4 792.9 119.5 12,919.7 (a) 1,127.5 15.1 1,599.5 361.1 47.2 3 ,056.0 9 ,863.7 4,847.5

Plant and Machinery 13,988.0 35.5 7,994.2 1,790.9 285.0 23,523.6 5,812.8 27.6 6,136.2 1,201.0 144.0 13,033.6(b) 10,490.0 8,175.2Vehicles 217.0 2.0 14.7 62.2 35.3 260.6 78.6 2.4 13.1 26.5 11.6 109.0 151.6 138.4

Furniture and Fixtures 484.8 1.7 399.1 37.4 11.8 911.2 214.9 1.1 309.8 34.6 9.1 551.3(b) 359.9 269.9

Sub-Total I 20,880.2 89.5 15,945.0 2,756.7 500.3 39,171.1 7,238.5 46.2 8,121.7 1,624.0 212.8 16,817.6 22,353.5 13,641.7

II. INTANGIBLE ASSETS

Trademarks, Designs and

Other Intangible Assets 2,460.2 (5.7) 3 ,379.7 569.9 55.1 6,349.0 774.0 (5 .0 ) 2 ,327.4 416.6 44 .5 3,468.5(b) 2,880.5 1,686.2

Sub-Total II 2,460.2 (5.7) 3,379.7 569.9 55.1 6,349.0 774.0 (5 .0 ) 2 ,327.4 416.6 44.5 3,468.5 2,880.5 1,686.2

TOTAL I + II 23 ,3 40 .4 83.8 19,324.7 3,326.6 555.4 45,520.1 8,012.5 41.2 10,449.1 2,040.6 257.3 20 ,286 .1 25,234.0 15,327.9

Previou s Year 21,476.1 (703.5) 2,955.8 388.0 23,340.4 6,850.7 (132.9) 1,533.1 (b) 238.4 8,012.5 15,327.9

Capital Work-in-Progress ( includ ing advances on capital accou nt) (c) 2,706.3 1,448.2

27,940.3 16,776.1

NOTES :

(a) Build ing s inclu de 8,620 (Previous Year 8,620) to w ards cost of shares in a Co-o perative Housing Society.y.

(b) Includes Imp airm ent of 30.8 M il lion (Previous Year 30.8 M il lion) includin g Nil (Previous Year 30.8 M il lion) on accoun t of

Imp airmen t for the year.

(c) Capit al w ork-in-p rogress ( includ ing advances on Capital Accoun t ) includ es 2.66 M illion (Previous Year 4.4 M illion ) on accoun t of

preoperative expenses.

(d) Represents assets and accum ulated d epreciation of TARO w hich becam e subsidiary during th e year. Also refer note no. B.22 to

Sch edu le 20.

in Million

(CONSOLIDATED)


14/33







SCHEDULE 8 : INVENTORIES

Consum able Sto res 321.0 170.5Sto ck in Trade

Raw M aterials 5,978.7 5,640.6Packing M aterials 1,180.2 623.3Finished Good s 4,019.8 1,711.4Work-in-Progress 3,294.2 14,472.9 2,592.7 10,568.0

14,793.9 10,738.5

SCHEDULE 7 : INVESTMENTS

A. LONG TERM INVESTMENTS (At Cost )

Quotedi) Eq uit y Sh ares 1,096.6 5,885.1ii) Bonds 52.1 52.5i ii ) Zero Percent-Notes 1,038.9 1,135.8iv ) D eben tu res 722.5 1,409.7

Unquotedi) Gove rnmen t Secu ri ties 164.0 0.0ii ) Equ it y Shares 152.9 148.9iii) Bo nd s 5.0 5.0iv ) D eben tu res 250.0 v) Passthrough Cert i ficates 503.3 500.0vi) D ep osit s 2,258.0 1,240.0v ii ) Mutua l Funds 14,971.1 4,466.1

Total (A) 21,214.4 14,843.1

B. CURRENT INVESTMENTS

i) Cer ti ficate o f Deposi ts (Quoted) 445.2 1,941.6

ii ) Mu tual Funds (Unquo ted ) 650.0 14,879.1

Tot al (B) 1,095.2 16,820.7

Tot al (A+B) 22,309.6 31,663.8

AGGREGATE VALUE OF INVESTMENTS BOOK VAL UE MARKET VAL UE BO O K VA LU E M A RKET VA LU E

Quoted 3,355.2 5,808.3 10,424.7 15,557.7Unquoted 18,954.4 21,239.1

(CONSOLIDATED)


15/33


As at 3 1st M arch, 2011 As at 31st M arch, 2010



SCHEDULE 9 : SUNDRY DEBTORS(Unsecured-Con sidered Goo d , un less stated o th erwise)Over Six Mon ths

Considered Good 1,228.7 1,074.6Con sidered Doub tful 78.1 1,306.8 79.6 1,154.2

Other Debts 10,487.2 10,673.1

11,794.0 11,827.3Less: Provision for Do ub tful D ebt s 78.1 79.6

11,715.9 11,747.7

SCHEDULE 10 : CASH AND BANK BALANCESCash / Chequ es on hand 6.7 88.7Balances wit h Banks

Sch edu led BanksCurrent Account s 5,551.6 175.2

Depo sit Accou nt s {Pledged 33.71 15,067.9 278.1

(Previou s Year 12.0) M illion } 20,619.5 453.3Oth er Banks

Current Account s 1,278.6 4,155.4Deposit Account s 31.6 1,310.2 391.5 4,546.9

21,936.4 5,088.9

SCHEDULE 11 : OTHER CURRENT ASSETS

Interest accrued on Investm ents 445.1 57.9

445.1 57.9

SCHEDULE 12 : LOANS AND ADVANCES( Unsecured Considered Good , un less stated o th erwise )

Loan to Em plo yees / Oth ers {Secured Loans 751.2 M illion

(Previou s Year 294.0 M illion )}

Considered Good 3,391.6 3,796.5

Considered Doubt ful 9.5 9.53,401.1 3,806.0

Less : Provision for Dou bt ful Ad vances 9.5 3,391.6 9.5 3,796.5Advances Recoverable in Cash or in Kind or for Value to b e received 2,570.5 659.5Ad vances to Sup pliers 1,130.2 299.2Balanc es with Central Excise and Custo m s 991.4 871.5DEPB and Ad vance Licences 209.5 137.2Oth er Deposits 146.4 108.6Ad vance Paymen t of Inc om e Tax (Net of Provision ) 2,841.2 2,615.6

11,280.8 8,488.1

(CONSOLIDATED)


16/33





Year ended 31st M arch, 2011 Year ended 31st March , 2010


SCHEDULE 13 : CURRENT LIABILITIES AND PROVISIONS

Current Liabilit iesSun dry Creditors

Due to M icro and Sm all Ent erprises 37.7 19.1Others 4,770.6 3,175.3

Advances from Custom ers 95.5 284.8Security Deposits 21.9 19.3

Investor Edu cation and Protection Fun d shall be credited byUnclaimed Dividend (Not Due) 30.4 23.5

Tem po rary Overdrawn Bank balance as per Boo ks 7.3 5.2Oth er Liabilities 4,198.6 401.7Interest accrued but no t du e on Loans 41.2 9,203.2 166.2 4,095.1

ProvisionsProvision for Fring e Ben efit Tax (Net of Ad van ce Tax on FBT) 0.6 0.6Prop osed Dividend 3,624.5 2,847.9Corporate Dividen d Tax 588.0 473.0Provision for em plo yee ben efits 817.2 5,030.3 162.6 3,484.1

14,233.5 7,579.2

(CONSOLIDATED)

SCHEDULE 14 : OTHER OPERATING INCOME

Non-recurring (incom e) 1,988.2(Refer No te B.14 of Sched ule 20)

1,988.2

SCHEDULE 15 : OTHER INCOME

Lease Ren tal and Hire Charges 47.3 28.3Interest Incom e (Net) 1,340.5 1,138.1(Refer No te B.5 of Schd ule 20 )

Gain o n Exchange Fluctuations 376.3 333.7Profit o n Sale of Fixed Assets 2.8 6.5Profit o n Sale of Investm ent s (Net) 427.5 73.3

(Refer No te B.17 of Sche du le 20)Sun dry Balances Written Back (Net) 0.7 15.7Insurance Claim s 20.4 5.2Div idend Incom e - Long Term Investm ent ( 2,820 ) 0.0 0.1M iscellaneou s Incom e 483.3 447.3

2,698.8 2,048.2


17/33


Year ended 3 1st M arch, 2011 Year ended 31st March , 2010



SCHEDULE 16 : COST OF MATERIALS / GOODS

Inven tories of Raw & Packing m aterial at th e beg inning o f the year 6,263.9 5,637.7Purch ases du ring t he year - Raw & Packing M aterial 13,384.2 10,557.5

- Finished g ood s 1,766.8 1,370.4Invent ories of Raw and Packing M aterial at the en d of t he year (7,158.9) 14,256.0 (6,263.9) 11,301.7Invent ories taken o ver on acq uisition o f Taro 3,360.8 Invent ories of Finished Goo ds and Work-In-Prog ress 4,304.1 3,979.7

at the beginn ing of th e yearInvent ories of Finished Goo ds and Work-In-Prog ress (7,314.0) (4,304.1)

at the end of the year(3,009.9) (324.4)

14,606.9 10,977.3

SCHEDULE 17 : PERSONNEL COST

Salaries,Wages an d Bon us 5,567.1 3,382.0Contribution t o Provident and Oth er Fun ds 613.0 411.2Staff We lfare Expenses 548.8 214.7

6,728.9 4,007.9

SCHEDULE 18 : OPERATING AND OTHER EXPENSES

Sto res an d Spares Con sum ed 600.1 547.9

Conversion and Ot her M anufacturing Charges 1,089.7 784.0Pow er and Fuel 946.0 919.2Rent 182.1 137.1Rates and Taxes 156.5 108.8Insurance 325.7 271.2Selling and D istribu tion 3,414.4 1,670.8Comm ission and Discount 1,328.4 497.1Repairs

Building 120.7 78.6Plant and Machinery 484.7 332.8Others 160.3 765.7 158.9 570.3

Printin g and Station ery 71.7 54.0Travelling and Conveyance 278.0 170.5Overseas Travel and Expo rt Prom ot ion 913.5 735.4

Communicat ion 123.5 71.9Provision for do ubt ful Debts / Advances

Provision for doub tful Debt s 12.9 21.2Sun dry Balances/Bad D ebt s Written Off ( Net ) 5.1 6.5Less :- Ad justed ou t of Provision for earlier years 14.4 3.6 5.1 22.6

Profession al and Consultancy 2,070.8 1,273.7Donations 3.3 111.7Loss on Sale of Fixed A ssets 16.5 66.5Excise Dut y on Stock (*) (2.9) 7.2M iscellaneou s Expen ses 1,032.0 1,353.0

13,318.6 9,372.9

(*) represents the d ifference b etween excise duty o n o penin g and closing stock of f inished good s.

(CONSOLIDATED)


18/33


Year ended 31st M arch, 2011 Year ended 31st March , 2010



SCHEDULE 19 : RESEARCH AND DEVELOPMENT

EXPENDITURE

Salaries,Wages an d Bon us 1,090.5 731.8

Contribution t o Provident and Ot her Fund s 74.2 43.9

Staff We lfare Expenses 102.0 38.5

M aterial, Sto res and Sp ares Con sum ed 840.8 747.0

Pow er and Fuel 22.1 18.7

Rate s and Taxes 15.0 4.1

Rent 0.8 4.1

Insurance 34.5 21.4

Repairs

Building 17.5 6.5

Plant and M achinery 44.6 51.3

Others 28.6 90.7 26.3 84.1

Printin g and Stationery 14.1 11.9

Travelling and Conveyance 19.7 13.2

Communicat ion 15.9 16.1

Profession al and Consultancy 382.9 195.4Loss on Sale of Fixed A ssets 0.6 0.3

M iscellaneou s Expen ses 385.1 315.7

3,088.9 2,246.2

Less:

Int erest In com e (Refer Not e B.5 of Sch du le 20) 1.1 0.8

Receip ts from Research activit ies 188.6 157.7

M iscellaneou s Incom e 39.2 0.5

Bad Deb ts Recovered / Sun dry b alances w ritten Back 228.9 4.1 163.1

2,860.0 2,083.1

(CONSOLIDATED)


19/33


SCHEDULE 20: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS

A SIGNIFICANT ACCOUNTING POLICIES:

1 Basis o f Conso lidat ion :The Consolidated Finan cial Statem ent s relate to Sun Pharm aceutical Indu stries Limit ed (the Com pan y) and its Sub sidiaries(toget her con stitute the Group). The Consolidated Financial Statem ent s have been prepared o n t he follow ing basis:

(i) The financial statements of the Com pany and its Subsidiaries have been com bined on a l ine-by-line basis by adding tog ether thebo ok values of like item s of assets, liabilities, inco m e and exp enses, after elimin ating int ra-group b alances, int ra-group transactionsand un realised profits or losses as per Accou nt ing Stand ard 21 Con solidated Financial Statem ents, as notified b y th e Com panies(Accoun tin g Standards) Rules, 2006. These financial statem ent s have b een prep ared using un iform accou nt ing po licies for liketransactions and o th er events in th e sim ilar circum stances.

(ii) In case of foreign subsidiaries, being n on -integral foreign op eration s, translation of financial statem ents for con solidation is do nein accordance w ith the p ol icy stated in Note 10 below.

(iii) The consolidated financial statem ent s of the Group includ e financial statem ent s of certain sub sidiaries prepared as of a differentdate from th at of t he Com pany s f inancial statem ents. Adjustm ents for effects of signif icant t ransactions and events that haveoccurred bet w een th e date of t he f inancial statem ents of th ese subsidiaries and the date of t he Parent Com panys f inancialstatemen ts are m ade in t he co nsolidated f inancial statem ents.

(iv) The excess of cost of investm ent in th e sub sidiaries over the share of equity in th e sub sidiaries as at the d ate of making th einvestm ent is recognised in t he f inancial statem ents as Goodw il l. Good w il l arising out of con solidation is not am ortised.How ever, the same is tested for imp airm ent at each Balance Sheet date.The excess of share of equit y of th e sub sidiaries over th ecost of acqu isition of th e respect ive investm ent s as at th e date of m aking t he in vestm ent is treated as Capit al Reserve. For th ispu rpose, share of equ ity is determ ined on th e basis of the latest f inancial statem ents prior to the acquisit ion after m akingnecessary adjustmen ts for m aterial event s betw een th e date of such financial statem ent s and th e date of respect ive acqu isition .

(v) Minor i ty Interest in the n et assets of Subsidiaries consists of :

i . th e amou nt o f equity attribut able to the m inorit ies at the date on w hich in vestm ent in Subsidiary is m ade and

ii . the m inorit ies share of m ovem ents in equ ity since t he d ate th e parent-subsidiary relationship cam e int o existence.

2 Basis o f Accoun tin gThe financial statements have been prepared under historical cost convention on an accrual basis and comply with theAccou nt ing Stand ards as no tified b y Comp anies (Accou nt ing Standards) Rules, 2006.

3 Use o f Est im at esThe presentation of financial statem ents in con formit y with th e gen erally accepted accoun ting principles requires estim ates andassump tions to be m ade that affect the reported am oun t of assets and l iabi li t ies on t he date o f the f inancial statement s and thereport ed am oun t of revenues and expenses du ring th e year. Difference b etw een th e actual result and estim ates are recogn ised

in th e year in w hich t he results are kno w n / m aterial ised.4 Fixed Assets and Depreciat ion / Amort izat ion

Fixed Assets including Intangible assets are stated at historical cost (Net of cenvat credit) less accumulated depreciation /am ortization th ereon and im pairm ent losses, if any. Dep reciation on tang ible assets is provid ed on Straigh t Line Meth od at therates specified in Sched ule XIV to th e Com pan ies Act, 1956 except for Caraco Pharm aceutical Laboratories Ltd. (Caraco),TaroPharm aceutical Ind ustries Ltd.(Taro), Alkaloida Ch em ical Com pan y Zrt.,Sun Farmaceut ica Ltd a, Sun Pharm aceutical Ind ustries(Australia) Pty. Ltd ., Sun Pharm aceut ical Ind ustries (Euro p e) B.V., Sun Pharm a Glob al (FZE), Sun Pharm aceut ical Sp ain, SL., SunPharm aceu tic als Italia S.R.L., Sun Pharm aceu ticals Germ any Gm bH, Sun Pharm aceut icals France, TKS Farmaceu tic a Ltd a. and SunPharmaceutical Ind ustries Inc dep reciation is comp uted using th e Straigh t Line M etho d o ver the estimated u seful l ives of th e

related assets, w hich ranges from 3 t o 100 years. Assets costing 5,000 or less are dep reciated at 100% on p ro-rata basis in th eyear of Purchase except, in case of Sun Pharmaceutical Spain, SL. where assets costing Euro 601 or less and in case of SunPharm aceut icals Italia S.R.L wh ere assets costin g Euro 516.46 or less are dep reciated at 100% in t he year of p urch ase. Leaseh old

FOR THE YEAR ENDED 31ST MARCH, 2011 (CONSOLIDATED)

SCHEDULES FORMING PART OF FINANCIAL STATEMENTS


20/33


land is amort ised over th e period of lease. At Taro, Leaseho ld im pro vem ents are dep reciated using t he straigh tline m eth od oveth e sho rter of th eir useful lives or the t erm s of leases gen erally 5 - 10 years.

Intangib le assets consisting of tradem arks, designs, techn ical know -how , no n com pete fees and oth er intang ible assets areamo rtized o n Straigh t Line Meth od from the d ate they are available for use, at the rates as estim ated by th e Man agem entconsidering th e terms of agreement, wh ich ranges from 3 to 20 years.

5 LeasesIn case of assets taken on op erating lease, th e lease rentals are charg ed to th e Profit An d Loss Acco un t in accord ance w ithAccou nt ing Stand ard 19 on leases as no tified b y the Com pan ies (Accoun tin g Stan dards) Rules, 2006.

6 Reven ue Reco gn it io nSales of p roduct s are recognised w hen risk and rew ards of ow nership of th e prod ucts are passed on to the custom ers, w hich isgen erally on despatch of g ood s. Sales inclu de d elayed paym ent charg es, and are stated net of return s, Vat / Sales Tax and

provision fo r chargebacks, M edicaid, rebates, shelf stock adju stmen ts, cash d iscoun ts and o th er sales deduc tion s, m ade on th ebasis of manag emen t expectation taking into account past experience, custom er experience, third-p arty prescription dataindu stry and regulatory changes and oth er relevant inform ation w hich are revised as necessary.

7 InvestmentsInvestm ents are classified into Current and Long Term Investm ents. Current Investm ents are valued at lower o f cost and fair valueLong Term Investm ents are stated at cost less provision, i f any, for other t han tem po rary dim inution in th eir value.

8 InventoriesInvent ories con sistin g of raw an d p acking m aterials, stores and spares, w ork in pro gress and fin ished go od s are stated at low eof co st (Raw an d Packing M aterial - Spec ific Iden tificaito n M eth od ; Sto res and Sp ares - FIFO b asis; Wo rk in Prog ress and Fin ish edGoods - Weighted Average Method) and net realisable value. In respect of Caraco Pharmaceutical Laboratories Ltd cost isdet ermined on specific ident ification basis, in respect of Alkaloida Chem ical Com pany Z rt and Sun Pharmaceutical Ind ustries Inccost is determ ined on FIFO basis, in respect o f Taro Pharm aceutical Indu stries Ltd co st is det erm ined on Average cost basis.

9 Research an d D evelop m en tThe research and developm ent cost is account ed in accordance w ith Accoun ting Stand ard 26 Intang ible Assets. All relatedrevenue expenditure incurred on original and p lann ed investigation un dertaken w ith the p rospect of g aining new scienti f ic otechn ical know ledge and un derstandin g up to th e t ime w hen it is po ssible to dem onstrate prob able future econo m ic benefitsis recog nised as research expen ses and charged off to t he p rofit and lo ss accoun t, as incu rred. All sub sequ ent expen dit ureincurred for product d evelopm ent o n the application of research f ind ings or other knowledge upon demon stration of probabili tyof future econom ic benefits, prior to th e com m encemen t of p roduction, to th e extent id enti f iable and po ssible to segregate areaccum ulated and carried forward as developm ent exp end iture und er Capital Work in Progress, to b e capitalised as an in tang ibleasset on com pletion of th e project. In case a project do es no t p roceed as per expectation s / p lans, th e sam e is abandon ed andth e amo unt classif ied as developm ent expenditu re und er Capital Work in Progress is charged o ff to the profi t and loss account

10 Foreign Currency Transactions and Traslation

Transactions den om inated in foreign currencies are recorded at t he exchan ge rates that appro ximates the actual rate p revailingat th e date of transaction. Mo netary i tems den om inated in foreign currency at t he year end are translated at year end rates. Inrespect o f mo netary item s which are covered b y forward exchange con tracts, the difference betw een the year end rate and th erate on the d ate of th e contract is recog nised as exchang e d ifference and the p remium on such forward con tracts is recognisedover the life of the forw ard cont ract. The exchange d ifferences arising on sett lemen t / translation are recognised in th e Profit andLoss accoun t.

The translation of t he f inancial statemen ts of non integral foreign o perations is accounted for as under:

a) All revenues and expenses are translated at average rate.

b) All mon etary and no n-m onetary assets and l iabi l i t ies are translated at th e rate prevail ing on t he balance sheet.

c) Result ing exchange d ifference is accum ulated in Foreign Currency Translation Reserve on Consolidation un ti l the disposaof the net investmen t in th e said n on integ ral foreign op eration.




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11 Taxes on IncomeProvision for taxation com prises of Current Tax and Deferred Tax. Current Tax p rovision has been m ade o n th e b asis of reliefs andded uctio ns available un der relevent Tax laws. Deferred tax resultin g from tim ing d ifferences betw een taxable and accoun tin gincom e is accoun ted for using th e tax rates and laws that are enacted or sub stant ively enacted as on th e balance sheet d ate. Thedeferred tax asset is recog nised and carried forw ard o nly to t he exten t th at th ere is a reason able certainty t hat th e assets can b erealised in futu re. How ever, w here th ere is unabsorb ed d epreciation or carry forw ard losses un der t axation laws, deferred taxassets are recogn ized o nly if th ere is virtu al certainty o f realisation of such assets. Deferred t ax assets are reviewed as at eachBalance She et d ate.

12 Employee Benef it s(a) The Groups cont ribution in respect of provident fu nd and oth er fun ds is charged to Profi t and Loss Accoun t each year.(b) With respect to gratuity l iabi l ity, som e of the ent i tes in group contribu tes to Life Insurance Corporation of India (LIC) und er

LICs Group Gratuity p olicy. Gratuity liability as determ ined on actu arial basis by t he in dep end ent valuer is charged to Profit

and Loss Account .(c) Liabi li ty for accumulated com pensated absences of emp loyees is ascertained for on actuarial valuation basis and provided

for as per gro up rules.

13 Government Gran ts / SubsidyGovernm ent g rant s, if any, are account ed w hen t here is reasonable assurance th at the ent erprise w ill com ply w ith t he con dition sattached to them and it is reasonably certain th at the ult imate col lection w il l be m ade. Capital Subsidy in n ature of Governm entGrant s related to specific fixed assets is accoun ted fo r wh ere collection is reason ably certain and t he sam e is show n as aded uction from t he gross value of the asset con cerned in arriving at its boo k value and according ly th e depreciation is provid edon th e reduced b ook value.

14 Der ivat ive Accoun t ingForward Contracts in the n ature of highly probable forcasted t ransactions / f i rm com m itm ents entered int o for hedg ing the riskof foreign currency exposure and o ther derivative cont racts are accoun ted for on t he p rinciples of prud ence as enun ciated inAccou nt ing Stand ard 1 (AS-1) Disclosure of Acco un tin g Policies. Pursuant to th is losses, if any o n M ark to M arket b asis, arerecognised in th e Profi t and loss Accoun t and g ains are no t recogn ised on prud ent b asis.

15 Bo rrow in g Co st sBorrowin g co sts that are attributable to th e acquisit ion or con struction of q ualifying assets are capital ised. Other b orrowin gcosts are recogn ised as an expense in t he p eriod in w hich they are incurred.

16 Provisions, Contingent Liabilit ies and Contingent AssetsProvisions are recogn ised on ly wh en t here is a present ob l igation as a result o f past events and w hen a rel iable estim ate of t heamou nt of th e ob l igation can be m ade. Conting ent l iabi l ity is disclosed for (i) Possible ob l igations w hich w ill be con firm ed on lyby futu re events no t w ho lly w ithin the con trol of th e Group or (ii ) Present ob l igations arising from past events wh ere it is no tprob able that an out f low o f resources wil l be required to sett le the o bl igation o r a rel iable estim ate of the amo unt of theob ligation can n ot b e made. Con ting ent Assets are not recogn ised in t he f inancial statem ents since th is m ay result in t he

recognit ion of incom e that m ay never be realised.17 Impai rment o f Asse ts

The Group assesses at each Balanc e Sheet d ate w het her th ere is any ind ication t hat an asset m ay be im paired. If any suchindication exists, the Group estim ates th e recoverable amo un t of th e asset. If such recoverable amo un t of th e asset o r th erecoverable am ou nt of th e cash g enerating un it to w hich t he asset belon gs is less th an its carrying am oun t, th e carrying amo un tis reduced to i ts recoverable am oun t. The reduct ion is treated as an im pairment loss and is recogn ised in th e Profi t and LossAccou nt . If at th e Balance Sheet date t here is an ind ication t hat if a previously assessed im pairm ent lo ss no lo ng er exists, th erecoverable am oun t is reassessed and th e asset is reflected at th e lower of recoverable amou nt and t he carrying amou nt th atw ould h ave been determ ined had n o imp airmen t loss been recog nised.

18 Comm on/Convert ible Preferred Stock IssuedCom m on / Convertible Preferred Sto ck is issued by Caraco from t im e to tim e in lieu of cash for directors fees and in exch ang e forfees to w ards form ula for prod ucts develop ed b y Parent & its affil iates and is recorded as com pen satory expen ses/research and

develop m ent co sts respectively.




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B NOTES TO FINANCIAL STATEMENTS:

1 The Con solidated Financial Statem ents present th e consolidated account s of Sun Pharm aceutical Industries Ltd with i ts fol lowin gsubsidiaries.

Sr. No. Nam e of Subsidiaries Count ry of Proport ion of Proport ion of Year EndIncorporat ion ownership ownership

in terest fo r the in terest fo r theyear 2010-11 year 2009-10

Direct Sub sidiaries

1 Green Eco Developm ent Cen ter Ltd . In d ia 100.00% 31/ 03/ 2011

2 Sun Pharm a Glob al Inc. Brit ish Virg in Island s 100.00% 100.00% 31/ 03/ 2011

3 ZAO Sun Pharm a In dust ries Ltd . Russia 100.00% 100.00% 31/ 12/ 2010(See Foot no te e)

4 Sun Ph arm aceut ical (Ban g ladesh ) Ltd . Bang ladesh 72.50% 72.50% 31/ 03/ 2011

5 Caraco Ph arm aceut ical Lab oratories Ltd . United States o f 75.83% 75.16% 31/ 03/ 2011(CARACO) Am erica

6 TKS Farm aceut ica Ltda Brazil 90.14% 90.10% 31/ 12/ 2010(See Foot n ot e f )

7 Sun Ph arm a De M exico S.A. DE C.V. M exico 75.00% 75.00% 31/ 12/ 2010

8 Sun Ph arm aceut ical In dust ries In c. United States o f 100.00% 100.00% 31/03/ 2011

America

9 Sun Farm aceut ica Ltd a Brazil 99.94% (See Foot n ote f )

10 SPIL De M exico S.A. DE C.V. M exico 100.00% 100.00% 31/ 12/ 2010

11 Sun Ph arm aceut ical Peru S.A.C. Peru 99.33% 99.33% 31/ 12/ 2010

12 OOO Sun Pharm aceut ical Ind ust ries Ltd . Russia 99.00% 99.00% 31/ 12/ 2010

13 Sun Ph arm a d e Ven ezuela, CA. Ven ezuela 100.00% 31/ 03/ 2011

Step dow n Sub sidiaries

14 Caraco Ph arm a Inc. United States o f 75.83% 75.16% 31/ 03/ 2011America

15 Chat tem Ch em icals Inc. United States o f 100.00% 100.00% 31/ 03/ 2011America

16 Taro Developm en t Corp orat ion United States o f 100.00% 31/ 03/ 2011America

17 Sun Developm ent Corporat ion I Un ited States o f 100.00% (See Foot n ote g )America

18 Alkalo ida Chem ical Com pan y Zrt . Hun g ary 99.99% 99.99% 31/ 03/ 2011

19 Sun Ph arm aceut ical UK Ltd . Un ited Kin gd om 100.00% 100.00% 31/ 03/ 2011

20 Sun Ph arm aceut ical Indust ries Australia 100.00% 100.00% 31/ 03/ 2011

(Australia) Pty. Ltd .


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21 Ad itya Acq u isit ion Com p any Ltd . Israel 100.00% 100.00% 31/ 03/2011

22 Sun Ph arm aceut ical Ind ust ries (Europe) B.V. Th e Netherlan ds 100.00% 100.00% 31/ 03/2011

23 Sun Ph arm aceut icals Italia S.R.L. Italy 100.00% 100.00% 31/ 03/2011

24 Sun Ph arm aceut ical Spain , SL. Sp ain 100.00% 100.00% 31/ 03/2011

25 Sun Ph arm aceut icals Germ an y Gm b H Germ any 100.00% 100.00% 31/ 03/201126 Sun Ph arm aceut icals Fran ce France 100.00% 100.00% 31/ 03/2011

27 Sun Ph arm a Global (FZE) U.A.E. 100.00% 100.00% 31/ 03/2011

28 Sun Ph arm aceut icals (SA) (Pty) Ltd . South Africa 100.00% 100.00% 31/ 03/2011

29 Sun Glob al Can ad a Pty. Ltd . Canada 100.00% 100.00% 31/ 03/2011

30 Sun Lab oratories In c United States o f 100.00% 31/ 03/2011America

31 M orley an d Com p an y In c United States o f 100.00% 31/ 03/2011America

32 Sun Laboratories FZE. Sh arjah , U. A. E. 100.00% 31/ 03/2011

33 Taro Ph arm aceut ical Ind ust ries Ltd .(TARO) Israel 66.30% 31/ 12/2010(See Foo t n ot e b.)

34 Taro Ph arm aceut icals In c. Canada 66.30% 31/ 12/2010

35 Taro Ph arm aceut icals U.S.A.,Inc. United States o fAm erica 66.30% 31/ 12/2010

36 Taro Research In st itu te Ltd . Israel 66.30% 31/ 12/2010

37 Taro Ph arm aceut icals North Am erica, In c. Caym an Island s, 66.30% 31/ 12/2010British w est Ind ies

38 Taro Ph arm aceut icals Europe B.V. Th e Netherlan ds 66.30% 31/ 12/201039 Taro Ph arm aceut icals Ireland Ltd . Irelan d 66.30% 31/ 12/2010

40 Taro In ternat ional Ltd . Israel 66.30% 31/ 12/2010

41 Taro Ph arm aceut icals UK Ltd . Un ited Kingd om 66.30% 31/ 12/2010

42 Taro Laboratories Ltd . United States o fAm erica 66.30% 31/ 12/2010

43 Taro Hun gary In tellectual Prop erty Hung ary 66.30% 31/ 12/2010Licensing LLC.

44 3 Skylin e LLC United States o f 66.30% 31/ 12/2010America




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45 One Com m erce Drive LLC United States o f 66.30% 31/ 12/ 2010America

46 Taro Healthcare Lim ited Un ited Kin gd om 66.30% 31/ 12/ 2010

47 Taro In d ustries Lim ited Un ited Kin gd om 66.30% 31/ 12/ 2010

48 Taro M an ufacturing Lim ited Un ited Kin gd om 66.30% 31/ 12/ 2010

49 Taroch em Ltd . Israel 66.30% 31/ 12/ 2010

50 Taro Pharm aceut ical Lab oratories INC United States o f 66.30% 31/ 12/ 2010America

51 Taro Ph arm aceut icals Can ad a, Ltd . Canada 66.30% 31/ 12/ 2010

52 Taro In tern at ional Lim ited Un ited Kin gd om 66.30% 31/ 12/ 2010

53 Taro Pharm aceut ical In d ia Private Ltd . In d ia 66.30% 31/ 03/ 2011

Partnership Firm

54 Sun Ph arm aceut ical Indust ries In d ia 97.50% 97.50% 31/ 03/ 2011

55 Sun Ph arm a Exports In d ia 80.00% 80.00% 31/ 03/ 2011

56 Sun Ph arm a Sikkim In d ia 97.50% 97.50% 31/ 03/ 2011

57 Sun Ph arm a Drugs In d ia 98.00% 31/ 03/ 2011

Cont rolled Entit y

58 Un iversal En terp rises (Pvt ) Ltd . In d ia 97.50% 97.50% 31/ 03/ 2011

a. The Financial Statem ent s of th e Com pan y and p artnership firms at Sr. No. 54 and 56 are aud ited by Deloitt e Haskins & Sells. The Finan ciaStatem ent s in respect of all Other sub sidiaries and Partnership Firms are audited by o th er aud itors except in respect of sub sidiaries atSr. No. 13,30 and 32 are un audit ed and are con solidated o n th e basis of m anagem ent accoun ts.

b. The aud ited co nsolid ated finan cial statem ent s of Taro Ph armaceu tical Ind ustries Ltd an d it s 20 sub sid iaries, listed un d er Sr.No. 33 to 53above been d raw n u p for the year end ed 31st Decem ber, 2010, w here the reportin g d ate is different from th e repo rting date of th e

Parent Comp any. The con solidated f inancial statem ents of this sub sidiary group as on th e date of th e acquisit ion by t he ParentComp any on 20th Septem ber, 2010 have been p repared in accordance w ith t he requirement s of Account ing Stand ard 21, ConsolidatedFinan cial Statem ent s as n ot ified un der th e Com pan ies (Accou nt ing Stan dard s) Rules, 2006 (Accou nt ing Stan dard 21) by g iving effectsof sign ificant transactions or other event s th at occur bet w een th e date of the latest available consolidated financial statem ent s of th esubsidiary group and th e date of acquisit ion and repo rted up on by th eir auditors. Such consolidated f inancial statem ents of th esubsidiary group for the p eriod end ed 31st Decem ber, 2010 have been furth er adjusted, in accordance w ith th e said Accoun tingStand ard 21, for sign ificant t ransaction s of th e sub sidiary group for th e period from 1st Janu ary, 2011 to 31st M arch, 2011 on th e b asisof th e reports of th eir audito rs.

The Group h olds 66.30% and 77.30% of ben eficial ow nership and v otin g po wer respectively in th e share capital of Taro PharmaceuticaIndu stries Ltd .


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c. In respect of subsidiaries at Sr. No. 3, 6, 7, 10, 11 and 12, th e repo rtin g date is also as of 31st Decem ber, 2010 and different from th ereporting d ate of the Parent Com pany and t he f inancial statem ents have been audited b y oth er audito rs. In terms of Account ingStan dard 21, adjustm ent s have b een m ade for sign ificant tran saction s of th ese subsidiaries for th e period s from 1st January, 2011 to31st M arch, 2011 and 1st January, 2010 to 31st M arch, 2010, on th e basis of th eir man agem ent accoun ts for th e said p eriods.

d. Sub sidiaries at Sr. No. 1, 13, 30, 32, and 57, hav e been in corp orated du ring th e year en d ed 31st M arch, 2011.

e. The Com pan y is in th e process for Liqu idation of ZAO Sun Pharm a Ind ustries Limited and h as app oint ed Official Liquid ator as per th eterm s of Resolution passed at t he General Meeting of th e Sub sidiary held o n 29th Octo ber, 2002.

f. With effect from 01st Oct ob er, 2010 Sun Farmaceut ica Ltda h as m erged w ith Tks Farmaceut ica Ltd a.

g. With effect from 20th Septem ber, 2010 Sun Developm ent Corporation I has merged w ith Taro Developm ent Corporation.

h. Sign ificant Accoun ting Policies and Notes to th ese Consolidated Financial Statem ents are int ended to serve as a m eans of inform ative

disclosure and a g uide for better un derstand ing o f th e consolidated p osit ion o f the Group. Recogn ising th is pu rpose, th e Group hasdisclosed on ly such po licies and not es from the in divid ual financial statemen ts wh ich fairly represent the n eeded d isclosures. Lack ofhom ogen eity and oth er similar considerations made it d esirable to exclude som e of them , w hich in th e opinion of th e m anagement ,could b e better viewed w hen referred from t he individual f inancial statement s.



As at As at31st March, 2011 31st March, 2010


2 a) CONTINGENT LIABILITIES NOT PROVIDED FOR:

Guarantees Given b y the b ankers on beh alf of th e Group 176.3 274.1Letters of Credit for Im po rts 187.8 515.0Liabi l i t ies Dispu ted - App eals f iled w ith respect to :

Incom e Tax on accoun t of D isallow ances / Add it ions 2,562.0 4,167.6With ho lding Tax due, relatin g t o Emp loyees of Taro 2,359.6 Sales Tax on acco un t of Rebat e / Classification 25.6 11.4Excise Duty on accoun t of Valuation / Cenv at Credit 326.8 316.6ESIC Contribut ion o n account of applicabil ity 0.2 0.2

Drug Price Equ alisation Accoun t [DPEA] on account o f dem and t ow ards 14.0 14.0un intend ed ben efit , including interest th ere on, enjoyed b y the Group

Dem and b y JDGFT im po rt dut y with respect to im port al leged to b e in excess of 11.5 11.1entit lemen t as per the Advanced Licence Schem e

Other Claims against the Group no t acknowledg ed as debts 820.2 6.7(Inclu des 781.4 m illion pertain ing to Taro)

b ) Est im at ed am oun t of co nt ract s rem aini ng t o b e execu ted o n Cap it al Acco un t 1,739.3 1,118.7(Net of Advances)

3 Legal Proceedings

The Comp any and / or its subsidiaries are involved in v arious legal proceeding s including prod uct liability, cont racts, emp loymen tclaims and oth er regulatory m atters relating t o co nd uct of i ts business. The Group carries produ ct l iabi l ity insurance / iscon tractually indem nified b y th e m anufacturer, for an amo un t it believes is sufficient for its need s. In respect of ot her claims, thegroup believes, these claims do not consti tute material l i t igation matters and with i ts meritorious defences the ult imatedispo sition of th ese m atters w ill not h ave m aterial adverse effect on its Financ ial Statem ent s.


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4 RESEARCH AND D EVELOPMENT EXPENDITURE INCLUDE:

On Revenue account 2,860.0 2,083.1

On Capit al accoun t 236.1 159.0

5 Net Interest income 1341.6 Million (Previous Year 1,138.9 Million) comprises of :

Interest incomeBank Dep osits 928.8 963.2

Loan 84.7 128.6Current Investm ent 134.7 1.4Long Term Investm ent 427.6 99.4Others 343.1 7.8

1,918.9 1,200.4

Interest Exp enseFixed Loan s 212.7 57.8Others 364.6 3.7

577.3 61.5

6 Goodwil l on consolidat ion ( Net ) comprises of:Goodwill in respect ofCaraco Pharmaceut ical Labo ratories Ltd . 5,012.0 4,563.5Sun Farm aceut ica Ltd a Brazil (see no te B 1(f)) 44.8TKS Fram aceut ica Ltd a 400.1 327.0Un iversal Ente rprises (P) Ltd . 7.5 7.5Taro Pharmaceut ical Indu stries Ltd. 3,182.6

Total (A) 8,602.2 4,942.8

Less:Capit al Reserve in respect o f :Alkaloida Chem ical Comp any Zrt. 882.5 882.5

Tot al (B) 882.5 882.5

Total ( A-B) 7,719.7 4,060.3

7 Sho rt-term Loan and Cash credit facility from Banks are secured by h ypot hecation of accoun ts receivable and invent ory, m ortgag ecovering the Groupss m anufacturing facil ity and equip men t.

2010-11 2009-10



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Year en ded Year en ded31st March, 2011 31st March, 2010




8 Accounting Standard (AS-20) on Earnings Per Share

Profit Aft er Tax 19,073.7 13,469.8Less : M in orit y Interest 913.1 (41.0)Profit used as Num erator for calculatin g Earnin gs per share 18,160.6 13,510.8Weight ed Average n um ber of Shares used in com pu ting basic & di luted earnin gs per share 1,035,581,955 1,035,581,955Nom inal value per share (in ) 1.0 1.0Basic and Diluted Earning s Per Share (in ) 17.5 13.0

Consequen t to t he app roval of th e mem bers of the Com pany and u po n requisite regulatory comp liance, during th e year, oneequ ity share of 5 each of th e Com pan y is sub- divid ed into five equ ity shares of 1 each fully paid -up . The Earning s Per Shareeof 1 each h as been restated for the previou s year in accordan ce with Accou nt ing Standard (AS-20) on Earning s Per Share asno tified u nd er The Com pan ies (Accoun ting Stand ards) Rules, 2006.

9 Related Party Disclosure - as per Annexure A annexed.

10 Accounting Standard (AS-17) on Segment Reporting

a) Pr imary SegmentThe Grou p h as iden tified Pharm aceuticals as th e only p rim ary repo rtable bu siness segm ent .

b) Secondary Segm ent (By Geographical Segm ent) in Million in M il lion

India 24,947.2 18,506.6Outside Ind ia 33,118.6 20,354.8

Tot al Sales 58,065.8 38,861.4In view of th e interwoven / interm ix nature of b usiness and m anufacturing facility, other segmen tal inform ation is no t ascertainable.

11 Intang ible assets consisting of t radem arks, designs, techn ical know ho w , no n c om pet e fees and ot her intan gib le assets are statedat cost of acquisit ion based on their agreement s and are available to the Group in p erpetuity. The depreciable am oun t o fintang ible assets is arrived at, based on th e m anagem ent s best estimates of useful lives of such assets after due con sideration asregards th eir expected usage, the p roduct l i fe cycles, technical and techn olog ical ob solescence, market d em and fo r prod ucts,com petit ion and th eir expected future benefits to th e Group.

12 (a) The Group has obtained certain p remises for i ts business operation s (includin g furniture and fi t t ings, th erein as app licable)un der op erating lease or leave and l icense agreement s. These are general ly not no n-cancellable and rang e betw een11 mo nth s to 5 years un der leave and l icences, or long er for oth er lease and are renew able by m utu al consent on m utuallyagreeable terms. The Grou p h as given refun dable int erest free security depo sits in accordance w ith th e agreed term s.

(b) Lease receipts/p aym ents are recogn ised in the Profi t and Loss Account un der Rent in Schedu le 14 ,Schedu le 18 and

Sch edu le 19.

(c) Operat ing lease

Group as lesseeThe future min imu m lease paymen ts und er non-cancellable op erating lease- no t later th an on e year 176.7 M illion (Previous year 98.3 M illion)- later th an on e year and no t later th an five years 477.1 M illion (Previous year 365.1 M illion)- later th an five years 120.1 M illion (Previous year 115.7 M illion)

Group as lessorThe future min imu m lease paymen ts und er non-cancellable operating lease- no t later th an on e year 16 M illion (Previous year 17.0 M illion)- later th an on e year and no t later th an five years Nil (Previous year Nil)- later th an five years Nil (Previou s year Nil)


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Year en ded Year end ed31st March, 2011 31st March, 2010




13 Remuneration to Audit ors (excluding service tax) :

Aud it Fees 142.8 27.3

In any ot her m anner, for certi f ication etc. 2.5 0.5

Out o f pocket expenses 0.2 0.2

Total 145.5 28.0

14 Other Operating Incom e includes upfront p aym ent received in terms of sett lem ent agreemen t for the g rant o f an exclusive

l icense to the l icensed patents and know how .

15 Accounting Standard (AS-15) on Emp loyee benefits

Contributions are made to Recognised Provident Fund/ Government Provident Fund, Family Pension Fund, ESIC and other

Statutory Funds which covers al l regular employees. While both the employees and the Company make predetermined

cont ribution s to th e Provident Fund and ESIC, cont ribution to t he Family Pension Fun d are made on ly by the Com pany. The

con tribu tion s are no rm ally based on a certain prop ortio n o f the em plo yees salary. Am ou nt recog nised as expense in respect of

th ese defined cont ribut ion plan s, agg regate to 115.4 Million (Previous year 96.5 Million )

Contribution to Provident Fund 106.3 90.3

Contrib utio n to Em plo yees State Insurance Schem e (ESIC) 6.2 3.9

and Em p loyees Dep osit Linked Insurance (EDLI)

Contribution to Labo ur Welfare Fun d 0.1 0.1

Em ployers Cont ribut ion to Fam ily Pension Fund 2.8 2.2

In respect of Gratuity, Contribu tion s are m ade to LICs Recog nised Grou p Gratuity Fund Schem e based on am oun t d em anded by

LIC of Ind ia. Provision for Gratu ity is based on actuarial valuation do ne b y ind epen den t actu ary as at th e year end . Actu arial

Valuation for Com pensated Ab sences is don e as at th e year end and t he p rovision is made as per Com pany rules amo unt ing to

47.4 M illion (Previous Year 42.1 M illion ) and it covers all regu lar em plo yees. M ajor drivers in actuarial assum pt ion s, typically,,

are years of service and em ployee com pen sation . After th e issuance o f Accoun ting Stand ard 15 on Emp loyee Benefits, com m itm ents

are actuarially det erm ined using th e Projected Unit Credit m eth od . Gains and losses on ch ang es in actu arial assum pt ion s are

accounted for in th e Profi t and Loss account.

Categor y of Plan Assets : The Com panys Plan Assets in respect of Gratuit y are funded th rou gh t he Group Schem e of t heLIC of India.In respect of g ratu ity (fun ded ):


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in MillionYear en ded

31st March, 2011 31st March, 2010

Reconciliat ion o f liabilit y recognised in t he Balance sheetPresent value of com m itm ent s (as per Actu arial Valuation ) 257.3 219.5Fair value of p lan assets 284.2 236.3Net asset in th e Balance sheet 27.0 16.8

Mov ement in net liabil ity recogni sed in th e Balance sheetNet liability / (assets) as at th e beg inn ing of th e year (16.8) (46.3)Net expense recognised in t he Profi t and Loss accoun t 30.6 61.1

Contribution d uring th e year (40.7) (31.7)Net liability / (assets) in th e Balance sheet (27.0) (16.8)

Exp ense recogn ised in th e Profi t and Loss accountCurrent service cost 26.7 19.8Inte rest cost 18.9 12.5Expected return on plan assets (21.4) (17.1)Actu arial loss 6.4 45.8Expense charged to th e Profi t and Loss accoun t 30.6 61.1

Retu rn on p lan assetsExpected return on plan assets 21.4 17.1Actu arial gain 3.4 3.4Actual return o n plan assets 24.9 20.5

Reconciliation of defined-benefit comm itm entsComm itments as at the b eginning of the year 219.5 148.1Current service cost 26.7 19.8Inte rest cost 18.9 12.5Paid ben efits (17.6) (10.3)Actuarial loss 9.8 49.2Comm itm ents as at the year end 257.3 219.5

Reconciliatio n o f plan assetsPlan assets as at th e beg inn ing of th e year 236.3 194.4Expected return on plan assets 21.4 17.1Contribution s during t he year 40.7 31.7Paid ben efits (17.6) (10.3)

Actu arial gain 3.4 3.4Plan assets as at t h e year end 284.2 236.3

The actuarial calculations used t o estimate com m itm ents and expen ses in respect o f gratuity and com pen sated absences arebased on the fol lowing assum ptions w hich i f changed, wo uld affect the com m itment s size, funding requirements and expense.

Discoun t rate 8.25% 8.00%Expected return on plan assets 8.25% 8.00%Expec ted rate of salary increase 6.00% 6.00%

Mortal i ty LIC (1994-96) Ultim ate

The estim ates of future salary increases, con sidered in th e actuarial valuation , take int o accou nt inflation , senio rity, pro m ot ionand ot her relevant factors such as sup ply and dem and in th e emp loymen t m arket.




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in MillionYear en ded

31st March, 2011 31st March, 2010 31st March, 2009 31st March, 2008 31st March, 2007

Experience adjustmen tOn plan l iabi l i t ies 18.1 57.2 5.4 127.4 3.2On p lan assets 3.4 3.4 4.1 2.5 1.2

Present value of benefit ob ligation 257.3 219.5 148.1 111.0 76.0Fair value of p lan assets 284.2 236.3 194.3 107.0 85.4Excess of (ob ligat ion over p lan assets) / 27.0 16.8 46.2 (4.0) 0.8

plan assets over ob ligation

The con tribution expected to b e m ade by the Com pany during f inancial year end ing 31st March, 2012 is 38.7 Mil lion.The above disclosure is pro vided t o th e extend ap plicable and available from th e ind ividual Financial Statem ents of subsidiaries.

16 The followin g are th e out stand ing Derivative Cont racts entered by t he Com pany & som e of its Sub sidiaries as on 31st M arch, 2011.

Nature of Derivat ive Cont ract Currency Buy / Sell Cross Am oun t in M il lion

Currency As at As at31st March, 2011 31st March, 2010

Forw ard Con tracts US Dollar Sell RUPEES $ 315.0 $ 175.0

Cross Currency Sw ap s Israeli New Shekel Buy US Dollar $ 7.7

In terest Rate Sw ap s US Dollar Sell US Dollar $ 1.0

17 Profit / (Loss) on Sale of Investm ents (net ) 2010-11 2009-10In Million In M il lion

Profit / (Loss) on Sale of Current Investm ents (net ) 406.0 (32.6)Profit / (Loss) on Sale of Long Term Investm ent s (net ) 21.5 105.9

427.5 73.3

18 Caraco has ann oun ced th e propo sal of merger w ith ano th er subsidiary of th e Com pany, sub ject to th e approval of Caracosstockho lders. Upon such app roval of this arrang emen t Caraco wil l becom e a w holly ow ned subsidiary of the Comp any.

19 As a result of t he FDA action , Caraco Pharm aceutical Laborato ries Ltd . (Caraco) had volun tarily ceased m anufacturing op eration s.

Caraco has engaged a co nsulting firm w hich is com prised of current go od m anufacturing p ractice (cGMP) experts, in accordancew ith t he Consent Decree, and subm itted a w ork plan to t he FDA in Octob er 2009 for rem edial actions leading to resum ption of i tsm anufacturing operations. The FDA app roved Caracos work p lan on March 17, 2010 after reviewing and sugg esting certainm od ifications. On Jun e 24, 2010 the FDA not ified Caraco th at its protocol fo r th ird party cGMP certification and b atch certification,detai ling th e activi t ies to be cond ucted by th e cGMP consultants, w as acceptable. Caraco is in th e process of implem enting th ecorrective actions and rem edial measures as stipu lated in th e w ork plan.

20 The con solidated Finan cial Statem ent s includ es to tal assets of 25,670.9 M illion and t ot al liabilities of 6,948.0 M illion as on31st March , 2011 and tot al revenue s of 9,946.3 M illion, Profit before Tax of 2,464.5 M illion and Profit after Tax of 2,028.5 M illionfor the p eriod from 20th Septem ber, 2010 to 31st M arch, 2011, con sequen t t o acqu isit ion o f Taro Group w ith effect from20th Sept em ber, 2010.


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21 At t he d ate of acquisit ion of Taro Group on 20th Sept em ber, 2010, th e Group has inter alia taken over n et d eferred t ax assetsagg regatin g 3193.7 M illion of w hich 190.7 M illion has already been set off as TARO Group has report ed profit before tax of

2464.5 M il lion for th e period from 20th Sept em ber, 2010 to 31st M arch, 2011. The b alance of such d eferred tax assets com prisestim ing difference related t o accrued expen ses, net o peratin g lo sses carried forw ard, am ort isation an d R & D expen ses. TARO Grouphas a history of p rofitability except th at tax losses had arisen in some o f th e years mainly on account o f un anticipated extraordinaryexcessive produ ct return. Based on th is perform ance, favourable business environ m ent, current p roduct p ortfolio, new prod uctsund er developm ent and prod ucts having exclusivity period in the Unites States of Am erica, the M anagem ent believes continuationof such profitability over futu re period , w hich rep resents virtual certainty suppo rted by con vincing evidence th at sufficient futu retaxable inco m e w ill be available again st wh ich such d eferred tax assets can b e realised.

22 Taro Pharm aceutical Ind ustries Ltd has closed du ring 2010, th e man ufacturing facility of its sub sidiary in Ireland and d ecided t osell th e facility. The related assets of 194.3 M illion , Liabilit ies of 11.6 M illion , Reven ues of 11.9 M illion an d losses of 31.6

M illion attribu table to it s Irish Sub sidiary has been con sidered in th e Con solidat ed Financial Statem ent s.

23 With respect t o p aym ent un der various loan agreemen ts, TARO is not in com pliance with certain f inancial reportin g co venantsand o th er provisions cont ained in the related loan agreemen ts. Due to this, various creditors have the righ t to accelarete theirindeb tedn ess and certain creditors may elect to p roceed against th e col lateral granted to th em to secure such indebt edness. Inth e event such in deb ted ness is accelerated, Managem ent b elieves that it h as sufficient capacity to satisfy such ob ligation . Alsow ith f i l l ing of Ann ual Reports of th e com pany from 2007 to 2010, TARO wo uld b e in com plince of al l financial and reportingrequirem ents und er the debt in strum ent p rospectively.

24 In t erms of Collective bargaining agreemen t b etw een Taro Pharmaceut ical Ind ustries Ltd (em ployer) with its em ployees at Israel,a on e tim e paym ent of 66.78 Million has been accrued as on M arch 2011,w hich is to be divid ed amon g Taro Israeli Em plo yees..

25 As per the b est estimate of t he m anagem ent, provision h as been m ade as per Accoun ting Stand ard (AS) 29, as no ti f ied byCom pan ies (Accoun tin g Standards) Rules, 2006, in respect of an y present o blig ation as a result of a past even t t hat co uld lead toa probable outf low of resources, wh ich w ould be required to sett le the o bl igation.

2010-11 2009-10In Million In M il lion

Provision*Opening balance 19.3 7.0Ad d: Taken o ver on acqu isitio

Documents

2010-11 Consolidated Financial Statement AR