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Jubilant Organosys Ltd.Regd. Office : Bhartiagram, Gajraula, Distt. Jyotiba Phoolay Nagar - 244223, Uttar Pradesh, India
Corporate Office : 1A, Sector 16A, NOIDA - 201301, Uttar Pradesh, Indiawww.jubl.com
ANNUAL REPORT2 0 0 8 - 0 9
INTEGRATED SOLUTIONS FOR PHARMACEUTICALS & LIFE SCIENCES
Registered Office
Corporate Office
Statutory Auditors
IFRS Auditors
Cost Auditors
Internal Auditors
Company Secretary
Registrars & Transfer Agents
Bhartiagram, Gajraula,Distt. Jyotiba Phoolay Nagar 244223Uttar Pradesh, IndiaTel.: +91-5924-252351-60
1A, Sector 16A, NOIDA 201301Uttar Pradesh, IndiaTel. : +91-120-2516601-11
K. N. Gutgutia & Co.11K, Gopala Tower,25, Rajendra Place,New Delhi 110008, India
KPMG Building No. 108th Floor, Tower BDLF Cyber City, Phase-IIGurgaon 122002Haryana, India
J K Kabra & Co.552/1B, Arjun Street,Main Vishwas Road,Vishwas Nagar,Delhi 110032, India
Ernst & Young Pvt. LtdHindustan Times Building,6th Floor,18-20, Kasturba Gandhi Marg,New Delhi 110001, India
Lalit Jain
Alankit Assignments Ltd.,Alankit House,2E/21, Jhandewalan Extension,New Delhi 110055, IndiaTel: +91-11-23541234, 42541234email: [email protected]
CORPORATE INFORMATION
Bankers
ICICI Bank Ltd.State Bank of IndiaExport Import Bank of IndiaPunjab National BankCorporation BankCanara BankABN AMRO Bank N.V.Standard Chartered BankING Vysya Bank Ltd.
For more Information please visit our website www.jubl.com or email us at [email protected]
Financials at a Glance
Annual Accounts
Directors' Report
Report on Corporate Governance
Auditors' Report & Annexure to the Auditors' Report
Balance Sheet and Profit & Loss Account
Cash Flow Statement
Schedules
Notes to the Accounts
Auditors' Report to Consolidated Accounts
Consolidated Balance Sheet and Profit & Loss Account
Consolidated Cash Flow Statement
Schedule to Consolidated Accounts
Notes to the Consolidated Accounts
Details of Subsidiary Companies
Corporate Information
40
59
86
90
92
93
104
125
126
128
129
140
158
Management Discussion & Analysis
Chairmen's Message
4 10
Pharmaceuticals and Life Sciences Products & Services14
24
28 Business Enablers
Industrial and Performance Products
CO
NT
EN
TS
3
BOARD OF DIRECTORS
Chairman and Managing Director
Co-Chairman and Managing Director
Shyam S Bhartia
Hari S Bhartia
Executive Directors
Directors
Executive Director - Finance
Dr. J M KhannaS N SinghShyamsundar Bang
Arabinda RaySurendra SinghH K KhanDr. Naresh TrehanAbhay HavaldarRahul YadavVishal Marwaha (Alternate to
Rahul Yadav)
R Sankaraiah
Standing Left to Right: Shyamsundar Bang, Rahul Yadav, S N Singh, R Sankaraiah, Vishal Marwaha, Dr. J M Khanna, Abhay Havaldar, Surendra Singh, Dr. Naresh TrehanSitting Left to Right: Arabinda Ray, Shyam S Bhartia, Hari S Bhartia, H K Khan
FINANCIALS AT A GLANCE
Revenue International Revenue
Operating EBITDA
Rs. million Growth %
PLSPS Revenue CRAMS Revenue
PAT
35,18041.3%
24,88937.5%
18,09720.7%
14,99028.5%
11,66835.8%
FY 2009FY 2008FY 2007FY 2006FY 2005 FY 2009FY 2008FY 2007FY 2006FY 2005
21,77156.2%
13,94067.6%
8,31841.3%
5,88741.3%4,167
82.2%
5 Y CAGR - 32.6% 5 Y CAGR - 56.9%
4,46046.0%
6,47345.1%
8,95038.3%
15,30271.0%
23,23751.9%
FY 2009FY 2008FY 2007FY 2006FY 2005 FY 2009FY 2008FY 2007FY 2006FY 2005
19,63250.2%
13,06985.5%
7,04631.4%5,363
38.4%3,87427.3%
5 Y CAGR - 50.1% 5 Y CAGR - 45.2%
3
* Adjusted for exchange gains.
2,832-4.8%
2,974*30.5%
2,28075.8%
1,2978.8%1,192
52.4%
FY 2009FY 2008FY 2007FY 2006FY 2005FY 2009FY 2008FY 2007FY 2006FY 2005
6,14822.1%
5,03633.5%
3,77159.3%
2,3675.5%
2,24335.9%
5 Y CAGR - 30.1% 5 Y CAGR - 29.4%
BOARD OF DIRECTORS
Chairman and Managing Director
Co-Chairman and Managing Director
Shyam S Bhartia
Hari S Bhartia
Executive Directors
Directors
Executive Director - Finance
Dr. J M KhannaS N SinghShyamsundar Bang
Arabinda RaySurendra SinghH K KhanDr. Naresh TrehanAbhay HavaldarRahul YadavVishal Marwaha (Alternate to
Rahul Yadav)
R Sankaraiah
Standing Left to Right: Shyamsundar Bang, Rahul Yadav, S N Singh, R Sankaraiah, Vishal Marwaha, Dr. J M Khanna, Abhay Havaldar, Surendra Singh, Dr. Naresh TrehanSitting Left to Right: Arabinda Ray, Shyam S Bhartia, Hari S Bhartia, H K Khan
FINANCIALS AT A GLANCE
Revenue International Revenue
Operating EBITDA
Rs. million Growth %
PLSPS Revenue CRAMS Revenue
PAT
35,18041.3%
24,88937.5%
18,09720.7%
14,99028.5%
11,66835.8%
FY 2009FY 2008FY 2007FY 2006FY 2005 FY 2009FY 2008FY 2007FY 2006FY 2005
21,77156.2%
13,94067.6%
8,31841.3%
5,88741.3%4,167
82.2%
5 Y CAGR - 32.6% 5 Y CAGR - 56.9%
4,46046.0%
6,47345.1%
8,95038.3%
15,30271.0%
23,23751.9%
FY 2009FY 2008FY 2007FY 2006FY 2005 FY 2009FY 2008FY 2007FY 2006FY 2005
19,63250.2%
13,06985.5%
7,04631.4%5,363
38.4%3,87427.3%
5 Y CAGR - 50.1% 5 Y CAGR - 45.2%
3
* Adjusted for exchange gains.
2,832-4.8%
2,974*30.5%
2,28075.8%
1,2978.8%1,192
52.4%
FY 2009FY 2008FY 2007FY 2006FY 2005FY 2009FY 2008FY 2007FY 2006FY 2005
6,14822.1%
5,03633.5%
3,77159.3%
2,3675.5%
2,24335.9%
5 Y CAGR - 30.1% 5 Y CAGR - 29.4%
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09 CHAIRMEN'S MESSAGE
CHAIRMEN'S MESSAGE
54
costs and improve their operational
efficiency in these challenging times.
We are happy to conclude FY2009
with record topline growth, which is
fuelled by the robust performance of
our Pharmaceuticals and Life Sciences
Products and Services (PLSPS)
business. Despite the global economic
slowdown, the Company has reported
robust organic growth due to its
strategic thrust on moving up the value
chain in its PLSPS business. The
earnings from this segment will be
strengthened further with positive
outcomes from the drug discovery and
development services. Our focus on
driving synergies in capacity utilisation
and business collaboration with global
pharmaceuticals and other life
sciences companies will enable us to
build future growth momentum.
The Company's core advantage is that
it offers an integrated business model
offering services at every stage of the
pharmaceuticals value chain. Jubilant
Organosys, the largest integrated
Custom Research & Manufacturing
Services (CRAMS) and a leading Drug
Discovery and Development Services
(DDDS) Company out of India has
successfully translated the India
advantages into value offerings for its
customers.
Jubilant's main strategy for growth has
been to move up the value chain in
terms of both value of products &
services and geography. We have
achieved this through vertical &
horizontal integration for products &
services. In terms of geography, we
have moved up to high value regulated
Jubilant Strategy for Growth
markets of USA, EU & Japan.
The Company has built a strong
sustainable business model through
consistent organic growth and
in-organic expansion by acquiring niche
businesses in developed markets like
USA, Canada and Europe.
Strategic Focus Areas
• The Company is leveraging upon its
cost leadership and in-house
research capabilities to enhance its
global leadership position in pyridine
and its derivatives.
• Jubilant is focusing on maximising
capacity utilisation by becoming the
preferred supplier to most of the
major pharmaceutical and biotech
companies by providing multi-
location advantage.
• The Company is well-positioned to
fortify the radiopharmaceuticals
business by expanding its
geographical reach and its niche
product portfolio. Sestamibi, the key
product, is expected to be launched
in USA during Q1, FY2010 and is
also approved in Canada, where it
will be launched after patent expiry in
July 2009. The launch of this product
is expected to provide a fillip to this
business.
• For allergenic products, the focus is
on enhancing market share of the
existing products and increasing the
line-up of high margin products.
• The Company is scaling up its filings
for Active Pharmaceutical Ingredients
(APIs) and generic business as it is
well placed to manufacture a wide
range of formulations at its world
class manufacturing facilities in India
and USA.
Leveraging the Integrated
Business Solutions Model
Dear Shareholders,
The Financial Year 2008-09 has been
an unprecedented year that has seen
severe and sudden correction in the
health of the world economy. Given the
slowdown that has now spread across
boundaries and industries, the growth
engines of the world economy, India
and China, are expected to post 5-8%
growth this year. The response of
Governments has been swift-there are
a series of measures in place and on
their way, to kick start growth and
demand. The effects of the same will
become apparent in the coming
months.
The Innovator companies are
increasingly looking for outsourcing
and India emerges as a preferred
outsourcing destination, since these
companies are facing multiple
challenges such as high R&D cost,
declining sales volumes, drying of
product pipeline, growing patent expiry,
increase in generic competition and
low availability of funds.
India as a cost-effective and high
quality manufacturing and research
hub offers multiple advantages like
availability of a large talent pool,
chemistry and biology skills, expertise
in pre-clinical development,
strengthened IPR environment, diverse
patient profile and a large English
speaking population. Indian Custom
Research & Manufacturing Services
(CRAMS) companies are expected to
benefit from the global economic
slowdown as big pharmaceutical
companies step up outsourcing to cut
International
Domestic
Geographical Revenue Break-up
38%
62%
The Company has built a strong sustainable business model through c o n s i s t e n t o rg a n i c growth and in-organic expansion by acquiring niche businesses in developed markets like USA, Canada and Europe.
We are happy to conclude FY 2009 with record topline growth, which is fuelled by the robust performance of our Pharmaceuticals and Life Sciences business.
Hari S BhartiaCo-Chairman and Managing Director
Shyam S Bhartia Chairman and Managing Director
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09 CHAIRMEN'S MESSAGE
CHAIRMEN'S MESSAGE
54
costs and improve their operational
efficiency in these challenging times.
We are happy to conclude FY2009
with record topline growth, which is
fuelled by the robust performance of
our Pharmaceuticals and Life Sciences
Products and Services (PLSPS)
business. Despite the global economic
slowdown, the Company has reported
robust organic growth due to its
strategic thrust on moving up the value
chain in its PLSPS business. The
earnings from this segment will be
strengthened further with positive
outcomes from the drug discovery and
development services. Our focus on
driving synergies in capacity utilisation
and business collaboration with global
pharmaceuticals and other life
sciences companies will enable us to
build future growth momentum.
The Company's core advantage is that
it offers an integrated business model
offering services at every stage of the
pharmaceuticals value chain. Jubilant
Organosys, the largest integrated
Custom Research & Manufacturing
Services (CRAMS) and a leading Drug
Discovery and Development Services
(DDDS) Company out of India has
successfully translated the India
advantages into value offerings for its
customers.
Jubilant's main strategy for growth has
been to move up the value chain in
terms of both value of products &
services and geography. We have
achieved this through vertical &
horizontal integration for products &
services. In terms of geography, we
have moved up to high value regulated
Jubilant Strategy for Growth
markets of USA, EU & Japan.
The Company has built a strong
sustainable business model through
consistent organic growth and
in-organic expansion by acquiring niche
businesses in developed markets like
USA, Canada and Europe.
Strategic Focus Areas
• The Company is leveraging upon its
cost leadership and in-house
research capabilities to enhance its
global leadership position in pyridine
and its derivatives.
• Jubilant is focusing on maximising
capacity utilisation by becoming the
preferred supplier to most of the
major pharmaceutical and biotech
companies by providing multi-
location advantage.
• The Company is well-positioned to
fortify the radiopharmaceuticals
business by expanding its
geographical reach and its niche
product portfolio. Sestamibi, the key
product, is expected to be launched
in USA during Q1, FY2010 and is
also approved in Canada, where it
will be launched after patent expiry in
July 2009. The launch of this product
is expected to provide a fillip to this
business.
• For allergenic products, the focus is
on enhancing market share of the
existing products and increasing the
line-up of high margin products.
• The Company is scaling up its filings
for Active Pharmaceutical Ingredients
(APIs) and generic business as it is
well placed to manufacture a wide
range of formulations at its world
class manufacturing facilities in India
and USA.
Leveraging the Integrated
Business Solutions Model
Dear Shareholders,
The Financial Year 2008-09 has been
an unprecedented year that has seen
severe and sudden correction in the
health of the world economy. Given the
slowdown that has now spread across
boundaries and industries, the growth
engines of the world economy, India
and China, are expected to post 5-8%
growth this year. The response of
Governments has been swift-there are
a series of measures in place and on
their way, to kick start growth and
demand. The effects of the same will
become apparent in the coming
months.
The Innovator companies are
increasingly looking for outsourcing
and India emerges as a preferred
outsourcing destination, since these
companies are facing multiple
challenges such as high R&D cost,
declining sales volumes, drying of
product pipeline, growing patent expiry,
increase in generic competition and
low availability of funds.
India as a cost-effective and high
quality manufacturing and research
hub offers multiple advantages like
availability of a large talent pool,
chemistry and biology skills, expertise
in pre-clinical development,
strengthened IPR environment, diverse
patient profile and a large English
speaking population. Indian Custom
Research & Manufacturing Services
(CRAMS) companies are expected to
benefit from the global economic
slowdown as big pharmaceutical
companies step up outsourcing to cut
International
Domestic
Geographical Revenue Break-up
38%
62%
The Company has built a strong sustainable business model through c o n s i s t e n t o rg a n i c growth and in-organic expansion by acquiring niche businesses in developed markets like USA, Canada and Europe.
We are happy to conclude FY 2009 with record topline growth, which is fuelled by the robust performance of our Pharmaceuticals and Life Sciences business.
Hari S BhartiaCo-Chairman and Managing Director
Shyam S Bhartia Chairman and Managing Director
76
CHAIRMEN'S MESSAGE
Rs. 6,148 million with operating
EBITDA margin of 17.5% overall. The
PLSPS EBITDA margin was 23.9%,
while IPP EBITDA margin was lower at
11.5%, as an outcome of the global
slowdown.
For FY2009, the Board of Directors of
the Company recommended a
dividend of 150% (same as in the
previous year) on fully paid up equity
shares of Rs. 1 each, for the year
ended March 31, 2009.
The growth of our Pharmaceuticals
and Life Sciences business was
largely driven by CRAMS business that
grew by 50%. Despite the global
challenges, our CRAMS business did
not witness any slowdown during the
year. The future of this business is
assured as the Company has a strong
order book position worth USD 750
million to be serviced over the next five
years. We plan to invest Rs. 2,500
million to augment our capacities for
APIs and Proprietary Products and to
ensure the growth of this business.
We have further expanded our
offerings through Contract
Manufacturing of sterile injectables &
non-sterile products and
radiopharmaceuticals in North
America. This was made possible
through the integration of our two
entities, Hollister-Stier and Draxis into
two business verticals. The Company
is now placed amongst the top 5
contract manufacturers of sterile
injectables in North America.
Our Active Pharmaceutical
Ingredients (APIs) business focussing
on key therapeutic areas of Central Nervous System (CNS),
the
(ANDA) pipeline.
During the year, we have also made
significant progress in the healthcare
business, the highest end of the
pharmaceuticals value chain. The
revenue from this business, though
small at this moment, is a good
beginning. Besides two functional
hospitals, a new multi super speciality
120 bed hospital is likely to be
commissioned in the state of West
Bengal, in the first half of FY2010.
Given our integrated presence in the
field, we have been able to achieve
revenue growth of 24.6% from the IPP
business, despite the overall slowdown
in the latter half of FY2009. This
business comprises three sub-
segments: Acetyls; Food Polymers,
Animal Nutrition & Fertilizers and
Performance Polymers. The Acetyls
business that was impacted the most is
showing signs of recovery. In Food
Polymers, Animal Nutrition & Fertilizers
business, we have expanded our
capacities to fuel future growth. In
performance products business, we
are rationalising our product portfolio to
target better margins from this
business in FY2010.
The Company is well placed to report a
steady top-line growth of over 15% in
FY2010, driven by the PLSPS
business. The growth will be led by
expected new product launches in the
radiopharmaceuticals business, new
customer approvals in the Contract
Manufacturing Operations (CMO)
Abbreviated New Drug Application
Industrial & Performance
Products (IPP) Business
Outlook for FY2010
• DDDS is being developed as the
next growth engine. Jubilant has
already partnered with several
leading pharmaceutical companies
such as Amgen, Lilly, AstraZeneca,
and many others for research
collaborations. We intend to offer
integrated drug discovery solutions
by providing cost efficiencies in
managing research collaborations.
The Company after establishing itself
as an outsourcing partner of choice for
pharmaceuticals and life sciences
products is now leveraging its
capabilities to position itself as an
'Innovation Partner' of choice to the
global innovator pharmaceutical
companies to help them accelerate
their quest for discovering medicines
for unmet medical needs.
Business Review
The all-round growth in outsourcing
business is the outcome of our
strategic focus on constantly moving
up the value chain to offer value added
Pharmaceuticals and Life Sciences
Products and Services to our
customers.
For FY2009, Jubilant recorded a
topline growth of 41.3% at Rs. 35,180
million which was led by the robust
performance of Pharmaceuticals and
Life Sciences Products and Services
(PLSPS) business which accounted for
Rs. 23,237 million, recording a growth
of 51.9%. Revenue from Industrial and
Performance Products (IPP) business
grew by 24.6% to Rs. 11,943 million.
The operating EBITDA was at
Focus on pharmaceuticals-
Jubilant approach to growth
Cardiovascular System ( ) Gastro-
Intestinal (GI) and Anti-Infectives,
recorded a remarkable growth of
36.6% during the year. This is
expected to gain momentum on the
back of 33 Drug Master Files (DMFs)
and 17 European Drug Master Files
(EDMFs) filed during the year in the US
and Europe, respectively.
Our Drug Discovery and Development
Services (DDDS) business has been
well positioned to collaborate with large
global innovator pharmaceuticals,
biotech and life sciences companies.
Through the integration of our three
subsidiaries Jubilant Biosys Ltd.,
Jubilant Chemsys Ltd. and Clinsys
Clinical Research Ltd. in this space, we
have built robust capabilities in the
areas of discovery technologies,
discovery research and drug
development. We offer functional
capabilities to our partners and deliver
outcomes in the most efficient, time
effective and innovative manner with a
focus on therapeutic value creation.
This business made noteworthy
progress during the year by entering
into several collaborations with leading
global innovator pharmaceutical
companies. The revenues from this
business stood at Rs. 2,415 million
during FY2009. We are confident of
DDDS business scaling up to become
a powerful growth engine for the
Company's pharmaceuticals and life
sciences business.
Our Generics business which grew at
68% during the year currently focuses
only on highly regulated markets of
USA and Europe. It is poised to scale
up further by leveraging upon our
backward integration capabilities and
CVS ,
The Company is now leveraging its capabilities to position itself as an 'Innovation Partner' of choice to the global innovator phar ma-ceutical companies
The Company is well placed to report a steady top-line growth of over 15% and EBITDA margin at 20% in FY2010.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
76
CHAIRMEN'S MESSAGE
Rs. 6,148 million with operating
EBITDA margin of 17.5% overall. The
PLSPS EBITDA margin was 23.9%,
while IPP EBITDA margin was lower at
11.5%, as an outcome of the global
slowdown.
For FY2009, the Board of Directors of
the Company recommended a
dividend of 150% (same as in the
previous year) on fully paid up equity
shares of Rs. 1 each, for the year
ended March 31, 2009.
The growth of our Pharmaceuticals
and Life Sciences business was
largely driven by CRAMS business that
grew by 50%. Despite the global
challenges, our CRAMS business did
not witness any slowdown during the
year. The future of this business is
assured as the Company has a strong
order book position worth USD 750
million to be serviced over the next five
years. We plan to invest Rs. 2,500
million to augment our capacities for
APIs and Proprietary Products and to
ensure the growth of this business.
We have further expanded our
offerings through Contract
Manufacturing of sterile injectables &
non-sterile products and
radiopharmaceuticals in North
America. This was made possible
through the integration of our two
entities, Hollister-Stier and Draxis into
two business verticals. The Company
is now placed amongst the top 5
contract manufacturers of sterile
injectables in North America.
Our Active Pharmaceutical
Ingredients (APIs) business focussing
on key therapeutic areas of Central Nervous System (CNS),
the
(ANDA) pipeline.
During the year, we have also made
significant progress in the healthcare
business, the highest end of the
pharmaceuticals value chain. The
revenue from this business, though
small at this moment, is a good
beginning. Besides two functional
hospitals, a new multi super speciality
120 bed hospital is likely to be
commissioned in the state of West
Bengal, in the first half of FY2010.
Given our integrated presence in the
field, we have been able to achieve
revenue growth of 24.6% from the IPP
business, despite the overall slowdown
in the latter half of FY2009. This
business comprises three sub-
segments: Acetyls; Food Polymers,
Animal Nutrition & Fertilizers and
Performance Polymers. The Acetyls
business that was impacted the most is
showing signs of recovery. In Food
Polymers, Animal Nutrition & Fertilizers
business, we have expanded our
capacities to fuel future growth. In
performance products business, we
are rationalising our product portfolio to
target better margins from this
business in FY2010.
The Company is well placed to report a
steady top-line growth of over 15% in
FY2010, driven by the PLSPS
business. The growth will be led by
expected new product launches in the
radiopharmaceuticals business, new
customer approvals in the Contract
Manufacturing Operations (CMO)
Abbreviated New Drug Application
Industrial & Performance
Products (IPP) Business
Outlook for FY2010
• DDDS is being developed as the
next growth engine. Jubilant has
already partnered with several
leading pharmaceutical companies
such as Amgen, Lilly, AstraZeneca,
and many others for research
collaborations. We intend to offer
integrated drug discovery solutions
by providing cost efficiencies in
managing research collaborations.
The Company after establishing itself
as an outsourcing partner of choice for
pharmaceuticals and life sciences
products is now leveraging its
capabilities to position itself as an
'Innovation Partner' of choice to the
global innovator pharmaceutical
companies to help them accelerate
their quest for discovering medicines
for unmet medical needs.
Business Review
The all-round growth in outsourcing
business is the outcome of our
strategic focus on constantly moving
up the value chain to offer value added
Pharmaceuticals and Life Sciences
Products and Services to our
customers.
For FY2009, Jubilant recorded a
topline growth of 41.3% at Rs. 35,180
million which was led by the robust
performance of Pharmaceuticals and
Life Sciences Products and Services
(PLSPS) business which accounted for
Rs. 23,237 million, recording a growth
of 51.9%. Revenue from Industrial and
Performance Products (IPP) business
grew by 24.6% to Rs. 11,943 million.
The operating EBITDA was at
Focus on pharmaceuticals-
Jubilant approach to growth
Cardiovascular System ( ) Gastro-
Intestinal (GI) and Anti-Infectives,
recorded a remarkable growth of
36.6% during the year. This is
expected to gain momentum on the
back of 33 Drug Master Files (DMFs)
and 17 European Drug Master Files
(EDMFs) filed during the year in the US
and Europe, respectively.
Our Drug Discovery and Development
Services (DDDS) business has been
well positioned to collaborate with large
global innovator pharmaceuticals,
biotech and life sciences companies.
Through the integration of our three
subsidiaries Jubilant Biosys Ltd.,
Jubilant Chemsys Ltd. and Clinsys
Clinical Research Ltd. in this space, we
have built robust capabilities in the
areas of discovery technologies,
discovery research and drug
development. We offer functional
capabilities to our partners and deliver
outcomes in the most efficient, time
effective and innovative manner with a
focus on therapeutic value creation.
This business made noteworthy
progress during the year by entering
into several collaborations with leading
global innovator pharmaceutical
companies. The revenues from this
business stood at Rs. 2,415 million
during FY2009. We are confident of
DDDS business scaling up to become
a powerful growth engine for the
Company's pharmaceuticals and life
sciences business.
Our Generics business which grew at
68% during the year currently focuses
only on highly regulated markets of
USA and Europe. It is poised to scale
up further by leveraging upon our
backward integration capabilities and
CVS ,
The Company is now leveraging its capabilities to position itself as an 'Innovation Partner' of choice to the global innovator phar ma-ceutical companies
The Company is well placed to report a steady top-line growth of over 15% and EBITDA margin at 20% in FY2010.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
business for sterile and non-sterile
products and robust revenue stream
from Drug Discovery & Development
Services (DDDS).
There will be a steady growth in
EBITDA margin in FY2010 at 20%
driven by higher capacity utilisation,
expanded global customer reach,
efficient supply chain management,
focus on working capital rationalisation
& various initiatives for cost reduction
and productivity enhancement through
six-sigma measures. Our PLSPS
segment is expected to post an
EBITDA margin of 27% led by CRAMS
and DDDS businesses, whereas the
IPP segment EBITDA is expected to
be at 11%, due to the current
economic slowdown. The Capital
expenditure for FY2010 at Rs. 2,500
million is planned to augment the
existing CRAMS business capacities.
We stay committed to deliver value to
our partners by leveraging upon
innovation at every step of the
pharmaceuticals value chain. We
would like to thank our independent
directors for their valuable contribution
and our valued customers, vendors,
bankers and shareholders for their
continuous support.
On behalf of the Board, we pay tribute
to Mr. Bodhishwar Rai, one of the
Directors of the Company, who passed
away in October, 2008. He was
associated with the Company for more
than a decade. During his tenure as
Director and Chairman of Audit
Committee, the Company benefitted
immensely from his vast experience
and invaluable guidance.
As we bid farewell to Mr S N Singh,
Executive Director, Chemicals, we
would like to appreciate the
contribution made by him during his 28
years of association with the Company
and as a distinguished member of the
board for the last ten years. He has
played a significant role in shaping the
Company as a leader in the Chemicals
business. We would like to thank him
for his valuable contribution towards
the Company's remarkable growth
during his tenure. We extend our best
wishes to him for future and look
forward to his continued association
with the Company as a goodwill
ambassador.
The progress of the Company during
challenging times is an outcome of the
efforts of our global employee base of
close to 6,000 people, who work
diligently to charter the success story of
Jubilant Organosys and all related
entities operating in India, China, USA,
Canada and Europe. We expect our
people, the human assets of the
Company, to stretch further and deliver
in line with the Company's growth
ambitions.
98
Best Wishes & Regards,
Shyam S BhartiaChairman & Managing Director
Hari S BhartiaCo-Chairman & Managing Director
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
business for sterile and non-sterile
products and robust revenue stream
from Drug Discovery & Development
Services (DDDS).
There will be a steady growth in
EBITDA margin in FY2010 at 20%
driven by higher capacity utilisation,
expanded global customer reach,
efficient supply chain management,
focus on working capital rationalisation
& various initiatives for cost reduction
and productivity enhancement through
six-sigma measures. Our PLSPS
segment is expected to post an
EBITDA margin of 27% led by CRAMS
and DDDS businesses, whereas the
IPP segment EBITDA is expected to
be at 11%, due to the current
economic slowdown. The Capital
expenditure for FY2010 at Rs. 2,500
million is planned to augment the
existing CRAMS business capacities.
We stay committed to deliver value to
our partners by leveraging upon
innovation at every step of the
pharmaceuticals value chain. We
would like to thank our independent
directors for their valuable contribution
and our valued customers, vendors,
bankers and shareholders for their
continuous support.
On behalf of the Board, we pay tribute
to Mr. Bodhishwar Rai, one of the
Directors of the Company, who passed
away in October, 2008. He was
associated with the Company for more
than a decade. During his tenure as
Director and Chairman of Audit
Committee, the Company benefitted
immensely from his vast experience
and invaluable guidance.
As we bid farewell to Mr S N Singh,
Executive Director, Chemicals, we
would like to appreciate the
contribution made by him during his 28
years of association with the Company
and as a distinguished member of the
board for the last ten years. He has
played a significant role in shaping the
Company as a leader in the Chemicals
business. We would like to thank him
for his valuable contribution towards
the Company's remarkable growth
during his tenure. We extend our best
wishes to him for future and look
forward to his continued association
with the Company as a goodwill
ambassador.
The progress of the Company during
challenging times is an outcome of the
efforts of our global employee base of
close to 6,000 people, who work
diligently to charter the success story of
Jubilant Organosys and all related
entities operating in India, China, USA,
Canada and Europe. We expect our
people, the human assets of the
Company, to stretch further and deliver
in line with the Company's growth
ambitions.
98
Best Wishes & Regards,
Shyam S BhartiaChairman & Managing Director
Hari S BhartiaCo-Chairman & Managing Director
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
12
Developments in the
Pharmaceutical Industry
The global pharmaceutical industry will
continue to witness steady growth due
to the increase in the ageing
population across the developed world,
prevalence of lifestyle diseases and
greater access to affordable medicines
and healthcare in the advanced and
emerging markets. In most of these
markets, healthcare expenditure by the
national governments is likely to
increase.
Most pharmaceutical companies are
facing the challenge of depleting
research pipeline, increasing research
costs and lower growth in revenue
due to their blockbuster drugs going
off-patent.
For sustained growth, these
companies are focussing on expansion
into emerging markets and outsourcing
to cost-effective manufacturing bases
in Asia. India offers great advantages
in terms of a large number of USFDA
approved production facilities; lower
operating costs; diverse talent pool
comprising chemists, physicians,
biologists and clinicians to support the
outsourcing activities.
The outsourcing trends are expected to
grow further with the contract
manufacturing market size at USD 45
billion globally by 2012 (USD 29 billion
for Dosage Forms and USD 16 billion
for APIs) and contract research market
size at USD 38 billion (Drug Discovery
at USD 11 billion and Clinical
Research at USD 27 billion). Jubilant,
with its inherent advantages, is
expected to garner a higher market
share of this expanding pie.
Jubilant - Leveraging
Outsourcing for Growth
Over the years, the Company has built
a formidable presence in the Custom
Research & Manufacturing Services
(CRAMS) business and has effectively
leveraged upon its global scale of
operations. It has recently established
a significant position in the Contract
Manufacturing Operations (CMO)
business of sterile and non-sterile
products and radiopharmaceuticals in
the international market.
Today, large global pharmaceuticals
and life sciences companies have
reposed their trust and confidence in
Jubilant. This has enabled it to be
successfully positioned as the
preferred outsourcing partner. The
Company's outsourcing order book is
expanding consistently which reflects
its capability and customer confidence.
The Company is well-aware of the
significance of quality and competence
of its workforce in driving the growth of
its outsourcing business. This will
assume greater importance as the
services component of the outsourcing
business expands further. Jubilant has
the largest pool of scientific talent in
the Indian outsourcing space,
comprising more than 1200 scientists.
Majority of these scientists are based
at state-of-the-art discovery centre at
Bangalore and multiple research and
development facilities of the Company
at Noida.
The Company is at the forefront of
innovation with its scientific teams
passionately engaged in research
activities to develop value-added
products and services for its partners.
INDUSTRYSCENARIO
The outsourcing trends are expected to grow. Jubilant with its inherent advantages is poised to garner a higher market share of this expanding pie.
MANAGEMENT DISCUSSION & ANALYSIS
1110
The Company is at the forefront of innovation with its scientific teams passionately engaged in research activities to develop value-added products and services for its partners.
MANAGEMENT DISCUSSION &
ANALYSIS
12
Developments in the
Pharmaceutical Industry
The global pharmaceutical industry will
continue to witness steady growth due
to the increase in the ageing
population across the developed world,
prevalence of lifestyle diseases and
greater access to affordable medicines
and healthcare in the advanced and
emerging markets. In most of these
markets, healthcare expenditure by the
national governments is likely to
increase.
Most pharmaceutical companies are
facing the challenge of depleting
research pipeline, increasing research
costs and lower growth in revenue
due to their blockbuster drugs going
off-patent.
For sustained growth, these
companies are focussing on expansion
into emerging markets and outsourcing
to cost-effective manufacturing bases
in Asia. India offers great advantages
in terms of a large number of USFDA
approved production facilities; lower
operating costs; diverse talent pool
comprising chemists, physicians,
biologists and clinicians to support the
outsourcing activities.
The outsourcing trends are expected to
grow further with the contract
manufacturing market size at USD 45
billion globally by 2012 (USD 29 billion
for Dosage Forms and USD 16 billion
for APIs) and contract research market
size at USD 38 billion (Drug Discovery
at USD 11 billion and Clinical
Research at USD 27 billion). Jubilant,
with its inherent advantages, is
expected to garner a higher market
share of this expanding pie.
Jubilant - Leveraging
Outsourcing for Growth
Over the years, the Company has built
a formidable presence in the Custom
Research & Manufacturing Services
(CRAMS) business and has effectively
leveraged upon its global scale of
operations. It has recently established
a significant position in the Contract
Manufacturing Operations (CMO)
business of sterile and non-sterile
products and radiopharmaceuticals in
the international market.
Today, large global pharmaceuticals
and life sciences companies have
reposed their trust and confidence in
Jubilant. This has enabled it to be
successfully positioned as the
preferred outsourcing partner. The
Company's outsourcing order book is
expanding consistently which reflects
its capability and customer confidence.
The Company is well-aware of the
significance of quality and competence
of its workforce in driving the growth of
its outsourcing business. This will
assume greater importance as the
services component of the outsourcing
business expands further. Jubilant has
the largest pool of scientific talent in
the Indian outsourcing space,
comprising more than 1200 scientists.
Majority of these scientists are based
at state-of-the-art discovery centre at
Bangalore and multiple research and
development facilities of the Company
at Noida.
The Company is at the forefront of
innovation with its scientific teams
passionately engaged in research
activities to develop value-added
products and services for its partners.
INDUSTRYSCENARIO
The outsourcing trends are expected to grow. Jubilant with its inherent advantages is poised to garner a higher market share of this expanding pie.
MANAGEMENT DISCUSSION & ANALYSIS
1110
The Company is at the forefront of innovation with its scientific teams passionately engaged in research activities to develop value-added products and services for its partners.
MANAGEMENT DISCUSSION &
ANALYSIS
1312
2009RS. 35,180 REVENUE
2009RS. 6,148 EBITDA
2009RS. 2,832PAT
Revenue
FY2009 Revenue showed a robust
growth of 41.3% at Rs. 35,180 million
compared to Rs. 24,889 million in
FY2008. The growth momentum
continued to come from the PLSPS
segment, where Revenue stood at
Rs. 23,237 million from Rs. 15,302
million last year.
comprises a gain of Rs. 591 million on
buyback of Foreign Currency
Convertible Bonds (FCCBs) of
USD 60.9 million; unrealised loss of
Rs. 1,013 million due to mark-to-
market of forward contracts taken on
future exports; profit of Rs. 53 million
on sale of fixed assets and a write-off
of intangible assets of Rs. 110 million.
Exceptional Item for FY2008 was a
gain of Rs. 902 million. This includes
Forex gains of Rs. 1,031 million and
write-off of intangible assets of
Rs. 129 million.
The PBT (before Exceptional Item) for
FY2009 stood at Rs. 3,445 million from
Rs. 3,660 million in the previous year.
After taking into account the
Exceptional Item, Profit Before Tax
was at Rs. 2,966 million compared to
Rs. 4,561 million last year.
Net Profit was at Rs. 2,832 million in
FY2009 against Rs. 2,974 million last
year after adjusting for Forex gain of
Rs. 1,031 million made in that year.
The related Basis EPS was at
Rs. 19.22 and Rs. 20.67 for FY2009
and FY2008, respectively.
The Company is fully geared to
continue on its growth trajectory
backed by its financial strengths.
Healthy cash flows for the next few
years will place the Company on a
sound financial footing. Nevertheless in
light of the weak macro-economic
influences, Jubilant is consciously
Profit Before Tax
Net Profit and Earnings per
Share (EPS)
managing the size and composition of
its balance sheet. The Company's
focus will be on debt reduction.
Furthermore, outlay for Capital
expenditure has been optimised to
support only high priority projects.
PLSPS segment is the strategic growth
platform of the Company, which has
enabled Jubilant to successfully
position itself as a partner to the global
pharmaceuticals and life sciences
companies. In order to strengthen its
outsourcing business model, the
Company has further integrated its
CMO business & speciality
pharmaceuticals business in North
America and has also consolidated its
drug discovery and development
services business. With this
integration, Jubilant has emerged as
one of the largest providers of Contract
Manufacturing services of sterile
injectables in North America and is
also strongly placed to offer niche
Radiopharmaceuticals and Allergenic
extracts. After consolidating the
services business of drug discovery
and development, Jubilant has also
become one of the largest players in
this business out of India.
The IPP segment has reported
performance in line with the market
conditions. The year FY2009 has seen
a macro-economic downturn that has
influenced most sectors across the
world. The Company's current focus
during these challenging times is, on
improving the productivity and cost
efficiency in IPP business.
Business Review
Jubilant thus continues to focus on
offering integrated and seamless
solutions for the outsourcing needs of
the pharmaceuticals and life sciences
industry by providing a range of
products including Advanced
Intermediates, Fine Chemicals, APIs,
Solid Dosage Forms, Injectables,
Ointments, Creams, Liquids,
Radiopharmaceuticals & Allergenic
Extracts & wide-ranging services in the
area of Drug Discovery and Drug
Development including Bio-
Equivalence and Bio-Availability,
Clinical Trials & other healthcare
services.
R SankaraiahExecutive Director, Finance
The Company is fully geared to continue its g r o w t h t r a j e c t o r y backed by its financial strengths. Healthy cash f lows for the next few years will place the Company on a sound financial footing.
MANAGEMENT DISCUSSION & ANALYSIS
Financial Review
Jubilant Organosys reported
encouraging financial results in
FY2009 despite the challenges
arising out of the global economic
meltdown. The share of
Pharmaceuticals and Life Sciences
Products & Services (PLSPS)
segment in Revenue and
Profitability improved further while
the Industrial & Performance
Products (IPP) segment delivered
moderate results.
Pharmaceuticals and Life Sciences Products and Services
Industrial & Performance Products
66%
34%
REVENUE BREAK UP %
MILLION
MILLION
MILLION
During the course of the year, the
Company has strengthened its position
in the CRAMS business where
Revenue grew to Rs. 19,632 million
from Rs. 13,069 million. This comprised
Rs. 4,895 million in Revenue from the
CMO business in FY2009 as
compared to Rs. 2,049 million in
FY2008. Revenue from International
operations was at Rs. 21,771 million
compared to Rs. 13,940 million in
FY2008. Revenue from the IPP
segment grew by 24.6% to Rs. 11,943
million from Rs. 9,587 million last year.
The Operating EBITDA was at
Rs. 6,148 million in FY2009 compared
to Rs. 5,036 million previously, showing
a growth of 22.1% and a margin of
17.5% in FY2009 against 20.2% in
FY2008.
However, the Operating EBITDA
(before Forex Impact and FCCB
interest income) was at Rs. 7,165
million in FY2009 compared to
Rs. 4,752 million previously, showing a
growth of 50.8% which was higher than
the growth in Revenue in the same
period. The corresponding margin was
at 20.4% in FY2009 and 19.1% in
FY2008. This was mainly driven by
PLSPS segment where operating
EBITDA margin increased to 25.8% in
FY2009 against 24.8% last year.
Operating EBITDA margin in IPP
segment was 13.6% in FY2009 against
15.9% last year.
The Exceptional Item was a loss of
Rs. 479 million in FY2009. This
EBITDA
Exceptional Items
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
1312
2009RS. 35,180 REVENUE
2009RS. 6,148 EBITDA
2009RS. 2,832PAT
Revenue
FY2009 Revenue showed a robust
growth of 41.3% at Rs. 35,180 million
compared to Rs. 24,889 million in
FY2008. The growth momentum
continued to come from the PLSPS
segment, where Revenue stood at
Rs. 23,237 million from Rs. 15,302
million last year.
comprises a gain of Rs. 591 million on
buyback of Foreign Currency
Convertible Bonds (FCCBs) of
USD 60.9 million; unrealised loss of
Rs. 1,013 million due to mark-to-
market of forward contracts taken on
future exports; profit of Rs. 53 million
on sale of fixed assets and a write-off
of intangible assets of Rs. 110 million.
Exceptional Item for FY2008 was a
gain of Rs. 902 million. This includes
Forex gains of Rs. 1,031 million and
write-off of intangible assets of
Rs. 129 million.
The PBT (before Exceptional Item) for
FY2009 stood at Rs. 3,445 million from
Rs. 3,660 million in the previous year.
After taking into account the
Exceptional Item, Profit Before Tax
was at Rs. 2,966 million compared to
Rs. 4,561 million last year.
Net Profit was at Rs. 2,832 million in
FY2009 against Rs. 2,974 million last
year after adjusting for Forex gain of
Rs. 1,031 million made in that year.
The related Basis EPS was at
Rs. 19.22 and Rs. 20.67 for FY2009
and FY2008, respectively.
The Company is fully geared to
continue on its growth trajectory
backed by its financial strengths.
Healthy cash flows for the next few
years will place the Company on a
sound financial footing. Nevertheless in
light of the weak macro-economic
influences, Jubilant is consciously
Profit Before Tax
Net Profit and Earnings per
Share (EPS)
managing the size and composition of
its balance sheet. The Company's
focus will be on debt reduction.
Furthermore, outlay for Capital
expenditure has been optimised to
support only high priority projects.
PLSPS segment is the strategic growth
platform of the Company, which has
enabled Jubilant to successfully
position itself as a partner to the global
pharmaceuticals and life sciences
companies. In order to strengthen its
outsourcing business model, the
Company has further integrated its
CMO business & speciality
pharmaceuticals business in North
America and has also consolidated its
drug discovery and development
services business. With this
integration, Jubilant has emerged as
one of the largest providers of Contract
Manufacturing services of sterile
injectables in North America and is
also strongly placed to offer niche
Radiopharmaceuticals and Allergenic
extracts. After consolidating the
services business of drug discovery
and development, Jubilant has also
become one of the largest players in
this business out of India.
The IPP segment has reported
performance in line with the market
conditions. The year FY2009 has seen
a macro-economic downturn that has
influenced most sectors across the
world. The Company's current focus
during these challenging times is, on
improving the productivity and cost
efficiency in IPP business.
Business Review
Jubilant thus continues to focus on
offering integrated and seamless
solutions for the outsourcing needs of
the pharmaceuticals and life sciences
industry by providing a range of
products including Advanced
Intermediates, Fine Chemicals, APIs,
Solid Dosage Forms, Injectables,
Ointments, Creams, Liquids,
Radiopharmaceuticals & Allergenic
Extracts & wide-ranging services in the
area of Drug Discovery and Drug
Development including Bio-
Equivalence and Bio-Availability,
Clinical Trials & other healthcare
services.
R SankaraiahExecutive Director, Finance
The Company is fully geared to continue its g r o w t h t r a j e c t o r y backed by its financial strengths. Healthy cash f lows for the next few years will place the Company on a sound financial footing.
MANAGEMENT DISCUSSION & ANALYSIS
Financial Review
Jubilant Organosys reported
encouraging financial results in
FY2009 despite the challenges
arising out of the global economic
meltdown. The share of
Pharmaceuticals and Life Sciences
Products & Services (PLSPS)
segment in Revenue and
Profitability improved further while
the Industrial & Performance
Products (IPP) segment delivered
moderate results.
Pharmaceuticals and Life Sciences Products and Services
Industrial & Performance Products
66%
34%
REVENUE BREAK UP %
MILLION
MILLION
MILLION
During the course of the year, the
Company has strengthened its position
in the CRAMS business where
Revenue grew to Rs. 19,632 million
from Rs. 13,069 million. This comprised
Rs. 4,895 million in Revenue from the
CMO business in FY2009 as
compared to Rs. 2,049 million in
FY2008. Revenue from International
operations was at Rs. 21,771 million
compared to Rs. 13,940 million in
FY2008. Revenue from the IPP
segment grew by 24.6% to Rs. 11,943
million from Rs. 9,587 million last year.
The Operating EBITDA was at
Rs. 6,148 million in FY2009 compared
to Rs. 5,036 million previously, showing
a growth of 22.1% and a margin of
17.5% in FY2009 against 20.2% in
FY2008.
However, the Operating EBITDA
(before Forex Impact and FCCB
interest income) was at Rs. 7,165
million in FY2009 compared to
Rs. 4,752 million previously, showing a
growth of 50.8% which was higher than
the growth in Revenue in the same
period. The corresponding margin was
at 20.4% in FY2009 and 19.1% in
FY2008. This was mainly driven by
PLSPS segment where operating
EBITDA margin increased to 25.8% in
FY2009 against 24.8% last year.
Operating EBITDA margin in IPP
segment was 13.6% in FY2009 against
15.9% last year.
The Exceptional Item was a loss of
Rs. 479 million in FY2009. This
EBITDA
Exceptional Items
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
1514
PHARMACEUTICALS AND LIFE SCIENCES
PRODUCTS AND SERVICES
Jubilant's consistent focus on the Pharmaceuticals and Life Sciences Products and Services
(PLSPS) segment has translated into Revenue from this stream expanding consistently. For
FY2009, the Revenue from PLSPS grew by 51.9% to Rs. 23,237 million against Rs. 15,302
million in the previous year.
Revenue from the international operations within PLSPS grew by 62.7% and stood at
Rs. 20,265 million this year from Rs. 12,458 million in the previous year. Jubilant continues to
derive a large percentage of its business from the regulated markets. In FY2009, the Company
recorded a Profit before Interest & Tax (PBIT) of Rs. 4,222 million in PLSPS compared to
Rs. 3,035 million in FY2008.
Jubilant's key to success is its integrated business model, developed over this decade, that
offers products and services across the complete spectrum of pharmaceuticals value chain.
Today it is possible for its customers to engage with Jubilant for drug discovery to
development, from production of intermediates and APIs to formulations including
sophisticated injectables and radiopharmaceuticals. For the Company, the key growth engine
is its outsourcing operation within PLSPS which comprises Custom Research and
Manufacturing Services (CRAMS) and Drug Discovery and Development Services (DDDS).
PLSPSJubilant's key to success is its integrated business model and focus on Pharmaceuticals and Life Sciences
Jubilant's PLSPS business is broadly divided into the following sub-segments:
1. CRAMS - Custom Research & Manufacturing Services
2. Drug Discovery and Development Services
3. Generic Dosage Forms
4. Healthcare
a) Proprietary Products & Exclusive Synthesis
b) Active Pharmaceutical Ingredients (APIs)
c) Contract Manufacturing of Sterile Injectables and Non-Sterile Products
d) Speciality Pharmaceuticals
Pharmaceuticals &
Life Sciences Products & Services
Break-up
CRAMS Rs. 19,632 million
DDDS Rs. 2,415 million
Generic Dosage Forms Rs. 1,133 million
Health Care Rs. 57 million
Custom Research&
Manufacturing Services Break-up
84.5%
4.9%
10.4%
0.2%
52.3%
9.8%
24.9%
13.0%
Speciality Pharmaceuticals Rs. 1,925 million
CMO of Sterile Injectables & Non-Sterile Products Rs. 4,895 million
API Rs. 2,550 million
Proprietary Products & Exclusive Synthesis Rs. 10,262 million
PHARMACEUTICALS AND LIFE SCIENCES
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
1514
PHARMACEUTICALS AND LIFE SCIENCES
PRODUCTS AND SERVICES
Jubilant's consistent focus on the Pharmaceuticals and Life Sciences Products and Services
(PLSPS) segment has translated into Revenue from this stream expanding consistently. For
FY2009, the Revenue from PLSPS grew by 51.9% to Rs. 23,237 million against Rs. 15,302
million in the previous year.
Revenue from the international operations within PLSPS grew by 62.7% and stood at
Rs. 20,265 million this year from Rs. 12,458 million in the previous year. Jubilant continues to
derive a large percentage of its business from the regulated markets. In FY2009, the Company
recorded a Profit before Interest & Tax (PBIT) of Rs. 4,222 million in PLSPS compared to
Rs. 3,035 million in FY2008.
Jubilant's key to success is its integrated business model, developed over this decade, that
offers products and services across the complete spectrum of pharmaceuticals value chain.
Today it is possible for its customers to engage with Jubilant for drug discovery to
development, from production of intermediates and APIs to formulations including
sophisticated injectables and radiopharmaceuticals. For the Company, the key growth engine
is its outsourcing operation within PLSPS which comprises Custom Research and
Manufacturing Services (CRAMS) and Drug Discovery and Development Services (DDDS).
PLSPSJubilant's key to success is its integrated business model and focus on Pharmaceuticals and Life Sciences
Jubilant's PLSPS business is broadly divided into the following sub-segments:
1. CRAMS - Custom Research & Manufacturing Services
2. Drug Discovery and Development Services
3. Generic Dosage Forms
4. Healthcare
a) Proprietary Products & Exclusive Synthesis
b) Active Pharmaceutical Ingredients (APIs)
c) Contract Manufacturing of Sterile Injectables and Non-Sterile Products
d) Speciality Pharmaceuticals
Pharmaceuticals &
Life Sciences Products & Services
Break-up
CRAMS Rs. 19,632 million
DDDS Rs. 2,415 million
Generic Dosage Forms Rs. 1,133 million
Health Care Rs. 57 million
Custom Research&
Manufacturing Services Break-up
84.5%
4.9%
10.4%
0.2%
52.3%
9.8%
24.9%
13.0%
Speciality Pharmaceuticals Rs. 1,925 million
CMO of Sterile Injectables & Non-Sterile Products Rs. 4,895 million
API Rs. 2,550 million
Proprietary Products & Exclusive Synthesis Rs. 10,262 million
PHARMACEUTICALS AND LIFE SCIENCES
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
17
1. CRAMS
CRAMS is the largest business sub-
segment of the Company which has
a wide range of products & services,
with an emphasis on global
partnership. For FY2009, Revenue
from CRAMS grew by 50.2% to
Rs. 19,632 million as against
Rs. 13,069 million in FY2008.
a) Proprietary Products & Exclusive
Synthesis
Jubilant is the largest manufacturer of
Pyridine and its derivatives in the
world. The Revenue in FY2009 grew
by 22.4% to Rs. 10,262 million from
Rs. 8,387 million last year. This
business is one of the largest
contributors to Jubilant's growth. Its
contribution to PLSPS and Total
Revenue of the Company stood at
44.2% and 29.2%, respectively.
Jubilant provides a range of fine
chemicals and advanced intermediates
to the global pharmaceuticals,
agrochemicals and life sciences
industry. These comprise pyridine and
its derivatives - which are used as
solvents, basic building blocks and
advanced intermediates with wide
application in the pharmaceuticals and
agrochemicals industry. The state-of-
the-art manufacturing facilities are at
Gajraula in UP, and Ambernath in
Maharashtra.
Within Proprietary Products, the
Company has a library of more than
150 products which are developed in-
house by R&D, fulfilling the specific
needs of the industry.
In the review period, the Company
acquired 100% stake in Speciality
16
Molecules, located in Ambernath (near
Mumbai) in India for Rs. 200 million on
a debt free, cash free basis. The
acquired company is engaged in the
business of developing, manufacturing
and selling of speciality intermediates
and has a strong position as the
manufacturer of Halogenated Pyridine
derivatives, using the niche technology
of halogenation. These Halogenated
Pyridine derivatives are used in
pharmaceuticals, cosmetics and life
sciences industry.
This acquisition will further strengthen
Jubilant's Halogenation capabilities.
The Company plans to market these
speciality intermediates as well as
intends to utilise them for captive
consumption for various life sciences
derivatives. This will enable the
Company to offer products based on a
common platform at very competitive
prices to its global customers who are
sector leaders in the pharmaceuticals
and agrochemicals industry.
Under its nutritional products business
the Company makes Niacin and
Niacinamide where it is ranked among
the top 3 manufacturers in the world.
Jubilant is backward integrated into
manufacturing of Beta Picoline, which
is the basic raw material used in the
making of nutritional products.
Jubilant has the distinct capability to
offer its wide yet integrated research
and manufacturing services spread
across the pharmaceuticals value
chain.
Under Exclusive Synthesis, the
Company offers research, development
and manufacturing services for
intermediates and APIs for New
Jubilant is the largest manu fac tu re r o f Pyr id ine and i t s derivatives in the world. This business is one of the largest c o n t r i b u t o r s t o Jubilant's growth.
Pramod YadavCEO, Advanced Intermediates and Vitamins
Jubilant has created a demonstrable value proposition with its Custom Research S o l u t i o n . T h e C o m p a n y o f f e r s CRAM Services for Intermediates & APIs for NCEs and in- market products from d e v e l o p m e n t t o commercial isat ion stage.
Rajesh SrivastavaCEO, CRAMS and Fine Chemicals
Chemical Entities (NCEs) and in-
market products from development to
commercialisation stage. This business
has completely integrated R&D,
technology and engineering
capabilities that enable it to be the cost
effective partner on a sustainable
basis. Jubilant has the capability to
undertake more than 30 complex
chemical reactions and has global
leadership in certain key technologies.
By leveraging upon the scientific
expertise and knowledge resident
across the organisation, Jubilant has
created a demonstrable value
proposition with its 'Custom Research'
solution. The uniqueness of the model
lies in its ability to meet requirements
right from 'mg' to 'metric tonne'
quantities effortlessly. The Company
offers expertise in Route selection,
Process development and Process
optimisation for Intermediates and
APIs on both Full Time Equivalent
(FTE) and molecule basis, based on
the requirements of the customer.
Jubilant has niche expertise in
developing and optimising non-
infringing processes, which are
scalable to multi tonne quantities.
In addition, Jubilant has succeeded in
demonstrating the effectiveness and
applicability of its 'collaborative'
outsourcing model to the
Pharmaceuticals and Life Sciences
outsourcing industry - as a result of
which it has forged close relationships
with major players in the sector.
Outlook
In this business, Jubilant is a market
leader and it is aiming at scaling up
these operations further. The Company
has a strong order book position,
including several multi-year contracts.
The Company expects strong volume
growth from this business and
continues to assess and organise
capacity augmentation on an ongoing
basis. The Company is in an advanced
stage of development of some large
volume halogenated derivatives which
will have substantial growth
opportunities.
b) Active Pharmaceutical
Ingredients (APIs )
Active Pharmaceutical Ingredients
business reported Revenue of
Rs. 2,550 million in FY2009 with a
spectacular growth of 36.6%. The
contribution of APIs to PLSPS and
Total Revenue of the Company stood
at 11.0% and 7.2%, respectively. The
APIs business witnessed healthy
volume growth and a stable pricing
environment in FY2009.
Under APIs, Jubilant has a focused
presence in therapeutic segments such
as Central Nervous System (CNS),
Cardiovascular System (CVS), Gastro-
Intestinal (GI) and Anti-Infectives.
The Company has filed 33 Drug
Master Files (DMFs) in the U.S. market
and 17 European Drug Master Files
(EDMFs) in Europe. Further, the
Company has 19 products under active
development. The focus of Research
and Development continues to be on
developing non-infringing processes to
produce APIs for the global generics
market.
The Company's API facility is located
at Nanjangud, Karnataka and
comprises 6 multi-purpose plants,
which manufacture many bulk actives
and several key intermediates. Jubilant
'
PHARMACEUTICALS AND LIFE SCIENCES
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
17
1. CRAMS
CRAMS is the largest business sub-
segment of the Company which has
a wide range of products & services,
with an emphasis on global
partnership. For FY2009, Revenue
from CRAMS grew by 50.2% to
Rs. 19,632 million as against
Rs. 13,069 million in FY2008.
a) Proprietary Products & Exclusive
Synthesis
Jubilant is the largest manufacturer of
Pyridine and its derivatives in the
world. The Revenue in FY2009 grew
by 22.4% to Rs. 10,262 million from
Rs. 8,387 million last year. This
business is one of the largest
contributors to Jubilant's growth. Its
contribution to PLSPS and Total
Revenue of the Company stood at
44.2% and 29.2%, respectively.
Jubilant provides a range of fine
chemicals and advanced intermediates
to the global pharmaceuticals,
agrochemicals and life sciences
industry. These comprise pyridine and
its derivatives - which are used as
solvents, basic building blocks and
advanced intermediates with wide
application in the pharmaceuticals and
agrochemicals industry. The state-of-
the-art manufacturing facilities are at
Gajraula in UP, and Ambernath in
Maharashtra.
Within Proprietary Products, the
Company has a library of more than
150 products which are developed in-
house by R&D, fulfilling the specific
needs of the industry.
In the review period, the Company
acquired 100% stake in Speciality
16
Molecules, located in Ambernath (near
Mumbai) in India for Rs. 200 million on
a debt free, cash free basis. The
acquired company is engaged in the
business of developing, manufacturing
and selling of speciality intermediates
and has a strong position as the
manufacturer of Halogenated Pyridine
derivatives, using the niche technology
of halogenation. These Halogenated
Pyridine derivatives are used in
pharmaceuticals, cosmetics and life
sciences industry.
This acquisition will further strengthen
Jubilant's Halogenation capabilities.
The Company plans to market these
speciality intermediates as well as
intends to utilise them for captive
consumption for various life sciences
derivatives. This will enable the
Company to offer products based on a
common platform at very competitive
prices to its global customers who are
sector leaders in the pharmaceuticals
and agrochemicals industry.
Under its nutritional products business
the Company makes Niacin and
Niacinamide where it is ranked among
the top 3 manufacturers in the world.
Jubilant is backward integrated into
manufacturing of Beta Picoline, which
is the basic raw material used in the
making of nutritional products.
Jubilant has the distinct capability to
offer its wide yet integrated research
and manufacturing services spread
across the pharmaceuticals value
chain.
Under Exclusive Synthesis, the
Company offers research, development
and manufacturing services for
intermediates and APIs for New
Jubilant is the largest manu fac tu re r o f Pyr id ine and i t s derivatives in the world. This business is one of the largest c o n t r i b u t o r s t o Jubilant's growth.
Pramod YadavCEO, Advanced Intermediates and Vitamins
Jubilant has created a demonstrable value proposition with its Custom Research S o l u t i o n . T h e C o m p a n y o f f e r s CRAM Services for Intermediates & APIs for NCEs and in- market products from d e v e l o p m e n t t o commercial isat ion stage.
Rajesh SrivastavaCEO, CRAMS and Fine Chemicals
Chemical Entities (NCEs) and in-
market products from development to
commercialisation stage. This business
has completely integrated R&D,
technology and engineering
capabilities that enable it to be the cost
effective partner on a sustainable
basis. Jubilant has the capability to
undertake more than 30 complex
chemical reactions and has global
leadership in certain key technologies.
By leveraging upon the scientific
expertise and knowledge resident
across the organisation, Jubilant has
created a demonstrable value
proposition with its 'Custom Research'
solution. The uniqueness of the model
lies in its ability to meet requirements
right from 'mg' to 'metric tonne'
quantities effortlessly. The Company
offers expertise in Route selection,
Process development and Process
optimisation for Intermediates and
APIs on both Full Time Equivalent
(FTE) and molecule basis, based on
the requirements of the customer.
Jubilant has niche expertise in
developing and optimising non-
infringing processes, which are
scalable to multi tonne quantities.
In addition, Jubilant has succeeded in
demonstrating the effectiveness and
applicability of its 'collaborative'
outsourcing model to the
Pharmaceuticals and Life Sciences
outsourcing industry - as a result of
which it has forged close relationships
with major players in the sector.
Outlook
In this business, Jubilant is a market
leader and it is aiming at scaling up
these operations further. The Company
has a strong order book position,
including several multi-year contracts.
The Company expects strong volume
growth from this business and
continues to assess and organise
capacity augmentation on an ongoing
basis. The Company is in an advanced
stage of development of some large
volume halogenated derivatives which
will have substantial growth
opportunities.
b) Active Pharmaceutical
Ingredients (APIs )
Active Pharmaceutical Ingredients
business reported Revenue of
Rs. 2,550 million in FY2009 with a
spectacular growth of 36.6%. The
contribution of APIs to PLSPS and
Total Revenue of the Company stood
at 11.0% and 7.2%, respectively. The
APIs business witnessed healthy
volume growth and a stable pricing
environment in FY2009.
Under APIs, Jubilant has a focused
presence in therapeutic segments such
as Central Nervous System (CNS),
Cardiovascular System (CVS), Gastro-
Intestinal (GI) and Anti-Infectives.
The Company has filed 33 Drug
Master Files (DMFs) in the U.S. market
and 17 European Drug Master Files
(EDMFs) in Europe. Further, the
Company has 19 products under active
development. The focus of Research
and Development continues to be on
developing non-infringing processes to
produce APIs for the global generics
market.
The Company's API facility is located
at Nanjangud, Karnataka and
comprises 6 multi-purpose plants,
which manufacture many bulk actives
and several key intermediates. Jubilant
'
PHARMACEUTICALS AND LIFE SCIENCES
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
19
has developed the capability of scaling
up production of APIs at a short notice
and has made the necessary
adjustments to its facilities. The API
manufacturing plant was successfully
audited by USFDA, Japanese PMDA
and AFSAPPS of France for regulatory
and cGMP Compliance.
Our APIs are exported worldwide, into
emerging as well as developed
markets. The key markets are North
America, South America, Europe,
Japan, Korea, CIS Countries, and
Australia.
Jubilant's manufacturing model for
APIs, as in its other business
segments, focuses on global
competitiveness. The Company thus
occupies world-level rankings in terms
of manufacturing ability and market
share in most of its products.
The Company has dedicated R&D
support for the development of APIs at
its R&D centre at NOIDA housing 150
scientists. This team is engaged in
developing non-infringing processes to
produce APIs for commercial supplies
post patent expiry. The centre also
provides contract research services to
the global pharmaceuticals and life
sciences industry. Jubilant has an
attractive pipeline of products in this
business with 19 products under
research and 11 products awaiting
commercialisation.
Outlook
Overall, the current business
momentum is expected to continue
driven by the stability in the pricing of
key products in the Company's
portfolio. Jubilant continues to leverage
upon its research skills to develop new
APIs both in the existing areas of
strength such as CNS and other areas
such as CVS, thereby strengthening
presence in these areas for future
growth. Jubilant is very keen to
strenghten this business furthur. The
Company is filing around 8-10 DMFs
each year and intends to maintain this
tempo for the coming years.
c) CMO of Sterile Injectables and
Non-Sterile Products
CMO (Contract Manufacturing
Operations) of Sterile Injectables and
Non-Sterile Products business reported
Revenue of Rs. 4,895 million in
FY2009 as compared to Rs. 2,049
million last year, thereby registering a
growth of 138.9%. The CMO business
contributed 21.1% of the Revenue in
PLSPS this year. The share in Total
Revenue of the Company stood at
13.9%.
The CMO business is well positioned
to service the spectrum of life sciences
industry requirements - from large
scale leading pharmaceutical
companies to virtual biotechnology
organisations, with two independently
branded CMO organisations in North
America: Hollister-Stier contract
manufacturing located in Spokane,
Washington, USA, Draxis Pharma
located in Montreal, Canada, and our
own in-house solid dosage form
capabilities, Jubilant is well positioned
to service clients with multiple dosage
form requirements from multiple
locations. The Hollister-Stier facility is
focused on the delivery of clinical and
commercial fill and finish services for
sterile parenteral pharmaceuticals,
utilising both liquid and lyophilisation
capabilities. The Draxis Pharma facility
has multi-dosage form capabilities
18
ranging from sterile parenteral (vial and
ampoule liquid and lyophilisation), as
well as sterile and non-sterile semi-
solid manufacturing. Between Hollister-
Stier and Draxis, we service five of the
world's top 10 pharmaceutical
companies. This business had signed
5 year contract for USD 120 million
with J&J for contract manufacturing of
Ointments, Creams and Liquids. This
contract is for five years commencing
from January 2009.
During FY2009, the CMO business of
Jubilant Organosys saw growth of
139% through acquisition and client
expansion. Further, strategic capital
additions were initiated with the
continuation of a significant
lyophilisation expansion in the
Hollister-Stier facility. The integration of
CMO service offerings was also
continued in FY2009 with the addition
of Jubilant's own solid dosage form
manufacturing capabilities in Salisbury,
Maryland to complement the facilities
in Spokane and Montreal. The CMO
business expanded its already
impressive regulatory track record with
FDA, Health Canada and MHRA
approvals across the various facilities
in North America.
Outlook
Moving forward, the CMO business will
be expanded to include robust Clinical
Trial Filling and Lyophilisation
capabilities which will be further
complemented with the integration of
additional solid dosage manufacturing
capabilities from our facility in Roorkee,
India. Further, we will continue to
implement leading systems to enable
quality and regulatory management,
and will expand our continuous
improvement capabilities applying lean
and six sigma principles across our
manufacturing operations. Also, we will
look to expand our dosage form
offering ensuring that we continue to
provide our clients with reliable,
efficient and innovative manufacturing
services to support their product
development and commercialisation
strategies.
d) Speciality Pharmaceuticals
Speciality Pharmaceuticals business
comprises Radiopharmaceuticals and
Allergenic Extracts. In FY2009,
Revenue grew by 151.3% and
stood at Rs. 1,925 million from Rs. 766
million earlier. The growth was an
outcome of the acquisition of
Radiopharmaceuticals business and
introduction of new products by the
business. Speciality Pharmaceuticals
contributed 5.5% of overall Revenue,
whereas its contribution to PLSPS
segment was at 8.3%.
Nuclear medicine imaging and
therapeutic agents are the focus of the
Radiopharmaceuticals Division
“DRAXIMAGE®” which develops,
manufactures and markets diagnostic
imaging and therapeutic
radiopharmaceutical products for the
global marketplace. Products currently
marketed by the radiopharmaceutical
division include a line of lyophilised
Technetium-99m kits used in nuclear
medicine imaging procedures and a
line of imaging and therapeutic
products labeled with a variety of
isotopes including Sodium Iodide I-131.
During FY2009, DRAXIMAGE®
Sestamibi, a diagnostic cardiac
imaging agent used in Myocardial
The CMO business is well positioned to s e r v i c e t h e f u l l s p e c t r u m o f l i f e sciences companies - from large scale leading p h a r m a c e u t i c a l s companies to virtual b i o t e c h n o l o g y organisations, with two independently branded CMO organisations in North America.
Marcelo MoralesCEO, CMO of Sterile Injectibles and Non Sterile Products
PHARMACEUTICALS AND LIFE SCIENCES
Jubilant focuses on global competitiveness in its APIs business. T h e C o m p a n y occupies world-level rankings in terms of market share in most of its products.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
19
has developed the capability of scaling
up production of APIs at a short notice
and has made the necessary
adjustments to its facilities. The API
manufacturing plant was successfully
audited by USFDA, Japanese PMDA
and AFSAPPS of France for regulatory
and cGMP Compliance.
Our APIs are exported worldwide, into
emerging as well as developed
markets. The key markets are North
America, South America, Europe,
Japan, Korea, CIS Countries, and
Australia.
Jubilant's manufacturing model for
APIs, as in its other business
segments, focuses on global
competitiveness. The Company thus
occupies world-level rankings in terms
of manufacturing ability and market
share in most of its products.
The Company has dedicated R&D
support for the development of APIs at
its R&D centre at NOIDA housing 150
scientists. This team is engaged in
developing non-infringing processes to
produce APIs for commercial supplies
post patent expiry. The centre also
provides contract research services to
the global pharmaceuticals and life
sciences industry. Jubilant has an
attractive pipeline of products in this
business with 19 products under
research and 11 products awaiting
commercialisation.
Outlook
Overall, the current business
momentum is expected to continue
driven by the stability in the pricing of
key products in the Company's
portfolio. Jubilant continues to leverage
upon its research skills to develop new
APIs both in the existing areas of
strength such as CNS and other areas
such as CVS, thereby strengthening
presence in these areas for future
growth. Jubilant is very keen to
strenghten this business furthur. The
Company is filing around 8-10 DMFs
each year and intends to maintain this
tempo for the coming years.
c) CMO of Sterile Injectables and
Non-Sterile Products
CMO (Contract Manufacturing
Operations) of Sterile Injectables and
Non-Sterile Products business reported
Revenue of Rs. 4,895 million in
FY2009 as compared to Rs. 2,049
million last year, thereby registering a
growth of 138.9%. The CMO business
contributed 21.1% of the Revenue in
PLSPS this year. The share in Total
Revenue of the Company stood at
13.9%.
The CMO business is well positioned
to service the spectrum of life sciences
industry requirements - from large
scale leading pharmaceutical
companies to virtual biotechnology
organisations, with two independently
branded CMO organisations in North
America: Hollister-Stier contract
manufacturing located in Spokane,
Washington, USA, Draxis Pharma
located in Montreal, Canada, and our
own in-house solid dosage form
capabilities, Jubilant is well positioned
to service clients with multiple dosage
form requirements from multiple
locations. The Hollister-Stier facility is
focused on the delivery of clinical and
commercial fill and finish services for
sterile parenteral pharmaceuticals,
utilising both liquid and lyophilisation
capabilities. The Draxis Pharma facility
has multi-dosage form capabilities
18
ranging from sterile parenteral (vial and
ampoule liquid and lyophilisation), as
well as sterile and non-sterile semi-
solid manufacturing. Between Hollister-
Stier and Draxis, we service five of the
world's top 10 pharmaceutical
companies. This business had signed
5 year contract for USD 120 million
with J&J for contract manufacturing of
Ointments, Creams and Liquids. This
contract is for five years commencing
from January 2009.
During FY2009, the CMO business of
Jubilant Organosys saw growth of
139% through acquisition and client
expansion. Further, strategic capital
additions were initiated with the
continuation of a significant
lyophilisation expansion in the
Hollister-Stier facility. The integration of
CMO service offerings was also
continued in FY2009 with the addition
of Jubilant's own solid dosage form
manufacturing capabilities in Salisbury,
Maryland to complement the facilities
in Spokane and Montreal. The CMO
business expanded its already
impressive regulatory track record with
FDA, Health Canada and MHRA
approvals across the various facilities
in North America.
Outlook
Moving forward, the CMO business will
be expanded to include robust Clinical
Trial Filling and Lyophilisation
capabilities which will be further
complemented with the integration of
additional solid dosage manufacturing
capabilities from our facility in Roorkee,
India. Further, we will continue to
implement leading systems to enable
quality and regulatory management,
and will expand our continuous
improvement capabilities applying lean
and six sigma principles across our
manufacturing operations. Also, we will
look to expand our dosage form
offering ensuring that we continue to
provide our clients with reliable,
efficient and innovative manufacturing
services to support their product
development and commercialisation
strategies.
d) Speciality Pharmaceuticals
Speciality Pharmaceuticals business
comprises Radiopharmaceuticals and
Allergenic Extracts. In FY2009,
Revenue grew by 151.3% and
stood at Rs. 1,925 million from Rs. 766
million earlier. The growth was an
outcome of the acquisition of
Radiopharmaceuticals business and
introduction of new products by the
business. Speciality Pharmaceuticals
contributed 5.5% of overall Revenue,
whereas its contribution to PLSPS
segment was at 8.3%.
Nuclear medicine imaging and
therapeutic agents are the focus of the
Radiopharmaceuticals Division
“DRAXIMAGE®” which develops,
manufactures and markets diagnostic
imaging and therapeutic
radiopharmaceutical products for the
global marketplace. Products currently
marketed by the radiopharmaceutical
division include a line of lyophilised
Technetium-99m kits used in nuclear
medicine imaging procedures and a
line of imaging and therapeutic
products labeled with a variety of
isotopes including Sodium Iodide I-131.
During FY2009, DRAXIMAGE®
Sestamibi, a diagnostic cardiac
imaging agent used in Myocardial
The CMO business is well positioned to s e r v i c e t h e f u l l s p e c t r u m o f l i f e sciences companies - from large scale leading p h a r m a c e u t i c a l s companies to virtual b i o t e c h n o l o g y organisations, with two independently branded CMO organisations in North America.
Marcelo MoralesCEO, CMO of Sterile Injectibles and Non Sterile Products
PHARMACEUTICALS AND LIFE SCIENCES
Jubilant focuses on global competitiveness in its APIs business. T h e C o m p a n y occupies world-level rankings in terms of market share in most of its products.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
21
Perfusion Imaging (“MPI”) to evaluate
the blood flow to the heart in patients
undergoing cardiac tests, was
approved by Health Canada for
commercialisation in Canada, where it
will be launched after patent expiry in
July 2009. Sestamibi is also expected
to be launched in USA during Q1,
FY2010 through a distribution tie-up
with GE Healthcare.
The Radiopharmaceutical Division
“DRAXIMAGE®” also has a number of
other products in late stage
development including Moly-Fill™, a
next-generation version of a
Technetium Generator and Ruby-
Fill™, a Rubidium Generator producing
a cardiac PET imaging agent. We are
continuing our efforts to obtain
registration in Europe and Asian
markets for all our existing products
that are currently approved in North
America. In order to support our
European expansion, the
Radiopharmaceutical Division
“DRAXIMAGE®” has signed an
exclusive distribution agreement with
Guerbet, an imaging market leader in
Europe. Products are expected to be
launched in Europe by the end of
2009. We are currently seeking to
expand our distribution network
throughout Asia.
Allergy business of Hollister-Stier,
located in Washington state in USA is
one of the leading North American
Immunotherapy companies with
around 90 years of experience and
brand loyalty. We are a full service
provider to the allergy specialty with a
product range of over 200 different
allergens and standard mixes of allergy
vaccines. Products such as Venomil®
venom products, AP™ extracts and
QUINTIP® & ComforTen™ diagnostic
skin test devices helps Allergy
business to stand out as a leader in the
industry.
During FY2009, this business
concentrated its efforts on optimising
the existing line of bulk extracts. We
continued a focused marketing plan
around our line of diagnostic skin test
devices which are beginning to take
market share following the launch of
the new ComforTen™ multiple skin
test devices late last year. Business is
assessing the proper direction to
proceed that will help solidify our
position as a leader in Allergy
Immunotherapy.
Outlook
Jubilant expects Sestamibi to make a
healthy contribution to the
radiopharmaceuticals business post
approvals for the US and EU markets.
The Company has a distribution tie-up
for Sestamibi with GE Healthcare for
US and Guerbet for EU. The Company
intends to have in place similar
agreements for distribution of its other
products.
The international Allergy market is a
key part of our future growth strategy
and we plan to increase our market
share in Europe and Asia along with
other regions over the next few years.
Growth in the immunotherapy market
is expected to rise significantly over the
next 4-8 years through the introduction
of new immunotherapy products
focusing on alternative routes of
administration, e.g. sublingual (under
the tongue), and ultra short treatment
courses , e.g. 4 injections yearly
instead of 12-40 per year.
20
Ju b i l a n t e x p e c t s Sestamibi to make a healthy contribution to the radiopharma-ceuticals business.
Jean Pierre RobertCEO, Speciality Pharmaceuticals
Sri MosurCEO & President Global Drug Discovery and Development Services
business is to accelerate drug
discovery and development across the
global pharmaceuticals industry.
Jubilant works in close collaboration
with major pharmaceuticals & biotech
companies, and renowned academia in
providing functional and integrated
solutions focused on delivering
affordable medicines to patients
worldwide.
Jubilant Biosys along with its discovery
chemistry affiliate, Jubilant Chemsys,
has entered into pioneering
partnerships in providing innovative
solutions combined with creative risk
mitigating strategies. The two
subsidiaries operate from Bangalore
and Noida where scientists from
Medicinal Chemistry, Invitro and Invivo
Biology, Structural Biology collaborate
with their global counterparts to
provide integrated and functional
solutions.
The past year has seen Jubilant Biosys
and Jubilant Chemsys announce
pioneering partnerships with many
major Pharmaceuticals & Biotech
companies. The most significant
among them was an agreement with
Lilly to form an equally-owned joint
venture in India that will focus on
providing drug development services
exclusively to Jubilant and Lilly
partnered molecules. The joint venture
is to be modelled after Lilly's early-
stage development division, Chorus,
which provides fast and capable drug
development for Lilly exclusively
through utilisation of external contract
companies. Other partnerships are
with Bioleap for fragment based
screening, Lilly for Legend Next-
generation screening tool, Amgen for
2. Drug Discovery and
Development Services (DDDS)
The Drug Discovery and Development
Services business contributed
Rs. 2,415 million to Revenue in
FY2009 thus giving an increase of
56.7% over the previous year. Jubilant
foresees very good potential in this
business. In the year under review, the
DDDS business had 10.4% Revenue
share in the PLSPS business. The
share of Revenue to the Total
Revenue of Jubilant was at 6.9%.
The business is operationally
integrated across three subsidiaries,
Jubilant Biosys, Jubilant Chemsys and
Clinsys Clinical Research with
locations across the Americas, Europe
and India. In FY2009, the three
subsidiaries entered into multiple
partnerships with global
pharmaceutical and biotech
companies. Capabilities within the
DDDS subsidiaries span the entire
spectrum of Discovery and
Development needs, which include:
Discovery Technologies: Discovery
informatics, insilico and computational
technologies, Electronic Data Capture
(EDC) and Pharma IT platforms.
Discovery Research: Capabilities
extend across multiple target platforms
as well as therapeutic areas to include
design and synthesis supported invitro
and invivo screening and validation
capabilities.
Drug Development: Disease specific
animal pharmacology models,
Preclinical, translational and global
clinical development capabilities
across multiple therapeutic areas.
The strategic objective of the DDDS
Jubilant has entered i n t o p i o n e e r i n g p a r t n e r s h i p s t o provide innovative solutions combined with creative risk mitigating strategies.
PHARMACEUTICALS AND LIFE SCIENCES
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
21
Perfusion Imaging (“MPI”) to evaluate
the blood flow to the heart in patients
undergoing cardiac tests, was
approved by Health Canada for
commercialisation in Canada, where it
will be launched after patent expiry in
July 2009. Sestamibi is also expected
to be launched in USA during Q1,
FY2010 through a distribution tie-up
with GE Healthcare.
The Radiopharmaceutical Division
“DRAXIMAGE®” also has a number of
other products in late stage
development including Moly-Fill™, a
next-generation version of a
Technetium Generator and Ruby-
Fill™, a Rubidium Generator producing
a cardiac PET imaging agent. We are
continuing our efforts to obtain
registration in Europe and Asian
markets for all our existing products
that are currently approved in North
America. In order to support our
European expansion, the
Radiopharmaceutical Division
“DRAXIMAGE®” has signed an
exclusive distribution agreement with
Guerbet, an imaging market leader in
Europe. Products are expected to be
launched in Europe by the end of
2009. We are currently seeking to
expand our distribution network
throughout Asia.
Allergy business of Hollister-Stier,
located in Washington state in USA is
one of the leading North American
Immunotherapy companies with
around 90 years of experience and
brand loyalty. We are a full service
provider to the allergy specialty with a
product range of over 200 different
allergens and standard mixes of allergy
vaccines. Products such as Venomil®
venom products, AP™ extracts and
QUINTIP® & ComforTen™ diagnostic
skin test devices helps Allergy
business to stand out as a leader in the
industry.
During FY2009, this business
concentrated its efforts on optimising
the existing line of bulk extracts. We
continued a focused marketing plan
around our line of diagnostic skin test
devices which are beginning to take
market share following the launch of
the new ComforTen™ multiple skin
test devices late last year. Business is
assessing the proper direction to
proceed that will help solidify our
position as a leader in Allergy
Immunotherapy.
Outlook
Jubilant expects Sestamibi to make a
healthy contribution to the
radiopharmaceuticals business post
approvals for the US and EU markets.
The Company has a distribution tie-up
for Sestamibi with GE Healthcare for
US and Guerbet for EU. The Company
intends to have in place similar
agreements for distribution of its other
products.
The international Allergy market is a
key part of our future growth strategy
and we plan to increase our market
share in Europe and Asia along with
other regions over the next few years.
Growth in the immunotherapy market
is expected to rise significantly over the
next 4-8 years through the introduction
of new immunotherapy products
focusing on alternative routes of
administration, e.g. sublingual (under
the tongue), and ultra short treatment
courses , e.g. 4 injections yearly
instead of 12-40 per year.
20
Ju b i l a n t e x p e c t s Sestamibi to make a healthy contribution to the radiopharma-ceuticals business.
Jean Pierre RobertCEO, Speciality Pharmaceuticals
Sri MosurCEO & President Global Drug Discovery and Development Services
business is to accelerate drug
discovery and development across the
global pharmaceuticals industry.
Jubilant works in close collaboration
with major pharmaceuticals & biotech
companies, and renowned academia in
providing functional and integrated
solutions focused on delivering
affordable medicines to patients
worldwide.
Jubilant Biosys along with its discovery
chemistry affiliate, Jubilant Chemsys,
has entered into pioneering
partnerships in providing innovative
solutions combined with creative risk
mitigating strategies. The two
subsidiaries operate from Bangalore
and Noida where scientists from
Medicinal Chemistry, Invitro and Invivo
Biology, Structural Biology collaborate
with their global counterparts to
provide integrated and functional
solutions.
The past year has seen Jubilant Biosys
and Jubilant Chemsys announce
pioneering partnerships with many
major Pharmaceuticals & Biotech
companies. The most significant
among them was an agreement with
Lilly to form an equally-owned joint
venture in India that will focus on
providing drug development services
exclusively to Jubilant and Lilly
partnered molecules. The joint venture
is to be modelled after Lilly's early-
stage development division, Chorus,
which provides fast and capable drug
development for Lilly exclusively
through utilisation of external contract
companies. Other partnerships are
with Bioleap for fragment based
screening, Lilly for Legend Next-
generation screening tool, Amgen for
2. Drug Discovery and
Development Services (DDDS)
The Drug Discovery and Development
Services business contributed
Rs. 2,415 million to Revenue in
FY2009 thus giving an increase of
56.7% over the previous year. Jubilant
foresees very good potential in this
business. In the year under review, the
DDDS business had 10.4% Revenue
share in the PLSPS business. The
share of Revenue to the Total
Revenue of Jubilant was at 6.9%.
The business is operationally
integrated across three subsidiaries,
Jubilant Biosys, Jubilant Chemsys and
Clinsys Clinical Research with
locations across the Americas, Europe
and India. In FY2009, the three
subsidiaries entered into multiple
partnerships with global
pharmaceutical and biotech
companies. Capabilities within the
DDDS subsidiaries span the entire
spectrum of Discovery and
Development needs, which include:
Discovery Technologies: Discovery
informatics, insilico and computational
technologies, Electronic Data Capture
(EDC) and Pharma IT platforms.
Discovery Research: Capabilities
extend across multiple target platforms
as well as therapeutic areas to include
design and synthesis supported invitro
and invivo screening and validation
capabilities.
Drug Development: Disease specific
animal pharmacology models,
Preclinical, translational and global
clinical development capabilities
across multiple therapeutic areas.
The strategic objective of the DDDS
Jubilant has entered i n t o p i o n e e r i n g p a r t n e r s h i p s t o provide innovative solutions combined with creative risk mitigating strategies.
PHARMACEUTICALS AND LIFE SCIENCES
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
2322
Shared risk drug discovery
collaboration, Forest Labs for drug
discovery collaboration, Orion for drug
discovery collaboration and Global TB
alliance for Philanthrophic effort to
identify new targets for drug resistant
TB. These partnerships strengthen
Jubilant's capabilities as well as
demonstrate the effectiveness of the
Jubilant business model.
Drug Development Services: Jubilant
has entered into a drug development
joint venture with Lilly focused on
rapidly developing preclinical
candidates in multiple therapeutic
areas to Phase II Proof of Concept
(POC). This partnership leverages the
capabilities of Clinsys Clinical
Research, the clinical component of
the DDDS group within Jubilant.
In addition, Clinsys Clinical Research
has grown the US and European
business effectively with multiple
partnerships with major
pharmaceutical and biotech companies
from US and Europe. Clinsys has
further expanded clinical development
capabilities in CNS and Oncology while
consolidating its capabilities in
Dermatology. Clinsys continues to
integrate its global locations in India,
US and Europe offering a wide range
of solutions from Bio Availability /Bio
Equivalence studies to Biometrics,
Electronic Data Capture (EDC)
support, Phase I-IV monitoring
capabilities across multiple therapeutic
areas.
Outlook
DDDS segment is one of the key
growth engines in PLSPS business.
Jubilant is expecting a strong traction
in revenue in the DDDS segment as an
outcome of its several collaborations -
existing and new. The Company is
working towards strengthening its
multiple partnerships model while
creating a global presence across
integrated capabilities.
In FY2009, Revenue from Generic
Dosage Forms (GDF) business stood
at Rs. 1,133 million and rose by 67.9%
from Rs. 675 million in FY2008. GDF
constitutes a small yet robustly growing
part of the PLSPS segment, and is
currently present only in the highly
regulated US and European markets.
In FY2009, its share in PLSPS
Revenue stood at 4.9%. The share of
this business to Total Revenue of the
Company stood at 3.2%.
The business strategy is aimed at
deriving benefit from backward
integration into the APIs, backed by in-
house R&D facility for formulation
development and regulatory filings, in-
house CRO for conducting bio-
equivalence studies for the Generic
R&D program and cost effective
manufacturing at UK MHRA approved
facility at Roorkee, India and the
USFDA approved facility at Salisbury,
USA.
During the year, GDF got USFDA
approval for its first Abbreviated New
Drug Application (ANDA) developed
through new Indian R&D centre and
launched it on 'day-1' with 3 key US
customers. During the year, the
business filed 8 Dossiers in Europe
and 6 ANDAs in the US. The Dosage
Forms facility at Roorkee was also
granted WHO GMP certificate by the
State Drug Licensing and Controlling
Authority, India in FY2009.
3. Generic Dosage Forms
G e n e r i c D o s a g e Fo r m s b u s i n e s s strategy is aimed at deriving benefit from backward integration with the APIs. The Company foresees good prospects for this business.
Jubilant is well-placed to expand its
business in this segment and serve
multiple global markets aided by its
integrated business model.
Jubilant sees good prospects for this
business. Jubilant's R&D centre at
Noida is continuously working to
introduce novel therapies. The focus of
this business is on value added
generics. Thus far, Jubilant has
patented 'oral disintegrating' and 'taste
masking platforms'.
Outlook
GDF has a strong developmental
pipeline of products with around 50
formulations at various stages of
development. The business plans to
file 10 ANDAs in the US, 6 Dossiers in
the EU and 8 Dossiers in the Rest of
the World next year.
The Healthcare business through
Jubilant First Trust Healthcare (JFTH)
contributed Rs. 57 million to Revenue
in FY2009 compared to Rs. 17 million
last year. JFTH is a nascent business
and its contribution to the Company's
overall Revenue is very small. The
contribution to the PLSPS business
however stood at 0.2%.
The Company's aim is to provide
'Better care at Lower cost'; and its
beneficiaries are spread across the
middle-income population in the vast
districts and towns of West Bengal.
The Company will achieve its objective
by its continuing focus on
rationalisation of capital expenditure,
process-driven systems, evidence-
based practice of medicine through its
team of doctors and innovative low-
cost business development policies.
4. Healthcare
The Company is developing an
integrated, hub-and-spoke model of
hospitals in West Bengal involving 1
tertiary, super-speciality 400 bed
hospital (Hub) at Howrah; and 6
secondary, multi-speciality 100 bed
hospitals (Spoke) in towns of South
Bengal thus creating 1000 beds. This
effort is accompanied by simultaneous
development of Nursing
School/College which will be critically
required to provide quality human
resource support. Land at all locations
has been purchased and progress of
work is at various stages at various
locations. The entire project is likely to
be completed by 2011.
Presently, the Company has 2
functioning hospitals at Berhampore
(Dist. Murshidabad) (45 beds), and at
Barasat (Dist. North 24-Parganas) (47
beds). The former hospital is under
Public-Private-Partnership scheme of
the Government of West Bengal. The
hospital at Barasat (Kalpataru) has the
1st private sector Burn Unit in West
Bengal, apart from being the only Cleft
Surgery Centre in India for Operation
Smile, a US-based NGO.
Another 120-bed multi-speciality
hospital (Jubilant Kalpataru Hospital)
will be commissioned in H1 FY2010.
The hospital has a team of full-time
doctors who have been trained at
some of the best institutes in UK &
USA.
Outlook
JFTH is progressing well and the
Company is confident of establishing a
unique, affordable healthcare model in
the State of West Bengal.
The Company's aim is to provide 'Better care at Lower cost.' The Company is focussing on establish-ing a strong affordable healthcare model in West Bengal.
PHARMACEUTICALS AND LIFE SCIENCES
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
2322
Shared risk drug discovery
collaboration, Forest Labs for drug
discovery collaboration, Orion for drug
discovery collaboration and Global TB
alliance for Philanthrophic effort to
identify new targets for drug resistant
TB. These partnerships strengthen
Jubilant's capabilities as well as
demonstrate the effectiveness of the
Jubilant business model.
Drug Development Services: Jubilant
has entered into a drug development
joint venture with Lilly focused on
rapidly developing preclinical
candidates in multiple therapeutic
areas to Phase II Proof of Concept
(POC). This partnership leverages the
capabilities of Clinsys Clinical
Research, the clinical component of
the DDDS group within Jubilant.
In addition, Clinsys Clinical Research
has grown the US and European
business effectively with multiple
partnerships with major
pharmaceutical and biotech companies
from US and Europe. Clinsys has
further expanded clinical development
capabilities in CNS and Oncology while
consolidating its capabilities in
Dermatology. Clinsys continues to
integrate its global locations in India,
US and Europe offering a wide range
of solutions from Bio Availability /Bio
Equivalence studies to Biometrics,
Electronic Data Capture (EDC)
support, Phase I-IV monitoring
capabilities across multiple therapeutic
areas.
Outlook
DDDS segment is one of the key
growth engines in PLSPS business.
Jubilant is expecting a strong traction
in revenue in the DDDS segment as an
outcome of its several collaborations -
existing and new. The Company is
working towards strengthening its
multiple partnerships model while
creating a global presence across
integrated capabilities.
In FY2009, Revenue from Generic
Dosage Forms (GDF) business stood
at Rs. 1,133 million and rose by 67.9%
from Rs. 675 million in FY2008. GDF
constitutes a small yet robustly growing
part of the PLSPS segment, and is
currently present only in the highly
regulated US and European markets.
In FY2009, its share in PLSPS
Revenue stood at 4.9%. The share of
this business to Total Revenue of the
Company stood at 3.2%.
The business strategy is aimed at
deriving benefit from backward
integration into the APIs, backed by in-
house R&D facility for formulation
development and regulatory filings, in-
house CRO for conducting bio-
equivalence studies for the Generic
R&D program and cost effective
manufacturing at UK MHRA approved
facility at Roorkee, India and the
USFDA approved facility at Salisbury,
USA.
During the year, GDF got USFDA
approval for its first Abbreviated New
Drug Application (ANDA) developed
through new Indian R&D centre and
launched it on 'day-1' with 3 key US
customers. During the year, the
business filed 8 Dossiers in Europe
and 6 ANDAs in the US. The Dosage
Forms facility at Roorkee was also
granted WHO GMP certificate by the
State Drug Licensing and Controlling
Authority, India in FY2009.
3. Generic Dosage Forms
G e n e r i c D o s a g e Fo r m s b u s i n e s s strategy is aimed at deriving benefit from backward integration with the APIs. The Company foresees good prospects for this business.
Jubilant is well-placed to expand its
business in this segment and serve
multiple global markets aided by its
integrated business model.
Jubilant sees good prospects for this
business. Jubilant's R&D centre at
Noida is continuously working to
introduce novel therapies. The focus of
this business is on value added
generics. Thus far, Jubilant has
patented 'oral disintegrating' and 'taste
masking platforms'.
Outlook
GDF has a strong developmental
pipeline of products with around 50
formulations at various stages of
development. The business plans to
file 10 ANDAs in the US, 6 Dossiers in
the EU and 8 Dossiers in the Rest of
the World next year.
The Healthcare business through
Jubilant First Trust Healthcare (JFTH)
contributed Rs. 57 million to Revenue
in FY2009 compared to Rs. 17 million
last year. JFTH is a nascent business
and its contribution to the Company's
overall Revenue is very small. The
contribution to the PLSPS business
however stood at 0.2%.
The Company's aim is to provide
'Better care at Lower cost'; and its
beneficiaries are spread across the
middle-income population in the vast
districts and towns of West Bengal.
The Company will achieve its objective
by its continuing focus on
rationalisation of capital expenditure,
process-driven systems, evidence-
based practice of medicine through its
team of doctors and innovative low-
cost business development policies.
4. Healthcare
The Company is developing an
integrated, hub-and-spoke model of
hospitals in West Bengal involving 1
tertiary, super-speciality 400 bed
hospital (Hub) at Howrah; and 6
secondary, multi-speciality 100 bed
hospitals (Spoke) in towns of South
Bengal thus creating 1000 beds. This
effort is accompanied by simultaneous
development of Nursing
School/College which will be critically
required to provide quality human
resource support. Land at all locations
has been purchased and progress of
work is at various stages at various
locations. The entire project is likely to
be completed by 2011.
Presently, the Company has 2
functioning hospitals at Berhampore
(Dist. Murshidabad) (45 beds), and at
Barasat (Dist. North 24-Parganas) (47
beds). The former hospital is under
Public-Private-Partnership scheme of
the Government of West Bengal. The
hospital at Barasat (Kalpataru) has the
1st private sector Burn Unit in West
Bengal, apart from being the only Cleft
Surgery Centre in India for Operation
Smile, a US-based NGO.
Another 120-bed multi-speciality
hospital (Jubilant Kalpataru Hospital)
will be commissioned in H1 FY2010.
The hospital has a team of full-time
doctors who have been trained at
some of the best institutes in UK &
USA.
Outlook
JFTH is progressing well and the
Company is confident of establishing a
unique, affordable healthcare model in
the State of West Bengal.
The Company's aim is to provide 'Better care at Lower cost.' The Company is focussing on establish-ing a strong affordable healthcare model in West Bengal.
PHARMACEUTICALS AND LIFE SCIENCES
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
25
Revenue from Industrial and Performance Products (IPP) segment grew by 24.6% to Rs. 11,943 million in FY2009 as against Rs. 9,587 million in the previous year. This was mainly on account of commissioning of new capacities in Acetyls and Single Super Phosphate (SSP).
The segmental EBIT in the IPP operation was at Rs. 1,093 million as against Rs. 1,289 million in FY2008. One of the primary reasons, for the decline in year-on-year profitability, was the crash in global commodities prices witnessed in the second half of FY2009 and the demand slowdown. The other factor was that the Company had to utilise high cost input material inventory in second half of the year. This has been fully liquidated by the end of FY2009.
The prices of key input materials had also shown an upward trend as the availability of molasses and alcohol in the domestic market remained constrained throughout the new crushing season. The Company has now imported cheaper alcohol from the international market, where prices are subdued due to lower crude oil prices.
The IPP business can be classified in the following sub-segments:
1. Industrial Products 2. Food Polymers, Animal Nutrition & Fertilizers
3. Performance Polymers
1. Industrial Products
Jubilant's industrial products business comprises Acetyls, Speciality Gases and Latex. The range of products application areas such as pharmaceuticals, agrochemicals, textiles and tyres. Given that these products primarily find usage as commodities they are subject to commodity cycle. In order to maintain a healthy portfolio of products, the Company focuses on customising the products with superior quality and just-in time delivery. Six sigma initiatives have been adopted where the Company constantly benchmarks and improves the product line-up to enhance efficiency measures.
a) Acetyls
Jubilant produces a range of organic intermediate products (called Acetyls) typically used in the manufacture of downstream products such as inks, textiles, pharmaceuticals, crop protection chemicals, paints, adhesives and other solvents. The Company follows the bio-route to make these
products i.e. via the processing of molasses and alcohol, as against the petrochemical route. This is more environment friendly and a sustainable business model. Jubilant enjoys leadership positions globally in Acetic Acid, Acetic Anhydride, Ethyl Acetate and Vinyl Pyridine Latex.
The year under review witnessed a decline in product realisations given a global macro-economic slowdown. Revenue from Acetyls business grew by 2.7% to Rs. 5,804 million in FY2009. The trends in molasses and alcohol were adverse given that the crushing of cane in the present season has been very subdued leading to a paucity of these products. But the price of alcohol in international market was soft due to lower crude oil prices. The Company has a flexible business model where it can alter the mix of produced and purchased alcohol according to the market prices.
Outlook
The present outlook for this business is Stable to Positive, with the commodities
24
IPP business reported growth of 24.6% despite being adversely impacted by the global economic crisis.
IPP
In order to maintain a healthy portfolio of p r o d u c t s , t h e Company focuses on c u s t o m i s i n g t h e products with superior quality and just-in time delivery.
INDUSTRIAL & PERFORMANCE
PRODUCTS
S N SinghExecutive Director, Chemicals
INDUSTRIAL & PERFORMANCE PRODUCTS
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
25
Revenue from Industrial and Performance Products (IPP) segment grew by 24.6% to Rs. 11,943 million in FY2009 as against Rs. 9,587 million in the previous year. This was mainly on account of commissioning of new capacities in Acetyls and Single Super Phosphate (SSP).
The segmental EBIT in the IPP operation was at Rs. 1,093 million as against Rs. 1,289 million in FY2008. One of the primary reasons, for the decline in year-on-year profitability, was the crash in global commodities prices witnessed in the second half of FY2009 and the demand slowdown. The other factor was that the Company had to utilise high cost input material inventory in second half of the year. This has been fully liquidated by the end of FY2009.
The prices of key input materials had also shown an upward trend as the availability of molasses and alcohol in the domestic market remained constrained throughout the new crushing season. The Company has now imported cheaper alcohol from the international market, where prices are subdued due to lower crude oil prices.
The IPP business can be classified in the following sub-segments:
1. Industrial Products 2. Food Polymers, Animal Nutrition & Fertilizers
3. Performance Polymers
1. Industrial Products
Jubilant's industrial products business comprises Acetyls, Speciality Gases and Latex. The range of products application areas such as pharmaceuticals, agrochemicals, textiles and tyres. Given that these products primarily find usage as commodities they are subject to commodity cycle. In order to maintain a healthy portfolio of products, the Company focuses on customising the products with superior quality and just-in time delivery. Six sigma initiatives have been adopted where the Company constantly benchmarks and improves the product line-up to enhance efficiency measures.
a) Acetyls
Jubilant produces a range of organic intermediate products (called Acetyls) typically used in the manufacture of downstream products such as inks, textiles, pharmaceuticals, crop protection chemicals, paints, adhesives and other solvents. The Company follows the bio-route to make these
products i.e. via the processing of molasses and alcohol, as against the petrochemical route. This is more environment friendly and a sustainable business model. Jubilant enjoys leadership positions globally in Acetic Acid, Acetic Anhydride, Ethyl Acetate and Vinyl Pyridine Latex.
The year under review witnessed a decline in product realisations given a global macro-economic slowdown. Revenue from Acetyls business grew by 2.7% to Rs. 5,804 million in FY2009. The trends in molasses and alcohol were adverse given that the crushing of cane in the present season has been very subdued leading to a paucity of these products. But the price of alcohol in international market was soft due to lower crude oil prices. The Company has a flexible business model where it can alter the mix of produced and purchased alcohol according to the market prices.
Outlook
The present outlook for this business is Stable to Positive, with the commodities
24
IPP business reported growth of 24.6% despite being adversely impacted by the global economic crisis.
IPP
In order to maintain a healthy portfolio of p r o d u c t s , t h e Company focuses on c u s t o m i s i n g t h e products with superior quality and just-in time delivery.
INDUSTRIAL & PERFORMANCE
PRODUCTS
S N SinghExecutive Director, Chemicals
INDUSTRIAL & PERFORMANCE PRODUCTS
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
27
prices bottoming-out, and a marked improvement seen in demand outlook and increase in the selling prices since the start of FY2010. Due to the flexibility of using alcohol as an alternative input material to molasses, the Company has created a competitive advantage, which reduces the risk of adverse impact on profitability due to higher molasses prices. The business expects to deliver good cash-flows in subsequent years.
b) Vinyl Pyridine (VP) / Styrene Butadiene Rubber (SBR) Latex
Jubilant produces and markets various kinds of Latex through this business. These products find usage in dipping of tyre cord and conveyor belt fabric. This business is also involved in the manufacture of SBR Latex tyre carcasses, V-belts and conveyor belts. The Company has carved out a niche for itself in this business and is the largest player in the Indian market and among the leading players in the world market.
The year under review was very good for the business. Revenue from Latex business grew by 45.5% to Rs. 651 million in FY2009. The Company consolidated its position in the international market by increasing the market reach and further increased its market share in the domestic market by adding new customers.
Outlook
Jubilant sees the demand for these products to move in line with the economic trends for the country. The Company is in a very strong position to grow this business due to its low cost advantage and better process efficiencies as compared to the competition.
c) Speciality Gases
Jubilant produces liquid Carbon Di-
oxide and Ethylene Oxide mixtures (ETO) under this business. The Carbon Di-oxide produced by the Company finds application in the soft drink and beer industries. The Company has excellent distribution network of a fleet of cryogenic tankers which transport high-purity products like Carbon Di-oxide & ETO.
ETO is an important product that is used in hospitals for sterilising medical equipment. The product is also used in the treatment of foodstuff, to make cosmetics and to preserve paper products.
The year under review witnessed a decline in production and realisations given a global macro-economic slowdown. Revenue in FY2009 was Rs. 161 million compared to Rs. 163 million in FY2008.
Outlook
Negative outlook on availability of molasses in the domestic market will impact the production of Carbon dioxide. This business is expected to deliver a stable performance as an outcome of the Company's long-term relationships with its customers.
a) Food Polymers
Jubilant is the largest Indian player and 3rd largest global manufacturer of Solid Poly Vinyl Acetate (Solid PVA), used for producing gum base for chewing gum & bubble gum. The business operates one of the most modern facilities which is ISO & Kosher certified and adheres to cGMP guidelines. The year under review was very good for the business. More than 75% of the total volume was exported & business grew by 20.5% in FY2009 to Rs. 484 million.
2. Food Polymers, Animal Nutrition & Fertilizers
26
Outlook
Jubilant aims to enhance its share with the global top 3 chewing gum manufacturers and to be among the top 2 manufacturers. The business also plans to expand its product offering to the customers and become the preferred global supplier.
b) Animal Nutrition & Fertilizers
Jubilant has a presence in animal nutrition and agricultural products. Within animal nutrition, over the years, the Company has developed competencies in Choline Chloride and Niacin - products that are used as supplements for poultry, cattle and in aquaculture. Other products made by Jubilant include feed supplements like vitamin, trace mineral pre-mixes and toxin binders (typically used in poultry rearing to rid the birds of mycotoxins).
In the sub-segment of fertilizers, the Company manufactures products like fertilizers, insecticides and plant growth regulators. Jubilant's fertilizer brand 'Ramban' is the leader in the Single Super Phosphate (SSP) market. Jubilant also manufactures organic manure, a by-product produced at the Company's distillery operations.
The year under review was excellent in terms of revenue growth and profits. Revenue grew by 158.3% to Rs. 3,051 million in FY2009. The Company benefited from the expanded capacity of Single Super Phosphate and favourable government policy for fertilizers.
Outlook
Given the favourable changes in the fertilizer policy, the Company will continue to benefit. The focus will be on maximising the production and increasing the reach to get maximum benefit.
3. Performance Polymers
The performance polymers business comprises manufacturing and marketing of speciality products for application in furniture, architectural coatings, packaging, textiles, footwear etc. Jubilant is a leader in polymer technology and is a respected player in this industry. The polymers business comprises the following strategic growth units:
a) Consumer Products
The consumer products business is engaged in manufacturing woodworking adhesives, wood finishes (coatings), footwear adhesives & epoxy sealants. The business has a strong national presence through its wide distribution network. The business markets its products under the umbrella brand "Jivanjor". Revenue grew by 7.7% to Rs. 952 million in FY2009.
Outlook
Due to its strong brand name for its class of products & customer orientation, the business is better placed to explore opportunities to increase market share, increase distribution reach, extend product lines and improve profitability.
b) Application Polymers
The application polymers business is engaged in manufacturing products for applications in lamination, flexible packaging, general packaging, coatings, textiles & pressure sensitive adhesives. Revenue in FY2009 was Rs. 840 million compared to Rs. 856 million last year.
Outlook
The business expects strong bottom line recovery through growth in polyurethane adhesives for niche & value added applications, and through stringent cost control.
Jubilant is a leader in polymer technology. T h e C o m p a n y ' s performance polymers business comprises manufacturing and marketing of speciality products for appli-cation in furniture, architectual coatings, packaging, textiles & footwear etc.
Ananda MukherjeeCEO, Polymers
INDUSTRIAL & PERFORMANCE PRODUCTS
The Company has carved out a niche for itself in the Latex business and is the largest player in the Indian market and among the leading players in the world market.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
27
prices bottoming-out, and a marked improvement seen in demand outlook and increase in the selling prices since the start of FY2010. Due to the flexibility of using alcohol as an alternative input material to molasses, the Company has created a competitive advantage, which reduces the risk of adverse impact on profitability due to higher molasses prices. The business expects to deliver good cash-flows in subsequent years.
b) Vinyl Pyridine (VP) / Styrene Butadiene Rubber (SBR) Latex
Jubilant produces and markets various kinds of Latex through this business. These products find usage in dipping of tyre cord and conveyor belt fabric. This business is also involved in the manufacture of SBR Latex tyre carcasses, V-belts and conveyor belts. The Company has carved out a niche for itself in this business and is the largest player in the Indian market and among the leading players in the world market.
The year under review was very good for the business. Revenue from Latex business grew by 45.5% to Rs. 651 million in FY2009. The Company consolidated its position in the international market by increasing the market reach and further increased its market share in the domestic market by adding new customers.
Outlook
Jubilant sees the demand for these products to move in line with the economic trends for the country. The Company is in a very strong position to grow this business due to its low cost advantage and better process efficiencies as compared to the competition.
c) Speciality Gases
Jubilant produces liquid Carbon Di-
oxide and Ethylene Oxide mixtures (ETO) under this business. The Carbon Di-oxide produced by the Company finds application in the soft drink and beer industries. The Company has excellent distribution network of a fleet of cryogenic tankers which transport high-purity products like Carbon Di-oxide & ETO.
ETO is an important product that is used in hospitals for sterilising medical equipment. The product is also used in the treatment of foodstuff, to make cosmetics and to preserve paper products.
The year under review witnessed a decline in production and realisations given a global macro-economic slowdown. Revenue in FY2009 was Rs. 161 million compared to Rs. 163 million in FY2008.
Outlook
Negative outlook on availability of molasses in the domestic market will impact the production of Carbon dioxide. This business is expected to deliver a stable performance as an outcome of the Company's long-term relationships with its customers.
a) Food Polymers
Jubilant is the largest Indian player and 3rd largest global manufacturer of Solid Poly Vinyl Acetate (Solid PVA), used for producing gum base for chewing gum & bubble gum. The business operates one of the most modern facilities which is ISO & Kosher certified and adheres to cGMP guidelines. The year under review was very good for the business. More than 75% of the total volume was exported & business grew by 20.5% in FY2009 to Rs. 484 million.
2. Food Polymers, Animal Nutrition & Fertilizers
26
Outlook
Jubilant aims to enhance its share with the global top 3 chewing gum manufacturers and to be among the top 2 manufacturers. The business also plans to expand its product offering to the customers and become the preferred global supplier.
b) Animal Nutrition & Fertilizers
Jubilant has a presence in animal nutrition and agricultural products. Within animal nutrition, over the years, the Company has developed competencies in Choline Chloride and Niacin - products that are used as supplements for poultry, cattle and in aquaculture. Other products made by Jubilant include feed supplements like vitamin, trace mineral pre-mixes and toxin binders (typically used in poultry rearing to rid the birds of mycotoxins).
In the sub-segment of fertilizers, the Company manufactures products like fertilizers, insecticides and plant growth regulators. Jubilant's fertilizer brand 'Ramban' is the leader in the Single Super Phosphate (SSP) market. Jubilant also manufactures organic manure, a by-product produced at the Company's distillery operations.
The year under review was excellent in terms of revenue growth and profits. Revenue grew by 158.3% to Rs. 3,051 million in FY2009. The Company benefited from the expanded capacity of Single Super Phosphate and favourable government policy for fertilizers.
Outlook
Given the favourable changes in the fertilizer policy, the Company will continue to benefit. The focus will be on maximising the production and increasing the reach to get maximum benefit.
3. Performance Polymers
The performance polymers business comprises manufacturing and marketing of speciality products for application in furniture, architectural coatings, packaging, textiles, footwear etc. Jubilant is a leader in polymer technology and is a respected player in this industry. The polymers business comprises the following strategic growth units:
a) Consumer Products
The consumer products business is engaged in manufacturing woodworking adhesives, wood finishes (coatings), footwear adhesives & epoxy sealants. The business has a strong national presence through its wide distribution network. The business markets its products under the umbrella brand "Jivanjor". Revenue grew by 7.7% to Rs. 952 million in FY2009.
Outlook
Due to its strong brand name for its class of products & customer orientation, the business is better placed to explore opportunities to increase market share, increase distribution reach, extend product lines and improve profitability.
b) Application Polymers
The application polymers business is engaged in manufacturing products for applications in lamination, flexible packaging, general packaging, coatings, textiles & pressure sensitive adhesives. Revenue in FY2009 was Rs. 840 million compared to Rs. 856 million last year.
Outlook
The business expects strong bottom line recovery through growth in polyurethane adhesives for niche & value added applications, and through stringent cost control.
Jubilant is a leader in polymer technology. T h e C o m p a n y ' s performance polymers business comprises manufacturing and marketing of speciality products for appli-cation in furniture, architectual coatings, packaging, textiles & footwear etc.
Ananda MukherjeeCEO, Polymers
INDUSTRIAL & PERFORMANCE PRODUCTS
The Company has carved out a niche for itself in the Latex business and is the largest player in the Indian market and among the leading players in the world market.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
29
Research & Development
Jubilant Organosys Ltd. along with its
subsidiaries is well positioned due to
its strengths of R&D capability and
infrastructure created at multiple points
to service the needs at every stage of
the pharmaceuticals and life sciences
value chain. Strong chemistry,
bioscience expertise and the
knowledge bank created by the
company bears testimony to its efforts
over the years. The application of this
scientific knowledge has been the key
enabler in Jubilant's transformation into
a Science active organisation.
Innovation is at the core of Jubilant's
efforts to ensure that its Clients,
Partners and the Company itself stay
competitive to meet the growing
challenges of the fast moving dynamic
environment. The Company
understands that the products
developed should be complemented
with cost effective, carbon efficient and
eco-friendly technologies to address the
better informed and more demanding
fraternity. To achieve this, the Company
has harnessed its strengths - strong
R&D team (the back bone of all
business groups), modern R&D
facilities, its command over the
chemical technologies and economies
of scale - into a synergistic organic
entity, continuously creating and
nurturing high quality products and
technologies. The innovations and the
discoveries are protected by Intellectual
Property Rights (IPR) division, which
has effective patent and IP protection
systems to safeguard the Company's
and clients' intellectual wealth.
Jubilant R&D has a strong portfolio of
API products, which is being expanded
to include Oncology products and APIs
based on Pyridine chemistry. The
consistent effort of R&D in vapour
phase chemistry has consolidated the
Company's global position in Pyridine
and its derivatives as one of the largest
manufacturer and fastest growing
player. Dosage forms R&D team
undertakes the development of
products for US and European
markets. This strong pipeline of
products has helped the Company in
significantly expanding its product
portfolio.
For a global organisation like Jubilant
with customers across fifty countries,
seamless integration of sales order
management, planning, manufacturing
and supply chain is critical for
maintaing its leadership position in its
key products. With the mandate of
delivering higher value to its
customers, Jubilant has adopted world
class practices in manufacturing and
supply chain.
Value Creation by adopting best
in class manufacturing & supply
chain processes
The Company's progress in diverse businesses has been made possible with
the seamless contribution of enablers such as R&D, Manufacturing & Supply
Chain, Business Excellence, and Human Resources
Research & Development, Manufacturing, Supply Chain, Business Excellence and Human Resources.
BUSINESS ENABLERS
28
BUSINESS ENABLERS
Dr. J M KhannaExecutive Director Science and Technology
BUSINESS ENABLERS
R e s e a r c h & Development is atthe core of Jubilant a s i t f o c u s e s o n continuous innovation and value building.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
29
Research & Development
Jubilant Organosys Ltd. along with its
subsidiaries is well positioned due to
its strengths of R&D capability and
infrastructure created at multiple points
to service the needs at every stage of
the pharmaceuticals and life sciences
value chain. Strong chemistry,
bioscience expertise and the
knowledge bank created by the
company bears testimony to its efforts
over the years. The application of this
scientific knowledge has been the key
enabler in Jubilant's transformation into
a Science active organisation.
Innovation is at the core of Jubilant's
efforts to ensure that its Clients,
Partners and the Company itself stay
competitive to meet the growing
challenges of the fast moving dynamic
environment. The Company
understands that the products
developed should be complemented
with cost effective, carbon efficient and
eco-friendly technologies to address the
better informed and more demanding
fraternity. To achieve this, the Company
has harnessed its strengths - strong
R&D team (the back bone of all
business groups), modern R&D
facilities, its command over the
chemical technologies and economies
of scale - into a synergistic organic
entity, continuously creating and
nurturing high quality products and
technologies. The innovations and the
discoveries are protected by Intellectual
Property Rights (IPR) division, which
has effective patent and IP protection
systems to safeguard the Company's
and clients' intellectual wealth.
Jubilant R&D has a strong portfolio of
API products, which is being expanded
to include Oncology products and APIs
based on Pyridine chemistry. The
consistent effort of R&D in vapour
phase chemistry has consolidated the
Company's global position in Pyridine
and its derivatives as one of the largest
manufacturer and fastest growing
player. Dosage forms R&D team
undertakes the development of
products for US and European
markets. This strong pipeline of
products has helped the Company in
significantly expanding its product
portfolio.
For a global organisation like Jubilant
with customers across fifty countries,
seamless integration of sales order
management, planning, manufacturing
and supply chain is critical for
maintaing its leadership position in its
key products. With the mandate of
delivering higher value to its
customers, Jubilant has adopted world
class practices in manufacturing and
supply chain.
Value Creation by adopting best
in class manufacturing & supply
chain processes
The Company's progress in diverse businesses has been made possible with
the seamless contribution of enablers such as R&D, Manufacturing & Supply
Chain, Business Excellence, and Human Resources
Research & Development, Manufacturing, Supply Chain, Business Excellence and Human Resources.
BUSINESS ENABLERS
28
BUSINESS ENABLERS
Dr. J M KhannaExecutive Director Science and Technology
BUSINESS ENABLERS
R e s e a r c h & Development is atthe core of Jubilant a s i t f o c u s e s o n continuous innovation and value building.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
31
While complying with applicable
regulations, there is constant effort to
reduce cost of production by improving
technology, using energy efficient
equipment and working closely with
vendors to reduce input cost.
Operational flexibility has been created
to meet customer demands. To
achieve operational excellence,
Jubilant has taken holistic approach to
optimise the utilisation of all resources
which include human talent, capital
assets and business processes.
With a view to meet the challenges
across its multi-product and multi-
location manufacturing base, Jubilant
has embarked on strengthening
processes and systems like World
Class Manufacturing, Lean Six Sigma
& Total Productivity Maintenance
(TPM).
“Sankalp” programme has been
launched at major manufacturing
locations to improve employee
participation for operational
improvement. Project “Torque” has
been launched to integrate supply
chain operations with sales order
management based on the
methodology developed by Supply
Chain Operations Reference (SCOR).
It aims at measuring key customer
facing metrics, benchmarking with
world class organisations engaged in
similar business, identifying
improvement areas and implementing
specific action plans to deliver the end
results.
To be the best in class, the
manufacturing organisation at Jubilant,
gives utmost importance to statutory
and regulatory compliance. Major
manufacturing locations have the
Integrated Management Systems
(IMS) accredition encompassing ISO
9001, ISO 14001 and OSHAS 18001.
cGMP guidelines are adhered to in API
and Fine Chemicals plants. Jubilant
also has the Hazard Analysis and
Critical Control Points (HACCP)
accredition for the products used in
food application. For all operations, the
target of zero discharge and zero
accident has been set.
Time and cost of order management is
being monitored and there is
continuous effort to improve the
efficiency with the aim of customer
satisfaction in the competitive
environment.
An efficient Projects team is able to
build projects in stipulated time and
cost and Technology Transfer team is
able to transfer the technology
developed in R&D to the operating
floor with diligence. In Custom
Research and Manufacturing business
it is important to shorten the time span
from receiving customer interest to
delivering the product. This concept
has helped Jubilant in converting
opportunities into business.
Jubilant sees itself as a top-quartile
organisation in the pharmaceuticals
and life sciences field. It aims at
Business Excellence
attaining leadership position in every
aspect of its functioning, both
externally and internally. This process
has been enabled by the continuous
improvement strategy of the Company
under the Business Excellence
initiatives.
The Company, today, enjoys a
commanding presence in several key
product areas including pyridine and its
derivatives, APIs and Acetyls. This
leadership position has been acquired
and retained through conscious efforts
of continuous cost optimisation through
manufacturing excellence initiatives
like Lean Six Sigma, Kaizen, TPM
(Total Productivity Maintenance), WCM
(World Class Manufacturing) and
SCOR (Supply Chain Operations
Reference) and Project Management.
The Company's sustained
improvement strategy has been fuelled
by focused process improvement
efforts in functions like Supply Chain,
Manufacturing, Sales and Marketing.
A dedicated team of Black Belts is
deployed to carry out the initiatives
across various sites and businesses.
There have been numerous tangible
and intangible benefits through these
initiatives across the entire value chain
in Chemicals and Pharmaceuticals
Businesses of Jubilant. It has helped in
better delivery performance to the
customers by creating a very Lean and
agile Supply Chain. The improvements
encompass Manufacturing process
optimisation and Statistical Process
Controls aimed at creating more
30
reliable Manufacturing operations.
It is no co-incidence that Jubilant's
product range is highly-rated on quality
parameters and customers perceive
that the robust processes are in place
to deliver quality consistently. The
Company has also regularly surpassed
and exceeded regulatory expectations
giving it the cleanest track records in
the sector. This is possible through a
continuous improvement culture
spanning across processes, people
and paradigms.
The concept of Business Excellence
extends to areas like customer and
supplier relations, employee
engagement, environment and
corporate social responsibility. There is
pro-activeness in handling issues that
befall the growing organisation,
through a Customer-centric philosophy
of improvement. This has resulted in
numerous awards and recognitions
being conferred upon Jubilant, which is
an acknowledgement of the
Company's business philosophy
centered on excellence.
Over the last few years, Jubilant has
been engaged in developing critical
assets of human resources to realise
its leadership aspirations in the global
business arena.
The Human Resource function focuses
on creating stakeholder value through
superior organisational and people
capability, in line with the strategic
direction of the Company. While
Human Resource Management
Jubilant has embarked o n s t r e n g t h e n i n g processes and systems l i k e Wo r l d C l a s s Manufacturing, Lean Six Sigma & Total Productivity Maint-enance.
Shyamsundar BangExecutive Director, Manufacturing and Supply Chain
BUSINESS ENABLERS
T h e c o n c e p t o f Business Excellence extends to areas like customer and supplier relations, employee engagement, environ-ment and corporate social responsibility.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
31
While complying with applicable
regulations, there is constant effort to
reduce cost of production by improving
technology, using energy efficient
equipment and working closely with
vendors to reduce input cost.
Operational flexibility has been created
to meet customer demands. To
achieve operational excellence,
Jubilant has taken holistic approach to
optimise the utilisation of all resources
which include human talent, capital
assets and business processes.
With a view to meet the challenges
across its multi-product and multi-
location manufacturing base, Jubilant
has embarked on strengthening
processes and systems like World
Class Manufacturing, Lean Six Sigma
& Total Productivity Maintenance
(TPM).
“Sankalp” programme has been
launched at major manufacturing
locations to improve employee
participation for operational
improvement. Project “Torque” has
been launched to integrate supply
chain operations with sales order
management based on the
methodology developed by Supply
Chain Operations Reference (SCOR).
It aims at measuring key customer
facing metrics, benchmarking with
world class organisations engaged in
similar business, identifying
improvement areas and implementing
specific action plans to deliver the end
results.
To be the best in class, the
manufacturing organisation at Jubilant,
gives utmost importance to statutory
and regulatory compliance. Major
manufacturing locations have the
Integrated Management Systems
(IMS) accredition encompassing ISO
9001, ISO 14001 and OSHAS 18001.
cGMP guidelines are adhered to in API
and Fine Chemicals plants. Jubilant
also has the Hazard Analysis and
Critical Control Points (HACCP)
accredition for the products used in
food application. For all operations, the
target of zero discharge and zero
accident has been set.
Time and cost of order management is
being monitored and there is
continuous effort to improve the
efficiency with the aim of customer
satisfaction in the competitive
environment.
An efficient Projects team is able to
build projects in stipulated time and
cost and Technology Transfer team is
able to transfer the technology
developed in R&D to the operating
floor with diligence. In Custom
Research and Manufacturing business
it is important to shorten the time span
from receiving customer interest to
delivering the product. This concept
has helped Jubilant in converting
opportunities into business.
Jubilant sees itself as a top-quartile
organisation in the pharmaceuticals
and life sciences field. It aims at
Business Excellence
attaining leadership position in every
aspect of its functioning, both
externally and internally. This process
has been enabled by the continuous
improvement strategy of the Company
under the Business Excellence
initiatives.
The Company, today, enjoys a
commanding presence in several key
product areas including pyridine and its
derivatives, APIs and Acetyls. This
leadership position has been acquired
and retained through conscious efforts
of continuous cost optimisation through
manufacturing excellence initiatives
like Lean Six Sigma, Kaizen, TPM
(Total Productivity Maintenance), WCM
(World Class Manufacturing) and
SCOR (Supply Chain Operations
Reference) and Project Management.
The Company's sustained
improvement strategy has been fuelled
by focused process improvement
efforts in functions like Supply Chain,
Manufacturing, Sales and Marketing.
A dedicated team of Black Belts is
deployed to carry out the initiatives
across various sites and businesses.
There have been numerous tangible
and intangible benefits through these
initiatives across the entire value chain
in Chemicals and Pharmaceuticals
Businesses of Jubilant. It has helped in
better delivery performance to the
customers by creating a very Lean and
agile Supply Chain. The improvements
encompass Manufacturing process
optimisation and Statistical Process
Controls aimed at creating more
30
reliable Manufacturing operations.
It is no co-incidence that Jubilant's
product range is highly-rated on quality
parameters and customers perceive
that the robust processes are in place
to deliver quality consistently. The
Company has also regularly surpassed
and exceeded regulatory expectations
giving it the cleanest track records in
the sector. This is possible through a
continuous improvement culture
spanning across processes, people
and paradigms.
The concept of Business Excellence
extends to areas like customer and
supplier relations, employee
engagement, environment and
corporate social responsibility. There is
pro-activeness in handling issues that
befall the growing organisation,
through a Customer-centric philosophy
of improvement. This has resulted in
numerous awards and recognitions
being conferred upon Jubilant, which is
an acknowledgement of the
Company's business philosophy
centered on excellence.
Over the last few years, Jubilant has
been engaged in developing critical
assets of human resources to realise
its leadership aspirations in the global
business arena.
The Human Resource function focuses
on creating stakeholder value through
superior organisational and people
capability, in line with the strategic
direction of the Company. While
Human Resource Management
Jubilant has embarked o n s t r e n g t h e n i n g processes and systems l i k e Wo r l d C l a s s Manufacturing, Lean Six Sigma & Total Productivity Maint-enance.
Shyamsundar BangExecutive Director, Manufacturing and Supply Chain
BUSINESS ENABLERS
T h e c o n c e p t o f Business Excellence extends to areas like customer and supplier relations, employee engagement, environ-ment and corporate social responsibility.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
33
preparing the Company for future
growth and globalisation through
appropriate people processes and
initiatives, the HR function is also the
key process owner for induction and
development of senior talent in the
Company, articulating and guiding its
people vision, the organisational
culture and its values. HR provides
specialist services to the businesses in
the areas of staffing, management
development, leadership development,
rewards and benefits, job analysis and
evaluation, performance management,
organisational development, ERP
platform, etc. HR also monitors and
takes proactive steps to promote
employee engagement through world-
class people processes and a value
based work culture.
Talent Acquisition
While attracting talent, the Company
ensures that the right person is
selected for the right job at the right
time. Competency based selection
process ensures that the person
selected possesses the core
competencies valued by Jubilant. Both
core and role based competencies
have been identified for execution,
managerial and leadership levels.
Competency mapping helps in
identifying future leaders and high
potential personnel who are then
provided individualised attention and
coaching. We believe that
Competencies can be developed and
hence focusing on them allows
individuals and organisations to
become more effective and successful.
Employee Engagement
“Voice of Customer” - both internal and
external customers - has always been
a very important factor driving
organisational strategies and
improvement initiatives at Jubilant. An
organisation wide employee
engagement survey through Gallup, is
in place to learn about workplace
strengths, weaknesses, to analyse
what drives Jubilant's workplace
culture and to benchmark with other
organisations. It is also aimed at
building a 'Great place to work' through
impact planning and new initiative in
people development to drive positive
business outcomes.
Performance Management
System
Jubilant uses a Balanced Scorecard
Approach in Performance Appraisal to
assess financial performance,
customer knowledge, internal process
and learning & growth. This ensures
objective assessment of achievement
against Key Result Areas (KRAs) to
differentiate high potential employees
from those displaying normal
performance. The Hoshin Kanri
approach of goal deployment down the
line helps in the alignment of individual
goals with organisational goals. This
has helped the Company to focus on a
few key things needed to create break-
through performance. This helps to
break down strategic measures to local
levels so that unit managers and other
employees can see and understand
what is required at their level to
achieve excellence in performance.
Learning & Development
Continuous and focused training of
employees results in positive
behaviour and outcomes. Leadership
Development Programmes are
conducted for senior managers to
chisel them for global competitiveness
by nurturing knowledge,
entrepreneurship and creativity.
The focus is on providing regular
training to employees on Good
Manufacturing Practices, security
measures, quality aspects and in
various other technical and soft skills
such as communication, managerial
effectiveness etc. to not only equip
them with the right skills required to
perform their roles, but also to help
them grow as well rounded
professionals.
At Jubilant, we are becoming more
heterogeneous as we globalise. With
every acquisition, we add a significant
number of new colleagues with diverse
backgrounds and experience. Hence
the focus is on equipping employees
with cross cultural skills to build a
seamless global organisation.
To motivate, retain and engage
employees, Jubilant has used a mix of
compensation, rewards, recognition,
incentives, training & development and
stock options.
32
Internal Control Systems & Risk
Management
Jubilant's Vision on Risk
Management
Risk Management Framework
The global scope of operations and
continuous enhancement in product
pipeline, capacities and technologies
coupled with intensifying competition
poses significant challenges and risks
for the organisation. Such risks, if not
perceived in a timely manner, could
adversely impact accomplishment of
the overall objectives of the
organisation & its sustainability.
An effective risk management
framework enhances the organisation's
ability to proactively address its risks &
opportunities by determining a risk
response strategy & monitoring its
progress on a dynamic basis. This, in
effect, helps in driving continued
competitive sustainability of an
organisation as it enables alignment of
its operations and activities with its
vision and values.
To establish & maintain an enterprise-
wide risk management capabilities for
active monitoring & mitigation of
organisational risks on a continuous &
sustainable basis.
Our risk management framework is
intended to ensure that risks are taken
with due diligence & care. We have
implemented an integrated risk
management framework to identify,
assess, prioritise, manage, monitor
and communicate risks across the
Company.
T h e H u m a n Re s o u rc e function focuses on creating stakeholder value through superior organisational and people capability, in line with the strategic direction of the Company.
BUSINESS ENABLERS
A n e f f e c t i ve r i s k management frame-w o r k a t Ju b i l a n t proactively address risks & opportunities by determining a risk response strategy & monitoring its progress on a dynamic basis.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
33
preparing the Company for future
growth and globalisation through
appropriate people processes and
initiatives, the HR function is also the
key process owner for induction and
development of senior talent in the
Company, articulating and guiding its
people vision, the organisational
culture and its values. HR provides
specialist services to the businesses in
the areas of staffing, management
development, leadership development,
rewards and benefits, job analysis and
evaluation, performance management,
organisational development, ERP
platform, etc. HR also monitors and
takes proactive steps to promote
employee engagement through world-
class people processes and a value
based work culture.
Talent Acquisition
While attracting talent, the Company
ensures that the right person is
selected for the right job at the right
time. Competency based selection
process ensures that the person
selected possesses the core
competencies valued by Jubilant. Both
core and role based competencies
have been identified for execution,
managerial and leadership levels.
Competency mapping helps in
identifying future leaders and high
potential personnel who are then
provided individualised attention and
coaching. We believe that
Competencies can be developed and
hence focusing on them allows
individuals and organisations to
become more effective and successful.
Employee Engagement
“Voice of Customer” - both internal and
external customers - has always been
a very important factor driving
organisational strategies and
improvement initiatives at Jubilant. An
organisation wide employee
engagement survey through Gallup, is
in place to learn about workplace
strengths, weaknesses, to analyse
what drives Jubilant's workplace
culture and to benchmark with other
organisations. It is also aimed at
building a 'Great place to work' through
impact planning and new initiative in
people development to drive positive
business outcomes.
Performance Management
System
Jubilant uses a Balanced Scorecard
Approach in Performance Appraisal to
assess financial performance,
customer knowledge, internal process
and learning & growth. This ensures
objective assessment of achievement
against Key Result Areas (KRAs) to
differentiate high potential employees
from those displaying normal
performance. The Hoshin Kanri
approach of goal deployment down the
line helps in the alignment of individual
goals with organisational goals. This
has helped the Company to focus on a
few key things needed to create break-
through performance. This helps to
break down strategic measures to local
levels so that unit managers and other
employees can see and understand
what is required at their level to
achieve excellence in performance.
Learning & Development
Continuous and focused training of
employees results in positive
behaviour and outcomes. Leadership
Development Programmes are
conducted for senior managers to
chisel them for global competitiveness
by nurturing knowledge,
entrepreneurship and creativity.
The focus is on providing regular
training to employees on Good
Manufacturing Practices, security
measures, quality aspects and in
various other technical and soft skills
such as communication, managerial
effectiveness etc. to not only equip
them with the right skills required to
perform their roles, but also to help
them grow as well rounded
professionals.
At Jubilant, we are becoming more
heterogeneous as we globalise. With
every acquisition, we add a significant
number of new colleagues with diverse
backgrounds and experience. Hence
the focus is on equipping employees
with cross cultural skills to build a
seamless global organisation.
To motivate, retain and engage
employees, Jubilant has used a mix of
compensation, rewards, recognition,
incentives, training & development and
stock options.
32
Internal Control Systems & Risk
Management
Jubilant's Vision on Risk
Management
Risk Management Framework
The global scope of operations and
continuous enhancement in product
pipeline, capacities and technologies
coupled with intensifying competition
poses significant challenges and risks
for the organisation. Such risks, if not
perceived in a timely manner, could
adversely impact accomplishment of
the overall objectives of the
organisation & its sustainability.
An effective risk management
framework enhances the organisation's
ability to proactively address its risks &
opportunities by determining a risk
response strategy & monitoring its
progress on a dynamic basis. This, in
effect, helps in driving continued
competitive sustainability of an
organisation as it enables alignment of
its operations and activities with its
vision and values.
To establish & maintain an enterprise-
wide risk management capabilities for
active monitoring & mitigation of
organisational risks on a continuous &
sustainable basis.
Our risk management framework is
intended to ensure that risks are taken
with due diligence & care. We have
implemented an integrated risk
management framework to identify,
assess, prioritise, manage, monitor
and communicate risks across the
Company.
T h e H u m a n Re s o u rc e function focuses on creating stakeholder value through superior organisational and people capability, in line with the strategic direction of the Company.
BUSINESS ENABLERS
A n e f f e c t i ve r i s k management frame-w o r k a t Ju b i l a n t proactively address risks & opportunities by determining a risk response strategy & monitoring its progress on a dynamic basis.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
35
Our risk management framework
comprises the following
elements
• Risk Management Strategy
• Risk Management Structure
• Risk Identification & Monitoring
Risk Management Strategy
Jubilant has a strong risk management
framework which enables active
monitoring of business activities for
identification, assessment and
mitigation of potential internal and
external risks.
We have a robust risk management
strategy in place that comprises
established processes and guidelines,
combined with a strong oversight and
monitoring system at the Board and
senior management levels.
Our senior management team sets the
overall tone and risk culture of the
organisation through defined and
communicated corporate values,
clearly assigned risk responsibilities,
appropriately delegated authority, and
a set of processes and guidelines. We
have laid down procedures to inform
Board members about the risk
assessment and risk minimisation
procedures. As an organisation, we
promote strong ethical values and high
levels of integrity in all our activities,
which works as a significant risk
mitigator.
Risk Management Structure
Our risk management structure
comprises the Audit Committee of the
board at the Apex level, which is
supported by Executive Directors,
Heads of Businesses, Heads of
support functions, Unit Heads,
Divisional Heads of Accounts and
Finance and Head of Assurance
function.
As risk owners, the heads of
Businesses, Unit Heads and Support
functions are entrusted with the
responsibility of identification &
monitoring of risks. These are then
discussed and deliberated at various
review fora chaired by the Executive
Directors and actionable steps are
identified. The Audit Committee,
Executive Directors and Head of
Assurance function, act as a governing
body to monitor the effectiveness of
the internal controls framework on a
regular basis.
In addition, regular internal audit
activity is carried out by M/s Ernst &
Young Pvt. Ltd. As our internal audit
partner, they give an independent
assessment on our risk mitigating
measures and provide suggestions for
improvement, which are then adopted
for implementation.
Audit Committee
The Audit Committee, on a quarterly
basis, reviews the adequacy &
effectiveness of the internal controls
being exercised by various businesses
& support functions & advises the
Board on matters of significant concern
for redressal.
Risk Identification and Monitoring
The Company has a strong Board and
34
a competent set of professional
managers who attempt to identify risks
at an early stage and take appropriate
steps to pre-empt or mitigate the same.
The Company has completed its third
year of certification process wherein,
all concerned Control Owners have
certified the correctness of key
operating, financial and compliance
related controls for approximately 1900
key controls, every quarter. This has
made our internal controls and
processes stronger and robust. It has
also served as the basis of compliance
with revised Clause 49 requirements
mandated by the Securities and
Exchange Board of India (SEBI).
Under this, a certification by the CEO
and the CFO on the accuracy of
financial statements and on the
adequacy of internal controls and risk
management is required.
Apart from the above, the Company
has also identified entity level controls
across the organisation, which covers
integrity and ethical values, adequacy
of internal audit and internal control
mechanisms and effectiveness of
internal and external communication.
We believe that this exercise has
considerably strengthened the internal
controls systems and processes within
the Company along with clear
documentation on key control points.
1) Global Economic Scenario
FY2009 witnessed a global financial
market meltdown which has resulted in
Management's Assessment of
Risk
a severe global recession. This has
had a cascading adverse impact on
most of the high growth industries
across geographical boundaries.
Jubilant has not been completely
insulated from this.
With its vision and able management,
Jubilant has been able to weather this
slowdown by strengthening its
pharmaceuticals and life sciences
business which has shown a strong
growth on account of improved
production capacities, expanded
product line-up and enhanced global
scope of operations. There has
however been a reduction in revenue
margins from Industrial and
Performance Products due to soft
global market conditions resulting in
weak demand for our products. Our
approach towards these developments
has been very pragmatic and pro-
active. Our operating model based on
strong fundamentals has reported
strong growth by mitigating these risks.
2) Compliance with Regulatory
Requirements
Any non-compliance with applicable
regulatory requirements creates the
risk of attracting fines, penalties or
even prosecution by the concerned
authorities.
To mitigate these risks, we have put in
place a good corporate governance
framework which ensures that
compliance processes are run
effectively. This is reported in
Corporate Governance section of this
annual report.
BUSINESS ENABLERS
A strong r i sk management f r a m e w o rk e n a b l e s a c t i ve monitoring of business activities for identification, assessment and mitigation of potential internal and external risks.
The Company has completed its third year of certification process wherein, all concerned Control Owners have certified 1900 key operating, financial & compliance related controls.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
35
Our risk management framework
comprises the following
elements
• Risk Management Strategy
• Risk Management Structure
• Risk Identification & Monitoring
Risk Management Strategy
Jubilant has a strong risk management
framework which enables active
monitoring of business activities for
identification, assessment and
mitigation of potential internal and
external risks.
We have a robust risk management
strategy in place that comprises
established processes and guidelines,
combined with a strong oversight and
monitoring system at the Board and
senior management levels.
Our senior management team sets the
overall tone and risk culture of the
organisation through defined and
communicated corporate values,
clearly assigned risk responsibilities,
appropriately delegated authority, and
a set of processes and guidelines. We
have laid down procedures to inform
Board members about the risk
assessment and risk minimisation
procedures. As an organisation, we
promote strong ethical values and high
levels of integrity in all our activities,
which works as a significant risk
mitigator.
Risk Management Structure
Our risk management structure
comprises the Audit Committee of the
board at the Apex level, which is
supported by Executive Directors,
Heads of Businesses, Heads of
support functions, Unit Heads,
Divisional Heads of Accounts and
Finance and Head of Assurance
function.
As risk owners, the heads of
Businesses, Unit Heads and Support
functions are entrusted with the
responsibility of identification &
monitoring of risks. These are then
discussed and deliberated at various
review fora chaired by the Executive
Directors and actionable steps are
identified. The Audit Committee,
Executive Directors and Head of
Assurance function, act as a governing
body to monitor the effectiveness of
the internal controls framework on a
regular basis.
In addition, regular internal audit
activity is carried out by M/s Ernst &
Young Pvt. Ltd. As our internal audit
partner, they give an independent
assessment on our risk mitigating
measures and provide suggestions for
improvement, which are then adopted
for implementation.
Audit Committee
The Audit Committee, on a quarterly
basis, reviews the adequacy &
effectiveness of the internal controls
being exercised by various businesses
& support functions & advises the
Board on matters of significant concern
for redressal.
Risk Identification and Monitoring
The Company has a strong Board and
34
a competent set of professional
managers who attempt to identify risks
at an early stage and take appropriate
steps to pre-empt or mitigate the same.
The Company has completed its third
year of certification process wherein,
all concerned Control Owners have
certified the correctness of key
operating, financial and compliance
related controls for approximately 1900
key controls, every quarter. This has
made our internal controls and
processes stronger and robust. It has
also served as the basis of compliance
with revised Clause 49 requirements
mandated by the Securities and
Exchange Board of India (SEBI).
Under this, a certification by the CEO
and the CFO on the accuracy of
financial statements and on the
adequacy of internal controls and risk
management is required.
Apart from the above, the Company
has also identified entity level controls
across the organisation, which covers
integrity and ethical values, adequacy
of internal audit and internal control
mechanisms and effectiveness of
internal and external communication.
We believe that this exercise has
considerably strengthened the internal
controls systems and processes within
the Company along with clear
documentation on key control points.
1) Global Economic Scenario
FY2009 witnessed a global financial
market meltdown which has resulted in
Management's Assessment of
Risk
a severe global recession. This has
had a cascading adverse impact on
most of the high growth industries
across geographical boundaries.
Jubilant has not been completely
insulated from this.
With its vision and able management,
Jubilant has been able to weather this
slowdown by strengthening its
pharmaceuticals and life sciences
business which has shown a strong
growth on account of improved
production capacities, expanded
product line-up and enhanced global
scope of operations. There has
however been a reduction in revenue
margins from Industrial and
Performance Products due to soft
global market conditions resulting in
weak demand for our products. Our
approach towards these developments
has been very pragmatic and pro-
active. Our operating model based on
strong fundamentals has reported
strong growth by mitigating these risks.
2) Compliance with Regulatory
Requirements
Any non-compliance with applicable
regulatory requirements creates the
risk of attracting fines, penalties or
even prosecution by the concerned
authorities.
To mitigate these risks, we have put in
place a good corporate governance
framework which ensures that
compliance processes are run
effectively. This is reported in
Corporate Governance section of this
annual report.
BUSINESS ENABLERS
A strong r i sk management f r a m e w o rk e n a b l e s a c t i ve monitoring of business activities for identification, assessment and mitigation of potential internal and external risks.
The Company has completed its third year of certification process wherein, all concerned Control Owners have certified 1900 key operating, financial & compliance related controls.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
3) Dependence on Molasses and
Alcohol
Dependence on molasses and alcohol,
being the base raw material for some
part of the business segment, could
impact the Company's overall
profitability. The supply of agricultural
products as raw materials is dependent
on the annual yield of the sugar crop
which is based on rainfall and other
natural factors.
In FY2009, the supply of molasses had
been considerably affected due to low
yield of sugarcane crop on account of
natural factors. This also resulted in
lower capacity utilisation of some of
our distillery plants. To mitigate this
challenging risk, the Company has
created flexibility in using input material
from molasses to alcohol and thus
reduced the risk of profit impact on
higher molasses prices. Also molasses
consumption is only 4% of the total
Revenue in FY2009.
Hence, the price increase in molasses
is no longer an area of concern for
Jubilant. To continue to be profitable in
our business, we imported alcohol and
acetic acid to produce downstream
products viz. Acetic Anhydride and
Ethyl Acetate. This has enabled the
Company to meet customer demand at
low cost, thereby protecting our
margins.
4) Foreign Currency Exposures
As a prudent risk management policy,
the Company does not enter into any
foreign exchange derivatives or
forward contracts which are
speculative in nature. Hence there are
no derivative transactions of a
speculative nature outstanding as of
date. This is a consistent policy
followed by the Company.
Foreign currency exposures on
account of Jubilant's global scale of
operations could impact the bottom line
of the Company.
The Company derives 61.9% of its
Revenue from International Revenue.
Apart from this, the Company has
foreign currency exposures arising out
of imports and foreign currency debt,
including convertible bonds.
To mitigate foreign currency related
risks, a risk management team
comprising CMD, ED-Finance and
Controller-Financial Market Risk
formulates the foreign exchange risk
management approach and reviews it
dynamically to align it with
developments in the external
environment and business
requirements.
The Company follows the concept of a
natural hedge. Based on exports and
imports, the currency-wise net
exposure is worked out on a business-
wise basis. This net exposure is
consolidated and forward contracts are
considered against the same. The
maximum period for such forward
contracts has been around one year.
The endeavour is to insulate the
Company's financial statements from
the risk of unfavourable exchange rate
movements and unpleasant surprises.
To maintain foreign currency loan
3736
exposures in US Dollars, which is the
currency in which the Company's
exports are pre-dominantly
denominated, any loans taken in any
other foreign currency are converted
into US Dollars by entering into
currency swaps at the inception of the
loan itself.
Further, interest rate swaps are
regularly evaluated to protect the
Company's interest rate exposures.
During the last financial year, interest
rate swaps and forward rate
agreements have been done to protect
interest rate costs on foreign currency
loans at historically low levels.
A quarterly update on foreign
exchange exposures, outstanding
forward contracts and swaps is placed
before the Board on a regular basis.
5) Cost Competitiveness
In today's economic scenario,
Companies may not be able to sustain
themselves in a cost competitive
environment unless proactive
measures are taken to work on areas
of cost reduction.
The Company has taken various key
initiatives to remain cost competitive
and protect its revenue margins. One
such initiative has been to lower its
working capital cost by driving the
following measures after working
closely with the businesses and
support functions.
• Maintaining optimum inventory
levels
• Re-negotiating with key suppliers for
better credit terms
• Various Six sigma initiatives for lean
manufacturing, including
improvement of productivity norms
6) Environmental issues
Being a Chemicals and
Pharmaceuticals Company, Jubilant is
exposed to various environment
related regulatory and health issues.
Some of our research and
development and manufacturing
operations involve dangerous
chemicals, processes, by-products and
effluent discharges. To manage these
risks, substantial investments and
resources are allocated on a
continuous basis to proactively adopt
and implement manufacturing and
effluent treatment processes, which
ensures adherence to environmental
quality standards and regulatory
requirements. Stringent Environment
Health and Safety (EHS) systems and
procedures at all manufacturing
locations, including all R&D centres
ensure strict compliance to
international standards and safety
practices which helps in reducing
environment related risks. Besides, an
independent assessment and
verification of environment related
hazard mitigation processes is also
done by Ernst & Young as our
assurance partner to provide comfort to
stakeholders. In addition, we also
maintain adequate property and public
liability insurance covers at our
manufacturing facilities as per best
industry practices.
BUSINESS ENABLERS
The Company has taken various key initiatives to remain cost competitive and protect its revenue margins.
The Company follows the concept of natural hedge and considers forward contracts on net exposure, based on exports and imports.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
3) Dependence on Molasses and
Alcohol
Dependence on molasses and alcohol,
being the base raw material for some
part of the business segment, could
impact the Company's overall
profitability. The supply of agricultural
products as raw materials is dependent
on the annual yield of the sugar crop
which is based on rainfall and other
natural factors.
In FY2009, the supply of molasses had
been considerably affected due to low
yield of sugarcane crop on account of
natural factors. This also resulted in
lower capacity utilisation of some of
our distillery plants. To mitigate this
challenging risk, the Company has
created flexibility in using input material
from molasses to alcohol and thus
reduced the risk of profit impact on
higher molasses prices. Also molasses
consumption is only 4% of the total
Revenue in FY2009.
Hence, the price increase in molasses
is no longer an area of concern for
Jubilant. To continue to be profitable in
our business, we imported alcohol and
acetic acid to produce downstream
products viz. Acetic Anhydride and
Ethyl Acetate. This has enabled the
Company to meet customer demand at
low cost, thereby protecting our
margins.
4) Foreign Currency Exposures
As a prudent risk management policy,
the Company does not enter into any
foreign exchange derivatives or
forward contracts which are
speculative in nature. Hence there are
no derivative transactions of a
speculative nature outstanding as of
date. This is a consistent policy
followed by the Company.
Foreign currency exposures on
account of Jubilant's global scale of
operations could impact the bottom line
of the Company.
The Company derives 61.9% of its
Revenue from International Revenue.
Apart from this, the Company has
foreign currency exposures arising out
of imports and foreign currency debt,
including convertible bonds.
To mitigate foreign currency related
risks, a risk management team
comprising CMD, ED-Finance and
Controller-Financial Market Risk
formulates the foreign exchange risk
management approach and reviews it
dynamically to align it with
developments in the external
environment and business
requirements.
The Company follows the concept of a
natural hedge. Based on exports and
imports, the currency-wise net
exposure is worked out on a business-
wise basis. This net exposure is
consolidated and forward contracts are
considered against the same. The
maximum period for such forward
contracts has been around one year.
The endeavour is to insulate the
Company's financial statements from
the risk of unfavourable exchange rate
movements and unpleasant surprises.
To maintain foreign currency loan
3736
exposures in US Dollars, which is the
currency in which the Company's
exports are pre-dominantly
denominated, any loans taken in any
other foreign currency are converted
into US Dollars by entering into
currency swaps at the inception of the
loan itself.
Further, interest rate swaps are
regularly evaluated to protect the
Company's interest rate exposures.
During the last financial year, interest
rate swaps and forward rate
agreements have been done to protect
interest rate costs on foreign currency
loans at historically low levels.
A quarterly update on foreign
exchange exposures, outstanding
forward contracts and swaps is placed
before the Board on a regular basis.
5) Cost Competitiveness
In today's economic scenario,
Companies may not be able to sustain
themselves in a cost competitive
environment unless proactive
measures are taken to work on areas
of cost reduction.
The Company has taken various key
initiatives to remain cost competitive
and protect its revenue margins. One
such initiative has been to lower its
working capital cost by driving the
following measures after working
closely with the businesses and
support functions.
• Maintaining optimum inventory
levels
• Re-negotiating with key suppliers for
better credit terms
• Various Six sigma initiatives for lean
manufacturing, including
improvement of productivity norms
6) Environmental issues
Being a Chemicals and
Pharmaceuticals Company, Jubilant is
exposed to various environment
related regulatory and health issues.
Some of our research and
development and manufacturing
operations involve dangerous
chemicals, processes, by-products and
effluent discharges. To manage these
risks, substantial investments and
resources are allocated on a
continuous basis to proactively adopt
and implement manufacturing and
effluent treatment processes, which
ensures adherence to environmental
quality standards and regulatory
requirements. Stringent Environment
Health and Safety (EHS) systems and
procedures at all manufacturing
locations, including all R&D centres
ensure strict compliance to
international standards and safety
practices which helps in reducing
environment related risks. Besides, an
independent assessment and
verification of environment related
hazard mitigation processes is also
done by Ernst & Young as our
assurance partner to provide comfort to
stakeholders. In addition, we also
maintain adequate property and public
liability insurance covers at our
manufacturing facilities as per best
industry practices.
BUSINESS ENABLERS
The Company has taken various key initiatives to remain cost competitive and protect its revenue margins.
The Company follows the concept of natural hedge and considers forward contracts on net exposure, based on exports and imports.
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
7) Integration of Acquired
Companies
The anticipated benefits on account of
merger or acquisition of companies /
businesses would get affected in case
of difficulty in integrating the acquired
Companies.
The Company manages acquisition
related integration risks by deploying
suitable management teams
comprising senior people who have the
requisite experience and skill sets in
rolling out policies and managing
integration related issues. Besides, the
Company uses a common technology
platform across the board to enable
seamless replication of systems and
ANNUAL ACCOUNTS
38
processes for acquired companies /
businesses.
8) Customer concentration in some
businesses
Over dependence of sales on a set of
few customers could directly impact
the profitability of the Company in the
event of customer attrition.
The Company continues to manage
these risks by entering into long term
contracts with its customers as well as
developing newer products for new
customers.
Mr S N Singh, Executive Director, Chemicals, has made remarkable contribution to
the evolution of Jubilant Organosys during his 28 years of association with the
Company.
A Chemical Engineer from Banaras Hindu University, he has been conferred with
Distinguished Alumnus Award by Institute of Technology, BHU. He started his
professional career as a Chemical Engineer in 1961 and joined Jubilant in 1981.
Mr Singh is a well respected veteran of the Chemical Industry that he has served for
over 48 years. Recently, the Indian Chemical Council, an apex body of the
Chemical Industry, has conferred its "Lifetime Achievement Award" upon Mr S N
Singh. He is a member of the Executive Committee of Indian Chemical Council as
well as a member of Chemical Committee, FICCI. He was former President of the Indian Chemical
Manufacturers Association.
As a distinguished member of the Board of the Company for the last ten years, he has played a significant role
in shaping the Company as a leader in the Chemicals business. We would like to thank him for his valuable
contribution towards the Company's noteworthy growth during his tenure. We extend our best wishes to him
for his future endeavours and look forward to his continued association with the Company as our goodwill
ambassador.
Note of Thanks
39
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
S N SinghExecutive Director, Chemicals
7) Integration of Acquired
Companies
The anticipated benefits on account of
merger or acquisition of companies /
businesses would get affected in case
of difficulty in integrating the acquired
Companies.
The Company manages acquisition
related integration risks by deploying
suitable management teams
comprising senior people who have the
requisite experience and skill sets in
rolling out policies and managing
integration related issues. Besides, the
Company uses a common technology
platform across the board to enable
seamless replication of systems and
ANNUAL ACCOUNTS
38
processes for acquired companies /
businesses.
8) Customer concentration in some
businesses
Over dependence of sales on a set of
few customers could directly impact
the profitability of the Company in the
event of customer attrition.
The Company continues to manage
these risks by entering into long term
contracts with its customers as well as
developing newer products for new
customers.
Mr S N Singh, Executive Director, Chemicals, has made remarkable contribution to
the evolution of Jubilant Organosys during his 28 years of association with the
Company.
A Chemical Engineer from Banaras Hindu University, he has been conferred with
Distinguished Alumnus Award by Institute of Technology, BHU. He started his
professional career as a Chemical Engineer in 1961 and joined Jubilant in 1981.
Mr Singh is a well respected veteran of the Chemical Industry that he has served for
over 48 years. Recently, the Indian Chemical Council, an apex body of the
Chemical Industry, has conferred its "Lifetime Achievement Award" upon Mr S N
Singh. He is a member of the Executive Committee of Indian Chemical Council as
well as a member of Chemical Committee, FICCI. He was former President of the Indian Chemical
Manufacturers Association.
As a distinguished member of the Board of the Company for the last ten years, he has played a significant role
in shaping the Company as a leader in the Chemicals business. We would like to thank him for his valuable
contribution towards the Company's noteworthy growth during his tenure. We extend our best wishes to him
for his future endeavours and look forward to his continued association with the Company as our goodwill
ambassador.
Note of Thanks
39
JUBILANT ORGANOSYS LIMITED Annual Report 2008-09
S N SinghExecutive Director, Chemicals
40
Your Directors have pleasure in presenting the Thirty First Annual Report and Audited Accounts for the year ended March31, 2009. Despite global economic slowdown, your Company recorded robust growth in revenue and operating profits dueto its strategic thrust on moving up the value chain in its Pharma and Life Science businesses. Outsourcing remains our keystrategy and your Company is the largest Custom Research and Manufacturing and leading Drug Discovery and DevelopmentServices Company out of India.
Financial Results
Year ended Year endedMarch 31, 2009 March 31, 2008
[Rs./million] [Rs./million]
Sales and Other Income 26,287 22,314
Net Sales 24,307 19,767
Operating EBITDA 4,399 4,480
Exceptional items# 379 (902)
EBITDA 4,020 5,382
Interest 544 147
PBDT 3,476 5,235
Depreciation 746 636
PBT 2,730 4,599
Provision for Taxation 123 676
PAT 2,607 3,923
Profit brought forward from previous year 6,712 4,046
PROFIT AVAILABLE FOR APPROPRIATION 9,319 7,969
Which the Directors have appropriated as follows:
– Proposed Dividend on Equity Shares 223* 220**
– Tax on Dividend on Equity Shares 38 37
– Transfer to General Reserve 1,500 1,000
Balance to be carried forward 7,558 6,712
# Exceptional items comprise (i) gain of Rs. 591 million on buyback of FCCBs of USD 60.9 million; (ii) provision of lossof Rs. 943 million on mark-to-market of unutilised forward covers outstanding on March 31, 2009; (iii) profit of Rs. 53million on sale of fixed assets; and (iv) intangible / fixed asset write-off of Rs. 80 million [Previous year (i) exchangegain of Rs. 1,031 million; and (ii) intangible / fixed asset write-off of Rs. 129 million].
* Includes Rs. 2.4 million (inclusive of Dividend Tax) in respect of shares allotted between April 1, 2008 and the recorddate for dividend payment.
** Includes Rs. 0.01 million (inclusive of Dividend Tax) in respect of shares allotted between April 1, 2007 and the recorddate for dividend payment.
DIRECTORS’
REPORT
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
41
Conversion Details
Operations
Standalone Financials
FY2009 Revenues showed a robust growth of 23% at Rs. 24,307 million as compared to Rs. 19,767 million. The growthmomentum continued to come from the PLSPS business, where Revenues stood at Rs. 12,362 million compared toRs. 10,206 million last year. During the course of the year the Company strengthened its position in the field of CRAMS -Revenues here grew to Rs. 12,341 million from Rs. 10,206 million last year. Revenues from International operationswere up at Rs. 10,978 million from Rs. 8,858 million. Revenues from the IPP business stood at Rs. 11,945 millioncompared to Rs. 9,561 million last year. The Operating EBITDA stood at Rs.4,399 million in FY2009 as compared toRs. 4,480 million previously. The PAT for FY2009 stood at Rs. 2,607 million compared to Rs. 3,923 million in theprevious year.
Consolidated Financials
FY2009 Revenues showed a robust growth of 41.3% at Rs. 35,180 million as compared to Rs. 24,889 million. Thegrowth momentum continued to come from the PLSPS business, where Revenues jumped to Rs. 23,237 million fromRs. 15,302 million last year. During the course of the year the Company strengthened its position in the field of CRAMS -Revenues here grew to Rs. 19,632 million from Rs. 13,069 million. Revenues from International operations were atRs. 21,771 million compared to Rs. 13,940 million. Revenues from the IPP business stood at Rs. 11,943 million up fromRs. 9,587 million last year. The Operating EBITDA stood at Rs. 6,148 million in FY2009 as compared to Rs. 5,036million last year. The PAT (after minority interest) for FY2009 stood at Rs. 2,832 million compared to Rs. 4,005 million inthe previous year.
Dividend
Your Directors recommend a dividend of 150% i.e. Rs. 1.50 per fully paid up equity share of Re. 1, for the year endedMarch 31, 2009. This will absorb Rs. 259 million (inclusive of tax) based on existing capital. The final outgo couldhowever increase due to increase in capital on conversion of Foreign Currency Convertible Bonds.
Appropriations
It is proposed to transfer Rs. 1,500 million to General Reserve and retain the balance in Profit and Loss Account.
Capital Structure
(A) Foreign Currency Convertible Bonds (FCCBs)
Your Company, during 2004-05, 2005-06 and 2006-07, issued FCCBs of USD 35 million, USD 75 million and USD200 million, respectively.
In accordance with Reserve Bank of India's guidelines, the Company bought back at a discount and cancelledduring the year, FCCBs amounting to USD 60.9 million.
The balance FCCBs along with the number of shares to be issued, if converted, is given below:
Particulars Year of Size of Interest FCCBs FCCBs Balance No. of sharesIssue Issue Rate converted bought FCCBs of Re.1 each
(in million (%) into equity back outstanding Conversion Conversion (to be allotted ifUSD) shares (in million (in million Period Price per converted for
(in million USD) USD) Equity Share outstandingUSD) (Rs.) FCCBs)
FCCB 2009 2004-05 35 1.5 34.7 0 0.3 June 14, 2004 and 163.646 82,140April 15, 2009
FCCB 2010 2005-06 75 0 22.3 3.0 49.7 July 3, 2005 and 273.0648 7,883,231May 14, 2010
FCCB 2011 2006-07 200 0 0 57.9 142.1 June 30, 2006 and 413.4498 15,483,391May 10, 2011
Total 310 57.0 60.9 192.1 23,448,762
Whilst the FCCBs are listed on Singapore Stock Exchange, the Global Depository Shares (GDSs) arising out ofconversion of FCCBs are listed on Euro MTF Market of the Luxembourg Stock Exchange.
DIRECTORS’ REPORT
42
(B) Employees Stock Options (ESOPs)
During the year, the members, vide their Postal Ballot resolution, approved increase in the number of stock optionsfrom 717,500 to 1,100,000 thereby increasing the resultant equity shares of Re.1 each on exercise from 3,587,500to 5,500,000 under Jubilant Employees Stock Option Plan 2005. Further, members approved constitution ofJubilant Employees Welfare Trust for the purpose of subscription / acquisition of shares from the Company /secondary market for holding and transfer of shares to eligible employees as per Jubilant Employees Stock OptionPlan 2005.
During the year, Jubilant Employees Welfare Trust was constituted. A sum of Rs. 567.9 million has been given asloan to the Trust. The Trust has bought 5,371,747 shares of the Company, which may be transferred from time totime to ESOP holders on exercise.
During 2008-09, 22,700 Options (for 113,500 equity shares of Re. 1 each) were granted to employees underJubilant Employees Stock Option Plan 2005.
As on March 31, 2009, 518,473 Options were outstanding. A maximum of 2,592,365 shares will be allotted /transferred upon exercise of these Options.
Till date, holders of 22,967 Options have exercised the ESOPs resulting in allotment of 114,835 shares of Re. 1each. The details as required under Regulation 12 of Securities and Exchange Board of India (Employee StockOption Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are given in Annexure A.
(C) Paid Up Capital
The paid up Capital as at March 31, 2009 stands at Rs. 147,542,258 comprising of 147,542,258 equity shares ofRe. 1 each.
During the year, 1,356,344 equity shares were allotted on conversion of FCCBs into equity shares and exercise ofstock options by employees / directors. Consequently, the paid up share capital of your Company increased from146,185,914 shares to 147,542,258 shares.
The impact of future conversions of FCCBs into equity shares on the share capital assuming full conversion wouldbe as follows:-
Particulars No. of Shares of Re. 1 each
Existing no. of shares as on March 31, 2009 147,542,258
Add : Shares to be allotted on conversion of outstanding FCCBs 23,448,762
Fully diluted no. of equity shares on conversion of FCCBs 170,991,020
Note: No dilution under ESOPs is envisaged, as Jubilant Employees Welfare Trust is expected to transfer the shares held by it to
ESOP holders on exercise.
Subsidiaries
Brief particulars of principal subsidiaries are given below:
Hollister-Stier Laboratories LLC – This Delaware, USA, based company, is a wholly owned subsidiary of HSLHoldings Inc. It is a recognized contract manufacturer of sterile injectable vials, syringes and lyophilized products andprovides a complete range of services to support the pharmaceutical and biopharmaceutical industries. Additionally, it isa manufacturer of allergenic extracts, targeted primarily at treating allergies and asthma.
Its contract manufacturing capabilities include aseptic liquid fill / finishing and lyophilization in three distinct cGMP areasdesignated as Small Volume Parenteral (SVP), Small Lot Manufacturing (SLM) and Clinical Trial Manufacturing (CTM).Its capabilities can be applied to a variety of projects from pre-clinical through commercial scale across a multitude ofdosage forms including: microspheres, suspensions, WFI/diluents, biologics (proteins), lyophilized products, liposomesand BD Hypak syringes. Hollister-Stier maintains an outstanding regulatory record with the FDA (CBER and CDER),EMEA and Japan's and Brazil's regulatory agencies. Hollister-Stier's contract manufacturing business serves 38customers, some of which involve multiple products, ranging from small biotechnology to large pharmaceuticalcompanies.
Draxis Specialty Pharmaceuticals Inc. – This Canadian Company was acquired by your Company during the year.This company provides products in three categories: sterile products, non-sterile products and radiopharmaceuticals.Sterile products include liquid and freeze-dried (lyophilized) injectables plus sterile ointments and creams. Non-sterileproducts are produced as solid oral and semi-solid dosage forms. Radiopharmaceutical is a niche, high entry barrierbusiness. Draximage markets radioactive products with radio active isotope already incorporated, and non-radioactiveproducts, which are solid in lyophilized form. Radiopharmaceuticals are used for both therapeutic and diagnostic
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molecular imaging applications to customers comprising hospitals, imaging centres and cardiology / oncology clinics.Pharmaceutical contract manufacturing services are provided through the DRAXIS Pharma division andradiopharmaceuticals are developed, produced and sold through the DRAXIMAGE division.
DRAXIS operates a USFDA approved manufacturing facility in Montreal at Canada. It is recognized globally for itsquality and execution capabilities, strong regulatory track record and has an established customer base comprising largeinnovator and specialty pharmaceutical companies.
Jubilant Biosys Limited – This company is a subsidiary of your Company through Jubilant Biosys (Singapore) Pte.Ltd., wholly owned subsidiary of your Company, which holds 66.98% of the equity of this company.
This company provides following Drug Discovery Services:
– Stand alone service model
• Functional services such as Informatics, Structural Biology etc.
• FTE-based model - Client agrees on the no. of FTE's for the project for the fixed period
• Fee-based Model - complete cost of the project is decided before initiation of the project.
– Collaborative / Partnership Model
• Integrated discovery program across a single or a portfolio of molecules
• Risk / Reward sharing option
– FTE based fee
– Payments for milestones achieved (Hit, Lead etc.)
– Bonus amount at each specified stage
– Royalty on successful commercialization of drug.
During 2008-09, this company has been able to consolidate its position in the Drug Discovery Services by providingservices in integrated drug discovery programmes, functional service in structural biology, High thru put screening,Insilco modelling and IN Vivo Biology.
Jubilant Discovery Services Inc. – This Delaware, USA corporation, became wholly owned subsidiary of JubilantBiosys Limited during the year. This company provides sales, marketing and liaising services to Jubilant Biosys Ltd. forits US based customers.
Jubilant Chemsys Limited – This Company is a subsidiary of your Company through Jubilant Drug Development Pte.Ltd., wholly owned subsidiary of your Company, which holds entire equity of this company.
This company offers following services to drug discovery companies based out of US, Europe and Japan on Full TimeEquivalent and molecule basis:
• Discovery Chemistry functions• Hit to lead and lead optimization• Medicinal Chemistry Services• Scaling up from mg to kg in kilo lab and pilot plant
It also works closely with Jubilant Biosys Limited in collaborative drug discovery research services areas.
Clinsys Clinical Research Limited – This company is a subsidiary of your Company through Jubilant DrugDevelopment Pte. Ltd., wholly owned subsidiary of your Company, which holds entire equity of this company.
This company offers following services to pharmaceutical, biotechnology and medical device companies:
• Full time CRO with 52 bed facility in India
• Clinical trials from Phase I-IV and Bio-analytical / Bio-equivalence, Pharmacokinetics
Clinsys Clinical Research Inc. – This New Jersey, USA corporation, is a wholly owned subsidiary of Clinsys HoldingsInc. and is a therapeutically focused full service clinical research organization.
This company has expertise in a wide range of highly specialized therapeutic areas including oncology, cardiovascular,central nervous system, respiratory, dermatology and allergy/immunology. It is offering broad range of clinical researchservices to pharmaceutical, biotechnology and medical device companies in support of Phase II-IV drug & devicedevelopment including project management, clinical monitoring, scientific and medical support, patient and investigatorrecruitment, site management, biostatistics, data management, drug safety, quality assurance, regulatory affairs andmedical writing. This company has operations in Bedminster, New Jersey, Raleigh, North Carolina, Ottawa, Ontario,Canada and Dusseldorf, Germany.
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Jubilant Infrastructure Limited – This wholly owned subsidiary of your Company has set up Sector Specific SpecialEconomic Zone (SEZ) for Chemicals and Pharmaceuticals in Gujarat. About 107 hectares land has been taken on leasefrom GIDC in Bharuch District, Gujarat. The Government of India notified the SEZ in February 2008. In September 2008,the Central Government has constituted the Approval Committee for this SEZ.
During first Approval Committee meeting for this SEZ in November 2008, SEZ unit of this company was considered forapproval and accordingly, a Letter of Approval has been issued for setting up Unit in the SEZ.
This SEZ has received all the required permissions, approvals, eligibility certificates & licenses under SEZ Act andRules & other relevant Laws. It has received Environment Clearance from Ministry of Environment & Forest, Governmentof India and accordingly, Consent to Establish has also been received from Gujarat Pollution Control Board under theapplicable Water and Air Acts.
Jubilant First Trust Healthcare Limited – This company is in the business of healthcare. This company is involved insetting up an integrated hub-and-spoke network with a total of about 1,000 beds in West Bengal. The effort is led by ateam of professional doctors and healthcare planners in West Bengal. The Company currently has two hospitals in WestBengal, with a total of 92 beds. Your Company holds 92.80% of equity capital of this company. This company holds99.76% capital of Asia Healthcare Development Limited.
Asia Healthcare Development Limited – This Company is a subsidiary of your Company through Jubilant First TrustHealthcare Limited. This Company runs a hospital in Behrampur, 200 kms away from Kolkata, on a Public-PrivatePartnership with Government of West Bengal.
Speciality Molecules Limited – This company was acquired by your Company in June 2008. This wholly ownedsubsidiary company is a niche manufacturer of Speciality Intermediates for pharmaceuticals and other life scienceindustry, with manufacturing facilities located in Ambernath, Mumbai. This is the only company in India producing2-Chloropyridine. It is a winner of Acharya P. C. Ray Award for Development of Indigenous Technology formanufacture of 2-Chloropyridine. It enjoys 80-85% domestic market share of 2-Chloropyridine. Its products are alreadyapproved by large overseas customers.
This company is in the process of expanding its capacity from about 700 TPA to 1800 TPA. With this expanded volume,this company will capture about 20% market share of 2-Chloropyridine globally.
In addition to 2-Chloropyridine, this company produces 4-5 other hallogenated pyridine intermediates including 2-Bromopyridine.
Cadista Pharmaceuticals Inc. – This Delaware, USA corporation, is a wholly owned subsidiary of Cadista Holdings Inc.This company is in the business of manufacturing generic pharmaceuticals, solid dosage forms and has a USFDAapproved manufacturing facility in USA.
Jubilant Organosys (USA) Inc. – This Delaware, USA corporation, is a wholly owned subsidiary of your Company. Itundertakes sales and distribution of advance intermediates, fine chemicals, CRAMS and APIs in USA.
Jubilant Organosys (Shanghai) Limited – This wholly owned subsidiary of your Company is held through JubilantPharma Pte. Ltd. It undertakes sales and distribution of products in China. It is into trading of advance intermediates -Pyridine & its derivatives and fine chemicals. It is catering to pharmaceutical and agrochemical industry in China. Thissubsidiary is also a sourcing hub for raw materials for your Company.
Jubilant Pharmaceuticals NV (earlier known as Pharmaceutical Services Incorporated NV) – This is a wholly ownedsubsidiary of your Company. 99.8% shares of this company are held by Jubilant Pharma NV, Belgium and balance byJubilant Pharma Pte. Ltd., Singapore, both wholly owned subsidiaries of your Company. This Company is engaged inthe business of licensing of generic dosage forms and offers regulatory affairs services to generic pharmaceuticalcompanies for the diverse European market.
PSI Supply NV – This is a wholly owned subsidiary of your Company. 99.5% shares of this company are held byJubilant Pharma NV and balance by Jubilant Pharma Pte. Ltd. It is engaged in the supply of generic dosage forms toEuropean markets.
Jubilant Organosys International Pte. Ltd. – This Company is a wholly owned subsidiary of Jubilant Pharma Pte. Ltd.,which itself is a wholly owned subsidiary of your Company. This company opened Regional Area Headquarters (RAHQ)in Philippines to explore various business development opportunities in Asia-Pacific region to link up potential customersacross the region to your Company and file product registrations for your Company. RAHQ would be a base for futureAsean harmonized zone.
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Other subsidiaries as at the year end are as follows :
Clinsys Holdings Inc., USA
Jubilant Pharma Pte. Limited, Singapore
Cadista Holdings Inc., USA
Jubilant Pharma NV, Belgium
HSL Holdings Inc., USA
Cadista Pharmaceuticals (UK) Limited, UK
*Jubilant Biosys (Singapore) Pte. Ltd., Singapore
*Jubilant Drug Development Pte. Ltd., Singapore
*Jubilant Organosys (BVI) Ltd., British Virgin Islands
*Jubilant Biosys (BVI) Ltd., British Virgin Islands
*Colvant Sciences Inc., USA
*Draximage Limited, Cyprus
*Draximage Limited, Ireland
*Deprenyl Inc., USA
*DSPI Inc., USA
*Draximage LLC, USA
*6963196 Canada Inc., Canada
*6981364 Canada Inc., Canada
*Draximage (UK) Limited, UK
*DAHI Animal Health (UK) Limited, UK
*DAHI LLC, USA
*Jubilant Innovation (BVI) Limited, British Virgin Islands
*Jubilant Innovation Pte. Limited, Singapore
* became subsidiary during the year
Particulars required as per Section 212 of the Companies Act, 1956
In terms of the exemption granted by the Government of India vide its letter dated April 27, 2009, from attaching theDirectors' Reports, Balance Sheets, Profit & Loss Accounts and other particulars of the aforesaid subsidiaries, the samehave not been attached to this Report.
Fixed Deposits
No fresh deposits have been accepted by your Company during the year from the public. As on March 31, 2009, yourCompany had no outstanding Fixed Deposits. There were no overdue deposits. There were, however, 97 unclaimeddeposits amounting to Rs. 1.44 million.
Auditors
K. N. Gutgutia & Co., Chartered Accountants, Auditors of the Company, retire at the ensuing Annual General Meetingand offer themselves for re-appointment. They have confirmed that their re-appointment, if made, shall be within thelimits laid down in Section 224 (1B) of the Companies Act, 1956.
Directors
During the year, Mr. S. N. Singh and Mr. Shyamsundar Bang were reappointed as Executive Directors of the Companyfor a period of five years with effect from November 1, 2008.
In accordance with the Articles of Association of the Company, Mr. Shyamsundar Bang, Mr. Abhay Havaldar andMr. H. K. Khan retire by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves forre-apointment.
Mr. Bodhishwar Rai expired in October 2008 and Mr. Ajay Relan resigned from the Board in October 2008. Mr. RahulYadav, nominee of Citicorp International Finance Corporation and HPC (Mauritius) Limited, was appointed as anAdditional Director and holds office upto the ensuing Annual General Meeting. Mr. Vishal Marwaha was appointed asAlternate Director to Mr. Rahul Yadav.
Notice under Section 257 of the Companies Act, 1956 has been received from a member, proposing Mr. Rahul Yadav’scandidature as Director.
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Directors’ Responsibility Statement
In compliance of Section 217 (2AA) of the Companies Act, 1956, the Directors of your Company, based on therepresentation received from management, confirm:
• that in the preparation of annual accounts, the applicable accounting standards had been followed along withproper explanation relating to material departures.
• that the Directors had selected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Companyas on March 31, 2009 and of the profit or loss of the Company for the year ended March 31, 2009.
• that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities.
• that the Directors had prepared the annual accounts on a going concern basis.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
Information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo,required to be made pursuant to Section 217(1)(e) of the Companies Act, 1956, read with Companies [Disclosure ofParticulars in the Report of Board of Directors] Rules, 1988, is given in Annexure B and forms part of this Report.
Employees
The particulars of employees, as required under Section 217(2A) of the Companies Act, 1956, read with the Companies(Particulars of Employees) Rules, 1975, are given in Annexure C and form part of this Report.
Corporate Governance
A separate section on Corporate Governance is attached to this Report as Annexure D. A certificate from the auditors ofthe Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the ListingAgreements with Stock Exchanges is enclosed as Annexure E. A certificate from the Chairman & Managing Directorthat all Board members and senior management personnel have affirmed compliance with the Code of Conduct for theyear ended March 31, 2009 is attached as Annexure F. CEO/CFO certificate is enclosed as Annexure G.
Management Discussion & Analysis
Notes on Management Discussion & Analysis of the financial position of the Company have been given separately andform part of this Report.
Corporate Sustainability Report
Your Company, being committed to address environmental issues and discharge its corporate social responsibility, ispublishing for the seventh year in a row, Corporate Sustainability Report, duly audited by Ernst & Young, and conformingto Global Reporting Initiative Guidelines. The Report is being mailed to all our shareholders.
Risk Management
An effective risk management framework focuses on enhancing the organization’s ability to proactively address its risksby assessing and determining a risk response strategy along with monitoring its progress on a dynamic basis. This, ineffect, helps in driving continued competitive sustainability of an organization as it enables alignment of its operationsand activities with its vision and values.
Your Company has a strong risk management framework that enables active monitoring of the business environmentand identification, assessment and mitigation of potential internal or external risks. This includes an external assessmentof our risk management procedures for which we partner with various external agencies.
Our senior management team sets the overall tone and risk culture of the organization through defined andcommunicated corporate values, clearly assigned risk responsibilities, appropriately delegated authority, and a set ofprocesses and guidelines. We have established procedures to inform Board members about the risk assessment andrisk minimization procedures. As an organization, we promote strong ethical values and high levels of integrity in all ouractivities, which in itself is a significant risk mitigator.
A detailed note on Risk Management is given as part of “Management Discussion & Analysis”.
Human Resource Management
Your Company has a very structured approach to managing its people across the entire employee life cycle.
While attracting talent, your Company ensures that right person is selected for the right job at the right time. Competency
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based selection process ensures that the person selected possesses the core competencies valued by Jubilant. Bothcore and role based competencies have been identified for execution, managerial and leadership levels. Competencymapping helps in identifying future leaders and high potential personnel who are then provided individualized attentionand coaching. We believe that Competencies can be developed and hence focusing on them allows individuals andorganizations to become more effective and successful.
“Voice of customer” - both internal and external customers - has always been very important factor driving organizationalstrategies and improvement initiatives at Jubilant. An organization wide employee engagement survey through Gallup isin place to learn about workplace strengths, weaknesses, to analyze what drives Jubilant’s workplace culture and tobenchmark with other organizations. It is also aimed at building a great place to work.
Your Company has a “Young Talent Programme” in place where bright Graduate Engineer Trainees and ManagementTrainees are selected from premier Engineering and B-Schools across India. Each of these trainees, after a structuredinduction programme, is assigned to work on a project and is also assigned a mentor who guides them through theircareer path.
Jubilant uses Balanced Scorecard Approach to assess financial performance, customer knowledge, internal process andlearning & growth. This ensures objective assessment of achievement against KRAs to differentiate high potentialemployees from those displaying normal performance. The Hoshi Kanri approach of goal deployment down the linehelps alignment of individual goals to organizational goals. This has helped your Company to focus on a few key thingsneeded to create break-through performance.
Instilling core values of Jubilant, in all cadres of employees, is a major focus area at Jubilant. Induction training (knownas “Parichay”) is organized for every incumbent in the organization where she/he is taken through a structured module,in order to get acquainted with the organization’s policies, processes and systems.
Continuous and focused training of employees results in positive behaviour and outcomes. Leadership DevelopmentProgrammes are conducted for senior managers to chisel them for global competitiveness.
Jubilant is fully aware of the acute shortage of talent in job market and has used a mix of compensation, rewards andrecognition, incentives, training & development and stock options to motivate and retain talent.
A detailed note on HR policies is given in the “Management Discussion & Analysis”.
Awards and Accolades
Your Company won Golden Peacock Global Award for CSR Reporting in September 2008.
The Company’s manufacturing facilities at Nanjangud and Nira won Gold and Silver categories Greentech Safety Award2009, respectively. Further, the Company’s manufacturing facility at Gajraula also won Silver category Greentech SafetyAward 2008.
One of its kind achievements for Jubilant Bhartia Foundation is to get financial support from NABARD, within one year ofoperation at our Samlaya plant.
The Company also won IMEA Gold Award 2008 for World Class Manufacturing facility at Nanjangud plant.
Certifications
Your Company follows several externally developed initiatives in the economic, environmental and social areas.Facilities of the Company at Gajraula, Nira, Savli and Nanjangud are ISO 9001:2000 certified for Quality ManagementSystem. These manufacturing facilities are also ISO 14001 certified for Environmental Management System. ForOccupational Health and Safety at work place, the manufacturing facilities are also certified to OHSAS 18001. Recently,animal nutrition unit at Savli facility got approval from FAMI-QS (European Feed Additives and Premixture QualitySystem). Three locations i.e. Gajraula, Nira and Savli have integrated the systems and now have IntegratedManagement System (IMS) in place. Dosage Forms facility at Roorkee follows Good Manufacturing Practices (GMP) asper World Health Organisation (WHO) specifications in manufacturing and testing of pharmaceutical products and hencehas been granted WHO GMP certificate by the Drug Licensing and Controlling Authority, Uttarakhand. Nanjangud planthas got USFDA (United States Food & Drug Administration) approval for exporting certain products in US market,AFSSAPS (Agence Francaise de Securite Sanitaire des Produits de Sante -The French Health Products Safety Agency)for certain products and PMDA (Pharmaceuticals and Medical Devices Agency, Japan) for exporting Risperidone HClinto the Japanese market.
Investor Services
In its endeavor to improve investor services, your Company has taken the following initiatives:
• With a view to communicating on a real time basis, your Company has been e-mailing to the shareholders, pressreleases and other similar communications soon after they are sent to the stock exchanges.
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• The Investor Section on the website of the Company www.jubl.com has been revamped and enlarged and is moreuser friendly now.
• A dedicated e-mail id viz. [email protected] for sending communications to the Company Secretary has beenmade effective. Members may lodge their complaints or suggestions on this e-mail as well.
• The Company has been mailing feedback forms to investors, annually, so as to bring about improvement in servicelevel based on responses received. The Company has also placed an online Investor Feedback Form on itswebsite www.jubl.com under the sub-head “Forms” under the head “Investors”. This form can be submittedelectronically.
Acknowledgments
Your Directors acknowledge with gratitude the co-operation and assistance received from the Central and StateGovernment Authorities. Your Directors thank the Shareholders, Private Equity Investors, Financial Institutions, Banks/other lenders, Depositors, Customers, Vendors and other business associates for their confidence in the Company andits management and look forward to their continued support. The Board wishes to place on record its appreciation for thededication and commitment of your Company’s employees at all levels, which has continued to be our major strength.
For and on behalf of the Board
Place : Noida Shyam S. BhartiaDate : April 28, 2009 Chairman & Managing Director
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ANNEXURE A
DETAILS AS PER REGULATION 12 OF SEBI (ESOP & ESPS) GUIDELINES, 1999
a) Options granted during 2008-09 22,700
b) Options granted upto March 31, 2009 7,12,727
c) Pricing formula Market price of share as on the date of grant, as perSEBI Guidelines.
d) Options vested upto March 31, 2009 486,308
e) Options exercised upto March 31, 2009 22,967
f) Total number of shares arising as a results of 114,835 Equity Shares of Re. 1 each.exercise of options upto March 31, 2009
g) Options lapsed upto March 31, 2009 171,287
h) Variation of terms of options upto March 31, 2009 i) The vesting period accelerated so that 10% of the Optionswill vest on the 1st Anniversary of the Grant date and 90%will vest on 2nd Anniversary of the Grant date. Further,following new lock-in provisions were introduced:-
Vesting Date % of Options Lock-inscheduled Period
to vest
1 year from 10 Nilgrant date
2 years from 15 Nilgrant date
2 years from 20 1 year fromgrant date vesting date
2 years from 25 2 years fromgrant date vesting date
2 years from 30 3 years fromgrant date vesting date
ii) Modification carried out to explicitly provide for recovery ofFringe Benefit Tax from the respective employees in respectof the exercise of Stock Options by them, in terms ofSection 115WKA of the Income Tax Act, 1961.
iii) Jubilant Employees Welfare Trust was constituted, for thepurposes of acquisition of equity shares of the Companyfrom the secondary market or subscription of shares fromthe Company, to hold the shares and to allocate / transferthese shares to eligible employees of the Company, on suchterms and conditions as specified under the JubilantEmployees Stock Option Plan 2005.
i) Money realized by exercise of options upto March 31, 2009 Rs. 23,170,959
j) Total number of options in force upto March 31, 2009 518,473
k) Employee-wise details of options granted during 2008-09 to:
i) senior management personnel; Mr. Ravinder Singh Singha – 8,000 Options
ii) any other employee who received a grant in any Mr. Amit Arora – 1,500 Optionsone year of options amounting to 5% or more ofoptions granted during that year;
iii) identified employees who are granted options, Nilduring any one year, equal to or exceeding 1% ofthe issued capital (excluding outstanding warrantsand conversions) of the company at the timeof grant
l) Diluted earning per share pursuant to issue of shares The Company has calculated the employee compensation coston exercise of option calculated in accordance with using the intrinsic value method of accounting to account forAccounting Standard AS-20. options issued under “Jubilant Employees Stock Option Plan
2005”. The stock based compensation cost as per the intrinsicvalue method for the financial year 2008-09 is Nil.
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m) Where the company has calculated the If the employee compensation cost was calculated as peremployee compensation cost using the intrinsic the fair-value of options based on Black Scholes methodology,value of the stock options, the difference read with Guidance Note on “Accounting for Employeebetween the employee compensation cost so Share-based Payments” issued by Institute of Charteredcomputed and the employee compensation Accountants of India, the total cost to be recognized in thecost that shall have been recognized if it had financial statements for the year 2008-09 would beused the fair value of the options, shall be Rs. 33.24 million. The effect of adopting the for value methoddisclosed. The impact of this difference on on the net income and earnings per share is presented below.profits and on EPS of the company shall alsobe disclosed Pro Forma Adjusted Net Income and Earnings Per Share:
Particulars Rs. in million
Net Income
As Reported 2,607.41
Add : Intrinsic Value Compensation Cost Nil
Less : Fair Value Compensation Cost 33.24
Adjusted Pro Forma Net Income 2,574.17
Earnings Per Share of Re. 1 each
Basic (In Rupees)
As Reported 17.70
Adjusted Proforma 17.47
Earnings Per Share of Re. 1 each:
Diluted (In Rupees)
As Reported 15.25
Adjusted Pro Forma 15.06
n) Weighted-average exercise prices and (i) Where exercise price equals the market priceweighted-average fair values of options shall of the stock options:be disclosed separately for options whose – Weighted average of exercise prices ofexercise price either equals or exceeds or is options: Rs. 216.43less than the market price of the stock options – Weighted average of fair values of options:
Rs. 103.56
(ii) Where exercise price exceeds the market priceof the stock options: Not applicable
(iii) Where exercise price is less than the marketprice of the stock options: Not applicable
o) A description of the method and significant The fair value has been calculated using theassumptions used during the year to estimate Black Scholes Option Pricing Model.the fair values of options, including thefollowing weighted-average information:–
i) date of grant April 22, 2008 July 15, 2008 October 14, 2008
ii) risk-free interest rate, 8.06% 9.44% 7.99%
iii) expected life, 6.75 years 6.75 years 6.75 years
iv) expected volatility, 35.50% 32.80% 33.41%
v) expected dividends, and 0.60% 0.51% 0.51%
vi) the price of the underlying share in market Rs. 359.25 Rs. 304.95 Rs. 198.55at the time of option grant.
Note : Each option entitles the holder to subscribe to 5 equity shares of Re. 1 each.
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ANNEXURE B
DISCLOSURE UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES(DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988.
A. Conservation of Energy
(a) Energy Conservation Measures Taken
• Increase in condensate recovery at Export Oriented Unit.
• Utilization of flash steam in Ethyl acetate plant.
• Energy conservation by replacement of vapour absorption heat pump operation from live steam toflash steam.
• Installation of variable frequency drive (VFD) for raw water pump.
• Energy conservation by heat recovery from condensate.
• Energy conservation by rationalization of vacuum pumps of Acetic Anhydride Plant.
• Installation of 19 Nos. of Energy efficient pumps in plants.
• Installation of automatic power factor correction panel.
• Reduction in power consumption by increasing the productivity of Aq. Choline chloride, Dry Choline &Vinyl Polymer Latex.
• Reduction in fuel cost by using Agro-waste in place of Furnace Oil.
• Optimization of lighting system.
• Installation of VFD for Furnace Oil circulation pumps, Hydraulic Vehicle Air Conditioning, Air HandlingUnits and Disc atomizer in Spray driers.
• Improved performance of Triple Effect Evaporator by increasing steam economy.
(b) Additional investment and proposals, if any, being implemented for reduction of consumption ofenergy
• Reduction in Power consumption of combustion air blower of Incinerator.
• Rationalization of steam pressure, to create additional extraction demand at 8 Kg/Cm2.
• Installation of VFD at blower of Single Super Phosphate dryer.
• Installation of energy efficient pumps for cooling tower.
• Installation of Energy efficient lighting in plants.
• Installation of VFD for Hot air generator Cold air fan & dryer ID Fan.
• Flat belt installation for Hammer mill, Air compressor & Refrigeration compressors.
• Conversion of Furnace Oil fired boiler to Solid fuel fired boiler.
• Timer based ON/OFF system for Air Conditioning.
• Installation of Light Emitting Diodes (LED) light fittings in place of conventional 250 W street light fitting.
• Optimization of compressed air system of utility.
• Installation of VFD and automation of Chilled water and Chilled brine Secondary pumps.
• Optimization of steam consumption in solvent recovery in Plants.
Expected investment in above initiatives is Rs. 46 million.
(c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impacton the cost of production of goods
• Reduction in steam and power consumption norms in all plants.
• Reduction in steam and power generation cost.
• Improved consistency in production.
1. Savings due to conservation of energy: Rs. 37 million per annum, approx.
2. Savings due to (b): Rs. 68 million per annum, approx.
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(d) Total Energy Consumption and energy consumption per unit of production
FORM A
A. Power & Fuel Consumption
2008-09 2007-08
1. Electricity
A. Purchased
i) Units KWH 51,568,941.00 53,160,832.00
ii) Total Amount Rs. in million 244.69 244.78
iii) Rate / unit Rs./KWH 4.74 4.60
B. Own Generation
Through DG
i) Units KWH 32,290,885.00 39,227,317.00
ii) Unit per litre of RFO/LDO KWH/LTR 3.54 3.54
iii) Cost / unit Rs./KWH 7.61 5.03
Through Steam Turbine Generator *
i) Units KWH 120,077,060.00 136,694,640.00
ii) Units per MT of Steam KWH/MT 470.57 533.04
iii) Cost / unit Rs./KWH 2.03 1.43
2. Coal**
Quantity MT 343,163.97 383,829.15
Total Cost Rs. in million 1,022.98 971.61
Average Rate Rs./MT 2,981.04 2,531.36
3. Furnace Oil
Quantity KL 17316.70 20,562.20
Total Cost Rs. in million 456.49 418.37
Average Rate Rs./KL 26,361.46 20,346.73
4. Others/Internal Generation
Internal Generation - Biogas
Quantity NM3 51,252,862.00 51,074,087.00
Total Cost *** Rs. in million 27.17 24.27
Average Rate Rs./NM3 0.53 0.48
* Steam is produced in boilers using coal, fuel and gas.** E grade coal is used for power generation and C/D grade is used for steam generation.*** No raw material cost as it is produced from waste water only.
B. Consumption per Unit of Production
2008-09 2007-08
Pharmaceuticals & Life Science Products
Electricity KWH/MT 758.21 767.23
Steam MT/MT 7.82 8.40
Furnace Oil LT/MT 77.86 56.14
Bio Gas NM3/MT 207.84 102.55
Pharmaceuticals & Life Science Products (Dosage)
Electricity KWH/No. 0.03 –
Steam MT/No. 0.00 –
Furnace Oil LT/No. 0.00 –
Bio Gas NM3/No. – –
ANNEXURE TO THE DIRECTORS’ REPORT
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
53
2008-09 2007-08
Industrial & Performance Products
Electricity KWH/MT 131.21 154.48
Steam MT/MT 0.99 1.12
Furnace Oil L/MT 3.21 2.45
Bio Gas NM3/MT 11.55 5.32
Reasons for variation in consumption of power and fuel from standard of previous year:
1. In Pharmaceuticals & Life Science Products segment, consumption of furnace oil has gone up due to lowavailability of biogas.
2. Power consumption has gone up due to induction of new product mix in existing plant and setting up of new plants.
B. Technology Absorption
(a) Research and Development (R & D)
The Company has R&D Centres at Noida, Gajraula, Nanjangud and Samlaya. The Company has 384 R&DEmployees out of which 92 are doctorates and others are post graduates and graduates. R&D supports theactivities of various businesses through new product development, diversification, process development,absorption of technology and establishing the technology on plant scale.
1. Specific areas where company carries out R&D:
(i) Active Pharmaceutical Ingredients and Dosage Forms
• Non-infringing Process development of generic Active Pharmaceutical Ingredients (APIs).• Non infringing process development of generic high potency oncology APIs.• Value creation in existing APIs through process improvement.• Development of chiral molecules through chemical and biological process.• Creation of intellectual property through development of creative synthetic routes.• Development of generic solid oral dosage forms for Human and Veterinary use.• Development of Novel Drug Delivery System.• Creation of intellectual property through development of non-infringing formulations.• Development of new validated analytical methods for non compendia products and sending them
to Pharmacopoeial committee for inclusion in the Pharmacopoeia.• Competent DRA team focusing on electronic submissions in Regulated and Emerging markets.
(ii) Biotechnology
• Bioethanol• Microbial processes for the treatment of industrial effluents.• Bio composting
(iii) Fine Chemicals
• Product/process developments in the area of pyridine and its derivatives and related heterocyclicchemistry.
• Extension of chemistry skills to non-heterocyclic compounds.• Value creation in existing key products through process improvements.• Chiral compounds.
(iv) Custom Research and Manufacturing Services (CRAMS)
• Process development & process optimization for Innovator, biotech & generic pharmaceuticalcompanies on Full Time Equivalent (FTE) and Molecule basis, by providing creative chemicalsolutions.
• Analytical protocol development service on FTE and Molecule basis.• Small-scale exclusive custom synthesis for pre-clinical and clinical studies.
(v) Performance Chemicals
• Development of speciality polymers.• Development of ethoxylates & emulsifiers.• Development of new latexes based on Butadiene chemistry.• Development of animal health care products.
ANNEXURE TO THE DIRECTORS’ REPORT
54
2. Benefits derived as a result of the above R&D
• Strong position in generic based businesses in regulated markets.• Two ANDA approvals received and expecting 3 more approvals in FY2009, two EU MA's are also expected.
Lamotrigine tablets are launched in US market immediately after patent expiry.• 8 ANDAs and 9 EU MA's are under review with the regulatory agencies.• Partners of choice for global pharmaceuticals and agrochemical companies.• Global leadership in select segments of our business.• Development of new products.• Generation of own IPRs to provide competitive edge.• Major growth in export of our products.• Competitiveness in cost and quality.• Effective effluent management.
3. Future Action Plan
• Process development for identified Active Pharmaceutical Ingredients and high potency oncology products.• Process development for identified dosage forms.• Novel Drug Delivery System research.• Process development of new derivatives of Pyridine and related heterocyclic chemicals.• Process development for non-heterocyclic chemicals leaveraging existing skills.• Bio transformations for the manufacture of fine and speciality chemicals.• Synthesis of chiral compounds.• Improvement in the fermentation technology and effluent management.• Development of new products in the field of polymers and adhesives for application in coating, textile,
footwear, paper, auto, electronic and other industries.• Implementation of lean six sigma in R&D for enhanced efficiency.
4. Expenditure on R&D (Rs./million)
2008-09 2007-08
(a) Capital 1,227 480
(b) Recurring 285 228
(c) Total 1,512 708
(d) Total R&D expenditure as a percentage of turnover 6.22% 3.58%
(e) R&D expenditure as a percentage of Pharmaceuticals 12.24% 6.94%& Life Science Products turnover
(b) Technology absorption, adaptation and innovation:
1. Efforts, in brief, made towards technology absorption, adaptation and innovation.
Research & Development plays a vital role in developing and adopting new technologies to enhance ouroperational efficiencies. We develop new technologies at the lab scale and the scientists andmanufacturing engineers work in close co-ordination to seamlessly scale-up the processes to commercialscale without losing on the efficiency of the process. Six Sigma initiatives at plants and R&D support, theadoption of new technologies and enhancing the efficiencies of our manufacturing plants to provide betterservices to our customers.
2. Benefits derived as a result of the above efforts, e.g. product improvement, cost reduction, productdevelopment, import substitution etc.
The innovation in all the areas of our business results in new and more efficient products, which helps inimprovement of the performance of our customers. Our R&D is grounded in business reality and wemeasure the performance of our R&D through the new product launches over the last five years and theircontribution to the net sales of your Company. Over the last five years, your Company developed 91products, which contributed 5% of the net sales.
These continuous efforts result in improvement in cost and our service to the customers.
3. In case of imported technology (imported during the last 5 years reckoned from the beginning of thefinancial year): Not Applicable
Technology Year of Has technology If not fully absorbed, areas where thisImported import been fully has not taken place, reasons therefor
absorbed? and future plans of action.
—————————— NIL ——————————
ANNEXURE TO THE DIRECTORS’ REPORT
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
55
C. Foreign Exchange Earnings and Outgo
a) Activities relating to exports, initiatives taken to increase exports, development ofnew export markets for products and services; and export plans
• Activities relating to exports
Jubilant has surpassed all export growth expectations by achieving 23.9% growth over the previousyear. During FY2009, exports were Rs. 10,977 million, as compared to Rs. 8,858 million in theprevious year. Exports contributed 45.2% of the net sales of the Company during FY2009, ascompared to 44.8% in FY2008.
Exports focus continues in tandem with the corporate philosophy of Pharmaceuticals and LifeScience Business. This segment contributed 50.9% of total sales during FY2009, as compared to51.6% during FY2008. This marks a growth of 21.1% during FY2009, as compared to last year.
• Initiatives taken to increase exports
Your Company also increased product penetration in existing markets of Mid-East. During the year,your Company explored new markets in Africa. Your Company added new products of CRAMSbusiness in regulated markets of Japan, Europe and USA.
• Development of new export markets for products and services
Your Company added many countries like Denmark, Sudan, Senegal, Madagascar etc. during theyear FY2009 to its total tally of total export countries.
The Company enhanced product penetration and realization effecting a 56% increase in CRAMSfrom the previous year.
The Company also enhanced product penetration, in its strong export markets of Europe. TheCompany added new customers to its existing portfolio of customers with stress on enhancingcustomer satisfaction levels. Several new customers are added especially in the area of FineChemicals, CRAMS and Acetyls in Europe.
Your Company has initiated and sustained Bulk Exports of its Acetyls products which cater to majorend use segments in Europe of Packaging, Starch Derivatives and Acetate Tow manufacturing.
Your Company has made inroads in enhancing the business in core activity of Fine Chemicals andCRAMS by adding new products to the existing supply portfolio to the global pharmaceutical majors.The Company has developed several key intermediates which are being used in advanced stageclinical trials paving the way for good future sales in the coming years. The Company has beenaccepted as a responsible and reliable supplier of intermediates and services to GlobalPharmaceutical and Agrochemical majors which has resulted in exclusive manufacturing anddevelopment contracts.
Persistent focus and efforts have resulted in initial breakthroughs with major pharmaceuticalcompanies in USA and Europe. Further, the effort has been to take over entire product segmentsfrom competition.
• Export Plans
Your Company would strive to sustain the existing business with its focus continuing on AdvanceIntermediaries in China. Our endeavor would be to explore markets for CRAMS business in China,Japan, Korea and East Europe. Your Company would emphasize on service delivers, as product'squality is already well established in the other geographies.
• Approach towards Foreign Exchange Risk Management
Your Company managed its foreign exchange risks by entering into forward contracts to ensure thatthere is a high degree of certainty about the exchange rates at which actual transactions shall berecorded.
(b) Total foreign exchange used and earned
(Rs. million)
2008-09 2007-08
Foreign exchange used 5,217 2,978
Foreign exchange earned 10,786 8,563
ANNEXURE TO THE DIRECTORS’ REPORT
56
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ANNEXURE TO THE DIRECTORS’ REPORT
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
57
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ANNEXURE TO THE DIRECTORS’ REPORT
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
59
ANNEXURE D
REPORT ON CORPORATE GOVERNANCE
a) Company’s Philosophy
Corporate Governance is both a tradition and a way of life at Jubilant.
Our Jubilant promise is: Caring, Sharing, Growing.
"We will, with utmost care for the environment, continue to enhance value for our customers by providing innovativeproducts and economically efficient solutions and for our shareholders through sales growth, cost effectiveness andwise investment of resources."
This credo succinctly sums up our basic corporate governance principles as follows:
• Caring for the environment which includes caring for the society around us.
• Enhancement of stakeholders value through pursuit of excellence, efficiency of operations, quest for growthand continuous innovation.
• Transparency, promptness and fairness in disclosures to and communication with all stakeholders includingshareholders, government authorities, customers, suppliers, lenders, employees and the community at large.
• Complying with laws in letter as well as in spirit.
Our Vision is driven by our Values, which are:
• teamwork to inspire confidence.
• efficiency to create and provide best value to customers.
• know how to provide innovative solutions.
• delivery to provide excellent quality of products and services.
The highlights of Jubilant's Corporate Governance Regime are:
• Broad based and well-represented Board with a fair representation of executive, non-executive andindependent directors with over 80% of the Board being non-promoters.
• Constitution of several Committees such as Audit Committee, Remuneration Committee, Investors GrievanceCommittee etc. for more focused attention.
• Established Codes of Conduct for Directors and Senior Management as also for other employees. InstitutedWhistle-blower policy and Code of Conduct for Prevention of Insider Trading.
• Focus on hiring, retaining and nurturing best talent and to promote a culture of excellence across theorganisation. Exhaustive HRD Policies cover succession planning, training and development, employeegrievance handling.
• Organisation wide 'Velocity' initiatives taken which include world-class improvement methodologies such asSix Sigma, Lean and World Class manufacturing.
• Exhaustive and unique system of internal controls spanning over 1875 control assertions monitored throughespecially designed software. The Company has voluntarily completed the documentation required as perSarbanes-Oxley Act.
• Robust Risk Management framework for identifying various risks, assessing their probability as well as likelyimpact and finalizing risk minimization plans.
• Regular communication with shareholders including e-mailing of quarterly results just after release to StockExchanges, obtaining regular and also online feedback from shareholders.
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• Comprehensive Corporate Sustainability Management System focussing on triple bottom- line reporting oneconomic, environment and society parameters as per Global Reporting Initiatives standards with a statedpolicy on sustainability.
The Corporate Governance practices of your Company are being acclaimed now. Your Company has won thefollowing three very prestigious global awards;
– Golden Peacock Global Award for Corporate Governance in September 2007
– Golden Peacock Global Award for Corporate Social Responsibility in February 2008
– Golden Peacock Global Award for CSR Reporting in September 2008
Jubilant is the only company to win all the three global awards. These awards recognize the best CorporateGovernance practices, concern for society and environment and creation of extraordinary value for shareholders byyour Company.
Standard & Poor (S&P), reputed agency of the world, launched ESG India Index 2008 wherein largest 500 NSElisted Indian companies were evaluated and ranked on Environment, Social and Governance standards. As ofDecember 31, 2007, Jubilant was ranked at number 6 on these parameters, implying that your Company is amongthe top six companies in India.
b) Board of Directors
The Board comprises of eleven directors out of which six are Non-Executive Independent Directors, two ManagingDirectors and three Executive Directors.
Board Meetings held during the year
During the year under review, 6 Board Meetings were held on April 4, 2008, April 22, 2008, May 8, 2008, July 15,2008, October 14, 2008 and January 27, 2009. The composition of the Board of Directors and attendance ofdirectors at the Board meetings, Annual General Meeting as also number of other directorships/committeememberships in Indian public limited companies are as follows:
Name of the Director Attendance No. of Category of Other Committeeat last Board Director Directorships membershipsAGM Meetings ^ (including
attended Chairmanship) ** ^
Mr. Shyam S. Bhartia @ Yes 6 CMD (Promoter) 12 3(3)
Mr. Hari S. Bhartia @ Yes 5 CCMD (Promoter) 13 6(1)
Dr. J. M. Khanna Yes 6 ED 3 1
Mr. S. N. Singh Yes 6 ED 2 1
Mr. Shyamsundar Bang Yes 5 ED 2 1
Mr. Bodhishwar Rai*** No 0 NED/ID – –
Mr. Arabinda Ray Yes 6 NED/ID 1 1(1)
Mr. Surendra Singh No 5 NED/ID 4 5(2)
Dr. Naresh Trehan No 4 NED/ID 4 3(1)
Mr. H K Khan No 3 NED/ID 3 3(1)
Mr. Ajay Relan~ # No 1 NED/ID – –
Mr. Rahul Yadav #! NA 0 NED/ID 5 0
Mr. Abhay Havaldar * No 5 NED/ID 0 0
Mr. Vishal Marwaha # NA 1 NED/ID 1 1(Alternate Director toMr. Ajay Relan/Mr. Rahul Yadav)
CMD - Chairman & Managing Director; CCMD - Co-Chairman & Managing Director; NED - Non Executive Director;ED - Executive Director; ID - Independent Director@ Mr. Shyam S. Bhartia and Mr. Hari S. Bhartia are related to each other, being brothers.# Nominee of Citicorp International Finance Corporation and HPC Mauritius Ltd. - Equity Investors.* Nominee of GA European Investments Limited - Equity Investors~Cessation from Directorship w.e.f. 14.10.2008! Appointed w.e.f. 14.10.2008^ Excluding private companies, Section 25 companies and foreign companies.** Committees for this purpose include Audit Committee and Investors Grievance Committee only. Committees of Jubilant arealso included.***Cessation from Directorship w.e.f. 16.10.2008 due to death.
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Board Agenda and Minutes
Regular Board meetings are held at least four times a year and maximum gap between the two meetings is notmore than four months. In addition, special meetings are called as may be necessary. An annual calendar ofmeetings is provided to the directors in the beginning of the year, to enable them to plan their attendance at themeetings. Directors are expected to attend Board Meetings, spend the necessary time and meet as frequently asthe situation warrants to properly discharge their responsibilities.
The Chairman and Managing Director (CMD)/Co-Chairman and Managing Director (CCMD) of the Company fromtime to time invite officers and other employees of the Company to attend Board Meetings, whenever deemedappropriate.
All Directors on the Board and various departments of the Company, communicate to the Company Secretary thematters requiring approval of the Board, well in advance, so that these can be included in the Agenda for thescheduled Board Meeting.
Agenda papers are circulated to the Board, well in advance before the Board Meeting. The agenda items areinclusive but not exhaustive of the following:
� Annual operating plans and budgets and any updates.
� Capital budgets and any updates.
� Quarterly results for the company and its operating divisions.
� Minutes of meetings of various committees of the Board.
� The information on recruitment and remuneration of senior officers just below the Board level, includingappointment or removal of Chief Financial Officer and the Company Secretary.
� Show cause, demand, prosecution and penalty notices which are materially important.
� Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems.
� Any material default in financial obligations to and by the company or substantial non-payment for goods soldby the company.
� Any issue, which involves possible public or product liability claims of substantial nature, including anyjudgement or order which may have passed strictures on the conduct of the company or taken an adverse viewregarding another enterprise that can have negative implications on the company.
� Details of any joint venture or collaboration agreement.
� Transactions that involve substantial payment towards goodwill, brand equity or intellectual property.
� Significant labour problems and their proposed solutions. Any significant development on the HumanResources/ Industrial Relations front like signing of wage agreement, implementation of Voluntary RetirementScheme etc.
� Sale of material nature of investments, subsidiaries or assets, which is not in the normal course of business.
� Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks ofadverse exchange rate movement, if material.
� Non-compliance of any regulatory, statutory or listing requirements and shareholders service such as non-payment of dividend, delay in share transfer etc.
Applicable provisions of law are being complied with by the Company. Further, the Company has substantiallycomplied with the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).
Draft Minutes of the Board meetings are circulated to the Directors of the Company for their comments thereon and,thereafter, confirmed by the Board in their next Meeting.
c) Committees of the Board
The Board of Directors has constituted Committees of Directors with adequate delegation of powers to dischargeurgent business of the Company. Committee members are appointed by the Board with the consent of individualdirectors. The Committees meet as often as required.
Each Committee has its own charter. The Charter of the Committee sets forth the purposes, goals andresponsibilities of the Committee.
The various Committees are:
I. Corporate Governance Committees
� Audit Committee
� Investors Grievance Committee
� Remuneration Committee
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II. Other Committees
� Finance Committee
� Compensation Committee
� Special Committee
The detailed terms of reference, composition, quorum and other details of the Committees are as under:
AUDIT COMMITTEE
The Audit Committee primarily constitutes a formal and transparent arrangement for accurate financial reportingand strong internal controls. The Committee through regular interaction with external and internal auditors andreview of various financial statements ensures that the interests of stakeholders are properly protected.
All members of the Audit Committee are financially literate and a majority have accounting or financial managementexpertise.
i) Terms of reference
The terms of reference of Audit Committee are the reviewing of all matters specified in Clause 49 of the ListingAgreement and Section 292A of the Companies Act, 1956, which, inter-alia, include the following:
• Recommending to the Board, the appointment, re-appointment and, if required, the replacement orremoval of the Statutory Auditors and the fixation of audit fees
• Approval of payment to Statutory Auditors for any other services rendered by the Statutory Auditors
• Reviewing with the management, the Annual Financial Statements before submission to the Board forapproval, with particular reference to:
– Matters required to be included in the Directors' Responsibility Statement to be included in theBoard's report in terms of Sub-section (2AA) of Section 217 of the Companies Act, 1956
– Changes, if any, in accounting policies and practices and reasons for the same
– Major accounting entries involving estimates based on the exercise of judgment by management
– Significant adjustments made in the financial statements arising out of audit findings
– Compliance with listing and other legal requirements relating to financial statements
– Disclosure of any related party transactions
– Qualifications in the draft audit report
• Reviewing with the management, the quarterly financial statements before submission to the Board forapproval
• Reviewing with the management, performance of Statutory and Internal Auditors, adequacy of the internalcontrol systems
• Reviewing the adequacy of internal audit function, if any, including the structure of the internal auditdepartment, staffing and seniority of the official heading the department, reporting structure, coverage andfrequency of internal audit
• Discussion with internal auditors of any significant findings and follow up thereon
• Reviewing the findings of any internal investigations by the Internal Auditors into matters where there issuspected fraud or irregularity or a failure of internal control systems of a material nature and reportingthe matter to the Board
• Discussion with Statutory Auditors before the audit commences, about the nature and scope of audit aswell as post-audit discussion to ascertain any area of concern
• To look into the reasons for substantial defaults in the payment to the depositors, debenture holders,shareholders (in case of non payment of declared dividends) and creditors
• Reviewing the functioning of the Whistle Blower mechanism
• Reviewing the Management discussion and analysis of financial condition and results of operations
• Reviewing the statement of significant related party transactions submitted by management
• Reviewing Management letters / letters of internal control weaknesses issued by the Statutory Auditors
• Reviewing the Internal audit reports relating to internal control weaknesses
• Reviewing the appointment, removal and terms of remuneration of the Chief Internal Auditor
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ii) Composition
The Committee comprises of 5 Non-Executive Independent Directors:
– Mr. Arabinda Ray (Chairman)
– Mr. Surendra Singh
– Mr. Rahul Yadav
– Mr. Abhay Havaldar
– Mr. H. K. Khan
Mr. Vishal Marwaha (being Alternate Director to Mr. Rahul Yadav) is an alternate member.
Mr. Bodhishwar Rai was a member of the Committee till he expired during the year.
Invitees
– Mr. S. N. Singh (Executive Director)
– Mr. Shyamsundar Bang (Executive Director)
– Dr. J. M. Khanna (Executive Director)
– Mr. R. Sankaraiah (Executive Director - Finance)
The Statutory Auditors, Internal Audit firm's representative, Head of the Assurance Audit Department, CostAuditor, and/or other executives as desired by the Committee, attend the meetings as invitees.
Secretary
– Mr. Lalit Jain (Company Secretary)
iii) Meetings and Quorum
The Audit Committee meets at least four times in a year with a gap of not more than four months between twomeetings. The quorum for the meeting is either two members or one third of the members, whichever is higher.
iv) Attendance during 2008-09
The Committee met 4 times during the year on April 22, 2008, July 15, 2008, October 14, 2008 and January27, 2009. The attendance details are as follows:
Name of the Member Status No. of meetings attended
Mr. Arabinda Ray* Member (Chairman) 4
Mr. Bodhishwar Rai** Chairman, upto 16.10.2008 0
Mr. Surendra Singh Member 4
Mr. Ajay Relan*** Member 0
Mr. Rahul Yadav**** Member 0
Mr. Abhay Havaldar Member 4
Mr. H. K. Khan Member 3
Mr. Vishal Marwaha ***** Alternate member 0
* Appointed as Chairman of the Committee w.e.f. 27.01.2009.** Ceased to be a Director w.e.f. 16.10.2008 due to death.*** Ceased to be a Director w.e.f. 14.10.2008.**** Appointed as nominee director in place of Mr. Ajay Relan on 14.10.2008.***** Alternate Director to Mr. Ajay Relan/Mr. Rahul Yadav.
INVESTORS GRIEVANCE COMMITTEE
The Investors Grievance Committee aims at redressal of shareholder complaints and overseeing investor services.
To expedite the process of share transfers, the Board of the company has delegated the power of share transfer tothe Investors Grievance Committee which attends to share transfer formalities once in a fortnight.
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i) Terms of reference
The Committee approves the matters relating to:
• Transfer or transmission of shares
• Issue of duplicate share certificates
• Non-receipt of balance sheet
• Non-receipt of dividend
• Review or redressal of investors' grievances
• Other areas of investor service
ii) Composition
The Committee comprises of the following Directors:
– Mr. H. K. Khan (Chairman)
– Mr. S. N. Singh
– Mr. Shyamsundar Bang
– Mr. Surendra Singh
Mr. Bodhishwar Rai was a member of the Committee till he expired during the year.
Secretary and Compliance Officer
– Mr. Lalit Jain (Company Secretary)
iii) Meetings and Quorum
The Investor Grievance Committee meets once in a fortnight. The quorum for the meeting is either twomembers or one third of the members of the Committee, whichever is higher.
iv) Attendance during 2008-09
The Committee met every fortnight, 24 times during the year. The attendance details are as follows:
Name of the Member Status No. of meetings attended
Mr. H. K. Khan Chairman 22
Mr. Bodhishwar Rai * Member 0
Mr. S. N. Singh Member 21
Mr. Shyamsundar Bang Member 23
Mr. Surendra Singh** Member 5
* Ceased to be a Director w.e.f. 16.10.2008 due to death.** Appointed as member of the Committee w.e.f. 27.1.2009.
v) Investors’ Complaints received and resolved during the year
During the year, the Company received 119 complaints, which were resolved. No complaint was pending as onMarch 31, 2009.
vi) Transfers and Transmissions approved
During the year under review, the Company received 255 cases (151,849 shares) of share transfer/transmission/ transposition out of which 142 cases (91,574 shares) were transferred and 113 cases (60,275shares) were rejected for technical reasons.
The Company had 22,802 investors as on March 31, 2009.
REMUNERATION COMMITTEE
The Remuneration Committee is responsible for framing policy on executive remuneration and for fixing theremuneration packages of Wholetime/Managing Directors. It also ensures that the levels of remuneration aresufficient to attract, retain and motivate directors to run the company successfully.
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i) Terms of reference
The Committee is empowered to decide and approve the remuneration of the Executive Board Members of theCompany.
ii) Composition
The Committee comprises of 3 Non-Executive Independent Directors namely:
– Mr. Arabinda Ray (Chairman)
– Mr. Surendra Singh
– Mr. H. K. Khan
Mr. Bodhishwar Rai was a member of the Committee till he expired during the year.
Invitee
– Mr. R. Sankaraiah (Executive Director - Finance)
Secretary
– Mr. Lalit Jain (Company Secretary)
iii) Meetings and Quorum
The Committee meets as frequently as circumstances necessitate. The quorum for the meeting is either twomembers or one third of the members of the Committee, whichever is higher.
iv) Attendance during 2008-09
The Committee met once during the year on October 14, 2008. The attendance details are as follows:
Name of the Member Status No. of meetings attended
Mr. Arabinda Ray Chairman 1
Mr. Bodhishwar Rai* Member 0
Mr. Surendra Singh Member 1
Mr. H. K. Khan** Member N.A.
* Ceased to be a Director w.e.f. 16.10.2008 due to death.** Appointed as member of the Committee w.e.f. 27.1.2009.
FINANCE COMMITTEE
The Board of Directors of the Company has delegated to the Finance Committee the powers to borrow moneys.
i) Terms of reference
• To avail financial assistance from Banks, Financial Institutions, NBFCs, Mutual Funds, InsuranceCompanies or any other Lenders by way of term loans, working capital loans or any other funding method
• To approve creation of the mortgages/charges in favour of lenders
ii) Composition
The Committee comprises of the following Directors:
– Mr. Shyam S. Bhartia (Chairman)
– Mr. Hari S. Bhartia
– Mr. S. N. Singh
– Mr. Shyamsundar Bang
– Mr. Surendra Singh
Mr. Bodhishwar Rai was a member of the Committee till he expired during the year.
Invitee
– Mr. R. Sankaraiah (Executive Director - Finance)
Secretary
– Mr. Lalit Jain (Company Secretary)
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iii) Meetings and Quorum
The Committee meets as frequently as circumstances necessitate. The quorum for the meeting is either twomembers or one third of the members, whichever is higher.
iv) Attendance during 2008-09
During the year, 5 meetings of the Committee were held on June 12, 2008, August 12, 2008, October 30,2008, January 15, 2009 and March 25, 2009. The attendance details are as follows:
Name of the Member Status No. of meetings attended
Mr. Shyam S. Bhartia Chairman 4
Mr. Hari S. Bhartia Member 4
Mr. Bodhishwar Rai* Member 0
Mr. S. N. Singh Member 4
Mr. Shyamsundar Bang Member 4
Mr. Surendra Singh** Member 1
* Ceased to be a Director w.e.f. 16.10.2008 due to death.** Appointed as member of the Committee w.e.f. 27.1.2009.
COMPENSATION COMMITTEE
The Compensation Committee has been constituted for administration and superintendence of the JubilantEmployees Stock Option Plan, 2005 (ESOP).
The Committee frames suitable policies and systems for grant of stock options so that there is full compliance withthe relevant provisions of the law. It also monitors the quantum of options to be granted under ESOP.
(i) Terms of reference:
• To determine the quantum of options to be granted under ESOP per employee and in the aggregate
• To formulate the conditions under which options vested in employees may lapse in case of termination ofemployment for misconduct
• To specify the exercise period within which the employees should exercise the options and that optionswould lapse on failure to exercise within the exercise period
• To specify the time period within which the employee shall exercise the vested options in the event oftermination or resignation
• To establish the right of an employee to exercise all the vested options at one time or at various points oftime within the exercise period
• To formulate the procedure for making a fair and reasonable adjustment to the number of options and tothe exercise price in case of corporate actions such as rights issues, bonus issues, merger, sale ofdivision and others and in case of employees who are on long leave and the procedure, if any, forcashless exercise of options
• To frame suitable policies and systems to ensure compliance with Securities and Exchange Board ofIndia (Prohibition of Insider Trading) Regulations, 1992 and Securities and Exchange Board of India(Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003.
(ii) Composition
The Committee comprises of the following Directors:
– Mr. Surendra Singh (Chairman)
– Mr. Hari S. Bhartia
– Mr. H. K. Khan
Mr. Bodhishwar Rai was a member of the Committee till he expired during the year.
Mr. S. N. Singh was a member of the Committee till he resigned as such during the year.
Invitee
– Mr. R. Sankaraiah (Executive Director - Finance)
Secretary
– Mr. Lalit Jain (Company Secretary)
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iii) Meetings and Quorum
The Committee meets as frequently as circumstances necessitate. The quorum for the meeting is either twomembers or one third of the members, whichever is higher.
iv) Attendance during 2008-09
During the year, 4 meetings of the Committee were held on April 22, 2008, July 15, 2008, October 14, 2008and January 27, 2009. The attendance details are as follows:
Name of the Member Status No. of meetings attended
Mr. Surendra Singh* Chairman 4
Mr. Bodhishwar Rai ** Chairman upto 16.10.2008 0
Mr. Hari S. Bhartia Member 4
Mr. S. N. Singh *** Member 3
Mr. H. K. Khan Member 3
* Appointed as Chairman of the Committee w.e.f. 27.1.2009.** Mr. Bodhishwar Rai was the Chairman of the Committee, who expired on 16.10.2008.*** Ceased to be a member of the Committee w.e.f. 27.01.2009.
SPECIAL COMMITTEES
The Special Committees have been constituted to issue and allot FCCBs / GDSs / Equity shares etc. TheCommittees decide the type of instrument and the terms and conditions of the issue/allotment/ conversion,appointment of merchant bankers, lawyers, auditors, depositories, printers and various other agencies.
(i) Terms of reference
• To decide the type of instrument and the terms and conditions of the issue/allotment/ conversion,appointment of various agencies
• To take all actions and decisions on matters relating to and/or incidental to the aforesaid issue
• To decide the nature, timing, pricing and other terms and conditions of the issue
• To issue and allot the GDSs / ADSs / FCCBs / Equity shares
• To liaise with any regulatory authority
• To approach stock exchange(s) for listing of the FCCBs/GDSs/ADSs/Equity shares
• To do all other acts and deeds in connection with above
(ii) Composition
The Committees comprise of the following Directors:
– Mr. Shyam S. Bhartia (Chairman)
– Mr. Hari S. Bhartia
– Mr. S. N. Singh
– Mr. H. K. Khan
Mr. Bodhishwar Rai was a member of the Committee till he expired during the year.
Invitee
– Mr. R. Sankaraiah (Executive Director - Finance)
Secretary
– Mr. Lalit Jain (Company Secretary)
iii) Meetings and Quorum
The Committees meet as frequently as circumstances necessitate. The quorum for the meeting is either twomembers or one third of the members, whichever is higher.
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iv) Attendance during 2008-09
During the year, 3 meetings of these Committees were held on May 5, 2008, June 2, 2008 and June 30, 2008.The attendance details are as follows:
Name of the Member Status No. of meetings attended
Mr. Shyam S. Bhartia Chairman 2
Mr. Hari S. Bhartia Member 2
Mr. S. N. Singh Member 3
Mr. Bodhishwar Rai * Member 0
Mr. H. K. Khan** Member N.A.
* Ceased to be a Director w.e.f. 16.10.2008 due to death.** Appointed as member of the Committee w.e.f. 27.1.2009.
Apart from the above, there are several Executive Committees comprising of Managing Directors /Whole timeDirectors and senior executives of the Company.
SUPPLY CHAIN COMMITTEE
i) Terms of reference
Focus on review of various aspects of supply chain performance including:
• Planning efficacy
• Purchase price monitoring
• Inventory monitoring
• Insurance
• Commercial matters
• Export related aspects
• Logistics optimization
• Indirect tax matters
• Legal matters
ii) Composition
– Mr. Shyamsundar Bang (Executive Director)
– Mr. S. N. Singh (Executive Director)
– Dr. J. M. Khanna (Executive Director)
– Mr. R. Sankaraiah (Executive Director - Finance)
– Mr. Manoj D Soni (Chief of Supply Chain)
– Mr. Amit Arora (Head - Financial Planning and Analysis)
Any other person, if required, is invited.
iii) Meetings
The Committee meets as frequently as circumstances necessitate. Normally, meetings are held once a week.
PURCHASE COMMITTEE
i) Terms of reference
Focus on review of various aspects of purchasing including:
• Review of purchase proposals (Top 60 items i.e. 90% value)
• Vendor development
• Vendor evaluation
• Logistics contracts & planning
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ii) Composition
– Mr. Shyamsundar Bang (Executive Director)
– Mr. S. N. Singh (Executive Director)
– Dr. J. M. Khanna (Executive Director)
– Mr. R. Sankaraiah (Executive Director - Finance)
– Mr. Manoj D Soni (Chief of Supply Chain)
– Mr. Amit Arora (Head - Financial Planning and Analysis)
Any other person, if required, is invited.
iii) Meetings
The Committee meets as frequently as circumstances necessitate. Normally, the Committee meets twice aweek.
BUSINESS PERFORMANCE REVIEW COMMITTEE
i) Terms of reference
To review the business performance of the Company.
ii) Composition
– Mr. Shyam S. Bhartia (Chairman and Managing Director)
– Mr. Hari S. Bhartia (Co - Chairman and Managing Director)
– Mr. R. Sankaraiah (Executive Director-Finance)
– Dr. J. M. Khanna (Executive Director)
– Mr. S. N. Singh (Executive Director)
– Mr. Shyamsundar Bang (Executive Director)
– Mr. Amit Arora (Head - Financial Planning and Analysis)
Any other person, if required, is invited.
iii) Meetings
The Committee meets as frequently as circumstances necessitate. Normally, meetings are held once in amonth.
CAPEX COMMITTEE
i) Terms of reference
To focus on
• Prioritisation of capex needs
• Feasibility analysis of capex proposal
• Review of Cash flow and alternative funding arrangements for capex
• Capex returns and project evaluation
ii) Composition
– Mr. R. Sankaraiah (Executive Director - Finance)
– Mr. Shyamsundar Bang (Executive Director)
– Mr. S. N. Singh (Executive Director)
– Dr. J. M. Khanna (Executive Director)
– Mr. Amit Arora (Head - Financial Planning and Analysis)
Any other person, if required, is invited.
iii) Meetings
The Committee meets as frequently as circumstances necessitate. Normally, meetings are held once in amonth.
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CREDIT CONTROL COMMITTEE
i) Terms of reference
• Validation of customer credit limits
• Monitoring of actual credit vs. approved credit limits
• Review and assist in formulation of various divisional credit policies
• Review of accounts receivables ageing
• Review of pricing policy
ii) Composition
– Mr. R. Sankaraiah (Executive Director - Finance)
– Mr. S. N. Singh (Executive Director)
– Dr. J. M. Khanna (Executive Director)
– Mr. Shyamsundar Bang (Executive Director)
– Mr. Amit Arora (Head - Financial Planning and Analysis)
Any other person, if required, is invited.
iii) Meetings
The Committee meets as frequently as circumstances necessitate.
d) Details of remuneration paid to directors for the year 2008-09, their Directorships, business interests andrelationships with the other Directors/Company.
i) Remuneration to Managing/Whole-Time Directors
Mr. Shyam S. Bhartia, Chairman & Managing Director and Mr. Hari S. Bhartia, Co-Chairman & ManagingDirector, were re-appointed for a period of five years each w.e.f. April 01, 2007.
Mr. S. N. Singh and Mr. Shyamsundar Bang, Executive Directors, were re-appointed for a period of five yearseach w.e.f. November 01, 2008. Dr. J. M. Khanna was re-appointed w.e.f. August 16, 2007 as ExecutiveDirector for a period of five years.
Remuneration including perquisites, commission and retirement benefits paid/payable to directors for the year2008-09 was as follows:
(Amounts in Rupees)
Mr. Shyam S. Mr. Hari S. Mr. S. N. Mr. Shyamsundar Dr. J. M.Bhartia Bhartia Singh Bang Khanna
Salary 1,500,000 1,500,000 6,031,650 6,513,150 7,563,225
Commission 11,000,000 11,000,000 Nil Nil Nil
Perquisites/ 22,513,585 22,308,000 5,698,133 5,323,761 7,268,091Allowances
Contribution to _ _ _ 976,973 _Superannuation Fund
Contribution to 180,000 180,000 723,798 781,578 907,587Provident Fund
TOTAL 35,193,585 34,988,000 12,453,581 13,595,462 15,738,903
The above excludes the provision for gratuity and leave encashment, as the same is calculated on overallcompany basis.
Service Contracts, Notice Period, Severance Fees
The appointments of Managing Directors and Whole-time Directors are contractual.
The appointments of the Whole time Directors are terminable by the Company by giving 3 months’ notice orsalary in lieu thereof.
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ii) Remuneration to Non-Executive Directors
Sitting fees for Board Meetings/ Committee Meetings and commission paid/ payable to the Non-ExecutiveDirectors for year ended March 31, 2009 were as under:
Sitting Fees Commission*Rs. Rs.
Mr. Arabinda Ray 165,000 200,000
Mr. Surendra Singh 182,000 200,000
Mr. H. K. Khan 160,000 200,000
Dr. Naresh Trehan 80,000 200,000
Mr. Ajay Relan – –
Mr. Abhay Havaldar – –
Mr. Rahul Yadav – –
Total 587,000 800,000
*Commission to the non-executive directors is payable in terms of approval obtained from the Central Government. Thesame is payable after the accounts are approved at the next Annual General Meeting.
Number of Equity Shares/ Stock Options in the Company held by Non-Executive Directors as onMarch 31, 2009
Name No. of Equity Shares of No. of Stock Options #Re.1/- held
Mr. Arabinda Ray 6,050 3,250 *
Mr. Surendra Singh _ 5,000
Mr. H. K. Khan _ 5,000
Dr. Naresh Trehan _ 5,000
Mr. Abhay Havaldar _ _
Mr. Rahul Yadav^ _ _
# These Stock Options were granted on September 6, 2005. The holder of each Stock Option has a right to subscribe tofive equity shares of Re.1/- each at an exercise price of Rs.201.33 per equity share.
* Mr. Arabinda Ray was granted 5,000 Stock Options on September 6, 2005. He exercised 500 options during 2006-07,and 1,250 options during 2008-09.
^ Appointed as Director w.e.f. 14.10.2008.
Other than holding shares/options as above and remuneration indicated above, the non-executive directors didnot have any pecuniary relationship or transactions with the Company.
iii) Criteria for making payment to Non-Executive Directors
The Company considers the time and efforts put in by the Non-Executive Directors in deliberations at Board/Committee meetings. They are compensated through sitting fees for attending the meetings and also throughcommission as approved by members and the Central Government.
iv) Holding of Directorships in other Companies.
Mr. Shyam S. Bhartia
� Jubilant Chemsys Limited
� Jubilant Infrastructure Limited
� Clinsys Clinical Research Limited
� Jubilant Organosys (USA) Inc.
� PSI Supply NV
� Jubilant Pharmaceuticals NV (Formerly Pharmaceutical Services Incorporated NV)
� Jubilant Pharma NV
� Jubilant Pharma Pte. Ltd.
� Cadista Holdings Inc.
� Cadista Pharmaceuticals Inc.
� Clinsys Holdings Inc.
� Clinsys Clinical Research Inc.
REPORT ON CORPORATE GOVERNANCE
72
� Jubilant Discovery Services Inc.
� Jubilant Energy (Holding) B.V.
� Jubilant Energy Limited Canada
� Jubilant Enpro Private Limited
� Enpro Oil Private Limited
� Jubilant Capital Private Limited
� Tower Promoters Private Limited
� Nikita Resources Private Limited
� Jaytee Private Limited
� Vam Holdings Limited
� Geo-Enpro Petroleum Limited
� Focus Brands Trading (India) Private Limited
� Lionel India Limited
� Zuari Industries Limited
� Chambal Fertilizers & Chemicals Limited
� Safe Foods Corporation
� Domino's Pizza India Limited
� B & M Hotbreads Private Limited
� B T Telecom (India) Private Limited
� American Orient Capital Partners (India) Private Limited
� Jubilant Bhartia Foundation
� Jubilant First Trust Healthcare Limited
� Hollister-Stier Laboratories LLC
� HSL Holdings Inc.
� Jubilant Energy NV, Netherlands
� Putney Inc.
� CFCL Technologies Limited (Cayman Islands)
� CFCL Venture Limited (Cayman Islands)
� Jubilant Innovation (USA) Inc.
� Jubilant Innovation (India) Limited
� ACME Tele Power Limited
� DRAXIS Specialty Pharmaceuticals Inc.(Formerly Jubilant Acquisition Inc. and post merger of Draxis Health Inc.)
� Indo Marac Phosphore SA, Morocco
� 6963196 Canada Inc.
� 6981364 Canada Inc.
� Deprenyl Inc., USA
� Draximage Limited, Cyprus
� DSPI Inc., USA
Mr. Hari S. Bhartia
� Jubilant Chemsys Limited
� Jubilant Biosys Limited
� Jubilant Infrastructure Limited
� Clinsys Clinical Research Limited
� PSI Supply NV
� Jubilant Pharmaceuticals NV (Formerly Pharmaceutical Services Incorporated NV)
� Jubilant Pharma NV
� Jubilant Pharma Pte. Ltd.
� Cadista Holdings Inc.
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� Cadista Pharmaceuticals Inc.
� Clinsys Holdings Inc.
� Clinsys Clinical Research Inc.
� Jubilant Discovery Services Inc.
� Jubilant Energy (Holding) B.V.
� Jubilant Energy Limited Canada
� Jubilant Enpro Private Limited
� Enpro Oil Private Limited
� Jubilant Securities Private Limited
� Nikita Resources Private Limited
� Jaytee Private Limited
� Vam Holdings Limited
� Geo-Enpro Petroleum Limited
� Domino's Pizza India Limited
� B & M Hotbreads Private Limited
� B T Telecom (India) Private Limited
� Television Eighteen India Limited
� IBN 18 Broadcast Limited
� Digital Talkies Private Limited
� American Orient Capital Partners (India) Private Limited
� Jubilant Bhartia Foundation
� Jubilant First Trust Healthcare Limited
� Hollister-Stier Laboratories LLC
� HSL Holdings Inc.
� Jubilant Energy NV, Netherlands
� Jubilant Innovation (USA) Inc.
� Jubilant Innovation (India) Limited
� Jubilant Organosys International Pte. Ltd.
� Asia Healthcare Development Limited
� Jubilant Biosys (Singapore) Pte. Ltd.
� Jubilant Drug Development Pte. Ltd.
� Jubilant Biosys (BVI) Ltd.
� Jubilant Organosys (BVI) Ltd.
� DRAXIS Specialty Pharmaceuticals Inc.(Formerly Jubilant Acquisition Inc. and post merger of Draxis Health Inc.)
� 6963196 Canada Inc.
� 6981364 Canada Inc.
� Jubilant Innovation Pte. Limited
� Draximage Limited, Ireland
� Focus Brands Trading (India) Private Limited
� Jubilant Retail Consolidated Pvt. Ltd.
� Jubilant Retail Holding Pvt. Ltd.
� Jubilant Retail Pvt. Ltd.
� Shriram Pistons & Rings Ltd.
Mr. Arabinda Ray
� SDV International Logistics Limited
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74
Mr. S. N. Singh
� Jubilant Biosys Limited
� Jubilant Organosys (USA) Inc.
� Speciality Molecules Limited
Mr. Shyamsundar Bang
� U. C. Gas Engineering Limited
� Jubilant Infrastructure Limited
� Asia Infrastructure Development Co. Private Limited
Dr. J. M. Khanna
� Jubilant Chemsys Limited
� Jubilant Biosys Limited
� PSI Supply NV
� Jubilant Pharmaceuticals NV (Formerly Pharmaceutical Services Incorporated NV)
� Cadista Holdings Inc.
� Cadista Pharmaceuticals Inc.
� Cadista Pharmaceuticals (UK) Limited
� Clinsys Clinical Research Limited
Mr. Surendra Singh
� NIIT Limited
� NIIT Technologies Limited
� NIIT Smart Serve Limited
� CMC Limited
Dr. Naresh Trehan
� Afsan Health Resorts Private Limited
� Dabur Pharma Limited
� Global Health Private Limited
� Globerian India Private Limited
� Raksha TPA Private Limited
� Trasa Investments Private Limited
� Wah India Private Limited
� Punj Lloyd Limited
� Naresh Trehan Holdings Private Limited
� Shrumps Real Estates Limited
� Kingfisher Airlines Limited
� Dr. Naresh Trehan & Associates Health Services Private Limited
Mr. H. K. Khan
� Calcom Visions Limited
� Asahi Songwon Colors Limited
� Today’s Petrochemicals Limited
� Sherwood Infrastructures (India) Private Limited
Mr. Rahul Yadav
� International Tractors Limited
� International Cars & Motors Limited
� Sharekhan Limited
� SVIL Mines Limited
� Sew Construction Pvt. Ltd.
� Indu Projects Limited
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Mr. Abhay Havaldar
� Patni Computer Systems Limited
� IBS Software Services Private Limited
Mr. Vishal Marwaha (Alternate Director to Mr. Rahul Yadav)
� Hindustan Sanitaryware & Industries Limited
� Henderson Equity Partners India Private Limited
� Sharda Worldwide Exports Private Limited
e) Remuneration Policy
Remuneration policy aims at encouraging and rewarding good performance/contribution to company objectives.
f) General Body Meetings
(i) The last three Annual General Meetings of the Company were held as under:
Financial Year Date Time Location
2007-08 September 27, 2008 11.30 a.m. Registered Office: Bhartiagram, GajraulaDistrict Jyotiba Phoolay Nagar, U.P.
2006-07 September 25, 2007 11.30 a.m. Same as above
2005-06 September 19, 2006 11.30 a.m. Same as above
(ii) Special resolutions passed during last 3 AGMs
AGM Date of AGM Subject matter of Special Resolutions Passed
30th AGM September 27, 2008 NIL
29th AGM September 25, 2007 NIL
28th AGM September 19, 2006 NIL
(iii) Special resolutions passed through Postal Ballot last year
1) Postal Ballot dated May 26, 2008
a) For modification of Jubilant Employees Stock Option Plan 2005 to:
– provide for accelerated vesting and new lock-in provisions, etc.
– provide for recovery of Fringe Benefit Tax, etc.
2) Postal Ballot dated October 14, 2008
a) For increasing the number of stock options from 717,500 to 1,100,000 thereby increasing theresultant number of equity shares on exercise from 3,587,500 to 5,500,000 shares of Re. 1 each.
b) For constitution of Jubilant Employees Welfare Trust for subscription / acquisition of equity shares ofthe Company from the Company / secondary market, to hold the shares and to allocate/transfer suchshares to eligible employees of the Company.
c) For re-appointment of Mr. S. N. Singh as Executive Director w.e.f. November 1, 2008 for a period offive years.
(iv) Whether any Special Resolutions are proposed to be passed through Postal Ballot
None.
(v) Procedure for Postal Ballot
– The notices containing the proposed resolutions and explanatory statements thereto are sent to theregistered addresses of all shareholders of the Company alongwith a Postal Ballot Form and a postagepre-paid envelope containing the address of the Scrutinizer appointed by the Board for carrying out postalballot process.
– The Postal Ballot Forms received within 30 days of despatch are considered by the Scrutinizer.
– The Scrutinizer submits his report to the Chairman and Managing Director of the Company, who on thebasis of the report, announces the results.
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g) Disclosures
(i) The Company does not have any material unlisted Indian subsidiary company.
(ii) There are no materially significant transactions with the related parties viz. promoters, directors or themanagement, their subsidiaries or relatives, etc. that may have a potential conflict with the interests of theCompany at large. Related party transactions are given at Note No. 21A of Schedule 'O' to the accounts.
(iii) No non - compliances have taken place nor have any penalties or strictures been imposed on the Company bythe Stock Exchanges or SEBI or any statutory authority on any matter related to capital markets during the lastthree years.
The Company has established a Whistle Blower Policy to make the workplace conducive to opencommunication regarding business practices and to protect the employees from unlawful victimization,retaliation or discrimination for their having disclosed or reported fraud, unethical behaviour, violation of Codeof Conduct, questionable accounting practices, grave misconduct etc.
The Policy has been posted on the Company's intranet viz: "Chemway".
During the year, no personnel were denied access to the Audit Committee.
h) Means of Communication
(i) The quarterly results of the Company are sent to the Stock Exchanges immediately after they are approved bythe Board. The results are published in leading Business Newspapers of the country like 'The FinancialExpress' and 'Business Standard' and regional newspapers like 'Aaj' and 'Dainik Jagran' in accordance withthe guidelines of Stock Exchanges.
(ii) The quarterly financial results are posted on the website of the Company at www.jubl.com. The website alsodisplays official news release. The results are also posted on the official website of SEBI www.sebiedifar.nic.in
(iii) Your Company has well laid out plans for communication to institutional shareholders and brokers. A detailedinvestors communication is sent through e-mail to all the leading Indian and international analysts on both buyand sell side and fund managers. These are also available on company's website for general public. Duringthe financial year, the company organised Earnings Calls after announcement of quarterly results, which werewell attended by the analysts, fund managers and investors. The Company also organised one to onemeetings with investors in Mumbai post the announcement of quarterly results. Investor presentations weremade during road shows in India as well as overseas.
i) General Shareholders’ Information
(i) Date, time and venue for 31st Annual General Meeting:
As per notice of 31st Annual General Meeting.
(ii) Tentative Financial Calendar- 2009-10*
Item Tentative Dates *
First Quarter Results July 14, 2009
Half Yearly Results October 13, 2009
Third Quarter Results January 12, 2010
Audited Annual Results for the year April 20, 2010
*As approved by the Board. However these dates are subject to change.
(iii) Book Closure & Dividend Payment Dates
As per Notice of 31st Annual General Meeting. The dividend, if declared, will be paid within 30 days from thedate of the Annual General Meeting.
(iv) Listing on Stock Exchange and Stock codes
The names of the Stock Exchanges at which the securities of the Company are listed and the respective stockcodes are as under:
S. No. Name of the Stock Exchange Security Listed Stock Code
1. Bombay Stock Exchange Limited Equity Shares 530019
2. National Stock Exchange of India Limited Equity Shares JUBILANT
3. Singapore Stock Exchange FCCB XS 0191865632XS 0219608022XS 0252816672
4. Luxembourg Stock Exchange GDS (on conversion of FCCB) 019274578
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(v) Market price data
High/low of market price of the Company’s equity shares traded on the Stock Exchanges during 2008-09was as follows:
(Equity Shares of Re. 1 each)
Month BSE NSE
High Low High Low(Rs.) (Rs.) (Rs.) (Rs.)
April, 2008 379.90 320.00 400.00 266.85
May, 2008 390.95 330.00 390.95 346.00
June, 2008 373.00 300.05 365.00 300.00
July, 2008 371.20 282.15 369.90 290.10
August, 2008 380.00 345.35 384.90 348.00
September, 2008 374.95 262.00 368.90 250.10
October, 2008 287.10 140.10 288.85 145.00
November, 2008 189.00 120.60 188.50 120.00
December, 2008 130.00 102.00 134.00 101.50
January, 2009 153.00 117.20 155.00 116.00
February, 2009 133.00 108.50 132.00 107.10
March, 2009 110.45 85.00 109.95 84.00
(vi) Performance of the Company’s equity shares in comparison to BSE Sensex
The above chart is based on the monthly closing prices of the shares of the Company and monthlyclosing BSE Sensex.
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(vii) Growth in Equity Capital
Year Particulars Increase in Cumulative Face Valuenumber of Number of (Rs.)/each
Shares Shares
1978 Issue of Shares to initial subscribers 1,200 1,200 10
1981 Issued to Indian promoters 608,370 609,570 10
1981 Issued to Foreign collaborators 655,430 1,265,000 10
1981 Issued to Public through public issue 2,200,000 3,465,000 10
1982-1983 Rights Issue 1: 5 693,000 4,158,000 10
1984-1985 Forfeited on account of non-payment of allotment money -3,200 4,154,800 10
1986-1987 Conversion of loan into equity shares 1,006,180 5,160,980 10
1995-1996 Issued to shareholders of RamgangaFertilizers Limited upon merger with theCompany 256,522 5,417,502 10
1999-2000 Issued to Shareholders of Anichem IndiaLimited & Enpro Speciality ChemicalsLimited upon merger with the Company 839,897 6,257,399 10
2001-2002 Conversion of 1,500,000 Warrants issuedto promoters on preferential basis 1,500,000 7,757,399 10
2002-2003 Sub-division of shares fromRs.10/- to Rs.5/- 7,757,399 15,514,798 5
2002-2003 Cancellation of shares as per Scheme ofAmalgamation of the Company with VamLeasing Limited & Vam Investments Limited -851,234 14,663,564 5
2003-2004 Issue of Bonus shares in the ratio of 3: 5 8,798,139 23,461,703 5
2004-2005 Issued to foreign investors onpreferential basis 2,424,273 25,885,976 5
2004-2005 Part conversion of FCCBs 27,379 25,913,355 5
2005-2006 Part conversion of FCCBs 1,448,348 27,361,703 5
2005-2006 Issued to foreign investors onpreferential basis 990,000 28,351,703 5
2005-2006 Sub-division of shares fromRs.5/- to Re.1/- 113,406,812 141,758,515 1
2005-2006 Part conversion of FCCBs 684,480 142,442,995 1
2006-2007 Part conversion of FCCBs 999,339 143,442,334 1
2006-2007 Issue of shares upon exercise ofOptions under Jubilant EmployeesStock Option Plan, 2005 3,000 143,445,334 1
2007-08 Part conversion of FCCBs 2,675,375 146,120,709 1
2007-08 Issue of shares upon exercise ofOptions under Jubilant EmployeesStock Option Plan, 2005 65,205 146,185,914 1
2008-09 Issue of shares upon exercise ofOptions under Jubilant EmployeesStock Option Plan, 2005 46,630 146,232,544 1
2008-09 Part conversion of FCCBs 13,09,714 147,542,258 1
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(viii) Appreciation in Share Price
Over the last 8 years, the Company transformed from a commodity chemicals manufacturer to anintegrated pharmaceutical industry player.
A person who invested Rs.1 lac in the Company on April 1, 2001 has holdings worth Rs. 24 lacsnow as computed below:
Date Action No. of FaceResultant Value
Shares (Rs.)
April 2, 2001 Purchased shares @ Rs. 62.90 per share 1,589.83 10(BSE Opening Price)
November 21, 2002 Sub-division of shares from Rs. 10/- to Rs. 5/- 3,179.65 5
March 18, 2004 Issue of Bonus Shares 3:5 5,087.44 5
March 24, 2006 Sub-division of shares from Rs. 5/- to Re. 1/- 25,437.20 1
Total value of 25,437.20 equity shares on March 31, 2009 @ Rs. 95.40 per share is Rs. 2,426,708.88
Thus, the investor has multiplied his wealth over 24 times in 8 years, implying a CompoundedAnnual Growth Rate of 49% approximately. In addition, he has got handsome dividends.
(ix) Compliance Officer
Mr. Lalit Jain, Company Secretary, is the Compliance Officer appointed by Board. He can be contactedfor any investor related matter relating to the Company. His contact no. is +91 120 2516601;Fax no. +91 120 2516629 and e-mail id is [email protected].
(x) Registrar and Transfer Agent
The Company has appointed M/s Alankit Assignments Limited, Alankit House, 2E/21, JhandewalanExtension, New Delhi-110055 as Registrar and Share Transfer Agent for physical as well as electronicconnectivity with the depositories for dematerialised shares.
(xi) Share Transfer System
Investors Grievance Committee is authorised to approve transfers of securities. Share transfers whichare received in physical form, are processed and the share certificates are normally returned within aperiod of 15 days from the date of receipt subject to the documents being valid and complete in allrespects. The dematerialised shares are transferred directly to the beneficiaries by the depositories.
(xii) Shareholder Satisfaction Survey
During the year under review, the Company conducted a survey to assess the shareholders'satisfaction level on the investor services being rendered by the Company, comprising:
1. Timely receipt of Annual Report
2. Quality & content of Annual Report
3. Dissemination of information about the Company
4. Response time & satisfaction level experienced
5. Interaction with Company's officials
6. Interaction with Registrar & Transfer Agents
7. Investor service section of Company's website
8. Overall rating of our investor services
The shareholders were asked to give one of the four possible ratings to each of the above:-
• Excellent
• Very Good
• Good
• Poor
The responses were converted into numbers after assigning weightages for each of the above 4 ratings.
The Composite Satisfaction Index arrived as above is 68.8%.
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(xiii) Distribution of shareholding as on March 31, 2009
(a) Value wise
Shareholding of Shareholders Shareholding
nominal value in Rs. Number % of Total Number % of Total
Upto 5000 22,405 98.26 11,461,859 7.77
5001 to 10000 208 0.91 1,492,564 1.01
10001 to 20000 66 0.29 896,277 0.60
20001 to 30000 23 0.10 590,703 0.40
30001 to 40000 12 0.05 426,028 0.29
40001 to 50000 3 0.01 135,841 0.09
50001 to 100000 23 0.10 1,720,087 1.17
100001 and above 62 0.28 130,818,899 88.67
Total 22,802 100.00 147,542,258 100.00
(b) Category wise
S. No. Category No. of shares Shareholding as a percentageof total number of shares
A Promoters & Promoter Group 74,420,424 50.44
B Public Shareholding1 Financial Institutions / Banks 2,289,098 1.55
2 UTI & Mutual Funds 2,363,998 1.60
3 Domestic Companies 12,216,941 8.28
4 Non Resident Indians 692,586 0.47
5 FII / Foreign Investors 36,414,763 24.68
6 Indian Public 19,144,448 12.98
Grand Total 147,542,258 100.00
(xiv) Disclosures
In accordance with the SEBI (Prohibition of Insider Trading) Regulations, 1992 and subsequentamendments, the Company has fomulated Jubilant Organosys Limited - Insider Trading Code forobservance by its Directors and other identified persons.
The Company Secretary is the Compliance Officer in this regard.
(xv) Unclaimed Dividends
Dividends pertaining to the financial years upto and including 1993-94, remaining unclaimed, have beentransferred to the General Revenue Account of the Central Government. Shareholders having validclaims of unpaid dividend for any of these financial years may approach the Registrar of Companies,U.P. & Uttaranchal, Kanpur.
Dividends pertaining to the financial years 1994-95 to 2000-01, remaining unpaid, have beentransferred to the Investor Education and Protection Fund (the Fund) established under Section 205C ofthe Companies Act, 1956 (the Act). As per said Section, no claims are allowed from the Fund.
In respect of unpaid/unclaimed dividends for the year 2001-02 onwards, the shareholders are requestedto write to the Company. Dividends remaining unclaimed for seven years from the date of transfer ofunpaid dividend account, will be transferred as per Section 205A (5) of the Act to the Fund.
Shareholders who have not encashed their dividend warrants relating to the dividends specified in thetable given below are requested to immediately approach the Registrar and Transfer Agent for issue ofduplicate warrants.
Financial Year Particulars Date of declaration Due for transfer
2001-02 Final Dividend September 23, 2002 October 26, 2009
2002-03 Final Dividend September 26, 2003 October 29, 2010
2003-04 Interim Dividend January 9, 2004 February 13, 2011
2003-04 Final Dividend September 15, 2004 October 15, 2011
2004-05 Final Dividend August 29, 2005 October 4, 2012
2005-06 Final Dividend September 19, 2006 October 22, 2013
2006-07 Final Dividend September 25, 2007 October 30, 2014
2007-08 Final Dividend September 27, 2008 October 30, 2015
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(xvi) Information pursuant to Clause 49 IV (G) (i) of the Listing Agreement
Information pertaining to particulars of Directors to be appointed and re-appointed at the forthcomingAnnual General Meeting is being included in the Notice convening the Annual General Meeting.
(xvii) Compliance Certificate of the Statutory Auditors
The Company has obtained a Certificate from the Statutory Auditors regarding compliance of conditionsof Corporate Governance as stipulated in Clause 49 of the Listing Agreement. The Certificate isattached as Annexure E.
(xviii) Distribution of Shareholding as on March 31, 2009
(xix) (a) Dematerialisation of Shares
The shares of the Company fall under the category of compulsory delivery in dematerialised modeby all categories of investors. The Company has signed agreements with National SecuritiesDepository Limited (NSDL) and Central Depositories Services (India) Limited (CDSL). As onMarch 31, 2009, 135,499,831 equity shares of the Company (91.84% of the paid-up capital) werein dematerialised form.
(b) Liquidity
The Equity Shares of the Company are frequently traded on the National Stock Exchange as wellas on the Bombay Stock Exchange (Group A).
(xx) Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, conversion date and likelyimpact on equity
(a) Your Company, during 2004-05, 2005-06 and 2006-07, issued Foreign Currency ConvertibleBonds (FCCBs) of USD 35 million, USD 75 million and USD 200 million, respectively.
In accordance with Reserve Bank of India's guidelines, the Company bought back at a discountand cancelled during the year, FCCBs amounting to USD 60.9 million.
The balance FCCBs along with the number of shares to be issued, if converted, is given below:
Particulars Year of Size of Interest FCCBs FCCBs Balance No. of sharesIssue Issue Rate(%) converted bought FCCBs of Re.1 each
(in million into equity back outstanding Conversion Conversion (to be allottedUSD) shares (in million (in million Period Price per if converted
(in million USD) USD) Equity for outstandingUSD) Share (Rs.) FCCBs)
FCCB 2004-05 35 1.5 34.7 0 0.3 June 14, 163.646 82,1402009 2004 and
April 15, 2009
FCCB 2005-06 75 0 22.3 3.0 49.7 July 3, 273.0648 7,883,2312010 2005 and
May 14, 2010
FCCB 2006-07 200 0 0 57.9 142.1 June 30, 413.4498 15,483,3912011 2006 and
May 10, 2011
Total 310 57.0 60.9 192.1 23,448,762
Whilst the FCCBs are listed on Singapore Stock Exchange, the Global Depository Shares (GDSs) arising out of conversionof FCCBs are listed on Euro MTF Market of the Luxembourg Stock Exchange.
Conversion Details
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82
(b) Further, the impact of future conversions of FCCBs into equity shares on the share capitalassuming full conversion would be as follows:-
Particulars No. of Shares of Re. 1 each
Paid-up Share Capital as on March 31, 2009 147,542,258
Add : Conversion of balance FCCB 2009 82,140
Add : Conversion of balance FCCB 2010 7,883,231
Add: Conversion of FCCB 2011 15,483,391
Eventual Paid-up Capital 170,991,020
Note: No dilution under ESOPs is envisaged, as the Trust is expected to transfer the shares held by it to ESOPholders on exercise.
(c) Employees Stock Options
During the year, 22,700 Stock Options were granted under the Jubilant Employees Stock OptionPlan 2005. Each option is convertible into five equity shares of Re. 1 each at the exercise pricefixed at the time of grant being market value as per SEBI Guidelines. As on March 31, 2009,518,473 Stock Options were outstanding.
(d) Paid-Up Capital
The Paid-up Capital as at March 31, 2009 stands at 147,542,258 equity shares of Re. 1 eachamounting to Rs. 147.5 million.
The impact of conversion of FCCBs into equity shares on the share capital assuming fullconversion has been explained in (b) above.
(xxi) Location of the Plants
(a) Bhartiagram, Gajraula, District Jyotiba Phoolay Nagar, Uttar Pradesh
(b) Block 133, Village Samalaya, Taluka Savli, District Vadodara, Gujarat
(c) Village Nimbut, Rly. Stn. Nira, District Pune, Maharashtra
(d) 56 Industrial Area, Nanjangud, District Mysore, Karnataka
(e) Sikanderpur Bhainswal Bhagwanpur, Roorkee, District Haridwar, Uttarakhand
(f) Village Singhpur, Tehsil Kapasan, District Chittorgarh, Rajasthan
(xxii) R & D Centres
Central R&D C-26, Sector 59, Noida, Uttar PradeshD-12, Sector 59, Noida, Uttar PradeshC-46, Sector 62, Noida, Uttar Pradesh
Gajraula R&D Bhartiagram, Gajraula, District Jyotiba Phoolay Nagar, Uttar Pradesh
Nanjangud R&D 56, Industrial Area, Nanjangud, District Mysore, Karnataka.
Savli Block 133, Village Samalaya, Taluka Savli, District Vadodara,Gujarat
(xxiii) Address for Correspondence
Jubilant Organosys LimitedPlot No.1A, Sector-16A, Noida - 201 301, U.P.Tel: +91 120 2516601/2516611, Fax: +91 120 2516629e-mail: [email protected], Website: www.jubl.com
Compliance with Clause 49 of Listing Agreement
(a) Mandatory Requirements
The Company has complied with all mandatory requirements of Clause 49 as detailed below:
Particulars Clause of Listing Agreement Compliance Status
I. Board of Directors
(A) Composition of Board 49(IA) Complied
(B) Non- Executive Directors’ compensation and disclosure 49(IB) Complied
(C) Other provisions as to Board and committees 49(IC) Complied
(D) Code of Conduct 49(ID) Complied
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II. Audit Committee
(A) Qualified and Independent Audit Committee 49(IIA) Complied
(B) Meeting of Audit Committee 49(IIB) Complied
(C) Powers of Audit Committee 49(IIC) Complied
(D) Role of Audit Committee 49(IID) Complied
(E) Review of information by Audit Committee 49(IIE) Complied
III. Subsidiary Companies 49(III) Complied
IV. Disclosures
(A) Basis of Related Party Transactions 49(IVA) Complied
(B) Disclosure of accounting treatment 49(IVB) Complied
(C) Board Disclosures- Risk Management 49(IVC) Complied
(D) Proceeds from public issues, right issues, preferential issues etc. 49(IVD) Complied
(E) Remuneration of Directors 49(IVE) Complied
(F) Management 49(IVF) Complied
(G) Shareholders 49(IVG) Complied
V. CEO/CFO certification 49(V) Complied
VI. Report on Corporate Governance 49(VI) Complied
VII. Compliance 49(VII) Complied
(b) Extent to which Non-Mandatory Requirements have been adopted:
1. The Board
– Non Executive Chairman’s Office
Not applicable as Chairman is executive.
– Tenure of independent directors not to exceed 9 years
Not Adopted
2. Remuneration Committee
The Company has set up a Remuneration Committee. The composition, terms of reference and other details ofthe same are given in preceding pages.
3. Shareholders’ Rights
Not complied.
4. Audit Qualifications
The financial statements of the Company contain no audit qualifications.
5. Training of Board Members
The Board of Directors is periodically updated on the business model, company profile, entry into new productsand markets.
6. Mechanism for Evaluating Non-Executive Board Members
Not Adopted.
7. Whistle Blower Policy
The Company has a Whistle Blower Policy. The Audit Committee periodically reviews its functioning.
Compliance with Code of Conduct
A declaration by the Chairman and Managing Director that all directors and senior management personnel have affirmedcompliance with the Code of Conduct of the Company for the year ended March 31, 2009 is attached as Annexure F.
CEO/CFO Certification
In compliance with Clause 49(V) of the Listing Agreement, a declaration by the CEO, i.e. the Chairman and ManagingDirector and the CFO i.e. the Executive Director- Finance, has been attached as Annexure G which, inter-alia, certifiesto the Board the accuracy of financial statements and the adequacy of internal controls pertaining to financial reporting.
Particulars Clause of Listing Agreement Compliance Status
REPORT ON CORPORATE GOVERNANCE
84
ANNEXURE E
AUDITORS’ CERTIFICATE ON COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE
To the Members ofJubilant Organosys Limited
We have examined the compliance of conditions of corporate governance by Jubilant Organosys Limited (“theCompany”) for the year ended on 31st March, 2009, as stipulated in clause 49 of the Listing Agreements of the Companywith the stock exchanges. Our examination was carried out in accordance with the Guidance Note on Certification ofCorporate Governance issued by the Institute of Chartered Accountants of India.
The compliance of conditions of corporate governance is the responsibility of the Company’s management. Ourexamination was limited to procedures and implementations thereof, adopted by the Company for ensuring thecompliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on thefinancial statements of the Company.
In our opinion and to the best of our information and according to the explanations sought and replies given to us by theCompany, its Directors and Officers, we certify that the Company has complied with, in all material respect, themandatory conditions of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreements.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiencyor effectiveness with which the management has conducted the affairs of the Company.
For K. N. Gutgutia & Co.Chartered Accountants
Place : Noida B. R. GoyalDate : April 28, 2009 Partner
ANNEXURE F
CERTIFICATE OF COMPLIANCE WITH THE CODE OF CONDUCT
This is to confirm that all the Board members and senior management personnel have affirmed compliance with theCode of Conduct of the Company for the year ended March 31, 2009.
For Jubilant Organosys Limited
Place : Noida Shyam S. BhartiaDate : April 28, 2009 Chairman & Managing Director
REPORT ON CORPORATE GOVERNANCE
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
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ANNEXURE G
CERTIFICATE OF CEO/CFO
This is to certify that:
(a) We have reviewed financial statements and the cash flow statement for the year 2008-09 and that to the best of ourknowledge and belief:
i. these statements do not contain any materially untrue statement or omit any material fact or containstatements that might be misleading;
ii. these statements together present a true and fair view of the Company’s affairs and are in compliance withexisting accounting standards, applicable laws and regulations.
(b) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the yearwhich are fraudulent, illegal or violative of the Company’s Code of Conduct.
(c) We accept responsibility for establishing and maintaining internal controls and that we have evaluated theeffectiveness of the internal control systems of the Company pertaining to financial reporting and we have disclosedto the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, ofwhich we are aware and the steps we have taken or propose to take to rectify these deficiencies.
(d) We have indicated to the auditors and the Audit Committee:
i. significant changes in internal control over financial reporting during the year;
ii. significant changes in accounting policies during the year and that the same have been disclosed in the notesto the financial statements; and
iii. instances of significant fraud of which we have become aware and the involvement therein, if any, of themanagement or an employee having a significant role in the Company’s internal control system over financialreporting.
For Jubilant Organosys Limited
Shyam S. Bhartia R. SankaraiahChairman & Managing Director Executive Director - Finance
Place : NoidaDate : April 28, 2009
REPORT ON CORPORATE GOVERNANCE
86
To the members of Jubilant Organosys Limited
1. We have audited the attached Balance Sheet of JUBILANT ORGANOSYS LIMITED as at 31st March, 2009 therelated Profit and Loss Account for the year ended on that date annexed thereto, and the Cash Flow Statement ofthe Company for the period ended on that date, which we have signed under reference to this report. Thesefinancial statements are the responsibility of the Company’s Management. Our responsibility is to express anopinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government in terms ofSection 227 (4A) of the Companies Act, 1956, and on the basis of such checks as considered appropriate andaccording to the information and explanation given to us during the course of our audit, we enclose in theAnnexure hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments mentioned in the Annexure referred to in above paragraph we report that:
a) We have obtained all the information and explanations which to the best of our knowledge and belief werenecessary 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 appearsfrom our examination of the books of the Company.
c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by the report are inagreement with the books of account of the Company.
d) In our opinion, the Profit & Loss Account, Balance Sheet and Cash Flow Statement comply with themandatory Accounting Standards referred to in sub-section 3 (c) of Section 211 of the Companies Act, 1956.
e) According to the information and explanation given to us and on the basis of written representations receivedfrom the directors as on 31st March, 2009 of the Company and taken on record by the Board of Directors, wereport that none of the directors is disqualified as on 31st March, 2009, from being appointed as a director interms of clause (g) of Sub Section (1) of Section 274 of the Companies Act, 1956.
f) In our opinion and to the best of our information and according to the explanations given to us, the saidaccounts, and read together with the notes and Significant Accounting Policies there on give the informationrequired by the Companies Act, 1956 in the manner so required and give a true and fair view in conformitywith 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, 2009.
(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 thatdate.
For K. N. Gutgutia & CompanyChartered Accountants
B. R. GoyalPlace : Noida PartnerDate : 28th April, 2009 Membership No. 12172
AUDITORS’ REPORT
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
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Re: Jubilant Organosys Limited
Referred to in paragraph 3 of our report of even date on the accounts of the year ended 31st March, 2009.
i) (a) The Company has maintained proper records showing full particulars including quantitative details andsituation of fixed assets.
(b) In our opinion, physical verification of fixed assets has been carried out in terms of the phased programme ofverification of its fixed assets adopted by the Company and no material discrepancies were noticed on suchverification. In our opinion the frequency of verification is reasonable, having regard to the size of theCompany and nature of its assets.
(c) During the year the Company has not disposed off any substantial / major part of fixed assets.
ii) (a) The inventories have been physically verified during the year by the management at reasonable intervals.
(b) In our opinion and according to the information and explanations given to us, the procedures of physicalverification of inventory followed by the management are reasonable and adequate in relation to the size ofthe Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. In our opinion, discrepancies noticed on physicalverification of stocks were not material in relation to the operations of the Company.
iii) (a) There were only four companies covered in the register maintained under Section 301 of the Companies Act,1956 to which the Company has granted loan. The maximum amount involved during the year wasRs. 1,421.19 million (including the opening balance) and the year end total balances of loans granted to suchparties was Rs. 1,083.80 million.
(b) In our opinion the rate of interest and other terms and condition on which loan were granted to the saidCompanies listed in register maintained under Section 301 of the Companies Act, 1956 are not prima facie,prejudicial to the interest of the Company.
(c) The said parties have repaid principal amounts on demand and all parties were regular in the payment ofinterest.
(d) There is no overdue amount of loan granted to the said Company.
(e) The Company had not taken any loan from any Company covered in the register maintained under Section301 of the Companies Act, 1956. Accordingly, paragraph 4 (iii) (e), (f) & (g) of the Order are not applicable.
iv) In our opinion and according to the information and explanations given to us, there are adequate internal controlsystems commensurate with the size of the Company and the nature of its business with regard to purchase ofinventory and fixed assets and for the sale of goods and services. During the course of our audit, we have notobserved any continuing failure to correct major weakness in internal control system.
v) (a) Based on the audit procedures applied by us and according to the information and explanations provided bythe management, we are of the opinion that the transactions that need to be entered into the registermaintained under Section 301 have been so entered.
(b) In our opinion and according to the information and explanations given to us, the transactions made inpursuance of contracts or arrangements entered in the register under Section 301 have been made at priceswhich are reasonable having regard to prevailing market prices, wherever comparable prices are available, atthe relevant time.
vi) In the case of public deposits received by the Company, the directives issued by the Reserve Bank of India andthe provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and theCompanies (Acceptance of Deposit) Rules, 1975 have been complied with. No order has been passed by theCompany Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any otherTribunal.
vii) In our opinion, the Company has an internal audit system commensurate with the size of the Company and thenature of its business.
viii) The Central Government has prescribed maintenance of the Cost Records under Section 209(1)(d) of theCompanies Act, 1956 in respect to the companies’ certain products. We have broadly reviewed the books ofaccount maintained by the Company pursuant to the Order made by the Central Government for the maintenanceof the cost records for certain products of the Company and are of the opinion that prima facie the prescribedaccounts and records have been maintained. We are, however, not required to and have not carried out anydetailed examination of such accounts and records.
ANNEXURE TO THE AUDITORS’ REPORT
88
ix) (a) According to the records examined by us, the Company is regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund, investors education and protection fund, employees stateinsurance, income tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess and other statutorydues wherever applicable. According to the information and explanations given to us, no undisputed arrearsof statutory dues were outstanding as at 31st March, 2009 for a period of more than six months from the datethey became payable.
(b) According to the records of the Company, the dues of sales tax, income-tax, customs, wealth-tax, service tax,excise duty, cess which have not been deposited on account of disputes and the forum where the dispute ispending are as under:
Name of the Statute Nature of Amount Period to which Forum Wherethe Dues Rs/million the amount relates dispute is pending
1. Central Excise Act, 1944 Excise Duty 1.26 April 2001- March 2002 Joint Commissioner, Pune
Excise Duty 3.70 April 2004 to July 2005 Additional Commissioner, Pune
Excise Duty 1.51 April 2003 to March 2007 Commissioner (Appeal), Meerut
Excise Duty 0.66 March, 1997 Commissioner (Appeal), Meerut
Excise Duty 1.27 February 2003 to September 2004 Commissioner, Meerut
Excise Duty 5.10 May 2007 to Feb. 2008 Commissioner, Meerut
CENVAT 1.77 April, 2003 to March 2005 Jt. Commissioner, Meerut
Excise Penalty 0.01 April, 2006 Govt. of India
CENVAT 4.38 March 2003 to March, 2007 Commissioner (Appeal) Vadodara
Excise – EOU 0.31 April, 2007 to November 2007 Deputy Commissioner Hapur
2. Customs Act, 1962 Custom Penalty 10.66 August, 2005 Commissioner Custom, Ahmedabad
Custom Penalty 92.84 July, 1999 to Feb., 2003 Commissioner Custom (Appeal), Chennai
Custom Penalty 82.26 April, 2002 to March, 2004 A. C. Custom ICD Tuglakabad
3. Service Tax, Service Tax 0.35 April, 2003 to March, 2004 Asstt. Commissioner, HapurFinance Act, 1994
4. Central Sales Tax, Act, Sales Tax Demand 0.24 1983-1984 Supreme Court
1956 and Sales Tax Sales Tax Demand 0.97 1996-2001 Cuttack Tribunal
Acts of Various States Sales Tax Demand 31.57 2002-08 Allahabad High Court &on SSP Jt. Commissioner (Appeal), Moradabad
Sales Tax Demand 1.69 2007-08 & 2008-09 Jt. Commissioner (Appeal)on PU Adhesive Moradabad
Sales Tax Demand 5.02 2005-07 & 2008-09 Jt. Commissioner (Appeal), Moradabad
Sales Tax Demand 0.92 2002 to 2009 Kolkata Tribunal
Sales Tax Demand 1.78 2004-05, 2005-06 & 2006-07 Appeal at Savli & Hyderabad
x) There are no accumulated losses of the Company as on 31st March, 2009. The Company has not incurred anycash losses during the financial year covered by our audit and in the immediately preceding financial year.
xi) Based on our audit procedures and the information given by the management, we are of the opinion that theCompany has not defaulted in repayment of dues to any financial institution, bank or debenture holders.
xii) Based on our examination of the records and the information and explanations given to us, the Company has notgranted any loans and/ or advances on the basis of security by way of pledge of shares, debentures and othersecurities.
xiii) The provisions of any special statute as specified under paragraph (xiii) of the Order are not applicable to the Company.
xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures, and other investments.Accordingly, the provisions of Clause 4 (xiv) of the Companies (Auditor’s Report) Order, 2003 are not applicable tothe Company. However, all investments have been held by it, in its own name or nominees.
xv) According to the information and explanations given to us, Company has given guarantees for loans taken byothers (by the step down subsidiary companies) from Banks and the terms of such guarantees are not prejudicialto the interest of the Company.
ANNEXURE TO THE AUDITORS’ REPORT
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
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xvi) According to the information and explanations given to us, the term loans raised during the year have been applied(including for investments) for the purpose for which they were raised.
xvii) According to the information & explanation given to us and on an overall examination of the balance sheet of theCompany, we report that no funds raised on short-term basis have been used for long term investment.
xviii) The Company has not made any preferential allotment of shares during the year to parties/companies covered inthe register maintained under Section 301 of the Companies Act, 1956.
xix) During the year covered by our audit report the Company has not issued secured debentures.
xx) The Company has not raised any money by Public Issue during the year.
xxi) Based upon the audit procedures performed and as per the information and explanations given to us by themanagement, we report that no fraud on or by the Company has been noticed or reported during the course of ouraudit.
For K. N. Gutgutia & CompanyChartered Accountants
B. R. GoyalPlace : Noida PartnerDate : 28th April, 2009 Membership No. 12172
ANNEXURE TO THE AUDITORS’ REPORT
90
In terms of our report of even date attached. For and on behalf of the Board
For K. N. Gutgutia & Co.Chartered Accountants
B. R. Goyal Shyam S. BhartiaPartner Chairman & Managing DirectorMembership No. 12172
Place : Noida Lalit Jain R. Sankaraiah Hari S. BhartiaDate : 28th April, 2009 Company Secretary Executive Director - Finance Co-Chairman & Managing Director
(Rs. in million)
As at 31st March, Schedules 2009 2008
SOURCES OF FUNDS
Shareholders’ Funds
Share Capital A 147.56 146.96
Reserves & Surplus B 13,246.32 13,639.66
13,393.88 13,786.62
Loan Funds C
Secured Loans 15,514.58 6,174.46
Unsecured Loans 9,741.83 10,480.53
25,256.41 16,654.99
Deferred Tax Liabilities (Net) D 1,265.55 1,427.05
39,915.84 31,868.66
APPLICATION OF FUNDS
Fixed Assets E
Gross Block 19,250.65 13,789.32
Less: Depreciation 5,282.81 4,565.76
Net Block 13,967.84 9,223.56
Capital Work-in-Progress 2,690.86 3,225.52
16,658.70 12,449.08
Investments F 17,095.36 13,782.51
Current Assets, Loans and Advances G
Inventories 3,334.26 3,215.56
Sundry Debtors 3,559.53 3,591.02
Cash & Bank Balances 2,789.31 76.72
Loans and Advances 4,730.80 3,945.79
14,413.90 10,829.09
Less: Current Liabilities & Provisions H
Liabilities 4,037.64 2,413.63
Provisions 4,217.77 2,794.88
8,255.41 5,208.51
Net Current Assets 6,158.49 5,620.58
Miscellaneous Expenditure I 3.29 16.49
(To the extent not written off or adjusted)
39,915.84 31,868.66
Notes to Accounts & Significant Accounting Policies O
Schedule “A” to “I” and “O” referred above form an integral part of the Balance Sheet.
BALANCE SHEET
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
91
(Rs. in million)
For the year ended 31st March, Schedules 2009 2008
INCOME
Sales & Services J 25,514.62 21,166.38
Less: Excise Duty on Sales (1,207.40) (1,398.89)
Net Sales & Services 24,307.22 19,767.49
Other Income K 771.94 1,148.00
Increase/(Decrease) in Stocks L 281.07 162.35
25,360.23 21,077.84
EXPENDITURE
Manufacturing & Other Expenses M 21,340.16 15,696.12
Depreciation & Amortisation 746.21 635.90
Interest N 543.54 146.80
22,629.91 16,478.82
Profit Before Tax 2,730.32 4,599.02
Income Tax
– Current Tax (including Wealth Tax) 562.89 684.31
– Deferred Tax Charge/(Credit) (161.50) 113.36
– Fringe Benefit Tax 24.18 24.00
– MAT Credit Entitlement (302.66) (145.32)
122.91 676.35
Profit After Tax 2,607.41 3,922.67
Balance Brought Forward from Previous Year 6,711.72 4,045.61
Balance Available For Appropriation 9,319.13 7,968.28
APPROPRIATIONS
Dividend on Equity Shares 223.34 219.29
Tax on Distributed Profits on Equity Shares 37.95 37.27
261.29 256.56
Transfer to General Reserve 1,500.00 1,000.00
Balance Carried To Balance Sheet 7,557.84 6,711.72
Basic Earnings Per Share of Re. 1 each (In Rupees) O 17.70 27.26
Diluted Earnings Per Share of Re. 1 each (In Rupees) O 15.25 21.96
Notes to Accounts & Significant Accounting Policies O
Schedule “J” to “O” referred above form an integral part of the Profit & Loss Account.
In terms of our report of even date attached. For and on behalf of the Board
For K. N. Gutgutia & Co.Chartered Accountants
B. R. Goyal Shyam S. BhartiaPartner Chairman & Managing DirectorMembership No. 12172
Place : Noida Lalit Jain R. Sankaraiah Hari S. BhartiaDate : 28th April, 2009 Company Secretary Executive Director - Finance Co-Chairman & Managing Director
PROFIT AND LOSS ACCOUNT
92
(Rs. in million)
For the year ended 31st March, 2009 2008
A. Cash flow arising from Operating Activities :Net profit before tax 2,730.32 4,599.02
Adjustment for : i) Depreciation & Amortisation 746.21 635.90ii) Loss/(Profit) on Sale of Fixed Assets (Net) 27.22 128.99iii) Interest (Net) 543.54 146.80iv) Amortisation/Write off (VRS Expenses) 13.20 24.36v) Provision for Doubtful Debts 3.58 (1.26)vi) Provision for Gratuity & Leave Encashment 8.65 42.75vii) Bad Debts/Irrecoverable Advances written off(net of write-in) 25.07 2.92viii) Unrealised (Gain)/Loss on Exchange -Net 1,312.80 (1,032.28)ix) Interest Income (as shown in Schedule “K”) (3.87) (0.28)x) Gain on Buy-back/Extinguishment of FCCB Debt (590.70) –xi) Profit on Sale of Trade Investments (1.46) –xii) Income from Current Investment (Non Trade)-Dividend (37.28) (8.12)
2,046.96 (60.22)
Operating Profit before Working Capital Changes 4,777.28 4,538.80
Adjustment for : i) Trade and other Receivables 776.74 1,522.38ii) Inventories 118.70 97.85
895.44 1,620.233,881.84 2,918.57
i) Current Liabilities & Provision 1,388.80 (26.50)
Cash inflow from Operations 5,270.64 2,892.07
Deduct : i) Interest Paid 566.65 186.33ii) Direct Taxes Paid (net of refunds) 317.52 429.96
884.17 616.29
Add : i) Interest Income Received (as shown in Schedule “K”) 3.87 0.28
Net Cash Inflow/(Outflow) in course of Operating Activities 4,390.34 2,276.06
B. Cash Flow arising from Investing Activities :Outflow i) Acquisition/Purchase of Fixed Assets/CWIP 3,921.28 3,095.90
ii) Purchase/(Sale) of Investments (net) (Including in Subsidiaries) 3,311.39 1,024.39iii) Loans to Subsidiaries (net) 286.00 436.60
7,518.67 4,556.89Deduct :Inflow i) Sale Proceeds of Fixed Assets 67.15 2.78
ii) Interest Received 113.33 50.30iii) Dividend Received 37.28 8.12
217.76 61.20
Net Cash Inflow/(Outflow) in course of Investing Activities (7,300.91) (4,495.69)
C. Cash flow arising from Financing Activities :Inflow i) Proceeds from Issue of Share Capital {Including Share 8.68 13.59
Premium of Rs. 8.64 million (Previous year Rs.13.06 million)}ii) Proceeds from Long Term & Short Term Borrowings 8,286.71 2,361.61
8,295.39 2,375.20
Deduct :
Outflow i) Buy Back of Foreign Currency Convertible Bonds (FCCBs) 2,431.57 –
ii) Dividend Paid (including Dividend Distribution Tax) 257.62 208.72
2,689.19 208.72
Net Cash Inflow/(Outflow) in course of Financing Activities 5,606.20 2,166.48
Net Increase in Cash & Cash equivalents (A+B+C) 2,695.63 (53.15)Add: Cash & Cash Equivalents at the beginning of Year 76.72 130.41
(Including Balance in Dividend Accounts)Cash & Cash Equivalents at the close of the Year 2,772.35 77.26
(Including Balance in Dividend Accounts)Cash & Cash Equivalents Comprise:Cash and Bank Balances 2,789.31 76.72
Unrealised Exchange Difference on Foreign Currency Cash and Cash Equivalents (16.96) 2,772.35 0.54 77.26
Notes: 1) Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard 3 (AS-3)-” Cash Flow Statements”, notified bythe Central Government under the Companies (Accounting Standard) Rules, 2006.
2) Purchase of fixed assets includes movement of Capital Work-in-Progress during the year.3) Closing Cash & Cash Equivalents includes Rs.6.83 million (Previous year Rs. 6.78 million) which can be utilised for specific purposes.4) Previous Year’s figures have been regrouped/rearranged wherever considered necessary to conform to this year’s classification.
In terms of our report of even date attached. For and on behalf of the Board
For K. N. Gutgutia & Co.Chartered Accountants
B. R. Goyal Shyam S. BhartiaPartner Chairman & Managing DirectorMembership No. 12172
Place : Noida Lalit Jain R. Sankaraiah Hari S. BhartiaDate : 28th April, 2009 Company Secretary Executive Director - Finance Co-Chairman & Managing Director
CASH FLOW STATEMENT
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93
(Rs. in million)
As at 31st March, 2009 2008
A. SHARE CAPITAL
Authorised
550,000,000 Equity Shares of Re. 1 each 550.00 550.00
(Previous Year 550,000,000 Equity Shares of Re. 1 each) 550.00 550.00
Issued & Subscribed
147,574,258 Equity Shares of Re. 1 each 147.57 146.22
(Previous Year 146,217,914 Equity Shares of Re. 1 each) 147.57 146.22
Paid up
147,542,258 Equity Shares of Re. 1 each 147.54 146.19
(Previous Year 146,185,914 Equity Shares of Re. 1 each)
Add: Equity Shares Forfeited (paid-up) 0.02 0.02
147.56 146.21
Add: Share Application money received pending allotment – 0.75
147.56 146.96
Notes:
1) The Company issued Zero Coupon Foreign Currency Convertible Bonds due 2011 (FCCB 2011) for an aggregatevalue of USD 200 million, convertible at any time between 30th June, 2006 to 10th May, 2011 by holders into fullypaid equity shares of Re. 1 each of the Company or Global Depositary Shares (GDS) each representing one equityshare at an initial conversion price of Rs. 413.4498 per share with a fixed rate of exchange of Rs. 45.05 = USD1.The conversion price is subject to adjustment in certain circumstances. The Bonds may also be redeemed, in wholebut not in part, at the option of the Company at any time on or after 19th May, 2009, subject to satisfaction ofcertain conditions. Unless previously converted, redeemed or purchased and cancelled, the Bonds will beredeemed on 20th May, 2011 at 142.429% of their principal amount. The FCCBs are listed on Singapore StockExchange. The GDSs arising out of conversion of FCCBs are listed on Luxembourg Stock Exchange. USD 57.90million Bonds were bought back at a discount upto 31st March, 2009, and the same were cancelled.
The outstanding balance of FCCB 2011 - USD 142.10 million, on conversion would result in allotment in of15,483,391 equity shares of Re. 1 each.
2) The Company issued Zero Coupon Foreign Currency Convertible Bonds due 2010 (FCCB 2010) for an aggregatevalue of USD 75 million, convertible at any time between 3rd July, 2005 to 14th May, 2010 by holders into fully paidequity shares of Re. 1 each of the Company or Global Depositary Shares (GDS) each representing one equityshares at an initial conversion price of Rs. 273.0648 per share with a fixed rate of exchange of Rs. 43.35 = USD 1.The conversion price is subject to adjustment in certain circumstances. The Bonds may also be redeemed, in wholebut not in part, at the option of the Company at any time on or after 23rd May, 2008, subject to satisfaction ofcertain conditions. Unless previously converted, redeemed or purchased and cancelled, the Bonds will beredeemed on 24th May, 2010 at 138.383% of their principal amount. The FCCBs are listed on Singapore StockExchange. The GDSs arising out of conversion of FCCBs are listed on Luxembourg Stock Exchange. USD 22.343million were converted upto 31st March, 2009 into equity shares and this represents 3,547,022 shares of Re. 1each as on 31st March, 2009 and USD 3 million Bonds were bought back at a discount upto 31st March, 2009 andthe same were cancelled.
The outstanding balance of FCCB 2010 - USD 49.657 million, on conversion would result in allotment in of7,883,231 equity shares of Re. 1 each.
3) The Company issued 1.5% Foreign Currency Convertible Bonds due 2009 (FCCB 2009) aggregating USD 35million, in the year 2004-05. The Bonds are convertible at any time between 14th June, 2004 and 15th April, 2009by holders into fully paid equity shares of Re.1 each of the Company or Global Depositary Shares (GDSs) eachrepresenting one Equity Shares at an initial conversion price of Rs. 163.646 per share with a fixed rate of exchangeon conversion of Rs. 44.805 = USD 1. The conversion price is subject to adjustment in certain circumstances. TheBonds may also be redeemed, in whole but not in part, at the option of the Company at any time on or after 14thMay, 2007 and prior to 8th May, 2009, subject to satisfaction of certain conditions. Unless previously converted,redeemed or purchased and cancelled, the Bonds will be redeemed on 15th May, 2009 at 113.70% of their principalamount. The FCCBs are listed on Singapore Stock Exchange. The GDSs arising out of conversion of FCCBs arelisted on Luxembourg Stock Exchange. Out of these FCCB 2009, USD 34.70 million were converted upto 31stMarch, 2009 into equity shares and this represents 9,500,521 shares of Re. 1 each as on 31st March, 2009.
The outstanding balance of FCCB 2009 - USD 0.30 million, on conversion would result in allotment of 82,140 equityshares of Re. 1 each.
SCHEDULES FORMING PART OF THE BALANCE SHEET
94
4) Under the Jubilant Employees Stock Option Plan;
a) Options in force as of 31st March, 2009 - 518,473 options convertible into 2,592,365 shares of Re. 1 each(Previous year 539,160 options convertible into 2,695,800 shares)
b) 22,967 vested options have been exercised upto 31st March, 2009.
5) Paid up capital includes:
a) 43,990,695 equity shares of Re. 1 each fully paid allotted and issued in 2003-04, as bonus shares bycapitalization of Capital Redemption Reserve in accordance with the resolution passed by the shareholdersdated 28th February, 2004.
b) 1,644,020 equity shares of Re. 1 each allotted and issued pursuant to the Scheme of Amalgamation oferstwhile Ramganga Fertilizers Ltd. with the Company for consideration other than cash in 1994-95.{761,780 equity shares of Re. 1 each allotted to Vam Investments Ltd. and 159,420 equity shares of Re. 1each allotted to Vam Leasing Ltd. were cancelled during the year 2002-03 - Refer note no 6 below}.
c) 5,064,000 equity shares of Re. 1 each allotted and issued pursuant to the Scheme of Amalgamation toshareholders of erstwhile Anichem India Ltd. and of erstwhile Enpro Specialty Chemicals Ltd. with theCompany for consideration other than cash in 1999-00. {1,620,970 Equity shares of Re.1 each allotted to VamInvestment Ltd. and 1,714,000 equity shares of Re. 1 each allotted to Vam Leasing Ltd. were cancelled duringthe year 2002-03 - Refer note no 6 below}.
d) 114,835 [including 46,630 issued during the year (Previous year 68,205)], equity shares of Re. 1 each allottedto employees and directors of Company on exercise of the vested stock options in accordance with the termsof exercise under the “Jubilant Employees Stock Option Plan”.
6) Pursuant to the Scheme of Amalgamation approved by the Hon’ble High Court of Judicature, Allahabad andHon’ble High Court of Delhi, Delhi, and as contained in the Opening Reference Balance Sheet annexed to theScheme, the paid up share capital of the Company reduced during the year 2002-03 by cancellation of 2,382,750and 1,873,420 equity shares of Re. 1 each fully paid up held by erstwhile Vam Investments Ltd. and Vam LeasingLtd. respectively as investments in the Company.
(Rs. in million)
As at Additions/ Deductions As at31st March, Created 31st March,
2008 during the year 2009
B. RESERVES AND SURPLUS
Capital Reserve 22.82 22.82
Capital Redemption Reserve 9.86 9.86
Amalgamation Reserve 13.21 13.21
Securities Premium Account (1) 3,970.69 365.72 478.58 3,857.83
General Reserve (2) 2,911.36 1,500.00 1,030.57 3,380.79
Surplus as per Profit & Loss Account 6,711.72 2,607.41 1,761.29 7,557.84
13,639.66 4,473.13 3,270.44 14,842.35
Foreign Currency Monetary ItemTranslation Difference Account (2) – – 1,596.03 (1,596.03)
Total 13,639.66 4,473.13 4,866.47 13,246.32
Previous Year 9,473.15 5,615.68 1,449.17 13,639.66
Notes :(1) a) Additions denote premium on issue of shares on conversion of FCCB’s and exercise of ESOP options.
b) Deductions denote provision of premium on redemption of FCCB’s net of tax and exchange loss on conversionof FCCB’s offset with the reversal of premium in respect of FCCB’s bought back and cancelled/convertedduring the year.
(2) Refer Note 18(A) of Schedule “O” regarding treatment of Foreign Exchange Difference pursuant to the notificationof the Ministry of Corporate Affairs.
SCHEDULES FORMING PART OF THE BALANCE SHEET
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
95
(Rs. in million)
As at 31st March, 2009 2008
C. LOANS
Secured
A. Loans From Bank
– Term Loans 15,437.84 5,913.20[Including Rs. 6,187.84 million (Previous year Rs. 4,413.20 million)in foreign currency]
– Working Capital 76.74 93.69[Including Rs. Nil (Previous year Rs. 60.80 million) in foreign currency]
– Vehicle Loans – 0.57
B. Loans From Others
– Term Loans – 167.00
15,514.58 6,174.46
Unsecured
1.5% Foreign Currency Convertible Bonds-FCCB 2009 * 15.22 12.03
Zero Coupon Foreign Currency Convertible Bonds-FCCB 2010 * 2,518.60 2,443.59
Zero Coupon Foreign Currency Convertible Bonds-FCCB 2011 * 7,207.31 8,024.00
Deferred Sales Tax Credits 0.70 0.91
9,741.83 10,480.53
*(Refer Note 9 of Schedule “O”)
Notes:
1. Rupee Term Loans amounting to Rs. 9,250 million from State Bank of India, Corporation Bank, Central Bank of Indiaand Hong Kong and Shanghai Banking Corporation Limited and Foreign Currency Loans amounting to Rs. 6,187.84million including External Commercial Borrowings (ECBs) from State Bank of India New York, BNP ParibasSingapore and Citibank N.A. London and FCNR(B) Loan from State Bank of India are secured by a first pari-passucharge by way of: -
Mortgage of the immovable fixed assets situated at Bhartiagram, District Jyotiba Phoolay Nagar, Uttar Pradesh(excluding Specified land and buildings situated at Bhartiagram, District Jyotiba Phoolay Nagar, Uttar Pradesh andconstructed out of the financial assistance granted by HDFC) and immovable fixed assets situated at VillageSamlaya, Taluka Savli, District Vadodara, Gujarat and Hypothecation on the entire movable fixed assets, bothpresent and future, of the company. However, Mortgage in respect of Rupee Term Loan of Rs. 2,500 million fromCentral Bank of India is pending creation with respect to above mentioned immovable properties of the Company.
2. Working Capital Facilities sanctioned by Consortium of Banks and notified Financial Institutions comprising of ICICIBank Limited, Corporation Bank, Punjab National Bank, State Bank of India, Canara Bank, Export Import Bank ofIndia, ING Vysya Bank Ltd., ABN Amro Bank and Standard Chartered Bank are secured by a first charge by way ofhypothecation, ranking pari passu inter-se Banks, of the entire book debts and receivables of the Company andinventories both present and future, of the Company; wherever the same may be or be held. The working capitalsanctioned limits also include Commercial Paper Programme of Rs. 1,000 million as sub-limit carved out of thefunded limits, against which the balance outstanding as at 31st March, 2009 Rs. Nil.
3. Secured Loans (excluding working capital loans) include loans of Rs. 1,545.16 million (Previous year Rs. 632.56million) repayable within one year.
(Rs. in million)
As at 31st March, 2009 2008
D. DEFERRED TAX LIABILITY
Deferred Tax Liabilities 1,937.81 1,547.84
Deferred Tax Assets 672.26 120.79
Deferred Tax Liabilities (Net) 1,265.55 1,427.05
(Refer Note 15(A) of Schedule “O”)
SCHEDULES FORMING PART OF THE BALANCE SHEET
96
SCHEDULES FORMING PART OF THE BALANCE SHEETE
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JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
97
(Rs. in million)
As at 31st March, 2009 2008
F. INVESTMENTS : (At Cost)
Number Face value All unquoted unless otherwise specifiedper unit
Trade Investments (Long Term)
In Subsidiary Companies
A) Fully paid Equity Shares
375 No Par Value – Jubilant Organosys (USA) Inc. 17.11 17.11(375)
13,900,000 EURO 1 – Jubilant Pharma N.V. (Belgium) 743.79 743.79(13,900,000)
– Rs. 10 – Jubilant Chemsys Ltd. – 20.00(1,999,766)
– Rs. 10 – Clinsys Clinical Research Ltd. – 20.00(1,999,766)
– Rs. 10 – Jubilant Biosys Ltd. – 147.80(295,600)
232,393,994 USD 1 – Jubilant Pharma Pte. Ltd. (Singapore) 10,716.13 9,637.17(210,793,994)
20,000,000 No Par Value – Clinsys Holdings Inc. (USA) 1,660.44 1,660.44(20,000,000)
27,900,000 Rs. 10 – Jubilant Infrastructure Ltd. 279.00 218.50(21,850,000)
8,380,290 Rs. 10 – Jubilant First Trust Healthcare Ltd. 386.75 223.55(4,844,000)
1,00,000 Rs. 10 – Speciality Molecules Ltd. 214.70 –(–)
B) Preference Shares
– Jubilant Chemsys Ltd.
26,450,000 Rs. 10 6% Optionally Convertible Non- 264.50 264.50(26,450,000) Cumulative Redeemable Preference
Shares fully paid.
18,600,000 Rs. 10 8% Optionally Convertible Non- 186.00 186.00(18,600,000) Cumulative Redeemable Preference
Shares fully paid.
– Clinsys Clinical Research Ltd.
20,850,000 Rs. 10 6% Optionally Convertible Non- 208.50 208.50(20,850,000) Cumulative Redeemable Preference
Shares fully paid up.
6,200,000 Rs. 10 8% Optionally Convertible Non- 62.00 35.00(3,500,000) Cumulative Redeemable Preference
Shares fully paid up.
– Speciality Molecules Ltd.
4,000,000 Rs. 10 12% Optionally Convertible Non- 40.00 –(–) Cumulative Redeemable Preference
Shares fully paid up.
Non Trade Investments
1,550,000 Rs. 10 Forum 1 Aviation Ltd. 15.50 –(–) Equity Shares fully paid up
SCHEDULES FORMING PART OF THE BALANCE SHEET
98
Current Investments
Investment in Mutual Fund
19,978,313 Rs. 10 Principal Floating Rate Fund FMP- 200.03 –(–) Institutional Option-Dividend
Reinvestment Daily
161,270,058 Rs. 10 Canara Robeco Treasury Advantage 2,000.89 –(–) Institutional Daily Dividend Fund.
99,901 Rs. 1000 Reliance Money Manager Fund- 100.02 –(–) Institutional Option-Daily Dividend Plan
– Rs.10 Principal Cash Management Fund- – 250.05(25,003,026) Growth Plan
– Rs.10 HSBC Cash Fund Institutional Plus- – 150.10(15,002,551) Dividend Plan
17,095.36 13,782.51
Aggregate NAV of Current Investments 2,300.94 400.15
Notes: (1) Figures in ( ) are in respect of previous year.
(2) During the year, the following current investments (Non-Trade) were purchased and sold:
i) 14,999,250 Units of ICICI Prudential Institutional Liquid Plan Super Institutional Daily Dividend - atcost of Rs. 150.23 million.
ii) 59,811,593 Units of HDFC Cash Management Fund - Treasury Advantage Plan Whole Sale - DDO- at cost of Rs. 608.95 million.
iii) 108,906,717 Units of SBI SHF - Ultra Short Term Fund - Institutional Plan Daily Dividend - at cost ofRs. 1,160.58 million.
iv) 59,960,029 Units of Principal Floating Rate Fund FMP Insti. Option Dividend Re - invest Daily -at cost of Rs. 600.98 million.
v) 15,002,551 Units of HSBC Cash Fund - Institutional Plus-Daily Dividend - at cost of Rs. 150.10million.
vi) 196,817 Units of Reliance Money Manager Fund - Institutional Option - D - at cost of Rs. 3.01million.
vii) 249,947 Units of UTI - Liquid Plus Fund Institutional Plan (DDO) - at cost of Rs. 251.64 million.
viii) 39,992,501 Units of IDFC Liquid Plus Fund TP - Super Inst Plan C - Daily Dividend - at cost ofRs. 402.99 million.
ix) 59,946,561 Units of Birla Sunlife Liquid Plus - Instl. - Daily Dividend - at cost of Rs. 609.21 million.
x) 24,802,079 Units of Kotak Floater Long Term - Daily Dividend - at cost of Rs. 251.41 million.
(Rs. in million)
As at 31st March, 2009 2008
F. INVESTMENTS : (At Cost)
Number Face value All unquoted unless otherwise specifiedper unit
SCHEDULES FORMING PART OF THE BALANCE SHEET
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
99
(Rs. in million)
As at 31st March, 2009 2008
G. CURRENT ASSETS, LOANS AND ADVANCES
Current Assets
Inventories: (Including in Transit & with Third Parties)
– Raw Materials 1,407.46 1,569.80
– Stores, Spares, Process Chemicals, Catalyst, Fuels & Packing Material 411.23 412.05
– Process Stocks 498.43 512.58
– Finished Goods (including Trading Goods) 1,017.14 721.13
3,334.26 3,215.56
Sundry Debtors
Unsecured
– Over Six Months - Good (1) 188.50 107.85
– Doubtful 6.79 3.21
– Other Debts - Good (1) 3,371.03 3,483.17
3,566.32 3,594.23
Less: Provision for Doubtful Debts 6.79 3.21
3,559.53 3,591.02
Cash & Bank Balances
– Cash in hand and as Imprest 4.20 5.15
– Cheques/Drafts in hand 76.28 47.18
– With Scheduled Banks
– On Current Accounts 773.43 4.19
– On Dividend Account 9.69 8.40
– On Deposit Accounts (2) 1,519.46 5.02
– With Non Scheduled Banks (3) 406.25 6.78
2,789.31 76.72
Loans And Advances
(Unsecured, Considered good)
– Loans to Subsidiaries (including interest accrued) 1,083.80 797.80
– Advances recoverable in cash or in kind or for value to be received (4) 1,664.77 1,243.28
– Deposits 105.95 138.84
– Deposits with Excise / Sales Tax Authorities (5) 845.71 759.94
– Advance Payment of Income Tax/Wealth Tax (including TDS) 336.36 614.38
– MAT Credit Entitlement 694.21 391.55
4,730.80 3,945.79
14,413.90 10,829.09
(1) Includes, Subsidy receivable:a) Due over six months - Rs. 87.12 million (Previous year Rs. 39.85 million)b) Others - Rs. 289.75 million (Previous year Rs. 4.68 million)
(2) Includes, Margin Money - Rs. 2.39 million (Previous year Rs. 2.78 million).
(3) Maximum Balance outstanding during the Yeara) Rs. 0.86 million (Previous year Rs. 0.72 million) with ICICI Bank UK Ltd.b) Rs. 1,020.38 million (Previous year Rs. 6.06 million ) with SBI New York.c) Rs. 533.45 million (Previous year Rs. Nil) with Citibank N.A., Hong Kongd) Rs. 685.08 million (Previous year Rs. Nil) with Citibank N.A., Escrow A/c, Hong Kong.
(4) Includes Rs. 567.85 million (Previous year Rs. Nil) Interest free Loan given to Jubilant Employee Welfare Trust andRs. 414.04 million (Previous year Rs. 317.30 million) Export Benefits Receivables.
(5) Deposit against disputed demands - Rs. 112.32 million (Previous year Rs. 109.12 million).
SCHEDULES FORMING PART OF THE BALANCE SHEET
100
H. CURRENT LIABILITIES AND PROVISIONS
A) Current Liabilities
Sundry Creditors and Expenses Payable
– Due to Micro, Small and Medium Enterprises 22.69 –(Refer Note 8 of Schedule “O”)
– Others 2,499.85 2,153.95
Acceptances 1,116.63 25.82
Trade Deposits & Advances 134.57 68.13
Interest Accrued but not due 148.28 42.13
Other Liabilities 103.11 111.68
Investors Education and Protection Fund shall be credited with thefollowing amounts namely:
– Unclaimed/unpaid Dividends 9.69 8.40
– Unclaimed Fixed Deposits 2.82 3.52
4,037.64 2,413.63
B) Provisions
For Dividends on Equity Shares (Including Dividend Distribution Tax) 258.93 256.55
For Income Tax, Wealth Tax & FBT 320.42 569.61
For Retirement/Post retirement Employee Benefits 332.95 324.30
For Others (1) 3,305.47 1,644.42
4,217.77 2,794.88
Total (A+B) 8,255.41 5,208.51
(1) Includes Premium on redemption of FCCBs - Rs. 2,342.30 million (Previous year Rs. 1,633.37 million) andProvision of loss of Rs. 942.88 million on marked to market of unutilised forward covers outstanding.
(Rs. in million)
As at 31st March, 2009 2008
(Rs. in million)
As at 31st March, 2009 2008
I. MISCELLANEOUS EXPENDITURE(to the extent not written off or adjusted)
Payments under Voluntary Retirement Scheme 3.29 16.49
3.29 16.49
SCHEDULES FORMING PART OF THE BALANCE SHEET
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
101
J. SALES & SERVICES
Sales 25,512.90 21,138.22
Manufacturing Services (Refer Note 16 of Schedule “O”) 1.72 28.16
25,514.62 21,166.38
(Rs. in million)
For the year ended 31st March, 2009 2008
(Rs. in million)
For the year ended 31st March, 2009 2008
K. OTHER INCOME
Income from Current Investments (Non-Trade) - Dividend 37.28 8.12
Profit on Sale of Trade Investments 1.46 –
Gain on Buy-back/Extinguishment of FCCB Debt (1) 590.70 –
Net Gain- Foreign Exchange Fluctuation - FCCBs/Loans – 1,039.71
Miscellaneous Receipts (2) 142.50 100.17
771.94 1,148.00
(1) Refer Note 9(D) of Schedule “O”.
(2) Includes: a) Income from Utilities & Services provided Rs. 24.73 million (Previous year Rs.19.31 million)(Tax Deducted at source Rs. 3.59 million - Previous year Rs. 3.01 million).
b) Interest Income of Rs.Nil (Previous year Rs. 0.28 million) on un-utilized proceeds of FCCB’s and onother deposits.
c) Bad Debts recovered Rs. 3.49 million (Previous year Rs.Nil ) and interest received from Income TaxDepartment Rs. 3.87 million.
(Rs. in million)
For the year ended 31st March, 2009 2008
L. INCREASE/(DECREASE) IN STOCKS
Stock at close – Process 498.43 512.58
Stock at close – Finished 1,017.14 721.13
1,515.57 1,233.71
Stock at commencement – Process 512.58 429.11
Stock at commencement – Finished 721.13 720.08
1,233.71 1,149.19
Increase/ (Decrease) in Stocks 281.86 84.52
Less: Increase/Decrease of Finished & Process Stock of IMFL Business (0.79) 77.83
(Refer Note 16 of Schedule “O”) 281.07 162.35
SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT
102
(Rs. in million)
For the year ended 31st March, 2009 2008
M. MANUFACTURING AND OTHER EXPENSESPurchases – Traded Goods 1,066.74 474.77
Raw & Process Materials Consumed 11,346.96 8,942.78
Power and Fuel 1,807.92 1,641.03
Excise Duty (3) 21.88 5.33
Stores, Spares, Chemicals, Catalyst & Packing Materials Consumed 1,166.64 1,066.83
Processing Charges 177.48 156.15
Repairs – Plant & Machinery 390.25 333.17
– Buildings 46.82 37.56
Salaries, Wages, Bonus, Gratuity & Allowances 1,373.23 1,137.84
Contribution to Provident & Superannuation Fund 94.28 80.34
Staff Welfare Expenses 92.45 75.24
Rent [Net of recoveries - Rs. 0.79 million (PY - Rs. 0.34 million)] 63.79 48.47
Rates & Taxes 24.30 23.27
Insurance [Net of recoveries - Rs. 8.95 million (PY - Rs. 8.97 million)] 51.78 52.07
Advertisement, Publicity & Sales Promotion 82.47 122.56
Traveling & Other Incidental Expenses 190.91 153.71
Office Maintenance 92.64 72.34
Vehicle Running & Maintenance 41.16 35.03
Printing & Stationery 25.39 21.72
Communication Expenses 51.88 48.52
Staff Recruitment & Training 41.26 35.84
Donation 18.40 0.79
Auditors Remuneration – As Auditors 1.54 1.49
– For Taxation Matters 0.40 0.34
– For Certification/Limited Review 0.38 0.64
– Out of Pocket Expenses 0.24 0.17
Legal, Professional & Consultancy Charges 114.15 120.11
Freight & Forwarding (including Ocean freight) 444.81 426.01
Amortisation/write off - (VRS Expenses) 13.20 24.36
Directors’ Sitting Fees 0.59 0.66
Directors’ Commission 22.80 43.00
Miscellaneous Expenses 24.72 30.10
Financial Charges (includes Foreign Exchange Fluctuation loss of 2,055.42 19.79Rs. 1,961.70 million (PY net gain of Rs. 26.08 million) and Bank Charges
Discounts & Claims to Customer and Other Selling Expenses 213.36 221.82
Commission on Sales 130.06 108.05
Loss/(Gain) on sale/disposal/discard of Fixed Assets/Intangibles(Net of gain of Rs. 52.51 million) 27.22 128.99
Loss/(Gain) on sale of Raw Materials (6.01) 3.57
Bad Debts / irrecoverable Advances written off /provided for (Net of write in) 28.65 1.66
21,340.16 15,696.12
(1) The above expenses are Netted off, after taking into account credit of Rs. 2.01 million & Rs. 1.34 million for OfficeMaintenance & Communication Expenses respectively (Previous year Rs. 0.91 million - Communication Expenses).
(2) The above expenditure includes :a) Expenditure incurred on R&D of Rs. 285.83 million (Previous year Rs. 228.40 million) under various heads of
accounts. (Refer Schedule M-1).b) Prior period adjustments determined during the year are adjusted to respective heads of account of Rs. 2.81
million (Previous year of Rs. 2.79 million).(3) Excise duty expense denotes provision on stock differential and other claims/payment.
SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
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(Rs. in million)
For the year ended 31st March, 2009 2008
M-1. RESEARCH & DEVELOPMENT EXPENSES
Material Consumption 131.56 96.08
Employee Cost 256.10 194.11
Utilities- Power 24.80 20.02
Others 412.39 180.52
824.85 490.73
Less: Transferred to Intangibles/Capital Work in Progress (539.02) (262.33)
Balance, charged to Revenue 285.83 228.40
(Rs. in million)
For the year ended 31st March, 2009 2008
Research & Development Expenses comprises as mentioned hereunder:-
N. INTEREST
On Term Loans 564.20 139.51
On FCCB 0.25 0.33
On Overdrafts & other Borrowings (1) 108.35 57.26
672.80 197.10
Less: Interest Income (2) (129.26) (50.30)
[Tax deducted at source Rs. 28.51 million (Previous year Rs. 11.38 million)] 543.54 (3) 146.80 (3)
(1) Includes Rs.Nil (Previous year Rs. 12.88 million) as Discounting Charges on Commercial Papers.
(2) Includes Rs. 85.62 million (Previous year Rs. 47.94 million) earned from Subsidiary Companies and Rs. 41.90million earned on Deposits from Bank.
(3) Net of Interest Capitalisation. (Refer Note 12 (A) of Schedule “O”)
SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT
104
O NOTES TO THE ACCOUNTS AND SIGNIFICANT ACCOUNTING POLICIES
Notes to the Balance Sheet as at 31st March, 2009 and Profit and Loss Account for the year ended onthat date.
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES:
A. Basis of Accounting / Preparation
The financial statements of Jubilant Organosys Ltd. (the Company) have been prepared and presented under thehistorical cost convention on the accrual basis of accounting in accordance with the accounting principles generallyaccepted in India (“GAAP”) and comply with the mandatory accounting standards notified by the CentralGovernment of India under the Companies (Accounting Standards) Rules, 2006 and with the relevant provisions ofthe Companies Act, 1956. The Financial Statements are presented in Indian rupees rounded off to the nearestmillion.
The preparation of financial statements in conformity with GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at thedate of financial statements and the results of operations during the reporting periods. Management believes thatthe estimates used in the preparation of the financial statements are prudent and reasonable. Actual results couldvary from these estimates. Any revision to accounting estimates is recognised in the period in which such resultsare known/materalised.
B. a. Fixed Assets and Depreciation
(i) Fixed Assets are stated at original cost net of tax/duty credits availed, if any, less accumulateddepreciation/amortisation. The cost of fixed assets includes effect of exchange differences on long termforeign currency borrowings, freight and other incidental expenses related to the acquisition andinstallation of the respective assets. Borrowing costs directly attributable to fixed assets which necessarilytake a substantial period of time to get ready for their intended use are capitalised. In case of fixed assetsacquired at the time of amalgamation of certain entities with Company, the same are at book value/fairvalue ascertained by the valuers.
Insurance spares / standby equipments are capitalised as part of the mother assets and are depreciatedat the applicable rates, over the remaining useful life of the mother assets. Such spares are charged off,on issue for Consumption.
Interest on loans and other financial charges and preoperative expenses including Trial Run Expenses(Net of trial run receipts, if any) for projects and/or substantial expansion up to the date of commencementof commercial production/ stabilisation of the project are capitalised.
(ii) Depreciation is provided on Straight Line Method, except in case of Plant & Machinery at Nira & Savliplants which is on Written Down Value Method, at rates mentioned and in the manner specified inSchedule XIV to the Companies Act, 1956 (as amended), on the original cost/ acquisition cost of assetsand read with the statement as mentioned herein under. Certain plants were classified as continuousprocess plants from the financial year ended 31st March, 2000 and such classification has been done ontechnical assessment, (relied upon by the auditor being a technical matter) and depreciation on suchassets has been provided accordingly.
Depreciation, in respect of assets added/installed up to 15th December, 1993, is provided at the ratesapplicable at the time of additions/installations of the assets as per Schedule XIV to the Companies Act,1956 and depreciation, in respect of assets added/installed during the subsequent period, is provided atthe rates, mentioned in Schedule XIV to the Companies Act, 1956 read with Notification dated16th December, 1993 issued by Department of Company Affairs, Government of India except for thefollowing classes of fixed assets, where the useful life has been estimated as under:
a. R&D related Equipments & Machineries are depreciated over ten years.
b. Motor Vehicles are depreciated over five years.
c. Computer & Information Technology related assets are depreciated over three to five years.
d. Certain employee perquisite - related assets are depreciated over five years, being the period of theperquisite scheme.
Depreciation on assets added/disposed off during the year has been provided on pro–rata basis withreference to the month of addition/disposal.
Depreciation on exchange fluctuation capitalised is charged over the remaining useful life of assets.
NOTES TO THE ACCOUNTS
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
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b. Intangible, product development and amortisation
Intangible assets are recorded at the consideration paid for acquisition. Intangible assets are amortised overtheir estimated useful lives on straight line basis, commencing from the date the asset is available to theCompany for its use.
Cost incurred for product development are recognised as intangible assets and amortised on a straight-linebasis over a period of five to ten years from the date of regulatory approval. Subsequent expenditures ondevelopment of such products are also added to the cost of intangibles.
c. Leased Assets: Amortisation/charging off
(i) Leasehold Land value is not amortised in view of the long tenure of the unexpired lease period/option ofconversion to freehold at the expiry of lease tenure.
(ii) Other lease assets: Assets, if any, acquired under finance lease from April 01, 2001 are capitalised at thelower of their fair value and the present value of the minimum lease payment in line with the AccountingStandard 19 (AS-19) - “Leases”, notified by the Central Government of India under the Companies(Accounting Standard) Rules 2006. In respect of other leases, lease rentals are charged to Profit andLoss Account.
C. Valuation of Inventories
Inventories are valued at lower of cost or net realisable value except scrap, which is at net estimated realisable value.
The methods of determining cost of various categories of inventories are as follows:
Raw materials Weighted average method
Stores and spares Weighted average method
Work-in-process and finished goods (manufactured) Variable Cost at weighted average includingan appropriate share of production overheads
Finished goods (traded) Actual cost of purchase
Goods in transit Actual cost of purchase
Cost includes all direct costs, cost of conversion and appropriate portion of overheads and such other costsincurred as to bring the inventory to its present location and condition inclusive of excise duty wherever applicable.Cost formula used is based upon weighted average cost.
D. Investments
Long Term Investments (non-trade) if any, are valued at cost unless there is a permanent fall in their value as at thedate of Balance Sheet.
Unquoted investments in subsidiaries being of long term and of strategic in nature are valued at cost and no loss isrecognised for the fall, if any, in their net worth, unless the diminution in value is other than temporary. Investmentin Foreign Subsidiary Companies are expressed in Indian currency at the rates prevailing on the date when theremittance for the purpose was made/ foreign currency balance abroad was used, as the case may be.
Current Investments are valued at Lower of cost or fair value.
E. Income Tax
Current Tax
Current Tax Expense is based on the provisions of Income Tax Act 1961 and judicial interpretations thereof as atthe Balance Sheet date and takes into consideration various deductions and exemptions to which the Company isentitled to as well as the reliance placed by the Company on the legal advices received by it.
Deferred Tax
Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxableincome for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets arerecognised using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferredtax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future;however, where there is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognisedonly if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed at each balancesheet date and is written-down or written-up to reflect the amount that is reasonably/virtually certain (as the casemay be) to be realised.
Fringe Benefit Tax
Provision for Fringe Benefit Tax has been made in accordance with the Income Tax Laws prevailing for the relevantassessment years.
NOTES TO THE ACCOUNTS
106
F. Foreign Currency Conversions / Translation
Transactions in foreign currency are recorded at the exchange rate prevailing on/or closely approximating to thedate of transactions. Monetary Assets and Liabilities are restated at the rate prevailing at the period end or at thespot rate at the inception of forward contract where forward cover for specific asset/liability has been taken and inrespect of such forward contracts the difference between the contract rate and the spot rate at the inception of theforward contract is recognised as income or expense in Profit & Loss Account over the life of the contract. All otheroutstanding forward contracts on the closing date are marked to market and resultant gain or loss is recognised asincome or expense in the Profit and Loss Account.
The Company has opted for accounting the exchange differences arising on reporting of long term foreign currencymonetary items in line with Companies (Accounting Standard) Amendment Rules, 2009 on Accounting Standard 11(AS-11) - “The Effects of Changes in Foreign Exchange Rates” notified by the Ministry of Corporate Affairs on31st March, 2009. Accordingly the effect of exchange differences on foreign currency borrowings including FCCBsof the Company is adjusted to cost of fixed assets to the extent it relates to utilization of funds for acquisition ofdepreciable capital assets and the balance is accumulated in Foreign Currency Monetary Item TranslationDifference Account (FCMITDA) and amortised during the balance period of such long term liability but not later than31st March, 2011.
G. Provisions, Contingent Liability and Contingent Assets
The Company recognises a provision when there is a present obligation as a result of a past event that probablyrequires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosurefor a contingent liability is made when there is a possible obligation or a present obligation that may, but probablywill not require an outflow of resource. Contingent Assets are not recognised/disclosed. Provisions, ContingentLiabilities and Contingent Assets are reviewed at each Balance Sheet Date.
H. Research & Development
Revenue expenditure on Research and Development is included under the natural heads of expenditure.
Capital expenditure on Research and Development (R&D) is capitalised as fixed assets. Development costincluding legal expenses in relation to patent/trade marks relating to the new and improved product and/or processdevelopment is recognised as an intangible asset to the extent that it is expected that such asset will generatefuture economic benefits. Other Research & Development cost is expensed as incurred.
I. Employee Benefits
• Contribution payable to recognised provident fund, employee state insurance and superannuation schemewhich is defined contribution scheme, is charged to Profit & Loss Account. For certain employees, ProvidentFund contributions are made to a trust, administered by the Company. The interest rate payable to themembers of the trust shall not be lower than the statutory rate of interest declared by the Central Governmentunder the Employees Provident Funds and Misc. Provisions Act, 1952. The Remaining contributions are madeto the Government administered Provident Fund.
• Gratuity and leave encashment which are defined benefits are accrued based on actuarial valuation as atBalance Sheet date by an independent actuary.
• The Company has also opted for a group Gratuity-cum Life Assurance Scheme of the Life InsuranceCorporation of India for certain employees of one of its unit and the contribution is charged to the Profit & LossAccount each year.
J. Borrowing Cost
Borrowing cost includes ancillary cost. Borrowing cost attributable to acquisitions and construction/fabrication ofqualifying assets are capitalised as a part of the cost of such assets upto the date as mentioned in Note No. B(a)(i)above. Other borrowing costs are charged as expenses in the year in which they arise.
K. Revenue Recognition
Revenue from Sales is recognised on dispatch of material and point when risk and reward are transferred to thecustomers. Sales include excise duty, export incentives and subsidies but exclude Inter Divisional Transfers andValue Added Tax.
Revenue from tolling services is recognised in accordance with the terms of the specific agreement.
Export incentives/ benefits are accounted for on accrual basis and as per the principles given under AccountingStandard 9 (AS-9) on “Revenue Recognition”, notified by the Central Government of India under the Companies(Accounting Standard) Rules, 2006.
Dividend income is recognised when the unconditional right to receive the income is established. Income frominterest on deposits, loans and interest bearing securities is recognised on the time proportionate method.
NOTES TO THE ACCOUNTS
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
107
L. Miscellaneous Expenditure / Amortisation
(i) Payments under Voluntary Retirement Scheme are amortised over a period of thirty six months commencingfrom the month in which payment / liability arise.
(ii) FCCB and share issue expenses/premium payable on redemption of FCCBs are adjusted against securitiespremium account.
M. Segment Accounting
The accounting policies adopted for segment reporting are in line with accounting policies of the Company.Revenue, Expenses, Assets and Liabilities have been identified to segments on the basis of their relationship tooperating activities of the segments (taking in account the nature of products and services and risks & rewardsassociated with them) and internal management information systems and the same is reviewed from time to time torealign the same to conform to the Business Units of the Company. Revenue, Expense, Assets and Liabilities,which are common to the enterprise as a whole and are not allocable to segments on a reasonable basis, havebeen treated as “Common Revenue / Expense / Assets / Liabilities”, as the case may be.
N. Impairment of Fixed Assets
The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired.If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverableamount of the asset or the recoverable amount of the cash generating unit to which the assets belongs is less thanthe carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as animpairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indicationthat previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset isreflected at the recoverable amount.
O. Employee Stock Option Schemes
In accordance with the Securities and Exchange Board of India Guidelines, in respect of the stock options grantedpursuant to the Company’s Stock Option Scheme, the intrinsic value, if any, of the option being the excess of themarket price, of share over the exercise price of the option, at the date of grant of option, is treated as discount andaccounted as employee compensation cost and amortised on a straight line basis over the vesting period.
2. Capital Commitments
Estimated amount of Contracts remaining to be executed on Capital Account (Net of Advances) Rs. 629.70 million(Previous year Rs. 1,384.88 million) [Advances Rs. 113.89 million (Previous year Rs. 107.01 million)].
3. Contingent liabilities
a) Claims/Demands/Disputes against which appeals are pending and not acknowledged as debts on account of:
(Rs. in million)
As at 31st March, 2009 2008
Central Excise 23.18 23.17
Customs ** 74.67 5.76
Sales Tax 48.01 5.86
Income Tax 162.36 173.64
Service Tax 3.12 2.77
Others 59.48 10.57
** Excludes Rs. 111.09 million show cause notices/confirmed demands issued to the company againstjudicial procedures and unlikely to be sustained.
Based upon the favorable decisions in similar cases, legal opinion taken by the Company or discussion withsolicitors, the Company believes that its contentions in the matter of disputed demands/claims are legallytenable and hence the possibility of these maturing is remote.
In additions to the amounts mentioned above, the Company may be required to pay interest on finality of thematters.
b) The Company has challenged the levy of transport fee by State of Maharashtra on consumption of rectifiedspirit and molasses in the Nira factory. The order of State imposing the levy was stayed by the Hon’bleMumbai High Court on 22nd October, 2001. The Company has been advised that the levy of transport fee onrectified spirit and molasses by State is not tenable. However, the Company has deposited Rs. 6.28 millionunder protest out of the total transport fee of Rs. 124.03 million.
NOTES TO THE ACCOUNTS
108
c) Outstanding guarantees furnished by Banks on behalf of the Company/by the Company including in respect ofLetters of Credits/Loss make up guarantee is Rs. 1,066.75 million (Previous year Rs. 1,169.91 million).
The Company has given Corporate Guarantee on behalf of its subsidiaries, HSL Holdings Inc. & DraxisSpecialty Pharmaceuticals Inc. (formerly Jubilant Acquisition Inc. & post merger of Draxis Health Inc.) to ICICIBank UK. PLC. & ICICI Bank, Canada for USD 50 million (effective guarantee as at 31st March, 2009 USD43.75 million) and USD 50.21 million respectively (total effective guarantee equivalent to Rs. 4,765.70 million),to secure financial facility granted by them.
d) Exports obligation undertaken by the Company under EPCG scheme to be completed over a period of five/eight years on account of import of Capital Goods at concessional import duty remaining outstanding isRs. 1,101.50 million (Previous year Rs. 1,111.40 million). Similarly Export obligation under Advance LicenseScheme/DFIA scheme on duty free import of specific raw materials, remaining outstanding is Rs. 558.01million (Previous year Rs. 2,891.12 million)
e) The Company has challenged the increase in denaturing fee by the State of Uttar Pradesh w.e.f. 1st April,2004 on denaturing of rectified spirit in the Gajraula factory before the Hon’ble Allahabad High Court and thewrit petition has been admitted by the court. The Company has deposited Rs. 19.11 million under protestwhich is shown as deposits.
f) Zila Panchayat at J. P. Nagar (in respect of the Company’s Gajraula plant) served a notice demanding acompensation of Rs. 277.40 million allegedly for percolation of poisonous water stored in lagoons and flowingthrough the land of Zila Panchayat resulting in loss of crops and cattle of the farmers and for putting poisonousfly ash on national highway which caused loss to the health and damages to eyes and skin of people.
District Magistrate issued a recovery certificate along with 10% collection charges inflating the demand toRs. 305.14 million. In the opinion of the Company, the Zila Panchayat has no jurisdiction in raising thisdemand. The demand was challenged in Hon’ble Allahabad High Court and the court stayed the demand tillfurther orders.
4. The Hon’ble Supreme Court has quashed the levy of license fee by State of Uttar Pradesh on captive consumptionof denatured spirit in the Gajraula factory, and has ordered the refund of the fee paid during the period of disputesubject to condition that the amount has not been collected from the Company’s customers. Further the Court hasdirected the State to investigate whether the Company has collected the disputed fee from its customers to theextent bank guarantees were furnished.
The Company is entitled to a refund of Rs. 84.06 million as the amount paid during the period of dispute or securedby bank guarantees was not collected from its customers. Accordingly the Company has approached the State ofUttar Pradesh for the refund of the said amount.
5. The Company has challenged the levy of license fees of Rs. 2.87 million by State of Uttar Pradesh, for grant ofPD-2 license for manufacture of Ethyl Alcohol for industrial use, before the Hon’ble Allahabad High Court. The writpetition has been admitted and is being listed for final hearing. Though the amount has been deposited and shownas such, no provision against this has been made as the issue is covered by the earlier favorable judgment of theHon’ble Supreme Court of India.
6. Dividend on Equity Shares includes Rs. 2.36 million (inclusive of Dividend Distribution Tax) in respect of Sharesallotted between 31st March, 2008 to the record date for Dividend.
7. Loans to Subsidiary Companies repayable on demand, including interest accrued thereon, namely, Jubilant BiosysLtd. - Rs. 1,083.80 million (Previous year Rs. 769.80 million) & Jubilant Chemsys Ltd. - Rs. Nil (Previous yearRs. 28.00 million). {Maximum amount due at any time during the year, Jubilant Biosys Ltd. - Rs. 1,148.53 million(Previous year Rs. 816.21 million), Jubilant Chemsys Ltd. - Rs. 28.94 million (Previous year Rs. 36.28 million),Jubilant Pharma Pte. Ltd. Singapore - Rs. 223.12 million (Previous year Rs. Nil) & Speciality Molecules Ltd.Rs. 20.60 million (Previous year Rs. Nil)}.
Maximum balance outstanding, during the year, recoverable from following Companies in which Directors areinterested, Jubilant Enpro Pvt. Ltd. - Rs. 2.83 million, Jubilant Oil & Gas Pvt. Ltd. - Rs. 4.08 million, B&M HotBreads Pvt. Ltd. - Rs. 0.13 million.
NOTES TO THE ACCOUNTS
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
109
8. Micro and Small Business Entities
There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than45 days as at 31st March, 2009. The information as required to be disclosed under the Micro, Small and MediumEnterprises Development Act, 2006 (MSMED) has been determined to the extent such parties have been identifiedon the basis of information available with the Company.
(Rs. in million)
Principal amount payable to suppliers at the year end 22.69
Amount of interest paid by the Company in terms of Section 16 of the MSMED, –along with the amount of the payment made to the supplier beyond the appointedday during the accounting year
Amount of interest due and payable for the period of delay in making payment (which –have been paid but beyond the appointed day during the year) but without addingthe interest specified under the MSMED
Amount of interest accrued and remaining unpaid at the end of the accounting year –
9. Foreign Currency Convertible Bonds (FCCB)
(A) 1.5% FCCB - USD 35 million (FCCB 2009)
The Company issued 1.5% Foreign Currency Convertible Bonds due 2009 (FCCB 2009) aggregating USD 35million, in the year 2004-05. The Bonds are convertible at any time between 14th June, 2004 and 15th April,2009 by holders into fully paid equity shares of Re. 1 each of the Company or Global Depositary Shares(“GDSs”) each representing One equity share at an initial conversion price of Rs. 163.646 per share with afixed rate of exchange on conversion of Rs. 44.805 = USD 1. The conversion price is subject to adjustment incertain circumstances. The Bonds may also be redeemed, in whole but not in part, at the option of theCompany at any time on or after 14th May, 2007, subject to satisfaction of certain conditions. Unlesspreviously converted, redeemed or purchased and cancelled, the Bonds will be redeemed on 15th May, 2009at 113.70% of their principal amount. The FCCBs are listed on Singapore Stock Exchange. The GDSs arisingout of conversion of FCCBs are listed on Luxembourg Stock Exchange. Out of these FCCB 2009, USD 34.70million were converted upto 31st March, 2009 into equity shares and this represents 9,500,521 shares ofRe. 1 each as on 31st March, 2009. The balance bonds of USD 0.30 million outstanding as of 31st March,2009 are included under ‘Unsecured Loans’.
The outstanding balance of FCCB 2009 - USD 0.30 million, on conversion would result in allotment of 82,140equity shares of Re. 1 each.
The proceeds were utilised for funding new projects & expansion of existing units - Rs. 795.4 million(USD 17.1 million), investment in/acquisition of overseas subsidiary companies - Rs. 722.0 million(USD 16.8 million) and issue expenses - Rs. 50.7 million (USD 1.1 million).
(B) FCCB - USD 75 million (FCCB 2010)
The Company issued, Zero Coupon Foreign Currency Convertible Bonds due 2010 (FCCB 2010) for anaggregate value of USD 75 million, convertible at any time between 3rd July, 2005 to 14th May, 2010 byholders into fully paid equity shares of Re. 1 each of the Company or Global Depositary Shares (GDSs) eachrepresenting one equity share of Re. 1 each at an initial conversion price of Rs. 273.0648 per share with afixed rate of exchange of Rs. 43.35 = USD 1. The conversion price is subject to adjustment in certaincircumstances. The Bonds may also be redeemed, in whole but not in part, at the option of the Company atany time on or after 23rd May, 2008, subject to satisfaction of certain conditions. Unless previously converted,redeemed or purchased and cancelled, the Bonds will be redeemed on 24th May, 2010 at 138.383% of theirprincipal amount. The FCCBs are listed on Singapore Stock Exchange. The GDSs arising out of conversion ofFCCBs are listed on Luxembourg Stock Exchange. Out of these FCCB 2010, USD 22.343 million wereconverted upto 31st March, 2009 into equity shares and this represents 3,547,022 shares of Re. 1 each as on31st March, 2009 and USD 3 million Bonds were bought back at a discount and were cancelled upto31st March, 2009. The balance bonds of USD 49.657 million outstanding as of 31st March, 2009 are includedunder ‘Unsecured Loans’.
The outstanding balance of FCCB 2010 - USD 49.657 million, on conversion would result in allotment of7,883,231 equity shares of Re. 1 each.
The proceeds of FCCB 2010 have been used for funding new projects & expansion of existing units -Rs. 1,384.1 million (USD 32.2 million), investment in/acquisition of overseas subsidiary companies -Rs.1,827.9 million (USD 41.0 million), issue expenses – Rs. 78.0 million (USD 1.8 million).
NOTES TO THE ACCOUNTS
110
(C) FCCB - USD 200 million (FCCB 2011)
The Company issued Zero Coupon Foreign Currency Convertible Bonds due 2011 (FCCB 2011) for anaggregate value of USD 200 million, convertible at any time between 30th June, 2006 to 10th May, 2011 byholders into fully paid equity shares of Re.1 each of the Company or Global Depositary Shares (GDSs) eachrepresenting one equity share at an initial conversion price of Rs.413.4498 per share with a fixed rate ofexchange of Rs.45.05 = USD1. The conversion price is subject to adjustment in certain circumstances. TheBonds may also be redeemed, in whole but not in part, at the option of the Company at any time on or after19th May, 2009, subject to satisfaction of certain conditions. Unless previously converted, redeemed orpurchased and cancelled, the Bonds will be redeemed on 20th May, 2011 at 142.429% of their principalamount. The FCCBs are listed on Singapore Stock Exchange. The GDSs arising out of conversion of FCCBsare listed on Luxembourg Stock Exchange. Out of these FCCB 2011, USD 57.90 million Bonds were boughtback at a discount and cancelled upto 31st March, 2009. The balance bonds of USD 142.10 millionoutstanding as of 31st March, 2009 are included under ‘Unsecured Loans’.
The outstanding balance of FCCB 2011 - USD 142.10 million, on conversion would result in allotment of15,483,391 equity shares of Re. 1 each.
The proceeds of FCCB 2011 have been used for funding new projects - Rs. 13.5 million (USD 0.30 million),investment in/acquisitions of overseas subsidiary companies - Rs. 8,873.0 million (USD 196.96 million) andissue expenses - Rs. 123.4 million (USD 2.74 million). There has been no conversion during the year inrespect of the above FCCBs.
(D) As permitted by the Reserve Bank of India (RBI), during the year, the Company bought back at discount totheir book value, FCCBs aggregating to USD 3 million out of outstanding FCCB 2010 of USD 52.657 millionagainst the issue size of USD 75 million and FCCBs aggregating to USD 57.90 million out of outstandingFCCB 2011 of USD 200 million. In terms of such buyback and cancellation/extinguishment of FCCB debt, thegain of Rs. 590.70 million, being reduction in loan liability has been credited to the Profit and Loss Account.
10. Employee Stock Option Scheme
In terms of approval of shareholders accorded at the AGM held on 29th August, 2005 and in accordance with SEBI(ESOP & ESPS) Guidelines, 1999, the Company instituted Jubilant Employees Stock Option Plan, 2005 (“Plan”) forspecified categories of employees and directors of the Company and its Subsidiaries. Under the Plan, upto 717,500Stock Options can be issued to eligible directors (other than promoter directors) and other specified categories ofemployees of the Company / Subsidiaries. The options are to be granted at market price. As per SEBI Guidelines,the market price is taken as the closing price on the day preceding the date of grant of options, on the stockexchange where the trading volume is the highest.
Each option, upon vesting, shall entitle the holder to subscribe to five equity shares of Re. 1 each. 10% of theOptions will vest on the 1st anniversary of the grant date and 90% will vest on 2nd anniversary of the grant date.Further lock–in provisions are as under:–
Vesting Date % of Options scheduled to vest Lock–in Period
1 year from grant date 10 Nil
2 years from grant date 15 Nil
2 years from grant date 20 1 year from vesting date
2 years from grant date 25 2 years from vesting date
2 years from grant date 30 3 years from vesting date
The Company has constituted a Compensation Committee comprising of a majority of independent directors. ThisCommittee is empowered to administer the Scheme.
During the year, in accordance with SEBI (ESOP & ESPS) Guidelines, 1999, approval was accorded to increasethe number of Stock Options that the Company can create, offer, issue and grant/allot at any time, directly, orthrough a trust, to the eligible employees of the Company and its Subsidiaries, from 717,500 Stock Options to1,100,000 Stock Options thereby increasing the resultant Equity Shares on exercise from 3,587,500 shares to5,500,000 shares of Re. 1 each under the Jubilant Employees Stock Option Plan, 2005.
During the year, Jubilant Employee Welfare Trust was constituted for the purpose of acquisition of equity shares ofthe Company from the Secondary market or subscription of shares from the Company, to hold the shares and toallocate/transfer these shares to eligible employees of the Company from time to time, in such manner and termsand conditions specified under Jubilant Employees Stock Option Plan, 2005. The Company would grant loan toTrust upto Rs. 1,000 million in one or more trenches, either free of interest or at interest agreed between the Boardand the Trust. The Trust has purchased 5,371,747 equity shares of the Company from the open market, out ofinterest free loan of Rs. 567.85 million provided by the Company till March 31, 2009.
NOTES TO THE ACCOUNTS
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
111
During the year, the following options were granted to eligible directors/ employees:
Date of grant Number of Exercise Price Market Price (Rupees)options granted per Share (Rupees) (As per SEBI Guidelines)*
22nd April, 2008 9,100 359.25 359.25 (a)
15th July, 2008 8,000 304.95 304.95 (b)
14th October, 2008 5,600 198.55 198.55 (c)
* Based on closing price (a) on 21st April, 2008 at NSE (b) on 14th July, 2008 at NSE (c) on 13th October, 2008 atNSE where higher turnover was recorded.
The movement in the stock options during the year ended 31st March, 2009 is set out below:
Number
Options outstanding at the beginning of the year 539,160
Granted during the year 22,700
Expired/forfeited during the year (34,061)
Exercised during the year (9,326)
Options outstanding at the end of the year 518,473
11. The Company’s significant operating lease arrangements are in respect of premises (residential, offices, godownetc.). These leasing arrangements, which are cancelable, range between 11 months and 3 years generally and areusually renewable by mutual agreeable terms. The aggregate lease rentals payable are charged as expenses.
12. (A) In line with the applicable Accounting Standards, interest on funds utilised and preoperative expensesincluding trial run expenses (net) for projects and/or substantial expansions have been capitalised up to thedate of commercial production/stabilisation of the project, amounting to Rs. 298.53 million (Previous yearRs. 276.63 million), including interest Rs. 220.09 million (Previous year Rs.150.55 million). The saidexpenditure (net of trial run receipts), so capitalised are accumulated as Capital work in progress and havebeen allocated to respective Fixed Assets to the extent fixed assets were put to use and balance is appearingin Capital work in progress.
(B) The carrying value of internally generated Intangible Asset - Product Development including under progress isreviewed for impairment annually. Accordingly a sum of Rs. 79.49 million has been written off during the year.
13. (A) During the year, the Company through its wholly owned subsidiaries has acquired 100% stake in DraxisSpecialty Pharmaceuticals Inc. (formerly Jubilant Acquisition Inc. & post merger of Draxis Health Inc.) alongwith its Subsidiaries (Draxis)., a Canada Based company which become subsidiary w.e.f. 28th May, 2008. Theacquired Company offers Contract Manufacturing services in the area of sterile and non-sterile products andalso focuses on discovering, developing and manufacturing diagnostic imaging and therapeuticradiopharmaceutical products.
(B) During the year, the Company acquired 100% stake in Speciality Molecules Ltd., a niche manufacturer ofSpecialty Intermediates with manufacturing facilities located in Ambarnath (near Mumbai), which becomesubsidiary w.e.f. 3rd June, 2008. The acquired Company is engaged in the business of developing,manufacturing and selling of specialty intermediates.
(C) In the year 2007-08, the Company through its wholly owned subsidiaries acquired 100% stake in Hollister-StierLaboratories LLC (HSL), a US based Company engaged in Contract Manufacturing of sterile injectables &producers of allergenic extracts.
(D) In the year 2004-05, the Company acquired 80% equity interest in two Belgium based pharmaceuticalcompanies namely Pharmaceutical Services Incorporated N.V. and PSI Supply N.V. through its subsidiarynamely Jubilant Pharma N.V. for a consideration of Euro 13.5 million.
In the year 2007-08, the Company through its wholly owned subsidiary invested Euro 1 million to acquirebalance 20% equity interest in Belgium based said pharmaceutical companies.
(E) In the year 2005-06 & 2006-07, the Company made, investment of USD 12.70 & USD 198.09 millionrespectively, in the Equity of its wholly owned Subsidiary - Jubilant Pharma Pte. Ltd., Singapore.
During the year, the Company made further investment of USD 21.60 million.
(F) In the year 2007-08, the Company acquired 88.17% stake in Jubilant First Trust Healthcare Limited (JFTHL)for a consideration of Rs. 223.55 million, which became subsidiary w.e.f. 23rd May, 2007. JFTHL is engaged inthe business of Development & Management of Hospitals & Health care units and is run by a team ofprofessional doctors in West Bengal. During the year the Company increased its holding in JFTHL from88.17% to 92.80%.
NOTES TO THE ACCOUNTS
112
JFTHL has also invested a sum of Rs. 12.52 million to acquire 99.68% stake in Asia Healthcare DevelopmentLtd. which became its subsidiary w.e.f 13th March, 2008.
(G) The Company made during the year, further investment of Rs. 60.50 million in Jubilant Infrastructure Ltd., awholly owned subsidiary engaged in setting up of SEZ in the State of Gujarat.
14. (A) During the year, the Company sold all the equity shares held by it in its subsidiary viz; Jubilant Biosys Ltd. toits step down subsidiary Jubilant Biosys (Singapore) Pte. Limited and also sold all the equity shares held by itin its subsidiaries viz; Jubilant Chemsys Ltd. and Clinsys Clinical Research Ltd. to its another step down whollyowned subsidiary-Jubilant Drug Development Pte. Limited, Singapore.
(B) In the year 2007-08, the Company sold all the shares held by it in its subsidiary viz; Jubilant Organosys(Shanghai) Ltd., to its wholly owned subsidiary Jubilant Pharma Pte. Ltd., Singapore.
15. (A) Deferred Tax Assets and Liabilities are attributable to the following items:
(Rs. in million)
As at 31st March, 2009 2008
Deferred Tax Assets
Provision for Leave Encashment and Gratuity 113.17 110.23
Amount disallowed u/s 43 B 15.49 2.84
Accumulated Losses as per Tax Laws 536.87 –
Others 6.73 7.72
672.26 120.79
Deferred Tax Liabilities
Accelerated Depreciation/Amortisation 1,598.65 1,368.75
Difference in value of CWIP/Intangibles 339.16 179.09
1,937.81 1,547.84
Deferred Tax Liabilities (Net) 1,265.55 1,427.05
(B) The profit attributable to the operations under the (EOU) Export Oriented Units Scheme are deductible fromtaxable income up to 31st March, 2010, and accordingly income from EOU setup at Nanjangud, Mysore, andat Bhartiagram, Jyotiba Phoolay Nagar (Gajraula), Uttar Pradesh have been considered as tax deductible, andprovision for tax has been made accordingly.
16. The bottling unit of the Company situated at Nira holds a potable liquor license for Indian Made Foreign Liquor(IMFL) and the same is bottling IMFL on the order of another Company and is charging bottling fee. The Accountsrecognise Revenue and Expenditure, only to the extent the Company enjoys beneficial interest. In Compliance withthe requirements of Schedule VI to the Companies Act, 1956, the following information is given hereunder inrespect of the transactions where the Company does not enjoy beneficial interest.
(Rs. in million)
For the year ended 31st March, 2009 2008
Sales 24.42 933.80
Excise Duty (8.92) (659.84)
Other Income 1.14 7.94
Increase/(Decrease) in Finished & Process Stocks 0.79 (77.83)
Raw & Process Materials Consumed (7.97) (63.72)
Stores, Spares, Chemicals, Catalyst & Packing Materials Consumed (3.59) (104.19)
Other Expenses (4.15) (0.30)
Purchase of Trading Material – (7.70)
NOTES TO THE ACCOUNTS
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
113
17. Disclosure required by Accounting Standard 29 (AS-29) “Provisions, Contingent Liabilities and Contingent Assets”
Movement in Provisions:
(Rs. in million)
Class of Provisions
Sr. No. Particulars of disclosure Excise Duty Premium onredemption
of FCCBs
1 Balance as at 1st April, 2008 34.63 1,633.37(52.93) (975.15)
2 Additional provision during 2008–2009 35.35 1,129.20(34.63) (663.21)
3 Provision used during 2008–2009 34.63 –(52.93) (–)
4 Provision reversed during 2008–2009 – 420.27(–) (4.99)
5 Balance as at 31st March, 2009 35.35 2,342.30(34.63) (1,633.37)
Provision for excise duty represents the excise duty on closing stock of finished goods.
18. (A) The Company has opted for accounting the exchange difference arising on reporting of long term foreigncurrency monetary items in line with the Companies (Accounting Standard) Amendment Rules, 2009 onAS 11 (AS-11) - “The Effects of Changes in Foreign Exchange Rates” notified by the Ministry of CorporateAffairs on 31st March, 2009. Accordingly during the year the Company has capitalised exchange differenceamounting to Rs. 1,130.81 million to the cost of fixed assets and the balance amount Rs. 1,596.03 million toForeign Currency Monetary Item Translation Difference Account [FCMITDA]. Also the exchange gainamounting to Rs. 1,030.57 million credited to Profit & loss account in the previous year is now reversedthrough General Reserve. Had the Company not opted for this method of accounting the profit for the yearwould have been lower by Rs. 3,757.41 million and the reserves would have been lower by Rs. 1,130.81million. The balance in FCMITDA will be amortised on or before March, 2011.
(B) The Company uses derivative financial instruments such as forward contracts and currency swaps toselectively hedge its currency exposures, firm commitments and highly probable forecast transactions,denominated in USD and EURO. Usually, the forward contracts mature within two years. The Company alsoenters into interest rate swaps to selectively hedge its interest rate exposures. The Company actively managesits currency/interest rate exposures through a centralised treasury setup and uses derivatives to mitigate therisk from such exposures.
No derivative transactions are entered into for any speculative purpose.
The information on derivative instruments is as follows:
i) Derivative instruments outstanding:
Buy/Sell Amount (foreign currency in millions)
As at 31st March, 2009 2008
Foreign Exchange Contracts
– USD/INR Sold USD 290.00 USD 87.58
– USD/INR Bought USD 10.59 –
– EURO/USD Sold EURO 0.69 EURO 11.52
Currency Swaps
– Loans of JPY 3,920.20 million USD 37.00 USD 20.00(PY JPY 2,304.50 million) swapped into USD
Interest Rate Swaps
– Loans swapped from floating six month USD USD 132.50 –LIBOR to fixed USD interest rate
NOTES TO THE ACCOUNTS
114
ii) Foreign currency exposure not hedged by derivative instrument:
Amount (foreign currency in millions)
As at 31st March, 2009 2008
Amount receivable on account of sale of goods & services USD – USD 17.44
EURO 2.30 EURO 1.78
GBP 0.04 GBP 0.07
Amount payable on account of purchase ofgoods & services, loans, FCCBs, etc. USD 346.75 USD 380.23
JPY 0.95 –
Amount outstanding as deposits with Banks USD 22.48 USD 0.27
iii) Forward contracts outstanding not applied for closing monetary assets and liabilities as on 31st March, 2009are marked to market and the resultant loss of Rs. 942.88 million has been charged to Profit and Loss Accountduring the year.
19. In the year 2007-08, effective 1st April, 2007, the Company adopted the revised Accounting Standard 15 (AS-15) -“Employee Benefits” notified by the Central Government under the Companies (Accounting Standard) Rules, 2006,on employee benefits. Pursuant to the adoption, the transitional obligation of the Company amounted to Rs. 90.24million (Net of deferred tax of Rs. 46.47 million) has been adjusted against General Reserve as at 1st April, 2007.
The Company has calculated the various benefits provided to employees as under:
(A) Defined Contribution Plans
a) Provident Fund
b) Superannuation Fund
During the year the Company has recognised the following amounts in the Profit and Loss Account:
(Rs. in million)
For the year ended 31st March, 2009 2008
Employers Contribution to Provident Fund 65.87 48.77
Employers Contribution to Superannuation Fund 18.88 17.94
(B) State Plans
a) Employee State Insurance
b) Employee’s Pension Scheme 1995
During the year the Company has recognised the following amounts in the Profit and Loss account:
(Rs. in million)
For the year ended 31st March, 2009 2008
Employers Contribution to Employee State Insurance 1.34 1.24
Employers Contribution to Employee’s Pension Scheme, 1995 19.83 17.05
(C) Defined Benefit Plans
a) Gratuity
b) Leave Encashment
The discount rate assumed is 7.60% which is determined by reference to market yield at the Balance Sheetdate on Government bonds. The estimates of future salary increases, considered in actuarial valuation, takeaccount of inflation, seniority, promotion and other relevant factors, such as supply and demand in theemployment market.
NOTES TO THE ACCOUNTS
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
115
Reconciliation of opening and closing balances of the present value of the defined benefit obligation:(Rs. in million)
Gratuity* Leave Encashment2009 2008 2009 2008
Present Value of obligation at the beginning of the year 223.92 188.56 84.66 80.05Current service cost 25.33 22.39 18.58 15.99Interest cost 17.02 16.12 6.44 6.85Actuarial (gain)/loss (31.15) (3.15) 4.78 (18.23)Benefits paid (16.73) – (11.58) –Present value of obligation at the end of the year 218.39 223.92 102.88 84.66
Reconciliation of the present value of defined benefit obligation and the fair value of the plan assets:(Rs. in million)
Gratuity* Leave Encashment2009 2008 2009 2008
Present value of obligation at the end of the year 218.39 223.92 102.88 84.66Fair value of plan assets at period end – – – –Assets/(Liabilities) recognised in the Balance Sheet (218.39) (223.92) (102.88) (84.66)
Cost recognised for the period (included under Salaries, Wages, Allowances, Bonus and Gratuity):(Rs. in million)
Gratuity* Leave Encashment2009 2008 2009 2008
Current service cost 25.33 22.39 18.58 15.99Interest cost 17.02 16.12 6.44 6.85Actuarial (gain)/loss (31.15) (3.15) 4.78 (18.23)Net cost recognised during the year 11.20 35.36 29.80 4.61
* Excluding for certain employees of Nanjangud Unit.
Reconciliation of opening and closing balances of the present value of the defined benefit obligation** :(Rs. in million)
Gratuity2009 2008
Present Value of obligation at the beginning of the year 20.44 16.59Current service cost 3.42 3.27Interest cost 1.55 1.42Actuarial (gain)/loss (7.43) (0.33)Benefits paid (0.98) (0.51)Present value of obligation at the end of the year 17.00 20.44
Reconciliation of the present value of defined benefit obligation and the fair value of the plan assets** :(Rs. in million)
Gratuity2009 2008
Present value of obligation at the end of the year 17.00 20.44Fair value of plan assets at period end 5.32 4.72Funded Status excess of Actual over estimated (0.37) 1.03Assets/(Liabilities) recognised in the Balance Sheet (11.68) (15.72)
Cost recognised for the period (included under Salaries, Wages, Allowances, Bonus and Gratuity)** :(Rs. in million)
Gratuity2009 2008
Current service cost 3.42 3.27Interest cost 1.55 1.42Actuarial (gain)/loss (7.06) (1.37)Expected Return on Plan Asset (0.37) (0.31)Net cost recognised during the year (2.46) 3.01
** In respect of certain employees of Nanjangud Unit.
NOTES TO THE ACCOUNTS
116
20. Segment Reporting :
i) Based on the guiding principles given in Accounting Standard 17 (AS-17) on “Segment Reporting”,notified by the Central Government under the Companies (Accounting Standard) Rules, 2006. TheCompany’s Primary Business Segments are organized around customers, on industry and productlines as under:
a. Pharmaceuticals and Life Sciences Products & Services: Active Pharmaceuticals Ingredients (APIs),Custom Research & Manufacturing Services (CRAMS).
b. Industrial & Performance Products: Organic Intermediates, Agri and Animal Nutrition Products, Industrialproducts for tyres, textiles and coatings; Consumer Products for woodworking solutions; Food Polymersand Specialty Gases.
ii) In respect of Secondary Segment information, the Company has identified its Geographical segmentsas:
(i) Within India (ii) Outside India.
iii) Inter Segment Transfer Pricing
Inter Segment Transfer prices are based on market prices.
iv) The Financial information about the primary business segments is presented in the table given below:
(Rs. in million)
Particulars Pharmaceuticals and Life Industrial & Performance TotalSciences Products & Services Products
2009 2008 2009 2008 2009 2008
1) Revenue 12,664.73 10,553.99 12,882.21 10,653.50 25,546.94 21,207.49
Less: Inter Segment Revenue 32.32 41.11 32.32 41.11
Less: Excise Duty on Sales 302.81 347.53 904.59 1,051.36 1,207.40 1,398.89
Net sales 12,361.92 10,206.46 11,945.30 9,561.03 24,307.22 19,767.49
2) Segment results 3,369.84 3,130.45 1,103.52 1,292.25 4,473.36 4,422.70
Less : Interest (Net) 543.54 146.80
Other un–allocable expenditure 1,199.50 (323.12)
(net of un–allocable income)
Total Profit Before Tax 3,369.84 3,130.45 1,103.52 1,292.25 2,730.32 4,599.02
3) Capital Employed
(Segment Assets – Segment Liabilities)
Segment Assets 14,567.72 12,308.19 9,824.11 8,343.50 24,391.83 20,651.69
Add: Common Assets 23,779.42 16,425.48
Total Assets 14,567.72 12,308.19 9,824.11 8,343.50 48,171.25 37,077.17
Segment Liabilities 1,855.79 1,025.44 2,323.86 1,529.44 4,179.65 2,554.88
Add: Common Liabilities 4,075.76 2,653.63
Total Liabilities 1,855.79 1,025.44 2,323.86 1,529.44 8,255.41 5,208.51
Segment Capital Employed 12,711.93 11,282.75 7,500.25 6,814.06 20,212.18 18,096.81
Add: Common Capital Employed 19,703.66 13,771.85
Total Capital Employed 12,711.93 11,282.75 7,500.25 6,814.06 39,915.84 31,868.66
4) Segment Capital Expenditure 3,186.39 763.80 2,281.93 699.03 5,468.32 1,462.83
Add: Common Capital Expenditure 53.82 145.88
Total Capital Expenditure 3,186.39 763.80 2,281.93 699.03 5,522.14 1,608.71
5) Depreciation & Amortisation 441.06 378.36 287.14 243.61 728.20 621.97
Add: Common Depreciation 18.01 13.93
Total Depreciation & Amortisation 441.06 378.36 287.14 243.61 746.21 635.90
Notes:
1) The Company has disclosed Business Segment as the Primary Segment.
2) Segments have been identified and reported taking into account the nature of products and services, the differing risk andreturns, the organization structure and the internal financial reporting systems.
3) The Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segmentsand amounts allocated on a reasonable basis.
NOTES TO THE ACCOUNTS
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
117
21. A. Related Party Disclosures
1. Related parties where control exists:a) Subsidiaries including Step–down subsidiaries:
Jubilant Pharma Pte. Ltd. Singapore, Draximage Ltd. Cyprus (formerly Pancity Ltd.), Draximage Ltd.Ireland (formerly Basehell Ltd.), Draximage LLC. USA., DSPI Inc. USA, Deprenyl Inc. USA, DraxisSpecialty Pharmaceuticals Inc. Canada. (formerly Jubilant Acquisition Inc.), 6963196 Canada Inc.Canada, 6981364 Canada Inc. Canada, DAHI LLC. USA, DAHI Animal Health (UK) Ltd. UK., Draxis USInc. (Merged with Deprenyl Animal Health Inc.), DAHI Nevada Inc. (Merged with Deprenyl Animal HealthInc), Deprenyl Animal Health Inc (Dissolved on 18th December 2008), Draximage (UK) Ltd. UK., ClinsysHoldings Inc. USA., Clinsys Clinical Research, Inc. USA. Cadista Holdings Inc. USA., CadistaPharmaceuticals Inc. USA., Colvant Sciences Inc. USA., Cadista Pharmaceuticals (UK) Limited, UK.(formerly Cadista UK Ltd.), Jubilant Organosys International Pte. Ltd. Singapore, HSL Holdings Inc. USA.,Hollister–Stier Laboratories LLC. USA., Jubilant Organosys (Shanghai) Ltd. China., Jubilant Pharma N.V.Belgium., Jubilant Pharmaceuticals N.V. (formerly Pharmaceutical Services Incorporated N.V.) Belgium.,PSI Supply N.V. Belgium., Jubilant Organosys (USA) Inc. USA., Jubilant Organosys (BVI) Ltd. BVI.,Jubilant Biosys (BVI) Ltd. BVI., Jubilant Biosys (Singapore) Pte Ltd. Singapore., Jubilant Biosys Ltd.,Jubilant Discovery Services Inc. USA., Jubilant Drug Development Pte. Ltd. Singapore., Jubilant ChemsysLtd., Clinsys Clinical Research Ltd., Jubilant Infrastructure Ltd., Jubilant First Trust Healthcare Ltd., AsiaHealthcare Development Ltd., Speciality Molecules Ltd., Jubilant Innovation (BVI) Ltd., BVI., JubilantInnovation Pte. Ltd., Singapore.
b) Other Entities:Draxis Pharma General Partnership Canada, Draximage General Partnership Canada
2. Other Related parties with whom transactions have taken place during the year.i) Enterprise over which certain Key Management Personnel have significant influence:
Jubilant Enpro Pvt. Ltd., Jubilant Oil & Gas Pvt. Ltd., Enpro Oil Pvt. Ltd., Domino Pizza India Ltd.,Tower Promoters Pvt. Ltd., Focus Brands Trading India Pvt. Ltd., B&M Hot Breads Pvt. Ltd.
ii) Key Management Personnel:Mr. Shyam S. Bhartia, Mr. Hari S. Bhartia, Mr. S. N. Singh, Mr. Shyamsundar Bang, Dr. J. M. Khanna,Mr. R. Sankaraiah, Mr. Pramod Yadav, Mr. Rajesh Srivastava, Mr. Ananda Mukherjee
iii) Relatives of Key Management Personnel:Ms. Asha Khanna (wife of Dr. J. M. Khanna), Ms. Shobha Bang (wife of Mr. Shyamsundar Bang)
iv) Others:Vam Employees Provident Fund Trust, Jubilant Employee Welfare Trust, Jubilant Bhartia Foundation
v) Secondary Segments (Geographical Segments): (Rs. in million)
Particulars 2009 2008
a) Sales revenue by Geographic Location of Customers (Net of Excise Duty)
Within India 13,329.36 10,909.09
Outside India 10,977.86 8,858.40
Total 24,307.22 19,767.49
b) Carrying Amount of Segment Assets
Within India 32,512.79 22,780.25
Outside India 15,658.46 14,296.92
Total 48,171.25 37,077.17
c) Capital Expenditure
Within India 5,522.14 1,608.71
Outside India – –
Total 5,522.14 1,608.71
d) Sales revenue by Geographic Markets
India 13,329.36 10,909.09
Americas & Europe 5,522.13 4,364.00
China 2,632.48 3,093.40
Asia & Others 2,823.25 1,401.00
Total 24,307.22 19,767.49
NOTES TO THE ACCOUNTS
118
3. Transactions with related parties during the year:(Rs.in million)
Particulars Subsidiaries Enterprise over Key Mgmt. Otherswhich certain Key Personnel &
Management RelativesPersonnel have
significant influence
Sale of Goods & Services 2,956.06 1.72(2,986.21) (–)
Interest on Inter-Corporate Deposits 85.62(47.94)
Purchase of Goods & services 173.81(37.86)
Recovery of expenses 262.29 27.15 –(47.21) (21.71) (0.05)
Reimbursement of expenses 116.76 3.59(52.83) (–)
Remuneration and Related Expenses 161.94(137.57)
Company’s Contribution to PF Trust. 60.47(45.40)
Rent paid 42.00 6.43(24.50) (5.05)
Donation 8.21(0.50)
Assets purchased (including CWIP) 10.97 –(–) (17.47)
Investments in Equity Share Capital 1,302.66(432.05)
Investment in optionally convertible Non– 67.00cumulative Redeemable Preference Shares. (221.00)
Sale/Purchase of Shares 189.25(8.80)
Inter-Corporate Deposits Given 557.12(443.60)
Inter-Corporate Deposits Received Back/ 271.12adjusted against Investment (7.00)
Loan to Jubilant Employee Welfare Trust 567.85(–)
Housing Loan Given 25.00(–)
Housing Loan Repayment 2.00(0.50)
Security Deposit Given –(21.00)
Inter-Corporate Deposits Outstanding 1,083.80(including interest accrued thereon) (797.80)
Outstanding Receivables (other than ICD’s) 849.31 21.00 25.00 567.85(935.18) (21.00) (2.00) (–)
Outstanding Payables 96.63 2.34(38.77) (–)
Guarantees on behalf of Subsidiary and 4,765.70outstanding at end of year. (2,000.00)
Note: (1) Managerial remuneration - Details as per Note 22 of Schedule “O”.(2) Figures in ( ) indicates in respect of previous year.(3) Related party relationship is as identified by the Company and relied upon by the Auditors.(4) No amount has been written off/provided for in respect of dues from or to any related party.
NOTES TO THE ACCOUNTS
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
119
21. B. Promoter Group
Group companies
The Company is controlled by Mr. Shyam S. Bhartia/Mr. Hari S. Bhartia group (“the promoter group”), being a groupas defined in the Monopolies and Restrictive Trade Practices Act, 1969.
The persons constituting the promoter group include individuals and corporate bodies who/which jointly exercise,and are in a position to exercise, control over the Company. The names of these individuals and bodies corporateare Mr. Shyam S. Bhartia, Mr. Hari S. Bhartia, Mrs. Shobhana Bhartia, Mrs. Kavita Bhartia, Mr. Priyavrat Bhartia,Mr. Shamit Bhartia, Ms. Aashti Bhartia, Master Arjun S. Bhartia, Mrs. Namrata Bhartia, Master Agastya Bhartia,Best Luck Vanijya Private Ltd., Enpro Exports Private Ltd., Jaytee Private Ltd., Jubilant Enpro Private Ltd., JubilantSecurities Private Ltd., Jubilant Capital Private Ltd., Klinton Agencies Private Ltd., Speedage Vinimay Private Ltd.,Rance Investment Holdings Ltd., Cumin Investments Ltd., Torino Overseas Ltd., Vam Holdings Ltd., WestcostVyapaar Private Ltd., Nikita Resources Private Ltd., Jubilant Oil & Gas Pvt. Ltd., Enpro Oil Pvt. Ltd., TowerPromoters Pvt. Ltd., U C Gas & Engineering Ltd., Asia Infrastructure Development Co. Pvt. Ltd., Western DrillingContractors Pvt. Ltd, Jubilant Realty Pvt. Ltd, Dignesh Suppliers Pvt. Ltd., Love Life Vinimay Pvt. Ltd.,Skylark Holdings Pvt. Ltd., Jubilant Properties Pvt. Ltd., Cougar Sales Agency Pvt. Ltd., Indian Country Homes Pvt.Ltd., Jubilant E&P Ventures Pvt. Ltd., Jubilant Retail Pvt. Ltd., Jubilant Retail Holding Pvt. Ltd., Jubilant Motors Pvt.Ltd., Jubilant Retail Consolidated Pvt. Ltd., B&M Hot Breads Pvt. Ltd.
22. Details of Remuneration to the Managing Directors, Executive Directors & other Directors under section 198of the Companies Act, 1956.
(Rs. in million)
For the year ended 31st March, 2009 2008
i) Salaries 23.11 18.58
ii) Rent /Rent Free Accommodation 52.05 50.64
iii) Contribution to Provident Fund and Superannuation Fund 3.75 5.02
iv) Perquisite value of other Benefits 11.06 7.82
v) Commission to Managing Directors 22.00 ** 42.00 **
vi) Commission to other Directors (Excluding Executive Directors) 0.80 1.00
112.77 125.06
The above excludes provision for gratuity/earned leave whereCalculations are on overall Company basis.
Calculation of Profit in accordance with Section 198 of theCompanies Act, 1956 for the purpose of calculation of Commissionpayable to Directors.
Profit before tax as per Profit & Loss Account 2,730.32 4,599.02
Add: Managerial Remuneration as above 112.77 125.06
Directors Sitting Fees 0.59 0.66
Depreciation as per Accounts 746.21 635.90
Net Profit 3,589.89 5,360.64
Less: Depreciation under Section 350 of the Companies Act, 1956 746.21 635.90
Premium on Redemption of FCCB 708.93 658.22
Exchange Gain on FCCBs/Loans – 1,039.71
Gain on Buy-back/Extinguishment of FCCB Debt 590.70 –
Profit/(Loss) on Sale of Assets (Net) (27.22) (128.99)
Net Profit in accordance with Section 198 (I)/349 of Companies 1,571.27 3,155.80Act, 1956 for calculation of Commission to Directors
Commission @ 0.75% (Previous Year @ 0.75%) to eachManaging Director (Rounded amount) 23.50 47.00
As Determined by the Board & Restricted to:
**Managing Directors (Previous year Rs. 21.00 million to each) 22.00 42.00
Other Directors (Excluding Executive Directors) Rs. 0.20 million each(Previous Year Rs. 0.20 million each). 0.80 1.00
NOTES TO THE ACCOUNTS
120
23. (A) Capacities, Stocks, Production and Turnover
S. Class of Goods Quantitative Capacity* Opening Stock Production Turnover Closing Stock
No. Denomination Installed Quantity Rs. in Qty. @@ Quantity Rs. in Quantity Rs. inmillion million million
1. Alcohol KBL 161,000 481 6.62 88,091 2,356 72.20 10,443 231.81KBL (157,700) (1,625) (19.87) (103,136) (861) (19.61) (481) (6.62)
2. Organic Including M.T 601,738 40,278 385.07 361,707 217,411 16475.91 20,877 457.70Speciality M.T (522,261) (25,484) (440.38) (518,819) (243,597) (15,725.19) (40,278) (385.07)Chemicals &Its Intermediates
3. Polymers Including M.T 37,560 724 51.58 27,132 27,279 2139.44 380 22.97Co-polymers & M.T (34,560) (871) (58.79) (27,666) (27,765) (1,871.32) (724) (51.58)VP Latex/ SBRlatex
4. Single Super M.T 425,700 18,978 97.16 220,338 235,255 2157.33 4,061 23.60Phosphate M.T (425,700) (10,601) (35.66) (142,964) (134,588) (603.00) (18,978) (97.16)
5. Sulphuric Acid M.T 68,835 2,089 19.65 64,538 31,372 213.83 1,039 0.07M.T (68,835) (1,643) (0.43) (50,795) (16,905) (102.14) (2,089) (19.65)
6. Dry & Aqueous M.T 22,000 538 31.93 8,146 4,945 275.53 35 12.75Choline Chloride M.T (22,000) (173) (13.71) (7,952) (4,550) (240.60) (538) (31.93)& Ethyoxylates
7. Feed Premixes M.T 3,500 120 3.13 3,208 2,669 216.81 231 4.85M.T (3,500) (168) (1.83) (2,010) (2,036) (129.25) (120) (3.13)
8. Agri Chemicals K.L – 234 5.84 1,162 811 78.82 585 24.33K.L (–) (67) (6.55) (1,133) (966) (58.88) (234) (5.84)
9. Active Pharma M.T 419 15 97.02 347 341 2441.28 21 209.29Ingredients (API) M.T (393) (24) (45.89) (293) (302) (1,844.22) (15) (97.02)
10. Tablets & No. in 891 – – 41 35 21.12 6 3.62Capsules millions (–) (–) (–) (–) (–) (–) (–) (–)
11. IMFL KBL 10,800 5 1.31 117 – – 15 1.15KBL (10,800) (446) (77.26) (4,841) (–) (–) (5) (1.31)
* Under the Industrial Policy Statement dated July 24, 1991 and the notifications issued thereunder, no licensing is requiredfor the Company’s products.
@@ Includes products manufactured by Contract Manufacturers on conversion basis wherever applicable
Notes:
a) Closing Stock has been arrived at after considering Captive Consumptions.b) Installed capacities are as certified by the Management, being a technical matter and relied upon by the Auditors
accordingly.c) Acetaldehyde is also produced which is mainly for captive consumption.d) Formaldehyde is also produced which is mainly used captively as process chemicals.e) V.P. Latex / SBR Latex installed Capacity is on Wet Basis.f) Agri chemicals production is on tolling basis.g) Difference in quantitative tally represent materials damaged / obsolete / issue for sample etc.h) The production & turnover of Tablets & Capsules is for the period Dec-08 to March-09.
NOTES TO THE ACCOUNTS
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
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23. (B) Particulars in respect of Trading goods.
For the year ended 31st March, 2009 2008
Quantity Rs. in million Quantity Rs. in million
i) Opening Stock
Agrochemicals (Ltrs.) 393,142 16.22 63,672 11.70
Other Organic Chemicals (MT) – – –
Others – 5.60 – 8.00
ii) Purchases
Agrochemicals (Ltrs.) 1,896,602 21.68 1,132,000 21.10
Other Organic Chemicals (MT) 18,619 499.43 2,364 110.80
Others – 545.63 – 342.87
iii) Sales
Agrochemicals (Ltrs.) 1,978,907 84.89 802,530 34.42
Other Organic Chemicals (MT) 18,619 684.91 2,364 130.50
Others – 650.83 – 379.09
iv) Closing Stock
Agrochemicals (Ltrs.) 310,837 15.03 393,142 16.22
Other Organic Chemicals (MT) – – –
Others – 9.97 – 5.60
23. (C) Raw Materials Consumed
For the year ended 31st March, 2009 2008
Quantity Rs. in million Quantity Rs. in million
Molasses (MT) 371,757 1,291.97 443,409 1,053.09
Alcohol (KL) 93,035 2,187.43 152,811 2,656.53
Process Chemicals (MT) 155,883 4,628.61 129,834 3,443.18
Rock Phosphate (MT) 132,583 850.00 82,596 302.67
Sulphur etc (MT) 72,157 671.09 40,613 248.37
Chemicals for Feed Additive (Kgs.) 2,760,920 158.42 2,868,933 166.77
Chemicals for Latex [MT] 2,931 420.68 2,618 242.97
Chemicals for API [MT] 8,057 1,005.41 868 732.02
Others [MT] (none of which individually account – 133.35 – 97.18for more than 10% of total consumption)
11,346.96 8,942.78
23. (D) Value of imported and indigenous raw materials, stores and spares consumed and percentage thereoffor the year.
For the year ended 31st March, 2009 2008
Rs. in million % Rs. in million %
Consumption of Raw Materials
– Imported 4,120.22 36.31 1,553.22 17.37
– Indigenous 7,226.74 63.69 7,389.56 82.63
11,346.96 100.00 8,942.78 100.00
Consumption of Stores, Spares, Chemicals,Catalyst & Packing Material
– Imported 115.52 9.90 127.69 11.97
– Indigenous 1,051.12 90.10 939.14 88.03
1,166.64 100.00 1,066.83 100.00
NOTES TO THE ACCOUNTS
122
23. (E) Earnings Per Share (EPS)
For the year ended 31st March, 2009 2008
I. (A) Profit Computation for Basic Earnings Per Share of Re. 1 each
Net Profit as per Profit and Loss Account available forEquity Shareholders Rs. in million 2,607.41 3,922.67
Adjustments for the purpose of Diluted EPS :–
Interest on Foreign Currency Convertible Bonds Rs. in million 0.25 0.33
Less: Tax on above Rs. in million (0.01) (0.05)
(B) Profit for Diluted Earnings Per Share of Re. 1 each Rs. in million 2,607.65 3,922.95
II. Weighted average number of equity shares forEarnings Per Share computation
A) For Basic Earnings Per Share Nos. 147,313,162 143,919,482
B) For Diluted Earnings Per Share:
No. of shares for Basic EPS as per II A Nos. 147,313,162 143,919,482
Add: Weighted Average outstanding Option/Sharesrelated to FCCB & Employee stock options. Nos. 23,662,100 34,742,665
No. of shares for Diluted Earnings Per Share Nos. 170,975,262 178,662,147
III. Earnings Per Share (Weighted Average)
Basic Rupees 17.70 27.26
Diluted Rupees 15.25 21.96
Note : The Diluted EPS for current year does not include the effect of vested employee stock options as number ofshares held by Jubilant Employee Welfare Trust is in excess of employee stock option (Refer Note 10 ofSchedule “O”).
NOTES TO THE ACCOUNTS
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
123
In terms of our report of even date attached. For and on behalf of the Board
For K. N. Gutgutia & Co.Chartered Accountants
B. R. Goyal Shyam S. BhartiaPartner Chairman & Managing DirectorMembership No. 12172
Place : Noida Lalit Jain R. Sankaraiah Hari S. BhartiaDate : 28th April, 2009 Company Secretary Executive Director - Finance Co-Chairman & Managing Director
(Rs. in million)
For the year ended 31st March, 2009 2008
23. (F) Expenditure in foreign currency (on remittance basis)
– Legal, Professional & Consultancy Charges 147.34 95.17
– Travel/Entertainment Expenses 39.32 29.56
– Commission on Export Sales 76.91 55.62
– Interest on FCCB/ECB 13.49 0.70
– Others 83.00 43.36
23. (G) Value of Imports on C.I.F. basis
– Raw Materials 3,607.14 2,160.23
– Trading Goods 643.80 274.72
– Stores, Spare, Chemicals & Catalyst 217.37 207.55
– Capital Goods 380.23 103.78
23. (H) Remittance in Foreign Currency on account of Final Dividend
a) Amount of Dividend Remitted 8.36 6.96
b) Number of Non-Resident Shareholders 3 3
c) Number of Equity Shares held by Non-Resident Shareholders* 5,570,445 5,570,445
d) The Year to which Dividend related 2007–2008 2006–2007
*excluding where Dividend has been paid in Indian currency
23. (I) Earnings in Foreign Exchange
– Export Sales (FOB Value) 10,783.71 8,562.45
– Interest Income on Bank Deposits (overseas) 1.81 0.28
24. Previous Year’s figures have been regrouped/rearranged wherever considered necessary to conform to this year’ sclassification.
Signatures to Schedule “A” to “O” forming part of the Balance Sheet and Profit and Loss Account.
NOTES TO THE ACCOUNTS
124
I. Registration Details :
Registration No.: 2 0 4 6 2 4 State Code : 2 0
Balance Sheet Date : 3 1 0 3 2 0 0 9
Date Month Year
II. Capital Raised during the year (Amount in Rs. Thousands)*
Public Issue : N I L Rights Issue : N I L
Bonus Issue : N I L Private Placement : N I L
* Issue of equity shares upon conversion of FCCB's - Rs.1310 & exercise of options under ESOP - Rs.46.
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)
Total Liabilities : 3 9 9 1 5 8 4 4 Total Assets : 3 9 9 1 5 8 4 4
Sources of Funds
Paid-up Capital : 1 4 7 5 5 8 Reserves & Surplus : 1 3 2 4 6 3 2 5
Secured Loans : 1 5 5 1 4 5 8 3 Unsecured Loans : 9 7 4 1 8 3 2
Deferred tax Assets & 1 2 6 5 5 4 6
Liability (Net):
Application of Funds
Net Fixed Assets : 1 6 6 5 8 7 0 5 Investments : 1 7 0 9 5 3 5 6
Net Current Assets : 6 1 5 8 4 9 1 Misc. Expenditure : 3 2 9 2
IV. Performance of Company (Amount in Rs. Thousands)
Turnover** : 2 5 0 7 9 1 6 8 Total Expenditure : 2 2 3 4 8 8 5 3
**Includes other Income
Profit / Loss before Tax : 2 7 3 0 3 1 5 Profit / Loss 2 6 0 7 4 0 6 after tax :
Earning Per Share of Re. 1 each : 1 7 . 7 0 Dividend Rate (%) : 1 5 0(Basic) (Rs.)
V. Generic Names of Principal Products/Services of Company (as per monetary terms)
Item Code No. (ITC Code) 2 9 3 3 3 1 . 0 0
Product Description P Y R I D I N E
Item Code No. (ITC Code) 2 9 3 3 1 9 . 9 0
Product Description O X C A R B A Z E P I N E
Item Code No. (ITC Code) 2 9 1 5 3 1 . 0 0
Product Description E T H Y L A C E T A T E
+ – + –
In terms of our report of even date attached. For and on behalf of the Board
For K. N. Gutgutia & Co.Chartered Accountants
B. R. Goyal Shyam S. BhartiaPartner Chairman & Managing DirectorMembership No. 12172
Place : Noida Lalit Jain R. Sankaraiah Hari S. BhartiaDate : 28th April, 2009 Company Secretary Executive Director - Finance Co-Chairman & Managing Director
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
� �
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
125
AUDITORS' REPORT TO THE BOARD OF DIRECTORS OF JUBILANT ORGANOSYS LIMITED ON THECONSOLIDATED FINANCIAL STATEMENTS OF JUBILANT ORGANOSYS LIMITED AND ITS SUBSIDIARIES.
1. We have examined the attached Consolidated Balance Sheet of Jubilant Organosys Limited ('the Company') andits subsidiaries and entities (collectively referred to as ‘Jubilant Group’) as at 31st March 2009, the ConsolidatedProfit and Loss Account for the year then ended and annexed thereto and the Consolidated Cash Flow Statementfor the year ended on that date. 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 generally accepted auditing standards in India. These Standardsrequire that we plan and perform the audit to obtain reasonable assurance whether the financial statements areprepared, in all material respects, in accordance with an identified financial reporting framework and are free ofmaterial misstatements. An audit includes, examining on a test basis, evidence supporting the amount anddisclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by the management, as well as evaluating the overall financial statements. We believethat our audit provides a reasonable basis for our opinion.
3. We report that the Consolidated Financial Statements have been prepared by the Company in accordance with therequirements of Accounting Standard (AS) 21, Consolidated Financial Statements, issued by the Institute ofChartered Accountants of India and on the basis of the separate audited financial statements of JubilantOrganosys Limited, and its subsidiaries included in the Consolidated Financial Statements.
4. On the basis of the information and explanation given to us and on consideration of the separate audit report onindividual audited financial statements of Jubilant Organosys Limited, and its subsidiaries, in our opinion, theconsolidated financial statements give a true and fair view in conformity with the accounting principles generallyaccepted in India:
a) In the case of the consolidated Balance Sheet, of the consolidated state of affairs of ‘Jubilant Group’ as at31st March, 2009;
b) In the case of the consolidated Profit and Loss Account, of the consolidated results of operations of ‘JubilantGroup’ for the year ended on that date; and
c) In the case of the consolidated Cash Flow Statement, of the consolidated cash flows of ‘Jubilant Group’ forthe year ended on that date.
For K. N. Gutgutia & CompanyChartered Accountants
B. R. GoyalPlace : Noida PartnerDate : 28th April, 2009 Membership No. 12172
AUDITORS’ REPORT
126
In terms of our report of even date attached. For and on behalf of the Board
For K. N. Gutgutia & Co.Chartered Accountants
B. R. Goyal Shyam S. BhartiaPartner Chairman & Managing DirectorMembership No. 12172
Place : Noida Lalit Jain R. Sankaraiah Hari S. BhartiaDate : 28th April, 2009 Company Secretary Executive Director - Finance Co-Chairman & Managing Director
(Rs. in million)
As at 31st March, Schedules 2009 2008
SOURCES OF FUNDS
Shareholders’ Funds
Share Capital A 147.56 146.96
Reserves & Surplus B 12,527.90 12,415.01
12,675.46 12,561.97
Minority Interest 319.52 213.91
Loan Funds C
Secured Loans 29,026.16 10,585.88
Unsecured Loans 9,754.94 10,498.65
38,781.10 21,084.53
Deferred Tax Liabilities (Net) D 1,150.63 1,302.30
52,926.71 35,162.71
APPLICATION OF FUNDS
Fixed Assets E
Gross Block 46,482.57 24,959.09
Less: Depreciation 9,032.56 5,834.90
Net Block 37,450.01 19,124.19
Capital Work-in-Progress 5,031.16 4,846.90
42,481.17 23,971.09
Investments F 2,713.56 456.37
Current Assets, Loans and Advances G
Inventories 5,956.10 4,349.67
Sundry Debtors 5,044.12 4,257.80
Cash & Bank Balances 3,816.64 5,237.68
Loans and Advances 4,854.92 3,552.70
19,671.78 17,397.85
Less: Current Liabilities & Provisions H
Liabilities 7,364.57 3,717.83
Provisions 4,578.52 2,961.26
11,943.09 6,679.09
Net Current Assets 7,728.69 10,718.76
Miscellaneous Expenditure I 3.29 16.49
(To the extent not written off or adjusted)
52,926.71 35,162.71
Notes to Accounts & Significant Accounting Policies O
Schedule "A" to "I" and "O" referred above form an integral part of the Consolidated Balance Sheet.
CONSOLIDATED BALANCE SHEET
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
127
(Rs. in million)
For the year ended 31st March, Schedules 2009 2008
INCOME
Sales & Services J 36,405.44 26,287.66
Less: Excise Duty on Sales (1,225.60) (1,398.89)
Net Sales & Services 35,179.84 24,888.77
Other Income K 1,015.66 1,429.99
Increase/(Decrease) in Stocks L 781.32 154.48
36,976.82 26,473.24
EXPENDITURE
Manufacturing & Other Expenses M 31,308.22 20,536.11
Depreciation & Amortisation (Net) 1,632.42 1,039.14
Interest N 1,070.42 336.68
34,011.06 21,911.93
Profit Before Tax 2,965.76 4,561.31
Income Tax
– Current Tax (including Wealth Tax) 668.37 702.47
– Deferred Tax Charge/(Credit) (126.85) (11.97)
– Fringe Benefit Tax 28.33 27.66
– MAT Credit Entitlement (302.66) (145.32)
267.19 572.84
Profit After Tax 2,698.57 3,988.47
Minority Interest (133.19) (16.47)
Profit After Tax And Minority Interest 2,831.76 4,004.94
Balance Brought Forward from Previous Year 6,697.99 3,960.05
Balance Available For Appropriation 9,529.75 7,964.99
APPROPRIATIONS
Dividend on Equity Shares 223.34 219.29
Tax on Distributed Profits on Equity Shares 37.95 37.27
261.29 256.56
Transfer to General Reserve 1,500.00 1,000.00
Balance Carried To Balance Sheet 7,768.46 6,708.43
Basic Earnings Per Share of Re. 1 each (In Rupees) O 19.22 27.83
Diluted Earnings Per Share of Re. 1 each (In Rupees) O 16.56 22.42
Notes to Accounts & Significant Accounting Policies O
Schedule “J” to “O” referred above form an integral part of the Consolidated Profit & Loss Account.
In terms of our report of even date attached. For and on behalf of the Board
For K. N. Gutgutia & Co.Chartered Accountants
B. R. Goyal Shyam S. BhartiaPartner Chairman & Managing DirectorMembership No. 12172
Place : Noida Lalit Jain R. Sankaraiah Hari S. BhartiaDate : 28th April, 2009 Company Secretary Executive Director - Finance Co-Chairman & Managing Director
CONSOLIDATED PROFIT AND LOSS ACCOUNT
128
(Rs. in million)
For the year ended 31st March, 2009 2008
A. Cash flow arising from Operating Activities :Net Profit before Tax 2,965.76 4,561.31Adjustment for: i) Depreciation & Amortization 1,632.42 1,039.14
ii) Loss/(Profit) on Sale of Fixed Assets (Net) 56.99 128.99iii) Interest (Net) 1,070.42 336.68iv) Amortization/Write off (VRS Expenses) 13.20 24.36v) Provision for Doubtful Debts 15.42 31.23vi) Provision for Gratuity & Leave Encashment 15.60 77.13vii) Bad Debts/Irrecoverable Advances written off (net of write-in) 64.22 1.31viii) Unrealised (Gain)/Loss on Exchange -Net 1,319.46 (1,030.35)ix) Gain on Buy-back/Extinguishment of FCCB Debt (590.70) –x) Interest Income (as shown in Schedule “K”) (30.15) (252.91)xi) Income from Current Investment (Non Trade) - Dividend (37.49) (8.58)
3,529.39 347.00Operating Profit before Working Capital Changes 6,495.15 4,908.31Adjustment for: i) Trade and other Receivables 1,431.46 1,993.61
ii) Inventories 1,095.95 217.432,527.41 2,211.043,967.74 2,697.27
i) Current Liabilities & Provision 1,971.82 360.07Cash inflow from Operations 5,939.56 3,057.34Deduct : i) Interest Paid 1,010.83 335.45
ii) Direct Taxes Paid (net of refunds) 419.88 454.221,430.71 789.67
Add : i) Interest Income Received (as shown in Schedule “K”) 60.96 307.01Net Cash Inflow/(Outflow) in course of Operating Activities 4,569.81 2,574.68
B. Cash Flow arising from Investing Activities :Outflow i) Acquisition/Purchase of Fixed Assets/CWIP 6,677.52 5,134.72
ii) Purchase/(Sale) of Investments (net) 2,244.24 417.53iii) Payment for Business Acquisitions 11,532.90 5,868.05
20,454.66 11,420.30Deduct :Inflow i) Sale Proceeds of Fixed Assets 80.90 4.08
ii) Interest Received 28.96 14.12iii) Dividend Received 37.49 8.58
147.35 26.78Net Cash Inflow/(Outflow) in course of Investing Activities (20,307.31) (11,393.52)
C. Cash flow arising from Financing Activities :Inflow i) Proceeds from Issue of Share Capital {Including Share 8.68 13.59
Premium of Rs. 8.64 million (Previous year Rs.13.06 million)}ii) Proceeds from Long Term & Short Term Borrowings 15,201.96 6,178.83iii) Payment to Minority (4.01) (55.64)
Deduct : 15,206.63 6,136.78Outflow i) Buy Back of Foreign Currency Convertible Bonds (FCCBs) 2,431.57 –
ii) Dividend Paid (including Dividend Distribution Tax) 257.62 208.722,689.19 208.72
Net Cash Inflow/(Outflow) in course of Financing Activities 12,517.44 5,928.06D. Foreign Currency Translation Difference arising on Consolidation 1,341.66 (622.02)
Net Increase in Cash & Cash equivalents (A+B+C+D) (1,878.40) (3,512.80)Add: Cash & Cash Equivalents at the beginning of Year 5,237.68 8,749.11
(Including Balance in Dividend Accounts)Add: Cash & Cash Equivalents on Consolidation of Subsidiaries acquired
during the year 399.67 1.91Cash & Cash Equivalents at the close of the Year 3,758.95 5,238.22
(Including Balance in Dividend Accounts)Cash & Cash Equivalents Comprise:Cash and Bank Balances 3,816.64 5,237.68Unrealised Exchange Difference on Foreign Currency Cash and Cash Equivalents (57.69) 3,758.95 0.54 5,238.22
Notes: 1) Cash flow statement has been prepared under the indirect method as set out in the Accounting Standard 3 (AS-3)-" Cash Flow Statements", notified by theCentral Government under the Companies (Accounting Standard) Rules, 2006.
2) Purchase of fixed assets includes movement of Capital Work-in-Progress during the year.3) Closing Cash & Cash Equivalents includes Rs.6.83 million (Previous year Rs. 4,654.78 million) which can be utilised for specific purposes.4) Previous Year's figures have been regrouped/rearranged wherever considered necessary to conform to this year's classification.
In terms of our report of even date attached. For and on behalf of the Board
For K. N. Gutgutia & Co.Chartered Accountants
B. R. Goyal Shyam S. BhartiaPartner Chairman & Managing DirectorMembership No. 12172
Place : Noida Lalit Jain R. Sankaraiah Hari S. BhartiaDate : 28th April, 2009 Company Secretary Executive Director - Finance Co-Chairman & Managing Director
CONSOLIDATED CASH FLOW STATEMENT
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
129
(Rs. in million)
As at 31st March, 2009 2008
A. SHARE CAPITAL
Authorised
550,000,000 Equity Shares of Re. 1 each 550.00 550.00
(Previous Year 550,000,000 Equity Shares of Re.1 each) 550.00 550.00
Issued & Subscribed
147,574,258 Equity Shares of Re. 1 each 147.57 146.22
(Previous Year 146,217,914 Equity Shares of Re.1 each) 147.57 146.22
Paid up
147,542,258 Equity Shares of Re. 1 each 147.54 146.19
(Previous Year 146,185,914 Equity Shares of Re.1 each)
Add: Equity Shares Forfeited (paid up) 0.02 0.02
147.56 146.21
Add: Share Application money received pending allotment – 0.75
147.56 146.96
Notes:1) The Company issued Zero Coupon Foreign Currency Convertible Bonds due 2011 (FCCB 2011) for an aggregate
value of USD 200 million, convertible at any time between 30th June, 2006 to 10th May, 2011 by holders into fullypaid equity shares of Re. 1 each of the Company or Global Depositary Shares (GDS) each representing one equityshare at an initial conversion price of Rs.413.4498 per share with a fixed rate of exchange of Rs. 45.05 = USD 1.The conversion price is subject to adjustment in certain circumstances. The Bonds may also be redeemed, in wholebut not in part, at the option of the Company at any time on or after 19th May, 2009, subject to satisfaction ofcertain conditions. Unless previously converted, redeemed or purchased and cancelled, the Bonds will beredeemed on 20th May, 2011 at 142.429% of their principal amount. The FCCBs are listed on Singapore StockExchange. The GDSs arising out of conversion of FCCBs are listed on Luxembourg Stock Exchange. USD 57.90million Bonds were bought back at a discount upto 31st March, 2009, and the same were cancelled.The outstanding balance of FCCB 2011 - USD 142.10 million, on conversion would result in allotment in of15,483,391 equity shares of Re. 1 each.
2) The Company issued Zero Coupon Foreign Currency Convertible Bonds due 2010 (FCCB 2010) for an aggregatevalue of USD 75 million, convertible at any time between 3rd July, 2005 to 14th May, 2010 by holders into fully paidequity shares of Re. 1 each of the Company or Global Depositary Shares (GDS) each representing one equityshares at an initial conversion price of Rs. 273.0648 per share with a fixed rate of exchange of Rs. 43.35 = USD 1.The conversion price is subject to adjustment in certain circumstances. The Bonds may also be redeemed, in wholebut not in part, at the option of the Company at any time on or after 23rd May, 2008, subject to satisfaction ofcertain conditions. Unless previously converted, redeemed or purchased and cancelled, the Bonds will beredeemed on 24th May, 2010 at 138.383% of their principal amount. The FCCBs are listed on Singapore StockExchange. The GDSs arising out of conversion of FCCBs are listed on Luxembourg Stock Exchange. USD 22.343million were converted upto 31st March, 2009 into equity shares and this represents 3,547,022 shares of Re. 1each as on 31st March, 2009 and USD 3 million Bonds were bought back at a discount upto 31st March, 2009 andthe same were cancelled.The outstanding balance of FCCB 2010 - USD 49.657 million, on conversion would result in allotment in of7,883,231 equity shares of Re. 1 each.
3) The Company issued 1.5% Foreign Currency Convertible Bonds due 2009 (FCCB 2009) aggregating USD 35million, in the year 2004-05. The Bonds are convertible at any time between 14th June, 2004 and 15th April, 2009by holders into fully paid equity shares of Re. 1 each of the Company or Global Depositary Shares (GDSs) eachrepresenting one Equity Shares at an initial conversion price of Rs. 163.646 per share with a fixed rate of exchangeon conversion of Rs. 44.805 = USD 1. The conversion price is subject to adjustment in certain circumstances. TheBonds may also be redeemed, in whole but not in part, at the option of the Company at any time on or after 14thMay, 2007 and prior to 8th May, 2009, subject to satisfaction of certain conditions. Unless previously converted,redeemed or purchased and cancelled, the Bonds will be redeemed on 15th May, 2009 at 113.70% of their principalamount. The FCCBs are listed on Singapore Stock Exchange. The GDSs arising out of conversion of FCCBs arelisted on Luxembourg Stock Exchange. Out of these FCCB 2009, USD 34.70 million were converted upto31st March, 2009 into equity shares and this represents 9,500,521 shares of Re.1 each as on 31st March, 2009.The outstanding balance of FCCB 2009 - USD 0.30 million, on conversion would result in allotment of 82,140 equityshares of Re 1 each.
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET
130
4) Under the Jubilant Employees Stock Option Plan;
a) Options in force as of March 31, 2009 - 518,473 options convertible into 2,592,365 shares of Re. 1 each(Previous year 539,160 options convertible into 2,695,800 shares)
b) 22,967 vested options have been exercised upto 31st March, 2009.
5) Paid up capital includes:
a) 43,990,695 equity shares of Re. 1 each fully paid allotted and issued in 2003-04, as bonus shares bycapitalization of Capital Redemption Reserve in accordance with the resolution passed by the shareholdersdated 28th February, 2004.
b) 1,644,020 equity shares of Re. 1 each allotted and issued pursuant to the Scheme of Amalgamation oferstwhile Ramganga Fertilizers Ltd. with the Company for consideration other than cash in 1994-95. {761,780equity shares of Re. 1 each allotted to Vam Investments Ltd. and 159,420 equity shares of Re. 1 each allottedto Vam Leasing Ltd. were cancelled during the year 2002-03 - Refer note no 6 below}.
c) 5,064,000 equity shares of Re. 1 each allotted and issued pursuant to the Scheme of Amalgamation toshareholders of erstwhile Anichem India Ltd. and of erstwhile Enpro Specialty Chemicals Ltd. with theCompany for consideration other than cash in 1999-00. {1,620,970 Equity shares of Re.1 each allotted to VamInvestment Ltd. and 1,714,000 equity shares of Re. 1 each allotted to Vam Leasing Ltd. were cancelled duringthe year 2002-03 - Refer note no 6 below}.
d) 114,835 [including 46,630 issued during the year (Previous year 68,205)], equity shares of Re. 1 each allottedto employees and directors of Company on exercise of the vested stock options in accordance with the termsof exercise under the "Jubilant Employees Stock Option Plan".
6) Pursuant to the Scheme of Amalgamation approved by the Hon’ble High Court of Judicature, Allahabad andHon’ble High Court of Delhi, Delhi, and as contained in the Opening Reference Balance Sheet annexed to theScheme, the paid up share capital of the Company reduced during the year 2002-03 by cancellation of 2,382,750and 1,873,420 equity shares of Re. 1 each fully paid up held by erstwhile Vam Investments Ltd. and Vam LeasingLtd. respectively as investments in the Company.
(Rs. in million)
As at Additions/ Deductions As at31st March, Created 31st March,
2008 during the year 2009
B. RESERVES AND SURPLUS
Capital Reserve 22.82 22.82
Capital Redemption Reserve 9.86 9.86
Amalgamation Reserve 13.21 13.21
Securities Premium Account (1) 3,970.69 365.72 478.58 3,857.83
Foreign Currency Translation Reserve (1,212.08) 1,565.06 – 352.98
Legal Reserve 2.84 – – 2.84
General Reserve (2 & 3) 2,909.68 1,500.00 1,158.79 3,250.89
Surplus as per Profit & Loss Account 6,697.99 2,831.76 1,761.29 7,768.46
12,415.01 6,262.54 3,398.66 15,278.89
Foreign Currency Monetary ItemTranslation Difference Account(2) – – 2,750.99 (2,750.99)
Total 12,415.01 6,262.54 6,149.65 12,527.90
Previous Year 8,917.59 5,697.95 2,200.53 12,415.01
Notes :
(1) a) Additions denote premium on issue of shares on conversion of FCCB's and exercise of ESOP options.
b) Deductions denote provision of premium on redemption of FCCB's net of tax and exchange loss on conversionof FCCB's offset with the reversal of premium in respect of FCCB's bought back and cancelled/convertedduring the year.
(2) Refer Note 15(A) of Schedule "O" regarding treatment of Foreign Exchange Difference pursuant to the notificationof the Ministry of Corporate Affairs.
(3) Including Rs. 128.22 million excess of loss over the minority interest in the equity of the subsidiary.
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
131
(Rs. in million)
As at 31st March, 2009 2008
C. LOANS
SecuredA. Loans From Bank
– Term Loans 27,083.38 9,245.40[Including Rs. 17,239.09 million (Previous year Rs. 7,534.05 million)in foreign currency]
– Working Capital 1,942.64 1,172.68[Including Rs. 1,863.02 million (Previous year Rs. 1,136.64 million)in foreign currency]
– Vehicle Loans 0.14 0.80B. Loans From Others
– Term Loans – 167.0029,026.16 10,585.88
Unsecured1.5 % Foreign Currency Convertible Bonds - FCCB 2009* 15.22 12.03Zero Coupon Foreign Currency Convertible Bonds - FCCB 2010 * 2,518.60 2,443.59Zero Coupon Foreign Currency Convertible Bonds - FCCB 2011* 7,207.31 8,024.00Short Term Loans From Bank 4.56 10.08[Including Rs. Nil (Previous year Rs. 3.98 million) in foreign currency]Other Loans From Bank 8.55 8.04[Including Rs. 8.55 million (Previous year Rs. 8.04 million) in foreign currency]Deferred Sales Tax Credits 0.70 0.91
9,754.94 10,498.65*(Refer Note 8 of Schedule "O")
Notes:
1. Rupee Term Loans amounting to Rs. 9,250 million from State Bank of India, Corporation Bank, Central Bank of India andHong Kong and Shanghai Banking Corporation Limited and Foreign Currency Loans amounting to Rs. 6,187.84 millionincluding External Commercial Borrowings (ECBs) from State Bank of India New York, BNP Paribas Singapore andCitibank N.A. London and FCNR(B) Loan from State Bank of India are secured by a first pari-passu charge by way of : -
Mortgage of the immovable fixed assets situated at Bhartiagram, District Jyotiba Phoolay Nagar, Uttar Pradesh (excludingSpecified land and buildings situated at Bhartiagram, District Jyotiba Phoolay Nagar, Uttar Pradesh and constructed out ofthe financial assistance granted by HDFC) and immovable fixed assets situated at Village Samlaya, Taluka Savli, DistrictVadodara, Gujarat and Hypothecation on the entire movable fixed assets, both present and future, of the company.However, Mortgage in respect of Rupee Term Loan of Rs. 2,500 million from Central Bank of India is pending creation withrespect to above mentioned immovable properties of the Company.
2. Working Capital Facilities sanctioned by Consortium of Banks and notified Financial Institutions comprising of ICICI BankLimited, Corporation Bank, Punjab National Bank, State Bank of India, Canara Bank, Export Import Bank of India, INGVysya Bank Ltd., ABN Amro Bank and Standard Chartered Bank are secured by a first charge by way of hypothecation,ranking pari-passu inter-se Banks, of the entire book debts and receivables of the Company and inventories both presentand future, of the Company; wherever the same may be or be held. The working capital sanctioned limits also includeCommercial Paper Programme of Rs. 1,000 million as sub-limit carved out of the funded limits, against which the balanceoutstanding as at 31st March, 2009 Rs. Nil.
3. Secured Loan of Rs.94.29 million as on 31st March, 2009 (Previous year 188.62 million) from ING Vysya Bank to JubilantBiosys Ltd. is secured by way of an Exclusive Charge on Fixed Assets to be created out of the said term loan.
4. Term Loan of USD 6 million (Rs. 304.32 million) as on 31st March, 2009 (Previous year USD 8 million (Rs. 320.95 million))from State Bank of India, New York Branch in consortium with Bank of Baroda, New York is secured by way of charge on allof the fixed assets including, without limitation, all equipment, machinery, vehicles, fixtures, improvements and furniture,general intangibles and other corporate property of the borrower expressly excluding the security for Revolving Credit, nowowned or hereinafter acquired, of Cadista Pharmaceuticals Inc. situated at Salisbury, Maryland, USA.
5. Revolving Credit facility of USD 2.99 million (Rs. 151.95 million) as on 31st March, 2009 (Previous year USD 2.94 million(Rs. 117.90 million)) from State Bank of India, New York Branch in consortium with Bank of Baroda New York is secured byway of charge over inventories and receivables, contract rights and rights to payments, present and future, of CadistaPharmaceuticals Inc. situated at Salisbury, Maryland, USA.
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET
132
(Rs. in million)
As at 31st March, 2009 2008
D. DEFERRED TAX LIABILITY
Deferred Tax Liabilities 2,316.79 1,554.42
Deferred Tax Assets 1,166.16 252.12
Deferred Tax Liabilities (Net) 1,150.63 1,302.30
(Refer Note 12 (A) of Schedule "O")
6. Secured loan of USD 20.94 million (Rs. 1,062.09 million) as on 31st March, 2009 (Previous year USD 19.78 million(Rs. 793.90 million)) under construction loan facility and USD 33.80 million (Rs. 1,711.07 million) as on 31st March, 2009(Previous year USD 23.8 million. (Rs.957.94 million)) under Line of Credit to Hollistier-Stier Laboratories LLC from Bank ofAmerica N.A. are secured by way of:
i) Security interest in the receivable inventory, equipments and fixtures, deposit accounts, general intangibles, includingpatents, trade marks, computer software etc. All books and records pertain to the collateral more particularly describedin the security interest agreement date 31st May, 2007.
ii) Deed of Trust dated 31st May, 2007 irrevocably & unconditionally growing security interest in the parcel or parcels ofreal property located in Spokane County, State of Washington, USA.
7. Secured loan of USD 43.75 million (Previous year USD 50 million) to HSL Holdings Inc from ICICI Bank UK PLC as thearranger and the agent is secured by way of irrevocable and unconditional corporate guarantee from the parent companyand Jubilant Pharma Pte Ltd., Singapore (WOS of Jubilant Organosys Ltd.) guaranteeing all outstanding obligations of theborrower under the facility. (Total guaranteed amount as on 31st March, 2009 is Rs. 2,219 million (Previous year Rs. 2,006million).
8. Secured loans of USD 60.25 million (Rs. 3056.04 million), CAD 40 million (Rs. 1621.0 million) and CAD 7 million(Rs. 283.34 million) under Facility A, Facility B and Facility D respectively to Draxis Specialty Pharmaceuticals Inc.(formerly Jubilant Acquisition Inc. & post merger of Draxis Health Inc.) from ICICI Bank, Canada as the arranger and theagent is secured by way of:
i) Irrevocable and unconditional corporate guarantee from Draxis Specialty Pharmaceuticals Inc. (formerly JubilantAcquisition Inc. & post merger of Draxis Health Inc.) and its subsidiaries.
ii) Pledge over all the fully paid up equity shares of Draxis Specialty Pharmaceuticals Inc. (formerly Jubilant AcquisitionInc. & post merger of Draxis Health Inc.) and its subsidiaries.
iii) First and exclusive charge over the fixed assets and current assets of Draxis Specialty Pharmaceuticals Inc. (formerlyJubilant Acquisition Inc. & post merger of Draxis Health Inc.) and its subsidiaries.
9. Secured loans of USD 60.25 million (Rs. 3,056.04 million), CAD 40 million (Rs. 1,621.0 million), USD 50.21 million(Rs. 2,546.70 million) and CAD 7 million (Rs. 283.34 million) under Facility A, Facility B, Facility C and Facility Drespectively to Draxis Specialty Pharmaceuticals Inc (formerly Jubilant Acquisition Inc. & post merger of Draxis Health Inc.)from ICICI Bank Canada as the arranger and the agent is secured by way of:
i) Pledge over the entire fully paid up equity shares (present and future of Draxis Specialty Pharmaceuticals Inc.(formerly Jubilant Acquisition Inc. & post merger of Draxis Health Inc.)
ii) First and exclusive charge over the assets of Draxis Specialty Pharmaceuticals Inc. (formerly Jubilant Acquisition Inc. &post merger of Draxis Health Inc.)
10. Secured loan of USD 50.21 million (Rs. 2,546.70 million) under Facility C to Draxis Specialty Pharmaceuticals Inc. (formerlyJubilant Acquisition Inc. & post merger of Draxis Health Inc.) from ICICI Bank Canada as the arranger and the agent issecured by way of irrevocable and unconditional corporate guarantee from parent company guaranteeing all outstandingobligations of the borrower under the facility. Total guaranteed amount as on 31st March, 2009 is Rs. 2,546.70 million.
11. Working capital facilities granted to Jubilant Chemsys Ltd. by ING Vysya Bank are secured by way of First Charge by way ofhypothecation of entire current assets (receivables & inventory) of Jubilant Chemsys Ltd.
12. Working capital facilities granted to Clinsys Clinical Research Ltd. by ING Vysya Bank are secured by way of First Chargeby way of hypothecation of entire current assets (receivables & inventory) of Clinsys Clinical Research Ltd.
13. Loan facility granted to Jubilant First Trust Healthcare Ltd. (JFTH) by State Bank of India is secured by way of:
i. First pari-passu charge over the entire fixed assets of JFTH including mortgage of the entire immovable propertiessituated at Howrah, Barasat, Bardhman, Kharagpur, Hoogly and hypothecation of entire movable fixed assets.
ii. Assignment of leasehold rights of Land at Barasat (Kalpataru) hospital.
iii. Assignment of leasehold rights of fixed assets at Berhampore hospital.
iv. First charge on all cash receivables, present and future, of JFTH.
14. Secured Loans (excluding working capital loans) include loans of Rs. 3,359.44 million (Previous year Rs. 1,142.04 million)repayable within one year.
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
133
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEETE
.F
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134
(Rs. in million)
As at 31st March, 2009 2008
F. INVESTMENTS : (At Cost)
Number Face value All unquoted unless otherwise specifiedper unit
Non Trade Investments
Muroplex Therapeutics, Inc. – Secured 12.38 8.90Convertible Note & Warrants
166,667 Putney Inc., (USA) - Convertible 50.72 40.12(166,667) Preferred Stock
510,771 USD 0.01 Safe Foods Corporation USA - 253.61 –(–) Common Stock
1,550,000 Rs. 10 Forum 1 Aviation Ltd. 15.50 –(–) Equity Shares fully paid up
Current Investments
Investment in Mutual Fund
19,978,313 Rs. 10 Principal Floating Rate Fund FMP- 200.03 –(–) Institutional Option-Dividend
Reinvestment Daily
161,270,058 Rs. 10 Canara Robeco Treasury Advantage 2,000.89 –(–) Institutional Daily Dividend Fund.
99,901 Rs. 1000 Reliance Money Manager Fund- 100.02 –(–) Institutional Option -Daily Dividend Plan
7,998,000 Rs. 10 GCCD IDFC Cash Fund Super Installment 80.41 –(–) Plan-Daily Dividend
– Rs. 10 Principal Cash Management Fund- – 250.05(25,003,026) Growth Plan
– Rs. 10 HSBC Cash Fund Institutional Plus- – 150.10(15,002,551) Dividend Plan
– Rs. 1000 Standard Chartered Liquidity Manager- – 7.20(7,201) Plus-Daily Dividend
2,713.56 456.37
Aggregate NAV of Current Investments 2,381.35 407.35
Notes:
(1) Figures in ( ) indicates in respect of previous year.
(2) During the year, the following current investments (Non-Trade) were purchased and sold:i) 14,999,250 Units of ICICI Prudential Institutional Liquid Plan Super Institutional Daily Dividend - at cost of
Rs. 150.23 million.ii) 59,811,593 Units of HDFC Cash Management Fund-Treasury Advantage Plan Whole Sale - DDO - at cost of
Rs. 608.95 million.iii) 108,906,717 Units of SBI SHF - Ultra Short Term Fund-Institutional Plan Daily Dividend - at cost of
Rs. 1,160.58 million.iv) 59,960,029 Units of Principal Floating Rate Fund FMP Insti. Option Dividend Re-invest Daily - at cost of
Rs. 600.98 million.v) 15,002,551 Units of HSBC Cash Fund-Institutional Plus-Daily Dividend - at cost of Rs. 150.10 million.vi) 196,817 Units of Reliance Money Manager Fund-Institutional Option - D - at cost of Rs. 3.01 million.vii) 249,947 Units of UTI-Liquid Plus Fund Institutional Plan (DDO) - at cost of Rs. 251.64 million.viii) 39,992,501 Units of IDFC Liquid Plus Fund TP - Super Inst Plan C-Daily Dividend-at cost of Rs. 402.99 million.ix) 59,946,561 Units of Birla Sunlife Liquid Plus-Instl.- Daily Dividend -at cost of Rs. 609.21 million.x) 24,802,079 Units of Kotak Floater Long Term - Daily Dividend - at cost of Rs. 251.41 million.xi) 7,201 Units of Standard Chartered Liquidity Manager Plus - Daily Dividend - at cost of Rs. 7.20 million.
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
135
G. CURRENT ASSETS, LOANS AND ADVANCES
Current Assets
Inventories: (Including in Transit & with Third Parties)
– Raw Materials 2,592.95 2,008.21
– Stores, Spares, Process Chemicals, Catalyst, Fuels & Packing Material 422.75 440.76
– Process Stocks 951.30 621.18
– Finished Goods (including Trading Goods) 1,989.10 1,279.52
5,956.10 4,349.67
Sundry Debtors
Unsecured
– Over Six Months - Good (1) 201.56 237.94
– Doubtful 57.02 41.60
– Other Debts - Good (1) 4,842.56 4,019.86
5,101.14 4,299.40
Less: Provision for Doubtful Debts 57.02 41.60
5,044.12 4,257.80
Cash & Bank Balances
– Cash in hand and as Imprest 6.27 6.98
– Cheques/Drafts in hand 117.69 47.18
– With Scheduled Banks
– On Current Accounts 1,275.76 57.41
– On Dividend Account 9.69 8.40
– On Deposit Accounts (2) 1,537.60 15.48
– With Non Scheduled Banks 869.63 5,102.23
3,816.64 5,237.68
Loans And Advances
(Unsecured, Considered good)
– Advances recoverable in cash or in kind or for value to be received (3) 2,531.60 1,426.66
– Unbilled Revenues 83.47 42.06
– Deposits 145.73 191.49
– Deposits with Excise / Sales Tax Authorities (4) 996.44 846.64
– Advance Payment of Income Tax/Wealth Tax (including TDS) 403.47 654.30
– MAT Credit Entitlement 694.21 391.55
4,854.92 3,552.70
19,671.78 17,397.85
(1) Includes, Subsidy receivable:
a) Due over six months - Rs. 87.12 million (Previous year Rs. 39.85 million)
b) Others - Rs. 289.75 million (Previous year Rs. 4.68 million)
(2) Includes, Margin Money - Rs. 2.39 million (Previous year Rs. 2.78 million).
(3) Includes Rs. 567.85 million (Previous year Rs. Nil) Interest free Loan given to Jubilant Employee Welfare Trustand Rs. 414.04 million (Previous year Rs. 317.30 million) Export Benefits Receivables.
(4) Deposit against disputed demands - Rs. 112.32 million (Previous year Rs. 109.12 million).
(Rs. in million)
As at 31st March, 2009 2008
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET
136
(Rs. in million)
As at 31st March, 2009 2008
H. CURRENT LIABILITIES AND PROVISIONS
A) Current Liabilities
Sundry Creditors and Expenses Payable
– Due to Micro, Small and Medium Enterprises 22.69 –
– Others 5,338.07 3,040.65
Acceptances 1,116.63 25.82
Trade Deposits & Advances (1) 462.42 384.82
Interest Accrued but not due 152.14 47.66
Other Liabilities 260.11 206.96
Investors Education and Protection Fund shall be creditedwith the following amount namely:
– Unclaimed/unpaid Dividends 9.69 8.40
– Unclaimed Fixed Deposits 2.82 3.52
7,364.57 3,717.83
B) Provisions
For Dividends on Equity Shares (Including Dividend Distribution Tax) 258.93 256.55
For Income Tax, Wealth Tax & FBT 447.96 617.55
For Retirement/Post retirement Employee Benefits 468.55 428.76
For Others (2) 3,403.08 1,658.40
4,578.52 2,961.26
Total (A+B) 11,943.09 6,679.09
(1) Includes Rs. 315.61 million (Previous year Rs. 127.22 million) towards unearned income.
(2) Includes Premium on redemption of FCCBs - Rs. 2,342.30 million (Previous year Rs. 1,633.37 million) and Provisionof loss of Rs. 1,013.05 million on marked to market of unutilised forward covers outstanding.
(Rs. in million)
As at 31st March, 2009 2008
I. MISCELLANEOUS EXPENDITURE(to the extent not written off or adjusted)
Payments under Voluntary Retirement Scheme 3.29 16.49
3.29 16.49
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
137
(Rs. in million)
For the year ended 31st March, 2009 2008
(Rs. in million)
For the year ended 31st March, 2009 2008
SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT
J. SALES & SERVICES
Sales 33,862.03 24,651.91
Licensing & Regulatory Fees 70.25 49.55
Drug Discovery Development Services 2,415.20 1,541.43
Hospital Revenue 56.24 16.61
Manufacturing Services (Refer Note 13 of Schedule “O”) 1.72 28.16
36,405.44 26,287.66
L. INCREASE/(DECREASE) IN STOCKS
Stock at close – Process 951.30 621.18
Stock at close – Finished 1,989.10 1,279.52
2,940.40 1,900.70
Stock Adjustment: Pursuant to consolidation of subsidiariesacquired during the year – Process 65.52 117.52
– Finished 192.07 249.91
Stock at commencement – Process 621.18 444.51
Stock at commencement – Finished 1,279.52 1,012.11
2,158.29 1,824.05
Increase/ (Decrease) in Stocks 782.11 76.65
Less: Increase/Decrease of Finished & Process Stock of IMFL Business(Refer Note 13 of Schedule “O” ) (0.79) 77.83
781.32 154.48
K. OTHER INCOME
Income from Current Investments (Non-Trade) - Dividend 37.49 8.58
Gain on Buy-back/Extinguishment of FCCB Debt (1) 590.70 –
Net Gain-Foreign Exchange Fluctuation - FCCBs/Loans – 1,039.71
Royalty 81.15 –
Miscellaneous Receipts (2) 306.32 381.70
1,015.66 1,429.99
(1) Refer Note 8 (D) of Schedule “O”.
(2) Includes: a) Income from Utilities & Services provided Rs. 24.73 million (Previous year Rs. 19.31 million) (TaxDeducted at source Rs. 3.59 million - Previous year Rs. 3.01 million).
b) Interest Income of Rs. 26.28 million (Previous year Rs. 252.91 million) on un-utilized proceeds ofFCCB’s and on other accounts.
c) Bad Debts recovered Rs. 3.49 million (Previous year Rs.Nil) and interest received from Income TaxDepartment Rs. 3.87 million.
d) Surplus in liquidation of Investment Rs. 68.92 million.
(Rs. in million)
For the year ended 31st March, 2009 2008
SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT
138
(Rs. in million)
For the year ended 31st March, 2009 2008
M. MANUFACTURING AND OTHER EXPENSES
Purchases – Traded Goods 1,134.85 506.91
Raw & Process Materials Consumed 13,148.77 9,510.17
Power and Fuel 1,979.06 1,704.32
Excise Duty (3) 21.88 5.33
Stores, Spares, Chemicals, Catalyst & Packing Materials Consumed 2,111.64 1,674.45
Processing Charges 177.48 156.15
Repairs – Plant & Machinery 607.10 387.03
– Buildings 61.09 44.44
Salaries, Wages, Bonus, Gratuity & Allowances 5,612.25 3,328.64
Contribution to Provident, Superannuation Fund & to Social Security Schemes 320.20 187.18
Staff Welfare Expenses 642.44 323.36
Rent [Net of recoveries - Rs. 0.79 million (PY - Rs. 0.34 million)] 214.56 162.64
Rates & Taxes 159.47 94.72
Insurance [Net of recoveries - Rs. 8.95 million (PY - Rs.8.97 million)] 126.09 86.33
Advertisement, Publicity & Sales Promotion 178.26 169.12
Traveling & Other Incidental Expenses 355.60 277.76
Office Maintenance 234.48 169.70
Vehicle Running & Maintenance 53.61 45.96
Printing & Stationery 58.59 44.39
Communication Expenses 142.97 102.11
Staff Recruitment & Training 96.18 59.93
Donation 23.76 2.16
Auditors Remuneration – As Auditors 2.13 1.92
– For Taxation Matters 0.54 0.39
– For Certification/Limited Review 0.38 0.64
– Out of Pocket Expenses 0.24 0.17
Legal, Professional & Consultancy Charges 323.41 247.91
Freight & Forwarding (including Ocean freight) 600.89 507.22
Amortisation/write off - (VRS Expenses) 13.20 24.36
Directors’ Sitting Fees 0.59 0.66
Directors’ Commission 22.80 43.00
Miscellaneous Expenses 90.52 69.88
Financial Charges (includes Foreign Exchange Fluctuation loss ofRs. 2,055.99 million (PY net gain of Rs. 8.05 million) and Bank Charges 2,185.58 32.79
Discounts & Claims to Customer and Other Selling Expenses 315.52 282.26
Commission on Sales 161.47 117.01
Loss/(Gain) on sale/disposal/discard of Fixed Assets/Intangibles(Net of gain of Rs. 52.51 million) 56.99 128.99
Loss/(Gain) on sale of Raw Materials (6.01) 3.57
Bad Debts/irrecoverable Advances written off /provided for (Net of write in) 79.64 32.54
31,308.22 20,536.11
(1) The above expenses are Netted off, after taking into account credit of Rs. 2.01 million & Rs. 1.34 million for Office Maintenance &Communication Expenses respectively (Previous year Rs. 0.91 million - Communication Expenses).
(2) The above expenditure includes:a) Expenditure incurred on R&D of Rs. 332.34 million (Previous year Rs. 228.40 million) under various heads of accounts.b) Prior period adjustments determined during the years are adjusted to respective heads of account of Rs. 2.81 million
(Previous year of Rs. 2.79 million)(3) Excise duty expense denotes provision on stock differential and other claims/payment.
SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
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(Rs. in million)
For the year ended 31st March, 2009 2008
N. INTEREST
On Term Loans 584.47 162.03
On FCCB 0.25 0.33
On Overdrafts & other Borrowings (1) 530.59 188.44
1,115.31 350.80
Less: Interest Income (2) (44.89) (14.12)
[Tax deducted at source Rs. 9.11 million (Previous year Rs. 0.53 million)] 1,070.42 (3) 336.68 (3)
(1) Includes Rs. Nil (Previous year Rs. 12.88 million) as Discounting Charges on Commercial Papers.
(2) Includes Rs. 41.90 million on Deposits from Bank.
(3) Net of Interest Capitalisation. (Refer Note 11 (A) of Schedule “O”)
SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT
140
NOTES TO THE CONSOLIDATED ACCOUNTS
O. NOTES TO THE CONSOLIDATED ACCOUNTS AND SIGNIFICANT ACCOUNTING POLICIES
Notes to the Consolidated Balance Sheet as at 31st March, 2009 and Consolidated Profit and Loss Accountfor the year ended on that date.
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES:
A. Basis of Accounting/ Preparation
The consolidated financial statements (CFS) relate to Jubilant Organosys Ltd. (hereinafter referred to as the“Company“) and its Subsidiaries (hereinafter referred as the “Group”).
The accounts of the Group are prepared and presented under the historical cost convention on the accrual basis ofaccounting in accordance with the accounting principles generally accepted in India (“GAAP”) and comply with themandatory accounting standards notified by the Central Government of India under the Companies (AccountingStandards) Rules, 2006 and with the relevant provisions of the Companies Act, 1956. The Financial Statements arepresented in Indian rupees rounded off to the nearest million.
The preparation of financial statements in conformity with GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at thedate of financial statements and the results of operations during the reporting periods. Management believes thatthe estimates used in the preparation of the consolidated financial statements are prudent and reasonable. Actualresults could vary from these estimates. Any revision to accounting estimates is recognised in the period in whichsuch results are known/materalised.
B. Principles of Consolidation
The consolidated financial statements have been prepared on the following basis:
i. The financial statements of the Company and its Subsidiary Companies have been combined substantially ona line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses,after fully eliminating intra-group balances and intra-group transactions.
ii. The Consolidated Financial Statements have been prepared in accordance with the Accounting Standard 21(AS-21), “Consolidated Financial Statements” notified by the Central Government of India under theCompanies (Accounting Standard) Rules 2006 and using uniform accounting policies for like transactions andother events in similar circumstances and are presented to the extent possible, in the same manner as theCompany’s separate financial statements.
The Subsidiary Companies considered in the Consolidated Financial Statements are:
Name of Subsidiary Country of Name of Parent Nature of Business Percentage ofIncorporation ownership
Jubilant Pharma Pte. Ltd. Singapore Jubilant Organosys Ltd. Investment 100%
Draximage Limited, Cyprus Cyprus Jubilant Pharma Pte. Ltd. Investment (Subsidiary with effect(formerly Pancity Limited) from 12th September, 2008) 100%
Draximage Limited, Ireland Ireland Draximage Limited, Sale/Purchase of Radiopharmaceuticals 100%(formerly Basehell Ltd.) Cyprus Products (Subsidiary with effect
from 20th October, 2008)
Draximage LLC. USA Draximage Limited, Sale/Purchase of Radiopharmaceuticals 100%Cyprus Products (Subsidiary with effect
from 28th May, 2008)
DSPI Inc., USA USA Draximage Limited, Sale/Purchase of Radiopharmaceuticals 100%Cyprus Products (Subsidiary with effect
from 4th November, 2008)
Deprenyl Inc., USA USA Draximage Limited, Investment (Subsidiary with effect 100%Cyprus from 4th November, 2008)
Draxis Specialty Pharmaceuticals Canada Jubilant Pharma Manufacture of Sterile and Non Sterile 100%Inc. (formerly Jubilant Pte. Ltd. Products & RadiopharmaceuticalsAcquisition Inc. & post Products (Subsidiary withmerger of Draxis Health Inc.) effect from 28th May, 2008)
Draxis Pharma Canada Draxis Specialty Contract Manufacturer for 99.90%General Partnership Pharmaceuticals Inc. Sterile and Non Sterile Products
(With effect from 28th May, 2008)6963196 Canada Inc 0.10%
Draximage General Canada Draxis Specialty Drug Discovery and 99.90%Partnership Pharmaceuticals Inc. Development Services
(With effect from 28th May, 2008)6981364 Canada Inc. 0.10%
6963196 Canada Inc. Canada Draxis Specialty Investment (Subsidiary with 100%Pharmaceuticals Inc. effect from 28th May, 2008)
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141
NOTES TO THE CONSOLIDATED ACCOUNTS
6981364 Canada Inc. Canada Draxis Specialty Investment (Subsidiary with 100%Pharmaceuticals Inc. effect from 28th May, 2008)
DAHI LLC. USA Draxis Specialty Non-operative Company (Subsidiary 100%Pharmaceuticals Inc with effect from 28th May, 2008)
DAHI Animal Health UK Draxis Specialty Non-operative Company (Subsidiary 100%(UK) Ltd. Pharmaceuticals Inc. with effect from 28th May, 2008)
Draxis US Inc USA Deprenyl Animal Sale of Pharmaceuticals 100%(Merged with Deprenyl Health Inc ProductsAnimal Health Inc)
DAHI Nevada Inc USA Deprenyl Animal Sale of Pharmaceuticals Products 100%(Merged with Deprenyl Health Inc.Animal Health Inc)
Deprenyl Animal USA Jubilant Pharma Sale of Pharmaceuticals Products 100%Health Inc (Dissolved on Pte Ltd, Singapore18th December, 2008)
Draximage (UK) Ltd. UK Draxis Specialty Sale of Radiopharmaceutical Products 100%Pharmaceuticals Inc. (Subsidiary with effect from
28th May, 2008)
Clinsys Holdings Inc. USA Jubilant Pharma Pte. Ltd. Investment 72.20%Jubilant Organosys Ltd. 27.80%
Clinsys Clinical USA Clinsys Holdings Inc. Clinical Research 100%Research, Inc.
Cadista Holdings Inc. USA Jubilant Pharma Pte. Ltd. Investment 81.28%
Cadista Pharmaceuticals Inc. USA Cadista Holdings Inc. Generic-Pharmaceuticals 100%& Dosage Forms
Colvant Sciences Inc. USA Cadista Holdings Inc. Non-operative Company (Subsidiary 100%with effect from 13th August, 2008)
Cadista Pharmaceuticals UK Jubilant Pharma Pte. Ltd. Non-operative Company 100%(UK) Limited (formerlyCadista UK Limited)
Jubilant Organosys Singapore Jubilant Pharma Sale/Purchase of Chemicals, APIs, 100%International Pte. Ltd. Pte. Ltd. Speciality Chemicals, Advance
Intermediates and formulations(Subsidiary with effect from 1st April, 2008)
HSL Holdings Inc. USA Clinsys Holdings Inc. Investment 100%
Hollister-Stier USA HSL Holdings Inc. Manufacture of Allergenic 100%Laboratories LLC. Extracts & Sterile Injectables Vials
Jubilant Organosys China Jubilant Pharma Pte. Ltd. Trading 100%(Shanghai) Ltd.
Jubilant Pharma N.V. Belgium Jubilant Organosys Ltd. Investment 100%
Jubilant Pharmaceuticals Belgium Jubilant Pharma N.V. Licensing & Regulatory Services 100%N.V. (formerlyPharmaceuticals ServicesIncorporated N.V.)
PSI Supply N.V. Belgium Jubilant Pharma N.V. Supply of Dosage Forms 100%
Jubilant Organosys (USA), Inc. USA Jubilant Organosys Ltd. Trading 100%
Jubilant Organosys BVI Jubilant Pharma Investment (Subsidiary 100%(BVI) Ltd. Pte. Ltd. with effect from 19th August, 2008)
Jubilant Biosys BVI Jubilant Organosys Investment (Subsidiary 100%(BVI) Ltd. (BVI) Ltd. with effect from 20th August, 2008)
Jubilant Biosys Singapore Jubilant Biosys Investment (Subsidiary 100%(Singapore) Pte Ltd. (BVI) Ltd. with effect from 20th August, 2008)
Jubilant Biosys Ltd. India Jubilant Biosys Drug Discovery & 66.98%(Singapore) Pte. Ltd. Development Services
Jubilant Discovery USA Jubilant Biosys Ltd. Drug Discovery and Development 100%Services Inc. Services (Subsidiary with
effect from 17th June, 2008)
Jubilant Drug Singapore Jubilant Pharma Investment (Subsidiary with 100%Development Pte. Ltd. Pte. Ltd. effect from 19th August, 2008)
Jubilant Chemsys Ltd. India Jubilant Drug Medicinal Chemistry Services 100%Development Pte. Ltd.
Clinsys Clinical India Jubilant Drug Clinical Research 100%Research Ltd. Development Pte. Ltd.
Name of Subsidiary Country of Name of Parent Nature of Business Percentage ofIncorporation ownership
142
NOTES TO THE CONSOLIDATED ACCOUNTS
Name of Subsidiary Country of Name of Parent Nature of Business Percentage ofIncorporation ownership
Jubilant Infrastructure Ltd. India Jubilant Organosys Ltd. Setting up of Special Economic Zone(s) 100%
Jubilant First Trust India Jubilant Organosys Ltd. Health Care 92.80%Healthcare Ltd.
Asia Healthcare India Jubilant First Trust Health Care 99.76%Development Ltd. Healthcare Ltd.
Speciality Molecules Ltd. India Jubilant Organosys Ltd. Niche manufacturer of Specialty 100%Intermediates (Subsidiary witheffect from 3rd June, 2008)
Jubilant Innovation BVI Jubilant Pharma Pte. Ltd. Drug Discovery and Development 100%(BVI) Ltd. Services (Subsidiary with
effect from 20th March, 2009)
Jubilant Innovation Singapore Jubilant Innovation Drug Discovery and Development 100%Pte. Ltd. (BVI) Ltd. Services (Subsidiary with
effect from 20th March, 2009)
iii. For the purpose of Consolidation of accounts of foreign subsidiaries, average rate of currencies have beentaken for revenue items and the year-end rates have been applied for Balance Sheet items as per AccountingStandard 11 (AS-11) - “The Effects of Changes in Foreign Exchange Rates”, notified by the CentralGovernment of India under the Companies (Accounting Standard) Rules, 2006.
iv. The net exchange difference for the translation of items in the financial statement of foreign subsidiaries is takento Exchange Fluctuation Reserve.
v. The excess of cost to the Company of its investments in the subsidiary Company over its share of the equity ofthe subsidiary Company, at the dates on which the investments in the subsidiary Company was made, isrecognised as ‘goodwill’ being an asset in the consolidated financial statement.
vi. Minority Interest in the net assets of consolidated subsidiaries consist of the amount of equity attributable tothe minority shareholders at the dates on which investments are made by the Company in the subsidiarycompanies and further movements in their share in the equity, subsequent to the dates of investments asstated above. The excess of loss over the minority interest in the equity, is adjusted against General Reserveof the Company.
vii. Goodwill in the Balance Sheet represents goodwill arising on consolidation of Jubilant Biosys Ltd. IndiaJubilant Pharma N.V Belgium, Clinsys Holdings USA, Jubilant Pharma Pte. Ltd. Singapore, Hollistier HoldingsInc. USA, Draxis Specialty Pharmaceuticals Inc. Canada, (formerly Jubilant Acquisition Inc. & post merger ofDraxis Health Inc.) Jubilant First Trust Healthcare Ltd. India, Speciality Molecules Ltd. India. Such Goodwillhas been tested for impairment using the cash flow projections of the said entities, based on the most recentfinancial budgets / forecasts approved by the management and accordingly, no amortisation is required duringthe Year.
viii. The accounts of Jubilant Employee Welfare Trust has not been consolidated in line with the Guidance Note onAccounting Employee Share-based Payment issued by the Institute of Chartered Accountants of India.
C. a. Fixed Assets and Depreciation
(i) Fixed Assets are stated at original cost net of tax/duty credits availed, if any, less accumulated depreciation/amortisation. The cost of fixed assets includes effect of exchange differences on long term foreign currencyborrowings, freight and other incidental expenses related to the acquisition and installation of the respectiveassets. Borrowing costs directly attributable to fixed assets which necessarily take a substantial period of timeto get ready for their intended use are capitalised. In case of fixed assets acquired at the time of amalgamationof certain entities with Company, the same are at book value/fair value ascertained by the valuers.
Insurance spares / standby equipments are capitalised as part of the mother assets and are depreciated at theapplicable rates, over the remaining useful life of the mother assets. Such spares are charged off, on issue forConsumption.
Interest on loans and other financial charges and preoperative expenses including Trial Run Expenses (Net oftrial run receipts, if any) for projects and/or substantial expansion up to the date of commencement ofcommercial production/ stabilisation of the project are capitalised.
(ii) Depreciation is provided on Straight Line Method, except in case of Plant & Machinery at Nira & Savli plantswhich is on Written Down Value Method, at rates mentioned and in the manner specified in Schedule XIV tothe Companies Act, 1956 (as amended), on the original cost/ acquisition cost of assets and read with thestatement as mentioned herein under. Certain plants were classified as continuous process plants from thefinancial year ended 31st March, 2000 and such classification has been done on technical assessment, (reliedupon by the auditor being a technical matter) and depreciation on such assets has been provided accordingly.
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143
NOTES TO THE CONSOLIDATED ACCOUNTS
Depreciation, in respect of assets added/installed up to 15th December, 1993, is provided at the ratesapplicable at the time of additions/installations of the assets as per Schedule XIV to the Companies Act, 1956and depreciation, in respect of assets added/installed during the subsequent period, is provided at the rates,mentioned in Schedule XIV to the Companies Act, 1956 read with Notification dated 16th December, 1993issued by Department of Company Affairs, Government of India except for the following classes of fixedassets, where the useful life has been estimated as under:
a. R&D related Equipments & Machineries are depreciated over ten years.
b. Motor Vehicles are depreciated over five years.
c. Computer & Information Technology related assets are depreciated over three to five years.
d. Certain employee perquisite - related assets are depreciated over five years, being the period of theperquisite scheme.
Depreciation on assets added/disposed off during the year has been provided on pro-rata basis with referenceto the month of addition/disposal.
Depreciation on exchange fluctuation capitalised is charged over the remaining useful life of assets.
(iii) Depreciation in respect to assets of overseas subsidiaries is provided over the estimated useful life by usingthe Straight Line method (SLM) except, in respect of some equipments for a subsidiary in Canada where its isprovided on Written Down Value (WDV) method.
However, the said rates of depreciation in respect of overseas subsidiaries are higher than the ratesprescribed vide Schedule XIV to the Companies Act, 1956.
b. Intangible, product development and amortisation
Intangible assets are recorded at the consideration paid for acquisition. Intangible assets are amortised overtheir estimated useful lives on straight line basis, commencing from the date the asset is available to theCompany for its use.
Cost incurred for product development are recognised as intangible assets and amortised on a straight-linebasis over a period of five to ten years from the date of regulatory approval. Subsequent expenditures ondevelopment of such products are also added to the cost of intangibles.
c. Leased Assets: Amortisation/charging off
(i) Leasehold Land value is not amortised in view of the long tenure of the unexpired lease period/option ofconversion to freehold at the expiry of lease tenure.
(ii) Other lease assets: Assets, if any, acquired under finance lease from April 01, 2001 are capitalised at thelower of their fair value and the present value of the minimum lease payment in line with the AccountingStandard 19 (AS-19) - “Leases”, notified by the Central Government of India under the Companies (AccountingStandard) Rules 2006. In respect of other leases, lease rentals are charged to Profit and Loss Account.
D. Valuation of Inventories
Inventories are valued at lower of cost or net realisable value except scrap, which is at net estimated realisable value.
The methods of determining cost of various categories of inventories are as follows:
Raw materials Weighted average method
Stores and spares Weighted average method
Work-in-process and finished goods (manufactured) Variable Cost at weighted average includingan appropriate share of production overheads
Finished goods (traded) Actual cost of purchase
Goods in transit Actual cost of purchase
Cost includes all direct costs, cost of conversion and appropriate portion of overheads and such other costsincurred as to bring the inventory to its present location and condition inclusive of excise duty wherever applicable.Cost formula used is based upon weighted average cost.
E. Investments
Long Term Investments (non-trade) if any, are valued at cost unless there is a permanent fall in their value as at thedate of Balance Sheet.
Current Investments are valued at Lower of cost or fair value.
144
NOTES TO THE CONSOLIDATED ACCOUNTS
F. Income Tax
Current Tax
Current Tax Expense is based on the provisions of the relevant applicable Income Tax Laws, and judicialinterpretations thereof as at the Balance Sheet date and takes into consideration various deductions andexemptions to which the Company is entitled to as well as the reliance placed by the Company on the legal advicesreceived by it.
Deferred Tax
Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxableincome for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets arerecognised using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferredtax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future;however, where there is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognisedonly if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed at each balancesheet date and is written-down or written-up to reflect the amount that is reasonably/virtually certain (as the casemay be) to be realised.
Fringe Benefit Tax
Provision for Fringe Benefit Tax has been made in accordance with the Income Tax Laws prevailing for the relevantassessment years.
G. Foreign Currency Conversions/ Translation
Transactions in foreign currency are recorded at the exchange rate prevailing on/or closely approximating to thedate of transactions. Monetary Assets and Liabilities are restated at the rate prevailing at the period end or at thespot rate at the inception of forward contract where forward cover for specific asset/liability has been taken and inrespect of such forward contracts the difference between the contract rate and the spot rate at the inception of theforward contract is recognised as income or expense in Profit & Loss Account over the life of the contract. All otheroutstanding forward contracts on the closing date are marked to market and resultant gain or loss is recognised asincome or expense in the Profit and loss Account.
The Company has opted for accounting the exchange differences arising on reporting of long term foreign currencymonetary items in line with Companies (Accounting Standard) Amendment Rules 2009 on Accounting Standard 11(AS-11) - “The Effects of Changes in Foreign Exchange Rates” notified by the Ministry of Corporate Affairs on31st March, 2009. Accordingly the effect of exchange differences on foreign currency borrowings including FCCBsof the Company is adjusted to cost of fixed assets to the extent it relates to utilization of funds for acquisition ofdepreciable capital assets and the balance is accumulated in Foreign Currency Monetary Item TranslationDifference Account (FCMITDA) and amortised during the balance period of such long term liability but not later than31st March, 2011.
H. Provisions, Contingent Liability and Contingent Assets
The Company recognises a provision when there is a present obligation as a result of a past event that probablyrequires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosurefor a contingent liability is made when there is a possible obligation or a present obligation that may, but probablywill not require an outflow of resource. Contingent Assets are not recognised/disclosed. Provisions, ContingentLiabilities and Contingent Assets are reviewed at each Balance Sheet Date. Service warranty cost in respect ofpost software development and implementation phase are accrued at the year-end on the basis of managementestimates of the efforts required on the respective projects as per the terms of the agreements.
I. Research & Development
Revenue expenditure on Research and Development is included under the natural heads of expenditure.
Capital expenditure on Research and Development (R&D) is capitalised as fixed assets. Development costincluding legal expenses in relation to patent/trade marks relating to the new and improved product and/or processdevelopment is recognised as an intangible asset to the extent that it is expected that such asset will generatefuture economic benefits. Other Research & Development cost is expensed as incurred.
In respect of certain overseas subsidiaries, Cost of Licenses, including incidental expenses, are capitalised.Expenses during the period of development of Dosage forms, till the final development are capitalised. However,Research expenses in respect of Dosage forms are charged to revenue.
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
145
NOTES TO THE CONSOLIDATED ACCOUNTS
J. Employee Benefits
i) In respect of Parent Company including Indian Subsidiaries:
• Contribution payable to recognised provident fund, employee state insurance and superannuation schemewhich is defined contribution scheme, is charged to Profit & Loss Account. For certain employees, ProvidentFund contributions are made to a trust, administered by the Company. The interest rate payable to themembers of the trust shall not be lower than the statutory rate of interest declared by the Central Governmentunder the Employees Provident Funds and Misc Provisions Act 1952. The Remaining contributions are madeto the government administered Provident Fund.
• Gratuity and leave encashment which are defined benefits are accrued based on actuarial valuation as atBalance Sheet date by an independent actuary.
• The Company has also opted for a group Gratuity-cum Life Assurance Scheme of the Life InsuranceCorporation of India for certain employees of one of its unit and the contribution is charged to the Profit & LossAccount each year.
ii) In respect of Foreign Subsidiaries:
Foreign subsidiaries make contribution to various social security plans and insurance schemes has been madeas per local requirements and generally accepted practices in their respective country of incorporation. Suchcontributions are charged to Profit & Loss Account in the year in which liability to pay arise.
K. Borrowing Cost
Borrowing cost includes ancillary cost. Borrowing cost attributable to acquisitions and construction/fabrication ofqualifying assets are capitalised as a part of the cost of such assets upto the date as mentioned in Note No. C(a)(i)above. Other borrowing costs are charged as expenses in the year in which they arise.
L. Revenue Recognition
(i) Revenue from Sales is recognised on dispatch of material and point when risk and reward are transferred tothe customers. Sales include excise duty, export incentives and subsidies but exclude Inter DivisionalTransfers and Value Added Tax.
Revenue from tolling services is recognised in accordance with the terms of the specific agreement.
Export incentives/ benefits are accounted for on accrual basis and as per the principles given underAccounting Standard 9 (AS-9) on “Revenue Recognition”, notified by the Central Government of India underthe Companies (Accounting Standard) Rules, 2006.
Dividend income is recognised when the unconditional right to receive the income is established. Income frominterest on deposits, loans and interest bearing securities is recognised on the time proportionate method.
(ii) For Jubilant Biosys Ltd:
(a) In respect of sales of products, revenue is recognised on delivery/acceptance of products to/by thecustomers, as the case may be, and
(b) In respect of projects taken up as per the specification of the customers, revenue is recognised onproportionate completion method, and
(c) In respect of on site services rendered, revenue is recognised on the basis of billable man-days actually spent.
(iii) For Jubilant Pharmaceuticals N.V. (formerly Pharmaceuticals Services Incorporated N.V.): Revenue forlicensing and regulatory services is recognised on the basis of milestones achieved as determined in therespective contracts with the clients.
(iv) For Jubilant Chemsys Ltd.:
(a) In respect of projects taken up as per the specification of the customers, revenue is recognised onProportionate Service Contract method, and
(b) In respect of FTE Contracts, revenue is recognised on the basis of billable man-days actually spent.
(v) For Clinsys Clinical Research Ltd, Revenue of Fixed-price contracts, are recognised, based on percentage ofcompletion method (on the technical estimates made by the management), and in case of service performedon time basis, revenues are recognised as services are rendered in accordance with terms of the contracts.
(vi) For Clinsys Clinical Research, Inc., USA, revenue from Fixed-price contracts are recorded on a ProportionalPerformance basis. Revenue from time and material contracts are recognised as hours are incurred, multipliedby contractual billing rates. Revenue from unit-based contracts is generally recognised as units are completed.
(vii) For Cadista Pharmaceuticals, Inc., USA, Sales (net of charge back) is recognised upon delivery of productsand point when risk & rewards are transferred to the customers.
146
NOTES TO THE CONSOLIDATED ACCOUNTS
(viii) For Hollistier Stier Laboratories LLC., USA, Sales of goods is recognised upon delivery of products and pointwhen risk & rewards are transferred to the customers. Revenues related to contract manufacturing arrangementare recognised when performance obligations are substantially fulfilled. Revenues related to developmentcontracts are recognised as defined milestones are achieved on proportionate completion method.
(ix) For Draxis Specialty Pharmaceuticals Inc., Canada, Sales of goods is recognised upon delivery of productsand point when risk & rewards are transferred to the customers. Revenues related to contract manufacturingarrangement are recognised when performance obligations are substantially fulfilled. Revenues related todevelopment contracts are recognised as defined milestones are achieved on proportionate completionmethod. Royalty is recognised on an accrual basis in accordance with the contractual agreement.
(x) For Jubilant First Trust Healthcare Ltd. & Asia Healthcare Development Ltd., revenue from rendering of medicalservices is recognised upon completion/performance of such service to the customers which generally coincideswith the discharge of the patients. Revenue from sale of pharmacy is recognised on delivery of the same.
M. Miscellaneous Expenditure / Amortisation
(i) Payments under Voluntary Retirement Scheme are amortised over a period of thirty six months commencingfrom the month in which payment / liability arise.
(ii) FCCB and share issue expenses/premium payable on redemption of FCCB are adjusted against securitiespremium account.
N. Segment Accounting
The accounting policies adopted for segment reporting are in line with accounting policies of the Company.Revenue, Expenses, Assets and Liabilities have been identified to segments on the basis of their relationship tooperating activities of the segments (taking in account the nature of products and services and risks & rewardsassociated with them) and internal management information systems and the same is reviewed from time to time torealign the same to conform to the Business Units of the Company. Revenue, Expense, Assets and Liabilities,which are common to the enterprise as a whole and are not allocable to segments on a reasonable basis, havebeen treated as “Common Revenue/Expense/Assets/Liabilities”, as the case may be.
O. Impairment of Fixed Assets
The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired.If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverableamount of the asset or the recoverable amount of the cash generating unit to which the assets belongs is less thanthe carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as animpairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indicationthat previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset isreflected at the recoverable amount.
P. Employee Stock Option Schemes
In accordance with the Securities and Exchange Board of India Guidelines, in respect of the stock options grantedpursuant to the Company’s Stock Option Scheme, the intrinsic value, if any, of the option being the excess of themarket price, of share over the exercise price of the option, at the date of grant of option, is treated as discount andaccounted as employee compensation cost and amortised on a straight line basis over the vesting period.
2. Capital Commitments
Estimated amount of Contracts remaining to be executed on Capital Account (Net of Advances) Rs. 1,010.07 million(Previous year Rs. 2,033.08 million) [Advances Rs. 123.19 million (Previous year Rs. 107.01 million)].
3. Contingent liabilities
a) Claims/Demands/Disputes against which appeals are pending and not acknowledged as debts on account of:
(Rs. in million)
As at 31st March, 2009 2008
Central Excise 23.18 23.17Customs ** 74.67 5.76Sales Tax 48.01 5.86Income Tax 162.36 173.64Service Tax 7.71 2.77Others 59.48 10.57
** Excludes Rs. 111.09 million show cause notices/confirmed demands issued to the Company against judicialprocedures and unlikely to be sustained.
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147
NOTES TO THE CONSOLIDATED ACCOUNTS
Based upon the favorable decisions in similar cases, legal opinion taken by the Company or discussion withsolicitors, the Company believes that its contentions in the matter of disputed demands/claims are legallytenable and hence the possibility of these maturing is remote.
In additions to the amounts mentioned above, the Company may be required to pay interest on finality of thematters.
b) The Company has challenged the levy of transport fee by State of Maharashtra on consumption of rectifiedspirit and molasses in the Nira factory. The order of State imposing the levy was stayed by the Hon’bleMumbai High Court on 22nd October, 2001. The Company has been advised that the levy of transport fee onrectified spirit and molasses by State is not tenable. However the Company has deposited Rs. 6.28 millionunder protest out of the total transport fee of Rs. 124.03 million.
Outstanding guarantees furnished by Banks on behalf of the Company/by the Company including in respect ofLetters of Credits/Loss make up guarantee is Rs. 1,085.88 million (Previous year Rs. 1,186.96 million).
The Parent Company has given Corporate Guarantee on behalf of its subsidiaries, HSL Holdings Inc. & DraxisSpecialty Pharmaceuticals Inc. (formerly Jubilant Acquisition Inc. & post merger of Draxis Health Inc.) to ICICIBank UK. PLC. & ICICI Bank, Canada for USD 50 million (effective guarantee as at 31st March, 2009 USD43.75 million) and USD 50.21 million respectively (total effective guarantee equivalent to Rs. 4,765.70 million),to secure financial facility granted by them.
c) Exports obligation undertaken by the Company under EPCG scheme to be completed over a period of five/eight years on account of import of Capital Goods at concessional import duty remaining outstanding isRs. 1,230.62 million (Previous year Rs. 1,214.05 million). Similarly Export obligation under Advance LicenseScheme/DFIA scheme on duty free import of specific raw materials, remaining outstanding is Rs. 558.01million (Previous year Rs. 2,891.12 million)
d) The Company has challenged the increase in denaturing fee by the State of Uttar Pradesh w.e.f 1st April, 2004on denaturing of rectified spirit in the Gajraula factory before the Hon’ble Allahabad High Court and the writpetition has been admitted by the court. The Company has deposited Rs. 19.11 million under protest which isshown as deposits.
e) Zila Panchayat at J. P. Nagar (in respect of the Company’s Gajraula plant) served a notice demanding acompensation of Rs. 277.40 million allegedly for percolation of poisonous water stored in lagoons and flowingthrough the land of Zila Panchayat resulting in loss of crops and cattle of the farmers and for putting poisonousfly ash on national highway which caused loss to the health and damages to eyes and skin of people.
District Magistrate issued a recovery certificate along with 10% collection charges inflating the demand toRs. 305.14 million. In the opinion of the Company, the Zila Panchayat has no jurisdiction in raising thisdemand. The demand was challenged in Hon’ble Allahabad High Court and the court stayed the demand tillfurther orders.
4. The Hon’ble Supreme Court has quashed the levy of license fee by State of Uttar Pradesh on captive consumptionof denatured spirit in the Gajraula factory, and has ordered the refund of the fee paid during the period of disputesubject to condition that the amount has not been collected from the Company’s customers. Further the Court hasdirected the State to investigate whether the Company has collected the disputed fee from its customers to theextent bank guarantees were furnished.
The Company is entitled to a refund of Rs. 84.06 million as the amount paid during the period of dispute or securedby bank guarantees was not collected from its customers. Accordingly the Company has approached the State ofUttar Pradesh for the refund of the said amount.
5. The Company has challenged the levy of license fees of Rs. 2.87 million by State of Uttar Pradesh, for grant ofPD-2 license for manufacture of Ethyl Alcohol for industrial use, before the Hon’ble Allahabad High Court. The writpetition has been admitted and is being listed for final hearing. Though the amount has been deposited and shownas such, no provision against this has been made as the issue is covered by the earlier favorable judgment of theHon’ble Supreme Court of India.
6. Dividend on Equity Shares includes Rs. 2.36 million (inclusive of Dividend Distribution Tax) in respect of Sharesallotted between 31st March, 2008 to the record date for Dividend.
7. Maximum balance outstanding, during the year, recoverable from following Companies in which Directors areinterested, Jubilant Enpro Pvt. Ltd. - Rs. 2.83 million, Jubilant Oil & Gas Pvt. Ltd. - Rs. 4.08 million and B&M HotBreads Pvt. Ltd. - Rs. 0.13 million.
148
NOTES TO THE CONSOLIDATED ACCOUNTS
8. Foreign Currency Convertible Bonds (FCCB)
(A) 1.5 % FCCB - USD 35 million (FCCB 2009)The Company issued 1.5% Foreign Currency Convertible Bonds due 2009 (FCCB 2009) aggregating USD 35million, in the year 2004-05. The Bonds are convertible at any time between 14th June, 2004 and 15th April,2009 by holders into fully paid equity shares of Re. 1 each of the Company or Global Depositary Shares(“GDSs”) each representing One equity share at an initial conversion price of Rs. 163.646 per share with afixed rate of exchange on conversion of Rs. 44.805 = USD 1. The conversion price is subject to adjustment incertain circumstances. The Bonds may also be redeemed, in whole but not in part, at the option of theCompany at any time on or after 14th May, 2007, subject to satisfaction of certain conditions. Unlesspreviously converted, redeemed or purchased and cancelled, the Bonds will be redeemed on 15th May, 2009at 113.70% of their principal amount. The FCCBs are listed on Singapore Stock Exchange. The GDSs arisingout of conversion of FCCBs are listed on Luxembourg Stock Exchange. Out of these FCCB 2009, USD 34.70million were converted upto 31st March, 2009 into equity shares and this represents 9,500,521 shares of Re. 1each as on 31st March, 2009. The balance bonds of USD 0.30 million outstanding as of 31st March, 2009 areincluded under ‘Unsecured Loans’.
The outstanding balance of FCCB 2009 - USD 0.30 million, on conversion would result in allotment of 82,140equity shares of Re. 1 each.
The proceeds were utilised for funding new projects & expansion of existing units - Rs. 795.4 million (USD 17.1million), investment in/acquisitions of overseas subsidiary companies - Rs. 722.0 million (USD 16.8 million)and issue expenses - Rs. 50.7 million (USD 1.1 million).
(B) FCCB - USD 75 million (FCCB 2010)The Company issued, Zero Coupon Foreign Currency Convertible Bonds due 2010 (FCCB 2010) for anaggregate value of USD 75 million, convertible at any time between 3rd July, 2005 to 14th May, 2010 byholders into fully paid equity shares of Re. 1 each of the Company or Global Depositary Shares (GDSs) eachrepresenting one equity share of Re. 1 each at an initial conversion price of Rs. 273.0648 per share with afixed rate of exchange of Rs. 43.35 = USD 1. The conversion price is subject to adjustment in certaincircumstances. The Bonds may also be redeemed, in whole but not in part, at the option of the Company atany time on or after 23rd May, 2008, subject to satisfaction of certain conditions. Unless previously converted,redeemed or purchased and cancelled, the Bonds will be redeemed on 24th May, 2010 at 138.383% of theirprincipal amount. The FCCBs are listed on Singapore Stock Exchange. The GDSs arising out of conversion ofFCCBs are listed on Luxembourg Stock Exchange. Out of these FCCB 2010, USD 22.343 million wereconverted upto 31st March, 2009 into equity shares and this represents 3,547,022 shares of Re.1 each as on31st March, 2009 and USD 3 million Bonds were bought back at a discount and cancelled upto 31st March,2009. The balance bonds of USD 49.657 million outstanding as of 31st March, 2009 are included under‘Unsecured Loans’.
The outstanding balance of FCCB 2010 - USD 49.657 million, on conversion would result in allotment of7,883,231 equity shares of Re. 1 each.
The proceeds of FCCB 2010 have been used for funding new projects & expansion of existing units -Rs. 1,384.1 million (USD 32.2 million), investment in/acquisitions of overseas subsidiary companies -Rs. 1,827.9 million (USD 41.0 million), issue expenses - Rs. 78.0 million (USD 1.8 million).
(C) FCCB - USD 200 million (FCCB 2011)The Company issued Zero Coupon Foreign Currency Convertible Bonds due 2011 (FCCB 2011) for anaggregate value of USD 200 million, convertible at any time between 30th June, 2006 to 10th May, 2011 byholders into fully paid equity shares of Re. 1 each of the Company or Global Depositary Shares (GDSs) eachrepresenting one equity share at an initial conversion price of Rs. 413.4498 per share with a fixed rate ofexchange of Rs. 45.05 = USD 1. The conversion price is subject to adjustment in certain circumstances. TheBonds may also be redeemed, in whole but not in part, at the option of the Company at any time on or after19th May, 2009, subject to satisfaction of certain conditions. Unless previously converted, redeemed orpurchased and cancelled, the Bonds will be redeemed on 20th May, 2011 at 142.429% of their principalamount. The FCCBs are listed on Singapore Stock Exchange. The GDSs arising out of conversion of FCCBsare listed on Luxembourg Stock Exchange. Out of these FCCB 2011, USD 57.90 million Bonds were boughtback at a discount and cancelled upto 31st March, 2009. The balance bonds of USD 142.10 millionoutstanding as of 31st March, 2009 are included under ‘Unsecured Loans’.
The outstanding balance of FCCB 2011 - USD 142.10 million, on conversion would result in allotment of15,483,391 equity shares of Re. 1 each.
The proceeds of FCCB 2011 have been used for funding new projects – Rs. 13.5 million (USD 0.30 million),investment in/acquisitions of overseas subsidiary companies - Rs. 8,873.0 million (USD 196.96 million) andissue expenses – Rs. 123.4 million (USD 2.74 million). There has been no conversion during the year inrespect of the above FCCBs.
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
149
NOTES TO THE CONSOLIDATED ACCOUNTS
(D) As permitted by the Reserve Bank of India (RBI), during the year, the Company bought back at discount totheir book value, FCCBs aggregating to USD 3 million out of outstanding FCCB 2010 of USD 52.657 millionagainst the issue size of USD 75 million and FCCBs aggregating to USD 57.90 million out of outstandingFCCB 2011 of USD 200 million. In terms of such buyback and cancellation/extinguishment of FCCB debt, thegain of Rs. 590.70 million, being reduction in loan liability has been credited to the Profit and Loss Account.
9. Employee Stock Option Scheme
In terms of approval of shareholders accorded at the AGM held on 29th August, 2005 and in accordance with SEBI(ESOP & ESPS) Guidelines, 1999, the Company instituted Jubilant Employees Stock Option Plan, 2005 (“Plan”) forspecified categories of employees and directors of the Company and its Subsidiaries. Under the Plan, upto 717,500Stock Options can be issued to eligible directors (other than promoter directors) and other specified categories ofemployees of the Company/ Subsidiaries. The options are to be granted at market price. As per SEBI Guidelines,the market price is taken as the closing price on the day preceding the date of grant of options, on the stockexchange where the trading volume is the highest.
Each option, upon vesting, shall entitle the holder to subscribe to five equity shares of Re. 1 each. 10% of theOptions will vest on the 1st anniversary of the grant date and 90% will vest on 2nd anniversary of the grant date.Further lock-in provisions are as under :-
Vesting Date % of Options scheduled to vest Lock-in Period
1 year from grant date 10 Nil2 years from grant date 15 Nil2 years from grant date 20 1 year from vesting date2 years from grant date 25 2 years from vesting date2 years from grant date 30 3 years from vesting date
The Company has constituted a Compensation Committee comprising of a majority of independent directors. ThisCommittee is empowered to administer the Scheme.
During the year, in accordance with SEBI (ESOP & ESPS) Guidelines, 1999, approval was accorded to increasethe number of Stock Options that the Company can create, offer, issue and grant/allot at any time, directly, orthrough a trust, to the eligible employees of the Company and its Subsidiaries, from 717,500 Stock Options to1,100,000 Stock Options thereby increasing the resultant Equity Shares on exercise from 3,587,500 shares to5,500,000 shares of Re. 1 each under the Jubilant Employees Stock Option Plan, 2005.
During the year, Jubilant Employee Welfare Trust was constituted for the purpose of acquisition of equity shares ofthe Company from the Secondary market or subscription of shares from the Company, to hold the shares and toallocate/transfer these shares to eligible employees of the Company from time to time, in such manner and termsand conditions specified under Jubilant Employees Stock Option Plan, 2005. The Company would grant loan toTrust upto Rs. 1,000 million in one or more trenches, either free of interest or at interest agreed between the Boardand the Trust. The Trust has purchased 5,371,747 equity shares of the Company from the open market, out ofinterest free loan of Rs. 567.85 million provided by the Company till 31st March, 2009.
During the year, the following options were granted to eligible directors/ employees:
Date of grant Number of Exercise Price Market Price (Rupees)options granted per Share (Rupees) (As per SEBI Guidelines)*
22nd April, 2008 9,100 359.25 359.25 (a)
15th July, 2008 8,000 304.95 304.95 (b)
14th October, 2008 5,600 198.55 198.55 (c)
* Based on closing price (a) on 21st April 2008 at NSE (b) on 14th July 2008 at NSE (c) on 13th October 2008 atNSE where higher turnover was recorded.
The movement in the stock options during the year ended 31st March, 2009 is set out below:
Number
Options outstanding at the beginning of the year 539,160
Granted during the year 22,700
Expired/forfeited during the year (34,061)
Exercised during the year (9,326)
Options outstanding at the end of the year 518,473
150
NOTES TO THE CONSOLIDATED ACCOUNTS
10. The Group’s significant operating lease arrangements are in respect of premises (residential, offices, godown etc.).These leasing arrangements, which are cancelable, range between 11 months and 3 years generally and areusually renewable by mutual agreeable terms. The aggregate lease rentals payable are charged as expenses.
11. (A) In line with the applicable Accounting Standards, interest on funds utilised and preoperative expensesincluding trial run expenses (net) for projects and/or substantial expansions have been capitalised up to thedate of commercial production/stabilisation of the project, amounting to Rs. 418.21 million (Previous yearRs. 347.34 million), including interest Rs. 241.06 million (Previous year Rs. 209.97 million). The saidexpenditure (net of trial run receipts), so capitalised are accumulated as Capital work in progress and havebeen allocated to respective Fixed Assets to the extent fixed assets were put to use and balance is appearingin Capital work in progress.
(B) The carrying value of internally generated Intangible Asset - Product Development including under progress isreviewed for impairment annually. Accordingly a sum of Rs. 108.79 million has been written off during the year.
(C) Goodwill in respect of Draxis Specialty Pharmaceuticals Inc. (formerly Jubilant Acquisition Inc. & post mergerDraxis Health Inc.), acquired during the year, has been determined based upon the management accounts onthe date of acquisition, and the same has been relied upon by the auditors.
12. (A) Deferred Tax Assets and Liabilities are attributable to the following items: (Rs. in million)
As at 31st March, 2009 2008
Deferred Tax AssetsProvision for Leave Encashment and Gratuity 113.63 110.23
Amount disallowed u/s 43 B 15.71 2.84
Accumulated Losses as per Tax Laws 992.74 –
Others 44.08 139.05
1,166.16 252.12
Deferred Tax LiabilitiesAccelerated Depreciation/Amortisation 1,949.39 1,368.72
Difference in value of CWIP/Intangibles 339.16 185.70
Others 28.24 –
2,316.79 1,554.42
Deferred Tax Liabilities (Net) 1,150.63 1,302.30
(B) The profit attributable to the operations under the (EOU) Export Oriented Units Scheme are deductible fromtaxable income up to 31st March, 2010, and accordingly income from EOU setup at Nanjangud, Mysore, andat Bhartiagram, Jyotiba Phoolay Nagar (Gajraula), Uttar Pradesh have been considered as tax deductible, andprovision for tax is made accordingly.
13. The bottling unit of the Company situated at Nira holds a potable liquor license for Indian Made Foreign Liquor(IMFL) and the same is bottling IMFL on the order of another Company and is charging bottling fee. The Accountsrecognise Revenue and Expenditure, only to the extent the Company enjoys beneficial interest. In Compliance withthe requirements of Schedule VI to the Companies Act, 1956, the following information is given hereunder inrespect of the transactions where the Company does not enjoy beneficial interest.
(Rs. in million)
For the year ended 31st March, 2009 2008
Sales 24.42 933.80
Excise Duty (8.92) (659.84)
Other Income 1.14 7.94
Increase/(Decrease) in Finished & Process Stocks 0.79 (77.83)
Raw & Process Materials Consumed (7.97) (63.72)
Stores, Spares, Chemicals, Catalyst & Packing Materials Consumed (3.59) (104.19)
Other Expenses (4.15) (0.30)
Purchase of Trading Material – (7.70)
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
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NOTES TO THE CONSOLIDATED ACCOUNTS
14. Disclosure required by Accounting Standard 29 (AS-29) “Provisions, Contingent Liabilities and Contingent Assets”
Movement in Provisions: (Rs. in million)
Class of Provisions
Sr. Particulars of disclosure Excise Duty Product Premium onNo. Warranties redemption
of FCCBs
1 Balance as at 1st April, 2008 34.63 1.03 1,633.37(52.93) (1.83) (975.15)
2 Additional provision during 2008-2009 36.21 0.13 1,129.20(34.63) (1.03) (663.21)
3 Provision used during 2008-2009 34.63 – –(52.93) (–) (–)
4 Provision reversed during 2008-2009 – 1.03 420.27(1.83) (4.99)
5 Balance as at 31st March, 2009 36.21 0.13 2,342.30(34.63) (1.03) (1,633.37)
Provision for excise duty represents the excise duty on closing stock of finished goods.
15. (A) The Company has opted for accounting the exchange difference arising on reporting of long term foreigncurrency monetary items in line with the Companies (Accounting Standard) Amendment Rules, 2009 on AS 11(AS-11) ) - “The Effects of Changes in Foreign Exchange Rates” notified by the Ministry of Corporate Affairs on31st March, 2009. Accordingly during the year the Company has capitalised exchange difference amounting toRs. 1,130.81 million to the cost of fixed assets and the balance amount Rs. 2,750.99 million to ForeignCurrency Monetary Item Translation Difference Account [FCMITDA]. Also the exchange gain amounting toRs. 1,030. 57 million credited to Profit & loss account in the previous year is now reversed through GeneralReserve. Had the Company not opted for this method of accounting the profit for the year would have beenlower by Rs. 4,912.37 million and the reserves would have been lower by Rs. 1,130.81 million. The balance inFCMITDA will be amortised on or before March, 2011.
(B) The Group uses derivative financial instruments such as forward contracts and currency swaps to selectivelyhedge its currency exposures, firm commitments and highly probable forecast transactions, denominated inUSD and EURO. Usually, the forward contracts mature within two years. The Company also enters intointerest rate swaps to selectively hedge its interest rate exposures. The Company actively manages itscurrency/interest rate exposures through a centralised treasury setup and uses derivatives to mitigate the riskfrom such exposures.
No derivative transactions are entered into for any speculative purpose.
The information on derivative instruments is as follows:
i) Derivative instruments outstanding:
Buy/Sell Amount (foreign currency in millions)
As at 31st March, 2009 2008
Foreign Exchange Contracts
– USD/INR Sold USD 311.25 USD 111.14
– USD/INR Bought USD 10.59 –
– EURO/USD Sold EURO 0.69 EURO 11.52
Currency Swaps
– Loans of JPY 3,920.20 million USD 37.00 USD 20.00(PY JPY 2,304.50 million) swapped into USD
Interest Rate Swaps
– Loans swapped from floating six month USD USD 132.50 –LIBOR to fixed USD interest rate
152
NOTES TO THE CONSOLIDATED ACCOUNTS
ii) Foreign currency exposure not hedged by derivative instrument:
Amount (foreign currency in millions)
As at 31st March, 2009 2008
Amount receivable on account of sale of goods & services USD 6.11 USD 17.74
EURO 2.53 EURO 1.78
GBP 0.04 GBP 0.07
Amount payable on account of purchase ofgoods & services, loans, FCCBs, etc. USD 459.71 USD 380.32
EURO 0.04 –
JPY 2.10 –
Amount outstanding as deposits with Banks USD 25.80 USD 0.49
iii) Forward contracts outstanding not applied for closing monetary assets and liabilities as on 31st March, 2009are marked to market and the resultant loss of Rs. 1,013.05 million has been charged to Profit and lossAccount during the year.
16. In the year 2007-08, effective 1st April, 2007, the Group adopted the revised Accounting Standard 15(AS-15) - “Employee Benefits” notified by the Central Government under the Companies (Accounting Standard)Rules, 2006, on employee benefits. Pursuant to the adoption, the transitional obligation of the Company amountedto Rs. 100.68 million (Net of deferred tax of Rs. 46.47 million) has been adjusted against balance of GeneralReserve/Profit & Loss as at 1st April, 2007.
The Company has calculated the various benefits provided to employees in respect of Parent Company includingIndian Subsidiaries as under:
(A) Defined Contribution Plans
a) Provident Fund
b) Superannuation Fund
During the year the Company has recognised the following amounts in the Profit and Loss account:
(Rs. in million)
For the year ended 31st March, 2009 2008
Employers Contribution to Provident Fund 81.45 59.57
Employers Contribution to Superannuation Fund 18.88 17.94
(B) State Plans
a) Employee State Insurance
b) Employee’s Pension Scheme, 1995
During the year the Company has recognised the following amounts in the Profit and Loss account:
(Rs. in million)
For the year ended 31st March, 2009 2008
Employers Contribution to Employee State Insurance 1.91 1.64
Employers Contribution to Employee’s Pension Scheme, 1995 26.19 22.36
(C) Defined Benefit Plans
a) Gratuity
b) Leave Encashment
The discount rate assumed is 7.60 % which is determined by reference to market yield at the Balance Sheetdate on Government bonds. The estimates of future salary increases, considered in actuarial valuation, takeaccount of inflation, seniority, promotion and other relevant factors, such as supply and demand in theemployment market.
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NOTES TO THE CONSOLIDATED ACCOUNTS
Reconciliation of opening and closing balances of the present value of the defined benefit obligation:(Rs. in million)
Gratuity* Leave Encashment2009 2008 2009 2008
Present Value of obligation at the beginning of the year 241.91 198.91 103.52 89.39Current service cost 33.47 29.37 27.52 24.40Interest cost 18.44 17.01 7.88 7.65Actuarial (gain)/loss (38.31) (3.38) (0.36) (17.92)Benefits paid (17.86) – (14.36) –Present value of obligation at the end of the year 237.65 241.91 124.20 103.52
Reconciliation of the present value of defined benefit obligation and the fair value of the plan assets:(Rs. in million)
Gratuity* Leave Encashment2009 2008 2009 2008
Present value of obligation at the end of the year 237.65 241.91 124.20 103.52Fair value of plan assets at period end – – – –Assets/(Liabilities) recognised in the Balance Sheet (237.65) (241.91) (124.20) (103.52)
Cost recognised for the period (included under Salaries, Wages, Allowances, Bonus and Gratuity)(Rs. in million)
Gratuity* Leave Encashment2009 2008 2009 2008
Current service cost 33.47 29.37 27.52 24.40Interest cost 18.44 17.01 7.88 7.65Actuarial (gain)/loss (38.31) (3.38) (0.36) (17.92)Net cost recognised during the year 13.60 43.00 35.04 14.13
*Excluding for certain employees of Nanjangud Unit.Reconciliation of opening and closing balances of the present value of the defined benefit obligation**:
(Rs. in million)
Gratuity2009 2008
Present Value of obligation at the beginning of the year 20.44 16.59Current service cost 3.42 3.27Interest cost 1.55 1.42Actuarial (gain)/loss (7.43) (0.33)Benefits paid (0.98) (0.51)Present value of obligation at the end of the year 17.00 20.44
Reconciliation of the present value of defined benefit obligation and the fair value of the plan assets**:(Rs. in million)
Gratuity2009 2008
Present value of obligation at the end of the year 17.00 20.44Fair value of plan assets at period end 5.32 4.72Funded Status excess of Actual over estimated (0.37) 1.03Assets/(Liabilities) recognised in the Balance Sheet (11.68) (15.72)
Cost recognised for the period (included under Salaries, Wages, Allowances, Bonus and Gratuity)**:(Rs. in million)
Gratuity2009 2008
Current service cost 3.42 3.27Interest cost 1.55 1.42Actuarial (gain)/loss (7.06) (1.37)Expected Return on Plan Asset (0.37) (0.31)Net cost recognised during the year (2.46) 3.01
**In respect of certain employees of Nanjangud Unit.
154
NOTES TO THE CONSOLIDATED ACCOUNTS
iv) The Financial information about the primary business segments is presented in the table given below:(Rs. in million)
Particulars Pharmaceuticals and Life Industrial & Performance TotalSciences Products & Services Products
2009 2008 2009 2008 2009 2008
1) Revenue 23,558.05 15,649.05 12,879.71 10,679.72 36,437.76 26,328.77
Less: Inter Segment Revenue 32.32 41.11 32.32 41.11
Less: Excise Duty on Sales 321.01 347.53 904.59 1,051.36 1,225.60 1,398.89
Net sales 23,237.04 15,301.52 11,942.80 9,587.25 35,179.84 24,888.77
2) Segment results 4,222.36 3,035.56 1,093.02 1,288.85 5,315.38 4,324.41
Less : Interest (Net) 1,070.42 336.68
Other un-allocable expenditure 1,279.20 (573.58)
(net of un-allocable income)
Total Profit Before Tax 4,222.36 3,035.56 1,093.02 1,288.85 2,965.76 4,561.31
3) Capital Employed
(Segment Assets - Segment Liabilities)
Segment Assets 46,327.34 26,244.79 9,848.62 8,343.50 56,175.96 34,588.29
Add: Common Assets 8,693.84 7,253.51
Total Assets 46,327.34 26,244.79 9,848.62 8,343.50 64,869.80 41,841.80
Segment Liabilities 5,399.80 2,471.64 2,323.86 1,529.44 7,723.66 4,001.08
Add: Common Liabilities 4,219.43 2,678.01
Total Liabilities 5,399.80 2,471.64 2,323.86 1,529.44 11,943.09 6,679.09
Segment Capital Employed 40,927.54 23,773.15 7,524.76 6,814.06 48,452.30 30,587.21
Add: Common Capital Employed 4,474.41 4,575.50
Total Capital Employed 40,927.54 23,773.15 7,524.76 6,814.06 52,926.71 35,162.71
4) Segment Capital Expenditure 6,005.49 2,455.74 2,281.93 699.03 8,287.42 3,154.77
Add: Common Capital Expenditure 53.82 354.54
Total Capital Expenditure 6,005.49 2,455.74 2,281.93 699.03 8,341.24 3,509.31
5) Depreciation & Amortisation (Net) 1,327.27 781.60 287.14 243.61 1,614.41 1,025.21
Add: Common Depreciation 18.01 13.93
Total Depreciation & Amortisation 1,327.27 781.60 287.14 243.61 1,632.42 1,039.14
Notes: 1) The Company has disclosed Business Segment as the Primary Segment.
2) Segments have been identified and reported taking into account the nature of products and services, the differing risk andreturns, the organization structure and the internal financial reporting systems.
3) The Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of thesegments and amounts allocated on a reasonable basis.
17. Segment Reporting:
i) Based on the guiding principles given in Accounting Standard 17 (AS-17) on “Segment Reporting”,notified by the Central Government under the Companies (Accounting Standard) Rules, 2006. TheGroup's Primary Business Segments are organized around customers, on industry and product linesas under:a. Pharmaceuticals and Life Sciences Products & Services: Active Pharmaceuticals Ingredients (APIs),
Generic Dosage Forms, Regulatory Affairs, Drug Discovery & Development Services, Chemistry Services,Clinical Research, Custom Research & Manufacturing Services (CRAMS); Contract Manufacturing ofSterile and Non-Sterile Injectables & Allergenic Extracts, Radiopharmaceutical Products; Development &Management of Hospital & Health Care Units.
b. Industrial & Performance Products: Organic Intermediates, Agri and Animal Nutrition Products, Industrialproducts for tyres, textiles and coatings; Consumer Products for wood working solutions; Food Polymersand Specialty Gases.
ii) In respect of Secondary Segment information, the Company has identified its Geographical segments as:(i) Within India (ii) Outside India.
iii) Inter Segment Transfer PricingInter Segment Transfer prices are based on market prices.
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
155
NOTES TO THE CONSOLIDATED ACCOUNTS
v) Secondary Segments (Geographical Segments):
(Rs. in million)
Particulars 2009 2008
a) Sales revenue by Geographic Location of Customers(Net of Excise Duty)
Within India 13,408.59 10,949.21
Outside India 21,771.25 13,939.56
Total 35,179.84 24,888.77
b) Carrying Amount of Segment Assets
Within India 32,877.05 22,780.48
Outside India 31,992.75 19,061.32
Total 64,869.80 41,841.80
c) Capital Expenditure
Within India 5,829.76 2,618.52
Outside India 2,511.48 890.79
Total 8,341.24 3,509.31
d) Sales revenue by Geographic Markets
India 13,408.59 10,949.21
Americas & Europe 15,943.46 9,468.20
China 2,902.94 3,024.60
Asia & Others 2,924.85 1,446.76
Total 35,179.84 24,888.77
156
NOTES TO THE CONSOLIDATED ACCOUNTS
18. A. Related Party Disclosures
1. Related parties with whom transactions have taken place during the year.
i) Enterprise over which certain Key Management Personnel have significant influence:
Jubilant Enpro Pvt. Ltd., Jubilant Oil & Gas Pvt. Ltd., Enpro Oil Pvt. Ltd., Domino Pizza India Ltd., TowerPromoters Pvt. Ltd., Focus Brands Trading India Pvt. Ltd., B&M Hot Breads Pvt. Ltd.
ii) Key Management Personnel:
Mr. Shyam. S. Bhartia, Mr. Hari. S. Bhartia, Mr. S. N. Singh, Mr. Shyamsundar Bang, Dr. J. M. Khanna,Mr. R. Sankaraiah, Mr. Pramod Yadav, Mr. Rajesh Srivastava, Mr. Ananda Mukherjee, Mr. Sridhar Mosur,Mr. Marcelo Morales*, Mr. Jean Pierre Robert*, Mr. David E Williams, Mr. Christopher Worrell*,Dr. Satadal Saha.
* For part of the year
iii) Relatives of Key Management Personnel:
Ms. Asha Khanna (wife of Dr. J. M. Khanna), Ms. Shobha Bang (wife of Mr. Shyamsundar Bang)
iv) Others:
Vam Employees Provident Fund Trust, Jubilant Employee Welfare Trust, Jubilant Bhartia Foundation
2. Transactions with related parties during the year: (Rs.in million)
Particulars Enterprise over which certain Key Mgmt. OthersKey Management Personnel Personnel &
have significant influence Relatives
Sale of Goods & Services 1.72(–)
Recovery of expenses 27.15 –(21.71) (0.05)
Reimbursement of expenses 3.59(–)
Remuneration and Related Expenses 295.55(214.24)
Company's Contribution to PF Trust. 60.47(45.40)
Rent paid 42.00 6.43(24.50) (6.47)
Donation 8.21(0.50)
Payment towards acquisition of balance –20% shares in PSI & PSI Supply N.V. (55.64)Assets purchased (including CWIP) –
(17.47)Assets sold –
(0.36)Loan to Jubilant Employee Welfare Trust 567.85
(–)Housing Loan Given 25.00
(–)Housing Loan Repayment 2.00
(0.50)Security Deposit Given –
(21.00)Outstanding Receivables 21.00 25.00 567.85
(21.00) (2.00) (–)Outstanding Payables 2.34
(–)
Note: (1) Figures in ( ) indicates in respect of previous year.(2) Related party relationship is as identified by the Company and relied upon by the Auditors.(3) No amount has been written off/provided for in respect of dues from or to any related party.
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
157
NOTES TO THE CONSOLIDATED ACCOUNTS
In terms of our report of even date attached. For and on behalf of the Board
For K. N. Gutgutia & Co.Chartered Accountants
B. R. Goyal Shyam S. BhartiaPartner Chairman & Managing DirectorMembership No. 12172
Place : Noida Lalit Jain R. Sankaraiah Hari S. BhartiaDate : 28th April, 2009 Company Secretary Executive Director - Finance Co-Chairman & Managing Director
18. B. Promoter GroupGroup companiesThe Company is controlled by Mr. Shyam S. Bhartia/Mr. Hari S. Bhartia group ("the promoter group"), being a groupas defined in the Monopolies and Restrictive Trade Practices Act, 1969.The persons constituting the promoter group include individuals and corporate bodies who/which jointly exercise,and are in a position to exercise, control over the Company. The names of these individuals and bodies corporateare Mr. Shyam S. Bhartia, Mr. Hari S. Bhartia, Mrs. Shobhana Bhartia, Mrs. Kavita Bhartia, Mr. Priyavrat Bhartia,Mr. Shamit Bhartia, Ms. Aashti Bhartia, Master Arjun S. Bhartia, Mrs. Namrata Bhartia, Master Agastya Bhartia,Best Luck Vanijya Private Ltd., Enpro Exports Private Ltd., Jaytee Private Ltd., Jubilant Enpro Private Ltd., JubilantSecurities Private Ltd., Jubilant Capital Private Ltd., Klinton Agencies Private Ltd., Speedage Vinimay Private Ltd.,Rance Investment Holdings Ltd., Cumin Investments Ltd., Torino Overseas Ltd., Vam Holdings Ltd., WestcostVyapaar Private Ltd., Nikita Resources Private Ltd., Jubilant Oil & Gas Pvt. Ltd., Enpro Oil Pvt Ltd, TowerPromoters Pvt. Ltd, U C Gas & Engineering Ltd., Asia Infrastructure Development Co Pvt Ltd, Western DrillingContractors Pvt. Ltd, Jubilant Realty Pvt. Ltd, Dignesh Suppliers Pvt. Ltd, Love Life Vinimay Pvt. Ltd., SkylarkHoldings Pvt. Ltd., Jubilant Properties Pvt. Ltd., Cougar Sales Agency Pvt. Ltd., Indian Country Homes Pvt. Ltd.,Jubilant E& P Ventures Pvt. Ltd, Jubilant Retail Pvt. Ltd., Jubilant Retail Holding Pvt. Ltd., Jubilant Motors Pvt. Ltd.,Jubilant Retail Consolidated Pvt. Ltd. B&M Hot Breads Pvt. Ltd.
19. Earnings Per Share (EPS)
For the year ended 31st March, 2009 2008
I. (A) Profit Computation for Basic Earnings Per Share of Re. 1 each
Net Profit as per Profit and Loss Account available for Rs. in million 2,831.76 4,004.94Equity Shareholders
Adjustments for the purpose of Diluted EPS :-
Interest on Foreign Currency Convertible Bonds Rs. in million 0.25 0.33
Less: Tax on above Rs. in million (0.01) (0.05)
(B) Profit for Diluted Earnings Per Share of Re. 1 each Rs. in million 2,832.00 4,005.22
II. Weighted average number of equity shares forEarnings per Share computation
A) For Basic Earnings Per Share Nos. 147,313,162 143,919,482
B) For Diluted Earnings Per Share:
No. of shares for Basic EPS as per II A Nos. 147,313,162 143,919,482
Add: Weighted Average outstanding Option/Shares related to FCCB & Employee stock options. Nos. 23,662,100 34,742,665
No. of shares for Diluted Earnings Per Share Nos. 170,975,262 178,662,147
III. Earnings Per Share (Weighted Average)
Basic Rupees 19.22 27.83
Diluted Rupees 16.56 22.42
Note : The Diluted EPS for current year does not include the effect of vested employee stock options as number of shares held byJubilant Employee Welfare Trust is in excess of employee stock option (Refer Note 9 of Schedule “O”).
20. Figures pertaining to the Subsidiary Companies, have been reclassified wherever considered necessary to bringthem in line with the Company's Financial Statements.
21. Previous Year's figures are not comparable due to acquisition of Draxis Health Inc. Canada (later merged withJubilant Acquisition Inc. and now known as Draxis Specialty Pharmaceuticals Inc.) and Speciality Molecules Ltd.during the year. Figures for previous year have been regrouped/rearranged wherever considered necessary toconform to this year's classification.
Signatures to Schedule "A" to "O" forming part of the Consolidated Balance Sheet and Consolidated Profit andLoss Account.
158
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JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
159
Jubi
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bila
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harm
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Con
td.)
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
161
DE
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OF
SU
BS
IDIA
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CO
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(20
08-0
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Con
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urre
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ept i
n ca
seof
Inve
stm
ent i
nsu
bsid
iarie
s)
(f)
Tur
nove
r 2
2,08
4,28
9 1
,015
.88
– –
– –
45,
116
2.0
8 –
–(I
nclu
ding
Oth
erIn
com
e)
(g)
Pro
fit/(
Loss
) be
fore
(1,
938,
107)
(71
.01)
(3,
751)
(0.
17)
(9,
668)
(0.
44)
(62
8,03
6) (
28.8
9) (
9,66
8) (
0.45
)T
axat
ion
(h)
Pro
visi
on fo
r (
1,77
0,21
4) (
81.4
3) –
– –
– –
– –
–T
axat
ion
(i)
Pro
fit/(
Loss
) af
ter
(16
7,89
3) 1
0.42
(3,
751)
(0.
17)
(9,
668)
(0.
44)
(62
8,03
6) (
28.8
9) (
9,66
8) (
0.45
)T
axat
ion
(j)
Pro
pose
d N
il N
il N
il N
il N
il N
il N
il N
ilN
il N
ilD
ivid
end
162
Jubi
lant
Org
anos
ysJu
bila
nt O
rgan
osys
Jubi
lant
Inn
ovat
ion
Jubi
lant
Inn
ovat
ion
Col
vant
Sci
ence
s(B
VI)
Ltd
.In
tern
atio
nal P
te.
Ltd.
(BV
I) L
td.
Pte
. Lt
d.In
c.
US
DR
s./M
illio
nU
SD
Rs.
/Mill
ion
US
DR
s./M
illio
nU
SD
Rs.
/Mill
ion
US
DR
s./M
illio
n
(a)
Cap
ital
3,8
00,0
01 1
90.1
9 2
85,0
03 1
2.60
3,0
20,0
00 1
51.9
81
0.0
01
0.00
(b)
Res
erve
and
(3,
751)
2.3
6 (
167,
333)
(6.
63)
(3,
700)
1.0
1 (
11,3
86)
(0.
58)
– –
Sur
plus
(ad
just
edfo
r de
bit b
alan
cein
Pro
fit &
Los
sA
ccou
nt w
here
appl
icab
le)
(c)
Tot
al A
sset
s 1
0,00
0 0
.51
129
,253
6.5
6 3
,220
,836
163
.36
9,98
2 0
.50
10.
00(F
ixed
Ass
ets+
Cur
rent
Ass
ets)
(d)
Tot
al L
iabi
litie
s 3
,750
0.1
9 1
1,58
3 0
.59
204
,536
10.
37 2
1,36
7 1
.08
– –
(Deb
ts +
Cur
rent
Liab
ilitie
s)
(e)
Det
ails
of
– –
– –
– –
– –
– –
Inve
stm
ents
(exc
ept i
n ca
seof
Inve
stm
ent i
nsu
bsid
iarie
s)
(f)
Tur
nove
r –
– 3
,016
0.1
4 –
– –
– –
–(I
nclu
ding
Oth
erIn
com
e)
(g)
Pro
fit /
(Los
s) b
efor
e (
3,75
1) (
0.17
) (
167,
333)
(7.
70)
(3,
700)
(0.
17)
(11
,386
) (
0.52
) –
–T
axat
ion
(h)
Pro
visi
on fo
r –
– –
– –
– –
– –
–T
axat
ion
(i)
Pro
fit /
(Los
s) a
fter
(3,
751)
(0.
17)
(16
7,33
3) (
7.70
) (
3,70
0) (
0.17
) (
11,3
86)
(0.
52)
– –
Tax
atio
n
(j)
Pro
pose
d N
il N
il N
il N
il N
il N
il N
il N
il N
il N
ilD
ivid
end
DE
TA
ILS
OF
SU
BS
IDIA
RY
CO
MP
AN
IES
(20
08-0
9) (
Con
td.)
JUBILANT ORGANOSYS LIMITED | Annual Report 2008-09
163
Cad
ista
Dra
xim
age
Dra
xim
age
Dra
xim
age
DS
PI
Inc.
,D
epre
nyl I
nc.,
Pha
rmac
eutic
als
Ltd.
, C
ypru
sLt
d.,
Irel
and
LLC
. U
SA
US
AU
SA
(UK
) Lt
d.(f
orm
erly
(for
mer
ly(f
orm
erly
Pan
city
Bas
ehel
lC
adis
taLt
d.)
Ltd.
)U
K L
td.)
GB
PR
s./M
illio
nU
SD
Rs.
/Mill
ion
US
DR
s./M
illio
nU
SD
Rs.
/Mill
ion
US
DR
s./M
illio
nU
SD
Rs.
/Mill
ion
(a)
Cap
ital
5,0
00 0
.43
202
,947
10.1
6 2
00,0
04 1
0.02
– –
100
0.0
0 1
,400
,100
69.
89
(b)
Res
erve
and
(2,
029)
(0.
22)
1,95
5,94
299
.34
(1,
885)
0.0
2 (
46,5
98)
(2.
36)
– –
160
,961
9.2
8S
urpl
us (
adju
sted
for
debi
t bal
ance
in P
rofit
& L
oss
Acc
ount
whe
reap
plic
able
)
(c)
Tot
al A
sset
s 5
,000
0.3
6 5
43,5
47 2
7.57
198
,119
10.
04 3
96,6
87 2
0.12
1,6
93,1
10 8
5.87
309
,759
15.
71(F
ixed
Ass
ets+
Cur
rent
Ass
ets)
(d)
Tot
al L
iabi
litie
s 2
,029
0.1
5 1
5,86
2 0
.81
– –
443
,285
22.
48 1
,693
,010
85.
87 9
8,69
8 5
.01
(Deb
ts +
Cur
rent
Liab
ilitie
s)
(e)
Det
ails
of
– –
– –
– –
– –
– –
– –
Inve
stm
ents
(exc
ept i
n ca
seof
Inve
stm
ent i
nsu
bsid
iarie
s)
(f)
Tur
nove
r –
– –
– –
– –
– –
– 2
59,7
84 1
2.19
(Inc
ludi
ng O
ther
Inco
me)
(g)
Pro
fit /
(Los
s) b
efor
e (
2,02
9) (
0.16
) (
43,9
58)
2.0
6 (
1,88
5) (
0.09
) (
78,7
35)
(3.
70)
– –
249
,279
11.
70T
axat
ion
(h)
Pro
visi
on fo
r –
– –
– –
– –
– –
– 8
8,31
8 4
.15
Tax
atio
n
(i)
Pro
fit /
(Los
s) a
fter
(2,
029)
(0.
16)
(43
,958
) 2
.06
(1,
885)
(0.
09)
(78
,735
) (
3.70
) –
– 1
60,9
61 7
.55
Tax
atio
n
(j)
Pro
pose
d N
il N
il N
il N
il N
il N
il N
il N
il N
il N
il N
il N
ilD
ivid
end
DE
TA
ILS
OF
SU
BS
IDIA
RY
CO
MP
AN
IES
(20
08-0
9) (
Con
td.)
164
DE
TA
ILS
OF
SU
BS
IDIA
RY
CO
MP
AN
IES
(20
08-0
9) (
Con
td.)
Dra
xis
Spe
cial
ty69
6319
669
8136
4D
AH
I LL
C.
DA
HI
Ani
mal
Dra
xim
age
(UK
)P
harm
aceu
tical
s In
c.C
anad
a In
c.C
anad
a In
c.H
ealth
(U
K)
Ltd.
Ltd.
(for
mer
ly J
ubila
ntA
cqui
sitio
n In
c. &
post
mer
ger
ofD
raxi
s H
ealth
Inc
.)
CA
DR
s./M
illio
nC
AD
Rs.
/Mill
ion
CA
DR
s./M
illio
nU
SD
Rs.
/Mill
ion
GB
PR
s./M
illio
nG
BP
Rs.
/Mill
ion
(a)
Cap
ital
49,
790,
100
2,1
50.9
3 2
,500
0.1
1 2
,500
0.1
1 1
0,00
0 0
.43
10.
00 1
0.00
(b)
Res
erve
and
(52
,974
,102
)(2
,279
.96)
(45
) (
0.01
) (
44)
(0.
01)
(18
6,72
0) (
9.39
) (
6,93
0) (
0.50
) –
–S
urpl
us(a
djus
ted
for
debi
t bal
ance
in P
rofit
& L
oss
Acc
ount
whe
reap
plic
able
)
(c)
Tot
al A
sset
s 2
58,1
90,2
1010
,463
.16
68
0.0
1 1
8 0
.00
9,6
79 0
.49
– –
10.
00(F
ixed
Ass
ets+
Cur
rent
Ass
ets)
(d)
Tot
al L
iabi
litie
s 2
81,6
39,1
98 1
1,41
3.43
113
0.0
1 6
2 0
.00
186
,399
9.4
5 6
,929
0.5
0 –
–(D
ebts
+C
urre
ntLi
abili
ties)
(e)
Det
ails
of
20,
244,
675
820
.42
2,5
00 0
.10
2,5
00 0
.10
– –
– –
– –
Inve
stm
ents
(exc
ept i
n ca
seof
Inve
stm
ent i
nsu
bsid
iarie
s)
(f)
Tur
nove
r 2
2,09
8,53
0 9
03.6
1 –
– –
– –
– –
– –
–(I
nclu
ding
Oth
er In
com
e)
(g)
Pro
fit /
(Los
s) (
21,6
49,2
08)
(885
.24)
(45
) (
0.00
) (
44)
(0.
00)
(209
,693
)(9
.84)
– –
– –
befo
re T
axat
ion
(h)
Pro
visi
on fo
r 1
62,3
96 6
.64
– –
– –
– –
– –
– –
Tax
atio
n
(i)
Pro
fit/(
Loss
) (
21,8
11,6
04)
(891
.88)
(45
) (
0.00
) (
44)
(0.
00)
(209
,693
)(9
.84)
– –
– –
afte
rTax
atio
n
(j)
Pro
pose
d N
il N
il N
il N
il N
il N
il N
il N
il N
il N
il N
il N
ilD
ivid
end
Not
es:
1.T
he M
inis
try
of C
ompa
ny A
ffairs
vid
e its
lette
r da
ted
27th
Apr
il, 2
009
has
gran
ted
appr
oval
und
er s
ectio
n 21
2 (8
) of
the
Com
pani
es A
ct, 1
956
(the
Act
) fo
r th
efin
anci
al y
ear
ende
d 31
st M
arch
200
9, w
here
by th
e B
alan
ce S
heet
, Pro
fit &
Los
s A
ccou
nt ,
Dire
ctor
s' R
epor
t and
Aud
itors
' Rep
ort o
f the
sub
sidi
arie
s an
d ot
her
docu
men
ts r
equi
red
to b
e at
tach
ed a
s pe
r th
e se
ctio
n 21
2 (1
) of
the
Act
are
not
req
uire
d to
be
atta
ched
to th
e C
ompa
nies
Acc
oun
ts. H
ence
, the
sam
e ar
e no
tbe
ing
atta
ched
. How
ever
the
annu
al a
ccou
nts
of th
e su
bsid
iary
com
pani
es a
nd th
e re
late
d de
taile
d in
form
atio
n w
ill b
e m
ade
avai
labl
e to
the
mem
bers
of t
heho
ldin
g an
d su
bsid
iary
com
pani
es s
eeki
ng s
uch
info
rmat
ion
at a
ny p
oint
of t
ime.
2.T
he a
nnua
l acc
ount
s of
the
subs
idia
ry c
ompa
nies
will
als
o be
kep
t ope
n fo
r in
spec
tion
by a
ny in
vest
or in
its
Hea
d of
fice
and
that
of t
he s
ubsi
diar
ies
conc
erne
d.
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