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NOTES TO ACCOUNTS

Sun Pharmaceutical Industries Ltd.

You can view the entire text of Notes to accounts of the company for the latest year
Market Cap. (₹) 96369.29 Cr. P/BV 2.33 Book Value (₹) 172.59
52 Week High/Low (₹) 617/345 FV/ML 1/1 P/E(X) 36.16
Bookclosure 28/08/2019 EPS (₹) 11.11 Div Yield (%) 0.68
Year End :2019-03 

Notes to the Standalone Financial Statements for the year ended March 31, 2019

NOTE : 46 EARNINGS PER SHARE

As at March 31,2019

As at March 31, 2018

Profit for the year (Rs in Million) - used as numerator for calculating earnings per share

8,166.0

3,056.4

Weighted average number of shares used in computing basic earnings per share (A)

2,399,326,681

2,399,296,653

Add : Dilution effect of employee stock option (B)

3,575

65,420

Weighted average number of shares used in computing diluted earnings per share (A B)

2,399,330,257

2,399,362,073

Nominal value per share (in Rs)

1

1

Basic earnings per share (in Rs)

3.4

1.3

Diluted earnings per share (in Rs)

3.4

1.3

NOTE : 47 EMPLOYEE BENEFIT PLANS

Defined contribution plan Contributions are made to Regional Provident Fund (RPF), Family Pension Fund, Employees State Insurance Scheme (ESIC) and other Funds which covers all regular employees. While both the employees and the Company make predetermined contributions to the Provident Fund and ESIC, contribution to the Family Pension Fund and other Statutory Funds are made only by the Company. The contributions are normally based on a certain percentage of the employee's salary. Amount recognised as expense in respect of these defined contribution plans, aggregate to Rs 702.9 Million (March 31, 2018 : Rs 676.3 Million).

Rs in Million

Year ended March 31, 2019

Year ended March 31, 2018

Contribution to Provident Fund and Family Pension Fund

600.1

566.3

Contribution to Superannuation Fund

64.9

72.7

Contribution to ESIC and Employees Deposit Linked Insurance (EDLI)

37.1

36.9

Contribution to Labour Welfare Fund

0.8

0.4

Defined benefit plan

a) Gratuity

In respect of Gratuity, a defined benefit plan, contributions are made to LIC's Recognised Group Gratuity Fund Scheme. It is governed by the Payment of Gratuity Act, 1972. Under the Gratuitiy Act, employees are entitled to specific benefit at the time of retirement or termination of the employment on completion of five years or death while in employment. The level of benefit provided depends on the member's length of service and salary at the time of retirement/termination age. Provision for gratuity is based on actuarial valuation done by an independent actuary as at the year end. Each year, the Company reviews the level of funding in gratuity fund and decides its contribution. The Company aims to keep annual contributions relatively stable at a level such that the fund assets meets the requirements of gratuity payments in short to medium term.

b) Pension fund

The Company has an obligation towards pension, a defined benefit retirement plan, with respect to certain employees, who had already retired before March 01, 2013 and will continue to receive the pension as per the pension plan.

Risks

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

i) Investment risk - The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the market yields on government bonds denominated in Indian Rupees. If the actual return on plan asset is below this rate, it will create a plan deficit. However, the risk is partially mitigated by investment in LIC managed fund.

ii) Interest rate risk - A decrease in the bond interest rate will increase the plan liability. However, this will be partially offset by an increase in the return on the plan's debt investments.

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

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

Other long term benefit plan

Actuarial Valuation for compensated absences is done as at the year end and the provision is made as per Company policy with corresponding (gain) / charge to the statement of profit and loss amounting to Rs. 275.6 Million [March 31, 2018 : Rs. (78.7) Million] and it covers all regular employees. Major drivers in actuarial assumptions, typically, are years of service and employee compensation.

Obligation in respect of defined benefit plan and other long term employee benefit plans are actuarially determined as at the year end using the 'Projected Unit Credit' method. Gains and losses on changes in actuarial assumptions relating to defined benefit obligation are recognised in other comprehensive income whereas gains and losses in respect of other long term employee benefit plans are recognised in profit or loss.

Rs. in Million

Year ended March 31, 2019 |

Year ended March 31, 2018

Pension Fund (Unfunded)

Gratuity (Funded)

Pension Fund (Unfunded)

Gratuity (Funded)

Expense recognised in the statement of profit and loss (Refer Note 34)

Current service cost

-

245.2

-

266.8

Interest cost

67.7

196.8

66.0

196.5

Expected return on plan assets

-

(191.1)

-

(131.5)

Expense charged to the statement of profit and loss

67.7

250.9

66.0

331.8

Remeasurement of defined benefit obligation recognised in other

comprehensive income

Actuarial loss / (gain) on defined benefit obligation

64.9

(254.6)

(44.4)

(581.8)

Actuarial gain on plan assets

-

24.7

-

(38.1)

Expense/(income) charged to other comprehensive income

64.9

(229.9)

(44.4)

(619.9)

Reconciliation of defined benefit obligations

Obligation as at the beginning of the year

903.7

2,625.8

969.5

2,885.3

Current service cost

-

245.2

-

266.8

Interest cost

67.7

196.8

66.0

196.5

Benefits paid

(87.0)

(250.8)

(87.4)

(141.0)

Actuarial (gains)/losses on obligations

- due to change in demographic assumptions

(15.4)

-

(114.2)

- due to change in financial assumptions

35.7

(160.0)

(50.0)

(406.5)

- due to experience

29.2

(79.2)

5.6

(61.1)

Obligation as at the year end

949.3

2,562.4

903.7

2,625.8

Rs. in Million

As at March 31, 2019

As at March 31, 2018

Gratuity (Funded)

Gratuity (Funded)

Reconciliation of liability/(asset) recognised in the Balance sheet

Present value of commitments (as per Actuarial Valuation)

2,562.4

2,625.8

Fair value of plan assets

(2,696.7)

(2,550.4)

Net (asset) / liability recognised in the financial statement

(134.3)

75.4

Rs. in Million

Year ended March 31, 2019

Year ended March 31, 2018

Gratuity (Funded)

Gratuity (Funded)

Reconciliation of plan assets

Plan assets as at the beginning of the year

2,550.4

1,930.7

Expected return

191.1

131.5

Actuarial gain

(24.7)

38.1

Employer's contribution during the year

230.7

591.1

Benefits paid

(250.8)

(141.0)

Plan assets as at the year end

2,696.7

2,550.4

As at March 31, 2019 |

As at March 31, 2018

Pension Fund (Unfunded)

Gratuity (Funded)

Pension Fund (Unfunded)

Gratuity (Funded)

Assumptions :

Discount rate

7.10%

7.10%

7.50%

7.50%

Expected return on plan assets

N.A.

7.10%

N.A.

7.50%

Expected rate of salary increase

N.A.

10.00%

N.A.

11.65%

Interest rate guarantee

N.A.

N.A.

N.A.

N.A.

Mortality

Indian Assured Lives Mortality (2006-08)

Indian Assured Lives Mortality (2006-08)

Indian Assured Lives Mortality (2006-08)

Indian Assured Lives Mortality (2006-08)

Employee turnover

N.A.

15.80%

N.A.

15.00%

Retirement Age (years)

N.A.

60

N.A.

60

Rs. in Million

As at March 31, 2019 |

As at March 31, 2018

Pension Fund (Unfunded)

Gratuity (Funded)

Pension Fund (Unfunded)

Gratuity (Funded)

Sensitivity analysis:

The sensitivity analysis have been determined based on method that extrapolates the impact on defined benefit obligation as a reasonable change in key assumptions occurring at the end of the reporting period

Impact on defined benefit obligation Delta effect of 1% change in discount rate

(76.3)

(122.0)

(68.2)

(113.6)

Delta effect of -1% change in discount rate

85.5

134.4

80.2

125.8

Delta effect of 1% change in salary escalation rate

-

130.0

-

119.8

Delta effect of -1% change in salary escalation rate

-

(120.5)

-

(110.5)

Delta effect of 1% change in rate of employee turnover

-

(17.9)

-

(28.9)

Delta effect of -1% change in rate of employee turnover

-

19.4

-

31.7

Maturity analysis of projected benefit obligation for next

1st year

88.4

566.0

87.4

461.2

2nd year

87.5

353.5

100.3

292.4

3rd year

86.7

355.0

115.2

305.2

4th year

85.8

314.1

132.3

295.8

5th year

84.8

303.6

151.9

273.8

Thereafter

2,143.7

2,023.9

174.4

1,138.5

The major categories of plan assets are as under

Central government securities

-

9.9

-

9.9

Bonds and securities of public sector / financial institutions

67.3

-

67.3

Insurer managed funds (Funded with LIC, break-up not available)

1,669.1

-

2,459.2

Surplus fund lying uninvested

-

950.4

-

14.0

The contribution expected to be made by the Company for gratuity, during financial year ending March 31, 2020 is Rs 81.1 Million (Previous year: Rs 241.1 Million)___________________________________________________

NOTE: 48 LEASES

(a) The Company has given certain premises and plant and equipment under operating lease or leave and license agreements. These are generally not non-cancellable and periods range between 11 months to 10 years under leave and licence / lease and are renewable by mutual consent on mutually agreeable terms. The Company has received refundable interest free security deposits where applicable in accordance with the agreed terms, (b) The Company has obtained certain premises for its business operations (including furniture and fittings, therein as applicable) under operating lease or leave and license agreements. These are generally not non-cancellable and periods range between 11 months to 10 years under leave and licence, or longer for other lease and are renewable by mutual consent on mutually agreeable terms. The Company has given refundable interest free security deposits in accordance with the agreed terms. These refundable security deposits have been valued at amortised cost under relevant Ind AS (c) Lease receipts / payments are recognised in the statement of profit and loss under "Lease rental and hire charges" and "Rent" in Note 31 and 36 respectively. The Company does not have any lease payment commitment in non cancellable leases.

NOTE : 49 EMPLOYEE SHARE-BASED PAYMENT PLANS

The Company operates employee stock option scheme namely, SUN Employee Stock Option Scheme-2015 (SUN-ESOS 2015) for the grant of stock options to the eligible personnel. Options are granted at the discretion of the Committee to selected employees depending upon certain criterion. Each option comprises one underlying equity share.

The movement of the options (post split) granted under SUN-ESOS 2015

March 31, 2019

Stock options (numbers)

Range of exercise prices (Rs)

Weighted-average exercise prices (Rs)

Weighted-average remaining contractual life (years)

Outstanding at the commencement of the year

263,680

270.0-562.5

450.3

1.5

Exercised during the year $

(11,790)

270.0-562.5

324.9

Lapsed during the year

(93,151)

270.0-562.5

275.0

Outstanding at the end of the year *

158,739

562.5

562.5

0.9

Exercisable at the end of the year *

158,739

562.5

562.5

0.9

* Includes options exercised, pending allotment

$ Weighted average share price on the date of exercise Rs. 492.6

March 31, 2018

Stock options (numbers)

Range of exercise prices (Rs.)

Weighted-average exercise prices (Rs.)

Weighted-average remaining contractual life (years)

Outstanding at the commencement of the year

401,678

270.0-562.5

462.9

1.9

Exercised during the year $

(18,893)

270.0-562.5

480.5

Lapsed during the year

(119,105)

270.0-562.5

488.1

-

Outstanding at the end of the year *

263,680

270.0-562.5

450.3

1.5

Exercisable at the end of the year *

263,680

270.0-562.5

450.3

1.5

* Includes options exercised, pending allotment

$ Weighted average share price on the date of exercise Rs. 565.1

NOTE: 50 BORROWINGS

Details of long term borrowings and current maturities of long term debt (included under other current financial liabilities)

(I) Unsecured External Commercial Borrowings (ECBs) has 6 loans aggregating of USD 290 Million (March 31, 2018 : USD 256 Million) equivalent to Rs. 20,036.1 Million (March 31, 2018 : Rs. 16,622.1 Million). For the ECB loans outstanding as at March 31, 2019, the terms of repayment for borrowings are as follows:

(a) USD 10 Million (March 31, 2018 : USD 26 Million) equivalent to Rs. 690.9 Million (March 31, 2018 : Rs. 1,688.2 Million). The loan was taken in tranches of USD 16 Million on March 24, 2017 and USD 10 Million on June 30, 2017. The first installment of USD 16 Million has been repaid during the year ended March 31, 2019 and last installment of USD 10 Million is due on June 28, 2019.

(b) USD 50 Million (March 31, 2018 : USD 50 Million) equivalent to Rs. 3,454.5 Million (March 31, 2018 : Rs. 3,246.5 Million). The loan was taken on August 11, 2015 and is repayable on August 08, 2019.

(c) USD 30 Million (March 31, 2018 : USD 30 Million) equivalent to Rs. 2,072.7 Million (March 31, 2018 : Rs. 1947.9 Million). The loan was taken on September 08, 2017 and is repayable on September 07, 2020.

(d) USD 50 Million (March 31, 2018 : USD 50 Million) equivalent to Rs. 3,454.5 Million (March 31, 2018 : Rs. 3,246.5 Million). The loan was taken on September 20, 2012 and is repayable in 2 equal installments of USD 25 Million each. The first installment of USD 25 Million is due on September 20, 2019 and last installment of USD 25 Million is due on September 18, 2020.

(e) USD 100 Million (March 31, 2018 : USD 100 Million) equivalent to Rs. 6,909.0 Million (March 31, 2018 : Rs. 6,493.0 Million). The loan was taken on June 04, 2013 and is repayable in 3 installments viz., the first installment of USD 30 Million is due on May 31, 2020, second installment of USD 30 Million is due on November 30, 2020 and last installment of USD 40 Million is due on November 30, 2021

(f) USD 50 Million (March 31, 2018 : USD Nil) equivalent to Rs. 3,454.5 Million (March 31, 2018 : Rs. Nil). The loan was taken on October 03, 2018 and is repayable in 2 equal installments of USD 25 Million each. The first installment of USD 25 Million is due on October 01, 2021 and last installment of USD 25 Million is due on October 03, 2022.

(II) Secured term loan from department of biotechnology of Rs. 108.2 Million (March 31, 2018 : Rs. 108.2 Million) has been secured by hypothecation of movable assets of the Company. The loan is repayable in 10 equal half yearly installments commencing from December 14, 2019, last installment is due on June 14, 2024.

The Company has not defaulted on repayment of loan and interest payment thereon during the year. The aforementioned unsecured ECBs are availed from various banks at floating rate linked to Libor (2.96% as at March 31, 2019) and secured loan from department of biotechnology have been availed at a range from 2% to 3%

NOTE : 51 RELATED PARTY DISCLOSURES (IND AS 24) AS PER ANNEXURE "A" NOTE: 52 LOANS/ADVANCES GIVEN TO SUBSIDIARIES AND ASSOCIATES

Rs. in Million

As at March 31, 2019

Maximum balance March 31, 2019

As at March 31,2018

Maximum balance March 31, 2018

Loans / advances outstanding from subsidiaries

Sun Pharmaceutical Medicare Limited, India

2,575.0

2,575.0

-

Zenotech Laboratories Limited, India

204.6

258.0

53.4

53.4

Skisen Labs Private Limited, India

0.1

0.1

-

-

Faststone Mercantile Company Private Limited, India

-

253.4

-

-

Loans / advances outstanding from an associate

Loans

Interest bearing with specified payment schedule:

Zenotech Laboratories Limited, India

-

-

726.9

These loans have been granted to the above entities for the purpose of their business.

NOTE: 53

In respect of any present obligation as a result of past event that could lead to a probable outflow of resources, provisions has been made, which would be required to settle the obligation. The said provisions are made as per the best estimate of the management and disclosure as per Ind AS 37 - "Provisions, Contingent Liabilities and Contingent Assets" has been given below:

Rs. in Million

Year ended March 31, 2019

Year ended March 31, 2018

Product and Sales related *

Product and Sales related *

At the commencement of the year

25,815.3

24,997.0

Add: Transfer on merger [Refer Note 56 (11)]

-

2,272.6

Add: Provision for the year

1,006.8

770.6

Add: Unwinding of discounts on provisions

46.7

265.8

Add / (less): Foreign currency exchange fluctuation

1,417.3

29.8

Less: Utilisation / settlement/ reversal

(5,724.3)

(2,520.5)

At the end of the year

22,561.8

25,815.3

(*) includes provision for trade commitments, discounts, rebates, price reduction and product returns

NOTE : 54 USE OF ESTIMATES, JUDGMENTS AND ASSUMPTIONS

The preparation of the Company's financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:

a) Litigations [Refer Note 2 (2.2) (m) and Note 39]

b) Revenue [Refer Note 2(2.2)(n)]

NOTE : 55 REVENUE FROM CONTRACTS WITH CUSTOMERS

Ind AS 115 "Revenue from contracts with customers" was issued on March 28, 2018 and supersedes Ind AS 11 "Construction Contracts" and Ind AS 18 "Revenue" and it applies, with limited exceptions, to all revenue arising from contracts with its customers. The Company adopted Ind AS 115 using the modified retrospective method of adoption with the date of initial application of April 01, 2018 which does not require restatement of comparative period. The Company elected to apply the standard to all contracts as at April 01, 2018. There is no impact to be recognised at the date of initial application as an adjustment to the opening balance of retained earnings.

The reconciling items of revenue recognised in the statement of profit and loss with the contracted price are as follows

Rs. in Million

Year ended larch 31, 2019

Year ended larch 31, 2018

Revenue as per contracted price, net of returns Less :

118,830.5

116,294.3

Provision for sales return

(643.1)

(569.7)

Rebates, discounts and price reduction

(20,354.5)

(27,980.5)

(20,997.6)

(28,550.2)

Revenue from contracts with customers

97,832.9

87,744.1

Revenue from contract with customers include sales made to Aditya Medisales Limited amounting to Rs. 30,913.7 Million (March 31, 2018: Rs 29,764.2 Million)

Rs in Million

As at March 31, 2019

As at March 31, 2018

Contract balances

Trade receivables

50,314.7

52,714.4

Contract assets

Contract liabilities

3,014.1

404.7

Contract assets are initially recognised for revenue from sale of goods. Contract liabilities are on account of the upfront revenue received from customer for which performance obligation has not yet been completed.

The performance obligation is satisfied when control of the goods or services are transferred to the customers based on the contractual terms. Payment terms with customers vary depending upon the contractual terms of each contract.

NOTE: 56

1 During year ended March 31, 2018, Zenotech Laboratories Limited ('Zenotech'), an associate of the Company, undertook a rights issue of its equity shares in which the Company participated and subscribed to equity shares worth Rs 855 Million. On account of such participation, Zenotech became a subsidiary of the Company effective July 25, 2017. In compliance with the relevant provisions of Ind AS 103 "Business Combination", the Company had reversed impairment during year ended March 31, 2018 in the books to the extent of fair value of equity shares determined on the basis of rights issue price amounting to Rs 725.7 Million.

2 Intangible assets consisting of trademarks, designs, technical knowhow, non compete fees and other intangible assets are available to the Company in perpetuity. The amortisable amount of intangible assets is arrived at based on the management's best estimates of useful lives of such assets after due consideration as regards their expected usage, the product life cycles, technical and technological obsolescence, market demand for products, competition and their expected future benefits to the Company.

3 In respect of an antitrust litigation, relating to a product Modafinil, the Company and one of its wholly-owned subsidiaries had previously entered into settlements with certain plaintiffs (Apotex Corporation, Retailer Purchasers and end-payor plaintiffs) for an aggregate amount of USD 150.5 Million. The equivalent Indian rupee liability of Rs 9,505.0 Million and Rs 240.0 Million was provided in the books of account in year ended March 31, 2018. The amount of Rs 9,505.0 Million was disclosed as an exceptional item.

During the current financial year, the Company has entered into settlement agreement with the Direct Purchaser Plaintiffs; while continuing to litigate as well as negotiate the case with the remaining one plaintiff. The Company has accounted for Rs 12,143.8 Million towards the settlement agreement and a likely amount payable to remaining plaintiff in the antitrust litigation relating to the product Modafinil.

4 Since the US-FDA import alert at Karkhadi facility in March 2014, the Company remained fully committed to implement all corrective measures to address the observations made by the US-FDA with the help of third party consultant. The Company has completed all the action items to address the US-FDA warning letter observations issued in May 2014. It is continuing to work closely and co-operatively with the US-FDA to resolve the matter for lifting the import alert. The contribution of this facility to Company's revenues is not significant.

5 The US-FDA, on January 23, 2014, had prohibited using API manufactured at Toansa facility for manufacture of finished drug products intended for distribution in the U.S. market. Consequentially, the Toansa manufacturing facility was subject to certain provisions of the consent decree of permanent injunction entered in January 2012 by erstwhile Ranbaxy Laboratories Ltd (which was merged with Sun Pharmaceutical Industries Ltd in March 2015). In addition, the Department of Justice of the USA ('US DOJ'), United States Attorney's Office for the District of New Jersey had also issued an administrative subpoena dated March 13, 2014 seeking information. The Company is continuing to fully co-operate and provide requisite information to the US DOJ.

6 In December 2015, the US-FDA issued a warning letter to the manufacturing facility at Halol. Post the November 2016 inspection, the US-FDA had re-inspected Halol facility and cleared the Halol site from the warning letter in June 2018. Since then, the US-FDA has started approval of products filed from Halol facility.

7 In September 2013, the US-FDA had put the Mohali facility under import alert and was also subjected to certain provisions of the consent decree of permanent injunction entered in January 2012 by erstwhile Ranbaxy Laboratories Ltd (which was merged with Sun Pharmaceutical Industries Ltd in March 2015).

In March 2017, the US-FDA lifted the import alert and indicated that the facility was in compliance with the requirements of cGMP provisions mentioned in the consent decree. The Mohali facility continues to demonstrate sustainable cGMP compliance as required by the consent decree. The Company continues to manufacture and distribute products to the U.S from this facility.

8 In accordance with Ind AS 108 "Operating Segments", segment information has been given in the consolidated Ind AS financial statements, and therefore, no separate disclosure on segment information is given in these financial statements.

9 Post implementation of Goods and Service Tax ("GST") with effect from July 01, 2017, revenue from contracts with customers is disclosed net of GST. Revenue from contracts with customers for the previous year included excise duty which was subsumed in GST. Revenue from contracts with customers for the year ended March 31, 2018 includes excise duty for the period ended June 30, 2017. Accordingly, revenue from contracts with customers for the year ended March 31, 2019 are not comparable with year ended March 31, 2018.

10 The Board of Directors of the Company at their meeting held on November 10, 2016 and the shareholders and unsecured creditors of the Company at their respective meetings held on June 20, 2017 approved the proposed scheme of arrangement u/s 230 to 232 of the Companies Act, 2013 for amalgamation of Sun Pharma Medisales Private Limited, Ranbaxy Drugs Limited, Gufic Pharma Limited and Vidyut Investments Limited into the Company with effect from April 01, 2017, the appointed date. On completion of all the formalities of the merger of the above companies with the Company, the said merger became effective September 08, 2017.

Consequent to the amalgamation prescribed by the Scheme, all the assets and liabilities of transferor companies were transferred to and vested in the Company with effect from April 01, 2017 ("the Appointed Date")

The amalgamation was accounted under the "pooling of interest" method prescribed under Ind AS 103 - Business Combinations, as prescribed by the Scheme.

Accordingly, all the assets, liabilities and other reserves of transferor companies were aggregated with those of the Company at their respective book values. As prescribed by the Scheme no consideration was paid as the transferor Companies were wholly owned subsidiaries of the Company. Accordingly, the resultant difference amounting to Rs 535.6 Million was credited to capital reserve account.

11 The Scheme of Arrangement between Sun Pharma Global FZE ("the Transferor"), and the Company ("the Scheme"), inter-alia envisaged merger of unbranded generic pharmaceutical undertaking of the transferor (Specified business) into the Company. The scheme was approved by Hon'ble National Company Law Tribunal, Ahmedabad Bench on October 31, 2018 and became effective on December 01, 2018 upon completion of all the formalities.

Consequent to the amalgamation prescribed by the Scheme, all the assets and liabilities of the specified business were transferred to and vested in the Company with effect from April 01, 2017 ("the Appointed Date").

The amalgamation was accounted under the "pooling of interest" method prescribed under Ind AS 103 - Business Combinations, as prescribed by the Scheme.

Accordingly all the assets, liabilities, and other reserves of the specified business as on April 01, 2017 were transferred to the Company as per the Scheme. As prescribed by the Scheme no consideration was paid as the transferor is a wholly owned subsidiary of the Company. Accordingly, the resultant difference between the book value of assets and liabilities taken-over as on the appointed date amounting to Rs 17,450.8 Million is credited to capital reserve account. Also, any gain or loss on translation of assets and liabilities to functional currency (i.e. Rs) till the date of order has been credited or debited to foreign currency translation reserve.

12 The Company vide its press release dated January 22, 2019, had announced the transition of India domestic formulations distribution business from Aditya Medisales Limited (AML), to a wholly owned subsidiary of Sun Pharma Laboratories Limited. Accordingly, a new wholly owned subsidiary, Sun Pharma Distributors Limited (SPDL), was incorporated on March 19, 2019. The phased transition to SPDL will be completed post receipt of all requisite regulatory approvals. During the quarter ended March 31, 2019 , the Company pursuant to this decision has taken over its unsold inventory amounting to Rs 3,380.6 Million from AML. The above-mentioned transition and change in distribution arrangement has led to one-time reduction in sales and consequent reduction in profit for the year ended on March 31, 2019. Pending receipt of regulatory approvals by SPDL in different jurisdictions for sale of pharmaceutical products, AML would act as an agent for the India domestic formulation business.

13 Expenditure related to Corporate Social Responsibility as per Section 135 of the Companies Act, 2013 read with Schedule VII thereof Rs 39.4 Million (March 31, 2018: Rs 27.0 Million).

14 The Board of Directors of the Company at its meeting held on May 25, 2018, had approved the Scheme of Arrangement between the Company, Sun Pharma (Netherlands) B.V. and Sun Pharmaceutical Holdings USA Inc. (both being wholly owned subsidiaries of the Company) which inter-alia, envisages spin-off w.e.f. April 01, 2017 of the specified investment undertaking 1 and 2 (as defined in the Scheme of Arrangement) of the Company. The scheme shall be effective post receipt of requisite approvals and accordingly, the standalone financial statements do not reflect the impact, if any, on account of the schemes.

As per our report of even date

For S R B C & CO LLP

For and on behalf of the Board of Directors of

Chartered Accountants

Sun Pharmaceutical Industries Limited

ICAI Firm Registration No. : 324982E/E300003

per PAUL ALVARES

DILIP S. SHANGHVI

Partner

Managing Director

Membership No. : 105754

Mumbai, May 28, 2019

C. S. MURALIDHARAN

SUDHIR V. VALIA

Chief Financial Officer

Wholetime Director

SUNIL R. AJMERA

SAILESH T. DESAI

Company Secretary

Wholetime Director Mumbai, May 28, 2019

Attention Investors :
Prevent Unauthorised transactions in your account --> Update your mobile numbers/email IDs with your stock brokers. Receive information of your transactions directly from Exchange on your mobile / email at the end of the day .......... Issued in the interest of investors
Attention Investors :
Prevent Unauthorized Transactions in your demat account --> Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from NSDL on the same day......................issued in the interest of investors.
Attention Investors :
KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
Attention Investors :
No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account.
“Investment in securities market are subject to market risks, read all the related documents carefully before investing”.