(1) Lease Accounting
Where the Company is a Lessee
The Company has obtained certain premises for its business operations
(including furniture and fixtures, therein as applicable) under
operating lease or leave and license agreements. These are generally
not non-cancellable and range between 11 months to 5 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.
Lease payments are recognised in the Statement of Profit and Loss under
'Rent' in Note 27.
Where the Company is a Lessor
The Company has given certain premises under operating lease or leave
and license agreement. The Company retains substantially all risks and
benefits of ownership of the leased asset and hence classified as
operating lease. Lease income on such operating lease is recognised in
the Statement of Profit and Loss under 'Rent' in Note 22.
(2) Segment Information
In accordance with AS-17 'Segment Reporting; segment information has
been given in the Consolidated Financial Statements of Cipla Ltd., and
therefore, no separate disclosure on segment information is given in
these financial statements.
Rs.in crore
2012 2011
(3) Contingent Liabilities
and Commitments
(to the extent not
provided for)
Contingent Liabilities
Claims against the Company
not acknowledged as Debt 1.88 1.64
Guarantees 100.51 59.97
Letters of Credit 20.75 36.54
Refund of Technical
Know-how/Fees on account of non-
compliance of certain obligations
as per respective agreements 27.19 7.45
Income Tax 179.73 204.44
Excise Duty/Service Tax 29.55 49.23
Sales Tax 3.64 4.02
363.25 363.29
Commitments
Estimated Amount of Contracts
unexecuted on Capital Account 291.61 218.93
Other Commitments 665.21 528.74
956.82 747.67
1320.07 1110.96
(4) In a proceeding instituted against the Company for patent
infringement of an animal health care product, the US District Court
issued an injunction and the Federal Circuit Court at Washington upheld
this order. Pursuant to this, the District Court is required to
initiate hearings to determine the award for damages, which has not yet
commenced. Therefore, it is now not possible to make any reliable
estimate of the liability that may come about and accordingly no
provision is made in the accounts. The Company is also examining
further legal remedies as may be advised.
(5) The Government of India has served demand notices in March 1995
and May 1995 on the Company in respect of six bulk drugs, claiming that
an amount of Rs.5.46 crore along with interest due thereon is payable
into the DPEA under the Drugs (Prices Control) Order, 1979 on account
of alleged unintended benefit enjoyed by the Company. The Company has
filed its replies to the notices and has contended that no amount is
payable into the DPEA under the Drugs (Prices Control) Order, 1979.
(6) In 2003, the Company received notice of demand from the National
Pharmaceutical Pricing Authority, Government of India on account of
alleged overcharging in respect of certain drugs under the Drug Price
Control Order. This was contested before the jurisdictional High Courts
wherein it was held in favour of the Company.
The orders were challenged before the Hon'ble Supreme Court by the
Government. The Hon'ble Supreme Court by separate orders restored the
matter to the jurisdictional High Court for interpreting the Drug
Policy on the basis of directions and principles laid down by them and
also restrained the Government from taking any coercive action against
the Company. The Company has been legally advised that on the basis of
these orders there is no probability of demand crystallising. Hence no
provision is considered necessary in respect of notice of demand
aggregating to Rs.1654.92 crore (inclusive of principal amount for the
period July 1995 to April 2009 and interest upto January 2012).