The Directors have pleasure in presenting the 52nd Annual Report and
Audited Accounts for the year ended December 31, 2012.
STANDALONE WOrkiNg rESULTS UNDEr iNDiAN gAAP
Rs. in Million
Year ended Year ended
31,2012 31, 2011
Net Sales 61,124.43 74,758.96
Expenditure 63,437.65 72,980.97
Proft before exceptional items and tax 2,169.42 7,236.15
- Settlement provision - 26,480.00
- Provision for other than temporary
diminution in the value of non-current
investment 1,030.00 -
- Product recall 2,370.20 -
- Loss on foreign currency option
derivative, net (other than on loans) 412.05 11,242.85
(Loss)/Proft before Tax (1,642.83) (30,486.70)
Income tax expenses
- Current tax (19.44) (33.07)
- Deferred tax - 66.86
(Loss) After Tax (1,623.39) (30,520.49)
Balance as per the last Balance Sheet (23,689.31) 6,828.68
(Loss)/Proft available for appropriation (25,312.70) (23,691.81)
CONSOLiDATED WOrkiNg rESULTS UNDEr iNDiAN gAAP
Net Sales 122,528.94 99,700.02
Expenditure 112,784.10 95,369.04
Proft before exceptional items and tax 14,720.53 10,480.04
- Settlement provision - 26,480.00
- Proft/(Loss) on disposal/sale of
subsidiaries and long term investment, (net) - (377.99)
- Product recall 1,859.54 -
- Loss on foreign currency option
derivatives, net (other than on loans) 412.05 11,242.85
Proft/(Loss) before tax share in loss of
associates (net) and minority interest 12,448.94 (26,864.82)
Income tax expenses
- Current tax 2,912.58 1,959.62
- Deferred tax 26.46 9.72
Proft/loss after tax and before share
in loss of Associates (Net) and
Minority Interest 9,509.90 (28,834.16)
Share in Loss of Associates (Net) 185.82 65.90
Minority Interest in the proft
for the year (net) 96.44 97.23
Proft/ (Loss) after tax, share of loss
of associates(net) and minority interest 9,227.64 (28,997.29)
Balance as per last Balance Sheet (17,184.87) 11,809.92
(Loss) available for appropriations (7,957.21) (17,187.37)
Proposed Dividend - 0.65
Tax on Proposed Dividend - (3.15)
(Defcit)/ Surplus transferred to
Reserves & Surplus (7,957.21) (17,184.87)
CONSOLiDATED FiNANCiAL STATEMENTS
Consolidated Financial Statements for the year ended December 31, 2012,
under Indian GAAP form part of the Annual Report.
The Company continued to be the leader amongst the pharmaceutical
companies from India with consolidated global sales of Rs. 122,529
million against Rs. 99,700 million in the previous year registering a
growth of 23%. Proft before exceptional items and tax stood at Rs.
14,721 million against a loss of Rs. 10,480 million in the previous
year. Proft after tax stood at Rs. 9,228 million as against a loss of
Rs. 28,997 million in the previous year despite the challenges in some
of the major markets and foreign exchange impact due to depreciation of
the Rupee against major currencies. However, in the standalone
accounts, the Company incurred a loss of Rs. 1,623 million primarily
due to foreign exchange impact on account of depreciation of the Rupee
against major currencies, impairment of investments in subsidiaries and
recall of Atorvastatin in the U.S.A.
In April 2012, the Company launched India's frst new drug, SynriamTM, a
new age anti-malarial for the treatment of uncomplicated Plasmodium
falciparum malaria in adults, thereby opening a new chapter in the
history of Research & Development in India.
During the second half of the year, the Company made a voluntary recall
of Atorvastatin tablets in the U.S.A. due to the potential presence of
a very small foreign matter. Due to this, the Company had to write off
the inventory which has impacted the proftability of the Company.
In continuation of signing of the Consent Decree with the USFDA, the
Company is in the fnal stage of settlement with the U.S. Department of
Justice (DOJ) to resolve civil and criminal liabilities.
The Company continues to maintain strategic focus on the 'branded'
markets, improvement in the product mix, capitalizing product level
opportunities for which regulatory approvals have been received,
product rationalization, greater marketing synergies and cost-effciency
throughout the organization.
In view of the loss in the standalone accounts, no dividend has been
proposed for the year ended December 31, 2012.
CHANgES iN CAPiTAL STrUCTUrE
Allotment of shares on exercise of Employees' Stock Options
During the year, the Company allotted Equity Shares (on pari-passu
basis) pursuant to exercise of Stock Options by the eligible employees,
as summarized below:
Date of Allotment No. of Shares
January 13, 2012 31,966
April 17, 2012 80,898
July 11, 2012 152,361
October 11, 2012 208,854
The Allotment Committee of Directors on December 21, 2012, also
allotted 440,000 Equity Shares of Rs. 5 each for cash at par to Ranbaxy
ESOP Trust (Trust), set up to administer Ranbaxy Employee Stock Option
Plan-2011 (ESOP-2011). The Trust would allocate the shares to the
employees of the Company and of its subsidiaries on exercise of stock
options from time to time under ESOP- 2011.
SUBSiDiAriES AND JOiNT VENTUrES
In continuation of the pursuit of leveraging and maximizing the
synergies of the Hybrid Business Model, the Company and Daiichi Sankyo
Co., Ltd., have decided to integrate the management and operations of
the subsidiaries in Thailand.
With a view to create sustainable business base in CIS countries, the
Company incorporated a subsidiary in Ukraine, through Ranbaxy
(Netherlands) B.V., a wholly owned subsidiary of the Company. Further,
for competing better in German market, another subsidiary in Germany
was set up through Basics GmbH, a wholly owned subsidiary of the
The Hon'ble High Courts of Delhi and Punjab & Haryana have approved the
scheme of merger of Rexcel Pharmaceuticals Limited, Solus
Pharmaceuticals Limited, Ranbaxy Drugs and Chemicals Company, Ranbaxy
Life Sciences Research Limited and Ranbaxy SEZ Limited with Ranbaxy
Drugs Limited, another wholly owned subsidiary of the Company.
A statement pursuant to Section 212 of the Companies Act, 1956,
relating to subsidiary companies is attached to the accounts. In terms
of the general exemption granted by the Ministry of Corporate Affairs
vide its circular no. 02/2011 dated February 8, 2011, the audited
accounts and Reports of Board of Directors and Auditors of the
Company's subsidiaries have not been annexed to this Annual Report. The
Company has complied with the requirements as prescribed under the said
circular. The consolidated fnancial statements prepared in accordance
with Accounting Standard - 21 issued by the Institute of Chartered
Accountants of India forming part of this Annual Report include the
fnancial information of the subsidiary companies.
MANAgEMENT DiSCUSSiON AND ANALYSiS rEPOrT
Management Discussion and Analysis Report, as required under the
Listing Agreements with the Stock Exchanges, is enclosed at Annexure
EMPLOYEES' STOCk OPTiON SCHEMES
Information regarding the Employees' Stock Option Schemes is enclosed
at Annexure 'B'.
LiSTiNg AT STOCk EXCHANgE
The equity shares of the Company continue to be listed on Bombay Stock
Exchange Ltd. and The National Stock Exchange of India Ltd. Global
Depository Shares are listed on the Stock Exchange at Luxembourg. The
annual listing fees for the year 2012-2013 have been paid to these
DiSCLOSUrE OF PArTiCULArS
As required by the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, the relevant information and data
is given at Annexure 'C'.
The Company has not invited / received any fxed deposits during the
DirECTOrS' rESPONSiBiLiTY STATEMENT
In terms of provisions of Section 217(2AA) of the Companies Act, 1956,
("Act"), your Directors confrm that:
(i) In the preparation of the annual accounts, the applicable
accounting standards have been followed, alongwith proper explanation
relating to material departures, wherever applicable.
(ii) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company, as at the end of the accounting year and of the loss of
the Company for the year.
(iii) The Directors have taken proper and suffcient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities.
(iv) The Directors have prepared the annual accounts on a going concern
The Board of Directors of the Company appointed Dr. Kazunori Hirokawa
as an Additional Director of the Company pursuant to Section 260 of the
Companies Act, 1956 and Articles of Association of the Company
effective May 9, 2012 and holds offce upto the date of this Annual
General Meeting. The Company has received Notice along with requisite
deposit of Rs. 500 from a member under Section 257 of the Companies
Act, 1956 proposing the candidature of Dr. Kazunori Hirokawa as a
Director of the Company.
In accordance with the Articles of Association of the Company, Dr.
Tsutomu Une and Mr. Rajesh V Shah, Directors, retire by rotation at the
ensuing Annual General Meeting and being eligible offer themselves for
Report on Corporate Governance alongwith the Certifcate of the
Auditors, M/s. B S R & Co. confrming compliance of conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreement with the stock exchanges forms part of the Annual Report.
The Board of Directors of the Company appointed M/s. RJ. Goel & Co.,
Cost Accountants, as the Cost Auditor of the Company for the year ended
December 31, 2012. The Audit report of the cost accounts of the Company
for the year ended December 31, 2012, will be submitted to the Central
Government in due course.
In terms of the circulars issued by Ministry of Corporate Affairs, the
last date for fling the Cost Audit Report for the year ended December
31, 2011, with the Central Government was February 28, 2013. The Report
was fled on December 31, 2012.
M/s. B S R & Co., Chartered Accountants, retire as Auditors of the
Company at the conclusion of ensuing Annual General Meeting and have
confrmed their eligibility and willingness to accept the offce of the
Auditors, if reappointed.
With regard to comments contained in the Auditors' Report, explanations
are given below:
i) The accumulated losses of the Company at the end of the year are not
less than ffty percent of its net worth.
The accumulated losses are primarily due to provision of Rs. 26,480
million created by the Company in the year ended December 31, 2011 for
settlement with the DOJ for resolution of potential civil and criminal
allegations by the DOJ. (Note 8 of the Financial Statements)
ii) Short term funds used for long term purposes.
The Company had made a provision of Rs. 26,480 million in the previous
accounting year for settlement with the DOJ (Note 8 of the Financial
Statements). This has resulted into long-term funds being lower by Rs.
5,558.22 million compared to long-term assets as at December 31, 2012.
Accordingly, short-term funds of Rs. 5,558.22 million have been used
for long-term purposes which is temporary in nature.
STATEMENT OF EMPLOYEES
Statement of particulars of employees as required under Section 217(2A)
of the Companies Act, 1956 ("Act") and Rules framed thereunder forms
part of this Report. However, in terms of the provisions of Section
219(1) (b) (iv) of the Act, this Report and Accounts are being sent to
all the shareholders excluding the Statement of particulars of
employees under Section 217(2A) of the Act. Any shareholder interested
in obtaining a copy of the statement may write to the Company Secretary
at the Corporate Offce of the Company.
The Directors hereby wish to place on record their appreciation of the
signifcant contribution made by each and every employee of the Company.
The Directors also thank all other stakeholders for their support and
encouragement. Your Directors look forward to your continued support in
the years to come.
On behalf of the Board of Directors
Gurgaon Dr. Tsutomu Une
February 26, 2013 Chairman