Leading Global Pharmaceutical Company | Lupin - The ... · Indian Pharmaceutical market grew by 14% as per ORG MAR MAT 07. The Company enjoys a market share of 2.4% and its ranking

61

DIRECTORS’ REPORT

To the Members,

Your Directors have pleasure in presenting their report on the business and operations of your Company for the

year ended March 31, 2007.

Financial Results

(Rs. in Million)

Year ended Year ended

March 31, 2007 March 31, 2006

Sales (Gross) 20288.7 16610.4

Less: Excise duty 579.4 549.4

Sales (Net) 19709.3 16061.0

Profit before interest, depreciation and tax 4802.1 3008.5

Less: Interest and finance charges 370.9 303.0

Less: Depreciation and amortisation 463.7 403.5

Profit before tax 3967.5 2302.0

Less: Provision for taxation (including wealth tax,

deferred tax and fringe benefit tax) 946.9 474.8

Net Profit 3020.6 1827.2

Less: Income tax – earlier years 40.8 37.2

Add: Surplus brought forward from previous year 1913.5 1411.0

Add: Debenture Redemption Reserve written back 10.0 10.0

Amount available for Appropriation 4903.3 3211.0

Appropriations:

Transfer to General Reserve 1500.0 1000.0

Proposed dividend on Equity Shares 401.7 260.9

Corporate tax on dividend 68.3 36.6

Balance carried to Balance Sheet 2933.3 1913.5

4903.3 3211.0

Performance Review

The performance of your Company for the year ended March 31, 2007 was very encouraging. The Company registered

an all-round growth in sales of Finished Dosages as well as Active Pharmaceutical Ingredients (API). Sales at Rs.20,289

Mn. grew by 22% as compared to those of the previous year. Domestic revenues as well as exports grew by 22% each.

Profit after tax at Rs.3,020.6 Mn. registered a growth of 65%, over that of the previous year. The earning per share

was Rs.37.10 on the equity capital of Rs.803.4 Mn., which more than doubled, on account of one for one bonus issue

and the allotment of shares to employees, pursuant to stock option plans.

Bonus Issue

As approved by you at the Twenty Fourth Annual General Meeting held on July 25, 2006, 40,152,494 Equity Shares

of Rs.10/- each, were allotted on August 17, 2006 as fully paid-up bonus shares in the ratio of one for one by

capitalising a part of the General Reserve.

Foreign Currency Convertible Bonds

As approved by you at the Twenty Third Annual General Meeting, Foreign Currency Convertible Bonds (FCCB)

aggregating US$ 100 Mn. were issued and listed on the Singapore Stock Exchange in January 2006. Of the net

proceeds of US$ 98.25 Mn. (net of commission and expenses) an amount of US$ 23.25 Mn. has been utilised for

meeting capital expenditure. The balance amount of US$ 75 Mn. has been invested as deposits with banks. In

terms of their issue, the said Bonds are convertible, anytime, prior to December 28, 2010 at a price of Rs.1134.08

per equity share. Consequent to the issue of bonus shares in the ratio of one for one, the number of underlying

shares has doubled and the conversion price halved to Rs.567.04 per equity share. The Company has received

request from an investor for converting Bonds of the principal amount of US$ three Mn., for which equity shares

will be issued shortly.

LUPIN LIMITED ANNUAL REPORT 2006-07

62

Operational Review

A detailed report on Management Discussion and Analysis covering Finished Dosages, API operations and R&D is

given as a separate statement, which forms part of this Annual Report.

Highlights of the operations, during the year ended March 31, 2007, are given below: -

1) Finished Dosages

a. India Region Formulations (IRF)

The IRF yet again outperformed the Indian finished dosages market by attaining a growth of 30%. The

Indian Pharmaceutical market grew by 14% as per ORG MAR MAT 07. The Company enjoys a market

share of 2.4% and its ranking has improved from 9th to 7th in the Indian Pharmaceutical Market. It also

has the distinction of recording the highest value growth among the top 10 Indian pharma companies.

While maintaining its undisputed leadership in the Anti-TB segment with a market share of 46%, your

Company has also sustained the number two position in Anti-Asthma segment. In Cardiovasculars, your

Company recorded the fastest growth rate (41%) among the top 10 companies and exceeded the market

growth rate by over three times. The Diabetes business, which was launched three years ago, registered

a growth of 54% during the year as against industry growth of 17%. In the Anti-Infective segment, the

Company ranks amongst the top ten players.

It is gratifying that through its Lupinova Division engaged in providing essential medicines to the rural

masses at an affordable price, your Company’s endeavour is to discharge its social obligations, apart

from attaining deeper and wider market reach.

Launch of innovative combinations and introducing in-licensed products, attainment of critical mass

through depth and width of market penetration, focus on rural marketing, new introductions, rising

market share in chronic segments, coupled with higher volumes of existing products and motivated and

passionate sales team have been some of the critical growth drivers.

b. Advanced Markets

Your Company operates in the advanced market of the US through its wholly owned subsidiary, namely,

Lupin Pharmaceuticals Inc. (LPI), U.S.A. The Company showed encouraging performance in the US market,

which is the largest and one of the most competitive markets of the world. Total formulation revenues

from the advanced markets (North American and Europe) registered a growth of 48%. The driving factor

was the growth in the finished dosages, particularly generics. The Company has been delivering value to

the customers by offering quality products in the generic space at affordable prices.

The noteworthy feature has been that your Company has attained significant market share and rankings

for its product portfolio. The launch of Lisinopril tablets last year was listed by IMS Health as one of the

top 10 launches in the US generics. Cefprozil tablets captured 25% share and rank 2nd in the market.

Cefprozil suspension also commands 25% market share and ranks 3rd. Your Company has adopted a

prudent strategy of graduating to a blend of patent challenges and plain filings.

On the branded side, Suprax®, a product promoted by internalised sales team, performed very well

during the year. Prescriptions increased from 5,000 per week last year, to 8,500 in the high season. A

novel formulation of Cefixime, which is a line extension of Suprax®, would further strengthen the

Company’s position in the Cephalosporins oral suspension paediatric market.

Your Company’s strength in API has been effectively leveraged to attain critical position in formulation

space. This in turn injects greater sustainability to the business model in the advanced markets.

A significant feature of the play in this market has been the transformation and maturing of LPI into a

‘Direct To Market’ (DTM) entity, which has been recognised by customers and channels of trade. The

company selectively follows marketing alliance route.

63

For the European markets, your Company has accelerated its filings to create a pipeline of lucrative

products. Your Company was the first to receive marketing approval for generic Cefpodoxime Proxetil

100mg tablets in France. The French market is the biggest European market for this product.

c. Rest of the world

The AAMLA division, which covers the regions of Asia, Africa, Middle East, Latin America and Japan

performed well during the year. The Company has adopted a strategy of entering into alliances with local

partners in difficult markets like Japan. The Company has a licensing agreement for its Anti-TB range for

the severely affected West and North African regions. The Company has secured the approval from the

Gulf Co-operative Council, for the Company’s facilities at Mandideep and Goa, which would provide the

gateway for registration of products in the Gulf region. The introduction of Multi Drug Resistant Anti-TB

products would further strengthen the Company’s Anti-TB portfolio in the Latin American region. The

Company’s efforts would be to launch value added generic and paediatric products in the strategically

important AAMLA region.

The CIS business recorded steady progress and offers good growth prospects. The Company has established

its reputation and eminence in Anti-TB segment and is consolidating its presence in herbal segment and

Anti-Infectives, including Cephalosporins. CIS shows strong brand preference. Through its motivated,

trained and focused sales team of over 85 representatives, the Company is set to further strengthen its

branded business for long-term gains.

Your Company is one of the few that were pre-qualified as a preferred supplier of Anti-TB products to the

Global Drug Facility (GDF). The Anti-TB formulations manufactured by your Company are supplied through

GDF to more than 50 countries, which are identified as High TB Burden Countries by the WHO.

2) API and Intermediates

The Company adopts the strategy of becoming global leader in chosen products, which insulates the API

business from being thinly spread. The leadership stems from its capabilities in the areas of knowledge of

complex chemistry, project implementation, research and regulatory understanding.

This business continued to perform exceedingly well, taking support of the solid foundation in terms of its

skills, scales and reach. The performance was mainly on account of larger volumes and cost efficiency. The

Company has further strengthened its leadership position in segments, such as Anti-TB, Cephalosporins and

Prils.

The Company has established business blocks, tailor made for some of the large multi-national companies,

which would provide an opportunity of inter-linking the Company’s competencies with theirs. The Company

is also exploring the possibilities of entering new therapies and of inorganic growth.

Overall, this makes your Company the most profitable API business in the country.

3) Research & Development

The progress in the field of research has been steady and remarkable. The Lupin Research Park plays a pivotal

role in managing cutting edge pharmaceutical science. Its endeavour is to create efficacious and differentiated

products for the market place.

In a landmark development, your Company entered into an agreement with Laboratoires Servier of France for

the sale of certain patent applications and related Intellectual Property (IP) for Perindopril, for a consideration

of Euro 20 Mn. This agreement testifies and demonstrates your Company’s research and IP capabilities.

Your Company has made significant strides in the NCE space. It has received approvals from Drugs Controller

General of India (DCGI) for conducting Phase-III clinical trials for its Anti-Migraine compound LLL 2011

(Amigra) and Phase-II clinical trials for its Psoriasis compound LL-4218 (Desoside-P). Two other molecules

for Anti-TB and Psoriasis (herbal compound) are in various phases of clinical trials.

DIRECTORS’ REPORT


64

While R&D provided the requisite lever to maintain the pace of regulatory filings, its focus during the year

was oriented towards increasing the complexity of the pipeline through controlled release and differentiated

products that would offer niche opportunities. In line with this orientation, your Company has established an

Innovation Cell for creating higher innovations.

Dividend

Your Directors are pleased to recommend dividend of Rs.5/- per equity share of Rs.10/- each, on the enhanced

equity capital.

Rural Development Programme

Your Company is committed to fulfilling its social responsibilities through its NGO arm, namely, Lupin Human

Welfare and Research Foundation (LHWRF). It has set in motion a silent revolution in the upliftment of rural

underprivileged and vulnerable sections of the society including women and children. It operates in the states of

Rajasthan, Maharashtra, Madhya Pradesh and Uttarakhand. It adopts a simple and innovative model to achieve

its objectives. It creates a local body at village level, with direct participation of villagers, women, scheduled

castes and tribes as mandatory participants. While the local body decides the priority activities, LHWRF imparts

requisite expertise and part-finance for successful implementation of the said activities. The activities range

from water projects, constructing school buildings, toilets, low cost rural houses, internal roads, to conducting

training programmes in agriculture, animal husbandry and rural industrial vocations.

LHWRF was conferred the prestigious FICCI Ladies Organisation Award for its outstanding contribution in women’s

welfare. LHWRF was also conferred the “Stree Shakti” Award, instituted by the Government of Rajasthan.

Subsidiary Companies

The Company has the following subsidiaries: -

a) Lupin Pharmaceuticals Inc. (LPI), U.S.A.

LPI is engaged in trading, marketing and development activities in the US. The company recorded a profit of

Rs.90.9 Mn. during the year. With the internalisation of its field force and launch of new products in the

target markets, the company is expected to do better.

b) Lupin Chemicals (Thailand) Ltd. (LCTL), Thailand

LCTL ceased to be a subsidiary of your Company with effect from June 1, 2006.

c) Lupin Hong Kong Ltd. (LHKL), Hong Kong

LHKL was incorporated to co-ordinate and support the Company’s API business in China. As it did not fit into

the overall business plan, it was decided to wind-up its operations.

d) Lupin Australia (Pty) Ltd. (LAPL), Australia

LAPL, a wholly owned subsidiary of the Company, was constituted primarily to effect and hold product

registrations in Australia. The company recorded a profit of Rs.1.5 Mn. It has, so far, submitted applications

to Therapeutic Goods Administration (TGA), Australia, for the registration of twelve products.

e) Max Pharma Pty Ltd. (MPPL), Australia

MPPL is a joint venture subsidiary company and its commercial operations are yet to commence. MPPL would

target niche products in hospitals and non-prescription category in the territories of Australia and New Zealand.

f) Lupin Holdings B.V. (LHBV), Netherlands

LHBV is a wholly owned subsidiary of the Company, which would be used as a special purpose vehicle for

overseas investments.

g) Lupin Herbal Ltd. (LHL), India

LHL provides marketing and promotional services to the Company’s herbal division. It recorded a profit of

Rs.49,327/-, during the year.

h) Lupin Pharmacare Ltd. (LPL), India

LPL plans to set up a plant for the manufacture of finished dosages at a suitable Special Economic Zone,

details of which are being worked out.

65

A statement containing particulars pursuant to the provisions of Section 212(1)(e) of the Companies Act, 1956 in

respect of the above subsidiaries forms part of this Annual Report. In compliance with Clause 32 of the Listing

Agreement, audited consolidated financial statements also form part of this Annual Report.

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement, detailed reports on Corporate Governance and Management

Discussion & Analysis and a Certificate from the Auditors regarding compliance with conditions of Corporate

Governance form part of this Annual Report.

Directors’ Responsibility Statement

In terms of the provisions of Section 217(2AA) of the Act your Directors confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards had been followed along with

proper explanation relating to material departures;

ii) the Directors had 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 your

Company at the end of the financial year and of the profit of your Company for that year;

iii) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in

accordance with the provisions of the Act for safeguarding the assets of your Company and for preventing and

detecting fraud and other irregularities; and

iv) the Directors had prepared the annual accounts on a ‘going concern’ basis.

Directors

Mr. P. K. Kaul passed away on February 28, 2007. Mr. Kaul, an eminent personality, was on the Board since 1992.

He joined the Indian Administrative Services in July 1951 and retired in July 1989. He held high positions in the

Government including the prestigious post of India’s Ambassador to the US. He was actively involved in social

work at Noida. The Company has immensely benefited from his vast knowledge and experience. The Board

records its great loss in his sad demise.

Mr. Edward R. Roberts, who was appointed as an Additional Director w.e.f. October 19, 2006, holds office up to the

date of the forthcoming Annual General Meeting. Notices have been received from certain members proposing his

name for appointment as a director. Mr. Roberts has wide experience of working with leading pharma multinationals

and is an eminent personality in the international pharma industry. He is associated with several leading companies

as director/advisor. The Company would benefit from his expertise in the pharma field.

Dr. Kamal K. Sharma, Mr. D. K. Contractor and Mrs. M. D. Gupta retire by rotation at the forthcoming Annual

General Meeting and are eligible for re-appointment.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

As required under the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988,

particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo are

given in Annexure ‘A’.

Fixed Deposits

Your Company has not accepted deposits from the public during the year under review. There were no deposits

outstanding as on March 31, 2007 as against Rs.98 Mn. as on March 31, 2006. 438 deposits aggregating Rs.4.90 Mn.

were lying unclaimed with the Company as on March 31, 2007, of which, 123 deposits aggregating Rs.1.35 Mn. have

since been claimed. The Company has sent reminders to the depositors concerned to claim the repayment of their

matured deposits.

Human Resources

The Company aims to align people practices with business goals, engage people for higher performance and build

a world-class competitive working environment. In pursuance of the Company’s commitment to develop and

retain best available talents, a series of programmes have been undertaken at various levels. The Company has

DIRECTORS’ REPORT


66

a category of High Performance High Potential employees. They shall form leadership pool for tomorrow. During

the year, they were trained also by IIM, Ahmedabad, with good results.

Employee relations continued to be cordial and harmonious at all levels and in all the units of your Company.

Auditors

M/s. Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors, retire at the conclusion of the forthcoming

Annual General Meeting and are eligible for re-appointment.

M/s. Khimji Kunverji & Co., Chartered Accountants, Mumbai, are the Internal Auditors of the Company.

Cost Auditors

With the prior approval of the Central Government, Mr. S. D. Shenoy and Mr. D. H. Zaveri, Cost Accountants in

practice, were appointed to conduct audit of cost records of API and finished dosages, respectively. Cost Audit

Reports would be submitted to the Central Government within the prescribed time.

Employees Stock Option Plans

Pursuant to the provisions of the Securities and Exchange Board of India (Employee Stock Option Scheme and

Employee Stock Purchase Scheme) Guidelines, 1999 as amended, the details of Stock Options as on March 31,

2007 under the ‘Lupin Employees Stock Option Plan 2005’ and ‘Lupin Subsidiary Companies Employees Stock

Option Plan 2005’ are set out in Annexure ‘B’ forming part of this Report.

Particulars of Employees

Information as prescribed by Section 217 (2A) of the Act, read with Companies (Particulars of Employees)

(Amendment) Rules, 2002 is given as an annexure to this Report. However, pursuant to the provisions of Section

219(1)(b)(iv) of the Act, the Report and Accounts are being sent to all the members excluding the aforesaid

annexure. Members interested in the said information may write to the Company Secretary at the registered

office of the Company.

Acknowledgements

Your Directors wish to express their gratitude to the various departments of Central and State Governments,

financial institutions, banks, investors, business associates and customers, the medical profession, distributors

and suppliers for their wholehearted support. They also wish to place on record, their appreciation of the services

rendered by all the employees of your Company.

For and on behalf of the Board of Directors

Dr. Desh Bandhu Gupta

Chairman

Mumbai, May 9, 2007

67

ANNEXURE ‘ A ’ TO THE DIRECTORS’ REPORT

Pursuant to the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

A. CONSERVATION OF ENERGY

a) Energy conservation measures taken:

i) Replaced boiler feed water pump with an energy efficient one.

ii) Used supply pump for chilled water flow in place of circulation one.

iii) Transfer of steam condensate directly into boiler feed water tank.

iv) Provided mechanical seal in cooling water circulation pump.

v) Arranged spot cooling in centrifuge area.

vi) Provided timer to stop the air-handling unit.

vii) Reduced electrical losses in cable transmission by providing capacitor banks.

viii) Organised energy conservation week and energy conservation program initiated through awareness

campaigns.

ix) Variable frequency drives were provided for cooling and chilled water systems to optimise pump

and air-handling unit performance.

x) Installed captive power plant at Ankleshwar and maximised its utilisation to reduce power cost.

xi) Thermal energy was conserved through waste heat recovery boiler for captive power plant.

xii) Maintained higher power factor by installing automatic power control panel to reduce transmission

losses.

xiii) Installed timers for street light applications to eliminate power wastages.

xiv) Improved agitator design and installed energy efficient planetary gearbox.

xv) Replaced conventional mild steel centrifugal blower with polypropylene/fibre reinforced

polypropylene.

xvi) Used psychometric cooling tower to concentrate process liquid feed.

xvii) Used waste heat from hot vapour of column for heating process liquid.

xviii) Used aerodynamically designed fibre reinforced polypropylene blade fans.

xix) Air compressors were thoroughly overhauled to increase efficiency and reduced running time.

b) Additional investments and proposals:

i) Install economiser to conserve heat from exhaust of captive power plant.

ii) Install multi-effect evaporator to reduce heat input for process stream.

iii) Thermal insulation of steam line for reducing heat loss.

iv) Upgrade capacitor bank for optimising power factor.

v) Use backpressure steam turbine in place of pressure-reducing station.

vi) Install hot well cold well system for chilled water.

vii) Use de-superheater for recovering thermal energy.

viii) Conserve thermal energy by using pressure power pump for transferring condensate back to the

boiler.

ix) Optimise variable frequency drive controls in air-handling units and chilled water pumps.

c) Impact of measures in a) & b):

i) Improved power factor resulted in lower power cost.

ii) Reduction in fuel consumption.

iii) Improved boiler and pump efficiency.

d) Total energy consumption and energy consumption per unit of production:

Details are given in Form A


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FORM ‘A’

(See Rule 2)

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

Year ended Year ended

March 31, 2007 March 31, 2006

A. POWER & FUEL CONSUMPTION

1. Electricity

a) Purchased Units Thousand KWH 78529 65483

Total amount Rs. in Mn. 386.7 298.4

Rate/unit (KWH) Rs. 4.9 4.6

b) Own Generation

i) Through Diesel Generator (HSD)

Units Thousand KWH 2863 1825

Units per litre of diesel oil KWH 3.1 3.0

Cost/unit (KWH) Rs. 13.1 11.8

ii) Through Generator (furnace oil)


Units per litre of furnace oil KWH 4.1 4.2


iii) Through Generator (gas)


Units per M3 of Natural gas KWH 3.2 3.3


2. Coal Nil Nil

3. i) Furnace oil (Boiler)

Quantity KL 11711 10747


Rate/unit (KL) Rs. 15895 14391

ii) Furnace oil (Power Plant)

Quantity KL 7377 6983


Rate/unit (KL) Rs. 15481 14146

4. Natural gas

Quantity Cu. mts. 12179728 10493021


Rate/unit (Cu. mt.) Rs. 9.2 8.9

B. CONSUMPTION PER UNIT OF PRODUCTION:

The Company manufactures APIs and several drug formulations of different pack sizes. It is therefore, impractical

to apportion the consumption and cost of utilities to each product.

NOTE:

There are no specific standards, as the consumption per unit depends upon the product mix. Variations in

consumption are due to different product mix.

69

B. TECHNOLOGY ABSORPTION:

e) Efforts made in technology absorption as per Form B are given below:

FORM ‘B’

(See Rule 2)

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO ABSORPTION

Research and Development (R & D)

1) Specific areas in which R&D was carried out by the Company:

Use of process chemistry and fermentation skills in compliance with regulatory requirements, with

an accent on increasing productivity, which is outside the purview of subsisting patents. Continued

efforts on creation of formulations based on NDDS platform, which would offer niche market for

generic dosages in the advanced markets. Continued thrust on identification and development of

modified release dosages. Focus on creating line extensions to existing brands. Endeavour was on

creating products with complexities. In addition to the customary chemical synthesis route, NCE

research also covered herbal-based leads. Sustained efforts were made to improve processes and

attain cost-efficiency. Development of eco-friendly process to reduce effluent load.

2) Benefits derived as a result of the above R&D:

The Company has filed patents based on Process, NCE and Formulation research. The Company has

filed ANDAs with the US FDA, based on modified release systems. Line extension was created for the

Company’s branded product in the US. Successful transfer of technology and meeting standards of

various regulatory agencies has ensured commercialisation of several products for various markets.

Critical processes were simplified and improved. Attained scale-up and standardisation of new

processes. Reduction in raw material costs through innovative chemistry. Processes were developed

with an accent on cost reduction and yield improvement. NCE research has progressed steadily. The

Company received approval from DCGI to conduct Phase II clinical trials for Psoriasis compound and

Phase III clinical trials for an anti-Migraine compound.

3) Future plan of action:

The aim would be to further fortify research skills by moving up the value chain by mastering

complex technologies. Focus would be oriented on developing differentiated, value added niche

products; enhancement of product basket and wider geographical spread by complying with diverse

regulatory requirements. It would be the endeavour to create product specific platform technology

for licensing opportunity.

4) Expenditure on R&D:

a. Capital Rs. 109.3 Mn.

b. Recurring (excluding depreciation of Rs.46.9 Mn.) Rs. 1,312.1 Mn.

c. Total Rs. 1,421.4 Mn.

d. Total R&D expenditure as a percentage of net sales 7.2%

Technology absorption, adaptation and innovation:

i) Efforts in brief, made towards technology absorption, adaptation and innovation:

While the Company continues to explore new areas of research, it adopts and integrates latest

innovations and technologies. The Innovation Cell at LRP facilitates achievement of these objectives.

The Company aims to become a knowledge based, technologically driven research organisation.

ii) Benefits derived as a result of the above efforts:

Controlled release products and those based on NDDS platform introduced. Improved existing processes.

iii) Imported technology:

During the year, the Company did not import any specific technology. The Company developed

technology through efforts of its in-house Research and Development.

ANNEXURE ‘ A ’ TO THE DIRECTORS’ REPORT


70

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:

f) Information regarding export activities and related matters is covered elsewhere in this Annual Report.

g) Earnings in foreign exchange were equivalent to Rs.11,234.5 Mn. and expenditure Rs.5,798.2 Mn.

For and on behalf of the Board of Directors


Chairman

Mumbai, May 9, 2007

71

ANNEXURE ‘ B ’ TO THE DIRECTORS’ REPORT

DETAILS OF STOCK OPTIONS AS ON MARCH 31, 2007

In terms of Clause 12.1 of the Securities and Exchange Board of India (Employee Stock Option Scheme and

Employee Stock Purchase Scheme) Guidelines, 1999 (“the SEBI Guidelines”) the particulars of options on March

31, 2007 are as under:

No. Description Details

a) Options granted·

227,400 (pre bonus) and 64,700 (post bonus) options were

granted under ESOP 2005

·31,850 (pre bonus) options were granted under SESOP 2005

Each option is convertible into one equity share of nominal value

of Rs.10/- each.

b) The pricing formula The exercise price of the option is the market price of

the shares, as defined under the SEBI Guidelines, as on

the grant date.

c) Options vested during the year 116,511

d) Options exercised during the year 50,936

e) Total number of shares arising as result of

exercise of options 50,936

f) Options lapsed during the year 122,575 options lapsed on account of resignation of

employees.

g) Variation of terms of options There has been no variation in the terms of options.

h) Money realised by exercise of options Rs.17.96 Mn.

i) Total number of options in force 1,092,204 options.

j) Employee-wise details of options granted to:

i. Senior managerial personnel 10,000 options (pre bonus) were granted to Dr. Kamal K. Sharma,

Managing Director, all other options were granted to

eligible employees in the grades of General Manager and above.

ii. Employees to whom options granted Nil

amounting to 5% or more, of the total

options granted during the year.

iii. Employees to whom options equal to or Nil

exceeding 1% of the issued capital have

been granted during the year.

k) Diluted earnings per share (EPS) pursuant to Rs.36.93

issue of shares on exercise of option

calculated in accordance with Accounting

Standard (AS) 20 ‘Earnings per share’

l) Where the company has calculated the Adjusted EPS:

employee compensation cost using the - Basic Rs.36.38

intrinsic value of the stock options, the - Diluted Rs.36.21

difference between the employee compensation

cost so computed and the employee

compensation cost that shall have been

recognised if it had used the fair value of the

options, shall be disclosed. The impact of this

difference on profits and on EPS of the company.


72

DETAILS OF STOCK OPTIONS AS ON MARCH 31, 2007

No. Description Details

m) Weighted average exercise prices and Weighted average exercise price of options

weighted average fair values of options granted during the year whose: -

disclosed separately for options whose a. Exercise price equals market price Rs.352.69

exercise price either equals or exceeds b. Exercise price is greater than market price N.A.

or is less than the market price of the stock. c. Exercise price is less than the market price N.A.

Weighted average for value of options granted during

the year whose: -

a. Exercise price equals market price Rs.437.58

b. Exercise price is greater than market price N.A.

c. Exercise price is less than the market price N.A.

n) Description of the method and significant assumptions used during the year to estimate the fair values

of the options, including the following weighted average information:

·Fair value calculated by using Black-Scholes option pricing formula.

·Stock price: The closing price on NSE as on the date of grant has been considered for valuing the

Options granted.

·Volatility: We have considered the historical volatility of the stock till the date of grant to calculate the

fair value.

·Risk free rate of return: The risk free interest rate being considered for the calculation is the interest

rate applicable for a maturity equal to the expected life of the options based on the zero coupon yield

curve for Government Securities.

·Time to Maturity: Time to Maturity/Expected Life of options is the period for which the Company

expects the options to be live. The minimum life of a stock option is the minimum period before which

the options cannot be exercised and the maximum life is the period after which the options cannot be

exercised.

·Expected dividend yield: Expected dividend yield has been calculated as an average of dividend yields

for the four financial years preceding the date of the grant.

Variables Weighted Average Information

Grant date 16-Jun-06 25-July-06 13-Sep-06 19-Oct-06

Risk free rate (%) 7.67 8.19 7.81 7.60

Expected life (years) 6.47 6.67 6.60 6.55

Volatility (%) 97.69 96.68 96.63 96.33

Dividend yield (%) 2.14 2.14 2.14 2.14

Stock price (BSE closing rate) Rs. 942.85 859.35 469.90 510.05

Option Fair Value Rs. 681.35 615.76 335.58 363.00

73

CORPORATE GOVERNANCE REPORT

1 Company’s Philosophy on Corporate Governance:

The Company’s mission is to be an exemplary corporate citizen. Your Company aligns its actions and leverages

its resources to become one of the most valued companies to its stakeholders, customers, business associates

and the society at large. A professionally competent team under the guidance of an eminent Board of

Directors manages your Company. The Company is guided by the belief that corporate governance is an

on-going process, vital for achieving the Company goals. Its core values include positive leadership, integrity,

customer focus, teamwork, innovation, performance excellence, quality consciousness, transparency in

dealings, disclosures and appropriate control measures. Your Company conducts its business by adhering

to its core values and continues to be committed to good corporate governance.

The Company has implemented all mandatory requirements and several non-mandatory requirements of Clause

49 of the Listing Agreement. Codes of business conduct have been adopted for Directors and the Senior

Management and posted on the website of the Company (www.lupinworld.com). All Board members and senior

management have affirmed compliance with the respective codes for the year ended March 31, 2007. The

Company has sound systems of internal control and risk management, which are regularly

evaluated. Risks are identified by conducting interviews, brainstorming sessions and workshops at various

levels and locations in the Company. Risks are categorised and assessed in terms of probability and their

impact on the Company’s business. The system monitors risks, effectiveness in operating and compliance with

applicable laws in conformity with business processes. Services of a professional consultancy firm of

international repute were engaged to advise the Company in preparing a formal risk management framework

for risk assessment and minimisation, which was placed before the Board for formal approval on May 9, 2007.

Certain non-mandatory requirements, such as, limit on the tenure of independent directors, circulation of

half-yearly financial performance, training of Board members, mechanism for performance evaluation of

non-executive directors and whistle blower policy have not been implemented.

A detailed Management Discussion and Analysis report forms part of this Annual Report.

2 Board of Directors:

The present strength of the Board is 11, of which, two are executive promoter directors, one is a

non-executive promoter director, one is an executive director, five are independent directors and two are

non-executive directors. The requisite particulars are given below:-

Sl. Name of the director Whether No. of Board Attendance Number of Member/

No. Promoter/ Meetings during at the last Directorships Chairman of

Executive/ the year AGM of other Committees other

Independent Held Attended companies than the Company

1. Dr. Desh Bandhu Gupta, P. & E. D. 5 5 Yes 7 -

Chairman

2. Dr. Kamal K. Sharma, E.D. 5 5 Yes 2 -

Managing Director

3. Mrs. M. D. Gupta, P. & E. D. 5 3 Yes 7 -

Executive Director

4. Mr. D. K. Contractor I.D. 5 5 Yes 8 1/-

5. Mr. Marc Desaedeleer N.E.D. 5 2 No 4 -

6. Mrs. Vinita Gupta P. & N-E. D. 5 1 Yes 1 -

7. Mr. P. K. Kaul (up to 28.02.2007) I.D. 5 2 Yes 12 9/2

8. Dr. Vijay Kelkar I.D. 5 3 Yes 13 4/-

9. Dr. K. U. Mada I.D. 5 5 Yes 7 6/2

10. Mr. Sunil Nair N.E.D. 5 1 No 2 -

11. Mr. Edward R. Roberts I.D. 2 1 N.A. 3 -

(w.e.f.19.10.2006)

12. Mr. R. A. Shah I.D. 5 4 Yes 22 11/5

13. Dr. D. P. Sinha (up to 09.05.2006) I.D. - - N.A. 4 -

Notes:

a) P. & E.D.: Promoter & Executive Director, E.D.: Executive Director, I.D.: Independent Director, N.E.D. Non-Executive Director, P. & N-E.

D. Promoter & Non-Executive Director.

b) In case of Mr. R. A. Shah, Directorships include one of a private limited company and seven Alternate Directorships of public limited

companies. Committee memberships include membership of a Remuneration Committee.

c) The Independent Directors Recommendation Committee is in the process of identifying a person for appointment as an independent

director, consequent to the casual vacancy created by the sad demise of Mr. P. K. Kaul on February 28, 2007.



74

Board Meetings

The Board plays a pivotal role in ensuring good corporate governance. It directs and guides the activities

of the management towards set goals. Board members express their opinions and bring up matters for

discussion at Board meetings. Agenda items are accompanied by comprehensive notes providing information

on related subjects. Detailed presentations are made to the Board on important matters, such as financial/

business plans, financial results, new projects, expansion/capital expenditure proposals, etc. Minutes of the

meetings of the Board are circulated to all Directors and confirmed at the subsequent Board meeting. Copies

of the signed minutes of the various Committees of the Board are tabled at Board meetings.

Details of Board Meetings

Board meetings are held at least once in every quarter and the time gap between two meetings was not more

than four months. During the year, five meetings of the Board of Directors were held on May 17, 2006, July

25, 2006, September 21, 2006, October 19, 2006 and January 17, 2007.

Remuneration to Executive Directors

Remuneration during 2006-07 (Rs. Mn.)

Particulars of Remuneration Dr. Desh Bandhu Gupta, Dr. Kamal K. Sharma, Mrs. M. D. Gupta,

Chairman Managing Director Executive Director

Fixed Component:

Salary 22.86 18.47 1.92

Benefits/Allowances 1.41 0.79 0.03

Ex-gratia - 0.60 -

Provident Fund/Superannuation 2.59 1.63 0.32

Variable Component:

Performance Linked Incentive - 12.18 -

Commission 29.10 - -

Total: 55.96 33.67 2.27

Remuneration to Non-Executive Directors

Sl. Name of the director No. of equity Remuneration paid in 2006-07

No. shares held Sitting fees Commission Total

(Rs. Mn.) (Rs. Mn.) (Rs. Mn.)

1. Mr. D. K. Contractor 2660 0.29 0.50 0.79

2. Mr. Marc Desaedeleer Nil - - -

3. Mrs. Vinita Gupta 10320 0.02 - 0.02

4. Mr. P. K. Kaul (up to 28.02.2007) Nil 0.04 0.50 0.54

5. Dr. Vijay Kelkar Nil 0.06 0.50 0.56

6. Dr. K. U. Mada 200 0.31 0.50 0.81

7. Mr. Sunil Nair Nil - - -

8. Mr. R. A. Shah 3000 0.11 0.50 0.61

9. Mr. Edward R. Roberts (w.e.f. 19.10.2006) Nil 0.02 - 0.02

10. Dr. D. P. Sinha (up to 09.05.2006) 4400 0.02 0.50 0.52

Notes:

a) Dr. Desh Bandhu Gupta, Chairman, Dr. Kamal K. Sharma, Managing Director and Mrs. M. D. Gupta, Executive Director, are

in wholetime employment of the Company and their employment is contractual in nature. While Dr. Gupta and Mrs. Gupta

hold office up to December 31, 2010, Dr. Sharma holds office up to September 28, 2008.

b) Dr. Desh Bandhu Gupta is entitled to a commission @ 1% of the net profit, provided the net profit is not less than Rs.500 Mn.

in the relevant accounting year.

c) The Company had granted to Dr. Kamal K. Sharma, Managing Director, 10,800 options at an exercise price of Rs.567.35 per

share under the “Lupin Employees Stock Option Plan 2003” and 10,000 options at an exercise price of Rs.859.75 per share

under the “Lupin Employees Stock Option Plan 2005”. Consequent to the issue of bonus shares in the ratio of one for one,

the number of options has doubled and the exercise prices halved.

d) At the 23rd Annual General Meeting held on July 28, 2005, members had approved payment of commission to the

non-executive directors, not exceeding in the aggregate 0.25% p.a. of the Company’s net profit, provided that the

aggregate of commission payable to all of them together shall not exceed Rs. 5 Mn. per year. The Board is to decide upon

the eligibility criteria and the quantum of commission payable to each of the non-executive directors and an amount of Rs.5

Mn. has been provided for the year ended March 31, 2007 for this purpose.

e) During the year under review, Crawford Bayley & Co., Mumbai, of which Mr. R. A. Shah is a senior partner, was paid

professional fees aggregating Rs.0.18 Mn., which constitute less than one percent of the total revenues of the said firm

and an insignificant fraction of the Company’s turnover. The Board of Directors is of the view and has also taken a legal

opinion on the subject, confirming that the said firm does not have a material association with the Company and payment

of the fees is not material enough to impinge on the independence of Mr. Shah.

75

Brief Profiles, other Directorships and Committee Memberships etc. of Directors seeking

re-appointment/appointment at the 25th Annual General Meeting:-

Dr. Kamal K. Sharma

Dr. Kamal K. Sharma, 59, is a chemical engineer from the Indian Institute of Technology (lIT), Kanpur, with

a post-graduate diploma in industrial management from Jamnalal Bajaj Institute of Management Studies,

Mumbai and a PhD. in Economics from lIT, Mumbai. He has also completed an advanced management

programme from Harvard Business School, Boston. Dr. Sharma has vast industry experience spanning over

three decades and has held senior management positions in the fields of projects, operations, corporate

development and general management in pharma and chemical industries. Dr. Sharma was associated with

Lupin Group from 1979 till 1995. He was the Managing Director of the Company (then known as Lupin

Chemicals Ltd.) from July 5, 1991 till October 31, 1995, prior to which, he was the President-Corporate

Development of the erstwhile Lupin Laboratories Limited, which was subsequently amalgamated with your

Company.

List of other Directorships Chairman/Member of the Committees of the Board

of the companies on which he is a director

Faisa Financial Pvt. Ltd., Director None

Templefree Properties Pvt. Ltd., Director

Mr. D. K. Contractor

Mr. D. K. Contractor, 79, is a commerce graduate and a certified associate and a fellow of the Indian Institute of

Bankers. He served the Central Bank of India in various capacities and retired as its Executive Director.

Mr. Contractor has vast experience of over 40 years in areas of banking, finance and administration.

Mrs. M. D. Gupta

Mrs. M. D. Gupta, 63, is a Bachelor of Arts. She is one of the promoters of the Company and an Executive

Director. She has wide business experience and expertise.


of the companies on which he is a director

Jai Corp Ltd., Director

Mazda Ltd., Director

Tufropes Pvt. Ltd., Director

Victoria Mills Ltd., Director

Zoroastrian Co-operative Bank Ltd., Director

Advisory & Analytics India Pvt. Ltd., Director

IL&FS Trust Company Ltd., Director

Centre for Promotion of Entrepreneurship

(A company within the meaning of Section 25

of the Companies Act, 1956), Vice-Chairman

Jai Corp Ltd., Member of Audit Committee

NoneLupin Investments Pvt. Ltd.

Rahas Investments Pvt. Ltd.

Lupin International Pvt. Ltd.

Zyma Laboratories Ltd.

Lupin Marketing Pvt. Ltd.

Visiomed (India) Pvt. Ltd.

Polynova Industries Ltd.


of the companies on which she is a director



76

List of other Directorships Chairman/Member of the Committees of the

Board of the companies on which he is a director

NoneBiopartners Zug Switzerland, Chairman

Merz Frankfurt Germany, Chairman

Icon Dublin Ireland, Director

3 Audit Committee:

The Audit Committee comprises Dr. K. U. Mada (Chairman) and Mr. D. K. Contractor, independent directors

and Dr. Kamal K. Sharma, executive director. Mr. Marc Desaedeleer and Mr. Sunil Nair are invitees at the

meetings of the Committee. Dr. D. P. Sinha was a member of the Committee till his sad demise on May 9,

2006. Mr. Kiran N. Bade, Company Secretary, is the Secretary of the Committee. Chief of the finance

function, representatives of accounts/business finance group, Statutory Auditors, Internal Auditors and

Cost Auditors are invited at its meetings. The Audit Committee acts as a link between the Statutory,

Internal and Cost auditors and the Board. It addresses matters pertaining to adequacy of internal controls,

reliability of financial statements/management information, adequacy of provisions for liabilities, whether

audit tests and checks are appropriate and scientifically carried out and that they were aligned with the

business needs and realities, adequacy of disclosures and compliance with all relevant statutes and other

facets vital to the Company’s operations. The Committee performs the functions enumerated in Clause 49

of the Listing Agreement and Section 292A of the Companies Act, 1956. The matters deliberated upon by

the Committee include: -

1) Overseeing and reviewing the Company’s financial reporting process with a view to ensure transparency,

accuracy, timeliness and quality of disclosure.

2) Fixation of audit fees and approval of various payments to statutory auditors for other services rendered

by them.

3) Reviewing, with the management and auditors the periodical and annual financial statements before

submission to the Board for approval, with particular reference to:

a) Confirmation of matters enumerated in the Director’s Responsibility Statement pursuant to the

provisions of Section 217(2AA) of the Companies Act, 1956.

b) Changes in accounting policies and practices and reasons for the same.

c) Major accounting entries involving estimates based on the exercise of judgment by management.

d) Significant adjustments made in the financial statements arising out of audit findings.

e) Compliance with listing and other legal requirements relating to financial statements.

f) Disclosure of related party transactions, which are in the ordinary course of business as also those,

not in the normal course of business.

g) Qualifications in the draft audit report, if any.

4) Reviewing with the management, performance of statutory and internal auditors.

Mr. Edward R. Roberts

Mr. Edward R. Roberts, 72, a British citizen, residing in Germany, is a 1959 pharmacy graduate from

Leicester University. He has wide experience in the international pharma industry. He is the Chairman of

the Board of Biopartners (a Swiss biotech company) and Merz Pharma (a well-known German pharma

company). He is also a member of the Board of Icon, a listed US Contract Research Organisation. He is also

Advisor to Avista, a US private equity company.

Till the year 1998, he was the Head of Pharmaceuticals at E Merck, a leading German pharma company,

prior to which, he spent 27 years at Eli Lilly in the US and other countries. His last assignment at Eli Lilly

was as President of Elanco, the agricultural division of Eli Lilly.

77


5) Reviewing the adequacy of internal audit function, including the structure of the internal audit

department, coverage and frequency of internal audit.

6) Discussing with internal auditors, significant findings and follow up thereon.

7) Reviewing findings of the internal auditors and reporting them to the Board.

8) Discussion with statutory auditors before the audit commences, about the nature and scope of audit as

well as post-audit discussion to ascertain areas of concern.

9) Assess whether there were any defaults in the payment to the depositors, debenture holders, members

(in case of non payment of declared dividends) and creditors.

10) Review and discuss with the management the status and implications of various legal cases.

The Committee also reviews other matters as required under the Listing Agreement and other laws, rules

and regulations.

Details of Audit Committee Meetings

During the year, seven meetings of the Audit Committee were held on May 5, 2006, May 17, 2006, July 25, 2006,

September 21, 2006, October 19, 2006, January 17, 2007 and March 7, 2007 and the attendance was as follows: -

Sl. No. Name of the director No. of Meetings

Held Attended

1. Dr. K. U. Mada 7 7

2. Mr. D. K. Contractor 7 7

3. Dr. D. P. Sinha (up to 09.05.2006) 1 1

4. Dr. Kamal K. Sharma (w.e.f. 17.01.2007) 1 1

4 Investors’ Grievances Committee:

The Investors’ Grievances Committee comprises independent directors, namely, Mr. D. K. Contractor (Chairman)

and Dr. K. U. Mada. Dr. D. P. Sinha was a member of the Committee till May 9, 2006. Mr. Marc Desaedeleer

and Mr. Sunil Nair are invitees at the meetings of the Committee. Mr. Kiran N. Bade, Company Secretary, is

the Compliance Officer.

The Committee reviews matters including the transfer/transmission of shares, mailing of annual reports,

payment of dividend, communication with members, transfer of unclaimed amounts to Investor Education

and Protection Fund, dematerialisation of shares and other depository related activities, regulatory compliances,

etc.

The Committee monitors operations of the Investors’ services department and encourages its team members

to provide qualitative services and ensures expeditious redressal of investor grievances.

During the year, 107 complaints were received from members and redressed/attended within one month of

their receipt. No investor complaint remained pending as on March 31, 2007. No request for dematerialisation/

rematerialisation remained unattended for more than two weeks, during the year.

Details of the Investors’ Grievances Committee Meetings

During the year, two meetings of the Investors’ Grievances Committee were held on June 23, 2006 and March

7, 2007 and the attendance was as under: -


Held Attended

1. Mr. D. K. Contractor 2 2

2. Dr. K. U. Mada 2 2

3. Dr. D. P. Sinha (up to 09.05.2006) - -


78

5 Remuneration/Compensation Committee:

The Remuneration/Compensation Committee comprises Dr. K. U. Mada (Chairman) and Mr. R. A. Shah,

independent directors and Mr. Sunil Nair (Alternate - Mr. Marc Desaedeleer), Non-Executive Directors. The

Committee performs inter alia functions specified in Clause 49 of the Listing Agreement and Schedule XIII of

the Companies Act, 1956. The Company’s remuneration policy is structured in line with the general trend in

the Indian pharma industry. Factors like the key position, experience and expertise, leadership qualities,

responsibilities shouldered by the individual, as also the volume of the Company’s business and profits

earned by it are taken into consideration at the time of fixing remuneration. The Committee determines the

policy on specific remuneration packages of Executive Directors and persons related to directors.

To attract and retain talented and qualified personnel and create a sense of belonging amongst them, the

Committee approved, during the year, the “Lupin Employees Stock Option Plan 2005” and the “Lupin

Subsidiary Companies Employees Stock Option Plan 2005”.

Details of the Remuneration/Compensation Committee Meetings

During the year, three meetings of the Remuneration/Compensation Committee were held on June 16, 2006,

July 25, 2006 and October 19, 2006 and the attendance was as under: -


Held Attended

1. Dr. K. U. Mada 3 3

2. Mr. Sunil Nair (Alternate - Mr. Marc Desaedeleer) 3 -

3. Mr. R. A. Shah 3 3

The Remuneration/Compensation Committee passed a resolution by circulation vide circular dated

September 13, 2006.

6 Independent Directors Recommendation Committee:

The Independent Directors Recommendation Committee comprises Dr. Desh Bandhu Gupta (Chairman),

Mr. Sunil Nair (Alternate - Mr. Marc Desaedeleer) and Dr. Vijay Kelkar. The Committee identifies persons for

appointment as independent directors. During the year, the Committee recommended the appointment of

Mr. Edward R. Roberts, an eminent personality in the international pharma industry, as an additional director

of the Company.

7 General body meetings:

Details of the last three Annual General Meetings: -

Year Day, Date and Time Location No. of Special Resolutions passed

2003 - 04 Thursday, July 29, 2004 Rang Sharda Natyamandir, One

at 2.00 p.m. Bandra Reclamation,

Bandra (West),

Mumbai - 400050

2004 - 05 Thursday, July 28, 2005 — do — Four

at 2.00 p.m.

2005 - 06 Tuesday, July 25, 2006 — do — One

at 2.30 p.m.

No business was required to be transacted through postal ballot at the above meetings. Similarly, no business

is required to be transacted through postal ballot at the forthcoming Annual General Meeting.

During the year, three resolutions (one Ordinary and two Special) were passed by two postal ballots.

Under the first ballot, a Special Resolution for altering the Articles of Association of the Company by deleting

Clause 170A(m) was passed by a thumping majority of 99.99%.

Under the second ballot, an Ordinary Resolution for revision w.e.f. July 1, 2006 in the remuneration payable to

Dr. Kamal K. Sharma, Managing Director and a Special Resolution for promotion of Mr. Nilesh Gupta as President

w.e.f. July 1, 2006 and revision in his remuneration were passed with an overwhelming majority of 99.97%.

79

Q


Ms. Neena Bhatia, practising Company Secretary, acted as the Scrutiniser for conducting both the ballots.

Procedure prescribed by Section 192A of the Companies Act, 1956 read with the Companies (Passing of the

Resolution by Postal Ballot) Rules, 2001 was meticulously followed for conducting the said ballots.

8 Disclosure on materially significant related party transactions:

During the year under review, there are no materially significant related party transactions entered into by

the Company with its promoters, directors, management or their relatives etc., which may have potential

conflict with the interests of the Company at large. The Audit Committee reviews statements of significant

related party transactions submitted by the management. Statements, in summary form, of the transactions

with related parties in the ordinary course of business and those not in the normal course of business, are

placed before the Audit Committee. The Register of Contracts containing details of transactions, in which

Directors are interested, is placed before every meeting of the Board and signed by the Directors present.

During the year, Crawford Bayley & Co., Solicitors & Advocates (of which Mr. R. A. Shah is a senior partner)

were paid professional fees aggregating Rs.0.18 Mn. Apart from sitting fees, professional fees and

commission as disclosed elsewhere in this Report, there is no pecuniary transaction with the non-executive

directors. In compliance with the Accounting Standard AS 18, details of related party transactions are

disclosed in the Notes to the Accounts. The Company has complied with the requirements of the Stock

Exchanges, SEBI and other statutory authorities on all matters relating to capital markets during the last

three years and they have not imposed any penalties on, or passed strictures against the Company.

9 Means of communication:

Quarterly, half-yearly and annual financial results of the Company are communicated to the stock exchanges

immediately after the Board takes them on record and thereafter, published in prominent English (Economic

Times) and Marathi (Maharashtra Times) newspapers. The results are also posted on the Company’s website

viz. www.lupinworld.com and on the Electronic Data Information Filing and Retrieval (EDIFAR) website

maintained by the National Informatics Centre, as required by SEBI. The website also displays official news

releases and presentations made to institutional investors or to the analysts. Disclosures, pursuant to the

Listing Agreement, are promptly communicated to stock exchanges.

10 General Members’ information:

� INVESTORS’ SERVICES DEPARTMENT - BUILDING ENDURING RELATIONSHIPS…THROUGH SERVICE

The Company has in-house Investors’ Services Department (ISD) located at the Registered Office of the

Company. The department comprises experienced and committed employees to provide quality services of

highest standards to its esteemed investors.

The department deals with the various matters relating to:

� Transfer and transmission of shares

� Dematerialisation of shares

� Execution of corporate action and other depository

operations

� Transfer of unclaimed amounts to Investor Education

and Protection Fund (IEPF)

� Implementation of Employees Stock Option Plans

� Listing of shares with stock exchanges

� Activities pursuant to SEBI (Prohibition of Insider

Trading) Regulations

� Liaison with stock exchanges, regulatory agencies etc.

� Disbursement of dividend and reminders to claim

unpaid dividend

� Uploading reports on the SEBI website pursuant to

EDIFAR guidelines

� Update data on the Company’s official website

� Issuance of duplicate share certificates

Did you know which company

• Has been paying dividends within 24 hours

of declaration, year after year?

• Regularly reminds it’s shareholders to claim

their unclaimed dividends? Answer

LUPIN

Investors’ Services Department,

comprising of experienced and

committed employees, endeavours

to provide quality services that are

benchmarked to the highest

standards and build an enduring

relationship with its esteemed

investors


80

Uninterrupted depository connectivity, expeditious redressal of investors’ grievances and highest standards

of regulatory compliances are ensured through NCFM qualified employees, supported with advance

communication systems and other infrastructural facilities.

The ISD is dedicated to its investors and can be approached for any query or assistance through letter,

telephone, fax or email. For the convenience of investors, a link has also been established to the department

through the Company’s website.

� Address for correspondence: Investors’ Services Department

159, C.S.T. Road, Kalina, Santacruz (East), Mumbai - 400 098.

Email: [email protected]

Tel: +91 22 6640 2323 (Extn: 2402/3)

Fax: +91 22 2652 8806

� Person in-charge of the Department: Mr. Pradeep S. Bhagwat, Sr. Manager - Investors’ Services.

� ANNUAL GENERAL MEETING

The 25th Annual General Meeting will be held at 2.30 p.m. on Thursday, July 19, 2007 at Birla Matushri

Sabhagar (Bombay Hospital Trust), 19, Marine Lines, Mumbai - 400 020.

� FINANCIAL CALENDAR

First quarter results : July 2007

Second quarter results : October 2007

Third quarter results : January 2008

Annual results : April/May 2008

Annual General Meeting : July/August 2008

� BOOK CLOSURE

The Register of Members and the Share Transfer Register will remain closed from Thursday, July 12, 2007

to Thursday, July 19, 2007, both days inclusive.

Dividend for the year ended March 31, 2007, if declared at the Annual General Meeting, shall be paid to:

a) beneficial owners at the end of business day on Wednesday, July 11, 2007 as per lists furnished by

NSDL and CDSL in respect of shares held in electronic form; and

b) persons whose names would appear on the Register of Members as at the end of the business day on

Wednesday, July 11, 2007 in respect of shares held in physical form.

� DIVIDEND PAYMENT DATE

Dividend, if declared, shall be paid within three days from the date of the Annual General Meeting.

Dividend shall be remitted through Electronic Clearing Service (ECS) at approved locations, wherever ECS

details are available with the Company, and in other cases, through warrants payable at par.

� SHARES LISTED AT

The equity shares of the Company are listed at:

Bombay Stock Exchange Limited (BSE) (Regional Exchange)Phiroze Jeejeebhoy Towers,

Dalal Street, Mumbai Samachar Marg,

Mumbai - 400 001.

81


National Stock Exchange of India Ltd. (NSE)

Exchange Plaza,

Bandra Kurla Complex,

Bandra (East),

Mumbai - 400 051.

The Company has paid listing fees to BSE and NSE for the year 2007-08.

The Foreign Currency Convertible Bonds aggregating US$ 100 Mn. are listed on the Singapore Stock Exchange.

� STOCK CODES

The stock codes of the Company are:

The Stock Exchange, Mumbai (BSE) 500257

National Stock Exchange of India Ltd. (NSE) LUPIN

� MARKET PRICE DATA

The equity shares of your Company are traded in A group. The Lupin scrip is amongst the few securities, which

are available for trading in Futures & Option (F & O) segment of the NSE, effective December 29, 2006.

The market price data covering the period April 2006 to March 2007 are given below: -

BSE NSE

(Rs.) (Rs.) (Rs.) (Rs.)

MONTH HIGH DATE LOW DATE HIGH DATE LOW DATE

APR-2006 1188.00 29.04.06 981.50 13.04.06 1183.95 29.04.06 986.00 13.04.06

MAY-2006 1275.00 08.05.06 878.50 22.05.06 1310.00 10.05.06 940.00 22.05.06

JUN-2006 1062.20 22.06.06 820.50 14.06.06 1098.95 01.06.06 825.00 14.06.06

JUL-2006 971.00 13.07.06 811.05 27.07.06 969.00 13.07.06 803.10 27.07.06

AUG-2006 945.00 09.08.06 871.20 01.08.06 949.40 09.08.06 868.80 01.08.06

(Pre Bonus)AUG-2006 551.00 18.08.06 465.00 11.08.06 552.00 18.08.06 452.15 11.08.06

(Post Bonus)SEP-2006 513.95 04.09.06 460.00 27.09.06 518.20 15.09.06 456.00 27.09.06

OCT-2006 528.40 31.10.06 467.80 03.10.06 528.00 31.10.06 468.00 03.10.06

NOV-2006 534.20 30.11.06 490.00 20.11.06 530.00 27.11.06 482.55 10.11.06

DEC-2006 625.00 28.12.06 506.00 12.12.06 625.00 28.12.06 510.00 12.12.06

JAN-2007 631.00 03.01.07 555.25 10.01.07 631.90 03.01.07 552.20 10.01.07

FEB-2007 678.40 22.02.07 550.00 28.02.07 678.90 22.02.07 532.25 28.02.07

MAR-2007 631.00 02.03.07 540.00 05.03.07 631.90 02.03.07 540.00 05.03.07

LUPIN SHARE PRICE (High - Low) NSE

1400

1200

800

600

400

200

0

Rate (

Rs.)

LowHigh

Month

Apr - 0

6

May -

06

Jun -

06

Jul - 0

6

Aug - 06

Sep -

06

Oct -

06

Nov -

06

Dec -

06

Jan -

07

Feb -

07

Mar -

07

1000

LUPIN SHARE PRICE (High - Low) BSE

1400

1200

800

600

400

200

0

Rate (

Rs.)

LowHigh

Month

Apr - 0

6

May -

06

Jun -

06

Jul - 0

6

Aug - 06

Sep -

06

Oct -

06

Nov -

06

Dec -

06

Jan -

07

Feb -

07

Mar -

07

1000


82

� TRADING VOLUMES

The traded volumes of shares at BSE and NSE are: -

Month BSE (Shares) NSE (Shares) Total (Shares)

APR – 2006 1523390 1516327 3039717

MAY – 2006 2184730 1540260 3724990

JUN – 2006 253868 582727 836595

JUL – 2006 429106 682643 1111749

AUG – 2006 442312 930789 1373101

SEP – 2006 825169 1460693 2285862

OCT – 2006 871498 1342649 2214147

NOV – 2006 368266 860971 1229237

DEC – 2006 538922 1246831 1785753

JAN – 2007 684640 2161742 2846382

FEB – 2007 1130499 3178269 4308768

MAR – 2007 490779 1453669 1944448

TOTAL 9743179 16957570 26700749

LUPIN SHARE PRICE COMPARED TO NSE S&P CNX NIFTY

Nif

ty

1200

1000

800

600

400

200

0

Rate (

Rs.)

Month

Apr - 0

6

May -

06

Jun -

06

Jul - 0

6

Aug - 06

Sep -

06

Oct -

06

Nov -

06

Dec -

06

Jan -

07

Feb -

07

Mar -

07

2000

1500

100

500

0

1400

3000

2500

3500

4000

4500

NSE S&P CNX Nifty Lupin (Rs.)

LUPIN SHARE PRICE COMPARED TO BSE SENSEX

1200

1000

800

600

400

200

0

Rate (

Rs.)

Lupin (Rs.)BSE Sensex

Month

Apr - 0

6

May -

06

Jun -

06

Jul - 0

6

Aug - 06

Sep -

06

Oct -

06

Nov -

06

Dec -

06

Jan -

07

Feb -

07

Mar -

07

12000

10000

8000

6000

4000

2000

Sensex

0

1400

14000

16000

� PERFORMANCE IN COMPARISON WITH BROAD BASED INDICES

Lupin share price compared with BSE Sensex and NSE S&P CNX Nifty (Month-end closing)

BSE NSE

Month Share Price Sensex Share Price S&P CNX Nifty

(Rs.) (Rs.)

APR – 2006 1176.75 12042.56 1178.60 3557.60

MAY – 2006 1030.90 10398.61 1033.45 3071.05

JUN – 2006 895.00 10609.25 889.45 3128.20

JUL – 2006 898.00 10743.88 897.70 3143.20

(Post 1:1 Bonus)

AUG – 2006 502.10 11699.05 502.80 3413.90

SEP – 2006 461.25 12454.42 463.50 3588.40

OCT – 2006 512.55 12961.90 511.15 3744.10

NOV – 2006 528.90 13696.31 528.05 3954.50

DEC – 2006 612.05 13786.91 613.70 3966.40

JAN – 2007 600.60 14090.92 600.90 4082.70

FEB – 2007 603.50 12938.09 599.55 3745.30

MAR – 2007 605.65 13072.10 606.20 3821.55

83


� SHARE TRANSFER SYSTEM

The Share Transfer Committee is constituted for approval of transfer of shares in physical form. Dr. Desh Bandhu

Gupta, or in his absence, Dr. Kamal K. Sharma is the Chairman of the Committee. Mrs. M. D. Gupta and Mr. D. K.

Contractor are the other members.

The Share Transfer Committee generally meets once a fortnight. The Committee met 24 times during the year

and approved 854 transfer proposals in respect of 29,791 shares.

Valid share transfer documents are processed and duly endorsed share certificates are despatched to the

respective transferees, within 25 days from the date of receipt of transfer documents. In terms of Clause 47 (c)

of the Listing Agreement, a practising Company Secretary audits share transfer process, every six months, and

issues a certificate, which is submitted to the stock exchanges.

� ALLOTMENT COMMITTEE

Dr. Desh Bandhu Gupta, or in his absence, Dr. Kamal K. Sharma is the Chairman of the Allotment Committee.

Mrs. M. D. Gupta is the other member.

During the year, ten meetings of the Allotment Committee were held. The Committee approved allotment of

50,936 shares to employees upon exercising the options under Lupin Employees Stock Option Plan 2003. The

Committee also allotted bonus shares during the year.

� ALLOTMENT OF BONUS SHARES

Pursuant to the special resolution passed at the 24th Annual General Meeting held on July 25, 2006, 40,152,494

fully paid up equity shares of Rs.10/- each were allotted on August 17, 2006, in the ratio of one bonus share for

every existing share held in the Company as on the Record date i.e. August 14, 2006.

The members were provided with an option to receive bonus shares either in demat mode or by way of physical

certificate. The bonus shares were listed expeditiously with the BSE and NSE.

� SHARE HOLDING PROFILE AS ON MARCH 31, 2007

i. Distribution of Shareholding

Shareholding range Members Shareholding

(No. of shares)

Numbers % Numbers %

1 – 500 43743 96.83 3140170 3.91

501 – 1000 667 1.48 510190 0.63

1001 – 2000 329 0.73 480220 0.60

2001 – 3000 108 0.24 281930 0.35

3001 – 4000 57 0.13 204880 0.26

4001 – 5000 36 0.08 170773 0.21

5001 – 10000 81 0.18 611320 0.76

10001 and above 152 0.33 74945081 93.28

Total 45173 100.00 80344564 100.00


84

ii. Shareholding Pattern

Category of Members No. of shares %

Promoters 42048958 52.34

Mutual Funds 7644451 9.51

Financial Institutions/Banks/Insurance Cos. 1507286 1.88

Foreign Institutional Investors 11061720 13.77

Foreign Bodies (FIPB route) 7844986 9.76

Non Resident Indians 154682 0.19

Public 10082481 12.55

Total: 80344564 100.00

iii. Holding Profile

Mode Demat (%) Physical (%) Total

Shares 79307255 98.71 1037309 1.29 80344564

Members 28116 62.24 17057 37.76 45173

Holding Profile

(No. of Holders)

62.24% Demat37.76% Physical

Shareholding Pattern

9.51% Mutual Funds

1.88% Financial Institutions/Banks/Insurance Cos.

13.77% Foreign Institutional Investors

9.76% Foreign Bodies (FIPB Route)

0.19% Non Resident Indians

52.34% Promoters

12.55% Public

The Association of Business Communicators of India recognises

and awards excellence in business communications. Lupin was a

recipient of an award for its Annual Report 2005-06

Holding Profile

(No. of Shares)

98.71% Demat

1.29% Physical


85


� DEMATERIALISATION OF SHARES AND LIQUIDITY

The Company’s shares are traded compulsorily in dematerialised form and are available for trading with both,

the depositories, namely, National Securities Depository Limited (NSDL) and Central Depository Services (India)

Limited (CDSL).

The Company has established direct connectivity with NSDL and CDSL and confirms valid demat requests within

five working days of receipt of demat request form, from Depository Participants (DPs).

With a view to expedite the dematerialisation process, the Company also monitors requests for dematerialisation

on an on-going basis.

The International Securities Identification Number (ISIN) assigned to Company’s equity shares by the

depositories is INE 326 A 01029

During the year, the Company has confirmed electronically 3,219 demat requests and 13 remat requests in

respect of 112,060 equity shares and 1,811 equity shares, respectively.

� DIVIDEND PROFILE

Financial year Book closure/Record dates Dividend Date of Date of payment declared declaration of dividend

2005 - 2006 11.07.2006 – 12.07.2006 65% 25.07.2006 26.07.2006

2004 - 2005 19.07.2005 - 20.07.2005 65% 28.07.2005 29.07.2005

2003 - 2004 15.07.2004 - 16.07.2004 65% 29.07.2004 30.07.2004

2002 - 2003 17.07.2003 - 18.07.2003 50% 06.08.2003 07.08.2003

2001 - 2002 (Final) 20.08.2002 - 21.08.2002 25% 02.09.2002 03.09.2002

2001 - 2002 (Interim) 07.02.2002 25% 17.01.2002 * 15.02.2002

2000 - 2001 13.09.2001 - 14.09.2001 35% 25.09.2001 26.09.2001

* Interim dividend declared by the Board of Directors

iv. Geographical distribution of members

State No. of members

Andhra Pradesh 1820

Bihar 1019

Delhi 3194

Gujarat 6030

Haryana 673

Karnataka 2162

Kerala 492

Madhya Pradesh 1537

Maharashtra 15928

North Eastern States 335

Orissa 272

Punjab 948

Rajasthan 1944

Tamilnadu 1986

Uttar Pradesh 3388

West Bengal 2986

Others 459

Total 45173


86

� ELECTRONIC DATA INFORMATION FILING AND RETRIEVAL (EDIFAR)

In terms of Clause 51 of the Listing Agreement, the Quarterly Financial Results and Shareholding Pattern are

promptly uploaded on the SEBI website www.sebi.gov.in. Annual requirements of electronically filing of the

Corporate Governance Report, Profit & Loss Account, Cash Flow Statements and Balance Sheet are also being

complied with.

Stock Option Plans (ESOPs) implemented for the benefit of the employees of the Company/its subsidiaries are

also posted on the SEBI website, in terms of the provisions of SEBI (Employee Stock Option Scheme and Employee

Stock Purchase Scheme) Guidelines, 1999.

� SECRETARIAL AUDIT REPORT

In accordance with SEBI guidelines, quarterly Secretarial Audit is undertaken by a Practising Company Secretary

for reconciling the total admitted capital with the records of the depositories, viz. National Securities

Depositories Limited (NSDL) and Central Depository Services (India) Limited (CDSL).

The Secretarial Audit Report inter alia certifying that the total shares held in NSDL, CDSL and those in physical

form tally with the issued/paid up capital, the Register of Members is duly updated, demat requests are

confirmed within stipulated time etc; is submitted to BSE and NSE on a quarterly basis. Details of changes, if any,

in the share capital of the Company during the quarter, are also covered in the report. The said report is placed

before the meetings of Board of Directors and Investors’ Grievances Committee.

� CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING

The Code of Conduct pursuant to the provisions of the SEBI (Prohibition of Insider Trading) Regulations 1992 has

been put in place and followed in spirit. Initial/continual disclosures, trading window closures and other

requirements envisaged under the Code are being regularly complied with.

� EMPLOYEES STOCK OPTION PLAN (ESOP)

During the year, the Remuneration/Compensation Committee implemented two employee stock option plans viz.

‘Lupin Employees Stock option Plan 2005’ (ESOP 2005) and ‘Lupin Subsidiary Companies Employees Stock Option

Plan 2005’ (SESOP 2005). Pursuant to the said plans, 227,400 (pre-bonus) and 64,700 (post bonus) options were

granted to 66 employees in four separate grants under ESOP 2005 and 31,850 (pre-bonus) options granted to 10

employees under SESOP 2005.

The plans were implemented according to the provisions of the SEBI guidelines with the exercise period of ten

years from the date of each grant. Each option is convertible into one equity share of nominal value of Rs.10/-

each and the vesting of which has been spread over a maximum period of four and a half years.

The Company has allotted 50,936 shares to the employees, who have exercised the vested options, granted to

them under the Lupin Employees Stock Option Plan 2003, as under:

Sl. No. Date of allotment No. of shares

1 July 11, 2006 8130

2 August 3, 2006 3230

3 September 11, 2006 2070

4 October 31, 2006 3135

5 November 20, 2006 13440

6 December 21, 2006 3990

7 January 22, 2007 3282

8 February 28, 2007 2040

9 March 30, 2007 11619

Total 50936

87


Considering the SEBI guidelines, the best global practices prevailing in this regard and with a view to pass on the

benefit of the bonus issue to option holders, an adjustment was made, so that an option holder would be entitled

to two options instead of one, for the same price, thereby halving the exercise price per option.

The Company has obtained necessary approvals for grant of initial and bonus options, allotment of shares and

listing thereof at the BSE and NSE.

� STATUS OF UNCLAIMED DIVIDENDS

Year of dividend Date of dividend Status of unclaimed dividend Entitlement

1993-94 {LCL} 08.12.1994 Transferred to General Amount can be claimed from

1993-94 {LLL} 09.08.1994 Revenue a/c of Central The Registrar of Companies, Maharashtra,

(Interim) Government C.G.O. Bldg, 2nd Floor, C.B.D. Belapur,

1993-94 {LLL} 20.12.1994 Navi Mumbai - 400 614.

(Final)

1994-95 (LLL) 01.02.1996 Transferred to Investor Amount cannot be claimed as per the

1995-96 (LLL) 01.02.1997 Education & Protection relevant provisions.

1996-97 (LLL) 02.02.1998 Fund (IEPF)

1997-98 (LLL) 05.01.1999

1997-98 (LCL) 19.01.1999

1998-99 (LLL) 03.01.2000

1998-99 (LCL) 04.01.2000

Dividends for the year 1999-2000 onwards shall be transferred to IEPF as under:

Year of Dividend Date of Declaration Date of transfer to unpaid / Due date for transfer to IEPF

of Dividend unclaimed Dividend account

1999-2000 * (LLL) 11.04.2000 30.05.2000 29.05.2007

1999-2000 (LCL) 04.11.2000 23.12.2000 22.12.2007

2000 - 01 25.09.2001 01.11.2001 31.10.2008

2001 - 02 * 17.01.2002 23.02.2002 22.02.2009

2001 – 02 02.09.2002 09.10.2002 08.10.2009

2002 – 03 06.08.2003 12.09.2003 11.09.2010

2003 – 04 29.07.2004 04.09.2004 03.09.2011

2004 – 05 28.07.2005 03.09.2005 02.09.2012

2005 - 06 25.07.2006 31.08.2006 30.08.2013

* Interim dividend

Members are advised to confirm with their records and claim the amount well before due date, if not encashed

earlier.

� OUTSTANDING GDRs/ADRs/WARRANTS/CONVERTIBLE INSTRUMENTS

Your Company issued Foreign Currency Convertible Bonds aggregating US$ 100 Mn., which are convertible at a

price of Rs.1,134.08 per equity share at a fixed exchange rate, anytime prior to December 28, 2010, unless

previously redeemed. Consequent to the issue of bonus shares in the ratio of one for one, the number of

underlying shares has doubled and the conversion price halved to Rs.567.04 per equity share.

Your Company has not issued any GDR/ADR/Warrants.


88

� PLANT LOCATIONS

The Company’s plants are located at:

i) T-142, MIDC Industrial Estate,

Tarapur Industrial Area,

Boisar, Dist. Thane,

Maharashtra.

ii) 198-202, New Industrial Area II,

Mandideep, Dist. Raisen,

Madhya Pradesh - 462 046.

iii) 211, New Industrial Area II,

Mandideep, Dist. Raisen,

Madhya Pradesh - 462 024.

� R & D CENTRE

Lupin Research Park

Survey Nos. 46A/47A,

Nande Village, Mulshi Taluka,

Dist. Pune,

Maharashtra - 411 042.

� CONTACT PERSONS FOR ENQUIRIES

Financial matters : Mr. Sunil Makharia,

email: [email protected]

Secretarial matters : Mr. Kiran N. Bade,


Investor related matters : Mr. Pradeep S. Bhagwat,


� ADDRESS FOR CORRESPONDENCE

The shareholders may address their queries/communications to:

Lupin Limited

Registered Office and Investors’ Services Department:

159, C.S.T. Road, Kalina,

Santacruz (East),

Mumbai - 400 098

India.

Tel: +91 22 6640 2323 Ext: 2402/2403

Fax: +91 22 2652 8806.

Exclusive email id for investor grievances

Pursuant to Clause 47(f) of the Listing Agreement, the following dedicated e-mail id has been designated for

communicating investors’ grievances:

[email protected]

For Lupin Limited


Chairman

Mumbai, May 9, 2007

iv) 124, GIDC Industrial Estate,

Ankleshwar,

Gujarat - 393 002.

v) A 28/1, MIDC Area,

Chikalthana, Aurangabad,

Maharashtra - 431 001.

vi) B-15, Phase I-A,

Verna Industrial Area,

Verna Salcette,

Goa - 403 722.

vii) Export Promotion Industrial Park,

SIDCO Industrial Complex,

Kartholi,

Bari Brahmana,

Jammu - 181 133.

89

CERTIFICATE PURSUANT TO CLAUSE 49 V OF THE LISTING AGREEMENT

We, Dr. Kamal K. Sharma, Managing Director and Mr. Sunil Makharia, Executive Vice President - Finance do

hereby certify to the Board that: -

(a) We have reviewed the Balance Sheet as at March 31, 2007, the Profit and Loss Account and the cash flow

statement for the year ended on that date and that to the best of our knowledge and belief:

(i) the said statements do not contain any materially untrue statement or omit any material fact or contain

statements that might be misleading;

(ii) the said statements together present a true and fair view of the Company’s affairs and are in compliance

with existing 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

year which are fraudulent, illegal or violative of the Company’s code of conduct.

(c) We accept responsibility for establishing and maintaining internal controls for financial reporting and that

we have evaluated the effectiveness of the internal control systems of the Company pertaining to financial

reporting and have disclosed to the Auditors and the Audit Committee, deficiencies in the design or operation

of such internal controls, if any, of which 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, if any;

(ii) significant changes in accounting policies during the year if any and that the same have been disclosed

in the notes to the financial statements; and

(iii) instances of significant fraud of which we have become aware and the involvement therein, if any, of

the management or an employee having a significant role in the Company’s internal control system over

financial reporting.

For Lupin Limited For Lupin Limited

DR. KAMAL K. SHARMA SUNIL MAKHARIA

MANAGING DIRECTOR EXECUTIVE VICE PRESIDENT - FINANCE

Mumbai, May 9, 2007

DECLARATION PURSUANT TO CLAUSE 49 I (D) (ii) OF THE LISTING AGREEMENT

In accordance with Clause 49 I (D)(ii) of the Listing Agreement with the Stock Exchanges, I hereby confirm that

the Board Members and Senior Management of the Company have affirmed compliance with the Code of Business

Conduct as applicable to them for the period ended March 31, 2007.

For Lupin Limited

DR. KAMAL K. SHARMA

MANAGING DIRECTOR

Mumbai, May 9, 2007



90

AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

TO THE MEMBERS OF LUPIN LIMITED

We have examined the compliance of conditions of Corporate Governance by Lupin Limited, for the year ended

on 31st March 2007, as stipulated in Clause 49 of the Listing Agreement of the said Company with the stock

exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our

examination was limited to procedures and implementation thereof, adopted by the Company for

ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression

of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, read with para

3 of the Corporate Governance report on ‘Audit Committee’ regarding compliance on 17th January 2007, with the

requirement of minimum number of directors since 9th May, 2006, consequent to the demise of a director and

para 1 of the Corporate Governance report regarding the formal framework of risk assessment and minimization

prepared by the Company placed before the Board of Directors on 9th May, 2007 and subject to the reconstitution

of the Board of Directors for minimum number of independent directors since 28th February, 2007, for the reason

stated in note (c) of para 2 of the Corporate Governance report, we certify that the Company has complied with

the conditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement.

We state that no investor grievance is pending for a period exceeding one month against the Company, based

on the records maintained by the Investors Services department and as certified by the Compliance officer of

the company.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the

efficiency or effectiveness with which the management has conducted the affairs of the Company.

For Deloitte Haskins & Sells Chartered Accountants

P. R. Barpande Partner

Membership No. 15291

Place : Mumbai

Dated : May 09, 2007

91LUPIN LIMITED

AUDITORS’ REPORT

TO THE MEMBERS OF LUPIN LIMITED

1. We have audited the attached Balance Sheet of Lupin Limited as at 31st March, 2007, the Profit and Loss

Account and also the Cash Flow Statement for the year ended on that date annexed thereto. 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 auditing standards generally accepted in India. Those Standards

require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as well as evaluating the overall

financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of

Section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters

specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief

were necessary 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

appears from our examination of the books;

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in

agreement with the books of account;

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the

accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e) On the basis of the written representations received from the directors as on 31st March, 2007 and

taken on record by the Board of Directors, we report that none of the directors is disqualified as on

31st March, 2007 from being appointed as a director in terms 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 said

accounts read with the significant accounting policies and other notes thereon give the information

required by the Companies Act, 1956, in the manner so required and give a true and fair view in

conformity with 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, 2007;

ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash flows for the year ended as on that date.

For Deloitte Haskins & Sells Chartered Accountants

P. R. Barpande Partner


Place : Mumbai



92

ANNEXURE TO AUDITORS’ REPORT

RE: LUPIN LIMITED (REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE)

(i) In respect of its fixed assets

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation

of fixed assets.

(b) The Company has physically verified certain assets during the year in accordance with a programme of

verification, which in our opinion provides for physical verification of the fixed assets at reasonable intervals.

According to the information and explanations given to us, no material discrepancies were noticed on such

verification.

(c) In our opinion and according to the information and explanations given to us, the Company has not made any

substantial disposal of fixed assets during the year.

(ii) (a) As explained to us, inventories were 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 physical

verification of inventories followed by the management were reasonable and adequate in relation to the size

of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained

proper records of its inventories and no material discrepancies were noticed on physical verification.

(iii) The Company has not granted or taken any loan secured/unsecured, to/from companies, firms or parties covered

in the register maintained under section 301 of the Companies Act, 1956. Accordingly, clause (iii) of Paragraph 4 of

the Companies (Auditor’s Report) Order, 2003 is not applicable to the Company.

(iv) In our opinion, and according to the information and explanations given to us, there is an internal control system

commensurate with the size of the Company and nature of its business for purchase of inventory and fixed assets

and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure

to correct major weaknesses in the internal control system.

(v) In respect of particulars of contracts or arrangements and transactions entered in the register maintained in

pursuance of section 301 of the Companies Act 1956;

(a) To the best of our knowledge and belief and according to the information and explanations given to us,

particulars of contracts or arrangements that needed to be entered into the register have been so entered.

(b) According to the information and explanations given to us, each of the transactions in pursuance of such

contracts/arrangements in excess of Rs 5 lakhs in respect of any party during the year, have been made at

prices which are reasonable having regard to the prevailing market prices at the relevant time, where such

prices are available.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the

provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956, and the rules framed

there under with regard to the deposits accepted from the public.

(vii) In our opinion, the internal audit functions carried out during the year by firms of Chartered Accountants

appointed by the management have been commensurate with the size of the Company and the nature of its

business.

(viii) We have broadly reviewed the books of account and records maintained by the Company relating to the manufacture

of bulk drugs and formulations, pursuant to the order made by the Central Government for the maintenance of

cost records under Section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the

prescribed accounts and records have been made and maintained. We have, however, not made a detailed

examination of the records with a view to determining whether they are accurate or complete.

(ix) (a) The Company, during the year, has been generally regular in depositing with the appropriate authorities

undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees’

State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other

material statutory dues applicable to it. According to the information and explanation given to us, no undisputed

amounts payable in respect of aforesaid, were in arrears as at 31st March, 2007 for a period of more than six

months from the date they became payable.

(b) According to the information and explanations given to us, the disputed dues that have not been deposited

on account of matters pending before respective authorities are as under:

93LUPIN LIMITED

ANNEXURE TO AUDITORS’ REPORT (CONTD.)

Name of the Statute Nature of the Dues Amount Periods to Forum where dispute is pending(Rs. in million) which

amountsrelate

Central Excise Act, 1944 Excise Duty 21.3 1997-2005 Customs, Excise and Service

Tax Appellate Tribunal (CESTAT)

3.7 1998-2006 Commissioner of Central Excise

(Appeals)

Central and various States’ Sales Tax 15.5 1992-2003 Commissioner of Sales Tax

Sales Tax Acts (Appeals)

13.0 1998-2006 Deputy Commissioner of Sales

Tax (Appeals)

3.7 1992-2003 Sales Tax Tribunal

1.0 1994-1995 Appellate Commissioner of

Commercial taxes

16.2 2001-2006 High Court, Jabalpur

(x) The Company has no accumulated losses at the end of the financial year and has not incurred any cash losses

during the current financial year and in the immediately preceding financial year.

(xi) Based on our audit procedures and on the basis of information and explanations given by the management, we

are of the opinion that the Company has not defaulted in the repayment of dues to financial institutions, banks

and debenture holders.

(xii) According to the information and explanations given to us, the Company has not given any loans and advances on

the basis of security by way of pledge of shares, debentures and other securities and hence the question of

maintenance of adequate records for this purpose does not arise.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or

a nidhi/mutual benefit fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Companies

(Auditor’s Report) Order, 2003 are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments.

Therefore, the provisions of clause (xiv) of paragraph 4 of the Companies (Auditor’s Report) Order, 2003 are not

applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the

counter guarantee given by the Company for loan taken by other party from a financial institution, are not prima

facie prejudicial to the interests of the Company.

(xvi) To the best of our knowledge and belief and according to the information and explanations given to us, the term

loans taken by the company were, prima facie, applied for the purposes for which they were raised.

(xvii) According to information and explanations given to us, and on an overall examination of the Balance Sheet of the

Company, funds raised on short term basis have, prima-facie, not been used for long term investment.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the Register

maintained under Section 301 of the Companies Act, 1956 and hence, the question of whether the price at which

shares have been issued is prejudicial to the interest of the Company does not arise.

(xix) According to the information and explanations given to us, the Company has not issued any secured debentures

during the year, hence the question of creation of security or charge in respect of debentures issued does not

arise.

(xx) The Company has not raised any money by way of public issue during the year. Therefore, the provisions of

clause 4(xx) of the Companies (Auditors’ Report) Order 2003 are not applicable to the Company.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud

on or by the Company was noticed or reported during the year.

For Deloitte Haskins & Sells

Chartered Accountants

P. R. Barpande

Place: Mumbai Partner

Dated: May 09, 2007 Membership No.15291


94

BALANCE SHEET

AS AT MARCH 31, 2007

I. SOURCES OF FUNDSShareholders’ Funds

Share Capital 1 803.4 401.4

Reserves and Surplus 2 8,080.7 6,038.1

8,884.1 6,439.5

Loan FundsSecured Loans 3 3,909.1 4,286.5

Unsecured Loans 4 4,736.4 4,839.5

8,645.5 9,126.0

Deferred Tax Liabilities (Net) 1,027.2 956.1

[Refer note no.6 of Schedule 17(B)]

TOTAL 18,556.8 16,521.6

II. APPLICATION OF FUNDSFixed Assets 5

Gross Block 9,517.1 8,350.6

Less: Depreciation and Amortisation 2,379.0 1,926.6

Net Block 7,138.1 6,424.0

Capital Work-in-Progress 825.5 252.1

7,963.6 6,676.1

Investments 6 58.6 95.0

Current Assets, Loans and AdvancesInventories 7 4,020.7 3,102.9

Sundry Debtors 8 4,793.0 3,483.9

Cash and Bank Balances 9 3,527.8 4,558.0

Loans and Advances 10 2,413.8 1,996.9

14,755.3 13,141.7

Less: Current Liabilities and Provisions 11

Current Liabilities 3,556.7 2,995.4

Provisions 664.0 395.8

4,220.7 3,391.2

Net Current Assets 10,534.6 9,750.5

TOTAL 18,556.8 16,521.6Significant Accounting Policies and Notes to Accounts 17

SchedulesAs at

31.03.2007As at

31.03.2006

Rs. in million Rs. in million

As per our attached report of even date

For Deloitte Haskins & Sells For Lupin LimitedChartered Accountants

P. R. Barpande Dr. Desh Bandhu Gupta Dr. Kamal K. Sharma M. D. Gupta

Partner Chairman Managing Executive

Director Director

D. K. Contractor K. U. Mada R. A. Shah

Director Director Director

Place : Mumbai Kiran N. Bade

Dated : May 09, 2007 Company Secretary

95LUPIN LIMITED

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED MARCH 31, 2007

INCOMESales (Gross) 20,288.7 16,610.4

Less: Excise Duty 579.4 549.4

Sales (Net) 19,709.3 16,061.0

Other Income 12 1,866.5 725.1

21,575.8 16,786.1EXPENDITURECost of Materials 13 9,127.7 7,567.7

Personnel Expenses 14 1,875.0 1,557.2

Manufacturing and Other Expenses 15 5,771.0 4,652.7

Interest and Finance Charges 16 370.9 303.0

Depreciation and Amortisation 463.7 403.5

17,608.3 14,484.1Profit before Tax 3,967.5 2,302.0Provision for Taxation

- Current Tax (including Wealth Tax) 753.7 338.9

- Deferred Tax 113.2 45.2

- Fringe Benefit Tax 80.0 90.7

Net Profit after Tax 3,020.6 1,827.2Less: Income Tax-earlier years 40.8 37.2

Add: Surplus brought forward from previous year 1,913.5 1,411.0

Add: Debenture Redemption Reserve written back 10.0 10.0

Amount Available for Appropriation 4,903.3 3,211.0APPROPRIATIONS :- Transfer to General Reserve 1,500.0 1,000.0

- Proposed Dividend on Equity Shares 401.7 260.9

- Corporate Tax on Dividend 68.3 36.6

Balance Carried to Balance Sheet 2,933.3 1,913.54,903.3 3,211.0

Earnings Per Share (Rs.) [Refer note no.14 of Schedule 17(B)]

- Basic 37.10 22.30- Diluted 36.93 22.24

Face Value of Equity Shares (Rs.) 10.00 10.00

Significant Accounting Policies and Notes to Accounts 17

SchedulesCurrent

Year ended31.03.2007

Previous

Year ended

31.03.2006






Director Director






96

CASH FLOW STATEMENT


CurrentYear ended

31.03.2007

PreviousYear ended

31.03.2006Rs. in million Rs. in million

A Cash Flow from Operating ActivitiesNet Profit before Tax 3,967.5 2,302.0

Adjustments for:


Loss on Sale/Discard of Fixed Assets (Net) 12.9 27.8

Interest and Finance Charges 370.9 303.0

Interest on Long Term Investments - Non Trade (1.4) (1.4)

Interest on Bank Fixed Deposits (205.7) (53.6)

Dividend on Long Term Investment - Trade

[31.03.2007 Rs. 6,615/-; 31.03.2006 Rs. 14,115/-]

Employee Benefits - Transitional adjustment as per AS-15 (125.2) -

(Revised) (Gross) [Refer note no.17(a) and (b) of Schedule 17(B)]

Provision for Doubtful Debts/Advances - 21.3

Provision for Doubtful Advances no longer required written back (13.3) -

Provision for Dimunition in value of Long Term Investments 3.8 0.8

Operating Profit before Working Capital Changes 4,473.2 3,003.4

Adjustments for:

Trade and other Receivables (1,797.5) (1,460.4)

Inventories (917.8) (622.1)

Trade Payables 585.6 647.8

Cash Generated from Operations 2,343.5 1,568.7

Direct Taxes paid (Net) (642.6) (360.3)

Fringe Benefit Tax paid (88.7) (85.0)

Net Cash Generated from Operating Activities 1,612.2 1123.4

B Cash Flow from Investing ActivitiesAdditions to Fixed Assets/Capital Work-in-Progress (1,766.3) (825.1)

Sale of Fixed Assets 2.2 5.2

Purchase of Investments (2.4) (2.1)

Sale of Investments 48.3 -

Loans and Advances to a subsidiary for investment - 13.3

Interest on Long Term Investments - Non Trade 1.4 1.4


[31.03.2007 Rs. 6,615/-; 31.03.2006 Rs. 14,115/-]

Interest on Bank Fixed Deposits 205.7 53.6

Net Cash used in Investing Activities (1,511.1) (753.7)

C Cash Flow from Financing ActivitiesProceeds from issue of Foreign Currency Convertible Bonds (FCCBs) - 4,461.5

FCCB issue expenses - (87.5)

(Repayment)/Proceeds from Borrowings (Net) (480.5) 258.1

Issue of Equity Shares (ESOPs) 0.5 -

Share Premium received (ESOPs) 17.4 -

Interest paid (Net) (370.9) (323.8)

Dividend paid (261.2) (261.2)

Corporate Dividend Tax paid (36.6) (36.6)

Net Cash (used in)/Generated from Financing Activities (1,131.3) 4,010.5Net (decrease)/increase in Cash and Cash equivalents (1,030.2) 4,380.2Cash and Cash equivalents as at the beginning of the year 4,558.0 177.8

Cash and Cash equivalents as at the end of the year 3,527.8 4,558.0

97LUPIN LIMITED

CASH FLOW STATEMENT (CONTD.)


Notes:

1. Cash and Cash equivalents include cash and bank balances in current accounts and in deposit accounts

(refer Schedule 9 of the Balance Sheet).

2. Additions to Fixed Assets (including movements in Capital Work-in-Progress) are considered as a part of

investing activities.

3. Interest income on Bank Fixed Deposits is classified as cash flow from Investing Activities.

4. The above Cash Flow Statement has been prepared under the ‘Indirect Method’ as set out in the Accounting

Standard (AS-3), “Cash Flow Statement” issued by the Institute of Chartered Accountants of India.

5. Previous year figures have been regrouped wherever necessary.





Director Director






98

SCHEDULES FORMING PART OF THE BALANCE SHEET

As at

31.03.2007

As at

31.03.2006


SCHEDULE 1 - SHARE CAPITAL

Authorised

100,000,000 (previous year 50,000,000) Equity Shares of Rs 10/- each 1000.0 500.0

Nil (previous year 1,500,000) Redeemable Cumulative Preference

Shares of Rs 100/- each - 150.0


TOTAL 1000.0 650.0

Issued, Subscribed and Paid-up

80,344,564 (previous year 40,141,134) Equity Shares of Rs 10/-

each fully paid up 803.4 401.4

TOTAL 803.4 401.4

Note :

Of the above equity shares-

i) 37,311,048 (previous year 37,311,048) Equity Shares of Rs. 10/- each were allotted as fully paid-up

without payment being received in cash, pursuant to the Scheme of Amalgamation with erstwhile Lupin

Laboratories Limited.

ii) 40,152,494 (previous year Nil) Equity Shares of Rs. 10/- each have been allotted as fully paid up Bonus

Shares by way of capitalisation of General Reserve, pursuant to the Shareholders’ resolution passed at the

Annual General Meeting held on July 25, 2006 [Refer note 2 to note no.14 of Schedule 17(B)].

iii) 50,936 (previous year Nil) Equity Shares of Rs. 10/- each, fully paid have been alloted under “ Lupin

Employees Stock Option Plan 2003" [Refer note no. 16(a) of Schedule 17(B)] Particulars of options on

unissued share capital [Refer note no.16(a) of Schedule 17(B)].

99LUPIN LIMITED


As at

31.03.2007

As at

31.03.2006


SCHEDULE 2 - RESERVES AND SURPLUS

Capital Reserve

- Investment Subsidies from Central Government

Balance as per last Balance Sheet 1.0 1.0

- Investment Subsidies from State Government


- On restructuring of capital of the Company under the Scheme

of Amalgamation


263.9 263.9

Capital Redemption Reserve


Securities Premium Account


Less: Foreign Currency Convertible Bonds (FCCBs) issue expenses (Net of Tax) - 58.0

Add:* Received during the year 17.4 -

413.7 396.3

General Reserve


Add :Transferred from Profit and Loss Account 1500.0 1000.0

Less :Utilised towards issue of Bonus Shares

[Refer note 2 to note no.14 of Schedule 17(B)] 401.5 -

Less :Adjustment on account of liability in respect of Employee

Benefits, as on April 1, 2006 (Net of Deferred Tax)

[Refer note no. 17(a) of Schedule 17(B)] 83.1 -

4015.4 3000.0

Debenture Redemption Reserve


Less:Transferred to Profit and Loss Account 10.0 10.0

10.0 20.0

Amalgamation Reserve


Surplus in Profit and Loss Account 2933.3 1913.5

TOTAL 8080.7 6038.1

* Represents amount received on allotment of 50,936 Equity Shares of Rs.10/- each, pursuant to “Lupin

Employees Stock Option Plan 2003" [Refer note no.16(a) of Schedule 17(B)].


100


As at31.03.2007

SCHEDULE 4 - UNSECURED LOANS

Fixed Deposits - 98.0

Short Term Loans from Banks

- Working Capital Loans - 55.0

Foreign Currency Convertible Bonds 4,461.5 4,461.5

[Refer note no. 21(a) of Schedule 17(B)]

Other Loans:

a) Sales Tax Deferment Loan - Government of Maharashtra 60.2 57.5

b) Loans from Council for Scientific and Industrial Research 214.7 167.5

[including interest accrued and due Rs.Nil (previous year Rs.2.5 million)]

TOTAL 4,736.4 4,839.5

Note :

Amount due within a year

i) Fixed Deposits - 98.0

ii) Loans from Council for Scientific and Industrial Research *- 31.9

*(On the basis of resheduled repayment terms)

iii) Working Capital Loans from Banks - 55.0


As at

31.03.2006

SCHEDULE 3 - SECURED LOANS

1. Debentures 1

1.2 million 8% ‘R’ Series Non-Convertible

Redeemable Debentures of Rs. 100/- each fully paid up. 40.0 80.0

2. Term Loans 2

(i) From Financial Institutions

- Rupee Loans 94.0 206.8

- Foreign Currency Loans - 53.5

(ii) From Banks

- Foreign Currency Loans 362.3 446.2

456.3 706.5

3. Cash Credit, Packing Credit and Post Shipment 3

Credit facilities from Banks 3,412.8 3,500.0

TOTAL 3,909.1 4,286.5

Notes :

1. Debentures are secured/to be secured by first legal/equitable mortgage of immovable assets and hypothecation of movable

assets of the company both present and future situated at (a) Aurangabad, Pune and Tarapur in State of Maharashtra, (b)

Ankleshwar in State of Gujarat, (c) Mandideep, District Raisen in State of Madhya Pradesh, (d) Verna in State of Goa and (e)

Bari Brahmana in State of Jammu and Kashmir. These debentures are redeemable in three equal annual installments starting

from August 17, 2005. Accordingly, these were redeemed during the year to the extent of Rs. 33.33 (previous year Rs.33.33)

(aggregating to date Rs. 66.66) per debenture due and paid on August 17, 2006 (previous year on August 17, 2005). The said

charge is ranking pari-passu between the lenders including for term loans (Refer note 2 below) and subject to prior charges

created/to be created in favour of the Company’s bankers on specific items of movables to secure working capital requirements

(Refer note 3 below).

2. Term loans from Financial Institutions/Banks are secured/to be secured by first charge ranking pari-passu with trustee for

debenture holders referred to in note 1 above and is further secured by way of personal guarantees of some of the Directors

of the company for amount aggregating to Rs.Nil (previous year Rs.38.8 million).

3. Loans from Banks in cash credit, packing credit and post shipment credit facilities are secured by hypothecation of

inventories and book debts and a second charge on immovable properties referred to in note 1 above.

4. Packing credit and post shipment credit facilities include foreign currency loans of Rs.1,654.9 million (previous year

Rs.1328.9 million).

5. Debenture of Rs. 40.0 million (previous year Rs. 40.0 million) and term loans of Rs. 343.8 million (previous year Rs. 220.7

million) are repayable within one year.

Notes

As at31.03.2007


As at

31.03.2006

101LUPIN LIMITED

SCH

ED

ULES FO

RM

ING

PA

RT O

F TH

E BA

LA

NCE SH

EET

SC

HED

ULE 5

- FIX

ED

ASSET

S

Gross Blo

ck

Deprecia

tio

n and A

mortis

atio

nN

et Blo

ck

Particulars

As

at

Addit

ions

Deducti

ons

As

at

Up t

oFor

the

Deducti

ons

Up t

oAs

at

As

at

Apri

l 01,

Marc

h 3

1,

Marc

h 3

1,

Year

Marc

h 3

1,

Marc

h 3

1,

Marc

h 3

1,

2006

2007

2006

2007

2007

2006

Fre

e H

old

Land

27.6

--

27.6

-

-

--

27.6

27.6

Lease

Hold

Land

125.4

22.9

-

148.3

9.8

2.1

-11.9

*136.4

115.6

Buildin

gs

1,9

63.0

272.0

-2,2

35.0

294.8

66.2

- 3

61.0

1,8

74.0

1,6

68.2

Pla

nt,

Machin

ery

and

Equip

ments

6,0

20.7

855.1

21.6

6,8

54.2

1,5

50.4

370.4

9.0

1,9

11.8

4,9

42.4

4,4

70.3

Furn

iture

and

Fix

ture

s134.3

41.1

0.2

175.2

38.4

13.7

**52.1

123.1

95.9

Vehic

les

21.5

1.8

4.6

18.7

4.8

1.9

2.3

4.4

14.3

16.7

Inta

ngib

le

Ass

ets

58.1

--

58.1

28.4

9.4

-37.8

20.3

29.7

(Com

pute

r Soft

ware

)

TO

TA

L8,3

50.6

1,1

92.9

26.4

9,5

17.1

1,9

26.6

463.7

11.3

2,3

79.0

7,1

38.1

6,4

24.0

Pre

vio

us

year

7,1

48.5

1,2

71.1

69.0

8,3

50.6

1,5

59.1

403.5

36.0

1,9

26.6

6,4

24.0

Capit

al

Work

-in-P

rogre

ss825.5

252.1

TO

TA

L7963.6

6,6

76.1

(Rs. in

m

illion)

* A

mounts w

rit

ten off in

respect of Lease hold

Land for the perio

d of le

ase w

hic

h has expir

ed.

** R

s.40,580/-

Notes :

1.

Cost of Buildin

gs in

clu

des cost of shares in

co-operativ

e socie

tie

s of Rs.1,000/- (previo

us year Rs.1,000/-).

2.

Capit

al

Work-in

-Progress in

clu

des capit

al

advances paid

, m

achin

ery under in

stallatio

n/in

transit

, constructio

n and erectio

n m

ateria

ls (in

clu

din

g those ly

ing

wit

h contractors) and pre-operativ

e expenses [Refer note no.5 of Schedule

17(B)].

3.

Deprecia

tio

n for the current year in

clu

des Rs.4.9 m

illion pertain

ing to earlier years (previo

us year Rs.2.6 m

illion).

4.

Addit

ions to Fix

ed Assets and Capit

al

Work-in

-Progress in

clu

des Rs.1.3 m

illion (N

et) ( previo

us year Rs. N

il) on account of exchange dif

ferences (N

et).

5.

Addit

ions to Fix

ed A

ssets in

clu

des it

em

s of Fix

ed A

ssets aggregatin

g to R

s.112.2 m

illi

on (previo

us year R

s. 95.3 m

illi

on) lo

cated at Research and

Develo

pm

ent Centres of the Com

pany.


102

As at As atNumber Face 31.03.2007 31.03.2006

Value Rs. in million Rs. in million Rs. in million

SCHEDULE 6 - INVESTMENTS

Long Term Investments(At cost/carrying amount unless otherwise stated)

1 In Government Securities-Unquoted (Non Trade)National Saving Certificates -

(Deposited with Government Authority)

(31.03.2007- Rs. 6,000/-)

2 In Equity Sharesa) In Subsidiary Companies - Unquoted (Trade)

Lupin Pharmacare Ltd. 49,994 Rs. 0.5 -

(Nil) 10

Lupin Herbal Ltd. 50,000 Rs. 0.5 0.5

(Including 6 shares held by nominees) (50,000) 10

Lupin Pharmaceuticals Inc., USA 300,000 USD 13.8 13.8

(300,000) 1

Lupin Holdings B. V., Netherlands 20,000 EURO 1.2 -

(Nil) 1

Lupin Australia Pty Ltd., Australia 430,000 AUD 14.5 0.5

[Refer note no. 2 of Schedule 10] (15,000) 1

Lupin Hong Kong Ltd., Hong Kong 800,000 HKD 4.7 4.7

(Including 1 share held by a nominee) (800,000) 1

[Refer note no.4(b) of Schedule 17(B)]

Lupin Chemicals (Thailand) Ltd., Thailand Nil Bahts - 48.3

[Refer note no.4(a) of Schedule 17(B)] (420,000) 100

35.2 67.8

Less : Provision for diminution in value of investments 4.6 0.8

[Refer note no. 4(b) of Schedule 17(B)] 30.6 67.0

b) Others - Unquoted (Trade)Biotech Consortium India Ltd. 50,000 Rs. 0.5 0.5

(50,000) 10

Bharuch Enviro Infrastructure Ltd. 4,410 Rs.

(31.03.2007 - Rs. 44,100/-; 31.03.2006 - Rs. 44,100/-) (4,410) 10

Bharuch Eco-Acqua Infrastructure Ltd. 643,675 Rs. 6.4 6.4

(643,675) 10

Tarapur Environment Protection Society 114 Rs. -

(31.03.2007 - Rs.11,400/-) (Nil) 100

6.9 6.9

c) Quoted (Non Trade)Gran Heal Pharma Ltd 575,000 Rs. 5.7 5.7

(575,000) 10

Less : Provision for diminution in value of investments 5.7 5.7

- -

3 In BondsQuoted (Non-Trade)

6.75% Tax Free US 64 Bonds 211,400 Rs. 21.1 21.1

(211,400) 100

TOTAL 58.6 95.0

Notes :-

1. a) Quoted Investments : Aggregate Cost/Carrying Value 21.1 21.1

: Aggregate Market/Repurchase Value of Bonds 21.1 21.5

b) Unquoted Investments : Aggregate Cost/Carrying Value 37.5 73.9

2. All the Investments in shares/bonds are fully paid up.


103LUPIN LIMITED

SCHEDULE 8 - SUNDRY DEBTORS

(Unsecured)

Debts outstanding for a period exceeding six months

- Considered Good 56.7 27.5

- Considered Doubtful 17.0 17.0

73.7 44.5

Other Debts Considered Good 4,736.3 3,456.4

4,810.0 3,500.9

Less: Provision for Doubtful Debts 17.0 17.0

TOTAL 4,793.0 3,483.9Note:

Sundry debtors include debts due from subsidiary companies

Rs.1,838.1 million (previous year Rs.1,182.5 million).


SCHEDULE 7 - INVENTORIES

Stock-in-trade

- Raw Materials 1,436.4 956.0

- Packing Materials 325.8 326.9

- Work-in-Process 761.0 628.4

- Finished Goods (including Traded Goods) 1,384.2 1,090.9

Consumable Stores, Spares and Fuel 113.3 100.7

TOTAL 4,020.7 3,102.9

As at31.03.2007

As at

31.03.2006


SCHEDULE 9 - CASH AND BANK BALANCES

Cash in hand [including Cheques on hand of Rs.84.6 million 87.0 35.4

(previous year Rs.33.4 million)]

Bank Balances:

- With Scheduled Banks

In Current Accounts (including remittances in transit) 81.6 67.2

In Exchange Earners Foreign Currency Account 0.2 0.3

In Deposit Accounts [including Margin Deposits Rs.4.6 million 3,350.0 4,441.8

(previous year Rs.6.7 million) and deposits placed out of proceeds

from FCCB issue Rs.3,260.3 million (previous year Rs.4,383.4 million)]

- With Others

In Current Accounts 9.0 13.3

[See note (ii) below]

TOTAL 3,527.8 4,558.0

Notes :

i) Bank Balances in deposit accounts include interest accrued on fixed deposits amounting to Rs. 46.9 million (previous year Rs.51.7 million).

ii) Bank Balances include balances with non scheduled banks are as under : (Rs. in million)

Maximum balance

Name of the Bank Country As at As at during the year ended

31.03.2007 31.03.2006 31.03.2007 31.03.2006

Bank of Foreign Trade - Vneshtorg Bank-US$ A/c Russia 0.6 0.5 1.1 0.7

Bank of Foreign Trade - Vneshtorg Bank-Rouble A/c Russia 0.1 0.7 0.2

(31.03.2007 Rs.16,160/-)

Texaka Bank - Tenge A/c Kazakhstan 0.1 1.2 0.1

(31.03.2007 Rs.19,557/-)

Texaka Bank - US$ A/c Kazakhstan 0.4 - 1.1 -

Ukreximbank UAH A/c Ukraine 1.0 0.2

(31.03.2007 Rs.22,884/-, 31.03.2006 Rs.40,854/-)

Ukreximbank US$ A/c Ukraine 0.6 0.6 3.6 0.7

Citi Bank N.A. UK 7.2 12.0 16.5 12.0

National Bank - Uzbekistan US$ A/c Uzbekistan 0.1 0.6 0.2

(31.03.2006 Rs. 2,461/-)


104


SCHEDULE 10 - LOANS AND ADVANCES

(Unsecured, considered good unless otherwise stated)

Loans and advances to a subsidiary - 13.3

Advances recoverable in cash or in kind or for value to be received

- Considered Good 1,530.7 1,161.4


1,537.2 1,181.2

Less: Provision for Doubtful Advances 6.5 19.8

1,530.7 1,161.4

Deposits 874.4 743.7

Balances with Customs and Excise Authorities 5.6 3.9

Advance payment of Income Tax (Net of Provision) 0.1 74.6


Advance payment of Fringe Benefit Tax (Net of Provision) 3.0 -

TOTAL 2,413.8 1,996.9Notes:

1. Loans and advances includes:

i) Cenvat balances 205.6 253.8

ii) Service Tax input credit 95.6 52.1

iii) Export Benefits Receivable 617.5 478.9

(DEPB/Target Plus Scheme/Excise Duty Refund)

SCHEDULE 11 - CURRENT LIABILITIES AND PROVISIONS

Current LiabilitiesAcceptances 375.7 733.6

Sundry Creditors :

i) Total outstanding dues to small scale industrial undertakings 161.0 142.9

ii)Total outstanding dues to creditors other than small scale

industrial undertakings (Refer notes below) 2,977.0 2,067.5

Interest Accrued but not due on loans 23.5 20.4

Unpaid Dividend * 8.2 8.5

Unpaid Matured Deposits * 6.5 13.8

Unpaid Matured Debentures * 1.7 2.5

Unpaid Interest Warrants * 3.1 6.2

* There are no amounts due and outstanding to be credited to

Investor Education and Protection Fund.

TOTAL 3,556.7 2,995.4

ProvisionsFor Gratuity 18.1 22.4

For Leave Encashment 97.3 69.0

For Taxation (including Wealth Tax) (Net of Advance Tax) 78.6 1.2


For Fringe Benefit Tax (Net of Advance Tax) - 5.7

For Proposed Dividend on Equity Shares 401.7 260.9

For Tax on Dividend 68.3 36.6

664.0 395.8

TOTAL 4,220.7 3,391.2

As at31.03.2007

As at

31.03.2006


2. Loans and Advances given to a subsidiary in the previous year, towards

advance subscription to ordinary shares, have been adjusted during the

year, on allotment of shares of the said subsidiary (Refer Schedule 6).

Notes :

1) Sundry Creditors include amount due to subsidiary companies Rs. 528.5 million

(previous year Rs.383.2 million).

2) The Company has not received intimation from suppliers regarding the status

under the Micro, Small and Medium Enterprises Development Act, 2006 and hence

disclosures, if any, relating to amounts unpaid as at the year end together with

interest paid/payable as required under the said Act have not been given.

105LUPIN LIMITED

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT

SCHEDULE 12 - OTHER INCOME

Export Benefits/Incentives 139.0 456.6

Income from Research Services 89.3 107.3

Income from Sale of Patent Application 1143.2 -

Dividend on Long Term Investments - Trade

[31.03.2007 - Rs. 6,615/- ; 31.03.2006 - Rs.14,115/-]


Interest on Deposits with Banks 205.7 53.6

[Tax Deducted at Source Rs.0.7 million (previous year - Rs. 0.5 million)]

Other Interest (Net) 4.5 13.5


Insurance Claims 8.8 41.0

Compensation Received 192.2 -

[Refer note no. 20 of Schedule 17(B)]

Credit balances written back 49.7 9.0

(including credit balances written back, consequent to settlement)

Provision for Doubtful Advances no longer required written back 13.3 -

Miscellaneous Income 19.4 42.7

[including share in income from a customer Rs. Nil (previous year

Rs.6.0 million)]

[Tax Deducted at Source Rs.0.6 million (previous year Rs.1.9 million)]

TOTAL 1,866.5 725.1

SCHEDULE 13 - COST OF MATERIALS

Raw Materials Consumed 6,509.4 5,424.3

Packing Materials Consumed 787.6 582.9

Purchase of Traded Goods 2,256.6 1,861.0

Opening Stock :

Finished Goods (including Traded Goods) 1,090.9 891.4

Work-in-Process 628.4 527.4

1,719.3 1,418.8

Closing Stock :

Finished Goods (including Traded Goods) 1,384.2 1,090.9

Work-in-Process 761.0 628.4

2,145.2 1,719.3

Increase in Stock of Finished Goods (including Traded Goods)

and Work-in-Process (425.9) (300.5)

TOTAL 9,127.7 7,567.7

SCHEDULE 14 - PERSONNEL EXPENSES

Salaries, Wages and Bonus 1,594.4 1,307.6

Contribution to Provident, Gratuity and Other Funds 148.9 137.4

Staff Welfare Expenses 131.7 112.2

TOTAL 1,875.0 1,557.2

Year Ended

31.03.2007

Year Ended

31.03.2006



106

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT

SCHEDULE 15 - MANUFACTURING AND OTHER EXPENSES

Processing Charges 182.9 123.0

Consumable Stores and Spares 487.5 400.3

Repairs and Maintenance :

- Buildings 56.4 48.7

- Plant and Machinery 113.3 87.4

- Others 87.1 64.7

Rent 35.1 29.4

Rates and Taxes 39.2 39.4

Insurance 81.2 61.4

Power and Fuel 902.6 732.5

Excise Duty (Net) 79.7 95.6

Selling and Promotion Expenses 1,353.5 1,161.8

Commission, Brokerage and Discount 345.2 278.7

[Including Cash Discount of Rs.4.7 million (previous year Rs.3.8 million)]

Freight and Forwarding 218.2 189.0

Lease Rent and Hire Charges 46.1 39.4

Postage and Telephone Expenses 73.9 66.3

Travelling and Conveyance 348.8 262.3

Legal and Professional Charges 406.0 145.0

Donations 40.0 32.0

Clinical and Analytical Charges 337.5 281.1


Bad Debts/Advances written off 12.5 4.0


Provision for Dimunition in value of Long Term Investments 3.8 0.8

[Refer note no.4(b) of Schedule 17(B)]

Directors Sitting Fees 0.9 1.0

Exchange Rate Difference (Net) 95.6 112.6

Miscellaneous Expenses 411.1 347.2

(includes Printing and Stationery, Contract Labour Charges,

Books and Periodicals, Product Registration Fees, Audit Fees, etc.)

TOTAL 5,771.0 4,652.7

Year Ended

31.03.2007

Year Ended

31.03.2006


SCHEDULE 16 - INTEREST AND FINANCE CHARGES

Interest on Debentures 5.8 7.6

Interest on Fixed Loans 56.3 83.2

Others 308.8 212.2

TOTAL 370.9 303.0

107LUPIN LIMITED

SCHEDULES FORMING PART OF THE ACCOUNTS

SCHEDULE 17 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE BALANCE

SHEET AND PROFIT AND LOSS ACCOUNT

A) SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Preparation of Financial Statements:

The financial statements are prepared as per historical cost convention and in accordance with the

generally accepted accounting principles in India, the provisions of the Companies Act, 1956 and the

applicable Accounting Standards issued by the Institute of Chartered Accountants of India.

b) Use of Estimates:

The preparation of financial statements requires estimates and assumptions that affect the reported

amount of assets and liabilities on the date of the financial statements and the reported amount of

revenues and expenses during the reporting period. Differences between the actual results and the

estimates are recognised in the period in which the same are known/materialised.

c) Fixed Assets:

Fixed Assets are stated at cost, net of modvat/cenvat, less accumulated depreciation and accumulated

impairment losses, if any. All costs, including financing costs till commencement of commercial production,

net charges on foreign exchange contracts and adjustment arising from exchange rate variations

attributable to the imported fixed assets are capitalised.

d) Intangible Assets:

Intangible assets are recognised only if it is probable that the future economic benefits that are

attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably.

The intangible assets are recorded at cost and are carried at cost less accumulated amortisation and

accumulated impairment losses, if any.

e) Foreign Currency Transactions/Translation:

Transactions in foreign currency are recorded at the original rate of exchange in force at the time

transactions are effected. Exchange differences arising on repayment of foreign currency liabilities

incurred for the purpose of acquiring imported fixed assets are adjusted in the carrying amount of the

respective fixed assets. Exchange differences arising on settlement of other transactions are recognized

in the Profit and Loss Account.

Monetary items (other than those related to acquisition of imported fixed assets) denominated in

foreign currency are restated using the exchange rate prevailing at the date of the Balance Sheet and

resulting net exchange difference is recognized in the Profit and Loss Account. The exchange gain/loss

arising on restatement of foreign currency liability relating to imported fixed assets is adjusted in the

value of the related fixed assets.

In case of monetary items which are covered by forward exchange contracts, the difference between

the exchange rate on the date of such contracts and the year end rate is recognized in the Profit and

Loss Account. Any profit/loss arising on cancellation of forward exchange contract is recognized as

Income or Expense of the year. Premium/discount arising on such forward exchange contracts is amortised

as Income/Expense over the life of contract.

Foreign offices/branches:

In respect of the foreign offices/branches, which are integral foreign operations, all revenues and

expenses (except depreciation) during the year are reported at average rate. Monetary assets and

liabilities are restated at the year-end exchange rate. Non-monetary assets and liabilities are stated at

the rate prevailing on the date of the transaction. Balance in ‘head office’ account whether debit or

credit is translated at the amount of the balance in the ‘foreign office’ in the books of the head office.

Net gain/loss on foreign currency translation is recognized in the Profit and Loss Account.

f) Financial Derivatives Transactions:

Financial Derivatives contracts are accounted on the date of their settlement and realised gain/loss in

respect of settled contracts are recognised in the Profit and Loss Account, along with underlying

transactions.


108


SHEET AND PROFIT AND LOSS ACCOUNT (CONTD.)


g) Investments:

Long-term investments are stated at cost of acquisition. Investments in foreign currency are stated at

cost by converting at exchange rate prevailing at the time of acquisition. Provision for diminution in

the value of long-term investments is made only if such decline is other than temporary.

h) Inventories:

Stock-in-trade is valued at lower of cost and net realisable value. Stock of consumable stores, spares

and furnace oil are valued at cost. Cost is computed based on moving weighted average in respect of

all procured materials and comprises of materials and appropriate share of utilities and other overheads

in respect of Work-in-Process and Finished Goods. Cost also includes all charges incurred for bringing

the inventories to their present location and condition.

i) Revenue recognition:

i) Revenue from sale of goods is recognised when the significant risks and rewards in respect of

ownership of products are transferred by the Company.

ii) Revenue from product sales is stated net of returns, sales tax and applicable trade discounts and

allowances.

iii) Income from research services is recognised as revenue when earned in accordance with the terms

of the relevant agreements.

iv) Insurance or other claims, interest etc. is recognised only when it is reasonably certain that the

ultimate collection will be made.

j) Export Benefits:

Export benefits available under prevalent schemes are accrued in the year in which the goods are

exported and are accounted to the extent considered receivable.

k) Excise Duty:

Excise Duty is accounted on the basis of payments made in respect of goods cleared and provision is

made for goods lying in bonded warehouses.

l) Depreciation and Amortisation:

Depreciation on fixed assets is provided on straight line basis in the manner and at the rates prescribed

in Schedule XIV to the Companies Act, 1956, except for the following fixed assets which are depreciated/

amortised over their useful life as determined by the Management on the basis of technical

evaluation, etc.

Assets Estimated useful lifeCaptive Power Plant at Tarapur 15 years

Certain assets provided to employees 3 years

Leasehold Land Over the period of lease

Intangible Assets (Computer Software) 6 years

m) Employee Benefits [Refer note no.17(a) and (b) of Schedule 17(B)]

i) Defined Contribution plan:

Company’s contribution paid/payable for the year to Defined Contribution Retirement Benefit

Schemes are charged to Profit and Loss Account.

ii) Defined Benefit plan:

Company’s liabilities towards Defined Benefit Schemes are determined using the Projected Unit

Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the

Balance Sheet date. Actuarial gains and losses are recognised in the Profit and Loss account in the

period of occurrence of such gains and losses. Past service cost is recognised immediately to the

extent of benefits are vested, otherwise it is amortised on straight-line basis over the remaining

average period until the benefits become vested.

109LUPIN LIMITED




The retirement benefit obligation recognised in the Balance Sheet represents the present value of

the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by

the fair value of scheme assets. Any asset resulting from this calculation is limited to past service

cost, plus the present value of available refunds and reductions in future contributions to the

scheme.

iii) Short-term employee benefits:

Short-term employee benefits expected to be paid in exchange for the services rendered by employees

are recognised undiscounted during the period employee renders services. These benefits include

performance incentives.

n) Taxes on Income:

Income Taxes are accounted for in accordance with Accounting Standard 22 (AS 22) “Accounting for

Taxes on Income” issued by The Institute of Chartered Accountants of India (ICAI). Tax expense comprises

both current tax and deferred tax. Current tax is measured at the amount expected to be paid or

recovered from the tax authorities using the applicable tax rates.

Deferred tax assets and liabilities are recognised for future tax consequence attributable to timing

differences between taxable income and accounting income that are measured at relevant enacted tax

rates. At each balance sheet date the company reassesses unrecognised deferred tax assets, to the

extent they become reasonably certain or virtually certain of realisation, as the case may be.

o) Fringe Benefit Tax:

Fringe Benefit Tax is recognized in accordance with the relevant provisions of the Income Tax Act, 1961

and the Guidance note on Fringe Benefit Tax issued by the ICAI.

p) Operating Leases:

Assets taken on lease under which all risks and rewards of ownership are effectively retained by the

lessor are classified as operating lease. Lease payments under operating leases are recognised as

expenses on accrual basis in accordance with the respective lease agreements.

q) Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a

present obligation as a result of past events and it is probable that there will be an outflow of resources.

Contingent liabilities are not recognised but are disclosed in the Notes to Accounts. Contingent Assets

are neither recognised nor disclosed in the financial statements.

r) Borrowing Costs:

Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalised as

part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of

time to get ready for its intended use. All other borrowing costs are charged to revenue.

s) Stock based Compensation:

The compensation cost of stock options granted to employees is measured by the Intrinsic Value Method,

i.e. the difference between the market price of the Company’s shares on the date of the grant of

options and the exercise price to be paid by the option holders. The compensation cost is amortised

uniformly over the vesting period of the options.

t) Impairment of assets:

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An

impairment loss is charged to Profit and Loss Account in the year in which an asset is identified as

impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a

change in the estimate of recoverable amount.


110


B) NOTES TO ACCOUNTS

1. Estimated amount of contracts remaining to be executed on capital account and not provided for,

net of advances, Rs.304.8 million (previous year Rs.357.0 million).

2. Contingent Liabilities: -

(Rs. in million)As at As at

March 31, 2007 March 31, 2006

a) Income Tax demands in respect of earlier years under dispute, 186.3 282.5

pending in appeals before higher authorities [including Rs. 113.7

million (previous year Rs. 113.7 million) consequent to department

preferring an appeal on the favourable order passed by the C.I.T.

(Appeals)]. Amount paid there against and included under Schedule

10 (Rs.72.6 million) previous year (Rs.153.0 million)

b) Excise Duty, Sales Tax disputed in appeals and pending decisions 82.9 78.7

before higher authorities. Amount paid there against and included

under Schedule 10 (Rs.8.5 million) previous year (Rs.12.3 million)

c) Custom Duty in respect of future export obligation in accordance 11.4 7.4

with Exim Policy.

d) Claims against the Company not acknowledged as debts [including

Rs.115.9 million (previous year Rs.112.6 million) along with interest

demanded under Drug Price Control Order 1979, payable into Drug Price

Equalisation Account towards unintended benefit enjoyed by the

Company. The Company has replied to the notices and contended

that no amount is payable and the matter is also pending decision,

before various courts on the appeals filed by the Associations of

which the Company is a member]. Amount paid there against without

admitting liability and included under Schedule 10 (Rs.31.5 million)

Previous year (Rs.4.8 million)

e) Counter guarantee given to GIDC in connection with loan sanctioned 7.5 7.5

by a financial institution to a company, jointly promoted by an

Association of Industries (of which, the Company is a member) and GIDC.

3. The Company in accordance with the resolution passed by the Shareholders at the Annual General

Meeting held on July 25, 2006 increased the authorised share capital from Rs. 650.0 million divided

into 50,000,000 Equity Shares of Rs.10/- each and 1,500,000 Redeemable Cumulative Preference Shares

of Rs. 100/- each to Rs. 1,000.0 million divided into 100,000,000 Equity Shares of Rs. 10/- each by

reclassifying the 1,500,000 Redeemable Cumulative Preference Shares of Rs. 100/- each into 15,000,000

Equity Shares of Rs. 10/- each and creation of 35,000,000 new Equity Shares of Rs. 10/- each. Accordingly,

the authorised share capital has been altered in the Memorandum and Articles of Association.

4. a) The Company had long term investments aggregating to Rs. 48.3 million (previous year Rs. 48.3

million) in Lupin Chemicals (Thailand) Ltd (a subsidiary company, in which the Company held 60%

stake). The said subsidiary had accumulated losses and its net worth was substantially eroded.

During the current year, on May 31, 2006, the Company sold the shares held by it in the said

subsidiary to another party at an amount equivalent to the amount paid by it for the purchase of

such shares. Consequent to the sale of the investments, Lupin Chemicals (Thailand) Ltd. ceased to

be subsidiary of the Company from June 1, 2006.



308.0 268.5

111LUPIN LIMITED




b) As regards the Company’s investments in Lupin Hong Kong Ltd (cost aggregating to Rs. 4.7 million),

a 100% subsidiary, considering the Company’s plan to restructure its business strategies, the said

subsidiary filed an application with the Registrar of the Companies, Hong Kong (ROC) for

de-registration, as the subsidiary is defunct. The said authority has communicated its in principle

approval and the subsidiary would be deregistered on completion of formalities under the ordinance

of Hong Kong, where the subsidiary is located. The said subsidiary has remitted Rs.0.1 million

(HKD 25,097) on closure of its bank account, which, pending completion of deregistration formalities,

has been grouped by the Company under current liabilities (Schedule 11), and the same would be

adjusted against investments on receipt of final deregistration communication. Considering the

above, the Company during the year has made a provision of Rs. 3.8 million (previous year Rs. 0.8

million) (aggregate to date Rs. 4.6 million) towards diminution in the value of the said investments.

5. Pre-operative expenses, included in Capital Work-in-Progress (Schedule 5), represent the expenses

incurred for projects, which are yet to be commissioned. Such pre-operative expenses mainly pertain

to plants/building under erection/construction at units/projects located at Jammu, Tarapur, Ankleshwar,

Goa and Mandideep, to be capitalised on completion of projects, at the respective locations. During

the year, some of the projects at Goa, Ankleshwar, Tarapur and Mandideep were commissioned and

capitalised. The details of the pre-operative expenses are:

6. Deferred Tax Provision:

The Deferred Tax Assets/(Liabilities) arising out of significant timing differences are as under:

7. As at 31st March 2007, advance payment of Income Tax and Provision for Taxation have been disclosed

on a net basis, wherever a legal right to set off exists and when the Company intends to settle the

assets and liabilities on a net basis. Accordingly, the previous year’s corresponding figures which were

disclosed on a gross basis have been now regrouped.

As at As atParticulars 31.03.2007 31.03.2006

Deferred Tax Liability:Depreciation (1092.9) (1027.3)

Deferred Tax Assets:Provision for Doubtful Debts and Advances 7.9 12.4

Provision for Leave Encashment 32.7 17.1

FCCB issue expenses 17.7 23.6

Other timing differences 7.4 18.1

Net Deferred Tax Liability (1027.2) (956.1)

(Rs. in million)

Particulars 2006-2007 2005-2006

Opening balance 4.7 18.7

Incurred in the current year :

Salaries, allowances and contribution to funds 24.9 8.1

Professional fees 0.9 0.5

Travelling expenses 6.3 1.3

Others 9.1 1.6

Total 45.9 30.2

Less : Capitalised during the year 19.1 25.5

Closing balance 26.8 4.7

(Rs. in million)


112




8. Segment Reporting:

i) Primary business segment:

The Company is exclusively in the Pharmaceutical business segment and has only one reportable

segment.

ii) Secondary business segment:

The Company has presented such data as per the requirements of AS 17 “Segment Reporting”

based on its consolidated financial statements, which forms part of this Annual Report.

9. Additional information pursuant to the Provisions of Paragraphs 3, 4C and 4D of Part II of Schedule VI

to the Companies Act, 1956.

a) Consumption of Raw Materials:

b) Value of Imported and Indigenous consumption:

i) Consumption of Raw Material:

ii) Consumption of Stores and Spares:

c) CIF Value of Imports:

2006-2007 2005-2006

(Rs. in million) (Rs. in million)

i) Capital Goods 227.5 125.2

ii) Raw Materials 3,980.4 3,049.5

iii) Packing Materials 171.7 255.0

iv) Purchase of Traded Goods 66.5 -

v) Consumable, Stores and Spares 46.7 35.4

TOTAL 4,492.8 3,465.1

2006-2007 2005-2006

% (Rs. in million) % (Rs. in million)

Imported 55.4 3607.6 53.9 2921.5

Indigenous 44.6 2901.8 46.1 2502.8

TOTAL 100.0 6509.4 100.0 5424.3

2006-2007 2005-2006

% (Rs. in million) % (Rs. in million)

Imported 3.0 14.6 2.6 10.4

Indigenous 97.0 472.9 97.4 389.9

TOTAL 100.0 487.5 100.0 400.3

2006-2007 2005-2006

Item Unit Quantity (Rs. in million) Quantity (Rs. in million)

DL2 (RECEMIC) MT 1569.8 690.4 1235.7 493.4

PEN G MT 5089.0 1609.0 4718.4 1361.0

Others 4210.0 3569.9

TOTAL 6509.4 5424.3

113LUPIN LIMITED


d) Expenditure in Foreign currencies on account of :

2006-2007 2005-2006

(Rs. in million) (Rs.in million)

i) Interest 37.4 35.9

ii) Travelling 31.2 20.9

iii) Commission 88.6 78.2

iv) Selling and Promotion Expenses 599.0 573.4

v) Clinical and Analytical Charges 47.5 74.5

vi) Legal and Professional Charges 319.7 83.6

vii) Personnel Expenses 55.8 45.6

viii) Others 126.2 105.6

TOTAL 1305.4 1017.7

e) Earnings in Foreign exchange on account of:

2006-2007 2005-2006


i) FOB value of Exports 9279.4 7611.0

ii) Deemed Exports 295.1 199.7

iii) Reimbursement of freight and insurance 115.0 103.2

iv) Income from Research Services 89.3 107.3

v) Income from sale of Patent Application 1143.2 -

vi) Interest on Bank Fixed Deposits 202.6 51.7

vii) Compensation received 58.7 -

viii) Others 51.2 20.7

TOTAL 11234.5 8093.6

10. Remittance in foreign currency on account of dividend:

The Company has paid dividend in respect of shares held by Non-Resident Shareholders on repatriation

basis. This inter-alia includes portfolio investment and direct investment, where the amount is also

credited to Non Resident External A/c (NRE A/c). The exact amount of dividend remitted in foreign

currency cannot be ascertained. The total amount remittable in this respect is given below:

Year to which the dividend relates 2005-2006 2004-2005

Number of non-resident shareholders 261 131

Number of shares held by them 8919768 10581274

Amount of dividend (Rs. in million) 57.9 68.8

11. a) Managerial Remuneration:

2006-2007 2005-2006


Salary and Allowances 56.0 34.2

Contribution to Provident and Other Funds 4.6 3.6

Perquisites 2.2 1.8

Commission to Whole time Director 29.1 23.7

Commission to Non Executive Directors 5.0 3.0

TOTAL 96.9 66.3




114




Notes:

i) Above amount does not include remuneration paid by a subsidiary company to a director aggregating

to Rs.30.3 million (previous year Rs.16.7 million).

ii) Remuneration for the current year includes increased remuneration of the Managing Director

w.e.f. 1st July, 2006 in accordance with the terms of the Shareholder’s resolution.

iii) The provision for gratuity and leave encashment is made on the basis of actuarial valuation, for all

the employees of the Company, including for the managerial personnel. Proportionate amount of

gratuity and leave encashment is not included in the above disclosure, since the exact amount is

not ascertainable.

iv) Remuneration for the current year includes performance incentive to the Managing Director, including

accounted in accordance with the requirements of AS 15 (Revised) “Employee Benefits”.

b) Computation of Net Profit under Section 349 of the Companies Act, 1956 and commission payable to

Whole-time Director/Non-Executive Directors:

Particulars 2006-2007 2005-2006


Profit before tax 3967.5 2302.0

Add :

i) Loss on sale/discard of fixed assets (Net) 12.9 27.8

ii) Provision for doubtful debts and advances - 21.3

iii) Provision for diminution in the value of long term investments 3.8 0.8

iv) Directors remuneration 96.9 66.3

v) Directors sitting fees 0.9 1.0

vi) Voluntary compensation paid under VRS - 0.3

Less:

i) Income from sale of Patent Application (1143.2) -

ii) Provision for doubtful advances written back (13.3) -

Net Profit as per Section 349/350 2925.5 2419.5

Commission (as approved and restricted by the Board of Directors)

-To Executive Chairman (Whole time Director) 29.1 23.7

-To Non-Executive Directors 5.0 3.0

12. Auditors’ Remuneration:

2006-2007 * 2005-2006*(Rs. in million) (Rs.in million)

A) Payment to Auditors:

a) As Audit Fees 2.6 2.0

b) In any other manner:

i) for FCCB related reports/certificates - 2.3

ii) for other services such as quarterly limited reviews,

audit of consolidated financial statement,

certificates, etc. 2.9 1.5

c) Reimbursement of out-of-pocket expenses

(2006-07 Rs. 37,129/-) (2005-06 Rs. 16,803/-)

Total [see note below] 5.5 5.8

B) Cost Audit Fees 0.1 0.1

* Excluding service tax

Note: The above excludes Rs.1.0 million (previous year Rs.1.1 million) being fees in respect of

taxation matters paid to a firm, in which a partner in the Auditor’s firm is a partner.

115LUPIN LIMITED




13. The Company procures on lease, equipments, vehicles and office premises under operating leases.

These rentals recognised in the Profit and Loss Account for the year are Rs.46.1 million(Previous year

Rs.39.4 million). The future minimum lease payments and payment profile of non cancellable operating

leases are as under:

2006-2007 2005-2006


Not later than one year 25.0 25.0

Later than one year but not later than five years 33.3 32.0

Later than five years 0.1 0.1

TOTAL 58.4 57.1

14. Basic and diluted earning per share is calculated as under:

2006-2007 2005-2006


Profit after Tax 3020.6 1827.2

Less :Income Tax in respect of earlier years 40.8 37.2

Profit attributable to Equity Shareholders 2979.8 1790.0

Weighted average number of Equity Shares :

- Basic 80307573 80282268

Add: Effect of dilutive issue of employees stock options

(Refer note no. 16 below) 377656 208710

- Diluted 80685229 80490978

Earnings per Share (Rs.)

- Basic 37.10 22.30

- Diluted 36.93 22.24

Notes :

1. Considering that the fair value of equity shares of the Company, as referred to in AS-20 “ Earning

per Share”, is less than the exercise price for the FCCBs issued [refer note no.21 (a) below], the

options embedded in the said FCCBs to subscribe to equity shares is anti-dilutive and hence the

same have not been considered for computation of diluted EPS.

2. The Shareholders of the Company approved the issue of Bonus Shares in the proportion of one new

equity share for every one existing equity share, at the Annual General Meeting held on July 25,

2006. On August 17, 2006, the Company allotted 40,152,494 equity shares of face value of Rs. 10/-

each as fully paid up, by capitalisation of part of the General Reserves. Accordingly, as per Accounting

Standard 20 (AS 20) on ‘Earning Per Share’ previous year’s earning per share (basic and diluted)

have been recomputed consequent upon issue of Bonus Shares.

15. The Company has not granted any loans/advances in the nature of loans, as stipulated in the clause 32

of the Listing Agreement with the Stock Exchanges. For this purpose, the loans to employees as per the

Company’s policy and security deposits paid towards premises taken/being taken on leave and license/

lease basis, against business conducting agreements, have not been considered. There are no

investments by loanees in the shares of the Parent Company and/or the subsidiary companies.


116




16. Employees Stock Option Plans

a) During the year, further to the “Lupin Employees Stock Option Plan 2003” which was implemented

in the previous year, the Company has implemented “Lupin Employees Stock Option Plan 2005” and

“Lupin Subsidiary Companies Employees Stock Option Plan 2005” (ESOPs) authorised by the

shareholders of the Company in the Annual General Meeting held on July 28, 2005 and duly approved

by the Remuneration/Compensation Committee of the Board of Directors of the Company at their

meeting held on June 16, 2006. Details of the options granted during the year under the plans are

as under:

Plan: Lupin Employees Stock Option Plan 2005:

Plan: Lupin Subsidiary Companies Employees Stock Option Plan 2005:

*Post bonus number of options (including options increased due to effect of bonus issue).

** Post bonus exercise price

Grant Date No of Options Exercise price Vesting Periodgranted Rs.

June 16, 2006 67005* 429.875** 16.06.2006 to 30.06.2007

67005* 429.875** 16.06.2006 to 30.06.2008

156345* 429.875** 16.06.2006 to 30.06.2009

156345* 429.875** 16.06.2006 to 30.06.2010

446700*

July 25, 2006 1215* 433.975** 25.07.2006 to 31.12.2007

1215* 433.975** 25.07.2006 to 31.12.2008

2835* 433.975** 25.07.2006 to 31.12.2009

2835* 433.975** 25.07.2006 to 31.12.2010

8100*

September 13, 2006 3300 469.90 13.09.2006 to 31.12.2007

3300 469.90 13.09.2006 to 31.12.2008

7700 469.90 13.09.2006 to 31.12.2009

7700 469.90 13.09.2006 to 31.12.2010

22000

October 19, 2006 6405 507.60 19.10.2006 to 31.12.2007

6405 507.60 19.10.2006 to 31.12.2008

14945 507.60 19.10.2006 to 31.12.2009

14945 507.60 19.10.2006 to 31.12.2010

42700

Grant Date No of Options Exercise price Vesting Periodgranted Rs.

July 25, 2006 9555* 433.975** 25.07.2006 to 31.12.2007

9555* 433.975** 25.07.2006 to 31.12.2008

22295* 433.975** 25.07.2006 to 31.12.2009

22295* 433.975** 25.07.2006 to 31.12.2010

63700*

117LUPIN LIMITED




The options are granted at the exercise price, which is in accordance with the SEBI guidelines in force,

at the time of such grants. Each option entitles the holder to exercise the right to apply for and seek

allotment of one equity share of Rs.10/- each. The options have vesting periods as stated above in

accordance with the vesting schedule as per the said plans with an exercise period of ten years from

the respective grant dates.

The particulars of the options granted and lapsed under the Schemes are as below:

Lupin Employees Stock Option Plan 2003:

Particulars Year Ended Year Ended

March 31, March 31,

2007 2006

Nos. Nos.

Options outstanding as at the beginning of the year (pre bonus) 355800 377150

Add: Options granted during the year (pre bonus) - 18000

Less: Options lapsed during the year (pre bonus) 17725 39350

Less: Options exercised (pre bonus) 11360 -

Add: Options increased due to effect of bonus issue 326715 -

Less: Options lapsed during the year (post bonus) 56490 -

Less: Options exercised (post bonus) 39576 -

Options outstanding as at the year-end

- Pre bonus - 355800

- Post bonus 557364 -


March 31, March 31,

2007 2006

Nos. Nos.

Options granted during the year (pre bonus) 227400 -


Add: Options granted during the year (post bonus) 64700 -


Options outstanding as at the year-end (post bonus) 471140 -



March 31, March 31,

2007 2006

Nos. Nos.




Lupin Subsidiary Companies Employees Stock Option Plan 2005:


118


b) The Company has followed the intrinsic value-based method of accounting for stock options granted

after April 1, 2005 based on Guidance Note on Accounting for Employee Share-based Payments, issued

by the Institute of Chartered Accountants of India. Had the compensation cost for the Company’s stock

based compensation plans been determined in the manner consistent with the fair value approach as

described in the Guidance Note, the Company’s net income would be lower by Rs. 57.8 million (previous

year Rs. 1.4 million) and earnings per share as reported would be lower as indicated below:

Note: Basic and diluted EPS of previous year have been recomputed consequent upon the issue of

Bonus Shares [Refer note 2 to note no.14 above].




March 31, 2007 March 31, 2006


Net profit as reported (after Income Tax of earlier years) 2979.8 1790.0

Less: Total stock-based employee compensation expense

determined under fair value based method 57.8 1.4

Adjusted net profit 2922.0 1788.6

Basic earnings per share

-As reported (Rs.) 37.10 22.30

-Adjusted (Rs.) 36.38 22.28

Diluted earnings per share


-Adjusted (Rs.) 36.21 22.22

The fair value of each option granted during the year is estimated on the date of grant based on the

following assumptions:

Particulars Grant Grant Grant Grant

dated dated dated dated

June 16, July 25, September 13, October 19,

2006 2006 2006 2006

Dividend yield (%) 2.14 2.14 2.14 2.14


Risk free interest rate (%) 7.67 8.19 7.81 7.60

Volatility (%) 97.69 96.68 96.63 96.33

17 a) Pursuant to the early adoption of Accounting Standard 15 (AS-15) (Revised 2005) ‘Employee Benefits’

issued by the Institute of Chartered Accountants of India (ICAI), though not yet mandatory in nature,

the Company has adjusted Rs. 83.1 million (net of Deferred Tax of Rs. 42.1 million) in respect of the

additional liability pertaining to Employee Benefits, up to March 31, 2006, against the opening balance

of General Reserve in accordance with the transitional provisions referred to in the said standard. Had

the Employee Benefits cost been determined in the manner consistent with earlier Accounting Standard

(AS-15) ‘Accounting for Retirement Benefits’, the profit before tax of the Company would have been

higher by Rs.15.1 million.

119LUPIN LIMITED


b) Retirement Benefit Plans

(i) Defined contribution plans

The Company makes contributions towards Provident Fund and Superannuation Fund to a defined

contribution retirement benefit plan for qualifying employees. The Provident Fund plan is operated

by the “Lupin Laboratories Ltd Employees Provident Fund Trust” and the Superannuation Fund is

administered by the Life Insurance Corporation of India (LIC). Under the schemes, the Company is

required to contribute a specified percentage of payroll cost to the retirement benefit schemes to

fund the benefits.

The Company recognised Rs. 46.5 million (previous year Rs. 40.5 million) for Provident Fund

contributions and Rs 32.8 million (previous year Rs 30.2 million) for Superannuation Fund

contribution in the Profit and Loss Account. The contributions payable to these plans by the Company

are at rates specified in the rules of the schemes.

(ii) Defined benefit plan

The Company makes annual contributions to the Lupin Limited Employees’ Group Gratuity cum

Life Assurance Scheme of the LIC, a funded defined benefit plan for qualifying employees. The

scheme provides for payment to vested employees as under:

a) On normal retirement/early retirement/withdrawal/resignation:

As per the provisions of Payment of Gratuity Act, 1972 with vesting period of 5 years of service.

b) On death in service:

As per the provisions of Payment of Gratuity Act, 1972 without any vesting period.

The most recent actuarial valuation of plan assets and the present value of the defined benefit

obligation for gratuity and leave encashment were carried out at March 31, 2007 by an actuary. The

present value of the defined benefit obligations and the related current service cost and past

service cost, were measured using the Projected Unit Credit Method.

The following table sets out the status of the Gratuity Plan and Leave Encashment and the amounts

recognised in the Company’s financial statements as at March 31, 2007.

Sr. Particulars Gratuity Leave

No (Funded) Encashment

As on 31.03.2007 (Non Funded)

As on 31.03.2007

I) Reconciliation in present value of obligations (PVO) -defined benefit obligation:Current Service cost 16.5 34.6

Interest cost 10.7 4.3

Actuarial (gain)/losses 13.2 (5.2)

Benefits paid (12.2) (8.5)

Past service cost - -

PVO at the beginning of the year 148.3 61.6

PVO at end of the year 176.5 86.8

II) Change in fair value of plan assets:Expected return on plan assets 11.5 -

Actuarial gain/(losses) 1.6 -

Contributions by the employer 34.5 8.5


Fair value of plan assets at beginning of the year 123.0 -

Fair value of plan assets at end of the year 158.4 -

(Rs. in million)





120







As on 31.03.2007

III) Reconciliation of PVO and fair value of plan assets:PVO at end of period 176.5 86.9

Fair Value of planned assets at end of year 158.4 -

Funded status (18.1) (86.9)

Unrecognised actuarial gain/(loss) - -

Net asset/(liability) recognised in the balance sheet (18.1) (86.9)

IV) Net cost for the year ended March 31,2007:Current Service cost 16.5 34.6


Expected return on plan assets (11.5) -


Net cost 27.2 33.7

V) Category of assets as at March 31, 2007:Insurer Managed Funds (100%) 158.4 -

VI) Actual return on the plan assets 13.1 -

VII) Assumption used in accounting for the gratuity plan:Discount rate (%) 7.5 7.5

Salary escalation rate (%) 5 5

Expected rate of return on plan assets (%) 8 -

Note : Leave encashment liabilities are excluding Provident Fund contribution.

18. The Company has entered into Forward Exchange Contracts, being derivative instruments for hedge purpose

and not intended for trading or speculation purposes, to establish the amount of currency in Indian Rupees

required or available at the settlement date of certain payables and receivables. The following are the

outstanding Forward Exchange Contracts entered into by the Company:

Currency Buy or Sell Cross Currency Amount in US$

March 31, 2007 March 31, 2006

US $ Buy Indian Rupees 12000000 13229266

US $ Sell Indian Rupees *18000000 *6000000

* Based on firm commitments.

Note: FCCB of US$ 100.0 million are convertible at a fixed exchange rate [Refer note no. 21(a) below].

The year end foreign currency exposures that have not been hedged by a derivative instrument or

otherwise are as below:

a. Amount receivable in foreign currency on account of the following

Particulars As on 31.03.2007 As on 31.03.2006 Foreign

Currency

Rs. in Amount in Rs. in Amount in

million foreign million foreign

currency currency

Export of goods

4.1 116250 1.5 45625 AUD

27.5 632710 - - ACUD

56.9 981990 37.3 691956 EURO

1.8 20814 3.7 47815 GBP

728.9 16767549 1500.2 33624495 US $

Bank fixed deposits 3260.3 75000000 4383.4 98249979 US $

(Rs. in million)

121LUPIN LIMITED





Currency



currency currency

Interest receivable on

bank fixed deposits 41.8 961069 51.7 1158245 US $

Other receivable Rs. 7649/- 173 - - SGD

19. The aggregate amount of revenue expenditure incurred during the year on Research and Development and

shown in the respective heads of account is Rs.1359.0 million (previous year Rs.1029.8 million).

20. Compensation received of Rs. 192.2 million (previous year Rs. Nil), included in the Schedule of "Other

Income" (Schedule 12) represents amounts received from the parties, consequent upon resolution of dispute/

termination of agreement.

21. a) During the previous year, the Company issued 1000 Foreign Currency Convertible Bonds (FCCBs) of a

face value of US$ 100000 each aggregating to US$ 100.0 million equivalent to Rs. 4461.5 million. As

per the terms of the issue, the holders have an option to convert FCCB into Equity Shares at an initial

conversion rate of Rs.1134.08 per equity share at a fixed exchange rate subject to certain adjustments

b. Amount payable in foreign currency on account of the following


Currency



currency currency

Import of goods and services

38.6 744550 159.9 3556776 US $

6.1 71099 0.4 5753 GBP

1.3 22662 13.6 255186 EURO

0.1 1140 0.4 11509 CHF

0.1 2193 - - UAH

0.1 3590268 - - UZS

Rs.14475/- 500 - - SGD

0.6 15222 0.2 5108 AUD

Secured and unsecured

Loans payable 805.4 18528254 1185.5 26572473 US $

Interest accrued and

not due on term loans 4.2 97532 2.6 57270 US $

Other payables

633.0 14561092 418.2 9374186 US $

Rs.24480/- 66501 Rs. 20406/- 53821 JPY

0.2 94038 0.1 87016 RUB

8.4 99380 0.5 7620 GBP

0.2 562812 Rs. 7411/- 200845 KZT

Rs. 15697/- 451388 - - UZS

0.9 21763 - - ACUD

0.1 9202 - - HKD

0.3 45284 - - ZAR

0.7 76856 0.4 46671 UAH

0.8 13525 Rs. 27922/- 518 EURO


122




as per the terms of the issue. However, consequent to the issue of bonus shares in the ratio of one for

one, the numbers of underlying shares have doubled and the conversion price is reduced to half i.e. Rs.

567.04 per share. Further, under certain conditions, the Company, after January 6, 2009 but before

December 28, 2010, has an option for earlier redemption of the bonds, in whole, but not in part. Unless

previously converted or redeemed or purchased and cancelled, the Company will redeem these bonds at

a premium of 34.74 per cent at the end of the five years from the date of issue i.e. on January 7, 2011.

As at March 31, 2007 none of the bonds have been converted into equity shares and the FCCBs outstanding

as on March 31, 2007 have been included and disclosed in the schedule of "Unsecured Loans" (Schedule 4).

b) The Company expects that the Bond Holders would opt for conversion rather than redemption and hence

in that case no premium would be payable and on that basis the same is not provided for. However, the

premium, if paid would be adjusted to the extent available, against the Securities Premium Account.

22. Sundry Creditors for the year ended March 31, 2007 include amounts due to the following small scale

undertakings, which are outstanding for more than 30 days.

Theme Park Design House, Ramesh Industries-Mumbai, Vent Air Systems-Mumbai, Suri Engineering, Aadarsh

Offset Printers Pvt.Ltd, Adit Pharma Pvt. Ltd, Brajesh Packaging Pvt. Ltd, Canton Laboratories Pvt. Ltd,

Cosmos Twisters Pvt. Ltd, Dhampur Alcochem Ltd, Enzal Chemicals (I) Ltd, FCG Power Industries P.Ltd,

Glamour Packaging Indt, Jain Carton Industries (Pvt.) Ltd, Khandelwal Polymers Pvt.Ltd, Mohini Organics

Pvt. Ltd, Nippon Techtextile Pvt. Ltd, Novoflex Marketing Pvt.Ltd, Purity Techtextile Pvt Ltd, Rich Offset

(I) Pvt. Ltd, Triumph Pack Pvt. Ltd, Usha Compressors Pvt. Ltd, Vijay Perfumes Pvt. Ltd, Sameer

Chemopharma, Electrolab, Adishakti Industries Pvt Ltd, Adit Containers Pvt Ltd, A to Z Pharmaceuticals

Pvt Ltd, Award Offset Printers &Pkg.P.Ltd, D.K. Pharma Chem Pvt. Ltd, Fabrica De Gas Carbonico Pvt. Ltd,

Gelnova Labs (India) Pvt Ltd, Gujarat Persalts Pvt Ltd, Harlem Poly Films Pvt. Ltd, Hi-Fab Engineers Pvt

Ltd, Igatwin Polymers Pvt Ltd, K L J Organic Limited, Kachrulal Vinaykumar, Kanam Latex Industries Pvt

Ltd, Kira Equipment (P) Ltd, Kishore Pharma Products Pvt.Ltd, Lessac Research Laboratories Pvt. Ltd,

MMC Healthcare (HP) Pvt. Ltd, Novex Poly Films Pvt. Ltd, Omega - Kemix Pvt Ltd, Paris Dakner

Microspherules Pvt Ltd, Printainia Offset Pvt.Ltd, Radiant Agro-Chem (P) Ltd, Shiva Pharmachem Pvt.

Ltd, Surelock Plastics Pvt Ltd, Swastik Packaging Pvt Ltd, Tailor Bird, Themis Laboratories Pvt Ltd,

Universal Pharmaceuitcals Ltd, Zen Pharma Pvt Ltd, A to Z Life Science, Chiniwalas Pvt. Ltd, Cosmo Life

Science, Monarch Catalyst Pvt. Ltd, Nirman Impresse, Vital Machinery Corporate, Award Packaging, G.M.

Engineering, H.B.R.Packaging, Industrial Thermoplastics Pkgg, Online Packaging, Preema Packaging, Purab

Packaging, Sushmit Packaging, Unicon Industrial Lining, Vardhman Packaging, Spraytech, Heniel Pack,

O.K.Print & Pack, Pacopack, Astral, Prachin Chemical, Sun Metachem, Tatva Chintan Pharma Chem, Time

Otc Chem, Everest Industrial Corporation, Garg Scientific Corporation, Super Label Mfg Co, Vital Flavour,

Aakar Arts, Adit Industries, Albert Printing Works, Amar Wood Works, Best Arts, Bharat Rubber Works,

Bhavana Chemical Industries, B K Enterprises, Cascade Engineers, Chirag Printers, D.S. Chunawala Chemical

Industries, Deepetch Graphics, Dipa Chemical Industries, Ekta Eterprises, Electrotek Services, Grace

Enterprises, Harsh Fines, Jai Ambe Printing Works, Jain Plastics, Jasmine Art Printers, Khanuja Wood

Works, Korchems, Krishan Engineers, Laser Securities, Laxmi Industries, Machhar Packaging Services,

Madhav Packers, Madhav- Ratna Packaging Industries, Maral Labs, Maxim Containers, Meera Offset Printers,

Navbharat Packaging Industries, Newtec Enterprises, Nikita Industries, Nitika Chemicals, Nitin Industries,

Novel Packaging Industries, Pack Print Industries, Package Industries, Packwell Industries, PCI Services,

Perfect Packing Industries, Polynova Packers, Pragna Organics, Reliance Packaging Industries, Right

Equipments, Roshan Packaging Industries, Seasons Polymers, Shree Packers, Sialca Industries, Sterling

Rubber Products, Sunrise Industries, Sushil Traders, Suyog Packwell Industries, The Madras Pharmaceuticals,

Vaibhav Industries, Vamech Seals, Vardhaman Cartons, Vijay Copolymers, Vikas Industries, Viketa Electronics,

Viswanath Packaging Industries, Wellcure Drugs, Ace Instrument, Clean Air Projects(I) Pvt. Ltd, Epitome

Technologies Pvt. Ltd, Graphic Print Art, Radix Electro Systems Pvt. Ltd, Silvo Plast, Uday Multiprint,

Zeolites & Allied Product, Leeds Kem, Placka Instruments (I) Pvt. Ltd, Plantex, Shree Patel Ice Factory

The list of SSI undertakings is determined by the Company on the basis of available information and is

relied upon by the auditors.

123LUPIN LIMITED




23. Details of capacities, production, turnover and stocks:

A) Details of licenced and installed capacities:

Installed Installed

Classification Unit 31.03.2007 31.03.2006

Formulations :

Tablets No. in million 3130.0 1570.0

Liquids Kilo-litres 3225.0 3216.0

Capsules No. in million 845.0 770.0

Injections:

- Liquids Kilo-litres 42.0 42.0

- Vials No. in million 12.0 12.0

Creams and Powder MT 415.0 403.0

Bulk drugs and intermediates MT 4186.2 3785.7

Notes:

i) In terms of press Note No.4 (1994 series) dt 25.10.94 issued by the Department of Industrial

Development,Ministry of Industry, Government of India,and Notification No.S.O.137(E) dated

March 1,1999 issued by the Department of Industrial Policy & Promotion,Ministry of Industry, Government

of India, industrial licencing has been abolished in respect of bulk drugs and formulations. Hence,

there is no registered/licenced capacities for these bulk drugs and formulations.

ii) Installed capacities, being a technical matter, are as certified by the management and relied upon by

the auditors.

B) Details of production and purchases of finished goods:

(Value Rs. in million)

Production Purchase of goods

Year ended Year ended Year ended Year ended

31.03.2007 31.03.2006 31.03.2007 31.03.2006

Classification Unit Quantity Quantity Quantity Value Quantity Value

A) Formulations :

Tablets No. in million 2864.2 1697.6 1375.3 975.4 1348.7 831.3

Liquids Kilo-litres 800.4 457.9 3922.4 340.8 3699.3 315.2

Capsules No. in million 485.8 371.3 291.4 368.1 276.3 382.0

Injections:

- Liquids Kilo-litres 107.4 102.2 52.5 43.3 30.0 26.1

- Vials No. in million 60.4 62.5 22.0 446.6 19.3 240.0

Creams and Powder MT 399.2 325.2 273.2 78.2 261.0 65.3

Inhalers No. in million 1.6 1.0 27618 Nos. 0.7 6000 Nos. 0.1

B) Bulk drugs, Intermediates MT 3951.0 3010.0 - - - -

and Chemicals

C) Others 3.5 1.0

Total 2256.6 1861.0

Notes:

i) Production includes goods manufactured for replacement and on loan licence basis by other parties but

excludes manufactured on job work basis for other parties and manufactured for Research and

Development activities.

ii) Production consists of saleable bulk drugs and intermediates. It excludes bulk drugs consumed for

manufacture of formulation.

iii) Production/purchases of formulations includes samples.


124




C) Details of Turnover:

(Value Rs. in million)

Year ended 31.03.2007 Year ended 31.03.2006

Classification Unit Quantity Value Quantity Value

A) Formulations :

Tablets No. in million 4110.8 6286.1 2722.0 4238.2

Liquids Kilo-litres 4344.0 1800.3 3762.2 1286.6

Capsules No. in million 744.0 1862.8 592.5 1561.8

Injections:

- Liquids Kilo-litres 148.7 189.3 118.3 150.4

- Vials No. in million 75.6 1725.8 77.1 1569.3

Creams & Powder MT 592.4 333.1 533.2 220.0

Inhalers No. in million 0.8 110.8 0.5 67.8

B) Bulk drugs, Intermediates MT 3847.6 7958.1 3106.0 7508.0

and Chemicals

C) Others 22.4 8.3

TOTAL 20288.7 16610.4

Notes :

i) Above excludes items distributed under free schemes and samples.

ii) Turnover is net of trade discounts.

D) Details of stock: (Value Rs. in million)

Opening Stock Closing Stock

Quantity Value Quantity Value

Classification Unit 01.04.2006 01.04.2006 31.03.2007 31.03.2007

A) Formulations:

Tablets No. in million 396.1 354.5 429.0 390.0

(265.8) (234.8) (396.1) (354.5)

Liquids Kilo-litres 363.6 57.2 529.1 77.1

(237.4) (41.9) (363.6) (57.2)

Capsules No. in million 78.6 110.9 77.3 113.4

(66.5) (80.8) (78.6) (110.9)

Injections:

- Liquids Kilo-litres 20.8 17.2 24.0 19.1

(15.0) (11.8) (20.8) (17.2)

- Vials No. in million 6.7 101.1 7.4 122.7

(5.9) (106.4) (6.7) (101.1)

Creams & Powder MT 121.6 37.1 150.4 43.7

(107.5) (30.0) (121.6) (37.1)

Inhalers No. in million 0.4 22.2 0.5 22.4

(0.4) (29.3) (0.4) (22.2)

B) Bulk drugs, MT 89.4 287.3 192.0 591.0

Intermediates & Chemicals (186.0) (355.5) (89.4) (287.3)

C) Others 103.4 4.8

(0.9) (103.4)

TOTAL 1090.9 1384.2

(891.4) (1090.9)

Notes :

i) Opening and closing stock of formulations includes quantity of samples.

ii) Figures in brackets are for previous year.

125LUPIN LIMITED




24. Related Party Disclosures, as required by AS-18 are given below :

A. Relationships

Category I:Subsidiaries of the Company :Lupin Pharmaceuticals Inc., USA

Lupin Chemicals (Thailand) Limited, Thailand (upto May 31, 2006)

Lupin Hong Kong Limited, Hongkong

Lupin Australia (Pty) Limited, Australia

Max Pharma Pty. Limited, Australia (w.e.f. September 21, 2006 )

Lupin Holdings B.V., Netherlands (w.e.f. March 30, 2007 )

Lupin Herbal Limited, India

Lupin Pharmacare Limited, India (w.e.f. January 10, 2007 )

Category III:Others (Relatives of Key Management Personnel and entities in which the Key ManagementPersonnel have control or significant influence)Mrs. Vinita Gupta

Mr. Nilesh Gupta

Dr. Anuja Gupta

Mrs. Kavita Gupta Sabharwal

Ms. Richa Gupta

Mrs. Pushpa Khandelwal

Adhyatma Investments Pvt. Limited

Badhira Leasing & Finance Pvt. Limited

Bharat Steel Fabrication and Engineering Works

Concept Pharmaceuticals Limited

D. B. Gupta (HUF)

Enzal Chemicals (India) Limited

Lupin Human Welfare and Research Foundation

Lupin International Pvt. Limited

Lupin Investments Pvt. Limited

Lupin Marketing Pvt. Limited

Category II:Key Management Personnel :Dr. D. B. Gupta Chairman

Dr. K.K. Sharma Managing Director

Mrs. M. D. Gupta Executive Director

Lupin Securities Limited

Matashree Gomati Devi Jana Seva Nidhi

Novamed Pharmaceuticals Pvt Limited

Pipleswar Holdings Pvt. Limited

Polynova Industries Limited

Pranik Landmark Associates

Rahas Investments Pvt. Limited

S N Pharma

Synchem Chemicals (I) Pvt. Limited

Timita Leasing & Finance Pvt. Limited

Varija Leasing & Finance Pvt. Limited

Visiomed (I) Pvt. Limited

Yogini Leasing & Finance Pvt. Limited

Zyma Laboratories Limited


126



B. Transactions carried out with the related parties. (Rs. in million unless other wise stated)

Sr. Transactions Subsidiaries Key Management Others Total

No. Personnel

1 Sale of Goods 3,255.6 - 6.5 3,262.1

(2,275.4) ( - ) (4.0) (2,279.4)

2 Sale of Fixed Assets - - - -

(1.2) ( - ) ( - ) (1.2)

3 Rent expenses - - 0.5 0.5

( - ) ( - ) (Rs.42,000/-) (Rs.42,000/-)

4 Business Conducting expenses - - Rs.6,000/- Rs.6,000/-

( - ) ( - ) (Rs.6,000/-) (Rs.6,000/-)

5 Agency Commission expenses - - 9.9 9.9

(9.8) ( - ) (5.6) (15.4)

6 Expenses recovered/Rent received 0.4 - 1.9 2.3

(0.1) ( - ) (1.9) (2.0)

7 Remuneration Paid - 91.9 11.3 103.2

( - ) (63.3) (6.3) (69.6)

8 Deposit paid for office premises - - 122.4 122.4

under lease arrangement. ( - ) ( - ) ( - ) ( - )

9 Purchase of Goods/Materials - - 57.5 57.5

(36.3) ( - ) (39.5) (75.8)

10 Investments during the year 15.7 - - 15.7

(0.5) ( - ) ( - ) (0.5)

11 Donations paid - - 16.5 16.5

( - ) ( - ) (13.1) (13.1)

12 Dividend paid - 3.9 132.8 136.7

( - ) (4.1) (132.8) (136.9)

13 Processing Charges paid - - 5.2 5.2

( - ) ( - ) (5.0) (5.0)

14 Services received 460.9 - - 460.9

(533.1) ( - ) ( - ) (533.1)

15 Advance received against investments 0.1 - - 0.1

[Refer note 4(b) above] ( - ) ( - ) ( - ) ( - )

16 Loans/Advances adjusted 13.3 - - 13.3

(refer note no. 2 of schedule 10) ( - ) ( - ) ( - ) ( - )

17 Expenses reimbursed 34.3 - 12.1 46.4

(14.0) ( - ) (7.4) (21.4)


127LUPIN LIMITED

Out of the above items transactions in excess of 10% of the total related party transactions are as under :

(Rs. in million unless otherwise stated)

Sr. Transactions Related party For the year For the year

No. relation ended 31.03.2007 ended 31.03.2006

1 Sale of Goods

Lupin Pharmaceuticals Inc., USA Subsidiary company 3,246.9 2,233.2

2 Sale of Fixed Assets

Lupin Pharmaceuticals Inc., USA Subsidiary company - 1.2

3 Rent expenses

Badhira Leasing and Finance Pvt. Ltd. Others - Rs.6,000/-

Bharat Steel Fabrications and

Engineering Works Others - Rs.6,000/-

Pipleshwar Holdings Pvt. Ltd. Others - Rs.6,000/-

Synchem Chemicals (I) Pvt. Ltd. Others 0.2 Rs.6,000/-

Timita Leasing and Finance Pvt. Ltd. Others - Rs.6,000/-

Varija Leasing and Finance Pvt. Ltd. Others - Rs.6,000/-

Yogini Leasing and Finance Pvt. Ltd. Others - Rs.6,000/-

Zyma Laboratories Ltd. Others 0.2 -

4 Business Conducting expenses

Synchem Chemicals (I) Pvt. Ltd. Others Rs.6,000/- Rs.6,000/-

5 Agency Commission expenses

Lupin Hongkong Ltd. Subsidiary company - 9.8

S N Pharma Others 9.9 5.6

6 Expenses recovered/Rent received

Polynova Industries Ltd. Others 0.6 0.7

Pranik Landmark Associates Others 1.2 1.2

Lupin Pharmacare Ltd Subsidiary company 0.3 -

7 Remunerations paid

Dr. D. B. Gupta Key Management Personnel 56.0 38.5

Dr. K. K. Sharma Key Management Personnel 33.7 22.5

Mr. Nilesh Gupta Others 10.7 -

8 Purchase of Goods/Material

Enzal Chemicals (India) Ltd. Others 57.4 39.5

Lupin Chemicals (Thailand) Ltd. Subsidiary company - 36.3

9 Investments during the year

Lupin Australia Pty Ltd Subsidiary company 14.0 0.5

10 Donations paid

Lupin Human Welfare and

Research Foundation Others 15.3 10.9

Matashree Gomatidevi Janseva Nidhi Others - 2.2

11 Dividend paid

Lupin Marketing Pvt. Ltd. Others 26.3 26.3

Rahas Investments Pvt. Ltd. Others 29.7 29.7

Visiomed (I) Pvt. Ltd. Others 28.3 28.3

Zyma Laboratories Ltd. Others 35.7 40.3

12 Processing Charges paid


SCHEDULES FORMING PART OF THE ACCOUNTSSCHEDULES FORMING PART OF THE ACCOUNTS




128




Sr. Transactions Related party For the year For the year

No. relation ended 31.03.2007 ended 31.03.2006

13 Service received

Lupin Pharmaceuticals Inc,USA Subsidiary company 456.0 525.1

14 Expenses reimbursed

Lupin Pharmaceuticals Inc., USA Subsidiary company 18.1 -

Lupin Herbal Ltd Subsidiary company - 4.5

Lupin Australia Pty Ltd Subsidiary company 14.2 9.5

Synchem Chemicals (I) Pvt. Ltd. Others 10.4 5.0

S N Pharma Others - 2.4

15 Advance received against investments

(Refer note 4(b) above)

Lupin Hong Kong Ltd Subsidiary company 0.1 -

16 Loans/Advances adjusted

(refer note no. 2 of schedule 10)

Lupin Australia Pty. Ltd Subsidiary company 13.3 -

17 Deposit paid for office premises under

lease arrangement

Pranik Landmark Associates Others 122.4 -

C. Balances due from/to the related parties (Rs. in million unless other wise stated)Sr. Transactions Subsidiaries Key Management Others Total

No. Personnel

1 Investments 35.1 - - 35.1

(67.8) ( - ) ( - ) (67.8)

2 Deposit paid under leave and licence - - 477.5 477.5

arrangement for office Premises ( - ) ( - ) (477.5) (477.5)

3 Deposits given for lease - - 122.4 122.4

arrangement for office premises ( - ) ( - ) ( - ) ( - )

4 Deposit given for Business - - 180.0 180.0

Conducting Arrangement ( - ) ( - ) (180.0) (180.0)

5 Debtors 1,838.1 - - 1,838.1

(1,182.5) ( - ) (0.1) (1,182.6)

6 Guarantees given * - - - -

(89.2) ( - ) ( - ) (89.2)

7 Creditors 528.0 - 2.3 530.3

(372.5) ( - ) (1.0) (373.5)

8 Commission payable - - 1.2 1.2

( - ) ( - ) (0.7) (0.7)

9 Expenses payable 0.5 - 0.1 0.6

(10.7) ( - ) ( - ) (10.7)

10 Advance received against investments 0.1 - - 0.1

(Refer note 4(b) above) ( - ) ( - ) ( - ) ( - )

11 Loans and advances -towards - - - -

ordinary shares (13.3) ( - ) ( - ) (13.3)

* Standby letter of credit issued by the Company’s bankers in connection with the credit facilities to the

wholly owned subsidiary company amount aggregating to Rs.Nil (previous year Rs.89.2 million) [Amount

availed under credit facilities Rs.Nil (previous year Rs. Nil)]

Note - Figures in brackets are for previous year.

(Rs. in million unless other wise stated)

129LUPIN LIMITED

25. Previous year figures have been regrouped wherever necessary to correspond with the figures of the

current year.





Signatures to Schedules 1 to 17





Director Director






130

BALANCE SHEET ABSTRACT AND COMPANY’S

GENERAL BUSINESS PROFILE

(Submitted in terms of part IV of Schedule VI of the Companies Act, 1956)

For Lupin Limited

Dr. Desh Bandhu Gupta Dr. Kamal K. Sharma M. D. Gupta

Chairman Managing Director Executive Director



Kiran N. Bade

Company Secretary

Place : Mumbai


(a) Registration DetailsRegistration No./CIN No. U24100MH1983PLC029442 State Code 11

Balance Sheet Date 31.03.2007

(b) Capital Raised during the Year (Amount in Rupees Thousands)Public Issue NIL Rights Issue(ESOPs) 510

Bonus Issue 401525 Private Placement NIL

(c) Position of Mobilisation and Deployment of funds (Amount in Rupees Thousands)Total Liabilities 22777539 Total Assets 22777539

Sources of FundsPaid-Up Capital 803446 Reserves and Surplus 8080703

Deferred Tax 1027200 Secured Loans 3909014

Unsecured Loans 4736408

Application of Funds Net Fixed Assets 7963643 Investments 58600

Net Current Assets 10534528 Misc Expenditure -

Accumulated Losses -

(d) Performance of Company (Amount in Rupees Thousands) Turnover 20288665 Total Expenditure 17608264

Profit Before Tax 3967525 Profit After Tax 3020622

Earning per Equity Share (Rs.) (Basic) 37.10 Equity Dividend Rate % 50

(e) Generic Names of Three Principal Products of Company(As per monetary terms)Product Description Item Code No.(As per ITC Code)

i) 7 Amino-Deacetoxy Cephalostoranic Acid (7ADCA) 29419000

ii) Cephalexin 29419020

iii) Ceftriaxone 30032000

131LUPIN LIMITED (CONSOLIDATED)

1. We have audited the attached Consolidated Balance Sheet of Lupin Limited (“the Company”) and its

subsidiaries as at 31st March, 2007 and also the Consolidated Profit and Loss Account and the Consolidated

Cash Flow Statement for the year ended on that date annexed thereto.

2. 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. We conducted our audit in accordance

with generally accepted auditing standards in India. These standards require that we plan and perform the

audit to obtain reasonable assurance whether the financial statements are prepared, in all material respects,

in accordance with an identified financial reporting framework and are free of material misstatements. An

audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial

statements. An audit also includes assessing the accounting principles used and significant estimates made

by management, as well as evaluating overall the financial statements. We believe that our audit provides

a reasonable basis for our opinion.

3. We did not audit the financial statements of a subsidiary, whose financial statements reflect total assets of

Rs.430.7 million as at 31st May, 2006, total revenue of Rs.134.3 million and net cash flows of Rs.11.3 million

for the period from 1st April, 2006 to 31st May, 2006. These financial statements have been reviewed by

other auditor, whose review report has been furnished to us, and our opinion, in so far as it relates to the

amounts included in respect of the said subsidiary is based solely on the review report of the other auditor.

4. We report that the consolidated financial statements have been prepared by the Company in accordance

with the requirements of Accounting Standard on ‘Consolidated Financial Statements’ (AS–21) issued by the

Institute of Chartered Accountants of India and on the basis of separate audited/reviewed financial

statements of the Company and its subsidiaries included in the consolidated financial statements.

5. Based on our audit and on consideration of the review report of other auditor on separate financial statements

of a subsidiary and on the other financial information of the components, and to the best of our information

and according to the explanations given to us, we are of the opinion that the attached consolidated financial

statements give a true and fair view in conformity with the accounting principles generally accepted in

India:

a) in the case of the Consolidated Balance Sheet, of the consolidated state of affairs of the Company and

its subsidiaries as at 31st March, 2007;

b) in the case of Consolidated Profit and Loss Account, of the consolidated results of the operations of the

Company and its subsidiaries for the year then ended and

c) in the case of the Consolidated Cash Flow Statement, of the consolidated cash flows of the Company

and its subsidiaries for the year then ended.

For Deloitte Haskins & Sells


P. R. Barpande

Partner


Place : Mumbai


AUDITORS’ REPORT

TO THE BOARD OF DIRECTORS OF LUPIN LIMITED ON THE CONSOLIDATED

FINANCIAL STATEMENTS OF LUPIN LIMITED AND ITS SUBSIDIARIES


132

LUPIN LIMITED CONSOLIDATED BALANCE SHEET

AS AT MARCH 31, 2007

SchedulesAs at

31.03.2007

As at

31.03.2006


I. SOURCES OF FUNDS

Shareholders’ Funds

Share Capital 1 803.4 401.4

Reserves and Surplus 2 7,929.7 5,831.4

8,733.1 6,232.8

Loan Funds

Secured Loans 3 3,911.2 4,409.5

Unsecured Loans 4 4,736.4 4,839.5

8,647.6 9,249.0

Deferred Tax Liabilities (Net) 1,027.2 956.1

[Refer note no.6 (ii) (a) of Schedule 17(B)]

Minority Interest 15.8

[31.03.2007 Rs. 27/-]

[Refer note nos.18 and 19 of Schedule 17(B)]

TOTAL 18,407.9 16,453.7

II. APPLICATION OF FUNDS

Fixed Assets 5

Gross Block 9,527.9 8,561.3

Less: Depreciation and Amortisation 2,382.1 2,095.6

Net Block 7,145.8 6,465.7

Capital Work-in-Progress 825.5 252.1

7,971.3 6,717.8

Investments 6 28.0 28.0

Deferred Tax Asset (Net) 1.3 17.1

[Refer note no.6(ii)(b) of Schedule 17(B)]

Current Assets, Loans and Advances

Inventories 7 4,298.1 3,429.1

Sundry Debtors 8 4,038.5 3,111.6

Cash and Bank Balances 9 3,844.5 4,774.2

Loans and Advances 10 2,448.2 1,999.6

14,629.3 13,314.5

Less: Current Liabilities and Provisions 11

Current Liabilities 3,515.2 3,146.9

Provisions 706.8 476.8

4,222.0 3,623.7

Net Current Assets 10,407.3 9,690.8

TOTAL 18,407.9 16,453.7



For Deloitte Haskins & Sells For Lupin Limited




Director Director






LUPIN LIMITED CONSOLIDATED PROFIT AND LOSS ACCOUNT


INCOME

Sales (Gross) 20,716.5 17,503.4

Less : Excise Duty 579.4 549.4

Sales (Net) 20,137.1 16,954.0

Other Income 12 1,990.5 741.0

22,127.6 17,695.0

EXPENDITURE

Cost of Materials 13 9,320.8 8,259.2

Personnel Expenses 14 2,199.9 1,689.6

Manufacturing and Other Expenses 15 5,694.1 4,769.6

Interest and Finance Charges 16 372.2 312.8


18,053.1 15,440.0

Profit before Tax 4,074.5 2,255.0

Provision for Taxation

- Current Tax (including Wealth Tax) 779.6 402.6

- Deferred Tax 128.5 28.0

- Fringe Benefit Tax 80.0 90.7

Net Profit after Tax 3,086.4 1,733.7

Less : Minority Interest [Refer note no.18 of Schedule 17(B)] 0.8 3.8

Net Profit after Minority Interest 3,085.6 1,729.9

Less: Income Tax-earlier years (Net) 51.0 34.5

Add : Surplus brought forward from previous year 1,802.6 1,394.7

Add : Debenture Redemption Reserve written back 10.0 10.0

Amount Available for Appropriation 4,847.2 3,100.1

APPROPRIATIONS

- Transfer to General Reserve 1,500.0 1,000.0

- Proposed Dividend on Equity Shares 401.7 260.9

- Corporate Tax on Dividend 68.3 36.6

Balance Carried to Balance Sheet 2,877.2 1,802.6

4,847.2 3,100.1

Earnings Per Share (Rs.) [Refer note no.8 of Schedule 17(B)]

- Basic 37.79 21.12

- Diluted 37.61 21.07

Face value of Equity Shares (Rs.) 10.00 10.00


SchedulesCurrent

Year ended

31.03.2007

Previous

Year ended

31.03.2006







Director Director






134

CONSOLIDATED CASH FLOW STATEMENT


A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before Tax and minority interest 4,074.5 2,255.0

Adjustments for:



Interest and Finance Charges 372.2 312.8

Interest on Long Term Investments - Non Trade (1.4) (1.4)

Interest on Bank Fixed Deposits (205.8) (57.1)


(31.03.2007 : Rs.6,615/-; 31.03.2006 : Rs.14,115/-)

Employee Benefits - Transitional adjustment

as per AS-15 (Revised) (Gross) (125.2) -

[Refer note no.12 (a) of Schedule 17(B)]

Profit on Sale/Disposal of Investment in a subsidiary (21.1) -


Provision for Doubtful Advances no longer required written back (18.2) -

Effect of foreign currency translation 0.9 -

Exchange difference (refer note 1 below) 14.3 (2.2)

Operating Profit before Working Capital Changes 4,569.2 2,970.2

Adjustments for:

Trade and Other Receivables (1,650.7) (876.8)

Inventories (973.4) (814.4)

Trade Payables 601.9 507.6

Cash Generated from Operations 2,547.0 1,786.6

Direct Taxes paid (Net) (678.9) (386.4)

Fringe Benefit Tax paid (88.7) (85.0)

Net Cash Generated from Operating Activities 1,779.4 1,315.2

B. CASH FLOW FROM INVESTING ACTIVITIES

Additions to Fixed Assets/Capital Work-in-Progress (1,773.4) (830.6)

Sale of Fixed Assets 2.2 1.8

Sale/Disposal of Investments in a subsidiary 48.3 -


Purchase of Investments - (1.6)



(31.03.2007 : Rs.6,615/-; 31.03.2006 : Rs.14,115/-)

Interest on Bank Fixed Deposits 205.8 57.1

Net Cash used in Investing Activities (1,515.7) (771.9)

C CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from issue of Foreign Currency Convertible Bonds (FCCBs) - 4,461.5

(Repayment)/Proceeds from Borrowings (Net) (455.7) 215.4

FCCB issue expenses - (87.5)

Issue of Equity Shares (ESOPs) 0.5 -

Share Premium received (ESOPs) 17.4 -

Interest paid (Net) (372.2) (333.6)

Dividend paid (261.2) (261.2)

Corporate Dividend Tax paid (36.6) (36.6)

Net cash (used in)/generated from Financing Activities (1,107.8) 3,958.0

Current

Year ended

31.03.2007

Previous

Year ended

31.03.2006



CASH FLOW STATEMENT (CONTD.)


Current

Year ended

31.03.2007

Previous

Year ended

31.03.2006


Net (decrease)/increase in Cash and Cash equivalents (844.0) 4,501.3

Cash and Cash equivalents as at the beginning of the year 4,771.9 270.6

Cash and Cash equivalents as at May 31, 2006 of Lupin Chemicals

(Thailand) Ltd. transferred to a party consequent to sale/disposal

of investment. (71.3) -


Cash and Cash equivalents as at the end of the year 3,856.5 4,771.9

Notes :

1.Cash and Cash equivalents include

Cash and Bank Balances (Refer Schedule 9) 3,844.5 4,774.2

Exchange difference [unrealised loss/(gain) on foreign currency

cash and cash equivalents] 12.0 (2.3)

Total cash and cash equivalents 3,856.5 4,771.9

2. Additions to Fixed Assets (including movements in Capital Work-in-Progress) are considered as a part of

Investing Activities.

3. Interest income on Bank Fixed Deposits is classified as cash flow from Investing Activities.

4. The above Cash Flow Statement has been prepared under the ‘Indirect Method’ as set out in the

Accounting Standard (AS-3),“Cash Flow Statement” issued by the Institute of Chartered Accountants

of India.

5. The Previous year’s figures have been regrouped wherever necessary.






Director Director






136

SCHEDULES FORMING PART OF THE CONSOLIDATED

BALANCE SHEET

SCHEDULE 1 - SHARE CAPITAL

Authorised :

100,000,000 (previous year 50,000,000) Equity Shares of Rs 10/- each 1,000.0 500.0

Nil (previous year 1,500,000) Redeemable Cumulative Preference - 150.0

Shares of Rs 100/- each [Refer note no.4 of Schedule 17(B)]

TOTAL 1,000.0 650.0

Issued, Subscribed and Paid-up

80,344,564 (previous year 40,141,134) Equity Shares of

Rs 10/- each fully paid up 803.4 401.4

TOTAL 803.4 401.4

Note :

Of the above equity shares of the Company-

i) 37,311,048 (previous year 37,311,048) Equity Shares of Rs. 10/- each were allotted as fully paid-up without

payment being received in cash, pursuant to the Scheme of Amalgamation with erstwhile Lupin Laboratories

Limited.

ii) 40,152,494 (previous year Nil) Equity Shares of Rs. 10/- each have been allotted as fully paid up Bonus

Shares of the Parent Company by way of capitalisation of part of General Reserve, pursuant to the Share-

holders' resolution passed at the Annual General Meeting of the Parent Company held on July 25, 2006 [Refer

note 2 to note no.8 of Schedule 17(B)].

iii) 50,936 (previous year Nil) Equity Shares of Rs. 10/- each, fully paid have been alloted under " Lupin

Employees Stock Option Plan 2003" [Refer note no. 11(a) of Schedule 17(B)]. Particulars of options on

unissued share capital [Refer note no.11(a) of Schedule 17(B)].

As at

31.03.2007

As at

31.03.2006




BALANCE SHEET

SCHEDULE 2 - RESERVES AND SURPLUS

Capital Reserve

- Investment Subsidies from Central Government


- Investment Subsidies from State Government


- On restructuring of capital of the Parent Company under the Scheme

of Amalgamation


263.9 263.9

Capital Redemption Reserve


Revaluation Reserve


Securities Premium Account


Less : Foreign Currency Convertible Bonds (FCCBs)

issue expenses (Net of Tax) - 58.0

Add :* Received during the year 17.4 -

413.7 396.3

General Reserve

Balance as per last Balance Sheet 2,895.7 1,895.7

Add : Transferred from Profit and Loss Account 1,500.0 1,000.0

Less : Utilised towards issue of Bonus Shares

[Refer note 2 to note no.8 of Schedule 17 (B)] 401.5 -

Less : Adjustment on account of liability in respect of

Employee Benefits, as on April 1, 2006 (Net of Deferred Tax)

[Refer note no.12(a) of Schedule 17(B)] 83.1 -

3,911.1 2,895.7

Debenture Redemption Reserve


Less : Transferred to Profit and Loss Account 10.0 10.0

10.0 20.0

Amalgamation Reserve


Foreign Currency Translation Reserve

Balance as per last Balance Sheet (0.9) -

Less : Credited/(Debited) during the year (net) 0.9 (0.9)

[Refer note no.18 of Schedule 17 (B)]

- (0.9)

Surplus in Profit and Loss Account 2,877.2 1,802.6

TOTAL 7,929.7 5,831.4

* Represents amount received on allotement of 50,936 Equity Shares of Rs. 10/- each, pursuant to " Lupin

Employees Stock Option Plan 2003" [Refer note no.11(a) of Schedule 17(B)]

As at

31.03.2007

As at

31.03.2006



138

SCHEDULE 4 - UNSECURED LOANS

Fixed Deposits - 98.0

Short Term Loans from Banks

Working Capital Loans - 55.0

Foreign Currency Convertible Bonds [Refer note 16 of Schedule 17(B)] 4,461.5 4,461.5

Other Loans :

a) Sales Tax Deferment Loan - Government of Maharashtra 60.2 57.5

b) Loans from Council for Scientific and Industrial Research 214.7 167.5

[including interest accrued and due Rs.Nil (previous year Rs. 2.5 million)]

TOTAL 4,736.4 4,839.5

Note:

Amount due within a year

i) Fixed Deposits - 98.0

ii) Loans from Council for Scientific and Industrial Research * - 31.9

* (on the basis of rescheduled repayment terms)

iii) Working Capital Loans from Banks - 55.0


BALANCE SHEET

Notes

SCHEDULE 3 - SECURED LOANS

1. Debentures 1

1.2 million 8% ‘R’ Series Non-Convertible

Redeemable Debentures of Rs.100/- each

fully paid up. 40.0 80.0

2. Term Loans 2 and 6

( i ) From Financial Institutions

- Rupee Loans 94.0 206.8

- Foreign Currency Loans - 53.5

( ii ) From Banks

- Foreign Currency Loans 364.4 446.2

458.4 706.5

3. Cash Credit, Packing Credit and Post Shipment 3

Credit facilities from banks 3,412.8 3,623.0

TOTAL 3,911.2 4,409.5

Notes :

1. Debentures are secured/to be secured by first legal/equitable mortgage of immovable assets and hypothecation of movable

assets of the Company both present and future situated at (a) Aurangabad, Pune and Tarapur in State of Maharashtra,(b)

Ankleshwar in State of Gujarat (c) Mandideep, District Raisen in State of Madhya Pradesh, (d) Verna in state of Goa and (e) Bari

Brahmana in State of Jammu and Kashmir. These debentures are redeemable in three equal annual installments starting from

August 17, 2005. Accordingly, these were redeemed during the year to the extent of Rs. 33.33 (previous year Rs.33.33)(aggregating

to date Rs. 66.66) per debenture due and paid on August 17, 2006 (previous year on August 17, 2005). The said charge is

ranking pari-passu between the lenders including for term loans (Refer note 2 below) and subject to prior charges created/to

be created in favour of the Company's bankers on specific items of movables to secure working capital requirements (Refer note

3 below).

2. Term loans from Financial Institutions/Banks are secured/to be secured by first charge ranking pari-passu with trustee for

debenture holders referred to in note 1 above and is further secured by way of personal guarantees of some of the Directors

of the Company for amount aggregating to Rs.Nil (previous year Rs.38.8 million).

3. Loans of Parent Company from Banks in Cash Credit, Packing Credit and Post Shipment Credit facilities are secured by

hypothecation of inventories and book debts and a second charge on immovable properties referred to in note 1 above.

4 . Packing Credit and Post Shipment Credit facilities include foreign currency loans of Rs.1,654.9 million (previous year Rs.1451.9 million).

5 . Debenture of Rs. 40.0 million ( previous year Rs. 40.0 million) and term loans of Rs. 343.8 million (previous year Rs. 220.7 million)

are repayable within one year.

6 . Vehicle loan is secured by charge on the concerned vehicle purchased by one of the subsidiary company.

As at

31.03.2006

Rs. in million

As at

31.03.2007

Rs. in million

As at

31.03.2007

Rs. in million

As at

31.03.2006

Rs. in million


SC

HED

ULE 5

- FIX

ED

ASSET

S

SCH

ED

ULES FO

RM

ING

PA

RT O

F TH

E CO

NSO

LID

ATED

BA

LA

NCE SH

EET

Gross Blo

ck

Deprecia

tio

n and A

mortis

atio

nN

et Blo

ck

Partic

ula

rs

As a

tAddit

ions

Deductio

ns/

As a

tU

p to

For the

Deductio

ns/

Up to

As a

tAs a

t

April 1

,A

dju

stm

ents

M

arch 31,

M

arch 31,

Year

Adjustm

ents

M

arch 31,

March 31,

March 31,

2006

2007

2006

2007

2007

2006

Free H

old

Land

4

9.7

-

22.2

27.5

-

-

--

27.5

49.7

Leasehold

Land

125.4

22.9

-

148.3

9.8

2.1

-11.9

*136.4

115.6

Buildin

gs

1,9

93.6

272.0

30.6

2,2

35.0

319.8

66.5

25.3

361.0

1,8

74.0

1,6

73.8

Pla

nt, M

achin

ery and Equip

ments

6,1

69.2

856.9

167.3

6,8

58.8

1,6

89.1

371.8

145.6

1,9

15.3

4,9

43.5

4,4

80.1

Furnit

ure and Fix

tures

139.5

44.3

4.4

179.4

39.9

14.3

2.6

51.6

127.8

99.6

Vehic

les

25.8

3.9

8.9

20.8

8.6

2.0

6.1

4.5

16.3

17.2

Intangib

le A

ssets

58.1

--

58.1

28.4

9.4

-37.8

20.3

29.7

(Com

puter Softw

are)

T

O T A

L8,5

61.3

1,2

00.0

233.4

9,5

27.9

2,0

95.6

466.1

179.6

2,3

82.1

7,1

45.8

6,4

65.7

Previo

us Year

7,3

46.6

1,2

76.6

61.9

8,5

61.3

1,7

17.7

408.8

30.9

2,0

95.6

6,4

65.7

Capit

al

W

ork-i

n-P

rogress

825.5

252.1

T

O T A

L7,9

71.3

6,7

17.8

(Rs.

in m

illion)

* A

mounts w

rit

ten off in

respect of le

ashold

la

nd for the perio

d of le

ase w

hic

h has expir

ed.

Notes :

1. Cost of Buildin

gs in

clu

des cost of shares in

co-operativ

e socie

tie

s of Rs.1,000/- (previo

us year Rs.1,000/-).

2. Capit

al

Work-i

n-P

rogress in

clu

des capit

al

advances paid

, m

achin

ery under in

stallatio

n/in

transit

, constructio

n and erectio

n m

ateria

ls (i

nclu

din

g those ly

ing w

ith contractors) and pre-operativ

e

expenses [R

efe

r note no.5

of

Schedule

17(B

)].

3. D

eprecia

tio

n for the current year in

clu

des Rs.4.9 m

illion pertain

ing to earlier years (previo

us year Rs.2.6 m

illion).

4. Addit

ions to Fix

ed Assets and Capit

al

Work-in

-Progress in

clu

des Rs.1.3 m

illion (N

et) (previo

us year Rs. N

il) on account of exchange dif

ferences.

5. Addit

ions to Fix

ed Assets in

clu

des it

em

s of fix

ed assets aggregatin

g to Rs. 112.2 m

illion (previo

us year Rs. 95.3 m

illion) lo

cated at Research and D

evelo

pm

ent centres of

the Parent Com

pany.

6. D

eductio

ns/adjustm

ents in

clu

de Fix

ed Assets (G

ross Blo

ck Rs.206.5 m

illion, accum

ula

ted D

eprecia

tio

n and Am

ortis

atio

n Rs.167.8 m

illion) transferred to another party consequent to sale

/

dis

posal

of

the Parent Com

pany’s

in

vestm

ents in

a subsid

iary com

pany lo

cated in

Thailand [R

efe

r note no.1

8 of

Schedule

17(B

)].

7.Vehic

le of a subsid

iary com

pany is

under a lien tow

ards lo

an taken from

Bank.


140


BALANCE SHEET

As at As at

Number Face 31.03.2007 31.03.2006

Value Rs. in million Rs. in million Rs. in million

SCHEDULE 6 - INVESTMENTS

(At cost/carrying amount unless otherwise stated)

Long Term Investments

1 In Government Securities - Unquoted (Non-Trade)

National Savings Certificates -

(Deposited with Government Authority)

(31.03.2007 - Rs. 6,000/-)

2 In Equity Shares

a) Unquoted (Trade)

Biotech Consortium India Ltd. 50,000 Rs.10/- 0.5 0.5

(50,000)

Bharuch Enviro Infrastructure Ltd. 4,410 Rs.10/-

(31.03.2007- Rs.44,100/-; 31.03.2006 - Rs. 44,100/-) (4,410)

Bharuch Eco-Acqua Infrastructure Ltd. 643,675 Rs.10/- 6.4 6.4

(643,675)

Tarapur Environment Protection Society 114 Rs.100/- -

(31.03. 2007 - Rs.11,400/-) (Nil)

6.9 6.9

b) Quoted (Non-Trade)

Gran Heal Pharma Ltd 575,000 Rs.10/- 5.7 5.7

(575,000)

Less : Provision for Diminution in Value of

Investments 5.7 5.7

- -

3 In Bonds

Quoted (Non-Trade)

6.75% Tax Free US64 Bonds 211,400 Rs.100/- 21.1 21.1

(211,400)

TOTAL 28.0 28.0

Notes :

1) a) Quoted Investments : Aggregate Cost/Carrying Value 21.1 21.1

: Aggregate Market/Repurchase Value of Bonds 21.1 21.5

b) Unquoted Investments : Aggregate Cost/Carrying Value 6.9 6.9

2) All the Investments in shares/bonds are fully paid up.


SCHEDULE 8 - SUNDRY DEBTORS

(Unsecured)

Debts outstanding for a period exceeding six months

- Considered Good 56.7 28.2


73.7 45.2

Other Debts


- Considered Doubtful - 5.0

3,981.8 3,088.4

4,055.5 3,133.6

Less: Provision for Doubtful Debts 17.0 22.0

TOTAL 4,038.5 3,111.6


BALANCE SHEET

As at

31.03.2006

Rs. in million

As at

31.03.2007

Rs. in million

SCHEDULE 9 - CASH AND BANK BALANCES

Cash in hand [including Cheques on hand of Rs.84.6 million 87.0 35.6

(previous year Rs.33.4 million)]

Bank Balances :

- With Scheduled Banks

In Current Accounts (including Remittances in Transit) 81.6 67.2

In Exchange Earners Foreign Currency Account 0.2 0.3

In Deposit Accounts [including Margin Deposits Rs.4.6 million 3,350.2 4,499.2

(previous year Rs.6.7 million) and deposits placed out of proceeds

from FCCB issue Rs.3260.3 million (previous year Rs.4383.4 million)]

- With Others

In Current Accounts 325.5 171.9

TOTAL 3,844.5 4,774.2

Note :

The Bank Balances in deposit accounts include interest accrued on Fixed Deposits amounting to Rs. 46.9 million

(previous year Rs.51.7 million).

SCHEDULE 7 - INVENTORIES

Stock-in-trade

- Raw and Packing Materials 1,762.2 1,343.7

- Work-in-Process 761.0 636.1

- Finished Goods (including Traded Goods) 1,661.6 1,346.8

Consumable Stores, Spares and Fuel 113.3 102.5

TOTAL 4,298.1 3,429.1


142


BALANCE SHEET

As at

31.03.2007

As at

31.03.2006


SCHEDULE 10 - LOANS AND ADVANCES

(Unsecured, considered good unless otherwise stated)

Advances recoverable in cash or in kind or for value to be received



1,570.3 1,195.1

Less: Provision for Doubtful Advances 6.6 19.8

1,563.7 1,175.3

Deposits 875.5 745.0

Balances with Customs and Excise Authorities 5.6 4.7

Advance payment of Income Tax (Net of Provision) 0.4 74.6

[Refer note no.6(iv) of Schedule 17(B)]

Advance payment of Fringe Benefit Tax (Net of Provision for Fringe Benefit Tax) 3.0 -

TOTAL 2,448.2 1,999.6

Note:

Loans and advances includes:

i) Cenvat balances 205.6 253.8

ii) Service Tax input credit 95.6 52.1

iii) Export Benefits Receivable 617.5 478.9

(DEPB/Target Plus Scheme/Excise Duty Refund)

SCHEDULE 11 - CURRENT LIABILITIES AND PROVISIONS

Current Liabilities

Acceptances 375.7 733.6

Sundry Creditors :

i) Total outstanding dues to small scale industrial undertakings 161.0 142.9

ii) Total outstanding dues to creditors other than small scale

industrial undertakings (Refer note below) 2,935.5 2,219.0

Interest Accrued but not due on loans 23.5 20.4

Unpaid Dividend * 8.2 8.5

Unpaid Matured Deposits * 6.5 13.8

Unpaid Matured Debentures * 1.7 2.5

Unpaid Interest Warrants * 3.1 6.2

* There are no amounts due and outstanding to be credited to

Investor Education and Protection Fund

TOTAL 3,515.2 3,146.9

Note :

The Company has not received intimation from suppliers regarding the status

under the Micro, Small and Medium Enterprises Development Act, 2006 and hence

disclosures, if any, relating to amounts unpaid as at the year end together with

interest paid/payable as required under the said Act have not been given.

Provisions

For Gratuity 18.1 22.5

For Leave Encashment 97.4 69.0

For Taxation (including Wealth Tax) (Net of Advance Tax) 103.9 34.6

[Refer note no.6 (iv) of Schedule 17(B)]

For Fringe Benefit Tax (Net of Advance Tax paid) - 5.7

For Proposed Dividend on Equity 401.7 260.9

For Tax on Dividend 68.3 36.6

For Price Differential [Refer note no.17 (a) of Schedule 17(B)] 17.4 39.1

Other Provisions [Refer note no.17 (b) of Schedule 17(B)] - 8.4

706.8 476.8

TOTAL 4,222.0 3,623.7




SCHEDULE 12 - OTHER INCOME

Export Benefits/Incentives 139.0 456.6

Income from Research Services 89.3 107.3

Income from Sale of Patent Application 1,143.2 -

Dividend on Long Term Investments - Trade

[31.03.2007 - Rs. 6615/- ; 31.03.2006 - Rs.14,115/-]


Interest on Deposits with Banks 205.8 57.1

[Tax Deducted at Source Rs. 0.7 million (previous year - Rs. 0.5 million)]

Other Interest (Net) 13.9 13.5


Insurance Claims 8.8 41.0

Compensation Received 192.2 -


Exchange Rate Diffference on Translation (Net) 15.1 -

Provision for Expenses/Sundry Credit balances written back 55.1 9.0

(including written back, consequent to settlement)

Provision for Doubtful Advances no longer required written back 13.2 -

Provision for Doubtful Debts written back 5.0 -

Profit on Sale/Disposal of Investments in a subsidiary company 21.1 -


Miscellaneous Income 87.4 55.1

[including share in income from a customer Rs. Nil (previous year Rs. 6.0 million)]

[Tax Deducted at Source Rs.0.6 million (previous year Rs.1.9 million)]

TOTAL 1,990.5 741.0

Year Ended

31.03.2007

Year Ended

31.03.2006


SCHEDULE 13 - COST OF MATERIALS

Raw and Packing Materials Consumed 7,369.0 6,546.6

Purchase of Traded Goods 2,461.6 2,195.6

Opening stock of Finished Goods (including Traded Goods) and Work-in-Process 1,912.8 1,499.9

Less: Closing stock of Finished Goods (including Traded Goods) and

Work-in-Process 2,422.6 1,982.9

Increase in Stock of Finished Goods (including Traded Goods)

and Work-in-Process (509.8) (483.0)

TOTAL 9,320.8 8,259.2

SCHEDULE 14 - PERSONNEL EXPENSES

Salaries, Wages and Bonus 1,898.5 1,429.8

Contribution to Provident, Gratuity and Other Funds 162.2 139.7

Welfare Expenses 139.2 120.1

TOTAL 2,199.9 1,689.6


144

Year Ended

31.03.2007

Year Ended

31.03.2006


SCHEDULE 15 - MANUFACTURING AND OTHER EXPENSES

Processing Charges 182.9 123.0

Consumable Stores and Spares 488.5 404.8

Repairs and Maintenance :

- Buildings 56.4 48.7

- Plant and Machinery 113.7 88.7

- Others 87.2 65.5

Rent 44.9 34.3

Rates and Taxes 47.5 50.5

Insurance 95.9 75.4

Power and Fuel 905.2 746.0

Excise Duty (Net) 79.7 95.6

Selling and Promotion Expenses 1,041.8 1,065.8

Commission, Brokerage and Discounts 345.2 289.2

[Including Cash Discount of Rs.4.7 million (previous year Rs.3.8 million)]

Freight and Forwarding 329.3 247.7

Lease Rent and Hire Charges 46.1 41.0

Postage and Telephone Expenses 80.4 73.5

Travelling and Conveyance 364.6 277.4

Legal and Professional Charges 454.5 188.9

Donations 40.0 32.0

Clinical and Analytical Charges 337.5 281.1


Bad Debts/Advances Written Off 17.0 4.0

Provision for Doubtful Debts/advances - 26.3

Directors Sitting Fees 0.9 1.0

Exchange Rate Difference (Net) 95.8 115.9

Miscellaneous Expenses 426.2 365.3

(includes Printing and Stationery, Contract Labour Charges,

Books and Periodicals, Product Registration Fees, Audit Fees, etc.)

TOTAL 5,694.1 4,769.6



SCHEDULE 16 - INTEREST AND FINANCE CHARGES

Interest on Debentures 5.8 7.6

Interest on Fixed Loans 56.4 83.2

Others 310.0 222.0

TOTAL 372.2 312.8


SCHEDULE - 17 SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE

CONSOLIDATED FINANCIAL STATEMENTS

A) SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Preparation of Financial Statements:

i) The financial statements of the subsidiaries used in the consolidation are drawn upto the same

reporting date as that of the Parent Company, namely March 31, 2007, except for Lupin Chemicals

(Thailand) Ltd. which is up to May 31, 2006 being the date of sale of the investments in the said

subsidiary (Refer note no. 18 below).

ii) The financial statements have been prepared under the historical cost convention and on the accrual

basis of the accounting. The accounts of the Parent Company, the Indian subsidiaries and foreign

subsidiaries have been prepared in accordance with the Accounting Standards issued by the Institute

of Chartered Accountants of India, except in case of a subsidiary located in Thailand whose accounts

have been compiled by the management under its local GAAP and reviewed by the local auditors. In

the opinion of the Company no adjustments are required to the said accounts considering the re-

quirements of consolidation in accordance with Indian GAAP and moreover the amounts in relation

to the said subsidiary which are for a period of two months during the current year [refer a(i)

above], are not material in relation to the consolidated financials.

b) Principles of Consolidation:

i) The financial statements of the Parent Company and its subsidiaries have been consolidated on a

line-by-line basis by adding together the book value of like items of assets, liabilities, income and

expenses, after fully eliminating intra-group balances, intra–group transactions and the unrealized

profits/losses.

ii) The financial statements of the Parent Company and its subsidiaries have been consolidated using

uniform accounting policies for like transactions and other events in similar circumstances.

iii) Minority interest in the net assets of the consolidated subsidiaries consist of :

a) The amount of equity attributable to minorities as at the date on which the investment in a

subsidiary is made and

b) The minorities share of movements in equity since the date the parent subsidiaries relationship

came in existence. The losses applicable to the minority in excess of the minority interest in the

equity of the subsidiary and further losses applicable to the minority, are adjusted against the

majority interest except to the extent that the minority has a binding obligation to and is able to

make good the losses. If the subsidiary subsequently reports profits, all such profits are allocated

to the majority interest until the minority’s share of losses previously absorbed by the majority

has been recovered.

iv) Minority interest is presented separately from the liabilities or assets and the equity of the Parent

Shareholders in the consolidated Balance Sheet. Minority interest in the income or loss of the group

is separately presented.

v) The difference between the proceeds from sale/disposal of investment in a subsidiary and the

carrying amount of assets less liabilities as of the date of sale/disposal is recognized in the consoli-

dated statement of Profit and Loss Account as the profit or loss on sale/disposal of investment in

subsidiary.

c) Use of Estimates:

The preparation of financial statements in conformity with the generally accepted accounting principles

require, estimates and assumptions to be made that affect the reported amounts of assets and liabili-

ties on the date of the financial statements and the reported amounts of revenues and expenses during

the reporting period. Differences between the actual results and estimates are recognised in the period

in which the results are known/materialised.


ACCOUNTS


146


CONSOLIDATED FINANCIAL STATEMENTS (CONTD.)

d) Fixed Assets :

Fixed Assets of the Parent Company, Indian subsidiaries and foreign subsidiaries except subsidiary

located at Thailand are stated at cost net of modvat/cenvat, less accumulated depreciation and

accumulated impairment losses, if any. All costs, including financing costs till commencement of

commercial production, net charges on foreign exchange contracts and adjustment arising from

exchange rate variations attributable to the imported fixed assets are capitalised. The Fixed Assets of

the foreign subsidiary located in Thailand are stated as under:

i) Land

- as at 31st December 1991 - at appraised value determined by independent appraiser less

impairment losses.

- Acquired after 31st December 1991 – is stated at cost.

ii) Plant and machinery

- as at 31st December 1991 - at appraised value determined by independent appraiser less

accumulated depreciation.

- Acquired after 31st December 1991 – at cost less accumulated depreciation.

iii) Other items - at cost less accumulated depreciation.

e) Intangible Assets:

Intangible Assets are recognised only if it is probable that the future economic benefits that are

attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably.

The Intangible Assets are recorded at cost and are carried at cost less accumulated amortisation and

accumulated impairment losses, if any.

f) Foreign Currency Transactions/Translation:

Transactions of the Parent Company in foreign currency are recorded at the original rates of exchange in

force at the time transactions are effected. Exchange differences arising on repayment of foreign

currency liabilities incurred for the purpose of acquiring fixed assets from a country outside India, are

adjusted in the carrying amount of the respective fixed assets. Exchange differences arising on

settlement of other transactions are recognized in the Profit and Loss Account.

Monetary items of the Parent Company (other than those related to acquisition of imported fixed as-

sets) denominated in foreign currency are restated using the exchange rate prevailing at the date of the

Balance Sheet and resulting net exchange difference is recognized in the Profit and Loss Account. The

exchange gain/loss arising on restatement of foreign currency liability relating to imported fixed assets

is adjusted in the value of the related fixed assets.

In cases where the Parent Company has entered into forward exchange contracts, the difference

between the exchange rate on the date of such contracts and the year end rate is recognized in the Profit

and Loss Account. Any profit/loss arising on cancellation of forward exchange contract is recognized

as Income or Expense of the year. Premium/discount arising on such forward exchange contracts is

amortised as Income/Expense over the life of contract.

Foreign offices/branches:

In respect of the foreign offices/branches of the Parent Company, which are integral foreign operations,

all revenues and expenses (except depreciation) during the year are reported at average rate. Monetary

assets and liabilities are restated at the year end exchange rate. Non-monetary assets and liabilities are

stated at the rate prevailing on the date of the transaction. Balance in ‘head office’ account whether

debit or credit is translated at the amount of the balance in the ‘foreign office’ in the books of the head

office. Net gain/loss on foreign currency translation is recognized in the Profit and Loss Account.


ACCOUNTS


Foreign Subsidiaries:

In case of foreign subsidiaries, the local accounts are maintained in local and functional currency. The

financial statements of the foreign subsidiaries, whose operations are integral foreign operations for

the Parent Company, have been translated to Indian Rupees on the following basis:

i) All income and expenses are translated at the average rate of exchange prevailing during the year.

ii) Monetary assets and liabilities are translated at the closing rate on the Balance Sheet date.

iii) Non–monetary assets and liabilities are translated at historical rates.

iv) The resulting exchange difference is accounted in ‘Exchange Difference Account’ and is charged/

credited to the Profit and Loss Account.

The financial statements of a subsidiary located at Thailand, whose operations were non-integral for-

eign operations for the Parent Company, have been translated to Indian Rupees on the following basis:

i) All income and expenses are translated at the average rate of exchange prevailing during the

period.

ii) Monetary and non monetory assets and liabilities are translated at the closing rate on the Balance

sheet date.

g) Financial Derivatives Transactions:

Financial Derivatives contracts are accounted on the date of their settlement and realised gain/loss

in respect of settled contracts are recognised in the Profit and Loss Account, along with underlying

transactions.

h) Investments:

Long term investments are stated at cost of acquisition. Investments in foreign currency are stated at

cost by converting at exchange rate prevailing at the time of acquisition. Provision for diminution in the

value of long term investments is made only if such decline, is other than temporary.

i) Inventories:

Stock-in-trade is valued at lower of cost and net realisable value. Stock of Consumable Stores, Spares

and Furnace Oil is valued at cost.

In case of the Parent Company, cost is computed based on moving weighted average in respect of all

procured materials and traded finished goods and comprises of materials and appropriate share of

utilities and other overheads in respect of Work-in-Process and Finished Goods.

Cost of finished goods (trading), raw materials, supplies and others are calculated by using the first in

first out method by the subsidiary companies. Cost also includes all charges incurred for bringing the

inventories to their present location and condition.

j) Revenue Recognition:

i) Revenue from sale of goods is recognised when the significant risks and rewards in respect of

ownership of products are transferred.

ii) Revenue from product sales is stated net of returns, sales tax and applicable trade discounts and

allowances.




ACCOUNTS


148

iii) Income from research services is recognised as revenue when earned in accordance with the terms

of the relevant agreements.

iv) Insurance or other claims, interest etc. are recognised only when it is reasonably certain that the

ultimate collection will be made.

k) Export Benefits:

Export benefits available under prevalent schemes are accrued in the year in which the goods are

exported and are accounted to the extent considered receivable.

l) Excise Duty:

Excise Duty is accounted on the basis of payments made in respect of goods cleared and provision is

made for goods lying in bonded warehouses.

m) Depreciation and Amortisation:

Depreciation on fixed assets is provided on straight line basis in the manner and at the rates prescribed

in Schedule XIV to the Companies Act, 1956, by the Parent Company except for the following fixed assets

which are depreciated/amortised over their useful life as determined by the Management on the basis

of technical evaluation, etc.

Assets Estimated useful life

Captive Power Plant at Tarapur 15 years

Certain assets provided to employees 3 years

Leasehold Land Over the period of lease

Intangible Assets (Computer Software) 6 years

Depreciation on Fixed Assets of the subsidiaries is provided on straight line basis over their estimated

useful life, as determined by the management as under:

Buildings 20 years

Plant and machinery 10 years

Furniture and Fixture and Office Equipments (including Computers) 3-7 years

Vehicles 5-8 years

n) Employee Benefits [Refer note no.12(a) and (b) of schedule 17(B)]

i) Defined Contribution Plan

Companies contribution paid/payable for the year to defined contribution retirement benefit schemes

are charged to Profit and Loss Account.

ii) Defined Benefit Plan

Parent Company’s liabilities towards defined benefit schemes are determined using the Projected

Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at

the Balance Sheet date. Actuarial gains and losses are recognised in the Profit and Loss Account in

the period of occurrence of such gains and losses. Past service cost is recognised immediately to the

extent of benefits are vested, otherwise it is amortised on straight-line basis over the remaining

average period until the benefits become vested.

The retirement benefit obligation recognised in the Balance Sheet represents the present value of

the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the

fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost,

plus the present value of available refunds and reductions in future contributions to the scheme.




ACCOUNTS


iii) Short-term employee benefits

Short-term employee benefits expected to be paid in exchange for the services rendered by

employees are recognised undiscounted during the period employee renders services. These

benefits include performance incentives.

iv) In case of wholly owned subsidiary located in Hong Kong, provision is made towards liability for

gratuity as payable under the Employment Ordinance (Hong Kong).

o) Taxes on Income:

Income Taxes are accounted for in accordance with Accounting Standard (AS-22) “Accounting for Taxes

on Income”, issued by The Institute of Chartered Accountants of India (ICAI). Tax expense comprises

both Current Tax and Deferred Tax. Current Tax is measured at the amount expected to be paid or

recovered from the tax authorities using the applicable tax rates. Deferred Tax assets and liabilities are

recognised for future tax consequence attributable to timing differences between taxable income and

accounting income that are measured at relevant enacted tax rates. At each Balance Sheet date the

group reassesses unrealised Deferred Tax Assets, to the extent they become reasonably certain or

virtually certain of realisation, as the case may be.

The Deferred Tax Assets and Deferred Tax Liabilities are off set if –

i) there exists a legally enforceable right to set off the assets against liabilities representing Current

Tax and

ii) the Deferred Tax Assets and the Deferred Tax Liabilities relate to taxes on income levied by the

same governing taxation laws.

p) Fringe Benefit Tax:

Fringe Benefit Tax is recognized by the Parent Company and Indian subsidiaries in accordance with the

relevant provision of the Income Tax Act, 1961 and the Guidance note on Fringe Benefits Tax issued by

the ICAI.

q) Operating Leases:

Assets taken on lease under which all risks and rewards of ownership are effectively retained by the

lessor are classified as operating lease. Lease payments under operating leases are recognised as

expenses on accrual basis in accordance with the respective lease agreements.

r) Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a

present obligation as a result of past events and it is probable that there will be an outflow of resources.

Contingent liabilities are not recognised but are disclosed in the Notes to Accounts. Contingent Assets

are neither recognised nor disclosed in the financial statements.

s) Borrowing Costs:

Borrowing cost attributable to the acquisition or construction of qualifying assets is capitalised as part

of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to

get ready for its intended use. All other borrowing costs are charged to revenue.

t) Stock based Compensation:

The compensation cost of stock options granted to employees of the Parent Company is measured by the

Intrinsic Value Method, i.e. the difference between the market price of the Company’s shares on the

date of the grant of options and the exercise price to be paid by the option holders. The compensation

cost is amortised uniformly over the vesting period of the options.




ACCOUNTS


150




ACCOUNTS

u) Impairment of assets:

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An

impairment loss is charged to Profit and Loss Account in the year in which an asset is identified as

impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a

change in the estimate of recoverable amount.

B) NOTES TO CONSOLIDATED ACCOUNTS

1. The consolidated financial statements present the consolidated accounts of Lupin Limited and the

following subsidiaries:

Name of subsidiary Country of Proportion

incorporation of Ownership

Interest

Lupin Chemicals (Thailand) Limited (Up to May 31, 2006)

(Refer note no. 18 below) Thailand 60%

Lupin Pharmaceuticals Inc. U.S.A 100%

Lupin Hong Kong Limited Hong Kong 100%

Lupin Australia Pty. Limited Australia 100%

Lupin Herbal Limited India 100%

Lupin Pharmacare Limited (w.e.f. January 10, 2007) India 99.99%

Max Pharma Pty Limited (w.e.f. September 21, 2006) (Refer note no. 21 ) Australia -

Lupin Holdings B. V. (w.e.f. March 30, 2007) Netherlands 100%

The consolidated accounts thus include the results of the aforesaid subsidiaries and there are no

other body corporate/entities, where the Company holds more than 50% of the share capital or where

the Company can control the composition of the Board of Directors/governing bodies of such

companies/entities, where the holding may be less than 50%.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for, net

of advances, Rs.304.8 million (previous year Rs.357.0 million).

3. Contingent Liabilities: (Rs. in million)

As at As at

March 31, 2007 March 31, 2006

186.3 282.5

b) Excise Duty, Sales Tax disputed in appeals and pending decisions 82.9 78.7

before higher authorities. Amount paid there against and included

under Schedule 10 (Rs.8.5 million) previous year (Rs.12.3 million)

c) Custom Duty in respect of future export obligation in accordance 11.4 7.4

with Exim Policy.

a) Income tax demands in respect of earlier years under dispute,

pending in appeals before higher authorities [including Rs. 113.7

million (previous year Rs. 113.7 million) consequent to department

preferring an appeal on the favourable order passed by the C.I.T.

(Appeals)]. Amount paid there against and included under Schedule

10 (Rs.72.6 million) previous year (Rs.153.0 million)



ACCOUNTS

As at As at

March 31, 2007 March 31, 2006

314.5 268.5

e) Counter guarantee given to GIDC in connection with loan sanctioned 7.5 7.5

by a financial institution to a company, jointly promoted by an

association of industries (of which, the Parent Company is a member) and

GIDC.



4. The Parent Company in accordance with the resolution passed by it’s Shareholders at the Annual

General Meeting held on July 25, 2006 increased the authorised share capital from Rs. 650.0 million

divided into 50,000,000 Equity Shares of Rs.10/- each and 1,500,000 Redeemable Cumulative Prefer-

ence Shares of Rs. 100/- each to Rs. 1,000.0 million divided into 100,000,000 Equity Shares of

Rs. 10/- each by reclassifying the 1,500,000 Redeemable Cumulative Preference Shares of Rs. 100/-

each into 15,000,000 Equity Shares of Rs. 10/- each and creation of 35,000,000 new Equity Shares of

Rs. 10/- each. Accordingly, the authorised share capital of the Parent Company has been altered in the

Memorandum and Articles of Association.

5. Pre-operative expenses, included in Capital Work-in-Progress (Schedule 5), represent the expenses

incurred for projects undertaken by the Parent Company, which are yet to be commissioned. Such

pre-operative expenses mainly pertain to plants/building under erection/construction at units/projects

located at Jammu, Tarapur, Ankleshwar, Goa and Mandideep, to be capitalised on completion of projects,

at the respective locations. During the year, some of the projects at Goa, Ankleshwar, Tarapur and

Mandideep were commissioned and capitalised. The details of the pre-operative expenses are:

(Rs. in million)

Particulars 2006-2007 2005-2006


Incurred in the current year :

Salaries, Allowances and Contribution to Funds 24.9 8.1

Professional fees 0.9 0.5

Travelling expenses 6.3 1.3

Others 9.1 1.6

Total 45.9 30.2

Less : Capitalised during the year 19.1 25.5

Closing balance 26.8 4.7

6. (i) The provision for Current Tax in respect of foreign subsidiaries has been computed considering the

applicable tax laws and rates of the respective countries, as certified by the local tax consultants

of the subsidiaries.

(ii) Deferred Tax provision:

The Deferred Tax Assets/(Liabilities) arising out of significant timing differences are as under:

d) Claims against the Parent Company and the subsidiary located in

the United States, not acknowledged as debts [including Rs.115.9

million (previous year Rs.112.6 million) along with interest demanded

under Drug Price Control Order 1979, payable into Drug Price

Equalisation Account towards unintended benefit enjoyed by the

Parent Company. The Parent Company has replied to the notices and

contended that no amount is payable and the matter is also pending

decision, before various courts on the appeals filed by the

Associations of which the Parent Company is a member]. Amount

paid there against without admitting liability and included under

Schedule 10 (Rs. 31.5 million) previous year (Rs.4.8 million)

(Rs. in million)


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a) Break-up of net Deferred Tax Liabilities of the Parent Company and it’s subsidiaries, except Lupin

Pharmaceutical Inc., USA and the subsidiary in Australia, is as under :

(Rs. in million)

As at As at

Particulars 31.03.2007 31.03.2006

Deferred Tax Liability:

Depreciation (1092.9) (1027.3)

Deferred Tax Assets:

Provision for Doubtful Debts and Advances 7.9 12.4

Provision for Leave Encashment 32.7 17.1

FCCB issue expenses 17.7 23.6


Net Deferred Tax Liability (1027.2) (956.1)

b) Break up of net Deferred Tax Asset of subsidiary Lupin Pharmaceutical Inc., USA is as under:

(Rs. in million)

As at As at

Particulars 31.03.2007 31.03.2006

Deferred Tax Liability:

Depreciation (1.0) (0.9)

Prepaid product liability insurance (9.4) (1.3)

Deferred Tax Assets:


Net Deferred Tax Asset 1.3 17.1

c) On the basis of Current Tax computation as referred to in note 6(i) above, there are no timing

differences and hence no Deferred Tax in respect of the subsidiaries located in Australia.

iii) Deferred Tax for the current year is net of Rs. 8.1 million (previous year Rs. Nil) in respect of earlier years.

iv) As at 31st March 2007, advance payment of Income Tax and Provision for Taxation have been disclosed

on a net basis, wherever a legal right to set off exists and when the Company intends to settle the

assets and liabilities on a net basis. Accordingly, the previous year’s corresponding figures which were

disclosed on a gross basis have been now regrouped.

7. Segment Reporting:

i) Primary segment:

The company is exclusively in the Pharmaceutical business segment and has only one reportable seg-

ment.

ii) Secondary segment data:

(Rs. in million)

India Outside India Total

Particulars 2006-07 2005-06 2006-07 2005-06 2006-07 2005-06

Revenue by Geographical Segment 10972.4 8921.3 11395.0 9201.1 22367.4 18122.4

Carrying amount of Segment Assets 15982.4 13209.1 6619.5 7228.2 22601.9 20437.3

Capital Expenditure 1764.6 826.2 8.8 4.4 1773.4 830.6

Notes :

a) The segment revenue in geographical segments considered for disclosure is as follows :

- Revenue within India includes gross sales to customers located within India and earnings in India.

- Revenue outside India includes gross sales to customers located outside India and earnings

outside India.





ACCOUNTS

b) Segment revenue comprises:

(Rs. in million)

India Outside India Total

Particulars 2006-07 2005-06 2006-07 2005-06 2006-07 2005-06

Sales by Geographical Segment 10894.3 8903.8 9822.2 8599.6 20716.5 17503.4

Other Income 78.1 17.5 1572.8 601.5 1650.9 619.0

(excluding Interest, Dividend, etc.)

Total Revenue 10972.4 8921.3 11395.0 9201.1 22367.4 18122.4

8. Basic and diluted earnings per share is calculated as under:

2006-2007 2005-2006


Net Profit after minority interest 3085.6 1729.9

Less :Income Tax in respect of earlier years 51.0 34.5

Profit attributable to Equity Shareholders 3034.6 1695.4

Weighted average number of Equity Shares :

- Basic 80307573 40141134

Add :Effect of dilutive issue of employees stock options 377656 104355

[Refer note no. 11(a) below]

- Diluted 80685229 40245489

Earnings per Share (Rs.)

- Basic 37.79 21.12

- Diluted 37.61 21.07

Notes :

1. Considering that the fair value of equity shares of the Parent Company, as referred to in AS-20 “

Earning per Share”, is less than the exercise price for the FCCBs issued [Refer note no.16 (a) below],

the options embedded in the said FCCBs to subscribe to equity shares is anti-dilutive and hence the

same have not been considered for computation of diluted EPS.

2. The shareholders of the Parent Company approved the issue of Bonus Shares in the proportion of one

new equity share for every one existing equity share, at the Annual General Meeting held on July 25,

2006. On August 17, 2006, the Parent Company allotted 40,152,494 equity shares of face value of Rs.

10/- each as fully paid up, by capitalisation of part of the General Reserve. Accordingly, as per Account-

ing Standard 20 (AS 20) on ‘Earning Per Share’ previous year’s earning per share (Basic and Diluted)

have been recomputed consequent upon issue of Bonus Shares.

9. Managerial Remuneration:

2006-2007 2005-2006


Salary and Allowances 56.0 34.2

Contribution to Provident and Other Funds 4.6 3.6

Perquisites 2.2 1.8

Commission to Whole time Director 29.1 23.7

Commission to Non-Executive Directors 5.0 3.0

96.9 66.3

Notes :

i) Above amount does not include remuneration of Rs.33.6 million (previous year Rs. 20.8 million) paid by

the subsidiary companies to its directors.


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ii) Remuneration for the current year includes increased remuneration of the Managing Director of the

Parent Company w.e.f. 1st July, 2006 in accordance with the terms of the Shareholder’s resolution.

iii) The provision for Gratuity and Leave Encashment of the Parent Company is made on the basis of

actuarial valuation, for all the employees of the Company, including for the managerial personnel.

Proportionate amount of Gratuity and Leave Encashment is not included in the above disclosure,

since the exact amount is not ascertainable.

iv) Remuneration for the current year includes performance incentive to the Managing Director of the

Parent Company, including accounted for in accordance with the requirements of AS 15 (Revised)

“Employee Benefits”.

10. The Parent Company and a subsidiary company located at Thailand (upto May 31, 2006) procures on lease,

equipments, vehicles and office premises under operating leases. These rentals recognised in the Profit

and Loss Account for the year are Rs.46.1 million (Previous year Rs. 41.0 million). The future minimum

lease payments and payment profile of non cancellable operating leases are as under:

2006-2007 2005-2006


Not later than one year 25.0 25.4

Later than one year but not later than five years 33.3 32.8

Later than five years 0.1 0.1

TOTAL 58.4 58.3

11. Employees Stock Option Plans:

a) During the year, further to the “Lupin Employees Stock Option Plan 2003” which was implemented in

the previous year, the Parent Company has implemented “Lupin Employees Stock Option Plan 2005”

and “Lupin Subsidiary Companies Employees Stock Option Plan 2005” (ESOPs) authorised by the

Shareholders of the Parent Company in it’s Annual General Meeting held on July 28, 2005 and duly

approved by the Remuneration/Compensation Committee of the Board of Directors of the Parent

Company at their meeting held on June 16, 2006. Details of the options granted during the year under

the plans are as under:

Plan: Lupin Employees Stock Option Plan 2005:

Grant Date No of Options Exercise price Vesting Period

granted Rs.

June 16, 2006 67005* 429.875** 16.06.2006 to 30.06.2007

67005* 429.875** 16.06.2006 to 30.06.2008

156345* 429.875** 16.06.2006 to 30.06.2009

156345* 429.875** 16.06.2006 to 30.06.2010

446700*

July 25, 2006 1215* 433.975** 25.07.2006 to 31.12.2007

1215* 433.975** 25.07.2006 to 31.12.2008

2835* 433.975** 25.07.2006 to 31.12.2009

2835* 433.975** 25.07.2006 to 31.12.2010

8100*

September 13, 2006 3300 469.90 13.09.2006 to 31.12.2007

3300 469.90 13.09.2006 to 31.12.2008

7700 469.90 13.09.2006 to 31.12.2009

7700 469.90 13.09.2006 to 31.12.2010

22000

October 19, 2006 6405 507.60 19.10.2006 to 31.12.2007

6405 507.60 19.10.2006 to 31.12.2008

14945 507.60 19.10.2006 to 31.12.2009

14945 507.60 19.10.2006 to 31.12.2010

42700





ACCOUNTS

Grant Date No of Options Exercise price Vesting Period

granted Rs.

July 25, 2006 9555* 433.975** 25.07.2006 to 31.12.2007

9555* 433.975** 25.07.2006 to 31.12.2008

22295* 433.975** 25.07.2006 to 31.12.2009

22295* 433.975** 25.07.2006 to 31.12.2010

63700*

Plan: Lupin Subsidiary Companies Employees Stock Option Plan 2005:

* Post bonus number of options (including options increased due to effect of bonus issue).

** Post bonus exercise price

The options are granted at the exercise price, which is in accordance with the SEBI guidelines in force, at

the time of such grants. Each option entitles the holder to exercise the right to apply for and seek allotment

of one equity share of Rs.10/- each. The options have vesting periods as stated above in accordance with

the vesting schedule as per the said plans with an exercise period of ten years from the respective grant

dates.

The particulars of the options granted and lapsed under the Schemes are as below:


31st March 2007 31st March 2006

Nos. Nos.

Options outstanding as at the beginning of the year (pre bonus) 355800 377150

Add: Options granted during the year (pre bonus) - 18000

Less: Options lapsed during the year (pre bonus) 17725 39350

Less: Options exercised (pre bonus) 11360 -



Less: Options exercised (post bonus) 39576 -

Options outstanding as at the year-end

- pre bonus - 355800

- post bonus 557364 -




Nos. Nos.




Lupin Subsidiary Companies Employees Stock Option Plan 2005:




Nos. Nos.



Add: Options granted during the year (post bonus) 64700 -




156


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b) The Parent Company has followed the Intrinsic Value-based Method of accounting for stock options

granted after April 1, 2005 based on Guidance Note on Accounting for Employee Share-based Payments,

issued by the Institute of Chartered Accountants of India. Had the compensation cost for the Parent

Company’s stock based compensation plans been determined in the manner consistent with the fair

value approach as described in the Guidance note, the Company’s net income would be lower by

Rs. 57.8 million (previous year Rs. 1.4 million) and earnings per share as reported would be lower as

indicated below:

Note: Basic and Diluted EPS of previous year have been recomputed consequent upon the issue of

Bonus Shares [Refer note 2 to no.8 above].

The fair value of each option granted during the year is estimated on the date of grant based on the

following assumptions:

Particulars Grant Grant Grant Grant

dated dated dated dated

June 16, July 25, September 13, October 19,

2006 2006 2006 2006

Dividend yield (%) 2.14 2.14 2.14 2.14


Risk free interest rate (%) 7.67 8.19 7.81 7.60

Volatility (%) 97.69 96.68 96.63 96.33

12. a) Pursuant to the early adoption of Accounting Standard 15 (AS-15) (Revised 2005) ‘Employee Benefits’

issued by the Institute of Chartered Accountants of India (ICAI), though not yet mandatory in nature,

the Parent Company has adjusted Rs. 83.1 million (net of Deferred Tax of Rs. 42.1 million) in respect

of the additional liability pertaining to Employee Benefits, up to March 31, 2006, against the opening

balance of it’s General Reserve in accordance with the transitional provisions referred to in the said

standard. Had the Employee Benefits cost been determined in the manner consistent with earlier

Accounting Standard (AS-15) ‘Accounting for Retirement Benefits’, the profit before tax of the Parent

Company would have been higher by Rs.15.1 million.

b) Retirement Benefit Plans

i) Defined contribution plans

The Parent Company makes contributions towards Provident Fund and Superannuation Fund to a

defined contribution retirement benefit plan for qualifying employees. The Provident Fund

plan is operated by the “Lupin Laboratories Ltd Employees Provident Fund Trust” and the

Superannuation Fund is administered by the Life Insurance Corporation of India (LIC). Under the

schemes, the Company is required to contribute a specified percentage of payroll cost to the retire-

ment benefit schemes to fund the benefits. The subsidiary company located in the United States

makes contributions towards Social Security to a defined contribution retirement benefit plan for

qualifying employees.


March 31, 2007 March 31, 2006


Net profit as reported (after Income Tax of earlier years) 3034.6 1695.4

Less: Total stock-based employee compensation expense

determined under fair value based method 57.8 1.4

Adjusted net profit 2976.8 1694.0

Basic earnings per share


-Adjusted (Rs.) 37.07 21.10

Diluted earnings per share


-Adjusted (Rs.) 36.89 21.05





ACCOUNTS

The Parent Company recognised Rs.46.5 million (previous year Rs.40.5 million) for Provident Fund

contributions and Rs.32.8 million (previous year Rs.30.2 million) for Superannuation Contribution

and the subsidiary company located in the United States recognised Rs.12.1 million (previous year

Rs.2.8 million) for Social Security contribution in the Profit and Loss account. The contributions

payable to these plans by the Company are at rates specified in the rules of the schemes.

ii) Defined benefit plan

The Parent Company makes annual contributions to the Lupin Limited Employees’ Group Gratuity

cum Life Assurance Scheme of the LIC, a funded defined benefit plan for qualifying employees. The

scheme provides for payment to vested employees as under:

a) On normal retirement/early retirement/withdrawal/resignation:

As per the provisions of Payment of Gratuity Act, 1972 with vesting period of 5 years of service.

b) On death in service:

As per the provisions of Payment of Gratuity Act, 1972 without any vesting period.

The most recent actuarial valuation of plan assets and the present value of the defined benefit

obligation for Gratuity and Leave Encashment of Parent Company were carried out at March 31,

2007 by an actuary. The present value of the defined benefit obligations and the related current

service cost and past service cost, were measured using the Projected Unit Credit Method.

The following table sets out the status of the Gratuity plan and Leave Encashment and the amounts

recognised in the financial statements as at March 31, 2007.




As on 31.03.2007

I) Reconciliation in present value of obligations (PVO) -

defined benefit obligation:

Current Service Cost 16.5 34.6

Interest Cost 10.7 4.3



Past service cost - -

PVO at the beginning of the year 148.3 61.6

PVO at end of the year 176.5 86.8

II) Change in fair value of plan assets:

Expected return on plan assets 11.5 -

Actuarial gain/(losses) 1.6 -

Contributions by the employer 34.5 8.5


Fair value of plan assets at beginning of the year 123.0 -

Fair value of plan assets at end of the year 158.4 -

III) Reconciliation of PVO and fair value of plan assets:

PVO at end of period 176.5 86.9

Fair value of planned assets at end of year 158.4 -

Funded status (18.1) (86.9)

Unrecognised actuarial gain/(loss) - -

Net asset/(liability) recognised in the balance sheet (18.1) (86.9)

(Rs. in million)


158




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As on 31.03.2007

IV) Net cost for the year ended March 31,2007:

Current Service cost 16.5 34.6


Expected return on plan assets (11.5) -


Net cost 27.2 33.7

V) Category of assets as at March 31, 2007:

Insurer Managed Funds (100%) 158.4 -

VI) Actual return on the plan assets 13.1 -

VII) Assumption used in accounting for the gratuity plan:

Discount rate (%) 7.5 7.5

Salary escalation rate (%) 5 5

Expected rate of return on plan assets (%) 8 -

Note : Leave Encashment liabilities are excluding Provident Fund contribution

13. The Parent Company has entered into Forward Exchange Contracts, being derivative instruments for hedge

purpose and not intended for trading or speculation purposes, to establish the amount of currency in Indian

Rupees required or available at the settlement date of certain payables and receivables. The following are

the outstanding Forward Exchange Contracts entered into by the Company:

Currency Buy or Sell Cross Currency Amount in US$

March 31, 2007 March 31, 2006

US $ Buy Indian Rupees 12000000 13229266

US $ Sell Indian Rupees *18000000 *6000000

US $ Buy Thai Baht - *294792

* Based on firm commitments.

Note : FCCB of US$ 100.0 million are convertible at a fixed exchange rate [refer note no. 16 (a) below].

The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise

are as below:

a. Amount receivable in foreign currency on account of the following


Currency



currency currency

Export of Goods

4.1 116250 1.5 45625 AUD

27.5 632710 - - ACUD

56.9 981990 37.3 691956 EURO

1.8 20814 3.7 47815 GBP

728.9 16767549 1569.7 35185799 US $

Bank Fixed Deposits 3260.3 75000000 4383.4 98249979 US $

Interest receivable on

Bank Fixed Deposits 41.8 961069 51.7 1158245 US $

Other Receivable Rs. 7649/- 173 - - SGD

(Rs. in million)






ACCOUNTS


Currency



currency currency

Import of goods

38.6 744550 397.2 8829132 US $

6.1 71099 0.4 5753 GBP

1.3 22662 13.6 255186 EURO

0.1 1140 0.4 11509 CHF

0.1 2193 - - UAH

0.1 3590268 - - UZS

Rs.14475/- 500 - - SGD

0.6 15222 0.2 5108 AUD

Secured and Unsecured 805.4 18528254 1185.6 26572473 US $

Loans Payable

Interest Accrued and 4.2 97532 2.6 57270 US $

not due on Term Loans

Other Payables

633.0 14561092 423.7 9495925 US $

Rs.24480/- 66501 Rs. 20406/- 53821 JPY

0.2 94038 0.1 87016 RUB

8.4 99380 0.5 7620 GBP

0.2 562812 Rs. 7411/- 200845 KZT

Rs. 15697/- 451388 - - UZS

0.9 21763 - - ACUD

0.1 9202 - - HKD

0.3 45284 - - ZAR

0.7 76856 0.4 46671 UAH

0.8 13525 Rs. 27922/- 518 EURO

b. Amount payable in foreign currency on account of the following

14. The aggregate amount of revenue expenditure incurred by the Parent Company during the year on

Research and Development and shown in the respective heads of account in the Profit and Loss Account is

Rs. 1359.0 million (previous year Rs.1029.8 million).

15. Compensation received by the Parent Company of Rs. 192.2 million (previous year Rs. Nil), included in the

schedule of “Other Income” (Schedule 12) represents amounts received from the parties, consequent upon

resolution of dispute/termination of agreement.

16. a) During the previous year, the Parent Company issued 1000 Foreign Currency Convertible Bonds (FCCBs)

of a face value of US$ 100000 each aggregating to US$ 100.0 million equivalent to Rs. 4461.5 million.

As per the terms of the issue, the holders have an option to convert FCCB into Equity Shares at an

initial conversion rate of Rs.1134.08 per equity share at a fixed exchange rate subject to certain

adjustments as per the terms of the issue. However, consequent to the issue of Bonus Shares in the

ratio of one for one, the numbers of underlying shares have doubled and the conversion price is

reduced to half i.e. Rs. 567.04 per share. Further, under certain conditions, the Company, after Janu-

ary 6, 2009 but before December 28, 2010, has an option for earlier redemption of the bonds, in whole,

but not in part. Unless previously converted or redeemed or purchased and cancelled, the Company will

redeem these bonds at a premium of 34.74 per cent at the end of the five years from the date of issue

i.e. on January 7, 2011. As at March 31, 2007 none of the bonds have been converted into equity

shares and the FCCBs outstanding as on March 31, 2007 have been included and disclosed in the

schedule of “Unsecured Loans” (Schedule 4).


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b) The Parent Company expects that the Bond Holders would opt for conversion rather than redemption

and hence in that case no premium would be payable and on that basis the same is not provided for.

However, the premium, if paid would be adjusted to the extent available, against the Securities Pre-

mium Account.

17. Disclosures as required by AS-29 “Provisions, Contingent Liabilities and Contingent Assets” issued by ICAI

in respect of provisions of the subsidiary located in USA as at March 31, 2007 are as under:

(Rs. in million)

Particulars Provision for Price Differential (a) Other Provisions(b)


( - ) ( - )

Additions 16.5 -

(98.0) (8.4)

Utilisation 29.9 -

(58.9) ( - )

Reversal 8.3 8.4

( - ) ( - )

Closing balance 17.4 -

(39.1) (8.4)

Note: Figures in brackets are for previous year.

(a) The subsidiary company, in accordance with the terms of agreements/understanding with the

customers, offers differential price due to reduction in the market prices of products. Accordingly, the

said subsidiary company on a prudent basis has made a provision based on historical data and future

market price trend expected. Actual outflow is expected in the next financial year.

(b) Other Provisions represent the provision towards an amount payable to a party under Co-promotion

Agreement, which had been terminated in the previous year. The same is reversed during the current

year consequent to settlement.

18. The Parent Company had long term investments aggregating to Rs. 48.3 million (previous year Rs. 48.3

million) in a subsidiary located at Thailand (in which the Parent Company held 60% stake). The said

subsidiary had accumulated losses and its net worth was substantially eroded. During the current year, on

May 31, 2006, the Parent Company sold the shares held by it in the said subsidiary to another party at an

amount equivalent to the amount paid by it for the purchase of such shares. Consequent to the sale of the

investments, the said company ceased to be subsidiary of the Parent Company from June 1, 2006.

Accordingly, the results of operations of the said subsidiary up to May 31, 2006 are included in the

consolidated financial statements for the current year and the profit on sale/disposal of investment in the

said subsidiary aggregating to Rs. 21.1 million has been credited to the consolidated profit and loss

account as Other Income (Schedule 12). Further, the balance in the Foreign Currency Translation Reserve

(Schedule 2) aggregating to Rs.0.9 million as at the date of sale pertaining to the said subsidiary which was

considered as a non integral foreign operations, has been also credited to the Consolidated Profit and Loss

Account in accordance with AS 11 (Revised) “The effects of changes in foreign exchange rates”.

19. The losses applicable to the minorities in the two subsidiaries namely Max Pharma Pty Ltd. and Lupin

Pharmacare Ltd, in excess of their respective interests in the equity aggregating to Rs 10.1 million (previous

year Rs. Nil) have been absorbed by the Parent Company and are accordingly debited to the consolidated

Profit and Loss Account, considering that there is no binding obligation on the concerned minorities to

make good these losses.

20. Considering the Parent Company’s plan to restructure its business strategies, Lupin Hong Kong Limited, its

100% subsidiary, has filed an application with the Registrar of Companies, Hong Kong (ROC) for

de-registration as the said company is defunct. In the opinion of the management, considering that the

subsidiary’s business would now be directly carried out by the Parent Company, the de-registration of the

said subsidiary is not a discontinuation of business operation. Moreover, the said business does not

represent a separate major line of business or geographic area of operation as contemplated under AS 24

on “Discontinuation of Operations”.





ACCOUNTS

21. Max Pharma Pty. Ltd. was incorporated on September 21, 2006 and in accordance with the

shareholding agreement, has initially issued only one share, which is held by the joint venture

party with whom shareholding agreement is entered into by the Parent Company. However the said

subsidiary company, in accordance with the terms of the aforesaid agreement proposes to issue

total 11,42,857 ordinary shares in the proportion of 87.5% to Lupin Limited and 12.5% to the JVP by

May 31, 2007. Accordingly, on the basis of the proposed shareholding pattern and the present

control on the composition of Board of Directors by Lupin Limited, the said company is a subsidiary

of Lupin Limited and is accordingly, considered and included for consolidation purposes.

22. Related Party Disclosures, as required by AS-18 are given below

A. Relationships -

Category I: Key Management Personnel / parties :

Dr. D B Gupta Chairman

Dr. K.K. Sharma Managing Director

Mrs. M D Gupta Executive Director

Mrs. Vinita Gupta Managing Director of Lupin Pharmaceuticals Inc., U.S.A.

Mr. Ramesh Chandra Saboo Managing Director of Lupin Chemicals

(Thailand) Limited, Thailand

(up to May 31, 2006)

Mr. Bruce Hewett Director of Lupin Australia Pty Limited, Australia

and Managing Director Max Pharma Pty Ltd, Australia.

Category II: Others (Relatives of Key Management Personnel and Entities in which the Key

Management Personnel have control or significant influence)

Dr. Anuja Gupta

Mrs. Kavita Gupta Sabharwal

Mr. Nilesh Gupta

Ms. Richa Gupta

Mrs. Pushpa Khandelwal

Adhyatma Investments Pvt. Limited

Badhira Leasing & Finance Pvt. Limited

Bharat Steel Fabrication and Engineering

Works

Chippendale Terrace Pty Limited Australia

Citco Nederlands B.V.

Concept Pharmaceuticals Limited

D. B. Gupta (HUF)

Enzal Chemicals (India) Limited

Lupin Human Welfare and Research

Foundation

Lupin International Pvt. Limited

Lupin Investments Pvt. Limited

Lupin Marketing Pvt. Limited

Lupin Securities Limited

Matashree Gomati Devi Jana Seva Nidhi

Novamed Pharmaceuticals Pvt Limited

Pipleswar Holdings Pvt. Limited

Polynova Industries Limited

Pranik Landmark Associates

Rahas Investments Pvt. Limited

S N Pharma

Synchem Chemicals (I) Pvt. Limited

Timita Leasing & Finance Pvt. Limited

Varija Leasing & Finance Pvt. Limited

Visiomed (I) Pvt. Limited

Yogini Leasing & Finance Pvt. Limited

Zyma Laboratories Limited


162




ACCOUNTS

B. Transactions carried out with the related parties. (Rs. in million unless other wise stated)

Sr. Transactions Key Management Others Total

No. Personnel

1 Sale of Goods - 6.5 6.5

( - ) (4.0) (4.0)

2 Rent Expenses - 0.5 0.5

( - ) (Rs.42,000/-) (Rs.42,000/-)

3 Business Conducting Expenses - Rs.6,000/- Rs.6,000/-

( - ) (Rs.6,000/-) (Rs.6,000/-)

4 Agency Commission Expenses - 9.9 9.9

( - ) (5.6) (5.6)

5 Expenses Recovered/Rent Received - 1.9 1.9

( - ) (1.9) (1.9)

6 Remuneration Paid 125.5 11.3 136.8

(84.0) (6.3) (90.3)

7 Deposit paid for office premises - 122.4 122.4

under lease arrangement. ( -) ( -) ( - )

8 Purchase of Goods/Materials - 57.5 57.5

( - ) (39.5) (39.5)

9 Donations Paid - 16.5 16.5

( - ) (13.1) (13.1)

10 Dividend Paid 3.9 132.8 136.7

(4.1) (132.8) (136.9)

11 Processing Charges Paid - 5.2 5.2

( - ) (5.0) (5.0)

12 Professional Fees Paid - Rs. 31970/- Rs. 31970/-

( - ) ( - ) ( - )

13 Expenses Reimbursed - 12.1 12.1

( - ) (7.4) (7.4)

14 Issue of Shares - Rs. 35/- -

( - ) ( - ) ( - )

Out of the above items transactions in excess of 10% of the total related party transactions are as under:


Sr. Transactions Related Party For the Year For the Year

No. Relation ended ended

31.03.2007 31.03.2006

1 Sales of Goods



2 Rent Expenses


Bharat Steel Fabrications and Engineering Works Others - Rs.6,000/-







3 Business Conducting Expenses


4 Agency Commission Expenses


Out of the above items transactions in excess of 10% of the total related party transactions are as under:




31.03.2007 31.03.2006

1 Sales of Goods



2 Rent Expenses


Bharat Steel Fabrications and Engineering Works Others - Rs.6,000/-







3 Business Conducting Expenses


4 Agency Commission Expenses






ACCOUNTS



31.03.2007 31.03.2006

5 Expenses Recovered/Rent Received

Polynova Industries Ltd. Others 0.6 0.7

Pranik Landmark Associates Others 1.2 1.2

6 Remunerations Paid

Dr. D. B. Gupta Key Management

Personnel 56.0 38.5

Dr. K. K. Sharma Key Management

Personnel 33.7 22.5

Mrs. Vinita Gupta Key Management

Personnel 30.3 16.7

7 Purchase of Goods/Material


8 Donations Paid

Lupin Human Welfare and Research Foundation Others 15.3 10.9

Matashree Gomatidevi Janseva Nidhi Others - 2.2

9 Dividend Paid

Lupin Marketing Pvt. Ltd. Others 26.3 26.3

Rahas Investments Pvt. Ltd. Others 29.7 29.7

Visiomed (I) Pvt. Ltd. Others 28.3 28.3


10 Processing Charges Paid


11 Expenses Reimbursed


S N Pharma Others - 2.4

12 Professional fees paid

Citco Nederlands B.V. Others Rs. 31970/- -

13 Deposit paid for office premises under lease

arrangement

Pranik Landmark Associates Others 122.4 -

14 Issue of Shares

Chippendale Terrace Pty Ltd Others Rs. 35/- -



164




ACCOUNTS

C. Balances due from/to the related parties (Rs. in million unless other wise stated)

Sr. Transactions Key Management Others Total

No. Personnel

1 Deposit paid under Leave and Licence - 477.5 477.5

arrangement for Office Premises ( - ) (477.5) (477.5)

2 Deposits given for Lease arrangement for - 122.4 122.4

Office Premises ( - ) ( - ) ( - )

3 Deposit given for Business Conducting - 180.0 180.0

Arrangement ( - ) (180.0) (180.0)

4 Debtors - - -

( - ) (0.1) (0.1)

5 Creditors - 2.3 2.3

( - ) (1.0) (1.0)

6 Commission Payable - 1.2 1.2

( - ) (0.7) (0.7)

7 Expenses payable - 0.1 0.1

( - ) ( - ) ( - )

Note - Figures in brackets are for previous year.

23. The consolidated results for the previous year include the results of operations of a subsidiary company

located in Thailand for the entire twelve months, where as the results for the current year include the

results of such operations for two months i.e. upto May 31, 2006 being the date of sale of investment in

the said subsidiary [Refer note no.18 above]. Further the results for the current year includes the results

of operations of three new subsidiaires incorporated during the year. Accordingly, the current year figures

are not strictly comparable with those of the previous year. Previous year figures have been regrouped

wherever necessary to correspond with the figures of the current year.

Signatures to Schedules 1 to 17




P. R. Barpande Dr. Desh Bandhu Gupta Dr. Kamal K. Sharma M. D. GuptaPartner Chairman Managing Executive

Director Director

D. K. Contractor K. U. Mada R. A. ShahDirector Director Director

Place : Mumbai Kiran N. BadeDated : May 09, 2007 Company Secretary


For

and

on

beha

lf of

the

Boa

rd o

f Dir

ecto

rs

Kira

n N.

Bad

eDr

. De

sh B

andh

u Gu

pta

Dr.

Kam

al K

. Sh

arm

aM

um

bai,

May 9

, 2

007

Com

pa

ny Secreta

ry

Ch

airm

an

Ma

na

gin

g D

irecto

r

*

Cea

sed

to b

e a

subs

idia

ry w

.e.f.

Jun

e 1,

200

6.,

**

Und

er li

quid

atio

n.*

**

The

com

pany

is a

sub

sidi

ary

on th

e ba

sis

of p

rese

nt c

ontro

l of c

ompo

sitio

n of

its

Boar

d of

Dire

ctor

s.

STATEM

EN

T PU

RSU

AN

T T

O SECTIO

N 212 O

F T

HE CO

MPA

NIE

S A

CT,

1956,

RELATIN

G TO

SU

BSID

IARY CO

MPA

NIE

S

Date f

rom

whic

h it b

ecam

e

subsid

iary com

pany

Extent o

f Interest o

f t

he h

old

ing

Com

pany in t

he C

apit

al and

Reserves of the subsid

iary

com

pany a

t t

he e

nd o

f t

he

fin

ancia

l year/ p

erio

d o

f t

he

subsid

iary com

pany

a) N

um

ber o

f s

hares h

eld

: :

Nam

e o

f t

he s

ubsid

iary c

om

pany

The f

inancia

l year/perio

d o

f

the s

ubsid

iary e

nded o

n

: :

b) E

xtent o

f h

old

ing

Net a

ggregate a

mount o

f t

he

subsid

iary com

pany’s

profit

/

(lo

ss) n

ot d

ealt

wit

h in t

he

hold

ing C

om

pany’s

accounts

Previo

us years/perio

ds

Net a

ggregate a

mount o

f t

he

subsid

iary C

om

pany’s

profit

/(lo

ss) d

ealt

wit

h in t

he

hold

ing C

om

pany’s

accounts

Current year/perio

d

Previo

us years/perio

ds

: : : : :

Current year/perio

d

Perio

d ended

31.0

3.2

007

30.0

3.2

007

Lupin

Hold

ings

B.V., N

etherla

nds

100%

(Rs.0

.1 M

n.)

N.A.

Nil

N.A.

20,000 E

quit

y s

hares

of t

he f

ace v

alu

e o

f

Euro 1

each

Lupin

Pharm

acare

Ltd., In

dia

Perio

d ended

31.0

3.2

007

10.0

1.2

007

99.99%

(Rs.0.3 M

n.)

N.A.

Nil

N.A.

49,994 E

quit

y s

hares

of t

he f

ace v

alu

e o

f

Rs.10/- e

ach

Max Pharm

a Pty

Ltd., Australia

Perio

d ended

31.0

3.2

007

21.0

9.2

006 -

(Rs.10.1 M

n.)

N.A.

Nil

N.A.

***

Lupin

Herbal

Ltd., In

dia

Year e

nded

31.0

3.2

007

12.0

8.2

004

100%

Rs.10,385/-

Rs.43,976/-

Nil

Nil

50,000 E

quit

y

shares o

f t

he f

ace

valu

e o

f R

s.10/-

each (

inclu

din

g 6

shares h

eld

by

nom

inees)

01.1

2.2

004

Lupin

Australia (

Pty)

Ltd., Australia

Year e

nded

31.0

3.2

007

100%

Rs.1.5 M

n.

(Rs.0.6 M

n.)

Nil

Nil

430,000 E

quit

y s

hare

s

of th

e f

ace v

alu

e o

f

Australian $

1 e

ach

31.0

5.2

002

Lupin

Hong K

ong

Ltd., H

ong K

ong

Year e

nded

31.03.2007**

100%

(Rs.3.7 M

n.)

(Rs.0.8 M

n.)

Nil

Nil

800,000 E

quit

y

shares o

f t

he f

ace

valu

e o

f H

ong K

ong

$ 1

each (

inclu

din

g

1 s

hare h

eld

by a

nom

inee)

25.0

8.1

989

Lupin

Chem

icals

(Thailand) Ltd.,

Thailand

Perio

d ended

31.05.2006*

60%

Rs.1.1 M

n.

(Rs.32.2 M

n.)

Nil

Nil

420,000 E

quit

y

shares o

f t

he f

ace

valu

e o

f B

aht 1

00

each

30.0

6.2

003

Lupin

Pharm

aceutic

als

Inc., U

SA

Year e

nded

31.0

3.2

007

100%

Rs.80.7 M

n.

Rs.93.0 M

n.

Nil

Nil

300,000 s

hares o

f

the f

ace v

alu

e o

f U

S

$ 1

each


166

INFO

RM

ATIO

N O

N TH

E FIN

AN

CIA

LS O

F TH

E SU

BSID

IARY CO

MPA

NIE

S

FO

R T

HE Y

EA

R E

ND

ED

MA

RCH

31,

2007

[A

s p

er t

he e

xem

ptio

n letter o

f t

he M

inis

try o

f C

om

pany A

ffair

s, G

overnm

ent o

f India

]

Notes:

1The M

inistry of C

om

pany Affairs has vide its letter bearing ref. no. 47/149/2007-C

L-III dated M

ay 21, 2007 exem

pted the C

om

pany from

attaching to its Balance Sheet, certain

inform

ation specified in Section 212(1) except that m

entioned in Section 212(1)(e) of the said Act, pertaining to subsidiary com

panies.

2C

onsequent to the sale of investm

ents in equity shares held by Lupin Lim

ited in Lupin C

hem

icals (Thailand) Ltd., it ceased to be a subsidiary w

.e.f June 01,2006.

3Lupin H

ong Kong Ltd has filed an application w

ith the Registrar of C

om

panies, H

ong Kong for its deregistration as a com

pany being defunct.

4Incom

e Tax of earlier year expenditure is Rs. 4,355/- in Lupin Austalia Pty Ltd.

5Paid up Share C

apital is Rs. 35/- in M

ax Pharm

a Pty Ltd.

6The figures of M

ax Pharm

a Pty Ltd are from

Septem

ber 21, 2006 to M

arch 31, 2007, Lupin H

oldings B.V. are from

M

arch 30, 2007 to M

arch 31, 2007 and Lupin Pharm

acare Ltd

are from

January 10, 2007 to M

arch 31, 2007.

7The negative figures of Reserves in case of few

subsidiaries are net im

pact of accum

ulated losses.

8In com

pliance w

ith C

lause 32 of the Listing Agreem

ent, audited consolidated financial statem

ents form

part of this Annual Report.

9Full annual accounts of the subsidiaries are available for inspection at the Registered O

ffice of the C

om

pany and on request w

ill be sent to m

em

bers free of cost.

Nam

e of the subsidiary

Lupin Pharm

aceuticals

Lupin C

hem

icals

Lupin H

ong Kong

Lupin A

ustralia

Max Pharm

aLupin H

oldings

Lupin H

erbal Ltd.,

Lupin Pharm

acare

com

pany

Inc., U

SA

(Thailand) Ltd.,

Ltd., H

ong Kong

(Pty) Ltd.,

Pty Ltd,

B.V., N

etherlands

India

Ltd., India

Thailand

Australia

Australia

The financial year/period

Year ended

Period ended

Year ended

Year ended

Period ended

Period ended

Year ended

Period ended

of subsidiary ended on

M

arch 31, 2007

M

ay 31, 2006

March 31, 2007

March 31, 2007

March 31, 2007

March 31, 2007

March 31, 2007

M

arch 31, 2007

Rs. in m

illion

Rs. in m

illion

Rs. in m

illion

Rs. in m

illion

Rs. in m

illion

Rs. in m

illion

Rs.

Rs.

Capital

13.8

85.0

4.7

14.5

1.2

500,000

500,000

Re

se

rve

s 173.7

(39.6)

(4.6)

0.9

(10.1)

(0.1)

54,361

(326,484)

Total Liabilities (D

ebts +

2,366.0

385.3

-0.4

13.4

0.1

864,122

30,001

Current Liabilities)

Total A

ssets (Fixed A

ssets

2,553.5

430.7

0.1

15.8

3.3

1.2

1,418,483

203,517

+ C

urrent A

ssets)

Tu

rn

ove

r3,553.5

129.9

-

0.8

-

-4,098,210

-

Profit/(Loss) before Tax

131.5

2.5

(3.7)

1.6

(10.1)

(0.1)

68,327

(326,484)

Provision for Tax

40.6

0.6

-0.1

-

- 19,000

-

Profit/(Loss) after Tax

90.9

1.9

(3.7)

1.5

(10.1)

(0.1)

49,327

(326,484)

Add/(Less) Incom

e Tax of

(10.2)

- -

- -

38,942

-

earlier years

Profit available for Appropriation

80.7

1.9

-1.5

-

-

10,385

-

Proposed D

ividend

-

-

- -

-

-

-

-

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