cover theme - pfizer · in 1961, the chandigarh plant was commissioned and went into full-scale...
TRANSCRIPT
cover theme
We are Pfizer. Over the last five decades we have made
significant contributions towards improving the quality of life
of millions. We discovered many of this country’s most widely
precribed medicines. We have worked with a passion for half a
century now. At Pfizer, we look to the future with the knowledge
that the only thing incurable is our passion.
cover theme
1
(As on March 11, 2000)
R.A. ShahChairman
Ian R. YoungManaging Director
Charles L. Sarris
K.F. Bunshah
board of directorsboard of directors
M.W. Hodin (Dr.) – Alternate : A.K. Nehru
P.J. Santoriella – Alternate : K. Handa
B. Valentini – Alternate : B. Bhattacharya
Pierre G. Etienne (Dr.) – Alternate : B.M. Gagrat (Dr.)
R.W. Norton
A.B. Thakkar
Pradip P. Shah
Ian R. Young Managing Director
B. Bhattacharya Startegic & Business Planning
R.P. Erande Information Technology
Fidela Moreno (Dr.) Clinical Research
B.M. Gagrat (Dr.) Pharmaceuticals
K. Handa Finance
50 Years of Pfizer 22222
Pfizer a history 44444
Indian Pharmaceutical Industry 66666
Finding new ways to help 88888
Shareholder Information 99999
Directors’ Report 1111111111
Annexures to Directors’ Report 1111177777
Notice 2121212121
Auditors’ Report 2424242424
Balance Sheet 2626262626
Profit and Loss Account 2727272727
Schedules 2828282828
Report & accounts of the subsidiary
company Duchem Laboratories Limited 4848484848
contentscontents
S. Madhok Animal Health
S. Mukherjee (Dr.) Medical Affairs
A.K. Nehru Manufacturing
S. Ramkrishna Corporate Affairs
H. Walder Personnel
management committeemanagement committee
A. Anjeneyan
secretarysecretary
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PFIZER LIMITED
50 Y
EA
RS
of
Pfiz
er in
Indi
a o
f Pf
izer
in In
dia
of
Pfiz
er in
Indi
a o
f Pf
izer
in In
dia
of
Pfiz
er in
Indi
aGrowth amid adversity
Pfizer’s entry into India, with the registration of
Dumex on 21.11.1950, heralded a new era for
pharmaceut ica l s in
India. In just the same
year , Pf izer had
developed its wonder-
dr ug Ter ramycin,
which was the world’s
f irst broad-spectrum
ant ib iot ic to be
launched here. In India,
Pf izer ’ s Chandigarh plant commenced the
production of Tetracycline & Oxytetracyline in
1961. As early as 1956, the company had already
developed and marketed Protinex, a unique protein
preparation manufactured from basic stages. In
1968, a new plant at Thane was inaugurated by
the then Pfizer Inc. chairman John J. Powers, Jr.
Those were very successful years for Pfizer in
India. Ed Pratt, President & CEO of Pfizer Inc.,
said on our 25th anniversary in 1975 that “you
have risen to a position of leadership within India’s
pharmaceutical industry. The future will not be
easy”.
In 1970’s the Indian government brought in the
new Patents Act. This Act, designed to promote
domestic drug industr y, took away product
patenting of pharmaceuticals. For research-based
pharmaceutical companies, this meant that their
painstakingly researched molecules could be copied
with ease by loca l f i rms. This was further
compounded by draconian price control regulations
which literally drove out many essential drugs from
the market through illogical pricing restrictions.
In the wake of these deve lopments , many
international companies withdrew from India. But
Pfizer stayed on.
Our grit and perseverence in the face of adversity
has often been admired by analysts and our
shareholding community. In fact, through all these
turbulent years, we patiently bore the brunt of
discouraging extremes in government polices. While
50 Y
EA
RS
of
Pfiz
er in
Indi
a o
f Pf
izer
in In
dia
of
Pfiz
er in
Indi
a o
f Pf
izer
in In
dia
of
Pfiz
er in
Indi
a
we continuously launched new products, we
unfortunately had to also pull-back some products
due to the rigours of price controls. Despite this,
some of our star products have been holding the top
position in countrywide sales in their respective
categories for years.
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3
We are today facing a future which holds great
promise: India is committed to make its patent laws
TRIPS compliant; the government has set up several
committees to review price controls and the R & D
environment in pharmaceuticals; and the economy
itself is in an upswing which would bring about greater
prosperity and, consequently, greater focus on
healthcare.
Throughout our history, our greatest resource has
been our people. Our shared sense of purpose and
common values form the foundation of an enduring
commitment: Life is our life’s work.
A proud parentage
Fame and Fortune
In recent years,
Pfizer Inc. was
twice named the
world’s most
a d m i r e d
pharmaceut i ca l
company in
F o r t u n e
magazine’s annual
Survey, and one of the top 10 most admired
companies in the world across all industry groups in
Fortune’s first “All-Star” ranking. In 1999, Forbes
named Pfizer its “Company of the Year”, and in
January 2000, Business Week ranked Pfizer Inc.’s
Board of Directors as one of the 25 best in the world.
The best is about to get better
In Feb 2000, Pfizer Inc and Warner Lambert
Company announced a merger which is positioned
for global leadership in the discovery of new
medicines that will benefit millions of patients
around the world.
The combined R & D operations of the company
will have a worldwide scientific staff of over 12,000
with $ 4.7 billion in annual R & D expenditure and
more than 138 compounds in development, the largest
in the industry.
No other pharmaceutical company will have so many
leading medicines across such a broad range of
therapeutic categories, including more than a dozen
drugs that each have annual sales of over US $ 500
million - which also includes seven drugs each with
over US $ 1 billion in sales.
PFIZER LIMITED
In 1961, the Chandigarh Plant was commissioned and went into full-scale operationthe following year.
In 1956, the Company commenced the basic manufacuture of Protinex at the DarukhanaLocation.
The first plant of the Company was setup at Darukhana in the heart of Bombay.Commissioned in 1952 as a packaging facility, this plant was the base on which the
comapny’s manufacturing competence was built.
PFI
ZE
R a
hist
ory
a hi
stor
ya
hist
ory
a hi
stor
ya
hist
ory
Our umbilical cord with the Indian Republic was evident in the year 1950, when thecompany was registered in the name of Dumex Ltd.
PFI
ZE
R a
hist
ory
a hi
stor
ya
hist
ory
a hi
stor
ya
hist
ory
Born with
5
In 1993, Amlogard (Norvasc) was introduced in our country andtoday it is a widely preferred anti-hypertensive drug.
In 1989, Dolonex (Feldene) was introduced in our countryand today it is amongst the leading prescribed non-steroidal
anti inflammatory drug.
In 1998, Pfizer Limited shifted its corporate office from NarimanPoint in South Mumbai to Jogeshwari (West) in the western suburbs.
In November 1968, John J. Powers, Jr. Chairman, Pfizer Inc. inaugurated the Thane Plant.
In 1964, Corex was manufactured for the first time and later this turned out to bea blockbuster for the company.
the Republic
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PFIZER LIMITED
A sunrise industry
That India can be a leader in the software industry
is something that is recognized by the government
which encourages the software industr y and
ensures that policies and regulations enhance its
capabi l i ty to deve lop and thr ive . The
pharmaceutical industr y, in comparison, i s
hampered by a legacy of rules, regulations and
Budding research in India
In recent years, and directly as a consequence of
the gradual liberalization which has taken place
The Indian pharmaceutical industry to be a world leader
since the early 1990’s and the advent of effective
pharmaceutical patent protection, a number of
Indian pharmaceutical companies have commenced
original research, with highly promising results.
A number of internat ional pharmaceut ica l
companies operating in India, including Pfizer,
have commenced significant clinical development
programs, with positive results and again with the
potent ia l for cons iderab le expans ion.
Pharmaceut ica l research in India can be
exceptionally rewarding in terms of contribution
to health care and contribution to the Indian
economy.
The Best Talent
Throughout the world scientists and managers of Indian
origin are making a major contribution to the
controls which were established at a time when
the pharmaceutical industr y was perceived as
purely a manufacturing industry producing low-
priced medicines for the masses.
In India, pharmaceutical companies traditionally
limited their activities to manufacturing. However,
increasingly Indian companies are becoming
involved, with some significant success, in all the
other elements of the broader knowledge- based
pharmaceutical industry. The industry is not
homogeneous and cer ta in ly not s imply a
manufacturing industry.
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7
advancement of medical and pharmaceutical science.
In India itself there is exceptional scientific, technical
chemical entity and in all cases from other chemical
entities competing in the same therapeutic category.
The free market will ensure price control, but at the
same time can allow comparative values to enter into
the equation. This indeed is what happens with products
which are presently not under price control. Those that
position themselves as offering superior products in
better packaging and with the provision of the required
p r o d u c t
knowledge to
the medical
profession, price
at one level,
whereas others, who offer the product in a basic format,
compete only on price.
Intellectual property protection
High technology, knowledge based industries like
pharmaceuticals flourish and become stronger when the
intellectual capital created by them through invention
and innovation is secure and protected. While India is
committed to WTO and to enacting TRIPS compliant
laws, there are sections of our society still debating the
desirability of better IP laws. Given the exceptional
scientific, technological, creative and innovative talent
which reside in India, the development of skills and
competence to manage intellectual property, should be
a national priority. Nothing changes today faster than
technology and the more we delay this process the
greater are the chances that we will miss the bus forever.
and creative talent, capable of developing the Indian
pharmaceutical industry into a world leader. However,
changes must be made in the constraints under which
the industry currently operates if this is to be achieved.
Although we have laboratories and manufacturing
plants, our greatest asset is brain power.
Market driven
India probably has the most competitive pharmaceutical
market in the world, with a vast number of
pharmaceutical manufacturers and a very price-
conscious consumer. There can be no more than a
handful of pharmaceutical products which are not
subject to strong
competition-in
most cases from
other copies of
the same
PFIZER LIMITED
Help for furnishing a Nursing Roomfor street children at the BandraCommunity Centre
1972Contributed Medicines worth
Rs. 5 Lakhs for relief to
Bangladesh Refugees. Also
donated Rs. 10 Lakhs towards
Prime Minister’s National
Defence Fund.
1973Provided assistance and relief
to drought affected areas of
Maharashtra in the form of
Five Relief Ambulance Vans,
Mobile Diagnostic Unit and
medicines valued at over
Rs. 9.5 Lakhs.
1993The Company rushed
medicines worth Rs. 2 Lakhs,
contributed Rs. 5 Lakhs to the
Chief Minister’s Relief
Fund, contributed one day’s
salary amounting to Rs. 2.6
Lakhs to the victims of the
Latur Earthquake.
1994The Company donated 1
million capsules of
Oxytetracycline to the states
most affected by the plague
epidemic. Also, launched
health education campaign
and set up medical advisory
groups in the affected areas.
FIN
DIN
G N
EW
WA
YS
tttt t o h
elp
o he
lpo
help
o he
lpo
help
Pfizer contributes to the Army Central WelfareFund for the Kargil affected army personnel
FIN
DIN
G N
EW
WA
YS
tttt t o h
elp
o he
lpo
help
o he
lpo
help
Mass deworming and prevention of night-blindness program at Jogeshwari, covering10,000 students
Pfizer people care. It is just as
apparent in the way Pfizer people
give of themselves to make our
communities better places to live.
Just as our research seeks to fill
major medica l needs , our
philanthropy is dedicated to
responding to societal needs. At
Pfizer, helping others is not just
a sideline; it is the essence of
who we are and what we do.
Whether it was in promoting a
healthy living environment for
people near our facilities, or in
supporting NGO projects, or in
rush ing a id to v ic t ims of
ep idemics , ear thquakes or
f loods, Pf izer India and i ts
employees have been swift in
responding to community needs.
And so it was, that Pfizer’s
phi lanthropy brought some
comfort to the hapless people of
Orissa.
Pfizer donated a fully equipped MobileMedicare Van to the cyclone affected peopleof Orissa
Mr. P. Harichandran (Pharmacist)dispensing medicines to patients
9
49th Annual General Meeting.Date : Tuesday, 25th April, 2000.Time : 3 pm.Venue : Y. B. Chavan Auditorium, General Jagannath Bhosale Marg, Near
Sachivalaya Gymkhana, Nariman Point, Mumbai - 400 021.Financial Calendar : 1st December, 1998 to 30th November, 1999.Date of Book Closure : 18th April, 2000 to 25th April, 2000 (both days inclusive)Dividend payment date : 8th May, 2000Listing on Stock Exchanges : The Company is listed on 2 Stock Exchanges viz., The Stock
Exchange, Mumbai and the National Stock Exchange. The annuallisting fees have been paid and there is no outstanding paymenttowards the Exchanges, as on date.
Stock code : B.S.E.-680; N.S.E. - No code no. givenMarket price Data : The High and Low prices of every month beginning December,
1998 upto February, 2000 is given belowMonth High LowDec’98 899.50 757.00Jan’99 985.00 836.00Feb’99 1048.00 845.00Mar’99 1545.00 1089.00Apr’99 1261.00 881.00May’99 1224.05 993.00June’99 1268.85 976.00July’99 1208.30 926.90Aug’99 1187.95 935.15Sept’99 1065.00 855.00Oct’99 1199.00 930.00Nove’99 1125.00 935.00Dec’99 1036.75 900.00Jan’2000 1240.00 925.00Feb’2000 1275.00 876.00
Address for Correspondencea) Registered Office : Pfizer Limited, Pfizer Center, Patel Estate, S. V. Road, Jogeshwari
(W), Mumbai - 400 102. Tel. : 022 678 5511 Fax. : 022 678 1766b) Registrar and Transfer Agents : Tata Consultancy Services, Lotus House, Sir Vithaldas Thackersey
Marg, New Marine Lines, Mumbai - 400 020.Tel. : 022 203 9136 Fax : 022 201 6689
Share transfer systemA Committee of directors has been constituted to approve the transfer and transmission of shares, issue ofduplicate share certificates and allied matters. The Company’s Registrars, Tata Consultancy Services (TCS)have adequate infrastructure in computer processing and qualified personnel to process share transfers. Thetotal rejection volume during last financial year was less than 5%.
A predetermined process cycle at 10 days interval ensures despatch of transferred share certificates within 25days from their date of receipt. In every transfer cycle, new share certificates are generated to save time andeliminate bad delivery risks associated with the manual endorsements.
In compliance with the Listing Guidelines, every six months the System is audited by a practising CompanySecretary and a Certificate to that effect is issued.
GE
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PFIZER LIMITED
Distribution of shareholding.(Class-wise Distribution of Equity Shares)
Shareholdings No. of Share Percentage of Share- Number % of Share-Holders holders to Total of Shares holding to Total
1 - 100 33224 84.55 1322973 11.29101 - 500 5548 14.12 1044056 8.91501 - 1000 318 0.81 221360 1.89
1001 - 5000 140 0.36 274123 2.345001 - 10000 23 0.05 169040 1.44
10001 - 20000 12 0.03 170913 1.4520001 - 30000 7 0.02 174377 1.4930001 - 40000 3 0.01 108697 0.9340001 - 4600000 19 0.05 3546559 30.26
4600001 - 4688050 1 0.00 4688050 40.00
Total 39295 100.00 11720148 100.00
Dematerialization of shareholdingThe Company’s scrip is part of the Compulsory demat segment for all investors effective 31st May, 1999. Tofacilitate the investors to have an easy access to demat system, the Company has executed agreements withboth the Depositories viz, National Securities Depository Limited (NSDL) and Central Depository Services(India) Limited (CDSL). The Company’s Registrars, TCS have established connectivity to both theDepositories. As on date, 42% of the paid-up share capital is held in the electronic mode.
Plant locations : Navi Mumbai & Chandigarh
Shareholding Pattern As On 11th March, 2000
General Public - 25%
Mutuals Funds - 7%
Finanacial Institutions & Nationalized Banks - 22%
Non-Resident Indians/ Overseas Corproate Bodies - 4%
Foreign Institutional Investors - 2%
Foreign Collaborator (Pfizer Corpn.) - 40%
Bank details for dividend payment
While opening your depository account with the Depository Participant, you might have given your bankaccount details. These details will be incorporated by your Company for printing on dividend warrants. Thisensures safety for investors that the dividend warrants, even if lost or stolen, cannot be used for any purposeother than for depositing the money in the specified account. However, in case if you desire a change in yourbank account details, you may intimate your Depository Participant (DP) about the change, furnishing thedetails with correct MICR Code of your bank on or before 13.4.2000.
Shareholders holding in physical form are requested to send their change in bank details to us/our Registrars,Tata Consultancy Services mentioning their folio no. alongwith the full details of their bank account on orbefore 13.4.2000.
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11
DIR
EC
TO
RS
’ rr rrrepep epepeporor ororortt ttt
DIR
EC
TO
RS
’ rr rrrepep epepeporor ororortt ttt
To The Members
Your Directors are pleased to present this 49th
Annual Report and the audited accounts of the
Company for the year ended 30th November, 1999.
The Report reviews the Company’s diversified
operations covering Pharmaceuticals, Nutritional and
Healthcare Products and Animal Health Products.
Financial Results Rupees in Lakhs
Year ended Year ended
30th Nov. 30th Nov.
1999 1998
Profit after tax 3093 1258
Add :
Balance of profit
from prior years 5391 4775
Surplus available
for appropriation 8484 6033
Appropriations :
Transfer to General Reserve 310 126
Proposed Dividend 586 469
Income-tax
on proposed Dividend 64 47
Surcharge on tax on
distributed profits for
the previous year. 5 —
Balance carried to
Balance Sheet 7519 5391
8484 6033
CORPORATE
The sales for the year ended November 30, 1999 is
Rs. 287 crores. From an overall point of view, after
adding the turnover of the wholly owned subsidiary,
Duchem Laboratories Limited, aggregating Rs. 108
crores, the total sales at Rs. 395 crores reflect a
growth of 12.5% as compared to the corresponding
period of the previous year.
The profit after tax for this period was Rs. 30.93 crores.
DIVIDEND
Your Directors recommend that, being the 50th year
of operations, a Dividend at the rate of Rs. 5/- per
share be declared for the year ended 30th November,
1999. The dividend will be paid after it is approved
at the forthcoming Annual General Meeting.
BONUS SHARES
Your Directors recommend an issue of fully paid-up
Bonus Equity Shares in the proportion of ONE share
for every ONE share held, subject to your approval
at the forthcoming Annual General Meeting. The
necessary increase in the Authorised Capital of the
Company is also placed for your approval.
REVIEW OF OPERATIONS
General
The Indian pharmaceutical market in 1999 is
Dividend Trend
Mar Mar Nov Nov Nov�96 �97 �97 �98 �99
Rs. per Share
3.00
4.00
3.00
4.00
5.00
5.5
5
4.5
4
3.5
3
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PFIZER LIMITED
estimated, by independent audit data, to have been
at around Rs. 12800 crores, representing an annual
growth of 8.4%. While these numbers suggest a
substantial market with reasonable growth, they are
in fact modest in relation to the size of the population,
the treatment needs, and the fact that new discoveries
by the pharmaceutical industry are providing
treatment possibilities in disease areas where none
existed before.
The Indian pharmaceutical industry is well capable
of expanding the availability of economically priced
medicines. What is required is access to these
medicines through broad-based economic expansion
and improved healthcare infrastructure. There are
positive signs that this will be forthcoming in the years
ahead.
The Indian pharmaceutical industry is beginning to
demonstrate its capability of developing a genuine,
knowledge-based research capability, with the
prospect that in the years ahead, Indian
pharmaceutical discoveries will be making major
contributions to the advancement of healthcare
around the world. Pfizer intends to be part of India’s
pharmaceutical research capability. Already, we
undertake in India clinical development of new
products to the highest international standards. A
significant part of Pfizer’s wordwide biometrics
operation (computerized tabulation and analysis of
clinical development results) is now based here in
India.
The pharmaceutical industry is one area where, with
effective government understanding and support, the
unleashing of India’s scientific, technological, creative,
innovative and entrepreneurial capability can be
dramatically demonstrated for the world to see.
Pharmaceuticals
ORG sales audit indicates that for the year 1999 Pfizer
(including sales from Duchem) ranked No. 6 in the
pharmaceutical industry. Pfizer’s growth in the same
period was one of the highest among the top 10
companies. Pfizer also has the distinction of having
9 of its 30 marketed brands among the top 300
brands in the industry with Corex (including Corex
Dx and BronCorex) as the No. 1 pharmaceutical
product.
In spite of factors which negatively impacted our
business in 1999, such as Government imposed price
Profits
Rs. in Lakhs
Mar �96 Mar �97 Nov �97 Nov �98 Nov �99
6000
5000
4000
3000
2000
1000
0
1070
19001378 1258
3093
1855
2967
2059 1887
5223
Profit before tax Profit after tax
Earnings Per Share
9.13
16.21
10.7311.76
26.39
Rs. per Share
Mar �96 Mar �97 Nov �97 Nov �98 Nov �99
40
30
20
10
0
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13
reductions and an unprecedented price increase of
Codeine, a raw material for Corex, we were able to
show a healthy sales growth of 12.5%.
Minipress XL, which has the distinction of being one of
the most successfully launched anti-hypertensives in
India, has grown by 50% this year. Minipress XL was
one of the top ten cardiovascular brands in 1999 among
over 300 brands marketed in India. A new indication
has been introduced for Minipress XL for the treatment
of benign prostatic hyperplasia (enlarged prostate).
Protinex has retained its leadership position in the
ethical protein supplements market. As part of
Pfizer’s social commitment, for every tin of Protinex
sold in 1999, Pfizer donated Re. 1 to the CRY (Child
Relief and You) fund.
New products launched in 1999 were well received
by the market. Combantrin A, an anthelmintic for
eliminating intestinal worms, was successfully
launched in mid 1999. By the end of the year, the
product was ranked No. 4, among the 38 marketed
Albendazole brands.
The innovative “Sales Force 2000” initiative which was
launched last year to maximize the effectiveness of our
field force and to make them the best in the Indian
pharmaceutical industry, is having a very positive
impact. As a result of this program, the productivity of
the field force increased in 1999 by over 20%.
Another unique initiative to bring us closer to our
customers, the retail chemists, was launched this year.
The program has helped in educating and building a
healthy working relationship with the retail chemists
while treating them as business partners.
Looking to the future, while we will continue to invest
in the growth of our in-line products, we also plan to
develop and introduce a number of new products.
These will, we believe, be particularly appropriate for
the Indian market.
Animal Health
Pfizer Animal Health Division continues its thrust in
the poultry & large animal market while looking at
opportunities which the companion animal business
may have to offer.
In the poultry market, Coxistac, as an anti-coccidial,
and Stafac as a growth promoter, have made further
gains and have commanding positions in their
respective segments.
Animal Sales Therapeutics Spreads
% Total Sales
Anti-infectives - 48.2%
Anti-Coccidials - 20.2%
Endo-Livestock - 14.9%ProductivityEnchancers - 10.3%
Others - 6.4%
Pharma Sales Therapeutics Spreads
Antitussives - 40.5%
Anti-infectives - 20.1%
Anti-arthritics - 15.1%
Vitamins - 11.0%
Cardio Vascular - 7.4%
Others - 5.9%
% Total Sales
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PFIZER LIMITED
Most of our products maintain a leading position in
the segments in which they compete.
Production Operations
Consequent to the closure of the Ankleshwar Plant,
a study was initiated as regards upgrading the Navi
Mumbai manufacturing plant to the highest standards.
The study has been completed and the process of
upgrading the plant has commenced. Completion will
be over a two year period, ensuring no negative effect
on the supply of goods.
The fermentation plant at Chandigarh has performed
consistently in the year, with high levels of
Oxytetracycline and Salinomycin 350 productivity.
The Chandigarh plant continues to be the favoured
source of Chlorpropamide export to Pfizer
international locations.
Human Resources
In line with the Company’s expressed goal of
becoming a Premier Employer by the year 2001, the
development of Human Resources and the reinforcing
of an empowering work culture based on Company’s
Core Values continues to receive active attention.
Our people and the practice of our Core Values combine
to provide the driving force to Company’s business
success. During the year, a series of communications,
meetings and programmes were held to enhance
awareness and acceptance of Core Values and their
incorporation in all our dealings with internal and external
customers. Special Employee Vision Teams were
constituted across the Organisation to work on specific
improvement areas. Various presentations were made
on Best Practices linked to the eight Core Values viz;
PERFORMANCE, RESPECT FOR PEOPLE,
CUSTOMER FOCUS, INNOVATION, TEAM
WORK, LEADERSHIP, INTEGRITY AND
COMMUNITY.
Kaizen stands for “Continuous Improvements”. It is
a matter of pride that there is enthusiastic participation
by employees across the Organisation with several
hundred Kaizens being put forward and implemented
at the work place.
Our Pfizer-India Field Force, which ranks amongst
the best in the industry, continues to do us proud.
Special developmental efforts were directed to sharpen
the Knowledge/Skills and Customer Focus of the
field force.
Revenue Earned for the year 1999
Sales - 85.1%
Services - 12.6%
Other Income - 2.3%
Revenue Spent for the year 1999
Materials - 26.1%
Employee Cost - 14.4%Sales Tax/ExciseDuty - 15.9%
Depreciation - 2.3%
Royalty - 1.6%
Interest - 0.1%
Other Expenses - 24.1%
Income Tax - 6.3%
Profit After Tax - 9.2%
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15
The Employee Relations climate throughout the
Company continued to be cordial and harmonious.
The Management would like to express appreciation
of the good work and co-operation extended by all
its employees in accomplishing the Company’s Goals.
Information Technology
Internet and E-Commerce are now keywords in
efficient business practice. These innovations will be
a driving force as we enhance efficiency and maximize
customer satisfaction. The WebSite of Pfizer India
Intranet for internal communication within the
Company was rolled out during 1999. In the Year
2000, it will be extended to medical practitioners.
Our increasingly sophisticated I.T. operations is
making available the timely and meaningful analytical
reports which are a requirement for quick decision-
making. A new and effective decentralized control
system for sales and distribution, is enabling us to
better serve our customers.
It remains uncertain how much of a threat the Y2K
bug really was, but certainly we were well prepared
and achieved an entirely trouble free rollover to the
new millennium.
160001400012000100008000600040002000
0
Net Wort h
Mar �96 Mar �97 Nov �97 Nov �98 Nov �99
1047
4
7523
7130
6060
5011
Rs. in Lakhs
Average Capital Employed
Rs. in Lakhs
Mar �96 Mar �97 Nov �97 Nov �98 Nov �99
9500
9000
8500
8000
7500
7000
8933
7490
81518448
9078
PFIZER INC.
Pfizer Inc. and Warner-Lambert Company announced
a merger agreement which will create the world’s
fastest-growing major pharmaceutical company. The
new company, to be named Pfizer Inc., will have
annual revenues of approximately $28 billion,
including $ 21 billion in prescription pharmaceutical
sales, and will have a market capitalisation in excess
of $ 230 billion. Compounded annual revenue and
earnings growth are expected to be 13 percent and
25 percent, respectively, through 2002. The new
company will have leadership in therapeutic areas
which include cardiovascular, lipid lowering, central
nervous system and infectious diseases. Dr. Henry
McKinnel, who will continue to be the President and
Chief Operating Officer of the new company, said
“the best is about to get better”.
At the time of writing, there are certain important
legal processes to be completed. Until such time as
these processes are complete, the two companies
remain independent and indeed competitors.
Directors
Mr. S. V. Pillai resigned from the Board of the
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PFIZER LIMITED
Company in December 1999. Mr. Pillai was inducted
on the Board in 1964. He became the Chairman and
Managing Director in 1971. He retired as Managing
Director in 1988 on attaining the age of
superannuation, but continued to be the Chairman
of the Company thereafter.
During his long innings with Pfizer India, Mr. Pillai’s
name became synonymous with the Company. His
valuable contributions to the Company is largely
responsible for its’ present pre-eminent position. His
long term vision has played a significant role in the
progress of the Company. The Board wishes to place
on record its sincere appreciation of the services
rendered by Mr. S. V. Pillai during his long tenure
on the Board of Directors of the Company.
Mr. Pradip Shah was appointed as an Additional
Director on the Board in December, 1999. He will
hold office up to the date of the ensuing Annual General
Meeting. Mr. Shah is the former Managing Director of
Credit Rating and Information Services of India Limited
(CRISIL) and is presently managing foreign private
equity fund for investment in India. It will be in the
interest of the Company to appoint Mr. Pradip Shah as
a Director at the ensuing Annual General Meeting.
Mr. K. F. Bunshah who retires by rotation at the
ensuing Annual General Meeting has expressed his
desire to step down from the Board consequent to
his retirement from Pfizer Inc.
It is proposed to appoint Mr. James S. Hilboldt, Jr.,
as director retiring by rotation in place of Mr.
Bunshah. Mr. Hilboldt is the Senior Corporate
Counsel for legal affairs of Africa/Middle East region
at Pfizer Inc., New York and has been in Pfizer Inc.
for the past eleven years.
The Board wishes to place on record its sincere
appreciation and gratitude to those directors whose
term of office is terminating at the ensuing Annual
General Meeting.
Further, consequent to the early retirement of Mr.
Clive P. Aldenhoven from Pfizer, Mr. Charles L.
Sarris is appointed as a director in his place. Mr. Sarris
is the Regional Vice President, Pfizer Inc. for the
Africa/Middle East region. He is with Pfizer Inc.
for the past twenty six years.
DUCHEM LABORATORIES LIMITED
The turnover of Duchem Laboratories Limited for the
year ended November 30, 1999 was Rs. 108 crores as
against Rs. 118 crores for the previous year. The
financial results of the company have been negatively
impacted due to the adverse price fixation orders. The
operations reflect a profit of Rs. 70 lacs.
The Howmedica Division was sold to Stryker India
Private Limited in October 1999.
AUDITORS
M/s. A. F. Ferguson & Co., the Company’s Auditors
will retire at the conclusion of the ensuing Annual
General Meeting. They have given their consent to
continue to act as Auditors of the Company for the
current year, if reappointed.
On behalf of the Board of Directors
Mumbai R. A. SHAH
March 11, 2000 Chairman
17
...50...50...50...50...50
ANNEXURE I TO DIRECTOR�S REPORT - Pfizer L imitedPARTICULARS PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES (DISCLOSURE OFPARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF THE DIRECTORS� REPORT.
1. CONSERVATION OF ENERGY:a) Energy Conservation continues to receive priority in the Company.
Energy audits are carried out, consumption monitored, maintenance systems improved and distribution losses reduced.Specific Energy Conservation Measures are:i) Replacement of existing chilled water pumps by energy efficient pumps.ii) Replacement of conventional cooling tower fans by FRP fans.iii) Use of magnetic devices to improve thermal efficiency of Boilers.
b) Additional proposals or activities if anyi) Use of Flash mixers for generation of hot water.ii) Replacement of existing dehumidifiers by energy efficient dehumidifiers.iii) Replacement of existing centrifugal chillers by vapour absorption chillers.iv) Automatic control of cooling tower fans.v) Use of soft starters to control RPM of motors.
c) Impact of measure takenEnergy conservation measures stated above have resulted in gradual savings.
Total energy consumption and energy conservation per unit of production :
As per Form A of the Annexure hereunder.
A N N E X U R EFORM A: FORM FOR DISCLOSURE OF PARTICULARS WITH REGARD TO CONSUMPTION OF ENERGYA. Power and Fuel consumption :
Current Year Previous Year1-12-98 to 1-12-97 to
30-11-99 30-11-981. Electircity
a) PurchasedUnit (000�s) KWH 18845 KWH 19654Total Amount (000�s) Rs. 75477 Rs. 70504Rate/Unit Rs. 4.01 Rs. 3.59
b) Own Generationi) Through Diesel
Generator (000�s) KWH 698 KWH 882Units/litre of LDO KWH 3.27 KWH 3.15Marginal Cost/Unit(considering only LDO price) Rs. 2.94 Rs. 3.16
ii) Through Steam TurbineGenerator � �
2. Coal � �
3. a) Furnace Oil & LSHSQuantity KL. 2949 KL 2552Total Amount (000�s) Rs. 23144 Rs. 16542Avg. Rate per KL Rs. 7848.08 Rs. 6482
b) Natural GasQuantity Cu.M. 97460 Cu.M 171389Total Amount (000�s) Rs. 1041 Rs. 1536Avg. Rate per Cu.M. Rs. 10.68 Rs. 8.96
4. Others/Internal GenerationQuantity Nil NilTotal Cost Nil NilRate/Unit Nil Nil
18
Consumption per Unit of production :Standard
Electricity (Units) There is no specific standard as the consumption per unit depends on the product mixFurnace Oil (Litres) of basic drugs (from chemical and biochemical processes) and formulations (capsules,
tablets, ointments, liquids and injectibles).Coal Nil.
TECHNOLOGY ABSORPTION:EFFORTS MADE IN TECHNOLOGY ABSORPTIONFORM B: FORM FOR DISCLOSURE OF PARTICULARS WITH REGARD TO ABSORPTIONRESEARCH AND DEVELOPMENT (R & D)
1. Specific areas in which R & D is carried out by the Company.R&D is carried out in Chemical, Pharmaceutical, Clinical, Analytical and Engineering Development areas.
2. Benefits derived as a result of the above R & D.(a) Product improvements, process development, import substitution, standardization of quality control of bulk drugs and
formulations.(b) New application for drugs researched abroad, better dosage recommendations and improvements.
3. Future plan of action:(a) Import substitution and resolving process problems encountered in basic chemical and fermentation manufacturing for
quality and productivity.(b) Optimization of process parameters with emphasis on cost control and rationalization.(c) Studying feasibility of using new manufacturing technology in existing dosage forms.(d) Development of new dosage formulations, pharmaceutical and animal health.
4. Expenditure on R&D Rs. in Lakhs(i) Capital 59.14(ii) Recurring 1287.73(iii) Total 1346.87(iv) Total R&D expenditure as percentage of total turnover 4.68
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION :
1. Efforts in brief made towards technology absorption, adaptation and innovation.a) The Company is allowed to use the patents and technical know-how of Pfizer Inc. U.S.A. Continuous adaptive research and
development of products and processes with the objective of import substitution and cost containment in an inflationaryenvironment is carried out.
b) Clinical research to introduce new products researched abroad and to find their new applications, better dosagerecommendations and improvements under Indian conditions is carried out.
c) Development of ancillary technology, for packaging materials and machinery is undertaken.
2. Benefits derived as a result of the above efforts :Product improvement, cost reduction, import substitution, standardized analytical methods which are reflected in the productivityof resources and better quality and stability of products.
3. Technology imported during the last 5 years reckoned from the beginning of the financial year is given below :Technology Import Year of Import Has technology
been fully absorbed
Tablet formulation of Amlodipine Besylate 1993 Yes
Import of high productive strains for Oxytetracycline fermentation 1994 Yes
Capsule formulation of Azithromycin dihydrate 1994 Yes
Manufacture of the active substance �Amlodipine Besylate� 1997 Being absorbed
Manufacture of the active substance - Azithromycin Dihydrate 1997-1998 being abosrbed
Tablet formulation of Azithoromycin dihydrate 1997-1998 Yes
Paediatric Powder formulation of Azithromycin dihydrate 1997-1998 Yes
Injectable formulation of Cefoperazone 1998 Yes
}
19
...50...50...50...50...50
FOREIGN EXCHANGE EARNINGS AND OUTGO :
1. Activities relating to exports : Initiatives taken to increase export: development of new export markets for products and servicesand export plans.
The Company is at present exporting bulk drugs and formulations in bulk pack to Hongkong, Belgium and nutritional supplementto Sri Lanka. The Company is continuously exploring possibilities of exporting more of its products to different markets.
2. During the period under review :
a) the foreign exchange earnings by the Company was Rs. 1901.80 lakhs.
b ) the foreign exchange expenditure (which includes import of raw materials, spares and remittance of dividendsetc.) was Rs. 2786.88 lakhs.
On behalf of the Board of Directors
R.A. ShahMumbai, March 11, 2000 Chairman
E nvironment , Health and Safety Policy
Pfizer has always considered effective management of the natural and work place environment
to be one of its highest priorities.
We reaffirm that commitment and pledge our continued efforts to improving our environment
and work place.
We shall :
● Seek continuous improvement in environment, health and safety performance.
● Maintain safe and environmentally sound manufacturing operation.
● Contribute to the common effort to protect the natural and work place environment.
● Have openness and dialogue with employees on environmental, health and safety issues.
In 1999, significant action in the area of environment, health and safety has resulted in
improvements in safety and environment statistics.
20
Annexure II - Pf izer LimitedStatement required U/S 217 (2A) of the Companies Act 1956 referred to in the Directors�Report for the Year Ended November 30, 1999 and forming part thereof, showing names andother particulars of the employees of the company who were :A. Employed throughout the financial year under review and were in reeceipt of remuneration for
that financial year in the aggregate of not less than Rs. 600000.
Name Designation and Quali f ication Date of Exp. Gross A g e Last EmploymentNature of Duties Employ- Year Remune-
ment rat ion
1 2 3 4 5 6 7 8
1. Mr. B. K. Anderson G.M., Purchase B.Sc., M.M.S. 1/7/1987 26 678998 49 Materials Manager,Boots (I) Co. Ltd.
2. Mr. Bhaskar Bhattacharya Director, Strategic M.Sc., P.G.D.M. 2/7/1984 20 1133588 44 Product Executive,& Business Planning Sandoz (I) Ltd.
3. Mr. Rajendra Erande G.M., Information M.Sc.,M.M.S. 19/10/1992 28 657748 50 Vice President, SoftwareTechnology Products & Services,
Rolta (India) Ltd.
4. Dr. B M Gagrat Director, M.Sc., Ph.D., D.O.M. 2/5/1989 24 1113852 53 Factory Manager,Pharmaceuticals Indo-Pharma
Pharmaceuticals Works Ltd.
5. Mr. M. Gundu Rao Financial Controller B.Com, A.C.A, A.C.S. 16/2/1995 22 613015 48 Manager- Accounting &Mgmt. ReportingHoechst India Ltd.
6. Mr. Kewal Handa Finance Director M.Com, A.I.C.W.A., 18/6/1990 25 1246340 48 Secretary & FinancialA.C.S Controller, Schrader
Scovill Duncan Ltd.
7. Mr. S Madhok G.M., Animal B.Sc. 20/12/1976 23 613217 46 Medical Rep. AlembicHealth Division Chemical Works and
Pharma Ltd.
8. Mr. A. K. Nehru Technical Director M.S. (Chem. Engg.), 27/1/1964 37 1243251 59 �Massachusetts Inst.of Technology
9. Mr. S Ramakrishna V.P., Corporate B.A., PGDMM., 23/2/1998 21 682242 44 President - CorporateAffairs D.B.M. Affairs & HRD, Modern
Group
10. Mr. L. V. Sachanandani Plant Manager B.E. (Mech., Germany) 29/10/1968 38 624808 59 Chief Engineer, Eldee WireRopes Pvt. Ltd.
11. Mr. Harold Walder Vice President, B.A, D.B.M, 23/10/1998 34 644222 55 Group General ManagerPersonnel Dip in H.R.M. (HRD), Greaves Limited
12. Mr. Ian R Young Managing Director C.A., Institute of 1/8/1997 33 1438402 57 Senior Director,Chartered Accountants Projects &of Scotland and Edinburgh Pricing, Pfizer Inc.University
B. Employed for a part of financial year under review and were in receipt of remuneration for anypart of that year, at a rate which in the aggregate, was not less than Rs. 50000 per month.
1 2 3 4 5 6 7 8
1. Mr. A K Barua Personnel Director B.A, Dip. In Social 30/8/1985 39 475548 60 Corporate PersonnelService Admn. Manager,
Atlas Copco (India)2. Ms. Fidela Ll Moreno Vice President M.D., University of 1/7/1999 26 418250 50 Director
Clinical Research Santo Tomas, ICRG, HongKongDivision Philippines.
Notes :1. All the above persons are/were full time employees of the Company.2. The employment is subject to the Rules and Regulations of the Company in force from time to time.3. No Director is related to any other Director. None of the above employees is related to any Director of the Company. None of the
employees holds more than 2% of the Paid up Equity Capital of the Company.4. Gross Remuneration includes salary, allowances, bonus, taxable value of perquisites and Company�s contribution to provident and superannuation Funds.
On behalf of the Board of Directors
R.A.ShahMumbai : March 11, 2000 Chairman
21
...50...50...50...50...50
N OT I C ENotice is hereby given that the 49th Annual General Meeting of
Pfizer Limited will be held at the Y.B. Chavan Auditorium, General
Jagannath Bhosale Marg, Next to Sachivalaya Gymkhana, MUMBAI-
400 021 on Tuesday, April 25, 2000 at 3.00 p.m. to transact the
following business :
ORDINARY BUSINESS
1. To receive, consider and adopt the Audited Profit and Loss
Account for the year ended 30th November, 1999, the
Audited Balance Sheet as at that date and the Reports of the
Board of Directors and Auditors.
2. To declare Dividend for the year ended 30th November,
1999.
3. To appoint a Director in place of Mr. B. Valentini, who retires
by rotation.
4. To appoint Mr. James S. Hilboldt, Jr. as a Director retiring by
rotation in place of Mr. K.F. Bunshah who retires by rotation.
5. To appoint Mr. Daniel P. Cronin as a Director retiring by
rotation in place of Mr. A.B. Thakkar, who retires by rotation.
6. To appoint Auditors and to fix their remuneration.
SPECIAL BUSINESS
To consider and if thought fit to pass with or without
modification, the following resolutions :
7. AS AN ORDINARY RESOLUTION :
�RESOLVED that Mr. Pradip P. Shah be and is hereby
appointed as a Director of the Company who shall be liable
to retire by rotation�.
8. AS AN ORDINARY RESOLUTION :
�RESOLVED that the Authorised Share Capital of the
Company be and is hereby increased from Rs.12,00,00,000
to Rs. 40,00,00,000 by the creat ion of 2,80,00,000
additional shares of Rs.10/- each�.
9. AS A SPECIAL RESOLUTION
�RESOLVED that the Memorandum and Articles of Association
of the Company be and they are hereby altered as follows :
a) Clause V of the memorandum of association shall be
substituted as under :
In Clause V of the Memorandum of Association, the
figures 12,00,00,000 and 1,20,00,000 and the words
�Rupees Twelve Crores� shall be substituted by the
figures 40,00,00,000 and 4,00,00,000 and the words
�Rupees Forty Crores� respectively; and
b) Article 3 of the Articles of Association shall be
substituted as under:-
In Article 3 of the Articles of Association of the
Company, the figures 12,00,00,000 and 1,20,00,000
and the words �Rupees Twelve Crores� and �One Crore
Twenty Lakhs� shall be substituted by the figures
40,00,00,000 and 4,00,00,000 and the words �Rupees
Forty Crores� and �Four Crores� respectively.
AND RESOLVED further that the Board of Directors of the
Company be and is hereby authorised to take such steps as
may be necessary or desirable to give effect to this
resolution�.
10 . AS AN ORDINARY RESOLUTION
RESOLVED that pursuant to :
a) the provisions of the Companies Act, 1956 ;
b) the Articles of Association of the Company ;
and subject to :
c) the Regulations issued by Securities and Exchange
Board of India; and
d) obtaining the requisite approval under the Foreign
Exchange Regulation Act, 1973 for allotment of shares
to non-resident members,
a sum of Rs.11,72,01,480/- (Rupees Eleven Crores Seventy
Two Lakhs One Thousand Four Hundred Eighty) consisting
of Rs. 1,33,94,720/- standing to the credit of share premium
account and a sum of Rs. 10,38,06,760/- standing to the
credit of General Reserve in the Books of the Company be
capitalized and distributed amongst the holders of the
existing Equity Shares of the Company whose names stand
on the Register of the Members on such date as may be fixed
by the Board of Directors in that behalf, on the footing that
they become entitled thereto as capital and that the same be
not paid in cash but be applied on behalf of such members
as aforesaid in paying up in full at par 1,17,20,148 new Equity
shares of Rs.10/- each to be allotted and distributed, credited
as fully paid-up to and amongst the said members in the
proportion of ONE new Equity Share for every ONE existing
Equity Share held by them.
22
AND RESOLVED further that the aforesaid proposal shall
be subject to the following terms and conditions :
a). The said 1,17,20,148 new Equity shares shall rank
pari pasu in all respects with the existing Equity
shares.
b) . The said 1,17,20,148 new Equity shares shall be
allotted subject to the Memorandum and Articles of
Association of the Company.
c). For the purpose of giving effect to this resolution,
the Board of Directors of the Company be and is
hereby authorised to do a l l such acts , deeds,
ma t t e r s a nd t h i n g s a s may, i n i t s a b so l u t e
d iscret ion , be necessar y, expedient , usua l or
proper and to settle any question or doubt that
may arise in relation thereto and its decision shall
be final and binding on all the members and other
interested persons.
NOTES:
1. The relative Explanatory Statement pursuant to Section 173
of the Companies Act, 1956 in respect of items 7 to 10 of
Special Business is annexed hereto.
2. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE
MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND
AND VOTE INSTEAD OF HIMSELF AND A PROXY NEED
NOT BE A MEMBER OF THE COMPANY.
3. The Register of Members and the Share Transfer Books of the
Company will remain closed from April 18, 2000 to April
25, 2000 (both days inclus ive) for determining the
entitlement for payment of dividend.
By order of the Board of Directors
A. ANJENEYAN
Secretary
Mumbai, March 11,2000
Registered Office :
Pfizer Centre,
Patel Estate, Patel Estate Road,
Off. S.V. Road, Jogeshwari (West),
MUMBAI - 400 102.
EXPLANATORY STATEMENT PURSUANT
TO SECTION 173 OF THE COMPANIES
ACT, 1956.
Item No. 4
A Notice under Section 257 of the Companies Act, 1956 has been
received from a shareholder alongwith the deposit of Rs.500/-
proposing the appointment of Mr. James S. Hilboldt, Jr., as a
Director retiring by rotation in place of Mr. K.F. Bunshah.
Mr. Hilboldt is the Senior Corporate Counsel at Pfizer Inc., New
York for the legal affairs of the Africa/Middle East Region. Mr.
Hilboldt is with Pfizer Inc. for the last 11 years.
None of the Directors of the Company is concerned or interested
in the said resolution.
Item No. 5
The Company has received a Notice under Section 257 of the
Companies Act from another shareholder alongwith the requisite
deposit of Rs.500/- proposing the appointment of Mr. Daniel P.
Cronin as a Director retiring by rotation, in place of Mr. A.B.
Thakkar.
Mr. Cronin is the Senior Assistant General Counsel at Pfizer Inc.,
New York in charge of the International, Animal Health, Central
Research and antitrust attorneys. He is with Pfizer Inc. for the last
several years.
None of the Directors of the Company is concerned or interested
in the said resolution.
Item No. 7
Mr. Pradip P. Shah was appointed as an Additional Director in the
vacancy arising due to the resignation of Mr. S.V. Pillai. He holds
office till the date of this Annual General Meeting.
Mr. Pradip Shah is the ex-Managing Director of CRISIL, India�s
first and the largest credit rating agency. Prior to founding
CRISIL, Mr. Pradip Shah assisted in founding the Housing
Development Finance Corporation (HDFC) in 1977. Mr. Shah
has also served as a consultant to USAID, the World Bank and
the Asian Development Bank.
Mr. Pradip Shah holds an MBA from the Harvard Business School.
He is also a Chartered Accountant and a Cost Accountant and
ranked first in India in the Chartered Accountancy examination.
23
...50...50...50...50...50
Mr. Pradip Shah is presently the Chairman of Indasia Fund Advisors
Pvt. Ltd. which is managing foreign private equity for investment
in India. The appointment of Mr. Pradip Shah with his distinct
business experience and acumen will bring considerable strength
to the Board.
A Notice under Section 257 of the Companies Act has been
received from a shareholder alongwith the deposit of Rs.500/-
proposing the appointment of Mr. Pradip Shah as a Director
retiring by rotation.
Other than Mr. Pradip Shah, no other Director of the Company
is concerned or interested in the resolution.
Item Nos. 8 and 9
The existing Authorised Capital of the Company is Rs.12 crores
divided into 1,20,00,000 shares of Rs.10/- each. As will be seen
from the resolution to be passed under Item No. 10 on the Agenda
of the Notice, it is proposed to capitalize a sum of Rs.11,72,01,480/
-. The issued capital of the Company after such capitalization will
exceed the present Authorised Capital of the Company. It is
therefore proposed to increase the Authorised Capital from Rs.12
crores to Rs.40 crores by the creation of 2,80,00,000 additional
shares of Rs.10/- each to take into account the Company�s present
and future requirements. The Company�s Memorandum and
Articles of Association consequently require alterations in the
manner and terms set out in the resolutions.
None of the Directors of the Company is interested in the passing
of the above resolutions.
Item No. 10
While maintaining a reasonable rate of dividend every year, the
Directors of the Company have followed a policy of ploughing
back and employing in the business as much of the profits of every
year as possible. The Company has a sizable amount of free reserves
which exceeds the paid-up capital. The Directors, therefore,
consider it desirable to increase the capital base of the Company
so as to bring it more in line with the capital employed in its business.
The proposed issue of Bonus equity shares in the proportion of 1:1 is
subject to such further statutory and regulatory approvals as applicable.
After the receipt of the approvals as aforesaid, the period of closure
of Register of Members for fixation of a Record Date for the
purpose of entitlement to the said new Equity shares will be fixed
in consultation with The Stock Exchange, Mumbai and National
Stock Exchange of India Ltd. and will be announced through
newspapers. The Company will adhere to the six month time frame
prescribed under SEBI guidelines for implementing the proposal
of issue of Bonus Shares.
The Directors of the Company may be deemed to be interested in
this resolution to the extent of their respective share holdings in
the Company.
By order of the Board of Directors
A. ANJENEYAN
Secretary
Mumbai, March 11,2000
Registered Office :
Pfizer Centre,
Patel Estate, Patel Estate Road,
Off. S.V. Road,
Jogeshwari (West),
MUMBAI - 400 102.
24
Auditors� ReportReport of the Auditors to the Members of
Pfizer Limited
We have audited the attached Balance Sheet of Pfizer Limited, as
at 30th November, 1999 together with the Profit and Loss Account
of the Company for the year ended on that date annexed thereto.
We report as follows :
1. As required by the Manufacturing and Other Companies
(Auditor�s Report) Order, 1988 issued by the Company
Law Board in terms of Section 227(4A) of the Companies
Act, 1956, we annex hereto a statement on the matters
specified in paragraphs 4 and 5 of the said Order on the
basis of the information and explanations received by us.
2. Further to our comments in the Annexure referred to in
paragraph 1 above :
(a) we have obta ined a l l the in format ion and
explanations which to the best of our knowledge and
belief, were necessary for the purposes of the 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 and Profit and Loss account dealt
with by this report are in agreement with the books
of account;
(d) in our opinion, the Profit and Loss account and
Balance Sheet comply with the accounting standards
referred to in sub-section (3C) of Section 211 of the
Companies Act, 1956;
(e) in our opinion and to the best of our information
and according to the explanations given to us, the
said accounts give the information required by the
Companies Act, 1956 in the manner so required
and give a true and fair view -
(i) in the case of the Balance Sheet, of the state of
affairs of the Company as at 30th November,
1999, and
(ii) in the case of the Profit and Loss account, of
the profit of the Company for the year ended
on that date.
For A.F. FERGUSON & CO.
Chartered Accountants
M.S.DHARMADHIKARI
Mumbai, January 31, 2000 (Partner)
ANNEXURE TO THE AUDITORS� REPORT
(Referred to in Paragraph 1 of the Report of even date of the
Auditors to the Members of Pfizer Limited on the accounts for the
year ended 30th November, 1999).
1. The Company is maintaining proper records to show full
particulars including quantitative details and situation of
fixed assets for all its locations. The Company�s programme
of physical verification of all its fixed assets over a period of
two years is, in our opinion, reasonable having regard to
the size of the Company and the nature of its assets.
Accordingly a portion of the fixed assets has been physically
verified by the management during the year. As explained
to us, the management is in the process of reconciling the
same with the books.
2. None of the fixed assets has been revalued during the year.
3. The stocks of finished goods, stores, maintenance spares
and raw materials have been physically verified by the
management at reasonable intervals during the year.
4. In our opinion the procedures of physical verification of
stocks followed by the management are reasonable and
adequate in relation to the size of the Company and the
nature of its business.
5. The discrepancies noted on such physical verification as
compared to book records, were not material and the same
have been properly dealt with in the books of account.
6. On the basis of our examination of the stocks, the valuation
of the stocks is fair and proper, in accordance with the
normally accepted accounting principles and is on the same
basis as in the preceding year.
7. The Company has not taken any loans, secured or
unsecured, from companies, firms or other parties listed in
the reg ister mainta ined under Sect ion 301 of the
Companies Act, 1956 and/or from the companies under
the same management as defined under sub-section (1B) of
Section 370 of the Companies Act, 1956.
8. The Company has granted loans to its wholly owned
subsidiary company. The terms and conditions of the loans
are not prima facie prejudicial to the interest of the
Company.
9. The parties to whom the loans or advances in the nature of
loans have been given by the company are except where
provisions against doubtful recoveries are made, repaying
the principal amounts as scheduled/rescheduled where
such stipulations have been made and are also regular in
25
...50...50...50...50...50
the payment of interest where applicable. No schedule has
been agreed for the repayment of principal in respect of
loans given to its wholly owned subsidiary company.
10 . In our opinion and according to the information and
explanations given to us, there are adequate internal
control procedures commensurate with the size of the
Company and the nature of its business for the purchases
of stores, raw materials including components, plant and
machinery, equipment and other assets and for the sale of
goods.
11 . In our opinion and according to the information and
explanations given to us, the purchase of goods and
materials or sale of goods, materials and services made in
pursuance of contracts or arrangements entered in the
register maintained under Section 301 of the Companies
Act, 1956 and aggregating during the year to Rs. 50,000/
- or more in respect of each party have been made at prices
which are reasonable having regard to the prevailing market
prices for such goods, materials or services or the prices at
which such transactions for similar goods or services have
been made with other parties.
12 . As expla ined to us , the Company has determined
unserviceable or damaged/deteriorated stores, raw
materials and finished goods. Adequate provisions has been
made in the accounts for the loss arising on the items so
determined.
13 . The Company has not accepted any deposits from the public
upto 30th November, 1999 to which the provisions of
Section 58A of the Companies Act, 1956 and the rules made
thereunder would apply.
14 . In our opinion, reasonable records have been maintained
for the sale and disposal of realisable scrap. We have been
informed that the Company has no by-products.
15 . In our opinion the Company has an internal audit system
commensurate with its size and nature of its business.
16 . We have broadly reviewed the books of account maintained
by the Company pursuant to the rules made by the Central
Government for 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 maintained and are being made up. We
have not, however, made a detailed examination of the said
records.
17 . The Company has been generally regular in depositing
Provident Fund dues and Employees� State Insurance dues
with the appropriate authorities.
18 . As explained to us, there are no undisputed amounts payable
in respect of income tax, wealth tax, sales tax, customs duty
and excise duty which were outstanding as at 30th
November, 1999, for a period of more than six months
from the date they became payable.
19 . Based on our examination of the books of account of the
Company in accordance with the generally accepted
auditing principles and the information and explanations
given to us, no personal expenses of employees or directors
have been charged to the profit and loss account, other
than those payable as per the terms of the contract of
employment or in accordance with generally accepted
business practices.
20 . The Company is not a sick industrial company within the
meaning of clause (o) of sub-section (1) of Section 3 of the
Sick Industrial Companies (Special Provisions) Act, 1985.
21 . In respect of services rendered:
(a) As regards the Company�s Cl in ica l Research
Development services, the Company has a proper
system of recording receipts of material. Having
regard to the nature of services rendered, the system
of recording issues and consumption of material and
its allocation to job is not considered necessary. As
regards other services, the nature of services
rendered is such that i t does not involve
consumption of materials and stores.
(b) Considering the nature of services rendered and the
basis of billing, it is not considered necessary to have
a system of allocation of man hours utilised to the
relative jobs.
(c) In our opinion, there is a reasonable system of
authorisation at proper levels and the related system
of internal control of the Company is commensurate
with the size of the Company and the nature of its
business.
22 . As explained to us, in respect of the trading activities of the
Company, damaged goods have been determined and
adequate provision has been made for the loss arising on
the items determined.
For A.F. FERGUSON & CO.
Chartered Accountants
M.S. DHARMADHIKARI
Mumbai, January 31, 2000 (Partner)
26
Per our Report attachedR.A. SHAH Chairman
For A. F. FERGUSON & CO. IAN R. YOUNG Managing DirectorChartered Accountants A.B. THAKKAR }
P. SHAH } DirectorsM.S. Dharmadhikari K. HANDA }(Partner) B. BHATTACHARYA }
B.M. GAGRAT (Dr.) }
A. ANJENEYAN Secretary
Mumbai, January 31, 2000 Mumbai, January 29, 2000
Balance Sheetas at 30th November,1999
Rupees in Lakhs Rupees in LakhsAs at As at
Schedule 30th Nov 30th NovRef. 1999 1998
SOURCES OF FUNDSShareholders� Funds
Share Capital 1 1172.19 1172.19Reserves and Surplus 2 9541.27 7103.58
10713.46 8275.77
LOAN FUNDSSecured Loans 3 � 156.26Unsecured Loans 4 0.86 1.26
TOTAL 10714.32 8433.29
APPLICATION OF FUNDSFixed Assets
Gross Block 5 7771.61 6869.64Depreciation (4462.97) (3747.45)Net Block 3308.64 3122.19Capital Work-in-Progressat cost, including advances 193.60 556.24
3502.24 3678.43
INVESTMENTS 6 324.36 346.33
Current Assets,Loans and Advances
Inventories 7 4486.33 4017.85Sundry debtors 8 3809.93 2316.57Cash and bank balances 9 2328.57 820.36Loans and advances 10 3839.00 3922.75
14463.83 11077.53
Current Liabilities andProvisions
Current Liabilities 11 (5438.91) (5375.14)Provisions 12 (2376.15) (2046.81)
(7815.06) (7421.95)
Net Current Assets 6648.77 3655.58
Miscellaneous Expenditure(TO THE EXTENT NOT WRITTEN OFF)
Deferred Revenue Expenditure 238.95 752.95(Voluntary Retirement Scheme)
TOTAL 10714.32 8433.29
Notes to the Accounts 21
27
...50...50...50...50...50
Per our Report attached to the Balance SheetR.A. SHAH Chairman
For A. F. FERGUSON & CO. IAN R. YOUNG Managing DirectorChartered Accountants A.B. THAKKAR }
P. SHAH } DirectorsM.S. Dharmadhikari K. HANDA }(Partner) B. BHATTACHARYA }
B.M. GAGRAT (Dr.) }
A. ANJENEYAN Secretary
Mumbai, January 31, 2000 Mumbai, January 29, 2000
P rofit and Loss Accountfor the Year Ended 30th November, 1999
Rupees in Lakhs Rupees in LakhsYear Ended Year Ended
Schedule 30th Nov 30th Nov� Ref. 1999 1998
INCOMESales 28732.57 23342.54Services 4275.28 3036.33Interest Income 13 275.88 278.74Miscellaneous Income 14 501.41 429.31
33785.14 27086.92Increase/(Decrease) in stocks ofFinished Goods, Work-in-Processand Own Manufactured Bulk Drugs 15 (215.66) 606.87
33569.48 27693.79
EXPENDITURECost of Materials Consumed 16 8614.11 7603.60Personnel Costs 17 4864.77 5711.62Excise Duty 3414.16 2805.78Sales Tax 1967.78 1547.84Interest Expense 54.50 210.99Other Expenses 18 8137.60 6504.48Depreciation 767.82 967.18Royalty 525.80 455.30
28346.54 25806.79
PROFIT BEFORE TAXATION 5222.94 1887.00Taxation 19 2130.10 629.10
PROFIT AFTER TAXATION 3092.84 1257.90Balance of Profit from Prior Years 5391.41 4775.20
TOTAL AVAILABLE FOR APPROPRIATION 8484.25 6033.10Proposed Dividend 586.00 468.81Tax on Distributed Profits 64.46 46.88Transfer to General Reserve 310.00 126.00Surcharge on Tax on distributedprofits for the previous year 4.69 �
965.15 641.69
BALANCE CARRIED TO BALANCE SHEET 7519.10 5391.41
Notes to the Accounts 21
28
Schedu lesRupees in Lakhs Rupees in Lakhs
Nov 1999 Nov 1998
SCHEDULE 1 SHARE CAPITAL
A u t h o r i s e d1,17,22,788 Equity Shares of Rs. 10 each 1172.28 1172.282,77,212 Unclassified Shares of Rs. 10 each 27.72 27.72
1200.00 1200.00
I s s u e d1,17,22,788 Equity Shares of Rs. 10 each 1172.28 1172.28
S u b s c r i b e d1,17,20,148 Equity Shares of Rs. 10 each fully paid-up 1172.01 1172.01Of the above 73,88,488 Shares were allotted as fullypaid-up bonus shares by capitalisation of ReservesAdd : Forfeited sharesAmount paid-up on 2,640 Equity Shares forfeited 0.18 0.18
TOTAL 1172.19 1172.19
SCHEDULE 2 RESERVES AND SURPLUS
Share Premium AccountPer last Balance Sheet 133.94 133.94
Genera l ReservePer last Balance Sheet 1578.23 1452.23Transfer from Profit and Loss Account 310.00 126.00
1888.23 1578.23
Prof i t and Loss AccountBalance as per account 7519.10 5391.41
7519.10 5391.41
TOTAL 9541.27 7103.58
SCHEDULE 3 SECURED LOANSBank overdraft secured by hypothecation ofpresent and future stock-in-trade. � 156.26
Interest Accrued and Due � �
TOTAL � 156.26
SCHEDULE 4 UNSECURED LOANS (SHORT TERM)Fixed Deposits 0.86 1.26(Note : Rs. 0.86 lakhs (Nov 1998 - Rs. 1.26 lakhs) isrepayable within a year)
Commercial Paper � �
(Maximum balance during the year Rs. 1000 lakhs(Nov 1998 - 2700 lakhs))
TOTAL 0.86 1.26
29
...50...50...50...50...50
Sch
ed
ule
s
SCHEDULE 5 : FIXED ASSETSRupees in Lakhs
COST DEPRECIATION/AMORTISATION WRITTEN DOWN VALUEAs at 30th As at 30th As at 30th For the As at 30th As at 30th As at 30thNov. 1998 Additions Deductions Nov. 1999 Nov. 1998 year Deductions Nov. 1999 Nov. 1999 Nov. 1998
LAND :Freehold 23.88 � � 23.88 � � � � 23.88 23.88Leasehold 95.82 � � 95.82 49.10 25.70 � 74.80 21.02 46.72
BUILDINGS :On freehold land @ 335.33 4.77 � 340.10 156.20 43.19 � 199.39 140.71 179.13On leasehold land ** 714.92 � � 714.92 482.04 108.87 � 590.91 124.01 232.88
LEASEHOLD IMPROVEMENTS 571.81 211.73 � 783.54 137.92 61.87 � 199.79 583.75 433.89MACHINERY & EQUIPMENT 3684.28 399.10 30.72 4052.66 2350.38 275.85 30.18 2596.05 1456.61 1333.90OFFICE EQUIPMENT, FURNITURE & FIXTURES 1294.67 226.28 20.96 1499.99 512.39 210.48 14.86 708.01 791.98 782.28VEHICLES 133.42 132.66 20.89 245.19 43.91 41.86 7.26 78.51 166.68 89.51TRADEMARKS 15.51 � � 15.51 15.51 � � 1 5 . 5 1 � �
TOTAL 6869.64 974.54 72.57 7771.61 3747.45 767.82 52.30 4462.97 3308.64
PREVIOUS YEAR 6231.11 643.11 4.58 6869.64 2784.81 967.18 4.54 3747.45 3122.19
CONSTRUCTION WORK-IN-PROGRESS (At Cost) 75.01 340.48ADVANCES ON CAPITAL ACCOUNTS 118.59 215.76
TOTAL 193.60 556.24GRAND TOTAL 3502.24 3678.43
@ Buildings include investment in share application money of Rs. 500 in a co-operative housing society, representing ownership of two residential flats. The agreement for sale is submitted for registration.
** Buildings include investment in 250 shares of Rs. 500 each in a co-operative housing society, representing ownership of a residential flat.
Note : Depreciation is provided on Fixed Assets on a straight Line basis at the following rates per annum :
Land :Leasehold Amortised over the lease periodBuildings 3.34%Leasehold improvements 8% to 10%Machinery & Equipment 8% to 40%Office equipment, furniture & fixtures 8% to 33.33%Vehicles 25%Trademarks Amortised over a period of 3 years
Refer Schedule 21 - Note 14 (a) and 14 (c) regarding Ankleshwar Plant.
30
Schedu lesRupees in Lakhs Rupees in Lakhs
Nov 1999 Nov 1998
SCHEDULE 6 INVESTMENTS(At cost except where otherwise stated)
Current InvestmentsNon-Trade (unquoted)
Nil (Nov 98 - 1,32,000) Units of Unit Trust of India � 19.87(Repurchase value Rs. Nil, Nov 98 Rs. 19.01 lakhs)
Long Term InvestmentsTrade (unquoted)
Leema Chemicals and Cosmetics Private Limited24 Equity Shares of Rs. 10 each, fully paid-up(Actual cost Rs. 240) � �
Non-Trade (quoted)18% Sardar Sarovar Narmada Nigam LimitedNil (Nov 98 - 2) Bonds of Rs. 1,00,000 each, fully paid-up(Market value Rs. Nil, Nov 98 Rs. 2.03 lakhs) � 2.00
Non-Trade (unquoted)Government Securities 0.11 0.21Gold Sovereign (Actual cost Rs. 61) � �The Shamrao Vithal Co-operative Bank Limited1,000 shares of Rs. 25 each, fully paid-up 0.25 0.25
In Bodies Corporate under the same management(Trade - unquoted):
Duchem Laboratories Limited (a subsidiary company)3,24,000 Equity Shares (Nov 98 - 3,00,000) of Rs. 100each, fully paid-up 324.00 300.00Nil (Nov 98 - 24,000) 9% Non-Cumulative RedeemablePreference Shares of Rs. 100 each, fully paid-up � 24.00
324.00 324.00
TOTAL 324.36 346.33
SCHEDULE 7 INVENTORIES
Stores and Maintenance Spares 96.98 80.03Packing Materials 215.14 186.87Physicians� Samples 77.90 �Stock-in-Trade
Raw Materials 1223.57 534.36Own Manufactured Bulk Drugs 326.42 519.25Work-in-Process 364.16 399.86Finished Goods 2182.16 2297.48
TOTAL 4486.33 4017.85
31
...50...50...50...50...50
Schedu lesRupees in Lakhs Rupees in Lakhs
Nov 1999 Nov 1998
SCHEDULE 8 SUNDRY DEBTORS
(Unsecured - Considered good except where otherwise stated)
(Considered doubtful : Rs. 281.58 lakhs - Nov 1998 Rs. 238.32 lakhs)
Debts outstanding for a period exceeding six months 399.90 316.94
Other Debts 3691.61 2237.95
4091.51 2554.89
Provision for doubtful debts (281.58) (238.32)
TOTAL 3809.93 2316.57
SCHEDULE 9 CASH AND BANK BALANCES
Cash on hand 2.74 1.30
With Scheduled Banks
On Current Accounts (including accounts with overdraft facility) 953.83 204.50
On Margin Money Accounts 17.33 3.48
On Time Deposit Accounts 1283.12 487.51
Cheques on hand 71.55 123.57
TOTAL 2328.57 820.36
SCHEDULE 10 LOANS AND ADVANCES
(Unsecured - Considered good except where otherwise stated)
Advances recoverable in cash or in kind or for value to be received:
Considered good 2627.67 2136.57
Considered doubtful 178.95 152.83
2806.62 2289.40
Provision for doubtful advances (178.95) (152.83)
2627.67 2136.57
Advances and Loans to Subsidiary Company
Duchem Laboratories Limited 968.48 1673.96
Balance with Customs and Excise on Current Accounts 94.97 111.92
Deferred Tax 140.93 �
Interest accrued on Time Deposits/ Investments 6.95 0.30
TOTAL 3839.00 3922.75
32
Schedu lesRupees in Lakhs Rupees in Lakhs
Nov 1999 Nov 1998
SCHEDULE 11 CURRENT LIABILITIESRefundable Share Application Money 18.91 18.91Acceptances � 14.52Sundry Creditors
Due to Small Scale Industrial Undertakings 250.25 198.02Others 3692.96 3926.67
Interest Accrued but not due on loans 6.26 13.25Dividends - Uncashed 26.41 22.65Security Deposits 1444.12 1181.12
TOTAL 5438.91 5375.14
SCHEDULE 12 PROVISIONSProposed Dividend 586.00 468.81Tax on Distributed Profits 64.46 46.88Gratuity 214.90 343.06Leave Encashment 325.69 361.87Income Tax Provisions (Net of Payments) 923.91 260.27Deferred Tax � 1.02Others 261.19 564.90
TOTAL 2376.15 2046.81
SCHEDULE 13 INTEREST INCOMEInterest (Gross)
On Staff Loans 14.98 10.83On deposits with banks, delayed payments, etc. 22.08 8.44(Tax deducted at source - Rs. 1.04 lakhs, Nov 1998 - Rs. 0.39 lakhs)On Income Tax refunds (net) 6.79 13.58On Long Term Investments 0.28 0.36(Tax deducted at source - Rs. 0.09 lakhs, Nov 1998 - Rs. 0.08 lakhs)On loans to Duchem Laboratories Limited (a subsidiary company) 231.17 240.92(Tax deducted at source - Rs. 49.87 lakhs, Nov 1998 - Rs. 48.19 lakhs)On Others 0.58 4.61
TOTAL 275.88 278.74
SCHEDULE 14 MISCELLANEOUS INCOMEExport Incentives � 2.93Dividend Income on Current Investments � 2.64(Tax deducted at source - Rs. Nil, Nov 1998 - Rs. 0.53 lakhs).Dividend Income on Long Term Investments 0.04 �Rental Income 373.66 361.93Profit on fixed assets sold/discarded (net) 30.50 4.12(includes capital profit Rs. 26.44 lakhs, Nov 1998 - Rs. Nil)Insurance Claims 20.94 28.88Sundry 76.27 28.81
TOTAL 501.41 429.31
33
...50...50...50...50...50
Schedu lesRupees in Lakhs Rupees in Lakhs
Nov 1999 Nov 1998
SCHEDULE 15 INCREASE/(DECREASE) IN STOCKS
OF FINISHED GOODS, WORK-IN- PROCESS
AND OWN MANUFACTURED BULK DRUGS
Stocks at commencement
Finished Goods *2169.29 1990.28
(*Excluding Physicians� Samples Rs. 128.19 lakhs)
Work-in-Process 399.86 324.15
Own Manufactured Bulk Drugs 519.25 295.29
3088.40 2609.72
Stocks at Close
Finished Goods 2182.16 2297.48
Work-in-Process 364.16 399.86
Own Manufactured Bulk Drugs 326.42 519.25
2872.74 3216.59
INCREASE / (DECREASE) (215.66) 606.87
SCHEDULE 16 COST OF MATERIALS CONSUMED
Raw Materials
Stock at commencement 534.36 432.34
Purchases (net) 5916.32 4451.45
6450.68 4883.79
Stock at close (1223.57) (534.36)
5227.11 4349.43
Packing Materials (Net) 1739.06 1721.11
Trading activity purchases 1647.94 1533.06
TOTAL 8614.11 7603.60
SCHEDULE 17 PERSONNEL COSTS
Salaries, Wages and Bonus 3598.36 3659.14
Company�s contribution to Gratuity Fund 175.32 418.67
Company�s contribution to Provident and other Funds 211.59 195.74
Staff Welfare Expenses 507.68 417.69
Voluntary Retirement Scheme 343.91 803.09
Reimbursement to third party 27.91 217.29
TOTAL 4864.77 5711.62
34
Schedu lesRupees in Lakhs Rupees in Lakhs
Nov 1999 Nov 1998
SCHEDULE 18 OTHER EXPENSES
Consumption of Stores and Maintenance Spares 160.47 147.06
Processing Charges 420.01 302.10
Power and Fuel 1077.98 983.16
Water 48.81 47.78
Repairs : Buildings 17.67 68.07
Machinery 194.94 153.18
212.61 221.25
Rent 452.06 414.36
Rates and Taxes 104.42 87.43
Insurance 91.37 81.48
Clinical Trials 700.56 247.18
Equipment rentals, service charges, low cost assets written off 223.35 223.05
Freight, Forwarding and Transport 385.21 324.23
Travelling (including boarding, lodging,
conveyance and other expenses) 748.76 762.39
Postage, Telephones and Fax 400.40 337.09
Advertising and Promotion 1205.96 750.27
Exchange loss (net) 20.86 29.13
Commission 142.28 136.30
Provision for Doubtful Debts 69.63 75.62
Provision for Doubtful Advances 30.09 �
Loss on sale of current Investments 0.59 �
Miscellaneous 1642.18 1334.60
TOTAL 8137.60 6504.48
SCHEDULE 19 TAXATION
Provision for Taxation
Income-tax payable [Refer note 18(b)] 2272.05 960.54
Tax effect on timing difference re : amounts charged in these accounts
On Depreciation / Fixed Assets sold/discarded (41.27) (175.11)
On Provision for Bad Debts/Advances (35.32) (21.92)
On Voluntary Retirement Scheme (171.53) 6.05
On Technical know-how 11.90 12.12
Other Provisions 94.27 (152.58)
(141.95) (331.44)
TOTAL 2130.10 629.10
35
...50...50...50...50...50
Schedu lesRupees in Lakhs Rupees in Lakhs
Nov 1999 Nov 1998
SCHEDULE 20 COMPUTATION OF NET PROFITS FOR
COMMISSION PAYABLE TO THE DIRECTORS
Net Profit per Profit and Loss Account 3092.84 1257.90
Income-tax 2130.10 629.10
Remuneration to Directors 90.11 93.90
Depreciation charged in the Accounts 767.82 967.18
Low cost and other assets written off 93.56 66.46
Net Profit on sale of fixed assets per Section 349
of the Companies Act, 1956 5.51 3.78
Provision for Doubtful debts/advances 99.72 75.62
3186.82 1836.04
6279.66 3093.94
Net (Profit)/Loss on sale of fixed assets per accounts
(including capital profit (Rs. 26.44 lakhs, Nov 1998 Rs. Nil)) (30.50) (4.12)
Depreciation under Section 350 of the Companies Act, 1956
(Estimated) (870.80) (978.34)
Bad debts (26.37) (12.97)
(927.67) (995.43)
Net Profit under Section 198 of the Companies Act, 1956 5351.99 2098.51
Commission to three (Nov 1998: three) Directors, who are not in
whole time employment and who are resident in India at the
rate of Rs. 50,000/- per annum (Nov 1998: Rs.50,000/- per
annum) to each of them, the aggregate not being in excess
of 1% of net profits as computed above. The Company has
been legally advised that this payment does not require the
approval of the Central Government. 1.50 1.50
Commission approved by the Board of Directors at 1.50 1.50
36
Schedu lesSCHEDULE 21 NOTES TO THE ACCOUNTS
1 Sign i f icant Account ing Policies
Basis of Account ingThe financial statements are prepared under the historical cost convention on an accrual basis and are in accordance with therequirements of the Companies Act, 1956.
F i xed Assets and Depreciat ionAll fixed assets are stated at cost of acquisition less accumulated depreciation.
Depreciation for the year has been provided on straight line method at the higher of the rates determined by the Company or therates specified in Schedule XIV to the Companies Act, 1956. Depreciation on additions/deletions to assets during the year isprovided on a pro-rata basis.
Foreign Currency Transact ionsTransactions in foreign exchange which are covered by forward contracts are accounted for at the contracted rate, the differencebetween the forward rate and the exchange rate at the date of transaction being recognised in the Profit and Loss Account overthe life of the contract. Transactions other than those covered by forward contracts are recorded at pre-determined standardexchange rates which are reviewed periodically. Gains and losses arising on account of periodic revisions of such standard exchangerates and also on realisiation are accounted for accordingly. Monetary assets and liabilities in foreign currency which are outstandingas at the year end and not covered by forward contracts are translated at the year end market exchange rate. Gains and lossesarising on account of such revision are reflected in the Profit and Loss Account.
I nves tmentsCurrent Investments are stated at lower of cost and fair value (repurchase value being considered as fair value), unless the fair valueis only marginally lower.
Long Term Investments are stated at cost.
Inventor iesInventories are stated at lower of cost and net realisable value except stock of Physicians� samples and stores and spares which arevalued at cost. Cost includes material cost, labour and appropriate overheads.
Sundry Debtors/Loans & AdvancesThese have been stated after making adequate provision for doubtful debts/advances.
Excise DutyExcise Duty payable is accounted for based on production.
Research & DevelopmentRevenue expenditure on research and development is written off in the Profit & Loss Account for the year in which it is incurred.Capital expenditure on research and development is treated in the same way as expenditure on Fixed Assets.
Retirement Benef i tsThe Company has various schemes of retirement benefits such as Provident Fund, Superannuation and Gratuity recognised by theIncome Tax authorities. Provident Fund and Superannuation Schemes are administered through Trustees and the company�scontribution is charged to Profit & Loss Account each year. The Company has opted for a Group Gratuity-cum-Life AssuranceScheme of the Life Insurance Corporation of India (LIC), and contribution towards gratuity liability as determined by LIC is chargedto the Profit & Loss account each year. The Company also provides for unutilised leave benefits on retirement available to itsemployees on the basis of an actuarial valuation.
Voluntary Retirement SchemeLiability under this scheme is booked based on the acceptance of the applications of the employees made under this scheme by theCompany and the same is charged to the Profit and Loss Account over a period of three years.
Revenue Recognit ionThe Company recognises sale at the point of despatch of goods to the customers. Sales are net of trade discounts and inclusive ofexcise duty and sales tax where applicable.
37
...50...50...50...50...50
2 Estimated amount of contracts on capital account to be executed and not provided for Rs.
74.30 lakhs (Nov. 1998 - Rs. 36.22 lakhs).
3 Contingent Liabi l i ty
In respect of the guarantees given to banks on behalf of:
(a) its subsidiary company - Rs. 2400 lakhs (Nov 1998 - Rs. 2400 lakhs).
(b) third parties - Rs. 200 lakhs (Nov 1998 - Rs. 200 lakhs)
In respect of excise duty and customs duty matters pending appeal Rs. 2214.87 lakhs (Nov 1998 - Rs. 887.96 lakhs).
Demands from Income-tax authorities for the interest on the alleged short deduction of tax at source on perquisites
relating to the Assessment Year 1987-88 which have been disputed by the Company and in respect of which the Company
has filed an appeal : Rs. 6.53 lakhs (Nov 1998 : Rs. 6.53 lakhs).
Others - amount not ascertainable, but not likely to be significant.
Rupees in Lakhs Rupees in Lakhs
Nov 1999 Nov 1998
4 Loans and Advances include amounts due fro m
Duchem Laboratories Limited, a Company under the same management 968.48 1673.96
Maximum aggregate amount due during the year Rs. 2496.32 lakhs
(Nov 1998 - Rs. 3084.11 lakhs). The receivables mentioned above from
Duchem Laboratories Limited, a wholly owned subsidiary company, have been
considered as good and fully recoverable, having regard to the said
subsidiary�s long term prospects.
Directors of the Company
Maximum aggregate amount due during the year Rs. 0.46 lakhs (Nov 1998 - Rs. 0.62 lakhs). 0 .29 0.46
An officer of the Company
Maximum aggregate amount due during the year Rs. 1.71 lakhs (Nov 1998 - Rs. 13.16 lakhs). 0 .06 1.71
5 Cost of materials consumed and other expenses include cost of samples
distributed Rs. 621.56 lakhs (Nov 1998 - Rs. 448.13 lakhs).
6 Auditors� Remunerat ion
For Audit 13.13 12.06
For Taxation Services 0.35 1.34
Reimbursement of out-of-pocket expenses 0.90 0.87
For Miscellaneous reports and other consultations 0.29 0.16
For Company Law matters 0.07 0.05
7 M a n ag er ia l re munerat ion under Sect ion 198 o f the Compan ies A c t , 1956 amounted
to Rs. 90.11 lakhs (Nov 1998 - Rs . 93.90 lakhs) .
Rupees in Lakhs Rupees in Lakhs
Nov 1999 Nov 1998
Salaries, Bonus & Commission 52.87 54.32
Contribution to PF and Other Funds 10.21 9.95
Perquisites 25.93 28.47
Sitting Fees 1.10 1.16
Total 90.11 93.90
Schedu les
38
8 . I n format ion required by Pa r ag r aphs 3 and 4 of Pa rt II of Schedule VI to the CompaniesAct, 1956.(a) Production, Sales and Stocks
M A N U FACTURING
A C T I V I T I E S
STOCKS AT STOCKS
COMMENCEMENT PRODUCTION SALES AT CLOSE
Class of goods Unit of Quantity Rupees Quantity Quantity Rupees Quantity Rupees
Measure in lakhs in lakhs in lakhs
BULK DRUGS AND
DRUG INTERMEDIATES
Oxytetracycline KGA(000s) 14.31 210.81 91.03 2.00 26.14 13.89 249.23
(19.30) (257.57) (99.14) (4.60) (53.32) (14.31) (210.81)
Others Tonnes 7.85 308.44 72.98 72.43 500.87 4.05 77.19
(10.49) (37.72) (75.20) (76.37) (491.92) (7.85) (308.44)
FORMULATIONS
Injectables :
Liquid Parenterals Litres 29,045.90 119.00 251,193.76 237,280.28 1,137.29 39,766.33 158.32
(33,502.74) (136.83) (233,411.73) (232,938.39) (1,167.58) (29,045.90) (119.00)
Powder Parenterals Kgs. � � 774.75 612.09 1,273.59 157.57 176.23
� � � � � � �
Tablets No. in
and Capsules Millions 57.88 556.78 386.49 386.35 6,639.85 46.65 397.44
(59.71) (444.43) (408.00) (387.35) (6,195.24) (57.88) (556.78)
Liquids Litres 436,329.14 651.48 3,368,158.65 3,325,567.70 9,049.58 386,853.59 753.77
(426,525.75) (614.74) (3,144,230.05) (3,061,913.04) (6,913.70) (436,329.14) (651.48)
Solids Kgs. 25,637.27 123.12 113,002.46 105,343.31 946.28 27,184.05 102.98
(16,752.62) (92.34) (116,672.17) (104,401.01) (976.08) (25,637.27) (123.12)
Ointments Kgs. 4,024.34 21.01 14,587.50 13,815.62 136.77 3,792.89 21.28
(2,656.03) (14.29) (16,596.79) (13,864.33) (135.16) (4,024.34) (21.01)
FOOD PRODUCTS Tonnes 64.03 132.04 666.27 683.04 2,344.61 41.02 84.71
(63.34) (124.79) (639.38) (627.08) (2,055.68) (64.03) (132.04)
FEED SUPPLEMENTS Tonnes 96.71 131.07 809.96 831.32 2,045.19 54.25 85.06
(131.21) (188.39) (757.61) (762.61) (1,753.00) (96.71) (131.07)
TRADING AC T I V I T I E S
STOCKS AT STOCKS
COMMENCEMENT PURCHASES SALES AT CLOSE
Class of goods Unit of Quantity Rupees Quantity Rupees Quantity Rupees Quantity Rupees
Measure in lakhs in lakhs in lakhs in lakhs
F O R M U L AT I O N S
Injectables :
Liquid Parenterals Litres 3,657.07 105.28 22,448.64 400.82 19,729.85 1,047.63 5,639.40 131.28
(2,590.15) (41.62) (18,003.65) (377.88) (16,139.90) (859.55) (3,657.07) (105.28)
Powder Parenterals Kgs � � � � � � � �
(�) (�) (�) (�) (-0.21) (-0.37) (�) (�)
Tablets No. in
millions 9.74 329.42 29.34 905.83 29.13 1,114.69 6.40 202.85
(9.17) (251.76) (23.65) (807.40) (20.58) (745.38) (9.74) (329.42)
Liquids Litres 3,424.90 11.23 39,375.90 55.56 31,081.00 111.56 10,360.35 13.44
(3,677.40) (12.28) (9,526.00) (30.60) (9,232.80) (72.88) (3,424.90) (11.23)
Solids Kgs 6,003.57 47.90 7,295.10 66.22 9,929.27 139.56 2,285.90 18.84
(569.75) (14.34) (14,738.20) (100.84) (8,996.05) (115.39) (6,003.57) (47.90)
Schedu les
39
...50...50...50...50...50
STOCKS AT STOCKS
COMMENCEMENT PURCHASES SALES AT CLOSE
Class of goods Unit of Quantity Rupees Quantity Rupees Quantity Rupees Quantity Rupees
Measure in lakhs in lakhs in lakhs in lakhs
Ointments Kgs 4,577.18 23.31 16,684.35 84.90 13,873.31 176.24 4,618.10 24.43
(4,115.17) (19.36) (18,179.00) (93.08) (14,036.22) (176.97) (4,577.18) (23.31)
FEED SUPPLEMENTS Tonnes 98.11 28.48 190.09 55.32 248.87 104.25 29.72 7.80
(64.36) (21.93) (278.54) (81.08) (253.19) (108.14) (98.11) (28.48)
FEED SUPPLEMENTS Litres 64,886.00 17.36 33,784.00 11.07 79,550.00 31.89 12,951.00 3.73
(54,897.10) (13.18) (157,292.00) (42.18) (128,189.00) (49.08) (64,886.00) (17.36)
SALES TAX 1,906.58
(1,473.84)
TOTAL 2,816.73 1,579.72 28,732.57 2,508.58
(2,285.57) (1,533.06) (23,342.54) (2,816.73)
NOTES
1. Figures of production are inclusive of production for captive consumption and quantities produced in the factories of third parties on loan
licences.
2. Figures of production are inclusive of production at Ankleshwar Plant till July 31,1999 (the date of its closure). Installed Capacity, however, is
on annual basis.
3. Current year figures for Production, Purchases and Closing Stock exclude Physicians� Sample packs.
4. Stocks are after adjustments of write-offs.
5. Figures in brackets are in respect of the previous year.
( b ) Raw Materia ls Consumed
Class of Goods Unit of Nov 1999 Nov 1998
Measure Quantity Rupees Quantity Rupees
in Lakhs in Lakhs
Vitamins Tonnes 5.73 50.50 5.58 51.90
Sulphadimidine Kgs 7,499.10 29.18 14,301.70 65.98
Codeine Phosphate Kgs 5,580.80 1,872.78 5,720.59 1,190.77
Cefoperazone Kgs 894.65 571.25 � �
Sugar Tonnes 2,056.61 285.12 2,119.10 309.67
Propylene Glycol Tonnes 251.99 150.04 236.40 137.27
Maize Germ Oil Tonnes 461.79 126.34 480.88 141.82
PCBs Urea Tonnes 53.22 89.76 52.43 93.58
Others (None of the items individually
exceed 10% of the total value of the
raw material consumed) 2,052.14 2,358.44
TOTAL 5,227.11 4,349.43
Whereof Percentage Percentage
Imported-Delivered Cost 20 1,022.00 18 764.57
Indigenously obtained 80 4,205.11 82 3,584.86
TOTAL 100 5,227.11 100 4,349.43
Note : �Components� and �Spare Parts� referred to in para 4 D(C) of Part II of Schedule VI to the Companies Act, 1956 are
assumed to be those incorporated in goods produced and not those used for maintenance of Plant and Machinery.
Schedu les
40
( c ) Licensed and Instal led Capacit ies
Licensed Capacity Installed Capacity
Class of goods Unit of (Refer Note A) (Three Shift basis)
Measure Nov 1999 Nov 1998 Nov 1999 Nov 1998
Bulk Drugs and Drug
Intermediates
Oxytetracycline/Tetracycline MT � 112 140 140
Others MT 724 724
FORMULATIONS
Injectables
Liquid Parenterals Litres 360000 360000
Dry Fills Mn. Vials 158.4 158.4
Tablets & Capsules Mn. Nos. 5412 5412
Liquids Litres 3500000 3500000
Solids Kgs 900000 900000
Ointments Kgs 232800 232800
FOOD PRODUCTS
Protein Food MT 1000 1000
Feed Supplements MT 1577 1577
N o t e s
A. In terms of Press Note No. 4 (1994 series) dated October 26, 1994 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 and Promotion, Ministry of Industry, Government of India, industrial licencing has been abolished
in respect of bulk drugs and formulations.
B. The installed capacity is as certified by the Management and not verified by the Auditors, this being a technical matter.
Rupees in Lakhs Rupees in Lakhs
Nov 1999 Nov 1998
( d ) Value of imports calculated on CIF basis
Raw Materials 931.33 684.11
Spare Parts for Maintenance of machinery and
laboratory chemicals 2.44 10.86
Capital Goods 38.36 �
Finished Goods 999.11 894.94
Packing Materials 47.35 11.88
( e ) Expenditure in Foreign Currency
Travel 83.27 54.44
Royalty 435.33 376.98
Interest 4.52 2.51
Professional Charges � 4.81
Others (Exchange Loss, etc.) 57.65 36.07
( f ) Remittance made on account of dividends in foreign currency
Number of shareholders 1 1
Number of shares held 46,88,050 46,88,050
Net amount of dividends remitted in foreign currency
Dividend in respect of the year ended 30th November 1998 187.52 �
Dividend in respect of the period ended 30th November 1997 � 140.64
187.52 140.64
Schedu les
41
...50...50...50...50...50
Rupees in Lakhs Rupees in Lakhs
Nov 1999 Nov 1998( g ) Earnings in foreign exchange
Total Exports (On FOB basis)Earnings in Indian Rupees 170.61 215.86Earnings in Foreign Exchange 499.61 488.68
Total 670.22 704.54
Service Income 1225.27 695.24Interest Income 3.96 �Others 2.35 2.29
9 Interest expense includes Rs. 15.18 lakhs payable on loans for fixed period (Nov 1998 - Rs. 150.29 lakhs).
1 0 Drugs Prices Equal isat ion Account (DPEA) .(a) Oxytetracycline & Other Formulations
In respect of certain price fixation Orders of 1981 of the Government of India, the Supreme Court vide its Order of 22nd March, 1993,held that, pending disposal of the Company�s Writ Petition in the High Court of Mumbai, the Company may deposit 50% of the impugnedamount of Rs. 87.61 lakhs, less Rs. 19.90 lakhs already deposited, with the Union of India before 15th May, 1993, which has been done.In the event that the Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the dateof the decision of the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balanceamount of Rs. 43.80 lakhs with interest at the rate of 15% per annum will have to be paid to the Government.
(b) Multivitamin FormulationsIn respect of a certain price fixation Order of 1986 of the Government of India, the Supreme Court vide its Order dated 3rdDecember, 1992, held that, pending disposal of the Company�s Writ Petition in the High Court of Mumbai, the Company may deposit50% of the impugned amount of Rs.98 lakhs with the Union of India before 31st January, 1993, which has been done. In the event thatthe Company succeeds before the High Court of Mumbai, this amount will be returned within one month from the date of the decisionof the High Court with interest at the rate of 15% per annum. However, if the Company loses the Writ Petition, the balance amountof Rs. 49 lakhs with interest at the rate of 15% per annum will have to be paid to the Government.
(c) Protinex*In yet another case, the Company had challenged in 1986 a price fixation Order of the Government of India by a Writ Petition beforethe High Court of Mumbai. The Honourable Court passed an ad interim and interim order staying the impugned order. The Petition,while it was still pending for hearing and final disposal, was withdrawn in 1989 on redressal of the Company�s grievances. Afterprotracted correspondence on the subject, in 1993 the Government raised a demand of Rs. 81.83 lakhs on the Company for theperiod April 1986 to July 1989 and directed the Company to deposit the same into the DPEA. Thereafter, the Drug Prices LiabilityReview (DPLR) Committee sent a letter dated 15th February, 1996 seeking the Company�s submission/ representation against thereduced claim amount of Rs. 33.87 lakhs for the period April 1986 to August 1987 as intimated to the DPLR Committee by theGovernment of India. The Company has made its submissions to the DPLR Committee vide its letter of 29th March, 1996 claimingthat no amount whatsoever is due and payable having regard to the facts and relevant material of the case.
In the meantime, the Department of Chemicals and Petrochemicals vide their letter dated 11th February, 1997, raised an additionaldemand of Rs 178.56 lakhs for the earlier period of February 1984 to March 1986 over and above the revised claim of Rs. 33.87 lakhsfor the period April 1986 to August 1987. Thus, the total demand raised now stands revised to Rs. 212.43 lakhs. The DPLR Committeehad, vide its letter dated 24th February, 1997 invited the Company to make its submissions/ representations against the above saidclaim. The Company has made its submissions to the DPLR Committee vide its letter dated 14th May, 1997 claiming that no amountwhatsoever is due and payable having regard to the facts and relevant material of the case.
Pursuant to the submissions made by the Company, the DPLR Committee directed by an Order on November 17, 1998 thatclarifications should be obtained from the Mumbai High Court on whether the Interim Stay granted in the Civil Writ PetitionNumber 2368 of 1996 is applicable to this matter. (This Writ Petition is filed by OPPI and IDMA jointly against any Noticeissued by the Government of India after August 25, 1987, to any member of the OPPI or IDMA, initiating proceedings forrecovery of an amount demanded in respect of a period prior to that date).
Schedu les
42
On a Notice of Motion filed by the Company in the said Writ Petition, the Mumbai High Court has granted ad interim Orderthat �pending the hearing and final disposal of this Notice of Motion, further proceedings in the said Case No 49/1996pending before the said Drug Prices Liability Review Committee be stayed.�
The Company would continue to seek legal recourse in the matter.
In view of matters (a) and (b) being subjudice, the legal opinion being in favour of the Company, and based on the assessmentof the Management, no further provision is considered necessary over and above the sum of Rs. 48.21 lakhs that has alreadybeen made in the accounts in earlier years.
* Regd. Trademark
11 The Company has recovered from its wholly owned subsidiary company- Duchem Laboratories Limited, General Administrationexpenses amounting to Rs. 17.09 lakhs (Nov 1998 : Rs. 21.70 lakhs); and payroll costs of persons deputed by the Companyamounting to Rs. 19.69 lakhs (Nov 1998 : Rs. 24.28 lakhs). �Miscellaneous Expenses� under �Other Expenses� (Schedule 18) and�Personnel Costs� (Schedule 17) are net of these recoveries respectively. The details of personnel costs are as given below :
Rupees in Lakhs Rupees in LakhsNov 1999 Nov 1998
Salaries, Wages and Bonus 15.65 19.80Company�s Contribution to Gratuity Fund 0.19 0.37Company�s Contribution to Provident andOther Funds 1.02 1.29Staff Welfare Expenses 2.83 2.82
19.69 24.28
12 The Company has opted for the Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India (LIC). TheCompany�s contribution to this scheme is charged to the Profit and Loss Account for the year. LIC has confirmed that the contributionstaken together with the funds available with LIC in the corpus, cover adequately the actuarially valued gratuity liability of theCompany. LIC would however seek replenishment of funds, should the funds get depleted due to abnormal withdrawals in any year.
13 In the previous year, the Company had made provision in the books under Voluntary Retirement Scheme, based on acceptance ofthe applications of the employees made under the scheme, as per the accounting policy followed consistently by the Company.During the year, some employees withdrew their application and declined to retire voluntarily. Accordingly, the excess provisionamounting to Rs. 135.64 lakhs has been reversed in the books. This has resulted in profit before tax for the year being higher byRs. 90.43 lakhs.
14 (a) During the previous year, as a part of its manufacturing-restructuring initiative, the Company had obtained members� approvalfor sale of its Ankleshwar plant. The Company had decided to either sell or close or cease its operations at the plant byDecember 31, 1999. Accordingly, the Company ceased its operations effective from July 31, 1999. In view of this, the Companyhad re-evaluated the useful life of the fixed assets at Ankleshwar and accordingly an additional depreciation of Rs. 167.68 lakhs(Nov 1998 - Rs. 447.06 lakhs) has been charged to the Profit and Loss Account.
(b) Payment of ex-gratia to employees on cessation of operations at its plant amounting to Rs. 96 lakhs (over and above theamount of Rs. 380 lakhs provided in the previous year) has been charged to the Profit and Loss Account under �Salaries, Wagesand Bonus� (Schedule 17 - Personnel Costs)
(c) Fixed Assets (Schedule 5) include fixed assets lying at the Ankleshwar plant as on November 30, 1999 at their respective bookvalues which are as follows :
Rupees in LakhsOriginal Cost Accumulated Depreciation Written Down Value
Freehold Land 20.28 � 20.28Leasehold Land 63.25 63.25 �Freehold Building 165.82 136.48 29.34Leasehold Building 506.66 426.33 80.33Machinery & Equipment 916.38 837.44 78.94Office Equipment, Furniture & Fixtures 37.85 33.68 4.17
1710.24 1497.18 213.06
Schedu les
43
...50...50...50...50...50
15 Expenditure on Research & Development during the year
Rupees in Lakhs Rupees in LakhsNov 1999 Nov 1998
Capital expenditure 59.14 85.87Revenue expenditure charged to the Profit and Loss Account 1287.73 752.12
1346.87 837.99
16 Information regarding assets taken on leaseNature of asset Lease rentals Future rental
for the year obligations
Rupees in Lakhs Rupees in LakhsNov 1999 Nov 1998 Nov 1999 Nov 1998
Office Equipment 17.80 24.53 3.24 20.02Vehicles 32.80 52.14 � 80.38
50.60 76.67 3.24 100.40
17 Exchange loss (net) on forward exchange contracts amounting to Rs. Nil lakhs has been deferred to next year (Nov 1998 : loss ofRs. 0.11 lakhs).
18 (a) The Provision for taxation has been computed on the basis of the profits for the year ended 30th November, 1999 although the ultimatetax liability for the assessment year 2000-2001 will be determined on the basis of the profits for the year ending 31st March 2000.
(b) Income tax payable shown under schedule 19 �Taxation� includes Rs. 132.66 lakhs on account of interest demanded by thetax authorities in respect of certain disputed items on completion of assessment of an earlier year.
19 (a) Until the previous year, stock of Physicians� samples of Rs. 128.19 lakhs was included in �Finished Goods� under �Inventories�(Schedule 7). Pursuant to the Accounting Standard AS-2 on �Valuation of Inventories� becoming mandatory, the same hasbeen shown separately under �Inventories� (Schedule 7) in the current year. This has no impact on the profit for the year.
(b) Stock of Physicians� samples pertaining to the Company�s service activities is included under �Loans and Advances� (Schedule10) Rs. 25.43 lakhs (Nov 1998 - Rs. 68.77 lakhs).
20 The names of the Small Scale Industrial Undertakings to whom the Company owes a sum exceeding Rs. 100,000 which is outstandingfor more than 30 days : -
Nov 1999 Nov 1998
Crown Paper Products Crown Paper ProductsAmijal Chemicals Amijal ChemicalsEnzochem Laboratories Enzochem LaboratoriesRamdev Chem Corropack IndustriesSynthokem Labs Pvt Ltd. Metakaps EngineeringVirdev Intermediates Latin RasayaniAward PackagingCorropack IndustriesMetakaps EngineeringMavji Haribhai OilcakeUshma Industries
The above information and that given in Schedule 11 - �Current Liabilities� regarding small scale industrial undertakings has beendetermined to the extent such parties have been identified on the basis of information available with the Company. This has beenrelied upon by the auditors.
21 The figures of the previous year have been re-grouped wherever necessary except for the accounting and disclosure, as applicable,of the stock of physicians� samples referred to in note 19 (a) above.
Schedu les
44
2 2 I n fo rma t ion requ i red as per Pa rt IV o f Schedu le V I to the Compan ies A c t , 1956.Balance Sheet Abstract and Company�s General Business Profile
Registration DetailsRegistration No. 8 3 1 1State Code 1 1Balance Sheet Date 30-11-99
Capital raised during the year(Amount in Rs. Thousands)Public Issue NILRights Issue NILBonus Issue NILPrivate Placement NIL
Position of Mobilisation and Deployment of Funds(Amount in Rs. Thousands)Total Liabilities 1852938Total Assets 1852938
Sources of FundsPaid-up Capital 117219Reserves and Surplus 954127Secured Loans NILUnsecured Loans 8 6
Application of FundsNet Fixed Assets 350224Investments 3 2 4 3 6Net Current Assets 664877Misc. Expenditure 2 3 8 9 5Accumulated Losses �
Performance of Company (Amount in Rs. Thousands)Turnover(incl. Other Income Rs. 77729 thousands) 3378514Total Expenditure 2856220Profit Before Tax 522294Profit After Tax 309284Earnings per Share in Rs. 2 6 . 3 8Dividend Rate % 5 0Generic Names of Three PrincipalProducts/Services of Company (as per monetary terms)
Item Code No. 30044005(ITC Code)Product Description Syrup based on codeine phosphateItem Code No. 30042002(ITC Code)Product Description Tetracycline of derivates in capsules, injections, ointments, etc.Item Code No. 30049011(ITC Code)Product Description Other anti-inflammatory (non-steroid) formulations
Schedu les
Signatures to Schedules 1 to 21which form an integral part of Accounts
R.A. SHAH ChairmanIAN R. YOUNG Managing DirectorA.B. THAKKAR }P. SHAH } DirectorsK. HANDA }B. BHATTACHARYA }B.M. GAGRAT (Dr.) }
Mumbai, January 29, 2000 A. ANJENEYAN Secretary
45
...50...50...50...50...50
Statement Pursuant toSection 212 of the Companies Act , 1956
RE : DUCHEM LABORATORIES L IM ITED
Pfizer Limited held the entire paid-up Share Capital of Rs. 324 lakhs in Duchem Laboratories Limited as at 30th November, 1999.
Duchem Laboratories Limited has made a net profit of Rs. 20.61 lakhs for the year ended 30th November, 1999. Adding thereto,
the profit of Rs. 1.89 lakhs brought forward from previous years, the total profit of Rs. 22.50 lakhs has been carried forward
in the books of Duchem Laboratories Limited.
Pfizer Limited�s investment in the shares of Duchem Laboratories Limited as at 30th November, 1999 is carried at cost in the
books of Pfizer Limited.
R.A. SHAH Chairman
IAN R. YOUNG Managing Director
A.B. THAKKAR }
P. SHAH }
K. HANDA } Directors
B. BHATTACHARYA }
B.M. GAGRAT (Dr.) }
A. ANJENEYAN Secretary
Mumbai, January 29, 2000
46
AUDITORS� REPORT
We have examined the attached Cash Flow Statement of Pfizer Limited for the year ended 30th November, 1999. The statement has beenprepared by the Company in accordance with the requirements of the listing agreement with the stock exchanges and is based on andderived from the accounts of the Company for the years ended 30th November, 1999 and 30th November, 1998 audited by us underthe Companies Act, 1956.
For A.F. Ferguson & Co.Chartered Accountants
M.S. DHARMADIKARIMumbai, January 31, 2000 Partner
Rupees in Lakhs Rupees in Lakhs
November 1999 November 1998
P A R T I C U L A R S Amount Amount
A Cash flow from Operating Activities : -
Net profit before tax and extraordinary items 5,222.94 1,887.00
Adjustments for
Depreciation (Including additional depreciation
on assets in Ankleshwar Plant Rs.167.68 Lakhs Nov 98 -
Rs.447.06 Lakhs - refer - note 14(a) of the notes to the Balance Sheet ) 767.82 967.18
Unrealised Foreign Exchange Loss / (Gain) 6.90 (1.75)
Investment Income (16.24) (4.93)
(Profit)/ Loss on fixed assets sold / discarded (30.50) (4.12)
(Profit)/ Loss on Investments sold 0.59 �
Deferred Revenue Expenditure 514.00 (17.28)
Interest Expenses 54.50 210.99
Operating profit before working capital changes 6,520.01 3,037.09
Adjustments for
Trade and other receivables (1,259.21) 778.52
Inventories (468.48) (732.08)
Trade and other payables 29.99 1,590.97
Provisions ( Excluding Proposed Dividend,Tax on distributed profits,
Income Tax Provision and Deferred Tax ) (468.05) 586.22
Cash generated from operations 4,354.26 5,260.72
Interest paid (49.25) (199.14)
Direct taxes paid (Net) (1,608.41) (1,361.30)
Net cash from operating activities (A) 2,696.60 3,700.28
B Cash flow from Investing Activities : -
Purchase of fixed assets (599.47) (762.71)
Purchase of Investments (Net) (1,025.00) (22.80)
Sale of Investments (Net) 45.38 �
Sale of fixed assets 50.77 4.16
Interest Received 9.55 2.29
Dividend Received 0.04 2.64
Net cash from / ( used ) in investing activities (B) (1,518.73) (776.42)
Cash Flow Statement
47
...50...50...50...50...50
C Cash flow from financing activities :-
Proceeds/( Repayment ) from/ of borrowings (Net) (0.40) (2,001.03)
Dividend paid ( Including Tax on distributed profits
Rs.51.57 Lakhs, Nov 98- Rs.35.16 Lakhs) (516.62) (410.90)
Net cash used in financing activities (C) (517.02) (2,411.93)
Net Increase/ (Decrease) in cash & cash equivalents (A)+(B)+(C) 660.85 511.93
Opening Cash and Cash Equivalents (Note 1) 664.10 152.17
Closing Cash and Cash Equivalents (Note 1) 1,324.95 664.10
660.85 511.93
Notes :
1. Cash and Cash Equivalents include :
Cash on Hand 2.74 1.30
With Scheduled Banks
On Current Accounts (including accounts with overdraft facility) 953.83 204.50
On Margin Money Accounts 17.33 3.48
On Time Deposit Accounts 282.12 487.51
Cheques on hand 71.55 123.57
Unrealised translation gain on foreign currency cash & cash equivalents (2.62) �
Bank Overdraft � (156.26)
1,324.95 664.10
2. The figures of the previous year have been regrouped wherever necessary
Per our Report attached R A Shah Chairman
Ian R Young Managing Director
For A.F. FERGUSON & CO. A B Thakkar }
Chartered Accountants P. Shah }
K Handa } Directors
B Bhattacharya }
M.S. Dharmadhikari B M Gagrat (Dr) }
(Partner) A Anjeneyan Secretary
Mumbai, January 31, 2000 Mumbai, January 29, 2000
Rupees in Lakhs Rupees in Lakhs
November 1999 November 1998
P A R T I C U L A R S Amount Amount
Cash Flow Statement Contd/-
48
Duchem Laboratories LimitedA n nual Accounts
49
Accounts of the SubsidiaryDuchem Laboratories Limited
Directors� Report
To t he Member s
Your Directors present this 41st Annual Report together with the audited accounts of the Company for the year ended
November 30, 1999.
F inanc i a l Resu l t s Rupees in Lakhs
Yea r ended Year ended
30 th November, 1 999 30th November, 1998
Profit for the year amounted to 7 0 6
Less: Tax provisions ( 4 9 ) (5)
Profit After Tax 2 1 1
After adjusting thereto the balance of Profitbrought from prior years 2 1
The Profit & Loss Account shows a balance Profitwhich has been carried forward to the next year 2 3 2
Review of Operations:
The turnover of the Company for the year under review declined to
108 Crores as compared to Rs. 118 Crores for the previous financial
year. The financial results of the Company have been negatively
impacted due to the adverse price fixation orders. This negative impact
is expected to continue into the current financial year.
The Company entered into a Business Transfer Agreement on 29th
October, 1999 thereby concluding the sale of Howmedica
operations in India to Stryker India Private Ltd. For details refer
note 8 to the Notes to the Accounts.
Directors:
In accordance with the Articles of Association of the Company,
Mr. A.K. Nehru and Mr. K Handa, Directors will retire by rotation
at the forthcoming Annual General Meeting and being eligible
offer themselves for re-appointment.
During the year, Dr. B.M. Gagrat was appointed as an Additional
Director. Confirmation of appointment of Dr. B.M. Gagrat as a
Director, retiring by rotation, will be taken up before the members
at the General Meeting.
C o n s e rv a t i o n o f E n e r gy, Te c h n o l og y
Absorption and foreign exchange earnings
and outgo:
Since the operations of the Company is restricted to trading , the
requirement of Section 217 (1)(e) of the Companies Act, 1956
read with the Companies (Disclosure of Particulars in the Report
of the Board of Directors) Rules, 1988 in respect of Conservation
of Energy & Technology Absorption are not applicable.
The foreign exchange earnings during the year were Rs. 359.99
lakhs as against the outflow of Rs. 417.39 lakhs.
Auditors:
M/s, A. F. Ferguson & Co. Auditors, will retire at the conclusion of the
forthcoming Annual General Meeting. They have given their consent
to act as the Company�s Auditors for the current year, if appointed.
On behalf of the Board Directors
K. HANDA B. BHATTACHARYAD i r e c t o r D i r e c t o r
Mumbai , 31st Januar y, 2000
50
We have audited the attached Balance Sheet of Duchem Labo
ratories Limited, as at 30th November, 1999 together with the
Profit and Loss Account of the Company for the year ended on
that date annexed thereto.
We report as follows :
1 As required by the Manufacturing and Other Companies
(Auditor�s report) Order, 1988 issued by the Company
Law Board in terms of Section 227(4A) of the Companies
Act, 1956, we annex hereto a statement on the matters
specified in paragraphs 4 and 5 of the said Order on the
basis of the information and explanations received by us.
2 Further to our comments in the Annexure referred to in
paragraph 1 above :
(a) we have obtained all the information and explanations
which to the best of our knowledge and belief, were
necessary for the purposes of the 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 and Profit and Loss account dealt
with by this report are in agreement with the books
of account;
(d) in our opinion, the Profit and Loss account and Balance
Sheet comply with the accounting standards referred
to in sub-section (3C) of section 211 of the Companies
Act, 1956;
(e) in our opinion and to the best of our information
and according to the explanations given to us, the
said accounts give the information required by the
Companies Act, 1956 in the manner so required
and give a true and fair view -
(i) in the case of the Balance Sheet, of the state of affairs
of the Company as at 30th November, 1999,
and
(ii) in the case of the Profit and Loss account, of the profit
of the Company for the year ended on that date.
For A.F. FERGUSON & CO.
Chartered Accountants
M.S. DHARMADHIKARI
Mumbai,
January 31, 2000 (Partner)
ANNEXURE TO THE AUDITORS� REPORT
(Referred to in Paragraph 1 of the Report of even date of the
Auditors to the Members of Duchem Laboratories Limited on
the accounts for the year ended 30th November, 1999).
1 The Company did not have any fixed assets at any time
during the year. Hence, the question of maintaining proper
records including quantitative details and situation of fixed
assets and their physical verification does not arise.
2 For the reason given in paragraph 1 above, the question of
revaluation of fixed assets does not arise.
3 The stocks of finished goods have been physically verified at
reasonable intervals during the year.
4 In our opinion the procedures of physical verification of
stocks followed by the management are reasonable and
generally adequate in relation to the size of the Company
and the nature of its business.
5 The discrepancies noted by the management on such
physical verification as compared to book records, were
not material and the same have been properly dealt with in
the books of account.
6 On the basis of our examination of the stocks, the valuation
of the stocks is fair and proper, in accordance with the
normally accepted accounting principles and is on the same
basis as in the preceding year.
7 The Company has taken loans only from its holding company
during the year and the rate of interest and other terms
and conditions of the loans are not prima facie prejudicial
to the interest of the Company.
8 The Company has not granted any loans, secured or
unsecured to any company, firm or other parties listed in
the reg ister mainta ined under Sect ion 301 of the
Companies Act, 1956 and/or to the companies under the
same management as defined under sub-section (1B) of
Section 370 of the Companies Act, 1956.
9 The Company has given advances to suppliers in the
normal course of business which are adjusted against
amounts due to them for supplies made. No other loans or
advances in the nature of loans have been given by the
Company. Therefore, the question of repayment of the
principal amount and the payment of interest does not
arise.
10 In our opinion and according to the information and
explanations given to us, there are generally adequate
Auditors� ReportReport of the Auditors to the Members of Duchem Laboratories Limited
51
internal control procedures commensurate with the size
of the Company and the nature of its business for the
purchases of goods and surgical instruments and for the
sale of goods. There were no purchases of stores, raw
materials including components, plant and machinery,
equipment or other assets during the year.
11 As explained to us, there are no purchases of goods and
materials from or sale of goods, materials and services to
the companies, firms or other parties listed in the register
maintained under Section 301 of the Companies Act, 1956.
12 We have been informed that the Company did not have
any manufacturing activity during the year and hence the
question of determination of unserviceable or damaged
stores, raw materials or finished goods does not arise.
13 The Company has not accepted any deposits from the public
upto 30th November, 1999 to which the provisions of
Section 58A of the Companies Act, 1956 and the rules
made thereunder would apply.
14 As stated in paragraph 12 above, we have been informed
that the Company did not have any manufacturing activity
during the year, and hence the question of maintenance of
records for the sale and disposal of realisable by-products
and scrap does not arise.
15 In our opinion the Company has an internal audit system
commensurate with its size and nature of its business.
16 As explained to us, the Central Government has not
prescribed the maintenance of cost records under
Section 209(1)(d) of the Companies Act, 1956 by the
Company.
17 As explained to us, the Company did not have any employees
at any time during the year, the personnel cost incurred
representing reimbursements to the Holding Company
Pfizer Limited for employees deputed to the Company.
Hence, the question of depositing Provident Fund dues and
Employees� State Insurance dues with the appropriate
authorities does not arise.
18 As explained to us, there are no undisputed amounts payable
in respect of income tax, wealth tax, sales tax, customs duty
and excise duty which were outstanding as at 30th
November, 1999, for a period of more than six months
from the date they became payable.
19 Based on our examination of the books of account of the
Company in accordance with the generally accepted
auditing principles and the information and explanations
given to us, no personal expenses have been charged to the
revenue account.
20 As explained to us, the provisions of item (XX) of clause (A)
of paragraph 4 of the aforesaid order (relating to Sick
Industrial Companies) are not applicable since this Company
is not an industrial Company.
21 As explained to us, in respect of the trading activities of the
Company, damaged goods have been determined and
adequate provision has been made for the loss arising on
the items determined.
For A.F. FERGUSON & CO.
Chartered Accountants
M.S . DHARMADHIKARI
( P a r t n e r )
Mumbai, January 31, 2000
52
Per our Report Attached
For A. F. FERGUSON & CO. KEWAL HANDA )Chartered Accountants B. BHATTACHARYA ) Directors
B. M. GAGRAT (Dr.) )
M.G. SUBRAMANIAM SecretaryM.S. DHARMADHIKARI(Partner)
Mumbai, January 31, 2000 Mumbai, January 28, 2000
Balance Sheetas at 30th November,1999
Rupees in Lakhs Rupees in Lakhs
As at As atSchedule 30th Nov. 30th Nov.
Ref. 1 9 9 9 1998SOURCES OF FUNDS
Shareholders � FundsShare Capital 1 324 .00 324.00Reserves and Surplus 2 22 .73 2.12
3 4 6 . 7 3 326.12
LOAN FUNDSSecured Loans 3 374.21 539.11Unsecured Loans 4 450.68 1,236.37
TOTAL 1 , 1 7 1 . 6 2 2,101.60
APPLICATION OF FUNDSSurg ica l Instruments - 283.32
(Net of Amortisation)
Long-Term Investment in 0 . 7 7 0.77Government Secur i t ies( U n q u o t e d )
Current Assets , Loans andA d v a n c e s
Inventories 5 1 ,910 .94 1,748.01Sundry Debtors 6 9 2 1 . 7 5 902.74Cash and Bank Balances 7 95.85 6.38Loans and Advances 8 362 .45 336.19
3 , 2 9 0 . 9 9 2,993.32
Current L iab i l i t ies andP r o v i s i o n s
Current Liabilities 9A ( 2 , 0 9 0 . 5 2 ) (1,175.81)Provisions 9B (29 .62) -
Net Current Assets ( 2 , 1 2 0 . 1 4 ) (1,175.81)1 , 1 7 0 . 8 5 1,817.51
TOTAL 1 , 1 7 1 . 6 2 2,101.60
Notes to the Accounts 15
53
Per our Report attached
For A. F. FERGUSON & CO. KEWAL HANDA }Chartered Accountants B. BHATTACHARYA } Directors
B. M. GAGRAT (Dr.) }
M. G. SUBRAMANIAM Secretary
M.S. DHARMADHIKARI(Partner)
Mumbai, January 31, 2000 Mumbai, January 28, 2000
P rofit and Loss Accountfor the Year Ended 30th November, 1999
Rupees in Lakhs Rupees in Lakhs
Year Ended Year EndedSchedule 30th Nov. 30th Nov.
� Ref. 1 9 9 9 1998
I N C O M ESales 1 0 7 9 7 . 6 7 11799.30Miscellaneous Income 10 3 2 6 . 8 8 18.95
1 1 1 2 4 . 5 5 11818.25
Increase/(Decrease) in stocks ofFinished Goods 11 3 3 0 . 2 2 (938.00)
1 1 4 5 4 . 7 7 10880.25
E X P E N D I T U R EPurchases 9 7 1 5 . 7 3 9193.62Sales tax 7 3 9 . 6 8 788.00Interest Expense (Other than onFixed Period Loans) 2 5 2 . 1 1 258.19Commission Expenses 1 2 8 . 3 6 142.47Personnel Costs 12 1 9 . 6 9 24.28Other expenses 13 5 2 9 . 7 6 468.09
1 1 3 8 5 . 3 3 10874.65
PROFIT BEFORE TAXATION 6 9 . 4 4 5.60Taxation 14 4 8 . 8 3 4.73
PROFIT AFTER TAXATION 2 0 . 6 1 0.87Balance of Profit/(Loss) From Prior Years 1 . 8 9 1.02
PROFIT CARRIED TO BALANCE SHEET 2 2 . 5 0 1.89
Notes to the Accounts 15
54
SchedulesRupees in Lakhs Rupees in Lakhs
Nov. 1999 Nov. 1998
SCHEDULE 1SHARE CAPITAL
A u t h o r i s e d4,76,000 Equity Shares of Rs. 100 each 4 7 6 . 0 0 476.0024,000 Nine per cent non-cumulativeRedeemable Preference shares of Rs. 100 each 2 4 . 0 0 24.00
TOTAL 5 0 0 . 0 0 500.00
I ssued, Subscr ibed and Pa id-up3,24,000 (November 1998 - 3,00,000) Equity Shares 3 2 4 . 0 0 300.00of Rs. 100 each fully paid upNil (November 1998 - 24,000) Nine per cent non-cumulativeRedeemable Preference shares of Rs. 100 each fully paid up(Redeemable at 30 days notice, after complying with Section80(1)(b) of the Companies Act, 1956) - 24.00
TOTAL 3 2 4 . 0 0 324.00(All the above shares are held by the Holding Company - Pfizer Limited and its nominee)
SCHEDULE 2 RESERVES AND SURPLUSGenera l Reserve
Per last Balance Sheet 0.23 0.23
Prof i t and Loss AccountBalance as per account 2 2 . 5 0 1.89
TOTAL 2 2 . 7 3 2.12
SCHEDULE 3 SECURED LOANSBank overdraft - secured by hypothecation of all the moveableassets such as stock-in-trade wherever situated both presentand future and of all the book debts, other receivables andbills both present and future and guaranteed by the HoldingCompany, Pfizer Limited 3 7 4 . 2 1 539.11
TOTAL 3 7 4 . 2 1 539.11
SCHEDULE 4 UNSECURED LOANS (Shor t Term)Loans from Holding company - Pfizer Limited. 4 4 7 . 6 6 1226.85Current Account with a Scheduled Bank 3 . 0 2 9.52- overdrawn balance per books
TOTAL 4 5 0 . 6 8 1236.37
SCHEDULE 5 INVENTORIESPhysicians� Samples 1 8 . 3 8 -Stock-in-Trade Finished Goods 1 8 9 2 . 5 6 1748.01
1 9 1 0 . 9 4 1748.01SCHEDULE 6 SUNDRY DEBTORS
(Unsecured - considered good except where otherwise stated)(Considered doubtful Rs. 121.87 lakhs, Nov 1998 : Rs. 101.53 lakhs)Debts outstanding for a period exceeding six months 1 3 2 . 8 7 164.62Other Debts 9 1 0 . 7 5 839.65
1 0 4 3 . 6 2 1004.27Provision for doubtful debts ( 1 2 1 . 8 7 ) (101.53)
TOTAL 9 2 1 . 7 5 902.74
55
Schedules
Rupees in Lakhs Rupees in Lakhs
Nov. 1999 Nov. 1998
SCHEDULE 7 CASH AND BANK BALANCES
With a Scheduled Bank
On Current Account 6 9 . 4 2 6.38
Cheques on hand 2 6 . 4 3 -
TOTAL 9 5 . 8 5 6.38
SCHEDULE 8 LOANS AND ADVANCES
(Unsecured - considered good except where otherwise stated)
Advances recoverable in cash or in kind or for value
to be received:
Considered good 311.80 286.35
Considered doubtful 9.68 -
3 2 1 . 4 8 286.35
Provision for doubtful advances ( 9 . 6 8 ) -
3 1 1 . 8 0 286.35
Income-Tax Recoverable (Net) - 28.98
Deferred Tax Asset (Net) 50.65 20.86
TOTAL 3 6 2 . 4 5 336.19
SCHEDULE 9A CURRENT LIABILITIES
Sundry Creditors
Due to Small Scale Industrial Undertaking 1 2 1 5 . 9 3 501.78
Others 2 6 8 . 8 8 156.73
Due to the Holding Company - Pfizer Limited 5 2 0 . 8 2 447.11
Interest accrued but not due on loans/security deposits 7 . 1 4 5.94
Security Deposits 7 7 . 7 5 64.25
TOTAL 2 0 9 0 . 5 2 1175.81
SCHEDULE 9B PROVISIONS
Income Tax Provisions (Net of Payments) 2 9 . 6 2 -
2 9 . 6 2 -
SCHEDULE 10 MISCELLANEOUS INCOME
Transit Claims 2 . 2 1 14.05
Interest on delayed payments 2 . 4 6 4.30
Interest on Fixed Deposits with a bank 0 . 0 1 0.40
(Tax Deducted at Source Rs. Nil, Nov 1998 - Rs. 0.07 lakhs)
Interest on Income Tax Refunds 2 . 6 1 -
Interest Others 1 . 6 6 -
Credit balance written back since no longer payable 2 9 . 9 4 -
Reimbursement of cost of Surgical Instruments (Refer Note 8) 2 8 7 . 9 9 -
Others - 0.20
TOTAL 3 2 6 . 8 8 18.95
56
SchedulesRupees in Lakhs Rupees in Lakhs
Nov. 1999 Nov. 1998
SCHEDULE 11 INCREASE/(DECREASE) IN STOCKS OF
FINISHED GOODS
Stocks at commencement 1 7 4 8 . 0 1 2686.01
Less : Stocks transferred on sale ofHowmedica Business (137.25) -
Less : Reclassification of Stock of Physicians� Samples ( 4 8 . 4 2 ) -
1562.34 2686.01
Stocks at Close 1 8 9 2 . 5 6 1748.01
INCREASE/(DECREASE) 3 3 0 . 2 2 (938.00)
SCHEDULE 12 PERSONNEL COSTSPayroll and related costs reimbursed to the Holding CompanyPfizer Limited for employees deputed to the CompanySalaries , Wages and Bonus 15.65 19.80Contribution to Gratuity Fund 0.19 0.37Contribution to Provident and Other Funds 1 . 0 2 1.29Staff Welfare Expenses 2.83 2.82
TOTAL 1 9 . 6 9 24.28
SCHEDULE 13 OTHER EXPENSESTravelling (including boarding, lodging,
conveyance and other expenses ) 1 1 . 7 1 27.00
Insurance 1 5 . 0 6 12.89
Rates and Taxes 3 . 7 6 4.16
Rent 1 0 . 2 0 12.62
Equipment Rentals 1 . 6 2 13.52Freight, Forwarding and Transport 1 3 0 . 4 0 107.00Bad Debts 0 . 8 2 -
Provision for Bad and Doubtful Debts/Advances 4 2 . 8 7 57.71
Exchange Loss (net) 0 . 3 5 42.99
Amortisation of Surgical Instruments 7 1 . 5 3 56.30
Advertisement and Promotion 3 . 2 9 11.46
Bank Charges 6 1 . 5 1 48.29
Accounting and Professional Fees 1 7 . 3 0 7.52
Postage, Telephone and Fax 2 5 . 6 6 22.48
Loss on sale of Howmedica business ( Refer Note 8) 6 5 . 1 4 -
Miscellaneous Expenses 6 8 . 5 4 44.15
TOTAL 5 2 9 . 7 6 468.09
SCHEDULE 14 TAXATIONProvision for TaxationIncome-tax payable 7 8 . 6 2 14.76Tax effect on timing differencere : amounts charged in these accounts
On provision for Bad Debts/Advances (15 .11) (20.20)
On amortisation of surgical instruments ( 1 4 . 6 8 ) 10.17
( 2 9 . 7 9 ) (10.03)
TOTAL 4 8 . 8 3 4.73
57
Schedules
SCHEDULE 15 NOTES TO THE ACCOUNTS
1 Sign i f icant Account ing Pol ic ies
Bas is o f Account ing
The financial statements are prepared under historical cost convention on an accrual basis and are in accordance with the
requirements of the Companies Act, 1956.
Foreign Currency Transact ions
Transactions in foreign exchange which are covered by forward contracts are accounted for at the contracted rate, the difference
between the forward rate and the exchange rate at date of transaction being recognised in the Profit and Loss Account over the
life of the contract. Transactions other than those covered by forward contracts, are recorded at pre-determined standard
exchange rates which are reviewed periodically. Gains and losses arising on account of periodic revisions of such standard
exchange rates and also on realisation are accounted for accordingly. Monetary assets and liabilities in foreign currency which
are outstanding as at the year end and not covered by forward contracts are translated at the year end market exchange rate.
Gains and losses arising on account of such revision are reflected in the profit and loss account.
I n v e n t o r i e s
Inventories are valued at lower of cost and net realisable value, except stock of Physicians� samples which is valued at cost. Cost
includes purchase price and other related expenses.
Surg ica l Instruments
Surgical Instruments are not meant for sale but are used for the promotion of sale of Hospital Products and are valued at cost
which includes purchase price and other related expenses. These instruments are amortised over a period of five years, being
their estimated life.
Revenue Recogni t ion
The Company recognises sale at the point of despatch of goods to the customers. Sales are net of trade discounts and inclusive
of sales tax where applicable.
2 Cont ingent L iab i l i ty
(i) In respect of the guarantee given to the bank on behalf of a third party Rs. 17.82 lakhs (Nov 1998 - Rs. 17.82 lakhs).
(ii) In respect of sales tax matters pending appeal Rs. Nil (Nov 1998 - Rs. 1.72 lakhs).
58
Schedules
3 . In format ion required by Paragraphs 3 and 4 of Part I I o f Schedule VI to the Companies Act , 1956.
(a) Production, Sales and Stocks
STOCKS AT STOCKS
COMMENCEMENT PURCHASES SALES AT CLOSE
Class of goods Unit of Quant i ty Rupees Quant i ty Rupees Quant i ty Rupees Quant i ty Rupees
Measure in lakhs in Lakhs in lakhs in lakhs
T R A D I N G
A C T I V I T I E S
Tablets and Capsules No. in
Millions 122.44 984.24 880.31 8,725.20 913.64 8,701.91 89.11 1,645.59
(236.44) (1,730.68) (818.85) (7,100.40) (906.61) (8,602.52) (122.44) (984.24)
Liquids Litres 106,978.86 117.53 559,742.10 639.96 5 6 0 , 3 2 6 . 7 4 6 8 6 . 9 6 8 0 , 9 7 5 . 2 2 9 1 . 8 9
(62 ,580 .36 ) (64 .57 ) (645 ,507 .60 ) (713 .90 ) (561 ,593 .04 ) (671 .83 ) (106 ,978 .86 ) (117 .53 )
Injectables :
L iquid Parenterals Litres - - - - ( 1 . 4 0 ) ( 0 . 0 7 ) - -
( 0 . 00 ) ( 0 . 00 ) ( 0 . 00 ) ( 0 . 00 ) ( - 1 . 40 ) ( - 0 . 07 ) ( 0 . 00 ) ( 0 . 00 )
Powder Parenterals Kgs. 166 .13 293 .69 574 .32 235 .40 356 .76 311 .60 354 .66 155 .08
(365 .87) (650 .67) (570 .84) (1 ,031 .72) (729 .39) (1 ,340 .51) (166 .13) (293 .69)
Sol ids Kgs . - - - - ( 28 .12 ) ( 0 . 2 5 ) - -
(71 .25 ) ( 0 . 65 ) ( 0 . 00 ) ( 0 . 00 ) ( - 160 . 99 ) ( - 1 . 92 ) ( 0 . 00 ) ( 0 . 00 )
Ointments Kgs . - - - - ( 48 .65 ) ( 0 . 3 7 ) - -
(101 .82) ( 0 . 73 ) ( 0 . 00 ) ( 0 . 00 ) ( - 289 . 40 ) ( - 2 . 22 ) ( 0 . 00 ) ( 0 . 00 )
HOSPITAL PRODUCTS* 352 .55 #10 .42 374 .66 -
(238 .71) (347 .60) (439 .46) (352 .55)
SALES TAX 723 .23
(749 .19)
TOTAL 1,748 .01 9 ,610 .98 10 ,797 .67 1 ,892 .56
(2 ,686 .01 ) (9 ,193 .62 ) (11 ,799 .30 ) (1 ,748 .01 )
Notes :
1. Current year figures for Purchases and closing stock exclude Physicians� Sample packs.
2. # Purchases are net of stocks transferred on sale of Howmedica business.
3. * As the products are dissimilar in nature, the quantities of purchases, sales & stocks are not shown.
4. Stocks are after adjustment of write-offs.
5. Figures in brackets are in respect of the previous year.
59
SchedulesRupees in Lakhs Rupees in Lakhs
Nov. 1999 Nov. 1998
( b ) Va lue of Impor ts ca lcu lated on CIF bas is
Hospital Products including Surgical
Instruments 4 1 5 . 6 5 505.95
( Net of Purchase Returns Rs. 3.74
lakhs (Nov 1998 - Rs. 8.05 lakhs) )
( c ) Earn ings in fore ign exchange
Total Exports (on FOB basis) 7 2 . 0 0 81.17
(Earnings in Indian rupees)
Reimbursement of cost of Surgical Instruments 287.99 -
Others - 0.05
(d) Expenditure in Fore ign Currency
Travel Expenses 1 . 3 9 2.39
Others (Exchange Loss) 0 . 3 5 42.99
(e) Cost of purchases include cost of samples Rs.104.75 lakhs (Nov 1998 - Rs. 138.22 lakhs) and excludes stocks of implants of
Rs. 395.39 lakhs transferred on sale of Howedica Business referred to in note 8 below.
4 Auditors � Remunerat ion
For Audit 4 . 2 0 4.20
For Taxation Services 0.13 0.08
Reimbursement of out-of-pocket expenses 0 . 0 3 -
For Other Services 0 . 2 7 -
5 Interest expenses include Rs. 231.17 lakhs payable on loans from the Holding Company, Pfizer Limited (Nov 1998 -
Rs. 240.92 lakhs).
6 Aggregate purchases of Surgical Instruments during the year amount to Rs. 20.25 lakhs (Nov 1998 - Rs. 170.96 lakhs), of which
Rs. 9.52 lakhs (Nov 1998 - Rs. 17.85 lakhs) being the cost of Surgical Instruments sold has been included in the Profit and Loss
Account under purchases and Rs. 18.17 lakhs (Nov 1998 - Rs. 36.19 lakhs) being the sale value of these instruments has been
included in sales for the year.
7 Information regarding assets taken on lease :
Lease rentals Future rental
for the year obligations
Rupees in Lakhs Rupees in Lakhs
Nov 1999 Nov 1998 Nov 1999 Nov 1998
Medical Equipment - 11.29 - -
Vehicles 1 . 6 2 2.23 - 2 .95
TOTAL 1 . 6 2 13.52 - 2.95
60
Schedules
8 Sa le of Howmedica Bus iness
During the year, vide Business Transfer Agreement dated October 29, 1999, the Company has sold its Howmedica business, except
for certain liabilities, as a going concern to M/s. Stryker India Private Limited for a consideration of Rs. 826.63 lakhs. Accordingly,
surgical instruments, inventories and receivables have been taken over by M/s. Stryker India Private Limited as on October 22,
1999. The resulting loss of Rs. 65.14 lakhs on the sale of the business is shown under �Other Expenses� in Schedule 13. Further, the
Company has also received from M/s. Pfizer Inc., New York on behalf of its erstwhile fully owned subsidiary, Howmedica
International Inc., an amount of Rs. 287.99 lakhs by way of a part reimbursement of cost of surgical instruments, referred to above,
which is shown under �Miscellaneous Income� in Schedule 10.
9 The provision for taxation has been computed on the basis of the profits for the year ended 30th November, 1999 although the
ultimate tax liability for the assessment year 2000-2001 will be determined on the basis of the profits for the year ending 31st
March, 2000.
1 0 Until the previous year, stock of Physicians� samples of Rs. 48.42 lakhs was included in �Finished Goods� under �Inventories�
(Schedule 5). Pursuant to the Accounting Standard AS-2 on �Valuation of Inventories� becoming mandatory, the same has been
shown separately under �Inventories� (Schedule 5) in the current year. This has no impact on the profit for the year.
1 1 The names of the small scale industrial undertakings to whom the Company owes a sum exceeding Rs. 100,000 which is outstanding
for more than 30 days : -
Nov�1999 Nov�1998
Omni Protech Drugs Pvt. Ltd. Omni Protech Drugs Pvt. Ltd.
Medibios Laboratories Pvt. Ltd.
The above information and that given in Schedule 9A - �Current Liabilities� regarding small scale industrial undertakings has been
determined to the extent such parties have been identified on the basis of information available with the Company. This has been
relied upon by the auditors.
1 2 The figures of the previous year have been regrouped wherever necessary except for the accounting and disclosure, as applicable,
of the stock of Physicians� samples referred to in note 10 above.
61
Schedules
13 In format ion required as per Part IV of Schedule VI to the Companies Act , 1956.Balance Sheet Abstract and Company�s General Business Profile
Registration DetailsRegistration No. 11117State Code 11Balance Sheet Date 30-11-99
Capital raised during the year(Amount in Rs. Thousands)
Public Issue NILRights Issue NILBonus Issue NILPrivate Placement - Equity Shares issued to the Holding Company 24000Redemption of Preference Shares (24000)
Position of Mobilisation and Deployment of Funds(Amount in Rs. Thousands)
Total Liabilities 329176Total Assets 329176Sources of FundsPaid-up Capital 32400Reserves and Surplus 2273Secured Loans 37421Unsecured Loans 45068Application of FundsInvestments 77Net Current Assets 117085Misc. Expenditure NILAccumulated Losses NIL
Performance of Company (Amount in Rs. Thousands)
Turnover(incl. Other Income Rs. 32688 thousands) 1112455Total Expenditure 1105511Profit/(Loss) Before Tax 6944Profit/(Loss) After Tax 2061Earnings per Equity Share in Rs. 6.36Dividend Rate % NIL
Generic Names of Three Principal Products/ Services of Company(as per monetary terms)
Item Code No. 30045005 (ITC Code)Product Description B group vitamins (B-Complex) with Vitamin C
Item Code No. 30042012(ITC Code)Product Description Doxycycline TabletsItem Code No. 30042019(ITC Code)Product Description Other Antibiotics
Signatures to Schedules 1 to 15 which form an integral part of Accounts.
K. HANDA }B. BHATTACHARYA } DirectorsB.M. GAGRAT (Dr.) }
Mumbai, January 28, 2000 M.G. SUBRAMANIAM Secretary
62
Auditor�s ReportWe have examined the attached Cash Flow Statement of Duchem Laboratories Limited for the year ended 30th November, 1999. Thestatement is based on and derived from the accounts of the Company for the years ended 30th November, 1999 and 30th November,1998 audited by us under the Companies Act, 1956.
For A. F. Ferguson & Co,Chartered AccountantsM. S. DHARMADIKARI
Mumbai, January 31, 2000 Partner
Cash Flow StatementPARTICULARS Ruppes in Lakhs Ruppes in Lakhs
November 1999 November 1998A Cash f low from Operat ing Act iv i t ies : -
Net Profit before tax and extraordinary items 6 9 . 4 4 5.60Adjustments forLoss on Sale of Howmedica Business (refer note 8 of the Notes to the Balance Sheet) 6 5 . 1 4 -Reimbursement of cost of surgical instruments(refer note 8 of the Notes to the Balance Sheet) ( 2 8 7 . 9 9 ) -
Amortisation of Surgical Instruments 7 1 . 5 3 56.30
Unrealised Foreign Exchange Loss / (Gain) 0 . 2 3 3.15
Investment Income ( 0 . 0 1 ) (0.40)
Interest Expenses 2 5 2 . 1 1 258.19
Operat ing prof i t before working cap i ta l changes 1 7 0 . 4 5 322.84
Adjustments for
Surgical Instruments (Note 2) ( 1 0 . 7 4 ) (153.12)
Trade and other receivables (Note 2) ( 1 6 8 . 6 3 ) 233.12
Inventories (Note 2) ( 6 9 5 . 5 6 ) 938.00
Trade and other payables 9 1 3 . 2 8 (215.14)
Cash generated from operat ions 2 0 8 . 8 0 1,125.70
Interest paid ( 2 5 0 . 9 1 ) (266.20)
Direct taxes paid (Net) ( 2 0 . 0 2 ) 31.81
Net cash from operat ing act iv i tes (A) ( 6 2 . 1 3 ) 891.31
B Cash f low from Invest ing Act iv i t ies : -Purchase of Investments - (0.30)
Interest Received 0 . 0 1 0.40
Extra-ordinary and other items :
Sale proceeds received in respect of sale of Howmedica business (Net of Stamp Duty) 8 1 4 . 1 9 -
Reimbursement of cost of Surgical Instruments 2 8 7 . 9 9 -
Net cash from / (used) in invest ing act iv i t ies (B) 1 , 1 0 2 . 1 9 0.10
C Cash f low from f inanc ing act iv i t ies :
Proceeds/(Repayment) from/of borrowings (Net) ( 7 7 9 . 1 9 ) (1,252.47)
Fresh Issue of Capital 2 4 . 0 0 22.80
Redemption of Preference Shares ( 2 4 . 0 0 ) -
Net cash used in f inanc ing act iv i tes (C) ( 7 7 9 . 1 9 ) (1,229.67)
Net Increase/(Decrease) in cash & cash equiva lents (A) + (B) + (C) 2 6 0 . 8 7 (338.26)
Opening Cash and cash equivalents (Note 1) ( 5 4 2 . 2 5 ) (203.99)
Closing Cash and cash equivalents (Note 1) ( 2 8 1 . 3 8 ) (542.25)
2 6 0 . 8 7 (338.26)
63
Cash Flow Statement Contd/-PARTICULARS Rupees in Lakhs Rupees in Lakhs
November 1999 November 1998Notes : -
1. Cash and Cash Equivalents include :With schedules BanksOn current Account 6 9 . 4 2 6.38On current account (overdrawn balance per books) ( 3 . 0 2 ) (9.52)Cheques on hand 2 6 . 4 3 -Bank Overdraft ( 3 7 4 . 2 1 ) (539.11)
( 2 8 1 . 3 8 ) (542.25)
2. Figures for November 1999 are after adjutments arising on transfer of assets on sale of Howmedica business.
3. The figures of the previous year have been regrouped wherever necessary
Per our Report attached
For A. F. FERGUSON & CO. K. HandaChartered Accountants B. Bhattacharya Directors
B. M. Gagrat (Dr)
M. S. Dharmadhikari M.G. Subramaniam Secretary( P a r t n e r )Mumbai, January 31, 2000 Mumbai, January 28, 2000
64
P f i zer Limited : Ten Year F inanc ia l SummaryAmount in Rupees Lakhs
1991 1992 1993 1994 1995 1996 1997 1997# 1998 1999
SOURCES OF FUNDSSHAREHOLDERS� FUNDS
Share Capital .............................................................. 1172 1172 1172 1172 1172 1172 1172 1172 1172 1172Reserves and Surplus ................................................ 1789 1909 2291 3133 3653 4506 5925 6694 7104 9541
TOTAL SHAREHOLDERS� FUNDS ............ 2961 3081 3463 4305 4825 5678 7097 7866 8276 10713BORROWED FUNDS
Secured Loans ............................................................ 1377 2136 3220 2822 1995 2077 397 84 156 ----Unsecured Loans ....................................................... 763 677 1017 1341 3151 806 629 2002 1 1
TOTAL 5101 5894 7700 8468 9971 8561 8123 9952 8433 10714
APPLICATION OF FUNDSNet Fixed Assets ............................................................. 1283 1360 2791 3002 3240 3343 3085 3885 3678 3502Investments ........................................................................ 265 265 3 20 23 23 25 324 346 324Current Assets, Loans and Advances:
Investories ................................................................... 2997 3005 3940 4462 4439 3875 3596 3286 4018 4486Sundry Debtors .......................................................... 1143 1084 1572 1661 1699 1999 2155 2462 2317 3810Cash and Bank Balances ......................................... 30 32 69 207 197 81 49 234 820 2329
(including amounts held on depositaccounts with banks)
Others ........................................................................... 1246 1522 1168 1823 2741 2436 3234 4572 3923 3839Total Current Assets, Loans and Advances ..... 5416 5643 6749 8153 9076 8391 9034 10554 11078 14464
Less : Current Liabilities and Provisions Current Liabilities ....................................... 1409 1091 1561 2312 2186 2938 3484 3857 5375 5439 Provisions ...................................................... 454 283 282 395 182 925 1574 1690 2047 2376
Net Current Assets ......................................................... 3553 4269 4906 5446 6708 4528 3976 5007 3656 6649Misc. Expenditure (Deferred RevenueExpenditure - Voluntary Retirement Scheme) ....... ---- ---- ---- ---- ---- 667 1037 736 753 239
TOTAL NET ASSETS 5101 5894 7700 8468 9971 8561 8123 9952 8433 10714
I N C O M ESales ..................................................................................... 11884 13823 17093 21356 23978 25260 26290 14160 23343 28733Increase / (Decrease) in Stock of HospitalProducts, Finished Goods, Work in processand Own Manufactured Bulk Drugs .......................... (161) (109) 301 962 24 (402) (307) (119) 607 (216)
11723 13714 17394 22318 24002 24858 25983 14041 23950 28517Services ............................................................................... ---- ---- ---- ---- ---- 205 1105 2321 3036 4275Interest Income ................................................................ 62 119 46 86 57 88 111 204 279 276Dividend Income .............................................................. ---- 104 ---- ---- 3 3 2 3 3 ----Other Income ................................................................... 176 280 162 355 508 292 880 279 426 501
TOTAL 11961 14217 17602 22759 24570 25446 28081 16848 27694 33569
COSTS AND EXPENSESMaterials Consumed ....................................................... 4881 6520 6879 9180 9178 8159 8931 4293 7604 8614Personnel Costs .............................................................. 2242 2359 2746 3240 3179 4051 4333 3072 5712 4865Excise Duty ........................................................................ 1284 1498 2362 2772 3118 3195 3105 1618 2806 3414Sales Tax ............................................................................ 727 853 1090 1388 1564 1655 1627 933 1548 1968Depreciation .................................................................... 169 184 288 311 354 362 437 319 967 768Interest Expense ............................................................... 275 373 664 569 627 571 358 160 211 54Other Expenses ................................................................ 1742 2158 2608 3465 4663 5015 5768 4124 6504 8137Goodwill/Technical Know-How Written off ........ ---- ---- 153 66 ---- ---- ---- ---- ---- ----Royalty and Technical Know-How Fees ................. ---- ---- ---- 39 682 583 555 270 455 526
TOTAL COSTS AND EXPENSES 11320 13945 16790 21030 23365 23591 25114 14789 25807 28346
PROFIT BEFORE TAXATION ........................................... 641 272 812 1729 1205 1855 2967 2059 1887 5223TAXATION .............................................................................. 291 98 465 730 396 785 1067 681 629 2130PROFIT AFTER TAXATION .............................................. 350 174 347 999 809 1070 1900 1378 1258 3093Tax Provision as % of PBT ................................................. 45.4 36.0 57.2 42.2 32.9 42.3 36.0 33.1 33.3 40.8Net Profit as % of Sales ....................................................... 3.0 1.3 2.0 4.7 3.4 4.2 7.2 9.7 5.4 10.8Earning per share (Rs.) ........................................................ 2.98 1.48 2.96 8.52 6.90 9.13 16.21 11.76 10.73 26.39Equity Dividend per share (Rs.) ........................................ 2.00 1.00 2.00 3.00 1.50 3.00 4.00 3.00 4.00 5.00+Total Dividend Amount (Rs. in Lakhs) ........................... 234 117 234 352 176 352 469 352 469 586Book Value per share (Rs.) ................................................ 25.26 26.29 29.55 36.73 41.17 48.45 60.55 67.12 70.61 91.41
+ Proposed dividend for the year ended 30th November, 1999.# 8 months period ended 30th November 1997.