Annual Report

2012–13

Shasun Pharmaceuticals Limited

Forward Looking Statements

In this Annual Report we have disclosed forward-looking information to enable investors to comprehend our prospects and

take informed investment decisions. This report and other statements-written and oral-that we periodically make contain

forward-looking statements that set out anticipated results based on the management’s plans and assumptions. We have

tried wherever possible to identify such statements using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’,

‘intends’, ‘plans’, ‘believes’ and words of similar substance in connection with any discussion of future performance.

We cannot guarantee that these forward-looking statements will be realized, although we believe we have been prudent

in our assumptions. The achievement of results is subject to risks, uncertainties and even inaccurate assumptions. Should

known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results

could vary materially from those anticipated, estimated or projected. Readers should bear this in mind.

We undertake no obligation to publicly update any forward looking-statements, whether as a result of new information,

future events or otherwise.

Board of Directors

Mr R Kannan Chairman

Mr R Sundara Rajan Independent Director

Mr N Subramanian Independent Director

Dr Sunny Sharma Independent Director

Prof Indira J Parikh Independent Director

Mr S Abhaya Kumar Managing Director

Dr S Devendra Wholetime Director

Mr S Vimal Kumar Wholetime Director

Mr M Mohan Wholetime Director

Contents

Financial Highlights 1

Letter from Managing Mirector 2

Doing Our Bit in the Community 4

Over the Years 6

Directors’ report 8

Management Discussion and Analysis 14

Report on Corporate Governance 20

General Shareholder’s Information 26

Independent Auditors’ Report 34

Standalone Financial Statements 38

Consolidated Auditors’ Report 65

Consolidated Financial Statements 66

Research and Development Financials 91

Summary of Financial Information of

Subsidiary Companies 92

Notice of Annual General Meeting 93

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Who are we?

An award-winning pharma solutions provider that aims to be a preferred partner for drug substance and drug product development and supply.

A truly global company from India with a global asset base that melds the best of the East and the West.

A pharmaceutical contract organization with demonstrated capabilities of manufacturing and development at every scale across the whole drug cycle.

A research and technology driven innovator in biotechnology, nanotechnology, bulk substance and generic drug development and manufacturing.

A fully integrated drug lifecycle manager that meshes research, engineering solutions, process development, project management, and logistics to efficiently deliver products.

A brand presence in the area of health solutions and initiative.

We are Shasun.

An aw

research and techn

A fully integrated drudevelopment

A truly

A pharmaceut

five years consolidated financial highlights

Rs in Mn

Financials 2008-09 2009-10 2010-11 2011-12 2012-13

Sales 7,382.62 7,654.42 8,344.51 10,664.03 10,847.71

Profit Before Depreciation, Interest and Tax (822.77) 699.66 934.33 1,639.02 1,352.31

Interest 209.84 301.06 322.59 436.99 321.88

Depreciation 381.26 378.47 375.79 405.70 526.47

Profit Before Tax (1,413.87) 20.13 235.95 796.33 503.96

Profit After Tax (1,370.86) 37.67 266.24 1,005.67 530.36

Dividend Distributed on equity shares - 48.31 14.56 119.14 84.94

Dividend % (including proposed) - 50.00 15.00 120.00 75.00

Earnings per share before prior period items (Rs.) (28.37) 0.42 5.48 20.69 9.61

Share Capital 96.63 96.63 97.09 110.25 113.25

Reserves 967.08 1,076.46 742.07 2,084.68 2,607.59

Money received against share warrants - - - 28.13 -

Net worth 1,063.71 1,173.09 839.16 2,213.11 2,700.28

Gross Block 4,772.00 4,811.19 5,218.99 5,863.77 6,985.60

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Dear Shareholders,

At the very outset, I would thank you for being with us and

reposing your confidence on the management. We make

all possible efforts to meet the highest standards for our

products. Our focus is quality and we believe in delivering

nothing but the best.

Herein, I am pleased to write to you about your Company’s

performance for the financial year 2012–13. During Fiscal

13, your Company posted revenue of Rs.11030.52 Mn.

and Profit after Tax of Rs.530.36 Mn. We have started

the new fiscal with confidence and positivity. I do believe

that the decisions by management over the last year will

yield positive results in the coming year. We have made

impressive strides towards the branded generic space

and at the same time maintaining our momentum towards

manufacturing operations and technology development.

The idea behind the above strategy is to make your

Company’s presence felt across the pharmaceutical value

Letter from Managing Director

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chain and at the same time provide impetus to its growth. You will be glad to hear that we have made appreciable

headway in nano- and biotechnology areas. FY 13 has been a very challenging year for all of us. The economic

scenario is not cheerful and power cuts have posed problems. But please be assured that capital expenditure

plan is on track and your Company’s infrastructure development is well on target. You will be delighted to know

that your Company’s facilities in Vizag and Cuddalore will soon be ready to support the expansion of next growth

phase.

I am very happy to share with you that Shasun has the highest number of phase-3 molecules in the pipeline.

All this has the potential of being translated into far greater supplier opportunities for us in the near future. On the

regulatory side, we have received approvals from key regulatory agencies for our API and Formulations divisions

and have acquired accreditation from all majority agencies post their inspections.

The performance of the CRAMS division has been encouraging. We have signed agreement for about 5 products

with one of the top 3 generic players in the world. This augurs well for the business unit in FY14.

EHS (Environment, Health and Safety) play an integral role in your Company’s functioning. We are committed

to promoting the best EHS practices for wholesome and holistic development of your Company and its people.

Your Company has invested in reverse osmosis plants, multiple-effect evaporators, agitated thin film driers and

an activated carbon bed facility for fugitive emissions. Apart from this, the environment around your Company’s

factory is regularly monitored by MOEF-approved labs. The above expounds our commitment towards exemplary

EHS practices. Various audits by customers and consultants have also established Shasun’s EHS practice as

amongst the best in the industry in the whole of our country.

We take our corporate social responsibility seriously and have taken humble efforts to contribute to the

community we live in. We have partnered with Sankar Foundation Eye Hospital in Vizag, Andhra Pradesh, to roll

out awareness programmes, health camps, and have funded surgeries for the poor. SPSL in the UK has been

supporting apprenticeships through a new initiative and has partnered with the Northumberland County Council

to make this a success. The waste water management programmes have also been refurbished and the initiative

has succeeded in involving people from the community on an on-going basis.

The future looks exciting and your Company is all geared for value creation. I am confident and enthused as we

head towards our goal. I would like to place on record my sincere appreciation and thanks for the assistance and

cooperation received from the Banks during the year under review. My deepest thanks to each of you for your

continual support and confidence. Without you and the support of our customers, and suppliers, your Company

would not have been where it is today. Finally I would like to end by thanking our staffs for their commitment and

contribution towards achieving our business objectives.

As I conclude a quote of Frank Lloyd Wright comes to my head, “I know the price of success; dedication, hard work, and an unremitting devotion to the things you want to see happen.”

With warm regards,

S. Abhaya Kumar Managing Director

Chennai

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Doing Our Bit in the Community

Health

SPSL, Dudley, UK

witnessed participation of a cross-section of its

employees and wholehearted involvement of

the local community including political leaders

and dignitaries. As in the past, a fund-raiser

was organized by Shasun employees this year

too, where £6,700 was raised. The company

made matching contribution and the total amount

was set aside to help local families with differently-

abled children.

with funds during the event. These include the

Newcastle Freeman Hospital, Newcastle Infirmary

Kidney Funds, The Julie Kent Trust Fund, the

Macmillan Cancer Research, and Children Today.

SPL, INDIA

Shasun Dispensary

eye camp, cardiology camp, etc., for patients from

around 10 villages around Kalapet, Puducherry.

Sankar Foundation Eye Hospital, Vizag, AP

partnership with SHASUN conducted eye camps

in Pinnintipeta on the occasion of the 10th death

anniversary of Late Smt. Sundarbai. In these

camps, 350 patients were examined and 132

among them underwent surgeries. Also utilised this

camp to create awareness regarding eye diseases,

and focused on its prevention and management.

We also received local support from the Sri Satya

Sai Bhajan Mandali.

partnership with SHASUN also conducted five

Cataract Eye Screening Camps at Dibbapalem,

Menthipeta, Pinnintipeta, Pundi, and Thanam.

Manavaseva Dharma Samvardhani

Shasun also supported the Manavaseva Dharma

Samvardhani, a charitable trust, to promote social

consciousness in its initiatives.

Shasun Pharmaceuticals is in continuous lookout for new

ways to actively and fruitfully contribute resources towards

corporate social responsibility activities; its primary focus areas

being—Health, Education & Social Infrastructure, to enhance

the social and economic development of the community in

which it operates.

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Education

SPSL, UK

SPSL UK has been working relentlessly with the

Northumberland County Council to employ and

develop young adult apprentices in a variety of

administrative roles within the company. Three local

school graduates have been successfully employed as

administrative apprentices, while being provided with

training and development to enable them to achieve

the National Vocational Qualifications in Business

Administration or related subjects.

SPL, INDIA

Shasun has been actively contributing towards

advancement of science and technology, especially

Chemistry, in local colleges.

Social Infrastructure

a number of local initiatives in Cuddalore and

Puducherry, like providing financial assistance for

social infrastructure facilities, such as schools,

panchayats, community halls, hospitals and

temples for the benefit of community in which we

operate.

community at Periakalapet, to support around

2500 families, to provide with safe drinking water.

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Over the Years

1976 19921977 1986 1988 1990 1991

2000 20062001 2002 2003 2004 2005

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1993 19991994 1995 1996 1997 1998

2007 20132008 2009 2010 2011 2012

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Directors’ Report

Dear Shareowners,

The Directors take pleasure in presenting the Thirty Eighth Annual Report of your Company together with the

audited statement of accounts for the year ended March 31, 2013.

FINANCIAL RESULTS Rs. in Mn

Financial Results for the year ending Standalone Consolidated

31.03.2013 31.03.2012 31.03.2013 31.03.2012

Gross Revenue 7964.11 7768.73 11030.52 11073.23

Profit before interest, Depreciation and Tax 817.83 924.82 1352.31 1639.02

Profit before tax 236.34 372.73 503.96 796.33

Profit after tax 262.78 530.58 530.36 1005.67

Appropriated as follows

Dividend on Equity Shares 84.94 119.14 84.94 119.14

Tax on Dividend 14.43 19.33 14.43 19.33

Transfer to General Reserve 26.28 53.06 26.28 53.06

EPS (diluted) on the basis of Rs 2/- share 4.76 10.76 9.61 20.39

A detailed analysis of the operations of the Company has been provided in the management discussion and

analysis report, which forms a part of this annual report

1. Dividend

The Board of Directors of the Company are pleased to recommend a dividend of Rs. 1.50 per equity

share of Rs. 2.00 each for the financial year of 2012–13. This dividend, if approved at the ensuing AGM,

will be paid to those shareholders whose names appear on the register of members of the Company as on

August 2, 2013. The total outflow on account of dividend, including the tax on distributed profits, is Rs.

99.37 Mn (Rs. 138.47 Mn for the previous year)

2. Directors

In accordance with the Articles of Association of the Company, Mr. R. Kannan and Mr. N. Subramanian retire

by rotation and are eligible for reappointment.

The Board appointed Prof. Indira J Parikh as Additional Director on the Board of Directors of the Company

on August 2, 2012. She will hold this office till the next Annual General Meeting of the Company. Due notice

has been received from a member proposing her appointment. It is proposed to appoint her as Director of

the Company liable to retire by rotation. The resolution for the same has been included in the notice of the

Annual General Meeting.

3. Allotment of Equity Shares upon conversion of Warrants

During the year under review, based on your approval, the Company allotted 15,00,000 equity shares at a

price of Rs. 75 per share upon conversion of warrants on a preferential basis to promoter group and directors.

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4. Auditors

The Statutory auditors of the Company, M/s B.S.R. & Co., Chartered Accountants retire at the ensuing

Annual General Meeting and are eligible for re-appointment.

5. Cost Audit

Pursuant to Section 233B of the Companies Act, 1956, the Central Government has prescribed Cost Audit

of the Company. Subject to approval from the Central Government, the Board has appointed M/s. Geeyes

& Co., Cost Accountants as cost auditor of the Company for the financial year 2013–14. The Cost Audit

is under process and the Company will submit the cost audit report to the Central Government within the

prescribed time.

6. Listing arrangements

The company’s shares are listed in the BSE Ltd. and National Stock Exchange of India Ltd., and the annual

listing fee has been paid to these stock exchanges.

7. Subsidiaries

The company has five subsidiary companies as on March 31, 2013. The members may refer to the statement

under Section 212 of the Companies Act, 1956, and the information on the financials of the subsidiaries

appended to the above statement under Section 212 of the Companies Act, 1956, in the Annual Report for

further information on these subsidiaries.

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the

Balance Sheet, Profit and Loss Account, and other documents of the subsidiary companies are not being

attached with the Balance Sheet of the Company. The Company will make available the Annual Accounts of

the subsidiary companies and the related detailed information to any member of the Company who may be

interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open

for inspection at the Registered Office of the Company. The consolidated financial statements presented by

the Company include the financial results of its subsidiary companies in prescribed formats.

8. Environment, Health & Safety

Shasun has a team of experienced and competent resources in the management of Environment, Health

and Safety. EHS plays an integral part of the business. The EHS resource team is well structured catering

to Process safety, General & Occupational Health and Safety, Fire Safety, Compliance management and

ETP operations at the site level, managed by the Corporate EHS under the guidance of the Director - EHS.

The team invests proactively in process safety studies like Hazardous Area classification, Consequence

Analysis / Quantitative Risk Analysis PHA, What-if analysis, HAZOP and Work place Chemical Risk

Assessments.

Towards better EHS management and operational control, the Environmental Management System (EMS

ISO 14001:2004) and the BS OHSAS 18001:2007 are well integrated as Integrated Management system,

which is periodically audited for the adequacy and continual improvement. The recent award given by CII for

the EHS excellence & NSC award given for best Safety Practices stand testimony.

From the Environmental protection front, Shasun has taken many water recycling and reuse initiatives

through Advanced treatment technologies like Electrochemical oxidation and coagulation. Towards better

treatment efficiency and Wastes reduction, increased focus is given by implementing comprehensive

Source Segregation Scheme. The Hazardous waste disposed in time through TSDF. Solid waste

management has been improved through environment friendly recycling/reuse of wastes in collaboration

with reputed organizations for paper recycling, plastic waste recycling and E-waste recycling. As part

of Corporate Social Responsibility, the company has undertaken various activities in the field of health

care, education and social infrastructure development which is elaborated in the Corporate Social

Responsibility section.

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9. Corporate Governance and Management Discussion and Analysis

The Corporate Governance and Management Discussion and Analysis reports as set out in annexure hereto

form an integral part of this report. A certificate from the auditors of the Company certifying compliance

of the conditions of corporate governance as stipulated in Clause 49 of the listing agreement with stock

exchanges is also annexed to the report on Corporate Governance.

10. Personnel

The Directors wish to place on record their appreciation to the employees for their notable contributions to

the Company and for the co–operation extended to the management in maintaining harmonious industrial

relations at all the units.

11. Particulars of Employees

The Statement of Particulars of Employees, providing information as per Section 217(2A) of the Companies

Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, form a part of this report. However,

as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Annual Report excluding this

statement is being sent to all the members. Any member interested in obtaining a copy of this statement

may write to the Company Secretary at the Registered Office.

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

Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and

outgo as required under section 217(1)(e) of the Companies Act, 1956, read with the Companies (Particulars

of Employees) Rules, 1975, as amended up to date is annexed hereto and the same forms part of the report.

13. Directors’ Responsibility Statement

In terms of the provisions of section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:

a) That in preparation of the annual accounts, the applicable accounting standards have been followed and

that no material departure has been made from the same.

b) That they have selected such accounting policies and applied them consistently and made judgements

and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of

the company at the end of financial year and of the profit or loss of the company for that period.

c) That they have taken proper and sufficient care for the maintenance of adequate accounting records

in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the

company and for preventing and detecting fraud and other irregularities.

d) That they have prepared the annual accounts on a going concern basis.

14. Public Deposits

The company has not accepted any public deposits.

15. Acknowledgement

Your Directors would like to express their grateful appreciation for the assistance and co-operation received

from the Banks during the year under review. Your Directors also place on record their deep sense of

appreciation for the continued support of customers, suppliers and investors of the Company.

For and on behalf of Board of Directors

Place : Chennai S. Abhaya Kumar Dr. S. Devendra S. Vimal KumarDate : May 29, 2013 Managing Director Wholetime Director Wholetime Director

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ANNEXURE 1

Statement as per Section 217(1) (e) of the Companies Act 1956

  Year ended 31.03.2013

Year ended 31.03.2012

A. Power & Fuel Consumption  

Electricity

a. Purchased units in 000's 41,065 41,964

Total amount paid Rs in 000's 236,974 187,930

Rate per unit Rupees 5.77 4.48

b. Own generation by

Diesel Generator (Units) in 000's 11,327 7,159

Unit per Ltr. of Diesel Oil 3.42 3.63

Rate per unit Rupees 13.28 11.54

c. Windmills units purchased in 000's 8,275 3,999

Amount Adjusted Rs in 000's 46,985 14,772

Rate per unit Rupees 5.68 3.69

Others

Furnace Oil Kgs in 000's 574 4,706

Total Amount paid Rs in 000's 25,622 170,467

Rate per Kg Rupees 44.63 36.22

Fuel Briquettes Kgs in 000's 20,668 9,032

Total Amount Paid Rs in 000's 116,389 47,207

Rate Per Kg Rupees 5.63 5.23

B. Consumption per unit of Production  

Electricity purchased KWH/ton 4.80 6.47

Diesel Generator KWH/ton 1.32 1.10

Furnace Oil Kg/ton 0.07 0.73

Fuel Briquettes Kg/ton 2.41 1.39

ANNEXURE 2

Information under Section 217 (1) (E) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988.

Research and Development:

Active Pharma Ingredients

The research and development function at Shasun is involved in research and product development

activities and last year, both these activities saw a big thrust in terms of the number of projects, research

scientists & customers.

The research activity at Shasun Research Center (SRC) is focused towards chemistry process research for

preclinical & clinical molecules for customers, including some of the top pharmaceutical companies across

US, Europe & Japan. The center witnessed a healthy trend with a high rate of repeat orders and successfully

completed projects as well as bagging clinical supply projects integrated across the chemistry & formulation

value chain.

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The infrastructure at SRC including its aesthetic design and high-end instrumentation continues to impress

potential customers and is a key asset for the company for attracting future contract manufacturing

opportunities. Also the investments in recent years in cGMP & safety training & installations of related

infrastructure have helped the center to build a robust system of compliance and have a productive work

culture. This was also reflected in the successful inspection of its analytical facilities by the US FDA in an

audit conducted in December 2012.

The product development efforts at Shasun was also augmented last year with the allocation of additional

labs to this effort and a resulting increase in the number of products taken up for development. Some of the

key products completed lab-scale development during the year and are in the process of being scaled-up or

being validated at our plants. Key aspects of the product development such as cost effectiveness, patent

non-infringement, scaleability and time-to-market have been targeted during the R&D efforts to ensure

successful commercialization of the products.

As a result of the focused work on generic products, the company has also filed 9 process patents for

various products and this is expected to give the company a major edge in production & marketing of these

products.

Formulations

A state-of-art Research and Development centre, it is spread over 7500 square feet area with modern

corporate quality construction and located along with commercial manufacturing unit at Puducherry, India.

The R&D centre of excellence comprises, Formulation Research & Development, Analytical Research &

Development, Technology Transfer, IPR Division, Clinical Division and Project Management departments.

The core business model of Shasun R&D is to design and develop new formulation & Innovative formulations

(NDA) for Shasun and also for third party’s based on development contracts. Our service includes Advanced

manufacturing technologies for highly complex products, Platform technologies, Cost effective formulation

development and commercial manufacturing, Analytical Method Development & Validation, Patent protection

& IP clearance, Safety & Efficacy studies (Clinical, BA, BE studies), Dossier registration and Regulatory

support for post-approval changes.

Shasun customer base includes several top pharmaceutical multi-national companies as well as a large

number of emerging pharmaceutical companies. Our development teams are fully dedicated to their projects

and follow strict project management schedules to deliver products on time, and within budget.

Our state of the art laboratories have all the required equipment to develop formulations as well as analytical

methods for drug products. Equipment design from development laboratories to pilot plant and commercial

manufacturing areas is similar in make and design to facilitate seamless technology transfer of our processes.

Analytical Development Lab have the instruments like HPLC, UPLC, TOC Analyzer, UV, Atomic absorption

spectrometer, FTIR, Polarimeter, Dissolution tester with auto samplers, Stability Chambers (1000L) and

Walk-In stability chambers (18000L), etc.,

The Company is endowed with sufficient knowledge in formulation capabilities especially in the areas of

Sustained Release and Controlled Release Technologies, Erosion Controlled Oral drug delivery systems,

Enteric coating for Site Specific Delivery & Conventional release.

The R&D facility is well supported by an in-house Quality Management System to monitor processes and

documentation as per regulatory guidelines of various stringent countries like US, Canada, Brazil, Japan,

UK and other European countries.

EXPENDITURE ON RESEARCH AND DEVELOPMENT (Rs. Mn)

Year Ended March 31, 2013

Year Ended March 31, 2012

Capital 79.84 14.76

Recurring 243.83 101.46

Total 323.67 116.22

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ANNEXURE 3

INFORMATION ON FOREIGN EXCHANGE EARNINGS AND OUTGO IS GIVEN IN ITEM NOS. 31, 32 & 33 IN NOTES TO FINANCIAL STATEMENTS.

ANNEXURE 4

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES

Name of the Subsidiary Company / Step-down Subsidiary

Shasun Pharma Solutions Inc.

Shasun USA Inc.

SVADS Holdings SA

Shasun Life Science Pvt.

Ltd.

Shasun Pharma Solutions Ltd.

Financial Year of Subsidiary Company Ended on: March 31, 2013 March 31, 2013 March 31, 2013 March 31, 2013 March 31, 2013

Paid Up Capital of Subsidiary Company INR 18,414,529 INR 539,880 INR 435,063,320 INR 100,030 INR 412,677,047

Extent of Holding in Equity Share Capital 100 % 100 % 100 % 99.97 % 100 %

The net aggregate profits/(losses) of the subsidiary company so far as it concerns the members of Shasun Pharmaceuticals Limited

a. Dealt with in the accounts of Shasun Pharmaceuticals Limited amounted to

For the subsidiary Company’s financial year ended on March 31,2013

NIL NIL NIL NIL NIL

b. Not dealt with in the accounts of Shasun Pharmaceuticals Limited amounted to

i) For the subsidiary Company’s financial year ended on March 31,2013

INR (4,312,426) INR (53,042,488) INR (8,528,441) INR (5,618) INR 321,093,606

ii) For previous financial years of the subsidiary up to March 31, 2012

INR 456,097 INR (146,512,556) INR (2,988,459) INR (46,198) INR (138,109,561)

iii) Material changes between the end of financial year of the subsidiary and that of Holdings Company

No change No change No change No change No change

For and on behalf of Board of Directors

Place : Chennai S. Abhaya Kumar Dr. S. Devendra S. Vimal KumarDate : May 29, 2013 Managing Director Wholetime Director Wholetime Director

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Management Discussion and Analysis

Company Performance

Your company is cognizant of the various emerging trends in the global pharmaceutical landscape and has

taken a lot of initiatives to ensure that it is well positioned to leverage the opportunities that arise out of such

trends.

The following section discusses such initiatives on a divisional basis

API Business

On a consolidated basis, API and its intermediate business contributed close to 52% of the turnover of the

company. On a standalone basis, they contributed close to 73% of the total sales.

Your Company’s strategy with respect to this SBU is to enhance sales and profitability. This can be achieved

through the following measures:

Capacity enhancement of the existing products to meet the growing demand

Commercializing new products which are under development

New products development to improve pipeline of products

Process Improvement initiatives

Shasun’s current API portfolio consists of Ibuprofen, Ranitidine, Nizatidine, Gabapentin, Levetiracetan and

Cycloserine, amongst others.

The Company has filed 5 new DMFs and 2 ANDAs in the current financial year.

In this current financial year, the API SBU has achieved a sales revenue of Rs.5316.22 Mn.

Outlook for API Business

The company continues to enjoy significant traction in its core APIs.

New products introduction is major initiative in FY 14 to enhance the sales and profitability.

Currently, your Company is investing in new facilities to manufacture three new APIs, which are to be

launched in FY15. This will bring significant volume and value to your Company. The USDMFs filed by your

company has been triggered by various customers

This year your Company is investing in Vizag SEZ to create manufacturing capacities for API business

segment

While North America and Europe continue to be key markets for your Company, other markets such as Korea,

Japan, and Brazil have presented new opportunities thereby opening more avenues for your Company.

Contract Research and Manufacturing Services Business

Your Company has an active presence in CRAMS in both APIs and Formulations

API CRAMS includes

1. Shasun Pharma Solutions Limited, UK

2. CRAMS SBU in India

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Formulations CRAMS includes

Finished Dosages facility in Pondicherry caters to contract manufacturing and contract development of

finished dosages for Innovator, Emerging and Generic pharma companies.

Formulation research centre in Pondicherry provides support for development of new formulation products.

During FY13, CRAMS consolidated business registered the revenue of Rs 4,899 Mn, comprising 48% of the

total consolidated revenue of Shasun and registering a growth of 3% over previous year.

Shasun Pharma Solutions Limited, UK( SPSL)

Operations-SPSL

During FY13, SPSL has continued to focus on its core strengths of safety and quality compliance, continuous

improvement, and innovation.

Safety performance and compliance were maintained at an industry leading level. The year under review

saw the successful completion of several scheduled major hazard regulatory inspections on key risk control

systems with no major observations. In addition, our safety performance and commitment to ensuring

the safety of our employees has been reinforced through a number of initiatives. Working with the Health

and Safety Executive on a competency project engaging all employees and a waste minimization project

working closely with the UK Environmental Agency. REACH compliance was maintained and expert support

and advise continues to be provided to our customer base as part of our service offering.

Compliance with cGMP standards was acknowledged through customer visits and eighteen quality audits at

our facility. The Company continued its excellent performance with respect to quality performance indicators

with a Process right first time of 98%. The company has invested around GBP 3 Million at Dudley facility to

capacity and capability enhancement and to infrastructure upgrades.

Sales-SPSL

Market interest continues to be driven by our key strengths – technical expertise and capability, speed of

response, good facilities, our people and our reliability.

SPSL has a unique ability to handle both highly complex and hazardous projects. A world class hazard

evaluation capability which is fully integrated into our process development group and project management

process allows early understanding and appropriate measures to ensure safe execution. This approach is

seen as an advantage over our competitors by several of our customers.

SPSL UK has achieved sales GBP 35.23 Million and posted PAT of GBP 3.69 million. Focus on high

value added, technically challenging projects has enabled SPSL to return a good PAT performance, despite

pressure on sales.

In 2012, SPSL hosted ninety customer visits to the Dudley site, of which 50% were new and prospective

clients. We have also seen improvements in other key performance metrics including number of inquiries,

number of proposals and proposal closure rate, generating a number of good prospects for our future

pipeline.

Science & technology - SPSL

Over the past year we have continued to focus on science & technology as a key initiative to differentiate

our offering. We continue to develop our HKR (Hydrolytic Kinetic Resolution) technology and broaden its

application, In 2012 a key milestone was achieved with the commercialisation of our 4th generation Salen

catalyst and novel synthesis for Hyperzine A(natural product).

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Outlook for SPSL

In 2012 SPSL had a pipeline of 24 launched products and grew its pre-launch pipeline to 27 projects

spanning all clinical phases. The pipeline remains strong with 9 exciting projects in Phase III, 2 of which

have been filed and are pending regulatory approval. The company, through its excellent level of service

coupled with it’s proprietary technology and innovation, is well placed to take advantage of the increased

outsourcing opportunities presented by both established and emerging pharma customers. The company

remains confident that based upon current orders and new business opportunities identified for 2013-14

it can sustain sales and coupled with planned plant efficiency improvements ensure the company remains

profitable.

CRAMS SBU in India

On the Contract Manufacturing front in India, your Company has posted a growth of 26% by successfully

capitalising on the global growth in the contract manufacturing business

Finished Dosages Business – Formulations CRAMS

Your company offers the services of development and manufacture of finished dosages to both Innovator

and generic companies worldwide. The division achieved sales of Rs.1472 Mn during FY13, a substantial

growth of 75% over the previous year.

The Finished Dosages facility has undergone successful inspections by various regulatory bodies such as

WHO Geneva, NDA Uganda, PMPB Malawi, TFDA Tanzania, MCAZ Zimbabwe and ROA Ivory Coast during

FY13.

During this period, it has also five products for registration with various regulatory agencies and has received

one approval for a product previously filed for registration.

Outlook for Formulation CRAMS

Finished Dosages Business remains a major opportunity for Shasun to increase and diversify its

revenue base. With the increased expansion capacity and expected approvals on newer Products, the

Formulation Division is planning to increase its revenues from FY13.The development work on ANDAs

have commenced with a goal of filing atleast 10 ANDAs and 2 CTDs for the European market in FY 14.

The outlook for the Formulations division is robust and your Company is preparing plans to initiate work

on Phase-III expansion later part of this year so as to increase the capacity to meet the growing needs

of its existing customers, and it is also preparing for new product approvals.

The service levels to our existing customers have improved with the changing needs, taking our partnership

with customers to newer heights. Customers have started adding new products from our formulation facility.

Biotechnology

The division achieved Sales growth of 58% for its flagship recombinant streptokinase product and continued

to strengthen its position as a leading manufacturer for streptokinase in India.

The product is also under export registration in some of the key developing countries.

While its other pipeline biosimilar molecules are progressing in development, the division is also drawing up

strategic plans for future growth on a sustainable & differentiated basis.

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Nanotechnology

Your company is one of the first few pharmaceutical companies in India to have embarked on nanotechnology-

based research & drug development. As the application & potential of nanotechnology keeps validating

through numerous research papers and partnering deals worldwide, your company is well-positioned to

leverage its knowledge and skills in this sunrise area.

The company is involved in a lead development compound based on the nanotechnology platform with

its joint venture partner – Nanoparticle Biochem Inc., USA & support from the University of Missouri, USA.

The compound is a radioactive gold nanoparticle and is being investigated for treatment of solid tumours.

Extensive preclinical testing is underway in animals and these include studies in both rodent & non-rodents

like dogs & pigs.

A clinical study has also been undertaken for treating prostate-cancer bearing patient dogs and the

compound has shown promising evidence of increase in survival time, tumour regression and retention

within the tumour.

The plan is for completing the rest of the identified preclinical studies and take the product for Investigational

New Drug (IND) filing in both India & USA. A Scientific Advisory team comprising of well-known experts has

also been formed in India and they are guiding the team in the development of this molecule.

With its nanotechnology foray, the company has also undertaken another area of research into polymeric

nanoparticles with the objective of developing a drug delivery platform that can be applied across various

molecules. This research is currently underway with the target of establishing the preliminary proof-of-

concept of the proposed technology platform.

Consolidated Financial Review

The Company has registered a consolidated Gross revenue of Rs.11030.52 Mn as compared to the previous

year figure of Rs.11073.23 Mn.

Raw material cost as a proportion of total net income decreased to 50.33% in FY13 from 52.64% in FY12.

This is mainly due to product sales mix and process improvement in various products.

Other operating expenses increase in line with increase in sales growth.

The Company has achieved PAT of Rs.530.36 Mn. in FY13 as compared to the previous year figure of

Rs.1005.67 Mn.

Forex forward contracts

Your Company has completed all forex forward contracts during October, 2012 and there is no pending

contracts.

Internal control and systems

The company deploys internal control procedures commensurate with the size and nature of its business.

The aim of these procedures is to ensure efficient use and protection of the Company’s resources, accuracy in

financial reporting, and due compliance with statutes and company procedures. Well-defined individual roles

and responsibilities, as well as an effective feedback flow, facilitate effective monitoring and a responsible

internal audit. Regular Audit Committee Meetings are held where the statutory auditors as well as the internal

auditors participate and the internal audit reports are thoroughly discussed and reviewed.

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Risk Management

Shasun is exposed to varied business risks while competing in global environment. The major risks and mitigations are as follows:

Environment risk

Manufacturing of APIs involves handling and processing of chemicals with water and thus results in the

generation of effluents. Effluents if not treated properly can adversely affect the environment. Any emission

or discharge beyond the norms laid down by the relevant regulatory bodies could cause legal censure and

affect the Company’s brand equity.

Risk mitigation

EHS plays an integral role in the running and success of the Company. An EHS policy outlines this approach,

promoting best EHS practices towards continual improvement. The Company’s investments in reverse

osmosis plants, multiple-effect evaporators, agitated thin flim driers, and an activated carbon bed facility

for fugitive emissions, apart from ensuring the monitoring of the environment by MOEF-approved labs, are

proof of its commitment to exemplary EHS practices. Various audits by customers and consultants have

also established. Shasun’s EHS practices are among the best in its industry in the country. The ISO 14001

and OSHAS 18001 certification of its Cuddalore and Pondy API facilities by BVQI are testimony to their

commitment and compliance. The recent award given by CII for the EHS excellence & NSC award given for

Best Safety Practices are further proof.

Regulatory risk

The Pharma industry is strictly regulated in most developed countries. Therefore, any failure to meet

regulatory requirements could potentially pose a risk that may be detrimental, for companies like Shasun,

to the expansion in existing markets and foray into new markets. This, in turn, may limit the prospects for

growth of these companies.

Risk mitigation

Regulatory capability is a key strength of Shasun’s reflected in the following achievements:

different markets and coordinating with its manufacturing team to make products that conform to them

for the Company’s products to be placed in markets in the shortest time

Japanese authorities TGA, and others.

and TPD (Canada).

Client concentration risk

Your Company depends on a few large companies for a majority of its revenues, any attrition in which could

impact its fortunes.

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Risk mitigation

The Company has built its foundation on long-term relationships with many important customers. Shasun is

focused on consolidating and expanding these relationships, as these partners increasingly sought Shasun’s

participation across a wider range of products and services. However, from a de-risking point of view, the

Company is broadening its customer base by training its focus on a few high -potential markets (such as

Japan, Brazil, Chile, South Africa, apart from its existing market base in Europe and US) and approaching

new customers with newer products. This would reduce risk associated with dealings with only a few large

customers.

Exchange rate risk

Shasun derives nearly 3/4th of its revenues from exports, exposing the company to an exchange fluctuation

risk.

Risk mitigation

Your Company is addressing this risk at multiple levels: providing for escalation clauses in key contracts,

borrowing in appropriate currency, diversifying its sales into various currencies, viz., US Dollar, Euro, Pound

Sterling, Japanese Yen and Indian Rupee.

Information Technology (IT) risk

Inappropriate IT framework may hamper uninterrupted operations

Risk mitigation

The company has initiated several IT automation measures to continue to strengthen the information risk

management process. The entire network is secured through the implementation of solutions like firewall,

intrusion prevention system, network segregation and End-Point Data Leak Prevention Solutions to ensure

that there is no unauthorized access to the company’s network or data. However, access to internet

is controlled through web security applications. Moreover, validation process has been strengthened to

ensure validation activity is carried in parallel with the application development or deployment. All business

application and infrastructure are continuously validated as a part of the Good Manufacturing Process (GMP)

guideline.

Human Resources

The Company’s induction training for new recruits includes familiarization visits and orientation on various

functions, tailor made to each unit. The company initiates comprise of training and motivate people to

achieve greater efficiencies.

The focus area for human resource function for the coming year is to build team and continue team efforts

for organization excellence.

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Report on Corporate Governance

1. Philosophy on Corporate Governance

The company is committed to good corporate governance. The company provides detailed information on

various issues concerning its business and financial performance. The company respects its shareholders’

right to information regarding the performance of the company and considers itself to be the trustee of its

shareholders.

2. Composition and attendance of the Directors at the Board Meeting and the Annual General

meeting held during the year 2012-13

a) Composition: The present strength of the Board is nine directors. The Board comprises of four whole

-time directors including the Managing Director. There are five non-whole time directors all of whom

including the Chairman are independent directors. The Board of Directors of your Company upholds

high standards of professionalism and experience.

b) Attendance at Board Meetings, Annual General Meeting and other Directorships:

The Board of Directors met five times during the financial year, under review – May 24, 2012, August 2,

2012, November 02, 2012, February 07, 2013 and March 21, 2013. The company placed the annual

operating plans, the budget and performance of various divisions before the Board. Information regarding

the recruitment of senior executives, show cause notices which that are materially important, defaults if

any in financial obligations, details of subsidiaries, labour problems, signing of wage agreements, etc.,

were also placed before the Board. The maximum interval between any two Board meetings was well

within the prescribed gap of 4 months.

The Constitution of the Board is given below:

Name Category

Directorship in other public companies*

Committees of other Indian Public Companies@

No. of Board meetings during 2012-13

Whether attended last AGM-August 2, 2012

No. of shares held

Membership Chairmanship Held Attended

Mr. R. Kannan Chairman & Independent Director

4 - - 5 5 Yes 50000

Mr. R. Sundara Rajan Independent Director 10 9 2 5 5 Yes 20000

Mr. N. Subramanian Independent Director 1 - - 5 5 Yes Nil

Dr. Sunny Sharma Independent Director 5 4 - 5 5 Yes Nil

Prof. Indira J. Parikh# Independent Director 4 - - 5 3 No Nil

Dr. S.Devendra Whole-time Director 1 - - 5 5 Yes 452072

Mr. S.Abhaya Kumar Managing Director 2 - - 5 5 Yes 1452750

Mr. S.Vimal Kumar Whole-time Director 1 - - 5 5 Yes 2332084

Mr. M. Mohan Whole-time Director - - - 5 5 Yes 3750

Note:* Private companies, foreign bodies corporates, and companies under Section 25 of the Companies Act, 1956 are excluded for computing

the directorship.@ Only Audit Committee and Investors Grievance Committee are considered for the purpose of Committee positions as per the Listing

Agreement.# Prof. Indira J. Parikh was appointed on August 2, 2012

None of the directors is a Member of more than ten board level committees or a Chairman of more than five

such committees, as prescribed under clause 49 of the listing agreement.

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3. Audit Committee

The audit committee was constituted in the year 2000. It was last reconstituted on February 7, 2013. During

the year under review, the committee met four times - May 24, 2012, August 2, 2012, November 02, 2012

and February 07, 2013.

The constitution of the Committee and the attendance of each member of the Committee are given below:

Name of the Director Position CategoryNo. of Committee

Meetings heldNo. of Committee Meetings attended

Mr. N. Subramanian Chairman Independent Director 4 4

Mr. R. Kannan Member Independent Director 4 4

Dr. Sunny Sharma Member Independent Director 4 4

Mr. S.Vimal Kumar Member Wholetime Director 4 4

Mr. S. Murali Krishna, Company Secretary is the Secretary of Audit Committee.

Terms of reference of the Audit Committee include a review of

Financial reporting process

Recommending to the Board, the appointment, re-appointment and if required the removal of the

Statutory Auditor, Cost Auditor and Internal Auditors and the determination of their fees.

Draft financial statements (Quarterly & Annual) and auditors’ report before submission to the board

Accounting policies and practices

Internal controls and internal audit systems

Risk management policies and practices

Related party transactions

Internal audit reports and adequacy of internal audit function

Compliance with Stock Exchange and legal requirements concerning Financial Statements.

4. Investors Grievance Committee

The Investor Grievance Committee of the Board was re-constituted on August, 19, 2011 and now comprises

of

1. Mr. R. Kannan - Chairman

2. Mr. N. Subramanian - Member

3. Mr. S. Abhaya Kumar - Member

The Investor Grievances Committee specifically looks into the redressal of shareholders’ complaints such as

transfer of shares, non-receipt of annual reports, non-receipt of declared dividends and an expeditious share

transfer process. During the year under review, the Committee met on November 01, 2012.

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A statement of the various complaints received and cleared by the Company during the financial year 2012-

13 is given below:-

Nature of Complaints 2012-13

Received Cleared

Non-receipt of shares certificates duly transferred Nil Nil

Non-receipt of dividend warrant 18 18

Non-receipt of Annual Report 6 6

Letters from SEBI Nil Nil

Letters from Stock Exchange Nil Nil

Letters from Ministry of Corporate Affairs Nil Nil

Mr. S. Murali Krishna, Company Secretary is designated as Compliance Officer of the Company for overseeing

and addressing investor complaints.

5. Compensation Committee / Selection Committee:

The Compensation Committee / Selection Committee was constituted on October 29, 2001 comprising

of non-executive Directors. It was last reconstituted on February 7, 2013. The Committee devises suitable

remuneration packages for Wholetime directors & their relatives and recommends the same to the Board.

The Board thereafter may approve the package, subject to the approval of the Shareholders at the ensuing

General Meeting wherever applicable. The committee also approves issue of stock options to employees.

The Compensation Committee / Selection Committee held two meetings during the year - May 24, 2012

and August 2, 2012. The attendance of committee members at the meetings is given below:

Name Position Category No. of meetings held Attended

Prof. Indira J. Parikh* Chairman Independent Director 2 Nil

Mr. R. Sundara Rajan Member Independent Director 2 2

Mr. R. Kannan Member Independent Director 2 2

Dr. Sunny Sharma Member Independent Director 2 2

Mr. N. Subramanian ** Member Independent Director 2 2

* Prof. Indira J. Parikh became a Chairperson on February 7, 2013.** Mr. N Subramanian was relieved from the Committee on February 7, 2013.

6. Remuneration to Directors

Details of remuneration paid to Directors are given below:

Director

Relationship with Directors

Business relationship with Shasun if any

Remuneration paid during 2012-13 (Rs. In Million)

Sitting fees

Salary/ Perquisites/Other

benefits

Commission Total

Executive Directors

Dr. S. Devendra Brothers Promoter 5.65 - 5.65

Mr. S. Abhaya Kumar Brothers Promoter 8.44 - 8.44

Mr. S. Vimal Kumar Brothers Promoter 5.65 - 5.65

Mr. M. Mohan Wholetime Director 5.14 - 5.14

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Director

Relationship with Directors

Business relationship with Shasun if any

Remuneration paid during 2012-13 (Rs. In Million)

Sitting fees

Salary/ Perquisites/Other

benefits

Commission Total

Non-Executive Directors

Mr. R. Kannan None 0.14 0.90 1.04

Mr. N. Subramanian None 0.13 0.50 0.63

Mr. R. Sundara Rajan None 0.10 0.90 1.00

Dr. Sunny Sharma None 0.12 - 0.12

Prof. Indira J. Parikh None 0.05 - 0.05

Note: 1. Salary paid to Executive Directors includes contribution made to provident fund and other funds. 2. Company has not given any loans and advances to its directors 3. Company has not granted any options under ESOP to its directors.

7. Code of Conduct:

The Company has laid down a code of conduct pursuant to Clause 49 (D) of the Listing Agreement for all

Board Members and Senior Management of the Company with the aim of ensuring the most effective and

best business practices and strict adherence to legal requirements. The code of conduct has been posted

on the Company’s Website www.shasun.com.

The Board Members and the Senior Management personnel affirmed compliance with the code on an

annual basis and a declaration to this effect has been given by the Managing Director as below:

I hereby confirm that the Company has obtained affirmation from all the members of the Board and the

Senior Management that they have complied with the code of conduct for Board Members and Senior

Management in respect to the financial year 2012-13.

S. Abhaya Kumar,

Managing Director

8. Name and Designation of Compliance Officer

Mr. S. Murali Krishna – Company Secretary

9. Disclosures

A. Related Party Disclosure

Information on related party disclosure is given in Item No. 39 of Notes to the Financial Statement.

Compliance:

No transactions of material nature are entered into by the company with promoters, directors or management,

or their relatives, etc. that may have a potential conflict of interest with the company. There are no material

pecuniary transactions with the independent/non-executive directors other than the payment of remuneration

as disclosed above.

B. The Company follows the Accounting Standards as specified in the Companies (Accounting Standard)

Rules, 2006 and the relevant provisions of the Companies Act, 1956. The Company has not adopted a

treatment different from that prescribed in any Accounting Standard, in the preparation of financial statements

C. The Company has laid down procedures to inform Board members about risk assessment and

minimization procedures. The Company has identified major and minor risks and these risks are analyzed

by the Management Team.

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D. There were no instances of non-compliances by the Company, no penalties and strictures imposed on

the Company by the Stock Exchanges or SEBI or any other statutory authorities on any matter related to the

capital markets during the last three years.

E. During the year, allotment of 15,00,000 equity shares of Rs. 2 each at a premium of Rs. 73 per share

were allotted to the Promoters and Director upon conversion of warrants on preferential basis. There were

no public & rights issues.

F. The Managing Director and the Chief Financial Officer of the Company certify to the Board every quarter

on matters related to the financial statements and other matters in accordance with Clause 49 of the Listing

Agreement.

10. Means of Communication

The Company’s quarterly unaudited financial results / annual audited results are being published in atleast

one of the leading English news papers viz Business Standard, Economic Times, Business Line, and also

in one vernacular news paper in compliance with Stock Exchange listing requirements. The Annual Report

is circulated to Shareholders. The financial results, periodical business updates and Annual Report are also

posted on the company’s website – www.shasun.com. The Company is also sending financial results on a

quarterly basis to all its Shareholders.

11. SEBI prescription of Insider Trading

As per SEBI guidelines, the Board has designed a code of conduct strictly in accordance with the model

code of conduct prescribed. The Code aside from other relevant matters prohibits an insider from dealing

with the shares of the company while in possession of the unpublished price sensitive information in relation

to the company. During the declaration of the results, dividend and other material events the trading

window is closed as per the code.

12. Reconciliation of Share Capital Audit

As stipulated by the SEBI, a qualified Practising Company Secretary carries out the reconciliation of Share

Capital Audit. This is done to reconcile the total admitted capital with National Securities Depository Limited

and Central Depository Services (India) Limited and the total issued and listed capital. The Audit confirms

that the total listed and paid up capital is in agreement with the aggregate of the total number of shares in

dematerialized form (held by NSDL and CDSL) and total number of shares in physical form

Quarterly Secretarial Audit Reports on the reconciliation of the total admitted capital with NSDL/CDSL and

the total issued and listed capital were carried out and furnished to the Stock Exchanges.

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Auditors’ Certification on Corporate Governance

To the Members of Shasun Pharmaceuticals Limited

We have examined the compliance of conditions of Corporate Governance by Shasun Pharmaceuticals

Limited (“the Company”) for the year ended on March 31, 2013 as stipulated in Clause 49 of the Listing

Agreement of the said Company with stock exchanges.

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

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

the compliance of the conditions of corporate governance. It is neither an audit nor an expression of opinion

on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify

that the Company has complied with the conditions of Corporate Governance as stipulated in the above

mentioned Listing Agreement.

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

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

for B S R & Co.Chartered AccountantsFirm Registration No. 101248W

S. SethuramanPartnerMembership No. 203491

Place : Chennai

Date : May 29, 2013

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General Shareholder’s Information

1. Annual General Meeting

The Thirty-Eighth Annual General Meeting of the Shareholders of the company will be held on Friday,

August 02, 2013 at Red Cross Building, No. 32/50, Montieth Road, Egmore, Chennai – 600 008 at 2.30 P.M.

for the financial year ended March 31, 2013.

2. Details of Annual / Extra-Ordinary General Meetings held in last three years and

Special Resolutions passed.

Financial Year ended

AGM / EGM

Date Time Venue Special resolutions

2009-10 AGM 30.07.2010 03.00 P.M Russian Cultural CentreNo. 74, Kasturi Ranga RoadTeynampet, Chennai – 600 018

1. Amendment to Memorandum and Articles of Association consequent to change of name of the company.

2. Payment of remuneration to non-Whole-time Directors.

2010-11 EGM 24.03.2011 11.30 A.M. Narada Gana Sabha (Mini Hall), 1st Floor, No. 314, TTK Road Alwarpet, Chennai 600 018

Nil

2010-11 AGM 29.07.2011 03.00 P.M. P. Obul Reddy Hall, Vani Mahal, 103, G.N. Road T. Nagar, Chennai - 600 017

1. Increase in remuneration payable to Mr. Jitesh Devendra under Section 314 of the Companies Act, 1956

2. Increase in remuneration payable to Mr. Jatin Vimal Kumar under Section 314 of the Companies Act, 1956

3. Increase in remuneration payable to Mr. Chaitanya Devendra under Section 314 of the Companies Act, 1956

4. Increase in remuneration payable to Mr. Nitin Vimal Kumar under Section 314 of the Companies Act, 1956

2011-12 EGM 22.03.2012 11.00 A.M. Narada Gana Sabha (Mini Hall), 1st Floor, No.314, TTK Road, Alwarpet, Chennai 600 018

Issue of 65,78,947 equity shares to M/s. Caduceus Asia Mauritius Limited on preferential basis under Section 81(1A) of the Companies Act, 1956

2011-12 AGM 02.08.2012 02.30 P.M. P. Obul Reddy Hall, Vani Mahal, 103, G.N. Road, T. Nagar, Chennai - 600 017

Nil

3. Postal Ballot

During the year under review, Special Resolutions were passed through Postal Ballot for the Issue of

Employee Stock Option under SPL-ESOP Plan 2012 to the employees of the Company, Issue of Employee

Stock Option under SPL-ESOP Plan 2012 to the employees of Subsidiary Companies and step down

Subsidiary Companies and an increase in the remuneration payable to Mr. Nitin Vimal Kumar under Section

314 of the Companies Act, 1956.

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Mrs. Lakshmmi Subramanian, Senior Partner, M/s. Lakshmmi Subramanian & Associates, Practising

Company Secretaries, Chennai was appointed as the Scrutinizer for the Postal Ballot. The procedure

as given in the Companies (Passing of the resolution by Postal Ballot) Rules 2011 was followed by the

Company.

The result of the Postal Ballot is as follows:

1. Issue of Employee Stock Option under Shasun Pharmaceuticals Limited Scheme to the employees of

the Company – Special Resolution

Particulars Number of Members

Representative Number of Shares

Total number of Postal Ballots received 389 24066144

Total number of Postal Ballot considered valid 359 24050034

Total number of Postal Ballots considered invalid 30 16110

Out of the above valid Ballots:

i) Number of votes cast in favour of the resolution 334 23721334

ii) Number of votes cast in against the resolution 25 328700

iii) Percentage to the total votes received in favour of the resolution 93.04% 98.63%

2. Issue of Employee Stock Option under Shasun Pharmaceuticals Limited Scheme to the eligible

employees of Subsidiary Companies and step down Subsidiary Companies – Special Resolution

Particulars Number of Members

Representative Number of Shares

Total number of Postal Ballots received 389 24066144

Total number of Postal Ballot considered valid 350 24044453

Total number of Postal Ballots considered invalid 39 21691

Out of the above valid Ballots:

i) Number of votes cast in favour of the resolution 328 23716530

ii) Number of votes cast in against the resolution 22 327923

iii) Percentage to the total votes received in favour of the resolution 93.71% 98.64%

3. Approval for increase in remuneration payable to Mr. Nitin Vimal Kumar – Special Resolution

Particulars Number of Members

Representative Number of Shares

Total number of Postal Ballots received 389 24066144

Total number of Postal Ballot considered valid 352 24044963

Total number of Postal Ballots considered invalid 37 21181

Out of the above valid Ballots:

i) Number of votes cast in favour of the resolution 315 24033433

ii) Number of votes cast in against the resolution 37 11530

iii) Percentage to the total votes received in favour of the resolution 89.49% 99.95%

The results of the Postal Ballot was published in Trinity Mirror (English) and Makkal Kural (Tamil) newspapers

and the same has been posted in the Company’s website www.shasun.com.

4. Book Closure

The company’s Register of Members and Share Transfer Books will remain closed from July 25, 2013 to

August 2, 2013 (both days inclusive) for payment of dividend.

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5. Dividend payment

The dividend payment will be made between August 9, 2013 and August 14, 2013.

6. Financial Calendar

Financial reporting for Month / Year

Quarter ending June 30, 2013 July / August 2013

Quarter ending September 30, 2013 October / November 2013

Quarter ending December 31, 2013 January / February 2014

Quarter ending, March 31, 2014 May 2014

7. Registered Office/Corporate Office:

‘Batra Centre’, 3rd & 4th Floor

28, Sardar Patel Road,

Guindy, Chennai 600032,

Tamil Nadu, India.

Tel : 91-44-43446700

Fax : 91-44-22350278

E- mail : shasun@shasun.com

Website : www.shasun.com

Details on Location of Factories:

A) Active Pharmaceutical Ingredient

Puducherry : Mathur Road, Periakalapet, Puducherry – 605 014.

Cuddalore : A 1/B SIPCOT Industrial Complex, Kudikadu, Cuddalore – 607 005.

B) Finished Dosage facility

Puducherry : Unit – II, R.S. No. 32, 33 & 34, PIMS Road, Periakalapet, Puducherry – 605 014.

C) Research & Development Centre

Chennai : No. 27, Vandalur-Kelambakkam Road, Keezhakottaiyur, Chennai – 600 048.

Puducherry : Unit II, R.J, No. 32, 33 & 34, PIMJ Road, Periakalapet, Puducherry – 605 014.

Bio-tech : Mathur Road, Periakalapet, Puducherry – 605 014.

D) Bio-tech : Mathur Road, Periakalapet, Puducherry – 605 014.

8. Listing on Stock Exchanges

The Company’s shares are listed at BSE Limited and National Stock Exchange of India Limited. The listing

fees have been paid to both the Stock Exchanges for the financial year 2013-14. The Company applied for

the delisting of equity shares with the Madras Stock Exchange and is awaiting approval.

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9. Stock Market Data:

a. Stock Code: The Stock Code for the company’s shares is as follows

BSE Limited : 524552 / SHASUNPHA

National Stock Exchange of India Limited : SHASUNPHAR

b. The ISIN Nos. for the company’s shares in demat mode : INE317A01028

c. Stock price data on a month-to-month basis during financial year 2012-13

NSE BSE

Month High LowNo. of shares traded

(Qty)High Low

No. of shares traded (Qty)

Apr-12 118.00 85.00 17,44,028 116.90 85.40 17,34,614

May-12 135.00 101.00 20,12,138 136.80 100.20 14,45,782

Jun-12 121.70 107.30 12,57,367 121.90 106.50 7,56,514

Jul-12 141.40 115.70 64,05,659 141.30 116.45 39,65,243

Aug-12 165.00 120.50 1,38,62,752 165.25 120.50 73,74,163

Sep-12 185.60 154.00 1,17,54,956 185.90 154.10 59,00,227

Oct-12 171.60 140.55 48,72,409 171.20 140.10 25,22,824

Nov-12 177.40 139.00 74,11,588 177.40 139.15 31,79,259

Dec-12 184.00 130.90 70,17,002 184.20 131.15 29,50,255

Jan-13 145.25 90.25 1,03,77,551 145.25 90.50 41,50,688

Feb-13 112.00 65.15 72,96,088 111.70 75.00 35,14,262

Mar-13 83.00 60.40 34,33,231 83.00 60.40 17,06,989

Shasun’s Share Price at NSE versus the Nifty

10. Registrar and Share Transfer Agent

Transfer agent for physical transfers and Demat shares

Integrated Enterprises (India) Limited, 2nd Floor, Kences Towers,

No.1 Ramakrishna Street, North Usman Road,

T. Nagar - Chennai - 600 017.

Tel.: 044 - 28140801-03. Fax – 91-44-28142479

email id:corpserv@integratedindia.in

0

1,000

2,000

3,000

4,000

5,000

6,000

Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13-

20

40

60

80

100

120

140

160

180

200

NSE Shasun

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11. Share Transfer System

The transfers of shares are processed by “Integrated Enterprises (India) Limited” and approved by the Share

Transfer Committee which meets once in 20 days. The transfers of shares are effected and share certificates

dispatched within 25-30 days from the date of receipt, if the relevant documents are complete in all respects.

12. Shareholding Pattern as on March 31, 2013

Category Shares Rs. Crs %

Foreign Venture Capital Investor 6,578,947 1.32 11.62%

Foreign Institutional Investor 192,297 0.04 0.34%

Foreign National 191,666 0.04 0.34%

Banks 177,355 0.04 0.31%

Financial Institutions 351,950 0.07 0.62%

Mutual Funds 3,957,609 0.79 6.99%

Non-resident Indian 279,941 0.06 0.49%

Corporate Bodies 4,184,342 0.84 7.39%

Promoters 24,062,699 4.81 42.50%

Independent Directors 70,000 0.01 0.12%

General Public 16,567,546 3.31 29.26%

Trust 9,000 0.00 0.02%

Limited Liability Partnership 500 0.00 0.00%

Total 56,623,852 11.32 100.00%

13. Distribution of shareholding as on March 31, 2013

No. of shares No. of Shareholders % 

No. of Shares % to Capital

From To

1 500 19,197 81.63 29,30,840 5.18

501 1,000 2,211 9.40 1,785,225 3.15

1,001 2,000 912 3.88 1,413,112 2.50

2,001 3,000 344 1.46 892,842 1.58

3,001 4,000 172 0.73 626,475 1.11

4,001 5,000 164 0.70 769,355 1.36

5,001 10,000 220 0.94 1,573,024 2.78

Above 10,000 296 1.26 46,632,979 82.36

Total 23,516 100.00 56,623,852 100.00

14. Dematerialisation of Shares

Trading in Shares of the company is permitted in dematerialized form for all investors w.e.f. July 24, 2000.

As on March 31, 2013 - 54,189,117 equity shares constituting 95.70% of the total paid-up capital of the

company have been dematerialized.

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15. Profile of the Directors being appointed / reappointed at the ensuing AGM

Name of Director R. Kannan

Category Independent Director

Date of birth June 2, 1949

Qualifications PG Maths, CAIIB, PG Mgmt Studies

Specialized Expertise Merchant Banking and Investment Banking

No. of shares held in SPL 50,000

Directorships in Companies Public Companies:

Bharat Aluminium Co. Ltd.

Orient Press Ltd.

Ram Ratna Wires Ltd.

Secure Earth Technologies Ltd.

Shasun Pharmaceuticals Limited

Private Companies :

Orion Sayi Consultant Pvt. Ltd.

Mentis Soft Solutions Pvt. Ltd.

Real Time Tech Solutions Pvt. Ltd.

New Leaf Educational Products Pvt. Ltd.

Lakecity Ventures Pvt. Ltd.

Foreign Companies :

Nil

Committee positions held Shasun Pharmaceuticals Limited:

Investor Grievance Committee – Chairman

Audit Committee – Member

Nomination/Selection Committee – Member

Compensation Committee – Member

Name of Director N. Subramanian

Category Independent Director

Date of birth March 17, 1954

Qualifications B.Sc., F.C A., A.C.S

Specialized Expertise Chartered Accountant

No. of shares held in SPL Nil

Directorships in Companies Public Companies:

Shasun Pharmaceuticals Ltd.

IEC Fabchem Ltd.

Private Companies :

Nil

Foreign Companies :

Nil

Committee positions held Shasun Pharmaceuticals Limited

Audit Committee – Chairman

Investor Grievance Committee – Member

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Name of Director Prof. Indira J. Parikh

Category Independent Director

Date of birth August 29, 1943

Qualifications M.A., Ph.D.

Specialized Expertise Management Education

No. of shares held in SPL Nil

Directorships in Companies Public Companies:

Shasun Pharmaceuticals Limited

Anil Ltd.

Marck Biosciences Ltd.

Sintex Industries Ltd.

Zydus Wellness Ltd.

Private Companies :

Flame-Tao Knoware Pvt. Ltd.

Foreign Companies :

Nil

Committee positions held Shasun Pharmaceuticals Limited

Compensation Committee – Chairperson

Nomination Committee – Member

16. Outstanding ADR’s / GDR’s

The company has not issued any Global Depository Receipt / American Depository Receipt / which are

likely to have an impact on Company’s equity.

17. Investors Correspondence

For the convenience of our investors, transfer requests, and other connected matters are also accepted at

the Registered Office:

Contact person: Mr. S. Murali Krishna, Company Secretary

Time: 09.00 a.m. to 01.30 p.m. and 02.00 p.m. to 06.15 p.m. on all working days (Monday to Friday)

Phone: 044 - 43446700. E-Mail: muralikrishna@shasun.com

18. Non-mandatory requirements

The non mandatory requirements have been adopted to the extent and in the manner as stated under the

appropriate sections detailed below:

1. The Chairman’s officeThe need for implementing this non mandatory requirement has not arisen.

2. Compensation committeeThe Company has set up a Compensation Committee. The terms of reference of this committee is given in

para 5 of report on Corporate Governance.

3. Shareholders’ rightsThe quarterly un-audited results of the Company after being subjected to a Limited Review by the Statutory

Auditors, are published in newspapers and on the Company’s website www.shasun.com. These results are

sent to shareholders individually on quarterly / half yearly basis.

4. Audit QualificationsThe auditors have issued an unqualified opinion on the statutory financial statements of the Company.

5. Training of Board Members / Mechanism for evaluating non-executive DirectorsAll the Non-Executive Directors have adequate experience and expertise in functional areas and attend in

their personal capacities various programmes that keep them abreast of relevant developments. There is

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no formal system of evaluating individual Directors but the Audit Committee evaluates their performance

annually and takes corrective action.

6. Whistle blower policyThe Company has a whistle blower mechanism in place.

19. Auditors

B S R & Co.

Firm Registration Number: 101248W

Chartered Accountants

KPMG House,

10, Mahatma Gandhi Road

Nungambakkam, Chennai – 600 034.

21. Bankers

State Bank of Travancore

State Bank of India

ICICI Bank Limited

State Bank of Mysore

State Bank of Hyderabad

Axis Bank Ltd

DBS Bank

Canara Bank

IDBI Bank

Managing Director (MD) and Chief Financial Officer (CFO) Certification

We, S. Abhaya Kumar, Managing Director and S. Hariharan, Chief Financial Officer of Shasun Pharmaceuticals

Limited,

1. To the best of our knowledge and belief, certify that we have reviewed the balance sheet and profit and loss

account (Consolidated and Unconsolidated) along with all its schedules and notes on Accounts, Cash Flow

statements and the Director’s report;

2. To the best of our knowledge and belief, certify that these statements do not contain any untrue statement

of a material fact or any omission to state a material fact on the statements made;

3. To the best of our knowledge and belief, certify that the financial statements and other financial information

contained thereon in this report, present a true and fair view of, the Company’s affairs, its financial condition,

the results of operations and cash flows of the company as of, and for, the period ending March 31, 2013.

These statements and other information presented in the report are in compliance with the existing accounting

standards and applicable laws and regulations as on the closing date;

4. To the best of our knowledge and belief, certify that no transactions entered into by the company during the

year are in contravention with the applicable laws and regulations, fraudulent, or in breach of the company’s

code of conduct;

5. To the best of our knowledge and belief, certify that we are responsible for establishing and maintaining

controls and procedures on disclosure as well as internal control over financial reporting for the company,

and we have:

a) designed such controls and procedures so as to ensure the material information relating to the company

and the consolidated position along with its subsidiaries are made available to us by others within those

entities, during the period in which this report is being prepared;

b) designed such internal control over financial reporting with a view to provide reasonable assurance

regarding the reliability of financial reporting and the preparation of financial statements for external

purpose in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the company’s disclosure, controls and procedures;

6. We further declare that all board members and senior managerial personnel have affirmed compliance with

the code of conduct for the current year.

Chennai S. Abhaya Kumar S. HariharanMay 29, 2013 Managing Director Chief Financial Officer

20. Details of the Cost Auditor

Mr. Manivannan R Rajan

Membership No. 9532

M/s. Geeyes & Co.,

Cost Accountants

A-3, III Floor, 56, Seventh Avenue

Ashok Nagar, Chennai 600 083.

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Independent Auditors’ Report

Independent Auditors’ Report to the Members of Shasun Pharmaceuticals Limited

Report on the financial statements

We have audited the accompanying financial statements of Shasun Pharmaceuticals Limited (‘the Company’), which comprise the balance sheet as at March 31, 2013, the statement of profit and loss and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (‘the Act’). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor consider the internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, and to the best of our information and according to the explanations given to us, the said financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2013;

(b) in the case of the statement of profit and loss, of the profit for the year ended on that date; and

(c) in the case of the cash flow statement, of the cash flows for the year ended on that date.

Report on other legal and regulatory requirements

1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”), as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. As required by Section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the books of account;

(c) The balance sheet, statement of profit and loss, and cash flow statement dealt with by this report are in agreement with the books of account;

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(d) In our opinion, the balance sheet, statement of profit and loss, and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; and

(e) On the basis of written representations received from the directors as at March 31, 2013, and taken on record by the board of directors, we report that none of the directors is disqualified as at March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

for B S R & Co. Chartered Accountants Firm registration no. 101248W

S SethuramanPartnerMembership No: 203491

Place: Chennai Date: May 29, 2013

Annexure to the Independent Auditors’ report(Referred to in our report of even date)

1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets, by which all fixed assets are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this program certain fixed assets were verified during the year and no material discrepancies were noticed on such verification.

(c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern assumption.

2. (a) The inventory, except the goods in transit, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with the third parties at the year-end, written confirmations have been obtained.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and book records were not material.

3. (a) The Company has granted loans to one party covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs.283.35 million and the year-end balance of such loan was Rs. 187.96 million.

(b) In our opinion, the rate of interest and other terms and conditions on which the aforesaid loan has been granted are not prima facie, prejudicial to the interest of the Company.

(c) The terms of agreement do not stipulate any repayment schedule in respect of principal amount or interest. Accordingly paragraph 4(iii)(c) of the order is not applicable to the Company in respect of repayment of principal amount and interest.

Independent Auditors’ report (Contd.)

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(d) There is no overdue amount of more than Rupees One lakh in respect of loans granted to any of the Companies, firms or other parties listed in the register maintained under Section 301.

(e) The Company has not taken any loans, secured or unsecured, from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, and having regard to the explanation that certain goods sold and services rendered are for the specialised requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets, and with regard to the sale of goods and services. In our opinion and according to the information and explanations given to us, we have not observed any major weakness in the internal control system during the course of audit.

5. (a) In our opinion, and according to the information and explanations given to us, the particulars of contracts and arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs.5 lakhs with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public.

7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8. We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of manufacture of Bulk Drugs, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

9. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident fund, Employees’ state insurance, Income-tax, Sales tax, Service tax, Customs duty, Wealth tax, Excise duty and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of investor education and protection fund.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident fund, Employees’ state insurance, Income tax, Sales tax, Service tax, Customs duty, Wealth tax, Excise duty and other material statutory dues were in arrears as at March 31, 2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the dues set out in Appendix I in respect of income tax, sales tax, service tax, customs duty and excise duty have not been deposited with the appropriate authorities on account of disputes.

10. The Company does not have any accumulated losses at the end of the financial year and has not incurred any cash losses in the financial year and in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to its bankers or to any financial institutions. The Company did not have any outstanding debentures during the year.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society.

14. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

15. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

Annexure to the Independent Auditors’ report (Contd.)(Referred to in our report of even date)

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16. In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

18. The Company has not made any preferential allotment of shares to companies/ firms/ parties covered in the register maintained under section 301 of the Companies Act, 1956.

19. The Company did not have any outstanding debentures during the year.

20. During the current year, the Company has not raised any money by public issues.

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

for B S R & Co. Chartered Accountants Firm Registration No. 101248W

S SethuramanPartnerMembership No: 203491

Place: Chennai Date: May 29, 2013

Appendix I as referred to in Para ix (b) of Annexure to the Independent Auditors’ report:

(Amount in Rs. Millions)

Name of Statute Forum pending

Income Tax Act,1961 Commissioner of Income Tax (Appeals)

Income tax Appellate Tribunal

High Court Total

3 years to 7 years - 44.21 - 44.21

Above 7 years - 5.13 35.51 40.64

Finance Act, 1994 Commissioner of central Excise

Customs, Excise and Service Tax Appellate Tribunal

High Court Total

Below 3 years 14.96 - - 14.96

3 years to 7 years 14.45 - - 14.45

Above 7 years 11.00 - - 11.00

Central Excise Act, 1944

Commissioner of central Excise

Customs, Excise and Service Tax Appellate Tribunal

High Court Total

Below 3 years 87.06 - - 87.06

3 years to 7 years 0.33 48.25 - 48.58

Above 7 years 8.03 1.30 - 9.33

Customs Act, 1962 Commissioner of central Customs

Customs, Excise and Service Tax Appellate Tribunal

High Court Total

Above 7 years 22.66 16.74 - 39.40

Grand total 309.63

Annexure to the Independent Auditors’ report (Contd.)(Referred to in our report of even date)

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Balance Sheet as at March 31, 2013(All amounts are in million Indian Rupees except share data and if otherwise stated)

Notes As at March 31, 2013

As at March 31, 2012

EQUITY AND LIABILITIESSHAREHOLDERS’ FUNDS

Share capital 3 113.25 110.25 Reserves and surplus 4 2,759.40 2,486.49 Money received against share warrants 46 - 28.13 Foreign currency monetary item translation difference account (20.56) (9.95)

2,852.09 2,614.92 NON-CURRENT LIABILITIES

Long-term borrowings 5 985.30 490.53 Deferred tax liability (net) 6 - 15.03 Other non-current liabilities 7 10.40 0.80 Long-term provisions 8 59.68 51.37

1,055.38 557.73 CURRENT LIABILITIES

Short-term borrowings 9 2,720.04 1,652.51 Trade payables 10 1,763.65 1,552.66 Other current liabilities 11 637.07 516.78 Short-term provisions 12 123.30 225.04

5,244.06 3,946.99 9,151.53 7,119.64

ASSETSNON-CURRENT ASSETS

Fixed assetsTangible assets 13 2,663.89 1,938.50 Intangible assets 14 9.96 4.79 Capital work-in-progress 773.36 308.09 Intangible assets under development 35.21 -

Deferred tax asset (net) 6 11.41 - Non-current investments 15 509.00 50.40 Long-term loans and advances 16 701.08 1,000.15 Other non-current assets 17 11.31 5.29

4,715.22 3,307.22 CURRENT ASSETS

Inventories 18 1,453.33 1,106.88 Trade receivables 19 2,206.76 1,970.55 Cash and bank balances 20 39.74 66.27 Short-term loans and advances 21 680.10 593.71 Other current assets 22 56.38 75.01

4,436.31 3,812.42 9,151.53 7,119.64

Significant accounting policies 2

The accompanying notes form an integral part of the financial statements.

As per our report of even date attached.

for B S R & Co. For and on behalf of Board of Directors ofChartered Accountants Shasun Pharmaceuticals LimitedFirm registration No. 101248W

S Sethuraman S Abhaya Kumar Dr. S Devendra S Vimal KumarPartner Managing Director Wholetime Director Wholetime DirectorMembership No: 203491

Place: Chennai S Murali Krishna S HariharanDate: May 29, 2013 Company Secretary Chief Financial Officer

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Statement of Profit and Loss for the year ended March 31, 2013(All amounts are in million Indian Rupees except share data and if otherwise stated)

Notes Year ended March 31, 2013

Year ended March 31, 2012

INCOME

Revenue from operations 23 7,827.56 7,359.09

Other income 24 136.55 409.64

7,964.11 7,768.73

EXPENDITURE

Cost of materials consumed 25 5,009.68 4,655.13

Purchases of traded goods 17.74 42.92

Changes in inventories 26 (177.84) (11.40)

Employee benefits expenses 27 767.43 595.24

Finance costs 28 264.87 304.81

Depreciation and amortization 12 and 13 316.62 247.28

Other expenses 29 1,529.27 1,562.02

7,727.77 7,396.00

PROFIT BEFORE TAXATION 236.34 372.73

PROVISION FOR TAXATION

- Current tax 14.91 62.10

- Minimum alternate tax credit entitlement (14.91) (105.15)

- Deferred tax (benefit) / charge (26.44) (114.80)

NET PROFIT FOR THE YEAR 262.78 530.58

Earnings per share 38

Basic 4.76 10.92

Diluted 4.76 10.76

Significant accounting policies 2

The accompanying notes form an integral part of the financial statements.

As per our report of even date attached.

for B S R & Co. For and on behalf of Board of Directors ofChartered Accountants Shasun Pharmaceuticals LimitedFirm registration No. 101248W

S Sethuraman S Abhaya Kumar Dr. S Devendra S Vimal KumarPartner Managing Director Wholetime Director Wholetime DirectorMembership No: 203491

Place: Chennai S Murali Krishna S HariharanDate: May 29, 2013 Company Secretary Chief Financial Officer

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Cash Flow Statement for the year ended March 31, 2013(All amounts are in million Indian Rupees except share data and if otherwise stated)

ParticularsYear ended

March 31, 2013Year ended

March 31, 2012CASH FLOW FROM OPERATING ACTIVITIESProfit before taxation 236.34 372.73 Adjustments for:Depreciation and amortization 316.62 247.28 Interest and finance charges 234.27 203.98 Bad debts written off 0.97 11.56 Provision for doubtful receivables - 1.56 Provision for doubtful advances 9.33 12.87 Provisions / liabilities no longer required written back (10.79) (61.78)Interest income (22.94) (36.75)Profit on sale of fixed assets (18.77) (272.71)Unrealised exchange differences, net (220.86) (46.53)Operating profit before working capital changes 524.17 432.21 Adjustments for:(Increase) / decrease in inventories (346.45) (58.14)(Increase) / decrease in trade receivables (232.32) (560.90)(Increase) / decrease in loans and advances (143.55) (318.95)Increase / (decrease) in current liabilities and provisions 250.85 617.74

52.69 111.96Taxes paid (45.59) (14.90)Net cash from operating activities (A) 7.10 97.06 CASH FLOW FROM INVESTING ACTIVITIESPurchase of fixed assets and changes in capital work-in-progress (1,615.52) (878.39)Sale of fixed assets 38.24 295.59 Investments made in subsidiaries / joint ventures (26.97) (26.91)Loan to subsidiaries 22.24 64.97 Maturity of bank deposits having original maturity more than three months - 21.04 Interest income 43.64 38.68 Net cash used in investing activities (B) (1,538.37) (485.02)CASH FLOW FROM FINANCING ACTIVITIESProceeds from issuance of share capital (including securities premium) 112.50 489.73 Proceeds from issuance of share warrants - 28.13 Availment of loans/ borrowings 1,886.13 307.52 Repayment of loans/ borrowings (245.07) (129.34)Dividend paid on equity shares (25.53) (107.84)Dividend distribution tax paid (3.58) (18.11)Interest and finance charges (219.71) (201.32)Net cash from financing activities (C) 1,504.74 368.77 Net increase / (decrease) in cash and cash equivalents (A+B+C) (26.53) (19.19)Cash and cash equivalents at the beginning of the year 65.31 84.50 Cash and cash equivalents at the end of the year 38.78 65.31

ParticularsAs at

March 31, 2013As at

March 31, 2012Notes to cash flow statement:1. Components of cash and cash equivalents: Cash on hand 2.96 0.84 Balances with banks in current accounts 35.82 64.47

38.78 65.31 2. Current account balances with banks includes Rs. 4.08 (Previous year: Rs. 8.27) held at a foreign branch which are not freely remissible to the

Company because of exchange restrictions.Significant accounting policies 2

The accompanying notes form an integral part of the financial statements.

As per our report of even date attached.

for B S R & Co. For and on behalf of Board of Directors ofChartered Accountants Shasun Pharmaceuticals LimitedFirm registration No. 101248W

S Sethuraman S Abhaya Kumar Dr. S Devendra S Vimal KumarPartner Managing Director Wholetime Director Wholetime DirectorMembership No: 203491

Place: Chennai S Murali Krishna S HariharanDate: May 29, 2013 Company Secretary Chief Financial Officer

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Notes to financial statements for the year ended March 31, 2013(All amounts are in million Indian Rupees except share data and if otherwise stated)

1. Company overview

Shasun Pharmaceuticals Limited (‘SPL’ / ‘the Company’) was incorporated in 1976 having its registered office in Chennai, India. The Company is primarily engaged in manufacturing of Active Pharmaceutical Ingredients (APIs), their intermediates and finished dosage. The Company is also into product development and provides contract research and manufacturing services.

2. Significant accounting policies

2.1 Basis of preparation of financial statements

The financial statements have been prepared and presented in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention using the accrual basis. GAAP comprises accounting standards notified by the Central Government of India under Section 211(3C) of the Companies Act, 1956 other pronouncements of Institute of Chartered Accountants of India, the provisions of Companies Act, 1956 and guidelines issued by Securities and Exchange Board of India (SEBI).

2.2 Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles in India requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

2.3 Tangible assets, intangible assets, depreciation and amortization

Tangible assets are stated at cost of acquisition or construction, less accumulated depreciation. Cost includes inward freight, duties, taxes and incidental expenses related to acquisition and installation of the asset. Borrowing costs directly attributable to acquisition or construction of tangible assets, which necessarily take a substantial period of time to be ready for their intended use, are capitalized.

Depreciation on tangible assets is provided using the straight-line method at the rates specified in schedule XIV to the Companies Act, 1956 or based on the useful lives of the assets as estimated by the management, whichever is higher. The management’s estimates of the useful lives for various categories of tangible assets are given below:

Asset category Estimated useful lives (in years)Factory buildings 30.00Non factory buildings 60.00Plant and machinery 10.00Electrical installations 10.00Office equipments 10.00Computers and accessories 2.50Furniture, fixtures and fittings 16.00Vehicles 5.00

Depreciation is charged on pro-rata basis for assets purchased / sold during the year. Individual assets costing less than Rs. 5,000/- are depreciated at 100%.

Intangible assets are recorded at the consideration paid for acquisition and are amortized over their estimated useful lives ranging from 3 to 5 years on a straight-line basis, commencing from the date the asset is available to the Company for its use.

The cost of assets not ready to be put to use before the yearend is disclosed under capital work in progress.

2.4 Impairment of assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount (higher of net realizable value and value in use) of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than the carrying amount, the carrying amount is reduced to its recoverable amount.

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The reduction is treated as an impairment loss and is recognized in the Statement of profit and loss. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

2.5 Revenue recognition

Revenue from sale of goods is recognised when significant risks and rewards in respect of ownership of products are transferred to customers. Revenue from sale of goods is recognised in case of exports on the date of the bill of lading or airway bill which coincides with transfer of significant risks and rewards to customer and is net of trade discounts, sales returns and sales tax, where applicable. Revenue from domestic sales is primarily recognized on dispatch basis.

Service income is recognised as per the terms of contracts with customers when the related services are performed, or when the agreed milestones are achieved. Upfront non-refundable payments received under these arrangements are deferred and recognized as revenue over the expected period over which the related services are expected to be performed.

Dividend income is recognised when the unconditional right to receive the income is established.

Income from interest on deposits and loans is recognised on the time proportionate basis.

Export entitlements are recognised as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

2.6 Leases

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalized at fair value of the assets or present value of the minimum lease payments at the inception of the lease, whichever is lower.

Lease payments are apportioned between finance charges and reduction of the lease liability at the implicit rate of return. Finance charges are charged to the Statement of profit and loss.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of profit and loss on a straight line basis over the period of the lease or as and when the payments are made over the lease term.

2.7 Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments.

Current investments are carried at the lower of cost and fair value. Long-term investments are carried at cost and provisions are recorded to recognize any decline, other than temporary, in the carrying value of each investment.

2.8 Inventories

Raw and packaging materials, stores and spare parts and lab chemicals are carried at cost. Cost includes purchase price (excluding those subsequently recoverable by the enterprise from the concerned revenue authorities), freight inwards and other expenditure incurred in bringing such inventories to their present location and condition. In determining the cost, weighted average cost method is used.

The carrying cost of raw and packing materials, stores and spare parts and lab chemicals are appropriately written down when there is a decline in replacement cost of such materials and finished products in which they will be incorporated are expected to be sold below cost.

Work in progress, manufactured finished goods and traded goods are valued at the lower of cost and net realizable value. The comparison of cost and net realizable value is made on an item by item basis. Cost of work in progress and manufactured finished goods is determined on a weighted average basis and comprises direct material, cost of conversion and other costs incurred in bringing these inventories to their present location and condition. Cost of traded goods is determined on weighted average basis.

The excise duty in respect of closing inventory of finished goods is included as part of inventory.

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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2.9 Employee benefits

The Company’s contribution in respect to Provident fund, Employees’ state insurance scheme, Pension fund and other defined contribution plans are charged to the Statement of profit and loss when incurred. The Company has no further obligation other than the monthly contributions to these funds.

Gratuity costs with respect to defined benefit schemes are accrued based on actuarial valuation, carried out by an independent actuary as at the balance sheet date. The contributions are made to approved ‘Shasun Chemicals Employees Gratuity Trust Fund’. Liabilities are determined by actuarial valuation using projected unit credit method carried out by an independent actuary as at the balance sheet date.

Provision for compensated absences is made on the basis of actuarial valuation as at the balance sheet date by an independent actuary using projected unit credit method.

Under the superannuation scheme, a defined contribution plan, the Company pays fixed contributions to approved superannuation trust and has no obligation to pay further amounts. Such fixed contributions are charged to the Statement of profit and loss on accrual basis.

All actuarial gains and losses arising during the year are recognized immediately in the Statement of profit and loss.

2.10 Foreign currency transactions and derivative instruments

Foreign currency transactions are recorded using the exchange rates prevailing on the dates of the respective transactions. Exchange differences arising on foreign currency transactions settled during the year are recognised in the Statement of profit and loss.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, not covered by forward exchange contracts, are translated at year-end rates. The resultant exchange differences are recognised in the Statement of profit and loss. Non-monetary assets are recorded at the rates prevailing on the date of the transaction.

Income and expenditure items at representative offices are translated at the respective monthly average rates. Monetary assets at representative offices at the balance sheet date are translated using the year-end rates. Non-monetary assets are recorded at the rates prevailing on the date of the transaction.

Forward contracts are entered into to hedge the foreign currency risk of the underlying outstanding at the balance sheet date. The premium or discount on all such contracts is amortized as income or expense over the life of the contract. Any profit or loss arising on the cancellation or renewal of forward contracts is recognised as income or expense for the period.

In relation to the forward contracts entered into to hedge the foreign currency risk of the underlying outstanding at the balance sheet date, the exchange difference is calculated and recorded in accordance with AS-11 (revised). The exchange difference on such a forward exchange contract is calculated as the difference of the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences are recognized in the Statement of profit and loss in the reporting period in which the exchange rates change.

Pursuant to the notification of the Ministry of Corporate Affairs issued on December 29, 2011, the Company has decided to exercise the irrevocable option granted under the said notification. Accordingly, the exchange fluctuations on all long term monetary items so far as they relate to the acquisition of a depreciable capital asset, are added to or deducted from the cost of the asset and are depreciated over the balance life of such assets. In cases other than those falling under above are accumulated in ‘Foreign Currency Monetary Item Translation Difference Account’ (FCMITDA), grouped under Reserves and Surplus, and amortized over the balance period of long-term monetary asset/liability but not beyond March 31, 2020.

In accordance with the announcement of “Accounting for Derivatives” made by the Institute of Chartered Accountants of India (‘ICAI’) on March 29, 2008, derivatives are marked to market and the changes in the value of such derivatives, to the extent they reflect a loss, are recognized in Statement of profit or loss.

2.11 Research and development

Research costs are expensed as and when incurred. Development expenditure is capitalized based on technical feasibility for each project and where future recoverability can reasonably be assured through probable future economic benefits.

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use, and otherwise when events or changes in circumstances indicate that the carrying value may not be recoverable.

Materials identified for use in research and development process are carried as inventories and charged to Statement of profit and loss on issuance of such materials for research activities.

2.12 Taxation

Income tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income tax law) and deferred tax charge or credit (reflecting the tax effects of the timing differences between accounting income and taxable income for the year). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carry forward of losses under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed at each balance sheet date and written down or written up to reflect the amount that is reasonably and virtually certain respectively to be realized.

Minimum Alternate Tax (“MAT”) paid in accordance with tax laws, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the company would pay normal income tax after tax holiday period and accordingly, MAT is recognized as an asset in the balance sheet when it is probable that the future economic benefit associated with it will flow to the company and the asset can be measured reliably. MAT credit entitlement is reviewed at each balance sheet date and written down to the extent there is no convincing evidence to the effect that the Company will pay normal income tax during the specified period.

2.13 Earnings per share

Basic earnings per share is computed by dividing net profit or loss for the period attributable to equity shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share amounts are computed after adjusting the effects of all dilutive potential equity shares. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which could have been issued on the conversion of all dilutive potential shares. In computing dilutive earnings per share, only potential equity shares that are dilutive and that decrease profit per share are included.

2.14 Employee stock option based compensation

The Company calculates the compensation cost based on the intrinsic value method wherein the excess of value of underlying equity shares as of the date of the grant of options over the exercise price of the options given to employees under the employee stock option schemes of the Company is amortised over the vesting period on a straight line basis. The Company follows the SEBI guidelines for accounting of employee stock options.

2.15 Cash flows

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non–cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows operating, financing and investing activities of the Company are segregated.

2.16 Provisions, Contingent liabilities and Contingent assets

The Company creates a provision when there is present obligation as a result of past events that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognised nor disclosed in the financial statements.

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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As at March 31, 2013

As at March 31, 2012

3 SHARE CAPITAL

Authorised

75,000,000 (Previous year: 75,000,000) equity shares of Rs. 2/- each 150.00 150.00

1,000,000 (Previous year: 1,000,000) redeemable preference shares of Rs. 100/- each 100.00 100.00

250.00 250.00

Issued, subscribed and paid-up

56,623,852 (Previous year: 55,123,852) equity shares of Rs. 2/- each fully paid up 113.25 110.25

113.25 110.25

a. Reconciliation of equity shares outstanding at the beginning and at the end of the reporting period

As at March 31, 2013 As at March 31, 2012

No. of shares Amount No. of shares Amount

At the beginning of the year 55,123,852 110.25 48,544,905 97.09

Issued during the year (Refer note 46) 1,500,000 3.00 6,578,947 13.16

Outstanding at the end of the year 56,623,852 113.25 55,123,852 110.25

b. Terms / rights attached to equity shares

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company’s residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company.

On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

During the year ended March 31, 2013, the amount of dividend recognized as distribution to equity shareholders was Rs. Nil per share (Previous year: Rs 2.00/- per share) on interim basis and Rs. 1.50/- per share (Previous year Rs. 0.40/- per share) as proposed final dividend.

c. Details of shareholders holding more than 5% of equity shares of Rs. 2/- each fully paid in the Company

As at March 31, 2013 As at March 31, 2012

No. of shares % held No. of shares % held

Caduceus Asia Mauritius Limited 6,578,947 11.62 6,578,947 11.93

Shasun Leasing and Finance Private Limited 4,627,494 8.17 4,327,494 7.85

Devendra Estates Private Limited 2,956,652 5.22 2,831,406 5.14

As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.During the previous year, the Company has made a preferential allotment of 6,578,947 equity shares of Rs. 2/- each at a premium of Rs.74/- per share aggregating to Rs. 499.99 to Caduceus Asia Mauritius Limited, Mauritius, a SEBI registered foreign venture capital investor after obtaining the approval of the shareholders and stock exchanges. In response to the Company’s intimation through the authorized dealer, the Reserve Bank of India has advised the Company to obtain the approval of the Foreign Investment Promotion Board (‘FIPB’) in respect of such investment. The Company has obtained the required approval from FIPB vide F.No.11(1)/2012-FIPB on July 24, 2012.

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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As at March 31, 2013

As at March 31, 2012

4 RESERVES AND SURPLUS

Capital reserve

As at the beginning and end of the year 3.00 3.00

Capital redemption reserve

As at the beginning and end of the year 50.00 50.00

Securities premium account

Balance at the beginning of the year 894.28 417.71

Add: additions made during the year (Refer note 46) 109.50 486.84

Less: share issue expenses incurred during the year - 10.27

Balance at the end of the year 1,003.78 894.28

General reserve

Balance at the beginning of the year 409.94 356.88

Add: amount transferred from surplus in the Statement of profit and loss 26.28 53.06

Balance at the end of the year 436.22 409.94

Surplus in the Statement of profit and loss

Balance at the beginning of the year 1,129.27 790.22

Add: Net profit for the year 262.78 530.58

Less: appropriations

Proposed dividend 84.94 22.05

Interim dividend - 97.09

Dividend distribution tax 14.43 19.33

Transfer to general reserve 26.28 53.06

Balance at the end of the year 1,266.40 1,129.27

2,759.40 2,486.49

5 LONG-TERM BORROWINGS

Secured:

External commercial borrowings from banks 1,000.10 566.83

Foreign currency term loans from banks 298.29 158.16

Unsecured:

Loan from others 10.74 -

1309.13 724.99

Less: disclosed under "Other current liabilities" (Refer note 11) (323.83) (234.46)

985.30 490.53

Security details and terms of re-payment for loans:

i. Foreign currency loan (INR loan with swing option of converting into foreign currency loan) from State Bank of India amounting to Rs. 68.50 (Previous year Rs. 158.16) is secured by way of first charge on:

(a) Moveable and immoveable fixed assets at Shasun Research Centre (SRC) located at Vandalur(b) Unencumbered immoveable assets at plot No. A1/A, measuring 5.01 acres located in Sipcot Complex, Cuddalore

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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(c) Unencumbered Land measuring 1 acre and 3 cents located at Shasun Research Centre (SRC) located at Vandalur(d) Moveable and immoveable fixed assets at Ozhavarkarai located at Pondicherry (dispensary land and building)

The loan carries interest ranging from 5.00% to 6.00% and is repayable in 33 equal monthly instalments of USD 0.15 million.

ii. Foreign currency loan (with swing option of converting into foreign currency loan) from State Bank of India amounting to Rs. 229.79 (Previous year Rs. Nil) is secured by way of first paripassu charge with DBS Bank on:

(a) The leasehold rights of the land admeasuring 45 acres and 47 cents located at Jawaharlal Nehru Pharma City - SEZ, Visakapatnam district, Andhra Pradesh

(b) Building, plant and machinery and other assets created / to be created out of bank finance at the aforesaid location

The loan carries interest ranging from 5.00% to 6.00% (if availed in USD), 12.00% to 13.50% (if availed in INR) and is repayable in 60 equal monthly instalments of USD 0.136 million.

iii. External commercial borrowing from DBS, Singapore amounting to Rs. 164.40 (Previous year: Rs. 206.12) is secured by way of first paripassu charge with State Bank of India on:

(a) The leasehold rights of the land admeasuring 45 acres and 47 cents located at Jawaharlal Nehru Pharma City - SEZ, Visakapatnam district, Andhra Pradesh

(b) Building, plant and machinery and other assets created / to be created out of bank finance at the aforesaid location

The borrowing carries interest ranging from 3.00% to 4.00% and is repayable in 8 semi-annual instalments of USD 0.50 million after an initial moratorium period of 18 months.

iv. External commercial borrowing from DBS, Singapore amounting to Rs. 548 (Previous year Rs. Nil) is secured by way of exclusive first charge on the entire plant and machinery present and future at Cuddalore plant.

The borrowing carries interest ranging from 3.00% to 4.00% and is repayable in 8 semi-annual instalments of USD 1.25 million after an initial moratorium period of 18 months.

v. External commercial borrowing from ICICI Bank Ltd, Singapore amounting to Rs. 287.70 (Previous year: Rs. 309.18) is secured by way of first paripassu charge on:

(a) Land, building, plant and machinery in Formulation unit, located at Pondicherry(b) Land and building in MPP unit, located at Cuddalore(c) Land and building in API unit (API, Biotech, Pilot units) located at Pondicherry

The borrowing carries interest ranging from 3.30% to 3.55% and is repayable in 16 equal quarterly instalments of USD 0.38 million after an initial moratorium period of 15 months.

vi. Standby line of credit availed by Shasun Pharma Solutions Limited, UK (wholly owned subsidiary) amounting to GBP 2.00 million (Previous year: GBP 2.00 million) from State Bank of India, UK with support of Axis Bank Ltd is secured by:

(a) Exclusive charge on land approx 3.13 acres situated at Kumarapettai, Cuddalore(b) Second charge on plant and machinery situated at Cuddalore unit(c) Hypothecation by way of subservient charge on current assets of the Company

vii. Standby line of credit availed by Shasun Pharma Solutions Limited, UK (wholly owned subsidiary) amounting to GBP 3.05 million (Previous year: GBP 5.50 million) from State Bank of India, UK is secured by:

(a) Second charge on moveable and immoveable fixed assets at Shasun Research Centre (SRC) located at Vandalur(b) Second charge on unencumbered immoveable assets at plot No. A1/A, measuring 5.01 acres located in Sipcot

Complex, Cuddalore(c) Second charge on unencumbered land measuring 1 acre and 3 cents located at Shasun Research Centre (SRC)

located at Vandalur(d) Second charge on moveable and immoveable fixed assets at Ozhavarkarai located at Pondicherry (dispensary land

and building)(e) Paripassu first charge on the tangible assets of Shasun Pharma Solutions Limited, UK

viii. External commercial borrowing from Standard Chartered Bank, Mauritius, amounting to Rs. Nil (Previous year: Rs. 51.53) was secured by way of first charge on plant and machinery situated at Cuddalore units. The loan was repayable in 6 semi-annual instalments of USD 1.00 million after an initial moratorium period of 30 months. The loan has been finally repaid during the year.

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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6 DEFERRED TAX (ASSET) / LIABILITY, net

Deferred tax liability on account of:

Depreciation and amortization 205.72 142.65

205.72 142.65

Deferred tax asset on account of:

Provision for mark-to-market losses on derivatives 3.35 58.53

Carry forward business loss and unabsorbed depreciation 183.69 53.35

Retirement benefits 9.88 5.64

Others 20.21 10.10

217.13 127.62

(11.41) 15.03

7 OTHER NON-CURRENT LIABILITIES

Security deposits from dealers 10.40 0.80

10.40 0.80

8 LONG TERM PROVISIONS

Provision for employee benefits:

- Compensated absence 22.00 17.78

Provision for taxation (net of advance taxes and tax deducted at source) 29.81 24.83

Provision for mark-to-market losses on derivatives 7.87 8.76

59.68 51.37

9 SHORT TERM BORROWINGS

Secured:

Overdrafts from banks 580.13 39.19

Packing credit facilities from banks 1,592.37 1,300.48

Unsecured:

Other loans from banks 547.54 312.84

2,720.04 1,652.51

Security details and terms of re-payment for loans:

i. Working Capital facility sharing under consortium arrangement from bankers aggregating to Rs. 3,800 (Fund based Rs. 2,200, Non-fund based Rs. 1,500 and standby line of credit amounting to Rs. 100) is secured by way of exclusive first charge on:

(a) Hypothecation of entire current assets on a paripassu basis with other members of the consortium(b) Paripassu first charge on land and building in API unit (API, Biotech and Pilot Units) located at Pondicherry(c) Paripassu first charge on land and building in MPP unit, located at Cuddalore(d) Land, buildings, plant and machinery in Formulation unit located at Pondicherry(e) Second charge on all other fixed assets of the Company.

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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10 TRADE PAYABLES

Dues to micro and small enterprises (Refer note 42) 20.79 22.92

Dues to others 1,742.86 1,529.74

1,763.65 1,552.66

11 OTHER CURRENT LIABILITIES

Current maturities of long-term borrowings (Refer note 5) 323.83 234.46

Creditors for capital goods

Dues to micro and small enterprises (Refer note 42) 9.16 -

Dues to others 53.05 43.39

Interest accrued and not due 20.59 5.14

Advance from customers 47.92 62.71

Book overdraft 5.70 39.52

Retention money payable 31.66 8.28

Unclaimed dividends 3.44 6.92

Other liabilities 141.72 116.36

637.07 516.78

12 SHORT-TERM PROVISIONS

Provision for employee benefits:

- Gratuity (Refer note 40) 13.13 25.14

- Compensated absence 8.45 2.57

- Pension payable 0.04 0.07

Proposed dividend 84.94 22.05

Dividend distribution tax payable 14.43 3.58

Provision for mark-to-market losses on derivatives 2.31 171.63

123.30 225.04

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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13 TANGIBLE ASSETS

ParticularsFreehold

landLeasehold

land #Factory

buildings

Non factory

buildings

Plant and machinery *

Electrical installations

Office equipments

Computers and

accessories

Furniture, fixtures

and fittingsVehicles Total

GROSS BLOCK

As at April 1, 2011 34.94 286.90 626.36 3.64 2,532.53 285.36 49.12 84.32 45.10 36.65 3,984.92

Additions / adjustments - - 121.03 11.47 357.43 28.00 13.05 3.72 4.43 11.54 550.67

Deletions 1.40 - 23.86 - 63.71 9.45 3.13 1.30 5.22 18.88 126.95

As at March 31, 2012 34.87 286.90 723.53 15.11 2,826.25 303.91 59.04 86.74 44.31 29.31 4,409.97

Additions / adjustments 13.13 6.97 153.59 57.39 689.10 52.12 28.96 23.85 6.39 25.67 1,057.17

Deletions 0.44 - 14.39 1.27 249.33 0.52 3.35 3.56 0.83 11.59 285.28

As at March 31, 2013 47.56 293.87 862.73 71.23 3,266.02 355.51 84.65 107.03 49.87 43.39 5,181.86

ACCUMULATED DEPRECIATION

As at April 1, 2011 - 9.93 181.33 0.44 1,781.65 188.29 33.37 80.39 24.39 26.03 2,325.82

Depreciation for the year - 2.90 22.96 0.14 183.22 24.46 4.28 3.04 2.62 4.42 248.04

Deletions - - 9.20 - 62.21 7.45 2.94 1.29 3.93 15.37 102.39

As at March 31, 2012 - 12.83 195.09 0.58 1,902.66 205.30 34.71 82.14 23.08 15.08 2,471.47

Depreciation for the year - 3.03 26.67 0.68 227.91 29.26 6.14 9.43 2.99 6.20 312.31

Deletions - - 3.95 0.10 245.26 0.50 3.21 3.56 0.80 8.43 265.81

As at March 31, 2013 - 15.86 217.81 1.16 1,885.31 234.06 37.64 88.01 25.27 12.85 2,517.97

NET BLOCK

As at March 31, 2013 47.56 278.01 644.92 70.07 1,380.71 121.45 47.01 19.02 24.60 30.54 2,663.89

As at March 31, 2012 34.87 274.07 528.44 14.53 923.59 98.61 24.33 4.60 21.23 14.23 1,938.50

# Amortization of Rs. 2.78 (Previous year: Rs. 2.76) is allocated to projects under capital work-in-progress.

* Depreciation for the year includes depreciation amounting to Rs. 42.11 (Previous year: Rs. 38.59) on assets used for research and development. During the year, the Company incurred Rs. 79.84 (Previous year: Rs. 14.76) towards capital expenditure for research and development.

14 INTANGIBLE ASSETS

Particulars SoftwareOther

intangible assets

Total

GROSS BLOCKAs at April 1, 2011 31.47 3.00 34.47 Additions / adjustments 4.15 - 4.15 Deletions - - - As at March 31, 2012 35.62 3.00 38.62 Additions / adjustments 9.77 2.49 12.26 Deletions - - - As at March 31, 2013 45.39 5.49 50.88 ACCUMULATED AMORTIZATIONAs at April 1, 2011 30.73 1.10 31.83 Amortization for the year 1.35 0.65 2.00 Deletions - - - As at March 31, 2012 32.08 1.75 33.83 Amortization for the year 5.14 1.95 7.09 Deletions - - - As at March 31, 2013 37.22 3.70 40.92 NET BLOCKAs at March 31, 2013 8.17 1.79 9.96 As at March 31, 2012 3.54 1.25 4.79

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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15 NON-CURRENT INVESTMENTS

Trade investments valued at cost unless stated otherwise

Unquoted equity instruments

Investments in wholly owned subsidiaries

Shasun USA Inc., USA

15,000 (Previous year: 15,000) common stock of USD 1 each, fully paid up 0.54 0.54

SVADS Holdings SA, Switzerland (Also, refer note 16)

12,324,759 (Previous year: 100,000) shares of CHF 1 each, fully paid up 435.06 3.43

Shasun Life Sciences Private Limited, India

10,000 (Previous year: 10,000) equity shares of Rs. 10/- each, fully paid up 0.10 0.10

Investment in a joint venture

Shasun NBI LLC, USA

(A Limited Liability Company registered in the State of Missouri, USA, wherein the Company is a member in the ratio of 50:50 along with Nanoparticle BioChem Inc., USA)

63.88 43.91

Investment in others

Clarion Wind Farm Private Limited, India

900,000 (Previous year: 200,000) equity shares of Rs. 10/- each, fully paid up 9.00 2.00

SIPCOT Industrial Common Utilities Limited, India

4,242 (Previous year: 4,242) equity shares of Rs. 100/- each, fully paid up 0.42 0.42

509.00 50.40

Aggregate book value and unquoted non-current investments 509.00 50.40

16 LONG-TERM LOANS AND ADVANCES

Unsecured and considered good:

Capital advances 147.52 111.61

Security deposits 44.46 34.03

Minimum alternate tax credit entitlement 120.06 105.15

Share application money pending allotment with related parties - 431.63

Loans and advances to related parties (Refer note (i) and (ii) below) 187.96 210.20

Loans and advances to other than related parties (Refer note (iii) below) 55.13 -

Advance income tax and tax deducted at source (net of provision for taxation) 141.44 105.78

Loans and advances to employees 4.51 1.75

701.08 1,000.15

i) Loans and advances to related parties (including interest receivable): In view of certain customer arrangements and working capital facilities arranged, the management believes that the loans granted to SVADS and the receivables due from SPSL would be recovered and that there is no diminution other than temporary in the value of the investment in SVADS. Accordingly, the investment in and dues from SVADS / SPSL have been carried at cost.

ii) Share application money pending allotment with related parties: In view of certain provisions of Swiss Code of Obligations, SVADS had not allotted shares against advances until previous year. During the current year, SVADS has allotted the shares based on necessary approvals being obtained from appropriate authorities.

iii) Loans and advances to other than related parties: Loans and advances to other than related parties include advances given to a Company towards capital expenditure for developing manufacturing facilities and loans granted to the shareholders of such Company towards acquiring equity shares. As at the year end, the Company is in the process of obtaining necessary approvals from the relevant authorities for transfer of aforesaid equity shares. Pending such approval, the loan balances have been grouped under long-term loans and advances.

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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17 OTHER NON-CURRENT ASSETS

Unamortised expenses - ancillary borrowing costs 11.31 5.29

11.31 5.29

18 INVENTORIES

Raw and packing materials (includes goods-in-transit of Rs. 40.00 (Previous year: Rs. 28.22))

671.72 520.99

Work-in-progress 573.10 404.14

Finished goods 149.24 142.75

Traded goods 2.39 -

Stores, spares and lab chemicals 56.88 39.00

1,453.33 1,106.88

19 TRADE RECEIVABLES

Unsecured:

Outstanding for a period exceeding six months from the date they are due for payment

- Considered good 42.86 64.21

- Considered doubtful 11.79 13.24

Other receivables

- Considered good 2,163.90 1,906.34

Less: Provision for doubtful receivables (11.79) (13.24)

2,206.76 1,970.55

20 CASH AND BANK BALANCES

Cash and cash equivalents:

Cash on hand 2.96 0.84

Balances with banks

- In current accounts 35.82 64.47

38.78 65.31

Other bank balances:

Margin money deposit 0.96 0.96

0.96 0.96

39.74 66.27

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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21 SHORT TERM LOANS AND ADVANCESUnsecured and considered good:Advances recoverable in cash or in kind or for value to be received 548.51 486.07 Prepaid expenses 39.01 10.82 Balances with government authorities 69.11 81.06 Loans and advances to related parties 9.91 - Loans and advances to employees 13.56 15.76 Unsecured and considered doubtful:Advances recoverable in cash or in kind or for value to be received 21.50 12.17 Balances with government authorities 3.85 3.85 Less: Provision for doubtful advances (25.35) (16.02)

680.10 593.71

22 OTHER CURRENT ASSETSUnsecured and considered good:Accrued interest receivable 52.45 73.15 Unamortised expenses - ancillary borrowing costs 3.93 1.86

56.38 75.01

Year ended March 31, 2013

Year ended March 31, 2012

23 REVENUE FROM OPERATIONSRevenue from operations, grossSale of products 7,378.82 6,956.80 Sale of traded goods 14.05 24.23

Sale of services 142.56 93.27 7,535.43 7,074.30

Other operating revenues, grossSale of by-products 235.51 241.80 Export incentives 292.77 228.68 Scrap sales, gross 9.06 9.09

537.34 479.57 Less: excise duty (245.21) (194.78)

7,827.56 7,359.09 Details of products sold and services rendereda. Finished goods sold Active pharmaceutical ingredients 5,917.20 6,168.87 Formulations 1,461.62 787.93

7,378.82 6,956.80 b. Traded goods sold Chemicals etc. 14.05 24.23

14.05 24.23 c. Services rendered Product development fees 93.62 63.66 Contract research fees 48.94 29.61

142.56 93.27

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Year ended March 31, 2013

Year ended March 31, 2012

24 OTHER INCOME

Interest income 22.94 36.75

Net gain on foreign currency transactions and translation 4.08 -

Profit on sale of fixed assets (net) 18.77 272.71

Bad debts written off now recovered - 4.73

Provisions / liabilities no longer required written back 10.79 61.78

Insurance claims 53.72 33.50

Miscellaneous income 26.25 0.17

136.55 409.64

25 COST OF RAW AND PACKING MATERIALS CONSUMED

Opening stock 520.99 490.15

Add: Purchased during the year 5,160.41 4,685.97

Less: Closing stock (671.72) (520.99)

5,009.68 4,655.13

i. Details of raw and packing materials consumed

Chemicals etc. for active pharmaceutical ingredients 4,128.28 4,159.87

Chemicals etc. for formulations 881.40 495.26

5,009.68 4,655.13

ii. Details of inventories raw and packing materials

Chemicals etc. for active pharmaceutical ingredients 498.12 411.67

Chemicals etc. for formulations 173.60 109.32

671.72 520.99

26 CHANGE IN INVENTORIES

Opening stock

- Finished goods 142.75 217.47

- Traded goods - -

- Work-in-progress 404.14 318.02

546.89 535.49

Closing stock

- Finished goods 149.24 142.75

- Traded goods 2.39 -

- Work-in-progress 573.10 404.14

724.73 546.89

(177.84) (11.40)

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Year ended March 31, 2013

Year ended March 31, 2012

26 i. Details of work-in-progress

Active pharmaceutical ingredients 526.55 386.81

Formulations 46.55 17.33

573.10 404.14

ii. Details of finished goods

Active pharmaceutical ingredients 140.83 108.39

Formulations 8.41 34.36

149.24 142.75

iii. Details of traded goods

Formulations 2.39 -

2.39 -

27 EMPLOYEE BENEFIT EXPENSES

Salaries, wages and bonus 641.98 504.51

Contribution to provident and other funds 48.32 43.17

Staff welfare expenses 77.13 47.56

767.43 595.24

28 FINANCE COSTS

Interest expenses

- On bank loans 216.52 177.46

- On others 17.29 16.81

- On interest rate swap 0.46 9.71

Bank charges 53.46 46.20

Net loss on foreign currency transactions and translation - 54.63

Less: Capitalised during the year (Refer note 47) (22.86) -

264.87 304.81

29 OTHER EXPENSESConsumption of stores and spare parts 137.21 82.05 Power and fuel 535.42 495.03 Rent 11.87 14.66 Repairs and maintenance *

- Buildings 32.50 9.20 - Plant and machinery 175.21 140.90 - Others 127.19 91.85

Insurance 41.40 24.04 Rates and taxes 3.27 22.24 Net loss on foreign currency transactions and translation - 152.13 Communication expenses 9.43 9.29

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Year ended March 31, 2013

Year ended March 31, 2012

29 Travelling and conveyance 60.28 37.49 Legal and professional charges (Refer note 34) 58.35 35.10 Printing and stationery 11.41 9.88 Commission and discounts 37.95 115.06 Commission to non-wholetime directors 2.30 1.20 Freight outwards 201.47 255.30 Sales promotion expenses 25.24 14.61 Bad debts written off 0.97 11.56 Provision for doubtful receivables - 1.56 Provision for doubtful advances 9.33 12.87 Miscellaneous expenses 48.47 26.00

1,529.27 1,562.02

* Includes stores and spares consumed Rs. 156.52 (Previous year Rs. 103.40)

30 Commitments and Contingent liabilities

Particulars As at March 31, 2013

As at March 31, 2012

CommitmentsEstimated amount of contracts remaining to be executed on capital amount and not provided for (net of advances)

26.74 591.23

Commitments relating to further investment in joint venture 37.68 58.40Contingent liabilities

Income tax - 318.14 Sales tax 15.37 13.27 Excise / customs 101.08 83.53 Counter guarantees given by the company to the bankers for bank guarantee 51.50 58.15 Obligations in respect of letter of credit outstanding 459.79 348.97 Corporate guarantee given to the bankers in respect of loan taken by Shasun Pharma Solutions Limited, UK (wholly owned subsidiary)

Out of the above corporate guarantee utilized in connection with loans availed by SPSL, UK

540.54

457.02

949.67

454.14Other claims against the Company not acknowledged as debts 41.22 38.76

31 Earnings in foreign currency

Particulars Year ended March 31, 2013

Year ended March 31, 2012

Exports of goods calculated on FOB basis 5,101.32 4,981.45

Product development fee 68.92 54.94

Contract research fee 48.94 29.61

Interest income 18.72 16.63

Miscellaneous income 20.47 -

Total 5,258.36 5,082.63

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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32 Expenditure in foreign currency

Particulars Year ended March 31, 2013

Year ended March 31, 2012

Carriage outwards 65.47 84.81

Commission 21.49 65.99

Interest on loans 53.13 38.03

Discounts 1.21 29.91

Salaries and wages 20.03 13.47

Travelling and conveyance 8.85 8.34

Legal and professional expenses 29.18 6.26

Sales promotion expenses 9.00 3.48

Licence and Listing fees 3.56 -

Others 10.44 5.18

Total 222.36 255.47

33 CIF value of imports

Particulars Year ended March 31, 2013

Year ended March 31, 2012

Raw and packing materials 1,304.29 1,362.26

Capital goods and spare parts 179.91 172.85

Total 1,484.20 1,535.11

34 Payments to Auditors, excluding service tax (included in legal and professional charges under note 29)

Particulars Year ended March 31, 2013

Year ended March 31, 2012

a) Statutory audit fees 2.40 2.40

b) Other charges

- Taxation matters 0.15 -

- Other matters 0.33 0.23

c) Out of pocket expenses 0.52 0.18

Total 3.40 2.81

35 Purchase of traded goods

Particulars Year ended March 31, 2013

Year ended March 31, 2012

Chemicals etc. 17.74 42.92

Total 17.74 42.92

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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36 Value of imported and indigenous raw and packing materials and stores and spares consumed

Particulars Year ended March 31, 2013 Year ended March 31, 2012

Amount % Amount %

Raw and packing materials

- Imported 1,587.45 31.69% 1,397.48 30.02%

- Domestic 3,422.23 68.31% 3,257.65 69.98%

Total 5,009.68 4,655.13

Stores, spares and lab chemicals

- Imported 1.82 0.62% 1.42 0.77%

- Domestic 291.91 99.38% 184.03 99.23%

Total 293.73 185.45

37 Operating Leases

The Company had entered into an operating lease arrangement in respect of office space during the previous year with a lease term of 3 years, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expense recognized during the year amounts to Rs. 8.37 (Previous year: Rs. 7.59). The schedule for future minimum lease payments in respect of non-cancellable operating leases is set out below:

Particulars As at March 31, 2013

As at March 31, 2012

Not later than one year 8.37 8.37

Later than one year but not later than five years - -

Later than five years - -

38 Earnings per share

Earnings per share are calculated by dividing the Profit / (loss) attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.

Particulars Year ended March 31, 2013

Year ended March 31, 2012

Earnings

Net profit after tax as per statement of profit and loss 262.78 530.58

Number of shares

Number of shares at the beginning of the year 55,123,852 48,544,905

Add: Equity shares issued on conversion of warrants issued on preferential basis 1,500,000 -

Add: Equity shares issued on preferential allotment basis - 6,578,947

Total number of equity shares outstanding at the end of the year 56,623,852 55,123,852

Weighted average number of equity shares outstanding during the year - basic 55,164,948 48,598,831

Weighted average number of equity shares outstanding during the year - diluted 55,164,948 49,324,241

Earnings per share

- of par value Rs. 2 – Basic (Rs.) 4.76 10.92

- of par value Rs. 2 – Diluted (Rs.) 4.76 10.76

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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39 Related party disclosures

Details of related parties including summary of transactions entered into by the Company during the year ended March 31, 2013 are summarized below:

Name of related parties and description of relationship:

Wholly owned subsidiaries:Shasun USA Inc., USAShasun Life Sciences Private Limited, IndiaSVADS Holding SA, Switzerland

Wholly owned step down subsidiaries: Shasun Pharma Solutions Limited, UK (100% subsidiary of SVADS Holding SA) Shasun Pharma Solutions Inc., USA (100% subsidiary of SVADS Holding SA)

Joint venture: Shasun NBI LLC, USAShasun NBI Nanotech India Private Limited (subsidiary of Shasun NBI LLC, USA)

Key management personnel and their relatives: Dr. S Devendra Wholetime Director S Abhaya Kumar Managing DirectorS Vimal Kumar Wholetime DirectorM Mohan Wholetime Director (from August 19, 2011)D Jitesh S/o of Dr. S Devendra D Chaitanya S/o of Dr. S Devendra V Jatin S/o of S Vimal Kumar V Nitin S/o of S Vimal Kumar

Entities where Directors have control or significant influence:Shasun Finance LimitedShasun Leasing and Finance Private LimitedDevendra Estate Private Limited Shasun Foundation Trust

Transactions during the year

Description Related party Year ended March 31, 2013

Year ended March 31, 2012

Loan repaid SVADS Holding SA 36.62 86.98

Advance Paid Shasun USA Inc 6.36 -

Interest income SVADS Holding SA 8.96 16.63

Shasun Pharma Solutions Limited 9.74 15.50

Sales of goods, net of sales returns Shasun USA Inc 0.41 (1.81)

Shasun Pharma Solutions Limited - (0.31)

Sale of asset Devendra Estates Private Limited 30.00 -

Donation Shasun Foundation Trust 4.15 0.60

Purchase of goods Shasun Pharma Solutions Limited - 6.63

Shasun USA Inc - 0.56

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Description Related party Year ended March 31, 2013

Year ended March 31, 2012

Selling commission Shasun USA Inc - 44.92

Income from services Shasun USA Inc 0.11 0.21

Shasun Pharma Solutions Limited 12.98 -

Reimbursement of expenses to Shasun USA Inc 2.12 -

Shasun Pharma Solutions Limited 1.87 0.76

Payment made on behalf and reimbursed by Shasun Pharma Solutions Limited 18.47 46.41

Shasun USA Inc 0.10 -

Remuneration S Abhaya Kumar 8.44 2.67

S Vimal Kumar 5.65 2.74

Dr. S Devendra 5.65 2.66

D Jitesh 7.68 4.45

V Jatin 5.91 2.94

M Mohan 5.14 3.00

V Nitin 2.34 0.56

Rent for leased property Devendra Estate Private Limited 0.78 -

Investments Shasun NBI LLC 19.97 26.91

Balances

Description Related party Receivable / (Payable) as at March 31, 2013

Receivable / (Payable) as at March 31, 2012

Payable Shasun USA Inc (0.79) (58.53)

Shasun Pharma Solutions Limited (8.33) (10.55)

Receivable Shasun USA Inc 6.36 -

Shasun NBI Nanotech India Private Limited 0.10 -

Shasun Pharma Solutions Limited 30.20 129.63

SVADS Holdings SA 240.41 714.98

Investments Shasun USA Inc 0.54 0.54

SVADS Holdings SA 435.06 3.43

Shasun Life Sciences Private Limited 0.10 0.10

Shasun NBI LLC 63.88 43.91

Share application money pending allotment

SVADS Holdings SA - 431.63

Remuneration payable D Jitesh (0.37) (1.09)

V Jatin (0.26) (0.89)

M Mohan (0.54) -

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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40 Employee benefits

Gratuity

The details in respect of gratuity are set out below:

Change in present value defined benefit obligation

Particulars As at March 31, 2013

As at March 31, 2012

Obligations at the beginning of the year 83.47 68.94

Current service costs 7.76 5.96

Past Service cost - -

Interest costs 6.42 5.67

Actuarial (gain) / loss 2.42 8.49

Benefits paid (6.48) (5.59)

Obligations at the end of the year 93.59 83.47

Change in fair value of plan assets

Particulars As at March 31, 2013

As at March 31, 2012

Fair value of plan assets at beginning of the year 58.33 55.46

Expected return on plan assets 5.48 4.51

Actuarial gain / (loss) 0.36 (0.91)

Contributions 26.77 4.86

Benefits paid (6.48) (5.59)

Fair value of plans assets at end of the year 84.46 58.33

Actual return on plan assets 5.84 3.59

Reconciliation of present value of defined benefit obligation and the fair value of plan assets

Particulars As at March 31, 2013

As at March 31, 2012

Present value of defined benefit obligation at the end of the year 93.58 83.47

Fair value of plan assets at the end of the year 84.46 58.33

Funded status amount of liability recognized in balance sheet 9.12 25.14

Classified as long term provision - -

Classified as short term provision 9.12 25.14

Note: The provision for gratuity payable under note 12 includes provision relating to certain employees amounting to Rs. 4.01 (Previous

year: Rs. Nil) who have completed 30 years of service with the Company. The provision is being made based on maximum ceiling under

the Gratuity Act, 1972.

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Gratuity cost for the year

Particulars Year ended March 31, 2013

Year ended March 31, 2012

Current Service cost 7.75 5.96

Past Service cost - -

Interest cost 6.42 5.67

Expected return on plan assets (5.48) (4.51)

Actuarial (gain) / loss 2.06 9.41

Net gratuity cost 10.75 16.53

The gratuity cost has been recognized in ‘Employee benefits expenses’ under note 27 to the Statement of profit and loss.

Experience adjustment for the current and previous four years

Particulars As at March 31, 2013

As at March 31, 2012

As at March 31, 2011

As at March 31, 2010

As at March 31, 2009

Defined benefit obligation 93.58 83.47 68.94 64.56 58.73

Plan asset 84.46 58.34 55.46 46.21 29.16

Surplus/(defecit) (9.12) (25.14) (13.48) (18.35) (29.57)

Experience adjustments in plan liabilities - (loss) / gain

2.42 8.49 (2.03) 1.54 1.15

Experience adjustments in plan assets - (loss) / gain

(0.36) 0.91 - 0.62 (0.41)

Assumptions

Particulars As at March 31, 2013

As at March 31, 2012

Discount rate 8.00% 8.57%

Estimated rate of return on plan assets 8.00% 8.00%

Attrition rate 9.00% 11.00%

Rate of growth in salary levels 9.00% 9.00%

The estimates of rate of escalation in salary considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

Investment details of plan assets

Particulars As at March 31, 2013

As at March 31, 2012

Insurer managed funds 100.00% 100.00%

Fixed deposits 0.00% 0.00%

Total 100.00% 100.00%

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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41 Segment reporting

In accordance with AS-17 “Segment Reporting”, segment information has been given in the consolidated financial statements of the Company and therefore no separate disclosure on segment information is given in these standalone financial statements.

42 Micro, small and medium enterprises

Under the Micro, Small and Medium Enterprises Development Act, 2006, (MSMED) which came into force from October 2, 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. The following is the list of Micro, Small and Medium Enterprises to whom the Company owes any sum together with interest outstanding for more than thirty days as at March 31, 2013. This list of undertakings covered under MSMED was determined by the Company on the basis of information available with the Company and have been relied upon by the auditors.

Particulars As at March 31, 2013

As at March 31, 2012

Principal amount due 18.15 4.20

Interest due on the above 0.65 1.05

Amount of interest due and payable where principal has already been paid but the interest has not been paid

0.40 1.05

Amount of interest accrued and remaining unpaid at the end of the period 1.05 2.10

Amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under Section 23 of the Act

1.05 2.10

Name of the enterprise Name of the enterprise Name of the enterpriseA Muthukrisnan Axiva Sichem Biotech Vensil Glass Works LimitedB.K. Equipments P Ltd Digital Instruments & Control Systems Newtech Industrial ValvesEnopeck Seals (India) Endee Engineers Pvt Ltd Labindia Analytical InstrumentsVaibhav Industries Kaypee Cargo Movers Pvt Ltd Electrolab (India) Pvt LtdBharat Rubber Works Pvt Ltd Novex Poly Films Pvt Ltd Sakthi Instruments & ServicesSidharth Chemicals Polycoat Flowchem Pvt Ltd Gandhi Automations Private LimitedAllchem Laboratories Chennai Metex Lab Private Limited Surya Pipes & EquipmentsTalli Godavari Fine Chemicals Pvt Ltd Sri Ragavendra Weighing Systems BenlabPrecia Molen India Ltd Adheswara Alum Pvt Ltd Chemcrux Enterprises LtdBhavika Chemicals Corpoartion Sri Chementor Private Limited Kalanjiam IndustriesJPN Pharma Pvt Limited Rolon Seals Enanti Labs Pvt LtdR.R.Industries Vignesh Engineering Works Innofab (India) Pvt LtdPremsen Engineering Corporation Best Labels Enterprises Pvt Ltd Polmon Vesnfer Private LimitedGenius Engineering Spak Orgochem (India) Pvt Ltd Avra Synthesis Private LimitedAscent Finechem Private Limited

43 Transfer pricing

The Company has international transactions with related parties. For the financial year ended March 31, 2012, the Company has obtained the Accountant’s Report from a Chartered Accountant as required by the relevant provisions of the Income-tax Act, 1961 and has filed the same with the tax authorities. For the financial year ended March 31, 2013, management confirms that it maintains documents as prescribed by the Income-tax Act, 1961 to prove that these international transactions are at arm’s length and the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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44 Un-hedged foreign currency

The yearend foreign currency exposures that have not been hedged by a derivative instrument or otherwise are as follows:

Particulars Amount receivable in foreign currency

Amount payable in foreign currency

March 31, 2013 March 31, 2012 March 31, 2013 March 31, 2012EUR equivalent 2.38 1.61 0.39 0.61 GBP equivalent 2.05 4.11 0.54 0.28 CHF equivalent - 0.01 0.04 0.05 USD equivalent 25.34 22.74 68.68 37.94 JPY equivalent 34.60 5.46 4.70 48.31 CAD equivalent - - 0.01 - INR equivalent 1,719.69 1,597.93 2,717.56 2,052.29

45 Outstanding forward contracts

March 31, 2013 March 31, 2012

Currency No. of contracts Buy / sell Currency No. of contracts Buy / sell

USD 14 Sell USD 20 Sell

46 During the previous year, the Company has made preferential allotment of 1,500,000 convertible warrants of Rs. 75/- each aggregating to Rs. 112.50 to its Promoter, Promoter group and an independent director after obtaining the approval of the shareholders and stock exchanges. During the current year, consequent to the option exercised by the allotees towards conversion of the warrants, the Company had issued 1,500,000 equity shares to the allotees.

47 Borrowing costs in connection with the borrowing and funds utilized towards qualifying assets amounting to Rs. 22.86 (Previous year: Rs. Nil) have been capitalized and included in capital work-in-progress.

48 Comparative figures

Prior year figures have been reclassified/regrouped wherever necessary to conform to the current year’s classification.

for B S R & Co. For and on behalf of Board of Directors ofChartered Accountants Shasun Pharmaceuticals LimitedFirm registration No. 101248W

S Sethuraman S Abhaya Kumar Dr. S Devendra S Vimal KumarPartner Managing Director Wholetime Director Wholetime DirectorMembership No: 203491

Place: Chennai S Murali Krishna S HariharanDate: May 29, 2013 Company Secretary Chief Financial Officer

Notes to financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Consolidated Auditors’ Report

Independent Auditors’ Report to the Board of Directors of Shasun Pharmaceuticals Limited on the

Consolidated Financial Statements of Shasun Pharmaceuticals Limited and its subsidiaries and a

joint venture

Report on the financial statementsWe have audited the accompanying consolidated balance sheet of Shasun Pharmaceuticals Limited (“the Company”) and its subsidiaries and a joint venture (collectively referred to as “the Group”) as at March 31, 2013, and also the consolidated statement of profit and loss and consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statementsManagement is responsible for the preparation of these consolidated financial statements that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in accordance with the requirements of Accounting Standard 21, Consolidated Financial Statements and Accounting Standard 27, Financial Reporting of interest in Joint Ventures prescribed by the Companies (Accounting Standards) Rules, 2006. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, and to the best of our information and according to the explanations given to us, the consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the consolidated balance sheet, of the state of affairs of the Group as at March 31, 2013;(b) in the case of the consolidated statement of profit and loss, of the profit of the Group for the year ended on that date; and(c) in the case of the consolidated cash flow statement, of the cash flows of the Group for the year ended on that date.

Other mattersWe did not audit the financial statements and other financial information of certain subsidiaries and joint venture, which have been audited by other auditors whose reports have been furnished to us and our opinion is based on the report of other auditors. The attached consolidated financial statements include assets of Rs. 1,936.33 million as at March 31, 2013, revenues of Rs. 3,020.60 million and net cash outflows amounting to Rs. 59.11 million in respect of the aforesaid subsidiaries and joint venture for the year then ended. Our opinion is not qualified in respect of this matter.

for B S R & Co. Chartered Accountants Firm Registration No. 101248W

S SethuramanPartnerMembership No: 203491

Place: Chennai Date: May 29, 2013

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Consolidated Balance Sheet as at March 31, 2013(All amounts are in million Indian Rupees except share data and if otherwise stated)

Notes As at March 31, 2013

As at March 31, 2012

EQUITY AND LIABILITIESSHAREHOLDERS’ FUNDS

Share capital 3 113.25 110.25 Reserves and surplus 4 2,607.59 2,084.68 Money received against share warrants - 28.13 Foreign currency monetary item translation difference account (20.56) (9.95)

2,700.28 2,213.11 NON-CURRENT LIABILITIES

Long-term borrowings 5 1,182.81 778.73 Deferred tax liability (net) 6 - 15.28 Other non-current liabilities 7 10.40 0.80 Long-term provisions 8 60.68 52.15

1,253.89 846.96 CURRENT LIABILITIES

Short-term borrowings 9 3,177.24 2,286.01 Trade payables 10 2,093.62 2,116.78 Other current liabilities 11 1,091.45 911.84 Short-term provisions 12 128.43 230.01

6,490.74 5,544.64 10,444.91 8,604.71

ASSETSNON-CURRENT ASSETS

Fixed assetsTangible assets 13 3,636.70 2,768.21 Intangible assets 14 10.45 16.30 Capital work-in-progress 773.77 523.91 Intangible assets under development 35.21 -

Non-current investments 15 9.52 2.52 Deferred tax asset (net) 6 142.71 129.41 Long-term loans and advances 16 513.68 365.86 Other non-current assets 17 11.32 6.70

5,133.36 3,812.91 CURRENT ASSETS

Inventories 18 1,691.70 1,378.74 Trade receivables 19 2,637.47 2,317.59 Cash and bank balances 20 65.68 150.01 Short-term loans and advances 21 716.58 677.62 Other current assets 22 200.12 267.84

5,311.55 4,791.80 10,444.91 8,604.71

Significant accounting policies 2

The accompanying notes form an integral part of the financial statements.

As per our report of even date attached.

for B S R & Co. For and on behalf of Board of DirectorsChartered Accountants Shasun Pharmaceuticals LimitedFirm registration No. 101248W

S Sethuraman S Abhaya Kumar Dr. S Devendra S Vimal KumarPartner Managing Director Wholetime Director Wholetime DirectorMembership No: 203491

Place: Chennai S Murali Krishna S Hariharan Date: May 29, 2013 Company Secretary Chief Financial Officer

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Consolidated Statement of Profit and Loss for the year ended March 31, 2013(All amounts are in million Indian Rupees except share data and if otherwise stated)

Notes Year ended March 31, 2013

Year ended March 31, 2012

INCOME

Revenue from operations 23 10,847.71 10,664.03

Other income 24 182.81 409.20

11,030.52 11,073.23

EXPENDITURE

Cost of raw and packing materials consumed 25 5,646.92 5,585.66

Purchases of traded goods 17.74 52.26

Changes in inventories 26 (205.50) (24.01)

Employee benefits expenses 27 1,866.41 1,594.05

Finance costs 28 321.88 436.99

Depreciation and amortization 12 and 13 526.47 405.70

Other expenses 29 2,352.64 2,226.25

10,526.56 10,276.90

PROFIT BEFORE TAXATION 503.96 796.33

PROVISION FOR TAXATION

- Current tax 14.60 61.72

- Minimum alternate tax credit entitlement (14.91) (105.15)

- Deferred tax (benefit) (26.09) (165.91)

NET PROFIT FOR THE YEAR 530.36 1,005.67

Earnings per share 33

Basic 9.61 20.69

Diluted 9.61 20.39

Significant accounting policies 2

The accompanying notes form an integral part of the financial statements.

As per our report of even date attached.

for B S R & Co. For and on behalf of Board of DirectorsChartered Accountants Shasun Pharmaceuticals LimitedFirm registration No. 101248W

S Sethuraman S Abhaya Kumar Dr. S Devendra S Vimal KumarPartner Managing Director Wholetime Director Wholetime DirectorMembership No: 203491 Place: Chennai S Murali Krishna S HariharanDate: May 29, 2013 Company Secretary Chief Financial Officer

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Consolidated Cash Flow Statement for the year ended March 31, 2013(All amounts are in million Indian Rupees except share data and if otherwise stated)

Particulars Year ended March 31, 2013

Year ended March 31, 2012

CASH FLOW FROM OPERATING ACTIVITIESProfit before taxation 503.96 796.33 Adjustments for:Depreciation and amortization 526.47 405.70 Interest and finance charges 277.44 300.35 Bad debts written off 0.97 6.65 Provision for doubtful receivables - 1.88 Provision for doubtful advances 9.33 12.87 Provisions / liabilities no longer required written back (10.79) (60.94)Interest income (5.77) (7.20)Profit on sale of fixed assets (18.92) (279.47)Unrealised exchange differences, net (269.16) (166.22)Operating Profit before working capital changes 1,013.53 1,009.95 Adjustments for:(Increase) / decrease in inventories (312.96) (96.81)(Increase) / decrease in trade receivables (315.99) (738.13)(Increase) / decrease in loans and advances (19.46) (288.86)Increase / (decrease) in current liabilities and provisions (70.98) 731.58

294.14 617.73 Taxes paid (45.05) (109.44)Net cash from operating activities (A) 249.09 508.29 CASH FLOW FROM INVESTING ACTIVITIESPurchase of fixed assets and changes in capital work-in-progress (1,714.89) (1,108.57)Sale of fixed assets 38.36 302.87 Investments made (7.00) -Maturity of bank deposits having original maturity more than three months 1.30 26.26 Interest income 5.77 6.55 Net cash used in investing activities (B) (1,676.46) (772.89)CASH FLOW FROM FINANCING ACTIVITIESProceeds from issuance of share capital including securities premium 112.50 489.73 Proceeds from issuance of share warrants - 28.13 Availment of loans / borrowings 1,997.53 363.48 Repayment of loans / borrowings (476.30) (132.85)Dividend paid (25.53) (107.84)Dividend distribution tax paid (3.58) (18.11)Interest and finance charges (262.88) (306.45)Net cash from / (used in) financing activities (C) 1,341.74 316.09 Net increase / (decrease) in cash and cash equivalents (A+B+C) (85.63) 51.49 Cash and cash equivalents at the beginning of the year 139.92 88.43 Cash and cash equivalents at the end of the year 54.29 139.92 Particulars As at

March 31, 2013 As at

March 31, 2012Notes to cash flow statement:1. Components of cash and cash equivalents:

Cash on hand 2.97 0.85 Cheques on hand 2.03 - Balances with banks in current accounts 49.29 139.07

54.29 139.92 2. Current account balances with banks includes Rs. 4.08 (Previous year: Rs. 8.27) held at a foreign branch which are not freely remissible to the Company because of

exchange restrictions.Significant accounting policies 2

The accompanying notes form an integral part of the financial statements.

As per our report of even date attached.

for B S R & Co. For and on behalf of Board of DirectorsChartered Accountants Shasun Pharmaceuticals LimitedFirm registration No. 101248W

S Sethuraman S Abhaya Kumar Dr. S Devendra S Vimal KumarPartner Managing Director Wholetime Director Wholetime DirectorMembership No: 203491

Place: Chennai S Murali Krishna S HariharanDate: May 29, 2013 Company Secretary Chief Financial Officer

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1. Description of Group

The Shasun group is an India-based pharmaceutical group headquartered in Chennai, India. The group’s principal areas of operation are manufacturing of Active Pharmaceutical Ingredients (APIs), their intermediates and finished dosage. The group is also into product development and provides contract research and manufacturing services.

Entity Country of incorporation

Nature of interest % share holding

Functional currency

Shasun Pharmaceuticals Limited India Holding Company Indian Rupees (INR)

Shasun USA Inc., USA USA Subsidiary of Shasun Pharmaceuticals Limited 100% US Dollars (USD)

SVADS Holdings SA, Switzerland (‘SVADS’)

Switzerland Subsidiary of Shasun Pharmaceuticals Limited 100% Swiss Francs (CHF)

Shasun Life Sciences Private Limited India Subsidiary of Shasun Pharmaceuticals Limited 100% Indian Rupees (INR)

Shasun Pharma Solutions Limited, UK (‘SPSL’)

United Kingdom Subsidiary of SVADS 100% Pounds (GBP)

Shasun Pharma Solutions Inc., USA USA Subsidiary of SVADS 100% US Dollar (USD)

Shasun NBI LLC, USA USA Joint venture entity of Shasun Pharmaceuti-cals Limited.

50% US Dollar (USD)

Shasun NBI Nanotech India Pvt. Ltd. India Subsidiary of Shasun NBI LLC, USA. 99% Indian Rupees (INR)

Shasun Life Sciences Private Limited (‘SLSPL’) is an immaterial subsidiary of the Company and does not have any operation during the year. Consequently, it has not been considered for the purpose of consolidation and the investment in SLSPL has been considered in the consolidated financial statements in accordance with AS 13 (Accounting for Investments).

2. Significant accounting policies

2.1 Basis of preparation of consolidated financial statements

The financial statements have been prepared and presented in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention using the accrual basis. GAAP comprises accounting standards notified by the Central Government of India under Section 211(3C) of the Companies Act, other pronouncements of Institute of Chartered Accountants of India, the provisions of Companies Act, 1956 and guidelines issued by Securities and Exchange Board of India.

2.2 Principles of consolidation

The consolidated financial statements include the financial statements of Shasun Pharmaceuticals Limited (“SPL or the Company”), the parent company and all of its subsidiaries (collectively referred to as “the group” or “Shasun Group”), in which the Company has more than one half of the voting power of an enterprise or where the Company controls the composition of the Board of Directors. In accordance with AS 27, - “Financial Reporting of Interests in Joint Ventures”, issued under the Companies (Accounting Standards) Rules, 2006, the group has accounted for its proportionate share of interest in a joint venture by the proportionate consolidation method.

The consolidated financial statements have been prepared on the following basis:

adding together the book values of like items of assets, liabilities, income and expenses after eliminating intra-group balances / transactions and resulting unrealised profits in full. Unrealised losses resulting from intra-group transactions have also been eliminated except to the extent that recoverable value of related assets is lower than their cost to the group. The amounts shown in respect of reserves comprise the amount of the relevant reserves as per the balance sheet of the parent company and its share in the post-acquisition increase in the relevant reserves of the subsidiaries.

the company’s proportionate share in the joint venture is combined on a line-by-line basis by adding the book values of like items of assets, liabilities, income and expenses after eliminating intra-group transactions and resulting unrealized profits, to the extent it pertains to the company.

equity at the respective dates on which investment in such entities were made is recognised in the financial statements as goodwill / capital reserve. The parent company’s portion of equity in such entities is determined on the basis of the

Notes to consolidated financial statements for the year ended March 31, 2013(All amounts are in million Indian Rupees except share data and if otherwise stated)

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book values of assets and liabilities as per the financial statements of such entities as on the date of investment and if not available, the financial statements for the immediately preceding period adjusted for the effects of significant transactions, up to the date of investment.

parent company for its separate financial statements.

events in similar circumstances.

2.3 Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles in India requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

2.4 Tangible assets, intangible assets, depreciation and amortization

Tangible assets are stated at cost of acquisition or construction, less accumulated depreciation. Cost includes inward freight, duties, taxes and incidental expenses related to acquisition and installation of the asset. Borrowing costs directly attributable to acquisition or construction of tangible assets, which necessarily take a substantial period of time to be ready for their intended use, are capitalized.

Depreciation on tangible assets is provided using the straight-line method at the rates specified in schedule XIV to the Companies Act, 1956 or based on the useful lives of the assets as estimated by the management, whichever is higher. The management’s estimates of the useful lives for various categories of tangible assets are given below:

Asset category Estimated useful lives (in years)Factory buildings 30.00Non factory buildings 60.00Plant and machinery 10.00Electrical installations 10.00Office equipments 10.00Computers and accessories 2.50Furniture, fixtures and fittings 16.00Vehicles 5.00

Depreciation is charged on pro-rata basis for assets purchased / sold during the year. Individual assets costing less than Rs. 5,000/- are depreciated at 100%.

Intangible assets are recorded at the consideration paid for acquisition and are amortized over their estimated useful lives ranging from 3 to 5 years on a straight-line basis, commencing from the date the asset is available to the Company for its use.

The cost of assets not ready to be put to use before the yearend is disclosed under capital work in progress.

2.5 Impairment of assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount (higher of net realizable value and value in use) of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than the carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of profit and loss. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

2.6 Revenue recognition

Revenue from sale of goods is recognised when significant risks and rewards in respect of ownership of products are transferred to customers. Revenue from sale of goods is recognised in case of exports on the date of the bill of lading or

Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

airway bill which coincides with transfer of significant risks and rewards to customer and is net of trade discounts, sales returns and sales tax, where applicable. Revenue from domestic sales is primarily recognized on dispatch basis.

Service income is recognised as per the terms of contracts with customers when the related services are performed, or when the agreed milestones are achieved. Upfront non-refundable payments received under these arrangements are deferred and recognized as revenue over the expected period over which the related services are expected to be performed.

Dividend income is recognised when the unconditional right to receive the income is established.

Income from interest on deposits and loans is recognised on the time proportionate basis.

Export entitlements are recognised as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

2.7 Leases

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalized at fair value of the assets or present value of the minimum lease payments at the inception of the lease, whichever is lower.

Lease payments are apportioned between finance charges and reduction of the lease liability at the implicit rate of return. Finance charges are charged to the Statement of profit and loss.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of profit and loss on a straight line basis over the period of the lease or as and when the payments are made over the lease term.

2.8 Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments.

Current investments are carried at the lower of cost and fair value. Long-term investments are carried at cost and provisions are recorded to recognize any decline, other than temporary, in the carrying value of each investment.

2.9 Inventories

Raw and packing materials, stores and spare parts and lab chemicals are carried at cost. Cost includes purchase price (excluding those subsequently recoverable by the enterprise from the concerned revenue authorities), freight inwards and other expenditure incurred in bringing such inventories to their present location and condition. In determining the cost, weighted average cost method is used.

The carrying cost of raw and packing materials, stores and spare parts and lab chemicals are appropriately written down when there is a decline in replacement cost of such materials and finished products in which they will be incorporated are expected to be sold below cost.

Work in progress, manufactured finished goods and traded goods are valued at the lower of cost and net realizable value. The comparison of cost and net realizable value is made on an item by item basis. Cost of work in progress and manufactured finished goods is determined on a weighted average basis and comprises direct material, cost of conversion and other costs incurred in bringing these inventories to their present location and condition. Cost of traded goods is determined on weighted average basis.

The excise duty in respect of closing inventory of finished goods is included as part of inventory.

10 Employee benefits

The Company’s contribution in respect to Provident fund, Employees’ state insurance scheme, Pension fund and defined contribution plans are charged to the Statement of profit and loss when incurred.

Gratuity costs with respect to defined benefit schemes are accrued based on actuarial valuation, carried out by an independent actuary as at the balance sheet date. The contributions are made to approved ‘Shasun Chemicals Employees Gratuity Trust Fund’. Liabilities are determined by actuarial valuation using projected unit credit method carried out by an independent actuary as at the balance sheet date.

2.

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Provision for compensated absences is made on the basis of actuarial valuation as at the balance sheet date by an independent actuary using projected unit credit method.

Under the superannuation scheme, a defined contribution plan, the Company pays fixed contributions to approved superannuation trust and has no obligation to pay further amounts. Such fixed contributions are charged to the Statement of profit and loss on accrual basis.

All actuarial gains and losses arising during the year are recognized in the Statement of profit and loss of the year.

2.11 Foreign currency transactions and derivative instruments

Foreign currency transactions are recorded using the exchange rates prevailing on the dates of the respective transactions. Exchange differences arising on foreign currency transactions settled during the year are recognised in the Statement of profit and loss.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, not covered by forward exchange contracts, are translated at yearend rates. The resultant exchange differences are recognised in the Statement of profit and loss. Non-monetary assets are recorded at the rates prevailing on the date of the transaction.

Income and expenditure items at representative offices are translated at the respective monthly average rates. Monetary assets at representative offices at the balance sheet date are translated using the year-end rates. Non-monetary assets are recorded at the rates prevailing on the date of the transaction.

Forward contracts are entered into to hedge the foreign currency risk of the underlying outstanding at the balance sheet date. The premium or discount on all such contracts is amortized as income or expense over the life of the contract. Any profit or loss arising on the cancellation or renewal of forward contracts is recognised as income or expense for the period.

In relation to the forward contracts entered into to hedge the foreign currency risk of the underlying outstanding at the balance sheet date, the exchange difference is calculated and recorded in accordance with AS-11 (revised). The exchange difference on such a forward exchange contract is calculated as the difference of the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences are recognized in the Statement of profit and loss in the reporting period in which the exchange rates change.

Pursuant to the notification of the Ministry of Corporate Affairs issued on December 29, 2011, the Company has decided to exercise the irrevocable option granted under the said notification. Accordingly, the exchange fluctuations on all long term monetary items so far as they relate to the acquisition of a depreciable capital asset, are added to or deducted from the cost of the asset and are depreciated over the balance life of such assets. In cases other than those falling under above are accumulated in ‘Foreign Currency Monetary Item Translation Difference Account’ (FCMITDA) and amortized over the balance period of long-term monetary asset/liability but not beyond March 31, 2020.

In accordance with the announcement of “Accounting for Derivatives” made by the Institute of Chartered Accountants of India (‘ICAI’) on 29 March 2008, derivatives are marked to market and the changes in the value of such derivatives, to the extent they reflect a loss, are recognized in Statement of profit or loss.

In accordance with the accounting principles as prescribed under AS 11 (revised) and based on the analysis of relevant criteria, the group has designated the operations of the following overseas consolidated entities viz. Shasun USA Inc., USA and SVADS Holdings SA, Switzerland as ‘Integral foreign operations’.

In translating the financial statements of an integral foreign operation for incorporation in consolidated financial statements, revenue items are translated at average rates; monetary items are translated using the closing rate; non-monetary items are translated using the exchange rate at the date of transaction i.e., the date when they were acquired. The net exchange difference resulting from the translation of items in the financial statements of foreign integral operations is recognised as income or as expense for the year; contingent liabilities are translated at the closing rate.

In translating the financial statements of a non-integral foreign operation for incorporation in consolidated financial statements, the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation are translated at the closing rate; income and expense items of the non-integral foreign operation are translated using average exchange rates prevailing during the reporting period. All resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment.

Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

2.12 Research and development

Research costs are expensed as and when incurred. Development expenditure is capitalized based on technical feasibility for each project and where future recoverability can reasonably be assured through probable future economic benefits.

The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use, and otherwise when events or changes in circumstances indicate that the carrying value may not be recoverable.

Materials identified for use in research and development process are carried as inventories and charged to Statement of profit and loss on issuance of such materials for research activities.

2.13 Taxation

Income tax expense comprises current tax (i.e. amount of tax for the year determined in accordance with the income tax law) and deferred tax charge or credit (reflecting the tax effects of the timing differences between accounting income and taxable income for the year). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carry forward of losses under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed at each balance sheet date and written down or written up to reflect the amount that is reasonably and virtually certain respectively to be realized.

Minimum Alternate Tax (“MAT”) paid in accordance with tax laws, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the company would pay normal income tax after tax holiday period and accordingly, MAT is recognized as an asset in the balance sheet when it is probable that the future economic benefit associated with it will flow to the company and the asset can be measured reliably. MAT credit entitlement is reviewed at each balance sheet date and written down to the extent there is no convincing evidence to the effect that the Company will pay normal income tax during the specified period.

2.14 Earnings per share

Basic earnings per share is computed by dividing net profit or loss for the period attributable to equity shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share amounts are computed after adjusting the effects of all dilutive potential equity shares. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which could have been issued on the conversion of all dilutive potential shares. In computing dilutive earnings per share, only potential equity shares that are dilutive and that decrease profit per share are included.

2.15 Employee stock option based compensation

The Company calculates the compensation cost based on the intrinsic value method wherein the excess of value of underlying equity shares as of the date of the grant of options over the exercise price of the options given to employees under the employee stock option schemes of the Company is amortised over the vesting period on a straight line basis. The Company follows the SEBI guidelines for accounting of employee stock options.

2.16 Cash flows

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non–cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows operating, financing and investing activities of the Company are segregated.

2.17 Provisions, Contingent liabilities and Contingent assets

The Company creates a provision when there is present obligation as a result of past events that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognised nor disclosed in the financial statements.

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Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

As at March 31, 2013

As at March 31, 2012

3 SHARE CAPITALAuthorised75,000,000 (Previous year: 75,000,000) equity shares of Rs. 2/- each 150.00 150.00 1,000,000 (Previous year: 1,000,000) redeemable preference shares of Rs. 100/- each 100.00 100.00

250.00 250.00 Issued, subscribed and paid-up56,623,852 (Previous year: 55,123,852) equity shares of Rs. 2/- each fully paid up 113.25 110.25

113.25 110.25

a. Reconciliation of equity shares outstanding at the beginning and at the end of the reporting period

As at March 31, 2013 As at March 31, 2012

No. of shares Amount No. of shares AmountAt the beginning of the year 55,123,852 110.25 48,544,905 97.09 Issued during the year (Refer note 38) 1,500,000 3.00 6,578,947 13.16 Outstanding at the end of the year 56,623,852 113.25 55,123,852 110.25

b. Terms / rights attached to equity shares

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company’s residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company.

On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

During the year ended March 31, 2013, the amount of dividend recognized as distribution to equity shareholders was Rs. Nil per share (Previous year: Rs 2.00/- per share) on interim basis and Rs. 1.50/- per share (Previous year Rs. 0.40/- per share) as proposed final dividend.

c. Details of shareholders holding more than 5% of equity shares of Rs. 2/- each fully paid in the company

As at March 31, 2013 As at March 31, 2012

No. of shares % held No. of shares % heldCaduceus Asia Mauritius Limited 6,578,947 11.62% 6,578,947 11.93%Shasun Leasing and Finance Private Ltd 4,627,494 8.17% 4,327,494 7.85%Devendra Estates Private Limited 2,956,652 5.22% 2,831,406 5.14%

As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

During the previous year, the Company has made a preferential allotment of 6,578,947 equity shares of Rs. 2/- each at a premium of Rs.74/- per share aggregating to Rs. 499.99 to Caduceus Asia Mauritius Limited, Mauritius, a SEBI registered foreign venture capital investor after obtaining the approval of the shareholders and stock exchanges. In response to the Company’s intimation through the authorized dealer, the Reserve Bank of India has advised the Company to obtain the approval of the Foreign Investment Promotion Board (‘FIPB’) in respect of such investment. The Company has obtained the required approval from FIPB vide F.No.11(1)/2012-FIPB on July 24, 2012.

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As at March 31, 2013

As at March 31, 2012

4 RESERVES AND SURPLUS

Capital reserve

As at the beginning and end of the year 3.00 3.00

Capital redemption reserve

As at the beginning and end of the year 50.00 50.00

Securities premium account

Balance at the beginning of the year 894.28 417.71

Add: additions made during the years (Refer note 38) 109.50 486.84

Less: share issue expenses incurred during the year - 10.27

Balance at the end of the year 1,003.78 894.28

General reserve

Balance at the beginning of the year 409.94 356.88

Add: amount transferred from surplus in the Statement of profit and loss 26.28 53.06

Balance at the end of the year 436.22 409.94

Foreign currency translation reserve

Balance at the beginning of the year (16.83) (15.67)

Less: deductions during the year 17.58 1.16

(34.41) (16.83)

Surplus in the Statement of profit and loss

Balance at the beginning of the year 744.29 (69.85)

Add: net profit for the year 530.36 1,005.67

Less: appropriations

Proposed dividend 84.94 22.05

Interim dividend - 97.09

Dividend distribution tax 14.43 19.33

Transfer to general reserve 26.28 53.06

Balance at the end of the year 1,149.00 744.29

2,607.59 2,084.68

5 LONG-TERM BORROWINGS

Secured:

External commercial borrowings from banks 1,000.10 566.84

Foreign currency term loans from banks 874.19 677.58

Unsecured:

Loan from others 10.74 -

1,885.03 1,244.42

Less: disclosed under the head Other current liabilities (Refer note 11) (702.22) (465.69)

1,182.81 778.73

Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

Security details and terms of re-payment for loans:

i. Foreign currency loan (INR loan with swing option of converting into foreign currency loan) from State Bank of India amounting to Rs. 68.50 (Previous year: Rs. 158.16) is secured by way of first charge on:

(a) Moveable and immoveable fixed assets at Shasun Research Centre (SRC) located at Vandalur(b) Unencumbered immoveable assets at plot No. A1/A, measuring 5.01 acres located in Sipcot Complex, Cuddalore(c) Unencumbered Land measuring 1 acre and 3 cents located at Shasun Research Centre (SRC) located at Vandalur(d) Moveable and immoveable fixed assets at Ozhavarkarai located at Pondicherry (dispensary land and building)

The loan carries interest ranging from 5.00% to 6.00% and is repayable in 33 equal monthly instalments of USD 0.15 million.

ii. Foreign currency loan (with swing option of converting into foreign currency loan) from State Bank of India amounting to Rs. 229.79 (Previous year: Rs. Nil) is secured by way of first paripassu charge with DBS Bank on:

(a) The leasehold rights of the land admeasuring 45 acres and 47 cents located at Jawaharlal Nehru Pharma City - SEZ, Visakapatnam district, Andhra Pradesh

(b) Building, plant and machinery and other assets created / to be created out of bank finance at the aforesaid location

The loan carries interest ranging from 5.00% to 6.00% (if availed in USD), 12.00% to 13.50% (if availed in INR) and is repayable in 60 equal monthly instalments of USD 0.136 million.

iii. External commercial borrowing from DBS, Singapore amounting to Rs. 164.40 (Previous year: Rs. 206.12) is secured by way of first paripassu charge with State Bank of India on:

(a) The leasehold rights of the land admeasuring 45 acres and 47 cents located at Jawaharlal Nehru Pharma City - SEZ, Visakapatnam district, Andhra Pradesh

(b) Building, plant and machinery and other assets created / to be created out of bank finance at the aforesaid location

The borrowing carries interest ranging from 3.00% to 4.00% and is repayable in 8 semi-annual instalments of USD 0.50 million after an initial moratorium period of 18 months.

iv. External commercial borrowing from DBS, Singapore amounting to Rs. 548 (Previous year: Rs. Nil) is secured by way of exclusive first charge on the entire plant and machinery present and future at cuddalore plant.

The borrowing carries interest ranging from 3.00% to 4.00% and is repayable in 8 semi-annual instalments of USD 1.25 million after an initial moratorium period of 18 months.

v. External commercial borrowing from ICICI Bank Ltd, Singapore amounting to Rs. 287.70 (Previous year: Rs. 309.18) is secured by way of first paripassu charge on:

(a) Land, building, plant and machinery in formulation unit, located at Pondicherry(b) Land and building in MPP unit, located at Cuddalore(c) Land and building in API unit (API, Biotech, Pilot units) located at Pondicherry

The borrowing carries interest ranging from 3.30% to 3.55% and is repayable in 16 equal quarterly instalments of USD 0.38 million after an initial moratorium period of 15 months.

vi. Standby line of credit availed by Shasun Pharma Solutions Limited, UK (wholly owned subsidiary) amounting to GBP 2.00 million (Previous year: GBP 2.00 million) from State Bank of India, UK with support of Axis Bank Ltd is secured by:

(a) Exclusive charge on land approx 3.13 acres situated at Kumarapettai, Cuddalore(b) Second charge on plant and machinery situated at Cuddalore unit(c) Hypothecation by way of subservient charge on current assets of the Company

vii. Standby line of credit availed by Shasun Pharma Solutions Limited, UK (wholly owned subsidiary) amounting to GBP 3.05 million (Previous year: GBP 5.50 million) from State Bank of India, UK is secured by:

(a) Second charge on moveable and immoveable fixed assets at Shasun Research Centre (SRC) located at Vandalur(b) Second charge on unencumbered immoveable assets at plot no. A1/A, measuring 5.01 acres located in Sipcot

Complex, Cuddalore(c) Second charge on unencumbered land measuring 1 acre and 3 cents located at Shasun Research Centre (SRC)

located at Vandalur

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(d) Second charge on moveable and immoveable fixed assets at Ozhavarkarai located at Pondicherry (dispensary land and building)

(e) Paripassu first charge on the tangible assets of Shasun Pharma Solutions Limited, UK

viii. External commercial borrowing from Standard Chartered Bank, Mauritius, amounting to Rs. Nil (Previous year: Rs. 51.53) is secured by way of first charge on plant and machinery situated at Cuddalore units. The loan was repayable in 6 semi-annual installments of USD 1.00 million after an initial moratorium period of 30 months. The loan has been finally repaid during the year.

ix. Term loan from ICICI Bank amounting to Nil (Previous year: Rs. 81.80) is secured by Standby Line of Credit from Axis Bank Ltd which is covered as part of the Consortium arrangement from bankers referred under short term borrowings.

x. Term loan from Royal Bank of Scotland availed by Shasun Pharma Solutions Limited, UK (Wholly owned subsidiary) amounting to Rs. 280.67 (Previous year: Nil) is secured by Standby Line of Credit from Axis Bank Ltd which is covered as part of the Consortium arrangement from bankers referred under short term borrowings.

As at March 31, 2013

As at March 31, 2012

6 DEFERRED TAX LIABILITY / (ASSET)

Deferred tax liability on account of:

Depreciation and amortization 205.72 245.14

205.72 245.14

Deferred tax asset on account of:

Provision for mark-to-market losses on derivatives 3.35 58.53

Carry forward business loss and unabsorbed depreciation 315.25 266.68

Retirement benefits 9.88 5.64

Others 19.95 28.42

348.43 359.27

Net deferred tax liability / (asset) (142.71) (114.13)

The net deferred tax asset of Rs. 142.71 (Previous year: Rs. 114.13) has the following breakdown:

Deferred tax liability - 15.28

Deferred tax asset (142.71) (129.41)

(142.71) (114.13)

7 OTHER NON-CURRENT LIABILITIES

Security deposits from dealers 10.40 0.80

10.40 0.80

8 LONG-TERM PROVISIONS

Provision for employee benefits:

- Compensated absence 22.00 17.78

Provision for taxation net of advance taxes and tax deducted at source 30.81 25.61

Provision for mark-to-market losses on derivatives 7.87 8.76

60.68 52.15

Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

As at March 31, 2013

As at March 31, 2012

9 SHORT-TERM BORROWINGS

Secured:

Overdraft from banks 1,037.33 672.69

Packing credit facilities from banks 1,592.37 1,300.48

Unsecured:

Other loans from banks 547.54 312.84

3,177.24 2,286.01

Security details and terms of re-payment for loans:

i. Working Capital facility sharing under consortium arrangement from bankers aggregating to Rs. 3,800 (Fund based Rs. 2,200, Non-fund based Rs. 1,500, standby line of credit amounting to Rs. 100) is secured by way of exclusive first Charge on:

(a) Hypothecation of entire current assets on a pari passu basis with other members of the Consortium(b) Paripassu first charge on Land and Building in API Unit (API, Biotech, Pilot Units), located at Pondicherry(c) Paripassu first charge on Land and Building in MPP Unit, located at Cuddalore(d) Land, Building, Plant and Machinery in Formulation Unit, located at Pondicherry(e) Second charge on all other fixed assets of the Company

ii. Working capital facilities of Shasun Pharma Solutions Limited, UK are subject to corporate guarantee by the ulimate parent company, Shasun Pharmaceuticals Limited and are secured by Paripassu first charge on tangible assets of Shasun Pharma Solutions Limited, UK.

10 TRADE PAYABLES

Dues to micro and small enterprises 20.79 22.92

Dues to others 2,072.83 2,093.86

2,093.62 2,116.78

11 OTHER CURRENT LIABILITIES

Current maturities of long-term borrowings (Refer note 5) 702.22 465.69

Creditors for capital goods

Dues to micro and small enterprises 9.16 -

Dues to others 53.05 43.39

Interest accrued and not due 20.59 5.14

Advance from customers 95.95 175.64

Book overdraft 5.70 39.52

Retention money payable 31.66 8.28

Unclaimed dividends 3.44 6.92

Other liabilities 169.68 167.26

1,091.45 911.84

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As at March 31, 2013

As at March 31, 2012

12 SHORT-TERM PROVISIONS

Provision for employee benefits:

- Gratuity (Refer note 36) 13.13 25.14

- Compensated absence 8.45 2.57

- Pension payable 5.17 5.04

Proposed dividend 84.94 22.05

Dividend distribution tax payable 14.43 3.58

Provision for mark-to-market losses on derivatives 2.31 171.63

128.43 230.01

13 TANGIBLE ASSETS

Particulars Freehold land

Leasehold land #

Leasehold improve-

ments

Factory buildings

Non factory

buildings

Plant and machin-

ery *

Electrical installa-

tions

Office equip-ments

Computers and

acces-sories

Furniture, fixtures

and fittings

Vehicles Total

GROSS BLOCK

As at April 1, 2011 37.81 286.90 18.57 633.62 5.31 3,622.69 285.36 50.22 113.05 46.24 38.08 5,137.85

Foreign exchange adjustments 0.40 - 0.64 1.03 - 146.79 - 0.03 3.76 - 0.19 152.84

Additions / adjustments - - - 121.03 11.47 401.90 28.00 13.05 28.96 4.43 11.54 620.38

Deletions 0.07 - 13.68 23.86 - 63.71 9.45 3.13 1.30 5.22 18.88 139.30

As at March 31, 2012 38.14 286.90 5.53 731.82 16.78 4,107.67 303.91 60.17 144.47 45.45 30.93 5,771.77

Foreign exchange adjustments 0.06 - 0.83 0.21 (1.67) 76.68 - 0.01 0.90 (0.01) 0.04 77.05

Additions / adjustments 13.13 6.97 - 166.47 57.39 936.41 52.12 29.00 24.00 6.39 26.78 1,318.66

Deletions 0.44 - 4.75 14.39 1.27 249.32 0.52 3.35 3.56 0.83 11.59 290.02

As at March, 31 2013 50.89 293.87 1.61 884.11 71.23 4,871.44 355.51 85.83 165.81 51.00 46.16 6,877.45

ACCUMULATED DEPRECIATION

As at April 1, 2011 - 9.93 13.92 183.17 2.12 2,101.98 188.29 34.29 105.22 25.25 26.94 2,691.11

Foreign exchange adjustments - - - 0.26 - 44.97 - - 3.20 - 0.13 48.56

Depreciation for the year - 2.90 0.87 23.58 0.14 310.26 24.46 4.37 5.73 2.75 4.73 379.79

Deletions - - 13.51 9.20 - 62.21 7.45 2.94 1.29 3.93 15.37 115.90

As at March 31, 2012 - 12.83 1.28 197.81 2.26 2,395.00 205.30 35.72 112.86 24.07 16.43 3,003.56

Foreign exchange adjustments - - 0.33 0.01 (1.68) (1.12) - (0.17) 2.93 (0.01) 0.02 0.31

Depreciation for the year - 3.03 4.75 28.37 0.68 408.95 29.26 6.24 16.42 3.15 6.62 507.47

Deletions - - 4.75 3.95 0.10 245.26 0.50 3.21 3.56 0.80 8.45 270.58

As at March, 31 2013 - 15.86 1.61 222.24 1.16 2,557.57 234.06 38.58 128.65 26.41 14.62 3,240.75

NET BLOCK

As at March 31, 2013 50.89 278.01 - 661.87 70.07 2,313.87 121.45 47.25 37.16 24.59 31.54 3,636.70

As at March 31, 2012 38.14 274.07 4.25 534.01 14.52 1,712.67 98.61 24.45 31.61 21.38 14.50 2,768.21

# Amortization of Rs. 2.78 (Previous year: Rs. 2.76) is allocated to projects under capital work-in-progress.

* Depreciation for the year includes depreciation amounting to Rs. 42.11 (Previous year: Rs. 38.59) on assets used for research and development. During the year, the Company incurred Rs. 79.84 (Previous year: Rs. 14.76) towards capital expenditure for research and development.

Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

14 INTANGIBLE ASSETS

Particulars SoftwarePatent,

licences and trademark

Total

GROSS BLOCKAs at April 1, 2011 31.47 49.67 81.14 Foreign exchange adjustments - 6.71 6.71 Additions / adjustments 4.15 - 4.15 Deletions - - - As at March 31, 2012 35.62 56.38 92.00 Foreign exchange adjustments - 3.89 3.89 Additions / adjustments 9.76 2.50 12.26 Deletions - - - As at March, 31 2013 45.38 62.77 108.15 ACCUMULATED AMORTIZATIONAs at April 1, 2011 30.73 12.96 43.69 Foreign exchange adjustments - 3.34 3.34 Amortization for the year 1.35 27.32 28.67 Deletions - - - As at March 31, 2012 32.08 43.62 75.70 Foreign exchange adjustments - 0.21 0.21 Amortization for the year 5.14 16.65 21.79 Deletions - - - As at March, 31 2013 37.22 60.48 97.70 NET BLOCKAs at March 31, 2013 8.16 2.29 10.45 As at March 31, 2012 3.54 12.76 16.30

As at March 31, 2013

As at March 31, 2012

15 NON-CURRENT INVESTMENTS

Trade investments valued at cost unless stated otherwise

Unquoted equity instruments

Investments in wholly owned subsidiaries

Shasun Life Sciences Private Limited, India (Refer note 1)

10,000 (Previous year: 10,000) equity shares of Rs. 10/- each, fully paid up 0.10 0.10

Investment in others

Clarion Wind Farm Private Limited, India

900,000 (Previous year: 200,000) equity shares of Rs. 10/- each, fully paid up 9.00 2.00

SIPCOT Industrial Common Utilities Limited, India

4,242 (Previous year: 4,242) equity shares of Rs. 100/- each, fully paid up 0.42 0.42

9.52 2.52

Aggregate book value of unquoted non current investments 9.52 2.52

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As at March 31, 2013

As at March 31, 2012

16 LONG-TERM LOANS AND ADVANCES

Unsecured and considered good:

Capital advances 147.52 113.11

Security deposits 45.02 40.07

Minimum alternate tax credit entitlement 120.06 105.15

Loans and advances to other than related parties (Refer note (i) below) 55.13 -

Advance income tax and tax deducted at source (net of provision for taxation) 141.44 105.78

Others 4.51 1.75

513.68 365.86

(i) Loans and advances to other than related parties: Loans and advances to other than related parties include advances given to a Company towards capital expenditure for developing manufacturing facilities and loans granted to the shareholders of such Company towards acquiring equity shares. As at the year end, the Company is in the process of obtaining necessary approvals from the relevant authorities for transfer of aforesaid equity shares. Pending such approval, the loan balances have been been grouped under long-term loans and advances.

17 OTHER NON-CURRENT ASSETS

Unamortised expenses - ancillary borrowing costs 11.32 6.70

11.32 6.70

18 INVENTORIES

Raw and Packing materials (includes goods-in-transit of Rs. 40.00 (Previous year: Rs. 28.22))

728.77 628.19

Work-in-progress 628.88 457.24

Finished goods 228.94 197.47

Traded Goods 2.39 -

Stores, spares and lab chemicals 102.72 95.84

1,691.70 1,378.74

19 TRADE RECEIVABLES

Unsecured:

Outstanding for a period exceeding six months from the date they are due for payment

- Considered good 42.86 16.77

- Considered doubtful 14.80 16.05

Other receivables

- Considered good 2,594.61 2,300.82

Less: Provision for doubtful receivables (14.80) (16.05)

2,637.47 2,317.59

Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

As at March 31, 2013

As at March 31, 2012

20 CASH AND BANK BALANCES

Cash and cash equivalents:

Cash on hand 2.97 0.85

Cheques on hand 2.03 -

Balances with banks

- In current accounts 49.29 139.07

54.29 139.92

Other bank balances:

Margin money deposit 0.96 0.96

Deposits with original maturity for more than 3 months but less than 12 months 10.43 6.22

Deposits with original maturity for more than 12 months - 2.91

11.39 10.09

65.68 150.01

21 SHORT-TERM LOANS AND ADVANCES

Unsecured and considered good:

Advances recoverable in cash or in kind or for value to be received 548.51 512.11

Prepaid expenses 70.05 34.35

Loans to employees - 15.76

Balances with government authorities 84.46 115.40

Others 13.56 -

Unsecured and considered doubtful:

Advances recoverable in cash or in kind or for value to be received 21.50 12.17

Balances with government authorities 3.85 3.85

Less: Provision for doubtful advances (25.35) (16.02)

716.58 677.62

22 OTHER CURRENT ASSETS

Unbilled revenue 196.19 265.98

Unamortised expenses - ancillary borrowing costs 3.93 1.86

200.12 267.84

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Year ended March 31, 2013

Year ended March 31, 2012

23 REVENUE FROM OPERATIONS

Revenue from operations, grossSale of products 10,357.50 10,183.08

Sale of traded goods 14.12 67.77

Sale of services 142.56 93.13

10,514.18 10,343.98 Other operating revenues, grossSale of by-products 235.51 241.80

Export incentives 292.77 228.68

Scrap sales, gross 50.46 44.35

578.74 514.83 Less: Excise duty (245.21) (194.78)

10,847.71 10,664.03

24 OTHER INCOME

Interest income 5.77 7.20

Profit on sale of fixed assets (net) 18.92 279.47

Bad debts written off now recovered - 4.73

Provisions / liabilities no longer required written back 10.79 60.94

Insurance claims 53.72 33.50

Miscellaneous income 93.61 23.36

182.81 409.20

25 COST OF RAW AND PACKING MATERIALS CONSUMED

Opening stock 628.19 566.86

Add : Purchases during the year 5,747.50 5,646.99

Less : Closing stock (728.77) (628.19)

5,646.92 5,585.66

26 CHANGES IN INVENTORIES

Opening stock

- Manufactured goods 197.47 281.05

- Work-in-progress 457.24 349.65

654.71 630.70 Closing stock

- Manufactured goods 228.94 197.47

- Traded Goods 2.39 -

- Work-in-progress 628.88 457.24

860.21 654.71

(205.50) (24.01)

Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

Year ended March 31, 2013

Year ended March 31, 2012

27 EMPLOYEE BENEFITS EXPENSESSalaries, wages and bonus 1,672.27 1,452.35 Contribution to provident and other funds 90.95 75.79 Staff welfare expenses 103.19 65.91

1,866.41 1,594.05

28 FINANCE COSTSInterest expenses

- On bank loans 216.52 177.46 - On others 60.46 113.18 - On interest rate swap 0.46 9.71

Bank charges 67.30 82.01 Net loss on foreign currency transactions and translation - 54.63 Less: Capitalised during the year (Refer note 39) (22.86) -

321.88 436.99

29 OTHER EXPENSESConsumption of stores and spare parts 234.73 162.72 Power and fuel 788.59 718.25 Rent 37.29 39.30 Repairs and maintenance *

- Buildings 42.72 21.52 - Plant and equipment 350.09 319.14 - Others 161.10 137.61

Research and development expenses 16.88 15.10 Insurance 88.51 67.13 Rates and taxes 28.57 62.59 Net loss on foreign currency transactions and translation 2.07 142.13 Communication expenses 25.10 16.53 Travelling and conveyance 82.00 54.55 Legal and professional charges 134.72 61.75 Printing and stationery 14.60 13.74 Commission and discounts 37.95 54.99 Commission to non-wholetime directors 2.83 1.69 Freight outwards 205.44 263.85 Sales promotion expenses 34.75 21.28 Bad debts written off 0.97 11.38 Provision for doubtful receivables - 1.88 Provision for doubtful advances 9.33 12.87 Miscellaneous expenses 54.40 26.25

2,352.64 2,226.25

* Includes stores and spares consumed Rs. 156.52 (Previous year Rs.103.40)

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30 Commitments and Contingent liabilities

Particulars As at March 31, 2013

As at March 31, 2012

CommitmentsEstimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)

46.86 598.67

Contingent liabilitiesIncome tax - 318.14

Sales tax 15.37 13.27

Excise / customs 101.08 83.53

Counter guarantees given by the company to the bankers for bank guarantee 51.50 126.52

Obligations in respect of letter of credit outstanding 466.44 416.46

Corporate guarantee given by the Company to bankers of Shasun Pharma Solutions Limited, UK (wholly owned subsidiary)

540.54 949.67

Out of the above corporate guarantee utilized in connection with loans availed by SPSL, UK

457.02 454.14

Other claims against the Company not acknowledged as debts 41.22 38.76

31 Accounting for interest in Joint Venture (JV)

During 2011, the Company had entered into an agreement with Nanoparticle Biochem Inc. for establishing a joint venture company in USA called Shasun NBI LLC. The Company has a 50% interest in Shasun NBI LLC. The contractual arrangement between Nanoparticle Biochem Inc and the Company indicates that it jointly controls the financial and operating policies of Shasun NBI LLC in the ordinary course of business.

The Company has, in accordance with AS 27 “Financial Reporting of Interests in Joint Ventures” issued under the Companies (Accounting Standards) Rules 2006, accounted for its 50% interest in the JV by the proportionate consolidation method. Thus the Group’s income statement, balance sheet and cash flow statement incorporate the Company’s share of income, expenses, assets, liabilities and cash flows of the JV on a line-by-line basis.

The aggregate amount of assets, liabilities, income and expenses related to the company’s share in the joint venture included in these financial statements as of and for the year ended March 31, 2013 are given below:

Particulars As at March 31, 2013

As at March 31, 2012

EQUITY AND LIABILITIES

Shareholders’ funds

Reserves and surplus (89.26) (57.30)

Current liabilities

Other current liabilities 28.49 34.00

(60.77) (23.30)

ASSETS

Non-current assets

Tangible assets 0.03 -

Intangible assets - 12.79

Current assets

Cash and cash equivalents 3.08 7.82

3.11 20.61

Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

Particulars Year ended March 31, 2013

Year ended March 31, 2012

ExpenditureOperating and other expenses 1.09 0.53 Research and development expenses 16.88 15.10 Depreciation and amortization expense 13.76 23.96 Loss before taxation 31.73 39.59 Provision for tax - - Loss after taxation 31.73 39.59

32 Operating Leases

The Company had entered into operating lease arrangements in respect of office and storage space, which are subject to renewal at mutual consent thereafter. The cancellable arrangements can be terminated by either party after giving due notice. The lease rent expense recognized during the year amounts to Rs. 37.29 (Previous year: Rs. 18.85). The schedule for future minimum lease payments in respect of non-cancellable operating leases is set out below:

Particulars As at March 31, 2013

As at March 31, 2012

Not later than one year 17.35 17.57

Later than one year but not later than five years 16.55 19.63

Later than five years - 0.49

33 Earnings per share

Earnings per share are calculated by dividing the Profit/ (loss) attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.

Particulars Year ended March 31, 2013

Year ended March 31, 2012

EarningsNet profit after tax as per statement of profit and loss 530.36 1,005.67 Number of sharesNumber of shares at the beginning of the year 55,123,852 48,544,905 Add: Equity shares issued on conversion of warrants issued on preferential basis 1,500,000 - Add: Equity shares issued on preferential allotment basis - 6,578,947 Total number of equity shares outstanding at the end of the year 56,623,852 55,123,852 Weighted average number of equity shares outstanding during the year - basic 55,164,948 48,598,831 Weighted average number of equity shares outstanding during the year - diluted 55,164,948 49,324,241 Earnings per share

- of par value Rs. 2 – Basic (Rs.) 9.61 20.69 - of par value Rs. 2 – Diluted (Rs.) 9.61 20.39

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34 Related party disclosures

Details of related parties including summary of transactions entered into by the Company during the year ended March 31, 2013 are summarized below:

Key management personnel and their relatives:Dr. S Devendra Wholetime Director S Abhaya Kumar Managing Director S Vimal Kumar Wholetime Director M Mohan Wholetime Director (from August 19, 2011) D Jitesh S/o of Dr. S Devendra D Chaitanya S/o of Dr. S Devendra V Jatin S/o of S Vimal Kumar V Nitin S/o of S Vimal Kumar John Wiper Director, Shasun Pharma Solutions Limited, UK R Sundar Rajan Director, Shasun Pharma Solutions Limited, UK Kevin P Cook Director, Shasun Pharma Solutions Limited, UK (Until April 1, 2011)

Entities where Directors have control or significant influence:Shasun Finance LimitedShasun Leasing and Finance Pvt. Ltd.Devendra Estate Private LimitedShasun Foundation TrustBritest Limited (until April 1, 2011)

Transactions

Description Related party Year ended March 31, 2013

Year ended March 31, 2012

Sale of Assets Devendra Estates Private Limited 30.00 -

Rent for leased property Devendra Estate Private Limited 0.78 -

Donation Shasun Foundation Trust 4.15 0.60

Remuneration S Abhaya Kumar 8.44 2.67

S Vimal Kumar 5.65 2.74

Dr. S Devendra 5.65 2.66

D Jitesh 7.68 4.45

V Jatin 5.91 2.94

M Mohan 5.14 3.00

Kevin P Cook - 6.59

D Chaitanya 6.21 3.45

John Wiper 10.37 7.49

V Nitin 2.34 0.56

Balances

Description Related party Receivable / (Payable) as at March 31, 2013

Receivable / (Payable) as at March 31, 2012

Remuneration payable D Jitesh (0.37) (1.09)V Jatin (0.36) (0.89)M Mohan (0.54) -

Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

35 Segment reporting

Primary segment

The Company has identifed “Pharmaceuticals” as its single reportable business segment. Pharmaceuticals segment comprises manufacture of Active Pharmaceuticals Ingredients (API), Intermediates and Formulations.

Geographic segment

The business is organized into five key geographic segments.

Segment Revenues: Revenues are attributable to individual geographic segments based upon the location of the customers.

Segment Assets and liabilities: The assets and liabilities of the entity are not fully identifiable with/ allocable to individual reportable segments. Consequently, the management believes that it is not practicable to provide segmental disclosures relating to total assets and liabilities of the enterprise.

Secondary segment information - geographical segments:

Particulars Year ended March 31, 2013

Year ended March 31, 2012

Revenue from operationsAsia Pacific 863.10 650.62 Europe 2,665.47 2,416.41 India 2,421.61 2,076.90 Africa 30.39 30.72 Americas (North and South) 4,681.53 5,462.51 Rest of the world 185.61 26.87 Total 10,847.71 10,664.03

36 Employee benefits

Gratuity

The details in respect of gratuity are set out below:

Change in present value defined benefit obligation

Particulars As at March 31, 2013

As at March 31, 2012

Obligations at the beginning of the year 83.47 68.94 Current service costs 7.76 5.96 Past Service cost - - Interest costs 6.42 5.67 Actuarial (gain) / loss 2.42 8.49 Benefits paid (6.48) (5.59)Obligations at the end of the year 93.59 83.47

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Change in fair value of plan assets

Particulars As at March 31, 2013

As at March 31, 2012

Fair value of plan assets at beginning of the year 58.33 55.46

Expected return on plan assets 5.48 4.51

Actuarial gain / (loss) 0.36 (0.91)

Contributions 26.77 4.86

Benefits paid (6.48) (5.59)

Fair value of plans assets at end of the year 84.46 58.33

Actual return on plan assets 5.84 3.59

Reconciliation of present value of defined benefit obligation and the fair value of plan assets

Particulars As at March 31, 2013

As at March 31, 2012

Present value of defined benefit obligation at the end of the year 93.58 83.47

Fair value of plan assets at the end of the year 84.46 58.33

Funded status amount of liability recognized in balance sheet 9.12 25.14

Classified as long term provision - -

Classified as short term provision 9.12 25.14

Note: The provision for gratuity payable under note 12 includes provision relating to certain employees amounting to Rs. 4.01 (Previous year: Rs. Nil) who have completed 30 years of service with the Company. The provision is being made based on maximum ceiling under the Gratuity Act, 1972. Gratuity cost for the year

Particulars Year ended March 31, 2013

Year ended March 31, 2012

Current Service cost 7.75 5.96

Past Service cost - -

Interest cost 6.42 5.67

Expected return on plan assets (5.48) (4.51)

Actuarial (gain) / loss 2.06 9.41

Net gratuity cost 10.75 16.53

The gratuity cost has been recognized in ‘Employee benefits expenses’ under note 27 to the Statement of profit and loss.

Experience adjustment for the current and previous four years

Particulars As at March 31, 2013

As at March 31, 2012

As at March 31, 2011

As at March 31, 2010

As at March 31, 2009

Defined benefit obligation 93.58 83.47 68.94 64.56 58.73

Plan asset 84.46 58.34 55.46 46.21 29.16

Surplus/(defecit) (9.12) (25.14) (13.48) (18.35) (29.57)

Experience adjustments in plan liabilities - (loss) / gain

2.42 8.49 (2.03) 1.54 1.15

Experience adjustments in plan assets - (loss) / gain

(0.36) 0.91 - 0.62 (0.41)

Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

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Notes to consolidated financial statements for the year ended March 31, 2013 (Contd.)(All amounts are in million Indian Rupees except share data and if otherwise stated)

Assumptions

Particulars As at March 31, 2013

As at March 31, 2012

Discount rate 8.00% 8.57%Estimated rate of return on plan assets 8.00% 8.00%Attrition rate 9.00% 11.00%Rate of growth in salary levels 9.00% 9.00%

The estimates of rate of escalation in salary considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

Investment details of plan assets

Particulars As at March 31, 2013

As at March 31, 2012

Insurer managed funds 100.00% 100.00%Fixed deposits 0.00% 0.00%Total 100.00% 100.00%

37 Outstanding forward contracts

March 31, 2013 March 31, 2012

Currency No. of contracts Buy / sell Currency No. of contracts Buy / sell

USD 14 Sell USD 20 Sell

38 During the previous year, the Company had made preferential allotment of 1,500,000 convertible warrants of Rs. 75/- each aggregating to Rs. 112.50 to its Promoter, Promoter group and an independent director after obtaining the approval of the shareholders and stock exchanges. During the current year, consequent to the option exercised by the allotees towards con-version of the warrants, the Company had issued 1,500,000 equity shares to the allotees.

39 Borrowing costs in connection with the borrowing of funds utilized towards qualifying assets amounting to Rs. 22.86 (Previous year: Rs. Nil) have been capitalized and included in capital work-in-progress.

40 Comparative figures

Prior year figures have been reclassified/regrouped wherever necessary to conform to the current year’s classification.

for B S R & Co. For and on behalf of Board of DirectorsChartered Accountants Shasun Pharmaceuticals LimitedFirm registration No. 101248W S Sethuraman S Abhaya Kumar Dr. S Devendra S Vimal KumarPartner Managing Director Wholetime Director Wholetime DirectorMembership No: 203491

Place: Chennai S Murali Krishna S HariharanDate: May 29, 2013 Company Secretary Chief Financial Officer

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Research and Development Financials(All amounts are in million Indian Rupees except share data and if otherwise stated)

Balance Sheet as at March 31, 2013Rs in Mn

R&D Unit I As at

March 31, 2013

R&D Unit II As at

March 31, 2013

R&D Unit III As at

March 31, 2013

Total As at

March 31, 2013

Total As at

March 31, 2012*Sources of fundsHead Office Control a/c 28.91 192.59 - 221.50 265.90Add: Transfers 21.49 172.16 65.69 259.34 38.83Less: Excess of Expenditure over Income 14.38 36.02 132.84 231.91 (13.25) 78.94 133.97 346.87 83.23 221.50Total 36.02 231.91 78.94 346.87 221.50Application of FundsFixed AssetsR&D EquipmentsGross BlockOpening as at April 1, 2012 80.94 248.61 47.24 376.79 367.47Additions - 54.44 9.26 63.70 14.71Deletions - 0.06 - 0.06 52.63Closing as at March 31, 2013 80.94 302.99 56.49 440.43 329.55Less: Accumulated Depreciation (52.70) (195.36) (33.27) (281.33) (229.68)Net Block as at March 31, 2013 28.24 107.63 23.23 159.10 99.87OthersGross BlockOpening as at April 1, 2012 16.28 165.33 5.56 187.17 222.53Additions - 15.37 0.77 16.14 0.05Deletions - 4.69 - 4.69 40.97Closing as at March 31, 2013 16.28 176.01 6.33 198.62 181.61Less: Accumulated Depreciation (8.50) (56.99) (2.31) (67.80) (63.15)Net Block as at March 31, 2013 7.78 119.02 4.03 130.83 118.46Current AssetsInventory - Lab Chemicals - 5.26 51.69 56.95 3.17Total 36.02 231.91 78.94 346.87 221.50

Statement of Income and Expenditure for the year ended March 31, 2013 Rs in Mn

R&D Unit I Year ended

March 31, 2013

R&D Unit II Year ended

March 31, 2013

R&D Unit III Year ended

March 31, 2013

Total Year ended

March 31, 2013

Total Year ended

March 31, 2012*ExpenditureEmployee Cost 4.52 85.62 21.27 111.41 48.86Materials / Consumables / Spares 1.35 36.48 25.72 63.55 14.85Utilities - 12.49 - 12.49 5.11Other Expenditure - R&D 1.40 53.73 0.22 55.35 32.39Interest - 1.03 - 1.03 0.25Total Revenue Expenditure excluding Depreciation

7.27 189.35 47.21 243.83 101.46

Depreciation 7.11 29.56 5.44 42.11 38.59Total Expenditure 14.38 218.91 52.65 285.94 140.05

IncomeCommercial Sale of Prototype & Others - 86.07 65.90 151.97 56.82Total Income - 86.07 65.90 151.97 56.82

Excess of Expenditure over Income 14.38 132.84 (13.25) 133.97 83.23

* Comparative information does not include R&D Unit III

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Summary of Financial Information of Subsidiary Companies(All amounts are in million Indian Rupees except share data and if otherwise stated)

Rs in Mn

Name of the Subsidiary Shasun Pharma

Solutions Inc

Shasun USA Inc

SVADS Holdings

SA

Shasun Life Science Pvt

Ltd

Shasun Pharma

Solutions Ltd.

Company/Step-down Subsidiary

Paid up Capital of Subsidiary Company as on March 31, 2013 18.41 0.54 435 0.10 412.68

Reserves & Surplus as on March 31, 2013 5.93 (199.59) (11.52) (0.05) 157.61

Total Assets as on March 31, 2013 25.29 6.80 676.15 0.15 2,071.54

Total Liabilities as on March 31, 2013 0.95 205.85 252.61 0.11 1,501.25

Details of Investment (Excluding Investment in Subsidiaries) as on March 31, 2013

Nil Nil Nil Nil Nil

Turnover for financial year ended on March 31, 2013 Nil 0.41 Nil Nil 3,020.19

Profit/(Loss) Before Taxation for financial yearended on March 31, 2013

(4.27) (53.01) (8.90) (0.01) 321.45

Provision for Taxation for financial year ended on March 31, 2013 0.03 0.03 (0.37) Nil 0.35

Profit/ (Loss) After Tax for financial year ended on March 31, 2013 (4.30) (53.04) (8.53) Nil 321.10

Proposed Dividend for financial year ended on March 31, 2013 Nil Nil Nil Nil Nil

Year end Exchange Rates

GBP/INR 83.16

USD/INR 54.80 54.80

CHF/INR 57.68

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Notice of Annual General Meeting

Notice is hereby given that 38th Annual General Meeting of the Company will be held on Friday, August 2, 2013 at Red Cross Building, No. 32/50 Montieth Road, Egmore, Chennai – 600 008 at 2.30 p.m. to transact the following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the Audited Profit & Loss Account for the year ended March 31, 2013, the Balance sheet as on that date and the reports of the Auditors and Directors thereon.

2. To declare a dividend on equity shares for the financial year ended March 31, 2013.

3. To appoint a Director in place of Mr. R. Kannan who retires by rotation and who, being eligible, offers himself for re-appointment.

4. To appoint a Director in place of Mr. N. Subramanian who retires by rotation and who, being eligible, offers himself for re-appointment.

5. To consider and, if thought fit, to pass, with or without modification, the following resolution as an Ordinary Resolution:

“RESOLVED THAT M/s. B S R & Co., Chartered Accountants be and are hereby appointed as Auditors of the Company to hold office from the conclusion of this Meeting till the conclusion of the next Annual General Meeting”

“RESOLVED FURTHER THAT the Board of Directors be and is hereby authorized to fix the remuneration payable and the reimbursement of out-of-pocket expenses, if any to the said Auditors”

SPECIAL BUSINESS

6. To consider and if thought fit, to pass, with or without modification(s) the following resolution as an Ordinary Resolution:

RESOLVED THAT pursuant to the provisions of Section 260 of the Companies Act,1956, and Articles of Association of the Company, Prof. Indira J Parikh who was appointed as an Additional Director at the meeting of the Board of Directors of the Company held on August 2, 2012 and who holds office up to the date of ensuing Annual General Meeting of the Company and in respect of whom the Company has received a notice from a member under Section 257 of the Companies Act,1956, proposing her candidature, be and is hereby appointed as Director of the Company, liable to retire by rotation.

Registered Office: By order of the Board Batra Centre, 3rd & 4th Floor S. Murali Krishna No. 28, Sardar Patel Road, Company Secretary Guindy, Chennai – 600 032

Place : Chennai Date : May 29, 2013

Notes:1. A member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of himself. A proxy need not

be a member of the company. Proxies, in order to be effective, must be received at the registered office of the company not less than 48 hours before the commencement of the meeting.

2. An Explanatory statement pursuant to Section 173(2) of the Companies Act, 1956, relating to the Special business to be transacted at the meeting is annexed hereto.

3. Shareholders are requested to bring their copy of the Annual Report to the Meeting.

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4. Members/Proxies should fill the Attendance Slip for attending the Meeting.

5. The information on the Directors appointment/reappointment is provided as per Clause 49 of the Listing Agreement and is given in the Corporate Governance Section of this Annual Report.

6. Members who hold shares in dematerialized form are requested to write their client ID and DPID numbers and those who hold shares in physical form are requested to write their Folio number in the attendance slip for attending the meeting.

7. The register of members will be closed from July 25, 2013 to August 2, 2013 (both days inclusive).

8. All documents referred to in the accompanying notice and explanatory statement are open for inspection at the registered office of the company during office hours on working days up to the date of the Annual General Meeting.

9. The company has already transferred all unclaimed dividends declared up to the financial year 2004-05 to the Investor Education and Protection Fund pursuant to Section 205C of the Companies Act, 1956. Members who have still not encashed their dividend for subsequent years are requested to encash the same at the earliest.

10. The Company provides the facility of National Electronic Clearing Services (NECS) to all shareholders, holding shares in electronic and physical forms, subject to availability of such facility at the respective location of such shareholders.

All members holding shares in Electronic form are requested to furnish the new bank account number allotted to them by their bank after implementation of (CBS), along with a photocopy of a cheque pertaining to the concerned account, to their Depository Participant (DP) at their earliest convenience.

If they do not provide their new account number allotted after implementation of CBS by the bank, to the DP, please note that ECS to their old account may either be rejected or returned.

11. The equity shares of the Company are listed at BSE Limited & National Stock Exchange of India Limited.

Annexure to the Notice:

Explanatory Statement pursuant to Section 173 (2) of the Companies Act, 1956:

Statement in respect of Item No. 6

Prof. Indira J. Parikh is the Founder President of FLAME. She was a faculty at IIM-Ahmedabad for over 30 years and Dean from 2002-05. She has taught at INSEAD, Fontainebleau (France) and Texas A&M University. She has specialized in organization development and design and institution building. She has designed and offered management and leadership development programs in public sector, private sector and multinational organizations. She has been a consultant to various national and international organizations and a coach for many leading and upcoming organiations. Her current work focuses on facilitating learning and development of Management and employees across levels in the context of organisation growth. Prof. Indira J. Parikh is also on the board of several companies. Prof. Parikh has been honored with several life time achievement awards both nationally and internationally. She has written numerous articles, published in National & International Journals and is the co-author/author of several books.

Prof. Indira J Parikh was appointed as Additional Director by the Board at its meeting held on August 2, 2012.

She holds directorship in Zydus Wellness Ltd., Anil Ltd., Sintex Industries Ltd., Marck Biosciences Ltd. and Flame-Tao Knoware Pvt. Ltd.

No other directors, other than Prof. Indira J Parikh is concerned or interested in this resolution.

Registered Office: By order of the Board Batra Centre, 3rd & 4th Floor S. Murali Krishna No.28, Sardar Patel Road, Company Secretary Guindy, Chennai – 600 032

Place: Chennai Date: May 29, 2013

:

:

Regd. Office: “Batra Centre”, 28 Sardar Patel Road, Guindy, Chennai 600 032

ATTENDANCE SLIP I hereby record my presence at the 38th Annual General Mee g of the Company held onFriday, August 02, 2013 at 2.30. P.M. at Red Cross Building, No. 32/50, Chennai-600008. ___________________ ___________________________________ Client ID/Folio Number Signature of the a ending member/proxy Notes: 1. Please fill in this attendance slip and hand it over duly signed at the ENTRANCE OF THE MEETING HALL. 2. As a token of hospitality your Company is arranging lunch for the shareholders at the AGM venue between 1 p.m. and 2.30 p.m. Cut here

Regd. Office: “Batra Centre”, 28 Sardar Patel Road, Guindy, Chennai 600 032

PROXY FORM I/We __________________________________of ____________________________________________ being a Member of Shasun Pharma cals Limited hereby appoint _______________ of____________ _____________________________________________________________________________________ failing him ___________________ at ____________________________________________________ as my/our proxy to a end and vote for me/us/and on my/our behalf at the 38th Annual General Mee of the Company to be held on Friday, August 02, 2013 at 2.30 P.M. and at any adjournment (s) thereof. Signed this____________________ day of __________________ 2013 Signature Client ID/Folio Number Notes: This Proxy form must be returned so as to reach the Registered Office of the Company, not less than 48 hours before the time for holding the aforesaid meeting.

AffixRevenue

Stamp forRe. 1

Corporate Information

Corporate Office Multi Product Facility - Cuddalore“Batra Centre”, 3rd & 4th Floor, A1/B SIPCOT Industrial Complex28, Sardar Patel Road, Kudikadu, Cuddalore – 607 005Guindy, Chennai 600 032 Tamil Nadu, IndiaTamil Nadu, India Tel : 91-4142-285400Tel : 91-44-43446700, 22207500 Fax : 91-4142-239709Fax : 91-44-22350278 Email : jatin@shasun.comEmail : shasun@shasun.com

Bio-tech Centre Branch Office UKMathur Road, Periyakalapet 165 A Thornbury RoadPuducherry 605 014 Isleworth, London–TW7 4QG, United KingdomIndia Tel : + 44 20 8560 9711Tel : 91-413-2654181, 2654190, 2654100 Fax : + 44 20 8560 9455 Fax : 91-413-2655154 Email : nitin@shasun.comEmail : shapdy@shasun.com

Research Centre Shasun USA Inc. & Shasun PharmaNo.27, Vandalur-Kelambakkam Road Solutions Inc.Keezhakottaiyur Village 197, Rt 18 South, Suite 102Chennai – 600 048. East Brunswick, Tamil Nadu, India NJ 08816, USATel : 91-44-47406100 Tel : +1-732-465-0700 * 106Fax : 91-44-47406190 Fax : +1-732-465-0710 Email : src@shasun.com Email : chaitanya@shasun.com

API Facility – Puducherry SVADS Holding SAMathur Road, Periyakalapet Rue Fritz-Courvoisier 40Puducherry – 605 014, India. 2300 La Chaux-De-FondsTel : 91-413-2655157, 2654100 Suisse, SwitzerlandFax : 91-413-2655154 Tel : +41 32 967 95 95Email : shapdy@shasun.com

Finished Dosage Facility Shasun Pharma Solutions LtdUnit – II, R.S.No. 32, 33 & 34, PIMS Road Dudley Lane, DudleyPeriyakalapet, Puducherry – 605 014, India Cramlington, NorthumberlandPhone: 91-413-2655946 / 2655952 / 2655697 / 2655698 England NE23 7QGFax : 91-413-2655154 Tel : +44 191 250 0471Email : jitesh@shasun.com Email : john.wiper@shasun.uk.com

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Shasun Pharmaceuticals Limitedwww.shasun.com