Fresenius Kabi Oncology Limited - Moneycontrol.comoncology market. Driven by the rise in cancer incidence and diagnosis, improved access to cancer therapies, better health insurance

We are Growth Ready

Fresenius Kabi Oncology Limited

9th Annual Report 2011-12

A snapshot of our business, along with an in-depth analysis of how we performed during the year 2011-12. Also includes messages from the Chairman and Managing Director & CEO describing our business strategy and the way forward.

Growth Ready 01

Identity 02

Business Proposition 06

Financial Snapshot 12

Chairman’s Message 14

Managing Director & CEO’s Message 16

Board of Directors and Corporate Information 18

What’s Inside?

COMPANY OVERVIEW

Overview by the management on the operations of the year under review along with outlining future goals.

Management Discussion and Analysis 20

PERFORMANCE

Provide details of the Board, its policies and procedures with comprehensive nancial statements for Fresenius abi Oncology Limited.

Directors’ Report 32

Report on Corporate Governance 41

Financial Statements with Auditors’ Report 51

FINANCIAL SECTION

At a deeper level, our growth and our mission of caring for life are intrinsically

interlinked, where one works for the other.

This is because when we grow as an organization, we do so by embracing more

lives in our fold.

And when we see the positive impact we bring about in the lives of patients and

their families, our commitment to grow faster intensi es. Our resolve gets stronger,

our passion deeper.

With our raison d’être well articulated and our mission well strategized, we have,

over the last few years, worked steadfastly and single-mindedly towards the goal of

making our company growth ready and in turn ensuring every life is cared for.

We are proud to state that our relentless efforts have started to yield dividends.

Our value drivers have started to spur sustainable growth. Our strategic investments

have started to deliver value.

When you’re growth ready, life looks up. For us, for all our stakeholders and all the

patients whose lives we promise to improve forever.

This year’s annual report, we dedicate to sharing our story of why we are

growth ready.

At Fresenius Kabi Oncology

Limited, we are committed to

partnering a journey called

growth and living a mission

based on caring for life.

We are Growth Ready

01

“

”COMPANY OVERVIEW PERFORMANCE FINANCIAL SECTION

A leading company for cancer

research and anti-cancer products,

Fresenius abi Oncology Ltd. is an

entity constantly striving to grow

to the next level on the strength

of its deep-rooted values and key

strategic investments. The Company,

which develops, manufactures and

markets specialty pharmaceutical

products in the area of oncology, has

emerged as a Competence Centre

for development and production of

APIs & Dosage Formulations.

An entity geared for growth

02 9th Annual Report 2011-12

OUR EXCELLENT PEDIGREE

Capitalizing on our global reach, we are

continuously benchmarking our products

to global standards of oncology excellence

through our world class production, as

well as our state-of-the-art manufacturing

and research & development facilities.

OUR STATE-OF-THE-ART RESEARCH AND MANUFACTURING FACILITIES

Armed with world class expertise for

the development and manufacturing

of active pharmaceutical ingredients,

intermediates and oral & injectable

nished dosage forms, we run our

operations through our two dosage

form manufacturing units – Baddi

(Himachal Pradesh, India) and Nalagarh

(Himachal Pradesh, India) as well as

our API plant at alyani (West Bengal,

India). All our development work is

carried out from our Global Centre of

Excellence for Oncology at Gurgaon

(Haryana, India).

03COMPANY OVERVIEW PERFORMANCE FINANCIAL SECTION

OUR PEOPLE

No organization can succeed without the

people that it is made of. Our dedicated,

committed and highly skilled employees

are geared up to build an organization

which is ‘ready for growth’.

OUR MISSION

Caring for life


Quality - We are committed to quality

in everything we do. All our business

practices and processes are designed

to achieve excellence in quality along

the entire value chain – from research

development through production to

sales and marketing.

Medical Progress - We are dedicated to

improving patient outcomes. We apply our

unique expertise in pharmaceuticals and

medical devices to create products that

advance the therapy and care of critically

and chronically ill patients worldwide.

Focus on Customer Needs - In all

aspects of our operations, from product

development and production to delivery

and customer support, we are focused

on our customers’ needs and

expectations in order to support them

in the optimal treatment and care of

patients. With our global operations

and geographic footprints, we provide

optimal service to our customers

worldwide.

Honesty and Integrity - We demand

high ethical standards of ourselves,

our products and processes. We

are committed to dealing fairly and

respectfully with our employees,

business partners, government

authorities and the general public.

Success in our business ventures

depends upon maintaining the trust of

these essential stakeholders.

Passion and Commitment - We aim

to achieve a sustained increase in

corporate value in the interests of our

shareholders, our customers, employees,

business partners and the society as

a whole. We will work together in the

spirit of partnership to create value.

Our success is founded on the skills and

commitment of our employees and we

encourage individual responsibility and

entrepreneurship.

OUR VALUES


We are growth ready. We give you many reasons to prove our case:


The oncology segment has become

the centre of focus for drug rms

and investors, and, being the fastest-

growing therapy segments in the

pharmaceutical market, has garnered

more attention than any other therapy

segment.

Sample some of the facts that vindicate

this:

Market size of global oncology

market in 2011 has been estimated

at $ 60 billion and growing by 6.8%,

whereas in pharma emerging markets

growth for the same period has been

estimated at 15.2%.

According to analysts’ reports, global

generics market in 2011 is estimated

at $ 225 billion out of which emerging

markets have a market share of $ 57

billion.

According to IMS Global oncology

spending is expected to reach $ 75

billion. Current oncology spending of

$ 9.6 billion will be exposed to generic

competition through 2015.

Cancer is one of the ten leading

causes of death in India and accounts

for 8% of the main causes of deaths

in the country.

According to Frost & Sullivan, it

is believed that the fast-changing

lifestyle and increase in spending

among the middle class in urban

areas in India has resulted in the

growth of oncology market, which is

expected to be $ 4.4 billion by 2015,

up from $ 3 billion in 2010.

GROWING OPPORTUNITY MATRIX 11

Given the large number of unmet needs

and an ever-increasing prevalence of

cancer, there is virtually a gold rush

among drug companies to enter the

oncology market. Driven by the rise

in cancer incidence and diagnosis,

improved access to cancer therapies,

better health insurance coverage, and

higher pharmaceutical spending, the

oncology segment is forecasted to

grow strongly. Also, the Indian oncology

market is likely to be dominated by

generics in the coming years since the

generic pricing brings these drugs within

the reach of a vast majority of Indians.

The demand scenario augurs well for

us as we are well-placed, on the back of

our inherent strengths and experience,

to make the most of the growing

opportunity matrix and continue to work

relentlessly towards the ful llment of

our promise of total cancer care.

“

”

Driven by the rise in cancer

incidence and diagnosis, improved

access to cancer therapies, better

health insurance coverage, and

higher pharmaceutical spending,

the oncology segment is forecasted

to grow strongly.


Our R&D focus lies at the heart of

our ability to continually move up the

growth ladder. Enabled by continuous

expansion and strengthening of our

R&D facilities over the years, we have

emerged as Fresenius abi’s global

centre of excellence in oncology

for the development of Active

Pharmaceutical Ingredients (API) and

nished dosage forms that are used

in chemotherapy. Our R&D centre at

Gurgaon is working with focus and

dedication to develop quality and safe

global formulations for all our new and

existing molecules. Armed with this

strategic focus, and working relentlessly

towards product harmonization, we

have evolved a strong ability to launch

products faster, with a single formulation

in any market, on the expiry of patents.

We are continuously enhancing our

R&D skill-set through investments in

FOCUS TOWARDS R&D 22 “

”

Our R&D centre at Gurgaon is

working with focus and dedication

to develop quality and safe global

formulations for all our new and

existing molecules.


equipment, capabilities and people. Our

scientists are engaged in developing

innovative chemistry processes as well

as formulations and dosage forms to

reach out to a wider market.

Our state-of-the art R&D centre, spread

over 54,000 sq. ft. area, provides a

safe, healthy and conducive working

environment for scientists. Additionally,

all our laboratories are equipped with

modern equipment such as NMR,

Mass spectrometer, XRD, DSC, TGA,

GCs, HPLCs, to name a few, thereby

ensuring uncompromising standards of

quality.

The demand is huge and it needs

extensive and high-end manufacturing

strength to address the same at

every step of our growth trajectory.

Our state-of-the-art manufacturing

facilities at Baddi (Himachal Pradesh,

India), Nalagarh (Himachal Pradesh,

India) and alyani (West Bengal, India)

bear testimony to our manufacturing

prowess. We are, in fact one of the

few manufacturers worldwide to

have international registration for

the production of all steps within the

manufacturing process of cytostatic

agents. Our manufacturing capacities

are fully backward integrated to deliver

both API as well as drug products.

We have, over the last few years,

made signi cant investment towards

increasing capacities, capabilities

Two plants in Himachal Pradesh,

India

Baddi Plant certi cations:

Regulatory bodies of countries

such as Belarus, Zimbabwe,

Jordan, Hungary, Brazil,

Columbia, Egypt, Yemen, Turkey,

Namibia, Malaysia, Sudan,

Ethiopia, Pakistan, Nigeria

Nalagarh Plant certi cations:

WHO GMP, MHRA, SFDA

Dedicated for manufacturing of

cytotoxic products.

One plant at alyani (West

Bengal, India)

Approved by USFDA, TGA,

EDQM, WHO

Manufactures oncological and

non-oncological APIs in separate

and fully segregated areas.

Quality and compliances lie at the centre

of product acceptance and off-take,

especially in the healthcare industry.

Cognizant of this, we have been

steadfastly increasing our compliances

for acceptance in fast growing markets

across the world. We strongly believe

and quantities at both our facilities.

Apart from the manufacturing lines,

efforts have also been directed

towards enhancing the batch sizes

which ensure that market demands

are met in a timely and cost-

ef cient manner. Cost being a crucial

productivity factor, our manufacturing

sites are continuously working to improve

the yield through process improvements.

We have also built strong networks

wherein in a case of capacity constraints

(on account of excessive orders); we

have developed sites globally and in

India to execute production orders.

Quality remains a single most important

factor in whatever we do. All our

business processes are integrated

with our quality standards and are

geared to ensure best in class

products.

in improving the patients’ quality of

life, and in line with this commitment,

we ensure application of quality

management system in whatever we do.

We assure the highest possible quality of

products in terms of safety and ef cacy.

WORLD-CLASS MANUFACTURING FACILITIES

ENSURING HIGH QUALITY STANDARD

DOSAGE FORM PLANTS API PLANT

3

44

“

”

We are, in fact one of the few

manufacturers worldwide to have

international registration for the

production of all steps within

the manufacturing process of

cytostatic agents.


eeping pace with the growing demand

for better and more effective products

across the healthcare chain, worldwide,

there is a constant challenge for

companies like ours. In an effort to

address this growing demand, we offer

a high quality product portfolio which

encompasses over 40 formulations,

including cytotoxic and cytostatic

A glimpse of our oncology portfolio

CRAMs is a key growth area for us and

we plan to strengthen, consolidate

and grow our position in this area in

the oncology space. Our contract R&D

and manufacturing agreements with

Fresenius abi Germany and its af liates

provides us with a business model

wherein cost incurred in development

and manufacturing of future products

is borne by Fresenius abi Germany. To

capitalize on the opportunities in this

space, we aim at being in the market at

in both I.V. and oral dosage forms.

Additionally, as a step to build on our

existing portfolio, we continuously

monitor the upcoming patent expiries.

A clear therapeutic focus has led to a

strong product portfolio in this segment.

In the anti-cancer drug segment, we plan

to have one of the broadest portfolios of

oncology generic products.

the time of patent expiry. To this end,

we have taken several initiatives, which

include:

Initiating the new launch activities in

advance

Developing alternate sources

Developing in licensing avenues

Implementing better forecasting

tools

Ensuring all approvals are done prior

to launch of any product

EXPANDING PRODUCT PORTFOLIO

ACCELERATED FOCUS ON CONTRACT RESEARCH AND MANUFACTURING SERVICES (CRAMs)

55

66

ANASTROZOLE DOCETAXEL TRIHYDRATE OXALIPLATIN

BICALUTAMIDE DOCETAXEL ANHYDROUS PACLITAXEL

BUSULFAN GEMCITABINE HCI TEMSIROLIMUS

CARBOPLATIN IRINOTECAN HCI TOPOTECAN HCI

DECITABINE LETROZOLE VINORELBINE

“

”

In an effort to address this

growing demand, we offer a

high quality product portfolio

which encompasses over 40

formulations, including cytotoxic

and cytostatic in both I.V. and oral

dosage forms.


Our focus on “First to Market”

opportunities is backed by well-

established innovation and development

capabilities, resulting in improving the

existing treatments for cancer patients.

The distribution of products developed

The reasons are many, but the focus singular. Every initiative that we undertake, every

product that we launch, every delivery that we ensure, every quality compliance that we

assure is geared to make us growth ready to take on the demands of the future. With our

growth drivers in place and our strategic plans effectively mapped out, we are perfectly

poised to translate our mission of ‘caring for life’ into a real vision for one and all.

and manufactured at our facilities are well

supported by Fresenius abi’s sales and

marketing network, which we believe to be

a strong pillar of our growth. This further

helps in accelerating the global rollout of

our generic cancer product portfolio.

ROBUST SALES & MARKETING NETWORK77

ery the focu

ry that we ensure, every quality compliance tha

The increasing importance being given

to healthcare facilities, and the vitality

of protecting and saving lives, demands

launch of more and more cost-effective

drugs in the market. Our experience

and expertise enables us to offer well

priced medicines. This is further backed

by vertical integration of business

operations, implementing new systems

to ensure timely deliveries in a cost

ef cient manner and adopting global

project management processes.

SUSTAINING COST COMPETITIVENESS88


Snapshot of

Particulars 2011-12 2010-11 2009-10 2008-09 2007-08

Turnover (Including other Income)

52,721.81 41,866.06 43,251.35 28,629.01 26753.34

PBIT (before extra ordinary item)

3,806.09 8,534.71 9,026.39 -4,110.32 3,774.27

PAT (before extra ordinary item)

1,687.69 4656.10 6,499.87 -6,585.69 2,398.02

12

(` Lacs)


60,000.00 -

50,000.00 -

40,000.00 -

30,000.00 -

20,000.00 -

10,000.00 -

0.00 -

-10,000.00 -

26,7

53.

34

2007-08 2008-09 2009-10 2010-11 2011-12

3,77

4.2

7

2,3

98

.02

28,6

29.0

1

43,

251.

35

9,0

26.3

9

-4,11

0.3

2

6,4

99

.87

-6,5

85

.69

41,8

66

.06

8,5

34

.71

4,6

56

.10

52

,72

1.81

3,8

06

.09

1,68

7.6

9

Turnover (Including other Income)

PBIT (before extra ordinary item)

PAT (before extra ordinary item)


(` Lacs)

Chairman’s Message

First of all let me extend to you warmest greetings on behalf of Fresenius abi Oncology Limited, all its employees and on my behalf. It gives me great pleasure to connect with you once again at the end of another exciting and notable year in your Company’s journey of excellence. Our efforts to continuously raise the bar of quality and customer satisfaction yielded admirable results during a year of very dif cult economic and political environment, and today we stand tall as global leaders in the oncology market.

Dear Shareholders,

14

As we continue to invest in our R&D and

manufacturing facilities, we perceive even greater potential

for progressively scaling up our business to deliver even

greater value towards our commitment to ‘caring for life’.

This perception emanates from our deep understanding of

our inherent strengths, which we have built over the years

with the support and cooperation of our people.


In my message in your Company’s last year’s annual report, I had made a mention of the new strategic initiatives we had decided to take during the year 2011-12, namely:

Enter into a contract R&D and manufacturing agreement with Fresenius abi, Germany

Disinvest your Company’s entire shareholding in Fresenius abi Oncology Plc, U to Fresenius abi, Germany

Enter into distribution agreement with Fresenius abi India Pvt. Ltd. for selling and marketing our products in India

I am very proud to inform that all these actions were successfully completed during the year under review and we were able to reap their bene ts as planned. Having become a Company specialist in manufacturing and R&D, 2011-12 proved to be another year of focused growth and success across our business fabric, which we expanded to cover new products and geographies on the back of our world-class production facilities and excellence in Research & Development. Propelled by the collaborative passion and commitment of our employees, customers, business partners and the community at large, we steered your Company to create greater value for each of our stakeholders.

Some of our notable achievements during the year were :

Obtaining USFDA Marketing approval of Gemcitabine, Anastrazole & Topotecan

Winning the Docetaxel patent litigation in Malaysia

Obtaining approval of rst dossier through Centralised Procedure – Docetaxel abi

Taking concrete steps to enter the very tough Japanese market for oncology generics

All these are shining examples of excellent teamwork among our R&D, regulatory and Active Pharmaceutical Ingredients (API) and dosage forms manufacturing functions.

As a restructured entity, we unleashed our intrinsic and inherent strengths to the maximum to capitalize on the huge opportunity matrix in the global oncology space. Our strong focus on total compliance to international standards and our concerted efforts to constantly enhance our quality and capacity thrust enabled us to consistently and effectively meet the growing demands of the global oncology market, which was estimated in 2011 to stand at $ 60 billion and growing by 6.8%. We rolled out a new IT based quality management system in the plants to ensure world class quality at all times.

Our R&D focus gave a further llip to our growth strategy, with our global centre of excellence in oncology facilitating expansion of our portfolio of API and nished dosage forms that are used in chemotherapy. We shall continue to strengthen this critical area of your Company’s growth with the con dence of leveraging our R&D skill-set to develop low cost as well as

environmentally friendly processes so as to maximize return on investment.

As we continue to invest in our R&D and manufacturing facilities, we perceive even greater potential for progressively scaling up our business to deliver even greater value towards our commitment to `caring for life’. This perception emanates from our deep understanding of our inherent strengths, which we have built over the years with the support and cooperation of our people. It is a realization that is vested in the uncompromising standards of excellence benchmarked to international grades, which we have consistently and unwaveringly followed. We always encourage our employees to continuously develop their knowledge and skills through training programs and e-learning platforms.

Going forward, it shall be our endeavor to further build on these strengths with your continued support. This is our vision for the future – a vision that I am sure shall be very ably and effectively steered by our new Managing Director & CEO, Mr. Peter F. Nilsson. Mr. Nilsson brings to the Company a global perspective and experience that shall take the transformational journey of your Company to new heights. Please join us in tirelessly serving cancer patients around the world.

Rakesh BhargavaChairman


Managing Director & CEO’s Message

This is a very special and pleasurable

occasion for me. It is my rst interaction

with you as the Managing Director &

CEO of the Company and I hope to nd

many more such occasions in the future.

The realignment of our business and the

restructuring of our operational model

have transformed the Company into a

highly focused and value-driven entity,

providing an exciting landscape for

future growth.

As a Global Excellence Centre for

Research and Manufacturing of

Oncology Generics, we are now at the

helm of the global oncology business,

with delivery of high-quality, cost-

effective and affordable products and

services, as the single most important

driver of our success strategy.

Strong quality focus and compliance

adherences have enabled our evolution

as an organization par excellence and

we see ourselves ideally positioned to

harness our inherent true potential to

continue to outperform on all indices in

the years ahead.

Let me brie y touch upon the year gone

by which has been extremely challenging.

Our organization is going through a

transition after last year’s decision to

make Fresenius abi Oncology as a

Contract Research and Development as

well as Contract Manufacturing Centre

for Fresenius abi, Germany for all

future products. We also disinvested

Dear Shareholders,


the Company’s entire shareholding in

Fresenius abi Oncology Plc, U and

entered into a distribution agreement

with Fresenius abi India Pvt. Ltd. for

selling and marketing our products in

India. This has allowed us to focus on our

core capability. Over the last few years,

we have strategically invested in our

R&D infrastructure as well as enhanced

the production capacities at all our plant

which has resulted in increased outputs.

During the year, we have commissioned

new production lines at our API Plant at

alyani (West Bengal, India) and have

approved capacity enhancements at

our Dosage forms plants at Nalagarh

Himachal Pradesh, India) and Baddi

Himachal Pradesh, India). The work

is in full force at all the sites. We

have received the USFDA marketing

approval of Gemcitabine, Anastrazole

& Topotecan and obtained approval for

Docetaxel abi which is our rst dossier

through Centralized Procedure. Besides

these, we have successfully launched

integrated Global Project Management

tools in our R&D centre to ensure timely

product development and enable us to

realize rst to market opportunities.

People continue to hold a central role

in our strategy and through our talent

management initiative we ensure that

they continue to be highly motivated

and committed to see the Company

achieve its growth objective. All our

nancial processes are now in line with

the global requirements. The internal

audit processes continue to ensure

‘risk based approach’ in planning and

conducting audits. We also continue to

consider Information Technology as a

key business enabler and through the

year added business processes have

been automated.

Due to a highly competitive business

landscape, continuously falling generic

prices and adverse foreign exchange

uctuations, our pro tability has taken a

dip. However, as an organization, we are

committed to mitigate this by producing

more drugs without compromising

on the quality and ensuring cost

effectiveness.

On a more tangible level, our thrust

on and continued investment in R&D,

along with regular initiatives towards

expansion of our manufacturing

facilities, shall give the necessary

stimulus to our growth plans as we

move forward. And your unwavering

support, along with the contribution of

our employees, shall, I am sure, enable

the realization of our objectives.

Peter F. Nilsson

Managing Director & CEO


Board of Directors

Mr. Rakesh Bhargava | Non - Executive Chairman

Dr. Naresh Trehan | Non - Executive Independent DirectorMr. Dilip G. Shah | Non - Executive Independent Director

Mr. Peter F. Nilsson | Managing Director & CEO Mr. Thomas Mechtersheimer | Non - Executive DirectorM ht h i |


Company Secretary

Mr. Nikhil Kulshreshtha

Auditors

M/s G. Basu & Co.

Chartered Accountants

Internal Auditors

PricewaterhouseCoopers Pvt. Ltd.

Bankers

IDBI Bank Ltd.

The HSBC Ltd.

The Royal Bank of Scotland N.V.

Credit Agricol Corporate & Investment Bank

Deutsche Bank AG

Punjab National Bank

State Bank of India

Registered ce

B-310, Som Datt Chambers – I

Bhikaji Cama Place,

New Delhi – 110 066, India

Ph: + 91 – 11 – 2610 5570

Fax: + 91 – 11 – 2619 5965

complianceof cer.india fresenius-kabi.com

Corporate ce

Echelon Institutional Area,

Plot No. 11, Sector – 32

Gurgaon, Haryana – 122 001, India

Ph: + 91 – 124 – 488 5000

Fax: + 91 – 124 – 488 5003

CORPORATE INFORMATION

Dr. Michael Schönhofen | Non - Executive Director

Mr. Gerrit Steen | Non - Executive Director

Mr. Nitin Potdar | Non - Executive Independent Director


Management Discussion and Analysis

“The Company is a fully integrated entity, which

undertakes generics drug development, API development,

registrations across the world, with several of these products

also facing business risks. ”


WE ARE GROWTH READY…

We have all the reasons to believe this,

and our multifarious actions taken

over the past few years would lead our

esteemed shareholders too to this belief.

With our motto of ‘Total Cancer Care’

guiding our strategies, we are set to chart

new growth levels and this Management

Discussion & Analysis report will take you

through the journey so far.

We continue to reinforce our position in

generic oncology space by leveraging

our key strengths of R&D, generation of

intellectual property, regulatory affairs

and ef cient distribution & supply chain.

This makes us a part of an exclusive

league of companies which are not only

forward and backward integrated but

also have a strong presence in both

highly regulated and comparatively less

regulated world markets.

We play a pivotal role at global level in:

Drug development (both API &

Formulation)

Intellectual Property scan and

Regulatory expertise (for most of

the lings worldwide)

Production of both APIs & nished

dosage forms at GMP approved

manufacturing facilities

Distribution and logistics

FINANCIAL REVIEW

In the year under review, price erosion

in major markets which was witnessed

by almost all the generic oncology

companies, impacted the Company’s

pro t performance. While the total

turnover increased during the period

under review by a healthy 27%, the

pro ts declined as compared to the last

scal year.

The Company’s nancial snapshot for

the year 2011-12 is as follows:

Total turnover (including other income)

increased from ` 41,866.06 lacs in the

previous year to ` 52,721.81 lacs

Pro t before tax (before extraordinary

items) stands at ` 2,721.32 lacs

Formulation business continued

to maintain its share at 82.48% of

total sales, the rest coming from bulk

actives

The international business accounted

for 88.41% of total sales

Historically, the Company has been

a fully integrated entity, which

undertook generics drug development,

API development, nished product

development, generics product

registrations across the world and selling

and distribution in all the markets. This

structure demanded huge commitment of

the Company’s nancial resources. It also

exposed the Company to business risks

and price discounting in all the markets.

Besides this, the increasing weakening

of the India Rupee in comparison to Euro

and US Dollar, led to exchange rate losses,

which further impacted the balance sheet

of the Company.

To handle this problem, as an organization

we have decided to focus mainly on

our development and manufacturing

capabilities. We are looking at increasing

our batch sizes, but are also focusing on

increasing volumes by establishing new

manufacturing lines. Our R&D centre is

continuously looking at newer molecules

for development and is working with

the sole purpose of delivering on time

Abridged Pro t and Loss Statement

Particulars 2011-12 2010-11 % change

Turnover (including other income) 52,721.81 41,866.06 26%

Manufacturing and Other expenses 47,603.73 33,442.32 42%

PBDT 5,118.08 8,423.74 -39%

Depreciation 2,396.76 1,692.00

Pro t Before Extraordinary Income 2,721.32 6,731.74 -60%

Extraordinary Income/ (Loss) 4,448.28 268.07

PBT 7,169.60 6,999.81

Current and Deferred Tax 2,074.52 2,075.64

PAT 5,095.08 4,924.17 3%


(` Lacs)

to market at the right cost. Further, to

reduce the exchange rate losses, we are

exploring alternate hedging strategies.

The Management is con dent that these

steps will help us mitigate risks both in

short and long term arising on account

of the falling currency prices.

As intimated in the last Annual Report,

our strategy of becoming the outsourcing

hub for Research and Manufacturing for

Fresenius abi Deutschland (Germany)

and its af liates will protect us from the

adverse effects of market risks in future.

As per the terms of agreement entered

into with Fresenius abi Deutschland

(Germany) and its af liates, for all new

product developments, our R&D Centre

will work as the contract R&D centre

for Fresenius abi Germany and we

shall recover all costs with a markup.

Considering this arrangement, we expect

to bene t from new products as growth

drivers, without incurring the cost of

development as well as facing the risk

of high litigation costs which normally

beset generic pharmaceutical businesses.

Therefore, as an organization, we

continue to enhance our development

and manufacturing capabilities and we

see these as the basis of growth in the

future.

TRENDS IN GLOBAL ONCOLOGY

The global cancer market represents the

most dynamic pharmaceutical market in

the world, characterized by a changing

commercial landscape and a high

degree of innovation. Market size of the

global oncology market in 2011 has been

estimated at $ 60 billion and is growing

by 6.8%, whereas in pharmerging

markets growth for the same period has

been estimated at 15.2%.

The global markets for generic drugs

will continue to grow despite cost

reduction measures from governments

and healthcare players in many markets.

According to analysts’ reports, global

generics market in 2011 is estimated at

$ 225 billion out of which emerging

markets have a market share of $ 57

billion.

Growth in the generic industry has

primarily been fuelled by new players or

increased competitive offering, through

mergers, acquisitions and increasingly

collaborative working with the branded

industry. Equally interesting has been

the activity around the branded and

generic companies. Industry giants,

previously no friend to the generic

sector, have struck major deals with

companies in pharmerging markets

such as India, China and Latin America.

As healthcare systems worldwide

emphasize on early detection and

disease management, the ever-

increasing demand for newer and

innovative oncology drugs will continue

to be a growth driver for the oncology

generics market. The attractiveness of

the generics market is also increasing

due to growing pressure to reduce

healthcare costs globally, and also as a

“

”

The global markets for generic

drugs will continue to grow despite

cost reduction measures from

governments and healthcare

players in many markets. According

to analysts’ reports, global generics

market in 2011 is estimated at

$ 225 billion out of which emerging

markets have a market share of

$ 57 billion.


New research on response of cancer

cells to anti-cancer agents

References: IMS, Espicom, Generic Drugs,

Reports-N-Reports, Cancer Market Research,

American Society of Clinical Oncology,

TRENDS IN THE INDIAN ONCOLOGY MARKET

The changing oncology market

scenario in India

Cancer is one of the ten leading causes

of death in India, accounting for about

9% of all deaths in the country. It

represents 14% of non-communicable

disease (NCD) mortality in India with

more than 6 lakh patients dying of

cancer every year. There are about 28

lakh cancer patients in India with about

10 lakh new cases being added every

year. Tobacco-related cancers of the oral

cavity and lung are the leading cancer

types among Indian males while cervix

and breast cancer are the predominant

cancer types among females. These

cancer types account for over 50% of

all cancer deaths in India. 70% of cancer

cases in India are diagnosed late, leading

to poor survival and high mortality rate.

Rising disposable income has led

to various lifestyle changes such as

increasing rates of smoking, decline

in physical activity among af uent,

increase in the consumption of red meat

and fast food in urban areas. These

trends in turn have led to increase rates

of various cancers in India. Change in

dietary habits and delay in child bearing

age are thought to be factors for rising

breast cancer incidence among urban

females.

Treatment Scenario

The diagnosis and treatment of cancer

has progressed exponentially in the

last few decades in India. Almost all

major cities in India have a 500 to 1000

bedded specialized oncology centres.

These centres have state-of-the-art

facilities for diagnosis and treatment

result of a sizeable number of existing

products going off-patent with each

passing year.

Oncology market de nitely has a lot

of prospect but is likely to slow down

primarily due to increased genericization,

ongoing patent expiries of block-busters

and most importantly due to a key

market dynamic. In many tumor areas,

the market has evolved from one of a

high unmet need to one in which payers

have several choices and are therefore

imposing access restrictions. Because of

rise in targeted and competing therapies

available across the board, reaching

“blockbuster” status ($ 1 billion in annual

sales) with an oncology launch seems

more dif cult than ever before.

According to IMS Global, oncology

spending is expected to reach $ 75

billion (approximately € 58 billion).

Current oncology spending of $ 9.6

billion (€ 7.4 billion) will be exposed

to generic competition through 2015.

Growth in pharmerging markets will be

lifted by traditional chemotherapy.

Principle factors that are likely to affect

the growth of oncology segment are:

Newer, smarter and more ef cacious

drugs also known as targeted

therapies

Growth of biologicals and biosimilars

Rise of oral therapies

Rise of the anti-cancer industry in

general, increased availability &

access to anti-cancer medication

Severe genericization, rise in the

number of available alternatives;

thanks to patent cliff

Rise of pharmerging markets

Competitive pricing strategies

Rising awareness about early

diagnosis leading to better survival

New tests to monitor ef cacy of

treatments

Emergence of cancer vaccines

“

”

According to IMS Global,

oncology spending is expected to

reach $ 75 billion (approximately € 58

billion). Current oncology spending of

$ 9.6 billion (€ 7.4 billion) will be

exposed to generic competition

through 2015.


of cancer. The talent pool of medical,

surgical, and radiation oncologists

continue to grow though the demand

far outstrips the supply. Increased

insurance coverage also has improved

the treatment scenario.

Market Overview

Frost & Sullivan believes that the fast-

changing lifestyle and increase in spending

among the middle class in urban areas in

the region has resulted in growth for the

oncology market, which is expected to be

$4.4 billion by 2015, up from $ 3 billion

in 2010. There will be growth in early

diagnosis of cancers and targeted therapy

in top three types of cancer: lung cancer,

breast cancer and colorectal cancer.

Increased rate of incidence of various

malignancies prevailing in India has

made many domestic and international

companies to focus on oncology segment.

The current market is largely generic and

dominated by regional players and more

than 30 drug companies are active in

Indian oncology market.

Challenges for Pharma Companies

While the economy is booming, more

than one-third of the Indian population

lives below the poverty line. The highly

priced innovator products are out of

reach of most patients. The current

IP and regulatory scenario in India is

weak but offers hope towards emerging

stronger in the near future. Recent

granting of a compulsory license for

an anti-cancer product is a signi cant

development and is likely to change

the pricing dynamics of patented

anti-cancer products. The Ministry of

Health has announced that National

Programme for Prevention of Cancer,

Diabetes, Cardiovascular Disease, and

Stroke (NPCDCS) will be implemented

throughout the country under the

12th Five Year Plan. An assistance of

` 1 lac will be given to all cancer patients

under this plan for treatment and this

will have a great positive impact on the

market for oncology drugs. A National

Pharmaceutical Pricing Policy is on the

anvil and its impact on prices of oncology

products will have to be studied after it

is nalized and implemented.

KEY MARKETS

We have emerged as a leading player

within the generic oncology space by

consolidating initial gains in key markets,

key elements of which include portfolio

extension and management, entry of

products into key institutions and new

product rollout. Over and above, our

response to the challenging situation

of drug shortage in the US has been

consistent with customer expectations

and growing market demand to a large

extent. Efforts to globalize our product

portfolio are an ongoing process and the

year gone by has been successful in terms

of breakthroughs in EU-7 markets and a

key product ling in Japan. Gemcitabine

exclusivity in the US was a major upside,

which got us the opportunity of 180

day exclusivity due to a sudden market

situation. This helped us grab a quick

market share of around 10% in US. We

have also launched this product in EU

and all key pharmerging markets.

We continue to maintain our focus on

key “Pharmerging Markets”. Product

“

”

Our ongoing efforts to enhance

our visibility by organizing and

and symposia have paid rich

dividends. Our initiative; Fresenius

Kabi’s Oncology Regional

Conference more commonly

known as “FORCE” has indeed

turned into a major event in Asia


and market expansion campaigns in

line with patent landscape and market

opportunity in Asia, Latin America and

CIS countries continue to remain key

areas of our business expansion plan.

With manufacturing facilities having

GCC approvals, regulatory lings of key

molecules are underway to establish

a strong foothold in the Middle East

markets & further strengthen our

international presence.

Our ongoing efforts to enhance our

visibility by organizing and participating

in scienti c seminars and symposia

have paid rich dividends. Our initiative;

Fresenius abi’s Oncology Regional

Conference more commonly known

as “FORCE” has indeed turned into a

major event in Asia Paci c region. More

than 140 oncologists from all over Asia

joined the 3rd edition of this conference,

which was held in Ho Chi Minh City in

Vietnam. ey success factors behind the

success of this event are interest and

need of knowledge exchange programs

dedicated to highlight the latest trends

in clinical oncology. In addition, we

had a good exposure to clinicians in

American Society of Clinical Oncology

(ASCO) conference, European Society

of Medical Oncology (ESMO) conference

and European Association of Hospital

Pharmacists (EAHP) conference, thus

helping us in getting a global exposure.

INTERNATIONAL BUSINESS

International business continues

to remain the main engine for the

Company’s growth. This segment

accounts for nearly 88.41% of the

total sales – an achievement made

possible through concerted efforts and

involvement of teams cutting across

various departments. Timely product

registrations and launch activities,

coupled with good support from the

logistics team, have resulted in this

landmark success. This performance is

expected to continue as the Company

forays into newer markets, expands

its therapeutic reach and enhances its

strike rate.

FORMULATIONS

Formulations are the key growth driver

for the Company, contributing over

82.48% of the total sales. Sales of

formulations are primarily driven by

EU and the US. With more and more

products in the pipeline, this trend is

expected to continue in the coming

years.

API SALES

Maintaining its consistent performance,

API sales have contributed

approximately 17.52% to the total

revenues. This contribution is likely to

increase in future as Drug Master Files

(DMFs) for various products have been

submitted for approvals. The Company

is in the process of registering its APIs

in Japan and China. It has added more

customers in US, EU and RoW (Rest of

World) markets resulting in expansion

of its overall customer base. The

Company’s strategy of offering its APIs

to third parties enables it to have a large

capacity and, thereby, cater to internal

and external customer alike. Fresenius

abi is globally recognized today as a

supplier of high-quality APIs supported

by immaculate documentation,

regulatory approvals and timely

deliveries.

DOMESTIC BUSINESS

Domestic sales account for 11.59% of the

overall sales for the year under review.

Over the last few years, the sales

organization had taken a number

of measures to mitigate the various

business challenges like we revamped

our sales and distribution practices,

rationalized our portfolio in terms of

basket offerings and categorization

of our products to ensure the focus

they deserved. We strengthened

and improved our customer focus

“

”

Over the last few years, the

sales organization had taken a

number of measures to mitigate

the various business challenges

like we revamped our sales and

distribution practices, rationalized

our portfolio in terms of basket

offerings and categorization of our

products to ensure the focus they

deserved.


we have built capabilities and capacities

for developing and manufacturing

both APIs as well as nished dosage

forms. We specialize in developing and

delivering high-quality, cost-effective

products, using cutting-edge technology

and by maintaining one standard for

all our products, irrespective of the

target market. This makes us a unique

organization for we not only develop our

own APIs and nished products but also

manage our own plantation of Taxus

and Mappia Foetide at our plantation

sites in Arunachal Pradesh (India) and

Uttarakhand (India).

The Company is committed to “Quality

by Design” approach, which is endorsed

by trusted regulatory authorities like

USFDA, MHRA, and TGA etc.

Inspired by our mission “Caring for

Life”, we at Fresenius abi Oncology

Limited are committed to work tirelessly

and with full dedication for the cause of

cancer.

Equipped with state-of-the-art

laboratories and endowed with modern

technology instruments, our main focus

areas are:

Quality generics products in

therapeutic segment of oncology

Highly integrated approach towards

product development, technology

transfers and regulatory submissions

Our R&D centre has introduced global

project management processes and

methods to ensure timely, compliant

and cost effective delivery of products

based on market requirements. In view

of this, global project management

based IT solution as well as time tracking

of all internal R&D resources have been

introduced.

In our chemical research labs, our

scientists are developing wide range of

chemistries by ensuring non-infringing,

safe and cost-effective processes, which

are scalable to plant level with minimum

rework. All this is happening in a safe

working environment.

In our formulations labs, our scientists

are developing injectable & oral

drug products with high degree of

competency in handling cytotoxics. Our

labs are equipped for development of

liquid injectables, lyophilized injectables,

tablets and capsules.

The analytical development team

provides quality services focused on

accelerating the product development

cycle. The team works relentlessly

“

”

We specialize in developing

and delivering high-quality,

cost-effective products, using

cutting-edge technology and by

maintaining one standard for all

our products, irrespective of the

target market.

by establishing individual customer

contribution analysis by ey Opinion

Leaders ( OL) mapping.

We continued to invest in improving the

image of the Company and organized

conferences, such as Fresenius Oncology

Regional Conference (FORCE) and

Fresenius abi Oncology Meet (F OM).

The objective was to increase awareness

about cancer-related technologies and

drugs, as well as to create brand recall

of Fresenius abi in the minds of key

oncologists. Besides these, several other

activities like various special people

awareness campaigns on the occasion

of Doctor’s Day, World No Tobacco Day,

various cancer months – CRC, Breast, and

Lung were organized for better customer

service, institutional penetration and

brand recall. All this not only helped us

grow the business but also helped us to

stabilize our sales organization, which

over the past few years was undergoing

turmoil.

RESEARCH AND DEVELOPMENT

Research and Development is at the

centre of our Company’s focus. Our state-

of-the-art facility at Gurgaon (Haryana,

India) is fast emerging as a centre of

excellence for all oncology related

developments. Over a period of time,


in data mining and information

compilation for dossier ling, in

prescribed formats, for registering

products across different markets by

liaisoning with local regulatory agencies,

government bodies.

Responsibility to the environment and

community has occupied an important

place in our corporate thinking. We

strive to design our products for

a sustainable environment, while

providing a safe and healthy workplace

for all employees, contractors and

communities. A dedicated department

of Environment, Health and Safety (EHS)

has been set up to take care of these

activities by working with research and

support staff. Moreover, the R&D labs

are well-equipped with advanced safety

features, which ensure an environment

of occupational health and safety for

scientists working in the labs.

OPERATIONS

The USFDA approval for the

Company’s formulation unit at

Nalagarh (Himachal Pradesh, India),

together with approvals in EU,

Australia, Brazil, are a testimony

of the high quality standards of its

manufacturing facilities. Our various

“

”

The intellectual property team’s

key expertise area lies in

challenging patents. Our team

works proactively to identify early

market entry opportunities in

various countries, especially in the

US and Europe. They are skilled to

perform patent landscaping, patent

analysis etc.

and with utmost focus by performing

method development, validations,

polymorphic studies, impurity pro ling,

stability studies as per ICH guidelines

and microbiological support to all R&D

projects in most modern analytical

laboratories with certi ed, quali ed and

validated equipments.

The department of clinical research

and medical services develops clinical

as well as non-clinical programs for

generics as well as differentiated

generic formulations. We also conduct

and manage Phase I to IV clinical studies

as well as bioequivalence studies for

the Company. The team also supports

by generating medico regulatory

documents and conducting medical

evaluation of new drugs.

The intellectual property team’s key

expertise area lies in challenging

patents. Our team works proactively to

identify early market entry opportunities

in various countries, especially in the US

and Europe. They are skilled to perform

patent landscaping, patent drafting &

ling, infringement analysis etc. The

team is also competent to ‘challenge’

patents in different countries.

The regulatory affairs team specializes

manufacturing units provide the

Company with the edge to supply

products in regulated markets across

the globe. The Company’s operations

have played a key role in contributing

to its performance by enhancing

production capacities, optimizing

output, adding synergy to sales and

marketing teams’ efforts by providing

quality products in time, every time.

We have seen signi cant investment in

the last few years towards increasing

capacities, capabilities and quantities

at Baddi (Himachal Pradesh, India),

Nalagarh (Himachal Pradesh, India)

and alyani (West Bengal, India)

plants. There have been strategic

investments in new manufacturing

lines. The batch sizes are also being

enhanced to ensure market demands

are met. Cost is a crucial productivity

factor and our manufacturing

sites are continuously working to

improve the yield through process

improvements.

No manufacturing or development

efforts are worthwhile if we fail to reach

the markets of launch on time. Our

supply chain efforts in this regard are

signi cant and worth a mention. Some


of the steps taken in this regard are as

follows:

Initiating new launch activities

Developing alternate sources for raw

materials as well as nished goods

Developing in licensing avenues

Better forecasting tools

Ef cient coordination with plants,

R&D and regulatory

We believe in improving the patients’

quality of life and this commitment

requires application of quality

management system in whatever we do.

We assure highest possible quality of

products in terms of safety and ef cacy.

Compliance is another big area we focus

on as ethics in everything we do is core

to our business philosophy.

DOSAGE FORM MANUFACTURING

We manufacture and distribute

dosage forms through our 2 plants in

Baddi (Himachal Pradesh, India) and

Nalagarh (Himachal Pradesh, India).

Baddi (Himachal Pradesh, India)

manufactures dosage forms that cater

to the emerging markets of Asia-Paci c,

Latin America, Africa, Middle East, CIS

and Central Asia. The site is approved

by regulatory bodies of countries like

Belarus, Zimbabwe, Jordan, Hungary,

Brazil, Columbia, Egypt, Yemen, Turkey,

Namibia, Malaysia, Sudan, Ethiopia,

Pakistan, Nigeria etc. The Nalagarh

(Himachal Pradesh, India) plant caters

to the developed markets of the US and

Europe, and some emerging markets.

The plant is approved by USFDA,

WHO GMP, U. . MHRA. The plant has

the capability to manufacture small

volume parenterals and hard gelatin

capsules. In order to cater to the needs

of its growing geographical reach,

the Company has decided to enhance

the capacities at Nalagarh plant,

and also upgrade the current Baddi

facility to meet global manufacturing

practices. During the year, quality

compliance module of MetricStream

was implemented. The plant also

successfully faced audits from MHRA

(Oral Solids/Injectables), Fresenius

abi Japan, Columbia, Turkey and ISO

9000 & 14001 agencies.

API MANUFACTURING

Our API production plant at alyani (West Bengal, India) continues to play a pivotal role in the growth of the Company. The plant develops, validates and manufactures key APIs, maintaining the highest levels of international quality and GMP standards, while ensuring high productivity and cost competitiveness and catering to US, EU, Australia and many markets across the globe. We manufacture Antineoplastic APIs by multi-step organic synthesis using closed handling with Isolator technology. This site also specializes in Taxol chemistry, Organoplatinum chemistry, extraction, Hydrogenation, Chromatography (Preparative HPLC) and other organic syntheses, analytical development and impurity pro ling. The site is approved by USFDA, TGA, EDQM, WHO. The site is equipped with LCMS, GCMS, ICP, UPLC, Ion Chromatography, development and pilot plants for scaling up cytotoxic and high potency APIs.

The facility has reported continuous lling of DMFs and achievement of

regulatory audit approvals.

“

”

investment in the last few years

towards increasing capacities,

capabilities and quantities Baddi

(Himachal Pradesh, India),

Nalagarh (Himachal Pradesh,

India) and Kalyani (West Bengal,

India) plants. There have been

strategic investments in new

manufacturing lines.


It was a signi cant year for this facility. Some more of the key capacity enhancement projects were handed over to production. Our team at the plant worked relentlessly to develop better methods to improve the yield and quality, and cost and conduct process scale-up for key products, thereby directly impacting productivity and the Company’s bottom line.

The site is ISO 14001 (Environment) & 18000 (OHSA) certi ed by BVQI, and ISO 14001 by TUV, thus underlining the Company’s commitment to Environment, Health and Safety.

QUALITY

Our products and services, as well as commitment and dedication of our employees, are focused on the treatment of critically and chronically-ill cancer patients. In order to ful ll this fundamental prerequisite, we maintain a Quality Management System, which assures the appropriate quality of products with regard to product safety and ef cacy. This is achieved by instituting systems and processes to measure up to international standards. To maintain these high standards, periodic checks and reviews are done, to ensure optimum compliance on each and every aspect of the business value chain. This year, a lot of initiatives were taken

“”

A clear endorsement of this

quality commitment is the fact that

9001:2008.

in this direction. These include Supplier Quali cation, Complaint Management and Assessment of Customer Satisfaction. In order to ascertain that we get quality supplies from our contract manufacturers, detailed monitoring and inspections were also undertaken. Robust technological systems were installed to ensure that our promise of commitment to quality is well kept. A number of trainings were organized throughout the year to ascertain that each and every employee is following our quality motto with utmost rigor. A clear endorsement of this quality commitment is the fact that the Company is certi ed as ISO 9001:2008.

HUMAN RESOURCES

As a Company, we strongly believe that people play a key role in the growth of its business. Being a knowledge-centric industry, we have clear direction and agenda about building employee capabilities, both technical/functional as well as behavioral. We believe and encourage people to grow internally in their jobs, and our dedicated and experienced human resources staff works diligently to ful ll our people development agenda. The Manager-Employee partnership towards development has resulted in identifying key talent, and engaging the same for key projects and deliveries, apart

from providing them with cutting edge functional and leadership training opportunities.

The year under review saw an emphasis on development initiatives for the employees in the form of launch of the e-learning portal and facilitation of advanced leadership programs for senior team members. In a knowledge-centric industry like ours, managing knowledge becomes a key indicator of future success. eeping this in mind, a number of training sessions were facilitated by our in-house subject matter experts from all areas. This initiative ensured that our knowledge reservoir is not only accessible to our people but is also regularly enhanced and enriched giving us a competitive advantage.

Laying a strong emphasis on steadfast business ethics, the Fresenius abi Code of Conduct was communicated across locations. Various training sessions on the topic were conducted for the employees to ensure that the Code of Conduct is embedded deeply into the system and each and every member of the organization abides by it. Looking forward, more work is planned in this area so that strong business ethics becomes a part of our organizational fabric.

The technological advancements in the form of new HR modules, leaves,


regard, a Cancer Awareness Program was organized at our Baddi plant (Himachal Pradesh – India).

Early detection is key to improving survival rate in breast cancer. A breast care awareness event was organized in Pune in the form of a “Pink Ribbon Winter Festival”. The event was visited by more than 400 ladies and out of them about 80 ladies could be motivated to go for mammography.

Other initiatives like participation in the blood donation camp at Medanta Medicity hospital were also a key highlight of the year gone by. Serious efforts are being made at all levels within the Company towards making a meaningful contribution to uplift and transform the lives of the underprivileged. As a responsible corporate committed to ‘Caring for Life’, the Company is providing support for treatment of children suffering from cancer in collaboration with Cankids, an NGO that supports treatment of underprivileged children suffering from cancer. This year, we celebrated Christmas and New Year with these kids as a gesture of lending our care and support to the children suffering from this life-threatening disease.

OCCUPATIONAL HEALTH AND SAFETY

To keep our manufacturing sites, R&D Centre and Corporate Of ce safe, we undertook a series of measures like launch of ‘Safety Handbook’ and re

ghting training sessions and evacuation mock drills etc. A workshop on ‘prevention

& control of hazards in industry’ was organized successfully to ensure the well-being and safety of our employees. Emergency preparedness was ensured through regular safety programs and mock drill exercises at all locations with the help of internal as well as external specialists.

INFORMATION TECHNOLOGY

In line with our strategic policy, we continued our focus on strengthening our Information Technology base, and we continue to invest in people, new business applications and information security initiatives. Many new IT projects have been initiated to bring in ef ciency in our business operations.

With IT becoming a core business enabler and its increasing dependency on the IT systems, as a Company we have realized the need to put up a robust information security framework to secure business information. Employees have been made aware of IT security policies and procedures through mediums like educational handbooks and training sessions. Various other important initiatives like Self Service Portal for Helpdesk, Desktop Management System, complete data backup and ADSelf Service have been introduced. Infrastructural advancement in the form of alyani LAN setup was also undertaken.

INTERNAL CONTROLS AND THEIR ADEQUACY

The Company has strong and adequate internal control systems to ensure:

attendance and mediclaim in SAP introduced a much more ef cient way of working. More modules are expected to be added to the system to make it completely streamlined and ef cient. These changes will go a long way in positioning us as an organization that is highly people centric and process oriented.

eeping the employee welfare at the top of our agenda, this year we celebrated togetherness at a grand event, Fresenius abi Family Gala where employees and their families had moments of fun, frolic, joy and laughter. The event not only rejuvenated the minds and souls of the people but infused a renewed sense of commitment and dedication.

We plan to continue to give prominence to our people agenda, and to ensure best-in-class HR policies and processes to attract and retain talent, while providing world-class infrastructure and work experience to people.

CORPORATE SOCIAL RESPONSIBILITY

The Company’s abiding concern for society extends beyond its business. Our mission drives sincere efforts to promote good health, social development and better environment for sustainable, all-round growth through its various Corporate Social Responsibility programs.

It has been the Company’s constant endeavor to spread awareness on cancer, its causes and prevention. In this

”

As a responsible corporate

committed to ‘Caring for Life’, the

Company is providing support for

treatment of children suffering

from cancer in collaboration with

Cankids, an NGO that supports

treatment of underprivileged

children suffering from cancer.


companies into the segment is given, and this will further impact the pro tability margins. Stringent regulatory barriers thwarting entry of generics is a major detrimental factor for launching products in some of the key markets. Further, regulations prohibiting branding of generics and promotion to physicians in leading markets virtually leave everything at the discretion of the pharmacist.

Risk of patent infringement litigation in the US and the EU is another major challenge, which usually leads to delays in the launch of key products in these markets. Development of non-infringing products is another critical area that could cause delays due to regulatory, IP roadblocks and dependence on external agencies to an extent for vital intermediates.

SYNERGIES AND OPPORTUNITIES

Fresenius abi, through its af liates and distributors gives direct access to oncology generics business in all key markets, such as EU, US (via APP), APAC, LATAM, Africa, CIS and Middle East countries, to offer the Company’s product range through an excellent logistics network and a dedicated sales force.

Fresenius abi is internationally known for its leadership in hospital-based infusion therapy products and related solutions. The Company has rm plans to leverage this expertise to build a credible global oncology generics franchise with a vision of total cancer care, by providing a comprehensive product portfolio. Another step in bringing synergy is integration of ideas to develop and launch a range of differentiated products, which would enable the Company to manage the product life cycles more effectively and provide newer avenues of growth.

To complement its existing therapeutic portfolio, the Company has identi ed products that provide excellent business opportunity. Lastly, the Company’s strengths in R&D, API and formulations manufacturing would be the key

to faster market access and a step forward towards achieving its vision of global leadership in oncology generics business.

CAUTIONARY STATEMENT

Statements in this management discussion and analysis describing the Company’s objectives, projections, estimates and expectations may be ‘forward looking statements’ within the meaning of applicable laws and regulations. Forward looking statements are identi ed in this report, by using the words ‘anticipates’, ‘believes’, ‘expects’, ‘intends’ and similar expressions in such statements. Although the Company believes its expectations are based on reasonable assumptions, these forward looking statements may be in uenced by numerous risks and uncertainties that could cause actual outcomes and results to be materially different from those expressed or implied. Some of these risks and uncertainties have been discussed in the section on risk factors.

Company assets are adequately safeguarded

Transactions are authorized, timely and correctly recorded

Adequate reliance and assurance on nancial controls

Compliance with laid down policies & procedures and applicable laws & regulations

Effectiveness and ef ciency of operations

The internal audit process follows a ‘risk-based approach’ in planning and conducting audits, thus aligning the internal audit focus with business objectives. The internal audit objectives are achieved through an on-going extensive review of majority of transactions in value terms, with respect to design of the internal controls and operative effectiveness of the same.

Corrective measures and process improvements recommended by the internal auditors are communicated to the Management on a regular basis. Focus on implementation of the same is enhanced through regular follow-ups and periodic updates to the Management and the Audit Committee.

Independence of the audit and compliance functions is ensured by direct reporting of the internal auditors to the Audit Committee of the Board. Details on the composition and functions of the Audit Committee can be found in the section on Corporate Governance of the annual report.

OUTLOOK ON RISKS AND CONCERNS

Oncology generics players are currently facing a number of challenges, including continued pricing pressure, tightening of product speci cations by innovator companies, unpredictable market authorization timelines, lack of patient awareness and education on generics, and mistrust among physicians and prescribers. Generic products are likely to come under intense pricing pressure due to changing pricing and reimbursement policies of healthcare providers and governments. Entry of more and more


Directors’ Report

2011-12


33

Dear Shareholders,

The Board presents below the report on the business and

operations of the Company for the financial year ended

31st March 2012.

FINANCIAL PERFORMANCE

Key aspects of Company's financial performance for the

financial year ended 31st March 2012 are summarised

below:

(` in lacs)

For the For the

year ended year ended

31st March 2012 31st March 2011

Turnover 52,721.81 41,866.06

(including other income)

Profit before Tax and

Extraordinary Items 2,721.32 6,731.74

Extraordinary Items 4,448.28 268.07

Profit before Tax 7,169.60 6,999.81

Less: Provision for 1,480.91 1,399.96

Taxation (Current)

Provision for 593.61 675.68

Taxation (Deferred)

Profit after Tax 5,095.08 4,924.17

Add: Balance of profit 26,314.99 21,390.82

brought forward from

previous year

Profit available for 31,410.07 26,314.99

appropriation

Appropriation to:

General Reserve 25,000.00 NIL

Balance Carried over to 6,410.07 26,314.99

the Balance Sheet

DIVIDEND

Considering the ongoing capacity expansion projects and

future growth plans, the Directors have decided to plough back

Directors' Report

the profits of the Company for financial year 2011-12.

Accordingly, the Board does not recommend any dividend

payment for the financial year ended 31st March 2012.

BUSINESS PERFORMANCE AND OPERATIONS

The Company's operations, performance, industry trends and

other material changes with respect to the Company and its

subsidiary, wherever applicable, during the year are

exhaustively discussed in "Management Discussion and

Analysis Report" which forms part of this Annual Report.

EXPANSION AND UPGRADATION PROJECTS

During the year, the Company has undertaken several

modernization/upgradation and expansion projects at its plant

locations in Himachal Pradesh and West Bengal (India) in order

to fulfill the local and international regulatory norms and cater

to the market demand for Company's products.

SHARE CAPITAL

During the year, authorised and paid up share capital of the

Company remained unchanged in comparison to previous year.

CORPORATE GOVERNANCE

The Company has adopted the best possible corporate

governance norms and it has been our endeavour to comply

and upgrade to the changing norms.

A separate section on Corporate Governance and a Certificate

from the Auditors of the Company regarding compliance of

conditions of Corporate Governance as stipulated under Clause 49

of the Listing Agreement(s) with the Stock Exchange(s) forms

part of the Annual Report.

In terms of sub-clause (v) of the Clause 49 of the Listing

Agreement, a certificate of the CEO/ CFO, inter-alia, confirming

Particulars

34

the correctness of the financial statements, adequacy of the

internal control measures and reporting of matters to the Audit

Committee in terms of the said clause, is also enclosed as a

part of the Annual Report.

BOARD OF DIRECTORS

Resignations

1. Dr. Satish B. Kulkarni resigned as the Managing Director

& CEO of the Company w.e.f. 20th October 2011.

The Board places on record its sincere appreciation and

hails the significant and remarkable contribution made

by Dr. Kulkarni in the growth of the Company during his

tenure as the Managing Director & CEO of the Company.

2. Dr. Anand Chand Burman, Non Executive Director of the

Company, resigned from the Directorship of the Company

w.e.f. 2nd February 2012.

The Board places on record its sincere appreciation

towards the valuable contribution and guidance rendered

by Dr. Burman during his tenure as a Director of the

Company.

3. Mr. Mats Christer Henriksson, Non-Executive Director of

the Company, resigned from the Directorship of the

Company w.e.f. 30th May 2012.

The Board places on record its sincere appreciation

towards the valuable contribution and guidance rendered

by Mr. Henriksson during his tenure as a Director of the

Company.

Appointments

Managing Director & CEO

Mr. Peter F. Nilsson was appointed as the Managing Director &

CEO of the Company w.e.f. 20th October 2011 for a period of

two years.

Appointment and remuneration of Mr. Nilsson have also been

approved by the Shareholders of the Company vide a Special

Resolution passed through postal ballot on 13th December 2011.

Being originally appointed as an Additional Director on

20th October 2011, Mr. Peter F. Nilsson will hold office up to the

date of the ensuing Annual General Meeting. The Company

has received a notice under Section 257 of the Companies Act,

1956, from a member, proposing the candidature of

Mr. Peter F. Nilsson for appointment as a Director in the Annual

General Meeting. He is eligible for appointment as a Director

and the Board recommends his appointment as a Director not

liable to retire by rotation in the Annual General Meeting.

Brief Profile of Mr. Peter F. Nilsson

Mr. Peter F. Nilsson was the Chief Financial Officer of Fresenius

Kabi Oncology Limited from 1st November 2008 to 20th October

2011. He holds a Degree in Accounting from Stockholm

University and has also completed a Finance Management

Course from INSEAD, France.

Mr. Peter F. Nilsson has a rich work experience of over 20 years

in the areas of Financial and Accounting Management at the

international level. He commenced his Career as 'Controller'

with Kabi Pharmacia Sweden in 1990 and subsequently moved

on to work for Pharmacia & Upjohn. After joining Fresenius

Group in 1999, Mr. Peter F. Nilsson has managed key positions

within the Group at various locations.

Appointment of Director in casual vacancy

In view of the resignation of Mr. Mats Christer Henriksson, the

Board of Directors, in the meeting held on 30th May 2012,

appointed Mr. Thomas Mechtersheimer as a Director in casual

vacancy in accordance with the provisions of Section 262 of

the Companies Act, 1956, read with Article 118 of the Articles

of Association of the Company.

Mr. Thomas Mechtersheimer, will hold office for the remaining

tenure of Mr. Mats Christer Henriksson.

In terms of requirements of Clause 49 of the Listing Agreement,below are some important information related to Mr. ThomasMechtersheimer:

Date of Birth 5th December 1964

Date of appointment 30th May 2012

Qualification • Bachelors degree in ElectricalEngineering from HelmleElektrotechnik, Weinstadt,Germany,

• Masters degree in InternationalMarketing and Foreign Tradefrom University of Economicsand Technology, Reutlingen,Germany

35

Expertise in specific Mr. Thomas Mechtersheimer hasfunctional area a rich & diversified international

experience in the field of Finance,Business development andoperations.

Shareholding in Fresenius NilKabi Oncology Ltd.

Directorship/Committee NilMembership in otherIndian Public Companies

DIRECTORS RETIRING BY ROTATION

As per Article 130 of the Articles of Association of the Company,

following Directors would retire by rotation at the forthcoming

Annual General Meeting of the Company and being eligible,

offer themselves for re-appointment:

1. Dr. Naresh Trehan

2. Mr. Dilip G. Shah

3. Mr. Rakesh Bhargava

A brief resume, expertise and other directorships and

Committee memberships held by the above Directors and other

details stipulated under provisions of Clause 49 of the Listing

Agreement forms part of the Notice convening the ninth

Annual General Meeting of the Company.

AUDITORS

The Statutory Auditors of the Company, M/s G. Basu & Co.,

Chartered Accountants retire at the conclusion of the ensuing

Annual General Meeting of the Company. They have confirmed

their willingness and eligibility for re-appointment for the

financial year 2012 -13 and have also confirmed that their

re-appointment, if made, will be within the limits prescribed

under section 224(1B) of the Companies Act, 1956. The Board

of Directors of the Company recommends their re-appointment.

COST AUDITORS

Pursuant to section 233B of the Companies Act, 1956, and

"General Cost Audit Orders" issued by the Ministry of Corporate

Affairs, the Central Government has prescribed cost audit of

the Company's manufacturing activities w.r.t. "Formulations

and Bulk Drugs".

Accordingly, the Board of Directors of the Company has

appointed M/s Ramanath Iyer & Co., Cost Accountants, as the

Cost Auditors of the Company for "Formulations and Bulk

Drugs" related activities for financial year 2012-13.

The Company will seek confirmation of Central Government

for such appointment in terms of applicable provisions of the

Companies Act, 1956 and rules made there under.

In terms of the requirements of General Circular No. 15/2011,

dated 11th April 2011, issued by Ministry of Corporate Affairs,

following are the brief particulars w.r.t. Cost Auditors & Cost

Audit Reports:

Financial Name of Cost Auditor Due date of Actual date of

Year filing Cost filing Cost

Audit Report Audit Report

2010 - 11 M/s Ramanath Iyer & Co. 27th September 27th September

2011 2011

2011 - 12 M/s Ramanath Iyer & Co. 27th September Yet to be filed

2012

AUDITORS' REPORT

The Board has duly examined the Statutory Auditor's report

to the accounts and clarifications, wherever necessary, have

been included in the Notes to the Accounts section of the

Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

The Company has disinvested its entire shareholding in Fresenius

Kabi Oncology Plc (the wholly owned subsidiary in UK) to

Fresenius Kabi AG, Germany at book value, which is not less

than the fair market value. There being no other subsidiary

company left as on 31st March 2012, therefore, the Company is

not furnishing consolidated financial results.

SUBSIDIARY COMPANY

During the year, the Company transferred its entire shareholding

in Fresenius Kabi Oncology Plc (the wholly owned subsidiary in

UK) to Fresenius Kabi AG, Germany at book value, which was

not less than the fair market value.

After the aforesaid transfer, the Company does not have any

subsidiary company.

36

ANNUAL REPORT OF SUBSIDIARY COMPANY

Post transfer of its entire shareholding in Fresenius Kabi

Oncology Plc (UK), the Company does not have any subsidiary

company as on 31st March 2012. Therefore, Annual Report of

subsidiary company has not been prepared and attached with

the Annual Report of the Company.

FIXED DEPOSITS

The Company has not invited/accepted any Fixed Deposits

during the year under review, as such; no amount of principal

or interest on fixed deposits was outstanding on the date of

Balance Sheet.

PARTICULARS OF EMPLOYEES

In terms of provisions of section 217(2A) of the Companies

Act, 1956, read with the Companies (Particulars of Employees)

Rules, 1975, the names and other particulars of employees are

set out in the "Annexure- II" to the Directors' Report.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION

AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information on conservation of energy, technology absorption and

foreign exchange transactions as stipulated under section 217(1)(e)

of the Companies Act, 1956 is set out in a separate statement,

attached to this Report and forms part of it as "Annexure-I".

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement of section 217(2AA) of the

Companies Act, 1956 in relation to Directors' Responsibility

Statement, it is confirmed that:

i) in the preparation of the annual accounts for the financial

year ended 31st March 2012, the applicable accounting

standards have been followed and no material departures

have been made from the same;

ii) the Directors have selected such accounting policies and

applied them consistently and made judgments and

estimates that are reasonable and prudent so as to give

true and fair view of the state of affairs of the Company

at the end of the financial year and of the profit of the

Company for the year under review;

iii) the Directors 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;

iv) the Directors have prepared the annual accounts for the

financial year ended 31st March 2012 on a going concern

basis.

ACKNOWLEDGEMENT / APPRECIATION

We thank our customers, vendors, investors and bankers for

their continued support during the year. We place on record

our appreciation of the contribution made by our employees

at all levels. Our consistent growth was made possible by their

hard work, solidarity, cooperation and support.

We thank the Government of India, particularly the Ministry of

Corporate Affairs, Department of Pharmaceuticals, the

Customs and Excise Departments, the Income Tax Department,

the Ministry of Commerce, the Ministry of Finance, the Reserve

Bank of India and other Government agencies for their support

and look forward to their continued support in the future.

For and on behalf of the Board of Directors

Sd/-

Gurgaon Rakesh Bhargava

30th May 2012 Chairman

37

CONSERVATION OF ENERGY

a. Energy conservation measures taken:

• Recovered the steam condensate upto 85% and

reduce fuel consumption on steam generation.

• Timely switching of AHUs and lightings of Non Cyto

and Cyto OSD block.

• Control the air conditioning in office area.

• Received ISO 14001:2004 (EMS) & OHSAS 18001 :

2007 certification.

• Reducing the power consumption from 1238 KWH to

654 KWH per day by replacing HPMV & HPSV type

lamps to CFL & LED type lamps at Kalyani Plant.

• Utilization of 50 KL treated effluent water per day

for boiler after passing through Reverse Osmosis

system to conserve water at Kalyani plant.

• Utilization of 50 KL treated effluent water per day

for gardening at Kalyani.

b. Additional Investments:

Negligible.

c. Impact of measures at (a) and (b) above for reduction

of energy consumption and consequent impact on the

cost of production of goods:

• Saving of approximately 14 lacs per annum by

recovery of steam condensate.

• Saving of approximately 12 lacs per annum by the

power saving measures.

d. Energy consumption:

• Energy consumption details as per prescribed

Form A are given at the end of this part.

TECHNOLOGY ABSORPTION

Research & Development (R&D)

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

• Development of non-infringing, safe and

commercially viable generic products in therapeutic

segment of Oncology for regulated as well as

emerging markets.

• Development of non-infringing & environment

friendly processes for API synthesis.

• Our product portfolio covers both parenteral and oral

products.

• Focusing on first-to-market opportunities.

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

• Developing quality and cost effective product.

• Backward integration (In-house API) provides better

cost competitiveness.

• Generation of Intellectual wealth: Key inventions/

technologies for drug substance synthesis were

protected by filing patent applications.

3. Future plan of action:

• Implement "Quality by Design" concept.

• Working on various approaches to deliver the drugs

in more safer and lesser toxic forms.

4. Expenditure on R&D:

The details of expenditure incurred by the Company on

the above are as under:

` In Lacs

a. Capital : 668.36

b. Recurring : 6,569.04

c. Total : 7,237.40

d. Total R&D as a percentage of : 15.36%

total turnover

Technology Absorption, Adaptation and Innovation

1. Efforts in brief, made towards technology absorption,

adaptation and innovation:

Annexure Forming Part of The Directors'

ReportINFORMATION REQUIRED UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 READ WITH THE

COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988

AND FORMING PART OF DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH 2012

38

• The newly setup R&D centre with world class facilities

and infrastructure has been engaged in the

development of cost competitive active

pharmaceutical ingredients and drug products.

• Technology for a number of new and challenging

active pharmaceutical ingredients and finished

formulations has been developed and transferred to

plant.

• Platform technology developed to manufacture

difficult-to-formulate lyophilized products has been

successfully implemented.

• Technological expertise in the field of developing and

manufacturing complex cytotoxic formulations has

been further enhanced to provide differentiated

generics in the oncology segment.

2. Benefits derived as a result of the above efforts:

• These initiates have resulted in development of cost

effective active pharmaceutical ingredients and

finished products.

• The technological expertise gained will help in

speedy introduction of difficult-to-formulate

products in all markets upon approval.

• The continuous up gradation and adoption of new

technology will benefit the Company in terms of cost

reduction, increased productivity and better quality

of the finished product.

3. Imported Technology:

Nil

FOREIGN EXCHANGE EARNING AND OUTGO

a. Activities relating to export; initiatives taken to increase

exports; development of new export markets for products

and export plans:

The Company has emerged as a lead player within the

Generic Oncology space by consolidating initial gains in

key markets. Key elements of which include portfolio

extension and management, entry of products into key

institutions and new product rollout. Over and above our

response to the challenging situation of drug shortage in

the US has been consistent with customer expectations

and growing market demand to a large extent. Efforts to

globalize our product portfolio are an ongoing process

and the year gone by has been successful in terms of

breakthroughs in EU-7 markets and a key product filing

in Japan.

• Gemcitabine exclusivity in the US was a major upside,

which got us the opportunity of 180 day exclusivity

due to a sudden market situation. This helped us to

grab a quick market share of around 10% in US. We

also have launched this product in EU and all key

Pharmerging markets.

• Fresenius Kabi continues to maintain its focus on key

"Pharmerging Markets". Product and market

expansion campaigns in line with patent landscape

and market opportunity in Asia, Latin America and

CIS countries continue to remain key areas of

company's business expansion plan. With

manufacturing facilities having GCC approvals,

regulatory filings of key molecules underway to open

major Middle East markets & further strengthen our

international presence.

• Fresenius Kabi continues to reinforce its position in

generic oncology space by leveraging its key

strengths in R&D, Intellectual property, Regulatory

affairs, efficient distribution & supply chain and

marketing expertise. This makes us part of a unique

league consisting of Companies which are not only

forward and backward integrated but also having a

global presence.

Our ongoing efforts to enhance our visibility by organizing

and participating scientific seminars and symposia have

paid rich dividends. Our initiative; Fresenius Kabi's

Oncology Regional Conference more commonly known

as "FORCE" has indeed turned into a major event in Asia

Pacific region. More than 140 Oncologists from all over

Asia joined the 3rd edition of this conference, which was

held in Ho Chi Minh City in Vietnam. Key success factors

behind the success of this event are interest and need of

knowledge exchange programs dedicated to highlight the

latest trends in clinical oncology. In addition Fresenius Kabi

had a good exposure to clinicians in American Society of

Clinical Oncology (ASCO) conference and European

Society of Medical Oncology (ESMO) conference and

European Association of Hospital Pharmacists (EAHP)

conference, thus helping us in getting a global exposure.

b. Total foreign exchange used and earned:

` In Lacs

• Foreign Exchange Earnings : 40717.34

• Foreign Exchange Outgo : 2642.00

39

ANNEXURE - I

A. CONSERVATION OF ENERGY

Form of Disclosure of particulars with respect to Conservation of energy

Sr. No. Power & Fuel Consumption 2011-2012 2010-2011

1. Electricity

a) Purchased

Units 27652156.00 17212251.00

Total amount (`) 149,319,215.00 99,036,873.00

Rate per Unit (`) 5.40 5.75

b) Own Generation

Through diesel generator unit 1753192.04 782549.00

Unit per Litre of diesel Oil 3.48 1.88

Cost per Unit (`) 11.59 12.21

Total Cost (`) 20,318,184.12 9,554,990.34

2. Coal (Specify quality and where used)

Quantity (Tonnes) N.A N.A

Total Cost (`) N.A N.A

Average rate per tonne (`) N.A N.A

3. Furnace Oil

Quantity (Kilo Ltr) 1632.54 948.70

Total Cost (`) 62,259,781.18 30,549,817.50

Average rate per Kilo Ltr (`) 38,136.66 32,201.94

4. Other Internal Generation LDO

Quantity (Kilo Ltr) N.A N.A

Total Cost (`) N.A N.A

Average rate per Kilo Ltr (`) N.A N.A

5. HSD used for Boiler

Qty (Kilo Ltr) 451.60 83.53

Total Cost (`) 17,412,178.20 2,878,187.98

Average rate per Kilo Ltr (`) 38,557.07 34,459.00

B. CONSUMPTION PER UNIT OF PRODUCTION

The Company is engaged in production of a number of drugs and formulations, hence the figures of consumption per unit

of production / product are not ascertainable with accuracy. The details of consumption of energy per unit of production,

therefore, cannot be given.

40

AN

NE

XU

RE

- I

I

Sta

tem

ent

of

part

icula

rs o

f em

plo

yees p

urs

uant

to t

he p

rovis

ions o

f S

ecti

on 2

17 (

2A

) of

the C

om

panie

s A

ct,

19

56

read w

ith C

om

panie

s (

Part

icula

rs

of

Em

plo

yees)

Rule

s,

1975

and f

orm

ing p

art

of

the D

irecto

rs'

Report

for

the y

ear

ended 3

1st M

arc

h 2

012

Sr.

Nam

eD

esig

nati

on

Natu

re o

f D

uti

es

Qu

alifi

cati

on

Ex

peri

en

ce

Rem

uner

ati

on

Date

of

Age

Part

icula

rs o

f la

st e

mplo

ym

ent

No.

(Yrs

)(`

)C

om

men

cem

en

t(Y

rs)

of

em

plo

ym

en

t

For

Full Y

ear

1G

ajan

an D

iwak

ar S

ath

eG

lob

al H

ead

-D

osa

ge

Form

BE

(E

lect

rica

l)2

810

,04

2,4

65

1st A

ugu

st 2

00

95

9D

irec

tor

Tech

nic

al,

Fres

eniu

sD

osa

ge

Form

Man

ufa

ctu

rin

gK

abi

Ind

ia P

vt L

td.

MF

G

2K

amal

Jee

t G

up

taE

xecu

tive

Vic

e1.

AP

I M

anu

fact

uri

ng

BE

(C

hem

),3

110

,58

2,4

95

9th

Mar

ch 2

00

45

5V

ice

Pre

side

nt -

Man

ufac

turi

ng /

Pre

sid

ent

-an

d S

ales

,P

GD

M (

IIM-A

)R

PG

Lif

e S

cien

ces

Lim

ited

AP

I B

usi

ne

ss2

.In

no

vati

on

&D

eve

lop

me

nt

3P

eter

F.

Nils

son

Ma

na

gin

gG

ener

al M

anag

emen

tD

egre

e in

22

11,5

53

,94

21s

t Nov

embe

r 20

08

47

Chi

ef F

inan

cial

Off

icer

Fre

seni

usD

irec

tor

& C

EO

Acc

ou

nti

ng

fro

mK

abi P

&T (

Bus

ines

s U

nit

Sto

ckh

olm

IV S

tan

dar

d S

olu

tio

ns)

Un

iver

sity

,Fi

na

nce

Ma

na

ge

me

nt

Co

urs

e fr

om

INS

EA

D,

Fran

ce

4R

akes

h S

har

ma

Exe

cuti

ve V

ice

Hu

man

Res

ou

rces

MB

A,

LL

.B3

39

,48

8,8

77

7th

Ju

ly 2

00

35

4V

ice

Pre

sid

ent

- H

R /

Dab

ur

Pre

sid

ent

- H

RP

har

mac

euti

cals

Ltd

.

5D

r. S

atis

h B

. K

ulk

arn

iE

xecu

tive

Vic

eIn

tern

atio

nal

Sal

es

M.S

c -

Mo

lecu

lar

20

21,

672

,95

811

th A

ugu

st 2

00

84

6S

r. V

ice

Pre

sid

ent

Mar

keti

ng

-P

resi

den

t -

So

uth

and

Mar

keti

ng

Bio

log

y, P

h.D

-A

sia

Pac

ific

/ F

rese

niu

s K

abi

Eas

t A

sia

Bio

tech

no

log

yA

sia

Pac

ific

Ltd

.

For

Part

of

the Y

ear

1D

r. S

ush

il K

um

ar D

ub

eyC

hie

f S

cien

tifi

cIn

no

vati

on

&M

.Sc,

Ph

.D3

010

,156

,35

617

th M

arch

20

09

57

Hea

d R

& D

AP

I, J

ub

ilan

tO

ffic

erD

eve

lop

me

nt

Org

ano

sys

Lim

ited

Note

s:

1R

em

un

era

tio

n i

ncl

ud

es

ba

sic

sala

ry,

allo

wa

nce

s a

nd

ta

xab

le v

alu

e o

f p

erq

uis

itie

s.

2A

ll th

e e

mp

loye

es

ha

ve

ad

eq

ua

te e

xpe

rie

nce

to

dis

cha

rge

th

e r

esp

on

sib

iliti

es

ass

ign

ed

to

th

em

.

3N

on

e o

f th

e e

mp

loye

es

me

nti

on

ed

ab

ove

is

a r

ela

tive

of

an

y D

ire

cto

r.

4N

on

e o

f th

e a

bo

ve m

en

tio

ne

d p

ers

on

s h

old

s m

ore

th

an

2%

of

eq

uit

y s

ha

res

of

the

co

mp

an

y e

ith

er

by

him

self

or

alo

ng

wit

h s

po

use

an

d d

ep

en

de

nt

child

ren

.

5D

r. S

ati

sh B

. K

ulk

arn

i w

as

the

Ma

na

gin

g D

ire

cto

r &

CE

O o

f th

e C

om

pa

ny

till

20

th O

cto

be

r 2

011

.

6M

r. P

ete

r F.

Nils

son

wa

s th

e C

hie

f Fi

na

nci

al

Off

ice

r o

f th

e C

om

pa

ny

till

19

th O

cto

be

r 2

011

.

7A

ll th

e a

fore

me

nti

on

ed

pe

rso

ns

are

re

gu

lar

em

plo

ye

es

of

the

Co

mp

an

y e

xce

pt

for

Mr. P

ete

r F.

Nils

son

, w

ho

is

on

co

ntr

act

ua

l a

pp

oin

tme

nt

for

a p

eri

od

of

two

ye

ars

w.e

.f.

20

th O

cto

be

r 2

011

in

his

ne

w c

ap

aci

ty a

s M

an

ag

ing

Dir

ect

or

& C

EO

.

Gu

rga

on

30

th M

ay

20

12

41

PHILOSHOPHY

Company’s philosophy on Corporate Governance focuses on

the four key areas i.e. timely disclosures, transparency,

accountability and responsibility to protect the interest of the

shareholders in best possible way.

Indeed “Standard of Governance” and “Economic

Development” are intrinsically linked. Good Corporate

Governance Practices enhance Company’s value and

stakeholders’ trust, leading to consistent growth of corporate

sector and healthy development of the economy.

The Company is committed to implement best Corporate

Governance Practices. The fundamental objectives are in twin

perspective of enhancement in the Company’s value and wealth

of stakeholders.

comprehensive and timely disclosure of material facts and

relevant information in the public domain vide prompt

intimation to Stock Exchanges, publication in the news papers

etc. concerning the organization to ensure that the investors

and other stakeholders have access to clear, factual and real

time information.

Following are the key essences of Corporate Governance at

Fresenius Kabi Oncology:

o Right and equitable treatment of shareholders;

o Protection of interest of other stakeholders;

o Integrity and strict adherence to the legal and ethical

standards;

o Effective Risk Management;

o Timely Disclosure and transparency.

BOARD OF DIRECTORS

Board Composition

The Board of Directors of the Company comprises of eminent

personalities in pharma business, medical, finance and legal

professions. The Board of Directors plays a role of trustees to

the stakeholders and carries out the function of strategic

supervision and policy making. It consists of eight Directors,

comprising one Executive Director and seven Non-Executive

Directors. Out of total seven Non-Executive Directors, three

are Independent. The Chairman of the Board is a Non-Executive

Director.

None of the Directors is a member on the Board of more than

fifteen companies, in terms of Section 275 of the Companies

Act, 1956, and a member of more than ten Board-level

Committees or Chairman of more than five such Committees,

as required under Clause 49 of the Listing Agreement.

Board Meetings

The Company prepares the schedule of the Board meetings

Strong Corporate Governance Standards focusing on fairness, transparency, accountability &

responsibility are vital not only for the healthy and vibrant corporate sector growth but also inclusive

growth of the economy.

The Company focuses on both accountability and responsibility.

Responsibility is the obligation to carry out an assigned task to

a successful conclusion and Accountability is the

acknowledgment of relevant obligation by way of accounting

for actions within the policy decisions of management.

Transparency in the activities of the Company includes, inter– alia,

Report on Corporate Governance

42

well in advance so as to enable the Directors in scheduling

their program accordingly. The agenda of the meeting is

circulated among the members of the Board well in advance

along with proper reports, recommendations and supporting

documents, so that each Board member can meaningfully

participate on each agenda item during the meeting.

The Board of Directors met 4 times during the financial year

2011-12 on following dates:

26th May 2011, 11 th August 2011, 20th October 2011 and

2nd February 2012. The interval between any two successive

meetings was less than four months.

Attendance record and other Directorships

Name of the Director Category Attendance during the year Other directorships(4) and committee(5)

2011-12 memberships and chairmanships

Number of Last AGM Other Committee CommitteeBoard Meetings held on Directorships Memberships ChairmanshipsHeld Attended 11th August

2011

Mr. Rakesh Bhargava Non-Executive (NED) 4 4 Yes - - -(Chairman)

Dr. Anand C. Burman(1) Non-Executive (NED) 4 2 No 10 - -

Mr. Dilip G. Shah Non-Executive, 4 4 Yes 1 1 -Independent (NED/ ID)

Mr. Gerrit Steen Non-Executive (NED) 4 3 Yes - - -

Mr. Mats Christer Non-Executive (NED) 4 2 No - - -Henriksson

Dr. Michael Schonhofen Non-Executive (NED) 4 1 No - - -

Dr. Naresh Trehan Non-Executive, 4 2 No 3 2 1Independent (NED/ ID)

Mr. Nitin Potdar Non-Executive, 4 3 No 4 5 -Independent (NED/ ID)

Dr. Satish B. Kulkarni Executive (ED) 4 3 Yes - - -(Managing Director& CEO)(2)

Mr. Peter F. Nilsson Executive (ED) 4 1 N.A. - - -(Managing Director& CEO) (3)

(1) Resigned w.e.f. 2nd February 2012;

(2) Resigned w.e.f. 20th October 2011;

(3) Appointed w.e.f. 20th October 2011;

(4) Other Directorships excludes alternate Directorships, Directorships in private limited companies, foreign body corporate and in companies incorporated undersection 25 of the Companies Act, 1956.

(5) As required by Clause 49 of the Listing Agreement, the disclosure includes Memberships/Chairmanships of Audit Committee and Investor Grievance Committeein Indian Public Companies (listed and unlisted). The chairmanship of the committees has been provided separately.

Note: There are no inter-se relationships between the Board members.

Information supplied to the Board

The Board has complete access to any information within the

Company. At the Board Meetings, employees who can provide

additional insights into the items being discussed are invited

and provided opportunity to share their ideas with the Board.

All statutory, significant and material information is placed

before the Board.

The information regularly tabled to the Board includes:

• Quarterly results for the Company and its operating

divisions or business segments;

• Minutes of meetings of the Board and Board Committees,

resolutions passed by circulation and minutes of the

meeting of the Board of Directors of the Subsidiary

Companies;

43

• Quarterly treasury reports including details of foreign

exchange exposures and the steps taken by management

to limit the risks of adverse exchange rate movement, if

material;

• Quarterly Risk Report and review thereof;

• Quarterly Compliance Certificates with the Exception

Reports which includes non-compliance(s), if any, of any

regulatory, statutory nature or listing requirements and

shareholders’ service;

• Certificates received from Practicing Company Secretary/

Chartered Accountants;

• Disclosures received from the Directors;

• Details of investment of surplus funds available with the

Company;

• Statement showing significant transactions &

arrangements entered into by the subsidiary/associate

companies;

• Related party transactions;

• Regular business updates;

• Performance review by the CEO;

• Report on action taken on last Board Meeting decisions;

• Other information as mentioned in Annexure 1A to Clause

49 of the Listing Agreements.

Remuneration to Directors

The Non - Executive Independent Directors are paid sitting fees

within the prescribed limits that could be paid without the

approval of the Central Government, for attending the Board/

Committee meetings. Such Directors are also entitled to

reimbursement for airfare, boarding and lodging expenses for

attending the Board/ Committee Meetings.

In addition to payment of sitting fees, the Non - Executive

Independent Directors are also paid an annual commission.

The commission is paid after taking into account the Non –

Executive Independent Directors’ performance and time spent

during the meetings of Board and Committees of the Company.

The said commission is subject to availability of sufficient

profits and will not exceed the statutory limit of 1% of the net

profit of the Company calculated as per the provisions of

Section 349 and 350 and other relevant provisions of the

Companies Act, 1956.

Remuneration paid to the Directors during financial year 2011-12: (`)

Name of the Director Salary Benefits Performance Commission@ Sitting Fee# Total

Linked

Incentive (PLI)

Mr. Rakesh Bhargava - - - - - -

Dr. Anand C. Burman - - - - - -

Mr. Dilip G. Shah - - - 1,80,000 1,20,000 3,00,000

Mr. Gerrit Steen - - - - - -

Mr. Mats Christer Henriksson - - - - - -

Dr. Michael Schonhofen - - - - - -

Dr. Naresh Trehan - - - 22,500 60,000 82,500

Mr. Nitin Potdar - - - 2,10,000 1,80,000 3,90,000

Dr. Satish B. Kulkarni* 72,49,065 28,45,687 32,41,031 - - 1,33,35,783

Mr. Peter F. Nilsson** 68,72,686 13,17,758 12,96,025 - - 94,86,469

# Sitting fees include fees for Board and other Committee meetings at the rate of ` 15,000 per meeting.

* The Company had executed an employment agreement with Dr. Kulkarni for a period of five years w.e.f. 11th August 2008. His performance was reviewed by theBoard of Directors annually and performance linked incentive was decided by them. Notice period was 12 months and he was not entitled for any severance fees.

** The Company has executed an employment agreement with Mr. Peter F. Nilsson for a period of two years w.e.f. 20th October 2011. His performance will be reviewedby the Board of Directors annually and performance linked incentive will be decided by them. Notice period is 3 months and he is not entitled for any severancefees.

@ As intimated in the last Annual Report, the amount of commission was due for financial year 2010-11 and has been paid during financial year 2011-12.

An amount of INR 12,00,000 (Rupees twelve lacs only) payable as commission to the Non- Executive Independent Directors for financial year 2011-12, will be paidduring the current financial year 2012-13. The same has been provided as payable to the eligible Non-Executive Independent Directors in the accounts for the yearunder review.

44

Directors’ Shareholding

None of the Directors of the Company is holding any share in

the Company.

COMMITTEES OF BOARD

In compliance with the Listing requirements, the SEBI

Regulations and the Companies Act, 1956, currently, the Board

has following mandatory Committees:

1. Audit Committee

2. Shareholders/ Investors Grievance Committee

The Committees comprise of experienced members of the

Board who ensures that high standards of Corporate

Governance is followed in every sphere. The matters relating

to the remuneration of Executive Director are looked into by

the Board of Directors directly and by the members of the

Company through General Meeting.

Audit Committee

The composition of the Audit Committee as on date and the

attendance of members at the meetings held during the

financial year 2011-12, are given below:

Member Director Category Status Number of Audit

Committee

Meetings

Held Attended

Mr. Dilip G. Shah NED/ ID Chairman 4 4

Mr. Nitin Potdar NED/ ID Member 4 3

Mr. Gerrit Steen NED Member 4 3

Dr. Naresh Trehan NED/ ID Member 4 2

Mr. Nikhil Kulshreshtha, Company Secretary & Head – Legal of

the Company acts as the Secretary of the Committee.

The role and terms of reference of the Audit Committee covers

the areas mentioned in Clause 49 of the Listing Agreement

with Stock Exchanges and Section 292A of the Companies Act,

1956, as amended from time to time, besides other matters as

may be referred by the Board of Directors.

The Committee derives its powers from clause 49(II)(C) of the

Listing Agreement. Apart from its other functions the

Committee has been regularly reviewing the information as

prescribes in Clause 49(II)(E) of the Listing Agreement.

In generality, the scope and functions of the Audit Committee

of the Company revolve around the following:

(a) Discussions with the auditors periodically on internal

control systems, scope of audit, observations of auditors

and review of quarterly, half yearly and annual financial

statements;

(b) Investigate into any matter as specified in Section 292A

or referred to it by the Board;

(c) Oversight of the financial reporting process and to ensure

that statement is correct, sufficient and credible;

(d) Recommending appointment, re-appointment and

removal of Statutory/Internal Auditors, Cost Auditors,

fixation of audit fee and approval for any other service(s);

(e) Reviewing the annual financial statements before

submission to the Board;

(f) Reviewing with management, performance of external

and internal auditors, the adequacy of internal control

systems and functions;

(g) Reviewing the findings of any internal investigation by

the Internal Auditors;

(h) Reviewing Company’s financial and risk management

policies;

(i) Review of related party transactions;

(j) Other functions as mentioned in Clause 49(II)(D) of the

Listing Agreements.

The Audit Committee meetings were held four times during

the year 2011-12 on 26th May 2011, 11th August 2011, 20th October

2011 and 2nd February 2012. The time gap between any two

successive meetings was less than four months.

Shareholders/ Investors Grievance Committee

In compliance with the Listing requirements and provisions of

the Companies Act, 1956, the Company has constituted a

Shareholders / Investors Grievance Committee, which

comprises of three members, two of whom, including the

Chairman are Non - Executive Directors.

Mr. Nikhil Kulshreshtha, Company Secretary & Head – Legal of

the Company acts as the Compliance Officer of the Company.

The Shareholders’ Grievance Committee is empowered to

perform all the functions of the Board in relation to resolving

of the Shareholders’ Grievances. It primarily focuses on:

• Review of investors’ complaints and their redressal;

• Review of the queries received from investors.

The meetings of Shareholders’ / Investors’ Grievance

Committee were held 4 times during the year 2011-12 on

26th May 2011, 11 th August 2011, 20th October 2011 and

2nd February 2012.

45

The composition and members’ attendance at the

Shareholders/ Investors Grievance Committee meetings are

presented below:

Member Director Category Status Number of

Meetings

Held Attended

Mr. Rakesh Bhargava NED Chairman 4 4

Dr. Satish Kulkarni* ED Member 4 3

Mr. Nitin Potdar NED/ ID Member 4 3

Dr. Anand C. Burman* NED Member 4 1

Mr. Peter F. Nilsson** ED Member 4 1

* Dr. Satish B Kulkarni and Dr. Aanad Chand Burman resigned w.e.f.20th October 2011 and 2nd February 2012 respectively.

** Mr. Peter F. Nilsson has joined as the member w.e.f. 20th October 2011.

The Committee expresses satisfaction with the Company’s

performance in dealing with investor grievances.

Details of the investors’ complaints as on 31st March 2012

are as follows:

No. of Received Resolved No. of

Complaints during during Complaints

pending as on the year the year pending as on

1st April 2011 31st March 2012

Nil 1 1 Nil

MANAGEMENT

Management Discussion and Analysis Report

The Annual Report has a separate section on Management

Discussion and Analysis, which, inter alia, deals with industry

structure and development, opportunities and threats, segment

wise performance, outlook, risks and concerns, internal control

system and their adequacy and discussion on financial

performance with respect to operations and material issues in

the sphere of human resources/ industrial relationship and

other necessary matters.

Disclosures

The Company is complying with all the mandatory

requirements of Clause 49 of the Listing Agreement. The

Company has been filing confirmation in this respect to the

concerned Stock Exchanges on quarterly basis.

a. Materially significant related party transactions

There have been no materially significant related party

transactions during the year ended 31st March 2012 that

may have potential conflict with the interest of the

Company at large.

The materially significant related party transactions that

may have potential conflict with the interest of the

Company at large, if any, are reported to Audit Committee.

During the year, the Company did not enter into any

material financial and commercial transactions with

Senior Managerial Personnel, where they have personal

interest that may have a potential conflict with the interest

of the Company at large.

Details of transaction with related parties are reflected

in the annual accounts under the head “Notes to

Accounts”.

b. Instances of Non Compliance

There were no instances of non-compliance by the

Company during the financial year ended 31st March 2012.

The Company has complied with all the legal

requirements related to Capital market and no strictures

passed/ penalties levied on it by the Stock Exchange /

SEBI or any other statutory authority during the last

three years.

ADOPTION OF NON - MANDATORY REQUIREMENT OF

CLAUSE 49 OF THE LISTING AGREEMENT

The Company has adopted the non mandatory requirement

related to implementation of Whistle Blower Policy.

Whistle Blower Policy

The Company has put in place a well-documented Whistle

Blower Policy after due approval by the Board of Directors. No

employee has been denied access to the Audit Committee.

Apart from above, no other non-mandatory requirement has

been adopted by the Company.

SHAREHOLDERS

Appointment/ Re- appointment of Directors

The individual details of Directors seeking appointment/

re-appointment at the ensuing Annual General Meeting of the

Company are provided in the explanatory statement

accompanying the notice of the Annual General Meeting.

Means of Communication

The Quarterly Results along with the Notes are normally

published in one English Newspaper having nationwide

circulation and one Hindi Newspaper circulating in New Delhi,

within 48 hours of approval by the Board and are intimated

immediately to the Stock Exchanges vide fax and emails.

These are also displayed on the Company’s web site

www.fresenius-kabi-oncology.com

46

General Body Meetings

The last three Annual General Meetings were held as under:

Financial Location Date Time

Year

2008-09 Air Force Auditorium, 29th July 04:30 PM

Subroto Park, New Delhi 2009

2009-10 Air Force Auditorium, 29th July 04:00 PM


2010-11 Air Force Auditorium, 11th August 04:00 PM


It is proposed to conduct the Ninth Annual General Meeting of

the Company for approval of the Annual Accounts for financial

year 2011 – 12 and other matters on Thursday, 9th August 2012

at 4:00 P.M. at Air Force Auditorium, Subroto Park, New Delhi.The shareholders are requested to refer to the Notice of theAnnual General Meeting for the detailed agenda and program.

Special Resolutions passed during last three (3) AGMs:

F.Y. 2008-09: Annual General Meeting held on 29th July 2009

(1) Alteration of Articles of Association of the Company to deletePart ll containing Article 193 to 198.

(2) Approval for payment of Remuneration to Dr. Satish B. Kulkarnias Managing Director & CEO of the Company.

(3) Waiver from recovery of excess remuneration paid to Mr. AjayKumar Vij, former Whole Time Director of the Company.

F. Y. 2009–10: Annual General Meeting held on 29th July 2010

(1) Payment of Commission to Non - Executive IndependentDirectors.

(2) Revision of remuneration to Dr. Satish B. Kulkarni, ManagingDirector & CEO of the Company.

F. Y. 2010–11: Annual General Meeting held on 11th August 2011

(1) Alteration of Articles of Association therby including theprovisions for convening & Conducting Board, Committee and

General Meetings by video conferencing.

Postal Ballot

During the year ended 31st March 2012, the following special

resolution for the appointment of Mr. Peter F. Nilsson as the

Managing Director & CEO was passed through Postal Ballot.

Particulars Assenting Dissenting Result

Votes (% in Votes (% in

brackets) brackets)

Appointment of 142,577,527 5,516 Passed asMr. Peter F. Nilsson (99.9957%) (0.0039%) Specialas the Managing Resolution

Director & CEO

The said resolution was passed pursuant to section 192 A of

the Companies Act, 1956 and Companies (Passing of the

Resolution by Postal Ballot) Rules, 2011, seeking approval of

the shareholders.

Ms. Kiran Sharma, Practicing Company Secretary was

appointed as Scrutinizer for conducting the above mentioned

postal ballot processes.

No special resolution is proposed to be passed by postal ballot at

the ensuing Annual General Meeting as mentioned herein below.

Additional Shareholder Information

a. Annual General Meeting

Date : 9th August 2012

Time : 4:00 PM

Venue : Air Force Auditorium, Subroto Park,New Delhi

Book Closure : 30th July 2012 to 9th August 2012

(both days inclusive)

b. Dividend Payment

No dividend was declared for the financial year ended31st March 2011. Hence there is no payment pendingtowards dividend for the said year.

In view of the ongoing expansion projects and futuregrowth plans, the Directors have decided to plough backthe profits of the Company for financial year 2011-12.Accordingly, the Board has not recommended anydividend payment for the year ended 31st March 2012.

c. Number of Employees

The Company had 1101 permanent employees on its payrollas on 31st March 2012.

d. Financial Calendar

The Company follows Financial Year, which commenceson 1st April, of each calendar year and ends on 31st March,of the next calendar year.

For the financial year 2012-13, quarterly un-audited /annual audited results shall be announced by:

• Mid of August, 2012: First quarter

• Mid of November, 2012: Half yearly

• Mid of February, 2013: Third quarter

• End of May, 2013: Fourth quarter and Annual Audited.

e. Listing Details

Name of Stock Exchange Stock Code

Bombay Stock Exchange Limited 532545

National Stock Exchange of FKONCOIndia Limited

The Listing fee for the financial year 2012-13 has beenpaid to the above stock exchanges within the due date.The ISIN Number allotted to the Company’s equity sharesof face value of Re. 1/- each under the depository system

47

is INE 575 G 01010. The listing is in place since

30th September 2004.

f. Registrar and Transfer Agent

Securities and Exchange Board of India (SEBI), has made

it mandatory for all work relating to share registry, both

in physical and electronic form, to be handled either

wholly ‘in house’ by Companies or wholly by a SEBI

registered external Registrar and Transfer Agent.

Pursuant to this, the Company has appointed MCS Limited,

New Delhi, as its Registrar and Transfer Agent.

g. Share Transfer System

As on 31st March 2012, 98.89% of the equity shares of the

Company were in Dematerialised form. Transfers of shares

in Dematerialised form are done through the depositories

without any involvement of the Company.

On the other hand, transfers of shares in physical form

are normally processed by the Company within 15 days

from the date of receipt, provided the documents are

complete in all respects.

For Share Transfer Related formalities the Board has

constituted the Share Transfer Committee and has also

delegated the requisite powers to the Company Secretary

& Head-Legal of the Company.

The Company Secretary & Head-Legal normally looks

after the share transfer and other related matters once

in a fortnight. The Committee meets at least once in a

quarter to approve and take note of the share transfer

and other related matters.

The Company obtains a certificate from a Practising

Company Secretary on half yearly basis to the effect that

all the transfers are completed in the statutorily stipulated

period. In compliance with clause 47(c) of the Listing

Agreements, a copy of the certificate so received is

submitted to both the Stock Exchanges, where the sharesof the Company are listed.

All share transfer and other communication regardingshare certificates, change of address, dividends, etc.should be addressed to Registrar and Transfer Agents.Requests for Share transfer in physical form can be lodgedwith the Registrar and Transfer Agents – MCS Limited.

h. Company’s Registered Office address

Registered Office

B-310, Som Datt Chambers - I,Bhikaji Cama Place,New Delhi-110 066Ph: +91 11 26105570Fax: +91 11 26195965

i. Company’s Plant locations

Formulations Unit

19, HPSIDC Industrial Area, Baddi, District Solan,

Himachal Pradesh-173 205

Manufacturing Plant-Baddi (H.P.)

Formulations Unit

Village Kishanpura, Tehsil Nalagarh, District Solan,

Himachal Pradesh-174 101

Manufacturing Plant-Nalagarh (H.P.)

Active Pharmaceutical Ingredients (API) Unit

D-35, Industrial Area, Kalyani, District Nadia,

West Bengal-741 235

Manufacturing Plant-Kalyani (W.B.)

j. Address for Correspondence

For share transfer / dematerialization of shares,payment of dividend and any other query relatingto the shares of the Company

MCS Limited,Registrar and Share Transfer Agent,F-65, First Floor, Okhla Industrial Area, Phase – I,New Delhi – 110 020Tel No.: +91 11 41406149.Email: [email protected]

For queries of Analysts, FIIs, Institutions, MutualFunds, Banks and Investors assistance

Mr. Nikhil Kulshreshtha,Company Secretary & Head - LegalFresenius Kabi Oncology Limited,Echelon Institutional Area, Plot No – 11, Sector-32,Gurgaon-122001, Haryana, India.Tel No. +91 124 488 5000

k. Dematerialization of shares and liquidity

The Company has entered into agreement with NationalSecurities Depository Limited (NSDL) and CentralDepository Services Limited (CDSL) for dematerialisationof its equity shares. The shares of the Company areregularly traded on NSE and BSE. As of 31st March, 2012,98.89% of the equity share capital of the Company isheld in demat mode.

l. Outstanding GDRs / ADRs / Warrants or any otherConvertible Instruments etc.

As on 31st March 2012 the Company has not issued anyADRs/ GDRs/ Warrants or any other ConvertibleInstrument.

48

m. Demat Suspense Account for Unclaimed Shares

As intimated through the last Annual Report, in terms ofthe requirement of Clause 5A of the Listing Agreementwith stock exchanges, the Company needs to open a

DEMAT SUSPENSE ACCOUNT for the shares which

remained unclaimed.

In Compliance with the above mentioned requirement, the

Company has opened a demat account with Abhipra Capital

Limited, Depository Participants namely Fresenius Kabi

Oncology Limited – “Unclaimed Suspense Account”.

Before crediting the above mentioned shares to in the

Demat Suspense Account, the Company sent three

reminders to the shareholders asking for their correct

particulars.

After handing over the unclaimed shares to their rightful

owners, remaining 889 cases (folios), comprising of

236280 equity shares were transferred to the

abovementioned Unclaimed Suspense Account.

The voting rights on these shares shall remain frozen till

the rightful owner of such shares claims the shares.

Further all corporate benefits in terms of securities

accruing on such shares viz. bonus shares, split etc.

shall also be credited to such Unclaimed Suspense

Account.

n. Transfer of Unpaid Dividend to IEPF

In terms of Section 205C of the Companies Act, 1956,read with the Investor Education and Protection Fund(Awareness and Protection of Investor) Rules, 2001, duringthe year ended 31st March 2012, the Company has creditedan aggregate amount of ` 1,20,450.00 to the InvestorsEducation and Protection Fund (IEPF).

Distribution of Shareholding as on 31st March 2012

Number of equity Number of % of No. of % of

shares held shareholders in Share- Shares Share-

each category holders held holding

1 - 500 39260 94.0359 5686098 3.5936

501 - 1000 1380 3.3054 1179434 0.7454

1001 - 2000 599 1.4347 919745 0.5813

2001 - 3000 196 0.4695 503900 0.3185

3001 - 4000 67 0.1605 245395 0.1551

4001 - 5000 69 0.1653 333729 0.2109

5001 - 10000 87 0.2084 625864 0.3955

10001 - 50000 72 0.1725 1473676 0.9314

50001 - 100000 10 0.0240 758826 0.4796

100001 and above 10 0.0240 146500988 92.5887

Total 41750 100.0000 158227655 100.0000

Market Price Data

The market price data is given in the table below from 1st April

2011 up to 31st March 2012.

(`)

Month NSE BSE

Month's Month's Month's Month's

High Price Low Price High Price Low Price

April, 2011 124.80 89.65 125.00 89.20

May, 2011 120.90 99.40 117.50 99.40

June, 2011 145.50 108.50 145.35 109.10

July, 2011 139.80 122.90 139.80 123.00

August, 2011 130.50 100.00 128.80 101.00

September, 2011 122.35 104.15 122.85 102.60

October, 2011 118.25 105.50 118.50 106.00

November, 2011 119.90 92.50 120.00 90.90

December, 2011 105.70 81.30 103.50 81.65

January, 2012 113.40 84.00 113.50 83.75

February, 2012 141.00 96.00 141.00 97.10

March, 2012 164.90 134.55 165.00 135.00

Stock performance in comparison to NSE Nifty

(Monthly closing)

Stock performance in comparison to BSE SENSEX:

(Monthly closing)

For and on behalf of the Board

Sd/-

Gurgaon Rakesh Bhargava

30th May 2012 Chairman

49

AUDITORS' REPORT ON CORPORATE GOVERNANCE

To

The Members of Fresenius Kabi Oncology Limited,

We have examined the compliance of conditions of Corporate Governance by Fresenius Kabi Oncology Limited for the year

ended 31st March 2012 in terms of requirements of the Listing Agreements of said company with stock exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination is limited to

procedures and implementation thereof, adopted by the Company for ensuring the compliance conditions of Corporate

Governance. It is neither an audit nor an expression of opinion of 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 in the above-mentioned Listing Agreements.

We state that in respect of investor's grievances received during the year ended 31st March 2012, no investors grievance is

pending for a period exceeding one month against the company as per the records maintained by the company.

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

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

For G. BASU & CO.


Firm registration number: 301174E

S. LAHIRI

Gurgaon Partner

30th May 2012 Membership no. 51717

DECLARATION ON COMPLIANCE OF CODE OF CONDUCT

I, Peter F Nilsson, Managing Director & CEO of Fresenius Kabi Oncology Limited, do hereby declare and confirm that all the Board

Members and Senior Management Personnel have affirmed to the Board of Directors, the compliance of the Code of Conduct

laid down by the Board.

Gurgaon Peter F. Nilsson

30th May 2012 Managing Director & CEO

50

CHIEF EXECUTIVE OFFICER (CEO)/ CHIEF FINANCIAL OFFICER (CFO)

CERTIFICATION

To,

The Board of Directors

FRESENIUS KABI ONCOLOGY LIMITED

We, the undersigned, in our respective capacities as Chief Executive Officer and Chief Financial Officer of FRESENIUS KABI

ONCOLOGY LIMITED ("the Company"), to the best of our knowledge and belief certify that:

(a) We have reviewed the financial statements and the cash flow statement for the year ended on 31st March 2012 and based on

our knowledge and belief, we state that:

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

that might be misleading;

(ii) these statements together present a true and fair view of the Company's affairs and are in compliance with existing

accounting standards, applicable laws and regulations.

(b) We further state that to the best of our knowledge and belief, there are no transactions entered into by the Company

during the year, which are fraudulent, illegal or violative of the Company's Code of Conduct.

(c) We are responsible for establishing and maintaining internal controls and for evaluating the effectiveness of the same over

the financial reporting of the Company and have disclosed to the Auditors and the Audit Committee, deficiencies in the

design or operation of internal controls, if any, of which we are aware and the steps we have taken or propose to take to

rectify these deficiencies.

(d) We have indicated to the Auditors and Audit Committee that:

(i) there has not been any significant changes in internal control over financial reporting during the year under reference;

(ii) there has not been any significant changes in accounting policies during the year requiring disclosure in the notes to

the financial statements; and

(iii) we are not aware of any material instances during the year of significant fraud and the involvement therein, if any, of

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

reporting.

Peter F. Nilsson Dheeraj Chopra

Chief Executive Officer Chief Financial Officer

Gurgaon

30th May 2012

51

To the Members of Fresenius Kabi Oncology Limited,

1. We have audited the attached Balance Sheet of Fresenius

Kabi Oncology Limited ( 'the Company'), as at 31st March,

2012, the Profit & Loss Account of 'the Company' and the

Cash Flow Statement of 'the Company' for the year ended

on that date, annexed thereto. These financial statements

are the responsibility of the Company's Management. Our

responsibility is to express an opinion on these financial

statements based on our audit.

2. We conducted our audit in accordance with auditing

standards generally accepted in India. Those standards

require that we plan and perform the audit to obtain

reasonable assurance about whether the financial

statements are free of material misstatement. An audit

includes, examining on a test basis, evidence supporting

the amounts and disclosures in the financial statement.

An audit also includes assessing the accounting principles

used and significant estimates made by management, as

well as evaluating the overall financial statement

presentation. We believe that our audit provides a

reasonable basis for our opinion.

3 As required by the Companies' (Auditors' Report) Order

2003, as amended, issued by the Central Government in

terms of Sub Section (4A) of Section 227 of the Companies

Act, 1956, and on the basis of such checks of the books

and records of the Company as we considered appropriate

and according to the information and explanations given

to us, we enclose in the annexure a statement on the

matters specified therein.

4. Further to our comments in the Annexure referred to

above, we report that:

i. We have obtained all the information and

explanations which to the best of our knowledge and

belief were necessary for the purpose of audit ;

ii. 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 those books.

Returns in respect of London Branch eligible to be

exempt from audit u/s 228 have been forwarded to

us and have been properly dealt with herein;

iii. The Balance Sheet, Profit and Loss Account and Cash

Flow Statement dealt with by this report are in

agreement with the books of account and returns

from the branch ;

iv. In our opinion, the Balance Sheet, Profit & Loss

Account and Cash Flow Statement dealt with by this

report comply with the mandatory accounting

standards referred to in sub-section (3C) of Section

211 of Companies Act, 1956 ;

v. On the basis of written representations received from

the Directors and taken on record by the Board of

Directors, we report that none of the Directors of

'the Company' is disqualified as on 31st March 2012

from being appointed as a director in terms of clause

(g) of Sub Section (1) of Section 274 of the Companies

Act, 1956 ;

vi. In our opinion and according to the information and

explanations given to us, the said accounts read in

conjunction with Schedules 1 to 21 and read with

other Notes appearing in Schedule "22" give the

information required by the Companies Act, 1956, in

the manner so required and give a true and fair view

in conformity with the accounting principles

generally accepted in India :

a) In the case of Balance Sheet, of the State of

Affairs of 'the Company' as at 31st March, 2012 ;

b) In the case of the Profit and Loss Account, of

the Profit of 'the Company' for the year ended

on that date; and

c) In the case of Cash Flow Statement, of the cash

flows of 'the Company' for the year ended on

that date.

For G. Basu & Co.



S. LAHIRI

Gurgaon Partner

30th May 2012 Membership Number: 51717

AUDITORS' REPORT

52

1. a) The Company has maintained proper records

showing full particulars including quantitative details

and situation of fixed assets in respect of all its

locations.

b) The fixed assets have been physically verified by the

management at all locations at reasonable intervals.

No material discrepancies between book records and

the physical inventories have been noticed on such

verification.

c) Fixed assets disposed of during the year are not

material enough to affect the going concern of the

Company.

2. a) The inventories have been physically verified during

the year at reasonable intervals by the Management.

b) In our opinion, 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 and have been properly dealt with in

the books of account.

3. a) 'The Company' has not granted any loan, secured or

un-secured to firms or other parties covered in the

register maintained under section 301 of the

Companies Act, 1956, during the year.

However the unsecured loans repayable on demand

of ` 4,042.96 lacs (including interest) that was

granted by the 'the Company' to its foreign subsidiary

has been repaid by the subsidiary before dissolution

of the Investment in its equity capital, therein, during

the year. Rate of Interest and other terms and

conditions of these loans were not, prima facie,

prejudicial to the interest of 'the Company'. Maximum

balance against these loans during the year was

` 4,114.93 lacs in aggregate.

b) 'The Company' has not taken any loan secured or

unsecured from firms or other parties covered in the

register maintained under section 301 of the

Companies Act, 1956, during the year.

However 'the Company' has taken unsecured loans

from two companies listed in the register maintained

under section 301 of The Companies Act, 1956. The

year end balance in respect of one of the said

Company was ` 9,522.05 lacs and the maximum

balance against these loans during the year was

` 12,522.05 lacs in aggregate. The rate of interest

and other terms and conditions of these loans are

not, prima facie, prejudicial to the interest of the

Company. As per the agreement with the lender

Companies having the year end balance as above,

the principal amount of loan has not become due

for payment and have accordingly been not paid up

to 31st March 2012. Interest thereon have been paid

as per respective agreements.

4. In our opinion and according to the information and

explanations given to us there is an adequate internal

control system commensurate with the size of the

Company and the nature of its business for purchase of

inventories and fixed assets and for the sale of goods and

services. During the course of our audit no major

weakness has been noticed in the internal control system.

5. a) Based on audit procedures applied by us and

according to the information and explanations

provided by the management, we are of the opinion

that the transactions that need to be entered into

the registers maintained under section 301 of

Companies Act, 1956 have been so entered.

b) According to information and explanation given to us,

the transactions of sales made in pursuance of

contracts or arrangements entered in the registers

maintained under section 301, during the year have

been made at prices which are reasonable having

regard to prevailing market prices at the relevant time.

6. In our opinion and according to information and

explanations given to us the company has not accepted

any deposit from the public and as such the question of

compliances of section 58, 58AA and other relevant

provisions of act do not arise.

ANNEXURE TO THE AUDITORS' REPORTAS REFERRED TO IN PARA 3 OF THE SAID REPORT OF EVEN DATE

53

7. In our opinion the company has an internal audit system

commensurate with its size and nature of its business.

8. On the basis of records produced, we are of the opinion

that prima facie cost records and accounts prescribed by

the Central Government under section 209 (i) (d) of the

Companies Act, 1956 in respect of products of the

company covered under the rules under said section have

been maintained. However we are neither required to

carry out nor have carried out any detailed examination

of such accounts and records.

9. a) According to information and explanation given to

us, the Company has been regular in depositing with

appropriate authorities undisputed statutory dues

including provident fund, investor education and

protection fund, employees state insurance , income

tax, sales tax, wealth tax, service tax, custom duty,

excise duty, cess and other statutory dues to the

extent applicable to it.

We have been informed that there are no undisputed

statutory dues as at the year end outstanding for a

period of more than six months from the date they

became payable.

b) There is no disputed due on account of sales tax,

wealth tax, service tax, customs duty and cess. Dues

on account of Income Tax / Excise Duty disputed by

the Company vis-a- vis forums where such disputes

are pending are mentioned below :

Excise Duty:

Name of Nature of Amount Period to Forum where

Statute the dues in (Lacs) which the the dispute

of ` amount relates is pending

Excise Duty PME 11.24 1998 CESTAT, New

Deductions to Delhi

& Service 2009

tax

reversal.

Income Tax:

Name of Nature of Amount Period to Forum where

Statute the dues in (Lacs) which the the dispute

of ` amount relates is pending

Income Tax Assessed 228.58 A.Y2005-06 CIT(A),N Delhi

demand

Disputed

Income Tax …do... 9.17 A.Y2006-07 ITAT,N Delhi

Income Tax …do... 304.97 A.Y2007-08 CIT(A),N Delhi

Income Tax …do… 674.44 A.Y2008-09 CIT(A),N Delhi

10. 'The Company' does not have any accumulated loss as on

31st March 2012. It has not incurred cash losses in the

current financial year and in the immediately preceding

financial year.

11. Based on our audit procedures and the information and

explanations given by the management, we are of the

opinion that the Company has not defaulted in repayment

of dues to any bank. The Company has no due to any

financial institution or debenture holder.

12. The Company has not granted any loans and advances

on the basis of security by way of pledge of shares,

debentures or other securities.

13. Based on our examination of the records and evaluations

of the related internal controls we are of the opinion that

proper records have been maintained of the transactions

and contracts relating to shares, securities, debentures

and other investments dealt in by the Company and timely

entries have been made in the records. We also report

that that the Company has held the shares, in its own

name.

14. 'The Company' has not furnished a guarantee for loans

taken by others from banks or financial institutions.

15. Term loan obtained from bank by 'the Company' has been

applied for the purpose for which they were raised.

16. No fund has been raised on short term basis during the

year which has been used for long term purposes.

17. 'The Company' has not made any preferential allotment

of shares during the year to any party or Companies

covered in the register maintained under section 301 of

the Companies Act, 1956.

18. The Company has not issued any debenture.

19. The Company has not made public issue so far.

20. Based upon the audit procedures performed and

information and explanations given by the management,

we report that no fraud on or by the Company has been

noticed or reported during the course of our audit.

21. Other clauses of the order are not applicable to the

Company for the year.

For G. Basu & Co.



S. LAHIRI

Gurgaon Partner

30th May 2012 Membership Number: 51717

54

I EQUITY AND LIABILITIES

1. Share holders’ Funds

a) Share Capital 1 1,582.28 1,582.28

b) Reserves and Surplus 2 57,676.90 52,551.82

2. Non-current liabilities

a) Long Term borrowings 3 9,522.05 9,522.05

b) Deferred Tax Liabilities (Net) 4 1,466.22 872.61

c) Long-term provisions 5 3,287.40 3,019.09

3. Current Liabilities

a) Short-term borrowings 6 5,209.19 23,772.96

b) Trade payables 13,937.18 8,126.43

c) Other current liabilities 7 618.11 495.94

d) Short-term provisions 8 7,714.26 5,979.48

Total: 101,013.59 105,922.66

II ASSETS

1. Non-current assets

a) Fixed Assets 9

i) Tangible assets 29,954.49 25,205.43

ii) Intangible assets 537.47 624.40

iii) Capital work-in-progress 13,381.84 8,958.84

iv) Intangible assets under Development 444.21 598.07

b) Non-current investments 10 3.00 12,628.20

d) Long-term loans and advances 11 3,813.13 3,371.76

e) Other non-current assets

(Read with note no 19 of Schedule 22) 12 12.34 12.72

2. Current assets

a) Inventories 13 18,855.04 20,722.39

b) Trade receivables 14 20,171.89 17,659.43

c) Cash and cash equivalents 15 1,363.86 1,849.50

d) Short-term loans and advances 16 12,476.32 14,291.92

Accounting Policy and Notes to Accounts 22

Total: 101,013.59 105,922.66

(` in Lacs)Schedule No. As at As at


For Fresenius Kabi Oncology Limited As per our reportof even date attached

RAKESH BHARGAVA PETER F. NILSSON DHEERAJ CHOPRA NIKHIL KULSHRESHTHA For G. BASU & CO.Chairman Managing Director & CEO Chief Financial Officer Company Secretary Chartered Accountants


S. LAHIRIGurgaon Partner30th May 2012 Membership No-51717

Balance Sheet as at 31st March 2012

55

I Revenue from operations 17 (a) 52,431.61 41,276.86

II Other Income 17 (b) 290.20 589.21

III Total Revenue (I +II) 52,721.81 41,866.06

IV Expenses

Cost of materials consumed 20,605.29 12,527.76

Purchase of stock in trade 285.06 301.51

Changes in inventories of FG , WIP & Stock in trade

Finished Goods 827.21 (421.76)

Work in Progress (224.83) 1,126.46

Employee benefits expenses 18 6,098.00 5,610.50

Finance costs 19 1,765.96 (468.54)

Depreciation and Amortisations expenses 20 2,396.76 1,692.00

Other Expenses 21 18,247.05 14,766.39

Total Expense 50,000.49 35,134.32

(V) Profit before exceptional and extraordinary

items and tax (III - IV) 2,721.32 6,731.74

(VI) Exceptional Items - -

(VII) Profit before extraordinary items and tax (V - VI) 2,721.32 6,731.74

(VIII) Extraordinary Items

(Refer Note no. 16(e) of Schedule 22) 4,448.28 268.07

(IX) Profit before tax (VII + VIII) 7,169.60 6,999.81

(X) Tax expense

(1) Current tax 1,480.91 1,399.96

(2) Deferred Tax 4 593.61 675.68

(XI) Profit/(Loss) for the year from continuing

operations (IX - X) 5,095.08 4,924.17

(XII) Earnings per equity share (before Extraordinary items)

(1) Basic 1.07 2.94

(2) Diluted 1.07 2.94

(XIII)Earnings per equity share (After Extraordinary items)

(1) Basic 3.22 3.11

(2) Diluted 3.22 3.11

Accounting Policy and Notes to Accounts 22

(` in Lacs)Schedule No. For the year ended For the year ended






for the year ended 31st March 2012

Profit & Loss Statement

56

A CASH FLOW FROM OPERATING ACTIVITIES

NET PROFIT BEFORE TAX AND EXTRAORDINARY ITEMS 7,169.60 6,999.81

ADD:


Interest Paid 1,084.77 1,802.97

Unrealised Loss / (Gain) in Foreign Exchange 681.19 (152.07)

Loss on sale of Fixed Assets 37.99 4,200.71 29.76 3,372.66

11,370.31 10,372.47

LESS:

Interest Received 138.61 257.08

Extra ordinary Income (Realisation on Investments inwholly owned subsidiary in excess of cost) - 268.07

138.61 525.15

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 11,231.70 9,847.32

WORKING CAPITAL CHANGES

(Increase)/Decrease in Inventories 1,867.35 (1,702.01)

(Increase)/Decrease in Debtors & Other Receivable 14.73 (2,970.05)

Increase/ (Decrease) in Trade and Other payable 5,773.91 1,374.79

Increase/(Decrease) in Working Capital 7,655.99 (3,297.27)

Cash generated from operating activities 18,887.69 6,550.05

TAX PAID (1,283.53) (1,546.37)

CASH USED(-)/ + GENERATED FOR OPERATING ACTIVITIES (A) 17,604.16 5,003.68

B. CASH FLOW FROM INVESTING ACTIVITIES

Payment against acquisition of Fixed Assets (11,242.39) (12,326.09)

Proceeds from sale of Fixed assets 175.94 204.80

Proceeds of Investment in Subsidiaries dissolved 12,625.20 548.77

CASH USED(-)/ + GENERATED FOR INVESTING ACTIVITIES (B) 1,558.75 (11,572.52)

C. CASH FLOW FROM FINANCING ACTIVITIES

REPAYMENT(-)/PROCEEDS(+) FROM SHORT TERM LOANSAND LONG TERM LOAN (18,563.77) 6,726.74

Interest Paid (1,084.77) (1,802.97)

CASH USED(-)/ + (GENERATED) IN FINANCING ACTIVITIES (C) (19,648.54) 4,923.77

NET INCREASE + /DECREASE (-) IN CASH AND

CASH EQUIVALENTS (A+B+C) (485.66) (1,645.07)

CASH AND CASH EQUIVALENTS OPENING BALANCE 1,849.50 3,494.57

CASH AND CASH EQUIVALENTS CLOSING BALANCE 1,363.86 1,849.50

CASH AND CASH EQUIVALENTS (YEAR END) :

Balances with banks 1,354.81 1,843.81

Cash-in-Hand 9.05 5.69

(` in Lacs)For the year ended For the year ended






Statement of Cash Flow (Pursuant to AS-3) Indirect Method

57

SCHEDULE 1: SHARE CAPITAL1. (a) Particulars of Shares:

(` in Lacs)

Sl Class of Shares Face Authorised Capital Issued, Subscribed Number of shares

No. value of & Fully Paid up held by Fresenius

one shares Total Kabi (Singapore)

Pte. Ltd., Holding

No. Value No. Value Body Corporate

A (i) Equity Shares As at 31st Re. 1 180,000,000 1,800 158,227,655 1,582.28 142,404,889

March 2012 (142,404,889)

As at 31st Re. 1 (180,000,000) (1,800) (158,227,655) (1582.28)

March 2011

Total share capital × 180,000,000 1,800 158,227,655 1,582.28

× (180,000,000) (1,800) (158,227,655) (1582.28)

Note:

1) There is no restriction on transferability of shares.

2) There has been no movement of share during the year or previous year.

Capital Reserve:

Opening Balance 150.00 150.00

Add: Addition during the year (Subsidy received) 30.00 –

180.00 150.00

Securities Premium Reserve: (As per last account) 7,675.41 7,675.41

General Reserve:

Opening Balance 18,411.42 18,411.42

Add: Transferred from surplus 25,000.00 –

43,411.42 18,411.42

Surplus / (deficit):


Add: Profit/(Loss) for the year 5,095.08 4,924.17

Total 31,410.07 26,314.99

Less:Transferred to General Reserve 25,000.00 –

6,410.07 26,314.99

Total 57,676.90 52,551.82

SCHEDULE 2: RESERVE & SURPLUS(` in Lacs)

Particulars Details As at Details As at


Schedules annexed to and forming part of the Balance Sheet as at 31st March 2012

58

SCHEDULE 3: LONG TERM BORROWING(` in Lacs)

Sl Nature of Borrowing Period Total Secured Unsecured Term of repayment Rate of Interest

i) Foreign Currency Term As at 31st 9,522.05 - 9,522.05

Loans from Related March 2012

Party (Holding

Company)

As at 31st (9,522.05) - (9,522.05) Repayable in 2013-14 Euribor+200

March 2011 basis points

Total As at 31st 9,522.05 - 9,522.05

March 2012

As at 31st (9,522.05) - (9,522.05)

March 2011

Note:

1. There is no default in repayment of principal loan or interest thereon.

2. No guarantee bond has been furnished against any loan by any third party including directors

Deferred Tax Liability :


Less: Deferred Tax Assets :

Doubtful debts 200.09 171.62

Provision for leave salary 202.76 141.42

Provision for Gratiuty 73.94 30.60

Provision for others 196.98 231.62

Doubtful Advances 32.55 32.55

Provision against financial instrument 155.67 861.98 607.81

Net Deferred Tax Liability 1,466.23 872.61

(Decrease)/Accretion in Deferred Tax Liability

provided during the year 593.62 676.00

SCHEDULE 4: DEFFERED TAX LIABILITIES (NET)(` in Lacs)



Leave encashment 548.73 339.50

For Taxation 2,738.67 2,679.59

3,287.40 3,019.09

SCHEDULE 5: LONG TERM PROVISIONS(` in Lacs)

Particulars As at As at


59

SCHEDULE 6: SHORT TERM BORROWINGS(` in Lacs)

Sl Nature of Borrowing Period Total Secured Unsecured

i) Cash Credits from bank As at 31st March 2012 1,139.59 1,112.55 27.04

As at 31st March 2011 (8,699.16) (6,350.47) (2,348.69)

ii) Foreign Currency Loan from Banks As at 31st March 2012 4,069.60 0.00 4,069.60

As at 31st March 2011 (5,573.80) (0.00) (5,573.80)

iii). Loan from related Party As at 31st March 2012 0.00 0.00 0.00

As at 31st March 2011 (3,000.00) (0.00) (3,000.00)

vi). Other Loan from Bank As at 31st March 2012 0.00 0.00 0.00

As at 31st March 2011 (6,500.00) (0.00) (6,500.00)

Total As at 31st March 2012 5,209.19 1,112.55 4,096.64

As at 31st March 2011 (23,772.96) (6,350.47) (17,422.49)

Note:

1. There is no default in repayment of principal loan or interest thereon.

2. Secured component of cash credits is secured by hypothecation of inventories and book debts.

3. Unsecured Loan from bank in foreign currency is covered by guarantee bond furnished by Fresenius Kabi AG a holding

entity.

4. No other third party including Director of company has furnished any guarantee bond against any loan.

Interest accrued & not due 79.62 64.09

Unpaid dividends 4.53 5.75

Advances from Customers 170.87 142.59

Statutory Liabilities 363.09 283.51

Total 618.11 495.94

SCHEDULE 7: OTHER CURRENT LIABILITIES(` in Lacs)



For Leave Encashment 47.78 76.56

For Gratuity Payable 217.53 90.02

For Taxation 6,411.10 5,131.47

For Provision against off balance sheet exposure

in financial instrument 458.43 –

For Provision -others 579.42 681.43

Total 7,714.26 5,979.48

SCHEDULE 8: SHORT TERM PROVISIONS(` in Lacs)



60

SC

HE

DU

LE

9 –

FIX

ED

AS

SE

TS

(` in

Lacs)

Gro

ss B

lock

Dep

reci

ati

on /

Am

orti

sati

onN

et B

lock

Sl

Par

ticu

lars

of

Ass

ets

Gro

ss C

ost

/A

ddit

ion

Valu

e as

Acq

uis

itio

nO

ther

Sub

Sale

/G

ross

Tota

l as

for

the

Sale

/To

tal a

sW

.D.V

. as

W.D

.V. a

son

1st A

pri

lA

dju

stm

ent

Tota

lad

just

men

tB

alan

ce a

s1s

t A

pri

lyea

rad

just

men

ton

31s

ton

31s

ton

31s

t

20

11duri

ng t

his

on 3

1st

20

11duri

ng t

his

Mar

ch 2

012

Mar

ch 2

012

Mar

ch 2

011

yea

rM

arch

20

12yea

r

i)Ta

ngib

le A

sset

s

Free

ho

ld L

and

625

.77

––

––

625

.77

––

––

625

.77

625

.77

Lea

seh

old

Lan

d4

20

.39

––

––

42

0.3

97.

81

14.2

6–

22

.07

398

.32

412

.58

Bu

ildin

g, R

oad

& C

ulv

erts

6,0

51.9

0–

1,970

.84

1,970

.84

–8

,02

2.7

48

97.

752

25

.44

–1,1

23.

196

,89

9.5

45

,154

.15

Pla

nt

& M

ach

iner

y19

,50

4.6

34

61.

46

4,3

09

.62

4,7

71.0

812

5.2

824

,150

.43

4,0

28.0

01,

311

.54

86

.06

5,2

53

.48

18,8

96

.95

15,4

76.6

3

Veh

icle

s24

6.4

47.

00

–7.

00

27.9

52

25.4

911

2.3

332

.1419

.1212

5.3

510

0.14

134

.11

Furn

itur

e &

Fix

ture

s2

,73

9.9

08

3.3

2–

83

.32

9.9

52

,813

.26

390

.77

398

.79

5.2

078

4.3

62

,028

.90

2,3

49

.13

Off

ice

Equ

ipm

ent

50

9.6

313

5.5

2–

135

.52

2.2

16

42

.94

85

.77

83

.34

0.8

516

8.2

64

74.6

84

23.8

6

Co

mp

ute

rs1,1

29

.96

150

.49

–15

0.4

92

0.2

41,

260

.22

50

0.7

824

3.6

314

.37

730

.04

53

0.18

629

.18

Tota

l:3

1,2

28

.64

83

7.7

96

,28

0.4

67,

118

.25

185

.64

38

,16

1.2

56

,02

3.2

12

,30

9.1

512

5.6

08

,20

6.7

62

9,9

54

.49

25

,20

5.4

3

ii)In

tangib

le A

sset

s

Pro

du

ct D

evel

op

men

t6

02

.66

––

––

60

2.6

618

0.8

06

0.3

9–

241.1

93

61.4

74

21.

86

Pat

ent/

Pro

du

ct R

igh

ts2

70.0

00

.69

–0

.69

–2

70.6

96

7.4

627

.22

–9

4.6

817

6.0

12

02

.54

Oth

er (

spec

ify)

––

––

––

––

––

––

Tota

l:8

72

.66

0.6

9–

0.6

9–

873

.35

24

8.2

68

7.6

1–

33

5.8

75

37.

47

62

4.4

0

iii)

Cap

ital

Wo

rk–i

n–p

rogr

ess

9,2

58

.39

10,4

03.

91

(6,2

80

.46

)4

,123

.46

–13

,38

1.84

––

––

13,3

81.8

48

,95

8.8

4

iv)

Inta

ng

ible

ass

ets

un

der

Dev

elo

pm

ent

59

8.0

7–

––

153

.86

44

4.2

1–

––

–4

44

.21

59

8.0

7

Gra

nd T

otal (

i+ii+

iii+

iv)

41,

95

7.76

11,2

42

.39

–11

,24

2.3

93

39

.50

52

,86

0.6

56

,27

1.4

72

,39

6.7

612

5.6

08

,54

2.6

34

4,3

18.0

13

5,3

86

.74

Pre

vio

us

Yea

r29

,96

4.6

219

,34

2.7

4–

–7,

34

9.6

24

1,95

7.74

4,6

77.

86

1,6

92

.00

98

.39

6,2

71.

47

35,6

86

.27

25,2

86

.76

Note

: L

ease

ho

ld L

an

d r

ela

tes

to

1)6

1.9

43

acr

es

of

La

nd

at

Ka

lya

ni t

ake

n o

n o

pe

rati

on

al le

ase

fo

r 9

99

ye

ars

fro

m 1

1th J

an

ua

ry 1

98

9.

2)

774

65

sq

ua

re f

ee

t o

f L

an

d a

t G

urg

ao

n

take

n o

n o

pe

rati

on

al le

ase

fo

r 11

ye

ars

fro

m 1

st O

cto

be

r 2

00

9.

61

A) Investment in overseas subsidiary in fully paid - 12,625.20equity instrumentFresenius Kabi Onclogy PLC, UK

B) Trade investment in Domestic Company in fully 3.00 3.00paid equity InstrumentShivalik Solid Waste Management Limited

Total 3.00 12,628.20

Note: Aggregate Book value of unquoted Investments 3.00 12,628.20

SCHEDULE 10: NON-CURRENT-INVESTMENTS(` in Lacs)



Advance Payment of Tax (Considered good) 3,643.16 3,201.79

Other Loans & Advances (Considered good) 169.97 169.97

Total 3,813.13 3,371.76

SCHEDULE 11: LONG TERM LOANS & ADVANCES (UNSECURED)(` in Lacs)



Miscellaneous Expenditure 12.34 12.72(Read with note no 19 of Schedule 22)

Total 12.34 12.72

SCHEDULE 12: OTHER NON-CURRENT ASSETS(` in Lacs)



Raw Materials 8,141.69 9,670.57

Work-in-Progress 5,127.20 4,902.37

Finished goods 3,474.83 4,302.03

Stores & spares 1,912.29 1,701.23

Plantation in progress 199.03 146.19

Total 18,855.04 20,722.39

Note: Raw Material includes stock-in-transit ` 56.11 Lacs, Previous year Nil.

SCHEDULE 13: INVENTORIES(` in Lacs)



Unsecured:

Debts outstanding for a period of above 6 month

Considered good 8,575.88 3,118.23

Considered doubtful 588.67 504.90

9,164.55 3,623.13

Less: Provision for doubtful debts 588.67 504.90

8,575.88 3,118.23 3,118.23

Other debts: considered good 11,596.01 14,541.20

Total 20,171.89 17,659.43

SCHEDULE 14: TRADE RECEIVABLES(` in Lacs)



62

Balances with banks 1,354.81 1,843.81

Cash-in-Hand 9.05 5.69

Total 1,363.86 1,849.50

Note:

1. Balances with banks include -

a) Balance in unpaid dividend account 5.00 6.00

b) Pledged on account of Margin money against LC 478.00 3.00

c) Pledged with government authorities against Earnest money Deposit 160.00 17.00

SCHEDULE 15: CASH & CASH EQUIVALENTS(` in Lacs)



Unsecured:

Capital Advance (Considered good) 231.04 299.55

Security Deposit (Considered good) 617.10 407.04

Loans & Advances to

Related to Parties (Considered good) - 4,042.96

Advances to Suppliers Considered good 4,618.69 2,093.33

Considered Doubtful 95.61 95.61

4,714.30 2,188.94

Less: Provision for doubtful advance 95.61 4,618.69 95.61 2,093.33

Advances to Employees (Considered good) 86.67 81.61

Balance with Excise Authorities (Considered good) 657.08 2,297.85

Advance Payment of Tax (Considered good) 5,772.14 4,874.64

Deposit with Govt. Authorities (Considered good) 17.24 18.00

Other Loans & Advances (Considered good) 476.36 176.94

Total 12,476.32 14,291.92

Note:

1. Loans & Advances due from officers severally or jointly with other parties 31.02 20.67

2. Loans & Advances due from private companies where one - 5.30

or more directors are director or member

Additional Disclosure as per Clause 32 of the Listing Agreement:

Loan to subsidiary (Fresenius Kabi Oncology Plc.)

Balance at year end - 4,042.96

Maximum due during the year - 4,042.96

Repayment time NA Repayable on

demand

SCHEDULE 16: SHORT TERM LOANS & ADVANCES(` in Lacs)



63

A Sale of Products 48,685.48 41,551.16

Domestic 7,033.14 6,730.19

Export 41,652.34 34,820.97

B Sale of Services 4,382.35 -

C Other Operating Revenues 937.39 1,062.43

Export Subsidy 831.94 899.28

Sale of Scrap 101.55 123.73

Miscellanceous Receipts 3.90 39.42

D Less Excise Duty (1,573.61) (1,336.73)

Total 52,431.61 41,276.86

SCHEDULE 17(A): REVENUE FROM OPERATIONS(` in Lacs)

Particulars Details For the year ended Details For the year ended


A Interest Income on

i) Fixed Deposit 105.79 1.21

(TDS ` 11.23, Previous Year ` 0.10)

ii) Loan (TDS ` 6.54, Previous Year ` 38.58) 32.82 257.08

B Provision for doubtful advances written back – 53.01

C Provision for doubtful debts written back 151.59 277.90

Total 290.20 589.21

SCHEDULE 17(B): OTHER INCOME(` in Lacs)

Particulars For the year ended For the year ended


A Salaries, Wages and Bonus 4,935.59 4,647.00

B Contribution to Provident and Other Funds 577.20 397.58

C Workmen and Staff Welfare 585.21 565.92

Total 6,098.00 5,610.50

SCHEDULE 18: EMPLOYEE BENEFITS EXPENSES(` in Lacs)



A Interest Expense 1,005.44 1,571.28

B Bank Charges 79.33 231.69

C Net (gain)/loss on foreign currency transaction 681.19 (2,271.51)

Total 1,765.96 (468.54)

SCHEDULE 19: FINANCE COST(` in Lacs)



64

Depreciation on Tangible Fixed Assets (Schedule 9) 2,309.15 1,604.73

Amortisation of Intangible Fixed Assets (Schedule 9) 87.61 87.27

Total 2,396.76 1,692.00

SCHEDULE 20: DEPRECIATION & AMORTISATIONS(` in Lacs)



Power and Fuel 1,776.79 1,292.68

Stores and Spares Consumed 2,255.08 1,300.42

Repair to Building 61.03 52.36

Repair to Plant and Machinery 308.62 192.97

Repair to Others 167.61 94.46

Processing Charges 1,036.72 973.04

Other Manufacturing Expenses 6.61 70.85

Rates and taxes 331.48 74.21

Rent 142.47 228.15

Insurance 103.61 54.85

Freight and Forwarding Charges 986.53 753.80

Printing & Stationery 119.33 126.55

Commission,Discount and Rebate 195.54 248.95

Advertisement and Publicity 381.02 865.94

Travel and Conveyance 718.02 885.55

Legal and Professional 456.47 751.20

Telephone and Fax Expenses 206.39 197.56

Security Expenses 87.04 67.33

General Charges 1,376.63 1,300.63

Director’s Fees 3.60 4.35

Auditor’s Remuneration 39.58 61.26

Contribution to Scientific Research 6,569.02 4,547.46

Loss on Sale of Fixed Assets 37.99 29.75

Computer Maintenance expenses 433.59 256.26

Provision for Doubtful Debts (net of realisation) 443.29 255.21

Fixed Assets Written Down 3.00 80.59

Total 18,247.05 14,766.39

SCHEDULE 21: OTHER EXPENSES(` in Lacs)



65

Annexed to and forming part of the Accounts for the year ended 31st March 2012 of FreseniusKabi Oncology Ltd.

SCHEDULE 22: ACCOUNTING POLICIES & NOTES TO ACCOUNTS (Figures in ` Lacs)

A. ACCOUNTING POLICIES

Significant Accounting Policies are summarized below

a. Basis of preparation of Financial Statements:

The accounts have been prepared in accordance with Indian GAAP under historic cost convention. GAAP enjoinsadherences of mandatory accounting standards prescribed by the Companies (Accounting Standards) Rules, 2006,guidelines issued by SEBI and specific provisions of Companies Act 1956 on disclosure & accounting exigencies.

To comply with GAAP, estimate and assumptions are made for factors affecting balances of year end assets andliabilities and disclosure of contingent liabilities. Such estimates change from time to time according to situation andappropriate changes are made with the knowledge of circumstances warranting such changes. Material changes arereported in notes to accounts including disclosures of financial impact thereof.

b. Fixed Assets and Depreciation/Amortisation (Tangible & Intangible):

Fixed assets are stated at cost less accumulated depreciation and impairment losses. Cost comprises the purchaseprice and any directly & indirectly attributable expense of bringing the asset to its working condition for its intendeduse including expenses on startup, commissioning, trial run and experimental production.

Any income generated during project implementation is reduced from project cost.

• Depreciation on Fixed Assets at factory locations have been provided for on straight line method at rates specifiedin schedule XIV of the Companies Act 1956, and the same at non factory locations have been provided on writtendown value method at the rates specified in the aforesaid Schedule.

• No depreciation has been provided on leasehold land, which are either for a period of 999 years or of perpetualnature. Relevant assets will be amortised in the year of termination of lease-deed, if occurs.

• The date of commencement of commercial production is identified with the date of attainment of ability of theplant to operate commercially ignoring delay in commencement of actual production, if any, caused by statutory/regulatory hindrances including delay in approval of sample.

• Expenditure incurred on account of product development is capitalized as intangible assets. The same is amortisedon Straight Line method over a period of 10 years from the year of completion of development.

• Patents acquired from external sources are treated as intangible assets which are amortized on Straight Linemethod over a period of 10 years from the year of acquisition.

c. Impairment of Assets:

i. The company identifies impairable tangible fixed assets at the year-end in term of cash generating unit conceptfor the purpose of arriving at impairment loss thereon being the difference between the book value and recoverablevalue of relevant assets if indication of impairment exists within the meaning of para 5 to 13 of AS-28 issued byICAI. Impairment loss if any when crystallizes is charged against revenue of the year.

ii. Intangible assets are subjected to periodic test of impairment on asset specific perspective in terms of para-83,AS-26.

d. Investments:

Investments being of long-term in nature, are held at cost.

e. Inventory:

Stocks are valued at lower of cost or net realizable value. Cost is determined as follows:

• Raw materials, Packing materials, stores & Spares At cost computed on moving average Basis.

• Work-in-process At cost of input plus overhead

Upto the stage of completion.

• Finished goods At cost of input plus appropriate Overhead.

• Plantation-in-progress At actual cost.

66

f. Plantation Accounting:

Regarding plantation of agro based input undertaken by the company in joint venture with a third party plantationperiod wherein extend in years and yield there-from augment with repeat cultivation, entire annual recurring cost ischarged to plantation-in -progress in the year of incurrence and one-time cost is charged to plantation-in-progress indeferred context over the lease period, the plantation land relates to.

Plantation cost proving higher than realisable value of the output in initial years of harvesting, final output is carriedat realizable value, leaving the excess of cost over realizable value for deferred amortization against annual plantationcost over remaining period of lease of plantation land.

g. Research and Development Expenses:

Scientific research expenses are charged to the Profit & Loss Account in the year in which the expenses are incurred.

Development expenses when duly measurable for attribution in intangible asset specific context are capitalized asstated in A(b) above on account of intangible asset for intended use only when technical feasibility of completing theasset with adequacy of technical, financial & other resources in the custody of company to complete the development& it's generation of further economic benefit are assured, otherwise the same is charged to revenue.

h. Retirement Benefits:

Liabilities in respect of retirement benefits to employees are provided for as follows: -

Defined Benefit Plans:

• Leave salary of employees on the basis of actuarial valuation as per AS 15 (revised).

• Gratuity liability on the basis of actuarial valuation as per AS 15 (revised)

Defined Contribution Plans:

• Liability for superannuation fund on the basis of the premium paid to the Life Insurance Corporation of India inrespect of employees covered under Superannuation Fund Policy.

• Provident fund & ESI on the basis of actual liability accrued and paid to trust / authority.

i. Recognition of Income and expenses:

• Sales and purchases are accounted for on the basis of passing of title to the goods.

• Sales comprise of sale price of goods including excise duty but exclude trade discount, VAT and sales tax.

• Income from research & development services extended is accounted for in respect of the period, relevantservice relate to.

• Exports subsidy is accounted for on the basis of receipt of licence.

• All items of incomes and expenses have been accounted for on accrual basis.

j. Income Tax and Deferred Tax:

The liability of company is estimated considering the provision of the Income Tax, 1961. Deferred tax is recognizedsubject to the consideration of prudence, on time differences being the difference between taxable income andaccounting income that originate in one period and capable of reversal in one or more subsequent periods in duecognizance of AS-22, issued by ICAI.

k. Forward Contract and option in foreign currency:

Gains or loss on forward exchange contracts to hedge overseas exposures against adverse currency fluctuation undermark to market are computed by multiplying foreign currency amount of forward exchange contract by the differencebetween the forward rate available at the reporting date for the remaining maturity contract and contracted forwardrate.

l. Contingent Liabilities:

Disputed liabilities and claims against the company including claims raised by fiscal authorities are provided in accountsunless no reliable estimate can be made of the amount of obligation or possibility of future cash flow is remote.Otherwise the same is disclosed by way of notes to accounts.

m. Foreign Currency Translation:

Foreign branches/offices are treated as integral operation as defined under AS-11 (Revised). Revenue items have beenconverted at the simple average of monthly exchange rates prevailing during the year. Fixed assets have been convertedat the rates prevailing on dates of purchase of overseas assets. Outside liabilities and assets other than fixed assetsare converted at the year-end exchange rate. Exchange gain or loss arising out of above is charged to Profit & LossAccount.

67

• Transactions in foreign currencies are recognized at rate of overseas currency ruling on the date of transactions.Gain / Loss arising on account of rise or fall in overseas currencies vis-à-vis reporting currency between the dateof transaction and that of payment is charged to Profit & Loss Account.

• Increase / decrease in foreign currency loan on account of exchange fluctuation is debited / credited to profit andloss account.

• Impact of exchange fluctuation is separately disclosed in notes to accounts.

n. Miscellaneous Expenditure:

i) Deferred Plantation Expenses:

Deferred Plantation Expenses incurred in a year are amortized equally during residual life of leasehold agriculturalland, plantation relates to.

o. Government Grants:

Project Capital subsidy is credited to shareholder's funds as Capital reserve.

B. NOTES TO ACCOUNTS

1. Test of impairment of tangible fixed assets conducted for three cash generating units (CGUs) of the Company (Kalyaniunit, Baddi-I unit & Nalagarh unit) revealed their recoverable value arrived at on the basis of value in use concepthigher than corresponding carrying costs. This ruled out the cause of any further exercise of ascertaining recoverablevalue on the basis of net selling price method and exigency of impairment provision.

2. Contingent Liabilities (not provided for):

A) Claims against the company not acknowledge as debts:

i. Excise duty demand disputed ` 11.24 (previous year ` 27.31).

ii. Income tax demand disputed ` 1,217.16 (Previous Year ` 569.60).

iii. Others ` 193.07 (Previous Year ` 193.07).

B) Guarantee Furnished ` 241.96 (Previous Year ` 242.54).

3. Commitments

i. Capital Contract ` 5,474.40 (Previous Year ` 7,941.83).

ii. Counter Guarantee against LC (sight) ` 129.86 (Previous Year ` 370.18).

4 Contingent liabilities provided for:-

Information pursuant to AS-29 on claims lodged against the company which has been disputed provided for:-

Particulars Opening Provision Closing Forum whereProvision Utilized/ Provision the dispute is1st April Adjusted 31st March pending2011 during the 2012

year

Aventis a party in Philippines has lodged claim for 373.90 102.00 271.90 Hon'ble Court -compensation against the company on alleged ground (465.64) (91.74) (373.90) Philippinesof infringement of patent right being disputed bycompany in court.

Compensation claimed by Welcure Ltd.,one of 240.52 - 240.52 Arbitrationcompany's erstwhile distributors, on alleged ground (240.52) (240.52)of wrongful termination of product manufacturingagreement, which has been contested by the company.

Total 614.42 102.00* 512.42(706.16) (91.74) (614.42)

i) No provision has been made during the year.

ii) * To meet part of expenses provisioned earlier, provisions amounting to ` 102 (previous year ` 91.74) was utilizedduring the year.

iii) Aforesaid provisions had been made in accounts as a measure of prudence in apprehension of possible outflow ofresources in future at point of time not being readily ascertainable.

iv) Said provisions against disputed liabilities, form part of provision others in schedule 8 of the Balance Sheet.

68

5. Building constructed on leasehold land included in the value of building in fixed assets schedule:

As at 31st March 2012 As at 31st March 2011

Cost 3,605.77 1,639.19

Written down Value 3,191.99 1,305.64

For the year Ended For the year Ended


6a. Expenditure in Foreign Currency:

Professional & Consultation Fees 1,283.95 715.39

Salary 49.16 0.00

Traveling & Conveyance 117.54 157.76

Advertisement & Commission 669.65 836.55

Administration Charges 80.20 53.69

Interest 316.11 108.35

Others 125.39 81.03

Total 2,642.00 1,952.77

6b. CIF Value of Imports:

Raw Materials 7,038.33 4,515.23

Stores & Spares (including of packing material) 2,059.09 1,680.48

Capital Goods 757.53 1,764.52

Total 9,854.95 7,960.23

6c. Earning in Foreign Exchange:

Export sales at FOB 40,684.52 33,352.87

Interest Income 32.82 257.08

Total 40,717.34 33,609.95

6d. Auditors Remuneration: 31st March 2012 31st March 2011

Audit Fee 19.37 16.50

Branch Auditor's fee 7.66 25.27

Certificaton - 2.90

Reimbursement of expenses 8.98 14.57

Other Matters 3.57 2.02

7a. a) Particulars of major itmes of raw material

Item Purchase Consumption

Current year Previous year Current year Previous year

A Bulk Drug 4,427.96 3,765.15 5,283.85 3,570.89

B Others 12,104.04 9,312.69 12,833.15 7,866.62

Total 16,532.00 13,077.84 18,117.00 11,437.51

69

b) Particulars of stock in trade

Item Purchase

Current year Previous year

A Injections 114.60 118.18

B Tablets 161.14 178.30

C Others 9.31 5.03

Total 285.05 301.51

c) Particulars of income from services

Nature of Service Product development

Current year Previous year

R&D services provided

(includes ` 4716.28 relates to previous years) 9,097.28 -

d) Closing stock of work in progress

Item Current year Previous year

Formulation 1,028.95 931.73

Bulk Drug 4,098.25 3,970.64

Total 5,127.20 4,902.37

7b) Breakup of Consumptions

Particualars Raw Material Packing Material

(Including stores & spares)

Amt (` Lacs) % Amt (` Lacs) %

Imported 5,722.38 32% 1,737.28 37%

(3,279.57) (28.67%) (655.48) (27.42%)

Domestic 12,394.62 68% 3,005.70 63%

(8,157.94) (71.33%) (1,735.19) (72.58%)

Total 18,117.00 100% 4,743.08 100%

(11,437.51) (100%) (2,390.67) (100%)

(Note: Figures in brackets relate to previous year)

8. Foreign Exchange exposure:

(a) Overseas exposure hedged against adverse currency fluctuations by way of forward contract:

i) Unsecured ECB 14.70 Mio EURO (previous year 14.70 Mio EURO)

ii) Off balance sheet exposure against open 18.00 Mio EURO (previous year 12.05 Mio EURO)

forward contract, mark to market, to hedge 9.00 Mio USD (previous year 9.70 Mio USD)

adverse foreign currency fluctuation

(b) Other Overseas liabilities and assets not being hedged

Sundry Creditors (foreign) (0.12) Mio GBP (previous year 0.17 Mio GBP)

(0.53) Mio USD (previous year 0.92 Mio USD)

1.78 Mio EURO (previous year 0.17 Mio EURO)

Sundry Debtors (foreign) 17.90 Mio EURO (previous year 16.75 Mio EURO)

13.09 Mio USD (previous year 13.69 Mio USD)

(c) There has been a change in treatment of Gain/Loss on forward exchange contract in line with accounting policy no

A(k) as against recognition of income or loss thereon at the point of closure of contract under earlier practice which

led to reduction of profit by Rs 458.43 lacs with corresponding rise in short term provision.

70

9. Due to Micro & Small enterprises within the meaning of Micro, Small & Medium Enterprises Development Act, 2006

shown under creditors for goods


Principal Due 50.34 78.39

There has been no delay in payment beyond specified period attracting interest liability.

10. Related party Disclosures:

Related party disclosures as required under AS-18 are given below:

a) Name of related party and nature of related party relationship where control exists:

Ultimate Holding Entity : Fresenius SE & Co. KGaA

Immediate Holding Entity : Fresenius Kabi (Singapore) Pte. Ltd.

Other Holding Entities : Fresenius Kabi AG, Fresenius Kabi Deutschland GmbH,

Fresenius Kabi Austria GmbH

Subsidiary : Fesenius Kabi Oncology Plc. (UK) (till 24th June 2011).

Fellow Subsidiaries : Calea Ltd., Fresenius Kabi Brazil Ltda., Fresenius Kabi

Chile Ltda., Fresenius Kabi Korea Ltd., Fresenius Kabi

México S.A. de C.V, Fresenius Kabi Denmark, PT.

Fresenius Kabi Indonesia, Fresenius Kabi México S.A. de

C.V., Fresenius Kabi Philippines Inc, HOSPED GmbH,

Calea UK Ltd., Fresenius Kabi Denmark, Fresenius Kabi

EOOD, Fresenius Kabi Pharma Portugal Lda., Laboratories

Filaxis International S.A, V. Krütten Medizinische Einmalgeräte GmbH,

Fresenius Kabi Argentina SA, Fresenius Kabi Asia

Pacific Ltd., Fresenius Kabi (China) Co. Ltd,

Fresenius Kabi (Singapore) Pte Ltd., Fresenius Kabi Ilac Sanayi ve Ticaret Ltd.,

Fresenius Kabi India Private Ltd.,

Fresenius Netcare GmbH, Pharmaceutical Partners Ontario,

Fresenius Kabi Asiaco GmbH, APP, U.S.A.

Fresenius Kabi Thailand Limited, Sanderson, Peru,

Fresenius Kabi Australia, Fresenius Kabi Oncology Plc. (UK)

Fresenius Kabi Malaysia, Fresenius Kabi Chile,

Fresenius Kabi Hungary, Fresenius Kabi AB Sweden,

Fresenius Kabi Taiwan Ltd.

b) Other related parties transaction

Key management personnel : Dr. Satish B Kulkarni (Managing Director & CEO till 20th October 2011)

Mr. Peter F. Nilsson (Managing Director & CEO from 20th October 2011)

71

Particulars Subsidiary Holding Key Fellow Total Outstanding

Company/ Management Subsidiary As on

Ultimate Personnel 31st March

Holding 2012

Company

Sale of Goods / Debtors 3,411.30 3,132.79 - 30,230.78 36,774.87 14,619.14

(18,373.07) (2,196.68) (-) (6,242.57) (26,812.32) (14,065.35)

Sale of assets - - - 7.60 7.60 -

(-) (-) (-) (-) (-) (-)

Purchase/Receiving of - 183.25 - 484.10 667.35 623.19

Services (-) (71.77) (-) (206.82) (278.59) (204.53)

Inter- company receipt - 9,567.66 - 277.09 9,844.75 -

(-) (-) (-) (-) (-) (-)

Remuneration - - 228.22 - 226.90 -

(-) (-) (240.35) (-) (240.35) (-)

Loan Given - - - - - -

(-) (-) (-) (-) (-) (3,717.07)

Realisation of Loans 3,717.07 - - - 3,717.07 -

Given (-) (-) (-) (-) (-) (-)

Interest Received/ 32.82 - - - 32.82 -

Receivable (-) (-) (-) (-) (-) (325.89)

Loan Taken - - - - - 9,522.05

(-) (2,481.70) (-) (-) (2,481.70) (9,522.05)

Interest Paid - 364.55 115.70 480.25

(-) (224.28) (-) (359.94) (584.22) (-)

Repayments of Loan taken - 3,000.00 3,000.00 -

(-) (-) (-) (-) (-) (-)

Interest Payable - 93.68 - 93.68 93.68

(-) (64.09) (-) (6.74) (70.83) (70.83)

Disposal of Investment 12,625.20 - - - 12,625.20 -

(-) (-) (-) (-) (-) (-)

(Figures in bracket relate to previous year)

1) Sale of goods made to Fresenius Kabi Oncology Plc UK, a Subsidiary Company ` 3,411.30. (previous year ` 18,373.07).

2) Receiving of services includes from Fresenius Kabi Deutschland Gmbh a holding company for ` 183.25 (previous year

` 71.77) & from fellow subsidiaries i.e. Fresenius Netcare GmbH ` 246.09 (previous year ` 206.82), Fresenius Kabi Ab

` 59.88 (previous year ` Nil) and Fresenius Kabi Oncology plc ` 151.20 (previous year ` Nil)

3) Inter -company receipt includes from Fresenius Kabi Deutschland Gmbh ` 9,518.30 out of which ` 9,097.28 towards

product development.

4) Repayment of loan given to subsidiary pertains to Fresenius Kabi Oncology Plc. UK for ` 3,717.07 and Interest received

on the loan is ` 32.82.

5) Interest paid to holding company Fresenius Kabi (Singapore) Pte Ltd : ` 364.55 (previous year ` 224.28) same paid to

Fellow subsidiary Fresenius Kabi India Pvt Ltd ` 115.70 (previous year ` 359.94).

6) Interest payable to holding company Fresenius Kabi (Singapore) Pte Ltd: ` 93.68 (previous year ` 64.09).

7) Receipt from Fresenius Kabi Oncology Plc towards proceeds of disposable of investment.

72

11. Employee related Dues : (Information pursuant to AS-15)

A) Defined Benefit Plan

a) Expenses recognized during the period

Particulars Gratuity Leave Salary Total(Funded) (Unfunded)

A. Past Service Cost - - -(-) (-) (-)

B. Current Service Cost 80.67 143.25 223.92(52.9O) (153.73) (206.63)

C. Interest Cost 39.15 41.68 80.83(26.49) (35.32) (61.81)

D. Expected Return on Plan Assets -33.43 - -33.43(-25.16) - (-25.16)

E. Actuarial Loss/ Gain 190.28 72.08 262.36(94.47) (-131.15) (-36.68)

F. Total Expenses recognized during 276.67 257.01 533.68(148.70) (57.90) (206.60)

b) Reconciliation of opening & closing balances of obligations


I. Obligation as on 1st April 2011 439.69 416.06 855.75(290.78) (371.2) (661.98)

II. Past service cost - - -(-) (-) (-)

III. Current service cost 80.67 143.24 223.91(52.9) (153.73) (206.63)

IV. Interest cost 39.15 41.68 80.83(26.5) (35.32) (61.82)

V. Actuarial Gain / (Loss) 192.25 72.08 264.33(94.46) (-131.15) (-36.69)

VI Settlement -61.85 -76.55 -138.4(-24.95) (-13.04) (-37.99)

VII. Obligation as on 31st March 2012 689.91 596.51 1,286.42(439.69) (416.06) (855.75)

c) Change in Plan Assets(Reconciliation of opening and closing balances)


I. Fair Value of Plan Assets as on 1st April 2011 349.67 - 349.67(269.19) - (269.19)

II. Expected Return on Plan Assets 33.43 - 33.43(25.16) - (25.16)

III. Actuarial Gain / (Loss) 1.96 - 1.96- - -

IV. Employer Contribution 149.17 - 149.17(80.27) - (80.27)

V. Settlement -61.85 - -61.85

(-24.95) - (-24.95)VI. Fair Value of Plan as on 31st March 2012 472.38 - 472.38

(349.67) - (349.67)

(Note: Figures in brackets relate to previous year)

73

d) Obligation vis-à-vis planned assets as on 31st March 2012

Particulars Gratuity Leave Salary Total

(Funded) (Unfunded)

Obligation as on 31st March 2012 689.91 596.51 1,286.42

(439.69) (416.06) (855.75)

Planned assets as on 31st March 2012 472.38 - 472.38

(349.67) (-) (349.67)

Deficit as on 31st March 2012 217.53 596.51 814.04

(90.02) (416.06) (506.08)

e. Investment detail of plan assets as on 31st March 2012 100% in reimbursement right from insurance company

for fund managed by it.

f. Actuarial Assumption:

Discount rate (%) 8.60%

Estimated rate of return of benefit obligation 8.50%

Salary escalation ratio inflation (%) 15.00%

Method Projected unit credit method

g. The estimates of future salary increase take into account regular increment, promotional increases and inflationary

consequence over price index.

h. Demographics assumptions take into account mortality factor as per LIC (1994-96) ultimate criteria, employees' turnover

at 13% (previous year 20%), retirement age at 58 (previous year 58).

B. Defined Contribution Plan: -

Company's contribution to different defined contribution plans: -

Particulars 2011-12 2010-11

Provident Fund 191.91 170.31

Employees State Insurance 25.36 22.20

Employees Superannuation Fund 64.96 31.89

Total 282.23 224.40

12 (a) Information about Primary Business Segments: (` in Lacs)

Formulation Bulk Drug Total

Revenue:

External sales 38,878.56 8,233.31 47,111.87

(34,525.18) (5,812.98) (40,338.16)

Inter-segment sales 9,497.95 9,497.95 -

(12,079.20) (12,079.20) (-)

Total Revenue 29,380.61 17,731.26 47,111.87

(22,445.98) (17,892.18) (40,338.16)

Results:

Segment result 7,032.60 2,875.61 9,908.21

(7,137.60) (5,355.44) (12,493.04)

Unallocated corporate expenses 5,643.69

(3,958.33)

74

(` in Lacs)

Formulation Bulk Drug Total

Operating profit 4,264.52

(8,534.71)

Interest expense 1,084.77

(1,802.97)

Income tax (Current & Deferred) 1,336.40

(2,075.64)

Profit from ordinary activities 1,843.35

(4,656.10)

Extraordinary loss / income 3,251.73

(268.07)

Net Profit 5,095.08

(4,924.17)

Other information:

Segment assets 52,819.90 29,911.84 82,731.74

(41,714.40) (16,245.71) (57,960.11)

Unallocated corporate assets 19,128.52

(48,570.33)

Total assets 101,860.26

(106,530.40)

Segment liabilities 6,547.00 11,718.66 18,265.66

(1,287.78) (1,958.61) (3,246.39)

Corporate Liability 24,350.75

(49,149.98)

Total Liabilities 42,616.41

(52,396.37)

Capital Expenditure 6,612.69 2,625.91 9,238.60

(1,526.33) (6,208.40) (7,734.73)

Depreciation 766.70 566.26 1,332.96

(750.37) (379.14) (1,129.51)

- - -

Non cash expenses other than depreciation (-) (-) (-)

Note: Figures in brackets relates to previous year.

(b) Information about secondary business segment (Geographical Segment):

Out of total sale of `47,111.87 (previous year `41,674.90) ` 41,652.34 (previous year ` 34,820.97) relates to exports and

` 5,459.53 (previous year ` 6,853.92) relates to domestic sales.

13. Information pursuant to AS-19

The total of future minimum lease rent payment under non-cancelable operating lease against residential/office

accommodation.

2011-12 2010-11

- Not later than one year 673.53 670.23

- Later than one year and not later than five years 3,637.44 3,511.77

- Lease rent recognized in Profit and Loss A/c during the year 789.43 929.81

75

14 (a) Movement of Provision for doubtful debts / advances

For the year ended For the year ended31st March 2012 31st March 2011

Debts Advances Debts Advances

Opening balance 504.90 95.61 1,175.52 148.62

Provision for the year 443.29 - 255.21 -

Less: write back 24.73 - - 53.01

Less: realization 126.86 - 277.90 -

Less: charged off as bad debt/ advance 207.93 - 647.93 -

Closing balance 588.67 95.61 504.90 95.61

(b) Other provision includes `67 (previous year `67) against metaxolone project forming part of capital Work-in-progress

in Schedule "9" being poised for abandonment.

(c) Movement of Provision of Taxation:




Add Provision for the year 1,480.91 1,399.96

Less: Adjustment against advvance tax pertaining to assesment 142.22 -

year 2004-05

Closing Balance 9,149.75 7,811.06

15. Information pursuant to AS-27

a) The Company has entered into contractual obligation with a co-venturer for joint control of cultivation of agro based

input, the co-venturer being the operators of the joint venture. Share of the company's assets, liabilities, income,

expenses and capital commitment in the joint venture deal accounted for/disclosed in financial statement are indicated

below:

Particulars As on As on


Plantation- in- progress (forming part of inventories) 199.02 146.19

Rent (forming part of profit & loss account) 3.55 10.45

Deferred plantation expenses (forming part of miscellaneous expenditure) 12.34 12.72

Payable (forming part of creditors for expenses) - 0.35

Advances 22.01 -

Capital commitment (forming part of capital commitment in 3(c) above) 3727.36 3,783.37

b) Break-up of plantation in progress:- As on As on


Seed 150.00 100.00

Professional Charges 8.70 8.70

Rent 4.00 1.55

Management Cost 31.35 31.35

Deferred plantation expenses amortized 1.35 0.97

Bonus 3.62 3.62

Total 199.02 146.19

76

16. Information pursuant to clause 22 of Accounting Standard 21:

a) Fresenius Kabi Oncology Plc ceased to be subsidiary of the company w.e.f 24th June 2011 after entire stake of the

company in relevant wholly owned overseas subsidiary was disposed of at cost to a holding entity.

b) Profit and loss statement for the year ended 31st March 2012 after consolidating operations of Fresenius Kabi Oncology

Plc, for the period it held the status of subsidiary is given below:

Consolidated Profit & Loss Statement for the year ended 31st March 2012 (` in lacs)

DESCRIPTION For the year ended For the year ended


I Revenue from operations 52,636.77 52,679.72

II Other Income 329.48 333.86

III Total Revenue (I +II) 52,966.25 53,013.57

IV Expenses

Cost of materials consumed 21,046.93 9,946.92

Purchase of stock in trade 5,423.53 5,048.30

Changes in inventories of FG, WIP & Stock in trade

Finished Goods 1,037.56 (581.43)

Work in Progress (5,322.05) 2,229.37

Employee benefits expenses 6,554.44 7,529.23

Finance costs 1,942.50 3,180.16

Depreciation and Amortisations expenses 2,827.19 3,430.49

Other Expenses 19,721.18 18,554.50

Total Expense 53,231.27 49,337.53

V Profit before exceptional and extraordinary items and tax (III - IV) (265.03) 3,676.04

VI Exceptional Items - -

VII Profit before extraordinary items and tax (V - VI) (265.03) 3,676.04

VIII Extraordinary Items (Refer sub-clause (e) of this Note) 4,448.28

IX Profit before tax (VII + VIII) 4,183.25 3,676.04

X Tax expense

(1) Current tax 1,480.91 1,399.96

(2) Deferred Tax 593.61 675.72

XI Profit/(Loss) for the year from continuing operations (IX - X) 2,108.73 1,600.36

XII Earnings per equity share (before Extraordinary items)

(1) Basic -0.82 1.09

(2) Diluted -0.82 1.09

XIII Earnings per equity share (After Extraordinary items)

(1) Basic 1.33 1.01

(2) Diluted 1.33 1.01

77

c) Assets and Liabilities ceased to be part of business combination since 24th June 2011 include following:

Particulars ` In Lacs

A) Assets

Fixed Assets 25,456.77

Inventories 11,966.12

Debtors 4,645.25

Cash & Bank 537.18

Loans and Advances 579.98

Sub Total (A) 43,185.30

B) Outside Liabilities

Unsecured Loan 51,618.65

Current Liabilities and Provisions 8,648.52

Sub Total (B) 60,267.17

C) Net Assets (A-B) -17,081.87

d) Fresenius Kabi Plc being the lone subsidiary of the Company at the point of disposal of former's stake, there is no

other financial statement calling for consolidation as on 31st March 2012.

e) Extraordinary income relates to income of ̀ 4,448.28 accrued during the year on account of research and development

services extended to a holding entity pertaining to earlier financial years following decision to the effect arrived at

during the current financial year netted by ` 268 being the liability for import duty crystallized during the year in

respect of earlier financial years. Extra ordinary income of previous year ` 268.07 lacs relates to excess of realization

over net investment during liquidation proceeding of wholly owned subsidiary of Thailand.

17. Research & Development expenditure include followings:-

Particular's For the year ended For the year ended


Advertisement 0.21 0.31

Computer Expenses - 2.45

Power & Fuel 224.46 220.36

Audit fees - 0.75

Legal & Professional 439.04 577.94

Freight, Postage & Telephone Charges 34.56 54.45

Printing & Stationery 69.56 60.65

Rates & Taxes 766.09 338.35

Rent 197.55 518.97

Repair- Plant & Machinery 240.01 117.51

General Exp 1,318.52 741.47

Salary 1,439.61 1,178.00

Stores & spares 402.03 225.24

Travel 222.26 167.95

Security Charges 76.68 18.86

Misc Receipt (50.99) (117.25)

Interest paid 0.73 -

Interest Recd - (0.33)

Insurance Charges 8.70 6.97

Consumption of raw material & chemicals 1,180.02 1,031.89

Total 6,569.04 5,145.53

Less : Transferred to intangible assets in progress - 598.07

Net 6,569.04 4,547.46

78

18. Information Pursuant to AS-20 on Earning per share (EPS)

a) Without considering of extra-ordinary items:

` In Lacs

Particular's For the year ended For the year ended


Profit after tax 5,095.09 4924.17

Add(less) extra ordinary expenses (income) (4,448.28) (268.07)

Add: Impact of change in of accounting financial instrument: 458.43 -

Less: Income Tax on above (84.81) -

Less: Deferred tax on financial instrument recognized

against forward contract (155.67) -

Add: Income tax on extra ordinary item 822.93 -

Profit before extra ordinary items 1,687.69 4,656.10

Number of equity shares (basic & diluted) 158,227,655 158,227,655

EPS (basic and diluted) before considering of extra ordinary items 1.07 2.94

b) After considering of extra-ordinary items:

Profit after tax 5,095.09 4,924.17

Profit including extra-ordinary ims 5,095.09 4,924.17

Number of equity shares (basic & diluted) 158,227,655 158,227,655

EPS (basic and diluted) after considering of extra ordinary items 3.22 3.11

19. Miscellaneous Expenditure:-

(to the extent not written off or adjusted)

Particular's For the year For the year


Deferred Plantation Expenses:- - -

Opening Balance 12.72 -

Addition during the year - 13.69

12.72 13.69

Less: Amortised during the year 0.38 12.34 0.97 12.72

20. (a) All monetary figures are expressed in ` Lacs unless stated otherwise.

(b) Previous year figures have been regrouped / recasted wherever considered necessary to make them comparable with

those of the current year.

Signatures to the Notes "1" to "20" Annexed to and forming part of the Accounts.





79

NOTES

80

NOTES

Fresenius Kabi Oncology Limited

B-310, Som Datt Chambers-1Bhikaji Cama Place,New Delhi-110066, Indiawww.fresenius-kabi-oncology.com

Documents

Fresenius Kabi Oncology Limited - Moneycontrol.comoncology market. Driven by the rise in cancer incidence and diagnosis, improved access to cancer therapies, better health insurance