Strides Pharma Science Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2017

1. The above results were reviewed by the Audit Committee and approved by the Board of Directors at their meeting held on 18 May 2017.

2. During the previous year, pursuant to the court approved Scheme of Amalgamation (the ‘Scheme’), the erstwhile Shasun Pharmaceuticals Limited (Shasun) has been amalgamated with the Company w.e.f. the appointed date of April 01, 2015.

Ind AS 103 'Business Combination’ is not applicable to the above referred merger in view of the Scheme sanctioned by the Hon'ble High Courts of Judicature under section 391 to 394 of the Companies Act, 1956.

The Company has followed the 'Pooling of Interest method1 as per the court approved Scheme of Amalgamation for the accounting of Assets and Liabilities of the erstwhile Shasun. The impact of aligning the accounting policies of the erstwhile Shasun with that of the Company on the assets and liabilities taken over on merger amounting to Rs. 1,682 lakhs has been expensed off in the results for the year ended 31 March 2016 under exceptional items.

The Company issued 21,017,329 equity shares of Rs. 10/- each to the shareholders of erstwhile Shasun in terms of the Scheme of Amalgamation. These shares have been considered for the purpose of calculation of earnings per share

3. Transition to Indian Accounting Standards (Ind AS):

The Standalone financial statements for the year ended March 31, 2017 are prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015. The adoption of Ind AS was carried out in accordance with Ind AS 101, using April 01, 2015 as the transition date. Ind AS 101 requires that all the Ind AS standards and interpretations that are effective for the Ind AS financial statements for the year ended March 31, 2017 be applied consistently and retrospectively for ail fiscal years presented. All applicable Ind AS, read with note 2 above, have been applied consistently and retrospectively wherever required. The resulting difference in the carrying amounts of assets and liabilities in the financial statements under both Ind AS and Indian GAAP as at the transition date have been recognised directly in equity at the transition date.

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from India GAAP to Ind AS in accordance with Ind AS 101:

(a) Equity as at April 01, 2015

(b) Equity as at March 31, 2016

(c) Total comprehensive income for the year ended March 31, 2016

4 Sale of Investments:

(a) During the current quarter, the Company sold its investments in Strides Biologix Private Limited, India ( Strides Biologix) an erstwhile subsidiary, and the related business. The gain on sale of Strides Biologix amounting to INR 308 Lakhs is included in discontinued operations end the results of this business are included in the details of the discontinued operations for the respective periods as set out in Note 4(c) below.

(b) Pursuant to the terms of Shareholders agreement entered on March 30, 2017, the Group disposed-off its Pharma Generics Manufacturing business in Africa. Consequently, the following subsidiaries / divisions ceased to be part of Strides Group:

(i) African Pharmaceutical Development Company

(ii) Congo Pharma SPRL

(iii) Sorepharm SA

(iv) Strides Pharma Botswana (Pty) Limited

(v) Strides Pharma Cameroon Limited

(vi) Strides Pharma Mozambique, SA

(vii) Strides Pharma Namibia Pty Limited

(viii) Strides Vital Nigeria Limited

(ix) SPC Co. Limited, Sudan

(x Pharma Generics Manufacturing division of the Company in Palgha', Maharashtra.

The loss on disposal of the Pharma Generics Manufacturing division in Palghar, Maharashtra amounting Rs.1,419 Lakhs the results of this business for the period are included in the discontinued operations as set out in Note 4(c) below: For table, kindly refer Corporate Announcements on www.bseindia.com.

5. As part of ongoing restructuring in the group, the following changes have been made during the quarter ended 31 March 2017, within the Strides group:

a. Strides Specialties (Holdings) Limited, Mauritius, transferred from Strides Pharma Global Pte Limited , Singapore, to Strides Pharma Asia Pte Limited, Singapore.

b. Stelis Biopharma (Malaysia) SDN BHD, Malaysia, transferred from Stelis Biopharma Private Limited, India to Strides Pharma Asia Pte Limited, Singapore.

c. Strides Pharma Solutions Inc., USA, and StabiJis Pharma inc., USA. transferred from SVADS Holdings SA, Switzerland to Strides Arcolab International Limited, UK.

6. Pursuant to the approvals of the board of directors of the Company and that of the shareholders received vide a postal ballot dated March 22, 2017, with regard to the Company's intent of capping its investments in Stelis Biopharma Private Limited ("Stelis, a company which is into development of Biosimilars") and its intention of reducing its stake to a significant minority, the Company entered into an amended shareholders agreement under which it has ceded control over Stelis but continues to exercise significant influence.

7. In the current quarter, pursuant to the Group acquiring remaining stake in Fagris Medica Private Limited. India and Arrow Pharma Pte Limited, Singapore, these entities became wholly owned subsidiaries of the Group

8. During the quarter ended 31 March 2017, Solara Active Pharma Sciences Limited (formerly known as SSL Pharma Sciences Limited) and Strides Consumer Private Limited, India, were incorporated as wholly owned subsidiaries of the Group.

9. On December 4, 2013, the Company and its wholly owned subsidiary. Strides Pharma Asia Pte Limited ("the Singapore Subsidiary"), completed the sale of investments in Agiia Specialties Private Limited and Agila Specialties Global Pte Limited (together, ''Agiia") to Mylan Laboratories Limited and Myian Institutional inc. (together, “Mylan") pursuant to separate agreements, each dated as of February 27;"2013 (the "SPAs"). Pursuant to the SPAs, the Strides Group established escrow arrangements to fund certain potential indemnification liabilities, including specified employee, tax and regulatory remediation costs from such consideration. These escrow arrangements included a US$ 100 million 'General Claims Escrow’ deposit (out of which US$ 8.00 million has been settled in an earlier year to be paid to Mylan in relation to certain claims) and a US$ 100 million 'Regulatory Escrow' deposit. Pursuant to the SPAs, the Company has also provided a corporate guarantee to Mylan for US$ 200 million (valid up to December 4, 2020) on behalf of Singapore Subsidiary which can be used for discharging financial obligations, if any, of the Singapore Subsidiary to Mylan.

Under the terms of the SPAs, claims against the Company / the Singapore subsidiary (as the case may be) can only be made under specific provisions contained in the SPAs which include the procedures and timelines for submission of notifications of claims and actual claims and commencing arbitration proceedings. The Company had received a consolidated notification of claims from Mylan under the terms of the SPAs.

These claims were related to third party claims, tax claims, claims against the regulatory escrows and general claims. In the current year, a significant portion of these claims have been settled and the Strides Group has received approximately USD 28 Million as full and final settlement from out of the Regulatory Escrow deposit. Further, the Company and Mylan also agreed on full and final settlement of warranty and indemnity claims to be adjusted against the ‘General Claims Escrow’.

Considering the terms of the SPAs, the nature of the pending claims that are in arbitration currently and the balance available in the General Claims Escrow deposit, the Company believes that any further outflow of resources is not probable.

10. The Company has entered into definitive agreement with Perrigo Group for acquisition of Perrigo API India Private Limited. As at 31 March 2017, pending completion of certain conditions precedent and other customary closing condition, this acquisition has not been completed. On April 6, 2017 the company has completed the acquisition of Perrigo API India Private Limited.

11. Income from Operations includes revenues from sale of products, product development services, royalties, export entitlements etc. Cost of material consumed is net of rebates, discounts, supplier reimbursements.

12. During the year ended 31 March 2017, 70,000 equity shares and 7,028 equity shares were allotted by the Company under the Strides Arcolab ESOP 2011 Scheme and Strides Arcolab ESOP 2015 Scheme, respectively, on exercising equal number of options.

13. Exchange fluctuation gain/loss (net) included under Exceptional Items comprises the exchange gain / loss arising on account of restatement and settlement of long term foreign currency loans and intra-group loans

14. The above results includes the results for the quarter ended March 31. 2017 being the balancing figure between audited figures in respect of the full financial year and the recast published year-to-date figures up to the third quarter of the current financial year.

15. The Board of Directors have proposed a final dividend of Rs 4.50 per share, which is subject to the approval by the shareholders in the Annual General Meeting.

Arun Kumar
Executive Vice Chairman & Managing Director