Biocon Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Dec 2018

Auditor and Management Disclosures and Notes for the quarterly results dated 31 Dec 2018

1. The unaudited standalone and consolidated financial results for the quarter and nine months ended December 31, 2018 in respect of Biocon limited ('the Company') have been reviewed by the Audit Committee and approved by the Board of Directors of the Company at their respective meetings held on January 24, 2019. The above results have been subjected to limited review by the statutory auditors of the Company. The reports of the statutory auditors are unqualified.

2. These financial results have been prepared in accordance with Indian Accounting Standards ('lnd AS' ) prescribed under Section 133 of the Companies Act, 2013 and other accounting principles generally accepted in India and in terms of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

3. The consolidated financial results include the financial results of the parent company Biocon limited and the financial results of the following subsidiaries: For Table, kindly refer Corporate Announcements on

In addition to the above, the consolidated financial results also include the financial results in respect of Biocon India limited Employee Welfare Trust and Syngene Employees Welfare Trust. The Company has also accounted for its share of interest in the joint venture i.e. Neo Biocon FZ-LLC and share of investment in the associates i.e. latria Inc. and Equillium Inc., (also refer note 5) if any under the equity method. Biocon Limited, its subsidiaries, associate and a joint venture are collectively referred to as 'the Group'.

4. Pursuant to a fire incident on December 12, 2016 at Syngene, certain fixed assets, inventory and other contents in one of the buildings were damaged. Syngene lodged an estimate of loss with the insurance company and the survey is currently ongoing. The Company had recorded a loss of Rs. 1,032 million arising from such incident till March 31, 2018. Syngene has recorded a further loss of Rs. 23 million during the nine months ended December 31, 2018. Syngene also recognised a minimum Insurance claim receivable for equivalent amounts in the respective periods. The aforementioned loss and the corresponding credit arising from insurance claim receivable has been presented on a net basis (Rs. Nil) under Exceptional items in these financial results. In addition, Syngene is in the process of determining its final claim for loss of fixed assets and Business Interruption and has accordingly not recorded any further claim arising therefrom at this stage.

5. During the year ended March 31, 2018, the Group, had accounted for its 19.5% equity investment in Equillium Inc. as an associate. During the quarter ended September 30, 2018, Equillium initiated its initial public offering (IPO) process and consequently had changes in its Board composition, which resulted in loss of significant influence over the investee. In accordance with lnd AS 28: Investments in Associates and Joint Ventures, the Company fair valued its investment on the date of loss of significant influence and the anti-dilutive rights on the date of IPO which resulted in a gain of Rs. 55 and Rs. 1,762 million, net of tax expenses of Rs. 3 and Rs. 184 million for the quarter and nine months ended December 31, 2018 respectively, which has been disclosed as an Exceptional item in these financial results. The Group, going forward has designated its investment in equity of Equillium to be accounted for at Fair value through other comprehensive income (FVOCI). Equillium completed its IPO and listed on NASDAQ on October 12, 2018.

6. Segment Reporting in Consolidated financial results: Based on the "management approach" as defined in lnd AS 108-0perating Segments, the Chief Operating Decision Marker evaluates the Group's performance and allocates resources based on an analysis of various performance indicators by business segments. Accordingly, information has been presented along these business segments. The accounting principles used in the preparation of these financial results are consistently applied to record revenue and expenditure in individual segments.

7. During the nine months ended December 31, 2018, the Company along with its subsidiary BRL sold 6,597,130 equity shares of Rs. 10 each of Syngene in the open market. Post the sale, the Company and its subsidiary's holding in equity shares of Syngene has reduced to 70.24%. Gain arising from such sale of equity shares, net of related expense and cost of equity shares amounting to Rs. 1,987 has been recorded as exceptional item in the standalone financial results for the nine months ended December 31, 2018.

The gain arising from such sale of equity shares, net of related expenses and cost of equity shares, for the nine months ended December 31, 2018 has been accounted in equity reserves in the consolidated financial results for the nine months ended December 31, 2018, as there is no Joss of control.

8. Pursuant to the requirements of lnd AS 115: Revenues from Contracts with Customers, the Group evaluated its open arrangements on out-licensing with reference to upfront non-refundable fees received in earlier periods and concluded that some of the performance obligations may not be distinct and hence would need to be bundled with the subsequent product supply obligations. Accordingly, the Group has recognised an incremental deferred revenue relating to such open contracts. The adoption of this standard and the consequential impact on change in some of the licensing arrangements did not have a material impact on the Revenue from Operations and results for the quarter and nine months ended December 31, 2018. The cumulative effect of transition recorded as of April 1, 2018 on retained earnings is Rs. 1,580 with the corresponding effect on deferred revenue and deferred tax asset amounting to Rs. 1,847 and Rs. 267 respectively. Comparative periods were not restated given the Group adopted the standard using the cumulative effect approach.

9. Prior period/ year figures have been reclassified wherever required to conform to the classification of the current period/ year.

Kiran Mazumdar Shaw
Chairman and Managing Director