Novartis India 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. This Statement has been reviewed by the Audit Committee at its meeting held on February 04, 2019 and approved at the meeting of the Board of Directors held on that date and have been subjected to limited review by the statutory auditors of the Company.

2. This Statement has been prepared in accordance with the recognition and measurement principles laid down in Companies (Indian Accounting Standards) Rules, 2015 (Ind AS), prescribed under Section 133 of the Companies Act, 2013, and other recognised accounting practices and policies to the extent applicable.

3. The Company has a single business segment namely 'Pharmaceuticals Business'.

4. (a) During the year ended 31.03.2018, the Company received interest on refund of Income tax for AY 1995-96. Interest income of Rs. 981.3 million received on such income tax
refund was recognized as income in the Statement based on the management estimate of the amount the Company was entitled to receive in accordance with the provisions of the Income Tax Act, 1961. The Company sought clarification with appropriate authorities for interest working. Pending receipt of clarification, balance amount of interest of Rs. 370.0 million received was included under "Other Current Liabilities" as at the year end. During the nine months ended 31.12.2018 the Company paid Rs. 384.6 million based on rectification order received from the appropriate authorities on refund of Income Tax for AY 1995-96, and the differential interest paid of Rs. 14.6 million was recognised under finance costs.

(b) "Other income" includes Rs. 201.6 million for the quarter ended 30.09.2018, Rs. 305.1 million for the nine months ended 31.12.2018, Rs. 198.8 million for the nine months ended 31.12.2017 and Rs. 198.8 million for the year ended 31.03.2018 being profit on disposal of certain assets out of "Assets held for sale".

5. Consequent to the notices received during the quarter ended 30.09.2018 from the Drugs Licensing Authority, Daman by the supplier of a product, the Company suspended the sale of the relevant product. The supplier has contested the notices and the matter is sub judice before Hon'ble Delhi High Court. The Company had earlier made a provision of Rs. 163.4 million for expected accelerated sales returns and stocks, relating thereto. This impacted the results for the quarter ended 30.09.2018.

During the current quarter the Company has, based on stock statements received from significant portion of its stockists, arrived at the stock position and accordingly reversed the provision made in earlier quarter by Rs. 90.1 million.

6. Finance Costs for year ended 31.03.2018 includes Rs. 51.2 million being interest on income tax provision pertaining to prior years.

7. Current tax for the quarter ended and nine months ended 31.12.2017 includes prior year's write back of Rs. 32.6 million and Rs 41 .6 million respectively. Current tax for the year ended 31.03.2018 includes prior year's provision of Rs. 191.7 million.

8. Figures for the prior periods / year have been regrouped where necessary.