iii) Variable lease payments
The Company does not have any variable lease payments for the above leases.
iv) Extension and termination options
Extension and termination options are included in a number of leases across the Company. These are used to maximise operational flexibility in terms of managing the assets used in the Company’s operations. Leases requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to Company’s operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
(iii) Terms and rights attached to equity shares
The Company has only one class of equity shares having a face value of ' 10 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholder.
(iv) Shares held by holding and ultimate holding Company
1,39,04,722 (December 31, 2024 : 1,39,04,722) equity shares of ' 10 each fully paid are held by Hoechst GmbH, Germany, holding Company and 4,865 (December 31, 2024: 4,865) equity shares of ' 10 each fully paid are held by Sanofi S.A., France, Ultimate Holding Company.
Nature and purpose of reserves:
1) Securities premium
Securities premium is created when shares are issued at premium. This is utilised in accordance with the provisions of the Companies Act, 2013.
2) General reserve
General reserve is created out of profits of the Company. The reserve is utilised in accordance with the provisions of Companies Act, 2013.
3) Share options outstanding account
The share options outstanding account is used to recognise the fair value of restricted stock units as at grant date issued by the Ultimate Holding Company, Sanofi S.A. to the Company’s eligible employees.
32 (b) For the year ended December 31, 2025, the Company has reversed deferred tax assets of ' 6 million (December 31, 2024: ' 24 million) in other comprehensive income on account of actuarial remeasurements of defined benefit plan. No aggregate amounts of current and deferred tax have arisen in the reporting periods which have not been recognised in net profit or loss or other comprehensive income but directly debited / (credited) to equity.
33 - Operating Segment
The operations of the Company are limited to one segment viz. Pharmaceutical products.
Operating segments are defined as components of a Company for which discrete financial information is available that is evaluated regularly by Chief Operating Decision Maker (“CODM”), in deciding how to allocate resources and assessing performance.
b) There are certain matters relating to Indirect tax litigations which are pending for decision at various authority levels. Based on management’s assessment, these would have a remote possibility of cash outflow.
c) There are other legal cases filed against the Company which based on the management assessment the likelihood of cash outflow is considered to be remote.
Terms and conditions of transactions with related parties
The sales, services and purchases from related parties are made on terms equivalent to those that prevail in arm’s length transactions. For the year ended December 31, 2025, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (December 31, 2024: Nil ). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
38 - Share Based Payments
Restricted Stock Units (RSU’s)
The Company does not provide any equity based compensation to its employees. However, the Ultimate Holding Company, Sanofi S. A. France (“the grantor”) maintains equity incentive plans that provide for award of restricted share plans to certain employees of the Company. The terms of those plans make the award contingent on the attainment of certain performance criteria which are considered to be defined grants. The vesting period of such plans is three years.
39 - Employee Benefits Defined Contribution Plans
The Company makes contributions towards superannuation fund and pension scheme to a defined contribution retirement benefit plan for qualifying employees. The superannuation fund is administered by the Life Insurance Corporation of India (LIC). Under the plan, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit plan to fund the benefits.
Defined Benefit Plans
I) Other long term employee benefits
Compensated absences (included as a part of salaries and wages in Note 28 - Employee benefits expense)
The entire amount of the provision of INR 158 Million (December 31, 2024 - INR 207 Million) is presented as current, since the Company does not have an unconditional right, at the end of the reporting period, to defer settlement for any of these obligations beyond 12 months. However, based on past experience, the Company does not expect all employees to avail the full amount of accrued leave or require payment for such leave within the next 12 months. All eligible employees can carry forward and avail / encash leave as per Company’s rules.
viii) Risk exposure :
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below :
Investment risk: If future investment returns on assets are lower than assumed in valuation, the scheme’s assets will be lower and the funding level higher than expected.
Changes in bond yields: A decrease in yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings.
Longevity risk: If improvements in life expectancy are greater than assumed, the cost of benefits will increase because pensions are paid for longer period than expected. This will mean the funding level will be higher than expected.
Inflation risk: If inflation is greater than assumed, the cost of benefits will increase as pension increases and deferred revaluations are linked to inflation.
B. Provident Fund
The Company manages the provident fund through a Provident Fund Trust for its employees which are permitted under The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. Eligible employees receive benefits from the said Provident Fund. Both the employees and the Company make monthly contributions to the Provident Fund Trust equal to a specified percentage of the covered employee’s salary. The minimum interest rate payable by the Trust to the beneficiaries every year is being notified by the Government of India. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate. The Board of Trustees administers the contributions made by the Company to the schemes and also defines the investment strategy.
The Company has an obligation to service the shortfall on account of interest generated by the fund and on maturity of fund investments and hence the same has been classified as Defined Benefit Plan in accordance with Ind AS 19 “Employee Benefits”. As per the Guidance Note from the Actuarial Society of India, the Company has obtained the actuarial valuation of principal loss and interest rate obligation in respect of Provident Fund as at December 31, 2025 and based on the same gain of ' 13 million (Previous Year gain of ' 74 million) on account of re-measurement of fair value of plan assets and on account of interest shortfall as on Balance Sheet date is recognised in Other Comprehensive Income.
Note: Figures in brackets are for the previous year.
1. Provision for indirect taxes represents differential excise duty, GST, sales tax and service tax in respect of which the claims are pending before various authorities for a considerable period of time and based on management’s estimate of claims provision is made on prudent basis that possible outflow of resources may arise in future. [Refer Note 36 (b)]
2. Provision for sales returns are on account of expected date expiry and breakages returns based on historical trends.
3. In respect of Provision for Drugs (Price Control) Order (DPCO) matters, based on the management assessment, the likelihood of any outflow in excess of the provision is considered as remote.
42 - (a) Consequent upon the decision of the Supreme Court in the matter of prices of certain bulk drugs fixed by the
Government of India under the Drugs (Prices Control) Order, 1979, the Company paid an amount of ' 31 Million in 1988 being the liability determined by the Special Team appointed by the Government. However, during 1990, fresh demands aggregating to ' 781 Million alleged to be payable into the Drug Prices Equalisation Account (DPEA) were made by the Government on account of alleged unintended benefit enjoyed by the Company. The Government has also made certain claims for applicable interest. On a Writ Petition filed by the Company in 1991, the Bombay High Court passed an order whereby the demands were to be treated as show cause notices. The High Court directed the Company and the Government to furnish relevant data to each other based on which the Government was to rework the figures. The Government did not furnish the requisite data to the Company. In 1995, a further demand of ' 80 Million was made by the Government.
In the meantime, a Committee was constituted by the Government to determine the liabilities of the drug companies. The Company filed written submissions with the Committee and contended during the personal hearing that in the absence of the Government furnishing the requisite data as directed by the Bombay High Court, the Company was not in a position to make an effectual presentation before the Committee.
In January 1999, the Company filed an Application before the Bombay High Court seeking directions to the Government to furnish the requisite data. The Application is pending. In the meantime, the Committee has deferred further hearing of the Company’s case, until the Application is heard and decided by the Bombay High Court. In any event, the Company is contesting the above demand.
(b) National Pharmaceutical Pricing Authority (NPPA) had raised demands on the Company for alleged overcharging of some of its products. The Company had contested the demands by filing writ petitions in the Delhi High Court. The Hon’ble Delhi High Court vide order dated 16th May 2019, without expressing any opinion on the matter, set aside the demands raised and the matter was remanded back to NPPA for considering them afresh in accordance with law.
An amount of ' 162 million which had been provided in the books of account in earlier years has been retained. The Company will continue to assess any further developments in this matter.
Based on the management assessment, the likelihood of any outflow in excess of the provision is considered as remote in respect of above matters.
43 - Micro and Small Enterprises
The Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.
Fair value of financial assets / liabilities measured at amortised cost
The carrying amounts of trade receivables, cash and cash equivalents, other bank balances, loans, other financial assets, trade payables, other financial liabilities are considered to be the same as their fair values, as they are current in nature.
The categories used are as follows :
Level 1 : Level 1 hierarchy includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. Considering that all significant inputs required to fair value such instruments are observable, these are included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
47 - Financial risk management
The Company’s activities expose it to variety of financial risks namely market risk, credit risk and liquidity risk. The Company has various financial assets such as deposits, trade and other receivables and cash and bank balances directly related to their business operations. The Company’s principal financial liabilities comprise of trade and other payables. The Company’s senior management’s focus is to foresee the unpredictability and minimize potential adverse effects on the Company’s financial performance. The Company’s overall risk management procedures to minimise the potential adverse effects of financial market on the Company’s performance are as follows :
The Company’s Board of Directors have overall responsibility for the establishment and oversight of the Company’s risk management framework.
The Company’s risk management is carried out by the management in consultation with the Board of Directors. The Board provides principles for overall risk management, as well as policies covering specific risk areas.
This note explains the sources of risk which the entity is exposed to and how the entity manages the risk.
(A) Management of Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and from its financing activities including deposits with banks and other financial instruments. The Company establishes an impairment allowance based on expected credit loss model that represents its estimate of incurred losses in respect of trade and other receivables.
(i) Trade and other receivables
The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to ' 1,767 million as at December 31, 2025 (December 31, 2024 - ' 2,300 million). Trade receivables are typically unsecured and are derived from revenue earned from customers located in India as well as outside India.
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry, the country and the state in which the customer operates, also has an influence on credit risk assessment. Credit quality of a customer is assessed based on credit rating scorecard and individual credit limits are defined in accordance with this assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.
The management continuously monitors the credit exposure towards the customers outstanding at the end of each reporting period to determine incurred and expected credit losses.
The management believes that no further provision is necessary in respect of trade receivables based on historical trends of these customers.
Concentration of credit risk arises when counter parties are engaged in similar business activities or have similar economic features that would cause the ability to meet contractual obligations to be similarly affected by changes in economical, political or other conditions. Concentration of credit risk indicate the relative sensitivity of the Company’s performance to developments affecting a particular industry. The Company’s exposure to customers is diversified.
(ii) Cash and cash equivalents and bank balances
The Company held cash and cash equivalents of ' 2,629 million as at December 31, 2025 (December 31, 2024 : ' 2,838 million) and other bank balances of ' 120 million (December 31, 2024 : ' 110 million). Credit risk on cash and cash equivalents is limited as these are generally held or invested in deposits with banks and financial institutions with good credit ratings.
The Company’s maximum exposure to the credit risk as at December 31, 2025 and December 31, 2024 is the carrying value of each class of assets.
(B) Liquidity Risk
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company’s approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.
The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended December 31, 2025 and December 31, 2024. Cash Flow from operating activities provides the funds to service the financial liabilities on a day-to-day basis.
The following table shows the maturity analysis of the Company’s all non - derivative, contractual financial liabilities based on agreed undiscounted cash flows along with its carrying value as at the Balance Sheet date.
(C) Management of Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risks namely interest rate risk, currency risk and other price risk, such as commodity risk. The Company is not exposed to interest rate risk and other price risk whereas the exposure to currency risk is given below :
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates and arises where transactions are done in foreign currencies. It arises mainly where receivables and payables exist due to transactions entered in foreign currencies. The Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies. The Company does not enter into financial instrument transactions for trading or speculative purposes. The Company’s exposure to foreign currency risk at the end of reporting periods in ' is as follows:
48 - Capital management
(a) Risk management
For the purpose of the Company’s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity share holders of the Company. The primary objective of the Company’s capital management is to safeguard the Company’s ability to remain as a going concern and maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions, annual operating plans and long term and other strategic investment plans. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The current capital structure of the Company is equity based with no financing through borrowings. The Company is not subject to any externally imposed capital requirement.
No changes were made in the objectives, policies or processes for managing capital during the year ended December 31, 2025 and December 31, 2024.
49 - Additional Regulatory Information required by Schedule III
(i) Details of benami property held
No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.
(ii) Borrowing secured against current assets
The Company has no borrowings from banks and financial institutions on the basis of security of current assets.
(iii) Wilful defaulter
The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
(iv) Relationship with struck off companies
The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.
(v) Compliance with number of layers of companies
The Company does not have any subsidiary, joint venture or associate company. Hence, this is not applicable.
(vi) Compliance with approved scheme(s) of arrangements
The Company has not entered into any scheme of arrangement which has an accounting impact in the current or previous financial year. (Refer Note 51).
(vii) Utilisation of borrowed funds and share premium
The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:
a. directly or indirectly lend or invest in other person(s) or entity(ies) identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
a. directly or indirectly lend or invest in other person(s) or entity(ies) identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
(viii) Undisclosed income
There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.
(ix) Details of crypto currency or virtual currency
The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
(x) Valuation of PP&E, right-of-use assets, intangible asset and investment property
The Company has not revalued its property, plant and equipment (including right-of-use assets) or intangible assets or both during the current or previous year.
The Company does not hold any investment property during current year and previous year.
Other Regulatory Information
(i) Title deeds of immovable properties not held in name of the Company
All the title deeds of immovable properties are held in the name of Company.
(ii) Registration of charges or satisfaction with Registrar of Companies
There are no charges or satisfaction which are yet to be registered with the Registrar of Companies beyond the statutory period.
(iii) Utilisation of borrowings availed from banks and financials institutions
The Company has no borrowings from banks and financial institutions. Hence this disclosure clause is not applicable.
51 - Scheme of arrangement-Discontinued Operation:
(a) The Board on May 10, 2023, had approved a Scheme of arrangement under Sections 230 to 232 of the Companies Act, 2013 (“Scheme”), to demerge the Consumer Healthcare business comprising of consumer healthcare products portfolio of the Company into its wholly owned subsidiary Sanofi Consumer Healthcare India Limited (“SCHIL”). Pursuant to receipt of necessary statutory approvals and in accordance with the Scheme, the Company has demerged its Consumer Healthcare business effective June 1, 2024, with the appointed date being June 1, 2023 as approved by NCLT under the Scheme.
As per the requirements of IND AS 105, the Income and expenses pertaining to Consumer Healthcare business for the previous year were presented in a separate line item-discontinued operations.
(c) Information of assets and liabilities transferred to demerged Company as per scheme were as under
Pursuant to the demerger, as explained in note (a) above, the Company has derecognized from its books of account, the carrying amount of assets and liabilities as on May 31, 2024 pertaining to the Consumer Healthcare business transferred to SCHIL. The excess of the carrying amount of assets transferred over the carrying amount of liabilities transferred aggregating to ' 1,902 million has been debited to reserves in accordance with the Scheme.
52 - On November 21, 2025, the Government of India notified the four consolidated Labour Codes, replacing several existing labour laws. Based on the draft rules and the guidance currently available, the Company has evaluated the impact of the revised definition of wages on its employee benefit obligations in accordance with Ind AS 19.
Following this assessment and the related actuarial valuation, the incremental impact arising from the implementation of the Labour Codes of ' 58 million has been recognised under Employee Benefits Expense in the current year. The Company will assess the final applicable Central and State Rules upon official notification and account for any differential financial impact, in the reporting period in which such Rules, or any pertinent clarifications thereto, are effective.
53 - Server Backup and Audit Trail
The Company maintains a strong and well-structured process for data backup. Its books of account and related records are backed up daily on servers physically located in India. If, due to technical reasons, a backup is not completed on any particular day on the servers in India, the Sanofi Group has robust global infrastructure and procedures to perform daily backups and weekly full backups for the entire SAP Unity system on servers located outside India. The Company also conducts annual tests of its Disaster Recovery Plan and Backup and Restore procedures on these global servers to ensure that they operate effectively in practice. There is no business disruption arising from a failure to take backup on any particular day, as the Sanofi Group’s global backup infrastructure ensures continuity of the SAP Unity system.
For audit trail in case of modifications by certain users with specific access (SAP Emergency IDs), the Company uses a Governance, Risk and Compliance (GRC) tool to track and control such specific access, including the related approvals. Execution logs are also captured for transactions performed using this access, and the corresponding access log reports are reviewed and approved by designated controllers. These measures provide clear traceability and effective oversight over the use of such access within the SAP application.
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