Tuesday, August 23, 2011

New Cost Rules for Pharma & Bulk Drugs

The FAPCCI in association with Hyderabad Chapter of Cost Accountants are jointly organized an interactive session on “New Cost Rules for Pharma & Bulk Drugs” today evening at FAPCCI. Mr. V.S Raju, President, FAPCCI was inaugurated the session.

Dr P.V.S. Jagan Mohan Rao, Central Council Member, ICWAI, Mr. K.K. Rao, Vice - Chairman, Hyderabad Chapter of Cost Accountants, Mr. B.L. Kumar, Secretary, Hyderabad Chapter of Cost Accountants, Mr. Dantu Mitra, Practicing Cost Accountant, Mr. K.V. Ranga Rao, Executive Director, Bulk Drug Manufacturers Association (India), Mr. Hari Govind Prasad, Chairman, Corporate Affairs Committee, FAPCCI Mr. Laxmi Niwas Sharma, Past President, FAPCCI, and Mr. AS Kumar, Deputy Secretary General, FAPCCI are the other dignitaries’ for the occasion.

Mr V.S Raju said in his chief guest address is that the The Indian Pharma Industry has been performing exceptionally well with turnover rising from about Rs.10 crore (US$ 2 million) in 1948 to a healthy Rs.1,17,000 crore (US$ 26 billion) in 2010. Pharma exports are booming at Rs.62,500 crore (US$ 13.9 billion), with formulation exports at US$ 5.8 billion and APIs at Us$ 8.1 billion. The country ranks 3rd worldwide by volume of production and 14th by value thereby accounting for around 10% of world’s production by volume and 1.5% by value. This speaks volumes for our quality and competitive prices. There are over 10,500 manufacturing units in India across 3000+ pharma companies making it an intensely competitive market.

Andhra Pradesh has a dominant position in the pharma sector and is well known internationally for its skill in chemical and other synthesis, process engineering and its speed to market. The State intends capitalizing on these strengths, acting quickly in the window of opportunity provided by global regulatory change to build a strong and globally competitive pharmaceutical industry. Hyderabad, which accounts for around one third of India’s total bulk drug production, is considered as the bulk drug capital of the country. A large number of bulk drug units are located in and around Hyderabad with good infrastructure and trained manpower. The Indian pharmaceutical industry is large and rapidly growing. The pharmaceutical industry in India is expected to grow $ 75 billion by 2020 Mr Raju said.

He also said about the cost accounting rules is - earlier there were different notifications for each of the 44 industries for preparation of Cost records i.e. Cost Accounting Record Rules (CARR). With the new Cost Accounting Record Rules 2011 having been notified, CARR for 36 industries has been superseded. New Cost Accounting Record Rules 2011 are applicable from year 2011-12 onwards. Now, all the companies including foreign companies which are engaged in the production, processing, manufacturing, or mining activities and which fulfill the following criteria have to mandatorily prepare Cost Records showing margin for each and every product manufactured/ produced/ constructed or services provided. Also the companies will be required to file Compliance Certificate with the MCA within 180 days of the close of financial year. As per the current practice, Central Government used to issue Cost Audit Order on Specific Companies which resulted in inequities as various companies though very big were being left out of the Cost Audit purview.