Meyer TP Study Report

8/12/2019 Meyer TP Study Report

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Meyer Organics Private LimitedTransfer Pricing Study ReportAssessment Year 2013-14


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Meyer Organics Private LimitedAssessment Year 2013-14

Table of Contents

Sr.

No.

Particulars Page

No.

1 Abbreviations and Acronyms

2 Executive ummary

3 !or"orate #ac$ground

4 %ndustry Overvie&

' "eci(ed )omestic *ransactions

+ ,unctions Assets and .is$s Ana/ysis

Economic Ana/ysis

,indings

)isc/aimer

10 .e/evant *ranser Pricing .egu/ations

11 %ndex o Princi"a/ )ocuments

2


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1. Abbreviations and Acronyms*e o//o&ing abbreviations and acronyms ave been de(ned or use trougout

tis study re"ort5

Abbreviations andAcronyms

Full Name

AE Associated Enter"rise!6PM !om"arab/e 6ncontro//ed Price Metod!PM !ost P/us Metod,A. ana/ysis ,unctions Assets and .is$s ana/ysis,Y 2012-13 ,inancia/ year ended Marc 31 20137uidance 8ote 7uidance 8ote on re"ort on internationa/

transactions under section 2E o te %ncome

*ax Act 1+1 issued by te %nstitute o

!artered Accountants o %ndia

Meyer Meyer Organics Private LimitedOE!) 7uide/ines *ranser Pricing 7uide/ines or Mu/tinationa/

Enter"rises and *ax Administrations "ub/ised

by te Organisation or Economic !oo"eration

and )eve/o"ment8PM 8et Pro(t MarginPL% Pro(t /eve/ indicatorPM Pro(t "/it Metod.PM .esa/e Price Metod

*8MM *ransactiona/ 8et Margin Metod*e Act %ncome-tax Act 1+1

*e ,irm u$bir 9 Associates*e tudy .e"ort *e *ranser Pricing tudy .e"ort*e .u/es %ncome-tax .u/es 1+2:# ;6


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2. Executive Summary

2515 Meyer as engaged te services o te ,irm to "re"are te tudy .e"ortdocumenting te revie& o te arm>s /engt nature o its internationa/

transactions &it its AEs during ,Y 2012-13 rom an %ndian transer "ricing

"ers"ective5

2525 Meyer Organics is one o te /eading "armaceutica/ manuacturers in

%ndia ounded in 12 in tecnica/ co//aboration &it Omega - Meyer Ltd5

?ersey ;#r5 %s/es=5 Meyer as manuactured innovative ea/t care "roducts

or over tree decades5 %t is ead@uartered in Mumbai %ndia &it g/oba/

"resence in more tan 30 countries5 *roug sared mar$eting $no&-o&

and "romotiona/ su""ort Meyer Organics strategy is to "rovide

"roessiona/ and com"reensive su""ort or its internationa/ "artners5

2535 Be "resent be/o& te /ist o te Associated Enter"rises and te

corres"onding countriesC

Sr.

No.

Associated

Enterrise

Country Nature of !elations"i

1 :itabiotics Ltd - :#

;6s main business is manuacturing and trading in

"armaceutica/ ormu/ations and oter items viFC "ac$ing materia/ or

"arma goods "/astics a//ied macinery and s"ares &ic are su""/ied in

8igeria5

4


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25+5 :itabiotics ;8igeria= Ltd5 is a /imited /iabi/ity com"any aving its registered

oce in Lagos 8igeria5 *e com"any>s as its o&n manuacturing aci/ities

to "roduce "armaceutica/ ormu/ations5

255 ,armex Meyer Ltd5 is a /imited /iabi/ity com"any aving its registered ocein Lagos 8igeria5 *e com"any>s main o"eration o business is

manuacturing and trading o "armaceutica/ ormu/ations5

255 :ita Aria is a /imited /iabi/ity com"any aving its registered oce at *eran

%ran5 *e com"any>s main o"eration o business is manuacturing

"armaceutica/ ormu/ations5

255 Omega Meyer 7ana Ltd is a trading com"any &it te registered oce at

Accra 7ana5 *e com"any is in te business o

25105:itabiotics *eran !o as its registered oce in *eran %ran5 *is com"any

is engaged in trading in Parma "roducts in %ran5

25115P* :itabiotics Dea/tcare is a manuacturing !om"any &it its registered

oce in ?a$arta *imur %ndonesia &it te actory at #andung5 *is

com"any is engaged in manuacturing in Parma "roducts in %ndonesia5

25125*e ,irm "re"ared te study re"ort in accordance &it te %ndian transer

"ricing "rovisions contained in ections 2 and 2A to 2, o te Act read

&it .u/es 10A to 10E o te .u/es5 %n revie&ing te internationa/

transactions useu/ inerences ave been made rom te G*ranser Pricing7uide/ines or Mu/tinationa/ Enter"rises and *ax Administrations> "ub/ised

by te OE!) 7uide/ines and 7uidance 8ote5

25135ection 2 o te Act re@uires tat te internationa/ transaction sa// be

com"uted aving regard to te arm>s /engt "rice5 *o "re"are te study

re"ort te (rm intervie&ed Meyer>s "ersonne/ and revie&ed various

documents and (nancia/ data "rovided by Meyer5

25145Be "resent be/o& te a summary o te internationa/ transactions

underta$en bet&een Meyer and its AEs and te transer "ricing metod

identi(ed as te most a""ro"riate metod5

Sr.

No.

Nature of Transaction Amount

#!s.$

%ost

Aroriate

%et"od1 !ontract Manuacturing Activity *8MM2 Ex"ort o Manuactured 7oods !PM3 *rading Activity !PM

Total

251'5Contract %anufacturing Activity

'


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)uring ,Y 2012-13 Meyer as manuactured "roducts or :# ;6s /engt standard rom

an %ndian transer "ricing "ers"ective5

251+5Exort of %anufactured &oods)uring ,Y 2012-13 Meyer as manuactured and ex"orted to AEs

"roducts amounting to .s5 H-5#ased on te ,A. ana/ysis and te avai/abi/ity o re/iab/e inormation

Meyer as been se/ected as te tested "arty5 Be se/ected !PM to be te

most a""ro"riate transer "ricing metod or determining arm>s /engt

"rice5,or te "ur"ose o a""/ying !PM &e com"ared te gross margin earned by

Meyer rom its ex"ort to AEs vis-I-vis gross margins earned by its domestic

manuacturing activity H ex"ort to unre/ated "arties H inde"endent

com"arab/e com"anies5 ,or ,Y 2012-13 te margin earned by Meyer rom

ex"ort to AEs is 454 "ercent and margin o its domestic manuacturing

activity H ex"ort to unre/ated "arties H inde"endent com"arab/e com"anies

is 350 "ercent5#ased on te aoresaid ana/ysis it is reasonab/e to conc/ude tat Meyer>s

internationa/ transactions &it its AE in res"ect o te ex"ort o

manuactured goods are consistent &it te arm>s /engt standard rom an%ndian transer "ricing "ers"ective5

2515Trading Activity)uring ,Y 2012-13 Meyer as trading activity &it its AEs amounting to

.s5 H-5#ased on te ,A. ana/ysis and te avai/abi/ity o re/iab/e inormation

Meyer as been se/ected as te tested "arty5 Be se/ected !PM to be te

most a""ro"riate transer "ricing metod or determining arm>s /engt

"rice5,or te "ur"ose o a""/ying !PM &e com"ared te gross margin earned by

Meyer rom its trading activity vis-I-vis gross margin earned by its+


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0. ndustry -vervie

4515 *e %ndian Parmaceutica/ %ndustry current/y to"s te cart amongst%ndias science-based industries &it &ide ranging ca"abi/ities in te

com"/ex (e/d o drug manuacture and tecno/ogy5 *e %ndian

Parmaceutica/ %ndustry ran$s very ig amongst a// deve/o"ing countries

in terms o tecno/ogy @ua/ity and te vast range o medicines tat are

manuactured5

4525 *e country no& ran$s 3rd in terms o vo/ume o "roduction ;10 "er cent o

g/oba/ sare= and 14t /argest by va/ue ;15' "er cent o g/oba/ sare=5 One

reason or /o&er va/ue sare is te /o&est cost o drugs in %ndia ranging

rom ' "er cent to '0 "er cent /ess as com"ared to deve/o"ed countries5

%ndian "armaceutica/ industry gro&t as been ue//ed by ex"orts and its

"roducts are ex"orted to a /arge number o countries &it a siFeab/e sare

in te advanced regu/ated mar$ets o te 6 and Bestern Euro"e5

4535 Many g/oba/ "armaceutica/ maJors are outsourcing manuacturing to

%ndian com"anies &ic enJoy muc /o&er costs ;bot ca"ita/ and

recurring= tan teir &estern counter"arts5 %ndian com"anies are "roving

to be better at deve/o"ing Active Parmaceutica/ %ngredients ;AP%s= tan

teir com"etitors rom target mar$ets and tat too &it non-inringing

"rocesses5 %ndian com"anies are entering in to contract manuacturing

agreements or su""/ying com"/ex under-"atent mo/ecu/es5 %ndia gained itsooto/d on te g/oba/ scene &it its innovative engineered generic drugs

and active "armaceutica/ ingredients and it is no& see$ing to become a

maJor "/ayer in outsourced c/inica/ researc as &e// as contract

manuacturing and researc5

4545 Parmaceutica/ ex"orts rom te country during 2012-13 stood at 6145+

bi//ion u" rom 61352 bi//ion te "revious year5 *e %ndian

"armaceutica/ industry &ou/d continue to ex"erience strong gro&t as

structura/ gro&t drivers continue to remain im"ervious5 *e industry is

ex"ected to acieve a gro&t o 10-12 "ercent in 2013-14 according to astudy by %!.A5

45'5 *e "armaceutica/ mar$ets are /i$e/y to &itness a !A7. o 3-+K over

2012-1+ to reac a mar$et va/ue o 6 152 tri//ion5 *e $ey gro&t drivers

or uture inc/ude an increasing sit to te use o generics medicines

accom"anied by "atent ex"iries and vo/ume-driven gro&t in "armerging

mar$ets5

%ar)et 2,1232,14

CA!/$

%ar)et 5alue by 2,14#6S 7

in billion$7/oba/ 3 + 11' - 120'

)eve/o"ed 1 4 ++0 - +0


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E6' ;-1= 2 13' 1+'Parmerging 12 1' 34' 3'.oBN 2 ' 140 10.oBN - .est o te Bor/d

45+5 *e "armaceutica/ contribution o deve/o"ed mar$ets is /i$e/y to dec/ine

rom 3K in 200+ to 'K by 201+ due to ex"iring "atents decreasing

s"ending on branded "roducts and iger cost containment measures by

"ayers5

455 7/oba/ sare o s"ending on medicines by E6' is /i$e/y to a// rom 1K in

200+ to 13K by 201+ due to a s/o&do&n in economic gro&t and

aggressive cost containment measures

455 Parmaceutica/ s"ending rom te emerging mar$etsNN is estimated toJum" rom 14K in 200+ and contribute 30K to te g/oba/ "armaceutica/

s"ending by 201+5 *is gro&t &i// be aci/itated by rising "o"u/ation rising

"er-ca"ita income im"roving medica/ inrastructure and economic gro&t5;NN!ina #raFi/ %ndia :eneFue/a Po/and Argentina *ur$ey Mexico

:ietnam out Arica *ai/and %ndonesia .omania Egy"t Pa$istan

6$raine and .ussia5=

8. nternational Transactions

'515 List o re/ated "arty internationa/ transactions coveredCSr.

No

.

Name * Country

of AENature of transaction

A9 2,1'3

10

Amount

%et"

od

6sed

1:itabiotics Ltd -

London

Ex"ort o Manuactured

7oods

+'0+3

*8MM

a/es o *rading 7oods223040

1!PM

a/es o !onsumab/es 9

Oter u""/ies2''+22+ !PM

Purcase o .a&Materia/ 9 consumab/es

+++43 !6P

2Ad/er Products Ltd -

8igeria


7oods22010 *8MM

a/es o *rading 7oods +2 !PMa/es o !onsumab/es 9

Oter u""/ies2+'+'04 !PM

3:itabiotics ;8igeria=

Ltd 8igeria


Oter u""/ies432'21 !PM

4,armex Meyer Ltd

8igeria


Oter u""/ies+104 !PM

' :ita Aria !o %ran a/es o !onsumab/es 9 12130+1 !PM


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Oter u""/iesa/es o *rading 7oods 10+0'' !PM

+Omega Meyer

7ana Ltd ;7ana=


Oter u""/ies223 !PM

Ex"ort o Manuactured7oods

2'3014 *8MM

a/es o *rading 7oods 0'4 !PM

:itabiotics *eran

!o ;*eran=


7oods3'30' !PM

P* :itabiotics

Dea/tcare

;%ndonesia=


Oter u""/ies2040 !PM

T-TA1+1:0+,''

+;1'

'525 %t is "ertinent to note tat te manuacturing or :itabiotics 6< is in te

nature o !ontract Manuacturing Arrangement &ereby Meyer

manuactures "roducts or tem on te basis o /ong term manuacturing

contract5 Manuacture is u//y according to 7ood Manuacturing Practice

;7MP= under conditions a""roved by re/evant autorities suc as te M!A

,)A5 Present/y Meyer as a tota/ ex"ort turnover o .s 132522 crores &ic

is main/y attributab/e to :itabiotics Ltd 6s /engt standard set

ort in te re/evant transer "ricing regu/ations contained in te Act and

te .u/es5

10


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+545 *e unctions to be "erormed by Meyer and its AEs in re/ation to te

transactions under revie& are based on inormation obtained in te course

o discussions &it te res"ective "ersonne/ o Meyer and are "resented

be/o&5

+5'5 Functions erformed

4.8.1. Contract %anufacturing Activity

+5'51515.esearc and )eve/o"ment:# ;6


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te re/evant mar$eting materia/ &ic :# ;6


13/23


Meyer manuactures goods or AEs on/y on te basis on orders

received rom tem &i/e in case o non-AEs Meyer estimates

demand based on "ast ex"erience5 Meyer $ee"s minima/

inventory o "roducts at its &areouses5

+5'52545Mar$eting o goodsMeyer usua//y does not underta$e any mar$eting activity and

business is received on/y rom continuing customers5 Most ne&

customers come troug reerra/s rom existing customers5

Meyer a/so se//s business "romotion materia/ to its AEs and non

AEs &it &ic tey mar$et te "roducts5 ,urter or certain

non-AEs Meyer may even de"ute "ersonne/ to train tem on

mar$eting tecni@ues etc5

+5'525'5Pac$agingA// "ac$aging is done by Meyer &ic se//s te "roducts in (na/

"ac$ed orms5

+5'525+5%nvoicing and co//ectionMeyer is res"onsib/e or bi//ing 9 co//ection i5e5 o//o&-u" &it

te customers or te rea/iFation o te sa/e "roceed5

+5'5255A summary o te unctions "erormed by eac com"any is

tabu/ated be/o&C

Function %eyer AEs

.esearc 9 )eve/o"ment

Procurement o .a& Materia/s

Manuacturing

%nventory Management

Mar$eting

ua/ity !ontro/

Pac$aging

+5'535 *rading Activity

+5'53515Order ProcurementAEs &o re@uire goods rom %ndia contact Meyer or "rocurement

o suc goods5 Meyer engages in trading on/y on suc s"eci(c

orders rom AEs5

+5'53525LogisticsMeyer "rovides /ogistic su""ort or te goods to be sent to its

AEs5 A// unctions /i$e vendor sourcing trans"ort arrangement

etc are "erormed by Meyer5

+5'53535Mar$eting

13


14/23


*ere is a/most no mar$eting activity invo/ved in tese

transactions since it is on/y an incidenta/ activity5 % any AE

re@uires a certain "roduct tey contact Meyer5 Meyer does not

active/y mar$et te "roducts5

+5+5 Assets em"/oyed

+5+515 Any business re@uires assets ;tangib/e or intangib/e= &itout

&ic it cannot carry out its activities5 An understanding o te assets

em"/oyed and o&ned by Prosa/es and its AE "rovides an insigt into

te resources de"/oyed by tem and teir contribution to te business

"rocessesHeconomic activities5

+5+525 %n te case o a// "roducts manuactured or :# ;6


15/23


Meyer se//s te "roducts on/y to :# ;6


16/23


based on contracts &it tem &ic are usua//y continuous in

nature5 Dence te occurrence o bad debts is rare5

+552535%nventory .is$

Meyer bears te inventory ris$ as any unso/d goods

+552545Barranty .is$

+5525'5,oreign Excange ,/uctuation .is$

+5525+5A summary o te ris$s assumed by eac com"any is tabu/ated

be/o&C

!is) AS=P Prosales

Mar$et .is$ !redit .is$

+5535 *rading Activity

*rading is "ure/y an incidenta/ activity or Meyer5 Meyer on/y "rovides

/ogistic su""ort or AEs &o &is to "rocure certain items rom %ndia5

*us Meyer bears no signi(cant ris$5

:. Economic Analysis

515 e/ection o te Most A""ro"riate Metod

51515 As "er te %ndian transer "ricing "rovisions te income arising

rom an internationa/ transaction &it an associated enter"rise must

be com"uted aving regard to te arm>s /engt "rice5 *e ca/cu/ation

o te arm>s /engt "rice as to be done by using te most

a""ro"riate metod5 *e most a""ro"riate metod must be se/ected

rom te o//o&ing metodsC !om"arab/e 6ncontro//ed Price ;R!6PS= Metod

.esa/e Price Metod ;R.PMS=

!ost P/us Metod ;R!PLMS=

Pro(t "/it Metod ;RPMS= or

*ransactiona/ 8et Margin Metod ;R*8MMS=5

51525 .u/e 10! ;2= o te %ncome *ax .u/es /ists te actors tat sou/d

be ta$en into account in se/ecting te most a""ro"riate metod5

ome o te actors areC

1+


17/23


T *e avai/abi/ity coverage and re/iabi/ity o data necessary or te

a""/ication o te metod

T *e extent to &ic re/iab/e and accurate adJustments can be made

to account or diUerences i any bet&een te internationa/

transaction or s"eci(ed domestic transaction and te com"arab/e

uncontro//ed transaction or bet&een te enter"rises entering into

suc transaction and

T *e nature extent and re/iabi/ity o assum"tions re@uired to be made

in a""/ication o a metod5

51535 !om"arab/e 6ncontro//ed Price Metod ;!6PM=*e !6PM sou/d be a""/ied &ere AEs buy or se// simi/ar goods or

services in com"arab/e transactions &it unre/ated enter"rises or

&en unre/ated enter"rises buy or se// simi/ar goods or services as is

being done bet&een te AEs5%nterna/ !6P invo/ves com"arison o "rices "aid H carged bet&een

one o te "arties to te contro//ed transaction and an unre/ated tird

"arty in uncontro//ed conditions &ereas an externa/ !6P invo/ves

com"arison o "rices "aidHcarged bet&een t&o unre/ated tird

"arties in uncontro//ed conditions5

!ontract Manuacturing Activity

Ex"ort o Manuactured 7oods

*rading Activity

51545 .esa/e Price Metod ;.PM=*e .PM eva/uates te arm>s /engt nature o a contro//ed transaction

by reerence to te gross "ro(t margin rea/iFed in a com"arab/e

uncontro//ed transaction5 *e .PM measures te va/ue o unctions

"erormed and is ordinari/y a""ro"riate in cases invo/ving te

"urcase and resa/e o tangib/e goodsHservices in &ic te

buyerHrese//er does not add substantia/ va/ue to te goods by

"ysica//y a/tering tem or by using mar$eting intangib/es5*e metod may become /ess re/iab/e &en tere are diUerences in

te unctions "erormed or ris$s assumed bet&een te contro//ed and

uncontro//ed transactions5 %t is "ertinent to note tat &en te resa/e

"rice margin used is tat o an inde"endent enter"rise in a

com"arab/e transaction te re/iabi/ity o te resa/e "rice metod may

be aUected i tere are materia/ diUerences in te &ay te AEs and

inde"endent enter"rises carry out teir businesses5


Ex"ort o Manuactured 7oods1


18/23


*rading Activity

515'5 *ransactiona/ 8et Margin Metod ;*8MM=6nder te *8MM te standards o com"arabi/ity are /ess stringent

re/ative to te oter metods &it on/y broad simi/arity o unctions

re@uired5 *is metod com"ares te norma/ net "ro(t margin

com"uted in re/ation to costs incurred or sa/es eUected or assets

em"/oyed or aving regard to any oter re/evant base rea/iFed by

AEs to te net "ro(t margin rea/iFed by unre/ated enter"rises rom

com"arab/e uncontro//ed transactions5 *e *8MM as te o//o&ing

"ractica/ advantagesCT %n te case o *8MM te net margins ;e5g5 return on assets

o"erating income to sa/es and "ossib/y oter measures o net"ro(t= are /ess aUected by transactiona/ diUerences tan is te

case &it "rice as used in te !6PT *e net margins may a/so be more to/erant to some unctiona/

diUerences bet&een te contro//ed and uncontro//ed transactions

tan gross "ro(t marginsT *e diUerences in unctions "erormed bet&een enter"rises are

oten reQected in variations in o"erating ex"enses5 !onse@uent/y

enter"rises may ave a &ide range o gross "ro(t margins but sti//

earn broad/y simi/ar /eve/s o "ro(ts



*rading Activity

515+5 Pro(t "/it Metod ;PM=*e PM is norma//y used in situations invo/ving transer o uni@ue

intangib/es or in mu/ti"/e internationa/ transactions or s"eci(ed

domestic transactions &ic are so c/ose/y interre/ated tat tey

cannot be eva/uated se"arate/y or determining te arm>s /engt

"rice5%n te instant case te "ro(tabi/ity o Prosa/es can be tested more

re/iab/y and easi/y troug oter metods &itout ma$ing arbitrary

assum"tions5 Moreover te transactions do not invo/ve te use o

uni@ue intangib/es5!ontract Manuacturing Activity


*rading Activity

1


19/23


5155 !ost P/us Metod ;!PM=*e !PM can be em"/oyed in cases invo/ving manuacture assemb/y

or "roduction o tangib/e "roducts or "rovision o services tat are

so/d H "rovided to re/ated "arties5 %t com"ares te norma/ gross "ro(t

mar$-u" on costs ;bot direct and indirect= earned by a

manuacturer H service "rovider to te gross "ro(t mar$-u" earned by

uncontro//ed manuacturers H service "roviders5 7ross "ro(t margin

needs to be adJusted to ta$e into account unctiona/ and oter

diUerences bet&een te internationa/ transaction or s"eci(ed

domestic transaction and te com"arab/e uncontro//ed transaction or

bet&een te enter"rises entering into suc transaction &ic cou/d

materia//y aUect te mar$-u" in te o"en mar$et5 A c/ose degree o

com"arabi/ity &it te "roducts H services "rovided by uncontro//ed

manuacturers H service "roviders and &it te unctions "erormed

and ris$s assumed by te uncontro//ed manuacturers H service"roviders &i// "roduce a more re/iab/e resu/t under te !PM5



*rading Activity

525 ,indingsC

As discussed above te direct metods ;!6PM and .PM= cannot be a""/iedto estab/is arm>s /engt va/ue o Prosa/es> internationa/ transaction5

,urter *8MM and PM a/so cannot be a""/ied or te reasons discussed

above5 *us or te internationa/ transaction under revie& !PM a""ears to

be te most a""ro"riate metod or bencmar$ing5

>. Findings

515 !ontract Manuacturing ActivityC

*e com"any as transactions in te nature o contract manuacturing

&it :# ;6


20/23


8igeria is a deve/o"ing country /ocated in te continent o Arica &i/e

)ubai is a deve/o"ed city in te 6nited Arab Emirates5 *us te

mar$et is signi(cant/y diUerent in terms o ty"e o customers and

teir re@uirements5

51525 :o/ume o transactions is diUerent

51535 !ontinuity o business

525 *rading Activity)uring te year Prosa/es ad reimbursed certain ex"enses to its AE at

actua/ cost and tere is no e/ement o any "rovision o services5A detai/ed &or$ing o te ex"enses reimbursed is contained in Annexure %5

A (na/ &or$ing based on te audited (gures o A)PL 9 Prosa/es as beenmade and is contained in Annexure %%5 *e diUerence bet&een te

ex"enses to be transerred as "er te (na/ &or$ing and te ex"enses

a/ready transerred &or$s out to .s5 '314+H- or 05'K o ex"enses

transerred5 *is is /o&er tan te materia/ity treso/d o 2K as "er te

cost saring agreement and tus no adJustment is re@uired5

;. Conclusion

1,. ndex of Princial =ocuments

*is study re"ort contains certain inormationHdocuments tat are re@uired

under te .u/e 10) o te .u/es5 A com"/ete /ist o te re@uired "rinci"a/

documents and i a""/icab/e teir /ocation in tis study re"ort o//o&s5

Oter "rinci"a/ documents are maintained by te tax"ayer in addition to

bac$ground documents5

S.N

o.

Primary =ocumentation !e?uirements ocation

1 )escri"tion o te o&nersi" structure o te

assessee enter"rise &it detai/s o sares or oter

o&nersi" interest e/d terein by oter enter"rises

V.u/e 10);1=;a=W

Paragrap# 3

and

$t#er

ree%ant

documents&

if any& are

maintained

'y t#e

ompany

2 Pro(/e o te grou" o &ic te assessee enter"rise Paragrap# 320


21/23


S.N

o.


is a "art a/ong &it te name address /ega/ status

and country o tax residence o eac o te

enter"rises com"rised in te grou" &it &om

internationa/ transaction or s"eci(ed domestic

transactions ave been entered into by te

assessee and o&nersi" /in$ages among tem

V.u/e 10);1=;b=W

and

$t#er

ree%ant

documents&

if any& are

maintained

'y t#e

ompany

3 #road descri"tion o te business o te assessee

and te industry in &ic te assessee o"erates

and o te business o te associated enter"rises

&it &om te assessee as transacted V.u/e10);1=;c=W

Paragrap# 3

) 4 and

$t#er

ree%antdocuments&

if any& are

maintained

'y t#e

ompany

4 *e nature and terms ;inc/uding "rices= o


transactions entered into &it eac associated

enter"rise detai/s o "ro"erty transerred or services"rovided and te @uantum and te va/ue o eac

suc transaction or c/ass o suc transaction V.u/e

10);1=;d=W

Paragrap# 4

' )escri"tion o te unctions "erormed ris$s

assumed and assets em"/oyed or to be em"/oyed by

te assessee and by te associated enter"rises

invo/ved in te internationa/ transaction or s"eci(ed

domestic transaction V.u/e 10);1=;e=W

Paragrap# *

+ .ecord o te economic and mar$et ana/yses

orecasts budgets or any oter (nancia/ estimates"re"ared by te assessee or te business as a

&o/e and or eac division or "roduct se"arate/y

&ic may ave a bearing on te internationa/

transaction or s"eci(ed domestic transactions

entered into by te assessee V.u/e 10);1=;=W

+ot

appica'e

.ecord o uncontro//ed transactions ta$en into

account or ana/yFing teir com"arabi/ity &it te


transactions entered into inc/uding a record o te

nature terms and conditions re/ating to any

Ree%ant

documents&

if any& are

maintained

'y t#e

21


22/23


S.N

o.


uncontro//ed transaction &it tird "arties &ic

may be o re/evance to te "ricing o te


transactions V.u/e 10);1=;g=W

ompany

.ecord o te revie& "erormed to eva/uate

com"arabi/ity o uncontro//ed transactions &it te

re/evant internationa/ transaction or s"eci(ed

domestic transaction V.u/e 10);1=;=W

Ree%ant

documents&

if any& are

maintained

'y t#e

ompany )escri"tion o te metods considered or

determining te arm>s /engt "rice in re/ation to

eac internationa/ transaction or s"eci(ed domestictransaction or c/ass o transaction te metod

se/ected as te most a""ro"riate metod a/ong &it

ex"/anations as to &y suc metod &as so

se/ected and o& suc metod &as a""/ied in eac

case V.u/e 10);1=;i=W

Paragrap# ,

10 .ecord o te actua/ &or$ing carried out or

determining te arm>s /engt "rice inc/uding detai/s

o te com"arab/e data and (nancia/ inormation

used in a""/ying te most a""ro"riate metod and

adJustments i any &ic &ere made to account ordiUerences bet&een te internationa/ transaction or

s"eci(ed domestic transaction and te com"arab/e

uncontro//ed transactions or bet&een te

enter"rises entering into suc transactions V.u/e

10);1=;J=W

Paragrap#

) Annexure

. to t#e

study report

11 *e assum"tions "o/icies and "rice negotiations i

any &ic ave critica//y aUected te determination

o te arm>s /engt "rice V.u/e 10);1=;$=W

+ot

appica'e

12 )etai/s o te adJustments i any made to transer

"rices to a/ign tem &it arm>s /engt "ricesdetermined under tese ru/es and conse@uent

adJustment made to te tota/ income or tax

"ur"oses V.u/e 10);1=;/=W

+ot

appica'e

13 Any oter inormation data or document inc/uding

inormation or data re/ating to te associated

enter"rise &ic may be re/evant or determination

o te arm>s /engt "rice V.u/e 10);1=;m=W5

Ree%ant

documents&

if any& are

maintained

'y t#e

ompany

11. =isclaimer

22


23/23


11515Our vie&s contained in tis study re"ort are based on te com"/eteness

and accuracy o te inormation "rovided by "ersonne/ o Prosa/es andHor

any assum"tions made by Prosa/es tat &ere re/ied u"on or te "ur"ose

o tis study re"ort5 Be disc/aim any /iabi/ity or advice based on incorrect

or inaccurate inormation "rovided to us re/ating to te o"erations and te

internationa/ transactions o Prosa/es &it its AE5 % any o te inormation

and assum"tions "rovided by Prosa/es is not com"/ete or accurate it is

im"erative tat &e be inormed according/y as te inaccuracy or

incom"/eteness tereo cou/d ave a materia/ eUect on our (ndings5

11525*e ana/ysis and (ndings out/ined in tis study re"ort are s"eci(ca//y in

res"onse to a re@uest or advice by Prosa/es5 *is study re"ort is

con(dentia/ and as been "re"ared so/e/y or te use by Prosa/es5 %t sou/d

not be co"ied or disc/osed to any tird "arty in &o/e or in "art &itoutour "rior &ritten consent5 Do&ever tis study re"ort may be "resented

;eiter in u// or "art= by Prosa/es to te tax autorities sou/d tere be an

in@uiry into its transer "ricing arrangements5 8eiter te ,irm nor any o

its members or em"/oyees underta$e res"onsibi/ity in any &ay &atsoever

to any "erson or com"any oter tan Prosa/es or any error or omission in

te advice given o&ever caused5 Our vie&s are not binding on any

autority or !ourt and ence no assurance is given tat a "osition

contrary to our vie&sHo"inions ex"ressed erein &i// not be asserted by any

autority andHor sustained by an a""e//ate autority or a !ourt o /a&5 *e

res"onsibi/ity or any taxesH "ena/ties arising rom te course oassessments &ou/d not rest on te ,irm5

11535%n te "re"aration o tis study re"ort &e ave re/ied on te "rovisions o

te Act te .u/es and Judicia/ and administrative inter"retations tereo

&ic are subJect to cange or modi(cation by subse@uent /egis/ation or

regu/atory canges or administrative "ronouncements or Judicia/ decisions5

Any suc cange &ic cou/d be "ros"ective retros"ective or retroactive

cou/d aUect te va/idity o te ana/ysis erein5 6n/ess s"eci(ca//y

re@uested oter&ise &e sa// not u"date tis study re"ort or subse@uent

canges or modi(cations to te /a& to te ru/esH regu/ations or to te

Judicia/ and administrative inter"retations tereo5

23

Meyer TP Study Report

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