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Directors Report of Dishman Pharmaceuticals & Chemicals Ltd.

Mar 31, 2015

The Shareholders of Dishman Pharmaceuticals and Chemicals Limited

The Directors have pleasure in presenting their Report along with the Audited Accounts of the Company for the year ended March 31, 2015.

(Rs. in Lacs)

FINANCIAL RESULTS

Standalone Consolidated

Particulars 2014-2015 2013-2014 2014-2015 2013-2014

Net Sales 47869.31 47328.11 157518.77 138532.00

Profit before tax & other adjustments 10382.59 11883.64 15924.71 15640.24

Net current tax expenses 2701.64 2528.05 4088.38 3766.24

Deferred tax liability 1833.12 676.93 (144.57) 946.76

Profit After Tax 5847.83 8678.66 11980.90 10927.24

Balance of profit brought forward 11853.28 5807.56 42114.18 33819.88

Amount available for appropriation 17701.11 14486.22 54095.08 44747.12

Adjustment of Depreciation (110.69) - (131.89) -

Appropriations:

Transfer to debenture redemption reserve - - - -

Transfer to general reserve 1500.00 1500.00 1500.00 1500.00

Proposed dividend 1613.94 968.37 1613.94 968.37

Tax on proposed dividend 328.56 164.57 328.56 164.57

Balance carried to balance sheet 14147.92 11853.28 50520.69 42114.18

PERFORMANCE AND OPERATION REVIEW

Standalone Financial Results

In FY2014-15, your Company achieved a turnover of Rs. 47869.31 lacs as compared to Rs. 47328.11 lacs in FY2013-14. Profit before tax stood at Rs. 10382.59 lacs in FY2014-15 as against Rs. 11883.64 lacs in FY2013-14. Profit after tax for the year remain at Rs. 5847.83 lacs in FY2014-15 as compared to Rs. 8678.66 lacs in FY2013-14.

Earning per share for the FY2014-15 remains at Rs. 7.25 per share as against Rs. 10.75 per share in FY 2013-14.

Consolidated Financial Results

In FY2014-15, your Company achieved a turnover of Rs. 157518.77 lacs as compared to Rs. 138532.00 lacs in FY2013-14. Profit before tax stood at Rs. 15924.71 lacs in FY2014-15 as against Rs. 15640.24 lacs in FY2013-14. Profit after tax for the year remain at Rs. 11980.90 lacs in FY2014-15 as compared to Rs. 10927.24 lacs in FY2013-14.

Earning per share for the FY2014-15 remains at Rs. 14.85 per share as against Rs. 13.54 per share in FY 2013-14.

A detail analysis of the performance of the company, its subsidiaries and financial results is given in the Management Discussion and Analysis Report, which forms part of this report.

DIVIDEND

For the financial year 2014-2015, the Board of Directors of your Company have decided to increase dividend for higher return on investment made by the shareholders of the Company. Your Directors are pleased to recommend a final dividend of 100% on the paid-up equity share capital of Rs. 1613.94 lacs (Rs. 2.00/- per equity share of Rs. 2/- each) (previous year 60% on the paid-up equity share capital of Rs. 1613.94 lacs, i.e. Rs. 1.20/- per equity share of Rs. 2/- each), subject to approval of shareholder at ensuing Annual General Meeting and will be paid out of the profits of the Company for the year to all those equity shareholders whose names appear in the Register of Members on the close of business hours as on 11th September, 2015.

TRANSFER TO RESERVES

The Company proposes to transfer Rs. 15.00 crores (previous year Rs. 15.00 crores) to the General Reserves out of the amount available for appropriation.

DEPOSIT

The Company has neither accepted nor invited any deposit from public, falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.

NON CONVERTIBLE DEBENTURES (NCDs)

- As you are aware, in February, 2010 your Company has issued Secured Redeemable Non Convertible Debentures of Rs. 75.00 crores in the form of Separately Transferable Redeemable Principle Parts ("STRPPs") of Rs. 10 lacs each fully paid-up on private placement basis and the said NCDs has been listed on the Bombay Stock Exchange Ltd. (BSE) in the list of securities of F Group - Debt Instrument w.e.f. 13th May, 2010. These NCDs will be redeemed at par at the end of 4th, 5th, 6th & 7th year in ratio of 20:20:30:30, respectively from the date of issue.

During the year, as per the terms of said NCD, on 18th February, 2015, the Company has redeem 20% of the Non convertible Debenture (first Trenched) issued by the Company in February, 2010 and accordingly; Company has paid Rs. 22.76 Cr. towards principal payment and interest thereon to the Debenture holders. Now, as on 31st March, 2015, there is an outstanding NCD -I (first trenched) amounting to Rs. 45.00 crores.

- In June, 2010, the Company has issued second trenched of its Secured Redeemable Non- convertible Debentures (NCD) of Rs. 75.00 crores in the form of Separately Transferable Redeemable Principle Parts ("STRPPs") of Rs. 1.00 lac each fully paid-up on private placement basis and the said NCDs have also been listed on the Bombay Stock Exchange Ltd. (BSE) in the list of securities of F Group - Debt Instruments w.e.f. 17th September, 2010. These NCDs will be redeemed at par at the end of 4th & 5th year in the ratio of 50:50, respectively from the date of issue.

During the year, as per the terms of said NCD, on 16th June, 2014, the Company has redeemed 50% of the NCD-II (second tranche) issued by the Company in June, 2010 and accordingly; Company has paid Rs. 38.25 crores towards principal payment and interest thereon to the Debenture holders. Now, as on 31st March, 2015, there is an outstanding NCD-II (second tranche) amounting to Rs. 37.50 crores.

The Company is paying interest on the said NCDs regularly on the due dates. As per the Circular No. 04/2013 dated 11th February, 2013 issued by Ministry of Corporate Affairs, Government of India, Company had created Debenture Redemption Reserve (DRR), in respect of both trenches of NCDs issued by the Company. The Company has deposited an amount of Rs. 9.00 Crores, by way of fixed deposit with Corporation Bank, being 15% of the maturing amount of Rs. 60.00 Crores, which is going to be matured during the Financial Year 2015-2016.

OPERATIONS

During the year, most of the key business verticals of the Company and also all major subsidiaries of the Company have performed reasonably well.

CRAMS

For the "CRAMS" segment of Dishman India, as you are aware, since the last three years, your Company has modified its focus and is now concentrating on a larger number of midsize contracts, instead of concentrating only on a few large MNCs. Your Company's strategy has started yielding fruits since last 2 years whereby apart from the big pharma companies your Company has been getting many orders from small and big and mid-sized pharma companies which has resulted into diversified portfolios in this segment in India and has also helped your Company in having a greater degree of predictability of the revenues. Your Company's 100% wholly owned subsidiary - CARBOGEN AMCIS AG Switzerland(CAAG), which is also operating in the CRAMS segment through its plant located in Switzerland and UK has done quite well during the year under review. In fact, CAAG's order book is almost full, and as a strategic measure, during the year under review, the China facility has been now put under the management of CAAG to cater to their gap of not having large volume manufacturing. We are happy to note that CAAG has expanded its markets significantly and also improved the product basket between Dishman India and Carbogen Amcis or Dishman Group, your Company now has the capability of offering complete solutions in the organic chemistry space in the CRAMS segment. Further, the performance of CARBOGEN AMCIS UK has also remained very satisfactory during the year under review.

We are also delighted to inform the members that during FY 2014-15, Dishman Group has also made remarkable progress specifically in terms of the Oncology space, thanks to the focused hard work in the development process by partnering with many Oncology companies over last few years. Thus Dishman Group bagged a prestigious order for supply of high value added Oncology API for a highly effective Lung Cancer drug to a leading mid size Oncology Formulation company based out of US. Further, many such products are in pipeline.

Your Company is confident of achieving a steady and sustainable growth in this segment in the coming years.

Hi-Po Unit

The state-of-the-art Hi-Potency (Hi-Po unit) - Unit 9 at Bavla has performed well during the year under review. Your Company has started receiving regular as well as repeated orders from major global pharma MNCs who are very excited about the type of the facility and infrastructure created in this unit. Again noteworthy is the fact that, apart from the on going projects, your Company has successfully completed a few technology transfer projects from CARBOGEN AMCIS to this unit which implies a significant scaling up of the production of such high value-added and extremely potent pharma APIs mainly in the oncology category. As you are aware, this is one of its kind facility not only in India, but in the entire world, which is capable of handling extremely high potency molecules in large volumes with a specific focus on the therapeutic segments of oncology, steroids, among others. Regular business has started coming in steadily from leading Global MNCs. For the current year, your Company has already an order book/ visibility of around US$ 12 million for this unit with only 2 of the possible 5 cells fitted and at its optimum capacity the target is to achieve a top line of around US$ 25-30 million over next 2 to 3 years for which a good visibility exists. Again, this is a high-margin segment which will also help in improving the bottom line of your Company and more importantly, the products when launched, will improve the life expectancy of many unfortunate people affected with such deadly diseases.

Vitamin D3

During the year under review, the Vitamin D3 Business has also performed satisfactorily. This Business is of the WOS namely Dishman Netherland B.V., which is having its plant in Netherlands producing cholesterol, the key raw material for Vitamin D3. During the year under review, the said company has changed its strategy for this Business and is now concentrating on selective business, which has yielded good results in the form of increased profitability.

Generic API Business

The growth of Generic API business during the year has been slightly subdued, but still satisfactory. The idea is to take the advantage of several products already developed by the Company in the form of around 25 to 30 potential good generic APIs for which the Company has enough data available to immediately file the DMFs in the regulated market. The key focus will be only on the regulated markets where the Company would be in a position to get a better value addition and comfortable profit margin.

Performance of China WOS

As indicated earlier, during the year under review, post taking over of the operations of china plant by CAAG, its performance has improved and the losses have considerably reduced. In FY 2014-15. Your Company is fairly confident of turning around Dishman China in the fiscal year FY2015-16.

Performance of Major Subsidiaries

The major subsidiary Companies have performed quite satisfactorily during the year under review. CARBOGEN AMCIS AG., Switzerland has reported a healthy revenue of Rs. 786.91 crores as against Rs. 621.28 crores in the previous year and PBT of Rs. 67.42 crores as against Rs. 56.12 crores. CAROGEN AMCIS Ltd., UK has also reported a healthy revenue of Rs. 80.22 crores as against Rs. 52.27 crores in the previous year and PBT of Rs. 13.65 crores as against Rs. 8.34 crores.

The other marketing subsidiaries viz. Dishman Europe Ltd., reported a revenue of Rs. 257.93 crores and PBT of Rs. 1.76 crores as compared to Rs. 274.36 crores and PBT of Rs. 8.72 crores in the previous year. Dishman USA reported a revenue of Rs. 95.87 crores and PBT of Rs. 1.89 crores showing growth of 8.58% and 43.18%, respectively, as compared to last year.

Dishman Netherland BV., (DNBV) perform well during the year, revenue of DNBV increased by 10.94% during FY 2014-15, which stood at Rs. 196.52 crores and PBT has been increased to Rs. 31.89 crores from Rs. 6.66 crores in the previous year. Other subsidiaries has also performed reasonably well during the year under review.

RESEARCH AND DEVELOPMENT

We continue to focus on Research & Development as our core strength. Our research is the foundation upon which our strategy of manufacturing and marketing of Bulk Drugs, Intermediates (including contract manufacturing), Fine Chemicals, Quats & Specialty chemicals stands.

We offer process development and optimisation services from our Ahmedabad-based state-of-the-art R&D centre and from other locations outside of India. At the Ahmedabad R&D centre which is in operation since 2005, our Process R&D scientists work in well- equipped laboratories, with an excellent analytical set-up for monitoring the reactions. Our development programs are designed to meet diverse customer expectations varying from project to project. We are considering refurbishment of the R&D laboratories.

A majority of our process development activities are aimed towards optimising our existing processes. Our prime objective is to make these processes economically and environmentally viable. During the period of development, safety and efficiency parameters of these processes is assumed most significance.

Amidst the ongoing changing regulatory scenario on drug design, we develop processes capable of producing pure APIs, with impurities well below the acceptable levels. Currently, there are 25 NCE Molecules under the laboratory to pilot scale production and some also at commercial scale due to the high volume requirement to supply material for multiple clinical trials for various indications.. The IPR of a few of these have been given to customers against "agreed-upon payments". Many of these IPR are owned by the Company.

In the Generic API segment, we are focusing on new and niche therapeutic areas in the segment of generic APIs. For developmental activities, our research scientists have access to online databases for all types of information requirement.

In this year, about 150 projects are at different stages of development of these, 100 CRAMS projects, 25 Generic APIs, about 25 NCE Molecules are currently under laboratory/pilot scale and commercial production IPR for some of them are given to customers against agree-upon payments but for many of them IPR is owned by Dishman.

QUALITY, HEALTH, SAFETY & ENVIRONMENT (QHSE)

Your company is committed to ensuring that those working with the Company are safe at work, and that everyone takes responsibility for achieving this. We include EHS and climate change-related considerations in our business decisions and strive to minimize the environmental impact of our operations on the environment. Measuring, appraising and reporting on environmental, health and safety performance is an important part of continuous improvement in our EHS performance.

Dishman's Environment, Health and Safety (EHS) organization conducts strategic planning to establish long-term EHS goals, assess resources required to achieve specific goals, and ensure critical business alignment. Dishman considers feedback from internal and external stakeholders in proposing and establishing its long-term goals in manufacturing operations.

Dishman's products and processes are developed in accordance with strictly defined local and international rules to ensure safety and Health of workers as well as the environment. This is achieved by conducting the Risk Assessment, Process Hazard Assessment, identification of significant environmental aspects, Safety Audits, customer audits, HAZOP study and Environment audits. Safety & Environment Management Program are being taken to reduce the Significant Risk & Environment Aspects.

The Company's QHSE policy is being implemented, among others, through (i) Maintaining the "Zero Discharge" of waste water by series of treatment; (ii)Stripper system, Multiple effect evaporator and ATFD for concentrated effluent stream; (iii) Practicing On- site emergency plan by conducting mock-drills; (iv) Replacement of hazardous process / chemical to non-hazardous process for converting to low hazards; (v) Fire detection and protection system available at site; (vi) Conducting intensive QHSE training programs including contractor employees; (vii) Participation of employees in Safety committee meetings at all levels and celebrating the National Safety Day, Fire Service Day, World Environment Day and World Earth Day; (viii) Independent safety and environment audits at regular intervals by third party and also in-house; (ix) In-house medical and health facility at site for pre-employment & periodical medical check-up of all employees including contract employees; (x) Blood Donation Camp at site for social cause; (xi) Participation and paper presentation on good practices adopted by dishman on SHE management in National and International Conferences. (xii) Rated low risk facility by various international Customer by conducting EHS audit in depth.

Dishman continues to pursue world class operational excellence on Process Safety Management (PSM). Dishman has established the capabilities within the Company and developed in-house experts in various facets of PSM. Process Hazard Analysis (PHA) at various plants is being carried out to reduce process safety risks.

In its pursuit of excellence towards sustainable development and to go beyond compliance, Dishman integrated its ISO:14001 EMS, ISO:9001 QMS and ISO:18001 OSHA management systems and certified for HACCP and FAMI-Qs for Vitamin D3 plant. The company is in process of getting the ISO 13485 Certification for Medical Disinfectant Products.

Your Company's efforts are recognized by State Level, National Level and International level Awards from time to time. This year Company has been awarded the most prestigious award by way of Certificate of Appreciation for Naroda Site from National Safety Council.

Indian chemical Council (ICC) has authorized Dishman Pharmaceuticals for use of Responsible Care Logo.

LISTING

The equity shares of the Company are listed on the National Stock Exchange of India Ltd., Mumbai (NSE) and Bombay Stock Exchange Ltd., Mumbai (BSE). Annual listing fees for the FY 2015-2016, as applicable, have been paid before due date to the concerned Stock Exchanges.

The Secured Redeemable Non-Convertible Debentures (NCDs) of Rs. 150 crores issued by the Company in two trenches is also listed at Bombay Stock Exchange Ltd., Mumbai (BSE). Annual listing fees for the FY 2015-2016, as applicable, have also been paid before due date to the BSE.

FORMATION OF VARIOUS COMMITTEES

Your Company has several Committees which have been established as part of the best Corporate Governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes.

The Company has following Committees of the Board:

- Audit Committee

- Stakeholder Relationship Committee

- Nomination and Remuneration Committee

- Corporate Social Responsibility Committee

- Management Committee

During the year, the Board has accepted all the recommendations made by various committees including Audit Committee. The details with respect to the compositions, powers, terms of reference etc of relevant committees are given in details in the Corporate Governance Report which forms part of this Annual Report.

DISCLOSURES UNDER THE COMPANIES ACT, 2013

i) Extract of Annual Return

The extracts of Annual Return pursuant to the provisions of sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is annexed herewith as Annexure A to this Report.

ii) Board Meetings

Regular meetings of the Board are held inter-alia, to review the quarterly results of the Company. Additional Board meetings are convened to discuss and decide on various business policies, strategies and other businesses. Due to business exigencies, certain business decisions are taken by the board through circulation from time to time.

During the FY 2014-15, the Board met Five (5) times i.e. 16th May, 2014, 28th May, 2014, 13th August 2014, 13th November, 2014 and 13th February, 2015. Detailed information on the meetings of the Board is included in the report on Corporate Governance, which forms part of this Annual Report.

iii) Related Party Transactions

Since all the related party transactions entered into during the financial year were on an arm's length basis and were in the ordinary course of business. Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, in the prescribed Form AOC-2, is appended as Annexure B to this Board's report. All Related Party Transactions are placed before the Audit Committee as also the Board for approval. The policy on Related Party Transactions has been approved by the Board and uploaded on the website of the Company. The details of the transactions with Related Party are provided in the accompanying financial statements vide note no. 27.15 of notes on financial statement as per requirement of Accounting Standard 18-related party disclosure issued by ICAI. These transactions are not likely to conflict with the interest of the Company at large. All significant transaction with related parties is placed before audit committee periodically.

iv) Particulars of Loans, Guarantees or Investments under Section 186

During the year under review, the Company has made investments, Loan, guarantee in compliance of Section 186 of the Companies Act, 2013, the said details are given in the notes to the financial statements.

v) Material Changes and Commitments Affecting the Financial Position of the Company

There are no significant and material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.

vi) Subsidiaries, Joint Ventures and Associate Companies

During the year following changes happened in Subsidiary, Joint Ventures and Associate Companies:

- Dishman Arabia Ltd. liquidated during the year under review.

- Dishman Japan Ltd. became wholly owned subsidiary of the Company (earlier Company holds 85%)

- Shanghai Yiqian International Trade Co. Ltd. formed by our wholly owned subsidiary company Shanghai International Trading Co. Ltd.

In view of the above, the total number of subsidiaries including wholly owned subsidiaries as on 31 March, 2015 was Eighteen (18), One (1) Joint Venture and one (1) Associate company.

CONSOLIDATED FINANCIAL STATEMENT

Pursuant to the provisions of Section 129, 134 and 136 of the Companies Act, 2013 read with rules framed thereunder and pursuant to Clause 41 of the Listing Agreement, your Company had prepared consolidated financial statements of the company and its subsidiaries and a separate statement containing the salient features of financial statement of subsidiaries, joint ventures and associates in Form AOC-1 forms part of the Annual Report.

The annual financial statements and related detailed information of the subsidiary companies will be provided on specific request made by any shareholders and the said financial statements and information of subsidiary companies are open for inspection at the registered office of the company during office hours on all working day except Sunday and holidays between 2 p.m. to 4 p.m. The separate audited financial statement in respect of each of the subsidiary companies is also available on the website of the Company.

As required under Clause 32 of Listing Agreement with the stock exchange(s) and in accordance with the requirements of Accounting Standard (AS-21) issued by the Institute of Chartered Accountants of India, the Company has prepared Consolidated Financial Statements of the Company and its subsidiaries and is included in the Annual Report.

While preparing the consolidated financial statements, Company has consolidated the accounts of one Joint Venture companies namely Schutz Dishman Biotech Ltd. (22.33% holding by the Company) and one associate company namely, Bhadra Raj Holdings Pvt. Ltd. (40% holding by the Company), as per the requirements of Accounting Standard 27 (AS-27) and Accounting Standard 23 (AS-23) respectively.

GENERAL DISCLOSURE

i) Issue of Equity Shares with differential rights as to dividend, voting or otherwise.

During the year 2014-2015, the Company has not issue any of Equity Shares with differential rights as to dividend, voting or otherwise.

ii) Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and ESOS. : During the year under review, the Company has passed enabling resolution for issue of shares under ESOS to the employee of the company and employee of subsidiary company by way of postal ballot which was approved by the shareholder on 13th January, 2015. However, the Company has not issued any shares under ESOS.

iii) Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries. : Managing Director and Whole time Director of the Company has not received any remuneration and commission from any Indian subsidiaries during the year under review.

iv) No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. There are no significant and material orders passed by the Regulators or Courts or Tribunals which could impact the going concern status and the Company's future operations.

DIRECTORS & KMPs

Retire by Rotation

Mr. Arpit Vyas, Managing Director of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible offer himself for reappointment.

Reappointment of Director

The term of Ms. Deohooti J. Vyas as whole time Director expires on 2nd September, 2016. The Board, therefore, recommends their re-appointment as Whole time director of the Company for the approval of the members at the ensuing Annual General Meeting.

Appointment of Director

The Board of Directors at their meeting held on 13th August, 2014, have approved the appointment of Mr. Mark Christopher Griffiths, a Global CEO of the Company, as an Additional Director of the Company, with the effect from September 1, 2014, whose term of office is upto the date of this Annual General Meeting in accordance with the applicable provisions of the Articles of Association and the Companies Act, 2013. The matter of appointing him, as regular director, liable to retire by rotation, appears as Item No. 6 in the Notice of the 32nd Annual General Meeting.

Mr. Subir Kumar Das and Mr. Rajendra S. Shah were appointed as an Additional Directors designated as an Independent Director w.e.f. 15th December, 2014 and 2nd April, 2015, respectively. The approval of members for their appointment as an Independent Directors is being sought vide item Nos. 7 & 8 in the Notice of the 32nd Annual General Meeting.

Statement of Declaration by Independent Directors

The Independent Directors have submitted the Declaration of their Independence, as required pursuant to Section 149(7) of the Companies Act, 2013, stating that they meet the criteria of independence as provided in sub section (6).

Cessation

During the year, Mr. Yagneshkumar B. Desai, resigned as a Director of the Company with effect from 13th December, 2014. The Directors place on record their appreciation of the valuable advice and guidance given by him during his tenure.

Key Managerial Personnel

During the year under review, Mr. Rajashekhar Bhat, Chief Financial Officer has been appointed as Key Managerial Personnel w.e.f. 1st April, 2014 in terms of Section 203 of the Companies Act, 2013. Mr. Rajashekhar Bhat, Chief Financial Officer has resigned from the Company w.e.f. 20th January, 2015.

Board Evaluation & Criteria

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a structured questionnaire was prepared after taking into consideration the various aspects of the Board's functioning, composition of the Board and its committees. The Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. The Board of Directors expressed their satisfaction with the evaluation process.

Board diversity

The Company recognizes and embraces the importance of a diverse board in its success. We believe that a truly diverse board will leverage differences in thought, perspective, knowledge, skill, regional and industry experience, cultural and geographical background, age, ethnicity, race and gender, which will help to retain our competitive advantage. The Board has adopted the Board Diversity Policy which sets out the approach to diversity of the Board of Directors. The Board Diversity Policy is available on our website, www.dishmangroup.com.

Policy on Director's appointment and remuneration

The Company's Policy on Directors' appointment and remuneration of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is available on the website of the Company.

DISCLOSURE UNDER RULE 5 OF THE COMPANIES (APPOINTMENT & REMUNERATION) RULES, 2014

The information required under Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in separate annexure forming part of this Report as Annexure C.

The statement containing particulars of employees as required under Section 197 of the Companies Act, 2013 read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this report as Annexure D.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTOR

The Company undertook various steps to make the Independent Directors have full understanding about the Company. The details of such familiarisation programmes have been disclosed on the Company's website at www.dishmangroup.com.

INDEPENDENT DIRECTORS' MEETING

A Separate meeting of Independent Directors held on 13th February, 2015 without the attendance of Non-Independent Directors and members of the Management. In the said meeting, Independent Directors reviewed the followings:

- Performance evaluation of Non Independent Directors and Board of Directors as a whole;

- Performance evaluation of the Chairperson of the Company taking into account the views of executive directors and non- executive directors;

- Evaluation of the quality of flow of information between the Management and Board for effective performance by the Board.

The Board of Directors expressed their satisfaction with the evaluation process.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, state that :

- that in the preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures;

- that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;

- that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- the directors have prepared the annual accounts on a going concern basis;

- the directors, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

- the director have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

INTERNAL FINANCIAL CONTROL SYSTEM

The details in respect of internal financial control system and their adequacy are included in Management Discussion and Analysis Report, which forms part of this report.

INSURANCE

Assets of your Company are adequately insured against various perils.

RISK MANAGEMENT POLICY

As per Clause 49 of the Listing Agreement, the Company has framed formal Risk Management framework for risk assessment and risk minimization for Indian operation which is periodically reviewed by the Board of Directors to ensure smooth operations and effective management control. The Audit Committee has additional oversight in the area of financial risks and control.

VIGIL MECHANISM

The Company has adopted a Whistle Blower Policy pursuant to the requirements of the Companies Act, 2013 and the Listing Agreement. The Policy empowers all the stakeholders to raise concerns by making protected disclosures as defined in the Policy.

The policy also provides for adequate safeguards against victimization of whistle blower who avail of such mechanism and also provides for direct access to the Chairman of the Audit Committee, in exceptional cases. The details of the Whistle Blower Policy are explained in the Report on Corporate Governance and the Policy is available on the website of the Company at www.dishmangroup.com.

SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

There were no incidences of sexual harassment reported during the year under review, in terms of the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

AUDITORS AND AUDITORS' REPORT

Statutory Auditors

As members are aware, M/s. Deloitte Haskins & Sells, Chartered Accountants, Ahmedabad have resigned from the office of Statutory Auditors of the Company due to unavoidable circumstances, resulting into a casual vacancy in the office of Statutory Auditors of the Company and thus, M/s. V. D. Shukla & Co., Chartered Accountants, Ahmedabad, (Firm Registration No. 110240W) has been appointed as Statutory Auditors of the Company by the members in their Extra Ordinary General Meeting held on 14th August, 2015.

The audited financial results have been reviewed by the Audit Committee and taken on record by the Board of Directors at their meetings held on 22nd August, 2015.

The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

M/s. V. D. Shukla & Co., Chartered Accountants, Ahmedabad, (Firm Registration No. 110240W) and M/s. Haribhakti & Co., LLP, Chartered Accountants, Mumbai, (Firm Registration No. 103523W) are proposed to be appointed as Joint Statutory Auditors of the Company provided that the appointment of M/s. V. D. Shukla & Co., shall be from the conclusion of this 32nd Annual General Meeting till the conclusion of 36th Annual General Meeting and the appointment of M/s. Haribhakti & Co. LLP, shall be from the conclusion of this 32nd Annual General Meeting till the conclusion of 37th Annual General Meeting, subject to ratification of the appointment by the members at every AGM held after the ensuing 32nd Annual General Meeting.

As required under Section 139 of the Companies Act, 2013, the Company has received a written consent from M/s. V. D. Shukla & Co., Chartered Accountants, Ahmedabad, (Firm Registration No. 110240W) and M/s. Haribhakti & Co., LLP, Chartered Accountants, Mumbai, (Firm Registration No. 103523W) for such appointment and also a certificate to the effect that their appointment, if made, would be in accordance with Section 139(1) of the Companies Act, 2013 and the rules made thereunder.

The Audit Committee and Board of Directors recommend the appointment of statutory auditors as mentioned in resolutions no.4 of the accompanying notice of ensuing Annual General Meeting.

Internal Auditors

M/s. Talati & Talati, Chartered Accountants, Ahmedabad has been internal auditors of the Company. Internal auditors are appointed by the Board of Directors of the Company on a yearly basis, based on the recommendation of the Audit Committee. The Internal Auditor's reports and their findings on the internal audit, has been reviewed by the Audit Committee on a quarterly basis. The scope of internal audit is also reviewed and approved by the Audit Committee.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules made thereunder, the Company had appointed Mr. Ashok P. Pathak, Practicing Company Secretary (Membership No. ACS: 9939; CP No: 2662), as Secretarial Auditors to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is appended in the Annexure E to the Directors' Report. The observations and comments, if any, appearing in the Secretarial Audit Report are self-explanatory and do not call for any further explanation / clarification by the Board of Directors.

Cost Auditors

M/s. Kiran J. Mehta & Co., Cost Accountants, Ahmedabad has been reappointed as Cost Auditor by the Board of Directors of the Company for the financial year 2014-15, which was ratified by the shareholders in the previous Annual General Meeting held on 4th September, 2014. Thereafter, Central Government has notified new rules for Cost Audit and as per new Companies (Cost Records and Audit) Rules, 2014 issued by Ministry of Corporate Affairs; Company is not falling under the Industries, which will subject to Cost Audit. Therefore filing of cost audit report for the FY 2014-15 is not applicable to the Company.

M/s. Kiran J. Mehta & Co., Cost Accountants, Ahmedabad has submitted their Cost Audit Report for the financial year 2013-14 to the Central Government on 26th September, 2014. which was within due date for filing the same.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION ANALYSIS REPORT

As per Clause 49 of the Listing Agreement with the Stock Exchange, a separate section on corporate governance practices followed by the Company, as well as "Management Discussion and Analysis confirming compliance, is set out in the Annexure forming an integral part of this Report. A certificate from Practicing Company Secretary regarding compliance with corporate governance norms stipulated in Clause 49 of the Listing Agreement is annexed to the report on Corporate Governance.

In compliance with one of the Corporate Governance requirements as per the Clause 49 of the Listing Agreement, the Company has formulated and implemented a Code of Conduct for all Board members and senior management personnel of the Company, who have affirmed compliance thereto.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

Information of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134 (3) (m) of the Companies Act, 2013 read with rule 8 of The Companies (Accounts) Rules, 2014, is given in the Annexure F and forms part of this Report.

CORPORATE SOCIAL RESPONSIBILITY

As part of CSR, the Company continued extending help towards social and economic development of the villages and the communities located close to its operations and also providing assistance to improving their quality of life. Company's intention is to ensure that we meet the development needs of the local community. Dishman has a long and strong tradition of supporting the larger communities that it connects with - from health, education etc.

The Company has constituted Corporate Social Responsibility (CSR) Committee and has framed a CSR Policy. The brief details of CSR Committee and contents of CSR policy is provided in the Corporate Governance Report. The details of CSR activities carried out by the Company are appended in the Annexure G to the Director's Report. The CSR Policy is available on the website of the Company.

ACKNOWLEDGEMENT

Your Directors would like to express their appreciation for the assistance and co-operation received from foreign institutions, banks, associates, Government authorities, customers, supplier, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services and teamwork by the executives, staff members and workers of the Company for enthusiastic contribution to the growth of Company's business.

For and on behalf of the Board

Place : Ahmedabad Janmejay R. Vyas

Date : 22nd August, 2015 Chairman & Managing Director


Mar 31, 2013

To The Shareholders of Dishman Pharmaceuticals and Chemicals Limited

The Directors have pleasure in presenting their Report along with the Audited Accounts of the Company for the year ended March 31, 2013.

FINANCIAL RESULTS:

(Rs.in Lacs)

Particulars 2012-2013 2011-2012

Net Sales 48463.61 46340.06

Profit before Tax & other Adjustments 9470.00 6751.86

Less: Current tax 2100.75 2096.89

Add:MAT Credit Entitlement 181.70

Less: Deferred Tax Liability 1233.44 171.40

Profit After Tax 6317.51 4483.57

Balance of profit brought forward 2040.53 2432.45

Amount available for Appropriation 8358.04 6916.02

Appropriations:

Transfer to Debenture Redemption Reserve 625.00 1250.00

Transfer to General Reserve 800.00 2500.00

Proposed Dividend 968.37 968.37

Tax on Proposed Dividend 157.09 157.09

Balance Carried to Balance Sheet 5807.58 2040.56

DIVIDEND:

Your Company follows a dividend policy by harmonizing the needs of the Company as well as the shareholders to have return on investment. For the financial year 2012-2013, your Directors are pleased to recommend a final dividend of 60% on the paid-up equity share capital of Rs.1613.94 lacs (Rs.1.20/- per equity share of Rs.2/- each) (previous year 60% on the paid-up equity share capital of Rs.1613.94 lacs, i.e. Rs.1.20/- per equity share of Rs.2/- each), which if approved at the forthcoming Annual General Meeting will be paid out of the profits of the Company for the year to all those equity shareholders whose names appear in the Register of Members on the close of business hours as on 19th July, 2013.

PERFORMANCE AND OPERATION REVIEW:

During the year, your Company achieved a turnover of Rs. 48463.61 lacs as against Rs. 46340.06 lacs during the previous year reflecting a growth of 4.58%. Exports constitute Rs.43326.17 lacs or 89.40% of sales for 2012-2013. Profit before tax improved by about 40.26% (Rs.9470.00 lacs during the year as against Rs.6751.86 lacs in the previous year). Profit after tax for the year was Rs. 6317.51 lacs as against Rs.4483.57 Lacs during previous year.

Earning per share for the year works out to Rs.7.83 per share (previous year Rs.5.56).

The consolidated turnover, which includes results of all its wholly owned subsidiaries, proportionate share in the joint ventures (Schutz Dishman Biotech Ltd., Dishman Arabia Ltd., and Dishman Japan Ltd.) and associate (Bhadra- Raj Holdings Pvt. Ltd.) reported 13.18% growth in sales to Rs. 127222.17 lacs for the financial year 2012-2013 compared to the previous year''s sales of Rs.112411.17 lacs.

Consolidated Profit before tax & other adjustment of the Company for the financial year 2012-2013 stood at Rs 14528.42 lacs (previous year Rs.8791.19 lacs), increased by 65.26% on account of improved performance of subsidiary companies. Consolidated Profit after tax for the financial year 2012-2013 was Rs. 10029.39 lacs (Previous year Rs.5675.85 lacs), an increase of 76.70%.

The consolidated Earning per share for the year work out to Rs.12.43 per share (previous year Rs.7.03 per share).

A detailed analysis of the performance of the Company and financial results is given in the Management Discussion and Analysis Report, which forms part of this Report.

OPERATIONS:

During the year under review, most of the key business verticals of the Company and also almost all major subsidiaries of the Company have performed reasonably well.

In respect of ''CRAMS” segment of Dishman India, as you are aware, since last two years your Company has modified its focus and is now concentrating on a larger number of midsize contracts rather than concentrating only on a few large MNCs. The idea is to de-risk the business model to the maximum extent and also fill up the available plant capacities so as to effectively improve the capacity utilization of the plants, which will result into an increase in the ''Return on Capital Employed”. We are happy to inform you that your Company has successfully started getting many new orders in this particular segment and the performance is improving. No doubt the business with the major pharma MNCs continues but as you are all aware this is a fairly long gestation business and in most of the cases the timelines are not under our control. Under this strategy your Company is confident of achieving a steady and sustainable growth in this segment in the coming years.

The state of the art Hi-Potency (Hi-Po unit) – Unit 9 at Bavla has come in operation during the year under review. As you are aware, this is perhaps the only one of its kind facility not only in India but in the entire Asian sub-continent and is capable of handling extremely high potency molecules with a specific focus on the therapeutic segments of oncology, steroids, etc. three or four major Global Pharma majors have already completed safety studies, and regular business has started, with this unit contributing a turnover of around US $ 4 million during the year under review. For the current year, your Company has already an order book/visibility of around US $ 10 million for this unit and at its optimum capacity the target is to achieve a top line of around US $ 25 – 30 million over next 2 to 3 years for which a good visibility exists. Again this is a high margin segment which will also help in improving the bottom line of your Company.

Similarly, during the year under review, the Vitamin D3 unit has also commenced operations. As you may be aware, this is a forward integration facility and adds value to the Vitamin D3 business that was acquired by your Company from erstwhile Solvay a few years ago, in the name of its subsidiary company Dishman Netherland Limited which is having its plant in Netherlands producing cholesterol, the key raw material for Vitamin D3. A part of the cholesterol is now being converted into Vitamin D3 resin in the Bavla, India facility of the Company and the said resin is sent back to the Netherlands for its formulation into various end use like value added cattle feed, cosmetics etc. Currently this plant is operating at around 50% capacity utilization and the target is to ramp up its capacity utilization in next couple of years so as to reach the optimum capacity.

As you may be aware, your Company has activated a new vertical viz. Generic API during the year under review. The idea is to take the advantage of several products already developed by the Company in the form of around 25 to 30 potential good generic APIs for which the Company has enough data available to immediately file the DMFs in the regulated market. The focus will be only on the regulated markets where the Company would be in a position to get a better value addition and comfortable profit margin. The fundamental logic is to ensure that the Company effectively increases its capacity utilization of the existing facilities already created and also capitalizes on product portfolio readily available with the Company to take the opportunity available in the generic space in the developed/regulated markets. Your Company has already appointed a separate marketing team for this purpose and has also filed about 5 DMFs in the regulated markets against specific firm orders/arrangement entered into with the pharma companies. Going forward this vertical has the potential of generating an annual turnover of Rs.250 crores over next 3 to 4 years.

As the members may be aware the non-integral subsidiary Company Carbogen Amcis Switzerland has started performing quite satisfactorily during the year under review, thanks to a major business restructuring exercise successfully completed by your Company. This subsidiary has reported a healthy revenue of around Rs.508 crores and EBIDTA in the region of 16% and going forward it is confident of continuing a steady growth in the top line as well as in the margins.

The other marketing subsidiaries viz. Dishman Europe, Dishman USA as well as Dishman Japan have operated quite satisfactorily during the year under review.

In as much as Dishman China is concerned your Company is operating on two parallel strategies. Thus, on one hand a concrete and effective business plan has already been chalked out to ensure that the available capacity is filled up at least to a level where the operations reach a cash break-even position. Simultaneously your Company is also looking for a strategic sell out of the said facility to a global interested party who could either constitute a joint venture for the said subsidiary or who could effectively takeover the said subsidiary, if we are offered a reasonable price.

In as much as the land allotted to your Company in the Pharma and Finechemicals SEZ situated at village Gangad and Kalyangadh, which is approx. 15 kms. distant from Company''s Bavla Plant developed by the group company Dishman Infrastructure Limited (DIL) is concerned, your Company has no plans for any Capex at that location in foreseeable future. As the members may be aware, the said group Company DIL is contemplating de-notification/sell out/exit from the SEZ in a viable manner and if that happens your Company will be cancelling the long term lease in respect of the leasehold land in the SEZ allotted to it and will get its amount duly refunded.

RESEARCH AND DEVELOPMENT:

Research is a critical thrust area for the Company because it is the foundation upon which Company''s strategy of manufacturing and marketing of Bulk Drugs, Intermediates (including contract manufacturing), Fine Chemicals, Quats & Specialty chemicals stands. At Bavla facility, your Company has created a state-of-the-art R & D center comprising three floors and having total built up area of 4500 Sq. Mtrs.

The R&D center houses a technical library, 8 R&D laboratories, a formulation development laboratory, an analytical development department, a kilo lab and a cGMP compliant pilot plant. The technical library has a rich collection of books and periodicals covering various chemistry and related topics. It is staffed by competent information scientists. Many of the searches are now done online using latest databases to help our scientists in their research with up to date scientific information.

Your Company offers portfolio of services from process R&D in state-of-the-art laboratories, kilo and pilot plant trials in well equipped kilo labs and pilot plants and scale-up to full scale commercial manufacture in multi purpose production units as well as dedicated facilities for certain products as per customer requirement. By offering technical and manufacturing excellence in multiple locations around the globe, your Company is the global outsourcing partner for the pharmaceutical industry providing innovative development and value for money, long term commercial supply.

Your Company Offers R & D services with a specialization in development process that is truly scalable to commercialization through process research and development aimed at commercially viable optimized processes. Your Company''s R & D process is supported by Analytical Services department which provide support in development of new analytical methods for products developed in the R&D labs. Analytical Development Lab is equipped with all modern equipment for the analysis of R & D products as well as for method validations. We constantly upgrade the instruments as per the requirements of our customers/products. The QC supports the analytical requirements starting from initial raw material releases to release of Final product. Kilo & Pilot facilities for cGMP production of API are an integral part of R&D center to facilitate maximum interaction and ensure seamless process transfer from Laboratory to plant.

The R&D labs work under full Good Laboratory Practices (GLP). Each R&D lab has a process R&D area and its own analytical section. The R&D labs are equipped with latest equipment for carrying out diverse reactions. We continue to add to our knowledge on various reactions as well as try new technologies. Based on this we have successfully commercialized enzyme technology as well as irradiation technology.

During the year under review, we have seen healthy growth in CRAMS projects where we have successfully completed complex projects in time for customers. Some of these are being scaled up currently and some have been already commercialized. Many of our existing processes have been optimized and now perform better giving us the advantage of better returns.

We have observed that more and more customers now look at Dishman as their preferred partner for regulatory market meaning they now have confidence in Dishman capabilities.

On the generics, R & D has continued optimization of the processes developed in-house making them more efficient and thus profitable. We will continue development of new API processes for commercialization and emerge strongly as a leading generic player in addition to our already existing CRAMS strength.

QUALITY, HEALTH, SAFETY & ENVIRONMENT (QHSE) & CORPORATE SOCIAL RESPONSIBILITY:

Dishman is committed to ensuring that those working with the Company are safe at work, and that everyone takes responsibility for achieving this. We include Environment, Health and Safety (EHS) and climate change-related considerations in our business decisions and strive to minimize the environmental impact of our operations on the environment. Measuring, appraising and reporting on environmental, health and safety performance is an important part of continuous improvement in our EHS performance.

Dishman''s EHS organization sets every year as part of strategic planning long term EHS goals, assess resources required to achieve specific goals, and ensure critical business alignment. Dishman considers feedback from internal and external stakeholders in proposing and establishing its long-term goals in manufacturing operations.

Dishman''s products and processes are developed in accordance with strictly defined rules to ensure safety and Health of workers as well as the environment. This is achieved by conducting the Risk Assessment, Identification of significant environmental aspects, Safety Audits, customer audits, HAZOP study and Environment audits. All manufacturing plants follow Responsible Care and audited by Indian Chemical Council.

The Company''s QHSE policy is being implemented, among others, through (i) Maintaining the ''Zero Discharge” of waste water by series of treatment; (ii) Stripper system, Multiple effect evaporator and ATFD for concentrated effluent stream; (iii) Practicing On-site emergency plan by conducting mock-drills; (iv) Replacement of hazardous process / chemical to non-hazardous process for converting to low hazards; (v) Fire detection and protection system available at site; (vi) Conducting intensive QHSE training programs including contract employees; (vii) Participation of employees in Safety committee meetings at all levels and celebrating the National Safety Day, Fire Service Day, World Environment Day and World Earth Day; (viii) Independent safety and environment audits at regular intervals by third party and also in-house; (ix) In-house medical and health facility at site for pre-employment & periodical medical check-up of all employees including contract employees; (x) Blood Donation Camp at site for social cause; (xi) Participation and paper presentation on good practices adopted by Dishman on SHE management in National and International Conferences. (xii) International customers conduct in depth EHS audit and have rated our facility as low risk.

Dishman continues to pursue world class operational excellence on Process Safety Management (PSM). Dishman has established the capabilities within the Company and developed in-house expertise in various facets of PSM. Process Hazard Analysis (PHA) at various plants is being carried out to reduce process safety risks.

In its pursuit of excellence towards sustainable development. Dishman had integrated its ISO:14001 EMS, ISO:9001 QMS and ISO:18001 OSHA management systems. Your Company has also been certified for HACCP and FAMI-Qs for Vitamin D3 plant.

Your Company''s efforts are recognized at State Level, National Level and International level. This year, Company has been awarded the prestigious award as under:

1) ''Shreshtha Suraksha Purashkar” for Bavla site from National Safety Council of India, Mumbai in manufacturing Sector.

2) Winner of Indian Chemical Council''s ICC Award 2011 for Excellence in management of Health, Safety & Environment.

3) CPhI India Pharma Awards 2012 for Innovation in Health, Safety & Environment.

4) Winner Safety Award for Bavla plant and Runner up Award for Naroda plant from Gujarat Safety Council.

CORPORATE SOCIAL RESPONSIBILITY:

The Company aims to maintain good labour management relations though good labour practices. The Company''s Values include selecting, training & developing labour to be creative and empower them to take decisions, so that they respond to all stakeholders with agility, confidence and teamwork.

The Company continued extending help towards social and economic development of the villages and the communities located close to its operations and also providing assistance to improve their quality of life. Company''s intention is to ensure that we meet the development needs of the local community. Dishman has a long and strong tradition of supporting the larger communities that it connects with -education, health, drinking water. The Company has made investments towards implementation of various development activities in the areas near Company''s Plants.

NON CONVERTIBLE DEBENTURE (NCD):

As you are aware, in February, 2010 your Company has issued Secured Redeemable Non Convertible Debentures of Rs.75 crores in the form of Separately Transferable Redeemable Principle Parts (''STRPPs”) of Rs.10 lacs each fully paid-up on private placement basis and the said NCD has been listed on the Bombay Stock Exchange Ltd. (BSE) in the list of securities of F Group – Debt Instrument w.e.f. 13th May, 2010. These NCDs will be redeemed at par at the end of 4th, 5th, 6th & 7th year in ratio of 20:20:30:30, respectively.

In June, 2010, the Company has issued second trench of its Secured Redeemable Non- convertible Debentures (NCD) of Rs.75 crores in the form of Separately Transferable Redeemable Principle Parts (''STRPPs”) of Rs.1 lac each fully paid-up on private placement basis and the said NCDs have been listed on the Bombay Stock Exchange Ltd. (BSE) in the list of securities of F Group – Debt Instruments w.e.f. 17th September, 2010. These NCDs will be redeemed at par at the end of 4th & 5th year in the ratio of 50: 50, respectively.

The Company is paying interest on the said NCDs regularly on the due dates. As per the Circular No.04/2013 dated 11th February, 2013 issued by Ministry of Corporate Affairs, Government of India, Company has created Debenture Redemption Reserve (DRR) for the year ended 31st March, 2013, in respect of NCD – First Trench issued by the Company in February, 2010 and deposited an amount of Rs.2.25 crores, by way of Fixed Deposit with Corporation Bank, being 15% of the maturing amount of Rs.15.00 crores, which is going to be matured during the Financial Year 2013-14.

LISTING ARRANGEMENT:

The equity shares of the Company are listed on the National Stock Exchange of India Ltd., Mumbai (NSE) and Bombay Stock Exchange Ltd., Mumbai (BSE). Annual listing fees for the year 2013-14, as applicable, have been paid before due date to the concerned Stock Exchanges.

The Secured Redeemable Non-Convertible Debentures (NCD) of Rs.150 crores issued by the Company in two trenches are also listed at Bombay Stock Exchange Ltd., Mumbai (BSE). Annual listing fees for the year 2013-14, as applicable, have also been paid before due date to the BSE.

DEPOSITS:

The Company has not accepted any deposits as defined under Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975, as amended, during the year under review.

DIRECTORS:

Mr. Yagneshkumar B. Desai and Mr. Ashok C. Gandhi, Directors of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment.

Mr. Arpit J. Vyas, Whole-time Director of the Company, has been appointed as Managing Director of the Company with effect from 28th May, 2013 by the Board of Directors of the Company at its meeting held on 28th May, 2013, on the recommendation of the Remuneration Committee held on the same day and also approved his re-appointment as a Managing Director of the Company for a further period of five years w.e.f. 1st June, 2014, subject to approval of the Members in general meeting.

Profiles of these Directors as required under clause 49 of the listing Agreement are given in the Annexure to the Notice dated 28th May, 2013.

INSURANCE:

The Company has made necessary arrangements for adequately insuring its insurable interests.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibilities Statement, the Directors, based on the representations received from the Company''s operating management, hereby confirm:

i. that in the preparation of the accounts for the financial year ended 31st March, 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. that the Directors had adopted such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

iii. that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. that the accounts for the financial year ended 31st March, 2013 have been prepared on a ''going concern'' basis.

AUDITORS AND AUDITORS'' REPORT:

M/s. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company hold office until the conclusion of the Thirtieth Annual General Meeting and are eligible for reappointment. M/s. Deloitte Haskins & Sells have informed the Company that, if appointed, their appointment as Auditors will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. Accordingly, the members'' approval is being sought for their appointment as the Auditors of the Company and for fixation of their remuneration for the year 2013-14, at the ensuing Annual General Meeting.

The Notes on Financial Statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments.

COST AUDIT:

M/s. Kiran J. Mehta & Co., Cost Accountants, having been appointed by the Central Government has conducted the audit of the cost accounts in respect of Bulk Drugs and Organic Chemicals products of the Company for the financial year 2011-12 and submitted their report to the Central Government on 27th December, 2012. For filing the Cost Audit Report in XBRL format for the financial year 2011-12, the Ministry of Corporate Affairs has extended the time limit for filing the same with Central Government, upto 28th February, 2013.

The Central Government has also approved the appointment of M/s. Kiran J. Mehta & Co., Practicing Cost Accountants, Ahmedabad as Cost Auditors for conducting cost audit of Bulk Drugs and Organic Chemicals products of the Company for the financial year 2012-13.

ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE:

Information of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is given in the Annexure-I and forms part of this Report.

PARTICULARS OF EMPLOYEES:

Information as per Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in the Annexure-II and forms part of this Report.

SUBSIDIARY COMPANIES & CONSOLIDATED FINANCIAL STATEMENT:

In accordance with the General Circular No.2/2011 dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Accounts and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. However, the financial information of the subsidiary companies is attached along with the consolidated financial statement in compliance with the said circular. The Company will provide the annual accounts of its subsidiary companies and the related detailed information on the specific request made by any Shareholders and the said annual accounts are open for the inspection at the registered office of the Company during office hours on all working days, except Sundays and holidays, between 2.00 p.m. and 4.00 p.m.

As required under Clause 32 of Listing Agreement with the stock exchange(s) and in accordance with the requirements of Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, the Company has prepared Consolidated Financial Statements of the Company and its subsidiaries and are included in the Annual Report.

While preparing the consolidated financial statements, Company has consolidated the accounts of two Joint Venture companies namely Schutz Dishman Biotech Ltd.(22.33% holding by the Company), and Dishman Arabia Ltd. (50% holding by the Company), and one associate company namely, Bhadra Raj Holdings Pvt. Ltd. (40% holding by the Company), as per the requirements of Accounting Standard 27 (AS-27) and Accounting Standard 23 (AS-23) respectively.

As the members are aware, the Company has established a joint venture company namely Dishman Arabia Ltd. (50% holding by Company) in Saudi Arabia. Subsequently, due to non-availability of required infrastructure and other related issues, the JV could not take off and decided for voluntary liquidation of the said JV. A Liquidator was appointed to sell of the assets of the Company. The main assets of the Company consisted of the piece of land, which was acquired to establish the production facility. During the year, liquidator has sold JV''s land and Company will be receiving Rs.1.50 crores (approx.) towards sale proceeds.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION ANALYSIS REPORT:

Your Company follows the principles of effective corporate governance and committed to maintain high standard of corporate governance by adhering to the corporate governance requirements set out by SEBI. The Company has complied with all the mandatory provisions of Corporate Governance as prescribed in the Clause 49 of the Listing Agreement with the Stock Exchanges.

As required by clause 49 of the Listing Agreement, a detailed report on Corporate Governance compliance and Management Discussion and Analysis Report forms a part of Annual Report along with the required Certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in revised Clause 49 of the Listing Agreement.

In compliance with one of the Corporate Governance requirements as per the revised Clause 49 of the Listing Agreement, the Company has formulated and implemented a Code of Conduct for all Board members and senior management personnel of the Company, who have affirmed compliance thereto.

ACKNOWLEDGEMENT:

Your Directors would like to express their grateful appreciation for the continued assistance and co-operation received from the Indian and International Financial Institutions, Banks, Government Authorities, Shareholders and other stakeholders. Your Directors are also grateful to the customers, suppliers and business associates of your Company for their continued co-operation and support. Your Directors wish to place on record their deep sense of appreciation to all the employees for their commendable teamwork and enthusiastic contribution to the growth of Company''s business during the year.

For and on behalf of the Board

Place : Ahmedabad (Janmejay R. Vyas)

Date :28th May, 2013 Chairman & Managing Director


Mar 31, 2012

To The Members of Dishman Pharmaceuticals and Chemicals Limited

The Directors have pleasure in presenting their Report along with the Audited Accounts of the Company for the year ended March 31, 2012.

FINANCIAL RESULTS:

(Rs. in Lacs)

Particulars 2011-2012 2010-2011

Net Sales 46340.06 42081.79

Profit before Tax & other Adjustments 6751.86 4853.92

Less : Current tax 2096.89 987.18

Add : MAT Credit Entitlement - 408.55

Less : Deferred Tax Liability 171.40 262.80

Profit After Tax 4483.57 4012.49

Balance of profit brought forward 2432.45 5795.42

Amount available for Appropriation 6916.02 9807.91

Appropriations:

Transfer to Debenture Redemption Reserve 1250.00 1250.00

Transfer to General Reserve 2500.00 5000.00

Proposed Dividend 968.37 968.37

Tax on Proposed Dividend 157.09 157.09

Balance Carried to Balance Sheet 2040.56 2432.45

DIVIDEND:

Your Company follows a dividend policy by harmonizing the needs of the Company as well as the shareholders to have return on investment. For the financial year 2011-2012, your Directors are pleased to recommend a final dividend of 60% on the paid-up equity share capital of Rs.1613.94 lacs (Rs.1.20/- per equity share of Rs.2/- each) (previous year 60% on the paid-up equity share capital of Rs.1613.94 lacs, i.e. Rs.1.20/- per equity share of Rs.2/- each), which if approved at the forthcoming Annual General Meeting will be paid out of the profits of the Company for the year to all those equity shareholders whose names appear in the Register of Members on the close of business hours as on 14th September, 2012.

PERFORMANCE AND OPERATION REVIEW:

During the year, your company achieved a turnover of Rs.46340.06 lakhs as against Rs. 42081.79 lakhs during the previous year reflecting a growth of 10.12%. Exports constitute Rs.40514.23 lakhs or 87.69% of sales for 2011-12. Profit before tax improved by 39.10% (Rs.6751.86 lakhs during the year as against Rs.4853.94 in the previous year). Profit after tax for the year was Rs.4483.57 lakhs as against Rs.4012.52 Lakhs during previous year.

Earning per share for the year works out to Rs.5.56 per share (previous year Rs.4.97).

The consolidated turnover, which includes results of all its wholly owned subsidiaries, proportionate share in the joint ventures (Schutz Dishman Biotech Ltd., Dishman Arabia Ltd., and Dishman Japan Ltd.) and associate (Bhadra- Raj Holdings Pvt. Ltd.) reported 8.99% growth in sales to Rs.112411.17 lacs for the financial year 2011-12 compared to the previous year's sales of Rs.103135.51 lacs.

Consolidated Profit before tax & other adjustment of the Company for the financial year 2011-12 stood at Rs. 8791.17 lakhs (previous year Rs. 9077.39 lakhs) marginal reduction due to higher operating costs arising from change in product mix. Consolidated Profit after tax for the financial year 2011-12 was Rs. 5675.83 lakhs (previous year Rs. 8001.19 lakhs), the decrease was mainly due to higher tax expenses as the tax concession available to EOU units in India are not available from financial year 2011-12 and the tax rabate available on carry forward loss to one of our subsidiaries is fully adjusted against the profits.

The consolidated Earning per share for the year work out to Rs.7.03 per share (previous year Rs.9.92 per share).

A detailed analysis of the performance of the Company and financial results is given in the Management Discussion and Analysis Report, which forms part of this Report.

ACQUISITION OF CREAPHARM PARENTERALS:

Your Company's wholly owned subsidiary company, namely Carbogen Amcis AG, Switzerland has acquired Creapharm Parenterals, a subsidiary of France based Greapharm Group. Creapharm Parenterals is a contract development and manufacturing organization specializing in liquid, semi-solid and injectable aseptic dosage form. As a part of this acquisition, Creapharm Parenterals has changed its name to Carbogen Amcis SAS. The Acquisition will extend Carbogen Amcis' comprehensive range of development and manufacturing services by adding complementary formulations, lyophilization, services and sterile GMP capabilities for the fast supply of drug products including highly potents, for preclinical studies and clinical trials.

US FDA APPROVALS:

In the month of October, 2011 Food and Drug Administration (FDA) has successfully audited the Veenendaal facility of Dishman Netherlands, a subsidiary of the company for its two products namely Cholesterol HP and Calcitriol. Also, during the year, Company's Wholly Owned Subsidiary company, namely Carbogen Amcis AG., Switzerland has successfully completed US FDA PAI for a new hi potency drug for a US multinational.

UNITS AT BAVLA:

During the year three major expansion units viz. Hypo facility (Unit 9), Disinfectant Division (Unit 10) and Vitamin D (Unit 13) were brought to stream and trial runs have been successfully completed and validation is going on.

RESEARCH AND DEVELOPMENT:

Imagination, Invention & Innovation are the three main pillars of Research and Developments. It is the foundation upon which Company's strategy of manufacturing and marketing of Bulk Drugs, Intermediates (including contract manufacturing), Fine Chemicals, Quats & Specialty chemicals stands.

At Bavla facility, your Company has created a state-of-the-art R & D center comprising three floors and having total built up area of 4500 Sq. Mtrs. The R&D center houses a technical library, 8 R&D laboratories, a formulation development laboratory, an analytical development department, a kilo lab and a cGMP compliant pilot plant. The technical library has a rich collection of books and periodicals covering various chemistry and related topics. It is staffed by competent information scientists.

Your Company offers portfolio of services from process R&D in state-of-the-art laboratories, kilo and pilot plant trials in well equipped kilo labs and pilot plants and scale-up to full scale commercial manufacture in multi purpose production units as well as dedicated facilities for certain products as per customer requirement. By offering technical and manufacturing excellence in multiple locations around the globe, your Company is the global outsourcing partner for the pharmaceutical industry providing innovative development and value for money, long term commercial supply.

Your Company Offers R & D services with a specialization in development process that is truly scalable to commercialization through process research and development aimed at commercially viable optimized processes. Your Company's R & D process is supported by Analytical Services department which provide support in development of new analytical methods for products developed in the R&D labs. Analytical Development Lab is equipped with all modern equipment for the analysis of raw materials, intermediates and finished products. We constantly upgrade the instruments as per the requirements of our customers/products. The QC supports the analytical requirements starting from initial raw material releases to release of Final API. Kilo & Pilot facilities for cGMP production of API are an integral part of R&D center to facilitate maximum interaction and ensure seamless process transfer from Laboratory to plant.

The R&D labs work under full Good Laboratory Practices (GLP). Each R&D lab has a process R&D area and its own analytical section. The R&D labs are equipped with latest equipment for carrying out diverse reactions. We continue to add to our knowledge on various reactions as well as try new technologies. We have now successfully used enzymes at lab scale and also commercial scale for conversions that involve multiple steps if done using conventional chemistry. We have concluded lab runs on irradiation technology for Vitamin D analogues. A small-scale irradiation equipment has been installed for certain niche products. In the kilo lab, we have small reactors ranging from 30 L to 100 L capacity for small scale reactions. The cGMP pilot plant has a range of equipment which is required for the scale up of reactions developed in the labs.

As you know, We now have a separate group of scientists working on generic APIs. This group is involved in developing non-infringing routes to various generic and soon-to-be generic APIs. Last year, non-infringing process for about 10 APIs of various therapeutic categories have been developed in the labs and successfully validated in the pilot plant.

QUALITY, HEALTH, SAFETY & ENVIRONMENT (QHSE) & CORPORATE SOCIAL RESPONSIBILITY:

Your Company's products and processes are developed in accordance with strictly defined rules to ensure safety and Health of workers as well as the environment. This is achieved by conducting the Risk Assessment, Identification of significant environmental aspects, Safety Audits, customer audits, HAZOP study and Environment audits. All manufacturing plants follow responsible care.

The Company's QHSE policy is being implemented, among others, through (i) Maintaining the "Zero Discharge" of waste water by series of treatment; (ii) Incineration of liquid and solid waste at site; (iii) Practicing On-site emergency plan by conducting mock-drills; (iv) Replacement of hazardous process / chemical to non-hazardous process for converting to low hazards; (v) Fire detection and protection system available at site; (vi) Conducting intensive QHSE training programs including contractor employees; (vii) Participation of employees in Safety committee meetings at all levels and celebrating the National Safety Day, Fire Service Day, World Environment Day and World Earth Day; (viii) Independent safety and environment audits at regular intervals by third party and also in-house; (ix) In-house medical and health facility at site for pre-employment & periodical medical check-up of all employees including contract employees; (x) Blood Donation Camp at site for social cause; (xi) Participation and paper presentation on good practices adopted by dishman on SHE management in National and International Conferences. (xii) Become the signatory member of Responsible Care for commitment towards Environment, Health & Safety (EHS) management system. (xiii) Rated low risk facility by various international Customer by conducting EHS audit in depth.

Dishman continues to pursue world class operational excellence on Process Safety Management (PSM). Dishman has established the capabilities within the Company and developed in-house experts in various facets of PSM. Process Hazard Analysis (PHA) at various plants is being carried out to reduce process safety risks.

In its pursuit of excellence towards sustainable development and to go beyond compliance, Dishman integrated its ISO:14001 EMS, ISO:9001 QMS and ISO:18001 OSHA management systems and also Company has initiated the process for certification of HACCP and FAMI- Qs.

Your Company's efforts are recognized by State Level, National Level and International level Awards from time to time. This year Company has been awarded the most prestigious award as:

1) "Suraksha Purashkar" for Bavla site and "Prashansha Patra" for Naroda site from National Safety Council of India, Mumbai in manufacturing Sector.

2) "Platinum Category" Greentech Environment Excellence Award 2011 from Greentech Foundation, Delhi.

CORPORATE SOCIAL RESPONSIBILITY:

The Company continued extending help towards social and economic development of the villages and the communities located close to its operations and also providing assistance to improving their quality of life. Company's intention is to ensure that we meet the development needs of the local community. The company is signatory member of Responsible Care. Dishman has a long and strong tradition of supporting the larger communities that it connects with - from education, health, drinking water. During the year, activities focused on improving the village infrastructure by Health camps at nearby villages, maintaining the Street solar Lights, maintaining the Circle, school buildings and education support etc. The Company has made investments towards implementation of these development activities in the village area of Bavla, Lodariyal, Modasar and Daran. Simultaneous to these, the Company furthered its community development activities as Blood donation camp, Multi-diagnostic Health camps, etc.

NON CONVERTIBLE DEBENTURE (NCD):

As you are aware, in February, 2010 your company has issued Secured Redeemable Non Convertible Debentures of Rs.75 crores in the form of Separately Transferable Redeemable Principle Parts ("STRPPs") of Rs.10 lacs each fully paid-up on private placement basis and the said NCD has been listed on the Bombay Stock Exchange Ltd. (BSE) in the list of securities of F Group - Debt Instrument w.e.f. 13th May, 2010. These NCDs will be redeemed at par at the end of 4th, 5th, 6th & 7th year in ratio of 20:20:30:30 respectively.

In June, 2010, the Company has issued second trench of its Secured Redeemable Non- convertible Debentures (NCDs) of Rs.75 crores in the form of Separately Transferable Redeemable Principal Parts ("STRPPs") of Rs.1 lac each fully paid-up on private placement basis and the said NCDs have been listed on the Bombay Stock Exchange Ltd. (BSE) in the list of securities of F Group - Debt Instruments w.e.f. 17th September, 2010. These NCDs will be redeemed at par at the end of 4th & 5th year in the ratio of 50: 50 respectively.

LISTING ARRANGEMENT:

The equity shares of the Company are listed at the National Stock Exchange of India Ltd., Mumbai (NSE) and Bombay Stock Exchange Ltd., Mumbai (BSE). Annual listing fees for the year 2012-13, as applicable, have been paid before due date to the concerned Stock Exchanges.

The Secured Redeemable Non-Convertible Debentures (NCDs) of Rs.150 crores issued by the Company in two trenches are also listed at Bombay Stock Exchange Ltd., Mumbai (BSE). Annual listing fees for the year 2012-13, as applicable, have also been paid before due date to the BSE.

DEPOSITS:

The Company has not accepted any deposits as defined under Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975, as amended, during the year under review.

DIRECTORS:

Mrs. Deohooti J. Vyas and Mr. Sanjay S. Majmudar, Directors of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. Profiles of these Directors as required under clause 49 of the listing Agreement are given in the Annexure to the Notice dated 31st July, 2012.

INSURANCE:

The Company has made necessary arrangements for adequately insuring its insurable interests.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibilities Statement, the Directors, based on the representations received from the Company's operating management, hereby confirm:

i. that in the preparation of the accounts for the financial year ended 31st March, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. that the Directors had adopted such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

iii. that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. that the accounts for the financial year ended 31st March, 2012 have been prepared on a 'going concern' basis.

AUDITORS AND AUDITORS' REPORT:

M/s. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company hold office until the conclusion of the Twenty Ninth Annual General Meeting and are eligible for reappointment. M/s. Deloitte Haskins & Sells have informed the Company that, if appointed, their appointment as Auditors will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. Accordingly, the members' approval is being sought for their appointment as the Auditors of the Company and for fixation of their remuneration for the year 2012-2013, at the ensuing Annual General Meeting.

The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. COST AUDIT:

M/s. Kiran J. Mehta & Co., Cost Accountants, having been appointed by the Central Government has conducted the audit of the cost accounts in respect of Bulk Drugs activity of the Company for the financial year 2010-11 and submitted their report to the Central Government on 27th September, 2011.

The Central Government has also approved the appointment of M/s. Kiran J. Mehta & Co., Practicing Cost Accountants, Ahmedabad as Cost Auditors for conducting cost audit of Bulk Drugs activity of the company for the financial year 2011-12.

ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE:

Information of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is given in the Annexure-I and forms part of this Report.

PARTICULARS OF EMPLOYEES:

Information as per Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in the Annexure-II and forms part of this Report.

SUBSIDIARY COMPANIES & CONSOLIDATED FINANCIAL STATEMENT:

In accordance with the General Circular No.2/2011 dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Accounts and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. However the financial information of the subsidiary companies is attached along with the consolidated financial statement in compliance with the said circular. The Company will provide the annual accounts of its subsidiary companies and the related detailed information on the specific request made by any shareholders and the said annual accounts are open for the inspection at the registered office of the Company during office hours on all working days, except Sundays and holidays, between 2.00 p.m. and 4.00 p.m.

As required under Clause 32 of Listing Agreement with the stock exchange(s) and in accordance with the requirements of Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, the Company has prepared Consolidated Financial Statements of the Company and its subsidiaries and are included in the Annual Report.

While preparing the consolidated financial statements, Company has consolidated the accounts of two Joint Venture companies namely Schutz Dishman Biotech Ltd.(22.33% holding by the Company), and Dishman Arabia Ltd. (50% holding by the Company), and one associate company namely, Bhadra Raj Holdings Pvt. Ltd. (40% holding by the Company), as per the requirements of Accounting Standard 27 (AS-27) and Accounting Standard 23 (AS-23) respectively.

During the year, Company has invested AED 0.8 million in the share capital of its wholly owned subsidiary Company namely Dishman Middle East (FZE).

In the month of March, 2012, the Company has agreed, subject to approval of the Dishman FZE's two lenders and compliance to the rules and regulations of UAE government, to disinvest its shareholding in Dishman FZE, a 100% wholly owned subsidiary of the Company to Nami Trading FZ LLC, a UAE based company and received the agreed amount. The Company has received approval for the said disinvestments from one of the term lenders of Dishman FZE and for other the request for approval is in process. Accordingly, the financial results of Dishman FZE, have been incorporated up to the date of the amount received by the Company for the said disinvestments, in accordance with the applicable requirements of Accounting Standard AS-21 on "Consolidated Financial Statements".

During the year, the Company's holding in JV namely CAD Middle East Pharmaceuticals Inds., established in Saudi Arabia, has been reduced from 30% to 14.9%, due to increase in shareholding by other JV Partners.

Dishman LLP, a limited liability partnership (LLP) incorporated in UK and subsidiary of the Company, has been dissolved w.e.f. 10th July, 2012, on the application made by the LLP to the Companies House, London for striking off its name from the Companies Registrar, UK.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION ANALYSIS REPORT:

Your Company follows the principles of effective corporate governance and committed to maintain highest standard of corporate governance by adhering to the corporate governance requirements set out by SEBI. The Company has complied with all the mandatory provisions of Corporate Governance as prescribed in the revised Clause 49 of the Listing Agreement with the Stock Exchanges.

As required by clause 49 of the Listing Agreement, a detail report on Corporate Governance compliance and Management Discussion and Analysis Report forms a part of Annual Report along with the required Certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in revised Clause 49 of the Listing Agreement.

In compliance with one of the Corporate Governance requirements as per the revised Clause 49 of the Listing Agreement, the Company has formulated and implemented a Code of Conduct for all Board members and senior management personnel of the Company, who have affirmed compliance thereto.

ACKNOWLEDGEMENT:

Your Directors would like to express their grateful appreciation for the continued assistance and cooperation received from the Indian and International Financial Institutions, Banks, Government Authorities, Shareholders and other stakeholders. Your Directors are also grateful to the customers, suppliers and business associates of your Company for their continued co-operation and support. Your Directors wish to place on record their deep sense of appreciation to all the employees for their commendable teamwork and enthusiastic contribution to the growth of Company's business during the year.

For and on behalf of the Board

Place : Ahmedabad (Janmejay R. Vyas)

Date : 31st July, 2012 Chairman & Managing Director


Mar 31, 2011

The Directors have pleasure in presenting their Report along with the Audited Accounts of the Company for the year ended March 31, 2011.

FINANCIAL RESULTS:

(Rs. in Lacs)

Particulars 2010-2011 2009-2010

Net Sales 41957.29 35260.88

Profit before Tax & other Adjustments 4855.95 7940.69

Less: Current tax 987.18 1371.32

Add :MAT Credit Entitlement 408.55 1150.75

Less: Deferred Tax Liability 262.80 683.25

Profit After Tax 4014.52 7036.87

Add/(Less): Prior Periods Adjustments (Net) (2.03) 110.00

Less: Short Provision of Income tax for earlier years — 39.52

Net Profit 4012.49 7107.35

Balance of profit brought forward 5795.42 7942.27

Amount available for Appropriation 9807.91 15049.62 Appropriations:

Transfer to Debenture Redemption Reserve 1250.00 625.00

Transfer to General Reserve 5000.00 7500.00

Proposed Dividend 968.37 968.37

Tax on Proposed Dividend 157.09 160.83

Balance Carried to Balance Sheet 2432.45 5795.42

DIVIDEND:

For the financial year 2010-2011, your Directors are pleased to recommend a final dividend of 60% on the paid-up equity share capital of Rs.1613.94 lacs (Rs.1.20/- per equity share of Rs.2/- each) (previous year 60% on the paid-up equity share capital of Rs.1613.94 lacs, i.e. Rs.1.20/- per equity share of Rs.2/- each), which if approved at the forthcoming Annual General Meeting will be paid out of the profits of the Company for the year to all those equity shareholders whose names appear in the Register of Members on the close of business hours as on 15th July, 2011.

PERFORMANCE AND OPERATION REVIEW:

During the year, your Company achieved a turnover of Rs.41957.29 lakhs as against Rs.35260.88 lakhs during the previous year reflecting a growth of 18.99%. Exports constitute Rs.30029.91 lakhs or 71.57% of sales for 2010-11. Other income earned during the year stood at Rs.275.36 lakhs as against Rs.315.28 lakhs in the previous year. Profit before tax decreased by 38.85% (Rs.4855.95 lakhs during the year as against Rs.7940.69 lakhs in the previous year). Profit after tax for the year was Rs.4014.52 lakhs as against Rs.7036.87 lakhs during previous year.

Earning per share for the year works out to Rs.4.97 per share (previous year Rs.8.81).

The consolidated turnover, which includes results of all its wholly owned subsidiaries, proportionate share in the joint ventures (Schutz Dishman Biotech Ltd., CAD Middle East Pharmaceutical Inds., Dishman Arabia Ltd. and Dishman Japan Ltd.) and associate (Bhadra- Raj Holdings Pvt. Ltd.) reported 8.25% growth in sales to Rs.99084.40 lakhs for the current financial year 2010-11 compared to the previous years sales of Rs.91535.74 lakhs.

Consolidated Profit before tax & other adjustment of the Company stood at Rs.9210.63 lakhs (previous year Rs. 13252.88 lakhs) and profit after tax for the year at Rs.8134.43 lakhs (Previous year Rs.11757.63 lakhs) for the current financial year 2010-11.

The consolidated Earning per share for the year works out to Rs.9.92 per share (previous year Rs.14.55 per share).

Lower sales and profit during the year is mainly due to global recession and inventory rationalization at customers end.

A detailed analysis of the performance of the Company and financial results is given in the Management Discussion and Analysis Report, which forms part of this Report.

Vitamin D

During the year, your Company started setting up a new unit to manufacture Vitamin D at Bavla. The unit is expected to be ready for trail production during the second quarter of FY 2011-12.

Disinfectant Division

Your Company has set up a manufacturing unit at Bavla to manufacture Antiseptics and Disinfectants for application in healthcare and related industries. Trial production is expected from the unit by end of June, 2011.

New High-Potency Manufacturing Unit (Unit 9)

Your directors are pleased to inform you that Unit 9 (HYPO facility) has successfully completed all validation procedures for the containment of highly active APIs. Unit 9 has smoothly undergone an in-depth and scientifically rigorous qualification process of our containment equipment, led by an external consultancy with a strong reputation and expertise in industrial hygiene. HYPO facility set up at Bavla completed containment performance validation by VEGA Environment Consultants Ltd. and ready for trial production in the first quarter of 2011-12.

RESEARCH AND DEVELOPMENT:

Research and Development is the foundation upon which Companys strategy of manufacturing and marketing of Bulk Drugs, Intermediates (including contract manufacturing), Fine Chemicals, Quats & Specialty chemicals stands. Your Company offers portfolio of services from process R&D in state-of-the-art laboratories, kilo and pilot plant trials in well equipped kilo labs and pilot plants and scale-up to full scale commercial manufacture in multi purpose production units as well as dedicated facilities for certain products as per customer requirement. By offering technical and manufacturing excellence in multiple locations around the globe, your Company is the global outsourcing partner for the pharmaceutical industry providing innovative development and value for money, long term commercial supply.

Your Company Offers R & D services with a specialization in development process that are truly scalable to commercialization through process research and development. Your Companys R & D process is supported by Analytical Services department which provided support in development of new analytical methods for products developed in the R&D labs. Analytical Development Lab is equipped with all modern equipment for the analysis of raw materials, intermediates and finished products. We continually upgrade the instruments as per the requirements of our customers/products. The Quality Control (QC) supports the analytical requirements starting from initial raw material releases to release of Final API.

Kilo & Pilot facilities for cGMP production of API are an integral part of R&D center to facilitate maximum interaction and ensure seamless process transfer from Laboratory to plant.

At Bavla facility, your Company has created a state-of-the-art R & D center comprising three floors and having total built up area of 4500 Sq. Mtrs. The R&D center houses a technical library, 8 R&D laboratories, a formulation development laboratory, an analytical development department, a kilo lab and a cGMP compliant pilot plant. The technical library has a rich collection of books and periodicals covering various chemistry and related topics. It is staffed by competent persons.

The R&D labs work under full Good Laboratory Practices (GLP). Each R&D lab has a process R&D area and its own analytical section. The R&D labs are equipped with latest equipment for carrying out diverse reactions. We continue to add to our knowledge on various reactions as well as try new technologies. We have now successfully used enzymes at lab scale and also commercial scale for conversions that involve multiple steps if done using conventional chemistry. We have concluded lab runs on irradiation technology for Vitamin D analogues. A small-scale irradiation equipment has been installed for certain niche products.

In the kilo lab, we have small reactors ranging from 30 L to 100 L capacity for small scale reactions. The cGMP pilot plant has a range of equipment which is required for the scale up of reactions developed in the labs.

We now have a separate group of scientists working on generic APIs. This group is involved in developing non-infringing routes to various generic and soon-to-be generic APIs.

In the year 2010-2011, non-infringing process for about 10 APIs of various therapeutic categories have been developed in the labs and successfully validated in the pilot plant. Regulatory filing for these APIs is under progress.

For the year 2011-2012, 10 new target APIs have been identified and work has already started on some of them with the first few being ready for pilot validation by the middle of this year.

In addition to APIs, this year 100 R&D CRAMS projects have been completed at lab and pilot level. Another 80 are in various stages of development.

During the current year, we have worked on about 140 R&D CRAMS projects. We added 5 new customers for whom we completed 9 projects at various scales. Negotiations are underway for repeat manufacturing campaigns for some of them.

QUALITY, HEALTH, SAFETY & ENVIRONMENT (QHSE) & CORPORATE SOCIAL RESPONSIBILITY :

Dishmans commitment towards excellence in Health, Safety and Environment is one of the Companys core values by complying with the laws and regulations first, and then going beyond the mandate to keep our planet safe for future generations. Minimizing the environment impact of our operations assumes utmost priority. The Company is unwavering in its policy of safety of persons overrides all production targets, which drives all employees to continuously break new grounds in safety management for the benefit of the people, property, environment and the communities in which Dishman operates. Our comprehensive QHSE policy, as well as dedicated measures by conducting the Risk Assessment, Identification of significant

environmental aspects, Safety Audits, customer audits, HAZOP study and Environment audits of all manufacturing plants and signatory commitment of Responsible Care. Greatest emphasis is given to safety measures for minimizing accidents and incidents. The year 2010-11 saw significant steps taken in the direction of building a full-proof and robust Safety, Health & Environment system in the organization.

While the main focus of occupational health services is on medical surveillance of employees, they also carry out extensive health education and awareness sessions, health exhibitions and diagnostic camps. All employees, irrespective of the nature of their work or location, undergo regular periodic medical examinations. The medical check up facility also coveres the Contractors employees engaged at the manufacturing sites. State-of-the-art Occupational Health Centres (OHCs) have been established. All employees are subjected to health risk assessments and appropriate measures are taken to prevent medical complications. Dishman celebrated the World Environment Day, Earth Day, Fire day, Safety Day, etc and created environmental awareness among employees and surrounding communities.

Dishman continues to pursue world class operational excellence on Process Safety Management (PSM). Dishman has capabilities and has developed in-house experts in various facets of PSM. Process Hazard Analysis (PHA) at various plants has been initiated to address and reduce process safety risks.

In its pursuit of excellence towards sustainable development and to go beyond compliance, Dishman integrated its ISO:14001 EMS, ISO:9001 QMS and ISO:18001 OSHA management systems. A management framework with defined structures, roles and responsibilities, group standards, audits and training has been further strengthened. Continuing the journey towards world class environmental performance through systems and robust processes, covering various environmental aspects were developed and issued. This was further supported by the development and release of third party audit protocols for the standards. Dishman strongly believes that these actions will be the change agent for reducing the Companys environmental risks and maintaining the "Zero Discharge" for liquid effluent.

Environment impact assessment and risk analysis have been performed for all new and major expansion projects. Dishman continues to give top priority to maintenance and performance improvements of all pollution abatement facilities like effluent treatment plants, air emission control. In these improvement efforts, audits play an important role. Dishman has inculcated a habit to be in harmony with nature and in this context, afforestation, maintenance of green belts, gardens, vermi-compost of waste and its use as manure are routine.

Your Companys efforts are recognized by State Level, National Level and International level Awards from time to time. This year Company has been awarded the most prestigious awards as:

1. State level winner of Safety Award from Gujarat Safety Council in Drugs and pharmaceutical, Food and Dairy sector continuous for the sixth year for Bavla site and Runner award for Fourth year of Naroda site.

2. "Suraksha Purashkar" for Bavla site and "Prashansha Patra" for Naroda site from National Safety Council of India, Mumbai in manufacturing Sector.

3. "Gold Category" Greentech Safety Award 2011 from Greentech Foundation, Delhi.

CORPORATE SOCIAL RESPONSIBILITY:

Dishman has a long and strong tradition of supporting the larger communities that it connects with – from education, health, drinking water.

Our intention is to ensure that we meet the development needs of the local community. The Company is signatory member of Responsible Care. The Company continued extending helping hand towards social and economic development of the villages and the communities located close to its operations and also providing assistance to improving their quality of life. During the year, activities focused on improving the village infrastructure by constructing Road dividers, Health camps at nearby villages, Solar Street Lights, Developing the Circle, school buildings, education support etc. The Company has made investments towards implementation of these development activities in the village area of Bavla, Lodariyal, Modasar and Daran. Simultaneous to these, the Company furthered its community development activities as Blood donation camp, Health camps, etc. The Company also assisted in repairing of village schools at other nearby villages.

SPECIAL ECONOMIC ZONE [SEZ] PROJECT:

During the year Company has been allotted land admeasuring 299151 sq. mtrs. by Dishman Infrastructure Ltd. (DIL) in the SEZ developed by them. An application has been made to the Development Commissioner for their approval for setting up the units in the said Pharma & Fine Chemicals SEZ of DIL. Your Company has decided to do the future expansion in the SEZ. DIL has started the development work at the SEZ site and first phase of development work will be completed by March, 2012.

FOREIGN CURRENCY CONVERTIBLE BONDS [FCCBs]:

As you are aware, in August, 2005, the Company has issued 0.5% Foreign Currency Convertible Bonds (FCCBs / Bonds), due 2010 convertible into equity shares of the Company, for US$50 million. The said FCCBs have been listed on the Singapore Exchange Securities Trading Ltd. (SGX-ST). Out of US$ 50.00 million US $ 47.50 million FCCBs were converted into equity shares of the Company.

The Company has not received any conversion Notice from the Bondholder for conversion of Bonds into Equity Shares of the Company upto 18th August, 2010. As per the terms of the said FCCBs outstanding FCCBs of US$ 2.50 million were redeemed on maturity i.e. on 19th August, 2010.

NON CONVERTIBLE DEBENTURES (NCD):

In February, 2010, your Company has issued Secured Redeemable Non Convertible Debenture of Rs.75 crores in form of Separately Transferable Redeemable Principle Parts ("STRPPs") of Rs.10 lacs each fully paid-up on private placement basis and the said NCD has been listed on the Bombay Stock Exchange Ltd. (BSE) in the list of securities of F Group – Debt Instrument w.e.f 13th May, 2010.

In June, 2010, the Company has issued second trench of its Secured Redeemable Non- convertible Debentures (NCD) of Rs.75 crores in the form of Separately Transferable Redeemable Principle Parts ("STRPPs") of Rs.1.00 lac each fully paid-up on private placement basis for augmenting medium to long term resources of the Company, including regular capex and retirement of high cost debt. These NCD will be redeemed at par at the end of 4th & 5th year in the ratio of 50: 50 respectively. The said NCD has been listed on the Bombay Stock Exchange Ltd. (BSE) and BSE has admitted the said NCD to deal on the Exchange in the list of securities of F Group – Debt Instruments w.e.f. 17th September, 2010.

LISTING ARRANGEMENT:

The equity shares of the Company are listed at the National Stock Exchange of India Ltd., Mumbai (NSE) and Bombay Stock Exchange Ltd., Mumbai (BSE). Annual listing fees for the year 2011-12, as applicable, have been paid before due date to the concerned Stock Exchanges.

The Secured Redeemable Non-Convertible Debentures (NCD) of Rs.150.00 crores issued by the Company in two trenches is also listed at Bombay Stock Exchange Ltd., Mumbai (BSE). Annual listing fees for the year 2011-12, as applicable, have also been paid before due date to the BSE.

DEPOSITS:

The Company has not accepted any deposits as defined under Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975, as amended, during the year under review.

DIRECTORS:

Mr Arpit J.Vyas and Mr. Ashok C. Gandhi, Directors of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for Re-Appointment.

The terms of appointment of Mrs. Deohooti J. Vyas as Whole-time Director of the Company expires on 2nd September, 2011. The Remuneration Committee and Board of Directors have passed the necessary resolution for re-appointment of Mrs. D. J. Vyas as Whole-time Director for a period of 5 (Five) years w.e.f. 3rd September, 2011 and increase in remuneration payable to her to Rs.10.00 lacs (Rupees Ten Lacs) per month subject to approval of members.

Profiles of these Directors as required under clause 49 of the listing Agreement are given in the Annexure to the Notice dated 26th May,2011.

INSURANCE:

The Company has made necessary arrangements for adequately insuring its insurable interests.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors Responsibilities Statement, the Directors, based on the representations received from the Companys operating management, hereby confirm:

i. that in the preparation of the accounts for the financial year ended 31st March, 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. that the Directors had adopted such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

iii. that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. that the accounts for the financial year ended 31st March, 2011 have been prepared on a going concern basis.

AUDITORS:

M/s. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company hold office until the conclusion of the Twenty Eighth Annual General Meeting and are eligible for reappointment. M/s. Deloitte Haskins & Sells have informed the Company that, if appointed, their appointment as Auditors will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. Accordingly, the members approval is being sought for their appointment as the Auditors of the Company and for fixation of their remuneration for the year 2011-2012, at the ensuing Annual General Meeting.

COST AUDIT:

The Central Government by an order No.52/77/CAB-2010 dated 16th December, 2010 directed the Company to conduct an audit of the cost account of the Company in respect of Bulk Drugs activity, for the year ending 31st March, 2011 and also for every financial year thereafter continuously, until further orders.

M/s. Kiran J. Mehta & Co., Practicing Cost Accountants, Ahmedabad has been appointed by the Board of Directors of the Company with the previous approval of Central Government to conduct the audit of the cost accounts in respect of Bulk Drugs activity of the Company for the financial year 2010-11.

ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE:

Information of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is given in the Annexure-I and forms part of this Report.

PARTICULARS OF EMPLOYEE:

Information as per Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in the Annexure-II and forms part of this Report.

SUBSIDIARY COMPANIES & CONSOLIDATED FINANCIAL STATEMENT:

The Ministry of Corporate Affairs, Government of India vide its order No.47/42/2011 CL III dated 21st January, 2011 issued under section 212(8) of the Companies Act, 1956 has granted an exemption to the Company from attaching the accounts along with the report of the Board of Directors and Auditors as required by section 212(1) of the Companies Act, 1956, of its 17 (seventeen) subsidiary companies namely i) Dishman Europe Limited, ii) Dishman U.S.A. Inc., iii) Dishman International Trading (Shanghai) Co. Ltd., iv) Dishman FZE, v) Dishman Switzerland Ltd., vi) Dishman Pharma Solutions AG., vii) Dishman Pharmaceuticals & Chemicals (Shanghai) Co. Ltd., viii) Carbogen Amcis AG., ix) Carbogen Amcis Limited (Name was changed from "Synprotec DCR Limited" w.e.f. 05/07/2007), x) Dishman Care Limited xi) Innovative Ozone Service Inc. (IO3S), xii) Dishman Netherlands B.V. (Name was changed from "Pharma Syn. B.V." w.e.f. 08/11/2007), xiii) Cohecie Fine Chemicals B.V. (Name was changed from "Dishman Holland B.V." w.e.f.22/09/2010), xiv) Dishman Japan Ltd., xv) Carbogen Amcis (India) Ltd., xvi) Dishman Australasia Pty. Ltd., and xvii) Dishman LLP, to the balance sheet of the Company for the financial year ended on 31st March, 2011.

The Company will provide the annual accounts of its subsidiary companies and the related detailed information on the specific request made by any investors and the said annual accounts are open for the inspection at the registered office of the Company during office hours on all working days, except Sundays and holidays, between 2.00 p.m. and 4.00 p.m. Particulars relating to the Subsidiary Companies, as per the condition (iii) of the above mentioned order of the Ministry of Corporate Affairs, are attached alongwith the consolidated financial statement.

As required under Clause 32 of Listing Agreement with the stock exchange(s) and in accordance with the requirements of Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, the Company has prepared Consolidated Financial Statements of the Company and its subsidiaries and are included in the Annual Report.

While preparing the consolidated financial statements, Company has consolidated the accounts of three Joint Venture companies namely Schutz Dishman Biotech Ltd. (22.33% holding by the Company), CAD Middle East Pharmaceutical Industries (30% holding by the Company), and Dishman Arabia Ltd. (50% holding by the Company), and one associate Company namely, Bhadra Raj Holdings Pvt. Ltd. (40% holding by the Company), as per the requirements of Accounting Standard 27 (AS- 27) and Accounting Standard 23 (AS-23) respectively.

In the month of April, 2010, Company has invested USD 0.7 million into the share capital of its wholly owned subsidiary Company namely Dishman Pharmaceuticals & Chemicals (Shanghai) Co. Ltd., incorporated in China. During the year, The Company has also invested JPY 42.50 million in the share capital of the Japanese subsidiary Company namely Dishman Japan Ltd., in the month of February, 2011.

During the year, the name of Companys stepdown subsidiary Company namely Dishman Holland B.V. has been changed to Cohecie Fine Chemicals B.V. w.e.f. 22/09/2010.

During the year, Company has formed wholly owned subsidiary Company, namely Dishman Middle East (FZE), in Sharjah, U.A.E. and in the month of April, 2011, Company has invested AED 150,000 (Arab Emirates Dirham One Hundred Fifty Thousand) into equity shares of Dishman Middle East (FZE).

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION ANALYSIS REPORT:

Your Company follows the principles of effective corporate governance. The Company has complied with the mandatory provisions of Corporate Governance as prescribed in the revised Clause 49 of the Listing Agreement with the Stock Exchanges.

As required by clause 49 of the Listing Agreement, a detail report on Corporate Governance compliance and Management Discussion and Analysis Report forms a part of Annual Report along with the required Certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in revised Clause 49 of the Listing Agreement.

In compliance with one of the Corporate Governance requirements as per the revised Clause 49 of the Listing Agreement, the Company has formulated and implemented a Code of Conduct for all Board members and senior management personnel of the Company, who have affirmed compliance thereto.

ACKNOWLEDGEMENT:

Your Directors would like to express their grateful appreciation for the continued assistance and cooperation received from the Indian and International Financial Institutions, Banks, Government Authorities and Shareholders. Your Directors are also grateful to the customers, suppliers and business associates of your Company for their continued co-operation and support. Your Directors wish to place on record their deep sense of appreciation to all the employees for their commendable teamwork and enthusiastic contribution to the growth of Companys business during the year.

For and on behalf of the Board

Place: Ahmedabad (Janmejay R. Vyas)

Date: 26th May, 2011 Chairman & Managing Director


Mar 31, 2010

The Directors have pleasure in presenting their Report along with the Audited Accounts of the Company for the year ended March 31, 2010.

FINANCIAL RESULTS:

(Rs. in Lacs) Particulars 2009-2010 2008-2009 Net Sales 35260.88 41588.47 Profit before Tax & other Adjustments 7940.69 9505.81 Less : Current tax 1371.32 1075.85 Add : MAT Credit Entitlement 1150.75 1025.69 Less : Deferred Tax Liability 683.25 167.61 Less : Fringe Benefit Tax - 32.41 Profit After Tax 7036.87 9255.63 Add/(Less): Prior Periods Adjustments (Net) 110.00 (12.06) Less:Short Provision of Income tax for earlier years 39.52 29.06 Net Profit 7107.35 9214.51 Balance of profit brought forward 7942.27 4860.70 Amount available for Appropriation 15049.62 14075.21 Appropriations: Transfer to Debenture Redemption Reserve 625.00 - Transfer to General Reserve 7500.00 5000.00 Proposed Dividend 968.37 968.37 Tax on Proposed Dividend 160.83 164.57 Balance Carried to Balance Sheet 5795.42 7942.27

DIVIDEND:

For the financial year 2009-2010, your Directors are pleased to recommend a final dividend of 60% on the paid-up equity share capital of Rs.1613.94 lacs (Rs.1.20/- per equity share of Rs.2/- each) (previous year 60% on the paid-up equity share capital of Rs.1613.94 lacs, i.e. Rs.1.20/- per equity share of Rs.2/- each), which if approved at the forthcoming Annual General Meeting will be paid out of the profits of the Company for the year to all those equity shareholders whose names appear in the Register of Members on the close of business hours as on 16th July, 2010.

PERFORMANCE AND OPERATION REVIEW:

During the year, your company achieved a turnover of Rs.35260.88 lakhs as against Rs. 41588.47 lakhs during the previous year reflecting a degrowth of 15.21%. Exports constitute Rs.31811 lakhs or 90% of sales for 2009-’10. Other income earned during the year stood at Rs.315.28 lakhs as against Rs.94.16 lakhs in the previous year. Profit before tax degrown by about 16.46% (Rs.7940.69 lakhs during the year as against Rs.9505.81 in the previous year). Profit after tax for the year was Rs.7036.87 lakhs as against Rs.9255.63 Lakhs during previous year.

Earning per share for the year works out to Rs.8.81 per share on absolute basis and Rs.8.74 on diluted basis as against Rs.11.43 per share on absolute basis and Rs.11.33 on diluted basis.

The consolidated turnover, which includes results of all its wholly owned subsidiaries, proportionate share in the joint ventures (Schutz Dishman Biotech Ltd., CAD Middle East Pharmaceutical Inds., Dishman Arabia Ltd., and Dishman Japan Ltd.) and associate (Bhadra- Raj Holdings Pvt. Ltd.) reported 13.84% degrowth in sales to Rs.91535.74 lacs for the current financial year 2009-10 compared to the previous year’s sales of Rs. 106235.78 lacs.

Consolidated Profit before tax & other adjustment of the Company stood at Rs.13252.88 lakhs (previous year Rs. 15745.56 lakhs) and profit after tax for the year at Rs.11757.63 lakhs (Previous year Rs. 14673.66 lakhs) for the current financial year 2009-10.

The consolidated Earning per share for the year works out to Rs.14.55 per share as against Rs.18.13 per share on absolute basis and Rs.14.44 per share against Rs.17.98 per share on diluted basis.

Lower sales and profit during the year is mainly due to global recession and inventory rationalization at customers end.

A detailed analysis of the performance of the company and financial results is given in the Management Discussion and Analysis Report, which forms part of this Report.

New High-Potency Manufacturing Unit

Your Directors have pleasure to inform about the commissioning of its World-class High Containment API facility for manufacture of a range of Oncology APIs and other related high potency products at its Bavla complex, near Ahmedabad from January, 2010. This facility has been set up primarily by the Technical Team of Dishman’s Swiss Subsidiary namely Carbogen Amcis AG. with active support of local Dishman team. This facility is, to the best of our knowledge, the only one of its kind not only in India, but in the entire Asia and comparable with very few such facilities in the world. This is a significant milestone in the history of the company and opens up huge opportunities for manufacture of high potency oncology APIs for manufacture of High value Oncology APIs and similar product on Contract Manufacturing Basis for the leading pharmaceuticals companies in the World.

Vitamin D Analogue manufacturing facility

A new Vitamin-D Analogue manufacturing facility was inaugurated on 27 November 2009 at Veenendaal, the Netherlands. The laboratory consists of 6 dedicated clean rooms with a scale of operation of up to 1 kg in addition to all standard laboratory facilities.

US FDA Approval

In the month of February, 2010, US FDA team has successfully completed inspection of Dishman’s EOU facility situated at its Naroda works, Ahmedabad and approved the said facility for API production for US market.

TGA Approval

Your Company’s Bavla Facilities are approved by Therapeutic Goods Administration (TGA), Department of Health and Ageing, Australian Government, Australia, for all Active Pharmaceutical Ingredients (API) production.

Sratagic alliance with Codexis Inc.

Your Company has finalized a Strategic alliance with California based biotechnology Company, Codexis Inc, to utilize the Enzymatic Biocatalysts Technology. As per the Agreement between both the parties i.e. DISHMAN and CODEXIS, your company use codexis technology to manufacture building blocks, intermediates and API’s for innovator pharmaceutical companies. This agreement make your Company the only Indian company to have High Grade Technology in the Indian CRAMS Segment. It adds another dimension to the already extensive portfolio of services offered by the Dishman Group.

The technology deals with reduction of chiral Compounds in the APIs and provides cheaper, cleaner, greener processes of manufacturing at a lower cost of production. Your Company will be offering these facilities to its customers and codexis will be offering a wide selection of enzymes for the pharma synthesis of Chiral Compounds.

This alliance provides considerable benefits to Dishman and put it far ahead in the race of companies dealing in the CRAMS Business. By utilizing this biocatalyst Technology, Dishman can reduce the quantity of Chiral Compound that is mainly used in preparation of drugs in larger quantity.

Disinfectant Division

As you are aware, your Company through its disinfection division offers a range of Antiseptics and Disinfectants for application in healthcare and related industries it has developed a unique position in bulk actives in the area of disinfectants. Company has established a new wholly owned subsidiary company in the name of Dishman Care Limited for the Disinfectant project and invested seed capital of Rs.5.00 lacs in the month of March, 2010.

RESEARCH AND DEVELOPMENT:

Imagination, Invention & Innovation are the three main pillars of Research and Developments. It is the foundation upon which Company’s strategy of manufacturing and marketing of Bulk Drugs & Intermediates (including contract manufacturing) and Fine Chemicals, Quats & Specialty chemicals stands. Your company offers portfolio of services from process of R&D through kilo and pilot supply to full scale & commercial manufacture by providing built and Dedicated Facilities. By offering technical and Manufacturing excellence in multiple Locations around the glob, your Company is the global outsourcing partner for the pharmaceutical industry providing innovative development to value for money, long term commercial Supply.

Your company Offers R & D services with a specialization in development process that are truly scalable to commercialization through Process of Research, Process of development & optimization. Your Company’s R & D process is supported by Analytical Services starting from initial Raw material releases to release of Final API, Kilo & Pilot facilities for cGMP production of API are an integral part of R&D center to facilitate maximum interaction and ensure seamless process transfer from Laboratory to plant.

At Bavla facility, your Company has created a state-of-the-art R & D center comprising three floors and having total built up area of 4500 Sq. Mtrs. The R&D center houses a technical library, 8 R&D laboratories, a formulation development laboratory, an analytical development department, a kilo lab and a cGMP compliant pilot plant. The technical library has a rich collection of books and periodicals covering various chemistry and related topics. It is staffed by competent information scientists.

The R&D labs work under full Good Laboratory Practices (GLP). Each R&D lab has a process R&D area and its own analytical section. The R&D labs are equipped with latest equipment for carrying out diverse reactions. We continue to add to our knowledge on various reactions as well as try new technologies. As an example, we have successfully run enzymatic reaction in the laboratories and are now planning scale-up. Also, we are working on irradiation technology in our labs as well as kilo lab. For this, small-scale irradiation equipment has been installed for certain niche products. In the kilo lab, we have small reactors ranging from 30 L to 100 L capacity for small scale reactions. The cGMP pilot plant has a range of equipment which is required for the scale up of reactions developed in the labs.

Analytical Development Lab is equipped with all modern equipments for the analysis of raw materials, intermediates and finished products. We continually upgrade the instruments as per the requirements of our customers/products.

We now have a separate group of scientists working on generic APIs. This group is involved in developing non-infringing routes to various generic and soon-to-be generic APIs.

In addition to APIs, this year 120 R&D CRAMS projects have been completed at lab and pilot level. Another 80 are in various stages of development.

SPECIAL ECONOMIC ZONE [SEZ] PROJECT:

As you are aware, Pharmaceuticals & Chemicals Special Economic Zone (SEZ) project of Dishman Infrastructure Ltd. (DIL), in which Company had invested seed Capital, is notified by the Central Government vide Notification dated 13th November, 2009.

The said Pharma SEZ of DIL is located close to the Company’s existing works at Bavla and to avail all the Tax Benefits available to SEZ Units, Company has decided to invest into the said Pharma SEZ as a part of Company’s expansion plan. DIL has agreed to allocate the land approx. 3.00 Lacs Sq. Mtrs. to the Company as per the earlier mutual agreement entered into with Company. DIL has started the development work at the SEZ site and first phase of development will be completed within 15 months.

LISTING ARRANGEMENT:

The equity shares of the Company are listed at the National Stock Exchange of India Ltd., Mumbai (NSE) and Bombay Stock Exchange Ltd., Mumbai (BSE). Annual listing fees for the year 2010-11, as applicable, have been paid before due date to the concerned Stock Exchanges.

FOREIGN CURRENCY CONVERTIBLE BONDS [FCCBs]:

As you are aware, in August, 2005, the Company accessed the international financial markets through an offering of 0.5% Foreign Currency Convertible Bonds (FCCBs / Bonds), due 2010 convertible into equity shares of the Company, for US $50 million. The FCCBs have been listed on the Singapore Exchange Securities Trading Ltd. (SGX-ST).

During the year, the Company has not received any conversion Notice from the Bondholder for conversion of Bonds into Equity Shares of the Company. As on date 95% of the Bonds were converted into equity shares of the Company and outstanding FCCB of USD 2.50 million will matured in August, 2010.

NON CONVERTIBLE DEBENTURE:

In February, 2010, the Company has issued Secured Redeemable Non-Convertible Debentures (NCD) of Rs.75.00 crores in form of Separately Transferable Redeemable Principle Parts (‘STRPPs’) of Rs.10.00 lacs each fully paid-up, on private placement basis for augmenting medium to long term resources of the Company, including regular capex and retirement of high cost debt. These NCDs will be redeemed at par at the end of 4th, 5th, 6th & 7th year in ratio of 20:20:30:30 respectively. The said NCDs has been listed on the Bombay Stock Exchange Ltd. (BSE) and BSE has admitted the said NCDs to dealing on the Exchange in the list of securities of F Group – Debt Instruments w.e.f. 13th May, 2010.

DEPOSITS:

The Company has not accepted any deposits as defined under Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975, as amended, during the year under review.

DIRECTORS:

Mr. Sanjay S. Majmudar and Mr. Yagneshkumar B. Desai, Directors of the Company retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for Re-Appointment. Profiles of these Directors as required under clause 49 of the listing Agreement are given in the Annexure to the Notice dated 29th May, 2010.

As you are aware, Mr. Arpit J. Vyas has been appointed as Whole-time Director of the Company for a period of five years w.e.f. 1st June, 2009 and his appointment as such and the remuneration of Rs.3.00 lacs per month with a power to the Board to increase or revise the remuneration subject to maximum of Rs.10.00 lacs per month during the tenure of said five years, were approved by the members at the 26th Annual General Meeting held on 31st July, 2009. Considering the valuable contribution by Mr. Arpit J. Vyas, his remuneration has been increased from Rs.3.00 lacs to Rs.10.00 lacs per month w.e.f. 1st June, 2010 by the Board of Directors at its meeting held on 29th May, 2010 upon the recommendation of Remuneration Committee held on 29th May, 2010., which is well within the powers of Board of Directors and permissible as well as the same is in accordance with the provisions of Schedule XIII to the Companies Act, 1956 without approval of Members and Central Government.

INSURANCE:

The Company has made necessary arrangements for adequately insuring its insurable interests.

DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors’ Responsibilities Statement, the Directors, based on the representations received from the Company’s operating management, hereby confirm:

i) that in the preparation of the accounts for the financial year ended 31st March, 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) that the Directors had adopted such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) that the accounts for the financial year ended 31st March, 2010 have been prepared on a going concern basis.

AUDITORS:

M/s. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company hold office until the conclusion of the Twenty Seventh Annual General Meeting and are eligible for reappointment. M/s. Deloitte Haskins & Sells have informed the Company that, if appointed, their appointment as Auditors will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. Accordingly, the members’ approval is being sought for their appointment as the Auditors of the Company and for fixation of their remuneration for the year 2010-2011, at the ensuing Annual General Meeting.

ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE:

Information of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is given in the Annexure-I and forms part of this Report.

PARTICULARS OF EMPLOYEE:

Information as per Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in the Annexure-II and forms part of this Report.

SUBSIDIARY COMPANIES & CONSOLIDATED FINANCIAL STATEMENT:

The Ministry of Corporate Affairs, Government of India vide its order No.47/70/2010-CL-III dated 23rd February, 2010, issued under section 212(8) of the Companies Act, 1956 has granted an exemption to the Company from attaching the accounts along with the report of the Board of Directors and Auditors as required by section 212(1) of the Companies Act, 1956, of its 17 (seventeen) subsidiary companies namely i) Dishman Europe Limited, ii) Dishman U.S.A. Inc., iii) Dishman International Trading (Shanghai) Co. Ltd., iv) Dishman FZE, v) Dishman Switzerland Ltd., vi) Dishman Pharma Solutions AG., vii) Dishman Pharmaceuticals & Chemicals (Shanghai) Co. Ltd., viii) Carbogen Amcis AG., ix) Carbogen Amcis Limited (Name was changed from “Synprotec DCR Limited” w.e.f. 05/07/2007), x) Dishman Africa (Pty.) Ltd., xi) Innovative Ozone Service Inc. (IO3S), xii) Dishman Netherlands B.V. (Name was changed from “Pharma Syn. B.V.” w.e.f. 08/11/2007), xiii) Dishman Holland B.V., xiv) Dishman Japan Ltd., xv) Carbogen Amcis (India) Ltd., xvi) Dishman Australasia Pty. Ltd., and xvii) Dishman LLP, to the balance sheet of the Company for the financial year ended on 31st March, 2010.

The Company will provide the annual accounts of its subsidiary companies and the related detailed information on the specific request made by any investors and the said annual accounts are open for the inspection at the registered office of the Company during office hours on all working days, except Sundays and holidays, between 2.00 p.m. and 4.00 p.m. Particulars relating to the Subsidiary Companies, as per the condition (iii) of the above mentioned order of the Ministry of Corporate Affairs, are attached alongwith the consolidated financial statement.

As required under Clause 32 of Listing Agreement with the stock exchange(s) and in accordance with the requirements of Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, the Company has prepared Consolidated Financial Statements of the Company and its subsidiaries and are included in the Annual Report.

While preparing the consolidated financial statements, Company has consolidated the accounts of three Joint Venture companies namely Schutz Dishman Biotech Ltd. (22.33% holding by the Company), CAD Middle East Pharmaceutical Industries (30% holding by the Company), and Dishman Arabia Ltd. (50% holding by the Company), and one associate company namely, Bhadra Raj Holdings Pvt. Ltd. (40% holding by the Company), as per the requirements of Accounting Standard 27 (AS 27) and Accounting Standard 23 (AS-23) respectively.

During the year, Company has formed an Indian wholly owned subsidiaries, namely Dishman Care Ltd. (DCL), and invested Rs.5.00 Lacs (Rupees Five Lacs only) into equity shares of DCL.

In the month of February, 2010, the Company has invested SAR 6.90 million in the equity of Joint Venture Company namely CAD Middle East Pharmaceuticals Industries, established in Saudi Arabia. The Company has also invested JPY 17.50 million in the share capital of the Japanese subsidiary company namely Dishman Japan Ltd., in the month of March, 2010.

During the year, Company has invested total amount of USD 3.50 million into the share capital of its wholly owned subsidiary company namely Dishman Pharmaceuticals & Chemicals (Shanghai) Co. Ltd. (Dishman China), incorporated in China. Thus, total investment into share capital of Dishman China at the year-end stood at USD 8.50 million.

The Company’s step down subsidiary namely Dishman Africa Pty. Ltd., which was dormant and inoperative since long, has been wound-up w.e.f. 26th January, 2010, on the application made by the Company.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION ANALYSIS REPORT:

Your Company follows the principles of effective corporate governance. The Company has complied with the mandatory provisions of Corporate Governance as prescribed in the revised Clause 49 of the Listing Agreement with the Stock Exchanges.

As required by clause 49 of the Listing Agreement, a detail report on Corporate Governance compliance and Management Discussion and Analysis Report forms a part of Annual Report along with the required Certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in revised Clause 49 of the Listing Agreement.

In compliance with one of the Corporate Governance requirements as per the revised Clause 49 of the Listing Agreement, the Company has formulated and implemented a Code of Conduct for all Board members and senior management personnel of the Company, who have affirmed compliance thereto.

ACKNOWLEDGEMENT:

Your Directors would like to express their grateful appreciation for the continued assistance and cooperation received from the Indian and International Financial Institutions, Banks, Government Authorities and Shareholders. Your Directors are also grateful to the customers, suppliers and business associates of your Company for their continued co-operation and support. Your Directors wish to place on record their deep sense of appreciation to all the employees for their commendable teamwork and enthusiastic contribution to the growth of Company’s business during the year.

For and on behalf of the Board Place: Ahmedabad (Janmejay R. Vyas) Date: 29th May, 2010 Chairman & Managing Director