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Directors Report of Jupiter Bioscience Ltd.

Mar 31, 2010

The Directors have pleasure in presenting herewith the 25th ANNUAL REPORT together with the Audited Statement of Accounts of the Company for the year ended March 31, 2010.

FINANCIAL HIGHLIGHTS

The Financial Results for the year ended March 31, 2010 are as under:

Year ended Year ended 31.03.2010 31.03.2009

Sales 18394.31 14292.76

Other Income 6.13 233.73

Operating Profit 9563.70 7572.26

(Before Interest and Depreciation)

Interest and pre-payment 2314.83 1740.85 Premium

Depreciation 3520.70 2623.27

Profit before Taxation 3728.17 3208.14

Provision for Taxation 633.79 363.48

MAT Credit Entitlement (633.79) (363.48) Provision for Fringe

Benefit Tax - 8.57

Provision for Deferred Tax 413.94 380.56

Profit after Taxation 3314.23 2819.01 Appropriations:

General Reserve 750.00 750.00

Dividend 322.67 322.67

Dividend Tax 54.85 54.85

Surplus Carried to

Balance Sheet 12205.65 10250.79

During the year under review your company recorded growth in sales in-spite of tough economic environment. The sale has risen by over 28.70% and the profit after taxation has gone up by 17.57% as compared to the previous year. This was achieved in spite of a difficult business environment in the last financial year.

The Company’s long term strategy with focus on R&D and product development has enabled it to withstand the pressures of the recession and achieve growth in sales during the last financial year. The company introduced a range of new products in the peptide business the significant one being the launch of pseudoproline peptides which are spurring the growth of the peptide synthesis industry.

Your Company is consistently working towards improving the yields in its manufacturing processes. During the last year, the focus was also directed towards improving the yields and process optimization for manufacturing many of the existing products which have provided us significant savings in our manufacturing costs.

Your company’s Research platform is directed towards process innovation and development to arrive at cost effective processes for manufacture of advanced organic intermediates/ penultimate intermediates and generic APIs where cost is the major driving force. Within these technology platforms the company has multi-process capabilities. With its R&D focus your company is able to not only develop products quickly but also able to bring down the costs significantly and remain competitive.

One of the foremost challenges for the peptide industry is towards Total Peptide Management program - a customized service platform is to ensure customer satisfaction and help the pharmaceutical and life sciences industries bring new and innovative drugs to market faster.

DIVIDEND

Your Directors have recommended dividend for the 10th year successfully after achieving a good growth in profit during the year. A Dividend @20% per Equity Share (Rs.2/- on the Paid-up Equity Share of Rs.10/- each) for the financial year 2009–2010. The dividend payout will aggregate to Rs.322.67 Lakhs and the dividend, if approved at the for thcoming Annual General Meeting, will be paid to all eligible equity shareholders.

TECHNOLOGY FOCUS OF THE COMPANY

At the R&D level the company is leveraging on its experience to dedicate significant resources and technical expertise to support research in solid and solution-phase technologies, unnatural amino acids, validation of manufacturing process and analytical methods. These capabilities allow us to supply generic peptides as well as peptides and related products for therapeutic and diagnostic areas in HIV, osteoporosis, diabetes, Alzheimer’s, and many other human diseases.

Your Company is focused at providing high cost effective standardized peptides and peptide building blocks and also develops a peptide Library which can support customers for their project.

The company is also expanding its business and technological focus on non-peptide generic drug and intermediates based on organic and chiral chemistry by adding products to its existing list.

The manufacturing operations in USA are being set up to focus on solid phase peptide synthesis while the operations in Switzerland are directed towards building capabilities on solution phase synthesis. The manufacturing facilities in India will focus on manufacturing the reagents and the building blocks. Manufacture of generic peptide and non–peptide APIs for the un- regulated market has commenced.

INTERNATIONAL MARKETING AND SALES EFFORTS

During the year the company participated in several trade shows to show case its capabilities and products. The list of the shows participated or mentioned in the table below. The company has participated in the CPHI Japan show in Japan. This show gives the opportunity for your company to explore one of the fastest growing markets in Pharmaceutical Industry.

The company had also participated in various trade shows across the globe and has received significant leads which can be converted into prospective business in the near future.

Name of the Exhibition Date & Place

CPhi Japan 2009 Tokyo BIG SIGHT Exhibition Centre, Tokyo, Japan April 21-23, 2009

BIO, 2009 Georgia World Congress Centre, Atlanta, Georgia, USA May 18-21, 2009

21st APS 2009 Indiana University Bloomington, USA June 7-12, 2009

CPhi World Wide Feira De Madrid 2009 Spain October 13-15, 2009

46th Japanese Kitakyushu International Peptide Conference Centre, Symposium 2009 Kokura, Japan November 4-6, 2009

The Peptide Cambridge Conference 2010 United Kingdom March 30-31, 2010

BIO 2010 McCormick Place, Chicago IL, USA May 3-6, 2010



BUSINESS OUTLOOK FOR COMING YEAR

Your company has achieved significant growth, recognition and market share in the Peptide Industry. As a part of its business policy and to continue its growth path the company has further consolidated and expanded its product range in non-peptide generics in the current year. The company is continuing to add capacity and extend its product range to meet the growing market demands. Your company proposes to manufact ure a range of fast moving non-peptide generics ranging from proton pump inhibitors, anti-allergy, anti-depressant, anti-AIDS segments, and antibiotics. Your company has developed cost effective processes for the products. Your company has added the products in the veterinary API segment especially anti- helmentics.

Jupiter group has achieved remarkably during the last 25 years with dedication, commitment and focus on the future of the company.

Company commenced operations with an expertise in conventional organic chemistry and thereon moved ahead to build up a strong base in advanced organic chemistry with a Philosophy of the company as follows:

- Process innovation

- Process development

- Process optimization

Visionary in the founder Sri. K.S. Sarma who has always thinking ahead and initiated with Jupiter family support only of its kind considering the Jupiter in the next 50 years in the year 1995.

This initiative based on the above three philosophies is the entry into peptide chemistry. Three years effort of process innovation and development between 1995 and 1998 has resulted in Jupiter on the radar screen of multinational pharma companies globally discovery companies.

The company today achieved the positioning of only of its kind business model based on technology in peptide pharmaceutical.

The company continued to focus on organic- chemistry to be in the Niche market of the high- end intermediates for the generic and research pharmaceutical market globally.

The company’s future R&D will be to augment capability high-end Peptide Building Blocks, Speciality, Organic intermediates and Chiral intermediates.

To achieve the above Jupiter will continue to collaborate with Universities and Academic Institutions and Research Institutions and Researchers.

In the field of the Peptide Chemistry the company continues to associate with:

- Bangalore University

- And has entered into MOU with University of Massachusetts, USA under the leadership of Dr.Louis Carpino who is considered father of Peptide chemistry.

In the next 25 years in the field of Organic & Chiral Chemistry the following will be plus:

Process development for single isomer through the following routes:

- Chiral pool

- Separation via diastereomeric salt crystallization

- Bio-resolution

Separation of racemic compounds

Expertise on resolution techniques and have developed the diasteromers and then separated them by chromatography or crystallization.

Chiral Pool

Undertake chiral isomer development using carbohydrates, amino acids, lipids, terpenes, and alkaloids. However our primary expertise is in using chiral amino acids as the starting material.

Chemical Asymmetric Methods

Capabilities to use transition metals as catalysts for oxidation and reduction reactions to develop chiral compounds

Biological Asymmetric Methods

Capabilities to use microbial enzymes for developing chiral compounds

Our capabilities on these platforms will enable us to develop chiral molecules such as speciality amino acids, amino alcohols and diamines through efficient synthetic routes

Carbohydrate chemistry

To Strengthen and Build-up expertise for the emerging Pharmaceutical market the company is embarking on a programme to focus on Carbohydrate chemistry.

This will bring the Jupiter on very high technology platform in the global positioning.

As a first step the company will be focusing on Monosaccharide Building Blocks.

CORPORATE SOCIAL RESPONSIBILITY Jupiter Group actively participates in the welfare of the local community. Our Company in India makes a difference through various Corporate Social Responsibility (CSR) Schemes / efforts which will make a positive difference to the people at large in the various walks of life. During the year the Company contributed to the Society for its well being in the following manner:

1. Donated a Borewell at Cheriyal village, where our manufacturing unit is located;

2. Also Donated a School building at Cheriyal village; and

3. Contributed towards higher studies of poor students, who are bright in studies and can not afford to pursue their higher studies.

STATEMENT PURSUANT TO LISTING AGREEMENT

The Equity Shares of the Company are listed with The Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE) (permitted). Your Company has paid the respective Annual Listing Fees up-to-date. The Company has provided Corporate Governance Report and Cash Flow Statement in this Annual Report and other required details.

SAFETY AND ENVIRONMENT

PROTECTION

Your Company has been following strict environmental protection standards and ensured that employees’ health and safety measures are maintained and monitored throughout the plant.

CONSERVATION OF ENERGY,

TECHNOLOGY, ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company’s operations do not involve high consumption of energy. But the Company is taking all the necessary steps for the optimum utilization of energy. The necessary particulars to be furnished under 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are furnished in the annexure to this Report.

The particulars to be furnished with regard to Technology Absorption and Research and Development are given in the Annexure-1 to this Report.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Company has earned Foreign Exchange of Rs.402.87 Lakhs on account of direct exports during the year 2009-2010. The Company has expended Rs.1376.70 Lakhs in Foreign Exchange on account of Investment in Jupiter Bioscience Inc., U.S.A., imports of raw materials International travel, and on expenses related to business development during the year 2009-10. The Management has made an extensive survey of foreign markets for the Company’s products and several orders are in pipeline and there will be substantial earnings in Foreign Exchange in the Current Year.

ACTIVITIES RELATING TO EXPORTS; INITIATIVES TAKEN TO INCREASE EXPORTS ETC.,

The company has marketing offices in USA, Switzerland, Japan. The Company has established representative offices and business development offices in Germany, Singapore, Middle East, Denmark and Spain.

The company is planning to expand marketing and business development operations during the next six months in the following countries viz.

Latin America, Central America, Malaysia, UK, France, Korea.

The above initiatives will definitely result in higher foreign exchange earnings in the coming years.

The major initiative in the next 6 months will be, Jupiter will stock many of its products in USA & Singapore and cater to the smaller volume customers extensively.

The following markets are planned to be focused for different product groups:

Peptide Building Blocks:

- US, Europe, Japan, Singapore, Canada, UK

Peptide APIs:

- South East Asia, Latin America, Middle East, India and Neighboring Countries

Organic Intermediates:

- US, Europe, Japan, Singapore, Canada, UK, India, South East Asia Organic APIs

- South East Asia, Latin America, Middle East, India and Neighboring Countries Chiral Intermediates

- US, Europe, Japan, Singapore, Canada

New Initiative:

The company will be adding a team of executives in business development in Europe, US and Japan during the next six months time.

Strategic Business:

The company is also currently discussing with a major contract manufacturing companies in USA and Europe to discuss business opportunities covering the entire expertise of Jupiter.

Contract Research:

The company has initiated business development effort of contract research business.

DIRECTORS

Mr. Rudolf H Tanner retires by rotation in this Annual General Meeting and is eligible for re- appointment. Your Directors recommend his re- appointment.

AUDITORS

M/s. A.G.V. Reddy & Co., Chartered Accountants, the Statutory Auditors of the Company retire at the ensuing Annual General Meeting and is eligible for re-appointment. They have furnished a certificate pursuant to Sec 224(1-B) of the Companies Act, 1956 regarding their eligibility for re-appointment and your Directors recommended their re-appointment.

SUBSIDIARIES

A. Sven Genetech Limited

Subsidiary of your Company Sven Genetech Limited during the year made rapid strides in synthesis of specialty peptides, launch of new formulations and development of its capabilities in the diagnostics and enzymes areas.

Sven proposes to enter new business segments in the coming years. These include

- Formulations – Oncology

- Biopharmaceuticals

- Biosimilars

- Enzymes

- Neutraceutical APIs

During the year under review, the Company has approved to disinvest its stake through offer of sale of shares as per the resolution passed in the Extraordinary General Meeting held on 09th December, 2009, for achieving a strategic advantage to both the companies, while the Company would benefit out of the disinvestments, the subsidiary could access the capital market for its long-term resources.

B. Jupiter Bioscience Inc. USA

The Company’s 100% subsidiary in USA, Jupiter Bioscience Inc. is gearing up for manufacture of custom peptides and generic peptide APIs by the solid phase peptide synthesis.

The results of the Subsidiary Companies are attached to this Report along with the statement pursuant to Section 212 of the Companies Act, 1956.

RESEARCH & DEVELOPMENT (R&D)

The company incurred an expenditure of Rs.1009.83 Lakhs in 2009-10 on R& D. This expenditure was incurred in developing the cost effective route for synthesis of several new peptide building blocks and development of non- peptide generic drug intermediates and APIs.

GDR ISSUE

The Company successfully completed its GDR issue which opened on 30th June, 2010 and closed on 2nd July, 2010. Through the said GDR issue the Company collected US $21.47 Million equivalent to Rs.100 Crores approximately. The Company has allotted 1,13,00,000 equity shares of Rs.10/- each against the 11,30,000 GDR issued.(i.e. 10 Equity shares of Rs.10/- each against every 1 (One) GDR of the Company.

The company proposes to utilize the GDR issue proceeds for the following purposes.

- Setting up/acquisition of new manufacturing facilities.

- Up-gradation / Modernisation of existing manufacturing facilities.

- Investment in subsidiaries

- Augmenting long term working capital needs

- Part retirement of high cost debt

- To meet the capital requirements of ongoing research and process development.

- Any other use, as may be decided by the management for the purpose of expanding its business and increasing the top line and bottom line by introducing the new products.

FCCB /ADR / GDR/ CONVERTIBLE SECURITIES :

To meet with the long-term capital requirements of the Company for its proposed expansion globally, it is proposed to issue various securities to the Promoters and others, subject to the approval of the members and the Statutory Authorities. The required details of the proposal of augmenting the long-term capital requirements are provided in the Notice convening the ensuing Annual General Meeting along with the Explanatory Statement providing the required details, as per SEBI ( Issue of Capital and Disclosure Requirements) Regulations, 2009.

INDUSTRIAL RELATIONS

Your Directors are pleased to inform you that the relations with employees including workmen at all levels continue to be warm and cordial. The Directors place on record their appreciation of the devoted services rendered by the employees.

PERSONNEL

The Board of Directors would like to place on record its deep appreciation for rendering impeccable services to every constituent of the Company by the employees at all levels. Industrial Relations continued to be cordial throughout the year at all locations.

Particulars of employees required to be furnished u/s 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 are given in the annexure attached and forms part of the report.

DEPOSITS

The Company has not accepted any deposits during the year within the meaning under Section 58A of the Companies Act, 1956.

CORPORATE GOVERNANCE - Clause 49 of the Listing Agreement.

Your Company has complied with all the recommendations of the Corporate governance code as provided in Clause 49 of the Listing Agreement. The compliance report as recommended, is provided elsewhere in this Annual Report along with a Certificate of Compliance from the Practicing Company Secretary.

DIRECTORS’ RESPONSIBILITY

STATEMENT AS PER SECTION 217(2AA) OF

THE COMPANIES ACT, 1956

In accordance with Section 217 (2AA) of the Companies Act, 1956 the Directors of the Company hereby state that :

- That in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

- That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so 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 of the Company for that year;

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

- That the Directors have prepared the accounts for the financial year ended March 31, 2010 on a ‘going concern’ basis.

ACKNOWLEDGEMENTS

Your Company wishes to place on record the strong support and interest from all the Shareholders in both retail and the institutional segment. Your Company wishes to place on record the appreciation of continued co- operation support and patronage received from all other stakeholders including government, bankers, suppliers and customers. Your Directors also wish to place on record their appreciation of the service rendered by all employees of the Company.

Cautionary note:

The statements forming part of the Directors report may contain certain forward looking remarks within the meaning of applicable securities laws and regulations. Many factors could cause the actual results, performances or achievements of the Company to be materially different from any future results, performances or achievements that may be expressed or implied by such forward looking statements.



for JUPITER BIOSCIENCE LIMITED

Venkat R. Kalavakolanu Chairman & Managing Director

Place: Secunderabad Date : July 02, 2010