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Directors Report of Piramal Phytocare Ltd.

Mar 31, 2017

Dear Shareholders,

The Directors have pleasure in presenting their 16th Annual Report on the business and operations of the Company and the Audited Financial Statements for the financial year ended March 31, 2017.

PERFORMANCE HIGHLIGHTS

(Rs. in Lakhs)

Particulars

FY 2016-17

FY 2015-16

Income

Net Sales

412.64

632.02

Other Income

28.91

25.76

Expenditure

Total Operating Expenses

418.16

518.22

Profit / (Loss) before Interest, Depreciation and Tax

23.39

139.56

Less: Interest Paid (Net)

0.24

0.29

Profit / (Loss) before Depreciation and Tax

23.15

139.27

Less: Depreciation / Amortization

4.17

463.18

Profit / (Loss) before Tax

18.98

(323.91)

Less: Tax Expense

-

-

Net Profit / (Loss) after Tax

18.98

(323.91)

Other Comprehensive Income / (Loss)

(12.03)

(4.89)

Total Comprehensive Income / (Loss) for the period

6.95

(328.80)

Earnings / (Loss) per share (Basic / Diluted) (Rs.) (Face Value of Rs. 10/- each)

0.07

(1.25)

Note: Previous year''s figures have been regrouped / reclassified wherever necessary in conformity with Indian Accounting Standards (Ind AS) to correspond with the current year''s classification / disclosure and may not be comparable with the figures reported earlier.

DIVIDEND

In view of marginal profits and to conserve resources of the Company, the Directors have not recommended any dividend for the Financial Year ended March 31, 2017.

OPERATIONS REVIEW

Net sales for the year were at Rs. 412.64 lakhs as against Rs. 632.02 lakhs for FY 2016. The operating expenditure for FY 2017 decreased to Rs. 418.16 lakhs as compared with Rs. 518.22 lakhs for FY 2016 primarily on account of lower sales, although employee benefit expenses and other expenses have increased as a percent of sales compared with the previous year. The Company had a profit before interest, depreciation and taxes of Rs. 23.39 lakhs for FY 2017 as compared to Rs. 139.56 lakhs for FY 2016. Net profit after Tax for the period was at Rs. 18.98 lakhs as compared with a loss of Rs. 323.91 lakhs for FY 2016. EPS for the year was at Rs. 0.07 per share. During the year, the Company continued to explore domestic markets for which it had commenced manufacturing through a Loan License Manufacturer. A detailed discussion of operations for the year ended March 31, 2017 is given in the Management Discussion and Analysis Section.

DEPOSITS

Your Company has not accepted any deposits from the public and as such, no amount of principal or interest was outstanding as on the balance sheet date.

STATUTORY AUDITORS AND AUDITOR''S REPORT

M/s. Haribhakti & Co., Chartered Accountants, Vadodara (Firm Registration No.118013W) (''M/s Haribhakti & Co.''), the Statutory Auditors of the Company, have expressed their desire to step down as the Statutory Auditors of the Company with effect from the conclusion of this Annual General Meeting (''AGM''). This has resulted in a casual vacancy in the office of Statutory Auditors of the Company as envisaged under Section 139(8) of the Companies Act, 2013 (''the Act'').

It is proposed to appoint Price Waterhouse Chartered Accountants LLP (FRN 012754N/N500016) (''Price Waterhouse'') as the Statutory Auditors of the Company in the casual vacancy caused by the resignation of the existing Auditors, M/s Haribhakti & Co. Price Waterhouse are one of the reputed Auditors in the industry and given the proposed increase in the operations of the Company, it is proposed that they be appointed as the new Auditors of the Company.

A special notice has been received under Section 140(4)(i) of the Act from a member proposing appointment of Price Waterhouse as the Statutory Auditors. Price Waterhouse have expressed their willingness to be appointed and confirmed that their appointment, if made, would be in accordance with the conditions specified in Rule 4(1) of the Companies (Audit and Auditors) Rules, 2014. Accordingly, approval of shareholders is being sought at this AGM, for appointment of Price Waterhouse as Statutory Auditors of the Company from the conclusion of this AGM until the conclusion of the 17th AGM of the Company, to be held in calendar year 2018.

The Auditor''s Report does not contain any qualification, reservation or adverse remark on the financial statements for the year ended March 31, 2017. The statements made by the Auditors in their Report are self - explanatory and do not call for any further comments.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

A) Conservation of energy:

The business of the Company mainly comprises product development and marketing of herbal products. As such, electricity consumption is not significant.

Your Company is taking measures to improve overall energy efficiency by installing power efficient equipment. Several environment friendly measures have been adopted by your Company such as:

- Minimizing usage of air-conditioning;

- Shutting off the lights when not in use;

- Minimizing the usage of papers and maximum usage of e-prints or e-folders for data archives;

- Creating environmental awareness by way of distributing relevant information in electronic form, encouraging conservation of energy and natural resources.

B) Technology absorption

As stated earlier, the business of the Company mainly comprises of product development and marketing of herbal products. Hence, details relating to Technology Absorption are not applicable.

C) Foreign Exchange Earnings and Outgo

During the year, foreign exchange earnings were Rs. 175.7 lakhs as against nil outgo.

EXTRACT OF ANNUAL RETURN

The extract of the Annual return in Form MGT-9 is annexed herewith as Annexure A.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Companies Act, 2013, Mr. Rajesh Laddha retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment.

Dr. Vandana Sonavaria, Non-Executive Non-Independent Director, resigned as a Director of the Company with effect from February 21, 2017, in view of her pre-occupations and commitments. The Board places on record its appreciation and gratitude for the invaluable contributions made by Dr. Sonavaria during her tenure as a member of the Board of Directors.

Ms. Rashida Najmi was appointed by the Board as Non-Executive Non-Independent Director (Woman Director) with effect from April 12, 2017 in the casual vacancy caused by the resignation of Dr. Vandana Sonavaria.

Dr. Ashish Suthar resigned as the Manager of the Company with effect from close of business hours on October 6, 2016.

Mr. Rajiv Salvi was appointed as the Manager of the Company with effect from February 8, 2017.

The Company has received declarations from all its Independent Directors, confirming that they meet the criteria of independence as prescribed under Companies Act, 2013 and Regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as ''Listing Regulations'').

BOARD EVALUATION

Evaluation of performance of all Directors is undertaken annually. The Company has implemented a system of evaluating performance of the Board of Directors and of its Committees and individual Directors on the basis of a structured questionnaire which comprises evaluation criteria taking into consideration various performance related aspects.

The Board of Directors has expressed its satisfaction with the evaluation process.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the year, four Board Meetings were convened and held, details of which are given in the Report on Corporate Governance forming part of the Annual Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY FOR DIRECTORS AND EMPLOYEES

The Company has established a Vigil Mechanism, which includes a Whistle Blower Policy, for its Directors and Employees, to provide a framework to facilitate responsible and secure reporting of concerns of unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct & Ethics. The details of establishment of Vigil Mechanism / Whistle Blower Policy are posted on the website of the Company and the weblink to the same is http://piramalphytocare.com/investors/.

AUDIT COMMITTEE

The Audit Committee comprises three members:

1. Mr. Gautam Doshi - Independent Director and Chairman

2. Mr. N. L. Bhatia - Independent Director

3. Mr. Rajesh Laddha - Non-Executive Director

Further details on the Audit Committee are provided in the Report on Corporate Governance forming part of the Annual Report.

NOMINATION AND REMUNERATION POLICIES

The Board of Directors has formulated a Policy which lays down a framework for selection and appointment of Directors and Senior Management and for determining qualifications, positive attributes and independence of Directors.

The Board has also formulated a Policy relating to remuneration of Directors, members of Senior Management and Key Managerial Personnel.

The Nomination Policy and the Remuneration Policy are given in Annexure B.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

There were no loans, guarantees or investments covered under Section 186 of the Companies Act, 2013.

MANAGERIAL REMUNERATION

A) Remuneration to Directors and Key Managerial Personnel

i. The percentage increase in remuneration of Manager, Chief Financial Officer and Company Secretary during the financial year 2016-17 is as under:

Sr. No.

Name of KMP

Designation

% increase in Remuneration (Fixed pay) during FY 2017

1.

Dr. Ashish Suthar

Manager (up to October 6, 2016)

21.97%

2.

Mr. Rajiv Salvi

Manager (w.e.f February 8, 2017)

N.A.

3.

Mr. Karthik Muralidharan

Chief Financial Officer

28.95%

4.

Mr. Maneesh Sharma

Company Secretary

17.00%

Notes:

A. Ratio of remuneration of each Director to median remuneration of employees - Independent Directors do not receive any remuneration other than sitting fees for attending Board and Committee Meetings. Details of sitting fees paid to Independent Directors are given in the Report on Corporate Governance forming part of the Annual Report and hence, are not included in the above table. The Non-Independent Directors do not receive any sitting fees nor any other remuneration. Therefore, providing details relating to ratio of remuneration of each Director to median remuneration of employees, would not be meaningful.

B. Mr. Rajiv Salvi was appointed as the Manager with effect from February 8, 2017. Therefore the percentage increase in remuneration for FY 2017 is not applicable in his case.

C. Remuneration to employees comprises fixed pay and variable pay. The variable pay component for FY 2017 is expected to be determined in the month of May, 2017. Therefore, details on percentage increase on total remuneration cannot be provided at this stage. Details provided in the above table pertain to percentage increase in fixed component of remuneration for FY 2017.

ii. There were 5 permanent employees on the rolls of the Company during FY 2017. The median remuneration of employees of the Company during FY 2017 was Rs. 9,32,794. The median remuneration of employees during FY 2017 decreased by 15.43% as compared to the previous financial year. The median remuneration has decreased since the Company has only

5 employees and there were changes among them during FY 2017;

iii. Average percentage increase made in the fixed remuneration of employees other than the managerial personnel in the last financial year i.e. FY 2017 was 15.66%. As regards change in the managerial remuneration details of the same are given in the above table at sr. no. (i);

iv. It is hereby affirmed that the remuneration paid is as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees.

Employee Particulars

Details of employee remuneration as required under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in a separate statement forming part of this Report. Further, this report is being sent to the Members excluding the said statement. The said statement is available for inspection by members at the Registered Office of the Company during working hours up to the date of the Annual General Meeting and shall be made available to any shareholder on request. The said statement is also available on your Company''s website, the weblink to which is http://piramalphytocare.com/investors/.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013, and the Rules made there under, the Company has appointed M/s. Dhrumil M. Shah & Co., Practicing Company Secretaries as the Secretarial Auditor of the Company. The Secretarial Audit Report is annexed as Annexure C and forms an integral part of this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

CORPORATE GOVERNANCE CERTIFICATE

The Report on Corporate Governance as stipulated in the Listing Regulations forms part of the Annual Report.

The requisite Certificate from M/s. Dhrumil M. Shah & Co., Practicing Company Secretaries, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Listing Regulations, is annexed hereto as Annexure D and forms part of this Report.

RISK MANAGEMENT POLICY

The Company has a robust Risk Management framework to identify, measure and mitigate business risk and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objective and enhance the Company''s competitive advantage. This risk framework thus helps is managing market, credit and operations risks.

DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors state that:

(a) in the preparation of the annual financial statements for the year ended March 31, 2017, the applicable accounting standards have been followed with no material departures;

(b) 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 as at March 31, 2017 and of the profit of the Company for the year ended on that date;

(c) 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;

(d) the Directors have prepared the annual financial statements on a going concern basis;

(e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively; and

(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Contracts/arrangements/transactions entered by the Company during the financial year with related parties were in ordinary course of business and on arm''s length basis. During the year, the Company had not entered into any contract/arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 is not applicable.

Prior omnibus approval of the Audit Committee has been obtained on an annual basis for transactions with related parties which are of a foreseeable and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted and a statement giving details of all transactions with related parties are placed before the Audit Committee for their review on a periodic basis.

Your Company has formulated a policy for dealing with related party transactions which is also available on website of the Company at http://piramalphytocare.com/investors/.

OTHERS

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. The details relating to deposits, covered under Chapter V of the Act, since neither has the Company accepted deposits during the year under review nor were there any deposits outstanding during the year.

2. Details relating to issue of equity shares including sweat equity shares and shares with differential rights as to dividend, voting or otherwise, since there was no such issue of shares.

3. 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.

During the year under review, no Stock Options were granted, vested or exercised. No Stock Options are in force as on date. Hence, there are no disclosures required to be made pursuant to the applicable requirements of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

Your Directors further state that during the year under review, there were no cases filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

ACKNOWLEDGMENTS

We take this opportunity to thank the employees for their dedicated service and contribution to the Company.

We also thank our business associates and shareholders for their continued support to the Company.

By Order of the Board

Mumbai N.L. Bhatia Rajesh Laddha

April 26, 2017 Director Director


Mar 31, 2013

Dear Shareholders,

The take pleasure in presenting the 12th Annual Report and Audited Accounts for the financial year ended March 31,2013.

PERFORMANCE HIGHLIGHTS

(Rs. in Million)

Particulars FY 2012-13 FY 2011-12

Income

Net Sales 52.4 28.5

Other Income 7.1 3.3

Expenditure

Total Operating Expenses 76.5 56.7

(Loss) before Depreciation and Tax (17.4) (24.9)

Less: Depreciation 46.2 46.2

(Loss) before Tax (63.6) (71.1)

Less: Provision for Taxation

(Loss) for the year (63.6) (71.1)

Earnings / (Loss) per share (Basic / Diluted) (Rs.) (Face Value ofRs.10/- each) (2.4) (2.7)

DIVIDEND

In view of the losses incurred by the Company, the Directors do not recommend any dividend for the Financial Year ended March 31,2013.

OPERATIONS REVIEW

Net sales for the year were at Rs. 52.4 million as against Rs. 28.5 million for FY2012. The operating expenditure increased to Rs. 76.5 million as compared with Rs. 56.7 million for FY2012. Loss before interest, depreciation and taxes was lower at Rs. 17 million for FY2013 as compared with Rs. 24.9 million for FY2012. Loss for the year was lower at Rs. 63.6 million as compared with Rs. 71.1 million for FY2012 and EPS for the year was at Rs. (2.4) per share. During the year, the Company focussed on product development in the herbal segment and incurred costs towards higher promotion and marketing initiatives in global markets, in addition to registration costs and professional fees, which also resulted in the Company incurring cash losses. A detailed discussion of operations for the year ended March 31, 2013 is given in the Management Discussion and Analysis.

SECRETARIAL AUDIT

As a measure of good Corporate Governance practice and as recommended by the MCA Corporate Governance Voluntary Guidelines, 2009, the Company has voluntarily subjected itself to a secretarial audit for FY2013, which was carried out by M/s. Bharat R. Upadhyay & Associates, Practicing Company Secretaries. The secretarial audit report forms part of this annual report.

The said secretarial audit report confirms that the Company has complied with all the applicable provisions of the Companies Act, 1956, Equity Listing Agreements with the Stock Exchanges and all the regulations of Securities and Exchange Board of India (SEBI) as applicable to the Company, including the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and the SEBI (Prohibition of Insider Trading) Regulations, 1992.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required under section 217(2AA) of the Companies Act, 1956 we hereby state:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) 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 as at March 31,2013 and its loss for the year ended on that date;

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

d) that the Directors have prepared the annual accounts on a going concern basis.

DIRECTORS

Mr. Gautam Doshi retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment, which the Board recommends.

Mr. N.L. Bhatia and Mr. Rajesh Laddha were appointed as Directors of the Company, liable to retire by rotation, with effect from February 2,2012, in the casual vacancies caused by the resignation of Sir Ravinder Maini and Prof. Goverdhan Mehta respectively. They hold office upto the date of the ensuing Annual General Meeting and are eligible for appointment as Directors, which the Board recommends.

APPOINTMENT OF MANAGER

Consequent to the resignation of Mr. Prashant Surana as Manager of the Company, Dr. Ashish Suthar has been appointed as Manager of the Company with effect from May 22, 2013 in compliance with the requirements of section 269 of the Companies Act, 1956.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Applicable particulars required under section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given as Annexure I to this Report.

CORPORATE GOVERNANCE

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite Certificate from M/s. Bharat R. Upadhyay & Associates, Practicing Company Secretaries, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is annexed hereto as Annexure II and forms part of this report.

HUMAN RESOURCES

The Company continues to focus on its core values of Knowledge, Action and Care and these are reflected in the action and behaviour of our employees. The Company has a formal Reward and Recognition program.

There were no employees who were in receipt of remuneration exceeding the limits laid down under section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975.

During the year under review, no Stock Options were granted, vested or exercised. No stock options are in force as on date. Hence, there are no disclosures required to be made pursuant to the applicable requirements of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

AUDITORS

M/s. Haribhakti & Co, retire as Auditors of the Company at the ensuing Annual General Meeting and are eligible for re-appointment.

ACKNOWLEDGMENTS

We take this opportunity to thank the employees for their dedicated service and contribution to the Company. We also thank our banks, business associates and our shareholders for their continued support to the Company.

By Order of the Board

Mumbai N.L. Bhatia Rajesh Laddha

May 8,2013 Director Director


Mar 31, 2012

The take pleasure in presenting the 11th Annual Report and Audited Accounts for the Year ended 31st March, 2012.

PERFORMANCE HIGHLIGHTS

(Rs. in Million)

Particulars FY 2010-11*

Income

Net Sales 28.5 23.3

Other Income 3.3 0.4

Expenditure

Total Operating Expenses 56.7 26.8

(Loss) before Interest, Depreciation and Tax (24.9) (3.1)

Less: Interest paid (Net) — —

(Loss) before Depreciation and Tax (24.9) (3.1)

Less: Depreciation 46.2 —

(Loss) before Tax (71.1) (3.1)

Less: Provision for Taxation — —

(Loss) for the year (71.1) (3.1)

Earnings / (Loss) per share (Basic / Diluted) (Rs.) (Face Value of Rs. 10/- each) (2.7) (0.1)

* Note: The NCE Research Unit was demerged into Piramal Healthcare Limited during 2012 with effect from 1st April, 2011 and consequently, the figures for year ended 31st March, 2012 exclude those relating to the NCE Research Unit. To facilitate comparison, the figures for year ended 31st March, 2011 as reflected in the above statement, are excluding those relating to the NCE Research Unit.

DIVIDEND

In view of the losses incurred by the Company, the Directors do not recommend any dividend for the Financial Year ended 31st March, 2012.

DEMERGER OF NCE RESEARCH UNIT INTO PHL

During the year, the NCE Research Unit of the Company was demerged into Piramal Healthcare Limited ('PHL') with effect from 1st April, 2011, under the Scheme of Arrangement sanctioned by the Hon'ble Bombay High Court. Under the demerger scheme, each shareholder was allotted one fully paid up equity share of Rs. 2 of PHL for every four equity shares of Rs. 10 each held in the Company. All assets and liabilities of the NCE division were transferred to PHL at book value.

Consequent to the demerger, the business of the Company mainly comprises marketing of herbal products.

OPERATIONS REVIEW

The financials of the year 2010-2011 have been restated above to exclude financials related to the NCE Research Unit which was demerged into Piramal Healthcare Limited with effect from 1st April, 2011. Net Sales for FY2012 grew by 22.3% to Rs. 28.5 million as compared to Rs. 23.3 million in FY2011. Loss before interest, depreciation and taxes was higher at Rs. 24.9 million as compared to Rs. 3.1 million in FY2011. A detailed discussion on operations for the year ended 31st March, 2012 is given in the Management Discussion and Analysis section.

The auditors, in para no. 10 of Annexure to the Auditors' Report have observed that the Company has incurred cash losses in the year under review and in the immediately preceding financial year. Cash losses in FY2011 were due to the operations of the NCE Research Unit. In the year under review i.e. FY2012, separate focus on the herbal segment has resulted in higher promotional and marketing costs, professional fees and increase in recruitments, contributing to the cash loss.

INDUSTRY OUTLOOK

The global nutritional supplements industry is quite fragmented, with many small and large companies operating in the sphere. The US, Europe and Japan collectively hold a major share in the global market. In the coming years, the share of Asia is expected to increase, mainly because of the supplement market's growth in China. The global herbal supplements market is estimated to reach US$ 93 billion by the year 2015, spurred by increasing incidence of ageing population and consumer awareness about general health and well being. The intrinsic benefits of herbal products include greater efficacy, little or no side effects and affordable prices. An increasing inclination towards healthier natural herbs and botanical derivatives is likely to lead to continued growth in this market. However, scientific research and clinical trials corroborating safety claims of herbal supplements and remedies remain a critical factor in determining long-term success in the market place.

DIRECTORS' RESPONSIBILITY STATEMENT

As required under section 217(2AA) of the Companies Act, 1956, ('the Act') we hereby state:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) 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 as at 31st March, 2012 and its loss for the year ended on that date;

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

d) that the Directors have prepared the annual accounts on a going concern basis.

DIRECTORS

Dr. Somesh Sharma retires by rotation at the ensuing Annual General Meeting and is eligible for reappointment, which the Board recommends.

Changes during the year

Consequent to the Demerger of the NCE Research Unit of the Company into PHL, following changes took place in the Board of Directors during the year:

1. Mr. Ajay G. Piramal, Dr. (Mrs.) Swati A. Piramal, Dr. R.A. Mashelkar, Mr. N. Santhanam, Prof. Goverdhan Mehta and Sir Ravinder Maini resigned as Directors of the Company with effect from 2nd February, 2012;

2. Mr. Rajesh Laddha and Mr. N.L. Bhatia were appointed as Directors in the resultant casual vacancies with effect from 2nd February, 2012;

3. Dr. Somesh Sharma ceased to be the Managing Director of the Company with effect from 2nd February, 2012. However, he continues to be a member of the Board as a Non-Executive Director. He has also been appointed as Chairman of the Board of Directors.

APPOINTMENT OF MANAGER

In compliance with the requirements of section 269 of the Companies Act, 1956, Mr. Prashant Surana has been appointed as Manager with effect from 3rd February, 2012.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION

Applicable particulars required under Section 217(1)(e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given as Annexure I to this Report.

CORPORATE GOVERNANCE

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite Certificate from Mr. Bharat R. Upadhyay, Practicing Company Secretary, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is annexed hereto as Annexure II and forms part of this report.

HUMAN RESOURCES

The Company continues to focus on its core values of Knowledge, Action and Care and these are reflected in the action and behaviour of our employees. The Company has a formal Reward and Recognition program.

Consequent to the demerger of the NCE Research Unit of the Company into PHL, there were no employees who were in receipt of remuneration exceeding the limits laid down under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975.

Stock Options disclosures pursuant to the applicable requirements of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are given as Annexure III to this Report.

AUDITORS

The current Auditors, M/s. Price Waterhouse & Co., Chartered Accountants, have expressed their unwillingness for their re- appointment as Statutory Auditors of the Company at the ensuing Annual General Meeting.

M/s. Haribhakti &Co., Chartered Accountants, Vadodara are proposed to be appointed as the Auditors of the Company. Requisite special joint notice under Section 225(1) of the Companies Act, 1956, has been received from members signifying their intention to appoint them as Auditors.

M/s. Haribhakti & Co., Chartered Accountants, Vadodara are eligible for appointment as Auditors, which your Board recommends for your approval.

ACKNOWLEDGEMENTS

We take this opportunity to thank the employees for their dedicated service and contribution to the Company. We also thank our banks, financial institutions, business associates and our shareholders for their continued support to the Company.

By Order of the Board

Mumbai N.L. Bhatia Rajesh Laddha

19th May, 2012 Director Director


Mar 31, 2011

We take pleasure in presenting the Annual Report and Audited Accounts for the Year ended 31st March 2011 being 4th Annual Report after the Companys shares were listed on 29th May, 2008.

PERFORMANCE HIGHLIGHTS :

(Rs. in Million)

Year ended March 31 2011 2010 Growth

Income

Sales and Services 158.1 47.4 233.5%

Other Income 0.9 14.7 (93.9%)

Expenditure

Total Operating Expenses 1,090.0 1,071.8 1.7%

(Loss) Before Interest, Depreciation and Tax (931.0)(1,009.7) 7.8%

Less: Interest Paid (Net) 385.5 249.0 --

(Loss) Before Depreciation and Tax (1,316.5) (1,258.7) (4.6)

Less: Depreciation 113.3 106.2 6.7%

(Loss) Before Tax (1,429.8) (1,364.9) (4.8)

Less: Provision for Taxation

Deferred Tax -- (67.0) --

(Loss) For the Year (1,429.8)(1,297.9) (10.2)

(Loss) Balance brought forward from previous year (3,323.5)(2,025.6) --

Net (Loss) (4,753.3)(3,323.5) (43.0)

Balance carried to Balance Sheet (4,753.3)(3,323.5) --

Earning/(Loss) Per Share (Basic/ Diluted) (Rs.) (Face value of Rs. 10/-each) (56.2) (51.0) --

DIVIDEND:

In view of the losses incurred by the Company, the Directors do not recommend any dividend for the Financial Year ended 31st March 2011.

OPERATIONS REVIEW:

During the year, PLSL received initial milestone payment for P2202 from Eil Lilly of Rs. 132.9 million; as a result sales for the year grew by 233.5% to Rs. 158.1 million. PLSL incurred Operating expenditure of Rs. 1,090.0 million as compared to Rs. 1,071.8 million in FY2010. Net capital expenditure was Rs. 68.9 million in FY2011 where as Rs. 99.8 million in FY2010.

AUDITORS OBSERVATIONS:

The observations by the auditors at para no.10 of Annexure to the Auditors Report are appropriately dealt with in note no.3 of Schedule 18 "Notes to Financial Statements".

RESEARCH & DEVELOPMENT:

Details about our Research & Development (R&D) programme can be found in our Management Discussion and Analysis (MDA) section.

INDUSTRY OUTLOOK:

The global pharmaceutical industry is going through a transformation at every stage of drug development. Patent expiries of blockbuster drugs in recent years, challenge by generic drug manufacturers and diminishing success in new drug approvals along with high drug development costs have raised a question on the flow of innovative drugs for future. In recent years, more stringent regulatory environment has created new and challenging hurdles for a new drug to enter the market.

These factors have forced the drug companies to consider alternate strategies. Companies are mending ways by shifting from fully integrated pharmaceutical company model towards a network model of fully integrated pharmaceutical network. The approach is to engage all major stakeholders in the drug development process, melding core competencies of each component to leverage capabilities, enhance efficiency and improve output. This is evidenced by growing number of partnerships and alliances in the pharmaceutical industry. The recent trend in world economy has changed the focus of pharmaceutical companies towards eastern countries like India which has necessary infrastructure, skills and expertise.

INTERNAL CONTROL SYSTEM:

The Company has a sound internal control system, which ensures that all assets are protected against loss from unauthorized use and all transactions are recorded and reported correctly. The internal control systems are further supplemented by internal audit carried out by an independent firm of Chartered Accountants and periodical review by management. The Audit Committee of the Board addresses issues raised by both, the Internal Auditors and Statutory Auditors.

PROPOSED DE-MERGER OF THE COMPANYS NCE RESEARCH UNIT INTO PHL

Your Directors have approved the scheme for De-merger of the NCE Research Unit of the Company into Piramal Healthcare Limited (PHL) (De-merger Scheme). Under the proposed De-merger scheme, each shareholder of the Company will be entitled to one fully paid up equity share of Rs. 2/- of PHL for every four equity shares of Rs. 10/- each held in the Company. All assets and Liabilities of the NCE Research Unit will be transferred to PHL at book value. The Scheme also contemplates utilizing the share premium account to adjust the debit balance in the Profit & Loss account to the extent feasible.

The De-merger Scheme is subject to the consent of requisite majority of shareholders and creditors of the Company and of PHL. The De-merger Scheme is also subject to the sanction of the High Court of Judicature at Bombay and all other regulatory approvals as may be necessary for the implementation of the De-merger Scheme.

HUMAN RESOURCES:

Our people are the most important asset at Piramal Life Sciences Limited (PLSL). We value their talent, integrity and dedication. PLSL has been highly successful in attracting scientists trained abroad with significant drug development experience in big pharmaceutical and biotech companies. Dr. Somesh Sharma leads the team and has over 35 years experience in academia, biotech, and pharmaceutical industry, in the US. Similarly, critical departments such as Medicinal Chemistry, Pharmacology, Analytical Sciences, Clinical, Process Research, Translational Research and more are led by scientists with decades of drug development experience in multi-national corporations. Over 15% of our scientists have been trained abroad and have global experience. As on 31st March 2011, we had 362 employees focused on drug discovery and development. The company continues to focus on its core values of Knowledge, Action and Care and these are reflected in the action and behavior of our employees.

Human Resources Highlights

Strengthening The Development Departments:

In our quest to develop a strong clinical pipeline, the emphasis has been towards strengthening the development departments like Clinical, Toxicology, Translational Research. We have brought in expertise in the areas of clinical and translational activities, to further strengthen our inhouse capabilities.

Developing Campus Relationship And Structured Training Programs:

In order to nurture home-bred scientific talent, whocould be potential future employees, PLSL has developed a relationship with several scientific institutes of repute in India. The scientific student community vies for a training opportunity at PLSL. The best talent is picked up for available training/employment opportunities. PLSL has also been providing training to students from several renowned international universities of repute, who apply and wish to train at our world class R&D facility.

Collaborative Projects Under Public-Private Partnership:

PLSL is involved in projects along with government bodies such as Department of Biotechnology (DBT), Government of India. Many young scientists are receiving scientific and project management training and experience through this initiative.

Opportunities For Development Including Further Studies:

People Development is an important agenda for the organization. Employees wishing to pursue further studies in related fields/ discipline are encouraged to do so. PLSL has tied up with Mumbai University and Vellore Institute of Technology and offers in- house Ph.D programs. To improve knowledge and skills, employees are sponsored for international conferences and seminars. Employees are also encouraged to present their work in scientific conferences and publish their work in peer reviewed journals.

Awards and Recognition:

The Company has initiated a formal Reward and Recognition program. Teams or individuals with exceptional contribution are felicitated by means of cash award and certificates.

Any shareholder interested in obtaining a copy of the statement of particulars of employees referred to in section 217(2A) of the Companies Act 1956, may write to the Company Secretary at the registered office of the Company. The statement is also available for inspection by the members on any working day (except Saturday) upto one day prior to the date of the meeting at the registered office of the Company between 10.00 a.m. to 5.00 p.m.

Stock Options disclosures pursuant to the applicable requirements of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are given in the Annexure to the Report. The Company has received a certificate from the Companys Auditors that the Piramal Life Sciences Limited-Employee Stock Options Scheme has been implemented in accordance with the said Guidelines and the resolution passed by the shareholders. The Certificate would be placed at the Annual General Meeting for inspection by members.

DIRECTORS RESPONSIBILITY STATEMENT:

As required under section 217(2AA) of the Companies Act, 1956 we hereby state:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) 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 as at 31 March 2011 and its loss for the year ended on that date;

c) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities.

d) that the Directors have prepared the annual accounts on a going concern basis.

GROUP:

As per the intimations from the Promoters, the names of the Promoters and the entities comprising group as defined in the Monopolies and Restrictive Trade Practices Act,1969 (MRTP) are given for the purpose of SEBI (Substantial Acquisitions of Shares and Takeovers) Regulations, 1997 in the Annexure to this Report.

DIRECTORS:

Prof. Goverdhan Mehta and Sir Ravinder Maini retire by rotation at the ensuing Annual General Meeting and are eligible for re- appointment which the Board recommends.

Dr. Somesh Sharma was appointed as Managing Director for a period of 2 years with effect from 9th May, 2010, subject to requisite approvals from Central Government which has been received vide its letter dated 12th May, 2011.

CORPORATE GOVERNANCE:

The Company has complied with the applicable provisions of Corporate Governance under Clause 49 of the Listing Agreement with the Stock Exchanges. A separate report on Corporate Governance compliance is included as a part of the Annual Report alongwith the Certificate from Mr. N.L. Bhatia, Practicing Company Secretary.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION :

Particulars required under Section 217 (1) (e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure to this Report.

AUDITORS:

Shareholders are requested to appoint the Auditors. Messrs. Price Waterhouse & Co., Mumbai retire as Auditors of the Company at the ensuing Annual General Meeting and are eligible for reappointment.

ACKNOWLEDGEMENTS:

We take this opportunity to thank the employees for their dedicated service and contribution to the Company. We also thank our bankers, business associates and shareholders for their support towards conduct of operations of the Company.

By Order of the Board

Ajay G. Piramal

Chairman

Mumbai: 21st June, 2011


Mar 31, 2010

We take pleasure in presenting the Annual Report and Audited Accounts for the Year ended 31st March 2010 being 3rd Annual Report after the Companys shares were listed on 29th May, 2008.

PERFORMANCE HIGHLIGHTS : (Rs. in Million) Year ended March 31 2010 2009 Growth Income Sales 47.4 21.3 122.6% Other Income 14.7 1.6 818.8%

Expenditure Total Operating Expenses 1,071.8 930.1 15.2%

(Loss) Before Interest, Depreciation and Tax (1,009.7) (907.2) (11.3%)

Less : Interest Paid (Net) 249.0 95.2 —

(Loss) Before Depreciation and Tax (1,258.7) (1,002.4) (25.6%)

Less : Depreciation - 106.2 98.0 8.4%

(Loss) Before Tax (1,364.9) (1,100.4) (24.0%)

Less: Provision for Taxation

Deferred Tax (67.0) — —

Fringe Benefit Tax — 8.1 —

(Loss) For the Year (1,297.9) (1,108.5) (17.1%)

(Loss) Balance brought forward from previous year (2,025.6) (917.1) —

Net (Loss) (3,323.5) (2,025.6) (64.1%)

Balance carried to Balance Sheet(3,323.5) (2,025.6) —

Earning / (Loss) Per Share (Basic/Diluted) (Rs.) (Face value of Rs. 10/- each) (51.0) (43.6) —

DIVIDEND:

In view of the losses incurred by the Company, the Directors do not recommend any dividend for the Financial Year ended 31st March 2010.

OPERATIONS REVIEW:

During the year, the total sales was Rs. 47.4 million registering growth of 122.6%. This was mainly towards exports of neutraceutical products. The Operating Loss before Interest Depreciation and Tax was Rs. 1,009.7 million as compared to Rs. 907.2 million in FY2009. Net capital expenditure was Rs. 99.8 million in FY2010 whereas it was Rs. 138.5 million in FY2009.

AUDITORS OBSERVATIONS:

The observations by the auditors at para no. 10 of Annexure to the Auditors Report are appropriately dealt with in note no. 3 of Schedule 17 "Notes to Financial Statements" read with para 4 (a) of Auditors Report which are self explanatory.

RESEARCH & DEVELOPMENT:

Details about our Research & Development (R&D) programme can be found in our Management Discussion and Analysis (MDA) section.

INDUSTRY OUTLOOK:

The global pharmaceutical industry is experiencing a challenging business environment due to drying R&D pipeline, poor productivity, rising cost of research and increased regulatory scrutiny. Governments across the world are encouraging generic drugs due to spiraling healthcare budgets. The current global economic climate has now intensified this pressure, creating new imperatives for drug development companies to cut costs.

However, these factors have aided India in emerging as a favorable country for conducting drug discovery and development. India has a vast pool of treatment naive patients that can help in crunching development timelines. Cost of conducting research in India is also considerably lower than western geographies. This combined with the trend of US & European trained Indian scientists returning to India has resulted in tremendous advancement of India drug discovery industry in a short time span.

INTERNAL CONTROL SYSTEM:

The Company has a sound internal control system, which ensures that all assets are protected against loss from unauthorized use and all transactions are recorded and reported correctly. The internal control systems are further supplemented by internal audit carried out by an independent firm of Chartered Accountants and periodical review by management. The Audit Committee of the Board addresses issues raised by both, the Internal Auditors and Statutory Auditors.

HUMAN RESOURCES:

Our people are the most important asset. We value their talent, integrity and dedication. PLSL has been highly successful in attracting scientists trained abroad with significant drug development experience in big pharmaceutical and biofech companies. Dr. Somesh Sharma leads the team and has over 35 years experience in academia, biotech, and pharmaceutical industry, in the US. Similarly, critical drug development departments such as Medicinal Chemistry, Pharmacology, Analytical Sciences, Clinical Development and IPR are headed by scientists with decades of drug development experience in multi-national corporations. 10% scientists with global drug development experience form a part of PLSLs senior and mid-level management positions. As on 31st March 2010 we had 335 employees focused on drug discovery. The company continues to focus on its core values of Knowledge, Action and Care and these are reflected in our employees actions and behavior.

Human Resources Highlights

Creation of New Departments:

A few departments were set up last year to augment the research activities and also to further internal capabilities. The new departments set up were Integrated Projects and Polymer Chemistry.

Strengthening the Development Departments:

In our quest to develop a strong clinical pipeline, the emphasis has been towards strengthening the development departments like Process Research, Chemistry Manufacturing & Control, Clinical Development. We have brought in expertise in the area of Toxicology, to strengthen our in-house capabilities.

Developing Campus Relationship and Structured Trainee Programmes:

In order to nurture home-bread scientific talent, who could be potential future employees, PLSL has developed a relationship with several scientific institutes of repute in India. The scientific student community vies for a training opportunity at Piramal Life Sciences. The best talent is picked up for available training/employment opportunities. PLSL has also been providing training to students from several renowned international universities of repute who apply and wish to train at our world class R&D facility.

Collaborative Projects Under Public-Private Partnership:

PLSL is involved in projects along with government bodies such as Department of Biotechnology (DBT), Government of India. Many young scientists are receiving scientific and project management training and experience through this initiative.

Opportunities for Development Including Further Studies:

People Development is an important agenda for the organization. Employees wishing to pursue further studies in related fields/ discipline are encouraged to do so. In many cases, the course fee is reimbursed. Employees have enrolled for Masters/Ph.D. programmes with several institutions, with the company not only providing permission but also adequate resources to carry out these programmes successfully. PLSL has tied up with Mumbai University and Vellore Institute of Technology and offers in-house Ph.D. programmes. To improve knowledge and skills, employees are sponsored for international conferences and seminars. Employees are also encouraged to present their work in scientific conferences and publish their work in peer reviewed journals.

Rewards and Recognition:

The company has initiated a formal Reward and Recognition program. Teams or individuals with exceptional contribution are felicitated by means of cash award and certificates.

Any shareholder interested in obtaining a copy of the statement of particulars of employees referred to in section 217(2A) of the Companies Act 1956, may write to the Company Secretary at the Registered Office of the Company.

Stock Options disclosures pursuant to the applicable requirements of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are given in the Annexure to the Report. The Company has received a certificate from the Companys Auditors that the Piramal Life Sciences Limited- Employee Stock Option Scheme has been implemented in accordance with the said Guidelines and the resolution passed by the shareholders. The Certificate would be placed at the Annual General Meeting for inspection by members.

CHANGE IN SHARE TRANSFER AGENT:

M/s Link Intime India Pvt. Ltd. (Link Intime) has been appointed as the new Share Transfer Agent of the Company with effect from February 1, 2010. Necessary communication in this regard was mailed individually to all the Shareholders as well as bv advertisement in the newspapers. Contact details of Link Intime have been provided under the Corporate Governance Section of this Annual Report and the same are also available on the website of the Company.

DIRECTORS RESPONSIBILITY STATEMENT:

As required under section 217(2AA) of the Companies Act, 1956 we hereby state:

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) 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 as at 31st March. 2010 and its loss for the year ended on that date;

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

d) that the Directors have prepared the annual accounts on a going concern basis.

GROUP:

As per the intimation from the Promoters, the names of the Promoters and the entities comprising group as defined in the Monopolies and Restrictive Trade Practices Act,1969 (MRTP) are given for the purpose of SEBI (Substantial Acquisitions of Shares and Takeovers) Regulations, 1997 in the Annexure to this Report.

DIRECTORS:

Mr. Gautam Doshi and Dr. R. A. Mashelkar retire by rotation at the ensuing Annual General Meeting and are proposed for re- appointment.

Dr. Somesh Sharma has been re-appointed as Managing Director of the Company for a period of 2 years with effect from 9th May. 2010, subject to requisite approvals.

The Board recommends their re-appointment at the ensuing AGM.

CORPORATE GOVERNANCE:

The Company has complied with the applicable provisions of Corporate Governance under Clause 49 of the Listing Agreement with the Stock Exchanges. A separate report on Corporate Governance compliance is included as a part of the Annual Report alongwith the Certificate from Mr. N. L. Bhatia, Practicing Company Secretary.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION:

Particulars required under Section 217 (1) (e) of the Companies Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure to this Report.

AUDITORS:

Shareholders are requested to appoint the Auditors. Messrs. Price Waterhouse & Co., Mumbai retire as Auditors of the Company at the ensuing Annual General Meeting and are eligible for reappointment.

ACKNOWLEDGEMENTS:

We take this opportunity to thank the employees for their dedicated service and contribution to the Company. We also thank our bankers, business associates and shareholders for their support towards conduct of operations of the Company.

By Order of the Board

Ajay G. Piramal

Chairman

Mumbai : 27th April, 2010

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