Directors Report of Polar Pharma India Ltd.

Mar 31, 2011

Dear Shareholders,

The Directors have the pleasure in presenting their 22nd Annual Report of the Company and the Audited Accounts for the financial year ended 31st March, 2011.

FINANCIAL HIGHLIGHTS (Rs. in Lacs)

Year Ended Year Ended 31stMarch,2011 31st March, 2010

Turnover & Other Income 1094.76 8.47

Profit/(Loss) before 202.71 (196.89) Interest, Depreciation & Extraordinary Item

Interest & finance charges 1332.84 1184.79

Profit/(Loss) before Depreciation 1130.13 (1381.68)

Depreciation 223.02 227.87

Profit/(Loss) before Taxation (1353.15) (1609.55)

Provision for Tax

Current Tax — —

Deferred Tax — —

Profit/(Loss) after Taxation (1353.15) (1609.55)

Add : Balance Profit/ (Loss) brought forward from last year (10030.52) (8420.97)

Balance carried forward to Balance Sheet (11383.67) (10030.52)

DIVIDEND

In view of operational loss incurred during the year, your Directors regret their incapability to declare payment of dividend on equity shares with respect to the year under review.

PERFORMANCE

During the year under review, owing to suspension of factory operations and order constraints till October 2010, your Company suffered huge operating losses during the period of suspension. Your Company in September 2010 succeeded in procuring orders from the Ministry of Health & Family Welfare (MHFW), Government of India (GOI). Factory operations has resumed w.e.f. 01.11.2010 after receipt of orders from the MHFW. Performance during the year showed some signs of recovery.

During the year ended March, 31, 2011, the turnover of the Company has increased to Rs.1085.67 lakhs as against Rs.2.73 lakhs only registered by the Company in the last fiscal. Notwithstanding the loss suffered upto 31st October, 2010, the Company has posted an operating profit before interest and depreciation (EBIDTA) Rs.202.71 lakhs in the entire year against operating loss of Rs.196.89 lakhs in the last fiscal.

DOMESTIC MARKET

During the year ended March 31, 2011 your Company has been able to execute GOI order of the value of Rs.1075 lakhs. Your Company expects to receive orders on a continual basis from them in the coming years.

INTERNATIONAL MARKET

During the year under review, owing to steep rise in prices of indigenous input costs your Company was unable to participate in international tenders.

QUALITY

During the year under review, your Company received orders of the value of Rs.1075 lakhs from the Ministry of Health and Family Welfare (MHFW), Government of India. Factory operations resumed on November 1, 2010. Your Company conforms to good quality maintenance practices.

LONG TERM DEBTS

During the year your Company could not repay any loan installment to Stressed Asset Stabilisation Fund (SASF) and Industrial Investment Bank of India (IIBI) owing to increased working capital requirements. The Company has submitted proposal for One-Time Settlement (OTS) in December 2010 to all the secured creditors.

DIRECTORS

Under Article 116 of the Articles of Association of the Company, Prof. Madhu S. Misra and Mr. V.P. Jain will retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re- appointment.

One of the Directors, Mr. Uma Shankar Sanganeria has resigned on May 15,2011. The Board of Directors placed on record their sincere appreciation for the valuable guidance and contribution made to the Company by Mr..Sanganeria during his respective tenure.

CORPORATE GOVERNANCE

Your Company reaffirms to maintain good Corporate Governance practices. With the purpose of appropriate and timely implementation of the Corporate Governance framework, the Ministry of Corporate Affairs has incorporated certain provisions in the Companies Bill 2009. The Ministry has issued a set of Voluntary Guidelines in the second half of December, 2009 for adoption by the companies. The Guidelines generally outline the conditions for constitution of Nomination Committee, appointment of Directors (including Independent Directors), guiding principles to remunerate Directors, responsibilities of the Board, Risk Management, the enhanced role of Audit Committee, rotation of audit partners and firms and conduct of secretarial audit. Your Company has initiated appropriate action in compliance thereof to the extent viable keeping in view the current position of the Company's business

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

A certificate from the Auditors of the Company ensuring proper compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is presented in a separate section forming part of the Annual Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 (the Act) with respect to Directors' Responsibility Statement, it is hereby confirmed :

a) That in the preparation of the Annual Accounts for the financial year ended 31st March, 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures.

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 at the end of the financial year ended 31st March, 2011 and of the profit or loss of the Company for that financial year.

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 for the financial year ended 31 st March, 2011 on a 'going concern' basis

AUDITORS' REPORT & AUDITORS OBSERVATIONS

Regarding Auditors' observation in point 4(i) of the main report, your Directors wish to clarify that the Company is in the process of compiling information with regard to suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006. In absence of detailed information from the vendors the disclosure as required in Section 22 of said Act could not be given in these accounts. In regard to Auditors' observation in point 4(H) the Company has been providing interest @ 11.5 % p.a. on the loan due from IIBI in terms of the sanction letter dated 26.02.2002. However, as per notice received in an earlier year, IIBI had also claimed payment of liquidated damages, penal interest and additional interest amounting to Rs. 116.33 lacs. As disposal of the application is pending, such amounts have not been provided in the books. No further notice has been received from IIBI for any claim of liquidated damages & penal interest during the year and as such the amount cannot be quantified. In regard to Auditors' observation in point 4(iii) the Company is in the process of obtaining confirmation in respect of balances lying under advances, sundry debtors and sundry creditors. In regard to Auditors' observation in point no. 9(a) the Company could not pay the arrear Statutory Dues amounting to Rs. 167.55 lacs owing to huge losses due to lack of operations during the year. Regarding Auditors' observation in point no. 11 of the Annexure to Auditors' Report for non repayment of loan installments to Industrial Investment Bank of India (IIBI) and Stressed Assets Stabilisation Fund (SASF), your Directors wish to clarify that the Company in view of liquidity constraint consequent to pressing working capital requirements on resumption of factory operations subsequent to receipt of supply orders from MHFW, GOI, the Company could not repay the installments to IIBI, SASF and International Assets Reconstruction Company Limited (IARC). With regard to other observations made in the Auditors' Report, the Notes on the Accounts are self explanatory and hence no further clarification is required.

AUDITORS

The Auditors, M/s. L.B. Jha & Co. hold office till the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Company has received a letter from M/s. L.B. Jha & Co. to the effect that their re-appointment as Auditors, if made, would be within the limits under Section 224(1 B) of the Act. The Members are requested to appoint Auditors for the current year at the Annual General Meeting and to authorize the Board of Directors to fix their remuneration to be mutually agreed upon between the Board and the Auditors.

PARTICULARS RELATING TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

The particulars as prescribed under sub-section 1(e) of Section 217 of the Act, read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed hereto as Annexure -1 to the Directors' Report.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956 (the Act), read with the Companies (Particulars of Employees) Rules, 1975, as amended, regarding employees is given in Annexure It to the Directors' Report.

INDUSTRIAL RELATIONS

The overall relation of the Company with its employees and workmen remained healthy throughout the year. The factory operations resumed on November 1, 2010 owing to receipt of orders from the Ministry of Health & Family Welfare, Government of India.

SUBSIDIARY & CONSOLIDATED FINANCIAL STATEMENTS

As required under Accounting Standard 21 (AS 21) and Clause 32 of the Listing Agreement, the Audited Financial Statements of the Parent Company and the Subsidiary Company has been consolidated and such Consolidated Financial Statements for the year ended 31.03.2011 alongwith the Auditors' Report thereon are annexed hereto and the same form part of this Annual Report.

FIXED DEPOSITS

The Company has not accepted any fixed deposit during the year under review.

ACKNOWLEDGEMENT

Your Directors would like to express their sincere appreciation for the paramount support and cooperation extended to the company by its Shareholders, Depositors, Banks & Financial Institutions, Investors, Suppliers, Dealers and all other Government Agencies including the Board for Industrial & Financial Reconstruction (BIFR). Your Directors also wish to place on record their deep sense of appreciation of the diligent, dedicated and creditable performance of the employees at all levels that constitute the most valuable asset of the Company.

For and on behalf of the Board of Directors

ANIL AGARWAL Chairman & Managing Director

Kolkata, 11th August, 2011.

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Mar 31, 2010

The Directors present their Twenty-first Annual Report of the Company and the Audited Accounts for the financial year ended 31st March, 2010.

FINANCIAL HIGHLIGHT

(Rs. in Lacs)

Year Ended Year Ended

31st March, 2010 31st March, 2009

Turnover & Other Income 8.47 144.30

Profit/ (Loss) before Interest, Depreciation & Extraordinary Item (196.89) (908.86)

Interest & finance charges 1184.79 387.48

Profit/(Loss) before Depreciation (1381.68) (1296.34)

Depreciation 227.87 232.97

Profit/(Loss) before Extraordinary Item (1609.55) (1529.31)

Extraordinary Item - (4400.16)

Profit / (Loss) after Extraordinary Item (1609.55) (5929.47)

Provision for Tax

- Current Tax - 2.98

- Deferred Tax Reversal - 860.58

Profit/(Loss) after Taxation (1609.55) (6793.03)

Add : Balance Profit/(Loss) brought forward from last year (8420.97) (1627.94)

Balance carred forward to Balance Sheet (10030.52) (8420.97)

DIVIDEND

In view of operational loss incurred during the year, your Directors regret their incapability to declare any payment of dividend on shares with respect to the year under review.

PERFORMANCE

During the year ended 31ST March, 2010, the turnover of the Company has dropped to Rs. 2.73 lakhs only as against Rs.25.71 lakhs registered by the Company in the last year. Losses during the year are due to suspension of factory operation leading to no capacity utilization in the absence of Government order and slow down in global economy. Therefore, performance during the year was not upto the mark and hence immensely dissatisfactory.

This year MHFW has already floated a tender and the Company has as usual participated in the tender. The Company is awaiting the final outcome against the said participation.

DOMESTIC MARKET

During the year under review, your Company could not execute any order owing to non-receipt of orders from Ministry of Health and Family Welfare (MHFW), Government of India. Your Company looks forward to receiving orders of higher quantities from them in the current year.

INTERNATIONAL MARKET

Your Company could not assertively participate in international tenders as the sharp rise in the indigenous input costs leaves barely any profit margin in the global tender business.

REFERENCE TO BIFR

The company has submitted a reference u/s 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 alongwith application in Form A with all enclosures to Board for Industrial & Financial Reconstruction (BIFR), New Delhi on 08.10.2009. BIFR in the hearing held on 21.01.2010 after considering the deliberations of various interested parties declared the company as a sick company pursuant to section 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985. BIFR has appointed Stressed Assets Stabilization Fund (SASF), Mumbai as the operating agency. The Company will prepare the rehabilitation scheme immediately after receiving supply order from Ministry of Health & Family Welfare (MHFW), Government of India and submit the same to the operating agency for final submission to BIFR for its consideration and final approval.

QUALITY

Owing to non-release of orders from the Government of India the management has declared suspension of factory operations on November 9, 2008 which is still continuing. Hence, no question regarding maintenance of quality of Companys products arises.

LONG TERM DEBTS

During the year your Company could not repay any loan installment to Stressed Asset Stabilisation Fund (SASF) and Industrial Investment Bank of India (IIBI) owing to huge operating losses.

DIRECTORS

Under Article 116 of the Articles of Association of the Company, Mr. V.P. Jain and Dr. Gora Ghose will retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment.

Mr. R.K. Basu, Director has resigned from the services of the Company with effect from 14.01.2010. The Board placed on record its deep sense of appreciation for the contribution made by Mr. Basu during his short tenure as Director of the Company.

Mr. Uma Shankar Sanganeria has been appointed as an Additional Director with effect from 27th January, 2010. He shall hold office till the conclusion of the ensuing Annual General Meeting. The Company has received a notice under Section 257 of the Companies Act, 1956 for his candidature.

CORPORATE GOVERNANCE

Your Company is committed to uphold good Corporate Governance practices. With the purpose of intensification of the Corporate Governance framework, the Ministry of Corporate Affairs has incorporated certain provisions in the Companies Bill 2009. The Ministry has issued a set of voluntary guidelines in the second half of December, 2009 for adoption by the companies. The Guidelines generally outline the conditions for constitution of nomination committee, appointment of Directors (including Independent Directors), guiding principles to remunerate Directors, responsibilities of the Board, Risk Management, the enhanced role of Audit Committee, rotation of audit partners and firms and conduct of secretarial audit. Your Company is about to initiate appropriate action for compliance thereof.

The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

A certificate from the Auditors of the Company conforming compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is presented in a separate section forming part of the Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 (the Act) with respect to Directors Responsibility Statement, it is hereby confirmed :

a) That in the preparation of the Annual Accounts for the financial year ended 31st March, 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures.

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 at the end of the financial year ended 31st March, 2010 and of the profit or loss of the Company for that financial year.

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 for the financial year ended 31st March, 2010 on a going concern basis.

AUDITORS REPORT & AUDITORS OBSERVATIONS

Regarding Auditors observation in point 4(vi) of the main report, your Directors wish to clarify that the Company is in the process of compiling information with regard to suppliers covered under Micro, Small and Medium Enterprises Development Act, 2006. In absence of detailed information from the vendors the disclosure as required in Section 22 of said Act could not be given in these accounts. In regard to Auditors observation in point 4(vii) the Company is in the process of obtaining confirmation in respect of balances lying under advances, sundry debtors and sundry creditors. In regard to Auditors observation in point 4(viii) the Company has been providing interest @ 11.5% p.a. on the loan due from IIBI in terms of the sanction letter dated 26.02.2002. However, as per notice received in an earlier year, IIBI had also claimed payment of liquidated damages, penal interest and additional interest amounting to Rs. 116.33 lacs. As disposal of the application is pending, such amounts have not been provided in the books. No further notice has been received from IIBI for any claim of liquidated damages & penal interest during the year and as such the amount cannot be quantified. In regard to Auditors observation in point no. 9(a) the Company could not pay the arrear Statutory Dues amounting to Rs.172.10 lacs owing to huge operating cash losses due to lack of operations during the year. Regarding Auditors observation in point no. 11 of the Annexure to Auditors Report for non repayment of loan installments to Industrial Investment Bank of India (IIBI) and Stressed Assets Stabilisation Fund (SASF), your Directors wish to clarify that the Company in view of continuing operating cash losses could not repay the quarterly installments to IIBI and SASF. With regard to other observations made in the Auditors Report, the Notes on the accounts are self explanatory and hence no further clarification is required.

AUDITORS

The Auditors, M/s. L.B. Jha & Co. hold office till the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Company has received a letter from M/s. L.B. Jha & Co. to the effect that their re-appointment as Auditors, if made, would be within the limits under Section 224(1 B) of the Act. The Members are requested to appoint Auditors for the current year at the Annual General Meeting and to authorize the Board of Directors to fix their remuneration to be mutually agreed upon between the Board and the Auditors.

PARTICULARS RELATING TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

The particulars as prescribed under sub-section 1 (e) of Section 217 of the Act, read with Rule 2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed hereto as Annexure -1 to the Directors Report.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956 (the Act), read with the Companies (Particulars of Employees) Rules, 1975, as amended, regarding employees is given in Annexure II to the Directors Report.

INDUSTRIAL RELATIONS

The relation of the company with its employees and workmen has been cordial throughout the year. Suspension of factory operations since 9th November, 2008 which due to non release of orders by Ministry of Health & Family Welfare (MHFW), Govt, of India from time to time has been further extended upto 31st July, 2010.

SUBSIDIARY & CONSOLIDATED FINANCIAL STATEMENTS

As required under Accounting Standard 21 (AS 21) and Clause 32 of the Listing Agreement, the Audited Financial Statements of the Parent Company and the Subsidiary Company has been consolidated and such Consolidated Financial Statements for the year ended 31.03.2010 alongwith the Auditors Report thereon are annexed hereto and the same form part of this Annual Report.

FIXED DEPOSITS

The Company has not accepted any fixed deposit during the year under review.

ACKNOWLEDGEMENT

Your Directors would like to express their sincere appreciation of the cooperation and assistance received from Shareholders, Depositors, Banks & Financial Institutions, Investors, Suppliers, Dealers and all other Government Agencies.

For and on behalf of the Board of Directors

ANIL AGARWAL

Kolkata, 30th July, 2010 Chairman & Managing Director