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Directors Report of Sterling Biotech Ltd.

Mar 31, 2016

Dear Shareholders,

The Directors have pleasure in presenting 30th Annual Report for the fifteen months period ended on March 31, 2016. The Accounting year of the Company has been changed from January -December to April-March in line with the provision of the Companies Act, 2013, which prescribe a uniform financial year. Accordingly, current year''s Annual Accounts and Report of the Company are for a period of fifteen months from January 1, 2015 to March 31, 2016. These figures, therefore, are not comparable with those of the previous year ended on Dec 31, 2014.

FINANCIAL RESULTS FOR THE FIFTEEN MONTHS ENDED ON MARCH 31, 2016 (Rs. in Million)

Particulars

15 Months ended on March 31, 2016

Financial year ended on December 31, 2014

Sales

5,239.90

6,669.51

Total Income

5,318.40

6,706.33

EBIDTA from Operation

722.98

1,149.19

Interest

4,147.82

4,695.06

Depreciation

3,513.20

2,765.74

Profit / (Loss) before Tax and Extraordinary item

(6,938.05)

(6,311.61)

Extraordinary items

-

-

Profit / (Loss) before Tax

(6,938.05)

(6,311.61)

Provision for Current Tax

0.00

0.00

Provision for Deferred Tax

(2,251.10)

(2,047.80)

Profit / (Loss) after Tax

(4,686.95)

(4,263.81)

OPERATIONS:

The total income of the Company in the current year has been Rs.5318.40 Million and in the previous year it was Rs.6, 706.33 Million. The finance cost has been Rs.4,147.87 Million and in the previous year it was Rs.4,695.06 Million. The Loss before Tax has been Rs.6,938.05 Million as and in the previous year it was Rs.6,311.61 Million. The loss after tax in the current year has been Rs.4,686.95 Million and in the previous year it was Rs.4,263.81 Million.

REASONS OF REDUCTION IN PROFITABILITY:

The major reasons for reduction in profitability are, Increase in Effluent Treatment cost due to increase in standards, global economic slowdown, increase in the cost of raw materials, the selling prices have remained more or less stable there by the increase in cost could not be passed on to the buyer and non availability of raw material due to restriction on slaughtering activity.

CORRECTIVE STEPS TAKEN BY MANAGEMENT:

1. Company has taken action like thorough study on the effluent discharge issue, tightening of quality norms for effluent discharge from the plant, evaluation of requirement of modification of existing effluent discharge problem and the necessary CAPEX has also been incurred by the company.

2. The Company has put in place the cost control measures like hard negotiation with the material suppliers, improvement in and tightening up of cost control system etc.

Company expects that the combined effect of all these factors would be favorable for overall operations.

DIVIDEND & TRANSFER TO RESERVE :

In view of the loss for the fifteen months period ended on March 31, 2016 no amount is proposed to be transferred to the reserve(s) and your Directors have not recommended payment of any dividend for the year under review.

SHARE CAPITAL:

The paid up Equity Share Capital of the Company as on March 31, 2016 was Rs.272,170,388 divided into 272,170,388 Equity Shares of Rs.1/- each and Preference Share Capital as on that date was Rs.18,424,500,000 divided into 1.842.450.000 number of Unlisted 8% Redeemable Cumulative Non-Participating Non-Convertible Preference Shares of Rs.10/- each having no voting rights.

ISSUE OF PREFERENCE SHARES:

During the year of 15 months, with a view to mitigate the financial crunch, promoters have funded Rs.3356,234,020 by subscribing to preference shares and the Company has issued and allotted 335,623,402 Unlisted 8% Redeemable Cumulative Non- Participating Non-Convertible Preference Shares carrying no voting rights of face value of Rs.10/- each at par to entities in which promoters are interested.

FCCB CONVERSION INTO EQUITY SHARES OR GDRs :

The FCCBs are convertible into equity shares or GDRs of the Company. During the year pursuant to Conversion of USD 153.000 FCCBs, the Company has issued 122,400 equity shares. After conversion, the outstanding FCCBs are USD 201,082,000.

QUALITY:

Meeting the stringent quality standards required by our international clientele, our facilities have earned certifications including:

- Hazardous Analysis and Critical Control Point Certification (HACCP)

- ISO 9001

- ISO 14001

- European Directorate For Quality of Medicine Certification (EDQM)

- Kosher Certificate

- IFANCA Halal Certificate

NUMBER OF BOARD MEETINGS:

During the period of fifteen months ended on March 31, 2016, the Board of Directors met Nine (9) times viz., on February 28, 2015, March 25, 2015, March 31, 2015, May 15, 2015, August 14, 2015, September 26, 2015, November 06, 2015, December 31, 2015 and February 12, 2016. The maximum interval between any two meetings did not exceed 120 days. Details of the meetings of the Board along with the attendance of the Directors therein have been disclosed as part of the Corporate Governance Report.

COMMITTEES OF THE BOARD OF DIRECTORS :

The Board has constituted following committees of Directors to deal with matters and monitor the activities falling within the respective terms of reference:-

- Audit Committee

- Nomination and Remuneration Committee

- Stakeholders Relationship Committee

- Corporate Social Responsibility Committee

The details of the membership, terms of reference and attendance at the meetings of the above Committees of the Board are provided in the Corporate Governance Report forming a part of this Annual Report. There has been no instance where the Board has not accepted the recommendations of the Audit Committee.

DIRECTORS:

Pursuant to Section 152 of the Companies Act, 2013, Mr. Nitin Sandesara and Mr. Chetan Sandesara, Directors of the Company, retires by rotation and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting.

DECLARATION OF INDEPENDENCE BY DIRECTOR:

Pursuant to the provisions under Section 134(3)(d) of the Companies Act, 2013, with respect to statement on declaration given by Independent Directors under Section 149(6) of the Companies Act, 2013, the Board hereby confirm that all the Independent Directors of the Company have given a declaration and have confirmed that they meet the criteria of independence as provided in the said Section 149(6) read with Regulation 16 of Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015.

SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES:

The Company has Overseas Subsidiary namely, Sterling Fincom Private Limited, Mauritius which also has a subsidiary namely Sterling Commercial FZE, U.A.E.

DEPOSITS:

During the period of fifteen months ended on March 31, 2016 your Company has not accepted any fixed deposits from the public falling under Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. Thus, as on March 31, 2016, there were no deposits which were unpaid or unclaimed and due for repayment.

AUDITORS:

The Statutory Auditors, M/s. H. S. Hathi & Co., Chartered Accountants, Mumbai (Firm Registration No:103596W) who will retire at the conclusion of 30th Annual General Meeting to be held on September 30, 2016 and being eligible, will offer themselves for re-appointment.

The Company has received letter from M/s. H. S. Hathi & Co., Chartered Accountants, to the effect that their appointment, if made, would be within the prescribed limits under Section 141 (3) (g) of the Act and that they are not disqualified for such appointment within the meaning of Section 141 of the Act.

The observations and comments given by Auditors in their report read together with notes to Accounts are self explanatory and hence do not call for any further comments under Section 134 of the Act. The Auditors'' Report does not contain any qualification, reservation or adverse remark.

SECRETARIAL AUDITOR:

A Secretarial Audit was conducted during the period of fifteen months ended on March 31, 2016 by the Secretarial Auditor M/s. Ramesh Kheradia a Company Secretary in Practice. The Report of Secretarial Audit in form of MR-3 for period of fifteen months ended on March 31, 2016 is attached as Annexure - 2 to the Report.

Secretarial Auditor gave the qualifications in his report for Non appointment of Compliance officer as per listing agreement and Non appointment of Company Secretary and Chief Financial Officer as per Section 203 of the Companies Act, 2013.

The Company is in process of making the appointments in compliance with the applicable provisions.

INDUSTRIAL RELATIONS:

The industrial relations of the Company continued to remain cordial. The Directors wish to place on record their sincere appreciation for the co-operation extended and the valuable contribution made by the employees at all levels.

RELATED PARTY TRANSACTIONS:

All contract(s) / arrangement(s) / transaction(s) entered into by your Company with its related parties, during the year under review, were:

- in "ordinary course of business" of the Company;

- on "an arm''s length basis"; and

- not "material",

As per the provisions of Section 188(1) of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014. Accordingly, Form AOC-2, prescribed under the provisions of Section 134 (3) (h) of the Act and Rule 8 of the Companies (Accounts) Rules, 2014, for disclosure of details of Related Party Transactions, which are "not at arm''s length basis" and also, which are "material & at arm''s length basis", is not provided as an annexure of the Directors'' Report.

However, details of the Related Party Transactions entered into during the year under review and as on March 31, 2016, are disclosed as part of the financial statements of your Company for the year under review, as Note 27. Further, pursuant to the provisions of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Board has, approved and adopted a Policy on Related Party Transactions. The said policy is available on your Company''s website viz. www.sterlingbiotech.in.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND:

Pursuant to provisions of Section 205A of the Companies Act, 1956 [pursuant to rule 3 of the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001] the unpaid/unclaimed dividend pertaining to the year ended on December 31, 2007 amounting to Rs.38,81,182/- (including interest accrued thereon) which was lying in the Company''s separate unpaid dividend account and remaining unclaimed for a period of seven years, was transferred to the Investor Education and Protection Fund (IEPF).

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

Loans, and investments covered under Section 186 of the Companies Act, 2013 form part of the Notes to the financial statements provided in this Annual Report.

The Company has not provided any guarantee as prescribed under section 186 of the Companies Act, 2013.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE:

During the period of fifteen months ended on March 31, 2016, there were no such orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

There have been no material changes and commitments, affecting the financial position of the Company which occurred between the end of period of fifteen months ended on March 31, 2016 to which the financial statements relate and the date of this report.

NOMINATION AND REMUNERATION POLICY

The Company follows a policy on nomination and remuneration of Directors and Senior Management Employees. The Policy is approved by the Nomination and Remuneration Committee. The policy on the above is attached herewith as Annexure- 3.

CORPORATE SOCIAL RESPONSIBILITY (CSR) :

Corporate Social Responsibility is a Company''s sense of responsibility towards the community and environment in which it operates. It is the continuing commitment by business to behave ethically and contribute to economic development of the society at large and building capacity for sustainable livelihoods. The Company believes in conducting its business responsibly, fairly and in a most transparent manner. It continually seeks ways to bring about an overall positive impact on the society and environment where it operates and as a part of its social objectives.

This policy has been formally formulated and adopted in terms of Section 135 of the Companies Act, 2013 and Rules framed there under to undertake CSR activities.

The responsibilities of the CSR Committee include:

1. Formulating and recommending to the Board of Directors the CSR Policy and indicating activities to be undertaken.

2. Recommending the amount of expenditure for the CSR activities.

3. Monitoring CSR activities from time to time.

In view of the losses for the year under review, your Company was not required to spend any amount towards the CSR activities, as per the applicable provisions of Section 135 of the Companies Act, 2013. Accordingly, the details of the CSR activities during the year under review are not provided in this Report.

BOARD EVALUATION:

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and Individual Directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of Committees, effectiveness of Committee Meetings, etc.

The Board and the Nomination and Remuneration Committee reviewed the performance of the Individual Directors on the basis of the criteria such as the contribution of the Individual Director to the Board and Committee Meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the chairman was also evaluated on the key aspects of his role.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, performance of the board as a whole and performance of the chairman was evaluated, taking into account the views of Executive Directors and Non-Executive Directors. The same was discussed in the Board Meeting that followed the meeting of the independent directors, at which the performance of the Board, its committees and Individual Directors was also discussed. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

CORPORATE GOVERNANCE:

Corporate governance requirements under the Companies Act, 2013, and as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. A separate section on corporate governance under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, along with the certificate from the Statutory Auditor confirming the compliance, is annexed and forms part of this Annual Report in Annexure - 4.

MANAGEMENT DISCUSSION & ANALYSIS:

Management Discussion and Analysis for the year under review, as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is presented in a separate section forming part of the Annual Report in Annexure - 1.

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return i n form MGT-9 is annexed herewith as Annexure- 5.

PARTICULARS OF EMPLOYEES:

There are no employees drawing remuneration of more than One crore and two lacs rupees limit as specified under provisions of Section 197(12) of the Act and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

VIGIL MECHANISM:

Your Company has a well-defined ''Whistle Blower Policy'' and established Vigil Mechanism to provide for adequate safeguard against victimisation of Directors and employees who follow such mechanism and also make provisions for direct access to the chairperson of Audit Committee in appropriate cases. Details of the Vigil Mechanism policy are made available on the Company''s website at www.sterlingbiotech.in/investors.html.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS:

All new Independent Directors (IDs) inducted into the Board are given an orientation. Presentations are made by Executive Directors (EDs) and Senior Management giving an overview of the Company''s operations, to familiarize the new IDs with the Company''s business operations. The new IDs are given an orientation on our products, group structure and subsidiary Company, Board constitution and procedures, matters reserved for the Board, and the Company''s major risks and risk management strategy. The Policy on the Company''s Familiarization Programme for IDs can be accessed at www.sterlingbiotech.in/investors.html

INTERNAL CONTROL AND ITS ADEQUACY:

The Company has adequate internal controls and processes in place with respect to its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. These controls and processes are driven through various policies, procedures and certifications. The processes and controls are reviewed periodically. The Company has a mechanism of testing the controls at regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity of financial information.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place a Policy against Sexual Harassment at work place in line with the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set-up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this Policy. No complaint received by the Committee during the year.

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

The information required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure-6.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 134 (3) (c) of the Companies Act, 2013, your directors hereby states that :

a) In the preparation of the annual accounts, the applicable Accounting Standards have been followed and there are no material departures from the same;

b) The accounting policies have been selected and these have been applied consistently and judgments and estimates made thereon are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company for the fifteen months period ended on March 31, 2016 and of the loss of the Company for the aforesaid period;

c) Proper and sufficient care has been taken 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) Annual accounts of the Company have been prepared on a ''Going Concern'' basis;

e) Internal financial controls have been laid down and being followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; and

f) Proper systems to ensure compliance with the provisions of all applicable laws have been devised.

ACKNOWLEDGEMENT:

Your Directors would like to express their sincere appreciation for the cooperation and assistance received from shareholders, bankers, financial institutions, regulatory bodies and other business constituents during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers and staff of the Company during the financial year.

For and on behalf of the Board of Directors

Nitin Sandesara Chetan Sandesara

Managing Director Jt. Managing Director

Mumbai : September 02, 2016 (DIN: 00255496) (DIN: 00255671)


Dec 31, 2014

The Members Sterling Biotech Limited

We have great pleasure in presenting the 29th Annual Report of the Company together with the audited statements of accounts for the year ended 31st December, 2014.

FINANCIAL HIGHLIGHTS

(Rs. in Million)

Particulars Year Ended Year Ended 31st December 2014 31st December 2013

Sales 6,669.51 7,180.69

Total Income 6,706.33 7,223.30

EBIDTA from Operation 1,149.19 989.41

Interest 4,695.06 4,377.08

Depreciation 2,765.74 2,543.17

Profit / (Loss) before Tax and Extraordinary item (6,311.61) (5,930.83)

Extraordinary items - -

Profit/(Loss) before Tax (6,311.61) (5,930.83)

Provision for Current Tax 0.00 0.00

Provision for Deferred Tax (2,047.80) (1,924.30)

Profit / (Loss) after Tax (4,263.81) (4,006.53)

DIVIDEND

Having regard to the loss for the year ended 31st December, 2014, your Directors do not recommend any dividend for the year.

OPERATIONS

During the year under review, the turnover (including other income) of the Company decreased to Rs. 6,706.33 Million as against Rs. 7,223.30 Million in the previous year. The finance cost increased to Rs. 4,695.06 Million as against Rs. 4,377.08 Million in the previous year. The Loss before tax was Rs. 6,311.61 Million as against Rs. 5,930.83 Million in the previous year. After reducing the deferred tax, the loss after tax was Rs. 4,263.81 Million as against Rs. 4,006.53 Million in the previous year.

REASONS OF REDUCTION IN PROFITABILITY

The major reasons for reduction in profitability are, Increase in Effluent Treatment cost due to increase in standards, global economic slowdown, increase in the cost of raw materials, the selling prices have remained more or less stable there by the increase in cost could not be passed on to the buyer.

CORRECTIVE STEPS TAKEN BY MANAGEMENT

1. Company has taken action like thorough study on the effluent discharge issue, tightening of quality norms for effluent discharge from the plant, evaluation of requirement of modification of existing effluent discharge problem and the necessary CAPEX has also been incurred by the company.

2. The Company has put in place the cost control measures like hard negotiation with the material suppliers, improvement in and tightening up of cost control system etc.

Company expects that the combined effect of all these factors would be favorable for overall operations.

SUBSIDIARY COMPANY

The Company has Overseas Subsidiary namely, Sterling Fincom Private Limited, Mauritius which also has a subsidiary namely Sterling Commercial FZE, U.A.E. However there are no business operations in the said subsidiaries.

ISSUE OF PREFERENCE SHARES

During the year, with a view to mitigate the financial crunch, promoters have funded Rs. 15,068,265,980 by subscribing to preference shares and the Company has issued and allotted 1,506,826,598 Unlisted 8% Redeemable Cumulative Non- Participating Non-Convertible Preference Shares carrying no voting rights of face value of Rs. 10/- each at par to entities in which promoters are interested.

ISSUE OF FRESH FCCBs IN LIEU OF EXISTING FCCBs

During the year, the Company has completed the Cashless Exchange Offer by issue of the Zero Coupon Convertible Bonds due 2019 aggregating to US$ 206,464,000 in exchange of outstanding Foreign Currency Convertible Bonds due 2012 of which USD 134,500,000 in principle amount remained outstanding.

As per the terms of the Cashless Exchange Offer, Now the Company''s obligation to the holders of the Foreign Currency Convertible Bonds due 2012 with respect to payment of principal, interest, default interest and premium stands discharged in full and no other amounts shall be payable to the holders of Foreign Currency Convertible Bonds due 2012. The FCCBs due 2019 carry a 0% coupon with a yield of 5.43% per annum calculated on semi-annual basis and convertible at a conversion price of Rs. 60.00 per share with fixed rate of exchange on conversion of Rs. 48/- per United States Dollar.

QUALITY

Meeting the stringent quality standards required by our international clientele, our facilities have earned certifications including:

- Hazardous Analysis and Critical Control Point Certification (HACCP)

- ISO 9001

- ISO 14001

- European Directorate For Quality of Medicine Certification (EDQM).

- Kosher Certificate

- IFANCA Halal Certificate MANAGEMENT DISCUSSION AND ANALYSIS

A separate report on Management Discussion and Analysis pursuant to Clause 49 of the Listing Agreement entered with stock exchanges is enclosed as a part of this Directors'' Report.

REPORT ON CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement entered with stock exchanges, a separate section on Corporate Governance is attached to the Annual Report.

DIRECTORS

It is lamentable and shocking to note the sad demise of Shri N. B. Patel, Director of the company. Shri N. B. Patel was on the Board of Directors of the company for many years. May his soul rest in peace and may almighty give courage to the members of the bereaved family to withstand this irreparable loss to them. The Directors would like to place on record their sincere appreciation for his commitment and contribution made by him during his tenure on the Board.

Shri Vilas Joshi and Shri P. B. Mehta, Directors of the Company, retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. The Board recommends their re-appointment.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm:

i) That in the preparation of the Annual Accounts for the year ended 31st December, 2014 the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

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

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

iv) That the Directors have prepared the Annual Accounts for the year ended 31st December, 2014 on a going concern basis.

FIXED DEPOSITS

The Company did not accept any deposits from the Public during the year under review.

AUDITORS

M/s. H. S. Hathi & Co., Chartered Accountants, Auditors of the Company shall retire at the conclusion of the ensuing Annual General Meeting and having furnished the required certificate pursuant to Section 224(1B) of the Companies Act, 1956, are eligible for re-appointment. The Board recommends their re-appointment. In respect of observations made by the Auditors in their Report, your Directors wish to state that the respective notes to the accounts are self-explanatory, and do not call for any further comments.

INDUSTRIAL RELATIONS

The industrial relations of the Company continued to remain cordial. The Directors wish to place on record their sincere appreciation for the co-operation extended and the valuable contribution made by the employees at all levels.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended regarding employees is given in annexure to the Director''s Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Annual Report is being sent to all shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such information may inspect at or write to the Company''s Registered Office address.

CHANGE IN ACCOUNTING YEAR

Our Company has financial year ended on December 31 every year. Pursuant to Section 2(41) of the Companies Act, 2013, we are required to change financial year from December to March. Therefore our next financial statement will be prepared for a period of fifteen months starting from 1st January, 2015 and ended on 31st March, 2016.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo required to be given by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure to this Report in the prescribed format under these rules.

ACKNOWLEDGEMENTS

We appreciate the valuable co-operation extended by the Central and State Government Authorities and all other Regulatory Authorities and are extremely grateful to Financial Institutions, ECB Lenders, Facility Agent(s), FCCB Holders and our bankers for their continued assistance and guidance. We are also grateful to our employees, shareholders, GDR Holders, Depositories, customers for their co-operation and look forward to their support in the future.

For and on behalf of the Board of Directors

NITIN J. SANDESARA CHETAN J. SANDESARA Managing Director Jt. Managing Director

Place: Mumbai DIN: 00255496 DIN: 00255671

Date: 28th February, 2015


Dec 31, 2013

The Director have great pleasure in presenting the 28th Annual Report of the Company together with the audited statements of accounts for the year ended 31st December, 2013.

FINANCIAL HIGHLIGHTS

( Rs.In Million)

Particulars Year Ended Year Ended 31st December 2013 31st December 2012

Sales 7,180.69 8,347.74

Total Income 7,223.30 8,417.97

EBIDTA from Operation 989.41 1,546.24

Interest 4,377.08 4,123.28

Depreciation 2,543.17 2,588.31

Profit / (Loss) before Tax and Extraordinary item (5,930.83) (5,165.35)

Extraordinary items 0.00 (12.19)

Profit / (Loss) before Tax (5,930.83) (5,177.54)

Provision for Current Tax 0.00 0.00

Provision for Deferred Tax (1,924.30) (1,679.80)

Profit / (Loss) after Tax (4,006.53) (3,497.74)

DIVIDEND

Having regard to the loss for the year ended 31st December, 2013, your Directors do not recommend any dividend for the year.

OPERATIONS

During the year under review, the turnover (including other income) of the Company is decreased to Rs.7,223.30 Million as against Rs.8,417.97 Million in the previous year. The finance cost was increased to Rs. 4,377.08 Million as against Rs.4,123.28 Million in the previous year. The Loss before tax was Rs.5,930.83 Million as against Rs.5,177.54 Million in the previous year. After reducing the deferred tax, the loss after tax was Rs.4,006.53 Million as against Rs.3,497.74 Million in the previous year.

REASONS OF REDUCTION IN PROFITABILITY

The major reasons for reduction in profitability are, Increase in Effluent Treatment cost due to increase in standards, global economic slowdown, increase in cost of fuel, increase in the cost of raw materials, the selling prices have remained more or less stable there by the increase in cost could not be passed on to the buyer.

CORRECTIVE STEPS TAKEN BY MANAGEMENT

1. Company has taken action like thorough study on the effluent discharge issue, tightening of quality norms for effluent discharge from the plant, evaluation of requirement of modification of existing effluent discharge problem and the necessary CAPEX has also been incurred by the company.

2. The Company has put in place the cost control measures like hard negotiation with the material suppliers, improvement in and tightening up of cost control system etc.

Company expects that the combined effect of all these factors would be favorable for overall operations.

SUBSIDIARY COMPANY

The Company has Overseas Subsidiary namely, Sterling Fincom Private Limited, Mauritius which also has a subsidiary namely Sterling Commercial FZE, U.A.E. However there are no business operations in the said subsidiaries.

QUALITY

Meeting the stringent quality standards required by our international clientele, our facilities have earned certifications including:

- Hazardous Analysis and Critical Control Point Certification (HACCP)

- ISO 9001

- ISO 14001

- European Directorate For Quality of Medicine Certification (EDQM).

- Kosher Certificate

- IFANCA Halal Certificate

- Trading House Certificate

MANAGEMENT DISCUSSION AND ANALYSIS

A separate report on Management Discussion and Analysis pursuant to Clause 49 of the Listing Agreement entered with stock exchanges is enclosed as a part of this Directors'' Report.

REPORT ON CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement entered with stock exchanges, a separate section on Corporate Governance is attached to the Annual Report.

DIRECTORS

Shri R. B. Dixit and Shri N. B. Patel, Directors of the Company, retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. The Board recommends their re- appointment. The term of office of Shri Chetan Sandesara as Joint Managing Director expired on 14th July, 2013. The Board of Directors at their meeting held on 14th August, 2013 re-appointed him as Joint Managing Director for a further period of five years from 15th July, 2013 subject to your approval at the ensuing Annual General Meeting of the Company. The Board recommends his re-appointment..

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm:

i) That in the preparation of the Annual Accounts for the year ended 31st December, 2013 the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

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

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

iv) That the Directors have prepared the Annual Accounts for the year ended 31st December, 2013 on a going concern basis.

FIXED DEPOSITS

The Company did not accept any deposits from the Public during the year under review.

AUDITORS

M/s. H. S. Hathi & Co., Chartered Accountants, Auditors of the Company shall retire at the conclusion of the ensuing Annual General Meeting and having furnished the required certificate pursuant to Section 224(1B) of the Companies Act, 1956, are eligible for re-appointment. The Board recommends their re-appointment. In respect of observations made by the Auditors in their Report, your Directors wish to state that the respective notes to the accounts are self-explanatory, and do not call for any further comments.

INDUSTRIAL RELATIONS

The industrial relations of the Company continued to remain cordial. The Directors wish to place on record their sincere appreciation for the co-operation extended and the valuable contribution made by the employees at all levels.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended regarding employees is given in annexure to the Director''s Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Annual Report is being sent to all shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such information may inspect at or write to the Company''s Registered Office address.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo required to be given by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure to this Report in the prescribed format under these rules.

ACKNOWLEDGEMENTS

We appreciate the valuable co-operation extended by the Central and State Government Authorities and all other Regulatory Authorities and are extremely grateful to Financial Institutions, ECB Lenders, Facility Agent(s), FCCB Holders and our bankers for their continued assistance and guidance. We are also grateful to our employees, shareholders, GDR Holders, Depositories, customers for their co-operation and look forward to their support in the future.



For and on behalf of the Board of Directors



NITIN J. SANDESARA

Chairman and Managing Director



Place: Mumbai

Date: 28th February, 2014


Dec 31, 2012

To The Members of Sterling Biotech Limited

The have great pleasure in presenting the 27th Annual Report of the Company together with the audited statements of accounts for the year ended 31st December, 2012.

FINANCIAL HIGHLIGHTS

( In Million)

Particulars Year Ended Year Ended 31st December 2012 31st December 2011

Sales 8,347.74 16,619.54

Total Income 8,417.97 16,712.62

EBIDTA from Operation 1,546.24 6,467.15

Interest 4,123.28 2,704.31

Depreciation 2,588.31 2,522.25

PBT and Extraordinary item (5,165.35) 1,240.59

Extraordinary items (12.19) (962.27)

PBT (5,177.54) 278.32

Provision for Current Tax 0.00 57.00

Provision for Deferred Tax (1,679.80) 30.00

PAT (3,497.74) 191.32



DIVIDEND

Having regard to the loss for the year ended 31st December, 2012, your Directors do not recommend any dividend for the year.

OPERATIONS

During the year under review, the company achieved a turnover (including other income) of Rs. 8,417.97 Million. The net loss from operations was Rs. 1,054.26 Million. The finance cost was Rs. 4,123.28 Million. The Loss before tax was Rs. 5,177.54 Million. After reducing the deferred tax, the loss after tax was Rs. 3,497.74 Million. The Net worth as at 31st December 2012 stood at Rs. 18,707.77 Million.

REASONS OF REDUCTION IN PROFITABILITY

The major reasons for reduction in profitability are, Increase in Effluent Treatment cost due to increase in standards, global economic slowdown, increase in cost of fuel, increase in the cost of raw materials, the selling prices have remained more or less stable there by the increase in cost could not be passed on to the buyer.

CORRECTIVE STEPS TAKEN BY MANAGEMENT

1. Company has taken action like thorough study on the effluent discharge issue, tightening of quality norms for effluent discharge from the plant, evaluation of requirement of modification of existing effluent discharge problem and the necessary CAPEX has also been incurred by the company.

2. The Company has put in place the cost control measures like hard negotiation with the material suppliers, improvement in and tightening up of cost control system etc.

Company expects that the combined effect of all these factors would be favorable for overall operations.

SUBSIDIARY COMPANY

The Company have formed Overseas Subsidiary namely, Sterling Fincom Private Limited, Mauritius which also has a subsidiary namely Sterling Commercial FZE, U.A.E and there are no business operations in the said subsidiaries.

QUALITY

Meeting the stringent quality standards required by our international clientele, our facilities have earned certifications including:

Hazardous Analysis and Critical Control Point Certification (HACCP)

ISO 9001

ISO 14001

European Directorate For Quality of Medicine Certification (EDQM).

Kosher Certificate

IFANCA Halal Certificate

Trading House Certificate

MANAGEMENT DISCUSSION AND ANALYSIS

A separate report on Management Discussion and Analysis pursuant to Clause 49 of the Listing Agreement entered with stock exchanges is enclosed as a part of this Directors'' Report.

REPORT ON CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement entered with stock exchanges, a separate section on Corporate Governance is attached to the Annual Report.

DIRECTORS

Shri Vilas Joshi and Shri P. B. Mehta, Directors of the Company, retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. The Board recommends their re-appointment. The term of office of Shri Nitin Sandesara as Managing Director expired on 28th February, 2013. The Board of Directors at their meeting held on 1st March, 2013 re-appointed him as Managing Director for a further period of five years subject to your approval at the ensuing Annual General Meeting of the Company. The Board recommends his re-appointment.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm :

i) That in the preparation of the Annual Accounts for the year ended 31st December, 2012 the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

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

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

iv) That the Directors have prepared the Annual Accounts for the year ended 31st December, 2012 on a going concern basis.

FIXED DEPOSITS

The Company did not accept any deposits from the Public during the year under review.

AUDITORS

M/s. H. S. Hathi & Co., Chartered Accountants, Auditors of the Company shall retire at the conclusion of the ensuing Annual General Meeting and having furnished the required certificate pursuant to Section 224(1B) of the Companies Act, 1956, are eligible for re-appointment. The Board recommends their re-appointment. In respect of observations made by the Auditors in their Report, your Directors wish to state that the respective notes to the accounts are self-explanatory, and do not call for any further comments.

INDUSTRIAL RELATIONS

The industrial relations of the Company continued to remain cordial. The Directors wish to place on record their sincere appreciation for the co-operation extended and the valuable contribution made by the employees at all levels.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended regarding employees is given in annexure to the Director''s Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Annual Report is being sent to all shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such information may inspect at or write to the Company''s Registered Office address.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo required to be given by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure to this Report in the prescribed format under these rules.

ACKNOWLEDGEMENTS

We appreciate the valuable co-operation extended by the Central and State Government Authorities and all other Regulatory Authorities and are extremely grateful to Financial Institutions, ECB Lenders, Facility Agent(s), FCCB Holders and our bankers for their continued assistance and guidance. We are also grateful to our employees, shareholders, GDR Holders, Depositories, customers for their co-operation and look forward to their support in the future.

For and on behalf of the Board of Directors

NITIN J. SANDESARA

Chairman and Managing Director

Place: Mumbai

Date: 1st March, 2013


Dec 31, 2011

To The Members Sterling Biotech Limited

The have great pleasure in presenting the 26th Annual Report of the Company together with the audited statements of accounts for the year ended 31st December, 2011.

FINANCIAL HIGHLIGHTS (Rs In Million)

Particulars Year Ended Year Ended 31st December 2011 31st December 2010

Sales 16,619.54 16,165.78

Total Income 16,712.62 16,272.16

EBIDTA 6,467.15 7,077.20

Interest 2,704.31 2,304.70

Depreciation 2,522.25 1,976.22

PBT and Extraordinary item 1,240.59 2,796.28

Extraordinary items (962.27) (631.05)

PBT 278.32 2,165.23

Provision for Current Tax 57.00 402.00

Provision for Deferred Tax 30.00 310.00

PAT 191.32 1,453.23

Proposed Dividend 0.00 133.94

Dividend Tax 0.00 22.76

Transfer to Debenture Redemption Reserve 107.14 107.14

Balance carried to Balance Sheet 92.34 1,198.23

EPS(Rs) 0.71 15.69

DIVIDEND

In view of sharp decline in profit and with a view to conserve the resources, the Board of Directors do not recommend any dividend.

OPERATIONS

During the year under review, net sales increased to Rs 16,619.54 million, an increase of 2.81 percent, while total Income grew 2.71 Percent to Rs 16,71 2.62 million from the previous year. Net Profit decreased to Rs 191.32 Million as compared Rs 1,453.23 million for the previous year. Earning per share decreased to Rs 0.71 from Rs 5.69 for the previous year.

CURRENT SCENARIO

Gelatin being a natural product has extensive usage in the Pharma industry. The recent overdrive for the better environmental management has put up the plant operations under stringent conditions & thereby partially affecting the plant operations. This has necessitated the improvement in Effluent Treatment Plants (ETP).

Besides, following are some of the key reasons contributing to the present scenario

1. Increase in Cost of Fuel.

2. Increase in Bone prices.

3. Increase in Effluent Treatment Cost.

SUBSIDIARY COMPANY

During the year, the Company have formed Overseas Subsidiary namely, Sterling Fincom Private Limited, Mauritius and there are no business operations in the said subsidiary.

QUALITY

Meeting the stringent quality standards required by our international clientele, our facilities have earned certifications including:

- Hazardous Analysis and Critical Control Point Certification (HACCP)

- ISO 9001

- ISO 14001

- European Directorate For Quality of Medicine Certification (EDQM).

- Sepharbi Kosher Certificate

- IFANCA Halal Certificate

- Trading House Certificate

MANAGEMENT DISCUSSION AND ANALYSIS

A separate report on Management Discussion and Analysis pursuant to Clause 49 of the Listing Agreement entered with stock exchanges is enclosed as a part of this Directors' Report.

REPORT ON CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement entered with stock exchanges, a separate section on Corporate Governance is attached to the Annual Report.

DIRECTORS

Shri R. B. Dixit and Shri N. B. Patel, Directors of the Company, retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. The Board recommends their re-appointment.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1 956, the Directors hereby confirm:

i) That in the preparation of the Annual Accounts for the year ended 31st December, 201 1 the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

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

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

iv) That the Directors have prepared the Annual Accounts for the year ended 31st December, 2011 on a going concern basis.

FIXED DEPOSITS

The Company did not accept any deposits from the Public during the year under review.

AUDITORS

M/s. H. S. Hathi & Co., Chartered Accountants, Auditors of the Company shall retire at the conclusion of the ensuing Annual General Meeting and having furnished the required certificate pursuant to Section 224(1 B) of the Companies Act, 1956, are eligible for re-appointment. The Board recommends their re-appointment. In respect of observations made by the Auditors in their Report, your Directors wish to state that the respective notes to the accounts are self-explanatory, and do not call for any further comments.

INDUSTRIAL RELATIONS

The industrial relations of the Company continued to remain cordial. The Directors wish to place on record their sincere appreciation for the co-operation extended and the valuable contribution made by the employees at all levels.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended regarding employees is given in annexure to the Director's Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Annual Report is being sent to all shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such information may inspect at or write to the Company's Registered Office address.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Out go required to be given by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1 988 are given in the Annexure to this Report in the prescribed Format under these Rules.

ACKNOWLEDGEMENTS

We appreciate the valuable co-operation extended by the Central and State Government Authorities and all other Regulatory Authorities and are extremely grateful to Financial Institutions, ECB Lenders, Facility Agent(s), FCCB Holders and our bankers for their continued assistance and guidance. We are also grateful to our employees, shareholders, GDR Holders, Depositories, customers for their co-operation and look forward to their support in the future.

For and on behalf of the Board of Directors

NITIN J. SANDESARA

Chairman and Managing Director

Place: Mumbai

Date: 29th February, 2012


Dec 31, 2010

The Members

We have great pleasure in presenting the 25th Annual Report of the Company together with the audited statements of accounts for the year ended 31st December, 2010.

FINANCIAL HIGHLIGHTS

(Rs. in Million)

Particulars Year Ended Year Ended 31st December 2010 31st December 2009

Sales 16,165.78 14,381.73

Total Income 16,272.16 14,470.37

EBIDTA 7,077.20 5,143.79

Interest 2,304.70 1,494.38

Depreciation 1,976.22 1,230.42

PBT and Extraordinary item 2,796.28 2,418.99

Extraordinary items (631.05) 620.51

PBT 2,165.23 3,039.50

Provision for Current Tax 402.00 350.00

Provision for Deferred Tax 310.00 335.00

Provision for FBT 0.00 1.25

PAT 1,453.23 2,353.26

Proposed Dividend 133.94 125.10

Dividend Tax 22.76 21.26

Transfer to Debenture Redemption 107.14 107.14

Reserve Balance carried to Balance Sheet 1,198.23 2,116.45

EPS (Rs.) 5.69 9.47

DIVIDEND

The Board of Directors proposes a dividend of 50 percent, i.e. Rs. 0.50 per equity share of face value of Rs. 1/- each, for the year ended 31 st December, 2010. The dividend increased from Rs. 125.10 million last year to Rs. 133.94 million this year.

OPERATIONS

During the year under review, net sales increased to Rs. 16,165.78 million, a growth of 12.41 percent, while total income grew 12.45 percent to Rs. 16272.16 million from the previous year. Operating profit increased by 37.59 percent to Rs. 7077.20 million over the year. The Adjusted Net Profit (before extraordinary items) increased to Rs. 2084.28 Million as compared to Rs. 1732.74 million for the previous year. Earning per share decreased to Rs. 5.69 from Rs. 9.47 for the previous year.

INCREASE IN PAID UP CAPITAL

Your Company, during the year 2005 and 2007, issued FCCBs of USD 175 million and USD 250 million respectively. During the year out of FCCBs of USD 175 Million, FCCBs of USD 61.63 million was converted into equity shares and as a result paid up capital of the Company has been increased from 250,196,564 equity shares of Rs. 1/- each to 267,873,590 equity shares of Rs. 1 /- each.

QUALITY

Meeting the stringent quality standards required by our international clientele, our facilities have earned certifications including:

-Hazardous Analysis and Critical Control Point Certification (HACCP)

-ISO 9001

-ISO14001

- European Directorate For Quality of Medicine Certification (EDQM).

MANAGEMENT DISCUSSION AND ANALYSIS

A separate report on Management Discussion and Analysis pursuant to Clause 49 of the Listing Agreement entered with stock exchanges is enclosed as a part of this Directors' Report.

REPORT ON CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement entered with stock exchanges, a separate section on Corporate Governance is attached to the Annual Report.

DIRECTORS

Shri Vilas Joshi and Shri P. B. Mehta, Directors of the Company, retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. The Board recommends their re-appointment.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm:

i) That in the preparation of the Annual Accounts for the year ended 31st December, 2010 the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

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

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

iv) That the Directors have prepared the Annual Accounts for the year ended 31st December, 2010 on a going concern basis.

FIXED DEPOSITS

The Company did not accept any deposits from the Public during the year under review.

EXTERNAL COMMERCIAL BORROWINGS

During the year, the Company have availed USD 147.4 million External Commercial Borrowings (ECBs) for the purpose of financing the Greenfield gelatin manufacturing project in Sterling SEZ, Gujarat.

BUYBACK/REDEMPTION OF FCCBs

During the year, after seeking permission to buyback part of FCCBs from RBI, the Company has repurchased and cancelled FCCBs with nominal value of USD 13,725,000 and USD 18,315,000 have been redeemed in full at the redemption price, as per the terms and conditions of the 0.50 % Convertible Bonds due 2010. The Company has outstanding amount of USD 134.50 Million of FCCBs due 2012.

AUDITORS

M/s. H. S. Hathi & Co., Chartered Accountants, Auditors of the Company shall retire at the conclusion of the ensuing Annual General Meeting and having furnished the required certificate pursuant to Section 224(1B) of the Companies Act, 1956, are eligible for re-appointment. The Board recommends their re-appointment. In respect of observations made by the Auditors in their Report, your Directors wish to state that the respective notes to the accounts are self- explanatory, and do not call for any further comments.

INDUSTRIAL RELATIONS

The industrial relations of the Company continued to remain cordial. The Directors wish to place on record their sincere appreciation for the co-operation extended and the valuable contribution made by the employees at all levels.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended regarding employees is given in annexure to the Director's Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Annual Report is being sent to all shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such information may inspect at or write to the Company's Registered Office address.

ENERGY CONSERVATION,TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo required to be given by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure to this Report in the prescribed format under these rules.

ACKNOWLEDGEMENTS

We appreciate the valuable co-operation extended by the Central and State Government Authorities and all other Regulatory Authorities and are extremely grateful to Financial Institutions, ECB Lenders, Facility Agent(s), FCCB Holders and our bankers for their continued assistance and guidance. We are also grateful to our employees, shareholders, GDR Holders, Depositories, customers for their co-operation and look forward to their support in the future.

For and on behalf of the Board of Directors

NITIN J. SANDESARA Chairman and Managing Director

Place: Mumbai Date : 31st May, 2011


Dec 31, 2009

We have great pleasure in presenting the 24th Annual Report of the Company together with the audited statements of accounts forthe year ended 31st December, 2009.

FINANCIAL HIGHLIGHTS (Rs.In Million)

Particulars Year Ended Year Ended 31st December, 2009 31st December, 2008

Sales 14,381.73 11,783.81

Total Income 14,470.37 11,884.13

EBIDTA 5,143.79 5,113.35

Interest 1,494.38 592.07

Depreciation 1,230.42 1,071.52

PBT and Extraordinary item 2,418.99 3,449.76

Extraordinary items* 620.51 (113.26)

PBT 3,039.50 3,336.50

Provision for Current Tax 350.00 375.00

Provision for Deferred Tax 335.00 755.00

Provision for FBT 1.25 4.75

PAT 2,353.26 2,201.74

Proposed Dividend 125.10 121.90

Dividend Tax 21.26 20.71

Transfer to Debenture Redemption Reserve107.14 107.14

Balance carried to Balance Sheet 2.116.45 1,942.05

EPS
* Extraordinary Item includes gain of Rs. 699.36 Million on buy back of FCCBs of US $ 90.50 Million.

DIVIDEND

The Board of Directors proposes a dividend of 50 percent, i.e. Rs. 0.50 per equity share of face value Re. 1 /- each, for the year ended 31st December, 2009. The dividend increased from Rs. 1 21.90 Million last year to Rs.l25.10Millionthisyear.

OPERATIONS

During the year under review, net sales increased to Rs. 14,381.73 Million, a growth of 22.05 percent, while total income grew 21.76 percent to Rs. 1 4,470.37 Million from the previous year. Operating profit increased 0.60 percent to Rs. 5,143.79 Million over the year. Net Profit increased to Rs. 2,353.26 Million signifying 6.88 percent growth compared to the previous year. Earning per share reached Rs. 9.47 for the current year.

As informed previous year, we continued to consolidate our position as one of the leading gelatin producers in the world. The Company has commissioned additional capacity of 1,500 MTPA of Gelatin, which was operationalised during the last quarter of 2009.

During the year, the company has raised USD 90 Million through External Commercial Borrowings (ECBs) for the purpose of buyback of outstanding FCCBs. Further, the Company has entered into facility agreement for availing USD 147.4 Million through External Commercial Borrowings (ECBs) for the purpose of financing the Greenfield gelatin manufacturing project in Sterling SEZ, Gujarat.

INCREASE IN PAID UP CAPITAL

Your Company, during the year 2005 and 2007, issued FCCBs of USD 1 75 Million and USD 250 Million respectively. During the year FCCBs of USD 28.25 Million was converted into equity shares and as a result paid up capital of the Company has been increased from 243,797,581 equity shares of Re. 1/- each to 250,196,564 equity shares of Re. 1/-each.

ACCOLADES

During the year, your company has been awarded Trading House Certificate for a period of Five years. Our facilities in Vadodara and Ooty produce gelatin on par with that produced in the USA, Europe and Japan.

QUALITY

Meeting the stringent quality standards required by our international clientele, our facilities have earned certifications including:

- Hazardous Analysisand Critical Control Point Certification (HACCP)

- ISO 9001

- ISO 14001

- European DirectorateforQualityof MedicineCertification (EDQM).

MANAGEMENT DISCUSSION AND ANALYSIS

A separate report on Management Discussion and Analysis pursuant to Clause 49 of the Listing Agreement entered with stock exchanges is enclosed as a part of this Directors Report.

REPORT ON CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement entered with stock exchanges, a separate section on Corporate Governance is attached to the Annual Report.

DIRECTORS

Shri R. B. Dixit and Shri N. B. Patel, Directors of the Company, retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. The Board recommends their re-appointment.

DIRECTORS RESPONSIBILITY STATEMENT

PursuanttoSection217(2AA)ofthe Companies Act, 1 956, the Directors hereby confirm:

i) That in the preparation of the Annual Accounts for the year ended 31st December, 2009 the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

ii) That the Directors had 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 ofthe Company at the end of the financial yearand of the profit ofthe Company for the year under review;

iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1 956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) That the Directors have prepared the Annual Accounts for the year ended 31st December, 2009 on a going concern basis.

FIXED DEPOSITS

The Company did not accept any deposits from the Public during the year under review.

EXTERNAL COMMERCIAL BORROWINGS

During the year under review, The Company have availed USD 90 Million External Commercial Borrowings (ECBs) for the purpose of Buyback of Foreign Currency Convertible Bonds (FCCBs). In accordance with Reserve Bank of India Guidelines, the Company repurchased/bought back FCCBs due 201 0 of nominal value of USD 7.5 Million and FCCBs due 201 2 of nominal value of USD 83.00 Million and as a result the outstanding amount of FCCBs are reduced to USD 93.67 Million and USD 1 34.50 Million respectively.

VOLUNTARY DEUSTING OF EQUITY SHARES FROM THE CULCUTTA STOCK EXCHANGE LIMITED

Pursuant to application for Voluntary Delisting of equity shares submitted under SEBI (Delisting of Securities) Guidelines, 2003, the equity shares of the Company have been delisted by The Culcutta Stock Exchange Ltd. w.e.f. 19th March, 2010.

AUDITORS

M/s. H. S. Hathi & Co., Chartered Accountants, Auditors of the Company shall retire at the conclusion of the ensuing Annual General Meeting and having furnished the required certificate pursuant to Section 224(1 B) of the Companies Act, 1 956, are eligible for re-appointment. The Board recommends their re-appointment. In respect of observations made by the Auditors in their Report, your Directors wish to state that the respective notesto the accounts are self-explanatory, and do not call foranyfurther comments.

INDUSTRIAL RELATIONS

The industrial relations ofthe Company continued to remain cordial. The Directors wish to place on record their sincere appreciation forthe co-operation extended and the valuable contribution made by the employees at all levels.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 21 7 (2A) of the Companies Act, 1 956 read with the Companies (Particulars of Employees) Rules, 1 975 as amended regarding employees is given in annexure to the Directors Report. However, as per the provisions of Section 21 9 (1) (b) (iv) of the Companies Act, 1 956, the Annual Report is being sent to all shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such information may inspect at or write to the Companys Registered Office address.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo required to be given by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1 988 are given in the Annexure to this Report in the prescribed format under these rules.

ACKNOWLEDGEMENTS

We appreciate the valuable co-operation extended by the Central and State Government Authorities and all other Regulatory Authorities and are extremely grateful to Financial Institutions, ECB Lenders, FCCB and GDR holders and their intermediaries and our bankers for their continued assistance and guidance. We are also grateful to our employees, shareholders, customers for their co-operation and look forward to their support in the future.

For and on behalf of the Board of Directors

Date Mumbai NITIN J. SANDESARA

Date: 31 March, 2010 Chairman and Managing Director


Dec 31, 2008

We have great pleasure in presenting the 23rd Annual Report of the Company together with the audited statements of accounts for the year ended 31st December, 2008.

FINANCIAL HIGHLIGHTS (Rs. in Millions)

Particulars Year Ended Year Ended 31 st December 31 st December 2008 2007

Sales 11,783.81 9,108.48

Total Income 11,852.82 9,782.69

EBIDTA 5,113.35 4,186.11

Interest 592.07 413.52

Depreciation 1,071.52 862.60

PBT 3,449.76 2,909.99

Extraordinary item 113.26 101.08

Provision for Current Tax 375.00 315.00

Provision for Deferred Tax 755.00 635.00

Provision for FBT 4.75 4.00

PAT 2,201.74 1,854.91

Proposed Dividend 121.90 114.74

Dividend Tax 20.71 19.50

Transfer to Debenture Redemption Reserve 107.14 0.00

Balance carried to Balance Sheet 2049.20 1,702.82

EPS(Rs.) 9.03 8.08

DIVIDEND

The Board of Directors proposes a dividend of 50 percent, i.e. Rs. 0.50 per equity share of face value Re. 1/- each, for the year ended 31st December, 2008. The dividend increased from Rs.l 14.74 million last year to Rs.121.90 million this year.

OPERATIONS

During the year under review, sales increased to Rs. 11,783.81 million, a 29.37 percent growth, while total income grew 21.16 percent to Rs. 11,852.82 million from the previous year. Gross profit increased 22.15 percent to Rs. 5,113.35 million over the year. Profit before tax increased to Rs. 3,449.76 million and net profit to Rs. 2,201.74 million signifying 18.55 percent and 18.70 percent growths compared to the previous year, respectively. Earnings per share reached Rs. 9.03 for the current year, a growth of 11.76 percent.

As informed previous year, we continued to consolidate our position as one of the leading gelatin producers in the world. We also have established our presence in Coenzyme Q10 during the year under review. The company has commissioned additional capacity of 4,600 tons of Gelatin, which was operationalised during the last quarter of 2008.

ACCOLADES

We are a One Star Export House, and our facilities in Vadodara and Ooty produce gelatin on par with that produced in the

USA, Europe and japan.

QUALITY

Meeting the stringent quality standards required by our international clientele, our facilities have earned certifications including:

Hazardous Analysis and Critical Control Point Certification (HACCP)

- ISO 9001

- ISO 14001

- European Directorate For Quality of Medicine Certification (EDQM).

MANAGEMENT DISCUSSION AND ANALYSIS

A separate report on Management Discussion and Analysis pursuant to Clause 49 of the Listing Agreement entered with stock exchanges is enclosed as a part of this Directors Report.

REPORT ON CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreement entered with stock exchanges, a separate section on Corporate

Governance is attached to the Annual Report.

DIRECTORS

Shri Vilas D. Joshi and Shri Priyadarshan B. Mehta, Directors of the Company, retire by rotation at the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. The Board recommends their re-appointment. Term of Shri Nitin J. Sandesara as Managing Director for a period of five years was further renewed during the year under review. Shri Chetan j. Sandesara was appointed as joint Managing Director during the year under review subject to approval of members in the forthcoming Annual General Meeting. The Board recommends his appointment as joint Managing Director.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm:

i) That in the preparation of the Annual Accounts for the year ended 31 st December, 2008 the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

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

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

iv) That the Directors have prepared the Annual Accounts for the year ended 31 st December, 2008 on a going concern basis.

FIXED DEPOSITS

The Company did not accept any deposits from the Public during the year under review.

DEBENTURES

During the year under review, to meet normal capital expenditure, general corporate purpose and long term working capital requirement, your Company issued Secured Redeemable Non-Convertible Debentures of Rs.300 crores and are listed on the Mumbai Stock Exchange (BSE) in Debt Segment.

AUDITORS

M/s. H. S. Hathi & Co., Chartered Accountants, Auditors of the Company shall retire at the conclusion of the ensuing Annual General Meeting and having furnished the required certificate pursuant to Section 224(1 B) of the Companies Act, 1956, are eligible for re-appointment. The Board recommends their re-appointment. In respect of observations made by the Auditors in their Report, your Directors wish to state that the respective notes to the accounts are self-explanatory, and do not call for any further comments.

INDUSTRIAL RELATIONS

The industrial relations of the Company continued to remain cordial. The Directors wish to place on record their sincere appreciation of the co-operation extended and the valuable contribution made by the employees at all levels.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended regarding employees is given in annexure to the Directors Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Annual Report is being sent to all shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such information may write to the Companys Registered Office address..

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Particulars of Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo required to be given by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure to this Report in the prescribed format under these rules.

ACKNOWLEDGEMENTS

We appreciate the valuable co-operation extended by the Central and State Government Authorities and are extremely grateful to Financial Institutions and our bankers for their continued assistance and guidance. We are also grateful to our employees, shareholders, customers for their co-operation and look forward to their support in the future.

For and on behalf of the Board of Directors

Place : Mumbai NITINSANDESARA

Date : 31st March, 2009 Chairman and Managing Director

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