Directors Report of Birla Pacific Medspa Ltd.

Mar 31, 2012

The Directors present hereunder the 4th Annual report on the Business and operations of the Company along with the Audited Statement of Accounts of the Company for the year ended March 31, 2012. The financial results for the year are summarized as under:

1. FINANCIAL RESULTS Amt. in Rupees)

Particulars 2011-121 2010-11

Net Sales and Other Income 4,60,48,351 2,24,47,983

Profit /(Loss) before Interest, Depreciation and Taxation (58,42,778) (3,30,94,246)

Less: Interest 17675

Less: Depreciation 98,61,273 1,12,47,374

Net Profit / (Loss) After Tax (1,57,21,726) (4,43,41,620)

Add: Balance bought forward (8,38,91,135) (3,95,49,515)

Balance carried forward to Balance Sheet (9,96,12,861) (8,38,91,135)

2. PERFORMANCE REVIEW

The net sales and other income of the Company for the financial year 2011-12 stood at Rs. 460.48 Lacs as against previous year Rs. 224.48 Lacs. The Loss after tax is Rs.157.22 Lacs as against Loss after tax of Rs.443.42 Lacs of corresponding previous year 2010-11.

3. DIVIDEND

Considering the financial performance of the Company for the financial year ended March 31, 2012, your Directors regret their inability to recommend dividend on the Equity shares.

4. SUBSIDIARY COMPANY

The Accounts of the wholly owned subsidiary Company, Birla IVF LLP have been received by the Company and a statement pursuant to Section 212 of the Companies Act, 1956 forms a part of this Annual Report.

PARTICULARS UNDER SECTION 212 OF THE COMPANIES ACT, 1956

The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2/2011 dated February 8, 2011, has granted a general exemption from compliance with Section 212 of the Companies Act, 1956, subject to fulfillment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. The financial data of the subsidiaries have been furnished under 'Annexure I to the consolidated notes' to financial statement forming part of the Annual Report. Consolidated Financial Statements of the Company and its subsidiary for the year ended March 31, 2012, together with reports of Auditors thereon and the statement pursuant to Section 212 of the Companies Act, 1956, form part of the Annual Report. The Annual Accounts and the related detailed information of subsidiary company will be made available to the Members of the Company and subsidiary Company seeking such information at any point of time. The Annual Accounts of the subsidiary Company will also be available for inspection by any member at the registered/head office of the Company and that of the subsidiary concerned.

5. DIVERSIFICATION OF BUSINESS

Your Directors thought it prudent to diversify and expand its existing business portfolio from pure service business to a scalable product business and need based medical services business such as to set up IVF Centers, Integrated Wellness Centers, Sports Nutrition etc.

6. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of clause 49 of the Listing Agreement with the Stock Exchange, the Management Discussion and Analysis Report is appended to this report.

7. CORPORATE GOVERNANCE

Your Company will continue to strive to incorporate best of standards for good corporate governance. As a listed company, all required measures are being taken to comply with the agreement entered with the Stock Exchange Guidelines and other statutory regulations. A separate report on Corporate Governance along with a Certificate of Compliance from the Auditors forms part of this report.

8. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217 (2AA) of the Companies Act 1956, with respect to Directors' Responsibility Statement the Directors of the Company state as under that:-

i. in the preparation of annual accounts, applicable accounting standards had been followed along with proper explanation relating to material departure;

ii. 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 or loss of the Company for that period;

iii. the directors had 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 & other irregularities;

iv. the directors had prepared the annual accounts on a 'going concern' basis.

9. DIRECTORS

During the year under review, Shri Ramprakash Murlidhar Mishra was appointed as an Additional Director of the Company with effect from May 25, 2012. As per provisions of Section 260 of the Companies Act 1956, such director holds office only upto the date of forthcoming Annual General Meeting of the Company. The Company has received notice proposing Shri Ramprakash Murlidhar Mishra as candidate for the office of Director pursuant to Section 257 of the Companies Act, 1956.

Shri Venkateswarlu Nelabhotla tendered his resignation with effect from August 9, 2012 as Director of the Company.

Shri Mohandas Shenoy Adige and Shri Anoj Menon Directors of the Company, retire by rotation and being eligible at the forthcoming Annual General Meeting, offers themselves for reappointment.

10. PUBLIC DEPOSIT

Your Company has not accepted any fixed deposit from the public. As such, no amount of principal or interest is outstanding as on the Balance Sheet date.

11. AUDITORS

M/s. Kanu Doshi Associates, Charter Accountants, the Statutory Auditors of the Company, retire at the ensuing Annual General Meeting. They have confirmed their eligibility and willingness for reappointment. The Directors recommend their reappointment by the Members at the forthcoming Annual General Meeting.

12. AUDITORS REMARKS

Auditors' Qualification Directors' Explanation

The Auditors have made a remark in point no. 4(vi) of the Auditors' Report for the year The Board of Directors explanation to this

ended March 31, 2012 which states that the Company has deferred the accumulated remark is that the management has

revenue expenditure of Rs. 8,97,55,020 (previous period Rs. 5,56,38,638 plus current continued to defer these expenses as it is

period Rs. 3,41,16,382) being in the nature of Brand Building Expenses which is not in felt that these expenses have benefit off

accordance with of Accounting Standard 26 "Accounting for Intangibles". Due to the enduring nature to the Company and

above, the loss as reported by the profit and loss account is understated by Rs. 3,41,16,382 therefore the same shall be written of in

and reserve of the company is overstated to the extent of Rs. 8,97,55,020. Our report the future years. for the earlier period contained similar observation

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

The information relating to energy, technology absorption and foreign exchange earnings and outgo required to be disclosed under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in the Annexure 'A' to the Directors Report.

14. PARTICULARS OF EMPLOYEES

During the year under review, there was no employee covered under the provision of Section 2I7(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended by Notification GSR 289(E) dated 3I.03.20II,General Circular No. 23 dated 03.05.2011.

15. HUMAN RESOURCE

Your Directors place on the record their appreciation to the contribution made by the employees at all levels who, through their competence, diligence, solidarity, co-operation and support, have enabled the Company to achieve the desired results during the year.

16. ACKNOWLEDGEMENTS

Your Directors take this opportunity to thank all investors, clients, vendors, banks, regulatory authorities and wishes to acknowledge the invaluable support extended to the Company by them. The Directors are pleased to place on record their appreciation for the valuable information made by the employees of the Company.

For and on behalf of Board of Directors

Place: Mumbai Dr. Abhijit Desai P.V.R. Murthy

Date: August 9, 2012 Managing Director Director