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26th Annual ReportDishman Pharmaceuticals and Chemicals Limited

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CONTENTSPage No.

Company Information ........................................................................................................................................................................2

Notice of Annual General Meeting ....................................................................................................................................................3

Directors’ Report ...............................................................................................................................................................................9

Management Discussion and Analysis Report .............................................................................................................................. 16

Corporate Governance Report ....................................................................................................................................................... 24

Auditors’ Report .............................................................................................................................................................................. 39

Annexure to the Auditors’ Report ................................................................................................................................................... 40

Balance Sheet ................................................................................................................................................................................ 42

Profit & Loss Account ..................................................................................................................................................................... 43

Cash Flow Statement ..................................................................................................................................................................... 44

Schedules forming part of Balance Sheet and Profit & Loss Account .......................................................................................... 45

Notes on Accounts ......................................................................................................................................................................... 52

Balance Sheet Abstract and Company’s General Business Profile .............................................................................................. 68

Auditors’ Report on Consolidated Financial Statements ............................................................................................................... 69

Consolidated Balance Sheet ......................................................................................................................................................... 70

Consolidated Profit & Loss Account .............................................................................................................................................. 71

Consolidated Cash Flow ................................................................................................................................................................ 72

Schedules forming part of Consolidated Balance Sheet and Profit & Loss Account ................................................................... 73

Significant Accounting Policies and Notes to Consolidated Financial Statements ....................................................................... 79

Statement relating to Subsidiary Companies ................................................................................................................................ 86

Attendance Slip and Proxy Form ................................................................................................................................................... 87


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COMPANY INFORMATIONBOARD OF DIRECTORS : Shri Janmejay R. Vyas (Chairman & Managing Director)

Mrs. Deohooti J. Vyas (Whole-time Director)Shri Yagneshkumar B. DesaiShri Sanjay S. MajmudarShri Ashok C. GandhiShri Arpit J. Vyas (Additional Director)

COMPANY SECRETARY : Shri Deepak S. PandyaAND COMPLIANCE OFFICER

BANKERS : State Bank of IndiaBank of BarodaCorporation BankBank of India

AUDITORS : Deloitte Haskins & SellsChartered Accountants, ‘Heritage’, 3rd Floor,Near Gujarat Vidhyapith, Off. Ashram Road,Ahmedabad – 380 014.

REGISTRAR & TRANSFER : Link Intime India Pvt. Ltd.AGENT (Formerly known as Intime Spectrum Registry Ltd.)

C-13, Pannalal Silk Mills CompoundLBS Marg, Bhandup (West), Mumbai – 400 078Tel. No. 91-22-2596 3838,Fax No. : 91-22-2594 6969,Email : [email protected]

SUBSIDIARY COMPANIES : Dishman Europe Ltd.Dishman USA Inc.Dishman International Trading (Shanghai) Co. Ltd.Dishman FZEDishman Switzerland Ltd.Dishman Pharma Solutions AG.Dishman Pharmaceuticals & Chemicals (Shanghai) Co. Ltd.Carbogen Amcis AG.Carbogen Amcis Ltd. (U.K.)Dishman Africa (Pty.) Ltd.Innovative Ozone Service Inc. (IO

3S)

Dishman Netherlands B.V.Dishman Holland B.V.Dishman Japan Ltd.Carbogen Amcis (India) Ltd.Dishman Australasia Pty. Ltd.Dishman LLP

JOINT VENTURE COMPANIES : Schutz Dishman Biotech Ltd.CAD Middle East Pharmaceutical IndustriesDishman Arabia Ltd.

REGISTERED OFFICE : Bhadr-Raj Chambers, Swastik Cross Road,Navrangpura, Ahmedabad – 380 009.Tel. No. : 91-79-26443053, 26445807Fax No. : 91-79-26420198Email : [email protected] : www.dishmangroup.com

WORKS : (i) Phase-IV, 1216/20, G.I.D.C. Estate, Naroda, Ahmedabad – 382 330.(also other Plots in Phase-I and IV)

(ii) Survey No. 47, Paiki Sub Plot No. 1,Village - Lodariyal, Taluka - Sanand,District - Ahmedabad. (also various other Plots)


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NOTICENOTICE is hereby given that the Twenty Sixth Annual General Meeting of the Members of DISHMAN PHARMACEUTICALSAND CHEMICALS LIMITED will be held on Friday, the 31st day of July, 2009 at 9.30 a.m. at Hall No. S 3-5, Ground Floor,Ahmedabad Management Association, ATIRA Campus, Dr. Vikram Sarabhai Marg, Ahmedabad - 380 015 to transact the followingbusiness:

ORDINARY BUSINESS:

1. To receive, consider and adopt the Audited Balance Sheet as at 31st March, 2009, Profit & Loss Account and Cash FlowStatement for the year ended on that date along with necessary annexures and the Reports of the Directors and Auditorsthereon.

2. To declare a dividend.

3. To appoint a Director in place of Mrs. Deohooti J. Vyas, who retires by rotation and being eligible, offers herself forreappointment.

4. To appoint a Director in place of Mr. Ashok C. Gandhi, who retires by rotation and being eligible, offers himself forreappointment.

5. To appoint M/s. Deloitte Haskins & Sells, Chartered Accountants as Statutory Auditors of the Company, who shall hold officefrom the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting and to fix theirremuneration.

SPECIAL BUSINESS:

6. To consider and, if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution:

"RESOLVED THAT pursuant to the provisions of Sections 198, 269, 309, 316 and other applicable provisions, if any of theCompanies Act, 1956 [including any statutory modification(s) or re-enactment thereof, for the time being in force] andrelevant Schedules thereto and subject to approval of the Central Government, if required, and also subject to such otherpermissions and consents, if any, as may be necessary, the consent of the Company be and is hereby accorded to the re-appointment of Shri Janmejay R. Vyas (Shri J. R. Vyas) as a Chairman & Managing Director of the Company for a furtherperiod of 5 (five) years with effect from 1st March, 2010 on the terms and conditions including remuneration as are set outhereunder with liberty to Board of Directors (hereinafter referred to as "the Board" which term shall be deemed to includeany Committee which the Board may constitute to exercise its powers, including the powers conferred by this resolution) toalter and vary the terms and conditions of the said appointment and/or remuneration within the parameters of the applicablelaws or any amendments thereto.

TENURE : 5 (five) years with effect from 1st March, 2010. The period of office of Shri J. R. Vyas shall not be liable todetermination by retirement of Directors by rotation.

FUNCTIONS: Shri J. R. Vyas, shall have substantial powers of management subject to direction, control and superinten-dence of the Board.

REMUNERATION: Subject to overall limit on remuneration payable to all the managerial personnel taken together, as laiddown in the Companies Act, 1956, the remuneration payable to Shri J. R. Vyas shall be 5% of the net profits of theCompany, computed in the manner laid down in section 349 of the Companies Act and may or may not comprise salary,allowances and perquisites as may be determined by the Board of Directors from time to time and agreed to by Shri J. R.Vyas, provided that the perquisites shall be evaluated as per Income Tax Act and Rules wherever applicable. The remu-neration for a part of the year shall be computed on pro rata basis.

SITTING FEES: Shri J. R. Vyas shall not be entitled to any sitting fees.

RESOLVED FURTHER THAT the Board be and is hereby authorized to take all such steps as may be necessary, proper orexpedient to give effect to this resolution."

7. To consider and, if thought fit, to pass with or without modification(s), the following resolution as a Special Resolution:

"RESOLVED THAT Mr. Arpit J. Vyas, who was appointed as an Additional Director of the Company by the Board of Direc-tors at its meeting held on 1st June, 2009 pursuant to Article 134 of the Articles of Association of the Company and who,under Section 260 of the Companies Act, 1956, holds office only up to the date of the forthcoming Annual General Meetingbut who is eligible for appointment and in respect of whom the Company has received a notice in writing from a memberproposing his candidature for the office of Director under the provisions of Section 257 of the Companies Act, 1956, be andis hereby appointed as a Director of the Company whose period of office shall be liable to determination by retirement ofDirectors by rotation.


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RESOLVED FURTHER THAT pursuant to the provisions of Sections 198, 269, 309 and other applicable provisions, if anyof the Companies Act, 1956 [including any statutory modification(s) or re-enactment thereof, for the time being in force] andrelevant Schedules thereto, consent of the Company be and is hereby accorded to the appointment of Mr. Arpit J. Vyas(Mr. A. J. Vyas) as a Wholetime Director of the Company for a period of 5 (five) years with effect from 1st June, 2009 on theterms and conditions including remuneration as are set out hereunder with liberty to the Board of Directors (hereinafterreferred to as "the Board" which term shall be deemed to include any Committee which the Board may constitute to exerciseits powers, including the powers conferred by this resolution) to alter and vary the terms and conditions of the said appoint-ment and/or remuneration within the parameters of the applicable laws or any amendments thereto.

TENURE : 5 (five) years with effect from 1st June, 2009.

FUNCTIONS : Mr. A. J. Vyas shall have substantial powers of management subject to direction, control and superinten-dence of the Board of Directors.

REMUNERATION : Subject to overall limit on remuneration payable to all Managerial Personnel taken together, as laiddown in the Companies Act, 1956, read with Schedule XIII thereto, Mr. A. J. Vyas shall be paid Rs.36.00 lacs (RupeesThirty Six Lacs) per annum and the above remuneration payable to him may comprise salary, allowances and perquisitesas may be determined by the Board of Directors from time to time and may be payable monthly or otherwise provided thatthe perquisites shall be evaluated as per Income Tax Act and Rules wherever applicable. The remuneration for a part of theyear shall be computed on pro rata basis.

FURTHER RESOLVED THAT wherein a financial year during the currency of his tenure, the Company has no profits or itsprofits are inadequate the remuneration payable to him shall not exceed the ceiling limit prescribed in Section II of Part II ofSchedule XIII to the Companies Act for that year, which will be payable to him as minimum remuneration for that year.

SITTING FEES: Mr. A. J. Vyas shall not be entitled to any sitting fees.

RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby also authorised to increase or revisethe remuneration of Mr. A. J. Vyas subject to maximum remuneration of Rs.10,00,000/- (Rupees Ten Lacs only) per month,from time to time during the tenure of said five years AND THAT the said increase or revision shall also be subject to overalllimit on remuneration payable to all the then managerial personnel taken together, as laid down in the Companies Act,1956, read with Schedule XIII thereto."

By Order of the Board of DirectorsRegd. Off. : Bhadr-Raj Chambers,Swastik Cross Road, Navrangpura,Ahmedabad - 380 009. (Janmejay R. Vyas)Date: 1st June, 2009 Chairman & Managing Director

NOTES:

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THIS MEETING IS ENTITLED TO APPOINT A PROXY TO ATTENDAND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. Proxies, in orderto be effective, must be received at the Company's Registered Office not later than 48 hours before the commencement ofthe meeting.

2. Members / Proxies should fill in the Attendance Slip for attending the meeting and they are requested to bring their Atten-dance Slip along with their copy of Annual Report to the Meeting. Members who hold shares in dematerialized form arerequested to write their Client ID and DP ID and those who hold shares in physical form are requested to write their FolioNumber in the Attendance Slip for attending the Meeting.

3. Members holding shares in physical form are requested to advise any change of address immediately to the Company'sRegistrar and Share Transfer Agent, Link Intime India Pvt. Ltd., C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup(West), Mumbai - 400 078. Members holding shares in electronic form must send the advice about change in address totheir respective Depository Participant only and not to the Company or the Company's Registrar and Share Transfer Agent.

4. Members are requested to intimate to the Company, queries, if any, on the accounts at least 10 days before the date of themeeting to enable the management to keep the required information available at the meeting.

5. The explanatory statement pursuant to Section 173(2) of the Companies Act, 1956, in respect of business under Item Nos.6 and 7 to be transacted at the meeting is annexed hereto. The relevant details as stipulated under Clause 49 of the ListingAgreement with the Stock Exchanges in India, in respect of Directors seeking appointment / re-appointment as Directorsunder Item Nos. 3, 4, 6 and 7 above, are also annexed hereto.

6. All documents referred to in the accompanying Notice and Explanatory Statement are open for inspection at the RegisteredOffice of the Company during office hours on all working days, except Saturdays and Sundays, between 2.00 p.m. and 4.00p.m. up to the date of the Annual General Meeting.


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7. (a) The Company has already notified closure of Register of Members and Share Transfer Books from Thursday, the16th day of July, 2009 to Friday, the 31st day of July, 2009 (both days inclusive), for determining the names ofMembers eligible for dividend on Equity Shares, if declared and approved at the Annual General Meeting.

(b) The dividend on Equity Shares, if declared at the Meeting, will be paid on or after 4th August, 2009 to those memberswhose names appear on the Company's Register of Members on the close of business hours on 15th day of July,2009. In respect of shares held in dematerialised form, the dividend will be paid on the basis of beneficial ownershipas per details furnished by the Depositories for this purpose. In respect of shares held in physical form by themembers, dividend will be paid to them after giving effect to valid transfers in respect of transfer requests lodged withthe Company on or before the close of business hours on 15th July, 2009.

8. Members holding shares in electronic form may please note that their bank details as furnished by the respective Deposi-tories to the Company will be printed on their dividend warrants as per the applicable regulations of the Depositories and theCompany will not entertain any direct request from such members for deletion or change in such bank details. Membersmay, therefore, give instructions regarding bank accounts in which they wish to receive dividend, directly to their DepositoryParticipants.

9. Members are entitled to make nomination in respect of shares held by them. Members desirous of making nominations arerequested to send the prescribed Form 2B duly filled in and signed by them to the Depository Participants in case theshares are held in electronic form.

ANNEXURE TO THE NOTICENotes on Directors seeking appointment/re-appointment at the Annual General Meeting as required under Clause 49 of the ListingAgreement entered into with the Stock Exchanges.Profile of Directors being Appointed/Re-appointed:Item No. 3Name : Mrs. Deohooti J. VyasAge : 57 yearsDate of Appointment : 01/12/1997Qualification : Holds a bachelor degree in Science.Experience : Mrs. D. J. Vyas has very rich experience in the field of Administration and Human

Resource development. She is associated with the Company since long time.She is instrumental in the strategic decision making in HR Policies.

Other Directorship : 1) Schutz Dishman Bio-tech Ltd.2) B. R. Laboratories Ltd.3) Bhadra Raj Holdings Pvt. Ltd.4) Azafran Innovacion Pvt. Ltd.5) Adiman Technologies Pvt. Ltd.

Chairman/Member of the Committees : NILof the Board of the other Companieson which she is a DirectorNo. of shares held in the Company : 10964500Disclosure of Relationships : Mrs. D. J. Vyas is Wife of Mr. Janmejay R. Vyas, Chairman & Managing Director

and Mother of Mr. Arpit J. Vyas, Additional Director of the Company.Item No. 4Name : Mr. Ashok C. GandhiAge : 69 yearsDate of Appointment : 30/07/2004Qualification : He holds bachelor degree in Commerce. He also holds a bachelor degree in

law and he is Advocate by profession.Experience : Mr. Gandhi has very wide and rich experience as senior Advocate and is a

partner of M/s. C. C. Gandhi & Co., Advocates, one of the eminent and reputedfirms in Ahmedabad. His expertise is in the area of Corporate Laws. He is holdingthe position of trustee in various Trusts having benevolent objects and also heis a Member and President of various Societies/Committees.

Other Directorship : 1) Amol Dicalite Limited2) Jayatma Spinners Limited


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3) Aarvee Denims and Exports Limited4) Ahmedabad Steel Craft Limited5) Gujarat Ambuja Exports Limited6) MSK Projects (India) Limited7) Mafatlal Industries Limited

Chairman/Member of the Committees : A) Audit Committee :-of the Board of the other Companies 1) Aarvee Denims and Exports Ltd.on which he is a Director 2) Ahmedabad Steel Craft Ltd.

3) Gujarat Ambuja Exports Ltd.4) MSK Projects (India) Ltd.5) Mafatlal Industries Ltd.

B) Remuneration Committee :-1) Gujarat Ambuja Exports Ltd.- Chairman of the Committee2) Amol Dicalite Ltd.3) Aarvee Denims and Exports Ltd.4) Ahmedabad Steel Craft Ltd.5) MSK Projects (India) Ltd.

C) Share Transfer Committee :-1) Amol Dicalite Ltd.2) Mafatlal Industries Ltd.

No. of shares held in the Company : 150Disclosure of Relationships : Mr. A. C. Gandhi is not, in any way, concerned/ interested/related with any of

the other Directors of the Company.Item No. 6Name : Mr. Janmejay R. VyasAge : 58 yearsDate of Appointment : 29/06/1983Qualification : He has a bachelor's degree in chemistry from St. Xavier's College, Ahmedabad

and a bachelor's degree in Pharma & Fine Chemical Technology from the UDCT,Mumbai.

Experience : Mr. J. R. Vyas, was acting as a consultant to various pharmaceutical companiesduring 1974 to 1983. In 1983, he promoted the Company. He is managing theaffairs of the Company since inception. While establishing the Company, hisfocus has been on research and developing various in-house technologies forquaternary ammonium compounds and APIs. He has been the head of theresearch and development division since 19 years. In 1987, he set-up the Narodafacility. Based on his understanding of the potential international outsourcingopportunity developing in the global pharmaceutical industry, he initiated theexpansion at Bavla in 1996. His emphasis on quality and adhering to internationalmanufacturing standards ensured that Bavla facility was set-up and developedas per internationally accepted standards. He has successfully marketed theCompany's in-house technologies and products, research and productioncapabilities both domestically and internationally. He has been felicitated with(i) the 'Bharatiya Udyog Ratan Award' in September 2000 by the Indian EconomicDevelopment & Research Association, New Delhi; (ii) the 'OutstandingEntrepreneur' 1999 by the Federation of Gujarat Industries, Baroda; and (iii) the'AMA-Atlas Dye-chem Outstanding Entrepreneur of the Year Award 2008' byAhmedabad Management Association (AMA), Ahmedabad.

Other Directorship : 1) Schutz Dishman Biotech Ltd.2) B. R. Laboratories Ltd.3) Bhadra Raj Holdings Pvt. Ltd.4) Adiman Technologies Pvt. Ltd.5) Dishman Europe Ltd.


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6) Dishman USA Inc.7) Dishman International Trade (Shanghai) Co. Ltd.8) Dishman FZE9) Dishman Switzerland Ltd.10) Dishman Infrastructure Ltd.11) Dishman Pharma Solutions Ltd.12) Carbogen Amcis AG13) Dishman Pharmaceuticals & Chemicals (Shanghai) Co. Ltd.14) Carbogen Amcis (India) Ltd.

Chairman/Member of the Committees : NILof the Board of the other Companieson which he is a DirectorNo. of shares held in the Company : 25042900Disclosure of Relationships : Mr. J. R. Vyas is Husband of Mrs. D. J. Vyas, Whole-time Director and Father of

Mr. Arpit J. Vyas, Additional Director of the Company.Item No. 7Name : Mr. Arpit J. VyasAge : 23 yearsDate of Appointment : 01/06/2009Qualification : Holds a degree in Chemical EngineeringExperience : Mr. A. J. Vyas has completed his education from University of Aston, Birmingham

for degree in Chemical Engineering in 2009. He has experience of handlingMarketing of various herbal cosmetic products of Azafran Innovacion Pvt. Ltd.,since last two years, in which he holds Directorship.

Other Directorship : 1) Azafran Innovacion Pvt. Ltd.Chairman/Member of the Committees : NILof the Board of the other Companieson which he is a DirectorNo. of shares held in the Company : 1000Disclosure of Relationships : Mr. A. J. Vyas is Son of Mr. Janmejay R. Vyas, Chairman & Managing Director

and of Mrs. Deohooti J. Vyas, Whole-time Director of the Company.

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956The following Explanatory Statement sets out all material facts relating to the special business mentioned in the accompanyingNotice dated 1st June, 2009.Item No. 6

Shri Janmejay R. Vyas has been appointed as Managing Director of the Company by the Board of Directors at its meeting held on30th July, 2004 and by the members of the Company at their meeting held on 24th September, 2004 in terms of sections 198, 269,309, 316 and other applicable provisions of the Companies Act, 1956 and approval of the Central Government accorded vide theirletter No. 1/423/2004-CL.VII dated 15th June, 2005 for a period of five years commencing from 1st March, 2005.Mr. Janmejay R. Vyas is the founder Director and Promoter of the Company. He has managed the Company as Managing Directorsince its inception and he is responsible for the growth of the Company. He is a qualified chemical technologist from University ofDepartment of Chemical Technology. He is well qualified and experienced. He has the experience of more than thirty years inPharmaceuticals and in-house technologies have been developed under his stewardship. The Company has established a well-equipped R & D department under his guidance. Mr. Vyas's vision is responsible for the Company's consistent track record andgrowth of the Company. Under his direction and leadership company has came out with a successful Initial Public Offer.Based on the recommendation of the Remuneration Committee, Mr. J. R. Vyas has been re-appointed as Managing Director ofthe Company for a further period of five years w.e.f. 1st March, 2010, by the Board of Directors of the Company at its meeting heldon 25th May, 2009 subject to approval of the members and Central Government if any required. Thereafter, upon sad demise ofShri R. T. Vyas, Chairman of the Company on 27th May, 2009, Board of Directors of the Company at its meeting held on 1st June,2009, appointed Mr. J. R. Vyas as Chairman of the Company.It is in the interest of the Company to continue to avail his services for the growth and conduction of affairs and business of theCompany and take advantage of his wide and rich experience, by re-appointing him as a Chairman & Managing Director of the


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Company for a further period of five years with effect from 1st March, 2010. The period of office of Mr. Janmejay R. Vyas uponreappointment as a Chairman & Managing Director shall not be liable to determination by retirement of Directors by rotation. Thereis no other variation in terms of his appointment and remuneration.This may be treated as an abstract of the terms of the draft resolution for the re-appointment of Mr. J. R. Vyas as Chairman &Managing Director of the Company, pursuant to Section 302 of the Companies Act, 1956.The resolution at item No. 6 of the Notice seeks the approval of the members by way of an Ordinary Resolution.The Board of Directors recommends the resolution at item No. 6 of the Notice for approval by the Members.

Mrs. D. J. Vyas, Wholetime Director and Mr. Arpit J. Vyas, Additional Director, of the Company may be considered as concernedand interested as being relatives of Mr. J. R. Vyas and Mr. J. R. Vyas may also be considered as concerned and interested as theresolution pertains to himself. None of the other Directors is interested or concerned in this resolution.Item No. 7Mr. Arpit J. Vyas (Mr. A. J. Vyas) was appointed as an Additional Director by the Board of Directors at its meeting held on 1st June,2009 and in terms of the provisions of Section 260 of the Companies Act, 1956, he will hold office as such only up to the date ofthe next Annual General Meeting. A notice under Section 257 of the Companies Act has been received from a member signifyinghis intention to propose the name of Mr. A. J. Vyas for appointment as a Director of the Company. Mr. A. J. Vyas has filed with theCompany his consent to act as a Director. Mr. A. J. Vyas has completed his education from University of Aston, Birmingham forDegree in Chemical Engineering in 2009. He is a Director of Azafran Innovacion Pvt. Ltd. Since last two years he is advising inmarketing of various herbal costemic products of that company. Company's marketing division will be strengthened further byappointing him as a Director on full time basis. Marketing is otherwise also his core area and he is interested and capable toperform very well and it would be an added advantage that his academic qualification is also in the area of Chemical Engineering.Keeping in view of this it will be in the interest of the Company to appoint him as a Director as well as wholetime Director of theCompany.Mr. A. J. Vyas, aged about 23 years, has been also appointed as Wholetime Director of the Company by the Board of Directors ofthe Company at its meeting held on 1st June, 2009, on the recommendation of the Remuneration Committee held on the sameday, for a period of five years w.e.f. 1st June, 2009 as well as for the payment of remuneration to him as stated in the resolutionproposed herein, subject to approval of the Members in general meeting.Since Mr. A. J. Vyas has not attained the age of 25 years, his appointment as Whole-time Director and payment of remunerationto him as such is permissible in accordance with the provisions of Schedule XIII to the Companies Act, 1956 without the approvalof Central Government, if his appointment is approved by the Members in General Meeting by passing a special resolution.This may be treated as an abstract of the terms of the draft resolution for the appointment of Mr. A. J. Vyas as Wholetime Directorof the Company, pursuant to Section 302 of the Companies Act, 1956.Your Directors, therefore, recommend a Special Resolution at item No.7 for your approval. Mr. J. R. Vyas, Chairman & ManagingDirector and Mrs. D. J. Vyas, Whole-time Director of the Company may be considered as concerned and interested as beingrelatives of Mr. A. J. Vyas and Mr. A. J. Vyas may also be considered as concerned and interested as the resolution pertains tohimself. None of the other Directors is interested or concerned in the resolution.

By Order of the Board of DirectorsRegd. Off. : Bhadr-Raj Chambers,Swastik Cross Road, Navrangpura,Ahmedabad - 380 009.Date: 1st June, 2009 (Janmejay R. Vyas)

Chairman & Managing Director


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DIRECTORS’ REPORTToThe Shareholders ofDishman Pharmaceuticals and Chemicals Limited

Your Directors have pleasure in presenting their Report along with the Audited Accounts of the Company for the year endedMarch 31, 2009.

FINANCIAL RESULTS

(Rs. in Lacs)

Particulars 2008-2009 2007-2008

Net Sales 41588.47 35920.03Profit before Tax & other Adjustments 9505.81 7261.17Less :- Current tax 1075.85 800.00Add :- MAT Credit Entitlement 1025.69 161.11Less :- Deferred Tax liability 167.61 459.95Less :- Fringe Benefit tax 32.41 24.22Profit after tax 9255.63 6138.11Less :- Prior period adjustments (Net) 12.06 9.23Less :- Short Provision of Income tax for earlier years 29.06 173.06Net Profit 9214.51 5955.82Balance of profit brought forward 4860.70 4848.99Amount available for appropriations 14075.21 10804.81Appropriations :Transfer to General Reserve 5000.00 5000.00Proposed Dividend 968.37 806.97Tax on Proposed Dividend 164.57 137.14Balance carried to Balance Sheet 7942.27 4860.70

DIVIDEND

For the financial year 2008-2009, your Directors are pleased to recommend a final dividend of 60% on the paid-up equity sharecapital of Rs.1613.94 lacs (Rs.1.20/- per equity share of Rs. 2/- each) (previous year 50% on the paid-up equity share capital ofRs.1593.68 lacs, i.e. Re.1/- per equity share of Rs. 2/- each), which if approved at the forthcoming Annual General Meeting will bepaid out of the profits of the Company for the year to all those equity shareholders whose names appear in the Register ofMembers on the close of business hours as on 15th July, 2009.

PERFORMANCE AND OPERATIONS REVIEW

During the year, your company achieved a turnover of Rs.41588 lakhs as against Rs.35920 lakhs during the previous yearreflecting a growth of 15.78%. Exports constitute Rs.34042 lakhs or 82% of sales for 2008-’09. Other income earned during theyear stood at Rs.69.79 lakhs as against Rs.944.33 lakhs in the previous year. Profit before tax grew by about 31% (Rs.9505.81lakhs during the year as against Rs.7261.17 in the previous year). Profit after tax for the year was Rs.9256 lakhs as againstRs.6138 Lakhs during previous year.

Earning per share for the year works out to Rs.11.43 per share on absolute basis and 11.33 on diluted basis as against Rs.7.81 pershare on absolute basis and Rs.7.35 on diluted basis.

The consolidated turnover, which includes results of all its wholly owned subsidiaries, proportionate share in the joint ventures(Schutz Dishman Biotech Ltd., CAD Middle East Pharmaceutical Inds., Dishman Arabia Ltd., and Dishman Japan Ltd.) andassociate (Bhadra- Raj Holdings Pvt. Ltd.) reported 32% rise in sales to Rs.106235.78 lacs for the current financial year 2008-09compared to the previous year’s sales of Rs.80307.62 lacs.

Consolidated Profit before tax & other adjustment of the Company stood at Rs.15745.56 Lakhs (previous year: Rs.12284.51lakhs) and profit after tax for the year at Rs.14673.66 Lakhs (Previous year: Rs.12151.19 lakhs) for the current financial year 2008-09.

The consolidated Earning per share for the year works out to Rs.18.13 per share as against Rs.15.70 per share on absolute basisand Rs.17.98 per share against Rs. 14.69 Per Share on diluted basis.

Your Company could achieve sustained growth due to continued pursuit of our strategy to work with innovator companies, developingnew compounds and reducing cost of existing products through process innovation.


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A detailed analysis of the financial results is given in the Management Discussion and Analysis Report, which forms part of thisReport.

Dishman Signed a Co-operation & Joint API Development Agreement With Polpharma - Poland

In March, 2009, your Company and Polpharma - Poland have signed a cooperation and joint API development agreement.Polpharma is a strong player in the Central and Eastern European markets and CIS countries with a turnover of ca. 400 million USdollars. Dishman group, a dedicated CRM player has ca. 200 million US dollars turnover. Both companies feel that this partnershipwill benefit mutually and pave the way for a stronger growth in coming years.

Dishman has now strategies to cooperate with leading API players and pharma companies such as Polpharma with their strengthin R&D and API plants in India as CRAM player. Such partnerships will ensure long term API manufacturing contracts to Dishmanand also provide API development and DMF preparation capabilities to partners to cut short their time to market.

Expansion at Bavla

The Company has decided to invest into a formulation facility at the Company’s Bavla plant. Purpose of this formulation facility isto become a full service provider as a CRAM Company. Company will invest around Rs.35.00 Crores to create this US FDA andMHRA approvable facility. Your company has no plans to enter generic formulation market and this facility is to cater to itscustomers as a full service provider from Contract Research to API’s to finished dosage form. Many European and US customershave expressed their interest in Dishman providing this service under Contract Manufacturing. Company is finalising a LOI withone customer who will occupy 30% capacity from inception of the plant.

Dishman is also building Asia’s largest facility to manufacture Cancer drugs and other high potency drugs at its Bavla plant.

Disinfectant Division

As you are aware, your Company has developed a unique position in bulk actives in the area of disinfectants. Now, the Companyis venturing in to manufacturing and marketing of disinfectant and sanitization products in India, Saudi Arabia and Australia. TheCompany will make formulated products for hospitals, domestic use and industrial disinfection. In India and Australia, this will bedone by company and its Australian subsidiary where as in Saudi, this will be under a JV called Dishman Arabia Ltd. with a Saudipartner.

RESEARCH AND DEVELOPMENT

Research is a critical thrust area for the Company because it is the foundation upon which Company’s strategy of manufacturingand marketing of Bulk Drugs & Intermediates (including contract manufacturing) and Fine Chemicals, Quats & Speciality chemicalsstands. At Bavla facility, your Company has created a state-of-the-art R & D center comprising three floors and having total builtup are of 4500 Sq. Mtrs. The R&D labs work under full GLP. There are eight independent Chemical laboratories, Kilo lab, Analyticaldevelopment laboratories, Technical Library and cGMP Pilot Plant.

Looking at the requirements of various projects, this year we have installed two reactors from De Dietrich- Germany of 100L eachto augment the kilo lab capacity. In addition to this, for some niche projects requiring irradiation, we have installed state-of the artirradiation equipment from Germany

Analytical Development Lab is equipped with all modern equipments for the analysis of raw materials, intermediates and finishedproducts. These include HPLC, UPLC GC, LC–MASS, GC-MASS, ICP, NMR, CHN Analyser, HPTLC, XRD, Spectrophotometeretc.

At present more than 220 scientists are working in three shifts. At its full capacity, around 260 scientists will be working on a 3-shiftbasis. This center focuses on contract research at lab, kilo and Pilot Plant scales. In addition to R&D Center, there are three pilotplant facilities. A new pilot plant facility is being planned which will be fully cGMP with four separate pharma areas. This facilitywould have many equipment with diverse designs to enhance the production technology and output.

The Company’s R & D orientation and understanding of synthetic routes of process innovation have resulted in development workfor customers under CDA and with the intention of getting long-term manufacturing contracts. Further, to give impetus to thecontract manufacturing assignments - both in the pharma and non-pharma segment and to capitalize on the potential outsourcingmarket related to the pharmaceutical and chemical industries, Company has developed and strengthened its contract researchcapabilities of APIs and intermediates. As a result of this, the technology for the production of the most of the 20 APIs has beendeveloped or is under final stages of development. The technology for manufacturing these APIs would then be transferred to theproduction facility coming up in Saudi Arabia. Besides these, we are developing about 15 other APIs based on market trends.

In addition to APIs, this year 130 R&D CRAMS projects have been completed at lab and pilot level. Another 60 are in variousstages of development.

QUALITY, HEALTH, SAFETY & ENVIRONMENT (QHSE) & RESPONSIBLE CARE

Your Company’s products and processes are developed in accordance with strictly defined rules to ensure safety and Health ofworkers as well as the environment. This is achieved by conducting the Risk Assessment, Identification of significant environmentalaspects, Safety Audits, customer audits, HAZOP study and Environment audits. All manufacturing plants follow responsible care.

The Company’s QHSE policy is being implemented, among others, through (i) Maintaining the “Zero Discharge” of waste water byseries of treatment; (ii) Incineration of liquid and solid waste at site; (iii) Practicizing On-site emergency plan by conducting mock-


11

drills; (iv) Replacement of hazardous process / chemical to non-hazardous process for converting to low hazards; (v) Fire detectionand protection system available at site; (vi) Conducting intensive QHSE training programs including contractor employees; (vii)Participation of employees in Safety committee meetings at all levels and celebrating the National Safety Day, Fire Service Day,World Environment Day and World Earth Day; (viii) Independent safety and environment audits at regular intervals by third partyand also in-house; (ix) In-house medical and health facility at site for pre-employment & periodical medical check-up of all employeesincluding contract employees; (x) Blood Donation Camp at site for social cause; (xi) Participation and paper presentation on goodpractices adopted by dishman on SHE management in National and International Conferences. (xii) Become the signatory memberof Responsible Care for commitment towards EHS management system. (xiii) ISO 9001:2008 and OHSAS 18001:2007 newversions certification from BVQI. (xiv) Rated low risk facility by various international Customer by conducting EHS audit in depth.

Your Company’s efforts are recognized by State Level, National Level and International level Awards from time to time. This yearCompany has been awarded the most prestigious award of “Shreshtha Suraksha Purashkar” from National Safety Council ofIndia, Mumbai in manufacturing sector.

SPECIAL ECONOMIC ZONE (SEZ) PROJECT

As you are aware, your Company has promoted the project of Special Economic Zone (“SEZ”), one for Pharmaceuticals & FineChemicals Segment and another for Engineering Segment through its subsidiary company namely Dishman Infrastructure Ltd.(“DIL”), and provided a seed capital for the said SEZ project. DIL is on the verge of filing for notification of both the SEZs.

In the month of March, DIL has increased its paid-up capital from Rs.5.00 lacs to Rs.500.00 lacs by allotting new shares to others.Hence, Company’s holding in DIL has decreased from 100% to 1% and hence, DIL is discontinued as wholly owned subsidiariesof the company w.e.f. 16th March, 2009.

LISTING ARRANGEMENT

The equity shares of the Company are listed at the National Stock Exchange of India Ltd., Mumbai (NSE) and Bombay StockExchange Ltd., Mumbai (BSE). Annual listing fees for the year 2009-10, as applicable, have been paid before due date to theconcerned Stock Exchanges.

FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)

As the members are aware, in August, 2005, the Company accessed the international financial markets through an offering of0.5% Foreign Currency Convertible Bonds (FCCBs / Bonds), due 2010 convertible into equity shares of the Company, for US $50million. The FCCBs have been listed on the Singapore Exchange Securities Trading Ltd. (SGX-ST).

During the year, the Company has received one conversion Notice from the Bondholder for conversion of Bonds into EquityShares of the Company for the principal amount of Bonds of US$ 4,000,000. Upon exercise of the option for the conversion ofFCCBs of the principal amount of US$ 4,000,000 the Company has allotted 10,13,023 equity shares of Rs.2/- each of the Companyat a premium of Rs.170/- per share. Consequently, the paid-up equity share capital of the Company has increased from 7,96,84,113equity shares to 8,06,97,136 equity shares of Rs.2/- each and with this 95% of the Bonds got converted into shares.

DEPOSITS

The Company has not accepted any deposits as defined under Section 58A of the Companies Act, 1956 read with the Companies(Acceptance of Deposits) Rules, 1975, as amended, during the year under review.

DIRECTORS

Shri Rajnikant T. Vyas, Chairman & Managing Director of the Company, expired on 27th May, 2009. The Board of Directors of theCompany expressed with deep sense of gratitude, the valuable contribution made by Shri R. T. Vyas, during his tenure asChairman & Managing Director of the Company. The Company shall be always guided by his teaching and vision.

Mrs. Deohooti J. Vyas and Mr. Ashok C. Gandhi, Directors of the Company retire by rotation at the forthcoming Annual GeneralMeeting and being eligible offer themselves for reappointment.

Mr. Janmejay R. Vyas was appointed as a Managing Director of the Company for a period of five years with effect from 1st March,2005. His appointment as such and the remuneration @ 5% of the Net Profit were approved by the members by an ordinaryresolution at the Annual General Meeting held on 24th September, 2004 and the Central Government has given permission for thesame. His term as such expires on 28th February, 2010. The Remuneration Committee and Board of Directors have passed thenecessary resolution for the re-appointment and payment of remuneration to Mr. J. R. Vyas for a further period of five years w.e.f.1st March, 2010 subject to approval of the members and Central Government, if required.

Upon sad demise of Shri R. T. Vyas, Chairman of the Company, Board of Directors at its meeting held on 1st June, 2009,appointed Mr. J. R. Vyas as Chairman of the Company.

Mr. Arpit J. Vyas was appointed as an Additional Director of the Company with effect from 1st June, 2009. He holds office up to thedate of ensuing Annual General Meeting and is eligible for reappointment. The Company has received notices under Section 257of the Companies Act, 1956, proposing his candidature for appointment as Director, subject to retirement by rotation. Mr. A. J. Vyshas also been appointed as Whole-time Director of the Company for a period of five years w.e.f. 1st June, 2009 by the Board ofDirectors of the company on the recommendation of the Remuneration Committee, subject to approval of the members in generalmeeting.


12

INSURANCE

The Company has made necessary arrangements for adequately insuring its insurable interests.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect to Directors’ ResponsibilitiesStatement, the Directors, based on the representations received from the Company’s operating management, hereby confirm:

a) that in the preparation of the accounts for the financial year ended 31st March, 2009, the applicable accounting standardshave been followed along with proper explanation relating to material departures;

b) that the Directors had adopted such accounting policies and applied them consistently and made judgments and estimatesthat 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 thefinancial year and of the profit or loss of the Company for the year under review;

c) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordancewith the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detectingfraud and other irregularities;

d) that the accounts for the financial year ended 31st March, 2009 have been prepared on a going concern basis.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company hold office until the conclusion of the Twenty SixthAnnual General Meeting and are eligible for reappointment. M/s. Deloitte Haskins & Sells have informed the Company that, ifappointed, their appointment as Auditors will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.Accordingly, the members’ approval is being sought for their appointment as the Auditors of the Company and for fixation of theirremuneration for the year 2009-’10, at the ensuing Annual General Meeting.

ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

Information of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules,1988, is given in the Annexure – I and forms part of this Report.

PARTICULARS OF EMPLOYEES

Information as per Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975,as amended, is given in the Annexure – II and forms part of this Report.

SUBSIDIARY COMPANIES

On 3rd January, 2009, the Company had made an application to the Ministry of Corporate Affairs, Government of India (MCA), forgranting exemption under Section 212(8) to the Company from attaching the Balance Sheet and Profit Loss Account along withthe reports of the Board of Directors and Auditors as required by Section 212(1) of the Companies Act, 1956 of its 18 (eighteen)subsidiary companies, namely Dishman Europe Limited, Dishman U.S.A. Inc., Dishman International Trading (Shanghai) Co.Ltd., Dishman FZE, Dishman Switzerland Ltd., Dishman Pharma Solutions AG., Dishman Infrastructure Ltd., DishmanPharmaceuticals & Chemicals (Shanghai) Co. Ltd., Carbogen Amcis AG., Carbogen Amcis Limited (Name was changed from“Synprotec DCR Limited” w.e.f. 05/07/2007), Dishman Africa (Pty.) Ltd., Innovative Ozone Service Inc. (IO3S), Dishman NetherlandsB.V. (Name was changed from “Pharma Syn. B.V.” w.e.f. 08/11/2007), Dishman Holland B.V., Dishman Japan Ltd., CarbogenAmcis (India) Ltd., Dishman Australasia Pty. Ltd., and Dishman LLP, to the balance sheet of the company for the financial year toend on 31st March, 2009.

The Company is still waiting for the said approval. Upon receipt of the order from the MCA, the Company will take appropriateaction before dispatch of the Annual reports to the shareholders of the company. However, the key details of the subsidiaries areattached along with the consolidated financial statement.

The Company will provide the annual accounts of its subsidiary companies and the related detailed information on the specificrequest made by any investors and the said annual accounts are open for the inspection at the registered office of the Companyduring office hours on all working days, except Sundays and holidays, between 2.00 p.m. and 4.00 p.m. Particulars relating to theSubsidary Companies, are annexed to the Accounts of the Company.

As required under Clause 32 of Listing Agreement with the Stock Exchange(s) and in accordance with the requirements ofAccounting Standard AS-21 issued by the Institute of Chartered Accountants of India, the Company has prepared ConsolidatedFinancial Statements of the Company and its subsidiaries and are included in the Annual Report.

While preparing the consolidated financial statements, Company has consolidated the accounts of three Joint Venture companiesnamely Schutz Dishman Biotech Ltd. (22.33% holding by the Company), CAD Middle East Pharmaceutical Industries (30%holding by the Company), and Dishman Arabia Ltd. (50% holding by the Company), and one associate company namely, BhadraRaj Holdings Pvt. Ltd. (40% holding by the Company), as per the requirements of Accounting Standard 27 (AS 27) and AccountingStandard 23 (AS-23) respectively.

Dishman LLP, a limited liability partnership has been formed in U.K. on 18th November, 2008 by the Company’s wholly ownedsubsidiaries namely Dishman FZE (holding 95% share in LLP) and Dishman Pharma Solution AG. (holding 5% share in LLP).


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The Company has invested Australian Dollar 1,00,000 in the equity of Dishman Australasia Pty. Ltd., which has been establishedas wholly owned subsidiary of the Company in Australia, in April, 2008.

During the year, Company has invested total amount of USD 1,699,000 into the share capital of its wholly owned subsidiarycompany namely Dishman Pharmaceuticals & Chemicals (Shanghai) Co. Ltd. (Dishman China), incorporated in China. Thus, totalinvestment into share capital of Dishman China at the year end stood at USD 5,000,000 (US Dollar Five Million only).

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Your Company follows the principles of effective corporate governance. The Company has complied with the mandatory provisionsof Corporate Governance as prescribed in the revised Clause 49 of the Listing Agreement with the Stock Exchanges. A separatereport on Corporate Governance compliance and a Management Discussion and Analysis Report as stipulated by the said Clause49 form part of the Annual Report along with the required Certificate from the Auditors of the Company regarding compliance ofthe conditions of Corporate Governance as stipulated by revised Clause 49 of the Listing Agreement.

In compliance with one of the Corporate Governance requirements as per the revised Clause 49 of the Listing Agreement, theCompany has formulated and implemented a Code of Conduct for all Board members and senior management personnel of theCompany, who have affirmed compliance thereto.

ACKNOWLEDGEMENTS

Your Directors would like to express their grateful appreciation for the continued assistance and cooperation received from theIndian and International Financial Institutions, Banks, Government Authorities and Shareholders. Your Directors are also gratefulto the customers, suppliers and business associates of your Company for their continued co-operation and support. Your Directorswish to place on record their deep sense of appreciation to all the employees for their commendable teamwork and enthusiasticcontribution to the growth of Company’s business during the year.

For and on behalf of the Board

Place : Ahmedabad (Janmejay R. Vyas)Date: 1st June, 2009 Chairman & Managing Director

ANNEXURE – I FORMING PART OF DIRECTORS’ REPORTInformation under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Reportof Board of Directors) Rules, 1988.

A. CONSERVATION OF ENERGY

(a) Energy conservation measures taken

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy.

(c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods.

The Company has taken all necessary measures from the beginning for energy conservation as part of maintaining the operating cost to the minimum.

The Company has upgraded its existing system of Energy and invested more than Rs. 6.00 crores for the same including installation of new own power substation, which has benefited to minimized breakdowns due to uninterrupted power supply, resulting into the less maintenance cost of entire plant machineries and the saving in power cost.

(d) Total energy consumption and energy consumption per unit of production.

See Form A, attached.

B. TECHNOLOGY ABSORPTION

(e) Efforts made in Technology absorption. See Form B, attached.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

(a) Activities relating to export initiatives taken to increase exports, development of new export markets for products and services and export plans.

The Exports of the Company have increased to Rs.340.42 crores during the year from Rs. 245.08 crores during the previous year. The Company is making aggressive efforts to increase exports and develop new export markets.

(b) Total foreign exchange used and earned. The particulars have been given under “f” and “g” of note No. C of “Schedule O” of Notes on Accounts


14

FORM ACONSERVATION OF ENERGY

B CONSUMPTION PER UNIT OF PRODUCTION : Since the Company manufactures several bulk drugs, bulkdrug intermediates and specialty chemicals, it is not practicalto apportion consumption of utilities per unit of production.

FORM BTECHNOLOGY ABSORPTION

RESEARCH AND DEVELOPMENT (R & D)

A POWER AND FUEL CONSUMPTION 2008-2009 2007-2008 1 Electricity (a) Purchased

Unit (KWH) Total amount (Rs.) Rate/Unit (Rs.)

14610930 91669600 6.27

13196160 72075455 5.46

(b) Own generation (through D.G. Unit) Unit (KWH) Unit per Ltr. of diesel oil (KWH) Cost/unit (Rs.)

1051072 3.46 11.69

1368163 3.76 8.83

2 Saw Dust Quantity (MT) Total amount (Rs.) Average rate (Rs./MT)

2784.71 8045834 2889.29

5466.05 11041069 2019.93

3 Fuel (LDO + FO) Quantity (Ltrs.) Total amount (Rs.) Average rate (Rs./ Ltr.)

1108416.40 24424791 22.03

1045607.36 21215210 20.29

4 Others/Internal generation Quantity Total cost Rate/unit

-- --

1. Specific areas in which R & D carried out by the Company.

2. Benefits derived as a result of the above R&D

• The Company has fully equipped R & D facilities with sophisticated instruments and is constantly engaged in developing and updating manufacturing processes of the existing products leading to reduction in process time and cost of production and also in developing new products.

Based on the R & D activities carried out for the client, if the molecule is commercialized, it can be converted into contract manufacturing during the entire life cycle of the drug.

3. Future plan of action • Your Company has created a state-of-the-art R & D center and cGMP pilot facility at Bavla plant. The Company has been investing aggressively in its R & D activities to the level of almost 2.00% of its turnover and continue augmenting R & D capabilities & productivity through technological innovations, use of modern scientific and technological techniques, training and development.

4. Expenditure on R & D. (Rs. in lacs) (a)

(b) (c) (d)

Capital Recurring Total Total R & D expenditure as a percentage of total turnover.

559.84 138.03 697.87 1.68%

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION Nil


15

ANNEXURE – II FORMING PART OF DIRECTORS’ REPORT

Information required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees)Rules, 1975.

Notes :1. The above Gross remuneration includes salary, allowances, company’s contribution to provident fund and superannuation.2. In addition to the above remuneration, employees are entitled to gratuity in accordance with the Company’s rules.3. The nature of employment in all cases is contractual.4. The above employees mentioned at Sr. No. 3, 7, 8 & 9 do not have any share in the paid-up capital of the Company. Mr. V. P.

Kathe, Mr. V.V.S. Murthy, Mrs. D. J. Vyas, Mr. R. T. Vyas and Mr. J. R. Vyas mentioned at Sr. No.1, 2, 4, 5 and 6, holds 150,500, 10964500 (13.59%), 12323300 (15.27%) and 25042900 (31.03%) equity shares of Rs.2/- each in the Company,respectively.

5. The above employees are not relatives of any Director of the Company except Mrs. D. J. Vyas, Mr. R. T. Vyas and Mr. J. R.Vyas, who are Directors and relatives of each other.

6. Shri Rajnikant T. Vyas, Chairman & Managing Director has expired on 27th May, 2009.# Mr. K. K. Agrawal and Mr. Tushar R. Mehta have resigned w.e.f. 1st August, 2008 and 14th May, 2008 respectively.

Sr. No.

Name of the Employee

Age (Years)

Designation/ Nature of Duties

Qualification Experience (Years)

Gross Remuneration Received (Rs.)

Date of Joining

Last Employment & Position held

a) Personnel who are in receipt of remuneration aggregating not less than Rs.24,00,000 per annum and employed throughout the year : 1.

Mr. Vasant P. Kathe 62 Sr. Vice President (Quality Assurance)

M.Sc. 37 35,60,028 06/08/2004 Lincoln Pharmaceuticals Ltd. Vice President (Technical)

2. Mr. V.V.S. Murthy 53 Chief Financial Officer (Finance & Accounts)

B.Com., A.C.A.

28 66,40,008 01/03/2007 Dr. Reddy’s Lab. Vice President (Finance)

3. Mr. Arvind A. Joshi 53 President (H.R. & Admn.)

B.Sc., L.L.B., M.S.W.

33

55,71,996 18/10/2007 J. B. Chemicals Ltd. Vice President (H.R.)

4. Mrs. Deohooti J. Vyas

57 Whole-time Director

B.Sc. (Chemistry)

25 56,00,000 01/12/1997

B. R. Laboratories. Proprietress

5. Mr. Rajnikant T. Vyas 84 Chairman & Managing Director

B.A. 60 24,00,000 15/02/1988

Fine Knitting Mills Manager & started his own power loom business.

6. Mr. Janmejay R. Vyas

58 Managing Director B.Sc. (Chemistry) B.Sc. (Tech.)

35 4,66,67,125

29/06/1983

Consultant to various Pharmaceutical Co.’s during the year 1974 to 1983

b) Personnel who are in receipt of remuneration aggregating not less than Rs.2,00,000 per month and employed for part of the year : 7. Dr. Mahadeo L.

Kubal 55 General Manager

(Analytical Dev. Lab)

Ph.D. (Chemistry)

32 20,25,000 01/07/2008 Indotech Organics. Director

8. Mr. K. K. Agrawal# 52 Chief Operating Officer (Operation)

B.Tech., M.Tech.

28 16,67,000 11/12/2006 Marksens Pharma Ltd. President (API)

9. Mr. Tushar R. Mehta#

46 Vice President (Supply chain)

B.Sc., M.B.A.

21 4,14,904

01/08/2007 Panacea Biotech Ltd. Vice President (Purchase)


16

MANAGEMENT DISCUSSION AND ANALYSIS REPORT(A) BUSINESS HIGHLIGHTS:

Sales:

Dishman has achieved a turnover of Rs.415.88 crores in 2008 09 as against Rs.359.20 crores during the previous yearrecording a growth of over 15.78%. Exports constituted around 82% of turnover as against 68% during the previous year.

Material costs:

Raw material consumption for the year was Rs.123.26 crores as against Rs. 125.43 crores during the year. Inventory of rawmaterials has gone up during the year by Rs.5.61 crores.

Work in process decreased by Rs. 24.53 Crores while finished goods have increased by Rs.14.52 crores.

Above increase of raw materials is mainly due to commencement of two new units at Bavla, increased operations fromexisting units. Increase in finished goods is mainly due to slow off take by some customers due to inventory rationalization.

Manufacturing expenses:

Manufacturing expenses mainly comprises of Power & Fuel Rs.20.54 crores, repairs & maintenance Rs.5.15 crores, R&Dexpenses Rs.2.66 crores as against Rs.16.99 crores, Rs.4.75 crores and Rs.2.28 crores respectively during the previousyear. Manufacturing expenses account for 9.03% of sales during the year as against 9.73% during the previous year.Manufacturing expenses during the year as a percentage of sales are lower due to a combination of product mix and costcontrol measures taken by the company.

Employee Emoluments:

Employee emoluments (other than managerial remuneration) have increased to Rs.28.59 crores during the year as againstRs.24.59 crores during the previous year. This increase is mainly due to salary increase given to employees and recruitmentemployees to run the new facilities created at Bavla.

Administrative, Selling and Other Expenses:

Major components of administrative, selling and other expenses include clearing & forwarding, insurance premium, forexloss (including mark to market loss on short term transactions) travelling and conveyance etc. Administrative, selling andother expenses for year amounted to Rs.35.61 crores as against Rs.25.02 crores during the previous year. These expensesaccounted for 8.56% sales during the year as against 6.96% during the previous year.

Interest and Finance charges:

Interest and Finance charges during the year have increased to Rs.22.50 crores as against Rs.7.21 crores during theprevious year due to higher operations and completion of some capex projects.

Depreciation:

Depreciation charge for the current year came to Rs.19.79 crores as against Rs.16.82 crores during the previous year.Addition to fixed assets during the year was Rs.32.60 crores as against Rs.67.79 crores during the previous year.

Change in accounting policy:

During the year the company has exercised the option to account foreign exchange gains/losses as per notification issuedby Government of India on 31st March 09. Accordingly, an amount of Rs.8.97 crores has been added to the cost of fixedassets, Rs.4.13 crores has been accumulated in foreign currency monetary items translation difference account, Rs.0.45crores being exchange differences pertaining to earlier years has been adjusted to the balance of general reserves in thebalance sheet and Rs.1.38 crores has been amortized and charged to profit and loss account

Provision for Tax:

Rs.0.50 crores (net of MAT entitlement) was provided during the year towards current tax as against Rs.6.39 crores duringthe previous year. The company has also provided Rs.1.68 crores towards deferred tax during the year as against Rs.4.60crores during the previous year. Fringe benefit tax for the year was Rs.0.32 crores as against Rs.0.24 crores during theprevious year.

Profit after tax:

Profit after tax for the current year was Rs.92.56 crores as against Rs.61.38 crores during the previous year

Earnings per share:

Basic earnings per share for the current year works out to Rs.11.43 as against Rs.7.81 during the previous year. DilutedEPS worked out to Rs.11.33 as against Rs.7.35 during the previous year.


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Composition of Expenses & Profit (% to Standalone Turnover 2008-09)

Interest & Finance Charges

5%

Provision for tax1%

Depreciation / Amortisation

Materials & Manufacturing

Expenses50%

Employee Emoluments

8%

Administrative, Selling & Other

Expenses9%

Profit after tax22%

5%

Composition of Expenses & Profit (% to Standalone Turnover 2007-08)


Expenses61%

Employee Emoluments

7%


Expenses5%


2%

Provision for tax3%

Profit after17%


5%


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Financial condition:

i) Secured loans

Secured loans stood at Rs.232.19 crores as at 31st March 09 as against Rs.188.07 crores as at 31st March 08 due todisbursement of loans sanctioned during the previous year. An amount Rs. 15.95 crores was repaid during the year.

ii) Unsecured loans:

Unsecured loans as on 31st March 09 were at Rs. 58.33 crores as against Rs.56.32 crores as on 31 st March 08.

iii) Inventories:

Major items of inventories as of 31st March are as under:Rs. crores

Particulars 2008-09 2007-08

Raw Materials 35.04 29.43

Work in process 48.56 73.09

Finished goods 30.45 15.93

Increase in raw materials and finished goods are mainly due to sudden change in dispatch schedules due to inventoryrationalization by some customers.

iV) Debtors:

Debtors as of 31st March 09 amounted to Rs.61.55 crores as against Rs.93.38 crores during the previous year.Debtors amount has come down inspite of higher sales due to better collection of receivables.

(B) SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The business segments of the Company comprise the following :

Segment Description of the activity

CRAMS Contract Research and Manufacturing Segment under long term supply agreements

MM Bulk Drugs, Intermediates, Quats, and Specialty Chemicals

Transactions not falling in the above segments have been grouped under others segment.

The break-up of Company’s total income from the product segments viz. “MM Segment” and “CRAMS segment” for thelast three years is as under :

(Rs. in mn.)

Product segment 31/03/2007 31/03/2008 31/03/2009

MM 1561.63 1523.88 1391.72

CRAMS 1569.67 1996.74 2674.04

Others -- 272.89 -

Total 3131.30 3793.51 4065.76

With strong R&D experience and effective relationship developed with MNC Customers, the Company has emergedas a premier contract manufacturing organization (CMO). The CMO business model was envisaged in the year 1997and there under set up a modern production facility at Bavla, near Ahmedabad, which is now a 100% EOU facility. Atpresent, the Company has eight-multi purpose production units at Bavla, out of which two are commercially dedicatedfor contract manufacturing for Solvay Pharmaceuticals B.V., Netherlands. This was your company’s first long termcontract as a CMO.

Your company has adopted various marketing strategies to continue the growth rate, including increase in number ofclients to reduce the dependency on any single client, increase the number of products range to reduce product risk;to enter contract manufacturing through contract research of new molecules etc. and enter the specific market withmarketing innovation, technology transfer in the developing markets, where technology is licensed to API manufacturerwith a stipulation that the intermediates are to be procured from Dishman on a long term basis.


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Consolidated Financials:

Turnover:

Dishman’s net sales turnover increased to Rs.1062.36 crores during 2008-2009 as against Rs. 803.08 crores during2007-2008, an increase of 32% year-on-year.

Profit:

The EBITDA increased to Rs.266.22 crores from Rs.200.53 crores in the previous year, yielding an increase of 33%over the previous year.

The Company’s Profit before Tax and other adjustments increased from Rs.122.85 crores in the previous year toRs.157.46 crores in the year ended 31-03-2009, an increase of 28% over the previous year.

The net Profit for the year increased to Rs.146.19 crores as compared to Rs. 119.71 crores in the previous year, anincrease of around 22% over the previous year.

Other income:

Other income for the year 2008 09 was Rs.4.76 crores against Rs.47.66 crores during the previous year. Previousyear’s other income includes Rs.37.86 crores on account of forex gains (including mark to market forex gains).

During the year the company has exercised the option to account foreign exchange gains/losses as per notificationissued by Government of India on 31st March 09. Accordingly, an amount of Rs.8.97 crores has been added to thecost of fixed assets, Rs.14.42 crores has been accumulated in foreign currency monetary items translation differenceaccount, Rs.43.28 crores being exchange differences pertaining to earlier years has been adjusted to the balance ofgeneral reserves in the balance sheet and Rs.4.53 crores has been amortized and charged to profit and loss account.

Depreciation:

Depreciation for the year was Rs.62.91 crores compared to Rs.47.19 crores for the previous year. The higher chargewas on account of the higher capital expenditure incurred during the last few years.

Fixed Assets:

Gross Block of the fixed assets at the end of the year increased to Rs.1187.82 crores compared to the previous year’sfigure of Rs.929.17 crores.

The increase is due to foreign exchange translation which represents foreign exchange difference arising due totranslation of certain foreign subsidiaries’ fixed asset at closing rate as their status are changed from ”Integral ForeignOperations” to “Non Integral Foreign Operations”.

Composition Of Expenses & Profit (% To Consolidated Turnover 2008-2009)


Expenses37%

Employee Emoluments

26%


Expenses12%


4%


6%

Provision for tax1%

Profit after tax14%


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(C) INDUSTRY OVERVIEW

Contract research and contract manufacturing of pharmaceutical products is growing due to outsourcing from big pharmaplayers in the West. Many innovator companies have already declared their intention to outsource majority of their APIs andpart of the research activities to control the costs and focus on their core activity. Indian CRAMS players are in a betterposition to grab these opportunities due to low cost manufacturing capabilities, strong chemistry and regulatory skills. Thekey catalyst for the boosting outsourcing was implementation of product patents from 2005.

Contract manufacturing of APIs is increasing due to severe pressure on margins due to patent expiries, lack of new blockbusterdrugs in the pipeline, raising R&D costs and environmental issues etc. API accounts for about 3 – 5 % of total revenue ofinnovator companies. Contract manufacturing industry size is estimated at US $ 22 bn in 2007.

Custom Synthesis – Lucrative opportunity

Custom Synthesis (CS) forms an important business sub-segment of CRAMS. CS entails synthesis of compounds/drugcandidates as per customer specification/requirements. Thus, CS involves supplying initial material, reference compounds,derivatives of lead compounds, and intermediates, especially for molecules in the development stage or drugs under patent.Many CRAMS companies offer services to manufacture customised APIs & advanced intermediates, exclusively to innovatorpharma companies. Their services encompass the entire life cycle of a drug – from the early clinical phase to market launchand even when the drug becomes generic.

Besides cost benefits and time saving, diversifying work among various players helps big companies maintain IPRconfidentiality. The current global CS market is dominated by API contract manufacturing organizations based in the US/EU,where IPR protection is in place and diverse & cutting-edge chemistry skill-sets exists. We believe that the key abilityrequired by the outsourcing partner is to gain confidence of the R&D-driven Company as against offering the lowest cost.European custom synthesis players now use Asian low-cost players by outsourcing early synthesis work to them.

CS offers an opportunity to Indian CRAMS players to build long-term strategic relationships with global R&D-driven companies.Indian companies can work with innovator partners through the total process, of producing a small quantity of the product inthe early stage of research to large quantities, once the product is commercialised. Moreover, the strong chemistry skillset,expertise in process development and ability to improve processes gives Indian companies an added advantage.

India advantage:

During the last couple of years, Indian companies are strongly competing with their western counter parts for outsourcingbusiness of innovator companies. Indian CRAMS companies offer low cost manufacturing without compromising on quality,strong chemistry and regulatory skills, trained manpower and IPR protection etc.

India’s CRAMS share in the world market is expected to increase to US $ 5 bn in FY 2012 from US $1.2 bn in FY 2007.


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(D) SWOT ANALYSIS OF THE COMPANY

The Company has focused on custom chemical synthesis since last number of years being an R & D driven Company. Thisgenerates increased revenue at higher margins.

The Company undertakes Contract Research for patent / license holders of either recently patented products or for theirgeneric products to be marketed in the regulatory markets and supply of trial products. It also enters into long-term supplycontracts for the supply of APIs/Intermediates on a long-term basis. This is called CRAMS (Contract Research andManufacturing Segment). This is in addition to Dishman’s regular manufacture and marketing of the marketable molecules,comprising Quats, PTCs, APIs and Bulk Drugs, Intermediates etc.

Strengths :

- Management depth and ability to mange client relationships.

- R &D capabilities to develop efficient and cost effective process at short notice having a State-of-the-Art dedicated R& D center at Bavla.

- Enhanced presence in the international market through international subsidiaries.

- Multi-purpose and multi-product production facilities having ISO 9001:2000, ISO 14001:2004 and OHSAS 18001:1999Quality certifications.

- USFDA approved Plant located at Bavla, to manufacture Eprosartan Mesylate.

- 100% EOU status at Bavla and Naroda New Plant.

- New Acquisition of R & D companies abroad with specialization in specific synthetic chemistry for APIs and/or healthypipeline product for contract manufacturing.

- Has equipped itself with new business dynamics of comprehensive service providers to the clients This may call forrequired diversification also for which the company has already equipped itself

Weaknesses :

- Business revenues skewed towards Europe, though the share of USA market of Dishman is increasing now.

- MNCs prefer larger balance sheet. (Of Course, Dishman’s balance sheet is becoming stronger and stronger, year afteryear)

Opportunities :

- Large number of pharmaceutical companies losing their blockbuster drug patents, thereby increasing the scope foroutsourcing to countries that offer a low cost manufacturing base such as India, China, Korea and Taiwan.

- Indian pharmaceutical segment witnessing change in business dynamics : Focus on export orientation.

- Growth of Generics market in US and Europe.

- CMO opportunities with other large MNCs : Patented Drugs .

- High value Quats Business and newer Quats applications.

- High potency product (high cost; low volume) manufacture

- A few of the products on which R & D activities are carried out for the clients and after completion of Phase III of trialsare commercialized, may be converted into contract manufacturing.

Threats :

- Competition from other Indian companies operating in similar segments.

- Competition from countries that offers low cost manufacturing base such as China, Korea and Taiwan.

- The patent/license holder may abandon the NCE at any stage due to various reasons.

(E) OUTLOOK

The global pharmaceutical market is expected to grow 4.5 - 5.5 percent next year, a pace similar to 2008, according to theIMS Global Pharmaceutical and Therapy Forecast and predicts global pharmaceutical sales to surpass $820 billion in CY2009.


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The market will continue to contend with a number of forces – among them, the shift in growth from developed countries toemerging ones, specialist-driven products playing a larger role, blockbuster drugs losing patent protection, and the risinginfluence of regulators and payers on healthcare decisions.

The environment for outsourcing is favorable as innovators look to reduce costs and increase the speed of the researchprocess. Clinical trials are increasingly becoming expensive in the developed world. Low costs, high quality Indianmanufacturing has become essential for API and intermediate production. Indian companies have acquired firms that givethem client access, create necessary manufacturing/ research facilities and widen portfolio of clients and services reducingconcentration risks. Indian companies are present in the highest value adding segments - high potency substances in CMOand discovery research in CRO.

Contract manufacturing includes outsourced manufacturing of intermediates and active pharmaceutical ingredients (APIs)as per the specific requirements of the innovator and generic companies, while R & D outsourcing is driven by two majorbenefits

a) reduced operating costs and

b) an increased number of drugs moving into development.

To ensure Company’s long-term success, the management is appropriately placing its best on R & D with contract researchleading to future manufacturing contracts. Given the pressure on innovators to cut costs and the long lead-time taken to inka manufacturing deal, we believe there is a high probability that innovators will deal with their research partners formanufacturing as well. Contract Research and Manufacturing (CRAM) business is the core of company’s business modeland company has undertaken a series of overseas acquisition, through its wide spread subsidiaries to seize the opportunitiesin this field. After accomplishing a successful small acquisitions of Synprotec DCR Ltd., in U.K. and IO3S in Switzerland,through its wholly owned subsidiary, Dishman Switzerland Ltd in February of 2005-06 and Carbogen and AMCIS, Switzerland-based process research on APIs and low-volume, high-value API and hypo Potency products manufacturing company in themonth of August, 2006, the Company through its subsidiaries has acquired fine chemicals, vitamin D and vitamin D analoguesbusiness of Solvay Pharmaceuticals BV in Netherlands in October, 2007. This has already added and will continue to addsubstantially to the company’s consolidated revenue.

Dishman is well poised to participate in this opportunity. The Company is selling its products in Europe, USA, South Africa,Netherlands etc. through its subsidiaries and has an expanding international portfolio of affiliates, joint ventures and alliances.

Dishman has successfully acquired its goal of growth through CRAM business, and continue to strive on this by entering intonew long-term contracts.

(F) RISKS AND CONCERNS

Given its large exports, Dishman is exposed to the foreign exchange fluctuation risk. However, with the exports being multicurrency in nature (Euro, USD, GBP etc.) the risk is minimized. Volatility in prices of key raw materials is the other major areaof risk and concern.

The Company had raised the long-term funds by issuing 0.50% US$ 50,000,000 Unsecured Foreign Currency ConvertibleBonds (FCCBs) due 2010, The Bonds are to be converted into equity shares of your Company at a fixed exchange rate ofRs.43.56 for dollar and at a premium of Rs.170/- per share of the face value of Rs.2/- each. As on 31st March 09, FCCBsworth US $2.5 mn are outstanding. The current market price is higher than the conversion price and hence there is all likelythat all the Bonds may be converted into shares. However, in the most unlikely event, if the remaining Bonds are notconverted by the investors, the bonds will have to be repaid in foreign currency, and this will mean an exposure of the foreignexchange fluctuation risk. This risk also is minimum, as the Company is net foreign exchange earner. If the Bonds are to beredeemed, the redemption will be with a premium so as to have overall YTM (yield to maturity of 5.75% p.a.) for which dueprovision for the amount due up to 31st March, 2009 is made in the accounts.

The Company has an expanding international portfolio by acquisition, affiliates and joint ventures. This includes risks toearnings from the deal (i.e. risk of dilution) and from execution (ability to achieve the targeted synergies).

Your company is mainly focusing on CRAM business; including R & D. R & D is more focusing on manpower and theintelligence. Though in India, scientists are available, their major turnover may be a risk to R & D business.

Apart from the risk on account of interest rate, foreign exchange and regulatory changes, business of the Company areexposed to certain operating business risks, which is mitigated by regular monitoring and corrective actions.

(G) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has proper and adequate system of internal controls commensurate with its size and nature of operations toprovide reasonable assurance that all assets are safeguarded, transactions are authorized, recorded & reported properly


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and to monitor internal business process, financial reporting and compliance with applicable laws.

The internal control system has been designed so as to ensure that the financial and other records are reliable and reflectsa true and fair view of the state of the Company’s business.

To further strengthen the Internal Audit system, including internal control systems and MIS, your company has appointed anexperienced firm of Chartered Accountants as Internal Auditors.

A qualified and independent Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness ofinternal control systems and suggests improvements for strengthening them.

(H) INDUSTRIAL RELATIONS & HUMAN RESOURCE MANAGEMENT

The Company believes that human resource is the most important assets of the organization. It is not shown in the corporatebalance sheet, but influences appreciably the growth, progress, profits and the shareholders’ values. During the year, yourcompany continued its efforts aimed at improving the HR policies and processes to enhance its performance. The vision andmission of the Company is to create culture and value system and behavioral skills to ensure achievement of its short andlong-term objectives.

The company as at year-end, has 835 employees on its roll and continues to attract excellent talent both from within andoutside India to further its business interests. Industrial Relations continue to be cordial.

Cautionary Statement

Statement made in the Management Discussion & Analysis describing the Company’s objectives, projections, estimates,expectations may be “Forward-looking statements” within the meaning of applicable securities laws & regulations. Actualresults could differ from those expressed or implied. Important factors that could make a difference to the Company’soperations include economic conditions affecting demand supply and price conditions in the domestic & overseas marketsin which the company operates, changes in the government regulations, tax laws & other statutes & other incidentalfactors.


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CORPORATE GOVERNANCE REPORTCorporate Governance and practices in accordance with the provisions of the Revised Clause 49 of the Listing Agreement :

1. The Company’s philosophy on Code of GovernanceThe Company’s philosophy on investor service and protection envisages the attainment of the highest levels oftransparency, accountability and equity, in all facets of its operations, and in all its interactions with its stakeholdersincluding shareholders, employees, the government and lenders. The Company is committed to achieving the higheststandards of corporate governance. The Company believes that all its operations and actions must serve the underlyinggoal of enhancing overall shareholder value, over a sustained period of time. The Company continues to take necessarysteps towards achieving this goal.

2. The Board of DirectorsComposition :

The present Board of Directors consists of half of non-executive/ independent directors, who are acknowledged asleading professionals in their fields. As of date, the Board comprises of three (3) whole-time/ executive directors andthree (3) non-executive/ independent directors.

The Company has an executive Chairman and the number of non-executive/independent directors is 50% of the totalnumber of Directors. The Company, therefore, meets with the requirements relating to the composition of the Board ofDirectors.

The composition and category of Directors are as follows:

Category Name of the Directors *Promoter & Executive Directors Independent & Non- Executive Directors

Mr. Rajnikant T. Vyas (Chairman & Managing Director) Mr. Janmejay R. Vyas (Managing Director) Mrs. Deohooti J. Vyas (Wholetime Director) Mr. Yagneshkumar B. Desai (Director) Mr. Sanjay S. Majmudar (Director) Mr. Ashok C. Gandhi (Director)

*Note : 1) Shri Rajnikant T. Vyas, Chairman & Managing Director of the Company has expired on 27th May, 2009.

2) Upon sad demise of Shri R. T. Vyas, Chairman of the Company, Board of Directors at its meeting held on 1s t

June, 2009, appointed Mr. J. R. Vyas as Chairman of the Company.3) Mr. Arpit J. Vyas (son of Mr. J. R. Vyas, Managing Director of the Company) has been appointed as an

Additional Director of the Company w.e.f. 1st June, 2009 and also appointed as Whole-time Director of theCompany in the said Board Meeting subject to confirmation and approval of the Members in this AnnualGeneral Meeting.

Disclosure of Relationships between Directors inter se :

Name of Directors Relationship with other Directors Mr. Rajnikant T. Vyas Father of Mr. Janmejay R. Vyas, Managing Director and Father-in-law of Mrs. Deohooti

J. Vyas, Whole-time Director of the Company. Mr. Janmejay R. Vyas Son of Mr. Rajnikant T. Vyas, Chairman & Managing Director and Husband of Mrs.

Deohooti J. Vyas, Whole-time Director of the Company. Mrs. Deohooti J. Vyas Wife of Mr. Janmejay R. Vyas, Managing Director and Daughter-in-law of Mr. Rajnikant

T. Vyas, Chairman & Managing Director of the Company. Mr.Yagneshkumar B. Desai Not, in any way, concerned/ interested/ related with any of the other Directors of the

Company Mr. Sanjay S. Majmudar Not, in any way, concerned/ interested/ related with any of the other Directors of the

Company Mr. Ashok C. Gandhi Not, in any way, concerned/ interested/ related with any of the other Directors of the

Company

Note : 1) Shri Rajnikant T. Vyas, Chairman & Managing Director of the Company has expired on 27th May, 2009.

2) Mr. Arpit J. Vyas has been appointed as an Additional Director of the Company w.e.f. 1st June, 2009 andalso appointed as Whole-time Director of the Company in the said Board Meeting subject to confirmationand approval of the Members in this Annual General Meeting. He is son of Mr. J. R. Vyas, Managing Directorand Mrs. D. J. Vyas, Whole-time Director of the Company.


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2.1 Attendance of each Director at the Board meetings, the last Annual General Meeting and the Number of otherDirectorships and Chairmanships/ Memberships of Committees of each Director in various companies, duringthe year 2008-2009 :

Name of Directors Attendance Particulars

No. of Directorships and Committee Membership/ Chairmanship (in other Cos.)

Board Meetings

Last AGM*

Other Directorships

Committee Memberships

Committee Chairmanships

Mr. Rajnikant T. Vyas 4 No 4 None None Mr. Janmejay R. Vyas 4 Yes 14 # None None Mrs. Deohooti J. Vyas 2 No 4 None None Mr. Yagneshkumar B. Desai 4 Yes 3 3 None Mr. Sanjay S. Majmudar 4 Yes 5 1 1 Mr. Ashok C. Gandhi 4 Yes 7 7 None

* Last Annual General Meeting was held on 31st July, 2008.# Including Directorships in 8 Overseas Subsidiaries (Direct or Indirect) of the Company.

Notes :1) Details of the Committee membership/ Chairmanship is in accordance with revised Clause 49 of Listing Agreement

and reflects the membership/ Chairmanship of the Audit Committee and Shareholders’ & Investor’s GrievanceCommittee of other public companies.

2) None of the Directors of the Company is a member of more than ten Committees nor is the Chairman of morethan five Committees across all the Companies in which he is a Director.

2.2 Number of Board Meetings held and the dates on which held

Four Board Meetings were held during the year 2008-09. The dates on which the meetings were held are 22nd May,2008; 30th July, 2008; 24th October, 2008 and 29th January, 2009.

Board of Directors of the Company has also passed Circular Resolutions on 28th April, 2008 and 30th March, 2009.

The Company has held one meeting every quarter and the maximum time gap between any two meetings was notmore than four months.

The information as required under Annexure IA to Clause 49 of the Listing Agreement is made available to the Board.The agenda and the papers for consideration at the Board meeting are circulated to the Directors in advance beforethe meetings. Adequate information is circulated as part of the Board papers and is also made available at the Boardmeetings to enable the Board to take informed decisions. Where it is not practicable to attach supporting/relevantdocument(s) to the Agenda, the same are tabled at the meeting and specific reference to this is made in the Agenda.

CEO and CFO Certification

The Managing Director and the Chief Financial Officer of the Company give annual certification on financial reportingand internal controls to the Board in terms of Clause 49. The Managing Director and the Chief Financial Officer alsogive quarterly certification on financial results while placing the financial results before the Board in terms of Clause 41.

Code of Conduct :

The Company has formulated and implemented a Code of Conduct for all Board members and senior managementpersonnel of the Company in compliance with Clause 49(I)(D) of the Listing Agreement. The said Code of Conduct hasbeen posted on the Company’s website www.dishmangroup.com.

Risk Management Policy :

The Company has formulated a Corporate Policy applicable to its Indian operations, and duly approved by the Boardof Directors at its meeting held on 24th May, 2005 in compliance with the requirement of the revised Clause 49 of theListing Agreement with the Stock Exchanges. Audit Committee and Board Members are reviewing and updating thesaid Policy every quarter.

3. Audit Committee:

The Board of Directors of the Company has constituted an Audit Committee and has been reconstituted from time totime. The said Committee has been reconstituted by inducting qualified and independent members on the committee, bythe Board of Directors of the Company at its meeting held on 28th October, 2004. Presently, the Audit Committeecomprises three independent directors namely Mr. Y. B. Desai, Mr. S. S. Majmudar, and Mr. A. C. Gandhi. Theconstitution, composition and functioning of the Audit Committee also meets the requirements of Section 292A of theCompanies Act, 1956 and Clause 49 of the Listing Agreement entered into with the Stock Exchanges.


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Terms of reference of the Audit Committee include approving and implementing the audit procedures, reviewingfinancial reporting systems, internal control systems and control procedures and ensuring compliance with theregulatory guidelines and also include those specified under the revised Clause 49 of the Listing Agreement as well asunder Section 292A of the Companies Act, 1956.

Powers of the audit committee – The audit committee has powers that include the following:

(a) to investigate any activity of the company within its terms of reference,(b) to seek information from any employee,

(c) to obtain outside legal or other professional advice,

(d) to secure attendance of outsiders with relevant expertise, if it considers necessary.Names of members & Chairperson of the Audit Committee and the meetings attended by them during the financial year2008-09 ended on 31st March, 2009, are as under:

Name of the Directors Category Status/Designation No. of meetingsattended

Mr. Yagneshkumar B. Desai Non-executive/ Independent Chairman 4

Mr. Sanjay S. Majmudar Non-executive/ Independent Member 4

Mr. Ashok C. Gandhi Non-executive/ Independent Member 4

The Committee met four (4) times during the year 2008-09. The dates on which Audit Committee meetings were held are22nd May, 2008, 30th July, 2008, 24th October, 2008 and 29th January, 2009. The maximum time gap between any twomeetings was not more than four months.

Members of the Audit Committee have requisite financial and management expertise and have held or hold senior positionsin other reputed organizations.

The Statutory Auditors, Internal Auditors of the Company and Finance personnel are invited to attend and participate in themeetings of the Audit Committee. The Committee holds discussions with them on various matters including limited review ofresults, audit plan for the year, matters relating to compliance with accounting standards, auditors’ observations and otherrelated matters.

Mr. Y. B. Desai has, being a Chairman of the Audit Committee, attended the last Annual General Meeting held on 31st July,2008.

4. Remuneration Committee

The Board of Directors of the Company has constituted a Remuneration Committee, despite it being a non-mandatoryrequirement, which has been reconstituted from time to time. The said Committee has been reconstituted by inductingqualified and independent members on the committee, by the Board of Directors of the Company at its meeting held on 28th

October, 2004. Presently, the Remuneration Committee comprises three independent directors namely Mr. S. S. Majmudar(Chairman), Mr. Y. B. Desai (Member) and Mr. A. C. Gandhi (Member).

During the year, one meeting of the Remuneration Committee was held on 22nd May, 2008, which was attended by Mr. S. S.Majmudar, Mr. Y. B. Desai and Mr. A. C. Gandhi.

The function of the committee is to determine the policy on specific remuneration packages for Executive/Wholetime Directorsincluding pension rights and any compensation payments. The Committee recommends to the Board the remuneration ofthe Executive Directors in all its forms (i.e. salary, contribution to provident fund, superannuation fund, gratuity, bonus, stockoption, compensation for loss of office, other amenities, perquisites etc.). The Committee takes into account the financialposition of the Company, profitability, trend in the industry, appointee’s qualification, experience, past performance, pastremuneration etc. and ensures out objectivity in determining the remuneration package.

The remuneration policy is directed towards rewarding performance, based on review of achievements on a periodicalbasis. The remuneration policy is in consonance with the existing industry practice.

The Details of remuneration paid to all the Directors during the year :

Non-executive/Independent Directors :

Payment of remuneration by way of Commission to Non-Executive Directors of the Company (Other than the Chairman &Managing Director, Managing Director and Whole-time Director) was approved by the Board of Directors at its meeting heldon 22nd May, 2008 and also approved by the members of the Company by passing a special resolution at the AnnualGeneral Meeting of the Company held on 31st July, 2008 in terms of Sections 309(4) of the Companies Act, 1956 andprovisions of Article No.138 of the Articles of Association of the Company.


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By passing a special resolution as such, Members of the Company given their consent and authorized Board of Directors forpayment of commission to Non-Executive Director(s) as may be determined by the Board of Directors for each such Non-Executive Director for each financial year ending on 31st March, 2009 up to and including financial year ending on 31st

March, 2013 to be calculated in accordance with the provisions of Section 349 and 350 of the Companies Act, 1956 anddistributed between such Non-Executive Director(s) and in such a manner as the Board of Directors may from time to timedetermine within the maximum limit of 1% of net profits of the Company, subject to maximum of Rs.15.00 lacs (Rupeesfifteen lacs only) in aggregate, which shall be in addition to the sitting fees being paid by the Company to all the Non-Executive Directors for attending the Board/ Committee meetings of the Company.

The Board of Directors in its meeting held on 25th May, 2009 has approved the payment of commission to Non-ExecutiveDirectors of the Company (Other than the Chairman & Managing Director, Managing Director and Whole Time Director) forthe financial year ending on 31st March, 2009 based on the contribution of & valuable services rendered by and expertiseadvice received from the Non-Executive Directors.

The details of said payment of commission to Non-Executive Directors for the financial year ending on 31st March, 2009, asapproved by the Board, and details of sitting fees paid to Non-Executive/ Independent Directors for attending Board Meetingsand Committee Meetings, during the last financial year i.e. from 01/04/2008 to 31/03/2009, are as under:

(Rs. in lacs)

Sr. Name of Director Commission Sitting FeesNo.

1. Mr. Yagneshkumar B. Desai 2.00 1.80

2. Mr. Sanjay S. Majmudar 6.00 2.60

3. Mr. Ashok C. Gandhi 2.00 2.60

Notes:

1) Previously, the sitting fees of Rs.1,500/- were paid to each Non-Executive Director for attending each Board Meeting. TheBoard of Directors has at its meeting held on 14th February, 2004, increased the sitting fees to Rs.10,000/- to be paid to allthe Non-Executive Directors for attending each Board Meeting. It was decided by the Board at its meeting held on 28th May,2004, to pay to Non-Executive Directors sitting fees of Rs.10,000/- for attending meetings of any committee formed by theBoard. Thereafter, the Board of Directors has at its meeting held on 30th July, 2004, increased the sitting fees toRs. 20,000/- to be paid to all the Non-Executive Directors for attending any Meeting of the Board as well as any committeeformed by the Board.

2) The Company also reimburses out of pocket expenses to outstation Director(s) for attending meetings in Ahmedabad.

Non-executive Directors with materially significant related party transactions, pecuniary or business relationshipwith the Company :

There has been no materially significant related party transactions, pecuniary transactions or relationships between theCompany and its Non-executive Directors that may have potential conflict with the interests of the Company at large.

Shareholding of Non-executive Directors :

Name of Non-executive Directors No. of Equity ConvertibleShares held Securities held

Mr. Yagneshkumar B. Desai Nil Nil

Mr. Sanjay S. Majmudar 21650 Nil

Mr. Ashok C. Gandhi 150 Nil


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The Details of remuneration paid to Managing and Whole-time Directors during the last financial year i.e. from01/04/2008 to 31/03/2009, are as under :

Executive/Whole-time Directors : (Rs. in lacs)

Name & Designation of the Director Salary/ Perquisites & Performance StockRemuneration Allowances Linked Bonus/ Options

(p.a.) Commission

1. Mr. Rajnikant T. Vyas, 24.00 Nil Nil NilChairman & Managing Director

2. Mr. Janmejay R. Vyas, 466.67 Nil Nil Nil Managing Director

3. Mrs. Deohooti J. Vyas, 56.00 Nil Nil NilWhole-time Director

NOTE : Remuneration of Mrs. D. J. Vyas, whole-time Director of the Company has been increased from Rs.3.00 lacs toRs.5.00 lacs per month w.e.f. 1st June, 2008 by the Board of Directors at its meeting held on 22nd May, 2008 upon therecommendation of Remuneration Committee held on 22nd May, 2008.

Terms of Appointment of the Managing and Whole-time Directors as per the resolutions passed in Board andGeneral Meetings are as under :

a.) Mr. Rajnikant T. Vyas, Chairman & Managing Director

TENURE : Five years with effect from 1st July, 2005.

REMUNERATION : Subject to overall limit to all Managerial Personnel taken together, as laid down in the CompaniesAct, 1956, read with Schedule XIII thereto, Shri Rajnikant T. Vyas shall be paid Rs.24.00 lacs (Rupees Twenty FourLacs only) per annum and the above remuneration payable to him may comprise salary, allowances and perquisitesas may be determined by the Board of Directors from time to time and may be payable monthly or otherwise providedthat the perquisites shall be evaluated as per Income Tax Act and Rules wherever applicable. The remuneration for apart of the year shall be paid on pro rata basis.

SITTING FEES : Shri Rajnikant T. Vyas shall not be entitled to any sitting fees.

b.) Mr. Janmejay R. Vyas, Managing Director

TENURE : Five years with effect from 1st March, 2005. The period of office of Shri J. R. Vyas shall not be liable todetermination by retirement of Directors by rotation.

REMUNERATION : Subject to overall limit on remuneration payable to all the managerial personnel taken together, aslaid down in the Companies Act, 1956, the remuneration payable to Shri J. R. Vyas shall be 5% of the net profits of theCompany, computed in the manner laid down in section 349 of the Companies Act and may or may not comprisesalary, allowances and perquisites as may be determined by the Board of Directors from time to time and agreed to byShri J. R. Vyas, provided that the perquisites shall be evaluated as per Income Tax Act and Rules wherever applicable.The remuneration for a part of the year shall be computed on pro rata basis.

SITTING FEES : Shri J. R. Vyas shall not be entitled to any sitting fees.

Note : Upon recommendation of the Remuneration Committee, the Board of Directors of the Company at its meetingheld on 25th May, 2009 has re-appointed Mr. J. R. Vyas as Managing Director of the Company for a further period fiveyears w.e.f. 1st March, 2010, subject to approval of members at the General Meeting. (Mr. J. R. Vyas has beenappointed as Chairman of the Company by the Board of Directors of the Company w.e.f. 1st June, 2009, upon saddemise of Shri R. T. Vyas, Chairman of the Company). For this purpose, an Ordinary Resolution is being proposed inthe Notice of this Annual General Meeting.

c.) Mrs. Deohooti J. Vyas, Whole-time Director

TENURE : Five years with effect from 3rd September, 2006.

REMUNERATION : Subject to overall limit to all Managerial Personnel taken together, as laid down in the CompaniesAct, 1956, read with Schedule XIII thereto, Mrs. Deohooti J. Vyas shall be paid Rs.36.00 lacs (Rupees Thirty Six Lacsonly) per annum and the above remuneration payable to her may comprise salary, allowances and perquisites as may


29

be determined by the Board of Directors from time to time provided that the perquisites shall be evaluated as perIncome Tax Act and Rules wherever applicable. The remuneration for a part of the year shall be computed on pro ratabasis. The Board of Directors of the Company is authorised to increase or revise the remuneration of Mrs. D. J. Vyassubject to maximum remuneration of Rs.5,00,000/- (Rupees Five Lacs only) per month, from time to time during thetenure of said five years

Remuneration of Mrs. D. J. Vyas, whole-time Director of the Company has been increased from Rs.3.00 lacs toRs.5.00 lacs per month w.e.f. 1st June, 2008 by the Board of Directors at its meeting held on 22nd May, 2008 upon therecommendation of Remuneration Committee held on 22nd May, 2008.

SITTING FEES : Mrs. D. J. Vyas shall not be entitled to any sitting fees.

The Company has not granted any stock options to its directors. The Chairman of the Remuneration Committee, Mr.Sanjay S. Majmudar, was present at the last Annual General Meeting of the Company held on 31st July, 2008.

5. Shareholders’ & Investors’ Grievance Committee

The Board of Directors has constituted a Shareholders’ & Investors’ Grievance Committee, which was reconstituted fromtime to time. Presently, the Shareholders’ & Investors’ Grievance Committee comprises of three directors, namely Mr.Sanjay S. Majmudar, Mr. Janmejay R. Vyas and Mr. Ashok C. Gandhi. The Committee functions under the Chairmanship ofMr. Sanjay S. Majmudar, an independent director.

The Committee is empowered to collect the relevant information from all departments, which would be useful to satisfy therequirements of the shareholders. The Committee should give required information to shareholders and solve the problems,complaints, grievances etc. of the shareholders promptly. The Committee also looks into redressal of shareholders’ complaintslike delays in transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends, etc. The Committee overseesthe performance of the Registrar and Transfer Agents, and recommends measures for overall improvement in the quality ofinvestor services.

To expedite the process of share transfer, transmission, split, consolidation, rematerialistion and dematerialisation etc. ofsecurities of the Company, the Board of Directors has delegated the power of approving the same to the Company’s R & TAgent namely Link Intime India Pvt. Ltd., (Formerly known as Intime Spectrum Registry Limited) under the supervisionand control of the Company Secretary Mr. Deepak S. Pandya, who is placing a summary statement of transfer/transmission,etc. of securities of the Company at the meetings of the said Committee.

The Committee has met four times during the year i.e. on 22nd May, 2008, 29th July, 2008, 24th October, 2008 and 28th

January, 2009. Mr. Sanjay S. Majmudar, Mr. Ashok C. Gandhi and Mr. J. R. Vyas have attended all the meetings.

In pursuance of the SEBI (Prohibition of Insider Trading) Regulations, 1992, the Board has approved the Code of Conductfor Prevention of Insider Trading and Mr. Deepak S. Pandya has been appointed as the Compliance Officer for complyingwith the requirements under the SEBI (Prohibition of Insider Trading) Regulations, 1992 and the requirements under theListing Agreement.

Name, designation & address: Mr. Deepak S. Pandya,of Compliance Officer VP (Legal) & Company Secretary

Bhadr-Raj Chambers, Swastik Cross Road,Navrangpura, Ahmedabad – 380 009Phone No.(079) 26443053 Fax No.(079) 26420198Email: [email protected]

As required by the provisions of Clause 47 (f) of the Listing Agreement, the Company has designated the below cited EmailID of the grievance redressel division/ compliance officer exclusively for the purpose of registering complaints by Investors.

Email ID. :[email protected]

The Company has displayed the above cited Email ID and other relevant details on its website and other materials forcreating investor awareness.


30

Quarter-wise Summary of Investors' Complaints received and resolved to the satisfaction of the shareholders duringthe financial year 2008-2009

Quarter Period

From To

Complaints Position at the

beginning of the quarter

Complaints received

during the quarter

Complaints resolved

during the quarter

Complaints pending at

the end of the quarter

01-04-2008 30-06-2008 NIL NIL NIL NIL

01-07-2008 30-09-2008 NIL 5 5 NIL

01-10-2008 31-12-2008 NIL 2 2 NIL

01-01-2009 31-03-2009 NIL NIL NIL NIL

TOTAL 7 7 NIL

Complaint pending at beginning of the year = NIL

Complaint received during the year = 7

Complaint resolved during the year = 7

Complaint pending at the end of the year = NIL

Action required regarding non-receipt / unclaimed share application money received by the company for allotmentof equity shares during Initial Public Offer (IPO) made in 2004 and due for refund (IPO refund order) and dividends:

For unclaimed IPO Refund Order:

In case of non-receipt of share application money (IPO Refund Order), investors' are requested to write / get in touch with theCompany as mentioned hereunder:

IPO Refund Order in respect of

Contact details Action to be Taken

Public issue of 3433500 equity shares of Rs.10/- each at a Price of Rs.175/- each (Issue opened on: 29th March, 2004 & Closed on: 7th April, 2004)

Mr. Deepak S. Pandya Company Secretary Dishman Pharmaceuticals and Chemicals Limited Bhadr-Raj Chambers, Swastik Cross Roads, Navrangpura, Ahmedabad – 380 009 Contact No.: 079-26443053 / 5807 Fax No. 079-26420198

Application on plain paper alongwith fresh (latest) Client Master List as issued by the Depository Participant (DP)

For unclaimed Dividends:

In case of non-receipt of Dividends, shareholders are requested to write / get in touch with the Company as mentionedhereunder:

Dividends for the Financial Year

Contact details Action to be taken

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

Mr. Deepak S. Pandya Company Secretary

Dishman Pharmaceuticals and Chemicals Limited Bhadr-Raj Chambers, Swastik Cross Roads, Navrangpura, Ahmedabad – 380 009 Contact No.: 079-26443053 / 5807 Fax No. 079-26420198

Application on plain paper


31

As per the provision of Section 205C of the Companies Act, 1956, the Company is required to transfer the unclaimed shareapplication money received by the company for allotment of equity shares during Initial Public Offer (IPO) made in 2004 &due for refund (IPO refund order) and amount of unclaimed Dividends, remaining unclaimed and unpaid for a period ofseven years from the due date to the Investor Education and Protection Fund (IEPF) set up by the Central Government.

Following is the due date for transfer of unclaimed and unpaid IPO Refund Order to the IEPF by the Company:

IPO Refund Order in respect of IPO Refund Order date Proposed date for transfer of unclaimed and unpaid IPO Refund

Amount to IEPF*

Public issue of 3433500 equity shares of Rs.10/- each at a Price of Rs.175/- each

(Issue opened on : 29th March, 2004 & Closed on : 7th April, 2004)

21st April, 2004 20th April, 2011

* Indicative dates, actual dates may vary

Following are the due dates for transfer of unclaimed and unpaid Dividends to the IEPF by the Company:

Dividends for the Financial Year

Dividend payment date Proposed date for transfer of unclaimed and unpaid dividends to IEPF*

2003-2004 29th September, 2004 28th September, 2011

2004-2005 1st October, 2005 30th September, 2012

2005-2006 4th July, 2006 3 rd July, 2013

2006-2007 12th August, 2007 11th August, 2014

2007-2008 5th August, 2008 4 th August, 2015

* Indicative dates, actual dates may vary

It may be noted that no claims will lie against the Company or the IEPF in respect of the said unclaimed amountswhen transferred to the IEPF.

Initial Public Offer (IPO) unclaimed shares:

In the month of April, 2004, the Company came out with the Public Issue (IPO) of 3,433,500 equity shares of Rs.10/- each ata price of Rs.175/- for cash aggregating Rs.600.86 million. The said IPO was oversubscribed almost about 40 times of thepublic issue amount. The Company has allotted 3,433,500 equity shares to the respective allottees on 18th April, 2004 asper the basis of allotment approved by the National Stock Exchange Ltd., and SEBI. As per the SEBI Guidelines, allotmentof equity shares was made only in Dematerialized Form.

The applications received during the IPO were considered valid on prima-facie basis and thereafter Corporate Action forallotment of the valid applications was carried out. Applications, which were valid on prima-facie basis, were allotted sharesin the IPO as per the basis of allotment. But when the Corporate Action for the allotment of shares was carried out throughNational Security Depository Limited and Central Depository Services Limited for crediting the equity shares allotted in IPO,various technical errors such as Incorrect Demat Account Number, Incorrect order of the names etc. were found. In thesense, the details as per the Demat Account was not matching with the Application Form filled in and signed by the applicants.

Initially, immediately after the IPO, 8650 equity shares of RS. 10/- each as allotted to 173 shareholders was not credited intheir respective Demat Accounts due to above-mentioned technical errors.

As per SEBI guidelines and Listing Agreement, the Registrar & Transfer Agent M/s. Intime Spectrum Registry Ltd., Mumbaihad sent reminder on 13th May, 2004 to the unclaimed shareholders to rectify the mistake and to comply with the procedurefor crediting equity shares allotted to them in the IPO. As a result, the balance of non-credit/unclaimed shares were decreasedto 1800 equity shares of 36 shareholders.

Thereafter, the Company had sent six reminders to the remaining unclaimed shareholders vide reminder letters dated 14thJuly, 2005; 19th September, 2005; 29th November, 2005; 8th February, 2006; 16th March, 2006 and 6th August, 2008 andalso collected the correct particulars of the unclaimed shareholders from their Depository Participants, resulting into thebalance of non credit/unclaimed shares decreased to 250 shares [before sub-division allotted 50 shares] of only oneshareholder at present.


32

Thus, the status of unclaimed shares as of date is as under :

Particulars At the beginning of the year

Approached for unclaimed shares during the year

Credit effected during the year

At the end of the year

No. of outstanding Shareholders

2 1 1 1

No. of outstanding unclaimed shares

500 250 250 250

The Company is in the process of opening a demat suspense account as per the Clause 5A of the Listing Agreemententered into with the Stock Exchanges. After the opening of the said demat suspense account, the outstanding 250 [originally(before sub-division) allotted 50 shares] unclaimed shares will be transferred to the said account and the voting rights onthese shares shall remain frozen till the rightful owner of such shares claims the shares.

6. General Body Meetings

Location, date and time of last three Annual General Meetings are as follows:

Year Location Date Time

2005-06 H. T. Parekh Convention Centre, Ahmedabad Management Association, ATIRA Campus, Dr. Vikram Sarabhai Marg, Ahmedabad – 380 015

29/06/2006 9.30 a.m.


07/08/2007 9.30 a.m.


31/07/2008 9.30 a.m.

Whether any Special Resolutions:

(a) Were put in the previous three AGMs : Yes *

(b) Were put through postal ballot last year : No

Details of voting pattern : N.A.

Person who conducted postal ballot exercise : N.A.

(c) Are proposed to be conducted through postal ballot : No#

(d) Procedure for postal ballot : N.A.

* Two special resolutions (without postal ballot) pertaining to Re-appointment of Mrs. Deohooti J. Vyas and to increase thelimit of investment by FII and NRIs, were passed in the 23rd Annual General Meeting held on 29th June, 2006 AND onespecial resolution (without postal ballot) pertaining to payment of remuneration by way of commission to Non-ExecutiveDirector(s) of the Company (Other than the Chairman & Managing Director, Managing Director and Whole-time Director),was passed in the 25th Annual General Meeting held on 31st July, 2008.

# The Board of Directors in its meeting held on 25th May, 2009, has decided to propose the ordinary resolution under section293(1)(a) of the Companies Act, 1956 in respect of creation of Security in favour of the proposed Lenders for securing theBorrowing up to a sum in aggregate not exceeding Rs.750 cores through Postal Ballot. Board has appointed Mr. Ashok P.Pathak, Practicing Company Secretary as Scrutinizer to conduct and oversee the voting through postal ballot.

7. Disclosures

7.1 There are no materially significant related party transactions i.e. transactions of the Company of material nature, withits promoters, the directors or the management, their subsidiaries or relatives etc., that may have potential conflict withthe interests of company at large in the financial year 2008-09. Related party transactions have been disclosed in theNotes to the Annual Accounts of the Company for the year ended 31st March, 2009.

7.2 There has been no instance of non-compliance by the company on any matter related to capital markets, during thelast three years and hence no penalties or strictures have been imposed on the company by Stock Exchange(s) orSEBI or any other statutory authority.


33

7.3 The Company has complied with all the mandatory requirements of the revised Clause 49 of the Listing Agreement.So, far as non-mandatory requirements are concerned, at present Company has not adopted the same, however, theCompany has constituted a Remuneration Committee, details of which are described at Sr.4 given herein above.

8. Means of Communication

The Company regularly intimates quarterly unaudited as well as yearly audited financial results to the stock exchanges,immediately after the same are taken on record by the Board. These results are normally published in the Economics Times,The Hindu Business Line, Indian Express (English edition) and in Financial Express (Gujarati edition). These are not sentindividually to the shareholders.The Company’s results and official news releases are displayed on the company’s web-site www.dishmangroup.com. TheCompany had meetings with and made presentations to the institutional investors and analysts during the year.The Management Discussion and Analysis Report forms part of this Annual Report.

All price sensitive information and announcements are communicated immediately after the Board decisions to the StockExchanges, where the Company’s shares are listed, for dissemination to the Shareholders.As per the requirement of Clause 51 of the Listing Agreement, Annual Report, Quarterly Results, Shareholding Pattern, etc.of the Company are being electronically filled on the EDIFAR website www.sebiedifar.nic within the time frame prescribed inthis regard.

9. General Shareholder Information9.1 Twenty-sixth Annual General Meeting

Date : 31st day of July, 2009Time : 9.30 a.m.Venue : Hall No. S 3-5, Ground Floor, Ahmedabad Management Association, ATIRA Campus, Dr. Vikram Sarabhai

Marg, Ahmedabad – 380015.As required under Clause 49IV(G)(i), particulars of Directors seeking appointment/reappointment are given in Annexureto the Notice of the Annual General Meeting to be held on 31st July, 2009.

9.2 Financial Year/CalendarThe Company follows April to March as its financial year. The results for every quarter beginning from April are beingdeclared in the month following the quarter as per the Listing Agreement except result of last quarter i.e. quarterending on March. The Company generally declares audited results for the whole year within the stipulated time ofthree months i.e. on or before 30th June, instead of unaudited result for the last quarter.

9.3 Date of Book ClosureFrom Thursday, the 16th day of July, 2009 to Friday, the 31st day of July, 2009 (both days inclusive), for determiningthe entitlement of the final dividend for the financial year 2008-2009.

9.4 Dividend Payment Date : On or after 4th August, 2009.9.5 Listing on Stock Exchanges

The Company’s shares are listed on the following Stock Exchanges :1) National Stock Exchange of India Ltd. (NSE), “Exchange Plaza”, Bandra-Kurla Complex, Bandra (E), Mumbai –

400 051.2) Bombay Stock Exchange Ltd. (BSE), Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai – 400 001.

Annual listing fees for the year 2009-10, as applicable, have been paid to the concerned Stock Exchanges. TheCompany has also paid Annual custodial fees for the year 2009-10, as applicable, to National Securities DepositoryLimited (NSDL) and Central Depository Services (India) Limited (CDSL).

Unsecured Foreign Currency Convertible Bonds (FCCBs) issued by the Company are listed on the Singapore ExchangeSecurities Trading Ltd. (SGX-ST), and Company has paid annual listing fees due to the said Stock Exchange.

9.6 Stock CodeNational Stock Exchange of India Limited : “DISHMAN” “EQ”Bombay Stock Exchange Ltd. : 532526Demat ISIN Number in NSDL & CDSL for Equity Shares : INE353G01020Note : New ISIN Number INE353G01020 has been allotted by the NSDL on Sub-division of the equity shares of theCompany (Pre sub-division ISIN was INE353G01012).Common Code for Foreign Currency Convertible : 022775693Bonds (FCCBs) issued by the CompanyISIN for FCCBs : XS0227756938The said FCCBs are settled by Euroclear and Clearstream.


34

9.7 Market Price Data:Market Price Information and Other Information Concerning the shares

The table below sets forth, for the periods indicated, the Closing high and low, volume and total volume of tradingactivity on the BSE and NSE for the shares.

(Price in Rs. per share)

NSE BSE

MONTH High (Rs.)

Low (Rs.)

Volume High (Rs.)

Low (Rs.)

Volume Total Volume (NSE & BSE)

April, 2008 321.30 285.05 2096868 322.65 285.50 1042344 3139212

May 325.65 294.45 1076529 322.95 291.40 814705 1891234

June 328.75 296.00 778740 328.75 295.45 819241 1597981

July 297.05 252.60 815013 298.80 253.40 537023 1352036

August 321.50 295.65 628534 320.60 296.05 469741 1098275

September 329.35 283.00 1133352 325.10 282.30 179646 1312998

October 299.95 129.15 1376141 301.60 128.95 199228 1575369

November 159.85 130.05 1144492 159.95 130.30 366393 1510885

December 148.30 121.80 1766228 147.25 122.40 482557 2248785

January, 2009 146.30 104.60 1131562 145.75 104.10 745446 1877008

February 123.50 107.45 472215 122.65 107.05 364411 836626

March 105.90 90.15 843650 107.80 89.75 519407 1363057

Total 13263324 6540142 19803466

9.8 Performance in comparison to BSE Sensex:

SHARE PERFORMANCE OF THE COMPANY IN COMPARISION TO BSE SENSEX

9000

1000011000

12000

13000

14000

15000

1600017000

18000

BS

E S

EN

SE

X C

LO

SIN

G H

IGH

90110130150170190210230250270290310330350

DIS

HM

AN

SH

AR

E P

RIC

E (

RS

.) C

LOS

ING

HIG

H

BSE SENSEX CLOSING HIGH DISHMAN SHARE PRICE (RS.) CLOSING HIGH (BSE)

BSE SENSEX CLOSING HIGH 17378 17600 16063 14942 15504 15050 13056 10631 10100 10336 9647 10048

DISHMAN SHARE PRICE (RS.)CLOSING HIGH (BSE)

323 323 329 299 321 325 302 160 147 146 123 108

Apr-08

May-08

Jun-08

Jul-08Aug-

08Sep-08

Oct-08

Nov-08

Dec-08

Jan-09

Feb-09

Mar-09


35

9.9 Registrar and Transfer Agent : Link Intime India Pvt. Ltd.(Formerly known as Intime Spectrum Registry Limited)

REGISTERED OFFICE : C-13, Pannalal Silk Mills Compound,L.B.S. Marg, Bhandup (West), Mumbai – 400 078Tel. No. 91-22-2596 3838, Fax No. : 91-22-2594 6969,Email: [email protected]

BRANCH OFFICES:

AHMEDABAD : 211 Sudarshan Complex, Near Mithakhali Underbridge,Navrangpura, Ahmedabad – 380 009Tel. No.: 079-26465179, Fax No.: 022-26465179Email: [email protected]

BANGALORE : 543/A, 7th Main, 3rd Cross,Hanumanthnagar, Bangalore - 560 019Tel fax: 080-26509004Email : [email protected]

COIMBATORE : Surya 35, Mayflower Avenue, Behind Senthil NagarSowripalayam Road, Coimbatore - 641028Tel : 0422-2314792 / 2315792Fax: 0422-2314792Email : [email protected]

FORT, MUMBAI : 203, Davar House, Next to Central CameraD N Road, Fort, Mumbai - 400 001.Tel : 022-22694127, Fax: 022-26465179Email : [email protected]

KOLKATA : 59C, Chowringhee Road, 3rd Floor, Kolkata - 700020Tel : 033-22890539/40, Fax : 033-22890539/40Email : [email protected]

NEW DELHI : A-40, 2nd Floor, Naraina Industrial Area, Phase II, Near BatraBanquet, New Delhi - 110 028Tel : 011-41410592/93/94, Fax : 011-41410591Email : [email protected]

PUNE : Block No. 202, 2nd Floor, Akshay Complex, Near Ganesh TempleOff. Dhole Patil Road, Pune - 411 001Tel : 020-26051629, 26050084 Fax: 020-26053503Email : [email protected]

VADODARA : 308, Jaldhara Complex, Opp. Manisha Society, Nr. ManishaChaar Rasta, Saiyad Vasna Road, Vadodara - 390015Tel : 0265-2250241/3249857/2250246, Fax : 0265-2250246Email : [email protected]

9.10 Share Transfer System

All the shares related work is being undertaken by our R & T Agent, Link Intime India Pvt. Ltd., Mumbai (Formerlyknown as Intime Spectrum Registry Limited). To expedite the process of share transfer, transmission, split, consolidation,rematerialistion and dematerialisation etc. of securities of the Company, the Board of Directors has delegated thepower of approving the same to the Company’s R & T Agent under the supervision and control of the CompanySecretary Mr. Deepak S. Pandya, who is placing a summary statement of transfer/transmission, etc. of securities ofthe Company at the meetings of the Shareholders’ & Investors’ Grievance Committee.

Shares lodged for transfer at the R & T Agent’s address in physical form are normally processed and approved within15 days from the date of receipt, subject to the documents being valid and complete in all respects. Normally, all therequests for dematerialization of shares are processed and the confirmation is given to the Depository within 15 days.The investors/shareholders grievances are also taken-up by our R & T Agent.

The Company has obtained and filed with the Stock Exchange(s), the half yearly certificates from a Company Secretaryin practice for due compliance with the share transfer formalities as required under Clause 47(c) of the Listing Agreement.


36

9.11 Distribution Schedule & Shareholding Pattern:

No. of Equity Shares held No. of

Shareholders % of

Shareholders No. of Equity Shares held

% of total holding

1 - 500 9756 93.56 1043786 1.29

501 - 1000 299 2.87 230745 0.29

1001 - 2000 147 1.41 212982 0.26

2001 - 3000 42 0.40 108436 0.13

3001 - 4000 22 0.21 74332 0.09

4001 - 5000 14 0.13 63297 0.08

5001 - 10000 38 0.36 279321 0.35

10001 and Above 110 1.05 78684237 97.51

Total 10428 100.00 80697136 100.00

Shareholding Pattern :

As on March 31, 2009 As on March 31, 2008 Sr. No.

Category Nos. of Shares held

% of Holding

Nos. of Shares held

% of Holding

1 Promoters 49041469 60.77 48965050 61.45

2 Mutual Fund & UTI Bank, Financial Institutions (FI's), 14029165 17.38 16346089 20.51

3 Insurance Companies 0 0.00 0 0.00

4 Foreign Institutional Investors (FII's) 8368525 10.37 7103814 8.91

5 Private Bodies Corporate 6936102 8.60 3430882 4.31

6 Indian Public 1978944 2.45 1623197 2.04

7 Any other (i) Non Resident Indian 255984 0.32 180262 0.23

(ii) Overseas Corporate Bodies 0 0.00 2023381 2.54

(iii) Clearing Member 86254 0.11 11438 0.01

(ii) Trust 693 0.00 0 0.00

Total 80697136 100.00 79684113 100.00

9.12 Dematerialization of shares and liquidity

The Company’s shares are in compulsory demat segment and as on 31st March, 2009, 80694502 equity shares of the

Company, forming 99.996 % of the Company’s paid-up equity share capital, is in dematerialized form. Company’sshares are easily traded on both the stock exchanges i.e. BSE and NSE.

9.13 Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, Conversion date and likely impact on equity

The Company has not issued any GDRs/ADRs/Warrants in the past. However, in August, 2005, the Company hasissued 0.50% US$ 50,000,000 Unsecured Foreign Currency Convertible Bonds (FCCBs) due 2010, convertible intoEquity Shares of the Company at the option of the Bondholders.

During the year, the Company has received one conversion Notice from the Bondholder for conversion of Bonds intoEquity Shares of the Company for the principal amount of Bonds of US$ 4,000,000. Upon exercise of the option for theconversion of FCCBs of the principal amount of US$ 4,000,000 the Company has allotted 10,13,023 equity shares of


37

Rs.2/- each of the Company at a premium of Rs.170/- per share. Consequently, the paid-up equity share capital of theCompany has increased from 7,96,84,113 equity shares to 8,06,97,136 equity shares of Rs.2/- each and with this 95%of the Bonds got converted into shares.

9.14 Plant Locations : 1) Phase - IV, 1216/20 G.I.D.C. Estate, Naroda,Ahmedabad – 382 330. (also other Plots in Phase-I and IV)

2) Survey No. 47, Paiki Sub Plot No. 1, Village - Lodariyal,Taluka- Sanand, District - Ahmedabad. (also various other Adjacent Plots)

9.15 Address for correspondence

a) Investor correspondence for transfer/ : Link Intime India Pvt. Ltd.dematerialisation of shares, payment (Formerly known as Intime Spectrum Registry Ltd.)of dividend on shares and any other C-13, Pannalal Silk Mills Compound,query relating to the shares of the L.B.S. Marg, Bhandup (West), Mumbai - 400 078Company. Tel. No. 91-22-2596 3838,

Fax No.: 91-22-2594 6969,Email: [email protected]

b) Any query on Payment of Dividend : Secretarial Departmenton shares and Annual Report Dishman Pharmaceuticals and Chemicals Ltd.

Bhadr-Raj Chambers, Swastik Cross Road,Navrangpura, Ahmedabad - 380 009.Phone No.: 91-79-26443053Fax No.: 91-79-26420198

9.16 Secretarial Audit Report

The Secretarial Audit Report of the Company prepared in terms of SEBI Circular No. D&CC/FITTC/CIR-16/2002 datedDecember 31, 2002, reconciling the total shares held in both the depositories, viz. NSDL and CDSL and in physicalform with the total issued/ paid-up capital of the Company were placed before the Shareholders’ & Investors’ GrievanceCommittee and Meeting of Board of Directors every quarter and also submitted to the Stock Exchange(s) every quarter.

26th Annual Report

Dishman Pharmaceuticals and Chemicals Limited

38

Auditors’ Certificate on Corporate Governance

To the Members ofDishman Pharmaceuticals and Chemicals Limited

We have examined the compliance of conditions of Corporate Governance by Dishman Pharmaceuticals and ChemicalsLimited (‘the Company’), for the year ended on March 31, 2009, as stipulated in Clause 49 of the Listing Agreement of the saidCompany with stock exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination has beenlimited to a review of the procedures and implementation thereof, adopted by the Company for ensuring compliance with theconditions of the Corporate Governance as stipulated in the said Clause. It is neither an audit nor an expression of opinion on thefinancial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us and based on the representationsmade by the Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governanceas stipulated in Clause 49 of the above mentioned Listing Agreement.

We state that such compliance is neither an assurance as to future viability of the Company nor of the efficiency or effectivenesswith which the Management has conducted the affairs of the Company.

For Deloitte Haskins & Sells Chartered Accountants

(Gaurav J. Shah)Place : Ahmedabad PartnerDate : 1st June, 2009 Membership No.35701

26th Annual Report


39

AUDITORS’ REPORTTo the Members ofDishman Pharmaceuticals and Chemicals Limited

1. We have audited the attached Balance Sheet of Dishman Pharmaceuticals and Chemicals Limited as at March 31, 2009and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. Thesefinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. These Standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finan-cial statements. An audit also includes assessing the accounting principles used and significant estimates made by man-agement, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s Report) (Amend-ment) Order, 2004 (together ‘the Order’) issued by the Central Government in terms of Section 227(4A) of the CompaniesAct, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessaryfor the purposes of our audit;

(b) In our opinion, proper books of account, as required by law, have been kept by the Company, so far as appears fromour examination of those books;

(c) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agree-ment with the books of account;

(d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report,comply with the Accounting Standards referred to in sub – section (3C) of Section 211 of the Companies Act, 1956;

(e) On the basis of written representations received from the directors as on March 31, 2009 and taken on record by theBoard of Directors, we report that none of the directors is disqualified as on March 31, 2009 from being appointed asa director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts readtogether with significant accounting policies and notes thereon give the information required by the Companies Act,1956, in the manner so required and give a true and fair view in conformity with the accounting principles generallyaccepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2009;

(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

For Deloitte Haskins & Sells Chartered Accountants

(Gaurav J. Shah) Place: Ahmedabad Partner Date : 25th May 2009 Membership No.35701

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ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph 3 of our report of even date on the accounts of Dishman Pharmaceuticals and Chemicals Limited forthe year ended on March 31, 2009)

1. The nature of the Company’s activities and other relevant facts are such that item (xiii) and (xiv) of paragraph 4 of the Orderare not applicable to the Company.

2. (a) The Company has maintained proper records showing full particulars including quantitative details and situation offixed assets.

(b) As explained to us, the fixed assets were physically verified by the management in a phased periodical manner, whichin our opinion is reasonable, having regard to the size of the Company and nature of its assets. No materialdiscrepancies were noticed on such physical verification.

(c) The Company has not disposed off substantial part of the fixed assets during the year.

3. (a) As informed to us, the inventories have been physically verified during the year by the management. In our opinion, thefrequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification ofinventories followed by the management are reasonable and adequate in relation to the size of the Company.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained properrecords of its inventories and no material discrepancies were noticed on physical verification of inventories.

4. (a) The Company has granted unsecured loan to a company listed in the register maintained under section 301 of theCompanies Act, 1956. The maximum amount involved during the year was Rs.35 lacs and the year-end balance of theloan granted to the company was Rs. NIL.

(b) In our opinion and according to the information and explanations given to us, the aforesaid loan is interest free andother terms and conditions of the loan are not prima facie prejudicial to the interest of the Company.

(c) In respect of the loan given by the Company, the terms of repayment of principal and interest have not been stipulatedand hence the question of overdue amount does not arise.

(d) The Company has taken unsecured loans from two companies listed in the register maintained under section 301 ofthe Companies Act, 1956. The maximum amount involved during the year was Rs. 137.25 lacs and the year-endbalance of loans taken from such companies was Nil.

(e) In our opinion and according to the information and explanations given to us, the aforesaid loans are interest free andother terms and conditions are not prima facie prejudicial to the interest of the Company.

(f) In respect of loans taken by the Company, the terms of repayment have not been stipulated.

5. In our opinion and according to the information and explanations given to us, there are adequate internal control systemscommensurate with the size of the Company and the nature of its business for purchase of inventory and fixed assets andfor sale of goods and services. We have not observed any continuing failure to correct major weaknesses in such internalcontrol system.

6. In respect of contracts or arrangements required to be entered in the register maintained in pursuance of Section 301 of theCompanies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) Particulars of contracts or arrangements have been so entered.

(b) The transactions made in pursuance of such contracts or arrangements have been made at prices which arereasonable having regard to the prevailing market prices at the relevant time.

7. According to the information and explanations given to us, the Company has not accepted any deposits from the public.Therefore, the provisions of Clause (vi) of paragraph 4 of the Order are not applicable to the Company.

8. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

9. We have broadly reviewed the books of account maintained by the Company pursuant to the notification of the CentralGovernment for maintenance of the cost records under section 209(1) (d) of the Companies Act, 1956 and on the basis ofsuch review, we are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained.We have not, however, carried out a detailed examination of the same.

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10. In respect of statutory dues:

(a) According to the information and explanations given to us, the Company is generally regular in depositing undisputedstatutory dues, including provident fund, employees’ state insurance, income tax, wealth tax, service tax, custom duty,cess and other material statutory dues with the appropriate authorities during the year. According to the informationand explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as atMarch 31, 2009 for a period of more than six months from the date of becoming payable.

(b) The disputed statutory dues that have not been deposited on account of disputed matters pending before appropriateauthorities are as under:

Sr. No.

Name of the statute

Nature of dues Amount (Rs. in lacs)

Period to which the amount relates

Forum where the dispute is pending

6.42 F.Y. 1996-97 Income Tax Appellate Tribunal 33.83 F.Y. 2001-02 Commissioner of Income Tax

(Appeals) 42.41 F.Y. 2002-03 Income Tax Appellate Tribunal 12.88 F.Y. 2003-04 Income Tax Appellate Tribunal

1. Income Tax Act, 1961

Income Tax

359.18 F.Y. 2004-05 Commissioner of Income Tax (Appeals)

10.01 F.Y. 2003-04 Central Excise and Service Tax Appellate Tribunal


2. Central Excise Act, 1944

Excise duties and service tax


3. Central Sales Tax Act, 1956

Sales Tax 41.73 F.Y. 2001-02 and F.Y. 2002-03

Joint Commissioner, Commercial Tax

4. Gujarat Sales Tax, Act

Sales Tax 114.95 F.Y. 2001-02 and F.Y. 2002-03

Joint Commissioner, Commercial Tax

11. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cashlosses during the financial year covered by the audit and in the immediately preceding financial year.

12. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repaymentof dues to financial institution or bank or debenture holders.

13. In our opinion and according to the information and explanation given to us, no loans and advances have been granted bythe Company on the basis of security by way of pledge of shares, debentures and other securities.

14. The Company has given guarantees for loans taken by others from banks and financial institutions. In our opinion andaccording to the information and explanations given to us, the terms and conditions thereof are not prima facie prejudicial tothe interest of the Company.

15. In our opinion and according to the information and explanation given to us, the term loans have been applied for thepurpose for which they were raised.

16. According to the information and explanations given to us and on an overall examination of the balance sheet of theCompany, funds raised on short-term basis have, prima facie, not been used during the year for long term investment.

17. During the year, the Company has not made any preferential allotment of shares to parties and companies covered in theregister maintained under Section 301 of the Companies Act, 1956.

18. The Company has not issued any debentures during the year.

19. The Company has not raised any money by way of public issue during the year.

20. To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud onor by the Company was noticed or reported during the year.

For Deloitte Haskins & SellsChartered Accountants

(Gaurav J. Shah)Place: Ahmedabad PartnerDate : 25th May 2009 Membership No.35701

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BALANCE SHEET AS AT MARCH 31, 2009As at As at

Schedule 31st March ‘09 31st March ‘08(Rs. in lacs) (Rs. in lacs)

SOURCES OF FUNDSShareholders Funds

Share Capital A 1,613.94 1,593.68

Reserves and Surplus B 53,747.57 43,784.8255,361.51 45,378.50

Loan Funds

Secured Loans C 23,218.51 18,807.40 Unsecured Loans D 5,833.42 5,632.03

29,051.93 24,439.43

Deferred Tax Liability (Net) 2,030.59 1,862.98TOTAL 86,444.03 71,680.91

APPLICATION OF FUNDS

Fixed Assets E Gross Block 35,873.19 32,696.55

Less: Depreciation / Amortization 9,013.16 7,069.76 Net Block 26,860.03 25,626.79

Capital Work-in-progress 17,296.47 11,061.61

44,156.50 36,688.40Investments F 15,637.40 13,250.61

Foreign Currency Monetary Item Transalation Difference Account 275.49 -

(Refer Note B.3 of Schedule O )Current Assets, Loans and Advances G

Inventories 11,631.71 12,063.01

Sundry Debtors 6,155.09 9,337.59 Loans and Advances 15,962.06 8,921.57

Cash and Bank Balances 320.48 449.30

Total Currents Assets 34,069.34 30,771.47Less: Current Liabilities and Provisions H

Current Liabilities 3,193.92 5,950.86

Provisions 4,500.78 3,078.72Total Current Liabilities and Provisions 7,694.70 9,029.58

Net Current Assets 26,374.64 21,741.89TOTAL 86,444.03 71,680.91

Significant Accounting Policies and ONotes to financial statements

As per our report of even date attached For and on behalf of the BoardFor Deloitte Haskins & Sells J R Vyas Managing DirectorChartered Accountants D J Vyas Wholetime Director

D S Pandya Company SecretaryGaurav J ShahPartner

Ahmedabad AhmedabadDate : 25th May, 2009 Date: 25th May, 2009

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PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON MARCH 31, 2009

2008-09 2007-08Schedule (Rs. in lacs) (Rs. in lacs)

INCOMESales and Services 42,388.90 36,744.97 Less: Excise Duty & Sales Tax 800.43 824.94Net Sales 41,588.47 35,920.03 Other Income I 69.79 944.33 Increase/(Decrease) in Stock J (1,000.68) 1,557.20

40,657.58 38,421.56EXPENDITURE Materials and Manufacturing Expenses K 19,946.29 23,415.54 Employee Emoluments L 3,415.92 2,840.29 Administrative, Selling & Other Expenses M 3,561.05 2,501.57 Interest and Finance Charges N 2,249.86 721.35 Depreciation / Amortisation 1,980.32 1,683.32 Less : Transferred From Revaluation Reserve (1.67) (1.67)

31,151.77 31,160.39Profit Before Tax 9,505.81 7,261.17 Provisions For Current tax 1,075.85 800.00 MAT Credit Entiltelment (1,025.69) (161.11) For Deferred Tax 167.61 459.95 For Fringe Benefit Tax 32.41 24.22Profit After Tax for the Year 9,255.63 6,138.11 Prior Period Adjustments ( Net ) 12.06 9.23 Short Provision of Deferred Tax in Earlier Years - 342.19 Less : Transfer from General Reserve - (342.19) Short Provision of Income Tax in Earlier Years 29.06 173.06Net Profit 9,214.51 5,955.82 Balance Brought Forward 4,860.70 4,848.99Amount Available for Appropriations 14,075.21 10,804.81Appropriations Transfer to General Reserve 5,000.00 5,000.00 Proposed Dividend 968.37 806.97 Tax on Proposed Dividend 164.57 137.14Balance Carried to Balance Sheet 7,942.27 4,860.70Earnings Per Share of the face value of Rs 2 eachBasic (Rs.) 11.43 7.81Diluted (Rs.) 11.33 7.35Significant Accounting Policies and ONotes to financial statements




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Cash Flow Statement for the year ended on March 31, 20092008-09 2007-08

(Rs. in lacs) (Rs. in lacs)A. CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax as per the Profit and Loss Account 9,505.81 7,261.17Adjustments for :Depreciation and Amortisation 1,978.65 1,694.65Interest Expense 2,558.15 976.20Interest Income (446.03) (254.85)Dividend Income (6.49) (9.87)Loss/ (Gain) on sale of Fixed Assets(Net) 24.37 (4.22)Loss / (Gain) on foreign exchange rate fluctuations 275.14 (223.27)Provision for doubtful debts and advances 331.16 2.11Loss /(Gain) on sale of Property Rights (Net) - (844.36)

4,714.95 1,336.39Operating profit before working capital changes 14,220.76 8,597.56Adjustments for :Trade Receivables 3,020.33 920.40Inventories 431.31 (2,198.05)Loans and Advances (5,000.47) (172.36)Trade Payables and Provisions (2,582.53) (2,057.53)

(4,131.36) (3,507.54)Cash Generated from Operations 10,089.40 5,090.02Taxes paid (994.47) (836.23)Prior Period Adjustments (Net) (12.06) (9.23)Net Cash Generated from Operating Activities 9,082.87 4,244.56

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (8,598.26) (12,928.87)Sale of Fixed Assets 22.16 43.21Investments in Subsidiaries (1,994.88) (121.39)Share application money in subsidiary/joint venture (543.64) -Sale of Property Rights - 844.36Dividend Received 6.49 9.87Interest Received 446.03 254.85Net Cash used in Investing Activities (10,662.10) (11,897.97)

C. CASH FLOW FROM FINANCING ACTIVITIESUnrealised loss/(gain) on FCCB balance - 21.60FCCB Issue Expenses - (4.47)Proceeds from Term Loans 4,849.36 9,454.21Inter-Corporate Deposits taken 103.32 4.49Interest Paid (2,558.15) (976.20)Dividend Paid (806.97) (762.65)Dividend Tax Paid (137.14) (129.61)Net Cash Generated from Financing Activities 1,450.42 7,607.37Net Increase / (Decrease) in Cash & Cash Equivalents (A+B+C) (128.81) (46.04)Opening Balance of Cash and Cash Equivalents 449.30 495.35Closing Balance of Cash and Cash Equivalents 320.48 449.30

Notes:-1 The Company has undrawn borrowing facilities of Rs.1000.68 Lacs (Previous Year Rs. 789.76 Lacs) at the end of the year.2 Cash and cash equivalalents include deposits with banks of Rs. 228.68 lacs (Previous Year Rs. 242.73 lacs) of margin

money, which amount is not available for immediate use.3 Interest paid is exclusive of, and purchase of fixed assets is inclusive of interest capitalised Rs. 611.08 lacs (Previous year Rs. 620.94 lacs)




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Schedules forming part of the Balance Sheet

As at As at 31st March 2009 31st March 2008

(Rs. in lacs) (Rs. in lacs)

Schedule A : Share Capital

Authorised:10,00,00,000 (P.Y. 10,00,00,000) Equity Shares of Rs. 2 each 2,000.00 2,000.00

Issued, Subscribed and Paid-up:8,06,97,136 (P.Y. 7,96,84,113) Equity Shares of Rs.2 each fullypaid up (See Note B.4 of Schedule O) 1,613.94 1,593.68Of the above, 1,01,00,000 equity shares of Rs. 10 eachwere issued as bonus shares by way of capitalisation ofreserves in earlier years.

1,613.94 1,593.68Schedule B : Reserves and Surplus

Revaluation Reserve

As per last balance sheet 177.56 179.23Less : Transferred to Profit & Loss Account 1.67 1.67(Refer Note No. 3 in Schedule-E)

175.89 177.56

Capital Redemption ReserveAs per Last Balance Sheet 249.02 249.02

Less: Transferred to General Reserve 249.02 -

- 249.02Securities Premium

As per last balance sheet 23,002.83 9,328.77

Add: Premium on conversion of FCCBs into shares during the year1,722.15 12,700.76

Add: Reversal of redemption premium on FCCBs convertedduring the year 115.63 977.75

Less: Premium on redemption of FCCBs -Less: Share Issue Expenses - 4.45

24,840.61 23,002.83

General ReserveAs per last balance sheet 15,494.71 10,873.35

Less: Deferred tax liability for earlier years - 342.19

Less: Adjustment as per transistional provisions of AS 15 (Revised 2005) - 36.45

Add: Reversal Of Exchange Difference Pertaining To Long Term Foreign Currency Monetary Items -As Per

Transitional Provisions Of AS-11

(Refer note B.3 of Schedule O) 45.07 -Add: Transferred from Capital Redemption Reserve 249.02 -

Add :Transferred from Profit & Loss Account 5,000.00 5,000.00

20,788.80 15,494.71Profit and Loss Account

Balance as per Profit and Loss Account 7,942.27 4,860.70

5 3,747.57 43,784.82

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Schedule C : Secured LoansTerm Loans from BanksForeign Currency Loans 8,834.02 8,714.79Rupee Loans 7,080.57 3,534.86Working Capital Loans from BanksForeign Currency Loans 29.43 2,452.37Rupee Loans 7,147.26 3,945.92Hire Purchase Loans 127.23 159.46Of the above term loans Rs 4413.72 Lacs (Previous Year Rs.1516.28lacs) are repayable within a period of twelve months

23,218.51 18,807.40Schedule D : Unsecured LoansLong Term LoansFrom Banks 714.02 1,500.00From Financial Institution 545.47 -Short Term LoansFrom Bank 3,178.21 1,500.00From Directors 127.22 23.90Foreign Currency Convertible Bonds (FCCBs) 1,268.50 2,608.13Of the above long term loans Rs 714.02 Lacs (Previous Year Rs. 785.98 lacs)are repayable within a period of twelve months

5,833.42 5,632.03

Schedule E : Fixed Assets (At Cost)

GROSS BLOCK DEPRECIATION NET BLOCKAs at Additions Deletions/ As at As at Additions Deletions/ As at As at As at

1st during Adjustments 31st 1st during Adjustments 31st 31st 31stApril ‘08 the during March ‘09 April ‘08 the during March ‘09 March ‘09 March ‘08

year the year year the year

L a n d 545 .88 4 .00 - 549 .88 - - - - 549 .88 545 .88Bui ld ings 4,910.16 364 .65 - 5 ,274.81 581 .74 151 .91 - 733 .65 4,541.16 4,328.42Plant & Machinery 20,193.88 1,501.94 22.59 21,673.23 4,741.37 1,253.45 10.43 5,984.39 15,688.84 15,452.51Laboratory Equipments 2 ,503.36 281 .59 38.44 2,746.51 444 .55 156 .32 14.45 586 .42 2,160.09 2,058.80Electrical Instal lat ions 1,983.92 667 .38 - 2 ,651.30 336 .05 116 .53 - 452 .58 2,198.72 1,647.87Furniture & Fixtures 778 .46 11.02 - 789 .48 195 .70 49.63 - 245 .33 544 .15 582 .76Off ice Equipments & Computers 689 .98 23.52 0 .57 712 .93 499 .85 51.66 0 .13 551 .38 161 .55 190 .13Veh i c l es 834 .33 52.14 21.86 864 .62 118 .92 81.60 11.91 188 .61 676 .01 715 .41Intangible Assets 256 .59 353 .84 - 610 .43 151 .58 119 .22 - 270 .80 339 .64 105 .01Total 32,696.56 3,260.09 83.45 35,873.19 7,069.76 1,980.32 36.92 9,013.16 26,860.03 25,626.79Capital Work In Progress 11,061.61 7,842.25 1,607.39 17,296.47 - - - - 17,296.47 11,061.61Total Fixed Assets 43,758.17 11,102.34 1,690.84 53,169.66 7,069.76 1,980.32 36.92 9,013.16 44,156.50 36,688.40Previous Year 30,888.22 15,981.63 3,111.69 43,758.16 5,470.06 1,683.32 83.62 7,069.76 36,688.40

Notes:(1) Additions to fixed assets includes:

(a) Rs. 109.99 lacs on account of borrowing cost on borrowings for qualifying assets (Previous Year Rs. 282.65 lacs)(b) Rs. 451.19 lacs on account of exchange differences pertaining to long term foreign currency monetary liabilities (Previous

year Rs. NIL)(2) Capital Work in Progress includes:

(a) Rs. 501.09 lacs on account of borrowing cost on borrowings for qualifying assets (Previous Year Rs. 338.29 lacs)(b) Rs. 445.59 lacs on account of exchange differences pertaining to long term foreign currency monetary liabilities

(Previous year Rs. NIL)(c) Rs. 9215.12 lacs on account of advance against capital expenditure (Previous year Rs. 3983.03 lacs)

(3) The gross block of fixed assets includes Rs 250 lacs (Previous year Rs 250 lacs) on account of revaluation of certain fixedassets viz Land, Buildings and Plant & Machinery as on 31st March 1995 on the basis of their replacement value as of thatdate determined by approved valuers. Consequent to the said revaluation there is an additional charge of depreciation ofRs. 1.67 lacs (Previous year Rs. 1.67 Lacs) and equivalent amount, has been withdrawn from revaluation reserve andcredited to the profit and loss account.

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Schedule F : Investments (At Cost)Long TermQuoted2100 Equity Shares of Bank Of IndiaRs. 10 each fully paid up* 0.95 0.95UnquotedInvestments in Subsidiaries / Joint Ventures159000 Equity shares of DishmanEurope Ltd. of GBP 1/- each fully paid up 105.47 105.47300000 Equity shares of DishmanUSA Inc.of US$ 1 each. fully paid up 136.20 136.20Ordinary Shares of Dishman International Trade(Shanghai) Co.Ltd., China (No. of shares not specified) 87.86 87.861 Equity Share of Dishman FZE of UAE Dirham 1 Million eachfully paid up 125.46 125.461030000 Equity Shares of Dishman Switzerland Ltd. of CHF 1 eachfully paid up 357.30 357.30334980 Equity shares of Schutz Dishman Biotech Ltd. ofRs. 10 each fully paid up 33.50 33.5015000 (Previous year 1500) Equity Shares of CAD MiddleEast Pharmaceuticals Industries LLC of SAR 1000 eachfully paid up 1,629.39 177.1028000000 Equity Shares of Dishman Pharma Solutions AG,Switzerland of CHF 1 each fully paid up 10,507.50 10,507.50Ordinary Shares of Dishman Pharmceuticals & Chemicals(Shanghai) Co. Ltd (No. of shares not specified) 2,217.78 1,469.07100000 Equity Shares of Dishman Australatia Pty Limited ofAUD 1 each fully paid up 38.05 -1336 Shares of Dishman Japan Limited of 50000 JPY eachfully paid up 233.22 233.2250000 Equity Shares of Carbogen-Amcis (India) Limited of Rs. 10 eachfully paid up 5.00 5.001250 (Previous Year NIL) Shares of Dishman Arabia Ltd.of SAR 1000/- each fully paid up 147.74 -Others6244 Equity Shares of Nutan Nagarik Sahkari Bank Ltd.of Rs. 25 each fully paid up 1.56 1.5630 Shares of Stuti(Ambawadi) Associationof Rs. 100 each fully paid up 0.03 0.0350 shares of The Sangeeta Plaza iftex officePremises Co-op Society Limited of Rs. 50 each fully paid up 0.03 0.03130 Equity Shares of B.R.Laboratories Ltd. Rs. 10 eachfully paid up 0.01 0.014000 Equity Shares of Bhadr-Raj HoldingsPrivate Limited of Rs. 10 each fully paid up 0.40 0.40

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50,000 Equity Shares of Dishman Infrastructure Limited of Rs. 10 each 5.00 5.00100 Gold Coins of Rs.4,951 each. 4.95 4.95

15,637.40 13,250.61Aggregate value of Quoted Investments 0.95 0.95 Unquoted Investments 15,636.45 13,249.66Notes:1) *Market Value of quoted investments is Rs. 4.61 Lacs

(Previous Year Rs. 5.31 lacs).2) During the year, 50632.801 units of Rs. 1000.20 each of DSP Merill Lynch

Liquidity Fund- Daily Dividend Investment Option were purchased at a cost ofRs. 506.34 lacs and sold/ redeemed

Schedule G : Current Assets, Loans and AdvancesInventoriesFinished Goods 3,044.93 1,592.65Work in Process 4,855.70 7,308.66Raw Materials and Goods in Transit 3,504.02 2,942.62Packing Materials 24.42 32.06Stores, Spares & Consumables 202.64 187.02

11,631.71 12,063.01Sundry Debtors(Unsecured and considered good, except stated otherwise)Outstanding over six months Considered good 323.25 751.06 Considered doubtful 220.10 57.94 Provision for Doubtful Debts (220.10) (57.94)Others 5,831.84 8,586.53

6,155.09 9,337.59Loans and Advances(Unsecured and considered good, except stated otherwise)Advances recoverable in cash or kind or for value to be received Considered Good 10,513.27 5,891.72 Considered Doubtful 184.00 15.00 Provisions for Doubtful Advances (184.00) (15.00)Share Application Money Pending Allotment 543.64 -Balance with Central Excise Authorities 551.44 733.43Advance Tax & Tax deducted at Source 3,166.91 2,135.31MAT Credit Entitlement 1,186.80 161.11

15,962.06 8,921.57

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Cash And Bank BalancesCash on hand 2.31 6.17Balances with Scheduled Banks In Current Accounts 84.28 198.29 In Margin Money Accounts 228.68 242.73 In Fixed Deposit Accounts 5.21 2.11

320.48 449.30Schedule HCurrent Liabilities & Provisions

Current LiabilitiesSundry Creditors (Refer note B.13 of schedule O) 2,292.25 4,626.73Advances from Customers 7.89 117.17Other Liabilities 893.78 1,206.96

3,193.92 5,950.86ProvisionsProvision for Taxation 3,059.90 1,889.89Provision for Leave Enchashment 60.24 48.37Provision for Gratuity 247.70 196.35Proposed Dividend 968.37 806.97Tax on Proposed Dividend 164.57 137.14

4,500.78 3,078.727,694.70 9,029.58

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Schedules forming part of the Profit & Loss Accounts2008-09 2007-08


Schedule I : Other Income

Dividend Income 6.49 9.87

Profit / (Loss) on sale of fixed asset (net) (24.37) 4.22

Miscelleneous Income 87.67 85.88

Profit on sale of rights in immovable properties/assets - 844.36

69.79 944.33

Schedule J : Increase /( Decrease) In Stock

Closing Stock

Finished Goods 3,044.93 1,592.65

Work In Process 4,855.70 7,308.66

7,900.63 8,901.31

Less : Opening Stock

Finished Goods 1,592.65 918.17

Work In Process 7,308.66 6,425.94

8,901.31 7,344.11

(1,000.68) 1,557.20

Schedule K : Materials and Manufacturing Expenses

Cost of goods traded in 3,865.98 7,376.24

Raw Materials Consumed 12,325.96 12,543.56

Stores, Spares & Consumables 82.91 96.42

Packing Materials Consumed 274.52 312.90

Material Processing Charges 237.91 404.38

Excise Duty 12.68 19.86

Power, Fuel & Electricity 2,053.51 1,698.94

Repairs and Maintenance

Plant & Machinery 277.84 309.39

Building 95.23 74.64

Others 141.51 91.01

Laboratory, Reaserch & Development Expenses 266.47 228.01

Factory Expenses 68.82 61.00

Other Manufacturing Expenses 242.95 199.19

19,946.29 23,415.54

Schedule L : Employees Emoluments

Salaries and Wages 2,694.08 2,328.44

Contributions to Provident and other funds 97.72 84.31

Welfare Expenses 67.45 46.78

Managerial Remuneration 556.67 380.76

3,415.92 2,840.29

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Schedules forming part of the Profit & Loss Accounts2008-09 2007-08


Schedule M : Administrative, Selling and Other ExpensesRent, Rates & Taxes 68.41 39.34Legal and Professional Charges 189.18 214.87Conveyance and Travelling 261.03 280.93Communication Expenses 36.96 35.96Stationary and Printing 49.48 40.65Subscriptions and Memberships 57.71 25.35Insurance Premium 217.52 234.90ECGC Premium 41.65 30.07Provision for Doubtful Debts & Advances 331.16 2.11Advance Licence Fees 0.67 0.57Office Electricity Expenses 16.99 14.50Recruitment Expenses 2.92 17.61Auditors Remuneration 12.36 11.75Sundry Balances Written Off (Net) 9.45 88.28Foreign Exchange Rate Fluctuation Loss 1,350.09 486.43Miscellaneous Expenses 124.47 125.15Clearing & Forwarding 620.31 698.65Sales Commission 31.30 36.55Advertisement and Business Promotion 34.31 78.02Donation 105.08 39.89

3,561.05 2,501.57Schedule N : Interest and Finance ChargesOn Fixed Loans 1,031.09 441.63Others 1,664.80 534.57

2,695.89 976.20Less : Interest Income (Gross of Tax Deductedat Source Rs. 92.19 lacs (P.Y. Rs.30.68 lacs) ) 446.03 254.85

2,249.86 721.35

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Schedule O

Significant Accounting Policies and Notes to Financial StatementsA. Significant Accounting Policies

1. Accounting Convention

The financial statements are prepared under the historical cost convention on the “Accrual Concept” of accountancy inaccordance with the accounting principles generally accepted in India and comply with the accounting standards issued bythe Institute of Chartered Accountants of India to the extent applicable and with the relevant provisions of the CompaniesAct, 1956.

2. Use of EstimatesThe preparation of financial statements requires estimates and assumptions to be made that affect the reported amount ofassets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during thereporting period. Difference between the actual result and estimates are recognized in the period in which the results areknown / materialized.

3. Tangible Fixed Assets

Fixed assets are stated at cost of acquisition / construction except for certain fixed assets which have been stated atrevalued amounts, less accumulated depreciation, amortization and impairment loss (if any). Cost comprises of purchaseprice, import duties and other non-refundable taxes or levies and any directly attributable cost to bring the assets ready forits intended use. Exchange difference, if any, in respect of liabilities incurred to acquire fixed assets is adjusted to thecarrying cost of fixed assets.Direct expenses, as well as pro rata identifiable indirect expenses on projects during the year of construction are capitalized.

Capital assets (including expenditure incurred during the construction period) under erection / installation are stated in theBalance Sheet as “Capital Work in Progress.”

4. Intangible AssetsIntangible assets are stated at cost of acquisition / cost incurred less accumulated amortization.

5. Depreciation / Amortization

All tangible fixed assets, except freehold land, leasehold land and capital work in progress, are depreciated on a straight linemethod at the rates and in the manner prescribed in Schedule XIV of the Companies’ Act, 1956.

Leasehold land shall be written off in the year in which the respective lease period expires.Intangibles Assets including Intellectual Property Rights in the nature of production processes, software and patents areamortized over a period of 5 years starting from the year after the year of incurring expenditure / commercialization. Thevalue of these intangible assets is reviewed at each balance sheet date to assess the probability of continuing futurebenefits. If there is any indication that the value of such assets is impaired, the resulting impairment loss is recognized in thefinancial statements.

6. Impairment of AssetsConsideration is given at each balance sheet date to determine whether there is any indication of impairment of the carryingamount of the company’s each class of the fixed assets. If any indication exists, an asset’s recoverable amount is estimated.An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recover-able amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flowsare discounted to their present value based on an appropriate discount factor.

7. Investments

Current investments are carried at the lower of cost and fair value computed category wise. Long term investments arestated at cost. Provision for diminution in the value of long term investments is made, only if, in the opinion of the manage-ment, such a decline is regarded as being other than temporary.

8. Inventories

Raw materials, packing materials, stores, spares and consumables are valued at lower of cost (net of refundable taxes andduties) or net realizable value. The cost of these items of inventory comprises of cost of purchase and other incidental costsincurred to bring the inventories to their present location and condition.

Work in progress and finished goods are valued at lower of cost or net realizable value. The cost of work in process andfinished goods includes cost of conversion and other costs incurred to bring the inventories to their present location andcondition.

Cost of inventories is determined on “First In First Out” basis.Excise Duty in respect of finished goods lying in factory premises are provided for and included in valuation of inventory incase of non EOU units.

Custom duty is accounted as and when goods are cleared from the bonded warehouse.

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9. Revenue Recognition

Revenue from domestic sales is accounted on dispatch of products to customers.

Revenue from export sales is recognized on shipment/ air lift of products. Exports sales include exchange rate differencearising on realization of revenue.

Income from Contract Research is recognized under Percentage Completion Method basis as per contractual terms.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rateapplicable.

Dividend income from investments is recognized when the shareholders’ rights to receive payment have been established.

10. Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transac-tion.

Monetary items denominated in foreign currencies at the year end are restated at the year end rates. Non monetary foreigncurrency items are carried at cost.

Exchange differences arising on settlement or restatement of long term foreign currency monetary items, in so far as theyrelate to acquisition of depreciable capital assets are adjusted to the carrying cost of such assets and depreciated over thebalance life of the assets and in other cases, are accumulated in ‘Foreign Currency Monetary Item Translation DifferenceAccount’ and amortized over the balance period of such long term asset / liability but not beyond March 31, 2011 byrecognition as income or expense in each of such periods. An asset or liability is designated as a long term foreign currencymonetary item, if the asset or liability is expressed in a foreign currency and has a term of 12 months or more at the date oforigination of the asset or liability.

Exchange differences on other monetary items denominated in foreign currencies are recognized in the profit and lossaccount.

11. Redemption Premium on Foreign Currency Convertible Bonds

Premium payable on redemption of Foreign Currency Convertible Bonds outstanding as at the balance sheet date is pro-vided on time basis by adjusting against the Securities Premium Account. Any changes to the premium payable on accountof conversion of bonds into equity shares are adjusted in the Share Premium Account.

12. Employee Benefits

Short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account ofthe year in which the related service is rendered.

Post employment benefits are recognized as an expense in the profit and loss account for the year in which the employeehas rendered services. The expense is recognized at the present value of the amount payable towards contributions. Thepresent value is determined using the market yields of government bonds, at the balance sheet date, at the discounting rate.

Other long-term employee benefits are recognized as an expense in the profit and loss account for the period in which theemployee has rendered services. Estimated liability on account of long-term benefits is discounted to the current value,using the yield on government bonds, as on the date of balance sheet, at the discounting rate.

Actuarial gains and losses in respect of post employment and other long-term benefits are charged to the profit and lossaccount.

13. Research and Development Costs

Research and development costs incurred for development of products are charged to revenue as incurred, except fordevelopment costs relating to the design and testing of new or improved materials, products or processes which are recog-nized as intangible assets to the extent that it is expected that such assets will generate future economic benefits. Researchand development expenditure of capital nature is added to fixed assets.

The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use, and otherwisewhen events and change in circumstances indicate that the carrying value may not be recoverable.

Expenditure on development of the production process of molecules is treated as capital work in progress and amortizedover the period of life of each product once the commercial exploitation of the respective product starts / put to use.

14. Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying fixed assets arecapitalized as part of the cost of such assets. All other borrowing costs are recognized as expense in the period in which theyare incurred.

15. Financial Derivates and Hedging Transactions

In respect of derivate contracts, premium paid, gains or losses on settlement and provision for losses for cash flow hedgesare recognized in the profit and loss account.

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16. Provision for Tax

Tax expenses for a year comprise of current tax and deferred tax.

Provision for current tax is determined based on assessable profits of the Company as determined under the Income TaxAct, 1961.

Provision for deferred tax is determined based on the effect of timing difference between the assessable profits under theIncome Tax Act and the profits as per the Profit and Loss Account. Deferred tax assets, other than those from carry forwardlosses and unabsorbed depreciation, are recognized only to the extent that there is reasonable certainty that sufficient futuretaxable income will be available against which such deferred tax assets can be realized. Deferred tax assets arising fromcarry forward losses and unabsorbed depreciation, are recognized and carried forward only to the extent that there is avirtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

17. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognized for when the Company has at present, legal or contractual obligation as a result of past events,only if it is probable that an outflow of resources embodying economic benefits will be required and if the amount involvedcan be measured reliably.

Contingent liabilities being a possible obligation as a result of past events, the existence of which will be confirmed only bythe occurrence or non occurrence of one or more future events not wholly in the control of the Company, are not recognizedin the accounts. The nature of such liabilities and an estimate of its financial effect are disclosed in the Notes to FinancialStatements.

Contingent assets are neither recognized nor disclosed in the financial statements.

B. Notes to the financial statements

1. Contingent Liabilities to the extent not provided for:

a. Guarantees given by Bank on behalf of the Company Rs 73.58 Lacs (Previous Year Rs. 104.25 Lacs)

b. Letters of Credit in favor of suppliers Rs 460.58 Lacs (Previous Year Rs 1603.53 Lacs)

c. Outstanding guarantees furnished to the bank in respect of wholly owned subsidiaries and a joint venture companyRs. 44046.23 Lacs (Previous Year Rs. 38073.08 Lacs)

d. Claims against the Company not acknowledged Rs. 5.06 Lacs (Previous Year Rs. 3.11 Lacs)

e. Disputed central excise duty (including service tax) liability is Rs. 302.04 Lacs (Previous Year Rs. 263.66 Lacs)

f. Disputed income tax liability Rs. 834.73 Lacs (Previous Year Rs. 3.92 Lacs) for various assessment years forwhich appeals are pending with Appellate authorities,out of the said amount company has paid Rs.380.00 lacsunder protest.

g. Disputed sales tax and central sales tax liability Rs 181.62 Lacs (Previous Year Rs. 99.74 Lacs), out of the saidamount company has paid Rs.24.94 Lacs under protest.

h. Bills discounted with banks Rs.2861.02 Lacs (Previous Year Rs. 1811.95 Lacs.)

2. Estimated amount of contracts remaining to be executed on capital accounts not provided for (Net of Advances)Rs. 2948.14 Lacs (Previous Year Rs 1526.58 Lacs)

3. Change in accounting policy

Hitherto, the Company was recognising the exchange rate differences on settlement or restatement of foreign currencymonetary assets and liabilities in the profit and loss account as per the pre-revised Accounting Standard 11 ‘ Accountingfor effects of changes in foreign exchange rates ‘ issued by the Institute of Chartered Accountants of India.

During the year, the Company has changed the accounting policy by exercising the option related to amortization foreignexchange fluctuation differences as per the notification dated March 31, 2009 issued by the Ministry of Corporate Affairs.As a result :

a) The exchange differences arising on restatement or settlement of long term foreign currency monetary items in sofar as they relate to acquisition of a depreciable capital asset are adjusted to the cost of such asset and depreci-ated over the balance life of the asset.

b) In other cases, they have been accumulated in ‘Foreign Currency Monetary Items Translation Difference Account’and amortized over the balance period of such long term asset/ liability but not beyond March 31, 2011 by recog-nition as an income and expenses in each of such periods.

Accordingly, Rs. 896.78 lacs has been added to cost of fixed assets, Rs. 413.19 lacs has been accumulated in‘Foreign Currency Monetary Items Translation Difference Account’, Rs. 45.07 lacs being exchange differencespertaining to earlier years has been adjusted to the balance of the general reserve in the balance sheet and Rs.137.74 lacs has been amortized and charged to profit and loss account during the year.

The amount remaining to be amortized in subsequent periods as at the balance sheet is Rs. 275.49 Lacs.

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4. Share Capital

The subscribed and paid up capital includes 10,13,023 equity shares of Rs. 2 each, allotted during the year, on conversionof 4,000 number of 0.5% Foreign Currency Convertible Bonds (FCCBs) of the principal amount of US $ 4 million.

5. Secured Loans

Secured Foreign Currency Term Loan from Bank of India(amount outstanding as at March 31, 2009 Rs. 6455.58 lacs), issecured against first pari - passu charge on the fixed assets of the Company created / to be created out of the said loan,located/to be located at Bavla and also against pledge of the shares of the Company held / to be held in wholly ownedsubsidiary in China, namely Dishman Pharmaceuticals & Chemicals (Shanghai) Co.Ltd.

Foreign currency loan from Cooperative Centrale Raifeisen- Boerenleenbank BA (trading as Rabobank International),Singapore(amount outstanding as at March 31, 2009 Rs.2378.44 lacs) is secured against pledge of the Company’s invest-ment in the equity shares of its wholly owned subsidiary, namely Dishman Pharma Solutions AG., Switzerland. The said loanare also secured against (i) corporate guarantee of Company’s wholly owned subsidiaries Dishman Pharma Solutions AG.,and Carbogen Amcis AG.,Switzerland; (CA) (ii)Pledge of the Dishman Pharma Solutions AG’s investment in the equityshares of its wholly owned subsidiary namely Carbogen Amcis AG. (iii) Charges over receivables of CA over all its presentand future book debts; and (iv) First charge on all present and future Fixed Assets of CA.

Secured Term Loan from Industrial Development Bank of India Limited (amount outstanding as at March 31, 2009 Rs.2830.57lacs) is secured against first pari-passu charge on the fixed assets of the company created/to be created against out of thesaid loan, located / to be located at Bavla.

Secured Term Loan from Indusind Bank Limited(IBL) (amount outstanding as at March 31, 2009 Rs.4250.00 lacs) is securedagainst first pari-passu charge on the present fixed assets at the company and the future assets to be created /affixed/installed out of IBL term loan and all fixed assets located at Bavla.

Hire Purchase Finances are secured by hypothecation of respective assets.

Working Capital Loans are secured against hypothecation of inventories, collateral security of book debts, first charge onfixed assets of the Company situated at Naroda, except EOU Unit and second charge on specific fixed assets of theCompany situated at Bavla

6. Unsecured loans from banks are personally guaranteed by one of the promoter directors.

Unsecured loans include loans from Life Insurance Corporation of India availed on the Keyman insurance policies of the keypersonnel of the entity.

7. The Company has pledged its 1 equity share of Dishman FZE with ABN AMRO Bank N.V. as security against loan availedby its subsidiary company, Dishman FZE.

8. Deferred Income Tax

Major components of deferred tax liability are as follows

Particulars As at March 31, 2009

(Rs. in lacs)

As at March 31, 2008

(Rs. in lacs)

Opening balance of deferred tax asset /(liability) (Net) (1862.98) (1060.86)

Deferred Tax Liability

Depreciation 326.10 814.32

Deferred Tax Assets

Disallowance under section 43B of the Income Tax Act, 1961 158.49 12.20

Provision for deferred tax asset /(liability) (Net) (2030.59) (1862.98)

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9. Details of debts due from companies under the same management :

2008-09 2007-08 Name of the Company Balance as at March

31, 2009

(Rs. in lacs)

Maximum balance during the year

(Rs. in lacs)

Balance as at March 31, 2008

(Rs. In lacs)


(Rs. In lacs)

Carbon Amis AG 146.07 149.36 - 52.66 Dishman Europe Limited

2947.95 8171.10 4938.69 4938.69

Dishman Australasia Pty Limited

16.15 19.18 - -

Dishman International Trade (Shanghai) Co. Limited

12.19 12.19 0.95 1.01

Dishman Pharma Solutia AG

3.40 3.40 - 400.19

Dishman USA Inc. 577.29 1014.39 942.41 1091.59 Innovative Ozone Services Inc.

36.11 36.11 33.10 33.10

Dishman Japan Ltd. 91.97 91.97 - 5.48 Total 3831.13 5915.15

Details of loans and advances due from companies under the same management:

2008-09 2007-08 Name of the Company Balance as at March

31, 2009

(Rs. In lacs)


(Rs. In lacs)

Balance as at March 31, 2008

(Rs. In lacs)


(Rs. In lacs)

Dishman Infrastructure Limited

3800.00 5979.77 1455.50 1702.12

Dishman Europe Limited

470.61 1266.99 1266.99 2494.84

Dishman Australasia Pty Limited

105.52 105.52 - -

Dishman Pharmaceuticals and Chemicals (Shanghai) Co. Limited

1014.80 1014.80 - -

Total 5390.03 2722.49

Capital work in progress includes Rs. 2054.78 lacs paid to Dishman Infrastructure Limited, a Company under the samemanagement for land.

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10. The Company has the following Joint Ventures as at March 31, 2009 and its proportionate share in the Assets, Liabilities,Income and Expenditure in the Joint Venture companies is as under:

Assets

(Rs in lacs)

Liabilities

(Rs. in lacs)

Contingent Liabilities

(Rs. in lacs)

Capital Commit-ments

(Rs. in lacs)

Income

(Rs. in lacs)

Expenditures

(Rs. in lacs)

Name of the Joint Venture Company

(including country of incorporation)

% of holding

As at March 31, 2009 For the year ended March 31, 2009

Schutz Dishman Bio-tech Ltd. (India) 22.33 343.83 343.83 134.69 0.67 408.07 360.52

CAD Middle East Pharmaceutical Industries (Saudi Arabia)

30 1987.80 1987.80 - - - -

Dishman Japan Limited (Japan) 85 226.28 226.28 - - 42.57 156.88

Dishman Arabia Ltd.(Saudi Arabia)

50 524.74 524.74 - - - -

11. Disclosures as per Clause 32 of the Listing Agreements with the stock exchanges

(a) Loans and advances in the nature of loans given to subsidiaries, Joint ventures and entities in which directors haveinterest by name or shares.

Name of the Company Relationship As at March 31, 2009

(Rs. in lacs)


(Rs. in lacs)

Maximum balance outstanding during the year

(Rs. in lacs)

Dishman Europe Limited Subsidiary 470.61 1266.99 1266.99

Dishman Australasia Pty Ltd. Subsidiary 105.52 - 105.52

D P C Shanghai Ltd. Subsidiary 1014.80 - 1014.80

Dishman Infrastructure Ltd. Entity in which director is interested

3800.00 1455.50 5979.77

CAD Middle East Pharmaceutical Industries

Joint venture - 333.08 1452.29

Loans and advances shown above fall under the category of Loans and Advances in nature of loans which arerepayable on demand.

(b) None of the loanees have made investments in shares of the Company.12. Prior period adjustment includes:

Particulars 2008-09 (Rs. In lacs)

2007-08 (Rs. In lacs)

Interest and Other Income (1.30) (7.46)

Machinery Repairs 1.12 -

Other Repairs 1.44 -

Raw Mater ia l Purchase-Import 1.85 -

Freight Inward 2.18 -

Director's Remuneration - 5 .00

Export Incentive - 3 .19

Security Expenses - 2 .16

Other Expenses 6.77 6.3 4

Total 12.06 9.2 3

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13. In the absence of any information from vender's regarding the status of their registration under the "Micro Small and MediumEnterprise Development Act 2006 " the company is unable to comply with the disclosures required to be made under the said Act.

14. Employee BenefitsThe present value of gratuity and leave encashment obligations is determined based on actuarial valuation using the ProjectedUnit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlementand measures each unit separately to build up the final obligation.Details of post retirement benefits are as follows:

1. Defined Benefit Plans I. Expenses recognized during the year

Particulars Gratuity (Rs in lacs)

Leave Encashment (Rs in lacs)

Current service cost 37.71 17.86

Interest Cost 14.80 3.84

Expected return on plan assets (0.04) -

Net actuarial losses (gains) 21.77 0.62

Total 74.24 22.33

II. Reconciliation of opening and closing balances of defined benefit obligation


Leave Encashment (Rs in lacs)

Defined benefit obligation at beginning of the year 185.94 48.26

Service cost 37.71 17.86

Interest cost 14.80 3.84

Actuarial losses (gains) 21.75 0.62

Losses (gains) on curtailments - -

Liabilities extinguished on settlements - -

Benefits paid (11.85) (10.42)

Defined benefit obligation at end of the year 248.35 60.17

III. Reconciliation of Opening and Closing balances of fair value of plan assets


Fair value of plan assets at beginning of the year, 2007 0.34

Expected return on plan assets 0.04

Actuarial gains and (losses) (0.02)

Contributions by employer 12.04

Benefits paid (11.85)

Fair value of plan assets at year end 0.55

IV. Reconciliation of the present value of defined benefit obligation and fair value of planned assets

Gratuity Leave Encashment

2008-09 2007-08 2008-09 2007-08

Present value of defined benefit obligations at the end of the year

248.35 185.94 60.17 48.26

Fair value of plan assets at the end of the year 0.55 0.34 - -

Net assets / (liability) at the end of year 247.80 185.60 60.17 48.26

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V. Investment details

% invested as at 31st March, 2009

High quality corporate bond 100%

VI. Actuarial Assumptions

Particulars Gratuity Leave Encashment

Mortality Table (LIC) 1994-96 (Ultimate) 1994-96 (Ultimate)

Discount Rate (per annum) 7.96% 7.96%

Expected Return on plan assets (per annum) 9% -

Rate of escalation in salary (per annum) 6% 6%

2. Defined Contribution Plans.

Contribution of Defined Contribution Plan, recognized as expense for the year as under:

Particulars 2008-09 (Rs. in lacs)

2007-08 (Rs. in lacs)

Employer’s Contribution to Provident Fund 63.04 54.74

Employers’ Contribution to Superannuation Fund 31.44 21.33

15. Disclosures in respect of Assets acquired under Hire Purchase Arrangements

The total of minimum Hire installments payable at the Balance sheet date are as under


(Rs. in lacs)


(Rs. in lacs)

For a period not later than 1 year 78.92 63.94

For a period later than 1 year but not later than 5 years. 48.31 95.52

For later than 5 years - -

Hire charges recognized in the profit and loss account Rs 15.54 Lacs (Previous Year Rs. 8.95 Lacs)

16. Balances of receivables, payables and loans and advances parties are subject to their confirmations. These balances aretherefore, subject to adjustments, if any, as may be required on settlement of these balances with the parties.

17. The profit and loss account includes:

a) Auditors’ Remuneration :


2007-08 (Rs. in lacs)

Audit fees 11.00 10.75

Tax Audit Fees 1.00 1.00

Certification fees 1.40 0.98

Out of Pocket Exp. 0.36 0.11

Total 13.76 12.84

b) Directors’ Remuneration :

Particulars 2008-09 (Rs in lacs)

2007-08 (Rs in lacs)

Salaries and Commissions 556.67 380.76

Total 556.67 380.76

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c) Managerial Remuneration

Computation of Net Profit in accordance with section 198 and 309(5) of the Companies Act, 1956:


2007-08 (Rs. in lacs)

Profit before other adjustment & tax as per Profit & Loss Account 9505.81 7261.17 Add: Managerial Remuneration 556.67 380.75 Loss on sale of assets 24.37 (4.22) Provision for bad & doubtful debt 331.16 2.11 Depreciation as per books 1978.65 1681.65 Directors’ sitting fees 7.00 7.60 Miscellaneous expenditure - 12.99 Total 12403.66 9342.05 Less: Depreciation as per Section 350 of Companies’ Act, 1956 1978.65 1681.65 Profit on sale of assets / rights - 844.35 Total 1978.65 2526.00 Net Profit as per Sections 198 and 309(5) 10425.01 6816.05

Entitlement of maximum remuneration to Managing Director @ 5% of the Net Profit as per Sections 198 and 309(5) of theCompanies Act, 1956 is Rs.496.43 lacs, as against which managerial remuneration provided for in the current year isRs. 466.67 lacs.

18. Expenditure on Research & Development activities as certified by the Management are as under:


2007-08 (Rs. in lacs)

Capital expenditure 559.84 136.76 Revenue expenditure 138.03 81.19 Total 697.87 217.95

19. Earnings Per Share (EPS)

2008-09 2007-08

Basic

Profit attributable to equity shareholders Rs in lacs 9214.51 5955.82

Nominal Value of equity share Rs. 2 2

Weighed average number of ordinary equity shares for Basic EPS

Nos. 80,622,200 76,240,252

Basic EPS Rs. 11.43 7.81

Diluted

Profit attributable to equity shareholders Rs. in lacs 9214.51 5955.82

Add: Interest payable on outstanding Foreign Currency Convertible Bonds

Rs. in lacs 2.58 25.62

Profit after tax for Diluted EPS Rs. in lacs 9217.09 5981.43

Weighed average number of ordinary equity shares for Basic EPS

Nos. 80,622,200 76,240,252

Add: Adjustment for option relating to Foreign Currency Convertible Bonds

Nos. 7,10,850 5,092,538

Weighted average number of ordinary equity shares for Diluted EPS

Nos. 81333050 81332790

Diluted EPS Rs. 11.33 7.35

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20. Related Party Disclosures

a) Related parties and their relationshipsName of the related party Relationship

Dishman USA Inc. Wholly Owned Subsidiary

Dishman Europe Limited Wholly Owned Subsidiary

Dishman International Trading ( Shanghai) Co. Limited Wholly Owned Subsidiary

Dishman FZE Wholly Owned Subsidiary

Dishman Switzerland Limited Wholly Owned Subsidiary

Dishman Pharmaceuticals & Chemical (Shanghai) Co.Limited Wholly Owned Subsidiary

Dishman Pharma Solutia AG Wholly Owned Subsidiary

Dishman Australasia Pty Limited Wholly Owned Subsidiary

Carbogen Amcis (India) Limited Wholly Owned Subsidiary

Carbogen Amcis Limited Wholly Owned Subsidiary (Step down)

Dishman Holland B.V Wholly Owned Subsidiary (Step down)

Dishman Africa (Proprietary) Limited Wholly Owned Subsidiary (Step down)

Dishman Netherlands B.V. Wholly Owned Subsidiary (Step down)

Carbogen Amcis AG Wholly Owned Subsidiary (Step down)

Dishman U.K LLP Wholly Owned Subsidiary (Step down)

Innovative Ozone Service Inc Wholly Owned Subsidiary (Step down)

Dishman Japan Limited Subsidiary

Dishaman Arabia Limited Joint Venture

Bhadra-Raj Holdings Private Limited Associate Concern

CAD Middle East Pharmaceutical Industries Joint Venture

Schutz Dishman Bio-tech Limited Joint Venture

Mr. Janmejay R.Vyas Key Management Personnel

Mr. Rajnikant T.Vyas Key Management Personnel

Mrs. Deohooti J.Vyas Key Management Personnel

Ms. Aditi J Vyas Relative of Key Management Personnel

Ms . Mansi J Vyas Relative of Key Management Personnel

Mr. J.R.Vyas HUF Key Management Personnel is Karta

Mr. Arpit J.Vyas Relative of Key Management Personnel

B.R. Laboratories Limited Equity Controlled By Key Management PersonnelDishman Infrastructure Limited* Equity Controlled By Key Management Personnel

* Dishman Infrastructure Limited ceased to be a subsidiary of Dishman Pharmaceuticals and Chemicals Limited from17th March 2009.

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b) Transactions with related parties(figures in brackets represent previous year data)

Subsidiaries

(Rs. in lacs)

Associates / Joint

Ventures

(Rs. in lacs)

Key Management

Personnel and their relatives

(Rs. in lacs)

Entity Controlled by Key Management

Personnel

(Rs. in lacs)

Total

(Rs. in lacs)

Purchase of goods 1.41 (0.43)

3.48 (4.21)

- (-)

2.59 (1.25)

7.48 (5.89)

Sale of goods/Export Services

25115.68 (19053.35)

435.16 (73.33)

- (-)

0.02 (0.30)

25550.86 (19126.98)

Contribution in common expenses received

- (-)

143.48 (113.84)

- (-)

0.59 (-)

144.07 (113.84)

Contribution in common expenses given

199.82 (79.20)

- (-)

- (-)

- (-)

199.82 (79.20)

Interest income 342.87 (219.91)

- (-)

- (-)

13.24 (-)

356.11 (219.91)

Reimbursements taken/Expenses transferred

28.54 (191.32)

0.97 (-)

- (-)

- (-)

29.51 (191.32)

Investments 2239.05 (238.22)

147.74 (-)

- (-)

- (-)

2386.79 (238.22)

Share Application Money given

120.48 (-)

298.16 (-)

- (-)

125.00 (-)

543.64 (-)

Loans granted 3474.18 (2169.11)

35.00 (708.73)

3.00 (-)

- (-)

3512.18 (2877.84)

Loans taken - (-)

104.00 (-)

500.00 (-)

168.42 (222.70)

772.42 (222.70)

Capital Advance 1117.72

(-)

-

(-)

-

(-)

688.11

(-)

1805.82

(-)

Dividends paid - (-)

6.00 (6.00)

483.36 (483.36)

- (-)

489.36 (489.36)

Remuneration - (-)

- (-)

557.57 (380.76)

- (-)

557.57 (380.76)

Rent Paid - (-)

- (-)

9.07 (4.00)

- (-)

9.07 (4.00)

Guarantees given 43473.18 (36158.94)

573.05 (-)

- (-)

- (-)

44046.23 (36158.94)

Outstanding balance(Dr)

5433.53 (8509.92)

- (333.08)

- (17.84)

5854.78 (-)

11288.31 (8971.32)

Outstanding balance(Cr) 153.32 (110.04)

- (84.85)

127.22 (4.00)

- (-)

280.54 (198.89)

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63

c) Disclosure in respect of material transactions with related parties

Name of the related party 2008-09 (Rs. in lacs)

2007-08 (Rs. In lacs)

Schutz Dishman Bio-tech Ltd. 3.48 - Purchase of goods B.R.laboratories Pvt Ltd 2.59 1.25 Dishman Europe Ltd 22240.29 16489.76 Carbogen Amcis India Ltd 384.60 50.32 Dishman USA Inc. 2360.13 2662.52 Dishman Japan Ltd 96.95 5.39

Sale of goods/Export Services

CAD Middle East Pharmaceuticals Industries

427.19 73.33


Schutz Dishman Bio-tech Ltd. 143.48 113.84

Contribution in common expenses given

Dishman Europe Ltd 199.82 79.20

Reimbursements taken/Expenses Transferred

Dishman Pharma Solutions Ltd Carbogen Amcis India Ltd

- 25.70

191.32 -

Dishman Europe Ltd 22.74 210.89 D P C (Shanghai) Co.Ltd 11.47 - Dishman Pharma Solutions Ltd - 13.47

Interest income

Dishman infrastructure Ltd 321.90 108.96 D P C (Shanghai) Co.Ltd 748.71 - Dishman Japan Ltd - 233.22 Carbogen Amcis India Ltd - 5.00 CAD Middle East Pharmaceuticals Industries

1452.29 -

Dishman Arabia Ltd. 147.74 -

Investments

Dishman Australasia Pty Ltd. 38.05 - Dishman Infrastructure Ltd 125.00 - Dishman Arabia Ltd. 298.16 -

Share Application Money given

Dishman Japan Ltd 120.48 - D P C (Shanghai) Co.Ltd 1005.10 - Dishman Australasia Pty Ltd. 104.58 - Dishman Infrastructure Ltd 2364.50 2169.11 Dishman Japan Ltd - 207.90

Loans and advances granted

CAD Middle East Pharmaceuticals Industries

- 333.08

B.R. Laboratories Ltd 168.42 222.70 Schutz Dishman Bio-tech Ltd. 104.00 -

Loans and advances taken

Mr. Janmejay R.Vyas 500.00 100.00 Capital Advances Dishman Infrastructure Ltd. 1805.82 -

Bhadra-Raj Holdings P.Ltd. 6.00 6.00 Mr. Janmejay R.Vyas 250.43 250.43 Mr. Rajnikant T.Vyas 123.30 123.23

Dividends paid Mrs. Deohooti J.Vyas 109.65 109.65

Mr. Janmejay R.Vyas 466.67 320.75 Mr. Rajnikant T.Vyas 24.00 24.00

Remuneration

Mrs. Deohooti J.Vyas 56.00 36.00 Dishman Pharma Solution Ltd 23751.52 20016.52 Dishman Europe Ltd 368.80 - Schutz Dishman Bio-tech Ltd. 573.05 929.21 Dishman FZE 3387.48 3312.36 D P C (Shanghai) Co.Ltd 2187.00 649.20 Carbogen Amcis AG 7559.60 6320.98

Guarantees given

Dishman Netherlands B.V. 6218.78 5859.88

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21. Segmental Reporting

The Company is in the business of manufacturing and marketing of

A. Contract Research & Contract Manufacturing (CRAMS).

B. Bulk Drugs, Intermediates, Quats & Specialty Chemicals

Segment revenue of the above business segment includes sales export incentive and income from Research and Develop-ment activity.

Segment revenue in geographical segment considered for disclosure is as follows:

A. Domestic Sales

B. Export Sales

The Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the segment andamount allocated on a reasonable basis by management

(figures in brackets represent previous year numbers)

Particulars CRAMS

(Rs. in lacs)

Bulk Drugs, Quats, Speciality Chemicals

(Rs. in lacs)

Total of Reportable Segments

(Rs. in lacs) Sales 27515.18

(18784.82) 14073.29

(15250.68) 41588.47

(34035.50) Inter segment sales -

(-) -

(-) - (-)

Other income - (-)

69.79 (99.98)

69.79 (99.98)

Segment revenue 26740.41 (19967.43)

13917.16 (15725.25)

40657.57 (35692.68)

Segment results 9298.69 (5539.97)

2456.98 (1294.80)

11755.67 (6834.77)

Segment assets 49711.38 (37955.92)

14756.39 (12477.01)

64467.77 (50432.93)

Segment liabilities 20298.65 (17107.27)

5387.70 (5692.86)

25686.35 (22800.13)

Reconciliation of reportable segments with financial statements

(figures in brackets represent previous year numbers)

Particulars Total of Reportable Segments

(Rs. in lacs)

Unallocated / Others

(Rs. in lacs)

As per Financial Statements (Rs. in lacs)

Revenues 40657.57 (35692.68)

- (2728.88)

40657.57 (38421.56)

Results 11755.67 (6834.77)

- 2249.86 (- 426.38)

9505.81 (7261.15)

Assets 64467.77 (50432.93)

29670.96 (32089.52)

94138.73 (82522.45)

Liabilities 25686.35 (22800.13)

11060.28 (12480.85)

36746.63 (35280.98)

Particulars Domestic

(Rs. in lacs) Export

(Rs. in lacs) Total

(Rs. in lacs) Revenue 6615.67

(10697.82) 34041.90

(24508.42) 40657.57

(35206.24) Total Assets 94138.73

(82522.45) - -

94138.73 (82522.45)

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22. Financial and derivative instruments

Derivative contracts entered into by the Company and outstanding as at March 31, 2009

(a) For hedging currency and interest related risks

Particulars As at March 31, 2009 (Rs. In lacs)

As at March 31, 2008 (Rs. In lacs)

Currency Swap - 3038.44

Options - 316.75

Total - 3355.19

(b) All derivative and financial instruments acquired by the Company are for hedging purposes only.

(c) The year end foreign currency exposures that have not been hedged by any derivate instrument or otherwise are as under

Particulars Foreign Currency

(in Millions)

Indian Currency (Equivalent Rs. in Lacs)

Amounts receivable in foreign currency CHF NIL EUR 2.08 GBP 0.04 USD 2.18 AUD 0.30

2638.10

Amounts payable in foreign currency EUR 9.71 GBP 0 .14 JPY NIL USD 4.96

9143.30

23. On 3

rd January, 2009, the Company had made an application to the Ministry of Corporate Affairs, Government of India

(MCA), for granting exemption under Section 212(8) to the Company from attaching the Balance Sheet and Profit LossAccount of the subsidiaries under Section 212(1) of the Companies Act, 1956. The Company is still waiting for the saidapproval. Upon receipt of the order from the MCA, the Company will take appropriate action before dispatch of the Annualreports to the shareholders of the company. However, the key details of the subsidiaries are attached along with the consoli-dated financial statement.

24. Donation includes of Rs.100 Lacs given to Bhartiya Janta Party (Previous Year Rs. NIL).

25. Previous year figures have been regrouped / rearranged wherever necessary.

C. Additional information pursuant to the provisions of Clause 3, 4C and 4D of Part II of Schedule VI of the CompaniesAct, 1956.

The Ministry of Company Affairs, Government of India, vide its Order No. 46/10/2008-CL- III dated 14th May 2008 issuedunder Section 211(4) of the Companies Act, 1956 has exempted the Company from disclosures of quantitative details in theProfit and Loss Account under paras 3(i) (a), 3(ii)(a) and 3(ii)(b) of Part II, Schedule VI to the Companies Act, 1956.

(a) Particulars in respect of goods manufactured, licensed and installed capacities

Capacity Unit 2008-09 2007-08 Licensed Capacity MT NIL NIL Installed Capacity MT NIL NIL Manufactured MT 2528.58 3182.44**

** Manufactured quantity, as mentioned above does not include recovered solvent.

(b) Stock of finished goods and sales

2008-09 2007-08 Particulars

Quantity (MT) Value (Rs. in lacs)

Quantity (MT) Value (Rs. in lacs)

Opening stock 264.76 1592.65 207.44 918.17 Sales 2529.48 36863.43 3124.91 27109.16 Closing stock 263.86 3044.93 264.76 1592.65

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(c) Trading Purchase and Sales

2008-09 2007-08 Particulars Quantity (MT) Value

(Rs. in lacs)

Quantity (MT) Value

(Rs. in lacs)

Opening stock 23.55 10.54 0.85 4.42

Purchases 97342.33 3865.98 1650.34 7382.36

Sales 97365.88 4725.04 1627.64 8803.36

Closing stock NIL NIL 23.55 10.54

(d) Consumption Raw Materials, Stores and Spares

2008-09 2007-08 Particulars Rs. in lacs % Rs. in lacs %

Raw Materials including packing material

Imported 7774.94 61.70 7866.85 61.19

Indigenous 4825.54 38.30 4989.61 38.81

Total 12600.48 100.00 12856.46 100.00

Stores and Spares

Imported - - - -

Indigenous 82.91 100.00 96.42 100.00

Total 82.91 100.00 96.42 100.00

(e) CIF Value of Import

Particulars 2008-09

(Rs. in lacs)

2007-08

(Rs. in lacs)

Raw Materials 5622.73 6313.92

Capital Goods And services 626.75 191.97

Total 6249.48 8504.89

(f) Earnings in foreign currency


2007-08 (Rs. in lacs)

Export of Goods on FOB 30852.45 23492.13

Contract Research Service 2098.37 466.31

Total 32950.82 23958.44

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(g) Expenditure in foreign currency

Particulars 2008-09

(Rs. in lacs)

2007-08

(Rs. in lacs)

Subscription Membership Fees 55.24 7.21

Sales Commission 31.40 29.77

Foreign Traveling 8.60 7.61

Bank interest & Charges 21.33 16.22

Consulting & Professional Charges - 2.30

Interest on Foreign Currency Loans 525.06 601.21

Insurances & Legal Expenses 39.66 25.76

Contribution to common Expenses 44.58 73.91

Other Expenses 30.70 23.81

Total 756.57 787.80

Signatures to Schedules A to OAs per our report of even date attached For and on behalf of the BoardFor Deloitte Haskins & Sells J R Vyas Managing DirectorChartered Accountants D J Vyas Wholetime Director



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ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF SCHEDULE VI OF THE COMPANIES ACT, 1956

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE1 Registration Details

Registration No. L24230GJ1983PLC006329

State code No. 04

Balance Sheet Date 31-Mar-09

2 Capital raised during the year (Rs. In ‘000)

Public issue NIL

Right issue NIL

Bonus issue NIL

Conversion from FCCB 2026

Private issue NIL

3 Position of Mobilisation and Deployment of Fund (Rs.in ‘000)

Total Liabilities 8644403

Total Assets 8644403

Sources of Funds:

Paid up Capital 161394

Reserves and Surplus 5374757

Secured Loans 2321851

Unsecured Loans 583342

Application of Fund:

Net Fixed assets 4415650

Investments 1563740

Foreign Currency Monetary Item Transalation Difference Account 27549

Net current assets 2637464

4 Performance of Company (Rs.in’ 000)

Turnover/Other Income 4065758

Total Expenditure 3115177

Profit/(loss) Before other Adjustment & Tax 950581

Profit/(loss) After Tax 921451

Earnings per share (Rs.) 11.43

Dividend Rate 60%

5 Generic Name of Three Principal Products/Services of the Company

Product Description Item Code No. (ITC Code)

Bulk Drugs 292390.00

Phase Transfer Catalysts 294200.29

Fine Chemicals 292390.00

For and on Behalf of the BoardJ R Vyas Managing DirectorD J Vyas Wholetime DirectorD S Pandya Company Secretary

PLACE : AhmedabadDATE : 25th May, 2009

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Auditors’ Report on Consolidated Financial StatementsTo The Board of Directors ofDishman Pharmaceuticals and Chemicals Limited

1. We have audited the attached Consolidated Balance Sheet of Dishman Pharmaceuticals and Chemicals Limited (“theCompany”), and its subsidiaries, (collectively referred to as ‘the Group’) as at March 31, 2009 and the Consolidated Profitand Loss account and the Consolidated Cash Flow statement for the year ended on that date annexed thereto. Thesefinancial statements are the responsibility of the Company’s management and have been prepared by the management onthe basis of separate financial statements and other financial information regarding components. Our responsibility is toexpress an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatements. An audit includes examining, on a test check basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significant estimates made by themanagement, as well as evaluating the overall financial statement presentation. We believe that our audit provides a rea-sonable basis for our opinion.

3. a) We did not audit the financial statements of subsidiaries, joint ventures and associates, whose financial statementsreflect total assets (net) of Rs. 85,216 lacs as at March 31, 2009, total revenues of Rs. 81,695 lacs and net cash flowsamounting to Rs.934.84 lacs for the year ended on that date. These financial statements and other financial informa-tion have been audited by other auditors whose reports have been furnished to us, and our opinion is based solely onthe report of other auditors.

b) We have relied upon the unaudited financial statements of four of the subsidiaries, whose financial statements reflecttotal assets of Rs. 13,107 lacs as at 31st March 2009, total revenue of Rs. 10,101 lacs and net cash flows amountingto Rs. (0.04) lacs for the year ended. These unaudited financial statements have been furnished to us and our reportin so far as it relates to the amounts included in respect of these subsidiaries is solely based on these financialstatements certified by the management.

4. We report that the consolidated financial statements have been prepared by the Company’s management in accordancewith the requirements of the Accounting Standards (AS) 21, Consolidated Financial Statements, Accounting Standards (AS)23, Accounting for Investments in Associates in Consolidated Financial Statements and Accounting Standards (AS) 27,Financial Reporting of Interests in Joint Ventures notified by Companies (Accounting Standard) Rules, 2006.

5. Attention is invited to Note no.4 of Schedule “O” regarding accounting policy followed by the group for accounting of foreigncurrency exchange differences on settlement or restatement of foreign currency long term monetary liabilities as per theoption granted by the notification dated March 31, 2009 issued by the Ministry of Corporate Affairs, Government of India.Had the effect been given to only those companies which are registered in India under the Companies Act 1956, balance ofgeneral reserve would have been higher by Rs. 4373.24 lacs, cumulative balance of Profit and loss account and Profit forthe year would have been lower by Rs. 3067.17 lacs and balance of Foreign currency Monetary Item Translation DifferenceAccount as shown in the balance sheet would have been lower by Rs. 1264.49 lacs.

6. Based on our audit and comments as aforesaid and on consideration of reports of other auditors on separate financialstatements and on the other financial information of the components and accounts furnished by the management as ex-plained in Para 3 (b) above and to the best of our information and according to the explanations given to us, we are of theopinion that the attached consolidated financial statements read with significant accounting policies and notes thereon, givea true and fair view in conformity with the accounting priniciples generally accepted in India;

(i) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at March 31, 2009;(ii) in the case of the Consolidated Profit and Loss Account, of the profit of the Group for the year ended on that date; and(iii) in the case of Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date.

For Deloitte Haskins & SellsChartered Accountants

(Gaurav J. Shah)

Place: Ahmedabad Partner

Date: 25th May 2009 Membership No. 35701

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Consolidated Balance Sheet as at March 31, 2009

As at As atSchedule 31st March 2009 31st March 2008





SOURCES OF FUNDSShareholders Funds

Share Capital A 1,613.94 1,593.68Share Application Money 175.24 2,345.00Reserves and Surplus B 68,649.96 53,408.67

70,439.14 57,347.35Loan Funds

Secured Loans C 66,431.44 55,165.08Unsecured Loans D 5,936.02 7,835.78

72,367.46 63,000.86Deferred Tax Liability 2,279.36 1,892.38Foreign Currency Monetary Item TransalationDifference Account (See Note B 4 of Schedule O ) 989.03 -TOTAL 146,074.99 122,240.59APPLICATION OF FUNDSFixed Assets E

Gross Block 96,510.00 78,070.08Less: Depreciation and Amortization 19,527.32 11,177.68Net Block 76,982.68 66,892.40Capital Work-in-progress 22,272.07 14,847.11

99,254.75 81,739.51Investments F 137.52 132.53Goodwill on Consolidation 824.90 1,617.75Deferred Tax Assets 196.19 400.47Current Assets, Loans and Advances G Inventories 30,396.40 30,473.15 Sundry Debtors 14,938.19 17,620.70 Loans and Advances 18,652.26 11,269.49 Cash and Bank Balances 4,515.75 3,709.76Total Current Assets 68,502.60 63,073.10Less: Current Liabilities and Provisions H Current Liabilities 15,879.63 19,590.62 Provisions 6,961.34 5,132.15Total Current Liabilities and Provisions 22,840.97 24,722.77Net Current Assets 45,661.63 38,350.33TOTAL 146,074.99 122,240.59Significant Accounting Policies and ONotes to financial statements

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Consolidated Profit and Loss Account for the year ended on March 31, 2009

2008-09 2007-08Schedule (Rs. in lacs) (Rs. in lacs)

INCOMESales and Services 107,048.00 80,685.75

Less: Excise Duty & Sales Tax 812.22 378.13Net Sales 106,235.78 80,307.62

Other Income I 475.97 4,765.94Increase/(Decrease) in Stock J (510.45) 2,159.12

106,201.30 87,232.68EXPENDITURE

Materials and Manufacturing Expenses K 39,832.11 37,220.33Employee Emoluments L 27,301.21 21,539.92Administrative, Selling & Other Expenses M 12,446.10 8,419.57Interest and Finance Charges N 4,585.02 3,049.83Depreciation and Amortisation 6,388.91 4,720.19Less : Transferred From Revaluation Reserve (97.61) (1.67)

90,455.74 74,948.17Profit Before Tax 15,745.56 12,284.51

ProvisionsFor Current tax 1,405.38 835.00MAT Credit Entiltelment (1,031.10) (161.11)For Deferred Tax 664.85 (565.10)For Fringe Benefit Tax 32.77 24.53

Profit After Tax for the Year 14,673.66 12,151.19Prior Period Adjustments ( Net ) 12.04 8.03Short Provision of Deferred Tax in Earlier Years - 342.19Less: Transfer from General Reserve - (342.19)Short provision of Income Tax in earlier years 42.90 173.04Share of Income in Associate 0.39 0.56

Net Profit 14,619.11 11,970.68Balance Brought Forward 13,962.54 9,215.81

Amount Available for Appropriations 28,581.65 21,186.49Appropriations

Transfer to General Reserve 5,005.90 6,279.84Proposed Dividend 968.37 806.97Tax on Proposed Dividend 164.57 137.14

Balance Carried to Balance Sheet 22,442.81 13,962.54Earnings Per Share of the face value of Rs 2 eachBasic (Rs.) 18.13 15.70Diluted (Rs.) 17.98 14.69Significant Accounting Policies and ONotes to financial statements




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Consolidated Cash Flow Statement for the year ended on March 31, 20092008-09 2007-08

(Rs. in lacs) (Rs. in lacs)A. CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax as per the Profit and Loss Account 15,745.56 12,284.51Adjustments for :Depreciation & Amortization 6,291.30 4,718.53Foreigh Exchange Fluctuation (Unrealised) (11,535.25) (347.12)Interest Expense 4,935.35 3,390.98Interest Income (350.33) (341.16)Dividend Income (6.48) (9.87)Loss on sale of Fixed Assets(Net) 24.37 29.45Provision for doubtful debts and advances 565.46 118.79

(75.58) 7,559.60Operating profit before working capital changes 15,669.98 19,844.11Adjustments for :Trade Receivables 2,682.52 (7,901.16)Inventories 76.75 (695.14)Loans and Advances (7,090.62) (2,876.86)Trade Payables and Provisions 3,275.45 (2,383.41)

(1,055.90) (13,856.57)Cash Generated From Operations 14,614.08 5,987.54Taxes paid (1,425.62) (1118.59)Prior Period Adjustments (Net) (12.04) (8.03)Net Cash From Operating Activities 13,176.42 4,860.92

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (17,465.16) (26,916.58)Sale of Fixed Assets 22.67 58.11Purchase of Investments 5.38 1,267.88Share Application Money in Subsidary / Joint Venture (292.15) -Dividend Received 6.49 9.87Interest Received 350.33 341.15Net Cash used in Investing Activities (17,372.44) (25,239.57)

C. CASH FLOW FROM FINANCING ACTIVITIESShare Application Money 175.24 2,045.00Unrealised loss/(gain) on FCCB balance - 21.60FCCB Issue Expenses - (4.45)Proceeds from / (Repayment of) Long Term Loans 12,600.10 20,662.19Inter-Corporate Deposits taken / (repaid) (1,893.87) 2,092.49Interest Paid (4,935.35) (3,390.98)Dividend Paid (806.97) (762.55)Dividend Tax Paid (137.14) (129.61)Net Cash Generated from Financing Activities 5,002.01 20,533.69Net changes in Cash &Cash Equivalents (A+B+C) 805.99 155.04Cash and Cash Equivalentsat the beginning of the year 3,709.76 3,554.72Cash and Cash Equivalentsat the end of the year 4,515.75 3,709.76

805.99 155.04

Notes:-1 The Company has undrawn borrowing facilities of Rs.1000.68 Lacs (Previous Year Rs. 789.76 Lacs) at the end of the year.2 Cash and cash equivalalents include deposits with banks of Rs. 229.30 lacs (Previous Year Rs. 248.01 lacs) of margin

money, which amount is not available for immediate use.3 Interest paid is exclusive of, and purchase of fixed assets is inclusive of interest capitalised Rs. 621.00 lacs (Previous year Rs. 620.94 lacs)




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Schedules forming part of the Consolidated Balance Sheet



Schedule A : Share CapitalAuthorised:10,00,00,000 (P.Y. 10,00,00,000) Equity Sharesof Rs. 2 each 2,000.00 2,000.00Issued, Subscribed and Paid-up:8,06,97,136 (P.Y. 7,96,84,113) Equity Sharesof Rs.2 each fully paid up (Refer Note B. 8 of Schedule O) 1,613.94 1,593.68Of the above, 1,01,00,000 equity shares of Rs. 10 eachhave been issued as bonus shares by way ofcapitalisation of reserves in earlier years

1,613.94 1,593.68Schedule B : Reserves and SurplusRevaluation ReserveAs per last balance sheet 767.55 769.22Less : Written off Against Depreciation 97.61 1.67(Refer Note No. 3 in Schedule-E)

669.94 767.55Capital Redemption ReserveAs per Last Balance Sheet 249.02 249.02Less: Transferred to General Reserve 249.02 -

- 249.02

Currency Fluctuation ReserveAs per Last Balance Sheet 82.90 (182.81)Add:- Addition During the Year 4,343.11 265.71

4,426.01 82.90Securities PremiumAs per last balance sheet 23,002.82 9,328.77Add: Premium on conversion of FCCBs into shares during the year 1,722.14 12,700.76Add: Reversal of redemption premium on FCCBs converted during the year 115.65 977.75Less: Premium on redemption of FCCBs - -Less: FCCB Issue Expenses - 4.46

24,840.61 23,002.82

General ReserveAs per last balance sheet 15,343.84 10,671.70Less: Deferred tax liability for earlier years - 342.19Less: Adjustment as per transistional provisions of AS 15 (Revised 2005) - 1,265.51Less: Reversal of Exchange Difference Peratining to Long term ForeignCurrency Monetary Items - as per Transitional Provisions of AS-11(Refer note B 4 of Schedule O) 4,328.17 -Add: Transferred from Capital Redemption Reserve 249.02 -Add : Transferred from Profit & Loss Account 5,005.90 6,279.84

16,270.59 15,343.84Profit and Loss AccountBalance as per Profit and Loss Account 22,442.81 13,962.54

68,649.96 53,408.67

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Schedule C : Secured LoansTerm LoansForeign Currency Loans 47,940.07 38,597.93Rupee Loans 7,080.57 3,534.86Working Capital LoansForeign Currency Loans 4,136.31 8,906.35Rupee Loans 7,147.26 3,945.92Hire Purchase Loans 127.23 180.02Of the above term loans Rs 10624.65 Lacs (Previous YearRs.8817.59 lacs) are repayable within a period of twelve months

66,431.44 55,165.08Schedule D : Unsecured LoansLong Term LoansFrom Banks 714.02 1,603.96From Financial Institution 545.47 -Short Term LoansFrom Bank 3,178.21 1,500.00From Directors 127.22 23.90From Others 102.60 2,099.79Foreign Currency Convertible Bonds (FCCBs) 1,268.50 2,608.13Of the above long term loans Rs 714.02 Lacs (Previous YearRs. 2286.50 lacs) are repayable within a period of twelve months

5,936.02 7,835.78Schedule E : Fixed Assets (At Cost)

GROSS BLOCK DEPRECIATION NET BLOCKAs at Additions Deletions/ As at Forex As at As at Additions Deletions/ As at 31st Forex As at As at As at

1st April ‘08 during Adjustm- 31st Exchange 31st 1st April ‘08 during Adjustm- March ‘09 Exchange 31st 31st 31stthe year ents during March ‘09 Translation March ‘09 the year ents during Translation March ‘09 March ‘09 March ‘08

the year the year

Land 3,876.98 458.96 1,823.00 2,512.94 (27.43) 2,485.51 - - - - - - 2,485.51 3,876.98Buildings 12,304.58 2,866.80 - 15,171.38 951.37 16,122.75 1,062.51 651.36 - 1,713.87 (115.49) 1,598.38 14,524.37 11,242.07Plant & Machinery 36,767.54 5,090.18 124.46 41,733.26 2,270.56 44,003.82 6,542.35 3,393.58 119.50 9,816.43 980.43 10,796.86 33,206.96 30,225.19Laboratory Equipments 3,841.30 334.77 58.17 4,117.90 1,227.63 5,345.53 1,135.79 385.68 31.42 1,490.05 1,165.62 2,655.67 2,689.86 2,705.51Electrical Installations 2,006.42 710.16 - 2,716.58 - 2,716.58 343.13 117.55 - 460.68 - 460.68 2,255.90 1,663.29Furniture & Fixtures 936.59 90.43 7.50 1,019.52 115.13 1,134.65 286.69 127.02 7.50 406.21 (37.25) 368.96 765.69 649.90Office Equipments& Computers 1,297.43 685.48 22.84 1,960.07 72.63 2,032.70 626.16 398.09 21.89 1,002.36 68.95 1,071.31 961.39 671.27Vehicles 898.27 70.26 21.86 946.67 2.17 948.84 243.89 89.78 7.46 326.21 3.14 329.35 619.49 654.38Goodwill 13,579.88 257.33 - 13,837.21 2,878.21 16,715.42 102.63 144.78 - 247.41 (11.80) 235.61 16,479.81 13,477.25Intangible Assets 2,561.09 944.11 - 3,505.20 1,499.00 5,004.20 834.53 1,081.07 - 1,915.60 94.90 2,010.51 2,993.70 1,726.56

Total 78,070.08 11,508.48 2,057.83 87,520.73 8,989.27 96,510.00 11,177.68 6,388.91 187.77 17,378.82 2,148.50 19,527.32 76,982.68 66,892.40Capital Work InProgress 14,847.11 14,674.12 7,820.65 21,700.58 571.49 22,272.07 - - - - - - 22,272.07 14,847.11

Total Fixed Assets 92,917.19 26,182.60 9,878.48 109,221.31 9,560.76 118,782.07 11,177.68 6,388.91 187.77 17,378.82 2,148.50 19,527.32 99,254.75 81,739.51Previous Year 66,480.35 29,989.24 3,552.40 92,917.19 - 92,917.19 6,991.17 4,720.19 533.68 11,177.68 - 11,177.68 81,739.51 -

Notes:(1) Additions to fixed assets includes:

(a) Rs. 109.99 lacs on account of borrowing cost on borrowings for qualifying assets (Previous Year Rs. 282.65 lacs)(b) Rs. 451.19 lacs on account of exchange differences pertaining to long term foreign currency monetary liabilities (Previous year NIL)

(2) Capital Work in Progress includes:(a) Rs. 511.01 lacs on account of borrowing cost on borrowings for qualifying assets (Previous Year Rs. 338.29 lacs)(b) Rs. 445.59 lacs on account of exchange differences pertaining to long term foreign currency monetary liabilities (Previous year NIL)(c) Rs. 9215.12 lacs on account of advance against capital expenditure (Previous year Rs. 3983.03 lacs)

(3) The gross block of fixed assets includes Rs 841.66 lacs (Previous year Rs 841.66 lacs) on account of revaluation of certain fixed assets viz Land, Buildings and Plant & Machinery as on31st March 1995 and on 9th May 2006, on the basis of their replacement value as of that date determined by approved valuers. Consequent to the said revaluation there is an additionalcharge of depreciation of Rs. 97.61 lacs (Previous year Rs. 1.67 Lacs) and equivalent amount, has been withdrawn from revaluation reserve and credited to the profit and loss account.

(4) Out the the total deletion/adjustment in Land during the year Rs. 1823.00 Lacs pertains to Dishman Infrastructure Limited which it ceased to be a subsidary as on 16th March 2009.(5) Foreign Exchange Translation represents foreign exchange differecne arising due to transalation of certain foreign subsidiaries’s fixed assets at closing rate.

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Schedule F : Investments (At Cost)

A. Long Term

Quoted

2100 Equity Shares of Bank Of India

Rs. 10 each fully paid up 0.95 0.95

Unquoted

Others

Investment in Bhadr-Raj Holdings Private Limited 125.43 125.00

50,000 Equity Shares of Dishman Infrastructure Limited of Rs. 10 each 4.56 -

6244 Equity Shares of Nutan Nagarik

Sahakari Bank Ltd. of Rs. 25 each fully paid up 1.56 1.56

30 Shares of Stuti(Ambawadi) Association

of Rs. 100 each fully paid up 0.03 0.03

50 shares of The Sangeeta Plaza iftex office

Premises Co-op Society Limited of Rs. 50 each fully paid up 0.03 0.03

130 Equity Shares of B.R.Laboratories Pvt.

Ltd. Rs. 10 each fully paid up 0.01 0.01

100 Gold Coins of Rs.4,951 each. 4.95 4.95

137.52 132.53

Aggregate value of

Quoted Investments 0.95 0.95

Unquoted Investments 136.5680 131.5780

Notes:

1) Market Value of quoted investments is Rs. 4.61 Lacs(Previous Year Rs. 5.31 lacs).

2) During the year, 50632.801 units of Rs. 1000.20 each ofDSP Merill Lynch Liquidity Fund- Daily Dividend InvestmentOption were purchased at a cost of Rs. 506.34 lacs and sold/ redeemed

Schedule G : Current Assets, Loans and Advances

Inventories


Work in Process 6,222.79 8,209.46

Raw Materials and Goods in Transit 17,237.94 16,813.39

Packing Materials 26.15 34.66


30,396.40 30,473.15

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Sundry Debtors

(Unsecured and considered good, except stated otherwise)

Considered good 14,938.19 17,620.70

Considered doubtful 610.06 212.48

Provision for Doubtful Debts (610.06) (212.48)

14,938.19 17,620.70

Cash And Bank Balances

Cash on hand 13.13 65.82

Bank Balances

In Current Accounts 3,918.92 2,418.50

In Margin Money Accounts 229.30 248.01

In Fixed Deposit Accounts 354.40 977.43

4,515.75 3,709.76

Loans and Advances

(Unsecured and considered good, except stated otherwise)

Advances recoverable in cash or kind or for value to be received

Considered Good 13,080.87 7,330.38

Considered Doubtful 184.00 15.00

Provisions for Doubtful Advances (184.00) (15.00)

Share Application Money Pending Allotment 292.15 -

Balance with Central Excise Authorities 557.78 737.44

Advance Tax & Tax deducted at Source 3,534.66 3,040.56

MAT Credit Entitlement 1,186.80 161.11

18,652.26 11,269.49

Schedule H : Current Liabilities & Provisions

Current Liabilities

Sundry Creditors 4,947.84 6,028.44

Advances from Customers 4,155.52 3,718.81

Other Liabilities 6,776.27 9,843.37

15,879.63 19,590.62

Provisions

Provision for Taxation 3,479.52 2,085.87

Provision for Leave Enchashment 1,405.22 1,346.80

Provision for Gratuity 943.66 755.37

Proposed Dividend 968.37 806.97

Tax on Proposed Dividend 164.57 137.14

6,961.34 5,132.15

22,840.97 24,722.77

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2008-09 2007-08(Rs. in lacs) (Rs. in lacs)

Schedules forming part of the Consolidated Profit & Loss Account

Schedule I : Other Income

Dividend Income 6.49 9.87

Foreign Exchange Rate Fluctuation Gain - 3,785.68

Miscellaneous Income 493.86 155.48

Loss on Sale of Fixed Asset (24.37) (29.45)

Profit on sale of rights in immovable properties/assets - 844.36

475.97 4,765.94

Schedule J : Increase /( Decrease) In Stock

Closing Stock


Work In Process 6,222.79 8,209.46

12,927.26 13,437.71

Less : Opening Stock


Work In Process 8,209.46 6,510.67

13,437.71 11,278.59

(510.45) 2,159.12

Schedule K : Materials and Manufacturing Expenses

Cost of goods traded in 5,214.27 7,450.46

Raw Materials Consumed 26,690.33 24,027.90


Packing Materials Consumed 284.01 322.88

Material Processing Charges 237.91 404.38

Excise Duty 12.86 20.30

Power, Fuel & Electricity 3,288.26 2,367.23

Repairs and Maintenance

Plant & Machinery 2,866.75 1,681.80

Building 143.01 77.06

Others 141.79 92.02

Laboratory, Reaserch & Development Expenses 345.31 308.06

Factory Expenses 185.47 145.71

Other Manufacturing Expenses 322.99 223.28

39,832.11 37,220.33

Schedule L : Employees Emoluments

Salaries and Wages 22,587.81 18,315.75

Contributions to Provident and other funds 3,490.31 2,352.33

Welfare Expenses 666.42 491.08

Managerial Remuneration 556.67 380.76

27,301.21 21,539.92

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Schedule M : Administrative, Selling and Other Expenses

Rent, Rates & Taxes 2,913.14 2,180.70

Legal and Professional Charges 1,642.29 1,190.82

Conveyance and Travelling 1,244.68 1,012.38

Communication Expenses 363.59 314.53

Stationary and Printing 159.48 164.48

Subscriptions and Memberships 110.97 76.66

Insurance Premium 835.90 730.71

ECGC Premium 42.29 30.74

Provision for Doubtful Debts & Advances 565.46 118.79

Advance Licence Fees 142.09 97.61

Office Electricity Expenses 108.80 15.71

Recruitment Expenses 107.54 141.04

Auditors Remuneration 166.74 130.15

Sundry Balances Written Off (Net) 9.45 88.28

Foreign Exchange Rate Fluctuation Loss 1,452.59 -

Miscellaneous Expenses 419.78 344.09

Clearing & Forwarding 995.32 861.64

Sales Commission 340.26 266.09

Advertisement and Business Promotion 720.60 615.26

Donation 105.13 39.89

12,446.10 8,419.57

Schedule N : Interest and Finance Charges

On Fixed Loans 2,992.11 2,576.72

Others 1,943.24 814.26

4,935.35 3,390.98

Less : Interest Income (Gross of Tax Deducted

at Source Rs. 92.19 lacs [P.Y. Rs.30.68 lacs]) 350.33 341.15

4,585.02 3,049.83

Schedules forming part of the Consolidated Profit & Loss Account2008-09 2007-08


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Schedule : O - Significant Accounting Policies and Notes to Consolidated Financial Statements

A. Significant Accounting Policies

1. Principles of Consolidation

The Consolidated Financials Statements relate to Dishman Pharmaceutical and Chemicals Limited (“the Company”) andits various subsidiary companies, an associate and joint ventures as stated in B(1) below. The consolidated financialstatements have been prepared on the following basis:

a) In respect of the subsidiary companies, the financial statements have been consolidated on a line-by-line basis by addingtogether the book values of like items of assets, liabilities, income and expenses, after fully eliminating the intra- groupbalances and unrealized profit/losses on intra-group transactions as per Accounting Standard- AS 21 Consolidated FinancialStatements issued by the Institute of Chartered Accountants of India.

b) Investments in associates have been accounted under equity method as per Accounting Standard 23 – Accounting forInvestments in Associates in Consolidated Financial Statements issued by the Institute of Chartered Accountants of India.

c) Investments in joint ventures have been accounted under proportionate consolidation method as per Accounting Standard27 – Financial reporting of Interests in Joint ventures issued by the Institute of Chartered Accountants of India.

d) The difference between the costs of investment in the subsidiary companies, over the net assets at the time of acquisitionof shares in the subsidiary companies is recognized in the financial statements as goodwill or capital reserve as the casemay be.

e) The Company classifies its foreign operations considering the way in which they are financed and operate in relation to theCompany. On a review of the status of the Company’s foreign operations in accordance thereto, effective from 1st April2008, the classification of certain foreign subsidiaries has been changed from “Integral Foreign Operation” to “Non-IntegralForeign Operation”. Consequently, translation of the financial statements of such non integral foreign operations is effectedas under:

i) Income and expenses are translated at the average exchange rates prevailing during the year.

ii) All assets and liabilities, both monetary and non-monetary, are translated at the exchange rate prevalent at the dateof the balance sheet.

iii) The resulting net exchange differences are recognized as foreign currency translation reserve as part of Reservesand Surplus.

In case of other subsidiaries, which are integral in nature to the company’s operations, the translation of financialstatements is effected as under:

i) Income and expenses are translated at the average exchange rates prevailing during the year.

ii) Monetary items at the year end are restated at the year end rates. Non monetary foreign currency items are carriedat cost.

iii) The resulting net exchange differences are recognized in the profit and loss account.

f) As far as possible, the consolidated financial statements are prepared using uniform accounting policies for like transactionsand other events in similar circumstances and are presented in the same manner as the Company’s separate financialstatements.

g) The financial statements of the subsidiary companies, associates and joint ventures used in consolidation are drawn up tothe same reporting date as that of the Company i.e. March 31, 2009, except for certain subsidiaries and a joint venturecompany (as indicated by # in Note 1 and Note 3 of Part B below) for which financial statements as on reporting date arenot available. These have been consolidated based on the last available financial statements, which are till December 31,2008.

2. Other Significant Accounting Policies

These are set out under “Significant Accounting Policies” as given in the unconsolidated financial statements of DishmanPharmaceuticals and Chemicals Limited.

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B. Notes to Consolidated Financial Statements

1. The subsidiaries considered in the consolidated financial statement as at 31st March 2009 are:

Name of the Subsidiary Company Country of %of holding eitherIncorporation directly or through

subsidiariesDishman Europe Limited UK 100%Dishman USA. Inc. USA 100%Dishman Dubai FZE UAE 100%Dishman International Trading (Shanghai) Co. Limited # China 100%Dishman Pharma Solutia AG Switzerland 100%Dishman Pharmaceuticals and Chemicals (Shanghai)Company Limited # China 100%Dishman Switzerland Limited Switzerland 100%Dishman Netherlands B.V ### Holland 100 %Dishman Africa (Proprietory) Limited. * South Africa 100%Carbogen Amcis Limited * UK 100%Carbogen Amcis AG ^ Switzerland 100%Dishman Holland BV @ Holland 100%Dishman Australasia Pty Limited Australia 100%Dishman UK LLP! UK 100%Innovative Ozone Services Inc ** Switzerland 100%Dishman Japan Limited Japan 85%Carbogen Amcis (India) Limited India 100%

* Through Dishman Europe Limited! Though Dishman FZE and Dishman Pharma Solutia AG^ Through Dishman Pharma Solutia AG@ Through Dishman Netherlands B.V** Through Dishman Europe Limited and Dishman Switzerland Limited### Through Dishman FZEDishman Infrastructure Limited, which has ceased to be a subsidiary company from 17th March 2009, is consolidated till16th March 2009.

2. The associate company considered in the consolidated financial statements is:

Name of the Associate Country of incorporation

% of holding

Bhadr-Raj Holdings Pvt. Limited India 40% 3. The joint venture companies considered in the consolidated financial statements are:

Name of the Joint Venture Companies Country of incorporation

% of holding

Schutz Dishman Biotech Limited India 22.33% Dishman Arabia Limited# Saudi Arabia 50% CAD Middle East Pharmaceuticals Industries LLC# Saudi Arabia 30%

4. Change in accounting policyHitherto, the Company was recognising the exchange rate differences on settlement or restatement of foreign currencymonetary assets and liabilities in the profit and loss account as per the pre-revised Accounting Standard 11 ‘ Accountingfor effects of changes in foreign exchange rates ‘ issued by the Institute of Chartered Accountants of India.During the year, the Company has changed in accounting policy by exercising the option related to amortization foreignexchange fluctuation differences as per the notification dated March 31, 2009 issued by the Ministry of Corporate Affairs.As a result,

a) The exchange differences arising on restatement or settlement of long-term foreign currency monetary items in so far asthey relate to acquisition of a depreciable capital asset are adjusted to the cost of such asset and depreciated over thebalance life of the asset.

b) In other cases, they have been accumulated in ‘Foreign Currency Monetary Items Translation Difference Account’ andamortized over the balance period of such long-term asset/ liability but not beyond March 31, 2011 by recognition as anincome and expenses in each of such periods.

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Accordingly, Rs. 896.78 Lacs has been added to cost of fixed assets, Rs. 1,441.96 Lacs has been accumulated in ‘ForeignCurrency Monetary Items Translation Difference Account’, Rs. 4328.17 Lacs being exchange differences pertaining toearlier years has been adjusted to the balance of the general reserve in the balance sheet and Rs. 452.93 Lacs has beenamortized and added to profit and loss account during the year.The amount remaining to be amortized in subsequent periods as at the balance sheet date is Rs. 989.03 Lacs.Had the effect been given to only those companies which are registered under the Companies Act 1956 as required by thenotification dated 31st March 2009, balance of general reserve would have been higher by Rs. 4373.24 lacs, cumulative ofbalance of Profit and loss account and Profit for the year would have been lower by Rs. 3067.17 lacs and balance ofForeign currency Monetary Item Translation Difference Account would have been lower by Rs. 1264.49 lacs.

5. Further to Para A 1(e) of the schedule P, the shareholders funds as at 31st March 2009 is higher by Rs. 2394.93 lacs dueto change in classification of certain foreign subsidiaries from “ Integral Foreign Operation” to “Non-Integral foreign operation”w.e.f. 1st April 2008. The shareholders fund for the previous year would have been higher by Rs. 5017.41 lacs, had thischange been effected at the beginning of that year.

6. Contingent Liabilities

a) Guarantees given by Bank on behalf of Company Rs 741.53 Lacs (P.Y. Rs. 6668.95 Lacs)b) Letter of Credit in favor of suppliers Rs 460.58 Lacs (P.Y. Rs 1624.16 Lacs)c) Outstanding guarantee furnished to the bank in respect of Joint Venture Company Rs. 445.09 Lacs (P.Y. Rs.

38073.08 Lacs)d) Claims against the Company not acknowledged Rs. 5.06 Lacs (Previous Year Rs. 3.11 Lacs)e) Disputed central excise duty (including service tax) liability is Rs. 302.04 Lacs (Previous Year Rs. 263.66 Lacs)f) Disputed income tax liability Rs. 834.73 Lacs (Previous Year Rs. 3.92 Lacs) for various assessment years for which

appeals are pending with Appellate authorities, out of the said amount company has paid Rs.380.00 Lacs underprotest.

g) Disputed sales tax and central sales tax liability Rs 181.62 Lacs (Previous Year Rs. 99.74 Lacs), out of the saidamount company has paid Rs.24.94 Lacs under protest.

h) Bills discounted with banks Rs.3237.52 Lacs (Previous Year Rs. 2796.83 Lacs.)7. Estimated amount of contracts remaining to be executed on Capital Accounts not provided for (Net of Advances) Rs.

5068.45 Lacs (Previous Year Rs 1526.58 Lacs).

8. Share CapitalThe subscribed and paid up capital includes 10,13,023 equity shares of Rs. 2 each, allotted during the year, on conversionof 4,000 number of 0.5% Foreign Currency Convertible Bonds (FCCBs) of the principal amount of US $ 4 million.

9. Deferred Income TaxMajor components of deferred tax liability are as follows:

Particulars As at

March 31, 2009 (Rs. in lacs)

As at

March 31, 2008 (Rs. in lacs)

Deferred Tax Liability

Provision for Stock 260.97 305.63

Provision for Work in Progress 308.25 243.41

Asset Retirement Obligations 207.84 194.21

Deprecation 2437.55 2080.28

Others 132.17 523.33

Total Deferred Liability (A) 3346.78 3346.86

Deferred Tax Asset

Disallowance under Tax Rules 197.35 38.10

On Employee Benefits Liability 192.41 255.44

Carry forward Losses 873.85 1561.41

Total Deferred Tax Asset (B) 126 3.61 1854.95

Net Deferred Tax (Liability)/ Asset (B -A) (2083.17) (1491.91)

The net deffered tax liability of Rs. 2083.17 lacs (previous year Rs. 1491.91 lacs) has been presented in the balance sheetas follows :

Deffered tax assets 196.19 400.47

Deffered tax liabilities (2279.36) (1892.38)

Deferred tax liability (Net) (2083.17) (1491.91)

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10. Disclosure in respect of payments of lease rent for operating leases:The total of minimum lease rentals payable at the Balance sheet date are as under

Particulars As at March 31, 2009

(Rs. in lacs)


(Rs. in lacs)



For later than 5 years 9392.75 3965.29 Lease rental charge recognized in the profit and loss account Rs. 2472.08 Lacs (P.Y. 2082.23 Lacs)

11. Disclosure in respect of Assets acquired under Hire Purchase ArrangementThe total of minimum Hire installments payable at the Balance sheet date are as under


(Rs. in lacs)


(Rs. in lacs)



For later than 5 years - -

Hire charges recognized in the profit and loss account Rs 15.54 Lacs (Previous Year 8.95 Lacs)12. Balance of receivables, payables, and loans and advances parties are subject to confirmation. These balances are therefore,

subject to adjustments, if any, as may be required on settlement of these balances with the parties.13. Earnings Per Share (EPS)

Particulars 2008-09 2007-08 Basic EPS Profit attributable to equity shareholders Rs in lacs 14,619.11 11,970.68 Nominal Value of equity share Rs. 2 2 Weighed average number of ordinary equity shares for Basic EPS

Nos. 80,622,200 76,240,252

Basic EPS Rs. 18.13 15.70 Diluted EPS Profit attributable to equity shareholders Rs. in lacs 14,619.11 11,970.68 Add: Interest payable on outstanding Foreign Currency Convertible Bonds

Rs. in lacs 2.58 25.62

Profit after tax for Diluted EPS Rs. in lacs 14,621.69 11,945.06 Weighed average number of ordinary equity shares for Basic EPS

Nos. 80,622,200 7,62,40,252

Add: Adjustment for option relating to Foreign Currency Convertible Bonds

Nos. 7,10,850 5,092,538

Weighed average number of ordinary equity shares for Diluted EPS

Nos. 8,13,33,050 8,13,32,790

Diluted EPS Rs. 17.98 14.69

14. Related Party Disclosure

a) Related parties and their relationshipName of the related party Relationship

Bhadra-Raj Holdings Pvt. Limited Associate ConcernB.R. Laboratories Ltd Entity Controlled By Key Management PersonnelDishman Infrastructure Limited * Entity Controlled By Key Management PersonnelCAD Middle East Pharmaceutical Industries Joint Venture CompanySchutz Dishman Bio-tech Ltd. Joint Venture CompanyDishman Arabia Ltd. Joint Venture CompanyDishman Japan Limited Joint Venture Company

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Mr. Janmejay R.Vyas Key Management PersonnelMr. Rajnikant T.Vyas Key Management PersonnelMrs. Deohooti J.Vyas Relative of Key Management PersonnelMs. Aditi J Vyas Relative of Key Management PersonnelMs . Mansi J Vyas Relative of Key Management PersonnelMr. J.R.Vyas HUF Key Management Personnel is KartaMr. Arpit J.Vyas Relative of Key Management Personnel

* Dishman Infrastructure Limited ceased to be a subsidiary of Dishman Pharmaceuticals and Chemicals Limited effectivefrom 17th March 2009.

b) Transactions with related parties (Figures in brackets represent previous year data)

Subsidiary (Rs. In Lacs)

Associates / Joint

Ventures (Rs. in lacs)

Entity Controlled by

Key Management

Personnel (Rs. In Lacs)

Key Management Personnel & their

relatives (Rs. in lacs)

Total (Rs. in lacs)

Purchase of goods - (-)

2.70 (5.46)

2.59 (-)

- (-)

5.29 (5.46)

Sale of goods/Services - (-)

319.77 (73.63)

0.02 (-)

- (-)

319.79 (73.63)


- (-)

111.44 (113.84)

0.59 (-)

- (-)

112.03 (113.84)

Investments - (-)

- (233.22)

- (-)

- (-)

- (233.22)

Loans granted 2364.49 (-)

27.18 (708.73)

- (-)

3.00 (-)

2394.67 (708.73)

Capital Advances 1117.71 (-)

- (-)

688.11 (-)

- (-)

1805.82 (-)

Loans taken - (-)

80.78 (222.70)

168.42 (-)

500.00 (-)

749.20 (222.70)

Dividends paid - (-)

6.00 (6.00)

- (-)

483.36 (483.36)

489.36 (489.36)

Remuneration - (-)

- (-)

- (-)

557.57 (380.75)

557.57 (380.75)

Rent Paid - (-)

- (-)

- (-)

9.07 (4.00)

9.07 (4.00)

Guarantees Given - (-)

445.09 (-)

- (-)

- (-)

445.09 (-)

Interest Income 308.66 (-)

- (-)

13.24 (-)

- (-)

321.90 (-)

Reimbursement / Expenses Transferred

- (-)

0.68 (-)

- (-)

- (-)

0.68 (-)

Share Application Money given - (-)

167.15 (-)

125.00 (-)

- (-)

292.15 (-)

Outstanding balance (Dr)

- (-)

- (333.08)

5854.78 (-)

- (17.84)

5854.78 (350.92)

Outstanding balance (Cr)

- (-)

- (84.85)

- (-)

127.22 (14.14)

127.22 (98.99)

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Name of the related party 2008-09 (Rs. in lacs)

2007-08 (Rs. in lacs)

B.R.laboratories Pvt Ltd 2.59 1.25 Purchase of goods Schutz Dishman Bio-tech Ltd. 2.70 -

Schutz Dishman Bio-tech Ltd. 27.18 167.75 Dishman Infrastructure Limited 2364.49 - B.R.laboratories Pvt Ltd 167.83 -

Loans granted CAD Middle East Pharmaceuticals

Industries - 333.08

Mr. Janmejay R.Vyas 500.00 - B.R. Laboratories Ltd 168.42 222.70 Loans taken Schutz Dishman Bio Tec Ltd. 80.78 -

Capital Advances Dishman Infrastructure Ltd. 1805.82 - Interest received Dishman Infrastructure Ltd. 321.90 -

Bhadra-Raj Holdings P.Ltd. 6.00 6.00

Mr. Janmejay R.Vyas 250.43 250.43

Mr. Rajnikant T.Vyas 123.23 123.23 Mrs. Deohooti J.Vyas 109.65 109.65 Ms Aditi J Vyas 0.01 - Ms Mansi J Vyas 0.03 -

Dividends paid

Mr. Arpit J Vyas 0.01 - Mr. Janmejay R.Vyas 466.67 320.75

Mr. Rajnikant T.Vyas 24.00 24.00

Mrs. Deohooti J.Vyas 56.00 36.00 Ms Mansi J Vyas 5.45 -

Remuneration

Ms Aditi J Vyas 5.45 - Guarantees given Schutz Dishman Bio-tech Ltd. 445.09 -

c) Disclosure in respect of material transactions with related parties

15. Segmental Reporting1. The Company is in the business of manufacturing and marketing of

A. Contract Research & Contract Manufacturing (CRAMS).B. Bulk Drugs, Intermediates, Quats & Specialty Chemicals

2. Segment revenue of the above business segment includes sales export incentive and income from Research andDevelopment activity.

3. Segment revenue in geographical segment considered for disclosure is as follows:a) Domestic Salesb) Export Sales

The Segment revenue, results, assets and liabilities include the respective amounts identifiable to each of the segmentand amount allocated on a reasonable basis by management.

(Figures in brackets represent previous year numbers)

Particulars CRAMS (Rs. in lacs)

Bulk Drugs, Quats, Specialty Chemicals

(Rs. in lacs)

Total of Reportable Segments

(Rs. in lacs)

Sales 77737.82 (60162.09)

28497.96 (20145.53)

106235.78 (80307.62)

Other income 388.79 (3766.09)

87.18 (999.85)

475.97 (4765.94)

Segment revenue 78051.56 (64492.02)

28149.74 (20856.13)

106201.30 (85348.15)

Segment results 14739.63 (13038.71)

5591.15 (1875.28)

20330.78 (14913.99)

Segment assets 116370.44 (101660.40)

40249.97 (38580.48)

156620.41 (140240.88)

Segment liabilities 98822.61 (78802.83)

40636.85 (41064.52)

139459.46 (119867.35)

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Reconciliation of Reportable Segment with financial statements

Particulars Total of Reportable Segments

(Rs. in lacs)

Unallocated / Other (Rs. in lacs)

As per Financial Statements (Rs. in lacs)

Revenues 106201.30 (85348.15)

- (1884.53)

106201.30 (87232.68)

Results 20330.78 (14913.99)

(4585.23) (-2629.48)

15745.55 (12284.51)

Assets 156620.41 (140240.88)

12295.55 (6722.48)

168915.96 (146963.36)

Liabilities 139459.46 (119867.35)

29456.50 (27096.01)

168915.96 (146963.36)

16. Financial and derivative instruments Derivative contracts entered into by the Company and outstanding as atMarch 31, 2009.(a) For hedging currency and interest related risks

Particulars Foreign Currency Indian Currency(In Millions) (Equivalent

Rs. in Lacs)Amounts receivable in foreign currency CHF Nil 2638.10

EUR 2.08GBP 0.04USD 2.18AUD 0.30

Amounts payable in foreign currency EUR 9.71 9143.30GBP 0.14

JPY NilUSD 4.96

17. Previous year figures have been regrouped / rearranged wherever necessary.

Particulars As at 31st March 2009 As at 31st March 2008(Rs. in lacs) (Rs. in lacs)

Currency Swap - 3038.44Options - 316.75Total - 3355.19

(b) All derivative and financial instruments acquired by the Company are for hedging purposes only.(c) The year end foreign currency exposures that have not been hedged by any derivate instrument or otherwise are as

under

Signatures to Schedule A to OAs per our report of even date attached For and on behalf of the BoardFor Deloitte Haskins & Sells J R Vyas Managing DirectorChartered Accountants D J Vyas Wholetime Director



Particulars Domestic (Rs. in lacs)

Export (Rs. in lacs)

Total (Rs. in lacs)

Revenue 7557.56 (12340.82)

98643.74 (74891.86)

106201.30 (87232.68)

Total Assets 77524.01 (83487.81)

91661.95 (63475.55)

168915.96 (146963.36)

26th Annual Report


86

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26th Annual Report


87

DISHMAN PHARMACEUTICALS AND CHEMICALS LIMITEDRegistered Office: Bhadr-Raj Chambers, Swastik Cross Road,

Navrangpura, Ahmedabad – 380 009.

ATTENDANCE SLIPPLEASE FILL ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE MEETING HALL.

Joint shareholders may obtain additional Slip on request.

* Client Id. No. ________________ * DP. ID. No. ________________ Ledger Folio No. _____________

NAME AND ADDRESS OF THE SHAREHOLDER: _____________________________________________________

____________________________________________________________________________________________________

____________________________________________________________________________________________________

No. of Share(s) held: ________________________

I hereby record my presence at the 26th ANNUAL GENERAL MEETING of the Company held on Friday, the 31st dayof July, 2009 at 9.30 a.m. at S 3-5, Ground Floor, Ahmedabad Management Association, ATIRA Campus, Dr. VikramSarabhai Marg, Ahmedabad - 380 015.

______________________________

Signature of the shareholder or proxy

* Applicable for investors holding shares in electronic form._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

DISHMAN PHARMACEUTICALS AND CHEMICALS LIMITEDRegistered Office: Bhadr-Raj Chambers, Swastik Cross Road,

Navrangpura, Ahmedabad – 380 009.

FORM OF PROXY

I/We ______________________________________________________ of _______________________________ in

the District of _____________________________________ being a member/members of the above named Company

hereby appoint __________________________ of _________________ in the District of _______________ or failing

him/her ____________________of_____________________ in the district of ______________ as my/our proxy to

vote for me/us on my/our behalf at the Twenty-Sixth Annual General Meeting of the members of the Company to be

held on Friday, the 31st day of July, 2009 at 9.30 a.m. at S 3-5, Ground Floor, Ahmedabad Management Association,

ATIRA Campus, Dr. Vikram Sarabhai Marg, Ahmedabad - 380 015 and at any adjournment thereof.

Signed this ___________day of ______________________, 2009

* Client Id. No. ________________ * DP. ID. No. ________________

L.F. No. __________________ No. of share(s) held ________________

* Applicable for investors holding shares in electronic form.Notes:1. A Member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of himself.

2. A proxy need not be a member.3. The Proxy form duly completed must be deposited at the Registered Office of the Company not less than 48

hours before the time for holding the Meeting. The Proxy need not be a Member of the Company.

Signature1 RupeeRevenue

Stamp

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