abott annualreport2005

8/6/2019 Abott AnnualReport2005

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Abbott India Limited

How our Income was spent

2005 2004

(Rupees in % (Rupees in %Millions) Millions)

1. Materials 2958 64.4 2490 53.8

2. Salaries 250 5.4 244 5.3

3. Depreciation 40 0.9 42 0.9

4. Other Expenses 476 10.4 475 10.3

5. Tax 280 6.1 352 7.6

6. Dividend (Includes 310 6.7 605 13.1Corporate DividendTax)

7. Retained Earnings 281 6.1 418 9.0


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Report & Accounts 2005

Notice

Notice is hereby given that the Sixty-Second Annual General

Meeting of Abbott India Limited will be held at Y B ChavanAuditorium, General Jagannath Bhosale Marg, Mumbai 400 021 on

Wednesday, May 3, 2006 at 10.30 a.m. to transact the following

business:

Ordinary Business:

1. To receive, consider and adopt the Balance Sheet as at

November 30, 2005 and the Profit and Loss Account for the

financial year ended on that date and the Reports of the

Directors and Auditors.

2. To declare a dividend.

3. To appoint a Director in place of Mr Munir Shaikh, who retiresby rotation and, being eligible, offers himself for re-

appointment.

4. To appoint a Director in place of Mr R A Shah, who retires by

rotation and, being eligible, offers himself for re-appointment.

5. To appoint auditors and to fix their remuneration.

Special business:

6. To appoint a Director in place of Mr Mark Masterson, who

was appointed as Additional Director of your Company under

Article 113 of the Articles of Association of the Company, and

who holds office up to the date of this Annual GeneralMeeting by reason of Section 260 of the Companies Act,

1956; but being eligible offers himself for appointment, and in

respect of whom your Company has received notices in

writing from some members expressing their intention of

proposing him as a candidate for the off ice of Director, along

with a deposit of Rs 500 from each such member.

By Order of the Board

Vivek Mohan

Managing Director

Mumbai : March 7, 2006

Registered Office:

3-4 Corporate ParkSion Trombay Road

Mumbai 400 071

NOTES :

i. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED

TO APPOINT ONE OR MORE PROXIES TO ATTEND AND

VOTE INSTEAD OF HIMSELF, AND A PROXY NEED NOT BE

A MEMBER OF THE COMPANY. Proxies, in order to be

effective, should be duly stamped, completed, signed and

deposited at the Registered Office of your Company not less

than 48 hours before the meeting.

ii. An explanatory statement pursuant to Section 173 of the

Companies Act, 1956 relating to the special business to be

transacted at the meeting is appended hereto.

iii. The Register of Beneficial Owners, Register of Members and

Share Transfer Books of your Company will remain closed

from Tuesday, April 25, 2006 to Wednesday, May 3, 2006

(both days inclusive).

iv. Dividend recommended by the Directors, and approved by

the members at the Annual General Meeting will be paid on or

before June 2, 2006. In respect of shares held in physical

form, the dividend will be payable to those members whose

names appear on the Register of Members on May 3, 2006. In

respect of shares held in electronic form the dividend will be

payable to the beneficial owners of the shares as on April 25,

2006 as per details furnished by the Depositories for this

purpose.

v. To ensure against misappropriation of dividend warrants to

be mailed to them, members holding shares in physical form

who have not sent in their bank details are requested toprovide their bank account numbers, names and addresses

of the bank branches to your Company or its Registrars &

Share Transfer Agents for incorporating the same on the

dividend warrants.

vi. Members holding shares in physical form are requested to

immediately intimate to your Company or its Registrars &

Share Transfer Agents, changes, if any, in their registered

addresses along with the pin code number. Members holding

shares in dematerialised mode are requested to forward

intimation for change of address, if any, to their respective

depository participants.

vii. Reserve Bank of India has introduced Electronic Clearing

Service (ECS) for payment of dividend electronically to your

Bank. Your Company proposes to offer this facility to

members located at Ahmedabad, Bangalore, Bhubaneshwar,

Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur,

Kolkata, Mumbai, Nagpur, New Delhi, Patna, Pune and

Trivandrum.

viii. Members holding shares in dematerialized mode are

requested to instruct their respective Depository Participants

regarding bank accounts in which they wish to receive the


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Item No 6

Mr Mark Masterson graduated from Rhodes University, South

Africa in 1984 with a Bachelor of Commerce Degree, and joined

Abbott as Europe Area Product Manager Abbott Diagnostics

Division located in Germany in 1989. He has since served in

various management positions, including Marketing Manager in

the US, for Abbotts Diagnostics Division, General Manager,

Australia/New Zealand and General Manager, South Africa in

Abbotts International Division. His most recent position was

Divisional Vice President and Regional Director PAA for Abbotts

International Division. He was elected to his current position,

namely, Vice President, Pacific/Asia/Africa Operations on June 27,

2005. Prior to joining Abbott, Mr Masterson worked in sales and

marketing roles with Johnson & Johnson.

Presently he is on the Board of Abbott Australia PTY Limited,

Abbott Laboratories NZ Ltd. and Abbott Laboratories (Pakistan)

Ltd. He does not hold any shares of your Company.

His rich and varied experience will benefit the Board and help

provide strategic direction to your Company.

It is recommended that Mr Mark Masterson be appointed as

Director of your Company.

Mr Mark Masterson is interested in the resolution at Item No 6 of

the accompanying Notice relating to his appointment.

By Order of the Board

Vivek Mohan

Managing Director


Registered Office:

3-4 Corporate Park

Sion Trombay Road

Mumbai 400 071

Explanatory Statement pursuant to

Section 173 of the Companies Act, 1956

dividends. Further, the bank details as furnished by the

respective Depositories to your Company will be used for the

purpose of distribution of dividend through Electronic

Clearing Service (ECS) as directed by the Stock Exchanges.Your Company/Registrars & Share Transfer Agents will not

act on any direct request from members holding shares in

dematerialized form for change/deletion of such bank details.

ix. In terms of Sections 205A and 205C of the Companies Act,

1956, any dividend remaining unpaid for a period of seven

years from the due date of payment is required to be

transferred to the Investor Education and Protection Fund.

Accordingly unclaimed dividend for the year ended

December 31, 1997 has been transferred to Investor

Education and Protection Fund. Members who have not

encashed their dividend warrants for the year ended

December 31, 1998 or thereafter are requested to write to the

Company/Registrars & Share Transfer Agents.

x. As per the Companies Act, 1956, facility for nominations is

available for shareholders in respect of the shares held by

them. Shareholders who wish to obtain Nomination forms

may write to the Company, or its Registrars & Share Transfer

Agents or to their respective depository participants, as the

case may be.

xi. Shareholders holding shares in identical order of names in

more than one folio are requested to write to the Registrars &

Share Transfer Agents of the Company to enable them to

consolidate their shareholding into one folio.

xii. Trading in your Companys shares through stock exchange is

permitted only in dematerialized/electronic form. The equity

shares of your Company have been inducted in both National

Securities Depository Limited as well as Central Depositories

Services (India) Ltd to enable shareholders to hold and trade

the securities in dematerialised/electronic form. In view of the

numerous advantages offered by the Depository System,

members holding shares in the Company in physical form are

requested to avail of the facility of dematerialisation.


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Report of the Directors

TO THE MEMBERS

Your Directors have pleasure in presenting the Sixty-

Second Annual Report and Audited Accounts of the

Company for the year ended November 30, 2005.

Financial Results (Rupees in Millions)

Year ended Year ended

Nov. 30, 2005 Nov. 30, 2004

Sales 4446.7 4050.7

Profit before tax 871.1 1374.5

Profit after tax 591.6 1022.5

Balance brought forward 1435.7 1120.2

Profit available for appropriation 2027.3 2142.7

Appropriations:

Dividend (Proposed) 267.4 534.8

Corporate Dividend Tax *42.6 69.9

Transfer to Reserves 59.2 102.3

Balance carried forward 1658.1 1435.7

*includes Rs 5.1 million for the year ended November 30,

2004

Dividend

Your Directors recommend a dividend of Rs 17.50 per

share on 15,280,100 fully paid-up Equity Shares of Rs 10

each of the Company for the year ended November 30,

2005. The proposed dividend, if approved at the Annual

General Meeting, will absorb a sum of Rs 267.4 million

(Previous year: Rs 534.8 million) and Corporate Dividend

Tax of Rs 37.5 million. The Corporate Dividend Tax is

provided at the rate applicable on the day on which the

Accounts were approved by the Board of Directors.

Reserves

The total Reserves as on November 30, 2005 amounted to

Rs 2011.6 million comprising of Amalgamation Reserve

Rs 3.8 million, Capital Reserve Rs 52.3 million, Capital

Redemption Reserve Rs 9.2 million, Revenue Reserve

Rs 288.2 million and Surplus as per Profit & Loss Account

amounting to Rs 1658.1 million.

Directors Responsibility Statement

Pursuant to Section 217 (2AA) of the Companies Act, 1956

your Directors state that:

1. In the preparation of the annual accounts, the

applicable accounting standards have been followed.

2. Your Directors have selected such accounting policies

and applied them consistently and made judgments

and estimates that are reasonable and prudent so as to

give a true and fair view of the state of affairs of the

Company for the year ended November 30, 2005, and

of the profit of the Company for that period, except for

the following:

The depreciation on computers, photocopiers,

facsimile machines, modems and appliances is

provided at the rate of 80% (See Schedule 17

Significant Accounting Policies 4).

3. Your Directors have taken proper and sufficient care

for the maintenance of adequate accounting records

in accordance with the provisions of this Act for

safeguarding the assets of the Company and forpreventing and detecting f raud and other irregularities.

4. Your Directors have prepared the accompanying

Annual Accounts for the year ended November 30,

2005, on a going concern basis.

Fixed Deposits

No fixed deposits were accepted during the year.


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Information pursuant to Section 217 of the

Companies Act, 1956

The information required to be disclosed under Section

217(1)(e) of the Companies Act, 1956 read with the

Companies (Disclosure of Particulars in the Report of the

Board of Directors) Rules, 1988 with respect to

conservation of energy, technology absorption and foreign

exchange earnings/outgo is given in Annexure I and forms

part of this Report.

The information required under Section 217(2A) of

the Companies Act, 1956, read with the Companies

(Particulars of Employees) Rules, 1975 is given in Annexure

II and forms part of this Report. As per the provisions of

Section 219(1)(b)(iv) of the Companies Act, 1956, the

Report and Accounts is being sent to the shareholders of

the Company, excluding the statement of particulars of

employees under Section 217(2A) of the Companies Act,

1956. Any shareholder interested in obtaining a copy

of the said statement may write to the Company at its

Registered Office.

Directors

Mr Thomas Chen resigned as Director of the Company with

effect from September 21, 2005. The Board placed on

record its sincere appreciation for his guidance and

services rendered by him.

At a meeting of the Board of Directors held on September

21, 2005, Mr Mark Masterson was appointed as additional

director. Mr Mark Masterson holds office upto the date of

the forthcoming Annual General Meeting. Notices in writing

have been received from some members expressing their

intention to propose the appointment of Mr Mark

Masterson as candidate for the office of director of our

Company. Your Directors have pleasure in recommending

his appointment.

Under Article 124 of the Articles of Association of the

Company, Mr Munir Shaikh and Mr R A Shah retire by

rotation at the forthcoming Annual General Meeting and

being eligible, offer themselves for re-appointment.

Your Directors have pleasure in recommending their

appointment.

Auditors

Messrs Deloitte, Haskins & Sells, Chartered Accountants,

retire at this Annual General Meeting and are eligible for

re-appointment as Auditors.

Health, Safety and Environment

The Company continues to accord utmost priority to the

areas of health, safety and environment. Compliance with

relevant regulation on these issues is an integral part of the

Companys operating philosophy.

i. Environment

The Goa Plant has obtained Hazardous Waste

authorization from the State Pollution Control Board

and is treating its wastes as per the directives of the

authorization. A modern effluent treatment plant is

operational at the Plant, treating and discharging

wastewater with parameters of treated effluent well

below the limits set by the local Pollution Control

Board. The treated effluent is recycled for horticulture

within the site. Water recycling activities have been

encouraged and implemented. The emissions from

boiler and generator stacks are monitored regularly

and are well below the limits set by the State Pollution

Control Board.

ii. Health and Safety

As part of its social responsibility towards promoting

health and safety, the Company has formed a Safety

Committee which includes representation from

workmen and meets regularly to review issuesimpacting plant safety and employee health. Training

programmes are conducted regularly on various health

and safety issues including dealing with epidemics,

work safety, road safety, first-aid, etc. An Automatic

External Defibrillator is installed at the Plant and

employees have been trained in its use. Detailed first-

aid training has been imparted to about 25% of

employees.


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Routine audits for Environment, Health and Safety

compliance are conducted with the assistance of personnel

from Abbotts global team.

Technology Absorption and Development

Development of new formulations and dosage forms and

modification of existing ones for lifecycle management,

cost containment and improved productivity is an ongoing

process and the Company is constantly engaged in

activities of development and clinical research. The R&D

Centre of the Company located at Goa, which is approved

by the Department of Scientific and Industrial Research,

has made significant contributions towards its assigned

goals of product and process development and cost

reduction through import substitution and vendor

development.

Employees

Relations with the employees remained cordial and your

Directors would like to place on record their appreciationfor the dedication and commitment shown by them.

Reports on Corporate Governance and

Management Discussion & Analysis

A Report on Corporate Governance along with a certificate

from the Auditors of the Company regarding compliance of

the conditions of Corporate Governance as also a

Management Discussion & Analysis Report pursuant to

Clause 49 of the Listing Agreement are annexed hereto.

For and on behalf of the Board

Vivek Mohan R A Shah

Managing Director Director



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Annexure I

Information pursuant to the Companies (Disclosure of

Particulars in the Report of the Board of Directors)Rules, 1988.

1. Conservation of Energy

(I) Energy conservation measures taken:

Fully automatic packaged type boilers having fuel

efficiency in excess of 80% have been installed.

Steam condensate is being recovered for re-use in

boilers.

Power factor improvement capacitors have been

installed for reducing the reactive power

consumption.

Maximum demand controller has been installed for

limiting development of peak demand.

(II) Additional investments and proposals, if any,

being implemented for reduction in consumption

of energy:

Nil.

(III) Impact of the measures at (I) and (II) above for

reduction of energy consumption and consequent

impact on the cost of production of goods:

The installation of capacitors and maximum

demand cont roller has resulted in lower maximum

demand for power.

(IV) Total energy consumpt ion and energy

consumption per unit of production:

A. Power & Fuel Consumption

2005 2004

(a) Electricity

(i) Purchased

(Unit Millions) 3.0 1.8

Total amount

(Rs Millions) 20.1 9.1

Rate/Unit (Rs) 6.63 5.18

(ii) Own Generation

Through Diesel

Generator

Through Steam

turbine/Generator N.A. N.A.

2005 2004

(b) Coal N.A. N.A.

(c) Furnace Oil

Quantity (kilo ltrs) 40.50 58.31

Total amount

(Rs Millions) 0.6 0.8

Average rate (Rs) 15.65 13.09

(d) Others/Internal

Generation N.A. N.A.

B. Consumption per Unit of Products

Since the Goa Plant manufactures different

dosage forms it is not practical to apportionutility cost based on available records.

2. Technology Absorption

A. Efforts made in technology absorption.

Following were the achievements of the

Companys R&D Centre at Goa:

1. Development of new Pharmaceutical

Products.

2. Establishing new technical capabilities.

3. Import substitutions and new vendor

development.

4. Optimization, standardization and

improvement of products and manufacturing

processes.

The R&D Centre developed new pharmaceutical

products in the areas of liquid orals, tablets,

capsules and topical preparations. It also

undertook the quality improvement of existing

products and manufacturing processes to

meet ever-changing regulatory and quality

requirements.

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

A well focused R&D effort has helped the

company in launching a number of new products

in the Indian market. Manufacturing process

optimization helped to bring in improved quality

and efficiency and substitution of imported

materials helped to reduce cost and to improve

the efficiency of supply chain. R&D work has also

resulted in improving the stability of some of the

products.

Cost of own

generation is

not comparable

as the generator

sets were

operated for trial

runs.


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C. Future plan of action.

R&D activities will continue to focus on new

product development, improvement in the existing

formulations/process and improving operationalefficiencies.

D. Expenditure on R&D.

Rs in Million

(a) Capital 0.5

(b) Recurring 15.1

(c) Total 15.6

(d) Total R&D expenditure

as a percentage of total turnover 0.4 %

E. Technology absorption, adaptation andinnovation.

(a) Efforts, in brief, made towards technology

absorption, adaptation and innovation.

The Company on an ongoing basis interacts

with Abbott, USA, for technical expertise

for products of high technology and

pharmaceutical formulations.

(b) Benefits derived as a result of the above

efforts, e.g., product improvement, cost

reduction, product development, import

substitution, etc.

The Company has benefited substantially as a

result of the emphasis on innovation.

Reduction in energy consumption and

improvement in product quality are some of

the benefits achieved in the current year.

(c) Imported technology (imported during the last

five years reckoned from the beginning of the

financial year).

Nil

3. Foreign Exchange Earnings and Outgo

(I) Activities relating to exports; initiatives taken to

increase exports; development of new export

markets for products and services, and export

plans.

The total foreign exchange earned during the year

amounted to Rs 35.3 million, which includes a

consideration of Rs 1.7 million towards sales

promotion and Rs 33.6 million towards exports.

(II) Total foreign exchange used and earned.

A. Total foreign exchange used

Rs in Million

(a) On import of raw materials,

finished goods, consumable

stores and capital goods 113.4

(b) Expenditure in foreign

currencies for technical

support charges, data center

charges, business travel,

subscription, commission on

export sales, registration

fees, etc. 10.1

(c) Remittance during the year

in foreign currency on account

of dividend 330.0

B. Total foreign exchange earned 35.3






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Report on Corporate Governance

Name of Directors Category: Attendance at Membership Membership/

Executive/ of other Board(s) Chairmanship of

Non-Executive/ Board Annual General (including alternate other Board

Independent Meetings Meeting directorships and Committees(April 26, 2005) directorships in

private companies)

Mr Munir Shaikh Non-Executive Director 7 Yes 3*

Chairman of the Board

Mr Vivek Mohan Executive Director 7 Yes

Managing Director

Mr R A Shah Non-Executive, 6 Yes 23* 10

Independent Director (includes

Chairmanship o f4 companies)

Mr Ashok Dayal Non-Executive, 5 Yes 4 1

Independent Director

Mr Thomas Chen Non-Executive Director 1 No 1*

(Resigned with effect

from 21.09.2005)

Mr David Wardell Non-Executive Director 1 No 3*

Mr Mark Masterson Non-Executive Director 1 No 3*

(Appointed as

Additional Director

with effect from 21.09.2005)

* including directorships of companies incorporated outside India.

(c) During the financial year 7 Board Meetings were held on the following dates:

December 8, 2004, January 25, 2005, March 22, 2005, April 26, 2005, June 28, 2005, August 3, 2005, and

September 21, 2005.

1. Companys Philosophy on Corporate Governance

The Companys philosophy on corporate governance is to

conduct its affairs in a manner which is transparent, clear

and evident to those having dealings with or having a stake in

the Company, namely shareholders, lenders, creditors and

employees. The Companys philosophy on corporate

governance is thus concerned with the ethics, values and

morals of the Company and its directors, who are expected

to act in the best interests of the Company and remain

accountable to shareholders and other beneficiaries for

their action.

2. Board of Directors

(a) The present strength of the Board is six directors(1 executive director and 5 non-executive directors, of

which two are independent directors) who are

professionals and have expertise in their respective

functional areas.

(b) The attendance at Board Meetings and the last Annual

General Meeting of each of the directors during the

financial year of the Company was as under:


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3. Audit Committee

The Audit Committee of members of the Board comprises of

three non-executive directors of which, Mr Ashok Dayal, who

is Chairman of the Audit Committee and Mr R A Shah, areindependent directors. Mr Munir Shaikh is the other member

of the Audit Committee. Mr G S Kurmi, Company Secretary,

was the Secretary of the Audit Committee until his resignation

on February 28, 2006.

The role of the Audit Committee and its terms of reference are

in accordance with the provisions of Clause 49 of the Listing

Agreement and include oversight of the companys financial

reporting process, reviewing the financial statements,

reviewing the adequacy of internal audit function,

discussions with internal and statutory auditors periodically

about their scope of audit and adequacy of internal control

systems, discussing with internal auditors on any significant

findings. The Audit Committee also acts as a link between the

Board of Directors and the internal and statutory auditors.

The duly constituted Committee met five times during the

financial year on January 25, 2005, March 22, 2005, April 26,

2005, June 28, 2005 and September 21, 2005 and these

meetings were attended by all the members.

4. Shareholders/Investors Grievance Committee

This Committee comprises of Mr Ashok Dayal, who is a non-

executive independent director and Chairman of the

Committee. Mr Vivek Mohan, the Managing Director, is the

other member of the Shareholders/Investors Grievance

Committee. Mr G S Kurmi, Company Secretary, was theCompliance Officer until his resignation on February 28,

2006.

During the financial year, the Committee held 4 meetings on

January 25, 2005, March 22, 2005, June 28, 2005 and

September 21, 2005.

A summary of complaints received and resolved by the

Company during the year ended November 30, 2005 is given

below:

Received Cleared

Non-receipt of share certificates

duly transferred 13 13

Non-receipt of dividend warrants 43 43

Miscellaneous 58 58

Letters from SEBI, Stock

Exchanges and Department of

Company Affairs 2 2

As on November 30, 2005, there were no pending share

transfers. Barring certain cases pending in Courts/Consumer

Forums relating to disputes over the title of the shares in

which the Company has been made a party, no investor

complaint is pending for a period exceeding one month.

5. Remuneration of Directors

The remuneration of the directors during the financial year

was as follows:

A. Executive Directors

All elements of remuneration package i.e. salary,

benefits, bonuses etc. paid to the Executive Director,

Mr Vivek Mohan, amount to Rs 20.3 million.

(a) The above remuneration includes commission/

performance linked incentive or bonus of Rs 2.1

million, based on certain pre-agreed criteria.

(b) The Agreement with Mr Vivek Mohan is for a period

of 5 years from November 1, 2004 and terminable

by 6 months notice on either side as per the

approval dated July 25, 2005 received from the

Central Government, however, the Company may

opt to pay 6 months remuneration including salary,allowances, benefits/perquisites in lieu of notice.

(c) Presently, the Company does not have a Scheme

for grant of Stock Options to the Directors.

B. Non-executive Directors

Two of the Non-Executive Directors, Mr R A Shah and

Mr Ashok Dayal were paid sitting fees totaling

Rs 55,000/- and Rs.70,000/- respectively for attending

Board meetings and various Committee meetings of the

Company.

The Company paid fees amounting to Rs 0.4 million to

its Solicitors, M/s Crawford Bayley & Co., of which

Mr R A Shah is a partner, for professional services

rendered to the Company. The quantum of professional

fees received by M/s Crawford Bayley & Co. from the

Company forms a very small portion of the total

revenues of M/s Crawford Bayley & Co. and less than a

fraction of the total revenues of the Company.

C. None of the NonExecutive Directors and relatives is

holding any shares of the Company except for Mr R A

Shah who through relatives holds 5098 shares.

6. General Body Meetings

Financial Date Time LocationYear

2002 April 29, 3.00 p.m. Y B Chavan Auditorium

2003 General JagannathBhosale MargMumbai 400 021

2003 April 27, 3.00 p.m. Y B Chavan Auditorium2004 General Jagannath

Bhosale MargMumbai 400 021

2004 April 26, 3.30 p.m. Y B Chavan Auditorium2005 General Jagannath

Bhosale MargMumbai 400 021

At present, no special resolutions are proposed to be

conducted through postal ballot.


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7. Disclosures

There were no transactions of a material nature with the

Directors or the management, the Companys subsidiary or

relatives of the Directors during the financial year of theCompany which could have potential conflict with the

interests of the Company at large. The Register of Contracts

containing the transactions in which Directors are interested

is placed before the Board regularly for its approval.

Transactions with related parties are disclosed in Note No 22

of Schedule 17to the Accounts in the Annual Report.

There were no instances of non-comp liance by the Company

on any matters related to the capital markets or penalties/

strictures imposed on the Company by the Stock Exchange

or SEBI or any statutory authority during the last 3 financial

years.

8. Means of Communication

Quarterly results are published in one English daily

newspaper (Free Press Journal) circulating in the country and

one Marathi newspaper (Navshakti) published f rom Mumbai.

These quarterly results are also made available on the

website of the Company (www.abbott.co.in) and on SEBIs

EDIFAR (Electronic Data Information Filing And Retrieval)

website (www.sebiedifar.nic.in). During the financial year, the

Company has not made any presentation to the institutional

investors or analysts.

The Management Discussion and Analysis Report forms a

part of this Annual Report.

9. General Shareholder Information

Annual General Meeting : Wednesday, May 3, 2006

at 10.30 a.m

Y B Chavan Auditorium,

General Jagannath Bhosale

Marg,

Mumbai 400 021

Financial Calendar : The Company fol lows December

1 November 30 as its financial

year. The unaudited results for

every quarter beginning from

December are declared in the

month following the quarter

except for the last quarter, for

which the audited results are

declared within 3 months of the

close of the financial year

Date of Book Closure : April 25, 2006 to

May 3, 2006 (both days

inclusive)

Dividend Payment Date : On or before June 2, 2006

Listing On Stock : Bombay Stock Exchange

Exchange Limited

Stock Code : 500488

Market Price Data (High/Low during each month) on BSE:

Month High Low

December 2004 768.00 613.60

January 2005 745.00 625.00

February 2005 749.00 605.00

March 2005 695.00 615.00

April 2005 702.00 620.00

May 2005 682.00 630.00

June 2005 694.90 582.00

July 2005 690.00 595.00

August 2005 740.00 640.00

September 2005 688.95 611.00

October 2005 678.00 624.95

November 2005 743.00 647.00

Performance in comparison to broad based indices:

Abbott Share Price / BSE 100

Year 2004 - 2005

Registrars and Share : Sharepro Services (India)Transfer Agents Private Limited,

Satam Estate, 3rd Floor,

Above Bank of Baroda,

Cardinal Gracious Road,

Chakala, Andheri (East),

Mumbai 400 099.

Phone : 2834 82 18 / 2832 98 28 /

2821 51 68

Fax : 2837 56 46

Email : [email protected]


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10. Share Transfer System

To expedite the process of share transfers, the Board has

delegated the powers of share transfers to a Share Transfer

Committee comprising of the officers of the SecretarialDepartment, who attend to the share transfer formalities at

least once in a fortnight. The Share Transfer Committee also

considers transmission of shares, issue of duplicate

certificates and issue of certificates on split/consolidation/

renewal. The business transacted at the Share Transfer

Committee meetings is also noted at every meeting of the

Board.

Shares lodged for transfer at the Registrars office are

normally processed within 15 days from the date of

lodgement, if the documents are clear in all respects. All

requests for dematerialisation of shares are processed and

the confirmation is given to the depositories within 15 days.

11. Distribution of shareholding as on November 30, 2005

Number of Number Percent- Number Percent-

Equity share of Share- age of of shares age of

holdings holders Share- share-

holders holding

1 - 50 5,636 40.71 149,074 0.98

51 - 100 3,171 22.90 282,549 1.85

101 - 500 3,493 25.23 868,743 5.69

501 - 1000 831 6.00 611,268 4.00

1001 - 5000 643 4.65 1,293,428 8.46

5001 - 10000 36 0.26 244,849 1.60

10001 & above 34 0.25 11,830,189 77.42

Total 13,844 100.00 15,280,100 100.00

12. Shareholders profile as on November 30, 2005

Sr. Category of Shareholders No. of % to

No. shares held total

1. Foreign Collaborators 9,428,184 61.70

2. Banks 6,400 0.04

3. Financial Institutions 1,352,722 8.85

4. Foreign Institutional Investors 214

5. Overseas Corporate Bodies 200

6. Mutual Funds 835,384 5.47

7. Domestic Companies 158,308 1.05

8. Non-Resident Indians 44,946 0.29

9. Others 3,453,742 22.60

Total 15,280,100 100.00

13. Dematerialisation of Shares as on November 30, 2005

92.30% of the Companys total paid-up share capital

(including 61.7% held by the parent company) representing

14,103,804 shares are held in dematerialised form. TheCompanys shares are traded on BSE A Group.

14. Plant Location

L-18/19, Verna Industrial Estate, Goa

15. Address for correspondence

Shareholders should address all correspondence to the

Companys Registrars and Share Transfer Agents, Sharepro

Services (India) Private Limited, at the address mentioned

above or at :

912, Raheja Centre, Free Press Journal Road,

Nariman Point, Mumbai 400 021

Contact Person: Ms Mazrine Wadia/Mr Ramesh Babu

Telephone : 2288 15 68 / 2288 15 69

Fax : 2282 54 84

Email : sharepro_services@roltanet .com

16. Appointment/Re-appointment of Directors

(1) As required by Clause 49.VI.A. of the Listing Agreement,

the profile of Mr Mark Masterson is given in the

Explanatory Statement forming part o f the Notice for t he

62nd Annual General Meeting.

(2) Mr Munir Shaikh and Mr R A Shah retire by rotation at the

ensuing Annual General Meeting and are eligible for

re-appointment.(a) Mr Munir Shaikh joined Abbott in 1968, and has

since served in several management posit ions with

Abbott in Asia, Latin America and United States,

including General Manager Pakistan, General

Manager Caribbean, Director Business

Development, Pacific and Far East, Regional

Director Pacific/Asia/Africa, Regional Director

Southeast Asia/ India in the Abbott International

Division. He was named Vice-President and

Regional Director, Southeast Asia/Sub-continent

Korea in 2003 and most recently, appointed

Divisional Vice President, Southeast Asia/Middle

East/Africa, Abbott Nutrition International, in June

2005, based in Singapore.

He is a Fellow of The Institute of Chartered

Accountants in England and Wales. He is also a

Director on the Board of Abbott Laboratories

(Singapore) Pte Ltd, Abbott Laboratories (Pakistan)

Limited and Pt Abbott Indonesia.

(b) Mr R A Shah is a leading Solicitor and a Senior

Partner of M/s Crawford Bayley & Co., a firm of

Solicitors and Advocates. He specialises in a broad


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15


spectrum of corporate laws. Mr R A Shah and his

relatives hold 5098 shares in the Company.

Presently he is the Chairman/Director and

Chairman or member of Audit Committees of thefollowing companies:

Name of the Company Designa- Chairmanship

tion or Membership

of Audit

Committee of

Board

1. Godfrey Phillips Chairman

India Ltd

2. Roche Scientific Chairman

Co (I) Pvt Ltd

3. Pfizer Limited Chairman Chairman

4. Colgate Palmolive (I) Vice- Chairman

Ltd Chairman

5. Asian Paints Director

(I) Ltd

6. Atul Limited Director

7 . The Bombay Dyeing & Director Chairman /

Mfg. Co. Ltd Member

8. BASF India Ltd Director Member

9. Colour Chem Ltd Director Member

10. Clariant India Ltd Director

11. Jumbo World Director

Holdings Ltd

(Foreign Company)

12. Deepak Fertilizers & Director

Petrochemicals

Corporation Ltd

13. Procter & Gamble Director Member

Hygiene and

Healthcare Ltd

14. Nicholas Piramal Director Chairman

India Ltd

15. Century Enka Lt d Alternate Member (Alternate)

Director

16. Wockhardt Ltd Alternate Member (Alternate)Director

17. BASF Polyurethanes Alternate

India Ltd Director

18. Gillette India Ltd Director

19. Lupin Limited Director

20. Modicare Limited Alternate

Director

21. RPG Life Sciences Alternate

Ltd Director

22. Schrader Duncan Ltd. Alternate

Director

23. Uhde India Limited Alternate

Director

Name of the Company Designa- Chairmanship

tion or Membership

of Audit

Committee of

Board

On behalf of the Board





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To,

The Members of Abbott India Limited

We have examined the compliance of conditions of Corporate

Governance by Abbot t India Limited for the year ended November

30, 2005, as stipulated in Clause 49 of the Listing Agreement of the

said Company with The Stock Exchange, Mumbai.

The compliance of conditions of Corporate Governance is the

responsibility of the Management. Our examination was limited to

procedures and implementation thereof, adopted by the Company

for ensuring the compliance of the conditions of the Corporate

Governance. It is neither an audit nor an expression of opinion on

the financial statements of the Company.

In our opinion and to the best of our information and according to

the explanations given to us, we certify that the Company has

complied in all material respects with the conditions of Corporate

Governance as stipulated in the above mentioned Listing

Agreement.

Auditors Certificate for CorporateGovernance

As required by the guidance note issued by The Institute of

Chartered Accountants of India, we have to state that, based on

the information received from the Companys Registrars and

Share Transfer Agents and as per the records maintained by theInvestor Grievance Committee, barring certain cases pending in

courts/consumer forums, relating to disputes over the title of

shares in which the Company has been made a party, no investor

grievance is pending for a period exceeding one month against the

Company.

We further state that such compliance is neither an assurance as

to the future viability of the Company nor the efficiency or

effectiveness with which the management has conducted the

affairs of the Company.

FOR DELOITTE HASKINS & SELLS

Chartered Accountants

K A KATKI

Mumbai Partner

March 7, 2006 Membership No. 038568


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Management Discussion &Analysis Report

1. Industry structure and developments

The Indian pharmaceutical market recorded sales of Rs 230

billion with a growth of 8.6% on MAT basis in the year 2005.

After an average growth of just 6% in the previous two years,

and a decline in the first quarter of 2005 due to reduced

buying by trade prior to implementation of Value Added Tax

(VAT), for the most part the Industry recovered and grew in

line with the projected GDP growth.

Indian pharmaceutical market ranks 4th in the world in terms

of volume and 13th in terms of value. The Government has

taken a number of steps to fuel further growth in the sector

such as export incentives, patent protection, import

liberalization and increased outlay on health.

During the year the Government amended the Patents Act to

provide for grant of product patents in respect of

pharmaceuticals, however, the impact of certain provisions of

the amended Patents Act such as patentability and

compulsory licensing, will be known only over a period of

time through implementation/administration of the new law.

The Draft National Pharmaceuticals Policy 2006 (Part A) has

been circulated and addresses issues in relation to

integration of drug regulatory bodies, IPR implementation,

data protection in clinical trials, price negotiations for

patented drugs, trade margins, government procurement,

branding and Research & Development. Part B of this

document relating to pricing is awaited.

MRP (Maximum Retail Price) based excise duty was made

applicable to the pharmaceutical industry from January 2005.

This caused many pharmaceutical companies, including your

Company, to revisit their manufacturing strategy.

2. Opportunities and Threats

Introduction of product patents from 2005 presents an

opportunity for the growth of the pharmaceutical industry. It

will facilitate speedier introduction of new products, attract

investment in research and lead to development of the

industry and market. Global Phase II and III clinical trials can

now be concurrently carried out in India.

Transition to VAT system is likely to benefit the industry in the

long run through uniformity and transparency in prices all

over the country. It is expected that the remaining seven

states that have not adopted the Value Added Tax system are

likely to join the mainstream in the near future.The industry also suffered on account of imposition of MRP

based Excise Duty on formulations. Pursuant to industry

representations made to the Government, changes are

expected in Excise Duty as well as Central Sales Tax, which

will provide an opportunity to revamp the strategy in

manufacturing, sourcing and distribution operations.

Eventually, elimination of Central Sales taxes (CST) will lead

to simplification of the distribution chain.

The Indian middle class is growing steadily and so also the

prospects for health insurance. The Indian market is very

under-insured and less than 4% of the population is covered

by State Health Insurance and private health insurance is

limited to a miniscule number. It is estimated that the number

of Indians who can afford quality private healthcare stands at

about 100 million, which is about 1/3rd of the middle class

population and 1/10th of the total population. Increasingpenetration of health insurance coupled with rising

purchasing power is expected to stimulate the market.

Healthcare reforms are also expected to expand the

coverage of organized healthcare to rural areas leading to

increased supp ly of secondary care.

All the above factors are likely to provide renewed

opportunities for the growth of pharmaceutical industry. Yet

there are some factors that limit Indias appeal for

multinational companies. The absence of a clear, objective

and transparent policy on drug price control continues to

impact the overall industry direction. The new Draft National

Pharmaceuticals Policy addresses some of the issues,

however, policy relating to price control is yet to be

announced. Similarly, the amended Patents Act does nothave adequate clarity with respect to definition of patentable

invention, data protection and compulsory licensing.

3. Segmentwise performance

The Company operates only in the pharmaceutical segment.

It has recorded faster growth than other multinational

companies across various therapeutic segments, especially

gastroenterology, neurology and metabolic disorders.

India is afflicted by a variety of health issues. In addition to

chronic diseases such as cardiovascular disorders, diabetes

and depression, which are prevalent in the developed

countries, India also has to face up to infectious diseases, re-

emerged diseases such as tuberculosis (TB) and malaria and

dreaded diseases such as cancer and AIDS. Although acutediseases are on the decline, chronic diseases are on the rise

due to changing lifestyles.

Your Companys product portfolio provides therapies for

both acute and chronic health condit ions. The performance of

the Company is in line with trends observed in the market,

viz, good growth in chronic disease areas, however, the

volumes in acute therapy areas such as gastroenterology and

pain management continue to be under pressure.

India is seeing the emergence of corporate hospitals and

world-class facilities. Abbott Indias hospital product

portfolio includes anaesthesia and neonatology and

continues to record good growth over the market.

4. OutlookIt is the Companys strategy to continue to focus on its

core therapeutic areas in pharmaceuticals, viz, CNS,

gastroenterology, metabolics, pain management, urology,

specialized anaesthesia range and neonatology. Growth in

chronic therapy areas is expected to continue while

innovations and life cycle management will continue to

support performance in acute therapy segments.

While keeping its focus on achieving a higher sales growth,

the Company continues to work on extracting cost related

efficiency in areas of Supply Chain as well as Administration

and Selling expenses and thus deliver improved operating


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18


margins. The Company will also continue to work on

increasing capacity utilization at its Goa plant and aligning

manufacturing/distribution strategy with emerging

opportunities.

5. Risks and Concerns

Introduction of new drugs and proliferations of generic

products have affected both demand and pricing of your

Companys products, specially in case of acute therapy.

Lack of clarity on the Governments future policy in relation to

Price Control continues to be a major risk facing the industry

even though draft policy has been circulated on other issues.

The industry also continues to be faced by the challenges

posed by manufacturers of spurious drugs and the company

is taking various measures to counter the threat.

There could be an impact on demand during the year due to

the uncertainty on VAT as the remaining seven States take

their decisions on movement to the VAT regime.Introduction o f new taxes and changes in existing tax laws as

well as other statutes particularly in the pharmaceutical

sector continue to pose a challenge to the industry.

6. Internal Control Systems and their adequacy

Your Company has an adequate system of internal controls

which ensures that its assets are protected against loss from

unauthorized use or disposition and all transactions are

authorized, recorded and reported in conformity with

generally accepted accounting principles.

The Internal control systems are documented with clearly

defined authority limits. These systems are designed to

ensure accuracy and reliability of accounting data, promot ion

of operational efficiency and adherence to the prescribedmanagement policies. These policies are periodically

updated to meet current business requirements.

The Company has a regular process of Internal Audit by a

leading firm of Chartered Accountants whose scope of work

and work programme is agreed with the Audit Committee at

the beginning of each year. The findings of the Internal

Auditors are discussed with the Audit Committee and

adequate mitigatory steps are taken accordingly to plug

control weaknesses pointed out.

In line with the requirement of the amended Clause 49 of the

Listing Agreement which came into force on January 1, 2006

the Company had appointed a firm of Consultants to do a

complete review of risks faced by the Company and to help

put in place a Risk Management Framework and theirfindings/recommendations were discussed with the Board of

Directors/Audit Committee. Risk Management as a formal

concept is an integral part of the business process and the

recommendations are being implemented.

7. Discussion on Financial Performance with respect to

Operational Performance

During the year under review, Sales amounted to Rs 4446.7

million (representing an increase of 9.8% over Last Year) and

Profit Before Tax stood at Rs 871.1 million. The Operating

Profit for the year amounted to Rs 762.6 million as compared

to Rs 842.5 million Last Year. This was impacted due to levy

of Excise Duty on Maximum Retail Price (MRP) and

destocking by t rade in the initial part of the year on account ofintroduction of Value Added Tax (VAT) even though the

Company took a number of steps to mitigate their impact.

Your Company continues to focus on extracting cost

efficiency in areas of Supply Chain, Selling and

Administrative expenses and to improve returns on c apital.

There were unprecedented rains and floods in Mumbai and

Southern States, causing huge loss to life and property and

resulting in disruption of supplies. The Company too

sustained loss at the Central Warehouses, however, the loss

was covered by insurance.

The Companys income from investment of surplus funds

came down significantly as compared to last year on account

of the fall in interest rates as well as the fact that a large

portion of income in the last year related to capitalappreciation of investments in the growth schemes of Mutual

Funds. The Company adopts a conservative approach

towards investments and its investment st rategy is to ensure

safety of capital and liquidity, however, this is reviewed

continuously with consultants to optimize returns.

Last year, the Company had achieved Class A accreditation

which was re-confirmed recently. This recertification marks a

continued commitment to excellence whereby the company

continuously raises the bar and sets a high level of

expectations of its business, its people and processes. Your

company has tremendous opportunities to grow the

business, and ensuring sound processes will enable it to

achieve objectives with greater speed.

8. Material developments in Human Resources/Industrial

Relations

During the year under review the Company has made

significant progress towards developing a high-performance

work culture and upgradation of talent and capabilities. Key

Human Resources (HR) initiatives have been built into the

strategic plan of the Company in order to attract, develop and

create a talent pool capable of achieving the business

objectives of the Company. Focused initiatives were

undertaken to improve HR process too ls and techniques.

With a view to recognize individuals who have shown

outstanding performance, various recognition programs were

introduced during the year.

The number of employees as on November 30, 2005 was858.






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Auditors Report

To the Members of Abbott India Limited

1. We have audited the attached Balance Sheet of Abbott IndiaLimited, (the Company) as at November 30, 2005, the Profit

and Loss Account and also the Cash Flow Statement for the

year ended on that date annexed thereto. These financial

statements are the responsibility of the Companys

management. Our responsibility is to express an opinion on

these financial statements based on our audit.

2. We conducted our audit in accordance with auditing

standards generally accepted in India. Those Standards

require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements

are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts

and disclosures in the financial statements. An audit also

includes assessing the accounting principles used and

significant estimates made by management, as well asevaluating the overall financial statement presentation. We

believe that our audit provides a reasonable basis for our

opinion.

3. As required by the Statement on Companies (Auditors

Report) Order, 2003 issued by the Central Government of

India in terms of sub-section (4A) of Section 227 of the

Companies Act, 1956, we enclose in the Annexure, a

statement on the matters specified in paragraphs 4 and 5 of

the said Order.

4. Further to our comments in the Annexure referred to above,

we report that:

(i) we have obtained all the information and explanations,

which to the best of our knowledge and belief were

necessary for the purposes of our audit;

(ii) in our opinion, proper books of account as required by

law have been kept by the Company so far as appears

from our examination of those books;

(iii) the balance sheet, profit and loss account and cash flow

statement dealt with by this report are in agreement with

the books of account;

(iv) in our opinion, the balance sheet, profit and loss account

and cash flow statement dealt with by this report complywith the accounting standards referred to in sub-section

(3C) of Section 211 of the Companies Act, 1956;

(v) on the basis of written representations received from

directors as on November 30, 2005 and taken on record

by the Board of Directors, we report that none of the

directors is disqualified as on November 30, 2005 from

being appointed as a director in terms of clause (g) of

sub-section (1) of Section 274 of the Companies Act,

1956;

(vi) in our opinion and to the best of our information and

according to the explanations given to us, the said

accounts read together with 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 generally

accepted in India:

(a) in the case of the balance sheet, of the state of

affairs of the Company as at November 30, 2005;

(b) in the case of the profit and loss account, of the

profit for the year ended on that date; and

(c) in the case of the cash flow statement, of the cash

flows for the year ended on that date.

For DELOITTE HASKINS & SELLS

Chartered AccountantsK A KATKI

Mumbai, Partner


1. In our opinion and according to the information and

explanations given to us, the nature of the Companys

business/activities during the year are such that clauses xiii,

xiv, xviii, xix, xx are not applicable to the Company.

2. In respect of its fixed assets:

a. The Company has maintained proper records showing

full particulars, including quantitative details and

situation of fixed assets.

b. Physical verification of fixed assets is being conducted

in a phased programme by the management designed to

cover all assets over a period of three years, except for

fixed assets lying with third parties in respect of which

the Company is in the process of obtaining necessary

confirmations, which in our opinion is reasonable having

regard to the size of the Company and the nature of

assets. The discrepancies noticed on such verification

were not material and have been properly dealt with in

the books of account.

c. Although some of the fixed assets have been disposed

off during the year, in our opinion and according to the

information and explanations given to us, the ability ofthe Company to continue as a going concern is not

affected.

3. In respect of its inventories:

a. As explained to us, the inventories were physically

verified during the year by the management at

reasonable intervals.

b. In our opinion and according to the information and

explanations given to us, the procedures of physical

verification of inventories followed by the management

are reasonable and adequate in relation to t he size of the

Company and the nature of its business.

Annexure referred to in paragraph 3 of theAuditors Report on the Accounts of AbbottIndia Limited


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c. In our opinion and according to the information and

explanations given to us, the Company has maintained

proper records of its inventories and the discrepancies

noticed on such physical verification between physical

stock and book records were not material and havebeen adequately dealt with in the books of account.

4. According to the information and explanations given to us,

the Company has not granted or taken any loan secured or

unsecured to or from companies, firms or other parties

covered in the register maintained under Section 301 of the

Companies Act, 1956.

5 In our opinion and according to the information and

explanations given to us, there are adequate internal control

systems commensurate with the size of the Company and

nature of its business for the purchase of inventory and fixed

assets and for the sale of goods. There were no transactions

in respect of sale of services. During the course of our audit,

we have not observed any continuing failure to correct major

weaknesses in internal controls.

6. To the best of our knowledge and belief and according to the

information and explanations given to us, there were no

transactions required to be entered in the register maintained

in pursuance of Section 301 of the Companies Act, 1956.


explanations given to us, the Company has not accepted any

deposits within the meaning of Section 58A, 58AA or any

other relevant provisions of the Companies Act, 1956 and the

Companies (Acceptance of Deposits) Rules, 1975 with regard

to the deposits accepted from the public.

8. In our opinion, the internal audit functions carried out during

the year by an external entity appointed by the management

have been commensurate with the size of the Company and

nature of its business.

9. We have broadly reviewed the books of account and records

maintained by the Company relating to the manufacture of

formulations, pursuant to the Order made by the Central

Government for the maintenance of cost records under

Section 209(1) (d) of the Companies Act, 1956 and are of theopinion that prima facie, the prescribed records have been

maintained and the prescribed accounts are in the process of

being made up. We have however, not made a detailed

examination of the records with a view to determining

whether they are accurate or complete. To the best of our

knowledge and according to the information and

explanations given to us, the Central Government has not

prescribed the maintenance of cost records for any other

product of the Company.

10. In respect of statutory dues:

a. According to the information and explanations given to

us, the Company has been regular in depositing

undisputed statutory dues, including Provident Fund,

Investor Education and Protection Fund, Employees

State Insurance, Income tax, Sales tax, Wealth tax,

Service tax, Customs Duty, Excise Duty, Cess and any

other material statutory dues with the appropriate

authorities during the year. Further, since the Central

Government has till date not prescribed the amount of

cess payable under Section 414A of the Companies Act,

1956, we are not in a position to comment upon the

regularity or otherwise of the Company in depositing the

same.

b. According to the information and explanations given to

us, details of disputed excise duty and sales tax, which

have not been deposited as on November 30, 2005 on

account of any dispute are given below:

Nature of Statute Nature of Dues Amount Period to Forum where dispute is pending

Rs in which the

Millions Amount relates

Central Excise Act, 1944 Classification dispute 0.3 1991-1992 Commissioner (Appeals)

Modvat Credit availed on inputs 0.1 1994 Commissioner

Modvat Credit availed on capital

goods 0.03 1994 Assistant Commissioner

Recovery of amount allegedly

refunded erroneously 0.1 2000 Assistant Commissioner

Demand for excise duty on empty

plastic containers 0.05 1998-2002 Assistant Commissioner

Classification dispute 3.0 2005 Commissioner (Appeal)

Modvat Credit availed on capital

goods 0.1 2001 Deputy Commissioner

The Bombay Sales Tax Act, 1959 Disputed Set off 4.0 1999- 2000 Sales Tax Tribunal

Uttar Pradesh Trade Tax Act, 1948 Disallowances of Credit Notes 0.4 1989- 1990 and Sales Tax Tribunal

1998-1999

Non-submission/Rejection of

relevant statutory forms 0.1 2000-2001 Sales Tax Tribunal

Non-submission/Rejection of

relevant statutory forms 0.01 2001-2002 Deputy Commissioner of Trade Tax

Central Sales Tax Act, 1956 Non-submission/Rejec tion o f

relevant statutory forms 0.01 2001-2002 Deputy Commissioner of Trade Tax


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There were no disputed dues in respect of Income tax,

Customs Duty, Wealth tax, Service tax and Cess during the

year.

11. The Company does not have any accumulated losses as at

the end of the financial year. The Company has not incurredcash losses during the financial year covered by our audit and

the immediately p receding financial year.


explanations given to us, the Company has not ob tained any

borrowings from any banks or financial institutions or by way

of debentures.

13. In our opinion, the Company has not granted loans and

advances on the basis of security by way of pledge o f shares,

debentures and other securities.


explanations given to us, the Company has not given any

guarantees for loans taken by others from banks and financial

institutions.

15. The Company has not obtained any term loans.

16. According to the information and explanations given to us,

and on an overall examination of the balance sheet of the

Company, funds raised on short-term basis have prima-facie,

not been used during the year for long-term investment.

17. To the best of our knowledge and belief and according to the

information and explanations given to us, no fraud on or by

the Company was noticed or reported during the year.

For DELOITTE HASKINS & SELLS

Chartered Accountants

K A KATKI

Mumbai, Partner



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As at As at

November 30, November 30,

2005 2004

Schedule Rupees in Rupees in Rupees in

Millions Millions Millions

I. SOURCES OF FUNDS

(1) SHAREHOLDERS FUNDS

(a) Share Capital .... .... ..... .... ..... ..... .... ..... .... ..... ..... .... ... (1) 152.8 152.8

(b) Reserves and Surplus ...... ..... ..... ..... .... ..... ..... ..... ... (2) 2,011.6 1,730.0

TOTAL SHAREHOLDERS FUNDS ............................ ..... 2,164.4 1,882.8

(2) LOAN FUNDS

Unsecured Loans................................................... (3) 18.2 21.9

(3) DEFERRED TAX LIABILITY (NET)................................... 53.1 64.7TOTAL.............................................................................. 2,235.7 1,969.4

II. APPLICATION OF FUNDS

(1) FIXED ASSETS

(a) Gross Block ........................................................... 676.2 642.5

(b) Less: Depreciation ................................................. 365.7 327.5

(c) Net Block ............................................................... 310.5 315.0

(d) Capital Work-in-Progress ...................................... 1.2 10.2

TOTAL FIXED ASSETS ................................................... (4) 311.7 325.2

(2) INVESTMENTS ................................................................ (5) 1,933.0 2,099.6

(3) CURRENT ASSETS, LOANS AND ADVANCES(a) Inventories .............................................................. (6) 442.1 299.1

(b) Sundry Debtors .. .... .... .... .... .... ... .... .... .... .... .... .... .... . (7) 200.1 203.2

(c) Cash and Bank Balances....... ...... ...... ..... ...... ..... ... (8) 93.5 125.1

(d) Loans and Advances .... .... ..... .... .... ..... .... ..... .... ..... . (9) 123.3 68.9

859.0 696.3

Less :

CURRENT LIABILITIES AND PROVISIONS

(a) Current Liabilities ................................................... 374.0 344.2

(b) Provisions ............................................................... 494.0 807.5

(10) 868.0 1,151.7

NET CURRENT ASSETS.......................... ....................... (9.0) (455.4)

TOTAL.............................................................................. 2,235.7 1,969.4

SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THEACCOUNTS......................................................................................... (17)

Balance Sheet

As at November 30, 2005

As per our report of even date

For DELOITTE HASKINS & SELLSChartered Accountants

K A KATKIPartner

Mumbai, March 7, 2006


VIVEK MOHAN Managing Director

R A SHAH Director

ASHOK DAYAL Director



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Year ended Year endedNovember 30, November 30,

2005 2004Schedule Rupees in Rupees in Rupees in

Millions Millions MillionsI . SALES AND OTHER INCOME

(a) Sales ........................................................................................ (11) 4,446.7 4,050.7

(b) Other Income .......................................................................... (12) 148.6 575.4

4,595.3 4,626.1

II. EXPENDITURE

(a) Raw and Packing Materials Consumed ................................ (13) 84.6 147.9

(b) Purchase of Finished Goods (Refer Note B19

Schedule 17) ............................ ............................ ................... 3,011.4 2,306.1

(c) (Increase)/Decrease in Work-in-Progress and FinishedGoods ...................................................................................... (14) (138.4) 36.1

(d) Manufacturing, Administrative & Selling Expenses............... (15) 726.5 718.1

(e) Depreciation ............................................................................ 39.9 41.7

(f) Interest ..................................................................................... (16) 0.2 1.7

3,724.2 3,251.6

III. PROFIT BEFORE TAX .................................................................. 871.1 1,374.5

IV. PROVISION FOR TAXATION

Current Income Tax ...................... ........................ .................. 278.0 358.4

Deferred Tax (Credit) (Net) .............................. ..................... (11.6) (6.4)

Fringe Benefit Tax .............................. .............................. ...... 13.0

279.4 352.0

V. PROFIT AFTER TAX ..................................................................... 591.7 1,022.5

VI. PRIOR YEARS ADJUSTMENTS

Taxation .......................... ........................... ............................ ........... (0.1) *

591.6 1,022.5VII. BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR .... 1,435.7 1,120.2

2,027.3 2,142.7VIII. APPROPRIATIONS

(a) Proposed Dividend ................................................................. (267.4) (534.8)(b) Corporate Dividend Tax

For the year ended November 30, 2005 ................... ... (37.5) For the year ended November 30, 2004 ................... ... (5.1) (69.9)

(c) Revenue Reserve .................................................................... (59.2) (102.3)

IX. BALANCE CARRIED FORWARD ................................................. 1,658.1 1,435.7

Earnings per Share Basic and Diluted ....................... ................. Rs 38.72 Rs 66.92Face Value per Share ......................... .......................... ................... Rs 10.00 Rs 10.00

Profit After Tax available to Equity Shareholders .......................... 591.6 1,022.5

Number of Shares used in computing earnings per Share Basic and Diluted ...................... .......................... ........................... .. 15,280,100 15,280,100

SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THEACCOUNTS............................................................................................... (17)

* Less than Rs 0.1 Million

Profit and Loss Account

For the Year ended November 30, 2005



K A KATKIPartner




R A SHAH Director




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Cash Flow Statement for the year ended November 30, 2005Year ended Year ended


2005 2004Rupees in Rupees in Rupees in Rupees in

Millions Millions Millions M illions

A Cash flow from operating activities :

Net Profit before tax .......................................................................... 871.1 1,374.5

Adjustments for :

Depreciat ion .......................... ........................... ........................... .. 39.9 41.7

Loss on sale of Fixed Assets/Impairment of Fixed Assets ...... 0.2 17.2

Unrealised (Gain)/Loss on Foreign Exchange ............................ 0.6 0.2

Provision for Doubtful Debts/Bad Debts written off ................. 1.8

Profit on sale of Investments in units of Mutual Funds (Net)... (0.9) (426.7)

Write back of dimunition in value of Investments in units of

Mutual Funds ......................... ............................. .......................... (0.2) (2.2)

Dividend .............................. .............................. ............................ (76.2) (55.8)

Interest payments ............................. .............................. .............. 0.2 1.7

(36.4) (422.1)

Operating Profit before working capital changes ........................... 834.7 952.4

Adjustments for :

Trade and other receivables .............................. .......................... (51.0) 54.0

Inventories .......................... ............................ ............................ ... (143.0) 38.4

Trade Payables and other liabilities ...................... ...................... 36.9 (39.1)

(157.1) 53.3

Cash generated from operations ...................................................... 677.6 1,005.7

Direct taxes paid net of refund ................................................... (309.4) (322.0)

Net cash f rom operating activities ................................................... 368.2 683.7

B Cash flow from investing activities :

Purchase of Fixed Assets ......................... ............................. ...... (30.2) (45.9)

Proceeds on sale of Fixed Assets .............................. ................ 0.2 2.4

Purchase of Investments in units of Mutual Fund including

Dividend Reinvested ............................. .............................. ......... (2,609.0) (3,539.8)

Less : Dividend Reinvested ....................... ........................... ....... 76.2 55.8

(2,532.8) (3,484.0)

Sale of Investments in units of Mutual Fund ............................. 2,776.7 3,469.2

Net cash f rom/(used in) investing activities ..................................... 213.9 (58.3)

C Cash flow from financing activities :

Repayment of long term borrowings .......................................... (3.7) (0.1)

Dividends paid (Includes Corporate Dividend Tax) ................... (609.8) (603.3)

Interest paid .......................... ........................... ........................... .. (0.2) (1.7)

Net cash from/(used in) financing activities .................................... (613.7) (605.1)

D Net increase/(decrease) in Cash and Cash equivalents (A+B+C) (31.6) 20.3

E Cash and Cash equivalents at the beginning of the year ....... 125.1 104.8

F Cash and Cash equivalents at the close of the year (D + E) ............ 93.5 125.1

See Notes attached


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Notes to the Cash Flow Statement for the year ended November 30, 2005Year ended Year ended


2005 2004Rupees in Rupees in

Millions Millions

1. Cash and Cash equivalents include :

Cash and Bank Balances ................................ .............................. ................... 93.5 125.1

Unrealised (Gain)/Loss on Foreign Currency ............................. ..................... * *

Total ....... 93.5 125.1

* Less than Rs 0.1 Million

2. The above Cash Flow Statement has been prepared under the Indirect

Method as set out in Accounting Standard-3 on Cash Flow Statements issued

by The Institute of Chartered Accountants of India.

3. The figures of the previous year are regrouped/rearranged wherever considered

necessary.



K A KATKIPartner




R A SHAH Director




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As at As atNovember 30, November 30,

2005 2004Rupees in Rupees in Rupees in

Millions Millions Millions1. SHARE CAPITAL

Authorised :

16,200,000 (2004 : 16,200,000) Equity Shares of Rs 10 each ........... 162.0 162.0

5,800,000 (2004 : 5,800,000) Unclassified Shares of Rs 10 each.... 58.0 58.0

220.0 220.0

Issued and Subscribed :

15,280,100 (2004 : 15,280,100) Equity Shares of Rs 10 each fullypaid-up ............................................................................... 152.8 152.8

PER BALANCE SHEET .... 152.8 152.8[9,428,184 (2004 : 8,262,000) Equity Shares are held by Abbott

Capital India Ltd (Formerly known as Lupharma UKHolding One Ltd) the holding company and Nil (2004 :1,166,184) Equity Shares are held by Abbott EquityHoldings Ltd, a group company, both of which aresubsidiaries of Abbott Laboratories, USA]

Of the above :

(a) 99,995 (2004 : 99,995) Equity Shares were allotted as fully paidpursuant to a contract without payment being receivedin cash.

(b) 15,099,570 (2004 : 15,099,570) Equity Shares were issued as fullypaid Bonus Shares by capitalisation of Share Premiumand Revenue Reserve.

(c) 25,000 (2004 : 25,000) Equity Shares were allotted to thefinancial institutions on conversion of 5% of Debentures

into Equity Shares.

2. RESERVES AND SURPLUS

Amalgamation Reserve :

Balance as per last Balance Sheet ..................... ............................. .......... 3.8 3.8

Capital Reserve :


Capital Redemption Reserve :


Revenue Reserve :


Add : Transferred from Profit and Loss Account ....................... ................... 59.2 102.3

288.2 229.0

Surplus as per Profit and Loss Account ....................... ........................... ..... 1,658.1 1,435.7

PER BALANCE SHEET .... 2,011.6 1,730.0

3. LOANS

Unsecured Loans :

Deferred Sales tax liability under the Maharashtra Governments PackageScheme of Incentives 1988

Pending Conversion into Long-term interest free Sales tax loan ........... 5.9 5.9

Converted into Long-term interest free Sales tax loan [Repayable withinone year Rs 4.2 Million (2004 : Rs 3.7 Million)] ......................................... 12.3 16.0

(Refer Note B18 Schedule 17)18.2 21.9

PER BALANCE SHEET .... 18.2 21.9

Schedules

Annexed to and forming part of the Balance Sheet as at November 30, 2005


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Schedules

Annexed to and forming part of the Balance Sheet as at November 30, 2005

4. FIXED ASSETSGROSS BLOCK AT COST DEPRECIATION NET BLOCK

As at Additions Disposals Impairment As at As at For the On Disposals As at As at As at

November 30, d uring the during the d uring the November 30, November 30, year during the November 30, November 30, November 30,

2004 year year year 2005 2004 year 2005 2005 2004

Rupees in Rupees in Rupees in Rupees in Rupees in Rupees in Rupees in Rupees in Rupees in Rupees in Rupees inMillions Millions Millions Millions Millions Millions Millions Millions Millions Millions Millions

Leasehold Land ......................... 4.8 4.8 0.6 0.1 0.7 4.1 4.2Buildings ..................................... 326.4 0.7 327.1 135.0 11.5 146.5 180.6 191.4Machinery and Equipments ....... 202.0 25.1 1.6 225.5 123.3 15.9 1.3 137.9 87.6 78.7Furniture, Fittings and OfficeEquipments ................................ 99.8 5.1 0.5 104.4 65.1 9.6 0.4 74.3 30.1 34.7Vehicles ...................................... 9.5 4.9 * 14.4 3.5 2.8 6.3 8.1 6.0

642.5 35.8 2.1 676.2 327.5 39.9 1.7 365.7 310.5 315.0

Previous year . ..... ...... ...... ...... ...... 648.7 40 .4 36.8 9.8 642.5 314.8 41.7 29.0 327.5

Capital Work-in-Progress and Advances thereagainst, at cost 1.2 10.2

PER BALANCE SHEET.............. 311.7 325.2

Note : Included in buildings is an amount of Rs 2,540 (2004: Rs 2,540) representing value of shares in co-operative housing societies, of which share certificates of Rs 1,540(2004 : Rs 1,540) are yet to be received.

* Less than Rs 0.1 Million.



Millions Millions Millions5. INVESTMENTS

IN FULLY PAID SHARES NON-TRADE UNQUOTED:

1,900 (2004 : 1,900) Equity Shares of Zest Pharmaceuticals Pvt Ltd of Rs 10 eachfully paid- up .................................................................................................................................. * *

CURRENT INVESTMENTS

IN UNITS OF MUTUAL FUNDS NON-TRADE QUOTED:

Mutual Fund No. of Face Repurchase

Units in Value PriceMillions Rs Rs in

Millions

Birla Cash Plus Institutional Plan Weekly Dividend 59.8(5.5) (10.00) (59.9)

Birla Cash Plus Institutional Premium Weekly Dividend 38.9 10.00 389.7 389.6 263.9

(26.3) (10.00) (263.9)DSP Merill Lynch Liquidity Fund Weekly Dividend 406.9

(32.8) (10.00) (407.0)

Grindlays Cash Fund Institutional Plan B Weekly Dividend 30.8 10.00 308.4 308.4 141.4(13.7) (10.00) (141.4)

HDFC Liquid Fund Premium Plan Dividend 36.4 10.00 445.3 440.7 172.3

(14.3) (10.00) (172.9)HSBC Cash Fund Institutional Plan Monthly Dividend 32.1 10.00 321.0 321.0 321.8

(30.8) (10.00) (321.8)HSBC Income Fund Short Term Institutional Dividend 3.8 10.00 38.4 38.4

() () ()

Prudential ICICI Institutional Liquid Plan Monthly Dividend 36.5 10.00 434.9 434.9 406.2(39.2) (10.00) (406.2)

Templeton India Treasury Management

Account Regular Plan Weekly Dividend 327.3(0.3) (1,000.00) (327.3)

1,933.0 2,099.6

PER BALANCE SHEET................. .......... 1,933.0 2,099.6

Notes : (1) Figures for the previous year are in bracket(2) Aggregate Book Value of Unquoted Investments * *(3) Aggregate Book Value of Quoted Investments 1,933.0 2,099.6(4) Aggregate Market Value of Quoted Investments 1,937.7 2,100.4(5) * Less than Rs 0.1 Million.


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Millions Millions Millions6. INVENTORIES

Stock-in-Trade :Raw Materials ........................... ........................... ............................ .......... 8.2 4.2Packing Materials ........................... ............................... ............................ 1.6 1.0Work-in-Progress....................................................................................... 4.3 1.9Finished Goods ................. ........................... ........................... .................. 428.0 292.0


7. SUNDRY DEBTORS UNSECUREDDebts outstanding for a period exceeding six months :

Considered Good ......................... ............................. ............................. ... Considered Doubtful ...................... ............................... ............................ 8.8 9.5

8.8 9.5Less : Provision for Doubtful Debts ......................... .......................... ...... 8.8 9.5

Other Debts :

Considered Good ......................... ............................. ............................. ... 200.1 203.2Considered Doubtful ...................... ............................... ............................ 0.7

200.8 203.2Less : Provision for Doubtful Debts ......................... .......................... ...... 0.7

200.1 203.2


8. CASH AND BANK BALANCESCash, Cheques and Stamps on hand ..................... ........................ .............. 0.1 0.1With Scheduled Banks :

On Current Account .......................... .......................... .......................... ...... 93.4 125.0


9. LOANS AND ADVANCES(Unsecured, Considered Good unless otherwise stated)

Advances recoverable in cash or in kind or for value to be received ..... 91.6 37.6(Refer Note B2 Schedule 17)Sundry Deposits ........................... ............................ ............................ ....... 31.7 31.3With Customs and Excise on Current Account .................................. ....... * *


10. CURRENT LIABILITIES AND PROVISIONSCurrent Liabilities :

Sundry Creditors :Due to Small Scale Industrial Undertakings (Refer Note B24 Schedule 17) ........................... ........................... ............................ .......... 0.9 13.8Others ............................ .....

abott annualreport2005

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