annual report 2009-10 - bombay stock exchange · 2010. 9. 27. · annual report 2009-10 c m y k...

Aarti Drugs Limited 1

Annual Report 2009-10

C M Y K

Corporate Information

Board of Directors

Chandrakant V. GogriChairmanPrakash M. PatilManaging Director & CEOHarshit M. SavlaJt. Managing Director & CFOHarit P. ShahWhole-time DirectorRajendra V. GogriNon-Executive DirectorUday M. PatilWhole-Time DirectorRamdas M. GandhiBhavesh R. VoraProf.Krishnacharya G. AkamanchiDr.Sudhirprakash B.SawantDr. Vilas G. GaikarSunil M. DedhiaIndependent Directors

Compliance OfficerDilip Maharana, Company Secretary

AuditorsM/s. Parikh Joshi & Kothare49/2341, M.H.B. Colony,Gandhi Nagar, Bandra (E),Mumbai- 400 051.

SolicitorsM/s. M. P. Savla & Co.Bharat House, 2nd floor,104 Mumbai Samachar Marg,Mumbai- 400 001.

Registrar & Transfer AgentSharepro Services (India) Pvt. Ltd.Samhita Complex, Gala No.52 to 56,Bldg.No.13A-B,Near Sakinaka Telephone Exchange,Andheri -Kurla Road,Sakinaka, Mumbai 400 072 .

BankersUnion Bank of IndiaBank of BarodaState Bank of IndiaCitibank N.A.Corporation BankStandard Chartered BankDBS Bank LimitedHSBCIDBI Bank Ltd.

Registered OfficePlot No. N- 198, M.I.D.C.,Tarapur, Village- Pamtembhi,Taluka – Palghar,Dist. Thane- 401 506,Maharashtra.

Corporate OfficeMahendra Industrial Estate,Ground Floor, Plot No. 109DRoad No.29, Sion (E),Mumbai- 400 022.

PlantsPlot Nos. N-198, G-60, E-120,K-40, K41, E-9/3-4 and E-21/22,MIDC Industrial Area,Tarapur, Tal- Palghar,Dist. Thane- 401 506, Maharashtra.

Plot Nos. 2902/2904,GIDC, Sarigam – 396 155Dist. Valsad, Gujarat.

R & D CentresPlot Nos. N- 198 & G- 60, MIDC Industrial Area,Tarapur,Village Pamtembhi,Tal- Palghar, Dist. Thane- 401 506,Maharashtra.

Plot Nos.D-277/278, TTC Industrial Area,Turbhe Navi Mumbai,Maharashtra

Visit us at www.aartidrugs.com

ContentsCorporate Information ..................................................... 1Financial Highlights ........................................................ 2Notice.............................................................................. 4Directors’ Report ............................................................. 8Management Discussion & Analysis ............................. 11Report on Corporate Governance ................................. 14Conservation of Energy etc ........................................... 23Auditors’ Report ............................................................ 26Balance Sheet ................................................................ 30Profit & Loss Account ................................................... 31Schedules ...................................................................... 32Notes Forming Part of Accounts ................................... 38Balance Sheet Abstract ................................................. 47Cash Flow Statement ..................................................... 48Statement of Interest in Subsidiaries ............................. 49Auditors’ Report on Consolidated Accounts ................. 51Consolidated Financial Statements ............................... 52Details of Subsidary Company ...................................... 62Proxy Form, Attendance Slip & NECS Mandate ...............

2 Aarti Drugs Limited

Aarti Drugs Limited

C M Y K

FIN

AN

CIA

L H

IGH

LIG

HTS

(Rup

ees

in L

akhs

)

Part

icul

ars

31-M

ar-0

431

-Mar

-05

31-M

ar-0

631

-Mar

-07

31-M

ar-0

831

-Mar

-09

31-M

ar-1

0

Sale

s23

,770

.47

26,5

27.2

727

,900

.01

31,3

30.2

633

584.

7940

,968

.87

49,6

94.8

7

Prof

it B

efor

e In

tere

st a

nd D

epre

ciat

ion

2,66

3.72

3,36

2.00

3,14

4.38

3,44

9.75

3,93

0.01

5,69

0.35

7,20

7.99

Inte

rest

385.

8258

6.08

841.

6898

6.3

1183

.81

2,27

1.69

1,47

4.45

Dep

reci

atio

n57

2.23

714.

779

1.8

861.

7296

2.93

1,10

3.92

1,35

1.75

Prof

it B

efor

e Ta

x1,

705.

672,

061.

221,

510.

901,

601.

7317

83.2

72,

314.

754,

381.

79

Prof

it A

fter

Tax

1,20

7.67

1,40

6.22

1,27

2.86

1,27

6.98

1307

.32

1,50

4.75

2,60

9.79

Div

iden

d (%

)30

3015

1218

30.0

050

Payo

ut35

1.26

351.

2617

5.62

140.

521

0.75

351.

2660

5.43

Equi

ty C

apita

l1,

170.

861,

170.

861,

170.

861,

170.

861,

170.

861,

170.

861,

210.

86

Res

erve

s &

Sur

plus

5,47

7.57

6,48

6.07

7,55

6.89

8,67

3.66

9734

.41

10,8

27.4

912

,898

.30

Less

: M

isce

llane

ous

Expe

nditu

re45

1.97

339.

3222

6.92

114.

933.

72-

-

Net

Wor

th6,

196.

467,

317.

618,

500.

839,

729.

5910

901.

5411

,998

.35

14,1

09.1

6

Bor

row

ings

Long

Ter

m3,

081.

234,

680.

163,

094.

124,

263.

6347

95.0

67,

204.

257,

818.

18

Shor

t-Te

rm-B

ank

5,36

8.61

4,52

4.31

6,70

1.47

7,49

3.42

7070

.58,

070.

956,

047.

94

Shor

t-Te

rm-O

ther

s2,

231.

354,

923.

258,

413.

267,

499.

3186

51.2

2,57

2.65

3,89

8.38

Tota

l B

orro

win

gs10

,681

.19

14,1

27.7

218

,208

.85

19,2

56.3

620

516.

7617

,847

.85

17,7

64.5

0

Gro

ss B

lock

11,7

87.2

215

,037

.17

20,0

59.6

821

,253

.39

2335

9.01

26,7

25.9

228

,748

.23

Less

: D

epre

ciat

ion

3,58

1.36

4,26

2.30

5,09

5.16

6,23

6.45

7446

.69

8,78

8.25

10,3

94.6

6

Net

Blo

ck8,

205.

8610

,774

.87

14,9

64.5

215

,016

.94

1591

2.33

17,9

37.6

618

,353

.57

Cap

tal

Wor

k In

Pro

gres

s61

7.92

2,26

0.06

Nil

1375

.214

66.9

64.4

234

0.35

Inve

stm

ents

31.4

414

5.7

2,04

0.49

2,13

4.85

3352

.82

2,13

7.85

2,13

7.85

Cur

rent

Ass

ets,

Loa

ns a

nd A

dvan

ces

14,9

25.6

215

,131

.79

17,0

98.4

817

,231

.02

1876

7.55

18,5

13.7

120

,020

.43

Cur

rent

Lia

bilit

ies

6,15

2.53

5,86

6.42

6,29

8.15

5,54

7.41

6626

.63

7,07

6.76

6,99

8.89

Net

Wor

king

Cap

ital

8,77

3.09

9,26

5.37

10,8

00.3

211

,683

.60

1214

0.92

11,4

36.9

613

,021

.54

Boo

k V

alue

52.9

262

.572

.683

.193

.11

102.

4711

6.52

Earn

ing

per

shar

e10

.32

12.0

110

.85

10.9

11.1

712

.85

22.0

8



C M Y K

0

100

200

300

400

500

600

20102009200820072006

Turnover

(Rup

ees

in C

rore

s)

279.00313.30 335.85

409.69

496.95

0

5

10

15

20

25

20102009200820072006

Earning Per Shares

(Am

ount

in R

upee

s)(A

mou

nt in

Rup

ees)

10.85 10.90 11.1712.85

22.08

0

10

20

30

40

50

20102009200820072006

Profit Before & After Tax

(Rup

ees

in C

rore

s)

AfterBefore

15.1112.73

16.0212.77

17.83

13.07

23.15

15.05

43.82

26.10

0

30

60

90

120

150

20102009200820072006

Book Value

83.0193.11

102.47

116.52

72.60

0

50

100

150

200

250

20102009200820072006

Networth

85.0197.29

109.02119.98

141.09

Dividend Payout

(Rup

ees

in C

rore

s)

(Rup

ees

in C

rore

s)

% Payout

13.80

23.34

11.00

16.12

0

10

20

30

40

20102009200820072006

1

2

3

4

5

6

7

8

6.05

3.51

2.101.41

1.76

23.20


Aarti Drugs Limited

C M Y K

NOTICE

NOTICE is hereby given that the Twenty Fifth Annual General Meeting of the Members of AARTI DRUGS LIMITED willbe held on Friday, 27th August 2010 at 11.00 a.m. at TIMA Hall, MIDC Tarapur, Taluka Palghar, Dist.: Thane - 401 506Maharashtra to transact the following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the Balance Sheet as at 31st March, 2010 and the Profit and Loss Account for theyear ended on that date and the Reports of the Directors’ and Auditors’ thereon.

2. To declare dividend.

3. To appoint a Director in place of Mr. Chandrakant V. Gogri, who retires by rotation and, being eligible, offershimself for re-appointment.

4. To appoint a Director in place of Mr. Uday M. Patil, who retires by rotation and, being eligible, offers himself forre-appointment.

5. To appoint a Director in place of Mr. Sunil M. Dedhia, who retires by rotation and, being eligible, offers himself forre-appointment.

6. To appoint a Director in place of Mr. Harshit M. Savla, who retires by rotation and, being eligible, offers himself forre-appointment.

7. To appoint Auditors and to fix their remuneration.

SPECIAL BUSINESS

8. To consider and, if thought fit, to pass with or without modification, the following resolution as an OrdinaryResolution:

“RESOLVED THAT in supersession of the earlier resolution passed by the Company on 31.08.2002, the consent ofthe Company, pursuant to Section 293(1)(d) and other applicable provisions, if any, of the Companies Act, 1956,the Articles of Association and subject to such approvals as may be necessary, be and is hereby accorded to theBoard of Directors of the Company (hereinafter called “the Board” and which term shall be deemed to includeCommittee constituted by the Board to exercise its power conferred by this resolution), for borrowing from time totime, moneys in such form and manner and upon such terms and conditions including security as deemed fit, asmay be required for the purposes of the Company, from one or more Banks, Financial Institutions and otherpersons, firms and body corporate, notwithstanding that moneys to be so borrowed (apart from the temporary loansobtained or to be obtained from time to time from the Company’s Bankers in the ordinary course of business)together with sums already borrowed may exceed the aggregate of the paid-up capital of the Company and its freereserves, that is to say, reserves not set apart for any specific purpose, provided however, that the sums so borrowedand remaining outstanding on account of the principal shall not, at any one time, exceed Rs.300 crores (RupeesThree Hundred Crores).”

9. To consider and, if thought fit, to pass with or without modification, the following resolution as an OrdinaryResolution:

“RESOLVED THAT in supersession of the earlier resolution passed by the Company on 31.08.2002, pursuant to theprovisions of Section 293(1)(a) and other applicable provisions, if any, of the Companies Act, 1956, the Articles ofAssociation and subject to such approvals as may be necessary, the consent of the Company be and is herebyaccorded to the Board of Directors (hereinafter referred to as “the Board”) of the Company to mortgage, hypothecate,pledge and/or charge, in addition to mortgage, hypothecation, pledge and/or charge already created, at such timeand in such form, manner and ranking and on such terms and conditions as the Board may deem fit in the interestof the Company, on all or any of the movable and/or immovable properties and assets of the Company, bothpresent and future, and/or the whole or part of the undertaking of the Company together with or without power totakeover the management of the business or any undertaking of the Company in case of certain events of default, infavour of the lender(s), bankers, agent(s), trustee(s) or others, for securing any loans, advances, any financialassistance debentures, external commercial borrowings or any other borrowings by way of any securities orotherwise, availed or to be availed by the Company, in foreign currency or in Indian Rupees, along with interest,additional interest, accumulated interest, liquidated damages, commitment charges or costs, expenses and all other



C M Y K

moneys payable by the Company including any increase as a result of devaluation/revaluation /fluctuations in therate of exchange, from time to time, upto the limits approved under Section 293(1)(d) of the Companies Act, 1956and other temporary loans or borrowings from the Company’s bankers in the ordinary course.

RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised to and cause toprepare, finalise, approve and execute on behalf of the Company with the lenders, bankers, agent(s), trustee(s) orothers, the documents, deeds, agreements, declarations, undertakings, indemnities and writings as may be necessaryand are expedient for giving effect to the foregoing resolution.

RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised to vary and/oralter the terms and conditions of the security created/to be created as aforesaid in consultation with the lenders,bankers, agent(s), trustee(s) or others as they may deem fit.”

Registered Office: By Order Of the Board

Plot No.N-198, MIDC,Tarapur,Village-Pamtembhi, Sd/-Taluka-Palghar, Dilip MaharanaDist. Thane 401 506. Company Secretary

Place: MumbaiDate: 26th May, 2010

NOTES1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE

(ON POLL) INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER OF THE COMPANY. A Proxy inorder to be effective must reach the Registered Office of the company not later than 48 hours before the time forholding of the aforesaid meeting.

2. The Explanatory statement pursuant to Section 173(2) of the Companies Act, 1956 in respect of the special businessto be transacted at the meeting is annexed hereto and forms part of the notice.

3. Corporate members are requested to send a duly certified copy of the Board Resolution authorizing theirrepresentatives to attend and vote at the AGM.

4. The Register of Members and Share Transfer Books of the Company will remain closed from, Saturday, 21st August,2010 to Friday, 27th August,2010 (both days inclusive) for determining the names of members eligible for dividend,if declared, by the Company subject to the provisions of Section 206A of the Companies Act, 1956.

5. All documents referred to in the accompanying notice and explanatory statement are open for inspection at theregistered office of the company on all working days except Saturdays, between 11.00 a.m. and 1.00 p.m., up tothe date of AGM.

6. The members are requested to note :(i) Change of Address /Bank details : Members holding shares in physical form are requested to inform M/s

Sharepro Services (India) Private Limited, immediately of any change in their address and bank details. Membersholding shares in dematerialized form are requested to intimate all changes with respect to their address, bankdetails, mandate etc. to their respective Depository Participants. These changes will then be automaticallyreflected in the Company’s records. This will help the Company to provide efficient and better service to themembers.

(ii) National Electronic Clearing Service (NECS) Facility: The Company has been using the Electronic ClearingServices (ECS) of the Reserve Bank of India (RBI), at designated locations, for payments of dividend to shareholdersholding shares in dematerialized form as well as payment of dividend to the shareholders holding shares inphysical form, who chose to avail of the same.As per RBI’s notification, with effect from 1st October 2009, the remittance of money through ECS hasbeen replaced by National Electronics Clearing Services (NECS). NECS operates on the new and uniquebank account number allotted by banks post implementation of the Core Banking Solutions (CBS). Pursuantto implementation of CBS, your bank account number may have undergone a change, which is required tobe communicated by you to your Depository Participant, incase you are holding shares in dematerializedform.


Aarti Drugs Limited

C M Y K

Shareholders holding shares in physical form who have not yet opted for the ECS Mandate Facility, mayauthorize the Company with their NECS mandate in the prescribed form. Request for payment of dividendthrough NECS for the year 2009-10 should be lodged with M/s. Sharepro Services (India) Private Limited on orbefore 16th Agust, 2010.

(iii) Section 109A of the Companies Act, 1956 provides for Nomination by the shareholders of the Company in theprescribed Form No. 2B for shares held in physical form. Blank forms will be supplied by the Company onrequest. Members holding shares in demat form may contact their respective Depository Participants forrecording of nomination.

(iv) Shareholders seeking any information or clarification on the accounts are requested to send written queries tothe Company at least 10 days before the date of the meeting to enable the management to keep the requiredinformation available at the meeting.

(v) The Company has transferred unclaimed amounts of dividends up to March 31, 2002 to the General RevenueAccount /Investor Education and Protection Fund of the Central Government as required under Sections205Aand 205C of the Companies Act, 1956.Those members who have so far not encashed their dividendwarrants for the below mentioned financial years may claim / approach the Company for the payment thereofas the same will be transferred to the Investor education Protection Fund of the Central Government, pursuantto section 205 C of the Companies Act,1956 on the respective dates mentioned hereunder.

Financial Year ended Date of Declaration Due date of Transfer

31.03.2003 09.08.2003 08.09.2010

31.03.2004(Interim) 31.10.2003 30.11.2010

31.03.2004(Final) 06.07.2004 05.08.2011

31.03.2005(Interim) 29.10.2004 28.11.2011

31.03.2005(Final) 06.08.2005 05.09.2012

31.03.2006 31.7.2006 30.08.2013

31.03.2007 12.03.2007 11.04.2014

31.03.2008 23.08.2008 22.09.2015

31.03.2009 1.08.2009 31.08.2016

7. Brief Resume of Directors seeking Re-election / Appointment:Mr. Chandrakant V. Gogri, aged 63, is a Bachelor of Chemical Engineering from UDCT, University of Mumbai,and also a Diploma Holder in Business Management. After graduation, while working as plant engineer and later asa project engineer, he gained valuable experience in chemical manufacturing before venturing on his own. He isone of the main promoters of the Company. His business acumen, entrepreneurial zeal and organizational skill hasbeen very much helpful to the Company to grow. As on 31st March,2010, his Directorship / committee membershipin other public companies are as follows:

Sr. No. Name of the Company Membership of Board/ Committees

1 Aarti Industries Limited ChairmanChairman: Shareholders Grievance Committee, RemunerationCommittee, Share Transfer Committee, Finance Committee

2 Aarti Healthcare Limited Member: Audit Committee

3 Aarti Corporate Services Limited Director

4 Aarti Drugs Limited ChairmanChairman: Shareholders Grievance Committee, RemunerationCommittee, Share Transfer Committee

Mr.Chandrakant V. Gogri holds 334990 shares in the Company.



C M Y K

Mr. Harshit M. Savla, aged 47, is a Bachelor of Commerce. He has experience over 24 years in handlingcommercial functions in company’s sales, purchase and exports. He is the Jt. Managing Director and ChiefFinancial Officer (CFO) of the Company. He played a major role to improve company’s financial position. As on31st March,2010, his Directorship / committee membership in other public companies are as follows:

Sr. No. Name of the Company Membership of Board/ Committees1 Aarti Drugs Limited Jt.Managing Director

Member: Shareholders Grievance Committee, Share TransferCommittee, Finance Committee

2 Suyash Laboratories Limited Director3 Amit Heterochem Labs Director

India Limited4 Dhaval Raltors (I) Pvt.Lilited Director5 Crystal Millenium Realtors Pvt. Ltd. Director

Mr. Harshit M. Savla holds 282819 shares in the Company.Mr. Uday M. Patil, aged 47 is working with the Company since long and he has good experience in factoryadministration work and liaisoning with various Government/Semi Government departments and agencies. As on31st March,2010, his Directorship / committee membership in other public companies are as follows:

Sr. No. Name of the Company Membership of Board/ Committees1 Aarti Drugs Limited Director2 Suyash Laboratories Limited Director

Mr. Uday M. Patil holds 3800 shares in the Company.Mr. Sunil M. Dedhia, aged 45, is a Chartered Accountant and Company Secretary. He is practicing CompanySecretary and has over 21 years of experience in the field of Corporate laws. As on 31st March,2010, hisDirectorship / committee membership in other public companies are as follows:

Sr. No. Name of the Company Membership of Board/ Committees

1 Aarti Industries Limited Director

2 Aarti Drugs Limited Director

3 Anushakti Chemicals & Drugs Ltd. Director & Member : Audit Committee

Mr. Sunil M. Dedhia does not hold any shares in the Company.Explanatory Statement pursuant to Section 173(2) of the Companies Act 1956Item Nos. 8 and 9Shareholders at the Annual General Meeting held on 31.08.2002 accorded their consent under Section 293(1)(d) of theCompanies Act,1956 to the Board of Directors of the Company to borrow up to an amount of Rs.150 crores over and abovethe aggregate of the paid up capital and free reserves of the Company for the time being and further consent under Section293(1)(a) of the said Act to create mortgages/charges on properties and assets, undertakings of the Company to secure suchborrowings and working capital credit facilities. In view of the increased operations and ongoing capital expenditures of theCompany and to take care of future expansion and diversification plans, your Directors request to increase the aforesaidpowers to Rs.300 Crores, by passing the enabling resolutions proposed at the Item Nos. 8 and 9 of the accompanying notice.Your Directors recommend the said resolutions for your approval.None of the other Directors is, in any way, concerned or interested in the said resolutions.

Registered Office: By Order Of the BoardPlot No.N-198, MIDC,Tarapur,Village-Pamtembhi, Sd/-Taluka-Palghar, Dilip MaharanaDist. Thane 401 506. Company SecretaryPlace: MumbaiDate: 26th May, 2010


Aarti Drugs Limited

C M Y K

DIRECTORS’ REPORTDear Shareholders,

Your Directors have pleasure in presenting the 25th Annual Report together with the Audited Statements of Accountsalong with the Report of the Auditors for the year ended 31st March, 2010.

COMPANY’S STANDALONE FINANCIAL RESULTS

(Rupees in Lakhs)

2009-2010 2008-2009

Gross Sales/ Income from Operations 49695 40969

Less: Excise Duty & Sales Tax 2553 3319

Net Sales/Income from operations 47142 37650

Less: (Increase) / Decrease in Stock-in-Trade 376 695

Consumption of Raw Materials 23179 21077

Staff Cost 1362 1114

Other Expenditure 14793 8950

Total Expenditure 39710 31837

Operating Profit Before Interest, Depreciation, Tax & Amortisation 7432 5814

Add: Non-operating Income 45 17

Profit before Interest, Depreciation, Tax & Amortisation 7477 5831

Less: Interest (previous year interest includes premium on FCCBs redemption) 1474 2272

Depreciation & Amortization 1621 1244

Profit Before Tax 4382 2315

Less: Provision for taxation – Current 1502 555

– Deferred 270 255

Profit After Tax 2610 1505Add: Surplus brought forward 9549 8607

Profit available for appropriation 12159 10112

Appropriations:

Income tax of Earlier Year 3 0

Transfer to General Reserve 261 151

Proposed Dividend 50% (Previous Year : 30%) 605 351

Tax on Dividend 101 60

Balance carried to Balance Sheet 11189 9549

DIVIDEND

Your Directors have recommended Dividend of Rs.5 /- (50%) per share for the year ended 31st March, 2010 (PreviousYear:30%). Total cash outflow on account of dividend payment including dividend tax will be Rs.706 lakhs for thefinancial year 2009-10(Previous Year:Rs.411 lakhs).



C M Y K

OPERATIONS REVIEW

During the year under review, the Company has achieved Sales Turnover of Rs.49695/- lakhs (Previous Year: Rs.40969/- lakhs) registering a growth of over 21%.

The Company has achieved Export Turnover of Rs.17297/- lakhs as against Rs.15883/- lakhs for the correspondingperiod last year, registering a growth of 8.90%.

Operating Profit before Interest, Depreciation & Tax has been Rs.7164/- lakhs (Previous Year Rs.5674 lakhs) registeringa growth of over 26%.

Profit After Tax has been Rs.2610/- lakhs (Previous Year: Rs.1505 lakhs) registering a growth of over 73%.

PREFERENTIAL ISSUE

The Company has issued and allotted on 20.12.2010, 4,00,000 Equity Shares of Rs.10/- each at a premium ofRs.42.60 ps. per share, upon exercise of option by the holders of Convertible Warrants issued by the Company onpreferential basis. Amount raised by issue of the said Equity Shares have been fully used to meet ongoing capitalexpenditure and long term working capital requirements as proposed.

DIRECTORS’ RESPONSIBILITY STATEMENT

As required u/s. 217 (2AA) of the Companies Act, 1956, your Directors hereby state that –

(i) in the preparation of the Annual Accounts for the financial year ended 31st March, 2010, the applicable accountingstandards have been followed. There are no material departures from the applicable accounting standards;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company atthe end of the financial year and of the profit of the Company for that year;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act for safeguarding the assets of the Company and for preventingand detecting fraud and other irregularities;

(iv) the Directors have prepared Annual Accounts on a going concern basis.

SUBSIDIARY COMPANY

Upon an application made by the Company under section 212(8) of the Companies Act,1956, the Central Government,vide its letter dated 17th March,2010, has exempted the Company from attaching the Balance sheet, Profit & LossAccount and other related documents to be attached under section 212(1) of the said Act to the Annual Report of theCompany. Accordingly the said documents of the Company are not attached with the Balance sheet of the Company.A gist of the financial performance of the subsidiary company is contained in this Report. The Annual Report of thesubsidiary company is open for inspection by any member/investor and the Company will make available thesedocuments at the request of any member or investor of the Company interested in obtaining the same. The Annualaccounts of the subsidiary will also be kept at the Registered office of the Company as well as at the head office of thesubsidiary Company.

CONSOLIDATED STATEMENTS OF ACCOUNTS

The Audited consolidated Accounts and Cash Flow statement, comprising of the company and its subsidiary, namely,Suyash Laboratories Limited form part of this Report. The Consolidated accounts have been prepared in accordancewith Accounting Standards (AS-21), on Consolidated Financial Statements issued by Institute of Chartered accountantsof India.


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DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr.Chandrakant V. Gogri , Mr. Harshit M. Savla, Mr. Sunil M. Dedhia, Mr. Uday M. Patil retire by rotation and beingeligible, offer themselves for re-appointment.

CORPORATE GOVERNANCE

Report on Corporate Governance compliance along with Auditors Certificate thereon is included as a part of thisReport.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report as required under the Listing Agreement is annexed hereto forming part ofthis Report.

DISCLOSURE OF PARTICULARS

Pursuant to section 217(2A) of the Companies Act,1956 read with Companies (Particulars of employees) Rules 1975, asamended up to date, the names and other particulars are set out in the Annexure to the Directors’ Report. However, asper the provisions of the section 219(1)(b)(iv) of the Companies act,1956, this Report is sent to the shareholdersexcluding the said information. Any shareholder interested in obtaining such particulars may write to the CompanySecretary at the Registered Office of the Company.

Particulars required u/s. 217(1)(e) of the Companies Act, 1956, read with Rule 2 of the Companies (Disclosure ofParticulars in the Report of Board of Directors) Rules, 1988, relating to conservation of energy, research & development,technology absorption, foreign exchange earnings and outgo are given in the annexure to this Report.

AUDITORS

M/s. Parikh Joshi & Kothare, Auditors of the Company retire at the ensuing Annual General Meeting and are eligible forreappointment. Members are requested to appoint Auditors and to fix their remuneration.

COST AUDIT

The Cost Audit Report relating to Bulk Drugs manufactured by the company will be submitted with the Centralgovernment in due course. The board of Directors have appointed Mr. Girish S. Maniar, Cost Accountant, for conductof the cost audit for the year ended 31st March, 2011, subject to the approval of the Central Government.

HUMAN RESOURCES

Your Company recognizes its human resources as one of its prime & critical resources. The relations between theManagement and the Staff Members remained very cordial and satisfactory throughout the year under review.

ACKNOWLEDGEMENT

We place on record our sincere appreciation to the employees of the Company at all levels for their co-operation anddedicated services. We also thank all our associated customers and suppliers who are always co-operative.

We also express our sincere thanks to Bankers, Financial Institutions and the Shareholders for their continued support.

By Order of the Board

Sd/-Chandrakant V. Gogri

ChairmanPlace: MumbaiDate: 26th May, 2010.



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Management discussions and AnalysisPharmaceutical Industry – Global & Indian

The global pharma market was USD 774.8 billion for the 2008 calendar year as per IMS health data, recording agrowth of 5.3%. Global pharma market is estimated to grow at an average rate of 4-7% over next 5 years from2008-2013. Rising healthcare costs have placed tremendous budgetary pressure on the Governments in the developedcountries leading to an increasing support in the favor of generics. The generic markets therefore continue to provideabundant opportunities for generic manufacturers in general and Indian pharmaceutical companies in particular due totheir cost competitiveness and ability to deliver quality products on time.

India belongs to a group known as Pharmerging market that collectively estimated to grow at a rate of 13 - 16% onCAGR basis during 2008-2013. Pharmerging group consists of countries like Brazil, Russia, India, China, Turkey,Mexico and S.Korea.. Stable Indian government, which has been a key to economic stability, developing infrastructure.Sound monetary & regulatory policies by RBI has kept Indian financial institutions and currency under constant checkto avoid financial crisis. We are still going strong in the Anti-inflammatory, Anti diarrhoeals and Anti-biotic therapeuticcategories. The pharmaceutical industry with its rich scientific talents and research capabilities, supported by theintellectual property protection regime is well set to take on the International market. Pharmaceutical & Healthcaresector has shown a good growth and is considered to be one of the most insulated sectors to downturn, which can alsobe justified by ADL’s FY2009-10 performance.

Business Strategy

• Domestic Market and Trends:

ADL expects to increase its market share in the Antibiotic segment, which is growing fast due to penetration ofhealth services in rural areas of the country. To cope up with the above demand ADL expanding its capacity invarious existing product-lines. There is also a shift in demand from drugs treating hygiene related diseases tolifestyle drugs for the urban sector. We are gearing up to cater to this demand with a diversified product basket withdrugs in the Anti-diabetic, Anti-infective, Anti-hypertensive and Cardio vascular therapeutic groups. ADL hasalready upgraded its facilities to meet high-standards, as lot of Indian formulators has started exporting ready-formulations to regulated markets.

• Export Market and Trends:

Semi-regulated markets are becoming more and more like regulated markets demanding better and GMP-approvedfacilities. Keeping that in mind, we have already upgraded most of our plants to cater the trend. ADL is alreadyworking & having discussions with global clients to harness the tremendous growth potential of the globalpharmaceutical industry by targeting the regulated markets in the near future. ADL’s USFDA, TGA approved plantis all approved to cater US pharma & Australian market. ADL also has three EUGMP approved facilities forEuropean market. Further COS approvals and supplier registrations for several of its existing products.

ADL will continue to cater global pharmaceutical markets through following channels:

• Contract Manufacturing

• Direct Exports

Increasing its share of direct exports to regulated and non–regulated markets. Continuing R&D on the moleculesthat will go off patent in near future

• Indirect Exports

Supplying APIs to domestic formulations for regulated markets

SWOT Analysis

Strengths & Opportunities

ADL has already established itself as a strong player in the global as well a domestic market, as a market leader inAnti-diarrhea. ADL is also strong in Anti-inflammatory, Anti-biotic Vitamins & Anti-diabetic therapeutic segments.


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In other therapeutic segments too, it is confident of increasing its share in the near future. In addition to the existingexports to 86 countries worldwide, it is developing business in new geographies as well.

To maintain the brand name of ADL as one of the most reliable bulk-drug manufacturer in the world, ADL is operatingits two State-of-the Art R & D Centers at Tarapur, which are recognized by Department of Science and IndustryResearch, Government of India, and the other R&D Center at Turbhe, Navi Mumbai. Our scientists are responsible fordeveloping technology, non-infringing synthesis routes, scale up and its transfer to manufacturing location forcommercialization. They actively work not only on bulk drugs in therapeutic areas like Glucocorticicosteroid,Anti-histamine, Antibiotics, Antianginal, Antitussive, Anticonvulsant, Anti-diabetics, Anti-depressant, Anti-fungal,Anti-hypertensive and Antipsychotic but also on specialty chemicals for non-API related applications.

ADL has custom synthesis facilities for reactions like Nobel Metal Hydrogenation (Catalytic Reduction), Oxidation,Fischer Idolization Balz Schiemann (halex) (Flourination of Amines) Esterification (including Asymmetric Esterification)Sulphonation, Alkylation, Methoxylation, Halogenation, (CI, BR, I) Acetylation, Diazotization & Related Chemistry,Grignard Reaction, Friedel Craft, Aldol Condensation, Cynation, ChloroSulfonation etc.

ADL has ISO 9001:2000 approved plant for manufacturing specialty chemicals. ADL also has 3 EUGMP plantsapproved by the European Directorate and Quality Management (EDQM), which will give better realization per unitand better profitability.

The company has USFDA approved plant which will help to increase ADL’s share of exports to regulated markets,which have recently gone off-patent or are scheduled to be off patent soon and will help to get better realization. Wealready have fourteen USDMFs assigned and eight COS approvals, which has open up opportunities in North American& European market.

Weakness, Risk and Concerns

As discussed in out last letter to shareholders, the crude oil prices have gone up and will continue to do so due toperennial need and limited supply. ADL is looking into newer and greener technologies to save power and fuel costs.ADL was able to cope up with these pressures due to strong operational efficiency and increased market share of itsproducts, which is also reflected in its high operating profits last the year.

Exchange rate of rupee against US dollar has been relatively steady last year. Volatility of US dollar against rupee isalways a concern for us. Part of ADL’s foreign exchange risk is automatically hedged because of its imports thatpartially balance its exports.

Internal control System and their Adequacy

The Company has sound and adequate internal control systems commensurate with its size and nature of business.

The Audit Committee of the Board periodically reviews the said systems. The systems ensure protection of assets andproper recording of transactions and timely reporting.Internal audit is being carried out by an independent firm ofchartered accountants.

The Audit Committee also reviews the periodic report of the internal auditors. Any issues rose by Internal Auditors andStatutory Auditors are discussed and addressed by the Audit committee.

Discussion on Financial & Operational Performance

During the year under review the company has achieved topline of Rs. 496.95 Crores, achieving a y-o-y growth of21.3% correspondingly EBIDTA worked out to Rs. 74.77 Crores, increasing 28.23% over last year. Net profit after taxregistered a growth of 73.42%, due to increase on operating efficiency and reduction in borrowing cost inspite ofhigher effective tax rate.

Human Resources

The Company has been continuously focusing on people and processes to encourage and nurture winning organizationalculture to realize their full potentials through continuous learning on the job and through other HRD initiatives. HumanResource is the most critical factor responsible for achieving the organizational goals and maintaining high quality



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standards. Prime focus of Human Resource Management has been overall development of our workforce. A full-fledgedHR Department is being run by professionally qualified team in co-ordination with the top management. HRD centerhad conducted number of training programs during the year 2009-10 on various topics related to TechnologicalDevelopment, Quality System Management, Behavioral Change Modules, Individual and Operational Safety, PersonalityDevelopment, Computerization of Systems etc. Apart from these internal training programs, employees are also sent fortraining / seminars participation at prominent training institutes on regular basis for upgrading their knowledge and skilllevel. To face the challenges put up by globalization, the need was felt have versatile workforce at technical level. Toachieve this, Multi Skill Training Programme was introduced in 2003. We are the first in the region to implement theconcept of “365 days training” in a calendar year. Cordial and harmonious relations with our employees continued toprevail through out the year under review.

Corporate Social Responsibility

As contribution towards Community Development to fulfill Company’s obligations towards the Society, Companyorganizes many activities on regular basis including Blood donation camps, Eye check up camps, Health check upcamps, Career guidance workshops for young students. The Company has also made donations to hospitals. As a steptowards our objective of upgrading primary education in the surrounding areas, infrastructure development of schoolwas initiated and supported. Contribution were made to primary schools of surrounding villages for painting of schoolbuildings, purchase of benches & furniture, sports equipments, records storage facilities etc.

Employees and community at large have appreciated our efforts. We have been providing maintenance services to thePalghar – Dahanu Taluka Sport Association Ground located at Boisar.

Environment Health and Safety

All our plants are designed with appropriate Waste Management Systems and operate in harmony with the surroundingecosystem. Safe disposal of waste, treating effluents to manufacture an eco-friendly by-product, generating steamthrough a waste heat recovery plant, and In-house R&D team ensuring pollution control & energy conservation aresome of the ways adopted by ADL to operate in a eco-friendly manner. Environmental requirements are incorporatedinto the plant design right from the preliminary stage of a process. Air scrubbers, dust filters, fire protection systems andan Effluent Treatment Plants are in place & well maintained. Regular safety drills ensure that readiness for safety getstop priority.

Outlook

The Company R&D programs are currently focused on new products amongst therapeutic categories such as Antipsychotic,Antitussive, Antifungal, Antihypertensive, Anticonvulsant, Antiarryhythmic, Cardiovascular, Alcoholism treatment andAnti-inflammatory. These products would be launched in a time-horizon of 2-4 years depending upon patents. Companywill continue to do R&D on APIs that are off patents and will work on non-infringing synthesis routes. ADL will alsofocus on expanding its specialty and agro-chemical product-line in near future. ADL’s perpetual process R&D will be akey to its success in the fiercely competitive Indian Pharma market.

ADL is already expanding the capacities of its existing products in Anti-Biotic, Anti-Diabetic, Anti-Fungal, and Anti-Diarrhea segments. Majority of the expansion program will be completed in this year and sales would also be seen inthe later half of the current year.

Cautionary Statement

Statement in the Management Discussion and Analysis describing the Company’s objectives, projections, expectationsand estimates regarding future performance may be “forward looking statements” and are based on currently availableinformation. The management believes these to be true to the best of its knowledge at the time of preparation of thisreport. However, these statements are subject to certain future events and uncertainties, which could cause actualresults to differ materially from those that may be indicated in such statements.


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Report On Corporate GovernanceYour Company has complied in all material respects with the Corporate Governance Code as per Clause 49 of theListing Agreement with the Stock Exchanges. A Report on the Corporate Governance compliance is furnished below:

Company’s Philosophy on Corporate Governance

Good Corporate Governance helps enhancement of long term shareholder value and interest of other stakeholders. Thisis achieved through increased awareness for responsibility, transparency and professionalism and focus on effectivecontrol and management of the organization. The Board of Directors of the Company is committed to the consistentadherence to the corporate governance code and constant review of the Board processes, practices and the managementsystems to maintain a greater degree of responsibility and accountability.

Mandatory Requirements :

1. Board of Directors

(a) Composition & Size of the Board:

As on 31.03.2010, the Board of the Company consists of 12(Twelve) Directors, out of which 8(Eight) i.e.majority Directors are non-executive/independent Directors including Chairman who is non-executive. TheBoard comprises of 4(four) executive Directors, 2 non executive Directors and 6(Six) independent Directors.

(b) Board Meetings & other relevant details:

During the year 2009-10, five Board Meetings were held on 20.05.2009, 30.07.2009, 30.10.2009, 20.12.2009and 25.01.2010. Agenda along with the explanatory notes and information which are materially significant fordiscussion and decision making are sent in advance to the Directors as per the requirements specified in clause49 of the Listing Agreement wherever applicable.

The Board composition as on 31.03.2010 and other relevant particulars are given below:

Name of Director Category No. of No. of No. of No. of Annualother Committee Chairmanship Board General

Directorship* membership on Board Meetings Meetingin all Committees** attended Attendance

companies** (held on01.08.2009)

Mr. C. V. Gogri Chairman 3 1 2 5 YesNon-Executive

Mr. P. M. Patil Managing 1 1 None 5 YesDirector

Mr. H. M. Savla Joint Managing 2 1 None 4 YesDirector

Mr. H. P. Shah Executive 2 1 None 4 YesMr. R. V Gogri Non Executive 5 2 None 4 NoMr. U. M. Patil Executive 1 None None Nil YesMr. R. M. Gandhi Independent 4 2 5 5 NoDr. V. G. Gaikar Independent None 1 None 4 NoMr. B. R .Vora *** Independent 1 2 1 4 Yes

(AlternateChairman)

Mr. S. M. Dedhia Independent 2 1 None 5 YesProf. K. G. Akamanchi Independent None None None 4 NoDr. S. B. Sawant Independent None None None 4 No

* excludes directorships held in private and foreign companies.** include Audit Committee & shareholder Grievance Committee only.



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Code of Conduct

The Code of Conduct laid down by the Board for all the Directors and Senior Management of the Company, hasbeen posted on the Company’s website www.aartidrugs.com. All the Board members and senior management ofthe Company have affirmed compliance with the Code of Conduct. A declaration to this effect, duly signed by theManaging Director is annexed hereto.

Audit Committee

The Audit Committee has been constituted as per Section 292A of the Companies Act, 1956 and the guidelines set outin the Listing Agreements with the Stock Exchanges. The role and terms of reference of the Audit Committee coversthe matters specified for Audit Committee under Clause 49 of Listing Agreements, which inter-alia include overseeingfinancial reporting process, reviewing periodic financial results, financial statements, internal control and internalaudit systems, accounting policies and practices, related party transactions, performance of internal and statutoryauditors, adequacy of internal audit function, discussions with internal and statutory auditors and cost auditors.

During the year 2009-10, four Audit Committee meetings were held on 20.05.2009, 30.07.2009, 30.10.2009 and25.01.2010.

The composition of the Audit Committee and other relevant details are given below:

Name of Director Category Profession No. of meetings attended

Mr. Ramdas M. Gandhi Non-executive Solicitor 4Chairman (Independent)

Mr. Bhavesh R. Vora Member Non-executive Professional 3Alternate Chairman (Independent)

Dr.Vilas G. Gaikar Non-executive Service 3Member (Independent)

Mr.Prakash M. Patil Managing Director Industrialist 4Member & CEO

3. Shareholders’ Grievance Committee

Terms of Reference of the Committee inter alia cover reviewing status of approval of transfer/transmission of shares,issue of duplicate certificates, review / redressal of investor’ grievances.

During the year 2009-10, Four Committee meetings were held on 15.06.2009, 15.09.2009, 16.11.2009 and16.02.2010.The composition of the Shareholders’ Grievance Committee and other relevant details are given below:

Name of Director Category No. of meetings attended

Mr. C. V. Gogri Chairman Non-Executive 4

Mr. Bhavesh R Vora Member Independent 4

Mr. Harit P.Shah Member Wholetime Director 4

Mr. H. M. Savla Member Joint Managing Director 4

Shareholders’ complaints : During the year, 30 complaints were received. All the complaints were resolved to thesatisfaction of shareholders.

No request for share transfer or dematerialisation was pending as on 31.03.2010.

4. Remuneration of Directors

The Remuneration payable to the Directors is considered and approved by the Remuneration Committee constitutedin accordance with the Corporate Governance Code and the provisions of the Companies Act, 1956, having dueregard to the relevant factors.


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The details of relationship of Directors inter se and remuneration paid to each Director are as under:

(Amount in Rs.)

Name of Director Inter se Salary and Commission Sitting Fees TotalRelationship Perquisites Remuneration

Mr. C. V. Gogri Brother of Nil Nil 125000 125000Mr. R. V. Gogri

Mr. P. M. Patil Brother of 2580062 4681081 NIL 7261143Mr. U. M. Patil

Mr.H. M. Savla - 2082847 4681081 NIL 6763928

Mr. H. P. Shah - 1833039 4681081 NIL 6514120

Mr.U. M. Patil Brother of 357373 Nil NIL 357373Mr. P. M. Patil

Mr.R. V. Gogri Brother of NIL NIL 88000 88000Mr. C. V. Gogri

Mr. R. M Gandhi - NIL NIL 63000 63000

Dr. V. G. Gaikar - NIL NIL 49000 49000

Mr. B. R. Vora - NIL NIL 67000 67000

Mr. S. M. Dedhia - NIL NIL 35000 35000

Prof. K. G.Akamanchi - NIL NIL 28000 28000

Dr. S. B. Sawant - NIL NIL 28000 28000

All Executive Directors except Mr. U. M. Patil are appointed under the contracts each for a period of five years andwith termination notice period of 180 days.

The Non-executive Directors, apart from receiving Directors’ remuneration by way of sitting fees or other fees, ifany, approved by the Board of Directors within the limit fixed and approved by the shareholders, do not have anyother material pecuniary relationship or transactions with the Company.

The shares held by the Non-Executive Directors of the Company as on 31st March, 2010 are as follows:

Name No. of shares held

Mr.C. V. Gogri 334990

Mr.R. V. Gogri 330980

Mr.R. M. Gandhi NIL

Dr.V. G Gaikar NIL

Mr.B. R. Vora NIL

Mr.S. M Dedhia NIL

Prof. K. G. Akamanchi Nil

Dr.S. B. Sawant 125



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5. General Body Meetings

Details of last three Annual General Meetings are as under :

Year Day, Date & Time Venue Special Resolutions passed for

2007 Monday, 03.09.2007 TIMA Hall, MIDC Tarapur, 1. Reappointment of Mr.Prakash M. Patil asAt 11.00 am Taluka – Palghar, Managing Director for 5years w.e.f 01.06.2007.

Dist. Thane 401 506,Maharashtra 2. Reappointment of Mr.Satish P. Nachane as

Managing Director for 5years w.e.f 01.06.2007.

3. Reappointment of Mr.Harshit M. Savla as JointManaging Director for 5years w.e.f 01.06.2007.

4. Reappointment of Mr.Harit P. Shah asWholetime Director for 5years w.e.f 01.06.2007.

5. Consent for appointment of Mrs.Hetal GogriGala to hold an office of profit as President –Purchases w.e.f 01.04.2007.

2008 Saturday, 23.08.2008 -Do- NilAt 11.30 am

2009 Saturday, 01.08.2009 -Do- NilAt 11.00 am

During the last year, no resolution was put through postal ballot. No Resolution is proposed to be put throughpostal ballot at the ensuing Annual General Meeting.

6. Disclosures

(a) The Company has continued to comply with the requirements of Stock Exchanges, SEBI and other statutoryauthorities on all matters related to capital markets during the last three years. No penalties or strictures havebeen imposed on the Company by the said authorities relating to the above.

(b) There have been no materially significant related party transactions that may have potential conflict with theinterests of the Company at large. Transactions with related party are disclosed in the schedule U - Notes toAccounts to the Annual Accounts in the Annual Report.

7. Means of Communication

The quarterly results were published in following Newspapers:

Financial Results for the quarter ended Newspapers

30.06.2009 Business Standard and Lokmat

30.09.2009 Economic Times and Maharashtra Times



The quarterly/half yearly and the annual results of the Company are also posted on the Company’s Website:www.aartidrugs.com.

All data required to be filed electronically pursuant to the then Clause 51 of the Listing Agreement with the StockExchanges, such as annual report, quarterly financial statements, Shareholding pattern, report on corporate governancewere regularly filed on the EDIFAR website (available till 31.12.2009) viz. www.sebiedifar.nic.in in addition to thefiling of the same with the stock exchanges.


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8. General Shareholders Information

i. 25th Annual General Meeting

Day Date Time Venue

Friday 27th August, 2010 11.00 a.m. TIMA Hall, MIDC Tarapur, Taluka- Palghar,Dist. Thane 401506 Maharashtra.

ii. Financial Calendar

Financial Year 1st April to 31st March

Adoption of Quarterly Results: Latest by 30th of the month following each quarter

Dates of Book Closure (Both days inclusive) Saturday, 21st August, 2010 to Friday, 27th August, 2010

Dividend payment date: on or after 2nd September, 2010.

iii. Listing on Stock Exchanges: Bombay Stock Exchange LimitedStock Code: 524348

National Stock Exchange of India LimitedStock Code: AARTIDRUGS

Liquidity of Shares: The Equity Shares of the Company are included under B1 category at Bombay StockExchange Limited. Equity Shares of the Company are also listed on the National Stock Exchange of IndiaLimited.

Listing fees and Annual Custodial Fee: The Company has paid the annual listing fees of the stock exchangesand annual custodial fees of the depositories for the year 2009-2010.

Dematerialization status: Equity Shares of the Company are traded compulsorily in dematerialized form.Security Code No. with NSDL and CDSL is - ISIN No. INE767A01016. As on 31st March, 2010, 9187553Equity Shares representing 75.88 % of the Paid-up Share Capital of the Company stands dematerialized.

Conversion of Convertible Warrants in to Equity:

4,00,000 Equity Shares of Rs.10/- each fully paid up were issued and allotted on 20.12.20009 at a price of Rs.52.60 ps. per share (including Premium of Rs.42.60 ps.) upon exercise of option by the warrant holders.Consequently the paid up Equity Share Capital of the Company has increased to Rs.12,10,85,500/- .

iv. Share Transfer Agents: Sharepro Services (India) Pvt. Ltd.Samhita Complex, Gala No.52 to 56, Bldg.No.13A-B, Near Sakinaka Telephone Exchange,Andheri - Kurla Road, Sakinaka,Mumbai 400 072.Tel.: 022-67720300,67720400Fax:022-28591568.

The shareholders are requested to address their communications/ grievances to the Share Transfer Agents at theabove address.

v. Compliance Officer: Mr. Dilip Maharana, Company Secretary.Mahendra Industrial Estate,Ground Floor, Plot No.109-D, Road No.29,Sion (E), Mumbai 400 022.Tel.:2407 2182 / 2407 2249.E-mail:[email protected]. / [email protected]

In accordance with the Clause 47(f) of the Listing agreement Company has opened a specific investor grievancee-mail ID : [email protected].



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vi. Share Transfer System:

To expedite the transfer process in the physical segment, authority has been delegated to the Share TransferCommittee, which comprises of Mr. C. V. Gogri, Mr. R. V. Gogri and Mr. H. M.Savla. Committee meets everyfortnightly for approval of the transfer request.

Reports on Share Transfer/transmission are placed before the Shareholders’ Grievances Committee and theBoard from time to time.

viii. Market Price Data:

Month Bombay Stock Exchange National Stock Exchange

High (Rs.) Low (Rs.) Volume High (Rs.) Low (Rs.) Volume

Apr-09 52.90 38.00 186263 53.90 36.45 203941

May-09 66.50 40.50 337080 66.70 40.10 528539

Jun-09 65.00 50.45 197632 66.30 50.05 162214

Jul-09 60.50 48.00 145406 60.90 47.00 183466

Aug-09 78.00 59.10 660453 78.00 59.00 691439

Sep-09 104.30 68.00 3338701 104.45 67.70 5629423

Oct-09 97.80 75.30 852104 98.20 74.50 1545412

Nov-09 91.50 78.70 413769 91.80 78.50 588901

Dec-09 116.90 83.60 4143462 117.40 83.95 7311598

Jan-10 117.80 87.25 1236192 117.30 92.95 2581971

Feb-10 105.00 86.55 240493 105.40 88.00 451385

Mar-10 114.00 91.15 1006935 114.70 91.30 2098361

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ix. Shareholding Pattern as on 31.03.2010

Category No. of Shares %

Promoters – Indian 6057324 50.03

Bodies Corporate 710144 5.86

NRIs/OCBs/FIIs 79216 0.65

Banks, Financial Institutions 2 0.00

Mutual Funds/trust 500 0.00

Public 5261364 43.46

Total 12108550 100.00

Distribution of Shareholding as on 31.03.2010

No. of Shares Shareholders Shares

Number % Number %

Less than 250 8469 76.998 830466 6.859

251 - 500 1283 11.665 506197 4.180

501 - 1000 595 5.410 486789 4.020

1001 - 2000 257 2.337 399488 3.299

2001 - 3000 123 1.118 316101 2.611

3001 - 4000 56 0.509 201172 1.661

4001 - 5000 46 0.418 217835 1.799

5001 - 10000 64 0.582 479833 3.963

10001 - 99999999998 106 0,964 8670669 71.608

Total 10999 100.000 12108550 100.000

x. Plant locations:

Plot No. N-198, G-60, E-120, K-40, K-41, E-9/3 ,E-9/4, E-21 and E-22 MIDC Industrial Area, Tarapur, VillagePamtembhi, Tal-Palghar, Dist. Thane – 401 506.

Plot Nos. 2902/2904, GIDC, Sarigam – 396155, Dist. Valsad, Gujarat.

xii. CEO/CFO Certification

As required under Clause 49 of the listing Agreement, a Certificate duly signed by Mr. P. M. Patil ,ManagingDirector (CEO) , Mr. H. M. Savla, Joint Managing Director(CFO) was placed at the Meeting of the Board ofDirectors held on 26.05.2010.



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Non-Mandatory Requirements

Remuneration Committee

Terms of Reference: The Committee is empowered to review and recommend/approve remuneration payable to theManagerial Personnel.

During the year ended 31.03.2010, one meeting was held on 20.05.2009.The composition of the RemunerationCommittee and other relevant details are given below:

Name of Director Category No. of Meetings Attended

Mr. C. V. Gogri Chairman, Non-executive 1

Mr. R. M. Gandhi Independent 1

Mr. P. M. Patil Managing Director 1

Dr. V.G.Gaikar Independent 1

Mr. B. R. Vora Independent 1

CEO’s Certification:

All the Directors and the Senior Management Personnel have affirmed compliance of the Code of Conduct laid downby the Board of Directors in terms of Clause 49 of the Listing Agreement made with the Stock Exchanges.

For and on behalf of the Board

Sd/-Place: Mumbai Prakash M. PatilDate: 26th May, 2010 Managing Director


Aarti Drugs Limited

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AUDITOR’S CERTIFICATE ON CORPORATE GOVERNANCE

To

The Members of Aarti Drugs Ltd,

Mumbai

We have examined the compliance of conditions of corporate governance by Aarti Drugs Ltd, for the year ended on31st March 2010, as stipulated in clause 49 of the Listing Agreement of the said company with stock exchanges.

The compliance of conditions of corporate governance is the responsibility of the management. Our examination waslimited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of theconditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements ofthe Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that thecompany has complied with the conditions of Corporate Governance as stipulated in the abovementioned ListingAgreement.

We state that no investor grievance is pending for a period exceeding one month against the Company as per therecords maintained by the Shareholders/Investors Grievance Committee.

We further state that such compliance is neither an assurance as to the future viability of the company nor theefficiency or effectiveness with which the management has conducted the affairs of the Company.

For PARIKH JOSHI & KOTHARECHARTERED ACCOUNTANTS

Sd/-

(CA Yatin R. Vyavaharkar)M. No. 33915

PartnerFirm Registration No.: 107547W

Place: Mumbai,Date: 26th May, 2010



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Annexure to Director’s reportADDITIONAL INFORMATION AS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS INTHE REPORT OF BOARD OF DIRECTORS) RULES, 1988

1. CONSERVATION OF ENERGY:

a. Energy Conservation Measures Taken:

The Company continues its policy of giving priority to energy conservation measures including regular reviewof energy generation, consumption and control on utilization thereof. The various measures taken during theyear include:

• Installation of energy efficient aerodynamically designed FRP fans replacing regular Aluminium fans forcooling towers.

• Installation capacitor banks for improvement of power saving

• Rationalization of usage of utility pumps for electrical power saving.

• Installation of auto star-delta switches for centrifuges.

• Continuous overhauling of all thermal insulations to reduce loss of heat due to radiation.

• Tuning of boilers / thermopacs for optimum Air –Fuel ratio to increase efficiency.

• Condensate recovery improved to reduce fuel consumption.

• Reduced furnace oil percentage that was use as a supplementary fuel along with liquid effluent in wasteheat recovery boiler.

• Tried to run refrigeration plants at optimum capacity & efficiency.

• Replaced furnace oil fired boiler with Briquette as a solid fuel boiler.

• Installation of Thermostat to control cooling tower temperature to reduce electricity consumption.

b. Additional Investment & Proposals If any being implemented for reduction of conservation of energy:

The proposals being considered for reduction of conservation of energy include

• Use of charcoal / carbon briquettes as a solid fuel in boilers

• Use of variable frequency drives for power saving in centrifuges & pumps

c. The adoption of energy conservation measures indicated above has resulted in optimum efficiency inoperation and saving & controlling in the cost of production.

d. Total energy consumption and energy consumption per unit of production:

I Power & Fuel Consumption

Current Year Previous Year

1 Electricity

Purchased Units (KWH) 24499341 17656077

Total Amount (Rs. In Lacs) 1250.06 809.31

Per Unit (Rs.) 5.10 4.58

2 L.D.O.

Purchased Units (MT) 36.86 37.52


Per Unit (Rs.) (Per Kg) 32.93 30.13


Aarti Drugs Limited

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3 Furnace Oil

Purchased Units (MT) 2119.88 2918.17


Per Unit (Rs.) (Per Kg) 23.05 21.26

4 Others (Rs. In Lacs)

Diesel (Rs in Lakhs) 83.05 128.76

Coal (Rs in Lakhs) 491.04 470.86

II. Consumption per unit of production:

Since the Company manufactures different types of bulk drugs and its intermediates, it is not practicable togive consumption per unit of production.

2. RESEARCH AND DEVELOPMENT ( R & D )

The Company’s two State-of –the Art R&D Centres at at Plot No.N-198 and G-60, MIDC industrial Area, Tarapur,recognized by Department of Science and Industry Research, Government Of India and other R&D center atTurbhe, Navi Mumbai, carry R&D activities for developing technology, scale up and its transfer to manufacturinglocation for commercialization of APIs and intermediates as well.

(A) Specific areas in which R & D carried out by the company during the year 2009-10:

Development of indigeneous technologies for major bulk drugs and intermediates, Improvement of existingprocess enhancing yields,quality, reducing cost etc, are as follows:

I) Bulk Drugs:-

Antibiotic,Anti-inflamatory,Antihypertensive,Antipsycotic,Nootropic, Antithrombotic, Anticonvulsant,Antibacterial, Anti BPH (benign prostatic hypertrophy), Cardioprotectant, Antiartheritis/Osteoporosis,Antidiarrhoea’s,Alzneimer’s treatment, etc.

II) Intermediates:-

Besides Sedative, Antiartheritis/Osteoporosis, Antibiotic etc., Company’s R&D has improved processdevelopment work for verious intermetiates used by the Company.

(B) Benefits derived as a result of the above R & D:-

(I) R& D efforts have helped for improvement in process and operating efficiency.

(II) Development /commercialization of various APIs and intermediates.

(III) Development of new markets, penetration in to regulatory markets through quality upgradation and costreduction.

(C) Future plans of Action :-

ADL will continue to harness the strength in high volume products by focusing on process improvement of itsexisting products as well as by introducing new blockbuster molecule in its productline. Products with patentsexpiring within next 5 years will be of key interest. At the same time we will try some innovaton in processdeveloment also so that AARTI’s name will appear in the IPR regime.




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(D) Expenditure on R&D:

(Rs. in lakhs)Current Year Previous Year

Capital 15.31 60.75

Recurring 361.90 232.50

Total 377.21 293.25

3. TECHNOLOGY ABSORPTION,ADAPTATION & INNOVATION

The Company has successfully developed Hydroxyzine Hydrochloride & Diclofenac Epolamine & CelecoxibForm – III. Technology improvement helped expansion of the key intermediate of Ciprofloxacin in the existingspace with marginal capital expenditure. This in turn helped to double the capacity of Ciprofloxacin.

4. TOTAL FOREIGN EXCHANGE EARNINGS AND OUTGO (Rs. In lakhs)


Total Foreign Exchange Earned 15278.92 13935.85

Total Foreign Exchange Used

CIF Value of Imports :

— Raw Material 11080.65 8464.63

— Capital Goods 62.96 133.83

Expenditure in Forign Currency

— Commission 218.01 214.30

— Travelling Expenses 32.65 29.80

— Sales Promotion 34.64 19.97

— Foreign Bank charges 37.88 34.75

— Interest on F.C.loan 189.19 197.80

— FCCB Issue Expenses and Interest 0.00 675.68

— Others 8.06 44.38

Total 11664.04 9815.14

For & on behalf of the Board

For & on behalf of the Board

Sd/-Place: Mumbai Chandrakant V. GogriDate:26th May, 2010 Chairman


Aarti Drugs Limited

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Auditors’ ReportAuditor’s Report to the Members ofAARTI DRUGS LIMITED,Mumbai.

1. We have audited the attached Balance Sheet of AARTI DRUGS LIMITED, as at 31st March, 2010 and also the Profitand Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financialstatements 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. Those Standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in termsof sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on thematters 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 werenecessary 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 appearsfrom our examination of those books;

(iii) The Balance Sheet and Profit and Loss Account and Cash Flow Statement dealt with by this report are inagreement with the books of account;

(iv) In our opinion, the Balance Sheet and Profit and Loss Account and Cash Flow Statement dealt with by thisreport comply with the accounting standards referred to in sub-section (3C) of section 211 of the CompaniesAct, 1956;

(v) On the basis of written representations received from the directors, as on 31st March 2010, and taken on recordby the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2010 from beingappointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

(vi) Without qualifying our opinion, we draw attention to Note 10 (c) of Schedule U: Notes annexed to andforming part of accounts for the year ended 31st March 2010. The company has changed the timing of theaccrual and accounting of Directors Commission from the date of the approval of the financial statements forthe year by the shareholders to the balance sheet date of the concerned financial year. Due to this, the NetProfit for the year and the Reserves are stated lower, and the Current Liabilities and Provisions higher, byRs.92,43,764/-.

(vii) In our opinion and to the best of our information and according to the explanations given to us, the saidaccounts give the information required by the Companies Act, 1956, in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India;



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(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;

(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.


Sd/-

(CA Yatin R. Vyavaharkar)M. No. 33915

PartnerFirm Registration No.: 107547W

Place: Mumbai,Date: 26th May, 2010


Aarti Drugs Limited

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Annexure To The Auditors’ Report(Referred to in para 3 of our Report of even date)

As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms ofsub-section (4A) of section 227 of the Companies Act, 1956 and explanations given to us and on the basis of suchchecks, as we considered appropriate, we have to state that:

The nature of the Company’s business during the year has been such that clause (xiii) pertaining to Chit Funds etc, andclause (xiv) pertaining to Dealing/Trading in Securities etc, of paragraph 4 of the Companies (Auditor’s Report) Order,2003, are not applicable to the Company.

(i) (a) The Company has maintained proper records showing full particulars including Quantitative details andsituation of its fixed assets.

(b) The fixed assets were physically verified by the Management during the year. We have been informed that nomaterial discrepancies were noticed on such physical verification.

(c) Substantial part of fixed assets has not been disposed of during the year.

(ii) (a) The stock of inventory has been physically verified during the year by the Management at reasonableintervals.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonableand adequate in relation to the size of the company and the nature of its business.

(c) The company is maintaining proper records of inventory.The discrepancies noticed on physical verification ofstocks as compared to book records were not material, however, the same have been properly dealt with inthe books of account.

(iii) (a) The Company has granted unsecured loan, to Company, covered in the register maintained under section 301of the Companies Act, 1956. The maximum amount involved during the year was Rs. 132.89 lakhs and theyear- end balance of the loan given was Rs. 127.92 lakhs.

(b) The Company has not taken a loan from a Company covered in the register maintained under section 301 ofthe Companies Act, 1956. The maximum amount involved during the year was Rs. 75.76 lakhs and the year-end balance of the loan given was Rs.73.76 lakhs.

(c) In our opinion, the rate of interest and other terms and conditions on which the loan had been granted to thecompany listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie,prejudicial to the interest of the Company.

(d) The loan is repayable on demand.

(e) There is no overdue amount of the loan given to the company covered in the Register maintained undersection 301 of the Companies Act, 1956

(iv) In our opinion, there is an adequate internal control system, commensurate with the size of the company and thenature of its business, for the purchase of inventory and fixed assets and for the sale of goods. During the courseof our audit no major weakness has been observed in the internal controls.

(v) (a) The particulars of contracts or arrangements referred to in section 301 of the Act have been entered in theregister required to be maintained under that section.

(b) In our opinion, the transactions made in pursuance of such contracts or arrangements have been made atprices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has accepted deposits from the public. In our opinion, the directives issued by the Reserve Bank ofIndia and the provisions of sections 58A and 58AA and other relevant provisions of the Act and the rules framedthereunder, where applicable, have been complied with.

(vii) In our opinion, the company has an internal audit system commensurate with its size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by theCentral Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 andwe are of the opinion that prima facie the prescribed accounts and records have been made and maintained.



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(ix) (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Educationand Protection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, CustomDuty, Excise Duty, Cess and other statutory dues with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts were payable in respect ofincome tax, wealth tax, service tax, sales tax, customs duty, for more than six months from the date theybecame payable.

(c) According to the records of the Company, the dues of Sales Tax, Income-Tax, Customs, Wealth-Tax, ServiceTax, Excise Duty, Cess, which have not been deposited on account of disputes and the Forum where thedispute is pending are as under:

Nature of Statute Nature of the Dues Amount Forum wherePending (Rs. in lacs) Dispute is

pending

1. Income Tax Act Income Tax Demand 10.87 ITAT

2. Income Tax Act Appeal for Penalty Order 1.09 CIT (Appeals)

3. Income Tax Act Income Tax Demand 24.08 High Court

4. Central Excise Excise Demand 102.90 CEGATSupreme court

(x) The Company does not have accumulated losses. The Company has not incurred cash losses in the financial yearunder report and in the immediately preceding financial year.

(xi) The Company has not defaulted in repayment of dues to financial institutions or banks.

(xii) The company has not granted loans and advances on the basis of security by way of pledge of shares, debenturesand other securities.

(xiii) According to the information and explanations given to us, no guarantee has been given for loans taken by othersfrom banks or financial institutions.

(xiv) Term loans availed by the Company were, prima facie, applied by the Company during the year for the purposesfor which the loans were obtained.

(xv) On an overall basis, the funds raised on short-term basis have, prima facie, not been used for long term investment.

(xvi) The Company has made preferential allotment of shares, on conversion of convertible warrants, to parties andcompanies covered in the Register, maintained under section 301 of the Companies Act, 1956, during the year.The price at which shares have been issued is as per the letter of offer made to them at the time of issue ofwarrants and are not prejudicial to the interest of the Company.

(xvii) The company has not issued debentures and hence requirement of reporting regarding creation of security inrespect of debentures issued does not arise.

(xviii) In relation to the shares mentioned in clause (xvi), the Company has raised money on conversion of convertibleshare warrants during the year and we have verified the end use of such money with the necessary documentsand in our opinion the company has made adequate disclosures regarding the same.

(xix) Based on the checks carried out by us, any fraud on or by the Company has not been noticed or reported during the year.


Sd/-(CA Yatin R. Vyavaharkar)

M. No. 33915Partner

Firm Registration No.: 107547WPlace: Mumbai,Date: 26th May, 2010


Aarti Drugs Limited

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Balance Sheet as at 31st March, 2010(AMOUNT IN RUPEES)

Schedules As at 31st As at 31st

March, 2010 March, 2009

SOURCES OF FUNDSSHAREHOLDERS’ FUNDSShare Capital A 121,085,500 117,085,500Equity Share Warrants B - 2,104,000Reserves & Surplus C 1,289,830,420 1,082,748,668

1,410,915,920 1,201,938,168Deferred Tax 197,966,133 170,966,133LOAN FUNDSSecured Loans D 1,386,612,138 1,527,519,840Unsecured Loans E 389,837,855 257,265,108

1,776,449,993 1,784,784,947

TOTAL 3,385,332,046 3,157,689,249

APPLICATION OF FUNDSFIXED ASSETS FGross Block 2,874,823,388 2,672,591,532Less :- Depreciation 1,039,465,919 878,825,407

Net Block 1,835,357,469 1,793,766,125Capital Work-in-Progress 34,035,367 6,442,275INVESTMENTS G 213,785,220 213,785,220CURRENT ASSETS,LOANS & ADVANCESInventories H 585,764,477 572,021,081Sundry Debtors I 1,184,549,575 1,063,315,079Cash & Bank Balance J 36,502,704 26,967,877Other Current Assets K 19,613,587 16,584,955Loans & Advances L 175,613,093 172,482,422

2,002,043,436 1,851,371,414

Less: CURRENT LIABILITIES AND PROVISIONSCurrent Liabilities M 639,346,696 672,550,135Provisions N 60,542,750 35,125,650

699,889,446 707,675,785

Net Working Capital 1,302,153,990 1,143,695,629MISCELLANEOUS EXPENDITURE(to the extent not w/off or adjusted) - -

TOTAL 3,385,332,046 3,157,689,249

NOTES TO ACCOUNTS U

AS PER OUR REPORT OF EVEN DATE For and on Behalf of the Board of DirectorsFor PARIKH JOSHI AND KOTHARECHARTERED ACCOUNTANTS

Sd/- Sd/- Sd/-(CA Y.R. Vyavaharkar) Prakash M. Patil Harshit M. Savla

Partner (Managing Director) (JT. Managing Director)Sd/-

Place : Mumbai Dilip MaharanaDate : 26th May, 2010 (Company Secretary)



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Profit & Loss Account for the year ended 31st March, 2010(AMOUNT IN RUPEES)

For the For TheSchedule Year Ended Year Ended

31st March, 10 31st March, 09

INCOME :Sales & Income from Operation 4,969,486,745 4,096,886,826Less : Excise Duty & Sales Tax 255,316,947 331,857,747

Net Sales 4,714,169,798 3,765,029,079Other Income O 4,495,961 1,670,990

TOTAL 4,718,665,759 3,766,700,069

EXPENDITURE :Manufacturing Expenses P 2,905,730,598 2,597,468,263(Inc)/Dec in inventory 37,614,324 69,497,296Purchase of goods traded in 820,240,929 344,277,656Office & Adm. Exps Q 67,810,163 51,762,575Selling & Dist.Exps R 143,949,557 111,724,580Borrowing Cost S 167,018,850 247,939,818Non Operative Expenses T 2,947,313 2,163,569

TOTAL 4,145,311,735 3,424,833,757

Profit before Depreciation 573,354,024 341,866,313Depreciation 135,174,805 110,391,751

Profit before tax 438,179,220 231,474,562Provision for taxation 150,200,000 54,000,000Fringe Benefit Tax 1,500,000

Profit after tax 287,979,220 175,974,562Provision for Deffered Taxation for C.Year 27,000,000 25,500,000

Profit after Deffered tax 260,979,220 150,474,562

Balance Profit Brought forward 954,939,410 860,732,147Income Tax of Earlier Year 339,324 72,044Transfer to General Reserve 26,100,000 15,100,000Proposed Dividend :Final Proposed Dividend 60,542,750 35,125,650Dividend Tax of C.Y. 10,055,394 5,969,604

Balance Carried To Balance Sheet 1,118,881,162 954,939,410

NOTES TO ACCOUNTS UEarning Per Share 22.08 12.85






Aarti Drugs Limited

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Schedules Forming Part of Balance Sheet as at 31st March, 2010(AMOUNT IN RUPEES)

SCHEDULE - ‘A’ - SHARE CAPITALAs at 31st As at 31st


AUTOHRISED :2,00,00,000 Equity shares of Rs. 10/- each 200,000,000 200,000,000(Previous Year 2,00,00,000 Equity Shares of Rs. 10/- each)

200,000,000 200,000,000

ISSUED & SUBSCRIBED & PAID-UP :13009500 (Previous Year 130,09,500)Equity Shares of Rs. 10/- each fully paid up 130,095,000Of the above shares - 37,56,333 (Previousyear 37,56,333) shares have been issuedand allotted in terms of the Scheme ofAmalgamation of RCIL,RCPL ,MCPL,MPPLAND ECPL sanctioned by the HonourableHigh Court at Mumbai vide its order dated29th March, 1996.(Of the above shares 60,03,167 Shares areallotted as fully paid Bonus shares byCapitalisation of Share Premium Account )Less :1300950 Equity Shares of Rs.10/- Each bought back 13,009,500

117,085,500 117,085,500Add : Warrants are converted into 4,00,000 EquityShares of Rs.10/- each at a premium ofRs.42.60 per Equity shares in exercise ofoption by the warrants holder 4,000,000 121,085,500

TOTAL 121,085,500 117,085,500

SCHEDULE - ‘B’ - EQUITY SHARE WARRANTSUpfront consideration at,(I) Rs.5.26 per Warrant received towards Preferential allotment of - 2,104,0004,00,000 Equity Shares Warrant of Rs.52.60/- eachThese Warrants are to be converted into 4,00,000 Equity sharesof Rs.10/- each at a premium of Rs.42.60 per Equity share inexercise of option by the Warrant holders on or before 18th March, 2010

- 2,104,000

SCHEDULE - ‘C’ - RESERVES & SURPLUS

(AMOUNT IN RUPEES)

As at Addition Deduction As at01/04/2009 During the Year During the Year 31/03/2010

Capital Reserves 20,074,336 Nil Nil 20,074,336Capital Redemption Reserve 13,009,500 Nil Nil 13,009,500Securities Premium Account 15,923,780 17,040,001 Nil 32,963,781General Reserve 78,801,642 26,100,000 Nil 104,901,642Profit & Loss Account 954,939,410 260,979,220 97,037,468 1,118,881,161

TOTAL Reserves - 31/03/2010 1,082,748,668 304,119,221 97,037,468 1,289,830,420

31/03/2009 973,441,403 165,574,562 56,267,297 1,082,748,668



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Schedules(AMOUNT IN RUPEES)

SCHEDULE - ‘D’ - SECURED LOANS

As at 31st As at 31st


FIXED LOANS :From Financial Institutions 554,318,396 720,424,808From Scheduled Banks 227,500,000 -OTHER LOANS :From Scheduled Banks 604,793,742 807,095,031

TOTAL 1,386,612,138 1,527,519,840

SCHEDULE - ‘E’ - UNSECURED LOANSFrom Directors 900,000 900,000From Others 388,937,855 256,365,108

TOTAL 389,837,855 257,265,108

SCHEDULE - ‘F’ - FIXED ASSETS(AMOUNT IN RUPEES)

ITEM G R O S S B L O C K D E P R E C I A T I O N N E T B L O C K

AS AT ADDITION DEDUCTION AS AT UP TO DURING THE DEDUCTION UP TO AS AT AS AT1-4-2009 31-03-2010 1-4-2009 YEAR YEAR 31-03-2010 31-03-2010 31-3-2009

LEASEHOLD LAND 29,775,814 - Nil 29,775,814 Nil Nil - Nil 29,775,814 29,775,814

BUILDING 363,262,147 30,710,298 74,247 393,898,198 70,830,143 12,286,622 380 83,116,385 310,781,813 292,432,004

PLANT & MACHINERY 2,034,828,685 163,413,711 1,206,523 2,197,035,873 742,375,550 116,527,583 9,774 858,893,359 1,338,142,514 1,292,453,136

OFFICE EQUIPMENTS 22,244,950 1,620,269 - 23,865,219 15,513,957 2,921,605 - 18,435,562 5,429,657 6,730,993

FURNITURE 27,673,526 6,299,748 - 33,973,273 8,006,579 1,844,896 - 9,851,475 24,121,798 19,666,947

VEHICLES 15,835,299 4,303,807 2,835,208 17,303,898 7,684,461 1,594,099 1,277,706 8,000,854 9,303,044 8,150,838

TOTAL (A) 2,493,620,420 206,347,833 4,115,978 2,695,852,276 844,410,690 135,174,805 1,287,860 978,297,635 1,717,554,641 1,649,209,731

PROCESS DEVELOPMENT (R&D) 178,971,112 - - 178,971,112 34,414,717 26,753,567 - 61,168,284 117,802,828 144,556,395

TOTAL (B) 178,971,112 - - 178,971,112 34,414,717 26,753,567 - 61,168,284 117,802,828 144,556,395

TOTAL (A + B) 2,672,591,532 206,347,833 4,115,978 2,874,823,388 878,825,407 161,928,372 1,287,860 1,039,465,919 1,835,357,469 1,793,766,126

2,335,901,709 344,955,533 8,265,710 2,672,591,532 744,668,773 136,175,123 2,018,489 878,825,407 1,793,766,126 1,591,232,937

1) Plant & machinery addittion includes Capital Expenditure incurred on account of R&D Rs.15,30,638/- (Previous Year Rs. 60,75,391/-)

2) Process Development (R&D) costs are amortised over the period of 7 years

3) Remaining periods of amortisation of process development (R&D) mentioned above are as follows

Particulars WDV as on Remaining periods of31/03/2010 amortisation

Process Development (06-07) 4,772,364 2 years 3 months

Process Development (07-08) 12,597,061 5 years


TOTAL 117,802,839


Aarti Drugs Limited

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SchedulesSCHEDULE-’G’ - INVESTMENTS (AMOUNT IN RUPEES)Name of the company Opening Add Less Closing Face As at As at

Balance Acquisition Disposed Balance Value 31/03/2010 31/03/2009during during Rs. (Rs.) (Rs.)

the year the year

I. Investment (Quoted) (valued at cost)a. Investment (Quoted) in Shares :

Aarti Industries Ltd. 750 Nil Nil 750 5/- 6,066 6,066Alembic Ltd 90 Nil Nil 90 2/- 1,315 1,315Aurobindo Pharma Ltd 10 Nil Nil 10 5/- 1,700 1,700Aventis Pharma Ltd. 5 Nil Nil 5 10/- 1,630 1,630Cadila Healthcare Ltd. 10 Nil Nil 10 10/- 655 655Cipla Ltd. 62 Nil Nil 62 2/- 7,050 7,050Dabur India Ltd. 150 Nil Nil 150 1/- 5,530 5,530Dr Reddy’s Laboratories Ltd. 4 Nil Nil 4 5/- 1,912 1,912Fresenius Kabi Oncol (Dabur Pharma Ltd.) 25 Nil Nil 25 10/- - -Glenmark Pharmaceuticals Ltd. 100 Nil Nil 100 1/- 1,330 1,330Ipca Lab.Ltd. 210 Nil Nil 210 10/- 25,490 25,490Ind-Swifts Lab Ltd. 5 Nil Nil 5 10/- 112 112Ind-Swifts Ltd. 25 Nil Nil 25 2/- 345 345Jagsonpal Pharma Ltd. 40 Nil Nil 40 5/- 463 463J.B.Chemicals & Pharmaceuticals Ltd. 500 Nil Nil 500 2/- 21,120 21,120Kopran Ltd 5 Nil Nil 5 10/- 172 172Krebs Bio Chem 100 Nil Nil 100 10/- 25,907 25,907Kojam Fininvest Ltd.(Piramal Glass) 14 Nil Nil 14 10/- - -Lupin Laboratories Ltd. 10 Nil Nil 10 10/- 1,135 1,135Matrix Laboratories Ltd 50 Nil Nil 50 2/- 2,365 2,365Morepen Laboratories Ltd. 5 Nil Nil 5 2/- 85 85Natco Lab Ltd. 5 Nil Nil 5 10/- 345 345Neuland Lab. Ltd. 100 Nil Nil 100 10/- 34,375 34,375Piramal HeaIth care.Ltd. 290 Nil Nil 290 2/- 43,816 43,816Novartis (I) Ltd. 5 Nil Nil 5 5/- 1,155 1,155Orchid Chemicals & Pharmaceuticals Ltd. 7 Nil Nil 7 10/- 595 595Panacea Biotec Ltd. 5 Nil Nil 5 1/- 158 158Pfizer Ltd. 10 Nil Nil 10 10/- 4,950 4,950Piramal Life Science 29 Nil Nil 29 10/- - -Ranbaxy Laboratories Ltd. 4 Nil Nil 4 5/- 1,410 1,410Reliance Capital 5 Nil Nil 5 10/- - -Reliance Communication 116 Nil Nil 116 10/- - -Reliance Energy (Infrast.) 8 Nil Nil 8 10/- - -Reliance Industries Ltd 116 Nil Nil 116 10/- 10,000 10,000Reliance Natural 116 Nil Nil 116 10/- - -Shasun Chemcials & Drugs Ltd. 500 Nil Nil 500 2/- 16,875 16,875Strides Arcolab Ltd. 100 Nil Nil 100 10/- 22,282 22,282Sun Pharma Advan. 10 Nil Nil 10 10/- - -Sun Pharmaceuticals Ind Ltd. 10 Nil Nil 10 5/- 1,660 1,660Tasc Pharmaceuticals Ltd.(Marksans ) 1,000 Nil Nil 1,000 1/- 5,219 5,219Torrent Pharmaceuticals Ltd. 20 Nil Nil 20 5/- 990 990Unichem Laboratories Ltd. 400 Nil Nil 400 5/- 24,825 24,825Bank of Baroda 1,500 Nil Nil 1,500 10/- 126,000 126,000Bank of India 2,300 Nil Nil 2,300 10/- 103,500 103,500Union Bank of India 2,523 Nil Nil 2,523 10/- 277,530 277,530Wyeth Ltd. 5 Nil Nil 5 10/- 1,300 1,300

b. Bonds (Quoted)Unit Trust of India (US-64) 190 Nil Nil 190 100/- 19,000 19,000SBI Capital Protection Fund 30,000 Nil Nil 30,000 - 300,000 300,000

1,100,367 1,100,367II. Investment (Unquoted) in Subsidary Companies

a. Equity shares :Suyash Laboratories Ltd. 619,116 Nil Nil 619,116 10/- 200,833,420 200,833,420

III. Investment (Unquoted) (Valued at Cost)a. Equity shares :

Aarti Biotech Ltd. 1,200 Nil Nil 1,200 10/- 12,000 12,000Perfect Enviro Control Systems Ltd. 240,200 Nil Nil 240,200 10/- 2,402,000 2,402,000Huanggang Yinhe Aarti Pharmaceutical Co. Ltd. 169 Nil Nil 169 1,690,000 9,436,433 9,436,433

b. Certificate :N.S.C 1 Nil Nil 1 1,000 1,000(One Certificate of Rs:-1000/- Face Value)

212,684,853 212,684,853

TOTAL 213,785,220 213,785,220

(Aggregate market value of quoted investment : as at 31st March, 2010 Rs 3940364/- and as at 31st March,2009 Rs.2088015/-)



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March, 2010 March, 2009SCHEDULE - ‘H’ - INVENTORIESStores & Spares 17,597,562 12,301,555Packing Materials 2,795,500 2,330,575Raw Materials 276,918,050 231,071,262Finished Goods 120,021,708 136,549,611Trading Goods - 250,000Work in process 168,431,657 189,518,078

TOTAL 585,764,477 572,021,081

SCHEDULE - ‘I’ - SUNDRY DEBTORSUnsecured,considered goodDebts outstanding for a periodexceeding six months 46,112,040 22,174,099- Others 1,138,437,535 1,043,333,723

1,184,549,575 1,065,507,822Less: Provision for Doubtful Debts - 2,192,743

TOTAL 1,184,549,575 1,063,315,079

SCHEDULE - ‘J’ - CASH & BANK BALANCESCash on Hand 2,044,915 1,317,154Cheques on Hand 23,252,262 14,451,313Balances with Scheduled Banks :On Current Accounts 4,557,858 5,263,405On Deposit Accounts 6,647,669 5,936,005

TOTAL 36,502,704 26,967,877

SCHEDULE - ‘K’ - OTHER CURRENT ASSETSSecurity Deposits 12,579,094 11,922,784Others 7,034,493 4,662,171

TOTAL 19,613,587 16,584,955

SCHEDULE - ‘L’ - LOANS & ADVANCES(Unsecured,considered good)Capital Advances 15,810,856 1,567,298Advances and loans 2,981,267 1,675,443Advances recoverable in cash orkind or for value to be received 157,996,220 146,697,337Advance tax and tax deducted at source (Net of Provision for Taxation) (1,175,249) 22,542,344

TOTAL 175,613,093 172,482,422

SCHEDULE - ‘M’ - CURRENT LIABILITIESSundry Creditors of Goods,Services & ExpensesDue to micro enterprises and small enterprises (see note 5 ) - -Due to others** 612,733,614 653,312,118Sundry Creditors of ProjectDue to micro enterprises and small enterprises (see note 5 ) - -Due to others 18,792,569 10,940,111Trade Deposits 5,289,220 6,289,720Unclaimed Dividend * 2,233,104 1,686,338Interest accrued but not due on Unsecured Loans 298,189 321,849

TOTAL 639,346,696 672,550,135

* There is no amount due and outstanding to be credited to Investor Education and Protection Fund** Due to Subsidiary Rs.29188649/- (Previous Year of Rs.79891103/-)


Aarti Drugs Limited

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SCHEDULE - ‘N’ - PROVISIONSProposed dividend 60,542,750 35,125,650

TOTAL 60,542,750 35,125,650

Schedule Forming Part of Profit & Loss Account for the year ended 31st March, 2010SCHEDULE - ‘O’ - OTHER INCOME

For the For TheYear Ended Year Ended


Dividend 50,944 273,114Interest (Gross) 496,788 456,349Miscellaneous income 3,948,230 941,527

TOTAL 4,495,961 1,670,990

SCHEDULE - ‘P’ - MANUFACTURING EXPENSESRaw Material Consumption 2,214,303,429 2,020,184,008Packing Materials 39,082,086 35,070,389Freight Inward 64,516,813 52,492,077Processing Charges 61,806,447 52,621,917Salaries,Wages and Bonus 104,458,651 86,396,272Labour Charges 39,965,188 28,388,406Insurance Expenses 5,053,427 6,011,286Labour Welfare Expenses 9,449,308 7,076,634Power & Fuel 232,502,145 204,053,693Stores & Spares 30,229,883 27,114,444Repairs & Maintenance- Building 260,291 224,149- Plant & Machinery 6,770,974 5,487,189Product Development Exps W/off - 346,534Research & development 45,518,360 29,572,967Loss on Sale of Assets 2,150,000 397,221Other Manufacturing Expenses- Water Charges 8,349,459 7,911,173- Laboratory Expenses 10,868,207 8,912,930- Other Factory Expenses 30,445,932 25,206,973

TOTAL 2,905,730,598 2,597,468,263



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Schedules

Schedules Forming Part of Profit & Loss Account for the year ended 31st March, 2010SCHEDULE - ‘Q’ - OFFICE & ADMINISTRATION EXPENSES



Salaries and Bonus 21,086,188 16,733,660Provident Fund Contribution 661,672 638,585Staff Welfare Expenses 591,061 539,404Directors’ Remuneration 20,896,563 8,102,059Books & Periodicals 89,386 39,578Auditors’ Remuneration 390,661 311,127Conveyance Expenses 1,354,976 1,325,805Legal & Professional Charges 4,939,648 7,032,534Membership & Subscriptions 138,491 271,874Printing & Stationery 1,301,175 1,207,172Postage,Telegram & Telephone 3,222,376 3,140,023Office Electricity Charges 1,802,149 1,837,250Insurance Charges 1,251,009 1,432,509Repairs & Maintanance - Others 2,688,668 2,673,797Entertainment Expenses 492,173 514,352Rates & Taxes 1,690 3,413Miscellaneous Expenses 978,386 1,730,381Vehicle Expenses 397,062 318,625Travelling Expenses - Directors 1,661,552 1,471,272

- Others 2,415,647 1,949,514Directors’ Sitting Fees 483,000 486,000Loss on sale of Assets 962,394 -

TOTAL 67,810,163 51,762,575

SCHEDULE - ‘R’ - SELLING & DISTRIBUTION EXPENSESAdvertisement & Sales Promotion 5,727,315 3,490,557Freight & Forwarding Charges 70,399,425 54,859,066Commission Expenses 44,079,874 38,503,685Insurance Expenses 465,504 518,445E.C.G.C. Premium 2,994,602 2,033,708Other Export Expenses 9,233,700 5,167,950Other Local Sales Expenses 2,191,993 3,001,385Bad Debts 8,857,145 4,149,784

TOTAL 143,949,557 111,724,580

SCHEDULE - ‘S’ - BORROWING COSTSInterest on Term Loans 67,571,974 108,694,690Interest on Working Capital 71,664,774 98,858,655Interest on Others 8,207,914 19,012,169Redemption Premium on FCCB - 603,459Bank Charges 19,574,188 20,770,845

Total 167,018,850 247,939,818

SCHEDULE - ‘T’ - NON-OPERATIVE EXPENSESDonations 2,947,313 2,138,120Preliminary expenses written off - 25,449

TOTAL 2,947,313 2,163,569


Aarti Drugs Limited

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SchedulesSCHEDULE ‘U’

NOTES ANNEXED TO AND FORMING PART OF ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2010

PART - A

1. Accounting Policies :

a) Recognition of Income and expenditure

These accounts are prepared under the historical cost convention on accrual basis and under the going concern assumptionin accordance with the accounting principles generally accepted in India and the relevant provisions of the CompaniesAct, 1956.

b) Fixed assets and depreciation

i) Fixed assets include all expenditure of capital nature and are stated at cost of acquisition, installation and commissioningand related borrowing cost less depreciation. Fixed asset values are stated at historical cost. Depreciation on fixedassets other than land is charged under the straight-line method in accordance with Schedule XIV of the CompaniesAct, 1956. Product/Process development costs arising out of R&D are carried forward when their future recoverabilitycan reasonably be regarded as assured. Any expenditure carried forward is amortised over the period of expectedfuture economic benefit, from the related project, not exceeding ten years.

ii) Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds their recoverable amount.Recoverable amount is higher of the net selling price of an asset or its value in use. Value in use is present value ofestimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of itsuseful life.

c) Investments

Long Term Investments are stated at cost. Provisions are made for diminution in value of investments, if any, other thanthose of a temporary nature.

d) Valuation of Inventories

Inventories are stated at lower of cost or net realisable value, on the following basis:

i) Raw materials, packing materials, stores and spares - At cost on FIFO Method

ii) Work in process - At cost plus appropriate allocation of overheads

iii) Finished Goods - At cost plus appropriate allocation of overheadsor net realizable value, whichever is lower

e) Retirement Benefits

I. In respect of Gratuity and Superannuation fund, the Company’s contribution to group insurance scheme of LifeInsurance Corporation of India are charged against revenue.

II. Provision for incremental liability in respect of encashable privilege leave on separation benefit is made as perindependent actuarial valuation at the year end.

f) Revenue Recognition

Revenue is recognized to the extent that it can be reliably measured and is probable that the economic benefit will flowto the Company.

1. Sale of Goods

Revenue from sale of goods is recognized when the significant risks and rewards of ownership of the goods aretransferred to the customer and is stated net of excise duty, sale returns and VAT.

2. Export Benefits

Export benefits available under prevalent schemes are accrued in the year in which the goods are exported and areaccounted to the extent considered receivable.



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Schedulesg) Borrowing Cost

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset arecapitalized as part of the cost of that asset. The amount of borrowing cost eligible for capitalization are determined inaccordance with Accounting Standard -16. Other borrowing cost are recognized as an expense in the period in which theyare incurred.

h) Foreign Currency Transactions

All exchange differences arising from foreign currency transactions are dealt with in the Company’s profit and lossaccount.

i) Research & Development Expenditure

Revenue Expenses are accounted under the head “Research & Development” and Capital Expenses are Accounted underthe head Fixed Assets.

j) Deferred Taxation

Deferred tax is recognised on timing difference between the accounting income and the taxable income for the year andquantified using the tax rates and laws enacted or substantially enacted on the Balance Sheet date.

PART - B

2. Contingent Liabilities :

a) In respect of bank guarantees issued and L/C opened by the Company’s bankers Rs. 1208.45 lakhs (As at 31st March 2009Rs 772.31 lakhs).

b) Demand in respect of additional income tax disputed in appeal Rs.36.04 lakhs (As at 31st March 2009 Rs. 573.39 lakhs)refund effect in respect of appeals decided in favour of Company aggregating to Rs.98.32 lakhs are pending.

c) The company has given Corporate Guarantee for Term loan & Working Capital of Rs.NIL lakhs (As at 31st March 2009Rs.1600 Lakhs) in respect of Suyash Laboratories Ltd .

d) Demand /Rebate in respect of Excise duty in case of Ammonium Sulphate of Rs.102.90 Lakhs (as at 31st March 2009Rs.102.90 lakhs). The Hon’ble High Court of Mumbai has decided the appeal in favour of the Company in February 2010on the basis of its earlier judgement in a similar case.

However, as per information available with the Company, the Department of Central Excise has filed an appeal in thatprecedent case in the Supreme Court, hence the company has continued to disclose this matter.

e) Liability for duty on raw material imported under advance licence benefit scheme against which export obligationremained to be fulfilled Rs.45.43 lakhs (As at 31st March 2009 Rs.4.97 lakhs).

f) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances)Rs 16.21 lakhs (As at 31st March 2009 Rs.37.12 lakhs).

3. Securities for loans taken from Banks:

a) Balances in respect of outstanding term loan from The Industrial Development Bank of India Rs. 3027.78 lakhs (As at 31st

March 2009 Rs.4027.78 lakhs), The Export Import Bank of India Rs.2515.41 lakhs (As at 31st March 2009 Rs 3176.47lakhs), Standard Chartered Bank Rs.2275 lakhs (As at 31st March 2009 Rs. NIL), are secured by pari-passu first charge byway of mortgage of immovable properties and hypothecation of moveable fixed assets, both present and future at Tarapur& Sarigam units. Out of the above the working Directors of the Company have personally guaranteed loans sanctioned byEXIM Bank on 21st June 2006 for Rs.2000 lakhs and IDBI Bank on 19th May 2004 for Rs. 500 lakhs the balance in respectof these loans are Rs.705.88 lakhs ( As at 31st March 2009 Rs. 1204.25 ) out of the above the loan sanctioned by IDBI Bankon 25th March 2008 for Rs.3000 lakhs also secured by second charge on the current assets of the Company both present& future alongwith existing term tender as a collateral security.

b) Loans from Scheduled Banks Rs.6047.94 lakhs (As at 31st March 2009 Rs. 8070.95 lakhs) are secured by hypothecation ofCompany’s raw materials stock, stock-in-process, finished goods, packing materials, stores & spares, book debts, foreign


Aarti Drugs Limited

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Schedulesdocumentary bills and all other current assets including goods in transit governed by documents of title and also pari-passusecond charge by way of mortgage of immovable properties and hypothecation of moveable fixed assets. The workingDirectors of the Company have personally guaranteed these loans.

4. There are no Micro and Small Enterprises, to whom the company owes dues, which are outstanding for more than 45 days asat 31st March, 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprises DevelopmentAct, 2006 has been determined to the extent such parties have been identified on the basis of information available with theCompany.

5. In the opinion of the Board, the Current Assets and Loans and Advances have a value on realisation at least equal to theamounts at which they are stated in the Balance Sheet.

6. Segment-wise Disclosure as per Accounting Standard: 17.

I. BUSINESS SEGMENTS AS PRIMARY SEGMENTS

The Company is considered to be a single segment Company engaged in pharmaceuticals business, hence the disclosurerequirement as per AS-17 ‘Business Segments as Primary Segment’ is not attracted.

II. GEOGRAPHICAL SEGMENTS AS SECONDARY SEGMENTS (Rs. In Lakhs)



Segment Revenue

a) Exports 17297 15883

b) Others 32398 25086

Total 49695 40969

Notes:

a. Segmental capital employed:

Fixed assets used in the Company’s business or liabilities contracted have not been identified to any of the reportablesegments, as the fixed assets and services are used interchangeably between segments. The Company believes thatcurrently it is not practicable to provide segment disclosures relating to total assets and liabilities.

7. Related party transactions:

Related party disclosure as required by Accounting Standard – 18. ‘ Related Party Disclosures’ issued By The Institute ofChartered Accountants of India are given below :

A Name and Relationship of the Related Parties :

3(a) SubsidiarySuyash Laboratories Ltd.

3(b) Associates & Joint VenturesHuanggang Yinhe Aarti Pharmaceutical Co.Ltd.

3(c) Individuals owning directly or indirectly, an interest in the voting power of the reporting enterprise that givesthem control or significant influence over the enterprise, and relatives of such individual.

1. IndividualsMr. Chandrakant V. Gogri Mr. Rajendra V. Gogri

2. Relatives of IndividualsMrs.Jaya C. Gogri Mr.Rashesh C. GogriMrs.Dhanvanti V. Gogri Mrs.Aarti R. GogriMirik R. Gogri Mr.Renil R. GogriMrs. Hetal Gogri Gala Mrs. Indira M. Dedhia



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Schedules3(d) Key Management personel alongwith their relatives have significant influence.

1. Key Management Personel

Mr. Prakash M. Patil Mr. Harit. P. Shah

Mr. Harshit M. Savla Mr. Uday M. Patil

1. Relatives of Key Management Personel

Mrs. Priti P. Patil Mrs. Seema H. Savla

Mr. Arun M. Patil Ms. Bhoomi S. Savla

Dr. Vikas M. Patil Vishwa H. Savla

Mr. Adhish P. Patil Mrs. Jayashree H. Shah

Mrs. Arati T. Sankhe Mr. Pragji M. Shah

Mrs. Kalika A. Mishra Mrs. Kesarben P. Shah

Mr. Sameer P. Shah

3(e) Enterprise/firms over which controlling individuals have significant influence.

1. Aarti Industries Ltd.

2. Aarti Healthcare Ltd.

3. Rupal Drugs Ltd.

Note : Sr. 3(a),3(b),3(c),3(d),3(e) refer to the relevant paras of AS 18.

B Transactions with the related parties during the year :

Note : Proportions given in the following statement belong to the respective accounting group as shown in the financialstatements for the year ended 31st March 2010.

Transaction with Subsidiary Associates & Enterprise/firmsRelated Parties Company Joint Ventures

C.Y. P.Y. C.Y. P.Y. C.Y. P.Y.

% % % % % %

Sales & Income from Operations 4.14 4.77 Nil Nil 0.05 0.47

Manufacturing Expenses 6.12 2.12 Nil Nil 2.65 5.80

Purchases of Goods Traded 11.13 29.43 Nil Nil Nil Nil

Office & Administration Expenses Nil Nil Nil Nil Nil Nil

Fixed Assets Nil Nil Nil Nil 0.00 0.35

Other Income Nil Nil Nil Nil Nil Nil

Borrowing costs Nil Nil Nil Nil 0.00 0.89

Outstanding Payable 4.70 12.03 Nil Nil 1.25 1.98

Outstanding Receivable Nil Nil 7.68 7.73 Nil Nil

Outstanding Unsecured Loan Nil Nil Nil Nil Nil Nil


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Transaction with Individuals Relatives of Key RelativeRelated Parties Individuals Management of Key

Personel ManagementPersonel

C.Y. P.Y. C.Y. P.Y. C.Y. P.Y. C.Y. P.Y.

% % % % % % % %

Manufacturing Expenses Nil Nil Nil Nil Nil Nil Nil Nil

Office & Administration Expenses 0.32 0.39 Nil Nil 32.35 18.50 Nil Nil

Borrowing costs Nil Nil Nil Nil 0.05 0.03 0.29 0.20

Unsecured Loans Accepted Nil Nil Nil Nil Nil Nil Nil Nil

Unsecured Loans Repaid Nil Nil Nil Nil Nil Nil 0.03 Nil

Outstanding Unsecured Loan Nil Nil 0.01 0.01 0.23 0.35 1.25 1.89

8. Sales and other sales income include export benefits amounting to Rs. 11,19,02,774/- (As at 31st March 2009Rs. 9,67,03,725/-)

9. a) Directors Remuneration : (AMOUNT IN RUPEES)


Salary to Managing Directors and whole time Directors 48,97,638 44,12,900

Medical/Leave Salary/ Insurance Premium 7,24,244 7,03,669

Commission paid to Directors (2008-09) 47,99,477 18,67,000

Commission payable to Directors (2009-10) 92,43,764 NIL

Contribution to Provident Fund 37,440 37,440

Superannuation fund scheme 11,94,000 10,81,050

Total Remuneration 2,08,96,563 81,02,059

Note: The above figures do not include contribution to gratuity fund as separate figures are not available for the managing/ whole time directors.

b) Computation of Managerial Remuneration: (AMOUNT IN RUPEES)


Profit before tax as per Profit & Loss Account 43,81,79,220 23,14,74,562

Add: Managing and Whole-time Directors’ remuneration 2,08,96,563 81,02,059

Loss on Sale of Assets 31,12,394 3,97,221

Less: Profit on Sale of Investment Nil Nil

Profit on Sale of Short Term Investment Nil Nil

Net profit as per Section 198 of the Companies Act, 1956 46,21,88,176 23,99,73,842

Maximum permissible managerial remuneration to whole-time Directorsunder section 349 of the Companies Act, 1956 @ 10% of the profitscomputed above 4,62,18,818 2,39,97,384

Commission payable to Managing/wholetime Director @ 2% ofNet Profit (Previous Year 2%) 92,43,764 47,99,477

Schedules



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c) The timing of the accrual and accounting of Directors Commission has been changed from the date of the approval of thefinancial statements for the year by the shareholders to the balance sheet date of the concerned financial year. Thedirectors’ commission of Rs. 92,43,764/- for the year ended March 31, 2010 has been provided in the financial statementsfor the year ended on that date. These financial statements have also been charged with the directors’ commission ofRs.47,99,477/- for the year ended March 31, 2009, approved in the Annual General Meeting held on August 1, 2009. Dueto this, the Net Profit for the year and the Reserves are stated lower, and the Current Liabilities and Provisions higher, byRs.92,43,764/-.

10. Auditors’ remuneration includes (AMOUNT IN RUPEES)


Statutory Audit 1,95,000 1,95,000

Other Audit Services 92,562 97,008

Certification 17,330 19,119

Total 3,04,892 3,11,127

11. Earning Per Share (AMOUNT IN RUPEES)


Net Profit available for Equity Shareholder (Rs.) 26,09,79,220 15,04,74,562

Weighted Number of Equity Shares (Nos.) 1,18,20,331 1,17,08,550

Basic & Diluted EPS (Rs.) 22.08 12.85

Nominal value per share (Rs.) 10.00 10.00

12. Deferred Tax Liability (Net) (AMOUNT IN RUPEES)


Depreciation 19,79,66,133 17,09,66,133

Others NIL NIL

Total 19,79,66,133 17,09,66,133

13. Product Development Expenditure (AMOUNT IN RUPEES)


Amortisation Period : 5 years

Opening Balance NIL 3,46,534

During the year NIL NIL

Amortisation NIL 3,46,534

Closing NIL NIL

Product/Process Development in Progress

Opening Balance NIL 8,66,48,950

During the year NIL 3,56,17,814

Less: Transfer to Intangible Assets NIL 12,22,66,764

Closing Balance NIL NIL

Schedules


Aarti Drugs Limited

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14. Disclosure Regarding Scientific Research & Development Expenditure

YEAR REVENUE CAPITAL EXPENDITURE EXPENDITURE

2005-2006 41,51,939 2,27,77,515

2006-2007 1,49,77,691 2,03,09,256

2007-2008 3,06,36,169 2,21,11,822

2008-2009 2,32,50,086 60,75,391

2009-2010 3,61,89,557 15,30,638

15. Foreign exchange fluctuation

Foreign exchange gain/(loss) included in Profit & Loss Account Rs.128.32 lakhs (previous year Rs.939.29 lakhs)

16. Employee Benefits:

Defined Benefit Plan

The employee’s gratuity fund scheme managed by Life Insurance of India is a defined benefit plan. The present value ofobligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period ofservice as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the finalobligation.

a. Reconciliation of Opening and Closing balances of Defined Benefit Obligation

Gratuity Gratuity(Funded) (Funded)


Defined Benefit Obligation at beginning of the Year 2,17,42,207 1,54,17,715

Current Service Cost 19,16,354 13,05,613

Interest Cost 18,07,296 12,86,127

Actuarial(gain)/ loss (55,769) 50,26,236

Benefits Paid (6,77,214) (12,93,484)

Defined Benefit Obligation at year end 2,47,32,874 2,17,42,207

b. Reconciliation of opening and closing balances fair value of plan assets

Fair value of plan assets at beginning of the year 1,85,33,134 1,13,27,405

Expected return of plan assets 19,50,413 14,31,990Actuarial gain/ (loss) 1,62,667 (1,51,985)Employer Contribution 61,85,641 72,19,208Benefits Paid (6,77,214) (12,93,484)Fair value of plan assets at year end 2,61,54,641 1,85,33,134Actual return on plan assets 21,13,080 12,80,005

c. Reconciliation of fair value of assets and obligations

Fair value of plan assets as at 31st March,2010 2,61,54,641 1,85,33,134Present value of obligation as at 31st March,2010 2,47,32,874 2,17,42,207Amount Recognized 14,21,767 32,09,073

d. Expenses recognized during the yearCurrent Service cost 19,16,354 13,05,613Interest cost 18,07,296 12,86,127Expected return on plan assets (19,50,413) (14,31,990)Actuarial(gain)/ loss (2,18,436) 51,78,221Net Cost 15,54,801 63,37,971

Schedules



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e. Investment Details

L.I.C Group Gratuity (Cash Accumulation) Policy 100% Invested 100% Invested

with L.I.C. with L.I.C.

f. Actuarial assumptions

Mortality Table(L.I.C.) - -

1994-96 1994-96

(Ultimate) (Ultimate)

Discount rate (per annum) 8% 8%

Expected rate of return on plan assets (per annum) 8% 8%

Rate of escalation of in Salary (per annum) 5% 5%

The estimate of rate of escalation in salary considered in Actuarial valuation, take into account inflation, seniority,promotion,other relevant factors’ including supply and Demand in the employment market. The above information is certified by the actuary.

Leave Encashment :

Leave Encashment liability amounting to Rs.63,03,770/- has been provided in the Accounts

17. Additional information pursuant to the provisions of paragraphs 3, 4CD, 4D and part II of Schedule VI of the CompaniesAct, 1956 (Figures in bracket relate to 31st March 2009)

a) Licensed capacity installed capacity and production (as certified by the Management and not verified by the Auditors, itbeing a technical matter.)

(Qty in 000’s Kgs)

Class of Goods Units * Licensed Installed Production Captive Net Production

Pharmaceutical Kgs. — 25716 19149.82 1813.71 17336.11(25000) (15907.87) (1533.18) (14374.69)

* As license is not required Licensed Capacity not given.

b) Opening Stock, Closing Stock and Sales(Qty in 000’kgs)

Opening Stock Closing Stock Sales * Sales

Qty. Amt. Qty. Amt. Qty. Amt.Kgs. Rs. Kgs Rs. Rs.

Pharmaceuticals 1008.519 136,549,611 383.997 120,021,708 28964.177 434,99,39,158(472.57) (212,162,573) (1008.52) (136,549,611) (20592.524) (400,75,67,249)

No.of Strips99288.760 61,95,47,587

(15250.683) (8,93,19,577)

* Sales includes Trading sales

c) Raw Materials Consumed


Chemicals and Solvents Quantity (Kgs.) Amount (Rs.) Quantity (Kgs. Amount (Rs.)2,4-Dichloro 5-Fluoro Aceto Phenone 5,61,702 20,02,04,594 4,24,080 15,39,41,6563 Cyanopyridine 4,90,800 19,83,62,752 4,59,000 17,21,37,963Others 4,49,12,630 1,81,57,36,083 3,80,59,540 1,69,41,04,343Total 4,59,65,132 2,21,43,03,429 3,89,42,620 2,02,01,83,962

SchedulesGratuity Gratuity

(Funded) (Funded)Current Year Previous Year


Aarti Drugs Limited

C M Y K

Quantity Amount(Rs)

d) Purchase of trading items:

No. of Strips 99,28,8760 58,10,77,418(1,52,50,683) (8,56,03,423)

Kgs 39,23,905 23,91,63,511(21,17,323) (25,86,74,233)

e) Value of Raw materials and spares consumedPercentage Amount

(%) (Rs)

Raw Material:

Indigenous 53.98 1,19,53,27,983(60.76) (1,22,74,23,695)

Imported 46.02 1,01,89,75,446(39.24) (79,27,60,267)

Stores and spares :

Indigenous 100 3,02,29,883(100) (2,71,14,444)

(Amount In Rupees)

Current Year Previous Yearf) C.I.F Value of Imports

Raw Material 110,80,65,437 84,64,63,447Capital Goods 62,95,681 1,33,83,725

g) Expenditure in Foreign CurrencyCommission 2,18,01,254 2,14,30,596Travelling Expenses 32,65,202 29,80,290Sales Promotion 34,64,208 19,97,818Foreign Bank Charges 37,88,587 34,75,107Interest on F.C. Loan 1,89,19,177 1,97,80,672FCCB Interest Nil 6,75,67,796Others 8,06,619 44,38,269

h) Earnings in Foreign Exchange

F.O.B. Value of Exports 1,527,892,016 1,393,585,447

18. The company has received money through the conversion of 4,00,000 warrants issued on preferential basis into equity sharesof Rs.2,10,40,000 during the year, and the money has been utilized for the purposes as stated in the “Objects of the issue” i.e.“to augment the long term funds to meet on going capital expenditure and long term working capital requirements

19. Figures of the previous year have been regrouped and rearranged wherever necessary.

Schedules







C M Y K

PART - IVBalance Sheet Abstract and Company’s General Business Profile

I. Registration Details

Registration No.: 55433 State code: 11

Balance Sheet Date : 31st March, 2010

II. Capital Raised during the year (Amount in Rs. Thousands)

Public Issue : Nil Right Issue : Nil

Bonus Issue : Nil Private Placement : Nil

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities : 3385332 Total Asset 3385332

Source of Funds

Paid up Capital : 121086 Reserves & Surplus : 1289830

Secured Loans : 1386612 Deferred Tax : 197966

Unsecured Loans : 389838

Application of Funds

Net Fixed Assets : 1835357 Investment : 213785

Capital WIP : 34035 Misc. Expenditure : 0

Net Current Assets : 1302154

Accumulated Losses : Nil

IV. Performance of company (Amount in Rs. Thousands)

Turnover : 4969487 Total Expenditure : 4531308

Profit/Loss Before Tax : 438179 Profit/Loss After Tax : 260979

Earning Per Share in Rs. : 22.08 Dividend rate % 50%

V Generic Names of Three Principal Products/Services of Company (as per Monetary terms)

Item Code No. (ITC Code) : 294190-30 Product Description : CIPROFLOXACIN

Item Code No. (ITC Code) : 293329-02 Product Description : METRONIDAZOLE

Item Code No. (ITC Code) : 293329-01 Product Description : TINIDAZOLE

For and on Behalf of the Board of Directors

Sd/- Sd/-Prakash M. Patil Harshit M. Savla

(Managing Director) (JT. Managing Director)Sd/-



Aarti Drugs Limited

C M Y K

CASH FLOW STATEMENT(Rupees in Lakhs)

For the year ended For the year ended31st March, 2010 31st March, 2009

A. Cash Flow from Operating ActivitiesNet Profit before Tax and Extraordinary items 4,382 2,315ADJUSTMENT FOR:Depreciation 1,352 1,104Expenses Amortised 268 140Interest Paid 1,670 2,265Exchange Rate Loss/(Gain) — 214Interest Received (5) (5)Dividend Received (0.5) (2.7)Loss on Sale of Asset 31.12 4Operating Profit before Working Capital Changes 7,697 6,035Trade & Other Receivable (1,511) (139)Inventories (137) 434Trade Payable (436) 250

Cash generated from operation 5,612 6,580Direct Taxes Paid (1,265) (495)

Net Cash Flow from Operating Activities 4,348 6,085B. Cash Flow from Investing Activities

Purchase of Fixed Assets / CWIP (2,339) (1,926)Sale of Investment 0 1,217Sale of Fixed Assets (3) 59Interest Received 5 5Dividend Received 0.5 1

Net Cash Flow from Investing Activities (2,337) (644)C. Cash Flow from Financing Activities

Proceeds from Long Term Borrowings 614 2,195Proceeds from Unsecured Loans & from Scheduled Bank (697) (5,078)Proceeds from Issue of Shares Capital/ Warrants 189 21Dividend Paid (351) (307)Interest Paid (1,670) (2,265)

Net Cash Flow from Financing Activities (1,915) (5,434)

Net Increase in Cash and Cash Equivalents (A+B+C) 95 7Opening Cash and Cash Equivalents 270 263Closing Cash and Cash Equivalents 365 270Note : (i) Figures in brackets indicate outflows

(ii) Cash and cash equivalent is cash and bank balance as per balance sheet(iii) Fixed Deposits with bank amounting to Rs.66.48 lakhs (Previous year Rs.59.36 lakhs) under lien are considered as

cash & cash equivalents


Sd/- Sd/-(CA Y.R. Vyavaharkar) Harshit M. SavlaPARTNER (JT. Managing Director)Place : MumbaiDate : 26th May, 2010



C M Y K

Statement pursuant to Section 212 of the Companies Act, 1956.Relating to Company’s interest in the Subsidiary Company

Name of the Company Suyash Laboratories Limited

1. The financial year of the Subsidiary company ended on 31st March, 2010

2. Date from which it became subsidiary Company 18th May, 2005

3. a. Number of shares held by Aarti Drugs Ltd. with its 6,19,116nominees in the subsidiary at the end of the financialyear of the subsidiary company

b. Extent of interest of holding company at the end of the 83.96financial year of the subsidiary company

4. The net aggregate amount of the subsidiary company Profit/Loss so far as itconcerns the members of the holding company.

a. Not dealt with in the holding Company’s accounts

i) For the financial year ended 31st March, 2010 Rs.19662548/-

ii) For the previous financial years of the subsidiary Rs.68812686/-companies since it became the holding Company’s subsidiary

b. Dealt with in holding Company’s accounts:

i) For the financial year ended 31st March, 2009 Nil

ii) For the financial years of the subsidiary companies Nilsince they became the holding company’s subsidiary

For and behalf of Board of Directors

Sd/- Sd/-Prakash M. Patil Harshit M. Savla

(Managing Director) (Jt. Managing Director)

Place: Mumbai

Date: 26th May, 2010.

Aarti Drugs Limited


C M Y K

Consolidated FinancialStatements 2009-10



C M Y K

CONSOLIDATED FINANCIAL STATEMENTS & NOTES

Auditors’ ReportAUDITOR’S REPORT TO THE BOARD OF DIRECTORS OF AARTI DRUGS LTD. ON THE CONSOLIDATED FINANCIALSTATEMENTS OF AARTI DRUGS LIMITED AND ITS SUBSIDIARY.

We have examined the attached consolidated balance sheet of AARTI DRUGS LIMITED and its subsidiary as at 31st

March 2010, the Consolidated Profit and Loss Account and the Consolidated Cash Flow for the year then ended.

These financial statements are the responsibility of the management of AARTI DRUGS LIMITED. Our responsibility is toexpress an opinion on these financial statements based on our audit. We conducted our audit in accordance withgenerally accepted auditing standards in India. These Standards require that we plan and perform the audit to obtainreasonable assurance whether the financial statements are prepared, in all material respects, in accordance with anidentified financial report framework and are free of material misstatements. An audit includes, examining on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall financialstatements. We believe that our audit provides a reasonable basis for our opinion.

We did not audit the financial statements of the subsidiary, whose financial statements reflect total assets of Rs.50,39,66,701/- as at 31st March, 2010 and total revenues of Rs.51,15,35,875/- for the year then ended. These financial statements of thesubsidiary have been audited by other auditors, whose report has been furnished to us and our opinion, insofar as it relatesto the amounts included in respect of the subsidiary, is based solely on the report of the other auditors.

As the audited statements of the foreign associate company for their financial year ended 31st December 2009,reflecting a share of Profit of Rs.19,39,979 /- are not available, the investment has been valued in the ConsolidatedFinancial Statements on the basis of unaudited financial statements, which is stated in Notes forming part of ConsolidatedFinancial Statements No. 3 c, and produced before us.

We report that the consolidated financial statements have been prepared by the Company in accordance with therequirements of Accounting Standard AS 21, Consolidated Financial Statements, issued by the Institute of CharteredAccountants of India and on the basis of the separate audited financial statements of AARTI DRUGS LTD. and itssubsidiary and the unaudited financial statements of its foreign associate included in the consolidated financial statements.

Without qualifying our opinion, we draw attention to Note 8 (b) of Schedule V: Notes annexed to and forming part ofaccounts for the year ended 31st March 2010. The company has changed the timing of the accrual and accounting ofDirectors Commission from the date of the approval of the financial statements for the year by the shareholders to thebalance sheet date of the concerned financial year. Due to this, the Net Profit for the year and the Reserves are statedlower, and the Current Liabilities and Provisions higher, by Rs.92,43,764/-.

On the basis of the information and explanation given to us and on the consideration of the separate audit report onindividual audited financial statements of AARTI DRUGS LTD. and its aforesaid subsidiary and the unaudited financialstatements of its foreign associate, read with the Notes annexed to the Consolidated Financial Statements of theCompany, we are of the opinion that:

(a) the Consolidated Balance Sheet gives a true and fair view of the consolidated state of affairs of AARTI DRUGS LTDand its subsidiary and associate as at 31st March, 2010and

(b) the Consolidated Profit and Loss Account gives a true and fair view of the consolidated results of operations ofAARTI DRUGS LTD. and its subsidiary and associate for the year then ended.

(c) the Consolidated Cash Flow Statement gives a true and fair view of the consolidated cash flows of AARTI DRUGSLTD. and its subsidiary and associate for the year then ended.


Sd/-(CA Yatin R. Vyavaharkar)

PartnerPlace: Mumbai M. No.33915Date: 26th May, 2010 Firm Registration No.: 107547W

Aarti Drugs Limited


C M Y K

Consolidated Balance Sheet as at 31st March, 2010(AMOUNT IN RUPEES)

Schedules As at 31st As at 31stMarch, 2010 March, 2009

SOURCES OF FUNDSSHAREHOLDERS’ FUNDSShare Capital A 121,085,500 117,085,500Equity Share Warrants B - 2,104,000Reserves & Surplus C 1,343,396,019 1,115,308,640

1,464,481,519 1,234,498,140Deferred Tax 210,280,002 184,851,933Minority Interest 48,646,110 94,678,199LOAN FUNDSSecured Loans D 1,386,612,138 1,608,645,250Unsecured Loans E 501,645,107 313,472,361

1,888,257,245 1,922,117,611

TOTAL 3,611,664,876 3,436,145,883

APPLICATION OF FUNDSFIXED ASSETS FGross Block 3,324,161,819 3,098,538,903Less :- Depreciation 1,242,136,784 1,046,149,609

Net Block 2,082,025,035 2,052,389,294Capital Work-in-Progress 34,035,369 6,442,275INVESTMENTS G 17,412,111 15,472,132CURRENT ASSETS,LOANS & ADVANCESInventories H 644,091,061 605,212,805Sundry Debtors I 1,158,672,428 1,134,811,496Cash & Bank Balance J 85,224,301 34,842,753Other Current Assets K 23,333,085 20,659,346Loans & Advances L 145,965,655 162,484,206

2,057,286,530 1,958,010,606

Less: CURRENT LIABILITIES AND PROVISIONSCurrent Liabilities M 518,564,544 561,059,179Provisions N 60,542,750 35,125,650

579,107,294 596,184,829

Net Working Capital 1,478,179,236 1,361,825,777MISCELLANEOUS EXPENDITURE(to the extent not w/off or adjusted) O 13,125 16,405

TOTAL 3,611,664,876 3,436,145,883

NOTES TO ACCOUNTS V







C M Y K

Consolidated Profit & Loss Account for the year ended 31st March 2010(AMOUNT IN RUPEES)

Schedules Consolidated Consolidatedfor Year Ended for Year Ended31st March 10 31st March 09

INCOMESales & Income from Operation 5,040,754,984 4,157,042,641Less : Excise Duty & Sales Tax 255,736,362 335,853,973

Sales (Net) 4,785,018,622 3,821,188,668Other Income P 6,303,622 5,223,374

TOTAL 4,791,322,244 3,826,412,042

EXPENDITUREManufacturing Expenses Q 2,927,848,192 2,639,443,719(Inc)/Dec in inventory 31,576,665 88,909,073Purchase of goods traded in 773,190,901 252,151,162Office & Adm. Exps R 70,117,440 52,743,444Selling & Dist.Exps S 153,698,182 121,287,665Borrowing Cost T 186,587,829 264,542,796Non Operative Expenses U 3,950,593 2,166,849

4,146,969,802 3,421,244,708

Profit before Depreciation 644,352,442 405,167,334Depreciation 170,326,205 144,758,166

Profit before tax 474,026,236 260,409,168Provision for taxation 164,200,000 58,000,000Fringe Benefit Tax - 1,577,000

Profit after tax 309,826,236 200,832,168Provision for Deffered Taxation for C.Year 25,428,069 25,135,800

Profit after Deffered tax 284,398,167 175,696,367

Less :-Share in Pre-Acquisition Profits due to increase in stake 1,068,693 312,343Minority Interest 3,756,399 8,562,803Unrealised profits (790,444) 1,556,255Share of (Profit)/Loss in Associate (1,939,979) 5,605,502Balance b/f from previous year 987,499,381 884,126,938Less: Income Tax of Earlier Year 661,835 1,498,309Transfer to General Reserve 26,100,000 15,100,000Transfer to Capital Redemption Reserve - -Add: Adjustment on Consolidation - 1,406,542Proposed DividendFinal Proposed Dividend 60,542,750 35,125,650Dividend Tax of C.Y./P.Y. 10,055,394 5,969,604

Balance Carried To Balance Sheet 1,172,442,900 987,499,381

NOTES TO ACCOUNTS VEarning Per Share 23.88 13.64





Aarti Drugs Limited


C M Y K

Schedules Forming Part of Consolidated Balance Sheet as at 31st March, 2010SCHEDULE - ‘A’ SHARE CAPITAL (AMOUNT IN RUPEES)



AUTOHRISED2,00,00,000 Equity shares of Rs. 10/- each 200,000,000 200,000,000(Previous Year 2,00,00,000 Equity Shares of Rs. 10/- each) -

200,000,000 200,000,000

ISSUED & SUBSCRIBED & PAID-UP 13009500013009500 (Previous Year 130,09,500)Equity Shares of Rs. 10/- each fully paid upOf the above shares - 37,56,333 (Previousyear 37,56,333) shares have been issuedand allotted in terms of the Scheme ofAmalgamation of RCIL,RCPL, MCPL, MPPLAND ECPL sanctioned by the HonourableHigh Court at Mumbai vide its order dated29th March, 1996.(Of the above shares 60,03,167 Shares areallotted as fully paid Bonus shares byCapitalisation of Share Premium Account )Less :1300950 Equity Shares of Rs.10/- Each bought back 13,009,500 117,085,500

Add : Warrants are converted into 4,00,000 EquityShares of Rs.10/- each at a premium ofRs.42.60 per Equity shares in exercise ofoption by the warrants holder 4,000,000 121,085,500

TOTAL 121,085,500 117,085,500

SCHEDULE - ‘B’ - EQUITY SHARE WARRANTSUpfront consideration at,(I) Rs.5.26 per Warrant received towards Preferential allotment of - 2,104,000

4,00,000 Equity Shares Warrant of Rs.52.60/- eachThese Warrants are to be converted into 4,00,000 Equity sharesof Rs.10/- each at a premium of Rs.42.60 per Equity shares inexercise of option by the Warrants holder on or before 18th March, 2010

- 2,104,000

SCHEDULE - ‘C’ - CONSOLIDATED RESERVES & SURPLUS(AMOUNT IN RUPEES)

As at Addition Deduction Adjustment on As at31/03/2009 During the Year During the Year a/c of 31/03/2010

consolidation

Capital Reserves 20,074,336 - - - 20,074,336Capital Reserves on consilodation - 3,859 - - 3,859Capital Redemption Reserve 13,009,500 - - - 13,009,500Securities Premium Account 15,923,780 17,040,001 - - 32,963,781General Reserve 78,801,642 26,100,000 - - 104,901,642Consolidation Adjustment Reserve - - - - -Profit & Loss Account 987,499,382 284,398,167 97,359,979 2,094,669 1,172,442,901

TOTAL Reserves - 31/03/2010 1,115,308,640 327,542,027 97,359,979 2,094,669 1,343,396,019

31/03/2009 998,242,738 190,796,367 57,693,563 16,036,903 1,115,308,640



C M Y K




SCHEDULE - ‘D’ - SECURED LOANSFIXED LOANSFrom Financial Institutions 544,318,396 710,424,808From Scheduled Banks 257,500,000 30,000,000OTHER LOANSFrom Scheduled Banks 584,793,743 868,220,442

TOTAL 1,386,612,138 1,608,645,250

SCHEDULE - ‘E’ - UNSECURED LOANSFrom Directors 21,000,000 13,100,000From Others 480,645,107 300,372,361

TOTAL 501,645,107 313,472,361

SCHEDULE - ‘F’ - FIXED ASSETS(AMOUNT IN RUPEES)

ITEM G R O S S B L O C K D E P R E C I A T I O N N E T B L O C K

AS AT ADDITION DEDUCTION AS AT UP TO ADDITION DEDUCTION AS AT AS AT AS AT1-4-2009 DURING YEAR DURING YEAR 31-03-2010 1-4-2009 DURING YEAR DURING YEAR 31-03-2010 31-03-2010 31-3-2009

GOODWILL ON CONSOLIDATION 4,986,877 5,146,678 - 10,133,555 - - - - 10,133,555 4,986,877

LEASEHOLD LAND 38,387,256 - - 38,387,256 - - - - 38,387,256 38,387,256

BUILDING 383,748,814 32,026,898 74,247 415,701,466 74,178,150 13,018,836 380 87,196,606 328,504,860 309,570,664

PLANT & MACHINERY 2,155,049,808 178,941,238 1,206,523 2,332,784,523 770,657,921 123,624,421 9,774 894,272,568 1,438,511,955 1,384,391,889

OFFICE EQUIPMENTS 22,926,372 1,710,684 - 24,637,056 16,042,257 3,037,732 - 19,079,989 5,557,067 6,884,115

FURNITURE 29,377,262 6,467,798 - 35,845,060 8,544,954 1,962,984 - 10,507,938 25,337,122 20,832,308

VEHICLES 15,871,399 5,445,600 2,835,208 18,481,791 7,701,609 1,955,497 1,277,706 8,379,399 10,102,392 8,169,790

TRADENAME 22,500,000 - - 22,500,000 11,250,000 2,250,000 - 13,500,000 9,000,000 11,250,000

TECHNICAL KNOWHOW 246,720,000 - - 246,720,000 123,360,000 24,672,000 - 148,032,000 98,688,000 123,360,000

TOTAL (A) 2,919,567,789 229,738,896 4,115,978 3,145,190,707 1,011,734,892 170,521,468 1,287,860 1,180,968,500 1,964,222,207 1,907,832,898

PROCESS DEVELOPMENT 178,971,112 - - 178,971,112 34,414,717 26,753,567 - 61,168,284 117,802,828 144,556,395

TOTAL (B) 178,971,112 - - 178,971,112 34,414,717 26,753,567 - 61,168,284 117,802,828 144,556,395

TOTAL (A + B) 3,098,538,901 229,738,896 4,115,978 3,324,161,819 1,046,149,609 197,275,035 1,287,860 1,242,136,784 2,082,025,036 2,052,389,293

PREVIOUS YEAR 2,777,022,269 354,011,623 32,494,990 3,098,538,902 877,626,560 170,541,539 2,018,489 1,046,149,610 2,052,389,295 1,899,395,710

1) Plant & machinery addittion includes Capital Expenditure incurred on account of R&D Rs.15,30,638/- (Previous Year Rs. 60,75,391/-)2) Trade name and Technical knowhow are not internally generated while process development are internally generated3) Remaining periods of amortisation of intangible assets mentioned above are as follows

Particulars WDV as on Remaining periods of31-03-2010 amortisation

Rupees

Tradename 9,000,000 4 years

Technical Knowhow 98,688,000 4 years


Process Development (07-08) 12,597,061 5 years


TOTAL 225,490,839

Aarti Drugs Limited


C M Y K

SchedulesSCHEDULE-’G’ - INVESTMENTS (AMOUNT IN RUPEES)Name of the company Opening Add Less Closing Face As at As at

Balance Acquisition Disposed Balance Value 31/03/2010 31/03/2009during during Rs. (Rs.) (Rs.)

the year the year

I. Investment (Quoted) (valued at cost)a. Investment (Quoted) in Shares

Aarti Industries Ltd. 750 Nil Nil 750 5/- 6,066 6,066Alembic Ltd 90 Nil Nil 90 2/- 1,315 1,315Aurobindo Pharma Ltd 10 Nil Nil 10 5/- 1,700 1,700Aventis Pharma Ltd. 5 Nil Nil 5 10/- 1,630 1,630Cadila Healthcare Ltd. 10 Nil Nil 10 10/- 655 655Cipla Ltd. 62 Nil Nil 62 2/- 7,050 7,050Dabur India Ltd. 150 Nil Nil 150 1/- 5,530 5,530Dabur Pharma Ltd. 25 Nil Nil 25 10/- - -Dr Reddy’s Laboratories Ltd. 4 Nil Nil 4 5/- 1,912 1,912Fresenius Kabi Oncol (Dabur Pharma Ltd.) 25 Nil Nil 25 10/- - -Glenmark Pharmaceuticals Ltd. 100 Nil Nil 100 1/- 1,330 1,330Ipca Lab.Ltd. 210 Nil Nil 210 10/- 25,490 25,490Ind-Swifts Lab Ltd. 5 Nil Nil 5 10/- 112 112Ind-Swifts Ltd. 25 Nil Nil 25 2/- 345 345Jagsonpal Pharma Ltd. 40 Nil Nil 40 5/- 463 463J.B.Chemicals & Pharmaceuticals Ltd. 500 Nil Nil 500 2/- 21,120 21,120Kopran Ltd 5 Nil Nil 5 10/- 172 172Krebs Bio Chem 100 Nil Nil 100 10/- 25,907 25,907Kojam Fininvest Ltd.(Piramal Glass) 14 Nil Nil 14 10/- - -Lupin Laboratories Ltd. 10 Nil Nil 10 10/- 1,135 1,135Matrix Laboratories Ltd 50 Nil Nil 50 2/- 2,365 2,365Morepen Laboratories Ltd. 5 Nil Nil 5 2/- 85 85Natco Lab Ltd. 5 Nil Nil 5 10/- 345 345Neuland Lab. Ltd. 100 Nil Nil 100 10/- 34,375 34,375Piramal HeaIth care.Ltd. 290 Nil Nil 290 2/- 43,816 43,816Novartis (I) Ltd. 5 Nil Nil 5 5/- 1,155 1,155Orchid Chemicals & Pharmaceuticals Ltd. 7 Nil Nil 7 10/- 595 595Panacea Biotec Ltd. 5 Nil Nil 5 1/- 158 158Pfizer Ltd. 10 Nil Nil 10 10/- 4,950 4,950Piramal Life Science 29 Nil Nil 29 10/- - -Ranbaxy Laboratories Ltd. 4 Nil Nil 4 5/- 1,410 1,410Reliance Capital 5 Nil Nil 5 10/- - -Reliance Communication 116 Nil Nil 116 10/- - -Reliance Energy (Infrast.) 8 Nil Nil 8 10/- - -Reliance Industries Ltd 116 Nil Nil 116 10/- 10,000 10,000Reliance Natural 116 Nil Nil 116 10/- - -Shasun Chemcials & Drugs Ltd. 500 Nil Nil 500 2/- 16,875 16,875Strides Arcolab Ltd. 100 Nil Nil 100 10/- 22,282 22,282Sun Pharma Advan. 10 Nil Nil 10 10/- - -Sun Pharmaceuticals Ind Ltd. 10 Nil Nil 10 5/- 1,660 1,660Tasc Pharmaceuticals Ltd.(Marksans ) 1,000 Nil Nil 1,000 1/- 5,219 5,219Torrent Pharmaceuticals Ltd. 20 Nil Nil 20 5/- 990 990Unichem Laboratories Ltd. 400 Nil Nil 400 5/- 24,825 24,825Bank of Baroda 1,500 Nil Nil 1,500 10/- 126,000 126,000Bank of India 2,300 Nil Nil 2,300 10/- 103,500 103,500Union Bank of India 2,523 Nil Nil 2,523 10/- 277,530 277,530Wyeth Ltd. 5 Nil Nil 5 10/- 1,300 1,300

b. Bonds (Quoted)Unit Trust of India (US-64) 190 Nil Nil 190 100/- 19,000 19,000Reliance Liquid Fund - Nil Nil - - - -SBI Capital Protection Fund 30,000 Nil Nil 30,000 - 300,000 300,000

1,100,367 1,100,367

II. Investment (Unquoted) (Valued at Cost)a. Equity shares

Aarti Biotech Ltd. 1,200 Nil Nil 1,200 10/- 12,000 12,000Amit Hetrochem (I) Ltd 137850 Nil Nil 137,850 10/- 10,600,000 10,600,000Perfect Enviro Control Systems Ltd. 240,200 Nil Nil 240,200 10/- 2,402,000 2,402,000Huanggang Yinhe Aarti Pharmaceutical Co. Ltd. 169 Nil Nil 169 1,690,000 3,296,744 1,356,765

b. CertificateN.S.C 1 Nil Nil 1 - 1,000 1,000(One Certificate of Rs:-1000/- Face Value)

16,311,744 14,371,765

TOTAL 17,412,111 15,472,132

(Aggregate market value of quoted investment : as at 31th March,2010 Rs.39,40,364/- and as at 31st March,2009 Rs.20,88,015/-)Note: Dabur Pharma Change the Name of Fresenius Kabi Oncol



C M Y K

(AMOUNT IN RUPEES)



SCHEDULE - ‘H’ - INVENTORIESStores & Spares 36,656,814 13,577,669Packing Materials 6,519,918 2,427,404Raw Materials 291,239,246 245,301,885Finished Goods 124,438,163 139,956,860Trading Goods 214,284 250,000Work in process 185,022,636 203,698,987

644,091,061 605,212,805

SCHEDULE - ‘I’ - SUNDRY DEBTORSUnsecured,considered goodDebts outstanding for a periodexceeding six months 46,569,353 22,578,041Others 1,112,103,076 1,114,426,197

1,158,672,428 1,137,004,239Less: Provision for Doubtful Debts - 2,192,743

1,158,672,428 1,134,811,496

SCHEDULE - ‘J’ - CASH & BANK BALANCESCash on Hand 2,076,570 1,334,423Cheques on Hand 27,340,457 14,639,066Balances with Scheduled BanksOn Current Accounts 36,597,937 3,216,146On Deposit Accounts 19,209,338 15,653,118

85,224,301 34,842,753

SCHEDULE - ‘K’ - OTHER CURRENT ASSETSSecurity Deposits 13,358,290 12,701,980Others 9,974,795 7,957,366

23,333,085 20,659,346

SCHEDULE - ‘L’ - LOANS & ADVANCES(Unsecured,considered good)Capital Advances 15,810,856 1,579,425Advances and loans 3,197,993 1,769,091Advances recoverable in cash orkind or for value to be received 127,727,719 133,701,513Advance tax and tax deducted at source(Net of Provision for Taxation) (770,914) 25,434,178

145,965,655 162,484,206

SCHEDULE - ‘M’ - CURRENT LIABILITIESSundry Creditors of Goods,Services & ExpensesDue to micro enterprises and small enterprisesDue to others 482,970,201 536,865,036Sundry Creditors of ProjectDue to micro enterprises and small enterprisesDue to others 18,792,569 10,940,110Trade Deposits 5,289,220 6,289,720Unclaimed Dividend 2,233,105 1,686,339Interest accrued but not due on Unsecured Loans 9,279,450 5,277,975

518,564,544 561,059,179

SCHEDULE - ‘N’ - PROVISIONSProposed dividend 60,542,750 35,125,650

60,542,750 35,125,650

TOTAL 579,107,294 596,184,829

SCHEDULE - ‘O’ - MISCELLANEOUS EXPENDITUREProduct Development Expenses - -Preliminary Expenses 13,125 16,405

13,125 16,405

Consolidated Consolidatedfor Year Ended for Year Ended31st March 10 31st March 09

SCHEDULE - ‘P’ - OTHER INCOMEDividend 50,944 273,114Interest (Gross) 890,202 706,429Sales Tax Refund 487,187 -Commission 927,060 3,302,303Miscellaneous income 3,948,230 941,527

TOTAL 6,303,622 5,223,374

Consolidated Consolidatedfor Year Ended for Year Ended31st March, 10 31st March, 09

SCHEDULE - ‘Q’ MANUFACTURING EXPENSESRaw Material Consumption 2,208,740,203 2,047,463,283Packing Materials 41,243,286 36,786,082Freight Inward 67,764,371 54,501,295Processing Charges 30,532,838 20,072,920Salaries,Wages and Bonus 114,767,924 94,128,938Labour Charges 45,651,218 31,714,416Insurance ( Manufacturing) 5,537,097 6,541,303Labour Welfare Expenses 10,543,282 7,954,049Power & Fuel 254,604,119 222,987,952Stores & Spares 34,545,514 30,890,440Repairs & Maintenance - Building 260,291 224,149- Plant & Machinery 7,505,122 6,214,645Product Development Exps W/off - 346,534Research & development 45,518,360 23,250,087Loss on Sale of Assets 2,150,000 397,221Other Manufacturing Expenses - -

Water Charges 8,349,459 7,911,173Laboratory Expenses 10,868,207 8,912,930Other Factory Expenses 39,266,901 39,146,303

TOTAL 2,927,848,192 2,639,443,719

SCHEDULE - ‘R’ - OFFICE & ADMINISTRATION EXPENSESSalaries and Bonus 21,086,188 16,733,660Provident Fund Contribution 661,672 638,585Staff Welfare Expenses 591,061 539,404Directors’ Remuneration 21,920,713 8,102,059Books & Periodicals 89,386 39,578Auditors’ Remuneration 498,065 482,268Conveyance Expenses 1,882,700 1,686,876Legal & Professional Charges 5,126,972 7,152,412Membership & Subscriptions 138,491 271,874Printing & Stationery 1,528,195 1,406,328Postage,Telegram & Telephone 3,272,366 3,193,279Office Electricity Charges 1,802,149 1,837,250Insurance Charges 1,251,009 1,432,509Repairs & Maintanance - Others 2,688,668 2,673,797Entertainment Expenses 492,173 514,352Rates & Taxes 1,690 3,413Miscellaneous Expenses 1,162,050 1,806,748Vehicle Expenses 397,062 318,625Travelling Expenses - Directors 1,661,552 1,471,272- Others 2,415,647 1,949,514Directors’ Sitting Fees 483,000 486,000Loss on sale of Assets 962,394 -

TOTAL 70,117,440 52,743,444

SCHEDULE - ‘S’ - SELLING & DISTRIBUTION EXPENSESAdvertisement & Sales Promotion 5,727,315 3,490,557Freight & Forwarding Charges 77,016,899 61,131,705Commission on Sales 47,139,852 41,746,857Insurance on Sales 495,897 550,293E.C.G.C. Premium 2,994,602 2,033,708Other Export Expenses 9,233,700 5,167,950Other Local Sales Expenses 2,232,773 3,016,812Bad Debts 8,857,145 4,149,784

TOTAL 153,698,182 121,287,665

SCHEDULE - ‘T’ - BORROWING COSTSInterest on Term Loans 67,571,974 108,694,690Interest on Working Capital 71,664,774 98,858,655Interest on Others 26,735,781 35,384,504Redemption Premium on FCCB - 603,459Bank Charges 20,615,301 21,001,488

Total 186,587,829 264,542,796

SCHEDULE - ‘U’ - NON-OPERATIVE EXPENSESDonations 3,947,313 2,138,120Preliminary expenses written off 3,280 28,729

TOTAL 3,950,593 2,166,849

Aarti Drugs Limited


C M Y K

SCHEDULE ‘V’

NOTES FORMING PART OF CONSOLIDATED FIANACIAL STATEMENTS FORTHE YEAR ENDED 31ST MARCH 2010.

1. Background

Consolidated Financial Statements include the parent company, Aarti DrugsLimited and the following subsidiary company :

Name of the Subsidiary Proportion of Ownership Interest (%)

Suyash Laboratories Ltd. 83.96 %(Previous Year 66.05%)

2. Significant Accounting policies and notes to these Consolidated FinancialStatements are intended to serve as means of informative disclosures and aguide to better understanding of the consolidated position of the Company.Recognizing this purpose, the company has disclosed only such policies andnotes from the individual financial statements, which fairly present the neededdisclosures. Lack of homogeneity and other similar considerations made itdesirable to exclude some of them, which, in the opinion of the Management,could be better viewed, when referred from the individual financial statements.

3. Principles of Consolidation

a. These Consolidation Financial Statements are prepared using the FinancialStatements of the parent company and the subsidiary company drawn upto the same reporting date.

b. The Consolidation of the financial statements of the parent company andits subsidiary is done on line by line basis by adding together like items ofassets, liabilities, income and expenses. All intra group transactions,unrealized inter-company profits and balances have been eliminated inthe course of consolidation.

c. The accounting period of the foreign associate ends on 31st December andit is not practical to draw up its audited financial statements upto thereporting date of the parent (i.e 31st March 2010), hence the unauditedfinancial statements of the foreign associate as on 31st December 2009have been considered for consolidation.

d. The financial statements of parent company and its subsidiary have beenconsolidated using uniform accounting policies for like transactions andother events in similar circumstances.

e. The excess of the cost of the Company’s investment in the subsidiary overits share in equity of the subsidiary company, on the date of acquisition, isrecognized in the financial statements as Goodwill.

f. Goodwill/Capital Reserve arising on additional acquisition or stake increaseis recognized on step-by step basis

4. Accounting Policies

a) Recognition of Income and expenditure

These accounts are prepared under the historical cost convention on accrualbasis and under the going concern assumption in accordance with theaccounting principles generally accepted in India and the relevantprovisions of the Companies Act, 1956.

b) Fixed assets and depreciation

i) Fixed assets include all expenditure of capital nature and are stated atcost of acquisition, installation and commissioning less depreciation.Fixed asset values are stated at historical cost. Depreciation on fixedassets other than land is charged under the straight-line method inaccordance with Schedule XIV of the Companies Act, 1956. Product/Process development costs arising out of R&D are carried forwardwhen their future recoverability can reasonably be regarded as assured.Any expenditure carried forward is amortised over the period ofexpected future economic benefit, from the related project, notexceeding ten years.

ii) Impairment loss, if any, is provided to the extent, the carrying amountof assets exceeds their recoverable amount. Recoverable amount ishigher of the net selling price of an asset or its value in use. Value inuse is present value of estimated future cash flows expected to arisefrom the continuing use of an asset and from its disposal at the end ofits useful life.

c) Investments

Long Term Investments are stated at cost. Provisions are made for diminutionvalue of investments, if any, other than those of a temporary nature.

d) Valuation of Inventories

Inventories are stated at lower of cost or net realisable value . on thefollowing basis :

i) Raw materials, packing materials, - At cost on FIFO Methodstores and spares

ii) Work in process - At cost plus appropriateallocation of overheads

iii) Finished Goods - At cost plus appropriateallocation of overheads or netrealizable value, whichever islower

e) Revenue Recognition

Revenue is recognized to the extent that it can be reliably measured and isprobable that the economic benefit will flow to the Company

1. Sale of Goods

Revenue from sale of goods is recognized when the significant risksand rewards of ownership of the goods are transferred to the customerand is stated net of excise duty, sale returns and VAT.

2. Export Benefits :

Export benefits available under prevalent schemes are accrued in theyear in which the goods are exported and are accounted to the extentconsidered receivable

f) Borrowing Cost

Borrowing costs that are directly attributable to the acquisition, constructionor production of a qualifying asset are capitalized as part of the cost ofthat asset. The amount of borrowing cost eligible for capitalization aredetermined in accordance with Accounting Standard -16. Other borrowingcost are recognized as an expense in the period in which they are incurred

g) Foreign Currency Transactions

All exchange differences arising from foreign currency transactions aredealt with in the Company’s profit and loss account. In case of foreigncurrency loans utilized upto 31st March 2004 directly for acquisition offixed assets, the loss/gain is regarded as adjustment of cost and is includedin the carrying amount of the related fixed asset(s).

h) Taxation

a) Current Income Tax is aggregate of the tax expenses appearing in thefinancial statements of Individual Companies in accordance with theapplicable tax regulations.

b) Deffered tax is recognized on timing difference in the case of theindividual Companies and is disclosed in the aggregating in theconsolidated financial statements.

5. Segment-wise Disclosure as per Accounting Standard: 17.

I. BUSINESS SEGMENTS AS PRIMARY SEGMENTS

The Company is considered to be a single segment Company engaged inpharmaceuticals business, hence the disclosure requirement as per AS-17‘Business segments as Primary Segment’ is not attracted.

(Rs. In Lakhs)

II. GEOGRAPHICAL SEGMENTS AS SECONDARY SEGMENTS

For the year For the yearended 31st ended 31st


Segment Revenue

a) Exports 17,313 15,900

b) Others 33,095 25,670

Total 50,408 41,570

Note:

a. Segmental capital employed:

Fixed assets used in the Company’s business or liabilities contracted havenot been identified to any of the reportable segments, as the fixed assetsand services are used interchangeably between segments. The Companybelieves that currently it is not practicable to provide segment disclosuresrelating to total assets and liabilities.



C M Y K

6. Related party transactions:

Related party disclosure as required by Accounting Standard – 18. ‘ RelatedParty Disclosures’ issued by The Institute of Chartered Accountants of Indiaare given below :

A Name and Relationship of the Related Parties :

3(c) Individuals owning directly or indirectly, an interest in the votingpower of the reporting enterprise that gives them control or significantinfluence over the enterprise, and relatives of such individual.

1. Individuals

Mr. Chandrakant V. Gogri Mr. Rajendra V. Gogri

2. Relatives of Individuals

Mrs.Jaya C. Gogri Mr.Rashesh C. GogriMrs.Dhanvanti V. Gogri Mrs.Aarti R. GogriMirik R. Gogri Mr.Renil R. GogriMrs. Hetal Gogri Gala Mrs. Indira M. Dedhia

3(d) Key Management personel alongwith their relatives have significantinfluence.

1. Key Management PersonelMr. Prakash M. Patil Mr. Harit. P. ShahMr. Harshit M. Savla Mr. Uday M. Patil

2. Relatives of Key Management PersonelMrs.Priti P. Patil Mrs.Seema H. SavlaMr.Arun M. Patil Ms.Bhoomi S. SavlaDr. Vikas M. Patil Vishwa H. SavlaMr.Adhish P. Patil Mrs.Jayashree H. ShahMrs.Arati T. Sankhe Mr.Pragji M. Shah

Ms.Kalika A.. Mishra Mrs.Kesarben P. Shah

Mr.Sameer P. Shah

3(e) Enterprise/firms over which controlling individuals have significantinfluence.1. Aarti Industries Ltd.2. Aarti Healthcare Ltd.3. Rupal Drugs Ltd4. Amit Hetrochem Labs (I) Ltd

B Transaction with the related parties during the year :

Note : Proportions given in the following statement belong to the respectiveaccounting group as shown in the financial statements for the year ended 31st

March 2010.

Transaction with Associates & Enterprise/firms overRelated Parties Joint Ventures which controlling

individuals havesignificant influence

C.Y. P.Y. C.Y. P.Y.% % % %

Sales & Income from Operations Nil Nil 0.05 0.46

Manufacturing Expenses Nil Nil 2.63 5.58

Borrowing costs Nil Nil 0.00 0.83

Fixed Assets Nil Nil 0.00 0.30

Outstanding Payable Nil Nil 1.57 2.17

Outstanding Receivable 7.88 8.18 2.94 3.29

Outstanding Unsecured Loan Nil Nil Nil Nil

Transaction with Individuals Relatives of Individuals Key Management Relative of KeyRelated Parties Individuals Personel Management Personel

C.Y. P.Y. C.Y. P.Y. C.Y. P.Y. C.Y. P.Y.% % % % % % % %

Office & Administration Expenses 0.31 0.38 Nil Nil 31.30 18.16 Nil Nil

Borrowing costs Nil Nil Nil Nil 0.05 0.03 0.26 0.01

Unsecured Loans Accepted Nil Nil Nil Nil Nil Nil Nil Nil

Unsecured Loans Repaid Nil Nil Nil Nil Nil Nil 0.03 0.00

Outstanding Unsecured Loan Nil Nil 0.01 0.01 0.18 0.28 0.97 1.54

Note : Sr. 3(c),3(d),3(e) refer to the relevant Para of AS 18.

7. Taxation

a) Current Income Tax is the aggregate of the tax expenses appearing in the financial statements of Individual Companies in accordance with the applicable taxregulations.

b) Deffered tax is recognized on timing difference in the case of the individual Companies and is disclosed in the aggregate in the consolidated financialstatements.

8. a) Directors Remuneration :

By the Parent By the Subsidiary By the Parent By the SubsidiaryCompany (Rs.) Company (Rs.) Company (Rs.) Company (Rs.)31st Mar-2010 31st Mar -2010 31st Mar-2009 31st Mar-2009

Salary to Managing Directors andwhole time Directors 48,97,638 9,68,400 44,12,900 Nil

Bonus/Leave Travel Allowance/House RentAllowance/ Medical/Commission/Leave Salary/Insurance Premium 1,47,67,485 55,750 25,70,669 Nil

Contribution to Provident Fund 37,440 NIL 37,440 Nil

Superannuation fund scheme 11,94,000 NIL 10,81,050 Nil

Total Remuneration 2,08,96,563 10,24,150 81,02,059 Nil

Note: The above figures do not include contribution to gratuity fund as separate figures are not available for the managing / whole time directors.

b) The timing of the accrual and accounting of Directors Commission has been changed from the date of the approval of the financial statements for the year bythe shareholders to the balance sheet date of the concerned financial year. The directors’ commission of Rs. 92,43,764/- for the year ended March 31, 2010 hasbeen provided in the financial statements for the year ended on that date. These financial statements have also been charged with the directors’ commission ofRs.47,99,477/- for the year ended March 31, 2009, approved in the Annual General Meeting held on August 1, 2009. Due to this, the Net Profit for the year andthe Reserves are stated lower, and the Current Liabilities and Provisions higher, by Rs.92,43,764/-.

Aarti Drugs Limited


C M Y K

9. Auditors’ remuneration includes

By the Parent By the Subsidiary By the Parent By the SubsidiaryCompany (Rs.) Company (Rs.) Company (Rs.) Company (Rs.)31st Mar-2010 31st Mar -2010 31st Mar-2009 31st Mar-2009

Statutory Audit 1,95,000 45,000 1,95,000 45,000Other Audit Services 92,562 30,000 97,008 37,641Certification 17,330 NIL 19,119 2125Other Services from Auditors - 32,404 86,375 86,375

Total 3,04,892 1,07,404 3,11,127 1,71,141

10. Foreign exchange fluctutaion

Foreign exchange gain/(loss) included in profit & loss Rs.128.32 lacs (previous year( Rs.939.29) lacs)

11. Contingent Liabilities (Rs. In Lakhs)

Sr. No. Particulars On the Parent On the Subsidiary On the Parent On the SubsidiaryCompany (Rs.) Companies (Rs.) Company (Rs.) Companies (Rs.)

Mar 10 Mar-10 Mar 09 Mar-09

a. In respect of bank guarantees issued & L/C opened by theCompany’s bankers 1208.45 273.32 772.31 Nil

b. Demand in respect of additional income taxdisputed in appeal 36.04 Nil 573.39 Nil

c. Demand / Rebate in respect of Excise dutydisputed in appeal :

1. Demand /Rebate in respect of Excise duty in case of 102.90 Nil 102.90 NilAmmonium Sulphate. The Hon’ble High Court of Mumbaihas decided the appeal in favour of the Company inFebruary 2010 on the basis of its earlier judgement in asimilar case. However, as per information available withthe Company, the Department of Central Excise has filedan appeal in that precedent case in the Supreme Court,hence the company has continued to disclose this matter.

d. Liability for duty on raw material imported under advance 45.43 0.31 4.97 0.00licence benefit scheme against which export obligationremained to be fulfilled

e. Estimated amount of contracts remaining to be executed 16.21 0.61 37.12 0.98on capital account and not provided for (net of advances)

12. Consolidated Financial Statement include the following

(a) Consolidated Financial statement include the financial statements of the Subsidiary, Suyash Laboratories Ltd. The Parent Company Aarti Drugs Ltd did notparticipate in the equity shares Buy- back offers made by Suyash Laboratories Ltd. Consequent to the completion of the buy-back of equity shares SuyashLaboratories ltd. On 2nd July 2009 the holding of the Parent , Aarti Drugs Ltd’s stake in Suyash increased to 83.96%, The effect of this increase on the Goodwilland Minority Interest has been recognized in the Consolidated Financial Statement.

(b) Consolidated Financial Statements include the following Associate Company.

Name of Associate Country/Currency % of Holding Amount Invested

Huanggang YinheAarti China/RMB 26% Rs. 94,36,433Pharmaceutical Co.Ltd

Amount Invested Adjustment to original Investment Adjustment During the Year Carrying Amount of Investment astowards loss upto 01-04-2009 towards Profit on 31-03-2010

Rs. 94,36,433 Rs. 80,79,668 Rs. 19,39,979 Rs. 32,96,724

13. Earning Per Share :


Net Profit Available for Equity Shareholder (Rs.) 28,23,03,498 15,96,59,464Weighted Number of Equity Shares (Nos.) 1,18,20,331 1,17,08,550Basic & Diluted EPS (Rs.) 23.88 13.64Nominal value per share (Rs.) 10.00 10.00


Sd/- Sd/- Sd/-(CA Y.R. Vyavaharkar) Prakash M. Patil Harshit M. SavlaPartner (Managing Director) (JT. Managing Director)Place : Mumbai Sd/-Date : 26th May, 2010 Dilip Maharana

(Company Secretary)



C M Y K

Consolidated Cash Flow Statement(Rupees in Lakhs)

For The Year For The YearEnded Ended


A. Cash Flow from Operating ActivitiesNet Profit before Tax and Extraordinary items 4,740 2,604ADJUSTMENT FOR:Depreciation 1,703 1,448Expenses Amortised 268 140Interest Paid 1,866 2,431Exchange Rate Loss / (Gain) - 214Interest Received (9) (7)Dividend Received (1) (3)Share of Profit/(loss) of Associate 19 (56)Profit on Sale of Asset - -Loss on Sale of Asset 31 4Dividend on Investments - -

Operating Profit before Working Capital Changes 8,618 6,776Trade & Other Receivable (362) (298)Inventories (389) 569Trade Payable (576) (32)

Cash generated from operation 7,291 7,014Direct Taxes Paid (1,380) (524)

Net Cash Flow from Operating Activities 5,912 6,490

B. Cash Flow from Investing ActivitiesPurchase of Fixed Assets (2,573) (2,016)Purchase of Investment (19) 1,308Sale of Fixed Assets (3) 59Change in Minority Interest (460) (511)Dividend on Investments - -Interest Received 9 7Dividend Received 1 3

Net Cash Flow from Investing Activities (3,046) (1,151)

C. Cash Flow from Financing ActivitiesProceeds from Long Term Borrowings 614 2,623Proceeds from Unsecured Loans & from Scheduled Bank (953) (4,871)Proceeds from Share Warrants 189 21Dividend Paid (346) (306)Interest Paid (1,866) (2,859)

Net Cash Flow from Financing Activities (2,361) (5,392)

Net Increase in Cash and Cash Equivalents (A+B+C) 504 (54)Opening Cash and Cash Equivalents 348 402Closing Cash and Cash Equivalents 852 348

Note : (i) Figures in brackets indicate outflows(ii) Cash and cash equivalent is cash and bank balance as per balance sheet(iii) Fixed Deposits with bank amounting to Rs.192.09 lacs (Previous year Rs.156.53 lacs ) under lien are considered as cash & cash

equivalents

AS PER OUR REPORT OF EVEN DATE For and on Behalf of the Board of Directors

For PARIKH JOSHI AND KOTHARECHARTERED ACCOUNTANTS

Sd/- Sd/-

(CA Y. R. Vyavaharkar) Harshit M. SavlaPartner (Jt. Managing Director)

Place : MumbaiDate : 26th May, 2010

Aarti Drugs Limited


C M Y K

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C M Y K

Regd.off: Plot No. N- 198, M.I.D.C., Tarapur, Village- Pamtembhi, Taluka – Palghar, Dist. Thane- 401 506, Maharashtra.

Dear Shareholder,

OPTION FOR NECS MANDATE

NECS Mandate

(i) For Shareholders holding shares in physical form

We are pleased to offer the facility of electronic credit of dividend directly to the respective bank Accounts of our shareholders,through National Electronic Clearing Services (NECS) facility. Shareholders who would like to avail of this facility are requestedto fill up the mandate form provided on the reverse of this letter and submit the same to the Company’s share transfer agentlatest 16th August,2010.This service not only protects a shareholder from fraudulent interception and encashment of dividendwarrants but also eliminates dependence on the postal system, loss/damage of dividend warrants in transit and correspondencerelating to revalidation of duplicate dividend warrants.

(ii) For shareholders holding shares in electronic form

Kindly note that as per the directives of Securities Board of India (SEBI), in respect of shareholders holding shares in dematerializedform, dividend shall be paid directly in to their Bank account furnished by the shareholder to their respective DepositoryParticipants.

As per RBI’s notification, with effect from 1st October, 2009, the remittance of money through ECS has been replaced byNational Electronics Clearing Services (NECS). NECS operates on the new and unique bank account number allotted by bankspost implementation of the Core Banking Solutions (CBS). Pursuant to implementation of CBS, your bank account number mayhave undergone a change, which is required to be communicated by you to your Depository Participant immediately.

Kindly note that the NECS/Bank Mandate instructions should be given under the signature of the shareholder(s) as per specimenlodged with the Company.

We seek your cooperation to enable us to serve you better.

Yours sincerely,

For Aarti Drugs Limited

Sd/-

Harshit M. Savla

Jt. Managing Director

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Aarti Drugs Limited


C M Y K

Date: _____________

To,

Sharepro Services (India) Pvt. LtdUnit : Aarti Drugs Ltd.Samhita Complex, Gala No. 52 to 56,Bldg., No. 13 A-B, Near SakinakaTelephone Exchange, Andheri-Kurla Rd,Sakinaka, Mumbai- 400 072.

Dear Sir,

NECS MANDATE FORM (Refer Note No. 6(ii) in the AGM Notice dated 26th May,2010)(Not required to be filled by shareholders holding share in dematerialized form)

I/We do hereby authorise Aarti Drugs Limited to Credit my dividend amount directly to my Bank Account as per details furnishedbelow by National Electronic Clearing Services (NECS) – NECS Mandate

Folio No.

Name

Bank Name

Bank Branch

Bank Address

Account Type (Saving / Current)

New Core Banking Account Numberallotted by your Bank (15 digit)

9 Digit Code number of the Bank &Branch as appearing on the MICR chequePlease attach photocopy of the cheque

Telephone number (with STD code) of shareholder

Email Id of shareholder

I /We shall not hold the Company responsible if the NECS mandate cannot be implemented for reasons beyond the control of theCompany.

Signature of shareholder(s)

(as per specimen lodged with the Company)

C M Y K

AARTI DRUGS LTDRegistered office: Plot No. N-198, MIDC, Tarapur, Village Pamtembhi, Tal. Palghar, Dist. Thane – 401 506.

TWENTY FIFTH ANNUAL GENERAL MEETING 27TH AUGUST, 2010ADMISSION SLIP

Folio No. / Client ID:

I certify that I am a registered shareholder/proxy for the registered shareholder of the company.

I hereby record my presence at the TWENTY FITH ANNUAL GENERAL MEETING of the company held at TIMA HALL, MIDCTarapur, Taluka-Palghar, Dist. Thane 401 506, Maharashtra on Friday, 27th August, 2010 at 11.00 a.m..

Name of the Member in BLOCK Letters Member’s Signature

Name of the Proxy in BLOCK Letters Proxy’s Signature

Note: Please fill this attendance slip and hand it over at the Entrance of the Hall.

Aarti Drugs LimitedRegd. Off.: Plot No.N-198, MIDC, Tarapur, Village-Pamtembhi, Taluka-Palghar, Dist.-Thane 401 506, Maharashtra

TWENTY FIFTH ANNUAL GENERAL MEETING 27TH AUGUST, 2010

FORM OF PROXY

Folio No. / Client ID:

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 ____________or

failing him /her ____________________________________ of _____________ in the district of_______________ as my/our proxy to

vote for me/us on my/our behalf at TWENTY FIFTH ANNUAL GENERAL MEETING of the Company to be held on Friday,27th

August 2010 at 11.00 am and at any adjournment thereof.

Place: Signed____________________________

Date:

Notes:This proxy form inorder to be effective should be duly stamped and signed and must be deposited at the Registered Office of theCompany not less than 48 hours before the time for holding the meeting.

AFFIX

REVENUE

STAMP

annual report 2009-10 - bombay stock exchange · 2010. 9. 27. · annual report 2009-10 c m y k...

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