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ALEMBIC_AR_ 2004-05

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ALEMBIC_AR_ 2004-05 Powered By Docstoc
					Over time, there has been a paradigm shift in the way we, as a
company, foresee our future. We not only look with pride at the
98 years gone by, but visualise with hope, excitement and a
youthful vibrancy, how we shall shape the next 100 years.
Our external environment is engulfed with constant change - patent regime, regulations,
innovation, competition, collaboration and so on. As we adapt and reinvent, it is important
that we give our company an identity that is in consonance with this change.
Just as a country is identified by the national flag, a company is identified by its logo. It reflects
the basic ethos of the company, what it stands for and how it expects to ride into the future.
From this perspective we are pleased to unveil the vibrant new logo of Alembic.




                   Alembic
The simplicity of the earlier logo has             The colours chosen are blue and green. Blue
remained intact. This is a symbol of the           stands for stability, knowledge, dependability
stability and respect Alembic has gained           and strength of character. Green on the other
over the past decades. The two uni-                hand stands for prosperity & freshness of
directional arrows below the name of               thoughts (innovation). Together blue and
Alembic depict the momentum surging                green symbolise the colours of the ocean,
across the organization to leverage its            which has unparalleled depth and is in
brand equity, to achieve its real potential        constant movement.
to reach higher goals and aspirations.             As members of the Alembic family, it is
Speed x Direction = Velocity. It is this           important that you understand the essence of
Velocity, this feeling of directed and             this logo and feel proud to participate in the
purposeful movement that we want to                growth of Alembic as we confidently march
bring into our company.                            towards our next 100 years.
 index
 Alembic - A Retrospective                                                                            1
 Unveiled                                                                                             4
 The Art of Brand Building                                                                            6
 Versatile Palette                                                                                    8
 ZERO - The launch                                                                                    9
 The World Our Canvas                                                                               10
 Figuratively Speaking                                                                              12
 Chairman's Address                                                                                 14
 Mastering the Art (Formulations Review)                                                            16
 Changing Landscapes (API Review)                                                                   18
 Different Strokes (Animal Healthcare Review)                                                       19
 Applied Creativity (Research Review)                                                               20
 Directors’ Report                                                                                  22
 Report on Corporate Governance                                                                     37
 Auditors’ Report                                                                                   46
 Financial Section                                                                                  49




This report contains forward-looking statements, which may be identified by their use of words
like ‘plans’, ‘expects’, ‘will’, ‘ anticipates’, ‘believes’, ‘intends’, ’projects’, ’estimates’ or other
words of similar meaning. All statements that address expectations or projections about the
future, including but not limited to statements about the Company’s strategy for growth, product
development, market position, expenditures, and financial results, are forward-looking
statements. Forward-looking statements are based on certain assumptions and expectations of
future events. The Company cannot guarantee that these assumptions and expectations are
accurate or will be realized. The Company’s actual results, performance or achievements could
thus differ materially from those projected in any such forward-looking statements. The
Company assumes no responsibility to publicly amend, modify or revise any forward-looking
statements, on the basis of any subsequent developments, information or events.
Board of Directors
Mr. Chirayu R. Amin
Chairman & Managing Director
Mrs. Malika C. Amin
Whole-time Director
                                           Regd. Office
Mr. Rajkumar Baheti                        Alembic Road, Vadodara - 390 003
Director, President-
Finance & Company Secretary                Manufacturing Facilities
                                           Alembic Road, Vadodara - 390 003
Mr. Ranjitbhai R. Patel
Dr. Babubhai R. Patel                      Formulation Division
Mr. Pranav N. Parikh                       Panelav
                                           Tal. Halol, Dist. Panchmahal - 389 350.
Mr. K. G. Ramanathan                       Gujarat
Mr. Ramanlal M. Kapadia                    Plot No. 21, 22, EPIP - Phase I, Jharmajri,
                                           Baddi, Tehsil - Nalagarh,
Statutory Auditors                         Dist. Solan, Himachal Pradesh

K. S. Aiyar & Co.                          API Division
Chartered Accountants,                     Panelav, Tal. Halol
Laxmi Estate No. F - 07, 08                Panchmahal - 389 350
Shakti Mills Lane, Off Dr. E. Moses Road   Gujarat
Mahalaxmi, Mumbai - 400 011
                                            Registrar & Transfer Agents
Bankers                                     M/s. Intime Spectrum Registry Limited
                                            201, Sidcup Tower
ABN-AMRO Bank N.V.                          Near Marble Arch, Race Course
Bank of Baroda                              Vadodara - 390 007
                                            Phone No.: 0265-2332474 (Tele-fax)
ICICI Bank Limited                          E-mail: vadodara@intimespectrum.com
IDBI Bank Limited
State Bank of India
Union Bank of India
UTI Bank Limited
Alembic
 A Retrospective
                                  Plant at Baddi, Himachal Pradesh           Plant at Panelav, Gujarat




          1907-2005



                                  Alembic, founded in 1907, is committed to excellence in pharmaceutical
                                  healthcare through the development of indigenous technologies, with a
                                  mission to give access to the best healthcare products at affordable prices
                                  to everyone, anywhere in the world. Alembic is one of India's most
                                  experienced manufacturers of bulk drugs and pharmaceutical formulations
                                  in human and animal healthcare, as well as a respected export house. The
                                  leadership position that Alembic's products enjoy in their respective
                                  categories speak aloud of the quality and service standards set by the
                                  company. Six of Alembic's brands feature among the top 300 brands in the
                                  country today.

                                  Alembic is a certified ISO-9002 and ISO-14001 company with
                                  manufacturing practices and facilities that conform to WHO-GMP
                                  guidelines. The Panelav facility has recently been upgraded and has
                                  received the approval of International Regulatory authorities such as the
                                  Medicines Control Agency, UK, Medicines Control Council, South Africa
                                  and the Food and Drug Administration, USA.

                                  Alembic was a pioneer in the basic manufacture of penicillin, is a world
                                  leader in macrolides and has the distinction of producing Cephalosporin - C
                                  for the first time in the country.
    OUR VALUES

    We shall establish a meritocracy
    that values integrity, innovation and
    fairness to leverage the true
    potential of our human capital.
2
Formulation Plant                 Corporate Office, Vadodara        Quality Testing               BioArc - The research centre at Vadodara




         Alembic's brand, Althrocin, is India's 3rd largest antibiotic.
         The major therapeutic segments where Alembic has a
         strong presence are antibiotics and antibacterials, cough
         and cold remedies, analgesic and anti-inflammatory
         medications, nutraceuticals and anti-diabetics.

         Alembic, headquartered in Vadodara is today an integrated                    OUR MISSION
         pharmaceutical company with the ability to research,
         develop, manufacture and effectively market                                    o
                                                                                      T become a knowledge-driven
         pharmaceutical products and services. It has
         manufacturing facilities in Gujarat and Himachal Pradesh,
                                                                                      global pharmaceutical company
         and a state-of-the-art research centre that conducts
         landmark projects in Chemistry, Microbiology, and
                                                                                      with the highest levels of
         Pharmaceutical Technology. Alembic shares collaborative                      excellence in all spheres
         & symbiotic relationships with preferred business
         partners, all of who reflect similar business ethics, trust &
                                                                                      of operations.
         transparency and quality standards.

         In the financial year 2004-2005 Alembic registered
         revenues of Rs. 583 crore and a profit after tax of
         Rs. 51.82 crore.




                                                                                                                                             3
    Unveiled growth
     New Products fuel




4
                                New products have been the prime growth drivers in the pharmaceutical
                                industry across the world and are used as the health barometer of a firm.
                                This year Alembic launched 23 new products including line extensions to
                                expand its product portfolio and drive growth in new emerging categories.

                                These new products span across therapeutic categories and include:

                                    G.I                       Hydral, Nitacure, Ignis

                                    Anti-infective            Altamet, Gatrich, Megaclav

                                    Pain Management           Etrik, Fortafen




          14
         03-04
                        23
                        04-05


                          8
                        02-03
                                    Cough & Cold

                                    Cardiovascular

                                    Anti-diabetic

                                    OTC




                                generators for Alembic.
                                                              NeoZeet

                                                              Amtor, Ezorva

                                                              Glimser

                                                              Zero
                                                                                        23
                                These new products contributed to 4.5% of the total sales vis-a-vis the
                                2% industry average, a persuasive indicator that they will be high revenue
                                                                                                                 NEW PRODUCTS
                                                                                                                 LAUNCHED




                                On the API front, Alembic aims to gain a strong foothold in the regulated
                                markets. Its goal is to file 5 DMFs every year to add to the 7, which have
New product launches/
Line extensions                 already been filed till date. As this initiative accelerates and the expertise
                                grows, a new healthy revenue stream will be generated for the company.

                                The research pipeline at Alembic is also healthy. The company filed a
                                number of patents, which include 43 for Active Pharmaceutical Ingredients
                                (APIs) and Intermediates.




                                                                                                                                5
    The Art of
    Brand Building
    Strong Brands. Robust Revenue.




6
In an industry where new product launches drive growth, strong brands
are vital to build a larger, sustainable and profitable revenue stream,
Alembic has an enviable record of building strong brands across
therapeutic areas.

This year one more formulation brand, Ciprowin, entered the list of top
300 pharmaceutical brands in the country. Althrocin and Roxid retained
their positions in the top 300 brands. Roxid maintained its leadership as the
largest prescribed brand amongst anti-infectives, whereas Azithral
emerged as one of the fastest growing brands in the Indian Pharma
Industry.

Rekool is an another brand which has outperformed the category. Within a
year and half of its launch, Rekool has become one of the most prescribed
brands by GPs for gastric acid related disorders. While Glycodin moved up
on the brand-chart from 236 in Dec '03 to 231 in Dec '04.


                     Alembic Brands that feature amongst the




    6
                     top 300 pharmaceutical brands in the country
                                                                                These brands have
                                                                                contributed 1.1 %
                     Althrocin          Wikoryl           Glycodin              market share out of
                                                                                1.7 % market

                     Azithral Roxid              Ciprowin                       share of Alembic.




The launch of 'Zero', a new generation, no calories, sucralose based sugar
substitute, marked Alembic's entry into the high-growth lifestyle OTC
product segment.

Over and above its products, brand Alembic also enjoys a strong equity
among the medical fraternity.
                                                                                Zero-the first Sucralose product in the country




 5th amongst ENTs                        6th amongst pediatricians
 9th amongst gynaecologists 9th amongst GPs




                                                                                                                                  7
Pactum, Alzolid, Natelide, Forminal, Pioride, Aldinir,
Altamet, Lormeg, Laveta, Nimegesic, Magadol,Vacox,
Etrik, Sharkoferrol, Protinules, Ferisis, Folinal, Calcy,
Ala,Hermin, Isovon, Tetan, Lipireg, Zeclop, Diax, Odinol,
Z o c a m , G l i m s e r, R e k o o l , M I C , O m e z o l
         A Versatile Palette
Glycodin, Zeet, Wikoryl,Ephedrex,Brozeet,Cepime,
Pactum, Alzolid, of products Forminal, Pioride, Aldinir,
       Our portfolio Natelide,
Altamet, Lormeg, Laveta, Nimegesic, Magadol,Vacox,
Etrik, Sharkoferrol, Protinules, Ferisis, Folinal, Calcy,
Ala,Hermin, Isovon,Areas
             Therapeutic
                                Tetan, Lipireg,Products
                                                    Key
                                                            Zeclop, Diax, Odinol,
                l i & Cold           Glycodin, o Wikoryl,          MIC,
Z o c a m , GCoughm s e r, R e kZeet,o l , Ephedrex, Brozeet O m e z o l
Glycodin, Zeet, Wikoryl,Ephedrex,Brozeet,Cepime,
              Anti-infective         Althrocin, Roxid, Azithral, Sparta,
                                     Bacimox, Norbid, Ciprowin, Clarithro,
Pactum, Alzolid, Natelide, Forminal, Pioride, Aldinir,
                                     Megaclav, Aldinir, Altamet

Altamet, Lormeg, Laveta, Nimegesic, Magadol,Vacox,
              Pain Management        Nimegesic, Magadol, Vacox, Etrik


Etrik, Sharkoferrol, Protinules, Ferisis, Folinal, Calcy,
              Nutraceuticals         Sharkoferrol, Protinules, Ferisis, Folinal,
                                     Calcy, Ala,Hermin, Isovon, Diax

Ala,Hermin, Isovon, Tetan, Lipireg, Zeclop, Diax, Odinol,
              Gastro-intestinal      Rekool, Hydral, Nitacure, Ignis.

                lims                 Tetan, k o o l
Z o c a m , GCardiovascular e r, R e Lipireg, Proace,, M I C , O m e z o l
                                     Amtor, Ezorva
Glycodin, Zeet, Wikoryl,Ephedrex,Brozeet,Cepime,
              Anti-Diabetic          Natelide, Forminal, Pioride, Glimser, GLZ

Pactum, Alzolid, Natelide, Forminal, Pioride, Aldinir,
              Gynaecological         Dubatran, Yutopar

              Critical Care Laveta, Nimegesic, Magadol,Vacox,
Altamet, Lormeg, Products Cepime, Pactum, Alzolid
Etrik, Sharkoferrol, Protinules, Ferisis, Folinal, Calcy,
              Antihistamines         Lormeg, Laveta


Ala,Hermin, Isovon, Tetan, Lipireg, Zeclop, Diax, Odinol,
Z o c a m , G l i m s e r, R e k o o l , M I C , O m e z o l
Glycodin, Zeet, Wikoryl,Ephedrex,Brozeet,Cepime,
Pactum, Alzolid, Natelide, Forminal, Pioride, Aldinir,
Altamet, Lormeg, Laveta, Nimegesic, Magadol,Vacox,
Etrik, Sharkoferrol, Protinules, Ferisis, Folinal, Calcy,
Ala,Hermin, Isovon, Tetan, Lipireg, Zeclop, Diax, Odinol,
 8
                                                             Zero
                                                             Alembic unveils the country's first
                                                             zero calorie sugar substitute




             With the rising awareness of the populace towards preventive care,
             general fitness and the need to eat healthy to stay healthy, the market
             for sugar substitutes, which has been growing at a healthy pace is
             about to explode.

Alembic is the first company in India to introduce Sucralose.
             Consumer predilection for sweetness in the diet creates an active
             marketplace for sweeteners with few or no calories. Initially the
             market was driven by diabetics, then came in the diet market with its
             concerns over weight gain and obesity-related disorders. The new
             growth-drivers for sugar substitutes are active and passive health
             seekers who are looking at options to reduce their calorie intake.
             Alembic has taken a giant leap into the Rs. 60 crore, high-growth
             sugar substitute market with the launch of its no calorie sugar
             substitute 'Zero'. The product differentiates itself from the other
             sugar substitutes in the market on the fact that it is made on the
             molecule sucralose and does not contain aspartame. Market                 Sucralose
             response to Zero has been very exciting and Alembic expects to            The Key Differentiator
             capture about 10 per cent of the current market in the first year and     It is derived from sugar
             accelerate the overall market growth from 28 % to 40 %. The               and tastes just like sugar.
                                                                                       It is 600 times sweeter
             company has unleashed a print and television campaign, which is           than sugar.
             supported by aggressive on-ground activity.                               It is stable at higher
                                                                                       temperatures and can be
             Down the line, Alembic would look at other forms of the same              used for cooking.
             product, ranging from sachets to a loose sugar-like form.                 It is approved by 42 countries
                                                                                       around the world including its
             Zero reinforces Alembic's OTC portfolio and underlines the                approval by the leading
             company's focus on the OTC category. OTC products in the pain and         regulatory authorities like US
                                                                                       Food & Drug Administration
             gastro-enterology segments are also on the anvil.                         (FDA), Joint FAO/WHO
                                                                                       expert committee on Food
                                                                                       Additives and the National
                                                                                       Food Authority of Australia
                                                                                       among others.                    9
     The World
      our canvas
       International markets




10
India is one of top five manufacturers of bulk drugs in the
world and is among the top 20 pharmaceutical exporters in
the world. The industry manufactures almost the entire
range of therapeutic products and is capable of producing
raw materials for manufacturing a wide range of bulk drugs
from the basic stage. The Indian pharmaceutical industry
enjoys excellent brand equity in international markets.

Alembic's revenue from exports of Branded Formulations
grew by 3%. The over-all revenue from exports though fell
                                                              Exports form a vital
from 135.7crore to 114.2 crore due to the sharp decline in    component of the
the global prices of Penicillin G.                            growth strategy at
The company has upgraded its API manufacturing facilities     Alembic and in the
and also obtained international regulatory approvals from     past few years the
institutions of repute like USFDA, and EDQM. Interactions     company has made
with major US and European generic players are underway
                                                              large strategic
for supply arrangements.
                                                              investments in view
The Formulation facilities have also been upgraded to meet
                                                              with the emerging
international standards.
                                                              opportunities and is
Alembic also established marketing offices in Nigeria,        now ready to sweat
Tanzania, Vietnam, Russia, Ukraine, Kenya and Myanmar.
                                                              the assets.
Direct marketing from India to South Africa, Europe, Middle
East and South East Asian Countries was reinforced.

The company launched the neutraceutical Isovon - a soy
isoflavone-based phytoestrogen supplement in Europe
through a downstream co-marketing exercise with Orchid
Healthcare.

From research to manufacturing to marketing and
distribution, Alembic has aggressive plans for the
international market.




                                                                                     11
     Figuratively
     speaking
     Numbers that say
     you can count on us




12
                 Turnover of INR 572 crore

                                                   2%
                72 %                               from R & D Activity
from formulation division




                                                                    No.1 prescribed brand
                                                  26 %              Alembic's Roxid continues to be the No.1
                                             from API               prescribed brand (C-MARC) among all
                                                                    anti-infectives

                                                                    43 patents
                                                                    filed for APIs & Intermediates in the
                                                                    current year

                 66 % jump in PAT                                   23 new products
                 This year Alembic reported a PAT of                including line extensions were
                 Rs.51.82 crore, vis-à-vis last year's PAT of       launched this year
                 Rs.31.26 crore
                                                                    4.5 % of the total sales
                 25 % reduction                                     contributed by new products launched in
                 in interest & financial costs                      last year which is double the industry
                                                                    average of 2 %
                 3 % growth in sales
                 of branded formulations in the
                                                                    15 % of the total sales
                 International Market                               contributed by new products launched in
                                                                    last two years which too beats the
                                                                    industry average of 8.9 %
                 3rd most preferred company
                 by doctors while prescribing antibiotics
                                                                    24 therapeutic areas
                 1.7 % market share                                 Product Portfolio spread across a wide
                 in the domestic pharmaceutical industry            therapeutic range

                 5.35 % of market share                             1,20,000 doctors serviced
                 of the total antibiotic market                     across the country by Alembic's field staff

                 6 of Alembic brands                                1300 strong field force
                 feature amongst the top 300 brands of              including first line & second line managers
                 Indian Pharma Industry as per
                 ORG-MARG data                                      Extensive distribution network of

                 Althrocin ranked 11th                              28 C&F agents
                 Among the top 300 pharma brands                    3000 authorized dealers
                 of the country                                     2,50,000 retailers




                                                                                                                  13
                                                          C H A I R M A N ' S           A D D R E S S




                                                          The company that does not
                                                     make the quantum leap to change
                                                             will see change pass it by.



     Dear Shareholders,                                      However with the implementation of VAT from
                                                             April 1, 2005 we do not foresee any such
     The national and global pharmaceutical industry
                                                             recurrence. The action plan to repurpose the
     remained dynamic, ever-changing, and growing.
                                                             fermentation manufacturing facility at Vadodara
     Alembic is also continually evolving to share in
                                                             is underway.
     the sector's growth. Continuity of change
     marked the past year at Alembic. Change was all         Mindful of the present bottom-line and focusing
     pervasive. It cut across product portfolio,             on the future, we accomplished many things in
     processes, people and paradigms.                        this year.

     PERFORMANCE                                             NEW FACILITIES
     Profits increased by 66 % to Rs. 51.82 cr in            It was the final phase of investment in assets.
     2004-05 from Rs. 31.26 cr in 2003-04 even               Alembic set-up in the record time of eight
     though revenues marginally decreased by 6.9%            months a state-of-the-art Formulation
     from Rs. 626 cr in 2003-04 to Rs. 583 cr in 2004-       Manufacturing facility at Baddi in Himachal
     05.                                                     Pradesh with a capital investment of Rs. 28 cr.
     The Profit before Tax (PBT) grew by 16 % and            Spread over 19,000 sq.mts. the plant has a
     operating profits registered a growth of 10.7 %.        production capacity of 900 million tablets and
                                                             600 million liquid oral bottles annually.
     It has been a consistent effort at Alembic to
     strengthen the quality of our income by refining        Alembic also invested Rs. 21.6 cr this year in a
     our product portfolio, extending our market             new 1,20,000 sq.ft. R&D facility. The entire
     reach, enhancing efficiencies and optimizing            facility is designed as per GLP guidelines and
     costs.                                                  became operational in July of 2004.

     The fall in revenues was a result of global             FORTIFIED PRODUCT PORTFOLIO
     depression in the prices of Penicillin G and other      Formulations
     APIs plus the initial apprehensions and
     confusions over VAT, which saw domestic                 Ability to build strong brands has been the
     formulation sales fall by almost 16 % in the last       strength of Alembic. Brands like Rekool and
     quarter vis-à-vis the corresponding period in the       Ciprowin posted a growth of 172 % and 72.7 %
     previous year.                                          respectively. Althrocin and Roxid captured
                                                             market share of 73.8 % and 54.2 % respectively.




14
>> New Products            >> Research               >> Formulations           >> Manufacturing




We reinforced our robust product portfolio by         EXTENDING REACH
adding new product and line extensions.               Alembic continued to invest in and grow its
OTC                                                   distribution operations; with an aim to ensure
                                                      that Alembic products always have a place on
During the year we also entered the fast
                                                      pharmacy shelves across the nation. Securing,
growing lifestyle segment with the launch of a
                                                      building and training the sales force is a
sugar substitute 'Zero'.
                                                      continuous process at Alembic, whereby we
                                                      keep physicians sufficiently informed to
RESEARCH GATHERS MOMENTUM
                                                      prescribe our branded products and enhance
Revenues from R&D activity posted a healthy           our market share.
growth of 52 %. The research initiatives which
were flagged of last year under the aegis of          OUTLOOK
BioArc, gathered momentum in all four
                                                      We remain confident about the future, knowing
disciplines - Chemistry, F&D, Pharmabiology
                                                      we hired talented people in all areas of our
and Bioequivalence.
                                                      business - most notably in science and in sales.
Along with the infrastructure, Alembic also           Launched new products and services in high-
expanded its width of services by offering            growth segments. Built manufacturing and R&D
Contract Research and Manufacturing Services          facilities that will allow us to continue to
(CRAMS).                                              develop, manufacture and distribute branded
9 patents were filed and 5 technologies were          formulations, OTCs and generics. Restructured
successfully scaled up to kilo-lab. 20 new            our finances and cut down on our debt burden.
formulations were developed and launched in           As we sign-off for the year 2004-05, we would
the market. Another 13 are in the pipeline.           like to thank our employees for their hard work
BioArc made its foray into clinical research and      and dedication, our customers for their business
established a state-of-the-art 36 bed                 and you, our shareholders for your continued
self-contained Bioequivalence Centre.                 support.
Various international customers evinced
interest to work with BioArc both in the in-vitro     Sincerely,
or cell based early drug discovery studies as well
as in the in-vitro animal based studies.




                                                      Chirayu R. Amin
                                                      Mumbai, 4th July, 2005




                                                                                                         15
     FORMULATIONS REVIEW




     Mastering the Art
     Like in previous years, Formulations reinforced its place of pride by being the
     largest contributor to the Company's revenues. The business grew from
     Rs. 402 cr in 2003-04 to Rs. 406 cr in 2004-05. During the year revenue from
     export of Formulations grew from Rs. 40.14 cr to Rs. 41.86 cr.


     Strong Brands
     In the Indian pharma industry 300 brands account for 48 % of revenues.
     Successful brands reward a company with higher revenues and margins, longer
     product life and enhanced product recognition.

     Alembic's core competence is in brand building and it continued to enhance its
     brand stable across therapeutic areas .


     Market Share Enhancement

       Brand                Market Share
                                                      Accelerated Growth
       Althrocin                 74 %
       Roxid                     54 %                Brand                 Growth
       Glycodin                  79 %
                                                     Rekool                172 %
       Rekool                    6.6 %
                                                     Ciprowin              72.7 %
       Azithral                  27 %
                                                     Azithral              14.6 %
       Wikoryl                   6.8 %
                                                     Glycodin              10.1 %
       Zeet                      2.6 %
       Sharkoferrol              41 %
                                                    Source: ACNielsen ORG-MARG

                                                    Our success is the result
                                                    of new products
                                                    introduced by us and
                                                    their effective distribution
                                                    across the country.
16
Diverse Product Portfolio
Formulations markets can be broadly divided into two segments, drugs for
managing acute diseases & drugs for managing chronic or lifestyle diseases.
Drugs for acute disease management account for 76 % of the total market. The
remaining is taken care by drugs used for chronic disease management. The                       The Formulations Composition
growth in the industry is largely fuelled by the latter drugs meant for managing
                                                                                                              CardioVascular
chronic diseases.                                                                                             & Diabetology 2%
                                                                                       Anti-infective 66%           Gastro Intestinal 2%
Alembic, a strong and established player in acute disease management market,                                         Nutraceuticals 6%
is focusing also on the chronic disease market with a host of new product and
management bandwidth.                                                                                               Pain Management 8%

Company's product portfolio is well-rounded with presence across
therapeutic segments. The Company not only has conventional medicines
                                                                                                                Cough & Cold 16%
anti-infective, pain, cough etc. but also caters to the high growth lifestyle
prescription products & lifestyle products for urban markets. Not to mention,
low cost generic options for rural markets.


    Segment          Market Rank              Val (Cr)            Market Share

   Anti-infective           7                  196.99                   5.31
   Macrolide                1                   135.3                   43.1
   Cold                     4                    16.5                    6.9
   Cough                    4                    39.0                    1.0
   Respiratory              7                    61.4                    3.0
   NSAID                    22                   21.6                   1.34



Healthy Product Pipeline
Alembic changed the complexion of its product portfolio by reinforcing its
product offerings in the chronic disease segment. The company flagged off
Specia division to cater to cardio vascular & diabetology. It also bolstered its
presence in the gastro-intestinal arena. Within a year's time of launching
Rekool, its brand of Rabeprazole, Alembic scaled up its rank to 15 in the anti-
peptic ulcer category. With a shift in the pharmaceutical industry towards
higher consumption of OTC products the company fortified its OTC
formulation portfolio with ZERO.

Focused Divisions
                      Mainline Pharma division with mature strong brands, it
  Alembic             services General Practitioners, Physicians, ENT Surgeons
                      Paediatricians and Orthopaedics


  Megacare            This division has greater focus towards Gynaecologists,
                      besides Physicians, ENTs, Paediatricians and GPs

  Specia              Super speciality brands for Cardiovascular & Diabetology


  Consumer Care       The FMCG division with strong OTC brands


  Veterinary          The Animal Health Care division catering to Veterinary Doctors


                                                                                                                                      17
     API REVIEW




     Changing Landscape
                                                                                          Principal
                                                                                          API Products
     The API business of Alembic is witnessing a paradigm shift. In 2004-2005 the
                                                                                          Penicillin G
     API revenues de-grew to Rs. 148.91 cr from Rs. 198.89 cr in 2003-2004. The
                                                                                          Erythromycin Thiocynate
     de-growth was a manifestation of the consistent erosion in the global prices of
                                                                                          Cephalosporin intermediate 7 ACA
     Penicillin G, Azithromycin and Clarithromycin. Sharp shrinkage in sales volume       Erythromycin Estolate
     of Penicillin G compounded the impact.                                               Cephalosporin Cephpime
                                                                                          Macrolides
     Capacity utilization of the API plant improved as Clarithromycin posted a
                                                                                           Roxithromycin
     substantial quantitative growth of over 22% in the year.                              Azithromycin
                                                                                           Clarithromycin
                                                                                          Others
     The Road Ahead                                                                         Leflunomide
                                                                                            Fenofibrate
                                                                                            Modafinil
     New manufacturing facilities, new products, new markets and even new
                                                                                            Venlafaxine HCl
     business models, a host of initiatives have already been put into motion.

     At Panelav in Gujarat, Alembic is building a 5 block multi-product facility, which
     shall also support a pilot plant. The intrinsic nature of the facility provides
     flexibility of products and volume, which in turn facilitates opportunity
     encashment and hardware repurposing. Not to mention, longevity of
     investment.

     The Panelav API facility received the approvals of USFDA and European
     Directorate of Quality Medicine (EDQM). This would be an enabler in
     Alembic's focus to strengthen its API business in regulated markets.

     Over and above the 7 DMFs already filed by the company, Alembic is geared to
     file 5-6 DMFs every year from 2005 onward.

     Alembic aims to be the preferred source of supply of generics for large
     multinationals. Talks are in advanced stages with major US and European
     generic players for supply arrangement. Within two years the company
     expects to be a force to reckon with in the API space.




18
  ANIMAL HEALTHCARE DIVISION




  Different Strokes

  Alembic has a significant presence in the animal healthcare segment. It is one of
  the fastest growing companies in this space, both in terms of revenue and               Profits grew by over
  profits.

  During the year the division successfully launched two new products
                                                                                          100 %
1XCEFT
  The active ingredient of Xceft is Ceftiofur sodium, a third generation
  Cephalosporin group exclusively used in veterinary applications internationally.
  Alembic is the first company to launch the same in India and the product has
  been well accepted by the veterinary practitioners and poultry farmers across
  the country. In the first nine months of its launch Xceft notched up sales of over
  Rs. 60 lac.



2 PORON
  An ectoparaciticidal synthetic pyrethroid used to control ticks and mites
  infestation in cattle, Poron registered a sale of over Rs 24 lac in the first year of
  its launch.

  New product development would continue to be a focus area in the coming
  years. Over and above reinforcing its growing presence in the livestock and
  poultry segment, Alembic also plans to enter the companion animal segment in
  the near future.




                                                                                                                 19
     THE RESEARCH REVIEW




     Applied Creativity
     Overview
     The Alembic of tomorrow is being shaped in our labs. In 2003-04, Alembic gave
     impetus to its research activities and launched BioArc Research Solutions - a
     whole new R&D division.
     In July 2004, BioArc commissioned its new state-of-the-art research
     infrastructure, providing well-planned spacious labs and workspaces to its
     scientists. The entire 1,20,000 sq.ft. facility is designed as per GLP guidelines
     and has all the essential analytical infrastructure like XRD, NMR, LCMS/MS,
     GCs, GC with headspace, HPLCs, Prep HPLCs, IR etc. New instruments such
     as parallel synthesizer are also being added to help tap newer segments like
     building blocks/library synthesis.
     The company invested over Rs. 21cr. in this facility during the year. The
     expenditure on R&D grew from 3.15 % of sales to 5.4 4% of sales in 2004-05.
                                                                                         Research Activities
     Captive Research                                                                    of BioArc,
                                                                                         the R&D division
     Non-infringing processes have been developed for generic APIs and following
     7 DMFs have been filed till date to facilitate entry into the regulatory market:    Captive Research
                                                                                         Generics
       Leflunomide        Venlafaxine hydrochloride                                      Formulations & Development
       Fenofibrate        Azithromycin monohydrate                                       for the domestic and non-
                                                                                         regulated markets
       Modafinil          Cilostazol                                                     Bioequivalence

     In Formulations, 13 products were developed and cleared from R&D.                   Contract Research
     Several new products are under development & scale up.                              Chemical Synthesis
                                                                                         Formulations & Development
     Bioequivalence                                                                      Pharmabiology
     BioArc made its foray into the clinical research arena by establishing state-of-    Bioequivalence
     the-art Bioequivalence Centre, with a 36 bed, self-contained 12,500 sq.ft.
     facility. The centre is attached to a 148 bed multi-speciality Hospital - Bhailal
     Amin General Hospital.
     Till date, Bioequivalence centre has conducted several biostudies for in-house
     formulations and is preparing itself to obtain international regulatory approvals
     in the next financial year.

20
          6 patents were filed       Country            Number of patents filed
        during the year, taking      India                             26
              the total tally of     USA                               04
       patents filed across the
                   globe to 43.      Rest of the world                 13
                                     Total                             43



     Contract Research
     Over and above captive research. BioArc also provides contract research
     services to global clients. Revenues from R&D grew by 52.5 % to Rs. 12.42 cr in
     2004-05 from Rs. 8.14 cr in 2003-04.

>>   Chemistry
     BioArc established contacts with major pharmaceutical and biopharmaceutical
     companies in US and also initiated business relationships with customers in
     Europe and SE Asian markets. An aggressive marketing campaign was launched
     to promote BioArc's services globally.

>>   CRAMS
     With an aim to add value and provide a bridge from research to scale-up,
     BioArc expanded its width of services to include Contract Research and
     Manufacturing Services (CRAMS).

>>   Pharmabiology
     BioArc is one of the pioneering companies in India to offer contract research
     services in the biology segment.
     In a relatively short span of time, BioArc received the mandate of leading MNCs
     and European Drug Discovery Companies and has already signed
     Confidentiality Disclosure Agreements and Business Services Agreements
     with its clients.
     Various international customers have evinced interest to work with BioArc,
     both in the in vitro or cell-based early drug discovery studies as well as in the in
     vitro animal based studies.

>>   Bioequivalence
     The centre has conducted bio-studies for leading generic companies in India,
     Europe and US.




                                                                                            21
                                                To the Members,

           Directors’                           Your Directors have pleasure in presenting their Ninety-eighth Annual
                                                Report together with the Audited Statement of Accounts for the year
           Report                               ended on 31st March, 2005.




     1    F I N A N C I A L R E S U LT S
                                                                                                                Rupees in lacs

         For the year ended 31st March                                           2005                       2004

         Profit for the year before Interest, Depreciation,
         Non-recurring expenses and Tax                                        9,339.23                   8,658.49

         Deducting therefrom
         Interest                                                              1,216.00                   1,609.71
         Depreciation                                                          2,556.95                   2,022.78
         Non-recurring Expenses                                                  566.64                     714.11
         Provision for deferred tax                                            (579.00)                     827.02
         Provision for current taxes                                             397.00                     359.00
                                                                              5,181.64                   3,125.87
         Adding thereto
         Balance brought forward from last year                                 706.30                     678.14
         Excess provision of income Tax no longer required                       22.16                        ----
         The amount available is                                              5,910.10                   3,804.01

         Appropriating therefrom
         Provision for Dividend-Equity Shares                                    830.70                     529.83
         Provision for Corporate Dividend Tax                                    117.87                      67.88
         General Reserve                                                       2,500.00                   2,500.00
         Balance carried forward to next year's accounts                       2,461.53                     706.30
                                                                              5,910.10                   3,804.01



                                           2    DIVIDEND
                                                Your Directors recommend Dividend on Equity Shares at Rs. 3.00 per share
                                                (i.e. 30 per cent) for the year ended on 31st March, 2005 as against Rs. 2.00
                                                per share (i.e. 20 per cent) for the year ended on 31st March, 2004.


                                           3    M A N A G E M E N T ' S D I S C U S S I O N A N D A N A LY S I S
                                                The Report on Management's Discussion and Analysis as required under the
                                                Listing Agreements with the Stock Exchanges is enclosed as Annexure - A to
                                                this report.



22
4   O P E R AT I O N S
    The Company's Gross Sales including export incentives were Rs. 572.42 crore for the
    year ended 31st March, 2005 as compared to Rs. 613.82 crore for the previous year.
    API sales decreased by 25 % due to depressed Penicillin G prices and fall in other API
    prices. The domestic formulations sales for the quarter ended on 31.03.2005 was
    lower by almost 16 % due to VAT related issues.
    The profit before interest, depreciation, non-recurring expenses and taxes was
    Rs. 93.39 crore for the year under review as compared to Rs. 86.58 crore for the
    previous year. The growth in profit is due to better product mix in formulations, cost
    reduction and improvement in operational efficiency.
    During the year, the interest and financing cost has been substantially reduced by
    24.47% to Rs. 12.16 crore as compared to Rs. 16.10 crore in the previous year, due to
    better financial management.

    (i) Domestic Formulation Sales
    Sales of domestic formulations for the year ended 31st March, 2005 is Rs. 364.27 crore
    as compared to Rs. 361.48 crore for the previous year ended on 31st March, 2004.
    In the Indian Pharma industry, pricing has gained eminence in the recent past. The
    negative price impact has become more pronounced in the market place in last three
    years. Your Company is no exception to that. As many as four recent introductions, viz.
    Etrik (Etoricoxib), Vacox (Valdecoxib), Aldinir (Cefdinir), Cepime (Cefepime) had to
    undergo downward price revision affecting the topline as well as bottomline.
    Realizing the fact that acute therapies, which account for 76 % of the business turnover
    of the industry is not the growth driver today in general. your Company is also seriously
    pursuing a very meaningful participation in the chronic therapy area by rejuvenating the
    Specia operation through strategic interventions.

    (ii) Export Formulations
    The sales of formulations export was Rs. 41.86 crore for the year ended 31st March,
    2005 as compared to Rs. 40.14 crore in the previous year ended 31st March, 2004. The
    International formulations posted a growth of over 3% in the branded formulations
    while the NSA sales declined. To cater to the regulated markets of U.K., Germany,
    South Africa and Canada, your Company's Panelav facility has been approved by MCC-
    South Africa, MHRC-U.K. and Canada.




                                                                                                23
     Directors’
     Report




                      (iii) Domestic API Sales
                      The domestic sales of API was Rs. 81.54 crore for the year ended on 31st March, 2005
                      as compared to Rs. 108.59 crore for the previous year.

                      (iv) Export API
                      The Export sales of API was Rs. 67.37 crore for the year ended on 31st March, 2005 as
                      compared to Rs. 90.30 crore for the previous year. The fall is mainly on account of fall in
                      prices of Penicillin G.
                      Due to intense competition and de-growing of the global market for sterile penicillin, no
                      growth was registered although market share was maintained.

                      (v) API Plant at Panelav
                      In order to capitalize on the growing generic market opportunities in Europe and USA, a
                      state-of-the-art facility which was conceived, is now fully commissioned and
                      operational. This facility has been approved by USFDA and European Directorate of
                      Quality Medicine (EDQM).


                  5   RESEARCH & DEVELOPMENT
                      Your Company inaugurated a new state-of-the-art R&D facility with built up area of
                      1,20,000 sq.ft. - BioArc Research Solutions, in July 2004. It is playing a prominent role in
                      the pharmaceutical business in terms of introducing newer molecules in the market and
                      for expanding its contract research business.


                  6   FINANCE
                      The cost reduction programme initiated last year was successfully continued and the
                      Company reduced its interest cost from Rs. 16.10 crore to Rs. 12.16 crore.


                  7   DE-LISTING OF SHARES
                      The Company's equity shares are delisted from the Vadodara Stock Exchange Ltd. (VSE)
                      with effect from 14th March, 2005. The equity shares of the Company continue to be
                      listed on the The Stock Exchange, Mumbai (BSE) and National Stock Exchange of India
                      Limited (NSE).


                  8   FIXED DEPOSITS
                      The fixed deposits (including loan from shareholders) as on 31st March, 2005 amounted
                      to Rs. 10.50 crore. Unclaimed deposits of Rs. 51.28 lac from 451 depositors have been
                      transferred to current liabilities. Deposits of Rs. 7.07 lac have since been repaid or
                      renewed at the option of 50 depositors and for the balance of Rs. 44.21 lac from 401
                      depositors, no instructions have been received so far and if not claimed in future, it shall
                      be deposited in the 'Investors Education & Protection Fund' in due course, as per the
                      provisions of the Companies Act, 1956.




24
9    S H A R E C A P I TA L
     (a) Bonus issue
     During the year the Company issued further 40,912 bonus shares on receipt of
     outstanding allotment money during the year from the concerned shareholders holding
     20,456 Rights shares.
     (b) Forfeiture of Shares
     During the year under review, the Company forfeited 123 Equity shares on account of
     non-payment of allotment money on the rights shares after giving due notices to the
     concerned shareholders and after complying with all necessary formalities.
     (c) Preferential Issue
     In order to meet the working capital requirements of the Company, the Company issued
     12,00,000 equity shares of Rs. 10/- each at a premium of Rs. 151/- per share aggregating
     to Rs. 19.32 crore to promoter group companies on preferential basis.


10   DIRECTORS
     The term of office of Mr. K.G. Ramanathan, who was appointed in casual vacancy caused
     on account of resignation of Dr. M.V. Patel, will expire at the ensuing Annual General
     Meeting. The Company has received a notice under Section 257 of the Companies Act,
     1956 from a member proposing him as a candidate for the office of director of the
     Company.
     In accordance with the provisions of the Companies Act, 1956 and Company's Articles
     of Association, Mr. R.K. Baheti and Mr. R.R. Patel, Directors of the Company retire by
     rotation and being eligible, offer themselves for reappointment.
     Brief resumes of Mr. K.G. Ramanathan, Mr. R.K. Baheti and Mr. R.R. Patel are given in the
     Corporate Governance Report.




                                                                                                 25
     Directors’
     Report




                  11   O N G C G A S M AT T E R
                       ONGC has still not communicated to the Company the final interest amount payable.
                       The Company, on its own, calculated the net amount payable after adjusting counter
                       claims and offered to pay to ONGC Rs. 293.47 Lacs. ONGC is yet to respond to the
                       Company's offer. However, the Company has provided this amount of Rs. 293.47 Lacs in
                       its books during the year.
                       No provision for interest in respect of period between 30.01.1987 to 31.05.1991 has
                       been made, pending re-determination of liability by ONGC in line with Hon'ble Supreme
                       Court's directive in judgement dated 12.04.2004 pertaining to pre-1987 period.

                  12   E N E R G Y, T E C H N O L O G Y A N D F O R E I G N E X C H A N G E
                       In accordance with the provisions of sections 217 (1)(e) of the Companies Act, 1956 read
                       with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules,
                       1988, the relevant information pertaining to conservation of energy, technology
                       absorption, foreign exchange earnings and outgo is given in Annexure - B to this report.

                  13   PA R T I C U L A R S O F E M P LO Y E E S
                       The information required under section 217 (2A) of the Companies Act, 1956, read with
                       Companies (particular of Employees) Rules, 1975, forms part of this report as Annexure-
                       C. However, as permitted by section 219 (1)(b)(iv) of the Companies Act, 1956, this
                       Annual Report is being sent to all shareholders excluding this Annexure. Any shareholder
                       interested in obtaining the particulars may obtain it by writing to the Company Secretary
                       of the Company.

                  14   CO R P O R AT E G O V E R N A N C E
                       Your Company strives to incorporate standards for good Corporate Governance. It has
                       complied with all the mandatory provisions of Corporate Governance as prescribed
                       under the amended Listing Agreements of the Stock Exchanges with which the
                       Company's shares are listed.
                       A separate report on Corporate Governance is produced as a part of the Annual Report,
                       along with the Auditor's Certificate on compliance.

                  15   AUDIT COMMITTEE
                                                                                               .N.
                       The Audit Committee consists of Mr. R.R. Patel, Dr. B.R. Patel and Mr. P Parikh. The
                       Committee reviewed the Internal Control System, Scope of Internal Audit and
                       compliance of various regulations. The Committee reviewed at length the Annual
                       Financial Statements and approved the same before being given to the Board of
                       Directors.

26
16   AUDITORS
     M/s. K.S. Aiyar & Co., the Company's Auditors, will retire at the conclusion of the
     ensuing Annual General meeting and are eligible for re-appointment as Auditors.
     Members are requested to re-appoint them and fix their remuneration.
     The Company has appointed M/s. Sharp & Tannan, Chartered Accountants, as its
     Internal Auditors to carry out Internal Audit of various operational areas of the
     Company.

17   COST AUDITORS
     The Central Government has directed that an audit of Cost Accounts maintained by the
     Company relating to Bulk Drugs and Formulations for the year ended on 31st March,
     2005 be conducted by an Auditor with qualifications prescribed in Section 233B (1) of
     the Companies Act, 1956. Accordingly, the Board has appointed Mr. H.R. Kapadia as
     Cost Auditor for the year ended on 31st March, 2005.

18   HUMAN RESOURCES MANAGEMENT
     Your Company firmly believes that Human Resource is the most important and valuable
     resource. During the period under review, the Company has further endeavoured to
     strengthen the performance-driven culture. The Company continues to have cordial
     and harmonious relations with its employees.


19   D I R E C TO R S ' R E S P O N S I B I L I T Y S TAT E M E N T
     Pursuant to the requirement under section 217 (2AA) of the Companies Act,1956 with
     respect to the Directors' Responsibility Statement, it is hereby confirmed:
     (i) That in the preparation of the annual accounts for the accounting year ended on
     31st March, 2005, the applicable accounting standards have been followed, except the
     'AS-10' relating to accounting of fixed assets in respect of certain plant and machinery
     which were revalued as at 1st April, 1997. Proper explanation relating to material
     departures, if any, have been furnished.
     (ii) That accounting policies, as listed in the 'Schedule U' to the financial statements, have
     been selected and consistently applied with reasonable and prudent judgements and
     estimates have been made so as to give a true and fair view of the state of affairs of the
     Company as on March, 31st 2005 and of the profit of the company for the accounting
     year ended on that date.
     (iii) That proper and sufficient care for maintenance of adequate accounting records has
     been taken in accordance with the provision of the Act, so as to safeguard the assets of
     the Company and to prevent and detect fraud and other irregularities.
     (iv) That the annual accounts have been prepared on a 'going concern' basis.


     On behalf of the Board of directors,
     Chirayu R. Amin
     Chairman & Managing Director
     Mumbai, 4th July, 2005.

                                                                                                      27
     ANNEXURE - A
     Management discussion and analysis report



                    The Indian Pharmaceutical formulation market estimated at Rs. 23,000 crore and Bulk
                    Drugs at Rs. 8,000 crore which accounts for 2.0 % of the world market. The market
                    growth has slowed down in recent times. The slow down is attributed primarily to
                    strong price competition, growth in generics business and generation of sales from new
                    products becoming tougher & tougher.
                    Growth rates may further be affected after 2005 with the arrival of product patents. In
                    some respects the introduction of product patents will depress market growth as
                    domestic manufacturers will no longer be able to launch their own version of new
                    molecules.
                    The industry is regulated on pricing front because of which it lags behind many
                    countries. In terms of value of products, India is ranked at the 13th position globally,
                    whereas in terms of volume, it ranks 4th in the world.
                    The Anti-infective segment is the largest followed by respiratory and cardiovascular
                    segment. Life cycle diseases like diabetic, cardiac disorders and depression etc. are on
                    the rise due to increasing industrialization, paradigm shift in socio-cultural pattern &
                    living style.

                    OPPORTUNITIES
                    The Indian Pharma industry enjoys competitive advantage due to -
                       Superior drug synthesis skills;
                       Relatively low cost of skilled man power;
                       Ability to develop generic faster than competitors;
                       An accelerated spending on R&D front

                    The skilled man power and cost effective base in the country should offer immense
                    scope for outsourcing of products on contract basis and/or services. A lot of initiatives
                    taken by the Pharmaceutical companies to set up the R&D and/or clinical trial facilities
                    should give a boost to the industry.

                    The Growth drivers are:
                       Introduction of new products.
                       Indian companies thrive on new products, MNC s on price hikes.
                       Chronic therapy areas growing faster than acute therapies.
                       Urban market growing faster than rural market.
                       Older population-increased prescription share.
                       Increasing importance of specialties.




28
ANNEXURE - A
Management discussion and analysis report



Patent expiries, matured services (Off Patent drugs), gains in market shares, contract
manufacturing and research services are some of the key growth drivers for Indian
industry.


THREATS
The Indian Pharma Industry faces a steep challenge in shaking up regulatory systems and
processes at home, in order to ensure the international standards of quality and IP
protection under new IPR regimes.
   2005 IPR regime implies drying up of product pipe line for many Indian companies.
   Margins have declined in Bulk Drugs segment due to increasing competition from
   China and progressive commoditisation.
   Ambiguity on VAT implementation.
   Increase in crude oil price would affect Bulk drug units due to increase in prices of
   solvents and energy costs.
The MRP based excise duty is likely to affect majority of the Pharmaceutical Companies
who outsource majority of their products, especially high margin products.


CRITICAL BUSINESS FACTORS
Given the multitude of companies in the Indian market, a whole range of factors come
into play in determining relative competitive position. Four of these stand out as
research expertise, re-engineered manufacturing process, optimised product mix and
dynamic marketing & distribution set up.


OUTLOOK
The Company is well positioned in the emerging business scenario with a clear objective
to enhance market share in the domestic and select international markets by way of
spending more on R&D, achieving higher levels of productivity and efficiency in all areas
of operations.

FINANCE
The Company has registered a total income (net of excise) of Rs. 535.14 crore for the
year under review as compared to Rs. 569.04 crore for the previous year ended on 31st
March, 2004. The profit, before providing for interest, depreciation, non-recurring
expenses and taxes, was Rs. 93.39 crore for the year under review as compared to
Rs. 86.58 crore for the previous year. The Company has made a profit after tax of
Rs. 51.82 crore for the year under review, as compared to Rs. 31.26 crore for the
previous year.




                                                                                            29
     ANNEXURE - A
     Management discussion and analysis report



                    INTERNAL CONTROL SYSTEMS AND ADEQUACY
                    The Company maintains a system of well-established policies and procedures for
                    internal control of operations and activities. The internal audit function is being further
                    strengthened in consultation with statutory auditors for monitoring statutory and
                    operational issues. The Company has appointed M/S. Sharp & Tannan, Chartered
                    Accountants as Internal auditors.
                    The prime objective of such audit is to test the adequacy and effectiveness of all internal
                    control systems laid down by the management and to suggest improvements.
                    Any significant issue is brought to the attention of the audit committee, which reviews it
                    periodically. Any suggestions and recommendations made by it are carried out.
                    Moreover, the Company has obtained ISO 9001 and ISO 14001 certification and
                    adheres to the Standard Operating Practices in its manufacturing and operating
                    activities.

                    INFORMATION TECHNOLOGY
                    Several fresh initiatives in the area of IT were implemented, viz., Baddi Plant and
                    Zirakpur Depot are well connected with our HO and all on-line information is available
                    from SAP-ERP to monitor inventory position and production planning. Internet and
                    Intranet facilities are also extended for improving productivity of employees at Baddi.
                    IT packages at our new bioequivalence center and BioArc are being implemented by
                    taking care of all statutory requirements to speed up the processes and take faster
                    benefits.


                    HUMAN RESOURCE INTERVENTION IN 2004-05
                    To intensify our efforts of driving the performance driven culture and to reinforce the
                    people oriented culture' that Alembic has built over the years, your organization has
                    taken up several key initiatives this year.
                    In an increasing competitive business scenario, talent of the people definitely provides
                    an edge. Your organization has been able to attract good talent in strategically critical
                    areas of competence like Marketing, Quality, Regulatory Affairs, R&D and Project
                    Management to steer growth. Cross Functional Teams with regular steering
                    committee reviews have been formed to coordinate and speed up the product
                    development process. Internal communication has also been strengthened to align
                    employees with the organizational goals, priorities and challenges.




30
ANNEXURE - B
Particulars required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.




(A) CONSERVATION OF ENERGY
The Company is committed to preservation of environment and conservation of
natural resources. During the financial year 2004-05, following measures were taken:

a) Energy Conservation Measures taken during the year under review.
   i)     The captive Co-generation Power Plant consisting of 3 X 4.2 MW captive gas
          turbine generator and associated Waste Heat Recovery Steam Generation
          (WHRSG) unit has been operated optimally with improved yield.
   ii)    Reduction in auxiliary consumption of gas turbines by way of modification of oil
          coolers of gas booster compressor and replacement of synthetic oil.
   iii)   Reduction in steam consumption by modification in de-aerator steam sparging
          in WHSRG.
   iv)    Reduction in contract demand with GEB.
   v)     5 MW wind farm was run throughout the year with expected level of efficiency.
   vi)    Improvement in air-conditioning system of Micro-process Development
          (MPD) lab and pilot fermentor, which resulted in power saving.
   vii) Stoppage of chilled water Booster Pump after re-routing chilled water pipe
        line of API-3.
   viii) Alternate arrangement for Brine for Kilo lab, resulted into pumping power
         saving.
   ix)    Reduction of Air Pressure in presso-filter of product recovery, which resulted
          into power saving.


b) Additional investment proposals for reduction of consumption
   and cost of Energy.
   i)     More fermentor to be put in cascade mode for aeration, which will result into
          reduction of air consumption, hence power for air compression.
   ii)    Proposal to reduce GEB contract demand further, for reduction of fixed
          payment to GEB.
   iii)   Proposal to install low head pump in Effluent Treatment Plant (ETP)
          equalization tank to feed bio-tower, to reduce power consumption.
   iv)    Various investment proposal to optimize specific consumption of brine and
          chilled water in the process.




                                                                                                                        31
     ANNEXURE - B
     Particulars required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.




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

                                      (i) Improved yield of gas turbine generator and associated WHRSG had reduced the
                                          variable cost of operation.
                                      (ii) Reduction in auxiliary consumption of gas turbines had reduced the overall cost of
                                           power.

                                 d) Total Energy consumption and energy consumption per unit
                                    of production.
                                      Form A enclosed.


                                 (B) TECHNOLOGY ABSORPTION
                                      Efforts made in technology absorption:
                                      Form B enclosed.


                                 (C) FOREIGN EXCHANGE EARNING AND OUTGO
                                      1. The Export sales were Rs.105.91 crore (FOB) during the year under review. The
                                         Company has undertaken aggressive marketing strategies to increase share of
                                         export business.
                                      2. Total Foreign exchanges used and earned:
                                         Please refer para 19 (E), (F) and (G) of Schedule V “NOTES FORMING PART
                                         OF ACCOUNTS”.




32
FORM A
Form for disclosure of particulars with respect to conservation of energy.




(A) POWER AND FUEL CONSUMPTION

  For the year ended 31st March                                     2005                    2004

  1.   Electricity:
       (a) Purchased Units (kWh):                                 68,55,914             2,98,38,619
           Total Amount (Rs.)                                   4,94,25,470            15,44,38,889
           Rate (Rs./Unit)                                             7.21                    5.18
       (b) Own Generation:
           (i) Through diesel generator:
               Units (kWh)                                         7,48,038                 1,84,592
               Units per litre of diesel oil                           3.20                     2.84
               Cost (Rs./Unit)                                         8.20                     6.22
           (ii) Through Gas/Steam Turbine/Generator:
                Units (kWh)                                     6,14,94,928              6,30,79,977
                Units per LTR/m³/M.T./LTR of Fuel                     2.760                    2.172
                oil/gas/steam/HSD
                Fuel Cost (Rs./Unit)                                  1.555                     2.385

  2.   Furnace Oil Quantity (kl):                                     1,722                    2,818
             Total Amount (Rs.)                                 2,13,36,672              3,18,76,706
             Average Rate (Rs./kl)                                   12,392                   11,312

  3.   Other / Internal Generation:
       (a) Natural Gas:
           Qty. (Cubic Meter)                                   1,57,55,053              1,34,54,179
           Amount (Rs.)                                         7,79,03,191              5,71,30,036
           Rate/Unit (Rs./m³)                                          4.95                     4.25
       (b) Steam (Purchase):
           Qty. (M.T.)                                               25,811                   82,530
           Amount (Rs.)                                         2,52,32,834              8,06,81,328
           Rate/Unit (Rs./M.T.)                                      977.60                   977.60

  4.   Wind Farm Generation:
         Units (kWh)                                            1,05,53,841                36,26,506



(B) CONSUMPTION PER UNIT OF PRODUCTION
In view of the number of products, with different sizes, shapes and other parameters, being
manufactured by the Company, it is not feasible to give information on consumption of fuel
per unit of production.

                                                                Alembic's investment in green power
                                                                started to yield results and power
                                                                purchased from the G.E.B. reduced to
                                                                just 36 lac/kWh, a saving of over 65%.




                                                                                                         33
     FORM B
     Form for disclosure of particulars with respect to technology absorption, etc.




                                  (A) RESEARCH AND DEVELOPMENT (R&D)
                                 1) R&D's areas of focus
                                     a) Process Improvement & Contract Research
                                     b) Formulation Development
                                     c) Collaboration with National Institutes and Universities
                                     d) Pharmabiology Services
                                     e) Microbial Research


                                 2) Benefits derived as a result of the R&D
                                     a) Non-infringing processes have been developed for 7 generic APIs and DMFs have
                                        been filed to facilitate entry into the regulatory market. Several new products are
                                        under development & scale -up.
                                     b) Till date, 43 patents for Active Pharmaceutical Ingredients (APIs) & Intermediates
                                        have been filed.
                                     c) Expansion of contract research business in prospective sectors of
                                        Chemistry and Pharmabiology. Company has received number of research
                                        contracts from few reputed US and European companies.
                                     d) Offered our services successfully to different clients with their developmental and
                                        pilot studies as a part of their ANDA programme. R&D support was also provided
                                        for their formulation development.
                                     e) Technology of new products have been developed at the lab scale and also on the
                                        synthetic front, scale-up and commercial production of nitazoxanide has been
                                        completed during the year.
                                     f) For exports, 7 new formulations were developed, out of which 4 are for US/
                                        Canada/Europe markets. Out of the 33 formulations developed for the domestic
                                        market, 20 formulations were commercialized.
                                     g) 5 prototype formulation development research projects and 6 projects with
                                        commercial supply agreements for our US, Europe and Canada based customers
                                        were developed.




34
FORM B
Form for disclosure of particulars with respect to technology absorption, etc.




3) Future plan of action
   a) Plan to file more DMFs in regulated market.
   b) R&D will continue to develop non-infringing processes and new formulations of
      existing and new drugs, which will help in filing of Abbreviated New Drug
      Applications (ANDA) in the regulated market.
   c) Contract research with Multi National Companies (MNCs) will continue.
   d) To speed up the collaborative discovery program and identify the scientific talent,
      R&D will continue to collaborate with National Institutes and Universities.
   e) Pharmabiology section is preparing itself to obtain Good Laboratory Practices
      (GLP) Certificate and upgradation of key infrastructure is in progress.
   f) Fermentation being the core area of the organization, new molecules representing
      cardiovascular, immunosuppressant and nutraceutical segments are the focus of
      the future. For the existing products; penicillin and erythromycin, continuous
      improvement in terms of better producing strains, cost-effectiveness and quality of
      the product are priority areas to remain in the fiercely competitive price market.


4) Expenditure on R&D

                                                                (Rs. in lacs)

       a)    Capital                                              1436
       b)    Recurring                                            1676
       c)    Total                                                3112
       d)    Total R&D expenditure                                 5.44 %
             as a percentage of total turnover




                                                                                            35
     FORM B
     Form for disclosure of particulars with respect to technology absorption, etc.




                                 (B) TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
                                      1) Efforts made towards technology absorption, adaptation and innovation
                                         The basic fermentation technology and technology for organic synthesis which are
                                         developed in our R&D laboratories are scaled up in our pilot plant and then
                                         implemented at the production scale.
                                     2) Benefits derived
                                         Introduction of better yielding strains and cheaper raw material with lower
                                         utility cost has helped us to remain in the price competitive market for our
                                         existing products.
                                     3) Information regarding technology imported during last five years
                                         Nil.




36
                                                                                                                      ALEMBIC LIMITED



    Report on Corporate Governance
1   Company's Philosophy

     The Company has always been committed to the principles of good corporate governance.
     The Company firmly believes that good corporate governance should be an internally driven need and is not to be looked upon as an issue of
     compliance dictated by statutory requirements.
     The Company's philosophy on corporate governance envisages an attainment of the highest level of transparency, accountability and equity
     in all facets of its operations and in all interaction with its stakeholders including the shareholders, employees, government and lenders.
     The Company believes that all its operations and actions must serve the underline goal of enhancing overall shareholders value over a
     sustained period of time and at the same time protect the interest of other stakeholders.




2   Board of Directors

     •   Composition of the Board:
         It is well recognised that there should be optimum combination of executive and non-executive Directors. The Company's Board
         meets this requirement as it is consisting of 5 Non-executive Directors (63% of the Board strength), and 4 independent directors
         (50% of Board strength).
     •   Number of Board Meetings held and the dates of the Board Meetings:
         5 Board Meetings were held during the period from 1st April, 2004 to 31st March, 2005. The dates on which the said meetings were
         held are as follows:
         07th May, 2004         22nd July, 2004         19th August, 2004        26th October, 2004         24th January, 2005
     •   Attendance of each Director at the Board Meetings and the last AGM

     Name of Director           Category          No. of other                   No. of other                No. of Board        Attendance
                                                  Directorships held             Board committees            Meetings            at the last
                                                  (excluding Directorships       of which member /           Attended            AGM
                                                  in foreign & private           chairman
                                                  companies)
     Mr. C. R. Amin             WTD               5                              2 (as Chairman)             5                   Yes
     Chairman & MD
     Mrs. M. C. Amin            WTD               2                              2 (as Member)               5                   Yes
     Whole-time Director
     Mr. R. K. Baheti           WTD               3                              Nil                         5                   Yes
     Director,
     President-Finance &
     Company Secretary
     Mr. R. R. Patel            N.E.D. (I)        4                              2 (1 as Chairman            5                   Yes
                                                                                 & 1 as Member)
     Dr. B. R. Patel            N.E.D (I)         Nil                            Nil                         5                   Yes
     Mr. R. M. Kapadia          N.E.D             5                              2 (as Chairman)             5                   Yes
          .
     Mr. P N. Parikh            N.E.D (I)         2                              Nil                         Nil                 No
     Mr. K. G. Ramanathan       N.E.D (I)         1                              Nil                         2                   No

     MD - Managing Director             N.E.D - Non Executive Director
     WTD - Whole Time Director          N.E.D (I) - Non Executive & Independent Director




                                                                                                                                                   37
                                                                                                                             ALEMBIC LIMITED



         Report on Corporate Governance

          As required by the Companies Act, 1956 and clause 49 of the listing agreement with stock exchanges, none of the directors hold
          directorship in more than 15 public companies, membership of board committees (Audit & Investor grievance committees) in excess of 10
          and chairmanship of board committee in excess of 5.




     3   Audit Committee

          •   Composition & Terms of Reference
                                                                                                        .
              The Audit Committee comprised of Directors viz. Mr. R. R. Patel, Dr. B. R. Patel and Mr. P N. Parikh. Mr. R. R. Patel is the Chairman of
              the Audit Committee. All the Directors in Audit Committee are Non-executive & Independent Directors. The terms of reference of
              the committee are wide enough to cover the matters specified for Audit Committee under the Listing Agreements. The Statutory
              Auditors, Internal Auditors, President - Finance and General Manager (Accounts) of the Company are invited to attend the Meetings of
              Audit Committee. The Joint Company Secretary acts as Secretary of the Committee.
              Mr. R. R. Patel, Chairman of the Audit Committee, was present at the Annual General meeting of the Company held on 19th August, 2004.
          •   Meetings and the attendance during the year:
              There were 4 meetings of the Audit Committee during the year held on 07th May, 2004, 22nd July, 2004, 26th October, 2004 & 24th
              January, 2005. The attendance of each Member of the Committee is given below:

                  Name of Director                              Category of Director                             No. of meetings attended
                  Mr. R. R. Patel                           Non-executive - Independent                                        4
                  Dr. B. R. Patel                           Non-executive - Independent                                        4
                       .
                  Mr. P N. Parikh                           Non-executive - Independent                                       Nil




     4   Remuneration Committee                                                                                                                 Rupees in lacs




          The Company has not formed Remuneration Committee of Directors as it is non-mandatory requirement. The remuneration of Managing
          Director, Whole-time Director and Director & President - Finance and Company Secretary are fixed by the Board of Directors within the
          overall limit fixed under the companies Act, 1956 and approved by the shareholders at their general meetings.
          •   Details of Remuneration paid to Directors
          a   Executive Directors
          All elements of remuneration package i.e. salary, benefits, bonuses, pension etc. paid to Executive Directors are as under:

          Name of Director                                                              Salary & Perquisites             Commission          Total
          Mr. Chirayu Amin (Managing Director)                                                    37.21                      239.47         276.68
          Mrs. Malika Amin (Whole-time Director)                                                  27.96                      138.06         166.02
          Mr. R. K. Baheti (Director, President - Finance & Company Secretary)                    43.16                             -        43.16
          Total                                                                                  108.33                      377.53         485.86




38
                                                                                                                     ALEMBIC LIMITED



    Report on Corporate Governance


     Notes:
     a    The agreement with the Executive Directors is for a period of 5 years.
          Mr. C. R. Amin, Managing Director                                        renewed w.e.f. 01.05.2003
          Mrs. M. C. Amin, Whole-time Director                                     renewed w.e.f. 02.07.2003
          Mr. R. K. Baheti, Director, President - Finance & Company Secretary      w.e.f. 25.01.2003
     b    There is no separate provision for payment of severance fees.
     c    The Company does not have any Stock Option Scheme.
     b    Non-Executive Directors
          Non-Executive Directors are paid the sitting fees for attending Board / Committee Meetings @ Rs. 5,000/- per meeting.

          Name of Directors                          Sitting fees for                    Sitting fees for                        Total
                                                    Board Meetings                   Committee Meetings                      Fees paid
                                                                (Rs.)                               (Rs.)                        (Rs.)
          Dr. B. R. Patel                                      25,000                             1,00,000                    1,25,000
          Mr. R. R. Patel                                      25,000                             1,10,000                    1,35,000
          Mr. R. M. Kapadia*                                   25,000                               90,000                    1,15,000
               .
          Mr. P N. Parikh                                           --                                   --                           --
          Mr. K. G. Ramanathan                                 10,000                                    --                     10,000
     *    Mr. R. M. Kapadia was paid consultancy fees of Rs. 12.57 lacs during the year 2004-05 pursuant to the Resolution passed at the Annual
          General Meeting of the Company held on 19th August, 2004.




5   Shareholders / Investors Committee

     Shareholders / Investors Committee comprises of 3 Directors viz. Mr. R. R. Patel, Dr. B. R. Patel and Mr. R. M. Kapadia, which looks into
     Shareholders and Investors related matters. Mr. R. R. Patel, who is non-executive and independent Director, is Chairman of the
     Shareholders / Investors Committee.
     •    Meetings and the attendance during the year:
          There were thirteen meetings of the Shareholders / Investors Committee during the year. The attendance of each Member of the
          Committee is given below:

         Name of Director                               Category of Director                           No. of meetings attended
         Mr. R. R. Patel                             Non-executive - Independent                                     13
         Dr. B. R. Patel                             Non-executive - Independent                                     11
         Mr. R. M. Kapadia                                  Non-executive                                            13

     Mr. R. K. Baheti, Director and Company Secretary, is the Compliance Officer of the Company. The Meeting of Shareholders/Investors
     Committee is held every month, in which transfers, transmission, issuance of certificates etc. are approved. Mr. Parthiv Parikh, Joint
     Company Secretary of the Company is also authorised by the Board to approve transfers at the interval of fifteen days time.
     The Company has been receiving various correspondences from shareholders and the required information / documents are furnished at
     the earliest possible to the satisfaction of shareholders. During the year, the Company has received 222 complaints from shareholders. At
     the end of the year, the Company has 8 transfers pending for 325 shares during 28-03-2005 to 31-03-2005 which were approved and
     transferred on 15-04-2005.




                                                                                                                                                  39
                                                                                                                               ALEMBIC LIMITED



         Report on Corporate Governance
     6   General Body Meetings

          Details of the location of the last three AGMs and the Extraordinary General Meetings held during the year.
          Details of the last three Annual General Meetings are given below:

            Year          Location                                                     Date                             Time        No. of Special
                                                                                                                                    Resolutions
                                                                                                                                    passed
            2001-02       “Sanskruti”, Alembic Corporate Conference Centre,            12th September, 2002             3.30 p.m.   2
                          Opp. Pragati Sahakari Bank Ltd., Alembic Colony,
                          Vadodara - 390 003.
            2002-03       “Sanskruti”, Alembic Corporate Conference Centre,            25th September, 2003             4.00 p.m.   3
                          Opp. Pragati Sahakari Bank Ltd., Alembic Colony,
                          Vadodara - 390 003.
            2003-04       “Sanskruti”, Alembic Corporate Conference Centre,            19th August, 2004                3.00 p.m.   2
                          Opp. Pragati Sahakari Bank Ltd., Alembic Colony,
                          Vadodara - 390 003.


          Details of the Extraordinary General Meeting of Members held during the year for obtaining approval for Issue of Preferential shares.

            Year          Location                                                     Date                             Time        No. of Special
                                                                                                                                    Resolutions
                                                                                                                                    passed
            2004          “Sanskruti”, Alembic Corporate Conference Centre,            26th November, 2004              3.00 p.m.   1
                          Opp. Pragati Sahakari Bank Ltd., Alembic Colony,
                          Vadodara - 390 003.

          6A Notes on Directors seeking appointment / re-appointment as required under Clause 49VI(A) of the Listing Agreement
             entered into with Stock Exchanges.
               Mr. R. K. Baheti and Mr. R. R. Patel - Directors of the Company will retire by rotation at the ensuing Annual General Meeting and are
               eligible for re-appointment.
               Mr. K. G. Ramanathan, appointed as director of the Company w.e.f. 26th March, 2003 in the casual vacancy caused by the resignation
               of Dr. M. V. Patel, shall have to be appointed at the ensuing AGM.
               Mr. R. K. Baheti had joined the Company as Director & President - Finance w.e.f. 25th January, 2003 and was appointed as Company
               Secretary of the Company w.e.f. 06th April, 2004. Mr. Baheti is B.Com (Hon.), FCA & FCS. He has 24 years of rich and varied
               experience in the areas of Corporate Finance, Accounts, Audit, Taxation and Secretarial. He is holding directorships in Alembic
               Exports Ltd, Shreno Investment & Finance Ltd and Sierra Investments Ltd.
               Mr. R. R. Patel is holding position of Director of the Company since last 21 years. He is a Bachelor of Commerce and has a wide &
               varied experience in the fields of Marketing, Banking, Corporate Management etc. He is Chairman of the Audit Committee and
               Shareholders / Investors Committees of the Company. He is holding directorships in Emtici Engineering Co. Ltd, Market Creaters
               Ltd, Transpek Industry Ltd, Tarak Chemicals Ltd and Pragati Sahakari Bank Ltd.
               Mr. K. G. Ramanathan is a postgraduate in Physics from University of Madras and is Retd. IAS Officer. He has worked in senior
               administrative positions in the State of Gujarat and also in Government of India. He has wide industrial experience particularly in the
               fields of fertilizers, chemicals and petrochemicals. Before his retirement from the Government, he was the Chairman and Managing
               Director of Indian Petrochemicals Corporation Ltd (IPCL), a prestigious petrochemical company of India.
               Mr. Ramanathan is the Chairman of Chemical and Petrochemical Manufacturers Association of India since its inception. He is also the
               founder President of Indian Centre for Plastics in the Environment (ICPE). He is also associated with several trade and industry
               associations and social organizations. He has also participated in several international seminars on topics related to Industrial
               Development.
               Presently, he is associated with Reliance Group of Industries as Advisor. His presence on the Board has helped the Company
               immensely.




40
                                                                                                                      ALEMBIC LIMITED



    Report on Corporate Governance
7   Disclosure

     There were no materially significant related party transactions that may have potential conflict with the interest of the Company at large.
     The Register of Contracts for the transactions in which Directors are interested is placed before the Board regularly for its approval.




8   Compliance

     The Company has complied with all the mandatory requirements of the Listing Agreements with Stock Exchanges as well as regulations
     and guidelines of SEBI. Further, there is no penalty/stricture by any statutory authority during the year.




9   Means of Communication

     • Quarterly Results                                                    : The results are published in newspapers having wide coverage
                                                                              and also put on the website of the Company.
     • Which Newspapers normally published in                               : The Economic Times (English), Business Standard (English) Lok
                                                                              Satta (Gujarati)
     • Any web-site where displayed                                         : www.alembic-india.com
     • Whether Shareholder information forms part of the Annual Report. : Yes




                                                                                                                                                   41
                                                                                                                       ALEMBIC LIMITED



      Report on Corporate Governance
     10   Shareholders' Information

          1            Annual General Meeting - Date and Time           August 31, 2005 at 3.30 P.M.
                       Venue                                            “Sanskruti”, Alembic Corporate Conference Centre,
                                                                        Opp. Pragati Sahakari Bank Ltd., Alembic Colony, Vadodara - 390 003.
          2            Financial Calendar                               Adoption of Results for the quarter:
                       Quarter ending June 30, 2005                     July, 2005
                       Quarter ending Sept. 30, 2005                    October, 2005
                       Quarter ending Dec. 31, 2005                     January, 2006
                       Quarter ending March 31, 2006                    April - May, 2006
                       Annual General Meeting for                       August - September, 2006
                       the year ended 31.03.2006
          3            Date of Book Closure                             18th August, 2005 to 31st August 2005 (both days inclusive)
          4            Dividend Payment Date                            5th September, 2005 onwards
          5            Registered Office                                Alembic Road, Vadodara - 390 003.
                                                                        Phone: (91-265) 2280550
                                                                        Fax: (91-265) 2285892/2282506
                                                                        E-mail: alembic@alembic.co.in Web: www.alembic-india.com
          6            Listing Details                                  The Stock Exchange, Mumbai (BSE)
                                                                        Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001.
                                                                        (Security Code: 506235)
                                                                        National Stock Exchange of India Limited (NSE)
                                                                        Exchange Plaza, Bandra-Kurla Complex,
                                                                        Bandra (East) Mumbai - 400 051.
                                                                        (Security Code: Alembicltd)
                                                                        * The shares of the Company are de-listed from
                                                                        Vadodara Stock Exchange w.e.f. 14th March, 2005.
          7            Stock Price Data                                                                                             (in Rupees)
                                            Mumbai Stock Exchange                                     National Stock Exchange
          Month                 Month's High Price          Month's Low Price               Month's High Price             Month's Low Price
          Apr., 2004                     185.90                   155.00                          195.00                        160.00
          May, 2004                      186.80                   115.50                          178.00                        115.00
          June, 2004                     126.00                   101.00                          125.00                        101.05
          July, 2004                     125.00                   100.90                          125.40                        101.00
          Aug., 2004                     135.85                   113.00                          136.00                        114.00
          Sep., 2004                     167.50                   130.00                          167.80                        128.95
          Oct., 2004                     197.85                   149.00                          198.00                        148.20
          Nov.,2004                      258.00                   191.00                          258.45                        191.30
          Dec.,2004                      276.80                   217.20                          276.70                        218.15
          Jan., 2005                     326.90                   266.00                          326.95                        265.10
          Feb., 2005                     334.00                   300.00                          333.80                        301.00
          Mar., 2005                     319.00                   255.00                          319.00                        260.50

          * As on 31st March, 2005 the closing price of the shares of the Company on BSE & NSE were Rs. 270.10 and Rs. 270.60 respectively.




42
                                                                                                                                               ALEMBIC LIMITED



Report on Corporate Governance


  Share performance of the Company in comparison to BSE Sensex

                        350                                                                                            8000


                        300                                                                                            7000

                                                                                                                       6000
                        250
 Closing Share Price




                                                                                                                              Closing Sensex
                                                                                                                       5000
                        200
                                                                                                                       4000
                        150
                                                                                                                       3000
                        100
                                                                                                                       2000

                         50                                                                                            1000                      Closing Sensex

                         0                                                                                             0                         Closing Share Price
                              Apr-04 May-04 Jun-04    Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05



  8                           Registrar and Share transfer Agents                Intime Spectrum Registry Limited
                                                                                 201, Sidcup Tower, Near Marble Arch, Race Course,
                                                                                 Vadodara - 390 007. Telefax: (0265) 2332474
                                                                                 Email: vadodara@intimespectrum.com

  9                           Share Transfer System                             Share transfers are registered and returned generally within a period of
                                                                                15 days from the date of receipt, if documents are in order in all
                                                                                respects. The Shareholders/Investors Committee meets every month
                                                                                and transfers are also approved by Company Secretary generally at the
                                                                                interval of 15 days time.
                                                                                The total number of shares transferred in the physical form during the
                                                                                year were 84,529 (previous year 13,88,529).


  Distribution of Shareholding
  The Distribution of Shareholding as on 31st March, 2005 is given as under:

                   No. of Shares               No. of Shareholders          % of Shareholders           No. of Shares held                        % of total shares
                         Up to 500                             35,301                       94.36                 29,40,438                                    10.62
                       501 - 1,000                              1,189                        3.18                      8,54,568                                   3.09
                   1,001 - 2,000                                    497                      1.33                      7,00,610                                   2.53
                   2,001 - 3,000                                    155                      0.42                      3,84,461                                   1.39
                   3,001 - 4,000                                    54                       0.14                      1,87,940                                   0.68
                   4,001 - 5,000                                    53                       0.14                      2,46,908                                   0.89
                   5,001 - 10,000                                   60                       0.16                      4,55,059                                   1.64
         10,001 & above                                             101                      0.27                2,19,20,997                                   79.16
                                Total                          37,410                     100.00                 2,76,90,981                                 100.00




                                                                                                                                                                         43
                                                                                                                           ALEMBIC LIMITED



     Report on Corporate Governance


      Shareholding pattern as on 31st March, 2005
           Sr. No.        Category                                                           No. of shares held           % of voting strength
             1            Promoters & Associates                                                     1,69,56,989                        61.24
             2            Mutual Funds & UTI                                                            3,10,613                          1.12
             3            Banks, Financial Institutions & Insurance Companies                           6,52,591                          2.35
             4            Foreign Institutional Investors                                              14,52,396                          5.25
             5            Private Corporate Bodies                                                      6,68,253                          2.41
             6            Indian Public                                                                62,05,203                        22.41
             7            NRIs / OCBs                                                                  14,44,636                          5.22
             8            Any other                                                                          300                             0
                          Total                                                                      2,76,90,981                       100.00


      10             Dematerialization of Shares and liquidity           At the end of the year 2,52,80,979 shares (91.30%) are held in
                                                                         dematerialized form by the shareholders. Trading in Company' shares
                                                                         for all investors is permitted only in dematerialized form from
                                                                         28.08.2000 as per notification issued by the SEBI.
                                                                         (ISIN CODE : INE426A01019)
      11             Outstanding GDR/Warrants                            Not applicable
      12             Plants Location                                     a   Alembic Road, Vadodara - 390 003.
                                                                         b   Formulation Division, Panelav, Tal. Halol,
                                                                             Dist. Panchmahal - 389 350 Gujarat.
                                                                         c   API Division, Panelav, Tal. Halol,
                                                                             Dist. Panchmahal - 389 350 Gujarat.
                                                                         d   Formulation Division, Plot No. 21, 22, EPIP - Phase I, Jharmajri,
                                                                             Baddi, Tehsil - Nalagarh, Dist. Solan, Himachal Pradesh.
      13             Investor Correspondence                             1   Alembic Limited, Alembic Road, Vadodara - 390 003.
                                                                         2   Intime Spectrum Registry Limited
                                                                             201, Sidcup Tower, Near Marble Arch, Race Course,
                                                                             Vadodara - 390 007.




44
                                                                                                                         ALEMBIC LIMITED



   Report on Corporate Governance
Auditors' Certificate on Corporate Governance

      The Members,
      Alembic Limited,
      Vadodara - 390 003.


      We have examined the compliance of conditions of Corporate Governance by Alembic Ltd. for the year ended March 31, 2005, as
      stipulated in clause 49 of the Listing Agreement of the said Company with the stock exchanges.
      The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to
      procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate
      Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.
      In our opinion and to the best of our information and according to the explanations given to us and the representations made by the
      Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in
      the above mentioned Listing Agreement.
      As required by the Guidance Note issued by the Institute of Chartered Accountants of India, we have to state that as per the records
      maintained by the Company, there were no investor grievances remaining unattended / pending for more than 30 days.
      We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness
      with which the management has conducted the affairs of the Company.




                                                                                                                            For K.S. AIYAR & CO.
                                                                                                                             Chartered Accountants

                                                                                                                            RAGHUVIR M. AIYAR
                                                                                                                                          Partner
Mumbai: 4th July, 2005                                                                                                       Membership No.38128




                                                                                                                                                     45
                                                                                                                                        ALEMBIC LIMITED



                                                                                        Auditor's Report
     To the members of Alembic Limited.

             We have audited the attached Balance Sheet of Alembic Limited as at 31st March, 2005, the Profit and Loss Account and also the Cash Flow
             Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's
             management. Our responsibility is to express an opinion on these financial statements based on our audit.
             We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and
             perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit
             includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
             assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
             presentation. We believe that our audit provides a reasonable basis for our opinion.
             As required by the Companies (Auditor's Report) Order, 2003 as amended by the Companies (Auditor's Report)(Amendment), 2004
             issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the
             Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.
             Further to our comments in the Annexure referred to above, we report that:
             i     We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes
                   of our audit;
             ii    In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of
                   those books;
             iii   The Balance Sheet, Profit and Loss Account and Cash flow Statement dealt with by this report are in agreement with the books of
                   account;
             iv    In our opinion, the Balance Sheet, Profit and Loss Account and Cash flow statement dealt with by this report comply with the
                   accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.
             v     On the basis of written representations received from the Directors, as on 31st March, 2005, and taken on record by the Board of
                   Directors, we report that none of the Directors is disqualified as on 31st March, 2005 from being appointed as a Director in terms of
                   clause (g) of sub-section(1) of section 274 of the Companies Act, 1956;
             vi    a   Shortfall in the interest provision, if any, pending final determination of the interest payable on delayed payment of gas price in respect of
                       gas supplied by ONGC during the period 01.01.1982 to 29.01.1987 (pre-87) is not determinable;
                   b   No provision has been made by the Company in respect of difference, if any, in the price of gas supplied by ONGC during the period
                       30.01.1987 to 31.05.1991 (Post-87) and interest for delayed payment thereon, the matter being sub-judice as detailed in note no.4 to
                       the accounts.
             vii The Company has revalued some items of plant and machinery on a selective basis rather than for a class of assets as at 1st April, 1997 as
                 detailed in note no.5 to the accounts. Such selective application of revaluation is not in conformity with the Accounting Standard 10 on
                 “Accounting for Fixed Assets” prescribed by the Institute of Chartered Accountants of India even though the accounting per se of such
                 revaluation is as per accepted accounting practice;
                   We further report that the effect of our observations at (vi) and (vii) above is not quantified/quantifiable.
                   Subject to para vi and vii above, in our opinion and to the best of our information and according to the explanation given to us, the said
                   accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in
                   conformity with the accounting principles generally accepted in India;
                   a   in the case of the Balance Sheet of the state of the affairs of the Company as at 31st March, 2005;
                   b in case of the Profit and Loss Account, of the Profit for the year ended on that date; and
                   c   in the case of Cash flow statement of the cash flows for the year ended on that date.




                                                                                                                                            For K.S. AIYAR & CO.
                                                                                                                                             Chartered Accountants

                                                                                                                                           RAGHUVIR M. AIYAR
                                                                                                                                                         Partner
     Mumbai: 4th July, 2005                                                                                                                 Membership No.38128



46
                                                                                                                      ALEMBIC LIMITED



 Annexure to the Auditor's Report
Re: Alembic Limited.

   Referred to in paragraph 3 of our report of even date,
   i      a The Company has maintained proper records showing full particulars, including quantitative details and situation of Fixed Assets.
            However item wise value in respect of assets other than land, buildings and vehicles acquired prior to 1968 are not available.
          b Fixed assets have been physically verified by the management during the year as per the phased programme of physical
            verification of fixed assets. As informed to us the programme is such that all the fixed assets will get physically verified in three
            years time. In our opinion the same is reasonable having regard to the size of the Company and the nature of it's fixed assets. No
            material discrepancies were noticed on such verification.
          c During the year, the Company has not disposed off substantial part of it's fixed assets.
   ii     a The inventory has been physically verified during the year by the management at reasonable intervals.
          b The procedures for physical verification of inventory followed by the management are reasonable and adequate in relation to
            size of the Company and nature of its business.
          c The Company is maintaining proper records of inventory. No material discrepancies have been noticed on physical verification of
            stocks.
   iii    a The Company has granted unsecured loans to two companies covered in the register maintained under 301 of the Companies
            Act, 1956 wherein the balance recoverable as at the year end is Rs.10,50,00,000/- (Maximum balance during the year
            Rs.19,20,00,000/-).
          b In our opinion, the rate of interest and other terms and conditions of loans given by the Company, secured or unsecured, to
            parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima-facie, prejudicial to the
            interest of the Company.
          c In respect of the above loans granted, payment/renewal of the principal amount and interest were regular, as stipulated.
          d The Company has taken reasonable steps for recovery/renewal of the above-unsecured loan given and interest thereon.
          e The Company has not taken any loans, secured or unsecured, from any party covered in the register maintained under 301 of the
            Companies Act, 1956. Therefore requirements of clause (iii)(f) and (iii)(g) are not applicable.
   iv     In our opinion and according to the information and explanations given to us, there are adequate internal control procedures
          commensurate with the size of the Company and the nature of its business with regard to the purchases of inventory, fixed assets and
          with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct
          major weaknesses in the internal controls.
   v      a According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements
            referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that
            section.
          b In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such
            contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the
            relevant time.
   vi     In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of
          Section 58A and 58AA or any other relevant provision of the Companies Act, 1956. No order has been passed by the Company Law
          Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.
   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 relating to materials, labour and other items of cost maintained by the Company
          pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 209 (1)(d) of the
          Companies Act, 1956 and we are of the opinion that, prima facie, the prescribed accounts and records have been made and
          maintained.
   ix     a The Company is generally regular in depositing with appropriate authorities, undisputed statutory dues including Provident
            Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax,
            Custom Duty, Excise Duty, Cess and any other material statutory dues applicable to it and there are no arrears outstanding as at
            the year end for a period of more than six months from the date they became payable.
          b According to the records of the Company, the following dues of Sales tax, Income Tax, Wealth Tax, Service Tax, Custom Duty,
            Excise Duty and Cess that have not been deposited on account of some dispute or are partially deposited under protest.




                                                                                                                                                    47
                                                                                                                                 ALEMBIC LIMITED



       Annexure to the Auditor's Report

                    Statute & Nature of dues            Amount not deposited Rs.             Forum where dispute is pending            Period
                    Sales Tax Act.                                   1,92,243                Assistant Commissioner (Appeals).         2000 - 2001
                    Sales Tax, interest and penalty.
                                                                 1,32,78,472                 Additional Commissioner                   2000 - 2001
                                                                   27,30,079                 Tribunal                                  1993 - 1994
                                                                   13,12,295                 High Court                                1999 - 2000
                    The Central Excise                             80,88,641                 Supreme Court                             1988 to 1998
                    & Customs Act / Excise Duty,
                    Interest & Penalty.
                                                                 9,42,34,877                 Customs, Excise and Service Tax           1996   -   97
                                                                                             Appellate Tribunal.                       1998   -   99
                                                                                                                                       1999   -   00
                                                                                                                                       2000   -   01
                                                                                                                                       2001   -   02
                                                                                                                                       2003   -   04
                                                                                                                                       2004   -   05
                    Custom Duty                                    15,28,506                 Customs, Excise and Service Tax           Oct, 1995
                                                                                             Appellate Tribunal.

             x        The Company does not have any accumulated losses as per the Balance Sheet as at the end of the financial year. The Company has
                      not incurred the cash losses during the financial year covered by our audit and the immediately preceding financial year.
             xi       In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to
                      a financial institution, bank or Debenture holders.
             xii      The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other
                      securities.
             xiii     The Company is not a Chit fund or a Nidhi/Mutual Benefit fund/Society. Therefore, the provisions of Clauses 4(xiii) of the Companies
                      (Auditor's Report) Order, 2003 are not applicable to the Company.
             xiv      In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the
                      provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.
             xv       In our opinion, the terms and condition on which the Company has given guarantee for loans taken by others from banks or financial
                      institution are not prejudicial to the interest of the Company.
             xvi      In our opinion the term loans are being applied for the purpose for which they were raised.
             xvii According to the information and explanations given to us, and on an overall examination of Balance Sheet of the Company, we
                  report that the no funds raised on short-term basis have been used for long term investment.
             xviii The Company has made preferential allotment of Equity shares as detailed in note no. 7 to the accounts to parties and companies
                   covered in the register maintained under section 301 of the Companies Act, 1956 at a price that is not prejudicial to the interest of
                   the Company.
             xix      There are no debentures issued by the Company during the year that require creation of security or charge and therefore the
                      requirement is not applicable.
             xx       The Company has not raised any money during the year by public issue.
             xxi      According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the
                      course of our audit.


                                                                                                                                   For K.S. AIYAR & CO.
                                                                                                                                    Chartered Accountants

                                                                                                                                  RAGHUVIR M. AIYAR
                                                                                                                                                Partner
     Mumbai: 4th July, 2005                                                                                                        Membership No.38128



48
49
                                                                                                             ALEMBIC LIMITED



                                                                            Balance Sheet
                                                                                                                               Rupees in lacs


            As at 31st March                               Schedules                           2005                          2004
            1. SOURCES OF FUNDS:
              1 Shareholders’ Funds:
                  a Capital                                      A             2,769.19                      2,644.00
                  b Reserves and Surplus                         B            24,597.11    27,366.30        18,634.08     21,278.08
              2 Deferred Tax Liability                                                      4,068.46                       4,647.46
              3 Loan Funds:
                  a Secured Loans                                C            16,304.50                     14,598.56
                  b Unsecured Loans                              D             4,024.31    20,328.81         5,430.46     20,029.02
                                                                                           51,763.57                     45,954.56




            2. APPLICATION OF FUNDS:
              1 Fixed Assets:
                  a Gross Block                                  E            50,162.93                     43,916.56
                  b Less: Depreciation                                        18,630.72                     16,094.66
                  c Net Block                                                              31,532.21                      27,821.90
              2 Investments:                                     F                          2,867.56                       1,368.03
              3 Current Assets, Loans and Advances:
                  a Inventories                                  G            11,772.99                      8,492.58
                  b Sundry Debtors                               H            10,863.48                     11,572.56
                  c Cash and Bank Balances                       I               138.48                       181.28
                  d Loan and Advances                            J             5,077.76    27,852.71         6,373.17     26,619.59
            Less: Current Liabilities and Provisions:            K
                  a Liabilities                                                9,541.67                      9,257.25
                  b Provisions                                                   947.24    10,488.91          597.71       9,854.96


            Net Current Assets                                                             17,363.80                      16,764.63


                                                                                           51,763.57                     45,954.56


            Notes Forming Part of Accounts                       U




     As per our report of even date                                                        For and on behalf of the Board of Directors
     For K.S. AIYAR & CO.
     Chartered Accountants
     RAGHUVIR M. AIYAR            CHIRAYU R. AMIN                    MALIKA C. AMIN        R. R. PATEL      K. G. RAMANATHAN
     Partner                      Chairman & Managing Director       Whole-time Director   Director         Director
     Membership No.38128
                                  B. R. PATEL                        R. M. KAPADIA          .
                                                                                           P N. PARIKH      R. K. BAHETI
                                  Director                           Director              Director         Director, President - Finance
     Mumbai: 4th July, 2005                                                                                 & Company Secretary



50
                                                                                                          ALEMBIC LIMITED



                                     Profit and Loss Account
                                                                                                                            Rupees in lacs


       For the Year ended 31st March                       Schedules                         2005                         2004
       INCOME:
       Sales and Export Incentives                            L            57,241.81                     61,382.22
       Less : Excise Duty                                                   4,796.00    52,445.81         5,736.12     55,646.10
       Other Income                                           M                          1,068.58                       1,258.11
                                                                                        53,514.39                     56,904.21
       EXPENDITURE:
       Raw Material Consumption                               N                         16,059.48                      18,231.14
       Packing Material Consumption                                                      3,191.80                       2,748.58
       Purchase of Finished Goods                                                        4,855.33                       4,873.08
       Excise Duty                                                                         438.76                         173.81
       Stores & Spares Consumption                                                         723.81                       1,268.79
       Manufacturing Expenses                                 O                          3,608.00                       5,385.41
       Employees' cost                                        P                          5,742.96                       4,035.33
       Research & Development Expenses                        Q                          1,675.50                       1,396.67
       Marketing & Distribution Expenses                      R                          5,872.45                       6,734.31
       Interest and Financing Cost                            S                          1,216.00                       1,609.71
       Depreciation ( See Note No . 5)                                      2,573.50                      2,039.33
       Less : Transferred from Revaluation Reserve                             16.55     2,556.95            16.55      2,022.78
       Others                                                 T                          3,406.51                       3,197.94
                                                                                        49,347.55                      51,677.55
       ADD/(LESS): Decrease/(Increase) in stock of
       Finished Goods and Work in Process                     N                         (1,399.44)                        200.66
                                                                                        47,948.11                      51,878.21
       PROFIT BEFORE NON-RECURRING ITEMS                                                  5,566.28                     5,026.00
       Expenses under Voluntary Retirement Scheme                                           273.17                        581.04
       Interest to O.N.G.C. (See Note No. 4)                                                293.47                             --
       Deferred Revenue Expenses                                                                 --                       133.07
       PROFIT BEFORE DEFERRED TAX                                                         4,999.64                      4,311.89
       Provision for Deferred Tax                                                         (579.00)                        827.02
       PROFIT BEFORE TAX                                                                  5,578.64                      3,484.87
       Provision for Current Tax                                                            390.00                        350.00
       Provision for Wealth Tax                                                               7.00                          9.00
       NET PROFIT AFTER TAX                                                               5,181.64                      3,125.87
       ADD/LESS:
       Balance brought forward from last year                                              706.30                        678.14
       Excess provision of Income Tax no longer required                                    22.16                             --
       BALANCE AVAILABLE FOR APPROPRIATION                                               5,910.10                      3,804.01
       APPROPRIATIONS:
         Dividend - Equity Shares                                                          830.70                         529.83
         Corporate Dividend Tax - Equity Shares                                            117.87                          67.88
         General Reserve                                                                 2,500.00                       2,500.00
       SURPLUS CARRIED TO BALANCE SHEET                                                  2,461.53                         706.30
                                                                                         5,910.10                      3,804.01
       Earnings per Share ( Basic & Diluted) (In Rs.)                                       19.27                          12.19
       Notes Forming Part of Accounts                         U


As per our report of even date                                                          For and on behalf of the Board of Directors
For K.S. AIYAR & CO.
Chartered Accountants
RAGHUVIR M. AIYAR             CHIRAYU R. AMIN                     MALIKA C. AMIN        R. R. PATEL      K. G. RAMANATHAN
Partner                       Chairman & Managing Director        Whole-time Director   Director         Director
Membership No.38128
                              B. R. PATEL                      R. M. KAPADIA             .
                                                                                        P N. PARIKH      R. K. BAHETI
                              Director                         Director                 Director         Director, President - Finance
Mumbai: 4th July, 2005                                                                                   & Company Secretary



                                                                                                                                             51
                                                                                                                           ALEMBIC LIMITED



                                                                                                      Schedules
                                                                                                             FORMING PART OF THE BALANCE SHEET




     A         Share Capital                                                                                                                   Rupees in lacs



         As at 31st March                                                                                                   2005              2004

         AUTHORISED:
           3,00,00,000 Equity Shares of Rs.10/- each                                                                    3,000.00           3,000.00
           20,00,000 Redeemable Cumulative Preference Shares of Rs.100/- each                                           2,000.00           2,000.00
                                                                                                                        5,000.00           5,000.00
         ISSUED, SUBSCRIBED:
           2,76,92,854 Equity Shares of Rs.10/- each                                                                    2,769.29           2,645.19
           (Previous Year 2,64,51,942 Equity Shares of Rs.10/- each)
                                                                                                                        2,769.29           2,645.19
         PAID UP:
           2,76,90,981 Fully paid up Equity Shares of Rs.10/- each                                                      2,769.10           2,645.01
           (Previous Year 2,64,50,192 Equity Shares of Rs.10/- each)
           Add: 1,873 Forfeited Equity Shares (Amount originally paid up)                                                    0.09               0.09
           Less: Calls in Arrears: (Previous Year 14,652 Equity Shares of Rs.7.50 each)                                         --              1.10
                                                                                                                        2,769.19           2,644.00
          Of the above:

          1.    1,27,860              Equity Shares have been allotted as fully paid up pursuant to contract without payment being received in cash.
          2.    1,84,07,324           Equity Shares have been allotted as fully paid up Bonus Shares by Capitalizations of Rs.7,00,000/- from
                                      Share Premium Account, Rs.16,83,50,000/- from Capital Redemption Reserve and Rs.1,50,23,240/- from
                                      General Reserve.
          3.    6,69,090; & 1,44,848; Equity shares of Rs.10/- each fully paid, were alloted to the Shareholders of erstwhile Neomer Ltd.,
                                      & Darshak Ltd., respectively, pursuant to the Scheme of amalgamation / merger without payment being
                                      received in cash.
          4.    12,00,000             Equity Shares of Rs.10/- each have been issued at a premium of Rs.151/- per Share on a Preferential basis
                                      during the year.




     B         Reserves and Surplus
         As at 31st March                                                                               2005                                   2004

         REVALUATION RESERVE:
         As per last Balance Sheet                                                824.71                                   995.06
         Less: Transferred to General Reserve                                     124.23                                   153.80
         Less: Transferred to Profit and Loss Account                               16.55             683.93                16.55            824.71
         CAPITAL RESERVE:
         As per last Balance Sheet                                                                      35.00                                  35.00
         SHARE PREMIUM ACCOUNT:
         As per last Balance Sheet                                              5,146.97                                 2,071.73
         Add: Received during the year                                          1,827.26                                 3,090.66
         Less: Calls in Arrears                                                         --                                  23.08




52
                                                                                                                    ALEMBIC LIMITED



                                                                                                Schedules
                                                                                                      FORMING PART OF THE BALANCE SHEET




B       Reserves and Surplus-Contd.                                                                                                     Rupees in lacs



    As at 31st March                                                                             2005                                  2004

    Add: Unallocated money Received                                              --          6,974.23                 7.66          5,146.97
    GENERAL RESERVE:
    As per last Balance Sheet                                           11,921.10                                 9,345.78
    Add: Transferred from Revaluation Reserve                               124.23                                  153.80
    Add: Transferred from Profit & Loss Account                           2,500.00                                2,500.00
                                                                        14,545.33                               11,999.58
    Less: Capitalized on or for Issue of Bonus Shares                         4.09                                   78.48
    Less: Utilised towards Provision for Impairment of Asset                 98.82                                       --
            (See Note No.6)
                                                                            102.91          14,442.42                78.48         11,921.10
    SURPLUS AS PER PROFIT AND LOSS ACCOUNT                                                   2,461.53                                 706.30
                                                                                            24,597.11                             18,634.08




C       Secured Loans
    As at 31st March                                                                             2005                                  2004

    A   From Financial Institutions, Banks and NBFC
        1 Foreign Currency Loans:
        a     External Commercial Borrowing against first                 5,278.66                                1,774.06
              hypothecation charge on all movable Plant &
              machinery, ranking pari-passu with other lenders.
        b Foreign Currency loans against first hypothecation              1,942.96                                4,926.55
              charge on all movable plant and machinery,
              ranking, pari-passu with other lenders.                                        7,221.62                                6,700.61
        2 Rupee Loans:
              Against first hypothecation charge on all movable                              3,020.00                                2,110.00
              plant and machinery, ranking pari-passu with other
              lenders.
                                                                                            10,241.62                                8,810.61
    B   From Banks for Working Capital:
        Short term bank borrowing against hypothecation
        charge on stocks and book-debts.                                                     6,062.88                                5,787.95
                                                                                            16,304.50                              14,598.56
     Note:

     In the case of Secured Loans, where movable plant and machinery are given as security, the movable plant and machinery of APIP division
     of the Company are not included.




                                                                                                                                                         53
                                                                                                                                             ALEMBIC LIMITED



                                                                                                                    Schedules
                                                                                                                            FORMING PART OF THE BALANCE SHEET




     D      Unsecured Loans                                                                                                                                             Rupees in lacs



         As at 31st March                                                                                            2005                                               2004

         Fixed Deposits From:
            Public                                                                        863.88                                          2,053.13
            Shareholders                                                                  134.78                   998.66                    376.02                   2,429.15
         Short Term Loans From:
            Banks & Institution - in Foreign Currency                                             --                                         972.81
            Banks & Institution - in Indian Rupee                                        2,000.00                                         1,000.00
            Others                                                                          25.65                 2,025.65                    28.50                   2,001.31
         Commercial Paper (Maximum outstanding during the year                                                    1,000.00                                            1,000.00
             Rs.35 crores. Previous year Rs.80 crores)
                                                                                                                  4,024.31                                        5,430.46



     E      Fixed Assets
          Assets                                 Gross Block                                           Depreciation Block                                  Net Block
                                        As on    Additions Deductions/          As on         As on Deductions/         Total   Impair-        As on          As on          As on
                                   01/04/2004              Adjustments     31/03/2005    01/04/2004 Adjustments Depreciation      ment    31/03/2005     31/03/2005     31/03/2004
                                                                                                                 for the year
                                                                                                                       ended
                                                                                                                  31/03/2005
                                          Rs.         Rs.          Rs.            Rs.            Rs.        Rs.           Rs.       Rs.          Rs.            Rs.            Rs.

         Freehold Land              352.42            --           --       352.42              --           --           --        --           --       352.42         352.42
         Leasehold Land             105.82            --           --       105.82           0.85            --       1.11          --       1.96         103.86         104.97
         Buildings                 3,611.16 2,401.78            0.72      6,012.22      1,127.72         0.23      149.76           -- 1,277.25 4,734.97               2,483.44
         Employees’ Quarters          89.38            --          --        89.38          59.26            --        0.72         --      59.98          29.40           30.12
         Plant and Machinery     35,273.98      3,210.12     147.05 38,337.05           12,725.92      111.01 2,194.49 98.82 14,908.22 23,428.83 22,548.06
         R & D Equipment           2,325.86 1,436.00               --     3,761.86      1,819.89             --    122.06           -- 1,941.95 1,819.91                 505.97
         Furniture & Fixtures        278.15      179.28            --       457.43        158.27             --      34.01          --    192.28          265.15         119.88
         Office Machinery           196.35       117.23         0.50        313.08         58.67         0.15        11.74          --      70.26         242.82         137.68
         Vehicles                   415.90        57.59       78.51         394.98        132.57        24.87        36.53          --    144.23          250.75         283.33
         Intangible Assets
         (Trade Mark)               103.24        25.50            --       128.74         11.51             --      23.08          --      34.59          94.15          91.73
         Total                   42,752.26 7,427.50         226.78       49,952.98 16,094.66           136.26 2,573.50 98.82 18,630.72 31,322.26 26,657.60
                                 (34,579.52) (8,233.31)      (60.57)     (42,752.26) (14,090.38)        (35.05) (2,039.33)           -- (16,094.66) (26,657.60)
         Capital work                                                       209.95                                                                        209.95
         in Progress
                                                                         (1,164.30)                                                                    (1,164.30)
                                                                         50,162.93                                                                     31,532.21
                                                                         (43,916.56)                                                                   (27,821.90)
         Notes:
         1. Sales proceeds are deducted from gross cost where cost is unascertainable
         2. Buildings: Include Rs.2,500/- (Rs.2,500/-) being cost of bonds of Morning Star Co.- Op. Housing Society Ltd.
         3. Plant and Machinery includes Machineries of gross value Rs.80.25 Lacs (Rs.80.25 Lacs) given on lease
         4. No Depreciation has been claimed on assets to the extent of Modvat /Cenvat claimed
         5. See Note No.5 in Schedule U
         6. Borrowing cost of Rs.28.81 Lacs (Rs.26.22 Lacs) and Exchange Loss Rs.17.35 Lacs (Exchange Gain Rs.10.85 Lacs) has been capitalized
         7. See Note No.6 of Schedule U for Impairment

         * Figures in brackets are in respect of the previous year

54
                                                                                                            ALEMBIC LIMITED



                                                                                         Schedules
                                                                                              FORMING PART OF THE BALANCE SHEET




F       Investments (at cost)                                                                                             Rupees in lacs


                                                                                 Face
    As at 31st March                                                  Nos.   Value Rs.               2005                 2004

    LONG TERM INVESTMENT
    I   In Government - Trust Securities:
           6 Years National Saving Certificate                                             0.01                  0.01
           8 Years National Saving Certificate                                             0.50                  0.50
                                                                                                     0.51                   0.51
           (Of the above, Government Securities of the face
           value of Rs.51,000/- are deposited with Government
           Departments. Previous Year Rs.51,000/-)
    II In Shares, Debentures and Bonds:
        1 Quoted
        a Bonds
           12% Industrial Finance Corporation of India                 19                 13.03                 13.03
           (Maturity date 13.01.2012)
           (Face Value Rs.12,77,500/-)
           6.75% Tax free US-64 Bonds                              135,900        100    135.90    148.93      135.90    148.93
        b Equity Shares (Fully paid up)
           Alembic Glass Industries Ltd.                           132,428        100    193.09                159.49
           (20,000 shares acquired during the year)
           Housing Development Finance Corporation Ltd.             35,240         10    115.96                  6.87
           (39,721 shares sold during the year &
           23,721 shares acquired during the year)
           Jyoti Ltd.                                               84,900         10      1.43                  1.43
           Matsushita Lakhanpal Battery India Ltd.                 101,856         10     16.54                 16.54
           Mafatlal Dyes and Chemicals Ltd.                             --         10         --                 0.06
           (250 shares sold during the year)
           Paraan Ltd.                                               2,350        100      2.35                  2.35
           Less: Provision for diminution in value of Investment                          (2.35)
           Paushak Ltd.                                            360,210         10     97.19                 97.19
           Procter and Gamble Hygiene and Healthcare Ltd.               --                    --                   --
           (143 shares sold during the year)
           Purak Vinimay Ltd.                                      109,000         10     10.90                 10.90
           Less: Provision for diminution in value of Investment                         (10.90)
           HDFC Bank Ltd. (1000 shares sold during the year)            --         10         --                 0.10
           Ujjwal Ltd.                                               1,600        100      1.60                  1.60
           O.N.G.C. Ltd. (25 shares sold during the year)               --         10         --                 0.09
           J. K. Pharmachem Ltd.                                        --         10         --                 0.01
           (100 shares sold during the year)
           Krebs Biochemicals Ltd.                                    100          10      0.15                  0.15
           Neuland Laboratories Ltd.                                    --         10         --                 0.13
           (100 shares sold during the year)
           Torrent Gujarat Biotech Ltd.                               100          10      0.02                  0.02
           Darshak Ltd.                                            515,051         10    169.08                169.08




                                                                                                                                           55
                                                                                                                   ALEMBIC LIMITED



                                                                                               Schedules
                                                                                                     FORMING PART OF THE BALANCE SHEET




     F      Investments (at cost)-Contd.                                                                                         Rupees in lacs


                                                                                       Face
         As at 31st March                                                  Nos.    Value Rs.               2005                  2004

               Xechem International Inc., USA                          9,142,857               289.73                 289.73
               (Common stock of par value of $0.00001per share)
               (Aggregate Market Value of Quoted Investments                                              884.79                755.74
               1306.23 Lacs. Previous Year Rs.1007.39 Lacs)
            2 Unquoted:
            a Equity Shares (Fully paid up)
               Aavaran Ltd.                                              1,1400         100      9.50                   9.50
               Dharak Ltd.                                                4,000         100      4.00                   4.00
               Light Publication Ltd.                                     1,120         100      0.80                   0.80
               Shreno Ltd.                                                    --        100         --                 69.60
               Alembic Export Ltd.                                       22,500          10      2.25                   2.25
               Sierra Investments Ltd.                                 1,000,000         10    100.00                 100.00
               Shreno Investment and Finance Ltd.                      1,296,000         10    144.60                  75.00
               (of the above 546000 shares received
               consequent upon merger of Shreno Ltd.)                                                     261.15                261.15
            b Preference shares (Fully paid up)
               12% Cumulative Preference shares of Paushak Ltd.         200,000         100    200.00                 200.00
               5% Non Cumulative Redeemable Preference                      500         100      0.50     200.50        0.50    200.50
               Shares of Pran Agro Services Pvt. Ltd.
            c Others
              Equity Shares (Fully paid up)
               Alembic Employees Co-op. Supply Society Ltd.                 100          10      0.01                   0.01
               Algen Ltd.                                                     --         10      0.40                   0.40
               Less: Provision for diminution in value of Investment                            (0.40)                 (0.40)
               Co-Operative Bank of Baroda Ltd.                             100          25      0.03                   0.03
               Gujarat Export Corporation Ltd.                               37         100      0.03                   0.03
               Pran Agro Services Pvt. Ltd.                                  17          10         --                     --
               (Rs.170/-. Previous Year Rs.170/-)
               Pragati Sahakari Bank Ltd.                                   500          10      0.05                   0.05
               Swaminarayan Co-op Bank Ltd.                               2,505          25      0.63                   0.63
               Saraswat Co-op Bank Ltd.                                   1,000          10      0.10                   0.10
               The Kalupur Commercial Co. Op. Bank Ltd.                       --         25         --                  0.25
               (1,000 shares surrendered during the year)                                                   0.85                   1.10
         III In Properties:
             Equity Shares of (Fully paid up)
            Baroda Industrial Development Corporation Ltd.                    6       1,000      0.06                   0.06
            Ganesh Co-op. Housing Society Ltd.                                2          50         --                     --
            (Rs.100/-. Previous Year Rs.100/-)




56
                                                                                                                ALEMBIC LIMITED



                                                                                            Schedules
                                                                                                 FORMING PART OF THE BALANCE SHEET




F      Investments (at cost)-Contd.                                                                                              Rupees in lacs


                                                                                Face
    As at 31st March                                               Nos.     Value Rs.                   2005                     2004

             Gujarat Urban Housing Company                           10            100        0.01                    0.01
             Jamasji Co-op. Housing Society Ltd.                     10            50         0.01                    0.01
             Morning Star Co-op. Housing Society Ltd.                 1            50           --                      --
             (Rs.50/-. Previous Year Rs.50/-)
             Udyog Mandir Co-op. Housing Society Ltd.                25            50           --      0.08          0.02         0.10
             (5 shares surrendered during the year)
    IV Others:
        8% Optionally Convertible Note of XE
        Chem International Inc. U.S.A. (Redeemable at the end                                        1,370.75                         --
        of 4th year from the date of issue in case
        conversion is not effected)
                                                                                                     2,867.56                 1,368.03



G      Inventories                  (Refer to Note No.1(e) pertaining to Accounting Policy) (As certified and valued by Management)


    As at 31st March                                                                         2005                               2004

    Stores & Spares                                                       286.50                            245.68
    Packing Material                                                      707.73                            394.97
    Raw Materials                                                     3,074.71            4,068.94         1,547.32           2,187.97
    Stock in Trade:
    Finished goods (at lower of cost or market value)                 7,117.79                             5,540.95
    Material in process (at cost)                                         586.26          7,704.05          763.66            6,304.61
                                                                                         11,772.99                            8,492.58



H      Sundry Debtors (Considered good unless otherwise specified)
    As at 31st March                                                                         2005                               2004

    Over Six Months                                                                       1,293.35                            1,082.58
    (Net of Provision for doubtful debts Rs.870.26 Lacs.
    Previous year Rs.495.26 Lacs)
    Others                                                                                9,570.13                           10,489.98
                                                                                         10,863.48                           11,572.56




                                                                                                                                                  57
                                                                                                               ALEMBIC LIMITED



                                                                                             Schedules
                                                                                                   FORMING PART OF THE BALANCE SHEET




     I      Cash and Bank Balances                                                                                             Rupees in lacs



         As at 31st March                                                                     2005                            2004

         Cash on hand                                                                          7.80                           10.12
         Bank Balances:
           With Scheduled Banks
             In Current Accounts                                            108.23                              76.24
             In Fixed Deposit Accounts                                        1.77                               1.77
             In Margin Deposit Accounts                                          --          110.00             71.01        149.02
           With Other Banks
           Pragati Sahakari Bank Ltd.
             In Current Accounts                                              0.68                               2.14
             (Maximum balance during the year Rs.13.56 Lacs
             P Rs.19.58 Lacs)
              .Y.
             In Fixed Deposit Accounts                                       20.00            20.68             20.00         22.14
             (Wherein our directors Shri R.M.Kapadia and
             Shri R.R.Patel are Directors)
                                                                                             138.48                          181.28



     J      Loans and Advances                             (Unsecured, considered good unless otherwise specified)


         As at 31st March                                                                     2005                            2004
         Advances recoverable in cash or in kind                                           2,530.43                         2,641.20
         or for value to be received
         To Staff Members & Corporates                                                     1,880.39                         1,581.68
         Tender and Other Deposits                                                           299.98                          269.17
         Income Tax / Wealth Tax Paid                                     1,477.94                           2,246.70
         Less : Provision of Income Tax / Wealth Tax                      1,110.98           366.96           365.58        1,881.12
                                                                                           5,077.76                        6,373.17




58
                                                                                 ALEMBIC LIMITED



                                                                Schedules
                                                                     FORMING PART OF THE BALANCE SHEET




K      Current Liabilities and Provisions                                                        Rupees in lacs



    As at 31st March                                             2005                            2004

    A CURRENT LIABILITIES:
       Creditors: Small Scale Industries                        109.88                           60.63
                   Others                                     8,213.32                        7,624.41
       Trade Deposits & Advances                              1,011.21                        1,207.20
       Investor Education and Protection Fund
       a    Unclaimed Dividend                       37.05                        30.75
       b Unclaimed Matured Deposits                  51.28       88.33            53.05          83.80
         (Will be paid to the Investor Education &
         protection Fund as and when due.)
       Interest accrued but not due                             118.93                          281.21
                                                              9,541.67                        9,257.25
    B PROVISIONS:
       Provision for Dividend                                   830.73                          529.83
       Provision for Corporate Dividend Tax                     116.51                           67.88
                                                                947.24                          597.71




                                                                                 ALEMBIC LIMITED



                                                                Schedules
                                                             FORMING PART OF THE PROFIT & LOSS ACCOUNT




L      Sales and Export Incentives
    For the Year ended 31st March                                2005                            2004

    Sales                                                    56,745.55                       60,865.79
    Export Incentives                                          496.26                           516.43
                                                             57,241.81                       61,382.22




                                                                                                                  59
                                                                                             ALEMBIC LIMITED



                                                                            Schedules
                                                                          FORMING PART OF THE PROFIT & LOSS ACCOUNT




     M      Other Income                                                                                      Rupees in lacs



         For the Year ended 31st March                                       2005                            2004

         a Dividend: Dividend from Trade Investment              2.48                          8.59
                         Other Dividends                        10.04        12.52            15.76           24.35
         b Other Income:
           Interest Received (Gross)                           333.79                        237.08
           (TDS Rs.30.37 Lacs. Previous Year Rs.39.68 Lacs)
           Rent                                                 46.02                         51.35
           Conversion charges                                       --                        30.81
           Insurance Claims                                    170.16                         72.79
           Computer Charges                                      9.69                          5.15
           Profit on sale of Fixed Assets (Net)                 15.14                        143.56
           Profit on sale of Investment (Net)                  226.87                        202.12
           Foreign Exchange Difference (Net)                    89.12                        316.98
           Bad Debts Written off now Realized                   48.02                            --
           Miscellaneous Income                                117.25     1,056.06           173.92        1,233.76
                                                                          1,068.58                        1,258.11




     N      Raw Materials' Consumption
         For the Year ended 31st March                                       2005                            2004

         Opening Stock                                                    1,547.32                         1,637.62
         Add: Purchases                                                  17,586.87                        18,140.84
                                                                         19,134.19                        19,778.46
         Less: Closing Stock                                              3,074.71                         1,547.32
                                                                         16,059.48                       18,231.14
         (Increase)/Decrease in Stock of Finished Goods
         and Material in Process:
         Opening Stock:
               Material in Process                             763.66                        928.82
               Finished Goods                                 5,540.95    6,304.61         5,576.45        6,505.27
         Less: Closing Stock
               Material in Process                             586.26                        763.66
               Finished Goods                                 7,117.79    7,704.05         5,540.95        6,304.61
                                                                         (1,399.44)                         200.66




60
                                                                                  ALEMBIC LIMITED



                                                                 Schedules
                                                               FORMING PART OF THE PROFIT & LOSS ACCOUNT




O       Manufacturing Expenses                                                                     Rupees in lacs



    For the Year ended 31st March                                 2005                            2004

    Power and Fuel                                             1,801.04                         3,550.84
    Repairs and Maintenance of Machinery                        502.21                            503.49
    Manufacturing and Labour Charges                           1,028.73                         1,086.29
    Laboratory and Analytical Expenses                          276.02                            196.42
    Technical Know How Amortized                                     --                            48.37
                                                               3,608.00                        5,385.41




P      Employees' Cost
    For the Year ended 31st March                                 2005                            2004

    Salaries, Wages, Bonus & Gratuity                          4,827.20                         3,491.64
    Contribution to Provident, Gratuity, E.S.I.
    and other Funds                                             728.21                           372.51
    Welfare Expenses                                            187.55                           171.18
                                                               5,742.96                        4,035.33




Q      Research & Development Expenses
    For the Year ended 31st March                                 2005                            2004

    Material Consumption                                        505.57                           525.81
    Others                                                      395.12                           223.86
    Employees' Cost
        Salaries, Wages, Bonus & Gratuity             616.39                      492.87
        Contribution to Provident, Gratuity, E.S.I.
        and other Funds                                44.05    660.44             37.76         530.63
    Utilities - Power                                             35.37                           45.40
    Utilities - Others                                            79.00                           70.97
                                                               1,675.50                        1,396.67




                                                                                                                    61
                                                                               ALEMBIC LIMITED



                                                              Schedules
                                                            FORMING PART OF THE PROFIT & LOSS ACCOUNT




     R      Marketing & Selling Expenses                                                       Rupees in lacs



         For the Year ended 31st March                         2005                            2004

         Marketing Expenses & Selling Commission            2,227.33                         3,838.66
         Publicity and Medical Literature                   2,521.53                         1,808.62
         Freight and Forwarding Charges                     1,123.59                         1,087.03
                                                            5,872.45                         6,734.31




     S      Interest and Discounting Charges
         For the Year ended 31st March                         2005                            2004

         Interest and Discounting charges                     342.49                           313.60
         Interest on Fixed Loans                              873.51                         1,296.11
                                                            1,216.00                         1,609.71




     T      Other Expenses
         For the Year ended 31st March                         2005                            2004

         Rent                                                  83.86                           52.43
         Bank Charges and Brokerage                           134.14                          160.87
         Rates and Taxes                                      233.41                          257.65
         Insurance                                            267.08                          316.05
         Communication Expenses                               375.75                          303.33
         Professional Fees                                    336.83                          220.15
         Donations                                             11.63                             3.15
         Travelling                                           569.41                          495.21
         Repairs and Maintenance
             Building and Roads                     66.33                       47.42
             Others                                143.07     209.40           113.69         161.11
         Auditors’ Fees and Expenses                           13.94                           10.86
         Managerial Remuneration                              485.86                          375.52
         Director Sitting Fees                                  3.85                             3.95
         Miscellaneous Expenses                               293.10                          281.83
         Bad Debts written off                                    --                          114.71
         Provision for Doubtful Debts                         375.00                          250.00
         Business Performance Improvement Fees                    --                          190.72
         Provision for Diminution in Investment                13.25                             0.40
                                                            3,406.51                        3,197.94




62
                                                                                                               ALEMBIC LIMITED



                                                                                          Schedules  FORMING PART OF THE ACCOUNTS




U   Notes forming part of accounts

     1   SIGNIFICANT ACCOUNTING POLICIES:
     A Basis of Accounting
       The Accounts are prepared as per Historical Cost Convention and on accrual basis unless otherwise specified.
     B Fixed Assets
       Fixed Assets are recorded at cost of acquisition or construction. These costs are excluding Modvat/Cenvat/Service Tax credit
       availed but include the borrowing cost upto the date of commercial production and net cost of trial run production. Certain
       Lands, Buildings and Plant & machinery which were revalued are recorded at revalued amounts.
     C Depreciation
       I Depreciation on Building and Plant & Machineries of Pharma Division Vadodara, and all assets of Panelav units and all
          assets acquired on or after 01.04.91 have been provided on Straight Line method and all other assets on written down
          value method.
         II   The straight line method depreciation is provided as under:

         Assets acquired

         Upto 31.05.86                       Till 30.06.93, Depreciation has been provided as per rates applicable under income tax
                                             rules, in force at the time of acquisition / installation as per circular no.1/86 CLB/No/14
                                             (5) 84 CL VI dated 21.05.86, issued by the Department of Company affairs, Government
                                             of India.
                                             With effect from 01.07.93, depreciation on these assets has been provided as per revised
                                             schedule XIV rates based on circular 14/93 dated 20.12.93 issued by Department of
                                             Company affairs, Government of India.
         After 31.05.86                      Depreciation has been provided as per the rates prescribed in Schedule XIV of
                                             Companies (Amendment) Act, 1988 and as revised based on circular 14/93 dated
                                             20.12.1993 issued by the Department of Company affairs, Government of India.

         III Depreciation as per written down value method has been provided as per the rates prescribed in schedule XIV of the
             Companies (Amendment) Act, 1988 and as revised based on circular 14/93 dated 20.12.1993 issued by the department
             of Company affairs, Government of India.
         IV Depreciation on revalued assets is provided as under:
              a   Depreciation on value written up on revaluation of Building has been provided on straight line method on the basis of
                  estimated life determined by the valuer and equivalent amount of depreciation has been transferred from
                  Revaluation Reserve to Profit and Loss Account.
              b   Depreciation on value written up on revaluation of some of items of plant and machinery has been provided on
                  straight line method on the basis of remaining estimated life determined by the valuer and the same is charged to
                  Profit and Loss Account and an equivalent amount is transferred from Revaluation Reserve to General Reserve.
         V    Depreciation on Assets given on Lease:
                 Depreciation has been provided @ 6.33%, based on the technical life of Assets.
         VI Leasehold Land is amortized over the period of Lease.
         VII Depreciation on Research and Development Equipments:
                Acquired upto 31.03.2003 @ 100% Depreciation
                Acquired from 01.04.2003 As per SLM at the rate prescribed in schedule XIV of the Companies Act.
         VIII Intangible Assets represented by Trademark are amortized over five years.
     D Investments
       I Long term investments are stated at cost except where there is a diminution in value other than temporary, in which case
           a provision is made to the carrying value to recognize the decline.




                                                                                                                                           63
                                                                                                                     ALEMBIC LIMITED



                                                                                                  Schedules FORMING PART OF THE ACCOUNTS




     U   Notes to Accounts-Contd.                                                                                                           Rupees in lacs




             II   Investments in foreign company are stated at cost by converting at exchange rate prevailing at the time of acquisition.
         E   Inventories are valued as follows:
             Raw Materials, Stores and Spares & Packing
             Materials                                        at weighted average cost
             Material in Process                              at weighted average cost
             Finished Goods                                   at lower of cost or market value
             Slow moving -
                  Raw Materials, Stores & Spares              at estimated realizable value
         F   Sales
             Sales include foreign exchange gain/loss but excludes sales tax.
             Export sales are recognized on the date of bill of lading.
         G Excise duty
           Excise duty is accounted for on completion/clearance of goods manufactured.
         H Research and Development
           Revenue expenditure                                Charged to Profit and Loss Account.
             Capital Expenditure on Plant & Machinery         Acquired upto 31.03.2003 - Charged
             and Lab Equipment                                Depreciation @ 100%
                                                              Acquired after 01.04.2003 - Charged
                                                              Depreciation as per SLM at the rates prescribed
                                                              in schedule XIV of the Companies Act.
         I   Foreign Exchange Transactions
             I Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of the year are
                translated at year-end exchange rates.
             II   The difference in translation of monetary assets & liabilities and realized gains & losses on foreign exchange transaction
                  other than those relating to fixed assets are recognized in the Profit and Loss Account.
                  Exchange difference in respect of liabilities incurred to acquire fixed assets are adjusted to the carrying amount of fixed
                  assets.
             III In respect of transactions covered by forward contracts, the difference between the contract rate and the rate on the
                 date of the transactions is charged to Profit and Loss Account over the contract period.
         J   Retirement benefits
             I The liability for gratuity is funded through the scheme administered by the Life Insurance Corporation of India, and the
                 amounts paid under the scheme are charged to Profit and Loss account.
             II   Superannuation payable as per superannuation scheme is provided by payment to superannuation trust fund.
             III Accumulated leave liability as at the year-end is provided as per actuarial valuation.
         K Deferred Tax
           Deferred Tax Assets and Liabilities are recognized as per Accounting Standard AS-22 on Accounting for Taxation for Income,
           issued by the Institute of Chartered Accountants of India.

             As at 31st March                                                                                         2005              2004

          2 Estimated amount of contracts remaining to be executed
             on capital accounts                                                                                      40.57           2,724.99
          3 Contingent liabilities not provided for
             i     Bill discounted                                                                                  495.25              468.55




64
                                                                                                               ALEMBIC LIMITED



                                                                                          Schedules  FORMING PART OF THE ACCOUNTS




U   Notes to Accounts-Contd.                                                                                                      Rupees in lacs




        As at 31st March                                                                                       2005              2004

        ii    Wage revision and reinstatement of employees and other demands                        Unascertained       Unascertained
        iii   Letter of Credit, Guarantees and counter guarantees                                              98.50              65.00
        iv    Liabilities Disputed in appeals
              Excise Duty                                                                                   1,038.52             660.39
              Water Charges                                                                                        --             41.38
              Sales Tax                                                                                       365.65             232.42
              Income Tax                                                                                           --            733.75

        v     Disputed liability in respect of Ministry of industry, Department of Chemicals and Petrochemicals in respect of price of
              Rifampicin allowed in the formulations and the landed cost of import amounting to Rs.34.93 Lac (Rs.34.93 Lac).
    4   The Hon'ble Supreme Court has passed judgement on 12.04.04, in respect of Company's dispute regarding interest payable to
        ONGC and Company's claims regarding excess principal amount charged for gas supplied during the period between
        01.01.1982 and 29.01.1987 (Pre -1987).
        It was held by the Hon'ble Supreme Court that interest is payable by the Company on simple interest basis. The Hon'ble
        Supreme Court has also directed ONGC to examine other points of disputes raised by the Company and thereafter re-
        determine the arrears payable along with interest.
        ONGC has still not communicated to the company the final interest amount payable. However the Company, on it’s own,
        calculated the net amount payable after adjusting counter claims and offered to pay ONGC Rs.293.47 Lacs. ONGC is yet to
        respond to company’s offer (ONGC had earlier, prior to this judgement of the Supreme Court, claimed interest of
        Rs.1370 Lacs on simple interest basis, without considering counter claims of the Company). However the Company has
        provided this amount of Rs.293.47 Lacs in its books during the year.
        For the period from 30.01.1987 to 31.05.1991 (post 1987), ONGC has raised demand for arrears on account of price
        difference, transportation cost, and interest on delayed payment thereon and has filed a suit for recovery in the Civil Court at
        Vadodara. ONGC' s demand on account of the principal amount is Rs.287/- Lacs for this period and of which the Company has
        paid Rs.222/- Lacs till May, 2000 which has been written off in 2001-02. The interest demand as compiled by ONGC upto
        26.07.2001 is Rs.321/- Lacs on simple basis and Rs.1087/- Lacs on compound basis. The matter is still sub judice and pending
        before Court and based on counter claim of the Company, final liability on account of balance principal and interest could not
        be determined. Therefore, the Company has not provided for any such liability.
    5   As per the revaluation report dated 18.05.1998, of R D Engineer and Associates - Registered valuers - appointed for the
        purpose of revaluing some of the plant and machinery at Vadodara and the same have been revalued as at 01.04.97, at Net
        Market Value / Net Replacement Cost as detailed below.

        Assets                                     Original    Market value/     Gross Amount         Accumulated         Net amount
                                                      Cost     Replacement          written up         Depreciation        credited to
                                                                       Cost                           on written up        revaluation
                                                                                                              value            reserve
                                                              As on 01.04.97                         up to 01.04.97
        Certain Plant and Machinery                 417.77           2,604.59            2,186.82             548.66           1,638.16

        Depreciation amounting to Rs.124.23 Lacs (Rs.153.80 Lacs) due to revaluation has been charged to Profit and Loss
        Account.
    6   As required by AS 28 on impairment of assets issued by ICAI, the Company has carried out an exercise of identifying the
        assets that may have been impaired. The Company has identified certain fixed assets that were impaired as at the
        beginning of the year mainly on account of economic performance and alternative viability of such assets.
        Accordingly an impairment loss of Rs.98.82 Lacs has been adjusted in the General Reserve as at the year-end.




                                                                                                                                                   65
                                                                                                                          ALEMBIC LIMITED



                                                                                                   Schedules  FORMING PART OF THE ACCOUNTS




     U   Notes to Accounts-Contd.                                                                                                           Rupees in lacs




         7   During the year the Company has issued 12,00,000 equity shares of Rs.10/- each at the Premium of Rs.151/- per share on
             a Preferential Allotment basis, aggregating to Rs.1932 Lacs.
         8   Staff loans and advances include loan to officers of the company: Rs.10.04 Lacs (Rs.16.14 Lacs). Maximum amount due at any
             time during the year: Rs.16.14 Lac s (Rs.16.14 Lacs).
         9   As required by the notification no. GSR 376(E) dated 22.05.2002, issued by the Department of Company affairs, Ministry of
             Law, Justice and Company affairs, a list of Small Scale undertakings whose due are outstanding for more than 30 days are:
             Kevin Process Technologies Pvt. Ltd.   Heena Roto Prints                      Paras Enterprise               Akshay Inorganics
             Medicare Equipment Co.                 Patwa & Sons                           Yogi Packaging Industries      Sujata Chemicals
             Pushparaj Plastic & Packaging          Shakti Packaging Industries            Narendra Packaging Pvt. Ltd.                      .
                                                                                                                          Oil Seal Mfg. Co. P Ltd.
             Bios Equipment                         Fitzer Instruments (India) Pvt. Ltd.   Sharda Packaging               Modern Rubber Ind.
             Saroja Rubber Industries               Dyna Filters Pvt. Ltd.                 Pooja Packaging Ind.                         .
                                                                                                                          Refoil Earth P Ltd.
             Hemson Pvt. Ltd.                       Conserve Chemicals                     Pramukh Packaging Ind.                               .
                                                                                                                          Pharma Instrument P Ltd.
             Ambica Machine Tools Co.               Abma Machines                          Everbright Corporation         Verma Gases
             Ambica Labeling Pvt.Ltd                Klassic Gold                           Wab Engineers                  Flow Chem Ind.
         10 Break up of deferred tax assets / liabilities are as under.

              As at 31st March                                                                                            2005             2004

              Deferred Tax Assets
              Provision for Diminution in value of Investments                                                             4.46              0.14
              Provision for Doubtful debts                                                                            216.33                     --
              Deferred Revenue Exp.                                                                                   189.24               197.78
              Others                                                                                                  102.75                79.62
                                                                                                                      512.78               277.54
              Deferred Tax Liabilities
              Depreciation                                                                                           4,581.24            4,925.00
                                                                                                                     4,581.24            4,925.00


              Total                                                                                                  4,068.46           4,647.46

          11 Segment Reporting
             a    Primary Segment
                  The Company has identified "Pharmaceuticals" as the only primary reportable segment.
             b    Secondary Segment (by Geographical Segment)

             For the year ended 31st March                                                                                2005             2004
              Sales - (Gross of Excise Duty)
                       India                                                                                       44,580.80            47,007.22
                       Outside India (Including Export Incentive)                                                  12,661.01            14,375.00
              Total Sales                                                                                          57,241.81           61,382.22

             In view of the inter-woven/inter-mixed nature of business and manufacturing facility, other secondary segmental
             information is not ascertainable.




66
                                                                                                                 ALEMBIC LIMITED



                                                                                           Schedules  FORMING PART OF THE ACCOUNTS




U   Notes to Accounts-Contd.                                                                                                       Rupees in lacs




    12 Disclosure in respect of Related Parties pursuant to Accounting Standard - AS 18 - issued by the Institute of Chartered
       Accountants of India are as follows:
        List of Related Parties with whom the Company has entered into transactions during the year.
        a   Controlling Companies: There is no controlling Company.
        b   Subsidiary and Fellow Subsidiary: There is no Subsidiary Company.
        c   Associate Companies:
            1     Alembic Glass Industries Ltd.        6    Light Publications Ltd.
            2     Purak Vinimay Ltd.                   7    Alembic Export Ltd.
            3     Sierra Investment Ltd.               8    Nirayu Pvt. Ltd.
            4     Paushak Ltd.                         9    Shreno Investment & Finance Ltd.
            5     Aavaran Ltd.                         10   Viramya Packlight Ltd.
        d   Key Management personnel:
            1     Shri C. R. Amin                      Chairman and Managing Director
            2     Smt. M.C. Amin                       Whole-time Director
            3     Shri R. K. Baheti                    Director, President-Finance and Secretary
            4     Shri R. M. Kapadia                   Director (Retired as Sr. Vice-President (Mgt. Services)
                                                       and Secretary w.e.f. 05.04.2004)
            During the year, the following transactions were carried out with related parties in the ordinary course of the business:
                                                                           Associates                   Key Management Personnel
        For the year ended 31st March
                                                                         2005               2004                 2005              2004

             i    Purchase of Goods                                    694.27              699.63                   --                    --
             ii   Purchase of Fixed Assets                              71.04              445.15                   --                    --
             iii Rendering of Services                                 475.87              553.06                   --                    --
             iv Receiving of Services                                  597.70            1,308.89                   --                    --
             v Commission Paid                                          89.67              574.87                   --                    --
             vi Rent Paid                                               25.10               20.14                   --                    --
             vii Rent Received                                          16.68               14.43                   --                    --
             viii Interest Received                                     97.21              145.99                 1.10                  1.12
             ix Dividend Received                                         2.16                8.19                  --                    --
             x Dividend Paid                                           188.12              113.30                29.22              14.55
             xi Loans Given                                          1,120.00            1,200.00                   --                    --
             xii Purchase of Investments                                33.60                   --
             xiii Managerial Remuneration                                    --                 --             485.86             375.52
             xiv Directors Sitting Fees                                      --                 --                3.85                  1.08
             xv Guarantees Given                                        98.50               65.00                   --                    --
        Outstanding balance
             Advance                                                    82.35              279.21                   --                    --
             Creditors                                                 138.13              162.15                   --                    --
             Loans                                                     700.00            1,145.00                10.04              16.14
             Investments                                               758.33              724.73




                                                                                                                                                    67
                                                                                                       ALEMBIC LIMITED



                                                                                   Schedules FORMING PART OF THE ACCOUNTS




     U   Notes to Accounts-Contd.                                                                                          Rupees in lacs




                                                                                             Relatives of Key Managerial Personnel
            For the year ended 31st March
                                                                                                        2005               2004

             i   Dividend Paid                                                                         24.00               12.77


         13 Earnings Per Share (EPS)

            For the year ended 31st March                                                              2005               2004
             a    Net Profit available for equity shareholders (Rs. in Lacs)                        5,181.64            3,125.87
                  (Numerator used for calculation)
             b    Weighted Average number of equity shares used                               26,890,981.00       25,640,048.00
                  as denominator for calculating EPS
             c    Earnings per share (Basic and diluted)                                               19.27               12.19
                  Face value per share Rs.10 each

         14 Auditors’ Fees and Expenses include remuneration to:

            For the year ended 31st March                                                              2005               2004
             a    Statutory Auditors:-
                  As Auditors                                                                           7.80                5.67


             In Other Capacity:-
                  i   Other Services                                                                    3.20                2.22
                  ii Reimbursement of expenses                                                          0.78                0.61


             b    Cost Auditors:-
                  i   As Cost Auditors                                                                  0.75                0.81
                  ii Other Services                                                                     0.16                0.23
             C    Tax Auditor:-
                  Tax Audit Fee                                                                         1.25                1.32
                                                                                                       13.94              10.86


         15 Managerial Remuneration includes payment to and provision for remuneration to Managing Director and Whole-time
            Director as under:
            For the year ended 31st March                                                              2005               2004
            Salary                                                                                     92.87               67.63
            Perquisite                                                                                 15.46               19.13
            Commission                                                                                377.53             288.76
                                                                                                      485.86             375.52




68
                                                                                                           ALEMBIC LIMITED



                                                                                       Schedules  FORMING PART OF THE ACCOUNTS




U   Notes to Accounts-Contd.                                                                                                 Rupees in lacs




     16 Computation of net profit under section 349 read with section 198 of the Companies Act, 1956.
                                                                                                    Amount Rs.        Amount Rs.
         Net Profit for the year as per Profit and Loss Account                                                           5,181.64
             Add :
             Provision for Income Tax                                                                      390.00
             Provision for Wealth Tax                                                                        7.00
             Depreciation                                                                                 2,556.95
             Provision for diminution in value of Investments                                               13.25
             V.R.S.                                                                                        273.17
             Managerial Remuneration                                                                       485.86
             Directors’ Sitting Fees                                                                         3.85         3,730.08
                                                                                                                          8,911.72
             Less:
             Depreciation as per Section 350 of the Companies Act,1956                                    2,556.95
             Profit on sale of investments                                                                 226.87
             Provision for Deferred Tax                                                                    579.00
             Profit on sale of assets                                                                       15.14         3,377.96
             Net Profit                                                                                                   5,533.76
             10% of the Net Profit i.e. maximum remuneration payable to                                                     553.38
             managerial personnel


     17 Additional information required under Schedule VI of the Companies Act, 1956 (as certified by Director).
         A   Raw Materials’ Consumption:
                                                                               For the year ended 31st March
         Name of Materials                                                 2005                                    2004
                                                 Unit             Quantity      Amount Rs.              Quantity      Amount Rs.
         a   Basic
             Antibiotics                         B.U.                  2,600                               40,530
                                                 Kg.                349,555           6,736.23            358,889          8,811.77
             Chemical and Other Drugs            Kg.              19,005,941                            11,497,635
                                                 Ltrs.             2,307,953          8,019.33           1,876,691         4,613.87
         b   Others                                                                   1,303.92                             4,805.50
             (Which in value individually
             account for less than 10% of
             the total Value of Raw
             Materials Consumed)
         Total                                                                      16,059.48                             18,231.14




                                                                                                                                              69
                                                                                                                  ALEMBIC LIMITED



                                                                                             Schedules  FORMING PART OF THE ACCOUNTS




     U   Notes to Accounts-Contd.                                                                                                    Rupees in lacs




           B   Installed capacities, Actual production, Opening Stock and Closing Stock of Finished Products produced and purchased:
               Class of Goods            Unit           Annual         *Actual        Opening        Opening        Closing      Closing
                                                      installed     production          Stock          Stock         Stock        Stock
                                                      Capacity      during the           Qty.          Value           Qty.       Value
                                                                         Year
               Bulk Drugs and Chemicals and Intermediates
                                         MMU/MT                #       1,757.201        131.893       2,610.77      126.853      2,738.58
                                                             (#)      (2,622.643)      (141.468)     (3,029.44)    (131.893)    (2,610.77)
               Protinules
                                         M.T.            500.00          147.441         12.084          30.52        16.338        45.16
                                                        (500.00)        (140.180)       (18.444)        (33.65)      (12.084)      (30.52)
               Formulations
               a Tablets and capsules
                                         Million       4,058.00        1,552.511         98.525       1,051.94      182.903      1,801.93
                                         Nos.         (3,158.00)      (1,403.550)       (98.528)       (986.62)      (98.525)   (1,051.94)
               b Injectables
                                         Million        224.543           95.611          6.029         422.75        11.381       686.22
                                         Nos.          (224.543)         (90.415)        (7.074)       (434.04)       (6.029)     (422.75)
               c Oral Preparation and Ointments
                                         M.T          9,462.616        4,893.280        489.214         470.78      711.919        785.80
                                                     (5,934.616)      (4,745.789)      (500.843)       (594.24)    (489.214)      (470.78)
               d Others                                        --               --             --       954.19                   1,060.10
                                                               --               --             --      (497.70)                   (954.19)
               Others
                   Electric Power Generation
                   Wind Mill                                5.00
               @ Co-Generation Plant                       12.60
                                         M.W.              17.60                **             --            --            --            --
                                                         (17.60)              (**)             --            --            --            --
               Neomer Division:
                   Polypropylene Fiber
                                         M.T.                  --               --             --            --            --            --
                                                      (4,300.00)                --       (14.82)         (0.76)            --            --
           Total                                                                                      5,540.95                   7,117.79
                                                                                                    (5,576.45)                  (5,540.95)

           * Including production on loan licence basis, captive consumption, samples and purchases of finished products.
           ** Entire generation of electricity is for captive consumption only.
           # Installed Capacity: The Installed capacity is flexible as the plant is versatile, enabling the Company to produce in different
              capacities and therefore, it varies depending upon the product programme.
           @ The Company has filed necessary Memorandum with Secretariat of Industrial Approval for generating electricity.




70
                                                                                                          ALEMBIC LIMITED



                                                                                        Schedules  FORMING PART OF THE ACCOUNTS




U   Notes to Accounts-Contd.                                                                                                  Rupees in lacs




      C Purchase of Finished Goods:
      For the year ended 31st March                                                 2005                           2004
           Class of Goods                                Unit               Quantity       Amount       Quantity           Amount
                                                                                              Rs.                             Rs.

          Pharmaceutical                                 Million            2,063.902      4,855.33      2,177.280         4,873.08
          Preparations                                   Nos. /M.T.


      D   Turnover:

          Bulk Drugs, Chemicals                          MMU/                797.806
          and Intermediates                              M.T.                152.837     15,691.57       1,773.705        20,668.54
          Protinules                                     M.T.                138.552        563.60          132.87           509.53
          Formulations:
          Tablets and Capsules                           Million Nos.       1,360.543    22,205.00       1,323.119        22,257.60
          Injectables                                    Million Nos.         82.872       8,414.28         85.722         7,405.25
          Oral Preparation and Ointments                 M.T.               4,396.744      9,871.10      4,362.994        10,024.87


          Polypropylene Fiber                            M.T.                      --              --                             --
          Total (Gross Rs.)                                                              56,745.55                        60,865.79


      E   Value of Imports calculated on CIF basis by the Company during the year in respect of:

      For the year ended 31st March                                                                        2005               2004

          i Raw Materials                                                                               7,080.83           6,708.97
          ii Components and Spare parts                                                                  234.32              133.50
          iii Capital Goods                                                                              743.28              267.48


      F   Expenditure in foreign currency during the year on account of :

      For the year ended 31st March                                                                        2005               2004
          i Professional and Consultancy Fees                                                             79.17               34.96
          ii Interest                                                                                    269.60              141.43
          iii Others
            a Foreign travelling                                                                          77.60               77.48
            b Commission on Export                                                                       297.30              352.72
            c Subscription, Publicity and other matters                                                  494.14              195.35
            d Salary                                                                                     187.83              146.79
            e Rent                                                                                        14.21               12.71




                                                                                                                                               71
                                                                                                                ALEMBIC LIMITED



                                                                                              SchedulesFORMING PART OF THE ACCOUNTS




     U     Notes to Accounts-Contd.                                                                                               Rupees in lacs




                 G
                 For the year ended 31st March                                                                  2005             2004
                     Earning in foreign exchange under export of
                     goods calculated on FOB basis equivalent to                                            10,591.30        12,429.25


                 H

                 For the year ended 31st March                                                                  2005             2004

                     a Value of imported raw materials, spare parts and components consumed                  6,238.64          7,616.30
                     b Value of indigenous raw materials, spare parts and components consumed               13,736.45        14,632.21
                     c Percentage of above to total consumption:
                        i     Imported raw materials, spare parts and components consumed                        31%              34%
                        ii Indigenous raw materials, spare parts and components consumed                         69%              66%

             18 Figures shown in brackets are corresponding figures of previous year.
             19 Previous year’s figures have been regrouped/re-arranged wherever necessary.




     As per our report of even date                                                           For and on behalf of the Board of Directors
     For K.S. AIYAR & CO.
     Chartered Accountants
     RAGHUVIR M. AIYAR             CHIRAYU R. AMIN                     MALIKA C. AMIN         R. R. PATEL      K. G. RAMANATHAN
     Partner                       Chairman & Managing Director        Whole-time Director    Director         Director
     Membership No.38128
                                   B. R. PATEL                         R. M. KAPADIA           .
                                                                                              P N. PARIKH      R. K. BAHETI
                                   Director                            Director               Director         Director, President - Finance
     Mumbai: 4th July, 2005                                                                                    & Company Secretary




72
                                                                                                                  ALEMBIC LIMITED



                                                                                           Cash Flow
                                                        Statement of Cash Flow Prepared Pursuant to the Listing Agreement with Stock Exchanges




                                                                                                                                       Rupees in lacs



For the Year ended 31st March                                                               2005                                      2004

A CASH FLOW FROM OPERATING ACTIVITIES:
  Net Profit before tax and after extraordinary items                                    4,999.64                                  4,311.89
  Add:
    1 Deferred Revenue Expenses                                             --                                   133.07
    2 Previous year's Technical Know how, Business
          Performance Improvement fees & VRS amortization                   --                                   198.71
    3 Depreciation                                                 2,556.95                                    2,022.78
    4 Interest Paid                                                1,216.00                                    1,609.71
    5 Lease rent Paid                                                       --                                      0.24
    6 Provision for Diminution in value of Investments                 13.25                                        0.40
    7     Provision for Doubtful Debtors                             375.00              4,161.20                250.00            4,214.91
  Less:
    1 Interest Received                                              333.79                                      237.08
    2 Dividend Received                                                12.52                                      24.35
    3 Profit on sale of Fixed Assets (Net)                             15.14                                     143.56
    4 Lease Rent Received                                              10.92                                      11.64
    5 Year End Foreign exchange Conversion (Net)                       89.12                                     316.98
    6 Profit on sale of Investments (Net)                            226.87                688.36                202.12              935.73
  Operating profit before change in working capital                                      8,472.48                                  7,591.07
  Add:
    1 Trade payable                                                  435.03                                    1,751.01
    2 Inventories                                                           --                                   428.88
    3 Trade receivables                                              334.08                769.11                      --          2,179.89
  Less:
    1 Inventories                                                   3280.41                                            --
    2 Trade receivables                                                     --                                   266.69
    3 Loans and Advances                                             158.00              3,438.41                755.06            1,021.75
  Cash generated from operation                                                          5,803.18                                  8,749.21
  Add:
    1 Income Tax Refund                                            1,139.32              1,139.32                      --                   --
  Less:
    1 Interest paid                                                1,372.92                                    1,593.31
    2 Income Tax Paid                                                       --           1,372.92                554.00            2,147.31
  NET CASH INFLOW FROM OPERATING ACTIVITIES (A)                                          5,569.58                                  6,601.90
B CASH FLOW FROM INVESTING ACTIVITIES:
    1 Sale of Fixed Assets                                           105.66                                      169.07
    2 Interest Received                                              273.04                                      198.55




                                                                                                                                                        73
                                                                                                                         ALEMBIC LIMITED



                                                                                                  Cash Flow
                                                               Statement of Cash Flow Prepared Pursuant to the Listing Agreement with Stock Exchanges




     Contd.                                                                                                                                   Rupees in lacs



        For the Year ended 31st March                                                              2005                                      2004

              3 Dividend Received                                             12.52               391.22                 24.35              391.97
           Less:
              1 Purchase of Fixed Assets                                  6,473.15                                    7,649.69
              2 Purchase of Investments (Net)                             1,285.91              7,759.06                 64.41            7,714.10
           NET CASH UTILISED IN INVESTING ACTIVITIES (B)                                      (7,367.84)                                (7,322.13)
        C CASH FLOW FROM FINANCIAL ACTIVITIES:
           Inflow:
              1 Proceeds from issue of share capital                      1,948.37                                    3,221.31
                   and share premium
              2 Proceeds from long term borrowings & H.P.                   388.91                                            --
                   arrangements (Net)
              3 Proceeds from Lease Finance                                   10.92             2,348.20                 11.64            3,232.95
           Outflow:
           Less:
              1 Proceeds from long term borrowings & H.P.                          --                                 2,147.16
                   arrangements (Net)
              2 Repayment of Lease Finance Liabilities                             --                                      0.24
              3 Dividend Paid                                               523.50                                      326.49
              4 Corporate Dividend Tax Paid                                   69.24               592.74                 42.42            2,516.31
           NET CASH GENERATED IN FINANCIAL ACTIVITIES (C)                                       1,755.46                                    716.64
           NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C)                                     (42.80)                                     (3.59)
              Cash and Cash Equivalents as at 31/3/2004                                           181.28                                    184.87
              Cash and Cash Equivalents as at 31/3/2005                                           138.48                                    181.28




     As per our report of even date                                                               For and on behalf of the Board of Directors
     For K.S. AIYAR & CO.
     Chartered Accountants
     RAGHUVIR M. AIYAR            CHIRAYU R. AMIN                    MALIKA C. AMIN               R. R. PATEL           K. G. RAMANATHAN
     Partner                      Chairman & Managing Director       Whole-time Director          Director              Director
     Membership No.38128
                                  B. R. PATEL                        R. M. KAPADIA                  .
                                                                                                   P N. PARIKH          R. K. BAHETI
                                  Director                           Director                      Director             Director, President - Finance
     Mumbai: 4th July, 2005                                                                                             & Company Secretary




74
                                                                                                                   ALEMBIC LIMITED



                                     Balance Sheet Abstract Additional Information Pursuant to Part IV of Schedule VI of the Companies Act, 1956




Balance Sheet abstract and Company’s business profile                                                                                    Rupees in lacs



 For the Year ended 31st March                                                                                     2005                 2004

 1 Registration Details:
    Registration No. 04-0033
    State code No. 4
    Balance sheet date 31.03.2005
 2 Capital raised during the period:
    Public Issue                                                                                                      Nil                   Nil
    Right Issue                                                                                                     1.10               147.17
    Bonus Issue                                                                                                     4.09             1,760.87
    Private Placement
    a) Equity Shares                                                                                             120.00                     Nil
    b) Preference Shares                                                                                              Nil                   Nil
    Preference Shares Application Money                                                                               Nil                   Nil
    Equity shares issued without payment being received in cash                                                       Nil                   Nil
 3 Position of mobilization and deployment of funds:
    Total liability                                                                                           62,252.48             55,809.52
    Total Assets                                                                                              62,252.48             55,809.52
    Paid up capital                                                                                            2,769.19              2,644.00
    Reserve & Surplus                                                                                         24,597.11             18,634.08
    Deferred Tax Liability                                                                                     4,068.46              4,647.46
    Secured Loans                                                                                             16,304.50             14,598.56
    Unsecured Loans                                                                                            4,024.31              5,430.46
    Net Fixed Assets                                                                                          31,532.21             27,821.90
    Investments                                                                                                2,867.56              1,368.03
    Net current Assets                                                                                        17,363.80             16,764.63
    Accumulated Losses                                                                                                Nil                   Nil
 4 Performance of Company:
    Turnover and Export incentives                                                                            52,445.81             55,646.10
    Total Expenditure                                                                                         47,948.11             51,878.21
    Profit Before Tax                                                                                          4,999.64              4,311.89
    Profit After Tax                                                                                           5,181.64              3,125.87
    Earnings Per Share                                                                                             19.27                 12.19
    Dividend rate %                                                                                                 30%                  20%




                                                                                                                                                          75
                                                                                                                         ALEMBIC LIMITED



                                        Balance Sheet Abstract    Additional Information Pursuant to Part IV of Schedule VI of the Companies Act, 1956




     Balance Sheet abstract... Contd.                                                                                                          Rupees in lacs



        For the Year ended 31st March                                                                                    2005                 2004

        5 Generic names of three principal products of Company:
           Item Code No. (ITC Code)                       Product Description
              300420 03                                   Erythromycin Formulations
              300410 00                                   Penicillin & Combination Formulations
              300420 03                                   Roxithromycin Formulations




     As per our report of even date                                                              For and on behalf of the Board of Directors
     For K.S. AIYAR & CO.
     Chartered Accountants
     RAGHUVIR M. AIYAR           CHIRAYU R. AMIN                   MALIKA C. AMIN                R. R. PATEL            K. G. RAMANATHAN
     Partner                     Chairman & Managing Director      Whole-time Director           Director               Director
     Membership No.38128
                                 B. R. PATEL                       R. M. KAPADIA                   .
                                                                                                  P N. PARIKH           R. K. BAHETI
                                 Director                          Director                       Director              Director, President - Finance
     Mumbai: 4th July, 2005                                                                                             & Company Secretary




76
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