Annual Report - Piramal Healthcare - 2009-2010

PIRAMAL HEALTHCARE LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

Dear Shareholders,

We take pleasure in presenting the 63rd Annual Report and Audited Accounts
for the Year ended 31st March 2010.



PERFORMANCE HIGHLIGHTS: (Standalone) (Rs. in Million)

Year Ended 31st March FY 2010 FY 2009 % Growth

Total operating income 26,662.1 23,334.6 14.3

OPBITDA excluding FOREX impact 6,043.0 5,217.0 15.8

Foreign Exchange (Gain) / Loss 106.1 966.5

OPBIDTA 5,936.9 4,250.5 39.7

% margin 22.3 18.2

Non-operating other income 116.5 112.4 3.6

EBIDTA 6,053.4 4,362.9 38.7

Less:

Interest (Net) 355.0 379.0 (6.3)

Depreciation 922.2 838.1 10.0

Profit before tax and Exceptional items 4,776.2 3,145.8 51.8

Exceptional items 3.6 -

Profit Before Tax 4,772.6 3,145.8 51.7

Less:

Income Tax provision 340.4 392.6 (13.3)

- Current 834.4 357.2

- Deferred 78.8 107.3

- MAT Credit Entitlement (572.8) (320.4)

- Fringe Benefits Tax - 248.5

Profit after tax 4,432.2 2,753.2 61.0

% margin 16.6 11.8

Add:

Profit brought forward from previous year 3,208.6 3,208.6

Profit available for appropriation 7,640.8 5,961.8

Appropriation:

Proposed dividend

- Equity Shares 1,128.6 877.9

- Dividend Distribution Tax thereon 187.5 149.2

Transfer to General Reserve 1,393.3 1,401.1

Transfer to Capital Redemption Reserve - -

Transfer to Debenture Redemption Reserve 325.0 325.0

Balance carried to Balance Sheet 4,606.4 3,208.6

Earnings Per Share (Basic/Diluted) (Rs.) 21.2 13.2

DIVIDEND

The Board has recommended Equity Dividend at Rs. 5.40 per share (i.e. 270%)
on 20,90,13,144 equity shares of Rs. 2/- each, which will be paid to
eligible members on or after July 9, 2010, after approval by the members at
the forthcoming Annual General Meeting.

The total cash outflow on account of equity dividend payments, including
distribution tax, will be Rs. 1,316.1 million. (FY2009 Rs. 1,027.1 million)
The Board recommends the above dividend for declaration by the members.

OPERATIONS REVIEW:

Total operating income for the year grew by 14.3% to Rs. 26.7 billion
compared to Rs. 23.3 billion for the year ended 31st March 2009. Operating
Profit (OPBIDTA) grew by 39.7% to Rs. 5.9 billion. Profit after Tax was
higher at Rs. 4.4 billion against Rs. 2.8 billion for the previous year
registering growth of 61.0%. Earnings per share for the year were also
higher at Rs. 21.2 per share as against Rs. 13.2 in FY2009.

A detailed discussion of operations for the year ended 31st March 2010 is
given in the Management Discussion and Analysis section.

RESEARCH & DEVELOPMENT:

The Company continues to conduct Research and Development related to:

* Development of conventional and novel dosage forms for drug products
across all the major therapeutic areas for the domestic market; .

* Pre-formulation and formulation development and clinical manufacturing of
NCE's for external clients; Process optimization / research and scale up,
for the early phase projects from clients;

* Development of cost effective and environment friendly process for
commercial manufacturing of Active Pharmaceutical Ingredients (APIs) and
their intermediates.

* Total R&D expenditure during the year was Rs. 403.8 million, including
capital expenditure of Rs. 41.9 million. The corresponding previous year
spends were Rs. 656.0 million and Rs. 208.4 million respectively. The
research and development staffs were 86 people from 143 people in FY2009.

SUBSIDIARY COMPANIES:

Piramal Diagnostic Services Pvt. Ltd. (PDSL):

During the year we focused on consolidation of business which was built
inorganically over the past several years. The focus for the year was on
improving processes and systems. Total Operating Income of the business
grew by 22.2% from Rs. 1.7 billion in FY2009 to Rs. 2.1 billion in FY2010.
Operating Profit for the year was up by 21.9% to Rs. 377.4 million from
Rs.309.6 million in FY2009. Piramal Diagnostic has 94 laboratories across
58 locations in India.

Piramal Healthcare UK Ltd:

In FY2009, we closed down one of our facilities in Huddersfield, U.K. which
had lower profitability. This resulted in lower sales for this company in
FY2010. The Net sales for FY2010 were Rs. 4.6 billion as compared to Rs.6.1
billion for FY2009. However, Operating Profit Margin for the company was up
from 10.9% in FY2009 to 12.4% in FY2010. Operating profit for the year was
lower at Rs. 565.6 million compared to Rs. 667.8 million for FY2009.
However due to creation of deferred tax asset of Rs. 479.5 million, Net
Profit for the year was higher at Rs. 683.8 million, as against loss of Rs.
153.2 million for FY2009.

Piramal Healthcare (Canada) Ltd.:

Our subsidiary at Canada continues to be affected by lower funding for R&D
firms. Net Sales for FY2010 was Rs. 893.6 million as compared to Rs. 1.0
billion in FY2009. Operating profit for the year was lower at Rs. 92.8
million as compared to Rs. 119.9 million in FY2009. Similarly, Net Profit
for the year was Rs. 27.5 million as compared to Rs. 47.6 million for
FY2009.

Piramal Critical Care Inc.:

Since our acquisition of Minrad Inc., operations at Minrad have been
completely integrated. We have increased the production at Bethleham
facility with significant reduction in cost. Sevoflurane market share grew
from 4.7% to 17.8% in volume terms in US market. Net sales for the year was
higher at Rs. 1.8 billion against Rs. 145.5 million for FY2009. As a
result, operating profit was also higher at Rs. 172.6 million against
Rs.37.2 million during the last corresponding period. Net loss for the year
was at Rs. 211.0 million compared to Net Profit of Rs. 424.5 million in
FY2009.

The Central Government has granted exemption under section 212(8) of the
Companies Act 1956, from attaching to the Balance Sheet of the Company, the
Accounts and other documents of its subsidiaries. However, the Consolidated
Financial Statements of the Company, which include the results of the said
subsidiaries, are included in this Annual Report. Further, a statement
containing the particulars prescribed under the terms of the said exemption
for each of the Company's subsidiaries is also enclosed. Copies of the
audited annual accounts of the Company's subsidiaries can also be sought by
any investor of the Company or its subsidiaries on making a written request
to the Company Secretary at the registered office of the Company in this
regard. The Annual Accounts of the subsidiary companies are also available
for inspection for any investor at the Company's and/or concerned
subsidiaries' registered office and are also available on the Company's
website i.e. www.piramalhealthcare.com

JOINT VENTURES:

Allergan India Private Limited (AIL')

AIL is a 51:49 Joint Venture between Allergan Inc., USA and Piramal
Healthcare Limited. Total Operating Income of AIL grew by 8.6% to Rs. 1.1
billion (FY2009 Total Operating Income: Rs. 1.0 billion). The PBIDT for
FY2010 was up by 8.5% to Rs. 349.7 million as compared to Rs. 322.3 million
in FY2009. Profit after tax for FY2010 was up by 15.9% to Rs. 220.6 million
as compared to Rs. 190.3 million for FY2009.

INDUSTRY OUTLOOK:

The domestic pharmaceutical industry continued to witness strong growth
momentum. Led by strong penetration into tier II/III cities, increased
number of new product launches and increase in field-force strength, the
market grew by a robust 17.7% (ORG IMS MAT March 2010). Indian
Pharmaceutical market has become increasingly attractive for large
multinational pharmaceutical companies as they aggressively pursue growth
opportunities in the emerging markets.

The demand in the pharmaceutical outsourcing market continued to be soft.
Due to reduction in inventory level across many large multinational
pharmaceutical companies, the industry struggled to grow for most parts of
FY2010. However, towards the end of the year, one could see a definite
recovery in the business environment. The inventory de-stocking phenomena
is coming to an end. The underlying rationale for outsourcing is now more
relevant than ever before, hence over a medium term we see attractive
growth opportunities in this business.

INTERNAL CONTROL SYSTEM:

The Company has a sound internal control system, which ensures that all
assets are protected against loss from unauthorized use and all
transactions are recorded and reported correctly. The internal control
systems are further supplemented by internal audit carried out by an
independent firm of Chartered Accountants and periodical review by
management. The Audit Committee of the Board addresses significant issues
raised by both, the Internal Auditors and the Statutory Auditors.

HUMAN RESOURCES:

Employees are vital to Piramal Healthcare. We have created a favorable work
environment that encourages innovation and meritocracy. We had staff
strength of 7,311 employees (FY2009: 7,397 employees) as at 31st March
2010.

Function 31st March 2010 31st March 2009 Change

a. Field 4,103 3,984 119
b. R&D 86 143 (57)
c. Others 3,122 3,270 (148)
Total 7,311 7,397 (86)

Any shareholder interested in obtaining a copy of the statement of
particulars of employees referred to in section 217(2A) of the Companies
Act 1956, may write to the Company Secretary at the Registered Office of
the Company.

Stock Options disclosures pursuant to the applicable requirements of the
Securities and Exchange Board of India (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999 are given as an Annexure
to this Report.

CHANGE IN SHARE TRANSFER AGENT:

M/s. Link Intime India Pvt. Ltd. (Link Intime') have been appointed as the
new Share Transfer Agents of the Company with effect from February 1, 2010.
Necessary communication in this regard was mailed individually to all the
Shareholders as well as by advertisement in the newspapers. Contact details
of Link Intime have been provided under the Corporate Governance Section of
this Annual Report and the same are also available on the website of the
Company.

DIRECTORS' RESPONSIBILITY STATEMENT

As required under section 217 (2AA) of the Companies Act, 1956 we hereby
state:

a) That in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures, if any;

b) That the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company as at 31st March, 2010 and its profit for the year ended on that
date;

c) That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;

d) That the Directors have prepared the annual accounts on a going concern
basis.

DIRECTORS:

Mr. R.A. Shah and Mr. N. Vaghul retire by rotation at the ensuing Annual
General Meeting and are proposed for re-appointment.

Mr. N. Santhanam has been re-appointed as Executive Director & Chief
Operating Officer' of the Company for a further period of 3 years with
effect from 25th October, 2010.

The Board recommends their re-appointment at the ensuing Annual General
Meeting.

CORPORATE GOVERNANCE:

The Company has complied with the applicable provisions of Corporate
Governance under clause 49 of the Listing Agreement with the Stock
Exchanges. A separate report on Corporate Governance compliance is included
as a part of the Annual Report alongwith the Certificate from Mr. N.L.
Bhatia, Practicing Company Secretary.

FIXED DEPOSIT

We have discontinued accepting /renewing fixed deposits. Unclaimed Fixed
Deposits from the public shareholders as on 31st March 2010 amounted to
Rs.Nil (FY2009: Rs. 5,000).

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION:

Particulars required under Section 217 (1) (e) of the Companies Act, 1956
read with Rule 2 of the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 is given in the Annexure to this Report.

GROUP:

As per the intimation from the Promoters, the names of the Promoters and
the entities comprising group' as defined in the Monopolies and
Restrictive Trade Practices Act, 1969 (MRTP) are given for the purpose of
SEBI (Substantial Acquisitions of Shares and Takeovers) Regulations, 1997
in the Annexure to this Report.

AUDITORS:

M/s. Price Waterhouse, retire as Auditors of the Company at the ensuing
Annual General Meeting and are eligible for re-appointment.

ACKNOWLEDGEMENTS:

We take this opportunity to thank the employees for their dedicated service
and contribution to the Company. Our sincere appreciation is also due to
the Medical Profession and Distributors for the patronage of our products.

We also thank our strategic alliances and joint venture partners, banks,
financial institutions, business associates and our shareholders for their
continued support towards conduct of efficient operations of the Company.

By Order of the Board

Ajay G. Piramal
Chairman

Place: Mumbai
Date : 7th May, 2010

ANNEXURE TO DIRECTORS' REPORT

1. Particulars under Companies (Disclosure of Particulars in the Report of
Board of Directors) Rules, 1988 for the year ended 31st March 2010

Conservation of Energy

During the year, the Company introduced the following measures to conserve
energy:

Pithampur

- Increased the quantum of steam condensate being recycled to the boiler,
thereby saving water and recovering heat for use as boiler feed;

- Steam traps not operating optimally identified in audit and changed,
resulting in reduction in steam wastage, thereby reducing the steam
generation;

- Installed energy efficient chilled water pumps leading to reduction in
power consumption;

- Cooling Tower Fan changed thereby increasing cooling tower efficiency and
reducing operating hours of cooling tower, leading to energy savings;

- De-scaled chilled water and cooling water headers, thereby increasing the
cooling efficiency and reducing the chiller operating hours, leading to
savings in power consumption;

- Increased awareness of energy conservation among all employees by
conducting workshops, circulating daily section-wise power consumption
report and instituting a reward scheme under 'Manthan' (an Operational
Excellence Programme);

Mahad

- Temperature controllers installed for cooling towers, resulting in energy
savings;

- Installation of timers for chillers, resulting in energy savings;

- Variable frequency drive installed on different machines resulted in
energy conservation;

- System developed for recovering water from certain manufacturing
processes: the processed water is circulated in the cooling tower sump and
used for gardening, leading to water conservation;

- Rain water harvesting implemented: harvested water used for domestic
purpose, leading to water conservation;

Baddi

- Replaced FFS machine dedicated Chiller with Plate Heat Exchanger;

- Increased steam to fuel ratio from 3.9 to 4.12;

- Servo stabilizer installed in lighting circuit of HMX plant;

- Installed VFD on Boiler FD fan;

VFCD Plant

- Variable frequency drives installed for high power continuously running
motors, leading to energy conservation;

- Optimized usage of high pressure steam as per process requirement.
Continuous monitoring of Biomass quality and enhanced controls on Biomass
addition in boiler, resulted in savings in Biomass consumption;

- Cooling media changed from chilled water to cooling tower water in
certain chemical processes, thereby drastically reducing load on the Vapour
Absorption Machine, leading to savings in Biomass consumption and energy
conservation;

Digwal

- Lighting Energy Conserver installed in lighting circuit, leading to
energy conservation;

- Two transformers inter-connected with bus coupler', leading to savings
in energy;

- Brine chilling systems remodeled and optimized resulting in energy
conservation;

- Installation of auto cut-off valve system and temperature cut-off system
in certain areas, leading to energy conservation;

- Higher rated capacity pumps (vacuum & centrifugal) replaced with modified
capacity pumps (after analyzing the user requirements) leading to energy
savings;

Ennore

- Reduction in fuel consumption in DG Set, by reducing its frequency;

- Reduction in energy consumption, by installing timers to vessel lamp
fittings;

- Replaced ML lamps with HPL / CFL lamps, leading to savings in energy;

- Replaced sodium vapour lamps with metal halide lamp, leading to energy
savings;

Pawne
- Installed power capacitors to improve the power factor from 0.80 to 0.90
thereby leading to energy savings.

FORM A

For the For the
Year Ended Year Ended
March 31, 2010 March 31, 2009

A. Power and Fuel Consumption

1. Gas and Electricity

(a) (i) Gas

Unit (000 M3) - -

Total Amount (Rs. In Lakhs) - -

Rate/Unit (Rs) - -

(ii) Electricity

Unit (000) 53,929.0 57,397.5

Total Amount (Rs. In Lakhs) 2,352.9 2,308.2

Rate/Unit (Rs) 4.4 4.0

(b) Own Generation

Diesel Generator

Unit (000) 6,631.1 5,850.1

Total Amount (Rs. In Lakhs) 700.7 551.7

Rate/Unit (Rs) 10.6 9.4

2. Coal

Qty. (Tonnes) 24,512.0 26,757.6

Total Cost (Rs. In Lakhs) 927.2 1,059.3

Cost/Unit (Rs) 3.8 4.0

3. Furnace Oil

Qty. (K.Ltrs) 406.5 430.6

Total Cost (Rs. In Lakhs) 114.0 117.2

Average / K ltrs. (Rs) 28,040.0 27,209.0

4. Other

(I) Hydle Power

Qty. (000M3) 4,400.0 4,400.0

Total Cost (Rs. in Lakhs) 181.2 169.4

Average Rate 4.1 3.9

(II) HSD OIL

Qty. (K.Ltrs) 1,073.0 839.0

Total Cost (Rs. In Lakhs) 379.1 304.7

Average Rate 35.3 36.3

(III) Biomass

Qty. (Tonne) 4,879.0 6,639.4

Total Cost (Rs. In Lakhs) 234.7 289.9

Average Rate 4.8 4.4

(IV) Husk

Qty. (Tons.) 4,899.5 4,310.6

Total Cost (Rs. In Lakhs) 182.6 195.7

Average Rate/Kg (Rs.) 3.7 4.5

B. Consumption per unit of Production (Rs. in Lakhs)

The operations of the Company not being power intensive and since it
involves multiple products, disclosure of consumption figures per unit of
production is not meaningful.

FORM B

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

Pharmaceutical R&D

* Pre-formulation and formulation development of various dosage forms for
Pharma Solutions (international clients) and Healthcare Solutions (domestic
market) including the development of platform technologies and novel
packaging;

Process Development

* Process optimization, research, development and scale up for early phase
projects from big pharma companies and mid size bio-tech companies;

* Development of cost effective and environment friendly processes for
commercial manufacturing of Active Pharmaceutical Ingredients (APIs) and/or
their intermediates;

* Innovative process development to achieve commercial and technical
breakthroughs;

2. Benefits derived as a result of the above

Pharmaceutical R&D

* Cost effective development of formulations for global pharmaceutical
companies, thus bringing in more molecules into the global pipeline;

* Presence of large number of new products in the domestic market for
treating varied therapeutic areas, thereby reducing the burden of disease;

Process Development

* Low cost and technically efficient development and manufacturing options
available to customers;

* Offered wide range of services to customer for their drug development;

3. Future Plan of Action

Pharmaceutical R&D

* Growing a pipeline of novel products for the domestic market and novel
platforms for broad usage;

* Becoming the Key India based contract formulation development and
clinical supplies partner for major global pharmaceutical companies;

* Differentiating ourselves on technical excellence across all faculties;

Process Development

* Continue to develop cost effective and environment friendly processes for
manufacture of quality APIs and their Intermediates;

* Explore newer areas of chemistry and technology for providing low cost
solutions to customers;

4. Expenditure on R&D (Rs. in Million)

- Capital 41.9

- Recurring 361.9

- Total 403.8

- Total R&D Expenditure as a
percentage to sales 1.5%

5. Technology Absorption, Adaptation and Innovation

Pithampur

- Installed new capping machine for fixing tamper proof caps on bottles,
thereby making the bottle tamper proof;

- Developed new moulds for the Form-fill-seal machines, to form bottles
suitable to fit tamper proof caps, thereby reducing wastage of LDPE
granules by reducing scrap generation;

Mahad

- Ultra filtration water system installed in general tablet plant with
continuous re-circulation loop;

- Automatic video-jet printing machine installed for overprinting sachets
laminates to reduce cycle time;

- High efficiency air wash system installed in final change room of Hormone
Tablets Section, thereby improving Safety Health & Environment (EHS);

- Major ETP modification carried out for total elimination of any oil
particles in effluent by providing oil separator thus improving EHS
systems;

- State of art facility for storage of Ethanol installed with separate
dispensing area to improve EHS systems;

Baddi

- Installed new bi-layer Sejong compression machine for production of bi-
layer tablets whereby two API layers with different colours would be
separately visible;

- Tablet Area converted to low RIF (Relative Humidity) areas to facilitate
transfer from R&D section to the Plant section, of new tablets which may be

moisture sensitive;

- Semi Automatic packing machine installed & operation started for faster
delivery of unit packs including physician samples to improve productivity;

- Automatic Ink-jet printing machine installed on all packing lines for
overprinting show boxes to reduce rejection;

- Automatic Bin wash machine installed for effective cleaning of blenders /
containers used in the manufacturing process, thereby eliminating manual
intervention;

- New high efficiency blower installed on Fluid Bed Dryer to improve drying
time;

VFCD Plant

- Yield of Active Pharmaceutical Ingredients (APIs) improved with the
improvement in ejector vacuum;

- Drastic reduction in Organic Volatile Substances achieved by improving
manufacturing & drying technology;

- Improvement in solvent recovery process by adopting improved technology &
modified process;

- Cycle time reduction & yield improvement achieved in certain derivative
product by using improved process engineering technology;

Digwal

- Successfully completed scale-up and validation batches of new products
with improved technology;

- Successfully commissioned the state-of-the-art class 100000 manufacturing
facility for certain products;

Ennore

- Process improvements implemented with respect to certain products,
resulting in elimination of certain solvent and solid waste generation,
thereby contributing to the environment;

- Cryogenic facility created in the PDS facility to handle reaction at
extreme temperatures;

- Indigenous development of systems to handle Mutagenic and Genotoxic
compounds in PDS plants;

Pawne

- Installed large capacity filtration unit and peristaltic pump for quicker
filtration.

6. Foreign Exchange Earnings and Outgo

During the year, foreign exchange earnings were Rs. 3.8 billion as against
outgo of Rs. 1.8 billion.

II. Group Coming within the Definition of Group' as Defined in Monopolies
and Restrictive Trade Practices Act, 1969 (MRTP)

The persons and entities which constitute the Group coming within the
definition of group' as defined in MRTP which exercises, or is established
to be in a position to exercise, control, directly or indirectly, over the
Company, include the following:

- Mr. Ajay G. Piramal

- Dr. (Mrs.) Swati A. Piramal

- Mrs. Lalita G. Piramal

- Ms. Nandini Piramal

- Mr. Anand Piramal

- Adelwise Investments Pvt. Ltd.

- Ajay G. Piramal (HUT)

- Akshar Fincom Pvt. Ltd.

- Alpex Holdings Pvt. Ltd.

- Alpex International Ltd.

- Alpex Power Pvt. Ltd.

- BMK Laboratories Pvt. Ltd.

- Cavaal Fininvest Pvt. Ltd.

- Glass Engineers Pvt. Ltd.

- Gopikisan Piramal Pvt. Ltd.

- Gopikisan Piramal (HUT)

- INDIAREIT Fund Advisors Pvt. Ltd.

- India Venture Advisors Pvt. Ltd.

- Nandini Piramal Investments Pvt. Ltd.

- Nicholas Piramal Pharma Pvt. Ltd.

- Paramount Pharma Pvt. Ltd.

- PEL Management Services Pvt. Ltd.

- PGL Holdings Pvt. Ltd.

- PHL Fininvest Pvt. Ltd.

- PHL Holdings Pvt. Ltd.

- Piramal Capital Pvt. Ltd.

- Piramal Diagnostic Services Pvt. Ltd.

- Piramal Enterprises Ltd.

- Piramal International Pvt. Ltd.

- Piramal Management Services Pvt. Ltd.

- Piramal Pharmaceutical Development Services Pvt. Ltd.

- Piramal Texturising Pvt. Ltd

- Piramal Water Pvt. Ltd.

- Propiedades Realties Pvt. Ltd.

- Savoy Finance & Investment Pvt. Ltd.

- The Ajay G. Piramal Foundation

- The Sri Gopikrishna Trust

- The Sri Govinda Trust

- The Sri Hari Trust

- The Sri Krishna Trust

- The Swastik Safe Deposit & Investments Ltd.

- Vulcan Investments Pvt. Ltd.

- Piramal Glass Ltd.

- Piramal Life Sciences Ltd.

The above disclosure has been made, inter-alia, for the purpose of
Regulation 3 (1) (e) of SEBI (Substantial Acquisitions of Shares and
Takeovers) Regulations, 1997.

III. Disclosures Regarding Stock Options

Pursuant to the applicable requirements, if any, of the Securities and
Exchange Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 ('the SEBI Guidelines'), following
disclosures are made in connection with the ESOP Scheme of the Company, for
Options granted to the Company's Employees for the financial year ended
31st March, 2010.

Details Disclosures

(i) Options Granted for FY2010 4,15,300 Options

(ii) Pricing Formula The option price is determined by the
Trustees of the Piramal Healthcare
Limited Senior Employees Stock Option
Scheme (ESOP Trust') and is subject
to a limit not exceeding the higher of:

(a) market price on the date of grant;
or
(b) average of the price prevailing
for the type of share or other security
in respect of which the option is
granted during the 3 (three) months
immediately preceding the date on which
the option is offered to the Employee;
or
(c) the issue price of any such shares
or securities if the same have been
issued within three months prior to the
option.
Options granted during the financial
year ended 31st March 2010, were at
an exercise price of Rs.125 per share
which was approved by the Trustees of
the ESOP Trust, taking into
consideration several factors.

(iii) Options Vested during Options Relating to Fin Yr
FY2010 Nil FY-06
1,73,913 FY-07
Nil FY-08
1,00,650 FY-09
Nil FY-10

(iv) Options Exercised during Options Relating to Fin Yr
FY2010 80,270 FY-06
1,56,561 FY-07
1,20,350 FY-08
73,800 FY-09
Nil FY-10

(v) Total number of shares Same as Options exercised, as each
arising as a result of Option entitles the holder thereof
exercise of options to 1 equity share.

(vi) Options Lapsed Options Relating to Fin Yr
22,255 FY-06
62,441 FY-07
82,825 FY-08
8,550 FY-09
Nil FY-10

(vii) Variation of terms of None
Options

(viii) Total number of Options Options Relating to Fin Yr
in force 17,937 FY-06
39,430 FY-07
1,64,050 FY-08
2,77,050 FY-09
4,15,300 FY-10

(ix) Employee-wise details of
options granted

- Senior managerial personnel All Stock Options that have been granted
by the Company as aforesaid, have been
granted to senior managerial personnel.

- Employees who receives a grant The following employees have received
in any one year of option a grant amounting to 5% or more of
amounting to 5% or more of Options granted during FY10:
options granted during that
year 1. Mr. N. Santhanam
Executive Director & Chief Operating
Officer

2. Mr. Rajesh Laddha
Chief Financial Officer

- Identified employees who were None
granted options during any one
year equal to or exceeding 1%
of the issued capital (excluding
outstanding warrants and
conversions) of the Company
at the time of grant.

Note:

Since the PHL ESOP Scheme is implemented by the ESOP Trust and the shares
issued by the ESOP Trust against exercise of stock options are those that
have been acquired by the ESOP Trust from existing shareholders and not
fresh shares issued by the Company, there will not be any increase in the
share capital of the Company, nor will there be any impact on the Earnings
Per Share or other ratios relating to share capital as a result of such
exercise of Stock Options.

MANAGEMENT DISCUSSION AND ANALYSIS

FY2010: (consolidated) at a glance

Summary - consolidated:

Total Operating Income : Rs. 36.7 billion

EBIDTA : Rs. 7.4 billion

Net Profit : Rs. 4.8 billion

Gross margins (sales less
material costs) : From 62.4% to 61.9% in FY2010

R&D spend : From 2.6% to 1.9% in FY2010

EBIDTA Margin : From 17.9% to 20.2% in FY2010

PAT : From 9.6% to 13.1% in FY2010

Revenue and Profits - consolidated:

Total Operating Income growth : 11.9%

Healthcare Solutions sales growth : 24.6%

Pharma Solutions sales growth : (16.6)%

Piramal Critical Care sales : 149.0%
growth

EBIDTA growth : 25.9%

Net Profit growth : 52.4%

Operations highlights - consolidated:

* Healthcare Solutions:

- Market Share expanded from 4.0% in FY2009 to 4.2% in FY2010 (ORG IMS MAT
March 2010).

- Field force of 4,103 people; 19 Marketing Divisions, 11 Specialist

Divisions.

- 32 new products & line extensions launched, new products (launched during
the last 24 months) form 7.6% of sales.

- Acquired 'I-Pill' brand from Cipla.

* Pharma Solutions:

- Renewed the remaining contract with Pfizer.

- 5 out of the top-10 companies visited Ahmedabad site and 4 have awarded
contracts.

- Pithampur site audited by USFDA without any 483s, Morpeth site inspected
by USFDA without any 483s.

* Piramal Critical Care:

- Production increased at Bethleham facility.
- Haemaccel suppy started from Baddi.
- Reduced manufacturing cost significantly.

Financial highlights - consolidated

Year

Particulars FY2010 FY2009 Growth
Rs. Million Rs. Million %

Total Operating Income 36,710.5 32,811.0 11.9
EBIDTA 7,409.7 5,887.3 25.9
(%) 20.2 17.9 -
Interest (Net) 916.4 838.0 9.4
Depreciation 1,426.5 1,195.7 19.3
PBT before exceptional items 5,066.8 3,853.6 31.5
PAT 4,819.0 3,162.5 52.4
EPS Rs. (Basic) 23.1 15.1 52.4
EPS Rs. before exceptional items 23.4 17.3 35.2

Particulars FY2010 FY2009

Debt / Equity ratio 0.77 1.02

ROLE % 21.2 19.0

RONW % 28.6 24.0

EVA (annualized) (Rs. million) 2,325.3 1,414.8

Net Sales / NFA ratio 1.7 1.6

Inventory (days*) 46 53

Receivables (days*) 44 53

Note: * Days have been worked on the basis of gross sales and also includes
other operating income and exclude sales tax.

Review of the year ended 31 March 2010: (Consolidated)

The operating results discussion in the Management Discussion and Analysis
refers to Consolidated Financial Statements, unless stated otherwise.

For the year ended 31 March 2010, Total Operating Income grew by 11.9% to
Rs. 36.7 billion compared with FY2009 total operating income of Rs. 32.8
billion.

Earnings Before Interest, Depreciation and Tax (EBIDTA) grew by 25.9% to
Rs. 7.4 billion, against Rs. 5.9 billion for FY2009. The EBIDTA margin was
also higher at 20.2% compared to 17.9% for FY2009.

Net Interest increased by 9.4% to Rs. 916.4 million, compared with Rs.838.0
million in FY2009. Total Debt as on 31 March 2010 was Rs. 12.9 billion,
compared to Rs. 13.4 billion for FY2009. Debt/Equity ratio was 0.77 in
FY2010, compared to 1.02 in FY2009.

Depreciation for the year was Rs. 1.4 billion compared to Rs. 1.2 billion
in FY2009. The higher depreciation is on account of full year impact of
acquired assets of Minrad International Inc.

Income Tax for FY2010 was Rs. 180.3 million, compared with Rs. 219.4
million in FY2009.

Profit after Tax grew by 52.4% to Rs. 4.8 billion against Rs. 3.2 billion
in FY2009.

Earnings Per Share for the year grew by 52.4% to Rs. 23.1 as compared to
Rs. 15.1 in FY2009

Net Sales analysis (Consolidated):

PHEs Healthcare Solutions business grew by 24.6% to reach Rs. 20.0 billion.
Sales from Pharma Solutions business were Rs. 8.8 billion as compared to
Rs. 10.6 billion for FY2009. Due to consolidation of Minrad revenues, the
Critical Care segment grew by 149.0% to Rs. 3.3 billion as compared to
Rs.1.3 billion in FY2009.

The break-up of aggregate Total Operating Income is as under:

Rs. million

Total Operating Income % Year ended
break-up sales 31-Mar-2010 31-Mar-2009 % Growth

1. Healthcare Solutions 54.5 20,002.3 16,048.9 24.6

2. Pharma Solutions 24.1 8,849.9 10,606.5 (16.6)

From Assets in India 10.2 3,758.8 3,925.1 (4.2)

From Assets outside India 13.9 5,091.1 6,681.3 (23.8)

3. Piramal Critical Care 8.9 3,276.7 1,316.0 149.0

4. Piramal Diagnostic
Services Limited 5.6 2,064.3 1,689.6 22.2

5. Others 6.9 2,517.4 3,150.1 (20.1)

Total 100 36,710.5 32,811.0 11.9

Healthcare Solutions (Domestic Branded Formulations)

Market commentary & Industry outlook:

The domestic pharmaceutical industry continued to witness strong growth
momentum. Led by strong penetration into tier II/III cities, increased
number of new product launches and increase in field-force strength, the
market grew by a robust 17.7% (ORG IMS MAT March 2010). Indian
Pharmaceutical market has become increasingly attractive for large
multinational pharmaceutical companies as they aggressively pursue growth
opportunities in the emerging markets.

Piramal Healthcare's consolidated formulations performance:

During the year, PHI:s domestic branded formulations grew 24.6% in
aggregate terms to Rs. 20.0 billion against Rs. 16.0 billion for FY2009.
The performance led by high growth in OTC, Anti-infective, Nutritionals,
Anti-Diabetic and Respiratory.

Formulations sales analysis:

Therapy area analysis

Rs. Million

Company financials year ended ORG-IMS
MAT-Mar. 10
Therapeutic Sales Wt 31-Mar-2010 31-Mar-2009 Growth Market
area
(%) (%) Growth(%)


1. Respiratory 17.4 3,481.1 2,833.2 22.9 21.0

2. Anti-Infective 17.6 3,520.7 2,557.8 37.6 15.0

3. CVS 11.8 2,364.7 2,055.9 15.0 19.9

4. CNS 10.1 2,024.4 1,684.8 20.2 20.3

5. Nutritionals 7.1 1,426.4 1,081.7 31.9 15.2

6. Biotek 1.4 273.3 275.8 (0.9) -

7. Anti-Diabetic 6.5 1,295.3 1,021.2 26.8 24.0

8. Gastro-intestinal 4.5 895.4 768.1 16.6 15.9

9. Dermatalogy 3.6 728.9 587.9 24.0 18.7

10. NSAIDs 4.3 869.7 736.3 18.1 17.3

11. OTC 6.2 1,245.4 759.0 64.1 -

12. Others 6.8 1,353.0 1,206.7 12.1 -

13. Opthalmology 2.6 524.1 480.3 9.1 16.7

Total 100 20,002.3 16,048.9 24.6 17.7

Note:

Market data source: ORG-IMS, no similar market data available for Biotek
segment.

Ranked No. 1 in new product launches:

During the year Piramal Healthcare grew by 24.6% against industry growth of
17.7%. During the year, Piramal Healthcare launched 32 new products and has
been ranked no. 1 in the Indian Pharmaceutical Industry in terms of sales
from new products. The revenues from new products launches have increased
from 4.4% in FY2008 to 7.6% in FY20 10. The Company has been ranked no. 3
in the Indian Pharmaceutical market for Q4FY2010 as per ORG-IMS.

Acquisition of I-pill brand:

During the year we acquired 'I-pill' brand of Cipla for an aggregate
consideration of Rs. 1,010.3 million. I-pill is an emergency contraceptive
pill used to prevent unplanned pregnancy and is available over the counter
at local chemists. The acquisition of I-pill strengthens Piramal's over the
counter (OTC) portfolio which has strong consumer brands such as Lacto
Calamine skin care range, Supractiv Complete, Saridon and Polycrol antacid.
As per ORG-IMS, I-pill features in the top-300 products in the Indian
pharmaceutical industry.

Piramal Knowledge Academy:

Last year we launched Piramal Knowledge Academy' with the objective of
sharing and spreading the latest scientific knowledge. Adhering to our core
objective, during the year we have taken several initiatives to create a
platform for Doctor engagement. It's a virtual knowledge centre to serve as
a 24 x 7 on-demand resource center for physicians accessible through the
web, mobile, helpline. This also builds a peer to peer collaboration
platform. Further, we have collaborated with leading institutions like BMJ,
Joslin, John Hopkins, NUS which has enabled us to develop thought
leadership programmes in strategic therapeutic areas.

Portfolio performance: Joint Ventures & Subsidiaries

Allergan India Limited (AIL):

AIL is a 51:49 Joint Venture between Allergan Inc., USA and Piramal
Healthcare Limited. Total Operating Income of AIL grew by 8.6% to Rs. 1.1
billion (FY2009 Total Operating Income: Rs. 1.0 billion). The PBIDT for
FY2010 was up by 8.5% to Rs. 349.7 million as compared to Rs. 322.3 million
in FY2009. Profit after tax for FY2010 was up by 15.9% to Rs. 220.6 million
as compared to Rs. 190.3 million for FY2009.

Core Brand Analysis:

The sale from our top-10 brands was 26.4% of the Healthcare Solutions sales
and that from our top-30 brands was 49.3%. The sales from Lifestyle segment
(which include therapy areas of CVS, CNS, Anti-diabetic and Biotek)
contributed to 29.5% of the total Healthcare Solutions.

Brands portfolio expansion:

New Products launch:

Piramal Healthcare launched a total of 32 new products (including
extensions) during FY2010. Sales from new products launched during the past
24 months were Rs. 1.5 billion during the year.

DPCO:

Products under the Drug Price Control Order (DPCO) contributed 11.4% of
Healthcare Solutions sales in FY2010 as compared to 13.0% in FY2009.

Field Force (standalone):

During the year, we have increased our field force from 3,984 people to
4,103 people. We are continuously investing in our fieldforce to achieve
our objective of market penetration. Piramal Healthcare now has a total of
19 Divisions, out of which 11 focus on specific therapies.

No. of people

Formulations Divisions TA Focus 31 March 2010 31 March 2009

I. Multi-specialty &
Institutional

1. General Medicine Respiratory/Pediatrics 487 504

2. Multispecialty General Medicine 253 266

3. Acute Care General Medicine 313 307

4. Multi Therapy General Medicine 359 355

5. Pain Management General Medicine/Pain
Management 304 310

6. Trade Management Trade Management 190 193

7. Nepal 25 21

8. Corporate Hospitals General Medicines 17 -

SUB-TOTAL 1,948 1,956

II. Dedicated

9. Cardiac Cardiovascular 289 251

10. Diabetes Diabetology 337 307

11. Biotek Nephrology/Oncology 29 26

12. Critical
Cardiology Cardiovascular 188 219

13. Cardio - Diabeto Cardio-Diabetes 230 219

14. Consumer Products OTC 234 200

15. Neuro-Psychiatry Neuro-Psychiatry 214 219

16. Derma Dermatology/Gynaecology 186 171

17. Ortho Orthopaedic 347 337

18. Institutional Sales Critical Care/
Anaesthesiology 9 9

19. CNS CNS 92 70

SUB-TOTAL 2,155 2,028

TOTAL 4,103 3,984

Launch of new division catering to corporate hospitals:

The rapid growth of corporate hospitals has presented a new segment of
growth for pharmaceutical companies. Hence we have launched a new division
with 17 people catering to Corporate Hospitals. This team will build
relationships with key stakeholders in 90 hospitals across 8 cities.

Pharma Solutions (Custom Manufacturing)

Market commentary:

The demand in the pharmaceutical outsourcing market continued to be soft.
Due to reduction in inventory level across many large multinational
pharmaceutical companies, the industry struggled to grow for most parts of
FY2010. However, towards the end of the year, one could see a definite
recovery in the business environment. The inventory de-stocking phenomena
is coming to an end. The underlying rationale for outsourcing is now more
relevant now than ever before, hence over a medium term we see attractive
growth opportunities in this business.

Piramal Healthcare's performance:

In March 2009, we closed down our manufacturing facility at Huddersfield,
U.K. As a result, sales from the Pharma Solutions business de-grew by 16.6%
to Rs. 8.8 billion, as compared to Rs. 10.6 billion in FY2009. The revenues
from Indian assets were Rs. 3.8 billion compared to Rs. 3.9 billion in
FY2009. We are seeing increased activity across all our sites in India.

Renewal of Pfizer contract at Morpeth site:

We have renewed the remaining set of manufacturing contracts with Pfizer
that were due to expire in FY2010. The contract has been renewed
indefinitely and Pfizer has expanded volumes from this site.

Scale-up of non-Pfizer revenues at Morpeth:

Over the last two years we have build a robust clinical trial packaging and
formulation development business. This now contributes to around 15% of
Morpeth revenues.

Commencement of revenues from our Early phase formulation development
facility at Ahmedabad:

During FY2010, we have made progress at our Ahmedabad site. Of the top-10
Global Pharmaceutical companies, 5 have conducted audits, 4 have awarded
projects and 2 are already sourcing clinical supplies from the site.

New contract signed from Grangemouth facility:

At Grangemouth, U.K. facility, we are working on 3 of the 4 most
significant antibody-drug conjugate platforms and therefore working with
the top 11 out of 19 large biotech companies. During FY2010, we have
secured a new contract from one of the leading antibody-drug conjugates
Company.

Audits Done/Awards Won:

* USFDA inspection at Morpeth with zero 483s, first time in site's 40 year
history

* USFDA audit at Pithampur in April 2009 without any 483s

* UK-MHRA audit in January 2010 at Digwal

* UK-MHRA audit at Pithampur in April 2009 with no critical non-compliances

* Awarded Platinum award in Economic Times India Manufacturing Excellence
Awards (IMEA) - 2009, survey conducted by Frost & Sullivan at Pithampur

* Golden award of in the Asia Manufacturing Excellence Award (AMEA) in 2009
at Digwal

* CII-National award for Energy efficient operations in 2009 at Digwal

Piramal Critical Care Business

During the year, we have completely integrated the operations of Minrad
International Inc. and RxElite. As a result, sales from Piramal Critical
Care grew by 149.0% to Rs. 3.3 billion against to Rs. 1.3 billion for
FY2009. We have increased production capabilities at our Bethleham facility
significantly with improved operational efficiencies.

Increased market share in US for Sevoflurane: We have increased market
share for Sevoflurane in the US market from 4.7% to 17.8% in volume terms.

Scale up achieved in other markets for Sevoflurane:

During the year we made significant inroads in private market segments in
Latin America, South East Asia & Africa for Sevoflurane. We successfully
managed to improve price realisation in ROW markets. Further, we have
completed dossier fillings for 28 European Union countries for Sevoflurane
and also have received the first Sevoflurane registration in MENA region.

Significant improvement in manufacturing:

During the year, we have more than doubled our production from Bethleham
facility in US. We have also changed some of the sourcing arrangements
which have resulted in significant cost savings.

Commencement of Haemaccel supplies from Baddi:

Following our acquisition of blood plasma product - Haemmacel from
PlasmaSelect AG, Germany, we have now started supply of Haemaccel from our
Baddi facility.

Allied Businesses

Diagnostic Services business:

During the year we focused on consolidation of business which was built
inorganically over the past several years. The focus for the year was on
improving processes and systems. Total Operating Income of the business
grew by 22.2% from Rs. 1.7 billion in FY2009 to Rs. 2.1 billion in FY2010.
Operating Profit for the year was up by 21.9% to Rs. 377.4 million from
Rs.309.6 million in FY2009. Piramal diagnostic has 94 laboratories across
58 locations in India.

Human Resources

The Company continues to focus on core values of Knowledge, Action and Care
for employee. The relationship with all employees in the Company continues
to be core. In recent year we have started numerous initiatives, which will
enhance our ability to attract & retain high caliber employees and enable
us to evaluate our potential & talent pool:

Bandhan:

Last year we started Bandhan - our journey of Employee Engagement. During
this period, our consistent effort to nurture a culture of engagement has
gained momentum. Now, in the second year, with the Bandhan Survey' we have
seen a commendable participation and our engagement levels have moved up
significantly.

PACE:

Piramal Group's value of 'Care' includes its continuing commitment to the
capability building of its employees for sustained superior performance and
has resulted in a series of structured management development programmes.
The PACE movement was a development initiative of the highest quality. It
was designed and aligned to our Vision, strategy, philosophy and core
values. The PACE programme was oriented towards the development needs of
the junior level employees / young talent.

eXplore is PHEs web enabled e-Recruitment solution. It is equipped to map
the entire recruiting process to a single, integrated solution in HR. It
automates the business process by efficient resume management and ensures
paperless workflow during the recruitment process. Since the launch of
eXplore, we now have a strong database of more than 32,500 resumes.

evolve is the e-Performance Management System for PHL. evolve is not just
goal setting. It's about gaining deep knowledge of our talent base so that
our action, enables us to take care of our performing assets. evolve has
helped make our PMS more efficient and transparent. We have had our
performance reviews for all corporate divisions and few locations during
the year through evolve and for the first time the performance will be
evaluated leading to final rating through evolve.

'Parichay' - the Employee's Information Portal. Parichay is an on-line
application, which acts as a multipurpose utility for employees of Piramal
Healthcare across all locations in India. All the HR processes like eRRS,
COP, eXplore, evolve, eL&A are now available under a one stop shop
Parichay. The application has been further enhance to include additional
features on-line salary & audit slips.

Career Opportunity Program (C.O.P):

The Career Opportunity Program was conceptualized to provide a platform to
give our employees opportunities to benefit cross-functional, inter &
intra-location and inter-intra-business movements across PHL globally.
Since the launch of C.O.P in July 2007, 83 employees have already moved
across Businesses in Healthcare Solutions, Pharma Solutions, R&D and
Corporate functions across various geographies. Through C.O.P, PHL has been
able to retain good talent and provide new opportunities for employees
within the organization itself.

During the period under review, total manpower decreased by 170 people to
7,987 from 8,157 in FY2009, while aggregate field force increased to 4,103
from 3,984.

Function 31-March-2010 31-March-2009 +/(-)

Piramal Healthcare Limited

a. Field 4,103 3,984 119

b. R&D 86 143 (57)

c. Others 3,122 3,270 (148)

Total PHL standalone manpower 7,311 7,397 (86)

Piramal Healthcare UK Ltd. 400 485 (85)

Piramal Healthcare Canada Ltd. 124 145 (21)

Piramal Healthcare Inc. 152 130 22

Total 7,987 8,157 (170)

Risks to Piramal Healthcare's Businesses:

Product risk:

Any product failure would create significant liability and adversely affect
our company.

New Drug Price Control Policy:

The Government of India is considering implementation of a new drug policy,
which would considerably expand purview of price-control over drugs. Price
control will adversely affect the profitability of our company.

Client concentration risk and Revenue volatility in Pharma Solutions
business:

Since our business model is based on contracts with customers any set back
for the client company product will adversely affect our revenues and hence
profits as well.

Foreign Exchange Risk:

We have significant revenues in foreign currency, particularly in U.S.
Dollars. We also have operations outside India in countries like U.K., U.S.
and Canada. Through these companies, we are exposed to risk arising out of
foreign exchange rate changes.

Disclaimer:

Certain statements included above may be forward looking and would involve
a number of risks, uncertainties and other factors that could cause actual
results to differ materially from those suggested by the forward-looking
statements.

Income Statement (Consolidated)

Rs. in Million

FY2010 FY2009 % Growth
Total Income

Total Operating Income

- Gross 36,813.0 33,116.1 11.2

- Net 36,244.7 32,448.1 11.7

Other Operating Income 465.8 362.9 28.4

Total 36,710.5 32,811.0 11.9

EBITDA 7,409.7 5,887.3 25.9

EBITDA as a % of Total Operating 20.2% 17.9% -
Income

Interest (net) 916.4 838.0 9.4

Depreciation 1,426.5 1,195.7 19.3

Exceptional Items 69.1 446.1 -

Profit Before Tax 4,997.7 3,407.5 46.7

Tax

- Current 910.8 451.7 -

- Mat Credit Entitlement (572.8) (320.4) -

- Deferred (157.7) (171.2) -

- Fringe Benefits - 259.3 -

Total Tax 180.3 219.4 (17.8)

Profit After Minority Interest 4,819.0 3,162.5 52.4

Earnings Per Share (Rs.)
(Face value Rs. 2/-) 23.1 15.1 52.4

Earnings Per Share before
exceptional items (net of tax) (Rs.) 23.4 17.3 35.2

Net Sales Consolidated Total Operating Income registered a growth of 11.9%
over the previous year. Detailed analysis of Net Sales is given earlier in
the report.

Earnings Before Interest, Depreciation and Tax (EBIDTA)

EBITDA for the year increased from Rs. 5.9 billion to Rs. 7.4 billion
registering a growth of 25.9%. The margins as a percentage of total income
were higher at 20.2% as compared to 17.9% for FY2009.

Net Interest Net Interest was up by 9.4% from Rs. 838.0 million to Rs.916.4
million in FY2010.

Depreciation Depreciation for FY2010 was higher at Rs. 1.4 billion compared
to Rs. 1.2 billion for FY2009. The full year depreciation impact of
acquired assets of Minrad International Inc. resulted in increased
depreciation.

Exceptional Items Exceptional Items during the year include mainly
additional restructuring expenses for Huddersfiled facility and payments
made under mutually agreed release program (VRS) for the company and its
subsidiaries.

Taxation Current tax rate was lower at 3.6% in FY2010 compared to 6.4%
including Fringe Benefit Tax in FY2009 due to one time creation of deferred
tax assets at the UK subsidiary.

Profit After Minority Interest Profit After Minority Interest increased by
52.4% to Rs. 4.8 billion in FY2010 against Rs. 3.2 billion in FY2009.

Earning Per Share (EPS)

FPS for the year was higher at Rs. 23.1 against Rs. 15.1 for FY2009
registering growth of 52.4%.

Balance Sheet (Consolidated)

Rs. Million

Particulars As at March 31, 2010 As at March 31, 2009

Liabilities

Share Capital 418.0 418.0

Reserves & Surplus 16,430.9 12,752.7

Minority Interest 0.0 74.5

Loan Funds 12,949.6 13,390.8

Deferred Tax Liability (Net) 567.8 725.5

Total Liabilities 30,366.3 27,361.5

Assets

Net Fixed Assets 21,130.1 20,390.9

Investments 325.5 278.3

Net Working Capital 8,910.7 6,692.3

Total Assets 30,366.3 27,361.5

Loan Funds

During the year, loan funds decreased by Rs. 441.2 million through internal
cash flows.

Fixed Assets

During the year, PHFs gross fixed assets increased by Rs. 1.5 billion. The
major items of capital expenditure were as under:

Details Rs. Million

1. Healthcare Solutions - assets 166.7

2. I-Pill brand acquisition from Cipla 1,010.3

3. Pharma Solutions - assets (354.6)

4. Piramal Critical Care - assets 503.6

5. Pathlabs 43.5

6. Other fixed assets additions 108.3

Total 1,477.8

Note - There is net reduction in Pharma Solutions assets as a result of the
closure of our facility at Huddersfield in U.K.

Net Working Capital (Consolidated)

Rs. Million

Particulars As at March 31, 2010 As at March 31, 2009

Raw/Packing Materials 1,499.3 1,879.2

No. of days 15 20

Finished Goods 1,707.1 1,447.5

No. of days 17 16

Receivables 4,529.5 4,866.3

No. of days 44 53

Net Working Capital 8,910.7 6,692.3

No. of days 87 73

Notes:

1. All the above ratios have been calculated on the basis of Gross Sales
(i.e. net sales + excise duty) and it also includes other operating income,
but it excludes sales tax. The previous year's numbers have been restated
accordingly.

2. The Raw/Packing materials days have come down from 20 in FY2009 to 15 in
FY2010 due to lower sales in our Pharma Solutions business which has higher
Raw/Packing Material requirements.

Return on Capital Employed (ROCS) (Consolidated)

Rs. Million

Particulars As at March 31, 2010 As at March 31, 2009

Net Fixed Assets* 20,760.5 16,488.2

Net Current Assets* 7,154.9 5,433.3

Capital Employed*
(excluding investments) 27,915.4 21,921.5

PBIT (Excluding Dividend and
Profit/Loss on sale of assets) 5,926.3 4,175.9

ROLE (%) 21.2 19.0

* Average

Return on Capital Employed increased to 21.2% from 19.0% in the last year.

Economic Value Added (EVA) (Consolidated)

Rs. Million

Particulars As at March 31, 2010 As at March 31, 2009

PAT for the Year 4,819.0 3,162.5

Add: Exceptional Items
(net of tax) 66.6 451.3

Add: Interest (net of tax) 883.3 847.8

Total (1) 5,768.9 4,461.6

Capital Employed (2) 28,217.3 22,386.9

Gearing % 43 50

Average Rate of Interest 7.0% 8.2%

Cost of Debt (post tax) 6.7% 8.2%

Cost of Equity

Long Term Govt. Bonds
(Source: Bloomberg) 7.7% 7.0%

Market Risk 15.0% 15.0%

Beta Variant (Source: Bloomberg) 0.6 0.8

Cost of Equity 16.4% 19.1%

WACC (3) 12.2% 13.6%

Cost of Capital (2x3=4) 3,443.7 3,046.9

EVA (1-4) 2,325.3 1,414.8

EVA increased to Rs. 2.3 billion in FY2010 from Rs. 1.4 billion in FY2009.