Annual Report - Torrent Pharma - 2009-2010

TORRENT PHARMACEUTICALS LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

To
The Shareholders

The Directors have the pleasure of presenting the Thirty Seventh Annual
Report of your Company together with the audited accounts for the year
ended 31st March, 2010.



FINANCIAL RESULTS

The summary of consolidated (Company and its subsidiaries) and standalone
(Company) operating results for the year and appropriation of divisible
profits is given below:
(Rs. in Crores except
per share data)
Consolidated Standalone
2009-10 2008-09 2009-10 2008-09

Sales & Operating Income 1916 1631 1449 1185

Profit Before Depreciation
Interest and Tax (PBDIT) 430 262 422 257

Less Depreciation 66 42 54 37

Less Net Interest Expense 17 19 17 20

Profit Before Exceptional
Items & Tax 347 201 351 200

Less Exceptional Items 0 9 37 9

Less Tax Expense 116 7 107 4

Net Profit for the Year 231 185 207 187

Balance brought forward 3 3 86 84

Distributable Profits 234 188 293 271

Appropriated as under:

Transfer to General Reserve 56 145 56 145

Proposed Equity Dividend 51 34 51 34

Tax on Distributed Profits 8 6 8 6

Balance Carried Forward 119 3 178 86

Earnings Per Share (Rs. per share) 27.32 21.79 24.51 22.07

Consolidated Operating Results

The consolidated sales and operating income increased to Rs. 1916.04 crores
from Rs.1630.66 crores in the previous year yielding a growth of 17.50%.
The consolidated operating profit for the year increased to Rs. 429.81
crores as against Rs. 262.24 crores in the previous year registering a
growth of 63.90%. The consolidated net profit increased to Rs. 231.20
crores from Rs. 184.37 crores in the previous year registering a growth of
25.40%. The Company has reviewed realisability of MAT credit entitlement,
recognized in earlier years. Based on the review, such MAT credit
entitlement, amounting to Rs. 52.86 crores, has been written off during the
year. Adjusted for this, the growth in consolidated net profit is 54.00%.

Standalone Operating Results

The sales and operating income increased to Rs. 1448.96 crores from
Rs.1184.89 crores in the previous year yielding a growth of 22.29%. The
operating profit for the year under review increased to Rs. 422.03 crores
as against Rs.256.75 crores in the previous year registering a growth of
64.37%. The profits after tax for the year under review increased to
Rs.207.37 crores as against Rs. 186.73 crores in the previous year
registering a growth of 11.05%. Growth in net profit adjusted for MAT
credit write off as stated above, is 39.00%.

Management Discussion and Analysis (MDA)

The detailed analysis of the operating performance of the Company for the
year, the state of affairs and the key changes in the operating environment
has been included in the Management Discussion and Analysis Section which
forms a part of the Annual Report.

APPROPRIATIONS

Dividend

The Board has recommended a dividend of Rs. 6.00 per equity share (previous
year dividend Rs. 4.00 per equity share) of fully paid up face value of
Rs.5, amounting to Rs. 50.77 crores (previous year dividend Rs. 33.84
crores). The tax on distributed profits payable on this dividend is Rs.8.43
crores (previous year Rs. 5.75 crores) making the aggregate distribution to
Rs.59.20 crores (previous year Rs. 39.60 crores). The distributed profits
are 29.00% (previous year 21.00%) of the net profits for the year. The
proposed dividend would be tax free in the hands of the shareholders.

Transfer to Reserves

The Board has recommended a transfer of Rs. 56.00 crores to the general
reserve and an amount of Rs.178.19 crores is retained in the profit and
loss account of Standalone financials.

DIRECTORS' RESPONSIBILITY STATEMENT

In terms of Section 217 (2AA) of the Companies Act, 1956, in relation to
financial statements of the Company for the year 2009-10, the Board of
Directors state that:

i. The applicable Accounting Standards have been followed in preparation of
the financial statements and there are no material departures from the said
standards;

ii. Reasonable and prudent accounting policies have been used in
preparation of the financial statements and that they have been
consistently applied and that reasonable and prudent judgments and
estimates have been made in respect of items not concluded by the year end,
so as to give a true and fair view of the state of affairs of the Company
as at 31st March, 2010 and of the profit for the year ended 31st March,
2010;

iii. Proper and sufficient care has been taken for maintenance of adequate
accounting records in accordance with the provisions of the Companies Act,
1956, for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities; and

iv. The financial statements have been prepared on a going concern basis.

SUBSIDIARIES

During the year under review, the Company incorporated two wholly owned
subsidiaries, one each at Canada and Thailand under the names of Torrent
Pharma Canada Inc. and Torrent Pharma (Thailand) Co., Ltd. respectively.
Further, the wholly owned subsidiary of the Company, Torrent Pharma GmbH
(TPG) at Germany, incorporated two subsidiaries namely Heunet Pharma GmbH
and Norispharm GmbH at Germany.

Brief review of the important subsidiaries is given below:

Heumann Pharma GmbH & Co Generica KG (Heumann), Heunet Pharma GmbH and
Norispharm GmbH at Germany

Heumann along with Heunet Pharma GmbH and Norispharm GmbH at Germany posted
revenues of Euro 41.01 million (Rs. 273.88 crores) for the financial year
2009-10 as compared with Euro 40.24 million (Rs. 261.68 crores) for the
previous year, registering a growth of 4.66% in terms of rupees. Net profit
for the year was Euro 0.48 million (Rs. 4.63 crores) as against a net
profit of Euro 2.22 million (Rs. 18.84 crores) for the previous year.
Charge on account of impairment of product licenses and increase in
employee costs due to revision in actuarial value of pension liability were
the primary reasons for lower profitability. During the year Heumann along
with its subsidiaries was successful in several tenders and the sales
toward these will flow in the coming years.

Torrent do Brasil Ltda. (TdBL), Brazil

During the year, TdBL achieved revenues of Reai 118.04 million (Rs. 300.97
crores), as compared with Reai 108.60 million (Rs. 256.79 crores) in the
previous year, registering a growth of 9.00% in Reai and 17.00% in rupees.

TdBL earned a net profit after tax of Reai 4.84 million (Rs. 18.38 crores),
as compared to a net profit after tax of Reai 2.48 million (Rs. 6.25
crores) in the previous year. The increase in the profit is primarily due
to reduction in overall spend level.

Zao Torrent Pharma (ZAO TP), Russia

During the year, ZAO TP achieved revenue of RRU 195.27 million (Rs. 30.06
crores) as compared with RRU 312.83 million (Rs. 52.69 crores) in the
previous year, registering a decrease of 42.95% in terms of rupees. Net
loss after tax for the year was at RRU 56.88 million (Rs.9.09 crores) as
against a net loss after tax of RRU 113.79 million (Rs. 19.52 crores) for
the previous year. Operations in Russia were affected by adverse economic
conditions and dampened demand resulting in the de-growth in revenues.
Torrent Pharma Inc.

(TPI), USA.

During the year, TPI earned revenues of USD 19.66 million (Rs. 93.10
crores), as compared with USD 7.13 million (Rs. 33.59 crores) in previous
year registering a growth of 177.17% in terms of rupees. Net profit for the
year was at USD 0.21 million (Rs. 0.14 crores) as against a net profit of
USD 0.22 million (Rs. 2.20 crores) for the previous year. The Company has
13 ANDA's approvals, 29 pending approvals and 28 filings under development.

Steady flow of product approvals from this pipeline is expected to sustain
growth momentum.

Torrent Pharma GmbH (TPG), Germany

During the year, TPG earned revenues of Euro 2.51 million (Rs. 16.86
crores) as compared with Euro 2.94 million (Rs. 19.09 crores) for the
previous year. Net loss for the year was at Euro 1.69 million (Rs. 11.10
crores) as against a profit of Euro 0.63 million (Rs. 4.09 crores) for the
previous year. Significant expenditure was incurred in obtaining product
registrations during 2009-10. Revenue against these will flow once the
regulatory approvals come through.

Torrent Pharma Philippines Inc. (TPPI), Philippines

During the year, TPPI earned revenues of Pesos 230.94 million (Rs. 23.18
crores) as compared with Pesos 172.23 million (Rs. 17.18 crores) for the
previous year. Net profit for the year was at Pesos 0.86 million (Rs. 0.02
crores) as against a profit of Pesos 5.81 million (Rs. 0.88 crores) for the
previous year. Laboratorios Torrent S.A. de C.V is still to start its field
promotion. Torrent Australasia Pty. Ltd, Torrent Pharma Japan Co. Ltd and
Torrent Pharma Canada Inc. are at their formative stages and have not
commenced any revenue generating activities.

CORPORATE SOCIAL RESPONSIBILITY

The Company is conscious about its social obligations and has been taking
various social and community initiative with special focus on health and
education. The Company is actively supporting the Torrent Group's
initiatives to expand the U N Mehta Institute of Cardiology and Research
Centre and to take patient care effectively.

In education field, your Company has adopted a primary school at village
Bhud, Baddi, Himachal Pradesh.

It has constructed additional class rooms and enhancing number of teachers
to ensure the quality of the education. Similar initiatives are taken at
village Indrad, Gujarat.

INSURANCE

The Company's plant, property, equipments and stocks are adequately insured
against major risks. After taking into account all the relevant factors,
including the risk benefit trade-off, the Company has consciously decided
not to take insurance cover for loss of profit under the Consequential Loss
(Fire) Policy. The Company also has appropriate liability insurance covers
particularly for product liability and clinical trials.

DIRECTORS

S.H. Bhojani and Dr. Prasanna Chandra are liable to retire by rotation at
the ensuing Annual General Meeting and being eligible have been proposed
for re-appointment. The details of their re-appointment together with
nature of their expertise in specific functional areas and names of the
companies in which they hold office as Director and/or the
Chairman/Membership of Committees of the Board, are provided in the Notice
of the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

As required by Clause 49 of the listing agreement, a separate report on
corporate governance forms part of the Annual Report. A certificate from
the statutory auditors of the Company regarding compliance of conditions of
corporate governance forms a part of this report as Annex 3.

AUDITORS

The term of appointment of statutory auditors C.C. Chokshi & Co. will
expire at the ensuing Annual General Meeting. C.C. Chokshi & Co. is a part
of network of firms of Chartered Accountants registered with The Institute
of Chartered Accountants of India (ICAI) under the Rules of Network issued
by the ICAI. Deloitte Haskins & Sells, Ahmedabad (Firm Registration No.
117365W) is a part of the Network. The Company proposes to appoint Deloitte
Haskins & Sells, Ahmedabad as its statutory auditors at the ensuing Annual
General Meeting. C.C. Chokshi & Co. has expressed their unwillingness to be
re-appointed as statutory auditors of the Company and Deloitte Haskins &
Sells, Ahmedabad has expressed their willingness to be appointed as the
statutory auditors of the Company. The Company has received a certificate
from Deloitte Haskins & Sells, Ahmedabad to the effect that the
appointment, if made at the ensuing Annual General Meeting, will be in
accordance with the limits specified in section 224(1B) of the Companies
Act, 1956. The Audit Committee in their meeting held on 6th May, 2010 has
recommended the appointment of Deloitte Haskins & Sells, Ahmedabad as
statutory auditors of the Company for the year 2010-11.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.

A statement containing the necessary information required under the
Companies (Disclosure of Particulars in the Report of Board of Directors)
Rules, 1988 is annexed to this report as Annex 1.

PARTICULARS OF EMPLOYEES

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 Annex 2. However, as permitted by section 219(1) (b)(iv) of
the Companies Act, 1956, this Annual Report is being sent to all
shareholders excluding the said Annexure. Any shareholder interested in
obtaining the particulars may obtain it by writing to the Company Secretary
at the registered office of the Company.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors appreciate the trust reposed by the medical fraternity and
patients in the Company and look forward to their continued patronage. The
Directors are also grateful and pleased to place on record their
appreciation for the excellent support, guidance and cooperation extended
by the Government of India, Government of Gujarat, Government of Himachal
Pradesh, Government of Sikkim, Gujarat Urja Vikas Nigam Ltd, Himachal
Pradesh State Electricity Board, other Central and State Government Bodies
and Authorities, Financial Institutions and Banks. The Board also expresses
its appreciation of the understanding and support extended by the
shareholders and employees of the Company.

For and on behalf of the Board

Place: Ahmedabad Sudhir Mehta
Date : 6th May, 2010 Chairman

ANNEX 1 TO DIRECTORS' REPORT

Particulars Required Under The Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988.

A. CONSERVATION OF ENERGY

(a) Energy conservation measures taken during the year

1. Replacement of Energy Efficient Dual Fuel burners, in Boilers at
Research Center resulted into approximately 40% cost saving with added
benefit in reduction of CO2 Gas emission to environment and resulted into
cost benefit of Rs. 46 lacs during the year.

2. To expand the benefits obtained last year, thyristor based automatic
power factor correction panels were installed near to unit to maintain
power factor and they are expected to yield annual rebate of Rs. 26 lacs
from UGVCL.

3. Reduction in energy consumption was achieved compared to previous year
by optimizing pump operation, auto-operation of fans, controlled usage of
lighting and reduction in water consumption which resulted into total
saving of Rs. 21 lacs.

4. The proposal made last year for reduction of consumption of energy
relating to installation of energy efficient centrifugal machine and three
units of ED 2000 Antifouling Systems were implemented during the year
resulting into substantial saving of energy.

5. Energy Management System was installed at Baddi Plant for monitoring and
controlling the power consumption in all areas. This system is used as a
diagnostic tool for identifying and solving energy problems and
appreciating opportunities for cost savings.

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

1. A 1.3 MW Gas based power generation system with heat recovery option is
proposed to be installed to meet additional power requirement of the plant,
with an investment of nearly Rs.165 lacs and is expected to give annual
saving of Rs. 34 lacs. Gas being cleaner fuel will additionally help in
protecting the environment.

2. To expand further the energy conservation benefits already obtained, it
is proposed to install Dual fired burner (Gas/FO) in other boilers
expecting substantial saving with cleaner fuel.

3. Heat recovery system is proposed to be installed for 6 and 10 Ton boiler
by installing Pressurized and Condensing Economizer with an investment of
Rs. 50 lacs and is expected to yield an annual saving of Rs. 25 lacs.

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

The above measures have helped the Company in effective and economic
consumption of electricity, fuel and reduced the energy expenses. The
specific benefits have been mentioned in the respective heads under clauses
(a) and (b) above.

(d) Particulars with respect to the conservation of energy are given below:

I. Power and Fuel Consumption*:

1. Electricity 2009-10 2008-09

a. Purchased Units (KWH in lacs) 327.09 263.54
Total Amount (Rs. in lacs) 1857.09 1478.40
Average Rate (Rs.) 5.68 5.61
b. Own generation through DG sets (KWH in lac Units) 20.64 26.81
Units generated per liter of diesel 3.69 3.68
Cost of fuel per Unit 8.19 8.91

2. Fuel Consumption

a. Furnace Oil (in lac liters) 13.75 22.54
Total Amount (Rs. in lacs) 363.41 539.72
Average Rate (Rs./liter) 26.43 23.95
b. Natural Gas
Purchased Gas in SCM 1738613 484044
Total Amount (Rs. in lacs) 266.34 120.75
Average Rate (Rs./SCM) 15.32 24.95

* For plants at Indrad, Gujarat and Baddi, H.P.

II. Consumption per unit of production:

The Company manufactures several drug formulations in different pack sizes
and bulk drugs. It is, therefore, impractical to apportion the consumption
and cost of utilities to each formulation and bulk drug.

B. TECHNOLOGY ABSORPTION

Particulars with respect to technology absorption are given below:

Research and Development (R & D)

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

The Company's R&D Centre is engaged in the discovery of New Chemical
Entities (NCEs) and is also developing new processes and suitable
formulations for known Active Pharmaceutical Ingredients (APIs) and value-
added & differentiated formulations on NDDS platforms.

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

* At the end of the year under review, 45 ANDAs and 18 DMFs filed in US and
16 in European Union (EU) and 34 new product Dossiers submitted in the EU.

* Five processes for APIs were developed and transferred to plant during
the year.

* 628 patents filed for NDDS technology, drug discovery projects and
innovative process of API & formulations for various markets and 222 have
been granted so far.

3. Future plan of action

* Drug discovery projects would be continued in focused therapeutic areas.
Building capabilities and infrastructure for Preclinical development and
clinical trials required for NCEs is being pursued aggressively.

* Efforts would continue for development of new, value added and
differentiated formulations and new innovative processes for APIs. Efforts
would also continue to explore novel technologies for formulation
development.

4. Expenditure on R & D

Particulars 2009-10
(Rs. in crores)

a. Capital expenses 10.48
b. Revenue expenses 109.07
Total (a+b) 119.55
c. Total R & D expenditure as 8.62
a percentage of turnover

Technology absorption, adaptation and innovation

1. Efforts, in brief, made towards technology absorption, adaptation and
innovation

The developed technologies and the processes were used to manufacture APIs
and formulations for commercial purpose for domestic as well as
international markets.

2. Benefits derived as a result of the above efforts, e.g. product
improvement, cost reduction, product development, import substitution, etc.

New products broadened the product basket of the Company and further
strengthened the Company's image as research-based organization.

3. Information in case of imported technology (imported during the last
five years reckoned from the beginning of the financial year).

Technology Imported Year of Whether
Import fully
absorbed

Biotransformation & Metabolism Database, 2005-06 Yes
ACD-PK & LogD software, ADME capabilities,
Multiplexing apparatus with Mass Spectrometer,
lowdensity gene expression array technology

Advanced modeling tools such as TOPKAT, 2006-07 Yes
HypoRefine software module Millar
Pressure-Volume Systems (MPVS)

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company used foreign exchange amounting to Rs.122.22 crores and earned
foreign exchange amounting to Rs. 464.25 crores during the year 2009-10 as
compared to previous year's Rs. 109.50 crores and Rs. 349.23 crores
respectively.

MANAGEMENT DISCUSSION AND ANALYSIS

TO THE SHAREHOLDERS

CAVEAT

Shareholders are cautioned that certain data and information external to
the Company is included in this section. Though these data and information
are based on sources believed to be reliable, no representation is made on
their accuracy or comprehensiveness. Further, though utmost care has been
taken to ensure that the opinions expressed by the management herein
contain their perceptions on most of the important trends having a material
impact on the Company's operations, no representation is made that the
following presents an exhaustive coverage on and of all issues related to
the same. The opinions expressed by the management may contain certain
forward-looking statements in the current scenario, which is extremely
dynamic and increasingly fraught with risks and uncertainties. Actual
results, performances, achievements or sequence of events may be materially
different from the views expressed herein. Shareholders are hence cautioned
not to place undue reliance on these statements, and are advised to conduct
their own investigation and analysis of the information contained or
referred to in this section before taking any action with regard to their
own specific objectives. Further, the discussion following herein reflects
the perceptions on major issues as on date and the opinions expressed here
are subject to change without notice. The Company undertakes no obligation
to publicly update or revise any of the opinions or forward-looking
statements expressed in this section, consequent to new information, future
events, or otherwise.

NOTE

Except stated otherwise, all figures, percentages, analysis, views and
opinions are on consolidated financial statements of Torrent
Pharmaceuticals Limited and its wholly owned subsidiaries and their
businesses (jointly referred as Torrent or Company, hereinafter). Financial
information presented in various sections of the Management Discussion and
Analysis is classified under suitable heads which may be different from the
classification reported under the Consolidated Financial Statements. Some
additional financial information is also included in this section which may
not be readily available from the Consolidated Financial Statements.

PERFORMANCE SNAPSHOT

Torrent is one of the leading pharmaceutical companies having presence in
India and global markets. The Company's revenues are mainly from
manufacture and sale of branded as well as unbranded generic pharmaceutical
products. A further break down of the revenues can be done as India
formulations (comprising branded pharmaceutical formulations sold in the
Indian market), International operations (comprising sales outside India of
branded and unbranded-generic pharmaceutical formulations) and Contract
manufacturing. Company's current international operations are focused on
five thrust areas: Brazil & Latin America, Europe, Russia & CIS countries,
North America and Rest of the World comprising, inter alia, of less
regulated markets of Africa and Asia.

During the financial year 2009-10, the Company reported revenues of
Rs.1,904 crores (excluding foreign exchange gains of Rs. 12 crores), a
growth of 17% compared with Rs. 1,631 crores in the previous financial
year.

The break up of Revenues under key segments is under:

(Rs. in crores)
Segment 2009-10 2008-09 Growth
Amount Share Amount Share %
India formulations (net
of excise duty) 726 38% 624 38% 16%
International Operations 970 51% 841 52% 15%
Contract Manufacturinq 205 11% 164 10% 25%
Others 2 0% 2 0% 16%
Total 1,904 100% 1,631 100% 17%

The India formulations segment registered growth of 17% over the previous
year on the back of improved performance from Oral Anti Diabetic and Anti
Infective portfolios.

Revenues from International Operations grew 15% on the back of growth in
Brazil (growing 18%) and ramp up of US sales. Generic business in Germany
was affected by difficult market environment with large portion of the
market moving to low margin tender based pricing and the revenues remained
flat. Revenues from Europe and Rest of the World Markets registered a
growth of 9% and 30% respectively benefiting from portfolio expansion and
consolidation in existing geographical areas. Operations in Russia & CIS
markets were affected by adverse economic conditions and dampened demand
resulting in de-growth in revenues by 35%.

Contract manufacturing income includes license fee income of Rs. 16 crores
from a multi-product/market out licensing contract signed during the
financial year 2009-10.

A. INDIA FORMULATIONS

1. Indian Pharmaceutical Market:

The India formulations market valued at Rs. 417 billion has grown at CAGR
of 14% (Source: ORG-IMS) over last 4 years. New product introductions
contributed to 44% of the sales growth while volume growth contributed to
51% of the sales growth. Growing population, increasing reach of
healthcare, rising income levels and increasing government spend on
healthcare are driving the market growth.

Indian market is witnessing gradual transition from acute diseases to
lifestyle diseases and chronic therapies like Cardiology, Neurology,
Psychiatry and Diabetes. With current demographic profile and growth
prospects of the economy, Indian Pharmaceutical market could see continuing
trend of transition towards chronic and super specialty therapies, with
acute therapies like Anti-Infectives retaining their market size.

Over the coming years, patent laws will provide an impetus to the launch of
patent protected products. The market for patented products is likely to be
concentrated in therapeutic segments like Neuro-Psychiatry, Oncology, Anti-
Infective, Gastro-Intestinal and Cardiovascular. Such products have the
potential to capture 10% of the overall market in the coming years.

However, outlook for generic products looks positive due to several
factors. The current pipeline of the generic products that are either
undergoing new process development or have been recently launched is
strong. In addition, domestic players have the opportunity to develop new
combinations and formulations of the products that are already in the
market. Generics players continue to have a wide range of options for new
generic launches from the basket of pre 1995 products.

Currently, the prices of 75 drugs are controlled as per the mandate issued
by the Drug Price Control Order, 1995 (DPCO). Currently 10% of Company's
revenues are from products covered by DPCO.

Given the above developments, the critical success factors for the pharma
companies would be differentiated product introductions, therapeutic
expansion, expanding the geographical reach by expanded sales, marketing
network and aggressive sales promotion.

2. Operating Highlights

India formulations segment registered a growth of 16% over the previous
year. The revenue growth was mainly driven by Anti Diabetic and Anti-
Infective portfolios. Top 10 brands contributed to 42% of the total India
formulation sales as against 43% during previous year. Cardiology continues
to remain the main therapeutic segment for the Company with a contribution
of about 35% of the total sales. Neuro-Psychiatry and Gastroenterology are
other key segments. The three therapeutic segments put together contribute
to over 74% of the total sales.

Break up of the Net Sales under key therapeutic segments is as under:

The Company introduced 55 new products during financial year 2009-10 as
compared to 15 products in financial year 2008-09.The growth in India
Formulations revenues based on age of the portfolio is given below:

Growth

Portfolio 2009-10 2008-09

Existing Products (other than those mentioned below) 11% 5%
New Products introduced in the previous year 1% 1%
New Products introduced in the current year 4% 1%
Total 16% 7%

During the year, as a part of its growth strategy, the Company expanded its
reach into the Tier II to VI cities and rural market through launch of a
dedicated division. During the first phase of expansion, the Company
launched its division in 5 states initially and gradually expanded to 3
more states during the financial year 2009-10. The Company plans to have
pan India presence by end of financial year 2010-11.

The Company has moved to expand its therapeutic reach by entering into
Gynecology segment having a market size of Rs. 2,404 crores, growing at 18%
(Source: ORG-IMS Mat Mar 10). Initially the Company will be mainly focusing
on regular Obstetrics and Gynecology market and has plans to penetrate into
infertility market. To begin with the Company has launched 8 products and
plans to launch another 11 products by financial year 2010-11 in phased
manner. With total 19 products in basket, the Company would cover 40% of
the regular Obstetrics and Gynecology market.

3. Positioning of Torrent in Indian Pharmaceutical Market

Torrent is one of the leading players in Indian Pharmaceuticals industry
maintaining leadership position in some of the key chronic therapies of
Cardiovascular and Neuro-Psychiatry. The Company is ranked No. 2 in
Cardiovascular segment and No. 3 in Neuro-Psychiatry therapies. The graph
below sets forth the market share movement of the Company in the key
therapeutic segments of Cardiovascular and Neuro-Psychiatry over a period
of 5 years.

As per ORG-IMS data set for the financial year 2009-10, the Company
registered a growth of 17% (previous year 7%) against a market growth of
18% (previous year 10%). The Company is ranked 16th by turnover in the
domestic market, has 6 brands in top 300 brands and has 37 brands in
leadership positions in their respective molecule segments.

4. Opportunities and Outlook

The Indian pharmaceutical industry is going through structural change with
lesser number of products available for introduction due to patent regime
effective from 2005 and increased focus of MNCs in Indian Pharmaceutical
Market on account of block buster products going off patent in developed
markets. The business environment will continue to remain challenging
characterised by intense competition, margin pressures and regulatory
interventions. These changes pose many challenges and opportunities to
companies operating in this environment. In this context, the Company has
identified several growth initiatives, part of which has since been rolled
out as detailed below:

Following are the areas where action has been initiated, the results of
which are expected to flow in the foreseeable future:

* Geographical expansion to cover Tier II to VI cities

* Increasing sales force to expand doctor coverage in metros

* Consolidating recent entry in Gynecology

* Accelerate growth through increasing doctor coverage, product exposure to
new medical specialties, increased product focus, territorial expansion,
new product introductions, new therapeutic areas and building strong sales
operations systems.

Further growth areas are:

* Emerging market segments like organized buyer groups, pharmacy chains and
corporate hospitals.

* Leverage on the strong franchise, specialized sales force and
distribution built in the domestic market by in-licensing of molecules.

* Product and assets acquisition opportunities.

* Use of information technology for efficient customer servicing and
improved sales productivity.

B. INTERNATIONAL OPERATIONS

Global Generics Market continues to present a positive outlook and growth
opportunities based on i) increasing health cost burden in developed
economies compelling governments to encourage genericisation ii)
approximately US$142 billion drugs to lose patent protections over next 5
years iii) rising income levels and improving health care coverage in the
emerging economies to provide significant growth opportunities.

Global Pharmaceutical Market grew 7% in 2009 to US$ 837 billion and is
expected to grow at 5% to 8% over a period of 5 years. Global Generic
Pharmaceutical Market is valued at approximately US$ 90 billion is expected
to grow at a faster rate of 8-9% over next 5 years. U.S is the largest
Generic Market which put together with Europe and Japan account for 60% of
the total global Generic Pharmaceutical Market. The growth of generic in
these markets is driven by patent expiries, increase in generic penetration
and

Government support to genericisation. Growth in emerging markets is even
higher and is driven by increasing domestic consumptions on the back of

high economic growth, strengthening of healthcare infrastructure and
greater healthcare awareness. Emerging markets like Latin America, Eastern
European countries, China, India and Russia are growing at double digit
rates. These markets, predominantly in the nature of Branded Generic
Formulations, offer attractive pricing whereas competition is less
intensive. Indian companies have been increasingly focusing on global
markets with a view to expand their geographical reach.

International generic opportunity continues to be a growth engine for the
Company. The Company is well positioned to capitalize on these growth
opportunities with strong development pipeline, low R&D and manufacturing
cost and sound marketing reach and capabilities built over a period of
time. Blockbuster drugs going off patent continue to offer significant
opportunity.

The Company has witnessed 5 year revenue CAGR of over 47%, in the revenues

from its International Operations (including the sales of Heumann Pharma
GmbH & Co. Generica KG (Heumann) acquired in 2005) which now accounts for
more than 50% of the total revenues. During the year the Company has
entered into product out-licensing and supply contracts with global pharma
players to exploit its product portfolio developed for regulated/semi
regulated markets. The supplies against these contracts are expected to
commence over next 2-3 years.

1. Brazilian Branded Formulation

Brazilian market is one of the biggest markets in emerging economies with a
market size of USD 12 billion, innovators controlling nearly half of the
market and growing at a 5 year CAGR of 15% (Source: IMS).

Torrent is one of the leading Indian branded generic players in Brazilian
market covering a market of USD 1 billion (Source: IMS) enjoying a market
share of 7% in the covered market. During the year the Brazil operations
registered revenues of Rs. 308 crores growing at 18%. Part of this growth
is attributable to favorable exchange rates. Growth in Reai terms is 9%.
The covered market growing at 14% is indicative of the growth potential out
of the existing portfolio. The Company has 43 products under approval and 5
products are expected to be approved by second half of the coming year. The
Company has a basket of 27 products with 12 products in the Cardio Vascular
(CV) segment, 11 products in the Central Nervous System (CNS) segment and 4
products in the Oral Anti Diabetic segment. The Company also has a strong
pipeline of 40 products in the above therapies to augment future growth.

2. US

US market is the largest generic market in the world. The generic market
grew by 7% to US$ 34 billion in 2009. New healthcare reforms recently
introduced in the US, are aimed at bringing more Americans under health
insurance coverage and promoting use of low cost medicines. These reforms
are expected to translate into huge opportunities to the companies sourcing
from low cost manufacturing countries like India. Cost competitiveness is
the key success factor.

The Company has started to realise the benefits of its investments in the
US market. Revenues from its US operations were Rs. 94 crores during the
financial year 2009-10 as compared with Rs. 29 crores during the previous
financial year 2008-09. Although Torrent was a late entrant in the US
generics market, it has been successful in building a decent market share
in existing products. Torrent is the second largest supplier of Citalopram
and Zolpidem in the US Market. The Company received 2 ANDA approvals and 3
tentative approvals in financial year 2009-10. In the future it plans to
launch 4 to 5 products every year. The Company has 16 ANDA approvals
(including 3 tentative approvals), and its pipeline consists of 29 pending
approvals and 27 filings under development. The US business is expected to
contribute to the growth of international business in a significant way.

3. Germany

German pharmaceutical market is the 2nd largest generic market. During the
year 2009, the generic market grew at 5% and was valued at USD 7 billion.
The year 2009 witnessed a major portion of the markets getting covered
under tender based buying by Government funded health insurance funds. With
approximately 65% market covered under such tender, average price
realisations are expected to fall substantially.

Revenues from our German operations (Heumann) remained stagnant at Rs. 264
crores during the financial year 2009-10, as compared to Rs. 266 crores
during previous year 2009-10 which was Company's second consecutive year of
profitable operations. Heumann was successful in obtaining tender awards
announced by various health insurance funds during the year, the revenues
from which will start flowing from financial year 2010-11.

12 new products are proposed to be launched in the coming year. Heumann
growth plans include filling portfolio gaps in existing therapies and
expanding into new therapy areas. Focus of the Company is to successfully
service the increased demand from the tender business, garner incremental
share in the market by aggressively bidding for upcoming tenders and launch
of new products.

4. Other Markets

Dossier outlicensing and product supply business (Europe) continues to
provide growth momentum in international business, registering growth of
9%, with revenues of Rs. 140 crores during the financial year 2009-10 as
compared with Rs. 125 crores during the previous year. The Company has a
strong pipeline of 50 molecules for launch in the coming years. Rest of
World segment registered growth of 12% with revenues of Rs. 120 crores
during the financial year 2009-10, as compared with Rs. 93 crores during
the previous year.

5. Opportunities and Outlook

Mexico:

The Company had identified Mexico as a promising market offering potential
for branded generic business and having a market size of USD 9 billion. The
Company plans to launch marketing operations during the financial year
2010-11 with a product basket of 6 products in the Neuro-Psychiatry
segment. The Company plans to expand the product portfolio in
Cardiovascular, Neuro-Psychiatry and Anti Diabetic segments over the course
of next 2-3 years.

Thailand:

In order to expand its footprint in Asia Pacific, the Company has
incorporated a subsidiary in Thailand to tap the significant growth
opportunity available in this market. Thailand is the second largest
pharmaceutical market in South East Asia with a market size of USD 2
billion and is growing at 16%. Generics constitute nearly 60% of the value
sales. Due to the universal insurance coverage policy implemented by the
Thai Government, the generic segment is rapidly growing in size and the
hospitals are increasing supporting purchase of quality generics.

The Company has identified a set of 45 molecules in Cardiovascular, Neuro-
Psychiatry and Anti Diabetic segment for potential launch in the market.
The key success factors besides product development capabilities,
innovative abilities, low cost high quality manufacturing would be the
early mover advantage. The Company is also planning to enter UK, Romania
and Canada with direct marketing operation.

MANUFACTURING

During the financial year 2009-10, the Company has successfully
commissioned a new injectible formulation manufacturing facility for Human
Insulin's with a capacity of 26 million vials per annum at Indrad.

During the previous financial year, the Company had initiated construction
of a new formulation manufacturing facility at Sikkim to cater to the
growing demand of domestic market. The project is expected to commence
commercial production during the third quarter of the financial year 2010-
11. This facility will provide fiscal incentives under new industrial
policy announced for the region by Central Government in 2007.

During the year, the formulation manufacturing facility at Baddi received
cGMP approval from ANVISA of Brazil, and is gearing up for obtaining
approvals for the other regulated markets. This facility was approved by
the German authorities during the previous financial year 2008-09.

New capital investments

In order to meet the increasing requirements of the international markets,
the Company is planning to build a new formulations and API manufacturing
facility at Dahej SEZ in Gujarat. It has also undertaken a substantial
expansion of formulation and API manufacturing capacities at US FDA Indrad
Plant, which is expected to be completed during the financial year 2010-11.

RESEARCH AND DEVELOPMENT

Discovery Research

The Company is currently working on several in-house New Chemical Entities
(NCE) projects within the areas of Diabetes and its related complications,
metabolic and cardiovascular disorders, ischemic diseases and Neuropathic
pain. The Company has cumulatively filed 374 patents for NCEs from these
and earlier projects in all major markets of which 155 patents have been
granted/accepted so far.

After successful completion of Phase-I clinical trial of Advanced Glycation
End-Products Breaker (AGE) program, the Company has now initiated multi-
centered Phase-II trial in India and Europe for the indication of diabetes
associated heart failure. The Company believes that its AGE Program has
attractive development potential in the poorly served diabetic heart
failure segment and certain long-term complications arising out of AGE
formation. The Company has published four research papers in peer reviewed
international journals describing various findings of consequence to the
AGE program.

During the financial year 2009-10, the Company has advanced its second NCE
to Phase-I clinical trial targeting increased cardiovascular risks
associated with metabolic syndrome. The Company believes that this program
is uniquely positioned to address the complications due to relative chronic
over-nutrition which are assuming alarming proportions of health hazard in
India and in the developed countries.

Developmental Research

The Company continues to have a robust product pipeline for development for
offerings in European, US and Brazil markets on their patent expiry. During
the financial year 2009-10, the Company completed development for 8
products for the EU market, 12 products for US market and 11 products for
Brazil market. The Company also developed and filed DMF for 6 APIs during
the year in US & Europe.

Substantial new product development is being done for other regulated and
semi-regulated international generic markets and also for the Indian
market.

Development of several New Drug Delivery Systems (NDDS) to create
differentiated products and market exclusivity in commodity generics market
are also progressing well.

THREATS, RISKS AND CONCERNS

Discovery research

The key risks are high rate of failure and long gestation period of a
discovery project coupled with significant upfront costs to be incurred
before results are known. The Company today may not have resources to carry
through a discovery project to final commercial stage. These risks are
sought to be mitigated by seeking suitable alliances with partners at
appropriate stage to share the risks and rewards of the project.

Company undertakes clinical trials on ongoing basis as part of its
discovery research programme. Insurance is obtained to cover the risks
associated with testing in human volunteers and the Company may be subject
to claims that are not covered by the policy.

The bio-equivalence facility is used for safety & efficacy studies for the
generic products meant for the regulated markets. The facility has received
approvals from the Brazilian authorities and USFDA during the year. The
regulatory authorities from France and Denmark have also inspected the BE
facility and their approvals are awaited.

Domestic Market

Price control:

The domestic market is subject to price control under DPCO, 1995. In the
event Government reduces the prices of Company's products under DPCO or
introduces price control on products currently not subject to such control,
the profit margins could be significantly affected. The Company manages its
product portfolio so as to move away, reduce and minimize the product
weightage of drugs under price control.

Intellectual Property Rights (IPR) regime:

Patent laws in respect of pharmaceutical products have been changed
effective 1st January, 2005. This would mean that pharmaceutical products
patented after 1st January, 1995 can no longer be copied through process
re-engineering. This has narrowed the choice of new products which the
Company can introduce in the market. Indian market being price sensitive is
less likely to see significant penetration of patented molecules. Generic
versions of out-of-patent products will experience an extended life cycle.

Other Market risks:

Regulatory changes may bring about de-branding of drugs in domestic market.
Generic competition, could lead to fall in sales in branded products
accompanied by price erosion. Increased coverage of healthcare spend
through insurance can lead to structural changes in the industry. However
the company does not anticipate changes in these areas in the immediate
horizon.

Overseas markets

The Company has expanded operations into select overseas markets of Latin
America, Russia & CIS, European Union and North America. Such expansion
involves substantial business set up expenses, product pipeline development
expenses and a gestation time before revenues begin to accrue. The Company
faces the risk arising out of a failed or delayed market entry which may
significantly affect the future profitability and financial position.

In Brazil where the Company sells branded generics, the pure generic
competition could adversely affect development of branded business. Price
erosions continue in the German generic market leading to shrinking
operating margins. The insurance companies have been empowered to enter
into rebate contracts and float tenders. Aggressive bidding by competitors
could lead to unsuccessful bids in tenders exposing the Company to loss of
existing sales. Likewise in other European markets, regulatory changes
could affect price realizations. The risks are sought to be mitigated
through careful market analyses, improved management bandwidth, marketing
alliances and corporate management oversight.

On supply side, for products made out of outsourced API, wherever the API
supply is from a single supply source the Company carries the risk of
probable supply disruption. The Company has a policy to actively develop
alternate supply sources for key products subject to economic
justification.

Product liability risks

The business is exposed to potential claims for product liability. These
risks are sought to be managed by appropriate laboratory and clinical
studies for each new product, compliance with Good Manufacturing Practices
and independent quality assurance system. The Company also has an insurance
cover for product liability.

New product risk

New product development and launch involves substantial expenditure, which
may not be recovered due to several factors including development
uncertainties, increased competition, regulatory delay, lower than
anticipated price realizations, delay in market launch and marketing
failure. The Company manages the risk through careful market research for
selection of new products, detailed project planning and monitoring.

Attrition rate

The Company faces high attrition levels, particularly in sales force, R & D
technical staff and production technical staff. This disrupts the smooth
working of the Company, inter-alia, leading to disruption and delays in
projects, loss of customers and sales, and increase in the cost of
recruitment and training. The Company proactively manages this phenomenon
through various measures including aggressive and timely recruitments,
industry compatible remuneration/incentive system and strengthening of the
human resources function.

Litigation risks

The Company faces the risk of high costs of litigation with the patent-
holder, in its business of international generic products. This risk is
sought to be managed by a careful patent analysis prior to launch of the
generic product.

New capital investments

The Company plans to build a new manufacturing facility at Sikkim for
manufacture of oral solid dosage formulations. The Company faces risks
arising out of delay in implementation, cost overrun and inappropriate
implementation. The risks are sought to be mitigated by forming appropriate
project management team and corporate management oversight.

Exchange fluctuation risks

Currency risks mainly arise out of overseas operations and financing
activities. Exchange rate fluctuations could significantly impact earnings
and net equity because of invoicing in foreign currencies, expenditures in
foreign currencies, foreign currencies borrowing and translation of
financial statements of overseas subsidiaries into Indian rupees. The
Company has a defined foreign exchange risk management framework to manage
these risks, excluding translation risks.

HUMAN RESOURCES

The total employee strength of the Company at the end of financial year
2009-10 was 6,964 against 5,636 as at the end of financial year 2008-09, an
increase of 1,328 employees. The field force increased by 552 from 2,812 at
the end of financial year 2008-09 to 3,364 at the end of financial year
2009-10. The R & D Centre had 804 employees (of which 683 were scientists)
at the end of financial year 2009-10 compared with 725 (of which 627 were
scientists) as at the end of financial year 2008-09, an increase of 79
employees. The worker strength at plant was 796 at the end of financial
year 2009-10 compared with 527 at the end of financial year 2008-09. The
remaining employee strength comprising mainly of head office personnel,
non-worker employees at Chhatral and Baddi Plant, branch & overseas offices
employees increased to 2,000 at the end of financial year 2009-10 from
1,572 at the end of financial year 2008-09.

INTERNAL CONTROL SYSTEM

The Company has a reasonable system of internal control comprising
authority levels and powers, supervision, checks and balances, policies and
procedures. The system is reviewed and updated on an on-going basis. The
Company continuously upgrades its internal control systems by measures such
as strengthening of IT infrastructure and use of external management
assurance services. The Company has in place a well defined internal audit
system whereby an internal audit is performed across locations of the
Company and the results of the audit findings are reviewed by the Audit
Committee.

RESULTS OF OPERATIONS FOR FINANCIAL YEAR 2009-10 COMPARED WITH

FINANCIAL YEAR 2008-09

Summary Financial Information:

Particulars 2009-10 2008-09 %
Rs. in % to Rs. in % to Increase/
Crores Revenues Crores Revenues Decrease

Net Sales and Operating
Income (Revenues) 1,904 100.0% 1,631 100.0% 16.8%

Gross Profit 1,227 64.4% 1,016 62.3% 20.8%
Selling, general and
administrative expenses
(SG&A) 698 36.7% 604 37.0% 15.6%

Research and
development spend 120 6.3% 112 6.9% 7.4%

Forex Gain/(Loss) 12 0.6% -41 -2.5%

Operating profit before 421 22.1% 259 15.9% 62.5%
depreciation/amortization,
tax, interest and
exceptional items

Depreciation/Amortization 66 3.5% 42 2.6% 56.3%

Net Interest expense 8 0.4% 16 1.0% -52.0%

Profit before tax 347 18.2% 201 12.3% 72.9%
and exceptional
items (PBT)

Exceptional Item 0 0.0% -9 -0.5%
Income Tax 116 6.1% 8 0.5%
Profit after
Tax (PAT) 231 12.1% 184 11.3% 25.6%

Net Sales and other operating income

Consolidated net sales stood at Rs. 1,833 crores compared with net sales of
Rs.1,587 crores during the previous financial year, registering growth of
16%.

Other operating income was Rs. 71 crores compared with Rs. 44 crores in
previous financial year, indicating an increase of 61%. Income of Rs. 16
crores from multi-product/market out licensing contract signed during the
financial year 2009-10 is the major item contributing to the increase.

Gross Profit

Company's Gross Profit increased by 21% indicating a margin gain of 2% as
compared to the previous year. Higher income from product registration
dossiers (described above) and reduction in the inventory impairments
(largely arising out of reduction in non-saleable returns) during the
financial year 2009-10, are the major factors contributing to improvement
in Gross Profit.

Operating Profit before depreciation/amortization, tax, interest and
exceptional items.

(PBDIT)

SG&A expenses increased by 16% to Rs. 698 crores as compared to Rs. 604
crores during the previous year.

Increase in spend related to marketing authorization registration for new
territories amounting to Rs. 11 crores was one of the major factors
contributing to the increase in SG&A.

Research & Development expenses increased by 7% to Rs. 120 crores, as
compared to Rs. 112 crores during the previous financial year. Product
development costs account for 70% (previous year 64%) and discovery
research costs account for 30% (previous year 36%) of the total R & D cost.
Research & Development expenses as % to revenues are at 6% as compared to
7% during the previous year.

Foreign exchange gains were Rs. 12 crores against loss of Rs. 41 crores
during the previous year. Company's PBDIT increased by 62% to Rs. 421
crores as compared to Rs. 259 crores during the previous year, indicating a
margin improvement of 6%.

Depreciation and amortization

Depreciation and amortization charge during the financial year 2009-10 was
Rs. 66 crores as compared with Rs. 42 crores during the previous financial
year. During the financial year 2009-10, the Company revised in useful
lives of plant & machinery, laboratory equipments, furniture & fixtures and
office equipments, which resulted into an additional depreciation charge of
Rs. 11 crores. The Company impaired some of its product license assets in
Heumann, which resulted into additional amortization charge of Rs. 7 crores
during the financial year 2009-10.

Net interest expense

Net Interest expenses (net of income from investments made in debt and
money market instruments) were Rs. 8 crores compared with Rs. 16 crores
during the previous year.

Income Tax

During the financial year 2009-10, in view of amendments made in the Income
Tax Act, 1961 by the Finance Act, 2009 and other relevant factors, the
Company reviewed realisability of MAT credit entitlement, based on which,
the MAT credit entitlement asset of Rs. 53 crores, recognized in earlier
years, has been written off.

Excluding MAT credit entitlement in both the financial years, the income
tax charge for the year 2009-10 is Rs. 63 crores compared to Rs. 27 crores
during the previous year. Average income tax rate as a percentage of profit
before tax is 18% for the year 2009-10 as compared to 14% for the year
2008-09. Increase in income tax charge for the year 2009-10 is mainly on
account of increase in MAT rate from 11% for the year 2008-09 to 17% for
the year 2009-10.

Exceptional item

Exceptional item of Rs. 9 crores for the year 2008-09 represents settlement
of a contract claim and certain related expenses, in respect of a research
contract pertaining to new chemical entities, agreed by the Company in an
out-of-court settlement through a mediation process.

Net profit after taxes

The net profit after taxes & exceptional items for the financial year 2009-
10 was Rs. 231 crores compared with Rs. 184 crores during the previous
financial year, an increase of 25%.

CAPITAL & DEBT

There was no change in the equity share capital during the year.

Out of the divisible profits of Rs. 234 crores (previous year Rs. 188
crores), a sum of Rs. 56 crores (previous year Rs.145 crores) was
transferred to General Reserve Account. Dividend of Rs. 51 crores (Rs. 6
per share) is proposed during the year, Previous year Rs. 34 crores (Rs. 4
per share) was distributed. This represents an increase of Rs. 2 in
dividend per share. This distribution (including tax thereon) is
approximately 26% of profit after tax for the year (previous year 21%).

The net long-term borrowing decreased by Rs. 10 crores during the year
(previous year increase was Rs. 104 crores) to Rs. 397 crores at the end of
financial year 2009-10 from Rs. 407 crores at the end of FY 2008-09.
Outstanding working capital loans as on 31st March, 2010 were Rs. 126
crores (previous year Rs. 76 crores). The total debt to net worth
(including deferred tax liability) ratio as at the end of financial year
2009-10 was 0.59 (previous year 0.68).

FIXED ASSETS

The net investment in fixed assets during the year was Rs. 86 crores;
comprising net addition in assets Rs. 149 crores reduced by increase in
accumulated depreciation of Rs.62 crores. Addition to fixed assets mainly
include capital expenditure incurred for setting up of new manufacturing
facility at Sikkim dedicated to Indian operations and capacity expansion at
manufacturing facility located at Indrad.

WORKING CAPITAL AND LIQUIDITY

The working capital investment (net current assets excluding cash and bank
balances, current investments and proposed dividends) decreased by Rs. 15
crores from Rs. 297 crores at the end of financial year 2008-09 to Rs. 282
crores at the end of financial year 2009-10, decrease of 5%. Decrease in
working capital investments is mainly on account of write off of MAT credit
entitlement of Rs. 53 crores, recognised in earlier years. As a percent of
revenues, the working capital investment was 15% at the end of financial
year 2009-10 and 18% at the end of financial year 2008-09. The decrease in
working capital was a result of gross current assets (excluding cash and
bank balances, current investments) increasing by Rs. 49 crores, from Rs.
723 crores at the end of financial year 2008-09 to Rs. 772 crores at the
end of financial year 2009- 10, and increase in gross current liabilities
(including provisions and excluding proposed dividends) by Rs. 64 crores,
from Rs. 426 crores at the end of financial year 2008-09 to Rs. 490 crores
at the end of financial year 2009-10.

The liquidity of the Company as reflected by cash and bank balances and
current investments increased by Rs. 160 crores, from Rs. 350 crores at the
end of financial year 2008-09 to Rs. 510 crores at the end of financial
year 2009-10.

The Company generated net cash of Rs. 287 crores from operations (after
working capital changes) during financial year 2009-10 while it spent a net
amount of Rs. 149 crores on new fixed assets, received income from
investments and interest of Rs. 20 crores. Net cash flow used in financing
activities comprising of dividend and interest paid and net debts taken,
was Rs. 5 crores during financial year 2009-10.

For and on behalf of the Board

Place: Ahmedabad Samir Mehta
Date : 6th May, 2010 Managing Director