18th ANNUAL REPORT

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18th ANNUAL REPORT2005-2006

-VivimedJWhen chemistry and costs matter

Vivimed Labs Ltd.www.vivimedlabs.com


Vivimed Labs Ltd.&M

-Vivimed'

CORPORATE INFORMATION

Board of Directors( As on 28/08/2006 )

Mr. Santosh Varalwar

Mr. Subhash Varalwar

Dr. V. Manohar Rao

Mr. R.N.Dhar

Mr. Raj Barathur

Prof. M. Bhagvanth Rao

Chairman 6t Managing Director

Vice- Chairman

Director

Director

Director

Director

Company SecretarySri Umakanta Barik

Audit CommitteeMr. Raj Barathur, ChairmanDr. R .N. Dhar, MemberProf. M. Bhagvanth Rao, Member

AuditorsM/s P. Murali a Co.Chartered Accountants6-3-655/2/3, Somajiguda, Hyderabad - 82.

Shareholders/Investors'Redressal CommitteeDr.R.N.Dhar, ChairmanProf. M.Bhagvanth Rao, MemberDr.V. Manohar Rao, Member

BankersState Bank of HyderabadHDFC Bank LimitedCITI Bank

Remuneration CommitteeDr. R.N.Dhar, ChairmanDr. Raj Barathur, MemberProf. Bhagvanth Rao, Member

Share Transfer AgentsAarthi Consultants Pvt.Ltd1-2-2/85, DomalgudaHyderabad

Registered Office78-A, Kolhar Industrial AreaBidar-585403Karnataka

FactoryUnit-i

78-A, Kolhar Industrial AreaBidar-585403,Karnataka

Corporate Office2nd Floor, Veeranag TowersHabsigudaHyderabad-500 007

Unit-iiSurvey No: 202,207/A, 207/EBonthapally Village,Medak Dist (A.P)

207/AA

www.vivimedlabs.com 18th Annual Report 2005 - 2006

•Vivimed-l


Vivimed Labs Ltd.

Contents'

1. Notice 3

2. Director's Report 7

3. Management's Discussion and Analysis 13

4. Report on Corporate Governance 15

5. Auditors' Certificate on Corporate Governance 24

6. Auditors Report on Financial statement 25

7. Balance Sheet 29

8. Profit and Loss Account 30

9. Schedules forming part of Balance Sheet and 31Profit and Loss Accounts

10. Significant accounting polices and notes on accounts 40

11. Cash flow statement 43

12. Statement of Interest in Subsidiary 46

13. Subsidiary Annual Report 47

14. Proxy form 63

15. Attendance Slip 65

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~J~ N* \ Vivimed Labs Ltd.

•Vivimed-

Notice

NOTICE is hereby given that the Eighteenth Annual General meeting of the members ofVIVIMED LABS LIMITED' will be held on Friday, 29th September 2006 at 11.30A.M.. at the Registered office ofthe company at 78/A Kolhar Industrial Area, Bidar to transact the following business.

Ordinary Business

1. To receive, consider and adopt the audited Profit and Loss Account for the financial yearended 31st March, 2006 and Balance Sheet as at that date together with the reports ofthe Directors' and Auditors' thereon.

2. To appoint a director in place of Dr. V. Manohar Rao who retires by rotation and beingeligible offers himself for re-appointment.

3. To appoint a director in place of Prof. M. Bhagvanth Rao who retires by rotation andbeing eligible offers himself for re- appointment

4. To consider and, if thought fit, to pass with or without modification, the followingresolution as an Ordinary Resolution.

Resolved that pursuant to the provision of Section 224 and other applicable provisions, if any, of theCompanies Act, 1956 M/s P. Murali & Co, Chartered Accountants, Hyderabad, be re-appointed as StatutoryAuditors of the company, to hold office from the conclusion of this Meeting until the conclusion of the nextAnnual General Meeting of the company, on a remuneration to be fixed by the Board of Directors of thecompany.

Special Business

5. To consider and, if thought fit, to pass with or without modification, the following resolutionas an Ordinary Resolution

"RESOLVED THAT pursuant to Sections 16, 94 and other applicable provisions, if any, of theCompanies Act, 1956, the Authorised Share capital of the Company be increased fromRs 11,00,00,0007- ( Rupees Eleven Crores only) divided into 1,10,00,000 Equity Shares of Rs.107-each to 15,00,00,0007- ( Rupees Fifteen Crores only) divided into 1,50,00,000 Equity Shares ofRs.107- each and consequently the existing clause V of the Memorandum of Association of theCompany relating to Share Capital be and is hereby altered to read as follows.

The Authorised Capital of the Company is Rs. 15,00,00,000 ( Rupees Fifteen Crores) dividedinto 1,50,00,000 Equity Shares of Rs.107- each with a power to issue the new shares upon suchterms and conditions and to attach thereto such preferential, deferred, qualified or specialrights, privileges or conditions as may be determined or in accordance with the CompaniesAct, 1956 and to vary, modify, amalgamate, abrogate any such rights, privileges, conditions insuch manner as may be provided by the Companies Act, 1956"

6. To consider and, if thought fit, to pass with or without modification, the followingresolution as an Special Resolution

"RESOLVED THAT pursuant to Section 31 and other applicable provisions , if any of theCompanies Act,1956( including any statutory modification(s) and re-enactment thereoffor the time being in force) and provisions of other statutes, as applicable and subject to

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l-Vivimed'jvivimed Labs Ltd.

such other approvals, consents, permissions and sanctions as may be necessary from theappropriate authorities or Bodies. Articles-3 of the Articles of Associations of theCompany be and is hereby altered to read as follows:

(3) The Authorised Capital of the Company is Rs. 15,00,00,000 ( Rupees Fifteen Crores)divided into 1,50,00,000 Equity Shares of Rs.10/- each with a power to issue the newshares upon such terms and conditions and to attach thereto such preferential, deferred,qualified or special rights, privileges or conditions as may be determined or inaccordance with the Companies Act, 1956 and to vary, modify, amalgamate, abrogate anysuch rights, privileges, conditions in such manner as may be provided by the CompaniesAct, 1956"

NO i hi

a) The Explanatory Statement pursuant to section 173(2) of the Companies Act,1956 in respect of item No 5 & 6 as set out in the Notice is annexed hereto

b) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A

PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF/ HERSELF AND A PROXY NEED NOT BE

A MEMBER OF THE COMPANY. PROXIES, IN ORDER TO BE VALID AND EFFECTIVE, MUST BE

DELIVERED AT THE REGISTERED OFFICE OF THE COMPANY NOT LATER THAN FORTY EIGHT

HOURS BEFORE THE COMMENCEMENT OF THE MEETING.

c) The Register of Members and share transfer books of the company will remain closed from25th September, 2006 to 29th September, 2006 (both days inclusive).

d) Members holding shares in physical forms are requested to immediately notify changein their address, if any to the Registrar and Transfer Agents of the company namelyM/s Aarthi Consultants Private Limited, 1-2-285, Domalguda, Hyderabad. , quoting theirfolio Number.

e) Pursuant to the requirements on the Corporate Governance under the listing agreemententered with Stock Exchanges, the information about the Directors proposed to beappointed /re- appointed is given in the annexure to the Notice.

f) All the documents referred to in the Notice will be available to the members at theRegistered office of the company between 10.30 A.M to 12.30 P.M on all working daysfrom the date hereof upto the date of the Meeting.

By order of the Board

Place : Hyderabad Umakanta Barik

Date : 28th August, 2006 Company Secretary

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Vivimed Labs Ltd.I.

Explanatory StatementExplanatory Statement under section 173 (2) of the Companies Act, 1956

Item No 05.

The present Authorized Share Capital of the company is Rs. 11, 00, 00,000/- (Rupees Eleven Crores)divided into 1, 10, 00,000 (One crore ten lacks) Equity shares of Rs 107- each and consequent to the decisionof the Board of Directors to increase the capital for the purpose of increasing the net owned funds of thecompany the existing Authorized Capital needs to be enhanced.

Consequent to increase of Authorized Capital, necessary amendments to the capital clause in theMemorandum of Associations will have to be suitably made and accordingly, the amendments are set out underitem No.5 of the Notice for approval of the Shareholders.

No Director is interested in the resolution.

Item No 06

The proposed amendment on Article (3) of the Articles of Association is consequential.

Section 31 of the Companies Act, 1956 requires a special resolution to be passed for any amendmentsof the Articles of Association.

No Director is interested in the resolution


Place: Hyderabad

Date 28th August, 2006

Umakanta Barik

Company Secretary



Vivimed Labs Ltd.•Vivimed-

Pursuant to clause 49 of the Listing Agreement with the Stock Exchanges,following information is furnished about the directors proposed to be

Appointed / Re appointeda) Dr. V. Manohar Rao

Dr. V. Manohar Rao, Is a post-graduate in Veterinary Biological Sciences from U.K. He has more than 30years experience in the manufacture, toxicology and control of bio-veterinary drugs. He has worked withDepartment of Animal Husbandry, Government of Andhra Pradesh for about 3 decades and retired as JointDirector. During his tenure with Department of Animal Husbandry, he was involved in administration andproduction of various vaccines for livestock and poultry. He also worked as a special officer for Meat andPoultry Department Corporation Andhra Pradesh Government Enterprises. He is in the Board since inception.

Dr. V. Manohar Rao is the Managing Director of WS Pharmaceuticals and Chemicals Pvt. Ltd.

b) Prof. M. Bhagvanth Rao

Prof. M. Bhagvanth Rao, was first appointed on the Board on 15th December, 2003, is a Ph.D. inChemical Engineering from the Indian Institute of Sciences, Bangalore and has done his post doctoral studiesat the Tokyo Institute of Technology, Japan. He has memberships to various professional associations includingFellowships in the Indian Institute of Chemical Engineers and A.P. Academy of Sciences, Life Membership in theIndian Society for Technical Education, etc. He has over 30 years of experience in research and teaching inthe fields of chemical reaction engineering, catalysis, thermodynamics and bio chemical engineering. He hasbeen involved with the Osmania University, Hyderabad in various positions including the Dean of Developmentand UGC Affairs, Director of Regional Centre for Urban and Environmental Studies and Director of PhysicalEducation. He has various research publications to his credit some of which include articles in the CanadianJournal of Chemical Engineering, Industrial Engineering and Chemistry Fundamentals (USA), Journal ofPolymer Sciences (USA), etc. He also acts as a research consultant to various laboratories like IICT, BHEL R&DNFC, etc. He was appointed by the Board as a non-executive independent director.


Place: Hyderabad

Date 28th August, 2006

Umakanta Barik

Company Secretary

18th Annual Report 2005 - 2006 www.vivimedlabs.com


Vivimed Labs Ltd.\ •Vivimed-

Director's ReportDear Shareholders

Your Directors have pleasure in presenting the Eighteenth Annual Report of the company with AuditedStatement of Accounts for the year ended 31st March, 2006.

Financial Results

The financial highlights for the current year in comparison to the previous year are as under

(Rupees in lakhs)

S.No. PARTICULARS

1 . Sales

2. Other Income

3. Expenditure

4. Profit before interest, depreciation and tax

5. Depreciation

6. Profit before interest & tax

7. Interest

8. Profit before tax

9. Provision for Income tax

10. Deferred tax (timing difference)

1 1 . Profit after tax

CURRENT YEAR2005-06

7901.79

204.16

6434.71

1671.24.

161.53

1509.71

211.19

1298.52

140.28

231.34

926.90

PREVIOUS YEAR2004-05

5208.81

34.40

4462.30

1056.37

118.45

937.92

186.60

751.32

63.26

206.78

481.28

Business Review & Performance

Your company has performed exceptionally well during the year 2005-06 and has recorded a growth of51.70% in gross turnover over previous year resulting in PAT of Rs.926.90 Lacs increase of92.60% over the previous year.

Research & Development

As a progressive thinking company, your company has continued the in-house Research and Developmentinitiatives at Hyderabad.

These R & D centres are doing remarkable work in identifying new products, conducting research fornew derivatives of amines, natural products, optimizing the input parameters for achieving better valueadditions, increasing the capacity utilization of the plant, by improving and fine tuning the process.

R& D committees are working on new product range and establishing break through in the processtechnology. The Research and Development centres have been headed by well qualified, experiencedprofessionals of varied knowledge pools.

Dividend

Your Directors have not recommended dividend for the period under scrutiny. The dividend pay out forthe year under review has been formulated in accordance with the Company's policy of striving to pay stable

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Vivimed Labs Ltd.

dividend linked to performance, keeping in view the company's need for capital, for its growth plans andthe intention to finance such plans through internal accruals to the maximum. Your Directors believe thatthis would increase shareholders value and eventually lead to a higher return and wealth creation to all thestakeholders.

Expansion / Diversification

The Company is focusing on manufacturing board spectrum anti-microbial and preservatives forapplications in the sectors such as Paints, Plastics, Adhesives, Wood preservation and Water treatment areas.Successfully completed the following projects during the financial year.

1. New Manufacturing facilities for Speciality Chemicals in compliance with GMP standards atBonthapally, Andhra Pradesh.

2. Acquired Creative Health Care Private Limited from Uttaranchal State Financial Corporation,modernised and expanded the Plant to meet GMP standards.

3. Addition of equipment to increase the production capacity of various existing products. Themanagement will continue to make efforts in identifying new products, processes for expansionand diversification as well as R 6t D initiatives to chalk out a growth oriented future for itsstakeholders.

Management's Discussion and Analysis Report

Management's discussion and Analysis Report for the year under review as stipulated under clause 49 ofthe Listing Agreement with stock exchanges in India is presented in a separate section forming the part of theAnnual Report.

Directors

In terms of Article 114 & 115 of the Articles of Association of the company Dr. V. Manohar Rao andProf. M. Bhagvanth Rao retire by rotation and being eligible, offer themselves for reappointment at theensuing Annual General Meeting. During the year Sri Sanjay Kothari was ceased to a Director.

Brief resume of the Directors proposed to be appointed / re appointed, nature of their expertise inspecific functional areas and names of companies in which they hold directorship and membership/chairmanship of the Board committee as stipulated by Clause 49 of the listing agreement with the stockexchange are provided in the Report in Corporate Governance forming part of the Annual Report.

Directors' Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with respect toDirector's Responsibility Statement, it is hereby confirmed that,

(i) in the preparation of the annual accounts, applicable accounting standards have beenfollowed.

(ii) the Directors have selected such accounting policies and applied them consistently andmade judgements and estimates that are reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company as at 31st March, 2006 and ofthe profit of the Company for the year ended on that date;

(iii) the Directors have taken Proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 forsafe guarding the assets of the company and for preventing and detecting fraud and otherirregularities.

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Vivimed Labs Ltd.

(iv) the Directors have prepared the annual accounts of the company on a goingconcern basis.

Auditors

The Auditors M/s P. Murali & Co, hold office until the conclusion of the ensuing Annual General Meetingand are recommended for re-appointment. Certificate from the Auditors has been received to the effect thattheir re-appointment, if made, would be within the prescribed limits under section 224 (1B) of the CompaniesAct, 1956.

The notes on accounts referred to in the Auditors' Report are self - explanatory and therefore do notcall for any further comments.

Employees

In terms of the provisions of section 217(2A ) of the Companies Act, 1956 read with the Companies(Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees arerequired to be set out in the Annexure to the Directors Report. However as per the provision of section 219(1) (b) (iv) of the said Act the Annual Report excluding the aforesaid information is being sent to all themembers of the company and others entitled thereto.

There are no employees of the company, whose particulars are to be disclosed pursuant to the provisionsof Section 217 (2A) of the Companies Act, 1956.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars required in the report of the Board of Directors in accordance with the Companies(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, in respect of Conservation of Energy,Technology Absorption and Foreign Exchange Earnings and Outgo are furnished in the prescribed format andAnnexed to this report.

Corporate Governance

Your Company is committed to maintain the highest standards of Corporate Governance. Your Directorsand senior management team adhere to the requirements set out by the Securities and Exchange Board ofIndia (SEBI) Corporate Governance practices and have implemented the same. Your Company has alsodecided to implement several best practices, though not mandatory at present, as part of the CorporateGovernance.

Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forming part ofthis Annual Report. Certificate from the Auditors of the Company, M/s P. Murali & Co., Chartered Accountants,confirming compliance of the conditions of Corporate Governance as stipulated under the aforesaid Clause49 is annexed to this Report.

Acknowledgements

Your Directors would like to express their grateful appreciation for the assistance and co-operationreceived from Banks, Government authorities, Customers, Vendors and Members during the year under review.Your Directors also wish to place on record their deep sense of appreciation for the committed services of theexecutives, staff and workers of the company.

For and on behalf of the Board of Directors

Place : Hyderabad SANTOSH VARALWAR

Date : 28-08-2006 Chairman a Managing Director

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£M

'Vivimed"Vivimed Labs Ltd.

Annexure to the Directors' ReportPARTICULARS 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

Improvement in energy efficiency is a continuous process at VLL and conservation of

energy is given a very high priority in all our plants and offices.

(b) Additional Investments and Proposals for Reduction of Consumption of

Energy

The company will be implementing various measures to automate the process, recovery

of energy which will result in reduction of energy consumption.

(c) Impact of the above measures

The company anticipates upon implementations, good savings on account of consumption

of power and fuel.

(d) Total Energy Consumption and energy Consumption per unit of production as per Form 'A'

attached hereto.

B. Technology Absorption (Enclosed in Form B)

Efforts made in technology absorption - as per Form B attached hereto.

C. Foreign Exchange Earnings and Outgo

EARNINGS

Income from Export Sales

OUTGO

i) Raw Materials

ii) Travels

iii) Others

2005-06

(Rs.)

309659692.00

2005-06

(Rs.)

78576630.00

2326319.00

1949642.00

2004-05

(Rs.)

243937586.00

2004-05

(Rs.)

54884993.00

2960883.00

4908204.00



Vivimed Labs Ltd.&M

LVivimed'

FORMA

Form of Disclosure of particulars with respect to Consumption of Energy

A. POWER AND FUEL CONSUMPTION

1. Electricity

a) Purchased Units 1709163

Total Amount Rupees 9913146.00

Average rate per unit Rupees 5.80

b) Own Generation

Through Diesel Generator

Units 8706378

Total amount Rupees 191540316.00

Average cost per unit Rupees 22.00

II. Through Steam turbine/generators

Units ---

Unit per tonne of coal

Coal (Specify quality and where used)

I. Coaking Coal for Boiler (Ton) 1635

Total Cost Rupees 5393875.00

Average rate per Tonne 3143.00

Furnace Oil --

Other (Agricultural waste)

I. BiogasQuantity (MT)

Total Cost Rupees

Average rate per MT

Fire wood

Quantity (MT)

Total Cost

Average rate per MT

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Vivirned Labs Ltd,

Form B

Form of Disclosure of Particulars with respect to Technology Absorption

A. RESEARCH AND DEVELOPMENT

1. Specific Areas in which the company carries out RftD.

The company continues its focus on Synthetic Organic Chemistry and alsodeveloping analytical methods to quantify its impurities

2. Benefits Derived

Continuous Process Development has helped the Company to improve its yields onkey products, thereby deriving added profits.

3. Future of Action

The Company is in the process of capacity enhancements for the existing productlines and has taken further initiatives to optimise costs with continued focus on"more molecules to more markets".

•n.u loyy Absorpt ion, Adoption and innovation

Efforts made

The Company in view of better service to its customers has developed process labwhich assists in formulating the final cosmetic products.

Benefits

The Company will be benefitted by its increased market shares globally with newcustomers.

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\ Vivimed L.nh . i

Management Discussion and Analysis

Forward Looking StatementsThis report contains forward-looking statements, which may be identified by their use of words like

1 plans' 'expects1 'will' , ' anticipates' , 'believes' , 'intends', 'projects', 'estimates' or other words of similarmeaning. All statements that address expectations or projections about the future, including but not limitedto the statements about the company's strategy for growth, product development, market position,expenditures, and financial results are forward looking statement.

Forward looking statements are based on certain assumptions and expectations of future events. The companycannot guarantee that these assumptions and expectations are accurate or will be realised. The company'sactual results, performances or achievements could thus differ materially from those projected in any suchforward looking statements. The company assumes no responsibility to publicly amend, modify or revise anyforward looking statements, on the basis of any subsequent developments, information's or events.

Growth in FocusWe harness our creative energies through a strong team work, a spirit of enterprise and financial

acumen, proven qualities that collectively determine our path of growth.

As we stand at the threshold of the next financial year, we are poised to test new waters, grow morebusiness, increase our returns and create greater stockholder value, bringing heightened levels of confidenceand satisfactions to every stakeholder.

We are poised to take on new challenges and move on to creating products and markets for tomorrow.

Business Review

We are one of the leading producers of specialty chemicals. We have our plant at 78/A, Kolhar IndustrialArea, Bidar, Karnataka and Bonthapally, Andhra Pradesh

We also have an R fit D centre at Nacharam, Hyderabad, with qualified people.

Financial ReviewThe Company performed well during the year 2005-06. The Company's gross turnover increased to Rs.

7901.79 Lacs from Rs. 5208.81 Lacs in the previous year. Sustained activity has resulted in improved yields onkey products. The Company has completed the initial public offer by over subscribing more than 37 timesduring the year.

Internal Control SystemThe company has installed a good system of internal controls in all spheres of its activities. The internal

control is supplemented by effective internal audit. The Audit Committee of Directors regularly review thebusiness process and effective steps to implement the suggestions, which are taken and monitored regularly.In the opinion of the Board, an effective internal control system adequate to the size of the company is inplace and as and when need arises resources are augmented in these systems.

In production process the company has its own efficient Distributed Control Systems. The systemautomatically controls all the fluctuations of parameter of manufacturing process and do not give any chanceto excessive losses and wastages. It provides the process a continuous flow of working without any interruptionby any reasons. This definitely improved on our productivity and profitability positively.

Industrial RelationshipIndustrial relationship during the year under review between the employees at various levels and the

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Vivimed'


Vivimed Labs Ltd.management continued to be peaceful. Employees are given training by attending seminars / workshops toenhance their skills and knowledge based on training identification system. Company has introduced asuggestion scheme since last three years for continual improvement of the working of the company and toencourage employees' participation. The suggestions from them selected by the management have beenimplemented and helped in optimising the utilisation of resources and improving the over all.

Human Resources

The Company's human resources philosophy is established and builds a strong performance andcompetency driven culture with greater sense of accountability and responsibility. The company has takenpragmatic steps to strengthen organisational competency through involvement and development of employeesas well as installing effective system to improve the quality and accountability at all functional levels. Withthe changing and turbulent business scenario our basic focus is to upgrade the skill and knowledge level ofits existing human assets to the required level by providing appropriate leadership at all levels, motivatingthem and inspiring them to take responsibility.

Safety, Health and Environmenta. Safety: Safety is accorded high priority and concerted efforts are made to ensure safe

working conditions for employees. All incidents are analyzed in safety committeemeetings and corrective actions are taken immediately. Employees are trained safepractices to be followed at work place.

b. Health: Health of employee is also accorded importance. Periodic check up of allemployees is done to monitor their health. Regular work area monitoring to checkconcentration of chemicals, noise level and quality of ambient air is done.

c. Environment: The Company also attaches importance to environment protection andadherence to pollution control norms.

1. Air Emissions: Emissions from various sources are monitored regularly and compliance tostatutory requirement is ensured. Measures are taken for reduction of emissions.

Risks and Concerns

All key functions and divisions are independently responsible to monitor risk associates within theirrespective areas of operations such as production, treasury, insurance, legal and other issues like health,safety and environment.

Future OutlookThe outlook for margins and profitability depends greatly upon the overall global economic outlook, the

industry demand supply scenario, and trends in feedback and product prices.

Over the decade, the company has assimilated the following strategic strengths:

a) Technical and Managerial capabilities to operate complex chemical plants moreproductively.

b) Sunrise product-mix leading to cost economies as well as flexibilities.

c) Wide end-product market portfolios to cater to different sectors like pharma, agro,chemicals, infrastructure etc for providing in-built resilience from sartorial swings.

Building on these strategic strengths, the company has embarked upon following strategy forgrowth.

* Maximisation of the Present * Expanding the present * Diversifying from the present

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\ Vivimed Labs Ltd.&M

•Vivimed'

Report on Corporate GovernanceA. Company's Philosophy on Corporate of Governance

Corporate Governance is a system by which an organisation is directed and controlled. CorporateGovernance integrates multi functions of an organisation to fulfil the objectives with in the frame work ofall the Stake holders, society, Law of Government, and people at large. Corporate Governance in essenceis about integrity, fairness, transparency and accountability. Your Company is committed to high values andethical business conduct. Your Company endeavours in letter and spirit to adopt best global practices inCorporate Governance to achieve the main objectives of the Company.

Your company has integrated the value system in all spheres of activities involving people from allfunctional areas. Your company has initiated to comply with code of conduct for all the directors, senior staffand functional heads. The main focus is on best global practices of business to be imbibed into the culture ofthe organisation and complying with value systems, ethical business practices, laws and regulations.

Your company respects the rights of the stakeholders to information on performance of the companyand provides the same and focus on increasing the wealth and long term value creation over a sustainedperiod of time.

Corporate Governance is a system with which, an organisation is structured. Corporate Governanceintegrates multi functions of an organisation to fulfil the objectives with in the frame work of all the Stakeholders, society, Law of Government, and people at large.

Your company respects and provides information to stake holders about the performance and strives tobe ahead of competition by taking all the risk assessment well in advance.

At VIVIMED LABS LIMITED the focus is on its core strengths, value systems, hard working and strategicmoves to be in the leading edge of new technology.

Your company has set highest standards of Corporate Governance and implemented the code ofCorporate Governance in accordance with clause 49 of the listing agreement with the stock exchanges.

A brief report on the practices and compliances by your company is given below.

B. Board of Directors

Composition

Your company has been one of the front runners in establishing broad based Directors with a balancedcomposition of Executive Director to Non executives Independent Directors ever since it went public.

The functions, responsibility, role and accountability of the Board are well defined. The detailed reportsof the company activities and performances are periodically placed before the Board for effective decisionmaking.

During the period under review, 6 Board Meetings were held namely,

27-05-05, 19-07-05, 05-08-05 ,24-10-05, 03-12-05, 25-01-06.

The Annual General Meeting (AGM) was held on 16th August' 2005.

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U/ivirned-


Vivimed Labs Ltd.

Structure of the Board for the Year ended 31st March, 2006

Name of the Director CategoryDirectorship

held

No. of other Membership/chairmanship Meeting

held in attended

No. of BoardLast AGM

held

Attendance at

Committees of

Sri Santosh Varalwar

Sri Subhash Varalwar

Dr.V. Manohar Rao


Sri. R. N. Dhar

Sri. Raj Barathur

Executive Director

Executive Director

Executive Director

Non- ExecutiveIndependent Director



otherCompanies

---

...

1

--

..

--

6

6

6

6

6

2

Yes

Yes

Yes

No

No

No

Board Meetings, its committee Meetings and Procedures

With a view to institutionalise all corporate affairs and set up systems and procedures for proper planningfor matters requiring discussion/ decisions by the Board, the Company has defined the guidelines for themeetings of the Board and Committees thereof.

Scheduling and Selection of Agenda for Board Meetings.

(a) Minimum four Board meetings are held in each year, which are pre-scheduled after the end ofthe each financial year. Apart from the pre schedule Board meetings, additionalBoard meetings are convened by giving appropriate notice to address the specific needsof the Company. •

(b) The meetings are held at the Company's Corporate Office at 2nd Floor, Veeranag Towers,Habsiguda, Hyderabad-500007 or at Registered Office at 78/A, Kolhar Industrial Area,Bidar, Karnataka.

(c ) The information placed before the Board includes

•» Quarterly results for the Company and its operating divisions or business segments

* Minutes of the meeting of the Audit Committee and other committees of the Board

* Non-compliance of any regulatory, statutory nature or listing requirements andshareholders services such as non payment of dividend, delay in share transfer etc.

* Quarterly summery of all long term borrowings, bank guarantees issued andinvestments made etc

* Notice of Interest of Directors

* Terms of reference of the Board Committees

* Any material default in financial obligations to and by the Company etc.

18th Annual Report 2005-2006 16 \\ www.vivimedlabs.com


Vivimed Labs Ltd.-Vivimed-

Board materials Distributed in advance

Agenda and Notes on agenda are circulated to the Directors, in advance, in the defined Agenda format. Allmaterial information is incorporated in the Notes on Agenda for facilitating meaningful and focusseddiscussions at the meeting for taking proper decisions.

Recording Minutes of proceedings at Board Meeting

The Company Secretary records the minutes of the proceedings of each Board and Committee meetings. Draftminutes are circulated to all the Members of the Board/ Committee for their comments. The finalised minutesof proceedings of a meeting are entered in the Minutes Book within 30 days from the conclusion of thatmeeting.

Compliance

The Company Secretary while preparing the Agenda, Notes on agenda, Minutes etc is responsible for and isrequired to ensure adherence to all the applicable laws regulations including the Companies Act, 1956read with the Rules issued there under and to the extent feasible, the Secretarial Standards recommendedby the Institute of Company Secretaries of India , New Delhi.

C. Board Committees.

1. Audit Committee

The Board has constituted Audit Committee, comprising three Non- Executive IndependentDirectors. All the members of the Audit Committee posses financial / accounting / managementexpertise. The constitution of audit committee meets the requirements of Section 292A of theCompanies Act, 1956 and Clause 49 of the Listing Agreement with Stock Exchanges.

The primary objective of the audit committee is to monitor and effectively supervise the Company'sfinancial reporting.

uring the year, The Audit Committee has met four times. The dates on which the meetings are held:

29-04-2005 28-07-200524-10-2005 25-01-2006

a) Terms of Reference

1) To provide direction and to oversee the operations of the audit functions of the Company

2) To review the internal control and audit systems with special emphasis on their qualityand effectiveness.

3) To review Quarterly, Half yearly and Annual financial results before submission to theBoard

4) To investigate into any matter in relation to the items specified in Section 292A of theCompanies Act, 1956 or referred by the Board.

5) To have full access to information contained in the records of the Company and externaladvice, if necessary.

6) To review matters required to be included in the Directors' responsibility statement tobe included in the Board's Report in terms of clause (2AA) of Section 217 of theCompanies Act, 1956.

www.vivimedlabs.com ff 17 18th Annual Report 2005 . 2006


l-Vivimed-lVivimed Labs Ltd.

The Constitution of the Audit Committee and the attendance of each member of the said committee is asunder:

Name

Sri. Raj Barathur

Designation

Chairman

Statusattended.

Non-Executive Indepenent Director

No. of Meeting

2

Dr. R. N. Dhar Member Non-Executive Independent Director

Prof. M. Bhagvanth Rao Member Non-Executive Independent Director

Company Secretary is the Secretary to the Audit Committee.

2. Remuneration Committee

The Board has constituted the remuneration Committee comprising three Non Executive lndepend«ntDirectors namely Sri R.N.Dhar, Chairman, Sri Raj Barathur, Member and Prof. M. Bhagvanth Rao, Member.

The Remuneration Committee has been constituted to recommend/ review remuneration of theManaging Director and Whole time Directors, based on their performances and terms of appointment.

Details of remunerations paid/payable to directors for the year ended 31st March, 2006 is as under;

Sri.

Sri.

Dr.

Dr.

Name

Santosh Varalwar

Subhash Varalwar

V. Manohar Rao

R. N. Dhar


Sri Raj Barathur

Relationship Loanswith from

Company Company Rs

PromoterDirector

PromoterDirector

PromoterDirector

None

None

None

NIL

NIL

NIL

NIL

NIL

NIL

Sitting Salary Commission TotalFees f± Perks

Rs Rs Rs Rs

1500000 — 1500000

1200000 — 1200000

600000 — 600000

14000 — — 14000

14000 — — 14000

7000 — — 7000

Apart from the sitting fees, there were no other pecuniary relationships or transactions of the Non-Executive Directors vis-a-vis the Company.

3. Shareholders/ Investors Redressal Committee

a) Terms of reference

The Board has constituted Shareholders'/ Investors' Redressal Committee, to look intogrievance/issue of share holders/investors relating to non-receipt of Balance Sheet, Shares sentfor transfer etc.

The Directors periodically reviewed the investors complaints received and redressed. The committeealso monitors the implementation and compliance of the Company's Code of Conduct.

The committee also review the performance of share transfer agent and recommend improving overallquality services to share holders.

18th Annual Report 2005 - 2006 18 www.vivimedlabs.com


i Vivimed Labs Ltd.

Composition

&M

•Vivimed'

Name

Prof. M. Bhagavanth rao

Dr. R. N. Dhar

Sri. Subhash Varalwar

Designation

Chairman

Member

Member

Status

Non-executive Independent Director

Non-executive Independent Director

Executive Director

Details of status of the references / complaints received and replied / resolved during theyear are given in the following statements

SI. No Nature of Reference/

Complaints Received <1n No>

1

2

3

4

Change of Address

Bank mandates

Transfer/ Transmission

Others

2

0

1

5

Resolved (In No)

2

0

1

5

Pending (In No)

Nil

Nil

Nil

Nil

D.General Body Meeting

Location, date and time of the Annual General Meeting held during the preceding 3 years are as follows.

Year

2002-2003

2003-2004

2004-2005

AGM Location Date

AGM Plot No:78/A, 30-09-2003Kolhar industrial Area,

Bidar,Karnataka

AGM Plot No:78/A, 30-09-2004Kolhar industrial Area,

Bidar,Karnataka

AGM Plot No:78/A, 16-08-2005

Kolhar industrial Area,

Bidar,Karnataka

Time

10.00A.M.

10.00A.M

10.00 A.M

Alt the special resolutions were passed only on show of hand and no postal ballot was conducted during theabove meetings.

At the ensuing Annual General Meeting also there is no resolution proposed to be passed through postal ballot.

E. Disclosures

There are no transactions of material nature undertaken by the company with its promoters, directors, their

relatives or the management that may have a potential conflict with the interest of the company.

Disclosure on transactions with related party as required under Accounting Standard 18 has been

incorporated in the notes on Accounts forming part of the Annual Report.

Details of non-compliances, penalties, strictures by Stock Exchanges/ SEBI / Statutory Authorities on anymatter related to capital markets during the period 2005-06: None.

www.vivimedlabs.com // 19 18th Annual Report 2005 - 2006


A Vivimed Labs Ltd.-VivimedJ

The Company circulated the Code of Conduct among all the Board members and senior management personneland affirm that they are complying with the code on an annual basis. The total text of the Code of Conductis posted on the company's website. Viz. www. vivimedlabs.com

The Chairman 6t Managing Director certified that the company has complied with the provision of clause49 (V) of the Listing Agreement.

Means of Communications

Quarterly /Half yearly results

Quarterly / Half yearly results are published in Vijay Times 6t Vijay Karnataka published in Karnataka.

News Releases, Presentations etc

Official news releases, analysis and information to investors, etc are displayed on the company's websitewww.vivimedlabs.com after duly complying with the provision of Listing Agreement by informing the stockholder.

Website

The company's website www.vivimedlabs.com contains separate dedicated section 'Investor information'

Annual Report

Annual Report containing inter alia Audited Annual Accounts,Directors' Report, Auditors Report and otherimportant information is circulated to Members and others entitled thereto, the Management Discussion andAnalysis Report is a part of the Annual Report.

SEBI EDIFAR

Annual results, Shareholding pattern etc., of the company are posted on the SEBI EDIFARWeb site, www.sebiedifar.nic.in

F. General Shareholder Information

18th Annual General Meeting 29th September 2006, 11.30 A.M, 78/A, KolharDate , Time and Venue Industrial Area, Bidar, karnataka

Financial calendar (tentative ) 1st Quarter results by last week of July, 2006

2nd Quarter results by last week of October, 2006

3rd Quarter results by last week of January, 2007

4th Quarter result by last week of April, 2007

Date of Book Closure 25th September 2006 to 29th September 2006 ( bothdays inclusive )

G. Company's shares are Listed in the following Stock Exchanges

i) The stock Exchange ii) National Stock Exchange of India LimitedMumbai (BSE) Exchange Plaza, Bandra-Kurla Complex,Phrioze jee jeebhoy Towers Bandra (East)Dalai Street, Mumbai-400001 Mumbai-40005

18th Annual Report 2005-2006 20 \\ www.vivimedlabs.com


Vivimed Labs Ltd.LVivimedJ

Annual listing fees for the year 2006-07 (as applicable) have been paid by the company to therespective stock exchanges.

H. Registrar and Share Transfer Agents

Aarthi Consultants Private Limited1-2-285, DomalgudaHyderabad-500029Phone No 91-40-27642217Fax: 91-40-27632184Email: [email protected]

I. Share Transfer System

Presently, the share transfers which are received in physical form are processed and the sharecertificates returned within 21 days from the date of receipt, subject to the documents being valid andcomplete in all respects.

The Board has delegated the authority for approving transfer, transmission etc of the company'ssecurities the Executive Director and company Secretary of the Company. A summary of share transfer/transmission of the securities of the company so approved by the Executive Director are placed at everyBoard Meeting.

The company obtains half yearly Certificate of Compliance with the Shares Transfer formalities asrequired under clause 47 (C) of the Listing Agreement with Stock Exchanges from a Company Secretaryin practice and same is submitted to the Stock Exchange within the period prescribed.

J. Dematerialisation

48.87% of the Company's paid-up equity share capital has been dematerialised as on 31st March, 2006.The trading in the Equity shares of the company is permitted only in dematerialised form as per thenotification issued by SEBI.

K. Stock Code

Bombay Stock ExchangeScrip code: 532660

L. Demat ISIN in NSDL ft CDSL for Equity Shares

ISIN: INE526G01013

www.vivimedlabs.com // 21 18th Annual Report 2005 -2006


^Vivimed-Vivimed Labs Ltd.

M. Stock market data

Market price data - High / Low during each month of the financial year 2005-06.

Month & Year

September, 2005

October, 2005

November,2005

December,2005

January,2006

February,2006

March, 2006

Open

Rs

215.00

140.00

134.90

135.00

152.70

220.70

190.00

High

Rs

215.00

149.90

153.80 ,

168.00

248.65

239.50

237.00

Low

Rs

137.30

105.10

130.25

128.10

151.10

189.05

190.00

Close

Rs

137.30

133.10

134.35

151.35

219.75

190.85

222.40

The equity shares of the company listed with Stock Exchanges in the month of August, 2005

29O.68

251 .SO

212.91"!

174.O3

135.14

Y%

\V

Vrw

ivAx

LAI u" i

/ l"wV r

N.

17/8/2005 28/10/2005 13/1/2006

Distribution of Shareholding as on 31st March, 2006

31/3/2006

Equity Shares

holding of nominal

value

1

1 - 5000

5001 - 10000

10001 - 20000

20001 - 30000

30001 - 40000

40001 - 50000

50001 - 100000

100001 - Above

Total

Equity Share

Number

2

3562

137

84

37

21

26

35

76

holders

% to

3

89.54

3.44

2.11

0.93

0.53

0.65

0.88

1.19

3978

Equity

In Rs

4

3886350

1 1 37790

1318920

921980

751240

1214550

2651740

60698720

100

Share Amount

%of

5

5.35

1.57

1.82

1.27

1.04

1.67

3.65

83.63

72581290 100



Vivimed Labs Ltd.l-Vivimed'

0. Locations of Manufacturing Facilities

FACTORY

UNIT-I UNIT-II78-A, Kolhar Industrial Area Survey No: 202,207/A, 207/E & 207/AABidar-585403, Bonthapally Village,Karnataka Medak Dist (A.P)

P. Address for Correspondence

(i) Investor Correspondence

For transfer / dematerialisation of shares, payment of dividend on shares and any other queryrelating to the shares of the company.

Aarthi Consultants Private Limited1-2-285, DomalgudaHyderabad-500029Phone No 91-40-27642217Fax: 91-40-27632184Email: [email protected]

For shares held in Demat form

To the Investors' Depository Participant(s) and/ Aarthi Consultants Private Limited

Any query on Annual ReportMr. Umakanta BarikCompany SecretaryVIVIMED LABS LIMITED2nd Floor, Veeranag TowersHabsiguda, Hyderabad-500 007Email: [email protected]

Q. Compliance Certificate of Auditors

Certificate from Auditors of the Company M/s P. Murali & Co confirming compliance with the conditionsof Corporate Governance as stipulated under clause 49 of the Listing Agreement is annexed to theDirectors' Report forming part of the Annual Report.

This Certificate has been forwarded to the Stock Exchange where the securities of the company arelisted.

w w w . v i v i m e d l a b s . c o m / ^gth Annual Report 2005 - 2006

•Vivimed-1


Vivimed Labs Ltd. /

CERTIFICATE FROM AUDITORS REGARDING COMPLIANCE OF

CONDITIONS OF CORPORATE GOVERNANCE

To

The Board of DirectorsVIVIMED LABS LIMITED,

We have examined the compliance of conditions of Corporate Governance by VIVIMED LABS LIMITED, forthe year ended 31st March, 2006 as stipulated in Clause 49 of the Listing Agreements of the said Company withstock exchange in India.

The compliance of conditions of Corporate Governance is the responsibility of the Company'sManagement. Our examination was limited to procedures and implementation thereof, adopted by theCompany for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit noran expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, wecertify that the Company has complied with the conditions of Corporate Governance as stipulated in the abovementioned Listing Agreement, as required under sub-clause 1 (A) of Clause of 49 of the Listing Agreement.

We state that in respect of investor grievances received during the year ended 31st March, 2006, noinvestor grievances are pending.

We further state that such compliance is neither an assurance as to the future viability of the Companynor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For P.Murali & CoChartered Accountants

P. Murali Mahan RaoPartner

Hyderabad.

29th August, 2006.

18th Annual Report 2005 - 2006 24 \\ www.vivimedlabs.com


Vivimed Labs Ltd.

AUDITORS' REPORTToThe Members,VIV'AAED LABS LTD

We have audited the attached Balance Sheet of VIVIMED LABS LTD as at 31st March , 2006 and also thePr. fit & Loss Account for the period ended on the date annexed thereto and the cash flow statement for theft' riod ended on that date. These financial statements are the responsibility of the Company's Management.Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those? andards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a test basis,i videnct' supporting the amounts and disclosures in the financial statement. An audit also includes assessingthe accounting principles used and significant estimates made by management, as well as evaluatingthe overall statement presentation. We believe that our audit provides a reasonable basis of our opinion.

As required by the Companies (Auditor's Report) order 2003 and as amended by the Companies (Auditor'sReport) (Amendment) order 2004, issued by the Central Government of India in terms of the sub-section(4A)of section 227 of the Companies Act, 1956, we enclose in the annexure a statement on the matters specifiedin paragraphs 4 and 5 of the said order.

Further to our comments in the Annexure referred to above, we report that:

(i) We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purposes of our Audit; ;

(ii) In our opinion, proper books of account as required by law have been kept by thecompany so far as appears from our examination of those books ;

(iii) The Balance Sheet & Profit & Loss Account dealt with by this report are in agreementwith the books of account;

(iv) In our opinion, the Balance Sheet & Profit & Loss Account dealt with by this reportcomply with the Accounting standards referred to in sub-section (3C) of Section211 of Companies Act, 1956 ;

(v) On the basis of written representations received from the Directors, as on 31st March ,2006 and taken on record by the Board of Directors, we report that none of the Directorsis disqualified as on 31st March, 2006 from being appointed Director in terms ofclause(g) of sub-section(l) of section 274 of the Companies Act,1956 ;

(vi) In our opinion and to the best of our information and according to the explanations giventc us. the said accounts give the information required by the Companies Act, 1956, inthe manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India ;

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2006;

(b) In the case of the Profit & Loss Account, of the Profit for the period ended on thatdate;

And

(c) In the case of the Cash Flow, of the cash flows for the period ended on that date;

PLACE : HYDERABAD

For P.MURALI a CO.,

CHARTERED ACCOUNTANTS

DATE : 29/08/2006 P.Murali Mohan RaoPartner

www.v1vimedlabs.com / / 2 5 18th Annual Report 2005 - 2006


_, Vivimed Labs Ltd.•VivimedJ

ANNEXURE TO THE AUDITORS' REPORT

I. (a) The Company has maintained proper records showing full particulars includingquantitative details and Situation of Fixed Assets.

(b) As explained to us, the fixed assets have been physically verified by the managementat reasonable intervals and no material discrepancies between the book records and thephysical inventory have been noticed on such verification.

(c) The Company has not disposed off substantial part of the Fixed Assets during the year.

II. (a) The Inventory has been physically verified during the year and in our opinion, thefrequency of verification is reasonable.

(b) In our opinion, the procedures of the physical verification of inventory followed by theManagement are Reasonable and adequate in relation to the size of the Company and thenature of its business. The Company is maintaining proper records of inventory and asexplained to us, no material discrepancies were noticed on physical verification ofstocks as compared to book records.

III. (a) The Company has not granted any loans, secured or unsecured to Companies, Firms or otherparties covered in the register maintained U/s.301 of the Companies Act, 1956.

{b) As the Company has not granted any loans, the clause of whether the rate of interest & otherterms and conditions on which loans have been granted to parties listed in the register maintainedunder section 301 is prejudicial to the interest of company, is not applicable.

(c) As no loans are granted by company, the clause of receipt of interest & principal amount fromparties, is not applicable to the company.

(d) No loans have been granted to Companies, Firms & other parties listed in the register U/s. 301 ofthe Companies Act, 1956, hence overdue amount of more than rupees one lac does not arise andthe clause is not applicable.

(e) The Company has not taken any loans, secured or unsecured from Companies, Firms orother Parties covered in the register maintained U/s.301 of the Companies Act, 1956.

(f) As the Company has not taken any loans, the clause of whether the rate of interest &other terms and conditions on which loans have been taken from parties listed in theregister maintained under section 301 is prejudicial to the interest of company, is notapplicable.

(g) As no loans are taken by the company, the clause of repayment of interest & principalamount to parties , is not applicable to the company.

IV. In our opinion and according to the information and explanations given to us, there aregenerally adequate internal control systems commensurate with the size of the company andthe nature of its business with regard to purchase of inventory and fixed assets and for sale ofgoods and services. There is no continuing failure by the company to correct any majorweaknesses in internal control.

V. (a) In our opinion and according to the information and explanation given to us, since nocontracts or arrangements referred to in section 301 of the Companies Act, 1956 have

18th Annual Report 2005 - 2006 26 www.vivimediabs.com

y- SANSCO SERVICES - Annual Reports Library Services - www.sansco.net

\ Vivimed Labs Ltd.•Vivimed"

been made by the company in respect of any party in the financial year, the entry in theregister U/s.301 of the Companies Act, 1956 does not arise.

,i

(b) According to the information and explanations given to us, as no such contracts orarrangements made by the company, the applicability of the clause of charging thereasonable price having regard to the prevailing market prices at the relevant time doesnot arise.

VI. The Company has not accepted any deposits from the public and hence the applicability of theclause of directives issued by the Reserve Bank of India and provisions of section 58A,58AA orany other relevant provisions of the Act and the rules framed there under does not arise. Asper information and explanations given to us the order from the Company Law Board orNational Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal hasnot been received by the Company.

VII. In our opinion, the company is having internal audit system, commensurate with its size andnature of its business.

VIII. In respect of the Company, the Central Government has not prescribed maintenance of costrecords under clause (d) of sub-section(l) of section 209 of the Companies Act, 1956.

IX. a) The Company is regular in depositing statutory dues including PF.ESI,Income Tax, CustomDuty, Excise Duty, and any other statutory dues with the appropriate authorities and atthe last of the financial year there were no amounts outstanding which were due formore than 6 months from the date they became payable.

b) According to the information and explanations given to us, no undisputed amounts arepayable in respect of PF, ESI, Income Tax, Custom Duty, Excise Duty, and any otherstatutory dues as at the end of the period, for a period more than six months from the date theybecame payable.

X. The Company has been registered for a period of not (ess than 5 years, and the company has noaccumulated losses at the end of the financial year and the company has not incurred cashlosses in this financial year and in the immediately preceding financial year.

Xi. According to information and explanations given to us, the Company has not defaulted inrepayment of dues to financial Institutions or banks.

XII. According to the information and explanations given to us, the Company has not granted anyloans or advances on the basis of security by way of pledge of shares, debentures and othersecurities and hence the applicability of the clause regarding maintenance of adequatedocuments in respect of loans does not arise.

XIII. This clause is not applicable to this Company as the Company is not covered by the provisionsof special statute applicable to Chit Fund in respect of Nidhi/Mutuat Benefit Fund/Societies.

XIV. According to the information and explanations given to us, the company is not dealing ortrading in shares, securities, Debentures and other investments and hence the provisions ofclause 4(xiv) of the Companies (Auditor's Report) Order 2003, are not applicable to theCompany.

XV. According to the information and explanations given to us, the Company has not given anyguarantee for loans taken by others from Banks or Financial Institutions, and hence the

SZ^www.vivimedlabs.com II 27 18th Annual Report 2005 - 2006


•Vivimed-Vivimed Labs Ltd.

applicability of this clause regarding terms and conditions which are prejudicial to the interestof the company does not arise.

XVI. According to the information and explanations given to us, the Term Loans were applied by thecompany for the purpose for which the loans were obtained.

XVII. According to the information given to us and on an overall examination of the Balance Sheet

of the Company, we report that the funds raised on short-term basis have been used for longterm investment during the year under audit.

XVIII. According to the information and explanations given to us, the Company has not made any

preferential allotment of Shares to parties and Companies covered in the Register maintainedunder section 301 of the Companies Act, 1956 and hence the applicability of the clause

regarding the price at which shares have been issued and whether the same is prejudicial tothe interest of the Company does not arise.

XIX. According to the information and explanations given to us, the company does not have any

debentures and hence the applicability of the clause regarding the creation of security orcharge in respect of debentures issued does not arise.

XX. We have verified the end use of money raised by public issue as disclosed in the Notes to the FinancialStatements.

XXI. According to the information and explanations given to us, no fraud on or by the Company hasbeen noticed or reported during the year under audit.

ForP.MURALI a CO.,CHARTERED ACCOUNTANTS

PLACE : HYDERABAD P.Murali Mohan Rao

DATE : 29/08/2006 PARTNER

18th Annual Report 2005-2006 28 \V www.vivimedlabs.com


Vivimed Labs Ltd,

BALANCE SHEET AS AT 31st MARCH, 2006

PARTICULARSSchNo.

As on31-03-2006

(Rupees)

As on31-03-2005

(Rupees)

I SOURCES OF FUNDS1) SHARE HOLDER1 S FUNDS

a) Share Capital

b) Reserves & Surplus

2) LOAN FUNDS

a) Secured Loans

b) Unsecured Loans

3) DEFFERED INCOME TAX LIABILITY

1 72,581,290 47,567,000

2 406,486,394 163,710,854

3 147,832,420 110,643,253

53,942,047 30,807,628680,842,151 352,728,736

II APPLICATION OF FUNDS

1)

2)

3)

4)

FIXED ASSETS

a) Gross Block

b) Less: Depreciation

c) Net Block

d) Capital Work-in-progess

INVESTMENTS

CURRENT ASSETS, LOANS & ADVANCES

a) Inventories

b) Sundry Debtors

c) Cash & Bank Balances

d) Loans, Advances & Deposits

Less: Current Liabilities & Provisions

NET CURRENT ASSETS

MISCELLANEOUS EXPENDITURE

(to the extent not written off or adjusted)

NOTES TO ACCOUNTS

TOTAL

4

5

6

7

8

9

10

20

399,597,162

62,500,513

337,096,649

10,705,244

5,000,000

140,303,588

178,493,932

4,566,128

103,402,844

115,791,651

310,974,841

17,065,418

680,842,151

253,025,287

46,347,275

206,678,012

5,600,000

-

110,788,404

95,795,868

424,625

16,192,072

86,009,677

137,191,292

3,259,432

352,728,736

SCHEDULES 1 TO 20 FORM INTEGRAL PART OF ACCOUNTS

AS PER OUR REPORT OF EVEN DATE

FOR P.MURALI & CO.,


FOR AND ON BEHALF OF THE BOARD

FOR VIVIMED LABS LIMITED

P.MURALI MOHAN RAOPartner

PLACE : HYDERABADDATE : 28-8-2006

www.vivimedlabs.com

SANTOSH VARALWARChairman & Managing Director

SUBHASH VARALWARVice-Chairman

UMAKANTA BARIKCompany Secretary

29 18th Annual Report 2005 - 2006


*̂5 Vivimed Labs Ltd.

PROFIT & LOSS ACCOUNT FOR THE

PARTICULARS

1 INCOME

a. Sales

b. Other Income

c. Increase / Decrease of Stocks

TOTAL

2 EXPENDITURE

a. Consumption of Raw-Materials

b. Manufacturing Expenses

c. R & D Expenses

d. Salaries, Wages & Other Allowances

e. Selling & Administrative Expenses

f. Interest & Financial Charges

g. Depreciation

h. Preliminary & Preoperative expenses

written off

TOTAL

Profit / (Loss) before Tax

Less: Provision for Taxation

Less: Provision for Deferred Tax Liability

for Current Year

Less: Fringe benefit Tax

Less: Prior Period Debits

Profit / (Loss) after Tax

Balance brought forward

Balance Carried forward to Balance Sheet

rYEAR ENDED 31ST MARCH, 2006

r h Year Ended Year EndedNo 31-03-2006 31-03-2005

(Rupees) (Rupees)

11 790,179,109 520,880,747

12 20,416,528 3,440,940

, 13 25,502,110 27,545,227

836,097,747 551,866,914

14 496,171,013 326,770,416

15 51,686,994 40,362,833

16 21,695,783 7,537,041

17 23,132,486 13,468,820

18 74,460,821 57,828,752

19 21,119,593 18,660,420

4 16,153,238 11,845,808

1,825,445

706,245,372 476,474,070

129,852,375 75,392,844

13,222,959 6,326,000

23,134,419 20,678,761

805,197

262,302

92,689,800 48,125,781

155,740,654 107,614,873

248,430,454 155,740,654

SCHEDULES 1 TO 20 FORM INTEGRAL PART OF ACCOUNTS


FOR P.MURALI & CO.,








18th Annual Report 2005 - 2006


30 www.vivimedlabs.com


Vivimed Labs Ltd.•Vivirned-

Schedules to Balance SheetSCHEDULE - 1

SHARE CAPITAL

PARTICULARS

AUTHORISED:

11, 000,000 Equity Shares of Rs. 107- each

ISSUED,SUBSCBIED & PAID-UP:

7258129 (4756700 ) Equity Shares of Rs. 107- each

TOTAL

AS AT

31-03-2006

(Rupees)

110,000,000

72,581,290

72,581,290

AS AT

31-03-2005

(Rupees)

110,000,000

47,567,000

47,567,000

SCHEDULE - 2

RESERVES & SURPLUS

PARTICULARS

General Reserve

Share Premium

Balance of Profit & Loss Account

TOTAL

AS AT

31-03-2006

(Rupees)

2,499,100

155,556,840

248,430,454

406,486,394

AS AT

31-03-2005

(Rupees)

2,499,100

5,471,100

155,740,654

163,710,854

SCHEDULE - 3

SECURED LOANS

PARTICULARS

AS AT

31-03-2006

(Rupees)

AS AT

31-03-2005

(Rupees)

a) State Bank of Hyderabad

- FUBD

- CASH CREDIT

- PACKING CREDIT

- BOOK DEBTS

-

12,817,239

32,971,288

9,242,048

6,299,733

15,991,401

28,454,251

8,878,649

b)CITI Bank N.A.

- CASH CREDIT

- FUBD

4,982,926

6,449,760

11,985,066

3,790,266


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* 3 D.

QJ CT

1/1 r-f

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3 0) a. QJ CT U5 h o 3


Vivimed Labs Ltd.•Vivjmed-

- PACKING CREDIT

(Pari-passu charge on company's existingand future Fixed Assets, raw materials, Stock in Process,finished goods, consumables, spares, book debts and

receivables. Pari-passu equitable mortage on the propertiesof the directors & personal .guarantee of the directors)

14,201,065 6,910,567

c) Term Loans

- TERM LOAN Against Fixed Assets (SBH)

- TERM LOAN Against Fixed Assets (Citi Bank)

- TERM LOAN Against Hypothecation of Vehicles

TOTAL

50,646,669

13,715,086

2,806,339

147,832,420

9,500,000

17,300,000

1,533,320

110,643,253

SCHEDULE - 5

INVENTORIES

PARTICULARS

a) Raw Materials

b) Work In Progress

c) Finished Goods

d) Consumables

TOTAL

AS AT

31-03-2006(Rupees)

30,743,757

73,040,855

36,518,976

-

140,303,588

AS AT31-03-2005

(Rupees)

25,770,271

37,632,724

46,424,997

960,412

110,788,404

SCHEDULE- 6

SUNDRY DEBTORS

PARTICULARS

AS AT31-03-2006

(Rupees)

AS AT31-03-2005

(Rupees)

(Unsecured and Considered good)

Considered good

a) Debts exceeding for a period of six months

b) Other debts

TOTAL

'

178,493,932

178,493,932

3,334,002

92,461,866

95,795,868



•Vivimed-Vivimed Labs Ltd.

SCHEDULE- 7

CASH a BANK BALANCES

PARTICULARS

Cash fit Bank Balance

TOTAL

AS AT31-03-2006(Rupees)

4,566,128

4,566,128

AS AT31-03-2005

(Rupees)

424,625

424,625

SCHEDULE - 8

LOANS , ADVANCES a DEPOSITS

PARTICULARS AS AT31-03-2006

(Rupees)

AS AT31-03-2005

(Rupees)

DEPOSITS

DEPOSITS WITH BANKS

Deposits with Others

48,664,413

3,475,930

6,518,815

4,178,720

ADVANCES RECOVERABLES IN CASH OR IN KINDOR FOR VALUE TO BE RECEIVED

1 . Advances to Suppliers

2. Advance to Creative Health Care PvtLtd (100% subsidiary)

3. Other Advances

4. Staff Advances

5. Prepaid Expenses

6. Advance Income Tax

7. TDS Receivable

TOTAL

28,443,763

12,545,288

7,270,927

846,482

529,544

1,000,000

626,497

103,402,844

825,474

1,483,258

2,851,530

334,275

-

-

16,192,072

SCHEDULE -9

CURRENT LIABILITIES a PROVISIONS

PARTICULARS

Creditors for Supplies

Creditors for Capital goods

Other Creditors

Provisions Et outstanding Exp.

Advances received from Customers

TOTAL

18th Annual Report 2005 - 2006 34 ̂ \

AS AT31-03-2006(Rupees)

46,936,924

17,861,459

14,523,490

31,594,777

4,875,000

115,791,651

WWW

AS AT31-03-2005

(Rupees)

62,668,376

2,441,764

9,756,820

11,142,717

-

86,009,677

vivimedlabs.com


Vivimed Labs Ltd.-Vivimed-

SCHEDULE -10

MISCELLANEOUS EXPENDITURE

PARTICULARS

Preliminary Expenses

Public Issue Expenses

TOTAL

AS AT31-03-2006

(Rupees)

2,997,130

14,068,288

17,065,418

AS AT31-03-2005

(Rupees)

3,259,432

-

3,259,432

Schedules to Profit & Loss Account

SCHEDULE - 11

SALE OF SPECIALITY CHEMICALS

SCHEDULE- 12

OTHER INCOME

SCHEDULE-13

INCREASE / DECREASE OF STOCKS

www. vivimedlabs.com

PARTICULARS

Sales - Domestic

Sales - Export ,

TOTAL

For theYear Ended31-03-2006

(Rupees)

480,519,417

309,659,692

790,179,109


(Rupees)

252,718,059

268,162,688

520,880,747

PARTICULARS

Other Income

TOTAL


(Rupees)

20,416,528

20,416,528


(Rupees)

3,440,940

3,440,940

PARTICULARS

OPENING STOCKS: WORK IN PROGRESS

For theYear Ended31-03-2006(Rupees)

37,632,724

For theYear Ended31-03-2005(Rupees)

27,012,930



*̂*» Vivimed Labs Ltd.

FINISHED GOODS

(A)

CLOSING STOCKS: WORK IN PROGRESS

FINISHED GOODS

(B)

INCREASE / DECREASE OF STOCKS (A-B)

r46,424,997

84,057,721

73,040,855

36,518,976

109,559,831

25,502,110

29,499,564

56,512,494

37,632,724

46,424,997

84,057,721

27,545,227

SCHEDULE -14

CONSUMPTION OF RAW- MATERIALS a CONSUMABLES

PARTICULARS

OPENING STOCK OF RAW MATERIALS & CONSUMABLES

ADDrPURCAHSE DURING YEAR

CUSTOMS & CLEARING CHARGES

FREIGHT INWARD

LESS : CLOSING STOCK OF RAW MATERIALS


(Rupees)

26,730,684

486,679,225

7,522,536

5,982,325

526,914,770

30,743,757


(Rupees)

13,557,727

328,466,144

6,465,384

4,051 ,432

352,540,687

25,770,271

LESS : CLOSING STOCK OF CONSUMABLES

TOTAL 496,171,013 326,770,416

SCHEDULE - 1 5

MANUFACTURING EXPESNSES

PARTICULARS

Consumables

Jobwork Charges

Power & Fuel

Factory Maintenance

Other Manufacturing Expenses

TOTAL


(Rupees)

5,496,641

9,265,129

23,698,280

6,626,136

6,600,809

51,686,994


(Rupees)

19,450,980

9,131,706

889,700

10,890,446

40,362,833

18th Annual Report 2005 - 2006 www, viv! med labs. com


\

SCHEDULE - 16

R & D EXPENSES

SCHEDULE - 17

SALARIES ,WAGES & OTHER ALLOWANCES

SCHEDULE -18

SELLING & ADMINISTRATIVE EXPENSES

Vivimed Labs Ltd.

PARTICULARS

R & D Expenses

Lab Maintenance

TOTAL

For the

Year Ended

31-03-2006(Rupees)

20,726,459

969,324

21,695,783

For the

Year Ended

31-03-2005

(Rupees)

6,569,348

967,694

7,537,041

PARTICULARS

Salaries & Wages

Provident fund

Bonus

Medical Expenses

Staff Welfare

Gratuity

TOTAL

For the

Year Ended

31-03-2006(Rupees)

17,391,801

922,824

2,102,065

288,399

1,942,051

485,346

23,132,486

For the

Year Ended

31-03-2005(Rupees)

10,301,031

736,132

744,713

233,454

1,334,958

118,532

13,468,820

PARTICULARS

For the

Year Ended31-03-2006

(Rupees)

For the

Year Ended31-03-2005

(Rupees)

SELLING EXPENSES

Sales Tax

Business & Marketing Exp

Commission & Discounts

Excise Duty Paid

export packing charges

6,380,300

1,704,160

1,003,386

26,168,189

201,301

3,336,554

6,311,924

3,147,132

15,522,022

www.vivimedlabs.con 37 18th Annual Report 2005 - 2006


•̂̂ Vivimed Labs Ltd.

Rebates & Discounts

Freight Outward

E.C.G.C Export

r1,027,983

9,717,513

267,848

7,959,066

353,948

ADMINISTRATIVE EXPENSES

Printing & Stationery

Telephone & Postage Expenses

Travelling Expenses

Rates & Taxes

Conveyance Expenses

Consultancy Charges

Auditors Remuneration

Insurance

Rent

Fluctuations in Foreign Exchange

1,724,968

2,402,836

4,930,023

702,815

1,779,358

1,725,858

57,750

1,374,772

700,338

2,394,005

776,035

2,012,376

3,748,755

1,565,604

640,942

929,087

64,800

1,187,434

477,668

800,912

Income tax Paid

Directos Remuneration

Directors' Sitting Fee

Other Administrative expenses

TOTAL

3,300,000

35,000

6,862,418

74,460,821

3,300,000

17,500

5,676,973

57,828,732

SCHEDULE - 19

BANK INTEREST & FINANCIAL CHARGES

PARTICULARS

Interest on Term Loan

Interest accrued but not due on Term Loan

Interest on Working Captial (Bank)

Interedst on Working Capital (Others)

Interest on Vehicle Loans

Financial Charges

TOTAL

For theYear Ended

31-03-2006(Rupees)

3,457,097

2,700,000

6,159,851

6,416,736

109,266

2,276,643

21,119,593

For theYear Ended

31-03-2005(Rupees)

2,074,742

6,282,833

7,704,461

2,598,384

18,660,420



\ Vivirned Labs Ltd.'Vivirned'

SCHEDULE - 20

NOTES FORMING PART OF ACCOUNTS

A. SIGNIFICANT ACCOUNTING POLICIES

General :

(i) Accounting policies not specifically referred to otherwise are consistent and in consonance withgenerally accepted accounting principles.

(ii) These accounts are prepared on the historical cost basis and on the accounting principles ofa going concern accounting principles.

Revenue Recognition :

The Company follows the Mercantile system of Accounting and recognizes income and expenditure onaccrual basis.

Foreign Exchange Transaction :

Realised gains & loss in foreign exchange transactions are recognised in Profit & Loss Account.

Transactions in foreign currency are recorded at the rates of exchange prevailing on the date of thetransaction..

Investments :

Investments are stated at cost i.e. cost of acquisition, inclusive of expenses incidental to acquisitionwherever applicable.

Fixed Assets :

Fixed assets are stated at cost less accumulated depreciation. Cost of acquisition and creation of fixedassets is inclusive of freight, other directly attributable costs , incidental expenses and applicableduties and taxes

Depreciation and Amortisation :

(i) Depreciation is provided on straight line method on pro-rata basis and at the rates and mannerspecified in the Schedule XIV of the Companies Act, 1956

(ii) Preliminary Expenses are amortised over the period of 10 years.

Capital Work-in-Progress :

The Capital Work-in-Progress includes cost of Fixed Assets under installation, advances for CapitalGoods and unallocated expenditure.

Inventories:

Inventories are valued at cost or market price whichever is lower.

Taxation :

Current Income Tax is provided as per applicable Income tax provisions. Deferred tax is provided

w w w . v i v i m e d l a b s . c o m ^ 9 18th Annual Report 2005 - 2006


•Vivimed-lVivimed Labs Ltd.

as required under Accounting Standard 22 (AS 22)

Gratuity :

B.

Liability on account of Gratuity and Leave Encashment are provided on accrual basis.

NOTES ON ACCOUNTS

Managerial Remuneration

Salary

: Current Year (Rs.)

33,00,0007-

Previous Year (Rs.)

33, 00,0007-

Auditor's Remuneration :

Audit Fee

Tax Matters

50,0007-

10,0007-

(50,0007-)

(10,0007-)

Detailed information regarding quantitative particulars under part II of Schedule VI to the Companies Act,

1956.

1. Quantitative information in regard to

a) Licensed Capacity

b) Installed Capacity in Tones per Annum

5. Actual Production:

Item

Speciality Chemicals

6. Product - wise Sales for the Year 2005-06

SI No. Product Qty (Mt)

1. Speciality Chemicals 1061.041

7. Opening & Closing Stocks

- N.A-

1150

Quantity in (Mt)

1047.092

Value (Rs.)

790179109

Item

Speciality Chemicals for

Opening Stocks

Qty(Kgs) Value (Rs.)

68467 46424997

Closing Stock

Qty(Kgs) Value Rs.

54518 36518976

8. Raw Material Consumed

P C E

n_hexane

Propane Triot

Others

Total

Rs. 32789366

Rs. 16362789

Rs. 30495411

Rs.41 6523447

Rs. 496171013

(Rs. 36403269)

(Rs.9799173)

(Nil)

(Rs. 280567974)

(Rs. 32677041 6)



\ Vivimed Labs Ltd.-Vivimed-

9. In August 2005, the Company made allotment of 2501429 equity shares, of Rs.10/- at a premium ofRs. 607- per share aggregating to Rs. 1751 lacs. Expenditure of Rs. 156.31 lacs, was incurred formaking the IPO. '

Proceeds of IPO of Rs.1751 lacs are utilised in the following manner.

Acquisition of fixed Assets

Expenditure for making the offer

Working Capital

1283.07

156.31

311.62

(Nil)

(Nil)

(Nil)

10. Investment of Rs 500000 represents 5,00,000 equity shares of Rs. 10/- each in M/s Creative Health

care Pvt.Limited, a 100% Subsidiary of the Company. The shares are unquoted.

11. Advances recoverable in cash or kind include Rs. 125.45 lacs due from subsidiary.

12. FOREIGN EXCHANGE EARNINGS AND OUTGO

EARNINGS

Income from Export Sales Rs. 309659692 ( Rs. 243937586)

OUT GO:

Raw Materials

Travels

Others

Rs. 78576630

Rs.2326319

Rs. 1949642

(Rs. 54884993)

(Rs.2960883)

(Rs. 4908204)

13. GIF Value of Imports

Raw material Rs.78576630

% of imported raw material to total consumption 15.84

14. No SSI dues are outstanding for more than 30 days

15. Related Party Disclosure:As per Accounting Standard 18, transactions with the related parties are given below:

List of the Related Parties

V.V.S. Pharmaceuticals Pvt. Ltd. Associate Company

V.Manohar Rao Key Managerial Personnel

Creative Health Care Pvt Ltd 100% Subsidiary

Transactions during the year with related Parties

V.V.S. Pharmaceuticals

V.Manohar Rao

Pvt. Ltd.

Creative Health Care Pvt Ltd

Purchases:

Sales

Salary

Advance

Rs. 5894000

Rs.936268

Rs.600,000)

Rs.1, 25,45,288

(Rs.9775034)

(Rs. 1334397)

(Rs.600000)

(Nil)

www.vivimedlabs.com ff 41 isth Annual Report 2005 - 2006


Yivimed-Vivimed Labs Ltd.

16. Contingent Liabilities:

Letter of Credit

Bank Guarantee

Rs.47256605

0.00

(Rs. 3418240)

(Rs.368109 )

Corporate Guarantee

(in favour of bankers of Subsidiary ) Rs.6, 50,00,000 (0.00)

17. Figures in the Parenthesis are of previous year .

18. Previous years figures have been regrouped wherever necessary.

19. All figures have been rounded off to the nearest rupee.

SIGNATORIES TO SCHEDULES 1 TO 20

Notes to Accounts 20

AS PER OUR REPORT OF EVEN DATEFORP.MURALI a CO.,CHARTERED ACCOUNTANTS





SANTOSH VARALWARChairman fit Managing Director



18th Annual Report 2005 - 2006

CASH FLOW FOR THE YEAR 2005-06

www.vivimedlabs.com


Vivimed Labs Ltd.•Vivimed'

PARTICULARS

A CASH FLOW FROM OPERATING ACTIVITIES

NET PROFIT BEFORE TAX

ADJUSTMENT FORDEPRECIATION

FINANCIAL EXPENSES

INTEREST EARNED & OTHER INCOME

LOSS ON FIXED ASSET SALE

PRELIMINARY EXP WRITEEN OFF

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES

ADJUSTMENT FOR

DECREASE / (INCREASE) IN INVENTORIES

DECREASE / (INCREASE) IN DEBTORS

DECREASE / (INCREASE) IN LOANS a ADVANCES

(DECREASE) / INCREASE IN CURRENT LIABILITIES

CASH GENERATED FROM OPERATIONS

INTEREST a FINANCIAL CHARGES

OTHER INCOME

CASH FROM OPERATING ACTIVITIES (A)

B CASH FLOW FROM INVESTING ACTIVITIES

Decrease / (Increase) in Fixed Assets Net

Decrease / (Increase) in Public Issue Expenses

Decrease / (Increase) in Investment in Equity

Decrease / (Increase) in Capital Work-in-progress

Cash used in Investment Activities (B)

C CASH FLOW FROM FINANCIAL ACTIVIES

(Decrease) / Increase in Long Term Borrowing

(Decrease) / Increase in Share Capital a Share

Application money a Share Premium

(Decrease) / Increase in Working Capital Loans

Net Cash from Financing Activities (c)

D Net Increase in Cash and Cash Equivalents (A+B+C)

E Cash and Cash equivalents as on 01-04-05

F Cash and Cash equivalents as on 31-03-06

Rs lakhs

2005-06

1,298.52

161.53

211.20

(204.17)

18.251,485.34

(295.15)

(826.98)

(872.11)

157.54

(351.36)

(211.20)

204.17

(358.39)

(1,465.72)

(156.31)

(50.00)

(51.05)

(1,723.09)

388.35

250.14

1,500.86

(16.46)

2,122.89

41.424.24

45.66


FORP.MURALI a CO.,




www.vivimedlabs.com



SANTOSH VARALWARChairman Et Managing Director





•VivimedJVivimed Labs Ltd.

AUDITOR'S CERTIFICATE

TO,The Board of Directors

Vivimed Labs Limited,

Hyderabad

We have examined the attached Cash flow Statement of M/S. Vivimed Labs Limited for the year ended

31st March, 2006. The Statement has been prepared by the Company in accordance with the requirement of

Clause 32 of listing agreement with Stock Exchange and is based on and in agreement with the corresponding

Profit & Loss Account and Balance Sheet of the Company, covered by our report of 29-08-2006 to the member

of the company.

Yours faithfully,

for P.MURALI & CO.

Chartered Accountants

PLACE : HYDERABAD P.MURALIMOHAN RAO

DATE : 29-08-2006 Partner

18th Annual Report 2005 - 2006 44 \ www.vivimedlabs.com


III.

IV.

V.

Vivimed Labs Ltd.'Vivimed-I

BALANCE SHEET ABSTRACT & COMPANY'S GENERAL BUSINESS PROFILERegistration Details 0 8 0 9 4 6 5 State Code: 0

Balance Sheet Date 0

Capital Raised during the year (Amount in Rs.Thousands)Public Issue Right issue

1Bonus Issue Private Placements

N I NPosition of mobilisation and Development of Funds (amount in Rs. Thousand)

Total Liabilities Total Assets

8 0 8 4 2 6 8 0 8

Sources of Funds

Paid-up-Capital Reserve & Surplus

8 1 0 8

Secured Loans Unsecured Loans & Deffered Tax Liability

1 7 8 3 2 9 4 2

Application of Funds

Net Fixed Assets Investments

7 0 9 6Net Current Assets Miscellaneous Exp.

1 0 9 7 4 1Accumulated Losses

N | I I LPerformance of the Company: (Amount in Rs. Thousand)

Turnover* Total Expenditure

8 0 0

"Including Other Income & Stock

Prof it/Loss before Tax Prof it/Loss after Tax

1 8

Earning per Share in Rs. (basis & diluted) Dividend Rate1 N

Generic Name of three Principal products of the Company (as per monetary terms)Product Description : TRICLOSAN 3380-34-5

AVIS (AVOBENZENE) ITEM CODE 70656-0-1CAGP 27214-00-2







www.vivimedlabs.com 45 18th Annual Report 2005 - 2006


•Vivimed.Vivimed Labs Ltd.

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956

RELATING TO SUBSIDIARY COMPANY

1. Name of the Subsidiary

2. Financial period ended

3. Holding company's interest

4. The net aggregate of profit or losses for

the current period of the Subsidiary so far as it

concerns the members of the Holding company

a. dealt with or provided for in the account ofthe Holding Company

b. not dealt with or provided for in the account of

the Holding Company

5. The net aggregate of profit or losses forthe previous financial years of the Subsidiary sofar as it concerns the members of the Holdingcompany

a. dealt with or provided for in the account ofthe Holding Company

b. not dealt with or provided for in the account of

the Holding Company

M/s Creative Health Care Pvt. Limited

31-03-2006

100%

NIL

NIL

NA

NA



•Vivimed-1

CREATIVE HEALTH CARE PRIVATE LIMITED

FIRST ANNUAL REPORT 2005-2006

BOARD OF DIRECTORS(AS ON 25.08.2:006)

1. Dr.V. MANOHAR RAO CHAIRMAN

2. SRI S.P.JAIN DIRECTOR

3. Dr. BIRBAL SINGH DIRECTOR

4. SRI.MANJIT SINGH DIRECTOR

5. SRI. SANDEEP VARALWAR DIRECTOR

6. SRI. SUNILARAB DIRECTOR

AUDITORS:

JAYESH SUTARIA ASSOCIATES


MUMBAI

REGISTERED OFFICE:

130, SHANTA INDUSTRIAL ESTATE

1ST FLOOR,I.B. PATEL ROAD

GOREGAON(E), MUMBAI-400 063

FACTORY:

PLOT NO-25

KUNDESHWARI VILLAGE

KASHIPUR, UDHAMSINGH NAGAR-244713

UTTARANCHAL

w w w . v i v i m e d l a b s . c o m \ s t Annual Report


•Vivimed'

CREATIVE HEALTH CARE PRIVATE LIMITED

DlRECTORS' REPORT

To

The members,

Your Directors have pleasure in presenting the First Annual Report together with Audited Accounts of theCompany for the year-ended 31.03.2006.

FINANCIAL RESULTS:

The current year being the first financial year of the company after incorporation the actual financial result

are not prepared.

DIRECTORS:

During the year Dr.V.Manohar Rao , Sri. Sandeep Varalwar, Dr. Birbal Singh, Sri Manjit Singh was appointed asan additional director of the Company and A.K. Newatia,Sri. Arun Goyal, Sri. Anupam Restogi and Sri. Raj

Kumar Singh was resigned from the Board.

AUDITORS :

Your Company's Auditors, Jayesh Sutaria Associates, Chartered Accountants retire at the conclusion of the

ensuing Annual General Meeting and are eligible for re-appointment .

COMPLAIANCE CERTIFICATECompliance Certificate as per the provision of section 383A of the companies Act,1956 issued by O.V.N.Murthy, Company secretary In Practice is annexed hereto for the information of the Members.

ENERGY CONSERVATION, TECHNOLOGY, ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO : NIL

DIRECTOR'S RESPONSIBILITY STATEMENT :

As required under section 217(2AA) of the Companies Act, 1956, your Directors state that:

a) In the preparation of the annual accounts , the applicable accounting standards have

been followed

b) The accounting policies selected and applied are consistent and judgements andestimates made are reasonable and prudent , so as to give a true and fair view of theaffairs of the Company as at end of the financial year and of the loss for the said year.

c) Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956 for safeguardingthe assets of the Company and for preventing and detecting fraud and other

irregularities.

d) The annual accounts have been prepared on a going concern basis.

EMPLOYEES:

There are no employees whose particulars are required to be disclosed in the Directors Report as per the

provisions of Section 217 (2A) of the Companies Act, 1956.

For and on behalf of the Board

PUCE: MUMBAI Dr. V. MANOHAR RAODATE : 25.08.2006 CHAIRMAN

1st Annual Report 48 \v www.vivimedlabs.com


•Vivimed'

COMPLIANCE CERTIFICATE

(Issued under the Companies (Compliance Certificate) Rules, 2001)

Registration No. of the Company : U24230MH2005PTC154622

Nominal Capital of the Company : Rs.50,00,0007-

ToThe MembersCreative Health Care Private Limited130, Shanta Industrial Estate,1st Floor, I.B.Patel Road, Goregaon (E)MUMBAI - 400 063

I have examined the registers, records, books and papers of M/s. Creative Health Care Private Limitedfor the financial year ended 31st March, 2006 as required to be maintained under the Companies Act, 1956and the rules made there under and also the provisions contained in the Memorandum and Articles ofAssociation of the Company. In my opinion and to the best of the information and according to theexaminations carried out by me and explanations furnished to me by the Company, its officers and agents, Icertify that in respect of the aforesaid financial year.

01. The Company has kept and maintained all registers and stated in Annexure 'A' certificate as theprovisions and the rules made there under and entries therein have been recorded.

02. The Company has filed the forms and returns as stated in Annexure 'B' to this certificate, withthe Registrar of Companies, Regional Director, Central Government, Company Law Board or otherAuthorities under the Companies Act, 1956 and the rules made there under.

03. The Company being a Private Limited Company has the minimum Paid up capital and its maximumnumber of members during the said Financial Year was Three (3) excluding its present and pastemployees of the Company.

(i) has not invited public to subscribe for its shares or debentures; and

(ii) has not invited or accepted any deposits from persons other than members, Directors ortheir relatives.

04. The Board of Directors met four times on 10th August, 2005, 1st September, 2005, 10th October,2005 and on 25th January, 2006, in respect of which meetings notices were given and theproceedings were recorded and signed in the Minutes Book maintained for the purpose. (Since thecompany was incorporated on 08-7-2005, there was no Board meeting in April - June, 2005)

05. The Company was not required to close its Register of Members during the Financial Year underreview.

06. No Annual General Meeting was held during the financial year under review since being the firstof Incorporation.

07. One Extraordinary General Meeting was held on 29th August, 2005 after giving notice to themembers of the company and resolutions passed thereat were recorded in the Minutes Bookmaintained for the purpose.

www.vivimedlabs.com ff 49 1st Annual Report


*•Vivimed-l

08. The Company being a Private Company, provisions contained in Sec. 295 of the Act are notapplicable.

09. The Company not contravened the provisions of section 297 of the Act in respect of contractsspecified in that section.

10. The Company has made entries in the register maintained under section 301 of the Act.

11. There were no appointments that took place which attracts the provisions of the Section 314during the year under scrutiny.

12. The Company has not issued any duplicate -share certificates during the financial year underscrutiny.

13. The Company:

(i) has delivered all the certificates on allotment of securities and on lodgment thereof fortransfer / transmission during the financial year

(ii) did not hold any AGM since being first year of Incorporation and hence provisions relatingto deposit of amount in a separate bank account in respect of dividends are notapplicable.

(iii) did not hold any AGM since being first year of Incorporation and hence provisions relatingto posting of warrants are not applicable.

(iv) was not required to transfer the amount in unpaid dividend amount, application money duefor refund, matured deposits, matured debentures and interest accrued thereon, whichhave remain unclaimed / unpaid for a period of 7 years to the Investors Education andProtection Fund.

(v) did not hold any AGM since being its first year of Incorporation and hence provisionrelating to Section 217 of the Act are not applicable.

14. The Board of Directors of the company is constituted. There were appointments of AdditionalDirectors and company has filed the relevant Form 32s during the Financial Year under scrutiny.

15. The provisions of section 269 read with Schedule XII of the Act, relating to the appointment ofManaging Director / Whole time Director / Manager are not applicable since being a PrivateCompany.

16. The Company has not appointed any sole selling agents during the financial year under scrutiny.

17. The Company is not required to seek any approvals of the Central Government, Company LawBoard, Regional Director, Registrar or such authorities prescribed under the various provisions ofthe Act during the financial year.

18. The Directors have disclosed their interest in other firms / companies to the Board of Directorspursuant to the provisions of the Act and the rules made there under.

19. The Company has allotted 4,90,000 Equity shares during the Financial Year under scrutiny and hasfiled the relevant Forms No. 2. However the company has not issued any Debentures during theFinancial Year under scrutiny.

20. The Company has not bought back any shares during the financial year ending 31st March, 2006.

1st Annual Report 50\\ www.vivimedlabs.com


•Vivimed'

21. There was no redemption of Preference Shares or Debentures during the financial year underscrutiny.

22. There were no transactions necessitating the Company to keep abeyance the rights to Dividend,Rights Shares and Bonus Shares, pending registration of transfer of shares during the financialyear under review.

23. The Company has not invited / accepted any deposits including unsecured loans from publicfalling within the purview of Section 58 A during the Financial Year under review.

24. The provisions of Section 293 (1) (d) are not applicable since being a Private Company.

25. The provisions relating to loans and investments, or giving guarantees or providing securities toother bodies corporate as per Section 372A of the Act, are not applicable since being a PrivateCompany.

26. The Company has not altered the provisions of Memorandum with respect to the situation of theCompany's Registered Office from one state to another during the financial year under scrutiny.

27. The Company has not altered the provisions of the Memorandum with respect to the objects ofthe Company during the financial year under scrutiny.

28. The Company has not altered the provisions of the Memorandum with respect to the name of theCompany during the financial year under scrutiny.

29. The Company has altered the provisions of the Memorandum with respect to the share capital ofthe company vide EGM held on 29-8-2005.

30. The Company has altered its Articles of Association during the Financial year under scrutiny.

31. There was no show cause notice from the Registrar of Companies received the Company foroffences under the Act during the financial year.

32. The Company has not received any money as a security from its employees during the financialyear.

33. The Company has not constituted any Provident Fund hence the provisions of Section 418 are notapplicable.

Place: Hyderabad

Date : 29th August, 2006 Signature :

Name of Company Secretary: O.V.N.Murthy

C.P. No. : 7171



•Vivimed' fAnnexure 'A'

Registers as maintained by the Company:

(1) Register of Members u/s. 150

(2) Register of Charges u/s. 143

(3) Minutes Books of the Meetings.

(4) Register u/s. 301

(5) Register of Directors u/s 303

(6) Register of Directors' Shareholdings u/s. 307

(7) Share Transfer Register u/s. 108

Annexure 'B'

Forms anrf Returns as filed by the Company with

1. The Registrar of Companies, Mumbai during the financial

Year ending 31st March, 2006.

S.No Form

1 Form 32

2 Form 32

3 Form 32

4 Form 5

5 Form 23

6 Form 2

7 Form 8 and 1 3

u/s

260

303

303

97

192

75

125

For

Appt. of Addl. Directors

Changes in Directors

Changes in Directors

Increase of Auth. Cap

Alteration of Articles

Return of Allotment

Creation of charge

Date/ Delayof filing

11.7.2005(No delay)

11.8.2005(No delay)

23.8.2005(No delay)

22.09.2005(No delay)

22.09.2005(No. delay)

18.10.2005(No delay)

30.12.2005(No delay)

2. Regional Director NIL

3. Company Law Board NIL

1st Annual Report www.vivimedlabs.com


AUDITORS' REPORTTo,The Members of,CREATIVE HEALTH CARE PRIVATE LIMITED,

We have audited the attached Balance Sheet of CREATIVE HEALTH CARE PRIVATE LIMITED as at31st March, 2006 and the Cash Flow Statement for the period ended on that date annexed there to, whichwe have signed under reference to the report. These financial statement are the responsibility of theCompany's management. Our responsibility is to express an opinion on these financial statement basedon our audit. Since the Company has not carried out any commercial activities, No profit and Loss Accounthas been prepared.

We conducted our audit in accordance with auditing standards generally accepted in India.Those Standards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statement are free of material misstatement. An audit includes examining, ona test basis, evidence supporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significant estimates made by management,as well as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for our opinion.

As required by the Companies (Auditor's Report) Order, 2003, ('the said order'), issued by the centralgovernment of India in term of Section 227(4A) of the Companies Act, 1956 ('the Act'), and on the basisof such checks as we considered appropriate and according to the Information and explanation givento us during the course of audit, we enclose in the Annexure, a statement on the matters specified inparagraph 4 and 5 of the said order, to the extent it is applicable to the Company.

Further to our comment in the Annexure referred to above, we report that:

We have obtained all the information and explanation which to the best of our knowledge and beliefwere necessary for the purposes of our audit;

In our opinion, proper books of accounts as required by law have been kept by the Company, so far asappears from our examination of those books.

The Balance Sheet and Cash flow Statement dealt with by this report are in agreement with the booksof accounts.

In our opinion the Balance Sheet and Cash Flow Statement comply with the accounting standardreferred to in sub-section (3C) of section 211 of the Act;

On the basis of written representations received from the directors, as on March 31, 2006, and takenon record by the Board of Directors, we Report that non of the Directors is disqualified as on March31, 2006from being appointed as a director under clause (g) of sub-section (1) of section 274 of the Act;

In our opinion and to the best of our information and according to the explanations given to us, the saidfinancial statement read with the notes thereon, give the information required by the act in the manner sorequired and, give a true and fair view in conformity with the accounting principles generally accepted inIndia.;

In the case of Balance Sheet, of the state of affairs of the Company as at March 31, 2006.and

ii. In the case of Cash Flow Statement, of the Cash Flow of the Company for the periodended on that date.

For JAYESH SUTARIA ASSOCIATESCHARTERED ACCOUNTANTS

(JAYESH SUTARIA)Mumbai

M.NO. 39696

www.vivimedlabs.com // 53 1st Annual Report


•Vivimed'

ANNEXURE TO THE AUDITORS' REPORT(Referred to in paragraph 2 of our report of even date)

1 (a) The company has maintained proper records to show full particulars includingquantitative details and situation of its fixed assets.

The company has program for physical verification of fixed assets at periodic intervals. In our opinionthe period of verifications is reasonable having regard to the size of the company and nature of itsassets. No material discrepancies between the books records and physical inventory were reported forthe assets verified during the year.

In our opinion and according to the information and explanation given to us, a substantial part of fixedassets has not been disposed off by the company during the year.

2 (a) The Company has not granted any loans, secured or unsecured, to companies, firmor other parties covered in the register maintained under section 301 of the Act.Accordingly clauses(iii)b,(iii)c and (iii)d of Paragraph 4 of the aforesaid order arenot applicable..

(b) The company has taken interest free unsecured loans of Rs. 147.47 lakhs from twocompanies listed in the register mentioned u/s 301 of the Companies Act, 1956.

(c) In our opinion, other terms and conditions of the loans taken are not prima facieprejudicial in the interest of the company

(d ) There are no overdue amounts against these loans..

In our opinion and according to the information and explanations given to us, there is adequate internalcontrol system commensurate with the size of the company and the nature of its business for thepurchase of inventory and fixed assets and for the sale of goods and services, further, on the basis ofour examination of the books and records of the company, and according to the information andexplanations given to us, we have neither

come across nor have been informed of any continuing failure to correct matter weaknesses in theaforesaid internal control system.

(a) According to the information and explanation given to us, we are of the opinionthat the transactions that need to be entered into the register maintained undersection 301 of the Act, have been so entered.

(b) In our opinion and according to the information and explanations given to us, thetransactions made in pursuant of contracts or arrangements entered in theregister maintained under section 301 of the Act, and exceeding the value of fivelakh rupees in respect of any party during the year have been made at prices whichare reasonable having regard to prevailing market prices,at the relevant time.

The Company has not accepted any deposits from the public to which the directives issued by theReserve Bank of India and the Provisions of section 58A and 58AA of the Act and the rules framed thereunder are applicable.

In our opinion the Company's Present internal audit system is commensurate with its size and nature ofits business.

We have been informed that central government has not prescribed maintenance of cost records undersection 209 (1)(d) of the Companies Act, 1956, in respect of company's activities.

1st Annual Report 54 \\ www.vivimedlabs.com


Vivimed'

According to the records of the company examined by us and the information and explanation given tous, the Company has not defaulted in repayment of dues to any financial institution or bank ordebenture holders as at the balance sheet date.

As the Company has not granted any loans or advances on the basis of security by way of pledge ofshares, debentures and other securities, clause (xii) of the said order is not applicable.

According to the information and explanations given to us, the Company has not given any guaranteefor loans taken by others from bank or financial institutions.

In our opinion and according to the information and explanation given to us, on an overall basis the termloan have been applied for the purpose for which'they were obtained..

On the basis of an overall examination of the balance sheet of the Company, In our opinion andaccording to information and explanation given to us, there are no funds raised on a short term basiswhich have been used for long term investments..

The Company has not made any preferential allotment of share or issued debenture or made any publicissue during the year, and accordingly, clauses (xviii), (xix) and (xx) of the said order are not applicableto the Company.

To the best of our knowledge and belief, and according to the information and explanations given to us,there have been no cases of fraud on or by the Company noticed or reported during the year.

In view of the nature of business carried on by the company 8t absence of conditions pre-requisite tothe reporting requirement of clauses (ii), (ix), (x), (xiii) and (xiv). The said clauses are, at present, arenot applicable.

For JAYESH SUTARIA ASSOCIATES

CHARTERED ACCOUNTANT

(JAYESH SUTARIA)

MumbaiM.No: 39696



•Vivmed-

BALANCE SHEET AS AT 31ST MARCH 2006Schedule

Sources of FundsShareholders FundsShare Capital

Loan Funds

a) Secured Loans

b) Unsecured Loans

Application of Funds

Capital Work in Progress and

Advances paid for Capital Expenditure

Pre-Operative Expenditure pending

Allocation and Capitalisation

Current Assets, Loans & Advances

a) Cash & Bank Balances

Less: Current Liabilities & Provisions

a) Current Liabilities

Net Current Assets

Miscellaneous Expenditure

(To the extent not written off or adjusted)


2

3

38,056,135

14.747.000

Total

1,534,672

7.736.711

Total

Amount (Rs.)

5,000,000

52.803.135

57.803.135

60,596,211

3,232,063

(6,202,039)

176.900

57.803.135

Significant Accounting Policies

Notes on Accounts

8

9

The Schedule referred to above form an integral part of these accounts

As per report of even dateFor Jayesh Sutaria AssociatesChartered Accountants

(Jayesh Sutaria)Proprietor

Membership No. 39696

1st Annual Report 56


Dr.V.Manohar RaoChairman

Sri.S.P.JainDirector

www.vivimedlabs.com


&M•Vivimed'

SCHEDULES FORMING PART OF BALANCE SHEET

Schedule 1 : Share Capital

Authorised

5,00,000 Equity Shares of Rs.10/- each 5.000.000

Issued, Subscribed and Paid up

5,00,000 Equity Shares of Rs. 107- each Fully Paid Up 5,000,000

The entire capital is held by Vivimed Laboratories Limited

the Holding Company and its nominees 5.000.000

Schedule 2 : Secured Loans (See notes below)

Term Loan from a Bank 38,056,135

38.056.135

Notes:

1) Secured by first charge on entire fixed assets of the company both present and future

including land and building constructed / to be constructed and collateral security of extension

of charge on the entire current assets of the company, both present and future and personal

guarantee of some of the directors of the company and corporate gurantee of holding company.

2) Repayable withhin a year Rs. 133.32 Lacs

Schedule 3 : Unsecured Loans

From Holding Company 12,527,000

Inter corporate Deposit 2,220,000

14.747.000

Schedule 4: Capital Work in Progess and Advances

paid for capital expenditureLand 5,379,404

Buildings 10,587,228

Plant & Machineries 37,638,736

Computer Systems 128,690

Equipments 17,990

Furniture & Fixtures 81,520

Electrical Installation 1,327,512

Advances for capital expenditure 5,435,131

60,596,211

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f•Vivimed-

Schedule 5: Pre Operative Expenditure pendingAllocation and Capitalisation

Stores a Spares 152,985Salaries, Wages a Allowances 281,208Professional Fees 91,126Travelling a Conveyance 615,979Insurance 97,850

Interest PaidBank ' 800,966Others 57,144Fuel a Oil 67,840Rent, Rates a Taxes 80,060Transport Charges 71,458

Auditors RemunerationAudit Fees 30,000Income Tax Matter Fees 5,000Labour Charges 19,224Printing a Stationery 4,876Advertisements 11,000Bank Charges 410,978Communication 48,055Staff Welfare Expenses 53,592General Expenses 200,895Vehicle Expenses 50,687Repairs a Maintenance (Others) 81,141

t 3.232.063

Schedule 6: Cash and Bank BalancesCash on Hand 319,640

Balance with scheduled banks:- In Current Accounts 1,215,032

1.534.672

Schedule 7: Current LiabilitiesSundry Creditors 5,086,711

Share Application Money 2,650,000

7,736,711

—~~>N.

1st Annual Report 58 \_ www.vivimedlabs.com


\ •Vivimed-

CREATIVE HEALTH CARE PRIVATE LIMITEDACCOUNTING PERIOD ENDED 31STAAARCH 2006

SCHEDULES: SIGNIFICANTACCOUTING POLICIES

«• Basis of Accounting

The financial statements are prepared under historical cost convention on a going concernbasis in accordance with the applicable accounting standards issued by the Institute ofChartered Accountants of India and relevant provisions of the Companies Act, 1956.

+ Use of EstimatesThe preparation of financial statements requires management to make certain estimates andassumptions that affect the amounts reported in the financial statements and notes thereto.Differences between actual results and estimates are recognized in the period in which theymaterialize.

* Fixed AssetsFixed Assets are stated at cost less accumulated depreciation, wherever applicable. The costof the assets comprises of purchase price and directly attributable cost of bringing the assetsto working condition for its intended use including borrowing cost and incidental expenditureduring construction period.

+ Capital Work in ProgressCapital work in progress includes cost of all assets at site, construction expenditure, advancemade for acquisition of capital assets and interest on funds deployed.

«• Borrowing CostsBorrowing cost attributable to acquisition, construction or production of qualifying assets arecapitalized as part of the cost of that asset, till the asset is ready for use. Other borrowingcosts are recognized as an expenses in the period in which they are incurred.

* Taxes on IncomeProvision is made for deferred tax for all timing differences arising between taxable incomeand accounting income at currently enacted or substantially enacted tax rates.

Deferred tax assets are recognized only if there is reasonably certainty that they will berealized and are reviewed for the appropriateness of their respective carrying values at eachBalance Sheet date.

* Miscellaneous ExpenditurePreliminary expenses will be written off during first year of commercial operation.

+ Contingent Liabilities

Contingent liabilities, which are considered significant and material by the company aredisclosed in the notes to the accounts.

*• Capital CommitmentsEstimated amount of contracts remaining to be executed exceeding Rupees one lakh in casesare disclosed .

+ Asset ImpairmentThe company reviews the carrying values of tangible and intangible assets for any possibleimpairment at each balance sheet date. An impairment loss is recognized when the carryingamount of an asset exceed its recoverable amount. In assessing the recoverable amount, theestimated future cash flow are discounted to their present value based on appropriatediscount rates.



•Vivimed-

SCHEDULE 9: NOTES ON ACCOUNTS

1. Estimated amount of contracts remaining to be executed on Capital Account (Net of Advances)and not provided for Rs. 22 .37 Lacs

2. There are no outstanding due against SSI units.

3. Related Party Disclosures

a) Related Parties and their RelationshipsHolding Company : Vivimed Laboratories Limited

Directors : Mr. S.P. Jain, Dr. Birbal Singh, Mr. Manjit Singh, Mr. Sandeep Rao,

Dr. V. Manohar Rao, Mr. Sunil Arab.

Enterprises over which key management personnel exercise significant influence

API Med Pharma Private LimitedWS Pharmaceuticals Limited4. Transactions with above parties in ordinary course of business

Holding CompanyReceipt of Share Application MoneyUnsecured Loan receivedUnsecured Loan re paidAmount payable at the year end

Rs. 49.00 LakhsRs. 163.27 LakhsRs. 38.00 LakhsRs. 125.27 Lakhs

DirectorsReceipt of Share Application MoneyAmount payable at the year end

Enterprises over which key management personnel exercise significant influenceUnsecured Loan receivedPurchase of MachineryUnsecured Loan re paidAmount payable at the year end

Rs. 27.50 LakhsRs. 26.50 Lakhs

Rs. 28.95 LakhsRs. 3.00 LakhsRs. 6.75 LakhsRs. 25.20 Lakhs

5. Since the company has not carried out any manufacturing activities, relevant details asrequired under the provisions of the Companies Act, 1956 have not been furnished.

6. The company was incorporated on 08th July and therefore the accounts are for the period 8thJuly 2005 to 31st March 2006.

7. Since the company has not carried out any manufacturing activities as well as commercialactivities no profit and loss account has been prepared.

8. This being first year of operation, there are no figures for previous year.

Signatures to Schedule 1 to 9

For Jayesh Sutaria AssociatesChartered Accountants


Membership No. 039696Mumbai:

1st Annual Report 60



Sri.S.P.Jain

Director

www.vivimedlabs.coni


-Vivimed-

CASH FLOW STATEMENT

(A) CASH FLOW FROM OPERATING ACTIVITIES

Operating Profit Before Working Capital ChangesAdjustments for changes in working capital

- Increase / (decrease) in Trade & Other Payable

Net Cash From Opearting Activities (A)

(B) CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets and Payments made for

Capital Work In Progress

Pre-Operative Expenses


Net Cash Used in Investing Activities (B)

(C) CASH FLOW FROM FINANCING ACTIVITIESFresh Issue of Share Capital

Receipt of Share Application Money

Proceeds of Long Term Borrwoings

Proceeds of Short Term Borrwoings

Net Cash Generated From Financing Activities (C)

Net Increase /(Decrease) in Cash & Cash Equivalents (A+B+C)

Cash and Cash Eqiivalents as at 31st March 2006Cash and Cash Eqiivalents Copmprise

Cash on Hand 319,640.00

Balance with Scheduled Banks in Current Accounts

Notes: 1) The above Cash Flow Statement has been prepared under theIndirect Method set out in Accounting Standard -3 issued by theInstitute of Chartered Accountants of India.

2) This being first year of the company, there are no figures forprevious year.

Amount (Rs.)

5.086.711.00

5.086.711.00

(60,596,211.00)

(3,232,063.00)

(176.900.00)

(64.005.174.00)

5,000,000.00

2,650,000.00

38,056,135.00

14,747,000.00

60.453.135.00

1,534,672.00

1,534,672.00

1,215,032.00

This is the Cash Flow Statementreferred to in our report of even

For Jayesh Sutaria AssociatesChartered Accountants




Membership No. 039696

Sri.S.P.JainDirector

www.vivimediabs.com 1st Annual Report


•Vivtmed- f

1 st Annual Report 6 2 w w w . v i v i m e d l a b s . c o m


Vivimed Labs Ltd.•Vivimed-

VIVIMED LABS LIMITED

REGISTERED OFFICE:

"78/A KOLHAR INDUSTRIAL AREA"

BIDAR-585403

KARNATAKA

PROXY FORM

I/We,of ...being member(s) of M/s. VIVIMED LABS LIMITED hereby appoint

ofon my / our behalf of as indicated below at the Eighteenth Annual General Meeting of the Company to beheld at 11-30 a.m. on Friday the 29th September, 2006 and at any adjournment thereof.

Agenda Item Vote * Agenda Item Vote *

No.

No.

No.

Signed th

1 No.4

2 No.5

3 No.6

s the day of 7006.Af

ReReveSta

fix1/-

snuemp

* Please state in this column whether 'in favour of or 'against'

Note: Proxy Form duly completed must reach the Company's Registered Office at least 48 hours before thecommencement of the meeting.

www.vivimedlabs.com 1st Annual Report

•Vivimed-


Vivimed Labs Ltd. (

1st Annual Report 64 \\ www.vivirnedlabs.comIt


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VIVIMED LABS LIMITED

REGISTERED OFFICE:

"78/A KOLHAR INDUSTRIAL AREA"

BIDAR-585403

KARNATAKA

EIGHTEENTH ANNUAL GENERAL MEETING

ATTENDANCE SLIP

DP Id No : Master Folio No

Client Id : No.of Shares :

NAME AND ADDRESS OF THE SHAREHOLDER

I hereby record my presence at the Eighteenth Annual General Meeting of the Company, being held on Friday,the 29th September, 2006 at 11-30 a.m. at the Registered Office of the Company.

Signature(s) of the member(s) or proxy present.



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Producing where it is most cost effective &selling where it is most remunerative

The Americas

ct & indirect Sales Network

Hong Kong

SingaporeShaijah


Vivimed Labs Ltd.Regd. Off : P. NO. 78/A, Kolhar Indl. Area, Bidar, Karnataka

Corp. Off : 2nd Floor, Veeranag Towers, Habsiguda, Hyderabad - 500 007 INDIAPh: +91 - 40 - 27172241 (3 lines) Fax : +91 - 40 - 27172242Email : [email protected] www.vivimedlabs.com

18th ANNUAL REPORT

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Transcript of 18th ANNUAL REPORT