LUPIN 2004-05

35 text 35

LUPIN LIMITED

3535

DIRECTORS� REPORT

To the Members,

Your Directors have pleasure in presenting their report on the business and operations of your Company for the year endedMarch 31, 2005.

Financial results

Performance Review

Your Company recorded gross sales of Rs. 12122.7 million, an increase of about 4% over Rs. 11679.3 million in the previous year. YourCompany achieved a net profit of Rs.843.6 million as compared to Rs. 987.1 million for the previous year.

Higher R&D expenditure, lower than expected market penetration of branded product Suprax® in the US, decline in the prices of PenG based Cephalosporins and destocking by the trade during the last quarter because of uncertainties about VAT resulted in lower profitfor the year.

Financials

The Company�s borrowings stood at Rs.4406.4 million at the end of the year, providing a debt-equity ratio of 0.88:1. Owing to a muchlower level of average borrowing carried by the Company during the year, interest cost came down from Rs.515.1 million in the previousyear to Rs. 273.1 million in the year under report.

The tax impact was lower in the year, owing to a significant portion of the Company�s profit emanating from Export Oriented Units.Deductions in respect of R & D expenditure also helped in this respect.

(Rs. in million)

Year ended Year ended

March 31, 2005 March 31, 2004

Sales (Gross) 12122.7 11679.3

Less: Excise duty 511.4 486.5

Sales (Net) 11611.3 11192.8

Profit before interest, depreciation, tax and extraordinary items 1457.9 2801.7

Less: Interest and finance charges (net) 273.1 515.1

Less: Depreciation and amortisation 332.1 290.4

Profit before tax and before extraordinary items 852.7 1996.2

Less: Provision for taxation (including wealth tax and deferred tax) 9.1 500.2

Net Profit before extraordinary items 843.6 1496.0

Less: Extraordinary items (net of tax) - 508.9

Net Profit after tax and after extraordinary items 843.6 987.1

Less: Income tax � earlier years 20.7 36.2

Add: Surplus brought forward from previous year 1601.3 859.7

Add: Debenture Redemption Reserve written back 35.0 350.0

Profit available for Appropriation 2459.2 2160.6

Appropriations:

Transfer to Debenture Redemption Reserve - 15.0

Transfer to General Reserve 750.0 250.0

Proposed dividend on Equity Shares 260.9 260.9

Corporate tax on dividend 37.3 33.4

Balance carried to Balance Sheet 1411.0 1601.3

2459.2 2160.6

36 Annual Report 2004-05

Operational Review

a) Finished Dosages-Semi regulated markets

India Region

The finished dosages business in India exhibited encouraging performance; it has grown by 15% as against industry growth rateof 6%. The Company achieved significant increase in sales in the cardiology and diabetology segments. Your Company offers awide range of products covering therapeutic segments such as gastro intestinal, pain management, anti-histaminic, nutraceuticals,cardiovascular, diabetes etc. , besides maintaining its leadership position in anti-Tuberculosis (TB) andanti-infectives. The performance of 1350-strong field force achieved prescription growth of 6% as against the industryrate of 1%.

Your Company successfully entered the highly competitive anti-asthma market. Within a short span of eight months, it registeredrevenue of Rs.90 million.

Your Company launched 18 new products in the market, which included unique products, such as Rablet IV, an anti-pepticulcerant, Nizonide, an anti-parasitic and Tonact EZ for cholesterol control. Your Company also introduced a life-saving antibioticNovapime, a fourth generation injectible cephalosporin, at an affordable price.

Six of your Company�s products feature in the top 300 pharma brands.

The uncertainties brought about by the introduction of VAT in several states led to significantly lower buying by the distributors.This occasioned much lower sales during the last quarter of the year.

Over the years, your Company has consciously reduced its dependence on anti-TB business, without diluting its undisputedmarket leadership. To accelerate growth, your Company has strategically focused on high-growth, high-contribution area oflife-style segments like diabetology, cardiology, CNS and Asthma. Your Company now offers various innovative Novel DrugDelivery System (NDDS) dosages to strengthen its doctor franchise, at the same time, increasing its reach to far-flung rural areasthrough the Mass Marketing Division.

Other markets

Your Company is entering value added generics through alliances in Australia and Japan. It has also set its sight on otherregulated markets like Brazil, Mexico and New Zealand, besides semi-regulated South East Asia, Middle East, Africa and LatinAmerica. A separate division �AAMLA� monitors these geographical areas.

Your Company is among the earliest Indian companies to operate in the erstwhile Soviet Union. The Company continues to focuson the CIS countries. During the year, Ribavin (anti-viral), One Be (herbal adaptogen revitalizer) and Softovac (herbal bowelregulator) were introduced in that market. Your Company is geared to consolidate its position in CIS through branded productsand is planning to achieve market penetration through expansion of field force.

b) Active Pharmaceutical Ingredients (API) - Semi regulated markets and Intermediates

This business retained its dominant global position in anti�TB and Cephalosporins.

Your Company�s statins facility at Tarapur received the USFDA approval and the injectible cephalosporin facility at Mandideepreceived approval of TGA Australia.

Certain segments of the Cephalosporin market (Pen G based products) came under pricing pressure. Profitability from thesa l eof these products was lower in the year consequent upon this. Prices of some other API products were also under pressure.

With a view to insulate itself from volatility in sales and margins, your Company has entered into long-term agreements withcustomers as well as suppliers of raw materials. Your Company also adopted a relationship-driven geographically diversifiedbusiness model, by establishing its presence in over 50 countries, by offering a wide product range. It derives its strength fr omits capability in integrated world class manufacturing facilities and economies of scale. A number of large global pharmacompanies are on the list of the Company�s customers.

Your Company has also leveraged its strength in intermediates and has become a prominent player in this segment in respect ofits chosen products.

DIRECTORS� REPORT

37 text 37

LUPIN LIMITED

3737

c) Regulated Markets

i) Finished Dosages

Generic

Your Company has made significant progress in its plans on regulated market formulations sale. The Company is pursuinga sufficiently large pipeline that, over time, will provide a critical mass of generic products for sale in the regulated marketsof the US and Europe. In this effort, the Company filed 14 ANDAs during the year. The Company expects to get approval forthese in time for the products to be launched in the US.

Recently, your Company has entered into a Development and Licensing Agreement with Cornerstone BioPharma Inc., US, forcollaborating in the clinical development of a NDDS for an anti-infective product. This validates your Company�s strategy ofapplying Novel Drug Delivery platforms to create value-added products in chosen therapeutic areas conforming to globalstandards. This also signifies your Company�s expertise in developing and manufacturing products to be administeredthrough patented delivery systems.

Through an exclusive tie-up with Baxter, a market leader in hospital products in the US, your Company is set to launchinjectible Ceftriaxone, which will go off patent in July 2005. Ceftriaxone is the largest selling Cephalosporin having anestimated market size of US$ 800 million in the USA alone.

Specialty

Your Company has set its vision on consolidating the foundation it has laid in the US for the specialty portfolio. Despite aslow start in April 2004, the level of prescriptions for the first branded product Suprax® has risen sharply in the recent months,generating over 85,000 prescriptions during the year. Your Company has also entered into an alliance with CornerstoneBioPharma Inc., US, for co-promotion of Suprax®, which would enhance its reach beyond paediatric market.

ii) Active Pharmaceutical Ingredients

The Company�s sales in the API segment of the regulated generics market registered significant gains. The Company achievedleadership in cardiovascular segment through Lisinopril and aims to achieve similar status in Statins. The customer base forLisinopril and some Cephalosporins was widened during the year, which would ensure long-term steady growth in theseproducts. The Company also improved its capabilities of entering into new products through focus on process/productdevelopment and investment in state-of-the-art manufacturing facilities.

The Intellectual Property Management Group, based at Pune, leverages the cross-functional competencies by playing apivotal role in identification of commercially viable products.

Research and Development

Your Company has succeeded in laying a strong foundation in R&D encompassing varied disciplines of science and technologythrough its state-of-the-art Research Park, based at Pune. The Park has enabled the Company to develop significant competencies inresolving complex chemistry involving non-infringing processes and novel drug delivery platforms, besides leveraging its strengths inNew Chemical Entity (NCE) and herbal research. Your Company remains committed to further accelerate R&D efforts in the years tocome.

It was a memorable year in your Company�s research history, which witnessed filings of 14 ANDAs, 15 DMFs, two EDMFs and four COSs,with wide therapeutic coverage ranging from anti-infective Cephalosporins, anti-hypertension prils, psychotropics, anti-depressant andlipid lowering agent statins. Your Company has received five ANDA approvals so far. The research team of your Company has a clearregulatory focus, oriented to meet the unique requirements of the target markets.

The Company has made encouraging progress in NCE research in the following areas:· The safe non-toxic anti-migraine nasal drops received approval from the Drug Controller General of India and is at present in

Phase II clinical trials.· An orally active herbal formulation and a pure compound isolated from a plant for treatment of Psoriasis have completed

Phase I clinical trials.· A new anti-TB molecule is undergoing Phase I clinical trials.


Besides the above, your Company has set its focus on broad-spectrum anti-bacterials, anti-asthma and diabetic research.

Your Company has thus defined a roadmap for focused growth of research and development to meet with confidence the challengesposed by the new patent regime.

The Company is proud of its 250 strong Scientist group, which has contributed phenomenally in building the foundation of research.

The Company increased its expenditure on R&D to 7.2% of net sales.

R&D Alliances

Your Company has entered into research collaborations with government agencies like Institute of Science, Bangalore, and variousCSIR laboratories (viz. National Chemical Laboratory, Pune, Indian Institute of Chemical Technology, Hyderabad, Central Drug ResearchInstitute, Lucknow, Regional Research Laboratory, Jammu) to further its objectives of development of new drug discovery programme.

Dividend

Your Directors are pleased to recommend dividend @ Rs.6.50 per equity share of Rs.10/- each, absorbing an amount of Rs.297.5 million,inclusive of tax on dividend.

Voluntary De-listing of Shares

As approved by the shareholders at the extraordinary general meeting held on December 5, 2003, equity shares of your Company werede-listed from the stock exchanges at Jaipur and Kolkata w.e.f. May 15, 2004 and September 30, 2004 respectively. The shares continueto remain listed on The Stock Exchange, Mumbai and National Stock Exchange of India Ltd.

Rural Development Programme

Initiating the rural development programme with 35 villages, Lupin Human Welfare & Research Foundation (LHWRF) has madesteady progress by revitalizing, revamping and recreating over 1900 villages in states of Rajasthan, Madhya Pradesh and Maharashtra,thereby making it one of the largest NGOs in the country. LHWRF has made an effective contribution to the sustainable developmentof thousands of people in poverty-ridden villages.

It is engaged in various philanthropic activities, directed towards the economic upliftment of those below the poverty line, skillup-gradation of people engaged in various vocations, conducting health camps for the poor, among others. It has also contributed tothe spread of education amongst children, forced to dropout for economic reasons.

The goal of LHWRF is to create replicable models of building happy and prosperous rural India.

Subsidiary Companies

Pursuant to the provisions of Section 212 of the Companies Act, 1956 (�the Act�), annexed hereto, are the audited statements of accounttogether with reports of the Directors and Auditors in respect of:

a) Lupin Pharmaceuticals Inc., USA, for the year ended March 31, 2005,b) Lupin Chemicals (Thailand) Ltd., for the year ended March 31, 2005,c) Lupin Hong Kong Ltd., for the year ended March 31, 2005,d) Lupin Herbal Ltd., for the period ended March 31, 2005 ande) Lupin Laboratories South Africa (Pty) Ltd., for year ended March 31, 2005.

Lupin Pharmaceuticals Inc. is engaged in marketing and development activities in the US. The company recorded a profit ofRs.25.6 million during the year. The company is expected to grow as new products are launched in the target market.

Lupin Chemicals (Thailand) Ltd. recorded a profit of Rs. 9.5 million during the year. The company is expected to perform better duringthe years to come.

Lupin Hong Kong Ltd. commenced operations during the year and recorded a profit of Rs. 2.1 million. The company carries outmarketing and development activities in South East Asia.

DIRECTORS� REPORT

39 text 39

LUPIN LIMITED

3939

Lupin Herbal Ltd., which provides marketing and promotional services to the Company�s herbal division, recorded a nominal profit ofRs. 5276/- during the period ended March 31, 2005.

A subsidiary known as Lupin Australia (Pty) Ltd. was formed in Australia, the operations of which are yet to commence.

Lupin Laboratories South Africa (Pty) Ltd., which was inoperative since the last few years, was wound-up w.e.f. April 25, 2005.

In compliance with Clause 32 of the Listing Agreement, audited consolidated financial statements form part of this Annual Report.

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement, detailed reports on Corporate Governance and Management Discussion & Analysisand a Certificate from the Auditors regarding compliance with conditions of Corporate Governance form part of this Annual Report.

Directors� Responsibility Statement

In terms of the provisions of Section 217(2AA) of the Act, your Directors confirm:i) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper

explanation relating to material departures;ii) that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that

are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financialyear and of the profit of your Company for that year;

iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;and

iv) that the Directors had prepared the annual accounts on a going concern basis.

Directors

Mrs. M. D. Gupta and Mr. P. K. Kaul retire by rotation at the forthcoming Annual General Meeting and are eligible for re-appointment.

UTI Asset Management Company Pvt. Ltd. (UTI) had withdrawn the nomination of Mr. M. Parameswaran w.e.f. July 29, 2004 andappointed Mr. Raghu Palat in his place. The nomination of Mr. Raghu Palat was withdrawn by UTI w.e.f. April 15, 2005 consequent torepayment of the entire dues owed by the Company to UTI. The Board places on record its sincere appreciation of the valuable servicesrendered by Mr. Parameswaran and Mr. Palat during their tenure as nominee directors.

The Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988

In terms of the above rules, your Directors give the prescribed particulars in an annexure forming part of this Report.

Fixed Deposits

Your Company has stopped accepting/renewing fixed deposits from public/shareholders. Deposits as on March 31, 2005 stood atRs.385.25 million as against Rs.734.8 million as on March 31, 2004. 949 deposits aggregating Rs.11.65 million were lyingunclaimed with the Company as on March 31, 2005, of which, 392 deposits aggregating Rs.5.14 million have since been claimed.The Company has sent intimations to the depositors concerned to claim the repayment of their matured deposits.

Industrial Relations

Industrial relations continued to be cordial and harmonious at all levels and in all the units of your Company.

Auditors

M/s. Deloitte Haskins & Sells, Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and areeligible for re-appointment.

Cost Auditors

With the prior approval of the Central Government, Mr. S. D. Shenoy and Mr. D. H. Zaveri, practicing Cost Accountants, were appointedto conduct audit of cost records of API and finished dosages respectively. Cost Audit Reports will be submitted to the Central Governmentwithin the prescribed time.


Employees Stock Option Plan

Your Company issued 377150 options under �Lupin Employees Stock Option Plan 2003�. In terms of Clause 12.1 of the Securities andExchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, [�the SEBI Guidelines�],given below are the requisite particulars of options granted as on March 31, 2005:

Particulars of Employees

Information as prescribed by Section 217 (2A) of the Act, read with Companies (Particulars of Employees) (Amendment) Rules, 2002 isgiven as an annexure to this Report. However, pursuant to the provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts arebeing sent to all the shareholders excluding the aforesaid annexure. Shareholders who are interested in obtaining the said informationmay write to the Company Secretary at the registered office of the Company.

Appreciation

Your Directors wish to place on record their appreciation of the services rendered by all the staff members of your Company and theirgratitude towards the financial institutions, banks, customers including the medical profession, distributors and suppliers for theircontinued support.

For and on behalf of the Board of Directors

Dr. Desh Bandhu Gupta

Chairman

Mumbai, May 20, 2005

1 : 377150 options representing equal number of equity shares.

2 : The exercise price of the options is the market price of the shares as defined under the SEBI Guidelines, as on the grant date.

3 : Nil

4 : Nil

5 : Nil

6 : There has been no variation in the terms of options.

7 : Nil

8 : 377150 options.

9

a) Senior managerial personnel : 10800 options were granted to Dr. Kamal K. Sharma, Managing Director. All other options were granted to eligible employees in the grades of manager and above.

b) Employees to whom options granted amounting to 5% or more of the total options granted during the year

: Nil

c) Employees to whom options equal to or exceeding 1% of the issued capital have been granted during the year

: Nil

10 : Rs. 20.48

Total number of options granted

The pricing formula

Options vested

Options exercised

Diluted Earning Per Share pursuant to issue of shares on exercise

Employeewise details of options granted to

Options lapsed

Variations of terms of options

Money realized by exercise of options

Total number of options in force

DIRECTORS� REPORT

41 text 41

LUPIN LIMITED

4141

ANNEXURE TO THE DIRECTORS� REPORT

Pursuant to the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

A. CONSERVATION OF ENERGY

a) Energy conservation measures taken:

i) Improved ventilation of the warehouse by installing eco-ventilator, which does not consume any energy.

ii) Installed sand filtration system and used soft water as make-up in cooling water.iii) Power factor maintained at 0.999 for reducing maximum demand and internal transmission losses.iv) Optimised air supply in natural gas fired boiler for improving combustion efficiency.v) Installed special lighting transformer for optimising voltage.vi) Installed high efficiency diffusion aeration system, replacing surface aeration system.vii) Installation of timer in lighting system to eliminate power wastage.viii) Installation of VFD in cooling water pump.ix) Installed De-Super heater for heat recovery and optimum utilisation of refrigeration compressor.x) Replaced timer based drain valve by �Witmans� automatic drain valve.xi) Installed temperature controller switch in cooling tower fan.xii) Installed Orteli burner assembly in TPH boilers in place of multi-nozzle Nestler burners.xiii) Installed Variable Speed Drive for FD Fan for optimal operation.xiv) Air pre-heater incorporated at Boiler exhaust to recover heat and improve efficiency.xv) Installed power free wind ventilators for improved ventilation.xvi) Cold Insulation specifications were improved to reduce heat gain.xvii) Deareator head installed at Condensate Water Tank for reducing flash steam wastage.xviii) Installed solar water heaters in specific areas to cater requirement of hot water.

b) Additional investments and proposals:

i) Procurement of R.O. plant to treat cooling tower blow down water.ii) Procurement of flash steam heat recovery system at boiler feed water tank.iii) Replacement of more steam valves so as to avoid steam loss on account of leakages.iv) Install online 0

2 monitoring system in exhaust duct for efficient operation.

v) Install boiler blow down heat recovery system to retrieve heat and precise TDS control.vi) Install steam trap leak detection system to immediately detect faulty traps.

c) Impact of measures in (a) & (b):

i) Operation of FD fans as per loading and replacement of power ventilation fans with power free wind ventilatorsresulted in conservation of electrical units.

ii) Improvement in condensate water temperature on account of waste heat retrieval resulted in reduction in fuelconsumption.

iii) Boiler efficiency has improved.iv) Power and energy losses are reduced.

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

Details are given in Form A


FORM �A�

(See Rule 2)

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

B. CONSUMPTION PER UNIT OF PRODUCTION:

The Company manufactures APIs and several drug formulations of different pack sizes. It is therefore, impractical to apportion theconsumption and cost of utilities to each product.

NOTE:

There are no specific standards, as the consumption per unit depends upon the product mix. Variations in consumption are due todifferent product mix.


March 31, 2005 March 31, 2004

A. POWER & FUEL CONSUMPTION

1. Electricity

a) Purchased Units Thousand KWH 56139 52702

Total amount Rs. in Million 275.1 268.0

Rate/unit (KWH) Rs. 4.9 5.1

b) Own Generation

i) Through Diesel Generator (HSD)

Units Thousand KWH 3104 3388

Units per litre of diesel oil KWH 3.1 3.2

Cost/unit (KWH) Rs. 9.5 8.7

ii) Through Generator (furnace oil)

Units Thousand KWH 30306 29668

Units per litre of furnace oil KWH 4.1 4.1

Cost/unit (KWH) Rs. 2.7 2.7

iii) Through Generator (gas)

Units Thousand KWH 5355 Nil

Units per M³ of Natural gas KWH 3.2 N.A.

Cost/unit (KWH) Rs. 3.4 N.A.

2. Coal Nil Nil

3. i) Furnace oil (Boiler)

Quantity KL 10075 8957


Rate/unit (KL) Rs. 12065 11280

ii) Furnace oil (Power Plant)

Quantity KL 7374 7218


Rate/unit (KL) Rs. 11152 11118

4. Natural gas

Quantity Cu. mts. 8093490 7144718


Rate/unit (Cu. mt.) Rs. 8.8 8.9


43 text 43

LUPIN LIMITED

4343

B TECHNOLOGY ABSORPTION:

e) Efforts made in technology absorption as per Form B are given below:

FORM �B�

( See Rule 2 )

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO ABSORPTION

Research and Development (R & D)

1) Specific areas in which R&D was carried out by the Company:

Evaluation of alternate raw materials for fermentation in line with regulatory requirements with a focus on improvingproductivity by using mathematical modelling and statistical designs. Improving strains including media optimisation forseveral microbial strains. Developing synthetic processes for improving yield. Development of recovery processes for newproducts based on fermentation technology. Significant progress has been made in the anti-psoriasis and anti-migraineprojects. Continuous efforts are on to reduce waste stream and improve recovery of byproducts. Emphasis is on reducing costof raw materials through innovative chemistry and development of eco-friendly processes to reduce effluent generation.With a view to achieve cost effectiveness, constant efforts are on to develop new processes and improve existing ones bysimplifying/modifying them.

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

Improvement in the quality and yield of 7-ACCA, 7-ADCA and Mandelic acid manufacturing technology was achieved. Yield andquality improvement of Lovastatin was achieved through development of a robust fermentation and isolation technology. Theanalytical research group has developed techniques for impurity profiling. Several patents have been developed and are atvarious stages of regulatory approval process. Increased focus on standardization of key ingredients resulted in products, whichcan be uniquely positioned in terms of their qualitative strengths. As a result of the continuous improvement and adaptation oftechnology, the Company was able to commercialise new products, improve processes and yields, enhance quality and reducecosts. One molecule is in Phase II clinical trials. Two molecules have completed Phase I clinical trials and one molecule isundergoing Phase I clinical trials. Line extensions for existing products and original formulations are developed, furthered byproprietary R&D capabilities.

3) Future plan of action:

The Company has drawn-up well-focused plans for facing with confidence the challenging times ahead. New non-conventionalroute of drug administration would be explored. Synthesis of drugs involving complex chemistry/technology have been identifiedfor process development research. New herbal leads for new indications have been identified for further development. TheCompany will tap emerging opportunities for licensing-out products.

4) Expenditure on R&D:

a. Capital Rs. 76.0 million

b. Recurring (excluding depreciation of Rs.37.6 million) Rs. 760.1 million

c. Total Rs. 836.1 million

d. Total R&D expenditure as a percentage of net sales 7.2%

Technology absorption, adaptation and innovation:

i) Efforts in brief, made towards technology absorption, adaptation and innovation:

The Company endeavours to become a strong knowledge based, technology oriented and R&D driven health care company. Inthis direction it made continuous efforts for technology development, adaptation and innovation. Time-bound programmes areundertaken for development and scale-up of new products.

ii) Benefits derived as a result of the above efforts:

The Company was successful in introducing efficacious products, developing technologies, improving processes, discovering NewChemical Entities and developing Novel Drug Delivery Systems.


i i i ) Imported technology:

During the year the Company did not import any specific technology. The Company developed technology through efforts ofin-house Research and Development.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:

f) Information regarding exports activities and related matters is covered elsewhere in this Annual Report.

g) Earning in foreign exchange was equivalent to Rs. 5695.2 million and expenditure Rs. 3434.5 million.



Chairman



45 text 45

LUPIN LIMITED

4545

CORPORATE GOVERNANCE REPORT

1 Company�s philosophy on Corporate Governance:

Your Company is committed to high standards of corporate governance and firmly believes in and practises it for optimisingshareholder value and protecting the interests of shareholders. The Company�s endeavours are towards attaining highest standardsof transparency and accountability by conducting its affairs with integrity, responsibility and fairness within the applicable regulatoryframework. The senior management team has an excellent blend of professionals and is guided by ethical integrity and functionsin a harmonious manner to meet every challenge and translate it into an opportunity for maximising returns to the shareholders.Your Company has been greatly benefitting from the invaluable inputs provided by the non-executive directors, who are personswith vast experience, expertise and wisdom.

The Company has implemented all mandatory requirements of Clause 49 of the Listing Agreement. Efforts are on to implementcertain non-mandatory requirements.

A detailed Management Discussion and Analysis report forms part of this Annual Report.

2 Board of Directors:

The present strength of the Board is ten, of which, two are executive promoter directors, one is non-executive promoter director, oneis executive independent director and six are non-executive independent directors. This is in compliance with the current normsprescribed by Clause 49 of the Listing Agreement. Requisite particulars of directors are given below:

##### P. & E.D.: Promoter & Executive Director, E.I.D.: Executive Independent Director, P. & N-E. D. Promoter & Non-Executive Director, N-E.I.D.: Non-Executive

Independent Director.

Promoter/

Executive/

Attendance

at the last

Independent/

Nominee #AGM

Held Attended

Dr. Desh Bandhu Gupta,

Chairman

Dr. Kamal K. Sharma,

Managing Director

Mrs. M. D. Gupta,

Executive Director

4 Mr. D. K. Contractor N-E.I.D. 5 5 No 9 3/-

5 Mr. Marc Desaedeleer N-E.I.D. 5 2 No Nil Nil

6 Mrs. Vinita Gupta P. & N-E. D. 5 1 No 1 -

7 Mr. P. K. Kaul N-E.I.D. 5 4 Yes 12 8/3

8 Dr. K. U. Mada N-E.I.D. 5 4 Yes 7 6/3

9 Mr. Sunil Nair N-E.I.D. 5 4 Yes 3 -

10 Dr. D. P. Sinha N-E.I.D. 5 4 Yes 4 -

Mr. M. Parameswaran

(up to 28.07.2004)

Mr. Raghu Palat

(from 29.07.2004 up to 15.04.2005)

Yes 4 -

Number of

Directorships

of other

companies

Member/Chairman

of Committees

other than the

Company

Yes 6 -

N.A. N.A.

12 N-E.I.D.- UTI Nominee

4 4

N.A.

3 P. & E. D. 5 3

11 N-E.I.D.- UTI Nominee

1 -

Yes 7 -

2 E.I.D. 5 5 Yes 1 -

1 P. & E. D. 5 5

Sl.

No.

Name of the director No. of Board

Meetings during

the year


Details of Board Meetings

During the year, five meetings of the Board of Directors were held on April 28, 2004, July 29, 2004, September 22, 2004, October27, 2004 and January 25, 2005.

Remuneration to Directors

Notes:

a) Dr. Desh Bandhu Gupta, Chairman, Dr. Kamal K. Sharma, Managing Director and Mrs. M. D. Gupta, Executive Director, are in wholetime employmentof the Company and their employment is contractual in nature. Dr. Gupta and Mrs. Gupta hold office up to December 31, 2005. Dr. Sharma holdsoffice up to September 28, 2008.

b) An employees stock option plan entitled �Lupin Employees Stock Option Plan 2003� was formulated, in terms of which, eligible employeesincluding whole-time directors (except a promoter or a person belonging to the promoter group) were issued options. Dr. Kamal K. Sharma wasgranted 10,800 options.

c) Dr. Desh Bandhu Gupta is entitled to a commission @ 1% of the net profit, provided the net profit is not less than Rs. 500 million in the relevant

accounting year.

Brief Profiles, other Directorships and Committee Memberships etc. of Directors seeking re-appointment at the

23rd Annual General Meeting:


Dr. Desh Bandhu Gupta, 67, has Masters Degree in Science and is an eminent personality in the pharmaceutical industry. He isthe main promoter of the Company and presently designated as the Chairman (Executive capacity). He has vast businessexperience and expertise and is in charge of the overall management of the Company. Under his able and dynamic leadership,the Company has grown manifold and is set to achieve even higher levels of performance in the years to come.


Salary & Perks Commission Sitting fees Total

(Rs. in Million) (Rs. in Million) (Rs. in Million) (Rs. in Million)

1 Dr. Desh Bandhu Gupta, Chairman 12.84 8.30 Nil 21.14

2 Dr. Kamal K. Sharma, Managing Director 21.16 Nil Nil 21.16

3 Mrs. M. D. Gupta, Executive Director 2.29 Nil Nil 2.29

4 Mr. D. K. Contractor Nil Nil 0.27 0.27

5 Mr. Marc Desaedeleer Nil Nil Nil Nil

6 Mrs. Vinita Gupta Nil Nil 0.02 0.02

7 Mr. P. K. Kaul Nil Nil 0.11 0.11

8 Dr. K. U. Mada Nil Nil 0.24 0.24

9 Mr. Sunil Nair Nil Nil Nil Nil

10 Dr. D. P. Sinha Nil Nil 0.21 0.21

11 Mr. Raghu Palat Nil Nil 0.08 0.08

(from 29.07.2004 up to 15.04.2005)

Remuneration during 2004-05Name of the directorSl.

No.

List of other Directorships Chairman/Member of the Committees of the Board of the companies

on which he is a director.

Lupin Investments Pvt. Ltd.

Rahas Investments Pvt. Ltd.

Lupin International Pvt. Ltd.

Zyma Laboratories Ltd.

Lupin Chemicals (Thailand) Ltd.

Lupin Marketing Pvt. Ltd.

Visiomed (India) Pvt. Ltd.

None

47 text 47

LUPIN LIMITED

4747

Mrs. M. D. Gupta

Mrs. M. D. Gupta, 61, is a Bachelor of Arts. She is one of the promoters of the Company and presently designated as an ExecutiveDirector. She has wide business experience and expertise.

Mr. P. K. Kaul

Mr. P. K. Kaul, 75, is B.Sc. and M.A. (Economics) from Allahabad University and Masters in Public Administration from HarvardUniversity, US. He joined the Indian Administrative Services in July 1951 and retired in July 1989. He held various senior positionssuch as, Secretary - Textile, Commerce, Defence and Finance. He was also the Cabinet Secretary and held the coveted position ofIndia�s Ambassador to the US. He is actively involved in social work at Noida, which includes primary education to theunder-privileged. Since 1990, he is on the boards of several leading corporates.

3 Audit Committee:

The Audit Committee comprises Dr. K. U. Mada (Chairman), Mr. D. K. Contractor and Dr. D. P. Sinha, all non-executive independentdirectors. Mr. Marc Desaedeleer and Mr. Sunil Nair are invitees at the meetings of the Committee. Mr. Kiran N. Bade, CompanySecretary, is the Secretary of the Committee. The Chairman of the Committee attended the last Annual General Meeting. President- Finance & Planning, Executive Vice President - Finance, Head of Internal Audit Department, representatives of the StatutoryAuditors and Cost Auditors are invited at its meetings. The Committee performs the functions enumerated in Clause 49 of theListing Agreement and Section 292A of the Companies Act, 1956 and the matters deliberated upon by the Committee include:

a) Oversee and review the financial reporting process so as to ensure accuracy, transparency, timeliness and quality of disclosure.

b) Review with the management and seek feedback from auditors about internal control systems.

List of other Directorships Chairman/Member of the Committees of the Board of the companies

on which she is a director.

Lupin Investments Pvt. Ltd.

Rahas Investments Pvt. Ltd.

Lupin International Pvt. Ltd.

Zyma Laboratories Ltd.

Lupin Marketing Pvt. Ltd.

Visiomed (India) Pvt. Ltd.

None

List of other Directorships Chairman/Member of the Committees of the Board of the companies on

which he is a director.

Tata Iron & Steel Co. Ltd. Tata Iron & Steel Co. Ltd. -

Sagar Tourist Resorts Ltd. Chairman of Audit Committee.

Duncan Industries Ltd. Duncan Industries Ltd. -

Select Holiday Resorts Ltd. Chairman of Audit Committee and

Havell�s India Ltd. Member of Remuneration/Compensation Committee.

Exl. Service Com (I) Ltd. Havell�s India Ltd. -

Eveready Industries India Ltd. Chairman of Audit Committee.

J.K. Paper Ltd. Eveready Industries India Ltd. -

Dynamic Advertising & Research Team Pvt. Ltd. Member of Audit Committee and Remuneration/Compensation Committee.

Creditcapital Investment Trust Company Ltd. J.K. Paper Ltd. -

Sagar Entertainment Ltd. Member of Audit Committee and Remuneration/Compensation Committee.

Hindustan Gum and Chemicals Ltd.


c) Review with the management and auditors, the periodical and annual financial statements before submission to the Boardwith focus on changes in accounting policies and practices, compliances of requirements of stock exchanges and legalrequirements.

d) Review the adequacy of internal control systems, discuss internal audit reports including the plan, scope of work, structure,staffing and budgets of the internal audit department.

e) Review the financial and operational risk management policies and ensure that adequate safeguards are made for variouslegal compliances.

f) Discuss and review with Cost Auditors the cost audit procedures, cost audit reports and related matters.

g) Review related party transactions.

h) Review and discuss with the management status and implications of various legal cases.

Details of Audit Committee Meetings

During the year, six meetings of the Audit Committee were held on April 28, 2004, July 29, 2004, September 22, 2004, October 6,2004, October 26, 2004 and January 25, 2005 and the attendance was as follows:

4 Investors� Grievances Committee:

The Investors� Grievances Committee comprises three non-executive independent directors, namely, Mr. D. K. Contractor (Chairman),Dr. K. U. Mada and Dr. D. P. Sinha. Mr. Marc Desaedeleer and Mr. Sunil Nair are invitees at the meetings of the Committee.Mr. Kiran N. Bade, Company Secretary, is the Compliance Officer.

The Committee reviews functioning of the Investors� Services Department covering all facets of operations including transfer/transmission of shares in physical form, payment of dividend and depository related activities.

The Committee closely monitors the redressal system maintained by the department and inspires the team to render qualityservices to the shareholders and depositors of the Company. It encourages and ensures that the highest standards of compliancesare being followed.

Your Company received and resolved 190 complaints from shareholders during the year. As on March 31, 2005, no complaintsremained pending/un-attended. During the year, no share transfers/complaints remained pending for more than 30 days.

Details of the Investors� Grievances Committee Meetings

During the year, two meetings of the Investors� Grievances Committee were held on September 22, 2004 and January 25, 2005and the attendance was as under:

Held Attended

1 Dr. K. U. Mada 6 6

2 Mr. D. K. Contractor 6 6

3 Dr. D. P. Sinha 6 4

Sl. No. Name of the directorNo. of Meetings

Held Attended

1 Mr. D. K. Contractor 2 2

2 Dr. K. U. Mada 2 2


Sl. No. Name of the directorNo. of Meetings


49 text 49

LUPIN LIMITED

4949

5 Remuneration/Compensation Committee:

The Remuneration/Compensation Committee comprises Mr. P. K. Kaul (Chairman), Mr. Sunil Nair (alternate - Mr. Marc Desaedeleer)and Dr. D. P. Sinha, all non-executive independent directors. The Committee inter alia performs functions specified in Clause 49 ofthe Listing Agreement and Schedule XIII of the Companies Act, 1956. The Committee approved the �Lupin Employees Stock OptionPlan 2003� in terms of which 377,150 options were granted to 174 employees.

Details of the Remuneration/Compensation Committee Meetings

During the year, three meetings of the Remuneration/Compensation Committee were held on July 29, 2004, November 10, 2004and February 17, 2005 and the attendance was as under:

6 Other Committees:

The Board had constituted an Independent Directors Recommendation Committee for identifying persons for appointment asindependent directors. Dr. Desh Bandhu Gupta is the Chairman of the Committee. Dr. D. P. Sinha and Mr. Sunil Nair (alternate - Mr. Marc Desaedeleer), all non-executive independent directors, are members. The Board also constituted an Executive Committeecomprising Dr. Desh Bandhu Gupta, Chairman, Mrs. M. D. Gupta, Executive Director, Dr. K. U. Mada and Mr. Sunil Nair (alternate- Mr. Marc Desaedeleer).

7 General body meetings:

Details of the last three Annual General Meetings:

No business was required to be transacted through postal ballot at the above meetings. Similarly, no business is required to betransacted through postal ballot at the forthcoming Annual General Meeting.

8 Disclosure on materially significant related party transactions:

During the year under review, the Company has not entered into any transactions of material nature with the promoters, directors,management or their relatives etc., which may have potential conflict with the interests of the Company. The Register of Contractscontaining details of transactions in which Directors are interested is placed before every meeting of the Board and is signed bythe Directors present at the meeting. Apart from payment of sitting fees as disclosed elsewhere in this Report, there is no pecuniarytransaction with the independent/non-executive directors. In compliance with the Accounting Standard AS 18, details of relatedparty transactions are disclosed in the Notes to the Accounts.

9 Means of communication:

Quarterly, half-yearly and annual financial results of the Company are communicated to the stock exchanges immediately afterthey are taken on record by the Board and thereafter they are published in prominent English and Marathi newspapers. Theresults are also posted on the Company�s website viz. www.lupinworld.com and on the Electronic Data Information Filing andRetrieval (EDIFAR) website maintained by the National Informatics Centre, as required by SEBI. Disclosures pursuant to the ListingAgreement are promptly communicated to stock exchanges.

Held Attended

1 Mr. P. K. Kaul 3 3

2 Mr. Sunil Nair (alternate - Mr. Marc Desaedeleer) 3 1


Sl. No. Name of the directorNo. of meetings

Year Day, Date and Time Location

Rang Sharda Natyamandir, Bandra

Reclamation, Bandra (West), Mumbai - 400050.

2002 - 03 Wednesday, August 6, 2003 at 2.00 p.m. --- do ---

2003 - 04 Thursday, July 29, 2004 at 2.00 p.m. --- do ---

2001 - 02 Monday, September 2, 2002 at 2.00 p.m.


10 General Shareholders information:

¤ In-House Investors� Services Department - At the service of the esteemed Shareholders

Your Company accords top priority to serve investors, who are its perpetual partners. Besides effecting timely de-materialisation/re-materialisation, share transfer/transmission, managing fixed deposit related activities, the Investors� Services Department rendersproactive and extensive services to investors, such as sending reminders to claim unpaid dividend/ interest, intimations on undeliveredmails, dividend disbursement within 24 hours of its declaration, educating and encouraging investors to register nominations,opting for Electronic Clearing Service (ECS) etc.

The Company has a full-fledged Investors� Services Department manned by experienced and NCFM (depository module) qualifiedemployees. The department is equipped with the state-of-the-art hardware infrastructure, investor service oriented and reliablesoftware systems and advanced communication systems to provide qualitative services for high investor satisfaction and confidence.

Dissemination of information for the benefit of investors is also a preferred service objective of the management. Pertinent andvaried information is hosted and regularly updated on the Company�s website, www.lupinworld.com. Data is regularly updated onSEBI�s website www.sebi.gov.in as per EDIFAR requirements.

Reliability, security and integrity of vital and voluminous database is ensured through various measures like access controls, dailydata backups, daily reconciliation of capital, data encryption etc.

The Investors� Services Department is dedicated to its investors and can be approached for any query or assistance through letter,telephone, fax or email. For the convenience of investors, a link has also been established to the department through theCompany�s website.

< Address for correspondence: Investors� Services Department, 159, C.S.T. Road, Kalina, Santacruz (East), Mumbai - 400 098.

Email: [email protected]

Tel: +91 22 5640 2323 (Extn: 2402 / 3)Fax: +91 22 2652 8806

< Person in-charge of the Department: Mr. Pradeep S. Bhagwat, Sr. Manager - Investors� Services.

¤ Annual General Meeting

The 23rd Annual General Meeting will be held at 2.00 p.m. on Thursday, July 28, 2005 at Rang Sharda Natyamandir, BandraReclamation, Bandra (West), Mumbai - 400 050.

¤ Financial Calendar

¤ Book Closure

The Register of Members and the Share Transfer Register will remain closed from Tuesday, July 19, 2005 to Wednesday,July 20, 2005.

Dividend for the year ended March 31, 2005, if declared at the Annual General Meeting, shall be paid to those shareholderswhose names appear:

(a) as beneficial owners at the end of business day on Monday, July 18, 2005 as per lists furnished by NSDL and CDSL in respectof shares held in electronic form; and

(b) on the Register of Members of the Company as on Monday, July 18, 2005 in respect of shares held in physical form.

First quarter results : July 2005

Second quarter results : October 2005

Third quarter results : January 2006

Annual results : April/May 2006

Annual General Meeting : July/August 2006


51 text 51

LUPIN LIMITED

5151

The Stock Exchange, Mumbai (BSE) 500257

National Stock Exchange of India Ltd. (NSE) LUPIN

¤ Dividend Payment Date

Dividend, as declared, shall be paid within three days from the date of the Annual General Meeting. Dividend shall be remittedthrough Electronic Clearing Service (ECS) at approved locations, wherever ECS details are available with the Company and in allother cases, through warrants payable at par.

¤ Shares Listed At

The equity shares of the Company are listed at:

The Stock Exchange, Mumbai (BSE) (Regional Exchange).

Phiroze Jeejeebhoy Towers,Dalal Street, Mumbai Samachar Marg,Mumbai - 400 001.

National Stock Exchange of India Ltd. (NSE).

Exchange Plaza,Bandra Kurla Complex,Bandra (East),Mumbai - 400 051.

The Company has paid listing fees to BSE and NSE for the year 2005-06.

As per Company�s decision, equity shares were de-listed from the Jaipur Stock Exchange Limited and The Calcutta Stock ExchangeAssociation Limited w.e.f. May 15, 2004 and September 30, 2004 respectively.

¤ Stock Codes

The stock codes of the Company are:

¤ Market Price Data

The equity shares of your Company are traded in �A� Group.The market price data covering the period April 2004 to March 2005 are given below:

(Rs.) (Rs.) (Rs.) (Rs.)

MONTH HIGH DATE LOW DATE HIGH DATE LOW DATE

Apr-04 892.00 23.04.04 638.20 01.04.04 900.00 23.04.04 635.00 01.04.04

May-04 885.00 06.05.04 615.75 17.05.04 889.75 06.05.04 618.40 17.05.04

Jun-04 749.00 16.06.04 553.55 22.06.04 729.90 02.06.04 588.00 24.06.04

Jul-04 649.95 06.07.04 561.00 26.07.04 650.00 08.07.04 580.00 15.07.04

Aug-04 692.00 13.08.04 581.10 24.08.04 693.70 12.08.04 556.20 18.08.04

Sep-04 734.70 30.09.04 584.90 22.09.04 735.55 09.09.04 642.10 09.09.04

Oct-04 743.80 05.10.04 556.50 27.10.04 744.00 05.10.04 554.60 27.10.04

Nov-04 650.00 04.11.04 622.10 09.11.04 672.00 24.11.04 600.00 05.11.04

Dec-04 739.00 17.12.04 536.00 02.12.04 745.00 20.12.04 620.00 02.12.04

Jan-05 695.00 11.01.05 484.00 25.01.05 739.90 04.01.05 482.00 25.01.05

Feb-05 611.00 02.02.05 510.00 14.02.05 607.75 01.02.05 507.55 18.02.05

Mar-05 626.90 08.03.05 540.00 31.03.05 623.95 08.03.05 536.15 31.03.05

BSE NSE


¤ Trading Volumes

The traded volumes of shares at BSE and NSE are:

BSE NSE Total

(Shares) (Shares) (Shares)

Apr-04 818469 1502610 2321079

May-04 424629 1004917 1429546

Jun-04 1076179 2003115 3079294

Jul-04 404704 984732 1389436

Aug-04 630130 939406 1569536

Sep-04 759707 1572810 2332517

Oct-04 909017 1469069 2378086

Nov-04 225214 809544 1034758

Dec-04 654298 1228862 1883160

Jan-05 566109 1000031 1566140

Feb-05 522297 542635 1064932

Mar-05 503382 440812 944194

TOTAL 7494135 13498543 20992678

Month

LUPIN SHARE PRICE (High - Low) BSE

900

800

700

600

500

400

300

200

100

0

Rate

(Rs.)

LowHigh

Month

Apr

- 04

May

- 04

Jun -

04

Jul

- 04

Aug -

04

Sep -

04

Oct

- 0

4

Nov

- 04

Dec

- 0

4

Jan -

05

Feb -

05

Mar

- 05

900

800

700

600

500

400

300

200

100

Apr

- 04

May

- 04

Jun -

04

Jul

- 04

Aug -

04

Sep -

04

Oct

- 0

4

Nov

- 04

Dec

- 0

4

Jan -

05

Feb -

05

Mar

- 05

Month

LUPIN SHARE PRICE (High - Low) NSE

Rate

(Rs.)

High Low


53 text 53

LUPIN LIMITED

5353

¤ Performance in Comparison with Broad Based Indices

Lupin share price compared with BSE Sensex and NSE S&P CNX Nifty (Month-end closing)

¤ Share Transfer System

The Share Transfer Committee is constituted for approval of transfer of shares in physical form. Dr. Desh Bandhu Gupta, or in hisabsence, Dr. Kamal K. Sharma is the Chairman of the Committee. Mrs. M. D. Gupta and Mr. D. K. Contractor are the other members.

The Share Transfer Committee generally meets once a fortnight. The Committee met 24 times during the year and approved 1013transfers in respect of 33930 shares.

Valid share transfer documents are processed and duly endorsed share certificates are despatched to the respective transfereeswithin 25 days from the date of receipt of transfer documents.

Month ( Rs.) Sensex ( Rs.) S&P CNX Nifty

Apr-04 807.30 5655.09 807.15 1796.10

May-04 700.20 4759.62 700.20 1483.60

Jun-04 634.70 4795.46 634.75 1505.60

Jul-04 620.30 5170.32 621.30 1632.30

Aug-04 671.95 5192.08 673.75 1631.75

Sep-04 730.35 5583.61 730.30 1745.50

Oct-04 620.90 5672.27 620.20 1786.90

Nov-04 633.65 6234.29 634.80 1958.80

Dec-04 685.45 6602.69 688.90 2080.50

Jan-05 600.55 6555.94 596.95 2057.60

Feb-05 556.45 6713.86 557.85 2103.25

Mar-05 553.05 6492.82 547.10 2035.65

BSE NSE

LUPIN SHARE PRICE COMPARED TO BSE SENSEX LUPIN SHARE PRICE COMPARED TO NSE S&P CNX NIFTYApr

- 04

May

- 04

Jun -

04

Jul

- 04

Aug -

04

Sep -

04

Oct

- 0

4

Nov

- 04

Dec

- 0

4

Jan -

05

Feb -

05

Mar

- 050

800

700

600

500

400

300

200

100

Rate

(Rs.)

Month

900 2500

2000

1500

0

Nifty

Lupin (Rs.)NSE S&P CNX Nifty

1000

500

Apr

- 04

May

- 04

Jun -

04

Jul

- 04

Aug -

04

Sep -

04

Oct

- 0

4

Nov

- 04

Dec

- 0

4

Jan -

05

Feb -

05

Mar

- 05

0

800

700

600

500

400

300

200

100

Rate

(Rs.)

Month

900 8000

7000

6000

5000

4000

0

Sen

sex

Lupin (Rs.)BSE Sensex

3000

2000

1000


ii. Shareholding Pattern

iii. Holding Profile

¤ Shareholding Profile as on March 31, 2005

i. Distribution of Shareholding

HOLDING PROFILE (NO. OF SHARES)

1.79% Physical

98.21% Demat 53.04% Demat46.96% Physical

HOLDING PROFILE (NO. OF HOLDERS)

Category of shareholders No of shares %

Promoters 21077599 52.51

Mutual Funds 2266094 5.65

Financial Institutions/ Banks/ Insurance Cos. 120663 0.30

Foreign Institutional Investors 6835916 17.03

Foreign Bodies (FIPB route) 5037713 12.55

Non Resident Indians 65460 0.16

Public 4737689 11.80

Total 40141134 100.00

Mode Demat % Physical % Total

Shares 39423225 98.21 717909 1.79 40141134

Shareholders 24873 53.04 22018 46.96 46891

52.51% Promoters

SHAREHOLDING PATTERN

11.80% Public

0.16% Non Resident Indians

12.55% Foreign Bodies (FIPB) Route

17.03% Foreign Institutional Investors

0.30% Financial Institutions / Banks / Insurance Cos.

5.65% Mutual Funds


Shareholding range

(No. of shares)

Numbers % Numbers %

1 � 500 46157 98.43 2209429 5.50

501 � 1000 381 0.81 278893 0.69

1001 � 2000 138 0.30 201544 0.50

2001 � 3000 60 0.13 151077 0.38

3001 � 4000 24 0.05 82275 0.21

4001 � 5000 18 0.04 84864 0.21

5001 � 10000 30 0.06 214794 0.54

10001 and above 83 0.18 36918258 91.97

Total 46891 100.00 40141134 100.00

Shareholders Shareholding

55 text 55

LUPIN LIMITED

5555

¤ Dividend Profile

* By Board of Directors

¤ Dematerialisation of Shares and Liquidity

The Company�s shares are traded compulsorily in dematerialised form and are available for trading with both the depositories, viz.,National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).

The Company has established direct connectivity with NSDL and CDSL and confirms valid demat requests within five working daysof receipt of demat request form, from Depository Participants (DPs).

With a view to expedite the dematerialisation process, the Company continually monitors requests for dematerialisation.

The International Securities Identification Number (ISIN) assigned to Company�s equity shares by the depositories isINE 326 A 01029

During the year under review, the Company has electronically confirmed 4915 demat requests in respect of 1049902 equityshares.

¤ Employees Stock Option Plan (ESOP)

With the global business environment becoming increasingly competitive, it is necessary for companies to adopt requisite measuresfor attracting and retaining qualified, talented and competent personnel, as also to impart a sense of belonging and ownershipamongst the employees. ESOP is one of the best tools to achieve this objective and to reward outstanding performance.

iv. Geographical distribution of shareholders

Date of payment

of dividend

2003 � 2004 15.07.2004 � 16.07.2004 65% 29.07.2004 30.07.2004

2002 � 2003 17.07.2003 � 18.07.2003 50% 06.08.2003 07.08.2003

2001 � 2002 (Final) 20.08.2002 � 21.08.2002 25% 02.09.2002 03.09.2002

2001 � 2002 (Interim) 07.02.2002 25% 17.01.2002 * 15.02.2002

2000 � 2001 13.09.2001 � 14.09.2001 35% 25.09.2001 26.09.2001

Financial year Book closure/Record dates Dividend

declared

Date of

declaration

State No. of shareholders

Andhra Pradesh 2070

Bihar 1228

Delhi 3381

Gujarat 6616

Haryana 738

Karnataka 2218

Kerala 553

Madhya Pradesh 1689

Maharashtra 15084

North Eastern States 369

Orissa 275

Punjab 1027

Rajasthan 2223

Tamilnadu 2092

Uttar Pradesh 3960

West Bengal 3063

Others 305

Total 46891


¤ Outstanding GDRs/ADRs/Warrants/Convertible Instruments

Your Company has not issued any GDR/ADR/Warrants.

The Company has granted 377150 stock options under Lupin Employees Stock Option Plan 2003, which are exercisable fromJune 30, 2006 onwards in a phased manner.

¤ Plant Locations

The Company�s plants are located at:

(i) T-142, MIDC Industrial Estate,Tarapur Industrial Area,Boisar, Dist. Thane,Maharashtra.

(ii) 198-202, New Industrial Area II,Mandideep, Dist. Raisen,Madhya Pradesh - 462 046.

(iii) 211, New Industrial Area II,Mandideep, Dist. Raisen,

Madhya Pradesh - 462 024.

(iv) 124, GIDC Industrial Estate,Ankleshwar,Gujarat - 393 002.

(v) A 28/1, MIDC Area,Chikalthana, Aurangabad,Maharashtra - 431 001.

(vi) B-15, Phase I-A,Verna Industrial Area,Verna Salcette,Goa - 403 722

Your Company implemented its maiden ESOP in February 2005, under which, 377150 options were granted to 174 employees atan exercise price of Rs.567.35. The plan is formulated and implemented according to the SEBI guidelines. The maximum numberof options granted to an employee was 10,800. The vesting of the options has been spread over a maximum period of four andhalf years with an exercise period of ten years from the date of grant. The period between grant of options and vesting thereof isnot less than 12 months as per SEBI guidelines. The vested options can be exercised by the grantee by communicating to theCompany in writing his intention to exercise the same and tendering the exercise price thereof.

¤ Unclaimed Dividends � Transfer to Investor Education and Protection Fund (IEPF)

Year of dividend Date of dividend Status of unclaimed dividend Entitlement

1993-94 {LCL} 08.12.1994

1993-94 {LLL} 09.08.1994(Interim)

1993-94 {LLL} 20.12.1994(Final)

1994-95 01.02.1996

1995-96 01.02.1997

1996-97 02.02.1998

Transferred to Investor Education & Protection Fund (IEPF)

Dividends for the year 1997-98 onwards shall be transferred to IEPF as and when due. Shareholders are advised to confirm

their records and claim the amount if not encashed earlier.

Amount can be claimed from Registrar of Companies, Maharashtra, C.G.O. Bldg, 2nd Floor, C.B.D. Belapur, Navi Mumbai - 400 614.

Transferred to General Revenue A/C of Central Government

Amount cannot be claimed as per the relevant provisions.


57 text 57

LUPIN LIMITED

5757

¤ Help Desk at AGM

A help desk for our shareholders shall be provided at the Annual General Meeting. We shall be pleased to be of any assistanceto you.

¤ Address for Correspondence

The shareholders may address their queries / communications to:

Lupin Limited

Registered Office and Investors� Services Department,159, C.S.T. Road, Kalina,Santacruz (East),Mumbai - 400 098India.Tel: +91 22 5640 2323 Ext: 2402 / 2403Fax: +91 22 2652 8806.

¤ R & D Centre

Lupin Research ParkSurvey Nos. 46A / 47A,Nande Village, Mulshi Taluka,Dist. Pune,Maharashtra - 411 042.

¤ Contact Persons For Enquiries:

Financial matters Mr. Indrajit Banerjee,

email: [email protected]

Mr. Sunil Makharia,


Secretarial matters : Mr. Kiran N. Bade,


Investors related matters : Mr. Pradeep S. Bhagwat,


:


AUDITORS� CERTIFICATE ON CORPORATE GOVERNANCE

To,

The Members of Lupin Limited

We have examined the compliance of conditions of Corporate Governance by Lupin Limited, for the year ended on 31st

March 2005, as stipulated in clause 49 of the Listing Agreement of the said Company with the stock exchanges.

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

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Companyhas complied in all material respect with the conditions of Corporate Governance as stipulated in the above-mentionedListing Agreement.

We state that no investor grievance is pending for a period exceeding one month against the Company, based on the recordsmaintained by the Investors� services department and as certified by the compliance officer of the Company.

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

For Deloitte Haskins & Sells

Chartered Accountants

P. R. Barpande

Partner

Membership No. 15291Place : MumbaiDate : May 20, 2005

59 text 59

LUPIN LIMITED

5959

AUDITORS� REPORTTO THE MEMBERS OF LUPIN LIMITED

1. We have audited the attached Balance Sheet of Lupin Limited as at 31st March 2005, the Profit and Loss Account and also theCash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of theCompany�s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. The financial statements of the Company for the year ended 31st March, 2004 were audited by other independent auditors,whose audit report dated 28th April, 2004 was unqualified. We have relied upon the balances of the assets and liabilities asat 31st March, 2004 being the opening balances as at 1st April, 2004 for the purposes of the financial statements for the yearended 31st March, 2005.

4. As required by the Companies (Auditor�s Report) Order, 2003, issued by the Central Government in terms of Section 227 (4A) of theCompanies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

5. Further to our comments in the Annexure referred to in paragraph 4 above, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for thepurposes of our audit;

b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from ourexamination of the books;

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with thebooks of account;

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the accounting standardsreferred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e) On the basis of the written representations received from the directors as on 31st March 2005 and taken on record by theBoard of Directors, we report that none of the directors is disqualified as on 31st March, 2005 from being appointed as adirector in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956;

f) We draw attention to note no. 9 (a) of Schedule 17 (B) regarding Rs. 0.8 Million increased remuneration paid to the ManagingDirector of the Company, which is subject to the approval of shareholders.

g) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read withthe significant accounting policies and other notes thereon give the information required by the Companies Act, 1956, in themanner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2005;

ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash flows for the year ended as on that date.



P. R. Barpande

Partner



ANNEXURE TO AUDITORS� REPORT(REFERRED TO IN PARAGRAPH 4 OF OUR REPORT OF EVEN DATE)

(i) In respect of its fixed assets

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixedassets.

(b) The Company has physically verified certain assets during the year in accordance with a programme of verification, which inour opinion provides for physical verification of the fixed assets at reasonable intervals. According to the information andexplanations given to us, no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, the Company has not made any substantialdisposal of fixed assets during the year.

(ii) In respect of its inventories:

(a) As explained to us, inventories were physically verified during the year by the management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification ofinventories followed by the management were reasonable and adequate in relation to the size of the Company and thenature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper recordsof its inventories and no material discrepancies were noticed on physical verification.

(iii) The Company has not granted or taken any loan secured/unsecured to/from companies, firms or parties covered in the registermaintained under section 301 of the Companies Act, 1956. Accordingly, clause (iii) of Paragraph 4 of the Companies (Auditor�sReport) Order, 2003 is not applicable to the Company.

(iv) In our opinion, and according to the information and explanations given to us, there is an internal control system commensuratewith the size of the Company and nature of its business for purchase of inventory and fixed assets and for the sale of goods andservices. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internalcontrol system.

(v) In respect of particulars of contracts or arrangements and transactions entered in the register maintained in pursuance of section301 of the Companies Act, 1956;

(a) To the best of our knowledge and belief and according to the information and explanations given to us, particulars ofcontracts or arrangements that needed to be entered into the register have been so entered.

(b) According to the information and explanations given to us, these contracts or arrangements have been made at prices whichare reasonable having regards to the prevailing market prices at the relevant time, where such prices are available.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions ofSections 58A, 58AA and other relevant provisions of the Companies Act, 1956, and the rules framed there under with regard to thedeposits accepted from the public.

(vii) In our opinion, the Company�s internal audit system is commensurate with the size and the nature of its business.

(viii) We have broadly reviewed the books of account and records maintained by the Company relating to the manufacture of bulkdrugs and formulations, pursuant to the order made by the Central Government for the maintenance of cost records under Section209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have beenmade and maintained. We have, however, not made a detailed examination of the records with a view to determining whetherthey are accurate or complete.

(ix) According to the information and explanations given to us in respect of statutory and other dues:

(a) The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Investor Educationand Protection Fund, Employees� State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty,Cess and any other statutory dues with the appropriate authorities during the year. According to the information andexplanation given to us, no undisputed amounts payable in respect of aforesaid were in arrears as at 31st March, 2005 for aperiod of more than six months from the date they became payable.

(b) The disputed dues that have not been deposited on account of matters pending before respective authorities are as under:

61 text 61

LUPIN LIMITED

6161

(x) The Company has no accumulated losses at the end of the financial year and has not incurred any cash losses during thecurrent financial year and in the immediately preceding financial year.

(xi) Based on our audit procedures and on the basis of information and explanations given by the management, we are of theopinion that the Company has not defaulted in the repayment of dues to financial institutions, banks and debenture holders.

(xii) According to the information and explanations given to us, the Company has not given any loans and advances on the basisof security by way of pledge of shares, debentures and other securities and hence the question of maintenance of adequaterecords for this purpose does not arise.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi /mutual benefit fund / society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Companies (Auditor�s Report) Order,2003 are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Therefore, theprovisions of clause (xiv) of paragraph 4 of the Companies (Auditor�s Report) Order, 2003 are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the guaranteesgiven by the Company for loans taken by others from banks, are not prima facie prejudicial to the interests of the Company.

(xvi) To best of our knowledge and belief and according to the information and explanations given to us, the term loans takenby the Company were, prima facie, applied for the purposes for which they were raised.

(xvii) According to information and explanations given to us, and on an overall examination of the Balance Sheet of theCompany, funds raised on short term basis have, prima-facie, not been used for long term investment.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained underSection 301 of the Companies Act, 1956.

(xix) The Company has not issued any debentures during the year, hence the question of creation of security or charge in respect ofdebentures issued does not arise.

(xx) The Company has not raised any money by way of public issues during the year.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by theCompany was noticed or reported during the year.



P. R. Barpande

Partner


Amount

(Rs. in Millions)

Income Tax Act, 1961 Income Tax 9.7 Commissioner of Income - Tax (Appeals)

7.7 Commissioner of Central Excise (Appeals),

1.2 Joint Commissioner of Central Excise (Appeals),

41.1 Commissioner of Sales Tax,

2.9 Sales Tax Tribunal

Sales TaxCentral and Various State Sales Tax Act�s.

Name of the Statute Nature of the Dues Forum where dispute is pending

Central Excise Act, 1944 Excise Duty and Service Tax


BALANCE SHEETAS AT 31ST MARCH, 2005

As per our attached report of even date



P. R. Barpande Dr. Desh Bandhu Gupta Dr. Kamal K. Sharma Dr. K. U. MadaPartner Chairman Managing Director Director

D. K. Contractor Sunil NairDirector Director

Kiran N. BadeCompany Secretary

Place : MumbaiDated : May 20, 2005

As at As at

Schedules 31.03.2005 31.03.2004

Rs. in million Rs. in million

I. SOURCES OF FUNDS

Shareholders' Funds

Share Capital 1 401.4 401.4

Reserves and Surplus 2 4603.6 4078.9

5005.0 4480.3

Loan Funds

Secured Loans 3 3806.3 2865.5

Unsecured Loans 4 600.1 905.6

4406.4 3771.1

Deferred Tax Liabilities (Net) 934.4 941.7

[Refer Note No. 5(b) of Schedule 17(B)]

TOTAL 10345.8 9193.1

II. APPLICATION OF FUNDS

Fixed Assets 5

Gross Block 7148.5 6404.1

Less: Depreciation 1559.1 1232.0

Net Block 5589.4 5172.1

Capital Work-in-Progress 698.1 171.7

6287.5 5343.8

Investments 6 93.7 89.1

Current Assets, Loans and Advances

Inventories 7 2480.8 2153.0

Sundry Debtors 8 2353.9 2158.3

Cash and Bank Balances 9 177.8 150.4

Loans and Advances 10 1726.2 1999.8

6738.7 6461.5

Less: Current Liabilities and Provisions 11

Current Liabilities 2374.3 1967.3

Provisions 399.8 734.0

2774.1 2701.3

Net Current Assets 3964.6 3760.2

TOTAL 10345.8 9193.1

Significant Accounting Policies and Notes to Accounts 17

63 text 63

LUPIN LIMITED

6363

PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2005








Schedules Current Year ended Previous Year ended

31.03.2005 31.03.2004


INCOME

Sales (Gross) 12122.7 11679.3

Less: Excise Duty 511.4 486.5

Sales (Net) 11611.3 11192.8

Other Income 12 187.7 455.5

11799.0 11648.3

EXPENDITURE

Cost of Materials 13 5684.4 5281.0

Personnel Expenses 14 1256.8 1048.1

Manufacturing and Other Expenses 15 3399.9 2517.5

Interest and Finance Charges 16 273.1 515.1

Depreciation and Amortisation 332.1 290.4

10946.3 9652.1

Profit before Tax and Extraordinary Items 852.7 1996.2

Provision for Taxation

- Current Tax (including wealth tax) 16.4 454.0

- Deferred Tax (7.3) 46.2

Net Profit before Extraordinary Items 843.6 1496.0

Extraordinary Items [net of tax of Rs. nil (previous year Rs. 198.0 million)] - 508.9

Net Profit after Tax and Extraordinary Items 843.6 987.1

Less : Income tax - earlier years 20.7 36.2

Add : Surplus brought forward from previous year 1601.3 859.7

Add : Debenture Redemption Reserve written back 35.0 350.0

Amount Available for Appropriation 2459.2 2160.6

APPROPRIATIONS:

- Transfer to Debenture Redemption Reserve - 15.0

- Transfer to General Reserve 750.0 250.0

- Proposed Dividend on Equity Shares 260.9 260.9

- Corporate Tax on Dividend 37.3 33.4

Balance Carried to Balance Sheet 1411.0 1601.3

2459.2 2160.6

Earnings Per Share (in Rs.) before extraordinary items [Refer Note No.12 of Schedule 17(B)]

- Basic 20.50 36.37

- Diluted 20.48 36.37

Earnings Per Share (in Rs.) after extraordinary items [Refer Note No. 12 of Schedule 17(B)]

- Basic 20.50 23.69

- Diluted 20.48 23.69

Face Value of Equity Shares (in Rs.) 10.00 10.00



CASH FLOW STATEMENTFOR THE YEAR ENDED 31ST MARCH, 2005

For the Year

Ended

For the Year

Ended

31.03.2005 31.03.2004


A. Cash Flow from Operating Activities

Net Profit before Tax and Extraordinary Items 852.7 1,996.2

Adjustments for:

Depreciation and amortisation 332.1 290.4

Loss on sale/discard of Fixed Assets (net) 6.7 6.5

Interest and Finance Charges 273.1 515.1

Interest on Long Term Investments- Non Trade (1.4) (2.0)

Dividend on Long Term Investment- Trade

[31.03.2005 Rs. 6,615/-; 31.03.2004 Rs. 21,615/-]

Provision for Diminution in value of Long Term Investments written back (net) - (11.2)

Provision for Doubtful debts 15.5 -

Loss on repurchase / cancellation of debentures - 37.1

Operating Profit before Working Capital Changes 1,478.7 2,832.1

Adjustments for:

Trade and other Receivables (184.2) 2,036.2

Inventories (327.8) (734.4)

Trade Payables 417.2 248.5

Cash Generated from Operations. 1,383.9 4,382.4

Interest paid (net) (282.3) (560.4)

Direct Taxes (Paid) / Refund (net) (129.4) 7.9

Net Cash generated from Operating Activities 972.2 3,829.9

B. Cash Flow from Investing Activities

Additions to Fixed Assets / Capital work-in-progress (1,285.2) (833.8)

Sale of Fixed Assets 2.7 1.5

Purchase of Investments (4.6) (38.4)

Sale of Investments 0.1 54.1

Interest on Long Term Investments- Non Trade 1.4 2.0


[31.03.2005 Rs. 6,615/-; 31.03.2004 Rs. 21,615/-]

Net Cash used in Investing Activities (1,285.6) (814.6)

C. Cash Flow from Financing Activities

Proceeds from / repayment of Borrowings 635.3 (2,738.1)

Loss on repurchase / cancellation of debentures - (37.1)

Premium on prepayments of Term Loans - (6.4)

Dividend Paid (260.4) (205.5)

Corporate Dividend Tax paid (34.1) (25.7)

Net cash Generated from/(used in) Financing Activities 340.8 (3,012.8)

Net increase in cash and cash equivalents 27.4 2.5

Cash and Cash equivalents as at the beginning of the year 150.4 147.9

Cash and Cash equivalents as at the end of the year 177.8 150.4

65 text 65

LUPIN LIMITED

6565

CASH FLOW STATEMENT (CONTD.)FOR THE YEAR ENDED 31ST MARCH, 2005

Notes :

1 Cash and cash equivalents include cash and bank balances in current accounts and deposits (refer Schedule 9 of the

Balance Sheet).

2 Additions to fixed assets (including movements in Capital work-in-progress) are considered as a part of investing activities.

3 Interest income on deposits, etc. is classified as cash flow from operating activities.

4 The above Cash Flow Statement has been prepared under the �Indirect Method� as set out in the Accouting Standard (AS-3),

�Cash Flow Statement� issued by the Institute of Chartered Accountants of India.

5 The previous year�s figures have been regrouped wherever necessary. The effect of extraordinary items in the previous year has

been given in the relevant heads.









SCHEDULE 1 - SHARE CAPITAL

Note :Out of the above Equity Shares, 37,311,048 Equity Shares were allotted as fullypaid-up without payment being received in cash, pursuant to the scheme ofAmalgamation with erstwhile Lupin Laboratories Limited.

SCHEDULE 2 - RESERVES AND SURPLUS

SCHEDULES FORMING PART OF THE BALANCE SHEET

As at As at

31.03.2005 31.03.2004


Authorised :

50,000,000 Equity Shares of Rs 10/- each 500.0 500.0

1,500,000 Redeemable Cumulative Preference Shares of Rs 100/- each 150.0 150.0

650.0 650.0

Issued, Subscribed and Paid-up

40,141,134 Equity Shares of Rs 10/- each fully paid up 401.4 401.4

TOTAL 401.4 401.4

Capital Reserve

- Investment Subsidies from Central Government

Balance as per last Balance Sheet 1.0 1.0

- Investment Subsidies from State Government


- On restructuring of capital of the Company under the Scheme

of Amalgamation


263.9 263.9

Capital Redemption Reserve


Securities Premium Account


General Reserve


Add: Transferred from Profit and Loss Account 750.0 250.0

2000.0 1250.0

Debenture Redemption Reserve


Add: Transferred from Profit and Loss Account - 15.0

Less : Transferred to Profit and Loss Account 35.0 350.0

30.0 65.0

Amalgamation Reserve


Surplus in Profit and Loss Account 1411.0 1601.3

TOTAL 4603.6 4078.9

67 text 67

LUPIN LIMITED

6767

SCHEDULE 3 - SECURED LOANS

Notes :1 a) Debentures are secured / to be secured by first legal / equitable mortgage of immovable assets and hypothecation of movable

assets of the Company both present and future situated at (a) Aurangabad, Pune and Tarapur in State of Maharashtra, (b)Ankleshwar in State of Gujarat, (c) Mandideep, District Raisen in State of Madhya Pradesh and (d) Verna Industrial area in Goa. Thesaid charge is ranking pari passu between the lenders including for term loan (Refer Note 2 below) and subject to prior chargescreated / to be created in favour of Company�s Bankers on specific items of movables to secure working capital requirements (Refernote 3 below).

b) �H� series Debentures are redeemable in 8 equal half yearly instalments starting from 1st September 2001, �M� series Debentures areredeemable in 3 equal annual instalments commencing from 28th October, 2002, �O� series and �P� series Debentures are redeemablein 8 euqal half yearly instalments starting from 30th Septemeber, 2001 and � R � series Debentures are redeemable in 3 equalannual instalments starting from 17th August, 2005. The Debentures under �H�, �M�, �O� and �P� series are redeemed during the yearon payment of last half yearly / annual instalments in respect of which the Company has initiated the steps for satisfaction ofcharges created in favour of Debenture Trustees of those series.

2 Term loans from Financial Institutions / Banks are secured / to be secured by first charge ranking pari passu with trustees for debentureholders refered to in note 1 (a) above and is further secured by way of personal gurantees of some of the Directors of the Company foramount aggregating to Rs.156.4 million (previous year Rs.274.0 million).

3 Loans from Banks in cash credit, packing credit and post shipment credit facilities are secured by hypothecation of inventories and bookdebts and a second charge on immovable properties referred to in note 1 (a) above.

4 Packing credit and post shipment credit facilities include foreign currency loans of Rs.2460.5 million (previous year Rs.1752.6 million).

5 Debenture of Rs. 40.0 million (previous year Rs. 134.9 million) and Term Loans of Rs. 224.1 million (previous year Rs. 197.8 million) arerepayable within one year.


As at As at

31.03.2005 31.03.2004

Notes Rs. in million Rs. in million

1. Debentures 1

Nil ( 1.5 million ) 14.5% 'H' Series Non-Convertible Redeemable

Debentures of Rs.100/- each fully paid up. - 25.0

Nil ( 2.3 million ) 14.5% 'M' Series Non-Convertible Redeemable


Nil ( 2 million ) 14.5% 'O' Series Non-Convertible Redeemable

Debentures of Rs. 100/- each fully paid up. - 50.0

Nil (1 million ) 14.5% 'P' Series Non-Convertible Redeemable


1.2 million 8% 'R' Series Non-Convertible

Redeemable Debentures of Rs.100/- each fully paid up. 120.0 120.0

120.0 254.9

2. Term Loans 2

( i ) From financial institutions

- Rupee Loans 398.4 590.0

- Foreign Currency Loans 104.9 131.1

( ii ) From Banks

- Foreign Currency Loans 437.5 -

940.8 721.1

3. Cash Credit, Packing Credit and Post Shipment

Credit facilities from banks 3 2745.5 1889.5

3806.3 2865.5TOTAL


SCHEDULE 4 - UNSECURED LOANS


As at As at

31.03.2005 31.03.2004


Fixed Deposits 385.3 734.8

[Due to Directors Rs.0.1 million (previous year Rs.0.1 million)]

Other Loans :

a) Sales Tax Deferment Loan - Government of Maharashtra 53.9 47.2

b) Loans from Council for Scientific and Industrial Research 160.9 123.6

TOTAL 600.1 905.6

Notes :

1. Fixed Deposits include deposits guaranteed by some of the Directors 37.7 62.6

2. Amount due within a year

i) Fixed Deposits 285.7 384.4

ii) Loans from Council for Scientific and Industrial Research 15.4 -

69

text69

LUPIN

LIMITE

D

69

69


SCHEDULE 5 - FIXED ASSETS

* Amounts written off in respect of leasehold land for the period of lease which has expired.

Notes :1. Cost of Buildings includes cost of shares in co-operative societies of Rs.1,000 (previous year Rs.1,000).2. Capital work-in-progress includes capital advances paid, machinery under installation / in transit, construction and erection materials (including those lying with contractors) and pre-operative expenses [Refer note no.4 of Schedule

17(B)].3. Depreciation for the current year includes Rs.0.5 million pertaining to earlier years (previous year Rs.0.3 million).4. Additions to Fixed Assets and Capital work-in-progress are after adjusting Rs. 0.3 million on account of exchange differences. The exchange difference on Indigenous Plant and Machinery is credited to Profit and Loss Account

aggregating to Rs. 20.1 million in view of the requirements of Accounting Standard (AS-11) �The effects of changes in foreign exchange rates� (Revised) issued by The Institute of Chartered Accountants of India, including clarification inthis respect, which hitherto was capitalised in the earlier years. Consequently there is a credit of Rs.20.1 million to the Profit and Loss Account and the profit for the year is higher by the like amount.

5. Intangible Assets (Computer Software) is regrouped from Plant, Machinery and Equipments considering the requirements of Accounting Standard (AS-26) �Intangible Assets�.

(Rs. in million)

Particulars As At As At Up To For The Up To As At As At

1st April Additions Deductions 31st March 31st March Year Deductions 31st March 31st March 31st March

2004 2005 2004 2005 2005 2004

Free Hold Land 29.7 - - 29.7 - - - - 29.7 29.7

Leasehold Land 112.7 - - 112.7 6.0 1.9 - 7.9* 104.8 106.7

Buildings 1596.0 125.7 0.6 1721.1 183.6 51.0 0.1 234.5 1486.6 1412.4

Plant , Machinery and

Equipments 4487.0 617.1 10.2 5093.9 1004.4 258.5 3.2 1259.7 3834.2 3482.6

Furniture and Fixtures 108.0 14.4 2.9 119.5 26.0 10.1 1.5 34.6 84.9 82.0

Vehicles 12.6 1.6 0.7 13.5 2.4 1.2 0.2 3.4 10.1 10.2

Intangible Assets 58.1 - - 58.1 9.6 9.4 - 19.0 39.1 48.5

(Computer Software)

TOTAL 6404.1 758.8 14.4 7148.5 1232.0 332.1 5.0 1559.1 5589.4 5172.1

Previous Year 5809.0 755.9 160.8 6404.1 952.5 290.4 11.0 1232.0 5172.1

Capital Work-In-Progress 698.1 171.7

TOTAL 6287.5 5343.8

Gross Block Depreciation And Amortisation Net Block


SCHEDULE 6 - INVESTMENTS


As at

Number Face 31.03.2004

Value Rs. in million Rs. in million Rs. in million

Long Term Investments

(At cost / carrying amount unless otherwise stated)

1 In Equity Shares

a) In Subsidiary Companies Unquoted (Trade)

Lupin Chemicals (Thailand) Ltd. 420,000 100 48.3 48.3

(420,000) Bahts

[Refer note no.3 of schedule 17(B)]

Lupin Laboratories South Africa (Pty) Ltd. 6,000 1

(31.03.2005 - Rs.40,020/-, 31.03.2004 - Rs. 40,020/-) (6,000) S.A. Rand

Lupin Pharmaceuticals Inc., USA 300,000 1 13.8 13.8

(300,000) USD

Lupin Hong Kong Ltd. 800,000 1 4.7 0.6

(Including 1 share held by the nominee) (100,000) HKD

Lupin Herbal Ltd. 50,000 Rs.10/- 0.5 -

(Including 6 shares held by the nominees) (Nil)

67.3 62.7

Less : Provision for diminution in value of investments

(31.03.2005 - Rs.40,020/-, 31.03.2004 - Rs. 40,020/-)

67.3 62.7

b) Others Unquoted (Trade)

Biotech Consortium India Ltd. 50,000 Rs.10/- 0.5 0.5

(50,000)

Bharuch Enviro Infrastructure Ltd. 4,410 Rs.10/-

(31.03.2005 - Rs. 44,100/-; 31.03.2004 - Rs. 44,100/-) (4,410)

Bharuch Eco-Acqua Infrastructure Ltd. 479,250 Rs.10/- 4.8 4.8

(479,250)

Dombivali Nagri Sahakari Bank Ltd. Nil Rs.50/- -

(31.03.2004 - Rs. 50,000/-) (1,000)

5.3 5.3

c) Quoted (Non Trade)

Gran Heal Pharma Ltd 575,000 Rs.10/- 5.7 5.7

(575000)

Less : Provision for diminution in value of investments 5.7 5.7

- -

2 In Bonds

Quoted (Non-Trade)

6.75% Tax Free US64 Bonds 211,400 Rs.100/- 21.1 21.1

(211,400)

93.7 89.1

Notes :-

1) a) Quoted Investments : Aggregate Cost / Carrying Value 21.1 21.1

: Aggregate Market / Repurchase Value of Bonds 22.1 22.9

b) Unquoted Investments : Aggregate Cost / Carrying Value 72.6 68.0

2) All the Investments in shares / bonds are fully paid up.

TOTAL

As at

31.03.2005

71 text 71

LUPIN LIMITED

7171

SCHEDULE 7 - INVENTORIES

SCHEDULE 8 - SUNDRY DEBTORS

(Unsecured )

Note :Sundry debtors include debts due from subsidiary companies Rs.159.1 million(previous year Rs.364.7 million).

SCHEDULE 9 - CASH AND BANK BALANCES

As at As at

31.03.2005 31.03.2004


Stock-in-trade

- Raw Materials 813.7 580.6

158.3 97.4

- Work-in-Process 527.4 709.3

- Finished Goods (including Traded Goods) 891.4 690.4

Consumable Stores, Spares and Fuel 90.0 75.3

TOTAL 2480.8 2153.0

- Packing Materials

Debts outstanding for a period exceeding six months

- considered good 104.1 105.3

- considered doubtful 15.5 -

119.6 105.3

Other Debts considered good 2249.8 2053.0

2369.4 2158.3

Less: Provision for doubtful debts 15.5 -

TOTAL 2353.9 2158.3

Cash in hand [including Cheques on hand of Rs.38.2 million 40.0 4.6

(previous year Rs.0.1 million)]

Bank Balances :

- With Scheduled Banks

In Current Accounts (including remittances in transit) 87.4 38.3

In Exchange Earners Foreign Currency Account 0.3 0.3

In Deposit Accounts [including Margin Deposits Rs.44.5 million 44.5 102.1


- With Others

In Current Accounts 5.6 5.1

(See Note below)

TOTAL 177.8 150.4



SCHEDULE 9 - CASH AND BANK BALANCES (CONTD.)

SCHEDULE 10 - LOANS AND ADVANCES

(Considered good unless otherwise stated)

Note: Loans and advances include Rs.1.2 million (previous year Rs. nil)being advance towards investments.

SCHEDULE 11 - CURRENT LIABILITIES AND PROVISIONS


As at As at

31.03.2005 31.03.2004


Unsecured

Advances recoverable in cash or in kind or for value to be received 880.0 917.8 Deposits 745.8 734.6 Balances with Customs and Excise Authorities 0.7 1.0 Advance payment of Income Tax 99.7 346.4

TOTAL 1726.2 1999.8

Current Liabilities

Acceptances 895.0 694.6 Sundry Creditors : i) Total outstanding dues to small scale industrial undertakings 58.3 35.8

1344.7 1151.4 Interest Accrued but not due on loans 36.6 39.0 Unpaid Dividend * 8.8 8.3 Unpaid Matured Deposits * 15.5 14.6 Unpaid Matured Debentures * 4.6 6.2 Unpaid Interest Warrants * 10.8 17.4

* There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

TOTAL 2374.3 1967.3

ii) Total outstanding dues to creditors other than small scale industrial undertakings

Note :

Bank Balances include balances with non scheduled banks as under : Rs. in million

Name of the Bank Country As at As at

31.03.2005 31.03.2004 31.03.2005 31.03.2004

Bank of Foreign Trade - Vneshtorg Bank - US$ A/c Russia 0.4 0.1 0.6 0.3

Bank of Foreign Trade - Vneshtorg Bank - Rouble A/c Russia 0.1 0.1 0.2 0.3

Texaka Bank - Tenge A/c [31.03.2004 - Rs. 865] Kazhakistan 0.1 0.2 0.3

Citi Bank N.A. USA - 4.8 4.8 5.2

Ukreximbank [31.03.2004 Rs. 16,147] Ukraine 0.2 0.9 0.6

Citi Bank N.A. UK 4.7 0.1 8.3 4.1

National Bank - Uzbekistan US$ A/c Uzbekistan 0.1 - 0.1 -

Maximum balance during the year ended

Note : Sundry Creditors include amount due to subsidiary companies Rs.158.5 million (previous year Rs.6.9 million).Provisions

For Gratuity 22.6 9.5For Leave encashment 41.2 33.3For Taxation (including wealth tax) 16.4 355.4For Proposed Dividend on Equity Shares 260.9 260.9For Tax on Dividend 36.6 33.4

Other Provisions [refer note no.16 of schedule 17(B)] 22.1 41.5399.8 734.0

TOTAL 2774.1 2701.3

73 text 73

LUPIN LIMITED

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SCHEDULE 12 - OTHER INCOME

SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT

SCHEDULE 13 - COST OF MATERIALS

SCHEDULE 14 - PERSONNEL EXPENSES

Raw Materials Consumed 4,152.7 4565.1

Packing Materials Consumed 358.6 303.8

Purchase of Traded Goods 1,192.2 846.2

Opening Stock :

Finished Goods (including Traded Goods) 690.4 549.7

Work - in - Process 709.3 415.9

1399.7 965.6

Closing Stock :

Finished Goods (including Traded Goods) 891.4 690.4

Work - in - Process 527.4 709.3

1418.8 1399.7

Increase in Stock of Finished Goods (including Traded Goods) and Work-in-Process (19.1) (434.1)

TOTAL 5684.4 5281.0

Salaries, Wages and Bonus 1035.8 871.5

Contribution to Provident , Gratuity and Other Funds 124.5 97.9

Welfare Expenses 96.5 78.7

TOTAL 1256.8 1048.1

Year Ended Year Ended

31.03.2005 31.03.2004


Export Benefits / Incentives 52.1 293.7

Income from Research Services 11.0 -

Dividend on Long Term Investments - Trade

[31.03.2005 - Rs.6,615 ; 31.03.2004 - Rs. 21,615]

Interest on Long Term Investments - Non Trade 1.4 2.0

Interest on Deposits with Banks 3.9 8.6

[Tax Deducted at Source Rs.0.8 million (previous year - Rs. 1.9 million)]

Interest on Inter Corporate Deposits - 9.9

[Tax Deducted at Source Rs. nil (previous year - Rs. 2.0 million)]

Other Interest (net) 23.4 11.1

[Tax Deducted at Source Rs.0.1 million (previous year - Rs. 0.1 million)]

Insurance Claims 2.0 3.5

Exchange Rate Difference (net) 14.6 78.5

Sundry Credit Balances written back (net) - 10.4

Provision for diminution in value of Long Term Investments - written back (net) - 11.2

Miscellaneous Income 79.3 26.6

[including share in income from a customer Rs.59.7 million

(previous year Rs. nil)]

[Tax Deducted at Source Rs.1.5 million (previous year Rs. nil)]

TOTAL 187.7 455.5


SCHEDULE 15 - MANUFACTURING AND OTHER EXPENSES

SCHEDULE 16 - INTEREST AND FINANCE CHARGES

SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT

Interest on Debentures 35.6 113.1

Interest on Fixed Loans 114.2 257.9

Others 123.3 144.1

TOTAL 273.1 515.1


31.03.2005 31.03.2004


Processing Charges 123.6 46.8

Consumable Stores and Spares 311.7 216.8

Repairs and Maintenance :

- Buildings 40.2 30.0

- Plant and Machinery 73.1 69.6

- Others 50.8 56.0

Rent 22.9 14.8

Rates and Taxes 33.5 27.3

Insurance 48.2 42.9

Power and Fuel 610.7 552.7

Excise Duty (net) 53.7 69.0

Selling and Promotion Expenses 701.2 374.8

Commission, Brokerage and Discount 230.5 260.8

[Including cash discount of Rs.2.7 million (previous year Rs.2.8 million)]

Freight and Forwarding 144.5 115.2

Lease Rent and Hire Charges 38.6 33.1

Postage and Telephone Expenses 59.9 41.3

Travelling and Conveyance 223.7 157.0

Legal and Professional Charges 95.5 94.5

Donations 30.9 23.0

[Includes contributions to Lupin Human Welfare and Research Foundation

aggregating to Rs.11.8 million (previous year Rs.11.8 million)]

Clinical and Analytical Charges 208.8 46.0

Loss on Repurchase / Cancellation of Debentures - 37.1

Loss on Sale of Investments - 0.4

Loss on Sale / Discard of Fixed Assets (net) 6.7 6.5

Bad Debts / Advances written off 25.6 -

Provision for Doubtful Debts 15.5 -

Directors Sitting Fees 0.9 0.8

Prior Period Adjustments (net) 11.1 10.9

Miscellaneous Expenses 238.1 190.2

(includes printing and stationery, contract labour charges,

books and periodicals, audit fees, etc.)

TOTAL 3399.9 2517.5

�

75 text 75

LUPIN LIMITED

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SCHEDULES FORMING PART OF THE ACCOUNTS

SCHEDULE 17 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE BALANCE

SHEET AND PROFIT AND LOSS ACCOUNT

A) SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Preparation of Financial Statements

The financial statements are prepared as per historical cost convention and in accordance with the generally acceptedaccounting principles in India, the provisions of the Companies Act, 1956 and the applicable accounting standards issued bythe Institute of Chartered Accountants of India.

b) Use of Estimates

The preparation of financial statements requires estimates and assumptions that affect the reported amount of assets andliabilities on the date of the financial statements and the reported amount of revenues and expenses during the reportingperiod. Differences between the actual results and the estimates are recognised in the period in which the same areknown / materialised.

c) Fixed Assets

Fixed Assets are stated at cost, net of modvat / cenvat, less accumulated depreciation and accumulated impairment losses,if any. All costs, including financing costs till commencement of commercial production, net charges on foreign exchangecontracts and adjustment arising from exchange rate variations attributable to the fixed assets acquired from a countryoutside India, are capitalised.

d) Intangible Assets

Intangible assets are recognised only if it is probable that the future economic benefits that are attributable to the assets willflow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and arecarried at cost less accumulated amortisation and accumulated impairment losses, if any.

e) Foreign Currency Transactions / Translation

Transactions in foreign currency are recorded at the original rate of exchange in force at the time transactions areeffected. Exchange differences arising on repayment of foreign currency liabilities incurred for the purpose of acquiringfixed assets from a country outside India, are adjusted in the carrying amount of the respective fixed assets. Exchangedifferences arising on settlement of other transactions are recognized in the Profit and Loss Account.

Monetary items (other than those related to acquisition of imported fixed assets) denominated in foreign currency andnot covered by forward contracts are restated using the exchange rate prevailing at the date of the Balance Sheet andthe resulting net exchange difference is recognized in the Profit and Loss Account. The exchange gain/loss arising onrestatement of foreign currency liability relating to fixed assets acquired from a country outside India is adjusted in thevalue of the related fixed assets.

Monetary items covered by forward contracts are translated at the rate on the date of transaction. Premium/discount arisingon such forward exchange contract is amortised as income/expense over the life of the contract. Any profit/loss arising oncancellation of such forward exchange contract is recognised as income or expense.

Foreign offices/branches :In respect of the foreign offices/branches, which are integral foreign operations, all revenues and expenses (exceptdepreciation) during the year are reported at average rate. Monetary assets and liabilities are restated at the year-endexchange rate. Non-monetary assets and liabilities are stated at the rate prevailing on the date of the transaction.Balance in �head office� account whether debit or credit is translated at the amount of the balance in the �foreign office�in the books of the head office. Net gain/loss on foreign currency translation is recognized in the Profit and LossAccount.

f) Investments

Long term investments are stated at cost of acquisition. Investments in foreign currency are stated at cost by converting atexchange rate prevailing at the time of acquisition. Provision for diminution in the value of long term investments is madeonly if such decline is other than temporary.

g) Inventories

Stock-in-trade is valued at lower of cost and net realisable value. Stock of Consumable stores, spares and furnace oil arevalued at cost.

Cost is computed based on moving weighted average in respect of all procured materials and comprises of materials andappropriate share of utilities and other overheads in respect of work-in-process and finished goods. Cost also includes allcharges incurred for bringing the inventories to their present location and condition.


h) Revenue recognition

i) Revenue from sale of goods is recognised when the significant risks and rewards in respect of ownership ofproducts are transferred by the Company.

ii) Revenue from product sales is stated net of returns, sales tax and applicable trade discounts and allowances.

iii) Income from research services are recognised as revenue when earned in accordance with the terms of the relevantagreements.

iv) Insurance or other claims, interest, etc. is recognised only when it is reasonably certain that the ultimate collection will bemade.

i) Export Benefits

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

j) Excise Duty

Excise Duty is accounted on the basis of payments made in respect of goods cleared and provision is made for goods lyingin bonded warehouses.

k) Depreciation and amortisation

Depreciation on fixed assets is provided on straight line basis in the manner and at the rates prescribed in Schedule XIV to theCompanies Act, 1956, except for the following fixed assets which are depreciated / amortised over their useful life as determinedby the Management on the basis of technical evaluation, etc.

l) Employee Retirement Benefits

i) Company�s contribution to Provident Fund, Superannuation Fund and other Funds is charged to the Profit and LossAccount.

ii) The amount of Gratuity liability as ascertained on the basis of actuarial valuation and funded through a scheme (GroupGratuity) administered by Life Insurance Corporation of India, is charged to the Profit and Loss Account.

iii) Provision is made towards liability for leave encashment as ascertained on the basis of actuarial valuation.

m) Taxes on IncomeIncome Taxes are accounted for in accordance with Accounting Standard 22 on �Accounting for Taxes on Income�, (AS 22)issued by The Institute of Chartered Accountants of India. Tax expense comprises both current tax and deferred tax. Current taxis measured at the amount expected to be paid or recovered from the tax authorities using the applicable tax rates.

Deferred tax assets and liabilities are recognised for future tax consequence attributable to timing difference betweentaxable income and accounting income that are measured at relevant enacted tax rates. At each Balance Sheet date theCompany reassesses unrealised deferred tax assets, to the extent they become reasonably certain or virtually certain ofrealisation, as the case may be.

n) Operating Leases

Assets taken on lease under which all risks and rewards of ownership are effectively retained by the lessor are classified asoperating lease. Lease payments under operating leases are recognised as expenses on accrual basis in accordance with therespective lease agreements.



SHEET AND PROFIT AND LOSS ACCOUNT (CONTD.)

Assets Estimated useful life

Captive Power Plant at Tarapur 15 years

Certain assets provided to employees 3 years

Leasehold land and building Over the period of lease

Intangible Assets (computer software) 6 years

77 text 77

LUPIN LIMITED

7777

o) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as

a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities, are not recognised

but are disclosed in the Notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

p) Borrowing Costs

Borrowing cost attributable to the acquisition or construction of qualifying assets is capitalised as part of the cost of such

assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other

borrowing costs are charged to revenue.

q) Impairment of fixed assets

At the end of each year, the Company determines whether a provision should be made for impairment loss on fixedassets by considering the indications that an impairment loss may have occurred in accordance with AccountingStandard (AS-28) ��Impairment of Assets�� issued by the Institute of Chartered Accountants of India. An impairment loss ischarged to the Profit and Loss Account in the year in which, an asset is identified as impaired, when the carrying valueof the asset exceeds its recoverable value. The impairment loss recognised in prior accounting periods is reversed ifthere has been a change in the estimate of recoverable amount.

B) NOTES TO ACCOUNTS

1. Estimated amount of contracts remaining to be executed on capital account and not provided for, net of advances, Rs. 167.5Million (previous year Rs.219.3 Million).

2. Contingent Liabilities: -




Rs. in million

As at 31st

March 2005

As at 31st

March 2004

a) Income tax demands in respect of earlier years under dispute, pending in appeals before higher authorities. 302.1 338.5

Amount paid there against and included under Schedule 10 � (Rs.292.4 million)

Previous year (Rs.291.5 million)

b) Excise duty, Sales tax disputed in appeals and pending decisions before higher authorities. 62.5 57.5

Amount paid there against and included under Schedule 10� (Rs.9.6 million)


c) Custom duty in respect of future export obligation in accordance with Exim Policy. 8.3 8.4

d) Claims against the Company not acknowledged as debts.

Amount paid there against and included under Schedule 10 (Rs.2.8 million)


e) Guarantees given by the Company on behalf of an Associate . - 97.5

f) Standby letter of credit issued by the Company�s bankers in connection with the credit facilities of a wholly owned Subsidiary Company. 87.5 -

195.2 376.9


3 . The Company has equity investments aggregating to Rs.48.3 million, in Lupin Chemicals (Thailand) Ltd. (a subsidiarycompany, in which the Company holds 60% stake). Further, the Company has trade receivables aggregating to Rs. 22.1million from the said subsidiary, as at the year-end. The said Company has accumulated losses at the year-end and networth of that Company is substantially eroded, though positive. However it has made profits consistently in the past fewyears and on that basis, and also considering the future business plans of the subsidiary company, which are expectedto result in increased turnover and consequent improvement in the profitability and net worth and the fact that thisinvestment is held as strategic long term investment, in the opinion of the management, the diminution in the valueof the aforesaid investments is considered temporary and the debts outstanding are considered as good of recovery.Accordingly, no provision is considered necessary at this stage in this respect.-offs taken on the following:

4. Pre-operative expenses, included in Capital Work-in-Progress, represent the expenses incurred for projects, which are yet tobe commissioned. Such pre-operative expenses mainly pertain to plants/building under erection/construction at units/projects located at Tarapur, Ankleshwar and Mandideep and to be capitalised on completion of projects at the respectivelocations. The details of these expenses are:

5. Current tax provision:a) Provision for income tax has been made on the basis of Minimum Alternate Tax in accordance with Section 115 JB of

the Income Tax Act, 1961 considering the relief/deductions available in accordance with the said Act.

b) The deferred tax assets / (liabilities) arising out of significant timing differences are as under :

6. Segment Reportingi) Primary business segment:

The Company is exclusively in the Pharmaceutical business segment and has only one reportable segment.

ii) Secondary business segment:

The Company has presented data based on its Consolidated financial statements, which forms part of this AnnualReport.




(Rs. in million)

Particulars 31.03.2005 31.03.2004

Deferred Tax Liability :

Depreciation (956.3) (953.3)

Deferred Tax Assets :

Provision for doubtful debts 5.2 -

Provision for leave encashment 7.8 -

Other timing differences 8.9 11.6

Net Deferred Tax Liability (934.4) (941.7)

(Rs. in million)

2004-2005 2003-2004

Opening balance 5.7 14.5

Incurred in the current year

Salaries, allowances and contribution to funds 8.8 10.0

Professional fees 0.6 4.7

Travelling expenses 2.0 2.9

Interest on project related fixed loans 9.1 5.7

Others 5.8 2.9

Total 32.0 40.7

Less : Capitalised during the year 13.3 21.5

Amount written off (Project abandoned) - 13.5

Closing balance 18.7 5.7

79 text 79

LUPIN LIMITED

7979

7. Additional information Pursuant to the Provisions of Paragraphs 3, 4C, and 4D of part II of Schedule VI to the Companies Act,1956.

a) Consumption of Raw Materials:

b) Value of Imported and Indigenous consumption:

i) Consumption of Raw Material :

ii) Consumption of Stores and Spares :

c) CIF Value of Imports:

d) Expenditure in foreign currencies on account of :




2004-2005 2003-2004


i) Interest (net of tax) 27.5 23.4

ii) Travelling 20.7 20.6

iii) Commission 74.8 102.4

iv) Selling and Promotion expenses 358.9 149.7

v) Clinical and Analytical charges 94.3 9.3

vi) Others 128.9 124.3

705.1 429.7

Item Unit Quantity Rs. in million Quantity Rs. in million

DL2 (RECEMIC) M.T. 1532.7 577.6 1316.8 440.7

PEN G M.T. 3303.7 1072.0 4145.6 1899.2

Cefuroxime Acid M.T. 12.4 161.7 16.4 384.2

Others 2341.4 1841.0

4152.7 4565.1

2004-2005 2003 � 2004

% Rs. in million % Rs. in million

Imported 52.9 2196.8 60.9 2781.2

Indigenous 47.1 1955.9 39.1 1783.9

100.0 4152.7 100.0 4565.1

2003 � 20042004-2005

% Rs. in million % Rs. in million

Imported 4.4 13.7 9.4 20.4

Indigenous 95.6 298.0 90.6 196.4

100.0 311.7 100.0 216.8

2004-2005 2003 � 2004

2004-2005 2003-2004


i) Capital goods 258.2 62.7

ii) Raw Materials

(including high seas purchases)

iii) Packing Materials 67.9 38.4

iv) Purchase of Traded Goods 0.7 12.3

v) Consumable, stores and spares 17.6 3.0

2729.4 2746.6

2385.0 2630.2


e) Earnings in foreign exchange on account of: -

8. Remittance in foreign currency on account of dividend:The Company has paid dividend in respect of shares held by Non-Resident Shareholders on repatriation basis. This inter-aliaincludes portfolio investment and direct investment, where the amount is also credited to Non Resident External A/c (NRE A/c).The exact amount of dividend remitted in foreign currency cannot be ascertained. The total amount remittable in this respect isgiven below:

9. a) Managerial Remuneration:

Note :i. Above amount does not include remuneration paid by a subsidiary Company to a director aggregating to Rs.11.7 million

(previous year Rs.5.5 million).ii. Salary and allowances includes Rs.0.8 million towards the increased remuneration (including Company�s contribution to

Provident and Superannuation Fund) paid to the Managing Director w.e.f. July 1, 2004 for which a memorandum pursuantto Section 302 of the Companies Act, 1956 was circulated to the shareholders. The approval of the shareholders for suchincrease in remuneration being sought at the ensuing Annual General Meeting of the Company.

iii. The managerial personnel are covered under the Companies Group Gratuity Policy along with other employees of theCompany. Proportionate amount of gratuity is not included in the aforementioned disclosure, since exact amount is notascertainable.

iv. Remuneration for the previous year includes remuneration to a director for part of the year, which during the year is for fullyear.



2004-2005 2003-2004


i) FOB Value of Exports 5532.7 5687.8

ii) Reimbursement of freight and insurance 86.9 65.4

iii) Others 75.6 11.2

5695.2 5764.4

Year to which the dividend relates 2003-04 2002-03

Number of non-resident shareholders 122 62

Number of shares held by them 11780287 797289

Amount of dividend (Rs. in million) 76.6 4.0

2004-2005 2003-2004

Rs. in million Rs.in million

Salary and Allowances 31.8 17.8

Contribution to Provident and Other Funds 3.2 1.1

Perquisites 1.3 3.9

Commission 8.3 13.1

44.6 35.9


81 text 81

LUPIN LIMITED

8181

b) Computation of Net Profit under Section 349 of the Companies Act, 1956 and commission payable to Executive Chairman.

10 Auditors� Remunerationa) Payment to Auditors :

11. The Company procures on lease, equipments and vehicles under operating leases. These rentals recognised in the Profit and LossAccount for the year are Rs.38.6 million (previous year Rs.33.1 million). The future minimum lease payments and payment profileof non cancellable operating leases are as under :

2004-2005 2003-2004


Not later than one year 11.6 9.0

Later than one year but not later than five years 20.8 17.1

32.4 26.1



2004-2005 * 2003-2004


i) For Statutory Audit 2.0 1.1

ii) For Taxation matters - 0.2

iii) For Other Services including Quarterly Limited Reviews, Certification

work including for corporate governance, etc. 1.6 0.4

iv) Reimbursement of out-of-pocket expenses 0.1 0.1

3.7 1.8

b) Cost Audit Fees 0.1 0.1

* Excluding service tax


Particulars 2004-2005 2003-2004


Profit before tax and extraordinary items 852.7 1996.2

Less : Extraordinary items (including tax) - 706.9

Profit before tax and after extraordinary items 852.7 1289.3

Add :

Provision for Diminution in the value of Investments written back (net) - (11.2)

Compensation received on surrender of tenancy rights - (0.2)

Voluntary Compensation paid under VRS 2.6 1.6

Loss on sale of Investments - 0.4

Loss on sale of Fixed Assets 6.7 6.5


Directors Remuneration 44.6 35.9


Net Profit on which commission is payable 923.0 1323.1

9.2 13.2

Restricted to 8.3 13.1

Maximum allowed as per Companies Act, 1956 at 1%

��


12. Basic and Diluted earning per share is calculated as under :

13. The Company has not granted any loans/advances in the nature of loans as stipulated in the clause 32 of the Listing Agreementwith the Stock Exchanges. For this purposes, the loans to employees as per the Company�s policy and security deposits paidtowards premises taken on leave and license basis and against business conducting agreements, have not been considered.Hence, there are no investments by loanees in the shares of the parent Company and /or the subsidiary Companies.

14. Employees Stock Option PlanDuring the year, 377150 options of Rs.567.35 each were granted under the �Lupin Employees Stock Option Plan 2003� dulyapproved by the Remuneration Committee of the Board of Directors of the Company and the shareholders of the Company in theExtra Ordinary General Meeting held on December 5, 2003. The options are granted at the price as computed in accordance withthe SEBI guidelines in force, at the time of such grant. Each option entitles the holder to exercise the right to apply for and seekallotment of one equity share of Rs.10/- each. The said options have a vesting period from June 30, 2006 to June 30, 2009 inaccordance with the vesting schedule as stated in the said scheme and an exercise period of ten years from the grant date.

The particulars of the options granted and lapsed under the Scheme are tabulated as below:

15. Sales have been regrouped during the year and have been disclosed net of trade discount. Accordingly, the trade discount ofRs.348.7 Million pertaining to the previous year has been netted off from the sales. However, the said regrouping has no impacton the profit.

16. �Other Provision� represents excise duty liability recognised by the Company based on substantial degree of estimation for exciseduty payable on clearance of goods lying in stock as on March 31, 2004 of Rs.41.5 million as per the estimated pattern ofdespatches. During the year, Rs.39.1 million was utilised for clearance of goods and the unused balance of Rs.2.4 million wasreversed. Liability recognised under this clause for the year is Rs.22.1 million which is outstanding as at March 31, 2005. Actualoutflow is expected in next financial year.

SCHEDULES FORMING PART OF THE ACCOUNTSSCHEDULE 17 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE BALANCE


Particulars Year Ended 31st March

2005

Year Ended 31st March 2004

Options outstanding as at the beginning of the year - -

Options granted during the year 377150 -

Options lapsed during the year - -

Options outstanding as at the year-end 377150 -

2004-2005 2003-2004


Profit after tax before extraordinary items 843.6 1496.0

Less: Income tax / wealth tax in respect of earlier years 20.7 36.2

Profit (before extraordinary items) attributable to Equity Shareholders 822.9 1459.8

Extra ordinary items (net of tax) - 508.9

Profits (after extraordinary items) attributable to Equity Shareholders 822.9 950.9

Weighted average number of Equity Shares :

- Basic 40141134 40141134

Add: Effect of dilutive issue of employees stock option 44431 -

- Diluted 40185565 40141134

Earnings per Share (in Rs.) before Extraordinary items

- Basic 20.50 36.37

- Diluted 20.48 36.37

Earnings per Share (in Rs.) after Extraordinary items

- Basic 20.50 23.69

- Diluted 20.48 23.69

83 text 83

LUPIN LIMITED

8383

17. The aggregate amount of Research and Development Expenditure incurred during the year and shown in the respective heads ofaccount is Rs.797.7 million (previous year Rs.460.9 million).

18. Sundry Creditors for the year ended 31st March 2005 include amounts due to the following small scale undertakings, which areoutstanding for more than 30 days.

Laxmi Industries, Shree Packers, Online Packaging, Agarwal Paper Products, Anand Packaging Industry, Industrial Packaging,Shree Packers, Jain Carton Industries Pvt Ltd, Kailash corrugators Pvt Ltd, Novex Poly films Pvt Ltd, Triumph Pack Pvt Ltd, Rel iancePackaging Industries, Novel Packaging Industries, Nandi Packers, Perfect Packaging Industries, Aadarsh Offset Pvt Ltd, AakarPrinters, Adit Pharma Pvt Ltd, Anit Packaging, Associated Capsules Pvt Ltd, Astral Pharmaceuticals Ind, Award Offset Printers PkgPvt Ltd, Award Packaging, Best Arts, Bharat Rubber Works, Everest Indl Corpn, Glamour Packaging Industries, Hbr Packaging,HenilPack, Industrial Thermoplastics, Jasmine Art Printers, Kisalaya Herbals Ltd, Kishore Pharma Products Pvt Ltd, Kolety Gums Pvt Ltd,Maral Labs, Maxim Containers Co, Meera Offset Printers, Microtrol Sterilisation, Newtec Enterprises, Nirman Impress Pvt Ltd, O KPrint & Pack, Pacopack, Plantex, Polynova Packers, Pragna Organics, Preema Packaging, Printania Offset Pvt Ltd, Ramesh Industries(Indore), Ramesh Industries (Mumbai), Roshan Packaging Industries, Seasons Polymers, Sterling Rubber Products, Sushil Traders,Sushmit Packaging, Swastik Flexipack Pvt Ltd, Swastik Packaging Pvt Ltd, The Madras Pharmaceuticals, Vikas Industries, VitalFlavours, Welcure., Flexit Laboratoies Pvt Ltd, Hi-Fab Engineers Pvt Ltd, Radix Electro Systems Pvt Ltd, Radix Sensors Pvt Ltd, NovexPoly Films Pvt Ltd, Vikas Pharmaceuticals Pvt Ltd, Asco Tarapur Industries, Jayson Chemical Industries, Mohini Organics Pvt Ltd,Ekta Udyoge, Girnar Corrugators (p) Ltd, Kurian Abraham Pvt Ltd, Mahabir Industries, Pankaj Polymers, Safeway Packaging Pvt Ltd,Shree Packers, Canton Laboratories, Bhavna Chemical Industries, Bharat Saw Mill, Deepak Industries, Cardkem Pharma Pvt Ltd,Multi-Tech Engineers Pvt, Ltd, Smeera Graphics, Harlem Polycontainers Pvt Ltd, Trimurti Transformer, Jarad Chemicals, JalaramPackaging, Shree Patel Ice Factory, Hi-Fab Engineers Pvt Ltd, Leeds Kem laxminarayan, Vital Machinery Corpopration, RoopRasayan Inds Pvt Ltd, Krishna Engineers, Vivid Systems, Novex Poly Films Pvt Ltd, Dorik Plastochem Ltd, Navbharat PackagingIndustries, Skega Engineering Co.Pvt. Ltd, Regal Chemicals & Minrals, Shree Ganesh Industries, UNP Polyvalve India (P) Ltd, D SChunawala Chemical Inds, Shreeji Paper Containers, Apex Construction, APF Water, Clean Air Engineers, Clean Room Presentations,Contech India P Ltd, Dharia Switchgear & Controls, Diva Envitech, Electromedics Inc, Fabwell Engineers, Fine Fab Pvt Ltd, GayatriSafety Weld, Gips Plastic Industries, Goel Process Systems P Ltd, Horizon polymer Engineering,, Industrial Plastic Containe, IntelligentAutomation System, J U Enggineering, Jay prakash Ind, Jayshar Engineers, K D Enterprises, K T Associates, Klenzaids BiocleanDevices, Lacto Seal Equipments, M B Instruments, Mayank Engineering Works, Mechnal Industries, Membrane Separation System,Mukesh Electric Centre, Nu Fibro Tech, Perfect Gasket Industries, Perfect Gasket Industries, Radix Sensors Pvt Ltd, Rdg EngineeringWorks, Right Equipments., Systems & Components India, Unik Engineering Services, Universal Insulation Compan, Vijay PumpsPvt.Ltd, a s Enterprises, Leeds Kem, Sameer Chemopharma, Tatva Chintan Pharma Chem Pvt Ltd, Zeoliter & Allied Products.

The list of SSI undertakings is determined by the Company on the basis of available information and relied upon by the auditors.

19. Details of capacities, production, turnover and stocks :

A) Details of licenced and installed capacities:

Notes :i) In terms of press Note No.4(1994 series) dt 25.10.94 issued by the Department of Industrial Development, Ministry of Industry, Government of India,

and Notification No.S.O.137(E) dated 1st March,1999 issued by the department of Industrial Policy & Promotion, Ministry of Industry, Government ofIndia, industrial licencing has been abolished in respect of bulk drugs and formulations. Hence, there is no registered / licenced capacities for thesebulk drugs and formulations.

ii) Installed capacities, being a technical matter, are as certified by the Management and relied upon by the Auditors.



Installed Installed

Classification Unit 31.03.2005 31.03.2004

Formulations :

Tablets No. in Million 1530.0 1530.0

Liquids Kilo-Litres 3216.0 3216.0

Capsules No. in Million 446.0 446.0

Injections:

- Liquids Kilo-Litres 42.0 42.0

- Vials No. in Million 12.0 12.0

Creams and Powder M. T. 403.0 403.0

Bulkdrugs and intermediates M. T. 3563.9 3044.3


B) Details of production and purchases of finished goods:

Notesi) Production includes goods manufactured for replacement and on loan licence basis by other parties but excludes manufactured on job work basis for

other parties and manufactured for Research and Development activities.ii) Production consists of saleable bulk drugs and intermediates. It excludes bulk drugs consumed for manufacture of formulations.iii) Production/Purchases of formulations includes samples.

C) Details of Turnover:

Notes :i.) Above excludes free schemes, samples and sale out of Research and Development activities.

ii.) Turnover is net off trade discounts [Refer Note No.15 of schedule 17(B)]



Value Rs. in million

<-----Production-----> <--------- Purchase of traded goods -------->


31.03.2005 31.03.2004

Classification Unit Quantity Quantity Quantity Value Quantity Value

A) Formulations :

Tablets No. in Million 1096.0 1075.9 938.9 508.3 705.7 410.5

Liquids Kilo-Litres 339.2 821.9 3101.9 243.0 1729.9 126.2

Capsules No. in Million 292.8 297.7 141.2 154.2 140.5 125.9

Injections:

- Liquids Kilo-Litres 84.7 113.6 44.4 27.2 33.1 23.9

- Vials No. in Million 20.4 19.4 11.7 206.0 4.2 100.6

Creams and Powder M. T. 335.2 272.7 222.5 50.5 162.4 44.9

Inhalers No. in Million 1.3 - - - - -

B) Bulk drugs, Intermediates M.T. 2765.7 2344.1 1.0 0.8 911.9 14.2

and Chemicals

C) Others 2.2 -

1192.2 846.2

Year ended '31.03.2005 Year ended '31.03.2004


Classification Unit Quantity Value Quantity Value

A) Formulations :

Tablets No. in Million 1910.3 2769.0 1662.2 2883.3

Liquids Kilo-Litres 3181.8 635.6 2505.1 713.5

Capsules No. in Million 396.5 1060.8 420.6 1083.0

Injections:

- Liquids Kilo-Litres 130.0 155.6 129.1 162.5

- Vials No. in Million 24.3 570.8 17.7 487.3

Creams and Powder M. T. 446.7 184.1 391.1 156.1

Inhalers No. in Million 0.3 42.0 - -

B) Bulk drugs, Intermediates M. T. 2679.3 6640.4 1969.9 6179.8

and Chemicals

C) Others 64.4 13.8

12122.7 11679.3

Year Ended 31.03.2005 Year Ended 31.03.2004


85 text 85

LUPIN LIMITED

8585

D) Details of stock:

Notes : i) Opening and Closing stock of formulations includes quantity of samples.

ii) Figures in brackets are for previous year.

20. Related party disclosures, as required by AS-18 are given below:

A. Relationships

Category I : Subsidiaries of the Company :

Lupin Pharmaceuticals Inc., USALupin Chemicals (Thailand) Limited, ThailandLupin Hong Kong Limited, HongkongLupin Herbal Limited, IndiaLupin Laboratories South Africa (Pty) Limited,South Africa

Category III: Others (Relatives of Key Management Personnel and Entities in which the Key Management Personnel have

control or significant influence)

Mrs. Vinita GuptaMr. Nilesh GuptaDr. Anuja GuptaBadhira Leasing and Finance Pvt. LimitedBharat Steel Fabrication and Engineering WorksConcept Pharmaceuticals LtdD. B. Gupta (HUF)Enzal Chemicals (India) LimitedKhandelwal Estates Pvt. LimitedLupin Human Welfare and Research FoundationLupin International Pvt. LimitedLupin Investments Pvt. LimitedLupin Marketing Pvt. Limited



Category II: Key Management Personnel :

Dr. Desh Bandhu Gupta ChairmanDr. Kamal K. Sharma Managing DirectorMrs. M D Gupta Executive Director

Lupin Securities LimitedMatashree Gomati Devi Jana Seva NidhiNovamed Pharmaceuticals Pvt Ltd.Pipleswar Holdings Pvt. LimitedPolynova Industries LimitedPranik Landmark AssociatesRahas Investments Pvt. LimitedSynchem Chemicals (I) Pvt. LimitedTimita Leasing and Finance Pvt. LimitedVarija Leasing and Finance Pvt. LimitedVisiomed (I) Pvt. LimitedYogini Leasing and Finance Pvt. LimitedZyma Laboratories Limited


Quantity Value Quantity Value

31.03.2004 31.03.2004 31.03.2005 31.03.2005

Classification Unit

A) Formulations :

Tablets No. in Million 224.3 186.9 265.8 234.8

(164.3) (162.0) (224.3) (186.9)

Liquids Kilo-Litres 142.2 18.9 237.4 41.9

(187.5) (27.8) (142.2) (18.9)

Capsules No. in Million 50.9 58.4 66.5 80.8

(43.5) (58.3) (50.9) (58.4)

Injections:

- Liquids Kilo-Litres 26.8 20.9 15.0 11.8

(14.1) (11.7) (26.8) (20.9)

- Vials No. in Million 3.1 79.3 5.9 106.4

(2.8) (53.0) (3.1) (79.3)

Creams and Powder M. T. 61.9 14.6 107.5 30.0

(53.2) (15.2) (61.9) (14.6)

Inhalers No. in Million - - 0.4 29.3

B) Bulk drugs, Intermediates M. T. 99.7 311.4 186.0 355.5

and Chemicals (500.2) (221.7) (99.7) (311.4)

C) Others - 0.9

690.4 891.4

(549.7) (690.4)

Opening Stock Closing Stock



Out of the above items, transactions in excess of 10% of the total related party transactions are as under :

20. B. Transactions carried out with the related parties.



Sr. Transactions Related party For the year For the year

No. relation ended 31.03.2005 ended 31.03.2004

1 Sale of GoodsLupin Chemicals (Thailand) Ltd. Subsidiary Company 39.7 - Lupin Pharmaceuticals Inc., USA Subsidiary Company 190.4 733.2

2 Rent ExpensesBadhira Leasing and Finance Pvt. Ltd. Others Rs.6,000/- Rs.47,000/-Bharat Steel Fabrications and Engineering Works Others Rs.6,000/- 0.2 Pipleshwar Holdings Pvt. Ltd. Others Rs.6,000/- Rs.47,000/-Synchem Chemicals (I) Pvt. Ltd. Others Rs.6,000/- 0.1 Timita Leasing and Finance Pvt. Ltd. Others Rs.6,000/- Rs.47,000/-Varija Leasing and Finance Pvt. Ltd. Others Rs.6,000/- Rs.47,000/-Yogini Leasing and Finance Pvt. Ltd. Others Rs.6,000/- Rs.47,000/-

3 Business Conducting ExpensesSynchem Chemicals (I) Pvt. Ltd. Others Rs.6,000/- 0.6

4 Agency Commission ExpensesLupin Hongkong Ltd. Subsidiary Company 7.1 -

5 Expenses Recovered / Service Charges ReceivedEnzal Chemicals (I) Ltd. Others 0.8 0.8 Polynova Industries Ltd. Others 0.7 0.7 Pranik Landmark Associates Others 1.2 1.2

(Rs. in million unless other wise stated)

Sr. Transactions Subsidiaries Key Management Others Total

No. Personnel

1 Sale of goods 243.4 - 6.6 250.0 (733.3) ( - ) (3.7) (737.0)

2 Rent Expenses - - Rs.42,000/- Rs.42,000/-( - ) ( - ) (0.5) (0.5)

3 Business Conducting Expenses - - Rs.6,000/- Rs.6,000/-( - ) ( - ) (0.6) (0.6)

4 Agency Commission Expenses 7.3 - - 7.3 ( - ) ( - ) (4.5) (4.5)

5 Expenses Recovered / Service Charges Received - - 2.7 2.7 ( - ) ( - ) (7.6) (7.6)

6 Interest received - - - - ( - ) ( - ) (9.9) (9.9)

7 Remunerations Paid - 44.6 5.9 50.5 ( - ) (35.9) (3.4) (39.3)

8 Compensation Received - - Rs.9,347/- Rs.9,347/-( - ) ( - ) (Rs. 35,569) (Rs. 35,569)

9 Purchase of goods / materials 0.9 - 34.5 35.4 (21.9) ( - ) (37.9) (59.8)

10 Investments during the year 4.6 - - 4.6 (14.4) ( - ) ( - ) (14.4)

11 Sale of Investments - - - - ( - ) ( - ) (17.0) (17.0)

12 Donations Paid - - 14.1 14.1 ( - ) ( - ) (13.9) (13.9)

13 Dividend Paid - 4.3 127.4 131.7 ( - ) (3.5) (131.3) (134.8)

14 Processing Charges Paid - - 4.3 4.3 ( - ) ( - ) (2.7) (2.7)

15 Expenses Reimbursed 317.6 - 4.6 322.2 (116.2) ( - ) (3.7) (119.9)

16 Inter Corporate Deposit received back - - - - ( - ) ( - ) (161.0) (161.0)

(Rs. in million unless otherwise stated)


87 text 87

LUPIN LIMITED

8787



20. B. Transactions in excess of 10% of the total related party transactions are as under (Contd.) :

Sr. Transactions Related party For the year For the year


C. Balances due from/to the related parties

Note: Figures in brackets are for previous year.

(Rs. in million unless other wise stated)Sr. Transactions Subsidiaries Key Management Others Total

No. Personnel

1 Investment in Equity Shares 67.3 - - 67.3 (62.7) ( - ) ( - ) (62.7)

2 Deposits given for Leave and Licence - - 477.5 477.5 arrangement for Office Premises ( - ) ( - ) (477.5) (477.5)

3 Deposit given for Business Conducting - - 180.0 180.0 Arrangement ( - ) ( - ) (180.0) (180.0)

4 Debtors 159.2 - 0.5 159.7 (365.2) ( - ) ( - ) (365.2)

5 Guarantees given - - - - ( - ) ( - ) (97.5) (97.5)

6 Creditors 0.4 - 2.1 2.5 ( - ) ( - ) (8.4) (8.4)

7 Commission Payable 13.1 - - 13.1 ( - ) ( - ) ( - ) ( - )

8 Expenses payable 145.0 - - 145.0 ( - ) ( - ) ( - ) ( - )

(Rs. in million unless otherwise stated)

6 Remunerations PaidDr. Desh Bandhu Gupta Key Management Personnel 21.1 21.8 Dr. Kamal K. Sharma Key Management Personnel 21.2 5.7 Mr Nilesh Gupta Others 4.5 3.4

7 Purchase of Goods/ MaterialEnzal Chemicals (India) Ltd. Others 34.3 37.9

8 Investments during the yearLupin Hongkong Ltd. Subsidiary Company 4.1 0.6 Lupin Herbal Ltd. Subsidiary Company 0.5 -

9 Sale of InvestmentPolynova Industries Ltd. Others - 17.0

10 Donations PaidLupin Human Welfare and Research Foundation Others 11.8 11.8 Matashree Gomatidevi Janseva Nidhi Others 2.3 2.0

11 Dividend PaidLupin Marketing Pvt. Ltd. Others 26.1 20.1 Rahas Investments Pvt. Ltd. Others 29.5 24.0 Visiomed (I) Pvt. Ltd. Others 28.0 22.8 Zyma Laboratories Ltd. Others 40.0 56.0

12 Processing Charges PaidZyma Laboratories Ltd. Others 4.3 - Lovincare products P. Ltd. Others - 2.7

13 Expenses Reimbursed Lupin Pharmaceuticals Inc., USA Subsidiary Company 311.7 116.2



Signatures to Schedules 1 to 17

21 BALANCE SHEET ABSTRACT AND COMPANY�S GENERAL BUSINESS PROFILE



(a) Registration Details

Registration No. 29442 State Code 11

Balance Sheet Date 31.03.2005

(b) Capital Raised during the Year (Amount in Rupees Thousands)

Public Issue NIL Rights Issue NIL

Bonus Issue NIL Private Placement NIL

(c) Position of Mobilisation and Deployment of funds (Amount in Rupees Thousands)

Total Liabilities 13119976 Total Assets 13119976

Sources of Funds

Paid-Up Capital 401411 Reserves and Surplus 4603623

Deferred Tax 934451 Secured Loans 3806326

Unsecured Loans 600065

Application of Funds

Net Fixed Assets 6287549 Investments 93746

Net Current Assets 3964624 Misc Expenditure -

Accumulated Losses -

(d) Performance of Company (Amount in Rupees Thousands)

Turnover 12122698 Total Expenditure 10946293

Profit Before Tax 852721 Profit After Tax 843621

Earning per Equity Share in Rs. (Basic) 20.50 Equity Dividend Rate % 65

(e) Generic Names of Three Principal Products of Company

(As per monetary terms)

Product Description Item Code No.(As per ITC Code)

i) Rifampicin - Formulation 30042007

ii) Lisinopril - Bulk Drug 294200.31

iii) Cephalexin - Bulk Drug 29419002

22 Previous year figures have been regrouped wherever necessary to correspond with the figures of the current year.








89

LUPIN LIMITED (CONSOLIDATED)

1. We have audited the attached Consolidated Balance Sheet of Lupin Limited (�the Company�) and its subsidiaries as at 31st

March, 2005, the Consolidated Profit and Loss Account and Consolidated Cash Flow Statement for the year ended on that dateannexed thereto.

2. These financial statements are the responsibility of the Company�s management. Our responsibility is to express an opinion onthese financial statements based on our audit. We conducted our audit in accordance with generally accepted auditingstandards in India. These Standards require that we plan and perform the audit to obtain reasonable assurance whether thefinancial statements are prepared, in all material respects, in accordance with an identified financial reporting framework andare free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statements. We believe that our audit provides areasonable basis for our opinion.

3. The Consolidated financial statements of the Company for the year ended 31st March, 2004 were audited by other independentauditors; whose audit report dated 28th April, 2004 was unqualified. We have relied upon the balances of assets and liabilitiesas at 31st March, 2004 being opening balances as at 1st April, 2004, for the purposes of the consolidated financial statementsfor the year ended 31st March, 2005.

4. We did not audit the financial statements of certain subsidiaries, whose financial statements reflect total assets of Rs. 466.7million and total revenues of Rs. 950.5 million for the year then ended. These financial statements have been audited by otherauditors, whose reports have been furnished to us, and in our opinion, so far as it relates to the amounts included in respect ofthe subsidiaries, are based solely on the report of the other auditors.

5. We report that the consolidated financial statements have been prepared by the Company in accordance with therequirements of Accounting Standard on �Consolidated Financial Statements� (AS�21) issued by the Institute of CharteredAccountants of India and on the basis of separate audited financial statements of the Company and its subsidiariesincluded in the consolidated financial statements.

6. We draw attention to note no. 8(ii) of Schedule 17(B) regarding Rs. 0.8 Million increased remuneration paid to the ManagingDirector of the Company, which is subject to the approval of shareholders.

7. On the basis of the information and explanation given to us and read with the significant accounting policies and other notesto consolidated financial statements and on the consideration of the separate audit reports on individual audited financialstatements of the Company and its aforesaid subsidiaries, we are of the opinion that the said consolidated financial statementsgive a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Consolidated Balance Sheet, of the consolidated state of affairs of the Company and its subsidiaries asat 31st March, 2005;

b) in the case of the Consolidated Profit and Loss Account, of the consolidated results of the operations of the Company andits subsidiaries for the year then ended and

c) in the case of the Consolidated Cash Flow Statement, of the consolidated cash flows of the Company and its subsidiariesfor the year then ended.



P. R. Barpande

Partner


AUDITORS� REPORTTO THE BOARD OF DIRECTORS OF LUPIN LIMITED ON THE CONSOLIDATED FINANCIAL

STATEMENTS OF LUPIN LIMITED AND ITS SUBSIDIARIES.


LUPIN LIMITED CONSOLIDATED BALANCE SHEETAS AT 31ST MARCH, 2005

As per our attached report of even dateFor Deloitte Haskins & Sells For and on behalf of the Board of Directors


P. R. Barpande Kiran N. Bade Dr. Desh Bandhu Gupta Dr. Kamal K. Sharma

Partner Company Secretary Chairman Managing Director

Place : Mumbai

Dated : May 20, 2005

As at As at

31.03.2005 31.03.2004

Schedules Rs. in Million Rs. in Million

I. SOURCES OF FUNDS

Shareholders' Funds

Share Capital 1 401.4 401.4

Reserves and Surplus 2 4492.4 3906.2

4893.8 4307.6

Loan Funds

Secured Loans 3 3972.0 3042.5

Unsecured Loans 4 600.1 905.6

4572.1 3948.1

Deferred Tax Liabilities (net) 934.6 941.8

[Refer Note No.5 (b) of schedule 17(B)]

Minority Interest 12.0 8.2

[Refer Note No.16 of schedule 17(B)]

TOTAL 10412.5 9205.7


Fixed Assets 5

Gross Block 7346.6 6600.4

Less: Depreciation 1717.7 1389.8

Net Block 5628.9 5210.6


6327.0 5382.3

Investments 6 26.4 26.4


Inventories 7 2614.7 2309.9

Sundry Debtors 8 2549.5 2276.1

Cash and Bank Balances 9 270.7 301.6

Loans and Advances 10 1754.3 2003.8

7189.2 6891.4

Less: Current Liabilities and Provisions 11

Current Liabilities 2713.8 2344.6

Provisions 416.3 749.8

3130.1 3094.4

Net Current Assets 4059.1 3797.0

TOTAL 10412.5 9205.7


91


LUPIN LIMITED CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2005

Current Year ended Previous Year ended

31.03.2005 31.03.2004

Schedules Rs. in Million Rs. in Million

INCOME

Sales (Gross) 13122.8 12638.5

Less : Excise Duty 511.4 486.5

Sales (Net) 12611.4 12152.0

Other Income 12 234.1 513.5

12845.5 12665.5

EXPENDITURE

Cost of Materials 13 6441.0 6224.6

Personnel Expenses 14 1329.1 1100.5

Manufacturing and Other Expenses 15 3507.1 2608.1

Interest and Finance Charges 16 282.5 525.9


11895.9 10754.4

Profit Before Tax and Extraordinary Items 949.6 1911.1

Provision for Taxation

- Current Tax ( including wealth tax ) 34.6 471.7

- Deferred Tax (7.2) 46.3

Net Profit Before Extraordinary Items 922.2 1393.1

Extraordinary Items [net of tax of Rs.nil (previous year Rs.198.0 million)] - 508.9

Net Profit after tax and extraordinary

Items But Before Minority Interest 922.2 884.2

Less : Minority Interest 3.8 16.2

Net Profit after Minority Interest 918.4 868.0

Less : Income tax - earlier years 21.0 36.2

Add : Surplus brought forward from previous year 1510.5 888.0

Add : Debenture Redemption Reserve written back 35.0 350.0

Amount Available for Appropriation 2442.9 2069.8

APPROPRIATIONS

- Transfer to Debenture Redemption Reserve - 15.0

- Transfer to General Reserve 750.0 250.0

- Proposed Dividend on Equity Shares 260.9 260.9

- Corporate Tax on Dividend 37.3 33.4

Balance Carried to Balance Sheet 1394.7 1510.5

2442.9 2069.8

Earnings Per Share (in Rs.) before extraordinary items

[Refer Note No 7 of Schedule 17(B)]

- Basic 22.36 33.40

- Diluted 22.33 33.40

Earnings Per Share (in Rs.) after extraordinary items

[Refer Note No 7 of Schedule 17(B)]

- Basic 22.36 20.72

- Diluted 22.33 20.72

Face value of Equity Shares (in Rs.) 10.00 10.00






Place : Mumbai



LUPIN LIMITED CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31ST MARCH, 2005

31.03.2005 31.03.2004


A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before Tax and Extraordinary Items 949.6 1,911.1

Adjustments for:


Loss on sale/discard of Fixed Assets (net) 6.7 6.5

Interest and Finance Charges 282.5 525.9

Interest on Long Term Investments- Non Trade (1.4) (2.0)


[31.03.2005 Rs. 6,615/-; 31.03.2004 Rs. 21,615/-]

Provision for Diminution in value of Long Term Investments written back (net) - (11.2)

Provision for Doubtful Debts / (written back) 15.5 (24.2)


Effect of foreign currency translation [refer note no.15 of schedule 17(B)] (13.0) -

Exchange difference (refer note 1 below) (0.1) -

Operating Profit before Working Capital Changes 1,576.0 2,738.5

Adjustments for:

Trade and other Receivables (268.2) 2,183.0

Inventories (304.8) (707.6)

Trade Payables 379.5 259.6

Cash Generated from Operations. 1,382.5 4,473.5

Interest paid (net) (291.7) (571.2)

Direct Taxes (Paid) / refund (net) (165.2) 7.9

Net Cash Generated from Operating Activities. 925.6 3,910.2

B. CASH FLOW FROM INVESTING ACTIVITIES

Additions to Fixed assets / Capital work-in-progress (1,292.0) (837.1)

Sale of Fixed Assets 4.4 1.8

Sale of Investment 0.1 54.1

Purchase of Investments - (24.0)

Interest on Long Term Investments- Non Trade 1.4 2.0


[31.03.2005 Rs. 6,615/-; 31.03.2004 Rs. 21,615/-]

Net Cash used in Investing Activities (1,286.1) (803.2)

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from / repayment of Borrowings 624.0 (2,729.1)

Loss on repurchase / cancellation of debentures - (37.1)

Premium on prepayments of Term Loans - (6.4)

Dividend Paid (260.4) (200.4)

Corporate Dividend Tax paid (34.1) (25.7)

Net cash from / (used in) Financing Activities 329.5 (2,998.7)

Net (decrease) / increase in cash and cash equivalents (31.0) 108.3

Cash and Cash equivalents as at the beginning of the year 301.6 193.3

Cash and Cash equivalents as at the end of the year 270.6 301.6

For the year Ended

93


LUPIN LIMITED CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR 31ST MARCH, 2005 (CONTD.)

2. Additions to fixed assets (including movements in Capital work-in-progress) are considered as a part of investingactivities.

3. Interest income on deposits, etc., is classified as cash flow from operating activiities.4. The above Cash Flow Statement has been prepared under the �Indirect Method� as set out in the Accounting

Standard (AS-3),�Cash Flow Statement� issued by the Institute of Chartered Accountants of India.5. The Previous year�s figures have been regrouped wherever necessary. The effect of extraordinary items in the

previous year has been given in the relevant heads.

31.03.2005 31.03.2004


For the year Ended

Notes:

1. Cash and cash equivalents include

Cash and Bank Balances (refer schedule 9) 270.7 301.6

Exchange difference [unrealised (gain) on foreign currency cash and cash equivalents] (0.1) -

Total cash and cash equivalents 270.6 301.6





Place : Mumbai



SCHEDULE �2� - RESERVES AND SURPLUS

SCHEDULES FORMING PART OF THE CONSOLIDATED

BALANCE SHEET

SCHEDULE �1� - SHARE CAPITAL

Note:Out of the above Equity Shares, 37,311,048 Equity Shares were allotted as fullypaid-up without payment being received in cash, pursuant to the scheme ofAmalgamation with erstwhile Lupin Laboratories Limited.

As at As at

31.03.2005 31.03.2004


Authorised :

50,000,000 Equity Shares of Rs 10/- each 500.0 500.0

1,500,000 Redeemable Cumulative Preference Shares of Rs 100/- each 150.0 150.0

650.0 650.0


40,141,134 Equity Shares of Rs 10/- each fully paid up 401.4 401.4

TOTAL 401.4 401.4

Capital Reserve

- Investment Subsidies from Central Government


- Investment Subsidies from State Government


- On restructuring of capital of the Parent Company under the Scheme

of Amalgamation


263.9 263.9

Capital Redemption Reserve


Revaluation Reserve


Securities Premium Account


General Reserve


Add: Transferred from Profit and Loss Account 750.0 250.0

1895.7 1145.7

Debenture Redemption Reserve


Add: Transferred from Profit and Loss Account - 15.0

Less : Transferred to Profit and Loss Account 35.0 350.0

30.0 65.0

Amalgamation Reserve


Exchange Reserve [Refer Note No.15 of schedule 17(B)] - 13.0

Surplus in Profit and Loss Account 1394.7 1510.5

TOTAL 4492.4 3906.2

95



BALANCE SHEET

SCHEDULE �3� - SECURED LOANS

Notes :

1. a) Debentures are secured / to be secured by first legal / equitable mortgage of immovable Assets and Hypothecation ofmovable assets of the parent Company both present and future situated at (a) Aurangabad, Pune and Tarapur in Stateof Maharashtra, (b) Ankleshwar in State of Gujarat (c) Mandideep, District Raisen in State of Madhya Pradesh and (d)Verna industrial area in Goa. The said charge is ranking paripassu between the lenders including for term loan (ReferNote 2 Below), and subject to prior charges created / to be created in favour of company�s Bankers on specific items ofmovables to secure working capital requirements (Refer note 3 below).

b) �H� series Debentures are redeemable in 8 equal half yearly instalments starting from 1st September 2001, �M� series Debenturesare redeemable in 3 equal annual instalments commencing from 28th October, 2002, �O� series and �P� series Debentures areredeemable in 8 equal half yearly instalments starting from 30th September, 2001 and �R� series Debentures areredeemable in 3 equal annual instalments starting from 17th August, 2005. The Debentures under �H�, �M�, �O� and �P�series are redeemed during the year on payment of last Half yearly / Annual Instalments in respect of which the parentCompany has initiated the steps for satisfaction of charges created in favour of Debenture Trustees of those series.

2. Term loans from Financial Institutions / Banks are secured / to be secured by first charge ranking paripassu with Trusteesfor debenture holders referred to in note 1 (a) above and is further secured by way of personal guarantees of some of thedirectors of the parent company for amount aggregating to Rs.156.4 million (Previous Year Rs.274.0 million).

As at As at

31.03.2005 31.03.2004

Notes Rs. in Million Rs. in Million

1. Debentures 1

Nil ( 1.5 million ) 14.5% 'H' Series Non-Convertible Redeemable


Nil ( 2.3 million ) 14.5% 'M' Series Non-Convertible Redeemable


Nil ( 2 million ) 14.5% 'O' Series Non-Convertible Redeemable


Nil (1 million ) 14.5% 'P' Series Non-Convertible Redeemable


1.2 million 8% 'R' Series Non-Convertible

Redeemable Debentures of Rs. 100/- each fully paid up. 120.0 120.0

120.0 254.9

2. Term Loans 2

( i ) From Financial Institutions

- Rupee Loans 398.4 590.0

- Foreign currency loans 104.9 131.1

( ii ) From Banks

- Foreign Currency Loans 437.5 -

940.8 721.1

3. Cash Credit, Packing Credit and Post Shipment

Credit facilities from Banks 3 2911.2 2066.5

[including interest accrued and due Rs.0.2 million (previous year Rs.nil)]

TOTAL 3972.0 3042.5


SCHEDULE �4� - UNSECURED LOANS

Notes :

1. Fixed Deposits include deposits guaranteed by some of the Directors 37.7 62.62. Amount due within a year

i) Fixed Deposits 285.7 384.4

ii) Loans from Council for Scientific and Industrial Research 15.4 -


BALANCE SHEET

SCHEDULE �3� - SECURED LOANS ( Notes - contd.)

3. a) Loans of parent company from Banks in cash credit, Packing credit and Post shipment credit facilities are secured byhypothecation of inventories and book debts of the parent company and a second charge on immovable properties referredto in note 1 (a) above.

b) Working capital Loan of a wholly owned subsidiary company from bank aggregating to Rs.61.5 million (previous year Rs.nil)is secured by irrecoverable standby letter of credit from the bankers of the parent company.

c) Working capital loans of a subsidiary company from banks aggregating to Rs.104.3 million (previous year Rs.177.0 million)are secured against its fixed deposits together with the mortgage of a portion of its land, machinery and equipments.

4. Packing credit and Post shipment credit facilities and Working Capital loans include foreign currency loans ofRs.2626.2 million (previous year Rs.1929.6 million).

5. Debentures of Rs.40.0 million ( Previous Year Rs. 134.9 million) and Term Loans of Rs. 224.1 million (Previous Year Rs. 197.8million) are repayable within one year.

As at As at

31.03.2005 31.03.2004

Rs. in Million Rs. in Million

Fixed Deposits 385.3 734.8

[Due to Directors Rs.0.1 million (previous year Rs.0.1 million)]

Other Loans :

a) Sales Tax Deferment Loan - Government of Maharashtra 53.9 47.2

b) Loans from Council for Scientific and Industrial Research 160.9 123.6

TOTAL 600.1 905.6

97

LUPIN

LIMITE

D (C

ON

SO

LIDATE

D)


BALANCE SHEET

SCHEDULE �5� - FIXED ASSETS

* Amounts written off in respect of leasehold land for the period of lease which has expired.

Notes :

1. Cost of Buildings includes cost of shares in co-operative societies of Rs.1,000 (previous year Rs.1,000).2. Capital work-in-progress includes capital advances paid, machinery under installation / in transit, construction and erection materials

(including those lying with contractors) and pre-operative expenses [Refer note no. 4 of Schedule 17(B)].3. Depreciation for the current year includes Rs.0.5 million pertaining to earlier years (previous year Rs.0.3 million).4. Additions to Fixed Assets and Capital work-in-progress are after adjusting Rs. 0.3 million on account of exchange differences. The

exchange difference on Indigeneous Plant and Machinery is credited to Profit and Loss Account aggregating to Rs. 20.1 million in viewof the requirements of Accounting Standard (AS-11) � The Effects of Changes in Foreign Exchange Rates� (Revised) issued by The Instituteof Chartered Accountants of India, including clarification in this respect, which hitherto was capitalised in the earlier years. Consequentlythere is a credit of Rs.20.1 million to the Profit and Loss Account and the profit for the year is higher by the like amount.

5. Intangible Assets (Computer Software) is regrouped from Plant, Machinery and Equipments considering the requirements of AccountingStandard (AS-26) �Intangible Assets�.

(Rs. in Million)

Depreciation / Amortisation

Particulars As at As at Up to For the Up to As at As at


2004 2005 2004 2005 2005 2004

Free Hold Land 51.2 - - 51.2 - - - - 51.2 51.2

Lease Hold Land 112.7 - - 112.7 6.0 1.9 - 7.9* 104.8 106.7

Buildings 1,625.7 125.7 0.6 1,750.8 204.9 52.5 0.1 257.3 1,493.5 1,420.8

Plant , Machinery and

Equipments 4,625.4 619.9 11.7 5,233.6 1,135.4 260.2 3.2 1,392.4 3,841.2 3,490.0

Furniture and Fixtures 110.5 18.4 6.4 122.5 28.3 10.7 4.8 34.2 88.3 82.2

Vehicles 16.8 1.6 0.7 17.7 5.6 1.5 0.2 6.9 10.8 11.2

Intangible Assets 58.1 - - 58.1 9.6 9.4 - 19.0 39.1 48.5

(Computer Software)

Total 6,600.4 765.6 19.4 7,346.6 1,389.8 336.2 8.3 1,717.7 5,628.9 5,210.6

Previous Year 6,004.6 759.2 163.4 6,600.4 1,107.8 295.3 13.3 1,389.8 5,210.6


Total 6,327.0 5,382.3

Net Block Gross Block


SCHEDULE �6� - INVESTMENTS

(At cost / carrying amount unless otherwise stated)

Notes :-

1) a) Quoted Investments : Aggregate Cost / Carrying Value 21.1 21.1 : Aggregate Market / Repurchase Value of Bonds 22.1 22.9

b) Unquoted Investments : Aggregate cost / Carrying Value 5.3 5.3

2) All the Investments in shares / bonds are fully paid up.


BALANCE SHEET

As at

Number Face 31.03.2004

Value Rs. in Million Rs. in Million Rs. in Million

Long Term Investments

1 In Equity Shares

a) Unquoted (Trade)

Biotech Consortium India Ltd. 50,000 Rs.10/- 0.5 0.5

(50,000)

Bharuch Enviro Infrastructure Ltd. 4,410 Rs.10/-

[31.03.2005 - Rs.44,100; 31.03.2004 - Rs. 44,100] (4,410)

Bharuch Eco-Acqua Infrastructure Ltd. 479,250 Rs.10/- 4.8 4.8

(479,250)

Dombivali Nagri Sahakari Bank Ltd. Nil Rs.50/- -

[31.03.2004 - Rs.50,000] (1,000) 5.3 5.3

b) Quoted (Non Trade)

Gran Heal Pharma Ltd 575,000 Rs.10/- 5.7 5.7

(575,000)

Less : Provision for diminution in value of investments 5.7 5.7

- -

2 In Bonds

Quoted (Non-Trade)

6.75% Tax Free US64 Bonds 211,400 Rs.100/- 21.1 21.1

(211,400)

TOTAL 26.4 26.4

As at

31.03.2005

99


SCHEDULE �7� - INVENTORIES

SCHEDULE �8� - SUNDRY DEBTORS

SCHEDULE �9� - CASH AND BANK BALANCES

SCHEDULE �10� - LOANS AND ADVANCES(considered good unless otherwise stated)

Note :Loans and advances include Rs.1.2 million (previous year Rs. nil)being advance towards investments.

As at As at

31.03.2005 31.03.2004


Stock-in-trade

- Raw and Packing Materials 1023.7 702.8

- Work-in-Process 533.6 716.5

- Finished Goods (including Traded Goods) 966.3 813.6

Consumable Stores, Spares and Fuel 91.1 77.0

TOTAL 2614.7 2309.9

Cash in hand [including Cheques on hand of Rs.38.2 million 40.3 5.7


Bank Balances :

- With Scheduled Banks

In Current Accounts (including remittances in transit) 87.4 38.3

In Exchange Earners Foreign Currency Account 0.3 0.3

In Deposit Accounts (including Margin Deposits) 103.8 217.3

- With Others

In Current Accounts 38.9 40.0

TOTAL 270.7 301.6

Unsecured

Advances recoverable in cash or in kind or

for value to be received 889.6 877.8

Deposits 746.1 734.6

Balances with Customs and Excise Authorities 1.0 45.0

Advance payment of Income Tax 117.6 346.4

TOTAL 1754.3 2003.8


BALANCE SHEET

(Unsecured)

Debts outstanding for a period exceeding six months

- Considered good 36.0 117.1

- Considered doubtful 15.5 -

51.5 117.1

Other Debts considered good 2513.5 2159.0

2565.0 2276.1

Less: Provision for doubtful debts 15.5 -

TOTAL 2549.5 2276.1



BALANCE SHEET

SCHEDULE �11� - CURRENT LIABILITIES AND PROVISIONS

As at As at

31.03.2005 31.03.2004


Current Liabilities

Acceptances 1182.5 938.5

Sundry Creditors :

i) Total outstanding dues to small scale industrial undertakings 58.3 35.8

ii) Total outstanding dues to creditors other than small scale

industrial undertakings 1396.7 1284.8

Interest Accrued but not due on loans 36.6 39.0

Unpaid Dividend * 8.8 8.3

Unpaid Matured Deposits * 15.5 14.6

Unpaid Matured Debentures * 4.6 6.2

Unpaid Interest Warrants * 10.8 17.4

* There are no amounts due and outstanding to be credited to

Investor Education and Protection Fund

TOTAL 2713.8 2344.6

Provisions

For Gratuity 22.7 9.5

For Leave Encashment 41.2 33.3

For Taxation (including wealth tax) 32.8 371.2

For Proposed Dividend on Equity 260.9 260.9

For Tax on Dividend 36.6 33.4

Other Provisions [refer note no.12 of schedule 17(B)] 22.1 41.5

416.3 749.8

TOTAL 3130.1 3094.4

101



PROFIT AND LOSS ACCOUNT

SCHEDULE �12� - OTHER INCOME

SCHEDULE �13� - COST OF MATERIALS

SCHEDULE �14� - PERSONNEL EXPENSES


31.03.2005 31.03.2004


Export Benefits / Incentives 52.1 293.7

Income from Research Services 11.0 -

Dividend on Long Term Investments - Trade

[31.03.2005 - Rs. 6, 615 ; 31.03.2004 - Rs. 21,615]

Interest on Long Term Investments - Non Trade 1.4 2.0

Interest on Deposits with Banks 4.4 9.4

[Tax Deducted at Source Rs.0.8 million (previous year Rs.1.9 million)]

Interest on Inter Corporate Deposits - 9.9

[Tax Deducted at Source Rs. nil (previous year Rs.2.0 million)]

Other Interest (net) 23.4 11.1

[Tax Deducted at Source Rs.0.1 million (previous year Rs.0.1 million)]

Insurance Claims 2.0 3.5

Exchange Rate Diffference (net) 34.3 103.2

Sundry Credit Balances written back (net) - 10.4

Provision for Doubtful Debts no longer required, written back - 24.2

Provision for dimunition in value of Long Term Investments - written back (net) - 11.2

Miscellaneous Income 105.5 34.9

[including share in income from a customer Rs.59.7 million

(previous year Rs. Nil)]

[Tax Deducted at Source Rs.1.5 million (previous year Rs.nil)]

TOTAL 234.1 513.5

Salaries, Wages and Bonus 1101.3 919.8

Contribution to Provident , Gratuity and Other Funds 126.5 99.5

Welfare Expenses 101.3 81.2

TOTAL 1329.1 1100.5

Raw and Packing Materials Consumed 5005.7 5339.6

Purchase of Traded Goods 1434.2 1335.0

1501.0 1051.0

1499.9 1501.0

1.1 (450.0)

TOTAL 6441.0 6224.6

Decrease / (Increase) in Stock of Finished Goods (including Traded Goods) and Work-in-

Process

Opening stock of Finished Goods (including Traded Goods) and Work-in-process

Less: Closing stock of Finished Goods (including Traded Goods) and Work-in-process




SCHEDULE �15� - MANUFACTURING AND OTHER EXPENSES

SCHEDULE �16� - INTEREST AND FINANCE CHARGES


31.03.2005 31.03.2004


Processing Charges 123.6 46.8

Consumable Stores and Spares 316.5 222.3


- Buildings 40.2 30.0

- Plant and Machinery 74.5 71.0

- Others 50.9 56.2

Rent 29.0 19.3

Rates and Taxes 33.6 27.5

Insurance 66.0 56.1

Power and Fuel 622.9 562.8

Excise Duty (Net) 53.7 69.0

Selling and Promotion Expenses 717.2 382.2

Commission, Brokerage and Discounts 223.8 264.8

[Including cash discount of Rs.2.7 million (previous year Rs.2.8 million)]

Freight and Forwarding 161.6 130.6

Lease Rent and Hire Charges 38.6 33.1

Postage and Telephone Expenses 62.2 45.3

Travelling and Conveyance 233.5 163.0

Legal and Professional Charges 108.0 105.9

Donations 30.9 23.0

[Includes contribution to Lupin Human Welfare and Research

Foundation aggregating to Rs.11.8 million (previous year Rs.11.8 million)]

Clinical and Analytical Charges 208.8 46.0

Bad Debts / Advances Written Off 25.6 -

Provision for Doubtful Debts 15.5 -


Loss on sale of Investments - 0.4

Loss on Sale / Discard of Fixed Assets (Net) 6.7 6.5


Prior Period Adjustments (Net) 11.1 10.9

Miscellaneous Expenses 251.8 197.5

(includes printing and stationery, contract labour charges,

books and periodicals, audit fees, etc.)

TOTAL 3507.1 2608.1

Interest on Debentures 35.6 113.1

Interest on Fixed Loans 114.2 257.9

Others 132.7 154.9

TOTAL 282.5 525.9

103



ACCOUNTS

SCHEDULE �17� - SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE CONSOLIDATED

FINANCIAL STATEMENTS

A) SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Preparation of Financial Statements :

i) The financial statements have been prepared under the historical cost convention and on the accrual basis of the

accounting. The accounts of the Parent Company and an Indian subsidiary and foreign subsidiaries have beenprepared in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India,except in case of a subsidiary located in Thailand whose accounts have been prepared in accordance with the locallaws and the applicable Accounting Standards / generally accepted accounting practices. No adjustment entries arerequired for conversion of the accounts of the aforesaid foreign subsidiary located in Thailand, from its local GAAPto Indian GAAP as certified by the local auditor of that subsidiary.

ii) The financial statements of the subsidiaries used in the consolidation are drawn upto the same reporting date as thatof the Parent company, namely March 31, 2005

b) Principles of Consolidation :

i) The financial statements of the Parent Company and its subsidiaries have been consolidated on a line by line basisby adding together the book value of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances, intra � group transactions and the unrealized profits/losses.

ii) The financial statements of the Parent Company and its subsidiaries have been consolidated using uniform accountingpolicies for like transactions and other events in similar circumstances.

iii) Minority interest is presented separately from the liabilities or assets and the equity of the parent shareholders in theconsolidated Balance Sheet. Minority interest in the income or loss of the group is separately presented.

c) Use of Estimates :

The preparation of financial statements in conformity with the generally accepted accounting principles require, estimatesand assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financialstatements and the reported amounts of revenues and expenses during the reporting period. Differences between the

actual results and estimates are recognised in the period in which the results are known / materialised.

d) Fixed Assets :

Fixed Assets of the parent company are stated at cost net of modvat / cenvat, less accumulated depreciation andaccumulated impairment losses, if any. All costs, including financing costs till commencement of commercial production,net charges on foreign exchange contracts and adjustment arising from exchange rate variations attributable to the fixedassets acquired from a country outside India, are capitalised. The fixed assets of the foreign subsidiary located in Thailandare stated as under :i) Land - at appraised value determined by independent appraiser.

ii) Plant and machinery �- as at 31st December 1991 - at appraised value determined by independent appraiser less accumulated depreciation.- Acquired after 31st December 1991 � at cost less accumulated depreciation.

iii) Other items - at cost less accumulated depreciation.

e) Intangible Assets :

Intangible assets are recognised only if it is probable that the future economic benefits that are attributable to the assetswill flow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at costand are carried at cost less accumulated amortisation and accumulated impairment losses, if any.



ACCOUNTS

SCHEDULE �17� - SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE

CONSOLIDATED FINANCIAL STATEMENTS (CONTD.)

f) Foreign Currency Transactions / Translation :

Transactions of the parent company in foreign currency are recorded at the original rates of exchange in force at the timetransactions are effected. Exchange differences arising on repayment of foreign currency liabilities incurred for the purpose ofacquiring fixed assets from a country outside India, are adjusted in the carrying amount of the respective fixed assets. Exchangedifferences arising on settlement of other transactions are recognized in the Profit and Loss Account.

Monetary items of the parent company (other than those related to acquisition of imported fixed assets) denominated inforeign currency and not covered by forward contracts are restated using the exchange rate prevailing at the date of theBalance Sheet and the resulting net exchange difference is recognized in the Profit and Loss Account. The exchange gain/loss arising on restatement of foreign currency liability relating to fixed assets acquired from a country outside India isadjusted in the value of the related fixed assets.

Monetary items of the parent company covered by forward contracts are translated at the rates on the date of transactions.Premium/discount arising on such forward exchange contract is amortised as income/expense over the life of the contract. Anyprofit/loss arising on cancellation of such forward exchange contract is recognised as income or expense.

Foreign offices/branches :

In respect of the foreign offices/branches of the parent company, which are integral foreign operations, all revenues andexpenses (except depreciation) during the year are reported at average rate. Monetary assets and liabilities are restated at theyear-end exchange rate. Non-monetary assets and liabilities are stated at the rate prevailing on the date of the transaction.Balance in �head office� account whether debit or credit is translated at the amount of the balance in the �foreign office� in thebooks of the head office. Net gain/loss on foreign currency translation is recognized in the Profit and Loss Account.

Foreign Subsidiaries :

In case of foreign subsidiaries, the local accounts are maintained in local and functional currency. The financial statements ofsuch foreign subsidiaries, which are integral foreign operations for the parent company, have been translated to Indian Rupeeson the following basis �

i) All income and expenses are translated at the average rate of exchange prevailing during the year.ii) Monetary assets and liabilities are translated at the closing rate on the Balance Sheet date.iii) Non�monetary assets and liabilities are translated at historical rates. iv) The resulting exchange difference is accounted in �Exchange Difference account� and is charged/credited to the Profit and

Loss Account (refer note no. 15 below)

g) Investments:

Long term investments are stated at cost of acquisition. Investments in foreign currency are stated at cost by converting atexchange rate prevailing at the time of acquisition. Provision for diminution in the value of long term investments is made onlyif such decline, is other than temporary.

h) Inventories:

Stock-in-trade is valued at lower of cost and net realisable value. Stock of consumable stores, spares andfurnace oil is valued at cost.

In case of the parent company, cost is computed based on moving weighted average in respect of all procured materials andtraded finished goods and comprises of materials and appropriate share of utilities and other overheads in respect of Work-in-Process and Finished Goods.

Cost of finished goods (trading), raw materials, supplies and others are calculated by using the first in first out method by thesubsidiary companies. Cost also includes all charges incurred for bringing the inventories to their present location and condition.

105


i ) Revenue Recognition :

i) Revenue from sale of goods is recognised when the significant risks and rewards in respect of ownership of products are transferred.ii) Revenue from product sales is stated net of returns, sales tax and applicable trade discounts and allowances.iii) Income from research services is recognised as revenue when earned in accordance with the terms of the relevant agreements.iv) Insurance or other claims, interest etc. are recognised only when it is reasonably certain that the ultimate collection will be

made.

j) Export Benefits :

Export benefits available under prevalent schemes are accrued in the year in which the goods are exported and are accountedto the extent considered recoverable.

k) Excise Duty :

Excise Duty is accounted on the basis of payments made in respect of goods cleared and provision is made for goods lying in

bonded warehouses.


ACCOUNTS



l) Depreciation and Amortisation :

Depreciation on fixed assets is provided on straight line basis in the manner and at the rates prescribed in Schedule XIV to theCompanies Act, 1956, by the parent company except for the following fixed assets which are depreciated / amortised over theiruseful life as determined by the Management on the basis of technical evaluation, etc.

Assets Estimated useful lifeCaptive Power Plant at Tarapur 15 yearsCertain assets provided to employees 3 yearsLeasehold land and building Over the period of leaseIntangible Assets (Computer Software) 6 years

Depreciation on fixed assets of the subsidiaries is provided on straight line basis over their estimated useful life, asdetermined by the management as under :

Buildings 20 yearsPlant and machinery 10 yearsFurniture and fixture and Office equipments (including computers) 3-5 yearsVehicles 5 years

m) Employee Retirement Benefits :

i) Parent Company�s contribution to Provident Fund, Superannuation Fund and other funds and the Hong Kong Subsidiary�scontribution to Mandatory Provident Fund Scheme is charged to Profit and Loss Account.

ii) The amount of Gratuity liability of the parent company as ascertained on the basis of actuarial valuation and fundedthrough a scheme (Group Gratuity) administered by Life Insurance Corporation of India, is charged to the Profit and LossAccount. In case of wholly owned subsidiary located in Hong Kong, provision is made towards liability for gratuity aspayable under the Employment Ordinance (Hong Kong).

iii) Provision is made towards liability for leave encashment as ascertained on the basis of actuarial valuation.




n) Taxes on Income :

Income Taxes are accounted for in accordance with Accounting Standard (AS-22) �Accounting for Taxes on Income�, issuedby The Institute of Chartered Accountants of India. Tax expense comprises both current tax and deferred tax. Current tax ismeasured at the amount expected to be paid or recovered from the tax authorities using the applicable tax rates. Deferred taxassets and liabilities are recognised for future tax consequence attributable to timing differences between taxable income andaccounting income that are measured at relevant enacted tax rates. At each Balance Sheet date the group reassessesunrealised deferred tax assets, to the extent they become reasonably certain or virtually certain of realisation, as the casemay be.

o) Operating Leases :

Assets taken on lease under which all risks and rewards of ownership are effectively retained by the lessor are classified asoperating lease. Lease payments under operating leases are recognised as expenses on accrual basis in accordance with therespective lease agreements.

p) Provisions, Contingent Liabilities and Contingent Assets :

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a

result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but

are disclosed in the Notes to Accounts. Contingent Assets are neither recognised nor disclosed in the financial statements.

q) Borrowing Costs :

Borrowing cost attributable to the acquisition or construction of qualifying assets is capitalised as part of the cost of such assets.

A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing

costs are charged to revenue.

r) Impairment of Fixed Assets :

At the end of each year, the Company determines whether a provision should be made for impairment loss on fixed assetsby considering the indications that an impairment loss may have occurred in accordance with Accounting Standard (AS-28)��Impairment of Assets�� issued by the Institute of Chartered Accountants of India. An impairment loss is charged to the Profit andLoss Account in the year in which, an asset is identified as impaired, when its carrying value exceeds its recoverable amount. Theimpairment loss recognised in prior accounting periods is reversed, when the carrying value of the asset exceeds its recoverablevalue.


ACCOUNTS

107


a) Income tax demands in respect of earlier years under dispute, pending in appeals before higher authorities. 302.1 338.5Amount paid there against and included under Schedule 10 � (Rs.292.4 million)Previous year (Rs.291.5 million)

b) Excise duty, Sales tax disputed in appeals and pending decisions before higher authorities. 62.5 57.5Amount paid there against and included under Schedule 10� (Rs.9.6 million)Previous year (Rs.1.14 million)

c) Custom duty in respect of future export obligation in accordance with Exim Policy. 8.3 8.4d) Claims against the Company not acknowledged as debts. 195.2 376.9

Amount paid there against and included underSchedule 10(Rs.2.8 million)Previous year (Rs.2.8 million)

e) Guarantees given by the Company on behalf of an Associate Company. - 97.5f) In case of subsidiary located in U.S.A., - Contingent liability on account of

�Differential Price� adjustable in respect of goods supplied under the terms of amountthe agreement (refer note no. 14 below). unascertained -



B) NOTES TO CONSOLIDATED ACCOUNTS

1. Estimated amount of contracts remaining to be executed on capital account and not provided for, net of advances,Rs. 167.5 Million (Rs.219.3 Million).

2. Contingent Liabilities:- Rs. in million

As at 31�st

March 2005

As at 31�st

March 2004

3. The consolidated financial statements present the consolidated accounts of Lupin Limited with the following subsidiaries:

The consolidated accounts thus include the results of the aforesaid subsidiaries and there are no other body corporate /entities, where the Company holds 50% or more of the share capital or where the Company can control thecomposition of the Board of Directors / governing bodies of such companies / entities, where the holding may be lessthan 50%.


ACCOUNTS

Name of subsidiary Country of

incorporation

Proportion of Ownership

Interest

Lupin Chemicals (Thailand) Limited (LCTL) Thailand 60%

Lupin Pharmaceuticals Inc. (LPI) U.S.A. 100%

Lupin Hong Kong Limited (LHKL) Hong Kong 100%

Lupin Laboratories South Africa (Proprietary) Ltd South Africa 60%

Lupin Herbal Limited (LHL) India 100%



FINANCIAL STATEMENTS (CONTD.)

4. Pre-operative expenses, included in Capital Work in Progress, represent the expenses incurred for projects, which are yet to becommissioned. Such pre-operative expenses mainly pertain to plants/building under erection/construction at units/projectslocated at Tarapur, Ankleshwar and Mandideep and to be capitalised on completion of projects at the respective locations. Thedetails of these expenses are:

5. Current tax provision:

a) Provision for income tax for the parent company has been made on the basis of Minimum Alternate Tax in accordancewith Section 115 JB of the Income Tax Act, 1961 considering the relief/deductions available in accordance with thesaid Act.

b) The deferred tax assets / (liabilities) arising out of significant timing differences are as under :

Rs. in million

Rs. in million

2004-2005 2003-2004

Opening balance 5.7 14.5

Incurred in the current year :

Salaries, allowances and contribution to funds 8.8 10.0

Professional fees 0.6 4.7

Travelling expenses 2.0 2.9

Interest on project related fixed loans 9.1 5.7

Others 5.8 2.9

Total 32.0 40.7

Less : Capitalised during the year 13.3 21.5

Amount written off (Project abandoned) - 13.5

Closing balance 18.7 5.7

Particulars 31.03.2005 31.03.2004

Deferred Tax Liability :

Depreciation (956.5) (953.4)

Deferred Tax Assets :


Provision for leave encashment 7.8 -

Other timing differences 8.9 11.6

Net Deferred Tax Liability (934.6) (941.8)


ACCOUNTS

109


6. Segment Reporting :

i) Primary segment :The Company is exclusively in the Pharmaceutical business segment and has only one reportable segment.

ii) Secondary segment data:

Notes :

a) The segment revenue in geographical segments considered for disclosure is as follows :-Revenue within India includes gross sales to customers located within India and earnings in India.-Revenue outside India includes gross sales to customers located outside India and earnings outside India.

b) Segment revenue comprises:



7. Basic and diluted earning per share is calculated as under :

Particulars 2004-05 2003-04 2004-05 2003-04 2004-05 2003-04

Revenue by Geographical Segment 6514.3 5939.5 6779.6 7056.3 13293.9 12995.8

Carrying amount of Segment Assets 11385.0 10354.3 2157.6 1945.8 13542.6 12300.1

Capital Expenditure 1284.3 820.2 7.7 3.5 1292.0 823.7

India Outside India Total

Rs. in million

Rs. in million

Particulars 2004-05 2003-04 2004-05 2003-04 2004-05 2003-04

Sales by Geographical Segment 6503.6 5926.2 6619.2 6712.3 13122.8 12638.5

Other Income excluding interest, dividend,

etc. 10.7 13.3 160.4 344.0 171.1 357.3

Total Revenue 6514.3 5939.5 6779.6 7056.3 13293.9 12995.8

India Outside India Total


ACCOUNTS

2004-2005 2003-2004

(Rs. in Million) (Rs.in million)

Profit after tax before extraordinary items 918.4 1376.9

Income tax / wealth tax in respect of earlier years 21.0 36.2

Profit (before extraordinary items) attributable to Equity Shareholders 897.4 1340.7

Extraordinary items (net of tax) - 508.9

Profits (after extraordinary items) attributable to Equity Shareholders 897.4 831.8

Weighted average number of Equity Shares :

- Basic 40141134 40141134

Add :Effect of dilutive issue of employees stock option 44431 -

- Diluted 40185565 40141134

Earnings per Share (in Rs.) before Extraordinary items

- Basic 22.36 33.40

- Diluted 22.33 33.40

Earnings per Share (in Rs.), after Extraordinary items

- Basic 22.36 20.72

- Diluted 22.33 20.72


The particulars of the options granted and lapsed under the Scheme are tabulated as below:

8. Managerial Remuneration:

Notes :i. Above amount does not include remuneration paid by a subsidiary companies to its directors.ii. Salary and allowances includes Rs.0.8 million towards the increased remuneration (including Company�s contribution to

Provident and Superannuation fund) paid to the Managing Director w.e.f. July 1, 2004 for which a memorandum pursuantto Section 302 of the Companies Act, 1956 was circulated to the shareholders. The approval of the shareholders for suchincrease in remuneration is being sought at the ensuing Annual General Meeting of the Company.

iii. The managerial personnel of the Parent Company are covered under the Companies Group Gratuity Policy along withother employees of the Company. Proportionate amount of gratuity is not included in the aforementioned disclosure, sinceexact amount is not ascertainable.

iv. Remuneration for the previous year includes remuneration to a director for part of the year which during the year is forfull year.

9. The Company procures on lease, equipments and vehicles under operating leases. These rentals recognised in the Profit andLoss Account for the year are Rs.38.6 million (Previous year Rs.33.1 million). The future minimum lease payments and paymentprofile of non cancellable operating leases are as under :

10. Employees Stock Option Plan:

During the year, 377150 options of Rs.567.35 each were granted under the �Lupin Employees Stock Option Plan 2003� dulyapproved by the Remuneration Committee of the Board of Directors of the Parent Company and the shareholders of the ParentCompany in the Extraordinary General Meeting held on December 5, 2003. The options are granted at the price ascomputed in accordance with the SEBI guidelines in force, at the time of such grant. Each option entitles the holder toexercise the right to apply for and seek allotment of one equity share of Rs.10/- each of the parent company. The saidoptions have a vesting period from June 30, 2006 to June 30, 2009 in accordance with the vesting schedule as stated in thesaid scheme and an exercise period of ten years from the grant date.


FINANCIAL STATEMENTS (CONTD.)

2004-2005 2003-2004

(Rs. in million) (Rs.in million)

Salary and Allowances 31.8 17.8

Contribution to Provident and Other Funds 3.2 1.1

Perquisites 1.3 3.9

Commission 8.3 13.1

44.6 35.9

2004-2005 2003-2004


Not later than one year 12.0 9.0

Later than one year but not later than five years 21.4 17.1

33.4 26.1


ACCOUNTS

Particulars Year Ended 31st Year Ended 31

st

March 2005 March 2004

Options outstanding as at the beginning of the year - -

Options granted during the year 377150 -

Options lapsed during the year - -

Options outstanding as at the end of the year 377150 -

111




11 Sales have been regrouped during the year and have been disclosed net of trade discount. Accordingly, the trade discount ofRs.348.7 Million pertaining to the previous year has been netted off from the sales. However, the said regrouping has no impacton the profit.

12 �Other Provisions� (refer schedule 11) represents excise duty liability recognised by the parent company based on substantialdegree of estimation for excise duty payable on clearance of goods lying in stock as on March 31, 2004 of Rs.41.5 million asper the estimated pattern of despatches. During the year, Rs.39.1 million was utilised for clearance of goods and the unusedbalance of Rs.2.4 million was reversed. Liability recognised under this clause for the year is Rs.22.1 million which is outstanding

as at March 31, 2005. Actual outflow is expected in next financial year.

13. The aggregate amount of Research and Development Expenditure incurred during the year and shown in the respective headsof account is Rs.797.7million (Previous year Rs.460.9 million).

14. A subsidiary company located in the U.S.A., in the earlier year, had accounted for a liability of Rs.12.7 million (US $ 292,447) toa party, which, in accordance with the agreement has been written back in the current year. In the opinion of the Company suchliability would not result into outflow of cash at any point of time and is not probable, taking into consideration the understandingwith the said party as reflected in the agreement. On the same basis, the Company does not consider any outflow of cash onthis account and no liability is accrued, however, same is considered as contingent as disclosed in Note no. 2 (f) above.

15. Exchange rate difference includes the net exchange differences on translation, of the financial statements of the foreignsubsidiaries from their respective local currencies to the Indian currency, considering the operations of the said subsidiarycompanies as integral to the parent company, in accordance with the Accounting Standard AS-11 �The Effects Of Changes inForeign Exchange Rates (Revised)�, which in the previous year were not so considered. Consequently, the profit for the year ishigher by Rs.13.0 million.

16 Minority interest represents the minority�s share in equity of the subsidiary company Lupin Chemicals (Thailand) Limited

Rs.12.0 million (previous year Rs.8.2 million).

17. Related party disclosures, as required by AS-18 are given below:

A. Relationships -

Category I : Key Management Personnel :

Dr. Desh Bandhu Gupta ChairmanDr. Kamal K. Sharma Managing DirectorMrs. M D Gupta Executive DirectorMrs. Vinita Gupta Managing Director of Lupin Pharmaceuticals Inc., USAMr. Ramesh Chandra Saboo Managing Director of Lupin Chemicals (Thailand) Limited, ThailandMr. Sanjay Moolchandani Director of Lupin Hong Kong Limited, Hong Kong

Category II: Others (Relatives of Key Management Personnel and Entities in which the Key Management Personnel have

control or significant influence)

Mr. Nilesh GuptaDr. Anuja GuptaBadhira Leasing and Finance Pvt. LimitedBharat Steel Fabrication and Engineering WorksConcept Pharmaceuticals LtdD. B. Gupta (HUF)Enzal Chemicals (India) LimitedKhandelwal Estates Pvt. LimitedLupin Human Welfare and Research FoundationLupin International Pvt. LimitedLupin Investments Pvt. LimitedLupin Marketing Pvt. LimitedLupin Securities Limited

Matashree Gomati Devi Jana Seva NidhiNovamed Pharmaceuticals Pvt Ltd.Pipleswar Holdings Pvt. LimitedPolynova Industries LimitedPranik Landmark AssociatesRahas Investments Pvt. LimitedSynchem Chemicals (I) Pvt. LimitedTimita Leasing and Finance Pvt. LimitedVarija Leasing and Finance Pvt. LimitedVisiomed (I) Pvt. LimitedYogini Leasing and Finance Pvt. Limited

Zyma Laboratories Limited


ACCOUNTS




B. Transactions carried out with the related parties.(Rs. in million unless other wise stated)

Sr. Transactions Key Management Others Total

No. Personnel

1 Sale of goods - 6.6 6.6 ( - ) (3.7) (3.7)

2 Rent Expenses - Rs.42,000/- Rs.42,000/- ( - ) (0.5) (0.5)

3 Business Conducting Charges Expenses - Rs.6,000/- Rs.6,000/- ( - ) (0.6) (0.6)

4 Agency Commission Expenses - - - ( - ) (4.5) (4.5)

5 Expenses Recovered / Service Charges Received - 2.7 2.7 ( - ) (7.6) (7.6)

6 Interest received - - - ( - ) (9.9) (9.9)

7 Remuneration Paid 61.1 5.9 67.0 (41.4) (3.4) (44.8)

8 Compensation Received - Rs.9,347/- Rs.9,347/- ( - ) (Rs. 35,569) (Rs. 35,569)

9 Purchase of goods / materials - 34.5 34.5 ( - ) (37.9) (37.9)

10 Sale of Investments - - - ( - ) (17.0) (17.0)

11 Donations Paid - 14.1 14.1 ( - ) (13.9) (13.9)

12 Dividend Paid 4.3 127.4 131.7 (3.5) (131.3) (134.8)

13 Processing Charges - 4.3 4.3 ( - ) (2.7) (2.7)

14 Expenses Reimbursed - 4.6 4.6 ( - ) (3.7) (3.7)

15 Inter Corporate Deposit received back - - - ( - ) (161.0) (161.0)

Out of the above items transactions in excess of 10% of the total related party transactions are as under :

(Rs. in million unless other wise stated)Sr. Transactions Related party For the year For the year


1 Rent ExpensesBadhira Leasing and Finance Pvt Ltd Others Rs.6,000/- Rs.47,000/-Bharat Steel Fabrications and Engineering Works Others Rs.6,000/- 0.2 Pipleshwar Holdings Pvt Ltd Others Rs.6,000/- Rs.47,000/-Synchem Chemicals (I) Pvt Ltd Others Rs.6,000/- 0.1 Timita Leasing and Finance Pvt Ltd Others Rs.6,000/- Rs.47,000/-Varija Leasing and Finance Pvt Ltd Others Rs.6,000/- Rs.47,000/-Yogini Leasing and Finance Pvt Ltd Others Rs.6,000/- Rs.47,000/-

2 Business Conducting ExpensesSynchem Chemicals (I) Pvt Ltd Others Rs.6,000/- 0.6

3 Expenses Recovered / Service Charges ReceivedEnzal Chemicals (I) Ltd Others 0.8 0.8 Polynova Industries Ltd Others 0.7 0.7 Pranik Landmark Associates Others 1.2 1.2


ACCOUNTS

113




17. B. Transactions in excess of 10% of the total related party transactions are as under (Contd.):

(Rs. in million unless other wise stated)Sr. Transactions Related party For the year For the year


17. C. Balances due from/to the related parties

18. Previous year figures have been regrouped wherever necessary to correspond with the figures of the current year.

Figures in brackets are for previous year.

(Rs. in million)

Sr. Transactions Others Total

No.

1 Security Deposits paid towards office premises taken on 477.5 477.5 leave licence basis. (477.5) (477.5)

2 Security Deposit paid as per terms of Business Conducting 180.0 180.0 Arrangement. (180.0) (180.0)

3 Debtors 0.5 0.5 ( - ) ( - )

4 Guarantees given - - (97.5) (97.5)

5 Creditors 2.1 2.1 (8.4) (1.5)


4 Remunerations Paid

Dr Desh Bandhu Gupta Key Management 21.1 21.8 Dr Kamal K Sharma Key Management 21.2 5.7 Mr Nilesh Gupta 4.5 3.4 Mrs. Vinita Gupta Key Management 11.7 5.5

5 Purchase of Goods/ MaterialEnzal Chemicals (India) Ltd Others 34.3 37.9

6 Sale of InvestmentPolynova Industries Ltd Others - 17.0

7 Donations PaidLupin Human Welfare and Research Foundation Others 11.8 11.8 Matashree Gomatidevi Janseva Nidhi Others 2.3 2.0

8 Dividend PaidLupin Marketing Pvt Ltd Others 26.1 20.1 Rahas Investments Pvt Ltd Others 29.5 24.0 Visiomed (I) Pvt Ltd Others 28.0 22.8 Zyma Laboratories Pvt Ltd Others 40.0 56.0

9 Processing Charges PaidZyma Laboratories Ltd. Others 4.3 - Lovincare Products Ltd. Others - 2.7


ACCOUNTS





Place : Mumbai


114

Annual R

eport 2

004-0

5

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956,

RELATING TO SUBSIDIARY COMPANIES


Kiran. N. Bade Dr. Desh Bandhu Gupta Dr. Kamal K. Sharma

Company Secretary Chairman Managing Director


Name of the subsidiary company : Lupin Pharmaceuticals Inc., Lupin Chemicals (Thailand) Ltd., Lupin Hong Kong Ltd., Lupin Herbal Ltd., Lupin Laboratories South Africa (Pty) Ltd.,

USA Thailand Hong Kong India South Africa

The financial year/period of the subsidiary ended on : Year ended 31.03.2005 Year ended 31.03.2005 Year ended 31.03.2005 For the period

26.02.2004 - 31.03.2005

Year ended 31.03.2005

Date from which it became subsidiary company : 30.06.2003 25.08.1989 31.05.2002 12.08.2004 09.07.1997

Extent of interest of the holding Company in the Capital

and Reserves of the subsidiary company at the end of

the financial year/period of the subsidiary company

b) Extent of holding : 100% 60% 100% 100% 60%

Net aggregate amount of the subsidiary company�s

profit/(loss) not dealt with in the holding Company�s

accounts

Current period : Rs.25.6 Million Rs.5.7 Million Rs.2.1 Million Rs.5276/- Nil

Previous years : Rs.9.6 Million (Rs.43.6 Million) Nil N.A. (Rs. 40002/-)

Net aggregate amount of the subsidiary company�s

profit/(loss) dealt with in the holding Company�s

accounts

Current period : Nil Nil Nil Nil Nil

Previous years : Nil Nil Nil N.A. Nil

6,000 Ordinary shares of the face value

of South African Rand 1 each

50,000 Equity shares of

the face value of Rs.10/-

each (Including 6

shares held by

nominees)

a) Number of shares held : 300,000 shares of the face

value of US $ 1 each

800,000 Equity shares

of the face value of

Hong Kong $ 1 each

(Including 1 share held

by a nominee)

420,000 Equity shares of the

face value of Baht 100 each

115 text 115

LUPIN PHARMACEUTICALS, INC.

115115

To the Members,

Your Directors have pleasure in presenting their report on the operations of your Company for the year endedMarch 31, 2005.

Financial results

Performance reviewDuring the year, your Company laid the platform for participation in the branded segment in the US market with the launchof Suprax®. From a slow start in the initial months, the product saw a steep increase in prescriptions resulting in increasedrevenues in the latter part of the year. Your Company also entered into a co-promotion agreement with CornerstoneBioPharma Inc., for promoting Suprax® with a focus on primary care physicians. During the part of the year, the Companyalso promoted ZymarTM (Gatifloxacin Opthalmic Solution) in the pediatric specialty area, through a collaboration agreementwith Allergan, Inc.

DividendIn order to conserve resources, your Directors do not recommend dividend.

Directors� Responsibility StatementThe Directors confirm that while preparing the annual accounts, applicable accounting standards had been followed alongwith proper explanation relating to material departures. They further confirm that they had selected such accountingpolicies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to givea true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Companyfor the said year. They also confirm that the annual accounts have been prepared on a going concern basis and that properand sufficient care has been taken for maintenance of adequate accounting records for safeguarding the assets of yourCompany and for preventing and detecting fraud and other irregularities.

AppreciationYour Directors wish to place on record their appreciation of the valuable services rendered by all the employees of theCompany and to the business associates of the Company for their continued support.


Vinita Gupta

Managing Director

Place : Baltimore, U.S.A.Date : May 17, 2005

DIRECTORS� REPORT

Year ended March

31, 2005

Period ended

March 31, 2004Year ended March

31, 2005

Period ended

March 31, 2004

Income from operations 14.179 15.909 624.794 722.605

Profit before Interest, Depreciation and Tax 0.775 0.600 39.393 20.075

Interest 0.005 - 0.203 -

Depreciation 0.002 0.001 0.106 0.033

Profit before Tax 0.768 0.599 39.084 20.042

Tax (including deferred tax) 0.308 0.232 13.491 10.142

Profit after Tax 0.460 0.367 25.593 9.900

Income tax of earlier period 0.007 - 0.271 -

Net Profit 0.453 0.367 25.322 9.900

Balance B/F 0.367 - 9.900 -

Balance carried to Balance Sheet 0.820 0.367 35.222 9.900

(USD in Million) (Rs. in Million)


AUDITORS� REPORTTo the Members ofLUPIN PHARMACEUTICALS, INC.

We have audited the Balance Sheet of Lupin Pharmaceuticals, Inc. (� the company�) as at 31st March, 2005, the Profit and LossAccount and also the Cash Flow Statement of the Company for the year ended on that date (the financial statements) attachedhereto, which have been prepared in accordance with the Generally Accepted Accounting Principles in India.

This report is issued solely for the purpose of consolidation of accounts by the holding company, Lupin Limited and to comply with theprovisions of the Companies Act, 1956.

This report does not include a statement on the matters specified in paragraphs 4 and 5 of the Companies (Auditor�s Report) Order,2003, issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956, since in our opinionand according to the information and explanations given to us, the said Order is not applicable to the Company.

Respective Responsibilities of the Management and Auditors

The management of the Company is responsible for the preparation of these financial statements. It is our responsibility to form anindependent opinion, based on our audit of the statements and to express our opinion thereon.

Basis of Opiniona) The financial statements of the Company for the year ended 31st March, 2004 were audited by other independent auditors,

whose audit report dated 28th April, 2004, was qualified with respect to non-disclosure of certain information as required asper part II of Schedule VI of the Companies Act, 1956. We have relied upon the balances of assets and liabilities as at 31st

March, 2004 being the opening balances as at 1st April, 2004 for the purposes of the financial statements for the year ended31st March, 2005.

b) We conducted our audit in accordance with the auditing standards issued by the Institute of Chartered Accountants of India.An audit includes examination, on a test basis of evidence relevant to the amounts and disclosures in the financial statements.It also includes an assessment of the significant estimates and judgments made by the management in the preparation ofthe financial statements and whether the accounting policies are appropriate to the circumstances to the Company, consistentlyapplied and adequately disclosed. We planned and performed audit so as to obtain all information and explanation, whichto the best of our knowledge and belief were necessary for the purpose of our audit.

c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report, are in agreement withthe books of accounts of the Company and comply with the accounting standards referred to in sub-section (3C) ofSection 211 of the Companies Act, 1956.

Opinion

The Company has not disclosed the break-up of sales, purchases and opening and closing stocks, in respect of each class of goods

traded, indicating the quantities and values thereof, as required by paragraph 3 of Part II of Schedule VI of the Companies Act, 1956.

Subject to the above, in our opinion, and to the best of our information and according to the explanations given to us, the financialstatements read with the accounting policies and notes thereon give a true and fair view;

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2005; and

(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

For Deloitte Haskins & SellsChartered Accountants

P. R. BarpandePartner

Membership No.15291

Place : Mumbai

Dated: 19th May, 2005

117 text 117


117117


As at 31.03.05 As at 31.03.04 As at 31.03.05 As at 31.03.04

Schedules US $ US $ Rs'000 Rs'000

I. SOURCES OF FUNDS

Shareholders' funds

Share capital 1 300,000 300,000 13,788 13,788

Reserves and Surplus 2 820,345 367,236 35,222 15,337

1,120,345 667,236 49,010 29,125

Loan funds

Secured Loan 3 1,404,637 - 61,446 -

Deferred Tax Liability (Net) 3,411 1,690 149 74

[Refer note 2.10 of Schedule '11']

Total 2,528,393 668,926 110,605 29,199


Fixed Assets 4

Gross block 12,012 5,124 525 224

Less : Depreciation 3,178 748 139 33

Net Block 8,834 4,376 386 191

Current Assets, Loans and Advances 5

Inventories 3,053,972 4,061,713 133,596 177,294

Sundry Debtors 5,793,932 7,070,261 253,456 308,617

Cash and Bank balances 682,027 2,169,882 29,835 94,715

Loans and Advances 555,233 - 24,289 -

10,085,164 13,301,856 441,176 580,626

Less : Current Liabilities and Provisions 6

Current Liabilities 7,258,912 12,406,649 317,541 541,550

Provisions 306,693 230,657 13,416 10,068

7,565,605 12,637,306 330,957 551,618

Net Current Assets 2,519,559 664,550 110,219 29,008

Total 2,528,393 668,926 110,605 29,199

Significant accounting policies and notes

forming part of accounts 11

As per our attached report of even dateFor Deloitte Haskins & Sells For Lupin Pharmaceuticals, Inc.Chartered Accountants

P. R. Barpande Vinita Gupta

Partner Managing Director

Place: Mumbai Place: Baltimore, U.S.A.Date: 19th May, 2005 Date: 17th May, 2005


PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2005

For the year

ended on

31.03.05

For the period

from 30.06.03 to

31.03.04

For the year

ended on

31.03.05

For the period

from 30.06.03 to

31.03.04

Schedules US $ US $ Rs'000 Rs'000

INCOME FROM OPERATIONS

Sales 6,710,968 13,383,453 293,253 607,891

Other Income 7 7,468,227 2,525,575 331,541 114,714

14,179,195 15,909,028 624,794 722,605

EXPENDITURE

Cost of Materials 8 4,942,082 12,266,520 215,619 564,352

Payment to and provision for employees 9 510,810 245,559 22,321 11,154

Operating and other expenses 10 7,951,511 2,796,618 347,461 127,024

Interest and Finance Charges 4,637 - 203 -

Depreciation 2,430 748 106 33

13,411,470 15,309,445 585,710 702,563

Profit Before Tax 767,725 599,583 39,084 20,042

Provision for Tax

Current Tax 306,693 230,657 13,416 10,068

Deferred Tax 1,721 1,690 75 74

308,414 232,347 13,491 10,142

Profit after Tax 459,311 367,236 25,593 9,900

Income Tax - earlier years 6,202 - 271 -

453,109 367,236 25,322 9,900

Add : Surplus brought forward from

previous year 367,236 - 9,900 -

Balance carried to Balance sheet 820,345 367,236 35,222 9,900

Earning per share- Basic and Diluted Rs. Rs.

(Refer note 2.11 of Schedule 11) 1.51 1.22 84.41 33.00

Nominal value of each equity share is US$ 1

Significant accounting policies and notes

forming part of accounts 11





119 text 119


119119


US $ US $ US $ US $ Rs'000 Rs'000 Rs'000 Rs'000

A. CASH FLOW FROM OPERATING

ACTIVITIES

Profit before Tax 767,725 599,583 39,084 20,042

Adjustment For :

Depreciation 2,430 748 106 33

Interest 4,637 203

Effect of foreign currency translation

[Refer Note 2.6 of Schedule 11] - - (5,437) 5,437

Exchange Difference [See Note 1

below] - - (32) -

7,067 748 (5,160) 5,470

Operating profit before working

capital changes 774,792 600,331 33,924 25,512

Adjustments for :

Trade and other receivables 721,096 (7,070,261) 30,873 (308,617)

Inventories 1,007,741 (4,061,713) 43,697 (177,294)

Trade and other payables (5,147,737) 12,406,649 (224,009) 541,550

(3,418,900) 1,274,675 (149,439) 55,639

Cash (used in) / from operations (2,644,108) 1,875,006 (115,515) 81,151

Direct Taxes paid (236,859) - (10,339) -

Net cash (used in) / from operating

activities (A) (2,880,967) 1,875,006 (125,854) 81,151

B. CASH FLOW FROM INVESTING

ACTIVITIES:

Purchase of fixed assets (6,888) (5,124) (301) (224)

Net cash (used in)/from investing

activities (B) (6,888) (5,124) (301) (224)

C. CASH FLOW FROM FINANCING

ACTIVITIES

Issue of shares - 300,000 - 13,788

Working Capital Loan 1,400,000 - 61,243 -

Net cash from financing activities (C) 1,400,000 300,000 61,243 13,788

Net increase in Cash and Cash

Equivalents (1,487,855) 2,169,882 (64,912) 94,715

Cash and Cash Equivalents at the

beginning of the year 2,169,882 - 94,715 -

Cash and Cash Equivalents at the

end of the year 682,027 2,169,882 29,803 94,715

For the year ended For the period

31.03.05 ended 31.03.04

For the year ended For the period

31.03.05 ended 31.03.04


SCHEDULES FORMING PART OF THE BALANCE SHEETAS AT 31ST MARCH, 2005

Notes:

2) Interest on bank deposits is considered as cash inflow from operating activities.3) Purchase of fixed assets are considered as a part of investing activities.4) The cash flow statement has been prepared under the �Indirect method� as set out in the Accounting Standard (AS-3)�Cash

flow Statement� issued by the Institute of Chartered Accountants of India.5) Previous year�s figures have been regrouped or reclassified, wherever necessary, to correspond with figures of current year.

CASH FLOW STATEMENT (CONTD.)FOR THE YEAR ENDED 31ST MARCH, 2005

1) Cash and Cash Equivalents include:

Rs.'000 Rs.'000

Cash and Bank balances (as stated in schedule 5) 29,835 94,715

Exchange Difference (unrealised gain) (32) -

Total 29,803 94,715

As at 31st March 2005 As at 31st March 2004





SCHEDULE "1" - SHARE CAPITAL

Authorised

10,000,000 Shares of US $1 /- each. 10,000,000 10,000,000 436,500 436,500

Issued, Subscribed and Paid up Capital

300,000 Shares of US $1/- each fully paid up. 300,000 300,000 13,788 13,788

(All the above shares are held by Lupin

Limited, the Holding Company)

Total 300,000 300,000 13,788 13,788

SCHEDULE "2" - RESERVES AND SURPLUS

Foreign Currency Translation Reserve - - - 5,437

[Refer Note 2.6 of Schedule'11']

Surplus in Profit and Loss account 820,345 367,236 35,222 9,900

Total 820,345 367,236 35,222 15,337

SCHEDULE "3" - SECURED LOANS

Short term Loan - from a bank 1,400,000 - 61,243 -

Add: Interest accrued and due 4,637 - 203 -

[Secured by irrevocable standby Letter of Credit from

the bankers of Lupin Limited, the Holding Company

located in India]

Total 1,404,637 - 61,446 -


US $ US $ Rs'000 Rs'000

12

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xt121

LUPIN

PH

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121

121


SCHEDULE 4: FIXED ASSETS


(In US $)

Description As at As at Upto For the On As at As at As at

1st April 2004 Additions Deductions 31st March 2005 31st March 2004 year deductions 31st March 2005 31st March 2005 31st March 2004

Computers 5,124 3,258 - 8,382 748 2,309 - 3,057 5,325 4,376

Furniture and Fittings - 3,630 - 3,630 - 121 - 121 3,509 -

Total 5,124 6,888 - 12,012 748 2,430 - 3,178 8,834 4,376

Previous Period - 5,124 - 5,124 - 748 - 748 4,376 -

Gross Block (at cost) Depreciation Net Block

( )Rs' 000

Description As at As at Upto For the On As at As at As at

1st April 2004 Additions Deductions 31st March 2005 31st March 2004 year deductions 31st March 2005 31st March 2005 31st March 2004

Computers 224 143 - 367 33 101 - 134 233 191

Furniture and Fittings - 158 - 158 - 5 - 5 153 -

Total 224 301 - 525 33 106 - 139 386 191

Previous Period - 224 - 224 - 33 - 33 191 -

Gross Block (at cost) Depreciation Net Block




US $ US $ Rs'000 Rs'000

SCHEDULE "5" - CURRENT ASSETS

Inventories

(At lower of cost or net realisable value)

Traded finished goods [ including goods in transit - Nil, 3,053,972 4,061,713 133,596 177,294

(Previous year US $ 1,637,411, Rs' 000 - 71,473)]

Total 3,053,972 4,061,713 133,596 177,294

Sundry Debtors (Unsecured, considered good)

Debts outstanding for a period exceeding six months - - - -

Other debts

- Due from Holding Company - Lupin Limited 3,314,108 2,658,792 144,976 116,056

- Others 2,479,824 4,411,469 108,480 192,561

Total 5,793,932 7,070,261 253,456 308,617

Cash and Bank Balances

Cash in hand 200 - 9 -

Bank Balances :

With others

- In Current account with Citibank N.A. 676,750 664,555 29,604 29,008

(Maximum amount outstanding during the year

US $2,823,229 (Rs'000 - 123,233 ) and

[Previous year US $ 664,555 (Rs'000 - 29,008)]

- In Deposit Account with Citibank N.A. 5,077 1,505,327 222 65,707

(Maximum amount outstanding during the year

US $1,505,327 (Rs'000 - 65,707) and

[Previous year US $ 1,505,327 (Rs'000 - 65,707)]

Total 682,027 2,169,882 29,835 94,715

Loans and Advances

(Unsecured considered good)

Advances recoverable in cash or in kind or for value

to be received - 147,199 - 6,439 -

Deposits 200 - 9 -

Advance payment of Income Tax 407,834 - 17,841 -

Total 555,233 - 24,289 -

SCHEDULE "6" - CURRENT LIABILITIES AND PROVISIONS

Current Liabilities

Sundry Creditors (Other than Small Scale Industries)

Due to Holding Company - Lupin Limited 3,131,849 10,963,155 137,003 478,542

Others 4,127,063 1,443,494 180,538 63,008

[including advances from customers US $ 2,000,000,

Rs'000 - 87,395, (Previous year - nil)]

Total 7,258,912 12,406,649 317,541 541,550

Provision -

- For Taxation 306,693 230,657 13,416 10,068

Total 306,693 230,657 13,416 10,068

123 text 123


123123

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2005

For the year

ended on

31.03.05

For the period

from 30.06.03 to

31.03.04

For the year

ended on

31.03.05

For the period

from 30.06.03 to

31.03.04

US $ US $ Rs'000 Rs'000

SCHEDULE "7" - OTHER INCOME

Service Charges [Refer Note 2.4 of Schedule '11'] 7,061,744 2,520,248 308,580 114,472

Liability no longer required written back 292,447 - 12,779 -

[Refer Note 2.5 of Schedule 11]

Interest on Deposits with Bank 77 5,327 3 242

Exchange difference on translation [Net] - - 5,199 -

[Refer Note 2.6 of Schedule 11]

Miscellaneous income 113,959 - 4,980 -

Total 7,468,227 2,525,575 331,541 114,714

SCHEDULE "8" - COST OF MATERIALS [TRADED GOODS]

Opening Stock 4,061,713 - 177,294 -

Add : Purchases 3,934,341 16,328,233 171,921 741,646

Less : Closing Stock 3,053,972 4,061,713 133,596 177,294

Total 4,942,082 12,266,520 215,619 564,352

Salaries Wages and Bonus 457,218 232,147 19,979 10,545

Staff welfare expenses 53,592 13,412 2,342 609

Total 510,810 245,559 22,321 11,154

SCHEDULE "9" - PAYMENTS TO AND PROVISIONS FOR

EMPLOYEES

SCHEDULE "10" - OPERATING AND OTHER EXPENSES

Traveling and Conveyance 118,154 39,818 5,163 1,809

Rent 80,937 58,789 3,537 2,670

Insurance 367,445 255,846 16,056 11,621

Legal and Professional Fees 244,897 230,023 10,701 10,448

Selling and Promotion expenses [ Net of Recoveries ] 6,903,055 2,004,674 301,646 91,054

[US $ 1,275,000, Rs'000 - 5,571,(Previous Year - nil]

Cash discount 50,099 90,030 2,189 4,089

Audit fees 7,112 7,728 311 351

Telephone and Postage 72,843 30,678 3,184 1,393

Miscellaneous expenses 106,969 79,032 4,674 3,589

(Includes office expenses, repairs and maintenance -

others etc.)

Total 7,951,511 2,796,618 347,461 127,024


SCHEDULE �11� : SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF ACCOUNTS

These financial statements are prepared solely for the purposes of consolidation by the holding company, Lupin Limited and to complywith the provisions of the Indian Companies Act, 1956.

1. Significant Accounting Policies:1.1 Basis of preparation:

The accompanying financial statements have been prepared under the historical cost convention in accordance with generallyaccepted accounting principles in India, and the applicable accounting standards issued by the Institute of Chartered Accountantsof India.

1.2 Use of Estimates:

The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires estimatesand assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statementsand the reported amounts of revenues and expenses during the reporting period. Differences between actual results andestimates are recognised in the period in which the results are known/materialise.

1.3 Translation to Indian Rupees:

The local accounts are maintained in local and functional currency, which is the US dollars (US $). The financial statementshave been translated to Indian Rupees on the following basis:i) All income and expenses are translated at the average rate of exchange prevailing during the year.ii) Monetary assets and liabilities are translated at the closing rate on the Balance Sheet date.iii) Non�monetary assets and liabilities and share capital is translated at historical rates.iv) The resulting exchange difference is accounted in �Exchange Difference account� and is charged/credited to the Profit

and Loss Account.1..4 Revenue Recognition:

i) Revenue from sale of goods is recognized when the significant risks and rewards in respect of ownership of products aretransferred by the Company.

ii) Revenue from product sales is stated net of returns and applicable trade discounts and allowances.1.5 Fixed Assets:

Fixed Assets are stated at cost of acquisition including taxes and duties. These are stated at historical cost less accumulateddepreciation.

1.6 Deprec ia t ion :

Depreciation on fixed assets is provided on Straight Line Method, over the useful life of the assets, as estimated by themanagement as under:

Computers - 3 yearsFurniture and fittings - 5 years

1.7 Inventories:

Inventories of traded finished goods are valued at cost or net realizable value whichever is less. Cost is determined onFirst-in-First-out basis. Cost comprises of purchase price and other related costs incurred in bringing the inventories totheir present location and condition.

1.8 Income Tax:

Income Taxes are accounted for in accordance with Accounting Standard 22 on �Accounting for Taxes on Income�, (AS 22)issued by The Institute of Chartered Accountants of India. Tax expense comprises both current tax and deferred tax. Current taxis measured at the amount expected to be paid or recovered from the tax authorities using applicable tax rates. Deferred taxassets and liabilities are recognized for future tax consequence attributable to timing difference between taxable income andaccounting income that are measured at relevant tax rates. At each Balance Sheet date the Company reassessesunrealized deferred tax assets, to the extent they become reasonably certain or virtually certain of realisation, as the casemay be.

1.9 Provisions, Contingent Liabilit ies and Contingent assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as aresult of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised butare disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

1.10 Borrowing Costs:

Borrowing cost attributable to the acquisition or construction of qualifying assets is capitalised as part of the cost of suchassets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use.All other borrowing costs are charged to revenue.

SCHEDULES FORMING PART OF THE BALANCE SHEET AND


125 text 125


125125

2 Notes to Accounts

2.1 Company Overview:

The Company was incorporated in United States of America under the Laws of the State of Virginia on 30th June, 2003.The company is a wholly- owned Subsidiary of Lupin Ltd. Its core business is to trade in pharmaceutical products andto render marketing services related thereto.

2.2 Contingent Liabilities:

Contingent liability on account of �Differential Price� adjustable in respect of goods supplied under the terms of the agreement(amount unascertained) (previous year - nil).

2.3 The Company mainly carries on trading activity in pharmaceutical products and earns income from such business andhence has only one reportable segment.

2.4 Service charges represents income accrued for reimbursement of marketing and other expenses by Lupin Limited, theholding company in terms of the agreement with Lupin Limited. In terms of the agreement, the Company is entitled forreimbursement of 100% of the marketing expenses and 50% of the common and administrative expenses, Further, theCompany is entitled to a mark-up of 6% on all the reimbursements except in respect of expenditure incurred forpayments to contract sales organisation and advertising agency.

2.5 The Company in the earlier year has accounted for a liability of Rs.�000 - 12,779 (US $ 292,447) to a party, which, inaccordance with the agreement has been written back in the current year (Schedule �7�). In the opinion of the Company suchliability would not result into outflow of cash at any point of time and is not probable, taking into consideration theunderstanding with the said party as reflected in the agreement. On the same basis, the Company does not consider anyoutflow of cash on this account and no liability is accrued, however, same is considered as contingent as so disclosed inNote no. 2.2 above.

2.6 Exchange difference on translation (Schedule 7) represents the net exchange difference considering the operations ofthe Company as integral to the parent company, in accordance with the accounting standard AS-11 �The Effects OfChanges in Foreign Exchange Rates (Revised)�, which in the previous year were not so considered.

2.7 There are no dues to Small Scale Industrial Undertakings which are outstanding at the Balance Sheet date. Thisinformation regarding Small Scale Industrial Undertakings has been determined on the basis of information availablewith the Company. This has been relied upon by the auditors.

2.8 Additional information pursuant to the provisions of paragraphs 3, 4 and 4D of part II of Schedule VI of the Indian CompaniesAct, 1956A) CIF Value of Imports in respect of :

B) Managerial Remuneration:



2004-2005 2003-2004 2004-2005 2003-2004

US $ US $ Rs.�000 Rs.�000

Salary and Allowances 246,000 116,180 10,749 5,277

Other Perquisites 20,770 4,910 908 221

Total 266,770 121,090 11,657 5,498

2004-2005 2003-2004 2004-2005 2003-2004

US $ US $ Rs.�000 Rs.�000

Purchase of Traded Goods 3,934,341 16,328,233 171,921 741,646

[Excludes US $ 330,048,

Rs'000 - 14,422, (Previous year - nil)

distributed as free samples and included in

�Selling and Promotion Expenses�]


Rs.�000 US $ Rs.�000 US $

184,472 4,221,585

(727,418) (16,015,023)

11,657 266,770

(5,498) (121,090)

308,580 7,061,744

(114,472) (2,520,248)

144,976 3,314,108

(116,056) (2,658,792)

137,003 3,131,849

(478,542) (10,963,155)

Key Management PersonnelHolding CompanySr. No. Description and Nature of Transaction

1 Purchase of Traded goods [including goods

distributed as free samples but excluding

freight, insurance etc.]

- -

2 Managerial Remuneration - -

3 Service Charges Income - -

4 Debtors Balance as at 31st March - -

5 Creditors Balance as at 31st March - -

As at 31st March

2005

As at 31st March

2004

As at 31st March

2005

As at 31st March

2004

US $ US $ Rs.�000 Rs.�000

Deferred Tax Liability:

Depreciation 3411 1690 149 74

Deferred Tax Liability 3411 1690 149 74

Particulars of timing difference

2.9 Related Parties Disclosure:

a ) Name of Related parties and description of relationship:i) Company whose control exists - Lupin Limited (Holding Company)ii) Key Management Personnel - Mrs. Vinita Gupta (Managing Director)

b) Related Party Transactions:

Notes1. Related Party relationship is as identified by the Company and relied upon by the Auditors.2. Previous period figures are given in the brackets.

2.10 The break up of deferred tax liability is as under:



2.11 Earnings per share is calculated as follows:

Particulars For the year

ended 31st

March 2005 in

US $

For the period

ended 31st March

2004 in

US $

For the year

ended 31st

March 2005 in

Rs� 000

For the period

ended 31st March

2004 in

Rs� 000

Net profit after tax 459,311 367,236 25,593 9,900

Income Tax- Earlier year 6,202 - 271 -

Profit attributable to Equity Shareholders 453,109 367,236 25,322 9,900

Weighted average number of Equity Shares 300000 300000 300000 300000

Basic and Diluted earnings per share 1.51 1.22 Rs.84.41 Rs.33.00

127 text 127


127127

2.12 Balance Sheet Abstract and Company�s General Business Profile



I. Registration Details

Registration No. * State Code *

Balance Sheet Date 3 1 0 3 0 5

Date Month Year

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

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

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

Total Liabilities Total Assets

4 4 1 5 6 2 4 4 1 5 6 2

Sources of Funds

Paid-up Capital Reserves and Surplus

1 3 7 8 8 3 5 2 2 2

Secured Loans Unsecured Loans

6 1 4 4 6 N I L

Deferred Tax Liability (net)

1 4 9


Net Fixed Assets Investments

3 8 6 N I L

Net Current Assets Misc. Expenditure

1 1 0 2 1 9 N I L

Accumulated Losses

N I L

*The company is incorporated in Virginia, United States of America. There is no registration number/state code.


2.12 Balance Sheet Abstract and Company�s General Business Profile (contd.)

2.13 The information contained in these financial statements for the year ended 31st March 2005 and the period ended 31st March2004, disclosed in USD is extracted from the books of accounts locally maintained and converted into Indian Rupees asdisclosed in �Translation to Indian Rupees�, as stated in 1.3 above. Such disclosures in USD are only for additional information.

2.14 Previous year�s figures have been regrouped or reclassified, wherever necessary, to correspond with figures of current year.

2.15 The previous year figures include results of operations for 9 months, whereas these for the current year include results ofsuch operations for entire 12 months and hence are strictly not comparable with those of the previous years�.



Signatures to schedules 1 to 11

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

Turnover Total Expenditure

2 9 3 2 5 3 5 8 5 7 1 0

+ - Profit/Loss before tax + - Profit/Loss after tax

3 9 0 8 4 3 2 5 5 9 3

(Please tick Appropriate box + for Profit, - for Loss)

Earning per Share in Rs.

(per Share of US $ 1 each) Dividend rate %

(Refer note no. 2.11 above)

8 4 . 4 1 -

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

Item Code No. (ITC Code) 3 0 0 4 . 2 0 . 0 0 . 6 0

Product Description CEFUROXIME AXETIL

Item Code No. (ITC Code) 3 0 0 4 . 2 0 . 0 0 . 6 0

Product Description CEFIXIME

Item Code No. (ITC Code) N I L

Product Description NIL

As per our attached report of even dateFor Deloitte Haskins & Sells For Lupin Pharmaceuticals, Inc.





3

129 text 129

LUPIN CHEMICALS (THAILAND) LIMITED

129129129

DIRECTORS� REPORT

To the Members,

Your Directors have pleasure in presenting their report on the operations of the Company for the year ended

March 31, 2005.

Financial Results

Performance ReviewNotwithstanding difficult market conditions, the performance of your Company for the year ended March 31, 2005 was satisfactory.

During the year your Company continued to utilise its full capacities of Erythromycin plant. Replacing �Rifampicin� with the new product

D & L Mandelic Acid was the progressive migration. However, this change did not yield the anticipated results. The premises that higher

sales volume of D & L Mandelic acid would off-set the revenue loss due to withdrawal of Rifampicin did not materialize due to

competition and sluggish market situation. This resulted in declining revenues from THB 1012.8 mn. (INR 1127.3 mn.) to 846.3 mn. (INR

944.1 mn.). Increasing level of competition and restrictive regulations will pose more challenges in the future.

The prolonged trend of high competition from China and India has affected your Company�s profitability, which shrunk the contribution

of each product and resulted in lower profit. Net profit after tax for the year was THB 8.5 mn. (INR 9.5 mn.) as against 14.7 mn.

(INR16.4mn.) last year.

DividendIn order to conserve resources, your Directors do not recommend dividend.

Directors� Responsibility StatementThe Directors confirm that while preparing the annual accounts, applicable accounting standards had been followed along with proper

explanation relating to material departures. They further confirm that they had selected such accounting policies and applied them

consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of

affairs of the Company at the end of the financial year and of the profit of the Company for the said year. They also confirm that the

annual accounts have been prepared on a going concern basis and that proper and sufficient care has been taken for maintenance

of adequate accounting records for safeguarding the assets of your Company and for preventing and detecting fraud and other

irregularities.

DirectorsDuring the year Mr. Nilesh D. Gupta and Mr. Shirish Sharma were appointed as directors of the Company in place of Ms. Vinita D. Gupta

and Mr. Nikhil Chandra respectively. The Board places on record its sincere appreciation of the valuable guidance and support

extended by them during their tenure.

EmployeesThe employee-employer relations have been cordial during the year. Your Company strives continuously to create a climate to inspire

its employees towards better performance. The Board wishes to express its sincere appreciation to all the employees for their valuable

service and support extended during the year.

Auditors

M/s. KPMG Phoomchai Audit Ltd. retire at the conclusion of the forthcoming Annual General Meeting and are eligible for

re-appointment.

AcknowledgementsThe Board takes this opportunity to express its sincere appreciation for the excellent support and co-operation received from bankers,

suppliers, customers and other business associates.


Place : Bangkok Ramesh Chandra Saboo

Date : April 7, 2005 Managing Director

Year Ended Year Ended Year Ended Year Ended

March 31, 2005 March 31, 2004 March 31, 2005 March 31, 2004

Income from operations 846.3 1012.8 944.1 1127.3

Profit before Interest, Depreciation and Tax 24.0 35.7 26.8 39.7

Interest 8.1 9.7 9.0 10.8

Depreciation and Amortization 3.5 4.4 3.9 4.9

Profit before Tax 12.4 21.6 13.9 24.0

Provision for Tax 3.9 6.9 4.4 7.6

Profit after Tax 8.5 14.7 9.5 16.4

Balance B/F (65.2) (79.9) (72.7) (89.1)

Balance carried to Balance Sheet (56.7) (65.2) (63.2) (72.7)

(Thai Baht in Million) (Rs. in Million)


1. We have audited the attached financial statements (all expressed in Thai Baht), including Balance Sheets of

LUPIN CHEMICALS ( THAILAND ) LIMITED (the Company) as at 31st March, 2005 and 2004, the Profit and Loss

Accounts and also the Cash Flow Statements of the Company for the years ended on that date, annexed thereto.

These financial statements are the responsibility of the Company�s management. Our responsibility is to express

an opinion on these financial statements based on our audits.

2. We conducted our audits in accordance with generally accepted auditing standards. Those standards require

that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are

free of material misstatement. An audit includes examining, on test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing the accounting principles used and

significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that our audits provide a reasonable basis for our opinion.

3. We report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief

were necessary for the purposes of our audit;

b) In our opinion, proper books of account have been kept by the Company so far as appears from our

examination of those books;

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in

agreement with the books of account;

d) In our opinion, the financial statements (all expressed in Thai Baht), including the Balance Sheets, Profit

and Loss Accounts and Cash Flow Statements dealt with by this report comply with generally accepted

accounting principles in Thailand and its Parent Company�s Accounting Guidance.

e) In our opinion and to the best of our information and according to the explanations given to us, the said

financial statements together with the notes thereon and attached thereto give a true and fair view in

conformity with generally accepted accounting principles in Thailand.

i) In the case of the Balance Sheets, of the state of affairs of the Company as at 31st March, 2005 and2004;

ii) In the case of the Profit and Loss Accounts, of the profit for the years ended on that date; and

iii) In the case of the Cash Flow Statements, of the cash flows for the years ended on that date.

f) Our examinations also comprehended the translation of Thai Baht amounts into Indian Rupee amounts

and, in our opinion, such translation has been made in conformity with the basis stated in Schedule 14b.

Such Indian Rupee amounts are presented solely for the convenience of readers in India.

g) This report is intended solely for consolidation with Lupin Limited�s accounts and should not be used for

other purposes.

KPMG Phoomchai Audit Ltd.

Place: Bangkok

Date: April 7, 2005

AUDITORS� REPORTTo the Members of


131 text 131


131131131

BALANCE SHEETSAS AT 31ST MARCH, 2005 AND 2004AMOUNT IN THAI BAHT AND INDIAN RUPEE

The Schedules referred to above form an integral part of the Balance Sheets.

Schedules Thai Baht Indian Rupee Thai Baht Indian Rupee

I. SOURCES OF FUNDS

Shareholders' funds

Share Capital 1 70,000,000.00 78,136,100.00 70,000,000.00 78,050,000.00

Reserves and Surplus 2 (42,693,430.27) (47,655,687.67) (51,189,300.95) (57,076,070.56)

27,306,569.73 30,480,412.33 18,810,699.05 20,973,929.44

Loan Funds

Secured Loans 3 93,393,449.86 104,248,570.54 158,860,152.42 177,129,069.96

TOTAL 120,700,019.59 134,728,982.87 177,670,851.47 198,102,999.40


Fixed Assets 4

Gross Block 176,770,467.92 197,316,499.41 175,924,309.11 196,155,604.66

Less: Depreciation 141,887,495.45 158,379,079.05 141,468,448.04 157,737,319.56

Net Block 34,882,972.47 38,937,420.36 34,455,861.07 38,418,285.10


Inventories 5 106,681,321.94 119,080,891.99 119,166,744.60 132,870,920.21

Sundry Debtors 6 220,574,742.50 246,212,144.82 263,537,114.24 293,843,882.38

Cash and Bank Balances 7 52,576,705.09 58,687,695.52 50,134,979.41 55,900,502.04

Loans and Advances 8 2,672,456.58 2,983,076.21 3,730,306.25 4,159,291.46

382,505,226.11 426,963,808.54 436,569,144.50 486,774,596.09

Less: Current Liabilities and Provision 9

Current Liabilities 294,416,570.15 328,636,608.10 288,265,625.88 321,416,172.86

Provision for Corporate Tax - net 2,282,070.90 2,547,316.00 5,106,375.28 5,693,608.40

296,698,641.05 331,183,924.10 293,372,001.16 327,109,781.26

NET CURRENT ASSETS 85,806,585.06 95,779,884.44 143,197,143.34 159,664,814.83

MISCELLANEOUS EXPENSES 10,462.06 11,678.07 17,847.06 19,899.47

TOTAL 120,700,019.59 134,728,982.87 177,670,851.47 198,102,999.40

ACCOUNTING POLICIES 14

NOTES TO ACCOUNTS 15

Expressed InExpressed In

2004 - 2005 2003 - 2004


PROFIT AND LOSS ACCOUNTSFOR EACH OF THE YEARS ENDED 31ST MARCH, 2005 AND 2004AMOUNT IN THAI BAHT AND INDIAN RUPEE

The Schedules referred to above form an integral part of the Profit and Loss Accounts.

Schedules Thai Baht Indian Rupee Thai Baht Indian Rupee

INCOME

Sales (Net) 831,517,924.30 927,658,026.71 980,956,999.49 1,091,780,616.51

Other Income 10 14,745,714.38 16,450,613.88 31,871,427.29 35,472,101.78

846,263,638.68 944,108,640.59 1,012,828,426.78 1,127,252,718.29

EXPENSES

Cost of Materials 11 716,816,797.11 799,695,155.19 869,815,207.77 968,082,580.87

Personnel Expenses 12 38,882,156.34 43,377,711.26 37,059,927.70 41,246,773.03

Other Expenses 13 66,565,544.73 74,261,853.01 70,285,958.98 78,226,515.19

Interest and Finance Charges 8,107,192.66 9,044,546.28 9,665,678.42 10,757,658.44

Depreciation 3,480,754.64 3,883,199.49 4,368,244.12 4,861,746.50

Amortization 7,385.00 8,238.85 7,385.00 8,219.32

833,859,830.48 930,270,704.08 991,202,401.99 1,103,183,493.35

Profit before Tax 12,403,808.20 13,837,936.51 21,626,024.79 24,069,224.94

Provision for Corporate Tax 3,907,937.52 4,359,773.26 6,861,909.39 7,637,133.60

Net Profit 8,495,870.68 9,478,163.25 14,764,115.40 16,432,091.34

Add: Balance brought forward from previous years (65,189,300.95) (72,715,967.89) (79,953,416.35) (89,148,059.23)

Balance Carried to Balance Sheet (56,693,430.27) (63,237,804.64) (65,189,300.95) (72,715,967.89)

Basic Earnings Per Share 12.14 13.54 21.09 23.47

ACCOUNTING POLICIES 14

NOTES TO ACCOUNTS 15

Expressed In Expressed In

2003 - 20042004 - 2005

133 text 133


133133133

STATEMENT OF CASH FLOWSFOR EACH OF THE YEARS ENDED 31ST MARCH, 2005 AND 2004

AMOUNT IN THAI BAHT AND INDIAN RUPEE

Notes :

1. The above Cash Flow statement has been prepared under the �Indirect Method�.

2. The previous year�s figures have been regrouped wherever necessary.

3. Cash and cash equivalents comprise bank balances and margin / deposit accounts.

Thai Baht Indian Rupee Thai Baht Indian Rupee

CASH FLOWS FROM OPERATING ACTIVITIES :

Net Profit before Tax 12,403,808.20 13,837,936.51 21,626,024.79 24,069,224.94

Adjustment for :

Depreciation 3,480,754.64 3,883,199.49 4,368,244.12 4,861,746.50

Profit on Sales of Fixed Assets - - (3,563.57) (3,966.16)

Interest and Finance Charges 8,107,192.66 9,044,546.28 9,665,678.42 10,757,658.44

Miscellaneous Expenditure 7,385.00 8,238.85 7,385.00 8,219.32

Operating Profit before Working Capital Changes 23,999,140.50 26,773,921.13 35,663,768.76 39,692,883.04

Adjustment for :

Trade and Other Debtors 44,020,221.41 48,810,058.61 (1,839,187.64) (2,050,694.22)

Inventories 12,485,422.66 13,790,028.24 46,133,821.47 51,439,210.94

Current Liabilities 6,466,139.95 7,571,228.43 (92,070,887.15) (102,659,039.17)

Cash Generated from Operation 86,970,924.52 96,945,236.41 (12,112,484.56) (13,577,639.41)

Direct Tax Paid (6,732,241.90) (7,506,065.66) (2,370,833.01) (2,638,677.87)

Interest Paid (net) (8,422,388.34) (9,395,339.47) (9,486,638.47) (10,558,391.45)

Net Cash Flow from Operating Activities 71,816,294.28 80,043,831.28 (23,969,956.04) (26,774,708.73)

CASH FLOWS FROM INVESTING ACTIVITIES :

Purchases of Fixed Assets - net (3,972,689.20) (4,434,434.87) (2,779,355.09) (3,098,980.93)

Written off of Fixed Assets 64,823.16 72,277.82 206,801.01 230,583.13

Net Cash Flow from Investing Activities (3,907,866.04) (4,362,157.05) (2,572,554.08) (2,868,397.80)

CASH FLOWS FROM FINANCING ACTIVITIES :

Increase (Decrease) in Secured Loans (65,466,702.56) (72,880,499.42) 56,108,163.51 62,560,602.31

Decrease in Unsecured Loan - - (20,375,000.00) (22,718,125.00)

Net Cash Flow from Financing Activities (65,466,702.56) (72,880,499.42) 35,733,163.51 39,842,477.31

Add : Effect of Foreign Currency Translation - (13,981.33) - 61,168.75

2,441,725.68 2,787,193.48 9,190,653.39 10,260,539.53

50,134,979.41 55,900,502.04 40,944,326.02 45,639,962.51

52,576,705.09 58,687,695.52 50,134,979.41 55,900,502.04CASH AND CASH EQUIVALENTS AT THE END OF YEARS


2004 - 2005 2003 - 2004

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEARS


SCHEDULES FORMING PART OF THE ACCOUNTSFOR EACH OF THE YEARS ENDED 31ST MARCH, 2005 AND 2004AMOUNT IN THAI BAHT AND INDIAN RUPEE

Note: Working Capital Loans from Banks are secured against fixed deposits together with the mortgage of a portion of the Company�s

land, machinery and equipment.


SCHEDULE 1 - SHARE CAPITAL

Authorised

700,000 shares of Baht 100/- each 70,000,000.00 78,136,100.00 70,000,000.00 78,050,000.00


700,000 shares of Baht 100/- each fully paid up 70,000,000.00 78,136,100.00 70,000,000.00 78,050,000.00

70,000,000.00 78,136,100.00 70,000,000.00 78,050,000.00

SCHEDULE 2 - RESERVES AND SURPLUS

Revaluation Reserve 14,000,000.00 15,627,220.00 14,000,000.00 15,610,000.00

Foreign Currency Translation Reserve - (45,103.03) - 29,897.33

Profit and Loss Account (56,693,430.27) (63,237,804.64) (65,189,300.95) (72,715,967.89)

(42,693,430.27) (47,655,687.67) (51,189,300.95) (57,076,070.56)

SCHEDULE 3 - SECURED LOANS

Working Capital Loans from Banks 93,393,449.86 104,248,570.54 158,860,152.42 177,129,069.96

2004 - 2005 2003 - 2004


13

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135

135

SCHEDULES FORMING PART OF THE ACCOUNTSFOR EACH OF THE YEARS ENDED 31ST MARCH, 2005 AND 2004AMOUNT IN THAI BAHT





2004 2005 2004 2005 2005 2004

Land

- At Cost 5,351,701.39 - - 5,351,701.39 - - - - 5,351,701.39 5,351,701.39

- At Appraised Value ( net

of impairment ) 14,000,000.00 - - 14,000,000.00 - - - - 14,000,000.00 14,000,000.00

Total Land 19,351,701.39 - - 19,351,701.39 - - - - 19,351,701.39 19,351,701.39

Buildings 26,618,968.07 - - 26,618,968.07 19,081,919.40 1,330,948.42 - 20,412,867.82 6,206,100.25 7,537,048.67

Machinery and Equipment

- At Cost 96,031,416.87 4,845,017.80 1,330,000.00 99,546,434.67 90,398,593.63 1,401,027.35 - 91,799,620.98 7,746,813.69 5,632,823.24

- At Appraised Value 25,000,000.00 - - 25,000,000.00 25,000,000.00 - - 25,000,000.00 - -

Total Machinery and

Equipment 121,031,416.87 4,845,017.80 1,330,000.00 124,546,434.67 115,398,593.63 1,401,027.35 - 116,799,620.98 7,746,813.69 5,632,823.24

Furniture , Fixtures and

Equipment 5,159,862.78 457,671.40 3,126,530.39 2,491,003.79 4,080,657.82 524,417.38 3,061,707.23 1,543,367.97 947,635.82 1,079,204.96

Vehicles 3,762,360.00 - - 3,762,360.00 2,907,277.19 224,361.49 - 3,131,638.68 630,721.32 855,082.81

Total 175,924,309.11 5,302,689.20 4,456,530.39 176,770,467.92 141,468,448.04 3,480,754.64 3,061,707.23 141,887,495.45 34,882,972.47 34,455,861.07

Gross Block Depreciation Net Block

136

Annual R

eport 2

004-0

5

SCHEDULES FORMING PART OF THE ACCOUNTSFOR EACH OF THE YEARS ENDED 31ST MARCH, 2005 AND 2004AMOUNT IN INDIAN RUPEE





2004 2005 2004 2005 2005 2004

Land

- At Cost 5,967,147.05 - - 5,973,729.64 - - - - 5,973,729.64 5,967,147.05

- At Appraised Value ( net of

impairment ) 15,610,000.00 - - 15,627,220.00 - - - - 15,627,220.00 15,610,000.00

Total Land 21,577,147.05 - - 21,600,949.64 - - - - 21,600,949.64 21,577,147.05

Buildings 29,680,149.40 - - 29,712,890.73 21,276,340.13 1,485,644.55 - 22,785,455.45 6,927,435.28 8,403,809.27

Machinery and Equipment

- At Cost 107,075,029.81 5,408,154.22 1,482,950.00 111,116,716.77 100,794,431.90 1,563,868.76 - 102,469,490.93 8,647,225.85 6,280,597.91

- At Appraised Value 27,875,000.00 - - 27,905,750.00 27,875,000.00 - - 27,905,750.00 - -

Total Machinery and

Equipment 134,950,029.81 5,408,154.22 1,482,950.00 139,022,466.77 128,669,431.90 1,563,868.76 - 130,375,240.93 8,647,225.85 6,280,597.91

Furniture , Fixtures and

Equipment 5,753,247.00 510,866.55 3,486,081.38 2,780,533.16 4,549,933.46 585,370.41 3,413,803.55 1,722,753.63 1,057,779.53 1,203,313.54

Vehicles 4,195,031.40 - - 4,199,659.10 3,241,614.07 250,439.03 - 3,495,629.04 704,030.06 953,417.33

Total 196,155,604.66 5,919,020.77 4,969,031.38 197,316,499.41 157,737,319.56 3,885,322.75 3,413,803.55 158,379,079.05 38,937,420.36 38,418,285.10

Gross Block Depreciation Net Block

137 text 137


137137137



SCHEDULE 5 - INVENTORIES

Finished Goods/ Traded Goods 53,794,609.85 60,047,157.35 62,845,407.97 70,072,629.89

Raw and Packing Materials 27,157,435.19 30,313,943.88 6,856,602.60 7,645,111.90

Work-in-Process 5,560,458.77 6,206,750.89 6,436,548.17 7,176,751.21

Stores, Spares and Fuel 1,011,382.03 1,128,934.96 1,519,118.16 1,693,816.75

Materials in Transit 19,157,436.10 21,384,104.91 41,509,067.70 46,282,610.46

106,681,321.94 119,080,891.99 119,166,744.60 132,870,920.21

SCHEDULE 6 - SUNDRY DEBTORS

Debts outstanding for a period exceeding six months 8,769,869.03 9,789,190.91 10,559,830.00 11,774,210.45

Other Debts outstanding considered good 211,804,873.47 236,422,953.91 252,977,284.24 282,069,671.93

220,574,742.50 246,212,144.82 263,537,114.24 293,843,882.38

SCHEDULE 7 - CASH AND BANK BALANCES

Cash on hand 216,572.18 241,744.36 367,160.55 409,384.01

Bank Balances - In Current Accounts 2,781,451.01 3,104,739.06 312,417.31 348,345.30

Bank Balances - In Saving Accounts 272,907.67 304,627.73 4,993,588.12 5,567,850.75

Margin/Deposit Accounts 49,305,774.23 55,036,584.37 44,461,813.43 49,574,921.98

52,576,705.09 58,687,695.52 50,134,979.41 55,900,502.04

SCHEDULE 8 - LOANS AND ADVANCES

2,371,616.17 2,647,269.12 1,977,417.33 2,204,820.32

Balances with Revenue Department 300,840.41 335,807.09 1,752,888.92 1,954,471.14

2,672,456.58 2,983,076.21 3,730,306.25 4,159,291.46

SCHEDULE 9 - CURRENT LIABILITIES AND PROVISION

Current Liabilities

Sundry Creditors and Other Liabilities 294,162,412.41 328,352,909.61 288,036,893.44 321,161,136.22

Social Security, Withholding Tax and Provident Fund 254,157.74 283,698.49 228,732.44 255,036.64

294,416,570.15 328,636,608.10 288,265,625.88 321,416,172.86

Provision

Provision for Corporate Income Tax - net 2,282,070.90 2,547,316.00 5,106,375.28 5,693,608.40

296,698,641.05 331,183,924.10 293,372,001.16 327,109,781.26

2004 - 2005 2003 - 2004

( At lower of cost and net realizable value, as taken, value

and certified by the Management )

Advances recoverable in cash or in kind or for value to be

received

Expressed InExpressed In


SCHEDULE 11 - COST OF MATERIALS

Raw and Packing Materials Consumed 443,100,432.03 494,331,703.98 430,882,763.90 479,561,744.15

Purchase of Finished Goods / Traded Goods 263,789,477.56 294,288,816.96 431,642,548.61 480,407,365.54

9,926,887.52 11,074,634.25 7,289,895.26 8,113,471.18

716,816,797.11 799,695,155.19 869,815,207.77 968,082,580.87

Decrease in Stock of Finished / Traded Goods and

Work-in-Process


SCHEDULE 10 - OTHER INCOME

Interest on Deposits with Banks 462,126.78 515,557.88 488,814.64 544,038.47

Exchange Rate Diffference (Net) 6,752,891.37 7,533,660.67 22,206,978.82 24,715,812.25

Miscellaneous Income 7,530,696.23 8,401,395.33 9,175,633.83 10,212,251.06

14,745,714.38 16,450,613.88 31,871,427.29 35,472,101.78


2004 - 2005 2003 - 2004

SCHEDULE 13 - OTHER EXPENSES

Consumable Stores 4,264,718.30 4,757,805.03 4,863,491.54 5,412,944.50


- Plant and Machinery 1,280,365.03 1,428,400.83 1,281,992.46 1,426,825.56

- Others 113,096.11 126,172.28 69,886.50 77,781.93

Rent 1,343,589.90 1,498,935.76 1,616,607.62 1,799,243.86

Rates and Taxes 96,000.00 107,099.52 192,000.00 213,691.20

Insurance 1,548,415.07 1,727,442.82 1,435,689.03 1,597,886.00

Power and Fuel 10,970,225.64 12,238,603.13 9,086,379.59 10,112,913.32

Selling and Promotion Expenses 23,532,123.53 26,252,907.65 28,237,880.52 31,428,055.07

Freight and Forwarding 15,322,174.87 17,093,724.73 13,436,403.52 14,954,381.21

Postage and Telephones 1,918,232.87 2,140,018.95 2,271,113.82 2,527,692.90

Travelling and Conveyance 3,172,522.69 3,539,329.76 3,787,170.76 4,215,026.38

Vehicle Maintenance 670,825.03 748,385.82 781,740.54 870,057.68

Legal & Professional Charges 684,169.00 763,272.62 896,542.81 997,829.73

Miscellaneous Expenses 1,649,086.69 1,839,754.11 2,329,060.27 2,592,185.85

66,565,544.73 74,261,853.01 70,285,958.98 78,226,515.19


SCHEDULE 12 - PERSONNEL EXPENSES

Salaries, Wages and Bonus 35,112,393.00 39,172,087.88 33,887,803.00 37,716,277.54

Contribution to Provident Funds 1,593,476.00 1,777,713.70 1,401,569.00 1,559,911.26

Welfare Expenses 2,176,287.34 2,427,909.68 1,770,555.70 1,970,584.23

38,882,156.34 43,377,711.26 37,059,927.70 41,246,773.03

139 text 139


139139139

a) AccountsThe financial statements are presented in Thai Baht and Indian Rupee and in conformity with generally accepted

accounting standards in Thailand except for certain accounting standards covering: Impairment of Assets, Related

Party Disclosure and Financial Instruments: Disclosure and Presentation, that are exempted in accordance with the

announcement of The Institute of Certified Accountants and Auditors of Thailand No. 004/2544-2546 dated December

21, 2001 �Accounting Standards with Exemption of Enforcement on Non-Public Companies�. Accordingly, the financial

statements are intended solely to present the financial position, results of operations and cash flows in accordance

with accounting principles and practices generally accepted in Thailand.

The accounts are prepared as per historical cost convention and on accrual basis unless otherwise specified herein

after.

b) Foreign Currency TranslationThe accompanying financial statements for the year ended 31st March, 2005 and 2004 have been prepared based

on the audited financial statements (expressed in Thai Baht) and have been translated into Indian Rupee by the

following basis;

i) Assets and Liabilities are translated at the exchange rate prevailing as at the Balance Sheet date on 31st

March, 2005(1 THB = 1.11623 INR) and on 31st March, 2004(1 THB = 1.115 INR).

ii) Income and Expenses are translated at the average exchange rate prevailing during the years 2005 (1 THB

= 1.11562 INR) and 2004(1 THB = 1.112975 INR).

iii) The Difference arising on account of period end translation is credited or debited to Foreign Currency

Translation Reserve.

c) Cash and Cash EquivalentsCash and cash equivalents comprise cash balances and call deposit. Bank overdrafts that are repayable on demand

are a component of financing activities for the purpose of the statement of cash flows.

d) Fixed Assets

Owned assets

The Company values its fixed assets as follows:

SCHEDULES FORMING PART OF ACCOUNTSAS AT 31ST MARCH, 2005 AND 2004(AMOUNT IN THAI BAHT AND INDIAN RUPEE)

SCHEDULE 14 - ACCOUNTING POLICIES

Subsequent expenditure

Subsequent expenditure relating to an item of property, plant and equipment is added to the carrying amount of the

asset when it is probable that the future economic benefits in excess of the originally assessed standard of performance

of the existing asset will flow to the Company. All other subsequent expenditure is recognized as an expense in the

period in which it is incurred.

i) Land -at appraised value determined by independent appraiser

ii) Plant and machinery

• as at 31st December 1991 -at appraised value determined by independent appraiser less

accumulated depreciation

• acquired after 31st December 1991 -at cost less accumulated depreciation

iii) Other items -at cost less accumulated depreciation


Number of

Building and improvements 20

Plant and machinery 10

Furnitures, fixtures and office equipments 5

Vehicles 5

SCHEDULE 14 - ACCOUNTING POLICIES (Continued)

Depreciation

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each

part of an item of property, plant and equipment. The estimated useful lives are as follows:

Depreciation charges on the revaluation increment in plant and machinery are treated as a deduction thereto.

e ) Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost of finished goods (production) and material in process are calculated using the average cost method and

comprises all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their

present location and condition. Cost of finished goods (trading), raw materials, supplies and other are calculated

using the first in first out method.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs

necessary to make the sale.

An allowance is made for all deteriorated, damaged, obsolete and slow-moving inventories.

f) Sundry Debtors

Sundry debtors including balances with related parties are stated at their invoice value less impairment losses.

Any impairment loss on doubtful receivables is assessed primarily on analysis of payment histories and future

expectations of customer payments. Allowances made are based on historical write-off patterns and the aging of

debtors. Bad debts are written off when incurred.

g) Foreign Currency Transactions

Transactions in foreign currencies are translated to Baht at the foreign exchange rates ruling at the date of the

transactions.

Monetary assets and liabilities denominated in foreign currencies at the Balance Sheet date are translated to

Thai Baht at the foreign exchange rates ruling at that date (except transactions covered by the foreign currency

exchange forward position which are translated by the forward exchange rate). Foreign exchange differences

arising on translation are recognized in the income statement.

Number of years


141 text 141


141141141

SCHEDULE 14 - ACCOUNTING POLICIES (Continued)

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are

translated using the foreign exchange rates ruling at the date of the transactions.

h) Revenue Recognition

Revenue excludes value added taxes or other sales taxes and is arrived at after deduction of trade discounts.

Sale of goods

Revenue from the sale of goods is recognized in the income statement when the significant risks and rewards of

ownership have been transferred to the buyer. No revenue is recognized if there are significant uncertainties regarding

recovery of the consideration due, associated costs, the probable return of goods or the continuing management

involvement with the goods.

Interest income

Interest income is recognized in the income statement as it accrues.

i) Expense Recognition

Operating leases

Payments made under operating leases are recognized in the income statement on a straight line basis over the

term of the lease. Lease incentives received are recognized in the income statement as an integral part of the total

lease payments made. Contingent rentals are charged to the income statement in the accounting period in which

they are incurred.

Interest and other expenses

Interest expense and similar costs are charged to the income statement in the period in which they are incurred,

except to the extent that they are capitalized as being directly attributable to the acquisition, construction or production

of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale.

j) Income TaxIncome tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially

enacted at the Balance Sheet date, and any adjustment to tax payable in respect of previous years.

k) Basic Earnings per ShareBasic earnings per share is determined by dividing the net profit by the weighted average number of shares

outstanding during the year (700,000 shares).

1. General

Lupin Chemicals (Thailand) Limited was incorporated as a limited company in Thailand on January 6, 1987 to

engage in manufacturing of pharmaceutical chemicals for medicine. The number of employees of Company as at

March 31, 2005 and 2004 were 130 and 132, respectively. The employee expenses for the year ended March 31, 2005,

and 2004 amounted to approximately Baht 38.9 million and Baht 37.1 million (Rupees 43.4 million and

Rupees 41.2 million), respectively. The registered office of the Company is located at 71 G.P. House, Sap Road,

Siphaya, Bangrak, Bangkok. The factory is located at 309 Soi 6 Bangpoo Industrial Estate, Sukhumvit Road,

Samutprakarn.

SCHEDULE 15 - NOTE TO ACCOUNTS



2. Contingent Liabilities

As at March 31, 2005 the Company :

a) Was contingently liable for bank guarantees issued by local financial institutions in favour of government

agencies totalling approximately Baht 1.12 million (Rupee 1.25 million).

b) Had unused letters of credit totalling approximately Baht 0.21 million (Rupee 0.23 million).

3. The Company operates solely in the pharmaceuticals segment and hence no separate

disclosure for segment wise information is required.

4. Consumption of raw materials and packing materials

SCHEDULE 15 - NOTE TO ACCOUNTS


Value Value

Item Unit Quantity Rs. �000 Quantity Rs. �000

Raw material Metric Ton 1,143 488,298 861 473,790

Packing Materials 6,034 5,772

494,332 479,562

% %

Imported 94.9% 469,021 96.5% 462,953

Indigenous 5.1% 25,311 3.5% 16,609

100.0% 494,332 100.0% 479,562

Expressed In Indian Rupee

2004 - 2005 2003 - 2004

Value Value

Item Unit Quantity THB �000 Quantity THB �000

Raw material Metric Ton 1,143 437,691 861 425,697

Packing Materials 5,409 5,186

443,100 430,883

% %

Imported 94.9% 420,412 96.5% 415,960

Indigenous 5.1% 22,688 3.5% 14,923

100.0% 443,100 100.0% 430,883

Expressed In Thai Baht

2004 - 2005 2003 � 2004

143 text 143


143143143

6. a) CIF Value of Imports:

b) Expenditure in foreign currencies on account of:

Value Value

% Rs. �000 Quantity Rs. �000

Indigenous 100% 4,758 100% 5,413

Expressed In Indian Rupee

2004 � 2005 2003 - 2004

SCHEDULE 15 - NOTE TO ACCOUNTS (Continued)

5. Consumption of Stores and Spares:

2004 - 2005 2003 - 2004

Rs. �000 Rs. �000

i ) Commission 23,729 29,803

ii ) Interest 1,811 2,368

iii ) Travelling 2,777 3,541

Total 28,317 35,712

Expressed in Indian Rupee

2004 - 2005 2003 - 2004

THB �000 THB �000

i ) Commission 21,270 26,778

ii ) Interest 1,624 2,128

iii ) Travelling 2,489 3,181

Total 25,383 32,087

Expressed in Thai Baht

Value Value

% THB �000 Quantity THB �000

Indigenous 100% 4,265 100% 4,863

Expressed In Thai Baht

2004 - 2005 2003 - 2004

THB �000 THB �000

i) Raw Materials 440,994 412,947

ii) Traded Goods 263,789 431,643

Total 704,783 844,590


2004 - 2005 2003 - 2004


2004 - 2005 2003 - 2004

Rs. �000 Rs. �000

i) Raw Materials 491,981 459,600

ii) Traded Goods 294,289 480,408

Total 786,270 940,008




c) Earnings (loss) in foreign exchange on account of:

7. Managerial Remuneration:

8. Auditors� Remuneration

2004 - 2005 2003 - 2004

THB �000 THB �000

470,504 520,391

38,304 42,423

Total 508,808 562,814

i ) FOB Value of Exports

ii ) Freight, Insurance and Commission


2004 - 2005 2003 - 2004

Rs. �000 Rs. �000

524,904 579,182

42,732 47,216

Total 567,636 626,398

i ) FOB Value of Exports

ii ) Freight, Insurance and Commission


2004 - 2005 2003 - 2004

THB �000 THB �000

1,980 1,965

Contribution to Provident and

Other Funds 68 66

Total 2,048 2,031

Salary and Allowances


2004 - 2005 2003 - 2004

THB �000 THB �000

For statutory audit 500 500

57 94

Total 557 594


Reimbursement of out-of-pocket expenses


2004 - 2005 2003 - 2004

Rs. �000 Rs. �000

2,209 2,187

Contribution to Provident and

Other Funds 76 74

Total 2,285 2,261



145 text 145


145145145


9. Future obligation of minimum lease rent payments under non cancellable operating

leases in respect of fixed assets are:

10. Basic earnings per share has been calculated by dividing the profit for the year attributable to

equity shareholders by the weighted average number of equity shares outstanding during the

period. The Company has not issued any potential equity shares and accordingly, the basic

earnings per share and diluted earnings per share are the same. Earnings per share has been

calculated as under:

2004 - 2005 2003 - 2004

THB �000 THB �000

Up to one year 340 -

566 -

Total 906 -

From one year to five years


2004 - 2005 2003 - 2004

Rs. �000 Rs. �000

9,478 16,432

700,000 700,000

13.54 23.47


Profit after tax

Weighted average number of shares

Basic Earnings per Share in Rupee

2004 - 2005 2003 - 2004

Rs. �000 Rs. �000

379 -

632 -

Total 1,011 -


Up to one year

From one year to five years

2004 - 2005 2003 - 2004

Rs. �000 Rs. �000

558 556

63 105

Total 621 661


For statutory audit

Reimbursement of out-of-pocket expenses

2004 - 2005 2003 - 2004

THB �000 THB �000

8,496 14,764

700,000 700,000

12.14 21.09


Weighted average number of shares

Profit after tax

Basic Earnings per Share in Baht




11. Details of capacities, production, turnover and stocks:

a) Details of production and purchases of finished goods:

b) Details of Turnover

Value Value

Quantity Rs. �000 Quantity Rs. �000

31st March, 31st March, 31st March, 31st March, 31st March, 31st March,

Classification Unit 2005 2004 2005 2005 2004 2004

Bulk Drugs,

Intermediates and

Chemicals Metric Ton 429.45 392.93 226.15 294,289 286.05 480,407

Quantity


Production Purchase of Traded Goods

Value Value

Classification Unit Quantity THB �000 Quantity THB �000

and Chemicals Metric Ton 648.18 831,518 653.26 980,957

2004 - 2005 2003 - 2004

Bulk drugs, Intermediates


Value Value

Classification Unit Quantity Rs. �000 Quantity Rs. �000

and Chemicals Metric Ton 648.18 927,658 653.26 1,091,781

2003 - 2004

Bulk drugs, Intermediates

2004 - 2005



Value Value

Quantity THB �000 Quantity THB �000

31st March, 31st March, 31st March, 31st March, 31st March, 31st March,

Classification Unit 2005 2004 2005 2005 2004 2004

Bulk Drugs,

Intermediates and

Chemicals Metric Ton 429.45 392.93 226.15 263,789 286.05 431,643

Quantity


Production Purchase of Traded Goods


147 text 147


147147147


c ) Details of stock

12. PROMOTIONAL PRIVILEGES

By virtue of the Industrial Investment Promotion Act, B.E. 2520, the Company has been granted certain privileges

relating to pharmaceutical chemicals for medicine for the exemption from payment of import duty for imported

supplies to be used in production for exporting and goods imported for re-exporting expiring in August 2005.

As a promoted company, the Company must comply with certain terms and conditions as prescribed in the

promotional certificates.

Value Value

Classification Unit Quantity THB �000 Quantity THB �000

Bulk Drugs:-

Finished Goods Production Metric Ton 57.88 44,739 52.95 38,119

Finished Goods Trading Metric Ton 15.40 18,106 15.51 15,676

Materials in Process 6,437 5,560

Raw Materials - Import Metric Ton 21.40 6,159 72.11 25,142

Raw Materials - Local Metric Ton 29.32 510 26.76 930

Packing Materials 188 1,086

Others Stores 1,519 1,011

Material in Transit 41,509 19,157

Total 119,167 106,681

31st March, 2004 31st March, 2005


Closing Stock Closing Stock

Value Value

Classification Unit Quantity Rs.�000 Quantity Rs.�000

Bulk Drugs:-

Finished Goods Production Metric Ton 57.88 49,884 52.95 42,549

Finished Goods Trading Metric Ton 15.40 20,189 15.51 17,498

Materials in Process 7,177 6,207

Raw Materials - Import Metric Ton 21.40 6,867 72.11 28,064

Raw Materials - Local Metric Ton 29.32 569 26.76 1,039

Packing Materials 210 1,211

Others Stores 1,693 1,129

Raw Material in Transit 46,282 21,384

Total 132,871 119,081


Closing Stock Closing Stock

31st March, 2004 31st March, 2005




13. Related Party Disclosures

The Company has certain transactions with its related companies. A portion of the Company�s assets, liabilities,

revenues, costs and expenses arose from transactions with the related companies. These companies are related

through common shareholdings and/or directorships.

Related party disclosures are given below

a) Relationships

Category I: the Parent Company:

Lupin Limited

Category II: Key Management Personnel:

Ramesh Chandra Saboo Managing Director

Category III: Relatives (including their firms) of key management personnel

Note : There are no holding company and fellow subsidiaries.

b) Transactions carried out with the related parties in 2005

c) Balances due from/to the related parties as at 31st March, 2005

Accounts Payable - Trade (Category I) 19,853 22,161

Transactions Thai Baht Indian Rupee

Purchase Transactions (Category I ) 31,874 35,559

Salary and Allowances (Category II) 1,980 2,209

Contribution Provident Fund (Category II) 68 76

2,048 2,285

In �000

35,579 39,692


149 text 149


149149149


14. Balance Sheet Abstract and Company�s General Business Profile

14.1 Registration Details

Registration No. 8 6 / 2 5 3 0 State Code

Balance Sheet Date 3 1 0 3 2 0 0 5

14.2 Capital raised during the year (Amount in Thousand Thai Baht)

Capital raised during the year (Amount in Thousand Indian Rupee)

14.3 Position of mobilization and deployment of funds (Amount in Thousand Thai Baht)

Sources of funds

Application of funds

N I L N I L

N I L N I L

Right issue

Private placement

Public Isssue

Bonus Issue

N I L N I L

N I L N I L

Private placement

Public issue Right issue

Bonus issue

-


7 0 0 0 0 - 4 2 6 9 3

Unsecured Loans Secured Loans

N I L 9 3 3 9 3


3 4 8 8 3 N I L

Net Current Assets

8 5 8 0 7



8 4 6 2 6 4 8 3 3 8 5 9

1 2 4 0 4 8 4 9 6

1 2 . 1 4 N I L

Total expenditure

Earning per equity share in Rs Equity dividend rate @ %

Profit before tax Profit after tax

Turnover


Position of mobilization and deployment of funds (Amount in Thousand Indian Rupee)

Sources of funds

Application of funds

14.4 Performance of Company (Amount in Thousand Thai Baht)

Performance of Company (Amount in Thousand Indian Rupee)

14.5 Generic names of three principal products of Company (As per monetary terms)

Product Description Item Code No. (As per ITC Code)

i) Erythromyon Salt - Formulation NIL

ii) Pyrazinamide - Bulk Drug NIL

iii) Amoxycillin - Bulk Drug NIL

9 4 4 1 0 9 9 3 0 2 7 1

1 3 8 3 8 9 4 7 8

1 3 . 5 4 N I L

Turnover

Profit before tax

Earning per equity share in Rs

Total expenditure

Profit after tax

Equity dividend rate @ %


3 8 9 3 7 N I L

Net Current Assets

9 5 7 8 0


7 8 1 3 6 - 4 7 6 5 6

Unsecured Loans Secured Loans

N I L 1 0 4 2 4 9

6 0


151 text 151151

LUPIN HONG KONG LIMITED

151

DIRECTORS� REPORT

To the Members,

Your Directors have pleasure in presenting their report on the operations of yourCompany for the year ended March 31, 2005.

Financial results

Performance review

During the year the Company kick started its trading operation and commissionagency services for API products. Your Company has done well in both these areas.

Dividend

In order to conserve resources, your Directors do not recommend dividend.


The Directors confirm that while preparing the annual accounts, applicable accountingstandards had been followed along with proper explanation relating to materialdepartures. They further confirm that they had selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonableand prudent so as to give a true and fair view of the state of affairs of the Companyat the end of the financial year and of the profit of the Company for the said year. Theyalso confirm that the annual accounts have been prepared on a going concern basisand that proper and sufficient care has been taken for maintenance of adequateaccounting records for safeguarding the assets of your Company and for preventingand detecting fraud and other irregularities.

Directors

In accordance with the Articles of Association, all Directors shall retire at the forthcomingAnnual General Meeting and are eligible for re-appointment.

Appreciation

Your Directors wish to place on record their appreciation of the valuable servicesrendered by all the employees of the Company and to the business associates of theCompany for their continued support.


Naresh K Gupta

Director

Place : MumbaiDate : May 17, 2005

(HK $) (Rs.)

Income from operations 6,445,025 36,253,266

Profit before Interest, Depreciation and Tax 525,432 2,754,035

Finance Charges 24,139 135,782

Depreciation 11,169 62,657

Profit before Tax 490,124 2,555,596

Tax 85,119 481,960

Net Profit carried to Balance Sheet 404,213 2,073,636

We have audited the Balance Sheet of Lupin Hong Kong Limited (� the company�) asat 31st March 2005, the Profit and Loss Account and also the Cash Flow Statement ofthe Company for the year ended on that date (the financial statements) attachedhereto, which have been prepared in accordance with the Generally AcceptedAccounting Principles in India.

This report is issued solely for the purpose of consolidation of accounts by the holdingcompany, Lupin Limited and to comply with the provisions of the Companies Act,1956.

This report does not include a statement on the matters specified in paragraphs 4and 5 of the Companies (Auditor�s Report) Order, 2003, issued by the CentralGovernment in terms of sub-section (4A) of section 227 of the Companies Act, 1956,since in our opinion and according to the information and explanations given to us,the said Order is not applicable to the Company.

Respective Responsibilities of the Management and Auditors

The management of the Company is responsible for the preparation of these financialstatements. It is our responsibility to form an independent opinion, based on ouraudit of the statements and to express our opinion thereon.

Basis of Opinion

a.) The financial statements of the Company for the year ended 31st March, 2004were audited by other independent auditors, whose audit report dated 21st

April, 2004, was unqualified. We have relied upon the balances of assets andliabilities as at 31st March, 2004 being the opening balances as at 1st April,2004 for the purposes of the financial statements for the year ended 31st March,2005.

b.) We conducted our audit in accordance with the auditing standards issued bythe Institute of Chartered Accountants of India. An audit includes examination,on a test basis of evidence relevant to the amounts and disclosures in thefinancial statements. It also includes an assessment of the significant estimatesand judgments made by the management in the preparation of the financialstatements and whether the accounting policies are appropriate to thecircumstances to the Company, consistently applied and adequately disclosed.We planned and performed audit so as to obtain all information and explanation,which to the best of our knowledge and belief were necessary for the purposeof our audit.

c.) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealtwith by this report, are in agreement with the books of accounts of the Companyand comply with the accounting standards referred to in sub-section (3C) ofSection 211 of the Companies Act, 1956.

OpinionIn our opinion, and to the best of our information and according to the explanationsgiven to us, the financial statements read with the accounting policies and notesthereon give a true and fair view;

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at31st March, 2005; and

(ii) in the case of the Profit and Loss Account, of the profit for the year ended onthat date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended onthat date.



P. R. Barpande

Partner

Membership No.15291

Place: MumbaiDated: May 17, 2005

AUDITORS� REPORTTO THE MEMBERS OF LUPIN HONG KONG LIMITED



PROFIT AND LOSS ACCOUNTAS AT 31ST MARCH, 2005



For Deloitte Haskins & Sells For and on Behalf of The Board of DirectorsChartered Accountants

P. R. Barpande Naresh K Gupta Sanjay M Moolchandani

Partner Director Director


As at As at As at As at

31.03.2005 31.03.2004 31.03.2005 3131.03.2004

Schedules HK $ HK $ Rs. Rs.

I. SOURCE OF FUNDS

Shareholders' funds

Share capital 1 800,000 100,000 4,682,000 564,000

Reserves and Surplus 2 404,213 - 2,073,636 -

1,204,213 100,000 6,755,636 564,000

Deferred Tax Liability 4,229 23,724

(Refer note no 2.6 of

Schedule 11)

Total 1,208,442 100,000 6,779,360 564,000


Fixed Assets 3

Gross block 41,782 - 234,397 -

Less : Depreciation 11,169 - 62,657 -

Net Block 30,613 - 171,740 -

Current Assets,

Loans and Advances 4

Sundry Debtors 2,334,072 - 13,094,144 -

Cash and Bank balances 726,439 100,000 4,075,322 564,000

Loans and Advances 46,848 - 262,817 -

3,107,359 100,000 17,432,283 564,000

Less : Current Liabilities 5

and Provisions

Current Liabilities 1,827,931 - 10,254,693 -

Provisions 101,599 - 569,970 -

1,929,530 - 10,824,663 -

Net Current Assets 1,177,829 100,000 6,607,620 564,000

Total 1,208,442 100,000 6,779,360 564,000

11

Significant Accounting

Policies and Notes

forming part of Accounts






Rs. Rs. Rs. Rs. HK$ HK$ HK$ HK$


Profit before Tax 2,555,596 490,124

Adjustments for :

Depreciation 62,657 11,169

Exchange difference (see note 2 below) 10,898

Operating profit before working capital changes 2,629,151 501,293

Adjustments for :

Trade and other receivables (13,356,961) (2,380,920)

Current liabilities and provisions 10,366,427 1,847,848

(2,990,534) (533,072)

Net cash used in operating activities (A) (361,383) (31,779)

B. Cash flow from investing activities

Purchase of fixed assets (234,397) (41,782)

Net cash used in investing activities (B) (234,397) (41,782)

Proceeds from issue of shares 4,118,000 564,000 700,000 100,000

Net cash from Financing activities ( C ) 4,118,000 564,000 700,000 100,000

Net increase in cash and cash equivalents 3,522,220 564,000 626,439 100,000

Cash and cash equivalents

at the beginning of the year 564,000 - 100,000 -

Cash and cash equivalents

at the end of the year 4,086,220 564,000 726,439 100,000

Previous yearPrevious year31st March,2005 31st March,2005

Current

Year

Previous

Year Current Year

Previous

Year

ended ended ended ended

31.03.05 31.03.04 31.03.05 31.03.04

Schedules HK $ HK $ Rs. Rs.

INCOME FROM OPERATIONS

Sales and

Operating Income 6 6,437,173 - 36,209,098 -

Other Income 7 7,852 - 44,168 -

6,445,025 - 36,253,266 -

EXPENDITURE

Cost of Materials 8 2,295,005 - 12,909,403 -

Payment to and

provision for employees 9 544,052 - 3,060,292 -

Operating and

other expenses 10 3,080,536 - 17,529,536 -

Finance Charges 24,139 135,782 -

Depreciation 11,169 62,657 -

5,954,901 - 33,697,670

Profit Before Tax 490,124 - 2,555,596 -

Provision for taxation

- Current Income Tax 81,682 458,236 -

- Deferred tax 4,229 23,724

Profit After Tax 404,213 - 2,073,636

Balance carried to Balance sheet 404,213 - 2,073,636 -

404,213 - 2,073,636

Earning per share - Basic

and Diluted 0.62 3.19

(Refer note no 2.7 of

Schedule 11)

Nominal value of each equity share is HK$1

Significant Accounting

Policies

and Notes Forming Part of

Accounts 11

153 text 153153


153

SCHEDULE "1" - SHARE CAPITAL

SCHEDULE �2� - RESERVES & SURPLUS

Notes :

1) Cash and cash equivalents includes cash and bank balances as stated in schedule4 of the financial statement.

2) Cash and cash equivalents include :

As at 31st

March 2005

As at 31st

March 2004

Rs. Rs.

Cash and Bank balances 4,075,322 564,000

Exchange difference 10,898 -

Total 4,086,220 564,000

CASH FLOW STATEMENTFOR THE YEAR ENDED 31ST MARCH, 2005 (Contd.)

3) Purchase of fixed assets are considered as a part of investing activities.4) The Cash Flow Statement has been prepared under the �indirect method� as set out

in the accounting standard (AS-3) �Cash Flow Statement� issued by the institute of

Chatered Accountants of India.





Place: MumbaiDate: May 17, 2005

SCHEDULES FORMING PART OF THE ACCOUNTSAS AT 31ST MARCH 2005


31.03.2005 31.03.2004 31.03.2005 31.03.2004

HK $ HK $ Rs. Rs.

Authorised

1,000,000 Equity shares

of HK$1/- each. 1,000,000 1,000,000 5,640,000 5,640,000

Issued, Subscribed and

Paid up Capital

800,000 (Previous Year

100,000) Equity shares of

HK$1/- each fully paid

up. 800,000 100,000 4,682,000 564,000

(All the above shares are

held by "Lupin Limited",

the holding company

and its nominee).

Total 800,000 100,000 4,682,000 564,000

Surplus as per Profit and 404,213 - 2,073,636 -

Loss account

Total 404,213 - 2,073,636 -

Partic

ula

rs

As

at

01.0

4.20

04A

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uct

ions

As

at 31.0

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For th

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3.2

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at

31.0

3.2

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As

at

31.0

3.20

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Com

pute

rs-

21,6

34

-21,6

34

-7,

139

-7,1

39

14,4

95

-

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6,43

9

-6,4

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-1,

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-1,2

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and

Fixt

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s-

13,7

09

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09

-2,

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-2,7

42

10,9

67

-

Tota

l-

41,7

82

-41,7

82

-11

,169

-11,1

69

30,6

13

-

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Year

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--

--

--

--

Gro

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Dep

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atio

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Partic

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.03.

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-40,0

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36,1

23

-36,1

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-7,

225

-7,2

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28,8

98

-

Furn

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and

Fixt

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s-

76,9

07

-76,9

07

-15

,381

-15,3

81

61,5

26

-

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l-

234,

397

-234,3

97

-62

,657

-62,6

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171,7

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SCH

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�3�

- F

IXED

ASSETS


SCHEDULE "11" - SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING

PART OF ACCOUNTS

These Financial statements are prepared solely for the purposes of consolidation bythe holding company, Lupin Limited and to comply with the provision of the IndianCompanies Act, 1956.

1. Significant Accounting Policies:

1.1 Basis of preparation:

The accompanying financial statements have been prepared under the historicalcost convention in accordance with generally accepted accounting principlesin India, and the applicable accounting standards issued by the Institute ofChartered Accountants of India.

1.2 Use of Estimates:

The preparation of the financial statements, in conformity with the generallyaccepted accounting principles, requires estimates and assumptions to be madethat affect the reported amounts of assets and liabilities on the date of thefinancial statements and the reported amounts of revenues and expenses duringthe reporting period. Differences between actual results and estimates arerecognized in the period in which the results are known / materialize.

1.3 Translation to Indian Rupees:

The local accounts are maintained in local and functional currency, which isthe Hong Kong dollars (HK$). The financial statements have been translated toIndian Rupees on the following basis

i) All income and expenses are translated at the average rate of exchangeprevailing during the year.

ii) Monetary assets and liabilities are translated at the closing rate on theBalance Sheet date.

iii) Non � Monetary assets and liabilities and share capital is translated athistorical rates.

iv) The resulting exchange difference are accounted in �Exchange Differenceaccount� and is charged / credited to the Profit and Loss Account.

SCHEDULE "4" - CURRENT ASSETS

Note : Bank balances include balances with non-scheduled banks as under :

SCHEDULE �5� - LIABILITIES & PROVISIONS

SCHEDULES FORMING PART OF THE ACCOUNTS AS AT 31ST MARCH 2005


31.03.2005 31.03.2004 31.03.2005 31.03.2004

HK $ HK $ Rs. Rs.

Name of the bank

Country

As at

31.03.2005

Rs.

As at

31.03.2004

Rs.

year

31.03.2005

in Rs.

year

31.03.2004

in Rs.

Citi bank - US $ account Hongkong 1,060,849 - 6,589,743 -

Citi bank - HK $ account Hongkong 3,006,631 564,000 3,849,194 564,000

Maximum balance


31.03.2005 31.03.2004 31.03.2005 31.03.2004

HK $ HK $ Rs. Rs.

SCHEDULE �6� - SALES AND OPERATING INCOME

SCHEDULE �7� - OTHER INCOME

SCHEDULE �8� - COST OF MATERIAL

Sales (Traded Finished Goods) 2,892,430 - 16,269,919 - Commission Income 3,544,743 - 19,939,179 -

Total 6,437,173 - 36,209,098

Year

ended

31.03.2005

Year

ended

31.03.2004

Year

ended

31.03.2005

Year

ended

31.03.2004

HK $ HK $ Rs. Rs.

Exchange difference -

on transactions (net) 7,852 - 44,168 - Total 7,852 - 44,168 -

Purchase of Finished

traded goods 2,295,005 - 12,909,403 - Total 2,295,005 - 12,909,403 -

SCHEDULE "9" - PAYMENTS TO AND PROVISIONS FOR EMPLOYEES

SCHEDULE "10" - OPERATING & OTHER EXPENSES

Year

ended

31.03.2005

Year

ended

31.03.2004

Year

ended

31.03.2005

Year

ended

31.03.2004

HK $ HK $ Rs. Rs.A. Sundry Debtors

(Unsecured

Considered Good)

Debts outstanding for a

period

Other debts

(due from holding company

- Lupin Ltd) 2,334,072 - 13,094,144

Total 2,334,072 - 13,094,144 -

B. Cash and Bank Balance

Cash in hand 1,398 - 7,843 -

Bank Balances :

- In Current accounts

(see note below) 725,041 100,000 4,067,480 564,000

Total 726,439 100,000 4,075,322 564,000

C. Loan and Advances

(Unsecured considered good)

Deposits 46,848 - 262,817 -

Total 46,848 - 262,817 -

A. Current Liabilities

Sundry Creditors (other

than small scale industries)

Due to Holding Company

- Lupin Ltd 3,800 - 21,318 -

Others 1,824,131 - 10,233,375 -

Total 1,827,931 - 10,254,693 -

B. Provisions

- For Taxation 81,682 - 458,236 -

- For Gratuity 19,917 - 111,734 -

Total 101,599 - 569,970 -

Salaries, Wages and Bonus 502,152 - 2,824,605 -

Contribution to Provident Fund 38,317 - 215,533 -

Staff welfare expenses 3,583 - 20,154 -

Total 544,052 - 3,060,292 -

Commission 2,385,773 - 13,419,973 -

Exchange difference - on

translations - - 201,522 -

Traveling and

conveyance 192,949 - 1,085,338 -

Rent 185,000 - 1,040,625 -

Legal and Professional

Fees 192,507 - 1,082,851 -

Selling and Promotion

expenses 31,394 - 176,591 -

Telephone Expenses 27,868 - 156,757 -

Audit fees 8,596 - 48,353 -

Miscellaneous expenses 56,449 - 317,526 - (includes Electricity

charges, Printing and

stationery, courier

charges, etc)

Total 3,080,536 - 17,529,536 -

155 text 155155


155

SCHEDULES FORMING PART OF THE ACCOUNTS AS AT 31ST MARCH 2005

SCHEDULE "11" - SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF ACCOUNTS (Contd.)

2.2 The Company operates solely in the pharmaceuticals segment and hence thereis only one reportable segment.

2.3 Additional information pursuant to the provisions of paragraphs 3,4 and 4D ofpart II of schedule VI of the Indians Companies Act 1956,

A) CIF Value of Imports in respect of:

B) Expenditure in Foreign currencies on account of:

2004-2005 2004-2005

HK $ Rs.

2,295,005 12,909,403

TOTAL 2,295,005 12,909,403

i) Traded Finished Goods

176,078 990,437

2,385,773 13,419,973

TOTAL 2,561,851 14,410,410

i) Traveling

ii) Commission

1.4 Revenue Recognition:

Revenue from sale of goods is recognized when the significant risks and rewardsof ownership are transferred to the customer and are net of Returns. CommissionIncome is recognized on rendering of agency services in accordance with theterms of understanding with the party.

1.5 Fixed Assets:

Fixed Assets are stated at cost of acquisition including taxes, duties. These arestated at historical cost less accumulated depreciation.

1.6 Foreign Currency Transactions:

i) Transactions in foreign currency are recorded at the original rates of theexchange in force at the time transactions are effected. Exchangedifferences arising on settlement of transactions are recognized in theprofit and loss account.

ii) Monetary items denominated in foreign currency are restated using theexchange rates prevailing at the date of balance sheet and the resultingnet exchange difference is recognized in the profit and loss account.

iii) Non-Monetary items are carried at cost.

1.7 Inventories:

Inventories of traded finished goods are valued at cost or net realizable valuewhich ever is less Cost is determined on FIFO basis. Cost comprises of purchaseprice and other related cost incurred in bringing the inventories to it�s presentlocation and condition.

1.8 Depreciation:

Depreciation on fixed assets is provided on Straight line method, over the usefullife of the assets, as estimated by the management as under:

Computers � 3 yearsFurniture and fixtures � 5 yearsOffice equipments � 5 years.

1.9 Retirement Benefits:

Company�s Contribution to Mandatory Provident Fund Scheme is charged toProfit and Loss account. Provision is made towards liability for Gratuity aspayable under the Employment Ordinance (Hong Kong).

1.10 Income Tax:

Provision for current tax is made after taking into consideration benefits admissibleunder the provisions of Inland Revenue Ordinance of Hong Kong.

Income taxes are accounted for in accordance with Accounting Standard 22 (AS-22) � Accounting for taxes on income� issued by the Institute of CharteredAccountants of India. Deferred tax assets and liabilities are recognized forfuture tax consequences attributable to timing differences between taxableincome and accounting income that are capable of reversing in one or moresubsequent periods and are measured using the relevant enacted tax rates. Ateach Balance sheet date, the company reassesses unrecognized deferred taxassets to the extent they have become reasonably certain or virtually certain ofrealization, as the case may be.

1.11 Provision, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement arerecognized when there is a present obligation as a result of past events and itis probable that there will be an outflow of resources. Contingent liabilities arenot recognized but are disclosed in the notes. Contingent Assets are neitherrecognized nor disclosed in the financial statements.

2 Notes to Accounts:

2.1 Company Overview:

The Company was incorporated in Hong Kong under the Companies Ordinanceon 31st May 2002. The Company is a wholly owned Subsidiary of Lupin Ltd. Its corebusiness is to provide commission agency services for bulk drugs products and totrade in bulk drugs. The Company has commenced operations from May 2004.

C) Earnings in Foreign exchange onaccount of:

D) Managerial Remuneration:

2,892,430 16,269,919

3,544,743 19,939,179

TOTAL 6,437,173 36,209,098

ii) Commission

i) FOB Value of Exports

317,461 1,785,713

24,917 140,156

100,000 562,500

TOTAL 442,378 2,488,369


Perquisites

Contribution to Provident and Other

Funds

2.4 Quantitative details of Traded Finished Goods (Bulk drugs):

2.5 Related Parties Disclosures:

a) Name of Related parties and description of relationship:

i) Company whose control exists - Lupin Limited (Holding Company)ii) Key management personal - Mr. Sanjay Moolchandani (Director)

b) Related Party Transactions:

Note: -i) Related Party relationship is as identified by the Company and relied upon by the

Auditors

Quantity in Kgs Value in Rs. Value in HK$

Opening Stock Nil Nil Nil

Purchases 4860 12,909,403 2,295,005

Sales 4860 16,269,919 2,892,430

Closing stock Nil Nil Nil

Sr.

No.

Description and Nature Of

Transaction

Holding

Company

Key

Management

Personnel

Holding

Company

Key

Management

Personnel

(Rs.) (Rs.) (HK$) (HK$)

1 Purchase of goods 12,909,403 - 2,295,005 -

2 Commission Income 19,939,179 - 3,544,743 -

3 Reimbursement of expenses 21,318 - 3,800 -

4 Debtors balance as at 31st

March 2005 13,094,144 - 2,334,072 -

5 Creditors balance as at 31st

March 2005 21,318 - 3,800 -

6. Managerial Remuneration - 2,488,369 - 442,377



2.8 During the year, the Company commenced the operation from May 2004 andaccordingly the Profit and Loss Account has been prepared. Since there were nooperations in the previous year, no Profit and Loss Account has been prepared inprevious years and consequently the information relating to the previous year inNote number 2.3, 2.4, 2.5, 2.6 and 2.7 has not been furnished. Accordingly, thefigures for the current year are not strictly comparable with that of the previousyears.

2.9 The information contained in the financial statements for the year ended 31stMarch 2005 and the period ended 31st March 2004, disclosed in HK$ is extractedfrom the books of accounts locally maintained and converted into Indian rupeesas disclosed in �Translation to Indian Rupees�, as stated above. Such disclosurein HK$ are only for additional information.

2.10 Balance Sheet Abstract And Company�s General Business Profile

(a) Registration Details

* The Company is incorporated in Hong Kong. Thus there is no registration numbers / state code.

(b) Capital Raised during the Year (Amount in Rs. Thousands)

SCHEDULE "11" - SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF ACCOUNTS (CONTD.)

Registration No. * State Code *


Public Issue NIL Rights Issue NIL

Bonus Issue NIL Private Placement 4,118

Total Liabilities 17604 Total Assets 17604

Sources of Funds

Paid-Up Capital 4682 Reserves and Surplus 2074

Deferred Tax 24 Secured Loans -

Unsecured Loans -


Net Fixed Assets 172 Investments -

Net Current Assets 6608 Misc Expenditure -

Accumulated Losses -

Turnover 36209 Total Expenditure 33698

Profit Before Tax 2556 Profit After Tax 2074

Earning per Equity Share in R 3.19 Equity Dividend Rate % -

Product Description Item Code No.(As per ITC Code)

i) Cephalexin - Bulk Drug 29419002

ii) Ethambutol - Bulk Drug 290514.01







(e) Generic Names of Three Principal Products of Company(As per monetary terms)

As at 31st March

2005 HK $

As at 31st March

2005 Rs.

4,229 23,724

4,229 23,724

Depreciation

Deferred tax liability

Particulars of timing difference

For the year ended

31st March 2005 in

HK $

For the year ended

31st March 2005 in

Rs.

404,213 2,073,636

650,000 650,000

0.62 3.19

Particulars

Basic and Diluted earnings per share

Weighted average number of Equity

shares � Basic and diluted

Net profit after tax

2.6 The break up of deferred tax liability is as under:

2.7 Earnings per share is calculated as follows:

(c) Position of Mobilisation and Deployment of funds (Amount in Rs. Thousands)

(d) Performance of Company (Amount in Rs. Thousands)

157 text 157

LUPIN HERBAL LIMITED

157

DIRECTORS� REPORT

To the Members,

Your Directors have pleasure in presenting the first report with audited accounts of

the Company for the period from February 26, 2004 (date of incorporation) to

March 31, 2005.

Financial Results

Conversion of the Company

The Company was incorporated as a private company on February 26, 2004 and it

commenced operations in July 2004. Upon Lupin Limited acquiring the entire equity

capital, the Company became a public company within the meaning of Section

3(1)(iv)(c) of the Companies Act, 1956 (�the Act�). After completing necessary formalities,

the Registrar of Companies, Maharashtra issued a Certificate certifying the change

in the Company�s status as a public limited company w.e.f. March 28, 2005.

Increase in the Authorised Capital and issue of equity shares

The authorised capital of the Company was increased from Rs. 1,00,000/- to

Rs.5,00,000/-. On November 30, 2004, 40,000 equity shares of the face value of

Rs.10/- were allotted to Lupin Ltd.

Performance Review

The Company was incorporated for providing marketing and promotional services to the

Herbal Division of Lupin Ltd. The service profile includes marketing and promoting of

herbal products of Lupin Ltd., detailing to Doctors, laisoning with the Institutions and

Trade. The Company earns a mutually agreed consideration for the services rendered.

Dividend

Your directors do not recommend dividend.


In terms of the provisions of Section 217(2AA) of the Act, your Directors confirm:

i) that in the preparation of the annual accounts, the applicable accounting

standards had been followed along with proper explanation relating to material

departures;

ii) that the Directors had selected such accounting policies and applied them

consistently and made judgments and estimates that are reasonable and

prudent so as to give a true and fair view of the state of affairs of your Company

at the end of the financial year and of the profit of your Company for that year;

iii) that the Directors had taken proper and sufficient care for the maintenance of

adequate accounting records in accordance with the provisions of the Act for

safeguarding the assets of your Company and for preventing and detecting

fraud and other irregularities; and

iv) that the Directors had prepared the annual accounts on a going concern

basis.

Directors

Upon the Company becoming a public company, the number of directors was raised

to three. Mr. S. P. Chakraborty and Mr. Sunil Makharia who were appointed as

additional directors on November 1, 2004, hold office upto the date of the forthcoming

Annual General Meeting. Notices have been received from certain shareholders

proposing the names of Mr. Chakraborty and Mr. Makharia for appointment as

directors.

Mr. Ajey Kumar resigned w.e.f. November 1, 2004. The Board places on record its

sincere appreciation of the valuable services rendered by him during his tenure as a

director.

Mr. Pradeep Pande retires by rotation at the forthcoming Annual General Meeting

and is eligible for re-appointment.

The Companies (Disclosure of particulars in the report of Board of Directors)

Rules, 1988

Particulars as prescribed under Section 217(1)(e) of the Act, read with the Companies

(Disclosure of particulars in the report of Board of Directors) Rules, 1988 are not

applicable to your Company.

Appreciation

Your Directors wish to place on record their appreciation of the valuable services

rendered by all the employees of the Company and to the business associates of the

Company for their continued support.


S. P. Chakraborty

Chairman

Place : Mumbai

Date : May 18, 2005

(Rs.)

Income from operations 6,325,913

Profit before tax 8,320

Tax 3,044

Net profit carried to Balance Sheet 5,276

AUDITORS� REPORTTo the Members of Lupin Herbal Ltd.

1. We have audited the attached Balance Sheet of LUPIN HERBAL Limited (�the

company�) as at March 31, 2005, the Profit and Loss Account and also the

Cash Flow Statement of the Company for the period ended on that date (together

referred to as �financial statements�). 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.

2. We conducted our audit in accordance with auditing standards generally

accepted in India. These Standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are

free of material misstatement. An audit includes examining, on a test basis,

evidence supporting the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting principles used and significant

estimates made by management, as well as evaluating the overall financial

statement presentation. We believe that our audit provides a reasonable basis

for our opinion.

3. As required by the Companies (Auditor�s Report) Order, 2003 (�CARO�) issued by

the Central Government of India in terms of Section 227 (4A) of the Companies

Act, 1956 (�the Act�), and on the basis of such checks of the books and records

as we considered necessary and appropriate and according to the information

and explanations given to us during the course of the audit, we enclose in the

Annexure a statement on the matters specified in paragraphs 4 and 5 of the

said Order.

4. Further to our comments in the Annexure referred to in para 3 of our audit

report.

i. We have obtained all the information and explanations which to the

best of our knowledge and belief were necessary for the purposes of

our audit;

ii. In our opinion, proper books of account as required by law have been

kept by the Company, so far as appears from our examination of those

books;

iii. The Balance Sheet & Profit and Loss Account dealt with by this report

are in agreement with the books of account;

iv. In our opinion, the Balance Sheet and Profit and Loss Account comply

with the accounting standards referred to in sub-section (3C) of Section

211 of the Act.

v. On the basis of the written representations received from the directors,

and taken on record by the Board of Directors, we report that none of

the directors are disqualified as on 31st March 2005 from being

appointed as a director under clause (g) of sub-section (1) of Section

274 of the Act.

vi. In our opinion and to the best of our information and according to the

explanations given to us, the said financial statements give the

information required by the Act in the manner so required and give a

true and fair view in conformity with the accounting principles generally

accepted in India;

a) In the case of the Balance Sheet, of the state of affairs of the

Company as at March 31, 2005;

b) In the case of the Profit and Loss Account, of the profit of the

Company for the period ended on that date; and

c) In the case of the Cash Flow Statement, of the Cash Flows for

the period ended on that date.

For JAIN JAIN AND ASSOCIATES

CHARTERED ACCOUNTANT

GOUTAM JAIN

PARTNER

M.No.35344

Place : Mumbai

Date : May 18, 2005


PROFIT AND LOSS ACCOUNTFOR THE PERIOD 26TH FEBRUARY, 2004 TO 31ST MARCH, 2005


ANNEXURE TO AUDITORS� REPORTof even date to the Member of Lupin Herbal Limited

i. (a) The Company has no Fixed Assets.

(b) Sub-clauses (b) & (c) not applicable.

ii. (a) Clause 2(a), (b) & (c) are not applicable since the Company is not a

manufacturing company.

iii. (a) The Company has not accepted any loans from other companies covered

under register maintained section 301 of the Companies Act, 1956. The

Company has not granted any loans to other companies covered under

register maintained section 301 of the Company Act, 1956.

(b) Clause (b), (c) & (d) are not applicable.

iv. (a) Clause (iv) is not applicable.

v. (a) Clause (v) (a), (b) are not applicable.

vi. The Company has not accepted any deposit from the public.

vii. The clause regarding Internal Audit is not applicable.

viii. Clause (viii) is not applicable as the Company is not liable to maintain cost

record.

(ix) (a) The Company is regular in depositing with appropriate authorities

undisputed statutory dues.

(b) According to the information and explanations given to us, no undisputed

amount payable in the respect of Income Tax, were in arrears, as at 31st

March, 2005 for a period of more than 6 months from the date become

payable.

(c) According to the information & explanations given to us, there are no

dues of sales tax, income tax, customs duty which have not been

deposited on account of any dispute.

(x) This clause not applicable to company because Company has been registered on

26th Feb.2004.

(xi) In our opinion & according to the information given to us, the Company has not

defaulted in repayment of dues to a financial institution, bank or debenture

holders and also there is no loan from bank & financial institution.

(xii) The clause (xii) is not applicable.

(xiii) In our opinion, the Company is not a chit fund or a nidhi mutual benefit fund/

society. Therefore the provision of clause 4(xiii) of the Companies (Auditor�s Report)

Order, 2003 are not applicable to the company.

(xiv) In our opinion, the company is not dealing in or shares, securities, debenture and

other investment. According, the provision of clause 4(xiv) of the Companies

(Auditor�s Report) Order, 2003 are not applicable to the Company.

(xv) On the basis of information & explanation given to us the Company has not given

any guarantee for loans taken by others from bank or financial institution.

(xvi) There were no term loans accepted during the year.

(xvii) According to the information and explanation given to us and on an overall

examination of the Balance Sheet of the Company, we report that the no funds

raised for short terms and long term used.

(xviii) During the year, the Company has not made any preferential allotment of

shares to parties and companies covered in the Register maintained under

section 301 of the Act.

(xix) There was no issue of debenture by the Company during the year.

(xx) The Company has not raised the monies by public issues during the year and

hence the question of disclosures and verification of end use of such monies

does not arise.

(xxi) According to the information and explanation given to us, no fraud on or by the

Company has been noticed or reported during the course of our audit.

For JAIN JAIN AND ASSOCIATES

CHARTERED ACCOUNTANT

GOUTAM JAIN

PARTNER

M.No.35344

Place : Mumbai

Date : May 18, 2005

Period Ended

31 st March, 2005

Schedules Rs.

INCOME

Commission 246,300

6,079,613

6,325,913

EXPENDITURE

Personnel Costs 7 3,504,465

Promotional Expenses 8 2,617,127

Administrative and Other Expenses 9 196,001

6,317,593

Profit Before Taxation 8,320

Provision For Taxation 3,044

Net Profit carried to Balance Sheet 5,276

Notes to the Financial Statements 10

Reimbursement of Expenses (Refer Note 4 of Schedule 10)

As per our report attached of even dateFor Jain Jain & Associates For and on behalf of the Board of DirectorsChartered Accountants

Goutam Jain S. P. Chakraborty Sunil MakhariaPartner Director DirectorMembership No.35344


As at

31 st March, 2005

Schedules Rs.

I. SOURCES OF FUNDS

Shareholders' Funds

Share Capital 1 500000

Reserves and Surplus 2 5276

Loan Funds

Secured Loan -

Unsecured Loan -

505276


Fixed Assets -

Investments -


Cash and Bank Balances 3 309457

Loans, Advances and Receivables 4 466841

776298

Less: Current Liabilities and Provisions

Current Liabilities 5 282454

Provisions 6 3044

285498

Net Current Assents 490800

Miscellaneous Expenditure

Preliminary Expenses 14476

(To the extent not written off or adjusted)

505276

Notes to the Financial Statement 10




159 text 159

LUPIN HERBAL LIMITED

159

STATEMENT OF CASH FLOWFOR THE PERIOD 26TH FEBRUARY 2004 TO 31ST MARCH 2005.

Notes:

1. The above cash flow statement has been prepared under the �Indirect Method� as

set out in the Accounting Standard - 3 on Cash Flow Statements, issued by the

Institute of Chartered Accountants of India.

2. There are no corresponding figures for the previous year as this is the first

accounting period of the Company.


SCHEDULE 1: SHARE CAPITAL

All the above shares are held by Lupin Ltd, the holding

company, and its nominees

Authorised Capital

50,000 Equity Shares of Rs. 10/- Each 5,00,000

Issued, Subscribed & Paid Up Capital

50,000 Equity Shares of Rs. 10/- Each 5,00,000

As on

31st March, 2005

Rs.

SCHEDULE 2: RESERVES AND SURPLUS

SCHEDULE 3: CASH AND BANK BALANCES

SCHEDULE 4: LOANS, ADVANCES AND RECEIVABLES

Profit and Loss Account 5,276

Cash in Hand 252

Balance with Bank in Current Account 3,09,205

3,09,457

Unsecured (Considered good) :

Advances recoverable in cash or in kind or for value to be

received 4,54,731

Tax deducted at source 12,110

4,66,841

SCHEDULES FORMING PART OF THE BALANCE SHEETAS AT 31ST MARCH, 2005 (CONTD.)

As on

31st March, 2005

Rs.

SCHEDULE 5: CURRENT LIABILITIES

SCHEDULE 6: PROVISIONS

SCHEDULE 7: PERSONNEL COST

SCHEDULE 8: PROMOTIONAL EXPENSES

SCHEDULE 9: ADMINISTRATIVE AND OTHER EXPENSES

Creditors for Expenses 31,846

Other Liabilities 2,50,608

2,82,454

Provision for Income Tax 3,044

Salaries and allowances 33,04,739

Contribution to Provident and Other Funds 1,57,747

Staff Welfare Expenses 41,979

35,04,465

Field Expenses 26,17,127

Statutory Audit Fees 11,020

Profession Tax 4,200

Bank Charges 5,149

Directors Sitting Fees 9,000

Legal and Professional Fees 33,805

License, Registration and Other Fees 34,084

Conveyance Expenses 2,676

Printing and Stationery 26,270

Rent 50,000

Software Development Charges 15,750

Preliminary Expenses Written Off 3,619

Miscellaneous Expenses 428

1,96,001

SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE PERIOD 26TH FEBRUARY, 2004 TO 31ST MARCH, 2005

SCHEDULE 10: NOTES TO THE FINANCIAL STATEMENTS

1. Significant Accounting Policies

a. The Company adopts the accrual concept in the preparation of

the accounts.

b. Preliminary expenses are written off over the period of five years.

2. Fixed assets and Investments � There are no fixed assets and investments.

3. Deferred Tax

There being no differences in between the taxable income and accounting

income that originate in one period and are capable of reversal in one or

more subsequent periods, there are no Deferred Tax Assets / Liabilities.

4. Reimbursement of expenses represent, reimbursement of personnel costs

and promotional expenses by Lupin Limited, the holding company in terms

of the agreement with Lupin Ltd.

5. The Company has only one reportable segment - promotion and marketing

of pharmaceutical products.

6. Related Party Disclosures Enterprise where control exists Holding Company

Lupin Limited Disclosure of transactions between the Company and related

party and outstanding balances as at the period end:

Commission Rs. 2,46,300

Reimbursement of expenses Rs. 60,79,613

Rent paid Rs. 50,000

Balances at the period end �

Amounts recoverable Rs. 4,40,231

Period Ended

31st March, 2005

Rs. Rs.


Net Profit before Taxation 8,320

Adjustments for :

Miscellaneous Expenditure 3,619

Operating Profit before Working Capital changes 11,939

Adjustments for Working Capital changes

Trade and Other Receivables (466,841)

Trade and Other payables 285,498

(181,343)

Cash generated from operations (169,404)

Less : Income Tax 3,044

Net Cash generated from operating activities (172,448)

B. CASH FLOW FROM INVESTING ACTIVITIES Nil

C. CASH FLOW FROM FINANCING ACTIVITIES

Issue of Shares 500,000

Less : Preliminary Expenses 18,095

Net Cash from financing activities 481,905

Net Increase in Cash and Cash Equivalents 309,457

Cash and Cash Equivalents - Opening Balance Nil

Cash and Cash Equivalents - Closing Balance 309,457





10. Balance Sheet Abstract and Company�s General Business Profile

I Registration Details

II Capital Raised during the year (Amount in Rupees thousand)

SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE PERIOD 26TH FEBRUARY, 2004 TO 31ST MARCH, 2005

SCHEDULE 10 :NOTES TO THE FINANCIAL STATEMENTS (CONTD.)

The Company was incorporated as a private company on 26th February 2004.

Upon Lupin Limited acquiring 100 percent of the Company�s equity share

capital, the Company became a public company within the meaning of Section

3(iv)(c) of the Companies Act, 1956. Accordingly, it was converted into a public

limited company. Accordingly the number of directors were raised to three and

paid-up share capital of the Company was increased to

Rs. 5,00,000/-. Necessary formalities for the said conversion were completed,

consequent to which the Registrar of Companies, Maharashtra issued a

Certificate certifying the change in status as a public limited Company w.e.f.

March 28, 2005.

8. Basic earnings per share have been calculated by dividing profit for the period

attributable to equity shareholder by the weighted average number of equity

shares outstanding during the period. The Company has not issued any potential

equity shares and accordingly, the basic earnings per share and diluted earnings

per share are the same. Earnings per share are calculated as under:

9. There are no corresponding figures for the previous year as this is the first

accounting period of the Company and the accounts are presented for the period

from 26th February 2004 to 31st March 2005.

Profit for the period (Rs.) 5,276

Weighted average number of shares 25,385

Earnings per share - Basic and Diluted (Rs.) 0.21

7. Share Capital

Authorised:

50000 Equity shares of Rs. 10/- each Rs. 5,00,000

Allotted, Issued and Fully paid:

50000 Equity shares of Rs. 10/- each Rs. 5,00,000

Registration No. 144760

State Code 11


Public Issue NIL

Right Inssue NIL

Bonus Issue NIL

Preferential Allotment 500

III. Position of mobilisation and deployment of funds (Amount in Rs. Thousands)

SOURCES OF FUNDS

Total Liabilities 505

Total Assets 505

10 Balance Sheet Abstract and Company�s General Business Profile (Contd.)

APPLICATIONS OF FUNDS

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

V. Generic Names of Three Principal Products of the Company (As per monetary

terms)

Signature to Schedules 1 to 10

Paid up Capital 500

Reserve and Surplus 5

Secured Loans NIL

Unsecured Loans NIL

Net Fixed Assets NIL

Investments NIL

Net Current Assets 491

Miscellenous Expenditure 14

Accumulated Losses NIL

Total Income 6,326

Total Expenditure 6,317

Profit/(Loss) before tax 8

Profit/(Loss) after tax 5

Earnings per share in Rs. 0.21

(Based on weighted average of number of shares)

Dividend Rate % N.A.

Item code No. Not Applicable

Product Description Not Applicable




161

LUPIN LABORATORIES SOUTH AFRICA (PROPRIETARY) LIMITED

DIRECTORS� REPORT

To the Members,

Your Directors have pleasure in presenting their report on the operations of your

Company for the year ended March 31, 2005.

Financial results

The results of the Company for the year are fully set out in the attached financial

statements.

Operational review

No business was transacted during the year under review as the Company is in the

process of being wound-up.

Share Capital

There have been no changes in the authorised or issued share capital of the Company

during the year under review.

Dividend

Your Directors do not recommend dividend.


The Directors confirm that while preparing the annual accounts, applicable accounting

standards had been followed along with proper explanation relating to material

departures. They further confirm that they had selected such accounting policies and

applied them consistently and made judgments and estimates that are reasonable

and prudent so as to give a true and fair view of the state of affairs of the Company

at the end of the financial year and of the profit of the Company for the said year. They

also confirm that the annual accounts have been prepared on a going concern basis

and that proper and sufficient care has been taken for maintenance of adequate

accounting records for safeguarding the assets of your Company and for preventing

and detecting fraud and other irregularities.

Appreciation

Your Directors wish to place on record their appreciation of the valuable services

rendered by business associates of the Company.


S. C. Kulkarni

Director

Place : Hyde Park

Date : March 31, 2005

REPORT OF THE INDEPENDENT AUDITORSTO THE MEMBERS OF LUPIN LABORATORIES

SOUTH AFRICA (PROPRIETORY) LIMITED

We have audited the financial statements of Lupin Laboratories South Africa

(Proprietary) Limited set out on pages 3 to 9 for the year ended 31 March 2005. These

financial statements are the responsibility of the company�s directors. Our responsibility

is to express an opinion on these financial statements based on our audit.

Scope

We conducted our audit in accordance with statements of South African Auditing

Standards. Those standards require that we plan and perform the audit to obtain

reasonable assurance that the financial statements are free of material misstatement.

An audit includes:

• examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements,

• assessing the accounting principles used and significant estimates made

by management, and

• evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.

Audit opinion

In our opinion, the financial statements fairly present, in all material respects, the

financial position of the company at 31st March, 2005 and the results of its operations

and cash flows for the year then ended in accordance with South African Statements

of Generally Accepted Accounting Practice, and in the manner required by the

Companies Act in South Africa.

Treisman, Venter & Associates

Hyde Park

31st March, 2005


Notes 2005 2004

R R

ASSETS

Current Assets

Cash & Bank Balances 500 500

Total 500 500

Current Liabilities

Accounts payable 0 0

Total 0 0

Net Current Assets 500 500

EQUITY AND LIABILITIES

Capital and reserves

Issued share capital 2 10,000 10,000

Retained earnings (9500) (9500)

Total capital and reserves 500 500

Notes 2005 2004

R R

Turnover 1.2 0 0

Cost of Sales 0 0

Gross Profit 0 0

Other Operating Income 0 0

Direct Expenses 0 0

Profit from Operations 2 0 0

Interest received 0 0

Profit before taxation 0 0

Income Tax Expense 0 0

Net Profit for the year 0 0

INCOME STATEMENTFOR THE YEAR ENDED 31ST MARCH, 2005

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31ST MARCH, 2005

Share Retained

Capital Reserves Earnings Total

R R R R

Balance at 31 March 2004 10000 0 (9500) 500

Balance at 31 March 2005 10000 0 (9500) 500

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31ST MARCH, 2005

Notes 2005 2004

R R

Cash Flows From Operating Activities

Net Cash generated from operations A 0 0

Net Cash paid 0 0

Increase in working capital B 0 0

Taxation C 0 0

Cash retained from operating activities 0 0

Cash Flows From Investing Activities 0 0

Acquisition of propoerty, plant and equipment 0 0

Proceeds on disposal of shares 0 0

(Increase) in share capital 0 0

(Decrease) in shareholders loans 0 0

Net Decrease / Increase in Cash

And Cash Equivalents 0 0

Cash and cash equivalents at the beginning of the year 500 500

Cash and Cash Equivalents at the End Of The Year 500 500


NOTES TO THE ANNUAL FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 MARCH, 2005

2005 2004

R R

A. CASH GENERATED FROM OPERATIONS

Operating loss/profit for the year 0 0

Elimination of non cash items:

Net Interest paid 0 0

Bad debt provision 0 0

Total 0 0

B. INCREASE IN WORKING CAPITAL

Decrease in accounts receivable 0 0

Decrease /(Increase) in Inventory 0 0

(Decrease) in accounts payable 0 0

Total 0 0

C. TAXATION PAID IS RECONCILED TO THE

AMOUNTS DISCLOSED IN THE

INCOME STATEMENT AS FOLLOWS

Amounts unpaid at the beginning of the year 0 0

Amounts charged to the income statement 0 0

Amounts unpaid at the end of the year 0 0

Total 0 0

NOTES TO THE CASH FLOW STATEMENTFOR THE YEAR ENDED 31ST MARCH, 2005

1. ACCOUNTING POLICIES

The annual financial statements are prepared on the historical cost

basis and incorporate the following principal accounting policies that

have been consistently applied in all material respects:

1.1. Inventory

Inventory, consisting of raw materials, work in progress and finished

goods, is valued at the lower of cost, determined on the first-in, first-out

basis, and net reliable value.

1.2. Turnover

Turnover comprises net invoicing in respect of normal trading activities

exclusive of value added tax.

2. SHARE CAPITAL

2005 2004

R R

Authorised

10,000 ordinary shares of R1 each 10,000 10,000

Issued

10,000 ordinary shares of R1 each 10000 10,000

Notes

LUPIN 2004-05

Documents

Transcript of LUPIN 2004-05