The Directors have pleasure in presenting the Fifteenth Annual Report
 of the Company alongwith the Audited Accounts for the year ended 31st
 March, 2000.
  
 FINANCIAL RESULTS
 
 The financial results for the year ended 31st March, 2000 are
 summarised below :
 
                                                             Rs. in Lacs
 
 Sales and Income from Operations                                9429.52
 
 Loss before Depreciation                                       (861.49)
 
 Less : Depreciation for the year                                 286.90
 
 Loss for the year                                             (1148.39)
 
 
 During the year under review, the business had incurred loss due to
 high interest cost and lower capacity utilisations and further due to
 change in the valuation of inventories as per Accounting Standards - 2.
 Further during the year, the Bulk Drug Division has been hived off, as
 this division could not take off as expected due to industry recessions
 and other factors and the relevant proceeds of the same were used for
 repayment of high cost debts.
 
 During the year, Dr Reddy's Laboratories Limited, (DRL) Hyderabad has
 acquired the entire stake of the promoters and made further
 acquisitions, through Open offers.  It is expected that this
 acquisition by Dr Reddy's Group will benefit the company in the long
 run.
 
 DIVIDEND
 
 In the light of operating loss for the year, the Directors have not
 recommended any dividend for the year.
 
 FIXED DEPOSITS
 
 The Deposits from the Public and Share holders as on 31.03.2000 amount
 to Rs. 29.43 lacs.  Deposits maturing during the year were paid on
 respective due dates.  There were no unpaid matured deposits.
 
 CONSERVATION OF ENERGY/TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
 AND OUTGO
 
 Information as per section 217 (1) (e) of the Companies Act, 1956 read
 with rule 2 of the Companies (Disclosure of particulars in the report
 of Board of Directors) Rules 1988, is set out in the annexure-1 which
 forms part of this report.
 
 DIRECTORS
 
 During the year Mr. R. K. Ramanathan, Mr. G. K. Ramani & Mr. V. S.
 Raaman resigned from the Board with effect from 25.02.2000.  The Board
 places on record grateful appreciation of the valuable services
 rendered by Mr. R. K. Ramanathan, Mr. G. K. Ramani & Mr. V. S. Raaman
 during their tenure of office as Directors.
 
 Mr. Satish Reddy, Mr. G. V. Prasad and Mr. V. S. Vasudevan, who were
 appointed as Directors of the Company with effect from 25.02.2000.
 
 AUDITORS
 
 The statutory Auditor of the Company M/s. Karra & Co., Chartered
 Accountants, Chennai retire at the ensuing Annual General Meeting and
 being eligible, offers themselves for reappointment.
 
 FINANCE
 
 The Directors would like to express their appreciation of the
 co-operation and support received from all the Banks and the Financial
 Institutions, Also the Directors would like to inform you that all
 loans borrowed from Banks and Financial Institutions were substituted
 with low cost borrowings.
 
 PARTICULARS OF EMPLOYEES
 
 As required by the provisions of Section 217 (2A) of the Companies Act,
 1956 read with the Companies (Particulars of Employees) Rules, 1975 as
 amended, the names and other particulars of the employees are set out
 in the Annexure - 2 to the Report of Directors'.  However, as per the
 provisions of section 219 (1) (b) (iv) of the Companies Act, 1956, the
 Report and Accounts are being sent to all the share holders of the
 company excluding the aforementioned information.  Any shareholder
 interested in obtaining such particulars may write to the Corporate
 Office of the Company.
 
 DEMATERIALISATION OF SHARES
 
 We are glad to inform you that the Company had entered into an
 agreement with National Securities Depository Limited (NSDL) to
 facilitate the holding and trading of the Company's shares in
 electronic form.
 
 Y2K COMPLIANCE
 
 The company has successfully rolled over its IT and other Business
 systems post millennium and no advance impact was encountered during
 the changeover period.
 
 II. CONSUMPTION PER UNIT OF PRODUCTION
 
 The consumption per unit depends on the product mix since it consists
 of different types of products and variable batch sizes.  Hence there
 is no specific standard.
 
 III. TECHNOLOGY ABSORPTION / RESEARCH & DEVELOPMENT
 
 TECHNOLOGY ABSORPTION
 
 Information under section 217 (1) (e) of the Companies Act, 1956 read
 with companies (disclosure in the report of Board of Directors) Rules,
 1988 and forming part of Report of Directors.
 
 SCIENTIFIC AREAS
 
 In the formulation R&D Centre at Ambattur, the following new products
 have been developed successfully during the year.
 
 1. Cetrizine and Ambroxol Tablets and Syrup
 
 2. Mouth dissolving Nimesulide Tablets
 
 3. Revised composition for Optisulin Capsules
 
 4. High concentration of Antioxidant in soft gelatin capsules
 
 5. Nimesulide in soft gelatin capsules
 
 6. Nimesulide and Paracetamol in soft gelatin capsules
 
 7. Griseofulvin topical preparations
 
 8. Haematinic capsules (for export)
 
 9. Chewable Vitamin tablet preparation.
 
 10. Anti diabetic Ayurvedic preparations.
 
 BENEFITS DERIVED AS A RESULT OF ABOVE R & D
 
 a. Following formulation brands have been launched during the financial
 year 1999-2000.
 
 1. Relent Tablet and Syrup
 
 2. Haematinic Capsules (for Export)
 
 3. Antoxid HC Capsules
 
 b. Branded formulations were exported to African countries, after their
 rgistration.
 
 IV. FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 Information under Section 217 (1) (e) of the Companies Act, 1956 read
 with Companies Act (Disclosure of Particulars in the Report of
 Directors' Rules, 1988) and forming part of Report of Directors.
 
 S.No.                                   Current Year      Previous Year
                                            1999-2000          1998-1999
 
 1. Earnings in foreign Exchange
 during the year F.O.B. value of
 Export                                   7,60,72,192        5,52,81,743
 
 2. CIF Value of Import (on cash
 basis) Raw materials, capital
 goods, spare parts, components
 & consumables                            4,85,07,918        2,63,07,346
 
 3. Expenditure in Foreign currency
 during the year (on cash basis)
 
 Travelling Expenses                         9,67,105           7,60,857
 
 Interest and Know-how fees                 10,18,094          20,37,899
 
 Others                                     36,43,846          27,73,913
 
 4. Total Foreign Exchange used (2+3)     5,41,36,963        3,18,80,015