The Directors have pleasure in presenting the 25th Annual Report
 together with the Audited Accounts of the Company for the financial
 year ended on 31st March, 2012.
 
 1.  FINANCIAL RESULTS:
 
                                                   (Rs. in Lakhs)
 
 Particulars                                2011-12     2010-11
 
 1)   Total Income                         14,224.60   11,664.84
 
 2)   Earnings before Interest , Tax,        1588.51     1131.76
 
 Depreciation & Amortisation
 
 Less :
 
 Depreciation & Amortisation                  413.08      342.36
 
 Finance cost                                 729.91      679.13
 
 Profit /(Loss)before taxation and prior
 period adjustment                            445.52      110.27
 
 Less :
 
 3)   Provision for taxation                    8.95        4.53
 
 4)   Deferred Tax                             60.75       58.67
 
 5)   Extra Ordinary / Non Recurring items       -           -
 
 6)   Prior year adjustments                    0.12       (0.16)
 
 7)   Profit after Tax                        375.70       47.23
 
 Add:
 
 8)   Profit & loss account balance at the    804.53      809.56
 beginning of the year
 
 9)   Profit /(Loss) made available for     1,180.23      856.79
 appropriation
 
 Less:
 
 10)  Proposed Dividend on Equity Shares         -           -
 
 11)  Tax on Dividend                            -           - 
 
 12)  Balance Carried to Balance sheet      1,180.23      856.79
 
 Note: Previous year''s income has been regrouped in line with that of
 the year under review for comparison. The opening balance of P & L has
 been reduced during the year consequent upon merger of Basava Chem
 Ltd., with the Company.
 
 2.  DIVIDEND:
 
 In view of the capex plans and to facilitate expansion programs under
 consideration, your Directors have decided not to recommend payment of
 dividend for the financial year 2011-12.
 
 
 4.  BUSINESS OPERATIONS:
 
 During the financial year 2011-12, your Company has achieved a total
 turnover of Rs 142.25 crores as against Rs. 116.65 crores achieved during
 the previous year 2010-11, thus registering a growth of 21.95%.
 
 With this increase in turnover, the net profit after tax of the Company
 during 2011-12 has increased substantially to Rs. 3.76 crores as against
 the net profit of Rs. 0.47 crore achieved in the previous year, 2010-11.
 
 The bulk drug business continues to dominate, as the total sales on
 this segment has increased from Rs. 46.20 crores in 2010-11 to Rs. 53.01
 crores during the year 2011-12. The products mix during the year
 2011-12 improved with higher sale of high value items in addition to
 our regular API.
 
 Exports of Bulk Drugs has registered a growth of 16.05% during the year
 under review with a turnover of Rs. 36.44 crores as against Rs. 31.40
 crores achieved during the previous financial year.
 
 The export formulations division registered a growth of 6.71% by
 increasing its turnover from Rs. 36.94 crores in the previous year to Rs.
 39.42 crores during the year under review.  Your Company expanded its
 presence in many new global markets such as Latin America, many African
 countries, South East Asia etc.
 
 Your Company''s branded formulations Divisions mainly consisting of
 Diabetic and Cardiac Products made a net sale of Rs. 24.09 crores
 during 2011.12 as against Rs. 19.58 crores during the previous year,
 thereby strengthening the Company''s presence in the domestic market.
 
 The over all exports of your Company during the year under review has
 increased to Rs. 75.85 crores from Rs. 66.48 crores achieved during the
 previous year.
 
 Supplies to Govt. Institutional business registered a turnover of Rs.
 8.14 crores during the year, as against Rs. 6.44 crores during the
 previous year and the Ayurvedic products Division has achieved a turn
 over of Rs 1.73 crores, during the year under review as against Rs. 1.94
 crores achieved during the previous financial year.
 
 Your Company has also won the Best Exporter award from the Sri Lankan
 Government for the Year 2011-12 for supply of drugs and medical
 equipments to Sri Lanka Pharmaceutical Corporation, a Government of Sri
 Lanka enterprise.
 
 5.  RESEARCH & DEVELOPMENT:
 
 The Research and Development division of your Company continued its
 activities in the field of development and standardization of pathways
 for the manufacture of novel and high value active pharmaceutical
 ingredients. The clear pathways thus established have resulted in the
 scale up of production levels of these drugs to meet the needs of the
 international market.
 
 The products developed by the R&D division, when they enter the
 manufacturing stream, are backed by extensive documentation of data
 pertaining to the control of the quality of the drug. The quality and
 purity of these products are established by recourse to extensive and
 sophisticated analytical methodology. The R&D division works in tandem
 with the Quality Control Department in the development of stringent
 analytical procedures and protocols.
 
 The quality of the drugs your Company offers to its customers being of
 such high order, there is ready acceptance of these products in the
 international markets. There is continuing and growing demand for
 products of your Company. New products in the therapeutic segments of
 antihistamines, anxiolytics and for the treatment of neurological
 disorders are being introduced in the near future in the commercial
 market. These products are of direct result of R&D efforts in this
 direction.
 
 6.  AUDIT COMMITTEE:
 
 The Audit Committee consisted of Dr. G.S.R. Subba Rao, Independent
 Director as Chairman, Mr. Ajit Kumar, nominee Director of EXIM Bank and
 Mr. Shrenik Siroya, Non-executive Director; Mr. Pramod Kumar. S who is
 Independent Director was inducted into the Committee as member, with
 effect from 10.08.2012. The Audit Committee has been discharging its
 duties under SEBI Guidelines read with the Listing Agreement.  The said
 Committee is also functioning as Audit Committee under Section 292A of
 the Companies Act, 1956.
 
 7.  AUDITORS'' REPORT
 
 There are no adverse qualifications or remarks in the Auditors'' Report.
 However, regarding the outstanding un-paid dividend amount for the year
 2003.04 of Rs. 1,84,828 which was due for transfer to the Investor
 Education and Protection Fund, as mentioned in the Auditors'' Report, it
 is hereby confirmed that the amount has since been transferred to the
 said Fund.
 
 8.  INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
 
 Your Company has an adequate system of internal controls with clearly
 defined authority limits. They ensure that the Company''s assets are
 protected against loss from unauthorised use or disposition and all
 transactions are authorised, recorded and reported in conformity with
 generally accepted accounting principles. These systems are designed to
 ensure accuracy and reliability of accounting data, promotion of
 operational efficiency and adherence to the prescribed management
 policies. These policies are periodically reviewed to meet current
 business requirements.
 
 Internal Audit is carried out by Messrs. Manjunath & Co.  Bangalore, an
 independent firm of Chartered Accountants.  They interact with the
 Audit Committee and have reported to the Directors that there is
 adequate internal control systems in respect of areas carried out by
 them.
 
 9.  DIRECTORS'' RESPONSIBILITY STATEMENT:
 
 In compliance to the provisions of Section 2I7(2AA) of the Companies
 Act, 1956, your Directors wish to confirm with reference to statement
 of Accounts for the financial year ended on 31.03.2012:
 
 (i) that in preparing the Annual Accounts, all applicable Accounting
 Standards have been followed;
 
 (ii) that the accounting policies adopted are consistently followed and
 the judgements or estimates made 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 and Loss Account of the
 Company for the financial year ;
 
 (iii) that the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Act for safeguarding the assets of the Company and
 for preventing/detecting fraud and other irregularities;
 
 (iv) That the Directors have prepared the annual accounts on ''going
 concern'' basis.
 
 10.  SUBSIDIARY COMPANIES:
 
 The Amalgamation proceedings of Basav Chem limited, with Bal Pharma
 Limited was approved by Honourable High Court of Karnataka vide COP No
 90/2010 and 89/2010. As on 31.03.2012 the Company has no subsidiaries,
 either wholly owned or otherwise. Hence, the financial results of the
 Company for the year under review and the results pertaining to the
 previous year, are not entirely comparable.
 
 11.  PARTICULARS OF EMPLOYEES:
 
 There was no employee drawing remuneration falling within the limits
 prescribed under Section 2I7(2A) of the Companies Act, 1956.
 
 12.  CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
 EARNINGS AND FOREIGN EXCHANGE OUTGO:
 
 As per provisions of Section 217(I)(e) of the Companies Act, I956, read
 with the Companies (Disclosure of Particulars in the Report of the
 Board of Directors) Rules, I988, details relating to the Conservation
 of Energy and Technology Absorption and Foreign Exchange Earnings and
 Outflow are given in Annexure I, which is forming part of the Directors
 Report.
 
 13.  PUBLIC DEPOSITS:
 
 As on date of the Report, the Company has not accepted any public
 deposits.
 
 14.  DIRECTORS:
 
 Dr. G. S. R Subba Rao and Mr. Shrenik Siroya, Directors retire by
 rotation at the 25th Annual General Meeting of the Company and being
 eligible, offer themselves for reappointment. Your Directors recommend
 their reappointments.
 
 15.  AUDITORS:
 
 Messrs T. D. Jain & DI Sakaria (erstwhile Messrs Ostawal & Jain),
 Chartered Accountants, Statutory Auditors of the Company retire at the
 Annual General Meeting and are eligible them for appointment.
 
 16.  COST AUDIT:
 
 Pursuant to Section 233B of the Companies Act, I956, the Central
 Government has prescribed Cost Audit of the Company''s Formulations
 Division as well as Bulk Drug Division.
 
 Subject to the approval of the Central Government, the Board has
 appointed Mr. M.R. Krishna Murthy as Cost Auditor of the Company for
 the financial year, 2011-12 for cost audit of both Formulation and Bulk
 Drug divisions of the Company separately. The Cost Audit is under
 progress and the Company will submit the Cost Auditor''s report to the
 Central Government soon.
 
 17.  CORPORATE GOVERNANCE AND ADDITIONAL INFORMATION TO SHAREHOLDERS:
 
 A detailed report on the Corporate Governance System and practices of
 the Company are given in a separate section in this Annual Report.
 Detailed information for the shareholders is given in Additional
 Shareholders information section.
 
 18.  HUMAN RESOURCES:
 
 The Company''s Human Resource agenda for the year focused on
 strengthening four key areas: Building a robust talent pipeline,
 enhancing individual and organizational capabilities for future
 readiness, driving greater employee engagement, and strengthening
 employee relations through progressive people management.
 
 19.  INSURANCE COVERAGE:
 
 The Board reports that your Company has adequate insurance cover on all
 the assets of the Company.
 
 20.  APPRECIATION:
 
 Your Directors place on record their sincere appreciation of
 significant contributions made by the employees through their
 dedication, hard work and commitment and the trust reposed on us by the
 medical fraternity and the patients. The Directors also acknowledge the
 support and wise counsel extended to the Company by Canara Bank, Punjab
 National Bank, EXIM Bank, State Bank of India and other Banks and
 financial institutions, government agencies, shareholders and investors
 at large. Your Directors look forward to having the same support in
 their endeavour to help people lead healthier lives.
 
                       For and on behalf of the Board of Directors 
 
 Bangalore 
 
                         Dr. S. Prasanna       Shailesh Siroya
 
 10th August, 2012     Executive Director     Managing Director