Biocon

The are pleased to present the Thirtieth Annual Report on business and
 operations together with the audited financial statements and the
 auditors report of your Company for the financial year ended March 31,
 2008. The financial highlights for the year under review are given
 below:
 
 Corporate Results:                                     Rs in Millions 
 Particulars for the year ended March 31,         2008        2007
 
 Total Revenues                                  9,292       8,631
 Total Expenditure                               6,511       6,267
 Profit before Interest Depreciation and Tax     2,781       2,364
 Interest                                           29          77
 Depreciation                                      690         576
 Profit before Tax                               2,062       1,711
 Income Tax                                        106         127
 Profit after Tax                                1,956       1,584
 Exceptional items (net of tax)                  2,394         -
 Surplus b/f from previous year                  4,376       3,301
 Profit available for appropriation              8,725       4,885
 Proposed dividend on equity shares                500         300
 Tax on proposed divided                            85          51
 Transfer to General Reserve                       435         158
 Balance in Profit and Loss account              7,705       4,376
 
 Consolidated results (Under Indian GAAP)               Rs in Millions
 Particulars for the year ended March 31,         2008        2007
 
 Total Revenues                                 10,902       9,896
 Total Expenditure                               7,552       7,023
 Profit before Interest, Depreciation and Tax    3,350       2,873
 Interest                                          102          98
 Depreciation                                      939         665
 Profit before Tax                               2,309       2,110
 Income Tax                                        129         169
 Profit after Tax                                2,180       1,941
 Minority Interest                                  65          62
 Profit after tax and Minority interest          2,245       2,003
 Exceptional items (net of tax)                  2,394         -
 Profit after exceptional items                  4,639       2,003
 
 
 Results of Operations:
 
 During the year under review the operations excluding exceptional items
 reflected 10 percent growth in consolidated revenues while Operating
 Profits (EBITDA) and Profit after Tax grew by 17 percent and 12 percent
 respectively. The performance for the year reflects strong focus on
 operational efficiencies and aggressively defending our market position
 in the face of strong competition in the generic API space,
 monetization of some of our research programs by way of licensing and
 partnering and the divestment of the Enzymes business.
 
 A detailed performance analysis is given in the Management Discussion
 and Analysis.
 
 Appropriations Dividend
 
 The Board of Directors recommend a dividend of 60%, which is Rs 3.00
 per equity share and also recommend a Special Dividend of 40% (Rs 21-
 per share) pursuant to the divestment of enzyme business, taking the
 total dividend payout to 100% (Rs 5 per share).
 
 Transfer to Reserves
 
 We propose to transfer Rs 435 millions to the General Reserves. An
 amount of Rs 7,705 million is proposed to be retained in the profit_
 and loss account.
 
 Consolidated financial statements:
 
 As stipulated in the listing agreement with the stock exchanges, the
 consolidated financial statements have been prepared by the Company in
 accordance with the relevant accounting standards issued by the
 Institute of Chartered Accountants of India. The audited consolidated
 financial statements together with Auditors Report thereon form part of
 the Annual report. The consolidated net profits of the Group for the
 year ended 31st March 2008 amounted to Rs 2,245 million as compared to
 Rs 2,003 million in the previous financial year. This represents basic
 earnings per share of Rs 23.25.
 
 Business Operations overview and Outlook
 
 Significant volume growth and increased market share in the European
 and US Markets for Statins helped to negate the impact of pricing
 pressures and the weakening US Dollar thereby maintaining Statin sales
 at previous years levels.
 
 Sales of Insulin increased significantly in both the domestic and
 export markets. During the year, the Company entered into licensing
 agreements covering certain markets in Asia and has also progressed its
 application for registration in the European Union and several
 countries across Asia, Latin America and Africa. To meet the overall
 increased projections for Insulin, the Company has commenced an
 expansion of its capacities and the new facility is near completion and
 is expected to be commissioned later this year.
 
 Immunosuppressants are also expected to offer significant growth
 opportunities consequent to product patent expiry in key markets of
 Mycophenolate Mofetil and Tacrolimus in the period 2008-2012.
 
 Biocons foray into direct marketing of formulations continued to make
 impressive strides. During the year the Nephrology Division launched
 ERYPRO™ and ERYPROSAFE™, for treatment in renal transplant and dialysis
 and two Immunosuppresants - RENODAPT™ and TACROGRAF™. Biocons Insugen
 has been widely prescribed and accepted with impressive gains in market
 share and BIOMAB EGFR™ has been prescribed to over a 1,000 patients
 since its launch in August 2006.
 
 Biocon signed two important agreements with Abraxis Biosciences, USA to
 out- license G-CSF for the North American and European markets and
 in-license Abraxane® for India and a few markets across Asia and the
 GCC. These agreements are expected to generate a steady stream of
 revenues once the products get regulatory approval in the relevant
 territories.
 
 Biocon also entered into an agreement to acquire a majority stake in
 AxiCorp GmbH, Germany. This strategic investment will enable Biocon to
 market and distribute biosimilar insulin and analogs in Europe which
 together with NeoBiocon, its joint venture in Dubai, thereby expanding
 Biocons global reach.
 
 Biocon continues to invest incrementally to progress its innovation
 pipeline. While during the year Biocon monetized some of its research
 programs by way of licensing and partnering , its rich product
 pipeline including IN-K)5, BVX 10, BVX 20 and T1H are expected to
 contribute significantly to Biocons growth in the future years. During
 the year Biocon has completed Phase I studies of IN-105 in India and
 received approval for commencement of Phase II studies. Biocon has also
 initiated Phase I studies for IN 105 in Sweden and Phase II studies for
 T1H in India.
 
 Subsidiaries and Joint Ventures: Syngene International Limited:
 
 Syngene has strong knowledge base where out of the total strength 907
 employees (754 in the previous year) more than 90% employees are
 scientists. With the focused and collaborative efforts of its
 employees, Syngene has achieved greater heights during the year and has
 built a strong international reputation.
 
 Clinigene International Limited:
 
 Clinigene International Limited is a wholly owned subsidiary of your
 Company focused on Clinical Development.
 
 For the current financial year, Clinigene earned a profit of Rs 24
 million as against Rs 8 million in the previous year. The company
 registered a revenue of 227 million as against Rs 115 million in the
 previous year.
 
 During the year Clinigene has moved into a 65,000 sq. ft. fully
 functional facility at Semicon Park which houses a complete array of
 services including human pharmacology, clinical operations, clinical
 data management, bioanlytical services and a central laboratory
 supporting early phase to late phase clinical development programs.
 With demand for outsourced research growing exponentially, Clinigene is
 well positioned to strengthen its existing relationships and
 establishing new partnerships with top MNC pharma companies for
 clinical development requirements.
 
 Biocon Biopharmaceuticals Private Limited:
 
 This is Biocons 51:49 JV with CIMAB SA, to manufacture monoclonal
 antibodies and other Recombinant Therapeutics. BBPL commenced
 operations during the current year and has primarily been engaged in
 the manufacture of BIOMAb-EGFR™ for the treatment of Head and Neck
 cancer.
 
 As at March 31, 2008, BBPL had accumulated losses of Rs 325,611.
 Biocons share in the accumulated losses of BBPL aggregates Rs 166.062.
 Approval of BIOMAb-EGFR™ for new indications and commencement of sales
 to global markets is expected to help improve
 
 profitability in fiscal 2010.
 
 Report on subsidiary companies:
 
 The Company has obtained exemption from the Government of India,
 Ministry of Company affairs from attaching the financial accounts of
 the subsidiary companies to this Report pursuant to Section 212 of the
 Companies Act, 1956. However, a statement showing the relevant details
 of the Subsidiaries is enclosed and is a part of the Annual Report.
 
 Capital Structure
 
 During the financial year under review, the share capital of your
 Company remained unaltered.
 
 Employees Stock Option Plan (ESOP):
 
 During the year Company granted employee stock options for purchase of
 311,821 shares in Biocon Limited at a 20% discount to the prevailing
 market price, the details of the which are reported separately under
 the report.
 
 Corporate Governance:
 
 We strive to attain high standards of corporate governance while
 interacting with all its stakeholders. The Company has complied with
 the corporate governance code as stipulated under the listing agreement
 with the stock exchanges. A separate section on Corporate Governance
 along with a certificate from the auditors confirming the level of
 compliance is annexed and forms a part of the Directors report.
 
 Directors:
 
 Dr. Bala S Manian and Dr. Neville C Bain retire by rotation at the
 ensuing Annual General Meeting, and being eligible, offer themselves
 for re-appointment.
 
 Auditors:
 
 The Statutory Auditors M/s. S. R. Batliboi & Associates, Chartered
 Accountants, Bangalore, retire at the ensuing Annual General Meeting,
 and have confirmed their eligibility and willingness to accept office,
 if re-appointed.
 
 Management Discussion and Analysis Report
 
 The report as required under the Listing agreements with the Stock
 Exchanges is annexed and forms part of the Directors Report.
 
 Table (1) details regarding options granted till date to Directors and
 key managerial employees are provided below:
 
 SI. Name of Director 
     or key managerial          First Grant (Post 
                                Equity Share Split    Fourth Grant (Post
                                                      Equity Share
 No. personnel                  and Bonus) (No. of 
                                Options               Split and Bonus)
                                                     (No. of Options
                                Granted)              Granted)
 
 Directors
 
 1   Dr. Neville Bain             195,902                 Nil
 2   Prof. Charles Cooney         195,902                 Nil
 Key managerial employees
 3   Dr. Arun Chandavarkar        195,902                 Nil
 4   Mr. Murali Krishnan K. N.    195,902                 Nil
 5   Dr. Goutam Das               195,902                 Nil
 6   Mr. Rakesh Bamzai            122,430                 Nil
 7   Mr. Chinappa M. B.           122,439              37,500
 
 Scientific Advisory Board:
 
 The Scientific Advisory Board under the chairmanship of Prof. Charles
 Cooney met twice during the year under review The Board has played an
 important role in evaluating and steering the Companys R&D programs in
 a pragmatic manner.
 
 Fixed Deposits:
 
 We have not accepted any fixed deposits during the financial year under
 review.
 
 Directors responsibility statement:
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, the Board of
 Directors hereby confirm as under:
 
 i) In preparation of annual accounts, the applicable accounting
 standards have been followed along with proper explanation relating to
 material departures, if any;
 
 ii) We have selected such accounting policies and applied them
 consistently and made judgements 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 that period;
 
 iii) We have taken proper and sufficient care for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities;
 
 iv) We have prepared the annual accounts on a going concern basis.
 Particulars of Research and Development, Conservation of energy,
 technology absorption etc.:
 
 Particulars required under Section 217 (I) (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 given in the annexure
 to the Report.
 
 Particulars of employees:
 
 The information required to be furnished under section 217 (2A)of the
 Companies Act, 1956 read with Companies (Particulars of Employees)
 Rules, 1975, as amended, is annexed and is a part of this report.
 
 Acknowledgements:
 
 Your Directors greatly appreciate the commitment and dedication of all
 the employees at all levels that has contributed to the growth and
 success of the Company. We would also thank all our clients, vendors,
 investors, bankers and other business associates for their continued
 support and encouragement during the year.
 
 Your Directors thank the Government of India, Government of Kamataka,
 Ministry of Commerce and Industry, Ministry of Finance, Ministry of
 Information technology and Biotechnology and Customs and Excise
 Department, Income Tax Department, CSEZ and all other Government
 agencies for their support during the year and look forward to their
 continued support in the future.
 
                                       For and on behalf of the Board
 
                Kiran Mazumdar-Shaw                   John Shaw
               Chairman and Managing Director         Vice Chairman
 April 22, 2008