The Directors hereby submit the Seventeenth Annual Report together with
 the Audited Accounts of the Company for the year ended 31st March,
 1999.
 
 FINANCIAL RESULTS :
 
 The financial results of the Company for the year ended 31st March,
 1999 are summarised below :
 
                                                           (Rs. in lacs)
 
                                         Current year      Previous year
                                              1998-99            1997-98
 
 Sales and other income                      4,600.55           3,505.46
 
 Gross Profit/(Loss) for the year              363.83           (123.44)
 
 Add : Interest                                262.12             183.01
 
 Depreciation                                   62.88              60.04
 
 Prior period Taxation                           0.63                --
 
 Net Profit/(Loss) for the year                 38.20           (366.49)
 
 REVIEW OF OPERATIONS :
 
 During the year, the total income increased to Rs. 4,600.55 lacs as
 compared to Rs. 3,505.46 lacs in last year.  The Company posted a
 profit of Rs. 38.20 Lacs as compared to a loss of Rs. 366.49 Lacs in
 the previous year.  Though the average sales realisation were lower as
 compared to the previous year, on account of higher volumes achieved,
 tight control over costs, increased production efficiency and marketing
 and financial support from Sun Pharmaceutical Industries Ltd, the
 Company was able to turn-around and post net profit for the year under
 review.
 
 DIVIDEND :
 
 Due to inadequacy of profits and high accumulated losses, the Directors
 regret their inability to recommend any dividend for the year.
 
 STATUS ON BIFR :
 
 The Board for Industrial and Financial Reconstruction (BIFR) at its
 hearing held on 31st March, 1999 declared the Company as Sick
 Industrial Company under the provisions of Sick Industrial Companies
 (Special Provisions) Act, 1985 (SICA) and appointed ICICI Limited as
 the Operating Agency (OA) for submitting a report on the rehabilitation
 package of the Company.  Further, BlFR has in its hearing held on 15th
 October, 1999 directed the OA to submit the revised rehabilitation
 proposal based on the Company's merger with Sun Pharmaceutical
 Industries Ltd. ICICI Ltd has appointed Messrs. Price Waterhouse as the
 valuers for recommending the share exchange ratio for the purposes of
 merger.
 
 DIRECTORS :
 
 Mr. Srinivas Lanka, Director resigned from the Board with effect from
 30th January, 1999.  The Board places on record 4 appreciation of the
 services rendered by Mr. Srinivas Lanka during his association with the
 Company.  Mr. Girish R. Desai was appointed as a Director by the Board
 in the casual vacancy created by the resignation of Mr. Srinivas Lanka.
 Mr. R. N. Sethna, Mr. D. T. Desai and Mr. Harin P. Mehta, Directors
 retire by rotation at the ensuing Annual General Meeting and being
 eligible have offered themselves for re-appointment.  Mr.H.I.Gandhi's
 term of appointment as the Managing Director expired on 30th November.
 1998.  The Directors have re-appointed him as the Managing Director of
 the Company for a further period of two years from 1st December, 1998
 subject to the approval of the shareholders of the Company.
 
 DEPOSITS :
 
 During the year, Company neither accepted nor renewed any deposits.
 
 AUDITORS :
 
 There is a proposal to appoint Messrs.  Price Waterhouse & Co.,
 Chartered Accountants, Mumbai as Auditors of the Company in place of
 the retiring Auditors Messrs.  Valia & Timbadia, Chartered Accountants,
 Mumbai.  The retiring auditors have informed the Company that they do
 not wish to seek re-appointment as Auditors of the Company at the
 forthcoming Annual General Meeting.
 
 The Board of Directors would like to thank Messrs.  Valia & Timbadia
 Chartered Accountants, Mumbai, the outgoing Auditors, for their
 services rendered to the Company during their association as Statutory
 Auditors.
 
 STATUS OF Y2K COMPLIANCE :
 
 The Company has ensured that all the hardware and software are Y2K
 compliant.  The Company has also taken all measures to meet any
 contingency that may arise.
 
 PERSONNEL :
 
 Industrial relations with Company employees during the year under
 review remained cordial.  The Directors take this opportunity to thank
 all the employees of the Company for their excellent co-operation.
 
 No particulars pursuant to Sections 217(2A) of the Companies Act, 1956
 read with Companies (Particulars of Employees) Rules 1975 as amended,
 are given, since the Company has no person in its employment drawing
 salary in excess of Rs 600,000 per annum or Rs. 50,000 per month
 
 INFORMATION AS PER SECTION 217(1)(e) READ WITH COMPANIES (DISCLOSURE OF
 PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1998 AND
 FORMING PART OF THE DIRECTORS' REPORT
 
 I. CONSERVATION OF ENERGY :
 
 (a) Energy conservation measures taken -
 
 The Company continues to reap benefits of the insulation work done in
 the earlier years.
 
 (b) Additional investments and proposals, if any, being implemented for
 reduction of consumption of energy -
 
 The Company has started to generate steam through Boiler using natural
 gas in a phased manner.  This has resulted in saving of energy.
 
 (c) Impact of the measures at (a) & (b) above for reduction of energy
 consumption and consequent impact on the cost of production of goods -
 
 Due to implementation of the above, the Company continues to save on
 the cost of utilities.
 
 II.  TECHNOLOGY ABSORPTION :
 
 Efforts made in technology absorption as per Form - B of the Annexure
 to the Rules :
 
 1.  Research & Development (R & D) :
 
 (a) Specific areas in which R & D carried out by the Company :
 
 Regular R & D activities are carried out in the in-house R & D Centre &
 Quality Assurance Laboratory for new product synthesis, ecofriendly
 process development, yield improvement, cost reduction, recyclability,
 improvement in the Quality and stability of the existing products.
 
 (b) Benefits derived as a result of the above R & D :
 
 Due to development of the process cost reduction, import substitution
 and reduction in consumption of the solvent are achieved.  Thus the
 efficiency of operations is expected to improve.
 
 (c) Future plan of action -
 
 Improvement in certain production areas are being planned for
 increasing productivity, quality, recyclability and development of
 ecofriendly processes.
 
 (d) Expenditure on R & D *                               (Rs. In lacs)
 
 i.  Capital                                                    --
 
 ii.  Recurring                                                7.43
 
 iii. Total                                                    7.43
 
 iv.  Total R & D expenditure as a
      percentage of total turnover                             0.16
      *  In-house quality control laboratory.
 
 2.  Technology Absorption, Adaptation and innovation.
 
 (a) Efforts, in brief, made towards technology, absorption, adaptation
 & innovation.  Continuous upgradation of production process is being
 implemented.
 
 (b) Benefits derived as a result of the above efforts e.g. product
 improvement, cost reduction products development, import substitution,
 Energy saving etc.
 
 Due to product improvement, intermediate development and recyclability
 there is a considerable saving in valuable foreign exchange and also
 improvement in availability of such life saving drugs.