A.  BALANCE SHEET
 
 1.  SECURED LOANS
 
 I.  Term Loans from various banks (excluding vehicle loans) are secured
 by way of First Pari Passu Charge on all the fixed assets of the
 Company and further secured by way of Second Pari Passu Charge on all
 the current assets of the Company and personal guarantee of directors
 namely Sh. Sanjiv Goyal & Sh. Aryan Goyal. Amount repayable within one
 year Rs. 838.11 millions (Previous Year Rs. 557.16 millions).
 
 II.  Working Capital Limits & Corporate Loans are secured by way of
 First Pari Passu Charge on all the current assets of the Company and
 further secured by way of Second Pari Passu Charge on all the fixed
 assets of the Company and personal guarantee of directors namely Sh.
 Sanjiv Goyal & Sh. Aryan Goyal.
 
 2.  UNSECURED LOANS
 
 Amount repayable within one year on vehicle loans is Rs. 3.02 millions
 (Previous Year Rs. 5.08 millions) and on FCCBs Rs. 1471.38 millions
 (Previous Year Nil.)
 
 3.  FIXED ASSETS
 
 A sum of Rs. 368.90 millions (previous year Rs.149.30 millions) has
 been capitalized under the head Plant & Machinery (Research &
 Development). The company has been regularly working on modernization
 and development of its existing technological system and development of
 new products & processes. As such, there has been loss of capacity
 utilization because of the development of new product and processes. In
 the opinion of management, the above process will yield benefits in the
 coming years in the shape of more demand in the international market as
 well as better price.
 
 4.  INVESTMENTS
 
 Investments are classified into current and long term investments. Long
 Term Investments are stated at cost and provision for diminution in
 value is made if decline is other than temporary in the opinion of the
 management. Current investments are valued at cost and provision is
 made for decline in market value.
 
 5.  CURRENT ASSETS, LOANS & ADVANCES
 
 In the opinion of the management of the Company, the current assets,
 loans and advances are approximately of the value as stated, if
 realized in the ordinary course of business.
 
 6.  CURRENT LIABILITIES
 
 i) The principal amount remaining unpaid as at 31st March 2011 in
 respect of enterprises covered under the Micro, Small and Medium
 Enterprises Development Act, 2006 was Rs. 1.32 millions (previous year
 Rs. 1.84 millions). The interest amount computed based on the
 provisions under Section 16 of the MSMED Act amounting to Rs.  0.03
 millions (previous year Rs 0.31 millions) was remaining unpaid as of
 31st March 2011. The principal amount that remained unpaid as at 31st
 March 2010 was paid during the year. The list of undertakings covered
 under MSMDA was determined by the Company on the basis of information
 available with the Company and have been relied upon by the auditors.
 
 ii) Investor Education and Protection Fund
 
 Other liabilities include Rs. 0.81 million (previous year Rs. 0.86
 millions) which relates to unclaimed dividend and share application
 money refundable. Out of it no amount has become due for deposit to
 Investor Education and Protection Fund as at balance sheet date.
 
 7.  UTILISATION OF FUNDS RAISED FROM GDR ISSUE AND PRIVATE EQUITY
 
 In February 2010, the company allotted 26.00 million equity shares
 having face value of Re.1 each on preferential basis and 46.00 million
 equity shares having face value of Re.1 each underlying Global
 Depository Receipts (GDRs) to the institutional investors.  The
 aggregate funds raised by such issue (including securities premium)
 were Rs. 2412.89 million (net of share issue expenses of Rs.108.24
 million). The equity shares represented by the GDRs/private placement
 carry equivalent rights with respect to voting and dividends as the
 ordinary equity shares. The company had utilized the funds for the
 purpose these were raised and the residual amount has been temporarily
 parked in Mutual Funds and various bank accounts of the Company.
 
 8.  CONTINGENT LIABILITIES
 
                                                    (Rs. in millions)
 
 S.No.  Particulars                             31.03.2011   31.03.2010
 
 i) Letter of Credit (Foreign / Inland)             482.40       307.25
 
 ii) Bank Guarantees                                  4.50         5.12
 
 iii) Bills Discounted                               39.95       149.37
 
 iv) Differential amount of custom duty in 
 respect of                                          38.08        74.23
 machinery imported under EPCG Scheme
 
 v) Claims not acknowledged as debts:- ** 
 
 -Income Tax matters                                 26.59        31.32
 
 vi) Estimated amount of contracts remaining to 
 be executed on                                     292.44         7.95
 capital account and not provided for 
 (net of advance)
 
 ** The matters are subject to legal proceedings in the ordinary course
 of business. The legal proceedings, when ultimately concluded will not,
 in the opinion of management, have a material effect on the results of
 operation or financial position of the company.
 
 3.  Sales Tax Assessments for earlier years are in progress. No sales
 tax liability exists as on Balance Sheet date.
 
 4.  Income Tax
 
 Current Tax
 
 Provision for Income tax has been made as per Income-tax Act, 1961.
 
 Deferred Tax
 
 In compliance with Accounting Standard (AS-22) relating to Accounting
 on Taxes on Income issued under Companies (Accounting standards) Rule
 2006, as amended upto date , the Company has provided Deferred Tax
 Liability accruing during the year aggregating to Rs. 6.20 million
 (Previous Year Rs 100.02 million) and it has been recognized in the
 Profit & Loss Account. In accordance with clause 29 of Accounting
 Standard (AS 22) Deferred tax Assets and Deferred tax liabilities have
 been set off.
 
 6.  Leases:
 
 Operating leases are mainly in the nature of lease of office premises
 with no restrictions and are renewable/ cancelable at mutual consent.
 There are no restrictions imposed by lease arrangements.  There are no
 sub leases.
 
 Lease payments recognized in the profit and loss account are Rs. 7.14
 millions ( Previous Year Rs. 6.77 millions).
 
 7.  Employee Benefits:
 
 1. Benefits valued: Gratuity & Earned leave (both availment &
 encashment)
 
 2. Nature of the plans: Defined benefit; both gratuity & compensated
 absence liabilities are unfunded
 
 3. Valuation method: Projected Unit Credit Method
 
 9.  Miscellaneous Income of Rs 125 Millions represents the income
 earned by the company out of real estate activities. The income was
 offered for taxation u/s 132 to the Income Tax Authorities as
 additional income.
 
 C.  SEGMENT REPORTING
 
 i) Primary Segment (Business Segment)
 
 The Company operates only in the business segment of Pharmaceuticals
 Products, and in the opinion of the management the inherent nature of
 activities in which it is engaged are governed by the same set of risks
 and reward. As such the activities are identified as single segment in
 accordance with the Accounting Standard (AS-17) issued under Companies
 (Accounting standards) Rule 2006, as amended upto date.
 
 D.  RELATED PARTY DISCLOSURES
 
 Related party disclosures as required under Accounting Standard (AS-18)
 on Related Party Disclosures issued under Companies (Accounting
 standards) Rule 2006, as amended upto date , are given below: -
 
 1.  Relationship
 
 i) Subsidiary Companies
 
 Chempharma Private Limited – Sri Lanka – Wound up during the year
 Nectar Capital Limited – Mauritius – Incorporated on 27th May, 2010
 Nectar Lifesciences UK Limited – United Kingdom – Incorporated on 1st
 March, 2011
 
 ii) Joint Ventures and Associates
 
 None
 
 iii) Key Management Personnel (Managing Director/Whole-time directors)
 
 Sh. Sanjiv Goyal
 
 Sh. Aryan Goyal
 
 Sh. Dinesh Dua
 
 Sh. Saurabh Goyal*
 
 * appointed w.e.f. 11th August, 2010
 
 iv) Relatives of the Key Management Personnel
 
 Smt. Raman Goyal
 
 Sh. Saurabh Goyal*
 
 * appointed w.e.f. 11th August, 2010
 
 v) Entities over which key management personnel/their relatives are
 able to exercise significant influence*
 
 Surya Narrow Fabrics – New Delhi
 
 Nectar Lifestyle Limited- New Delhi
 
 Nectar Organics Ltd. – New Delhi
 
 * With whom the company had transactions during the year.
 
 E.  Foreign Currency Convertible Bonds (FCCBs)
 
 During the year 2006-2007, the company raised Zero Coupon FCCB
 aggregating to USD 35 million (Rs. 1563.50 Million as on the date of
 the issue) for financing its capital expenditure and other permitted
 expenditure. The bond holders, had the option to convert the FCCBs into
 equity shares of the company at an initial conversion price of Rs.
 25.996 per share at a fixed rate of exchange on conversion Rs. 44.6725
 per USD, at any time on and after 4th June, 2006 and prior to 16th
 April 2011. Further the company has an option of early redemption of
 these FCCBs in whole at any time on or after 25th April, 2009 but prior
 to 26th April, 2011, subject to certain conditions. During the year
 2007-2008, FCCBs amounting to Rs. 86.34 millions (USD 20 millions) were
 converted into Equity Capital. The Balance FCCBs were redeemed in USD
 on 26th April, 2011 at 150.71 per cent of their principal amount.
 
 The FCCBs premium payable on redemption for the current year has been
 charged to Profit & Loss account. In earlier years, the same was
 charged to Securities Premium Account, due to uncertainty, as the bond
 holders had the option to convert the FCCBs into equity shares of the
 company.
 
 F.  DERIVATIVES
 
 CURRENCY DERIVATIVES
 
 The company uses foreign currency forward contracts and currency
 options to hedge its risks associated with foreign currency
 fluctuations relating to certain firm commitments and forecasted
 transactions. The use of foreign currency forward contracts and
 currency options is governed by Company''s strategy. The company does
 not use forward contracts and currency options for speculative
 purposes.
 
 I.  IMPAIRMENT OF ASSETS
 
 Management periodically assesses using external and internal sources
 whether there is an indication that an asset may be impaired.
 Impairment occurs where the carrying value of future cash flows
 expected to arise from the continuing use of the assets and its
 eventual disposal. The impairment loss to be expensed is determined as
 the excess of the carrying amount over the higher of the asset''s net
 sales price or present value as determined above.