Novartis India

The Directors are pleased to present the Annual Report and the Audited
 Accounts for the financial year ended 31st March 2008.
 
 Financial Results                                  Rs million
                                            2007-2008     2006-2007
 
 Net Sales                                   5535            5422
 Operating Profits
 Profit before tax                           1543            1354
 Profit after tax                             972             886
 Balance brought forward from previous year   857             424
 Available for appropriation                 1829            1310
 
 The Directors have made the following appropriations:
 Interim Dividend                              --            320
 Dividend (Proposed)                          320             --
 Tax on distributed profits                    54             45
 General Reserve                               97             88
 Carry forward                               1358            857
                                             1829           1310
 
 Dividend
 
 Directors recommend payment of dividend @ 200% (Rs 10 per share) for
 the year under review. The dividend, if approved, will result in an
 outflow of Rs 374 million including dividend tax.
 
 Number of employees as on 31st March 2008 was 908.
 
 Information as per Section 217(2A) of the Companies Act, 1956,
 read.with the Companies (Particulars of Employees) Rules, 1975, forms
 part of this Report. However, as per the provisions of Section
 219(l)(b)(iv) of the Companies Act, 1956, the Report and the Accounts
 are being sent to all shareholders, excluding the Statement of
 Particulars under Section 217(2A). Any shareholder, interested in
 obtaining a copy of this statement, may write to the Company Secretary.
 
 Corporate Citizenship
 
 The, Company continues to view health and education of the
 underprivileged as a key area for its efforts to contribute to the
 communities in which it operates. Therefore it has continued its
 Sponsorship of the Akanksha educational centre catering to the needs of
 slum children in Mumbai as well as the Scholarship for the Girl Child
 at the International School of Business, Hyderabad.
 
 During Community Partnership Week, our employees engaged in various
 initiatives ranging from field trips for children with special needs
 and the less privileged, to spending time with the old and the lonely.
 
 The Company was recognized for its work in the rehabilitation of
 leprosy patients through the Novartis Comprehensive Leprosy Care
 Association and was conferred with the Pegasus CSR Gold Award by the
 well regarded Readers Digest. The Pegasus CSR Awards distinguish
 outstanding work done by socially conscious companies.
 
 Recognising the impact of global warming the Company has initiated a
 Go Green campaign to create awareness among its associates and take
 measures to reduce, reuse and recycle.
 
 The Companys commitment to Health, Safety and Environment (HSE)
 Protection is also an integral dimension of its Corporate Citizenship
 policy. HSE at Novartis includes occupational safety and health
 protection; building safety; process safety; product stewardship;
 environmental protection and conservation of natural resources and
 energy. Divisions and Business Units have managerial and operational
 responsibility for all HSE aspects.
 
 Fixed Deposits
 
 No fresh fixed deposits were accepted from the public during the year.
 However, deposits under the Voluntary Retirement Scheme 1992, continued
 to be accepted. Total deposits as at 31st March 2008 stood at Rs 4
 million. The Company does not have any unclaimed or overdue deposits as
 of date.
 
 Directors
 
 Ms A. Mirchandani, who retires at the end of this meeting, has been on
 the Board of the Company since 1st November 2002, and being eligible,
 offers herself for re-appointment.
 
 Ms Mirchandani, a Management Graduate, has been with Novartis for close
 to 30 years. She has been heading the Finance function since 1993 and
 brings with her a rich and varied experience with the Company. She has
 been actively involved in the major restructuring of the Indian
 operations and has successfully overseen a series of demergers and
 mergers.
 
 Dr J. Acebillo retires at the end of this meeting and, being eligible,
 offers himself for reappointment.  Dr Acebillo was first appointed as
 Director effective 20th May 2005.
 
 Dr Acebillo holds a Doctors degree in Medicine and Surgery (Ph.D. and
 M.D.) with specialisation in Paediatrics and Nutrition from the
 University of Zaragoza, Spain. Dr Acebillo is Head of Emerging Growth
 Markets and is responsible for key markets of India, China, Asia
 Pacific, Middle East, Africa and Eastern Europe. Since 2004 he has held
 senior positions in the Novartis Group prior to which he held positions
 of increasing responsibility at Bayer, Miles Laboratories and the
 University Hospital in Spain.
 
 Effective 23rd October 2007, Dr Peter Jager succeeded Dr Erwin
 Schillinger as Chairman of the Board.  Dr Schillinger, who has had a
 long and illustrious career with Novartis in India and abroad, retired
 from the Board. Dr Jager, a Pharmacist, is currently Country President
 Novartis South Korea. During his long tenure with the Group, Dr Jager
 has held several positions of increasing responsibility across various
 functions including sales and marketing, clinical trials, product
 management and strategic planning in different geographic locations.
 
 Auditors
 
 Messrs Price Waterhouse, Chartered Accountants, retire at the end of
 this Annual General Meeting and, being eligible, offer themselves for
 reappointment. The Board recommends their appointment.
 
 Cost Audit
 
 The Directors have appointed Messrs N. I. Mehta and Co., Cost
 Accountants, as Cost Auditors to audit the accounts relating to drug
 formulations for the year ending 31st March 2009.
 
 Energy, Technology Absorption and Foreign Exchange
 
 Information required under Section 217 (l)(e) of the Companies Act,
 1956 read with the Companies (Disclosure of Particulars in the Report
 of the Board of Directors) Rules 1988, with respect to conservation of
 energy, technology absorption and foreign exchange earnings/outgo is
 included in Annexures A and B.
 
 Directors Responsibility Statement
 
 Pursuant to Section 217(2AA) of the Companies (Amendment) Act, 2000,
 the Directors confirm that:
 
 (a) in the preparation of the annual accounts, the applicable
 accounting standards have been followed;
 
 (b) appropriate accounting policies have been selected and applied
 consistently and have 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 as at 31st March 2008 and of the profit of the Company
 for the year ended 31st March 2008;
 
 (c) proper and sufficient care has been taken 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;
 
 (d) the annual accounts have been prepared on a going concern basis.
 
 Corporate Governance
 
 The Company continues to incorporate appropriate standards for good
 Corporate Governance in line with parent company norms. The company has
 complied in all material respects with the features of corporate
 governance as specified in the listing agreement.
 
 A certificate of compliance from Dr K. R. Chandratre, a reputed
 practicing Company Secretary and the report on Corporate Governance
 form part of this Report.
 
 General
 
 The Directors place on record their appreciation of the contribution
 made by employees and the continued good relations with and support
 received from all other stakeholders including shareholders, customers,
 suppliers, the medical profession and business partners.
 
 The Directors also place on record their appreciation of the continued
 management support received from the parent company Novartis AG in the
 areas of Health, Safety and Environment and in terms of product and
 process know-how in manufacturing.
 
 Cautionary Note
 
 The statements forming part of the Directors Report may contain
 certain forward looking remarks within the meaning of applicable
 securities laws and regulations. Many factors could cause the actual
 results, performances or achievements of the Company to be materially
 different from any future results, performances or achievements that
 may be expressed or implied by such forward looking statements.
  
                                   On behalf of the Board of Directors
 
                                                     R. SHAHANI
 Mumbai, 9th May 2008               Vice Chairman & Managing Director