Piramal Life Sciences

The take pleasure in presenting the Annual Report and Audited Accounts
 for the year ended 31st March 2008.
 
 Pursuant to the Composite Scheme of Arrangement between Nicholas
 Piramal India Limited (now known as Piramal Healthcare Limited) (PHL)
 and the Company (Demerger Scheme) duly sanctioned by the Honble Bombay
 High Court, the New Chemical Entity (NCE) Research Unit of PHL was
 demerged to the Company w.e.f. 1st April, 2007, which was the Appointed
 Date under the Demerger Scheme. As you are aware, pursuant to Fresh
 Certificate of Incorporation consequent upon Change of Name issued by
 the Registrar of Companies, Maharashtra, the name of the Company was
 changed from NPIL Research and Development Limited to Piramal Life
 Sciences Limited (PLSL) effective from 15th February, 2008. The Company
 has on 25th February, 2008, issued and allotted, credited as fully paid
 up one (1) equity share of Rs.10/-, to the shareholders of PHL for
 every ten (10) equity shares of Rs.2/- each held in PHL as on 22nd
 February, 2008, which was the Record Date fixed for the purpose.
 
 The shares of the Company have been listed on Bombay Stock Exchange
 Limited (BSE) and The National Stock Exchange of India Limited (NSE)
 with effect from 29th May, 2008.
 
 PERFORMANCE HIGHLIGHTS :
 
                                                  (Rs. in Million)
 
 Year ended March 31 2008 
 
 
 Income 
 
 Other Income                                            0.6
 
 Expenditure
 
 Total operating expenses                              826.1
 
 (Loss) Before Interest, Depreciation and Tax         (825.5) 
 
 Add: Interest                                           1.5 
 
 (Loss) Before Depreciation and Tax                   (824.0)
 
 Less: Depreciation                                     90.7
 
 (Loss) Before Tax                                    (914.7)
 
 Less: Fringe Benefits Tax                               2.3
 
 (Loss) for the year                                  (917.0)
 
 (Loss) brought forward from previous year              (0.1)
 
 Net (Loss)                                           (917.1)
 
 Balance carried to Balance Sheet                     (917.1)
 
 Earnings per share (Face value Rs. 10/-) 
 (Basic/Diluted) (Rs.)                                 (39.1)
 
 There are no comparable numbers for previous year figures.
 
 DIVIDEND:
 
 In view of the losses incurred by the Company, the Directors do not
 recommend any dividend for the Financial Year ended 31st March 2008.
 
 OPERATIONS REVIEW:
 
 Pursuant to the Demerger Scheme, Net Assets of Rs. 1,831.2 million
 (including Rs. 950.0 million earmarked for NCE Research out of rights
 issue proceeds by PHL) was transferred to PLSL. During the year, PLSL
 has incurred net revenue operating expenditure of Rs. 825.5 million and
 net capital expenditure of Rs. 166.3 million.
 
 RESEARCH & DEVELOPMENT:
 
 Details about our Research & Development (R&D) program can be found in
 our Management Discussion and Analysis (MDA) section.
 
 INDUSTRY OUTLOOK:
 
 The pharmaceutical industry worldwide is dependent on new drugs for
 growth. The process of discovery and development of a new drug is
 risky, long drawn and requires significant investment. Global pharma
 companies spend 18-20% of their sales on R&D of new drugs.
 
 The pharmaceutical industry globally is poised at a very exciting
 juncture with biotechnology and genetic engineering opening up new
 avenues.  Pharmaceutical leaders are not significantly increasing the
 number of NCEs in their pipelines preferring instead to requisition R&D
 boutiques that work at creating new molecular designs.
 
 Global spending on R&D is likely to grow 8-12% by 2010 and trends
 indicate that up to 30 per cent of global research expenditure will be
 outside established corporate boundaries on a contract or part-time
 investment basis.
 
 On the other hand, the volume and complexity of work in the
 international markets that is required to bring an entity to approval
 is increasing steadily. In developed markets, patient recruitment is a
 critical problem with rising costs both in direct money terms and
 indirectly by extending the time to approval, thereby shortening the
 drug life under patent.
 
 Some estimates show that patient recruitment and medical personnel
 account for nearly 70 per cent of the clinical costs that are required
 to bring a drug to market.
 
 INTERNAL CONTROL SYSTEM:
 
 The Company has a sound internal control system, which ensures that all
 assets are protected against loss from unauthorized use and all
 transactions are recorded and reported correctly. The internal control
 systems are further supplemented by internal audit carried out by an
 independent firm of Chartered Accountants and periodical review by
 management. The Audit Committee of the Board addresses issues raised by
 both, the Internal Auditors and Statutory Auditors.
 
 HUMAN RESOURCES:
 
 Our people are the most important asset. We value their talent,
 integrity and dedication. PLSL has been highly successful in attracting
 scientists trained abroad with significant drug development experience
 in big pharmaceutical and biotech companies.
 
 Dr. Somesh Sharma leads the team with over 35 years experience in
 academia, biotech and pharmaceutical industry in the US.
 
 Likewise, critical drug development activities such as Medicinal
 Chemistry, Analytical Chemistry, Pharmacology, and Clinical Development
 are headed by scientists with decades of drug development experience in
 multi-national corporations. Scientists with global drug development
 experience lead over 10% of PLSEs senior and mid-level management
 positions. As on 31st March 2008 we had 308 employees.
 
 Any shareholder interested in obtaining a copy of the statement of
 particulars of employees referred to in section 217(2A) of the
 Companies Act 1956, may write to the Company Secretary at the
 Registered Office of the Company.
 
 DIRECTORS RESPONSIBILITY STATEMENT:
 
 As required under section 217(2AA) of the Companies Act, 1956 we hereby
 state:
 
 a) that in the preparation of the annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures, if any;
 
 b) that the Directors have selected such accounting policies and
 applied them consistently and made judgments 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 31 March 2008 and its loss for the year
 ended on that date;
 
 c) 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 and detecting fraud and other irregularities.
 
 d) that the Directors have prepared the annual accounts on a going
 concern basis.
 
 DIRECTORS:
 
 Dr. (Mrs.) Swati A. Piramal retires by rotation at the ensuing Annual
 General Meeting and is eligible for re-appointment, which the Board
 recommends.
 
 Mr N.Santhanam who was appointed on the Board on 5th September, 2007 in
 casual vacancy caused by resignation of Mr. Anand Piramal is proposed
 to be appointed on the Board. Dr. R.A. Mashelkar, Mr. Gautam Doshi,
 Prof Goverdhan Mehta, and Sir R. Maini who were appointed by the Board
 as Additional Directors hold office upto the date of the ensuing Annual
 General Meeting.
 
 Your approval is sought for their appointment vide respective
 resolutions set out in the accompanying Annual General Meeting notice.
 
 Dr. Somesh Sharma has been appointed as Managing Director of the
 Company with effect from 9th May, 2008, subject to requisite approvals.
 Your approval to the said appointment and payment of remuneration to
 him is sought vide resolution set out in the accompanying Annual
 General Meeting notice.
 
 CORPORATE GOVERNANCE:
 
 The Company has complied with the applicable provisions of Corporate
 Governance under clause 49 of the Listing Agreement with the Stock
 Exchanges. A separate report on Corporate Governance compliance is
 included as a part of the Annual Report alongwith the Certificate from
 Mr.  N.L. Bhatia, Practicing Company Secretary.
 
 In compliance with the Corporate Governance requirements, the Company
 has implemented a Code of Conduct for the Board members, who have
 affirmed compliance thereto. A Code of Conduct has also been formulated
 and implemented for the senior management of the Company.  The said
 Codes of Conduct have been posted on the Companys website.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION:
 
 Particulars required under Section 217 (1) (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 are given in the annexure
 to this Report.
 
 AUDITORS:
 
 Shareholders are requested to appoint the Auditors. Messrs. Price
 Waterhouse &. Co., Mumbai retire as Auditors of the Company at the
 ensuing Annual General Meeting and are eligible for reappointment.
 
 ACKNOWLEDGEMENTS:
 
 We take this opportunity to thank the employees for their dedicated
 service and contribution to the Company. We also thank our bankers,
 business associates and shareholders for their support towards conduct
 of operations of the Company.
 
 
                                By Order of the Board
 
                                Ajay G. Piramal
                                Chairman
 
 Mumbai : 31st May, 2008