Plethico Pharmaceuticals

The Directors are pleased to present their 15th annual report and
 audited accounts of the company for the accounting year ended December
 31st 2007.
 
 FINANCIAL PERFORMANCE
 
 The financial highlights of the company for the period are as under: Rs
 in Million
 
 PARTICULARS                         Current Period    Previous Year       
                                         ended 31st    ended 30th 
                                     December, 2007    September, 2006
                                      (15 months)       (12 months) 
 
 Sales and Other Income                   5562.66          3212.85
 Total Expenditure excluding              3972.75          2224.65 
 Interest, depreciation & tax
 Profit before Interest, 
 Depreciation & Tax                       1589.91           988.20
 Interest (Net)                             73.98            54.32 
 Depreciation/Amortisation                  67.29            51.60
 Profit Before
 Taxation                                 1448.64           882.28
 Provision for Taxation                     29.88            22.00 
 
 Profit After
 Tax                                      1418.76           860.28
 
 Extra ordinary Income                     164.58             0.00
 Profit bought forward                     533.97           757.65 
 Profit available for appropriation       2117.31          1617.93 
 
 APPROPRIATIONS 
 
 Proposed Dividend                          85.17            85.17 
 Tax on Distributed Profit                  14.47            11.94 
 Transfer to General Reserve               241.11           986.85
 Surplus carried forward                  1776.56           533.97
 
 OVERVIEW
 
 Hitherto company was following accounting year from October to
 September every year, but in order to coincide accounting year with
 those of associate companies and WOS abroad, the accounting year of the
 company has also been changed to January-December every year.
 Consequently, the current accounting year has been extended up to 31st
 December 2007 and accounts have been compiled for 15 months period and
 results have been declared for the period from 01.10.2006 to
 31.12.2007. In view of this, the current years figures are not
 comparable with that of the previous year.
 
 The Company has a very successful year registering highly improved
 performance on all key parameters. During 15 months period ended on
 31st December 2007, the turnover has increased to Rs.5514.48 million
 representing the growth of 38.43% on annualized basis compare to Rs.3i
 86.94 minion in the previous year. The profit after tax increased to
 Rs. 1418.76 million as compare to Rs.860.28 million in the previous
 year. The performance during the year was driven by significant growth
 in export sales across the developed and emerging markets, increased
 operating efficiencies, a continuing focus on cost optimization and
 better management of working capital. Riding on the economys growth
 momentum, the company has posted improved performance, with revenue and
 profits higher that ever before. The companys Unit at Kandla Special
 Economic Zone has also been awarded Top Exporter Award for the
 financial year2006-07.
 
 Your company today has well entrenched into the semi regulated markets
 of the world consisting of markets like CIS, Africa and Third Front
 comprising of Latin America, South East Asia and Gulf Countries and
 also has presence in India in the OTC segments. The companys brands
 including Travisil®, Mountain Herbz,
 
 Effertabs, Coachs Formula®and Therasil have become leading brands in
 the international markets where company is operating. Unlike, other
 pharmaceutical players in the Indian market who are fighting for a pie
 of the available export generics opportunity, your company has adopted
 a completely different path by focusing on high margin herbals and
 nutraceuticals in the international markets. After initially focusing
 on the unregulated markets such as CIS & Africa, the company has now
 entered in the regulated markets like the US & Europe.
 
 ACQUISITION ABROAD
 
 Your Company considered acquisitions as part of its growth strategy.
 During the period under review, the company had entered into a Merger
 and Acquisition Agreement for acquisition of NATROL INC., a USA based
 US$ 100 million nutraceutical / herbal company listed at the Nasdaq,
 for a total consideration of US$ 80.8 million. This acquisition has
 been planned through a SPV route, the immediate SPV being at
 Netherlands in the name of Plethico Global Holdings, BV, which will
 ultimately acquire 100% equity of Natrol INC, USA.
 
 Natrol is synergistically operating in the herbal / nutraceutical
 sphere, but is predominantly present in USA. Natrol has a portfolio of
 Healthcare and wellness brands representing quality nutritional
 supplements, functional herbal teas and sports nutritional products.
 Established in 1980, Natrols portfolio of brands includes Natrol®,
 MRI, Prolab®, Laci Le Beau®, Promensil®, Trinovin®, Nu Hair® and Shen
 Min.
 
 Natrol distributes products nationally through more than 54,000
 retailers, as well as internationally in over 40 other countries
 through distribution partners and subsidiaries in the UK and Hong Kong.
 Your company intends to market Natrols top brands into Indian and
 other stronghold semi-regulated markets.  Likewise, company aiso pians
 to launch its leading homegrown brand Travisil in the US Markets
 through well-established marketing and distribution network of the
 Natrol. With this acquisition your company has evolved into a global
 pharmaceutical company in terms of outlook, focus, presence, customers
 and employment.
 
 FCCB
 
 During the year under review, the company has successfully floated
 issue of zero percent Foreign Currency Convertible Bond (FCCB) of US
 million. This issue was meant to part finance overseas acquisition(s)
 of brands / pharmaceutical and / or nutraceutical company. The FCCB
 maturing on 23.10.2012 has been listed at SGX-ST, Singapore.
 
 SUBSIDIARIES ABROAD
 
 During the period under review, the company has floated a SPV at
 Netherlands in the name of Plethico Global Holdings BV for ultimate
 acquisition of equity holding of Natrol INC, USA. Your company holds
 100% equity of this SPV at Netherlands. Your company has also floated
 another wholly owned subsidiary at UAE in the name of Plethico
 International Limited to set-up an ultra modern formulation / lozenges
 manufacturing unit in the UAE to cater the demand of CIS, GCC, Middle
 East, South East Asia and the African Countries.
 
 During the period under review, the company has disinvested its equity
 holding partly in all the six subsidiaries in CIS namely CJSC Rezlov,
 Russia, TOO Rezlov Limited, Khazakistan, Rezlov MOSRL, Moldova, SC
 Rezlov Ukraine, Rezlov LLS, Azarbaijan and Rezlov Limited, Kyrghzstan,
 for a total consideration of USD 13.26 million yielding capital gain of
 USD 5.23 million. This part dilution will bring down your companys
 holding in all the above companies uniformly to 45%. Since all such
 companies have ceased to be subsidiary during the period under review,
 no reporting under section 212 of the Companies Act, 1956 is being made
 in respect thereof.
 
 RESEARCH & DEVELOPMENT AND TECHNOLOGY
 
 Your company has a long-standing culture and history of delivering high
 quality products through superior technology for its brands. This
 sustained high performance has helped in building a strong foundation
 for our business and also differentiated our brands strongly.
 
 A major R&D emphasis for us in the recent times has been in the area of
 nutraceutical, herbal and ayurveda. After exploring our countrys vast
 traditional knowledge base, the best sustainable offerings are
 identified and refined to provide specific performance benefits to the
 consumers in the area of health and personal care.
 
 HUMAN RESOURCES
 
 Since your company operates in a knowledge-based sector, the importance
 of the human assets cannot be underscored. The Human Resource Agenda
 for the year 2006-07 was focused on three key areas embarking on human
 resource transformation program, building organizational and individual
 capabilities and significantly enhancing people productivity to drive
 sustainable business growth. The search for the highest degree of
 intellectual capital to enrich professional and technical milieu is a
 perennial one at your company.
 
 The beliefgreat people create great organizations has been at the
 core of the companys approach to its people. Your company made
 significant investments for training in the areas of marketing,
 excellence in customer services and building expertise and capabilities
 for well organized and systematic business operations. All the efforts
 are aimed to develop and nurture the entrepreneurial attitude and skill
 among the employees.
 
 For efficient management of human resource transactions, your company
 is going to implement a separate HR module in the JD Edward ERP. The IT
 platform would relay on self service mode thereby enhancing the
 productivity of HR Management by freeing up them from routine
 management and transactional workload.
 
 The relations with the employees continued to be cordial during the
 period under review. The directors wish to place on record their
 sincere appreciation for the excellent team spirit with which they have
 worked for the progress of the Company and the dedicated and sincere
 efforts made by all of them to grow the company as are excellent
 worldwide healthcare institution.
 
 DIVIDEND
 
 The Board of Directors is pleased to recommend a dividend of 25% (i.e.
 Rs. 2.50 per share) for the period ended 31st December, 2007
 aggregating to Rs.85.17 Million. The dividend payout will result in a
 total outflow of Rs.99.64 Million (including Rs. 14.47 Million towards
 tax on distributed profits).
 
 MANAGEMENT
 
 Shri Ashok Sodhani resigned from the Board w.e.f. 22/11/2007. All the
 members of the Board expressed their sincere thanks and appreciation
 for the valuable services rendered by Mr. Ashok Sodhani during his
 tenure.
 
 Mr. Shashikant Patel and Mrs. Gauravi Parikh, Directors of the company
 retire by rotation, as per Article 111 of the Articles of Association
 of the Company. Being eligible, they have offered themselves for
 re-appointment. Further details about Directors are given in the
 Corporate Governance Report as well as in the Notice of the ensuing
 Annual General Meeting being sent to the shareholders along with Annual
 Report. The Board of Directors recommends their re-appointment.
 
 COMPANY SECRETARY & COMPLIANCE OFFICER
 
 During the period under review, Mr. Ashok Mishra (a qualified member of
 the Institute of Company Secretaries of India) has been appointed as
 Company Secretary and Compliance Officer of the Company in place of Mr.
 Pankaj Pabaiya who has resigned from the post of the Company Secretary.
 
 AUDITORS
 
 M/s. N. P. Gandhi & Co., Chartered Accountants, Mumbai, the Statutory
 Auditors of the Company will retire at the ensuing Annual General
 Meeting and are eligible for re-appointment. M/s. N. P.  Gandhi & Co.
 have confirmed that their re-appointment, if made shall be within the
 limits of Section 224 (1B) of the Companies Act, 1956.  The Board
 recommends their re-appointment as Auditors and to fix their
 remuneration.
 
 M/s Vijay P. Joshi & Co., Cost Accountants, have been appointed as the
 Cost Auditors of the Company for the ensuing year 2007-08.
 
 AUDITORS REPORT
 
 The report of the auditors of the Company and notes to the accounts are
 self-explanatory and do not require further explanation from the Board
 and may be treated as adequate compliance of section 217(3) of the
 Companies Act, 1956. .
 
 FIXED DEPOSITS
 
 The Company did not invite or accept any deposits from the public
 during the period within the meaning of section 58A of the Companies
 Act, 1956. There are no unpaid or unclaimed deposits with the Company.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the provisions of Section 217(2AA) of the Companies Act,
 1956, the Directors responsibility statement in relation of the
 financial statement for the period ended on 31st December 2007 is
 furnished herein below. Your Directors state and confirm:
 
 i) that in the preparation of annual accounts, the applicable
 accounting standards had been followed along with proper explanation
 relating to material departures;
 
 ii) that the directors had 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 31st December 2007 and of the profit or
 loss of the company for the period ended on that date
 
 iii) that the directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the assets of the Company and
 for preventing and detecting fraud and other irregularities;
 
 iv) that the directors had prepared the financial statement and annual
 accounts on a going concern basis.
 
 CORPORATE GOVERNANCE
 
 Your company has been practicing the principal of good corporate
 governance over the years and lays strong emphasis on transparency,
 accountability and integrity. Yours directors adhere to the stipulation
 set out in the listing agreement to the Stock Exchanges. The Company
 has complied with the corporate governance code as stipulated under sub
 clause VI of Clause 49 of the Listing agreement with the Stock
 Exchanges. A separate section on report on corporate governance along
 with a certificate of the auditors of the company M/s. N.P. Gandhi &
 Co. confirming the level of compliance is annexed and forms part of the
 Annual Report.
 
 In terms of sub clause V of Clause 49 of the listing agreement,
 certificate of the CEO and CFO, inter alia confirming the correctness
 of the financial statements, adequacy of the internal control measures
 and reporting of matters to the audit committee in terms of the said
 clause, is also enclosed as a part of the report.
 
 MANAGEMENT DISCUSSION AND ANALYSIS REPORT
 
 The report as required under the listing agreement under the stock
 exchanges is annexed and farm part of the Annual Report.
 
 ENVIRONMENT, SAFETYAND ENERGYCONSERVATION
 
 Safety and environment performance has been integral to the business
 performance of your company and continued to receive focus throughout
 the year. Our vision is to be a Zero-injury organization. Effective
 implementation of the safety and environmental standards is supported
 by your companys occupational safety program based on the behavioral
 safety management techniques. The company continued to focus on
 behavioral safety aspects of employees and visitors along with
 continual improvements in engineering controls and safety management
 systems.
 
 Your company has been focusing on improving environmental performance
 and has drawn up an ambitious plan to reduce the environmental aspects
 of operations including reduction in the energy costs.
 
 Information on conservation of energy, technology absorption, foreign
 exchange earnings and outgo as required to be given pursuant to Section
 217(1 )(e) of the Companies Act, 1956 read with Companies (Disclosure
 of Particulars in the Report of Board of Directors) Rules, 1988 is
 annexed hereto in Annexure i and forms part of this report.
 
 PARTICULARS OF EMPLOYEES
 
 Information required pursuant to the provisions of Section 217(2A) of
 the Companies Act, 1956, read with the Companies (Particulars of
 Employees) Rules, 1975, is annexed hereto marked Annexure-ll and forms
 part of this report.
 
 LISTING OF SHARES
 
 The shares of the Company are listed on Bombay Stock Exchange and
 National Stock Exchange, Mumbai. Your company has paid the listing fees
 to each of these stock exchanges for the year 2006-07 before the due
 date.
 
 WEBSITE
 
 The Company has a well designated website www.plethico.com containing
 information about the Companys products, manufacturing facilities,
 area of specialization, performance overview etc. The details with
 respect to new product developed, new market explored, companys
 upcoming plans etc. have also been put on the website. The parties
 associated with the organization are welcome to visit the website to
 keep themselves updated on the Company.
 
 CORPORATE RESPONSIBILITIES
 
 The company continued to involve itself in social welfare activities,
 both through charity and social investment around issues like
 education, health, nutrition and initiatives for economic uplifting of
 the underprivileged. The Company is contributing to sustainable
 development by its economic activities combined with the fulfillment of
 its social responsibilities relating to the health, safety and
 environment aspects. Your Companys arm Shri Hari Charitable Trust is
 serving society at large by providing totally free education to the
 poor and needy girls of rural areas.
 
 Your company is alive to the challenges and remains firm in its believe
 that it is possible to do good while doing well and that running a
 successful business and creating positive social impact are not
 separate objectives.
 
 ACKNOWLEDGEMENT
 
 We would like to take this opportunity to express our deep sense of
 gratitude to the banks, financial institutions, medical professionals,
 business associates, customers, suppliers, Central and State
 Governments and their departments and the local authorities for their
 continued guidance and support. We would also like to place on record
 our sincere appreciation for the total commitment, dedication and hard
 work put in by every member of the Plethico family.
 
 And to you, our shareholders, we are deeply grateful for the confidence
 and faith that you have always reposed in us.
 
                                For and on behalf of the Board
 
 Indore,                        Shashikant Patel
 27th May, 2008                 Chairman cum Managing Director