Sun Pharmaceutical Industries

The Directors take pleasure in presenting the Sixteenth Annual Report
 and Audited Accounts for the year ended 31 st March, 2008.
 
 Dividend
 
 An interim preference share dividend on pro-rata basis @ 6% p.a. had
 been declared on 25th Oct, 2007 on outstanding preference shares and
 was paid on Nov 1, 2007. Your Directors recommend that the interim
 dividend on preference paid be treated as final.  Your Directors are
 pleased to recommend a equity dividend of 210% (previous year 135%) for
 the year ended 31st March, 2008 on the equity share capital.
 
 Management Discussion and Analysis
 
 The management discussion and analysis on the operations of the Company
 is provided in a separate section and forms part of this report.
 
 Human Resources
 
 At Sun Pharma, we have grown to a committed workforce of over 8000
 multi-cultural employees pursuing a shared vision of excellence across
 our corporate office, two R&D centres & seventeen plants (including
 associate companies) across three continents. Our consistent growth
 firmly establishes our remarkable team, their potential and
 capabilities to deliver. The company recognizes the importance of human
 capital and search for this intellectual capital and to enrich
 professional and technical skill is an ongoing process. Relentless
 efforts to develop and nurture through in-house, external professional
 development programs and on-job training are used to upgrade technical,
 marketing and management skills. Performance orientation and ethics are
 a high priority area. The work environment and development
 opportunities help to retain talent. Your Directors recognize the
 team’s valuable contribution, nurtures with joy their more than 8000
 people and place on record their appreciation for Team Sun Pharma.
 
 Information as per Section 217(2A) of the Companies Act, 1956, read
 with the Companies (Particulars of Employees) Rules, 1975 as amended,
 is available at the registered office of your Company. However, as per
 the provisions of Section 219(1)(b)(iv) of the said Act, the Report and
 Accounts are being sent to all shareholders of the Company and others
 entitled thereto excluding the aforesaid information.  Any shareholder
 interested in obtaining a copy of this statement may write to the
 Company
 
                                    (Rs. in million except book value)
 
 Financial Result                 Year ended          Year ended
                                 31st March, 2008    31st March, 2007
 
 Total Income                          32767             24067
 
 Profit after tax                      10140              6289
 
 Dividend on Preference Shares             1                 1
 
 Dividend on Equity Shares - Final      2175              1300
 
 Corporate Dividend tax                  372               182
 
 Transfer to various Reserves           3014              2000
 
 Rate of dividend on equity shares       210               135
 Book value per equity share
 
 (Rs. 5 paid up)                         203               126
 
 Secretary/Compliance Officer at the Corporate office or Registered
 office address of the Company.
 
 Information on Conservation of Energy, Technology Absorption, Foreign
 Exchange Earning and Outgo.
 
 The additional information relating to energy conservation, technology
 absorption, foreign exchange earning and outgo, pursuant to Section
 217(1)(e) of the Companies Act 1956 read with the Companies (Disclosure
 of Particulars in the Report of the Board of Directors) Rules, 1988, is
 given in Annexure and forms part of this Report.
 
 Corporate Governance
 
 Report on Corporate Governance and Certificate dated 30th May, 2008 of
 the auditors of your Company regarding compliance of the conditions of
 Corporate Governance as stipulated in Clause 49 of the listing
 agreement with stock exchanges, are enclosed.
 
 Consolidated Accounts
 
 In accordance with the requirements of Accounting Standard AS-21
 prescribed by the Institute of Chartered Accountants of India, the
 Consolidated Accounts of the Company and its subsidiaries is annexed to
 this Report.
 
 Subsidiaries
 
 Ministry of Corporate Affairs, Government of India, vide order No.
 47/461/2008-CL-III dated July 11, 2008 has granted approval that the
 requirement to attach various documents in respect of subsidiary
 companies, as set out in sub-section (1) of Section 212 of the
 Companies Act, 1956, shall not apply to the Company. Accordingly, the
 Balance Sheet, Profit and Loss Account and other documents of the
 subsidiary companies are not being attached with the Balance Sheet of
 the Company. Financial information of the subsidiary companies, as
 required by the said order, is disclosed in the Annual Report. The
 Company will make available the Annual Accounts of the subsidiary
 companies and the related detailed information to any member of the
 Company and its subsidiaries who may be interested in obtaining the
 same. The annual accounts of the subsidiary companies will also be kept
 open for inspection by any investor at the Registered Office &
 Corporate / Head Office of the Company and that of the respective
 subsidiary companies. The Consolidated Financial Statements presented
 by the Company include financial results of its subsidiary companies.
 
 Finance
 
 The banks in consortium continue to offer their highest rating to your
 Company enabling it to source funds from banks at attractive rates of
 interest. CRISIL continued to reaffirm their highest rating of “P1+”,
 for your Company’s Short Term Borrowing Program throughout the year.
 
 The Company does not offer any Fixed Deposit scheme.
 
 Issue of Shares on Full Conversion of FCCB
 
 During the year ended 31st March, 2008, the Company received notices
 from Foreign Currency Convertible Bond (FCCB) holders for exercising
 the conversion option in respect of full balance 222,214 FCCBs of US$
 1000 each (which were outstanding at the beginning of the year) Out of
 total of 350,000 FCCBs thus leaving no FCCBs outstanding as on 31st
 March, 08. Accordingly, the Company allotted during the year ended 31st
 March,2008, 13,714,271 equity shares of Rs.5 each to these Bondholders
 at the conversion price of Rs. 729.30 per share.
 
 Corporate Social Responsibility (CSR)
 
 Your organization has identified health, education, disaster relief and
 periodically, patient awareness as areas of priority. Our emphasis is
 assistance on a need basis and preferably at a local level, working
 with a local body, NGO or existing organization.
 
 One person’s education can make a difference to an entire family. Your
 organization continues to support tribal education, at village schools
 called ashram pathshalas across several states. We have often stepped
 in to support infrastructure in the village schools around our plants
 and offices. We helped Adarsh Kanyashala, near our R&D center in
 Baroda, with computer facilities. In Ahmednagar, support is extended to
 Gramin Vikas Mandal, which runs a primary school in the MIDC area, for
 children whose parents are employed in the industrial area. We have
 helped the school management in the high school in Karkhadi with
 financial assistance for science fair, school day, etc. A mobile van
 project has been sponsored for education in the rural and tribal areas
 near Panoli and this is organized by Ankleshwar Industrial Development
 Society.
 
 Another important activity was assistance at the primary and university
 levels, including support to students of the MS University of Baroda.
 Last year, we donated a 150-seater hostel for the post graduate
 students of SSG Medical College, MS University. For years now, we have
 been helping students work towards their doctorates using the
 facilities at SPARC. Your company regularly sponsors symposia,
 laboratory equipments and some production machines for local colleges.
 
 Amongst important medical support activities was the donation of
 machines and medicines to general hospital near our plants.  For
 instance, the Panoli plant gave financial assistance to Smt. Jayaben
 Modi Hospital for its rural and tribal medical checkup programs.
 
 In Bangladesh last year, we helped a group of psychiatrists with the
 development of an IQ rating scale. We also assisted health checkup
 camps in remote rural areas. We donated a calorimeter to a hospital.
 Donations were made to a fund for acid survivors.  Spot painting
 competitions were organized for school children in different
 cities/towns to an enthusiastic response.
 
 At our Silvassa plant, employees volunteered for a blood donation camp.
 Lifeline Foundation, working for highway rescue and accident treatment,
 continues to be supported with funds for communication.
 
 We have helped the local government with infrastructure development
 from time to time, for instance, the Karkhadi panchayat with the
 construction of panchayat office, the Dadra gram panchayat for the
 construction of a road.
 
 Directors
 
 Shri S. Mohanchand Dadha and Shri Sailesh T. Desai retire by rotation
 and being eligible offer themselves for re-appointment.
 
 The terms of appointment of Shri Sudhir V. Valia and Shri Sailesh T.
 Desai as Whole-Time Director will expire on 31st March, 2009.  Both of
 these Directors have contributed well for all round growth of the
 Companys business. Your Directors recommend the re-appointment of both
 directors for a further period of 5 years.
 
 Directors’ Responsibility Statement
 
 Pursuant to the requirement under Section 217(2AA) of the Companies
 Act, 1956, with respect to Directors’ Responsibility Statement, it is
 hereby confirmed:
 
 (i) that in the preparation of the annual accounts for the financial
 year ended 31st March, 2008, the applicable accounting standards have
 been followed along with proper explanation relating to material
 departures;
 
 (ii) that the Directors have selected appropriate accounting policies
 and applied them consistently and made judgements and estimates that
 were reasonable and prudent so as to give a true and fair view of the
 state of affairs of the Company at the end of the financial year and on
 the profit of the Company for the year under review;
 
 (iii) that the Directors have taken proper and sufficient care 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; and,
 
 (iv) that the Directors have prepared the annual accounts for the
 financial year ended 31st March, 2008 on a ‘going concern’ basis.
 
 Auditors
 
 Your Company’s auditors, M/s. Deloitte Haskins & Sells, Chartered
 Accountants, Mumbai, retire at the conclusion of the forthcoming Annual
 General Meeting. Your Company has received a letter from them to the
 effect that their re-appointment, if made, will be in accordance with
 the provisions of Section 224(1-B) of the Companies Act, 1956.
 
 Acknowledgements
 
 Your Directors wish to thank all stakeholders and business partners,
 your Company’s bankers, financial institutions, medical profession and
 business associates for their continued support and valuable
 co-operation. The Directors also wish to express their gratitude to
 investors for the faith that they continue to repose in the Company.
 
 
 
                            For and on behalf of the Board of Directors
 
                            Dilip S. Shanghvi
 
                            Chairman & Managing Director
 
 14th July, 2008
 Mumbai