Torrent Pharmaceuticals

The Directors have the pleasure of presenting the Thirty Fifth Annual
 Report of Your Company together with the audited accounts for the year
 ended 31 March 2008.
 
 OPERATING RESULTS
 
 The summary of standalone operating results for the year and
 appropriation of divisible profits is given below:
 
 Rs.  in Crores
 
                                               2007-08       2006-07
 
 Sales & Operating Income                      995.90         882.90
 
 Operating Profits (PRDIT)                     216.98         167.49
 
 Less Depreciation                              32.74          30.24
 
 Less Net Interest Expense                      18.40          13.15
 
 Profit Before Tax & Exceptional Items         165.84         124.10
 
 Less Net Income Tax Expense                    10.32          11.14
 
 Net Profit for the Period                     155.52         112.96
 
 Balance brought forward from Last Year         62.02          48.39
 
 Distributable Profits                         217.53         161.35
 
 Appropriated as under:
 
 Transfer to General Reserve                    99.00          70.39
 
 Proposed Equity Dividend                      29.61            -
 
 Interim Dividend                                 -            25.38
 
 Tax on Distributed Profits                      5.03           3.56
 
 Balance Carried Forward                        83.89          62.02
 
 Earnings Per Share                             18.38          13.35
 
 The sales and operating income increased to Rs. 995.90 crores from Rs.
 882.90 crores in the previous year yielding a growth of 12.80%. The
 export turnover aggregated to Rs. 235.91 crores registering a growth
 rate of 16.97%. The operating profit for the year under review
 increased to Rs. 216.48 crores as against Rs. 167.49 crores in the
 previous year registering a growth of 29.25%. The profits after tax for
 the year under review increased to Rs. 155.52 crores as against Rs.
 112.96 crores in the previous year registering a growth of 37.70%. The
 earnings per share for the year was Rs. 18.38 as against Rs. 13.35 in
 the previous year.
 
 Consolidated Numbers
 
 The consolidated sales of the Companv and its subsidiaries was Rs.
 1312.30 crores for 2007-08 (previous year Rs. 1263.33 crores). The
 consolidated net profit was Rs. 134.68 crores (previous year Rs. 93.51
 crores) registering a growth of 44%. The consolidated profit was less
 than the stand-alone profit of the Companv mainly due to unrealized
 profits in inventories supplied to subsidiaries and losses in Heumann.
 
 Management Discussion and Analysis (MDA)
 
 The detailed analysis of the operating performance of the Company for
 the year, the state of affairs and the key changes in the operating
 environment has been included in the Management Discussion and Analysis
 section which forms a part of the Annual Report.
 
 APPROPRIATIONS
 
 Dividend
 
 The Board has recommended a dividend of Rs. 3.50 per equity share
 (previous year dividend Rs. 3 per equity share), 70% on fully paid up
 face value of Rs. 5, amounting to Rs. 29.61 crores (previous year
 dividend Rs. 25.38 crorcs).  The tax on distributed profits payable on
 this dividend is Rs. 5.03 crores (previous year Rs. 3.56 erores) making
 the aggregate distribution to Rs. 34.64 crores (previous year Rs. 28.94
 crores). The distributed profits are 22% (previous year 26%) of the net
 profits for the year.
 
 The proposed dividend would be tax free in the hands of the
 shareholders.
 
 Transfer to Reserves
 
 The Board has recommended a transfer of Rs. 99 crores to the general
 reserve and an amount of Rs. 83.89 crores is retained in the profit and
 loss account.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 In terms of Section 217 (2AA) of the Companies Act, 1956, in relation
 to financial statements for the year 2007-08, the Board of Directors
 state that:
 
 i the applicable accounting standards have been followed in preparation
 of the financial statements and there are no material departures from
 the said standards;
 
 ii reasonable and prudent accounting policies have been used in
 preparation of the financial statements and that they have been
 consistently applied and that reasonable and prudent judgments and
 estimates have been made in respect of items not concluded by the year
 end, so as to give a true and fair view of the state of affairs of the
 Company as at 31st March, 08 and of the profit for the year ended 31st
 March, 08;
 
 iii proper and sufficient care has been taken for 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;
 
 iv the financial statements have been prepared on a going concern
 basis.
 
 CAPITAL AND BORROWINGS
 
 During the year, there was no change in the equity share capital of the
 Company.
 
 The total outstanding long term loans from banks/ financial
 institution/others as on 31st March, 08 is Rs. 303.17 crores (previous
 year Rs. 245.90 crores). The Net worth stands at Rs. 585.25 crores as
 at 31st March, 08 representing an increase of Rs. 120.87 crores on
 account ofretained earnings.
 
 The Gross Fixed Assets increased by Rs. 107.80 crores representing
 capital expenditure on land acquisition for new projects, expansion of
 formulation manufacturing facility, expansion of Research & Development
 facility and other maintenance capital expenditure. Long term
 investments increased by Rs. 27.58 crores mainly on account of increase
 in investments in subsidiaries and strategic investment to get a
 foothold in identified markets.  The above activities were funded
 mainly from the term loans and internal accruals.
 
 The Company had cash and cash equivalents aggregating to Rs. 133.17
 crores as on 31 March, 08 as against Rs. 10.25 crores as on 31st March,
 08. This increase is largely on account of significant increase in cash
 generated from operating activities. The Company has sufficient
 financial flexibility, in terms of available committed facilities from
 banks / financial institution to finance the future growth plans and
 capitalize on emerging opportunities.
 
 SUBSIDIARIES
 
 Brief review of the important subsidiaries is given below.
 
 ZAO Torrent Pharma (ZAO TP), Russia
 
 ZAO Torrent Pharma, the wholly owned subsidiary of the Company in
 Russia, is essentially an importing and distributing company, sourcing
 its entire requirement from the Company. For the year 2007-08 ZAO TP
 achieved revenue of RRU 304.58 million (Rs. 49.04 crores), an increase
 of 11.60% from RRU 258.51 million (Rs. 43.95 crores) for the previous
 year. Net loss after tax for the year was at RRU 4.23 million (Rs. 0.97
 crores) as against a net loss after tax of RRU 40.58 million (Rs. 7.00
 crores) for the previous year. At consolidated level, for the year
 2007-08, the Russia & CIS operations of the Company registered revenue
 of Rs. 61.87 crores (previous year Rs. 58.91 crores).
 
 Torrent Pharma GmbH (TPG), Germany
 
 During the year, TPG earned revenues of euro 2.98 million (Rs. 17.02
 crores) as compared with euro 2.46 million (Rs. 14.38 crores) for the
 previous year. Net profit for the year was at euro 0.67 million (Rs.
 3.84 crores) as against a profit of euro 0.12 million (Rs. 1.11 crores)
 for the previous year. At a consolidated level, for the year 2007-08,
 the European operations (other than Heumann) earned revenue of Rs.
 82.14 crores as against revenue in the previous year of Rs. 54.12
 crores.
 
 Heumann Pharma GmbH & Co Generica KG (Heumann), Germany
 
 Heumann posted revenues of euro 38.15 million (Rs. 217.74 crores) for
 the financial year 2007-08 as compared with euro 46.56 million (Rs.
 271.82 crores) for the previous year. Net loss for the year was euro
 3.48 million (Rs. 20.14 crores) as against a net loss of euro 3.86
 million (Rs. 20.34 crores) for the previous year. At a consolidated
 level for the year 2007-08, Heumann earned revenue of Rs. 222.98 crores
 as against Rs. 276.10 crores in the previous year.
 
 Torrent do Brasil Ltda. (TdBL), Brazil
 
 During the year, TdBL achieved revenues of Reals 81.39 million (Rs.
 177.11 crores), as compared with Reais 79.51 million (Rs. 166.89
 crores) in the previous year, registering a growth of 6.10%.
 
 TdBL earned a net profit after tax of Reais 3.69 million (Rs. 8.68
 crores), as compared to a net profit after tax of Reais 3.43 million
 (Rs. 8.55 crores) in die previous year.  At a consolidated level, the
 Brazilian operations earned revenue of Rs. 178.97 crores compared with
 Rs. 167.74 crores in the previous year.
 
 Torrent Pharma Philippines Inc. (TPPI) and Torrent Pharma Inc. (TPI)
 were formed to develop business in Philippines and North America. These
 companies have commenced selling operations and are likely to have
 significant business potential. Torrent Australasia Pty. Ltd,
 Laboratories Torrent S.A. de C.V and Torrent Pharma Japan Co. Ltd. are
 at their formative stages and have not commenced any revenue generating
 activities.
 
 INSURANCE
 
 The Companys plant, property, equipments and stocks are adequately
 insured against major risks. After taking into account all the relevant
 factors, including the risk benefit trade-off, die Company has
 consciously decided not to take insurance cover for loss of profit
 under the Consequential Loss (Fire) Policy. The Company also has
 appropriate liability insurance covers particularly for product
 liability and clinical trials.
 
 DIRECTORS
 
 Markand Bhatt, Sanjay Lalbhai and Prof. S. Ramnarayan1 are liable to
 retire by rotation at the ensuing Annual General Meeting and being
 eligible have been proposed for re-appointment. The details of their
 re-appointment together with nature of their expertise in specific
 functional areas and names of the companies in which they hold office
 of a Director and/or the Chairman/Membership of committees of the
 Board, arc provided in the notice of the ensuing Annual General
 Meeting.
 
 CORPORATE GOVERNANCE
 
 As required by clause 49 of the listing agreement, a separate report on
 corporate governance forms part of the Annual Report. A report from the
 statutory auditors of the Company regarding compliance of conditions of
 corporate governance forms a part of this report as Annex 3.
 
 AUDITORS
 
 The Auditors, C. C. Chokshi & Co., Chartered Accountants retire at the
 ensuing Annual General Meeting and are eligible for re-appointment as
 Auditors.
 
 The Audit Committee in their meeting held on 6 1 May 2008 has
 recommended the re-appointment of C. C. Chokshi & Co.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.
 
 A statement containing the necessary information required under the
 Companies (Disclosure of Particulars in the Report of Board of
 Directors) Rules, 1988 is annexed to this report as Annex 1.
 
 PARTICULARS OF EMPLOYEES
 
 The information required under section 217(2A) of the Companies Act,
 1956, read with Companies (Particular of Employees) Rules, 1975, forms
 part of this report as Annex 2. However, as permitted by section
 219(l)(b) (iv) of the Companies Act, 1956, this Annual Report is
 being.sent to all shareholders excluding the said Annex.
 
 Any shareholder interested in obtaining the particulars may obtain it
 by writing to the Company Secretary at the registered office of the
 Company.
 
 APPRECIATION AND ACKNOWLEDGEMENTS
 
 Your Directors appreciate the trust reposed by the medical fraternity
 and patients in the Company and look forward to their continued
 patronage. The Directors are also grateful and pleased to place on
 record their appreciation for the excellent support, guidance and
 cooperation extended by the Government of India, Government of Gujarat,
 Government of Himachal Pradesh, Gujarat Urja Vikas Nigam Ltd, Himachal
 Pradesh State Electricity Board, other Central and State government
 bodies, Financial Institutions and Banks. The Board also expresses its
 appreciation of the understanding and support extended by the
 shareholders and employees of the Company.
 
 
 
                                     For and on behalf of the Board
 
 Ahmedabad,                          Sudhir Mehta
 
 6th May, 2008                       Chairman