joy of creation

Annual Report 2007 I 2008Abridged

Bilcare LimitedShiroli, Rajgurunagar,Pune 410505 India.investor@bilcare.com

www.bilcare.com

Vision

Bilcare is a unique organization with a strong research

foundation and unending quest for global leadership in

the pharmaceutical and healthcare services space

An organization of passionate professionals who go

that extra mile to share excellence and spread joy

Values

Our constant approach at all levels is to seek better

ways of listening, thinking and doing- making our

offerings meaningful and impact full

We are motivated by our customer's success and

happiness of our stakeholders

Transforming health outcome – touching lives

Speed

Innovation

Happiness

Proactive and swift actions are our mantras

Key Events

Acquisition of Singular ID, Singapore

Launch of Bilcare Centre of Excellence for Research Felicitation of Mohan Bhandari at 59th IPC at Varanasi

ACRP Chapter inauguration in Singapore

Launch of anti-counterfeit technology

developing and launching its anti–counterfeit

In December 2007, Bilcare acquired Singular ID, a technology. This technology is one of the first cost

Singapore based Technology Company. The effective and useful solutions for the common man.

company is engaged in research, development, The anti-counterfeit technology will help tackle the

and innovation of micro and nanotechnology menace of counterfeit drugs being faced universally

based products. This was done to build by the global pharmaceutical industry. The

capabilities in the anti-counterfeit technology acquisition of Singular ID, Singapore will compliment

front, where Bilcare is already doing substantial in developing and commercially taking the

work. technology to the international market.

In December 2007, Bilcare launched its Centre of Mohan Bhandari, Chairman & Managing Director,

Excellence for Research in Rajgurunagar. Former Bilcare was felicitated by Dr. John L. LaMattina, Ex-

President of India, Dr. APJ Abdul Kalam and President, Pfizer Global Research, with the Life-time

Dr. John L. LaMattina, Ex-President, Pfizer Global Achievement Award during the 59th IPC conference.

Research and Development inaugurated this This honour is bestowed upon stalwarts who have

Centre Of Excellence. The focus of the Centre of helped change the face of the Indian pharmaceutical

Excellence is to provide comprehensive research industry and elevated it to a global level.

services and solutions to the challenges faced by

the global pharmaceutical companies.In December 2007, Mr. Thomas Adams, President of

Association of Clinical Research Professional (ACRP),

In December 2007, Bilcare took a major leap in its USA, inaugurated ACRP’s Singapore Chapter at

fight against counterfeit by successfully Bilcare Singapore. The inauguration of this

chapter was especially significant for the industry

professionals in the region. It was also a In December 2007, Bilcare launched its Clinical

stepping-stone towards establishing the Bilcare Research Academy in Bangalore, which was

Research Academy in Singapore. inaugurated by Dr. John L. LaMattina,

Ex-President, Pfizer Global Research. The Academy

in Bangalore has entered into a strategic tie-up Bilcare Global Clinical Supplies presented its with the Bangalore Diabetes Hospital to provide broad range of clinical trials supplies and services clinical practical training to the students.at the 44th Drug Information Association (DIA)

Annual Meeting, Boston, MA in June 2007. For

biotechnology, pharmaceutical, and regulatory MeadWestvaco and Bilcare came together and

professionals, DIA’s Annual Meeting is the “event jointly acquired International Labs, Florida, USA.

to attend” each year. The joint acquisition leverages best-in-class

capabilities for patient-preferred, adherence-

promoting pharmaceutical packaging and Bilcare Global Clinical Services (GCS) participated streamlining supply chain by eliminating several in the BIO International Convention, the global steps in the distribution channel. The event for biotechnology in San Diego, CA in collaboration helps make, not only patient but June 2007; This trade show and educational also pharmacy friendly medication packs, conference provided Bilcare GCS with an providing real value to consumers throughout the outstanding platform to reach to the heart global market place, especially for a large number of the U.S. biotech community. of low-cost generic and branded drug programs.

Clinical Research Academy Launch in Bangalore

DIA

Acquisition of International Labs, US

BIO

Chairman’s Letter 03

Board of Directors 06

Management Discussion and Analysis 09

Corporate Governance 33

Human Asset – Team Bilcare 43

Corporate Citizenship – Bilcare Foundation 47

Directors’ Report 49

Auditors’ Report 57

India Financial Statements 60

Consolidated Financial Statements 70

Content

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Dear Shareholders,

These are fast changing times. Global

growth is slowing, margins are getting

squeezed and job cuts becoming common.

We at Bilcare, on the other hand, are

thriving on the new possibilities in the

pharmaceutical and the healthcare services

space. The difference is in our innovation

culture and ethos of challenging the

status quo.

We are continuously investing in R&D for

delivering ‘customer centric’ solutions and

also build meaningful intellectual property;

thereby ensuring next generation solutions

and products in the areas of pharma

packaging, clinical trial supplies and brand

management technologies.

During the year, we accomplished major

milestones which will have an everlasting

impact on our future. We established our

Global Centre of Excellence for Research

at Pune, India. It was inaugurated by the

visionary scientist and former President of

India Dr. APJ Abdul Kalam. This state -of-the

art Research Centre will provide integrated

solutions to the global pharmaceutical

industry in our domain.

A recent study by US based Centre for

Medicines in the Public Interest predicts that

counterfeit drug sales will reach US$ 75

billion globally in 2010, an increase of more

than 90% from 2005. Across the world the

menace of counterfeit drugs is looming

large. It is thus imperative that collaborative

and sustained effort be made to stop this

threat that has a devastating effect on

patient care.

Our anti-counterfeit technology is one

the world’s first cost effective solutions

for the common man against his fight

to procure genuine medicines. This path

breaking technology uses inherent disorder

technology of nano–particulate composite

systems to create a unique fingerprint for

each product pack. This unique fingerprint

when affixed onto a product pack, makes

it 100% secure. Our technology overcomes

Chairman’s Letter

Innovation Delivered

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and addresses the limitations of RFID. This

technology is a sure proof way to track a

drug throughout its lifecycle — from the

manufacturer to the patient. This solution

is being serviced through our business

division, Bilcare Technologies.

Bilcare continues its robust growth with

Pharma Packaging Innovation business

playing a lead role. This business intends

to garner a strong presence in the global

pharma packaging market by 2010 and

we continue to partner with big Pharma

to provide one-stop solutions for their

packaging through our innovative branding

and design solutions. Some of the global

blockbuster drugs have started availing our

services and in near future we foresee more

such brand conversions.

We see ourselves positioned strategically in

the global new drug discovery value chain

and partnering the pharmaceutical industry

in various stages of the clinical trial process.

New drug discovery is becoming time

consuming and expensive - Bilcare Global

Clinical Services aims to become an integrated

one-stop destination for global pharma and

biotech companies for these services. In the

current year we have invested significantly

in new clinical research facilities and have

also strengthened the team significantly.

With these measures, Bilcare is well poised

to become a significant player in the global

clinical services industry. Our global presence

and ability to service customers in all or any

geography is a key strategic advantage for

Bilcare Global Clinical Services.

Talent is scarce which is truer for specialized

healthcare and research services. We are

relentlessly working towards creating quality

manpower in the area of clinical trials in

Asia. Bilcare Research Academy expanded

its presence in India with the opening of

the Academy in Bangalore this year and

received an enthusiastic response from

all quarters. Strategically located in the

same building as the Bangalore Diabetes

Hospital, the students have the unique

opportunity to observe the clinical trial

activities at the research wing of Bangalore

Diabetes Hospital. We launched another

chapter of Association of Clinical Research

Professionals (ACRP) in Singapore and

are preparing to open Bilcare Research

Academy in Singapore.

The consolidated turnover of our Company

for the year 2007-08 increased by 57% to

Rs 669.92 crores, and the net profit went

up by 36% to Rs.81.55 crores. Our

Directors have recommended a 40% annual

dividend at Rs.4/- per share.

One of our key strength in our growth

has been the depth of our management

team and our ability to attract the best

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global talent. As Bilcare crosses shores to

delight customers across the world, we are

building local teams which the customer

can identify with – thus bringing about a

multi-cultural team of exceptional talent

globally. A passion to excel and to create

‘customer delight’ is the core focus of each

team member at Bilcare. Today we have a

team of highly competent professionals from

Europe, America & Asia, who are driving

Mission Bilcare. The three major businesses

viz. Pharma Packaging Innovation, Global

Clinical Services and Brand Management

Technologies are being successfully driven by

strong leadership teams.

Going forward, I see very attractive growth

in all of our business segements - especially

in our overseas operations.

Corporate Social Responsibility has been the

DNA of Bilcare culture. Bilcare Foundation

is our vehicle to deliver on this endeavour.

The initial focus of the Foundation, through

its various projects, has been to ignite the

minds of young children and facilitate their

holistic growth. A key event during the year

was the launch of ‘Window To The World’,

an initiative for the school children of

Rajgurunagar (India). Similar CSR initiatives

have been undertaken by our teams at

Wales (UK), Singapore and Phoenixville

(USA) during the year.

I thank you and look forward to your

continued participation on this exciting

journey.

Warm Regards,

Mohan H. Bhandari

Chairman and Managing Director

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Board of Directors

Mohan H. Bhandari Founder, Chairman and Managing Director

Mohan H. Bhandari is the founder of Bilcare and leads the company along with his team of professional management. He has over 26 years experience in the global pharmaceutical packaging industry and under his leadership, the Company has grown exponentially both in the national and international arena. Mr. Bhandari is a first generation technocrat entrepreneur and holds a degree in Physics from the University of Pune and post-graduate diplomas in both Management Studies and Packaging Science.

Dr. Praful Naik Executive Director

Dr. Naik leads the core research at Bilcare and is the Company’s Chief Scientific Officer. He has over 18 years of experience in pharmaceutical science and has vast knowledge of medicines and their formulations. Prior to joining Bilcare, Dr. Naik worked with Johnson & Johnson and Glaxo Smithkline. Dr. Naik holds a Ph.D in Pharmaceutics from the Institute of Technology, BHU. He represents Indian pharmaceutical industry on International Medical Products Anti-Counterfeiting Taskforce of WHO.

Chandra Prakash JaggiExecutive Director

Mr. Jaggi is responsible for bringing Bilcare on par with global standards in Quality and Cost. He has over 36 years of experience in the manufacturing industry. A recipient of numerous awards, he has also won an award from the President of India for productivity and quality improvement and is an engineer by profession.

Rakesh Jhunjhunwala

Mr. Jhunjhunwala is a qualified Chartered Accountant and one of India’s renowned equity investors. He has been profiled among the five best investors in India. Mr. Jhunjhunwala is one of the few investors who share their insights on successful investing with people through articles, interviews and presentations.

Cyrus Bagwadia

Mr. Bagwadia provides guidance to Bilcare on its global strategic initiatives. He has over three decades’ of experience in international business and has worked with multinationals like Dupont. Among his various and notable achievements is building the largest lami-tube company in the world. Mr. Bagwadia is a polymer engineer and a post-graduate in Business Management.

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Dr.Volker Huelck

Dr. Huelck offers guidance to the Bilcare Research Academy and material science development team He is an MS in Chemical Engineering and a Ph.D in Interpreting Poylmer Networks. Dr. Huelck is the Chairman of the German Plastics Centre and a member of the Global Council at Lehigh University, USA.

Dr. Kalyani Gandhi

Dr. Gandhi gives leadership and direction to the human resource team at Bilcare and is on the Advisory Board of the Bilcare Research Academy, Bangalore. She has three decades’ of experience in teaching and is the former Dean of the Indian Institute of Management (IIM), Bangalore. Dr. Gandhi has an MA in Industrial Psychology and has completed her Ed.D and M.Ed. from Rutgers University, USA.

Manish Gupta

Mr. Gupta is a member of the core team at the private equity group of RARE Enterprises. He has an MBA from the Indian Institute of Management (IIM), Ahmedabad and a BE in Chemical Engineering from the Birla Institute of Technology and Science, Pilani. Mr. Gupta has extensive strategy and consulting experience gained through his stints at Boston Consulting Group and Honeywell.

Rajendra Tapadia

Mr. Tapadia provides support to Bilcare on process and product technology. He is an eminent industrialist with more than 26 years’ experience. Mr. Tapadia holds a degree in Chemistry from Pune University and a post-graduate diploma in Business Management.

Dr. R. V. Chaudhari

Dr.Chaudhari provides valued assistance to Bilcare’s IPR initiatives. He holds Ph.D. in Physical Chemistry and Research Fellowships of several scientific academies and societies. Dr. Chaudhari has presented more than 100 papers in various international journals and holds 62 patents. He is a ‘Deane E Ackers Distinguished Professor’ at the Department of Chemical and Petroleum Engineering Center for Environmentally Beneficial Catalysis at the University of Kansas, USA.

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Management Discussion and AnalysisOverview

Progressing Vision

Pharmaceutical Industry Overview A change in the disease profile of the global population towards lifestyle led illness, higher sales of speciality medications, increased opportunities in the areas of R&D with focus on Bio Pharmaceuticals and Pharmacogenomics was a boon in disguise in this challenging year of sub-normal growth of the global pharmaceutical industry. IMS Health, a global pharmaceutical market research agency reported a 6.4% growth for the global pharmaceutical industry, aggregating US$ 712 billion in the year 2007.

Increased R&D spend coupled with poor success ratio of the drug discovery programs in churning new block busters as well as traditional marketing models are the key factors for the not so robust growth of the pharma industry. Moreover, there is an added pressure on several blockbuster drugs of imminent generic competition when going off patent, which could result in substantial revenue loss in the near future.

In this challenging sceanrio, one of the significant concerns that the industry faces is counterfeit and compliance along with issues of cost, communication and the convenience of use by the patient. In case of counterfeit, for brand owners, the risk is much more than just loss of revenue – counterfeiting affects the product’s image, the company’s reputation, profits, future growth and much more.

Pharmaceutical counterfeiting is no longer just an issue that causes financial loss to a few industry players; rather it has emerged as a significant threat to the public health and healthcare businesses as it is more widespread due to the easy availability of computer technology, growth of medicine selling through the internet, emergence of small distributors as well as the rising prices of drugs.

Global pharmaceutical sales By 2010, the global pharmaceutical market is forecasted to grow to US$ 842 billion. There will be consolidation in the mature markets comprising mainly of the developed nations and healthy growth in the BRIC countries; thus, today industry attention is equally shifting to smaller, developing markets that are doing exceptionally well.

Global Sales(US $BN) 2004 2005 2006 2007

Total World market 560 605 649 712 (current US$)

Growth over previous year 8.0% 7.3% 7.1% 6.4% ($ Constant US$ Growth)

Source:IMS Intelligence Applied

Global pharmaceutical sales by region North America retained the top position with sales of US$ 305 billion on a region wise basis accounting for 46% of the global pharmaceutical sales and registering a growth of 4.2%; Europe and Asia followed North America and there has been no substantial change in the sales spending pattern. Europe, which holds 31.1 % of the market share, grew by 6.7% to US$ 206.2 billion.

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Despite sales gains being driven largely by price enhancements and increase in foreign exchange from a weaker dollar as well as momentum from a few products introduced in 2006, the overall growth in 2007 was lesser than that 2006 (7.0 % from 2005).

Pharmaceutical sales by region Audited Market 2007

Sales % Growth % Mkt Share 2007

Worldwide 100.0 6.1

North America 45.9 4.2

Europe 31.1 6.7

Asia, Australia, Africa 9.4 13.1

Japan 8.8 4.2

Latin America 4.8 12.0

10 Key Markets 79.8 5.1

Source: IMS Intelligence Applied

This trend is likely to continue, with the industry to experience further attrition in growth rate in 2008 mainly as several products are set to go off patent. Pharma 2020: The Vision (PricewaterhouseCoopers Report) points out that as the patent on many of the medicines launched in the 1990s expire over the next few years, only four out of ten companies have enough products in their pipelines to fill the impending revenue gap. With patent expirations losses estimated to reach $20 billion in 2008, sales volumes of innovator drugs are most likely to be affected.

Leading Therapy Classes in 2007Among audited therapy classes, in 2007, the Oncology class overtook 2006’s top ranked Lipid Regulators class topping with sales of US$ 41.4 billion; it had the highest market share of 6.2% while Lipid Regulators were a second at 5.1%. Lipid Regulators class registered a negative growth rate of 6.7% during the year.

Therapeutic Classes WorldwideAudited Market 2007

Sales % Growth % Mkt Share 2007

Worldwide 100.0 6.1

Oncologics 6.2 16.2

Lipid regulators 5.1 -6.7

Respiratory agents 4.3 12.3

Acid pump inhibitors 3.9 2.8

Antidiabetics 3.6 10.7

Antipsychotics 3.1 10.7

Antidepressants 3.0 -6.8

Angiotensin II antagonists 2.9 13.6

Anti-epileptics 2.3 13.5

Autoimmune agents 2.0 20.3

Leading 10 Therapeutic Classes 36.4 7.3

Source: IMS Intelligence Applied

Respiratory agents were the third-largest therapy class last year, with 12.3% growth in sales amounting to US$ 28.6 billion.

Maintaining its growth since last year, the autoimmune agents class entered the Top 10 list in 2007 with US$ 13.3 billion sales. It registered the highest YoY growth of 20.3% among all therapy classes.

In 2007 Big Pharma investments in oncology R&D have increased drastically. According to IMS Health reports, the global pharmaceutical market for cancer therapeutics in 2007 was growing at 17%. The other growth sector is the vaccines market. The US $15 billion global vaccines market, following the success stories of Gradasil (Merck ) and Prevnar (Wyeth ) and taking into consideration the innovation in the biotech R&D fuelled by investments from the pharma industry, is all set to reach US $28.0 billion in 2012 – as per Frost & Sullivan.

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Pharma industry at its inflection pointTougher registration procedures, intense cost pressures and more accountability from the healthcare systems is causing greater price competition within the pharma sector. Increased innovation and efficiency through more intensive cooperation with external providers having specific expertise will become the mantra for sustainability. Global pharma majors will increasingly explore outsourcing of R&D, clinical trials and other innovative methods to remain competitive. Reducing sales and marketing costs by outsourcing may become one of the next big initiative which the pharma industry will implement. A recent report, published by PricewaterhouseCoopers, Pharma 2020 quotes: “In order to flourish, companies will need to invest more in research, understand and demonstrate the value of their products, lower the cost of distribution, collaborate with partners at home and and provide value-added services to their customers”.

The pharma industry is at its inflection point and will grow by taking a re-look in the very way it conducts business; be it a partnership and R&D led knowledge outsourcing model or value added services to its customers; these radical changes will become the key to the pharma industry’s future success. In such a challenging and exciting global scenario, Bilcare aspires and is well poised to be a one-stop integrated value service provider with its comprehensive range of novel technologies, products and services for pharma companies that are looking toward collaborating with such providers to help them continue accomplishing their growth in a much more innovative manner.

Business Overview Going forward, the four strategic verticals will enable Bilcare to emerge as leaders in technology for counterfeit, clinical trial materials services, packaging innovations and creating best in class clinical professionals.

Our focus has been two fold; the first being continuous investment in R&D and knowledge to create, develop and provide better solutions for customers and second, to create a global geographic footprint of world-class facilities to ensure that we can service customers anywhere in the world. Today more than 45% of the global pharmaceutical business happens in USA, hence our specific focus in creating manufacturing & research capabilities and a workforce in the US for extending our direct localized support and services.

The business activities of the company are focused in four distinct verticals – Pharma Packaging Innovation, Global Clinical Services, Bilcare Research Academy and Bilcare Technologies. Bilcare Technologies is the new business unit which will steer the integration of path breaking technology solutions developed as novel anti-counterfeiting measures. We firmly believe that anti-counterfeiting being an increasing global menace, our technology will take a giant leap in eliminating this menace and find several exciting end use applications. The company launched its first cost effective and totally secure anti-counterfeit technology in December 2007.

Pharmaceutical companies have already started taking their first steps towards increasing innovation and efficiency through more intensive cooperation with external providers. Bilcare’s Clinical Services business is strategically positioned to address these emerging needs by way of completing its strategically planned upgradation and expansion of its existing facilities. We believe that our enhanced expertise and expanded global facilities will help in collapsing the time frame from drug discovery to market. During the year, we made substantial investment in people, technology and facilities in the Clinical Services facilities in US; in UK, we announced the expansion of the existing facility while the Pune facility is undergoing a major capacity expansion to embrace the global clinical research opportunities.

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One of the key initiatives has been the launch of the Centre of Excellence for Innovation, Design and Research in Pune which will undertake cutting edge research and innovation projects for the global pharmaceutical industry. Making significant headway in our processes and services, we now have extended our packaging solutions offerings to liquid and semi-liquid formulation dosage forms. The Center for Excellence has accomplished several crucial successes for its clients by addressing the 5C’s i.e. key challenges of Counterfeiting, Compliance, Communications, Convenience and Cost. The Center continues to tread speedily on the innovation pathway and provide comprehensive R&D advice and solutions to pharmaceutical companies globally.

In December 2007, Bilcare acquired Singular ID, Singapore; a technology innovator company engaged in creation of micro and nanotechnology based novel products. This strategic acquisition immensely strengthens Bilcare’s product line and focused drive in the anti-counterfeit space.

During the year Bilcare Research Academy spread its wings of learning by opening a branch in Bangalore. Our focus on creating global manpower for clinical research and trials will continue with our academy reaching out to many other places, the next planned stop being Singapore. With clinical research and trials moving to Asia, it is not only ours but also the pharma industry’s as well as ACRP’s (Association of Clinical Research Professionals) belief that Bilcare Research Academy will transform into a key resource provider, effectively addressing the needs of this sector in the years to come.

Bilcare is moving forward towards accomplishing its vision of “Transforming Health outcome and touching lives”.

Financial PerformanceFor the year ended 31st March 2008 the Company achieved a consolidated revenue of Rs. 669.92 crores, registering a growth of 57% over the previous year consolidated revenue of Rs. 425.72 crores. Net Profit grew by over 36% to Rs 81.55 crores for 2007-08 as against Rs. 59.92 crores in the previous year.

The India standalone revenue of the company for the current year grew by 24% to Rs. 422.12 crores in 2007-08 from Rs. 341.44 crores in 2006-07.

An interesting pointer to this year’s performance is that near to 40% of our revenues are coming from markets outside India, like the US. This is in sync with our strategy of investments and strengthening our base and solution offerings to clients outside India, like US and Europe, with India remaining a stable and consistent business geography.

Dividend declared was at 40% at Rs.4/- per equity share for the year ended 31st March 2008. This was the same as the previous year.

This resulted in EBIDTA of India standalone growth of 18% from Rs.108.50 crores in the previous year to Rs.128.68 crores in 2007-08. The EPS of the company stood at Rs.37.49 in 2007-08 as against Rs.41.24 in 2006-07 due to the conversion of outstanding warrants and convertible bonds during the year.

Information Technology Bilcare believes that a state-of-the-art information technology is critical to providing faster time-to-market inputs to customers. During the year, Bilcare implemented the SAP Enterprise Resource Planning (ERP) system across its facilities in India and Singapore. This system helps in enhancing the business performance and optimizes the supply chain by aligning all the transactional systems. IT remains one of the most important aspects of Bilcare’s growth and innovation.

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and senior friendly packaging features for an ageing population is already gaining ground and the advent of biological drugs requires special packaging techniques to ensure the drugs’ efficacy, potency and safety through its shelf life.

During the year, we significantly ramped up production volumes. This will help us meet the increased customer demands in and outside India, more particularly for our high end packaging solutions. The newly built Research Center of Excellence which has significantly enhanced capacities and competencies along with the newly inaugurated Asia’s first customized state of art, integrated Flexo printing facility in India for new innovative solutions in printed packaging materials, especially the Aluminum foils, have further strengthened the global offering of Bilcare.

Bilcare continued investments in core areas in its manufacturing and research facilities in India, US and Singapore both for expanding and upgrading existing infrastructure and also for creating state-of-the art new manufacturing facilities. During the year, our facilities across the globe underwent a total of 29 audits by customers and we achieved 100% success rate, which is a significant achievement. It speaks about our commitment and continual investments for ensuring the creation of newer benchmarks of quality or sometimes even exceeding the quality standards and cGMP of global pharmaceutical industry.

Management Discussion and AnalysisBusiness Divisions

Pharmaceutical Packaging InnovationToday packaging has become an integral part of a medicine and thus, the role of pharmaceutical packaging has taken a giant leap in the sphere of pharmaceutical formulations and preparations. Pharmaceutical packaging design and development is increasingly becoming more complex and going ahead, scientific packaging will be a key to the success of a medicine in the market place. Bilcare’s research philosophy focuses on the creation of novel technologies, processes, products and services which effectively address the challenges encountered by the pharmaceutical industry more particularly the key 5C’s viz. Counterfeit, Compliance, Communication, Convenience and Cost.

The large global and other prominent players in the pharmaceutical industry are increasingly realizing that scientific and innovative packaging is the best pathway to effectively address the challenge of escalating costs in the entire supply chain by deploying innovative processes, products, systems and services for eliminating wastage at each step of the supply chain. Packaging innovations and research is now all about developing design solutions which use less material, take up less shelf space, have integrated technologies to prevent misuse and deploy the product from point of manufacture to point of sale in the most effective and long lasting manner. New trends like child resistant

Propelling Branding Solutions

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At Bilcare, we are totally driven by the efficiency and efficacy of our innovations which the pharmaceutical industry can leverage by implementing them effectively. The core of our R&D and innovation outcomes stems from a deep understanding of both the pharmaceutical as well as material sciences. We are creating new, innovative products keeping in mind the four needs of our customers – Global availability, value Prices, Functionality and Time. Today we are working towards ensuring better convenience, safety and usability factor for pharmaceuticals administered to / consumed by patients. The challenges and growth related issues in the global pharmaceutical sector has also led to the desire for having SMART packaging with additional enhanced features which address the key issues of compliance, effective communication, advanced print inputs, child resistant and elderly friendly packaging which fulfill the requirements of the new concept of “Active Integrated Packaging”.

During the year, we launched several of our new branded products aimed at providing solutions to the high end packaging needs of the pharma industry. We launched ‘Patina Plus’ which is an improved version and has superior properties in comparison to Patina. Another new product is ‘Bilcare Astra’ which has better water vapour transmission rate compared to standard PVC. ‘Bilcare Optra’ has the unique property of being more environmental friendly because it can be easily recycled. ‘Bilcare PETRA’ film has better thermoforming characteristics thus making it more suitable for blister forming operations. ‘Bilcare Metnova‘ is an economical alternate to standard aluminum foil which is becoming prohibitively expensive because of increasing energy costs. All of the above along with several other new products launched during the year have enhanced scientific packaging quality which is helping the pharma industry deliver better and safer formulation dosage form resulting

in superior patient care. In the domain of anti-counterfeit packaging solutions we launched a varied range of solutions tiered at different levels of sophistication based on the magnitude and complexity of the counterfeit problem like Bilcare Protect, Bilcare Secure and Secure Alu Alu. We have also developed a new generation multilayered counterfeit packaging which has patented structure, advanced printing technology with flexo machine and nano technology based secure fingerprint tags embedded in the packaged blisters - a sure proof high tech and top end solution for complete elimination of the counterfeit challenge.

We added a host of prestigious clients, both Indian and international for whom we developed and successfully commercialized customized innovative packaging solutions. We have also been selected for providing novel packaging solutions for some of the international block bluster drugs of global pharmaceutical majors. Simultaneously we are also working with some of the leading companies for creating innovative packaging concepts and systems complete in all respects including selection of materials and material specifications for their leading brands utilizing our unique “Crunch-break through” innovation model.

Counterfeiting is a menace to the global pharmaceutical industry and Bilcare continues its endeavor against this menace by infusing continual significant investments of intellectual time and resources for developing novel packaging solutions based on advanced R&D to ensure the objective of total security of the medicine. Apart from the reported estimated revenue losses globally which is quite significant, it also endangers health and safety of consumers at large. Even a single adverse event or fatality due to counterfeit medicine is a major blow to the fundamental right of the global citizen for leading a healthy and safe life.

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Research Services Across the globe, as innovation becomes the key to the survival strategy, the same holds true for the pharma companies positively compelling an increasing number of them to turn outward to outsource their research needs in systemic segmentized format, to organizations that deliver quality solutions which are also cost effective. At Bilcare, our focus on research led packaging solutions for the pharma world has helped us stay in tune with the evolving demands of the pharma industry. Bilcare’s core focus is the scientific study and analysis of pharmaceutical products using its patented revolutionary technology – ‘Bilcare Optima’ and substantiating the same by scientifically integrating the evaluated formulation dosage forms to best suited and functionally viable innovative packaging materials. During the current year, Bilcare took a big leap in R&D efforts with the setting up of the Bilcare Center of Excellence for Research. The Center was launched in Pune by H.E. Dr. APJ Abdul Kalam, former President of India in the presence of Dr. John L LaMattina, Senior Vice President, Pfizer Inc. and President, Pfizer Global Research & Development and Dr. R Chidambaram, Principal Scientific Advisor to the Government of India.

With this investment, Bilcare will now able to provide integrated R&D consultancy and solutions to the global pharmaceutical industry in the critical areas of brand protection and next generation packaging solutions. Bilcare Center of Excellence is globally integrated and networked to its satellite labs in Singapore and USA and currently has over 20 full time scientists working in the areas of R&D for Packaging Research, Material Research, Analytical Research, Drug Sensitivity Studies Formulation Dosage Forms Evaluation and Package Design. The Center has approval from the Department of Science and Industrial

Research (DSIR), Government of India and is the first R&D Center for exclusive research in the areas of pharmaceutical packaging and drug protection.

‘Bilcare Optima’ is the first scientific packaging development method to identify the optimum packaging for a pharmaceutical formulation. Launched last year, this patented service offering was available for solid dose formulations – and has now been developed further, extending its capability for evaluation of semi-solid and liquid formulations. During the year, several new research services were introduced based on our new R&D capabilities which encompasses services like sensitivity profiling of drug formulation for speedy formulation optimization, comprehensive packaging development and design services and method development services. The state of the art R&D center is also equipped to undertake stability batch packaging and studies, and unique simulation of the complete science behind blister formation. The comprehensive Total packaging audit is another service introduced during the year.

Bilcare, till date, has over 90 patent filings worldwide and is continuously working towards thought leadership, innovation and solutions for the pharmaceutical world by developing newer technologies. Collaborative research initiatives are increasingly gaining momentum to address the current and future key concerns, be it speed-to-market, counterfeits, enhanced stability of the product coupled with increased shelf life, brand differentiation and identity, enhanced compliance, comprehensive support for global clinical trials or packaging innovations. Bilcare’s R&D efforts will continuously work towards addressing these challenges faced by the industry by extending its expertise and knowledge for collaborative and partnering initiatives with its customers.

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Cost pressures and increased competition among major pharmaceutical players is leading to more importance being placed on packaging as a product positioning tool-both from a visual and functional viewpoint. A strong need to decrease medication errors present an immediate need to develop packaging solutions which are more predictable, dependable and user friendly.

Our R&D commitment and continuing research in the field of packaging research solutions has led us to come out with innovative solutions for our clients. We will like to keep up the pace with major pharmaceutical companies, in the area of R&D efforts. The current patent filings and future pipeline of discoveries give us enough confidence that Bilcare will be a

leader in innovation in creating solutions that help clients to do business more efficiently and effectively.

The Pharmaceutical Packaging Innovation business contributed to majority sales of the company among all divisions and continues to grow significantly. Our focus on developing integrated and complete packaging solutions for pharmaceutical companies through cutting edge R&D and innovations will be our key competitive strength going ahead. Today Bilcare is recognized for its pioneering work in providing pharma packaging solutions to the pharmaceutical industry globally and continues to partner with leading names in the industry as integrated packaging innovations and solutions provider.

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Global Clinical ServicesThe increased cost of R&D and poor success ratio of conversion of NCE’s into commercial blockbusters are a major cause of concern for the innovator pharmaceutical companies across the globe that are already facing the challenge of large number of their innovator products going off patent. There is a compelling need for these companies to keep their research activity in full swing and yet innovate in the sphere of escalating R&D spend resulting into newer collaborative approaches. Global Clinical Services (GCS) remains a key thrust area for Bilcare which offers end to end clinical trial services to pharmaceutical companies across the globe. Bilcare is amongst the few companies to commission state of the art clinical trial facilities across US, UK, Singapore and India that are seamlessly integrated to help clients achieve a significantly faster time to market.

Recent studies show that the continuing trend of globalization of clinical trials will cause the complexity of running these studies to dramatically increase by 2010. Pharmaceutical companies will particularly face myriad challenges managing the clinical supply chain and efficiently completing trials on time. In addition, the scope and size of trial is set to broaden, with anticipated increase in the number of people participating in Phase I, II, and III studies by 2010. The increasing complexity as well as stringency of regulators, coupled with disconnected clinical trial material supply processes are already

resulting in an extended and expensive development process. The biggest challenge in a global trial is in “getting the right kit at the right time at the right site.” Bilcare GCS with its global reach, sound network and best practices is addressing these challenges and enabling customers in speeding up their drug discovery process by creating an efficient, end to end value chain.

A recent benchmarking study by BearingPoint and AMR Research on the clinical supply chain highlighted the increasingly complex environment in which life sciences companies are working. To move ahead and stay competitive, pharma majors need to become globally lean and agile corporations. Traditionally this required a more effective and efficient supply chain. The study throws up an interesting observation that the focus needs to go beyond the regular supply chain to include the clinical supply chain. This will be critical to pharmaceutical majors achieving the goal of reducing time to market, quickening study timelines and reducing R&D costs.

Increased R&D spend, is making the big pharmaceutical companies to revisit the necessity of having in-house global clinical supplies divisions for their clinical trials materials. Bilcare estimates the in-house clinical services business of big pharmaceutical companies to be around US$ 2 billion per annum market opportunity.

Management Discussion and AnalysisBusiness Divisions

Speed to Market

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We believe that Innovation can and will play a major role in enabling the enhancement of speed and accuracy in the clinical trial process. The Global Clinical Services of Bilcare ensures the elimination of regional complexities which hampers both the quality and time of the trial. Under the aegis of Bilcare Global Clinical Services – Clinical Supplies Project Management, Formulation Development, Analytical Research Services, Package Design & Development, and Clinical Trial Materials manufacturing facilities for antibiotics as well as non-antibiotics are included. A wide range of technologies and processes including project management, product and protocol design, batch manufacturing system, randomization, kit assembly processes, returns and destruction management and Interactive Voice Response System (IVRS) among others are integrated with the development and manufacturing capabilities thus allowing Bilcare to provide the highest standards of clinical trial services at unmatched speed to its global customers.

Currently, Bilcare is servicing biotechnology companies, Clinical Research Organisations / Institutions, and mid and large sized pharmaceutical companies. With pharmaceutical companies still experimenting with various R&D collaboration frameworks which is evolving, in-licensing is seen by Bilcare as a significant opportunity in Global Clinical Services. In-licensing in the sphere of Clincal services encompassing Clinical trial materials manufacturing provides a great opportunity to reduce costs and ensure that R&D expenses are under control.

Excellent project management and best in class formulation, analytical and packaging expertise are a must for the companies to ensure the success of their clinical trials. Bilcare believes in providing customers a service that exceeds all their expectations. The company adheres to the philosophy of providing quality beyond compliance. The

solution, thus delivered is innovative and is supportive of the client’s drug through the entire clinical trial lifecycle. These all-encompassing services are provided for solid, semi-solid, liquid, DEA (CI-V), and biotech clinical trial materials satisfying a broad range of requirements.

FY 2008 saw Bilcare Clinical Services fortify its unique position by strengthening its team, R&D and continuing with significant capital investments. Pharmaceuticals is one of the most intense “Knowledge Driven” industries which relies heavily on its intellectual capital. Bilcare has always believed in investing heavily on its knowledge base by inducting and retaining the finest talents in the industry. The Company believes that people are its true strength and during the year the Company got on board highly talented professionals across the world, nearly doubling its total workforce in this crucial business unit. Today Bilcare Clinical Services has a right mix of scientists and industry veterans with more than 75% of the people based in the US.

The other significant development during the year was the formation of a Global Advisory Board, which is being chaired by the former Pfizer R&D President, Dr. John LaMattina. The Advisory Board includes eminent scientists like Dr. Arthur Carty, former National Science Advisor to Government of Canada. The Board will endeavor to provide objective inputs and insight in the form of independent scientific industry expertise to the GCS leadership team enabling the incremental progress towards the company’s global mission.

Renamed Bilcare Global Clinical Supplies (Europe) Ltd., the UK unit is in the process of expanding its facility in South Wales. During the fiscal year, Bilcare also made significant investments to upgrade and expand its facilities in the US which includes

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expansion of warehousing and storage capacities more particularly for the ambient as well as cold chain and frozen chain operations. These capacity expansions will allow it to meet the demand of the large pharmaceutical companies.

For the pharmaceutical sector, Asia is the newly emerging destination for clinical trials. To meet growing demand for clinical trials in the Asian Region, Bilcare GCS expanded its primary and secondary packaging capacities including its storage capacity at its existing site in Pune, India. The new capacity is expected to be operational in the third quarter of FY2009 and will significantly enhance Bilcare GCS’ global footprint.

The globalization of clinical trials is creating immense logistical challenges and operational roadblocks for clinical trial supply teams. Leading pharmaceutical companies are looking at conducting clinical trials efficiently

across the globe with specific focus on emerging markets through strategic partnering and outsourcing.

With a presence across the globe and its ability to service clients across key markets, Bilcare Clinical Services is now fully geared to provide critical support to Phase III and Phase IV clinical trial projects and at the same time deliver an even greater level of service to early-phase customers. With the current investments and growth plans, Bilcare Clinical Services is well poised towards becoming a full-service solution provider: a true, integrated partner that can take its customers from Research & Development to Phase I and II trials as well as through longer-term Phase III and Phase IV. Today Clinical Services is one of the fastest growing businesses of Bilcare with the highest profitability and going ahead Bilcare Clinical Services will become a key contributor in enhancing the company’s topline and also maintaining healthy returns.

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Bilcare strengthened its research and technology leadership in the global pharmaceutical anti-counterfeiting solutions space by acquiring Singular ID, Singapore. Singular ID is a technology innovator company engaged in R&D and creation of micro and nanotechnology based novel products. It provides integrated and secure tagging solutions and is a leading provider of tracing and authenticating items of value. This strategic acquisition will significantly enhance and compliment Bilcare’s product line in anti-counterfeit technology with Singular ID’s high-end technology enterprise brand security tags becoming a part of its product portfolio. Bilcare’s manufacturing expertise and research facilities will help in integrating the novel technology products and services of Singular ID as well as quick scale up to large volumes post commercialization.

In December 2007, Bilcare Technologies unveiled its unique integrated technology enterprise anti-counterfeit system at the hands of the former President of India, Dr. APJ Abdul Kalam. This unique nano technology based product and system creates an irreproducible secure finger-print tag, which cannot be duplicated, even by us as its innovator. When combined with current widely used track and trace products like barcodes it creates a secure tag which when can be securely read by the novel scanning device which communicates with a secure signature authentication server via the currently used normal mobility systems like

Bilcare Technologies Today, the global proliferation of product counterfeiting threatens consumers, governments and companies, irrespective of the nature of purchase or from where it is purchased. Counterfeiting is a lucrative revenue generating business of organized crime and threatens the basic tenets of economic security across international frontiers giving rise to a parallel economy. Counterfeiters are social criminals who act with utter disregard for consumers and their safety. Counterfeiting is not limited to pharmaceuticals and affects other industries like automotive, electrical and engineering, software, apparel, luxury goods, personal care, and office product sectors just to name a few. We get a complete picture of the grave dangers a counterfeit can cause when it comes to consumers suffering with chronic and critical illnesses consume counterfeit medicines. Technology along with appropriate regulatory approaches and responsible participation of all stakeholders is a sure way of attacking the counterfeit menace.

In some countries, up to 50 percent of all medicines are fakes. According to the World Health Organization (WHO) the growing counterfeit drug market is estimated to be worth US $ 75 billion globally by 2010. It is estimated that fake and counterfeit drugs account for 10–30% of medicines in many developing countries in Asia, Africa and Latin America and up to 20% of medicines in some countries of the former USSR.

Management Discussion and AnalysisBusiness Divisions

Securing Brand Pedigree

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mobile phones to match and authenticate the tagged product at astoundingly rapid speeds of mili-seconds. The activity for the end user has been kept very simple to ensure ease of use. The product is currently undergoing commercial validation trials and will be ready for market launch in the New Year.

Bilcare’s anti counterfeit technology is one the world’s first cost effective and affordable solutions and as described above it uses inherent disorder technology of nano–particulate composite systems to create a unique fingerprint for each product pack. This unique fingerprint, called as Signanotures, is then affixed onto a product pack as a secure tag. The Signanotures are irreproducible, besides being tamperproof and incorporated with measurable biometrics.

We see Bilcare Technologies’ anti-counterfeit solution securing a mammoth

business opportunity and potential because it overcomes and addresses the limitations of the current available solutions including high tech solutions like RFID tags, 2D encrypted barcodes and pedigree programs, enabling the total security across the complete supply and sales chain for a product. The cost effectiveness and irreproducibility provides a distinct advantage over other technologies apart from addressing multiple limitations of the currently available technology like total security and privacy amongst several others.

We believe that Bilcare Technologies’ pioneering anti-counterfeit solution with its affordability, security and ease of integration with any existing manufacturing infrastructure will be a potent and significant combat weapon for the global pharmaceutical industry in its war against counterfeit medicines.

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Bilcare Research AcademyThe pharmaceutical business is one of the most knowledge-intensive businesses. With clinical trials showing a trend of moving towards Asia, there is an acute dearth of professionals in this field. Statistics show that if India’s clinical trial business grows to 10% of that in the U.S. by 2015, the industry will need approximately 50,000 clinical research professionals. Bilcare Research Academy was envisaged with bridging this vast knowledge gap. This holistic initiative in collaboration with the worlds largest and premier organization ACRP – Association of Clinical Research Professionals, USA is immensely helping raise the bar for Indian clinical research professionals to global standards and best practices.

After the success of the first centre in Pune (India), the second center in Bangalore (India) was inaugurated in December 2007 by Dr. John La Mattina, President, Global Research, Pfizer, in December 2007. The event also marked the launch of the Bangalore ACRP chapter by Mr. Thomas Adams, President & CEO, ACRP. The students of the Bilcare Research Academy at Bangalore also participated in the prestigious ICBIO conference this March. Strategically located in the same building as the Bangalore Diabetes Hospital, the Bangalore students have the opportunity to observe on realtime basis, the clinical trial activities at the research wing of Bangalore Diabetes Hospital.

Mr. Thomas Adams, President & CEO of ACRP, USA, also inaugurated ACRP’s Chapter in Singapore at Bilcare Singapore. The inauguration of this Chapter was a significant milestone for the industry professionals in the region and is the stepping-stone towards establishing the Bilcare Research Academy in Singapore.

Bilcare Research Academy was founded with the mission of identifying promising young people and turning them into leading and cutting edge professionals in the field of clinical research. Today it offers a ten month Post Graduate Diploma in Clinical Research (PGDCR) in collaboration with the Association of Clinical Research Professionals (ACRP), which is the largest international professional body of clinical research professionals in the world. On successful completion of the course students are awarded a joint certification by Bilcare Research Academy and ACRP.

With burgeoning demand for clinical research professionals across Asia, Bilcare Research Academy is all set to be the premier learning centre which will provide the industry with skilled professionals who will add value by conducting clinical research that adhere to global standards of best practices. Bilcare Academy’s next planned center will open in Singapore. As worldwide clinical trials shift to Asia region, the Academy will ensure the continuous availability of leaders who will be best in class Clinical research professionals.

Management Discussion and AnalysisBusiness Divisions

Spreading Knowledge

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Outlook Global pharmaceutical industry is slowly coming out of pain and pressures that it experienced in the last few years; it is embracing change in a big way and one of the key issues which is changing the pharma landscape is the new trend of working with outsourced knowledge partners for research and innovation. Bilcare is rightly poised to take up this opportunity and work as integrated knowledge partner in the areas of pharmaceutical packaging innovation, clinical trial outsourcing and anti-counterfeit technology development to ensure the best standards of patient care.

The company will focus its resources in the US market which constitutes almost 46% of the global pharma market. Europe and Asia will also be an area of focus for the company while India will remain a consistent and stable market.

The various acquisitions made by the Company will start giving results in the next few years. While some acquisitions are helping us in scale up technology solutions capability in a big way, other acquisitions give us footprint into key markets. Going ahead, we look towards organic and inorganic growth to ensure value addition and staying competitive. The global sourcing contracts and our value added solutions to big pharmaceutical companies will help grow the packaging material business. The Brandpak Building Solutions and

‘Bilcare Optima’ Solutions of the company will result in long term contracts and deep relationships.

With clinical services shifting to Asia, Bilcare’s Clinical Services offerings are one of its kind for global customers with state of art facilities, geographic reach and the amongst the best leadership teams. This will be the key growth driver of our Clinical Services business in the future. According to a FICCI white paper discussion report, the global clinical trials market opportunity in 2007 is US $ 26 billion and Bilcare is continuously working towards garnering a pie of this market.

Another area which we are excited about is our success in anti-counterfeiting technology area; we believe that Bilcare Technologies has immense potential with its various cost effective products and solutions which has opportunity for pharmaceutical companies, retailers and end consumers.

Risks & ConcernsToday, the risks encountered by every global corporation are two-fold, macro-risks and micro-risks. While macro-risk usually affects a whole industry or state and thus needs joint and collaborative efforts, micro-risks can be derisked at the company level.

The key macro-risks faced by every global corporation are many and varied; the first being country and geographic risks with companies operating across nations. Thus

Management Discussion and AnalysisConclusion

Progressing Vision

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local political developments, ethnic issues and change in laws of the land are a risk. The other risks are economic trends like global rise in crude oil prices resulting in higher price of input costs and inflationary trends. Also, the movement of one currency against the other is affecting markets globally. At a micro-level, global companies broadly face the issues of customer risk, competitor risk, brand & product risk, industry risk and human resource risk, amongst others.

Bilcare has over the years, put a strong risk management practice in place in line with global corporations. It reviews, evaluates and acts upon its key risk parameters on a regular basis. With over 500 customers spread over various geographies and the revenue from each customer balanced and not skewed towards few, it is well positioned in this scenario. Also, with operations across four geographies, all country, political and local risks are covered with an even spread of the business. A professional senior

management team ensures that human resource risk is minimized while cutting edge R&D and customer focus ensures that Bilcare’s remains customer focused and continuously strengthens its value proposition to the market.

The company practices a prudent and alert risk management mechanism which helps it in addressing all risk concerns and ensures the smooth running of the operations.

Cautionary Statement

Statement in this Management Discussion and Analysis

describing the company’s objectives, projections, estimates

and expectations may be ‘forward looking statements’

within the meaning of applicable laws and regulations.

The factors that could affect the Company’s performance

substantially or materially from those expressed or implied,

include a downtrend in the pharmaceutical industry-global

or domestic or both, significant changes in political and

economic environment in india or key markets abroad,

tax laws, litigation, labour relations, exchange rate

fluctuations, interest and host of other incidental factors.

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Corporate Governance

Board of Directors and Attendance at Board Meetings and AGMName of the Director Category Particulars of Attendance

Board Meetings Last AGMPromoter Executive Director Mr. Mohan H. Bhandari Chairman & Managing Director 6 —Non-Promoter Executive Directors Mr. Chandra Prakash Jaggi Executive Director — —Dr. Praful R. Naik Executive Director 6 PresentIndependent Directors Dr. Volker Huelck Director 1 —Dr. Kalyani Gandhi Director 3 —Dr. R.V. Chaudhari Director — —Mr. Cyrus Bagwadia Director 3 —Mr. Rajendra B. Tapadia Director 4 PresentMr. M.L. Bhakta* Director — —Non Independent Directors Mr. Rakesh Jhunjhunwala Director — —Mr. Manish Gupta Director 4 Present

* Resigned as a Director w.e.f. 31st July, 2007

This chapter, along with the chapters on ‘Management Discussion and Analysis’ and ‘Shareholder Information’, constitutes the compliance with Clause 49 of the Company on Corporate Governance during the year 2007-08.

Company’s philosophy on Code of Governance Bilcare Limited is committed to implement the Corporate Governance norms specified in Clause 49 of the Listing Agreement.

Bilcare Limited is a growing organization, with global expansion, where systems are being developed and improved continuously for maximizing Shareholder value and sustaining the ongoing growth.

Board of Directors The Board of Directors at Bilcare Limited is comprised of ten Directors. The Board comprises of the Chairman and Managing Director, who is a Promoter Director, two Executive Directors and seven Non-Executive Directors, out of which five are Independent Directors. All Non-Executive Directors are persons of eminence and bring a wide range of expertise and experience to the Board.

None of the Directors is a member of more than ten Board level Committees of the public limited companies in which they are Directors or Chairmen of more than five such Committees, as included for the purpose of Corporate Governance laid down by SEBI and the Listing Agreement.

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Number of Board Meetings The Board met six times. The meetings were on 13th April, 29th June, 30th July, 30th October 2007, 29th January and 12th March 2008. All the meetings were held in such manner that the gap between two consecutive meetings was not more than four months.

Information supplied to the Board Amongst others, the information supplied to the Board includes:• Quarterly results of the Company • Minutes of meetings of the Board of

Directors, Audit Committee and other Committees

• Any joint venture or collaboration proposals

• Significant development in human resources and the industrial relations front

• Transfer of material nature of assets, which is not in the normal course of business

The Board of Bilcare Limited is presented with the agenda papers well in advance of the meeting.

Committees of the Board

Audit Committee The Audit Committee of the Company comprises of three Independent, Non-Executive Directors viz. Mr. Rajendra B. Tapadia (Chairman of the Committee), Dr. Kalyani Gandhi and Dr. Volker Huelck. The terms of reference stipulated by the Board are as contained under Clause 49 of the Listing Agreement. Mr. Anil Tikekar, Company Secretary, is the Secretary to the Committee. The powers of the Audit Committee has been specified by the Board of Directors as under:1. To investigate any activity within its terms

of reference. 2. To seek information from any employee. 3. To obtain outside legal or other

professional advice.

4. To secure attendance of outsiders with relevant expertise, if it considers necessary.

The role of the Audit Committee shall includethe following: 1. Oversight of the company’s financial

reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the Statutory Auditors and the fixation of audit fees.

3. Approval of payment to statutory auditors for any other services rendered by the Statutory Auditors.

4. Reviewing, with the management, the quarterly and annual financial statements before submission to the Board for approval, with particular reference to:

a. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of section 217 of the Companies Act, 1956

b. Changes, if any, in accounting policies and practices and reasons for the same

c. Major accounting entries involving estimates based on the exercise of judgment by management

d. Significant adjustments made in the financial statements arising out of audit findings

e. Compliance with listing and other legal requirements relating to financial statements

f. Disclosure of any related party transactions

g. Qualifications in the draft audit report, if any.

5. Reviewing, with the management, performance of auditors, and adequacy of the internal control systems.

6. Discussion with statutory auditors about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.

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7. To look into the reasons for substantial defaults in the payment to the depositors, shareholders (in case of non payment of declared dividends) and creditors.

8. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

9. To review the following information: a. Management discussion and analysis of

financials and results of operations; b. Statement of significant related party

transactions (as defined by the audit committee), submitted by Management;

c. Management letters / letters of internal control weaknesses issued by the statutory auditors;

d. Internal audit reports relating to internal control weaknesses; and

e. The appointment, removal and terms of remuneration of the Internal Auditors.

10. Reviewing the financial statements and in particular the investments made by the unlisted subsidiaries of the company.

The Committee met four times, on 26th June, 28th July and 26th October 2007 and 29th January 2008. Table no.1 gives the Audit Committee attendance record.

Table no. 2: Attendance record of Shareholders’ / Investors’ Committee members for 2007-08

Name of Director Category Status No of meetings

Held Attended

Mr. Rajendra B. Tapadia Independent Chairman 1 1

Mr. Mohan H. Bhandari Promoter, Executive Member 1 1

Mr. Chandra Prakash Jaggi Executive Member 1 0

Remuneration Committee Bilcare Limited does not have a Remuneration Committee. Detailed terms of the appointment of the Managing Director and other Executive Directors are governed under the Board and General Meeting resolutions.

Shareholders’/ Investors’ Grievance Committee The Board of the Company has constituted a Shareholders’/ Investors’ Grievance Committee, comprising of Mr. Rajendra B. Tapadia (Chairman of the Committee), Mr. Mohan H. Bhandari and Mr. Chandra Prakash Jaggi. The committee met once during the year on 29th January 2008. Mr. Anil Tikekar, Company Secretary, is the Compliance Officer. Table no. 2 gives the attendence record of Shareholders’/Investor Committee Members. The total number of letters/ complaints were 8 and the same were redressed. There were no complaints pending at the end of the year. No requests for dematerialization and/or transfer were pending for approval as on 31st March 2008. Table no. 3 gives the number and nature of complaints.

Table no. 1: Attendance record of Audit Committee members for 2007-08

Name of Director Category Status No of meetings

Held Attended

Mr. Rajendra B. Tapadia Independent Chairman 4 4

Dr. Kalyani Gandhi Independent Member 4 4

Dr. Volker Huelck Independent Member 4 2

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Remuneration of Directors The aggregate value of salary and perquisites for the year ended 31st March 2008 to Wholetime Directors is as follows: Mr. Mohan H. Bhandari – Rs.85.57 Lacs, Mr. Chandra Prakash Jaggi – Rs.30.00 Lacs and Dr. Praful R. Naik – Rs.53.88 Lacs. Besides this, the Executive Directors are also entitled to facilities as are available to other employees in the senior management of the Company.

ManagementManagement Discussion and Analysis This Annual Report has a detailed chapter on Management Discussion and Analysis.

Code of ConductThe Board of Bilcare Limited has laid down a code of conduct for all Board Members and Senior Management of the Company. All Board Members and Senior Management personnel have affirmed compliance with the Code of Conduct and the Managing Director has confirmed the same.

Disclosures by the Management to the Board All disclosures relating to financial and commercial transactions where Directors

may have a potential interest are provided to the Board and the interested Directors do not participate in the discussion nor vote on such matters.

Shareholders Appointment and Re-appointment of DirectorsMr. Rajendra B. Tapadia, Dr. Volker Huelck and Dr. Kalyani Gandhi are retiring by rotation and being eligible offer themselves for re-appointment. Their details are given below:

Mr. Rajendra B. Tapadia holds a degree in Chemistry from Pune University and a postgraduate diploma in Business Management. He is an eminent industrialist with over 26 years of experience in the industry. He guides Bilcare Limited in process and product technology.

Dr. Volker Huelck is an MS in Chemical Engineering and a Ph.D. in Interpenetrating Polymer Networks. He did his postdoctoral research in polymer chemistry. He is the Chairman of the German Plastics Centre and a member of the Global Council at Lehigh University, USA. He guides the Research Academy team and material science development at Bilcare, worldwide.

Table no. 3: Number and nature of complaints received and redressed during 2007-08

Nature of Complaint No of complaints received No of complaints redressed

Non-receipt of Bonus Share certificate 5 5Non-receipt of shares lodged for transfer 2 2Non-receipt of Dividend 1 1

Shares and Convertibles held by Non Executive DirectorsDetails of the shares and convertible instruments held by the Non-Executive Directors as on 31st March 2008, are as under :

Name of the Director Category Number of shares held

(Equity Shares of Rs.10/- each)

Dr. Volker Huelck Independent NilDr. Kalyani Gandhi Independent NilDr. R.V. Chaudhari Independent NilMr. Cyrus Bagwadia Independent NilMr. Rajendra B. Tapadia Independent 301,051Mr. Rakesh Jhunjhunwala Non Independent 1,750,000

Mr. Manish Gupta Non Independent 3,850

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Dr. Kalyani Gandhi is the former Dean of the Indian Institute of Management (IIM), Bangalore. She is an MA in Industrial Psychology and has completed her Ed.D. and M.Ed. from Rutgers University, USA.

Material Disclosures and Compliance None of the transactions with any of the related parties were in conflict with the interests of the Company. There was no non-compliance by the Company, related to capital markets, during the last three years.

Means of Communication The quarterly results are published in ‘The Economic Times’, ‘The Times of India’, ‘Maharashtra Times’, `Business Standard’ and ‘Business Line’.

In addition to this, the Company has also filed quarterly, half yearly, annual results, quarterly shareholding patterns on the Electronic Data Information Filing and Retrieval (EDIFAR) website (www.sebiedifar.nic.in) maintained by National Informatics Centre (NIC), online, in the manner, format and within such time as prescribed by SEBI.

General Body Meetings Location and time for the last 3 Annual General Meetings were:

Financial Year Venue Date Time

2004-05 Registered Office of the Company 24th September 2005 11.00 a.m.

2005-06 Registered Office of the Company 29th September 2006 11.00 a.m.

2006-07 Registered Office of the Company 28th September 2007 11.00 a.m.

General Shareholder Information Annual General MeetingDate : 30th September 2008Time : 11.00 a.mVenue : Registered Office of the Company Gat No 1028, Village Shiroli, Taluka Khed, Rajgurunagar, Pune 410505

Financial Calendar1st April to 31st MarchFor the year ended 31st March 2008, results were announced on –• 30th July 2007 : First Quarter• 30th October 2007 : Half yearly• 29th January 2008 : Third Quarter• 30th June 2008 : Annual

Book ClosureThe books will be closed from 22nd September to 30th September 2008 for payment of dividend.

Dividend DateThe Board has recommended a dividend of 40% i.e. Rs.4/- per Equity share of Rs.10/- each and the same would be payable on and from 15th October 2008.

No special resolution was put through postal ballot in the last year. This year no resolution is proposed to be taken up through postal ballot.

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ListingThe Equity shares of Bilcare Limited are listed on the Pune Stock Exchange Limited, Bombay Stock Exchange Limited and Ahmedabad Stock Exchange Limited.

Stock CodeBSE : 526853

Stock DataThe table below gives the monthly high and low prices and volumes of Bilcare Limited at Bombay Stock Exchange Limited, Mumbai (BSE) for the year 2007-08.

High and Low Prices and Trading volumes at BSE Month High (Rs.) Low (Rs.) Volume (Nos.)

Apr-07 775 560 767,418

May-07 929 712 1,191,075

Jun-07 1047 831 412,147

Jul-07 1225 985 665,609

Aug-07 1069 948 341,421

Sep-07 1325 980 497,220

Oct-07 1272 880 482,086

Nov-07 1342 975 626,918

Dec-07 1797 1200 694,861

Jan-08 1830 822 483,035

Feb-08 1085 780 238,024

Mar-08 1020 630 337,956

Registrar and Transfer Agents and Share Transfer and Demat System The Board’s Executive Committee generally meets twice a month for dealing with matters concerning securities/share transfers of the Company. The Company has appointed Intime Spectrum Registry Limited as the Registrar and Transfer Agents of the Company, to carry out the share transfer work on behalf of the Company.

Address of the Registrar and Transfer Agent: Intime Spectrum Registry Limited, (Unit: Bilcare Limited)Block No. 202, 2nd Floor, Akshay Complex Off Dhole Patil Rd. Pune – 411 001, IndiaTelefax : 020 – 26053503E-mail : pune@intimespectrum.com

Stock PerformanceShare price of Bilcare Limited versus BSE Sensex

Both, BSE Sensex and Bilcare Limited share price are indexed to 100 as on April 2, 2007.

Dematerialization The Company’s equity shares are under compulsory demat trading. As on 31st March 2008, dematerialized shares accounted for 96.10% of the total equity.

Demat ISIN numbers in NSDL & CDSL for Equity Shares : INE986A01012.

Liquidity Bilcare Limited shares are part of the ‘S’ group on Bombay Stock Exchange Limited and are traded regularly.

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Share Holding Pattern The tables below give the pattern of shareholding by ownership and share class respectively.

Pattern of shareholding by ownership as on 31st March 2008

Category Number of shares held Shareholding %

Promoters 7,276,274 44.22

Mutual Funds 60,000 0.37

Insurance Companies — —

Nationalised Banks — —

Foreign Insitutional Investors 464,432 2.82

Corporate Bodies 1,357,093 8.25

Non Resident Indians 940,893 5.72

Indian Public 6,354,373 38.62

Total 16,453,065 100.00

Pattern of shareholding by share class as on 31st March 2008

Shareholding Class Number of Shareholders Number of Shares Shareholding %

Up to 500 7239 704,486 4.28

501 - 1,000 376 289,555 1.76

1,001 - 2,000 181 275,887 1.68

2,001 - 3,000 123 324,196 1.97

3,001 - 4,000 36 130,378 0.79

4,001 - 5,000 39 188,324 1.14

5,001 - 10,000 54 409,166 2.49

10,001 & above 93 14,131,073 85.89

Total 8141 16,453,065 100.00

Outstanding FCCB and Convertible Warrants, Conversion Date and likely impact on EquityThe Company on 27th December 2006 made allotment of Warrants as under:

1. 7,45,000 Warrant ‘A’, entitling to apply for one Equity Share against each Warrant convertible into or exchangeable with Equity Shares at the price of Rs.535/- (including premium of Rs.525/-), being conversion price, of face value of Rs.10/- each and

2. 7,55,000 Warrant ‘B’, entitling to apply for one Equity Share against each Warrant convertible into or exchangeable with Equity Shares at price of Rs.535/- (including premium of Rs.525/-), being conversion price, of face value of Rs.10/- each;

to Mrs. Nutan Bhandari, who is a part of the Promoter Group.

Subsequently, the Company on 17th October 2007 and on 20th June 2008, respectively allotted –

1. 7,45,000 Equity Shares of Rs.10/- on conversion of the above Warrant ‘A’ convertible into Equity Shares of Rs.10/- each issued at Rs.535/- per share (including premium) and

2. 7,55,000 Equity Shares of Rs.10/- on conversion of the above Warrant ‘B’ convertible into Equity Shares of Rs.10/- each issued at Rs.535/- per share (including premium)

to Mrs. Nutan Bhandari, who is part of the Promoter Group.

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The Company on 23rd December 2005, allotted 5,000 Foreign Currency Convertible Bonds (FCCBs) of face value of US $ 10,000 each, aggregating to US $ 50.00 million, including offering under Green Shoe Option.

Subsequently, during the year the Company allotted 614,265 Equity Shares of Rs.10/- each upon conversion of 1,182 Foreign Currency Convertible Bonds (FCCBs) as per the terms and conditions of the Offering Circular, at a conversion price of Rs.880/- per share including premium. The balance 3,818 FCCBs continue to remain as Bonds.

Consequently, the paid up share capital of the Company post conversion of all the above, stood at Rs.172,080,650/-.

Plant LocationGat No. 1028, Village Shiroli, Tal. Khed, Rajgurunagar, Pune 410 505.

Investor Correspondence Address For transfer/dematerialisation of shares and any other query relating to the shares of the Company:

Intime Spectrum Registry Limited, (Unit: Bilcare Limited)Block No. 202, 2nd Floor, Akshay Complex Off Dhole Patil Road, Pune – 411 001, IndiaTelefax : 020 – 26053503E-mail : pune@intimespectrum.com

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To,

The Members of Bilcare Limited

Re : Report on Corporate Governance

We have reviewed the records concerning the Company’s compliance of the conditions of corporate governance as stipulated in Clause 49 of the Listing Agreement entered into by the company with the Stock Exchanges of India for the financial year ended on 31st March 2008.

The compliance of conditions of corporate governance is the responsibility of the management. Our review was limited to procedures and implementation thereof, adopted by the company for ensuring the compliance of the conditions of the corporate governance. It is neither an audit nor an expression of an opinion on the financial statements of the company.

We have conducted our review on the basis of the relevant records and documents maintained by the company and furnished to us for examination and the information and explanations given to us by the company.

Based on such a review, and to the best of our information and according to the explanations given to us, in our opinion, the company has complied with the conditions of corporate governance as stipulated in Clause 49 of the Listing Agreement of the Stock Exchanges of India.

We further state that such compliance is neither an assurance as to the future viability of the company nor to the efficiency with which the management has conducted the affairs of the company.

For R.L. Rathi & Co.Chartered Accountants

R. L. RathiProprietorMembership No. 14739 Dated : 30th June 2008

Certificate by the Auditors on Corporate Governance

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Human Asset

The Human Mind Is Our Fundamental Resource – John F Kennedy

Continuous business challenges and innovation-led solutions are a reality in today’s competitive global scenario. While technology is an enabler, the ability of the human mind to stretch beyond the obvious will be the key to Corporates to stay ahead.

Consolidating across borders, companies are focussed on managing cross-cultural teams that are working synergistically to meet the needs of an increasingly demanding customer. The team at Bilcare is no exception, with specialists joining the organisation at various levels globally. Effectively managing this global talent pool, we continue to march ahead in our diverse business segments.

With the objective of becoming the employer of choice in the healthcare sector we have initiated several strategic HR tools which will increase organizational and employee efficiency.

One of our key HR drivers today is to manage the high growth and talent. With facilities across the world, a multi-cultural workforce and varied professional needs, the challenge we face is to create a one company, one culture spirit across the organisation. We have mapped our organisational needs for functional and leadership talent requirement to keep pace with this growth and are putting best practices in place to make Bilcare

ready to handle growth. While going out to attract and retain the best talent, Bilcare is also looking at re-energising and articulating qualities which were inadvertently embedded in the company’s culture when it started its growth journey few years back. So while our aspirations are to be a global player, our philosophy will be to grow our mind to a global scale yet retain the heart of a small company.

One of the key challenges every organisation faces today is that of managing growth and ability to predict the future before others; an organisation requires tremendous leadership and management bandwidth to ensure competitiveness. Bilcare in the past one year has transformed itself into a true multi-national company (MNC) and is on its way to creating a MNC culture of professionalism and hard work. With a multi-cultural and multi-lingual workforce, we need leaders who have proven themselves in the global competitive scenario. Bilcare is building a strong cadre of professional managers, thus, derisking the business from individual brilliance.

To identify and capture the above, an Organizational Diagnostic Workshop was conducted; the workshop revealed the strategic priorities for Bilcare in the areas of Human Resource Management and Organizational Development. The company’s Annual Strategy Meet had senior Blicare team members across the globe brainstorming over the future roadmap.

Team Bilcare

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Another key area of focus for the human resource team is to keep the spirit of ‘human innovation’ intact and grow it within the Company; Bilcare is a research focussed organisation and innovation is key to its growth and competitive edge. We want every team member to genuinely want to innovate and grow.

A corporate business review team has been set up for streamlining all business reviews. This measure will facilitate and support each business vertical to move quicker towards its business goals. The Balanced Score Card (BSC) initiative was effectively implemented in the Pharma Packaging Research and Global Clinical Services businesses. The idea behind the above

is to make the HR function a strategic business driver in the company’s growth and not just limit it to a functional role.

With 45% of its employees outside India, Bilcare’s HR is gearing up to create international best practices. Today the workforce comprising of 25% Americans, 12% Singaporeans, 7% British and 56% Indians is the intellectual capital that is driving the success of this knowledge driven company.

Bilcare aims to attract, retain and develop the finest human capital available across the globe and create an eco-system of knowledge partnership with its employees.

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know the world. This programme devised by “Bilcare Foundation” for children in the age group of 14-17, involves a fully equipped Audio Visual Van with all latest devices which will educate the children in an interactive way. These vans go around all local schools in Rajgurunagar village on a regular basis to impart knowledge with assistance from school teachers and Bilcare Foundation’s volunteers.

“A bit of fragrance clings to the hand that gives flowers” – Bilcare believes that by giving back to society it ensures a holistic, sustainable growth for itself. From humble beginnings in 1983, today we operate in USA, Singapore, India, UK, Germany, Brazil, China and Australia. Nonetheless, we are dedicated in our mission to enhance quality of human life by allowing people to live better and achieve more.

Bilcare Foundation is spearheaded by employees, their families and other volunteers. Across the globe, wherever we do business, we want to be part of community adding value in a meaningful way.

At the end, all the work we do with children stem from the belief that “Children are the living messages we send to a time we will not see.” – John W. Whitehead

Bilcare Foundation

Our greatest natural resource is the minds of our children – Walt Disney

At Bilcare, Corporate Social Responsibility is an integral part of our focus from the very beginning. Bilcare Foundation’s objective is to enrich and empower the lives of the underprivileged, especially children, by ensuring that they receive appropriate opportunities and genuine guidance that can propel them towards the path of success. We work with children and our activities are focussed towards ensuring a brighter and better future for them.

A key event during the year was the launch of ‘Window To The World’, an initiative of Bilcare Foundation for the school children of the Rajgurunagar village, near Pune, in India; it was aptly launched by Former President of India, Dr. APJ Abdul Kalam whose fondness for children is well known. On this occasion, around 500 children from 14 local schools interacted with Dr. APJ Abdul Kalam where he affectionately told the children the importance of education and knowledge. ‘Window To The World’ is a local project out of Pune in India to reach out to the children to familiarize them with the English language and the Internet. The aim of this initiative is to equip them to reach out and

Touching Lives

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Board of DirectorsMr. Mohan H. Bhandari – Chairman & Managing Director

Dr. Volker Huelck

Mr. Cyrus Bagwadia

Mr. Rakesh Jhunjhunwala

Dr. R. V. Chaudhari

Mr. Rajendra B. Tapadia

Dr. Kalyani Gandhi

Mr. Manish Gupta

Dr. Praful R. Naik – Executive Director

Mr. Chandra Prakash Jaggi – Executive Director

Company SecretaryMr. Anil Tikekar

Registered Office and Works1028, Village Shiroli, Taluka Khed,

Rajgurunagar, Pune - 410505, India

AuditorM/s R. L. Rathi & Co., Pune

BankersABN Amro Bank NV

Barclays Bank Ltd.

Corporation Bank

DBS Bank Ltd.

HDFC Bank Ltd.

Hongkong & Shanghai Banking Corporation Ltd.

Indian Bank

Indian Overseas Bank

Standard Chartered Bank

State Bank of India

Registrar & Transfer AgentsIntime Spectrum Registry Limited

(Unit Bilcare Limited)

Block no 202, 2nd floor, Akshay Complex

Opp Dhole Patil Road, Pune 411 001, India

Telefax – +91 20 26053503

Email – pune@intimespectrum.com

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To the MembersWe are pleased to present the report on our business and operations for the financial year ended 31st March 2008.

Financials The Company on a standalone basis, has achieved a turnover growth of over 23% vis-à-vis previous year. Rs. Lacs

2007-08 2006-07

Sales & Other Income 42,212.26 34,143.70

Profit before tax 10,153.39 8,981.44

Profit after tax 6,168.92 5,856.42

Profit available for appropriation 17,231.72 12,369.16

General Reserve 1,000.00 600.00

Dividend 694.56 603.75

Dividend Tax 118.04 102.61

Balance in Profit & Loss Account 15,419.12 11,062.80

Dividend We recommend a Dividend of 40% i.e. Rs.4/- per equity share of Rs.10/- each for the financial year ended 31st March 2008.

Consolidated Financial Statements The Consolidated Financial Statements, pursuant to clause 32 of the Listing Agreement and in accordance with Accounting Standard 21 issued by the Institute of Chartered Accountants of India have been provided in the Annual Report.

Directors’ Report

These consolidated financial statements provide financial information about the Company and its subsidiaries as a single economic entity and form part of this annual report.

For the year ended 31st March 2008, the consolidated turnover of Rs.66,992.23 lacs, was higher by 57% over the previous year’s turnover of Rs.42,572.63 lacs. The consolidated net profit went up to Rs.8,155.62 lacs for 2007-08 from Rs.5,992.11 lacs in the previous year.

Subsidiary CompaniesThe Company has a subsidiary company overseas – Bilcare Singapore Pte. Ltd, Singapore which in turn has its respective step down subsidiaries.

The Company has received an approval of the Central Government under Section 212(8) of the Companies Act, 1956, which exempts the Company from attaching to the Annual Report, the copies of the Financial Statements and other documents required to be attached under Section 212 (1) of the Companies Act of its subsidiary companies, namely: i) Bilcare Singapore Pte. Ltd, Singapore;

ii) Bilcare GmbH, Germany;

iii) Bilcare Inc., USA;

iv) Bilcare Farmaceutica Embalagem E Pesquisas Ltda., Brazil;

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v) Bilcare (UK) Ltd, U.K;

vi) Bilcare GCS (Europe) Ltd. (formerly known as DHP Ltd.), U.K., a wholly owned subsidiary of Bilcare (UK) Ltd;

vii) Singular ID Pte. Ltd, Singapore;

viii) Singular ID Italia Srl., a subsidiary of Singular ID Pte. Ltd.

ix) Bilcare Switzerland SA, Switzerland;

Accordingly, the said documents are not being attached to the Financial Statements of the Company. A gist of the financial performance of the subsidiaries is given in this Annual Report. The annual accounts of the subsidiary companies are open for inspection by any Member.

Singular ID Pte. Ltd Bilcare Singapore Pte. Ltd. acquired Singular ID Pte. Ltd., Singapore, a provider of integrated high technology enterprise brand security system in December 2007.

Creating and developing innovative anti-counterfeit technologies and products has been one of the core Research initiatives at Bilcare which has been consistently appreciated by our customers. This acquisition underlines the importance that Bilcare places on offering state-of-the-art anti-counterfeit solutions, more particularly in the form of end-user oriented, fully integrated systems.

With counterfeit products not only affecting the trust and safety of the consumer, but also damaging the reputation and bottom line of the industry, there has been a dire need for a robust and scalable anti-counterfeit solution for the healthcare and other industries. This acquisition will bring Singular ID into the Bilcare group and greatly strengthen the Company’s vital product offering across industry verticals.

Head-quartered in Singapore, and with a subsidiary in Padua, Northern Italy, Singular ID is a technology company engaged in research, development and creation of micro and nanotechnology based novel products which are patented and extremely valuable intellectual property. With a mission to safeguard customers’ interests by providing integrated tagging solutions, Singular ID is a leading solution provider for tracing, tracking and authenticating items of value. Singular ID has a customer-centric approach and works closely with its clients to tailor its technology to meet specific customer requirements.

Singular ID Italia SrlSingular ID Italia Srl, is a subsidiary of Singular ID Pte. Ltd. with holding of 92.5% of the total paid up equity capital of Singular ID Italia Srl.

Bilcare Research Academy Bilcare Research Academy was founded with a focus to address the shortage of trained manpower in the Asian region in the Clinical Trial domain.

The Academy offers a ten months Post Graduate Diploma in Clinical Research (PGDCR) in collaboration with the Association of Clinical Research Professionals (ACRP), US, the largest international professional body of clinical research professionals in the world. The first centre was opened at Pune, India and was inaugurated in June 2007 by the then Drugs Controller General of India Dr. Venkateswarlu in the presence of Mr. Thomas Adams, President & CEO of ACRP. This event also marked the launch of the very first ACRP Indian chapter at Pune. Owing to the overwhelming response to this crucial initiative of Bilcare Research Academy, the second batch was started at Pune within a gap of three months.

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The first batch of students from Pune have secured a 100% placement with several of the students getting multiple opportunities and some of them securing overseas appointments. Several leading global pharmaceutical companies, clinical research organizations as well as renowned Research Institutes in India came for campus interviews and expressed their appreciation for the kind of value creation being steered by the Academy.

The second Center of the Bilcare Research Academy was inaugurated at Bangalore by Dr. John L LaMattina, President, Global Research & Development, Pfizer Inc. on 17th December 2007. This historic day also marked the launch of the Bangalore ACRP chapter by Mr. Thomas Adams, President & CEO, ACRP.

Research & DevelopmentYear 2007-08 has been a landmark year for the Research & Development activities.

The inauguration of the Global Center of Excellence for Research in Pune at the hands of H.E. Dr. APJ Abdul Kalam and Dr. John L LaMattina, President, Global R&D, Pfizer Inc. became etched as the most memorable event. Dr. R Chidambaram, Principal Scientific Advisor to the Government of India at this historic occassion unveiled the Indian patent awarded for path breaking Counterfeit and Compliance technology developed by the R&D team.

This Center of Excellence becomes the only one of its kind in the world which will engage in continuous advancements in technologies, processes, products and services for building the highest levels of Efficacy, Potency and Safety standards in

Formulation dosage forms by way of scientific integration of the dosage form with all its components, more particularly the most crucial component – Packaging.

The year also saw investments in expansion of existing R&D lab in Singapore and also establishing the new lab facility housing the packaging research services in USA. The lab in USA will liaise with the customers and conduct all primary evaluation, experimentation and research on the projects received from the local / regional customers and amalgamate its findings with the Global Center of Excellence, for providing the comprehensive Research report to the customers.

The packaging research services strengthened their material simulation capabilities by integrating high-end technology solutions like SOLID WORK & PAM-FORM2G Software systems. These software systems enable the conclusive determination of material characteristics and performance resulting in defining material selection and its manufacture and end-use stabilization parameters. The materials research team had embarked on several projects for developing newer specialty packaging materials based on the specific unique needs of a variety of products and were able to successfully develop several new specialty proprietary and intellectual property based materials. These new products are currently undergoing standardization and validation runs for subsequent commercialization.

The Brand Management Technologies team continues to work relentlessly on the development of back and front end systems for providing a secure enterprise architecture for brand pedigree.

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The R&D activities in Clinical Supplies business continues its focus in providing innovative Formulation Development and Analytical Research services, more particularly to innovators having New Chemical Entities (NCE’s) which require appropriate functional formulation dosage forms for conducting clinical trials. It also integrates packaging research, design and development activities into creation of patient kits with enhanced compliance capabilities based on the trial protocols. The lab facility expanded its infrastructure by adding high-end technology equipment. It also significantly expanded its capacity for stability study programs. The Clinical Supplies R&D services now offers an integrated formulation development and design inclusive of packaging research to enable its customers take their products to market at enhanced speed post successful clinical trials.

The focused initiative of Research across all business activities has resulted in our company for applying 45 patent applications worldwide in the current year. Today Bilcare has 9 granted patents and over 90 patent filings at various stages in the grant process worldwide.

Benefits derived from R & D• BilcareOptima, the most valuable and

accepted novel service to the customers has also become the core revenue earner for Research services offered by Pharma Packaging Innovation business

• Bilcare Patina became the most successful new product introduction and continues to be the most admired innovation from Bilcare by its customers.

• Several key customers have signed exclusive research services agreement

encompassing a broad range of research services.

• Innovative solutions group was successfully able to provide novel branding strategies and infuse functionally sound, integrated packaging systems for several leading brands. These brands with their new aura exhibited incremental revenue growth. Bilcare benefited from exclusive packaging materials supplies for most of these brands apart from revenues earned for the research services.

• Exclusive supplies agreements for specialty and patented materials have been signed off with customers for their key brands.

• The path breaking Anti-counterfeit solution has resulted in keen interest from the Pharmaceutical industry, Industry organizations and Regulatory bodies across the world. Several pilot projects are being planned in conjunction with these groups.

• Process development activities have resulted in enhanced productivity in the manufacture of the specialty packaging materials with improved product characteristics. Lacquer coatings on Bilcare Patina, barrier coatings, flexo printing process, lamination process with enhanced bonding are some of the key projects completed successfully.

Future plan of action• Establishment of Packaging Research

facility is under process in USA. This facility will provide exclusive packaging research services to its customers as

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well as integrated services with the R&D division of Clinical Supplies for complete formulation dosage form development. This facility will be networked with the Global Research Center of Excellence in India as well as the Singapore Research facility enabling enhanced speed of deliveries for a wide range of specialty research to customers across the world.

• Signing of Master Services Agreements with leading global pharmaceutical clients for comprehensive pharmaceutical formulation development integrated with packaging research.

• Prioritize technology transfer for effective commercialization of new products developed and continue development activities for creating newer products and processes.

• Commercialize the newly developed research services for packaging research on Semi solid and liquid formulation dosage forms

• Continue focus on expanding the technologies research and development for enhancing the offerings of existing range of products as well as development of newer products to compliment the wide range of application needs.

Conversion of Foreign Currency Convertible Bonds (FCCBs) and WarrantsUpon conversion of 1,182 FCCB and 1,500,000 warrants, the Company allotted 2,114,265 Equity Shares of Rs.10/- each.

Post allotment of Equity Shares as aforesaid, the Paid-up Equity Share Capital of the

Company stood at Rs.172,080,650/- divided into 17,208,065 Equity Shares of Rs.10/- each.

Expenditure on R & D Rs. Lacs

Capital 1,449.06 Recurring 923.10 Total 2,372.16 R & D Expenditure as a percentage of Total Turnover 5.62%

On a consolidated basis, total R & D expenditure as a percentage of consolidated turnover is 6.50%.

Conservation of Energy and Technology AbsorptionThe energy consumption for the financial year has marginally gone up due to expansion of operations. Energy costs have also increased due to increased usage of D.G. Set for addressing frequent power failures.

The Company’s prioritization on continuous efforts for improving productivity and optimization of plant operations to reduce per unit energy consumption resulted in successful containment and optimization of energy costs.

Some of the key energy saving initiatives for optimization of energy cost implemented during the year were –

i) Maintaining the power factor to unity.

ii) Upgraded existing power generating facilities for better efficiency and lower cost of operations, besides meeting all emission control norms.

iii) Electric load management to restrict maximum demand of power supply.

iv) Installed digital energy monitoring system with energy management software to

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ensure optimum utilization of energy with online reporting.

v) Implementation of better operational practices leading to reduction in power consumption per unit of production.

Additional investments and proposals for the further reduction of consumption of energy have been planned. They are –

i) Installation of High Tension feeder line.

ii) Air Conditioning system optimization.

iii) Energy management system and controls for target reduction of energy consumption by 18%.

iv) Planned replacement / up-gradation of the existing equipments in utilities with energy efficient alternations.

Technology Absorption, Adaptation and InnovationResearch and technology focus have enabled Bilcare to successfully accomplish sustained performance excellence. Treading on the Innovation pathway, Bilcare has remained very focussed in creation, absorption and adaption of products, processes and technologies.

Some of the key Research and Technology initiatives that have been successfully absorbed and adapted are –

i) Successful commissioning of state-of-art customized Flexo printing technology for use in printing of a wide range of substrates having pharma and health care applications.

ii) Installation of SCADA (Supervisory Controlled And Data Acquisition) for effective management, process optimization and automation.

iii) State-of-art Pentapack CT1200L system at Clinical Services facilities in USA and UK enabling the online design of blister packaging configurations.

iv) Incorporation of high-end Technology solutions software systems enabling the evaluation and simulation of characterestics and performance of various packaging materials.

v) Successful commissioning of Sewage Treatment plant for environmental compliances and zero discharge.

Initiatives planned for implementation are –

i) Design and install state-of-art multi substrate HSL Coating facility.

ii) Transform current IVRS to a omprehensive business solution system.

iii) Develope and induct a unique knowledge management system.

iv) Enhance the capability of the Anti-Counterfeit technology platform for expanded business solution offering encompassing brand pedigree.

Foreign Exchange Earnings & Outgo Rs. Lacs

Foreign exchange earned 3,277.45

Foreign exchange outgo 12,402.76

Directors Mr. M. L. Bhakta resigned from the directorship of the Company, with effect from 31st July 2007. The Directors place on record their appreciation for the services and contributions made by Mr. Bhakta during his association with the Company.

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Mr. Rajendra B Tapadia, Dr. Volker Huelck and Dr. Kalyani Gandhi are retiring by rotation and being eligible offer themselves for re-appointment.

Directors’ Responsibility StatementPursuant to the requirement under the Section 217(2AA) of the Companies Act, 1956, with respect to the Directors’ Responsibility Statement, it is hereby confirmed:

i) That in the preparation of the accounts for the financial year ended 31st March 2008 the applicable accounting standards have been followed along with proper explanations relating to material departures, if any.

ii) That the Directors have selected such accounting policies and applied them consistently and made judgment 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 of 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.

iv) That the Directors have prepared the accounts for the financial year ended 31st March 2008 on a ‘going concern’ basis.

Corporate Governance A report on Corporate Governance is given in this Annual Report.

Auditors M/s. R. L. Rathi & Co., Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment.

Statutory Disclosures As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the Annexure to the Directors’ Report. However, in terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and the Accounts is being sent to all Shareholders of the Company excluding the aforesaid Annexure. Any Shareholder interested in obtaining a copy of said Annexure may write to the Company Secretary at the Registered Office of the Company.

Particulars regarding technology absorption, conservation of energy and foreign exchange earning and outgo required under section 217 (1)( e) of the Companies Act, 1956 and Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 have been given in the preceding paras.

For the fiscal year 2008, the compliance report is provided in the Corporate Governance section of this Annual Report. The auditors’ certificate on compliance with the mandatory recommendations of the committee is annexed to this report.

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AcknowledgementWe thank our domestic and international customers, vendors, investors, banking community, investment bankers, rating agencies and stock exchanges for their continued support during the year. We place on record our appreciation of the contribution made by the employees at all levels worldwide. Our consistent growth was made possible by their hard work, solidarity, commitment and unstinted efforts.

We thank the Governments of various countries where we have our operations and also thank the Government of India and

other government agencies for their positive co-operation and look forward to their continued support in future.

Finally, we wish to express our gratitude to the members and shareholders for their trust and support.

For and on behalf of the Board of Directors

Mohan H. Bhandari Chairman and Managing Director

Place: Pune Dated: 29th July 2008

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AUDITORS’ REPORT ON ABRIDGED ACCOUNTS

TOTHE MEMBERS OFBILCARE LIMITED

We have examined the attached Abridged Balance Sheet of Bilcare Limited as at 31st March 2008, the related Abridged Profit & Loss Account and the Cash Flow Statement for the year then ended on that date annexed thereto, together with the Notes and Significant Accounting Policies thereon. These abridged financial statements have been prepared by the Company pursuant to Rule 7A of the Companies (Central Government’s) General Rules and Forms, 1956 and are based on the audited financial statements of the Company for the year ended 31st March 2008 prepared in accordance with the provisions of Section 211 of the Companies Act, 1956 and covered by our report of even date to the members of the Company, which report is attached hereto.

For R. L. Rathi & Co. Chartered Accountants

R. L. Rathi Proprietor

Date: 30th June 2008 Membership No. 14739

AUDITORS’ REPORT

To,THE MEMBERS OFBILCARE LIMITED.

We have audited the attached Balance Sheet of Bilcare Limited as at 31st March 2008, the Profit and Loss Account and also the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government of India in terms of subsection (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said order.

Further to our comments in the annexure referred to above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.

(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books. The Branch Auditors’ reports have been forwarded to us and have been appropriately dealt with;

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of accounts and with the audited returns from the branches.

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(iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable.

(v) On the basis of written representations received from the directors, as on 31st March 2008 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2008 from being appointed as a director in terms of Section 274 (1) (g) of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with Significant Accounting Policies and Notes on Accounts in Schedule 19 and those appearing elsewhere in the accounts give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2008;

(b) in the case of Profit and Loss Account, of the Profit for the year ended on that date; and

(c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

For R. L. Rathi & Co. Chartered Accountants

R. L. Rathi Proprietor

Date : 30th June 2008

ANNEXURE TO AUDITORS’ REPORT

1. (a) The Company has maintained proper records to showing full particulars, including quantitative details and situation of all fixed assets.

(b) All the fixed assets have not been physically verified by the Management during the year but there is regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) During the year the Company has not disposed off a substantial part of its fixed assets.

2. (a) The inventories have been physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. No material discrepancies have been noticed on physical verification of stocks as compared to book records.

3. (a) As informed to us and the records produced to us for our verfications, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act 1956.

(b) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. During the course of audit, no major weakness has been noticed in these internal controls.

5. (a) Based on the audit procedures applied by us and according to the information and explanations given to us we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

59

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5,00,000 in respect of each party during the year are either have been made at prices which are reasonable having regard to prevailing market prices at the relevant time or the prices at which transactions for similar goods or services have been made with other parties or as compared to the prices quoted by others, or such comparisons could not be made since there are no other suppliers of similar items.

6. In our opinion and according to the information and explanation given to us, the Company has complied with the provisions of Section 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. Accordingly, there have been no proceedings before the Company Law Board in this matter nor any order has been passed.

7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8. As per our information the Company is not required to maintain cost records prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956.

9. (a) The Company is regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty and other material Statutory Dues applicable to it. There were no arrears as at 31st March 2008 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no statutory dues payable which have not been deposited with the appropriate authorities on account of any dispute.

10. The Company has no accumulated losses at the end of the financial year and it has not incurred any cash losses in the current or in the immediately preceding financial year.

11. According to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

12. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

14. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

15. In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from banks or financial institutions are, prima facie, not prejudicial to the interest of the company.

16. According to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

18. The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19. According to the information and explanations given to us, no debentures have been issued during the year.

20. The Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed and information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For R. L. Rathi & Co. Chartered Accountants

R. L. Rathi Proprietor

Date : 30th June 2008

60

ABRIDGED BALANCE SHEET AS ON 31ST MARCH 2008

Rs. Lacs

As on 31st

March 2008

Rs. Lacs Rs. Lacs

As on 31st

March 2007

Rs. Lacs

SOURCES OF FUNDS

SHAREHOLDERS’ FUND

Share Capital 1,645.31 1,420.08

Share Application Money 403.99 1,737.66

Reserves & Surplus 34,678.48 18,433.35

36,727.78 21,591.09

DEFERRED TAX 6,100.37 4,073.86

LOAN FUNDS

Secured Loans 15,373.80 10,828.95

Unsecured Loans 16,252.27 22,755.33

31,626.07 33,584.28

74,454.22 59,249.23

APPLICATION OF FUNDS

FIXED ASSETS

Gross Block 34,566.81 23,940.24

Less : Depreciation 4,713.27 3,147.00

Net Block 29,853.54 20,793.24

Capital work in progress 329.04 1,057.28

30,182.58 21,850.52

INVESTMENTS 17,322.66 15,376.55

CURRENT ASSETS, LOANS & ADVANCES

Inventories 5,907.67 3,887.44

Sundry Debtors 13,140.52 9,605.76

Cash & Bank Balances 8,663.55 9,590.07

Loans & Advances 3,085.58 1,753.18

30,797.32 24,836.45

LESS : CURRENT LIABILITIES & PROVISIONS 3,848.34 2,814.29

NET CURRENT ASSETS 26,948.98 22,022.16

74,454.22 59,249.23

NOTES ON ACCOUNTS

As per our report of even date For and on behalf of Board of Directors

R. L. Rathi & Co. Chartered Accountants

R. L. Rathi Mohan H. BhandariProprietor Managing Director

Place : Pune Anil Tikekar Dr. Praful R. NaikDate : 30th June 2008 Company Secretary Executive Director

61

ABRIDGED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2008

Year ended

31st March 2008

Rs. Lacs

Year ended

31st March 2007

Rs. Lacs

INCOME

Sales 40,635.32 32,297.76

Other Income 1,576.94 1,845.94

42,212.26 34,143.70

EXPENDITURE

Cost of Materials Consumed / Sold 24,757.10 19,890.91

(Increase) / Decrease in Stocks (805.63) (195.42)

Payments to & Provision for Employees 1,563.58 1,200.28

Overheads 3,829.04 2,397.71

Interest 1,143.53 796.51

Depreciation 1,571.25 1,072.27

32,058.87 25,162.26

Profit Before Taxation 10,153.39 8,981.44

Provision for Taxation 3,984.47 3,125.02

Net Profit after Tax 6,168.92 5,856.42

Income Tax relating to earlier years – 132.87

Add: Balance brought forward from Previous Year 11,062.80 6,645.61

Profit Available for Appropriation 17,231.72 12,369.16

APPROPRIATIONS

i) General Reserve 1,000.00 600.00

ii) Proposed Dividend 694.56 603.75

iii) Tax on Dividend 118.04 102.61

Balance carried to the Balance Sheet 15,419.12 11,062.80

Earnings Per Share (EPS) par value Rs.10/- each

(Refer Note No.9)

Basic (Rs.) 37.49 41.24

Diluted (Rs.) 32.14 35.29

NOTES ON ACCOUNTS

As per our report of even date For and on behalf of Board of Directors

R. L. Rathi & Co. Chartered Accountants

R. L. Rathi Mohan H. BhandariProprietor Managing Director

Place : Pune Anil Tikekar Dr. Praful R. NaikDate : 30th June 2008 Company Secretary Executive Director

62

ABRIDGED CASH FLOW FOR THE YEAR ENDED 31ST MARCH 2008

Year ended

31st March 2008

Rs. Lacs

Year ended

31st March 2007

Rs. Lacs

A Cash flow from operating activities

Profit after tax 6,168.95 5,723.55Adjustment for:Depreciation 1,571.25 1,072.27Interest/Dividend (Net) 1,028.13 326.31Discounting on account of Sales Tax deferral (54.51) (142.43)(Profit) / Loss on sale of fixed assets 5.88 12.11Operating profit before Working Capital Charges 8,719.70 6,991.81Deferred Tax Liability 2,026.51 1,340.18Adjustments for:Trade & other receivables (4,867.16) (3,805.85)Inventories (2,020.23) (1,835.68)Trade Payables 1,385.18 266.19Cash generated from operations 5,244.00 2,956.65Interest Paid (1,156.86) (862.48)Direct Taxes paid (436.74) 725.38Cash flow before extraordinary items 3,650.40 2,819.55Provision for Employee Benefits for earlier years (123.32) –Discounting on account of Sales Tax deferral 54.51 142.43

Net cash from operating activities 3,581.59 2,961.98

B Cash flow from investing activities

Purchase of fixed assets (9,918.90) (5,168.04)Sale of fixed assets 9.70 16.40Investments (1,946.11) (7,992.33)

Interest received 114.89 469.73

Dividend received 0.51 0.47

Net cash used in investing activities (11,739.91) (12,673.77)

C Cash flow from financing activities

Proceeds from Share application money (1,333.69) 1,072.63Proceeds from issue of Share Capital 225.23 –Proceeds from Share Premium (Net) 11,012.13 –Proceeds from long term borrowings 8,069.02 2,111.04Repayment of long term borrowings (10,027.23) (2,666.93)Dividend paid including tax (713.66) (485.77)

Net cash used in financing activities 7,231.80 30.97

Net increase in cash & cash equivalents (A+B+C) (926.52) (9,680.82)Cash and cash equivalents as at 01.04.2007 9,590.07 19,270.89Cash and cash equivalents as at 31.03.2008 8,663.55 9,590.07

As per our report of even date For and on behalf of Board of DirectorsR. L. Rathi & Co. Chartered Accountants

R. L. Rathi Mohan H. BhandariProprietor Managing Director

Place : Pune Anil Tikekar Dr. Praful R. NaikDate : 30th June 2008 Company Secretary Executive Director

63

NOTES ON ABRIDGED ACCOUNTS

As on 31st

March 2008

Rs. Lacs

As on 31st

March 2007

Rs. Lacs

1. Contingent Liabilities not provided for:

a) In respect of counter guarantees given for subsidiary company 18,923.30 1,021.64

b) Disputed Income Tax matters in appeal 479.51 –

c) Estimated amount of contracts remaining to be executed on capitalaccount and not provided for (Net of Advances)

246.37 380.15

2. (Note No.4 – Schedule 19 of Annual Account)

Information as required by paragraph 4 of part II of Schedule VI of the Companies Act, 1956.

Production during the year Licensed Capacity

NA

NA

Installed Capacity TPA 26,000 22,000

Production RFT Lacs 10,361.22 7,598.72

3. (Note No.7 – Schedule 19 of Annual Account)

The credit facilities sanctioned by the Banks and Institutions are secured by mortgage of immovable properties and hypothecation of all movable property inter alias machinery, equipment and current assets, namely inventory and book debts, both present and future.

4. (Note No.11 – Schedule 19 of Annual Account)

a) The company has issued Foreign Currency Convertible Bonds (FCCB) on 27th December 2005 amounting to USD 50 million.

No interest is payable on the Bonds. Unless previously converted, redeemed or cancelled, the Company will redeem each Bond at 145.270% of its principal amount on the Maturity Date which is 22nd December 2010. The Bonds are convertible into fully paid equity shares at any time on or after 21st January 2006 and prior to close of business on 22nd November 2010. The Conversion Price at which the Bonds will be converted into shares will initially be Rs. 880/- per share with a fixed rate of exchange of Rs. 45.7325 = USD 1.00 on conversion. The Conversion Price will be reset downwards by upto 20% of the initial Conversion Price on 21st December 2007 and / or 21st December 2008 if the average Closing Price of the shares in the five trading days before the reset date is less than the Conversion Price. There is an option for the Company to redeem the Bonds in whole but not in part at any time on or after 21st December 2007 and prior to 22nd December 2010 subject to certain conditions.

In the opinion of the Management the above mentioned Convertible Bonds issued upon terms and conditions set out in the offering circular dated 16th December 2005, would be outside the purview of Section 117(C) of the Companies Act, 1956 as regards creation of Debenture Redemption Reserve.

b) During the year, the Company has allotted –

i) 893,000 Equity Shares of Rs.10/- each @ Rs.290/- (including share premium of Rs.280/-) on conversion of Warrant ‘B’;

ii) 745,000 Equity Shares of Rs.10/- each @ Rs.535/- (including share premium of Rs.525/-) on conversion of Warrant ‘A’ and;

iii) 614,265 Equity Shares of Rs.10/- each @ Rs.880/- (including share premium of Rs.870/-) on conversion of 1,182 Foreign Currency Convertible Bonds.

Consequently, the paid-up equity share capital of the Company stands increased to Rs.1,645.31 lacs.

c) Foreign exchange loss arising on conversion of FCCB together with share issue expenses aggregating to Rs.743.63 lacs are debited to Securities Premium Account.

64

NOTES ON ABRIDGED ACCOUNTS

5. (Note No.12 – Schedule 19 of Annual Account)

As required by Accounting Standard – AS 18 “Related Party Disclosures” issued by the Institute of Chartered Accountants of India are as follows:

a) Subsidiary Companies

i) Bilcare Singapore Pte Ltd.

ii) Bilcare GmbH; subsidiary of Bilcare Singapore Pte Ltd.;

iii) Bilcare Inc, subsidiary of Bilcare Singapore Pte Ltd.;

iv) Bilcare Farmacseutica Embalagem E Pesquisas Ltda, subsidiary of Bilcare Singapore Pte Ltd.;

v) Bilcare (UK) Ltd., subsidiary of Bilcare Singapore Pte Ltd.;

vi) Bilcare GCS (Europe) Ltd. (Formerly DHP Ltd.), subsidiary of Bilcare (UK) Ltd.

vii) Bilcare SA, subsidiary of Bilcare Singapore Pte Ltd.;

viii) Singular ID Pte. Ltd., subsidiary of Bilcare Singapore Pte Ltd.; and

ix) Singular ID Italia Srl, subsidiary of Singular ID Pte. Ltd.

b) Key Management Personnel

i) Mr. Mohan H. Bhandari (Managing Director)

ii) Mr. Chandra Prakash Jaggi (Executive Director)

iii) Dr. Praful R. Naik (Executive Director)

c) Transaction with parties referred above

Rs. Lacs

Subsidiary Companies Key Management Personnel

Particulars Year ended 31st

March 2008Year Ended 31st

March 2007Year ended 31st

March 2008Year Ended 31st

March 2007

Remuneration – – 169.45 116.15

Rent Payment – – 23.00 –

Sale 1,311.66 835.73 – –

Purchases 900.76 54.73 – –

Lease Income 700.00 407.50 – –

Note: Related party relationship on the basis of the requirements of AS18 as in 1(a) and 1(b) above is given by Management and relied upon by the Auditors.

6. (Note No.13 – Schedule 19 of Annual Account)

The Company is engaged in pharma packaging research solutions which as per Accounting Standard – AS 17 is considered the only reportable business segment by the Management in the light of the dominant source and nature of risks and returns, location of its production facilities and assets of the group and relied upon by the auditors. As per AS 17 all reportable information as regards segment revenue, segment results, carrying amount of segment assets, segment liabilities, total cost of acquisition of segment assets and depreciation are fairly disclosed in the financial statements.

7. (Note No.14 – Schedule 19 of Annual Account)

The Department of Company Affairs, Government of India vide its order issued under Section 212 (8) of the Companies Act, 1956 has exempted the Company from attaching a copy of Accounts of its subsidiaries for the financial year ended 31st March 2008.

65

NOTES ON ABRIDGED ACCOUNTS

8. (Note No.15 – Schedule 19 of Annual Account)

Major components of deferred tax assets and liabilities arising on account of timing differences are:

Year ended

31st March 2008

Rs. Lacs

Year ended

31st March 2007

Rs. Lacs

Deferred Tax Liability on account of

timing difference in Depreciation 6,100.37 4,073.86

9. (Note No.16 – Schedule 19 of Annual Account)

Earnings Per Share (EPS)

a) Net Profit as per Profit & Loss Account 6,168.92 5,856.42

b) Net profit available for equity shareholder(Numerator used for calculation)

6,168.92 5,856.42

c) Weighted Average number of ordinary shares outstanding 16,453,065 14,200,800

d) Effect of potential ordinary shares on share Warrants and convertible Bonds outstanding

2,739,167 2,393,000

e) Weighted average number of ordinary shares in computing diluted earnings per share ( c + d )

19,192,232 16,593,800

f) Earnings per share ( Face value Rs.10/- per share)

Basic [ (b) / (c) ] (Rs.) 37.49 41.24

Diluted [ (b) / (e) ] (Rs.) 32.14 35.29

10. (Note No.22 – Schedule 19 of Annual Account)

Figures for the previous year have been regrouped / reclassified wherever necessary to confirm with the current years classification.

11. (Note No.23 – Schedule 19 of Annual Account)

All figures are in Rupees lacs, rounded off to two decimal places.

12. (Note No. 24 – Schedule 19 of Annual Account)

Significant Accounting Policies:

i) Basis of accounting

The Company adopts the accrual basis in the preparation of its accounts except otherwise stated and those with significant uncertainties. Financial statements are based on historical cost. These costs are not adjusted to reflect the impact of changing value in the purchasing power of money.

ii) Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

iii) Fixed Assets

Fixed assets are stated at cost of acquisition exclusive of Cenvat and inclusive of duties, taxes, incidental expenses and any directly attributable cost of brining the assets to its working condition for intended use including expenditure incurred on trial runs.

Patents/Trademarks are recorded at their acquisition cost.

66

NOTES ON ABRIDGED ACCOUNTS

iv) Depreciation

Depreciation is provided on straight line method in the manner prescribed by Schedule XIV to the Companies Act, 1956 read with the relevant circulars issued by Department of Company Affairs from time to time.

In respects of assets added / disposed off during the year it has been provided on pro-rata basis with reference to the number of days in use.

Patent and Trademarks are amortized over their estimated economic life not exceeding ten years.

v) Research and development expenditure

Revenue expenditure is charged to the Profit and Loss Account and capital expenditure is added to the cost of fixed assets in the year in which it is incurred.

vi) Investments

Investments are stated at cost.

vii) Inventories

a) Raw Materials, Work -In-Process and Finished Goods are valued at cost or realizable value whichever is less. Cost of inventories is computed on FIFO basis.

b) Stores and Maintenance spares are valued at cost.

c) Import of materials is accounted on receipt thereof at the factory.

viii) Sales Tax

a) The Company has opted for the Sales Tax Incentives by way of deferral under Government of Maharashtra Package Scheme of Incentive 1983 and Package Scheme of Incentive 1988 for the expansion. The Period of which the tax liability will be deferred will be 12 years and 10 years respectively and payable thereafter in six and five equal annual installments respectively.

b) The Company is accounting deferred Sales Tax liability at its net present value and accordingly the excess over its present value has been taken to the Profit & Loss Account.

c) Sales tax set off is reduced from the purchase cost of the material.

ix) Excise Duty

a) Liability for Excise Duty on finished goods is accounted as and when they are cleared from the factory premises. No provision is made in the account for goods manufactured and lying in factory premises.

b) Sales are recorded net of excise duty, sales tax and trade discounts.

x) Cenvat

Cenvat benefit is accounted for by reducing the purchase cost of the materials.

xi) Treatment of Retirement Benefits

Liabilities in respect of retirement benefits to employees are provided for by payment to Gratuity and Provident Funds. The actual payment to the Gratuity funds is based on actuarial valuation. Provision of accrued leave encashment is made at the end of the year. There is no superannuation scheme exists for the employees.

xii) Foreign currency transactions on revenue accounts

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transaction.

b) Monetary items denominated in foreign currencies at the year end and not covered by forward exchange contracts are translated at year end rates and those covered by forward exchange contracts are translated at the rate of forward exchange contract. The loss or gain due to fluctuation of exchange rate is charged to Profit and Loss Account other than on the funds utilized for acquisition of fixed assets in India.

xiii) Expenditure during construction and expenditure on new projects

In case of new projects and in case of substantial modernization / expansion at existing units of the Company expenditure incurred including interest on borrowings and financing cost on specific loans prior to commencement of commercial production is capitalized.

67

NOTES ON ABRIDGED ACCOUNTS

xiv) Deferred Tax is recognized at the current rate of Tax, subject to the consideration of prudence on timing differences, being the difference between Taxable Income and Accounting Income that originate in one period and are capable of reversal in one or more subsequent periods.

xv) Provision, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

xvi) Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

xvii) Revenue Recognition

The Company recognizes sales at the point of dispatch of goods from the plant to the customer. Sales are net of discounts, sales tax, excise duty and sales returns.

Dividend is recorded when the right to receive payment is established.

Interest income is recognized on accrual basis.

As per our report of even date For and on behalf of Board of DirectorsR. L. Rathi & Co. Chartered Accountants

R. L. Rathi Mohan H. BhandariProprietor Managing Director

Place : Pune Anil Tikekar Dr. Praful R. NaikDate : 30th June 2008 Company Secretary Executive Director

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69

AUDITORS’ REPORT ON ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS

Auditors’ Report To the Board of Directors of Bilcare Limited.

We have examined the attached Abridged consolidated Balance Sheet of Bilcare Limited and its subsidiary Bilcare Singapore Pte. Ltd. as at 31st March 2008, the Abridged consolidated Profit & Loss Account and consolidated Cash Flow Statement for the year then ended on that date annexed thereto, together with Notes thereon. These abridged consolidated financial statements have been prepared by the Company, pursuant to Rule 7A of the Companies (Central Government’s) General Rules and Forms, 1956 and are based on the audited Consolidated Financial Statements of the Company and its subsidiary for the year ended 31st March 2008 prepared in accordance with the requirements of Accounting Standard 21 – Consolidated Financial Statements issued by the Institute of Chartered Accountants of India and is covered by our report of even date to the Board of Directors of the Company, which report is attached hereto.

For R. L. Rathi & Co. Chartered Accountants

R. L. Rathi Proprietor

Date: 30th June 2008 Membership No. 14739

AUDITORS’ REPORT ON CONSOLIDATED FINANCIAL STATEMENT

Auditors’ Report to the Board of Directors of Bilcare Limited.

1. We have audited the attached consolidated Balance Sheet of Bilcare Limited and its subsidiary company Bilcare Singapore Pte Ltd., Singapore, as at 31st March 2008 and also related Profit and Loss Account and Cash Flow Statement for the year then ended. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the financial statement of the subsidiary company Bilcare Singapore Pte Ltd., Singapore, and it’s subsidiaries Bilcare Inc, Bilcare GmbH, Bilcare Farmacseutica Embalagem E Pesquisas Ltda, Bilcare (UK) Ltd., Bilcare GCS (Europe) Ltd. (Formerly DHP Ltd.), subsidiary of Bilcare (UK) Ltd., Singular ID Pte. Ltd. and Singular ID Italia Srl, subsidiary of Singular ID Pte. Ltd. for the year ended on 31st March 2008. These statements were audited by other auditors whose reports have been furnished to us, and our opinion, so far as it relates to these companies is based solely on the report of the other auditors.

2. We conducted the audit in accordance with generally accepted auditing standards in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our opinion.

3. We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of Accounting Standard 21 `Consolidated Financial Statements’ issued by the Institute of Chartered Accountants of India, on the basis of the individual financial statements of Bilcare Limited and its subsidiaries included in the aforesaid consolidation.

4. In our opinion, based on our audit and the separate report of other auditors, the consolidated financial statements referred to above give true and fair view of the financial position of Bilcare Limited and its aforesaid subsidiaries as at 31st March 2008 and of the result of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles in India.

For R. L. Rathi & Co. Chartered Accountants

R. L. RathiProprietor

Date : 30th June 2008

70

ABRIDGED CONSOLIDATED BALANCE SHEET AS ON 31ST MARCH 2008

Rs. Lacs

As on 31st

March 2008

Rs. Lacs Rs. Lacs

As on 31st

March 2007

Rs. Lacs

SOURCES OF FUNDS

SHAREHOLDERS’ FUND

Share Capital 1,645.31 1,420.08

Share Application Money 1,710.26 10,893.33

Reserves & Surplus 37,238.61 18,970.42

40,594.18 31,283.83

DEFERRED TAX 6,303.55 4064.39

LOAN FUNDS

Secured Loans 17,446.23 13,388.27

Unsecured Loans 52,921.94 22,755.32

70,368.17 36,143.59

117,265.90 71,491.81

APPLICATION OF FUNDS

FIXED ASSETS

Gross Block 58,789.77 38,018.47

Less : Depreciation 6,289.35 4,305.00

Net Block 52,500.42 33,713.47

Capital work in progress 4,323.33 1,057.29

56,823.75 34,770.76

INVESTMENTS 13,620.31 8,665.97

CURRENT ASSETS, LOANS & ADVANCES

Inventories 8,165.67 4,607.51

Sundry Debtors 21,202.61 12,508.64

Cash & Bank Balances 15,661.16 10,745.47

Loans & Advances 7,360.07 4,708.54

52,389.51 32,570.16

LESS : CURRENT LIABILITIES & PROVISIONS 8,116.24 5,060.04

NET CURRENT ASSETS 44,273.27 27,510.12

MISCELLANEOUS EXPENSES

(to the extent not written off or adjusted)

2,548.57 544.96

117,265.90 71,491.81

NOTES ON ACCOUNTS

As per our report of even date For and on behalf of Board of DirectorsR. L. Rathi & Co. Chartered Accountants

R. L. Rathi Mohan H. BhandariProprietor Managing Director

Place : Pune Anil Tikekar Dr. Praful R. NaikDate : 30th June 2008 Company Secretary Executive Director

71

ABRIDGED CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2008

Year ended

31st March 2008

Rs. Lacs

Year ended

31st March 2007

Rs. Lacs

INCOME

Sales 65,068.17 40,785.43

Other Income 1,924.06 1,787.20

66,992.23 42,572.63

EXPENDITURE

Cost of Materials Consumed / Sold 36,150.17 24,838.72

(Increase) / Decrease in Stocks (641.48) (515.08)

Payments to & Provision for Employees 6,054.67 2,239.19

Overheads 9,157.43 4,311.30

Interest 1,427.60 911.59

Depreciation 2,415.58 1,543.80

54,563.97 33,329.52

Profit Before Taxation 12,428.26 9,243.11

Provision for Taxation 4,272.64 3,251.00

Net Profit after Tax 8,155.62 5,992.11

Income Tax relating to earlier years – 132.87

Add: Balance brought forward from Previous Year 12,163.30 7,371.77

Profit Available for Appropriation 20,318.92 13,231.01

APPROPRIATIONS

i) General Reserve 1,000.00 600.00

ii) Proposed Dividend 694.56 603.75

iii) Tax on Dividend 118.04 102.61

Balance carried to the Balance Sheet 18,506.32 11,924.65

NOTES ON ACCOUNTS

As per our report of even date For and on behalf of Board of DirectorsR. L. Rathi & Co. Chartered Accountants

R. L. Rathi Mohan H. BhandariProprietor Managing Director

Place : Pune Anil Tikekar Dr. Praful R. NaikDate : 30th June 2008 Company Secretary Executive Director

72

ABRIDGED CONSOLIDATED CASHFLOW FOR THE YEAR ENDED 31ST MARCH 2008

Year ended

31st March 2008

Rs. Lacs

Year ended

31st March 2007

Rs. Lacs

A Cash flow from operating activities

Profit after tax 8,155.62 5,859.25Adjustment for:Exchange Difference (Foreign Currency Trans. Reserve) (202.39) (489.52)Depreciation 1,989.33 2,125.72Interest/Dividend (Net) 763.79 388.78Discounting on account of Sales Tax deferral (54.51) (142.43)(Profit) / Loss on sale of fixed assets 5.88 12.11Operating profit before Working Capital Charges 10,657.72 7,753.91Deferred Tax Liability 2,239.15 1,353.36Adjustments for:(Increase) / Decrease in Preliminary Expenses (2,003.61) (394.70)Trade & other receivables (11,345.50) (6,982.45)Inventories (3,558.17) (2,352.30)Trade Payables 3,346.81 1,849.14Cash generated from operations (663.60) 1,226.96Interest Paid (1,380.40) (948.84)Direct Taxes paid (436.74) 725.85Cash flow before extraordinary items (2,480.74) 1,003.97 Provision for Employee Benefits for earlier years (123.32) –Discounting on account of Sales Tax deferral 54.51 142.43

Net cash from operating activities (2,549.55) 1,146.40

B Cash flow from investing activities

Purchase of fixed assets (24,057.90) (15,307.08)Sale of fixed assets 9.71 16.40Investments (4,715.66) (5,822.36)Interest received 663.30 522.34Dividend received 0.51 0.47

Net cash used in investing activities (28,100.04) (20,590.23)

C Cash flow from financing activities

Proceeds from Share application money (9,183.07) 10,228.30Proceeds from Forfeiture of Share application money – 1.95Proceeds from issue of Share Capital 225.23 –Proceeds from Share Premium (Net) 11,012.21 13.65Proceeds from long term borrowings 44,251.80 3,449.92 Repayment of long term borrowings (10,027.23) (2,666.92)Dividend paid including tax (713.66) (485.77)

Net cash used in financing activities 35,565.28 10,541.13

Net increase in cash & cash equivalents (A+B+C) 4,915.69 (8,902.70)Cash and cash equivalents as at 01.04.2007 10,745.47 19,648.17Cash and cash equivalents as at 31.03.2008 15,661.16 10,745.47

As per our report of even date For and on behalf of Board of DirectorsR. L. Rathi & Co. Chartered Accountants

R. L. Rathi Mohan H. BhandariProprietor Managing Director

Place : Pune Anil Tikekar Dr. Praful R. NaikDate : 30th June 2008 Company Secretary Executive Director

73

NOTES ON ABRIDGED CONSOLIDATED ACCOUNTS

1. Basis of Consolidation

a) Basis of Preparation

The Consolidated Financial Statements are prepared in accordance with Accounting Standard 21 on Consolidated Financial Statements issued by the Institute of Chartered Accountants of India.

b) Principles of Consolidation

The Consolidated Financial Statements comprise the Financial Statements of Bilcare Limited (“the Company”) and its subsidiaries.

The Financial Statements of all the companies are prepared according to uniform accounting policies in accordance with generally accepted accounting principles in India.

The effects of the subsidiary companies transactions are eliminated on consolidation. The financial statements of the company and its subsidiary have been combined on a line by line basis by adding together the book value of like items of assets, liabilities, income and expenses.

c) Companies included in Consolidation are:

Name of the company Country ofIncorporation

% of voting power held as at 31st March, 2008

i) Bilcare Singapore Pte Ltd. Singapore 100% *

ii) Bilcare GmbH, Subsidiary of Bilcare Singapore Pte Ltd.

Germany 100% *

iii) Bilcare Inc., Subsidiary of Bilcare Singapore Pte Ltd. USA 100% *

iv) Bilcare Farmacseutica Embalagem E Pesquisas Ltda, Subsidiary of Bilcare Singapore Pte Ltd.

Brazil 100% *

v) Bilcare (UK) Ltd., Subsidiary ofBilcare Singapore Pte Ltd.

UK 100% *

vi) Bilcare GCS (Europe) Ltd. (Formerly DHP Ltd.), Subsidiary of Bilcare (UK) Ltd.

UK 100% *

vii) Singular ID Pte. Ltd, Subsidiary ofBilcare Singapore Pte Ltd.

Singapore 100% * w.e.f. 14th December 2007

viii) Singular ID Italia Srl, Subsidiary ofSingular ID Pte Ltd.

Italy 92.50% * w.e.f. 14th December 2007

* Held through subsidiary

d) Figures of Bilcare Singapore Pte Ltd., Singapore and its subsidiaries have been included till the date of its year end i.e. upto 31st March 2008.

e) Conversion rate used are as of 31st March 2008 for all items.

2. Significant Accounting Policies

Most of the accounting policies of the Reporting Company and those of its Subsidiaries are similar. Due to inherent diversities in the legal and regulatory environments, certain accounting policies in respect of depreciation / amortisation etc. differ. The accounting policies of all the Companies are in line with generally accepted accounting principles in India.

3. Notes of these Consolidated Financial Statements are intended to serve as a means of informative disclosure and a guide to better understanding of the consolidated position of the companies. Recognizing this purpose, the Company has disclosed only such Notes from the individual financial statements, which fairly present the needed disclosure. Practical considerations, made it desirable to exclude notes to Financial Statements, which in the opinion of the management, could be better viewed, when referred from the individual Financial statements of Bilcare Limited. Notes referred to in these financial statements are references to the notes to the independent financial statements of Bilcare Limited.

4. The Company is engaged in pharma packaging research solutions which as per Accounting Standard – AS 17 is considered the only reportable business segment by the management in the light of the dominant source and nature of risks and returns, location of its production facilities and assets of the group, and relied upon by the auditors.

74

As per our report of even date For and on behalf of Board of DirectorsR. L. Rathi & Co. Chartered Accountants

R. L. Rathi Mohan H. BhandariProprietor Managing Director

Place : Pune Anil Tikekar Dr. Praful R. NaikDate : 30th June 2008 Company Secretary Executive Director

NOTES ON ABRIDGED CONSOLIDATED ACCOUNTS

5. Depreciation – Fixed Assets

On assets, depreciation is provided on straight line method in the manner prescribed by Schedule XIV to the Companies Act, 1956 read with the relevant circulars issued by Department of Company Affairs from time to time.

In respects of assets added / disposed off during the year it has been provided on pro-rata basis with reference to the number of days in use.

Patent and Trademarks are amortized over their estimated economic life not exceeding ten years.

For Subsidiaries, the depreciation is provided on the basis of useful life of the asset, determined by the Management.

6. Bilcare Singapore Pte. Ltd., Singapore has issued USD 90 million 4% Convertible Bonds due 2012. The bonds may be redeemed in whole at the option of the bondholder on the maturity date at a price of 130.726% of the principal amount, plus accrued interest, as per the terms of the issue. The Bonds may be converted to shares of Bilcare Singapore Pte. Ltd. at maturity or 90 days after the completion of a Qualified IPO. The bonds are listed on Singapore Stock Exchange.

7. Consolidated

31st March 2008

Rs. Lacs

Consolidated

31st March 2007

Rs. Lacs

a. Estimated amount of contracts remaining tobe executed on capital account and not provided for(Net of Advances)

965.83 1,289.66

b. Contingent Liabilities not provided for in respect of claims against the Companies not acknowledged as debts.i) Income Taxii) Corporate Guarantee given for loans taken by subsidiary companies.iii) Guarantees

NIL18,923.30

29.43

NIL1,021.64

29.43

8. Deferred tax (assets) and liabilities arising on account of timing differences inDepreciation 6,303.55 4,064.39

9. The subsidiaries have reported related party transactions, which are eliminated in consolidation. Hence disclosure in this regard is fairly reflected in Notes on Accounts No. 5 to the independent financial statements of Bilcare Limited.

10. Difference between the cost of investment in subsidiary company and the value as on the date of conversion due to foreign exchange fluctuation is credited / debited to Foreign Exchange Translation Reserve.

11. The Department of Company Affairs, Government of India vide its order issued under Section 212 (8) of the Companies Act, 1956 has exempted the Company from attaching a copy of Accounts of its subsidiaries for the financial year ended 31st March 2008.

12. Figures for the previous year have been regrouped / reclassified wherever necessary to confirm with the current years classification.

75

NOTES

76

NOTES